One of the hallmarks of globalization is that increased contact between the people and governments of different nations will eventually lead to increased cooperation the makes use of the competitive advantages of nation to produce a benefit for both. While there is considerable debate on whether this sort of cooperation is indeed effective but at least in terms of the energy industry, expanded cross-national cooperation has had a considerable impact on how business is done. Moreover, depending on your point of view, the impacts can be seen as positive or negative. For example, in 2014, China and the U.S. came to agreement on climate change. As two of the largest, if not largest, energy consuming nations in the world, the agreement will necessarily play an important role in how the global energy industry in general and the Chinese and American industry in particular do business for years to come. For instance, the agreement calls on the U.S. to cut climate pollution from 26-28 percent by 2025 and China to obtain similar reductions by 2030 or earlier (OPS, 2014). On the one hand, this means that “dirty” energy companies that deal in fossil fuels and coal will need to adjust their production of energy units accordingly. In short, unless they can develop cleaner ways to use dirty energy, these companies are facing a future in which a substantial amount of their products will not be needed at least in the U.S. and China. On the other hand, the agreement is good news for clean energy companies, who now have the support of the Chinese and American government to explore ways in which to design, build, and implement cleaner energy methods, equipment and policies. To be sure, according to the agreement, China and the U.S. are to establish bilateral clean energy research and development initiatives for the purpose of facilitating the transition from dirty energy to clean energy (OPS, 2014). Again, the fact that China and the U.S. use so much energy is significant in that influence that cross-national cooperation can bring to bear on the energy industry. This is even more so in a nation such as China, where most if not all energy companies are state-owned and therefore required to comply with government initiatives.
Another factor of affecting globalization that is related to cross-national cooperation as discussed above is changes in political situations and government policies. To be sure, the China-U.S. agreement produced a substantial change in the global political situation related to the energy industry by getting two of the biggest energy users to agree to change drastically change their consumption of energy. Politically, the energy industries in both nations are now constrained to the requirements of the agreement, so long as the agreement is valid. For instance, in the U.S., while an American oil or carbon company may lobby to have less stringent requirement, as long as the requirements stand, they must abide or face penalties. Moreover, the China-U.S. agreement illustrates just how deep impact government policies can have on the energy industry. For example, President Obama has tasked the Environmental Protection Agency (EPA) to draft and implement the policies needed in order to achieve the agreed to limits. Consequently, the EPA has proposed a number of guidelines for the energy companies to abide by. These guidelines will necessarily have a substantial impact on the energy industry. For instance, the EPA guidelines call for coal plants to increase their efficiency and decrease the amount of carbon emissions that they expel. Depending on the plant this may simply mean installing better filters or it may main the complete retro-fitting the plan. Both nations’ commitment to reduce reliance on coal as an energy source is another government policy of tremendous importance to the energy industry in general and the coal industry in particular. Both China and the U.S. are heavily dependent on coal. In fact, China and the U.S. are the first and second largest producers and consumers of coal in the world (Asia Society, 2009). Accordingly, any government policy aims to reduce or even eliminate reliance on coal will have significant effects on how the coal energy industry goes forward as the guideline will have and industry-wide, rather than individual company, effect.
References
The White House – Office of the Press Secretary - OPS. (2014, Nov. 11). Fact Sheet: U.S.-China joint announcement on climate change and clean energy cooperation. Retrieved from https://www.whitehouse.gov/the-press-office/2014/11/11/fact-sheet-us-china-joint-announcement-climate-change-and-clean-energy-c
Asia Society and the Pew Center on Global Climate Change. (2009, Jan.). A roadmap for U.S.-China cooperation on energy and climate control. Retrieved from http://www.c2es.org/docUploads/US-China-Roadmap-Feb09.pdf
