MAY/JUNE 2023• VOLUME 102• NUMBER 3

The Age of
Energy Insecurity
How the Fight for Resources
Is Upending Geopolitics
JASON BORDOFF AND MEGHAN L. O'SULLIVAN

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 The Age of
Energy Insecurity
How the Fight for Resources
Is Upending Geopolitics
Jason Bordoff and Meghan L. O’Sullivan

A
s recently as 18 months ago, many policymakers, academics,
and pundits in the United States and Europe were waxing
lyrical about the geopolitical benefits of the coming transi-
tion to cleaner, greener energy. They understood that the move away
from a carbon-intensive energy system that relied on fossil fuels was
going to be difficult for some countries. But on the whole, the con-
ventional wisdom held that the shift to new sources of energy would
not only aid the fight against climate change but also put an end to
the troublesome geopolitics of the old energy order.

JASON BORDOFF is Founding Director of the Center on Global Energy Policy at

Columbia University’s School of International and Public Affairs and Co-Founding Dean
of the Columbia Climate School. During the Obama administration, he served as Special
Assistant to the President and Senior Director for Energy and Climate Change on the staff
of the National Security Council.
MEGHAN L. O’SULLIVAN is Director-Designate of the Belfer Center for Science and
International Affairs and the Jeane Kirkpatrick Professor of the Practice of International Affairs at
the Harvard Kennedy School. During the George W. Bush administration, she served as Special
Assistant to the President and Deputy National Security Adviser for Iraq and Afghanistan.

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Such hopes, however, were based on an illusion. The transition

to clean energy was bound to be chaotic in practice, producing new
conflicts and risks in the short term. By the fall of 2021, amid an
energy crisis in Europe, skyrocketing natural gas prices, and rising
oil prices, even the most optimistic evangelist of the new energy
order had realized that the transition would be rocky at best. Any
remaining romanticism evaporated when Russia invaded Ukraine
in February 2022. The war revealed not only the brutal character of
Russian President Vladimir Putin’s regime and the dangers of an
excessive energy dependence on aggressive autocracies but also the
risks posed by a jagged, largely uncoordinated scramble to develop
new energy sources and to wean the world off old, entrenched ones.
One result of this turmoil has been the revival of a term that
had come to seem anachronistic during the past two decades of
booming energy supplies and utopian visions of a green future:
energy security. To many Americans, that phrase is redolent of the
1970s, conjuring images of boxy sedans and wood-paneled station
wagons lined up for miles, waiting to fill their tanks with gasoline
at sky-high prices thanks to the Arab oil embargo of 1973 and the
Iranian Revolution of 1979. But energy security is hardly a thing of
the past: it will be crucial to the future.
Energy security has historically been defined as the availability of
sufficient supplies at affordable prices. But that simple definition no
longer captures reality; the risks the world now faces are both more
numerous and more complicated than in earlier eras. To handle these
new challenges, policymakers must redefine the concept of energy
security and develop new means of ensuring it. Four broad principles
should guide this process: diversification, resilience, integration, and
transparency. Although these principles are familiar, the traditional
methods of applying them will prove insufficient in this new era;
policymakers will need new tools.
There is no reason to despair just yet. After all, the oil crisis of
the 1970s sparked a great deal of innovation, including the devel-
opment of today’s wind and solar technologies, greater efficiency
in vehicles, and new government and multilateral institutions to
make and coordinate energy policy. The policies and technologies
that now seem old and outdated were once shiny and new. Today’s
crisis may likewise lead to novel ideas and techniques, as long as
policymakers fully grasp the new realities they face.

