Showing posts with label Energy. Show all posts
Showing posts with label Energy. Show all posts

31 December 2021

Major Power Rivalry and Multilateral Conflict Management

Richard Gowan

In a period of growing major power competition, senior U.S. policymakers may have little time for problems associated with civil wars and regional conflicts. Yet if those conflicts go unaddressed, some are liable to escalate into broader humanitarian and political crises and—depending on their location and the stakes involved—draw in the major powers to some degree. Even if the primary U.S. focus is now on China and Russia, a strong case can be made for investing in conflict management elsewhere to avoid unexpected foreign policy shocks.

Though the major powers will decide their policies on conflict-affected countries on a case-by-case basis, convening broader discussions of the evolution of conflict management and reinforcing international crisis management structures will be valuable. The United States should test China’s and Russia’s willingness to participate in more technical discussions of humanitarian affairs, peacekeeping, and related topics among the five permanent members of the Security Council (P5), with the goal of sketching U.S. priorities for subsequent higher-level meetings. The United States should also continue to look for ways to reinforce regional organizations—such as renewing talks on UN funding for African Union peace operations or staffing and logistical support to African regional mediators—which will have a significant or growing role in international conflict management.

While some U.S. observers remain wary of China’s growing interest in UN peacekeeping, these concerns should not be overstated. China’s role in peace operations remains limited and does not challenge U.S. strategic interests. Washington can afford to test Beijing’s interest in more cooperation in this field, possibly by proposing to work together on those areas, such as increasing the safety and security of peacekeepers, that Beijing has prioritized. This should begin with policy talks between respective diplomats in New York, and potentially continue with small common projects—such as joint safety training—in the field.

International humanitarian agencies such as the World Health Organization and the UN High Commissioner for Refugees will be at the forefront of conflict management efforts. The U.S. Agency for International Development and the U.S. Mission to the United Nations should corral other major aid donors to address these problems together since the United States has a strong interest in developing more efficient aid mechanisms. The United States should also try to induce China to join these discussions and throw more money in the international pot.

The future of international conflict management will likely be messy and shaped by unforeseen events. U.S. initiatives alone will not resolve the fundamental drivers of current armed conflict or erase the problems of major power competition, but the United States can help multilateral institutions adapt to an uncertain future. It would be a mistake for the United States, China, and Russia to allow their overall differences to blind them to areas for cooperation, which can at least limit worsening instability in an era of heightened tensions.

This is the eighth Discussion Paper in the Managing Global Disorder series, which explores how to promote a stable and mutually beneficial relationship among the major powers that can in turn provide the essential foundation for greater cooperation on pressing global and regional challenges.

29 December 2021

What History Tells Us About the Future of Cyber Vulnerabilities in the Power Industry

Dennis Hackney

The power and energy sector is one of the most critical areas of our country’s infrastructure, making it a prime target for cybercriminals increasingly looking for ways to infiltrate and disrupt the sector and ultimately the national grid. In fact, the U.S. Government Accountability Office (GAO) released a report in early 2021 that found the grid, and subsequently its distribution systems that carry electricity from transmission systems to end-users, to be growing targets for large-scale, strategic state-sponsored cyber war operations.

This heightened interest and motivation can be attributed to hackers looking for larger ransomware payouts as well as nation states who consider the sector key to crippling the U.S. economy. High-profile attacks like the Colonial Pipeline have given threat actors more motivation to go after critical infrastructure. These groups continue to mature and adopt sophisticated tactics, techniques, and procedures, while industry leaders look to safeguard their critical systems and essential services.

If recent history is any indication of what we can expect in 2022 and beyond, the power and energy sector must prepare for the worst and prioritize their industrial cybersecurity programs accordingly.

A History of Known Vulnerabilities & Attacks

More than a decade before the GAO’s report, a number of other U.S. agencies came forward to recognize vulnerabilities and threats facing the power and energy sector. The CIA revealed in 2008 that hackers were able to disrupt power supplies in four different cities, stating it typically didn’t make this information public but decided the benefits of sharing outweighed the risk so power equipment operators could protect their systems from the known threat. Shortly after, in 2009, the Dept. of Homeland Security (DHS) disclosed it had known about vulnerabilities in power grid computer systems for years.

