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PESD has concluded a two year collaborative study on the Indian natural gas market with three India research groups- A.T. Kearney, Indian Institute of Management - Ahmedabad, and Integrated Research and Action for Development (IRADe). The study explores gas demand to the year 2025 in the three main gas consuming sectors within India - electricity generation, nitrogenous fertilizer production, and industrial applications - under a range of different policy and economic scenarios.

The study concludes that coal is likely to remain the dominant fuel in the power sector, but opportunities exist for gas in reducing regional air pollution and providing peaking power. For the fertilizer sector, significant opportunities exist to import cheap fertilizer, thereby reducing domestic gas demand, but political constraints will likely buoy gas demand. Industrial consumers will benefit from increased supplies from LNG to displace expensive liquid fuels, but cheap coal remains the dominant fuel for many industrial applications.

Regional air pollution constraints in the power sector - already underway in certain parts of India could reduce carbon dioxide emissions by over 100 million tonnes per year. Reforms underway in the Indian coal sector, however, could bring a surge in new supplies, which would undermine the opportunities for gas in the power sector.

From an international supply standpoint, India doesn't appear able to guarantee the offtake of a proposed large natural gas pipeline from Iran within the next 10-15 years, making the project very difficult to justify from a financial risk standpoint.

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Program on Energy and Sustainable Development Working Paper #65
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Talk delivered at dinner during CISAC's conference, "The Security Implications of Increased Global Reliance on Nuclear Power," Wednesday, 19 September 2007, Stanford University.

Introduction: "Since you're dealing with the transition ongoing in the world to nuclear energy, I thought it might be comforting to hear a little about the problems of earlier energy transitions--from wood to coal and from coal to oil as well as natural gas and nuclear power. Energy transitions take time, writes Arnulf Grübler. 'Hardly any innovation diffuses into a vacuum,' he says. 'Along its growth trajectory, an innovation interacts with existing techniques...and changes its technological, economic, and social characteristics....Decades are required for the diffusion of significant innovations, and even longer time spans are needed to develop infrastructures....' The diffusion process is a process of learning, and humans learn slowly."

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Global population increases, surging economic growth in new economies, and an unabated appetite for fossil fuels all are driving huge demand for the world's natural resources. At the same time, climate change is upon us.

Add to that instability across the Middle East--the world's oil epicenter--and the growth of extremism and international terrorism.

The complexities of today's world are confounding and frightening, but there are still reasons for hope:

-Groundbreaking research on alternatives to fossil fuels

-Breakthroughs in energy efficiency

-Progress in addressing threats to ocean and freshwater resources

-Increased understanding of terrorism, poverty, and extremism--threats to the stability of current energy sources

In the face of such extraordinary circumstances, how do we understand the complex interconnections among these issues? What can we do as individuals and as a nation to address them? And what is the way forward when violence and the threat of terrorism put us on a razor's edge?

Sponsored by the 2007 Roundtable at Stanford and Stanford Reunion Homecoming.

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Carlos Watson (Moderator) Former CNN Political Analyst Moderator
Thomas Friedman Columnist, New York Times Panelist
Pamela Matson Dean, School of Earth Sciences, Stanford University Panelist
Stephen Breyer U.S. Supreme Court Justice Panelist
General John Abizaid Visiting Fellow, Hoover Institution Panelist
John Hennessy (Host) President, Stanford University Speaker
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National oil companies (NOCs) appear resurgent in the global energy markets and now control a sizeable majority of the world's oil and gas reserves. Their performance therefore plays a key role in these markets and has implications for the supply of oil and gas resources. This paper analyzes available macro-level data on oil and gas companies in order to quantitatively compare the performance of NOCs with international oil companies (IOCs) including the global majors. Due to performance shortcomings or government-dictated strategies that differ from those of purely profit-maximizing enterprises, NOCs are seen to extract resources far less efficiently than IOCs. Much of the oil and gas reserves in NOC hands are thus effectively "dead." At the same time, NOC performance is far from monolithic - some national oil companies are able to perform at or near the level of the global majors, while others fall significantly short.

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Program on Energy and Sustainable Development Working Paper #64
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Nadejda M. Victor
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The BP Foundation has awarded a five-year, $7.5 million grant to Stanford University's Program on Energy and Sustainable Development to support research on modern energy markets. The foundation is funded by BP, one of the world's largest energy companies.

