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C-EENRG

Cambridge Centre for Environment, Energy and Natural Resource Governance

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Working Papers

Papers published in this series:

 

14. Modelling Innovation and the Macroeconomics of Low-Carbon Transitions:  Theory, Perspectives and Practical Use, Mercure, J-F., Knoblosh, F., Pollitt, H., Paroussos, L., Scrieciu, S., Lewney, R., 2017-3.
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13. Sounds of the Anthropocene, Verea, S., 2017-2.
Download - Introduction

12. The concept of subjective right and the Anthropocene, He, L., 2017-1.
Download - Introduction

11. Promoting renewables through free trade agreements? An assessment of the relevant provisions, Cima, E., 2016-7.
Download - Abstract 

10. The double failure of environmental regulation and deregulation and the need for ecological law, Montini, M., 2016-6.
Download - Abstract 

9. Rethinking regulation for promoting an ecologically based approach to sustainability, Montini, M., Volpe, F., 2016-5.
Download - Abstract 

8. Law and the Anthropocene, Viñuales, J. E., 2016-4.
Download - Introduction 

7. A price is a guide: The English plastic bag charge and measuring the internalisation of law, Larcom, S., Panzone, L. A., Swanson, T., 2016-3.
Download - Abstract 

6. How IPBES works: The functions, structures and processes of the Intergovernmental Platform on Biodiversity and Ecosystem Services, Montana, J., 2016-2.
Download - Abstract 

5. Foreign investment and the environment in international law: The current state of play, Viñuales, J. E., 2016-1.
Download - Introduction

4. The role of money and the financial sector in energy-economy models used for assessing climate policy, Pollitt, H., Mercure, J. F., 2015-4.
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3. The Paris climate agreement: an initial examination, Viñuales, J. E., 2015-3.
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2. Modelling complex systems of heterogeneous agents to better design sustainability transitions policy, Mercure, J. F., Pollitt, H., Bassi, A. M., Viñuales, J. E., Edwards, N. R. 2015-2. 
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1. International investment law and natural resource governance, Viñuales, J. E. 2015-1. 

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Abstracts

1. International investment law and natural resource governance, Viñuales, J. E., C-EENRG Working Papers 2015-1. Download 

This paper analyses the implications of contemporary international investment law for the regulation of natural resources. Natural resources are unevenly distributed across different regions and countries and that makes access a very important question. In turn, access to resources located in the territory or within the jurisdiction of a country and, more generally, any activities conducted in connection with such resources, are subject to the regulatory powers of the host State. Although such powers are above all a matter of sovereignty, understanding them through this prism alone would miss an important point, namely that the interests of a host State and a foreign investor may be aligned not only in pursuance of public welfare but also to the detriment of it. The latter phenomenon has been called the “resource curse” – i.e. a situation where a rapacious government exploits the country’s natural resources for its own benefit depriving the population of its due. Foreign investors may be involved in such phenomenon either deliberately (i.e. through a close connection with the rapacious government) or as a mere result of their activity in the host State (i.e. by making the exploitation profitable for the government irrespective of any explicit complicity). Thus, questions of 'access', 'sovereignty' and 'distribution' are closely interrelated in ways that require sustained analysis. The first section of the paper provides a brief overview of the basic architecture and building blocks of international investment law, from a structural and dynamic perspective. The focus then turns to the core subject matter, namely the specific implications of this body of law for the governance of natural resources, particularly as regards access, sovereignty and distribution. In conclusion, some observations and recommendations regarding possible avenues for reform are put forward for consideration and future research. 

Keywords: international investment law, natural resources, extractive industries, investment policy


2. Modelling complex systems of heterogeneous agents to better design sustainability transitions policyMercure, J. F., Pollitt, H., Bassi, A. M., Viñuales, J. E., Edwards, N. R., C-EENRG Working Papers 2015-2. Download  

