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Adrienne Arsht Latin America Center

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Willow Fortunoff

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EnergySource Aug 8, 2022

The Inflation Reduction Act places a big bet on alternative mineral supply chains

By Reed Blakemore, Paddy Ryan

The Inflation Reduction Act’s consumer electric vehicle tax credit will create strong demand for alternative minerals, sourced and processed outside of existing supply chains. The ability for these alternative supplies to meaningfully diversify mineral value chains hinges on further investment and policymaking effort.

Energy & Environment Energy Markets & Governance

EnergySource May 6, 2022

Colombia can lead the energy transition in Latin America

By Juan Gomez

Colombia’s geography gives it a chance to take a leadership role in Latin America’s energy transition. But to do so, Colombian leaders will first need to address indigenous concerns, remove barriers to investment, and fix long-standing mismanagement issues.

Colombia Energy & Environment

EnergySource Aug 10, 2022

Does the Inflation Reduction Act take the right approach to shoring up clean energy supply chains?

By William Tobin, Daniel Helmeci, and Selin Kumbaraci

The IRA houses two distinct approaches to building up domestic and friendly clean energy supply chains. The approach based on incentives is likely to be more effective than the one based on penalties.

Energy & Environment Energy Markets & Governance

Learn more about the Global Energy Center

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 How cities can drive the energy transition in the Western Hemisphere appeared first on Atlantic Council.

Moldova must seize opportunity to end energy dependence on Russia

Suriya Evans-Pritchard Jayanti — Mon, 10 Jul 2023 16:22:04 +0000

When Moldova acceded to the EU Energy Community Treaty in 2010, it pledged to restructure away from Soviet centralization and reform its natural gas sector to comply with the EU’s anti-trust laws. More than 13 years later, the path ahead toward unbundling remains long and winding. The issue is urgent, however, because without gas sector reforms that break Russia’s stranglehold on Moldova’s energy sector and allow for real competition, Europe’s poorest country cannot hope to achieve energy security.

Moldova simply cannot afford to delay reforming its gas sector any longer. It is completely dependent on imports to keep itself heated and lit. Landlocked between Ukraine and Romania, 99% of oil is imported, along with 100% of natural gas. That gas fuels heating and the country’s lone power plant, located in Kremlin-controlled separatist region Transnistria.

This alone would be a recipe for energy disaster (and has been). Additionally, the country’s gas sector is almost entirely controlled by a monopoly called Moldovagaz, which is 51% owned by Russia’s gas monopoly Gazprom, with a 36% share owned by the Moldovan government and 13% by Transnistria. Moldovagaz’s wholly owned subsidiaries dominate all of the various subsectors of the energy industry. For example, Moldovatransgaz runs 98% of the distribution network.

This arrangement has afforded Moscow decades of informal control over Moldova. Indeed, allegations of Russia’s manipulation, coercion, and malign influence over the tiny country as exercised through Moldovagaz are too extensive to illuminate in full. A few highlights are the 2006 and 2009 gas shutoffs by Gazprom, which left tens of thousands of Moldovans without heating in the dead of winter. There have also been several rounds of brutal gas supply negotiations that have left Moldova with deeply disadvantageous gas contracts.

The most recent contract was signed in October 2021 and committed Moldova to another five years of Gazprom supplies. At the same time, President Maia Sandu’s new government, its lawyers, and its Western supporters are struggling with the fact that either pro-Russian actors in the former government or Moldovagaz officials appear to have wiped the files necessary to untangle several of the legal instruments that keep the country in its unhappy marriage with Gazprom.

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Modovagaz also faces various accusations of accounting shenanigans. These include claims that it supplies Transnistria with gas that the breakaway region doesn’t pay for, and then charges the debt to the Moldovan government. Coupled with sometimes dubious debts Moldova has incurred buying gas, Gazprom claims the government now owes it $9 billion. This represents $760 million in purported Moldovan government debt, and $8.24 billion in debt tied to Transnistria. For comparison, Moldova’s GDP is under $14 billion.

Meanwhile, during October 2021 negotiations with Gazprom, Moldovagaz committed “not to carry out a forced reorganization” until this debt is settled. Critics believe this is a further indication that unbundling would be good for Moldova and bad for Russia. Signed in the midst of the mounting energy crisis of late 2021 and with Moldova running entirely out of gas, this agreement has been widely branded as an example of inappropriate Russian influence over the Moldovan energy sector.

Eurasia Center events

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The obvious solution to break Russia’s energy dominance over Moldova is for the authorities to finally implement the unbundling of the gas sector and vertically de-integrate Moldovagaz. The EU Third Energy Package requires the three tiers of a natural gas market (upstream/production, midstream/transmission, and downstream/distribution) not be controlled by the same entity. In practice, this means separating the gas transmission system operator, Moldovatransgaz. The original deadline for unbundling was in 2016, with extensions then granted until January 2020, and then February 2021. In 2021, EU officials opened infringement proceedings against Moldova for its continued failure to unbundle Moldovagaz. In June 2023, the Ministry of Energy announced it was “determined” to complete Moldovagaz unbundling by September 2023. We shall see.

What form any unbundling will take also remains unclear. The Moldovan government may believe it lacks the capacity to manage Moldovatransgaz and the transmission system and may look for an external company to operate it. This would be a major mistake because giving critical infrastructure assets over to foreign entities would be repeating the same error as with Gazprom and Moldovagaz. It would also preclude Moldova’s learning to be self sufficient, a key aspect of energy independence and security. Another theoretical option is privatization, but that requires finding a buyer. Given Moldova’s history of defaults and disputes with private investors, there’s close to zero chance of that happening.

The best option is almost certainly finding a different government entity other than Moldovagaz to take control of Moldovatransgaz. This would replicate how Ukraine unbundled its gas monopoly, Naftogaz, by spinning off the transmission system operator into a separate entity controlled by a different ministry. There is some tangential precedent: Using a revolving EBRD credit of €300 million, the gas trading team at state agency Energocom, led by Maciej Wozniak, has pushed Gazprom out of the Moldovan market. Along the same lines, another state agency could step into the distribution business. This would have the added benefit of being more efficient because nothing new would need to be created; the unbundling would be a matter of paperwork.

There has probably never been a better time for Moldova to get serious about this; the cessation of gas transit from Gazprom into Europe means Russia has already played its energy trump card and has relatively little leverage left.

At the same time, Western interest and willingness to support Moldova during the transition should help cover any gaps. Politically, Moldova taking control of assets ultimately owned by Russia is good optics for Sandu’s government. And the political turmoil in Moscow coupled with the Kremlin’s distraction from its stalled war in Ukraine could make Moldovan maneuvers less likely to elicit an aggressive response. If everything goes right, becoming the supplier to Transnistria could even forge something of a path to national reconciliation. There’s never been a better moment to try, and there’s no time to waste.

Suriya Evans-Pritchard Jayanti is a nonresident senior fellow at the Atlantic Council’s Eurasia Center.

The beginning of the conversation included a review of the causes of corruption in Iran and specifically analyzed the role that sanctions play in its prevalence. To initiate the discussion, Chamlou mentioned a study by one of Iran’s top economists that found only 20% of corruption can be traced back to sanctions, whereas 80% is attributed to other factors. This begs the question, what could that something else be?

Entrepreneur Majid Zamani claimed that while sanctions are not the only cause of this corruption, they have created a plethora of opportunities for rent-seeking, which only those who are ideologically connected to the regime have access to.

Within Iran specifically, Zamani discussed the existence of a theocratic system, stating that because people are selected for leadership based on their loyalty to ideology, rather than merit, the political system is poorly organized and thus more susceptible to corruption. Furthermore, Dadpay argued that because Iran has a nationalized economy with extensive regulations, as opposed to a globalized economy, the government benefits from corruption and monopolization. Zamani added that the banking system epitomizes this vulnerability to corruption due to the interest rates, corrupting all loans.

Impact of Corruption & Sanctions

The panel then moved to the discussion of how corruption and sanctions have manifested in Iranian society. Given the US Government’s prioritization of US interests, as opposed to those of the Iranian community, Atlantic Council’s nonresident senior fellow Brian O’Toole and Dadpay both recognized that even though these sanctions are targeted, they will ultimately influence all Iranians, by creating a demand for sanctions evasion and a market that avoids financial responsibility. When asked whether Iranians could avoid corruption in the private sector and still succeed, Zamani claimed that the entire private sector in Iran is impacted by its relationship to the government. However, there is a spectrum of involvement, with one end including those who are loyal to the government and comfortable with the corruption and the other end comprising of individuals trying to avoid engaging in corrupt behaviors but ultimately having to comply at times in order to survive. He also clarified that although they do not make up the majority of the GPD, the Iranian private sector includes small market owners and medical professionals, occupations that comprise the bulk of society.

How to address it

After discussing the causes and effects of corruption in Iranian society, the panelists moved to their recommendations as to how to address it. O’Toole said that it takes time, so patience and persistence are crucial, and tackling corruption begins by addressing root problems. While pursuing flashy cases of corruption may be more alluring, it often only targets a single perpetrator rather than the source. To tackle the wider system would require transparency at every stage, even the more mundane. Dadpay agreed with O’Toole, advocating for a clear and transparent legal framework and stating that accountability in corruption cannot be achieved without an explicit and independent judiciary branch. In order to achieve transparency and accountability, according to Zamani, civil society must demand it from the government, through civil disobedience and outward refusal to engage in a corrupt system of governance. Lastly, moderator Chamlou included her own belief that tackling corruption in Iran would require dismantling networks of patronage and government insiders.

Masoud Mostajabi is a Deputy Director at the Atlantic Council’s Middle East Programs.

Britt Gronemeyer is a Young Global Professional with the Middle East Programs at the Atlantic Council.

The post The mechanisms of corruption in Iran appeared first on Atlantic Council.

South Asia’s climate challenges are transnational. Its climate solutions must be, too.

Ahsan Butt — Fri, 07 Jul 2023 20:08:25 +0000

This northern summer has highlighted the transnational nature of the climate challenge. Wildfires in Canada have rendered air in the United States unbreathable, while heatwaves have killed citizens on both sides of the Rio Grande. South Asia is no stranger to such phenomena: Cyclone Biparjoy was, at one point, forecast to almost perfectly bisect Indian and Pakistani territory, albeit lands that are generally sparsely populated.

By luck or providence—even secular Karachiites, half-jokingly, repeatedly invoked the spirit of Abdullah Shah Ghazi in the week before the cyclone was to hit—Pakistan was spared the worst of Biparjoy. And while India was not so lucky as to avoid it completely, the damage it meted out was considerably less intense than initially predicted.

The cyclone highlighted the negligible level of cooperation between the Indian and Pakistani governments on climate issues. Despite its geographic trajectory, the days before the cyclone made landfall saw no communication, collaboration, or coordination between Islamabad and New Delhi, or even among the state governments most likely to be affected—Sindh and Gujarat. And while it is notable that Pakistan used data from the Indian Meteorological Department, which is better equipped than Pakistan’s, neither side acknowledged this help. More importantly, had the cyclone hit more densely populated border areas, each country would have handled its own disaster response.

This siloed strategy for dealing with Biparjoy is emblematic; the lack of a joint approach to climate disaster management reflects a wider lack of climate cooperation across South Asia, whose two billion people share plenty of problems but few solutions. Governments and officials in the region almost never talk about floods and droughts, nor heat plans for cities, nor data on river flow and glacial melt, nor farming techniques. Notwithstanding limited efforts by multilateral organizations such as the International Centre for Integrated Mountain Development or the World Bank (through its One South Asia program), it is not controversial to claim that South Asia features the least amount of transnational climate cooperation of any region in the world, a travesty of epic proportions when one considers the region’s vulnerability to climate change.

The reason South Asia lags well behind other regions in transnational climate cooperation is simple: the geopolitical strife between India and Pakistan. In an alternate universe, where the pair had a normal, productive relationship, the South Asian Association for Regional Cooperation would be the venue for tackling the species-threatening challenge of climate change. Instead, the organization is a moribund joke, not even managing to hold a meeting in almost a decade.

In the same alternate universe, there would be high-level delegations from India, Pakistan, and Bangladesh regarding the water cycle and changes in the monsoon, common air sheds that trap heat and pollution, negotiations over the next generation of water treaties, crop burning and air pollution, trade in electric vehicles, and, potentially, the construction of a region-wide renewable energy grid. Instead, in the real world, even Track II meetings—where information, ideas, and conversations were once exchanged by activists, journalists, and experts—have, since 2018, ground to a halt.

Above this structural baseline of regional connectivity, or lack thereof, Pakistan suffers disproportionately. India’s preponderant geopolitical position vis-à-vis Pakistan, especially economically and diplomatically, and its stated mission to isolate Islamabad, (which even manifests in India’s cricket team refusing to visit Pakistan for international tournaments), leaves Pakistan worse off than the typical South Asian country when it comes to tapping into regional networks of climate cooperation. In interviews I conducted in Pakistan this summer, some environmental activists allege that the country tends to be excluded from even multilateral, technocratic ventures run by outside actors such as the World Bank or the United Nations Environment Programme (UNEP), and that Pakistan is suffering a “blackout of sorts.” This is before one even considers bi- or trilateral climate cooperation between national governments.

One illustration of Pakistan’s isolation is the electricity deal poised to be struck between India, Bangladesh, and Nepal. The agreement will allow India’s neighbors to trade surpluses in energy production to each other through India’s grid. This is a landmark achievement that, once formalized, has a great deal of potential to alleviate energy anxiety and promote clean energy throughout the region. But Pakistan is conspicuously absent from these discussions, which feature not just the three signatories but also the likes of Bhutan and Sri Lanka.

While the costs of this marginalization mostly accrue to Pakistan, the rest of South Asia also loses what it could gain from collaboration with Pakistani officials, activists, lawyers, scientists, mayors, farmers, and journalists. Pakistan’s experiences, for instance, with its reforestation of mangroves, widely lauded as one of the world’s most successful such efforts, may prove valuable to others. Even more checkered initiatives, such as Imran Khan’s ballyhooed Billion Tree Tsunami, can furnish important lessons, both in their successes and failures. One of my interviewees, a policy expert with experience throughout Asia, favorably rates Pakistan’s efforts with a carbon market, which outpace the likes of Sri Lanka’s or Nepal’s.

The fundamental reality is that, for South Asia, cooperation on climate change is not a nice-to-have, but a need-to-have. The best case for all concerned would be for India and Pakistan to resolve their geopolitical differences. But even absent such optimistic scenarios, cooperation on climate, easily the biggest political challenge of the twenty-first century, cannot be held hostage to twentieth century disagreements. Climate change is simply too extreme in its impacts, and its nature—transnational, viciously complex in its distributional effects across and within borders, and multifaceted across water, ice, air, heat, and soil—means that cooperation is not just necessary, but existentially urgent.

Given Pakistan’s present distraught and destabilized state, and the uncompromising mood in New Delhi on all matters Pakistan, one should not expect even a minor diplomatic thaw any time soon. Some analysts put hope in the 2024 elections in India, after which, the story goes, Prime Minister Narendra Modi will have more room for maneuver for a breakthrough with Pakistan, and Pakistan itself might become a more stable and less dysfunctional polity able to deliver on whatever agreement the two countries reach.

If all that happens, fantastic. But waiting for intergovernmental cooperation on this score would be wrongheaded. There is a deep reservoir of potential in people-to-people contacts drawn from civil society, the academic and research communities, metropolitan authorities, and those who work in agriculture. Such meetings should be encouraged and institutionalized, preferably at a distance from the sharp glare of ministries, personalities, and government offices for whom, no matter how small the meeting or event, the political stakes will always be too high. Moreover, multilateral organizations devoted to tackling climate change in South Asia, including but not limited to UNEP and the World Bank, must do more to include Pakistan, even if this contradicts the goals of Indian foreign policy.

Ahsan I. Butt is a nonresident senior fellow at the Atlantic Council’s South Asia Center and an associate professor at the Schar School of Policy and Government at George Mason University.

SouthAsiaSource Apr 12, 2023

The geopolitics of the energy trilemma in South Asia

By Robert F. Ichord, Jr.

South Asian countries are being subjected to the consequences of China and Russia’s efforts to expand their influence in the region. In this complex geopolitical context, expanded US and G7 clean energy efforts are needed.

Bangladesh Climate Change & Climate Action

SouthAsiaSource Sep 9, 2022

Experts react: Catastrophic flooding in Pakistan

By South Asia Center experts

More than one-third of Pakistan is underwater amid catastrophic climate change-induced flooding. South Asia Center experts provide their analyses of the situation.

Climate Change & Climate Action Economy & Business

SouthAsiaSource May 23, 2022

South Asia’s climate crisis: Policymakers need to feel the heat

By Erum Haider

Few things unite South Asia more urgently right now than the climate crisis. We can only hope that policymakers are listening.

Climate Change & Climate Action Energy & Environment

Southasiasource Blog

How four cities are building resilience to extreme heat

Kashvi Ajitsaria — Fri, 07 Jul 2023 19:14:19 +0000

The world broke the record for the hottest day ever this week—twice. On July 3, the average global temperature hit 17.01°C (62.62°F), exceeding the August 2016 record of 16.92°C (62.46°F). Then, on July 4, it rose to 17.18°C (62.92°F).

Already, cities around the world are facing intense heat waves. Several European and Southeast Asian countries broke records for their hottest temperatures. The southern United States has been hit by a long-lasting heat dome; parts of India have sweltered under 47°C (116°F) heat; and areas of North Africa reached temperatures of 50°C (122°F) this year.

The worse news? This summer will likely get even hotter.

As the urgency of this issue becomes impossible to ignore, many local governments are taking action to build heat resilience. At the Atlantic Council’s Adrienne Arsht-Rockefeller Foundation Resilience Center (Arsht-Rock), we work closely with cities around the world to protect the people most exposed to the dangerous impacts of climate-driven extreme heat. Here are four examples.

Seville: Naming heat waves is changing the way people understand extreme heat

Seville, Spain, has been leading the charge on naming extreme heat events. So far, Seville has experienced two named heat waves: Zoe in July 2022 and Yago in June 2023.

Seville has named heat waves through a naming and categorization system called proMETEO. This system, piloted by Arsht-Rock in collaboration with the University of Seville and Seville City Council, monitors the weather forecast and categorizes heat waves into three tiers ranging from least (Category One) to most severe (Category Three).

Seville is in its second year of naming and categorizing heat waves. In addition to better protecting Seville’s residents, this project is creating important social dialogue on the harmful impacts of extreme heat, and it is serving as a model for other cities to pilot similar initiatives.

Miami: The world’s first Chief Heat Officer is tackling heat head-on

Miami, where temperatures routinely hit the high 90s, was the first city in the world to appoint a Chief Heat Officer (CHO). CHOs are officials supported by Arsht-Rock’s Extreme Heat Resilience Alliance who are responsible for unifying their city governments’ responses to extreme heat.

Miami’s CHO, Jane Gilbert, has more than thirty years of experience working in climate resilience. She has worked closely with Miami-Dade County Mayor Daniella Levine Cava to launch the Miami-Dade County Extreme Heat Action Plan, which outlines nineteen key actions to protect people from extreme heat, including cooling schools and expanding access to shade and water.

In her role as CHO, Gilbert has implemented extensive heat season campaigns to raise awareness on the dangers of extreme heat. She also manages mobile Community Resilience Pods, which empower people to prepare for climate stressors through educational storytelling.

Freetown: Outdoor market shade covers are providing relief for more than 2,300 women

In Sierra Leone’s capital, extreme heat is devastating for outdoor and informal workers, who spend long hours laboring in extreme temperatures. Many of these workers are women and girls, who face disproportionate health and social impacts from extreme heat.

Arsht-Rock has been working with Eugenia Kargbo, Freetown’s CHO, and a network of partners to address this. Through the Freetown Market Shade Cover project, Arsht-Rock installed shade covers over three outdoor markets, expanding the daily window for safe and comfortable shopping in hot conditions.

The Market Shade Cover project has given more than 2,300 market women better working conditions and economic opportunities. By minimizing the health impacts, food spoilage, and financial losses resulting from extreme heat, this intervention has benefitted entire communities dependent on the market women.

Santiago: New partnerships are protecting the most heat-vulnerable workers

Even though Chile’s capital has a cool and temperate climate, Santiago has been scorched by extreme temperatures in recent years. Local authorities are taking a wide range of approaches to build heat resilience, from advocating for workers’ protection policies to providing air-conditioned ambulances to more than twenty-five communities.

Santiago’s CHO, Cristina Huidobro Tornvall, partnered with the Chilean Security Association (ACHS), an entity representing more than one million Chilean workers, to promote heat safety measures among outdoor workers. Together, they are educating employers on how to recognize and respond to the dangers of extreme heat.

The partnership’s goal is for employers to institute practices to protect their workers and provide health coverage for workers injured on the job. To this end, ACHS is planning to monitor how often workers seek medical care for exposure to extreme heat, which will help inform worker protection policies.

Cities are a crucial part of the solution

Severe heat can arrive with little or no warning. However, there are several steps cities can take in advance to prepare for extreme heat events.

Cities can conduct baseline heat risk assessments to understand which communities and parts of the city are most vulnerable to extreme heat.

Cities can create heat action plans that identify strategies and responsible actors in advance of extreme heat events.

Cities can implement educational campaigns in advance of heat seasons to build public awareness of the dangers of extreme heat.

Arsht-Rock’s Heat Action Platform brings together diverse case studies of these solutions with guidance on how to plan for, finance, and implement projects into one comprehensive platform. The platform is designed to be a step-by-step guide for those starting out their heat resilience planning, as well as a reference guide and implementation resource for cities already well into the heat-planning process.

Local leaders are positioned to take these ideas and run with them. Cities have an urgent responsibility to respond to climate change. Billions of people are already living with the impacts of extreme heat, and even more will become more vulnerable as the world continues to urbanize. We already have the solutions, knowledge, and resources needed to protect people from heat—now, we just have to take action.

Kashvi Ajitsaria is a project associate at the Adrienne Arsht-Rockefeller Foundation Resilience Center.

The post How four cities are building resilience to extreme heat appeared first on Atlantic Council.

Iran and Afghanistan are feuding over the Helmand River. The water wars have no end in sight.

Holly Dagres — Fri, 07 Jul 2023 19:09:01 +0000

Water disputes between Iran and Afghanistan date back to as early as the 1870s. However, with the Taliban back in power in Kabul since 2021, the Helmand River has become an increasing topic of contention between the neighboring countries, particularly in recent months. A recent uptick in violence on the 580-mile border between Iran and Afghanistan came to a head on May 27, when border guards on both sides clashed, resulting in the death of one Taliban soldier and two Iranian guards. Fatemeh Aman, a non-resident senior fellow at the Middle East Institute with a focus on Afghanistan and Iran, speaks to IranSource editor Holly Dagres about why the Islamic Republic and Taliban are bumping heads on transboundary water issues and why the water wars are not ending any time soon.

IRANSOURCE: The Islamic Republic and the Taliban have been in high tensions recently since the militant group ceased power in Kabul. Both countries have a long-term dispute over shared transboundary waters, but what is different now?

FATEMEH AMAN: The difference this time was that two old issues—the dispute over shared water and clashes at the borders—coincided, which made the transboundary water issue more dramatic. First, let me explain the dispute over each country’s share of Helmand transboundary water.

Iran and Afghanistan’s water disputes have existed for over 150 years and go back to when Afghanistan was a British protectorate. Back then, a British officer drew the Iran-Afghan border along the main branch of the Helmand River. In 1939, serious discussions between the Iranian government of Reza Shah Pahlavi and the Afghan government of Mohammad Zahir Shah led to a treaty over water allocation to each country, which the Afghans never ratified.

The dispute intensified in the 1950s when Afghanistan built two dams on the Helmand River.

Renegotiations continued until 1973, when the then-Iranian and Afghan prime ministers signed a treaty. In recent decades, and under different governments, the issue has taken a more dramatic turn. War, displacement of populations, lucrative dam buildings, disastrous water management, and the impact of climate change have all intensified the dispute.

The good news is that there has been an agreement since 1973 known as the Helmand River Treaty. However, it needs to be reviewed and updated. Nevertheless, the prospect of both governments sitting down and finding a lasting solution is not very bright.

Turning transboundary water rights into a political issue is a terrible idea. Both Tehran and Kabul use rhetoric rather than dialogue. Just recently, Iranian President Ebrahim Raisi warned the Taliban “to take the issue of [Helmand] water and Iran’s share of water seriously.” The Taliban hit back with their spokesperson Zabihullah Mujahid stating that Iranian officials should present their request “using appropriate words.”

Besides the water dispute, there have been clashes at the border between Iran and Afghanistan. Tension and confrontation have happened frequently on the eastern border, including the most recent violent encounter in May, which occurred in Nimroz and Zabul, leaving several border guards from both sides dead.

