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That risk is due to a number of factors, but one glaring reason is the limited availability or mining of these minerals in the United States. That is increasingly problematic as demand for these minerals rises, considering the role they play in building a green economy globally.

In contrast, across the Atlantic, Africa is home to over 30 percent of the world’s known reserves of critical minerals. While international interest and investment in the African critical-minerals industry have been lagging, it is rapidly picking up; this is welcome news for resource-rich African nations.

But history shows that mining interest and investment—even if welcome—can have inadvertent negative effects. In recent years, mines in the Democratic Republic of Congo (DRC), Zambia, and South Africa have been found to be polluting waterways, contributing to acid rain, and poisoning residents. Thus, the US public and private sectors should develop strategies surrounding mining projects that ensure African workers’ health is protected, the environment is not damaged, and the opinions of local communities are sought out, heard, and respected.

Acknowledge the checkered history of mining in Africa

It is important for mining companies and foreign governments to be cognizant of the historical context that surrounds the African mining industry.

For example, in South Africa in the nineteenth century, the discovery of diamonds and gold brought Africans and Europeans alike to mining areas such as the Witwatersrand and mining towns such as Kimberley. After the initial boom, the South African government passed the Natives Land Act in 1913, which restricted Black Africans from buying or occupying land outside of specified areas, except as employees. This policy restricted many Africans from benefiting from the proceeds of mining minerals, and for these people, their main access to any financial gain from the mines came only from working as miners.

While the legislation was repealed in 1991—and others like it are firmly in Africa’s past—it created the conditions for a variety of socioeconomic challenges, including poverty, inequality, and landlessness. Thus, as the US public and private sectors look to get more involved on the continent with mining projects, they should integrate into their strategies a plan for increasing economic opportunity for local communities.

The US government seems to be headed in this direction already with its support for and investment in the Lobito Corridor project, which aims to update the infrastructure along an economic route stretching from the DRC and Zambia to an Angolan port in order to improve the flow of mining-related trade and also to create jobs for local communities. Concerns still remain, but this form of holistic engagement is essential to ensuring mutual prosperity in mining projects.

Don’t exacerbate the “resource curse”

Many African countries have been associated with a “resource curse,” a term that refers to the failure of many resource-rich countries to fully benefit from their natural resources.

For example, Cabo Delgado, a small province in Mozambique’s north, is one of the country’s poorest regions, despite the region’s many natural resources. This has led many in Cabo Delgado to feel marginalized and angry at the central government. A 2011 discovery of a massive natural gas field off the northeastern coast of Mozambique further exacerbated this dissatisfaction. Specifically, youth in the region felt sidelined as foreigners and Mozambicans from elsewhere in the country benefited from the jobs and wealth associated with the discovery.

As the government formalized the mining sector and centralized control of it, artisanal miners were displaced. A widely held sense of injustice gave rise to an Islamist militant group, Mozambique’s al-Shabaab, which took advantage of these grievances to gain popularity among youth in the region. The activities of various armed groups in Cabo Delgado have resulted in around five thousand deaths and the displacement of 582,000 people since 2017.  

In conducting mining projects on the continent, the US public and private sector should add to their strategies specific plans to ensure that the benefits of natural-resource endowment reach local communities.

Botswana provides a positive example. In recent years, the country—one of the world’s leading producers of diamonds and also among the least corrupt on the African continent—has developed a “pro-equity based extractive sector strategy,” taking revenues from extractive sectors and investing them in health and education infrastructure and also into long-term savings through an asset fund. There are also various mechanisms and institutions set up to prevent or catch corruption, such as a constitutionally independent body in charge of cases of corruption. Botswana shows that strong business and the fight against corruption are perfectly compatible.

As part of any strategy, US stakeholders should support African countries in their anti-corruption endeavors and empower human-rights organizations that risk much to protect the resources of these countries and ensure benefits from mining reach local communities. Doing so would encourage African countries to take corruption issues seriously and, in the long run, would create a more attractive environment for sustainable investments. That contradicts the naive belief of some people—such as Israeli businessman Dan Gertler, who was sanctioned by the Trump administration for what it called “corrupt mining and oil deals” in the DRC (he has denied wrongdoing)—that lifting sanctions would be a way to bring back foreign investors.

Strategize for stability

Over time, mismanaged mining projects have contributed to instability, violence, and conflict across Africa.

That dynamic can be seen not only in the Mozambique case but also in Kivu, a region in the DRC’s east. The DRC is central to the production of several critical minerals. For example, as much as 70 percent of global cobalt comes from the DRC. A conflict has gripped the region for almost three decades, and armed groups have wrestled control of mining areas to finance their operations. The DRC, Rwanda, Uganda, and China have often put their interests ahead of those of the residents, who are hoping to see their quality of life improve. Currently, six million people are internally displaced within the DRC, and since the start of the conflict in 1996, six million people have been killed.

With this history in mind, US mining companies with projects on the continent must strategize on how to limit the role mining plays in exacerbating conflicts and tensions. They can do that by bringing more of the supply chain—specifically, value-adding stages of critical-mineral processing—to the continent.

Industrializing the mineral sector in Africa

Historically, mining in Africa has been exploited by foreign partners. China, for example, controls 80 percent of the world’s raw mineral refining and owns fifteen of the seventeen cobalt mining operations in the DRC.

But the US public and private sector can change this status quo by bringing more of the value-adding stages of critical-mineral processing to the African continent, rather than extracting the minerals and bringing them immediately overseas for processing. Not only would this appeal to local populations—as it would encourage industrialization—but employing this different strategy would offer the United States a comparative advantage over China.

A strategy that brings value-adding steps of the value chain to the continent should promote local job creation, prioritize environmental protection in areas with high floral and animal biodiversity, and protect workers’ health. It should also prioritize the deployment of cleaner mining techniques (including those mobilizing artificial intelligence) and encourage countries to adopt a tax that allows for a more fair and just distribution of revenues from mining.

Economic communities—such as the Southern African Development Community—should also play a role in promoting regional value chains. Through such groupings, countries should take advantage of opportunities to share information and data, build capacities, and harmonize legal frameworks.

Stakeholders from the United States must remember that this is about more than curbing Chinese and Russian influence on the continent; rather, it is about avoiding past wrongdoings on the continent, by supporting local communities and preventing mining operations from contributing to various forms of instability and conflict.  

But there’s also a bigger picture to keep in mind: By getting mining investment right, the United States can set a new precedent for its collaboration with African countries in other areas, such as in health, security, and technology.

Rama Yade is senior director of the Atlantic Council’s Africa Center and senior fellow for the Europe Center. She is also a professor of African affairs at Mohammed VI Polytechnic University in Morocco and at Sciences Po Paris.

Sibi Nyaoga is a program assistant for the Atlantic Council’s Africa Center where he supports the center’s work on critical minerals and migration. 

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However, Japan is taking positive steps in restarting its nuclear reactors under new security and safety measures established after the Fukushima Daiichi accident in 2011. The government recognizes nuclear energy as an important source of baseload electricity generation that can help achieve Japan’s climate targets and bolster energy security to hedge against the volatility of global fossil fuel import markets. To power its economic growth and competitiveness, Japan must continue restarting its existing fleet and commit to the eventual construction of next-generation advanced reactors.  

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Japan’s climate and energy security strategy

Japan’s energy system is transforming to decarbonize and ensure energy security. The government’s “S Plus 3E” strategy is based on the four pillars of safety, energy security, economic efficiency, and the environment. To advance these objectives, the government is targeting an electricity mix in which nuclear constitutes 20-22 percent of generation by 2030, alongside a 36-38 percent share for renewables, 20 percent liquefied natural gas, 19 percent coal, and 2 percent oil.  

Japan has some offshore wind capacity—currently 0.25 gigawatts (GW)—and ambitious goals of achieving 10 GW by 2030 and 30-40 GW by 2050 under its feed-in-tariff (FIT) scheme. The 2012 FIT significantly boosted solar generation, increasing installed capacity from 5.6 GW before 2012 to 70 GW by May 2023. However, solar deployment has slowed recently due to a shortage of land and grid congestion. 

In February 2023, the government announced its Basic Policy for the Realization of GX (Green Transformation), Japan’s vision for a virtuous cycle of emissions reductions and economic growth. The GX Promotion Strategy, adopted in July 2023, identifies support for nuclear power as one of several necessary policies to provide a steady supply of energy. Public approval of nuclear energy has steadily increased since the Russian invasion of Ukraine. In 2023, a majority in Japan favored restarting the existing reactor fleet. 

New momentum for nuclear

As of fiscal year (FY) 2022, nuclear energy constituted 5.6 percent of Japan’s electricity production, a significant decrease from 25 percent in FY 2010, the year before the Fukushima Daiichi accident. In the last few years, nuclear generation has recovered steadily, despite remaining well below pre-2011 levels. Nuclear also holds great promise for repowering retired coal-fired power plants, providing firm generation for data centers and semiconductor facilities, producing industrial heat and hydrogen, and powering Japanese industries participating in a growing export market.   

Japan operated over fifty nuclear reactors before the accident; as of May 2024, thirty-three reactors are classed as operable. However, only twelve reactors—of the twenty-seven that have applied—have met new regulatory requirements and received approval from the Nuclear Regulation Authority (NRA) to restart. Ten remain under the authority’s review and must obtain local government consent before restarting. Notably, Tsuruga Unit 2 could be the first to be denied restart approval under post-Fukushima regulations, due to its proximity to fault lines and failure to meet new seismic regulatory requirements. 

Two notable plants being queued for restart are at Onagawa and Shimane. The Onagawa Nuclear Power Station, which utilizes boiling-water reactors (BWRs), will likely be the first BWR to resume operation in Japan since the 2011 earthquake. This restart is a powerful step toward advancing Japan’s S Plus 3E objectives.  

Safety improvements learned from the Fukushima Daiichi accident, such as tsunami walls and earthquake reinforcements, have been implemented for the existing fleet. The restart process has taken over a decade, with continuous reviews and updates required by the NRA. Japan should glean lessons from Onagawa Unit 2’s upcoming reconnection process to refine technical, operational, and regulatory efficiencies for other pending BWR restarts. Improving the clarity and predictability of the regulator’s heightened post-Fukushima safety requirements will also be essential. 

Increasing or decreasing demand?

Japan’s government currently projects that energy demand will decrease as a result of a declining population and successful energy efficiency measures. However, these projections have yet to reflect the government’s plans to boost energy-intensive industries and reverse Japan’s population decline. 

Japan’s birth rate has been declining since the 1970s, reaching an all-time low in 2023 with only 727,277 births for a population of 125 million. Prime Minister Fumio Kishida has committed to doubling government spending on child-related programs and established the Children and Families Agency in an attempt to reverse this trend. If successful, the government will need to revise its expectations that falling birth rates will contribute to plummeting energy demand. 

Economic growth is also challenging those assumptions. The domestic semiconductor industry is growing, with Taiwan Semiconductor Manufacturing Company (TSMC) investing $20 billion for two plants in southwest Japan, one of which opened in February 2024. Micron Technology intends to build a manufacturing facility in Hiroshima, and Tokyo-based Rapidus aims to build a facility in northern Japan, an effort reinforced by $6 billion in government support. 

Rapid adoption of new AI tools is boosting Japan’s economy and tech sector. Digitalization gained momentum during the pandemic, and tech giants like Microsoft—which is investing $2.9 billion in AI data centers over the next two years—and Oracle—which is planning to invest over $8 billion in cloud computing and AI within the next decade—underscore this AI boom. 

These factors are expected to increase power demand significantly. The International Energy Agency forecasts that data centers and data transmission services—and their insatiable appetite for electricity—could double their power consumption between 2022-26. This level of growth is already being seen in some markets. In the United States, a recent Energy Information Administration survey found that, because of large-scale computing facilities, commercial demand for electricity generation surged by 27 billion kilowatt-hours in Texas and Virginia from 2019-23, and increased by 40 percent in North Dakota over the same period.  

As a result, Japan’s Ministry of Economy, Trade and Industry (METI) is supporting the restart of nuclear power plants to meet growing energy needs, particularly to backstop load growth from its expanding tech and AI industries. METI’s Advisory Committee for Natural Resources and Energy will no doubt capture these emerging dynamics in its forthcoming seventh Strategic Energy Plan, currently under discussion and expected later this year.  

Moving forward with nuclear energy

In August 2022, Kishida proclaimed that restarting idled nuclear power plants is a strategic imperative to avert crisis and secure Japan’s electricity supply, urging additional units approved by the NRA be brought online.  

Echoing this sentiment at the March 2024 Nuclear Energy Summit in Brussels, Kishida said, “Japan will work to push forward the restart of nuclear power plants, extend their operational periods, and foster the development and construction of next-generation advanced reactors.” 

Japan has moved to utilize its existing nuclear power units and restarted twelve reactors. It is imperative, however, to look to the future when the existing fleet will need to be replaced and new reactors built. To create a favorable business environment and enable utilities to construct next-generation advanced reactors, policies that promote large initial capital investments and improved business predictability are crucial. Additionally, the nuclear industry struggles with an aging workforce and an illiquid market for skilled labor, necessitating sustained investments in human capital and a strengthened talent pipeline. Japan must also work to bolster supply chains needed for eventual plant construction and operation. Moreover, if Japan is to compete in the global market—and team up with the United States and other like-minded countries on reactor export tenders—efforts such as the Nuclear Supply Chain Platform are essential and will enable the Japanese nuclear workforce to maintain expertise.  

To overcome these challenges, Japan must maintain positive momentum and implement robust measures to support the nuclear sector, ensuring it can meet growing electricity demand and secure its energy future. Nuclear power plants are not solely physical components of critical electrical infrastructure; they are long-term strategic assets that generate clean, firm power and can strengthen green growth strategies, as articulated in Japan’s GX policy. Japan can harness its existing fleet and leverage its technical prowess to secure and invest in a brighter economic future.  

Note: This blog post is based on the authors’ recent trip to Japan, having attended a workshop on advanced reactor technologies at Tohoku University in Sendai. The authors wish to thank Tohoku Electric Power Company for hosting a tour of Onagawa Nuclear Power Station in May 2024.

Lauren Hughes is the deputy director of the Nuclear Energy Policy Initiative at the Atlantic Council Global Energy Center.

Maia Sparkman is the former associate director for climate diplomacy at the Atlantic Council Global Energy Center.

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This progress has come as no surprise: Ukrainian military planners have been working to capitalize on Russia’s air defense vulnerabilities from the first year of the full-scale invasion. Ukraine’s attacks have escalated significantly since the beginning of 2024, with oil refineries and airfields emerging as the priority targets.

In a July interview with Britain’s Guardian newspaper, Ukrainian commander-in-chief Oleksandr Syrskyi confirmed that Ukrainian drones had hit around two hundred sites connected to Russia’s war machine. Meanwhile, Ukrainian President Volodymyr Zelenskyy has vowed to continue increasing the quality and quantity of Ukraine’s long-range drone fleet. Underlining the importance of drones to the Ukrainian war effort, Ukraine recently became the first country in the world to launch a new branch of the military dedicated to drone warfare.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Long-range attack drones are a good fit for Ukraine’s limited offensive capabilities. Kyiv needs to be able to strike military targets inside Russia, but is prevented from doing do with Western-supplied missiles due to restrictions imposed by the country’s partners. While Ukraine has some capacity to produce its own missiles domestically, this is insufficient for a sustained bombing campaign.

Drones are enabling Ukraine to overcome these obstacles. Ukrainian drone production has expanded dramatically over the past two-and-a-half years. The low cost of manufacturing a long-range drone relative to the damage it can cause to Russian military and industrial facilities makes it in many ways the ideal weapon for a cash-strapped but innovative nation like Ukraine.

Ukraine’s drone industry is a diverse ecosystem featuring hundreds of participating companies producing different models. The Ukrainian military has used a variety of drones with different characteristics for attacks inside Russia, making the campaign even more challenging for Russia’s air defenses.

The decentralized nature of Ukraine’s drone manufacturing sector also makes it difficult for Russia to target. Even if the Kremlin is able to identify and hit individual production sites located across Ukraine, this is unlikely to have a major impact on the country’s overall output.

Since 2022, Ukraine has taken a number of steps to reduce bureaucracy and streamline cooperation between drone makers and the military. The result is a sector capable of adapting to changing battlefield conditions and able to implement innovations quickly and effectively. This includes efforts to create AI-enabled drones capable of functioning without an operator, making it far more difficult for Russia to jam.

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As it expands, Ukraine’s drone bombing campaign is exposing the weaknesses of Russia’s air defenses. Defending a territory as vast as Russia against air strikes would be problematic even in peacetime. With much of Russia’s existing air defense systems currently deployed along the front lines in Ukraine, there are now far fewer systems available to protect industrial and military targets inside Russia.

During the initial stages of the war, this shortage of air defense coverage was not a major issue. However, Ukraine’s broadening bombing offensive is now forcing Russia to make tough decisions regarding the distribution of its limited air defenses.

In addition to strategically important sites such as airbases, the Kremlin must also defend prestige targets from possible attack. In July, CNN reported that air defenses had been significantly strengthened around Russian President Vladimir Putin’s summer residence. Protecting Putin’s palace from attack is necessary to avoid embarrassment, but it means leaving other potential targets exposed.

Ukraine’s drone program is the biggest success story to emerge from the country’s vibrant defense tech sector, and is helping Ukraine to even out the odds against its far larger and wealthier adversary. The country’s partners clearly recognize the importance of drones for the Ukrainian military, and have formed a drone coalition to increase the supply of drones from abroad. This combination of international support and Ukrainian ingenuity spells trouble for Russia. It will likely lead to increasingly powerful and plentiful long-range strikes in the months ahead.

Marcel Plichta is a PhD candidate at the University of St Andrews and former analyst at the US Department of Defense. He has written on the use of drones in the Russian invasion of Ukraine for the Atlantic Council, the Telegraph, and the Spectator.

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The initiative also represents a significant part of Armenia’s peace agenda in the South Caucasus amid negotiations with Azerbaijan. Armenian leaders envision these renovated and newly built routes as conduits for cultivating economic, political, and cultural ties between the countries involved, thus advancing long-term peace and stability in the region. With the potential to economically benefit the region, promote peace and cooperation in the South Caucasus, and reduce Armenia’s dependence on Russia, the West should support the Crossroads for Peace plan with more robust diplomatic backing and infrastructure investment.

Decades of instability

The South Caucasus, straddling the juncture between Europe and Asia, has long been a region of strategic importance plagued by persistent instability and conflict. Most notable has been the Karabakh conflict between Armenia and Azerbaijan, which emerged in the early 1990s and led to the closure of the Armenia-Azerbaijan and Armenia-Turkey borders, severely restricting Armenia’s trade and hardening political divides.

The conflict experienced a significant turning point on September 27, 2020, when Azerbaijan launched a major offensive, triggering the worst escalation since 1994. After six weeks of intense fighting, a Russia-brokered ceasefire was signed on November 9, 2020, which stipulated concessions of Armenian-controlled territory within the internationally recognized borders of Azerbaijan. Azerbaijan blockaded Karabakh for nearly ten months starting on December 12, 2022, leading to a humanitarian crisis. On September 19, 2023, Azerbaijan launched a military assault that seized full control of Karabakh and forced more than one hundred thousand ethnic Armenians to flee to Armenia. The United Nations estimates that only about fifty Armenians remain in the region.

The Karabakh conflict ended on January 1, 2024, with the Karabakh authorities announcing that their unrecognized government ceased to exist. Consequently, the initial rationale behind the closure of the Armenia-Azerbaijan and Armenia-Turkey borders no longer holds. Despite this, both Azerbaijan and Turkey, with the latter often aligning with the former’s policies, continue to refuse to reopen their borders with Armenia. This refusal persists even in the face of Armenia’s Crossroads for Peace initiative—a proposal that would be beneficial for regional development.

Corridors and crossroads

The Trans-Caspian Corridor, also known as the “Middle Corridor,” is an increasingly important channel for transportation and cross-border trade connecting the Central Asian states with Europe. It primarily involves the transport of goods and resources across the Caspian Sea, bridging Central Asian countries such as Kazakhstan and Turkmenistan to Azerbaijan via maritime routes. From Azerbaijan, the goods are then transported through Georgia and Turkey, reaching European markets. Though trade volumes and capacity are still relatively low, the corridor holds immense strategic opportunities, as it offers a viable alternative to the traditional, longer routes through Russia or the southern maritime paths via the Suez Canal, significantly reducing transit time and avoiding geostrategic hotspots.

The Eurasian Northern Corridor, offering both road and rail options, is currently the primary route for transcontinental transport but largely traverses Russian territory. Western sanctions, investment deterrents, and financial restrictions tied to Russia’s war on Ukraine complicate this corridor’s use, and potential instability in Russia might eventually further weaken this route’s reliability. More direct routes through Central Asian and South Caucasus nations could diminish the value of the Eurasian Northern Corridor, aligning with US and European Union efforts to reduce dependencies on Russia. The development of the Trans-Caspian Corridor offers such a strategic alternative, diversifying energy supplies to Europe and enhancing trade connectivity between Asia and Europe, while bypassing Russian influence.

Armenia’s Crossroads for Peace initiative, therefore, would create a vital complementary set of routes, enhancing the strategic depth and utility of the Trans-Caspian Corridor. By developing infrastructure such as the Yeraskh-Julfa-Meghri-Horadiz railway, Armenia would offer new logistic pathways linking the Caspian region directly to the Mediterranean and Black seas through Armenian territory. This would not only shorten transit times and distances between Asia and Europe but would also introduce reliable alternative routes.

Additionally, the integration of Armenia into the Trans-Caspian Corridor could stimulate economic growth in the region by attracting foreign investment focused on logistics and infrastructure development. Armenia could become a central node in Eurasian trade, enhancing the corridor’s capacity and security. This strategic expansion would diversify the transport routes available to major trading powers and fortify the economic independence of Armenia and its neighboring countries by reducing their reliance on Russia.

Moreover, the Crossroads for Peace initiative is premised on the principles of sovereignty and jurisdiction, ensuring that infrastructure within each country’s borders remains under its control. The idea is to promote mutual respect and cooperation among its neighboring nations, facilitating equal and reciprocal management of border and customs controls. This ensures that each country would be able to safeguard its interests while promoting shared economic growth.

Obstacles in the path

However, Crossroads for Peace faces significant geopolitical hurdles. Azerbaijan has so far refused to support Armenia’s initiative, with analysts stating that neither Baku nor Ankara had been consulted. While the Armenian government should intensify its outreach on Crossroads for Peace, Armenia’s neighbors should judge the initiative in good faith on commercial viability, rather than on geopolitical grounds.

If realized, Crossroads for Peace could significantly benefit both Azerbaijan and Turkey by boosting regional trade and opening new markets. For Azerbaijan, it could provide a more direct route to European markets, while Turkey could see enhanced trade corridors that bypass less stable regions. Additionally, the project could serve as a diplomatic bridge, easing longstanding tensions and transforming a historical conflict into a hub of international commerce. For Turkey in particular, supporting this initiative could strategically position it as a peace broker in the region, which could strengthen its diplomatic relationships not only with its immediate neighbors but also across Europe and into Asia. 

Baku has instead called for the development of the “Zangezur Corridor,” which would connect mainland Azerbaijan directly with its exclave of Nakhchivan through Armenia’s southernmost Syunik province. Azerbaijan’s conception of Zangezur includes not only a railway link, but also a highway between the two parts of Azerbaijan, and demands that it would have extraterritorial status, which would require Armenia to cede control over a strip of its own territory. Crucially, Zangezur envisions opening a single transit route with Azerbaijan, whereas Crossroads for Peace aims to open several border crossings with both Azerbaijan and Turkey.

Armenia has firmly stated that any discussions involving the loss of sovereignty and territorial integrity or third-party control over its territory are nonnegotiable red lines. Indeed, Baku has insisted that a detachment from Russia’s Federal Security Service guard Zangezur; having just kicked Russian border guards out of the country, it’s understandable why Armenia would balk at the installation of more Russian agents on its territory.

Azerbaijan’s Zangezur plan is also detrimental to Western interests in several ways. First, it would hinder the broader Western strategic objective of stabilizing and economically developing the South Caucasus—critical for energy routes and geopolitical balance among Europe, Asia, and the Middle East. By stalling broader regional integration initiatives, Azerbaijan’s position perpetuates dependence on existing routes that run through Georgia, which face logistical and capacity hurdles, and which could be susceptible to disruptions by external geopolitical influences.

This ongoing tension and the resultant lack of comprehensive peace and cooperation in the South Caucasus allows Russia and Iran to exert their influence there. Armenia’s isolation forces it to maintain its reliance on Russia, countering Western efforts to promote democratic governance and market liberalization in the area. This situation becomes increasingly dangerous as autocratic Azerbaijan deepens its ties with Russia. Simultaneously, Iran benefits by positioning itself as a crucial partner for Armenia in energy and trade, while also providing diplomatic support by rejecting the Zangezur plan to maintain clout in the South Caucasus.

By keeping the Armenia-Azerbaijan and Armenia-Turkey borders closed, Azerbaijan impedes Armenia’s economic and connectivity opportunities, limiting the scope for Western engagement and investment in the region. This keeps Armenia overly dependent on trade with Russia. Baku has long complained about Armenia’s close ties with Russia and should welcome Yerevan’s desire to open trade with Azerbaijan and Turkey, as well as its commitment to leave the Moscow-led Collective Security Treaty Organization.

The Crossroads for Peace initiative, therefore, offers a more promising path. By opening up the region and paving the way for a new era of mutual economic growth and cooperation in the South Caucasus, Crossroads for Peace could serve as a catalyst for regional stability and prosperity. This initiative not only counters the restrictive nature of the Zangezur plan but also aligns economic incentives with geopolitical opportunities.

How the West can help

Armenia’s Crossroads for Peace initiative deserves more robust support and engagement from Western nations. By backing Armenia’s efforts to integrate into the Trans-Caspian Corridor and promote cooperation across the South Caucasus, Western countries can help ensure that the region develops into a vibrant economic hub that is less dependent on Russia. Increased investment in infrastructure, clear diplomatic backing, and strategic partnerships, such as the recent upgrade in US-Armenia relations, can solidify the West’s commitment to promoting a more balanced geopolitical landscape in this region.

This should start with applying diplomatic pressure on Turkey and Azerbaijan to engage constructively with the initiative and entering security pacts with Armenia that help deter aggression and maintain open and secure trade routes. Subsequently, Western countries should implement targeted funding and financial incentives along with technical assistance for the construction and modernization of infrastructure in the region. Potential new trade agreements and the promotion of private sector involvement encouraging Western businesses to invest in and partner with local firms within the framework of Crossroads for Peace would also help make the initiative more viable.

Enhanced Western support for Armenia could also serve as a catalyst for broader regional cooperation and prosperity, setting a precedent for peaceful conflict resolution and cooperative development efforts. Western policymakers should therefore help integrate Crossroads for Peace into regional connectivity plans that promote open, stable, and cooperative international systems and can make Armenia a key player in the diversification of transit routes across Eurasia.

Sheila Paylan is a human rights lawyer and senior legal consultant with the United Nations. The views expressed herein are her own and do not necessarily reflect those of the United Nations.

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An instigating ingredient added this past weekend was the disappointing jobs report released on Friday. Analysts expected 180,000 jobs—which would signal a slowdown but still relatively healthy job growth. This was, it seems, what the Federal Reserve expected last Wednesday when it decided not to cut interest rates and its chair, Jerome Powell, said, “the labor market has come into better balance.”

Instead, 114,000 jobs were created in July. This was disappointing, and some believed it signaled that the United States is headed for slower growth than forecast and even—dare one say the dreaded word—a recession. But within a day or two, most market participants had taken a deep breath, recognizing that bad weather probably had an impact, remembering that unemployment was still near historic lows, and aware that US gross domestic product growth was far outpacing that of the rest of the Group of Seven (G7).

Then Japan happened. As several financial commentators have noted, a unique mix of problems is plaguing Japanese markets. The Bank of Japan had stuck to zero interest rates during the global cycle of rate hikes but was forced to intervene last week to avoid further yen depreciation. This now means that Japanese borrowing conditions are becoming tighter as recession risks grow, making it an outlier during the coming easing cycle—just as it was during the global cycle of rate hikes. The record Nikkei index rout on Monday can also be attributed to the export-oriented nature of Japanese firms, which had benefited from the weak yen, until now.

So why then did US markets react so violently Monday? It’s not just the jobs report and it’s not just Japan. Instead, it’s the x-factor ingredient—geopolitics. Specifically, Iran’s likely imminent attack on Israel, as retribution for the assassination of Hamas political leader Ismail Haniyeh in Iranian territory.

Pricing in geopolitics is almost always an impossible task for Wall Street. Speculation about equity markets is one thing. Speculation about Ayatollah Ali Khamenei’s intentions is usually far outside traders’ field of expertise. With more uncertainty comes more fear—see the VIX index, which is essentially Wall Street’s fear gauge, below—surprisingly showing that the market is more concerned now than it was during Silicon Valley Bank’s collapse in March 2023. In fact, it’s the highest volatility reading since the COVID-19 pandemic, rivaling volatility during the global financial crisis.

What’s especially hard for markets is to navigate a geopolitical crisis intertwined with bad economic news. Individually, either one can be mitigated and hedged against. But together, the two developing at the same time create a haze that can make each situation appear more threatening than it actually is. How then do we find solid ground? Focus on the data.

The US economic data remains strong. The economy is slowing, but it is nowhere near a recession. And in fact, as the chart below shows, it could slow significantly before falling to the level of its G7 peers.

Moreover, data released Monday show that economic activity in the service sector grew more than expected. And remember that the United States is still creating new jobs, even if at a slower pace than before. Gas prices are significantly lower than two years ago at the outset of Russia’s full-scale invasion of Ukraine. So even if a crisis widens in the Middle East, a slower global economy should keep price increases in check.

Meanwhile, inflation is finally coming back down to the Federal Reserve’s target range of 2 percent. All this signals an economy that is, as long forecast, coming off its breakneck pace. The Federal Reserve should probably have acted sooner by cutting rates last week, but to jump into an emergency session as some have called for is not supported by the data right now and risks creating more panic. The economic fundamentals remain stable.

Geopolitical tensions actually present the greater risk to markets. No one knows how and when Iran will retaliate and what the fallout will be. And as I wrote in February, the relative weakness of the region’s economies means any worsening of the situation could send multiple countries into debt distress and trigger more market failures.

Still, the overwhelming likelihood is that whatever develops in the Middle East this week will be contained to the Middle East. While that may impact energy prices, it is unlikely to trigger wider global economic fallout. To be sure, nothing is guaranteed. The situation could deteriorate and the worst fears could be realized. But it is not the most likely outcome.

So in the days ahead, it’s geopolitical tensions that will likely move the markets more than the macroeconomics. Watch carefully in the coming days (or as Macbeth would say, “tomorrow, and tomorrow, and tomorrow”) as markets recognize this reality and, hopefully, cooler heads prevail.

Josh Lipsky is the senior director of the Atlantic Council’s GeoEconomics Center and a former adviser at the International Monetary Fund.

Data visualizations created by Alisha Chhangani, Mrugank Bhusari, and Sophia Busch.

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Since the start of Russia’s full-scale invasion in February 2022, Russia has destroyed, damaged, or occupied approximately eighty percent of Ukraine’s electricity infrastructure. The situation has deteriorated sharply since March 2024 following a wave of Russian attacks on Ukrainian power plants that have devastated the country’s thermal capacity.

Ukrainian energy sector officials believe that during the coming winter season, peak demand could be above eighteen gigawatts, with average consumption likely to hover around fifteen gigawatts. However, remaining capacity is just over ten gigawatts. Unless significant new sources can be secured, Ukrainians will have to deal with extended blackouts amid subzero temperatures. This could lead to a humanitarian catastrophe and create new waves of refugees fleeing to the EU.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Looking ahead, there is no substitute for much needed air defenses to protect Ukraine’s remaining energy production capacity. However, additional steps from the Ukrainian authorities and Kyiv’s partners could help prepare the country for the coming winter season.

A July 2024 report funded by Germany’s Federal Ministry for Education and Research has identified a number of short-term measures that could be adopted swiftly to at least partially plug current shortfalls. Fast repairs of thermal and hydro plants together with the deployment of small-scale gas-fired turbines and solar panels could bring approximately 3.4GW of additional capacity online before temperatures start to drop. Donations of spare equipment are also absolutely vital, while Ukraine should intensify work with partners to establish stockpiles of components to rebuild generation capacity.

One of the most promising initiatives would involve increasing cross-border capacity with neighboring EU countries operating under the umbrella of the European Network of Transmission System Operators for Electricity (ENTSO-E). Ukraine synchronized with the ENTSO-E grid in March 2022. Since then, Kyiv has increased cross-border capacity significantly, but there is still scope for a further expansion of interconnection capacity by approximately 0.3GW ahead of the coming winter season. This may be easier said than done, however.

Hungary and Slovakia are key exporters of electricity to Ukraine but are currently threatening to cut flows after Kyiv introduced a partial ban on the transit of Russian oil to refineries in the two EU countries. Budapest and Bratislava have long benefitted from cheap Russian energy imports and have faced accusations of acting in the Kremlin’s interests by blocking EU financial and military support to Ukraine. Both countries could now undermine efforts to boost energy exports to Ukraine.

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While there has not yet been any disruption to electricity flows from the EU into Ukraine, it is clearly in Kyiv’s interests to avoid disagreements where possible and to seek enhanced energy partnership with the country’s European neighbors. Closer cooperation with Slovakia and Romania in particular could pay major dividends. Indeed, recent research has found that transmission capacity could be more than doubled to five gigawatts. This could provide greater energy security, create jobs, and attract significant investments.

If completed, one existing power line project linking Slovakia and Ukraine could bring additional capacity of one gigawatt, enough to supply a million consumers. Work on this line began in 2013 and is seventy percent complete on the Ukrainian side, but nothing has yet been done on the Slovak side. Similarly, a proposed electricity power line linking Ukraine’s Pivdennoukrainska nuclear power plant to Romania would not only bring an additional one gigawatt of transfer capacity, but could also potentially end nearby Moldova’s dependence on electricity generated in the Kremlin-controlled Transnistria enclave.

Despite the numerous benefits offered by these projects, the Romanian and Slovakian governments remain unwilling to commit. This lack of political cooperation may contribute to a humanitarian crisis in Ukraine during the coming winter months that could spill over into neighboring countries. With the countdown to the cold season now already underway, there is no time to lose. Helping Ukraine to keep the lights on should be a priority for the whole of Europe.

Dr. Aura Sabadus is a senior energy journalist who writes about Eastern Europe, Turkey, and Ukraine for Independent Commodity Intelligence Services (ICIS), a London-based global energy and petrochemicals news and market data provider. Her views are her own.

Further reading

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The West’s collective fear of escalation and reluctance to commit to Ukrainian victory have convinced Putin that he can outlast his opponents and achieve an historic triumph in Ukraine, writes Mykola Bielieskov.

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The Russian Navy’s quiet retreat from Crimea highlights the emptiness of Putin’s red lines and the self-defeating folly of Western escalation management, writes Peter Dickinson.

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Ukrainian fencing star Olga Kharlan has won the country’s first medal at the 2024 Paris Olympics and dedicated her medal to the Ukrainian athletes “who couldn’t be here because they were killed by Russia,” writes Mark Temnycky .

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Where does Europe stand on the green agenda? Are concerns over a wide spread “greenlash” in Europe exaggerated? Why did climate policy not play as much of a significant role in the last European Parliament elections compared to the elections in 2019? Under her next Commission mandate, will Commission President von der Leyen bring continuity on climate change policy in the EU?

On this episode of #AtlanticDebrief, Carol Schaeffer sits down with Nils Redeker, Deputy Director Jacques Delors Centre, to discuss European voter sentiment on climate policies and the future of the EU’s approach.

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It is a crucial time in Mexican energy politics. While there are important challenges to address, Sheinbaum’s initial moves are a promising beginning to maximizing Mexico’s economic potential, which requires significant investment in clean energy.

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Uncertainties complicate investment in clean energy

Under Mexican law, the new Congress takes office on September 1, but the new president takes office on October 1. The current government intends to present constitutional reforms to the new Morena-dominated legislature—the ruling party that will now likely have a supermajority—in a manner that could challenge certain policy adjustments by the new government. To that end, AMLO has stated that electoral and judicial constitutional reforms are his legislative priorities—repealing the 2013 energy reforms, which enabled an influx of foreign and private investment in Mexico’s energy sector during the mid-2010s, is not.

The outgoing government introduced complexities to private investment, especially in clean energy. These include suspending auctions in oil, gas, and clean energy, giving priority to the state electricity system operator CFE’s established fossil-based generation over cleaner and cheaper alternatives, and suspending implementation of the clean energy certificate program, which incentivized conversion to less carbon intensive electricity. Several of these actions are now the subject of disputes under the United States-Mexico-Canada Agreement (USMCA), and have disincentivized foreign investment in manufacturing, due to companies’ strict carbon-emission reduction targets—for them to set up shop or expand in Mexico, they require access to clean energy.

The government has also taken steps to prioritize Mexico’s long-established fossil-based power sector, but production by national oil champion Pemex is at historic lows despite a consistent influx of federal spending to revive the flagging company, which faces a looming debt crisis. Meanwhile, CFE is struggling to power Mexico’s growing economy amid the burdens of extreme heat and other climate-exacerbated energy challenges.

The federal government is in a challenging fiscal position, as its budget deficit is forecast to grow this year.  In addition, there appear to be adverse market reactions to controversial, proposed judicial reforms, which include appointing judges by popular vote. Some foreign investors remain cautious, particularly in the energy sector.

Mexico’s golden economic opportunity requires clean energy to sustain it

Despite these investment challenges, Mexico holds vast potential as a nearshoring destination. For Mexico to capitalize on the USMCA and its proximity to the lucrative US export market, it will need to expand its energy supply not only for manufacturing, but also to power artificial intelligence use by data centers, which will increase demand for clean energy exponentially.

It will be in the interest of both US government and energy industry stakeholders to help Sheinbaum find a way to navigate among Morena’s different groups to develop a pragmatic policy approach that moves forward Mexico’s energy security and transition while maintaining a leading role for Pemex and CFE, which remains a central element of Morena’s policy platform. Public-private partnerships of many forms can be part of the solution.

It will be challenging but possible for Sheinbaum to retain the primacy of Pemex and CFE while also giving foreign and domestic investors full confidence that they will receive permits to build and obtain reasonable returns without fear that a popularly elected judiciary and weaker national regulators will undermine their projects.

Serious policymakers will be in charge

Sheinbaum wants to make her own mark on history as the first female president of Mexico, but faces a tough road ahead. The most important benchmarks will be her cabinet appointments, her commitment to a predictable and transparent policymaking process, and her engagement on the USMCA, which comes up for review in 2026.

The composition of Sheinbaum’s cabinet will be an indication of her intent to meaningfully address Mexico’s energy and fiscal challenges. So far, the news is positive, with serious policy professionals being tapped for high-level appointments. Current Finance Minister Rogelio Ramírez de la O, who is familiar with the overall fiscal challenge, including that posed by Pemex and CFE, is slated to remain in his post. Former Foreign Minister Marcelo Ebrard, a highly experienced and capable politician, was named economy minister and will play a steadying hand. Luz Elena González, an economist who until recently was finance secretary of Mexico City, will be the secretary of energy, demonstrating that the government understands the relevance of public finances for energy policy. Finally, current Foreign Minister Alicia Bárcena, who is experienced in environmental issues, will become environment minister and could be a relevant actor on energy transition.

The path forward

Sheinbaum’s commitment to clear, predictable policies will be an important marker of her style of governance. This can send positive signals to investors in areas such as energy import permits and infrastructure investment. Her approach to the 2026 USMCA review—which will be deeply impacted by whoever wins the US presidential election in November—will be another test of the Sheinbaum administration’s ability to navigate a delicate bilateral relationship. That review will be a top-line issue for both the US and Mexican governments, and early consultations are already underway. Energy will loom large in this review; both the US government and private stakeholders have a powerful motivation to ensure that energy disputes do not undermine the USMCA—they need it to remain strong enough to provide certainty for the wider cross-border relationship.

