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It has also delayed new energy investments and is planning to close almost a quarter of its fossil fuel power plants,

European energy companies, struggling to respond to weak demand in a flatlining economy, say they need guaranteed pricing to keep open unprofitable plants or to invest in new ones.

Their revenue is being hit by dwindling demand for electricity and by new wind and solar projects that undercut the price of the energy produced from many fossil fuel plants.

At the same time, record-low prices on carbon emissions trading markets, which were introduced to encourage clean and efficient energy production and use, have perversely become a disincentive to investment.

Many of the Continent’s aging power stations, particularly those that burn highly polluting coal, are earmarked for closure by 2020 to meet stringent local environment regulations.

Without these investments, industrial companies in Europe may face higher energy prices when local economies eventually recover,

“Energy utilities are facing a perfect storm,”

In a bid to generate 20 percent of the European Union’s electricity from renewable sources by 2020, Germany, Spain and other E.U. countries have provided hefty subsidies to wind and solar farms, which now constitute a sizable minority of daily electricity generation, often surpassing the 20 percent target.

Policy makers are debating a system of support payments to keep uneconomic power plants open,

“Without long-term signals of energy prices, investment won’t happen.”

Some analysts also expect domestic regulators to eventually create financial incentives for companies

Klaipedos Nafta, a state-controlled oil terminal operator, is leasing the ship, formally known as a floating gas storage and regasification unit, from a Norwegian company, Hoegh, in a 10-year deal for 430 million euros, or $560 million.

Lithuania would need to import L.N.G. at prices 5 to 10 percent less than Gazprom charges for its gas to ensure the project breaks even; Lithuanian officials said the price of L.N.G. imports could be as much as 20 percent less than Gazprom charges.

“We will be able for the first time in our history to negotiate, because we have alternative sources,”

But Mr. Masiulis said his greatest challenge was overcoming the Lithuanian bureaucracy and fending off attempts to give the project “a shade of corruption.”

Today, a fifth of U.S. energy consumption is fueled by coal, mainly from Appalachia and the West, a long-term energy source that has provided jobs for millions, a century-old way of life

Roughly speaking, burning coal produces twice as much carbon dioxide as burning the equivalent amount of natural gas. Almost all domestic coal is used to generate electricity—it produces 38 percent of the U.S. power supply. Fracking is swiftly changing this: in 2011, utilities reported plans to shut down 57 of the nation’s 1,287 coal-fired generators the following year. Largely in consequence, U.S. energy-related carbon-dioxide emissions have dropped to figures last seen in 1995. Since 2006, they have fallen more than those from any other nation in the world.

In the sort of development that irresistibly attracts descriptors like ironic, Germany, often touted as an environmental model for its commitment to solar and wind power, has expanded its use of coal, and as a result is steadily increasing its carbon-dioxide output. Unlike Americans, Europeans can’t readily switch to natural gas; Continental nations, which import most of their natural gas, agreed to long-term contracts that tie its price to the price of oil, now quite high.

Several researchers told me that the current towel-snapping between Beijing and Tokyo over islands in the East China Sea is due less to nationalistic posturing than to nearby petroleum deposits.)

What is known, says Timothy Collett, the energy-research director for the USGS program, is that some of the gulf’s more than 3,500 oil and gas wells are in gas-hydrate areas.

In Dutch-disease scenarios, oil weakens all the pillars but one—the petroleum industry, which bloats steroidally.

Because the national petroleum company, with its gush of oil revenues, is the center of national economic power, “the ruler typically puts a loyalist in charge,” says Michael Ross, a UCLA political scientist and the author of The Oil Curse (2012). “The possibilities for corruption are endless.” Governments dip into the oil kitty to reward friends and buy off enemies. Sometimes the money goes to simple bribes; in the early 1990s, hundreds of millions of euros from France’s state oil company, Elf Aquitaine, lined the pockets of businessmen and politicians at home and abroad.

“How will the royal family contain both the mullahs and the unemployed youth without a slush fund?”

