Energy Markets & Governance - Atlantic Council

Adrienne Arsht Latin America Center Global Energy Center

Caribbean Climate Change & Climate Action

OUR WORK

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.

The post Pragmatism can improve Mexico’s energy outlook appeared first on Atlantic Council.

Novak quoted in Petroleum Australia on strategic petroleum hubs in Timor-Leste

ylee — Thu, 18 Jul 2024 20:24:16 +0000

ORIGINAL SOURCE

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.

Fellow

Parker Novak

Global China Hub Indo-Pacific Security Initiative

Australia Democratic Transitions

The post Novak quoted in Petroleum Australia on strategic petroleum hubs in Timor-Leste appeared first on Atlantic Council.

Chevron deference is dead—and US climate action hangs in the balance

David L. Goldwyn, Andrea Clabough — Thu, 11 Jul 2024 18:56:36 +0000

In a seismic ruling, the US Supreme Court overturned the long-standing “Chevron deference” in its decision for Loper Bright Enterprises v. Raimondo. The ruling was not specifically concerned with energy or climate policy. But its consequences for US decarbonization are profound.

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.

STAY CONNECTED

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

MEET THE AUTHOR

Fellow

David L. Goldwyn

Adrienne Arsht Latin America Center Global Energy Center

Caribbean Climate Change & Climate Action

Fellow

Andrea Clabough

Climate Change & Climate Action Energy & Environment

OUR WORK

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

The UK sets a path for clean, affordable energy—and renewed climate leadership

Charles Hendry — Tue, 09 Jul 2024 16:24:21 +0000

The new United Kingdom administration is one that is passionate about clean energy and the energy transition. But first, to understand its approach to energy policy, it is important to understand how this new government will operate.

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.”

STAY CONNECTED

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

MEET THE AUTHOR

Fellow

Charles Hendry

Distinguished Fellow

Energy & Environment Energy Markets & Governance

OUR WORK

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

Why the EU needs US liquefied natural gas

John M. Roberts, Ariel Cohen — Mon, 08 Jul 2024 13:00:00 +0000

In 2024, the gas market in Europe may seem calm, but the underlying threats are just as great. The continuing war in Ukraine, the Gaza conflict, and deep tensions throughout the Middle East mean the energy security environment is becoming increasingly volatile.

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.

DOWNLOAD PDF

AUTHORS

Fellow

John M. Roberts

Energy & Environment

Fellow

Ariel Cohen

Eurasia Center

Central Asia Politics & Diplomacy

OUR WORK

Associate Director & Fellow, Caribbean Initiative

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

Strengthening Taiwan’s resiliency

Franklin D. Kramer, Philip W. Yu, Joseph Webster, Elizabeth Sizeland — Tue, 02 Jul 2024 13:00:00 +0000

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

Download PDF

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:

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.
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.
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.
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:

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.
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.
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.
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.
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.

Food and water resiliency

Taiwan’s food supply needs will be significant in the event of a contingency, but pale in comparison to its energy and water requirements. Taiwan’s water security is a serious concern, as it is already suffering from water access issues in noncrisis periods. Taiwan should prioritize scarce land for electricity generation, especially onshore wind and solar, which are much less water-intensive than coal and natural gas generation. Repurposing farmland for renewables would ease Taiwan’s electricity and water needs in peacetime and during any crisis.

Taiwan’s food security challenges are serious, but manageable. The island’s self-sufficiency ratio for food stands at about 40 percent, after rising somewhat in recent years. Unlike energy, however, Taiwan can both store food, especially rice, and replenish these inventories. Meals ready to eat (MREs) can store for more than eighteen months.

Additionally, the island would likely be able to resupply itself aerially in all situations short of conflict. The PRC might well be extremely reluctant to shoot down a civilian aircraft resupplying Taiwan with food. The PRC’s shootdown of a civilian aircraft would damage external perceptions of the PRC, and strengthen global support for sanctions. While there can be no certainty, the PRC’s self-interest in managing perceptions of a confrontation would increase the likelihood of the safe transit of aerial and perhaps even maritime food deliveries to the island.

Taiwan’s water access problems are serious. Water shortages have manifested even in peacetime, as Taiwan experienced a severe drought in 2021. During a contingency with the PRC, Beijing might attempt to exploit this vulnerability.

Luckily, Taiwan’s water resiliency can be strengthened by tackling agricultural consumption and, wherever politically and technically feasible, repurposing farmland for energy generation. From 2013 to 2022, 71 percent of Taiwan’s water consumption was attributable to agriculture. Meanwhile, Taiwan’s industries comprised only 10 percent of demand during that period, with domestic (i.e., residential and commercial) consumption accounting for the remainder. Taiwan’s water needs are growing, due to “thirsty” industrial customers, but the agricultural sector is primarily responsible for the majority of the island’s consumption, although consumption and supply sources vary across the island.

Taiwan’s policymakers recognize its water problems and have begun raising water prices, especially for heavy users. Taiwan should continue to encourage efficiency by gradually but perceptibly increasing water prices. Concomitantly, it should further reduce demand by repurposing water-intensive farmland for electricity generation, when feasible. Repurposing farmland will undoubtedly prove politically difficult, but it will also improve Taiwan’s water and electricity resiliency.

Food and water security recommendations

Prioritize energy and water security needs over food production.
Secure and disperse inventories of foodstuffs, such as MREs, medicines, and water, along with water purification tablets.
Bolster the island’s cold storage supply chains and overall foodstuff inventories.
Plan and work with partners to stage food supply if a Berlin airlift-style operation becomes necessary.
Continue to encourage water conservation by increasing water prices gradually but steadily.
Ensure redundancy of water supplies and systems, especially in the more populous northern part of the island.
Ensure that drinking water and sanitation systems can operate continuously, after accounting for any electricity needs.

SOURCES

Gustavo F. Ferreira and J. A. Critelli, “Taiwan’s Food Resiliency—or Not—in a Conflict with China,” US Army War College Quarterly: Parameters 53, no. 2 (2023), doi:10.55540/0031-1723.3222; Joseph Webster, “Does Taiwan’s Massive Reliance on Energy Imports Put Its Security at Risk?,” New Atlanticist, Atlantic Council blog, July 7, 2023, https://www.atlanticcouncil.org/blogs/new-atlanticist/does-taiwans-massive-reliance-on-energy-imports-put-its-security-at-risk/; Amy Chang Chien, Mike Ives, and Billy H. C. Kwok, “Taiwan Prays for Rain and Scrambles to Save Water,” New York Times, May 28, 2021, https://www.nytimes.com/2021/05/28/world/asia/taiwan-drought.html; “Water Resources Utilization,” Ministry of Economic Affairs (MOEA), Water Resources Agency, 2022, https://eng.wra.gov.tw/cp.aspx?n=5154&dn=5155; Meng-hsuan Yang, “Why Did Formosa Plastics Build Its Own Desalination Facility?,” CommonWealth Magazine, May 31, 2023, https://english.cw.com.tw/article/article.action?id=3440; and Chao Li-yen and Ko Lin, “Taiwan State-Owned Utility Evaluates Water Price Adjustments,” Focus Taiwan, January 26, 2024, https://focustaiwan.tw/society/202401260017#:~:text=As%20of%20Aug.

NOTE

The Berlin airlift of 1948 and 1949 demonstrates the power of aerial food replenishment logistics in an uncontested environment. From June 26, 1948, to September 30, 1949, Allied forces delivered more than 2.3 million tons of food, fuel, and supplies to West Berlin in over 278,000 airdrops. While Taiwan’s population of more than twenty-three million is significantly larger than West Berlin’s population of 2.5 million, the world civilian air cargo fleet has expanded dramatically over the past seventy-five years. In all situations short of conflict, Taiwan would be able to restock food from the air. For more on the Berlin airlift, see Katie Lange, “The Berlin Airlift: What It Was, Its Importance in the Cold War,” DOD News, June 24, 2022, https://www.defense.gov/News/Feature-Stories/Story/Article/3072635/the-berlin-airlift-what-it-was-its-importance-in-the-cold-war/.

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.

Accelerating the energy transition in the Eastern Caribbean

Wazim Mowla — Fri, 28 Jun 2024 16:00:00 +0000

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.

Climate change wreaks havoc across Caribbean islands that do not have the available climate-resilient infrastructure to withstand strong wind speeds and heavy rainfall. September 19, 2022. REUTERS/Ricardo Rojas

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.

Utility-scale solar PV is a low-cost renewable energy option in the Eastern Caribbean, but it requires significant planning and project design work due to the unique landscapes of each country—all of which are costly. October 26, 2017. REUTERS/Alvin Baez

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.

Renewable energy projects, like offshore wind, have high upfront costs and require significant technical assistance to design, build, and implement. September 4, 2023. REUTERS/Tom Little

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

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.

Bangladesh’s air quality is among the world’s worst. What can be done?

Joseph Webster, Natalie Sinha, and Sarah Meadows — Tue, 25 Jun 2024 22:53:39 +0000

Bangladesh is grappling with a severe air quality crisis. Recent reports highlight pollution’s impact on the nation’s health, economy, and environment. Bangladesh urgently needs to balance growth, sustainability, and energy access to enhance the well-being of its population. But the country faces profound challenges in moving toward a safer and more equitable energy system.

STAY CONNECTED

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

MEET THE AUTHOR

Staff

Joseph Webster

Senior Fellow, Global Energy Center

Global Energy Center Indo-Pacific Security Initiative

Central Asia China

OUR WORK

The post Bangladesh’s air quality is among the world’s worst. What can be done? appeared first on Atlantic Council.

US-Mexico energy cooperation is vital to enable nearshoring

William Tobin — Tue, 18 Jun 2024 18:57:00 +0000

Claudia Sheinbaum’s historic election matters for Mexico’s relationship with the United States, particularly in trade and energy. While Sheinbaum has pledged continuity with the top-line agenda of outgoing president Andrés Manuel López Obrador (AMLO), subtle differences are emerging, opening new areas for cooperation. To make the most of those opportunities, the United States and Mexico must work together to enhance Mexico’s grid for a new industrial era.

STAY CONNECTED

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

MEET THE AUTHOR

Staff

William Tobin

Assistant Director

Africa China

OUR WORK

Senior Fellow, Global Energy Center

The post US-Mexico energy cooperation is vital to enable nearshoring appeared first on Atlantic Council.

Generative AI provides a toolkit for decarbonization

Joseph Webster and Shaheer Hussam — Mon, 10 Jun 2024 16:43:13 +0000

Rapidly improving artificial intelligence (AI) capabilities will help accelerate the energy transition. Both established and emergent AI capabilities—such as large language models (LLMs)—can be applied to an array of strategic, technical, financial, and policy challenges posed by decarbonization. It is critical for energy transition stakeholders to monitor, understand, and carefully apply these capabilities to their unique decarbonization challenges, while also addressing the risks involved.

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.

STAY CONNECTED

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

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.

EnergySource

MEET THE AUTHOR

Staff

Joseph Webster

Global Energy Center Indo-Pacific Security Initiative

Central Asia China

OUR WORK

Introduction
Section 1: Summary of damages and the economic and financial situation
Section 2: First steps toward building a reconstruction strategy
Section 3: Steps to create a reconstruction-friendly ecosystem
Section 4: The best opportunities for each economic sector
Summary of recommendations
Conclusion

The post Generative AI provides a toolkit for decarbonization appeared first on Atlantic Council.

Reconstructing Ukraine at war: The journey to prosperity starts now

John E. Herbst, Olga Khakova, Charles Lichfield — Fri, 07 Jun 2024 12:30:00 +0000

WATCH THE LAUNCH

Public Event Fri, June 7, 2024 • 8:45 am ET

After Berlin: Tangible strategies for reconstruction following the 2024 Ukraine Recovery Conference

Please join the Atlantic Council’s GeoEconomics, Global Energy, and Eurasia Centers for the launch of their new report, Reconstructing Ukraine at war: The journey to prosperity starts now.

Economy & Business Energy & Environment Europe & Eurasia Geopolitics & Energy Security

Introduction

Rebuilding the Ukrainian economy after years of war will be a monumental task that the country’s allies and partners know they must assist. Helping Ukraine to prosper should be just as big a priority for those who believe Ukraine’s victory is key to preventing further Russian aggression and sending a cautionary message to other autocrats around the world. While rarely dismissed out of hand, the reconstruction is intuitively seen by many in the West as secondary to the need to help Ukraine fight back against aggression. This is understandable, but neglects how reviving the Ukrainian economy—and the government’s cash flow—also helps the war effort through additional funds, resources, and motivation.

The Ukrainian government is staffed by clever, innovative experts capable of expressing a clear vision of how to reach prosperity. But when the Atlantic Council’s Global Energy Center and GeoEconomics Center embarked on a weeklong research trip in February 2024 to meet them, Kyiv faced cash-flow problems and high uncertainty over future macrofinancial assistance, especially from the United States.

The situation has since improved, not least thanks to the US supplemental spending law that includes $10 billion of budgetary support—but it’s imperative that the West does not create doubts about its support for Ukraine again in 2025. The macrofinancial assistance meant to keep Ukraine’s government functioning cannot finance the recovery as well. In addition to central government funds, a myriad of Western grants and loans need to be tied to individual projects. The innovative systems designed to implement this are up and running but not always used to their full potential.

This report provides a snapshot of the economic, societal, and energy-security situation on the ground, capturing key challenges and opportunities for supporting Ukraine’s survival and building a more prosperous future. It also explores how the country can meaningfully contribute to Europe’s economic growth and strategic autonomy at large through innovation, energy security, decarbonization, and diversified supply chains. While the situation is changing daily, these key takeaways will remain pertinent to reconstruction discussions for the foreseeable future.

Our research is based on more than thirty meetings in Kyiv in February 2024. These included meetings with the most senior levels of the ministries in charge of reconstruction, influential think tanks, Western embassies, legislators in the Rada, journalists, and business leaders. These meetings were conducted under the Chatham House Rule. Our trip was followed by additional visits to Ukraine by the Atlantic Council Eurasia Center in February and March. With further research and follow-up discussions with experts, we have summarized our analysis in this recommendations-focused Atlantic Council report.

Section 1: Summary of damages and the economic and financial situation

Taking stock of unexpected wins and measuring sobering losses

Moscow’s relentless assault has caused immeasurable humanitarian suffering and damage to Ukraine’s infrastructure and natural environment. Since the Russian Federation’s 2022 invasion of Ukraine, more than 14.6 million Ukrainians, or a third or more of the population, have fled their homes at some point during the war, according to the International Organization for Migration (part of the United Nations system); 6.5 million refugees fled Ukraine, and 3.7 million are still displaced within the country. By February 2024, at least thirty-one thousand Ukrainian troops and tens of thousands of civilians have died for reasons related to the war. And while the Ukrainian army succeeded in pushing the Russian aggressor far back in 2022, physical damage is by no means limited to the front line. As of February 2024, 156,000 square kilometers (km) in liberated territories and along the active front have been contaminated with mines, which were rarely used before this full-scale invasion. The June 2023 destruction of the Kakhovka dam caused $14 billion in damage and loss, submerged at least 620 square km of territory under Ukrainian control, and damaged ecosystems even further afield. Russia’s air campaigns continue to target the whole country, undermining both the economic recovery and morale.

Targeting energy infrastructure has been one of Russia’s most pernicious and persistent tactics to cause harm to millions at once and multiply the cost of reconstruction. With over $10 billion in damage to date, these attacks have hindered access to basic human necessities, such as potable water and heating. The international donor community has consistently helped Ukraine with repairing the damage, which was mostly focused on energy generation capacity and transmission in the winter of 2022 and 2023. Thanks to robust international support and the courage and dedication of energy-sector employees, Ukraine survived these horrific months, restoring over 2.2 gigawatts (GW) of installed capacities. Unfortunately, worse was on the horizon. The Kremlin escalated its critical infrastructure destruction starting in March 2024 by bombing Ukraine’s biggest thermal power plants: the heart of generating capacity for the largest population hubs. Delays in military support hamstrung Kyiv’s high-precision defense capabilities, leaving million-dollar power plants exposed to Russia’s hybrid attacks. During the spring of 2024, Ukraine lost 9 GW of generation capacity, which is equivalent to 22 million photovoltaic (PV) panels, or power for 7 million households.

This leaves Ukraine with expensive solutions and a tough journey ahead. The country is left to purchase electricity imports from European neighbors, which are more costly than what it could have produced at home and leads to higher fees due to the oversubscribed transmission capacity. It costs around $0.20 per kilowatt-hour to produce electricity in Ukraine. Households paid a fraction of this after subsidies, which are being incrementally reduced in an effort to bring in additional funding to repair the damages, resulting in $0.107 per kilowatt-hour cost to consumers until April 30, 2025. At the same time, Ukraine and its allies are racing to secure gas turbines for energy generation and balancing needs, as well as parts to repair power plants. Cities are already experiencing blackouts, which will be more frequent when the heat-driven peak summer demand overloads the grids. Ukraine will need a mix of budgetary support, equipment transfers, and technical assistance to survive this winter, which promises to be the most challenging since the full-scale invasion.

Domestic energy availability in Ukraine: 2022-2024

Power plants destroyed in Ukraine as of April 2024

Source: Available data collected by DiXi Group through the following references; Atlantic Council mapping:

Efforts to quantify overall damages systematically are important in the pursuit of justice. The Register of Damage Caused by the Aggression of the Russian Federation against Ukraine (RD4U) will be a source of information. Established through a Council of Europe resolution, the register receives, processes, and records claims filed by individuals, entities, and the Ukraine government for damage, loss, and injury from wrongful Russian aggression against Ukraine. (Forty-three nations and the European Union have joined the Register.) A compensation mechanism is yet to be established, but the register is an essential step in the process of pursuing compensation from Russia. The catalog should aid in ensuring that compensation is provided to the right individuals and broader communities. Citizens can now make entries via the Diia app, the main platform for Ukrainian government services.

Three rounds of Rapid Damage and Need Assessments (RDNA) already provide evidence of the mounting toll of the war. The World Bank, the government of Ukraine, the European Commission, and the United Nations coordinate to provide a reliable tally of “total costs” imposed on the Ukrainian economy by Russia’s aggression, with the latest citing direct damage to buildings and infrastructure of up to $152 billion and an estimated recovery and reconstruction cost surpassing $486 billion—“approximately 2.8 times the estimated nominal GDP of Ukraine for 2023.” It is noteworthy that these include the direct cost of destroyed or damaged physical assets and infrastructure—which started increasing significantly as Russia has targeted energy infrastructure—and also economic losses from lost activity and increases in the number of citizens needing assistance. The estimated restoration cost does cause some double-counting alongside the accounting for destroyed physical assets. However, this does not mean the bar for funding the reconstruction is low. The RDNAs integrate the loss of domestic production and increasing dependence on state handouts, which have both reduced revenues and increased liabilities for the government.

Meanwhile, Ukraine has developed a digital platform to track reconstruction projects in the nation: the Digital Restoration EcoSystem for Accountable Management (DREAM). The platform can help the government and international financial institutions (IFIs) differentiate between large-scale reconstruction projects that are long-term endeavors and short-term urgent repairs, and then orient appropriately. In this regard, DREAM is a rare combination of polyvalence and transparency. Developed in tandem with Ukrainian civil society and with support from USAID and UK Aid Direct, the DREAM platform was launched in 2023 by the Ministry for Restoration (formerly the ministry for infrastructure). DREAM is both a “digital route” for and a “window” into projects repairing or replacing infrastructure damaged by the war. Citizens, firms, and municipalities can submit evidence of damage, receive provisional approval, submit invoices, and receive compensation straight to their bank accounts. The platform is transparent down to every individual project. By mapping their density by region, we can see that restoration projects cover most of the territory controlled by the Ukrainian government, whereas new construction projects remain focused on larger cities.

Status of rehabilitation projects logged in the DREAM portal

Data as of April 2024

Source: Dream.ua data and Atlantic Council mapping.

The large percentage of pending or unfinished projects may be due to improper documentation of requests and, in part, a legacy of the cash-flow issues Ukraine faced earlier this year, and has since improved following Japan’s earlier-than-planned donations, EU “bridge financing” (discussed below), Canadian assistance, and passage of a long-planned $61 billion US aid package. Incomplete or poorly prepared applications also account for some of the backlog: Local governments often input projects to ensure they’re noticed but lack the expertise to perfect their write-ups. Still, it is also noteworthy that projects can still be approved without working through DREAM. Direct commissions of large projects can still, as far as we know, bypass DREAM as well. Of the four major lending institutions, only the European Investment Bank (EIB) is using the system. The Cabinet of Ministers of Ukraine had resolved in 2022 to make the use of the platform mandatory but the relevant law has not yet been adopted.

Finally, the work of civil society in connecting funders, firms, and communities in need remains important. The Kyiv School of Economics’ Recovery Lab and former Deputy Foreign Minister Lana Zerkal, who serves on the Coordinating Committee of the Ukraine Facility Platform, among others, are advancing this work.

The state of Ukraine’s economy and finances

Despite the onslaught of aggression and destruction, Ukraine’s economy is growing: 5 percent in 2023 and, based on the International Monetary Fund’s (IMF) forecasts, another 3 percent in 2024. But this comes after a 29.1 percent drop in 2022 and a large loss in the workforce in 2022 due to the mobilization, but 4.5 million Ukrainians have returned home since then. Still, the IMF does not expect the economy to reach its prewar level of production until 2029, and that relies on an assumption of the war ending in the next year. It would also be wrong to think the domestic economy is truly growing. It is adapting to wartime conditions and new firms are being created, but the amount of budget assistance, recovery funding, and humanitarian aid being sent into the country is the dominant factor.

The resumption of shipping from ports provides a bright spot in terms of exports. Despite environmental damage, a perilous sea route, and protests by EU farmers at overland points of entry, Ukraine’s exports of grain and oilseed products are recovering, reaching a wartime high in February 2024—but have not yet reached preinvasion levels.

Firms with a presence in Ukraine have continued to invest. This is partly in repairs and upkeep, but they are also expanding into new fields to shore up their own supply chains or respond to demand. International firms with an established presence in Ukraine have found demand for their products increasing, especially without Russian competitors and with domestic production capacity damaged. The crucial problem is that greenfield investment (i.e., projects starting from the ground up) has been close to zero.

The following chart compares the different components of the national accounts in constant prices. Three clear phenomena are at play: a significant expansion of government spending, irregular gross capital formation as investment slows and firms run down inventories, and increasing reliance on imports. The overall size of the economy is still noticeably smaller—even in the much-depreciated hryvnia. Were data in the chart in current US dollars, the shrinking of the economy would be even more noticeable.

Ukraine national accounts, constant prices

Government revenue has been volatile, though adaptation to wartime conditions and the knock-on effects of inflation have allowed for an impressive recovery. Excluding grants, government revenues fell to $36 billion in 2022, a 32 percent drop from $53 billion in 2021—but recovered sharply in 2023 to $46 billion and are forecast by the Ministry of Finance to fall slightly to $43 billion this year.

The challenge is that the government is expected to fund the war effort while paying pensions, keeping services running, and contributing to repairs and replacements made necessary by war damage. The 2024 budget forecasts $82.3 billion in expenditures, over half of which will go to the war effort and domestic security. In the budget, spending on repairs and reconstruction will fall under the categories of interbudgetary transfers and economic activity, which make up less than 10 percent, but are not exclusively devoted to these goals, putting the ceiling for centrally organized spending on restoration at less than $8 billion. The numbers in Kyiv’s budget reflect only what goes through the Ministry of Finance, so do not include contributions in-kind or directly to the local governments.

Ukraine already faces a large foreign-currency debt burden which it is trying to honor. For now, an agreed holiday on interest payments and war uncertainty preclude it from borrowing more on international markets. So the budgetary deficit has to be filled with a combination of international assistance (both grants and loans) and domestic bonds. Since the beginning of the full-scale invasion, $25 billion in domestic bonds have been purchased; the Ukrainian government would rather not have to rely on bonds too much as domestic savings are finite and the financial system also needs liquidity. Ukraine received $42.5 billion in external financing last year and is on track to receive about $38.6 billion in financial assistance in 2024.

Kyiv has tried to stick to certain principles to remind donors that it is treating their support with care. Its tax revenues cover defense spending, excluding donated equipment and other logistical and intelligence support. Grants and loans from friendly governments and IFIs cover the rest of the government’s liabilities. Kyiv also likes to remind supporters that it is engaging heavily with its bondholders ahead of the end of the debt holiday, which is currently set to end in August 2024. Negotiations with a consortium of Eurobond holders are currently revolving around a resumption of regular payments in exchange for forgiveness of an unspecified chunk, whereas governments that have lent to Ukraine have agreed to holidays lasting until 2027. This is a delicate negotiation for Kyiv, which has avoided falling into “default” status thus far but may do so this year even if bondholders agree to a haircut. The government also has managed to satisfy the IMF that its fiscal consolidation efforts are genuine, as the National Revenue Increase Strategy, published in late 2023, unlocked an $880 million tranche of IMF loans, with an additional $2.2 billion expected in June.

The National Bank of Ukraine (NBU) deserves credit for stabilizing and running a fully functioning financial system, even at the very start of the full-scale invasion. High interest rates and strict controls have prevented capital flight and allowed exchange rates to stabilize following a planned devaluation in July 2022, which reflects lower growth potential and higher dependence on imports. On the other hand, remittances and charity donations—in addition to Western aid—have helped to keep hard currency flowing into Ukraine and prevent a balance-of-payments crisis. The NBU has managed to recover and even surpass the reserve position it had before February 2022. To encourage investments, the NBU has recently announced the relaxation of controls on the payment of dividends to foreign investors and the repayment of foreign currency loans, albeit under a monthly cap.

The goal of this first section was to show the extent of the damage to the Ukrainian economy and that, even with national resilience and competent management, Russian efforts to inflict further devastation continue and the economy still relies absolutely on external support. In the next section, we will look at how this external support is being organized and how this can be improved, both to accommodate bigger strategic decisions alongside day-to-day spending and to demonstrate to Russia that Kyiv won’t run out of money.

Section 2: First steps toward building a reconstruction strategy

Building a reliable flow of money

Ukrainians and the international donor community must be unified around the vision for and the approach to Ukraine’s reconstruction to ensure efficient resource utilization and impactful collaboration. Given the destruction of significant parts of its energy system, industrial base, and housing stock, the country will have to balance urgent basic humanitarian needs with large-scale economic transformation.

First and foremost, Ukraine needs financial and military assistance to be as reliable as possible for at least the next five years to demonstrate long-term resolve to its people and to the Russian leadership. Such steadiness would also provide a more predictable environment for investors, whose decisions to bet on Ukraine’s future will accomplish part of the reconstruction aims and reduce dependence on outside support. Postponements and delays, on the other hand, risk entrenching population displacement and investor reticence.

UK Foreign Secretary David Cameron recently promised that the United Kingdom would give £3 billion a year “for as long as it takes.” Other governments should consider communicating on their commitments in as simple and clear a way, though the political consensus on supporting Ukraine isn’t always as clear as it is in the UK, where the Labour Party has also pledged “ironclad” support for Ukraine in its battle against Russia. Other countries such as Canada, Spain, and Belgium have done the same on military aid, albeit with lower financial commitments.

Passed in early 2024, the European Union’s €50 billion Ukraine Facility is meant as an integrated strategy. The best-publicized part, pillar one, covers €17 billion in grants and €33 billion of loans from 2024 through 2027. The first disbursement—€4.5 billion of “bridge financing”—was sent on March 1. The facility’s innovation comes with pillars two and three. Pillar two provides derisking mechanisms for investors via a “Ukraine Guarantee” of €6.97 billion covering risks for loans and other credit instruments offered by IFIs such as the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD). Pillar three offers technical assistance to help Ukraine converge with EU rules and prepare for accession. The facility also is remarkable for including minimum targets of green projects and tasking the EIB with working with subsovereign entities like regions and municipalities.

Other governments have made an extra effort at decisive moments to help Ukraine. G7 finance ministers’ meetings are the main venue for where Kyiv’s macro financial assistance needs are discussed. For example, as Ukraine’s cash flow problems mounted early this year amid a delay in US assistance and the impact of farmers’ and truckers’ protests on Ukraine’s exports, Japan was able to accelerate a donation of just under half a billion dollars to February, allowing Kyiv to pay teachers’ and other civil servants’ salaries in March and April. This was coordinated through the G7. Canada also sent two billion Canadian dollars through a concessional loan in March, the same day that the third review of the IMF program was completed.

Recovery funding now benefits from its own coordinating body, the Multi-agency Donor Coordination Platform. Launched in January 2023, the body is supported by a Brussels- and Kyiv-based Secretariat. The permanent members of the Steering Committee are Ukraine, the EU, the United States, and the other Group of Seven countries. In February 2024, the roster expanded to include the Republic of Korea, Netherlands, Norway, and Sweden as temporary members, who either have contributed or are committed to contributing at least 0.1 percent of their country’s 2022 GDP and at least $1 billion. Six EU members have observer status: Denmark, Estonia, Latvia, Lithuania, Poland, and Spain. IFIs participate in the meetings.

Already, the Multi-agency Donor Coordination Platform is becoming more prominent. The most recent meeting took place in Kyiv and the US deputy national security advisor for international economics, Daleep Singh—one of the architects of the Russian sanctions regime—made the trip.

The expansion of participants in this coordinating body isn’t sufficient to secure the volume of assistance that Ukraine needs. At its current level of intensity, the war entails an active front that has to be manned, with frequent air raids on civilian infrastructure and valuable economic targets. The flow of aid to Ukraine needs to be sufficient to keep government services operating while funding appropriate repairs within a reasonable time frame.

The two priorities are of course funded by different types of Western support: macro financial assistance funds the Ukrainian government and keeping services open while the recovery would ideally be funded through recovery loans but these haven’t been fully disbursed because they haven’t been matched with enough projects. To avoid delays and inefficiencies, Kyiv should continue building out trust and transparency mechanisms to showcase how international support is deployed. Large in-kind donations such as spare turbines and transformer equipment have been useful on occasion, but come with costs, from transportation to adaptation for the local infrastructure. Some urgent needs are best addressed with cash transfers, which donors are still uncomfortable providing to organizations in certain sectors, like energy.

Money is fungible and the lack of macro financial assistance earlier this year did force the Government of Ukraine to defer recovery projects, though these in theory are funded from a different source. An improvement the Multi-agency Donor Coordination Platform can make is to apply the coordinating prowess G7 finance ministers have demonstrated on macro financial assistance and do more to bring the flow of recovery funding closer to what the Government of Ukraine and the latest RDNA agree is the budget necessary to tackle recovery priorities—$15 billion this year—and should continue to do so in the years to come.

The Multi-agency Donor Coordination Platform may come across as a simple capital-to-capital device that will entrench centralization. However, its structure in no way precludes the sort of country-to-city or country-to-region donor engagement that has been very successful, albeit on a small scale so far. Led by the Danish Export and Investment Bank, the Denmark-Mykolaiv Partnership has earmarked more than $100 million for reconstruction across the city. Local engagement fosters a timely and needs-based pipeline for aid. In the case of Mykolaiv, Denmark rapidly responded to needs including water purification, wildfire containment, agriculture projects, schools, technical support, and energy infrastructure. Such a partnership enables a city- or region-level focus at times when most of the aid is moving through centralized channels in Kyiv (a necessary but imperfect method for addressing urgent needs in localities). Italy and France are exploring similar partnerships and can draw on vital best practices from the Denmark initiative, such as strong governance and robust stakeholder engagement.

If every European country adopted a Ukrainian city on its reconstruction journey, or at least the cities with the worst damages, it would help to ensure that no communities were left behind. This is not a small ask, but these partnerships can begin with small financial commitments and focus on highlighting local needs across Ukraine’s forgotten municipalities for the international donor community. EIB developed a unique solution to the difficulties of local governments’ creditworthiness and the fact that some needs may be too small for the major loan providers, which could be replicated by other major funders: financing guaranteed by the European Union in sovereign loans. In many cases, receiving aid comes down to how well the local leadership can energize international supporters. However, most mayors don’t have the capacity to advocate for their cities on the global stage—in some cases because of simple language barriers but also because of poor creditworthiness.

Large state-owned enterprises also require credit instruments tailored to Ukraine’s exceptional circumstances and needs. This implies intense coordination among those in development finance who are willing to take on the challenge. In June 2023, the EBRD—the largest institutional investor in Ukraine—and eighteen other development finance institutions signed a memorandum of understanding (MoU) on a Co-investment Platform to support Ukraine’s SOEs and private sector. In practice, this means the institutions are meant to coordinate their activities so that funding is deployed strategically. Participants held their first meeting following the MoU in Norway in May 2024.

Where will next year’s money come from?

The outlook for financial assistance to Ukraine is now adequate—a reversal of fortune since the cash-flow challenges in February. It is crucial to avoid making the same mistakes that led to this crisis, which forced Ukraine’s government to slow the pace of even basic repairs.

The European Union and the United Kingdom have made multiyear commitments: £3 billion in the United Kingdom’s case and—assuming the European Union sends at least one-fourth of its four-year Ukraine Facility budget—€8 billion in loans and €4.25 billion in grants from the European Union. On the other hand, the IMF’s disbursements will slow from $5.3 billion to $1.8 billion and most other IFI commitments will go to infrastructure projects and private firms, not the central government. We also have seen that Ukraine’s private bondholders are pushing for interest payments to start again.

As the war draws on, it also seems likely that expenditure will have to be bigger than currently forecast—by about $12 billion above the current baseline deficit projection of $23 billion.

So what can be done?

Recent G7 discussions about using the future interest income from the approximately $300 billion of Russia’s reserves immobilized in the West to lend funds to Ukraine are showing more promise than they have before. The solution would offer a timely injection of cash, $50 billion or more, and this wouldn’t preclude any long-term policy involving the reserves.

The full amount won’t be transferred to the government of Ukraine in one go and it is highly likely some of it would be used to buy weapons on Ukraine’s behalf. Nonetheless, to finance a gap in the 2025 budget which could be the $10-12 billion normally financed by the United States, the instrument could be very useful indeed.

The details that still need to be ironed out for the loan to work include the risk sharing between Europe and North America.

Demining and air defenses should be more of a priority

The international community has not fully grasped the scale of demining that needs to take place in Ukraine, particularly in the liberated territories, to make them ready for reconstruction. Mine contamination and other explosive hazards riddle over a third of Ukraine (180,000 square km), according to the Ukraine government, endangering civilians, halting agricultural activities, and detracting from such areas’ investment prospects. It also complicates the return of civilians to the liberated territories. However, with the right resolve and the latest technologies, Ukraine’s allies can remove this large-scale obstacle to reconstruction.

Ukraine’s National Mine Action Authority, which was established under Ukraine’s 2018 Mine Action Law, oversees mine action activities, coordination, monitoring, and tasking and is in charge of approving national plans for mine action. The Mine Action Centre (under the Ministry of Defense) organizes and coordinates demining efforts in Ukraine, which are conducted by the State Emergency Service of Ukraine, and works with the Humanitarian Demining Center. The Ministry of Economy and the Ministry for Reintegration of the Temporarily Occupied Territories of Ukraine also lead land mine clearance efforts.

The United Nations Development Programme (with contributions from several Western nations) funds 80 percent of the demining operations and multiple nongovernmental organizations such as the HALO Trust are present on the ground. Direct bilateral donations, technical support, and equipment assistance also play crucial roles. The United States, the European Union, and South Korea, among others, have made important in-kind donations with innovative systems including MV-10 demining systems. External entities sometimes struggle or take a while to receive accreditations to assist in demining, but their role is essential. Streamlining the process also offers an opportunity to engage countries and organizations that have been unable to provide military support for Ukraine, like Ireland.

Compared to demining, the lack of air defenses receives relatively more coverage—precisely because the situation has become steadily worse since late 2023. Facing off against Russia’s inexpensive kamikaze drones, Ukraine’s rate of success with its air defenses remains high at 82 percent, but the frequency and sophistication of attacks—often starting with fleets of drones and followed by ballistic missiles—are designed to overwhelm systems. A lack of provision from allies has forced Ukraine to use its supplies sparingly so even valuable economic assets have to be knowingly sacrificed, like the Trypilska power plant in the supposedly well-protected Kyiv region.

The supplemental passed by the US Congress will restore some supplies—but other initiatives including a German-led effort to donate Patriot batteries have fizzled. Finding solutions is beyond the scope of this report, but we see the damage done to Ukraine’s energy network and economy and would welcome anything that can spare Ukraine the impossible dilemma of not being able to shoot down a cheap missile that wreaks extremely costly damage. Analysts have suggested that Poland, for instance, should protect its border areas by shooting down Russian missiles in Ukraine’s skies that are adjacent to its air space, which would free Kyiv to focus its resources further east. Others have suggested embracing Ukraine’s ability to target drone production facilities, storage, and launch units in Russia.

Empowering Ukraine’s leadership structure for success

The chain of command for economic recovery and reconstruction is understandably split and subject to change. As the Office of the President reorganizes these authorities, the priorities should be easy engagement and transparency. Currently, the bodies in the executive branch that have a say over these issues include the Cabinet of Ministers as well as the Ministry of Economy, the Ministry of Energy, the Ministry of Strategic Industries, and last but not least, the Ministry for Communities, Territories and Infrastructure Development. Created by a merger of two ministries in December 2022, the latter oversees the State Agency for Restoration and Infrastructure Development. In the coming months, this key ministry is likely to be split again into separate ministries for regional development and infrastructure.