The gift follows the BP Foundation's initial grant of $1.8 million over three years, which was pledged in 2004 in support of the program.

"BP's support has allowed our program to study the world's most pressing energy problems, such as global warming, energy poverty and the prospects for the world oil market," said program director and Stanford law Professor David G. Victor. "In addition to BP Foundation support, we learn from BP's experience as an energy company because they operate in all the markets where we do research--such as in China and India."

"BP Foundation believes the work undertaken at Stanford deals directly with global issues that are key to meeting the world's growing energy needs," said Steve Elbert, chairman of the BP Foundation. "The drive to research and implement strategies to further understand today's energy markets is important work, and we are proud to partner again with Stanford."

The Program on Energy and Sustainable Development, part of the Freeman Spogli Institute for International Studies, concentrates on the legal, political and institutional dimensions of how societies derive value from energy. The BP Foundation grant is part of a rapid expansion of Stanford's research and teaching on energy issues, much of which focuses on the technical aspects of energy systems.

All of the program's research is public and published openly, including on its website. The gift from the BP Foundation, as well as all similar gifts to support the program's research, includes special provisions that assure the research program's independence in setting its research agenda.

The agreement with Stanford is one in a series of BP partnerships with universities in the United Kingdom, the United States and China, representing a total commitment of more than $600 million. The program at Stanford complements work on similar topics at Princeton University, Tsinghua University and Imperial College, among others.

Founded in 2001, the Program on Energy and Sustainable Development focuses on the "political economy" of modern energy services--the interaction of political, institutional and economic forces that often dominate energy markets. It collaborates with the Stanford Law School and other university departments and schools, including economics, engineering and earth sciences. About half of the program's resources are devoted to research partnerships in key developing countries, including Brazil, China, India, Mexico and South Africa. Program researchers have examined the emergence of a global business in natural gas, reforms of electric power markets and the supply of modern energy services to low-income rural households in developing countries.

The program's other major sponsor is the Electric Power Research Institute in Palo Alto, Calif., a research consortium that includes most of the world's largest electric companies.

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Mark C. Thurber is Associate Director of the Program on Energy and Sustainable Development (PESD) at Stanford University, where he studies and teaches about energy and environmental markets and policy. Dr. Thurber has written and edited books and articles on topics including global fossil fuel markets, climate policy, integration of renewable energy into electricity markets, and provision of energy services to low-income populations.

Dr. Thurber co-edited and contributed to Oil and Governance: State-owned Enterprises and the World Energy Supply  (Cambridge University Press, 2012) and The Global Coal Market: Supplying the Major Fuel for Emerging Economies (Cambridge University Press, 2015). He is the author of Coal (Polity Press, 2019) about why coal has thus far remained the preeminent fuel for electricity generation around the world despite its negative impacts on local air quality and the global climate.

Dr. Thurber teaches a course on energy markets and policy at Stanford, in which he runs a game-based simulation of electricity, carbon, and renewable energy markets. With Dr. Frank Wolak, he also conducts game-based workshops for policymakers and regulators. These workshops explore timely policy topics including how to ensure resource adequacy in a world with very high shares of renewable energy generation.

Dr. Thurber has previous experience working in high-tech industry. From 2003-2005, he was an engineering manager at a plant in Guadalajara, México that manufactured hard disk drive heads. He holds a Ph.D. from Stanford University and a B.S.E. from Princeton University.

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In April 2007, a delegation of scholars from Shorenstein APARC visited Shanghai, Hangzhou, and Beijing, fulfilling the center's mission to carry its work "into Asia." The delegation met senior officials from government and business and held wide-ranging exchanges with Chinese scholars and policymakers at leading universities and research institutions. The conversation ranged from China's development strategy to the current state of relations between China and its longtime rival and neighbor, Japan. Daniel Sneider, Shorenstein APARC's associate director for research, recalled the busy trip for FSI's regular newsletter, Encina Columns, (page 8).

Walking down a side street in Shanghai's French Concession, a partially preserved corner of that city's gloried and turbulent past, visitors come upon an ivy-covered house that served as the headquarters for the Shanghai branch of the Communist Party in the 1940s. Here the spartan quarters of Mao's second in command, Zhou Enlai, are carefully preserved, the narrow beds and wooden desks evoking a simpler, revolutionary China.

