New Winners, New Losers: Toward a New Energy Security
We are in the midst of the biggest global energy crisis in history. Old playbooks are not up to the task. The climate crisis and the horrors of the war in Ukraine are adding considerable urgency to the task of building a new paradigm for energy security. But allowing the war in Ukraine and its effects on global oil and gas markets to drive the discussion will misdiagnose the long-term threats to sustainable energy security. This new paradigm will require making the new geopolitical risks and tradeoffs of sustainable energy systems explicit. It will also require figuring out how to ensure energy security for some — major powers and developed economies — does not create massive insecurity for the rest: the many developing countries that have huge unmet energy needs and significant natural resources.
We are now in what is commonly referred to as an energy transition — moving toward a low-carbon system. This big transition will entail myriad smaller transitions in the techno-social systems around fossil fuels, critical minerals, and the public and private systems that create, store, and distribute power.
These changes will create a new set of challenges and a new set of winners and losers. The global energy system is changing in fundamental ways, but remains deeply interconnected, tied together by data, and less about physical volumes of goods and more about shifting capital deployment. The keys to managing these risks lie in robust, equitable, and interdependent global markets and supply chains, coupled with strong regional partnerships and country alliances.
Energy security has long been a central goal of both domestic and foreign policy. In the United States, it harkens back to the Eisenhower and Carter doctrines committing the U.S. forces to minding the Strait of Hormuz and the Arabian Sea. With shifts toward renewables, there are new technologies, new priorities for society, a new focus for capital, and thus new ways to think about actors and resources. These new ways of thinking should not be premised in Cold War security paradigms, but rather one that leverages robust and open trade and investment relationships with a variety of partners — including those that do business with other major powers like China and Russia. The “new” energy security can also serve as a powerful driver for clean energy systems — a more effective positive narrative than framing everything through a diffuse and somewhat negative climate security lens.
Defining Energy Security
Energy security policy generally consists of measures taken to ensure adequate supply of oil at bearable prices and reduce the risks of supply disruptions below some certain tolerable level. Insecurity in energy supply stems both from relative scarcity — how much is available at a given time — and the need to rely on global markets to equilibrate supply and demand due to uneven resource endowments across countries: Kuwait has more than it could possibly consume, while China has very little compared to what it needs.
But it also stems from political instability in exporting and transit countries and the deliberate use of energy as a weapon. Both challenges are on display in Ukraine. Moreover, Vladimir Putin’s history of manipulating gas exports for diplomatic leverage and attacking when energy prices are high highlight these vulnerabilities.
Finally, energy insecurity relates to the operational reliability of energy systems — from grids to pipelines and the manufacturing systems that support them — that ensure services are efficiently delivered. This component is often taken for granted in developed countries but is a live and pressing concern in countries where stable fuel and power supplies cannot be assumed. And in the aftermath of the Texas power grid’s failure in February 2021 and recent summertime challenges, even developed-country consumers are beginning to worry whether the heat or air conditioning will come on when the weather turns cold or warm.
There is no standard definition of energy security. That is because the topic requires a rigorous aggregation of dozens of variables that impact energy flows in the real world. The bulk of the global energy-security literature focuses on the geopolitical aspects of energy security policy from an industrialized country perspective.
What had become the standard definition is alliterative: availability, accessibility, affordability, and acceptability. Aleh Cherp and Jessica Jewell furthered the definitional inquiry, saying that “energy security is an instance of security in general and thus any concept of it should address three questions: ‘Security for whom?’, ‘Security for which values?’ and ‘Security from what threats?’”