However, such clashes did not start with the Taliban government and have happened under previous governments as well.

Both sides commonly blame each other for starting the fire, but eventually, Tehran and Kabul always calm down. The incidents are often called “mistakes” or “misunderstandings.” There are talks about forming a joint committee to quickly resolve the issues on the eastern border. However, I do not see any sign that the occasional clashes will end for good.

IRANSOURCE: Walk us through the Taliban’s relationship with Tehran. Is this the first time we’ve seen tension between the Islamic governments?

FATEMEH AMAN: Iran’s current relationship with Afghanistan has been chaotic since the Taliban took over in 2021. The Islamic Republic does not want to look like allies of the Taliban, as both view each other with mistrust. However, there are conflicting and somewhat confusing messages on the nature of the relationship.

Iran and the Taliban almost went to war in 1998 over a Taliban militant raid on the Iranian consulate in Mazar-e Sharif, which left nine Iranians—eight diplomats and a journalist—dead. Iran deployed two hundred thousand army troops and seventy thousand members of the Islamic Revolutionary Guard Corps (IRGC) to the border area, but ultimately decided not to enter Afghanistan’s soil.

Iran has always tried to keep its presence in Afghanistan due to its significant concerns: shared transboundary water, drug trafficking, and border security. Iran takes the possibility of infiltration of terrorist groups, such as the Islamic State-Khorasan (IS-K), into Iran from its eastern borders very seriously and firmly believes it is vulnerable from the eastern border it shares with Afghanistan and Pakistan.

Since the Taliban was ousted from power in 2001, Iran kept some ties with some Taliban factions. Later, when the Taliban’s presence became more visible, Iran-Taliban ties also grew.

The emergence of IS-K in Afghanistan in 2015, as well as Tehran’s conclusion that the Taliban’s participation in Afghanistan’s future government was inevitable, prompted Iran to get closer to the Taliban. Iran tried to increase their influence within the group. The extent of the Taliban’s ties with Iran was revealed when the group’s former leader, Mullah Akhtar Mansour, was killed in a US drone strike when returning to Pakistan from Iran in May 2016.

In 2018, Iran admitted to having hosted Taliban delegations in Iran. Iran was actively involved in the intra-Afghan dialogue, inviting Afghanistan’s opposing factions to Tehran for negotiations. At the time, a best-case scenario for Iran would have been an inclusive government with the participation of Iran-leaning factions. This did not happen. The Taliban took control of the government in 2021 and did not plan to form an inclusive government.

IRANSOURCE: Most governments do not recognize the Taliban. Does the Islamic Republic, and how does this impact discussions?

FATEMEH AMAN: No country has recognized the Taliban regime, as no country wants to be the first to recognize them. However, I think once one does, the others will follow.

Iran has not yet recognized the Taliban regime. However, the Afghan embassy in Tehran and the Afghan consulate in Mashhad have been taken over by the Taliban regime since 2021. Iran, like other countries, wants to use recognition as leverage.

IRANSOURCE: Back to the dispute over shared water… The region has been going through a persistent drought. The Islamic Republic complains that Afghanistan is blocking the flow of water, and the Taliban claims there is not enough water to flow into Iran due to drought. How much is the drought in the southeast to blame on government mismanagement versus climate change?

FATEMEH AMAN: Several factors have contributed to the current situation, including the impact of climate change. Let us take the example of the Hamoun wetland drying up. The Lake Hamoun area is a transboundary wetland fed by the Helmand River.

Hamoun Lake, naturally fed by water flowing from the Helmand River, used to be the third-largest lake in Iran and played a vital role in the lives of people in southeastern Sistan and Baluchistan province. However, it has nearly dried up due to several factors, including the disruption of water flow from Afghanistan to Iran. Other factors include unsustainable and profit-driven dam constructions, extensive canal creation, diverting Helmand River water to four giant reservoirs in Sistan and Baluchistan province, construction of dikes on the Iran-Afghan border (on Helmand) to prevent drug traffickers from entering Iran, and the introduction of invasive fish species by the Fisheries Company in the 1980s, which destroyed the entire vegetation cover of Hamoun.

With the disruption of water flow from Helmand into Iran, I was referring to the killing of Iranian diplomats in Mazar-e Sharif in 1998 and the subsequent conflict between Iran and the Taliban. This led to the Taliban closing the Kajaki Dam’s sluices, obstructing the water flow from Helmand River to Iran, which ultimately halted the water supply to Hamoun. So, there is never a single reason for a catastrophe.

Both countries took steps to revitalize the Hamoun wetland on the Iran-Afghanistan border in 2015 and 2016. However, the efforts were cut for several reasons, including economic sanctions imposed on Iran that restricted international funds.

IRANSOURCE: Anti-regime protests continue in some parts of Iran, particularly in the impoverished southeastern province of Sistan and Baluchistan. Some may interpret the dire water situation as the clerical establishment purposely punishing the population for participating in protests. What is your read on this?

FATEMEH AMAN: Sistan and Baluchistan province is the most deprived province in Iran. Yes, there has been an unbelievable level of discrimination by the Shia-centric government against the Sunni-majority province. Yes, there needs to be more investment to improve the livelihoods of millions in that region. There has been disastrous water mismanagement in many parts of Iran, including Sistan and Baluchistan. However, the province’s critical water issue is unrelated to recent protests.

The Islamic Republic had four decades since the 1979 revolution to invest in water and ensure that the region’s drinking water would not be dependent on transboundary water. But they failed. Their failed policies are more comprehensive than those in Sistan and Baluchistan. Many parts of the country face critical water shortages due to ineffective policies.

IRANSOURCE: Iranian lawmakers recently said Sistan and Baluchistan province only have three months of water left before it runs out. How will it impact the neglected population there?

FATEMEH AMAN: As I said, the Islamic Republic had over forty years to invest in improving the water management system. They missed all opportunities. Unfortunately, authorities not only ignored experts’ warnings for many years, but they also prosecuted and imprisoned environmental activists working on the issue. Unless Iran reaches a lasting agreement with the Afghans, I do not see how things can be improved or stopped from worsening. We will probably see mass migration and more conflict in the future due to water and climate change.

IRANSOURCE: How will this dispute impact Afghan refugees in Iran?

FATEMEH AMAN: Before the 2021 Taliban rule, Iranian authorities could blackmail the Afghan government by threatening to send back millions of refugees to Afghanistan. Right now, they do not have this luxury. The Taliban would not care about refugees being forcibly returned. The only leverage Tehran has is recognition of the Taliban, which Iran is not giving away without some concessions. Iran will continue the same approach if the situation does not change.

According to the United Nations High Commissioner for Refugees (UNHCR), since the Taliban regained power in August 2021, an estimated one million Afghans have sought refuge in Iran alone.

Unfortunately, refugees in many countries are used as scapegoats, and Afghan refugees in Iran are no exception. With the deepening dispute, the Afghans will experience more hardship in Iran.

The post Iran and Afghanistan are feuding over the Helmand River. The water wars have no end in sight. appeared first on Atlantic Council.

Russian War Report: Russian conspiracy alleges false flag at Zaporizhzhia nuclear plant

Digital Forensic Research Lab — Fri, 07 Jul 2023 18:02:29 +0000

As Russia continues its assault on Ukraine, the Atlantic Council’s Digital Forensic Research Lab (DFRLab) is keeping a close eye on Russia’s movements across the military, cyber, and information domains. With more than seven years of experience monitoring the situation in Ukraine—as well as Russia’s use of propaganda and disinformation to undermine the United States, NATO, and the European Union—the DFRLab’s global team presents the latest installment of the Russian War Report.

Russian missile strike in Lviv kills ten civilians, injures dozens

At least ten people were killed and thirty-seven injured in Russia’s July 6 attack on Lviv, in western Ukraine. Regional Governor Maksym Kozytskyy said that a Russian missile struck a residential building in the city, destroying more than fifty apartments.

Meanwhile, Russian forces continue to launch offensive actions in Donetsk and Luhansk oblasts. Ukrainian forces reported thirty-eight combat engagements against Russian troops near Novoselivske, Novohryhorivka, Berkhivka, Bohdanivka, Bakhmut, Avdiivka, and Marinka. In the direction of Lyman, Russian forces shelled Nevske, Bilohorivka, Torske, Verkhnokamyanske, and Rozdolivka in Donetsk. Russian aviation conducted an airstrike in Bilohorivka. Russia also attacked villages in Zaporizhzhia and Kherson oblasts, including Levadne, Olhivske, Malynivka, Huliaipole, and Bilohirka. On July 6, Russian troops shelled Chervonohryhorivka and Nikopol, damaging civilian infrastructure.

On July 5, reports from Russian military bloggers suggested that Ukrainian forces had advanced southwest of Berkhivka, west of Yahidne, and southwest of Bakhmut. The Ukrainian army said it conducted offensive operations south and north of Bakhmut and is moving on Bakhmut’s southern flank. The Russian Ministry of Defense claimed that the Ukrainian army conducted offensive operations near Lyman, Bakhmut, along the Avdiivka front, on the border between Zaporizhzhia and Donetsk, and in western Zaporizhzhia.

The Ukrainian army appears to have launched a coordinated attack on Russian army logistical and communications hubs. On July 4, Ukrainian forces reportedly struck an ammunition depot in occupied Makiivka, Donetsk. Russian sources claimed without evidence that Ukraine had struck a hospital. Former Russian army commander Igor Strelkov, also known as Igor Girkin, said the attack demonstrates how Ukraine regularly launches missile strikes against Russian rear targets. Other unconfirmed reports from July 5 indicate Ukraine may have struck Russian positions near Debaltseve. Russian sources claimed that Ukrainian forces hit Russian positions near Yakymivka in the Melitopol area and attempted to strike Berdyansk in the Zaporizhzhia region.

—Ruslan Trad, resident fellow for security research, Sofia, Bulgaria

New narrative accuses US and Ukraine of planning false flag attack on Zaporizhzhia nuclear power plant

Ahead of next week’s NATO Summit in Vilnius, Lithuania, allegations that the United States and Ukraine will launch a false flag operation on the Zaporizhzhia nuclear power plant are spreading on various platforms, including Twitter, 4chan, and Instagram. The allegations seemingly aim to create panic and, in the event of a future attack on the plant, establish a narrative the West and Ukraine are to blame.

On July 3, a post appeared on 4chan from an anonymous user who introduced himself as a US Marine Corps veteran now working for the government in electronic espionage. The user claimed that the Ukrainian and US governments are working together to bomb the Zaporizhzhia power plant. According to the conspiracy theory, after the false flag operation, the United States will be able to use “nuclear warheads” against Russia. At the time of writing, the post had been deleted from 4chan. However, similar posts remain on the platform.

Screencap of an anonymous 4chan post claiming the US and Ukraine are planning a false flag attack. (Source: 4chan)

However, the false flag claims did not originate on 4chan. Russian Twitter accounts posted similar claims building the false flag narrative. After the 4chan post, the claim circulated again on Twitter.

A similar narrative was also shared by Renat Karchaa, an adviser to Rosenergoatom, a subsidiary of the Russian state nuclear agency Rosatom. Karchaa claimed on Russian state television channel Russia-24 that on the night of July 5, the Ukrainian army would attempt an attack on the Zaporizhzhia plant. Without evidence, he accused the United States and the West of planning a false flag incident to damage Russia’s reputation. The claims were further amplified by Russian state media outlets.

The allegations escalated on social media after July 4, when Ukrainian President Volodymyr Zelenskyy repeated Ukraine’s concerns about the status of the nuclear power plant. In an address, Zelenskyy restated that Russia plans to attack the plant and that Russian troops have placed explosive-like objects on the building’s roof. In June, Ukrainian military intelligence made similar claims when it reported that the plant’s cooling pond had been mined by Russian troops.

On July 5, the International Atomic Energy Agency (IAEA) said that it was aware of reports that mines and other explosives had been placed around the plant. The IAEA said their experts inspected parts of the facility and did not observe any visible indications of mines or explosives. IAEA Director General Rafael Mariano Grossi added, “The IAEA experts requested additional access that is necessary to confirm the absence of mines or explosives at the site.” On July 7, the IAEA announced that Russia had granted its experts further access, “without – so far – observing any visible indications of mines or explosives.”

—Sayyara Mammadova, research assistant, Warsaw, Poland

Former employees share details about Prigozhin’s media group and troll farms

Several independent Russian media outlets published stories this week interviewing former employees of Yevgeny Prigozhin’s Patriot Media Group, which dissolved on June 30.

In a video published on Telegram, Yevgeny Zubarev, director of Patriot Media Group’s RIA FAN, said the goal was to “work against the opposition, such as Alexei Navalny and others who wanted to destroy our country.” Zubarev confirmed key details previously reported by independent Russian journalists at Novaya Gazeta in 2013 and the now-Kremlin-controlled RBC in 2017 about the existence of paid commentators and the creation of Prigozhin-affiliated media outlets. Zubarev added that, after Russian President Vladimir Putin’s 2018 re-election, the group hired “foreign affairs observers.” The timing corresponds with attempts by Prigozhin’s Internet Research Agency to meddle in the 2020 US presidential election.

Further, independent Russian media outlets Sever.Realii, Bumaga, and Novaya Gazeta interviewed former employees of Prigozhin’s media group. Speaking on the condition of anonymity, the former employees confirmed that Prigozhin’s “troll factory” and “media factory” conducted coordinated information attacks on opposition leaders, published fabricated or purchased news “exclusives,” praised Putin, and deliberately ignored particular individuals who criticized Wagner Group. Bumaga and Sever.Realii described a smear campaign against Saint Petersburg Governor Alexander Beglov. In 2019, Prigozhin’s media group supported and promoted Beglov, but in 2021, Prigozhin reportedly launched a smear campaign, as Beglov allegedly prevented him from developing a waste collection business in the city. Novaya Gazeta’s report also provided evidence that Prigozhin’s troll farm activities extended beyond Russia, with employees portraying skinheads and fascists in the Baltic region, specifically in Lithuania.

In recent years, additional revelations about Prigozhin’s media group have come to light. For example, Bumaga reported that prospective hires had to pass a “lie detector test” in which “security service specialists” asked candidates about their attitudes toward the opposition and Alexei Navalny in particular. Once hired, employees were closely surveilled. One former employee Bumaga interviewed characterized the atmosphere as being in a “closed military company.” Both Bumaga and Novaya Gazeta’s interviewees said that most of the employees did not believe in the mission. In one example, an employee left after refusing to launch a smear campaign against Ivan Golunov, a journalist at the independent news outlet Meduza who was detained in 2019 under false pretenses. Bumaga, citing an unnamed former employee, also reported that at one point an employee had hacked the system, erased a database, and fled to Poland. The same interviewee claimed they employed two Telegram administrators who also administered pro-Ukraine channels.

—Nika Aleksejeva, resident fellow, Riga, Latvia

Kremlin-owned RT offers jobs to former employees of Prigozhin’s troll factory

RT Editor-in-Chief Margarita Simonyan offered to hire employees of Yevgeny Prigozhin’s Patriot Media Group, which reportedly housed his troll factories. In the latest episode of the program Keosayan Daily, Simonyan praised the work of “Wagner’s media empire.” She said their work “was super professional” and that anyone left without a job can join “them,” referring to Russian propaganda outlets. She added, “We know you as professional colleagues of ours.”

The fate of Patriot’s former employees is being actively discussed in Russia. According to Russian outlet Novie Izverstia, Pavel Gusev, editor-in-chief of the pro-Kremlin outlet MK.ru, volunteered to help find jobs for former employees of Patriot. In addition, the chairman of the Saint Petersburg branch of the Union of Journalists of Russia stated that the union would contact the heads of media outlets to help find opportunities for dismissed employees and would provide additional informational support.

—Eto Buziashvili, research associate, Tbilisi, Georgia

The post Russian War Report: Russian conspiracy alleges false flag at Zaporizhzhia nuclear plant appeared first on Atlantic Council.

Does Taiwan’s massive reliance on energy imports put its security at risk?

Joseph Webster — Fri, 07 Jul 2023 09:55:00 +0000

Russia’s full-scale invasion of Ukraine has launched many useful comparisons about how Ukraine’s efforts to survive and repel Russian forces might be applicable to Taiwan’s defense against a potential attack by the People’s Republic of China (PRC). Taiwan and its partners, for example, could directly apply a number of military and economic statecraft lessons against China. Energy security is more complicated, however. The Kremlin’s invasion of Ukraine clearly demonstrated that energy security and national security are inseparable, yet Ukraine was a thoroughfare of Russian gas pipelines before the invasion and still has substantial coal reserves and nuclear power. Taiwan, in contrast, is one of the world’s most energy-insecure economies, relying on maritime imports for about 97 percent of its energy.

A review of Taiwan’s energy security challenges is urgently needed to assess its specific vulnerabilities and strengths in the face of attempted coercion by the PRC. Beijing appears increasingly capable of launching a quarantine, blockade, siege, or even invasion of the island.

It’s worth defining these terms. In a PRC quarantine of Taiwan, Beijing would employ the People’s Liberation Army Navy, or PLAN, to interdict all shipping under the guise of inspecting for military kit but allow food and some supplies to pass through. It is possible the PRC believes this insidious tactic is its most attractive option in a Taiwan scenario, due to the limited costs and commitments it would require; the ambiguities it would impose on Western policymakers; and the potential that world public opinion, at least in parts of the developing world, would side with Beijing over the West as economic costs mounted.

Other options appear less probable, but much more coercive and potentially violent. In a blockade scenario, the PLAN would prevent all shipments from entering Taiwan, aiming to coerce the island into surrendering. A siege is a subset of both a blockade and invasion. In this scenario, Beijing would degrade the island’s defensive capability for months before launching an invasion. In the invasion scenario, Beijing would attempt a snap assault, hoping to leverage the element of surprise and secure Taiwan with minimal resistance. A snap invasion is extremely unlikely, however. The weeks that Russia built up its forces on its border with Ukraine before its full-scale invasion—in full view of the world—suggest that the PRC will almost certainly be unable to conceal mobilization for an extremely complicated, massive amphibious assault.

The risks of each scenario are real. The PLAN conducted blockade and quarantine trial runs as recently as April, suggesting Beijing is considering disrupting Taipei’s trade, including its maritime energy imports. Military deterrence is the ultimate guarantor of Taiwan’s freedom, but there are additional nonmilitary steps Taiwan can take with the United States and its allies to ensure its energy needs are met in the event of a crisis.

Taiwan’s Middle Eastern oil imports can be replaced, if necessary

The first issue is whether Taiwan can sustain a reliable supply of energy, which means tracing the energy back to its source. The island is highly dependent on maritime crude oil imports. They accounted for 44 percent of Taiwan’s total energy needs in 2022, and most of this oil comes from the Middle East. Last year, it sourced about 72 percent of its crude oil supply from Saudi Arabia (33 percent), Kuwait (21 percent), the United Arab Emirates (9 percent), Oman (7 percent), and Iraq (2 percent).

The PRC’s economic footprint is expanding in the Middle East and exceeds the Taiwanese or even US presence. Beijing’s crude and condensate oil imports have more than quadrupled since 2006 and stood at over 508 million tons in 2022. China, the world’s largest oil importer, is vital for Middle Eastern economies. In 2022, exports to China accounted for 8 percent of Saudi Arabia’s gross domestic product, 15 percent of Kuwait’s, 9 percent of the United Arab Emirates’, and a shocking 33 percent of Oman’s. Gulf Cooperation Council countries exported nearly 8.5 times more crude oil to China than to the United States in 2022; China’s oil imports are projected to rise further even as US imports plateau or recede. Taiwan imported 41 million tons of crude oil and condensates in 2022, just 8 percent of the PRC’s total.

The PRC’s increasing influence in the Middle East is undeniable, but the risks vis-à-vis Taiwan are manageable. Even in a worst-case scenario—Gulf producers abandoning Taiwan under PRC pressure—the island could find alternative suppliers, though not easily. While oil is a globally traded and largely fungible commodity, refineries require different grades of crude oil, as barrels have distinct sulfur content and densities. If the PRC ever successfully pressured Gulf exporters to halt shipments to Taiwan, the United States and Canada could export a mix of heavy and sulfuric grades—notably Western Canada Select—to supply the island’s refineries. If they have not already, US and Canadian energy officials should hold quiet conversations with their counterparts in Taiwan, South Korea, and Japan about how North American crude oil and oil products could manage disruptions in the event of a blockade.

What about coal, LNG, and nuclear energy?

Taiwan also imports coal and liquefied natural gas (LNG). Of the island’s total energy needs in 2022, coal and coal products imports stood at nearly 30 percent, and LNG imports reached 19 percent. Australia accounted for more than half of Taiwan’s total 2022 coal imports; produces more than enough metallurgical and thermal coal to supply the island; and is not vulnerable to Chinese pressure, particularly since Beijing recently imposed an unofficial, two-year ban on Australian coal imports that was walked back only in February. Taiwan’s LNG outlook is also favorable. The island can count on future LNG imports from the United States, Australia, and Canada, while an active LNG fleet is highly dispersed across European and Asian democracies. Taiwan’s coal and LNG import outlook is relatively positive, outside of a physical blockade.

Nuclear energy plays a largely positive role in Taiwan’s energy security. Nuclear imports—that is, imports of nuclear fuel for use in domestic reactors—stood at 5 percent of Taiwan’s total energy needs in 2022. Once nuclear fuel is shipped to Taiwan, the island’s nuclear power plants can continuously produce zero-emission power for approximately eighteen to twenty-four months. Still, there are reasons why Taiwan’s energy planners consider nuclear energy to be an energy import. Russia is deeply embedded in nuclear energy supply chains, while nuclear exports from Kazakhstan could easily be interdicted by the PRC. Kazakhstan accounted for 43 percent of the world’s uranium production from mining in 2022 and Beijing and Moscow, working together, might work to blockade Kazakhstani energy exports.

Taiwan is currently phasing out its nuclear energy use, as the Democratic Progressive Party and the bulk of the island’s voters are opposed to the technology. Nuclear energy is clean and reliable, and it plays a positive role in the island’s energy security. Still, Taiwan’s concerns about its supply chain—especially in the event of a long-duration quarantine or blockade—are not unfounded.

Beware of the PRC’s maritime blockade capabilities

Taiwan’s dependency on seaborne energy imports heightens the risks of maritime disruption. The PRC navy appears increasingly capable of imposing a physical blockade or quarantine of Taiwan. The PLAN had 351 warfighting-capable ships in 2022 and now outnumbers the entire US Navy by more than fifty ships. Moreover, due to the US Navy’s dispersed global responsibilities, the PLAN enjoys an even larger numerical advantage in the Indo-Pacific theater. The PRC also continues to improve its fleet both qualitatively and quantitatively. The latest US Department of Defense China Military Power Report projects that the PLAN’s battle force will grow to four hundred ships by 2025 and 440 ships by 2030. The US Office of Naval Intelligence predicts that PRC blockade-relevant maritime platforms could exceed eight hundred ships by 2030, after units from the Chinese Coast Guard and maritime militia are included.

The PRC does not just enjoy numerical superiority; it also has a home field advantage. Although some ships and subs are permanently forward deployed in Japan and Guam, the United States and allied navies would have to transit hundreds or even thousands of miles to reach the Taiwan theater. Meanwhile, the PRC’s anti-ship missile range extends several thousand kilometers off its coastline, implying that US and coalition ships would be forced to break a blockade while sailing within the PRC’s anti-access/area denial envelope. Finally, since Taiwan’s large ports are on the western side of the island, US and coalition ships would have to sail directly opposite the PRC coastline.

Coalition policymakers and naval strategists need to consider how a potential PRC maritime blockade can be defeated along every level of the escalation ladder. Some steps include enhancing the credibility of the United States’ and the coalition’s conventional military deterrent; holding key PRC economic, energy, and financial nodes liable to severe sanctions in the event of a prolonged blockade; addressing gaps in overcoming a long-duration blockade; expanding the merchant marine and convoy escort fleet; ensuring ships from allied and partner civilian fleets can “re-flag” as US vessels; and back-stopping shipping insurance markets, as insurance risk premiums would surely spike in the event of a confrontation over Taiwan. Fortunately, US allies comprise six of the top ten owners of the world’s civilian fleet, as measured in deadweight tons carrying capacity.

Indigenous clean energy generation: opportunities and constraints

Taiwan can further reduce its energy security vulnerabilities by developing its indigenous renewable energy resources. While solar and wind cannot solve all of Taiwan’s energy challenges, the PRC will find it relatively difficult to disrupt production of local renewables, especially distributed solar.