Sheinbaum has much to gain from reassuring investors, capitalizing on Mexico’s advantages in nearshoring, and addressing the country’s slow energy transition. She can creatively design a framework that respects Morena’s political stance on energy while increasing investor confidence. Sheinbaum will be looking for able and willing partners to craft solutions that maximize the potential of foreign investment and job creation in Mexico. Undoubtedly, the energy industry and civil society on both sides of the border all have a major interest in helping her succeed.

David L. Goldwyn served as special envoy for international energy under President Barack Obama and assistant secretary of energy for international relations under President Bill Clinton. He is chair of the Atlantic Council’s Energy Advisory Group.

Antonio Ortiz-Mena is a professor at the Center for Latin American Studies, Walsh School of Foreign Service, Georgetown University, and a partner at DGA Group.

The views expressed are the sole responsibility of the authors and not necessarily those of any institution with which they are affiliated.

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As the United States seeks to nearshore supply chains, Mexico’s energy sector presents a valuable opportunity for collaboration. By easing regulations on the private sector, Mexico can facilitate US energy investment without impeding its own vision for growth.

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While previous G20 meetings have been noteworthy for their disagreements, Brazil has emphasized substance and consensus over geopolitics during its G20 presidency. Felipe Hees, the Brazilian diplomat and sous-sherpa of this year’s G20 presidency, explained this strategy on July 25 at an Atlantic Council conference on the sidelines of the meeting. Brasília, he said, has sought to acknowledge fundamental disagreements on geopolitics between some members, and then to sidestep them entirely at the ministerial level. The big question now is: How long can this approach last?

So far, Brazilian officials have chosen to focus on economic development issues that already enjoy widespread support. Last week, this approach resulted in one of the few joint G20 ministerial-level communiqués in the past two years. Released on July 26, this communiqué displays G20 members’ alignment on launching the Global Alliance against Hunger and Poverty under the Brazilian presidency. It’s an important topic for the host country, since Brazil is the world’s leading producer of soybeans, corn, and meat, and Brazilian President Luiz Inácio Lula da Silva has emphasized his country’s role in alleviating global food insecurity. At the same time, the issue has a wider resonance. At the Atlantic Council conference, Cindy McCain, executive director of the World Food Program, emphasized that “food security is a national security issue, and it should be labeled as one.”

Climate finance and the energy transition were at the forefront in Rio last week as well. Discussions focused on how to mobilize the public and private sector in achieving climate goals. At the Atlantic Council’s conference, Renata Amaral, the Brazilian secretary for international affairs and development in the Ministry of Planning and Budget, formally called for technical assistance from multilateral development banks for catastrophic weather events, such as the floods in southern Brazil this May. Immediately following the summit, US Treasury Secretary Janet Yellen headed to Belém, the capital city of the northern Brazilian province Pará. Located near the mouth of the Amazon River, Belém was a symbolic choice for the unveiling of the US Treasury’s Amazon Region Initiative Against Illicit Finance, which is intended to help combat nature crimes.

Another issue that garnered attention last week was wealth inequality, which the Brazilian president spotlighted in his speech on June 24. “The poor have been ignored by governments and by wealthy sectors of society,” he said. Despite disagreements on whether the G20 is the right forum for the issue, it issued the first ever ministerial declaration on taxation. While Brazil’s ambition was to move the needle on a 2 percent global wealth tax, the declaration simply said that ultra-high-net-worth individuals must pay their fair share in taxes. While this fell short of Brazil’s hopes on this issue, the meetings in Rio have done more on building consensus than the past two presidencies, which have been rife with outbursts over geopolitical issues between member states.

In 2022, the then G20 president, Indonesia, saw its plan to build international cooperation for the post-pandemic recovery paralyzed by Russia’s full-scale invasion of Ukraine in February. When finance ministers and foreign ministers met in April and July of the year, officials from Russia and from the United States and Europe walked out of the room when their counterparts spoke. Ministers failed to agree on a communiqué, and negotiations on climate and education also broke down over criticisms of the war. Ahead of the leaders’ summit in November 2022, Western leaders balked at the thought of sharing a table with Russian President Vladimir Putin, who ultimately did not attend the summit. In the end, the leaders could only agree to a declaration that was a broad, noncommittal summary of approaches to addressing global challenges.

Last year, India focused its G20 presidency on depoliticizing the issue of the global supply of food, fertilizers, and fuels, as well as on addressing climate change and restoring the foundations of negotiations at the forum. Its strategy was to move geopolitics off center stage by highlighting perspectives from the “Global South,” including formally adding the African Union as a full member, and thus shaping the platform as an action and communication channel between advanced economies and emerging markets.

This was difficult. Shortly into India’s presidency, Russia and China withdrew their support for the text in the Bali statement on Ukraine. At the technical level, none of the ministerial meetings produced a joint communiqué, and New Delhi was forced to issue chairs’ statements instead. Since the leaders’ summit in New Delhi, the outbreak of war between Israel and Hamas in October 2023 has made the job of navigating geopolitical tensions all the more difficult for Brazil.

While the Russian and Chinese leaders did not attend last year’s leaders’ summit, the New Delhi Declaration was nevertheless bolder and more specific than its Bali predecessor. It set the agenda for the G20 for the years ahead but offered few specifics on how to achieve these goals.

Will Brazil’s strategy of sidestepping geopolitics work at the leaders’ summit scheduled for November 18-19 in Rio? Finance ministers and central bank governors can ignore geopolitics; presidents and prime ministers often cannot. If Brasília concludes technical negotiations on the various proposals ahead of the leaders’ summit, then consensus-building at the gathering will be easier, as geopolitics will remain just an elephant in the room.

If Brazil is successful, it can end the stalemate that the G20 has found itself in and remake it into a relevant economic coordination body—one that can adequately address the goals of its emerging market and advanced economy members. If Brazilian officials are not successful, however, the forum’s relevance may begin to wane.

It has been in the interest of the last few G20 presidencies to keep up the balancing act between the United States, China, and Russia. Moreover, it is likely that South Africa will follow this approach as it takes on its presidency in 2025. As many of the discussions in Rio noted, however, what happens in the US presidential elections this November could determine both the relevance and the tone of the G20 meetings going forward.

Ananya Kumar is the deputy director, future of money at the Atlantic Council’s GeoEconomics Center.

Mrugank Bhusari is assistant director at the Atlantic Council’s GeoEconomics Center.

The post Dispatch from Rio: Can Brazil set the G20 leaders’ summit up for success? appeared first on Atlantic Council.

Does the new EU-Serbia lithium deal undermine democracy? The European Union’s recent memorandum of understanding with Serbia on raw materials has sparked debate across the Balkans. Signed during German Chancellor Olaf Scholz’s visit, the MoU revives a controversial lithium mining project, drawing opposition from many Serbians.

In this episode, Nonresident Senior Fellow Ilva Tare is joined by Ivan Vejvoda, Permanent Fellow at the Institute for Human Sciences and Head of Europe’s Futures Project in Vienna, to dissect this complex issue.

Does Mr. Vejvoda share the criticism that the EU and Germany are prioritizing lithium access in Serbia over essential democratic principles like environmental protection, rule of law, and independent media?

With concerns about weak independent institutions and a critical public sphere in Serbia, can the country uphold high environmental and social standards?

How can the EU ensure that such agreements maintain rigorous environmental and social principles?

Could this agreement reduce Serbia’s reliance on China, and what might be the broader geopolitical implications?

Join #BalkansDebrief for an in-depth discussion on the potential impacts of this deal and the geoeconomic and geopolitical interests of the EU in the Western Balkans.

#BalkansDebrief is an online interview series presented by the Atlantic Council’s Europe Center and hosted by journalist Ilva Tare. The program offers a fresh look at the Western Balkans and examines the region’s people, culture, challenges, and opportunities.

Watch #BalkansDebrief on YouTube and listen to it as a Podcast.

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Climate change cost estimates by 2049 will be close to $40 trillion per year for countries such as Germany and the United States. How is Germany managing both the scale of the climate problem and related economic costs? What is the German government doing to get citizens onboard to support climate change policies? What is the role of technological innovation in Germany when it comes to combatting climate change? And what is Germany doing to decarbonize its industrial sector? What role can a post-war Ukraine play in the green energy sector in Europe, and what are the possibilities for bilateral energy trade between Ukraine and Germany?

On this episode of #AtlanticDebrief, Carol Schaeffer sits down with Dr. Lukas Köhler, member of the German Bundestag, to discuss Germany’s approach to climate policy and green energy opportunities.

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Carol Schaeffer

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The post #AtlanticDebrief – What is Germany’s approach to climate policy? | A Debrief from Lukas Köhler MdB appeared first on Atlantic Council.

In the Call to Action, the secretary-general makes clear that governments and policymakers must protect and care for the lives and livelihoods of frontline communities, protect workers, advance the evidence base to drive innovative resilience solutions, and limit global temperature rise to 1.5 degrees Celsius. 

This clear recognition from the Office of the Secretary-General is an important moment for us all. Extreme heat is often underestimated and ignored, but its impacts are unavoidable. The planet is heating up faster than we thought. We are outside scientific model predictions and extreme weather events are becoming more frequent and devastating. 

Rising heat affects our major critical systems—such as water, energy, food, transportation, and communications. It also feeds mega droughts, wildfires, and storms, creating cascading and compounding crises. It’s a global crisis. But we are not ready for any of it. We’re sleepwalking.

In my work as global chief heat officer and first chief heat officer for the city of Athens, I have worked directly with cities and have seen the impacts of heat firsthand. Cities are heating up at twice the rate of the global average. At 1.5 degrees Celsius of global warming, sixty-seven cities will experience 150 or more days per year of temperatures exceeding 35 degrees Celsius (95 degrees Fahrenheit). At 2 degrees Celsius, the number jumps to ninety-four cities. At just under 3 degrees Celsius of global warming, it soars to 197 cities.  

Policies to address extreme heat so far remain scattered, disjointed, and underfunded. But the rising temperatures mark a global crisis with local impacts. That’s why the global focus of the UN’s Call to Action is so crucial. Increasingly, our world is facing challenges that go beyond the capacity and limited mandate of single nation states. We’re facing crises, like climate change, that need international cooperation to support and facilitate equitable, multilevel, science-based decision making and solutions. The UN is the only legitimate multilateral governance structure able to address issues that need global mobilization and localized solutions. As cities take on climate change, they need support at every level.  

In 2022, globally, humanity spent a little over one trillion dollars on adapting to and mitigating the effects of climate change. For comparison, the world spent $11.7 trillion on COVID-19 emergency fiscal measures in 2020 alone. As temperatures rise, this funding gap is a dangerous threat. And there is another issue that needs to be urgently addressed: In 2022, about one trillion dollars went to financing emissions mitigation, while only one hundred billion dollars went to adaptation and resilience-building initiatives. We urgently need both climate adaptation and resilience financing. 

The UN’s Call to Action is an important milestone for climate resilience, but it is also only the beginning. As the document explains, the world urgently needs a Global Action Strategy to “mobilize governments, policy makers, and all stakeholders to act, prevent, and reduce heat risk.” A dedicated trust fund for urban heat resilience initiatives is also needed, because cities are on the frontlines of extreme heat, and they are where more than half of the world’s population lives—a share that is expected to rise to seven-in-ten people by midcentury. Finally, more dedicated heat champions, like the community of chief heat officers established by the Arsht-Rock Resilience Center, with heat resilience departments that can articulate the challenges and co-create the best solutions are needed. These champions are critical to ensuring that the dangers of—and the solutions to—extreme heat are understood widely.

Each of these essential efforts, as well as others, requires building an international consensus around the scope of the problem and its solutions. Here, the UN’s Call to Action on Extreme Heat can help shape conversations in positive directions at upcoming conferences such as Climate Week NYC and this year’s UN Climate Change Conference of the Parties, also known as COP29. Heat resilience must be at the top of the agenda at these and other international meetings, and work is needed at every level to ensure that cities have the support and finances they need to scale solutions.

As the Call to Action makes clear, everyone is at risk from extreme heat, and we must enable resilience at the local and international level, taking “bold decisions to change the way we live to avoid an even more scorched Earth in the future.” 

Eleni Myrivili is the world’s first global chief heat officer, a role jointly created and appointed by the Atlantic Council’s Arsht-Rock Resilience Center and the United Nations Human Settlements Programme (UN-Habitat).

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A mismatch between supply security, climate ambition, and grid capacity

Upgrading electricity grids to enable decarbonization is a worldwide issue. The International Energy Agency (IEA) estimates that global grid investments must double to reach $600 billion per year by 2030 to meet nationally set climate objectives. In Europe, a recent study by Eurelectric suggests that the EU and Norway must invest €67 billion in grids per year to realize carbon neutrality by 2050.  

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As the EU aims to reach a 42.5 percent—ideally 45 percent—share for renewables in its total energy mix by 2030, grid capacity must keep pace with rapidly growing clean energy generation.

Europe overall, including the UK, is making progress on renewable deployment, but a mismatch in grid capacity is already causing significant challenges. In Britain, for example, the connection queue for generation, storage, or energy-consuming projects waiting to be connected to the grid is projected to reach 800 gigawatts by the end of 2024. Grid congestion is also a major problem in the Netherlands, with industry and households asked to reduce demand at peak times to avoid blackouts. In Romania, a boom in state-backed prosumers without adequate storage facilities is placing significant stress on the grid.

Building the grid of the future

Currently, cross-border interconnections within the EU limit the amount of electricity that can be imported or exported, creating significant price discrepancies between neighboring states. Expected increases in electricity demand due to electrification will only exacerbate these distortions.

Enabling greater cross-border electricity trade is a must for solidifying energy security and solidarity across Europe. New high-voltage transmission lines could convert intermittent renewable generation into more baseload-like output by quickly moving excess clean electricity to regions in deficit.

To this end, debate continues in Brussels over creating an EU-wide supergrid that would enable high volumes of electricity to be transported across the continent. This would help level energy prices across borders, reduce equity concerns, and improve supply security over the short and long term.

Furthermore, the difficulties in predicting renewable energy generation and adapting consumption accordingly requires the digital transformation of energy grids. Digitalization can further integrate renewable generation through smart meters and smart appliances that can accurately forecast output and match it with flexible electricity consumption. This can help minimize grid congestion and enhance resilience in the face of intermittency.

Additionally, new sensor and software platforms can enable predictive maintenance that reduces the time infrastructure is out of service. Digital twins—virtual representations of physical power grids—use data analytics to model various scenarios, leading to higher operational efficiency, increased asset lifespan, and optimized energy flow. While a highly digitalized energy grid may also increase cyber threats, other sectors have demonstrated over decades that these threats can be mitigated through strategies that include rapid incident reporting to limit malware spreading and investment in threats monitoring systems.

The unavoidable but necessary cost

Upgrading and extending the grid would translate into higher tariffs paid by European end-users, who have already struggled with energy affordability. A spike in network tariffs could lead to negative social, economic, and—eventually—political consequences, as was seen during EU-wide protests in 2022, triggered by increasing energy bills.

Although these investments will impose direct and indirect costs on consumers in the short term, they will unlock over the medium and long term increased electrification and pass decreasing renewable generation costs onto rate payers. Today, onshore wind and solar photovoltaic energy are cheaper than new fossil fuel plants almost everywhere. The average cost of variable renewable energy generation is expected to drop further, from a levelized cost of electricity of $155 per megawatt hour in 2010 to $60 in 2028.

To finance these upgrades while minimizing the negative impacts on rate payers, new earmarked EU funds could complement tariff-based network revenues. While this has not been done before in advanced economies with complex electricity systems, policy innovation is required to keep the EU’s ambitious 2030 targets alive. 

Not investing in transmission and distribution would jeopardize both European energy security and climate ambitions. By stalling deployment of renewable generation and thereby the electrification of heating and transport, failing to invest in the European grid would prolong high levels of fossil fuel imports. This would keep energy bills high, leave Europe exposed to fossil fuel supply insecurity, and place at risk Europe’s social and political fabric.

Bottlenecks to be addressed

Beyond financing challenges, building power infrastructure is notably slow. In Europe in particular, permitting procedures cause significant delays. The IEA highlights that the United States and EU have the longest deployment times for distribution—around three years—and transmission lines—between four and twelve years. The COVID-19 pandemic has made the problem worse, creating high demand while constricting supply for power grid components. 

Regulatory frameworks are also constraining grid development. While the regulation of these natural monopolies has evolved in Europe to liberalize and unbundle the sector, national regulatory authorities need to deal with greater uncertainty; for instance, the rate of electrification and improvements on energy efficiency are difficult to predict. They will need to manage increased investment while encouraging innovation and keeping tariffs in check. Energy regulators must learn from previous experience, respond to current challenges, and anticipate future trends—all at the same time. 

The overlooked factor in European energy security

Energy security in Europe hinges on the state of its power grids. As reliance on renewable energy and electrification grows, existing grid infrastructure is struggling to keep pace, causing congestion and delays. Substantial investments in grid upgrades and modernization are essential for integrating renewables, accelerating the electrification of heating and transportation, building technical redundancies to enhance resilience, combatting cyber threats, and protecting against extreme weather events.

While difficult to sell politically, investments in grid infrastructure will ultimately pay off in lower energy bills for consumers and industry, compared to a business-as-usual scenario. Failing to achieve these objectives will imperil Europe’s security of supply and its capacity to build a resilient energy future.

Andrei Covatariu is a Brussels-based energy expert. He is a senior research associate at Energy Policy Group (EPG) and a research fellow at the Centre on Regulation in Europe (CERRE). This article reflects his personal opinion. 

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On July 22, IPSI nonresident senior fellow Ryo Hinata-Yamaguchi was quoted in Deutsche Welle regarding Japan’s strategic competition with China in the Pacific Islands. He emphasized that Japan aims to be a reliable partner to Pacific nations through infrastructure development and climate change efforts, in contrast to China’s significant investments and security agreements.  

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On July 17, GCH/IPSI nonresident fellow Parker Novak was quoted in Petroleum Australia regarding the development of petroleum hubs in Timor-Leste to support the Greater Sunrise gas project. Novak emphasized the strategic importance of these hubs in enhancing Timor-Leste’s capacity to handle large-scale energy projects and improving regional energy security.

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Australia Democratic Transitions

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What can be expected from a von der Leyen 2.0? Ahead of her confirmation, she laid out a raft of proposals in her political guidelines for the next Commission term—a combined effort to outline her vision and win over votes. The guidelines prioritize:

1. Building a more competitive Europe that balances regulation and innovation that facilitates Europe’s green transition, 
2. Boosting the EU’s defense ambitions, 
3. Pushing social and economic policies such as affordable housing, 
4. Sustaining agriculture and environmental policies, 
5. Protecting Europe’s democracy, and 
6. Standing up for Europe’s global and geopolitical interests.

In practice, this means her next term will mean more of a central and active role for the Commission—and for von der Leyen. But there will also likely be more roadblocks from the European Council and Parliament.

Start with her leadership style. In her first term, von der Leyen turned the Commission into the most important arm inside the EU at a time when crises came new and often. She served as the EU’s chief decision maker and negotiator during the COVID-19 crisis, helped coordinate Europe’s response to Russia’s full-scale invasion of Ukraine, and shaped the EU’s economic de-risking strategy and general hawkishness toward China, serving as Europe’s “bad cop” standing up to Beijing’s coercive and unfair trade practices. The grumblings of an overstepping and power-hungry Commission president from other arms of the EU and national capitals aside, European leaders still looked to the Commission and von der Leyen to take action.

The Commission’s role was boosted by its policy successes too. Her first term oversaw the adoption of major rules on the digital and green transitions. The EU pushed through world-leading digital regulations on artificial intelligence, online content moderation, and platform competition, and it incentivized semiconductor manufacturing. She also prioritized green policies to reduce emissions, including the Carbon Border Adjustment Mechanism and setting new emission reduction targets for cars, shipping, and factories.

For her second term, von der Leyen will seek to pick up where she left off. The Commission will also look to build itself a stronger role in the traditional defense and the economic security agendas, with an eye to boosting Europe’s defense capabilities against Russia and de-risking from China. Von der Leyen’s focus on a competitiveness agenda will push for greater innovation and industrial support while furthering the green transition. On Thursday, von der Leyen promised a “European competitiveness fund” and a “clean industrial deal” within the first hundred days of the Commission’s next mandate, along with greater investment in energy infrastructure and technologies. This will all come with a price tag, and more responsibility for the Commission.

As a consequence of a busy 2019-2024 legislative cycle, von der Leyen and her Commission must now see through a raft of new rules. On digital policy alone, the to-do list is a tall order. The EU is standing up new offices and hiring a new army of competition lawyers, boosting the already massive size and scope of the Commission.

But there will be limits to von der Leyen’s ambition as member states and the parliament will look to exercise their own power.

Europe’s political center is not what it was in 2019, and EU members will want their influence felt. Von der Leyen will have to contend with a growing number of populist leaders around the table at Council meetings. More far-right governments may pop up over the next five years, including in major countries such as France as Marine Le Pen’s National Rally gets ever closer to power. And as the Commission tries to take on a bigger role in traditional member-state driven policies, such as security and defense, von der Leyen will need to deal with more engaged member states looking to exact concessions or carveouts, or to wield their own influence at the EU level.

Far- and hard-right groups in the European Parliament are also on the rise, and they are looking to make a mark. In a shift from her first term, emboldened hard-right politicians are more eager to influence EU policy rather than just play spoiler to it. The growing number and influence of far-right and hard-right groups will likely add extra complexity to the legislative process, and legislation may need to pass with ad hoc coalitions rather than the tradition of grand coalitions of parliaments past.

Greater influence on the right may hamper the Commission’s regulatory ambition. Von der Leyen promised she would continue the green transition, but the EU’s green rules have already become a political target. The platforms of the center-right European People’s Party (EPP), von der Leyen’s own group, and the further right European Conservatives and Reformists, both have peppered in objections to onerous new regulations, especially those associated with the green transition. And the competitiveness debate is in large part spurred on by this backlash to the Commission’s regulatory appetite. This may be difficult for the Commission. Institutionally, the Commission is designed to present new regulations and proposals. It is the only arm inside the EU that can. But that desire will be a point of friction with the aversion among member states and Parliament to new, seemingly onerous, rules.

Von der Leyen will face challenges from beyond Europe, too. “We have entered an age of geostrategic rivalries,” notes the policy guidelines. To the east, Beijing will continue to try to split Europe and poison the EU’s de-risking agenda just as it is starting to take off. And supporting Ukraine against Russia’s full-scale invasion will require sustained attention and funds.

To the west, von der Leyen cannot ignore the upcoming US elections. A transatlanticist at heart, she pushed the EU closer together with the United States in her first term—in large part benefiting from a new EU-friendly US administration. She will likely face an uphill battle in strengthening transatlantic ties in the event of a second Trump administration. “They treat us very badly,” former President Donald Trump said to Bloomberg News when asked about the European Union on June 25.

Von der Leyen’s confirmation this week goes a long way already to set up the EU for success and avoids an own goal for team Europe. Rejecting her would have forced the European Council back to the drawing board to pick a new—and likely weaker—appointee, wasting more time on internal bickering and politicking when predictability, not chaos, is critical. It’s not hard to picture the jubilee from Beijing, taunts from Moscow, and even snide comments from Washington about EU dysfunction in the face of a no vote. In the words of Greek Commissioner Margaritis Schinas (and von der Leyen ally) on her appointment, “There is no plan B.” It is a good thing plan A worked.

James Batchik is an associate director at the Atlantic Council’s Europe Center.

The post What to expect from Ursula von der Leyen’s second term appeared first on Atlantic Council.

The higher demand for critical minerals is expected to cause a significant expansion in the extraction and production of an array of mineral resources. For example, the World Economic Forum projects that the production of minerals including graphite, cobalt, and lithium could increase by nearly 500 percent by 2050 to meet the growing demand for clean-energy technologies. Estimated to hold approximately 30 percent of the volume of critical-mineral reserves, the African continent is situated at the very center of the energy transition.

A considerable amount of minerals—for example, 25 percent of tin and 26 percent of tantalum production—is sourced by artisanal and small-scale mining (ASM): low-tech, labor-intensive mining operations in which workers (largely unskilled labor) use rudimentary tools and techniques to access mineral ore. ASM is an important source of rural employment in Sub-Saharan Africa, with an estimated ten million people in the region working as artisanal and small-scale miners—sourcing critical minerals but also other minerals such as gold. These workers are often driven to the sector by poverty. At least sixty million other individuals facilitate these informal supply chains.

However, many of these artisanal and small-scale miners work informally and face harsh conditions. Before critical-mineral production ramps up even further, African communities, stakeholders, and governments must take steps to formalize these workers—and the international community, including the United States, should help.

What is the problem?

In contrast with ASM, large-scale mining (LSM) is industrial and long-term, utilizing heavy machinery to extract resources. Furthermore, LSM has more geological information available to it and better access to capital and finance. Most importantly, LSM generally operates within the rules of law and adheres to international standards and regulations. It is accompanied by many challenges, however, including causing ecological and habitat damage; polluting the water, air, and soil; and threatening human health. Even where mining operations are conducted legally and formally, they still pose significant environmental and socioeconomic problems.

Although vastly different types of mining, ASM and LSM often take place in overlapping spaces, with ASM operations appearing on the periphery of larger industrial sites. Artisanal miners frequently live and work in areas earmarked for large-scale mining projects, blurring the line between the two. This is exemplified by the presence of illicit or licit networks of middlemen who transport ore from ASM sites to LSM companies and processing facilities. Middlemen often aggregate minerals from various sources, including both ASM and LSM operations, making it especially difficult to trace the origin of the minerals. The fragmented and opaque nature of the mineral supply chain complicates the traceability of products from upstream suppliers to downstream companies.  

There are many challenges associated with artisanal mining. At least 90 percent of artisanal miners work informally, without the necessary licenses or permits required by law. Securing permits improves miners’ access to services they are unable to access in the informal economy—such as microfinance credit, grants, and government loan facilities, which, in turn, place the miners in a better position to accumulate wealth. In many cases, ASM activities are found in regions that are out of reach of regulators, where the institutional presence of the government is weak. By operating outside of state recognition, it becomes impossible for the government to establish and enforce health and safety standards and regulations.

With informal mining operations flying under the radar of the government, either by the design of mining site owners or willful ignorance on the part of the government, workers are routinely exposed to poor labor conditions and dangerous situations. Artisanal miners often work without proper tools and protective gear in unsupported and poorly ventilated underground shafts where, as Amnesty International points out, temperatures can be extremely high. Exposure to the dust and mineral waste generated from these mines can lead to potentially fatal diseases and health conditions, and the dust and waste also contributes to pollution and environmental degradation in the area surrounding the mine.

Across the African continent, artisanal mining has been linked to human-rights violations, forced labor, crime, and conflict. These issues, compounded with artisanal miners’ lack of legal rights, exacerbates their vulnerability and the cycles of poverty and exploitation they face.

More at stake

The problems in ASM often present a significant barrier to sustainable foreign investment in African critical minerals. The aforementioned problems in the artisanal sector have made Western business interests hesitant to invest in Africa’s critical minerals. Poor labor practices and human rights violations associated with ASM could expose global companies to reputational and regulatory risks. These concerns—combined with pressure from non-governmental and human-rights organizations—make investment in ASM a complicated and risky proposition.

This barrier is present in artisanal cobalt mining in the Democratic Republic of the Congo (DRC). Cobalt is a critical component of many lithium-ion batteries, including ones used to power electric vehicles, produce components for wind and solar energy technologies, and power portable electronic devices such as smartphones. The DRC accounts for more than 74 percent of global cobalt mining, and 20 to 30 percent of that is via ASM.

In some regions of the DRC, artisanal miners are exploited by armed groups that seek to control mining areas and siphon revenue to finance their operations, purchase weapons, and sustain conflicts. Militias have abducted and trafficked children to extract cobalt as well as copper, in a bid to fund their groups. In addition, some ASM cobalt operations employ children. It was once estimated that forty thousand children were mining for cobalt, working in life-threatening conditions and exposed to violence, extortion, and intimidation.

Such problems associated with informality, including the absence of regulatory standards and the occurrence of human-rights violations, make it difficult for potential investors to justify long-term investments. Without clear, enforceable laws, investors face a high-risk business environment and unpredictable changes in mining policies, which undermine investor confidence.

In addition to posing these immediate risks to artisanal miners and their communities, informal mining exacerbates economic and market instability on a macroeconomic level. Informal miners typically earn a meager and unstable income, which is subject to fluctuation based on the market prices and demand for cobalt. Miners’ economic instability translates into broader economic uncertainty for the sector and limits opportunities for community development. The presence of such substantial unregulated economic activity leads to significant tax revenue losses for the government, because these transactions primarily occur outside of official channels. This undermines the state’s capacity to invest money in necessary social programs, build infrastructure, and quell violence in other regions of the DRC. In spite of these challenging economic implications, African governments might resist formalization efforts, unwilling to disrupt the vital role ASM plays in the livelihoods of many individuals and communities across Africa.

While artisanal cobalt mining in the DRC provides a case study, some of these issues associated with informality are also prevalent in the mining of critical minerals in other African nations, such as lithium production in Zimbabwe and Namibia. Across the continent, the volatility of ASM creates a less attractive investment environment, given that investors seek dependable production to ensure stable supply chains and therefore profitability.

What might formalization look like?

Despite the complications associated with the informal production of many critical minerals, the solution is not to disengage from ASM; it employs 90 percent of the mining workforce. Rather, the solution lies in formalizing and legalizing ASM, which will help mitigate the risks inherent to these mining operations while fostering a more regulated and stable environment for international investment in Africa’s critical minerals.

Integrating the ASM sector into the formal economy would help improve local security, stabilize incomes, and ensure that safer and more environmentally sustainable practices are implemented. It would also help create national regulations and international standards, pressuring the ASM sector to improve practices to become compliant.

Formalization means that miners are registered with proper mining titles. Even in some countries where ASM is recognized by law, governments have not made it possible for miners to obtain the necessary permits and licenses. But in addition to these permits and licenses, formalization also includes—according to the Washington-based nonprofit Pact—efforts by the mining industry to enact chain of custody and supply chain transparency measures; health, safety, and environmental protections; security and human-rights protections; measures that improve access to finance; and requirements to use proper mining techniques. In addition, formalization includes sound industry policies, procedures, and due diligence systems, which should be in place throughout the life cycle of a mine. These components of formalization create a framework within which artisanal miners can operate safely and legally, contributing positively to community-wide and country-wide development goals and global supply chains.

Given the complexity of the informal economy, there is no simple, one-size-fits-all approach to formalization. We can, however, look for strategies that have been effective in other countries or industries and use them to guide the approach towards formalizing ASM. For example, Rwanda’s 2010 Land Tenure Reform Programme initiated a systematic registration effort to promote land access and address tenure insecurity. This program registered over ten million land parcels in less than five years and enabled landowners to use their property as collateral for loans, facilitating access to credit. The program has been widely regarded as successful in integrating the informal economy, particularly due to its simple registration process and involvement of community members and stakeholders in the reform. Transitioning ASM to the formal economy must also use an integrated whole-of-society approach, centering African communities, stakeholders, and governments. This might mean starting small at a grassroots level by engaging local communities in social dialogue, allowing informal miners to express their views and defend their interests. Their inclusion at an early stage of the formalization process will ensure that policies address informality efficiently and enhance the effectiveness of such measures.

There have been some efforts in recent years to support the formalization of ASM workers and improve social and environmental practices in the sector. For example, as the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) explains, international Fairtrade and Fairmined standards set minimum standards for responsible mining, which support formalization. Furthermore, chain of custody initiatives trace supply chains from mine to market to ensure that supply chains are not associated with any conflicts or human rights abuses and that they meet international regulations. These are certainly steps in the right direction but, as the IGF explains, there are concerns about the long-term sustainability of these initiatives and whether they are reaching the most marginalized communities.

Formalization is a very complex but necessary process that can improve the lives of miners and address issues in the critical-mineral supply chain—and therefore attract more sustainable investment to the sector, contributing to the broader development goals of African countries.

How the international community can help

As mineral extraction in Africa is only expected to increase in the foreseeable future, it would be strategically unwise for the international community, and in particular the United States, to sit idly by on the issue of formalizing artisanal mining.

Going forward, the United States can focus on capacity building and simplifying trade processes and market access to help formalize artisanal mining in Africa, which could lead to increased global investment in critical minerals. To build the foundation for policies and programs that provide legal protection for ASM miners, the United States could fund and support training programs for artisanal miners, local authorities, and government officials on sustainable mining practices, health and safety standards, regulatory compliance, and business skills. By strengthening local and national institutions responsible for overseeing the ASM sector, governments would be better able to enforce regulations, protect the rights of artisanal miners, and formalize the sector.

The United States could also work with African governments and international organizations—such as the African Union and the United Nations Conference on Trade and Development—to simplify trade procedures, enabling miners to participate legally and more fully in global supply chains. In December 2022, the United States signed a memorandum of understanding with the DRC and Zambia to develop a productive electric-battery supply chain—from the extraction of minerals to the assembly line. The agreement also serves as a commitment to respect international standards and to prevent, detect, and fight corruption and build a sustainable industry in Africa that benefits workers and local communities, as well as the US private sector. At this time, it is more political than actionable, although it creates a framework for future negotiations and strengthened partnerships. Deepening ties with African nations and collaborating with international organizations can help leverage the resources, expertise, and global networks to ensure a more conducive environment for investment and sustainable growth. Increasing institutional capacity would also allow governments to strengthen tenure security and clarify property rights for ASM, particularly reducing the incidence of ASM-LSM conflict.

The creation of more legal channels for miners to sell their products could enhance supply chain transparency and promote more sustainable market practices. Implementing an international certification mechanism, similar to the Kimberley Process Certification Scheme (KPCS), offers the ASM sector an opportunity for empowerment and a pathway towards legitimacy. Originally established to remove conflict diamonds from the global supply chain, the KPCS mandates that member countries adhere to strict certification requirements, import and export controls, regular audits, and controlled trade. The principles of the Kimberly Process might be adapted to the extraction of critical minerals so as to increase the security of artisanal miners and their access to legal markets.

Not only would these policy actions benefit African countries in the context of the critical-minerals boom and improve the livelihoods of miners, but they would allow the United States to strengthen its economic and strategic partnerships with African countries. As critical minerals will continue to advance the clean-energy transition, decisive action is essential to make the future of mining a pathway for inclusive, sustainable development for the countries that supply minerals to the world.

Sarah Way is a graduate of the University of Colorado Boulder’s International Affairs Program with a specialization in Africa and the Middle East. Her research centers on the intersection of natural resources and development, with a specific focus on extractive minerals in Africa.

The post Integrating artisanal mining into the formal economy would benefit African miners and economies alike appeared first on Atlantic Council.

The ruling creates deep complications for the Joe Biden administration’s energy and climate agenda. But it also highlights their significance for the upcoming presidential election.

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The death of deference

The landmark 1984 ruling in Chevron U.S.A., Inc. v. Natural Resources Defense Council centered on the prerogatives of federal agencies to interpret existing—and potentially decades-old—federal laws. Under the precedent enshrined as “Chevron deference,” agencies were allowed a wide berth to interpret federal laws where they were unclear or ambiguous on a specific issue. Chevron deference has proven valuable to administrations of every political inclination for forty years.

The end of deference represents a monumental shift in regulatory authority away from agencies and their technical experts—now merely accorded “respectful consideration”—and toward the hundreds of federal judges seated throughout the country.

Judges are empowered as arbiters if and when a given statute is ambiguous. They thus determine whether an agency’s interpretation of its authorities—as expressed in agency-delivered regulations—is valid. This outcome creates a more complex legal system surrounding every regulatory intervention, potentially creating a patchwork of interpretations across the ninety-four US federal judicial districts.

This development has implications for any future administration. Regardless of the outcome of the November election, both candidates must contend with the new realities of enacting their respective energy and climate visions without Chevron deference.

Overruling net zero?

For the Biden administration, the ruling undermines its sweeping regulatory efforts toward economy-wide decarbonization. Already, key agencies such as the Environmental Protection Agency (EPA) and the Securities Exchange Commission have likely anticipated this court could end the Chevron deference, tailoring their recently finalized regulations accordingly.

But the Biden administration’s marquee regulations could now be challenged in whole or in part for straying too far from the letter of their foundational laws. If so, any federal judge could rule against that perceived overextension of an agency’s statutory authority.

The fate of the EPA’s regulation for fossil-fueled power plants will be a litmus test. Finalized last April, it’s expected to be extensively litigated and eventually reach the Supreme Court. Democratic leaders have anticipated this, confirming within the 2022 Inflation Reduction Act (IRA) that greenhouse gases, including carbon dioxide, are air pollutants, giving the EPA the explicit authority to regulate it.

However, this legislative amendment does not necessarily insulate the EPA from scrutiny of how it regulates the newly labeled air pollutant—for example, by encouraging changes in generation mix, implementing power plant-level regulations not explicit within the original Clean Air Act, or, most recently, mandating the adoption of carbon capture.

This Supreme Court’s string of recent rulings, from West Virginia v. EPA and the stay of the “good neighbor rule” to extending the timeline for a federal rule to be challenged, suggests that the bench views the EPA’s authority as far more limited than the Biden administration does.

Crucially, the Loper ruling has limitations of its own. Per the majority opinion, it will not apply retroactively, meaning that previously decided cases where agency deference was at play cannot be reopened. Perhaps even more importantly, the ruling applies specifically to the federal government and not to local, state, or regional administrations.

Even if the EPA and other agencies find themselves confined to strict readings of their statutory authorizations, state regulations—including clean energy and renewable portfolio standards—cannot be challenged on this basis. On the contrary, a state attorney general could instead leverage the end of Chevron deference as a new opportunity to litigate regulations from the federal government not aligned with their state’s climate and energy goals.

Beyond November, the end of agency deference could destabilize the Biden administration’s climate agenda in a re-election scenario. Implementation of the IRA is likely to be hampered by lawsuits, and agencies may see newly issued regulations and guidelines—such as the controversial hydrogen guidance pertaining to Section 45V—become fodder for litigation. The same could be true for federal permitting and siting procedures.

Federal agencies may find it less cumbersome to simply issue broad, performance-based regulations that set a widely applicable standard, such as to power plants. These could allow for a wide range of approaches to meet a given standard rather than prescriptive rules mandating specific technologies or fuels. Programmatic approaches that concern major statutes, such as the Endangered Species Act, Clean Water Act, and others, may also become the preferred means to simplify environmental reviews and preclude challenges.

Not so clear a victory

The extensive media coverage of the Loper decision has framed the outcome as an unequivocal boon to Donald Trump’s agenda, particularly in the energy and climate landscape. To some extent, this perspective is justified; a new Trump administration will leverage this ruling as justification to back away from addressing environmental or climate challenges beyond the bare minimum mandated by existing statutes.

However, agencies have long been criticized by stakeholder and environmental organizations for hiding behind Chevron deference for inadequate enforcement of environmental laws. A Trump administration, which aims for the floor, but can no longer rely on Chevron deference for protection, may discover that such lawsuits have become more numerous and disruptive.

Moreover, not every congressional statute on energy and environmental matters is ambiguous. A new Trump administration attorney general would struggle to argue that the IRA’s methane fee cannot or should not be enforced, as this requirement is explicit in the law.

There are other, more subtle, pathways to undermine the IRA and other major Biden-era climate achievements if a Trump administration were set on doing so—namely, by doing as little as possible.

The 45V credits are instructive. If a given Internal Revenue Service regulation for this section of the IRA were challenged in court as being outside the letter of the original law, it could be thrown out in a post-Loper world where agency deference is no longer assumed. A Trump administration, gifted this development, could simply refuse or delay issuing new guidance if it were uninterested in abetting the emergence of a US clean hydrogen industry.

This tactic would undermine investment certainty for large, expensive projects across technologies and fuel types while technically keeping the IRA on the books. This approach, however, assumes that federal courts will agree with sharply limited interpretations of ambiguity and not rule against thin regulations or force a Trump administration to issue guidance whether it wants to or not.

If agency deference is no longer axiomatic, then a conservative administration risks similar pushback in interpreting laws to suit ideological preference and policy goals. In a post-deference world, such an administration might face legal challenges in, for example, attempting to extend the lifetimes of operating coal plants, as much as a more liberal administration might face challenges for creative attempts to phase coal out of the US generation mix.

A volatile patchwork lies ahead

Fundamentally, the end of Chevron deference implies a new era of volatility in the legal and regulatory landscape for US energy and climate policy. Everyone from project developers and operators to investors and local stakeholders should prepare accordingly.