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THE FUTURE ARRIVED EARLY

The events of the past year and a half have dramatically revealed the
many ways in which the energy transition and geopolitics are entan-
gled. Dynamics that were once seen as theoretical or hypothetical are
now concrete and evident to even the casual observer.
First, the past 18 months have highlighted the “feast before famine”
dynamic facing traditional producers of oil and gas, whose power and
influence will increase before it wanes. In 2021, for example, Russia
and other oil and gas producers had a banner year in terms of reve-
nue as extreme weather and the world’s emergence from pandemic
slowdowns boosted demand for natural gas. Such shocks had outsize
impacts in a market with a meager cushion. In previous years, poor
returns, uncertainty about future demand for energy, and pressure to
divest from fossil fuels all contributed to diminished investment in
oil and gas, resulting in inadequate supplies. Russia took advantage
of these tight energy markets by draining its European gas storage
sites and slashing spot gas sales even as it met long-term contractual
commitments. Average natural gas prices tripled from the first half
to the second half of 2021. Combined with rising oil prices, these
developments granted Russia a feast of annual revenues that were 50
percent higher for oil and gas than the Kremlin had expected.
The past year and a half also demonstrated that some oil and gas
producers were still prepared to use their energy prowess to ruthlessly
advance their political and geostrategic objectives; hopes that the
world had moved beyond such behavior were dashed with the brutal
Russian invasion of Ukraine in February 2022. In the months that
followed, Russia gradually cut its pipeline gas deliveries to Europe by
more than three-quarters, triggering a crisis that led European gov-
ernments to spend a staggering 800 billion euros shielding companies
and households from higher energy costs. The world’s dependence
on Russia for energy initially weakened the global response to the
invasion: for many months, Russian oil flows were exempt from Euro-
pean sanctions. To this day, the EU has not sanctioned Russian gas
sales; indeed, its members continue to import significant volumes of
Russian liquefied natural gas. Tight energy markets allowed Russian
oil and gas revenues to soar and gave Moscow a potential means of
dividing a newly united Europe.
By last year, the mismatch between declining supplies and rising
demand had already tightened the oil market. Prices leaped even

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further, to a 14-year-high, on market fears that the delivery of millions

of barrels per day of Russian oil would be disrupted even as demand
surged. At the beginning of the war in Ukraine, the International
Energy Agency (IEA) predicted that Russian production would decline
by three million barrels per day. Fears of supply shocks drove up oil
prices and boosted both the income and the geopolitical heft of major
oil producers, particularly Saudi Arabia. The United States had thought
its days of begging Saudi Arabia to increase oil output had passed. But
in the face of high prices, old patterns reas-
serted themselves, as Washington pleaded—
mostly in vain—for more output from Saudi Energy security
Arabia, the only country with any meaningful is hardly a thing
spare oil production capacity.
The tremors of the last 18 months also
of the past: it
illustrate how the geopolitical environment will be crucial
can affect the pace and scope of the tran- to the future.
sition to clean energy. Before the Russian
invasion of Ukraine, European countries and the United States were
committed to transforming their economies to achieve net-zero
carbon emissions in the coming decades. The brutality of Russia’s
actions and the knowledge that those actions were funded by fossil
fuel receipts reinforced the determination among many in Europe
and the United States to move away from oil, gas, and coal. In Wash-
ington, one result was landmark climate legislation in the form of
the Inflation Reduction Act. Europe also expedited its green plans,
notwithstanding some small near-term increases in coal use.
Many American officials worry, however, that a more accelerated
energy transition will necessarily involve greater dependence on China,
given its dominance of clean energy supply chains. U.S. Senator Joe
Manchin, a Democrat from West Virginia, warned that he did not want
to have to wait in line to buy car batteries from China the way he waited
in line in the 1970s to buy gasoline made with oil from the Middle East.
Such fears led Congress to create incentives for the domestic production,
refining, and processing of critical minerals now centralized in China.
Rather than praising Washington for finally passing meaningful climate
change legislation, however, much of the world resented these moves as
acts of U.S. protectionism, stirring talk of climate-provoked trade wars.
Finally, the energy crisis of the last 18 months has widened the rift
between rich and poor countries. Many countries in the developing

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world became more strident in objecting to pressure to diversify away

