1. NS4960 Summer Term 2019 Economist: New Power Superpowers Introduction

2. Overview The Economist Special Issue defines geopolitics of energy as
Impact of energy flows on the power influences of nations
Historically most focus has been on oil
Areas of concern regarding oil are how to
Secure it
Safeguard its shipment
Stop enemies from getting or keeping hold of it and monopolizing its use, distribution and price

3. Changing Ideas of Scarcity I
Traditionally consuming nations have felt scarcity makes them more vulnerable
Since oil embargo of 1973 each president has seen country’s dependence on imported oil as a weakness
Starting with Nixon, the goal of most presidents has been to make the U.S. energy independent
“Carter Doctrine” U.S. right to use military force to protect its strategic interest in Middle East
Largely aimed at securing a stable supply of oil

4. Changing Ideas of Scarcity II
However the notion of scarcity is coming to an end do to three developments
America’s shale revolution
Now producing as much oil as ever
World’s largest producer of combined oil and gas
Still importing oil, but Canada biggest supplier
Changes taking place in China
Country moving from a energy intensive economy to a service led one
Major developments in moderating demand for coal and oil
Major effort in developing renewable energy supplies
The need to create a low-carbon energy system to fight climate change – has set off energy transition

5. Historical Oil Price Movements

6. Recent Trends in Oil and Gas Production

7. Energy Transition I
To achieve goals of Paris Agreement of 2015 trillions of dollars will have to be invested in
Wind
Solar energy
Batteries
Electricity grids and
Range of more experimental clean energy sources
Energy transition set off global race for
Best technologies and
Raised concerns about access to rare earths and critical minerals to make the necessary hardware

8. Energy Transition II
Past few years have seen new energy order developing
Growing American self-reliance and
Chinese self restraint
For America some see it as a windfall – our text book
Argument that shale revolution has
Helped temper predictions of American decline
Made it easier to impose sanctions on adversaries
Helped create a global gas market to ease Russia’s stranglehold over Ukraine and
Reduced China’s pursuit of energy resources

9. Energy Transition III
May be over-optimistic since Russia and OPEC cartel
Have been surprisingly successful in cutting production to counter the oil glut
Have turned towards China which is pouring money into their energy infrastructure
Also -- American shale development risks entrenching reliance on oil even more deeply in global economy – potentially perilous consequences for climate
If America focuses too much on producing fossil fuels, may lose
Sight of need to develop cleaner energy for the future
Current technological lead in job creating green technologies

10. Geopolitics of Green Energy I
Green energy advocates argue renewable energies will make world more peaceful
Unlike hydrocarbons renewable energy is potentially available almost anywhere
As power generation becomes more dispersed, regions may become more self-sufficient in energy
Process called energy democratization
Energy transition will
give communities super powers over their energy
rather than turn countries into energy superpowers

11. Geopolitics of Green Energy II
Transition also has potential to cause geopolitical friction
Most problems will affect economies that depend on petroleum
Clearest losers will be
Those blessed with ample fossil fuel reserves and
Those who bet on oil for too long without reforming their economies.

12. Geopolitics of Green Energy III
However risks can multiply as economies become more electrified with super grids to supply stepped up demand -- Grid politics could replace pipeline politics
Ukraine cut off electricity supplies to Crimea in 2015
Chinese investments in grids in Europe and Australia under scrutiny on national security grounds
Ever more electrified economies are at ever higher risk from cyber attacks

13. Geopolitics of Green Energy IV
Inevitable geopolitics of energy will develop into a contest to see which country
Can produce the most energy on its own
Has the best technology
So far:
EU has set goal to decarbonize all energy by 2050 and has appropriate market structures in place
China is firmly committed to clean energy and has some impressive clean-tech entrepreneurs
US has invented much of world’s clean energy technology

14. Assessment
US Shale revolution opened up vast potential supplies of natural gas that can generate electricity far more cleanly than coal
Can serve as bridge to lower-carbon future
Problem country risks losing focus
Divided between fossil fuel fundamentalists – mainly Republicans and
Clean energy enthusiasts, mostly Democrats
The two sides cannot agree on the best way forward for the economy and the climate