It seems fair to say that if autocrats in these places were toppled, most Americans would not mourn. But it seems equally fair to say that they would not necessarily be enthusiastic about their replacements.

ransfers from a Luxembourg company to the US would have typically been subject to a withholding tax. Last year, after attracting the attention of Spanish tax authorities, Exxon quietly closed down the operation.

“Normally you would have to pay a 10 per cent withholding tax at source to send profits to the US,

Spain introduced the ETVE in the mid-1990s to encourage foreign investment, and better compete with Luxembourg and Holland for international companies seeking tax-efficient European holding structures. It also allowed for foreign companies to take advantage of Spain’s strong network of bilateral tax treaties with countries in Latin America, such as Argentina, Brazil and Mexico, which can offer more favourable tax rates than other countries. Once the ETVE has been established all overseas dividends that are paid into it are exempt from tax in Spain, and can be easily moved on to a final destination, providing a small number of conditions have been met. Most importantly, corporation tax must have been paid in the country of origin on the dividends being transferred, and companies using ETVEs to house shareholdings in foreign subsidiaries must not be resident in any country identified by Spain as a tax haven.

In fact, Linthal is an ETVE used by Ambev, a subsidiary of Anheuser-Busch InBev, the Belgian-based brewer, to distribute dividends from several Latin American beer brands, such as Argentina’s Quilmes and Cervecería Boliviana Nacional, to its holding company in Brazil.

Mr. Mir noted there were hidden costs that needed to be taken into account for both renewable energy and fossil fuels. Solar and wind farms, for example, produce power intermittently — when the sun is shining or the wind is blowing — and that requires utilities to have power available on call from other sources that can respond to fluctuations in demand.

“Renewables had two issues: One, they were too expensive, and they weren’t dispatchable. They’re not too expensive anymore.”

Especially in the interior region of the country, from North Dakota down to Texas, where wind energy is particularly robust, utilities were able to lock in long contracts at 2.1 cents a kilowatt-hour, on average, she said. That is down from prices closer to 5 cents five years ago.

Already, solar executives are looking to extend a 30 percent federal tax credit that is set to fall to 10 percent at the end of 2016.

The third principle is that the ban on exports of dual-use technology, which applies to military and civilian products, will for now be limited to military end-users.

Spain’s grid is barely connected to France so its wind farms cannot export their production when it exceeds domestic demand. Similarly, solar and wind energy from southern Italy is wasted because it is not effectively linked to the industrial north.

Full energy convergence needs more than interconnectors. Widely divergent electricity prices are often determined by national tax rates. Grids that can respond to demand further afield in a continent-wide “supergrid” will need more direct (rather than alternating) current infrastructure. While it took Spain and France more than three decades to build a 64.5km interconnection, some 52,000km of lines need to be built or upgraded across the continent.

Poland argues that Gazprom has confidential data on each country it deals with, knowing its gas prices and infrastructure vulnerabilities. It can then use this data to its advantage, pushing some countries into more onerous contracts than others.

The advantage of a hub would become more apparent when new supplies from Azerbaijan and the eastern Mediterranean are integrated into the market by means of the so-called southern corridor supply route.

Geoffrey Feasey of the European Network of Transmission Systems Operators for Electricity says one-third of the most vital projects to connect Europe are being held up by “permitting and public acceptance”.

There is nothing new in the need to address possible discrimination of imported electricity by Germany,” he said. “If consumers have to pay a surcharge on their consumption of both domestic and imported electricity but revenue from the surcharge is used to only finance domestic electricity producers, there is a risk that imported electricity is disadvantaged and made comparatively more expensive.”

In Japan, for instance, an environmental engineer has attributed a mysterious pestilence that is killing trees on Yakushima Island to pollutants from China.

But the proportion of China’s exports that are made in China has risen steadily in recent years as many companies move more of their supply chains, instead of just having final assembly work done here.

The country accounts for over a quarter of global greenhouse gas emissions.