Meanwhile, the dismissal of the top team at the soon-to-be divided ministry met with some consternation. The team was known for its commitment to transparent decision-making and open data: The DREAM platform was one of its most recognizable achievements. At the June Recovery Conference in Berlin and over the second half of the year, it will therefore be fundamental for the government to show that the systems (and the principles behind them) remain central to decision-making on the allocation of funds to projects. The same should go for procurement. The ProZorro portal, Ukraine’s e-procurement system, is not being used for any military spending, although this represents half the government’s budget. It should be possible to set tenders on nonsensitive purchases through this system.

A second gap concerns the management of big-ticket investments that will drive Ukraine’s modernization and its integration into the EU single market. Ukraine needs an updated public investment management framework and also a fit-for-purpose vehicle for private-sector stakeholders—including those with little to no exposure to Ukraine—to interact and agree on joint ventures. One goal of the Berlin Recovery Conference is to create an online platform for this—which notably could provide access to insight on the relative war risk and mitigation strategies. For it to work, however, the methodology will have to be agreed at least between the government of Ukraine, the European Union, and the IMF, and discussions are ongoing. Once running, this platform should not be restricted to firms based in the participating countries of the Multi-agency Donor Coordination Platform. While these capitals may feel they deserve some recompense for their efforts, it would be foolish to exclude firms that are interested and have something to offer. The most obvious example: Turkish building contractors, who represent the second-biggest global force in this sector after China, provided they aren’t servicing the Russian market.

Section 3: Steps to create a reconstruction-friendly ecosystem

The pull of EU accession

It was the Euromaidan protests against the Ukrainian government’s failure to sign an Association Agreement with the European Union in 2013—as President Viktor Yanukovich pivoted toward Russia—that led to the 2014 fall of the government in Kyiv. Russia responded by invading Crimea and southeastern Ukraine, violating Ukraine’s territorial integrity. Ukrainians continue to desire EU membership, seeing in it the promise of a more prosperous and stable life, and are overwhelmingly in favor of moving in this direction.

The EU accession process is demanding—and provides a very useful framework for reform, with clear incentives, visible and embraced by the public, for making progress toward EU standards.

The thirty-five chapters of the acquis—the body of common rights and obligations that is binding on all EU member states—all come with dozens of reforms. Firms based within the EU’s current border represent an important driver of the move to higher standards in anticipation of membership. Invaluable transfers of know-how on EU law compliance can happen as long as there is a sense that the government and the parliament are stewarding the reforms through.

Even with the uncertainty of the war, tapping into such virtuous cycles will be vital. Efforts made now to comply with environmental standards in the short term will shorten the wait for EU accession. All mid-term reconstruction planning should account for sustainability and green elements and, while there is a minimum threshold of 20 percent of these in the Ukraine Facility, it is worth identifying which will have the maximum impact on Ukraine’s carbon emissions.

Ukraine’s National Energy and Climate Plan (NECP) for 2025-2030 is in line with 2030 Energy Community Treaty energy and climate targets. However, there will be several areas where a long-term vision for Ukraine’s economic and societal prosperity must be carefully balanced with the most urgent wartime needs to keep the lights on, the government running, and the economy afloat. With the latest bombardment on Ukrainian energy generation, securing gas turbines and multiple co-generation facilities and fixing coal power plants must be prioritized in the immediate term. This does not amount to reducing the roles of renewable energy, efficiencies, and clean technologies deployment: Ukraine’s government drew from a clean energy road map produced for Kyiv by nine US agencies ahead of the UN COP 28 climate talks as it set its decarbonization goals, while finalizing its recovery and energy strategy. But a big concern is just what kind of price Ukraine could pay when the European Union’s Carbon Border Adjustment Mechanism (CBAM) kicks in in 2026, with tariffs that penalize trade from countries with insufficiently rigorous environmental rules. The European Union should bear in mind Ukraine’s wartime context. A 2023 European Commission staff report notes Ukraine’s “good progress on environment, some progress on energy and Trans-European networks,” and limited progress on climate change and transport policy.

The European Union, recognizing how cumbersome accession can be, has identified sixty-nine priority reforms, most of which are tied to investment indicators. Some Ukraine Facility disbursements will be tied to progress on these, providing added incentives for progress along the way toward the long-term goal of EU accession.

At this early stage, we are concerned about the European Union’s ability to keep offering Ukraine advantageous market-access terms: They have helped generate much-needed cash for Kyiv and almost all regions, but the objections of European farmers and truck drivers can’t be ignored. As part of the association agreement, the EU-Ukraine Deep and Comprehensive Free Trade Area allows for tariff-rate quotas if a particular good is being exported in excessive amounts. Yet more elegant solutions exist, especially with fungible products like food. More grain entering the single market should also mean the EU has more capacity to export, and global demand remains high. EU and national leaders should be bolder in calling out and refuting Russian disinformation meant to exploit such issues.

Still, the Polish farmer border protests are symptomatic of a wider challenge that the European Union and Ukraine will have to face together. Ukraine remains much poorer than even the least well-off EU member states. In this European Parliament campaign season, low wages in Ukraine have frequently been invoked by some at the political extremes as a reason to delay or refuse Ukraine’s accession. And if the rules on cohesion funding were left unchanged, the EU Council estimates that €186 billion would be redirected to Ukraine over a seven-year budget cycle at the expense of “convergence” elsewhere in the bloc. The European Commission is already working on how it will have to change the rules, but the task is momentous—and will inevitably be costly. An underused argument which Kyiv and EU capitals should lean on more often is that, with the right reforms, Ukraine’s joining the single market can be a net contribution to Europe’s strategic autonomy. We shall see in the following section just how much Ukraine has to offer, from food and critical raw materials to battle-hardened know-how on defense and IT.

Decentralization and winning the fight against corruption

Ukraine has a successful track record on decentralization. Starting from a low bar in the aftermath of the Revolution of Dignity, Kyiv embarked on a three-year process to rebalance decision-making. A new status for amalgamated municipalities, or hromadas, was created and revenue for local authorities increased threefold through a combination of direct transfers and new tax-raising powers. The new hromadas have played a vital role in assisting citizens throughout the war, and they are mostly ready to help allocate funds to reconstruction projects in a way that best suits their citizens.

One area of reform that was incomplete before the 2022 invasion was providing hromadas with the ability to act as a “legal person.” This would provide them with the ability to borrow money more easily and make claims through the courts in a more reliable way. Completing this reform should clearly be a priority so that hromadas can take on a fuller role, including by actively raising funds.

On our research trip, we heard differing accounts of how the anticorruption apparatus was faring. On paper, the division of labor is straightforward and justified. The National Agency on Corruption Prevention (NACP) takes care of strategy and foreseeing legal bottlenecks in dealing with corruption. The Specialized Anti-Corruption Prosecutor’s Office can launch investigations, and the High Anti-Corruption Court’s role is self-explanatory. The National Anti-Corruption Bureau of Ukraine (NABU) has a much broader role, and interlocutors ranging from elected legislators to business leaders suggested this may have become a little too wide-ranging and could do with more checks and balances. It is clear that Ukraine needs a transversal body that is independent and can withstand political pressure. NABU would do well to pursue this important work without television cameras in tow for showy raids and arrests, which only play into Russian propaganda on corruption in Ukraine.

The corpus of judges in Ukraine needs new recruits. The overhaul of the political class since 2014 has not been accompanied by the same replenishment in the judiciary and courts rank among the least trusted public institutions in the country. To the government’s credit, the war has not slowed longstanding plans to “liquidate” the most notoriously corrupt courts, like the District Administrative Court of Kyiv, but the new bodies being set up are often staffed by the same people.

Energy sector reforms

Energy sector reforms have a dedicated subsection in this brief due to their outsized impact on Ukraine’s broader economic recovery.

Tremendous progress has been made on governance and institutional reforms, anticorruption measures, rule of law, and human rights. However, the war has posed unique challenges and opened the door to backsliding, something that had made private equity stay away even before the full-scale invasion. When institutional investors and companies consider entering the Ukrainian market, war risks are not the only deterrents. In addition to concerns shared by other investors about judicial independence and capital controls, energy sector investors seek assurances against seizure and/or nationalization of their assets, whether their return on investment can be easily taken out of Ukraine without controls or restrictions, and whether board management is independent and fully functional.

It will remain challenging to convince foreign investors that Ukraine’s energy sector is worth the additional risks when similar returns could be secured elsewhere.

Good arguments exist. Entering Ukraine’s market now, before reconstruction picks up speed, would give companies competitive advantage and valuable market insight, while paving the way for other growth opportunities in the region.

Ukraine has also conducted energy reforms. The Cabinet of Ministers adopted a resolution on the guarantees of origin for electricity generated from renewable energy sources. This legislative change will improve transparency and valuation of renewable energy production for accurate feed-in tariff payments and cross-border exports, particularly as the European Union works toward expanding the CBAM’s scope. Additionally, Ukraine adopted reforms to align its legislation with the EU Regulation on Energy Market Integrity and Transparency, which drives wholesale energy market integrity and transparency and combats market manipulation with help from an independent utility regulator, the National Energy and Utilities Regulatory Commission, adopted in May 2023.

Another huge milestone is Ukrenergo’s full membership in the European Network of Transmission System Operators for Electricity, as of January 2024, two years after Ukraine cut ties with Russia’s electric grid and pivoted to the European network in record time. Thanks to the updated EU Trans-European energy network regulation, Ukraine can apply for project funds through the Connecting Europe Facility (CEF) program’s calls for transport proposals to strengthen connectivity with EU member states; moreover, the status of the projects of mutual interest may unlock funding and streamlined permitting for energy infrastructure. Cross-border renewable energy projects offer yet another avenue for Ukraine to pursue CEF-Energy support.

Nonetheless, the energy sector has more work to do, particularly in moving toward liberalization of electricity prices. Although an extremely unpopular reform, charging market rates for the cost of electricity would reduce debt for Ukraine’s national energy companies, incentivize efficiency solutions, and attract foreign investment when developers can rely on receipt of payments for electricity generation and services. It’s important to note that ending the blanket fixed low electricity prices for households would be particularly challenging when households are barely getting by. However, with carefully targeted support for consumers in need and effective communication strategies with grassroots engagement, Ukraine can take this difficult step toward creating an attractive investment environment. Extra care must be taken to ensure that this reform does not affect energy security or access for the Ukrainian population, particularly the elderly and disabled, and those with financial hardships or other obstacles. Several waves of tariff increases have already taken place, driven by the financial strain of repairs needed across the system: Prices nearly doubled in June 2023 and again in June 2024. However, they are still below the market rate. Ukraine needs to develop a timetable for the careful phaseout of public service obligations, paired with robust strategic support for the most vulnerable consumers. In addition, Ukraine has opportunities to reduce consumption across district heating systems and integrate efficiency criteria into public procurement processes.

War risk and political risk: Insurance mechanisms

Ukraine was a very large market for “war insurance”—until the war. In February 2022, the risk of an insured asset being damaged became too high for private providers to be able to provide new insurance at a competitive price, and the market dried up. Laudable progress has since been made.

State backing was extremely helpful for insuring the first Black Sea convoys, under the UN-brokered grain initiative. Now, the risk is better spread between friendly governments and a nascent market. The World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) can issue trade finance guarantees giving exporters and logistics providers peace of mind that they will be compensated for shipments that don’t make their destination.

While the available insurance products are a big achievement, they only offer coverage for as long as the shipment lasts. Long-term insurance covering the private investments Ukraine needs is scarcely available. The World Bank’s MIGA has provided coverage for new warehouses and the Unites States Development Finance Corporation and Poland’s Development Fund offer guarantees against political and war-related risks as well. Still, Russia’s targeting of economic assets make an insurance market capable of covering high value-add installations a remote possibility for now. It is still important to prepare. Building robust data portals for evaluating risks and differentiating for every region can start to build an appetite for the private sector to reenter the market.

Human capital

Ukraine’s greatest reconstruction asset is its human capital—and also its most concerning shortage.

Ukraine’s labor markets have been through tremendous disruption since the onset of Russia’s full-scale invasion, with a massive loss of jobs followed by labor shortages in some sectors and high unemployment in others. As men get called to the front lines, women make up a larger percentage of the workforce. Automation and other efficiencies happen out of necessity.

Nonetheless, Ukraine needs to continue making progress on merit-based recruitment and reforming job classifications and salaries because transparency and human resource management feature among the sixty-nine priority reforms in the Ukraine Facility Plan, which calls for a “transparent procedure for selecting specialists for positions and digitalization of civil service and human resources management.” These are major issues for the public and private sectors.

Human capital will play a disproportionately large role in the success of the recovery efforts, which means that investments today will bring compounded economic benefits down the road. Creating a path for bringing people back to Ukraine now—through lucrative employment opportunities, secure schools, and robust air defense capabilities—will be vital for a successful economic recovery and, eventually, self-sufficiency.

Reintegrating veterans into civil society and the workforce is both an economic and societal imperative for Ukraine, and there could be five million of them by the end of the war. Some have missed out on higher education due to the war and should be supported in advancing their studies, should they choose to do so. Others may seek upskilling or retraining. But their unique postservice needs must be prioritized first, with easy access to services including healthcare and financial support.

Ukraine’s future workforce includes schoolchildren now living close to the front lines and who are losing years of schooling due to the insufficient number of shelters. This is the biggest impediment to continued education, as Russia targets kindergartens, schools, sporting facilities, and libraries in its ruthless campaign. Donors should prioritize building shelters to optimize children’s educational opportunities and future career prospects. Big City Lab, in collaboration with public and private stakeholders, is developing principles and testing out pilot projects on how to most effectively rebuild and remodel old Soviet school buildings into safe, social, multifunctional, and innovative spaces fit for tomorrow’s needs. Such pilot projects can be recreated in other sectors to develop best practices for reconstruction.

International organizations can expand support for strategic reskilling, upskilling, and specialty trade training. The technology sector can provide the mechanism for these trainings and is a growing sector in its own right, particularly in providing employment opportunities for veterans. Digital startups are at the front lines of innovations. Ukraine is already exporting solutions, such as the Diaa portal of digital services, to other countries.

Rail, roads, and ports

Efficient and frequent movement of goods will be a key metric for Ukraine’s economic recovery.

And to reinforce earlier points, none of these large-scale investments will be realized without sufficient and sustained air defense. Investing in Ukraine’s transportation system by the EBRD, EIB, and the World Bank must be scaled now through private sector engagement to maintain current trade volumes and prepare the system for large-scale reconstruction efforts, including the tonnage of materials coming in and burgeoning exports leaving Ukraine through ports, railways, roads, and air.

Ukraine has already achieved important transportation reforms, such as decentralizing the state agency of roads, Ukravtodor, and reforms and greater transparency through ProZorro. However, Ukraine will need to adopt and implement the trans-European transport network (TEN-T) guidelines and prepare its transport system for decarbonization and digitalization.

Donors have an opportunity to support feasibility studies for priority projects identified under the Indicative TEN-T Investment Action Plan. Moreover, pairing ProZorro with additional transparency and verification measures in the transportation development area will contribute to weeding out corruption risks and instilling confidence for the donor community. Digitalizing, upgrading, and securing “soft infrastructure” like customs controls and port data systems would improve efficiency and ensure consistent adherence to process.

The US government deserves particular praise here. USAID’s contribution to upgrades to border crossing infrastructure and railway infrastructure leading to the European Union will help the integration of Ukraine’s economy into the single market; and while a prosperous Ukraine is clearly a US foreign policy goal, the projects will benefit the US economy much less directly.

Section 4: The best opportunities for each economic sector

Russia’s hybrid war is spreading at the rate of an aggressive cancer, penetrating all sectors of Ukraine’s economy to destroy Ukraine on the financial battlefield, as Russian President Vladimir Putin fails to win on the actual front lines. Every dollar Ukraine can produce through trade is a win against Moscow’s efforts to diminish Ukraine’s economic output, and vital tax revenue for the military budget. Support for Ukraine’s top sectors and trade is the smartest investment into the country’s future self-sufficiency and economic stability.

The European Council presidency, in consultation with parliament negotiators, provisionally extended the duty-free trade agreement with Ukraine until June 5, 2025, which is pending June steps for official adoption. The action—which includes an automatic safeguard mechanism to trigger “tariff-rate quotas” for poultry, eggs, sugar, oats, maize, groats, and honey as well as “enhanced monitoring” of wheat and cereal imports—underscores the importance of EU member nations’ domestic communication of the benefits of this economic lifeline for Europe.

Recovery Priority #1: Supporting Ukraine’s energy sector

The energy sector will be the engine of Ukraine’s reconstruction, but urgent support is needed now to keep it from collapsing. Moscow annihilated much of Ukraine’s energy generation—but not the country’s rich energy potential, nor its ingenuity and resolve. Ukraine urgently needs more air defense and a lifting of restrictions on how it deploys weapons furnished by its allies to prevent Russians from leveling more cities and driving civilians into a state of despair and displacement. As long as any prohibition to use US weapons for attacks on Russian soil is in place, Ukraine’s power plants are sitting ducks and prime targets for Moscow’s bombardment. These restrictions are slowly and incrementally being lifted, but Kyiv still faces difficult trade-offs on defending key economic assets.

Ukraine’s air defense and offensive capabilities should be complemented with passive protection (i.e., physical barriers for critical infrastructure) which is effective against drones and is currently being enhanced to withstand missiles when covering smaller critical structures such as a transformers, substations, and generators. Meanwhile, the large power plants must rely on air defense for protection. This multilayer strategy for defending critical energy infrastructure—grid, centralized power plants, transformers, gas storage systems—is crucial for future energy development and energy system transformation.

The latest wave of attacks aimed at destroying centralized energy production capacity and natural gas storage caused immeasurable harm and system imbalance, with Ukraine having to resort to scheduled blackouts and purchasing electricity from its neighbors instead of producing it at home at a fraction of the price. Preparations for the winter must start now as the system is already in critical condition months ahead of the heating season. Securing and financing gas turbines to ensure sufficient capacity and balancing the grid is a matter of life and death for the Ukrainian population this winter. The G7+ Energy Coordination mobilizes efforts to restore and protect Ukraine’s energy infrastruture through efforts such as equipment procurements and the Ukraine Energy Support Fund, managed by the Energy Community Secretariat, is intended to finance critical energy equipment for Ukraine, such as procuring gas turbines. All possible efforts must be made to expedite procurement while adhering to the Austrian Federal Public Procurement Law (given that the secretariat is based in Vienna). Capacity-driven delays must be addressed through proper staffing at the secretariat and timely communication with the Ukrainian stakeholders.

Decentralizing Ukraine’s energy production system requires a multipronged strategy, which Ukrenergo is leading with support from relevant ministries. Distributed generation would advance decarbonization, make for challenging targets for Moscow’s attacks, and could present an appealing investment opportunity for the private sector. Such a system will require smart and digital solutions and customer service, with strong cybersecurity measures. Storage installation could be owned by the distribution system operators to attract financing. Coordination with local communities, both to tap their capacities and get buy-in, will be foundational to the success of building out distributed networks. Ukraine can work towards establishing a decentralization ecosystem through regulatory changes (such as streamlining connectivity rules), feasibility studies for projects, and liberalization of electricity prices.

Ukraine has tremendous clean energy resources (including wind, solar, hydropower, and geothermal potential); low-carbon gases including biomethane; critical minerals deposits; and unparalleled expertise in cybersecurity and system resilience and recovery from kinetic attacks. Conducive policies will be essential for encouraging investments. Ukraine’s National Energy and Climate Plan—an important condition for securing financing via the EU’s Ukraine Facility—will be presented at the Berlin Recovery Conference on June 11-12: This will signal which clean energy technologies will play the biggest roles in meeting climate targets for the country, the policy gaps to enable their deployment, and most importantly, private investment needs to reach scale.

There is untapped potential in energy efficiency for Ukraine. Soviet buildings were built without care for energy conservation. Determining which buildings to remodel and which to demolish will be an important part of the reconstruction process. Cost and building condition will play a major role. The industrial sector presents tremendous opportunity for cutting energy consumption and could lead to 12.5 million tonnes in CO₂ reduction, and $3 billion in annual savings, with $13 billion in investments through 2030. Low energy costs are also a key driver in industrial competitiveness and would contribute to the revival of this important sector. In 2023, Ukraine launched the State Fund for Decarbonization and Energy Efficient Transformation, which could be an effective mechanism for attracting international loans and grants for the implementation of investment projects. However, Ukraine will need market mechanisms to properly account for the value of energy efficiency investments, which pay for themselves over time (particularly in a liberalized market), but may require a higher upfront cost compared to less-efficient construction and technologies. For scale, Ukraine will need market solutions which will enable the private sector to capitalize on efficiency investments. On paper, Ukraine’s energy efficiency rules are generally aligned with the European Union’s; however, opportunities exist for infusing energy efficiency criteria into both the public procurement process and strategy for building renovations. Ukraine should also seek to attract investment for making the transmission and distribution systems more efficient.

A number of Ukrainian state-owned enterprises, such as Energoatom and Ukrnafta (owned by Naftogaz), are integrating independent boards into their leadership structure to create additional layers of transparency and verification. These boards will have a unique opportunity to advance implementation of reforms and instill confidence through transparent operations and practices.

Nuclear energy is a critical low-carbon, balancing resource for Ukraine, which has a wealth of expertise in the sector. Ukraine should continue building partnerships with Western countries and companies to extend the life of existing reactors, build out new capacity, and diversify nuclear supply chains for future nuclear plants and uranium enrichment. To lay the foundation for an appealing investment environment, Ukraine needs to complete reforms at Energoatom (under the leadership of the new supervisory boards) and carve a path forward on transparent denationalization. Following debilitating capacity losses, Ukraine is looking to undertake nuclear build-out starting as early as 2024, utilizing existing equipment from Bulgaria. Most importantly, the international community must pressure Russia to leave the Zaporizhzhia nuclear power plant, a 6 GW facility, before an accident takes place.

Recovery of Ukraine’s energy sector will hinge on the support of a multitude of stakeholders, and multilateral development banks are poised to play a key role. When it comes to gas, however, some of these institutions have guidelines that prevent or make it challenging to finance such infrastructure, per climate commitments. This is a missed opportunity to support Ukraine in its time of need—especially since investment in gas turbines and piston installations would accelerate Ukraine’s shift away from coal.

Ukraine’s natural gas network could be redeployed to transport Ukraine’s indigenous gas production and low-carbon gases (with some adjustments), after the gas transit agreement with the Kremlin expires by the end of 2024. There is a chance that European traders may work out a short-term agreement with Gazprom on the flows and negotiate the transit fees with Ukraine separately. However, for any gas flows to continue moving through Ukraine, the country needs to invest in border-metering mechanisms for clarity on export volumes. Ukraine also needs a strategic vision for its robust pipelines network, most of which is not utilized at the moment, as the upkeep of the entire network weighs on the country’s expenditures at a critical time. With sufficient air defenses, European traders can continue to utilize Ukraine’s vast gas storage in the western part of the country—which they have done so far without war risk insurance. The storage system has demonstrated incredible resilience in light of the recent escalatory attacks.

Large-scale investing in agriculture

Dodging bombs and navigating land mines are not standard farming practices, yet Ukrainian farmers have persisted. The resilience and bravery shown in this sector, which employs 14 percent of Ukraine’s population and yields 12 percent of country’s GDP, must not be taken for granted. The sector requires large-scale investments to continue and expand this level of production and prevent famine for the consumers reliant on Ukrainian crops, who number 400 million.

First and foremost, Ukraine’s farming communities must be demined (as discussed above), and secure and reliable transportation routes and storage must be established.

The full liberalization of the agriculture market in early 2024 unlocked a variety of financial mechanisms for farmers, such as the ability to borrow against their land. Notwithstanding, additional capital is needed for farms of all sizes to improve operations productivity and maintain export levels.

Avoiding deindustrialization and seeking a competitive edge in manufacturing

Ukraine’s manufacturing sector has been battered since Russia’s initial invasion in 2014, which led to illegal occupation of Ukraine’s industrial centers. COVID-19, inflation, the full-scale invasion, and workforce migration (mostly forced by the war’s atrocities) have placed more pressure on the neck of once a robust economic sector. Massive investments in modernizing, digitalizing, and efficiency measures are needed to keep Ukraine’s factories afloat. But the sector is also deeply interconnected to developments in air defense, secure and reliable transportation routes, transparent and functioning customs systems, and clear signals from the European market on how Ukraine can contribute to EU strategic autonomy through priority trade partnerships such as in the mining and processing of critical minerals.

Unleashing tech innovations

Ukraine is digitizing its economy at record speed. In some cases, this is happening out of necessity to provide vital, urgent services in a safe environment through platforms such as DREAM, Diaa, Prozorro, and United24. Digitalization also enables transparency and verification—top requests by Ukraine’s donors. This is also a space with top growth potential as new sectors integrate digitalization into their reforms and to create efficiencies and automation. Ukraine’s sophisticated IT sector offers some of the most desirable jobs in the country, with one opening attracting 150 applications. The sector already employs 300,000 professionals and has plenty of room to grow. Ukraine has a unique opportunity to unleash its digital space innovations while it prepares to synchronize its regulatory environment with EU legislation such as the Digital Services Act, AI Act, and the Digital Markets Act.

Summary of recommendations

Measuring the damage

International stakeholders

Support Ukraine’s capacity to track damages, develop a verification mechanism, and connect to resources, particularly in areas that may lack capacity and capabilities with documenting destruction. Enlist AI and automation where feasible.
Develop a focused platform enabling the Ukrainian government and IFIs to differentiate among large-scale projects as either long-term or short-term/urgent repairs.

General reconstruction strategy

International stakeholders

Provide multiyear financial, recovery, and military assistance commitments (of five years at a minimum) to establish a reliable investment ecosystem.
Support reconstruction during wartime as a vital ingredient to Ukraine’s victory, morale, and future economic prosperity, treating this call for international investment with the urgency necessary for its success.
Unify around an allied vision and approach toward Ukraine’s reconstruction to ensure efficient resource utilization and impactful collaboration.
Prioritize support for the completion of demining Ukraine’s territories to avoid derailing reconstruction.
Enhance aid and reconstruction coordination efforts among donors via the special envoys for reconstruction.
Support municipalities and underserved communities in advocating for themselves through, for example, partnerships between European nations and Ukrainian cities, following the success of the Denmark-Mykolaiv example.
Find creative financial solutions for local government authorities and SMEs which lack creditworthiness, using sovereign guarantees and workarounds provided by the EIB where possible.
Recognize the delicate balance between Ukraine’s urgent needs to fuel the economy and making progress toward a resilient, low-carbon future.
Make recovery convenings more impactful through an action-driven approach.
Continue decoupling from Russian infrastructure.
Encourage CEOs and boards to visit Ukraine to understand the challenges and opportunities.

Ukraine government

Enhance the leadership structure of and coordination across Ukrainian ministries, streamlining decision-making and communication with external stakeholders.
Kyiv should continue building out trust and transparency mechanisms to showcase how international support is deployed.

Energy sector

International stakeholders

Assist Ukraine in bolstering protection of its energy infrastructure, which needs passive (physical barriers) and active (air defense) protection from Russian bombardment to minimize future damage and attract investment in the sector.
Expedite equipment procurement under the Energy Community Secretariat platform and other mechanisms.
Participate in public-private investments to advance decentralization of the energy network through distributed generation, batteries, and prosumers (i.e., those who both produce and consume energy), which is a massive undertaking necessary to secure, decarbonize, and liberalize Ukraine’s energy system.
Reduce barriers and restrictions for multilateral development banks to finance gas infrastructure in Ukraine to secure sufficient capacity and balancing services this winter.

Ukraine government

Devote vigor to the important work of decentralizing the energy network.
Make progress on liberalized energy market pricing while maintaining targeted subsidies for vulnerable populations.

Agriculture

International stakeholders

Invest in demining, transportation, and storage.
Ensure farms of all sizes have access to capital.

Workforce

International stakeholders

Prioritize building school shelters to optimize children’s educational opportunities and future career prospects.
Expand support for strategic reskilling, upskilling, and specialty trade training opportunities.

Ukraine government

Continue to make progress on merit-based recruitment and the reform of job classifications and salaries.
Support veterans in reintegrating into civil society with comprehensive services, continued education, and reskilling and upskilling opportunities.

Finance

International stakeholders

Support Ukraine in absorbing aid in a timely manner through capacity building and streamlined procurement.
Promote Ukraine’s potential as a net contributor to Strategic Autonomy. EU citizens tend to be told about substantial cost of supporting Ukraine’s accession but know less about its supplies of critical minerals (especially titanium) and its innovative defense sector.
Unlock grants and incentives for Ukraine’s private sector, particularly in workforce development and creating efficiencies and automation. Provide support for small- and medium-sized enterprises through grants, loans, and risk mitigation, addressing the main barrier of war-related risks and the lack of related insurance products.

Ukraine government

Continue to modify strict capital controls imposed at the beginning of the full-scale invasion, which are a deterrent for new investors. A recent relaxation announced by the National Bank of Ukraine includes a provision for the payment of dividends to foreign investors and the repayment of foreign currency loans, albeit under a monthly cap, which should be gradually lifted as long as capital outflows do not undermine financial stability.

Stakeholders and the Ukraine government

Ensure that no communities are left behind during aid distribution through municipalities capacity building.

General reforms

Complete the decentralization reforms, including granting hromadas “legal person” status.
Hire new judges and improve their salaries.
Harness investment by firms based in the EU as a driving force for convergence with EU rules and norms.

Conclusion

This report has avoided sugarcoating the reality of Ukraine’s economic and financial predicaments. We still believe it is a testament to unmatched resilience and innovation amidst the challenges of war. As we discuss recovery, two imperatives emerge: sustained multiyear military support, especially for air defenses; and clear, forward-looking funding commitments, in macro financial assistance and in recovery grants and loans. These are two distinct funding streams but, when we visited Kyiv, uncertainty over the former was affecting the government’s cash flow and preventing it from focusing on recovery projects which were already feasible.

Even amid conflict, reconstruction is necessary because of the destruction it has wrought. By prioritizing viable projects in sectors such as energy, industry, agriculture, transport, and technology, and ensuring transparency, we can drive economic recovery and help Ukraine meet EU standards.

The upcoming conference in Berlin has broken the task ahead into four dimensions: business, the human dimension, regions, and EU accession. However, due to Russia’s ongoing attacks, the most urgent priorities are restoring energy capacity and bolstering air defenses to protect new and existing assets.

Now is the moment for Ukraine’s allies to take decisive action. By supporting Ukraine today, we invest not only in its survival but also in its future contributions to a stronger, more prosperous Europe. Together, we can help Ukraine rebuild and thrive, setting a powerful example of hope and resilience for the world.

ABOUT THE AUTHORS

Staff

John E. Herbst

Senior Director

Eurasia Center

Ukraine Politics & Diplomacy

Staff

Olga Khakova

Deputy Director, European Energy Security

Deputy Director and C. Boyden Gray Senior Fellow

Geopolitics & Energy Security Europe & Eurasia

Staff

Charles Lichfield

GeoEconomics Center

Economic Sanctions Economy & Business

The authors would especially like to thank Nicholas Pantazopoulos, who conducted critical graphing and cartography, and Lizi Bowen, who led web design, in this effort.

Policy memo: What will it take to make the MENA region a renewable energy powerhouse?

Shihab Elborai, Anthony Yammine, and Pavel Popikov — Wed, 05 Jun 2024 16:00:00 +0000

Saudi Arabia and its Gulf Cooperation Council (GCC) neighbors stand as a pivotal force in the global energy landscape. Beyond their stature as premier fossil fuel producers and exporters, these nations play a crucial role in effectively coordinating and regulating the production and sale of oil globally. Through strategic measures, they have endeavored for decades to stabilize prices and maintain a consistent oil supply to the international market. In doing so, they mitigate the risks of excessive price volatility that could undermine demand or deter essential investment in supply.

At a time of rapid growth in renewable energies such as solar and wind, it would be easy to write off the region (as some are doing) as a waning power, both in terms of energy and geopolitics. After all, how good can the outlook be for petrostates in a world focused on moving to net-zero emissions? In our view, the opposite is true: the region is well placed to become not just a major source of renewable energy, but also a central and indispensable player in the global energy transition, uniquely able to balance supply and demand for all types of energy, both hydrocarbons, and renewables.

Saudi Arabia and other GCC countries are already moving in this direction, perhaps faster than many outside the region realize, thanks to a powerful mix of investment, infrastructure, and political determination. They have a unique opportunity to take the lead in putting the world on a more sustainable energy footing while simultaneously diversifying and enriching their economies.

A critical question is whether and how the other countries in the region follow their lead. A new phase of cooperation within MENA will be needed if the potential for the region in a reconfigured energy setup is to be realized.

Natural and geographical advantages

GCC countries are in a strong starting position for the energy transition in large part because of their natural advantages. Thanks to abundant sunshine and wind, they can produce and export renewable energies at a consistently lower cost than any other region. For example, Saudi Arabia’s Al Shuaiba project is projected to generate solar energy at a levelized cost of electricity (LCOE) of 1.04 US cents per kilowatt hour, which is just one-fifth of the 2023 global average for solar photovoltaic (PV) energy. This is followed by the United Arab Emirates’ 2 gigawatt (GW) Al Dhafra Solar PV project, which can produce solar energy at a price as low as 1.35 US cents per kilowatt-hour.

The abundance of both fossil and renewable resources means that, at every point on the path from a hydrocarbon-based energy system to a fully decarbonized one, GCC countries can deliver the cheapest configuration for the desired CO2 emissions level without compromising on energy security. In other words, they are well placed to continue with their role of balancing supply and demand—not just with oil and gas, but in a new, green era with a full range of energy resources, both renewable and traditional.

Other advantages are the region’s central geographical location, which provides comparatively easy access to large import markets in both Europe and Asia, as well as to developing markets such as those within Africa, and a ready supply of capital to help finance the transition. Moreover, the closely regulated single-buyer market in GCC countries, which grants regulators greater control over the whole electricity system, enables them to efficiently enact state policy and ensure a choreographed deployment of supply and transmission investments.

A Saudi man walks on a street past a field of solar panels at the King Abdulaziz City of Sciences and Technology, Al-Oyeynah Research Station. REUTERS/Fahad Shadeed

Uneven prospects in the region

For the GCC alone, as we write in our recently published book, Arabian Gambit, these advantages provide the opportunity to become a global force in green hydrogen, recycled plastics, artificial proteins, and even some low-energy manufacturing, among other prospects. For instance, we estimate that every million tonnes of recycled plastics produced could create around 1,450 jobs and contribute US$650 million directly to the GCC’s gross domestic product. Furthermore, attracting 10 percent of global manufacturing in high-potential products could bring up to US$300 billion in foreign direct investment and create 150,000 new jobs, while also unlocking US$25 billion in nonoil exports and offsetting 75 million tonnes of CO2-equivalent emissions annually. Where does that leave other countries in MENA—a region that is particularly exposed to climate change as well as to global efforts to mitigate it?

It’s important to draw some distinctions between countries: MENA is not a monolith and can be distinguished into three groups based on national governmental budget and net energy exports. The first group consists of countries with a budget surplus and large net energy exporters, such as Saudi Arabia, the UAE, Kuwait, and Qatar. With their strong financial position, they can invest heavily in renewable energy infrastructure. The second group consists of countries with a budget deficit, but are net energy exporters, such as Oman, Libya, and Algeria. These countries might face challenges in transitioning to renewable sources of energy due to budget constraints. Egypt is a country in this category, but it has already made significant progress in the renewable transition despite similar constraints. The third group consists of countries with a budget deficit which are net energy importers such as Morocco, Jordan, and Lebanon. Morocco and Jordan focus heavily on renewable transition and have considerable potential to become significant hubs for renewable energies.

The push into renewables in many of these countries is impressive. The International Energy Agency (IEA) estimates that, over the past decade, North Africa has managed to increase its renewable energy production by 40 percent. Countries like Egypt and Morocco are leading in solar and wind energy production outside the GCC, according to the IEA. Egypt alone added 25.5 GW of new generating capacity between 2015 and 2019, including 1 GW of solar PV and nearly 840 megawatts (MW) of new wind capacity—and in the process, went from chronic power shortages to having a 25 percent surplus of electricity supply. Morocco, meanwhile, accounts for three-quarters of the region’s renewable electricity production growth. Home to one of the largest solar farms in the world, the Noor Ouarzazate complex, Morocco is on track to increase the share of renewables in electricity to 60 percent to 65 percent by 2030, according to IEA estimates. Jordan has also been developing substantial solar and wind projects.

Collaborative energy framework

Much more still needs to be done to press home the renewable energy advantages that the whole MENA region has—and help those countries still lagging accelerate their energy transition. Wind and solar energy are only the beginning: even when countries have renewable resources and land on which to build installations, they lack some of the other attributes that are needed, including long-term finance, trust of investors and other potential stakeholders, appropriate regulatory regimes, and the government offtake that will make these installations viable.

This is where the GCC countries can help, taking the lead to build a collaborative energy framework and network across the region. The GCC members have a natural edge through their access to capital and the stability that allows for long-term investments that some other countries in the region may lack—and they can be the prime movers and facilitators of such a network.

There are multiple opportunities for greater collaboration. These include opportunities to integrate more renewables overall: creating possibilities to balance loads by exchanging renewable energy with neighboring countries, building out renewable energy infrastructure, and, potentially, marketing jointly to other regions such as Europe. GCC countries could facilitate the transfer of technology and expertise to other MENA countries, focusing on training and capacity building in renewable technologies. They can do so by fostering joint ventures and public-private partnerships with local companies and government agencies in those countries.