Distributed solar can be installed on any rooftop and is extremely difficult to disrupt via cyber or kinetic means if microgrids are employed. However, it suffers from low utilization rates and unfavorable bespoke installation costs. Utility-scale solar is more efficient and less expensive but may be more susceptible to cyberattacks, due to its concentration of panels. More broadly, Taiwan’s solar potential is also constrained by frequent cloudy skies and land scarcity.

Onshore wind potential is greatest on the western side of the island but land use tradeoffs constrain development—especially since Taiwan imports about 65 percent of its food. Still, onshore wind should be a higher priority than food production, as the Berlin airlift demonstrated that airborne food supply chains can break non-kinetic blockades. Additionally, since prepackaged Meals Ready-to-Eat have a shelf life of eighteen months even at ninety degrees Fahrenheit, there are relatively few risks of the PRC “starving out the island.”

Offshore wind is a promising technology for Taiwan. A nine hundred-megawatt wind farm off Taiwan’s west coast first produced electricity in early 2022; once fully complete, the installation could power approximately one million homes. Taiwan aims to install 5,700 megawatts of offshore wind capacity by 2025, which would substantially improve its energy security. Still, the Taiwanese military is concerned about offshore wind farms’ radar profile and the vulnerability of turbines and transmission cables to attack. Offshore wind has great potential, but Taiwan needs to balance its military and energy security needs carefully.

There are relatively few risks of Taiwan falling prey to sole-supplier dependency in either solar or wind, despite the PRC’s leading role in both technologies. There is limited international trade in wind turbines due to unfavorable weight-to-value ratios. Taiwan’s offshore wind projects have very strict local content requirements, and the island is establishing more wind turbine facilities. The PRC currently dominates solar market supply chains, producing 75 percent of all finished panels, but the United States and its allies and partners are increasing their own manufacturing capacity. Taiwan will be able to procure wind and solar components from non-PRC sources.

Taiwan’s most effective energy security tool may be to raise electricity tariffs, which would help rationalize demand and incentivize domestic clean energy generation. Raising electricity prices would encourage conservation efforts and make new renewables projects more economically viable, reducing Taiwan’s energy import needs.

Defending Taiwan from a military or energy shock

Taiwan’s energy security challenges are serious, but its chief problems are fundamentally military and naval. If the United States and its allies and partners cannot deter a PRC military invasion or naval blockade of Taiwan, disaster will likely result. US, Taiwanese, and other coalition forces must maintain credible conventional and strategic military deterrents against the PRC.

The West must walk a diplomatic tightrope to maintain its policy of dual deterrence. While Beijing’s increasingly provocative behavior vis-à-vis Taiwan is worrisome and warrants firm responses, the United States and its allies should also continue to discourage Taipei from undertaking any irresponsible moves toward independence. The West should continue to communicate to Beijing its vital interests in Taiwan while signaling its intent to avoid any unnecessary confrontation or conflict.

Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center, where he leads its Chinese energy security and offshore wind programs; he also edits the China-Russia Report. This article represents his own personal opinion.

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Technological and policy pathways to accelerate US industrial decarbonization

Joseph Webster — Thu, 06 Jul 2023 20:47:53 +0000

Industrial decarbonization in the United States will be an important element in lowering global emissions. US industry released 1.4 gigatons of carbon in 2021, about 28 percent of all US emissions. Lowering these greenhouse gas contributions and modeling effective strategies to achieve reductions will go a long way toward not only lowering the US carbon footprint, but also leading global decarbonization efforts.

To accelerate US industrial decarbonization, policymakers should start with the lowest hanging fruit, such as electrification or cleaning hydrogen for existing use cases, and then expand to more difficult areas. Greening the electricity sector would sharply curtail emissions from electricity-intensive industries, while switching to clean hydrogen in refineries will likely accelerate hydrogen’s relevance for other promising but unproven use cases, such as in steelmaking. By targeting “easier” challenges, policymakers can achieve decarbonization gains as quickly as possible.

The most effective paths to accelerate industrial decarbonization will require permitting reform and pursuing a comprehensive understanding of clean energy deployment, including in transmission. While the United States has enhanced fiscal support for clean energy development, policymakers across the country at all levels of government should reduce permitting review times and ensure that projects are not stuck in regulatory limbo indefinitely. The United States should also research methods of decarbonization, including nuclear energy development, and wires-vs-pipeline transportation costs for green hydrogen. To limit the consequences of climate change, the United States must urgently advance a suite of efforts to guarantee the domestic and international industrial emissions reductions the world needs.

AUTHOR

Staff

Joseph Webster

Central Asia China

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Building a biofuels industry in Africa

Maia Sparkman, William Tobin, Maxwell Zandi — Wed, 28 Jun 2023 14:30:00 +0000

Many African nations are faced with simultaneous development imperatives to achieve a high-growth, low-carbon economy, while increasing access to modern energy services. Expansion of the biofuels industry across the continent, particularly in regions outside of North Africa, could potentially serve as a solution, albeit a partial one, to support these imperatives. When produced in localized or regionalized supply chains, biofuels—which are made from plants and other biological materials—can serve as a clean energy source to meet two fundamental needs of developing economies in African regions: transportation and—perhaps less intuitively—cooking. However, ensuring the availability of crops for food security is a prerequisite for expanding the biofuels industry.

Further expanding this nascent industry will require chipping away at a web of challenges facing continent-wide biofuels production and biorefining, including first ensuring crops for food security are not diverted to biofuel manufacturing. To build out the potential of the biofuels industry in Africa, it is imperative that agricultural practices modernize, and adequate infrastructure be developed to enable the storage, transport, and conversion of feedstocks and fuels.

To realize this vision, the value chain for biofuel products will require substantial support from private and public sources of investment, regulators, and local market participants. Across the continent, establishing a biofuels industry will require coordinated efforts to build a supply of feedstocks and to develop adequate market-driven mechanisms for the collection and transport of feedstock to processing or refining facilities. Expanding the industry will also require feedstock-calibrated refining capabilities and distribution systems to transport biofuels to end users. Progressing to this end state will hinge on the presence of public-private partnerships to match suppliers with demand sources, technology-sharing initiatives between African nations and other economies with large biofuel industries, and targeted efforts to de-risk investment in pioneering projects and facilities through the use of concessional finance or innovative blended-finance structures, paired with technical assistance.

While full-scale deployment of biofuels may require the synchronization of several intermediate steps, the benefits are clear. Developing the biofuels industry in African countries can partially incentivize much-needed agricultural modernization across the continent, produce valuable low-carbon fuels to meet growing domestic and worldwide demand, and promote access to clean cooking, provided that food security is addressed as a prerequisite—although such efforts may be mutually reinforcing.

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AUTHORS

Maia Sparkman is an assistant director with the Atlantic Council Global Energy Center (GEC), where she focuses on energy and climate policy. She supports the GEC’s research on energy access and energy system transformation in Africa; city-level climate action; and industrial decarbonization.

Prior to joining the Council, Sparkman served in the Peace Corps as a sustainable agriculture specialist in Zambia, where she worked closely with small-holder farmers and liaised with Zambia’s Ministry of Agriculture and the US Forest Service to promote climate-smart agriculture practices and diversify household nutrition.

William Tobin is a program assistant at the GEC, where he focuses on energy and climate policy. William’s research efforts center on energy transitions in emerging markets; clean energy supply chains and critical materials; the future of oil and gas; and emerging technologies such as clean hydrogen and advanced batteries.

Tobin served previously for the US Department of State at a Regional Environment, Science & Technology, and Health Office; and for two members of the US House of Representatives. He is a graduate of the University of Florida, where he earned a Bachelor of Science in biology.

Maxwell Zandi is a former young global professional at the GEC. His research interests include the geopolitical dimensions of energy policy and the water-energy-food nexus. Prior to his time at the Atlantic Council, Zandi interned at the Wilson Center and Green Powered Technology.

Zandi holds a master’s degree in international affairs from George Washington University with a concentration in international security and US foreign policy. He also has a bachelor’s degree in political science from Villanova University.

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Meaningfully advancing the green agenda

Pepe Zhang — Mon, 26 Jun 2023 16:00:00 +0000

This is the 5th installment of the Unlocking Economic Development in Latin America and the Caribbean report, which explores five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

How does the private sector perceive Latin America and the Caribbean (LAC)? What opportunities do firms find most exciting? And what precisely can companies do to seize on these opportunities and support the region’s journey toward recovery and sustainable development? To answer these questions, the Atlantic Council collaborated with the Inter-American Development Bank (IDB) to glean insights from its robust network of private-sector partners. Through surveys and in-depth interviews, this report identified five vital opportunities for the private sector to drive socioeconomic progress in LAC, with sixteen corresponding recommendations private firms can consider as they take steps to support the region.

Meaningfully advancing the green agenda

The private sector identified the green agenda as a major opportunity, with more than half of survey respondents flagging “addressing climate change” as a top sustainable development and business priority to drive full economic recovery from COVID-19.¹ While climate action is critical on a global level, companies recognize that it is particularly pressing in LAC.

LAC is the world’s most economically unequal region and the second-most disaster-prone region in the world, highly vulnerable to climate consequences.² This vulnerability threatens to further entrench inequality and undermine the wellbeing of people and communities. Every year, between one hundred and fifty thousand and two million people in LAC are pushed into poverty or extreme poverty because of natural disasters, while as many as seventeen million people could migrate across LAC by 2050 due to climate change.³ Climate change also threatens food security, which can heavily impact rural communities.⁴ It will generate economic costs of up to $100 billion annually by 2050, which undercut growth and limit the ability of businesses to operate, prosper, and thrive.⁵

Recommendations for the private sector

Advancing the green agenda is not only imperative as a means of addressing the threat of climate change, but also as a means of unlocking massive business opportunities with the potential to drive private-sector-led economic recovery and growth in LAC. In particular, private firms have an important role to play by creating green jobs, promoting the circular economy, and partaking in green finance.

Creating green jobs: Firms can help create green jobs by adopting sustainable practices, seizing business opportunities in emerging green sectors, and providing upskilling, reskilling, and other support for workers displaced by the green transition.
Promoting the circular economy: Firms can help drive a transition to a circular-economy model by financing circular-economy efforts, supporting multistakeholder initiatives, and adopting and promoting sustainable business practices.
Partaking in green finance: The financial sector can help foster a green-finance ecosystem in the region by tightening environmental, social, and governance (ESG) requirements, aligning investments with green objectives, and nurturing green[1]bond markets in LAC.

About the author

Staff

Pepe Zhang

Adrienne Arsht Latin America Center

China Coronavirus

Report Jun 5, 2023

Enhancing market size, scalability, and regional integration in Latin America and the Caribbean

By Pepe Zhang

To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. The private sector can strengthen the hard and soft infrastructure supporting Latin America and the Caribbean’s economies, while drawing them closer together through trade, regulatory, and other integration.

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Accelerating digitalization and innovation in Latin America and the Caribbean

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To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. The private sector can improve infrastructure, foster skills, and promote adoption to help the region transform its digital potential into development gains.

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Report Jun 20, 2023

Improving state governance, institutional capacity, and transparency

By Pepe Zhang

To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. Technological, governance, and other cooperation between the public and private sectors can enhance institutional capacity, integrity, government service delivery, and regulatory quality in LAC.

Americas Inclusive Growth

Report Jun 22, 2023

Addressing multidimensional inequality

By Pepe Zhang

To sustain the ongoing recovery against short-term headwinds and boost inclusive, productive, and sustainable development in the long term, governments cannot, and should not, act alone. Private-sector actions to reduce gender inequality, like level the playing field between SMEs and large firms and narrow the urban-rural divide, can enable a more inclusive economy for LAC.

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#ProactiveLAC: A digital future for regional prosperity

A virtual conversation on the role of public-private partnerships and policy actions in increasing digital connectivity across Latin America and the Caribbean.

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1 Opportunities and Challenges in Latin America and the Caribbean: The Private Sector Perspective,” June 2022, question 10.

2 “GHO 2023: at a Glance,” Humanitarian Action, last visited January 25, 2023, https://gho.unocha.org/appeals/latin-america-and-caribbean#footnote-paragraph-136-1.

3 Carlos Felipe Jaramillo, “A Green Recovery of Latin America and the Caribbean is Possible and Necessary,” Latin America and the Caribbean World Bank Blog, September 11, 2020, https://blogs.worldbank.org/latinamerica/green-recovery-latin-america-and-caribbean-possible-and-necessary.

4 Enrique Oviedo and Adoniram Sanches, coords., “Food and Nutrition Security and the Eradication of Hunger: CELAC 2025: Furthering Discussion and Regional Cooperation,” Community of Latin American and Caribbean States, July 2016, 74–75. https://repositorio.cepal.org/bitstream/handle/11362/40355/S1600706_en.pdf?sequence=1&isAllowed=y.

5 Walter Vergara, et al., “The Climate and Development Challenge for Latin America and the Caribbean: Options for Climate-Resilient, Low-Carbon Development,” Economic Commission for Latin America and the Caribbean, Inter-American Development Bank, and World Wildlife Fund, 2013, 13–14, https://publications.iadb.org/publications/english/document/The-Climate-and[3]Development-Challenge-for-Latin-America-and-the-Caribbean-Options-for-Climate-Resilient-Low-Carbon-Development.pdf.

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US offshore wind’s growing pains: Permitting and cost inflation

Joseph Webster, Elina Carpen — Mon, 26 Jun 2023 14:04:38 +0000

The United States has a nascent offshore wind strategy that requires approving new projects and catalyzing investment into the sector. Although offshore wind is gradually developing, it lags behind other important international markets, as the world’s largest economy has deployed less offshore wind than virtually every other advanced economy.

Two major issues are constraining US offshore wind deployment: challenges in securing permits and cost inflation. Regulatory uncertainty and a slow approval process are slowing the United States’ deployment of offshore wind. Project developers stress that there are not enough regulatory personnel to quickly approve projects. Meanwhile, projects are also constrained by rising installation costs which are largely macroeconomic in nature. The sector is not immune to broader inflationary forces and rising interest rates, while trade policy and steel tariffs are also raising costs. Still, there are also industry-specific cost pressures, including limited port and vessel infrastructure and skilled labor shortages.

These are, to some extent, growing pains for a rapidly developing industry. How fast the US offshore wind market matures will depend in part on whether the country quickly learns from others who have more developed offshore wind sectors.

A complex regulatory web

Over the past few years, the Biden administration has taken renewed leadership in the energy transition, rolling out measures intended to advance offshore wind in the United States. In March 2021, the administration set a target to deploy 30 gigawatts (GW) of offshore wind by 2030, and the Inflation Reduction Act (IRA) incudes federal tax credits that support the deployment of offshore wind in the country.

Yet, these newfound commitments do little to address the bottlenecks that result from the environmental permitting process in the United States. Nor do they provide clarity on the federal regulatory process.

Since 2009, the US Bureau of Ocean Energy Management (BOEM) has been responsible for lease sales and the coordination of permitting activity for US offshore wind projects. However, the US Bureau of Safety and Environmental Enforcement (BSEE) remains responsible for offshore wind safety and environmental enforcement and compliance, while other agencies have environmental authority over permitting processes related to protected species and other filings under the National Environmental Policy Act (NEPA). This lack of federal coordination can result in delays issuing Environmental Impact Statements—federal documents that assess the impact that a project might have on the surrounding environment—preventing the deployment of these projects.

Similarly, connecting offshore wind power to the onshore electricity grid remains a work in progress in the United States, and will require significant infrastructure development. The environmental impact of expanding transmission infrastructure is largely unknown and will be subject to its own regulatory process.

Learning from Europe

Europe, in contrast, is a mature offshore market, boasting approximately 255GW of installed wind capacity. Europe is also developing a meshed grid, which will comprise clusters of offshore wind farms that are connected to multiple energy grids across the continent to allow for a more coordinated deployment of offshore wind power infrastructure. This success has been made possible by a clearly defined permitting process.

Germany, for instance, has a one-stop permitting approach, where a single government authority coordinates the entire process. This government agency, the BSH, handles all approval methods, including strategic environmental assessments. Germany also has a fixed permitting timeline, which requires specific permitting requirements to be completed on a predetermined schedule, providing additional clarity. These standardized procedures allow for a more streamlined permitting process.

The United Kingdom, Europe’s offshore wind leader, is moving toward an overall strategic—rather than site-specific—approach. This would allow offshore wind developers to offset their environmental impacts on a larger scale, granting developers access to larger infrastructure projects that can encourage large-scale renewable energy usage while avoiding detailed environmental assessments on a site-specific basis. This change aims to cut down the offshore permitting process from four years to one.

The US BOEM has recognized the need for more clarity and efficiency in the US regulatory processes and has taken steps to mitigate existing permitting bottlenecks. BOEM has proposed a Notice of Intent checklist for Environmental Impact Statements, a document that details the review process for any proposed offshore wind development project. This checklist would act as a resource to keep the process on track and avoid delays in NEPA reviews. This is a good start; although challenges remain, the United States has recognized the current obstacles impeding offshore wind deployment and is taking steps to mitigate them.

Cost inflation and deployment

Offshore wind has some unique advantages when compared to other renewables. It is the only variable baseload power generation technology, meaning it has a high utilization rate nearly on par with gas-fired combined cycle power plants. Offshore wind also enjoys relatively low hourly variability, especially when compared to solar photovoltaic systems.

Yet, offshore wind has still suffered from some of the problems plaguing other renewables—and the broader economy. Offshore wind costs have risen due to rising interest rates, higher labor expenses, and increased prices for steel, copper, and other relevant materials. Steel accounts for approximately 90 percent of the materials used for an offshore wind farm, and iron and steel prices remain well above pre-pandemic levels, although they have declined from record highs.

The offshore wind sector is also hurting from specific challenges. Steel prices in the United States are still subject to uncertainty stemming from Russia’s invasion of Ukraine removing supply from world markets, including Ukrainian manufacturing facilities. Moreover, Trump-era steel tariffs have not been fully lifted, and there is a chance that some of the tariffs that have been removed could return later in the year if the legislation’s October deadline to strike a US-EU deal is not met. Increased tariffs would hit offshore wind projects hard, dealing a further blow to the industry.

Limited port and vessel infrastructure also continues to constrain projects, while some segments of the supply chain, such as wind turbine installation vessels and skilled labo, could become part of a tug-of-war between US and European projects. Already, several offshore wind projects along the US East Coast are seeking to renegotiate contracts because of these headwinds. Renegotiation attempts have faced legal challenges from state regulators, including in Massachusetts.

On the positive side, procurement contracts, which are critical for offshore wind development, have provided credible and durable long-term demand signals, enhancing certainty for suppliers. The IRA has also incentivized manufacturers to invest in steel, blade, tower, and nacelle capacity, while regional transmission planning has been funded through the bill.

The way forward

To address the bottlenecks in issuing permits, the United States should learn from German and British offshore wind strategies by housing permitting authorities within a single agency and staffing regulatory bodies appropriately to enable large-scale, strategic approval processes. While these reforms may not be possible to implement at the national level, US states should consider adopting them to enable rapid deployment of offshore wind capacity.

Cost inflation remains a problem for US offshore wind. Steel prices remain elevated, there are a limited number of available service vessels, and transmission challenges will loom larger as projects move closer to deployment. However, in addition to the IRA, procurement contracts from states have helped incentivize project development. Ultimately, US offshore wind will require strong federal and state support if the ambitious targets to generate 30GW by 2030 are to be met.

Joseph Webster is a senior fellow at the Atlantic Council Global Energy Center. Elina Carpen is a program assistant at the Atlantic Council Global Energy Center. This article reflects their own personal opinions.

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EnergySource Dec 5, 2022

A nascent US offshore wind strategy? Permitting reform and the Inflation Reduction Act

By Joseph Webster

US strategy on offshore wind is steadily evolving. The attendant changes could lay the groundwork for emergence as an offshore wind powerhouse.

Energy & Environment Energy Markets & Governance

EnergySource Jun 27, 2022

30 GW by 2030: Policies for expanding US offshore wind capacity

By Joseph Webster

The US’ goal of 30 gigawatts of offshore wind capacity by 2030 is ambitious. Attentive policymaking, from the highest levels of the federal government all the way down to local governments in affected communities, will be key.

Energy & Environment Energy Markets & Governance

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By Joseph Webster and Elina Carpen

The Inflation Reduction Act sets the US clean energy industry up for rapid expansion, and offshore wind is no exception. Additional legislation could close remaining gaps and drive US offshore wind to the head of the energy transition.

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Pavia quoted in Al-Monitor on Algerian President Abdelmadjid Tebboune’s visit to Russia

Atlantic Council — Thu, 22 Jun 2023 19:49:16 +0000

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The ‘de-risk’ is in the details: A look at Europe’s ambitious new economic security strategy

Atlantic Council experts — Thu, 22 Jun 2023 18:23:24 +0000

Don’t call it decoupling. This week, the European Commission released its European economic security strategy, an ambitious plan to intercede in the European economy to reduce security risks across supply chains, critical infrastructure, and digital technology. European Commission Executive Vice-President Margrethe Vestager underscored that the strategy will “de-risk” the European Union (EU) from threats, not “decouple” its economy. But from whom? While the strategy dodges a direct answer, the EU’s top trading partner in goods, China, is an understood top concern.

Read insights below from Atlantic Council experts on what’s in the strategy and what it reveals about Europe’s economic and geopolitical future.

Click to jump to an expert analysis:

Barbara C. Matthews: The EU is acting to decrease points of vulnerability for renewable energy

Charles Lichfield: While not mentioned, China is the central focus of the strategy

Sarah Bauerle Danzman: The road to an EU outbound investment mechanism will be rocky

Elmar Hellendoorn: The strategy seeks to be adaptable but also comprehensive

Europe is taking a hard look at itself

The European economic security strategy represents a welcome development not just for its contents but in how the European Commission is thinking about economic security—and itself.

Under a framework of “promote, protect, and partner,” the strategy sheds light on the commission’s approach to de-risking, the phrase du jour of today’s geopolitics. It proposes new assessments of vulnerabilities, strengthened rules on key areas like foreign direct investment and export controls, and new rules on outbound investment. It also recycles existing proposals—the Critical Raw Materials Act, Net-Zero Industry Act, and Cyber Resilience Act, for example. By themselves, these are not groundbreaking. But it would be a mistake to stop there. Taken together, the strategy is a welcome document that outlines how the commission sees its policies become larger than the sum of their parts.

The contents of the strategy notwithstanding, there are three takeaways about how Europe sees its economic future. First, it starts with knowing oneself. The strategy opens with a frank acknowledgement that Europe was “insufficiently prepared” for many of the challenges that the COVID-19 pandemic, Russia’s war in Ukraine, and challenges from unnamed—read: China—players posed to Europe. Second, the strategy acknowledges that the European market, its regulations, and cohesion is by itself a European strength that can “keep global supply chains open and shape standards.” Third, that there is a direct reference that the economic risks identified could threaten Europe’s national security is a small but notable addition. It shows a recognition of the convergence of the geopolitical and the economic.

However, the strategy also shows both the potential and the limitations of the commission. First, as much as the Berlaymont may be thinking geopolitically, the commission still relies on capitals across the continent to approve and implement new rules. Throughout the strategy, there are polite reminders for member states to implement or enforce existing or future rules. Second, and perhaps more crucially, it’s clear that the commission is increasingly out ahead of member states on issues of security, defense, and now economics. Many member states will have reservations, if not objections to some of the conclusions and proposals in the strategy. There is no shared consensus among member states about how to adequately defend themselves against China.

It’s important to remember that, as the strategy’s sentences, conjunctions, and punctuation will now be parsed and debated across the continent and the European Parliament, the strategy is not a roadmap that will solve all of Europe’s woes but an opening salvo.

—Jörn Fleck is the senior director of the Europe Center at the Atlantic Council.

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

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The EU is acting to decrease points of vulnerability for renewable energy

The newly announced European economic security strategy constitutes a shift beyond the EU’s previous “strategic autonomy” security priorities. It will likely generate friction with both China and the United States in the near term regarding key renewable energy resources.

Until this year, the EU’s main focus was to ensure that its capacity to pursue its strategic interests remain unconstrained. It sought to ensure that policy conflicts and tensions between the United States and other countries (such as China and Russia) did not adversely impact its own interests.

Now, the EU seeks actively to minimize “the risks arising from economic linkages that in past decades we viewed as benign.” Those past linkages include Russia (natural gas), China (automobile component and other industrial manufactured exports) and the United States (a deeply integrated, multidimensional trade relationship that includes a deep reliance on retail technology giants that dominate the twenty-first century). Following Russia’s illegal invasion of Ukraine in 2022, the EU effectively replaced Russia with the United States as the key external supplier of energy resources, even as it made great strides toward delivering an energy mix that, for the first time, is generated more from renewable sources (specifically, wind and solar) than from gas.