from fossil fuels, noting the rise in food and energy costs emanating
from a European war. Developing countries have also denounced what
they perceived as the hypocrisy inherent in how the developed world
has responded to the crisis: after years of citing climate change as a
reason to avoid funding natural gas infrastructure in lower-income
countries, for example, European countries were suddenly racing to
secure new supplies for themselves and building new infrastructure
to accept them. Making matters worse, as Europe bid up the price of
gas, demand for coal spiked in Asia and drove prices to record levels,
leaving developing and emerging-market countries, such as Pakistan
and Bangladesh, struggling to afford energy in any form. These ten-
sions were on full display at the UN climate conference in Egypt in
November 2022. Biden arrived to take a victory lap over the passage of
a historic domestic climate law but found that poorer countries were
unimpressed. Instead, they asked why the United States was not doing
more to finance climate-change adaptation and clean energy outside
its borders and demanded that their richer counterparts compensate
them for the damage that climate change has already caused to their
cities, agriculture, and ecosystems.
The energy crisis may have eased in recent months, but it is still far
too early for complacency. The vast majority of Europe’s reduction in
gas demand last year arose from unusually warm weather and the idling
of industrial production, as opposed to intentional conservation that
can be sustained. Moreover, Europe may not be able to rely on much,
if any, Russian gas to refill its storage facilities over the coming year.
The flow of piped Russian gas into Europe throughout 2022, albeit in
shrinking volumes, has now halted and seems unlikely to resume; the
Russian liquefied natural gas still flowing to Europe could come under
pressure and be curtailed in the months ahead.
Meanwhile, with growing risks to Russian oil output, global demand
is expected to rise nearly twice as much as supply in 2023, according to
the IEA. Washington’s primary tool for cushioning supply disruptions,
the U.S. Strategic Petroleum Reserve, is vastly diminished. If prices begin
to soar again, Western countries will have few options but to turn once
more to Saudi Arabia and to the United Arab Emirates, which also has
some spare capacity. Ironically, by the time the UAE hosts the next major
UN climate conference, at the end of 2023, the world may well also be
turning to Abu Dhabi not just for climate leadership but for more oil.

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SOURCES OF STRESS
Driving the new energy insecurity are three main factors: the return
of great-power rivalry in an increasingly multipolar and fragmented
international system, the efforts of many countries to diversify their
supply chains, and the realities of climate change.
Russia’s invasion of Ukraine and its broader confrontation with the
West offer a striking example of how the ambitions of a single leader
can create energy insecurity for broad swaths of the world’s population,
and the war serves as a reminder that great-power politics never really
went away. The U.S.-Chinese contest, however, may ultimately prove
more consequential. The intensifying desire of the United States and
China to not rely too much on each other is remaking supply chains
and reinvigorating industrial policy to a degree not seen in decades.
Even with redoubled efforts to produce more clean energy at home,
the United States and others will still depend on China for critical
minerals and other clean energy components and technologies for
years to come, creating vulnerabilities to Chinese-induced shocks. For
instance, in recent months, China has suggested that it may restrict
the export of solar energy technologies, materials, and know-how as
a response to restrictions that Washington imposed last year on the
export of high-end semiconductors and machinery to China. If Beijing
were to follow through on this threat or curtail the export of critical
minerals or advanced batteries to major economies (just as it cut off
rare earth supplies to Japan in the early 2010s), large segments of the
clean energy economy could suffer setbacks.
Traditional energy heavyweights are also recalibrating their positions
in response to the changing geopolitical landscape in ways that increase
energy security risks. Saudi Arabia, for instance, now sees its global
stance differently than it did in the decades that followed the famous
“oil for security” bargain struck by U.S. President Franklin Roosevelt
and Saudi King Abdulaziz ibn Saud on Valentine’s Day in 1945. Riyadh
is now far less concerned with accommodating Washington’s requests,
overt or implied, to supply oil markets in ways consistent with U.S.
interests. In the face of a perceived or real decrease in U.S. strategic
commitment to the Middle East, Riyadh has concluded it must tend
to other relationships—especially its links to China, the single largest
customer for its oil. The kingdom’s acceptance of China as a guaran-
tor of the recent Iranian-Saudi rapprochement bolsters Beijing’s role
in the region and its global status. Relations with Moscow have also

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become particularly important to Saudi Arabia. Regardless of the inva-

sion of Ukraine, the Saudi government believes that Russia remains an
essential economic partner and collaborator in managing oil-market
volatility. It will therefore be extremely reluctant to take positions that
pit the Saudi leadership against Putin.
The new energy insecurity is also shaped by forceful moves many
countries have made to domesticate and diversify their supply chains
since the invasion of Ukraine and the global pandemic. Such moves
are understandable, and even wise, given the now evident risks of
excessive dependence on certain countries, notably China, in this new
geopolitical era. Yet an interconnected global energy system remains
the cornerstone of energy security; markets are still the most efficient
way to allocate supplies. Increased self-sufficiency may give countries
an increased sense of resilience but could also make them vulnera-
ble; an interconnected global market can ease disruptions caused by
extreme weather or political instability. More segmented energy mar-
CH RIST IAN GRALI NGEN

kets will inevitably have fewer options to tap in such circumstances.