Further, the GCC countries can lead in developing a harmonized regulatory framework for renewables that encourages investments across the region. Harmonization of renewable energy practices and standards among MENA countries would be a big step forward to greater cooperation. For financing, GCC countries could develop a foreign direct investment approach, stepping in to help, where useful. They can establish a MENA renewable fund to support projects in countries with budget deficits and high solar or wind potential and use this to drive demand for the export of components manufactured in the GCC. For manufacturing, for example, GCC countries could help finance and develop the capacity to produce solar and wind turbines elsewhere in the region. If the cooperation develops strongly, it could even give rise to the creation of a clean energy souk, or marketplace, that brings together all the different elements under a single umbrella.

Some of this is already starting to happen, particularly on the investment front. Saudi Arabia is heavily investing in the renewable transition of MENA countries. The Saudi firm ACWA Power is looking to ramp up investments in both Egypt and Morocco to further clean energy projects there. This includes setting up a 200 MW solar project in Kom Ombo, Egypt, and a 150 MW solar plant as part of the Noor Ouarzazate solar complex in Morocco. The UAE also is driving large investments in solar and wind projects in Egypt, Morocco, and Jordan. In Egypt, Abu Dhabi’s Masdar signed an agreement to build a US$10 billion wind farm, and AMEA Power completed a US$1.1 billion deal to deploy 1 GW of wind and solar energy. Further, AMEA Power has won a contract to build two solar power plants in Morocco, and Masdar is set to develop a 1 GW wind project in Jordan. Additionally, Arab Petroleum Investments Corporation has taken a 20 percent stake in a major Jordanian wind project.

This is just the beginning, and more can be done to promote ties and further cooperation in clean energy across the MENA region. Much is at stake and much can be gained: the energy transition amounts to a larger regional reset as a global clean energy powerhouse. For all their differences, MENA countries have the essential components required to step into the new role. Now they need to take decisive steps toward realizing that potential.

Dr. Shihab Elborai and Anthony Yammine are partners, and Pavel Popikov is a manager, at Strategy& Middle East, a strategy consultancy part of the PwC network.

The post Policy memo: What will it take to make the MENA region a renewable energy powerhouse? appeared first on Atlantic Council.

From Vilnius to Warsaw: How to Advance Three Seas Goals Between Summits

Olga Khakova — Thu, 23 May 2024 19:30:27 +0000

Leaders at the ninth Three Seas Summit and Business Forum, held in Vilnius in April, raised the need for creating a permanent body that would institutionalize regional cooperation on digital, transport, and energy integration. While there is little disagreement among participating countries that such an office is needed, their views diverge on the location of this coordinating body, reporting structure, and coverage of its operating costs.

Solving these administrative problems is one of the biggest impediments to formalizing a secretariat. To ensure that the Three Seas Initiative (3SI), which convenes at the annual summits, can effectively and quickly address the unique challenges facing its thirteen Southeastern, Central, and Eastern European member states, associate states, and strategic partners in reaching common goals, its leaders must now agree on a structure.

STAY CONNECTED

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

More than 900 participants joined this year’s summit, which every year aims to explore ways to tap members’ vast economic potential while fortifying against mounting security threats. They discussed ways to advance connectivity, economic growth, and broader security by overcoming shared regional barriers via the 3SI mechanism. However, making progress between summits requires institutionalization of the 3SI through a permanent secretariat body to maintain momentum and focus between the annual events.

How a 3SI institution could work

The secretariat could be launched and housed in a neutral, non-3SI city in Europe, preferably a financial hub, like Brussels, with a small permanent team whose operating costs would be covered by the 3SI country hosting the summit that year. The 3SI team’s initial guidance could include exchange of information between 3SI stakeholders, outreach to private investors, and the promotion of cross-border digital, energy, and transportation projects in the region, with a particular focus on the project priority list. In a sense, the secretariat would serve as a library of projects for inquiring investors. The 3SI platform can play a meaningful role in helping resolve top priority issues in the region, which were raised repeatedly at the summit, ministerial, and in private events (including those jointly hosted by the Atlantic Council, Clean Air Task Force, and Amber Infrastructure Group). These issues include:

Access to finance
Fragmented market
Supply chains risks
Russian aggression in Ukraine and the broader region
Commercialization of new technologies and innovative solutions
Workforce shortages

By addressing these challenges throughout the year (through the work between the summits), the 3SI stakeholders would create compounding benefits, securities, and efficiencies for Europe, particularly through 3SI’s unique power to connect traditionally siloed sectors and geographies and its magnifying platform for bringing attention to the top challenges in the region.

Leaning into the 3SI mission

Once a 3SI body is created, it can rapidly get to work on actualizing steps toward achieving its goals, including regional integration of resources, coordination of workforce development, optimization of external partnerships, and raising finance. Dialogue at the Three Seas summits has yielded broad consensus and support for these priorities.

Goal 1: Integrating the regions, markets, and innovation

Despite gigantic leaps in connectivity across Europe, regional integration is hampered by the lack of cross-border coordination, regulatory hurdles, supply chain risks, and market fragmentation. These gaps create diverging prices, inefficient routes, and lags in information sharing. 3SI would not be a one-fix-fits-all in resolving these issues, but the presidential-level platform has untapped potential to alleviate some of these challenges. 3SI is uniquely positioned to highlight the regional cost and security threats of insufficient energy interconnection, transportation routes, and digital integration. Priority-project lists should be frequently updated and expanded, something the secretariat can manage, to provide ample options for potential investors with projects’ bankability and other relevant details included.

Moreover, 3SI has a unique opportunity to embrace a technologically neutral approach while focusing on solutions-driven criteria: competitive pricing, carbon emissions, environmental impacts, and secure and diversified supply chains. To scale new technologies, the 3SI secretariat could support existing regional coordination on regulatory alignment to forge an easy-to-navigate investment environment. Cooperation on cyber security and kinetic threats across 3SI stakeholders can enhance protection for these technologies and infrastructure in the region.

Goal 2: Investing in a workforce that will transform the region

In addition to the work dismantling regulatory barriers, 3SI can contribute to forging an innovation ecosystem through building a talented workforce for the future. The Three Seas economies have a unique opportunity to exchange data around the current labor force and the anticipated talent gap in energy, digital, and transportation sectors. The region is already leading in science and technology education in Europe and can build on this competitive advantage by scaling the number of trained professionals through coordinating programs and forging an efficient education-to-workforce placement pipeline. The annual 3SI summits could include programming dedicated to student engagement, recruitment, and education on key opportunities in the growing sectors.

Goal 3: Optimizing collaboration with 3SI associated and strategic partners

Japan’s inclusion as a 3SI strategic partner this year is a testament to the value of global partnership on commercialization of new technologies and diversified supply chains. Several summit panels touched on driving Japanese companies’ investments in the region, particularly rail and communications sectors development.

3SI countries also have an opportunity to develop strategic priorities in support of associate members Ukraine and Moldova (complementary to the existing efforts), while exploring the potential to build additional energy and transport interconnections, as well as collaboration in the digital space.

Goal 4: Financing a secure, competitive, and low-carbon Three Seas region

An enormous barrier to achieving 3SI priorities is the trillion-dollar gap between where infrastructure stands today and where the region agrees it needs to be. National budgets are insufficient. EU funding is challenging to access and excludes some infrastructure and technologies. The Three Seas Fund, 3SI’s investment arm, can play an important role in leveraging private finance and helping match public and private capital to realize the projects. As the next round of the 3SI fund is established, attracting private equity will be crucial for reaching scale of impact. Cross-country coordination creates efficiency and minimizes risk for cross-border investments, particularly in addressing the grid infrastructure gaps and preparing roads for a safe, low-carbon transportation future.

Achieving a shared vision of the future

No similar coalition exists with focus on security and economic prosperity through integration. This shared vision of a secure, digitized, integrated, low-carbon, resilient economy is refined every year at the Three Seas Summit as new ideas are shared on stage, discussed during coffee breaks, and put to the test following the conference. With the formalization of a 3SI institution to build on the work between summits, 3SI could be an unstoppable platform for realizing the region’s rich potential and talent.

Olga Khakova is the deputy director for European energy security at the Atlantic Council Global Energy Center

EnergySource

MEET THE AUTHOR

Staff

Olga Khakova

Deputy Director, European Energy Security

Geopolitics & Energy Security Europe & Eurasia

OUR WORK

Senior Fellow, Global Energy Center

The post From Vilnius to Warsaw: How to Advance Three Seas Goals Between Summits appeared first on Atlantic Council.

Without tariffs, the EU faces a flood of Chinese imports of the ‘new three’

Joseph Webster — Thu, 23 May 2024 18:49:40 +0000

Washington’s recent tariffs against Chinese products all but ensure a flood of these exports to Europe, necessitating a response from Brussels. The products include China’s “new three” cleantech exports—lithium-ion batteries, electric vehicles (EVs), and solar panels—posing undeniable dilemmas for Brussels as it balances security, economic, and climate interests. To head off a deluge of Chinese products while also allowing some to support decarbonization goals, Brussels should selectively and thoughtfully apply greater tariffs and restrictions. Concurrently, European industrial policy should prioritize the development of indigenous battery and EV supply chains and manufacturing capacity.

STAY CONNECTED

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

The European Union’s 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.

Sources: PRC General Administration of Customs, Author’s Calculations

Europe’s imports of these cleantech products have fallen in recent months, partly because of the global glut in solar panels and constraints on installations. The EU’s anti-subsidy investigation into electric vehicles, launched in October, has also cooled shipments.

Europe’s most consequential tariff decisions concern EVs and batteries, as these products hold economic and strategic relevance.

With the automotive sector indirectly providing 6.1 percent of total EU employment and 7 percent of GDP turnover, EVs and batteries are a key future driver for the EU’s economy. This sector is at risk due to China’s heavily subsidized auto exports.

While transitioning to EVs from internal combustion engines will necessitate disruptions, ceding Europe’s auto industry would deliver a “second China shock” of mass economic dislocations, all but ensuring a fierce political blowback with potentially calamitous implications for the European project.

Reasonable people could disagree about the wisdom of allowing cheap Chinese imports to undercut domestic industries in the 1990s and 2000s. At the time, many believed that greater economic linkages between the West and China would produce rising living standards across the board, reduce geopolitical frictions, and potentially even lead to constructive political changes within China itself.

That didn’t happen. While trade with China led to complicated, often ambiguous impacts for Western economies, Beijing threatens global democracy more than ever, and the Communist Party continues to rule mainland China with an iron fist.

Recognizing this dynamic, various European Union bodies have characterized the Chinese government as a “systemic rival”—as well as a partner.

While European threat perceptions of Chinese exports largely center around economic and political concerns, security dimensions shouldn’t be overlooked.

China’s exports of sensor-laden connected vehicles pose potential espionage and sabotage risks. Chinese security services could use these vehicles to monitor European military and political facilities, as well as collect real-time economic and mobility data. In a worst-case scenario, these vehicles’ software systems would be vulnerable to hacking.

China’s lithium-ion battery complex also has latent military potential, as batteries are critical components for diesel-electric submarines, unmanned maritime platforms, and aerial drones. Moreover, technological advances in solid-state batteries could offer significant, potentially game-changing performance improvements for military use cases.

Given the economic and security risks, Europe should impose tariffs on Chinese exports of EVs and lithium-ion batteries. To balance decarbonization goals with these other needs, however, Europe could follow the US approach by phasing in certain tariffs, such as on Lithium-ion non-electrical vehicle batteries. These batteries are useful for grid decarbonization but pose few direct security threats.

China is unsubtly hinting it will respond to any European tariffs with countermeasures, including against wine and dairy exports.

Yet Europe is better off accepting short-term pain than allowing the formation of a clean energy cartel overseen by a systemic rival.

In other cases, such as solar panels, Chinese clean tech exports pose few economic and security risks to Europe. This industry has left Europe and isn’t coming back, especially since European solar potential is limited. Although inverters should be monitored closely, there are no known security risks for solar panels, which cannot communicate with the grid. Consequently, Europe should accept Chinese solar imports while still ensuring that global supply chains are not held hostage to a single supplier.

Importantly, the West should continue to emphasize to Beijing that it seeks to de-risk rather than decouple supply chains. While Western trade with China has not fundamentally improved ties, commercial ties nevertheless can provide ballast for the relationship, mitigate security dilemmas, and provide economic benefits.

To stop political ties from deteriorating further while maximizing trade and climate benefits, Europe and its partners should identify products where commerce can be conducted with China without damaging economic or security interests.

Still, Europe should rapidly employ tariffs and fiscal support to bolster critical industries and technologies, including EVs and batteries. Balancing decarbonization objectives with economic and security needs is no easy task, but Brussels must find sure footing on this tightrope, and quickly.

Joseph Webster is a senior fellow at the Atlantic Council and editor of the independent China-Russia Report. This article represents his own personal opinion.

EnergySource

MEET THE AUTHOR

Staff

Joseph Webster

Global Energy Center Indo-Pacific Security Initiative

Central Asia China

OUR WORK

The post Without tariffs, the EU faces a flood of Chinese imports of the ‘new three’ appeared first on Atlantic Council.

Webster quoted in the Guardian, Globe and Mail, and Die Zeit on the Xi-Putin meeting

smeadows — Tue, 21 May 2024 15:05:59 +0000

The Guardian

Globe and Mail

Die Zeit

The post Webster quoted in the Guardian, Globe and Mail, and Die Zeit on the Xi-Putin meeting appeared first on Atlantic Council.

Webster quoted in the Financial Times, CNN, AFP, and Yahoo News on US-China tariffs

smeadows — Tue, 21 May 2024 15:04:58 +0000

The post Webster quoted in the Financial Times, CNN, AFP, and Yahoo News on US-China tariffs appeared first on Atlantic Council.

Wald joins Bloomberg Surveillance to discuss the oil slowdown

smeadows — Fri, 10 May 2024 15:43:32 +0000

The post Wald joins Bloomberg Surveillance to discuss the oil slowdown appeared first on Atlantic Council.

Wald joins Bloomberg to discuss the relationship between the US and Saudi Arabia

smeadows — Fri, 10 May 2024 15:37:35 +0000

The post Wald joins Bloomberg to discuss the relationship between the US and Saudi Arabia appeared first on Atlantic Council.

One hundred years of energy transitions

Mahmoud Abouelnaga — Wed, 08 May 2024 12:09:08 +0000

Thousands of energy leaders, technology developers, and climate advocates gathered in Rotterdam, Netherlands from April 22-25 along the 26th World Energy Congress. Looking back at the first Congress, then called the World Power Congress, in London in 1924, global energy systems looked very different. In 1924, global oil production was around 2.8 million barrels per day, compared to almost 102 million barrels per day last year. In other words, a country like South Korea or Canada consumes today the same amount of oil that the whole world needed one hundred years ago.

In 1924, there was no nuclear energy in the global energy mix and renewables were probably beyond the imagination of policy makers. By 1975, there were 200 nuclear power reactors in 19 different countries, but solar and wind power were still practically nonexistent. It was not until the early 2000s that solar and wind began to gain traction and break records year after year, contributing 18 percent of the world’s total energy consumption.

Unlike previous energy transitions, the current energy transition is not mainly driven by a more superior technology in terms of energy density and efficiency alone. The current energy transition is mainly responding to the climate impacts related to energy generation and consumption over the last century, or what economists call “externalities”. However, this transition towards more sustainable sources of energy is constrained by the increasing energy demand globally, especially in emerging and less developed economies. This makes the global energy transition measured against three main criteria, commonly referred to as the “energy trilemma”: energy security, energy affordability, and environmental sustainability.

To address the energy trilemma, four critical discussion themes emerged during the centenary World Energy Congress in Rotterdam: 1. Accelerating the deployment of existing solutions, 2. Scaling innovative technologies, 3. The interaction of energy and artificial intelligence (AI), and 4. Humanizing the energy transition.

Accelerating the deployment of existing solutions

There has been great progress on deployment of clean energy technologies over the last 20 years that made most of these technologies cost-competitive with fossil fuels in today’s market even without financial support. However, these technologies are not deployed fast enough to get us on track to meet our climate targets. For example, utility-scale wind and solar projects in the United States can take 4.5 years on average to obtain the necessary permits and navigate necessary environmental reviews for siting and construction.

There is a need for regulatory reforms that can strike the right balance between timely decisions on clean energy and infrastructure projects while preserving thorough environmental reviews. This balance would not leave project developers concerned about fluctuations in equipment costs while they are waiting on permits. The recent delays in offshore wind projects along US coastlines show how the combination of uncertainty, public acceptance, and affordability can impact the pace of the energy transition.

Scaling innovative technologies

In their 2023 World Energy Transitions Outlook, the International Renewable Energy Agency (IRENA) estimated that accelerating the deployment of renewables, energy efficiency, and electrification could achieve 69 percent of global emissions reductions needed to reach net zero by 2050. This would leave almost a third of the needed abatement to innovative, disruptive technologies (e.g., long-duration energy storage, hydrogen, e-fuels, carbon capture utilization and storage (CCUS), carbon dioxide removal) that have not been deployed at a scale large enough to meet our climate targets.

Renewables need long-duration energy storage at scale to ensure that this clean power is available anytime, day or night. Hydrogen and e-fuels will also be needed to support transportation and industrial applications that require liquid fuels, especially when their high heat demands can’t be met with renewables. Although there has been some progress on production of these cleaner fuels with major hydrogen production and infrastructure projects in the United States, Europe, Asia, and the Middle East, there are still gaps around how policies can create large demand signals to scale this market.

After all these mitigation efforts are exhausted, there will still be carbon emissions in the air that need to be subtracted from our limited carbon budget, a clear and direct role for carbon management technologies. CCUS can capture emissions from unabated industrial resources or remaining fossil-based power generation units. Some industries, even if they were completely powered by clean energy, would still emit carbon. For example, almost 60 percent of the emissions from cement production are unavoidable process emissions from the calcination process (i.e., the decomposition of calcium carbonate into calcium oxide and carbon dioxide) rather than energy-related emissions. As the Intergovernmental Panel on Climate Change indicated, climate mitigation efforts to date have been insufficient and there is a need for scaling carbon dioxide removal technologies to reduce the risks of climate overshoot and complement emissions reduction efforts, especially from hard-to-abate sectors.

The interaction of energy and artificial intelligence (AI)

Over the last few years, AI has emerged as an enabler for the energy transition. Generative AI can play an important role in modernization of the electric grid by enabling grid operators to make better, faster decisions and optimize loads. Also, AI can be one of the most effective abatement tools for fugitive methane emissions by using satellite and aerial measurements to quantify, map, and predict methane leaks. This approach can revolutionize fugitive emissions abatement by moving from preventive measures to predictive and even descriptive measures.

A successful emissions abatement strategy relies heavily on accurate measurements which can be challenging for companies with complex operations and supply chains. However, the automation capabilities of AI can drastically reduce the margin of error from manual inputs and provide accurate, real-time data to help companies identify where to focus their emissions reduction activities.

Additionally, AI can be used to improve the performance and increase the output of solar photovoltaic (PV) and concentrated solar power (CSP) systems by predicting solar output, reducing corrective maintenance costs, and providing a more accurate forecast of the capacity available to the grid from electric loads that can be turned on or off depending on the balance between electric demand and generation.

With the increase in electric vehicles (EV) adoption, AI-enabled energy demand forecasts will be critical in avoiding peak charges and reducing the burden on the grid. Although AI has many advantages to enable the energy transition, its huge energy footprint remains a challenge as countries plan for future energy needs. The International Energy Agency (IEA) estimated that electricity consumption from data centers could double by 2026 to be roughly equivalent to the electricity consumption in Japan.

Humanizing the energy transition

Since this is the first energy transition in history that is not driven solely by technology metrics, it is critical to ensure that local communities are involved in climate action plans. With disproportionate impacts of climate change around the world, especially in the global South where most countries have historically contributed far less to global emissions, energy equity and climate justice should be at the center of the energy transition. There is a dire need for bridging the climate finance gap and facilitating the flow of funds to the Global South by de-risking investments and regulatory reforms in developing economies. This would also require institutional reforms in the finance sector to move towards new financing mechanisms (e.g., concessional finance, credit guarantee, grants) rather than the unfair, high-interest loans from multilateral banks that have been the main vehicle for energy infrastructure and development projects for decades.

The world has gone through many energy transitions before, but what probably differentiates the current energy transition is that it encompasses multiple energy transitions happening at the same time. There are transformations across the globe in energy generation processes, infrastructure development, energy policy frameworks, environmental laws, and financing mechanisms. While these transformations do not need to happen at the same pace in every region, countries should ensure that the collective energy transition efforts are sufficient to meet our global climate targets. We have enough tools today to shape the next hundred years of energy.

A hundred years ago, participants at the World Energy Congress were probably not as concerned about energy-related climate impacts. However, we know better today about these impacts and how we can meet global energy needs without compromising environmental integrity. In his masterpiece, One Hundred Years of Solitude, Gabriel Garcia Marquez showed us how it took five generations to decipher the prophecy of the Buendia family and their town of Macondo. We have deciphered the energy trilemma, but global action is imperative to navigate the storm and tackle the climate crisis. If we learned anything from Marquez’s magical realism and the fate of the city of Macondo, we should work together to accelerate the deployment of energy and climate solutions that can shape a brighter future for people and planet.

Fellow

Mahmoud Abouelnaga

GeoTech Center

Africa Americas

GeoTech Center

Championing positive paths forward that societies can pursue to ensure new technologies and data empower people, prosperity, and peace.

Explore the program

The post One hundred years of energy transitions appeared first on Atlantic Council.

Amid competing pressures, will Ukraine quit its transit of Russian gas?

Sergiy Makogon and Daniel Stein — Tue, 07 May 2024 18:58:09 +0000

Despite Russia’s ongoing war in Ukraine, Russian gas continues to transit Ukraine on its way to European buyers. By and large, both sides continue to adhere to the 2019 EU-brokered gas transit agreement. Under that agreement, Gazprom is obliged to ship a minimum volume of gas—65 billion cubic meters (bcm) in the first year and 40 bcm in subsequent years—under ship-or-pay conditions. But there has been much speculation about what happens to transit when the 2019 agreement expires at the end of December 2024.

STAY CONNECTED

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

Ukraine’s gas transmission system has traditionally played a major role in delivery of Russian gas to Europe. As late as 2019, transit volume was about 90 bcm, accounting for one half of Russia’s total gas exports to Europe. After Moscow’s full-scale invasion, the continuation of Russian gas transit through Ukraine provided EU member states energy security while also buying them time to arrange for alternative natural gas supplies. And by 2023, the transit volume had fallen to less than 13 bcm, with most of the gas being delivered to Austria, Italy, Hungary, and Slovakia. Other major consumers, including Germany, Poland, and the Czech Republic, have managed to end their dependence on Russian pipeline gas and Russian gas in general, although Russian LNG exports to Europe have continued to rise. But since 2022 the United States has emerged as a main LNG supplier to Europe, accounting for nearly half of total EU LNG imports in 2023 and helping to blunt Europe’s need for Russian LNG.

Of the countries most likely to be directly affected by the expiration of the 2019 agreement, Slovakia and Hungary have been the most vocal in calling for the continuation of Ukraine transit. Italy already has been able to largely replace Ukraine transit gas with LNG and pipeline gas from other sources, including Azerbaijan, and has been silent on the future transit issue. Austria presents a mixed picture. Some Austrian politicians have expressed concerns over its growing dependence on Russian gas, while others have signified their reluctance to break existing supply contracts.

For its part, the EU has expressed the view that there is no need to extend the current transit agreement, although it has not commented on the prospects for transit in the absence of an agreement. This could take the form of capacity bookings by European traders who would take delivery of Russian gas at Ukraine’s eastern border. This possibility has been discussed with little interest for many years until recently, presumably because European traders were not willing to take the attendant risk.

Meanwhile, the view from Kyiv is muddled at best. The minister of energy has completely ruled out future transit, but the prime minister has nixed an extension of the current agreement, while suggesting that transit still might continue under the right circumstances. The head of the Ukrainian gas transit company has similarly expressed willingness to continue transit at least through 2027, the proposed target date for EU countries to phase out imports of Russian fossil fuels.

The arguments in favor of Ukraine continuing to offer transit are weak, premised on the revenue Ukraine earns from transit and concerns over the availability and price of replacement gas. The first concern is overblown. Although Ukraine currently collects about $800 million per year from transit, that does not account for the costs of operating the system. Given the (EU-style) tariff methodology employed by Ukraine, the actual financial benefit is much less, and in the context of Ukraine’s economy, relatively insignificant at 0.46 percent of GDP.

Concerns about replacing Ukraine transit gas are equally overblown. Countries now dependent on Ukraine transit can easily source replacement gas, particularly LNG. Increases in US and Canadian LNG production in 2025-2026 alone would more than replace Russian gas currently being transited via Ukraine.

Meanwhile, the EU has added around 50 bcm of LNG regasification capacity since 2022. Further capacity expected to come online by the end of 2024 will result in total capacity of about 235 bcm, able to meet over 55 percent of European annual gas demand based on the gas consumption average of the last five years.

The argument that the end of transit would lead to much higher gas prices in Europe is likewise questionable. The EU gas market has currently stabilized and returned to its pre-war price range, and Ukrainian transit accounts for only 4 percent of total European demand.

So why the pressure to continue transit once the agreement lapses if Ukraine transit gas can economically be replaced with gas that doesn’t originate in Russia? In the case of Slovakia, and to a lesser extent Austria, purely financial considerations may be at work. The end of Ukraine transit could hit Slovakia hard, since most of the Ukraine transit gas also transits Slovakia through the Eustream pipeline system. However, Eustream has a ship-or-pay contract with Gazprom extending to 2028, obligating payment by Gazprom even in the absence of transit (although force majeure might excuse non-performance). The economic damage to Austria is likely smaller, since it also earns revenue from non-Russian gas transiting its Baumgarten hub.

However, Russia’s continued aggression and the war’s potential to escalate into a NATO-Russia or EU-Russia conflict underline the need for European unity and solidarity, particularly in reducing the export revenues of the aggressor. Billions of dollars in gas revenues from NATO and EU members should not be used to fuel Russia’s military capabilities. In fact, the EU is now considering a complete ban on Russian LNG imports.

Moreover, the continued reliance on Russian pipeline gas gives Russia undue political leverage and creates disunity among EU member states, weakening the West’s overall response to Russian aggression. Ending transit via Ukraine after 2024 would enhance the region’s energy security and diminish Russia’s export income with minimal disruption in gas supplies.

The Ukrainian government may face political pressure from some EU member states to maintain gas transit, with or without an agreement. To counter this pressure, the United States should: (1) discourage its EU allies from continuing to import Russian gas via Ukraine and (2) urge Ukraine to resist this pressure, while also encouraging the EU to support Ukraine in its stance.

Sergiy Makogon is the former CEO of GasTSO of Ukraine (2019-2022).

Daniel D. Stein is a former senior advisor with the Bureau of Energy Resources at the US Department of State.

EnergySource

EnergySource Feb 21, 2024

Two years on, what the Russian invasion of Ukraine means for energy security and net-zero emissions

By Atlantic Council experts

Experts from the Atlantic Council’s Global Energy Center offer perspectives on navigating global energy security and charting a course towards a more secure and sustainable energy future two years after Russia’s full-scale invasion of Ukraine.

Energy & Environment Energy Markets & Governance

EnergySource Dec 13, 2023

The US and NATO must clamp down on Russian fossil fuels to end the war in Ukraine

By Svitlana Romanko and Oleh Savytskyi

The US and its EU allies have made several attempts to diminish Russia’s fossil fuel exports, with mixed results. the West must do more to staunch the flow of Russian oil and gas—and restore peace for Ukraine.

Energy & Environment Energy Markets & Governance

EnergySource Oct 11, 2023

A Ukrainian energy hub will help Europe’s clean transition

By Mark Temnycky

Ukraine can become an energy and minerals hub for European. Investing in Ukraine’s renewable energy industry is vital for European decarbonization.

Energy & Environment Energy Transitions

Learn more about the Global Energy Center

The post Amid competing pressures, will Ukraine quit its transit of Russian gas? appeared first on Atlantic Council.

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

Elena Benaim — Fri, 03 May 2024 20:13:34 +0000

Energy ministers from the Group of Seven (G7) met in Turin, Italy, on the 29th and 30th of April for the first time since the United Nation climate summit in Dubai. Two days of discussion at the Climate, Energy, and Environment Ministerial meeting resulted in a series of shared commitments to address climate change and energy security. The 35-page long joint communiqué includes a historic pledge to phase out coal power plants by 2035.

STAY CONNECTED

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

The commitment of “phasing out coal by 2035 or on a timeline consistent with the 1.5 temperature limit” marks a further step in the direction indicated last year by the UN climate summit, known as COP28, to reduce the use of fossil fuels, of which coal is the most polluting. Mentioning the IEA’s Net-Zero Roadmap report, G7 countries say that “phase-out of unabated coal is needed by 2030s in advanced economies and by 2040 in all the other regions, and that no new unabated coal power plant should be built.” This represents the first agreement on a timeline for phasing out coal after the initiative had previously failed due to opposition by some members. However, it should be noted that, despite the positive step towards a common goal, by using the term “unabated” in the communication, members of the G7 leave open a potential path for the use of coal beyond the indicated timeline.

In addition to the importance of ending coal reliance, it is now widely recognized that the success of the energy transition is linked to a technology-inclusive approach both for reaching climate neutrality and strengthening energy security. The communication of the G7 promotes members’ increasing use of diverse low-carbon energy technologies including renewable energy, energy efficiency, hydrogen, carbon management, storage, nuclear energy, and fusion.

Energy ministers fully committed to the “implementation of the global goal of tripling installation of renewable energy capacity by 2030 to at least 11 terawatts (TW)” and to “double the global average annual rate of energy efficiency improvements by 2030 to 4%,” signaling the intention to create a strong connection with COP28 pledges.

On energy storage, G7 members agreed to a global goal in the power sector of 1500 gigawatts (GW) in 2030, a more than six-fold increase from 2022. Introducing this target for storage is very important to support renewable implementation and ultimately reach the installation capacity target set in Dubai.

The communication highlights the importance for countries to reduce reliance on civil nuclear technologies from Russia and commits to strengthening the resilience of the nuclear supply chain. Countries opting for nuclear energy would work to deploy next generation nuclear reactors.

Fusion made it in the final text with a strong emphasis on the potential of this technology to provide a lasting solution to the global challenges of climate change and energy security in the future, marking an important addition to the G7 joint communication, since in the Hiroshima Communique, fusion was not mentioned.

In order to implement these targets and scale technologies, the G7 countries this year also reaffirmed their commitment to jointly mobilize $100 billion per year until 2025 and their intention to scale up public and private finance. “We stress the need to accelerate efforts to make finance flow consistent with a pathway towards low greenhouse gas emissions and climate-resilient development,” and “we acknowledge that such efforts involve the alignment of the domestic and international financial system.” Attention is now directed toward the upcoming G7 finance meeting, the G20 in Brazil, and the “finance COP” in Azerbaijan.

Finally, convergence and cooperation with countries outside the G7 will play a crucial role in the success of the transition. The joint communication acknowledges that developing countries represent “an important partner in the just energy transition” and recognizes “the great potential of the African continent in becoming a global powerhouse of the future.”

At this year’s energy ministerial meetings, Azerbaijan’s Deputy Minister on Energy Elnur Soltanov (representing the 2024 COP29 presidency), Brazil’s Minister of the Environment and Climate Change Marina Silva (representing the 2024 G20 presidency), and Kenya’s Principal Secretary on Energy Alex K. Wachira, participated along with the G7 partners. This approach shows recognition of the fundamental role that inclusivity plays in a successful transition and the willingness to create strong synergies with the upcoming multilateral forums.

It would be difficult to overstate just how critical pragmatism and convergence are to the energy transition. But this message, in addition to being successfully incorporated in the communication was further reinforced during the Future of Energy Summit, a half-day event hosted by the Atlantic Council Global Energy Center, Politecnico di Torino, and World Energy Council Italy as part of Planet Week on the sidelines of last weekend’s G7 ministerial meeting. Experts and speakers at the Summit emphasized the need to strengthen a technology-inclusive, not exclusive, approach and cooperation among countries.

The IEA’s Net Zero Emissions by 2050 Scenario (NZE) envisages that by 2030, advanced economies would end all power generation by unabated coal-fired plants, making the new G7 historic commitment unfit for purpose. However, the overall success of the transition will not be determined by pledges, but more so by the will of countries to transform pledges into action. Whether G7 countries will be able to succeed in the energy transition will depend on their capacity to create resilient clean energy supply chains, implement diversified energy mixes, promote collaboration with developing countries, scale up public and private finance, and it seems like many steps are being taken in the right direction.

Elena Benaim is a nonresident fellow with the Atlantic Council Global Energy Center.

EnergySource

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.

Central Asia Central Europe

EnergySource Dec 13, 2023

The US and NATO must clamp down on Russian fossil fuels to end the war in Ukraine

By Svitlana Romanko and Oleh Savytskyi

Energy & Environment Energy Markets & Governance

EnergySource Dec 5, 2023

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

By David L. Goldwyn, Andrea Clabough

Energy & Environment Energy Markets & Governance

Learn more about the Global Energy Center

The post G7 pledges to end coal—but only inclusive action will make a real climate impact appeared first on Atlantic Council.

Webster quoted in Recharge News on Chinese wind power dominance

smeadows — Thu, 02 May 2024 14:46:30 +0000

The post Webster quoted in Recharge News on Chinese wind power dominance appeared first on Atlantic Council.

Shaffer quoted in S&P Global on US sanctions on Iran

smeadows — Wed, 24 Apr 2024 15:15:46 +0000

The post Shaffer quoted in S&P Global on US sanctions on Iran appeared first on Atlantic Council.

Natural gas and the energy transition: Security, equity, and achieving net zero

Phillip Cornell — Wed, 24 Apr 2024 13:00:00 +0000

DOWNLOAD PDF

Executive summary

Within the short span of three years, the global economy has needed to contend with the COVID-19 pandemic, subsequent inflation, the Russian invasion of Ukraine, and the impact of that conflict on commodity shortages, rising energy costs, and declining energy security. As a result, short-term reliance on fossil fuels has increased, fewer resources are available for the energy transition, and coordination among regional and global partners has become more complicated. In the longer term, the crisis underscored the dangers of reliance on fossil fuel imports and exposure to price volatility.

All of this augers broadly for accelerating the energy transition. But narrow approaches to the transition run the risk of curtailing existing energy sources before viable alternatives are sufficiently scaled and integrated.

In their crudest form, policies to incentivize investment into decarbonization are based on categorizing energy sources as either “clean” or “dirty”—despite a wide range of emissions implications depending on the particular energy source. In the case of natural gas, the reality is that there are gradations of “clean.”

Alternatives also matter. Gas replacing coal or upgrading older gas-fired turbines to highly efficient modern ones are major wins. But greenfield unabated gas-fired generation will not be sustainable and will often be more costly than the renewable alternative.

Even under a credible net-zero scenario, gas demand will likely persist, both for technical reasons and to create low-carbon fuels like blue hydrogen. In the medium term, natural gas can be part of a solution in which sustainable economic development is a corollary (or prerequisite) to climate action. In developing countries where industrial activities are a source of growth and are particularly effective at addressing poverty, such development can equip societies with the resources and space to address climate concerns.

About the author

Phillip Cornell is a nonresident senior fellow at the Atlantic Council’s Global Energy Center. He is a specialist on energy and foreign policy, global energy markets and regulatory issues, critical energy infrastructure protection, energy security strategy and policy, Saudi Arabian oil policy, Gulf energy economics, and sustainable energy transition policy. He currently leads the global practice for energy and sustainability at Economist Impact, part of the Economist Group.

Webster in The Interpreter: The Kyrgyzstan route facilitating Russia’s invasion of Ukraine

smeadows — Tue, 23 Apr 2024 17:31:01 +0000

Public Event Wed, July 24, 2024 • 2:00 pm ET

The post Webster in The Interpreter: The Kyrgyzstan route facilitating Russia’s invasion of Ukraine appeared first on Atlantic Council.

The flaws in project-based carbon credit trading and the need for jurisdictional alternatives

Byron Swift, Ken Berlin, George Frampton, and Frank Willey — Tue, 23 Apr 2024 16:17:16 +0000

WATCH THE LAUNCH

Effective jurisdictional approaches to forest conservation

Please join the Atlantic Council’s Global Energy Center for the launch of a recent Atlantic Council issue brief, The flaws in project-based carbon credit trading and the need for jurisdictional alternatives.

Energy & Environment

This issue brief highlights several significant, and at times unresolvable, problems with the project-based approach to carbon credit trading, the purpose of which is to reduce deforestation and sequester carbon. Beginning with first-hand observations of the principal author during his experience with forest conservation efforts in the tropics, the brief describes the challenges that arise when this crediting model is implemented in the field, particularly in rainforests and other remote areas of the world. The publication then assesses the three critical structural problems with project-based credit trading that lead to a fundamental lack of integrity in such programs:

The intractable challenges of a project-based regulatory structure involving difficult-to-prove requirements of additionally and leakage prevention.
The major transaction and intermediary costs that can amount to half of project funding.
The credit duration that is far less than the life of the additional CO₂ emissions that are consequently emitted.

The analysis also explains how economic forces and incentives exacerbate these problems, particularly with programs that are carried out by commercial credit traders as opposed to nonprofit entities. Finally, this brief discusses better alternatives, such as jurisdictional programs administered by governments or Indigenous associations, that could more effectively reduce emissions and strengthen the social fabric of communities required to assure credit integrity, accurate measurement, and adequate co-benefits.

download pdf (ENGLISH)

BAJAR EL PDF (ESPAÑOL)

AUTHOR

Byron Swift is an environmental lawyer and senior adviser for wildlands at Re:wild. He has devoted much of his career, over forty years, to conservation issues in Latin America, working in almost all countries with a focus on protected areas, natural resources management, and capacity building of local institutions. An environmental lawyer, he has served as president of Nature and Culture International, founder and president of Rainforest Trust, and head of the US office of the International Union for Conservation of Nature (IUCN). He has also spent a decade working with the Environmental Law Institute on pollution control and trading issues, and has worked on carbon issues since 1996.