A short ride away, across the murky waters of the Huangpu River, monuments to the new China are being erected in what was farmland less than two decades ago. The Pudong New Area, with its clusters of highrise office towers and multi-story shopping malls, is emblematic of the rush to wealth and economic power that now drives China.

These were among the images from a visit to China by a delegation of scholars from the Walter H. Shorenstein Asia-Pacific Research Center from April 8-14, 2007. Though time was short, the group managed to visit Shanghai, Hangzhou, and Beijing.

Fulfilling Shorenstein APARC's mission to carry its work "into Asia," the delegation met senior officials from government and business and held wide-ranging exchanges with Chinese scholars and policymakers at leading universities and research institutions. The conversation ranged from China's development strategy to the current state of relations between China and its longtime rival and neighbor, Japan.

The delegation was led by Shorenstein APARC director and professor of sociology Gi-Wook Shin and by professor of political science Jean C. Oi, who has launched the center's new China studies program. The group included Shorenstein distinguished fellow Ambassador Michael H. Armacost, associate director for research Daniel C. Sneider, and senior program and outreach coordinator Neeley Main. In Beijing, Freeman Spogli Institute director Coit Blacker joined the delegation, as did Shorenstein APARC's Scott Rozelle.

The trip started in Shanghai, a dynamic center of finance and industry that has drawn in many Stanford graduates. State-owned enterprises such as Baosteel, one of the world's largest steel producers, are in the midst of becoming players in the global marketplace. From Baosteel's sprawling complex of docks, blast furnaces, and rolling mills along an estuary of the Yangtze River, products are now being dispatched around the world. In a meeting, the leadership of the Baosteel Group expressed an eagerness to tap into the educational and training opportunities offered at Stanford University.

Shanghai is not only the business capital but also a political center, rivaling Beijing. The Shanghai Institute for International Studies is an unofficial foreign relations arm of the Shanghai government. Shanghai Institute scholars are also players in national policy debate on many key issues facing China, such as relations with Taiwan, with Japan, and even with the Korean peninsula.

The scholars presented their views on a wide range of issues, from the preparations for the 17th Congress of the Communist Party this coming fall to emerging structures of regional integration in East Asia. Professor Xu Mingqi, who is also a senior leader of the Shanghai Academy of Social Sciences, explained that China's development strategy is shifting toward a more balanced approach. Whereas local government officials previously were pressed to meet targets for GDP growth, foreign investment, and export volume, now they must also raise employment levels, close the growing income gap, and provide social security.

Hangzhou, considered one of the most beautiful cities in China, is a two-hour drive south of Shanghai. The modern roadway passed a tableau of the suburbanization of this part of China's countryside, with multi-story brick homes mushrooming amidst the fields. The delegation arrived at Zhejiang University, considered among the best of China's provincial higher educational institutions and growing rapidly in size and scope.

The Shorenstein APARC delegation met with faculty members from Zhejiang's social science departments, who briefed the delegation on their research work in areas such as distance education, international relations, Chinese history, even a school of Korean studies. Zhejiang is also the site of a new research institution, the Zhejiang Institute for Innovation (ZII), founded by Stanford engineering graduate Min Zhu, a Silicon Valley entrepreneur who is determined to bring the lessons of Stanford and the valley to his home province and his undergraduate alma mater. ZII aims to foster applied research that can tie the university to the vibrant entrepreneurial culture of Zhejiang province. Shorenstein APARC researchers may soon be carrying out fieldwork in this laboratory of change, based at ZII.

Beijing, however, is still the place that matters most in China, not only in the realm of government but also when it comes to academic scholarship. The delegation met with two of Shorenstein APARC's longtime corporate affiliates in China: PetroChina, the state-owned oil and gas giant, and the People's Bank of China. Shorenstein APARC dined with a lively group of Chinese journalists, organized by former Stanford Knight fellow Hu Shuli, the editor of Caijing Magazine, considered China's leading independent business publication.