The new EU “de-risking” strategy now views none of these economic linkages as benign. It views concentrated economic relationships as a source of risk that must be managed through a diversification strategy that places alignment on key norms (such as democracy, decarbonization, and commitment to open economies) as the foundation for future engagement.

Europe’s successful shift in the last year toward renewable energy implies a sharp increase in demand by Europe for a range of energy inputs that are, at present, predominantly controlled by China. Not only does China “dominate all steps of solar panel production,” it also has long served as the “dominant or near-monopoly producer” of most critical minerals needed to produce modern technology and renewable energy components such as wind turbine parts. Europe’s demand for hydrogen and lithium are set to skyrocket in the next decade, increasing the importance of the forthcoming Critical Minerals Agreement negotiations with the United States. The EU is acting now to decrease these points of vulnerability by mobilizing significant financial resources to promote renewables developments across Africa, the Middle East, and Latin America, even as it prepares to implement its carbon tax later this year.

The European policy shift to “de-risking” holds the promise of aligned transatlantic policy priorities in which EU and US initiatives complement each other to provide an effective counterbalance to Chinese economic pressure globally across the resource-rich Global South. It also holds the risk that misalignment with the United States regarding resource access and digital policy will generate frictions that can be exploited by other countries. Successful execution of this policy will require more than checkbook diplomacy. It will require Washington and Brussels to focus on the larger strategic picture to avoid individual technical issues from derailing their strategic relationship.

—Barbara C. Matthews is a nonresident senior fellow at the Atlantic Council. She was the first US Treasury attaché to the EU with the Senate-confirmed diplomatic rank of minister-counselor.

While not mentioned, China is the central focus of the strategy

The seventeen-page long “communication” on a European economic security strategy does not mention China once. It does refer to Russia, but only in its scene-setting introduction. For the rest of the paper, economic risks stem only from phenomena, not countries. Third countries are the focus of the section following these risks, but this puts them in an exclusively positive light: to confront challenges to its economic security, Europe needs the broadest possible partnerships.

Can there be any purpose to a strategy that dares not mention which countries are causing the risks it is supposed to tackle? The answer is still yes.

The robust discussions that took place between European Commission President Ursula von der Leyen’s team and the European Council—representing the views of all twenty-seven member states—are well publicized. A critical mass of national capitals, though concerned about the consequences of Chinese economic practices, are keen to avoid falling into a ratchet of policies and partnerships leading to an anti-China coalition. This includes members who have long been calling for the EU to take a more hands-on approach on economic statecraft, such as France.

And yet, even under such constraints, the strategy gets many things right. Alongside the traditional calls for cooperation, it pushes for more structured dialogue with the private sector—something that has been lacking on economic security strategy so far. We should also remember that von der Leyen did get to set out her views on EU-China relations not too long ago. So even if China isn’t mentioned, we can be pretty sure it remains the central focus of the EU’s fledgling strategy.

—Charles Lichfield is the deputy director and C. Boyden Gray senior fellow, of the Atlantic Council’s GeoEconomics Center.

The road to an EU outbound investment mechanism will be rocky

This strategy makes clear that the commission is going to bat for outbound investment controls, likely tightly connected to the three emerging technologies most poised to transform war making capabilities—advanced semiconductors, quantum computing, and artificial intelligence. This position reflects a rapid evolution in the commission’s thinking; just last year it was less enthusiastic toward outbound controls when the United States first announced its intention to develop a tool to regulate such investments. Then it only agreed to “study the issue.” Despite the commission’s commitment to propose an outbound initiative by the end of 2023, the debate between the EU, member states, and the business community is likely to be fierce.

In the near term, the inclusion of outbound investment in the strategy has two important implications. First, it substantially increases the likelihood that the United States will move forward with its own mechanism—through an executive order—in the next couple of months. The Biden administration can now point to the document as evidence of a growing consensus among partners and allies to place narrow restrictions on outbound investments into key strategic technologies. Second, and in line with the recent Group of Seven (G7) communiqué on economic resiliency, it frames the issue of outbound regulation squarely around technology security and technology leakage rather than around broader policy objectives such as supply-chain diversification.

The road to an EU outbound investment mechanism will be rocky. The economic security strategy identifies technology security as an element of “economic security,” but the proliferation of dual-use technology has traditionally been viewed as a matter of national security—an area over which member states, rather than the commission, have competence. Moreover, the EU has traditionally—through both export control and inward screening policies—sought to develop tools that do not discriminate between foreign countries. If the EU maintains this policy principle, its outbound mechanism will likely look quite different from the United States’ plan to only focus on investments into entities operating in or owned by “countries of concern” such as China.

—Sarah Bauerle Danzman is a nonresident senior fellow with the GeoEconomics Center’s Economic Statecraft Initiative and associate professor of international studies at the Hamilton Lugar School for Global and International Studies, Indiana University Bloomington.

The strategy seeks to be adaptable but also comprehensive

The most important element of the document can be read between the lines: it is not so much about what the commission is going to do about economic security but how. Three key principles seem to be guiding the commission’s economic security strategy.

The first principle is strategic adaptability. The commission announces that it will constantly work toward a vision on economic security that will help to tie the different policy instruments together. As geopolitical circumstances are changing in unforeseeable and complex ways, the commission has wisely refrained from setting its economic security policy approach in stone. Adaptability and flexibility appear to be baked into the commission’s thinking on this issue.

The second principle is comprehensiveness. In the strategy, the commission clearly expresses the ambition to break through different policy silos. While it does sum up the different policy instruments the EU has to strengthen its economic security—ranging from foreign direct investment screening to cybersecurity—the underlying question is how it is going to coordinate the use of its economic statecraft toolkit to achieve a maximum result.

The third principle is cooperation. The commission also shows a certain humility in pointing out all the work ahead on economic security. Clearly, it needs the support of its member states, not only in terms of policy execution, but also in helping to fully understand the challenge. Also, the EU is going to align its diplomacy and economic security policy more, thus targeting countries that the EU can work with to achieve greater economic security. Lastly, in terms of further conceptualization of its strategic approach to economic security, the commission also seems to be reaching out to the wider private sector.

—Elmar Hellendoorn is a nonresident senior fellow with the Atlantic Council’s GeoEconomics Center.

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The new Ukraine will be a country worthy of its heroes

Yulia Svyrydenko — Thu, 22 Jun 2023 01:22:19 +0000

People often talk about achieving strength through adversity. In Ukraine, this is the everyday reality for millions of people. Over the past sixteen months, Ukrainian courage has stunned the world. This is not just a matter of resilience; Ukrainians know that we face destruction if we do not win.

Thanks to Ukrainian bravery and determination, almost nobody now doubts our ability to survive the war and defeat Russia’s invasion. However, many international observers are now starting to ask a new question: What will Ukraine do next?

I was recently in my hometown of Chernihiv. Russia tried to seize it in the first weeks of the full-scale war. For a period, the city was surrounded. One year later, Chernihiv is humming with activity. Ruins are gradually being rebuilt and businesses are working. During my trip, I talked to a local entrepreneur, Andrii, who owns a small store. He donates half of his profits to the Ukrainian military. Andrii asked me: “Of course, we will win, but what happens next? How will the country develop?”

I answered him and I can answer the whole world. We have a clear vision of what Ukraine must become and how to achieve it. Our plan for Ukraine has three pillars: security, freedom, and drive.

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Security comes first. All other efforts will be futile without this key ingredient. Ukraine needs a strong army to ensure the safety of our people and our economy. This is also the only way to make sure NATO’s eastern border remains secure.

Freedom is the second pillar. This is a central aspect of Ukraine’s European identity. As a nation, we stand for human rights and against international aggression. The new Ukraine will be a place where citizens and businesses have the freedom to innovate and succeed. We aim to remove unnecessary barriers to business development while ensuring inclusion and equality through social policies.

The third pillar is drive, shaping our goal for dynamic growth. We want Ukraine to become a global competitor and contributor, not a state dependent on others. By attracting investment and promoting innovation, Ukraine will become a new engine of European economic growth.

Ultimately, Ukraine’s goal is to join the Trillion Dollar Club. We need to finance a strong army of 500,000 personnel and a highly developed defense sector, as well as social services, education, and healthcare. A GDP of $1 trillion will enable ample funding for these sectors without imposing a critical burden on the budget.

At present, we see an investment potential in the region of $500–900 billion toward the rebuilding of Ukraine over the next 20 years. Additionally, replacing Russian and Chinese exports to EU and G7 countries could generate very large volumes annually.

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The construction industry and infrastructure development are top priorities. Currently, the damage inflicted by Russia on Ukraine’s residential sector alone amounts to over $54 billion. Reconstruction will require a significantly larger investment, creating unprecedented challenges and opportunities for the entire sector. We envisage a generational infrastructure upgrade that moves Ukraine away from the post-Soviet model and toward a modern European approach.

In the longer term perspective, we intend to rely on sectors where Ukraine already has proven potential and can offer globally competitive solutions. This includes food security, green transition, high-end technology, and industry.

We are committed to participating in the green transition, which is essential for Europe. This will make it possible to replace Russian energy resources. Our understanding of the green transition goes beyond energy to include the development of green metallurgy and a shift toward green logistics. Furthermore, Ukraine’s large reserves of strategic minerals position us as a major player in the production of lithium-ion batteries and nuclear fuel. The availability of resources provides an opportunity for high-tech production, opening the way for the EU to replace supplies from China.

Industrial development will generate demand for technological solutions and innovation. We expect to see a new boom in the Ukrainian IT sector, as well as the emergence of sectoral R&D centers capable of meeting the needs of other industries and the digital economy.

We are focused on technological development, but we are also very much aware that 350 million people are currently facing starvation worldwide. We aim to boost food security and become a food provider for 600 million people globally.

None of the above would be possible without the people who will make it happen and for whom all of this is intended. We aim to create conditions for millions of Ukrainians to return home and to persuade others to relocate to Ukraine by implementing attractive social policies and citizenship rules.

Simultaneously, we need to do the same for investors. The task we face is enormous. Ukraine’s record annual foreign direct investment (FDI) total remains the $11 billion received in 2007. We must attract at least that amount every single year for the next two decades.

We understand that investors need to see tangible results not just ambitious plans. Key steps include reform of Ukraine’s law enforcement agencies and courts, along with the establishment of strong and independent regulators. If successfully implemented, this will provide an institutional framework to ensure fair play and anti-corruption policies.

Setting up a business in Ukraine will become easy. We will simplify and digitize all processes involved in the creation of a new business, from construction permits and environmental regulations to turnkey utilities connections. We will reform monetary, tax, and labor policies by revising rates and tariffs and liberalizing the labor market. Ukraine will become one of the most convenient places on the planet to do business.

Ukraine’s future goes beyond sectoral growth. We envision ourselves as an integral part of the European community and a driving force for global development. We will contribute to international security, propose solutions for shared challenges, and establish good governance practices.

Over the last 10 years, Ukraine has already made significant progress toward countering corruption. Further advances are crucial as we seek to become a NATO member to protect our nation, and as we pursue EU membership to open up new business opportunities and consolidate reforms.

There is no alternative for us. Ukrainians must turn these ambitions into reality to ensure the country’s future safety and preserve freedom. Otherwise, Russia will remain a threat and will inevitably make another attempt to destroy Ukraine.

We call on all Ukrainians to return home and invite the global community to join us on this transformative journey. We invite them to invest in our resilient nation and to become shareholders in the prosperity that Ukraine’s success will surely bring. This is more than a national task; it is a global call to action. It will show how ordinary people in extraordinary times can turn adversity into strength.

Yulia Svyrydenko is Ukraine’s First Vice Prime Minister and Minister of Economic Development and Trade.

Russia has occupied Ukraine’s Zaporizhzhia plant since the first weeks of the invasion. Last summer, the Kremlin allowed the International Atomic Energy Agency (IAEA) to monitor its operational safety remotely. But in April 2023, IAEA officials began warning of growing risks and calling for additional measures to protect the plant. With Ukraine’s long-awaited counteroffensive now underway, alarm is mounting.

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Zelenskyy’s claims that the Kremlin is planning to orchestrate a nuclear disaster in Ukraine are not at all far-fetched, given how Putin’s forces have been purposely laying waste to the country for the past sixteen months. The invading Russian army has planted landmines across an area the size of Switzerland, displaced more than ten million people, and destroyed dozens of Ukrainian towns and cities. Countless residential apartment buildings, schools, and hospitals have been reduced to ruins. A comprehensive and methodical nationwide bombing campaign has targeted the country’s civilian infrastructure.

In recent weeks, Russia is suspected of having blown up the Khakovka dam in southern Ukraine, causing an ecological catastrophe. However, even this unprecedented act of ecocide failed to stop Ukraine’s counteroffensive. With Russia’s military predicament expected to become increasingly grim in the weeks and months ahead, the likelihood of further extreme measures will grow. “They constantly need destabilization here. They want the world to put pressure on Ukraine to stop the war,” commented Zelenskyy.

Putin has been making nuclear threats since the very first days of Russia’s full-scale invasion. During the initial stages of the war, he very publicly placed his nuclear forces on high alert. With the invasion in danger of unravelling in September 2022, he again hinted at a possible nuclear response while warning, “I’m not bluffing.”

Not everyone is convinced. Former Russian diplomat Boris Bondarev, who resigned after last year’s invasion, told Newsweek in early 2023: “today [Putin is] bluffing and we know that he has bluffed about nuclear threats. Ukrainians recovered some parts of their territory, and there was no nuclear retaliation. If you’re afraid of Putin using nukes, then you already lose the war against him and he wins.”

Others warn against possible complacency. The recent destruction of Kakhovka dam has caused many observers to reassess their earlier skepticism over Russia’s readiness to go nuclear in Ukraine. Putin has also crossed another red line by vowing to place nukes in Belarus. The Russian dictator is currently holding all Europeans hostage with the threat of a deadly explosion at the continent’s largest nuclear plant, and is moving nuclear weapons closer to the heart of Europe.

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The world must heed Ukraine’s warnings before it is too late. Zelenskyy first raised the alarm about the Kakhovka dam in October 2022 but the international community failed to react. Since the destruction of the dam, the relatively weak and ineffective international response has fuelled fears that Russia will read this as a green light to go further.

For now, most international attention appears to be focused on Putin’s placement of nukes in Belarus. “I absolutely believe that moving weapons to Belarus demands an unequivocal response from NATO,” Polish President Andrzej Duda said recently before meeting with French President Emmanuel Macron and German Chancellor Olaf Scholz. Significantly, Russia’s decision to deploy nukes to Belarus even drew a critical response from Chinese officials, who renewed calls for de-escalation and reminded Russia that its leaders had reaffirmed their opposition to nuclear war at their March 2023 summit with China in Moscow.

Ultimately, there is no way of knowing whether Russia’s nuclear threats are genuine or not, but Western leaders cannot afford to let Putin’s nuclear blackmail tactics succeed. If the Russian dictator’s nuclear saber-rattling enables him to rescue the faltering invasion of Ukraine, he will do it again and others will follow. To prevent this nightmare scenario, the West must respond forcefully by escalating support for Ukraine militarily, diplomatically, and economically. The only sensible answer to Russia’s reckless nuclear intimidation is a heightened international commitment to Ukrainian victory.

In parallel to increased support for Ukraine, international watchdogs must be dispatched to monitor the situation at the Zaporizhzhia Nuclear Power Plant and other Ukrainian infrastructure sites that Russia could potentially target. Strong pressure must also be placed on China and India to condemn Russia’s nuclear threats. The invasion of Ukraine has already transformed the international security climate; Putin must not be allowed to normalize nuclear blackmail.

Diane Francis is a nonresident senior fellow at the Atlantic Council’s Eurasia Center, editor-at-large with the National Post in Canada, author of ten books, and author of a newsletter on America.

mvahdati — Fri, 16 Jun 2023 14:54:06 +0000

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Ariel Ezrahi joins ABC National Radio to discuss OPEC+ producers’ surprising decision leading to oil price surge.

mvahdati — Fri, 16 Jun 2023 14:47:08 +0000

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How is China mitigating the effects of sanctions on Russia?

Maia Nikoladze, Phillip Meng and Jessie Yin — Wed, 14 Jun 2023 14:42:28 +0000

China and Russia’s leaders have signaled a deepening strategic and economic partnership, but the reality hasn’t always matched the rhetoric. Following two high-level visits–Xi’s trip to Moscow in March and Russian Prime Minister Mikhail Mishutin’s trip to Beijing last month–both countries announced new trade, investment, and industrial production initiatives. But despite Xi and Putin’s public proclamation of a ‘no limits’ partnership, China and Russia’s economic ties are limited by Beijing’s strategic interests.

How are these growing economic ties impacting Moscow’s ability to withstand G7 sanctions and maintain its invasion of Ukraine—and where do Beijing’s interests diverge from Moscow’s?

Below we outline six trends that have defined the two countries’ relations since the invasion of Ukraine. Russia’s access to the yuan has bolstered its wartime economy. However, when it comes to trade and financial support, Beijing has been less accommodating.

Chinese yuan is Russia’s friendliest currency.

China is mitigating the impact of sanctions on Russia by providing Moscow an alternative currency for transactions. Chinese yuan supplanted the dollar as Russia’s most traded currency in early 2023. The switch came after the United States imposed sanctions on a few banks in Russia that were still allowed to make cross-border transactions in dollars. As the Group of Seven (G7) sanctions constrain Russian financial institutions’ ability to transact in the world’s leading reserve currencies, like dollars, euros, and yen, the yuan is arguably the only relatively stable, widely traded currency issued by a non-sanctioning authority that enables Russia to make international transactions.

Central bank currency swap lines play a major role in increasing the circulation of the yuan in the Russian economy. Although China’s capital controls make it difficult for foreigners to obtain yuan, Beijing has supported Russia’s growing yuan marketplace by backing currency swap facilities. Through these swaps, Russia and China’s central banks exchange rubles for yuan. Major Russian commercial banks then tap into their central bank’s accounts to introduce the yuan into the Russian economy. Furthermore, as China’s banks have accumulated Russian assets, they have also likely increased the amount of yuan in local circulation.

Russia’s linkages to the Chinese financial system also allow it to mobilize its currency reserves. G7 countries froze most Russian reserves held by sanctioning jurisdictions. However, Russia has been able to access its central bank reserves held in China (nearly 18 percent before the conflict), which are largely denominated in yuan. As a result, Russia has been able to use yuan-denominated reserves to conduct foreign exchange transactions to manage the value of the ruble. Moreover, Russia increased the permitted share of yuan in its National Welfare Fund up to 60 percent last year and plans on selling more yuan from the wealth fund to make up for the lost energy revenues and cover budget deficit.

Vital trade links

Russia has compensated for lost market share in the West by exporting more energy to China. Beijing has increased spending on Russian energy from $57 billion in the year prior to the invasion to $88 billion in the year after and allowed Moscow to make up for the lost revenues in the EU market. Russian crude oil exports to China could increase even further in 2023, as China’s state-run refiners have been increasing purchases of Russian oil, and Beijing has signaled that it may allow a further ramp-up. However, China maintains informal quotas on crude oil imports to limit exposure to any individual energy exporter. These sit at 15 percent of overall imports or around two million barrels a day per country. Another component of China’s energy imports from Russia is natural gas. Natural gas is more dependent on existing infrastructure and is thus harder to rapidly increase in imports. Russia is expected to deliver 22 billion cubic meters of natural gas to China through the Power of Siberia pipeline in 2023, eventually increasing to full capacity of 38 billion cubic meters in 2027. However, even though Russia has pushed for the construction of the Power of Siberia 2 pipeline, Beijing has shown hesitation and has, in fact, negotiated a new pipeline through Central Asia. Whether Russia keeps exporting more oil or natural gas to China will depend on Beijing’s decisions on quotas or new pipelines, making Russia asymmetrically dependent on its economic partnership with China.

Russia has imported electronic equipment from China to offset the effects of export controls but is struggling with obtaining advanced technology—even from Beijing. Integrated circuit imports from China have increased from $67 billion in 2021 to $170 billion in 2022, but most electronics exports from China to Russia are made up of basic computers and transport equipment. Notably, Beijing has banned the export of advanced Loongson microprocessors. The West’s imposition of export controls on advanced semiconductors against China in October 2022 signals that Beijing will become even more protective of advanced technology and less likely to transfer them to Russia.

China is not the only country whose trade with Russia has increased. Although Beijing has provided a lifeline to the Russian economy, countries such as India and Turkey have also expanded trade with Russia. In fact, India has become the second largest destination of Russian crude oil exports after China. Meanwhile, Central Asian and Caucasus countries’ exports of electronic equipment to Russia ballooned in 2022 and Serbia, Turkey, and Kazakhstan have provided semiconductors to Russia throughout the last year. China might be the largest economy supporting Russia but other countries’ trade relations with Russia should be as closely monitored as Beijing’s.

Limits in the ‘no-limits’ partnership

China has generally avoided steps that could trigger secondary sanctions or that greatly increase its own strategic dependence or risk exposure to Russia. For example, Chinese banks have not become creditors to the Russian government. Likewise, China has hedged against dependence on Russian energy imports and has restricted the flow of advanced technology to Russia. The notion of a “no limits” partnership remains rhetorical for now.

Maia Nikoladze is the assistant director at the Economic Statecraft Initiative within the Atlantic Council’s GeoEconomics Center. Follow her at @Mai_Nikoladze.

Phillip Meng is a young global professional at the Atlantic Council’s GeoEconomics Center.

Jessie Yin is a young global professional at the Atlantic Council’s GeoEconomics Center.

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

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

The Rt Hon. Chris Skidmore, MP — Mon, 12 Jun 2023 14:11:17 +0000

Nearly four years ago, back in June 2019, the United Kingdom enshrined its commitment to achieve net-zero carbon dioxide emissions into law. The United Kingdom had long been a climate leader, with the pioneering Climate Change Act of 2008 and its introduction of carbon-budgeting into government decision-making, helping to halve Britain’s emissions compared to 1990 levels. With the 2019 legislation, the United Kingdom became the first G7 country to commit to net zero.

Since then, other countries have caught up. Today, 90 percent of global GDP is under some form of net-zero commitment, which would have been unimaginable in 2019. The progress made by both governments and corporate boardrooms across the world has been staggering. It is becoming ever-clearer that there is no future economy—and certainly no future financial investment—without a green economy and green finance at its heart. The United Kingdom, by working with its close ally the United States, can reassert its climate leadership through a green special relationship that can galvanize net-zero objectives domestically and abroad.

This paradigm shift toward net zero has created a global net-zero race. Countries are now seeking to demonstrate not only when they will achieve net zero, but also how net-zero commitments can catalyze and deliver the new clean technologies of the future. In the United States, the Inflation Reduction Act’s commitment of $369 billion in public investment in clean energy is a game changer that has sent shock waves throughout the world. The money is important, but what is also critical to the act is its long-term stability, with tax credits guaranteed until January 2033. The European Union also has its €1 trillion Green Deal, again with long-term funding commitments that can foster a new green economy. It is vital that the United Kingdom, once a climate leader, demonstrate similar ambitions if it wishes to re-establish climate leadership and avoid falling behind in the net-zero race.

The UK government recently embarked on a review of its net-zero readiness. That review sought to make recommendations on how net zero could be achieved in a more pro-growth, pro-business manner. The group’s final report, Mission Zero, concluded that net zero is not a cost but rather an opportunity, to secure £1 trillion of inward investment by 2030 and create 480,000 new jobs. Conversely, the cost of “not zero” would be far higher for the UK economy. The review also recognized the importance of ensuring that the United Kingdom collaborates with friends and partners to jointly address the world’s shared climate challenge. Carbon dioxide knows no borders. Like-minded nations should recognize that rivalry and competition, while healthy in driving markets forward and bringing costs down, must not be allowed to create new barriers and delay progress on climate action.

Many criticize the Inflation Reduction Act for being protectionist, for putting the United States first. Others claim the act will start a global subsidy race. That concern is overblown. While there is clearly a chance the law will lure companies to the United States by the promise of tax credits and investment, the wider deployment of these technologies will not be possible without establishing global supply chains and international cooperation. There is not enough skilled labor for the demand the green Industrial Revolution is creating, and new alliances for delivering net zero must therefore be forged. Without collaboration, net zero and the economic promise of the energy transition will fall short.

For the United States and the United Kingdom, an opportunity exists as like-minded friends and allies to work together to establish a new green special relationship. As advocates of democracy, liberty, and freedom, we can work with developing nations to support their own energy transitions. The net-zero prize for our nations is not simply an economic one: it can also strengthen the foundations of our shared democratic values across the globe.