CONTRIBUTING AUTHORS

Fellow

Ken Berlin

Senior Fellow

Distinguished Senior Fellow

Chinese Climate Change & Climate Action

Staff

George Frampton

Energy & Environment Energy Transitions

Staff

Frank Willey

Program Assistant

Energy & Environment French

ACKNOWLEDGMENTS

This report was written and published in accordance with the Atlantic Council policy on intellectual independence. The authors are solely responsible for its analysis and recommendations. The Atlantic Council and its donors do not determine, nor do they necessarily endorse or advocate for, any of this report’s conclusions.

Webster quoted in Recharge on how the ‘revolutionary’ new EU trade weapon aims to blunt Chinese wind power

nsinha — Wed, 17 Apr 2024 14:49:48 +0000

David Goldwyn: Energy markets will hinge on Israel’s response

The post Webster quoted in Recharge on how the ‘revolutionary’ new EU trade weapon aims to blunt Chinese wind power appeared first on Atlantic Council.

What Iran’s attack on Israel means for global energy

Atlantic Council experts — Tue, 16 Apr 2024 19:34:36 +0000

Energy markets have shown a muted response to Iran’s unprecedented attack on Israel over the weekend, despite the threat this escalation poses to global oil supplies. But, as Israel weighs its response, the risks to fuel prices and global energy security are extremely high. Our experts comment on what to watch for as tensions rise.

Click to jump to an expert analysis:

Ellen Wald: Will Iran close the Strait of Hormuz?

Brenda Shaffer: Iran-Israel direct confrontation will last months, not days

STAY CONNECTED

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

Energy markets will hinge on Israel’s response

Energy markets have been pretty sanguine about rising tensions in the Middle East for some weeks. This may not last. The baseline assumptions have been that the Strait of Hormuz will remain open because it is in Iran’s interest to keep them open. Trade in liquefied natural gas (LNG) has been rerouted to avoid Houthi attack in some cases, but Qatar has had a fast pass to deliver to market. Even this week, markets were relieved at the ability of Israel and its allies to repel the Iranian drone and missile attack, and continue to assume that Israel’s response will not attack Iranian oil production.

But the key question is what comes next. Pressure in Israel to respond to the Iranian attack is intense. There is a high risk of confrontation with Hezbollah in the north to mitigate the risk of a short-range missile attack on Israel. And the Israelis are not done with their Gaza operation. Iran has taken what it thinks is a well previewed and measured response to Israel’s strike on its consulate in Syria to end the cycle of response, but neither Israel nor the United States can tolerate Iranian attacks on Israel as the new normal.

Key issues to watch in the next two weeks are: 1) what measures the United States and allies will take to try to forestall an Israeli escalation that could lead to a wider war; 2) whether new sanctions on Iran will target insurance clubs, Chinese banks, or both; 3) whether the United States will dramatically increase targeting of Houthi strongholds as a way of reducing the threat to shipping and retaliating against Iran; and 4) whether Israel will exercise restraint, or whether it will trigger a new round of kinetic activity.

At minimum, shipping costs are likely to increase based on the increased risk of military action in the Persian Gulf, pressure on US and European insurance clubs to avoid any transactions—including those with China—that involve Iranian crude and additional rerouting of oil and gas shipments in response to Houthi threats, or Allied responses. Cooler heads in the United States, Europe, Jordan, Saudi Arabia, and hopefully China will try to head off confrontation that will drive oil and gas prices into triple digits. But they may not prevail….

David L. Goldwyn served as special envoy for international energy under President Obama and assistant secretary of energy for international relations under President Clinton. He is chair of the Atlantic Council’s Energy Advisory Group and a nonresident senior fellow with the Council’s Global Energy Center.

Will Iran close the Strait of Hormuz?

As the conflict between Iran and Israel intensifies, the big question is “will Iran close the Strait of Hormuz”? This narrow waterway must be traversed by all ships exiting and entering the Persian Gulf. According to the EIA, about 21 percent of the world’s liquid petroleum (crude oil, condensate and petroleum products) travels through the Strait of Hormuz, making it the most important oil transit chokepoint.

If Iran shut down transit through the strait, oil supplies would be immediately and significantly impacted. Asia would feel the effects most acutely, as 80 percent of the crude oil and condensate that leaves the Persian Gulf through the strait is shipped to Asian customers.

Iran has threatened this action in the past, but never followed through. Iran isn’t likely to close the strait to Saudi, Kuwaiti, Iraqi, and Emirati oil, because if it did, the United States would immediately deploy naval forces to prohibit ships carrying Iranian oil from exiting the Persian Gulf. Iran is completely dependent on revenue from its illicit oil trade, and if it could not export oil, the government would become immediately insolvent.

Even though Iran’s oil is technically under heavy US sanctions, those sanctions are applied on the buyers of Iranian oil, and those buyers have ways of evading sanctions by masking the origin of the oil they purchase. In addition, the Biden administration has not enforced sanctions violations against Iran’s largest customer, China, in ways significant enough to deter Chinese refiners from buying Iranian oil.

Sanctions enforcement and the security of the Strait of Hormuz go hand in hand. If the United States starts enforcing its oil sanctions more strictly and Iran cannot not find buyers for its oil, then Iran could be motivated to close the strait to shipping, because it has nothing to lose. But if sanctions are not as strictly enforced and Iran continues to generate significant revenue from its oil sales, then it will be motivated to keep the Strait of Hormuz open to all shipping.

At the same time, Iran uses revenue from its oil industry to fund terrorism and unrest throughout the Middle East and beyond. Iran isn’t going to close the Strait of Hormuz unless it has nothing to lose. Insurance costs on transporting oil through the Persian Gulf will likely rise, as the potential for an oil tanker to get caught in the crossfire is now more likely. The risk of short-term spikes for oil prices will remain, but the risk of long-term, elevated oil prices owing to a supply shock from the Middle East is still low.

Ellen R. Wald is a nonresident senior fellow with the Atlantic Council Global Energy Center and the co-founder of Washington Ivy Advisors.

Iran-Israel direct confrontation will last months, not days

The Iran-Israel direct confrontation is not over. Currently, the oil market does not correctly reflect the risks to disruption of oil supplies, especially to Iran’s oil production and exports.

Israel will respond to Iran’s April 13 massive aerial barrage. The timing of Israel’s response will depend on when the proper target emerges. States do not pick a date to attack and then look for targets, rather the opposite. When the proper target is identified, the attack will take place.

Iran’s oil production and export is an attractive potential target, because a severe disruption of Iran’s oil infrastructure will be a strategic loss to Iran—and can be accomplished with few human casualties. Yet, clearly the United States would oppose an attack that would reduce Iranian oil exports. The Biden administration wants as many barrels on the market as possible in an election year to keep the global oil prices low, and has not been enforcing US sanctions on Iranian oil exports. Iranian oil production and exports have grown significantly under the Biden administration. In new Iran sanctions that the administration announced on April 18, reference to oil was conspicuously missing.

An illustration of the administration’s tenacity in keeping foreign barrels in the market, Washington asked Ukraine to refrain from attacking Russian oil refineries, despite the effectiveness of these attacks to slow Russia down. If Israel decides to attack Iran’s oil infrastructure, it will likely wait to do it until after the US November elections. Thus, in assessing the impact of the Iran-Israel confrontation on the global oil market, it is important to assess impact over months and not over days.

Iran’s decision to attack Israel from its own territory, and not via proxies as it has done for over twenty years, is exceptional. The regime in Iran is quite calculating and strategic and this decision to attack Israel does not fit its normal mode of behavior. Iran essentially has no modern navy, no serious air defense, and no air force (most of the planes in is inventory were purchased from the United States and France in the 1970s). In this state, it is surprising that Tehran launched the massive aerial attack on Israel, opening itself up to a counterattack. There are two potential explanations to Iran’s decision. One, Iran may be very close to developing a nuclear weapon (or has succeeded), thus has increased confidence, despite its conventional military inferiority. Or, Tehran may have underestimated US support for Israel and the mobilization of most Arab states to challenge the Iranian attack.

Brenda Shaffer is a nonresident senior fellow with the Atlantic Council Global Energy Center.

EnergySource

EnergySource Feb 21, 2024

Escalating Middle East conflict means North America must bolster global energy security

By Julia Nesheiwat

The Houthi attacks on ships in the Red Sea have raised shipping costs and caused delays for certain traded goods. While global energy supply has remained uninterrupted, the threat of a broader conflict in the region raises the chances that there will be disruptive attacks on energy and transport infrastructure, putting energy security at risk.

China Energy & Environment

New Atlanticist Jan 11, 2024

Experts react: What to know about US and UK strikes on the Houthis in Yemen

By Atlantic Council experts

Atlantic Council experts share their insights about the strikes and about what to expect next—including how Iran might respond.

Conflict Crisis Management

Learn more about the Global Energy Center

The post What Iran’s attack on Israel means for global energy appeared first on Atlantic Council.

Shaffer quoted in S&P Global on Iranian oil sanctions

smeadows — Mon, 15 Apr 2024 16:54:40 +0000

The post Shaffer quoted in S&P Global on Iranian oil sanctions appeared first on Atlantic Council.

Goldwyn and Shaffer quoted in S&P Global on Iranian oil sanctions

nsinha — Mon, 15 Apr 2024 13:59:51 +0000

The post Goldwyn and Shaffer quoted in S&P Global on Iranian oil sanctions appeared first on Atlantic Council.

Webster quoted in Il Riformista on Chinese subsidies to its wind sector

nsinha — Wed, 10 Apr 2024 17:55:35 +0000

The post Webster quoted in Il Riformista on Chinese subsidies to its wind sector appeared first on Atlantic Council.

Webster quoted in China Watcher on EU’s crackdown of China’s state-backed wind turbines

nsinha — Tue, 09 Apr 2024 17:49:27 +0000

The post Webster quoted in China Watcher on EU’s crackdown of China’s state-backed wind turbines appeared first on Atlantic Council.

Webster quoted in Politico Europe on Brussels’ new probe into Chinese wind turbines

nsinha — Tue, 09 Apr 2024 17:44:00 +0000

The post Webster quoted in Politico Europe on Brussels’ new probe into Chinese wind turbines appeared first on Atlantic Council.

Ellinas in Cyprus Mail: Coming months will see big price increases at the pumps

nsinha — Sun, 31 Mar 2024 19:16:32 +0000

ORIGINAL SOURCE

The post Ellinas in Cyprus Mail: Coming months will see big price increases at the pumps appeared first on Atlantic Council.

Khakova quoted in Energy Intelligence on Russian energy sanctions

smeadows — Thu, 28 Mar 2024 15:15:30 +0000

The post Khakova quoted in Energy Intelligence on Russian energy sanctions appeared first on Atlantic Council.

Ellinas in Financial Mirror: Egypt’s natgas woes continue

smeadows — Tue, 26 Mar 2024 16:35:00 +0000

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

The post Ellinas in Financial Mirror: Egypt’s natgas woes continue appeared first on Atlantic Council.

Ukraine paves way for green energy future amid Russia’s escalating attacks

Aura Sabadus — Tue, 26 Mar 2024 14:38:33 +0000

In a week when Russia launched some of its most extensive drone and missile attacks against Ukraine’s civilian electricity infrastructure since the start of war, Ukrainian MPs passed a law that could help define the country’s future as one of the biggest suppliers of green energy to Europe. In an historic vote, the Ukrainian parliament lifted restrictions on the export of biomethane, paving the way for a major expansion of Ukraine’s green gas production.

Boasting the largest agricultural landmass in Europe, Ukraine’s biomethane potential is unrivaled across the continent. The country is not only able to produce volumes that could singlehandedly cover the equivalent of a medium-sized European nation’s annual natural gas consumption; it can also do so at prices that are comparatively cheaper than other EU states.

Although Ukraine adopted legislation regulating the production of biomethane last year, it could not realize its full potential because of restrictions introduced at the start of Russia’s full-scale invasion in February 2022. Immediately after the start of war, Ukrainian policymakers imposed a blanket ban on the export of natural gas, fearing the country would be left without supplies to keep the lights on or provide heating to consumers.

While this ban was designed with natural gas in mind, wartime restrictions also extended to biomethane because it is approximately equal to natural gas in quality. As a result, many companies which had invested in producing biomethane using biomass crops had to suspend production or postpone investments as they could not access lucrative European markets.

Stay updated

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.

With restrictions now lifted, biomethane companies are aiming to export the first volumes to Germany by May. Ukraine is expected to develop its own EU-aligned guarantees of origin which will demonstrate compliance with European Union sustainability criteria. These guarantees will then be linked to the EU’s Union Database for Biofuels (UDB), becoming part of the EU’s single market. Although this process may take two years to complete, Ukrainian companies looking to start exports immediately will be able to do so by providing customs-agreed certificates of compliance or proofs of sustainability.

Ukraine’s enthusiastic embrace of biomethane will help the country move further away from its past reliance on Russian gas and coal imports. Crucially, this shift toward green energy will also support Ukraine’s efforts to monetize its agricultural resources in a way that benefits both local producers and European consumers.

Five biomethane refining plants are currently gearing up to produce and export 77 million cubic meters of biomethane this year. Another ten plants are expected to enter commercial operation in 2025, nearly doubling production. As there is keen interest from large international customers to secure more biomethane from Ukraine, there are expectations that output may be scaled up even further to cover 20% of the EU’s biomethane demand of 35 billion cubic meters by 2030. Within 20 years, Ukraine’s annual output could potentially rise to around 22 billion cubic meters, one of the highest expected levels in Europe.

Eurasia Center events

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

Conflict Russia Security & Defense Ukraine

To a significant degree, the Ukrainian biomethane industry’s success depends on its ability to export fuel to Europe. Under current regulations, Ukraine doesn’t subsidize internal production, which means it is only viable if exported to countries which have financial support schemes in place. Beyond that, there are also a number of challenges related to potential opposition from European farmers who may fear Ukrainian competition.

Following the introduction of wartime regulations easing Ukrainian access to EU markets, farmers in a number of EU countries have been pushing for greater import controls on Ukrainian agricultural products. This is forcing European politicians to address domestic agricultural sector opposition while also continuing to support Ukraine in the fight against Russia. Since biomethane production is an emerging industry, Ukrainian and EU policymakers have a window of opportunity to find mutually attractive solutions capable of easing Ukraine into the European single market while preparing farmers to face fair competition.

The most important and immediate challenge that Ukraine faces is the Russian threat to its energy infrastructure. A series of Russian missile and drone strikes in late March represented the largest concentrated attack on Ukrainian energy infrastructure since the start of the full-scale invasion in February 2022. This has added to the comprehensive damage already sustained by Ukraine’s energy infrastructure over the past two years. Ukraine’s new biomethane plants will be dotted across the country, but they will not be completely shielded from similar strikes.

To protect the country’s infrastructure and help Europe secure clean sources of energy, Ukraine urgently needs additional air defense systems in large quantities. Failure to act will endanger more Ukrainian lives and could also undermine Europe’s chances of securing competitively-priced green energy.

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.

Peacemaking through curbing Russian oil and gas exports

Svitlana Romanko and Oleh Savytskyi — Wed, 20 Mar 2024 13:22:59 +0000

Ukraine seems to have found an effective asymmetrical response to the massive waves of deadly missile attacks that Russia has unleashed against Ukrainian cities since early January. A number of Russian oil refineries and oil terminals have been hit with precision strikes, attributed to new Ukrainian long-range drones.

By targeting fossil fuel exports—the financial lifeline of the Kremlin’s regime—this response has had an impact. In January Russia’s seaborne oil product exports fell 8.6 percent from a year earlier and 2 percent from the previous month to 10.8 million metric tons, owing to lower processing capacity and unplanned repairs.

Drone strikes at critical processing and export facilities bring financial pain to Russia. Repairs are costly and time-consuming, especially because of sanctions that limit access to Western technology, which is making the replacement of destroyed equipment difficult.

STAY CONNECTED

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

However, Ukraine’s efforts to repel Russian attacks would be made less challenging if Europe and the United States did even more to throttle Moscow’s oil and gas exports by utilizing the full power of sanctions.

The tragic loss of human life in Ukraine, including hundreds of children, is still too often paid for by cash that Russia receives from the export of oil and gas enabled by loopholes that persist in the sanctions regime imposed on Moscow by the United States and the European Union. Amid the ongoing struggle for peace and sovereignty in Ukraine, governments that believe in the rule of international law must do more. The United States, EU, and the Group of Seven (G7) industrialized nations should be consistent and strict in enforcing sanctions against Russian fossil fuels.

Western governments have strong tools to dry up the Kremlin’s war budget. They can do this by plugging the gaps in sanctions against Russian oil and gas exports, strengthening them further, and thereby severing the critical revenue stream supporting the Kremlin’s oppressive regime and its brutal war machine.

There are five specific actions that the G7 and EU can take in this direction: enforce price caps on Russian oil and oil products; prevent the expansion of Russia’s shadow fleet of oil tankers; close the refining loophole; fully ban Russian liquefied natural gas (LNG) imports; and take decisive actions to reduce demand for oil and gas in the long-term.

Civil society organizations are urging Western leaders to take these steps. More than 290 groups from across the globe addressed the G7 and EU leaders with this call in February, as Ukraine marked the tragic two-year anniversary of the full-scale invasion.

There is an urgent need to eliminate loopholes in sanctions against Russian fossil fuels to prevent further escalation of the Kremlin’s aggression in Europe outside of Ukraine.

The shadow of Russia’s military plans looms ominously. This is evident in the 2024 federal budget, with a staggering allocation of resources to the military-industrial complex, not seen since Soviet times. This is a startling shift in budgetary focus, with a third dedicated to the army. This militarization signifies a perilous path toward conflict intensification, threatening regional stability. In 2024, Russia’s “national defense” budget will expand to 10.8 trillion rubles ($110 billion), marking a 70 percent increase from 2023 and more than doubling from 2022. It is three times higher than the pre-war 2021 allocation.

Regrettably, Europe and the United States inadvertently contribute to this war chest. The refining loophole in Western sanctions against Russian oil exports, meticulously highlighted by Global Witness, remains a massive funding source feeding Russia’s aggression, a fact that should not be overlooked.

While Western governments have banned the imports of crude oil, petrol, diesel, and jet fuel that originate in Russia, their countries can still import refined oil products produced from Russian crude in other nations, like India, China, Turkey, or the United Arab Emirates. In 2023 sales of Russian crude oil to refineries in India went through the roof. These Indian refineries capitalized on selling the refined products to G7 markets, where direct supplies of Russian oil were banned. The refining loophole increases the demand for Russian crude oil and enables higher sales in terms of volume, while keeping its price up. As a result, the price of Russian crude oil does not collapse in the global market even with the Western sanctions.

OPEC members’ decision to restrict exports of additional volumes of oil to world markets benefits Putin, and contributes to Russia’s strategy to weaponize energy supply. The refining loophole also creates a space for cooperation between Russia and OPEC countries, which can import Russian oil to refine or mix it with other blends of crude to conceal origin and profit from it.

Similarly, Europe still buys significant volumes of Russian natural gas, not so much through pipelines, but increasingly in the form of LNG. Key Russian LNG importers such as France, Spain, and Belgium have little excuse for continuing to do business with Russia. The gas storage in Europe is ample, and projections indicate an energy surplus bolstered by record-breaking clean energy expansion and alternative LNG supplies set to come online in 2024.

In total, since the start of the full-scale invasion in Ukraine on February 24, 2022, Russia has amassed more than $650 billion in profits from fossil fuel exports. Yet, if international sanctions on Russia’s fossil fuel industry are maintained and rigorously enforced, the International Energy Agency projects that the Kremlin’s profits from oil and gas could plummet by 40 to 50 percent by 2030.

The West has to act collectively to cripple the Kremlin’s fossil fuel export lifeline to help end the war in Ukraine faster. The future of Ukraine’s security and human dignity hinges on this critical moment of action, and world leaders must take action now to stop funding Russia’s aggression.

Svitlana Romanko, Founder and Director of Razom We Stand

Oleh Savytskyi, Campaigns Manager at Razom We Stand

EnergySource

EnergySource Feb 21, 2024

Two years on, what the Russian invasion of Ukraine means for energy security and net-zero emissions

By Atlantic Council experts

Energy & Environment Energy Markets & Governance

EnergySource Dec 13, 2023

The US and NATO must clamp down on Russian fossil fuels to end the war in Ukraine

By Svitlana Romanko and Oleh Savytskyi

Energy & Environment Energy Markets & Governance

EnergySource Sep 14, 2023

What to do about Russia’s energy trojan horse

By Olga Khakova, Charles Lichfield

The future of Gazprom’s piped deliveries to Europe looks bleak. However, Europe has no binding timeline for phasing out Russia’s growing LNG exports. Reducing these import will be critical to bringing Ukraine closer to victory and for securing Europe’s energy system.

Economic Sanctions Economy & Business

Learn more about the Global Energy Center

The post Peacemaking through curbing Russian oil and gas exports appeared first on Atlantic Council.

Shaffer quotes in the Washington Examiner on Biden’s LNG pause

smeadows — Mon, 11 Mar 2024 20:05:31 +0000

The post Shaffer quotes in the Washington Examiner on Biden’s LNG pause appeared first on Atlantic Council.

Webster quoted in El Economista on China’s electric car potentials

smeadows — Fri, 08 Mar 2024 16:29:26 +0000

Original source

The post Webster quoted in El Economista on China’s electric car potentials appeared first on Atlantic Council.

Webster quoted in VOA Chinese on the mobile intelligence concerns of electric vehicles

smeadows — Thu, 07 Mar 2024 16:23:01 +0000

The post Webster quoted in VOA Chinese on the mobile intelligence concerns of electric vehicles appeared first on Atlantic Council.

Webster quoted in Axios on China’s electric vehicles

smeadows — Tue, 05 Mar 2024 16:26:28 +0000

The post Webster quoted in Axios on China’s electric vehicles appeared first on Atlantic Council.

Ellinas in Cyprus Mail: How natural gas could reduce electricity prices

smeadows — Sun, 03 Mar 2024 15:44:05 +0000

The post Ellinas in Cyprus Mail: How natural gas could reduce electricity prices appeared first on Atlantic Council.

Shaffer quoted in Nikkei Asia on Asian gas exports

smeadows — Sat, 02 Mar 2024 14:45:07 +0000

The post Shaffer quoted in Nikkei Asia on Asian gas exports appeared first on Atlantic Council.

Western Balkans must pursue more competitive energy sectors

Matthew Bryza — Mon, 26 Feb 2024 15:19:14 +0000

European Union (EU) officials are looking ahead to 2030 as a possible target for enlargement into the Western Balkans. In preparation, the leaders of these six aspirant countries (Kosovo, North Macedonia, Serbia, Bosnia and Herzegovina, Montenegro, and Albania) are gauging how strictly Brussels enforces it directives and regulations—with the energy sector particularly important given its significance to economic growth and social stability, and its impact on the climate. Neighboring Bulgaria provides a test case. Although an EU member now for fifteen years, Bulgaria still relies on coal to generate more than half of its electricity and its energy sector remains dominated by inefficient state-owned entities whose lack of transparency provides fertile ground for Russian meddling. Analogous problems also plague energy sectors across the Western Balkans. The European Commission should therefore set an example for EU aspirants in the Western Balkans by pressing Sofia to live up to its commitments to a competitive and efficient energy sector that advances the energy transition and is independent from Russia.

Western Balkan energy: Too little competition, too much coal, and too much Russia

Energy sectors across the Western Balkans are dominated by state enterprises whose non-transparency and mismanagement have hampered competition, enabled Russian meddling, and slowed investments in the energy transition.

Privatizations of electricity networks in Serbia in the mid-2000s and Montenegro in 2009, for example, were marred by allegations of undervaluing state assets to benefit politically connected investors and thereby defrauding state budgets. The European Commission, meanwhile, recently criticized a lack of transparency in access to North Macedonia’s natural-gas transit infrastructure, as well as the country’s illiquid gas market. And concerns about corruption, mismanagement, and environmental degradation regarding the Kalivac hydropower project in Albania have resulted in major delays and cost overruns, with the project ultimately scaled back significantly.

Russia exploits these energy-sector weaknesses for both economic and geopolitical gain. The 2007 Comprehensive Energy Agreement Between Serbia and the Russian Federation, for example, outsources much of Serbia’s energy security and fiscal control to Russia. Under this framework, Russia’s Gazprom Neft acquired 50 percent of shares in Serbia’s national oil company, Naftna Industrija Srbij (NIS), while Gazprom gained 6.15 percent, yielding a controlling stake of 56.15 percent for Russia’s majority state-owned Gazprom group. Moreover, this arrangement grants Gazprom control over NIS revenue payments to the Serbian government that account for approximately 25 percent of national budgetary revenues.

Serbia is also a key player in the Balkan Stream pipeline, an extension of the TurkStream pipeline that exclusively carries Russian gas under the Black Sea to Turkey, then across Bulgaria to Serbia and Hungary. Moscow has pursued this project, previously called South Stream, since 2007 to resist competition from Azerbaijani gas while bypassing Ukraine as a transit route into Southeast Europe.

Today, Balkan Stream reinforces the efforts of both Serbian President Aleksander Vucic and Hungarian President Viktor Orban to balance relations between the EU and Russia.

Meanwhile, governments across the Western Balkans have also failed to make concerted efforts on perhaps the quickest and most cost-effective way to reduce carbon emissions in their countries’ energy sectors: switching from coal to natural gas as a primary fuel for electricity generation.

Though also a fossil fuel, natural gas emits only one-half to one-third the amount of carbon dioxide when burned that coal does. Moreover, switching to natural gas is a cost-effective way to maintain sufficient electricity volumes to sustain economic growth, even as countries muster the massive investments required to transition fully to renewable energy.

Germany provides an illustrative case. For the past four decades, the German government has been a global leader in transitioning to renewable energy under its Energiewende program, through which it has invested hundreds of billions of euros in wind and solar-power technologies, electricity-grid upgrades, and other elements of the green-energy transition.

Germany chose affordability over sustainability, however, when the US “Shale Revolution” took off in 2008, as new horizontal-drilling and rock-fracturing technologies unlocked vast new quantities of natural gas. This large increase in supply caused the price per unit of energy of natural gas in the United States to drop beneath that of coal. As a result, many US electricity companies switched from coal to gas as a primary fuel. This freed up US coal for export, causing its price per unit of energy in Germany to fall below that of natural gas. Many German electricity producers therefore moved in the opposite direction of their US counterparts, shifting back to “dirty” coal. Germany consequently missed its targets under the 1997 Kyoto Protocol for reducing its greenhouse-gas emissions while the United States, which never ratified the protocol, met its Kyoto targets thanks to its increased use of natural gas rather than coal.

Despite Germany’s short-term reembrace of coal but long-standing pursuit of renewable energy, German industry still chooses to depend significantly on natural gas to cover approximately 27 percent of the country’s fuel demand, second only to oil and significantly more than renewables’ share of 16 percent.

Before its full-scale invasion of Ukraine in February 2022, Russia provided 70 percent of Germany’s natural-gas supply. When Russia subsequently slashed those supplies, Berlin did not double down on renewable energy. It instead replaced Russian gas supplies with liquid natural gas (LNG), largely from the United States, after executing an unprecedentedly quick investment program to develop four import terminals to re-gasify LNG and deliver it into Germany’s pipeline network.

Western Balkan countries, however, have so far not chosen to follow Germany’s lead in relying on natural gas as a key transition fuel to a renewable-energy future. As the table indicates, Kosovo, a potential EU candidate country, uses coal for 95 percent of its power generation—primarily lignite, which is locally plentiful but the dirtiest variety of the dirtiest primary fuel. In North Macedonia, coal is responsible for generating 75 percent of the country’s electricity, while the figure is 70 percent in Serbia and 63 percent in Bosnia.

Source: Bankwatch Network

Montenegro and Albania use less coal and more hydropower. Coal is responsible for 43 percent of electricity generation in Montenegro, hydropower provides 47 percent of its electricity, and wind and solar provide the remaining 11 percent. In Albania, hydropower generates 99 percent of the country’s electricity, but the supply is insufficient, which requires electricity purchases from neighboring countries, most of which are generated from coal.*

Many climate activists are pleased that none of the Western Balkan countries relies on natural gas to generate significant volumes of electricity, and they advocate for the EU to press these aspirant countries to jump directly from coal to renewables. This is precisely what Kosovo plans to do. It is difficult to understand, however, how Kosovo will be able to attract the massive investments necessary to generate sufficient volumes of renewable electricity quickly enough to alleviate serious electricity shortfalls and affordably enough to maintain political stability, especially with 40 percent of its population living below the poverty line.

The government of Serbia, in contrast, is planning to increase the role of natural gas in its economy. Serbia has been buying Russian natural gas for decades. It now plans to increase those purchases via the Balkan Stream pipeline. In addition, Bulgaria and Serbia are finalizing a separate gas interconnection that could theoretically provide non-Russian supplies, but in practice may deliver exclusively Russian gas—albeit disguised as “Turkish gas”—via a recent agreement between the state-owned natural gas monopolies of Turkey and Bulgaria.

At the same time, Belgrade is also planning to diversify its supplies of natural gas to try to reduce its dependence on Russia. Serbia thus hopes to purchase Azerbaijani gas via the EU-supported Southern Corridor.

The Southern Corridor consists of the South Caucasus Gas Pipeline across Azerbaijan and Georgia, which then connects with the Trans-Anatolia Pipeline (TANAP) across Turkey, which in turn feeds into the Trans-Adriatic Pipeline (TAP) across Greece and Albania and under the Adriatic Sea to Italy. The Interconnector Greece-Bulgaria (ICGB) will divert gas from TANAP at the Turkey-Greece border and deliver it into Bulgaria; from there it will soon be able to enter Serbia via a new Bulgaria-Serbia interconnection.

Albania is also weighing whether to introduce natural gas into its economy to expand electricity generation in a more cost-effective way than building new hydropower plants, which have sparked sharp environmentalist protests in the past, such as at the aforementioned Kalivac dam project. Thus, the government of Albania is considering whether to develop localized natural-gas grids in two cities, perhaps as precursors for a national natural-gas grid.

North Macedonia, Bosnia and Herzegovina, and Montenegro are also considering significant investments in natural-gas infrastructure. Moscow, however, is working to lock these countries and their neighbors into dependence on Russian natural gas, with Russia now developing seven natural gas power plants, in tandem with Chinese financing and technology, in North Macedonia, Bosnia and Herzegovina, Serbia, and Croatia.

Bulgaria: State monopolies and coal crowd out the private sector and gas

In contrast to plans by five of the six Western Balkan countries to adopt natural gas as a cost-effective way to sustain economic growth and reduce carbon emissions, Bulgaria has been moving in the opposite direction for the past thirty years. Natural-gas consumption has decreased from 7 billion cubic meters (BCM) in 1993 to approximately 3 BCM today. As a result, coal remains the primary fuel for generating 56 percent of Bulgaria’s electricity. In contrast, during the same period, natural-gas consumption increased in Greece from zero to 7 BCM, and in Turkey from 15 BCM to 70 BCM.

To make matters worse, Bulgaria’s electricity system remains so inefficient that 80 percent of the energy released by burning coal in power plants is lost before the electricity reaches customers. This creates a double blow to the EU’s greenhouse-gas reduction targets: excessive use of fuel in general, and over-reliance on the dirtiest fuel, coal.

Bulgaria, like Serbia, consequently consumes more than three times as much energy and emits three times as much carbon per unit of GDP as do the EU’s original member states, which have been consuming significant volumes of natural gas for decades. It is, therefore, no coincidence that the energy intensity of Bulgaria’s economy today is roughly equal to that of Germany and the Netherlands in the 1970s, when they first began to adopt natural gas. Rather than emulating the Netherlands and Germany in switching from coal to natural gas, however, the Bulgarian government continues to subsidize coal-fired electricity, perpetuating decades of non-transparent revenue streams acquired and distributed via state-owned energy monopolies.

Moreover, with the lowest per-capita GDP in the EU, Bulgaria’s energy investments must be affordable, which rules out the enormous capital investments required for a direct jump from coal to renewables. The most cost-effective—and therefore politically sustainable—way for Bulgaria to slash carbon emissions would be to encourage private investment in a shift from coal-fired electricity to natural gas.

Unfortunately, this is not happening. Instead, Bulgaria’s state-owned energy monopoly, Bulgaria Energy Holdings (BEH)—which includes natural-gas supplier Bulgargaz and transmission-system operator Bulgartransgaz—has been crowding out private companies that are eager to invest in Bulgaria’s natural-gas infrastructure.

In 2012, for example, BEH prevented private companies from using Bulgaria’s natural-gas transmission pipelines. The European Commission fined BEH 77 million euros for this anticompetitive behavior. BEH continues to fight that fine in court, while private companies struggle to carve out space to compete with the state monopoly.

Punished for doing the right thing

Bulgaria’s private natural-gas suppliers are under severe financial strain after obeying EU regulations to fill Bulgaria’s underground gas storage (UGS) to 80 percent capacity by November 2022 to ensure security of supply in case Russia cut off gas to the EU following its invasion of Ukraine. This required Bulgarian gas suppliers to buy natural gas last summer at all-time peak prices and inject it into Bulgaria’s natural-gas storage facility at Chiren. Once the winter heating season concluded, natural gas prices in Europe fell to a fraction of the price suppliers paid to fill Bulgaria’s UGS. Normally, Bulgaria’s gas suppliers would have purchased hedges to protect against such dramatic seasonal price shifts. In this instance, however, there appeared to be no reason to do so because the European Commission had directed member-state governments with gas in storage to take “all necessary measures” to protect gas suppliers against such financial losses, as per Regulation (EU) 2022/1032.

Unfortunately, as of February 2024, the Bulgarian government had not yet promulgated the compensation mechanism it promised in accordance with the EU regulation. Private buyers of the stored gas therefore face a brutal financial dilemma: either sell now at enormous losses or hang onto the gas until prices rise, denying them the revenues required to service their loans. Either way, private Bulgarian gas suppliers face a severe liquidity squeeze, which could bankrupt them. As a result, they would likely be unwilling and/or unable to make emergency gas purchases again for this coming winter in case of another supply crisis.

Sofia did, however, extend a highly concessional 400-million-euro loan to Bulgargaz to compensate for some of its unhedged losses. However, the government then rejected requests by the country’s private gas suppliers for an analogous loan. The government’s loan to Bulgargaz would therefore appear to be an example of illegal state aid and another example of the state crowding out private companies in Bulgaria’s energy sector. The European Commission, however, decided to permit the market-distorting example of state aid because of what it terms an “energy” crisis caused by Russia’s sharp curtailment of natural gas deliveries into the EU.

Bulgaria’s nexus among corrupt energy officials and Russia

BEH’s non-transparent and anti-competitive behavior also undercuts the EU’s geopolitical goal of reducing energy revenues on which Russia relies to finance its war against Ukraine.

Bulgaria is infamous for murky ties between its government officials and their Russian counterparts. One former Bulgarian minister of energy, Rumen Ovcharov, is sanctioned under the US Global Magnitsky Act for participating in corrupt deals with Russian natural-gas and nuclear-fuel suppliers, as are Aleksandar Nikolov and Ivan Genov, two former chief executive officers (CEOs) of Bulgaria’s Kozloduy nuclear-power plant.

Today, Russia’s enduring presence in Bulgaria’s energy sector is evident at the country’s most valuable industrial asset, the Neftochim oil refinery in Burgas, which is owned by Russia’s Lukoil. While Bulgaria’s current government may be planning to nationalize and then privatize the refinery via non-Russian investors, its predecessor caretaker government secured a derogation from the EU’s ban of Russian oil imports to feed the refinery until 2027.

Meanwhile, Russia’s role in Bulgaria’s natural-gas sector appears to be growing, thanks to a January 2023 confidential agreement between the state-owned natural-gas monopolies of Bulgaria and Turkey. That agreement, the terms of which were leaked to Bulgarian media and subsequently confirmed by the current Bulgarian government, define a thirteen-year contract that reserves the entire capacity of the gas interconnection between Turkey and Bulgaria for BOTAS and Bulgargaz, locking out all competitors. Moreover, the agreement obligates Bulgargaz to accept any gas from BOTAS without BOTAS having to disclose the origin of that gas, while obligating Bulgartransgaz to deliver that gas to any exit point from Bulgaria via the country’s transmission pipeline system.

These unusual contractual obligations by Bulgargaz and Bulgartransgaz are now reportedly under investigation by the European Commission as potential violations of EU competition rules. The commission is also exploring whether the contract provides a potential “backdoor” for Russian gas to enter the EU even after the EU’s 2027 cutoff date for ending all imports of gas and oil from Russia, a suspicion reinforced by Russian President Vladimir Putin’s proposal to establish what he termed “a Turkish hub for Russian natural gas” during his September 4 meeting with Turkish President Recep Tayyip Erdogan. Erdogan, in contrast, is pressing for a genuine natural-gas trading hub in Turkey, where supplies converge from multiple directions and prices are set by market forces.