The term “energy independence” is popular political rhetoric in many countries, none more than the United States. Linguistically, it’s an attractive idea, but its use as a goal in policy can lead to myopic thinking and decisions. Numerous examples are available considering the war in Ukraine. From roughly 15 years ago to today, the United States has gone from a major importer of oil and gas to the world’s largest producer of those fuels. And yet, the ability to “protect” voters from the vagaries of global prices remains out of reach. This, despite the issue of gasoline prices still being a top-tier priority of U.S. voters. Policies ranging from releasing the strategic reserves to gas tax holidays to increasing allowable amounts of ethanol into fuel do not significantly change the price, but may have negative consequences for the environment and contribute to global food insecurity. In defining a new energy security, we might help ground the exuberance for independence in a frame that can guide good policy decisions — or at least better ones.
In 2020, we coined a new term in the security space: actorless threats, or those threats that fail to manifest in the form of a clear enemy. And while the focus was on changing military approaches, it is one important vector for a new energy security. We wrote: Addressing these global issues will not just require making traditional national security agencies more climate- and pandemic-aware, but a reimagining of the concept of national security itself.”
We envision six major opportunities and challenges that can help to paint a picture of what a new energy security paradigm might entail. First, there are dramatically changing roles for minerals and metals that are needed for technologies like electric vehicles and solar panels. While these have different security attributes to oil, the rapid and growing supply-demand gaps will have effects on geopolitics and investments. It has become clear that new abilities and access to advanced data analysis and satellite data is changing how we see the world and plan for the future. Third, and fundamental to success, is a renewed focus in many countries on justice and equity. A tremendous shift in capital is moving toward sustainable or “green” investments. The war in Ukraine laid bare the need to ensure a focus on the robustness, resilience, and governance of global supply chains. Lastly, cybersecurity threats in the energy sector and beyond have the potential to be deeply disturbing. This list is not comprehensive, but highlights some of the root issues arising in the very short term that urgently need to be addressed.
Critical Minerals and Metals
For a century, energy security concerns have revolved around oil. Winston Churchill’s move to convert the British navy from coal to oil set in motion a scramble by major powers to secure access to this crucial strategic resource. Oil was comparatively more energy-dense, easier to transport, and allowed ships to travel further faster. But the transition to oil-fueled navies in the 1920s meant that, for the first time, the projection of global power would require most major powers to rely on energy sources over which they were not sovereign. Other than the United States and Russia, all of the 20th century’s major powers (Germany, France, the United Kingdom, Italy, Japan, and China) and current permanent members of the U.N. Security Council have been highly dependent on oil imports. To fuel their economies and wage war, all have needed access to crude oil sourced from abroad since the early 20th century.
Decarbonizing global energy systems will spur demand for and a shift in geopolitical attention from hydrocarbon reserves to the critical minerals that underpin solar, wind, geothermal, and other forms of renewable energy, as well as electric vehicles: aluminum, coltan, copper, aluminum, zinc, tin, rare earths, lithium, tantalum, and cobalt, among others. Global production of some of these minerals will need to increase, by a factor of nearly 50 in some cases, to meet the renewable energy and emissions targets established by the Paris Agreement. These minerals are not just key to fueling the energy transition: As advanced militaries look for ways to reduce their own carbon footprints, these resources will become increasingly critical for the projection of military power. Both their economic and strategic significance will therefore rise. The way we define criticality only relies on supply side dimensions, and thus needs to be refined to consider the effects this demand boom will have on the countries and communities from which they are sourced.
Data Analytics for Energy Security
The ability to use satellite data is no longer solely the purview of the military and intelligence communities. Satellites can capture an array of information rendered from various spectra of electromagnetic radiation, including ultraviolet, infrared, microwave, or visible light. In the energy security space, they are regularly used to track global power systems as well as oil and gas production and flaring. They are especially useful in detecting the impacts of kinetic military actions through the sensing of fires or electricity black outs. The big data techniques being utilized today can help better inform aspects of up-to-date decisions in the energy sector.