While federal judges are newly empowered to intervene, the Supreme Court cannot adjudicate every potential dispute in the handful of cases it reviews in a given year. As a result, it will take any suit years of litigation to reach that level—if at all—making the rulings of lower federal courts more important than ever before. Judicial opinions are likely to vary widely, making the location and timing of a suit paramount to its outcome.

For project developers, this uncertainty compounds an already serpentine US permitting landscape. Depending on which administration is in control after 2024, it is conceivable that environmental and social justice considerations around projects are given less weight than had Chevron deference been maintained. Going forward, an agency may be less inclined to propagate criteria or guidelines that would allow refusal of a permit on the basis of considerations not explicitly prescribed in existing laws. Confined to their statutory foundations, agencies may therefore be inclined to decide on leases and permits more quickly. But with fewer creative tools to mitigate project impacts authorized in their foundational statutes, agencies may simply lean toward faster denials.

Ultimately, however, the Supreme Court is the likely final stop for all major regulations going forward, implying greater uncertainty, circuitous timelines for judicial review, and whiplash aligned to the winds of political change in the executive branch. This could foster a scenario where climate action is largely blocked by the courts, and Congress is unable to meaningfully amend or write new laws to clarify the exact role of the federal government in addressing the climate crisis.

That prospect, and its implications, could exacerbate societal tensions at a time of deepening alarm over our global climate future.

David L. Goldwyn is chairman of the Atlantic Council’s energy advisory group and a nonresident senior fellow at the Atlantic Council Global Energy Center and the Adrienne Arsht Latin America Center.

Andrea Clabough is a nonresident fellow at the Atlantic Council Global Energy Center and a senior associate at Goldwyn Global Strategies, LLC.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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David L. Goldwyn

Nonresident Senior Fellow

Adrienne Arsht Latin America Center Global Energy Center

Caribbean Climate Change & Climate Action

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Andrea Clabough

Nonresident Fellow

Global Energy Center

Climate Change & Climate Action Energy & Environment

EnergySource Sep 11, 2023

The IRA’s best kept climate secret: Moving oil and gas toward operational net zero 

By William Tobin

The IRA contains a suite of provisions to help oil and gas move toward scope one and two climate neutrality, potentially comprising some of the law’s most impactful climate measures.

Energy & Environment Energy Transitions

EnergySource Dec 5, 2023

The Oil and Gas Decarbonization Charter is a start, but more work remains

By David L. Goldwyn, Andrea Clabough

Although the Oil and Gas Decarbonization Charter is laudable, the pace of change for this industry (as represented in this charter) is not fast enough, deep enough, or broad enough to materially address the yawning gap between the Paris commitments and the present Dubai reality.

Energy & Environment Energy Markets & Governance

EnergySource Oct 4, 2023

What’s next in the two-front war against climate change and energy insecurity?

By Robert F. Ichord, Jr.

Electrification is a powerful weapon in the battles against climate change and the weaponization of energy supply. To improve overall system reliability and resilience, the United States and European Union must decarbonize, meet new consumer and industrial demands, and expand transmission capacity.

Climate Change & Climate Action Energy & Environment

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Chevron deference is dead—and US climate action hangs in the balance appeared first on Atlantic Council.

Read up on the events shaping the democratic world order.

Reshaping the order

This month’s topline events

Tensions mount within the Israeli government as conflict grinds on. As June ended, Israel and Hamas still had not agreed on a cease-fire, despite hopes earlier in the month that both sides would sign onto a previously floated three-phase plan. Although the United States assured that Israel accepted, it is unclear whether Israel declined the latest three phase. Yet Hamas requested some unworkable changes after all the parties alleged acceptance. Even as the two sides haggled over cease-fire terms, Israeli military operations in Gaza slowed due to operational tempo, but there remained an increase in intensity in the continued tit-for-tat exchanges between Israel and Iran-backed Hezbollah, driving global concern over a potential war between them that could evolve into a broader regional conflict. Netanyahu dissolved his war cabinet, the unit established to bring a unified approach to Israel’s fight against Hamas. The decision came following the resignation of former military chief Benny Gantz from the cabinet. Gantz resigned amidst protests over the continued lack of a strategic plan to defeat Hamas. Illustrating further divisions within the Israeli government over war aims, the Israeli army’s chief spokesman publicly questioned the government’s articulated goal of destroying Hamas, noting, “Hamas is an idea, Hamas is a party. It’s rooted in the hearts of the people—whoever thinks we can eliminate Hamas is wrong.” Tens of thousands of Israeli people protested in Tel Aviv to demand a cease-fire and the return of hostages.

• Shaping the order. Tensions within the Israeli government, between Netanyahu and his military leadership, came to a head as the two sides seemed at odds over end goals for Israel’s military operations. There remains limited consensus on the way forward. In February, Netanyahu presented a post-war plan aiming for local officials to govern Gaza, with Israel preparing to test the experimental model with “humanitarian bubbles.” Allies have collectively strategized various pathways and there remains widespread skepticism of the plan. Yet the Israeli government continues to struggle to advance a post-conflict plan and receive sufficient buy-in from the United States, Arab states, and others, which remains a key priority for regional stability and US interests.
• What to do. The Biden administration should continue to work with allies in Doha and Cairo to pursue a path to a temporary cease-fire and hostage-for-Palestinian-prisoners deal—that would also enable a flood of humanitarian relief in Gaza—despite the low probability of success.

The United States and its allies step up support for Ukraine. The United States expanded its policy to allow Ukraine to use US-provided weapons to strike “anywhere that Russian forces are coming across the border from the Russian side to the Ukrainian side to try to take additional Ukrainian territory,” according to US National Security Advisor Jake Sullivan. This builds on its May decision to allow Ukraine to use US-provided weapons to strike a limited set of targets, largely across the border from Kharkiv.

The Biden administration, following the G7 meeting in Italy, announced it would rush the delivery of air-defense interceptors to Ukraine by delaying the delivery of them to most other nations. The G7 also agreed to use interest on immobilized Russian sovereign assets to collateralize a fifty-billion-dollar loan to Ukraine. The United States added new and strong US sanctions against Russia and finalized a US-Ukraine ten-year memorandum of understanding on security cooperation.

As US munitions began to reach the front lines in Ukraine, the Russian offensive against Kharkiv lost momentum. Although Russian attacks on Ukrainian energy generation did considerable damage (taking down almost half of Ukrainian electric generation), the US decision to rush delivery of air-defense interceptors may help further mitigate such attacks, as will Romania’s decision to send to Ukraine one of its Patriot batteries. Meanwhile, Ukrainian attacks on Russian military infrastructure in Crimea were taking an increasing toll, and Russian President Vladimir Putin visited North Korea to shore up his relationship with dictator Kim Jong Un and ensure Pyongyang continues providing munitions and arms to Moscow for the war in Ukraine.

On the diplomatic front, Russia escalated its demands for a cease-fire in an unrealistic fashion, insisting that Ukraine must first abandon territory it currently holds in the four provinces partly occupied by Russia, land that Russia has been unable to take by force. Days after that, from June 15 to 16, ninety-three countries attended a peace conference in Switzerland to discuss Ukrainian terms (its ten-point plan) for a settlement and seventy-eight countries signed a document that called for the restoration of Ukraine’s territorial integrity, a key Ukrainian point (more countries have signed on since). China did not attend, however, and some key countries in the Global South such as South Africa, India, Brazil, and Mexico did not sign the conference document.

• Shaping the order. The Biden administration’s decision to allow Ukraine to use US-provided weapons to strike inside Russia, beyond initial restrictions on targets near Kharkiv, is a significant, positive step in Western support for Ukraine. Using frozen Russian assets to collateralize a loan for Ukraine is another positive step, but the United States and its allies may find they need to go further, using said assets themselves rather than continuing to use their own funds exclusively.
• Hitting home. Some US experts argue that Ukraine is a strategic liability and that US focus there diverts resources better used in the Indo-Pacific. Russian victory in the war, which is likely to result from a US withdrawal, would cause cascading security problems in Europe that would draw on even more US resources.
• What to do. The United States and its allies must marshal continued military assistance for Ukraine, including air defense and weapons that support Kyiv’s attacks on Russian military targets in occupied Ukraine, especially Crimea. The United States has the means to intensify pressure on the Russian economy and should use such tools. Washington should consider enforcing sanctions to hit smugglers of technology subcomponents utilized for Russian weapons and evaders of the oil price cap (the latter missing from the otherwise strong June 12 US sanctions package). A successful Ukrainian land offensive may not be possible in the near term. 

The center holds, but the right makes gains, in European Parliament elections. Across the EU’s twenty-seven member states, voters cast ballots to select their representatives to the European parliament. The election saw gains for the center-right and right, but it was a disappointing showing for French President Emmanuel Macron’s centrist Renew party. The European People’s Party, the European Conservatives and Reformists Group (of Italian Prime Minister Giorgia Meloni), and Identity and Democracy—the hard right—were the main beneficiaries of the elections. These results were overshadowed by Macron calling for a snap parliamentary election after his party’s incredibly poor performance in the European Parliament election (garnering less than half the votes of their far-right rivals, the National Rally): The snap election resulted in the left-wing New Popular Front on top, Macron’s  centrist alliance placed second, and  Marine Le Pen’s far-right National Rally, which finished third. Yet, the right did not do well in Scandinavia, Spain, and Romania, and had only a modest uptick in Poland, where the ruling Civic Platform came in first place. The parties in Germany’s ruling coalition—the Social Democrats, the Free Democrats, and the Greens—all lost ground in Germany, but the center-right alliance between the Christian Democratic Union and the Christian Social Union did well.

• Shaping the order. Snap elections in France overshadowed the fact that the center mostly held its ground in the EU elections. The far right’s marginal gains will matter, however, if said forces can unite and if center-right parties are willing to engage with the far-right. Even so, the incoming parliament is likely to be more fragmented and polarized than its predecessor. And the French elections, the first round having wrapped, are pointing to a major defeat for Macron and a surge of the right, which is both nationalist and wary about the extent of French support to Ukraine.
• Hitting home. Even though the center largely held in the European Parliament elections, the increased fragmentation will likely mean less clarity on policy issues that impact US companies.
• What to do. The United States should constructively engage the European Parliament, encouraging it to hold firm to its moderate stances and not bend to the far right’s proposals.

Quote of the Month

“The votes cast put the far-right forces at almost 40 percent and the extremes [on the right and left] at almost 50 percent. This is a political fact that cannot be ignored.“
—French President Emmanuel Macron, speaking after the European Parliament elections.

State of the Order this month: Unchanged

Assessing the five core pillars of the democratic world order

Democracy ()

• On June 30, the far-right National Rally won in the first round of the parliamentary elections, although it’s unclear whether they will get a majority with the second-round vote upcoming on July 7. Many French citizens have been protesting against the National Rally out of concern for women’s rights and minority rights, where thousands of women marched in dozens of French cities, including Paris, to protest against Marine Le Pen’s far-right National Rally.
• Mexico elected Claudia Sheinbaum, its first female president, in the country’s largest election in history with 98 million registered voters. As Mexico City’s former mayor and the favored successor of outgoing President Andrés Manuel López Obrador, Sheinbaum was favored to win. Promising to continue López Obrador’s policies, she believes the government has a strong responsibility to address economic inequality and establish robust social security.
• On balance, the democracy pillar was unchanged.

Security ()

• Chinese forces seized Philippine small boats that were attempting to resupply a Philippine military outpost at Second Thomas Shoal. Multiple Philippine vessels were damaged, and sailors were injured in the incident. One US official called China’s actions “deeply destabilizing.”
• Houthi rebels launched an aerial drone, striking and damaging the Transworld Navigator in the Red Sea, one of more than sixty attacks targeting specific vessels. The attack comes after United States recalled its USS Dwight D. Eisenhower after an eight-month deployment. Shipping in the corridor—crucial for connecting Europe, the Middle East, and Asia—has slowed significantly. The Houthis said they would continue the attacks as long as the Israel-Hamas war continues.
• On balance, the democracy pillar was unchanged.

Trade ()

• Amid the European Commission’s anti-subsidy investigations into electric vehicles (EVs) coming from China , the European Union announced additional tariffs on  imported Chinese EVs. The tariffs range from 17.4 to 38.1 percent—and that’s on top of the 10 percent duty already in place. As a result, Chinese car companies may consider raising prices or establishing factories in Europe, as the continent recently became China’s largest EV export market.
• On balance, the democracy pillar was unchanged.

Commons (↓)

• The United Nations conducted a worldwide poll that revealed 80 percent of people want governments to take more action on addressing climate change. The survey noted majority support for stronger climate action in twenty of the world’s biggest greenhouse gas emitters and majority support globally a quicker transition away from fossil fuels. Despite the increasing state of global conflict and rise of nationalism, the desire to set aside geopolitical differences and work together on climate change is expanding.
• Record-breaking heat, fueled by climate change, affected millions around the globe, scorching four continents and surpassing last summer as the warmest in two thousand years. There were more than forty thousand suspected heat stroke cases in India between March 1 and June 18, and in Saudi Arabia, over one thousand people died participating in the Hajj pilgrimage amid soaring temperatures. Devastating forest fires spread in Europe and northern Africa, and a heat dome trapped large regions of the United States, preventing cool air from getting in.
• On balance, the commons pillar was weakened.

Alliances (↑)

• For the first time in twenty-four years, Russian President Vladimir Putin and dictator Kim Jong Un met in North Korea, reinforcing their commitment to cooperate and protect each other’s interests. As part of the meeting, they signed a mutual military-assistance treaty, with Putin announcing that Russia could provide weapons to North Korea—with potentially destabilizing effects for the democratic world order.
• The leaders of the G7 convened in Apulia, Italy, for the 2024 G7 Summit to discuss supporting Ukraine, pushing back on unfair economic practices, combating climate change, addressing food and health insecurity, leveraging critical technologies, and partnering with like-minded countries around the globe.
• On balance, the alliances pillar was strengthened.

Strengthened (↑)________Unchanged ()________Weakened (↓)

What is the democratic world order? Also known as the liberal order, the rules-based order, or simply the free world, the democratic world order encompasses the rules, norms, alliances, and institutions created and supported by leading democracies over the past seven decades to foster security, democracy, prosperity, and a healthy planet.

This month’s top reads

Three must-read commentaries on the democratic order

• Michael Doyle, in Foreign Affairs, argues that democratic peace is back in vogue and great powers can prevent the tensions between democracies and autocracies from escalating into full-blown global cold war.
• Robert C. O’Brien, in Foreign Affairs, outlines a Trump administration foreign policy centered on the return of peace through strength.
• Célia Belin and Mathieu Droin explore in Foreign Policy what a far-right victory would mean for French foreign policy.

Action and analysis by the Atlantic Council

Our experts weight in on this month’s events

• Niva Yau, in an  Atlantic Council report, shows how China is training future authoritarians overseas in order to secure its interests in Global South countries and beyond.
• Matthew Kroenig and Dan Negrea, in Foreign Policy, explain that the United States’ competition with China should be focused on weakening and defeating the Chinese Communist Party regime.
• Daniel Fried, in the New Atlanticist, offers seven ways to reboot G7 sanctions on Russia, stating that United States and its allies must commit to dedicating resources to identifying targets for taking economic steps against Russia.
• Andrew Michta, in a piece for the German Council on Foreign Relations, contends that Germany must commit to significantly expanding its defense industrial base so that it will be well positioned to establish strong cooperation with whichever candidate wins the next US presidential election.

__________________________________________________

The Democratic Order Initiative is an Atlantic Council initiative aimed at reenergizing American global leadership and strengthening cooperation among the world’s democracies in support of a rules-based democratic order. Sign on to the Council’s Declaration of Principles for Freedom, Prosperity, and Peace by clicking here.

Patrick Quirk – Nonresident Senior Fellow
Dan Fried – Distinguished Fellow
Ginger Matchett – Project Assistant

If you would like to be added to our email list for future publications and events, or to learn more about the Democratic Order Initiative, please email pquirk@atlanticcouncil.org.

The post State of the Order: In June, the world’s alliances strengthened—but concerning risks for the democratic order remain appeared first on Atlantic Council.

The post Donovan and Nikoladze cited by Washington Post on sanctions evasion appeared first on Atlantic Council.

At the same time, the danger Russia poses extends well beyond Eastern Europe. The Washington summit provides the Alliance an opportune moment to develop a strategy to address Russia’s growing, and unsettling, Arctic presence, which is connected with Moscow’s complex cooperation with China in the region and with new sea lanes opening due to accelerated ice melting in the region.

Russia has long viewed the Arctic as a crucial source of income, national pride, and strategic importance. The Russian military has continued to establish an outsized Arctic presence even during its war in Ukraine, now consisting of the Northern Fleet, nuclear submarines, radar stations, airfields, and missile facilities. A large share of this presence is concentrated in the Kola Peninsula, near NATO allies Finland, Sweden, and Norway. According to the International Institute for Strategic Studies, Russia operates one-third more military bases in the Arctic Circle than all NATO members put together. 

NATO members should note that Russia has outpaced the Alliance in its establishment and usage of trade corridors in the Arctic region, funded heavily by Chinese investment. Transporting energy and mineral commodities via the Northern Sea Route (NSR) presents strong advantages to Russia: staying within its territory and circumventing the Suez Canal shortens Russian tankers’ trips to China by about ten days per journey. As climate change warms the Arctic at a pace far exceeding other parts of the world, the viability of the NSR will increase and the region’s strategic importance will continue to grow. Historically, Russian energy in the High North has been dispatched using ships specially built to navigate sea ice, but in September 2023, the first shipment was sent using a conventional, non-ice class oil tanker due to high levels of summer ice melt, an increasingly common phenomenon. 

“The energy crisis that has emerged from the Ukraine war has been building for decades,” Paul Sullivan, an energy and international relations professor at Johns Hopkins University, told us. “Russia’s development of Arctic LNG [liquefied natural gas] and usage of the NSR should be of top concern to NATO countries with concerns about the precarity of energy sources and trade routes, respectively.”

Russia’s economic dependence on exporting its extensive energy and mineral resources has led to strengthened cooperation with China, an imperfect relationship based on mutual need. Chinese state-owned energy enterprises have in the past five years invested billions of dollars in Russian oil and gas ventures and mineral projects in the Arctic. Since facing Western sanctions, Russian reallocation of its crude oil supply to a discounted Chinese market cemented the partnership between the two nations. Since then, this infrastructure investment for ports, pipelines, mines, and railways has surged. Moscow’s interest in securing its trade routes in the High North has been boosted by Russia’s alignment with Beijing, which has affirmed its own involvement in the region as a “near-Arctic state.” For example, Russian and Chinese vessels were spotted in August 2023 conducting joint military exercises near Alaska’s Aleutian Islands. That said, NATO members rethinking Arctic strategies should take a clear-eyed approach as to the extent of the “no limits” partnership between Moscow and Beijing. At the beginning of June, the Russian gas market announced a pause of the Power of Siberia 2 pipeline to China. The deal has reportedly stalled over monopsonistic Chinese demands to pay drastically lower prices for lower quantities of gas.

NATO’s Arctic member states—the United States, Canada, Norway, Sweden, Denmark, Finland, and Iceland—remain intent on maintaining free and navigable Arctic shipping lanes and are exploring their own energy and mineral resource projects in the region. Jennifer Spence, the project director of the Arctic Initiative at the Harvard Kennedy School’s Belfer Center, explained to us that “in these remote areas, military and economic infrastructure development go hand in hand—securitization of the Arctic can help facilitate investments in a more diversified economy for Arctic states.”

Recent European Parliament legislation to facilitate the construction of new mines to secure critical minerals has been a boon to Swedish mining companies, which have discovered mineral resources in the country’s north. In the United States, the ConocoPhillips Willow project is set to commence in northern Alaska’s National Petroleum Reserve, and in Canada, the federal government recently announced new investments in Arctic defense. Separately, the province of Alberta has worked with the state of Alaska to promote energy development ties. Per Spence, “commercial progress in the North American Arctic is comparatively more rhetoric than action, though signals of permanent infrastructure investment seem to be not too far behind.”

NATO’s Arctic member states have increasingly focused on the region as an important operational theater—and this trend should continue. Nordic countries have announced major NATO exercises in the High North as well as training events with the United States. Canada is procuring and deploying new Arctic-proof military aircraft and ships, and recently conducted joint exercises with the United States, demonstrating an independent investment in regional security. The United States has also increased its Arctic presence. This has included an initiative by the US Coast Guard and the US Navy, which built three Polar Security Cutters, upgraded versions of heavy-duty icebreakers replete with advanced sensors and equipment. 

As of now, Russia’s pause in its Arctic developments reflects the status of commercial investment progress in the region. International sanctions, most of which were initiated by countries that are also NATO members, have taken a major toll on Russian Arctic commercial expansion (for example, Russian energy behemoth Novatek suspended production at its Arctic LNG 2 project in the spring due to sanctions and a shortage of ice-class gas tankers). As for NATO progress, according to Sullivan, the Johns Hopkins expert, the accession of Sweden and Finland “increases NATO’s Arctic footprint massively and thereby significantly improves its position.” With a vastly larger Arctic footprint and record levels of military spending, the time is ripe for NATO to further address the looming security consequences of Russia’s Arctic expansion. The NATO Summit in Washington provides the perfect moment for the Alliance to forge an even more unified approach to the future of security in the High North. 

David Babikian is a graduate from Princeton University in economics. His research practice spans from work with policymakers, investment firms, and nongovernmental organizations, pertaining to climate resilience, commodities, and critical minerals. He is a fellow at Climate Cabinet.

Julia Nesheiwat is a distinguished fellow with the Atlantic Council’s Global Energy Center, a member of the Atlantic Council board of directors, vice president for policy at TC Energy, and the former US homeland security advisor.

The post NATO needs a strategy to address Russia’s Arctic expansion appeared first on Atlantic Council.

Prime Minister Keir Starmer’s pitch is that the government will be focused on “mission delivery” with mission delivery boards chaired by Starmer personally. He has said that his approach to all issues will be “country first—party second.”

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Almost all members of the Shadow Cabinet have been appointed to those same portfolios in government and, in addition, Starmer has also brought back some former ministers from the Tony Blair/Gordon Brown years. They are all therefore familiar with their portfolios, widely respected, and able to hit the ground running. It is also clear that the prime minister wants to work closely with the private sector in order to make early progress on the government’s priorities.

Ed Miliband has been appointed as secretary of state for energy security and net zero. This is broadly the role he held when Labour was last in government before 2010, so he knows the issues well and is a genuinely passionate advocate for tackling climate change and delivering net zero.

With the UK government now one the most secure among the large western nations (with a five-year mandate and a very large majority), the United Kingdom is expected to reassume a leading role in the international discussions on climate change. As the only country to have reduced its carbon emissions by over 50 percent since 1990, many will welcome that leadership once again.

In most areas, there will not be a huge difference in UK government energy policy under the new administration, but there will be a few distinct changes.

Labour has set a very challenging target to decarbonize the electricity grid by 2030. Until there is much more detail about how this can be done, industry will understandably be skeptical about the feasibility of such a goal, the costs involved, and how local communities will be brought on board. This will involve a significant further commitment to renewables, including a welcome early announcement to end the ban on onshore wind. The United Kingdom’s success in developing offshore wind will be continued.

There is evident government support for new nuclear, including next generation small modular reactors, and in the longer-term for fusion. The government wants to see a significant role for hydrogen and for tidal power, but these cannot deliver at scale in time for the 2030 target, so expect to see an acceleration of carbon capture utilization and storage programs. Starmer has spoken recently about the continuing role for gas in the mix, to deliver energy security, and this can only happen if its use can be decarbonized.

Labour is committed to ending the granting of new oil and gas licenses for the North Sea, while respecting the licenses that have already been issued. In reality, these would be for field developments that are many years off, so they would not make any significant difference to the United Kingdom’s energy security in the short-term. Of more immediate impact, there will be a new levy on companies operating in the North Sea oil and gas sector, and here the detail will be crucial—if not done carefully, companies may simply choose to leave the United Kingdom, as many have already done.

At the heart of its energy policy, there will be a new government organization, Great British Energy, and although its full details are still to be clarified, its purpose is to drive forward the clean energy sector and accelerate the transition. If done properly, it will help ensure the roll-out of the grid infrastructure needed to harness the wealth of renewable energy that the United Kingdom has in abundance.

Also of value will be greater attention on issues that have not had the attention they deserve, such as energy efficiency, decarbonizing heat, and an acceleration of demand-side response measures that are already starting to transform the electricity market. The government already knows that the success of its energy policy will be judged in large part by whether people can afford their bills.

Sadly, energy rarely seemed to be center-stage under the Conservative government (unless in response to a crisis), and that seems to be changing fast. There is already a sense that energy deeply matters to this administration—not just to deliver energy security but as an economic driver, helping to decarbonize homes and businesses, and creating a mass of new green jobs.

As a former Conservative energy minister, I wish this new administration well. If they can get these policies right, they stand a very good chance of delivering the holy grail in energy terms—clean, and secure energy, at a price people can afford.

Charles Hendry is a distinguished fellow with the Atlantic Council Global Energy Center, a former member of the UK Parliament, and former UK minister of state for energy.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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Fellow

Charles Hendry

Distinguished Fellow

Global Energy Center

Energy & Environment Energy Markets & Governance

EnergySource Jun 12, 2023

Leader perspective: Forging a green special relationship between the United States and United Kingdom

By The Rt Hon. Chris Skidmore, MP

The United Kingdom had long been a climate leader, but other countries have caught up. By working with its close ally the United States, the United Kingdom can reassert its climate leadership through a green special relationship that can galvanize net-zero objectives domestically and abroad.

Climate Change & Climate Action Energy & Environment

EnergySource Mar 11, 2021

Can green finance compensate for London’s post-Brexit losses?

By Paddy Ryan

Supporters of Brexit suggest that making London a “world leader” in green finance could compensate for the City’s post-Brexit losses. Green financial leadership could boost Britain’s domestic industry and transform its foreign policy. But competitive advantages for its financial sector may not materialize.

Economy & Business Energy & Environment

EnergySource May 3, 2024

G7 pledges to end coal—but only inclusive action will make a real climate impact

By Elena Benaim

During the G7 energy ministerial in Turin, Italy, climate, energy, and environment ministers made a historic pledge to phase out coal power plants by 2035 among other agreements. But members ultimately need to turn pledges into action to blunt the impacts of climate change.

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The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

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The post The UK sets a path for clean, affordable energy—and renewed climate leadership appeared first on Atlantic Council.

Europe is facing tough choices as it confronts Russia’s unexpected reentry into European gas markets in the form of steadily increasing deliveries of liquefied natural gas (LNG). A fourteenth round of sanctions adopted in June are designed to help curb these supplies. At the same time, Europe risks gas shortages if there are no alternative LNG supplies on hand. 

To resolve Europe’s dilemma, it must have a clear alternative for immediate and long-term gas supplies from producers capable of outcompeting Russian gas. Surveying the possibilities points to a single source as the most promising reliable gas provider: the United States.

This fraught situation puts pressure on the Biden administration to resume issuing fresh permits for LNG projects intended for export to countries with which the United States does not have a free trade agreement (FTA). Currently, the United States has no FTA with any European country. And although a judge recently ordered the administration to resume permitting, it could appeal the decision, leaving the fate of additional projects in limbo.

Fellow

John M. Roberts

Nonresident Senior Fellow

Global Energy Center

Energy & Environment

Fellow

Ariel Cohen

Nonresident Senior Fellow

Eurasia Center

Central Asia Politics & Diplomacy

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

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The post Why the EU needs US liquefied natural gas appeared first on Atlantic Council.

The Occupational Safety and Health Administration (OSHA) has proposed new federal regulations to protect workers. When the heat index reaches or exceeds 80 degrees Fahrenheit, employers would be required to monitor workers and provide water and rest areas. At 90 degrees Fahrenheit, more protections kick in, including mandatory fifteen-minute rest breaks every two hours and monitoring employees for signs of heat-related illnesses.

Heat-related illnesses have been recognized as occupational hazards for a decade, with an estimated 2,300 workers in the United States dying from extreme heat exposure last year alone. However, this number is likely an undercount and does not capture the many more who suffered nonlethal or chronic heat-related illnesses, as well as workers who injured themselves on the job due to the heat. For instance, researchers at the University of California, Los Angeles found that workers in California are up to 9 percent more likely to suffer a workplace injury on days with temperatures over 90 degrees Fahrenheit than on days that are between 50 to 60 degrees Fahrenheit. This is a problem that will only get worse. The summer is only a few weeks underway in the Northern Hemisphere, and already more than one hundred million US residents have been exposed to extreme heat.

What comes next?

Despite the need for action, OSHA’s proposal will have significant opponents. Industry groups are gearing up for battle, arguing that the rule will be both administratively cumbersome and costly. This is a sentiment that some political leaders have already embraced. Earlier this year, both Florida and Texas enacted state-wide bans to prevent localities from instituting their own worker-protection ordinances. Both state governments are unlikely to accept OSHA’s proposal without protest. In fact, despite the persistent threat of extreme heat, only five states have extreme heat worker protections: California, Colorado, Minnesota, Oregon, and Washington.  

The argument that extreme heat worker protections will come at a cost often ignores the very real cost of maintaining the status quo under dangerously high temperatures. Aside from the price that workers pay with their health, extreme heat in the workplace has significant economic impacts, from lost labor productivity to healthcare costs. The high and growing price of extreme heat on US residents’ lives and livelihoods illustrates not only that this new rule is necessary, but also that, on its own, it is not enough.

Since 2021, the Biden administration has worked to reestablish the role of the United States as a leader in the fight against climate change, both domestically and abroad. This new rule could help cement the United States’ leadership role on climate—but only if it is properly enforced and expanded upon. For the rule to be effective, the administration should continue significantly utilizing OSHA’s National Emphasis Program for Outdoor and Indoor Heat-Related Hazards, which gives it latitude to direct resources toward both employer education on heat safety protocols and inspections that will better ensure compliance.

The Biden administration should also leverage existing funds to ensure that workers remain safe even when they head home for the day. As temperatures rise across the United States and the world, workplace regulations alone will not be enough to adequately protect workers. Federal agencies should incentivize states to direct Low Income Home Energy Assistance Program (LIHEAP) funding toward cooling assistance in vulnerable households, and lawmakers should ensure that LIHEAP is funded adequately to cover energy needs during both the summer and winter months. Currently, only approximately 5 percent of LIHEAP’s four billion dollars in funding goes to cooling assistance (heating receives ten times as much), despite the accelerating demand for relief from high nighttime temperatures that place a significant burden on the human body, and which can lead to heat exhaustion while on the job.  

Ultimately however, this issue cannot be solved at the federal level alone. It also requires efforts at the state and local level to ensure that the most vulnerable communities and individuals are being identified and solutions tailored to local contexts are being implemented. The appointment of a Chief Heat Officer (CHO), at the city, county, or state level, is one tool that can address the local challenges of extreme heat. Local governments such as Miami-Dade County, Phoenix, and Los Angeles have already taken this approach. Local climate leaders—like CHOs—are well positioned to work closely with their communities to tailor solutions to meet their specific needs and to create a unified response to build resilience to extreme heat both during the workday and off the clock.

Catherine Wallace is the associate director of strategic partnerships and advocacy for the extreme heat resilience pillar of the Atlantic Council’s Adrienne Arsht–Rockefeller Foundation Resilience Center (Arsht-Rock).

Owen Gow is the deputy director for the extreme heat resilience pillar at the Atlantic Council’s Adrienne Arsht–Rockefeller Foundation Resilience Center (Arsht-Rock).

The post Feeling the heat? Biden’s proposed protections for workers are a welcome start. appeared first on Atlantic Council.

This brief also examines the regional factors in Southeast Europe, including gas flows, infrastructure changes, and market demand, which would affect Caspian fossil fuel supplies’ availability in Europe. Georgia, Turkey, Italy, and Southeast and Central Europe stand to directly benefit from Caspian gas via the Southern Gas Corridor. They can also serve as conduits of these supplies further north and west.  

However, economic and geopolitical factors could hinder the rapid production and export of additional supplies from the Caspian region. Raising finance for oil and gas projects has become difficult as international financial institutions and the European Commission seek to reduce fossil fuel investment. Moreover, while proposals on both sides of the Caspian for large-scale hydrogen export projects targeted at European markets are ambitious, the complexity of delivery means they may take years to mature. Azerbaijan’s military actions in Nagorno-Karabakh may also impact European willingness to increase energy reliance on Azerbaijan. By successfully navigating these obstacles, Caspian producers can further contribute to European energy security.

Fellow

John M. Roberts

Nonresident Senior Fellow

Global Energy Center

Energy & Environment

Julian Bowden
Senior Visiting Research Fellow
Oxford Institute for Energy Studies

The authors are on the advisory board of a project to lay a forty-eight-mile connector pipeline between the Petronas-operated Magtymguly field in Turkmenistan and gas-gathering facilities operated by BP in Azerbaijan’s ACG oilfield.

EnergySource Dec 12, 2022

Europe and the Caspian: The gas supply conundrum

By John Roberts and Julian Bowden

The Caspian has emerged as a major player in Europe’s effort to move away from Russian gas. But logistical and political difficulties could prevent crucial Caspian projects from getting off the ground.

Central Asia Energy & Environment

EnergySource Mar 20, 2022

Removing Russia from the European gas balance: A major role for Caspian gas

By John Roberts and Julian Bowden

Exporting more Caspian gas to Turkey could free up precious LNG cargoes for consumption in the EU market. Three Caspian options in particular would go a long way to ensuring the EU can get out from under Russian gas hegemony.

Energy & Environment Europe & Eurasia

EnergySource Aug 20, 2020

Trans-Caspian Pipeline—Still a pipe dream?

By Daniel D. Stein

Although there have been intermittent efforts to revive the Trans-Caspian Pipeline (TCP), the project has largely been dormant in recent years. However, the impending completion of the Southern Gas Corridor (SGC), a new source and route of gas supply to Europe, has led to renewed interest in TCP.

Energy & Environment Energy Markets & Governance

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Caspian contributions to energy security in Europe appeared first on Atlantic Council.

Unfortunately, this is a familiar scene for the region, which routinely battles the effects of extreme weather events and climate change. Hurricane Beryl once again spotlights why focusing on the mitigation of climate change, through such methods as cutting carbon emissions, alone is insufficient. Caribbean countries must prioritize climate adaptation as the primary mechanism to withstand hurricanes and other baked-in effects of climate change.

Climate adaptation is the answer to these extreme weather events, but it requires significant investment that governments in the Caribbean cannot afford. International support, including private finance, is needed. In five months, the United Nations Climate Change Conference of the Parties, also known as COP29, will take place in Baku, Azerbaijan. It has been dubbed the “finance COP,” and there governments and the private sector should come together and show the commercial utility of prioritizing climate adaptation. Doing so can unlock new financing and create project pipelines that are commercially attractive to global investors.

The Caribbean is often categorized as the world’s most vulnerable region to climate change. Seventy percent of the region’s population lives or works on the coast, meaning that storm surges from hurricanes affect businesses, lifestyles, and government operations. Hurricanes and strong storms also bring the tourism industry to a halt, disproportionately affecting the region’s tourism-dependent economies and severely slowing economic growth. Hurricane Maria in 2017 cost Dominica an estimated 225 percent of its gross domestic product, while Hurricane Irma in the same year cost Antigua and Barbuda more than $136 million in damages, of which the tourism industry represented 44 percent.

Strong storms damage critical infrastructure. Downed power lines cause widespread power outages, while flooded roads and bridges can prevent rescue operations. Already, Hurricane Beryl has caused power outages in Saint Lucia, and homes in Saint Vincent and the Grenadines have lost their roofs. And stronger storms lead to longer recovery periods, which can increase governments’ public debt as they borrow at high interest rates from multilateral institutions to rebuild after the storm has passed. Six years after Hurricane Maria, for example, citizens in Dominica are still rebuilding.

Withstanding strong storms and other effects of climate change requires new climate adaptation projects. For hurricanes with high wind speeds (such as Beryl, which sustained wind speeds of 150 mph at its peak), it is necessary to retrofit infrastructure to be resilient. To achieve this, governments need to require building codes for new homes and infrastructure that ensure sufficient resilience across structures. To brace for storm surges, governments need to move water and energy infrastructure underground where possible to avoid damage. New sea walls and flood protection systems also need to be built.

In all, the region needs more than $100 billion dollars in investment to meet its climate adaptation goals, but it has only been approved for less than one billion dollars from various climate funds. Governments are often left to fend for themselves, taking high-interest loans (due to the classification of many Caribbean nations as middle- and high-income economies by the World Bank) since they often do not qualify for concessional financing. At the same time, governments have borne the brunt of the responsibility because these types of climate adaptation projects are not always attractive to the private sector. Retrofitting infrastructure and other climate adaptation projects, for example, have high upfront costs with little return on investment.

COP29 is an opportunity to bring the public and private sector together to unlock new financing and advance climate adaptation projects. The private sector—both in the region and around the world—has access to needed technologies and has the capacity to undertake climate adaptation projects, from providing drainage on roads and bridges to help ease flash flooding to building decentralized energy grid infrastructure to limit widespread blackouts. Climate adaptation is, after all, in the private sector’s interest. If the effects of hurricanes and climate change worsen and the region’s economies slow, then businesses’ profits will be affected.

What will it take to get the private sector more involved? Attracting private sector participation requires regulatory reforms and carve outs by governments to ensure that companies yield a return on projects. Governments can provide incentives, such as giving exclusive benefits to companies participating in projects and providing subsidies or tax exemptions on materials used. Equally important is access to low-cost finance and capital. Governments can work with institutions such as IDB Invest and global donors that provide grant finance to funnel capital to companies undertaking long-term developments while engaging with insurance agencies that can underwrite riskier projects. 

Caribbean leaders have begun to explore private sector participation in climate adaptation projects, notably through the Bridgetown Initiative and the Blue Green Investment Corporation, but there is still work to be done. COP29 might well be the ideal forum to strengthen these initiatives and encourage commitments from governments and the business community. Doing so requires flexibility from both sectors and a focus on projects that are investment-friendly and can attract global donors. 

In the lead-up to COP29, governments will need to begin laying the regulatory groundwork and soliciting the required technical assistance from development institutions to encourage private sector participation. Moreover, Caribbean governments should consider adding or increasing the size of the private sector groups to their delegations for COP29 to ensure they have a seat at the table and are bought into any signed agreements. Building these public-private relationships can go a long way toward showing global donors and companies the viability of investing in climate adaptation projects in the Caribbean and unlock needed capital that can save lives in the long run.

Wazim Mowla is the associate director and fellow of the Caribbean Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center.

The post Hurricane Beryl spotlights the importance of climate adaptation in the Caribbean appeared first on Atlantic Council.

Introduction
The geopolitics of infrastructure
The economic realities
Coordination of project identification and implementation
Recommendations
Conclusion

Introduction

Infrastructure development is a central component of the West’s global engagement strategy. This effort, if done effectively, could be a strategic, economic, and geopolitical feat. The development of sustainable and secure infrastructure carries the potential to create economic prosperity for countries aspiring to move up the global value chain, support the world’s green transition, provide an alternative to China’s exploitative investments, and strengthen the Western-led order.

The Group of Seven (G7) countries have varying plans for infrastructure development in cooperation with various partners around the globe, with particular focus on the Global South. Launched in 2022, the G7’s Partnership for Global Infrastructure and Investment (PGII) aims to mobilize $600 billion in capital for development projects by 2027.¹ In Europe, the European Union’s (EU) Global Gateway will invest 300 billion euros by 2027 in global infrastructure projects on behalf of the bloc.² Italy’s Mattei Plan, launched in January 2024, brings a direct focus on infrastructure development in Africa.³ Further abroad, the Group of Twenty (G20) partners signed the India-Middle East-Europe Economic Corridor (IMEC) memorandum in 2023, which aims to directly counter China’s Belt and Road Initiative (BRI) and cut down transit time between India and Europe.⁴

These initiatives are a good start. However, all G7 members face various challenges that could ultimately hamper progress on these initiatives, most notably: geopolitical challenges, limited funds, skittishness from private sector investors, and lack of coordination. For these initiatives to have a lasting impact, the G7 and likeminded partners must closely coordinate to both avoid and overcome these pitfalls.