Washington and London can also forge new partnerships across green industries where we cannot go it alone. Together, the allies can be greater than the sum of their parts in several strategic energy partnerships where they enjoy a comparative advantage. In new nuclear technologies, such as advanced and small modular reactors, TerraPower and X-Energy—both US companies—are seeking to locate in the United Kingdom where there are shovel-ready former coal sites with local populations that recognize the benefits of nuclear energy for workers. In carbon capture, the United Kingdom has vast geologic storage opportunities with up to 78 billion metric tons of capacity identified under the North Sea. In energy efficiency, Ameresco—another US firm—is partnering with the City of Bristol to invest £450 million in a new district heating network. These are joint opportunities from which both sides recognize the huge mutual benefits of cooperation. These can go much further, if stakeholders are willing to seize this moment to collaborate.

The Inflation Reduction Act has fired the starting gun toward delivering on net zero by providing the investment, certainty, and stability needed to allow private capital to flow and drive forward the green revolution. That investment will go far further, and achieve far greater value, if it is matched with partnerships to maximize comparative advantages that are shared by the United States and United Kingdom in achieving net zero. Now is the time to build a Green Special Relationship, for the future. Global ambitions to achieve net zero and combat climate change depend upon it.

The Rt Hon. Chris Skidmore, MP is chair of the UK government’s Net Zero Review and a former UK energy minister. He authored the government’s recent Mission Zero report. He delivered a speech on the “Green Special Relationship” at the Atlantic Council on Tuesday, April 25.

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A new security challenge: The geopolitical implications of climate change

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

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

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Russia’s failing Ukraine invasion is exposing Putin’s many weaknesses

Anders Åslund — Mon, 12 Jun 2023 00:29:11 +0000

Vladimir Putin’s disastrous invasion of Ukraine is exposing all of his personal weaknesses as a ruler. It is also casting an unforgiving light on the extensive damage he has done to Russia.

In the early 1990s, I encountered Putin several times at international meetings in St. Petersburg, but I never really met him. I talked to the city’s friendly mayor, Anatoly Sobchak, and his first deputy Alexei Kudrin, but Putin, whose background in the KGB was well known, hid on the sidelines and did not really talk to anybody. He was perceived as a secretive nuisance.

Based on this early impression of Putin, I have always been surprised by his remarkable rise to the pinnacle of Russian politics. My view is that he was simply lucky and owed his many promotions to a handful of people close to Russia’s first post-Soviet president, Boris Yeltsin. Putin’s main benefactors were Yeltsin’s daughter Tatyana and last two chiefs of staff, Valentin Yumashev and Alexander Voloshin, along with oligarchs Boris Berezovsky and Roman Abramovich, who trusted his loyalty while Yeltsin was too sick to rule in 1998-99.

Putin arrived at a table of increasing abundance laid by Yeltsin and his reformers; he was further helped by an extended period of rising global oil prices. He has had a surprisingly long run, but nobody can expect to be lucky forever. For more than two decades, Putin thrived on personal loyalty and relied on his slow, deliberate approach to decision-making. However, as the invasion of Ukraine continues to unravel, his many flaws and weaknesses are now coming to the fore.

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Despite being in power for more than two decades, Putin has never broadened his expert base. Instead, he has stuck to his former KGB colleagues and old St. Petersburg technocrats along with a small number of economists and lawyers. How can anybody seriously listen to Nikolai Patrushev or Yuri and Mikhail Kovalchuk? They are considered among Putin’s closest advisers but they are full of old-style Soviet conspiracy theories.

Putin himself has consistently refused to rely on any sources of information other than his own intelligence agencies. In his big media events, he has repeatedly shown that he believes in all manner of conspiracy theories. In other words, he has consciously chosen to remain poorly informed.

He has never been a fast decision maker or crisis manager and has always taken his time. For much of his reign this has not been a major issue, but that is no longer true in the current wartime environment. Putin’s obvious lack of skill as a crisis manager is presumably one of the reasons why so many important decisions related to the war in Ukraine are late and inconsistent.

Putin is also a micromanager who is reluctant to delegate and prone to over-centralizing. He has persistently gone far too deep into details. Much of the failure of the war in Ukraine seems to have been caused by Putin insisting on deciding too much himself, just like Hitler during World War II. Military decisions require detailed knowledge which Putin simply does not possess. He is also physically far from the battlefield due to his lack of personal courage.

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Since 2000, Putin has systematically destroyed Russia’s state institutions and imposed extreme repression. One consequence is that his regime has very little capacity to generate, receive, or utilize negative feedback. Everybody around him has learned that he only wants to hear good news. As a result, neither he nor his administration learn much from their mistakes.

Many biographers of Putin have been reluctant to discuss allegations that he has been deeply involved in organized crime and kleptocracy for much of his political career. Nevertheless, awareness of this kleptocracy is vital for anyone seeking to understand today’s Russia. Far-reaching criminal influence has made the Russian state rot from within. It can neither manage processes nor produce things effectively.

A peculiarity of the Putin regime is that the ruler actually offers two-way loyalty, unlike Stalin. Putin recognizes only one crime, disloyalty. If one of his underlings happens to steal a billion or two, it is not typically seen as a problem. Nor does Putin fire anybody because of incompetence. Instead, incompetent senior officials are forgiven for their frequent blunders as long as they remain personally loyal to Putin.

The invasion of Ukraine has exposed widespread corruption and incompetence throughout the Russian military and defense sector, but Putin’s old friends and allies remain in their posts. Rather than dismissing the many incompetent Russian generals, Putin prefers to circulate them. The most outstanding failures, Defense Minister Sergei Shoigu and Chief of the General Staff Valery Gerasimov, have not lost their jobs despite their obvious and costly mistakes.

With the invasion of Ukraine now in its sixteenth month, Putin’s limitations as a leader have left Russia heading for an historic defeat. During the early years of his reign, he benefited from the hard work done before him by 1990s reformers and enjoyed favorable international conditions, but his many sins and shortcomings are now clearly catching up with him.

Anders Åslund is a senior fellow at the Stockholm Free World Forum and author of “Russia’s Crony Capitalism: The Path from Market Economy to Kleptocracy.”

There are additional concerns over a potential nuclear disaster as the reservoir behind the collapsed dam supplies the cooling water for the nearby Zaporizhia Nuclear Power Plant, the largest in Europe. Floodwaters are also thought to have dislodged significant numbers of mines, creating further potential for civilian casualties.

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While the Kremlin has denied blowing up the dam and has instead accused Ukraine, initial analysis strongly suggests Russian responsibility. A New York Times article citing engineering and munitions experts concluded that a “deliberate explosion” inside the Russian-controlled dam “most likely caused it to collapse.” Only Russian forces could have carried out such an explosion.

Many have also questioned the credibility of Moscow’s counterclaims suggesting the dam was destroyed by Ukrainian missile or artillery fire. Independent experts have confirmed that the Cold War era dam, which was built to withstand a nuclear attack, would be extremely difficult to destroy via external bombardment, according to The Times.

Russia also has a clear military motive and a long record of attacks on Ukraine’s civilian infrastructure. At the time of the dam collapse, Russian forces were preparing to face a long anticipated Ukrainian summer counteroffensive. The widespread flooding produced by the disaster effectively ruled out the possibility of Ukrainian troops attempting a river crossing along an entire section of the 1000-kilometer front. Meanwhile, Russia spent much of the winter and spring seasons conducting a methodical nationwide bombing campaign designed to destroy Ukraine’s energy infrastructure and freeze the country into submission. While the destruction of a major dam would mark an escalation in this campaign, it would clearly not be unprecedented.

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Despite the likelihood that Russia is responsible for the dam collapse, in legal terms it is still too early to hold anyone directly accountable. First, there would need to be incontrovertible proof that this was actually an attack rather than some kind of horrible accident, miscommunication, or mistake made amid the “fog of war.” Then, the issue of attribution would have to be dealt with. This means that Russia’s responsibility for the attack would need to proven beyond doubt.

If it can be established that Russia intentionally carried out an attack on the dam, there are many potential pathways to justice. For example, Ukraine could pursue accountability through its own domestic courts; international actors could establish a regional tribunal; the International Criminal Court could investigate and potentially indict a responsible individual; or countries could choose to exercise universal jurisdiction in order to prosecute Russia for its actions.

Unfortunately, there are many obstacles to overcome in pursuing accountability through these mechanisms. History has shown that the wheels of justice are excruciatingly slow in international war crimes cases. Prosecutors and Ukrainians alike would have to show extraordinary patience in waiting for these approaches to pay dividends. It would also be difficult to prove who ordered the attack and get that person in the dock, barring unlikely regime change within Russia itself. These are neither fair nor easy circumstances for Ukrainians to accept in the face of such trauma.

Furthermore, there are still huge information gaps. There would need to be a committed fact-finding effort, starting in the immediate present, to fill these gaps for a case that might not be prosecuted for many years or even decades. Ukrainians have shown an unprecedented ability to document abuses in real time throughout the current war. The onus would be on them to identify the individual Russian units and commanders responsible for blowing up the dam.

The challenges are even greater if Ukraine or the international community wants to pursue specific accountability for ecocide. Although there has been a lot of momentum in this direction, ecocide is not yet codified as a crime under international law (although it is under Ukrainian law). Even if this were to be accomplished in the near future and ecocide came to fall under the Rome Statute that established the ICC, there would still be enough ambiguity and lack of legal precedent to potentially deter prosecutors from pursuing the charge of ecocide in the Kakhovka dam case. There would also need to be an extensive investigation, which would not be easy given bureaucratic and financial barriers along with the fact that many affected areas remain under Russian control or are heavily mined.

In light of these obstacles, what can be done in the short-term to help hold Russia accountable for the destruction of the Kakhovka dam and its devastating consequences? First, the international community needs to broaden its view of what might constitute justice beyond the courtroom. This means listening to and supporting local civil society in Ukraine. It also means investing in Ukraine not only in the short-term, but in sustainable ways that bolster the country’s longer-term recovery and reconstruction, quite possibly by using frozen Russian assets to finance it. This requires helping the Ukrainian authorities combat corruption and build the capacity of the country’s own judicial system to pursue accountability.

In the pursuit of justice for Ukraine, the most meaningful steps are those that ensure Russia’s decisive defeat. Accountability will be much more difficult to achieve if the conflict becomes protracted or frozen. In such circumstances, it is highly unlikely that anyone will ever face prosecution over the destruction of Kakhovka dam. Ultimately, the only way to achieve a just and durable peace is through Ukrainian victory.

Danielle Johnson holds a PhD in Politics from Oxford University and is currently a Senior Ukraine Analyst at ACAPS.

Kakhovka dam collapse threatens Europe’s largest nuclear plant

Suriya Evans-Pritchard Jayanti — Thu, 08 Jun 2023 20:06:08 +0000

The blowing up of the Kakhovka dam in Russian-occupied southern Ukraine in the early hours of June 6 has produced a range of catastrophic humanitarian and environmental consequences. The resultant draining of the Kakhovka reservoir also creates significant risks for the nearby Zaporizhzhia Nuclear Power Plant. The plant, which is the largest in Europe, is not believed to be in any immediate danger, but rapidly dropping water levels in the reservoir will make it difficult to access the water necessary to cool the plant’s six reactors.

Nuclear power plants work by splitting atoms to create tremendous heat, which turns turbines to generate electricity. The heat created is so extreme that advanced cooling systems are required to keep temperature levels under control and prevent a meltdown. The Fukushima disaster was the result of a cooling system failure when a tsunami caused by a major earthquake disabled the Japanese nuclear power plant’s cooling system and three reactors melted down from their own heat. By contrast, the 1986 Chornobyl disaster in Soviet Ukraine was due to human error that caused the graphite reactor cores to burn.

The Zaporizhzhia plant features VVER-1000 pressurized light water reactors. This means that a Chornobyl-style meltdown is not possible as there is no graphite to burn, but the risk of a cooling system failure is a grave concern. The plant has been carefully monitored by the International Atomic Energy Agency (IAEA) since it was first captured by Russian troops in March 2022 during the early weeks of the full-scale Russian invasion.

Since then, Russia has repeatedly struck the transmission lines that power the plant’s cooling systems, necessitating the use of back-up generators to keep the cooling system operational. Despite regular alarms over the close proximity of combat operations and the deployment of Russian troops at the plant, the risk of a nuclear disaster has been seen as present but never pressing due to numerous residual safety features. For example, the plant can run on its own power for short periods of time if power grid access and generators simultaneously fail. So far, this hasn’t happened.

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The Kakhovka dam collapse has now increased the risk of disaster. In addition to electricity, the plant needs large quantities of water to run its cooling system. The plant was built in the 1980s, decades after the Kakhovka dam was constructed, and features a design that relies on reservoir water for its cooling system. And although the plant’s six reactors have been turned off for more than eight months to reduce the likelihood of wartime nuclear accidents, it will still be a decade before the reactor fuel rods are cool enough to be moved into dry storage.

Water levels in the reservoir have plummeted since the blast on Tuesday morning. At this stage, nobody can say with any certainty how far the water levels will eventually drop before leveling out. The IAEA commented on June 7 that if water levels fall below 12.7 meters, the lowest level at which water can be pumped upstream to the Zaporizhzhia Nuclear Power Plant, there are alternative options that can be used to source cooling system water. One day later, this point was reportedly reached. With the Kakhovka dam beyond repair and no clear way to stop it hemorrhaging water from the reservoir, it seems likely that external water sources will be necessary.

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At present, IAEA officials say there is “no immediate risk” to the plant, while officials from Ukraine’s nuclear operator Energoatom have stated that water supplies stored close to the facility are sufficient for the next few months. However, others have noted that summer heat could speed evaporation and exhaust existing reserves far sooner.

The destruction of Kakhovka dam is widely viewed as the latest and most reckless in a series of attacks on Ukrainian civilian infrastructure carried out by Russia since the full-scale invasion of Ukraine began almost sixteen months ago. While Moscow has officially denied destroying the dam, initial analysis points to Russian responsibility. A New York Times article citing engineering and munitions experts concluded that a “deliberate explosion” inside the Russian-controlled dam “most likely caused its collapse.” Meanwhile, independent experts have confirmed that the Cold War era dam, which was built to withstand a nuclear attack, would be extremely difficult to destroy via external bombardment, according to The Times.

In addition to the heightened risk to the Zaporizhzhia Nuclear Power Plant, the destruction of the dam has also unleashed an ecological disaster throughout the region. Tens of thousands of local residents whose homes have been flooded are in urgent need of care and shelter. Significant quantities of oil and chemicals have poured into the Dnipro River and must be contained, along with munitions. These are the most immediate challenges facing the Ukrainian authorities.

The risks posed to Europe’s largest nuclear power plant by the loss of access to reservoir water must also be addressed without delay before the situation becomes critical. Beyond this pressing logistical issue, the blowing up of the Kakhovka dam is also fueling speculation over whether Russia may be prepared to adopt similarly drastic measures at the Zaporizhzhia plant itself. With this in mind, the international community must send a clear message to Moscow that it will be held accountable for any further attempts to intimidate the world with the threat of nuclear disaster.

Suriya Jayanti is a nonresident senior fellow at the Atlantic Council.

The debt-ceiling permitting deal misses the real problems holding back the energy transition

Ken Berlin, Frank Willey — Thu, 08 Jun 2023 15:35:20 +0000

On Saturday, President Joe Biden signed into law a bill that raises the debt limit in exchange for concessions on federal spending. The deal also seeks to reform permitting for energy projects by introducing changes to the National Environmental Policy Act (NEPA), commissioning an interregional transfer capability determination study, streamlining approvals for energy storage projects, and—most controversially—completing the Mountain Valley Pipeline.

Shortening the review process for transmission projects and renewable interconnection to the grid is critical for accelerating the United States’ clean energy transition. Transmission lines take an average of five to ten years to build, largely due to the complex patchwork of stakeholders and permitting authorities involved in the review process. In addition, of the 2,000 gigawatts (GW) of generation capacity awaiting connection to the US transmission system, natural gas accounts for only 85 GW and coal merely 1 GW—the rest are zero-carbon technologies.

The critical permitting bottlenecks holding back the energy transition involve securing access to and approval of new transmission lines and the interconnection of new renewable projects to the grid. The legislation in the bill does not address either subject and will do little to clear the blockages in the permitting queue. To meet climate targets, legislators must adopt additional measures that are specific to transmission and renewable interconnection.

Source: Berkeley Lab

Completion of the Mountain Valley Pipeline
The Mountain Valley Pipeline, the most contentious of the provisions included in the bill, will proceed with development and could be completed as early as the end of this year. Some approve of the pipeline’s completion for its potential economic and energy security benefits, while others condemn its negative environmental impact. Construction on the pipeline is already 94 percent complete, but the impact on the environment and indigenous communities remains an open issue.

The Builder Act

The debt ceiling deal includes the Builder Act, which introduces reforms to NEPA that impose time limits on environmental reviews unless the project sponsor and agency agree to extend, designate a lead agency to coordinate federal project permitting, and allow project sponsors to conduct the NEPA study themselves, subject to agency review. In addition, the act revises language within the original NEPA legislation, requiring agencies to consider only environmental effects that are “reasonably foreseeable” and alternatives that are “technically and economically feasible,” potentially constraining which environmental impacts and alternatives a company must evaluate. Whether the updated legal language will result in a less comprehensive consideration of alternatives will be revealed in future litigation. Finally, the act shortens the length of NEPA documents, although the page limits do not apply to appendices, which could minimize the effects of this reform.

The provisions in the act that set time limits on the preparation of Environmental Impact Statements (EIS) and Environmental Assessments (EA) will shorten the federal review process but will not resolve the state and local jurisdictional issues that also hinder project deployment. Currently, it takes on average four-and-a-half years to complete an EIS. The Builder Act creates a two-year deadline for completing an EIS and a one-year deadline for an EA. The lead agency can extend the deadline in consultation with the project applicant but must complete the process within ninety days of a court order after the deadline. Projects, however, are not automatically approved if the timeline is not met, and significant barriers remain related to agency staffing to meet the shortened deadlines, an issue neglected in the debt ceiling reforms.

Contrary to widely expressed fears, these changes are unlikely to affect the integrity of the NEPA process. NEPA statements remain subject to the same judicial review as they were before the amendment, and if its conclusions are unsound, a reviewing court will send the NEPA document back to the agency for further review. The reviewing agency must still scrutinize any documents submitted by project sponsors and is responsible for final approval. If short deadlines prevent rigorous analysis from being completed, the NEPA document would not likely stand up in court. The environmental community, civil society, and businesses can still add comments or additional information to the administrative record but now have less time to review and comment on EISs and EAs, putting more pressure on interested parties to move swiftly.

Interregional Transmission Planning Opportunities Study

NEPA is not the biggest barrier to the rapid buildout of transmission and renewable infrastructure. The uncoordinated patchwork of federal and state permitting agencies involved in approvals, asynchronous review processes that stretch permitting times, and the Federal Energy Regulatory Commission (FERC)’s lack of direct authority over transmission wires—in contrast to its authority over natural gas pipelines—play a much more significant role in holding back project development. In addition, disagreements about cost allocation have proven formidable obstacles to building transmission and getting new renewable projects onto the grid.

These barriers are being studied extensively. The US Department of Energy (DOE) is conducting a National Transmission Planning study to be released this summer. FERC also issued a Notice of Proposed Rulemaking (NOPR) in April 2022 to improve regional transmission planning and cost allocation procedures. Instead of using these and other studies to inform legislation, the Builder Act directs the North American Electric Reliability Corporation (NERC) to conduct an interregional transmission planning opportunities study that will be published within eighteen months of the bill’s passage, followed by a year of public comment. FERC will then recommend statutory changes subject to their own review timeline.

Congress, FERC, and other federal agencies should not wait for completion of the NERC study. Instead, they should act using completed studies and the results of the DOE and FERC processes when considering additional transmission permitting and planning reform, as the infrastructure is needed as soon as possible. A Princeton study estimates the grid will need to expand by 60 percent by 2030 and triple in size by 2050. Building 60 percent more electricity transmission infrastructure within four years, starting in 2026 after the NERC study’s completion, is not feasible.

Permitting streamlining for energy storage

The bill also adds energy storage to the list of “covered projects” under the Fixing America’s Surface Transportation (FAST) Act, which improves federal-state coordination and enshrines tangible deadlines for review, but can pose additional eligibility criteria and procedural requirements that do not make the process simpler. Project proponents are subject to restrictions on review period extensions and must interpret new terminology in consultation with agencies to ensure compliance with the program. Overall, including energy storage projects under FAST-41—named after Title 41 in the FAST Act—is a welcome development. Such programs should be expanded but must be supplemented with reform of the standard permitting process.

Recommendation for permitting reform

The permitting reforms in the agreed legislation will not affect the integrity of the EIS and EA processes, despite concerns from the environmental community. However, they fail to address the substantive permitting issues related to transmission and interconnection that investors and developers face today. Bills that address primarily oil and gas leasing and permitting are counterproductive to both the permitting discussion and energy transition goals. Legislators must work together and compromise to address permitting issues.

This article is the first in a series on EnergySource discussing permitting reform in the United States. The next article will examine opportunities for permitting reform after the debt ceiling bill.

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 project assistant at the Atlantic Council Global Energy Center.

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EnergySource Dec 3, 2021

Ensuring resilient clean energy infrastructure

By Andy Bochman, Jennifer T. Gordon

As the energy infrastructure of the future starts to spring up, ensuring its resilience to potential changes in climate will be pivotal. Modeling tools must evolve to forecast these coming challenges, and climate adaptation discussions must expand to include clean energy infrastructure.

Energy & Environment Energy Transitions

EnergySource Aug 8, 2022

How to build on the Inflation Reduction Act and incentivize truly clean electricity

By Ameya Hadap

The production tax credits in the Inflation Reduction Act will lift up every carbon-free source of electricity in the United States. But there is no guarantee these clean energy sources will actually displace carbon from the grid. More legislation is needed to build on the bill and close the gap between clean energy deployment and carbon mitigation.

Energy & Environment Energy Transitions

EnergySource Dec 5, 2022

A nascent US offshore wind strategy? Permitting reform and the Inflation Reduction Act

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US strategy on offshore wind is steadily evolving. The attendant changes could lay the groundwork for emergence as an offshore wind powerhouse.

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The post The debt-ceiling permitting deal misses the real problems holding back the energy transition appeared first on Atlantic Council.

Private roundtable on Iraq with Dr. Azzam Alwash

Atlantic Council — Wed, 07 Jun 2023 14:40:54 +0000

On May 18, the Atlantic Council’s Iraq Initiative hosted Dr. Azzam Alwash, Founder and CEO of Nature Iraq, for a private hybrid roundtable discussion on Iraq’s environmental crisis and future efforts to address climate change. Iraq Initiative Director Dr. Abbas Kadhim moderated the conversation.

The post Private roundtable on Iraq with Dr. Azzam Alwash appeared first on Atlantic Council.

Moldova needs an energy overhaul

Suriya Evans-Pritchard Jayanti — Wed, 07 Jun 2023 13:33:27 +0000

If energy security is national security, then Moldova is one of the most vulnerable countries in the world. It is perennially at risk of being destabilized by malign actors and vested interests linked to Russia because Moldova faces an existential struggle to heat and power itself.

The tiny country of 3.6 million, wedged between Romania and Ukraine, imports 100% of its natural gas, 99% of its oil, and relies on a single power plant in Russian-controlled separatist region Transnistria for 80% of its electricity. Russia’s Gazprom owns 51% of Moldovagaz, the country’s natural gas monopoly. There is almost no foreign investment in the energy sector, and what little there is has found the country unworkable. This was a difficult situation before Russia’s full-scale invasion of Ukraine. It is now untenable.

Ukraine has traditionally supported Moldova, at least commercially if not altruistically, as have other countries, but with the war ongoing to the east and a still unfolding global energy crisis, the need to become self sufficient is paramount. To fortify Chisinau, the international community must get serious about helping Western-educated Moldovan President Maia Sandu and her government achieve energy independence. For its part, Chisinau must reform its commercial and rule of law institutions to become attractive to foreign energy investment, and it must allow investors to function there.

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The international community has been involved in ongoing efforts to support Moldova’s energy sector. For example, the US government has given a total of $40.5 million in energy-related funding plus $30 million in budget support “to help ameliorate the energy crisis” since the Russian invasion of Ukraine. On February 24, 2023, the US announced an additional $300 million in energy support for Moldova. The EU has been similarly supportive, as have international finance institutions including the EBRD and the World Bank.

So far, this money has gone mostly to “capacity building” and technical assistance instead of structural reform, an approach that has proved ineffective. Critics have likened it to the proverbial pouring water into a leaky bucket. To some extent, it’s a problem of where to start when so much needs reform and restructuring. But the failure is also due to a focus on lower level changes, giving Moldova’s energy sector the equivalent of an oil change when a new engine and transmission system are required.