The substantive task was to forge new ties with key research institutions. The current state of China's development strategy was again on the agenda when the delegation met with senior officials from the National Development and Reform Commission (NDRC), formerly China's State Planning Commission. Alongside the NDRC, the delegation met as well with the leadership of an offshoot of China's State Council, the China Development Research Foundation, which is doing important work in promoting good governance in areas such as poverty alleviation, nutrition, and budgeting. Those conversations were echoed later in our meetings with scholars from Peking University's School of Government.

Shorenstein APARC's own China program, as Oi explained, is focused on understanding the tensions that arise as China grapples with the consequences of its rapid economic development. Out of the meetings in Beijing, an ongoing dialogue has begun, to be advanced this summer with a visit from a NDRC delegation and in the fall with an international conference at Stanford on China's Growing Pains.

The delegation also engaged in frank and useful exchanges on a variety of international relations issues. We had an extended meeting with scholars and leaders of the China Reform Forum (CRF), a think-tank associated with the Communist Party's Central Party School, the premier institution for training party leaders and officials. The CRF is credited with authoring important concepts such as the foreign policy doctrine of China's "Peaceful Rise." These discussions were followed by a visit and exchange with scholars from Peking University's widely respected School of International Studies.

The scholars shared analysis of the current state of the North Korean nuclear negotiations, as well as evaluating the outcome of Chinese Premier Wen Jibao's visit that week to Japan. Over dinner with CRF Vice Chairman Ding Kuisong, the conversation turned to the American presidential politics and the future direction of U.S. foreign policy.

Professors Blacker, Shin, and Oi also met with senior officials of Peking University, as part of an ongoing dialogue about cooperation between these two premier institutions of higher education.

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Little more than a decade ago, Rowen's answer to the question posed by this essay's title was the year 2015. His assessment, published in the Fall 1996 issue of the National Interest, began by observing that all countries (leaving aside states that make nearly all their money from oil exports) which had attained a Gross Domestic Product per capita (GDPpc) of at least US$8,000 per year (as measured by the Purchasing-Power Parity or PPP standard for the year 1995) stood no worse than Partly Free in the ratings of political rights and civil liberties published annually by Freedom House (FH).

As China's economy was growing at a rate that promised to carry it to a level near or beyond that GDPpc benchmark by 2015, Rowen reasoned that this, the world's largest country, was a good bet to move into the Partly Free category as well. Since then, China has remained deep in Not Free territory even though its civil-liberties score has improved a bit -- from an absolutely abysmal 7 to a still-sorry 6 on the 7-point FH scale -- while its political-rights score has remained stuck at the worst level. Yet today, surveying matters from a point slightly more than midway between 1996 and 2015, Rowen stands by his main conclusion: China will in the short term continue to warrant a Not Free classification, but by 2015 it should edge into the Partly Free category. Indeed, Rowen goes further and predicts that, should China's economy and the educational attainments of its population continue to grow as they have in recent years, the more than one-sixth of the world's people who live in China will by 2025 be citizens of a country correctly classed as belonging to the Free nations of the earth.

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Little more than a decade ago, Rowen's answer to the question posed by this essay's title was the year 2015. His assessment, published in the Fall 1996 issue of the National Interest, began by observing that all countries (leaving aside states that make nearly all their money from oil exports) which had attained a Gross Domestic Product per capita (GDPpc) of at least US$8,000 per year (as measured by the Purchasing-Power Parity or PPP standard for the year 1995) stood no worse than Partly Free in the ratings of political rights and civil liberties published annually by Freedom House (FH).

As China's economy was growing at a rate that promised to carry it to a level near or beyond that GDPpc benchmark by 2015, Rowen reasoned that this, the world's largest country, was a good bet to move into the Partly Free category as well. Since then, China has remained deep in Not Free territory even though its civil-liberties score has improved a bit -- from an absolutely abysmal 7 to a still-sorry 6 on the 7-point FH scale -- while its political-rights score has remained stuck at the worst level. Yet today, surveying matters from a point slightly more than midway between 1996 and 2015, Rowen stands by his main conclusion: China will in the short term continue to warrant a Not Free classification, but by 2015 it should edge into the Partly Free category. Indeed, Rowen goes further and predicts that, should China's economy and the educational attainments of its population continue to grow as they have in recent years, the more than one-sixth of the world's people who live in China will by 2025 be citizens of a country correctly classed as belonging to the Free nations of the earth.

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