Conclusion: Set the right example in Bulgaria for the EU’s enduring integrity

Analogous versions of these Bulgarian energy problems are prevalent across the Western Balkans. They are almost certain to persist as long as government-owned companies dominate these countries’ energy sectors. Although it will take years to eliminate these state-led market distortions, there are significant steps the European Commission can take now in Bulgaria to strengthen private-sector competition, reduce greenhouse-gas emissions, mitigate corruption, and thwart Russian meddling, thereby setting examples for the EU aspirants in the Western Balkans. The European Commission should therefore press the Bulgarian government to:

Encourage the Bulgarian government to end subsidies for coal-fired electricity and instead support increased use of natural gas as a transition fuel to renewable energy, while also creating an operating environment that is conducive to investments in natural gas infrastructure by non-Russian and non-Chinese parties;

penalize the Bulgarian government for illegal state aid that crowds out the private sector and reduces competition, such as the 400-million-euro loan to Bulgargaz;

enforce Regulation (EU) 2022/1032 by insisting that the Bulgarian government finalizes and implements its “necessary measure” to protect against significant financial losses incurred by suppliers that injected gas into storage ahead of the 2022–2023 winter heating season, as required by the European Commission;
and demand the same level of transparency regarding the origins of natural gas at entry points into the EU (such as at the Turkey-Bulgaria border) as the European Commission already requires inside the EU at interconnections between member states.

Taken together, these measures would set a powerful example for political and business leaders across the Western Balkans and stress that they must take seriously the EU’s rules pursuing more transparent, efficient, and competitive energy sectors within its member states, which are are driven by well-governed private companies that invest in the energy transition and are free from Russian influence. Absent such steps in Bulgaria, however, Brussels risks signaling to leaders across the Western Balkans that the reform commitments they make today to secure EU membership can be ignored tomorrow. Such disregard for EU requirements risks undermining the credibility, and eventually even the viability, of the European Union as the world’s premier rules-based organization.

Matthew Bryza was a nonresident senior fellow with the Atlantic Council’s Global Energy Center and the Atlantic Council IN TURKEY. Bryza was formerly the US Ambassador to Azerbaijan. Follow him on X (formerly known as Twitter) @BryzaMatthew.

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

Explore the program

The post Western Balkans must pursue more competitive energy sectors appeared first on Atlantic Council.

Goldwyn quoted in Bloomberg on Venezuelan oil

smeadows — Fri, 23 Feb 2024 18:29:04 +0000

The post Goldwyn quoted in Bloomberg on Venezuelan oil appeared first on Atlantic Council.

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

Ken Berlin, Frank Willey — Thu, 22 Feb 2024 16:39:13 +0000

The International Energy Agency’s (IEA) analysis of commitments to reduce carbon emissions by 2030 made both before and at the United Nations Climate Change Conference (COP28) concludes that the world is on a path to achieving only one-third of the reductions in carbon emissions needed to limit global warming to 1.5 degrees C.

Achieving the needed reductions, according to the IEA, requires reducing fossil fuel emissions and tripling clean energy investments. The need for increased financing is even greater in emerging markets and developing economies. Current investment in clean energy in these markets is around $260 billion per year, but the IEA concludes that around $2 trillion a year must be invested by 2030.

STAY CONNECTED

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

Reducing emissions in developing countries is critical to achieving the goal of net-zero greenhouse gas emissions by 2050. Although developing countries have contributed a very low percentage of historical greenhouse gas emissions, today, they emit nearly half of all greenhouse gas emissions and one-third of energy sector emissions. Failure to provide the needed finance would make achieving the 1.5-degree goal almost impossible.

Historically, the World Bank Group and other multilateral development banks (MDBs) have played the principal role in financing investment and providing guarantees to developing economies. They have supported catalytic projects, built capacity, provided grants, loans, and equity financing and guarantees to the poorest countries. They also developed the concept of blended finance where the public and private sector work and invest together.

Despite these important results, however, the MDBs have not been able to attract a significant level of private investment in developing countries. Their processes are too slow, their financial regulations too narrow, and their bureaucracy too great to attract the needed trillions of dollars of investment that governments cannot afford and that only private investors can provide to reach emission reduction goals. The MDBs are working to reform their processes, but unless they develop innovative new financing structures, their existing structure, mandates, and limitations make it very unlikely that these reforms will sufficiently open the spigot of private investments.

Thus, innovative new approaches and institutions are needed to achieve emission reduction goals. There is a growing consensus that the best way to attract private investment in developing countries is to reduce the real and perceived risks of those investments by providing guarantees at a level that makes projects investment grade in the minds of the private investors. Guarantees provide the most efficient way of leveraging public financing since the cash needed is only the amount necessary to cover expected losses in the investments. Unexpected losses are protected against by balance sheet backups to the cash provided to cover expected losses.

There are many guarantee proposals being considered and implemented. To achieve the needed impact, one or more of the proposals should establish a facility that provides over a ten-year period at least $500 billion in financing guarantees for loans and possibly for equity. Sovereign nations and perhaps very large foundations and private corporations would fund the facility.

This proposal is very ambitious, but not as costly as it sounds. If, for example, the facility concludes that the risk of loss is very high, say 10 percent, the nations providing funding would have to put up $50 billion in cash over a ten-year period, or $5 billion a year. If ten sovereign funds contribute to the facility, each country would have to put up an average of $500 million a year. This is a significant commitment, but a doable amount, particularly given developed countries’ pledges of $100 billion a year in financing to the developing world. Moreover, the facility could ramp up slowly, requiring lower contributions in the early years.

The facility would structure itself to attract private institutional investors by setting up a simple and efficient process of evaluating their investments and approving the guarantees. It would guarantee projects in a portfolio of investments by an investor, setting standards in advance on due diligence, environmental reviews, and involvement of local communities (ESG). Investors would be responsible for conducting due diligence and implementing the standards. The facility would spot check due diligence and implementation, but not conduct its own reviews. It would require a very small fee on investments to raise funds for capacity building in EMDEs.

The facility would comprehensively guarantee all risks necessary to make the project viable, including political and operational risks. It would provide guarantees in the amount necessary to ensure that investors can internally rate a project as investment grade. It would not guarantee currency risks but would work with a partner organization to cover that risk. It would charge interest and fees at very low concessional rates.

This structure would thus allow an investor to make an investment in the manner it normally invests, without additional layers of review, approval, and bureaucracy. Because the guarantees would lower the risk of an investment, investors would be able to provide loans at a much lower interest rate and equity without a premium on return to cover risk. This would lead to more financially viable projects and lower costs to consumers.

Lower interest rates would also significantly contribute to ensuring that the developing world can compete economically since it is cheaper, often much cheaper, in most of the world to generate renewable energy than fossil fuel-based energy. Lower interest rates would also contribute to achieving equity between advanced economies and emerging and developing economies since the cost of investments would converge instead of investments being significantly more expensive in developing countries.

Reaching 2030 carbon reduction targets in developing countries will require support from many different types of financial institutions. Working with Ian Callaghan, the founder of the UK Climate Finance Accelerator, we have proposed, along with co-author George Frampton, distinguished fellow with the Atlantic Council Global Energy Center, a new facility, the emerging market investment compact (EMCIC), that meets all the above criteria. EMCIC or a similar type of facility would complement the financing provided by multilateral development banks and governments and would play a crucial role in enabling developing countries to achieve their carbon reduction goals.

Ken Berlin is a senior fellow and the director of the Financing and Achieving Cost Competitive Climate Solutions Project at the Atlantic Council Global Energy Center.

Frank Willey is a program assistant at the Atlantic Council Global Energy Center.

EnergySource

Meet the authors

Fellow

Ken Berlin

Senior Fellow

Chinese Climate Change & Climate Action

Staff

Frank Willey

Program Assistant

Energy & Environment French

EnergySource Nov 30, 2023

Mobilizing climate finance at COP28: Improving enabling environments in emerging and developing countries

By Robert F. Ichord, Jr.

As nations take stock of national and global efforts to address climate change and finance the clean energy transition at COP28, the dialogue should elevate the issue of how to improve the enabling environments in emerging markets and developing countries.

Economy & Business 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 Oct 4, 2023

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

By Robert F. Ichord, Jr.

Climate Change & Climate Action Energy & Environment

Learn more about the Global Energy Center

The post How to finance net zero in developing economies: Beyond the existing investment framework appeared first on Atlantic Council.

Escalating Middle East conflict means North America must bolster global energy security

Julia Nesheiwat — Wed, 21 Feb 2024 22:18:22 +0000

In recent weeks, attacks on ships in the Red Sea have significantly raised shipping costs and caused delays for traded goods, from hospital supplies to food and clothes. Though the global energy supply is so far uninterrupted, a broader conflict in the region would mean disruptive attacks on energy and transport infrastructure, whether through Iranian naval action or Iranian proxies. North America must prepare itself for a coming crisis in the global energy supply, particularly the United States—where President Biden recently announced his decision to pause the approval of new liquefied natural gas exports.

STAY CONNECTED

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

Red Sea attacks continue to threaten shipping

In November 2023, Houthi rebels began attacking commercial ships in the Red Sea and surrounding waters. The Houthis, a Fiver Shiite political faction and the de facto government of western Yemen, are a US-designated terrorist group closely aligned with Iran. They are targeting commercial vessels as a way to oppose Israel’s war against Hamas. In response, the United States helped launch a multinational naval coalition to safeguard navigation in the Red Sea, and it has since struck Houthi military targets several times. However, this has not yet stopped Houthi attacks.

The Red Sea conflict has forced ships to reroute around the Cape of Good Hope. This has disrupted the trade of commodities, including oil and gas, by raising freight rates, increasing shipping times, and reducing the number of ships available. Despite these disruptions, key oil prices such as the Brent benchmark have not yet spiked. Natural gas prices also remain relatively low, as overall demand is still being mitigated by full European gas stocks, a relatively warm winter in some places, and a slowdown in the Chinese economy and other economies, such as Japan and Germany. According to Reuters, US gas exports have played a key role in maintaining global price stability, especially in Europe, but also in Asia.

However, if the disruption in the Red Sea continues unabated, it will invariably drive up global costs for oil and liquefied natural gas (LNG). Freight rates for oil and petroleum product tankers continue to climb—in some cases by nearly 500 percent since November. Additionally, transport times and costs have gone up for oil and LNG shipments from the Middle East to Europe and Asia.

The near future remains uncertain. A wider conflict in the Middle East capable of physically interrupting oil or gas supply is increasingly likely. Recent press reports claim a war between Hezbollah and Israel may be “inevitable,” which in turn would force Iran to act. Iran’s military could easily disrupt the key shipping routes, forcing many countries to seek out supplies shipped via alternative means, notably from North America.

Iran’s actions will be key to the energy outlook

How Iran would respond to all-out conflict between Hezbollah and Israel remains an open question, but historical trends give no reason for optimism.

Primarily, Iran’s past actions in the Gulf mean more frequent harassment of Western-linked tankers is almost guaranteed. This strategy may have already started. In January, Iranian forces seized a Greek tanker off the coast of Oman, though they claim the seizure was reprisal for US sanctions against Iranian oil. The Iranian military is also building up its capabilities. In December, the Revolutionary Guard announced the establishment of a new, volunteer naval force intended to carry out “deep sea missions.” Iran’s navy is building a drone carrier intended for “long-range strike[s].”

There are two obvious ways for Iran to militarily act: the Iranian navy attacks or seizes commercial ships; or Iran-aligned militias attack a major Gulf energy producer, such as Saudi Arabia. Iran has previously resorted to both tactics.

During the Iran-Iraq War of the 1980s, the Iranian armed forces sank and seized tankers leaving Iraqi ports. In 2019, Iranian-led Houthi forces used drones and missiles to damage an oil processing plant in Abqaiq, Saudi Arabia. In 2021, Houthi rebels carried out a similar attack against a Saudi oil terminal in Jazan. The Houthis also attacked energy facilities in the United Arab Emirates with drones.

Broader conflict would severely impact energy supplies

To what extent Iranian military action would cut off the flow of oil and gas is beyond the scope of this analysis. But the impact on the global economy would be swift, including for major economies like China, Japan, South Korea, Taiwan, and India, who all significantly rely on crude oil, refined products, and LNG from the Gulf states. Altogether, around 25 percent of crude cargoes and 20 percent of LNG cargoes pass through the Strait of Hormuz. The EU also relies on oil imports from the Gulf states although less so than Asian countries.

Any large disruption to the Gulf states would leave North America as the most reliable, significant supply of energy. The United States alone exported 91 million tons of LNG in 2023, ahead of Australia and Qatar, which both exported about 80 million tons. Crude oil exports averaged nearly 4 million barrels per day. By one estimate, up to 40 percent of US LNG exports are destination-flexible, meaning they could be easily redirected to buyers in case of a Middle East supply disruption.

North America must bolster global energy security
Every day, it becomes likelier that there will be an escalation of conflict in the Middle East, particularly between Hezbollah and Israel. Such a war and the ensuing Iranian response would jeopardize the global supply of oil and gas due to trade disruptions not only in the Gulf, but also via the drought-affected Panama Canal, which has seen a drop in trade since November 2023. Countries would be left scrambling and forced to turn to reliable production in the United States, Canada, and Mexico. Altogether, the future of the global energy market may soon depend on how North America chooses to respond. The World Bank has estimated that up to 8 percent of global crude supply would be interrupted in case of a conflict. Such an event would also raise the price of LNG and other commodities. Inaction would be easy, and perhaps even politically expedient, but would further strain supplies. Given the risks, it would be best to allow a full development of North American energy possibilities.

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 former US Homeland Security Advisor.

EnergySource

Meet the author

Fellow

Julia Nesheiwat

Distinguished Fellow

Arabic Climate Change & Climate Action

New Atlanticist Jan 25, 2024

Houthi attacks in the Red Sea hurt global trade and slow the energy transition

By William Tobin, Joseph Webster

Recent attacks on commercial shipping in the Red Sea are a reminder that a major disruption to freedom of navigation would hold many negative consequences.

Economy & Business Energy & Environment

New Atlanticist Dec 20, 2023

What’s behind the attacks on ships in the Red Sea

By Ellen Wald

Houthis have increased drone and missile attacks against commercial ships in the area, and companies are suspending routes through the Suez Canal.

Economy & Business Energy & Environment

Global Energy Agenda Feb 7, 2024

Energy security is global security

By Geoffrey R. Pyatt

The energy transition has been and will continue to be an important element in ensuring our long-term energy security. But for the energy transition to succeed, it must be just.

Energy & Environment Energy Transitions

Learn more about the Global Energy Center

Charles Hendry: Russia’s invasion of Ukraine forced the West to confront lessons unlearned

The post Escalating Middle East conflict means North America must bolster global energy security appeared first on Atlantic Council.

Two years on, what the Russian invasion of Ukraine means for energy security and net-zero emissions

Atlantic Council experts — Wed, 21 Feb 2024 20:17:58 +0000

Russia’s full-scale invasion of Ukraine on February 24, 2022 has reverberated throughout the global energy landscape, significantly impacting both energy security and the ongoing transition towards sustainable energy sources. Swift action is needed to mitigate risks, strengthen resilience, and ensure that energy remains a driver of stability and prosperity in the face of geopolitical uncertainty. Our experts share their insights on the second anniversary of the war.

Click to jump to an expert analysis:

Ellen Wald: US LNG helped keep Europe’s lights on—future resilience isn’t guaranteed

Olga Khakova: Delays in aid to Ukraine could erase energy security wins from the last two years

Robert F. Ichord: Europe reduced Russian energy—but created a solar energy paradox

Joseph Webster: War dims Gazprom’s future as China doubles down on homegrown energy

Jennifer T. Gordon: Nuclear power remains a crucial pillar of global energy security and decarbonization

STAY CONNECTED

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

Russia’s invasion of Ukraine forced the West to confront lessons unlearned

There’s a Winston Churchill quote for every occasion and as he (supposedly) said about energy: “Security comes from diversity and diversity alone.” That’s as true today as it was more than one hundred years ago. The harsh lesson from Russia’s illegal invasion of Ukraine was that Europe had allowed itself to be overly reliant on a single source of gas supply. The actions by European governments since then—and especially Germany—to end that reliance have been extraordinary, but the clear lesson is that we must never again allow such dependence.

The move in the last two years to bolster energy security had led to greater focus on indigenous sources of power and an accelerated commitment to low-carbon sources of generation. And for once, the answer to the questions of what is best for security, for climate, and for affordability is mostly the same —go low carbon. Our governments are rightly focused on how we can enhance our energy resilience, yet still meet our net-zero commitments.

In the longer term, we can also see where the next threat of over-dependence comes from. It is not healthy for the West to be so dependent on China for so much of the low-carbon supply chain—for example, around 90 percent of the lithium chemicals we need for electric vehicles comes from China. Such overreliance is not good for China either, so we need to act now to build up our own industries, to make sure that we have supply chain security. The United States is leading the way on this through the Inflation Reduction Act, and it is now for the EU and UK to respond accordingly.

–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.

US LNG helped keep Europe’s lights on—future resilience isn’t guaranteed

The real story behind European energy security post-Russian invasion of Ukraine is the incredible growth of the US LNG industry. According to the US Energy Information Administration (EIA), the United States exported more liquefied natural gas (LNG) than any other country in the first half of 2023. US LNG exports to European countries in the first six months of 2023 more than doubled compared to pre-war exports in 2021. Without this incredible expansion, both in US LNG exports and in regasification terminals in Europe, the continent would not have been able to reduce Russian natural gas and oil, and maintain electricity and fuel supplies as it did.

The US energy industry’s role in ensuring European energy security cannot be stressed enough—no other LNG exporting country in the world was in the position to expand its exports as rapidly as the United States was when the Nord Stream pipeline was destroyed and sanctions against Russian energy were put into place. For this, among other reasons, the Biden administration’s decision to suspend authorizations for new LNG export terminals must be questioned. If the EU and the US do not foresee an end to the Russia-Ukraine war in the near future, how can Europe continue to secure sufficient natural gas to meet growing energy demands without more LNG from the United States?

Although sanctions against Russian crude oil and petroleum products caused temporary disruptions on the global oil trade, the market has responded in resourceful ways. Without European countries to purchase their crude oil, Russia expanded sales to China and opened a new market in India. According to data provided by TankerTrackers.com, India has become the second largest importer of Russian crude oil and the largest importer of Russian seaborne crude oil. In 2023, India imported an average of 1.7 million bpd of Russian crude oil, whereas prior to the invasion of Ukraine it imported next to none. Countries like India and Turkey have found new business opportunities importing Russia crude oil and refining it into petroleum products that European customers are eager to purchase. Russia has also developed its own shipping fleet and insurance network to work around the US-EU price cap policy that is designed to limit their oil revenue.

Two years later, it can be concluded that the energy sanctions and price cap policies are not hurting Russian revenue significantly enough to impact its ability to wage war in Ukraine. As US policymakers consider whether to continue aiding Ukraine, the efficacy of these sanctions and price cap policies should also be examined. At the same time, the resiliency of the global energy oil market to accommodate such major changes without incurring serious shortages should be applauded.

–Ellen R. Wald is a nonresident senior fellow at the Atlantic Council Global Energy Center and the president of Transversal Consulting.

Delays in aid to Ukraine could erase energy security wins from the last two years

For two years, Russia has carried out indiscriminate, exceptionally cruel attacks on Ukraine’s civilian energy infrastructure. Included in these attacks have been acts of ecocide, such as the destruction of the Kakhovka Dam. However, Ukraine’s energy system and the sector workforce have showcased unparallel resilience and innovation in withstanding Moscow’s aggression, with robust technical, financial, and capacity support from the allies.

Beyond Ukraine, the war also profoundly and rapidly reshaped energy throughout Europe. Europeans have optimized homegrown production and efficiency measures to reduce reliance on imports, built out additional interconnectors to secure alternative energy supplies, and spent billions to minimize economic hardships on businesses and households.

As the war drags on, the West must learn to see Ukraine not as a charity case—but as a symbiotic energy partner contributing to European energy security and decarbonization. Ukraine offers important lessons in repelling cyber security attacks, fixing destroyed energy infrastructure, operating energy markets under volatile conditions. It also has valuable expertise in oil and gas, renewables, and civil nuclear energy. Ukraine has integrated into the European electricity market in record time, houses a critical gas storage system that is currently utilized by European gas traders, and is taking bold steps on reform and regulatory changes necessary for EU integration. However, these advantages are at high risk. War and political uncertainties are keeping new large-scale investments away; human capital shortages are placing additional strains across all levels of Ukrainian systems; and the delay in aid from the United States is impacting the recovery and defense of Ukraine’s energy generation. Western support is needed more urgently now than ever to ensure that Ukrainians can continue defending European territories, democratic values, and energy security.

–Olga Khakova is the deputy director for European energy security at the Atlantic Council’s Global Energy Center.

Europe reduced Russian energy—but created a solar energy paradox

The war in Ukraine has spurred profound changes in Europe’s energy system and fostered concerted efforts like REPowerEU to improve energy security. Not only has it reoriented and reduced dramatically Europe’s gas supplies from Russia and cut gas consumption, but it has boosted Green Deal transition efforts to develop renewable and zero-carbon energy (including nuclear) and improve energy efficiency. It has motivated the forging of stronger energy links both among European countries and with the United States, which supplied about 50 percent of the EU’s LNG imports in 2023.

But in doing so, these overall efforts have created a paradox. The rapid growth in solar energy that is reported to be 40 per cent higher in 2023 than the 41 GW of solar added in 2022, has made the EU dependent on China for over 95 percent of its solar photovoltaic (PV) modules and threatens domestic EU manufacturers due to the much lower price of Chinese modules. Renewables constituted 23 percent of the EU primary energy consumption in 2022, of which solar was about 6 percent and was the fastest growing share providing 12 percent of EU electricity in the summer months. The EU Council has raised the binding target to 42.5 percent in 2030 with the ambition to achieve 45 percent. The EU Solar Strategy aims to increase solar PV capacity to 320 GW by 2025 and up to 600 GW by 2030, compared with 260 GW in 2023.

The EU and its member governments are debating various options to increase domestic solar PV production and limit imports from China. There is some consensus on setting a 40 percent non-binding self-sufficiency target but there are divergent interests between the domestic manufacturing companies and installers and assemblers of systems. Faced with a similar situation, the US placed high tariffs on Chinese modules, diversified suppliers and temporarily waived tariffs on imports from Southeast Asia and provided credits for solar PV manufacturing under the Inflation Reduction Act. Such an approach by Europe would be expensive for Europeans, who are already experiencing high costs of energy. In his February 12 speech to the European Parliament, EU Council President Charles Michel stressed the importance of energy affordability in efforts to improve EU energy security, noting that EU energy prices were 4.5 higher than its main competitors.

But there is a path for reducing dependence on China’s solar supply chain. The market is currently flooded with solar PV panels as Chinese manufacturers overproduced in 2023 and European companies imported more than they installed. Stockpiling panels, for example, could be part of a less expensive strategy for reducing vulnerability to market manipulation or politically inspired supply cutoffs. Although the energy security implications from this growing dependence on Chinese solar panels are quite different from Russia’s use of gas as a political weapon against Europe, current overall geopolitical and trade tensions with China suggest that China’s global market monopolization of this important energy technology requires serious consideration and coordination among Western allies.

–Robert F. Ichord, Jr., is a nonresident senior fellow with the Atlantic Council Global Energy Center.

War dims Gazprom’s future as China doubles down on homegrown energy

Russian gas giant Gazprom will never recover from Putin’s invasion of Ukraine. Gazprom’s exports to Europe stood at just 28 billion cubic meters (bcm) in 2023, down from 200 bcm in 2019, before the invasion and COVID. The Russian pipeline export monopolist is exceedingly unlikely to offset this loss of demand via other markets, including China, as its long-planned Russia-to-China Power of Siberia-2 pipeline has gained little traction since the invasion despite Gazprom’s desperation to clinch a deal. The reasons for the delay are manifold and include high interest rates, financing disagreements, elevated steel costs, and geographic realities.

Perhaps more importantly, Putin’s invasion and the resulting shock to global energy prices reinforced Beijing’s energy security anxieties. China is constructing massive amounts of renewables while also doubling down on coal plant construction (although throughput across its coal fleet will likely decline in future years). China added nearly 300 gigawatts of wind and solar capacity in 2023 and could very well replicate that pace—or even accelerate it—for another decade. Chinese deployment of clean electricity generators, paired with batteries, heat pumps, hydrogen (eventually)—and, incongruously, coal—is sharply reducing its need for Russian natural gas. In sum, while Putin may yet prevail in Ukraine, Gazprom’s exports will almost certainly never approach pre-war volumes.

–Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center and editor of the China-Russia Report. This article represents his own personal opinion.

Nuclear power remains a crucial pillar of global energy security and decarbonization

From the earliest days of Russia’s brutal invasion of Ukraine in February 2022, nuclear energy has been a flashpoint in the war. Russia shelled and subsequently occupied the Zaporizhzhia Nuclear Power Plant, and a key part of the response from the US government and non-governmental organizations has focused on efforts to provide relief to Ukrainian nuclear power plant workers.

Even while under attack, Ukraine has recognized that the nuclear energy sector is a crucial part of its power sector, its ability to rebuild its industrial sector, and its long-term economic prosperity. Even with the loss of the Zaporizhzhia Nuclear Power Plant, roughly “55 percent of all electricity production in Ukraine is still from [nuclear reactor] units at Khmelnytskyi, Mykolaiv and Rivne.” Furthermore, Ukraine has ended imports of nuclear fuel from Russia and has relied on US-based Westinghouse Electric Company for its nuclear fuel needs. With an eye toward eventual reconstruction in Ukraine, US Special Presidential Envoy for Climate John Kerry and Ukraine’s Minister of Energy German Galushchenko announced in November 2022 “a two-to-three-year pilot project aimed at demonstrating the commercial-scale production of clean hydrogen and ammonia from small modular reactors in Ukraine using solid oxide electrolysis.”

Ukraine’s regional partners—especially Poland and Romania, which are deeply involved in Ukraine’s energy future—also understand the extent to which the nuclear energy industry must play a crucial role in Ukraine’s reconstruction. Romania is currently the only country in Central and Eastern Europe that is operating North American reactors, with its Canadian CANDU reactors having generated electricity since 1996. Romania also plans to build a first-of-a-kind small modular reactor, in partnership with the United States. Poland is dedicated to establishing a civil nuclear program, with plans for large lightwater reactors and small modular reactors.

Finally, Russia’s unprovoked war in Ukraine has had a major impact on the global nuclear energy industry. Problems that may have been papered over prior to February 2022 have been brought to the fore. For example, US and global dependence on Russian enrichment and conversion capabilities for nuclear fuel is finally being addressed as the US has started ramping up domestic capacity for enrichment and conversion. However, more remains to be done. As Russia continues to make inroads into emerging markets for nuclear energy technologies, the United States and its allies must redouble their efforts to outcompete Russia, in order to ensure that new-to-nuclear countries are able to uphold the highest standards of safety, security, and nonproliferation.

–Jennifer T. Gordon is director of the Atlantic Council Global Energy Center’s Nuclear Energy Policy Initiative.

EnergySource

European Energy Security Dec 7, 2023

Energy security as the foundation for Ukraine’s formula for peace

By German Galushchenko

Rebuilding Ukraine’s energy sector in line with the world’s best practices in sustainable development and decarbonization will help to finally break the grip of the fossil fuel dictatorship and strengthen the new energy model of the world.

Energy & Environment Energy Transitions

EnergySource Oct 11, 2023

A Ukrainian energy hub will help Europe’s clean transition

By Mark Temnycky

Ukraine can become an energy and minerals hub for European. Investing in Ukraine’s renewable energy industry is vital for European decarbonization.

Energy & Environment Energy Transitions

EnergySource Oct 16, 2023

Policy Memo: How to deepen transatlantic energy and climate cooperation at the US-EU summit

By George Frampton, Olga Khakova, Joseph Webster, Paddy Ryan, Maia Sparkman, William Tobin

Energy & Environment Energy Markets & Governance

Learn more about the Global Energy Center

The post Two years on, what the Russian invasion of Ukraine means for energy security and net-zero emissions appeared first on Atlantic Council.

Ellinas in Cyprus Mail: From catastrophe to salvation for Cyprus electricity users

smeadows — Mon, 19 Feb 2024 18:41:05 +0000

The post Ellinas in Cyprus Mail: From catastrophe to salvation for Cyprus electricity users appeared first on Atlantic Council.

Shaffer featured in Reuters on IEA’s clean energy initiatives

smeadows — Thu, 15 Feb 2024 14:55:10 +0000

The post Shaffer featured in Reuters on IEA’s clean energy initiatives appeared first on Atlantic Council.

Global Energy Agenda full survey results

Nancy Messieh — Thu, 15 Feb 2024 03:13:11 +0000

Global Energy Agenda full survey results

Survey questions

Demographic data

Global Energy Agenda

Nov 30, 2023

The 2024 Global Energy Agenda

By Landon Derentz, Christine Suh, Paul Kielstra (Editors)

The fourth edition of the Global Energy Agenda kicks off with a collection of essays by energy leaders that are rolling out during COP28. Rounding out the Agenda in early 2024, the Atlantic Council Global Energy Center will release the results of its annual survey of experts that takes the pulse on the geopolitical risks affecting energy markets, the future of fossil fuels, and the transition to clean energy.

Energy & Environment Geopolitics & Energy Security

The post Global Energy Agenda full survey results appeared first on Atlantic Council.

Nesheiwat in Press News Agency: The escalating battle within the Center East and its impression on world power safety

smeadows — Thu, 08 Feb 2024 17:24:07 +0000

orginal source

The post Nesheiwat in Press News Agency: The escalating battle within the Center East and its impression on world power safety appeared first on Atlantic Council.

Shaffer joins S&P Global to explore the Houthi attacks, oil supply, and US response

smeadows — Mon, 05 Feb 2024 19:34:31 +0000

The post Shaffer joins S&P Global to explore the Houthi attacks, oil supply, and US response appeared first on Atlantic Council.

Ellinas in Cyprus Mail: Cronos’ time has come if right decisions are made

smeadows — Mon, 05 Feb 2024 17:18:41 +0000

The post Ellinas in Cyprus Mail: Cronos’ time has come if right decisions are made appeared first on Atlantic Council.

Gordon and Derentz in the Oxford Institute for Energy Studies: United States nuclear policy, small modular reactors, and global energy security

smeadows — Mon, 05 Feb 2024 14:48:27 +0000

Original source

The post Gordon and Derentz in the Oxford Institute for Energy Studies: United States nuclear policy, small modular reactors, and global energy security appeared first on Atlantic Council.

Khakova joins DW to discuss effects of US LNG permitting pause

smeadows — Sat, 03 Feb 2024 15:20:38 +0000

The post Khakova joins DW to discuss effects of US LNG permitting pause appeared first on Atlantic Council.

Schaffer quoted in Foreign Policy on LNG politics, economy, and supply

smeadows — Thu, 01 Feb 2024 20:46:16 +0000

The post Schaffer quoted in Foreign Policy on LNG politics, economy, and supply appeared first on Atlantic Council.

Tobin and Webster quoted in El Economista on global energy trade in the Arabian Gulf states

smeadows — Fri, 26 Jan 2024 15:49:22 +0000

The post Tobin and Webster quoted in El Economista on global energy trade in the Arabian Gulf states appeared first on Atlantic Council.

Wald in MarketWatch: The LNG boom Is a great American success story. Don’t end it now.

smeadows — Thu, 25 Jan 2024 19:52:34 +0000

The post Wald in MarketWatch: The LNG boom Is a great American success story. Don’t end it now. appeared first on Atlantic Council.

Webster in The Interpreter: Can China use offshore wind to break its reliance on foreign LNG and coal?

smeadows — Thu, 25 Jan 2024 17:09:01 +0000

The post Webster in The Interpreter: Can China use offshore wind to break its reliance on foreign LNG and coal? appeared first on Atlantic Council.

How Europe can escape its structural energy weakness amid great power competition

Ben Judah, Tim Sahay, Shahin Vallée, and Francis Shin — Thu, 25 Jan 2024 13:30:00 +0000

download pdf

Europe faced a perfect storm in 2022, with the invasion of Ukraine upsetting the post war security order, massive disruption in energy supplies especially coming from Russia undermining the backbone of Europe’s energy system and growing geopolitical rivalry, in particular between the US and China that crippled further the world trading system on which Europe relies for its economic growth. This is but the latest episode of Europe’s failure to insulate itself from the geopolitics of energy, a position of great vulnerability akin to a “Permanent Suez” crisis. The European response to double down on the energy transition and accelerate the decarbonization of its economies is sensible and necessary. It is also the only response that leads to a more secure and prosperous Europe.

Devoid of large fossil fuel and mineral resources, the continent is dependent on an arc of authoritarian energy powers, across central Asia, Africa and the Middle East. These toxic relationships, necessary to fuel the European economy, have repeatedly threatened European domestic politics, international security and wealth, culminating with the Russian war in Ukraine. In that light, Europe’s decarbonization policies can serve as more than climate policy, but also a security and foreign policy. Europe’s strategy in this energy transition will hinge on its ability to overcome five internal problems:

The Fiscal problem: The European Union’s fiscal rules and limited budget limit the necessary financing Europe’s energy transition requires.
The Hostage problem: Anti-transition interest groups continue to hold national politics hostage.
The Collective Action problem: National veto players at the European level can hold the entire Bloc back.
The Just Transition problem: The energy transition creates winners and losers, and the latter need to be compensated fairly, as exemplified by the “Gilets Jaunes” protests.
The Industrial problem: Europe’s industrial base, green or otherwise, is increasingly challenged outside its borders.
The Multilateral problem: Europe will need to support decarbonization outside its own borders, and in particular in less-developed countries.

Europe will need to completely overhaul its economic, trade and fiscal policies if it is to find a sustainable place in this new order. The race for critical minerals, of which Europe is once again bereft, will force European policymakers to redefine their relationships with mining states, while learning from the mistakes of the past. Further down the value chain, Europe risks massive deindustrialization if it fails to compete with Chinese and American firms. Finally, the Bretton Woods institutions that have governed global financial markets need to be reformed to unlock climate financing for less-developed States. This is a tall challenge that will require leaning on the US as much as possible.

Europe has entered the race to “net zero” from a position of weakness, and will need to reform internally and chart a path between the United States and China so as to avoid confrontation. Europeans should find an arm-length relationship that allows creating a Critical Minerals Club with the United States, reassure China about the scope of its economic de-risking and push hard for reforms international financial institutions, and push for a global “green” spending target as a percentage of GDP. This is an arduous path, but the only one which ensures Europeans a secure and prosperous place in the new world order.

About the authors

Ben Judah is director of the Transform Europe Initiative and a senior fellow at the Atlantic Council’s Europe Center. His current research focus is on the European consequences of Russia’s invasion of Ukraine, transnational kleptocracy, European energy and decarbonization politics, and Britain’s attempts to reset its diplomatic posture after Brexit.

Shahin Vallée is a senior research fellow in DGAP´s Center for Geopolitics, Geoeconomics, and Technology. Prior to that, he was a senior fellow in DGAP’s Alfred von Oppenheim Center for the Future of Europe.

Tim Sahay is a nonresident senior fellow at the Atlantic Council’s Europe Center and the senior policy manager at the Green New Deal Network, a coalition of labor, climate, and environmental justice organizations growing a movement to pass national and international green policies.

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

Ellinas in Financial Mirror: US LNG exports to see further growth

smeadows — Sun, 21 Jan 2024 20:01:38 +0000

The post Ellinas in Financial Mirror: US LNG exports to see further growth appeared first on Atlantic Council.

Ellinas in Finacial Mirror: No end in sight for fossil fuels

smeadows — Sat, 20 Jan 2024 19:58:49 +0000

The post Ellinas in Finacial Mirror: No end in sight for fossil fuels appeared first on Atlantic Council.

Wald featured in Bloomberg Surveillance podcast discussing potential for oil supply risk amid recent Houthi attacks and avoiding the Red Sea

smeadows — Fri, 05 Jan 2024 20:35:21 +0000

The post Wald featured in Bloomberg Surveillance podcast discussing potential for oil supply risk amid recent Houthi attacks and avoiding the Red Sea appeared first on Atlantic Council.

Wald quoted in Bloomberg on the potential disruption to the oil trade amid Red Sea attacks

smeadows — Fri, 05 Jan 2024 16:23:03 +0000

The post Wald quoted in Bloomberg on the potential disruption to the oil trade amid Red Sea attacks appeared first on Atlantic Council.

Wald and Shaffer quoted in S&P Global Commodity Insights on Iranian sanctions, ties to Houthis, and crude oil supplies

smeadows — Fri, 29 Dec 2023 16:54:36 +0000

The post Wald and Shaffer quoted in S&P Global Commodity Insights on Iranian sanctions, ties to Houthis, and crude oil supplies appeared first on Atlantic Council.

Wald featured in Bloomberg Surveillance podcast discussing global oil markets in Middle East geopolitics

smeadows — Thu, 28 Dec 2023 16:08:10 +0000

The post Wald featured in Bloomberg Surveillance podcast discussing global oil markets in Middle East geopolitics appeared first on Atlantic Council.

Sullivan quoted in Business Day on oil trade and traffic in the midst of Houthi attacks

smeadows — Wed, 20 Dec 2023 16:46:09 +0000

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

The post Sullivan quoted in Business Day on oil trade and traffic in the midst of Houthi attacks appeared first on Atlantic Council.

Wartime Ukraine’s European energy integration continues

Aura Sabadus — Tue, 19 Dec 2023 21:32:29 +0000

The EU’s decision to open membership talks with Ukraine on December 14 was an historic win for Kyiv, but it was not the only piece of encouraging news received that day. A few hours before EU leaders agreed to launch accession negotiations, Ukraine was invited to join Europe’s leading electricity infrastructure association as a full member, gaining a voice in discussions that will shape the EU’s energy vision in the years to come.