What is needed is a wholesale restructuring of Moldova’s energy sector to free it from legacy Soviet inefficiencies, and from modern Russian meddling. A few clear priorities should be construction of a power plant that is not within the breakaway region of Transnistria; ending Gazprom’s stranglehold on Moldovagaz, or if that is not reasonably achievable, breaking existing Moldovagaz contracts and establishing an alternative natural gas supplier; building Moldova a power market; and broadly, diversification of the energy mix.

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Despite political will since Sandu came to power and especially since the new government was seated in February 2023, critically with a new energy minister, Moldova has demonstrated little wherewithal to tackle these tasks. One big obstacle is money. Chisinau is living “paycheck to paycheck,” hence the annual emergency bailouts and budget support from Western governments, and emergency gas supplies from Ukraine. In this constant state of energy emergency, there has proved little capacity to learn to fish versus begging for fish. Structural reforms that, for example, empower an alternative agency to be the vehicle for natural gas contracts at the expense of Moldovagaz, could help break the cycle.

But to do this, Moldova needs money. Rather than being treated like a charity case with annual emergency bailouts from foreign governments which are counted on desperately every year but which are never guaranteed, the country needs to attract foreign investment to fuel its energy overhaul and solidify it. Only once private capital buoys Moldova’s energy sector will the country be able to earn the regular taxes and royalties necessary to build its own energy independence.

This is where Moldova has stood in the way of its own reform. Although under Sandu the perception of Moldova regarding corruption has improved, many barriers to foreign investment remain. The country ranks 48th on ease of doing business, with notably lower scores for contract enforcement and dispute resolution, two issues critically important to potential investors. It ranks 58th for rule of law adherence. A warmer welcome to private energy investors could be conceived.

Meanwhile, most of the few companies who have braved investment in the Moldovan energy sector have paid dearly for it. In 2016 Gas Natural Fenosa, a Spanish company and Moldova’s largest supplier and distributor of electricity, sued the government over “discrepancies” in electricity tariffs that cost it over €20 million. The EU Energy Community eventually brought a dispute against Moldova over the issue. In 2021, the Court of Justice of the European Union issued a final decision in Moldova v. Komstroy, a case arising from a Moldovan state-owned entity default on electricity contracts with a Ukrainian company. The private investor was left empty handed.

Currently, the Moldovan government is being sued by the largest private gas company in the country, Rotalin Gas Trading, the only private competitor to Russian controlled Moldovagaz, for gas tariff irregularities that are forcing it out of business. Rotalin claims to have lost many millions over two decades. These are just a few examples, and a fair warning to potential investors.

The merits of any of these disputes aside, any reasonable investor would understandably hesitate before risking money in the Moldovan energy sector. What amounts to an appearance of hostility to foreign investment and a lack of adherence to contracts must be overcome before private capital will seriously consider Moldova. Furthermore, if Chisinau is going to make a credible argument that it is being manipulated and abused by Gazprom, it must not appear to be doing the same to private energy investors in Moldova.

Until private investors enter the market in force, Moldova will be left at the mercy of generous foreign governments, which in turn will continue providing emergency assistance instead of actual, sustainable reform. Only private capital can break this cycle, and it needs to be able to turn a profit, however meager, before it will.

Suriya Evans-Pritchard Jayanti is a nonresident senior fellow at the Atlantic Council’s Eurasia Center.

Below, Atlantic Council experts answer our most pressing questions about what the damaged dam means for the ongoing war.

1. If Russia is behind the dam collapse, what would it reveal about Russian strategy and tactics at this stage in the war?

That they have no red lines that can’t be crossed and that they have no regard for human lives or ecology. I’m afraid that if the Russians are capable of blowing up such a large piece of critical infrastructure, they’re also capable of striking at the occupied Zaporizhzhia nuclear power plant—the consequences of which would be horrific. There is little left in the West’s toolbox to restrain Russia, but a tightening of the noose of sanctions and providing Kyiv with all the fighting kit it is asking for would be a logical starting point.

—Michael Bociurkiw is a Ukraine-based nonresident senior fellow at the Atlantic Council’s Eurasia Center.

It would reveal nothing new compared with what we have already known about Vladimir Putin’s Russia and its efforts to destroy the Ukrainian state and the Ukrainian people. Putin’s regime has already systematically committed crimes against humanity and pursues a policy of genocide, showing total disregard for human lives. Destruction of the Nova Kakhovka dam appears to be one more piece of evidence of the dark nature of Putin’s regime—a terrible and extremely dangerous act aimed at inflicting maximum suffering on people and maximum damage on the environment. Putin is still trying to escalate and terrorize Ukraine and its partners. It’s long overdue that we deny him this possibility.

—Oleh Shamshur is a nonresident senior fellow at the Atlantic Council’s Eurasia Center and a former Ukrainian ambassador to the United States.

2. What are the implications for the environment and other parts of Ukraine such as Kherson and Crimea?

Ukrainian officials are already reporting the deaths of zoo animals near the dam. Some eighty settlements are at risk of substantial flooding and countless hectares of land are in the path of floodwaters. What is more, the flooding could trigger another wave of displaced people or asylum seekers. If people in the West feel they won’t be impacted, they should think again and brace themselves for higher food prices and a fresh wave of refugees.

—Michael Bociurkiw

Since last fall, Ukraine has implored the international community to prevent a Russian terrorist attack on the Nova Kakhovka dam. The immeasurable suffering today should be a wakeup call regarding how Ukraine’s critical energy infrastructure must be protected in the future and the importance of trusting Ukraine’s experts on risk assessment and mitigation strategies, in particular regarding nuclear power plants. While there are no evident immediate risks to the Zaporizhzhia nuclear plant, which relies on water from the reservoir for cooling and operations, its continued safety is anything but guaranteed. The international community should be treating Russia’s apparent escalation as a ramp-up for broader genocide and ecocide in Ukraine. Western allies, including multilateral bodies such as the International Atomic Energy Agency, cannot entrust Zaporizhzhia’s safety and that of other massive energy installations to the Russians.

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

The destruction of Ukraine’s Nova Kakhovka dam will result in short- and long-term environmental, humanitarian, military, and economic consequences. Given the global impacts, especially for Global South food security, Russia, if it was behind the destruction, has cemented its reputation as one of the world’s largest orchestrators of civilian suffering.

Damage is still unfolding, but there are fears that hundreds of thousands among Ukraine’s already-battered civilian population may be left without their homes, water, electricity, or other access to vital infrastructure in the Kherson region, Crimea, and beyond. Known disaster-related flood risks—like mold-caused health impacts and downed power lines in the water—are exacerbated by reports of Russian troops shelling evacuations, floating mines, and more than a hundred tons of engine oil polluting the Dnipro River.

Europe’s largest steppe, Askania Nova, is endangered, along with the native zebras, buffaloes, and wildebeests that call the steppe their home. Untold ecosystem damage may unfold. Springtime births make animal populations and the ecosystems they support especially vulnerable. In light of the economic damage to Ukraine’s agribusiness and metallurgy industries, which require extensive water supplies, Western governments will need to take decisive action to redirect frozen Russian assets for Ukraine’s recovery. Concerns about the long-term cooling of the Zaporizhzhia nuclear power plant will rise.

—Kristina Hook is a nonresident senior fellow with the Atlantic Council’s Eurasia Center specializing in genocide and mass atrocity prevention, emerging technologies, and post-conflict reconstruction.

3. Could the dam destruction constitute a war crime?

As more details are clarified, the legal implications potentially could be vast, with prohibitions of attacks on such facilities inscribed in the Geneva Conventions. Concrete steps on accountability for war crimes are needed, and global humanitarian aid must surge. None of the ecological crimes unfolding over the past sixteen months were inevitable, given Ukraine’s robust environmental management and monitoring prior to 2014. All trace back to Russia’s nearly decade-long war against Ukraine. The ensuing damage to Ukraine and the global economy lies squarely at Russia’s feet.

Given months of Ukrainian and international warnings about the possibility of Russia attacking the dam, global condemnation is not sufficient. Anything less than a tangible response alerts the Kremlin that it can get away with the environmental equivalent of a weapon of mass destruction, encouraging Russia to climb further up an escalation ladder aimed directly at Ukraine’s civilians. This day offers a painful snapshot of Ukrainian life under Russia’s terror: nine months of violent occupation in Kherson, with torture camps, rape, and summary executions, followed by relentless shelling, and now, apparently, flooding—losing everything in a day.

—Kristina Hook

Destruction of the dam absolutely violates the Geneva Conventions and fits the definition of a crime against humanity as described in the Rome Statute of the International Criminal Court. So it should be recognized as such and its perpetrators should be held accountable. We’re seeing a developing humanitarian disaster, primarily due to the massive displacement of the population of flooded areas and a sharp drop in the supply of drinking water. If Russia committed the destruction, it would be one more reason to see Putin and company in The Hague, hopefully in the near future.

—Oleh Shamshur

The post Three questions (and expert answers) about the dam collapse in Ukraine appeared first on Atlantic Council.

Is China preparing for a post-Putin Russia?

Anders Åslund — Tue, 06 Jun 2023 21:05:22 +0000

One of the greatest mysteries of the Russo-Ukrainian War is China’s actual policy. While China moves cautiously, it appears to be gradually distancing itself from Vladimir Putin. A little-noticed fact is that Chinese President Xi Jinping is cultivating Russian Prime Minister Mikhail Mishustin in quite a blatant fashion.

Just two weeks before Putin launched the full-scale invasion of Ukraine in February 2022, he extracted a commitment from Xi Jinping of “friendship without limits” at their meeting during the Beijing Olympics. However, some significant limits have since became evident. China has apparently refused to deliver arms and sanctioned technology to Russia. China has also abstained on half a dozen United Nations General Assembly resolutions condemning Russia’s war of aggression against Ukraine.

In February 2023, China presented its own twelve-point peace plan to end the war in Ukraine. Supporters of Ukraine have complained that this plan does not condemn Russia or call for a Russian withdrawal from Ukraine, but in fact the first point of China’s plan reads: “Respecting the sovereignty of all countries. Universally recognized international law, including the purposes and principles of the United Nations Charter, must be strictly observed. The sovereignty, independence, and territorial integrity of all countries must be effectively upheld.” Implicitly, China suggests that Russia has to withdraw its troops from Ukraine.

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Both Xi and Putin have limited public appearances and abstained from traveling because of their fears of Covid-19, and Putin has become ever more isolated because of his war of aggression against Ukraine. Therefore, it was perceived as a great event when Xi Jinping went on an official three-day visit to Russia in March 2023. It was Xi’s first international meeting since his re-election as president during the 2023 National People’s Congress, and it offered Putin a rare break in his international isolation.

While we don’t know what the two leaders said in their long private meetings, nothing seems to have gone right for Putin. His big official project was a large second “Power of Siberia” gas pipeline from western Siberia to China, but Xi clearly said no, limiting Russia’s possibilities to export gas to China for the foreseeable future. Nor does Xi appear to have approved of arms or sensitive technology sales to Russia. Curiously, Xi had a separate meeting with Russian Prime Minister Mikhail Mishustin, contrary to strict Chinese protocol.

As a follow up, Chinese Prime Minister Li Qiang invited Mishustin, his Russian counterpart, to Beijing for an official visit in late May. Mishustin is the highest-ranking Russian official to visit China since the start of the Ukraine invasion in February 2022. On the second day of his visit, Xi Jinping received Mishustin at the Great Hall of the People, once again completely beyond the ordinary bounds of Chinese and Russian protocol.

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If there is a greater stickler of protocol than the Chinese leaders, it is probably Putin. In spite of all the greetings to and from Putin that Xi and Mishustin exchanged, the obvious question arises: Why was Mishustin invited and not Putin? This cannot have gone down well with the Russian leader.

Putin appears to have given his response. Mishustin is one of thirteen permanent members of the Security Council, Russia’s highest policy-making body which meets about every tenth day, always chaired by Putin. Usually all but one or two of the permanent members are present. Mishustin attended on May 15, the last meeting before his trip to China, but he was missing both on May 26 and June 2 after his return from his triumphant visit. Reasons for absence from a Security Council meeting are never officially given.

This old-style Kremlinology is perhaps the best evidence we have that China may be looking beyond Putin and seeking to cultivate alternative relationships in Russia. Such objective observations are better than dubious rumors and can potentially tell us a lot. First of all, it seems clear that China’s “friendship without limits” with Russia actually has many limits, as indicated above. China is presumably more afraid of US and EU secondary sanctions than interested in supporting Russia in its war against Ukraine.

Second, China does claim that universally recognized international law, including the purposes and principles of the United Nations Charter, must be strictly observed, which means that it opposes Russia’s invasion in principle. Third, the Chinese have indicated distrust in Putin and they may be looking to Mishustin as a credible alternative. Whether this is realistic is not all that relevant.

Fourth, by apparently excluding Mishustin from his two most recent Security Council meetings, Putin has indicated that he has paid attention and dislikes these recent developments. The standard procedure would have seen Putin calling Mishustin to the Security Council to report what he had learned in China.

Mishustin has carefully avoided saying anything in public about the war in Ukraine or his visit to China. His father is considered to have served in the KGB, and he has been both the head of the Russian tax service and a wealthy investment banker. Mishustin is often overlooked in analysis of power dynamics in today’s Russia, but his relationships with both Putin and China should be watched carefully.

Anders Åslund and Andrius Kubilius have just published the book “Reconstruction, Reform, and EU Accession for Ukraine.”

Beijing’s local air quality has improved nearly continuously since 2013 as particulate matter (PM) 2.5 levels decreased. The US Environmental Protection Agency defines PM 2.5 as “fine inhalable particles, with diameters that are generally 2.5 micrometers and smaller.” These particles can cause serious health problems after inhalation. PM 2.5 may be particularly harmful for children, and early-life exposure is associated with an increased risk of childhood asthma.

Publicly available measurements of particulate matter concentration from the US embassy in Beijing show that the city’s average annual air quality index (AQI) fell sharply from 2013 to 2019, the last pre-COVID year in Beijing. Higher AQI values correspond to greater air pollution.

Figure 1: Beijing’s average annual Air Quality Index (lower scores indicate less pollution)
(Source: U.S. State Department, author’s calculations)

Several factors have contributed to improving air quality scores. Lauri Myllyvirta of the Centre for Research on Energy and Clean Air identifies key drivers: implementing strong emissions standards and using of emissions-control technologies for power plants and high-emissions industries; eliminating coal-based heating and cooking in homes; and slowing growth in coal consumption.

An embrace of natural gas also undoubtedly played a major role in enabling Beijing to reduce local coal production while maintaining energy access. The city has shuttered over 2 gigawatts (GW) of local coal plant capacity, beginning in 2014, while opening nearly 6 GWs of cleaner natural gas capacity.

Figure 2: Beijing’s changing electricity generation landscape
(Source: Global Energy Monitor Global Coal Plant and Global Gas Plant Trackers, author’s calculations)

As local demand for natural gas rose, Beijing sourced more supplies from abroad. Pipeline natural gas imports along the Central Asia-to-China Pipeline (CACP) were particularly important. According to the Chinese National Petroleum Company, natural gas service enabled the shutdown of four thermal coal plants in 2015. The CACP’s Line C, which entered service in 2014 and has a capacity of 25 billion cubic meters (bcm) per year, undoubtedly played a role. The CACP’s A and B lines came online in 2009 and 2010, respectively, and have a combined capacity of 30 bcm per year.

Liquefied natural gas (LNG) imports also played an important role in Beijing’s clean air transformation. From 2013–2018, China opened five LNG import terminals near Beijing, with capacity just under 40 bcm. In addition, the increased adoption of natural gas in the adjacent Tianjin municipality and Hebei and Liaoning provinces have also helped reduce coal pollution in the greater Beijing area. It’s clear that natural gas imports, especially LNG, have played an enormously important role in reducing Chinese urban pollution. China’s total natural gas imports more than quadrupled from 2011 to 2021, while its LNG imports rose from just under 17 bcm to 110 bcm in this period.

Figure 3: Chinese natural gas imports, by source
(Source: BP Statistical Review, author’s calculations)

Yet China’s victory over urban air pollution has been costly. The central government has often simply transferred coal generation from its biggest cities to less-populated locations. Therefore, while urban air pollution has declined dramatically since 2010, China’s emissions from steam coal used to make electricity have risen by 28 percent. China’s strategy has been to use natural gas selectively, reducing air pollution in politically important urban areas while increasing emissions in other parts of the country.

China also negated the environmental benefits of coal-to-gas switching by turning to Turkmenistan, almost certainly the world’s most methane-intensive producer. While coal produces far more carbon emissions than natural gas, methane emissions from natural gas production undercut that advantage. Methane has a shorter lifetime in the atmosphere than carbon dioxide, but is more efficient at trapping radiation. China sources most of its Central Asian natural gas imports from Turkmenistan, which has a methane intensity of production of 1.37 kilograms of methane per gigajoule–a level more than six times higher than in the United States even before the IRA incentivized producers to slash methane output.

Worryingly, Turkmenistan has not agreed to any concrete steps to reduce methane emissions, despite growing evidence it will secure another pipeline deal with China. If a new, 30 bcm-per-year Turkmenistan-to-China pipeline comes online and Turkmenistan’s current methane emission rate remains constant, the pipeline’s raw methane content could exceed the methane emissions of the entire US LNG complex, which boasts an export capacity of around 150 bcm a year. If Turkmenistan’s methane emissions are not abated, China’s procurement of Central Asian gas may reduce local air pollution in its cities, but will ultimately raise global emissions and associated costs.

Natural gas should be a tool for both urban air quality and climate

While the overall impact of natural gas on the climate is currently somewhat ambiguous, due to the role of methane, there need not be a tension between urban air quality and decarbonization. While there is strong evidence that replacing coal with natural gas can help reduce urban air pollution in China, India, and other economies across the Indo-Pacific, natural gas’ climate impacts can be significantly mitigated.

LNG producers from the United States and elsewhere must reduce methane emissions by limiting flaring and venting, which contribute to GHG emissions. US natural gas producers are already cutting methane emissions ahead of implementation of a methane fee under the Inflation Reduction Act. More effort is needed to reduce US natural gas GHG emissions, including by storing carbon, but the world’s largest natural gas producer and LNG exporter is on the right path.

Natural gas production does incur carbon and methane emissions—but it’s also a tool for reducing air pollution and asthma rates in urban population centers in developing countries. Moreover, if methane can be abated, natural gas can reduce global emissions when replacing coal.

The US and other natural gas producers must therefore accelerate methane and carbon emissions reductions. Meanwhile, natural gas importers, including China, must also pressure producers to limit methane and carbon emissions. Washington and Brussels are working to ensure that responsible natural gas production and LNG exports serve as a climate bridge fuel and a tool for urban emissions reduction, but they will need cooperation from Beijing and other important natural gas stakeholders.

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

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EnergySource May 1, 2023

China’s wind industrial policy “succeeded” – but at what cost?

By Joseph Webster

China has the world’s largest wind energy market in terms of generation and capacity. But China’s emergence as the world’s leading player in wind has been costly.

China Climate Change & Climate Action

EnergySource Mar 8, 2023

Chinese refining markets 101—and their implications for price caps on Russian oil

By Joseph Webster

Price caps on Russian crude and oil products have placed Chinese refineries in the spotlight. Their historical tendencies and political connections could shed light on what to expect from them as the oil market reorients itself.

China Energy & Environment

EnergySource Nov 1, 2022

China’s energy security realities and COP27 ambitions

By Joseph Webster, William Tobin

China will enter COP27 firmly playing both sides of the energy transition. The country is a global leader in clean technologies, but it is also pouring money into new coal plants and production. Beijing may have to choose between its climate aspirations and its coal realities to compete successfully with the West.

China Energy & Environment

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The post Natural gas reduced China’s urban air pollution. Can it be a global climate solution? appeared first on Atlantic Council.

Hakimi quoted in Radio Free Europe/Radio Liberty: The limits Of China’s budding relationship with Afghanistan’s Taliban

Atlantic Council — Sun, 04 Jun 2023 19:41:28 +0000

The post Hakimi quoted in Radio Free Europe/Radio Liberty: The limits Of China’s budding relationship with Afghanistan’s Taliban appeared first on Atlantic Council.

Central Asia’s clean energy opportunity: Hydropower

Maxwell Zandi — Fri, 02 Jun 2023 18:11:41 +0000

Central Asia holds some of the greatest potential for hydropower in the world. The Pamir and Tien Shan mountain ranges and vast river networks that form from glacier meltwater provide numerous locations for hydroelectric dams in Central Asia. Upstream republics, including Tajikistan and Kyrgyzstan, already receive nearly 90 percent of their electricity from hydroelectric production.

However, the region has failed to harness its full hydropower potential. Tajikistan has only developed 4 percent of its total capacity, while Kyrgyzstan has exploited just 10 percent. If Tajikistan and Kyrgyzstan were to fully capitalize on their topography, they would have a surplus of electricity to export to their fossil fuel-dependent neighbors.

Several roadblocks have stalled Central Asia’s hydropower development. But through investments in Central Asia’s energy infrastructure and by fostering new dialogue on transboundary water management, the United States and European Union (EU) can help unlock much of Central Asia’s potential and forge stronger ties to the region.

Barriers to development

The majority of Central Asia’s hydropower infrastructure was built during the Soviet era and is not equipped for today’s challenges. The dated technology is unable to generate and distribute electricity at a scale needed to support rising demand in the region.

Climate change has compounded these problems. Central Asia is warming faster than most regions in the world, and recent cases of extreme heat have increased electricity demand while depleting water flows, plunging the region into darkness.

In addition, advancing new projects in Central Asia has been difficult. Historically, hydropolitics has hindered regional cooperation. Downstream republics, including Uzbekistan, Kazakhstan, and Turkmenistan are dependent on the flow of water for cotton and wheat production, which account for 5 percent of Kazakhstan’s GDP and nearly 25 percent of Uzbekistan’s. Uzbekistan’s former president even threatened the use of military force against Kyrgyzstan and Tajikistan over proposed dam projects in 2012.

A glimmer of hope

Since then, however, new leadership has engaged in more constructive dialogue on shared resources in Central Asia. This newfound willingness to cooperate has opened the door for new hydroelectric dam projects. Projects that were shelved for decades are advancing to new stages of development. The Rogun and Kambar-Ata Dams, once points of contention between upstream and downstream republics, now provide hope for Central Asia’s hydropower sector.

In 2016, Tajikistan restarted construction of the Rogun Dam, and now the early stages of the future world’s tallest dam sit on the Vakhsh River. With the technical assistance of an Italian company, Webuild, the Rogun Dam is expected to become fully operational by 2032, with a capacity of 3,600 megawatts (MW), doubling Tajikistan’s installed electrical generation capacity. Even though the project has endured significant delays, the Rogun Dam can transform the region with clean baseload energy.

The Kambar-Ata Dam is another beneficiary of the hydropolitics détente in Central Asia. In January of 2023, Kyrgyzstan, Kazakhstan, and Uzbekistan agreed to a roadmap for the project, which will have an installed capacity of 1,860 MW. Nonetheless, the project remains in the early stage of development and needs additional financing before its completion.

Pathways forward

Central Asia is trending in the right direction but must overcome several barriers before maximizing its full hydropower potential.

To mitigate cross-border disputes over new hydroelectric dams, Central Asian governments should address how to navigate the water-energy nexus. Central Asian republics should conclude new water-sharing agreements that set out clear frameworks for apportioning water between upstream hydroelectric power producers and downstream agricultural users. Greater transboundary transparency on the use of shared resources can reduce anxieties over new dam projects and help plan for contingencies in water availability. Preemptive measures can ensure the sustainable and long-term operation of hydroelectric dams in Central Asia.

Given new technology, small-scale hydropower can avoid much of the political fighting related to large-scale dams. Smaller units can be more easily deployed in existing canals and irrigation systems. This minimizes the disruption to the environment and local populations compared to large-scale units. Additionally, small-scale hydropower does not require large power lines, helping electrify rural areas in Central Asia, who tend to lack access to consistent electricity. Small-scale hydropower is not a silver bullet, but it can help expand Central Asia’s hydropower production at the margins.

To fully capitalize on its clean energy potential, however, Central Asia should continue to develop large-scale hydropower projects. Financing new projects remains a key challenge. Development institutions, such as the World Bank and Asian Development Bank, have offered support, but more is needed.

For decades, Russia has been closely linked to Central Asia’s energy system, but President Vladimir Putin’s invasion of Ukraine has motivated Central Asian governments to hedge their dependency on Moscow. New partners–China and the EU–see Russia’s isolation as an opportunity to gain new inroads into the region through energy investments.