These admissions spurred the North American Electric Reliability Corp (NERC) to begin implementing updated cybersecurity measures. NERC sought to increase a company’s accountability, including cybersecurity risk management practices such as asset management, training, perimeter and physical security, and incident response and recovery. It did this by requiring a designated manager with overall responsibility and annual reviews of risk-based assessments. Known as Version 2 of the Critical Infrastructure Protection (CIP) Reliability Standards, the updated measures removed terminology like “acceptance of risk” and “reasonable business judgement” resulting in more stringent control implementation requirements.

Despite the government’s efforts to warn organizations and NERC’s work to help ensure the security of the nation’s power system, the sector began to see a flurry of activity in the years following:

In 2012, US Industrial Control Systems Cyber Emergency Response Team (ICS-CERT) shared that U.S. power plants began to see malware infections through USB drives.

In 2013, DHS reported that the U.S. power grid was constantly being probed by Iranian threat actors.

In 2014, officer members of the Main Intelligence Directorate of the General Staff of the Armed Forces of the Russian Federation, known as GRU, hacked the Georgia utility company, Westinghouse Electric Co. LLC, and stole user credentials and passwords related to nuclear reactor systems.

In 2014, the Dept. of Energy (DOE) revealed that more than 1,100 cyberattacks against its components occurred, 159 of which were successful cyber intrusions between 2010-2014 exposing critical information about the U.S. power systems.

Each of these incidents were examples of classic cyber reconnaissance techniques, also known as Network Information Gathering. And even though NERC was implementing security measures, these cybersecurity reconnaissance efforts were still being pulled off. In these cases, threat actors were looking for ways to circumvent the industry’s cybersecurity practices.

Yet, despite the government alerting the industry, and many years of reconnaissance activities by threat actors to uncover vulnerabilities of the U.S. power grid, a few of the nation’s adversaries launched campaigns against U.S. power companies:

The North Koreans launched a probing campaign, utilizing spear-phishing techniques on U.S. electric companies in 2017 by using fake emails to conduct the early stages of cyber reconnaissance.

An Iranian hacker group targeted the operational technology (OT) environments within power companies in the U.S., Europe, East Asia, and the Middle East in 2017.

A hacker group connected to Russian intelligence services conducted more reconnaissance against OT networks within U.S. and UK electric utility companies in 2017, prompting the DHS to report that they possessed the ability to cause blackouts.

Between known vulnerabilities that have been identified and the flurry of cyber incidents over the course of the last decade, it is clear that a cyber war is well underway, and threat actors are deeply embedded in the electric networks and OT that are responsible for power generation across the nation. This is the new reality.

The Powerful Lessons to Learn from History

Many organizations are already behind in the race to safeguard against an attack. Companies in the power and energy sector must learn from the past and adapt to state-sponsored cyber operations.

For those responsible for protecting critical infrastructure, gaining a better understanding of their OT environment, and accepting the reality that they are exposed a good first step. Well-funded threat actors are spending time and resources to learn how to disrupt power operations to make the biggest impact with a cyber-physical event. These OT environments are found throughout power plants and the grid. Any disruption to these systems could have far-reaching effects such as brownouts, blackouts, and even wide-scale service disruptions, which is why they are such attractive targets for criminals.

In order to adequately secure OT, organizations must handle and secure them differently than they would information technology (IT). OT monitors and controls how physical devices perform, while IT creates, processes, stores, retrieves and sends information. The two typically require the use of different languages and protocols.

What’s even more important to note is that the consequences of exploitation in these areas also differ. IT cyber incidents often have financial ramifications that can be attributed to data loss, business interruption, and reputational damage. OT incidents can have physical impacts such as death or injury, and property or environmental damage – in addition to the financial impacts.

These differences require organizations to engage an industrial cybersecurity expert with experience working in OT in power and energy.

A cybersecurity leader with expertise in industrial cyber security in the power and energy sector will adopt the following best practices:

Conduct a comprehensive audit of all OT systems to determine unique vulnerabilities.

Gain visibility into all OT environments and monitor associated networks and technologies for threats and cybersecurity intrusions.