This article proposes a fundamental methodological shift in the modelling of policy interventions for sustainability transitions in order to account for complexity (e.g. self-reinforcing mechanisms, such as technology lock-ins, arising from multi-agent interactions) and agent heterogeneity (e.g. differences in consumer and investment behaviour arising from income stratification). We first characterise the uncertainty faced by climate policy-makers and its implications for investment decision-makers. We then identify fi ve shortcomings in the equilibrium and optimisation-based approaches most frequently used to inform sustainability policy: (i) their normative, optimisation-based nature, (ii) their unrealistic reliance on the full-rationality of agents, (iii) their inability to account for mutual influences among agents (multi-agent interactions) and capture related self-reinforcing (positive feedback) processes, (iv) their inability to represent multiple solutions and path-dependency, and (v) their inability to properly account for agent heterogeneity. The aim of this article is to introduce an alternative modelling approach based on complexity dynamics and agent heterogeneity, and explore its use in four key areas of sustainability policy, namely (1) technology adoption and diffusion, (2) macroeconomic impacts of low-carbon policies, (3) interactions between the socio-economic system and the natural environment, and (4) the anticipation of policy outcomes. The practical relevance of the proposed methodology is subsequently discussed by reference to four specific applications relating to each of the above areas: the diffusion of transport technology, the impact of low-carbon investment on income and employment, the management of cascading uncertainties, and the cross-sectoral impact of biofuels policies. In conclusion, the article calls for a fundamental methodological shift aligning the modelling of the socio-economic system with that of the climatic system, for a combined and realistic understanding of the impact of sustainability policies.

Keywords: environmental policy assessment; climate change mitigation; complexity sciences; behavioural sciences


3. The Paris climate agreement: an initial examination, Viñuales, J. E., C-EENRG Working Papers 2015-3. Download 

This paper provides an initial examination of the legal structure and content of the Paris Agreement adopted at COP-21 on 12 December 2015. After a brief overview of the negotiations leading to Paris, I analyse the architecture of the Paris Agreement focusing on three main components, namely (1) the goals, (2) the action areas (mitigation, adaptation, loss and damage), and (3) the implementation techniques (information-based: transparency mechanism and global stocktake; compliance facilitation: finance, technology transfer, capacity-building, REDD, linking, sustainable development mechanism; management of non-compliance: non-compliance procedure and dispute settlement). Each component is analysed in turn. The paper concludes with some general observations on the prospects for the Paris Agreement.


4. The role of money and the financial sector in energy-economy models used for assessing climate policy, Pollitt, H., Mercure, J. F., C-EENRG Working Papers 2015-4. Download  

This paper outlines a critical gap in the assessment methodology used to estimate the macroeconomic costs and benefits of climate policy. It shows that the vast majority of models used for assessing climate policy use assumptions about the financial system that sit at odds with the observed reality. In particular, the models’ assumptions lead to ‘crowding out’ of capital, which cause them to show negative impacts from climate policy in virtually all cases. We compare this approach with that of the E3ME model, which follows non-equilibrium economic theory and adopts a more empirical approach. While the non-equilibrium model also has limitations, its treatment of the financial system is more consistent with reality and it shows that green investment need not crowd out investment in other parts of the economy – and may therefore off er an economic stimulus.

The implication of this finding is that standard Computable General Equilibrium models consistently over-estimate the costs of climate policy in terms of GDP and welfare, potentially by a substantial amount. The conclusions from the modelling therefore overly restrict the range of possible emission pathways accessible using climate policy from the viewpoint of the decision-maker, and may also lead to misleading information used for policy making. Improvements in both modelling approaches should be sought with some urgency – both to provide a better assessment of potential climate policy and to improve understanding of the dynamics of the global financial system more generally.

Keywords: macroeconomic modelling, financial modelling, investment, crowding out, climate policy 


5. Foreign investment and the environment in international law: The current state of play, Viñuales, J. E., C-EENRG Working Papers 2016-1. Downloadd  

Several years have passed since the relationship between the laws governing foreign investment and environmental protection started to receive well-deserved attention.1 What was foreseeable then is clear now. The increased momentum to move from a resource-inefficient and polluting socio-economic model to one with a lower environmental footprint is resulting in significant regulatory change, and much more is coming. One major objective of such change is to harness the financial and technological strength of the private sector to promote environmental protection, which, despite the prevailing ‘synergistic’ discourse, can, unfortunately, not be achieved without some significant tensions arising from cost-internalisation or investment shifting measures that adversely affect economic operators. Yet, the transition from a brown to a green economy is in motion, and its fine print, including the regulatory and litigation risks it entails, is taking an increasingly recognisable shape.
This paper is about trends that have moved from forecast to reality. It is also about more forecasting. And it is, above all, about understanding how environmental protection is gaining ground in the international law of foreign investment and in the mindset of those whose profession is to clarify it and apply it.