China has avoided entering into the region’s historically fractious hydropolitics by investing downstream in Uzbekistan and Kazakhstan, both significant hydrocarbon exporters. At a recent summit with Central Asian leaders, Beijing expressed continued commitment to oil and gas investment in the region. The EU, which now accounts for 42 percent of Central Asia’s total foreign direct investment, has also taken a greater interest in the region, hoping to reduce the region’s reliance on Russian energy and counter China’s Belt and Road Initiative.

Interest from international partners is geopolitical in nature. However, if the United States and EU force Central Asian republics to choose a side in a larger geopolitical contest, they could be less receptive to new investments with strings attached and move closer to Russia and China. Instead, Western nations should focus on how investments can accelerate the region’s energy transition, thereby reducing demand for Russian hydrocarbons and strengthening Central Asia’s energy security.

Central Asia’s untapped potential for hydropower presents a unique opportunity for the region and for many Western nations. With greater international assistance and a pragmatic approach that addresses the root of the water-energy nexus, external partners can help Central Asia overcome barriers to development, strengthen collaboration, and support the region’s clean energy transition.

Maxwell Zandi is a young global professional at the Atlantic Council Global Energy Center.

EnergySource May 5, 2023

Green hydrogen: Loaded up and (long-haul) trucking

By Joseph Webster, William Tobin

California and Texas are two potential markets to advance hydrogen-fueled trucking. Both states have excellent potential and can decarbonize heavy-duty transportation.

Climate Change & Climate Action Energy & Environment

EnergySource May 1, 2023

China’s wind industrial policy “succeeded” – but at what cost?

By Joseph Webster

China has the world’s largest wind energy market in terms of generation and capacity. But China’s emergence as the world’s leading player in wind has been costly.

China Climate Change & Climate Action

EnergySource Mar 31, 2023

Green investment takes the lead: Japan’s revamped approach in Africa

By Emi Yasukawa

Japan’s approach to Africa is becoming more investment-based, instead of relying just on aid. Japanese companies and banks have recalibrated their strategies and are looking to advance continent-wide development.

Africa Energy & Environment

Learn more about the Global Energy Center

The post Central Asia’s clean energy opportunity: Hydropower appeared first on Atlantic Council.

Through carbon markets, corporations have a role to play in Africa’s development. They should take it seriously.

Aubrey Rugo — Fri, 02 Jun 2023 14:22:45 +0000

Corporations are in a unique position to responsibly engage in the “wild west” that is the carbon-offset market, all while supporting Africa’s rising low- and middle-income populations.

Through the purchase of carbon credits, corporations can immediately reduce their global carbon footprints while also serving their long-term economic interests to expand their market bases. That is in part because, by purchasing high-quality carbon credits in voluntary carbon markets, these companies can support the sustainable growth of low- and middle-income populations in the world’s fastest-growing regions—including across the African continent.

Voluntary carbon markets allow entities like corporations and individuals to buy carbon credits entirely at their discretion to offset their emissions. These markets differ from compliance markets, which feature legally binding emissions-reduction obligations, often under cap-and-trade structures like those in the European Union and California. Carbon credits are not intended to replace corporate emissions-reduction efforts; rather, they can serve as an additional mechanism to accelerate transitions to net zero, offset unavoidable emissions, and direct capital to regions with insufficient local investment.

Although still relatively immature, voluntary carbon markets have grown considerably—in 2022, their overall value surpassed two billion dollars, a fourfold increase from 2020, and African credits have grown 36 percent on average over the last five years. However, this rapid growth coupled with a lack of underlying structure has led to various issues, including concerns about the quality and legitimacy of many carbon credits sold, which cast doubt on the credits’ actual contributions to climate-change mitigation and stall market growth. Additionally, some carbon credits, which are primarily purchased by corporations based in the Global North, have hindered development in the Global South. For example, some governments in the Global South have forced local communities to sell land for the purpose of creating carbon credits. Organizations such as the Integrity Council for the Voluntary Carbon Market are working to solve the various issues related to the voluntary carbon market; in March, it released the first part of its “Core Carbon Principles,” outlining standards around carbon credits to ensure that offset efforts create verifiable impact.

Carbon-credit prices currently lack standardization, with prices being determined by the type or specific characteristics of the credits. They typically range from under four dollars per ton for lower-quality credits, often renewable energy projects, to over one hundred dollars for higher-quality credits, mainly tons removed from the atmosphere through carbon-removal technologies such as direct air capture. However, with large-scale removal technology still in development stages, removal projects accounted for just 3 percent of all projects issuing credits in 2022. In recent years, low-priced or “junk” credits have flooded the market, enabling dozens of companies to claim carbon-neutral status while only making limited environmental impact. At the twenty-seventh United Nations Climate Change Conference of the Parties, Kristalina Georgieva, head of the International Monetary Fund, asserted that unless carbon credits are priced on a trajectory that attains a seventy-five-dollar average price per ton by 2030, climate goals will remain out of reach. While Georgieva’s comments were likely targeted at compliance markets, pricing between the two markets is inherently connected, and there’s interest in formalizing that connection. By adopting thoughtful carbon-credit-purchasing strategies, including by supporting higher-quality credits that accurately reflect the value of a carbon ton, corporations can strengthen the voluntary carbon market and help it integrate it with compliance markets, rather than delegitimize it.

As rating agencies in the industry mature, corporations will need to take it upon themselves to work with these players and do their own due diligence to ensure that the carbon credits they purchase are high quality, as determined by key characteristics. For example, high-quality credits are “additional”: In other words, the emission reduction would not have occurred without the offset financing activity, an increasingly difficult hurdle for renewable energy credits. A high-quality credit is also quantifiable, in that it is produced by a project that can properly track resulting emissions reductions, and brings other environmental benefits such as improving air quality or enhancing biodiversity. Corporations may need to hire teams to analyze and determine the best partners to purchase credits from or work with trusted brokers with shared values. It will require collaborating with governments, banks, and other industry players to help build the necessary infrastructure and integration with compliance markets.

Workers walk near a hot spring at the Olkaria Geothermal power plant, near Naivasha west of Kenya’s capital Nairobi on October 10, 2014. Photo via REUTERS/Noor Khamis.

Thoughtful participation comes at a price, leaving open the question of why corporations should, if not mandated, participate sincerely or meaningfully in voluntary carbon markets at all. Engaging cheaply just to claim carbon-neutral status, what many call “greenwashing,” will likely become meaningless to consumers soon. While corporations may be incentivized to invest in credits to get ahead of regulatory risk or to appease investors, another often unmentioned reason is to support and grow their future consumer bases. Many opportunities for high-quality carbon credits are in the Global South, which will be disproportionately affected by climate change—and also host the largest urban centers and burgeoning middle-income populations. By the end of the century, Africa is projected to be the only continent experiencing population growth and will be home to thirteen of the world’s twenty largest urban areas. India’s population just surpassed China’s. If the Global South is not supported in its sustainable growth, achieving climate goals will become nearly impossible, and economic environments will become less prosperous.

Instead, by purchasing high-quality carbon credits, corporations can help build a sustainable future that expands economic opportunity in the Global South. For example, corporations can purchase reduction credits by supporting organizations like KOKO Networks, which developed a bioethanol cooker and fuel dispensary service in the hopes of transitioning the third of the world’s population that currently cooks on charcoal or wood (particularly in Africa and Southeast Asia) to a less carbon-heavy and less pollutive fuel source. By integrating hardware (their cookstove) with software (data collected at their dispensaries) KOKO Networks is able to properly measure its carbon impact and issue carbon credits to account for the reduction in emissions. Other such organizations are LifeStraw, which prevents carbon-dioxide emissions generated from boiling water via wood or charcoal by offering a drinking straw that filters water, and Mauto, which recently closed a five-million-dollar transaction to deploy electric two-wheelers across Africa. While more advanced technologies for carbon removal may prove fruitful in the future, corporations should not overlook the credits available today via initiatives like these that can have an immediate impact on ensuring Africa and other regions’ low- and middle-income populations grow sustainably.

Carbon-reduction credits (in contrast to carbon-removal credits) can help shift high-polluting consumer behaviors to sustainable practices in the world’s fastest-growing markets. When purchasing a bioethanol cookstove or an electric vehicle is not financially feasible in African markets, the sale of carbon credits could effectively subsidize these products and make them available to consumers at competitive prices. On the individual level, a mother in Nairobi can cook cleanly in her home, improving her family’s health, resulting in possibly lower medical costs or fewer days of missed work. On a larger scale, avoiding deforestation can help lessen the local impact of climate change because forests regulate weather conditions and help to avoid massive droughts or monsoons that can destroy crops and livelihoods. It is in corporations’ best interest to ensure African consumers are increasingly economically advantaged, a reality that is only possible through sustainable expansion, and carbon credits serve as one tool to support this growth.

By participating in the voluntary carbon market and purchasing high-quality carbon credits, corporations can contribute to sustainable development in the urban centers of tomorrow, while serving their own business interests. Rather than turning away from carbon credits due to the difficulties involved, corporations should lean in and consider which credits can best support their future customers.

Aubrey Rugo is co-president of the London Business School Tech & Media Club.

The Africa investment imperative: Diversification and resilience amid economic downturns

By Aubrey Hruby and Guillaume Arditti

At a time when investors are faced with high risks due to a global economic downturn, African markets are a viable investment opportunity.

Africa Democratic Transitions

AfricaSource Jul 8, 2022

Europe’s Green Deal plan is Africa’s green finance opportunity

By Emilie Bel

Can natural gas and nuclear power be green? “Sometimes, and for a limited period of time,” said the European Parliament on July 6, as part of an ongoing negotiation over the EU taxonomy, a key component of the European Green Deal (EGD). The EGD is the European Union’s ambitious plan to create the first emissions-neutral […]

Africa Climate Change & Climate Action

AfricaSource Apr 23, 2021

Climate change will not be fixed without Africa

By Rama Yade

When Congolese President Félix Tshisekedi spoke at the virtual Leaders Summit on Climate this week, he had the force of the continent behind him. And his message was that developed countries must do more. As the summit comes to a close, the world still has so much to learn from Africa about how to tackle the climate crisis—if the world would only listen.

Africa Climate Change & Climate Action

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

The post Through carbon markets, corporations have a role to play in Africa’s development. They should take it seriously. appeared first on Atlantic Council.

The G7 can take NATO-EU climate cooperation to the next level

Francis Shin, Rachel Rizzo — Thu, 01 Jun 2023 23:37:57 +0000

Since Russia’s invasion of Ukraine, decarbonization has emerged as an increasingly high priority for the transatlantic community. The European Union’s (EU) early discontent with the US Inflation Reduction Act also demonstrates that transatlantic policy consensus will be essential to the success of any decarbonization strategy. In January, NATO and the EU released their latest joint statement on how the two organizations plan to cooperate in the years ahead, including expanding and deepening cooperation on “the security implications of climate change.” This is good news. Unfortunately, the same issues that impede increased EU-NATO cooperation on other projects will continue to affect deeper cooperation on climate and decarbonization strategies. However, the Group of Seven (G7) could be a good platform to help inform each institution on ways to better coordinate their individual strategies and work together where able.

In recent years, NATO has become much more active in identifying global warming as a threat and focusing on how it can do its part to combat climate change and bolster energy security. Following NATO’s Madrid Summit last year, it released its Strategic Concept, in which it proclaimed “NATO should become the leading international organization when it comes to understanding and adapting to the impact of climate change on security.” Furthermore, NATO policymakers have recognized that there is a potential danger of redundant replication of climate projects between the climate policies of NATO and member states that would not have additional value toward addressing climate change. The Strategic Concept does partially account for this, as it argues that NATO should strengthen its cooperation with the EU to accelerate the development of NATO’s climate strategy.

In contrast to NATO, the European Union has been a significant player in climate action dating back to as least 2001, when it issued Directive 2001/77/EC, which promoted renewable electricity generation. Moreover, some EU member states had already attempted to “mainstream” climate policy into NATO strategy. For example, some German senior officials hoped that the Permanent Structured Cooperation (PESCO) program, established in 2017, would introduce climate change as a challenge for NATO to face. Despite such efforts, these attempts with PESCO have had mixed success at best.

Likewise, NATO-EU cooperation is regularly hampered by the Cyprus dispute. Turkey, which is the only state that recognizes the breakaway republic of Northern Cyprus and has stationed military forces in its territory, is a NATO member but not an EU member, whereas Cyprus is an EU member but not in NATO. Turkey justifies its opposition to NATO-EU cooperation on the basis that doing so would imply its recognition of the Republic of Cyprus. In fact, following the aforementioned NATO-EU joint declaration, Turkish diplomats reportedly expressed discontent with the declaration and distanced themselves from it. As the Cyprus dispute is unlikely to be resolved soon, further NATO-EU cooperation on climate action beyond vague declarations is doubtful under existing channels.

On the surface, it might seem like NATO-EU cooperation should be easy (despite the Turkey/Cyprus issue) given that, for example, the two organizations are just a few miles from each other in Brussels. Unfortunately, when speaking with employees at both organizations, it’s always surprising at just how lacking the overlap and coordination truly is. Hence, any effort to develop, say, a NATO- or EU-led policy steering body to develop strategies to address climate change will likely run into the same issues most other NATO-EU cooperation projects run into.

To avoid this, the G7 could potentially act as a primary steering platform for NATO and the EU to develop climate strategies before being disseminated to NATO and EU member states to implement or deliberate further.

How would this work?

To start, the G7 could provide a permanent guest invitation to the NATO secretary general to attend G7 meetings, much like how the G20 provides permanent guest invitations to several intergovernmental organizations. This would ensure that the NATO secretary general has a direct means of communication with the European Commission and the United States simultaneously, which would help in preventing transatlantic discord like that seen over the US Inflation Reduction Act. It would also reduce chances of a NATO-EU impasse developing over the Cyprus dispute before consensus is reached at the most senior policymaking levels of NATO and the European Union, as neither Turkey nor Cyprus will be present in this channel.

Discussing climate change from a security perspective will not be a matter of ‘mission creep’ for the G7.

Beyond its membership structure and distance from the Cyprus dispute, the G7 is a suitable vehicle for NATO-EU cooperation because of its existing security and climate agenda, which is increasingly aligned with that of NATO’s. Except for Japan, every member of the G7 is a NATO ally, and the European Union is represented at the body by the European Commission. And, although it was originally formed as an informal forum to discuss economic policy following the 1970s energy crises, the G7 has put security on its agenda as far back as 1980 when the Soviet Union invaded Afghanistan. It has also addressed global warming since 1985. Discussing climate change from a security perspective will not be a matter of “mission creep” for the G7.

Additionally, the G7 has already incorporated a commitment to achieving net zero carbon emissions since 2015 and recognized climate change as an existential security risk in 2022. The same year, the G7 launched the Partnership for Global Infrastructure and Investment (PGII) to assist with global climate financing and introduced the G7-led Climate Club to tackle climate change, with membership open to all countries. Climate is a high priority for the recently concluded G7 Summit in Hiroshima as well, with the G7 ministers of Climate, Energy and the Environment releasing new ambitious targets for 2030, such as increasing offshore wind capacity.

The G7 has engaged in greater cooperation with NATO as well. Since February 2022, the G7 has coordinated closely with NATO in response to Russia’s invasion of Ukraine. This included the convening of the 2022 G7 Summit just prior to NATO’s Madrid Summit, with European Commission President Ursula von der Leyen, European Council President Charles Michel, and Japanese Prime Minister Fumio Kishida in attendance at the latter. Later, during the G20 Bali Summit, the G7 and NATO issued a joint statement for the first time in their histories to express their concern about the missile strike in Polish territory.

Altogether, there is a strong opportunity for meaningful NATO-EU cooperation by using the G7 as a convening platform for climate change-related discussions. The demand to accelerate decarbonization campaigns has never been stronger in all three organizations, and they should seize this opportunity together.

Francis Shin is a research assistant in the Atlantic Council’s Europe Center.

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

The post The G7 can take NATO-EU climate cooperation to the next level appeared first on Atlantic Council.

Russia’s new reality: Less Peter the Great, more Putin the Pariah

Peter Dickinson — Tue, 30 May 2023 20:40:09 +0000

Will Vladimir Putin dare to visit the BRICS summit in South Africa this August? In previous years, his attendance would have been taken for granted, but war crimes charges brought by the International Criminal Court in March 2023 are fueling speculation that he could face arrest if he decides to risk the trip. As a signatory to the Rome Statute that established the ICC, South Africa is technically obliged to arrest Putin.

Reports this week suggest the South African government may be seeking to bypass its obligations to the ICC by granting all summit participants diplomatic immunity, but officials also stressed that immunity “does not override any warrant that may have been issued by any international tribunal against any attendee of the conference.” Even if Putin receives assurances that he will not be detained in Cape Town itself, traveling to the summit would involve considerable uncertainty due to the potential for emergency landings in numerous other jurisdictions where apprehension would be possible.

Many commentators still regard the entire notion of arresting Vladimir Putin as somewhat far-fetched. Nevertheless, the fact that his travel plans are now being shaped by the likelihood of detention speaks volumes about the Russian dictator’s dramatic fall from grace. Ten years ago, Putin was a member of the elite G8 group of world leaders and a permanent fixture at the top table of international affairs. Today, he is a wanted war crimes suspect who cannot leave his own country without first checking that he will not end up in jail.

On the rare occasions when Putin has traveled abroad since launching the invasion of Ukraine in February 2022, his interactions with other heads of state have tended to underline his reduced status. For years, Putin was notorious for making world leaders such as Angela Merkel, Donald Trump, and Pope Francis wait while he arrived hours after the appointed time. With his position seriously undermined by the disastrous war in Ukraine, Putin is now the one doing the waiting. During a September 2022 conference in Uzbekistan, the leaders of Turkey, Azerbaijan, India, and Kyrgyzstan all left Putin standing as they arrived fashionably late for bilateral meetings.

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Putin’s geopolitical isolation looks even uglier when compared to the remarkable recent international ascent of his nemesis, Ukrainian President Volodymyr Zelenskyy. In recent weeks, Zelenskyy has been lionized during high-profile visits to Rome, Berlin, Paris, and London; he has grabbed the headlines at the Arab League summit in Saudi Arabia and was the center of attention at the G7 summit in Japan. While everyone apparently wants to be seen alongside the Ukrainian leader, very few appear eager to stand with Putin.

This is not just a problem for Putin alone. Indeed, the toxicity engulfing his personal reputation has also led to Russia’s international ostracism. When the owner of popular dating apps Tinder and Hinge announced its departure from the Russian market in May 2023, company officials made clear that they could not afford the reputational damage of association with Vladimir Putin. “It’s not a good look for a trusted brand to be continuing operations in a nation where the head of state has been indicted by the International Criminal Court,” commented Match Group executive director Jeff Perkins.

Dating apps are only the tip of the iceberg, of course. A long list of global brands including McDonald’s, Coca-Cola, Nike, and Starbucks have exited or begun the process of leaving Russia since the full-scale invasion of Ukraine began in February 2022. European countries have pivoted away from Russian energy imports, leading to an historic loss of market share for the Kremlin. Russia is also finding it increasingly difficult to source the spare parts it needs to keep its war machine rolling due to chronic shortages caused by the unprecedented sanctions imposed by the West over the attack on Ukraine.

None of this was anticipated by Putin when he first gave the order to invade Ukraine early last year. Based on his prior experience of Western weakness following the 2008 invasion of Georgia and the 2014 seizure of Crimea, Putin fully expected the democratic world to respond to his latest act of international aggression with vocal protests and symbolic sanctions before getting back to business as usual. This was an extremely costly miscalculation that has left Russia more isolated than at any time since the immediate aftermath of the Bolshevik Revolution one hundred years ago.

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After Vilnius: What’s next on Ukraine’s path to NATO?

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As something of an amateur historian, Putin must be painfully aware that he has brought his own country to one of its lowest points in centuries. He has long been preoccupied with his place in Russian history and has authored a number of lengthy historical essays that have been carefully crafted to justify his own deeply revisionist worldview. This obsession with the past has defined Putin’s entire reign and lies at the heart of his fateful decision to launch the full-scale invasion of Ukraine.

Since coming to power at the turn of the millennium, Putin has consistently expressed his bitterness over the perceived historical injustice of the Soviet collapse. This has fed a vicious contempt for Ukrainian statehood, which he has come to view as the primary obstacle to his sacred mission of reuniting “historical Russia.” Putin is notorious for claiming Ukrainians are actually Russians (“one people”), and has called Ukraine “an inalienable part of Russia’s own history, culture, and spiritual space.” In February 2022, he resolved to settle the matter once and for all.

From the very beginning of Russia’s invasion, the baleful influence of Putin’s historical baggage has been abundantly clear. Russian Foreign Minister Sergei Lavrov acknowledged this on day one of the war, when he reportedly quipped that Putin only has three advisors: “Ivan the Terrible, Peter the Great, and Catherine the Great.” Speaking months later in summer 2022, Putin confirmed the accuracy of Lavrov’s observation by publicly comparing his invasion to the eighteenth century imperial conquests of Czar Peter.

With the war now in its sixteenth month, it is fair to say things have not gone according to plan for the would-be conqueror. Putin originally envisioned a blitzkrieg campaign that would rapidly extinguish Ukrainian independence and mark the dawn of a new Russian Empire. Instead, his soldiers have suffered a string of humiliating defeats that have shattered Russia’s reputation as a military superpower, and stand accused of sickening war crimes that have horrified the watching world.

For now, Putin remains defiant and insists his war aims will eventually be achieved, but it is difficult to see how Russia can hope to repair the damage done to its international standing. Instead, the decision to invade Ukraine looks set to be remembered as one of the greatest geopolitical blunders of the modern era. It has left Russia shunned and greatly diminished on the world stage, while earning Putin himself a place in infamy alongside history’s greatest criminals. He dreamed of emulating Peter the Great, but he has become Putin the Pariah.

Peter Dickinson is Editor of the Atlantic Council’s UkraineAlert Service.

It is important to understand what is driving China’s trade with Russia. It is not only about Ukraine. Starting in 2013, Russia initiated a “Pivot to the East,” to China first and foremost. This has paid off for Moscow. Over the previous five years (excluding pandemic-wracked 2020) trade grew by an average of around 23 percent annually.

While the recent year-over-year trade increase of 27 percent was well above this trend-line growth, other factors make the data seem even more dramatic than it in fact is. In 2022, for example, the yuan depreciated against both the dollar and the ruble, increasing the competitiveness of Chinese exports to Russia.

In absolute terms, Chinese trade dwarfs all of Russia’s other major trading partners. With $188 billion worth of goods exchanged, China was Russia’s top trading partner. However, China’s economy is more than twenty times larger than Russia’s next largest trading partner, Turkey. Accounting for overall economic size, China’s trade with Russia is much less exceptional and is overshadowed by that of many US allies and partners, as the chart below shows. Looking at it from China’s perspective, its trade with Russia is on par with its trade with Malaysia and well below its trade with Vietnam, two economies that are one-fifth the size of Russia’s.

Russia’s trade with US allies and partners

Two countries that have substantially increased their trade with Russia are NATO member Turkey, which has seen trade with Russia surge 93 percent, and US partner India, whose trade has ballooned by nearly 250 percent since 2021. Both nations provide critical lifelines to key aspects of Russia’s economy: India has surpassed the EU to become Russia’s second largest destination for oil exports after China, and Turkey is now a significant supplier of electric machinery and parts, including integrated circuits and semiconductors.

Although Turkish exports of electronic machinery, including critical integrated circuits, fell in the immediate aftermath of Russia’s full-scale invasion, they have since recovered and grown well beyond the pre-invasion average. From March 2022 to March 2023, Turkish electronic exports to Russia jumped by about 85 percent. For comparison, Chinese exports to Russia remained basically flat, only growing half a percent over the same period.

Integrated circuits and electronic machinery are not the only strategic good Turkey continues to supply to the Russian economy. Turkish companies export millions of dollars worth of chemicals, plastics, rubber items, and vehicles, all of which help Russia’s manufacturing sector. To Ankara’s credit, following pressure from the Group of Seven (G7), Turkey has agreed to halt its transit of sanctioned goods to Russia. However, its trade with Russia remains a vital economic lifeline for its businesses as the country recovers and reconstructs from a devastating earthquake earlier this year.

Russia’s economy has avoided catastrophe thanks in large part to revenue from the export of mineral fuels, most notably crude oil. The fastest growing new buyer of Russian oil, however, is not China. It’s India. Since Russia’s invasion the value of Indian imports has grown nearly tenfold from around $4.7 billion in the year prior to Russia’s invasion to around $41 billion in the year following. While Chinese imports have also grown by around 55 percent, this is largely in line with the trend-line growth that predated the conflict.