Ukraine’s electricity grid operator, Ukrenergo, will become the fortieth member of the European Network of Transmission System Operators for Electricity (ENTSO-E) on January 1, 2024. In this new role, it will contribute alongside other members to drafting strategies designed to boost the security, resilience, and reliability of the continent’s connected power systems.

It is highly symbolic that Ukraine’s breakthrough to full ENTSO-E membership should come on the same day as the landmark agreement to begin EU membership talks. Ukraine’s European energy sector integration got underway just hours before the launch of Russia’s full-scale invasion on February 24, 2022, when the country unplugged its energy grid from the old Soviet system. This process has continued in parallel with the country’s EU integration, despite the unique challenges created by Europe’s largest invasion since World War II.

Wartime Ukraine’s energy sector pivot toward Europe has been little short of remarkable. The country’s electricity infrastructure has been targeted by Russian drone and missile attacks ever since the start of war, making Ukrenergo’s fight to keep the lights on even harder as it has transitioned from the legacy Soviet grid to synchronising with the EU.

During twenty-one months of air strikes and bombardments, Russia has destroyed more than half of Ukraine’s thermal power generation capacity and transmission lines, damaged or occupied 90 percent of its wind farms, and taken over the Zaporizhzhia nuclear power plant, the largest in Europe. While the current winter season has yet to witness a repeat of last year’s intensive bombing campaign targeting Ukraine’s civilian energy infrastructure, the threat of further large-scale attacks remains.

Stay updated

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.

In addition to guarding its civilian energy infrastructure against Russian air strikes, Ukraine must also navigate the further integration of its electricity market at a time when the EU itself is making an historic transition of its own from fossil fuels to cleaner forms of energy. Closer cooperation with Romania may help. Deepening energy sector partnership between Kyiv and Bucharest would not only boost regional security and facilitate a smoother energy transition, but could also pay economic dividends.

Romania has already offered Kyiv significant support last year, exporting electricity and helping to stabilize the Ukrainian system when Russian airstrikes plunged much of Ukraine into darkness. Bucharest has also helped Moldova, which synchronized with the European grid together with Ukraine last year, but whose electricity supplies were caught in the Russian crossfire. The three countries could now build on this relationship in a way that would be mutually beneficial.

The bulk of Romanian power generation is concentrated in the southeastern Dobrogea region of the country, with an excess of renewable output which cannot be easily transported to other regions. Unless major investments are made to reroute flows northwards, Romania will not be able to build additional offshore wind capacity in its share of the Black Sea region.

One option would be to export some of the excess generation to decongest the system. Southern Ukraine’s Odesa region, which shares a border with Romania, has a supply deficit and needs to import electricity to cover demand, particularly in a postwar scenario where its industrial base would need to be rebuilt. Meanwhile, nearby Moldova has historically depended on electricity generated in the country’s Kremlin-controlled Transnistria province and would benefit from ending this reliance.

Eurasia Center events

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

Conflict Russia Security & Defense Ukraine

Prior to the Russian invasion of Ukraine, there had been discussions to build a 120 kilometer high-voltage overhead line linking Isaccea in Romania to Prymorske in the Odesa region. If these plans were resurrected, the project could help establish an interconnection capacity of up to 1,200 megawatts. This would have the potential to power around two million homes in Ukraine and possibly also supply Moldova, while helping Romania to decongest its Dobrogea region. The project could be part of a broader vision to regenerate the northwestern part of the Black Sea coast.

Romania, Moldova, and Ukraine are also linked through the Trans-Balkan corridor, a major gas transmission artery previously used by Russia to transport gas to southern Europe. This route has remained largely idle since 2020 after the Kremlin decided to reroute supplies via its new TurkStream pipelines to Turkey. Efforts to make the most of the Trans-Balkan corridor are now gaining momentum. In December 2023, Ukraine and Moldova announced plans to join a vertical gas corridor that would give companies the possibility to receive gas from international markets in Greece before exporting it to Ukrainian underground storage facilities via Bulgaria, Romania, and Moldova.

The Trans-Balkan corridor is of major importance not only because it can link southern Europe to Ukraine and Moldova, but also because by 2027 it should be in a position to start transporting larger quantities of gas produced in the Romanian Black Sea offshore zone. In the longer term, the three countries could also establish an energy research center focusing on offshore natural gas or wind output and adapting electricity and gas transmission infrastructure to accommodate cleaner forms of generation. A Black Sea energy production and research cluster would not only provide greater supply security to this part of Europe, but also help Ukraine, Romania, and Moldova deepen their integration and regenerate their economies.

With no end in sight to the Russian invasion in Ukraine, talk of regional energy transformations may seem overly ambitious. However, Ukraine’s remarkable wartime progress toward European energy sector integration is a reminder that major developments remain realistic.

smeadows — Tue, 19 Dec 2023 16:17:35 +0000

The post Wald featured in Bloomberg Surveillance podcast discussing the impacts of the Red Sea attacks on the global oil market, commercial transportation alterations, and responses to Houthi attacks appeared first on Atlantic Council.

Sullivan quoted in Al Jazeera on what the Houthi attacks mean for the oil market

smeadows — Sat, 16 Dec 2023 16:31:18 +0000

The post Sullivan quoted in Al Jazeera on what the Houthi attacks mean for the oil market appeared first on Atlantic Council.

The US and NATO must clamp down on Russian fossil fuels to end the war in Ukraine

Svitlana Romanko and Oleh Savytskyi — Wed, 13 Dec 2023 14:35:07 +0000

Last Wednesday, Russian President Vladimir Putin landed in the United Arab Emirates for a short visit before heading to Saudi Arabia. His trip outside of Russia, a rare occurrence since Russian forces began their full-scale invasion of Ukraine in February 2022, is evidence that Putin is strategically wielding his country’s influence among OPEC+ nations—this at a time when the United States and European Union are attempting to tamp down Russia’s fossil fuel exports that help fund its war. Efforts to do so have yielded mixed results, and with Russia’s military budget set to dramatically increase in 2024, the West must do more to staunch the flow of Russian oil and gas—and restore peace for Ukraine.

The connection between Russia and oil-and-gas-producing countries in the Middle East has undeniably strengthened in the nearly two years since the invasion of Ukraine and Russia’s hybrid energy warfare against Europe began. Following the imposition of a price cap on Russian oil by the Group of Seven (G7) and the subsequent reluctance of most Western nations to consume Russian crude, international traders seeking unhindered dealings with Russia flocked en masse to Dubai.

But preventing financial actors from capitalizing on these resources is imperative. Attempts to do so thus far have largely been thwarted. International sanctions on Russian exports of fossil fuels—its primary financial resource—aimed to deal an economic blow to the Kremlin. Initially impactful, these measures soon faltered due to various loopholes and insufficient enforcement, rendering them ineffective, with Russian fossil fuels ending up in unexpected places. Investigations by the Washington Post and Project on Government Oversight reveal that shipments of Russian oil have continuously made their way to a refinery that supplies fuels to US military bases in the Mediterranean Sea. And, as the authors found in their report, “The carbon war: Accounting for the global proliferation of Russian fossil fuels,” the share of tax proceeds from fossil fuel exports in Russia reduced this year but still represents nearly a third of all federal income.

Since February 24, 2022, Russia has amassed around $600 billion in profits from fossil fuel exports, and is rushing to develop Siberian and Arctic fields. If, however, international sanctions on Russia’s fossil fuel industry remain in place and are rigorously enforced, the International Energy Agency projects that the Kremlin’s profits from oil and gas could plummet by 40 to 50 percent by 2030.

Anything short of a unified approach among Western nations to curb the export of Russian fossil fuels and hinder the country’s expansion of LNG exports would reveal a vulnerability that the United States, EU, and all G7 nations cannot afford in a destabilized world. Reaping profits from oil and gas exports, the Kremlin has sponsored more than 112,000 registered war crimes in Ukraine since February 2022. Russia has alarming plans to escalate the brutal war in Ukraine even further. These plans are starkly visible in its recently adopted budget for the coming year. For the first time since the Soviet era, the Kremlin allocated almost a third of all expenditures to the army and the military-industrial complex. In 2024, the national defense budget will swell to 10.775 trillion roubles, which is 70 percent more than in 2023, 2.3 times more than in 2022, and three times higher than in pre-war 2021. The army and private military companies will account for 30 percent of the 2024 budget, with all security forces together receiving 40 percent.

Frankly put, for the United States and NATO to maintain credibility concerning international security, it’s high time they earnestly consider dismantling the Russian oil and gas business. Putin’s recent trip to Middle East shows that Russia is increasingly becoming politically and economically invested in the key region that stirs in Russia’s oil and gas into world markets. Controlling profit-driven traders, banks, shippers, refineries, and all intermediaries sustaining the Kremlin’s financial lifeline is no simple feat. However, it’s an imperative task that the Biden administration and other Western leaders can’t afford to dodge.

Svitlana Romanko is the Founder and Director of Razom We Stand.

Oleh Savytskyi is the Senior Campaigns Manager of Razom We Stand.

EnergySource

EnergySource Sep 14, 2023

What to do about Russia’s energy trojan horse

By Olga Khakova, Charles Lichfield

Economic Sanctions Economy & Business

EnergySource Sep 18, 2023

Moldova has the chance to break from its Gazprom-dominated past

By Jamal Nusseibeh and Branko Terzic

Moldova has the opportunity to make good use of the lessons of its past by strengthening regulatory independence, increasing competition, and introducing transparent pricing.

Eastern Europe Energy & Environment

EnergySource Oct 11, 2023

A Ukrainian energy hub will help Europe’s clean transition

By Mark Temnycky

Ukraine can become an energy and minerals hub for European. Investing in Ukraine’s renewable energy industry is vital for European decarbonization.

Energy & Environment Energy Transitions

Learn more about the Global Energy Center

The post The US and NATO must clamp down on Russian fossil fuels to end the war in Ukraine appeared first on Atlantic Council.

The private sector’s role in the climate crisis

Frederick Kempe — Sat, 09 Dec 2023 19:00:00 +0000

DUBAI—There are different theories about how this city, the most populous in the United Arab Emirates, got its name. My favorite is that it came from an Arab proverb that says “Daba Dubai,” meaning, “They came with a lot of money.”

Dubai was established in the eighteenth century as a fishing village, where a good living could be made from trade and pearl diving. By the time the COP28 climate conference kicked off here, it had become one of the world’s richest cities, with the world’s tallest building and more five-star hotels than any city except London, the result of oil revenue, tourism, real estate, and sovereign investment.

Dubai was host to climate action over the past week, gathering almost one hundred thousand people from nearly two hundred countries. The public and private sectors drew closer than ever before to a consensus that addressing the perils of a warming planet was both a matter of urgency and business opportunity.

That does not fix the problem, but there is no solution without vast amounts of private-sector financing and investments in climate solutions from renewables to nuclear energy, and from decarbonization to green tech.

Many climate activists opposed opening the doors to industry, particularly those producing fossil fuels, but the result has been a flurry of unprecedented agreements that, if executed and sustained, have the potential for tens of billions of new dollars to address the climate crisis.

For example, there is the $700 million in loss and damage support for the Global South. There is also the $30 billion “Alterra” fund, launched by the United Arab Emirates—and with private-sector giants Blackrock, Brookfield, and TPG—whose aim is to generate $250 billion of capital by 2030 for climate investments in the Global South.

Some fifty oil and gas companies, including Saudi Aramco and twenty-nine national oil companies, agreed to reduce their emissions to zero by 2050 and to reduce methane emissions to zero by 2030. At other points of the convening, countries joined together in agreeing to triple renewables, also by 2030, and to triple emissions-free nuclear energy by 2050. Achieving both goals will require the participation of the private sector.

Negotiators are squabbling over the text of the final COP28 agreement. Politico reports that a draft it has seen has expanded to twenty-seven pages and includes five different options on how to manage disputes over “phasing down” or “phasing out” fossil fuels. The battle could get ugly before the conference closes on Tuesday.

Whatever the outcome, veterans of the UN climate process believe this year’s sharply increased level of private-sector engagement could be the game changer to address challenges beyond the capacity of governments alone. Says Jorge Gastelumendi, a veteran of sixteen COPs who runs the Atlantic Council’s Adrienne Arsht-Rockefeller Foundation Resilience Center: “After twenty-eight COPs, we have finally seen the private sector arrive in the climate space with full force and commitment. Without them, we will not be able to solve the climate crisis.”

Frederick Kempe is president and chief executive officer of the Atlantic Council. You can follow him on Twitter @FredKempe.

This edition is part of Frederick Kempe’s Inflection Points Today newsletter, a column of quick-hit insights on a world in transition. To receive this newsletter throughout the week, sign up here.

The post The private sector’s role in the climate crisis appeared first on Atlantic Council.

Forging a collaborative energy transition between GCC and Turkey

Mouza Almarzooqi — Fri, 08 Dec 2023 17:00:00 +0000

This is part of an essay series on the mutual challenges posed by climate change and opportunities presented by the energy transition that the Gulf Cooperation Council (GCC) and Turkey share.

Recently, countries have reached a point at which energy transition coincides with climate goals, economic growth, national interests, and sustainability. In the Gulf Cooperation Council (GCC) region, no country can self-achieve energy transition; thus, nations should plan on how to join forces for diversifying energy sources and reducing carbon footprints in the region. The prospects for cooperation for a sustainable future between the GCC and Turkey center on increasing adoption of renewable energy, offshore wind, solar energy, nuclear power, and clean hydrogen in agriculture, manufacturing, and transportation.

Cooperation in energy transition

The GCC countries and Turkey have a chance to cooperate in energy transition for a sustainable future by promoting international agreements based on mutual interests, as well as the principle of and belief in a just energy transition for all. Turkey has been an energy-dependent country and enjoys a constantly growing market. On the other hand, GCC economies have benefited from oil and gas exports for the past fifty years. There is an opportunity for these regional actors to work together, spearhead the region’s transition to clean energy, and make joint efforts toward meeting their climate goals. Nevertheless, each country in the region has unique challenges and opportunities. There is an opportunity to ensure an energy transition that is inclusive, responsive, flexible, rational, and digital. The aim here is for nations to reduce their reliance on fossil fuels and combat the adverse effects of climate change. These countries understand and appreciate the importance of adopting renewable energy, and they can do that by coming together to invest in feasible, productive projects.

Climate change and agriculture are another opportunity for cooperation between the GCC and Turkey in terms of the energy transition. Notably, the UAE and Turkey have embarked on multiple recent collaborations to address climate change and foster environmental sustainability. In February 2022, the two nations signed multiple agreements and memoranda of understanding (MoUs) aimed at promoting their cooperation and collaboration on climate and environmental issues. Such agreements demonstrate that the two nations have decided to work together to support the global transition to climate neutrality. Specifically, GCC countries and other actors should have a common vision of international cooperation in terms of sharing best practices in the energy transition and addressing their unique challenges to ensure a sustainable future. Cooperation can take many forms, one of which is a joint investment in research facilities and sharing scientific knowledge sources and collaborative projects that aim to improve existing technologies in the energy transition field. Also, promoting the exchange of experts and professionals that would enable knowledge-sharing and capacity building. Training programs can be established to facilitate the transfer of expertise with the focus on energy policy and efficiency.

Joint climate action in the GCC and Turkey

The Middle East is among the world’s most vulnerable regions to the accelerating impacts of human-caused climate change, due to effects ranging from heat waves to rising in sea levels and water scarcity. The Gulf nations face depleted freshwater resources within the next 50 years, while average temperatures are soaring at a rate that is two-to-seven times faster than the global average – it is no surprise that the region is home to 12 of the world’s 17 most “water stressed countries”. There is a huge opening for them to come together and adopt clean-energy sources that can signal a transition from fossil fuels to clean sources of energy.

Climate change has also adversely affected the countries’ economies and political stability. There is an enormous chance for the GCC, Turkey, and related actors to collaborate on future joint actions to address climate-change issues—including water and air pollution, sandstorms, and flooding—with the goal of preserving the nations’ economic stability and social resilience. Such countries should be driven by their strong commitment and goodwill toward ensuring economic diversification and phasing out of fossil fuels in order to ensure the preservation of stability and the attraction of foreign direct investment. For instance, Turkey and countries in the GCC—including the UAE, Bahrain, Qatar, Kuwait, and Oman—have a chance to use cooperation on climate action and the energy transition as the chief drivers for regional reconciliation.

GCC nations and Turkey can pledge to work jointly to implement lucrative projects in renewable energy. For instance, the UAE, Qatar, Saudi Arabia, and Turkey recently signed a strategic partnership and framework agreement in the area of green and natural resources. The “Zero Waste Blue Project,” aimed at keeping gas and water resources free from waste, is an area of prospective cooperation in the Middle East. Furthermore, the Arab-China Business Conference that was conducted in Riyadh concluded that $10 billion should be used in the construction of energy-transition projects in the GCC such as electrification of transport. Additionally, leading Emirati corporations have invested in projects that benefit both the GCC and Turkey, with AED1.8 billion ($490 million) committed toward the energy transition. Other collaborations in the GCC to mitigate climate change and its adverse consequences should take place in the areas of transport, commerce, and manufacturing such as expansion of smart buildings and paperless trading through digitization. These initiatives, when explored, would lead to the construction of carbon-free airports and green railway stations powered by wind and solar energy, and car factories powered using green initiatives.

Looking ahead for a just and sustainable transition

The GCC and Turkey have the opportunity to come together and dedicate resources to diversify energy sources and transition from the use of fossil fuels to the use of clean energy. In the field of agriculture, the Middle East region should cooperate to mitigate adverse effects of climate change, such as droughts, sandstorms, and floods that affect the growth and maturity of food crops. Moreover, in the areas of green and renewable resources, these nations can commit to dedicating financial resources and efforts toward energy-efficient projects that would lead to the adoption of carbon-free and green industries and infrastructural projects.

Mouza Almarzooqi is the Head of Economic Studies section at TRENDS Research and Advisory

The post Forging a collaborative energy transition between GCC and Turkey appeared first on Atlantic Council.

Charting energy transitions in the Eastern Mediterranean and Arabian Peninsula

Karim Elgendy — Fri, 08 Dec 2023 17:00:00 +0000

This is part of an essay series on the mutual challenges posed by climate change and opportunities presented by the energy transition that the Gulf Cooperation Council (GCC) and Turkey share.

The eastern Mediterranean and the Arabian Peninsula share sunny skies and unique geopolitical locations. Their largest economic powerhouses, the Gulf Cooperation Council (GCC) and Turkey, share progressive plans to decarbonize their economies by the middle of the century. However, their energy-transition pathways are propelled by distinct forces.

As Turkey’s appetite for energy rapidly grew, its reliance on imported natural gas left it critically vulnerable to supply shocks, price volatility, and geopolitical pressures. Thus, Ankara views investing in renewables, nuclear power, and hydrogen as crucial to enhancing its energy security. In contrast, the hydrocarbon-exporting Gulf nations are seeking to future-proof their economies in a decarbonizing world by proactively diversifying into solar, wind, and hydrogen production. While their motivations differ, Turkey and the GCC both understand that their energy systems must evolve for economic reasons.

Securing supply through diversification

Turkey’s energy demand has increased in recent decades due to population growth, industrialization, economic development, and rising living standards. This has made it heavily reliant on imported fossil fuels, especially natural gas, which has a roughly 30-percent share in its energy mix. To enhance energy security and meet rising electricity demand, it has focused on diversifying its power-generation portfolio.

Hydroelectric dams have long been Turkey’s main renewable-electricity source. But installed capacity of solar and wind power expanded rapidly since 2014, more than doubling renewables’ share of total generation to 42 percent by 2022. Turkey’s mountainous geography provides substantial potential for additional hydropower, while its western and southern regions have favorable wind and solar resources.

Under its 2053 net-zero emissions pledge, Turkey aims to double electricity capacity by 2035, with renewables providing nearly 65 percent of power. Wind and solar capacity are slated to scale up dramatically. Turkey has strong project pipelines, with wind projects largely on track. However, solar growth has lagged targets so far. Beyond renewables, nuclear power from new plants will provide 11 percent of Turkey’s electricity by 2035.

While pushing renewables, Turkey seeks greater fossil-fuel production and supply diversification to ensure energy security during the transition period. Turkey is planning expansion of its coal and gas electricity-generation capacity by 3 and 10 gigawatts (GW), respectively, but both are expected to fall after 2030. Expanding natural-gas exploration resulted in major discoveries in the Black Sea, which could provide up to 30 percent of Turkey’s gas demand. But regional disputes have hindered Turkey’s ambitions to become an Eastern Mediterranean gas hub.

Alongside its renewable-energy plans, Turkey also plans major deployment of battery storage and green-hydrogen production to provide grid flexibility. Hydrogen output could reach 0.75 million tons annually by 2035 and 10.5 million tons annually by 2053, most of which would be available for export to Europe. Blending hydrogen into gas networks is also envisioned.

Preparing for a post-oil era in the Gulf

Like Turkey, the GCC states have witnessed substantial energy-demand growth in recent decades, driven by population growth and rising living standards. This rising domestic demand initially increased reliance on oil and gas before GCC states took measures to manage demand, diversify their energy mix, and free up more oil and gas for export.

Solar-power capacity has expanded rapidly in Saudi Arabia, Qatar, Oman, and the United Arab Emirates (UAE), where it now represents 8 percent of electricity generation. Under its 2060 net-zero pledge, Saudi Arabia aims to add 59 GW of solar and wind capacity by 2030 and source 50 percent of its electricity from renewables. The UAE has similarly ambitious targets, aiming for 30-percent clean power by 2031, which includes both renewables and nuclear power. The UAE is the only GCC country with a functional nuclear plant.

While adding renewables, the GCC still seeks to maximize oil and gas output for export. The bloc is expanding upstream investments to increase capacity. Saudi Aramco and UAE’s ADNOC, the national oil companies, are planning massive oil and gas investments. Meanwhile, Qatar’s North Field expansion will significantly boost its natural-gas exports.

Capitalizing on their energy expertise and cheap solar energy, GCC states are also well positioned to enter the low-carbon hydrogen market. This includes production of both green hydrogen from renewable sources and blue hydrogen from natural gas with carbon capture. With most of the planned production slated for export, the GCC aims to meet growing global demand for hydrogen in hard-to-decarbonize sectors.

The UAE, which delivered the region’s first hydrogen shipment to Germany, has set a goal of becoming a leading global producer of green and blue hydrogen by 2031. It plans to capture 25 percent of global trade with production of 1.4 million tons annually, rising to 15 million tons by 2050. Saudi Arabia is building the world’s largest green-hydrogen plant at NEOM, targeting 2.9 million tons by 2030 and 4 million tons by 2035. Similarly, Oman aims to produce at least 1 million tons of green hydrogen by 2030 and up to 8.5 million tons by 2050.

Turning geopolitical challenges into energy collaboration

Though their motivations for energy transition differ, Turkey and the GCC still have much to gain from collaboration that plays to their respective strengths. In solar power, Turkey could benefit from the GCC nations’ extensive expertise from developing mega-scale projects in the Gulf’s sun-drenched deserts. Investments in Turkey by GCC companies, such as the UAE’s Masdar and Saudi Arabia’s ACWA Power could leverage the GCC’s financing and experience, while helping Ankara scale up photovoltaics rapidly. The GCC region could also benefit from Turkey’s wind-power expertise, as was demonstrated in Masdar’s attempts to purchase Turkish renewable-energy company Fiba.

Connecting the electricity grids between the GCC and Turkey would also help manage supply and demand fluctuations from renewable sources. Saudi Arabia already plans to link its grid with Iraq’s, which could potentially be expanded to Turkey.

For both sides, joint development of green-hydrogen production facilities offers substantial synergies. With plentiful wind resources and local industries that can be powered by green hydrogen, Turkey could learn from the Emirati, Saudi, and Omani green-hydrogen experiences and benefit from their investments. The GCC, in turn, could benefit from lower transportation costs for consumers and possible pipeline connectivity to the European hydrogen backbone. Channeling complementary strengths, such partnerships could help unlock their ambitions to be major hydrogen suppliers to Europe.

Turkey also has much to gain from the GCC’s know-how in nuclear energy as it powers up the Akkuyu plant, which is operated by Russia’s Rosatom. The UAE’s Barakah project, the first Arab nuclear-power station, could provide a model for future reactors in Turkey.

While Eastern Mediterranean natural-gas collaboration faces geopolitical complexities, increased Qatari exports via the North Field expansion would benefit Turkey. Importing oil from the GCC countries could also help reduce Turkey’s dependence on Russia, and diversify and create new markets for expanded GCC production capacity.

Finally, technical partnerships in renewable-energy research and development (R&D) between GCC and Turkish universities and companies would further strengthen these emerging energy ties. Planned research centers, such as the UAE’s green-hydrogen R&D center, could present a basis for technical collaboration.

As Turkey and the GCC charge ahead with their respective energy transitions, it is clear they have much to gain from increased collaboration. By combining their unique expertise and resources, they can unlock greater energy security and sustainability. Such cooperation demonstrates the potential for these regions to fully incorporate energy in their economic partnership in pursuit of a better future for all.

Karim Elgendy is an urban sustainability and climate expert based in London. He is an associate director at Buro Happold, an associate fellow at Chatham House, and a nonresident scholar at the Middle East Institute in Washington. Elgendy is also the founder and coordinator of Carboun, an advocacy initiative promoting sustainability in cities of the Middle East and North Africa through research and communication.

The post Charting energy transitions in the Eastern Mediterranean and Arabian Peninsula appeared first on Atlantic Council.

Prospects for cooperation in energy transition for a sustainable future: GCC, Turkey, and regional perspectives

Atlantic Council IN TURKEY & TRENDS Research and Advisory — Fri, 08 Dec 2023 17:00:00 +0000

Foreword

The Gulf Cooperation Council (GCC) and Turkey share mutual challenges posed by climate change while, at the same time, possessing important synergies in the energy sector that deserve further exploration from policymakers and the private sector.

With the shared goals of reducing carbon emissions, ensuring energy security, and stimulating economic growth in perspective, TRENDS Research & Advisory and the Atlantic Council in Turkey are proud to present our joint publication on Prospects for Cooperation in Energy Transition for a Sustainable Future: GCC, Turkey, and Regional Perspectives. We hope this publication will contribute to the important discussion of the need for international and regional cooperation to accelerate the adoption of clean energy and address climate change. Our joint publication represents a starting point and roadmap for future cooperation.

Diversifying the energy mix through clean energy enhances energy security for both regions. By reducing reliance on fossil fuels, the GCC and Turkey can shield themselves from geopolitical uncertainties and price fluctuations in the global oil and gas markets. By sharing knowledge and best practices, they can accelerate climate adaptation, making the transition more efficient and cost-effective. Collaboration in clean energy projects can also promote regional stability at this critical time of uncertainty by fostering economic ties and mutual interests.

The joint publication explores prospects for partnership between the GCC countries and Turkey to accelerate energy transition and clean-energy deployment. The goal is to diagnose the current state of renewables adoption in Turkey and the GCC, identify potential areas for cooperation in aligning their net-zero emissions targets, and produce a set of policy recommendations to accelerate the transition. The publication underscores the imperative of shared efforts, knowledge exchange, and sustainable initiatives to fortify regional stability and contribute to a resilient, low-carbon future.

May our joint efforts to address the challenges of climate change and foster clean-energy cooperation serve as a testament to the power of regional partnerships in shaping a more secure, resilient, and interconnected world.

Mohammed Abdullah Al-Ali
CEO, TRENDS Research and Advisory

Defne Arslan
Senior Director, Atlantic Council IN TURKEY & Turkey Programs, Atlantic Council

ARTICLES

Introduction

Going together toward a sustainable future

Charting energy transitions

EV adoption could drive collaboration

Forging a collaborative energy transition

Prospects for cooperation in energy transition for a sustainable future: GCC, Türkiye, and regional perspectives

An in-person discussion and publication launch taking place at COP28, on Türkiye-GCC prospects for cooperation in energy transition.

Energy & Environment Energy Transitions Geopolitics & Energy Security Middle East

Dubai, United Arab Emirates

The post Prospects for cooperation in energy transition for a sustainable future: GCC, Turkey, and regional perspectives appeared first on Atlantic Council.

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

David L. Goldwyn, Andrea Clabough — Tue, 05 Dec 2023 17:19:40 +0000

A cornerstone of the United Arab Emirates’ COP28 presidency has been its proposed commitment to meaningfully bring the oil and gas industry to the table for the first time in order to negotiate a comprehensive, concrete strategy for emissions reductions in the controversial sector. The Oil and Gas Decarbonization Charter is the scorecard for that gambit. Does it succeed, and what can (or should) come next?

What it accomplishes

Perhaps most notable in the charter is the aspiration to “reach net-zero CO₂eq emissions (Scope 1 and 2) for operations under our control…by or before 2050.” In addition, signatories publicly pledge to eliminate routine flaring and achieve “near-zero” methane emissions by 2030. The charter achieves corporate commitments to methane reductions that theoretically parallel the country-level commitments of the Global Methane Pledge. It requires each company to sign the charter, a public (albeit voluntary) commitment that includes “required mechanisms” for transparency. Among these are the development and publication of company strategies to achieve scopes one and two emissions reductions by 2030. If not already published, companies must do so no later than 2025, with an update and potentially increased aspiration by 2028, adoption of a to-be-determined “measuring, monitoring, reporting, and verification” system to score progress, and annual publication of their emissions levels.

As of now, fifty oil and gas companies have signed the agreement, publicly committing to its net-zero and other aspirations, representing about 40 percent of global production. Among these are a number of international oil companies (IOCs) such as ExxonMobil, BP and Shell but also several major national oil companies (NOCs) which, as a broad category, have historically been hesitant to make overarching climate commitments. NOC signatories include Saudi Aramco, ADNOC, Petrobras, Sonangol, Libya National Oil Company, and Petronas.

Given the vast diversity of the global oil and gas industry (and challenges/incentive structures therein), this is a significant accomplishment. In this respect, the charter has materially broadened the level of commitment of the upstream oil and gas industry to emissions reductions, both carbon dioxide and methane. While these commitments are voluntary, they are public and now subject to measurement and verification.

What it does not accomplish

Despite an impressive effort to coalesce a wide range of industry stakeholders around a shared ambition, there are significant shortcomings to the charter as it stands. These areas represent opportunities for strengthening the agreement as the Global Decarbonization Accelerator (GDA) takes clearer shape. The GDA is a plan launched by the COP28 presidency to speed up system-wide emissions reductions across a range of key sectors, including the oil and gas industry.

Limited breadth

Unfortunately, the charter only addresses a part of the oil and gas value chain and a minority share of oil and gas production. Despite the dozens of signatories, dozens more companies have not signed on to this initial charter; some of these include major developing country NOCs (such as Qatar Petroleum or Mexico’s Pemex) as well as some Western majors including American companies Chevron and Conoco-Philips.

Undoubtedly, there are manifold reasons why individual companies were unable or unwilling to agree to this first iteration of the charter; reluctance to sign on may not necessarily represent a repudiation of its goals or sentiment. However, it is in the interest of the oil and gas sector writ large, as well as major consumers of oil and gas industry products and services, to incentivize those companies not yet aligned with the charter’s laudable goals to reconsider.

Limited commitments

The charter itself places a relatively limited commitment on its signatories that leaves important areas minimally or not addressed at all. For example, the charter addresses the emissions of “upstream” or producing companies, not including the “midstream” companies that transport hydrocarbons or the “downstream” or refining and processing companies that turn them into products (such as liquefied natural gas exports). Within this framing, the agreement only addresses scope one and two emissions and is silent on “scope three emissions” (i.e., emissions from the use of oil and gas products) altogether—for both carbon dioxide and methane. For the oil and gas industry, the use (overwhelmingly combustion) of its products constitutes the vast majority of the industry’s carbon footprint.

In another example, signatories pledge to work with partners (such as technology companies and data centers) that consume massive amounts of power, but those partners make no commitments under this particular agreement. Likewise, charter members address “operations under their control” but pledge to work with their partners on non-operated projects, ones where NOCs or non-signatories control operations. This is a recognition of the massive volume of oil and gas production by companies that, so far, have refused to spend what would be required to achieve significant reductions (e.g., such as tools to prevent flaring).

A differentiated approach

Importantly, the charter speaks to “differentiated approaches” many times, a recognition that the IOCs that signed the agreement are already on a faster track to emissions reductions than many of their NOC peers. The charter also understandably refers to the need for supportive governmental policies, the importance of a full suite of emissions reducing technologies from direct air capture to carbon capture and sequestration, and the need for permitting reform to expedite the siting and construction of infrastructure. It also speaks to the importance of energy security and alleviating energy poverty in line with the UN Sustainable Development Goals, which remains a significant challenge in many low-income countries. All of these are key acknowledgments given the salience of the energy trilemma in a world attempting to fundamentally transform its energy systems.

Is this meaningful?

The charter achieves three meaningful contributions. It significantly broadens the commitment to emissions reductions, especially methane, by bringing a wider range of companies into the fold. It has secured highly public commitments by fifty companies, a commitment weighty enough to have given pause to many IOCs and NOCs that might be concerned that the targets are out of reach. It unequivocally extracts recognition by major members of the oil and gas industry of responsibility to address emissions quickly while meeting obligation to provide security of supply.

Although 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. After months of negotiations to achieve this charter, it is now time for governments, consumers, and other stakeholders worldwide to push even further. The oil and gas industry is, after all, a business; it responds to its buyers. The mounting pressure on this industry to begin to change, combined with the perseverance of the COP28 leadership, resulted in this important step forward in addressing its role in climate change. But this charter should be the beginning of a conversation since we are nowhere close to its end.

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

Note: Three companies mentioned in this article—ExxonMobil, BP, and ADNOC—are donors to the Atlantic Council’s Global Energy Center. This article, which did not involve these donors, reflects the authors’ views.

EnergySource

Global Energy Center at COP28

The 28th annual United Nations Climate Change Conference takes place from November 30-December 12, 2023 in Dubai, United Arab Emirates. The Atlantic Council Global Energy Center will be on the ground to work alongside government, industry, civil society, and public stakeholders to discuss key issues and outcomes.

LEARN MORE

Meet the author

Fellow

Andrea Clabough

Climate Change & Climate Action Energy & Environment

Fellow

David L. Goldwyn

Adrienne Arsht Latin America Center Global Energy Center

Caribbean Climate Change & Climate Action

EnergySource Nov 21, 2023

Beyond promises: Pathways to deliver on methane commitments

By David L. Goldwyn, Andrea Clabough

The Global Methane Pledge has committed over one hundred adherents to collectively reduce their methane emissions by 30 percent by 2030. The challenge however, seems as intractable as ever.

China Climate Change & Climate Action

EnergySource Nov 29, 2023

How COP28 can help cities drive climate action

By Willow Fortunoff, Maia Sparkman

Centering cities as enablers of both climate adaptation and mitigation is absolutely critical. In light of this, COP28 will include, for the first time, a summit dedicated to localized efforts to curb climate change.

Africa Americas

New Atlanticist Nov 30, 2023

Expert analysis: The successes and shortcomings in the fight against climate change at COP28

By Atlantic Council experts

Our experts dispatched to Dubai, where they analyzed how global leaders responded to the greatest challenges posed by climate change.

Climate Change & Climate Action Energy Transitions

The post The Oil and Gas Decarbonization Charter is a start, but more work remains appeared first on Atlantic Council.

Partner perspective: To make a lasting impact on carbon emissions, we must respect the developing world’s needs

Majid Jafar — Tue, 05 Dec 2023 06:19:08 +0000

global energy agenda

global energy forum

Majid Jafar is the CEO of Crescent Petroleum and a member of the Atlantic Council’s International Advisory Board. Crescent Petroleum is a sponsor of the 2023 Atlantic Council Global Energy Forum. This essay is part of the Global Energy Agenda.

As COP28 kicks off in the United Arab Emirates, the divide between Western countries and the developing world over cutting global carbon emissions has never been deeper. As Western activists and policymakers focus on cutting oil and gas production and wrangle over whether to phase out or phase down the use of hydrocarbons, those in the developing world increasingly see their future coming down to reducing emissions at the cost of economic progress.

Bridging this divide will be critical for any real, lasting climate progress. The developing world is where the entire climate change battle will be won or lost; it is where all the net growth in emissions will come from, because it is where the most rapid economic and population growth is taking place. These nations must progress toward a lower-emissions pathway to development, but policymakers must disabuse themselves of the idea that progress can be accomplished by reducing access to energy supply or simply cutting consumption.

Policymakers must disabuse themselves of the idea that progress can be accomplished by reducing access to energy supply or simply cutting consumption.

Unintended consequences

Every nation has been grappling with the energy trilemma of affordability, availability, and sustainability as energy crises began in 2022. Every leg of this trilemma is critical to maintaining equilibrium and ensuring that energy security is met while emissions fall. But while European countries realized the importance of the trilemma when the energy crisis began, the developing world has faced the challenge for decades.

The West’s choices and policies have had significant unintended consequences on the developing world, which often bears the brunt of climate change impacts despite contributing minimally to the problem. Western policies that seek to dampen investment in oil and gas only darken the picture by raising energy costs and creating shortages for those who can least afford them.

European policymakers, for example, proudly heralded their ability to prevent energy shortages at home amid the energy crisis of 2022 by amassing liquefied natural gas (LNG) supplies from around the world. But the triumphalism ignored the impact of their deep pockets on energy costs and supply going to developing countries such as Pakistan, Bangladesh, and others. The result in these emerging markets was skyrocketing LNG costs, energy shortages, inflation, and ultimately greater use of dirtier fuels.