Some efforts to better coordinate development projects have already begun. Along with its investments and focus on leveraging private capital, the United States led in the creation of the Blue Dot Network, “a multilateral initiative aimed at advancing robust standards for global infrastructure and mobilizing investment for projects in developing countries.”⁵ In addition, the US-EU Trade and Technology Council (TTC) has launched coordinated connectivity projects between the United States and the EU in third countries including Kenya, Costa Rica, Jamaica, the Philippines, and Tunisia.⁶

Holding the G7 presidency for 2024, Italy has made infrastructure development and strengthening relations with the Global South, and in particular Africa, central to its priorities. The 2024 G7 Leaders’ Summit in Apulia, Italy, in June 2024 again reaffirmed the group’s commitment to PGII and investments across Africa, with announcements including the creation of a secretariat to coordinate investments and aid information sharing and a greater shared focus on unlocking investment for green infrastructure projects.⁷

Now, G7 countries must focus on transforming the summit’s conclusions into reality and making real progress on development coordination. This issue brief provides an actionable set of recommendations to advance the G7’s ambitions.⁸ It examines the geopolitical impetus for infrastructure development, the economic realities of infrastructure, and the state of coordination on project implementation before providing recommendations to take forward for the rest of Italy’s G7 presidency and beyond.

The geopolitics of infrastructure

The G7’s focus on development is rooted in the shared understanding that G7 countries must fundamentally reset relations with the Global South. Historically, countries in the Global South, particularly in Africa, have been on the receiving end of unfair and extractive relationships with the West.

The result has been growing mistrust and disillusionment, and many countries now view China as a better partner than Europe or the United States. A 2022 study conducted by the University of Cambridge noted that around seventy percent of people not living in liberal democracies held positive views of China, and those in the developing world held more favorable views of China than of the United States.⁹ Another 2023 survey saw China’s approval rating in Africa rise to its highest levels in a decade, with ten-point increases in some countries.¹⁰

On infrastructure development specifically, China has outcompeted the West for years. China’s outreach to the Global South has been generally successful, and the BRI has evolved into an established brand. For example, in 2021 China pledged $40 billion over three years to Africa (though this was a reduction from an earlier pledge of $60 billion), and Beijing has out-invested the United States in Africa every year since 2013.¹¹ Though Chinese investments have yet to surpass their pre-pandemic heights, China’s rate of investment is again rising, and Africa was the largest recipient of BRI investment in 2023.¹² In part, as a result, Beijing is also poised to overtake Europe’s total trade with Africa by 2030.¹³

There are downsides to partnering with China, however. Its values-ambivalent approach is not built for sustainability and comes with a well-documented debt trap. For example, Zambia, which had more than 50 percent of its foreign loans from China, went into default and was unable to afford interest payments on loans financing construction projects in the country including ports, mines, and power plants (though China and Zambia have agreed to a restructuring of Zambia’s debt).¹⁴ Similarly, in Kenya, the government held back paychecks to its civil-service workforce to save cash to pay foreign loans.¹⁵

G7 countries are making progress on closing this partnership gap with China. Leaders at the Apulia Summit reaffirmed their ambition to meet the spending target of $600 billion by 2027, and the summit’s conclusions have a clear focus on infrastructure development, including with an announcement of a secretariat to facilitate the coordination of development projects.¹⁶ Leaders made further announcements at a side event where Italy joined the US- and EU-led consortium on projects in the Lobito Corridor in southern Africa, and Western companies like Microsoft and Blackrock pledged more investments across Africa and beyond.¹⁷

The summit also saw the participation of countries including Algeria, Brazil, Kenya, and Tunisia, among others—something Prime Minister Georgia Meloni lauded as delivering on a pledge to make outreach to the Global South a cornerstone of Italy’s G7 presidency.¹⁸

The summit also highlighted that the West’s values-based approach can be a strategic asset to building sustainable global partnerships. A focus on good governance and environmental and labor standards allows for long-term success and, in turn, economic growth. The G7 recognizes the importance of engaging with Africa specifically, with the 2024 Communiqué positioning the PGII, the Global Gateway, and the Mattei Plan as frameworks to “promote [the West’s] vision of sustainable, resilient, and economically viable infrastructure in Africa underpinned by transparent project selection, procurement, and finance.”¹⁹

This is a good start, but there is still room for improvements. Some of the West’s recent outreach has received similar criticisms to previous efforts, for example, failing to consult the very countries these efforts are meant to engage. In particular, African leaders noted Italy failed to consult them before announcing the Mattei Plan.²⁰ Moreover, the West’s tedious approach to infrastructure development can be perceived as an obstacle, not an asset, especially if it is not applied consistently.²¹

G7 countries should make greater efforts to convene with PGII partners in the region including the private sector, civil society, and government—to sustain debate and discussion about the West’s ambitions and the reasoning behind its values. At the same time, more regular and targeted engagements can, in turn, expose Western public and private financial institutions to the realities of partner markets and address the misconceptions of perceived risks. It’s a win-win for both sides. Where possible, the framing should be adapted to showcase the importance of the long-term sustainability of projects, especially compared to the non-durability of Chinese infrastructure. This engagement will also be a useful tool to address criticisms that Western initiatives are organized without the feedback and involvement of partner countries.

Finally, while competition with China will be a defining element of Western global infrastructure projects, geopolitics cannot eclipse all else. Recipient countries are looking for projects for their benefit to move up the global value chain and to spur domestic growth—not to be a pawn in other parties’ geopolitical rivalries. States can and have the option to accept projects from different sources, including from China. In response, policymakers should be cognizant that countries might be interested in partnering with both China and the West, and should not be forced into a binary, mutually exclusive choice of one or the other.

It will be important, then, for transatlantic policymakers to work out how to both compete against and partner with China. This will be critical specifically in the area of information and communications technology (ICT) development, where using “untrustworthy” vendors has been an area of focus. Policymakers should be clear about where and when non-G7 countries are involved in projects, and in what respects that will not preclude partnership.

The economic realities

Geopolitics may be a key impetus for development initiatives, but policymakers must also contend with economic realities that have long-plagued development projects. Economic stability in recipient countries is important for investments, but that stability is not always a luxury the West can expect. The International Monetary Fund’s regional economic outlook from spring 2024 for sub-Saharan Africa, for example, notes “the fiscal position of many sub-Saharan African countries has deteriorated, a trend exacerbated by repeated shocks and the ensuing demand for fiscal support,” which adds to political and economic uncertainty.²² The cost of borrowing for African states is also four to eight times higher than for Western countries, making raising capital prohibitive.²³

The reality is that currencies can collapse and interest rates can rise, but the need and opportunities for investments will remain. The West, therefore, cannot wait to invest in projects until after implementing structural reforms to partner states’ finances and economies.

G7 countries, the United States in particular, have stressed the importance of the private sector to achieve its financing goals. The Apulia Summit placed additional emphasis on the necessity of private-sector capital for the success of PGII. Side events on the PGII have taken place at every G7 summit since the PGII was announced, and since 2023, have prominently featured participation from major investors and companies including Citi, Nokia, Global Infrastructure Partners, Blackrock, and Microsoft—usually with investment announcements in tow.²⁴ Policymakers should appreciate and foster a bottom-up approach to project identification from the private sector and its appetite to invest.

However, leveraging private capital to help fund infrastructure projects comes with its own challenges. Investments into large-scale infrastructure projects are inherently risky, and shaky local markets only add to the unease felt by private-sector investors as currency devaluations risk erasing investments.

G7 members will therefore need to play a greater role, in some form, as guarantors of investments to help reduce the cost of borrowing and alleviate some of the risk. This comes with its own difficulties, as unlocking government-backed funds is not a straightforward process. Certain firms may not be eligible for funding depending on where they are located. And while it makes sense for European taxpayer funds to go to European firms, for instance, multinational firms can become caught up in the bureaucratic web, impeding their involvement with investment projects. Nevertheless, governments must figure out how to play a role here. The European Union, for instance, has a AAA credit rating, and can take on the role of a guarantor for private-sector investment.²⁵ The US International Development Finance Corporation (DFC) has provided political-risk insurance up to $25 million for investments in Ukraine.²⁶ The case of Ukraine is not a one-to-one comparison to investments in the Global South, but offers a useful example to consider. This is not meant to provide a blank check to the private sector for risky investments. However, investment projects cannot wait for long-term structural reforms that will impact geoeconomic changes like foreign-exchange rates. Instead, investors need to work within current economic realities.

Greater efforts are also needed to address change Western misconceptions of African markets and perceived risks that may not truly reflect realities on the ground. The metrics used by the West to measure projects, specifically environmental, social, and governance (ESG) standards, do not always have as strong a foothold in recipient countries, making investment look riskier or undesirable. Balancing the focus to communicate the impetus for these metrics—while maintaining a degree of flexibility and not completely sacrificing all ESG baselines—will be an important needle for policymakers and investors to thread.

Coordination of project identification and implementation 

Shared project standards are an opportunity for greater coordination. The 2023 Hiroshima G7 summit provided a starting point, highlighting forty projects of common interest.²⁷ Italy’s G7 presidency looked to further this effort. As Meloni outlined at the G7 summit side event focusing on the PGII, Italy’s ambition was to create “structured synergies and coordinated activities to maximize efforts and investments” between G7 members’ various projects.²⁸

The 2024 Apulia Summit specifically pledged greater effort at coordination through three prongs: establishing a secretariat “for effective implementation and investment coordination with partners,” supporting investment platforms to “enhance information sharing, transparency, and public policies on investments in Africa,” and working in particular on green investments in Africa.²⁹ These efforts are all good starts, but they remain wide in their ambition and vague in actual substance.

Coordination on project identification should be an early priority for the PGII secretariat. As G7 countries and the private sector will necessarily look to identify more of these projects, it will be useful to have shared criteria for projects to meet quality and sustainability standards. A shared understanding of what projects G7 members are looking to support, and metrics to assess projects, would also help the private sector in more easily identifying projects in which to invest. The Blue Dot Network is a good starting point for this effort, but so far only a few European G7 countries are on its steering committee.

Additionally, coordination between the United States and the EU through the TTC to support connectivity projects provides another useful starting point for this effort. Established in 2021, the TTC has become the backbone of this US administration’s efforts to strengthen its relationship with Brussels. Despite its initially limited scope, it has morphed into a clearinghouse for discussions not only on transatlantic trade and technology coordination, but also on sanctions against Russia and support for projects in third countries to support internet connectivity.³⁰ Supporting connectivity projects at the TTC is useful, but it is limited to smaller projects. Taking coordination from the TTC to the G7 level would allow participation and coordination with countries like the United Kingdom and Japan.

In terms of project selection and implementation, the G7 must also ensure money is available for maintenance, and enough staff is available to follow-up and to make projects sustainable. Ongoing efforts must leverage available funding not just to start projects, but to fund them through their full cycle, and staff them at a level that supports medium- to long-term maintenance. Often, this will include building relationships with on-the-ground in-country partners, and then training and subsequently employing local civilians to shoulder these responsibilities. It is simply not feasible for European, US, Japanese, British, or Canadian project managers to shoulder this burden. In this respect, it is equally important to get buy-in from national and local governments in recipient countries. Locals with knowledge about projects, communities, and factors on the ground will be critical to the maintenance and durability of such projects. The G7 conclusions rightly noted the importance of working with local partners. Now, a secretariat should take forward that effort in earnest.

Maintenance also means investing in skills. This is just as important for implementation and maintenance as investing in technology or brick-and-mortar buildings. Project identification must not look past the funds and time needed to train partners on the ground. For G7 members it will be important, especially on projects in which the United States and EU are involved, to standardize, de-duplicate, or divide training efforts.

Recommendations

At the 2024 Apulia summit, G7 countries made some progress on global infrastructure development in the context of the PGII. Implementation must now follow pronouncements. Italy should lead through the rest of its G7 presidency to see that real progress is made and to ensure this remains a priority in forthcoming summits (much like the role Japan played on artificial intelligence), and each G7 member must also work to meet its national commitments. To make greater coordination a reality, the G7 should undertake the following recommendations.

• Expand the Blue Dot Network Steering Committee. The European Union and/or all EU member states that are part of the G7—Italy, Germany, and France—should join the Blue Dot Network. The Blue Dot Network’s steering committee is currently composed of Australia, Japan, Spain, Switzerland, Turkey, the United Kingdom, and the United States (Canada, Czechia, and Peru are network members and do not contribute funds).³¹ All G7 members, and the EU, should become members of the steering committee. European membership in the Blue Dot Network should not be limited just to G7 EU members, and the EU could take on a role representing all EU member states.

• Invest in the PGII secretariat and commit to the adequate staffing of development institutions. A PGII secretariat can serve as an important hub for coordination, but it must be staffed adequately. G7 countries should assign national-level envoys to the secretariat, or at least fold them into the offices responsible, such as IMEC. Much of the work to take forward the agreements at the G7 will also fall to domestic institutions and development finance institutions. However, staffing and financing shortages have limited their effectiveness. G7 members should pledge a benchmark for spending on development financing.

• Establish regular convenings in or with partner countries. G7 members should commit to hosting regular meetings with partners and their private sectors, civil societies, and governments. The Hiroshima G7 meeting highlighting the PGII was a good start, but the initiative should now be further developed with a partner-first mindset. G7 member officials should host annual meetings in partner countries to make the case for the West’s efforts. This would signal a departure from the West’s historically paternalistic approach to engagements with African partners, and the Global South generally. Outreach and consistent engagement at the ambassadorial level would also be useful.

• Identify which third countries can take part in which projects. Currently, there is no clear framework for which third countries can take part in specific development projects or what limits exist to partnering with third countries, including those like China. Where issues like human rights and national security come into play, G7 countries may differ in their strategies for engaging with third countries. At the same time, there should be clearer frameworks for private companies and governments in terms of in which projects each can take part.

• Build in long-term maintenance and implementation of projects at the development stage. Projects should begin with the end in mind. If there is no way to measure success or to educate and employ local populations, these projects will turn into basic assistance with no longevity. G7 countries should agree that investment projects under the PGII umbrella should mandate a long-term implementation and maintenance plan with substantial involvement and buy-in from the partner country. Countries want economic success and want to move up the global value chain; they don’t want to be seen as mere development recipients. It is up to the G7 to ensure such upward movement happens.

• Map and publish all PGII-related projects. The PGII secretariat should map out all investments under the PGII umbrella, along with projects of interest. This could serve as a clearing house, especially for the private sector to identify opportunities for investment. This would also create a strong public relations tools showcasing the West’s impact and investment footprint. This effort could also be utilized to facilitate the submission of new investment projects by the private sector and potentially lead to consolidated funding for joint investments promoted or pursued by G7 members.

Conclusion

Giorgia Meloni called the dialogue around the PGII “one of the most significant achievements of the G7” to deliver “concrete action” to Africa and the Global South.³² The G7 has made progress, but such a conclusion is premature. The G7 is well on its way to turning its ideas and visions for new partnerships with the Global South into action. Putting the resources and people behind those visions will ensure that they come to life.

James Batchik is an associate director at the Atlantic Council’s Europe Center, where he supports programming on the European Union, the United Kingdom, Germany, Italy, and the center’s transatlantic digital and tech portfolio.

Rachel Rizzo is a nonresident senior fellow at the Atlantic Council’s Europe Center. Her research focuses on European security, NATO, and the transatlantic relationship.

Nick O’Connell is the deputy director for public sector partnerships at the Atlantic Council. He also contributes regularly to the Atlantic Council’s Italy project, a collaboration between the Europe Center and Middle East Programs.

New Atlanticist Apr 24, 2024

Dispatch from Rome: Political stability gives Italy a chance to step into the spotlight

By Jörn Fleck, Rachel Rizzo, James Batchik, Nicholas O’Connell

With newfound steadiness at home, Rome can make its priorities for the West heard, especially the security of the Mediterranean and outreach to Africa.

Economy & Business Europe & Eurasia

Report Apr 3, 2024

The case for African social infrastructure

By Tom Koch

Investment in African social infrastructure can be defined as African real estate that serves an essential societal purpose.

Africa Economy & Business

New Atlanticist Feb 5, 2024

Italy’s Mediterranean pivot: What’s driving Meloni’s ambitious plan with Africa

By Alissa Pavia

The Mattei Plan for Africa was presented on January 29-30 to a delegation of more than twenty-five African leaders. It seeks to establish an Italian agenda that prioritizes Africa’s needs and avoids predatory practices.

Africa Economy & Business

The Europe Center promotes leadership, strategies, and analysis to ensure a strong, ambitious, and forward-looking transatlantic relationship.

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The post Doing as the Romans do: Recommendations for the infrastructure development agenda for Italy’s G7 presidency appeared first on Atlantic Council.

• Introduction
• Establish a comprehensive security strategy
• Cybersecurity and critical infrastructure resilience
• Energy
• Food and water resiliency
• Enhancing defense resilience
• Conclusion
• About the authors
• Acknowledgments

Introduction

This report recommends actions for the new leadership of Taiwan to take to enhance its societal resilience against Chinese aggression in the context of both “gray zone” conflict and wartime attacks. The report focuses on establishing a comprehensive security strategy and analyzes three key areas particularly important for effective resilience: enhancing cybersecurity for critical infrastructures; improving energy security; and accelerating defense transformation.

The new administration of Lai Ching-te faces both existing resilience challenges and the potential for significantly greater problems if the People’s Republic of China (PRC) pursues expanded gray zone activities or if actual conflict occurs.¹ The ongoing challenges include substantial disinformation campaigns, cyberattacks, military incursions, and periodic economic coercion. Potential future challenges could involve expansion of one or more of these ongoing Chinese activities. In the context of a more contested environment such as a quarantine,² blockade, or a kinetic conflict, Chinese actions could seek to cause leadership failures and loss of social cohesion; undertake cyberattacks to target critical infrastructures; generate energy shortages; and seek to defeat Taiwan militarily before the United States could provide effective support. The potential for such harms substantially increases the importance of resilient responses by Taiwan.

The report recommends four major sets of actions to enhance Taiwan’s resilience:

1. Establish a comprehensive security strategy that engages government, the private sector, and individuals in cooperative efforts to ensure all facets of resilience including:
   1. Risk analyses and priority requirements.
   2. Organization of data relevant to responding to challenges from the PRC.
   3. Development of expertise in key areas required for response.
   4. Provision of governmental leadership and activation of the whole nation as part of a comprehensive approach.
2. Enhance cybersecurity by establishing:
   1. Off-island, cloud-based capabilities to duplicate governmental and other critical functions.
   2. Working arrangements with high-end, private-sector cybersecurity providers.
   3. A surge capability of cybersecurity experts.
   4. Regular engagement with US Cyber Command’s Hunt Forward program.
   5. Alternatives to undersea cables through low-earth orbit (LEO) communications satellites.
3. Bolster energy security resilience by:
   1. Rationalizing—that is, increasing—energy prices, especially for electricity.
   2. Supporting indigenous supply, including nuclear energy.
   3. Prioritizing energy needs.
   4. Dispersing and hardening energy storage facilities.
   5. Preparing comprehensive rationing plans for energy.
4. Enhance defense resilience by:
   1. Continuing the trend of higher defense spending to at least 3 percent of gross domestic product (GDP).
   2. Leveraging Taiwan’s strength in high tech manufacturing and shipbuilding to accelerate the development of a Ukraine-style, public-private “capability accelerator”³ for emerging technologies.
   3. Fielding low-cost, high-effectiveness capabilities including unmanned surface vessels, unmanned aerial vehicles, and naval mines.
   4. Incorporating training in emerging technologies and unconventional tactics for conscripts and reserves.
   5. Investing in East Coast port infrastructure as counterblockade strongholds.
   6. Raising the All-out Defense Mobilization Agency (ADMA) to the national level and implementing a larger civil defense force that fully integrates civilian agencies and local governments.

Establish a comprehensive security strategy

Resilience is not a new theme in Taiwan. Former President Tsai Ing-wen, who completed two terms in office on May 20, entitled her 2022 National Day Address “Island of Resilience,”⁴ and similarly identified resilience as a key factor for Taiwan in her two subsequent National Day addresses.⁵ “The work of making the Republic of China (Taiwan) a more resilient country is now our most important national development priority,” she stated in that 2022 speech, in which she articulated four key areas of  resilience: economy and industry, social safety net, free and democratic government system, and national defense. What is left undone, however, is aligning these and other resilience elements into a comprehensive security strategy similar to those undertaken by Finland⁶ and Sweden,⁷ which utilize a whole-of society approach to enhance resilience.

Resilience is a nation’s ability to understand, address, respond to, and recover from any type of national security risk. Given the scale of risk Taiwan faces from China, domestic resilience should be front and center in Taiwan’s national security strategy.⁸ Comparable comprehensive national security approaches, such as the Finnish model, aim to foster and enable an engaged national ecosystem of partners, each with a clear understanding of their roles and responsibilities. Finland’s model is instructive, underscoring the importance of engagement by the entire society:

• The Security Strategy for Society lays out the general principles governing preparedness in Finnish society. The preparedness is based on the principle of comprehensive security in which the vital functions of society are jointly safeguarded by the authorities, business operators, organisations and citizens.⁹

Comprehensive security thus is far more than just government activities:

• Comprehensive security has evolved into a cooperation model in which actors share and analyse security information, prepare joint plans, as well as train and work together. The cooperation model covers all relevant actors, from citizens to the authorities. The cooperation is based on statutory tasks, cooperation agreements and the Security Strategy for Society.¹⁰

The Finnish strategy identifies seven “vital functions” as key areas: leadership; international and European Union activities; defense capability; internal security; economy, infrastructure, and security of supply; functional capacity of the population and services; and psychological resilience.¹¹

Taiwan has taken a variety of actions to enhance resilience including the establishment in 2022 of the All-out Defense Mobilization Agency.¹² That agency has a useful but limited scope with its mandate of “comprehensive management of ‘planning for mobilization, management, service, civil defense, [and] building reserve capacity.’ ”¹³ But while defense is important (and further discussed below), as the Finnish and Swedish strategies underscore, Taiwan should expand its approach to resilience to include the full spectrum of governmental, private sector, and individual tasks—and the necessary cooperative efforts to make them most effective.

President Lai’s recent election ushered in an unprecedented third consecutive term for the Democratic Progressive Party.¹⁴ This outcome not only provides continuity in the agenda set by the island’s duly elected leader, but also presents an opportunity to sharpen the focus areas for resilience. As Taiwan transitions to a Lai presidency, the challenge of shoring up the island’s resilience should be at the forefront.

As a valuable starting point for establishing such an expanded resilience strategy, the Lai government should undertake extensive consultations with both Finland and Sweden—which could be facilitated as necessary by the United States. Taiwan should also seek to engage with the Hybrid Center of Excellence, based in Finland, which is an “autonomous, network-based international organization countering hybrid threats.”¹⁵

The discussion below describes several important elements of a comprehensive resilience strategy, and it will be a crucial task for the Lai administration to expand Taiwan’s current efforts to the full scope of such an approach. Resilience is a team game with the whole of society playing a role. But only Taiwan’s central government can act as the team captain, setting expectations, establishing priorities, formulating and communicating national strategy, and coordinating activities. Only leaders in national-level government can oversee the critical work of developing institutional effectiveness in key areas of risk management and resilience.

As a starting point, Taiwan should undertake a comprehensive audit now to uncover any gaps in the country’s ability to understand, respond to, and recover from both the chronic risks it currently faces and any more acute manifestations of PRC aggression in the future. Taiwan’s government should examine the following areas to pursue greater resilience:

1. Activating the whole nation: Working with the private sector and local government, and communicating to households are essential to develop a truly comprehensive approach to Taiwan’s resilience.
2. Understanding risk: Developing a set of scenarios that will help prioritize activities across government and beyond. Prioritizing is critical where resources are limited—as is identifying areas of cross-cutting work that can help to reduce risk in multiple scenarios.
3. Building data capacity: Laying a foundation for data exploitation needs will be critical for Taiwan, which will need this capacity both ahead of and during any crisis response. Preparing for and providing this capacity is not just the preserve of government, as commercially available and industry data sources will provide critical insights. Planning to access, receive, store, and process this data needs to start early, as the foundations for technical infrastructure, capabilities, data-sharing policies, and data expertise in government all require time and cannot just be activated on the cusp of crisis. Part of this work entails developing scenarios to help analysts map out gaps in information sources (intelligence, open source, commercial, and from allies) that Taiwan will likely need in each circumstance to build situational awareness. Ahead of and during crisis, risk assessment and effective decision-making will be highly dependent on the availability, quality, and usability of intelligence, information, and data.
4. Expanding its network of professional skills and resources: Assessing the range of skills and the levels of resourcing needed in government to manage a long-term crisis posture should start well ahead of any crisis. It would be helpful to look now at the gaps in key areas of professional expertise: analysts, data experts, crisis-response professionals, and operational planners will all be needed in larger numbers to sustain an effective response. Taiwan will also need professionally administered and well-exercised crisis facilities, resilient technical infrastructure, and business continuity approaches in place.
5. Preparedness and planning: Thinking through potential impacts of crisis scenarios in advance and working up potential policy and operational responses will bolster the quality of adaptability, which is an essential component of resilience. The process of exercising and refining plans is also helpful to build the professional connections and networks that will be activated during a live response.

Working with countries that are already developing vanguard resilience capabilities could help Taiwan quickly establish a workable model. For example, the United Kingdom’s National Situation Centre¹⁶—built in less than a year during the COVID-19 pandemic—is a model of developing access to critical data in peacetime and lessons learned from previous crisis scenarios about the practical challenges a nation could face in a variety of scenarios. Many commercial providers offer competent ways of displaying data insights on dashboards, and while this is helpful, it is only part of what can be achieved.

As a model for its broader resilience requirements, Taiwan will have the benefit of its existing efforts including in the counterdisinformation arena, where it has programs as effective as any in the world, despite the fact that Taiwan consistently faces the world’s highest volume of targeted disinformation campaigns.¹⁷ The saturation of PRC information manipulation across Taiwan’s traditional and social media platforms is strategically designed to undermine social cohesion, erode trust in government institutions, and soften resistance to Beijing’s forced unification agenda, while sowing doubts about America’s commitment to peace and stability in the region. 

Taiwan has developed a multifaceted strategy to combat this onslaught, eschewing heavy-handed censorship in favor of promoting free speech and empowering civil society. This approach serves as a beacon for other democracies, demonstrating how to effectively counter disinformation through rapid-response mechanisms, independent fact-checking, along with widespread media literacy initiatives. Collaborative efforts such as the Taiwan FactCheck Center, Cofacts, and MyGoPen have proven instrumental in swiftly identifying and debunking false rumors, notably during the closely watched presidential election on January 13.¹⁸

Taiwan’s Minister of Digital Affairs (MoDA) attributes the island’s success in combating this “infodemic” to its sophisticated civil-sector efforts, which avoids reliance on reactive takedowns of malicious content akin to a game of whack-a-mole. Much like its handling of the pandemic—where Taiwan achieved one of the world’s lowest COVID-19 fatality rates without resorting to draconian lockdowns—it has demonstrated resilience and innovation in the digital sphere.¹⁹

Taiwan’s response to disinformation demonstrates that it is well-positioned to establish a comprehensive approach to societal resilience. The discussion below describes several important elements of a comprehensive resilience strategy, but it will be a crucial task for the Lai administration to expand Taiwan’s current efforts to the full scope of such an approach.

Cybersecurity and critical infrastructure resilience

Cyber risks to critical infrastructures

Like all advanced economies, Taiwan depends on its critical infrastructures. Critical infrastructures have been described as “sectors whose assets, systems, and networks, whether physical or virtual, are considered so vital . . .  that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety.”²⁰ Since several critical infrastructures are interlinked, it is important in evaluating resilience to “capture cross-cutting risks and associated dependencies that may have cascading impacts within and across sectors.”²¹ Among those interlinked critical infrastructures are energy, communications, transportation, and water. Each of these are critical to society as a whole and each are dependent on digital technology for their operations.

In Taiwan, the Administration for Cyber Security has identified critical infrastructures “by their feature types into the following eight fields: energy, water resource, telecommunications, transportation, banking and finance, emergency aid and hospitals, central and local governments, and high-tech parks.”²² It is worth underscoring that several of Taiwan’s critical infrastructures, such as the electric grid²³ and the water system,²⁴ are significantly centralized or have other notable vulnerabilities such as the dependency on undersea cables for international communications²⁵ that increase the potential consequences from a successful cyberattack.

The Taiwan government has fully recognized the significant risks from cyberattacks. As described by Taiwan’s Administration for Cyber Security, “Due to Taiwan’s unique political and economic situation, the country faces not only a complex global cyber security environment but also severe cyber security threats, making the continuous implementation and improvement of cyber security measures a necessity.”²⁶

The number of cyberattacks against Taiwan is notable.²⁷ Published estimates range from five million cyberattacks per day against Taiwanese government agencies²⁸ to the detection of 15,000 cyberattacks per second, including attempted intrusions, in Taiwan during the first half of 2023.²⁹

The attacks often focus on key societal infrastructures. A recent Voice of America report noted that just prior to the January 2024 elections:

• Most of the attacks appeared to focus on government offices, police departments, and financial institutions, with the attackers focused on internal communications, police reports, bank statements and insurance information.³⁰

Google researchers have likewise described the cyber threat to key critical infrastructures, revealing that it is “tracking close to 100 hacking groups out of China [and that these] malicious groups are attacking a wide spectrum of organizations, including the government, private industry players and defense organizations.”³¹

The attacks themselves are often relatively sophisticated. Trellix, a cybersecurity firm, described multiple techniques utilized by attackers that “focused on defense evasion, discovery, and command and control . . . to subvert system defenses to gather information about accounts, systems, and networks.” Among them are “living-off-the-land” techniques, which allow attackers to maintain their intrusions over time with smaller chances of detection.³²

While no one can say with certainty what actions the PRC would take in the context of a blockade of or outright conflict with Taiwan, the United States is clear-eyed about the potential for attacks on its own critical infrastructures if engaged in conflict with China. The February 2023 Annual Threat Assessment of the US Intelligence Community notes the likelihood of such PRC cyberattacks in that context:

• If Beijing feared that a major conflict with the United States were imminent, it almost certainly would consider undertaking aggressive cyber operations against U.S. homeland critical infrastructure and military assets worldwide . . .  China almost certainly is capable of launching cyber attacks that could disrupt critical infrastructure services within the United States, including against oil and gas pipelines, and rail systems.³³

The ongoing Russian cyberattacks against Ukraine in the Russia-Ukraine war further underscore the reality of critical infrastructures as a target in a conflict. It seems reasonable to assume that comparable actions (and perhaps even more) would be undertaken against Taiwan in the event of a blockade or kinetic conflict. “Probable targets,” according to James A. Lewis, would include critical infrastructures such as electrical power facilities, information and communications systems, and pipelines.³⁴

Actions to enhance Taiwan’s cyber resilience

Taiwan can enhance its cyber resilience through its own actions and in collaborative activities with private-sector companies and with the United States. While cyberattacks can be highly disruptive, one of the important lessons of the Ukraine-Russia conflict is that the effects on operations can be mitigated, as described in a CyberScoop analysis that underscores a shift in expectations:

• The war has inspired a defensive effort that government officials and technology executives describe as unprecedented—challenging the adage in cybersecurity that if you give a well-resourced attacker enough time, they will pretty much always succeed. The relative success of the defensive effort in Ukraine is beginning to change the calculation about what a robust cyber defense might look like going forward.³⁵

According to the analysis, the critical element for such success has been significant multinational and public-private collaboration:

• This high level of defense capability is a consequence of a combination of Ukraine’s own effectiveness, significant support from other nations including the United States and the United Kingdom, and a key role for private sector companies.
• The defensive cyber strategy in Ukraine has been an international effort, bringing together some of the biggest technology companies in the world such as Google and Microsoft, Western allies such as the U.S. and Britain and social media giants such as Meta who have worked together against Russia’s digital aggression.³⁶

Actions by Taiwan

Taiwan should utilize the Ukraine model of cyber resilience—backed in part by private-sector companies—and take comparable actions to enhance its cybersecurity. Taiwan has a substantial existing cybersecurity framework on which to build such mitigating actions. Since 2022, the Ministry of Digital Affairs, through its Administration for Cyber Security, is responsible for “implementing cyber security management and defense mechanisms for national critical infrastructures” including “evaluating and auditing cyber security works at government agencies and public entities.”³⁷ Utilizing that framework, Taiwan should undertake the following four actions that would significantly enhance the island’s cybersecurity resilience.

First, Taiwan should utilize cloud-based capabilities to establish a duplicative set of cyber-enabled governmental functions outside of Taiwan. Ukraine undertook such actions, thereby rendering Russian cyberattacks in Ukraine unable to disrupt ongoing governmental activities. Taiwan’s Ministry of Digital Affairs has been evaluating the use of public clouds including the possibility of  “digital embassies” abroad to hold data.³⁸ Taiwan should organize such actions with key cloud providers such as Amazon Web Services, which provided support to Ukraine.³⁹ The United States should work with Taiwan and appropriate cloud providers to help effectuate such a result.

Second, Taiwan should establish arrangements with private-sector cybersecurity providers to undertake defensive operations against PRC cyberattacks in the context of a blockade or kinetic conflict. As noted above, such private-sector actions have been instrumental to Ukraine, and would similarly be invaluable for Taiwan. The United States should also help facilitate such private-sector defensive cyber operations for Taiwan.

Third, Taiwan should organize a surge capability of individual cybersecurity experts who can be called upon to complement governmental resources. Both Estonia and the United Kingdom have very effective cyber-reserve approaches, and Taiwan should engage with each country, seeking lessons learned as part of establishing its own reserve corps.

Fourth, Taiwan needs to accelerate its low-earth orbit satellite communications program. The Ministry of Digital Affairs’ two-year, US$18 million plan to strengthen the resilience of government communications entails building more than 700 satellite receiver stations. The impetus: ships from mainland China have repeatedly severed submarine internet cables in what Taiwan perceived as “a trial of methods” that the PRC could use to prepare for a military invasion.⁴⁰

The existing program involves satellites as well as ground-based receivers. The Taiwan Space Agency disclosed its plan for a “dedicated” LEO satellite communications project in late 2022,⁴¹ as a public-private partnership: 

• Distinct from traditional government programs, this groundbreaking project is structured as a privately operated venture, wherein the Taiwanese government would retain a substantial minority ownership. . . . This project intends to enhance the Taiwan Space Agency’s initial proposal for two government-built LEO satellites by evolving it into a “2+4” configuration. This will involve constructing four additional satellites through collaborative efforts between the public and private sectors.⁴²

Actions with the United States

In accord with the Taiwan Relations Act,⁴³ and as a matter of long-standing policy, the United States strongly supports Taiwan’s defensive capabilities including for cybersecurity. The Integrated Country Strategy of the American Institute in Taiwan (essentially the unofficial US embassy) specifically provides that “bolster[ing] Taiwan’s cybersecurity resilience” is one of the United States’ strategic priorities for the island.⁴⁴ To support that objective, the United States can enhance Taiwan cybersecurity through cooperative defensive activities.

First, US Cyber Command regularly supports the network resilience of allied countries and partners through its “Hunt Forward” operations, which are “strictly defensive” joint ventures, undertaken following an invitation from the ally or partner, to “observe and detect malicious cyber activity” on these networks, together searching out “vulnerabilities, malware, and adversary presence.”⁴⁵

While Taiwan has not been specifically identified as a Hunt Forward participant, Anne Neuberger, who is the US deputy national security advisor for cyber and emerging technology, said at a Politico Tech Summit in 2023 that in the event of a major cyberattack on Taiwan, the United States would “send its best teams to help hunt down the attackers, the same approach typically used to help global allies in cyberspace.”⁴⁶ She described the typical approach as:

• Putting our best teams to hunt on their most sensitive networks to help identify any current intrusions and to help remediate and make those networks as strong as possible.”⁴⁷

Neuberger also highlighted US work with Taiwan to carry out military tabletop games and exercises to prepare for potential cyberattack.⁴⁸

More recently, the National Defense Authorization Act (NDAA) for Fiscal Year 2024 explicitly authorized the Defense Department to cooperate on:

• Defensive military cybersecurity activities with the military forces of Taiwan to (1) defend military networks, infrastructure, and systems; (2) counter malicious cyber activity that has compromised such military networks, infrastructure, and systems; (3) leverage United States commercial and military cybersecurity technology and services to harden and defend such military networks, infrastructure, and systems; and (4) conduct combined cybersecurity training activities and exercises.⁴⁹

Going forward, those authorities authorize not only Hunt Forward actions but also actions to  leverage commercial and military technology to harden such networks (which would seem to resolve any export control issues) and to conduct combined training and exercises, all of which underscores clear congressional approval for enhanced cybersecurity activities with Taiwan.⁵⁰

Second, the United States should undertake to enhance Taiwan’s communications resilience by making available access to US commercial and military LEO networks. The important role of the commercial provider Starlink in assuring communications in the context of the Ukraine-Russia war is well-known.⁵¹ Starlink’s parent company, SpaceX, is, however, controlled by Elon Musk, whose Tesla company has major investments in China. That linkage has raised the question of whether Taiwan could rely on any commercial arrangements it might make on its own with Starlink—particularly since Starlink did impose some limitations on Ukraine’s use of the network.⁵² However, as previously described by one of the authors of this report, the US government has sway on such matters:

• The Defense Production Act authorizes the [US] government to require the prioritized provision of services—which would include services from space companies—and exempts any company receiving such an order from liabilities such as inability to support other customers.⁵³

Accordingly, the US should rely on this authority to organize appropriate arrangements with Starlink—and other space companies that provide like capabilities—to ensure access that would support Taiwan communications. One way to do this would be to incorporate appropriate terms into the commercial augmentation space reserve (CASR) program arrangements that US Space Force is currently negotiating with civil space providers,⁵⁴ as part of the Department of Defense’s overall commercial space strategy.⁵⁵

Additionally, the DOD is developing its own LEO capability through a variety of constellations being put in place by Space Force.⁵⁶ Pursuant to the recent NDAA authorization noted above, DOD should work with the Taiwan military to ensure that those constellations will be available to support Taiwan as necessary.

Longer term, the United States should also undertake to enhance the resilience of Taiwan’s undersea cables. As previously proposed by one of the authors, the United States should lead in establishing an international undersea infrastructure protection corps. It should:

• Combine governmental and private activities to support the resilience of undersea cables and pipelines. Membership should include the United States, allied nations with undersea maritime capabilities, and key private-sector cable and pipeline companies.⁵⁷

Such an activity would include focus on cybersecurity for undersea cable networks, hardening and other protection for cable landing points, and capabilities and resources to ensure expeditious repair of cables as needed.⁵⁸ To be sure, getting such an activity up and running will necessarily be a multiyear effort. However, Taiwan’s vulnerability underscores the importance of beginning promptly and working as expeditiously as possible.

Cybersecurity recommendations for Taiwan

• Utilize cloud-based capabilities to establish a duplicative set of cyber-enabled governmental functions outside of Taiwan.
• Establish arrangements with private-sector cybersecurity providers to undertake defensive operations against PRC cyberattacks.
• Organize a surge capability of individual cybersecurity experts who can be called upon to complement governmental resources.
• Accelerate the low-earth orbit satellite communications program.
• Actively engage with Cyber Command’s Hunt Forward activities.
• Enhance Taiwan’s communications resilience by making available access to US commercial and military LEO networks.
• Undertake on a longer-term basis enhanced resilience of Taiwan’s undersea cables.

Energy

As part of its efforts to enhance resilience, Taiwan must mitigate its energy vulnerabilities, as its reliance on maritime imports for about 97 percent⁵⁹ of its energy needs creates acute risks. To lessen its dependency on maritime imports and strengthen its resiliency in the face of potential PRC coercion, Taiwan should curb energy and electricity demand, bolster indigenous supply, overhaul its inventory management, and prepare rationing plans. A resilient energy security approach would credibly signal to the PRC that Taiwan could hold out for long durations without maritime resupply.

Curbing demand by rationalizing prices 

Taiwan’s ultra-low electricity prices are a security risk (and a black eye for its climate targets). Reliance on seaborne energy shipments presents straightforward security problems, and Taiwan’s low electricity prices subsidize consumption that is being met by imports of hydrocarbons, especially coal. The new Lai administration should make haste prudently, increasing electricity prices more frequently and significantly, without exceeding the limits of the politically possible.