Implement boundary protection devices and logically isolate OT from other networks.

Ensure that the operating systems, firewalls, and VPN applications are patched and up to date.

Review user accounts and disable or delete dormant or unused accounts.

Implement multi-factor authentication.

Use strong, unique passwords.

Course Correcting in 2022 for Better Protection

They say that those who do not learn from history are doomed to repeat it. For industrial cybersecurity, they might simply be doomed. As industrial systems become more connected, more remotely operated, and more dependent on digitalization, they become much more exposed to cyber attacks. This can have devastating consequences on operations, safety, and the environment. If history has shown us anything, it is that cyber threat actors are quick to adapt. It also shows that companies are often slow to evolve. Recent attacks on critical infrastructure show both the vulnerabilities and impacts of industrial cyber attacks. Failure to put in the basic prevention, detection and response will have increasing consequences for companies, and society as a whole. Not learning from the past, and not preparing for the future risks putting power in the wrong hands.

Mark Zuckerberg's Ring of Power


ATHENS – Once upon a time, in the ancient kingdom of Lydia, a shepherd called Gyges found a magic ring, which, when rotated on his finger, made him invisible. So, Gyges walked unseen into the royal palace, seduced the queen, murdered the king, and installed himself as ruler. If you were to discover such a ring or another device that granted you exorbitant power, Socrates asked, would it be wise to use it to do or get whatever you want?

Mark Zuckerberg’s recent announcement of some fabulous digital metaverse awaiting humanity gives new pertinence to Socrates’ answer: People should renounce excessive power and, in particular, any device capable of granting too many of our wishes.

Was Socrates right? Would reasonable people renounce the ring? Should they?

Socrates’ own disciples were not convinced. Plato reports that they expected almost everyone to succumb to the temptation, pretty much as Gyges had. But could this be because Gyges’ ring was not powerful, and thus not scary, enough? Might a device far more powerful than a ring that merely makes us invisible cause us to shudder at the thought of using it, as Socrates recommended? If so, what would such a device do?

26 December 2021

Power is Power: What’s India’s Problem with Chinese Equipment in its Power Plants?

Krzysztof Iwanek

In my favorite dialogue from George R.R. Martin’s saga, A Song of Ice and Fire, two characters known for their cunning, Varys and Tyrion, consider the nature of power. They do so through a riddle: If a king, a priest and a wealthy man sit in a room with a mercenary, whom of the three will the armed man listen to? Varys’ commentary to the riddle is that “power resides where men believe it resides.”

In the HBO adaptation of the novel, another character, Cersei, known more for her cruelty and use of strength than for a fondness of riddles, has a much more simplistic answer. After a short demonstration of physical strength of her guards on her rival she tells him: “power is power.” This quote has served as a sort of inspiration for the title of this text. Power is power, and it, of course, resides in power plants.

21 December 2021

The emerging global natural gas market and the energy crisis of 2021-2022

Alex Gilbert, Morgan D. Bazilian, and Samantha Gross

The ongoing energy crisis of late 2021 looks sure to move into 2022. It has already had wide-ranging impacts on economics, the environment, and security. This essay considers a few of the tensions arising for government policy, investors, and consumers. The crisis has three distinct elements: COVID-19 and supply chain disruptions, greater interconnectedness of natural gas markets, and signs of energy price volatility during the energy transition away from fossil fuels.

As the global economy continues a halting recovery from the COVID-19 pandemic, energy prices and availability threaten to derail it. The pandemic brought about a historic drop in energy demand and prices, but recovering demand is now straining fossil fuel markets for oil and gas, and even coal. Prices are skyrocketing as demand chases fuel supply that has not yet recovered from the pandemic drop.

13 December 2021

Metals Demand From Energy Transition May Top Current Global Supply – Analysis

Nico Valckx, Martin Stuermer, Dulani Seneviratne, and Ananthakrishnan Prasad

The clean energy transition needed to avoid the worst effects of climate change could unleash unprecedented metals demand in coming decades, requiring as much as 3 billion tons.