Even assuming that China’s population does not grow at all over the next 30 years, that the energy efficiency of its economy increases at a faster pace than most developed and developing countries and that it manages to decarbonize its energy sources faster than pretty much anybody else, China would still be emitting a lot more carbon in 2040 than it does today, according to E.I.A. calculations.

Can the United States or anybody else do anything to speed China down a low-carbon path?

The latest report from the United Nations Intergovernmental Panel on Climate Change, issued in April, suggested several ways to allot responsibilities. If one starts counting in the 18th century and counts only emissions from industry and energy generation, the United States is responsible for more than a quarter of all greenhouse gases that humanity has put into the air. China, by contrast, is responsible for 10 percent.But if one starts counting in 1990, when the world first became aware that CO2 was a problem, and includes greenhouse gases emitted from changes in land use, the United States is responsible for only 18 percent, and China’s share rises to 15 percent. Rich and poor countries, unsurprisingly, disagree on the proper measure. Photo

Not everybody will meet their Copenhagen pledges. Japan, which unplugged its nuclear energy after the disaster at the Fukushima nuclear power plant, will fall behind. So will Canada and Australia, whose new conservative governments have lost interest in the pledges of their predecessors.

Exchanges of goods such as aircraft and automobiles, semiconductors, pharmaceuticals, and microelectronics, as well as professional services and foreign direct investment flows, are growing faster than others.

Digital technologies, which reduce the cost of production and distribution, are transforming flows in three ways: through the creation of purely digital goods and services, “digital wrappers” that enhance the value of physical flows, and digital platforms that facilitate cross-border production and exchange.

Developing economies now account for 38 percent of global flows, nearly triple their share in 1990. S

oday, digital technologies enable even the smallest company or solo entrepreneur to be a “micromultinational,” selling and sourcing products, services, and ideas across borders. Individuals can work remotely through online platforms, creating a virtual people flow. Microfinance platforms enable entrepreneurs and social innovators to raise money globally in ever-smaller amounts.

merica’s Bureau of Economic Analysis draws data from surveys of manufacturers, builders and retailers, as well as from trade and financial flows, among other sources. These data are used to estimate the components of GDP, such as total investment and net exports

Real, or inflation-adjusted, GDP is needed to compare figures across time periods, while GDP per person is best for understanding how individual incomes are evolving.

If one is only interested in estimating the domestic value-added embedded in a country’s or sector’s gross exports, applying Leontief’s insight is sufficient. However, for many economic and policy applications, one also needs to quantify other components in gross exports and their structures. In such circumstances Leontief’s original insight is not sufficient, as it does not provide a way to decompose intermediate trade flows across countries into various value-added terms according to their final absorption,

Our gross trade accounting framework in fact allows one to further decompose each of the four major parts of gross exports above into finer components with economic interpretations

By the gross statistics, presented in column 1 of Table 1, the trade is highly imbalanced – Chinese exports to the US ($176.9 billion in 2011) are five times that of US exports to China ($35.1 billion in 2011). If we separate exports of final goods and of intermediate goods (reported in columns 2a and 2b of Table 1), we see that most of the Chinese exports consist of final goods, whereas most of the US exports consist of intermediate goods.

In other words, the US exports rely overwhelmingly on its own value-added (only 2.1% from China and 5.8% from other countries in 2011), whereas the Chinese exports use more foreign value-added, especially value-added from third countries (with 3.2% from the US and 23.1% from Japan, Korea, and all other countries).

As a consequence of these differences in the structure of value-added composition, the China–US trade balance in this sector looks much smaller when computed in terms of domestic value-added than in terms of gross exports.

By identifying which parts of the official data are double counted and the sources of the double counting, our gross trade accounting method provides a transparent way to bridge official trade statistics (in gross terms) and national accounts (in value-added terms) consistent with the System of National Accounts standard.

subsidies for domestic coal production must be stopped

Ever since these pipelines were effectively handed over to nominally private companies in murky deals, earnings from transit fees have gone missing, along with vast amounts of gas, while little maintenance has been carried out.