Taiwan’s electricity price quandary is illustrated by Taipower, the state-owned monopoly utility. In 2022 and 2023, Taipower lost 227.2 billion New Taiwan dollars (NTD) and 198.5 billion NTD, respectively, as its per kilowatt hour cost of electricity sold substantially exceeded per unit prices.⁶⁰ Taipower’s prices failed to offset the steep rise in electricity input costs amid Russia’s invasion of Ukraine and the post-COVID-19 unsnarling of supply chains.

Taiwan’s electricity costs remain too low, diminishing the island’s resiliency, although policymakers have now taken some steps in light of the problem. The Ministry of Economic Affairs’ latest electricity price review, in March 2024, raised average prices by about 11 percent, with the new tariff reaching about 3.4518 NTD, or approximately $0.11 USD/kWh.⁶¹ This rationalization of prices, while welcome, is insufficient. In the United States, the rolling twelve-month ending price in January 2024 for all sectors totaled $0.127/kWh.⁶² Taiwan’s heavily subsidized electricity consumers therefore enjoy a discount in excess of 13 percent compared to their US counterparts, despite US access to low-cost, abundant, and indigenously produced energy.

Taiwan’s heavily subsidized electricity prices incentivize maritime imports, especially coal. Astonishingly, Taiwan was the world’s largest per capita user of coal generation for electricity in 2022, higher than even Australia, a major coal exporter.

Taiwan’s low electricity prices and use of coal expose the island to PRC economic coercion. Taiwan’s dependency on imported coal heightens its vulnerability in the summer, when the island’s electricity-generation needs peak. Concerningly, Taiwan has already experienced electricity shortfalls in summer peacetime conditions, including a wave of outages⁶³ between July and August 2022. With the island’s future summer cooling needs set to rise even further due to climate change and hotter temperatures, Taiwan’s electricity needs pose a vulnerability that the PRC may attempt to exploit.

Curbing Taiwan’s electricity demand during summer months is critical, necessitating a rise in prices. While this reduction is a principal energy security challenge, the island must also do more to secure supply, especially for nuclear energy.

Supply: Support indigenous production

Taiwan’s resiliency will be strengthened by producing as much indigenous energy as possible, especially during the critical summer months. Taiwan, which has virtually no hydrocarbon resources, can therefore indigenously produce only four different forms of energy at scale: nuclear energy, offshore wind, onshore wind, and solar. Taiwan should pursue each of these indigenous energy sources. Taiwan should apply “carrots” by strengthening incentives and payments for indigenous production. At the same time, applying the “stick” of higher prices to energy consumption, especially for energy imports, would bolster the island’s resiliency.

Taiwan’s renewable resources are significant and often economically viable, but they cannot secure adequate levels of resiliency by themselves. Taiwan’s wind speeds slow in the summer,⁶⁴ limiting onshore and offshore wind’s effectiveness in bolstering energy security. Additionally, Taiwan’s stringent localization requirements for offshore appropriately minimize PRC components and sensors in Taiwan’s offshore wind turbines, but also raise the costs of this technology. Taiwan’s solar potential⁶⁵ is also limited⁶⁶ by cloudy skies, frequent rainfall, and land scarcity.

Accordingly, nuclear energy is the most viable way for Taiwan to address its summer electricity needs without turning to maritime imports. While Taiwan’s nuclear reactors must acquire fuel from abroad, this fuel can be used for approximately eighteen to twenty-four months.⁶⁷ Taiwan should maintain its existing nuclear energy capacity; restart retired capacity as soon as politically and technically feasible; and seek new, incremental capacity over time.⁶⁸

Unpacking Taiwan’s storage complexities: Dispersal and hardening is critical

To cope with various contingencies, including the possibility of a prolonged summertime blockade, Taiwan should increase its stockpiles of energy, disperse inventory around the island, and harden facilities.

While Taiwan’s ability to hold out against a blockade involves by many factors, energy inventories are a critical element. Taiwan’s electricity reserves are limited: it reported fifty-six days of supply of coal inventories in February 2023,⁶⁹ and aims to raise its natural gas inventories from eleven days to more than twenty days by 2030.⁷⁰ These inventory levels should be expanded, in part because “days of supply” fail to encapsulate uncertainty. Demand fluctuates depending on temperature and other variables, while Taiwan’s access to energy storage inventories faces the risk of sabotage and, in certain scenarios, kinetic strikes.

Taiwan’s management of petroleum reserves is a matter of great importance, given the use of these fuels, especially diesel, for military matters. Taiwan’s Energy Administration, in the Ministry of Economic Affairs, reported in April 2024 that its total oil inventories stood at 167 days of supply.⁷¹ This topline figure presents an overly optimistic portrait of Taiwan’s petroleum security, however. For instance, Taiwan’s government-controlled inventories in April 2024⁷² included 2.6 million kiloliters of crude oil and refined products; private stocks added another 6.5 million kiloliters. Accordingly, Taiwan reports forty-seven days of supply from government stockpiles, with an additional 120 days from private inventories.⁷³ Given that domestic sales and consumption equated to about 54,200 kiloliters per day from prior comparable periods,⁷⁴ Taiwan calculated it had about 167 days of supply.

There may, however, be insufficient monitoring of private inventories. Marek Jestrab observed:

• A concerning—and possibly significant—loophole exists in these laws, where the criteria and computation formulas for the actual on-hand security stockpiles will be determined by the central competent authority, and are not required to be disclosed. This presents the opportunity for energy that is loaded onboard merchant shipping while in transit to Taiwan to count toward these figures.⁷⁵

While Taiwan should ensure that stockpiles are actually on the island, and not at sea, it also needs to carefully examine the inventory split between crude oil and crude products, such as diesel, gasoline, jet fuel, etc. Additionally, Taiwan’s policymakers should not expect to rely on its crude inventories, which only have a latent potential: crude oil cannot be used until it is refined into a crude product. Therefore, if the PRC disrupted Taiwan’s refineries via cyber or even kinetic means, Taiwan would not be able to access the totality of its crude oil reserves.

Taiwan’s military requirements for fuel would likely surge during a confrontation or conflict with the PRC, reducing the “days of supply.” Since Taiwan’s military vehicles largely run on diesel, the island should pay careful attention to this product.

Taiwan should disperse and harden its energy assets, especially diesel storage, as concentrated objects would present inviting targets for the PRC. Beijing is studying Russia’s invasion of Ukraine closely and will not fail to notice that Moscow attacked about 30 percent of Ukrainian infrastructure in a single day.⁷⁶ As one author witnessed during his recent visit to Kyiv, Ukraine’s dispersal of electricity assets is achieving a reasonable degree of success. Indeed, Russia’s more recent campaign⁷⁷ attacking large-scale thermal and hydroelectric power plants illustrates the utility of dispersed energy infrastructure. Like Ukraine, Taiwan should disperse and harden its energy storage inventories to the maximal feasible extent.

Rationing plans

While both Taiwan’s electricity supply and demand will be very hard to predict in a state of emergency, rationing plans must be considered—especially for the island’s manufacturing and semiconductor industries.

Taiwan’s economy is uniquely⁷⁸ tied to electricity-intensive manufacturing, as industrial consumers accounted for more than 55 percent of Taiwan’s electricity consumption in 2023.⁷⁹ Most of these industrial producers (such as chipmaker Taiwan Semiconductor Manufacturing Company) service export markets—not Taiwan. While the PRC might attempt to disrupt the island’s energy and electricity supply via cyber and kinetic means, Taiwan’s electricity consumption would fall dramatically during a crisis if Taiwan’s industries were forced to shut down. Although the closure of Taiwan’s industry would prove economically ruinous, it would also make the island’s electricity and energy issues much more manageable. Adding an additional layer of complication, many of Taiwan’s most valuable exports – such as chips – are shipped via civilian airliners, not on seaborne vessels, and would consequently be more difficult to interdict in circumstances short of war.⁸⁰ Taiwan should prepare rationing plans for a variety of contingencies, adapting to a range of scenarios, including a quarantine, siege, or even kinetic conflict. Taiwan must be ready. 

Energy recommendations for Taiwan 

• Gradually raise electricity and energy prices, communicating that price hikes will persist and require significant adjustments over the medium term.
• Expand the frequency of electricity price reviews from twice a year to a quarterly basis. More frequent price adjustments will allow smaller incremental increases while also enabling Taiwan to respond more quickly to potential contingencies.
• Expand fiscal support for indigenous forms of energy. Demand-side management programs could include virtual power plants, building efficiency measures, two-way air conditioning units, and more. On the supply side, Taiwan should incentivize indigenous energy production, including nuclear energy, onshore wind, offshore wind, and solar.
• Extend the life of Taiwan’s nuclear energy power plants and consider expanding capacity. Nuclear energy is not only Taiwan’s best option for meeting its summer generation needs but also extremely safe and reliable. In the event of a conflict, the PRC is extremely unlikely to launch highly escalatory and provocative attacks against nuclear facilities on territory it seeks to occupy.
• Bolster domestic energy supplies and decarbonization objectives including by considering easing localization requirements for offshore wind projects—while ensuring that PRC components and sensors are not incorporated.
• Disperse and, where possible, harden energy and electricity assets and volumes across the island for both military and civil defense needs.
• Examine potential alternatives to diesel, as diesel inventories can begin to degrade after several weeks, including “long-duration diesel” solutions that, while more polluting, could extend the shelf life of its inventories, enhancing the durability of Taiwan’s military and civil defense efforts.
• Deepen liquified natural gas (LNG) ties with the United States. Contracting with US LNG producers would moderately bolster Taiwan’s energy security, as the PRC would be more reluctant to interdict US cargoes than vessels from other nations.
• Conduct comprehensive studies into energy contingency planning, examining how energy and electricity would be prioritized and rationed during various scenarios.

Enhancing defense resilience

Ever since Beijing leveraged then-Speaker Nancy Pelosi’s August 2022 visit to Taiwan as an excuse to launch large-scale joint blockade military exercises, pundits have labeled the residual military situation around Taiwan as a “new normal.” Yet there is really nothing normal about a permanent presence of People’s Liberation Army (PLA) Navy warships menacingly surrounding the island along its twenty-four nautical mile contiguous zone, and nothing usual about increasing numbers of manned and unmanned military aircraft crossing the tacit median line in the Taiwan Strait—a line that held significance for seven decades as a symbol of cross-strait stability. Nor should it be viewed as normal that a steady stream of high-altitude surveillance balloons—which are suspected of collecting military intelligence—violate Taiwan’s airspace.⁸¹ Some have better described this “new normal” as a strategy akin to an anaconda noticeably tightening its grip around the island, drawing close enough to reduce warning time and provocative enough to raise the risk of inadvertent clashes. In other words, the PRC has unilaterally dialed up a military cost-imposition campaign meant to chip away at peace and stability across the Taiwan Strait, wear down Taiwan’s military, and erode confidence and social cohesion in Taiwan society. 

Russia’s full-scale invasion of Ukraine in 2022 was an additional wake-up call for the citizens of Taiwan, following mainland China’s 2019 crackdown on Hong Kong freedoms, heightening recognition of the risks presented by the PRC and, in particular, that the long-standing status quo in cross-strait relations is no longer acceptable to Beijing. Taiwan thus finds itself in the unenviable position of simultaneously countering PLA gray zone intrusions and cognitive warfare—what NATO calls affecting attitudes and behaviors to gain advantage⁸²—while beefing itself up militarily to deter the growing threat of a blockade or assault.

With this backdrop, Taipei authorities have since embarked on long-overdue reforms in defense affairs, marked by several developments aimed at bolstering the island democracy’s military capabilities and readiness in the face of growing threats from Beijing.

First, Taiwan’s overall defense spending has undergone seven consecutive year-on-year increases, reaching 2.5 percent of gross domestic product.⁸³ While this is commendable, Taiwan’s defense requirements are very substantial, and its budget in US dollars is only $19.1 billion.⁸⁴ Accordingly, it will be important for Taiwan to continue the trend of higher defense spending to at least 3 percent of GDP both to bolster Taiwan’s military capabilities and as a deterrent signal to Beijing—and also to garner international community recognition that Taiwan is serious about its own defense. A key element will be to ensure that Taiwan has sufficient stocks of ammunition and other weapons capabilities to fight effectively until the United States could fully engage and in the event of a longer war. One area that deserves a high degree of attention is defense against ballistic and cruise missiles and unmanned vehicles. Especially in light of the recent coalition success in defeating such Iranian attacks against Israel, planning should be undertaken to assure comparable success for Taiwan against PRC attacks. Adding mobile, short-range air defenses to the high-priority list of military investments for Taiwan—such as the highly mobile National Advanced Surface-to-Air Missile System (NASAMS)⁸⁵—will make it harder for the PLA to find and destroy Taiwan defenses, especially if combined with passive means for target detection and missile guidance.

Second, the new president can kick-start an enhanced approach to defense by embracing full integration of public-private innovation and adopting Ukraine’s model of grass-roots innovation for defense, which has served it well through a decade of war against a much larger Russia. Recognizing that innovation is itself a form of resilience, Taiwan can draw valuable lessons from Ukraine, particularly in leveraging private-sector expertise. By implementing what some Ukrainian defense experts term a “capability accelerator” to integrate emerging technologies into mission-focused capabilities, Taiwan can enhance its resilience and swiftly adapt to evolving security challenges, including rapidly fielding a high volume of unmanned systems to achieve distributed surveillance, redundant command and control, and higher survivability.⁸⁶ This comprehensive approach, which recognizes the private sector as the greatest source of innovation in today’s complex security environment, holds significant potential for enhancing Taiwan’s defense capabilities through the utilization of disruptive technologies. The island’s overall resilience would significantly benefit by drawing the private sector in as a direct stakeholder in national defense matters. 

Ukraine’s grass-roots model of defense innovation, spearheaded by volunteers, nongovernment organizations, and international partners, is a worthy and timely model for Taiwan. Ukraine’s approach has yielded significant advancements in drone warfare, as well as sophisticated capabilities like the Delta battlefield management system—a user-friendly cloud-based situational awareness tool that provides real-time information on enemy and friendly forces through the integration of data from sources such as drones, satellites, and even civilian reports.⁸⁷ This collaborative model, reliant on cooperation between civilian developers and military end users, has propelled Ukraine’s military technological revolution by integrating intelligence and surveillance tasks, while enhancing decision-making and kill-chain target acquisition. Taiwan will benefit from a comparable approach.

Third, as suggested above, Taiwan should focus a large portion of its defense budget on low-cost, highly effective systems. In terms of force structure, it appears that Taiwan has settled on a design that blends large legacy platforms of a twentieth-century military with the introduction of more survivable and distributable low-end asymmetric capabilities. The latter are best exemplified by Taiwan’s indigenously produced Ta Chiang-class of high-speed, guided-missile corvettes (PGG) and Min Jiang-class fast mine laying boats (FMLB).⁸⁸ But much more must be done to bolster Taiwan’s overall defense capabilities by focusing on less expensive, but nonetheless highly effective systems.

In Ukraine’s battle against Russian Federation invaders, drones have provided Ukrainian forces with important tactical capabilities by enabling them to gather intelligence, monitor enemy movements, and conduct precision strikes on high-value targets. Taiwan can comparably utilize low-cost UAVs to establish mesh networks that connect devices for intelligence, surveillance, and reconnaissance and for targeting that would be invaluable in countering a PRC amphibious assault. Lessons from Ukraine further highlight the importance of having the right mix of drone types and capabilities in substantial stockpiles, capable of a variety of missions. Notably, Ukrainian officials have called for the production of more than one million domestically produced drones in 2024.⁸⁹ Then-President Tsai’s formation of a civilian-led “drone national team” program is a commendable step in this direction and underscores the power of collaborative innovation in joint efforts between  users.⁹⁰ Encouraging cooperation between Taiwan drone makers and US private industry will accelerate the development of a combat-ready unmanned systems fleet with sufficient range, endurance, and payload to enhance situational awareness and battlefield effects. 

Concurrent with those efforts utilizing unmanned systems, Taiwan should bolster its naval mining capabilities as a strategic measure against PRC aggression. Naval mines represent one of the most cost-effective and immediately impactful layers of defense.⁹¹ In this regard, Taiwan’s new Min Jiang class of FMLB represents the right type of investments in capabilities which could prove pivotal in thwarting potential invasion attempts.

Even more significantly for a Taiwan audience, Ukraine broke a blockade of its Black Sea ports using a combination of naval drones and coastal defense missiles—and repelled the once-mighty Russian Black Sea Fleet—all without a traditional navy of its own.⁹² Faced with clear intent by a PLA Navy practicing daily to isolate the island, the time is past due for Taiwanese authorities to hone their own counterblockade skills including a heavy reliance on unmanned surface vehicles. 

Taiwan should also make rapid investments in port infrastructure and defenses along Taiwan’s eastern seaboard in places such as Su’ao and Hualien harbors, which can serve as deepwater ports that are accessible, strategic, antiblockade strongpoints, and where any conceivable PLA blockade would be at its weakest and most vulnerable point logistically. Su’ao harbor, as a potential future homeport for Taiwan’s new indigenous Hai Kun-class diesel submarines, could also serve a dual purpose as an experimentation and development zone for public-private collaboration on unmanned-systems employment and operations. Infrastructure investments in East Coast ports could enhance the island’s ability to attain emergency resupply of energy, food, humanitarian supplies, and munitions under all conditions, broadening options for international community aid and complicating PLA efforts.

Fourth, every new capability needs trained operators who are empowered to employ and engage.  This year Taiwan began implementation of a new, one-year conscript training system for male adults born after January 1, 2005 (up from a wholly inadequate four months of conscription in the past decade).⁹³ Taiwan’s “all-out defense” plan realigns into a frontline main battle force consisting of all-volunteer career military personnel, backed up by a standing garrison force composed mainly of conscripted military personnel guarding infrastructure, along with a civil defense system integrated with local governments and private-sector resources. Upon mobilization, there would also be a reserve force to supplement the main battle and garrison forces. 

According to details laid out in its 2023 National Defense Report, Taiwan’s revamped one-year conscript system and reorganized reserve mobilization system place significant emphasis on traditional military combat skills, such as rifle marksmanship and operation of mortars.⁹⁴ However, in response to evolving security challenges and the changing nature of warfare, Taiwan’s military should incorporate greater training in emerging technologies and unconventional tactics, along with decentralized command and control, especially in the areas of drone warfare, where unmanned aerial vehicles and surface vessels play a crucial role in reconnaissance, surveillance, and targeted strikes. By integrating drone warfare training into the conscript system as well as in annual reserve call-up training, Taiwan can better prepare its military personnel to adapt to modern battlefield environments and effectively counter emerging threats.

Integrating drone operations into military operations down to the conscript and reservist level offers a cost-effective means to enhance battlefield situational awareness and operational capabilities, and also has the added benefit of enhancing the attractiveness and value of a mandatory conscription system emerging from years of low morale and characterized by Taiwan’s outgoing president as “insufficient” and “full of outmoded training.”⁹⁵ Recognizing the imperative to modernize military training to face up to a rapidly expanding PLA threat, Taiwan’s military force realignment plan came with a promise to “include training in the use of Stinger missiles, Javelin missiles, Kestrel rockets, drones, and other new types of weapons . . . in accordance with mission requirements to meet the needs of modern warfare.”⁹⁶ Looking at the example of Ukraine, where drones have been utilized, underscores the importance of incorporating drone warfare training into its asymmetric strategy.

The Taiwan Enhanced Resilience Act “prioritize[d] realistic training” by the United States, with Taiwan authorizing “an enduring rotational United States military presence that assists Taiwan in maintaining force readiness.”⁹⁷ There have been numerous reports of US special forces in Taiwan,⁹⁸ and those forces could provide training in tactical air control, dynamic targeting, urban warfare, and comparable capabilities.⁹⁹ Likewise, parts of an Army Security Force Assistance Brigade could do similar work on a rotational basis, on- or off-island.

To facilitate a comprehensive and integrated approach to defense planning and preparedness between the military, government agencies, and civilian organizations, Taiwan has also established the All-out Defense Mobilization Agency, which (as noted above) is a centralized body subordinate to the Ministry of National Defense that is tasked with coordinating efforts across various sectors, down to the local level, to enhance national defense readiness. That agency would be significantly more effective if raised to the national level with a broadened mandate as part of a comprehensive approach.

The Taiwanese leadership also should consider elevating their efforts to create a large-scale civil defense force, offering practical skills training which would appeal to Taiwanese willing to dedicate time and effort toward defense of their communities and localities. These skills could include emergency medical training, casualty evacuation, additive manufacturing, drone flying, and open-source intelligence. Private, nonprofit civil defense organizations such as Taiwan’s Kuma Academy hold widespread appeal to citizens seeking to enhance basic preparedness skills.¹⁰⁰ With a curriculum that covers topics ranging from basic first aid to cognitive warfare, Kuma Academy’s popular classes typically sell out within minutes of going online. According to a recent survey of domestic Taiwan opinions sponsored by Spirit of America, “When facing external threats, 75.3% of the people agree that Taiwanese citizens have an obligation to defend Taiwan.”¹⁰¹ A well-trained civil defense force and other whole-of-society resilience measures provide an additional layer of defense and enhance social cohesion to better deny Beijing’s ultimate political objective of subjugating the will of the people.

Defense resilience recommendations for Taiwan

• Raise defense spending to at least 3 percent of GDP.
• Adopt Ukraine’s model of grass-roots innovation in defense.
• Focus a large portion of its defense budget on low-cost, highly effective systems including unmanned vehicles and naval mines.
• Incorporate greater training in emerging technologies and unconventional tactics for conscripts and reserves.
• Invest in East Coast port infrastructure as counterblockade strongholds.
• Elevate the All-out Defense Mobilization Agency to the national level and implement a larger civil defense force that fully integrates civilian agencies and local governments.

Conclusion

On April 3, 2024, Taiwan was struck by the strongest earthquake in twenty-five years. In the face of this magnitude 7.4 quake, Taiwan’s response highlights the effectiveness of robust investment in stricter building codes, earthquake alert systems, and resilience policies, resulting in minimal casualties and low infrastructure damage.¹⁰² Taiwan’s precarious position on the seismically vulnerable Ring of Fire, a belt of volcanoes around the Pacific Ocean, mirrors its vulnerability under constant threat of military and gray zone aggression from a mainland China seeking seismic changes in geopolitical power. Drawing from its success in preparing for and mitigating the impact of natural disasters, Taiwan can apply a similarly proactive approach in its defense preparedness. Safeguarding Taiwan’s sovereignty and security requires investments in a comprehensive security strategy for resilience across society—including cybersecurity for critical infrastructures, bolstering energy security, and enhanced defense resilience. Such an approach would provide Taiwan the greatest likelihood of deterring or, if necessary, defeating PRC aggression including through blockade or kinetic conflict. 

About the authors

Franklin D. Kramer is a distinguished fellow at the Atlantic Council and a member of its board. He is a former US assistant secretary of defense for international security affairs.

Philip Yu is a nonresident senior fellow in the Indo-Pacific Security Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security, and a retired US Navy rear admiral. 

Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center, a nonresident senior fellow in the Indo-Pacific Security Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security, and editor of the independent China-Russia Report.

Elizabeth “Beth” Sizeland is a nonresident senior fellow at the Scowcroft Strategy Initiative of the Atlantic Council’s Scowcroft Center for Strategy and Security. Earlier, she served in the United Kingdom’s government including as deputy national security adviser and as adviser to the UK prime minister on intelligence, security, and resilience issues.

This analysis reflects the personal opinions of the authors.

Acknowledgments

The authors would like to thank the following individuals for their helpful comments and feedback: Amber Lin, Elsie Hung, Kwangyin Liu, and Alison O’Neil.

Report Oct 4, 2023

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Africa is central to the global energy transition. The necessary resources for a low-carbon economy are abundant in Africa, with the continent possessing 30 percent of the world’s known mineral reserves—many of which are critical for the manufacturing of batteries, solar panels, wind turbines, and other clean energy technologies. Africa’s untapped potential is greater yet, with research suggesting that the continent holds 85 percent of manganese reserves, 80 percent of platinum and chromium reserves, 47 percent of cobalt reserves, and 21 percent of graphite reserves, much of which is unexplored or underexplored. Demand for these resources is also on the rise, expected to more than double between now and 2030.

While Africa is rich in minerals and strategically located, it risks losing out on a historic investment opportunity. The infrastructure investment problems that have hindered non-Chinese capital flows into African markets for decades are front and center as investors and governments assess the strategic role the continent could and should play in the global shift to cleaner energy sources. While infrastructure investment has shown growth in recent decades, a significant financing gap persists, estimated to be around $100 billion each and every year.

To counterbalance China’s dominance in battery supply chains, the United States must leverage its strengths in technology, education, and capital markets. Initiatives such as Prosper Africa need to be dynamically scaled and optimized to provide meaningful support, ensuring that US investors can more easily and rapidly navigate the complex landscape of Washington.

With this urgency in mind, this report provides a snapshot of Africa’s mineral wealth and the state of mining industries, draws out the similarities between the mining and infrastructure investment attraction challenges, describes the competitive landscape African nations find themselves in, and makes innovative recommendations—namely to the US government—to rapidly accelerate investment in sustainable mining industries in African markets.

This report is the first in a series on the critical minerals sector in Africa, and is part of the Africa Center’s Critical Mineral Task Force.

The Africa Center works to promote dynamic geopolitical partnerships with African states and to redirect US and European policy priorities toward strengthening security and bolstering economic growth and prosperity on the continent.

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Although California’s story is mostly one of success, both the state of California and the city of Los Angeles face several significant challenges that could undermine their longstanding formulas. First, California’s economy is at some risk of losing its luster given its longstanding reputation as a high-cost state for workers and business. Second, California’s monumental plans to combat climate change—including the massive expansion of wind and solar infrastructure—are at odds with other elements of the state’s environmental legacy, such as habitat conservation. Third, climate change itself might derail decarbonization as extreme weather worsens, threatening communities, business, and the power grid. California’s continued success as a global technology and climate innovator depends on its ability to mitigate these risks.  

Staff

Peter Engelke

Senior Fellow, Scowcroft Strategy Initiative

Global Energy Center Scowcroft Center for Strategy and Security

Technology & Innovation Europe & Eurasia

The Atlantic Council would like to thank Chevron for supporting our work on this project.

The author thanks Danielle Miller, Frank Willey, and Daniel Hel- meci for their research assistance.

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• Introduction
• Severe consequences of energy insecurity
• Energy-transition barriers
• Applying the CEWG roadmap
• A global call to action
• Acknowledgments
• About the author
• About the Caribbean Energy Working Group Co-Chairs

Introduction

Countries in the Eastern Caribbean¹ are among the world’s most energy insecure nations. These countries grapple with high electricity costs that undercut economic competitiveness and growth, are heavily dependent on petroleum products, and are uniquely vulnerable to the effects of climate change. At the same time, a World Bank designation as middle- or high-income economies significantly limits access to concessional financing. The result is a slow transition to renewable energy power generation, including attracting commercial interest for the relevant infrastructure and unbundling utility systems that often stymie regulatory changes and curtail needed investments in the energy sector.

The time may be ripe for accelerating the pace of the transition in the Eastern Caribbean. A broad consensus exists among regional governments, the business community, and multilateral partners to further usher in a transition to renewable energy, given the unique vulnerabilities facing Eastern Caribbean countries. Meanwhile, countries in the Southern Caribbean (Guyana, Trinidad and Tobago, and Suriname) are leaning into their hydrocarbon reserves as they balance their own energy transition, while other countries are either attracting commercial interest or are far along in their renewable energy development relative to the Eastern Caribbean. Though there is an abundance of solar and wind power potential in the Eastern Caribbean—along with significant geothermal reserves in Dominica, Saint Vincent and the Grenadines, and Saint Kitts and Nevis—countries in this region are faced with defining how a realistic, affordable, and just energy transition can take place and unlocking new private sector and multilateral resources.

The Atlantic Council’s Caribbean Initiative engaged in a series of consultations with the Caribbean Energy Working Group (CEWG), whose members identified two main constraints to the region’s transition: the top-down vertically integrated nature of state-owned utility systems; and limited access to low-cost financing and credit to governments and clean energy developers. While recognizing that an energy transition requires a holistic approach, CEWG members propose that the starting points must be addressing utility constraints and access to finance to ensure a reliable and resilient energy system transformation that is sustainable and affordable for consumers, governments, and the private sector in the Eastern Caribbean. An energy transition in the Eastern Caribbean must ensure reliable power to combat price volatility for consumers while energy infrastructure should be resilient to the effects of climate change, hurricanes and strong tropical storms, and rising temperatures.

The CEWG brings together up to fifteen policy and technical experts from across the Caribbean, and was first convened in 2023 by the Atlantic Council. This publication builds off the CEWG’s first report, “A roadmap for the Caribbean’s energy transition,” which was published last year and outlined a five-step process that governments, developers, and regional partners can undertake to facilitate an energy transition in the Caribbean. The five-step process includes: conducting energy modeling and analysis; modernizing energy grids; diversifying utility structures; creating bankable projects; and scaling project investment to national and subregional levels. This publication focuses on applying steps three and four of the roadmap.

The CEWG met as part of two roundtable discussions, followed by five one-on-one consultation sessions across the group to identify barriers and solutions to accelerating a reliable and resilient energy transition in the Eastern Caribbean. This publication serves as a complement to existing initiatives and projects dedicated to facilitating an energy transition, with the aim of raising additional awareness of the reality and the urgency of the moment for the world’s most vulnerable countries.

Severe consequences for energy insecurity

Countries in the Eastern Caribbean are open facing, small market economies, vulnerable to ebbs and flows of the global financial system. The region’s import dependence means that supply chain constraints and rising global interest rates have a disproportionate effect on these economies. For example, when Russia’s war in Ukraine stemmed the flow of fertilizer to agriculture commodity exporters, food inflation in the Eastern Caribbean skyrocketed and remained high even as prices eventually declined in industrialized nations.² And although the price of renewable energy, such as solar photovoltaic (PV) power, has declined dramatically over the past decade, capital and investment in this sector naturally gravitated to the bigger economies in the Global North.

Stronger storms, more outages
Climate change is a significant driver of the energy transition in the Eastern Caribbean. Hurricanes and strong tropical storms cause flash flooding and high wind speeds that damage energy infrastructure. Global warming, as a result of increasing greenhouse gas emissions (GHG), is fueling stronger and more frequent tropical storms. The result is lost power for days and weeks, as was the case in 2017 when Hurricane Irma hit Antigua and Bermuda, damaging transmission lines and generators. Similarity, in 2019, Hurricane Dorian caused widespread power outages in Dominica.³

The makeup of these economies has resulted in Eastern Caribbean countries paying some of the highest electricity prices in the Americas, including double and sometimes triple of what the average consumer pays in the United States ($0.109 per 1 kilowatt-hour (KW/h).⁴ On average, consumer costs in Antigua and Barbuda ($0.367 per 1 KW/h) and Saint Kitts and Nevis ($0.333 per 1 KW/h) rank on the higher end of the spectrum, with Saint Vincent and the Grenadines ($0.185 per 1 KW/h) on the lower end, and the rest of the countries falling in between. These high costs coincide with an import dependence on petroleum products, with Antigua and Barbuda (100 percent), Dominica (92 percent), Grenada (93 percent), Saint Lucia (98 percent), Saint Kitts and Nevis (87 percent), and Saint Vincent and the Grenadines (95 percent) all relying on fossil fuels to satisfy almost all of their energy demand.⁵ The cost of these imports account for almost 7 percent of the subregion’s gross domestic product, cutting into public expenditure needed to invest in climate adaptation projects and social sectors such as education and health services.⁶

High electricity prices and energy imports undercut the competitiveness of key economic sectors in the Eastern Caribbean—notably the hospitality sector—and limit the purchasing power of consumers. According to the Inter-American Development Bank, six of the countries prioritized in this publication rank in the global top ten of tourism-dependent economies.⁷ The tourism industry accounts for a significant share of energy demand in these countries, increasing the prices for hotel rooms due to high usage of air conditioning and lighting.⁸ Given that the tourism industry is an economic driver, high energy costs can make industries uncompetitive vis-à-vis other tourist hubs in the region such as Jamaica and the Dominican Republic. Beyond the tourism sector, more than a quarter of energy demand in the Eastern Caribbean is for residential use.⁹ High power bills can take up a large share of household income and decrease the purchasing power of individuals, leaving them unable to spend money on local products and services, like food and transportation, which help to stimulate economic growth.

Despite the challenges facing the Eastern Caribbean, bright spots exist. Renewable energy, such as solar, wind, and geothermal reserves, are abundant. Across the region, the sun shines more than 200 days annually,¹⁰ has an estimated potential of almost 70 gigawatts of available offshore wind (excluding Dominica), and (excluding Antigua and Barbuda) houses an estimated 6,290 megawatts (MW) of available geothermal reserves.¹¹ But this potential has not been tapped. Current installed capacity of renewable energy (as a percentage) stands at: Antigua (4 percent), Dominica (25 percent including hydroelectric power), Grenada (4 percent), Saint Lucia (3 percent), Saint Kitts and Nevis (5 percent), and Saint Vincent and the Grenadines (17 percent including hydroelectric).

Geothermal development is a high priority in the Eastern Caribbean
Dominica has an estimated 1,390 MW of geothermal potential. The country’s small population and energy grid had not provided adequate incentive to develop that capacity, due to the high capital costs of exploring its geothermal reserves at scale- until recently. Commitment by the government in 2023 to develop its reserves and support this year from the World Bank have helped the country begin developing its geothermal potential. The World Bank is financing a new project at $38.5 million to support drilling of new geothermal wells and helping construct new transmission lines and substations to connect the future geothermal plants to consumers. Meanwhile, St. Kitts and Nevis is consistently looking for new partners to support its own geothermal ambitions for close to a decade, with a total project cost estimated at US $505 million. A mixture of bilateral and multilateral financing will be needed to bring this project closed to Dominica’s stage.¹²

Energy-transition barriers

The utility systems in the Eastern Caribbean are state-owned entities—excluding Saint Lucia, which has a public-private model—tasked with providing power to citizens. Tax revenues are used by governments to invest in critical and social services. These are top-down systems in vertically integrated structures, meaning that they single-handedly operate the generation, transmission, and distribution of power. This model can stifle innovation and competition, leaving customers without alternative choices and increasing the cost of electricity. Further, it means that introducing new clean energy technologies, when possible, must be financed and implemented by the utility, which is often devoid of the needed capital and technical assistance to act. Therefore, incorporating renewable energies into this model can be expensive—particularly since these technologies have high upfront costs. It is both a political and economic challenge that clean energy is not necessarily cheap energy.

However, unbundling utility systems is not a straightforward solution and not all state-owned entities are necessarily bad. Breaking these systems apart might divide consumer bases and may not lower the cost of electricity given the small size of Eastern Caribbean countries’ populations. Instead, as discussed below, the best-case scenario is to introduce innovation into the utility system, such as diversifying the utility structure across generation, distribution, and transmission by using public-private models. Maintaining an intact customer base is critical for utilities to keep the costs low for consumers while ensuring that utilities and the private-sector entities are still turning a profit. This does not mean that breaking up systems is the sole way to ensure low prices for renewable energy generation. Some markets, particularly in micro economies like in the Eastern Caribbean, might be too small to introduce competition and keep prices affordable. There is no one-size-fits-all solution, as changes in utility structures need to adapt to and be contextualized for each individual country.

Changing the business model of the utilities can help to create more incentives to incorporating renewable energy generation by factoring in the social cost externalities (the associated costs of fossil fuels on the broader public and society) of depending on fossil fuels as a realistic price comparison. Current models determine the price of electricity based on the cost of petroleum imports. But the emissions of fossil fuels—not just carbon dioxide but also other toxins that cause respiratory illnesses—increase cancer risks and, generally, overall poor health. The future healthcare costs for the consumer and the burden on governments to invest in adequate healthcare infrastructure are typically not added to the total cost of importing fossil fuels. If a full cost analysis and reformed business model are developed, then the price of importing fossil fuels might be higher than renewable power generation.

Commercial developers fund projects initially on their own before seeking to make projects bankable by obtaining loans that are backed by cash flow. Projects in the Eastern Caribbean take a long time to develop, given financing challenges due to unclear regulations and permitting, and a lack of investment-grade utility systems to guarantee payments under negotiated power purchasing agreements. Due to the long period of development, investors and governments look to derisk their projects by seeking full grants or convertible loan grants to help them clear these hurdles.

Commercial renewable energy projects also suffer from limited access to low cost and concessionary finance and capital. As discussed, state-owned utilities and governments are responsible for financing new renewable energy projects. These countries do not have the fiscal space or national budgets to self-finance these projects, leaving them to seek loans and grants from multilateral development banks (MDBs) and bilateral lenders. However, the World Bank classifies Eastern Caribbean countries as middle- and high-income economies, disqualifying them from accessing low-cost loans from the World Bank and those that also use this classification, such as the US Development Finance Corporation. This also applies to the business community and energy developers who need access to financing during the pre-project phase (prefeasibility studies, production of design drawings, and environmental social and impact assessments, among others).

Applying the CEWG roadmap

Addressing utility constraints and unlocking new access to finance and capital both are needed, but a well thought-out process that takes the context and nuances of each country into account is needed. To the international community, these countries are bound by their similarities (e.g., population and market size, and geographic location). Realistically, there are enough differences between them that suggest that no solution to the region’s energy transition challenges can be a one-size-fits-all approach. Each country’s context will determine how the below solutions are applied, from unbundling utility structures to attracting finance and capital based on renewable energy. While each country needs a transition that is contextualized to its own reality, technical assistance and transmission upgrades are at the core of the energy transition. Policy action and financial resources are both required, and Caribbean governments and regional institutions will need the assistance of partners like the US Trade and Development Agency and the Inter-American Development Bank (IDB) to deploy the assistance throughout the transition process.

Based on the small consumer bases and state-owned nature of utility systems in the Eastern Caribbean, unbundling utilities might not actually lower electricity costs. Instead, the structure of the utility might be reformed to a public-private partnership (PPP) model that also accounts for price comparisons between fossil fuel imports with social cost externalities attached to a transition to renewable energies. In essence, PPPs are a collaborative model that leverages the strengths of both the public and private sectors, which can help accelerate the deployment of renewable energy infrastructure while ensuring cost-effectiveness and financing sustainability. For example, needed transmission upgrades can be undertaken by governments to help absorb costs and prevent them from being passed to consumers. And the private sector can take responsibility for generation projects, driving down costs and improving competitiveness. Governments and utilities are still able to benefit from the revenue to use for public-sector investments while private-sector entities can streamline innovation in the energy sector, helping to attract more commercial interest.

Designing PPP models will be complex. Each country and its utility or utilities are unique. The challenge will be designing the appropriate model. Here, entities such as the IDB should work with the Caribbean Development Bank (CDB), and use input from private-sector companies in the region, to design a PPP model for utility structures. The IDB houses the experience and expertise in designing PPP models, and through its new One Caribbean program is already building a project preparation facility that can incorporate PPP designs into its model.¹³ The challenge is that Eastern Caribbean countries are not members of the IDB, though they are borrowing member countries of the CDB. In the past, the CDB and the IDB have worked together to streamline assistance to and analysis for the Eastern Caribbean. The same can be done here, with the added benefit of the CDB already understanding the nuances of each of the countries in the subregion.

However, designing and implementing a PPP model requires political will and government support. Governments might not be anxious to adopt renewables if the cost of the electricity does not lower prices—affecting key political constituents—and if accelerating an energy transition comes with increased public debt through high-interest loans. Simply put, a transition is only possible if governments are given assurances and feel comfortable that incorporating renewables will not affect their standing with their constituents, meaning that entities like the IDB, CDB, and partners, such as the United States, will have to secure government support before an energy transition can take place.

As utility systems are able to reform their models to ensure that renewable energy projects are affordable for governments and consumers, support to countries and investors is needed to finance projects through the project pipeline. As discussed in the CEWG’s first report, the projects in the Caribbean tend to fall in the “valley of death,” due to project delays ranging from limited site access to an inability to secure additional financing. Key to moving projects through the pipeline is to derisk them and ensure their bankability. Two steps are needed. First, Caribbean countries need access to the expertise and capacity to conduct feasibility studies, environmental social and impact assessments, and design power purchase agreements, among other things. Second, Eastern Caribbean countries need access to investment vehicles that prioritize grants or low-cost loans for the upfront costs of renewable energy projects. Entities like IDB Invest have pockets of financing that allows the institution to inject equity into projects, but the pool of funds is small relative to what is available for other countries or subregions in Latin America.