6. How IPBES works: The functions, structures and processes of the Intergovernmental Platform on Biodiversity and Ecosystem Services, Montana, J., C-EENRG Working Papers 2016-2. Download  

The Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES) is an international knowledge institution established through the United Nations system. Mandated to “strengthen the science-policy interface for biodiversity and ecosystem services”, IPBES has a detailed set of intergovernmentally agreed functions, structures and processes that guide its first Work Program (2014-2018). This working paper sets out these institutional arrangements, noting that broader understanding of the IPBES mechanisms may assist wider participation, accountability, and scholarly analysis.

Keywords:  biodiversity; environmental knowledge; institutional arrangements; IPBES; science-policy interface


7. A price is a guide: The English plastic bag charge and measuring the internalisation of law, Larcom, S., Panzone, L. A., Swanson, T., C-EENRG Working Papers 2016-3.
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We measure the behavioural and motivational impacts of a legislative change in England that required supermarkets to charge for new plastic carrier bags they issued. Using a difference-in-difference estimator, we find that the treatment group used 1.7 less new plastic bags per shopping trip after seven weeks. We also find evidence of motivational ‘crowding in’. That is, we find increased motivation to reduce plastic bag use and acceptance of the government’s role in regulating their use. Using mediation analysis we find that the price effect of the charge grows over time, whereas the internal motivation effect falls (in relative terms). Seven weeks after the legislation came into force the price change explains 90% of the reduction in new plastic bags used, while the change in motivation explains only 10% of the reduction.

Keywords: internalisation of law, expressive law, crowding in, external and internalised motivations


8. Law and the Anthropocene, Viñuales, J. E., C-EENRG Working Papers 2016-4. Download 

This article aims to provide a research agenda to understand the role of law
in prompting, sustaining and potentially managing the Anthropocene, the current
era of the Earth system where humans are the driving geological force. More
fundamentally, the article aims to frame the vast inquiry on the role of law in the
Anthropocene that we, as lawyers, will face in the 21st century and explain why
such an inquiry must go far beyond the narrow confines of environmental law and
encompass the entirety of law and legal processes, with particular emphasis on
some areas where law seems to have favoured and sustained the advent of the
Anthropocene.


9. Rethinking regulation for promoting an ecologically based approach to sustainability, Montini, M. Volpe, F., C-EENRG Working Papers 2016-5.
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The present paper argues for the necessity to rethink regulation in order to effectively promote a new ecologically based approach to sustainability. The paper firstly focuses on the following fundamental question: what is the original and correct meaning of sustainability? In order to try and answer such question, the historical origin of the term sustainability is traced back and analysed. Secondly, on the basis of the findings of the analysis on the original and correct meaning of the term sustainability, an essential and foremost research question is investigated: sustainability of what? This is a crucial issue, given the fact that, despite the widespread use of the term sustainability, it is evident that a general understanding of what should be sustained or, in other terms, of what should be the object and the aim of sustainability, is missing. Then, on the basis of the findings of the two above mentioned questions, the issue of how to rethink regulation for promoting a new ecologically based approach to sustainability is tackled. In such a context, a triple change of perspective is proposed, with the aim to contribute to the shift from the current economic model, based on the mantra of an infinite economic growth, to a more balanced approach, based on the concept of ecological integrity, aimed at promoting human development in harmony with nature.

Keywords: environmental law, regulation, ecological sustainability, ecological integrity, nature


10. The double failure of environmental regulation and deregulation and the need for ecological law, Montini, M., C-EENRG Working Papers 2016-6.
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The evolution of environmental law in the last few decades has developed along two main phases, which correspond to two opposed and sometimes conflicting trends.The first phase, which may be identified with the “environmental regulatory trend”, has been characterised by the attempt to protect the environment by addressing and managing the negative externalities caused on the environment by the unrestrained growth promoted by the currently dominant economic model. Such a regulatory trend, despite producing an enormous corpus of legislation, has shown many deficiencies. The shortcomings of the environmental regulation trend have therefore paved the way for the advent of the second phase, characterised by an “environmental deregulatory trend”, which has promoted a shift towards the progressive revision of the existing legislation, with a view to simplify and streamline it. Unfortunately, both approaches have led to a substantial failure. The aim of the present paper is to analyse the double failure of environmental regulation and deregulation and to promote a possible way out. This is identified in the need to revise the current regulatory regime for environmental protection and to promote a shift towards a new ecologically based approach to the law, which should primarily aim at the protection of the health and integrity of the ecosystems which support life on Earth. Moreover, in order to signal the decisive shift that the new approach should mark, a corresponding change in the name of the law aimed at the protection of the environment and the ecosystems will be proposed: from environmental law to ecological law.