The U.S. Inflation Reduction Act and Europe’s Green Deal industrial
plan are intended to accelerate the drive to net-zero emissions, and
they reduce energy insecurity in some ways by curbing dependence
on globally traded hydrocarbons exposed to geopolitical risks.

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Yet they also increase insecurity, since promoting domestic industries

runs the risk of stoking protectionism and fragmentation, both of
which can make economies less energy secure.
Finally, climate change will be a major threat to energy security
in the coming decades, posing risks to infrastructure old and new.
Warmer waters and more severe droughts will make it harder to
cool power plants, transport fuels, and rely on hydropower. In 2022,
California lost half its hydroelectric output because of drought, and
Brazil was nearly forced to ration electricity after losing much of
its hydropower. These kinds of events will become more common
as the world decarbonizes because an energy system less reliant on
hydrocarbons will depend more heavily on electricity; the cheapest
way to decarbonize sectors such as transportation and heating will
be to use electricity instead of gasoline engines or natural gas boilers.
The IEA estimates that if the world is to reach the goal of net-zero
carbon emissions by 2050, 50 percent of global energy consumption
will need to be met by electricity, up from only 20 percent today. And
nearly all that electricity will need to be produced from zero-carbon
sources, up from only 38 percent today.
Climate change will place much of the infrastructure for this
electricity generation, transmission, and distribution at greater risk,
since fragile grids and overhead wires are often more vulnerable to
extreme weather, wildfires, and other climate-related risks. Climate
change can also have a negative impact on renewable sources of
electricity, with the UN Intergovernmental Panel on Climate Change
projecting that by 2100, average global wind speeds could fall by 10
percent as climate change reduces the differences in atmospheric
temperatures that generate wind.

DIVERSIFICATION DILEMMAS
One solution to these problems is to diversify supply. Diversification
remains as central to energy security as it was in 1913, when Winston
Churchill, then the first lord of the Admiralty, declared that “in vari-
ety, and in variety alone” would the United Kingdom find a solution
to vulnerabilities created by his decision to shift the British navy from
a reliance on Newcastle coal to less secure sources of oil from Persia.
In the long run, the clean energy transition will lead to improved
energy security in many cases by diversifying fuel sources and suppliers.
For example, transportation, most of which currently runs on oil, will

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be less vulnerable to fuel supply disruptions in a world where roughly

two-thirds of vehicles are electrified, since electricity can be generated
from multiple energy sources. And because most electricity is produced
close to where it is consumed, a more electrified world will also be less
subject to import disruptions caused by disputes among countries.
Yet as the transition progresses and consumers diversify away from
fossil fuels, new vulnerabilities and threats to energy security will arise.
Even as oil use wanes, geopolitical risks may increase as global production
becomes further concentrated in countries that
can produce at low cost and with low emis-
sions, many of which are in the Persian Gulf. The United States
In the IEA scenario in which the world reaches thought its days
net-zero carbon emissions by 2050, the share
of global oil supply from OPEC producers rises
of begging Saudi
from around one-third today to roughly one- Arabia to increase
half. The oil giant BP anticipates an even greater oil output had
global dependence on these producers, estimat- passed.
ing that by 2050, they will account for close to
two-thirds of global oil supply. In the long run,
that will be a large share of a tiny pie, but for decades, oil demand will
remain very high and consequential even if annual demand is falling.
U.S. policymakers may well ask themselves how comfortable they
would feel if global oil production were to be even more heavily concen-
trated in OPEC countries than it is today. Faced with that outcome, they
might consider a number of options, such as extending the increasingly
popular concept of “friend shoring” to oil by more actively supporting
production at home and in countries such as Norway and Canada,
which are perceived as less risky than, say, Iran, Libya, and Venezuela.
Some officials might even advocate penalizing less friendly oil sources
through import taxes or even sanctions.
Taking such measures to subvert the market and bolster oil production
in preferred locations would carry significant risks, however. It would
undermine the benefits that come from the ability to reroute oil supplies in
case of disruption. It would also risk backlash and retaliation from major
global oil producers in OPEC, which can send prices higher by restricting
output. Subsidizing domestic supply would also run counter to efforts to
encourage consumers to move away from fossil fuels. A better approach
would be to embrace global markets but boost defenses against inevitable
shocks and volatility with larger, not smaller, strategic oil reserves.