A typical electric vehicle battery pack, for example, needs around 8 kilograms (18 pounds) of lithium, 35 kilograms of nickel, 20 kilograms of manganese and 14 kilograms of cobalt, while charging stations require substantial amounts of copper. For green power, solar panels use large quantities of copper, silicon, silver and zinc, while wind turbines require iron ore, copper, and aluminum.

Such needs could send metal demand and prices surging for many years, as we outlined in a recent blog based on our research for the October World Economic Outlook and a new IMF staff paper.

Metal prices have already seen large increases as economies re-opened, highlighting a critical need to analyze what could constrain production and delay supply responses. Specifically, we assess whether there are enough mineral and metal deposits to satisfy needs for low-carbon technologies and how to best address factors that could restrain mining investment and metals supplies.
Supply constraints

Under the International Energy Agency’s Net-Zero by 2050 Roadmap, the share of power from renewables would rise from current levels of around 10 percent to 60 percent, boosted by solar, wind, and hydropower. Fossil fuels would shrink from almost 80 percent to about 20 percent.

Replacing fossil fuels with low-carbon technologies would require an eightfold increase in renewable energy investments and cause a strong increase in demand for metals. However, developing mines is a process that takes a very long time—often a decade or more—and presents various challenges, at both the company and country level.

The first question is how far current metals production is stretched and whether existing reserves can provide for the energy transition. Given the projected increase in metals consumption through 2050 under a net zero scenario, current production rates of graphite, cobalt, vanadium, and nickel appear inadequate, showing a more than two-thirds gap versus the demand. Current copper, lithium and platinum supplies also are inadequate to satisfy future needs, with a 30 percent to 40 percent gap versus demand.

We also examined whether production can be scaled up, by looking at current metal reserves. For some minerals, existing reserves would allow greater production through more investment in extraction, such as for graphite and vanadium. For other minerals, current reserves could be a constraint on future demand—especially lithium and lead, but also for zinc, silver, and silicon.

Importantly, however, metal reserves and production are not static. Firms can expand reserves through innovation in extraction technology and further exploration efforts may lead to increasing the future supply of metals to meet future demands.

Moreover, metals recycling can also increase supplies. Reuse of scrap metals only occurs on a large scale for copper and nickel, but it’s now increasing for some scarcer materials like lithium and cobalt.

One complicating factor is that some important supplies are generally very concentrated. This implies that a few producers will benefit disproportionately from growing demand. Conversely, this lays bare energy transition risks from supply bottlenecks should investments in production capacity not meet demand, or in case of potential geopolitical risk inside or between producer nations.

The Democratic Republic of the Congo, for example, accounts for about 70 percent of cobalt output and half of reserves. The role is so dominant that the energy transition could become more difficult if the country can’t expand mining operations. Similar risks apply to China, Chile, and South Africa, which are all top producers for some of the metals most crucial to the energy transition. Breakdowns or disruptions in their institutions, regulations, or policies could complicate supply growth.

Financing concerns

A related challenge is insufficient financing for metals and mining investment due to growing investor focus on environmental, social, and governance considerations, or ESG. Mining involves environmental impacts and fuels global warming, albeit just a fraction of coal and gas generation, as pointed out by a World Bank report on the mineral intensity of the energy transition.

Reduced access to financing by firms with lower ratings could constrain production, adding another potential supply-chain bottleneck. In response, miners are trying to reduce their carbon footprint. An S&P Global analysis shows that the ESG average score of the S&P Global 1200, an index representing about 70 percent of global stock-market capitalization, stood at 62 out of 100, while the metals and mining sector’s score rose to 52 last year from 39 in 2018. This may indicate miners are catching up with other sectors to become more attractive to global investors seeking to build more responsible portfolios.

Commitment to better environmental scores could help unlock more green financing for mining firms. This is supported by our analysis of S&P 1200 firms, which shows that mining companies that raised their ESG ratings from 2018 to 2020 also saw an increase in debt and equity financing. More generally, the effort to unlock more green financing is also aided by global efforts from, among others, the World Bank’s Climate-Smart Mining Initiative and IMF support for greening the recovery and promoting green finance.

The world needs more low-carbon energy technologies to keep temperatures from rising by more than 1.5 degrees Celsius, and the transition could unleash an unprecedented metals demand. While deposits are broadly sufficient, the needed ramp-up in mining investment and operations could be challenging for some metals and may be derailed by market- or country-specific risks.