Adoption of natural gas with renewables by the developing world promises to be the most effective means of cutting carbon emissions quickly and affordably. Enabling the developing world to begin the downward march of carbon emissions now is crucial to this goal. Yet when investment in gas is starved to discourage its development and use, or the cost of capital is too high to enable the shift, the Global South is forced to resort to cheaper but higher-emitting fuels, namely coal.

License to operate

The oil and gas industry is also making tangible progress to be part of the climate solution. Most companies have pledged to reduce their carbon intensity and prevent methane leaks ahead of COP28, further reinforcing the reductions possible with natural gas and other cleaner sources of fuel. Substituting diesel and fuel oil with natural gas is one way the industry can decrease CO₂ emissions. Additionally, process improvements to lower carbon intensity along with offsets can enable the industry to achieve carbon neutrality across operations.

Efforts like these can create a virtuous circle of emissions reductions while ensuring affordable and reliable energy supply for developing economies. In time, the energy mix will include natural gas and other clean fuels such as hydrogen, in addition to intermittent renewables and other forms of new energy.

The developing world is where the entire climate change battle will be won or lost.

Financing the change

Ultimately, change on the order required to reduce emissions is only possible with global cooperation. Lasting change requires genuine efforts from the West to respect and address the needs of developing nations by fulfilling climate funding commitments and providing finance as well as technical support and assistance.

One promising solution would be a new global institution, such as a World Carbon Bank, to channel technical assistance and climate aid to developing countries. Another powerful solution would be to establish a global system of carbon pricing to create economic incentives for reducing greenhouse gas emissions by incorporating the true cost of carbon into market decisions.

Clearly, the inherent distrust developing countries feel toward the West remains a major stumbling block to achieving global net-zero ambitions. It is therefore crucial to have a neutral space to host these conversations where all countries’ views will be welcomed and provided an equal platform.

COP is such a platform, and the UAE as the COP28 convener offers a model for action. As an early and major investor in all forms of energy, the UAE has the resources, both in terms of finance and low-cost solar energy supply, to advance the technologies of the future such as hydrogen. It plans to invest $54 billion in renewables over the next seven years as part of efforts to reach net-zero emissions by 2050.

The UAE’s geographical location also makes it a strategic meeting point between the Global South and North, serving as a hub for trade, finance, and diplomacy, with strong ties to both developed and developing nations.

The fight against climate change requires global solidarity, collaboration, and systematic thinking. Climate policies must be revised to reflect the needs and views of developing nations as well as those of the West. Undermining poorer countries’ growth in order to cut emissions is not a viable path to change; only by respecting those countries’ needs can we make a lasting impact. That is why we can all look forward to real and lasting action at COP28 in Dubai this year.

All essays

The energy transition can shape a more inclusive world

By Damilola Ogunbiyi

Europe needs a Green Deal that can meet the moment

By Michał Kurtyka

Countries can only achieve carbon neutrality together

By Shin Hosaka

Public funds alone can’t solve the climate crisis

By Mafalda Duarte

Accelerating clean energy in emerging markets

By Sebastian Kind

Toward net zero with a new generation of nuclear energy

By John Wagner

Partner perspective: A catalyst for cleaner energy

By Scott Strazik

Partner perspective: Climate policies must reflect developing world’s needs

By Majid Jafar

A people-centric energy transformation

By H.E. Leila Benali

Energy security as the foundation for Ukraine’s formula for peace

By German Galushchenko

Partner perspective: Energy companies are essential to global climate solutions

By Mansoor Mohamed Al Hamed

Energy security is global security

By Geoffrey R. Pyatt

Dubai, United Arab Emirates

The post Partner perspective: To make a lasting impact on carbon emissions, we must respect the developing world’s needs appeared first on Atlantic Council.

Why India could play a pivotal role as climate mediator

Rachel Rizzo, Théophile Pouget-Abadie — Fri, 01 Dec 2023 17:26:33 +0000

As Indian Prime Minister Narendra Modi prepared for a historic visit to Washington, DC this year, Apple CEO Tim Cook made a journey in the other direction: He flew to Mumbai to celebrate Apple’s twenty-five-year presence in the South Asian nation. “I really feel that India is at a tipping point,” Cook declared, joining the ranks of business leaders and economists who have spent the last three decades forecasting that the twenty-first century will belong to India.

If it’s true that this is the “Indian century,” it is not just because the country is now the most populous on Earth and on track to become the world’s largest economy; it is because India will play a central role in the global energy transition.

India’s success in this area will be measured by a few obvious targets: its ability to bring down emissions domestically, the example it sets for how other nations of the Global South can undergo their own successful energy transitions, and India’s ability to partner with other nations on climate solutions.

But there may be another just as important, but less obvious, role for India to play: an unofficial mediator between the United States and China to ensure global international decarbonization targets remain in reach amid intensifying competition. The United Nations (UN) Climate Change Conference, also known as COP28—taking place only months after India hosted the Group of Twenty (G20) Summit in New Delhi—is a good opportunity for India to begin to flex its climate muscles on the world stage.

India’s strides at home

The “Indian century” argument is usually built on two pillars: demography and economics. India’s growing population has already surpassed China’s, and by 2050, 20 percent of the world’s workforce could be Indian. Once projected to be the “world’s second-largest economy,” India is now poised to become the “world’s largest everything.” The past two decades have seen India lift millions out of poverty as it achieved some of the fastest growth rates in the world. But this is just the beginning; the International Monetary Fund foresees India’s economy overtaking Germany and Japan before the end of the decade, the eurozone by 2050, and, if you ask Goldman Sachs, even the United States by 2075.

As a consequence of India’s size and growth, the country is a huge greenhouse gas emitter and currently contributes 7 percent of global emissions. At COP26—which took place in Glasgow, Scotland, in 2021—India surprised everyone by saying it intends to reach net-zero emissions by 2070. Many observers are skeptical about India’s ability to make the domestic changes it needs to reach the lofty target. In a Foreign Affairs article in June, Arunabha Ghosh—chief executive officer of the Council on Energy, Environment, and Water and vice chair of the UN Committee for Development Policy—sounded a hopeful but cautious note on this issue. “India is trying to develop as fast as it can while eliminating greenhouse gas emissions, and traditionally, states cannot develop and decarbonize simultaneously,” he wrote. “[India] will, in other words, have to grow in a manner that no major economy has before.”

Think about it: Combine India’s rapid demographic growth with its economic growth, and one gets the fastest-growing energy demand in the world in the coming decades. As it connects fifty million citizens to the grid each year and ramps up its manufacturing capabilities, India has become the second-largest producer and consumer of coal, which provides more than 70 percent of its power needs. In doing so, it has become the world’s third-largest greenhouse gas emitter. While India has committed to reducing the share of coal in its energy mix, this doesn’t necessarily translate into an absolute decrease in coal consumption. Today, Indians consume a third of the electricity the average individual does, and a twelfth compared to Americans. To close this gap, the Indian government has accelerated coal production. Last year, for example, coal production increased by more than 15 percent. In a February Washington Post interview, Indian Coal Secretary Amrit Lal Meena could not have been more direct: “Our energy needs are first and foremost. . . whatever we produce is consumed. Every coal mine matters.” In international climate negotiations, India’s ambivalent position has dented its climate credibility, in Paris and more recently in Glasgow.

On a more positive note: In 2021 alone, the South Asian giant built up twice as much renewable capacity as coal. Through innovative auctions, India is on track to achieve its target of meeting half of its electricity needs from renewables by 2030. In 2021 alone, India added fourteen gigawatts (GW) of solar capacity, the equivalent of the United Kingdom’s total solar fleet. India has amassed close to seventy GW of solar capacity and forty GW of wind. If India can succeed in meeting economic and population growth with decreasing emissions and cleaner energy, then there is hope the rest of the world can too.

India on the world stage

The above examples, however, are just within India’s borders. India has no choice but to reduce its own emissions, but that alone will not fix its climate problems. Global warming of two degrees Celsius would lead to six times more heatwaves in India and significantly disturb monsoon rains, a phenomenon so important for India’s economy that one Indian leader referred to it as India’s “real finance minister.” These unavoidable facts, combined with India’s historical nonalignment, mean that the country holds the international keys to finding common climate solutions.

India is proving to be an indispensable international partner for the West. As Europe and the United States struggle to find alternative suppliers to China to rebalance their clean industry supply chains, India is developing its own manufacturing capabilities through the “Make in India” plan. More business with India and less with China could be seen as beneficial for Western policymakers and Indian policymakers. Indian and Western policymakers share challenges and objectives: India and most of the West are large net importers of fossil fuels (the notable exception being the United States). They are both ramping up investments in clean energy, and back in 2015, India and France launched an initiative to mobilize one trillion dollars to advance solar power in developing countries. While much was made of security and defense during Modi’s visit to Washington, DC, the joint statement released at the close of the summit placed decarbonization at the forefront, welcoming an investment from India’s VSK Energy that would be directed toward a solar panel factory in the United States, as well as calling for deepened cooperation on energy storage and carbon capture. Europe, meanwhile, has been looking to deepen its ties with India on green hydrogen.

India’s nonalignment policy also lends it credibility with the developing world. India has thus far helped to ensure that both developing and developed nations bring emissions down in a manner that is fair. Historically, India has championed the notion of justice in international climate negotiations, under the principle of “differentiated responsibilities.” India has argued that countries should focus on cumulative historical emissions and emissions per capita, two metrics on which the United States and Europe fare particularly poorly. At COP28, Indian negotiators will be pushing for developed nations to become carbon negative by 2050. Recently, India has played a vocal role in the effort by developing countries to attract more climate funding from rich nations. The pledge made by developed countries at COP15—held in Copenhagen, Denmark, in 2009—to provide one hundred billion dollars per year to developing nations for climate action has been broken every year since.

India as a climate mediator?

Although many major greenhouse gas emitting countries are motivated to reach climate targets by domestic (rather than international) pressure, simmering tensions between the West and the rest could eventually hamper international climate negotiations efforts. This may lead to yet another role for India to play in the global green transition: a mediator to ensure that US-China competition doesn’t derail global climate targets.

India has its own issues with China, of course. The December 2022 clash at the 2,100-mile India-China border (known as the Line of Actual Control), represented the worst breakdown in the relationship since 2020 and created a more heavily militarized border between the two countries. According to the Pew Research Center, India is the only middle-income country where a majority has an unfavorable view of China. Chinese leader Xi Jinping also decided to skip the G20 Summit in New Delhi, most likely because China would rather focus its energy on where it’s a bigger player in the room: the BRICS Plus. India is also working to reduce its own dependencies on China and is cooperating with the United States and its allies in the Indo-Pacific region, a key component of Modi’s visit to Washington this year. The Biden administration has breathed new life into the Quad, a security dialogue among the United States, India, Japan, Australia. Even the India-Middle East-Europe Economic Corridor, announced at this year’s G20 Summit, seems meant to directly compete with China’s Belt and Road Initiative (which is, at the moment, floundering.) And India has its own clean industry rebalancing challenge: China continues to dominate the supply of solar panels in India, and several Indian manufacturers have declared bankruptcy.

But India has also built bridges with China that the West lacks. Both Asian superpowers view coal as strategic, capable of stabilizing grids as renewable energy comes online. They both agree on the push to recognize historical emissions, not only current emissions, and they partake in several fora where the West is absent, such as the BRICS Plus and the Shanghai Cooperation Organization. If any country is capable of speaking with both sides of the US-China divide, it is India.

So how can India become a successful climate mediator?

First, India should be clear that framing the US-India relationship through the lens of competition with China won’t work. The “us or them” approach has not paid off for the United States in the rest of the Global South, and it cannot risk allowing that same approach to fail in India. Up until now, India’s role as a nonaligned middle power seems to have resonated with US policymakers, and there’s been a major diplomatic push from Washington to deepen its relationship with New Delhi. India knows that the United States needs it as a partner in the Indo-Pacific region, so the relationship today is win-win. But it’s up to India to continue to hold its ground against the tendency for the United States to shape most of its relationships through the lens of its competition with China. Nowhere is this more important than in the global energy transition.

Second, India should ensure that the geopolitical rivalry between the United States and China does not derail green technology advancements and emulation. Overly aggressive decoupling from China will fragment global economies and raise the costs of decarbonization when the world can least afford it. Where one has built expertise in a given sector, that expertise should be shared. Europe and India can lead by example in this regard: They have just opened talks for the production and supply of green hydrogen. China’s domination of clean energy supply chains and the US Congress passing the Inflation Reduction Act in 2022 have raised concerns among some experts about unfair trade practices. But India and the West (including the United States) both remain extremely dependent on the rest of the world for their energy transitions, and protectionist measures threaten to choke the large supplies of raw materials, solar panels, and everything else they need to meet their goals.

Third, developing countries need much more climate finance from developed countries to successfully combat the far-reaching effects of global climate change. According to a 2023 analysis by the UN Framework Convention on Climate Change, developing countries’ needs will amount to nearly six trillion dollars by 2030 to meet their Nationally Determined Contributions—measurements that are “at the heart of the Paris Agreement and the achievement of its long-term goals.” Heeding this call and reaching these goals require reforming international climate finance. New ideas were put on the table at the Summit for a New Global Financial Pact in Paris in June, including reforms for multilateral lenders. As Sarang Shidore wrote for Foreign Affairs in August, “Global South states have mostly maintained a united front in demanding more climate financing from their European and North American counterparts.” This is an area where India could take the lead on behalf of the Global South, especially given its proven track record in crowding in private capital for renewable development.

An Indian climate century should be celebrated by the West: A strong India, taking the lead in the fight against climate change, is in everyone’s interest. India, by reaching toward its own climate targets at home, can step up its engagement on the international stage, lead the reform of international climate finance, push cross-border cooperation in vital green technologies, and help to defuse US-China tensions. It may not be the easiest road, but for the good of the international community, it is a necessary one for India to take.

Rachel Rizzo is a nonresident senior fellow at the Atlantic Council’s Europe Center.

Théophile Pouget-Abadie is a nonresident fellow at the Atlantic Council’s Transform Europe Initiative and policy fellow at the Jain Family Institute.

Note: This piece has been updated to remove an outdated reference to negotiations over the loss and damage fund, which was agreed to on November 30.

The post Why India could play a pivotal role as climate mediator appeared first on Atlantic Council.

Goldwyn quoted in S&P Global on the US Treasury’s move to ramp up sanctions on Iran

bmathews — Wed, 29 Nov 2023 19:49:39 +0000

Original source

The post Goldwyn quoted in S&P Global on the US Treasury’s move to ramp up sanctions on Iran appeared first on Atlantic Council.

Beyond promises: Pathways to deliver on methane commitments

David L. Goldwyn, Andrea Clabough — Tue, 21 Nov 2023 14:20:43 +0000

Two years ago, the announcement of the Global Methane Pledge at COP26 in Glasgow was one of the most intriguing and potentially impactful developments of that conference. The pledge has since committed its now over one hundred adherents, together responsible for 45 percent of global methane emissions, to collectively reduce their methane emissions by 30 percent by 2030. Its announcement was a crucial moment of reckoning with a highly potent greenhouse gas, of which 40 percent of human-caused emissions come from the energy sector alone.

As the proverbial saying goes, that was then. In the here and now, the methane challenge seems as intractable as it ever was. The latest iteration of the International Energy Agency’s Global Methane Tracker estimates that global energy sector methane emissions rose about 2 percent last year to nearly 135 million metric tons (MT) despite more efforts to track, contain, and monitor leaks. Oil and gas production is a major source of energy sector methane emissions, particularly through operational practices like venting and flaring of gas. Although IEA projects that global average methane intensity of oil and gas production has fallen by around 5 percent since 2019, the overall growth in actual methane emissions in the energy sector remains alarming. Despite all of this, methane abatement remains highly cost-effective; an estimated $100 billion in investment (a fraction of oil and gas industry’s profits) are estimated as sufficient to deploy all necessary abatement measures by 2030.

The continuing malaise around methane should galvanize those delegations representing major oil and gas producing countries at COP28. While there are multiple reasons for the limited progress on abating the potent greenhouse gas, the fundamental obstacle to curbing it is that the existing and even proposed frameworks to achieve reductions are overwhelmingly voluntary in nature. Thus far, concrete actions to address the methane challenge have been limited to a handful of wealthy producer countries and have no market-driven enforcement mechanisms.

The Global Methane Pledge Itself is a voluntary commitment made by countries that choose to join. It therefore implicitly relies on the ability of countries to promulgate effective regulations and enforce them among their own local industries, or to disburse donated funds to support measurement and mitigation in countries that cannot afford it. The COP28 presidency is reportedly seeking to elevate the level of commitment through a new voluntary initiative, whereby producing companies would make substantial pledges on methane reduction and subject themselves to self-reporting and measurement.

Some countries are taking enforceable measures to meet their commitment. The United States, for example, is pursuing a number of initiatives to tackle its energy sector methane emissions including a historic methane fee integrated into the 2022 Inflation Reduction Act, in addition to imminent Environmental Protection Agency methane performance standards. The European Union is developing its own binding 2030 methane reduction target for its oil and gas sector, as well as a methane intensity threshold for imported fuels. The United Arab Emirates, host of this year’s COP, has made its own commitments on methane: in July, its national oil company ADNOC committed to achieving zero methane emissions by 2030.

In time, these and similar efforts will likely produce fruit. But while these unilateral and multilateral voluntary measures are important, they are not sufficient to the challenge at hand. Crucially, they do not address the challenge of methane emissions in those countries not party to the Global Methane Pledge (or similar bodies) where energy-sector methane emissions are high and there is far less pressure or incentives to reduce them. Many high-emitting countries have not taken any enforceable measures to meet the pledge. Some of these, such as Russia, have adversarial relationships with the United States and may eschew efforts which are largely Western-led. Others, such as China, have announced aspirational methane strategies, but they often lack concrete targets or clear accountability mechanisms. In the case of oil and gas producers in developing countries, both within and outside the Global Methane Pledge (such as Turkmenistan and Venezuela), the price tag and infrastructure complexity of systemic methane abatement represents an entirely different barrier.

COP28 cannot resolve all these complex, interwoven issues, but those delegations that are mindful of the methane abatement challenge could demonstrate a renewed commitment to addressing it on a global scale.

An obvious starting point is financial support to fund methane abatement in those countries unable or hesitant to expend limited resources. A multilateral financing push for those countries interested in such support need not be a singular fund (such as the in-development Loss and Damage Fund), but it could involve a collective agreement to leverage a certain percentage of foreign investment and development resources for this explicit purpose. Multilateral development banks, particularly those hesitant to engage with any fossil-related financing, might clarify their parameters for such financing and signal which sorts of projects would qualify for favorable loans or other assistance, as many will require technology access to capture gas flared from oil production and covert it to some productive use.

To meaningfully impact the behavior of countries and companies that are not taking action to reduce methane emissions, the world will also need market-based mechanisms that penalize producers who do not adhere to an acceptable standard. Committed delegations should agree to raise the bar on methane abatement by incentivizing highly-efficient, low-emission fossil fuels through regulatory and trade alignment. Flickers of progress in this space are evident: the Joint Declaration from Energy Importers and Exporters, published in November 2022, theoretically aligned the United States, EU, Norway, UK, Canada, Singapore and Japan around the need to reduce methane emissions throughout the fossil fuels sectors. The incoming EU methane threshold for imported fuels takes this approach one step further; a similar approach in any future US border adjustment mechanism remains an open question. However, the US Department of Energy has recently announced a new Measuring, Monitoring, Reporting and Verification (MMRV) Working Group which will “advance comparable and reliable information about greenhouse gas emissions across the natural gas supply chain to drive global emissions reductions.” Notable participants include the United Kingdom, the European Commission, Germany, Japan, Australia and Brazil.

Even an early version of an agreeable gold standard (or agreed group of standards) for the methane emissions of traded fossil fuels products could be a valuable COP28 deliverable, particularly within a wider framework that promotes independent monitoring, reporting, and verification across a range of major stakeholders. A number of existing platforms that could inform such a gold standard (such as those of GTI Veritas Initiative) could be applied or leveraged. If global demand for fossil fuels must necessarily decline in a net-zero outlook, producers and consumers of fossil fuels can collectively lay the groundwork for those supplies with the most sustainable methane profiles to also be the most competitive. Such an approach to trade and regulatory policy could be tailored to favor those oil and gas companies (including both international and national oil companies) that maintain a high standard of emissions reductions across all of their multinational operations, reducing emissions across the full scope of their operational profiles and not just in those countries with robust requirements. Such a trade framework would compel producers who today decline to take methane mitigation measures to do so, in order to remain competitive in the global market.

There are many complex, entrenched challenges to realizing a global energy transition; responsible management of methane should not be among them. Reasonable solutions in this space already exist at scale and could be deployed worldwide at relatively little cost compared to the trillions that must ultimately be expended on deep decarbonization. Any steps forward on this front at COP28 could pay dividends now and for years to come. At a conference where every success is set to be hard-fought, methane is one area where important wins should be achievable.

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

EnergySource

Global Energy Center at COP28

LEARN MORE

Meet the authors

Fellow

David L. Goldwyn

Adrienne Arsht Latin America Center Global Energy Center

Caribbean Climate Change & Climate Action

Fellow

Andrea Clabough

Climate Change & Climate Action Energy & Environment

EnergySource Nov 16, 2023

Six steps Guyana can take to avoid the resource curse

By David L. Goldwyn

Guyana is on a rapid path to potentially becoming the fourth largest oil producer in the world. Now, the government has an opportunity to show the world how to do resource development right.

Energy & Environment Geopolitics & Energy Security

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 Aug 7, 2023

A year after the IRA, industrial policy has gone global. Now what?

By David L. Goldwyn, Andrea Clabough

The domestic impacts of the IRA are undeniable. It is less certain what it means for the global energy transition. One year later, officials must prioritize opportunities to align with like-minded allies overseas.

Energy & Environment Energy Transitions

Learn more about the Global Energy Center

Flagship Event Tue, November 14, 2023 • 1:00 pm ET

The post Beyond promises: Pathways to deliver on methane commitments appeared first on Atlantic Council.

Webster quoted in Fortune on Danish wind company’s tendentious write-off

cakers — Fri, 17 Nov 2023 14:55:38 +0000

Original Source

The post Webster quoted in Fortune on Danish wind company’s tendentious write-off appeared first on Atlantic Council.

What the EU and US want to get done at COP28

Katherine Walla — Thu, 16 Nov 2023 22:40:02 +0000

Watch the full event

EU-US Defense & Future Forum

The third annual EU-US Defense & Future Forum gathers policymakers from both sides of the Atlantic to discuss how the EU-US relationship can further strengthen collective prosperity and security. This Forum will take place from Nov 14 – 15, 2023.

Economy & Business Energy & Environment Europe & Eurasia European Union

Two hundred countries are hurriedly assembling inventories on how they are doing on climate change—and where gaps remain—in the global stocktake. EU climate envoy Anthony Agotha predicted that the survey, set to conclude at this year’s United Nations Climate Change Conference (known as COP28), won’t say that countries are “still on the path” to limiting global warming to 1.5 degrees Celsius.

Despite that outlook, Sue Biniaz, US deputy special envoy for climate change, said the landmark agreement from COP21 holds up: “The Paris Agreement is working,” she said, “it’s just not working fast enough, and we need to accelerate.

The two climate leaders spoke Wednesday at the EU-US Defense & Future Forum, cohosted by the Delegation of the European Union to the United States and the Atlantic Council’s Europe Center. There, the officials outlined their priorities for COP28.

At last year’s COP27 in Egypt, there was a “concerted effort” to focus on loss and damage and to hold the line on climate change mitigation commitments set at COP26 in Scotland. “We were going in hoping to get Glasgow plus, [but] it almost turned out Glasgow minus,” Agotha said.

And now, he explained, it has become clear that “there is no dollar or euro [amount] in the world enough to redress the loss and damage that will happen,” even if global warming is kept in check. Biniaz and Agotha said they hoped that countries can design and adopt the loss and damage fund in the coming weeks at COP28 in Dubai, considering the urgency.

Below are more highlights from their conversation at the forum, moderated by Atlantic Council Global Energy Center Senior Director Landon Derentz, which touched upon the EU’s and United States’ COP priorities and ways that the transatlantic partners are working together on mitigating and adapting to climate change.

Adapting for a climate-changed future

At COP28, “fossil fuels [have] to be on the table,” Agotha said, explaining how Russia’s war in Ukraine and supply chain crises have highlighted the world’s dependence on oil and gas. “We reduced our dependence on Russian gas,” he explained, adding that countries need to raise their ambitions to reduce their fuel usage. Currently, he said, many in the energy industry are only looking to extract fuel to “the last drop of oil” and counterbalance with carbon capture.
Agotha said that the EU is trying to take a “whole of government approach” to securing a climate-changed future. For both him and Biniaz, that means more than reducing their militaries’ emissions: It means preparing forces to operate in changing environments and adjusting to a new world in which the risk of conflict is increased by climate change.
As leaders meet at COP28, they’ll be considering a new effort to attain global agreement on tripling renewable energy deployment and doubling energy efficiency. Agotha and Biniaz said that climate financing will be necessary for those goals. Biniaz said that the “forgotten goal” of the Paris Agreement is to make finance flows consistent across the world. “There has not been enough attention paid to that goal; it’s something that [the EU and United States] together are trying to highlight.”
Currently, countries are racing to fulfill their commitment to mobilize one hundred billion dollars in annual climate financing for low-income countries. Biniaz said that developed countries are “on track” to meet the goal, albeit running behind. Even then, that funding “is not going to get us to 1.5 or to sufficient adaptation,” she warned. “We need to be talking about the trillions.”

Can allies on separate tracks work together?

In talking about the EU’s Carbon Border Adjustment Mechanism, which imposes carbon emissions tariffs on imported goods, Agotha recalled the difficulty in designing a measure that is “watertight.” “Any country in the world that goes through a green transition will have to deal with the issue of carbon leakage”—when industries leave to manufacture elsewhere, using practices that damage the climate. “We would love the US to have a carbon price, which would harmonize this much better.”
Biniaz acknowledged that the US Inflation Reduction Act (IRA) sparked “a little bit of a mixed reaction in the world, including from the EU,” but she explained that with the Paris Agreement calling on countries to take more and more ambitious action, “almost by definition, you’re going to have national laws that have trade-related provisions in them. It’s kind of inevitable.”
Despite that initial shock from the EU, Agotha said that the IRA and the EU’s Green Deal Industrial Plan are proof that “the road on the transition is the right one to take.” He added that despite “some discriminatory effects,” the EU and United States do “find channels to discuss this and to see if we can smooth things out.”
With the world “ripping at its seams,” as Agotha argued, maintaining the transatlantic relationship is critical: “We need to continue to work, even where we disagree.”
On Tuesday, the United States and China issued a statement on enhancing their climate cooperation—despite tensions in the US-China bilateral relationship. “We have been treating climate as a kind of separate track from bilateral issues. Because… it’s an existential issue,” Biniaz explained. “We should not be holding it hostage to whether we disagree on some bilateral issue.”
The EU climate commissioner is set to meet with China’s top climate envoy to continue climate and environment dialogues. Agotha explained that, because they have “mostly the same point of view on climate,” the EU and United States essentially “[reinforce] each other” when they work bilaterally with China. Biniaz warned that in the past, China has “tried to divide us, at least in the global negotiations,” so there may be a benefit to hosting “trilateral” talks instead.

Katherine Walla is an associate director of editorial at the Atlantic Council.

Watch the full event

The post What the EU and US want to get done at COP28 appeared first on Atlantic Council.

Rebooting the Russian oil price cap

Brian O’Toole, Olga Khakova, Tomasz Wlostowski, and Charles Lichfield — Thu, 09 Nov 2023 20:50:21 +0000

The policy of capping the price of Russian oil exports reaches its first anniversary in less than a month. The idea was born just a few months after Russia launched its full-scale invasion of Ukraine, as the sanctions-wielding coalition identified record oil and gas export income as Moscow’s lifeline against an otherwise gloomy economic backdrop.

Most observers agree that the cap has played a role in limiting export income for Russia this year after a bumper 2022. Yet, as global prices have risen in recent months, the average price of an exported barrel of Russian oil has teetered above the sixty-dollar cap. September saw Russia’s monthly oil export earnings increase to $18.8 billion, the highest value since July 2022. A large fiscal deficit for 2023 seemed inevitable only a few months ago, but higher revenues captured through regular and special quarterly taxation mean Russia’s deficit may now be as small as 1 percent of gross domestic product or may even be replaced by a small surplus.

Alongside Western headlines on the price cap’s woes, Russian decision makers have become more brazen in their dismissal of the cap as a failure. In October, Deputy Prime Minister Alexander Novak called the cap “not only ineffective, but harmful” to Western consumers. In her long and technical briefing of the Russian Central Bank’s latest decision to raise interest rates, Central Bank Governor Elvira Nabiullina made a subtle dig by saying her forecasting teams would start using the Brent oil benchmark in their models instead of the Urals benchmark. It’s hard not to see a link to the price cap’s purported failure here. One of the reasons she gave for the switch was that it would allow the bank to better predict the Russian government’s tax take.

In June 2022, the Atlantic Council was among the first to showcase the nascent debate on the relative merits and risks of imposing a price cap. In the same format as the earlier article, experts offer several ideas on how the policy should be rebooted now. The three proposals below offer different views on how much can be expected of the cap, but all make useful policy recommendations on how to tighten implementation.

Keep the price cap as a cost to Russia without cutting off supply

Take on the “shadow fleet” helping Russian oil avoid the cap

Go after refined products and dodgy attestations

Keep the price cap as a cost to Russia without cutting off supply

The oil price cap mechanism always had a twofold goal: depressing Russia’s oil export revenues while keeping Russian supply on the market. Barrels sold by Russia have been systematically exceeding the sixty-dollar level prescribed by the cap in recent months as Brent has inched closer to one hundred dollars a barrel. But it’s still been possible to argue that the cap has dragged the average price of a Russian barrel down even as global prices have risen, thus depressing revenue for Moscow. Recent reports of significant tax revenues call more into question how long this argument can hold.

Beyond what the West needs to do to tighten obvious enforcement gaps, it also faces a communications problem. A slew of “the price cap isn’t working” headlines have hit front pages in recent weeks and months. It’s hard to disagree that the policy is failing to keep buyers of Russian barrels from paying above the sixty-dollar cap set in December of last year. But Western policymakers are more focused on how much harm Russia’s economy faces, suggesting that lens is better for evaluation than whether this complex price cap mechanism actually works.

Russia has lost more than $47.3 billion in income from oil exports since the price cap was introduced, according to estimates by the Atlantic Council’s GeoEconomics Center. This is over half of the $88.3 billion which Russia has made from exporting crude over the same period, according to customs data. This does not represent failure. The discount that Russian oil was already selling at compared to global prices has been entrenched by the cap. Even after the average price of a Russian barrel broke the cap in September, the discount to rising global prices has remained.

So far, the West’s attempts to tighten enforcement have been cautious, suggesting that the priority of keeping Russian oil on the market remains at least as important as limiting revenue. The first sanctions imposed by the US Treasury in relation to the price cap, imposed in October, were relatively low-profile, with only two new designations on firms based outside the coalition of countries that impose the cap. The justification provided is that the firms used US-based services—presumably insurance—for shipments that were not cap-compliant. US policymakers say this first attempt to sanction for cap circumvention is meant to serve as a deterrent and that a longer list of entities could be designated later. The European Union’s (EU’s) next package of sanctions—the twelfth—is expected to include measures against price cap circumvention too.

But as this all moves forward, those seeking to figure out what the West will do should pay less attention to the stories about whether a very complicated mechanism is “working.” Instead, they should focus on how policymakers are balancing between two priorities: keeping Russian oil on the market, and thus limiting price increases, while causing at least some impact on Russia’s income.

—Brian O’Toole is a nonresident senior fellow with the Atlantic Council’s GeoEconomics Center and global head of sanctions at Wells Fargo, where he oversees sanctions compliance and list-based screening efforts across the enterprise.

Take on the “shadow fleet” helping Russian oil avoid the cap

September marked a noticeable turning point for the oil price cap, as export income exceeded nine billion dollars for crude alone, according to calculations by the GeoEconomics Center. Russia has spent over a year and billions of dollars investing in a scrap-quality “shadow fleet” of oil tankers and seeking alternative insurance services. This has allowed it to shift 35 percent of its oil exports to providers based in jurisdictions that don’t apply the cap, while engaging in fraud—usually overinflated transport services and fake attestations—to sell oil above the sixty-dollar cap when using Western services for the other 65 percent. A multi-pronged approach is necessary to regain the lead in the sanctions game of cat and mouse. The sanctions-wielding coalition needs to improve transparency on the shadow fleet’s operations, strengthen attestation verification, and add a tariff to future ship sales to Russia by firms based in sanctions-wielding jurisdictions.

Russia’s recently acquired oil tankers play all the tricks in the book. Their ownership and management are opaque, with frequent “flag hopping,” or swapping a vessel’s flags to circumvent laws. The owners charge inconsistent freight rates with hidden trader and broker fees. Crew members spoof their vessel’s location or turn off their automatic identification system transponder, especially for ship-to-ship transfers (which are dangerous). The tankers are likely to exhibit severe maintenance deficiencies, too. The aged shadow fleet is a perfect recipe for an environmental disaster. For any ships passing through EU or UK territorial waters, authorities should mandate greater transparency and safety standards. Capitals that have decided against applying sanctions should also tighten supervision, if only to avoid an environmental disaster near their shores.

The foundation for this already exists in the eleventh sanctions package, which prohibits “access [to] EU ports for vessels that engage in ship-to-ship transfers suspected to be in breach of the Russian oil import ban or G7 [Group of Seven] Coalition price cap” and “for vessels which manipulate or turn off their navigation tracking system when transporting Russian oil subject to the oil import ban or G7 price cap.” This ban should be expanded to European territorial waters and not just the ports. Additionally, the ships should have up-to-date special survey inspections and be approved by a member of the International Association of Classification Societies Ships Registrations. Ships registered in countries with notoriously poor safety oversight, such as Cameroon, should also be banned from European territorial waters. Vessels moving through these areas should also showcase a clear and transparent ownership and management system, which will force greater accountability in case of an incident. And as suggested by former US Ambassador to Russia Michael McFaul’s International Working Group on Russian Sanctions, these ships should hold proper spill insurance.

How might all this help Ukraine and reduce Moscow’s revenues? Older ships are exceptionally expensive to maintain. Before Russia’s buying spree, ships more than fifteen years old were often worth more as metal scraps and parts. Moscow’s urgent and desperate need for alternative export methods has inflated their value. Forcing Russia to invest more into surveying and maintaining this fleet will reduce their net income and the amount they can devote to the war. For example, a special survey of one ship costs between three and four million dollars. Alongside the cost of longer shipping routes to reach Asian markets in lieu of European consumers and investments in launching insurance services, like-minded countries should use the cost of compliance to make it unviable for the shadow fleet to operate, forcing Russia to utilize reliable G7 services and sell its oil at cap-compliant prices.

There is an untapped space for cooperation between the West and the top buyers of Russian oil on ensuring the shadow fleet’s safety enforcements. China and India have already held back Russian ships for weeks due to safety concerns.

The G7 Coalition missed the boat on the first wave of shadow fleet acquisition by Russia, but something still can be done about future sales. European ship owners have made tidy profits by selling ships due for scrapping to Russia. All future sales should be taxed at a high level, but one where it still makes sense to pay the tax rather than to sell to Russia via circuitous measures and shell corporations. Though difficult to reach as new tax measures require the unanimous approval of member states, such a setup would protect European sellers while also making them more accountable for dealing with Russia.

—Olga Khakova is the deputy director for European energy security at the Atlantic Council’s Global Energy Center.

Go after refined products and dodgy attestations

As the one-year anniversary of the introduction of the Russian oil and petroleum products price cap in the EU approaches, this sanctions instrument is coming under increasing strain. With press reports of an ever-growing share of Russian oil trading outside the jurisdiction of the “price cap coalition” and many examples of Indian and Turkish petroleum products made from Russian crude entering the EU, it is fair to ask what the purpose of the policy is at this stage.

The European Commission will release its own proposals in the twelfth sanctions package next week, which are likely to require notification of tanker sales and banning trade with sanctioned vessels, as well as possibly some other measures. But three main problems are likely to remain unaddressed and they, too, require immediate attention.

The first one is a lack of review. The European Commission and the Council of Ministers have so far failed to review the level of the cap, though the legislation clearly sets out that the cap should be reviewed every two months. While the intention was to lower the cap, this could, in theory, have allowed the cap to be increased as long as it remained “at least 5 percent below the average market price for Russian oil and petroleum products.” But many member states still want to lower the cap, while others are closer to the United States in having Russian supply staying on the market as a priority. The lack of review remains puzzling, disheartening, and corrosive to the idea that EU law and compromises struck in the Council are followed. Although jurisdiction of the European Court of Justice on these matters is limited, one of the more hawkish EU member states could eventually try to sue the Council out of desperation and to highlight the problem.

The second problem is imports of petroleum products manufactured in third countries, such as India and Turkey, from Russian crude oil. Imports of petroleum products from countries that have clearly increased their imports of Russian crude as feedstock have increased. While the EU can hardly afford a complete ban on imports of petroleum products produced from Russian crude, it can afford to use the power of the EU import market to ensure full compliance with the price cap in line with the original spirit. Specifically, the EU should require that all imports into the EU of petroleum products manufactured from Russian crude abroad prove that Russian crude had been bought under the cap. This could be linked with a duty forcing third country refiners to log their imports of Russian crude to prove compliance. Opponents of this system will invoke complexity, but import procedures are already full of paperwork and documentation, which importers are used to dealing with. There is also the risk of fraud through false attestations, but that exists today. The system could work and any penalties should be high.