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Meanwhile, diversifying the inputs of clean energy will be even

more difficult than doing so for fossil fuels. The sources of the requisite
technology and components, notably the critical minerals needed for
batteries and solar panels, are even more heavily concentrated than
oil. The world’s largest supplier of lithium (Australia) accounts for
around 50 percent of global supply, and the leading suppliers of cobalt
(the Democratic Republic of the Congo) and rare earths (China)
each account for around 70 percent of those resources. In contrast, the
world’s largest producers of crude oil—the United States, Saudi Arabia,
and Russia—each account for just 10 to 15 percent of global supply.
The processing and refining of these minerals are even more concen-
trated, with China currently performing around 60 to 90 percent of it.
Meanwhile, Chinese companies manufacture more than three-quarters
of electric vehicle batteries and a similar proportion of the so-called
wafers and cells used in solar energy technology.
U.S. policymakers have recently awakened to these vulnerabilities
and the fact that they will become more acute as the transition pro-
gresses. The Inflation Reduction Act encourages the production of criti-
cal minerals in the United States and elsewhere by providing tax credits
and loan guarantees for domestic producers, among other measures.
The Biden administration recently signed agreements with Congo and
Zambia that are intended to increase U.S. imports of their clean-energy
minerals. And the U.S. International Development Finance Corpora-
tion (DFC) has pursued debt transactions to support the development of
solar cell manufacturing outside China. But to get more of the minerals
it needs from more of the countries it prefers, Washington will need
to strike many more bilateral and multilateral trade agreements and
sharpen instruments such as the U.S. Export-Import Bank, which can
fund overseas mining operations in friendly countries such as Indone-
sia. For its part, the U.S. Congress should increase the DFC’s authority
and expand its ability to make investments.
Another area that badly needs more diversification is enriched ura-
nium, which will become more important as the use of nuclear power
increases globally to meet low-carbon electricity needs. Russia’s role as
a dominant supplier of nuclear fuel services to many countries, includ-
ing the United States, is a source of great discomfort and vulnerability,
given the current geopolitical realities. Boosting uranium production,
conversion, and enrichment in the United States and among its West-
ern allies and substantially ramping up their fabrication of the fuel

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assemblies for Russian-made reactors will be critical to maintaining the

existing nuclear fleet and keeping decarbonization goals within reach.

BUILDING RESILIENCE
A secure energy system must be able to withstand and bounce back
quickly from unexpected shocks and disruptions. At the most funda-
mental level, reliable energy infrastructure is the key to that sort of
resilience. Governments and private companies have long worked to
protect energy infrastructure from dangers of all kinds, from terrorist
attacks to hurricanes. As the transition proceeds, they will need to
step up such efforts. Moreover, as the clean energy economy becomes
more digitized and electrified, it will be exposed to a growing threat of
cyberattacks. Private companies and governments will need to coor-
dinate and cooperate to deter and respond to threats such as the 2015
cyberattack that took out large swaths of the grid in western Ukraine.
Resilience also requires flexibility, which in the energy sector is
measured by the ability of every part of a system to cope with losses
in other parts. Because renewable sources such as solar power and
wind are highly variable, the energy they generate needs to be either
stored or backed up by other sources, with delivery systems making
minute-by-minute adjustments. That is already a difficult task, and it
will become even harder in a grid with more intermittent sources of
energy and more variable electricity demand. According to the IEA,
the global power system’s need for flexibility—measured as the amount
the rest of the system needs to adjust to handle changes in demand
and in solar and wind output—will more than quadruple by 2050 if
all countries fulfill their climate pledges. Today, plants that run on
coal or gas perform most of these adjustments. But as the transition
progresses, the number of such plants—and thus their ability to serve
as backstops—will progressively diminish.
To counteract that dynamic, U.S. policymakers should take steps
to make sure that the increasing share of renewable energy on the
grid is matched by adequate balancing resources and storage capacity.
Doing so will require structures such as so-called capacity markets,
which pay generators to be available to meet peak demand even if
they are idle much of the time. Such mechanisms can help ensure that
companies whose resources are needed only infrequently nevertheless
stay in business and support a reliable electricity supply even as their
utilization rate falls as the grid decarbonizes.