3 December 2021

Green Upheaval The New Geopolitics of Energy

Jason Bordoff and Meghan L. O’Sullivan

It is not hard to understand why people dream of a future defined by clean energy. As greenhouse gas emissions continue to grow and as extreme weather events become more frequent and harmful, the current efforts to move beyond fossil fuels appear woefully inadequate. Adding to the frustration, the geopolitics of oil and gas are alive and well—and as fraught as ever. Europe is in the throes of a full-fledged energy crisis, with staggering electricity prices forcing businesses across the continent to shutter and energy firms to declare bankruptcy, positioning Russian President Vladimir Putin to take advantage of his neighbors’ struggles by leveraging his country’s natural gas reserves. In September, blackouts reportedly led Chinese Vice Premier Han Zheng to instruct his country’s state-owned energy companies to secure supplies for winter at any cost. And as oil prices surge above $80 per barrel, the United States and other energy-hungry countries are pleading with major producers, including Saudi Arabia, to ramp up their output, giving Riyadh more clout in a newly tense relationship and suggesting the limits of Washington’s energy “independence.”

Proponents of clean energy hope (and sometimes promise) that in addition to mitigating climate change, the energy transition will help make tensions over energy resources a thing of the past. It is true that clean energy will transform geopolitics—just not necessarily in the ways many of its champions expect. The transition will reconfigure many elements of international politics that have shaped the global system since at least World War II, significantly affecting the sources of national power, the process of globalization, relations among the great powers, and the ongoing economic convergence of developed countries and developing ones. The process will be messy at best. And far from fostering comity and cooperation, it will likely produce new forms of competition and confrontation long before a new, more copacetic geopolitics takes shape.

Biofuels and the Water-Energy Nexus: Perspectives for the United States

Alexandre Strapasson, Henry Lee and Jack Schnettler

This paper focuses on liquid biofuels, especially corn-based ethanol, and the energy-water nexus. It examines the implications of potential land area expansion for increased biofuel production and on water supply availability. Given the potential expansion of the use of irrigation in crop production for biofuels, the associated water footprint can be challenging in some areas, depending on the assumptions and trends considered in the projections. On average, biofuels are among the most water-intensive energy products. Producing a gallon of conventional gasoline requires 3 to 7 gallons of water, whereas a gallon of corn ethanol requires from 11 gallons up to 160 gallons of water in extreme situations. Thus, these impacts vary according to the production system and region.


To date, biofuel production in the United States has not been limited by water availability.
Some simulations show that it is possible to expand corn-based ethanol nationwide over the next ten years without using additional water and land resources. Conventional ethanol production could reach approximately 19 billion gallons in the 2030-31 crop year, representing a 28% increase from current levels, based on yield growth on existing acreage and without changing the annual corn exports and internal stocks.

Doubling current ethanol production in ten years without an acreage expansion, achieving about 32 billion gallons in 2030-31, would require the reallocation of corn from other uses. Otherwise, an increase in existing corn area might be required, which could exacerbate water scarcity in some areas, if precautionary measures are not addressed.

Policies and regulations should establish clear incentives to reduce agricultural water withdrawals in water stressed areas in favor of rain-fed crops. To the extent possible, they should also account for changing climatic conditions.

Future policies should support sustainable water management and develop markets for advanced biofuels, aiming to minimize both irrigation and carbon intensity.

2 December 2021

Hunt for the ‘Blood Diamond of Batteries’ Impedes Green Energy Push

Dionne Searcey and Eric Lipton

KASULO, Democratic Republic of Congo — A man in a pinstripe suit with a red pocket square walked around the edge of a giant pit one April afternoon where hundreds of workers often toil in flip-flops, burrowing deep into the ground with shovels and pickaxes.

His polished leather shoes crunched on dust the miners had spilled from nylon bags stuffed with cobalt-laden rocks.

The man, Albert Yuma Mulimbi, is a longtime power broker in the Democratic Republic of Congo and chairman of a government agency that works with international mining companies to tap the nation’s copper and cobalt reserves, used in the fight against global warming.

