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Wednesday, August 17, 2022

OPINION:

The latest developments in European energy policy confirm that Russia has finally turned from the “reliable energy supplier” the Kremlin insisted it was for decades, into a power that wields its oil and energy export capabilities as a strategic weapon against “unfriendly nations” (the list of which is constantly enlarged).

Even the concessions recently made by Germans and Canadians in loosening their sanctions vis-à-vis Moscow proved unable to fully restore the gas flows in the Baltic. This forced many EU member states, as well as the United Kingdom, to enact emergency measures that will be introduced in the coming months.


After years of believing energy trade is a part of the global economic routine, policymakers have returned to the more strategic vision dominant during the Cold War.

This approach was foreseen and has been championed for years by Alexander Mirtchev, a renowned energy expert, deputy Chair of the Atlantic Council’s Board of Directors, and a Distingu­ished Visiting Pro­fessor with the Schar School of Po­licy and Government at George Mason University. In his book, publi­sh­ed well before the Russian invasion of Ukraine, (The Prolo­gue: The Alternative Energy Megatrend in the Age of Great Power Competiti­on) he argues that great powers’ energy policies–whether based on fossil fuels production or the development of renewable energy strategies – should be assessed by “securitization.” This term does not refer to the stock market but addresses, in its broadest sense, the influence security has on energy policy.

Dr. Mirtchev’s book addresses critical aspects of contemporary“ security”; tracing how and when the traditional military-political sense of the term changed to include financial and ecological priorities. Mirtchev posits that for de­cades, if not centuries, energy issues have been a fundamental part of the secu­rity environment, and, as Dr. Kissinger mentioned, the book, “provides a sweeping exploration of the changing energy landscape outlining issues that will occupy scholars and policymakers for decades to come”.

Recent events, Dr. Mirtchev notes, can to a large extent be seen as a reaction to the current energy transition (he calls it “the Megatrend”). While President Putin’s rule might be called a period of Russia’s “energy imperialism” (the Russian president himself, used to talk about his country being an “energy super­power”), Moscow’s policies could be better explained from the perspective of Euro­pe’s transformation into a decarbonized economy.

This would be of a bigger concern to the Russian leadership than any NATO expansion. The turn to a “green economy” in the West and plans to introduce a carbon tax caused a real panic around the Kremlin last year. It might well be that Moscow would accelerate its expansionist plans before Europe’s dependence on its energy supplies falls below a certain critical level – otherwise Kremlin’s main source of leverage will simply disappear (In the 2000s Putin’s advisers grossly underestima­ted the threats posed by the shale revolution that made the United States energy independent, as well as the development of the LNG gas market – so the Kremlin likely believes that it has little room for another miscalculation). In other words, today’s conflict in Europe is at least partly caused by a change in the world economy that Russia sees as too dangerous for itself, and which has made energy supplies to Europe its main geo-economic weapon aimed at radically changing the balance of power between the West and Russia.

What looks even more important are Dr. Mirtchev’s reservations regarding the “renewables revolution” as European politicians are voicing their conviction that only a full switch to “green energy” will liberate Europe from Russia’s influence (currently the EU leaders are forced to opt for Venezuelan, Saudi and Iranian oil, and Qatari, Algerian, Azerbaijani, Egyptian, Israeli and in the future more Libyan gas to counterbalance “autocratic” Russia with the help of some more democratically dubious state actors.

The era of renewables will fuel geopolitical ten­sions as the new customers will face new authoritarian suppliers. Today this tran­sition is mainly seen as a triumph of new technologies, predominantly provided by the Western nations, over the old ones, used by their opponents. However, raw materials and production facilities are critical to the production of such technologies.

The transition to “green energy” is based on the use of commodities that might become even more scarce than oil and gas were believed to be in the 1970s. The global distribution of these goods may be less even than that of fossil fuels (the 2010s energy revolution in the U.S. proved that fossil fuels are, after all, not as scarce as was believed). In1976 at the apex of the oil crisis, Gulf nations produced “only” 1.65 times more oil than the current OECD nations – and in just 30 years the latter caught up. Moreover, the oil produ­cing nations have never been the West’s geopolitical adversaries (the Soviet Union rose to its oil exporter status at the time of its demise), but the renewable energy raw materials and tech sources of tomorrow may mostly be held by direct adversaries of the West.

Renewables depend on solar panels, electric engines, and batteries – and they all need rare earth elements to be produced. China’s control over lithium, a vital rare earth element, demonstrates this problem. China’s share of rare earths production stands at around 60 percent (аnd if one adds Myanmar’s figures, it will exceed 70 percent).

This issue was recently raised by Janet Yellen, stating that the United States “cannot allow countries like China to use their market positions in key raw materials to disrupt our economy or exercise unwanted geopolitical le­verage”. And while Saudi Arabia and Russia have been crude oil exporters for decades, China is close to monopolizing many elements critical for renewable energy production. China accounts for 97 percent share of silicon wafers production, 79 percent share of photovoltaic cells and 67 percent share of polysilicon). Even capital-intensive production, a traditional Western industrial stronghold, is not immune to this dynamic with China currently producing 58 percent of all-electric vehicles. If this new energy paradigm was seen from the same “securitiza­tion” angle as the old one, the United States should be even more concerned with China’s meteoric rise.

Dr. Mirtchev has rightly called his book “Prologue”: it seems the world we are in is just a prologue between one where some nations were speculating on their role as energy commodity producers, and one where revisionist powers may bet on a combination of control over basic resources, efficient industrial production, and huge export potential to reshape the world. To believe the age of renewables may eliminate all traditional resource-related conflicts would be a huge mistake.

  • Vladislav Inozemtsev, Ph.D., is the author of “The World Without Russia” and a Special Advisor to MEMRI’s Russian Media Studies Project, is based in Washington, D.C. He is the Foun­der and Director of the Center for Post-Industrial Studies.


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