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Officials can also make use of new tools to manage demand

for energy without massively inconveniencing consumers or creating
political headaches. For instance, digital technology can help consumers
shift energy-intensive activities to low-demand times of the day (such
as running dishwashers and clothes dryers overnight) or prompt
them to save energy by lowering thermostats in unoccupied rooms.
Artificial intelligence will also play a growing role—for example,
by reducing the amount of time that energy systems are down for
maintenance, by forecasting demand, and by
improving storage. Such tools would have
Energy security come in handy in December 2022, when
will be advanced grid operators in Texas badly underestimated
how much electricity customers would need
not through more and the state barely avoided widespread
autonomy but blackouts. Finally, officials should avoid the
through more early retirement of fossil-fired electricity
integration. sources that can balance the grid and ensure
reliability before alternatives are fully capable
of providing the necessary level of service.
A resilient system must also be able to weather unexpected shocks
and supply disruptions. For decades, policymakers have relied heavily
on two types of buffers: the spare capacity of oil-producing countries
(especially Saudi Arabia) and strategic stockpiles, which members
of the IEA are required to hold as part of an agreement forged after
the Arab oil embargo in the 1970s. These historical buffers will still
matter as the transition unfolds—even more so if, as seems likely
today, declines in energy supply and investment are not synchronized
with declines in demand, leading to less slack in the system to
handle unexpected shocks and more volatility. Moreover, it is clear
that Riyadh has become far less willing to dip into its spare capacity
whenever Washington demands it. As coal generation declines in
a decarbonizing economy, there will be less opportunity for power
generators to toggle between natural gas and coal, as many do now. This
new reality could result in more volatility in natural gas prices. And
recent turmoil in the refining sector that contributed to skyrocketing
gasoline and diesel prices in the United States was a reminder that
limited refining investment can bite consumers before vehicle
electrification causes fuel use to drop sharply. For those reasons, other
strategic stocks of all kinds will become more important—not just

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those that hold oil but also ones that hold natural gas and oil products
such as diesel fuel and gasoline.
The United States will also need strategic stockpiles of the building
blocks of clean energy, working with its allies to amass critical minerals
such as lithium, graphite, rare earths, and nickel. Such coordination
would be enhanced if the IEA had a hand in negotiating agreements,
assessing which countries are best positioned to contribute to which
stockpiles, and regularly monitoring whether the composition of stock-
piles fits current needs. The IEA has played this role admirably for oil
and oil products and could do so again with critical minerals if its
members chose to expand its mandate.

INTEGRATION AS INSURANCE
A desire for greater security has spurred the decades-long quest for
“energy independence” in the United States and elsewhere. And
because of the shale revolution, the United States has become energy
self-sufficient in net terms. Nevertheless, the country continues to
be vulnerable to geopolitical risks because in a global market, supply
shocks anywhere affect prices everywhere. Proponents of the tran-
sition to a net-zero carbon system have long heralded the greater
insulation from geopolitics that would likely result from the end
of the fossil-fuel era. But at least for the next few decades, energy
security will be advanced not through more autonomy but through
more integration—just as it always has been.
Interconnected and well-functioning energy markets increase energy
security by allowing supply and demand to respond to price signals so
the entire system can better handle unexpected shocks. In 2005, when
Hurricanes Katrina and Rita disrupted much of the U.S. Gulf Coast’s
vast production and refining operations, energy companies were able
to avert fuel shortages by quickly importing supplies from the global
market. Similarly, after the Fukushima nuclear disaster in 2011, Japan
was able to temporarily shut down its nuclear power sector because it
could import other sources of fuel from the global market.
But maintaining and cultivating interdependence in today’s
environment is more difficult than at any time in recent memory,
as countries around the world are embracing industrial policies that
involve increased state intervention in markets. Although those efforts
can deliver benefits, such as minimizing markets’ vulnerability to the
whims of geopolitical adversaries, many policymakers want to go further,