Mr. Yuma’s professed goal is to turn Congo into a reliable supplier of cobalt, a critical metal in electric vehicles, and shed its anything-goes reputation for tolerating an underworld where children are put to work and unskilled and ill-equipped diggers of all ages get injured or killed.

30 November 2021

Promoting Energy for Development in a World Accelerating to Net-Zero: Roundtable Report


On September 14, 2021, Sustainable Energy for All (SEforALL) and Columbia University’s Center on Global Energy Policy (CGEP) co-hosted a high-level virtual roundtable on energy for development and climate objectives, the first of a series of discussions focusing on the intersection between these two policy priorities. Among the roundtable participants were senior leaders representing major international organizations, development finance institutions, civil society, philanthropic foundations, academia, youth activists, and energy and finance industries.

Convened a week before the United Nations (UN) High-Level Dialogue on Energy—the first in 40 years—the virtual roundtable occurred at a time when the focus of many decision makers around the globe was on accelerating climate change mitigation to fulfill the goals of the Paris Agreement. Amid this sense of urgency to accelerate decarbonization, the roundtable served as a timely reminder of energy’s role in alleviating poverty and promoting growth. With 2.6 billion people (more than a third of the world’s population) lacking access to clean cooking and almost 760 million people (roughly 10 percent of the world’s population) lacking access to electricity, bridging the energy gap by 2030 should remain at the top of the global agenda.[1] Energy access is essential for economic development, especially for the 9.1–9.4 percent of the world that still lives in extreme poverty (defined as living on less than $1.90 per day).[2] Moreover, the role of energy extends beyond basic access: it is critical to generating broad-based economic growth to lift people out of poverty and enable quality healthcare, education, gender equity, food security, and other benefits enjoyed by middle-class populations worldwide.

21 November 2021

How to Stop Moscow From Squeezing Ukraine’s Energy Sector

Eugene Chausovsky

As the world contends with growing energy challenges—from climate change to rising oil and natural gas prices to politically motivated supply risks—such challenges are particularly acute in Ukraine. Ukrainian officials have recently warned about a brewing energy war with Russia, and U.S. Secretary of State Antony Blinken spoke against Moscow’s “attempt to use energy as a weapon” following a meeting with his Ukrainian counterpart in Washington on Nov. 10. However, with concerted help from the United States and European Union, Ukraine can both benefit from and contribute to energy security throughout the European continent.

Ukraine’s energy sector faces several major challenges and vulnerabilities. First and foremost is the role of Russia, which has traditionally provided Ukraine with the vast majority of its energy imports. However, Russia poses a significant geopolitical threat to Ukraine, not only in terms of the energy sector but across the political, economic, and security spectrums. Russia frequently uses energy as a geopolitical tool in Ukraine—whether as a punitive measure in the form of natural gas cutoffs, such as those in 2006 and 2009 under the pro-Western Ukrainian government of Viktor Yushchenko, or as a reward for political loyalty, such as when it lowered natural gas prices for the pro-Russian administration of Viktor Yanukovych in 2010.

16 November 2021

The United States’ Offshore Wind Industrial Strategy

Stephen J. Naimoli

Key Points

Offshore wind is a key part of the United States’ climate strategy. The country hopes to deploy 30 gigawatts (GW) of offshore wind by 2030.

In addition to climate goals, the federal government hopes the offshore wind industry will drive investment in new manufacturing plants and create 44,000 jobs by 2030.

The federal government invests in research and development, runs the leasing process for offshore wind farms, and provides funds to incentivize deployment. The states secure contracts for power from planned offshore wind farms and leverage the process to generate economic development in their borders.

Most offshore wind development is on the East Coast due to favorable waters, but interest has spread to the Gulf of Mexico and the West Coast, where the country could harness over 700 GW of potential.

13 November 2021

India bets its energy future on solar—in ways both small and big


DUNGARPUR, INDIAMarried at 13 and a mother by 16, Rukmini Katara once ran a small grocery store with her husband in her village near Udaipur in Rajasthan. Like millions of rural Indian women, she expected to follow a familiar path: doing what her husband’s family asked of her, devoting herself to domestic responsibilities at the cost of any personal ambition. But Katara has become the face of an effort to ignite a solar energy revolution in India’s villages.

