War in Ukraine Shifts European, American Views on Energy Dependence
Power pylons and wind turbines in Rommerskirchen, North Rhine-Westphalia, Germany, February 26, 2022Relying on authoritarian states for fuel supplies turns out to be a dismal geopolitical strategy.
Relying on authoritarian states for fuel supplies turns out to be a dismal geopolitical strategy.
In Ukraine, climate change means mud season arrives earlier. Fields normally freeze solid in late winter, but this February, warmer weather has thawed soils into pools of thick goo that have slowed the Russian army’s advance. Vehicles have gotten bogged down, forcing convoys to abandon shortcuts and hug the road to Kyiv. The grim spectacle of Russia’s offensive has so commanded the world’s attention that when the latest report from the United Nations’ Intergovernmental Panel on Climate Change landed, full of dire new facts about our smoldering planet, it escaped broad notice.
Perversely, though, the war in Ukraine has accomplished what COP26 failed to do in Glasgow when the United Nations climate conference ended four months ago. The opprobrium that’s rained down on Russia has helped fuel a strong new European consensus on expediting the clean-energy transition. More importantly, Russian President Putin’s attack on Ukraine has exposed the dangers of relying on authoritarian states to broker terms in the energy sector. Yet if the West simply swaps out fossil fuels for renewables with little appreciation for the geopolitical consequences of exchanging Russia for China, the leading supplier of the rare earth metals that are vital to the renewable-energy sector, it merely substitutes one set of immense challenges for another.
Natural gas production has cratered as North Sea gas supplies were tapped out, while demand rebounded after COVID-19-stricken economies opened up to a colder winter, all of which contributed to the recent price shocks in Western Europe. In less than a week after the war began, Germany shed any remaining illusions about Russia with remarkable speed considering its deep and almost crippling dependence on Russia for 35 percent of its oil imports, 55 percent of its natural gas imports, and 50 percent of its coal imports. After abandoning the certification of Nord Stream 2 this week, Germany announced plans to purchase liquefied natural gas from other suppliers and set a decisive path to solar and wind renewables that will supply 80 percent of the country’s electricity by 2030 and 100 percent by 2035. In Eastern Europe, however, this transition is more challenging for countries like Poland and Slovakia that have modest renewables sectors and are even more dependent on fossil fuels.
Under the banner “Renewable energy is freedom energy,” an intricate recalibration project is under way. The German public’s abhorrence of nuclear energy, stemming from the Chernobyl and Fukushima catastrophes, has not abated. Opposition to coal also remains strong, yet both fuels could re-emerge as short-term options in Germany’s energy mix.
Though Ukraine continues to send tremors through the American energy sector, the war has amplified the existing debate rather than presaging a wholesale transformation in attitudes toward renewables. Bolstered by Sen. Joe Manchin (D-WV), coal interests never stopped bad-mouthing renewables and called for federal assistance during the pandemic. Coal-sector lobbyists promise to become even more assertive in the wake of rising natural gas prices. One problem is that renewables are not well positioned to replace fossil fuels on a large scale anytime soon, absent an acceleration in developing a viable clean-energy storage technology. Nevertheless, coal’s new ascendance promises to be short-lived once natural gas prices begin to decrease and power companies ramp up commitments to renewables.
With oil prices headed north of $100 a barrel, President Biden announced during his State of the Union address that the United States has pledged to contribute 30 million barrels from the Strategic Petroleum Reserve to the 60 million barrels committed by International Energy Agency member countries to forestall Russian supply disruptions and reassure nervous markets (and American drivers). (Prices have surged anyway, of course.) European consumers, who have long paid considerably more for gas and electricity than Americans, have already been saddled with mounting costs for more than a year, and are likely to see prices continue to climb with war on the continent. American consumers have been increasingly subject to price shocks, too, as inflation surges—whether they will continue to accept high prices under these circumstances is not yet clear.
For now, Russian gas continues to flow west.
Local energy sources can guarantee a certain amount of energy independence and security. But will substituting one extractive industry for another wreak strategic havoc over time? Already empowered by its lead role in mining the rare earth metals used in batteries and the manufacturing of renewable components, China has been making mining deals in Africa and Central and South America. Russia has also wanted to cash in on rare earth metals, aiming to be a major producer by 2026, which could bolster its military technology and provide new funding for its armed forces and mercenaries as well.
Eroding China’s dominance of rare earth supplies, however, poses its own economic challenges. “If we decide that we don’t want to rely on the Chinese for [photovoltaics] and wind turbines, and these critical raw materials, and, instead, rely on lithium from Chile and Bolivia, and our own resources in the U.S. and Canada, the effect will be that they’ll be a lot more expensive,” says Michael Mehling, deputy director of the MIT Center for Energy and Environmental Policy Research.
The White House did announce last week new investments in domestic production of rare earths, particularly in California’s San Bernardino and Imperial Counties. But these are mainly pilot programs and demonstration projects that will take years to spin up.
Wartime pledges to accelerate the renewables transition, then, have their strategic complexities—in particular, the prospect of swapping out fossil fuels produced by Russia and OPEC+ for Chinese dominance of the supply of rare earth metals used in solar and wind generation. With another commodity gearing up to take center stage, countries may end up repeating the same geopolitical mistakes that have empowered Putin. The task before the West, then, is not just transitioning to renewable energy, but doing that guided by a strategic energy and industrial policy that limits dependence on potential adversaries.