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promoting such policies as a means to boost domestic jobs and build

political coalitions in support of stronger action on the environment.
Indeed, although climate diplomacy has been premised for years on
the assumption that progress depends on transnational cooperation,
some efforts to advance climate action paradoxically risk undermining
cooperation by fueling the forces of fragmentation and protectionism.
The case for energy integration has suffered as a result of Europe’s
urgent need to decouple from Russian energy during the war in
Ukraine. Nevertheless, although shocks may be felt more broadly in
an integrated system, they are also felt less intensely. Integration is a
form of insurance that spreads the risk of energy supply disruptions
among many parties. And even if more autonomy were preferable to
more integration, it would not be possible to expand clean energy at
the scale and speed needed if each country sought to produce and
consume only within its own borders. According to the IEA, the
value of global trade in critical minerals will need to triple to achieve
net-zero emissions by 2050. Global trade in low-carbon fuels such
as hydrogen and ammonia will also need to grow exponentially. For
the United States, energy security will require fewer trade barriers
and more trade agreements with allies, as well as with other countries
that meet certain environmental standards. Washington should also
eliminate tariffs on goods and technologies related to clean energy
and help finalize the Environmental Goods Agreement, which would
reduce tariffs on goods that benefit the environment to lower their
costs and increase their trade.

WHAT YOU DON ’ T KNOW CAN HURT YOU

One of the reasons that the United States, Canada, Japan, and several
European countries created the IEA in 1974 was that a lack of accurate,
reliable data on prices and supplies had made it hard for governments
to craft policies and respond to crises. The lesson was clear: good data
allows markets to function, prevents panic, and deters the specula-
tion that exacerbates price spikes, volatility, and shortages. Over the
decades, IEA data, along with data assembled by the International
Energy Forum, has underpinned decision-making about production
levels and guided actions such as coordinated releases of stockpiled oil.
A clean energy economy will need the same kind of transparency.
Inadequate data in nascent markets, such as those for green ammonia
and hydrogen, can cause supply disruptions, a lack of liquidity, and

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poor availability of spot price assessments, all leading to pronounced

price fluctuations. The energy transition will also depend heavily on
the market for critical minerals, such as nickel. But investors were
reminded of how market opacity can trigger extreme volatility when
the price of nickel on the London Metal Exchange almost quadru-
pled over just two days in early 2022, owing to massive short-selling
caused in part by a lack of price transparency.
Currently, some private companies have good information on prices,
but no single entity gathers broad industrywide data and makes it pub-
licly available. The IEA is the clear candidate to fill that role. Ideally, the
agency would ask governments to share consumption and production
data on minerals and make informed inferences about inventory levels.
Such data sharing would be especially important to ensure compliance
if governments agreed to create strategic stockpiles, as they do with
oil. For such a system to work, however, the IEA would have to bring
in countries that are not members of the organization but produce or
consume significant amounts of those minerals, which in turn would
require a new legal framework for the agency. Meanwhile, to help
prevent market manipulation and speculation, national regulators such
as the U.S. Commodity Futures Trading Commission should require
greater transparency in the pricing and trading of commodities.

SECURITY AND THE CLIMATE

The importance of energy security never diminished; it had sim-
ply been taken for granted in a world of abundance and integrated,
well-functioning global energy markets. Policymakers now have the
opportunity to look at energy security and climate security afresh,
to accord appropriate weight to both, and to appreciate that neither
can be achieved in the absence of the other.
This effort requires recognizing that energy security is not a static
concept but one that has evolved a great deal since the crises of the
1970s. Policymakers must grasp the new risks to energy security and
modernize their toolkits to combat them. Doing so is not a distraction
from addressing climate change but central to it; without this shift,
energy crises might derail the drive to net-zero emissions. In the not-
so-distant past, officials and experts thought that excessive fears about
energy security might hinder the fight for the climate. Today, the oppo-
site is true: as the transition to a net-zero world proceeds, the bigger
danger to the climate will be insufficient attention to energy security.

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