Katara, 34, is the C.E.O. of Durga Energy, a company that manufactures solar panels and is staffed by about 40 women—including many who never finished high school. Launched with help from the Indian Institute of Technology, Bombay, and the Rajasthan state government, the company has sold more than 300,000 solar panels since its factory began operations in 2017.

Most have gone to homes, businesses, and institutions in and around Dungarpur, a small town near Udaipur, where Durga Energy is located, in a neighborhood a few blocks away from the town’s main thoroughfare. One solar installation that Katara is particularly proud of is a set of panels that powers the pump of a well in a nearby village. It saves dozens of women the daily effort of drawing water by hand.

9 November 2021

What Europe's Energy Crunch Reveals


BRUSSELS – This month represents an important milestone in the fight against global warming – and not only because of the United Nations Climate Change Conference (COP26) currently underway in Glasgow. Although many countries announced ambitious emissions-reduction targets in the run-up to the gathering, these often extend a generation into the future, to 2050 or even 2060.

Meanwhile, governments in Europe and elsewhere face an immediate energy crisis in the form of surging gas and oil prices. And how they react to it will reveal much more than their long-term net-zero pledges do about their ability to manage the concrete challenges of the green transition.

The current energy-price spike is a classic case of an accident that was waiting to happen. Years of low prices, combined with regulatory pressure on banks to reduce their exposure to brown industries, have naturally depressed investment in fossil fuels. A faster-than-expected rebound from the COVID-19 recession, plus somewhat colder weather in the Northern hemisphere, were then enough to drive up prices to their highest levels in a decade.

5 November 2021

Is Russia Using Energy as a Weapon Again?

Stephen Sestanovich

What’s happening?

Europe is experiencing energy turmoil, with spot prices for natural gas surging in the past month to levels five times those of a year ago. Some analysts see Russia as the villain in this new crisis, but the tight market has several other explanations: declining gas production in Europe itself, strong growth in Asia’s energy demand, depletion of gas reserves during the winter of 2020–21, and lower output from renewable sources such as wind and hydropower.

In recent years, European importers have expected to alleviate such shortages by boosting purchases of liquefied natural gas (LNG). However, cuts by many non-European LNG producers, including in the United States, have put that option at least temporarily out of reach.

Is Russia stoking the crisis?

Yes and no. Because so many global, regional, and local factors are contributing to tight markets, Moscow alone can hardly be blamed for high prices and shortages. Many experts point out that Russia itself has struggled to increase output (and sustain its own storage levels). President Vladimir Putin has called claims that his country is weaponizing energy “politically motivated blather.”

The big choices for oil and gas in navigating the energy transition

The COVID-19 crisis has resulted in a material near-term drop in global energy demand, at one point leading to a 30 percent reduction. Yet this is not the biggest threat the oil and gas industry faces.

The recent crisis has proved just how vulnerable the global economy remains to systemic risks, one of the most important of which is climate change. Long before COVID-19, pressure was building to shift the energy system away from one dominated by hydrocarbons toward one in which low-carbon sources play the lead role. The events of the past year, as a recent report by the International Renewable Energy Agency shows, have “sharpened investors’ interest in sustainable and resilient assets, including renewables.”1 Investors are increasingly seeking out positions that reduce their exposure to climate change as well as the risk of stranded assets. According to analyses conducted by the Wall Street Journal, in the first three quarters of 2020 alone, oil and gas companies in North America and Europe wrote down asset values of $145 billion, roughly equivalent to 10 percent of their market value.2 Climate Action 100+, an investors initiative that aims to ensure major companies take necessary actions on climate issues, has more than 500 signatories which, combined, account for more than $50 trillion in assets under management.3 Likewise, many governments are making sustainable investments a keystone of their economic stimulus strategies. And in an unprecedented global decision, Denmark has cancelled all upcoming North Sea licensing rounds in anticipation of ending oil and gas production in the North Sea by 2050.4 Given these dynamics, this is a moment for oil and gas companies to make thoughtful choices: both to improve their economic and reputational resilience, and to consider whether and how to reposition themselves to take advantage of the accelerating low-carbon winds of change.