This is where regional partners like the United States and existing regional programs like the CARICOM Development Fund (CDF) and the Bridgetown Initiative¹⁴ should be utilized. The United States government, through the International Development Finance Corporation (DFC), should take advantage of the current DFC reauthorization process to create a carve out for clean energy projects in the region. The scale of investment is minimal compared to other DFC-financed projects and would have outsized effects in the small markets and grids in the Eastern Caribbean. This would take an act of the US Congress—particularly for a middle-income country exception—but there is precedent and increasing appetite to prioritize energy security in the Caribbean. Further, the United States should encourage the IDB and the CDB to work with the CDF and the Bridgetown Initiative to create a project pipeline (with attached equity investments available) to attract large-scale financing and grants from global donors. Capital and finance around the world are available if regional partners and entities are able to build mechanisms that streamline funding to energy projects in the Eastern Caribbean and build a project pipeline to attract commercial investors.

A global call to action

An energy transition in the Eastern Caribbean requires political will, regional coordination, and consistent technical assistance. Relative to the cost of the global energy transition, the needed capital in the Eastern Caribbean is minimal. But the tides are changing in the region, as more political actors and financial institutions are thinking creatively of how to accelerate an energy transition. Still, human capital and capacity limitations stifle the region’s ability to undertake this process alone. Partner governments like the United States and Canada have committed to the region’s energy security in the past few years, but these two countries do not have the funding or domestic political will to direct their attention consistently to the Eastern Caribbean. Addressing the climate crisis and facilitating a global energy transition is increasing in urgency each day, meaning that more actors across governments, international bodies, the business community, and foundations are unlocking new forms of support. Tapping into these resources will be critical. Regional governments and their partners need to continue raising the profile of the Eastern Caribbean and using regional and global platforms, from the Group of Twenty to the UN General Assembly to the COP29 climate talks in November to ensure that these countries are not left behind.

Acknowledgments

The Atlantic Council thanks board member Melanie Chen for her financial support of this publication and the corresponding working group. A thank you also goes to the CEWG members who joined the numerous one-on-one consultations and roundtables that informed this publication, including co-chairs David Goldwyn and Eugene Tiah. A special thank you goes to Jason Marczak, vice president and senior director of the Adrienne Arsht Latin America Center, which houses the Caribbean Initiative, for his guidance and comments throughout the working group and during the drafting of this publication. Maite Gonzalez Latorre managed the production flow of this publication.

About the author

Staff

Wazim Mowla

Associate Director & Fellow, Caribbean Initiative

Adrienne Arsht Latin America Center

Caribbean China

Wazim Mowla is the associate director and fellow of the Caribbean Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center. He leads the development and execution of the initiative’s programming, including the Financial Inclusion Task Force, the US-Caribbean Partnership to Address the Climate Crisis (PACC) 2030 Working Group, and the Caribbean Energy Working Group. Since joining the Council, Mowla has co-authored major publications on the strategic importance of sending US COVID-19 vaccines to the Caribbean, strategies to address financial derisking, and how the United States can advance new policies to support climate and energy resilience.

About the Caribbean Energy Working Group Co-chairs

David Goldwyn is president of Goldwyn Global Strategies, LLC (GGS), an international energy advisory consultancy, and chairman of the Atlantic Council Global Energy Center’s Energy Advisory Group. He is a globally recognized thought leader, educator, and policy innovator in energy security and extractive-industry transparency.

Eugene Tiah is a senior business executive with in-depth knowledge and more than forty years of experience in the oil and gas business within the United States and the Caribbean region. He is also the president and CEO of the Caribbean Energy Chamber.

Report May 31, 2024

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By Wazim Mowla, Charlene Aguilera

The Atlantic Council organized a PACC 2030 Working Group and worked closely with governments, the business community, and civil society organizations to support the implementation of PACC 2030’s objectives.

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Financial de-risking in the Caribbean: The US implications and what needs to be done

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This report identifies how the withdrawal of correspondent banking relations, otherwise known as de-risking, affects Caribbean economies, people, and US-Caribbean relations.

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Caribbean Economy & Business

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

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The post Accelerating the energy transition in the Eastern Caribbean appeared first on Atlantic Council.

Executive summary

The European Union (EU) has increasingly raised its climate ambition, especially since the launch of the European Green Deal in 2019, which set a target of climate neutrality by 2050. The bloc’s achievement demands a contribution from all sectors: power, industry, buildings, and transport. The latter is sizable, accounting for almost a quarter of the total emissions of the twenty-seven EU members (EU-27) in 2021—with road transport responsible for more than 75 percent of the transport sector’s total emissions given its reliance on fossil fuels. Additional policies and measures are required since the sector’s emissions have substantially increased since 1990, unlike the other sectors.

While EVs are gaining relevance and are set to become an increasingly important factor in decarbonization, policymakers will need to address critical issues, especially relating to enabling infrastructure (i.e., charging stations) to have a sustainable and smooth transition. Italy, one of the largest car markets in Europe, has much to do to decarbonize road transport. It has developed alternative fuels, but electricity still accounts for less than 0.3 percent of vehicle fuels. It has set ambitious EV targets to achieve by 2030: 6.6 million cars including 4.3 million BEVs.

This article explores Europe’s rising ambition in electrifying this sector and the political and market drivers at work; presents the case of Italy, including its national objectives, trends, and challenges in the transition; and provides a summary of takeaways and policy recommendations to further support the electrification of the road transport sector, especially in Italy.

Pier Paolo Raimondi is a researcher in the Energy, Climate and Resources Program at the Istituto Affari Internazionali (IAI) in Rome. His main research topics are related to energy markets, energy policy, energy geopolitics, and geoeconomics. He also is a PhD student in institutions and politics at the Catholic University of Milan. He holds a master of international relations and a bachelor degree in political science from the University of Milan.

New Atlanticist Jun 12, 2024

Europe is gearing up to hit Chinese EVs with new tariffs. Here’s why.

By Atlantic Council experts

The European Commission just proposed new tariffs on China-made electric vehicles of up to 38 percent. Atlantic Council experts explain why—and what might happen next.

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The Atlantic Council in Turkey, which is in charge of the Turkey program, aims to promote and strengthen transatlantic engagement with the region by providing a high-level forum and pursuing programming to address the most important issues on energy, economics, security, and defense.

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The Europe Center promotes leadership, strategies, and analysis to ensure a strong, ambitious, and forward-looking transatlantic relationship.

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The post Electrification of the road transport sector in Europe and the case of Italy appeared first on Atlantic Council.

But now, climate-skeptic voices and opposition to climate efforts are gaining political weight, as shown by recent trends in the European Parliament election results earlier this month. While Europeans still see climate change as a major challenge, discontent with financial developments and concerns about defense and security rank even higher in their priorities, according to the latest Eurobarometer polling.

With the changing composition of the European Parliament, some of the biggest implications will concern climate policy. A weakened EU climate agenda could result in the continent falling short of decarbonization targets. It could also influence partners abroad to mirror more lax climate policies. In the face of these shifts, Europe’s policymakers need a resilient environmental policy profile that endures political shifts and builds trust in the longevity of EU climate action among voters and international partners. 

The legacy of a climate consensus

In the 2019 European Parliament elections, climate change was a decisive topic for voters. Following the vote, the then nominee for European Commission president, Ursula von der Leyen, promptly pledged a strong focus on climate action as part of her eventually successful bid to secure the approval by the European Parliament. The Commission turned her pledge into action with the European Green Deal, which comprised numerous ambitious decarbonization policies. Von der Leyen called it Europe’s “man on the moon” moment.

To align EU legislation with the intermediate goal of reducing net greenhouse gas emissions by at least 55 percent by 2030, the Fit for 55 package expanded the EU emissions trading system, introduced the Carbon Border Adjustment Mechanism for carbon-intensive imports, and set new standards for the land use, transportation, and energy sectors, among other policies. Furthermore, at least 30 percent of the European recovery package funding was allocated for climate action.

Despite the initial progress, the wind in the sails of the EU’s green agenda now appears diminished. A sluggish economic recovery, stubbornly persistent inflation, and rising energy costs—in part, a downstream effect of Russia’s full-scale invasion of Ukraine in 2022—have resulted in the green agenda as a target for farmers’ protests and rallies.

Interest group pressure and conservative opposition to climate action have hampered green policies at the national level, too. A watered down German climate change law, climate-skepticism among Italian political leadership, and French President Emmanuel Macron calling in May of last year for a “pause” of EU environmental regulations exemplify the simultaneous nature of developments on the member state and the EU level.

Green parties lost in this year’s European Parliament elections, greatly diminishing their political weight in the body. Some commentators have already written the obituary of the bloc’s green agenda, arguing that “Europe’s green moment is over.” 

What’s next for the Green Deal?

The center-right European People’s Party (EPP), von der Leyen’s party group and the largest in the European Parliament, reaffirmed Europe’s leading role in global climate action in its 2024 party platform. At the same time, it advocates for technological neutral approaches and distances itself from the Greens and Socialists, whose position the EPP calls “ideological” in their manifesto. The rejection of a contentious bill on pesticide use in 2023 demonstrates the group’s ambiguous stance on environmental legislation as it restrained von der Leyen’s Green Deal objectives to foster sustainability in the agricultural sector. Newly and reelected EPP members are “completely divided on where to go with the Green Deal,” according to Greens/EFA co-president Terry Reintke, emphasizing the limbo in which the project currently hangs.

In the incoming European Parliament, support for the Green Deal will continue to come from the center-left Socialists and Democrats (S&D) group, which highlights the social aspects of a just climate transition, and the liberal Renew Europe group, which emphasizes the need for pragmatic implementation. While the Greens proposed an even more ambitious Green and Social Deal as a major investment plan, other left groups are more critical of the bloc’s approach to decarbonization.

Further to the right, the green backlash has become a rallying cry for conservative and far-right political groups, such as the European Conservatives and Reformists (ECR) and the populist Identity and Democracy (ID), which oppose the Green Deal, advocate for local climate strategies, and call decarbonization targets unrealistic. A more prominent role of the ECR and ID in the European Parliament, following their gains in the European elections could slow down the already insufficient emissions reduction and impede the effective implementation of Green Deal policies.

However, it’s too soon to declare the death of the green agenda. It will, instead, likely be deprioritized, contending with competing policy interests. While the overlapping crises of climate change, pandemic recovery, the war in Ukraine, and the resulting inflationary trends have drawn away the electorate’s focus on climate issues, environmental concerns remained salient for voters. It is unlikely that the European Green Deal will be abandoned, especially if von der Leyen stays on as European Commission president.

The new distribution of the parliamentary seats opens possibilities for a more conservative majority but also for coalitions with center-left parties. While the three main centrist groups have reportedly reached an agreement on top European Union posts with von der Leyen as Commission president, it is not a given that she will gather enough votes in parliament. Given the new distribution of parliament seats, Green parties might therefore be the key to securing von der Leyen a second term and thus exert influence on climate protection to remain prioritized.

Regardless, even a weakened climate agenda would be a mistake. Both for political and strategic reasons, European policymakers cannot abandon the green transition. Other priorities may, rightly, deserve attention, but the climate crisis must not be ignored. Europe is, after all, the fastest-warming continent, according a recent report by the United Nations and EU. Temperatures there are rising at around twice the global average.

To ensure the viability and centrality of the Green Deal in the new European parliament, officials will need to link policy issues and make the case that the green transition can help the competitiveness agenda. A focus on implementation rather than new legislation is likely. In this consideration, a nonpartisan commitment to technologically sound and ecologically just climate action is necessary to accommodate voters’ demands and bridge party gaps. This will require political leadership, especially from von der Leyen and her EPP party group, which has yet to find a common line regarding the future of the European Green Deal.

Moritz Ludwig is a young global professional with the Atlantic Council’s Europe Center.

The post Green Deal fatigue? How the European Parliament elections could affect EU climate policies. appeared first on Atlantic Council.

These new tariffs on both sides of the Atlantic signal greater alignment between Washington and Brussels on China. That is good news for the transatlantic partnership. But the technical differences in the latest salvos by the United States and Europe point to important differences in where Washington and Brussels are starting from and where they each might move next.

The Biden administration’s tariffs, announced on May 14, cover a wide range of strategic industries deemed critical to national security. These industries include steel, aluminum, microchips, EVs, and batteries. The most eye-grabbing figure was US tariffs on Chinese EVs quadrupling to 100 percent. The news from Brussels on June 12 delivered a similar but smaller effort, and one based less on a national-security framing. Moreover, Europe’s new tariffs are part of an ongoing investigation into Chinese practices, and therefore they are provisional.

The European Commission began its probe into Beijing’s massive subsidies of key sectors in October 2023. It has focused on the threat of cheap Chinese imports flooding the European market, driving down prices, and hurting Europe’s automotive sector. The investigation reflects a calculated approach, aligning with the EU’s new de-risking approach, but still, as is typical for the bloc, centering on adherence to World Trade Organization-complying trade defense regulations. 

Unlike Washington’s tariffs, which apply to the entire sector, the new European tariffs target specific Chinese companies. They do not, in the words of German Vice Chancellor Robert Habeck, amount to “punitive tariffs.” Europe’s tariffs on battery EVs will cover a wide umbrella of companies, including Western brands with production facilities and joint ventures in China. This leaves open the option for carmakers to relocate their production to Europe, thereby avoiding the tariffs.  

Much of the difference between Washington and Brussels is due to the different immediate market threats posed by Chinese EVs. The United States imported fewer than three thousand EVs from China last year, and the tariffs are in part intended to prevent Chinese market share from growing. In Europe, in contrast, China is already a major player. Chinese-made EVs account for around 25 percent of the European market, with Beijing exporting 430,000 such vehicles to the continent in 2023, a number that has quadrupled in the past five years. The EU decision therefore must be seen as an attempt to strike a balance between protecting Europe’s internal automobile industry and avoiding escalation into a trade war with Beijing.

Another factor is European unity—or lack thereof. European Commission President Ursula von der Leyen has underscored that Europe “will not waver from making tough decisions needed to protect its economy and its security” and she has not shied away from directly confronting China’s leadership on Chinese overcapacity “flooding the European market.” But von der Leyen is well out in front of many of her European counterparts with her economic security agenda. Export-oriented members, such as Germany, Sweden, and Greece, have expressed reservations toward the increased tariffs, and the Commission’s announcement came only after an eleventh-hour push by Germany to lower the tariffs.

This hesitance from certain member states is spurred on by Beijing, which has fought the investigation since its inception and sought to sow division within the bloc. Even though Europe’s countervailing duties are likely insufficient to offset the advantage China holds in production, Beijing has warned that the EU’s moves could lead to a trade war. On June 17, Beijing opened a dumping probe into imports of pork from the EU in response to Brussels’ tariff announcement.

Prior to the news of the EV tariffs, China also threatened retaliatory tariffs targeting German carmakers, French luxury products, and the European aviation and agricultural sectors, highlighting the breadth of China’s appetite to hit back at sectors that will hurt specific EU countries.

Another difference between the US and EU tariffs is the finality of these announcements. The Biden administration can move relatively quickly and decisively, but the European Commission’s tariff announcement is provisional. The investigation is still ongoing, and final tariffs will come four months after the provisional tariffs’ imposition on July 4. The EU’s tariffs could realistically be lowered during this time if China continues to push back and if EU member states get skittish. The EU and China have already begun consultations on the tariffs, which may bring about some revisions to the EU’s actions.

Finally, there is the issue of leadership. The United States will hold an election in November, but Washington is generally united on its approach toward China. As the Biden administration’s extension of many of the Trump administration’s policies toward Beijing signal, tariffs and a hardline approach on China will likely feature in any next US administration. There is far less certainty of consistent support in Europe, however.

Over the summer, the European Commission leadership will turn over. If von der Leyen were to win a second term leading the next Commission, it would solidify the EU’s increasingly tough trade policy approach toward China, signaling continuity and alignment with Washington. But nothing is guaranteed. Von der Leyen has yet to be nominated by the EU’s member states or confirmed by the European Parliament. She will certainly defend her Commission’s decisions on China, but she may be forced to make concessions on future action to secure her post. This trade saga is far from over.

Jacopo Pastorelli is a program assistant with the Atlantic Council’s Europe Center.

James Batchik is an associate director at the Atlantic Council’s Europe Center.

The post The EU’s new tariffs are just the start of the EV trade saga with China appeared first on Atlantic Council.

But that assessment seems to be more of an issue of semantics than an accurate reflection of voter sentiment. Widespread discontent among Indian farmers and agricultural laborers (sectors that represent 43 percent of the country’s total workforce), persistent inflation, and a lack of jobs for India’s youth, have all been cited as reasons for the BJP’s slide. All of these problems, at least in part, are caused by climate change, whether post-election coverage acknowledges this or not. To maintain popular support, the coalition government will need to adopt long-term climate solutions that connect directly to the livelihoods and economic needs of India’s youth and agricultural sector.

Farmers have been struggling with the impacts of extreme weather events on their crops for years (not to mention their anger over Modi’s attempts to disincentivize crop residue burning). The corresponding rise in agricultural product prices has stoked inflation. Additionally, disruptions in supply chains caused by flooding, cyclones, and droughts exacerbated already high costs for consumer products. Certainly, extreme heat impacted worker productivity in the agricultural and construction sectors, contributing to lackluster hiring of young workers, who often fill these jobs. Climate change is the hidden hand behind many of these worrying economic trends.

Notably, the BJP did take some significant actions on climate change prior to the elections: Modi made pledges that India would achieve energy independence by 2047, have five hundred gigawatts of renewable energy by 2030, and become central to the manufacture of green technologies. While these are laudable goals, it seems that they were not ambitious enough, or targeted for dates too far into the future, to quell voters’ concerns. Going forward, Modi and his coalition government will need to do more to connect climate change initiatives with kitchen table issues.

An example of a winning climate change solution already exists in Punjab. India’s largest bio-compressed natural gas (CNG) facility became operational in Lehragaga, Punjab, in 2022, with support from the BJP’s Sustainable Alternative Towards Affordable Transportation program, even though Punjab is not a BJP-controlled state. This facility converts paddy stubble (the leftover plant debris after a rice harvest) into bio-CNG, which significantly reduces the need for stubble burning, a major cause of air pollution throughout India. The stubble is collected directly by the facility, alleviating the cost and time that normally burdens farmers, thereby making the harvesting process more profitable. The byproduct of the facility’s process is biomanure, which can be used to enrich soil, further benefitting farmers. Ultimately, the plant produces cost-effective renewable CNG, which can be used for cooking, automotive fuel, and other applications. Duplicating this kind of facility throughout the agricultural regions of India could win over disgruntled farmers, provide new renewable energy jobs for young people, address the harms caused by climate change, and strengthen India’s energy security. The BJP’s Waste to Energy Programme under the Ministry of New and Renewable Energy could be expanded and more aggressively mobilized to facilitate this.

Likewise, the use of vetiver grasses to mitigate the impacts of flooding, which has markedly increased due to climate change, has a long history in India. Unfortunately, a byproduct of the industrialization of agriculture in the name of enhanced productivity has caused traditional, yet effective, practices like the use of vetiver grasses to be left behind. These hardy grasses, when planted along rivers and other sources of floodwaters, strengthen embankments and can largely prevent the soil erosion responsible for catastrophic landslides. These grasses also absorb carbon from the atmosphere and help recharge local groundwater. A new coalition government program that encourages vetiver use would help farmers avoid crop damage from flooding, while also reducing the cost of irrigating fields. The program could create vetiver planting jobs (suitable for youth and agricultural workers) and dovetail with national goals for planting more carbon-sequestering vegetation. This is a climate change solution with a direct connection to the issues that voters care about. Notably, vetiver can also be harvested for use in cosmetics, perfumes, and other personal care products. It can also be used as a feedstock for producing cellulosic ethanol, a renewable fuel. Producing these products domestically using vetiver would also give a boost to Modi’s “Make in India” initiative.

While Modi’s emphasis on building infrastructure for transportation, power, and sanitation has proven popular with the Indian public, more can be done to improve the country’s water management. Rainwater and floodwater retention systems have a long history in India, with the famous Rani Ki Vav stepwell and rainwater retention system (located in Modi’s native state of Gujarat) even being featured on the one-hundred-rupee note. A government coalition program that emphasizes such kinds of water catchment systems would help recharge local groundwater and reduce the impacts of flooding, creating value for the agricultural sector while also allowing Modi to lean into traditional practices that provide a source of national pride. 

There are many climate change programs that connect with kitchen table issues and resonate especially well with farmers and youth; Modi has an opportunity to strengthen support for the BJP by redirecting some of his energies to these programs. His prior use of short-term subsidies on grain and cooking gas temporarily obscured underlying problems without fixing them (which likely had the effect of inhibiting the development of long-term climate solutions). Similarly, export restrictions on rice and other agricultural commodities dampened market demand and farmers’ incomes in the name of marginally helping the common person. Instead of these approaches, Modi and his coalition government would be well served by promoting long-term, job-creating solutions, such as those involving bio-CNG, vetiver grasses, and water retention and detention.

Whether acknowledged or not, climate change influences the Indian electorate and underlies the discontent felt by many voters. Importantly, making progress on climate change in ways that are highly visible to the common person will help galvanize support from India’s youth, who currently have pessimistic views of humanity’s prospects of enduring climate change. They also happen to be the key to winning future elections.

Shék Jain is a nonresident senior fellow at the Atlantic Council’s South Asia Center and chairman of the Pura Terra Foundation.

The post Climate change was a hidden force in India’s elections. Now Modi needs to deliver solutions. appeared first on Atlantic Council.

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Bangladesh’s air quality crisis

The air quality index (AQI) measures air pollution through levels of PM2.5, fine particulate matter small enough to penetrate the lungs and enter the bloodstream. This past decade, PM2.5 concentration in Bangladesh’s capital, Dhaka, came in at a yearly average of 77.1 micrograms per cubic meter (μg/m³), more than eight times higher than the US Environmental Protection Agency’s health-based PM2.5 standard of 9.0 μg/m³ per year.

Bangladesh’s alarming AQI has many causes, including vehicle emissions, industrial discharges, and the widespread use of kilns to make bricks. These are all exacerbated by the absence of stringent environmental regulations and enforcement.

This extreme level of air pollution exacts a severe human toll. Particulate pollution has reduced the average life expectancy in Bangladesh by 6.9 years. By contrast, the next-biggest health hazard in the country—tobacco use—reduces life expectancy by 1.6 years, while child and maternal malnutrition in Bangladesh are responsible for a 1.4-year decrease. Pollution in Bangladesh not only has a dire immediate health impact; it poses negative long-term consequences on the well-being and productivity of its population​​.

Rising incomes, rising emissions

Bangladesh’s level of carbon emissions are also rising, tied to increasing levels of development fueled by hydrocarbons. Between 2010 and 2022, Bangladesh’s annual per capita income rose by three-and-a-half times to reach nearly $2,700 in real terms. Over the same period, Bangladesh’s consumption of oil and coal rose by factors of three and six, respectively. Natural gas consumption also rose by 52 percent.

While greater economic growth has improved living standards in Bangladesh, air quality has worsened. A World Bank study found that average annual PM2.5 concentration levels in Dhaka rose from 84 μg/m³ in 2013 to 106 μg/m³ in 2021.

Bangladesh’s growing use of fossil fuels has not only worsened air pollution, it has also contributed to climate impacts, which will increasingly produce negative economic effects. The United Nations Intergovernmental Panel on Climate Change says Bangladesh could lose 2 to 9 percent of its GDP from more frequent natural disasters like tropical cyclones and severe flooding.

It’s important to note, however, that Bangladesh’s use of coal pales in comparison to other regional actors. According to data from the Energy Institute, China’s consumption of commercial solid coal fuels exceeded Bangladesh’s by more than 325 times in 2023. So, while the world should seek to mitigate Bangladesh’s coal consumption, the country only contributes about 0.4 percent of all world emissions, even as China accounted for about 27 percent of greenhouse gas emissions in 2021, according to Climate Watch.

Nevertheless, if Bangladesh’s use and import of coal remains on its current trajectory, 2024 is poised to break national emissions records—and, more significantly—degrade its air quality and economic goals. Importantly, Bangladesh’s coal use could harm its export abilities as the European Union and other jurisdictions impose carbon border adjustments.

Bangladesh’s difficult transition to clean energy

Bangladesh’s poor air quality is disproportionately large compared to its overall carbon footprint. The country contributes less than 1 percent of global carbon emissions, yet its cities have some of the worst AQI scores in the world. Fifty-nine percent of the country’s energy derives from natural gas, 31 percent from oil, and 10 percent from coal. Renewables are a negligible part of Bangladesh’s energy mix, while coal use has ticked up sharply in both absolute and proportional terms.

Coal-versus-gas competition has great relevance for Bangladesh’s air quality. While natural gas emits carbon dioxide, it produces far fewer particulates than coal, with some studies showing that swapping coal for gas can reduce harmful emissions of sulfur dioxide by more than 90 percent, and of nitric oxide and nitrogen dioxide (NO_X) by more than 60 percent.

Coal-to-gas switching is a quick and relatively easy fix for Bangladesh’s air quality concerns, given the country’s daunting challenges in switching to clean energy. Bangladesh’s solar and wind resources are limited, and it has weak hydropower potential. The country suffers an absence of summertime breezes, reducing wind’s usefulness in meeting peak demand during the hottest months.

The promise of nuclear energy

Given its constrained supply of indigenous renewables, Bangladesh is building two new nuclear power plants, for which Russia, China, and South Korea all provided bids. In 2009, Russia’s proposal was accepted. Bangladesh’s first reactor, which began construction in 2017, is set to begin operation this year.

While nuclear energy produces no emissions or pollutants, Bangladesh’s pursuit of the technology has not been cheap. Russia’s Rosatom is providing technical assistance, but Bangladesh is responsible for financing, for which it received a Russian loan. The Rosatom-led Rooppur project will cost $12.65 billion and is set to have a total capacity of 2.4 gigawatts. While nuclear energy is useful for decarbonization and improving air quality, expanding it further in the near term will prove difficult for Bangladesh. Capital financing costs have risen since Russia’s full-scale invasion of Ukraine, while tie-ups with Rosatom are potentially fraught. Some US legislators have called for sanctions on the state-owned Russian nuclear power giant, although experts generally believe these measures would disrupt Western markets while providing few geopolitical benefits. 

How Bangladesh can improve its air quality

A nearer-term and more affordable option for reducing air pollution is liquefied natural gas (LNG). LNG is a fossil fuel, but it burns cleaner than coal and oil, which can help improve air quality.

Other measures to improve Bangladesh’s air quality could target vehicles, a major source of air pollutants. Bangladesh should look to models such as Mexico City’s ‘hoy no circula’ or Beijing’s odd and even days to limit vehicle pollution.

In Mexico City, the last number of a vehicle’s license plate determines which days it can be driven, with only the lowest-emission vehicles allowed to operate seven days a week. In Beijing, a similar program dates back to 2008, when China hosted the Summer Olympics. Beijing’s restrictions limit which weekdays cars with license plates ending in certain digits are allowed on the road.

These measures come at a significant economic cost, which may be too high given Bangladesh’s lower level of economic development compared to Mexico and China. But Bangladesh’s cities may consider such tradeoffs as acceptable given the severity of the country’s air quality crisis.

Over the longer term, Bangladesh can access cleaner electricity and lower its air pollution by integrating its grid with other hydropower-rich countries in the region. In January 2024, India concluded an agreement with Nepal to import 10,000 megawatts of hydropower from the Himalayan country, showing that cross-border electricity deals are possible in the region.

While deeper integration of regional electricity markets will require substantially more political trust than exists today, cooperation is necessary to meet Bangladesh’s energy access and air quality needs.

Bangladesh’s air quality trilemma

There are no easy ways to mitigate Bangladesh’s air quality crisis. Bangladesh has little renewable energy potential and faces difficulties in expanding nuclear energy or adopting vehicular emissions programs given the country’s limited financial resources. Moreover, Bangladesh suffers from substantial energy poverty, making improved energy access a top priority.

It is extremely difficult to balance these concerns, particularly in the short term. But in the longer term, trade in low-emission fuels and clean electricity can help Bangladesh resolve its trilemma of ensuring clean air, economic growth, and sustainable energy access.

Joe Webster is a senior fellow at the Atlantic Council Global Energy Center.

Natalie Sinha is a former young global professional at the Atlantic Council Global Energy Center.

Sarah Meadows is a former young global professional at the Atlantic Council Global Energy Center.

This article reflects the authors’ personal opinions.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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Staff

Joseph Webster

Senior Fellow, Global Energy Center

Global Energy Center Indo-Pacific Security Initiative

Central Asia China

EnergySource Feb 10, 2020

The climate and equity dilemma: Bending the coal curve in South and Southeast Asia

By Robert F. Ichord, Jr.

South and Southeast Asia are leading the world in terms of developing countries’ energy growth—how can need be met while avoiding new coal investments?

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The United States is outperforming all of its advanced economy peers in post-COVID growth, and it is not particularly close. As we’ll surely hear from Biden on Thursday, fiscal policy has played a role. The major infrastructure investments through the Inflation Reduction Act and CHIPS and Science Act, have started to create new jobs in the manufacturing sector. The Federal Reserve also played a key role by keeping interest rates near zero for twenty-two months and pumping trillions in liquidity and backstops into the US economy after the crisis. But there are other factors at play as well, including the rise of homegrown artificial intelligence companies and producers such as NVIDIA that make those machines hum, boosting the United States ahead of its fellow Group of Seven (G7) countries. Combined with increased productivity growth, you have the recipe for an unexpected surge in the US economy. 

—Josh Lipsky is the senior director of the Atlantic Council’s GeoEconomics Center and a former adviser at the International Monetary Fund.

How does inflation in the United States compare to the G7? It’s falling, but not as fast as in Europe. The tradeoff with higher growth has been somewhat sticky inflation in the United States and a struggle to get back to the Fed’s 2 percent target range for price growth. It’s the surge in inflation during the pandemic and the still-elevated price levels that have generated so much discontent domestically about the US economy. Voters can’t feel that they may be doing better than citizens in Japan or Germany—what they can feel is how much it costs them to go to the grocery store this year compared to last. 

—Josh Lipsky

One of the biggest points of contention during the debate will be about job creation. Biden will say Trump was the first president since Herbert Hoover to leave office with the United States having lost jobs during his presidency. If there’s one rule in US economic history, it’s to try not to be compared to Herbert Hoover. Of course, the reason for that fact was the COVID-19 pandemic. What’s most surprising, though, is what happened after. Unlike previous recoveries, the US labor market rebounded swiftly and within twenty-nine months had recovered all the jobs lost during the crisis. As of May 2024, over fifteen million jobs have been created during the Biden administration. The numbers are the numbers. The big debate that we will see play out Thursday is which factors drove which parts of the crash and recovery, and who gets the credit or blame. 

—Josh Lipsky

One issue on which both sides of the aisle seem to agree is taking a strong stance on economic competition with China. The question of how strong will be up for debate, with Trump suggesting a 60 percent tariff on Chinese goods and Biden following a more targeted approach in his recent tariff increases on electric vehicles, steel, and other goods. Biden likely won’t mention that most of the Trump-era tariffs remain in place, and Trump won’t want to admit that the share of US imports coming from China is lower now than at any point in the last decade. Two of the driving forces—China’s economic slowdown and zero-COVID policies—probably won’t be part of the discussion. But they should be. 

—Sophia Busch is an assistant director at the GeoEconomics Center.

The US economy continues to show declining emissions intensity of gross domestic product (GDP), meaning the amount of carbon emissions per unit of GDP. Crucially, the United States is cutting emissions while continuing to grow the economy. The Rhodium Group projects that emissions fell 1.9 percent even as the economy expanded by 2.4 percent in 2023. Accordingly, US emissions intensity of real GDP continues to decline even though the US economy is larger than it has ever been. 

—Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center.

US energy production stands at an all-time high because of the country’s higher output of oil, gas, and renewable energy sources such as solar and wind. Energy from oil production in 2023 rose by 5 percent compared to pre-COVID times in 2019, while natural gas output increased by 32 percent. Solar energy production has soared by a whopping 104 percent, as wind energy output grew by 44 percent. These developments have put pressure on coal output, which has fallen by 17 percent and is poised to decline further. Crucially, solar generation outpaced coal consumption for the first time in March 2024 in Texas, the country’s largest coal-consuming state. The US energy production mix is changing. Energy production—including for clean energy sources such as solar, wind, and nuclear energy—seems poised to surge if onerous permitting roadblocks, such as for siting transmission lines, are lifted. 

—Joseph Webster

While the United States outperforms other G7 nations in economic growth, it falls behind in broader measures of well-being. Over the past decade, the United States has seen a decline on the Atlantic Council’s Prosperity Index, the only G7 country to experience a decline. More striking is the fact that even in the prosperity components in which the country has experienced improvements, such as education, these gains have been smaller than its peers’. As a result, the United States’ ranking has fallen in virtually all categories of the Prosperity Index since 1995. Yet this decline must be put in perspective, as the United States remains well established among the top countries on the Prosperity Index—ranking thirty-sixth out of 164 countries.

—Joseph Lemoine is the director of the Atlantic Council’s Freedom and Prosperity Center.

Life expectancy, an important health indicator, remains a challenge for the United States. Not only does it lag behind other G7 nations, but it also experienced the worst decline among G7 nations during the COVID-19 pandemic. Furthermore, the United States is one of only two G7 countries, alongside Germany, that hasn’t fully recovered from the pandemic’s impact on life expectancy.

—Joseph Lemoine

Income inequality has been a persistent problem in the United States for decades. While there might be temporary fluctuations, the overall trend shows minimal improvement. There has been some progress made in the last five years, but the United States remains worse off compared to 2010 when it comes to income inequality.

—Joseph Lemoine

Alisha Chhangani, Clara Falkenek, Gustavo Romero, and Konstantinos Mitsotakis of the GeoEconomics Center contributed to the data visualizations in this article.

The post Your presidential debate prep on the US economy, in charts appeared first on Atlantic Council.

“Sustainability” is not just an environmental concern. In a broader sense, such as that employed by the United Nations Sustainable Development Goals (SDGs), sustainability requires improving human health, prosperity, and economic growth. And in discussing sustainability in AI, following a framing described by the Sustainable AI Lab at University of Bonn, it is important to discuss not only AI applications for sustainability, but also the sustainability of the AI industry itself.

The Organisation for Economic Co-operation and Development pointed out in November 2022 that it is important to consider both the direct sustainability impacts of computing as well as the indirect impacts of AI applications. However, the sustainability of computing seems to rarely be mentioned in current conversations about the governance of AI development and deployment or in new legislation or guidance such as the European Union (EU) AI Act, United Nations resolution A/78/L.49, Canada’s C27 bill, the Australian government’s interim response report, the White House executive order on AI and follow-on actions, or requirements in various US states. Instead, these and many other conversations around the world focus primarily on the also-critical topics of trustworthy AI, data privacy, alignment, and ethics.

If policymakers close this gap and focus today on the sustainability of the AI industry, they will have the opportunity to steer entire industries toward contributing to a positive future for both people and the planet.

To develop and leverage AI at the scale imagined by researchers, businesses, and governments, significant physical resources will be required for the design and deployment of the requisite computing hardware and software. While all AI approaches merit attention regarding their sustainability, generative AI is particularly resource-intensive: One such AI-powered chatbot is reportedly consuming the energy equivalent of 33,000 homes. (Note that while it is complicated to estimate such equivalences—given variations in operational timescales and details, home location, user numbers, etc.—various calculations have yielded estimated energy use equivalent to that of tens to hundreds of thousands of US homes.)

In addition, new data centers are being designed and built with high demand and at a fast pace, new AI-critical hardware components are being designed and fabricated, and organizations large and small are experiencing urgency in setting their short-term tactics and long-term strategies for AI. Demands on data centers will only continue to grow as AI-powered applications spread through industries and around the world. For example, a recent International Energy Agency report projected an increase in data center energy consumption in 2026 equivalent to the energy consumption of Japan.

Sustainability-focused regulation of AI, if deployed in a timely manner, can incentivize further improvements in the efficiency of data center operation and even the efficiency of software itself. Unfortunately, in the past, similar opportunities to promote the sustainable development of emerging technologies across industries have been missed. Failure to act during the rise of cryptocurrency mining has led to concerns today about the industry’s electricity and water use and to tension—internationally and domestically—around regulation and resource accessibility. For example, blockchain advocates filed a lawsuit against the US Department of Energy after the agency attempted to conduct an emergency survey of energy use by crypto miners, with the advocates arguing that it forced businesses to divulge sensitive information.

More broadly, global digitization and its associated technologies have spurred crises in e-waste, supply-chain fragility, and human rights, to name a few. Early consideration and prioritization of these issues could have prevented harmful patterns from becoming embedded in today’s systems and processes. Crucially, the projected demands on data centers in the coming years due to the rise of AI—in terms of hardware, power, cooling, land and water use, and access to physical infrastructure and network bandwidth (a particular concern in growing urban areas)—are likely to far outstrip demands associated with other technologies. The potential cumulative impacts of the AI revolution, including resource consumption and byproduct production, underscore the urgency of acting today.

Questions for a sustainable industry

In order for policymakers to introduce measures that encourage AI initiatives (and the entire AI industry) to be more sustainable—and to enable consumers to choose sustainable AI tools—there needs to be more transparency around the sustainability of developing, training (including storing data), and deploying AI models, and into the lifecycle of attendant hardware and other infrastructure. Policymakers should require that any new AI initiative, early in planning, complete sustainability reporting that helps estimate a proposed AI initiative’s physical impact on the planet and people, both now and in the future. This transparency is not only necessary for guiding future regulation and consumer choice; it is also a crucial part of fostering a culture that prioritizes developing and regulating technology with the future in mind.

The questions that policymakers should require organizations developing and deploying AI initiatives to answer should, to use a metaphor, address the entire “iceberg.” In other words, these questions should inquire about visible sustainability issues (such as the production of carbon dioxide) as well as less-visible issues below the “waterline” (such as whether the land underlying physical infrastructure could have been used for food production). These questions should cover three overarching categories:

1. The consumption of readily detectable resources,
2. The production of byproducts, and
3. The achievement of broader sustainability goals.

In developing the questions for reporting, policymakers should gather insights from regulators, AI technologists, environmental scientists, businesses, communities near AI infrastructure, and end users. The questions should be useful (easily interpretable and insights from them point to potential areas of improvement), be extensible (applicable across current AI models and for future models), and result in reliable answers (roughly repeatable using distinct tools). Framing questions in a way that results in the reporting of concrete and preferably quantitative answers can set the stage for organizations to implement internal, dashboard-style approaches to sustainable AI development and deployment.

Beyond the wording of such questions, the timing of asking organizations matters as well. Answers to these questions should be reported in the earliest stages of an AI initiative’s planning, as they will help organizations conduct cost/benefit analyses and assess their return on investment. Real-time insights gathered during the operational lifetime of an AI initiative would enable not only monitoring of the project’s sustainability, but also execution of in silico experiments that could reveal novel operational, budgetary, and sustainability benefits. The questions should apply equally to all organizations in the public and private sectors using AI. Finally, policymakers should revisit the questions regularly as AI technologies continue to develop and be deployed—and as user needs and geopolitics change.

To capture these broad considerations in a concise set of questions, policymakers should look to the following key sustainability questions as a starting point.

What resources (inputs) are being consumed, directly and indirectly, throughout the lifecycle of an AI initiative?

• How much energy is required? What are the sources of this energy? What percentage of this energy is renewable? What is the Power Usage Effectiveness for the initiative?
• How much water is required, for example for cooling? What are the sources of this water and, for example, is it recycled water? How much of this water could have been suitable for human consumption or agricultural use? What is the Water Usage Effectiveness for the initiative?
• How much land is required, for example for physical infrastructure? How close is each land parcel to human habitation? How much of this land is appropriate for food production or human habitation? How has local biodiversity been impacted by the use of this land for AI initiatives?
• What rare metals are used and what are their sources? What are the sources of all metals required for hardware (such as graphics processing units, also known as GPUs)—land, ocean, or recycled? How are local communities and workers, in areas where these metals are procured, engaged or affected?

What byproducts (outputs) are being produced, directly and indirectly, throughout the lifecycle of an AI initiative?

