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Monthly Archives: December 2022

When the Energy Transition Meets an Energy Crisis

Colonial Pipeline Storage Tanks As Gas Pumps Run Dry

U.S. gas prices soared in June of this year to an all-time high of $4.99 per gallon –– a 47% increase from prices at the start of 2022. In response to this raging inflation, President Biden traveled to Saudi Arabia in July, with part of the agenda set to discuss boosting oil production with Saudi OPEC leaders. His proposal was rejected and OPEC retained plans to cut oil production, which will drive up global energy prices further. These cuts have yet to be implemented. At the G20 summit in Egypt this November, world leaders acknowledged Western sanctions against Russia and resultantly high inflation rates that have driven up energy prices worldwide. Despite the energy crisis, G20 leaders reaffirmed their commitments to the Paris Agreement and worldwide efforts toward a clean energy transition.

These two focuses at the G20 –– a clean energy transition and inflation brought on by the energy crisis –– reveal a complicated restructuring of the global geopolitical jigsaw. An energy transition in the midst of the energy crisis will engender greater dependence on oil-producing countries, especially those in the Middle East. U.S. national security is attached to the energy crisis and hinges on both the clean energy transition and the transition process –– all of which is largely at the mercy of oil producing countries.

Security implications of the energy crisis and transition: 

Recent global upheaval around the compounding impacts of climate change has created a worldwide movement toward a clean energy transition. The implications of an energy transition are simultaneously threatening and promising to U.S. security and geopolitical prowess. On the one hand, a clean energy transition requires remaking the global economy energy system, including how we generate, use, store and ship energy. Such a massive transition will be highly economically disruptive. There are no signs of abating energy demand, even as currently limited clean energy sources and new oil drilling projects are struggling to replace Russian fossil fuels. The resulting supply deficit could leave the U.S. financially restricted in facing geopolitical issues such as nuclear proliferation in Iran, China’s economic rise and humanitarian abuses, and other global events that may threaten U.S. and global security.

Leading science on the effects of climate change assert that the sooner that nations –– especially leading polluters –– turn to clean, sustainable energy rather than fossil fuels, the safer the futures of their coastal populations and infrastructure, as well as nationwide agriculture. Cleaner energy is more sustainable and will enhance U.S. energy security and self-sufficiency by diversifying our energy sources. It will ease dependence on globally traded fossil fuels and on the world’s leading oil producers such as Saudi Arabia and Russia, which have historically been antithetical to U.S. interests and values. Unfortunately, these long-term benefits of the clean energy transition depend on the short-term provisions of leading oil producers, including the Middle East and Russia.

The clean energy transition depends on oil producers: 

Despite an energy crisis that has plagued the world –– especially Europe –– even before Russia invaded Ukraine, the clean energy transition is slowly gaining traction. Renewable energy made up about 37% of electricity production in the EU in 2020. Germany moved up its deadline for a fully renewable power sector by five years (to 2035). Nevertheless, the global energy system still relies on fossil fuels. If demand for fossil fuels does not drop as quickly as fossil fuels are replaced by renewable sources, petrostates will become more, not less, important.

The current reality is that usage of oil, gas and coal is growing. As evidenced by Biden’s appeal to Saudi OPEC leaders to boost oil production, the Middle East holds the power to quickly add or remove oil from the market (spare capacity), enabling them to balance market volatility. A stable market will facilitate the energy transition, making Middle Eastern spare capacity key to easing the transition along. However, in light of diplomatic tensions and especially the Russian-Ukrainian crisis, it is unclear how much the Middle East is willing or able to contribute to the energy market in the midst of the energy transition.

Geopolitical consequences of the energy crisis and transition:

Not only does the energy crisis place greater power in the hands of the Middle East –– the energy transition itself may do the same. Even as fossil fuels are phased out, oil will never be eliminated as a resource. The Middle East is likely to be among the last standing oil producers as the world transitions to cleaner energy. Their geopolitical leverage will increase as they possess more and more of a shrinking resource.

The energy crisis is directly related to other supply-chain interruptions resulting from Russia-Ukraine and other global crises like lockdowns in China. Energy shortages on top of these disruptions puts the U.S. at risk of greater economic instability that could hamper its ability to respond to global crises. The recession during the first years of COVID-19, for instance, may exacerbate an already diminishing U.S. budget for international affairs. This means less money for international security assistance and overseas contingency operations to eliminate potential security threats.

The energy crisis is already a present and growing threat to global security. Sky-high inflation and resulting international insecurity pose the question of whether it’s productive or even feasible to approach an energy transition at this stage. Without an energy transition, however, the energy insecurity that caused this crisis will persist. In 2021, the EU imported more than 45% of its natural gas from Russia. The EU is now among the regions hardest-hit by international sanctions against Russia. This case study, along with recent climate research, strongly indicates that diversification of energy sources will reduce excessive reliance on a single country or resource. As the U.S. mitigates the energy crisis and continues pushing towards a clean energy transition, they will be more energy secure and in a better fiscal position to address global security threats beyond the energy crisis.