Article (11 pages)

1 November 2021

Judy Asks: Is Europe’s Energy Crisis Self-Inflicted?


Europe learned from the 2006 and 2009 gas cut-offs and put in place a series of regulations that make an outright cut-off unlikely today.

In 2021, a cut-off is not the problem. Instead, Europe is suffering from a gas price spike and a drop in the volumes of gas it receives. Russia has learned that it cannot play the 2006 and 2009 game again. But Moscow still has numerous tools it can use to put pressure on Europe and make itself richer.

In 2021, as in 2009, EU member states need to ask themselves how the EU can use Russian gas without falling prey to an energy weapon. Europe is still importing a strategically significant amount of gas from Russia—in recent years around 40 percent. And constructing pipelines like Nord Stream 2 only increases the extent and duration of Europe’s reliance on Russian energy.

So is Europe’s energy crisis self-inflicted? Yes. Rather than taking the 2006 and 2009 crises as signs of the need to dramatically reduce reliance on Russia, Europe adjusted its rules and made states feel they could increase reliance on Russian gas.

30 October 2021

How Climate Activists Caused The Global Energy Crisis

Michael Shellenberger

Over the last decade, climate activists have successfully pressured governments, banks, and corporations to divest from oil and natural gas companies. At first such efforts appeared to be strictly symbolic. But in recent years years climate activists succeeded in driving public and private investment away from oil and gas exploration and toward renewables. The result is the worst energy crisis in 50 years.

Under-investment in oil and gas exploration is not the only cause of today’s energy crisis. The economic comeback from the covid pandemic has pushed up demand. Lack of wind in Europe meant higher demand for both natural gas and coal. And a drought in Brazil meant it had to import natural gas.

But the main cause of energy shortages is the half-decade-long under-investment in oil and gas driven by climate concerns.

27 October 2021

Japan moves forward with nuclear power, Germany moves backward

Stephen Johnson

In March 2011, a tsunami struck Japan’s Fukushima Daiichi nuclear power plant, triggering three nuclear meltdowns and leaking radioactively contaminated water miles out into the Pacific Ocean. It was the worst nuclear accident since Chernobyl in 1986. Shaken by the disaster and uncertain of the safety of its remaining nuclear power plants, Japan shut down all but one of its nuclear reactors.

But it was Germany that responded most severely to the Fukushima disaster. Facing strong political and public opposition to the nation’s own nuclear infrastructure, the German government began closing nuclear power plants and set plans to phase out all of the nation’s nuclear facilities by 2022.

Japan, however, is planning to restart its nuclear power program. Prime Minister Fumio Kishida said at a press conference earlier this month that it was “crucial” for the country to bring its nuclear reactors back online, noting that the nation’s demand for electricity is projected to spike. Likewise, Japan’s industry minister recently said that he would like “to promote the maximum adoption of renewable energy, thorough energy conservation, and the restart of nuclear power plants with the highest priority on safety.” These efforts, he said, will push Japan toward its goal of carbon neutrality by 2050.

23 October 2021

Russia’s Energy Strategy and Gas Disputes

Lakshmi Priya Panicker

Today, Russia’s transition from a state-controlled economy to a mixed economy posed existential questions to the new state and its fragile economy. Fortunately, Russia is a resource-rich country, specifically gas and oil, and was able to rise from the economic stagnation and enter the golden decade of economic growth and rapid development. Russia’s recovery from the collapse of the Soviet Union was cushioned by the oil and gas exports. In fact, Russia has a greater scope and range of natural resources, greater than that of the U.S and, is the second-largest producer and exporter of oil after Saudi Arabia. It also is the world’s largest exporter of natural gas. Russia’s reserve of oil and gas has helped its growth, reversing the budgetary starvation of its army and a further increase in oil prices in 1998, allowing Russia to boost its military spending and revenue allocations (Gidadhubli, 2003). In this context, energy resources for Russia have been a boon, helping its economy riddled with corruption, mismanagement and unemployment, giving it an impetus for growth. While energy resources have helped its economy, oil and gas have also helped Russia to maintain its influence and power. Energy diplomacy or Russian gas pipelines have hence become an important aspect of its soft power (Tynkkynen, 2016).