A Renewed Focus on Justice and Equity
Pursuing energy security via hydrocarbon-based energy systems widened economic and social inequality and had anti-democratic effects in many exporting countries. Countries with large hydrocarbon revenues per capita have higher economic inequality. And hydrocarbon exploration, development, and exploitation generate large environmental costs that fall on small, often marginalized proportions of the population. Armed movements like the Movement for the Emancipation of the Niger Delta in Nigeria and various armed groups in Northeast India have made oil-related grievances central to their discourse and recruitment. Many of the world’s most deeply entrenched autocrats — Putin in Russia, Muhammad bin Salman in Saudi Arabia, and Ilham Aliyev in Azerbaijan — rule over oil-exporting economies. This is not a coincidence, as oil exports both endow these leaders with massive resources to invest in both patronage and repression and give major importers a stake in their political fortunes.
A Shift in Capital Toward Sustainable or “Green” Investments
There are trillions of dollars from investment houses of all kinds and geographies looking to “green” their portfolios. Many new funds are being created each week with a focus on aspects of clean energy or climate change. The wider framing of environmental, social, and governance reporting and investing has begun to shift global capital management significantly. How this money flows in the next decades will have implications for geopolitics and thus security. The countries and regions that attract these funds through innovation or deployment will be in a stronger position vis a vis those that do not, and that will not follow the traditional resource-rich global map. New tensions are likely to arise for those left behind or stuck outside of trade patterns and partnerships.
Robustness, Resilience, and Governance of Global Supply Chains and Markets
The fragility of supply chains and some markets has been highlighted by the war in Ukraine. From silicon chips to the trading of nickel, many have not proven resilient or robust considering outside threats and changing supply-demand dynamics. Moves for onshoring and limiting the scope of supply chains will likely serve to weaken rather than support the development of resilient supply chains and markets. Moving toward strong partnerships and a focus on governance will be required to preserve security throughout these global systems. The role of big multinational corporations should also be highlighted here, as they are large enough to act as geopolitical players in many markets, including energy.
Both the number and security implications of sophisticated cyber attacks on companies providing critical energy infrastructures are increasing. As power networks and, to a certain extent, oil and gas infrastructure both upstream and downstream are becoming increasingly integrated with information communication technology systems, they are growing more susceptible to these attacks. There are also significant economic implications to industries from cyber attacks. This relatively new form of security threat requires new approaches for defense across the energy sector, but it seems likely to play a large role in any future conception of energy security.
Breaking the Deadlock
The six challenges we describe ranging from securing critical minerals to building resilient energy infrastructure are formidable, but they are all addressable by a combination of technical and societal approaches and innovations. Ensuring these tensions are explicit in decision-making processes and political discourse is essential. The political discourse is deeply frayed in many jurisdictions, but by highlighting and then prioritizing these issues, we may be able to not only impress on populations that they will help prevent disaster but also provide a positive narrative for our shared future.
Grounding this discussion in expert-informed analytic frameworks is vital. Much of the current assessment of energy security does not make use of the sophisticated approaches offered by academics and issue-specific think tanks. This is, of course, typical: The literature requires considerable “translation” and time to become part of the language of policymakers, and it takes time to knit seemingly arcane patches of insight into a coherent tapestry. In other cases, geopolitical threat assessments are often ad hoc and not grounded in a clear understanding of what energy security will entail moving forward. These snapshot assessments are of course necessary for identifying actionable problems. But they can detract from longer-term strategic thinking. Incorporating the six issues we have highlighted here, along with a focus on demand and not just supply-side considerations, can help better guide decision-making and foreign policy.
Morgan Bazilian is professor and director of the Payne Institute for Public Policy at the Colorado School of Mines. He is a global fellow at the Wilson Center, and a member of Ireland’s national climate change advisory council. He was previously lead energy specialist at the World Bank.
Cullen S. Hendrix is senior fellow at the Peterson Institute for International Economics, nonresident senior research fellow at the Center for Climate & Security, and a specially appointed research professor with the Network for Education and Research on Peace and Sustainability at Hiroshima University. He is currently on leave from the Korbel School of International Studies at the University of Denver.