An energy ministry that decides who can obtain gas at one-fifth of its cost and who cannot is obviously subject to irresistible pressures to distribute its favors to whomever offers the largest bribes or kickbacks. The same applies to coal subsidies, except that the subsidies go to the most inefficient producers.

these steps also risk hitting eastern Ukraine, which contains a substantial Russophone minority, particularly hard. Some there might be tempted by the allure of a better life in “Mother Russia,” with its vast resources of cheap energy.

And it should open its markets, not only by abolishing its import tariffs on Ukrainian products, which has already been decided, but also by granting a temporary exemption from the need to meet all of the EU’s complicated technical standards and regulations.

At the same time, the EU should help to address the cause of extraordinary heating costs: the woeful energy inefficiency of most of the existing housing stock.

Even a slight improvement in Ukraine’s energy efficiency would contribute more to reducing greenhouse-gas emissions than the vast sums currently being spent to develop renewable energy sources.

To do so, CO2 emissions from industry and energy use would have to fall to at most 1.6 tons a year for every person on the planet by midcentury.

That is less than a tenth of annual American emissions per person today and less than a third of the world average

Lacking any understanding of the feasibility of the exercise, governments postured and jockeyed over which country should be responsible for what

This is not achievable by going after low-hanging fruit, such as replacing coal with natural gas in power plants.

The decarbonization paths rely on aggressive assumptions about our ability to deploy new technologies on a commercial scale economically.

Russia, for instance, hit the target. But Oleg Lugovoy of the Environmental Defense Fund, who worked on the Russian plan, observed that “if we don’t have carbon capture and storage we would have to reconsider.”

But three years later, the same row erupted again: Gazprom demanded a price hike to $400-plus from $250, Kiev flatly refused, and on New Year's day 2009, Gazprom began pumping only enough gas to meet the needs of its customers beyond Ukraine.

Again, the consequences were marked. Inevitably, Russia accused Ukraine of siphoning off supplies meant for European customers to meet its own needs, and cut supplies completely

several countries – particularly in south-eastern Europe, almost completely dependent on supplies from Ukraine – simply ran out of gas.

Bulgaria shut down production in its main industrial plants; Slovakia declared a state of emergency

Many industry experts, though, point out that the world has changed since 2009, and that there are any number of reasons why Moscow's natural gas supplies may not prove quite the potent economic and diplomatic weapon they once were.

higher than normal temperatures are forecast to continue for several weeks yet, significantly reducing demand for gas and leaving prices at their lowest for two years

since the first "gas war" of 2006, many European countries have made huge efforts to increase their gas storage capacity and stocks are high. Some countries, such as Bulgaria, Slovakia and Moldova, which lack large storage capacity and depend heavily on gas supplies via Ukraine, would certainly suffer from any disruption in supplies

New Gazprom pipelines via Belarus and the Baltic Sea to Germany (Nord Stream) have cut the proportion of Gazprom's Europe-bound exports that transit via Ukraine to around half the total, meaning only about 15% of Europe's gas now relies on Ukraine's pipelines. Gazprom is also planning a Black Sea pipeline (South Stream), expected in 2015, meaning its exports to Europe will bypass Ukraine completely. Ukraine itself has cut its domestic gas consumption by nearly 40% over the past few years, halving its imports from Russia in the process.

Europe is increasingly installing specialist terminals that will allow gas to be imported from countries such as Qatar in the form of liquefied natural gas – while Norway's Statoil sold more gas to European countries in 2012 than Gazprom did. "Since the Russian supply cuts of 2006 and 2009, the tables have totally turned," Anders åslund, an energy advisor to both the Russian and Ukrainian governments, told the Washington Post.

Europe accounts for around a third of Gazprom's total gas sales, and around half of Russia's total budget revenue comes from oil and gas. Moscow needs that source of revenue, and whatever Vladimir Putin's geo-political ambitions, most energy analysts seem to agree he will think twice about jeopardising it.