Keywords:  environmental law, regulation, deregulation, nature, ecological sustainability, ecological law


11. Promoting renewables through free trade agreements? An assessment of the relevant provisions, Cima, E., C-EENRG Working Papers 2016-7.
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The vast network of free trade agreements that are being negotiated around the world could be seen as a viable vehicle to facilitate trade in renewable energy goods, services, and technologies. Unlike WTO agreements, modern FTAs contain an increasing number of provisions dealing, directly or indirectly, with renewable energy. The purpose of this paper is twofold. First it aims at providing a taxonomy of the main techniques used by countries to include provisions on renewable energy in their FTAs, by focusing on all the agreements signed by the EU and the US. These techniques are then further analysed comparing different agreements, as each technique can have a very different impact based on the scope of the relevant provisions, their degree of generality/specificity, as well as their specific content. Second, this paper builds on this analysis to further investigate the ways in which FTAs distance themselves from WTO Agreements in their attempt to regulate renewable energy. In this regard, the paper pinpoints three characteristics of FTAs: the model used to incorporate renewable energy provisions in their chapters, the tendency to promote dispute prevention, and the shift towards a more balanced dispute resolution.

Keywords: free trade agreements, renewable energy provisions, environmental provisions, trade and environment, trade and renewable energy.


 12. The concept of subjective right and the Anthropocene, He, L., 2017-1.
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The category of ‘right’ has become undoubtedly one of the basic concepts of modern legal history. Frequently studied by theorists of human rights or fundamental rights, it has also played a foundational role regarding contemporary political communities2. Legally speaking, the concept of ‘right’ is also very often described as ‘subjective right’, which is a more continental legal category (droit subjectif or subjectives Recht), because ‘law’ and ‘right’ are usually expressed with the same word in these languages. It would be possible to use the Hohfeldian category of ‘claim right’ to clarify the sense of ‘subjective right’ in the English language, but still the translation is not completely exact, since a Hohfeldian ‘liberty’ can also be a subjective right. So what is a right? Since it is not our main purpose here to propose another conceptual understanding, the more appropriate question might be: what is the meaning of subjective right vis-à-vis the Anthropocene?


13. Sounds of the Anthropocene, Verea, S., 2017-2.
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Sounds of the Anthropocene is a project that involves a group of artists and scientists with the aim to raise awareness of humankind´s unprecedented footprint on the Earth and, more fundamentally, to flesh out this singular moment in human history from the perspective not of words, images or acts, but sounds. Specifically, it aims at translating data from stratigraphic markers of the Anthropocene into sound, expressing the state of our planet in the shape of music stemming from the Earth’s changing condition.


14. Modelling Innovation and the Macroeconomics of Low-Carbon Transitions:  Theory, Perspectives and Practical Use, Mercure, J-F., Knoblosh, F., Pollitt, H., Paroussos, L., Scrieciu, S., Lewney, R., 2017-3.

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Analysis carried out by various institutions to assess the potential economy-wide impacts of energy and climate policies typically involves quantitative modelling using whole-economy macro-sectoral tools. When projecting economic impacts of policies for driving the uptake of low-carbon energy technologies, model based studies often conclude on different scales and even directions. These differences are attributed to the modelling methodologies used. This paper aims to provide a comprehensive account of the theoretical origins of the differences in outcomes observed between models, which are traced down to treatments of innovation and finance. We argue that all branches of macro-innovation theory can be grouped into two classes: ‘Equilibrium – Optimisation’ and ‘Non-equilibrium – Simulation’. While both approaches are theoretically rigorous and self-consistent, they yield different conclusions for the economic impact of low-carbon policy. In equilibrium models, technology support policies tend to reallocate a fixed quantity of capital resources, which may lead to sub-optimal equilibria from an economic perspective. Meanwhile, non-equilibrium models emphasise entrepreneurial activity, the creation of purchasing power by banks, and a policy’s impact on increasing economic activity. In case of scenarios that address capital intensive transformations of the economy and energy system, we find that the main determinants of model outcomes are current types of representations of the monetary and financial sectors, and of the barriers to innovation finance. Improving the representation of finance and innovation in all modelling approaches is crucial for gaining a more consistent picture of the macroeconomic impacts of energy system transformations and greenhouse gas emissions reductions. Better capturing finance and innovation may also help bring convergence in projected macroeconomic model outcomes