The third problem is the ease with which EU entities can claim to be complying with the cap, even if the underlying transactions they are engaged in do not. Under EU sanctions, EU insurance and shipping providers cannot service the export of Russian crude and petroleum, unless the transaction complies with the price cap. But the proof they are meant to demand varies. The EU’s guidelines have put actors into tiers depending on their access to pricing information. The closer one’s tier is to the underlying oil transaction, the more detailed the paperwork that is required to prove compliance.

For most, the documentation required is extremely light. Many entities can rely on generic attestations—often in the form of contract clauses—from other parties closer to the transaction stating they have complied or will comply in the future. This may partly be justified by the nature of the oil business: At the time the service provider is contracted, the price of the oil cargo is not yet known as the underlying transaction has not yet materialized. If increasing the burden of proof before the transaction is not an option, the new guidelines should at least require that EU entities verify—even ex post—the cargo was compliant with the cap once the transaction materialized. When billions of dollars are at stake, relying on parties’ promises to comply with the law is simply not good enough. The EU should not tolerate willful blindness when tens of thousands of innocent people are killed by weapons bought with money that EU companies helped Russia make.

Whatever the solution, the EU must do more to ensure the price cap is not routinely circumvented, as it seems to be today.

—Tomasz Wlostowski is a dual-trained EU/US sanctions lawyer with more than twenty years of experience in sanctions and export controls and the managing partner of EU Strategies, a consultancy.

The post Rebooting the Russian oil price cap appeared first on Atlantic Council.

Future of the Cities Summit of the Americas

Willow Fortunoff, Diego Area — Wed, 08 Nov 2023 21:30:00 +0000

The first of a six-part series following up on the IX Summit of the Americas commitments.

A report by the Adrienne Arsht Latin America Center in partnership with the US Department of State. This readout was informed by multi-stakeholder dialogues focused on facilitating greater, constructive exchange among multi-sectoral thought leaders and government leaders as they work to implement Summit commitments.

Executive summary

The first-ever Cities Summit of the Americas created a new platform for mayors across the hemisphere to build partnerships with civil society organizations–particularly those focused on the region and/or local governance–private sector companies, and one another. While attendees and observers from national and local government agreed the new forum should continue in some fashion, the task is now to identify new and existing mechanisms to institutionalize the mayoral convening.

Connecting the Cities Summit to the Summit of the Americas process, empowering stakeholders to contribute to the Cities Summit, and connecting subnational perspectives to hemispheric diplomacy mechanisms could help transition the summit from inaugural to continual.

DOWNLOAD PDF

Coverage

Alongside this readout, hear Daniel Ricchetti, Deputy Special Representative for City and State Diplomacy at the US Department of State, share his thoughts on the future of the Cities Summit and the prospects for providing continuity to the Summit: pic.twitter.com/UP1yzEDslt
— Latin America Center (@ACLatAm) November 8, 2023

Online Event Fri, June 10, 2022 • 10:00 pm ET

The joint future of the Caribbean working with Latin America

A series of discussions featuring heads of state and government following the conclusion of the Summit of the Americas.

Online Event Mon, May 23, 2022 • 2:00 pm ET

Road to the Summit: A digital future for the Americas

A conversation to generate strategies for bridging the digital divide at the Summit of the Americas.

Economy & Business Latin America Technology & Innovation

Online Event Tue, November 30, 2021 • 9:00 am ET

Road to the Summit: New opportunities for a more inclusive Americas

A conversation on democracy and governance ahead of the Ninth Summit of the Americas. How can democracies provide essential goods and services? What safeguards can be put in place to protect democratic institutions?

Americas Latin America Politics & Diplomacy Resilience & Society

Staff

Diego Area

Deputy Director, Strategic Development

Adrienne Arsht Latin America Center

Crisis Management Democratic Transitions

Former staff

Willow Fortunoff

Former Assistant Director

Adrienne Arsht Latin America Center

Americas Caribbean

Subscribe to LAC Source Newsletter
Get monthly updates on Latin America and the Caribbean (LAC) to receive the latest developments of the region, upcoming public events and recaps, new reports, and more.

The post Future of the Cities Summit of the Americas appeared first on Atlantic Council.

Derentz joins CNA to discuss energy markets and his expectations for COP28

bmathews — Thu, 26 Oct 2023 12:48:15 +0000

The post Derentz joins CNA to discuss energy markets and his expectations for COP28 appeared first on Atlantic Council.

Goldwyn quoted in News Room on Guyana’s strategies to manage its new oil and gas industry

bmathews — Wed, 25 Oct 2023 13:06:37 +0000

The post Goldwyn quoted in News Room on Guyana’s strategies to manage its new oil and gas industry appeared first on Atlantic Council.

Atoms for Peace 2.0: The case for a stronger US-Japan nuclear power alliance

Julia Nesheiwat and Shoichi Itoh — Mon, 23 Oct 2023 13:34:35 +0000

Since US President Dwight Eisenhower’s “Atoms for Peace” speech at the UN General Assembly in 1953, the nuclear energy landscape has changed dramatically. Eisenhower envisaged atomic energy as a way to build bridges between nations. Yet today, as an increasing number of countries in the Global South show interest in the carbon-free technology and view its adoption as a sign of geopolitical strength, Russia has capitalized on this opportunity to entrench itself in worldwide nuclear markets, while China waits in the wings to do the same.

The world currently has sixty nuclear reactors under construction, of which more than one-third are Russian-designed. Combined with projects under planning or negotiation, Russia currently enjoys more than 40 percent of the global nuclear reactor export market in various forms, including power plant construction, investments, provision of enriched uranium, and disposal of spent fuel. Russia has also weaponized nuclear power by occupying and refusing to operate the Zaporizhzhia Nuclear Power Plant in Ukraine and is jeopardizing global security by threatening to use tactical nuclear weapons, in spite of its status as a permanent member of the United Nations Security Council and founding member of the Nuclear Non-Proliferation Treaty (NPT).

Russia’s actions compel a thorough review of the geopolitics of nuclear energy. The United States must play a forceful role in ensuring that nuclear technologies contribute to the global order rather than be weaponized against it. In that endeavor, Japan can be an invaluable ally. Facing new challenges for peaceful use of atomic energy against the backdrop of Russian and Chinese-induced geopolitical instability, Tokyo and Washington should redouble their commitment to competing in the international nuclear energy market.

For Russia, nuclear power represents another geopolitical weapon, similar to oil and gas. Its state nuclear company, Rosatom, works analogously to Gazprom in leveraging energy trade for political ends. Rosatom has provided loans for strategic nuclear power projects abroad, including Astravyets in Belarus, Akkuyu in Turkey, El Dabaa in Egypt, and Rooppur in Bangladesh.

China has also identified the nuclear industry as a strategic sector and is gathering market share with its relatively cheap nuclear reactors, including the introduction of its Hualong One reactors in Pakistan and Argentina. Saudi Arabia is also reportedly interested in the Chinese reactor design.

A nuclear reactor race has begun between democracies and authoritarian states, and the latter are currently ahead.

Nuclear projects are capital-intensive with lengthy time horizons, and authoritarian powers’ intention to distribute nuclear reactors in developing countries is motivated by more than commerce. Russian and Chinese state-backed nuclear entities accrue geopolitical influence beyond mere commercial interests. The risk is that a short-sighted approach may inexorably lead to a diminished role for democracies in the growing international nuclear industry.

By contrast, nuclear vendors from democratic states, including the United States and Japan, have engaged the civilian nuclear market with business principles as opposed to geopolitical influence. That approach risks pushing the NPT regime toward collapse if the nuclear industry of the democratic world forfeits market share to authoritarian rivals.

With its hostage-taking of the Zaporizhzhia plant, Russia has eschewed strict compliance with the NPT principle of peaceful atomic energy use. Given such recklessness, it cannot be ruled out that Moscow is helping non-democratic states develop reactors in contravention of internationally accepted rules regarding management of nuclear fuels, related technologies, and fissile materials. Meanwhile, amid tensions with the West, China is leaning on Russia’s increasing provision of highly enriched uranium to scale up its military and civilian nuclear aspirations.

The United States and Japan should counter these actions in support of a norms-based nuclear energy trade. The United States is the world’s single-largest operator of nuclear reactors with a fleet of ninety-three in operation. Japan—with whom the United States has consolidated one of the strongest bilateral civilian nuclear partnerships—has the fifth-largest fleet in the world with thirty-three reactors.

Such experience and expertise in operating atomic energy assets should be put to use internationally as the global nuclear energy market expands in response to energy security and climate challenges.

Over the past six decades, Japan has become a key US partner with regard to the development of nuclear technologies and facilities. A nuclear partnership between the United States and Japan that promotes research and development and accelerates commercialization of next-generation nuclear reactor innovations—including small modular reactors (SMRs)—could address energy insecurity globally and spread best practices in nuclear safety.

The US-Japan strategic collaboration on supporting deployment of SMRs in Ghana, announced in October 2022, is an example of such a partnership. Following this example, the two allies should pursue commitments to the other countries in agreement with the International Atomic Energy Agency’s standards of nuclear safety, security and nonproliferation for the sake of sustaining the NPT regime.

Re-establishing a visionary nuclear energy strategy should be an economic and geopolitical priority for the democratic world. The US-Japan alliance should assume the leadership in peaceful atomic energy collaboration, along with the International Atomic Energy Agency, lest deeper Russian and Chinese penetration of the global nuclear market erode NPT safeguards.

Shoichi Itoh is a senior fellow at the Institute of Energy Economics, Japan (IEEJ)

Dr. Julia Nesheiwat is a distinguished fellow at the Atlantic Council Global Energy Center

EnergySource

EnergySource Jul 22, 2021

Expanding nuclear energy to the Arctic: The potential of small modular reactors

By Julia Nesheiwat

As Arctic communities look to reduce reliance on diesel generators for electricity production, small modular reactors are becoming an increasingly attractive option. Collaboration between governments, private companies, and civil society organizations is crucial to ensure the successful development and deployment of safe, transportable, microreactors for remote areas.

Energy & Environment Energy Transitions

EnergySource Oct 12, 2022

Nuclear energy and global energy security in the new tripolar world order

By Robert F. Ichord, Jr.

As the United States, Russia, and China move into a period of overt confrontation, competition in both the current and next-generation nuclear technology spaces will assume even more importance. Climate concerns only add more urgency to the race to deploy.

China Energy & Environment

EnergySource Feb 9, 2022

The hyper-charged appeal of hydrogen in the Arctic

By Julia Nesheiwat

It was a good summer for those hedging their bets on hydrogen as the next big thing in energy production, storage, and conservation. But while hydrogen looks to be an important part of net-zero energy mixes globally, its potential is especially exciting in low-density communities and fragile ecosystems like the Arctic, where the harsh effects of fossil fuel-induced climate change are most acute.

Energy & Environment Energy Transitions

Learn more about the Global Energy Center

The post Atoms for Peace 2.0: The case for a stronger US-Japan nuclear power alliance appeared first on Atlantic Council.

Ellinas in Financial Mirror: Green future needs natural gas

bmathews — Sun, 22 Oct 2023 12:58:32 +0000

The post Ellinas in Financial Mirror: Green future needs natural gas appeared first on Atlantic Council.

Ellinas in Financial Mirror: Supply shortage, conflicts keep oil prices high

bmathews — Sat, 21 Oct 2023 13:02:02 +0000

Online Event Thu, October 19, 2023 • 8:30 am ET

The post Ellinas in Financial Mirror: Supply shortage, conflicts keep oil prices high appeared first on Atlantic Council.

Goldwyn was quoted in World Ports on Venezuelan oil sanctions relief

bmathews — Fri, 20 Oct 2023 14:10:43 +0000

original Source

The post Goldwyn was quoted in World Ports on Venezuelan oil sanctions relief appeared first on Atlantic Council.

Senator Manchin: The US can ‘leapfrog’ China on clean energy with hydrogen investments

Nick Fouriezos — Thu, 19 Oct 2023 19:24:17 +0000

Watch the full event

Senator Joe Manchin on driving US industrial competitiveness with hydrogen

AN #ACFRONTPAGE EVENT – A conversation with US Senator Joe Manchin of West Virginia on US industrial competitiveness and global leadership in the hydrogen sector.

Energy Transitions Politics & Diplomacy United States and Canada

To better compete in the global energy arms race with China, the United States has a not-so-hidden weapon, according to the chairman of the US Senate energy committee: Hydrogen.

“If you want to be the superpower of the world, you have to be self-reliant on your energy, and we have all the resources to do it,” Senator Joe Manchin of West Virginia told Frederick Kempe, president and CEO of the Atlantic Council, at an #ACFrontPage event on Thursday.

The discussion comes at a time when energy independence has become not just an economic concern, but also a national security challenge. That reality has been underscored by the Russian war against Ukraine, as well as global supply chain concerns laid bare by the pandemic.

Read on for more of the key takeaways from their conversation, in which the chairman of the Senate Energy and Natural Resources Committee presented a vision for how US leadership on hydrogen can help fuel a net-zero future.

More than catch-up

Manchin highlighted the potential of hydrogen to enable a cleaner energy transition while maintaining US energy security. “Hydrogen basically does everything that petroleum does for you,” Manchin said, noting that, unlike solar or wind, it can provide the horsepower and torque needed for planes and other heavy transportation.
China’s hydrogen industry has a head start, including significant investments in the electrolyzer technologies that split water into hydrogen and oxygen, in part because it has “such an appetite for cheap energy,” Manchin said. “We’re still in first, maybe one-and-a-half to second generation.”

Manchin stressed the United States’ need to balance energy security needs with its energy transition objectives. “You cannot eliminate your way to a clean environment; you can innovate your way to it,” said Manchin.

Manchin credited recent legislative packages, including the Bipartisan Infrastructure Law and the Inflation Reduction Act, as market-driven solutions that position the United States to do more than just compete with China on clean energy: “You will see us leapfrog so quickly,” he said. “We cannot only play catch-up: We will surpass quicker than anyplace in the world because of our innovative and creative dynamics.”

Fueling American industries

The Department of Energy recently announced that its new seven billion dollar regional clean hydrogen hubs initiative will include funding for an Appalachian hub that includes West Virginia. “We can infuse hydrogen into our coal-fired units and reduce emissions,” Manchin said of his home state, which relies heavily on fossil fuels. “With gas, we can make blue hydrogen all day long.”
Looking ahead, Manchin predicted fusion power will become the major global energy source for the next generation. He said he is attending a groundbreaking Friday in West Virginia for a fusion power facility at a steel plant that could come online by 2028. “That’ll make the cleanest steel in the world,” Manchin said.

Throughout the conversation, Manchin stressed the need to balance environmental goals with energy security. “I am not going to remove something that’s dispatchable 24/7, dependable, reliable, and affordable with something that I’m betting on that only gives you five or six hours of intermittent power,” he said.
Manchin added that the focus must remain on how to reduce carbon emissions while still giving people quality jobs: “We’re investing more than any place else in the world on the cleanest energy for the future. And with that, you can’t leave anybody behind.”

Accelerating clean energy worldwide

Watching Russia weaponize energy in its war against Ukraine has led Manchin to worry even more about US dependence on China for energy and manufacturing. “I guarantee you Xi Jinping can weaponize all of those things. . . they could cripple us.”
China’s dominance includes processing 85 percent of the world’s rare earths, critical minerals needed for batteries, solar panels, and other clean energy technologies. Manchin and other legislators adjusted electric vehicle tax credits to incentivize automakers to source materials from the United States and trusted allies, with the intent of making sure the economy isn’t held captive. “That was our biggest problem,” he said. “We’ve allowed the building blocks of the United States of America to be relied upon in areas of the world that don’t have our values.”
To continue its global leadership, Manchin said the United States must understand the energy needs of emerging nations and partner with them, rather than punish them. It can do so by providing incentives to adopt the latest emissions-reducing technologies in “new coal plants they’re going to build anyway,” Manchin said. “We entice them by giving them access to our market. . . You can’t force them.”

Nick Fouriezos is a writer with more than a decade of journalism experience around the globe.

Watch the full event

The post Senator Manchin: The US can ‘leapfrog’ China on clean energy with hydrogen investments appeared first on Atlantic Council.

US Senator Joe Manchin on hydrogen’s role in the clean energy transition

Atlantic Council — Thu, 19 Oct 2023 16:18:10 +0000

Watch the event

Online Event Thu, October 19, 2023 • 8:30 am ET

Senator Joe Manchin on driving US industrial competitiveness with hydrogen

AN #ACFRONTPAGE EVENT – A conversation with US Senator Joe Manchin of West Virginia on US industrial competitiveness and global leadership in the hydrogen sector.

Energy Transitions Politics & Diplomacy United States and Canada

Event transcript

Uncorrected transcript: Check against delivery

Speaker

US Senator Joe Manchin (D-WV)
Chairman of the Senate Energy and Natural Resources Committee

Moderator

Frederick Kempe

President and CEO, Atlantic Council

FREDERICK KEMPE: Good morning. I’m Fred Kempe. I’m president and CEO of the Atlantic Council. Thanks for joining us today for a conversation with Senator Joe Manchin on US industrial competitiveness amid a rapidly evolving energy system.

So in recent years, the US government has allocated significant resources to large legislative packages intended to grow the US domestic industrial base—the Bipartisan Infrastructure Law, Inflation Reduction Act. Senator Manchin, you had a lot to do with those things. Building on these efforts, last week President Biden traveled to Philadelphia to announce deployment of a seven billion dollar fund to fund regional clean energy hubs through the Bipartisan Infrastructure Law. The US Treasury is also developing guidelines for the hydrogen tax credits included in the Inflation Reduction Act, which seek to balance environmental objectives and practical economic concerns, and US energy leadership. Hydrogen is seen as a key energy resource that will help enable net zero industrial and transportation sectors by 2050. So, with an abundance of our natural resources and strong labor force, we as a country are pretty well positioned to lead the hydrogen economy of the future and, at the same time, to be a net-zero industrial powerhouse.

That’s what we’re going to be talking about today, with a person who knows more about this than maybe anybody else anywhere, but certainly in the Senate. Senator Joe Manchin of West Virginia, chairman of the US Senate Energy and Natural Resources Committee, also serves on the Senate Committee on Appropriations, Senate Committee on Armed Services, and Senate Committee on Veteran Affairs. Longtime advocate of a balanced, common-sense approach to energy policy that considers the needs of our environment, for sure, the demands of the economy, and—let’s underline this—the strategic value of energy independence and industrial competitiveness to US national security and leadership.

So, Senator Manchin, welcome.

JOE MANCHIN: Fred, thanks for having me. It’s great to be here.

FREDERICK KEMPE: It’s terrific to have you here and terrific to have worked with you over many years.

So the first question is a broad one, before we get to hydrogen. Talking about the resurgence of policies that promote domestic manufacturing, a stronger US industrial base. You’ve been a big part of all of those. Where is this coming from and how is this underpinning a new vision for the economy?

JOE MANCHIN: Well, Fred, how everything came to came to light, you know, we’ve lived through historical times. We’ve gone through a pandemic that we’ve never, ever experienced in any of our lifetimes. I remember hearing about it from my grandparents, because my great-grandfather died of influenza in 1918. So I remember hearing about this horrible pandemic back then. Knowing it came to us in the twenty-first century was not preparing us for it. We never thought it would ever happen and we’re too advanced as a culture and a society. But it happened and it could repeat itself if we don’t learn from our—from our past.

So with that happening it changed who we are, how we do things, what we expect government to do. A lot of people got more dependent on government and a lot of the government people got more relaxed, if you will.

So then we see this horrific war in Ukraine. We were told it was going to be two weeks. Well, that wasn’t true. We were told inflation would be transitory. That wasn’t true. And then all of a sudden, we saw Putin weaponize energy and we’ve heard and we’ve seen this before. Many wars have been fought over energy and here we are in the twenty-first century, a land war in Europe and Putin has weaponized it.

And I’m thinking if he’s weaponized energy I guarantee you Xi Jinping can weaponize all of the things. The building blocks that they’re making for us at a lower price we’re thinking we’re getting a heck of a bargain. But they have control over the supply chain. They could cripple us.

So everything started coming to a reality that something’s wrong here and we’ve got to change. So I says, we’re not energy independent and now our European allies are held hostage because of the lack of energy and here’s the defender, the superpower of the world, United States of America, didn’t have the energy supply to be independent ourselves let alone be able to help our allies. That’s how this got started. That was the crux of all of this.

The bipartisan infrastructure bill was a spinoff of that big BBB bill. I could not do that whatsoever. I told the president—I said, this is a piece of legislation—

FREDERICK KEMPE: And BBB stands for?

JOE MANCHIN: Build back better. That was his, basically, marquee piece of legislation. I said, Mr. President, we respectfully disagree on this because I think it changes the psyche of our nation. I’m of the generation of “ask not what your country can do for you, what you can do for your country,” that John Kennedy said. I said, this piece of legislation is changing the psyche of our nation to how much more can my country do for me, and I couldn’t get there, just no way, shape, or form.

So, but the infrastructure, which we hadn’t done anything for thirty years, was there. We took that piece of legislation. I agreed that we could move forward, not guaranteeing my vote because I would never vote for BBB. But I needed to separate the bipartisan infrastructure bill and then we—my committee wrote the energy portion of that bill and that’s where hydrogen came in, and then from there we went to the IRA, which—and I will just say the results of the IRA, it was an energy security bill. The administration and the president have sold that as an environmental bill and that’s good because it does have a lot.

I will just say this. We are responsible as a nation to be energy independent and secure. If you want to be the superpower of the world you have to—you have to be self-reliant on your energy and we have all the resources to do it—oil, coal, gas—and we can do it better and cleaner than anywhere in the world.

FREDERICK KEMPE: And you were just saying on the way into this room that we’re producing more than we’ve ever produced.

JOE MANCHIN: And I’ll give you that. First of all, I’ve always said this. You cannot eliminate your way to a cleaner environment. You can innovate your way to it and the rest of the world will follow. You can’t eliminate and say: OK, I know you have these resources in your country, but you can’t use them. They’re going to use them.

FREDERICK KEMPE: So talk about this. I mean, we all talk about energy transition, energy transition. Could you translate that into plain English—what that means for America and the United States?

JOE MANCHIN: Energy transition means that basically every one of us are responsible for the climate. So my friends who say, oh, this is—this is the hoax, climate’s not real, well, they’re deniers, same as people who said that elections aren’t real and the—and the insurrection wasn’t real. I was there when that happened. It’s real. Those were all real.

So on that I just said here, to show the proof of the pudding, we are producing more energy today than ever in the history of the United States of America. We’ll be 4.6 billion barrels of oil this year. Thirty-seven trillion cubic feet of gas will be produced. Thirteen-and-a-half billion cubic feet of LNG is going out. That’s when we go up to twenty-five. That really helps backfill all of Europe’s needs.

So we’re doing our job and also we’ve increased the amount of production we get from wind and solar. We’ve doubled it in one year. So, the bill did what it was supposed to. The difference of the United States of America, what we did when we wrote these bills, we used the government as your partner and we incentivized and took some of the risk away.

So if we’re removing 15-20 percent of the risks you’re taking for a mega investment, investors will say, OK, I think I can take that risk. I can’t take 100 percent of it. And Europe has been using the carbon pricing forever, but they never took the proceeds to spur innovation and technology. So they were upset with us, and if you’ve talked to our European friends from government were upset because they’re hearing that sucking sound. Everyone’s coming to America to do this investment. And we’re getting more in my state of West Virginia than ever before.

So we’re going to be able to help innovate the new technologies that will help decarbonize the world. And the best way to say it is, we’re producing the energy that we need today and investing in the energy we’ll need for tomorrow. So we’re giving you what you need and we’re investing in what you want.

FREDERICK KEMPE: That’s a great way to describe the transition. In fact, it’s maybe the best way I’ve heard it described. So, let’s get to hydrogen and West Virginia. So, Department of Energy announces last week, this seven billion dollars for hydrogen hubs. And it includes the Appalachian Regional Clean Hydrogen Hub, incorporating West Virginia.

JOE MANCHIN: Well, it started—that’s where it is now. It’s going to be—that’s the majority of it. And we have some in Ohio and some in Pennsylvania. But we have that region, which is really—it’s hot as a firecracker as far as energy. We’ve always been coal, as you know. And now we have a tremendous amount of Marcellus Shale. We have Utica Shale. We’re one of the largest gas producers in the world.

FREDERICK KEMPE: Well, let’s talk about—why is hydrogen so important?

JOE MANCHIN: Hydrogen basically does everything that petroleum does for you. You know, it’ll do everything that hydrocarbons are doing, because of horsepower. But it has very low—and you can also make it very green with very low carbon emissions, or no carbon emissions. So if you’re going to be—if you need to do the job—you need to fly your planes, you need to run your trains, you need to basically run your trucks and things of that sort, electric’s not going to do it, OK? You need that horsepower; you need that torque. And hydrogen can give you that torque.

We’ve known it for a long time, but it was expensive, so when you had oil and you have all the refineries of diesel and all that that did it so much cheaper. But now, with our responsibilities to our climate—and the climate, basically, is real. We have a responsibility. This was a natural way to go. We’ve never matured it. So when I looked at, OK, where should we be investing? Where should we incentivize people to do things? It was based on technology that’s already been proven. We just never—we don’t have to go out and reinvent the wheel. It’s already been—just smooth it out, balance it. And we have to invest into that. And we never did that before.

China’s done an awful lot in hydrogen, OK? Electrolyzers and things of that sort. We’re still in first, maybe one and a half to second generation. And we can do an awful lot more. The United States of America, everyone said we’re playing catch-up. We cannot only play catchup; we will surpass quicker than anyplace in the world because of our innovative and creative dynamics.

FREDERICK KEMPE: Well, because you went to China, let’s stay there for a minute. How concerned are you about Chinese domination? Let’s stick with the hydrogen situation.

JOE MANCHIN: No, no, I know what you’re talking—I know where you’re going, Fred.

FREDERICK KEMPE: I mean, you know, because we’re competing in a lot of different areas. And energy is one of them. But let’s talk about the energy part, but put it in context of the overall competition.

JOE MANCHIN: Well, here, so basically, this administration wants to move to EVs, electric vehicles. I’m a market person. I’m a capitalist and the market person. So I believe that the market will take us at a time in this—if there’s that much demand for the product, there’ll be that much production. I think that basically that Elon Musk was the only person that jumped out when we had the crash into 2008-2009, and then there was some incentives put in there for electric vehicles to try to help the automotive industry. He’s the only one took advantage of it. He saw—he had the vision for that and did extremely well. Now everybody’s trying to play catch-up. And now they want us to continue to give $7,500 credit. That’s going to end. That has to end.

But the bottom line is, I was very reluctant to do that at all. And it went round and round with our—with our big three producers in America. And I said, listen, if you want the taxpayers to invest, then you’re going to have to give us something back. And that’s going to be critical minerals and processing has to be done in either North America or countries that we have reliable relations, with free trading agreements, so we don’t be held—so we’re not held hostage by China, by Russia, by Iran, and by North Korea, or countries that don’t have our values. That was our biggest problem that we’ve done. We’ve allowed the building blocks of the United States of America to be relied upon in areas of the world that don’t have our values.

FREDERICK KEMPE: And that’s where we are now.

JOE MANCHIN: That’s where we are now. And we’ve got to change that as quickly as we can. The administration, I think, in their desire to put so many vehicles out, they’re still going to be reliant on China, because China has an 80 percent lock on critical minerals processing—anodes, cathodes, everything for the battery. We’re trying to change that as quickly as we can. That’s the—that was a part of why we have—you get 3,750 dollars of credit for your car if you processed and you sourced the materials in North America or our free trade—our allies and friends. If you produced it in North America, you get the other 3,750 dollars. So we’re bringing manufacturing back. You’re having all these battery factories and this and that going on.

But what happens is you don’t have that horsepower, and that’s where hydrogen came in. So now you see these hubs. And in West Virginia, we’re in a transitional state. We probably rely more on fossil than any state in the nation, but we’ve been carrying this—I mean, filling that void for a long time. The coal-fired units we have, 93 percent of our energy in West Virginia comes from coal-fired. We can infuse hydrogen into our coal-fired units and reduce our emissions. There’s so much more we can do with it. With gas, we can make blue hydrogen all day long. We can make blue hydrogen almost carbon-free by carbon capture/sequestration, and we have the geological formations to do that. So we are a natural. That was a natural hub for this to prove that we can do with hydrogen as we transition and not really threaten any of the jobs that we have now, but complement them.

FREDERICK KEMPE: So on the supply chain in China, what is the problem in the supply chain with hydrogen? And then, more to the point, are we behind with China in this field?

JOE MANCHIN: Well, China’s—I mean, they’ve been doing hydrogen for quite—China has such an appetite for cheap energy they’re doing everything they can. They’re still the largest polluter in the world. And now, with India coming on, they’re going to fight each other who will pollute more.

So, with that, how can we help them? You can only do it by us accelerating through our creativity and our innovation. We can do that better and we always have. But now, when it comes to producing, you know, they have—their labor force was much cheaper. India’s labor force is going to be much more competitive. The technology will come from America, which it always has in everything they’ve done. But now we’re going to be utilizing the technology that we’re using, too.

People—I tell people, I say, you know, it’s global climate. Global climate’s not West Virginia climate. It’s not the United States climate. It’s not North—it’s the globe. So if 90 percent of all emissions are coming from one continent, Asia, then you can either, you know, throw stones at it or you can basically create the activity and create new technology that they’re able to use too. We’re not going to hold that from them; we’re just not going to be reliant on them to provide it to us.

So the electrolyzers, you will see us leapfrog so quickly in the new technology of electrolyzers to make—to make hydrogen, whether it’s going to be green hydrogen, it’s going to be pink hydrogen, blue hydrogen, all of these. And I’m just—I’m excited about it.

FREDERICK KEMPE: Senator, I hear the excitement. Some people of a certain age remember in a movie called “The Graduate” where Dustin Hoffman was told for the future you have to go—

JOE MANCHIN: Oh, now you’re—now you’re aging me.

FREDERICK KEMPE: —you have to go into plastics.

JOE MANCHIN: Yeah.

FREDERICK KEMPE: People in energy say now that current plastics is hydrogen, so maybe that’s true.

We’re the Atlantic Council, and we certainly think about transatlantic cooperation but we’re really about global cooperation. Our mission is working together with partners and allies to shape the global future. In this field, how can the US work with allies and partners to accelerate the development of the global hydrogen economy? So how does this—how does this apply to hydrogen?

JOE MANCHIN: Here’s the thing. You know, you have to look—these are all sovereign countries. They’re going to make their own decisions. They’re going to say: What’s best for my country? OK? So if they have resources that we know that might be more harmful to the climate, and we have that technology and we’ve proven—let’s use coal because I know about the coal –

FREDERICK KEMPE: Yeah.

JOE MANCHIN: I was a young person that grew up in the coalmines, coalfields, and all this. My family’s worked in coalmines, and we’ve—we’ve lost—I lost my uncle in coal disasters. So we’ve been through the real horrible part of all this. But also, they’re the most patriotic people you’ve ever seen. They produce the energy that won every war we’ve had. And if anything, they were deferred from going to the military because they needed to mine the coal that made the guns and—made the steel that built the guns and ships. So they’re very patriotic towards that.

The United States is this: With our technology but with our economy, we can allow developing nations that are using coal-fired plants, first generation, without scrubbers, without low-NOx boilers, without baghouses—if we can entice them to use this new technology when they’re putting these new coal-fired plants up that they’re going to build anyway, and we entice them by giving them access to our market, you can incentivize them to, OK, use the best technology that’s available and we will share that with you. We will help you. But this is our incentive to you to do that. You can’t force them, OK, which we’re not. And now, if you are an Indian in rural India, years ago I was there and there were people basically taking animal waste and cooking it in the sun, letting it bake, and then using it for fuel at night to heat their home, cook their food. Now, do you think that a person that had to go through that to have any type of substance of life is going to worry about what’s coming out of a smokestack with a new coal-fired plant? I don’t think so.

FREDERICK KEMPE: Talk to them about hydrogen, right?

JOE MANCHIN: Yeah. So, we have to accelerate that. And I think that’s the leadership that United States can give.

FREDERICK KEMPE: An accelerator but working with partners and allies.

JOE MANCHIN: You work with them. You basically show them—you can have the World Bank, Ex-Im Bank, all this now to give them financing. Help them start out. If you’re going from—there are six hundred million people in the world have no energy at all. And there’s probably a couple—close to a couple billion that have first-generation energy that we used in the forties and fifties. This is what we’re dealing with.

FREDERICK KEMPE: So we’re just about out of time, but maybe just finally, this whole balancing between decarbonization goals and energy security, how does the US pull that off? And as you’re balancing this, how do you—how do you strike that balance?

JOE MANCHIN: Fred, let me just say this, I’m a staunch believer that just because you have a desire that you think this would be better, well, in a perfect world, you’re probably right. This would be better than this. It’s not a perfect world. But we have to balance it out the best we can. I am not going to remove something that’s dispatchable 24/7, dependable, reliable, and affordable, with something that I’m betting on that only gives you five, or six, or intermittent power. I’m not going to replace dispatchable with intermittent until the intermittent can give me dispatchable reliability. We don’t have that yet.

I will say that all the younger people watching, listening to us, will probably end up in their lifetime and our children’s lifetime with fusion being the main source, OK? And that solves a lot of the world problems because a lot of the world has been disrupted because of the fight over energy. And I was—I’ve been to France. I’ve been to Provence area France, ITER. You’ve heard of ITER. If you—if you haven’t, just Google ITER, I-T-E-R and Provence, France. And it’ll tell you all about fusion. Thirty-seven countries. China’s still involved. They’re working side-by-side. The Russians are there. We’re there. The Koreans are there. Everybody that you hear all this turmoil going on around the world are trying to unlock—

FREDERICK KEMPE: Have you—have you—we’re at the end, but when does fusion come in as something—

JOE MANCHIN: Let me just tell you right now, OK, I’ll be going tomorrow back home to West Virginia. And we’re going to break ground for Nucor Steel, one of the largest steel companies in the world. They’re building a three billion dollar new plant with arc furnaces. They just signed a contract with Helion. Helion is a new fusion company. And they’re going to build—they’re planning to build a Helion factory—a power fusion factory—beside the steel factory that will be making the most—the cleanest steel in the world. And they think that that’ll be feasible by 2028.

FREDERICK KEMPE: 2028? All right. You heard it here. 2028, fusion and—

JOE MANCHIN: Well, we’re hoping—

FREDERICK KEMPE: And the cleanest steel factory in the—well, look, this is just a terrific conversation. It brings us to the end of our discussion today. I want to thank Joe Manchin, Senator Joe Manchin, for joining us for today’s edition of Atlantic Council Front Page. This is our platform for global leaders on these issues.

JOE MANCHIN: Let me just say, Fred, if I can, this: The United States of America is producing more energy, cleaner than anywhere in the world today. More energy, cleaner than anywhere in the world. We’re investing more than any place else in the world on the cleanest energy for the future. And with that, you can’t leave anybody behind. The transition is basically, how do we transition into a lower carbon or a zero-carbon environment, and still have people that have quality jobs? That’s what’s going on. Hydrogen is that great, natural gas is that great transition. That’s what—that’s what we’re working on.

What happened when they went to wind and solar, and during the 2009-10 years they did it, and bringing the cost of sixteen to eighteen cents a kilowatt hour down to five and six cents, left a lot of people behind, OK? And West Virginia was one of those states. It’s always been a heavy lifting, done everything that’s been asked of them, and got left behind. That’s not happening anymore. And it won’t happen with what we’re doing now.

FREDERICK KEMPE: I think that’s the place to close.

JOE MANCHIN: OK.

FREDERICK KEMPE: I think anyone watching here in our offices, virtually around the world, has got to be infected by your enthusiasm for all this.

JOE MANCHIN: It’s going to happen. It’s a great time to be an American.

FREDERICK KEMPE: Yeah. It’s a great time. I share your enthusiasm about the technology. And I think sometimes people don’t focus enough on the technology and where it’s going. So thank you for that. Thank you for joining us for Atlantic Council page one. Tune in for more sessions with the Atlantic Council. We’ll see you again soon. And please also here and the audience here, join me in thanking Senator Joe Manchin.

JOE MANCHIN: Thank you. Thank you. Appreciate it.

Watch the event

The post US Senator Joe Manchin on hydrogen’s role in the clean energy transition appeared first on Atlantic Council.

Wald quoted in Univision on the US’ suspension of Venezuelan oil sanctions

bmathews — Thu, 19 Oct 2023 14:15:17 +0000

The post Wald quoted in Univision on the US’ suspension of Venezuelan oil sanctions appeared first on Atlantic Council.

Wald quoted in Axios on Venezuelan partial oil sanction relief

cakers — Thu, 19 Oct 2023 14:13:02 +0000

Original Source

The post Wald quoted in Axios on Venezuelan partial oil sanction relief appeared first on Atlantic Council.

Shaffer in The Central Asia – Caucasus Analyst: A New Spring for Caspian Transit and Trade

cakers — Tue, 17 Oct 2023 14:06:18 +0000

Original Source

The post Shaffer in The Central Asia – Caucasus Analyst: A New Spring for Caspian Transit and Trade appeared first on Atlantic Council.

Elnagdy in The National Interest: Is South America A New Persian Gulf?

Atlantic Council — Mon, 16 Oct 2023 19:05:13 +0000