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8 May 2022

From Russia to Indonesia: How Energy Crises Will Evolve

Justin Conrad & Chase Duncan

Russia's invasion of Ukraine quickly created chaos in global energy markets and resulted in increased consumer prices for oil and natural gas. But the shocks have not been limited to fossil fuels alone: nickel prices have been extremely volatile, at one point, almost doubling overnight. A critical component of many electric vehicles and utility-scale batteries, nickel was already surging in demand as the world moves away from high carbon energy sources. Some analysts have concluded that the recent volatility in the market could undermine the long-term plans of electric vehicle manufacturers. These trends have forced many to acknowledge an uncomfortable reality: even if the world weans itself from fossil fuels, energy choices will still impact global security.

Indonesia illustrates how "new" energy sources are converging with geopolitics and domestic conflict to pose an emerging threat to international security. The country is primed to dominate global nickel production over the next decade, thanks in large part to increasing Chinese investments. These investments, like China's dominance of the supply of rare earth metals, pose significant security challenges for the world. As a result, the United States and its allies need to move now to diversify their technology and resource bases as a hedge against the kind of resource monopoly developing in Indonesia.

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