• How much greenhouse gas (embodied carbon) is produced, in metric tons of carbon dioxide equivalent?
• What is the projected functional lifetime of each of the top five most abundant hardware components (such as central processing units—also known as CPUs—or GPUs)?
• How much hardware waste is generated each year? How much of this waste is recycled effectively? How much of this waste will go to the landfill? How much waste pollutes the air and water? How much of this waste is toxic to human health and to the environment?
• How much wastewater is produced, where does it go, and what can it be used for? Does it require further treatment? Can it be released back into the environment, and how would its release impact the environment (e.g., changing the water temperature of an ecosystem)? Is it used as gray water for other applications?

What broader sustainability opportunities are being harnessed through each AI initiative, using the United Nations’ SDGs as a framework?

• How resilient is the associated physical infrastructure to earthquakes, floods, droughts, fires, storms, and other disasters? (SDGs 9 and 11)
• How much of the broader labor force is local to the land and community being used for an AI initiative? How competitive are wages relative to the industry? (SDGs 1 and 8; broader questions around AI and labor disruption are critical but go beyond the scope of the current discussion)
• How safe and healthy are working conditions for all contributing employees and contractors, both local and remote to the physical infrastructure of the initiative? (SDG 3)
• How many educational opportunities are being produced by, and contributing to, the AI initiative? (SDG 4)
• Regarding gender equality and broader inclusivity, what percentage of the workforce, both full-time and contract, identifies as a member of a marginalized group? Are efforts being made to reduce inequality within and between countries that provide AI workforce? (SDGs 5, 10, and 11)

Sticking the landing

Any organization working with AI—whether the organization is using in-house compute resources or external (cloud) service providers to develop and deploy AI models—should report their answers to the above sustainability questions yearly. Several tools and frameworks for reporting and answering some sustainability questions already exist; adopting new policies such as required reporting will spur the development of further tools.

For the time being, transparency obligations should fall on the organizations that are developing and deploying AI models—not on consumers who are only end users of AI models. That may change if large numbers of end users themselves end up training and developing their own models, causing a rapid expansion in AI-associated resource consumption and byproduct production. However, the question about where transparency obligations fall must be revisited regularly as AI technologies continue to develop rapidly and increasingly resource-intensive queries by users become possible. Crucially, hypothetical future affordances of AI must not be factored into the answers to these sustainability questions. For example, if the goal of an AI initiative is to help an end user reduce their carbon emissions, then that hypothetical future reduction must not be factored into the organization’s assessment of the carbon emissions of this AI initiative this year.

Policymakers should promote the monitoring and reporting of accurate information, rather than define “good” answers to these questions and penalize companies that do not meet those benchmarks. The EU’s Sustainable Finance Disclosure Regulation framework, with its emphasis on the power of transparency to shape and amplify market forces, can serve as a model for such an approach. If reported data were gathered in a single, open-access database (perhaps analogous to the European Single Access Point), then regulators, investors, technology companies, nonprofits, and the general public would be able to reward progress toward sustainability goals, over various time horizons, through a variety of mechanisms. It will be important to have external auditors to ensure the credibility of reported data, as they have done for sustainable finance.

Authority to penalize nonreporting should be assigned to a designated agency. For example, for the United States, while the Securities and Exchange Commission and environmental protection agencies at the federal and state levels could be logical candidates for this authority, this environment-centered approach overlooks the larger definitions of sustainability that could be encompassed by regulation. The Office of Science and Technology Policy at the White House may be more appropriate as a centralizing point, given this entity’s mandate to pursue “bold visions” and “unified plans” for US science and technology, as well as its ability to engage with external partners in industry, government, academia, and civil society. The agencies selected to carry out this responsibility should have direct lines of communication with their counterparts in other countries, enabling an agile and coordinated international response to rapid advances in AI.

Critically, international regulators, researchers, businesses, and other developers and users of AI should maintain a collaborative—rather than adversarial—relationship, as doing so could position sustainability as an investment in the future that delivers returns in the near to medium term. Subsidies from federal, state, or local governments could be used to assist small and medium-sized enterprises with the administrative and other financial burdens of this reporting, as mentioned by the EU’s AI Act. To ease the burden on organizations as they comply with potential future reporting and auditing requirements about the sustainability of their AI operations, policymakers should identify metrics and processes that can be used for parallel disclosures. For example, this can be done by requiring data that a single company could use to fulfill their transparency obligations for sustainable AI, sustainable finance, and sustainable corporate reporting such as the EU’s Corporate Sustainability Reporting Directive. Policymakers should also strive to maintain consistency internationally, perhaps following the EU’s lead in sustainability policy to date. Ultimately, the International Organization for Standardization should expand its current AI offerings to include standards for the transparency of AI sustainability (such as the questions suggested above), in alignment with its current standards addressing environmental management, energy management, social responsibility, and more.

A unique moment

The sustainability of AI is an urgent and pressing issue with long-lasting, global impacts. Today, the world still dedicates a great deal of attention to AI; the technology has not yet faded into the background or become ubiquitous and invisible, much like electricity has. However, the current moment—of unprecedented demand for the extraction and deployment of AI-enabling physical resources—is a crucial turning point.

Current and future generations depend on policymakers to steward the world’s resources sustainably, especially as a wave of global resource expenditure—with an anticipated long tail—approaches. In light of this impending growth, the opportunity for action is brief and the need is immediate. Although the scale of the challenge is daunting, international responses to ozone depletion and Antarctic geopolitical tension showcase the power of international collaboration for rapid and high-impact action.

With the framing of key sustainability questions, policymakers can gather the insights they need to adequately build a regulatory framework that encourages responsible resource expenditure and adapts to the inevitable shifts in a nascent industry. Transparency can empower consumers and investors to incentivize sustainable AI development. International cooperation on this effort can foster transparency and inspire collaborative action to build a future that is sustainable in many senses of the word.

Tiffany J. Vora is a nonresident senior fellow at the Atlantic Council’s GeoTech Center. She has a PhD in molecular biology from Princeton University.

Kathryn Thomas is the chief operating officer of Blue Lion. She has a PhD in water quality and monitoring from the University of Waterloo.

Anna Ferré-Mateu is a Ramón y Cajal fellow at the Instituto de Astrofísica de Canarias and an adjunct fellow at the Center of Astronomy and Supercomputing of the Swinburne University of Technology. She has a PhD in astrophysics from the Instituto de Astrofísica de Canarias.

Catherine Lopes is the chief data and AI strategist of Opsdo Analytics. She has a PhD in machine learning from Monash University.

Marissa Giustina is a research scientist and quantum electronics engineer. She has a PhD in physics from the University of Vienna. She conducted the research for this article outside of her employment with Google DeepMind and this article represents her own views and those of her coauthors.

The authors gratefully acknowledge David Rae of EY for fruitful discussions. The authors also acknowledge Homeward Bound Projects, which hosted the initial working session that led to the ideas in this article.

The GeoTech Center champions positive paths forward that societies can pursue to ensure new technologies and data empower people, prosperity, and peace.

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The post The sustainability questions policymakers should be asking about AI appeared first on Atlantic Council.

For years, multinational corporations by the score would pay handsomely to be partners of the forum, and would invest heavily in state-of-the-art exhibition stands. Participation was by invitation only, with careful vetting of those who were to have, once inside the entrance gate, virtually unrestricted access to the senior Russian government officials, CEOs, and other notables in attendance. The evening social and entertainment agendas were replete with over-the-top extravaganzas featuring many of the luminaries of Russia’s cultural beau monde.

SPIEF was also seen as a measure of Russia’s standing in the world as an economic and geopolitical power, and a reflection of the esteem in which world leaders held Vladimir Putin. Typically, no less than half a dozen heads of state or government from the world’s most important industrial and emerging market economies would typically join Putin on stage during the keynote address.

Most VIP political guests at SPIEF were democratic leaders, reflecting a desire to embrace Russia as a new member of the democratic club, albeit one that did not yet fully abide by the rules. Some leaders of a more authoritarian hue would also attend, but diplomatic politesse ensured that everybody was well behaved. The long days and mild weather, combined with the undeniable beauty of St. Petersburg, created an upbeat atmosphere and friendly spirits. As one who attended five SPIEFs, I can attest to the enchantment of it all.

While the weather and the venue have remained the same, SPIEF has experienced a gradual and then abrupt decline in status over the past decade. This process first began in 2014 after the annexation of Crimea. It has accelerated dramatically following the full-scale invasion of Ukraine in 2022, and was all too evident in June 2024.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Prior to 2014, SPIEF attendance had been regarded as more or less obligatory for the CEOs of all the largest international oil and gas companies. This year, however, the picture was strikingly different, with SPIEF attracting virtually no business leaders from G7 or EU member countries. Instead, there was only a relatively small contingent representing state-owned enterprises from other countries, mostly those that trade in sanctioned Russian oil and gas.

As far as can be gleaned from the official SPIEF website (personal attendance is now out of the question), the only partners and exhibitors at this year’s event were Russian companies, mostly state-owned or controlled. SPIEF claims to have attracted 21,200 participants, but this figure likely includes offsite events open to the public.

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The most striking thing about the 2024 SPIEF program was the absence of high-level international political participation. Indeed, it must have been particularly painful for Vladimir Putin to share a stage with the presidents of Bolivia and Zimbabwe. Having lived in Bolivia, I do not mean to disparage that beautiful country; nor do I harbor any ill will toward Zimbabwe. Nevertheless, there is no escaping the fact that Putin most certainly does not see those leaders as peers. Nor do they compare to the global heavyweights who traditionally participated in previous SPIEFs.

The only other “heads of government” in attendance in St. Petersburg this June were the leader of Georgia’s Russian-occupied Abkhazia region, and the head of Republika Srpska, a sub-national entity in Bosnia-Herzegovina. This underwhelming international guest list at Russia’s flagship annual economic forum speaks volumes about Putin’s pariah status.

The reasons for the absence of democratic leaders at SPIEF are obvious and require no further explanation. At the same time, it is interesting to note that numerous putative allies of Russia also gave the event a miss. Perhaps Chinese President Xi’s recent visit to the Shangri-La Conference in Singapore was too close in timing. Significantly, Iran chose not to send any senior officials. The leaders of Venezuela, Nicaragua, and Cuba similarly stayed away.

The absence of Syria’s Bashar al-Assad came as no surprise as he rarely travels. But what about Russia’s BRICS partners Brazil, South Africa, and India? Meanwhile, the most glaring absence of all was Belarusian dictator Alyaksandr Lukashenka. No other head of state is as personally indebted to Putin, who saved Lukashenka in 2020 after anti-regime protests erupted across Belarus following a sham presidential election.

Russia’s remaining partners are clearly in no hurry to engage in public demonstrations of support for Moscow. Nor can the Kremlin necessarily count on Putin’s fellow pariahs. If SPIEF is Russia’s showcase, then the glass evidently needs a thorough cleaning.

Edward Verona is a nonresident senior fellow at the Atlantic Council’s Eurasia Center covering Russia, Ukraine, and Eastern Europe, with a particular focus on Ukrainian reconstruction aid.

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The statement released by G7 leaders after their summit last week garnered ample attention for its strong language on China’s unfair economic practices and ongoing support for Russia’s war on Ukraine, and triggered a predictably sharp Chinese response. The back-and-forth is another reminder of China’s worsened relations with developed democracies over the past few years.

Beijing is by no means abandoning those relationships – Premier Li Qiang’s visit to Australia and New Zealand this week, not to mention President Xi’s trip to Europe last month, underscore a drive to mend damaged ties. But the incident is another piece of evidence confirming that Beijing’s positions on global and economic issues receive a more welcoming reception in the developing world, where China’s economic and political ties are growing by the day.

China’s strategic shift toward greater focus on the so-called Global South is unmistakable. One need only look at where China is spending diplomatic attention and propaganda dollars.

As colleagues at the Digital Forensics Research Lab explore in a new report on China’s messaging in Africa, China is increasingly promoting pro-Russian narratives about Ukraine in sub-Saharan Africa using its media platforms, commentators, social media, and broadcasting infrastructure. The effort aims to portray China as a force for peace while the United States prolongs the war, in line with Beijing’s drive to enhance its reputation relative to Washington across the developing world.

This effort to shape perceptions of China’s responsible global role in contrast to the United States is now routinely reflected in the content of high-level diplomatic engagements with developing countries.

In his speech just last week at the BRICS Dialogue with Developing Countries in Russia, Foreign Minister Wang Yi not only underscored China’s leadership of the Global South as the “largest developing country” but also called for the convening of “a true international peace conference” on the Ukraine war that involves Russia – after Beijing pulled out all the stops to try to scuttle the Swiss-organized conference earlier this month – and threw in some choice words on US efforts to “maintain its unipolar hegemony” for good measure.

As I and the Global China Hub team discovered on a trip to Brazil, Colombia, and Honduras earlier this month, China is also ramping up diplomatic, economic, and technological engagement across Latin America, and pairing those efforts with a push to shape understanding of China across the region. Our editor-in-chief Tiff Roberts dives into that and much more in this issue of Global China – take it away, Tiff!

-David O. Shullman, Senior Director, Atlantic Council Global China Hub

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Dexter Tiff Roberts

Nonresident Senior Fellow

Global China Hub Indo-Pacific Security Initiative

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Latin American officials flood Beijing revealing China’s global priorities

Want to know one key region of the Global South China is now focusing on? Take a look at who visited Beijing in early June. Before the first week of the month was even over, Brazil’s Vice President Geraldo Alckmin, Venezuela’s Foreign Minister Yván Gil, and special envoy of Cuban President Miguel Díaz-Canel and Minister of Foreign Affairs Bruno Rodríguez Parrilla had all passed through China’s capital (the Brazilian vice president met with Xi Jinping and secured $4.49 billion in credit concessions. Brazil has been a key market for China too, as evidenced by an eighteen-fold surge in Chinese EV sales by value).

Latin America, with its rich resources, is a key target as China expands its global economic and political reach, and that’s a concern for the US. Testifying before the US-China Economic and Security Review Commission hearing “Key Economic Strategies for Leveling the U.S.-China Playing Field: Trade, Investment, and Technology,” Pepe Zhang of the Adrienne Arsht Latin America Center called for a development-focused economic partnership with LAC that would make the Western Hemisphere more competitive, resilient, and better integrated with the US.

Economics used to bolster authoritarian power in Global South training

China’s commerce ministry isn’t just fretting about EU tariffs (see below). It has also spearheaded an effort to train officials in countries across the Global South. And perhaps not surprisingly, the instruction is about more than trade and economics: “This effort is integral to the PRC’s drive to transform a global order currently predicated on the centrality of democracy and individual rights to one more “values-agnostic” and thus suited to China’s rise under authoritarian CCP rule,” writes the Global China Hub’s Niva Yau in a June 12 report called “A Global South with Chinese Characteristics” (watch the launch event here). The 795 training descriptions reviewed by Yau show “how the PRC marries economics and politics in its trainings, revealing that Chinese economic achievements are used to support authoritarian ideals.”

The report certainly got the PRC’s attention. The Chinese Embassy responded, saying the report is “full of Cold War mentality and ideological prejudice,” with the Foreign Ministry adding that “China has always respected the peoples of all countries in independently choosing their development paths and social systems,” which is very reassuring.

A new, coordinated transatlantic response to China emerges on trade?

In a widely expected move, the European Union announced new tariffs on Chinese electric vehicles on June 12, up as much 38.1% on top of existing taxes of 10% before, affecting companies including BYD, SAIC, and NIO. Also to no surprise was the heated response from Beijing: the move by the EU “undermines the legitimate rights and interests of China’s EV industry,” and is “blatant protectionism,” Ministry of Commerce spokesperson He Yadong said in a press briefing. On June 17, Beijing officially launched an anti-dumping probe on imported pork and its by-products from the EU in response.

With the EU action coming just over a month after US President Joe Biden imposed tariffs on EVs of 100%, is a new, more coordinated transatlantic response to the Chinese trade juggernaut emerging? On June 3rd, in an ACFrontPage conversation with United States Trade Representative Katherine Tai, she did not mince words on how the US and the EU should adapt the transatlantic trade relationship to reflect the realities of China’s economic system, saying “Capitalism with Chinese characteristics… I haven’t heard that term used in many, many years. At this point, I think it’s less diplomatic than just sort of ahistorical. The China that we’re dealing with now, the PRC, is not a democracy. It’s not a capitalist, market-based economy.”

In an Econographics article exploring a similar theme entitled “Biden’s electric vehicle tariff strategy needs a united front,” the GeoEconomics Center’s Sophia Busch and Josh Lipsky write, “tariffs, working in isolation, can’t fully achieve all the objectives—no matter how high they go. It’s only when tariffs are relatively aligned across countries… that the trajectory could change.”

And it’s not just EVs that pose a threat to global industries. Without tariffs, the EU faces a flood of Chinese imports of the “new three” clean tech exports—lithium-ion batteries, solar panels, and, of course, electric cars (along with the action against EVs, the White House also raised tariffs simultaneously on lithium-ion batteries and solar cells to 25%.) “Imports of the new-three cleantech export categories have skyrocketed in recent years. Over the course of 2023, China’s exports to the EU totaled $23.3 billion for lithium-ion batteries, $19.1 billion in solar panels, and $14.5 billion for electric vehicles,” the Global Energy Center’s Joseph Webster wrote in a piece for EnergySource.

• Beginning on June 17, Atlantic Council President and CEO Fred Kempe and former President of Latvia Egils Levits have co-led the Atlantic Council’s annual delegation trip to Taiwan, hosted by the Taiwanese government. Joined by former Czech Minister of Foreign Affairs Tomáš Petříček, they will meet with Taiwan government leaders, including President Lai, think tanks, and business representatives to discuss security and economic issues facing Taiwan and the Indo-Pacific.
• The Global China Hub hosted a public conversation on allied solutions to de-risking tech supply chains from Chinese investment to spur collective action between the United States and government and private sector partners in Europe and the Indo-Pacific. The event was a continuation of the Hub’s work on tech competition and China’s drive to dominate emerging technologies and relevant supply chains.
• China’s trade with Russia has risen substantially since the Kremlin’s full-scale invasion of Ukraine, significantly bolstering Moscow’s war aims, according to new research by the Global Energy Center’s Joseph Webster.
• Xi Jinping’s recent visit to Europe was in part intended to divide it as the EU increasingly hardens its stance on China. The Global China Hub’s Zoltán Fehér explores the degree to which Xi was successful in these efforts in a New Atlanticist piece.

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The Global China Hub researches and devises allied solutions to the global challenges posed by China’s rise, leveraging and amplifying the Atlantic Council’s work on China across its 16 programs and centers.

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Mexico’s nearshoring opportunity

Mexico features prominently in US ambitions to “nearshore,” whereby companies move their production facilities closer to home and away from far-flung industrial hubs—mainly China. This shift is influenced by the United States’ drive to build more resilient supply chains in the wake of the COVID-19 pandemic and heightened geopolitical competition with China.

Cross-border economic ties under the United States-Mexico-Canada (USMCA) free trade zone are growing. The United States and Mexico are now each other’s largest trading partner. This can be attributed to many factors, including a deteriorating trade relationship between the United States and China, which reinforces the argument for nearshoring.

Mexico presents a supply chain opportunity for the United States. But from the Mexican perspective, support for nearshoring is relatively subdued. The “national project” of AMLO and Sheinbaum’s Morena party emphasizes combatting inequality including by developing the country’s south and strengthening state-owned companies. By contrast, the bulk of nearshoring investments would be made by private companies and go toward Mexico’s industrialized north, along the US border. Perhaps as a result, nearshoring has not progressed as rapidly as many predicted. US investors will need to align with Sheinbaum’s agenda to build a Mexican energy system capable of turning nearshoring into a reality.

Is nearshoring even happening?

A closer look at investment data paints a mixed picture of nearshoring. On one hand, foreign direct investment (FDI) in Mexico—the only measure of whether investment in the country is rising—reached a record $20.3 billion in the first quarter (Q1) of 2024, a 9 percent increase over Q1 2023. Fifty-two percent of total FDI in Mexico originated from the United States. On the other hand, only 3 percent of this increase can be attributed to new investments, contradicting the narrative that large-scale nearshoring is occurring. Furthermore, manufacturing as a share of Mexico’s economy grew to only 21 percent in the first half of 2023, from a pre-pandemic level of 20 percent. Tesla, which in March 2023 announced one of the largest nearshoring projects, has yet to break ground on its facility in Nuevo León. Like other investors, Tesla has encountered rising costs and logistical challenges.

Grid constrains are stifling nearshoring

Nearshoring is being limited by structural issues faced by Mexico’s electricity sector. Mexico’s grid has struggled to keep up with rising demand. The country suffers an “energy deficit,” facing difficulty connecting new manufacturing plants to the grid and—by extension—to renewable energy sources. The latter is a potential sticking point for electric vehicle producers looking to relocate to Mexico such as Tesla, GM, and Ford. The Mexican Association of Private Industrial Parks notes that this issue has postponed some projects and has throttled nearshoring in the years since the pandemic.

Is Mexico’s electricity sector a constraint?

The fragility of Mexico’s grid presents another major nearshoring obstacle. This was made clear in early May 2024 when the electricity demand on the grid nearly exceeded the total available generating capacity, leading the national electric system operator, CENACE, to declare a state of emergency. It has been reported that much of this demand can be attributed to the rising use of air conditioning and electric cooling during a record-breaking, weeks-long heatwave. As Mexico gets hotter courtesy of climate change, demand for cooling technologies—particularly for industrial processes—is set to rise.

Mexico’s electricity sector needs to shape up to meet increased demand from nearshoring.

More competition is needed—US investors can help

Mexico’s electricity sector offers a promising path for the United States to align its nearshoring objectives with Sheinbaum’s agenda. But to do so, it must benefit state-owned companies and free up state funds for social programs aimed at reducing inequality.

Increased private sector participation in the electricity sector is a necessity for achieving greater capacity and connectivity to unlock nearshoring. One analysis from the National Autonomous University of Mexico argues that increasing private sector participation in the electricity sector would not displace the state-owned electricity company CFE, which controls 40 percent of Mexico’s electric generation capacity, produces 70 percent of its power with private partners, and controls the full transmission and distribution network of the national grid.

In fact, CFE could benefit from increased industrial demand driven by nearshoring. Increasing private sector involvement in power generation can even help CFE by freeing it to investment in other areas, such as upgrading its transmission and distribution network and strengthening its balance sheet in the long term.

New president, new opportunities

AMLO has tried to strengthen CFE by passing a measure in 2021 to discriminate against private sector electricity generation and negate the 2013 Electricity Industry Law, which was designed to promote competition in the sector. Although the measure has since been overturned by the Supreme Court, the administration has effectively halted new public auctions for independent power contracts, preventing growth in private sector investment. Despite this, the private sector drove the increase in solar and wind power from 2014-2020.

Reversing course on private investment will be critical to restoring and expanding the capacity of the electric system and lowering costs. In 2019, independent power producers generated electricity 35 percent cheaper than CFE.

Sheinbaum’s election may present an opportunity for greater private sector collaboration with the United States. Facilitating investment can both strengthen Mexico’s grid and bolster the Mexican state, outcomes that are in line with Morena’s socioeconomic justice goals. While Sheinbaum will likely continue to favor state-owned companies, the Wall Street Journal reports that she also aims to “attract billions of dollars in private investment for solar and wind farms, with the government keeping control and a majority share in the electricity market,” citing a close advisor to Sheinbaum.

How the US-Mexico partnership can boost nearshoring and the electricity sector

The United States should seize the opportunity to work with the incoming Sheinbaum administration to strengthen the Mexican energy sector, thereby enabling supply chain security gains through nearshoring. The relationship should uphold the mutually beneficial tenets of the USMCA, including its level playing field for private sector investment.

In addition, the United States should redouble its technical and regulatory cooperation efforts with Mexican electricity regulators as has been conducted through the U.S. National Renewable Energy Laboratory (NREL). The aim of this partnership should be to work toward goals which benefit the Mexican administration’s agenda while strengthening economic ties and boosting Mexico’s manufacturing potential.

US-Mexico cooperation on electricity sector regulation can facilitate private sector investment in generation that could decrease the burden on CFE as the sole entity responsible for expanding the grid. Ceding greater financing responsibility to the private sector—with CENACE retaining control of the national electric system—could enable CFE to expand its business alongside the private sector and permit the Mexican state to focus on investments that promote increased prosperity for all its citizens.

With higher private sector participation conducted in a manner that respects the central role state-owned companies play in Mexican society, the electricity sector in Mexico can be transformed into an enabler of the nearshoring trend.

William Tobin is an assistant director with the Atlantic Council Global Energy Center.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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William Tobin

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Africa China

EnergySource Feb 24, 2023

Lula is back. Are Brazil’s climate credentials?

By Lizi Bowen, Maia Sparkman, William Tobin

Lula’s return to office in Brazil heralded a renewed commitment to environmental stewardship. But steps must be taken to ensure that renewal becomes as concrete and effective as possible.

Brazil Climate Change & Climate Action

Blog Post Feb 22, 2024

How to finance net zero in developing economies: Beyond the existing investment framework

By Ken Berlin, Frank Willey

The IEA’s recent analysis concludes that the world is on a path to achieve only one-third of the necessary reductions to limit global warming to 1.5 degrees C by 2030. The establishment of a new financing structure that catalyzes private investment in developing countries through innovative financing guarantees is crucial for achieving ambitious carbon reduction goals.

Climate Change & Climate Action Energy Markets & Governance

EnergySource Jul 11, 2022

Climate and energy at the US-Mexico bilateral summit

By David L. Goldwyn, Neil Robert Brown, Andrea Clabough

Energy and climate issues will feature heavily when Mexico’s president visits the White House this week. President Biden faces the tough task of fostering greater cooperation while asserting US demands for treaty compliance and a free and fair energy market.

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The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

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These agreements have drawn attention to Ankara’s presence in the Horn of Africa and build upon a long history of Turkish engagement in the region. They hold great potential for expanding the security and economic benefits of Turkey-Somalia cooperation, but implementing them will not be easy. Great-power competition over influence in Mogadishu, regional rivalries, security challenges, and a fractured Somali government will all pose significant challenges to these agreements and Turkey’s bid for a greater role in the Horn of Africa.

What’s the big deal?

On February 22, Ankara and Mogadishu signed a memorandum of understanding (MOU) establishing the Turkish Armed Forces as a partner in Somalia’s maritime security and law enforcement for the next ten years. Per reports about the MOU, Turkey will reconstruct, equip, and train the Somali Navy while receiving 30 percent of the revenue from Somalia’s exclusive economic zone. Proponents say that the stability and security brought to Somalia’s seas outweigh the costs. Somalia loses $500 million dollars annually to illegal fishing, for example to Iranian and Chinese fishermen, while Somalia’s oil and gas reserves of up to thirty billion barrels remain largely untapped since civil war broke out in 1991. A brief period of stability has led oil and gas companies to cautiously return to Somalia. In 2019, ExxonMobil and Shell indicated a potential return to the country, and in 2022, Coastline Exploration struck a seven-block exploration deal, though an increase in fighting once again prevented any major steps forward. Shortly following this agreement with Turkey, Liberty Petroleum announced that it had secured three offshore blocks for exploration.

Shortly after reaching the maritime defense and security deal, Ankara and Mogadishu announced another MOU, establishing Turkey as a partner in Somalia’s exploration, appraisal, and extraction of petroleum blocks, with the possibility of Turkey taking over sales and distribution. Though the first agreement of its kind for Turkey, Ankara is increasingly factoring hydrocarbons into its diplomatic efforts, including in Libya.

Guns and roses

Turkey’s reaching out to Somalia has been in the making for nearly two decades, though then Turkish Prime Minister (and current president) Recep Tayyip Erdoğan’s visit to Somalia during a devastating famine in 2011 was the watershed moment. The first non-African head of state to visit Somalia in twenty years, Erdoğan toured refugee camps and hospitals, pledging aid and drawing international attention to the crisis. His visit was warmly received by the Somali people, many of whom felt abandoned by the global community.

In the years since Erdoğan’s visit, Turkey has integrated deeply into Somali affairs, in everything from its security to its garbage collection and wastewater treatment to its management of seaports and airports. According to Erdoğan, Turkey provided more than one billion dollars in aid to Somalia between 2011 and 2022. Though Turkey’s presence has not been entirely without controversy, evidence of its popularity is widespread, whether through popular fundraising efforts for Turkish earthquake relief in 2023 or in day-to-day life—“Istanbul” is now a common girl’s name in Somalia.  

Turkey receives major attention for the aid it provides, especially considering that it is in the middle on the list of providers of official direct aid to Somalia. This is likely because of Turkey’s tendency to heavily brand its projects, its willingness to operate in dangerous areas of the country, and the close political ties between the two countries. The Turks often capitalize on shared cultural and religious ties to legitimize and optimize their operations, while the Turkish Directorate of Religious Affairs (also known as the Diyanet) facilitates some projects.

At the heart of the Turkey-Somalia relationship is military cooperation, which began in 2015. In 2017, Turkey established its first African military base, Camp TURKSOM in Mogadishu, and it has reportedly trained up to sixteen thousand troops. Alongside the United States, Turkey has conducted drone strikes against the terrorist group al-Shabaab, with at least nineteen confirmed strikes since 2022. In April 2023, Ankara sold Bayraktar TB2 drones to Mogadishu as part of counterterrorism efforts (a sale for which the United Nations accused Ankara of violating an arms embargo). Turkey also plays an important role in training and arming the Haramcad paramilitary unit and Gorgor commando brigade— one of two major elite units in the Somali National Army (SNA), with the other being the Danab brigade, which is trained by the United States. In collaboration with the Danab brigade, the Gorgor has played an important role in combatting al-Shabaab, particularly in renewed fighting in 2021 and 2022.

Turkey turns southward

Ankara’s presence in Somalia is part of a Turkish push toward Africa that started in 1998, with the creation of the Africa Action Plan. By 2008, Turkey had been declared a strategic partner of the African Union and opened at least a dozen embassies across the continent. When Turkey made its successful bid to become a nonpermanent member of the United Nations Security Council in 2009, it was supported by fifty-one of the fifty-three African states. In 2013, Turkey became a member of the African Development Bank Group. Turkey has varying interests in Africa, including ideological motivations, economic and trade priorities, and a desire to build up Ankara’s own defense industries and capabilities. Now, Turkey has a large presence in the region in the areas of humanitarian aid and military cooperation. As of 2022, some thirty African states had signed security cooperation agreements with Turkey, nineteen of which included troop training.

The Horn of Africa is critical for Turkish interests because of its its geographical position, rich mineral resources, and development potential. The region has seen increasing great-power competition involving a diverse cast of characters including Iran, the United Arab Emirates (UAE), Russia, China, and the United States. Since 2001, at least eighteen foreign military bases have been constructed in the region, primarily for counterterrorism and counterpiracy operations.

Over the past two decades, Ankara has developed a complex web of economic and military ties with the region, including by leasing the Sudanese island of Suakin, selling drones to Ethiopia, and participating in a decades-long anti-piracy mission off the Horn of Africa under NATO’s Combined Task Force 151. In 2017, Djiboutian officials invited Turkey to establish a military base near the critical Bab el-Mandeb Strait in an effort to promote freedom of navigation and regional stability. On February 20 this year, Djibouti and Turkey signed a military training cooperation agreement.

The Emirati angle

Turkey is far from the only power involved in Somalia. As recently as mid-February, Mogadishu signed an MOU with Washington to open five new military bases in the country and increase training for its Danab brigade. Qatar and the United Kingdom are also players in Somalia. Turkey’s primary competitor in Somalia, however, is the UAE, which has historically seen the region as critical to its strategic interests.

Flush with cash, the Emiratis have embarked on a campaign of infrastructure projects and security agreements across the region, including building major ports in Somaliland (an unrecognized republic in the north of Somalia that self-declared independence in 1991), Eritrea, and Djibouti. It also armed the Rapid Support Forces (RSF) of Sudan and the Ethiopian government during conflicts in those countries. In November 2022, according to Middle East Eye, Somalia reportedly signed a secretive deal with the UAE to train ten thousand Somali troops and police officers in Egypt. However, frustration among officials with the terms of the agreement, as well as continued Emirati projects in Somaliland, have complicated the UAE-Somalia relationship. On January 1, Ethiopia (also close with the UAE) announced it had reached an MOU with Somaliland exchanging recognition for sea access and the lease of a military base. Following the two major Turkey-Somalia agreements of 2024, the Emiratis severely cut their support for the SNA, which included providing an additional $256 in monthly salary for the 14,400 soldiers trained by the UAE.

The Emirati factor carries two major risks for Turkish ambitions in Somalia. First, Abu Dhabi has played a critical role in the fight against al-Shabaab, including through air strikes. Manpower shortages have plagued the SNA for decades, an issue that Emirati coffers have helped alleviate. The withdrawal or reduction of Emirati support in the fight against terrorism will have a compounding effect as the African Union’s Transition Mission in Somalia (ATMIS), abiding by a request from Somalia, plans to withdraw its forces by the end of 2024. The withdrawal of both ATMIS and the UAE risks Turkey becoming further burdened by the region’s fight against terrorist groups. Second, the UAE has faced several setbacks across the region as the number of players continues to grow, and its attempts to reinforce its position will create effects that will impact Turkey. The UAE is entering increasing competition with China in Djibouti, especially now that Djibouti’s government nationalized the Doraleh Deep Water Port, which was previously owned by an Emirati company; meanwhile, in Sudan, the Emirati-backed RSF has seen its first major setbacks in months with the loss of Omdurman to the Sudanese Armed Forces, who have purchased weapons from Iran. As the UAE seeks to reassert itself and reinforce its position in the region, it will likely double down on its already substantial investments in Puntland, Somaliland, and Ethiopia. Whether the emboldening of Somalia’s rivals and the geopolitical balancing in the Horn will have a stabilizing or destabilizing effect remains to be seen, but it will likely be closely watched by Turkey.

Known unknowns

Though Somali and Turkish officials maintain that the recent agreements are unrelated to the major deal between Somaliland and Ethiopia, the timing is difficult to ignore. The Somali cabinet labeled the Somaliland-Ethiopia MOU as a “blatant assault” on its sovereignty and said it was an example of Ethiopian “interference against the sovereignty of [Somalia].” Unsurprisingly, Somalilanders reacted similarly to the Turkey-Somalia agreements that followed. Though the regional backlash to the MOU may in part steer Ethiopia and Somalia to dissolve it, this is far from certain. It remains unknown if Turkey’s enforcement of Somali maritime security will extend to Somaliland waters, which Ankara recognizes as part of Somalia. In May, Somaliland’s foreign minister explicitly stated that Turkish naval vessels would not be welcome in its territorial waters. This issue will be particularly important if Ethiopia proceeds with its plans to build a naval facility in Somaliland. Despite a strong Turkish-Ethiopian relationship, the Turkish Navy supported joint Somalia-Egypt naval exercises days after the January 1 agreement was signed. It is also unclear how the Turkish Navy will interact with the Puntland Maritime Police Force, which has received funding support from the UAE. Though the semi-autonomous Somali region of Puntland does not claim total independence, it pulled recognition of the Somali federal government in March.

Equally uncertain is how Ankara will react should the Houthis attack a ship transiting through the Somali waters that it will be charged with protecting. Handcuffed by the group’s connection to the war in Gaza, Turkey has balanced a precarious relationship with the extremist group, quietly opposing them over the last seven years while refusing to label them a terrorist organization and shying away from joining the US-led Operation Prosperity Guardian.

A winding path forward

It is uncertain how Turkey and Somalia will deliver on the major agreements and continue the upward trajectory in their bilateral relations. Turkey faces a complex and challenging Somali political landscape. Both MOUs were quickly ratified by the Somali parliament (members perhaps had little choice in the matter, according to one Somaliland-based researcher), though the deal is not without detractors. Beyond concerns over sovereignty, Mohamud is in need of an influential patron as he faces allegations of consolidating power. For Mohamud, Turkey may be the answer, as Turkey largely disregards Somalia’s domestic politics and offers near unconditional support for Villa Somalia, which has led some analysts to describe Turkey as an “all-weather friend.” Mohamud recently proposed a series of constitutional changes, including transitioning to a presidential system, arguing that it would combat clan politics and unite the country. The reforms have prompted protests and polarized the parliament. The Puntland region declared on March 31 that it would be withdrawing from the federal government until a new constitution was put in place. Days later, the Daily Somalia reported that Puntland President Said Abdullahi Deni traveled to the UAE and Ethiopia.

Furthermore, Mohamud’s government lacks unity. The same day that the Liberty Petroleum deal was signed by Somali Minister of Petroleum and Mineral Resources Abdirizak Omar Mohamed, Somali Prime Minister Hamza Abdi Barre expressed concerns and called for revoking the deal. Similarly, the Somali government lacks a clear strategy toward al-Shabaab. Following a successful first phase of “total war” in 2022, both battlefield and political gains have slowed, and al-Shabaab has struck back with a series of horrific attacks. Barre declared his support for peace talks with al-Shabaab in direct opposition to Mohamud, garnering public and private support from within a fractured cabinet.

Moreover, the recent battlefield gains by al-Shabaab undermine the legitimacy of Turkey’s military presence in the country. The concessions required for a peaceful settlement with the terrorist group may include ejecting Turkey’s military, the presence of which al-Shabaab has condemned harshly.

As Turkish officials and lawmakers consider ratification and implementation, they will no doubt look to the past decades of Turkish engagement with Somalia—but also the challenges that lay ahead. The difficulties posed by external influences, great-power competition, tumultuous domestic politics, widespread corruption, high costs, and continued conflict in Somalia will make Turkey’s enormous promises extremely difficult to fulfill. The future of these agreements and thus the future of Turkey’s relations with Somalia and position in the Horn of Africa, though built upon a strong foundation, remains to be seen.

Kiran Baez is a young global professional at the Atlantic Council Turkey program. Add him on LinkedIn.

The views expressed in TURKEYSource are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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Without adequate air defenses it is futile to build new fixed capacity; without adequate power and heating, the prospects for Ukraine’s economic recovery are gloomy. While severe already, this problem will become critical in the coming winter months. 

From Ukrainian President Volodymyr Zelenskyy, who spoke at the opening session, to Ihor Terekhov, mayor of the beleaguered front line city of Kharkiv, the message was driven home: Air defense and electric power are inextricably intertwined, and both are desperately needed. 

Ukraine’s partners appear to recognize the urgency of the situation. German Chancellor Olaf Sholz used the conference to announce that Germany will provide Ukraine with additional IRIS-T and Gepard air defense batteries. Italy confirmed plans to deliver another SAMP/T anti-missile battery. Just hours after the conference, Washington announced that it will be sending another Patriot anti-missile system to Ukraine. 

This was certainly welcome news for Kyiv. However, the breadth and intensity of Russia’s attacks will require many more such deliverables to provide some assurance of the survivability of any new or rebuilt power plants.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Another takeaway from the URC was the role of private sector investment in Ukraine’s recovery. Speaking at the conference, an IFC representative said the ratio of private sector investment to official funding for Ukraine’s reconstruction should be seven-to-one. As was acknowledged by many speakers, including US Special Representative for Ukraine Reconstruction Penny Pritzker, this will not be feasible without affordably priced political and war risk insurance, along with export credit guarantees backed by foreign governments. 

Here, too, the message seems to have reached Western capitals. The US Development Finance Corporation (DFC) announced a $300 million expansion of political risk coverage on top of the more than $1 billion of coverage already extended both prior to and since the full-scale invasion. The European Investment Bank (EIB) announced a new $1 billion lending facility, while the EBRD unveiled a planned $700 million credit for Ukrenergo on top of a total loan portfolio of $4.2 billion, and the IFC confirmed a total of $1.4 billion invested in Ukraine since the invasion. 

The export credit agencies of Denmark, Germany, Japan, and Poland all reported substantial coverage and very low default rates. Nevertheless, Rostislav Shurma, Energy Advisor to the President of Ukraine, cited continuing impediments to lending and insurance coverage. These include high pricing, short maturities, lending caps, and less than one hundred percent coverage. 

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Online Event Thu, August 15, 2024 • 9:00 am ET

Ukraine’s advance in Kursk: What’s next and implications

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The Berlin conference addressed a wide range of additional topics related to the idea of Ukraine’s reconstruction. Representatives of local and regional governments, civil society, and the private sector were active participants in the many lively sessions. Attendance was more than 1500, with the plenary session standing room only for those who dawdled on the way in (this writer included). 

The atmosphere in the breakout sessions was akin to a revival meeting, with frequent applause and eager participation from audience members. The photographs and displays lining the corridors dramatically illustrated the human tragedy of Russia’s brutal invasion, the resilience of the Ukrainian people, and their determined defense of their country. 

Still, the question remains whether the measures announced in Berlin will be enough to launch a sustainable recovery. They are a good start, and show a steady increase since the 2022 and 2023 URC events, but significant challenges remain. 

Many speakers referred to frozen Russian Central Bank reserves and other Russian assets, with Ukrainians urging Western governments to allow these funds to be used for Ukraine’s reconstruction. The $300 billion plus this represents would go a long way toward rebuilding much of Ukraine’s damaged and destroyed infrastructure. Unfortunately, there was no sign from Western government officials at the Berlin URC that their governments are quite ready to take that step. However, the issue remains very much on the agenda, with progress possible before the 2025 URC, to be hosted by Italy.

Edward Verona is a nonresident senior fellow at the Atlantic Council’s Eurasia Center covering Russia, Ukraine, and Eastern Europe, with a particular focus on Ukrainian reconstruction aid.

Further reading

UkraineAlert Jun 12, 2024

Ukraine is making the Russian occupation of Crimea untenable

By Olivia Yanchik

Ukraine’s growing air strike capabilities are decimating Russian air defenses in Crimea and making the occupation of the peninsula increasingly untenable, writes Olivia Yanchik.

Conflict Defense Technologies

UkraineAlert Jun 4, 2024

Vladimir Putin just tacitly admitted Crimea is not really part of Russia

By Peter Dickinson

Russia claims to have annexed five Ukrainian provinces but refuses to extend security red lines to these regions. This highlights the pragmatic political realities behind Putin’s talk of historic conquests, writes Peter Dickinson.

Conflict Disinformation

UkraineAlert May 30, 2024

If the West wants a sustainable peace it must commit to Ukrainian victory

By Hanna Hopko, Andrius Kubilius

Since 2022, Western policies of escalation management have failed to appease Putin and have only emboldened the Kremlin. If the West wants peace, it must help Ukraine win, write Hanna Hopko and Andrius Kubilius.

Civil Society Conflict

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.

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• US vs. China in Regional Influence
• Importance of International Order
• US Strategic Partnerships
• China’s Regional Impact

Chapters

00:00 – Introduction

03:51 – Navigating Biden’s China Challenge in the Middle East

08:46 – Safeguarding Strategic Partnerships Amidst China’s Rise

11:41 – Exploring China’s Economic Development

15:00 – Contrasting US and China Infrastructure Support

20:19 – Assessing China’s Trade Influence

22:23 – Impact of the International Order on Gulf Economies

24:30 – Insights from the China-Arab States Cooperation Forum

29:18 – China’s Prioritization of its Immediate Periphery

34:04 – Cooperation and Countering Iran’s Influence

38:19 – Iran’s Behavior Changes and China’s Role

39:51 – Evading Sanctions: Iran, Russia, and China

42:22 – Outro

Dana Stroul
Director of Research and Senior Fellow
The Washington Institute for Near East Policy

Dana Stroul is Director of Research and Shelly and Michael Kassen Senior Fellow at The Washington Institute for Near East Policy, positions she assumed in February, 2024. She rejoined the Institute after serving from 2021-2023 as deputy assistant secretary of defense for the Middle East, the Pentagon’s top civilian official with responsibility for the region. In that capacity, she led the development and execution of U.S. defense policy in the region during an especially turbulent period that included accelerating integrated air and maritime defense, addressing Iran’s destabilizing activities, formulating the U.S. approach to strategic competition, sustaining the DEFEAT-ISIS coalition, and responding to the Israel-Hamas War. Previously, she served for five years as a senior professional staff member on the Senate Foreign Relations Committee, where she covered the Middle East, North Africa, and Turkey, and also served in Middle East policy office of the Secretary of Defense.

In this episode of China-MENA, titled “Unpacking Influence: China’s Impact on US Strategy in the Middle East,” join our host Jonathan Fulton and guest Dana Stroul, director of research and senior fellow at the Washington Institute for Near East Policy and former Deputy Assistant Secretary of Defense (DASD) for the Middle East, as they explore China’s evolving role and its impact on US policy in the Middle East and North Africa. This episode delves into global partnerships like the US-UAE-G42-Microsoft collaboration, the strategic significance of 5G technology and cloud computing, and the role of China on Iran’s behavior changes. Among other themes, Dana also discusses:

• The China-Arab States Cooperation Forum
• How to safeguard strategic partnerships amidst China’s rise
• Contrast between China and US infrastructure support
• Evasion of sanctions: Iran, Russia and China

Join us for an insightful discussion on the future of the US and its strategic goals in the region.

Fellow

Jonathan Fulton

Nonresident Senior Fellow

Rafik Hariri Center & Middle East programs Scowcroft Middle East Security Initiative

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The China-MENA podcast features conversations with academics, think-tankers, and regional specialists on Chinese Influence in the Middle East and informs US and MENA audiences in the policy and business communities about the nature of China’s outreach to the region.

At a time when China’s global footprint is getting deeper and deeper, it has never been more important to understand its foreign policy and the Middle East is one of the world’s most consequential regions: home to major religions, diverse cultural and social heritage, central to global energy markets, and of course, geopolitics, linking people and markets in Asia, Africa and Europe.  This show will help you understand what China is doing in the region, and how the region is engaging with China as an increasingly important external power.

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Listen to the latest episode of the China-MENA podcast, featuring conversations with academics, government leaders, and the policy community on China’s role in the Middle East.

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New Atlanticist Feb 19, 2023

China-Iran relations are warming. Here’s what the rest of the world should know.

By Atlantic Council experts

While much of the world is focused on Chinese balloons violating US airspace, Iranian President Ebrahim Raisi recently flew to Beijing to meet with Chinese leader Xi Jinping.

China Iran

MENASource Dec 15, 2022

No, Xi’s visit to Riyadh wasn’t because of bad US-Saudi relations. It’s about much more.

By Jonathan Fulton

Given the bad state of US-Saudi relations, it is natural to see Xi’s visit in the context of geopolitical competition between Washington and Beijing, but that framework misses the bigger picture.

China East Asia

MENASource Feb 1, 2024

China doesn’t have as much leverage in the Middle East as one thinks—at least when it comes to Iran

By Jonathan Fulton

China is more likely to continue to be the regional actor it has been over the past decade—one that comes to the Middle East to trade and build, not lead. 

China Conflict

This podcast was funded in part by a grant from the United States Department of State. The opinions, findings, and conclusions stated herein are those of the author and do not necessarily reflect those of the United States Department of State.

The post Unpacking Influence: China’s Impact on US Strategy in the Middle East appeared first on Atlantic Council.

The post Khakova quoted in BBC The World at One on Ukraine’s energy infrastructure appeared first on Atlantic Council.

While energy was not the driving issue for the majority of the 185 million European voters for this election, the newly elected Parliament will play an important role in determining how to defend the bloc’s energy security, reduce emissions, and boost competitiveness.

Our experts weigh in on the impact of Europe’s elections on these issues.

Click to jump to an expert analysis:

András Simonyi: Will the EU elections slow its energy transition?

Pau Ruiz Guix: How the EU can stay the course on clean energy goals

Andrei Covatariu: EU elections put climate, energy security, and political capital at risk

Elena Benaim: EU climate and energy agenda hangs in the balance

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

Will the EU elections slow its energy transition?

Five years ago, the European Commission under President Ursula von der Leyen set out to make the green transition its top priority. What comes next for the EU’s climate and energy agenda is uncertain. The Parliament’s new composition, and, perhaps even more importantly, the final choice of Commission president (which is up in the air) and members of the Commission, along with the distribution of portfolios, will be reflective of but also critical to the future direction of the EU.

While the gains of the extreme right are mainly a result of the migration crisis, the huge losses suffered by the Greens, plus the economic and political costs of the energy transition, need to be taken into account. These indicate a strong push to “rebalance” green transition and energy security.

Europe’s competitiveness has thus been added to climate and security/energy security concerns—for some member states, it is the number-one priority. Besides the geopolitical realities, as we warned years ago, the “absorption” capacity of European societies increasingly determines the speed with which the green transition can move forward.

There is an overwhelming view that now the next Commission will have to focus on the implementation of previous decisions. There are clearly two competing political trends, however. One aims to speed up the green transition as a panacea to all the issues mentioned above. The other takes a more pragmatic and realistic position to continue the transition, while taking into account the security, cost, and social aspects of that transition.

No matter what, energy security will take center stage. This means that US liquefied natural gas (LNG) will continue to play a major role, particularly as the majority view in Europe is that it will not go back to the status quo ante with Russian energy supplies.

András Simonyi is the former Hungarian ambassador to the United States and a nonresident senior fellow with the Atlantic Council Global Energy Center.

How the EU can stay the course on clean energy goals

The European elections results reflect a sentiment that has already been increasingly apparent: a need to align ambitious climate policy with a competitiveness and resilience agenda that delivers growth and economic security. While the reality of European policymaking means that a clearer picture will only emerge when new leadership is at the helm of the European Commission, the next five years will be all about implementing already-adopted regulation to reduce European greenhouse gas emissions by 55 percent by 2030.

To deliver on deep decarbonization goals, EU countries will need to implement targets to decarbonize hydrogen production at a time when carbon pricing will be extended, and the Carbon Border Adjustment Mechanism will be implemented and potentially expanded.

To deliver on domestic clean technology manufacturing goals, the new European leadership may opt to accelerate a trend toward re-shoring and friend-shoring, requiring new instruments, partnerships, and relationships within the multilateral trade system.

To deliver on clean hydrogen deployment goals, a sector where final investment decisions (FIDs) are struggling to take off, the new mandate should finalize low-carbon hydrogen rules and revise clean hydrogen rules reflecting what works and what doesn’t.

Achieving these three broad goals, which inevitably tackle global and trade-exposed sectors, will require strong climate and energy diplomacy that strengthens global cooperation on increased decarbonization of hard-to-abate industries, supply chain security, and regulatory alignment and certification. The US position and transatlantic cooperation will play a key role in achieving these objectives, and, therefore, not only European elections but American ones in November will inform and influence the realm of possibilities.

All in all, a world of different speeds in the energy transition is a challenging place, and the European experience shows that only by working together is it possible to balance climate, economic, and security objectives to the benefit of the people and the planet.

Pau Ruiz Guix is a trade and international relations officer with Hydrogen Europe.

EU elections put climate, energy security, and political capital at risk

In 2022, after Russia’s full-scale invasion of Ukraine, the European Commission set ambitious energy and climate targets to a significant extent aimed at minimizing social unrest and maintaining political stability in the European Parliament for the 2024 elections. This strategy largely succeeded, with the 2019 political coalition still holding a majority—albeit a narrow one— while public protests have been managed over the last years.

However, overambitious targets may soon backfire. As Commission President Ursula von der Leyen works to secure a strong coalition (which could include the Greens), some of the energy and climate objectives are at risk. Revising the approved 2030 targets is complex and politically risky with a right-leaning European Parliament. This could slow the transition pace, possibly enhancing short-term energy security but undermining long-term climate goals and supply security.

An alternative would be to maintain the existing targets, but this approach would also risk leaving goals unmet. This outcome could hurt energy security and political credibility, especially as the deadline for meeting targets falls right after the five-year term of the newly elected European Commission. Failing to meet the targets could erode the credibility of the leaders who will be in power at the end of this decade.

Looking beyond 2030, negotiations over the unapproved 2040 EU energy and climate targets pose even greater challenges than before, thus creating yet another significant political risk. Additionally, the EU enlargement process may also become less ambitious, which will only continue to generate spillover effects. Prospective countries would remain easily targeted by Russia with physical attacks on critical infrastructure, cyberattacks, or energy supply cuts, which will continue to hurt EU member states.

Andrei Covatariu is senior research associate at Energy Policy Group (EPG) and a research fellow at the Centre on Regulation in Europe (CERRE). This article reflects his own personal opinion.

EU climate and energy agenda hangs in the balance

On June 6, 2024, when called upon to vote for the European Parliament, European voters kept the center-right European People’s Party (EPP) as the leading group with 190 seats—a slight increase compared to the previous elections. However, to hold the majority, which requires 361 seats out of 720, the EPP will need to find working coalitions with other groups to pass legislation.

As announced by the EPP, European Commission President Ursula von der Leyen will again be their candidate for the presidency. With a second mandate, von der Leyen would be expected to protect the Commission’s legacy (including its key initiatives such as Fit for 55 and RePower EU) and to continue focusing on competitiveness, cleantech, innovation, global leadership, and energy resilience. However, coalitions in the European Parliament will heavily determine the direction of climate and energy policies.

With a majority formed by the EPP, Progressive Alliance of Socialists and Democrats (S&D), Renew Europe, and the Greens, the European Green Deal could be safe in terms of ambitions and targets. The coalition would probably maintain a decarbonization agenda strongly focused on energy security and industrial competitiveness and a likely dominant conversation around the social dimension of the energy transition.

With a majority that includes the hard-right group European Conservatives and Reformists (ECR), there could be a serious risk of seeing climate ambition weakened. Right-wing parties in member states have openly criticized Europe’s climate ambition, and this could result in undermining the provisions of the Fit for 55 plan. It might also complicate the already challenging discussion on unlocking investments for the green transition at the EU level.

A move to the right by the EPP would have severe implications for the legacy that the previous Commission built and hinder the possibility for the EU to build a strong industrial competitiveness strategy that supports the energy transition and climate targets.

Elena Benaim is a nonresident fellow with the Atlantic Council Global Energy Center.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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András Simonyi

Nonresident Senior Fellow

Global Energy Center

Energy & Environment Europe & Eurasia

Staff

Olga Khakova

Deputy Director, European Energy Security

Global Energy Center

Geopolitics & Energy Security Europe & Eurasia

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Elena Benaim

Nonresident Fellow

Global Energy Center

Energy & Environment

EnergySource May 3, 2024

G7 pledges to end coal—but only inclusive action will make a real climate impact

By Elena Benaim

During the G7 energy ministerial in Turin, Italy, climate, energy, and environment ministers made a historic pledge to phase out coal power plants by 2035 among other agreements. But members ultimately need to turn pledges into action to blunt the impacts of climate change.

Africa Brazil

EnergySource May 23, 2024

From Vilnius to Warsaw: How to Advance Three Seas Goals Between Summits

By Olga Khakova

To define regional goals of digital, transport, and energy integration, the leaders of the Three Seas Initiative member states and partners meet annually. But to make real progress toward these goals, they must now create a secretariat to coordinate and act on challenges throughout the year.

Central Europe Eastern Europe

EnergySource Apr 3, 2024

Central and Eastern Europe needs to rethink its approach to energy security

By Pawel Czyzak and Nolan Theisen

The upcoming Three Seas Initiative Summit is an opportune time for Central and Eastern European leaders to pivot toward clean, affordable, and local renewables to build energy security.

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The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

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The post Will the new Parliament change Europe’s course on energy security and climate? appeared first on Atlantic Council.

1. Why is the EU taking this step now?

By putting in place additional tariffs of up to 38.1 percent (much higher than the anticipated 15-30 percent), the Commission has shown its commitment to aggressively protecting the EU auto industry from a massive increase in Chinese EV imports. By setting these countervailing tariffs lower than the United States’ 100 percent and by applying rates differentially based on firm-specific levels of Chinese subsidization, production sites within the EU, and cooperation with the Commission, the EU is also communicating that its primary goal with these tariffs is to level the playing field rather than completely wall the single market off from Chinese EV imports.

The size of these tariffs indicate that the French have more influence than the Germans in EU trade policy, at least for now. French carmakers, in contrast to German auto brands, are less dependent on the Chinese market and more willing to use tariff policy to protect local production capacity. Indeed, the tariffs and their political fallout reflect a split between EU member states with deep ties to China’s car industry, such as Germany, Sweden, and Hungary, and member states that view China as more of a threat than an opportunity, such as France and Italy.

—Sarah Bauerle Danzman is a resident senior fellow in the GeoEconomics Center’s Economic Statecraft Initiative.

The European Commission unveiled its higher-than-expected countervailing tariffs on some EVs imported from China. With this move, European Commission President Ursula von der Leyen’s economic security agenda has won out against even a last-minute push by Germany to soften the decision. Concerns and disappointment have already echoed from German industry, criticizing the Commission’s “Trumpian protectionist” decision and denouncing detrimental economic consequences for Germany’s automotive industry. However, apart from the howls of opposition from some large German auto and chemical actors, almost 70 percent of German industries support protective measures against China’s unfair trade practices and market distortion. This fracture between Germany’s Mittelstand and major global players (such as Volkswagen, Siemens, BMW, Mercedes-Benz, BASF, and Bayer) reflects the underlying contrast between the EU’s need to protect its industries against Chinese overcapacity versus certain export-dependent sectors within the European bloc. 

With a strong chance of von der Leyen leading the Commission for the next five years and an increasingly protectionist-oriented global economy, it will be interesting to watch who catches up with whom. Will von der Leyen’s ambitious economic security agenda that echoes Washington’s tougher stance on China be reined in by export-dependent member states such as Germany? Or will Berlin come to a realization that the EU has to address key vulnerabilities vis-à-vis Beijing? This is only the opening salvo in a longer-term policy debate. 

—Jörn Fleck is the senior director of the Atlantic Council’s Europe Center.

—Jacopo Pastorelli is a program assistant in the Atlantic Council’s Europe Center.

In order to not affect the European Parliament election campaign, the European Commission waited to announce its decision to impose additional tariffs on Chinese EVs. But now that the election is over, it can finally move. It is indeed high time for the EU to react to China’s subsidized industrial overcapacities. The United States and other countries, such as Turkey, had already announced additional tariffs on Chinese EVs, thereby raising the pressure on the EU, because China could further divert its exports to Europe. 

But the decision by Brussels is not backed by all EU member states. While France is in favor, auto giant Germany has been wary of these tariffs and made an eleventh-hour bid to dilute and reduce the Commission’s planned tariff hike. In the corridors of the German chancellery and parts of the German economics ministry, there is great concern that the German automotive industry could bear the brunt of Chinese retaliatory action. And this remains a space to watch. So far, this is a provisional predisclosure by the European Commission. It now has four months to adopt definitive measures, which will require an implementing act with an examination procedure, which usually implies a qualified majority vote in a comitology procedure, meaning it is not final and set in stone, yet.

—Roderick Kefferpütz is a nonresident senior fellow at the Atlantic Council’s Europe Center and the director of the Heinrich-Böll-Stiftung European Union office in Brussels. The opinions expressed are those of the author and do not necessarily represent the views of the Heinrich-Böll-Stiftung.

The EU is undertaking tariffs on China-made EVs due to surging shipments to Europe. Additionally, the US imposition of tariffs on EVs and other products—especially batteries—forced the EU’s hand. 

The EU is of at least two minds regarding tariffs on China-produced EVs. Germany, Sweden, and Hungary all oppose the tariffs, which they feel will damage existing commercial ties with China. Germany fears retaliation against its own auto sales to China. Sweden’s Volvo brand is owned by the Chinese firm Geely. And Hungary has received substantial EV investments from Chinese EV and battery companies. Conversely, France, Italy, and several other EU actors advocated for additional tariffs, as these measures could protect EU automakers from subsidized competitors while attracting inward investments from China. 

Owing to a lack of internal consensus, as well as the rapidly changing nature of the EV landscape, the EU may well revisit its decision in the coming months. The EU’s decision is caveated at several points and could be reassessed if the European-US alliance weakens over the next year.

—Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center, where he leads the center’s efforts on Chinese energy security.

2. How does this step compare with the new US tariffs?

Because the United States has very little Chinese EV market penetration as of now, its recent Section 301 tariffs on Chinese EVs are largely preventive. In contrast, the EU’s tariffs are responding to a rapid increase in Chinese EV imports. In this way, the EU tariffs are more in keeping with the manner in which antidumping/countervailing duty investigations are usually undertaken, and the EU announcement makes it clear that it is at least attempting to impose these duties in a World Trade Organization-compliant manner, including by offering to enter negotiations with the Chinese government.

The EU tariffs are both lower than the United States’ and more complicated. By choosing to apply tariffs on a company-by-company basis, the EU is trying to demonstrate that its actions are rooted in factual determinations about Chinese subsidies, which themselves are provided on a company-by-company basis. By ensuring SAIC cars are hit with the highest tariff rate, the EU is also differentiating between state-owned car companies (which SAIC is) and private firms (such as BYD and Geely). This also gives the EU tools to incentivize car companies on an individual basis to transfer more production to the EU in order to gain better market access. The message is clear—site production in the EU or be subject to a tariff designed to eliminate the subsidization benefits of building vehicles in China.

The differences between the US and EU tariffs further highlight how much more dependent major European car manufacturers are on China—as a market, a production site, and as a source of inward investment. US carmakers are much less reliant on China for revenue, largely because as Chinese automakers have grown, US brands have been pushed out. The sense that China is a declining market for US autos has also blunted organized industrial opposition to tariffs on Chinese vehicles. Across the Atlantic, European car manufacturers have been much more vocal and concerned about tariff action against Chinese EVs due to the potential for retaliation, and this shows in both the tariff level—which is much lower than the United States’—and the firm-specific carve-outs.

—Sarah Bauerle Danzman

The EU’s tariffs are vastly different from the US measures in several key aspects. The EU-announced tariff rates are substantially lower than comparable US measures; are differentiated on a company-by-company basis; and, unlike the United States’, indicate a receptiveness to inward investment. 

The European Commission’s investigation determined that Chinese automakers BYD and Geely will receive preferential tariff rates of 17.4 percent and 20 percent, which will be applied on top of the existing 10 percent tariff rate that Chinese EVs face. Other producers would face additional tariffs ranging from 21 percent to 38.1 percent. 

While the criteria for determining provisional countervailing duties is not transparent, it appears that the European Commission awarded lower rates to automakers investing into the European ecosystem. 

It is not clear how the Commission determined a level of subsidization on a company-by-company basis—or if this exercise is even possible. The Chinese system of subsidies is diverse, complex, and opaque. Chinese firms often receive direct or implicit support via preferential interest rates, directed credit, tax credits, and cross subsidies—such as in the steelmaking and shipbuilding sectors. Moreover, these subsidies take place at the national, provincial, and even local level. 

While it’s not clear how the European Union could determine the level of these subsidies, especially on a company-by-company basis, it can calculate which firms have the largest local footprint. Both BYD and Geely have substantial investments in Europe. BYD has already opened an EV plant in Hungary and plans to open another facility. Geely owns the Swedish brand Volvo and has begun to shift production of some vehicles from China to Belgium. 

Finally, China’s SAIC group received the maximum tariff rate of 38.1 percent. The automaker has a limited footprint on the continent, and it has yet to select a site for its first European production facility, despite nearly a year of consideration. Accordingly, Europe seems to be warning SAIC to site a facility within Europe or face tariffs.

—Joseph Webster

3. How might China react?

China will likely issue some corresponding tariffs on European-made goods, even if only for symbolic purposes. Yet, it may have no choice other than to accept that Europe will accept its investment, but not its exports. Beijing may also seek to re-engage with Europe on electric vehicles after the US presidential election, which will have significant implications for transatlantic ties. 

Beijing will closely watch Europe’s posture toward lithium-ion batteries, which can be used for grid storage or electric vehicles (and also have potential military implications). With US tariffs on lithium-ion batteries beginning in 2026, Europe will be flooded by these products unless it applies its own measures.

—Joseph Webster

China has already indicated it may retaliate with tariffs against internal combustion engine vehicles, aviation equipment, and agriculture. It remains to be seen whether China makes good on that threat, but it did send a letter to the Commission in the aftermath of the tariff announcements, asking for a negotiated settlement and threatening to start retaliatory measures in aviation and agriculture in the absence of a deal. Agriculture and aviation are both politically sensitive sectors, with exports to China representing more than 6 percent of the EU’s agricultural trade. It’s less clear how easily China could absorb the costs of aviation tariffs given that Airbus planes represent more than 50 percent of China’s commercial aviation fleet.

At some point, the usefulness of tariffs in changing governments’ behavior displays decreasing returns. This is especially true as rounds of protectionism reduce firms’ market share in each other’s markets. The lack of strong US industrial opposition to tariffs on Chinese EVs is a case in point. The lesson here is that governments are going to eventually have to sit down and work out their differences; trade wars might be on-trend at the moment, but eventually the downsides—including increased costs and reduced consumer choice—will become more apparent to citizens.

—Sarah Bauerle Danzman

The post Europe is gearing up to hit Chinese EVs with new tariffs. Here’s why. appeared first on Atlantic Council.

At this dangerous moment, with air assaults continuing and a renewed land offensive likely in Ukraine, both sides of the Atlantic need to put their backs into support for Kyiv, whose success in its war of survival is critical to transatlantic security and remains possible. The most important part of that work is for the United States and European countries to provide more and better weapons with fewer caveats—a process that is already underway. But it also means exerting more economic pressure on Russia’s wartime economy. 

Sanctions and other forms of economic pressure alone are not going to force Putin to abandon his war objectives. But they can continue to weaken the Russian economy, lower Russian income, complicate production, and intensify the distortion of a rapidly militarized economy with an increasingly starved civilian sector. The Russian economy, like the Soviet economy, has little natural resilience. Nor does it allow space for entrepreneurship on a large scale. Under sustained pressure and extreme military spending, it will be prone to decay, like its Soviet predecessor. Group of Seven (G7) countries imposed sanctions against Russia after its initial invasion in 2014 and much stronger measures after Russia launched its full-scale war in 2022. Both sets of sanctions have had an impact. But as recent Russian economic statistics show, the impact of these efforts is plateauing as Russia gets better at evading and mitigating them. Sanctions are a dynamic game, and the United States and its G7 partners need to be as agile in addressing Russia’s responses to existing sanctions as Russia has been in adapting to the sanctions themselves. 

“Sanctions are like antibiotics: Repeat usage builds up resistance,” Deputy National Security Advisor Daleep Singh explained in remarks on May 28. The necessary and appropriate response, then, is to intensify them to produce the desired effect. Happily, there are viable options to intensify the economic hit on Russia. None is without some risk or complication—options that promise all gain and no pain don’t actually exist. But the United States and the European Union (EU) should follow and choke off the money, show they mean it when it comes to enforcement, and hold sanctions evaders accountable.

Steps to do this could include:

1. Give the Russian oil price cap more teeth

Oil remains Russia’s number one export earner. The Russian oil price cap sought to limit the price of Russian oil sold on world markets to sixty dollars per barrel while not limiting the quantity of sales. The price cap was designed to reduce Russian income without spiking world oil prices, which would have happened if sanctions took Russian oil off the markets. And it worked, especially in the first year, lowering Russian revenues from oil sales by about 40 percent in the first nine months of 2023. The enforcement occurred through banning Western services, such as insurance and shipping, to oil shipments above the price cap.

Over the past year, however, Russia has adapted to the sanctions, procuring a “ghost fleet” of tankers to transport oil at prices above the price cap and offering its own insurance and other services to buyers. This ghost fleet has enabled Russia to demand its buyers pay prices closer to market value—and above price cap prices—because buyers cannot cite the price cap as an impediment to their paying higher prices.

It is time for the G7 to adapt the price cap accordingly. The G7 should back the price cap with the threat of secondary sanctions on those companies engaged in or supporting sales of Russian oil above the price cap by, for example, purchasing Russian oil above the price cap or shipping it. These secondary sanctions could be announced with a grace period of, for example, four months. During this time, current customers of Russia that are buying above-cap oil could rework their purchasing agreements with Russian suppliers, and US and EU enforcers could gather material on potential targets should they not do so. It’s also time to curtail the ability of banks, wherever they are based, to support the sale of Russian oil above the price cap. This can be done by narrowing the scope of licenses intended to facilitate financing for oil trade.

Any steps to check Russian revenue through oil sales would have to be gamed out to lower the risk of unintended consequences, such as a spike in prices. The Biden administration has been sensitive to any such steps, going so far as to press the Ukrainians not to strike at Russian oil refineries. This was an ill-considered admonition and was badly received by the Ukrainians, who rightly regard Russian refineries as legitimate military targets and have conducted effective attacks on them.

But the principle that informed the initial price cap still applies: As long as the price cap is significantly above Russia’s cost of production, Russia will have an incentive to keep up exports and will suffer a major loss of revenue if it does not. Russia’s cost of production can be estimated in various ways, but generally is regarded at well under sixty dollars per barrel. The risk of spiking world oil prices by more aggressively enforcing a cap on Russian oil exports thus seems acceptable.

2. Cut off Russia’s energy future

Russia has also been adapting to the sanctions by developing new capacities to help export oil and gas that don’t rely on its traditional pipeline network. This includes liquefied natural gas (LNG), where the Biden administration late last year sanctioned Russia’s Arctic LNG 2 project as a particular target. While Russia is the world’s fourth-largest LNG exporter, global production (and US production in particular) is rising. LNG supply shortages seem unlikely in the near term.

Russian officials have also discussed building new pipelines in the country’s east, particularly to China. US sanctions should push back on these efforts to develop new energy export avenues. Measures could include forcing all LNG service companies out of the sector, using the threat of secondary sanctions, and imposing additional sanctions on new export flows. As with increases in oil sector sanctions, these might have to be phased in and accompanied by licenses to avoid unintended consequences—for example, with Japan’s interest in LNG kept in mind.

3. Push Western firms to crack down on diversion of their products to Russia

Many Western companies have fully withdrawn from the Russian market, and even those that remain have generally adopted programs to comply with Western sanctions. However, reporting continues to find Western component parts pervasive across Russia’s military machinery: One recent study found that 95 percent of the non-Russian components in Russian weapons recovered in Ukraine were from Western firms, with only 4 percent from Chinese firms. Many of these Western components were likely produced in China and other manufacturing hubs and then disappeared into a network of shadowy middlemen.

After the 9/11 terrorist attacks, the US government pushed global banks to overhaul the way they complied with sanctions, and the banks generally developed an extensive infrastructure to spot and stop terrorist and other rogue money moving through the financial system. The United States and its partners should undertake a similar effort with the manufacturing and tech sectors, working collaboratively to strengthen compliance and reduce the diversion of Western-made components flowing to Russia. Through warnings and public enforcement actions, such as civil and criminal penalties that make examples of selected companies that show flagrant irresponsibility, the United States and Europe could put pressure on firms to take seriously the “Know Your Customer” (and “Your Customer’s Customer”) principle.

4. Drop the hammer on third-country evaders

Reports abound of exports of banned technologies to Russia through third countries, including through Georgia, Central Asian countries, and Turkey. US officials have been traveling widely and urging greater cooperation, and the United States has for some time sanctioned third-country evaders. Beyond getting Western companies to strengthen their export controls compliance protocols, the United States should increase pressure on countries that serve as platforms for re-exports to Russia, including an aggressive campaign of secondary sanctions on firms that re-export prohibited goods to Russia.

5. Consider a shift to “embargo-minus” rather than “targeted sanctions-plus”

Since the initial Russian invasion in 2014, the United States and Europe have gradually imposed financial sanctions on Russia’s big state banks and some selected private banks, along with a large number of sectoral sanctions and sanctions on Russian companies. This creates a complex sanctions regime where a lot of trade is banned but a lot of other trade remains allowed, leaving gray areas and loopholes for Russia to exploit and complicating enforcement.

The United States and Europe should consider imposing a general embargo on both trade and financial transactions with Russia, except for defined categories of white-listed trade, such as medicine, permitted energy, and other transactions. Such a system—phased in with grace periods and perhaps starting with a general financial embargo—would have to be flexible enough to account for unanticipated problems by issuing supplemental licenses.

6. Face the China challenge

While apparently not directly sending weapons to Russia, China has emerged as Russia’s greatest economic backer since its full-scale invasion of Ukraine, providing general economic support and dual-use equipment and technology to support Rusia’s war effort. These efforts have weakened the impact of—and could undermine—US and European sanctions. Aware of this, the Biden administration has imposed sanctions on smaller Chinese companies engaged in sanctions violations, hoping for a change in Chinese policy but to little apparent avail. During his trip to Beijing in late April, US Secretary of State Antony Blinken reportedly pressed his Chinese interlocutors to back off their economic support for Russia, and the administration may hope that a frank warning will result in China changing course.

If not, the United States should take action, such as imposing sanctions on a larger Chinese bank or company involved in supporting Russia’s war machine. Chinese financial transactions with Russia are likely happening outside the reach of US sanctions, meaning outside of the US dollar and US financial system. Therefore, these sanctions would initially serve more as a messaging tool than a mechanism to immediately turn off the transactions.

But messaging is important, especially when dealing with China. Sanctions targeting a large Chinese financial institution or significant company facilitating material support to Russia would lead other countries and companies to de-risk from these sanctioned entities to reduce their sanctions exposure. It would mean US secondary sanctions in China. Such steps risk Chinese retaliation or unintended consequences. But a sanctions carve-out that allows China to back up Russia’s military machine, which is what a lack of action effectively amounts to, would pose a bigger risk: that of failure of US and European support for Ukraine and a message that the West is not serious about its own policy.

7. Take Russia’s money to pay for Russia’s war

In a bold move immediately after the full-scale invasion, the G7 immobilized around $300 billion of Russian sovereign assets. It has since debated what to do with the funds and has been slow to get beyond general agreement that they will remain immobilized. Many in the United States have advocated seizing all the immobilized funds and using them for Ukraine (the passage of the REPO Act gives the US legal backing to do so with the funds in its jurisdiction, which is reportedly at least five billion dollars). The EU, where the vast bulk of the Russian assets are located (in Belgium), had limited itself to using the interest on the immobilized Russian principal for Ukraine. While a welcome step, that interest comes to around three billion dollars per year, an inadequate amount given the scale of Ukraine’s needs in the face of Russia’s ongoing war.

The G7 now seems to be closing in on a compromise proposal to take the interest on the Russian assets for twenty years rather than just one year, a proposal that could provide a pot of $53 billion. Those funds could be used as collateral for a loan or grant to Ukraine from the United States or a group of willing countries. Meanwhile, efforts to capture agreement on using the entire principal would continue.

That seems to be a smart compromise that provides one way to have Russia rather than European or US taxpayers pay to help Ukraine. The upcoming G7 summit in Italy would be the time and place to reach agreement. That will not be easy: Some Europeans seem stuck in a mode of thinking that has not yet internalized Russia’s war of aggression against Ukraine and its ongoing aggression against other European countries through disinformation, assassination, and sabotage.

Seizing sovereign assets is a big step. But the G7 crossed the line of absolute immunity for sovereign assets when it immobilized the Russia’s assets more than two years ago. While other countries, such as China and Saudi Arabia, may have hated that step and may be privately warning of retaliation should Europe or the United States go further and take Russian assets or proceeds, they have not pulled funds out of US, European, or UK financial markets. The G7 needs to see through what it began in February 2022 and find a way to use Russian funds to pay for Russia’s war of aggression and national extermination against Ukraine.

Neither these nor any serious economic steps against Russia are risk-free or simple; if they were, they would have been introduced already. Each will require resources to identify targets, anticipate potential risks, and enforce. Manufacturers won’t like the scrutiny or demands that they monitor their products’ ultimate destinations. Third countries will not appreciate the pressure to cut down on diversion of exports to Russia. The United States and allied governments should consider their choices not as alternatives to a zero-risk ideal but against the backdrop of the considerable stakes and their own repeated and accurate statements of how important it is to help Ukraine defeat Russia in this war.

Daniel Fried is the Weiser Family distinguished fellow at the Atlantic Council. His last position in the US government was as sanctions coordinator at the Department of State. Peter Harrell, a former State Department and National Security Council senior director, contributed to this article, for which the author gives thanks.

The post Seven ways to reboot G7 sanctions on Russia appeared first on Atlantic Council.

The most consequential new class of AI, generative AI, is able to analyze and create text, audio, code, and even molecular design—doing so faster and often with higher quality than human-created counterparts. Generative AI uses extraordinary volumes of training data and novel data-processing mechanisms which require unprecedented computational power. Data center load growth, driven by a range of factors, is forcing utilities across the United States and Europe to revisit system planning needs. Indeed, this added demand is—in some regions—delaying the retirement of coal-fired power plants. To ensure that climate targets are met, data center growth must coincide with transmission upgrades, energy efficiency improvements, and new low-carbon generation capacity. More broadly, policymakers must also consider how to harness the potential from generative AI while managing complex uncertainties, from inaccurate outputs and data leakage to AI-enabled cyberattacks on critical infrastructure. The deployment of generative AI will require rigorous human oversight, particularly in the early stages.

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Given the capabilities of generative AI, integration into organizational workflows can help energy stakeholders in multiple ways—for example, lower regulatory compliance costs, consider strategic planning options, and evaluate the financial risk around their low-carbon investments, among others.

1. Strategic planning

Recent demonstrations of generative AI capabilities are impressive. Generative AI can already outline, summarize, and draft documents cheaper and faster than many humans. It can also help humans conduct strategic tasks more effectively. A study by Harvard Business School examined the effects of GPT-4—the model behind ChatGPT—on knowledge workers’ productivity, finding that GPT-4 significantly improved workers’ abilities to generate effective ideas and develop implementation plans. Another study from University College London found that a collection of LLMs could give strategic recommendations at a comparable level to human experts. As strategic planning use cases are systemic and across industries, improvements in productivity would apply across the decarbonization value chain.

2. Regulatory compliance

Some generative AI use cases will directly enhance clean energy project developers’ ability to manage cumbersome regulatory processes. As generative AI capabilities are integrated into institutional workflows, they will assist on tasks ranging from simple emails to complex, costly, and time-consuming regulatory processes. The Pacific Northwest National Laboratory, as part of its PolicyAI, initiative, recently found that LLMs could streamline the public comment-review process under the National Environmental Policy Act (NEPA), which is burdensome for many renewables firms.

Importantly, generative AI may aid regulators by accelerating reviews of a variety of environmental impact studies. For instance, after New York State attempted to ease traffic and pollution by passing traffic congestion pricing, an exhaustive environmental review took five years and more than 4,000 pages of analysis. By streamlining portions of these document-intensive regulatory tasks, generative AI can speed up environmental reviews, giving infrastructure projects a quicker go/no-go decision.

3. Decarbonization investment analytics

A range of AI tools, using both existing techniques and generative AI, are being developed to assist with financial and economic modeling, a critical but resource-intensive task for renewable energy projects. While still at the early stages, generative AI tools may be able to partially or even fully build financial models or propose complex scenario plans. In addition, AI is already being used to enhance corporate due diligence by detecting anomalies in financial statements, summarizing earnings call transcripts, or rapidly analyzing trade press. These capabilities will continue to assist both investors and corporate mergers-and-acquisitions teams in their decarbonization investments.

4. Energy asset management

Financial and economic modeling tools overlap with another essential aspect of decarbonization: advanced energy asset management. Currently, communications with energy asset field operators are typically executed via middle management and dashboards with both planned and ad hoc analytics. Generative AI may enable more simplified analytics and communication with the workers physically assessing and repairing assets. At the energy asset management level, generative AI tools could deliver improvements in compiling, summarizing, and communicating asset performance in a customized manner for financial managers. 

5. Wildfire risk assessment

In parallel to generative AI, another area of quiet yet significant advancement has been machine-learning (ML) models for weather forecasting, which have produced some extraordinary results. Further advances in weather forecasting could help mitigate the climate change-driven fire season. Wildfires themselves exacerbate the climate crisis—global fires produce emissions of about 2 gigatons of carbon dioxide equivalent per year, equal to 4 percent of total global emissions. These fires can also force large populations indoors for weeks due to health risks and poor air quality. Further investment in AI/ML-based modeling could help manage these risks by predicting the probable location and magnitude of potential wildfires and improving real-time surveillance of smoke, enabling firefighters to combat the over 80,000 wildfires that occur in the United States alone every year. 

Despite the current AI hype cycle and the early-stage risks around generative AI, improving the broad range of AI models will be integral to developing a low-carbon economy. The magnitude and pace will be difficult to predict, as models are integrated into institutional workflows. Human oversight, particularly around critical infrastructure, must remain comprehensive. If managed appropriately, these emergent capabilities will yield important advances in regulatory analysis, environmental management, strategic planning, and an array of challenges essential to achieving net-zero emissions.

Joseph Webster is a senior fellow at the Atlantic Council Global Energy Center.

Shaheer Hussam is a partner at Aetlan, an energy advisory and analytics firm.

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EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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