However, Indian (and Chinese) import growth is a feature, not a bug of G7 actions against Russia’s oil exports. The United States and its allies were deliberate in imposing their own import ban of Russian oil but avoiding an embargo on general Russian oil exports. An embargo against the world’s third largest oil producer would cause crude prices to skyrocket and would incite backlash against G7 actions from non-aligned countries. To reduce the Kremlin’s revenues, the United States has instead sought to cap the price Russia can charge for its oil exports. So far, both China and India have complied when using the Western infrastructure covered by the price cap. Even when using alternative means of shipment and insurance, they are able to convince Russia to sell them oil at ten-to-twelve dollars per barrel below similar grades from other suppliers.

A one-way street

There are actually signs that China is exercising some restraint in its economic engagement with Russia, only acting when Beijing has an overwhelming self-interest. Following the February 2022 invasion, Chinese banks halted financing for the purchase of Russian commodities, and there have been no signs that it has resumed. More broadly, throughout 2022 China avoided financing any major new investments in Russia. China has also yet to instruct its state-owned enterprises (SOEs) to enter the Russian market. In fact Beijing has gone so far as to tell its SOEs, such as state-run Sinopec Group, to halt preexisting investment plans for fear of running afoul of G7 sanctions.

Chinese leader Xi Jinping has also slowed the construction of new infrastructure projects that would further link the two economies, despite Russian enthusiasm for them. During Xi’s March 2023 visit to Moscow, Putin heavily pushed for the agreement of a new gas pipeline connecting Russia to China called Power of Siberia 2. Xi, however, did not oblige and Beijing’s silence on the issue suggests that China hopes to exploit Russia’s inability to export gas to the West to secure the best possible price.

What support China is providing often falls far short of Russian wartime needs. Chinese businesses have largely only sent basic mobile phones, transport equipment, and computers to Moscow, not the more advanced technology Russia lacks. Last December, Beijing reportedly banned the export of its Loongson chips, one of the higher-performance microprocessors China produces, due to their strategic importance and military sensitivity. This left Russia without a Chinese alternative to advanced Western integrated circuits.

While there have been examples of Chinese and other foreign companies circumventing G7 sanctions and export controls, they comprise only a fraction of the overall commerce exchanged between China and Russia. In general, China appears to comply with Western sanctions and export controls for fear of subjecting itself to US sanctions or secondary sanctions. For example, major Chinese state-owned enterprises have avoided purchasing the Russian assets of Western companies, such as BP and Shell, over fears of the possibility of Western action.

None of this is to say China does not favor a Russian victory in Ukraine. A defeated Russia is not in China’s interest, and China continues to lend Russia a massive diplomatic hand at the United Nations, in the Group of Twenty (G20), and with non-aligned countries around the world. China has sold millions of dollars worth of drones and drone parts to Russia in 2022. It is also likely rerouting some shipments to Russia through Central Asia. However, its trading relationship with Russia is not by itself an indication of a concerted effort by the Chinese Communist Party to intervene in the Ukraine conflict on Putin’s behalf. The China-Russia trade uptick seems more in line with one driven by companies acting on behalf of their own interests—just as with recent surges in trade between Russia and US partners and allies such as India and Turkey.

Until China, or any other country, crosses the legally significant line the United States and its partners have drawn around lethal aid, or until there is clear evidence of state support to circumvent G7 sanctions or export controls, any attempt to restrict other legitimate commerce will be ineffective and could risk further alienating non-aligned and fence-sitter nations. If Washington chooses to narrowly focus on China’s trading patterns, it may miss opportunities to convince US allies and partners to reduce their support for Russia’s economy.

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

Niels Graham is an assistant director for the Atlantic Council GeoEconomics Center where he supports the center’s work on China’s economics and trade.

The post China is trading more with Russia—but so are many US allies and partners appeared first on Atlantic Council.

Developing countries need a loss and damage fund for climate change. How can COP28 make it happen?

Lama El Hatow — Thu, 25 May 2023 17:16:59 +0000

One of the major outcomes of COP27 in Egypt, which occurred from November 6-18, 2022, was the agreement to establish a Loss and Damage Fund (L&D). Loss and damage has been discussed for over a decade, starting with COP16 in Mexico, but little progress has been achieved over that time. The concept entails looking at the irreversible losses and damages incurred by climate change impacts on states, such as loss of land, ecosystems, heritage, biodiversity, and people.

Loss and damage differs from mitigation and adaptation. Mitigation refers to the amount of Green House Gas (GHG) emissions that states need to reduce to reach the 1.5 C target (34.7 F). Adaptation refers to methods that will help states adapt to a warming climate irrespective of emissions reductions, such as coastal protection measures, heat resistant crops, and more. Loss and damage, however, implies that although we are reducing emissions and adapting to a warmer world, there are still complete losses of ecosystems, species, land, and people that require attention and consideration—and, ultimately, compensation.

Mitigation and adaptation have long been part of already-established climate finance mechanisms. Meanwhile, L&D is a new paradigm that not only requires a separate pot of money, but also needs significantly more resources, since irreversible losses may cost more to cover.

While following the cash flow of climate finance, it has been observed that, of the $100 billion pledged by developed countries to developing countries, a maximum of $80 billion has been dispersed since the Paris Agreement of 2015. Since the full allotment of climate finance for mitigation and adaptation has yet to be fulfilled by developed countries, one must wonder where and how this new pot of money for L&D will come from.

In March 2023, the first transitional committee met in Luxor, Egypt to discuss the L&D fund. It made promising steps to claim that the fund could be finalized and set in place by COP28 in the United Arab Emirates (UAE) from November 30-December 12.

The talks did not address controversial issues such as sources of financing or the type of projects the fund would cover, but there was agreement over a road map to create a fund. This came with the understanding and responsibility that part of the outcome in COP28 must be the definition of clear guidelines for financing the L&D fund, in addition to drafting the operational guidelines for the scope and mechanism of the fund itself.

Deciding the scope and mechanism of the L&D fund is also quite tricky, as setting criteria for which countries are eligible for financing and under what conditions is extremely contentious. After the devastating floods in Pakistan in 2022—which killed over seventeen hundred people, with damages having been estimated at $14.9 billion and economic losses registering at $15.2 billion—the country representatives were vocal at COP27 about the necessity for compensation and assistance to developing countries in regard to the complete eradication of land.

Small Island Developing States (SIDS), including Vanuatu, have also spoken up about the complete encroachment of the sea on their islands and the erasure of their countries, heritage, and entire existence. The SIDS—with Barbados leading the narrative against this climate injustice—have also been forthcoming in arguing how essential the money from L&D is to their survival.

So, how does the mechanism decide who gets priority in financing? This is a daunting task for the transitional committee. The aim is to set criteria for economic and non-economic losses to put a structure in place for such a framework.

Many have ultimately criticized the actual outcome and agreement of the L&D fund in COP27, stating that it is essentially the failure of the United Nations Framework Convention on Climate Change (UNFCCC) system as a whole. For decades, states have been meeting regularly to come to an agreement on providing climate finance to developing countries that have not contributed to the climate crisis. At the same time, states have attempted to put requirements on each other to reduce Greenhouse Gas (GHG) emissions. That being said, the latest assessments have shown that the pledged emissions reductions have not been sufficient to meet the 1.5 C target set in Paris. In fact, the world is heading towards an average temperature increase of 2.5-2.8 C (36-37 F).

Many countries in the developing world have come to the consensus that they will be left with irreversible damages in the near future if other developed countries do not sufficiently reduce their GHG emissions or disburse climate finance as promised. The battle and persistence for an L&D fund by these countries is a matter of survival. L&D is the last lifeboat for these countries after decades of struggle to achieve some form of global climate justice. How the L&D fund will be structured and operated will be a telling sign of whether the last lifeboat can save lives or not.

Lama El Hatow is a nonresident fellow with the Atlantic Council’s empowerME Initiative.

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How dependent is too dependent on China? Central Asia may soon find out.

Niva Yau — Sat, 20 May 2023 18:27:02 +0000

Central Asian leaders are walking into a potential trap, guided by a recent rush of Chinese persuasion and engagement to align with the eastern power. A region that even within the last few years championed a form of non-alignment among large powers—a balancing act Kazakhstan termed “multi-vector diplomacy”—today risks becoming increasingly dependent on, and therein possibly beholden to, Beijing.

Five Central Asian leaders—from Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan—just visited Xi’an in central China to meet Chinese leader Xi Jinping for the C+C5. The new China-led summit is aimed at elevating regional ties with Beijing, and it is the first of three events this year that brings Central Asian leaders face to face with Xi. At the summit, the Chinese leader took steps to persuade the Central Asian countries that, in this polarizing world, they can count on China and they are at one with the Chinese “common destiny.”

There were inducements to help with this persuasion. Kazakhstan and China signed a deal for a new industrial transfer program, and Beijing pledged to support Kazakh businesses operating in China and to increase the number of tourists visiting the country. Kyrgyzstan and China have announced a new investment fund, extended an invitation for China to open branches of its banks in the country, and added Kyrgyzstan to China’s list of countries Chinese nationals are allowed to visit as tourists. Looking at the bilateral statements coming out of the Xi’an Summit, the China-Uzbekistan statement has twenty-eight items, the China-Kazakhstan statement seven, China-Kyrgyzstan eleven, and China-Tajikistan eighteen. Most importantly, China is planning to open a C+C5 secretariat with nineteen separate channels of direct engagement with the region, moving away from its long preference of working bilaterally to instead attempt to tie the whole of Central Asia’s outlook to China no matter what domestic political changes occur there.

Central Asian countries vary in their receptiveness to China’s overtures. For example, Kazakhstan and Uzbekistan have previously shown greater reluctance to engage with Beijing than some of their neighbors. But there is a clear region-wide trend of closer alignment with the large power to the east.

At the same time China is ramping up its persuasion campaign, the opportunities for Central Asian countries to cooperate with foreign actors other than Beijing have shrunk. Russia is embroiled in its war with Ukraine. The United States’ exit from Afghanistan reduced attention to the wider region from Washington. Moreover, recent programs intended to increase cooperation with Central Asia led by Turkey, India, the European Union, and the United States are not matching up to growing Chinese initiatives across all sectors working to forge deep regional dependence on China.

There’s more. China is exporting its governance style—which easily accommodates authoritarian practices—to Central Asia. By oppressing civil society, detaining or expelling journalists, and arresting leaders of protests ahead of and after demonstrations, Central Asian governments have shown their preference for a governance style based on the one that they perceive as successful in China.

China has also made economic-integration efforts that feed the local rent-seeking appetite, discouraging region-wide commitments to reforms and to developmental aid from the international community that is conditioned on reforms. In Kyrgyzstan alone, between 2014 and 2019, there were five major corruption scandals involving a Chinese company and elite-level local politicians, including two former prime ministers and two former mayors of large cities.

China actively works to sustain its dominance in commodity trade with Central Asia via its state-subsidized railway which has, in the past decade, discouraged Central Asia from investing in a new trade route—the Middle Corridor, which connects the region to Europe via the Caspian Sea—therein disincentivizing trade with Europe.

While some European countries have been willing to transfer industrial technology to the region, China has been more active in such cooperation in recent years. There are fifty-six active Chinese industrial transfer programs for Kazakhstan, perhaps a dozen projects in Uzbekistan, forty in discussion with Kyrgyzstan, and several in Tajikistan. These include the recent setting up of a nuclear-rod production line in Kazakhstan, which contains the world’s second largest uranium reserves.

In the area of education, China is offering a number and variety of programs to the region, directly competing with other foreign actors for the brightest Central Asian students. It is also experimenting with new vocational initiatives such as the Luban Workshop, China’s skill-training project, in the hopes of deepening trade ties. Its first in Central Asia opened in November in Dushanbe, Tajikistan.

Putting the multi in multi-vector

Despite Central Asia’s desire to prevent any great power from becoming dominant in the region, the “multi-vector” approach has proven difficult to implement in practice as Chinese ambitions and activities have rapidly increased in the region. Internally, Central Asian leaders explain their catering to Chinese interests as a matter of being constrained, that they are landlocked and share a long border with China. Central Asian experts often argue that the region has no choice but to maintain close relations with its giant neighbor.

This rationale amounts to an unnecessary narrowing of possibilities. Compare it to Mongolia, whose prime minister says that, despite dependence on China for trade and Russia for fuel, the country’s policies are not so deeply influenced by Beijing or Moscow. “[Our] people’s mindset and society is very different from those countries,” Prime Minister Luvsannamsrai Oyun-Erdene said earlier this year. Serious commitments to democratic governance since the 1990s and continuous political will have paid off over the years, creating in Mongolia a vibrant civil society and a shift of political identity from Central Asian to Northeast Asian, aligning more with South Korea and Japan. In this way, Mongolia empowers itself to maintain a more independent foreign policy.

What might drive Central Asia to look beyond China? Drastic social changes are one possibility. In fact, Russia’s ongoing aggression toward Ukraine is driving active discussions in Central Asia about decolonization, a topic that would have been considered taboo just one generation ago. Many in Central Asia now recognize that prolonged continuation of Russian influence has had serious consequences to political and social life, and they have turned to revive previously repressed Central Asian languages and national heroes as a step toward more autonomy.

As the region further detaches from its history under Soviet imperialism, Central Asian countries will likely undertake an even greater search for national identity. China, foreseeing such a search beginning, has paid serious efforts to promoting select stories that depict “harmonious Silk Roads.” However, this is a strange concept to impose on Central Asians as many grew up learning that the Great Wall of China was built after continual attacks from Turkic tribes. China’s abuses toward the Turkic population in Xinjiang, most notably the Uyghurs, have not yet stopped Central Asian elites from supporting Beijing internationally; however, Turkey and other actors have in comparison much better appeal and authenticity when it comes to historical ties, language, and cultural affinity with the region. Led by Turkey, the Organization of Turkic States could grow into another serious vector for Central Asia moving forward to rebuild its Turkic identity, develop stronger relations in the region, and be empowered to implement a foreign policy and development pathway less in the shadow of China or Russia.

Given time, Central Asians may find their historical roots and culture inseparable from their Turkic counterparts in Xinjiang. It could become clearer to Central Asian countries that their own historical experiences with the Russian Empire are no different than the experience of those in Xinjiang under Chinese rule. Acknowledging this would also encourage Central Asian countries to look for connections beyond Beijing.

The photos of leaders shaking hands in Xi’an may bolster the impression that China has secured Central Asian loyalty. If so, it might only be for the short term. Sooner or later, the landlocked region will likely step back from an overly China-driven diplomacy. When that happens, Central Asian countries could focus more on cultivating and balancing multiple options abroad and on developing their regional identity, foreign-policy strategy, trade independence, and security.

Niva Yau is a nonresident fellow with the Atlantic Council’s Global China Hub. Her research work focuses on China-Central Asia relations and China’s new overseas security management infrastructure and initiatives. She is based in Bishkek, Kyrgyzstan.

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Webster mentioned in Mississippi State University article on wartime supply chains and munitions

mzandi — Thu, 18 May 2023 20:52:31 +0000

Online Event Wed, May 17, 2023 • 3:00 pm ET

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Grant Shapps on UK energy security: ‘We must not be reliant on unreliable partners again’

Atlantic Council — Wed, 17 May 2023 21:28:45 +0000

Watch the event

A conversation with the Rt. Hon. Grant Shapps MP

The Right Honorable Grant Shapps MP, UK Secretary of State for Energy Security and Net Zero, discusses initiatives at the Department of Energy Security and Net Zero to bolster energy security and achieve net zero carbon goals.

Energy & Environment Energy Markets & Governance Energy Transitions Europe & Eurasia

Event transcript

Uncorrected transcript: Check against delivery

Speaker

Grant Shapps
UK Secretary of State for Energy Security and Net Zero

Moderator

Richard Morningstar
Founding Chairman, Global Energy Center, Atlantic Council

RICHARD MORNINGSTAR: Good afternoon, everybody, and good evening for those of our friends in Europe who are—who are joining us today. I’m Dick Morningstar. I’m the founding chairman of the Atlantic Council’s Global Energy Center and, among other things, a former US ambassador to the European Union.

And it’s my honor to lead this discussion today on the United Kingdom’s energy priorities with Secretary and Member of Parliament Grant Shapps, who is the secretary of state for the Department of Energy Security and Net Zero.

And I guess to state the obvious, with Russia’s war in Ukraine and the ensuing energy crisis, that’s highlighted the risks of energy underinvestment and dependence on malign actors, and has demonstrated the need for a cohesive and a strategic approach to energy security and decarbonization. And I want to emphasize that the green transition and decarbonization relates directly to energy security because, among other things, it will reduce dependence on single actors like Russia.

And as part of the response to these challenges, the UK government has recently launched its Powering Up Britain plan, which outlines how the government will enhance energy security and deliver on its net-zero commitments. And it’s fascinating that the secretary’s title is secretary for the Department of Energy Security and Net Zero, which tells you how important Britain sees the net-zero commitments. But this comprehensive strategy aims to advance energy independence and economic security through a series of multi-pound investments to expand clean energy and to take critical steps to achieve the UK’s goal of zero emissions by 2050.

Today we’re lucky to have Secretary Shapps with us, who will speak on the priorities for implementing this initiative and the department’s plans, and we’ll get into a whole bunch of—a whole bunch of related issues.

Let me remind you we have both an in-person audience and a virtual audience. This is a public session and it’s on the record and that, unfortunately, we can only handle questions from the in-person audience. And so if you have questions there’s a microphone over to the right where you’ll be able to line up or get up and ask the question.

So let’s start. So with that, maybe first, Mr. Secretary, you could tell us about your trip. I realize you had an unfortunate delay at Heathrow Airport which lasted overnight. But he’s in great—you’re in great shape for the session this afternoon.

But what are you going to be doing here in Washington and how important do you think the US-British relationship is—the US-UK relationship—with respect to the topics we were talking about, energy security, the green transition? How can we all work together on this?

GRANT SHAPPS: Yeah. Well, Ambassador, first of all, it’s great to be here. It’s fantastic to be at Atlantic Council and brilliant to be discussing this issue, which is so high up both of our populations’ agendas and, in fact, many people throughout the world, obviously, as a consequence of what happened in Ukraine.

But, actually, on the way here we passed the old post office pavilion and that fantastic statue of Benjamin Franklin is just out to the front and to the right of it, and I was reminded that he was, of course, American British. He had an American mother and a British father.

RICHARD MORNINGSTAR: And lived in Paris.

GRANT SHAPPS: And lived in Paris, yes, amongst other places.

RICHARD MORNINGSTAR: Right. Yeah.

GRANT SHAPPS: And, obviously, was absolutely critical to—you know, one of the founding figures—central founding figures of the United States. But it did remind me of, you know, that sort of very, very close relationship and everyone will, at least somewhere in their minds, remember that he had that famous experiment. He was an energy pioneer because he put a kite up in 1752 and demonstrated lightning was electricity, which was news to many because it was unproven at the time.

But in 1757 he moved to the UK. He moved to London. I don’t know where Paris was in all of that but at some point he lived in London. The bit of this that struck me, he lived on a street called Craven Street, and Craven Street is right by where this new department for energy security and net zero has its new home and we’re about to move in there in the old war office right on Whitehall there.

So, I mean, you just kind of, you know, perhaps by a quirk of nature get the sense of, you know, our obvious history is stretching back but on the energy side of things throughout history pioneering so many of the big energy breakthroughs including nuclear power on the defense side, obviously, the Manhattan Project on the civil side, the UK created the first—the world’s first nuclear civil power station at Calder Hall in Cumbria.

It was producing a massive forty megawatts, actually, on the side because what it was really doing was producing plutonium at the time for our military nuclear program. But our histories are tied and our approaches to what’s happened with Putin, what’s happened in Ukraine, are tied—closely tied together as well.

And, you know, if you look at by a long way, by a long stretch, the United States has put the resource into, you know, helping to fight Putin’s evil war but the number-two country is the UK and, again, you know, we just share that natural instinct to always be the countries to be in defense of those freedoms and liberties.

But energy has become a sort of blackmail. Putin has used energy as a weapon of war to blackmail the West in the hope that we would all crumble. We haven’t. We have managed to see our way through the first very difficult winter, you know, various different ways. I mean, Germany had a pipeline, and a second one on its way, to have 47 percent of their gas was from Putin. The UK was much more fortunate. We didn’t have a gas pipeline. We only bought 4 percent of our gas. So it wasn’t such a big wrench. But nonetheless, we still suffered in our energy prices.

And so we know that our response for this year and going forward has to be the thing that you just mentioned, which is we can have renewable energy which splits us off from the gas reliance, from the hydrocarbons, and nuclear in a renaissance that is going to make us energy-independent. It’s popular at home. I know it’s popular here. It deals with a big concern, which is the cost of living for our citizens in both countries and once again, I mean, just sort of back to the start with Benjamin Franklin, you know, the two countries working closely together. I’ve come here directly from a meeting with your energy secretary, Jennifer Granholm, discussing precisely these issues and how we can work in much closer cooperation. And that’s our third meeting in three months to move this agenda forward. So there’s a lot of serious work going on.

But I think that’s the challenge that lays ahead of us—cheap, reliable energy that no despotic leader can prevent us from accessing in the future.

RICHARD MORNINGSTAR: So, you know, energy certainly is and should be part of the special relationship between the UK and the US. What are some—where can that cooperation take place? How can one and one make three?

GRANT SHAPPS: So I would say, first of all, the UK has had, in the last ten to fifteen years, a big move into renewables. So if you take offshore wind, for example, in the North Sea we have the world’s biggest wind farm. But as you—also in the North Sea we have the world’s second-biggest, the third-biggest. The fourth-biggest is being constructed, and that will then become the largest again. And we’ve got the world’s first floating and the largest floating wind farms. As well, we’ve installed a lot of solar. Surprisingly—here’s a stat that will amaze people. It amazes me even as I repeat it for the hundredth time. The UK produces as much solar power as France, despite France being twice the geographical mass, and also the weather in the UK not being quite as sunny as in France.

So, you know, we’ve managed to do a lot on renewables. We still need to go further. I think, in answer to your question, you have now mechanisms in place to do that transition to renewables with several different acts from Congress, including the Inflation Reduction Act. And so there’s a great—we’re seeing a great requirement for the skills and the knowledge and the technologies that have been built up over the last decade and a half, and we’re keen to work together on that.

And that’s just one example. Nuclear power, civil nuclear power, very obvious areas of deep cooperation, some of which already exist. There’s much, much more to do with natural obvious partners, for all the reasons we discussed.

RICHARD MORNINGSTAR: Do your conversations include cooperating on critical materials? I mean, one of the great concerns has been we don’t want a dependence on Russia to be—you know, we’ll get over the dependence on Russia, but then what about China? And is that an area of potential cooperation?

GRANT SHAPPS: Yeah, absolutely. Critical minerals are at the heart of actually every form of renewable power and also nuclear power. So, I mean, they are—without sourcing out the supply chain to critical minerals, we can’t make this transition. So it’s not—you know, working with the US, but also other countries; Canada is a good example with lots of minerals, but many others as well, to make sure that we are not—again, change of policy, different world. Who knows what will happen next, as the last few years have demonstrated? We must not be reliant on unreliable partners again.

And, you know, I go back to the very obvious and most extreme example with our German friends finding themselves so reliant on Putin, who’s turned out to be the least reliable interlocutor, whilst actually this last month closing down their nuclear power. They closed down their last reactor last month. And so, of course, critical minerals are at the heart of making sure that, you know, countries who share our values are able to secure the power that they need. So there’s some ideas that we’ve been discussing just in the last hour of my meeting here in Washington about how we further bring the world together to discuss this. Of course, we’ve been doing it at the G7 Energy Conference in Japan, in Sapporo, and elsewhere. But actually, that was one of the subjects which—watch this space. There’s going to be more on this very soon.

RICHARD MORNINGSTAR: You know, we talked a little bit even before we came in that there are somewhat different approaches in the US and the UK. You know, we have our IRA, which created a lot of angst, which I think is dissolving some on the continent. What’s Britain’s view towards the IRA and the various approaches?

GRANT SHAPPS: Well, the first thing to say is we’re very careful to call it “eye-rah.” We’ve renamed it, in the UK, for reasons of history that some will recognize.

RICHARD MORNINGSTAR: I guess so.

GRANT SHAPPS: So the Inflation Reduction Act. But I think—I think the fundamental issue is this: In the UK we have a political consensus around the need to secure national energy security. And that one of the ways to do that is you actually very accurate, I thought, summed up in your introduction, is to move to renewables so that we’re not reliant on hydrocarbons that all too often—not always. You know, we have not seen all the gas. You have a lot of LNG, and other places are good partners. But actually, all too often we end up too reliant on a single form of energy, and then the world changes geopolitically, and we end up in difficulty.

So in the UK, we have a political consensus that actually several years ago, and actually under this Conservative government which will sound odd to an American ear, we passed legislation that said we had to get to net zero by 2050. So that was a cross-parliament agreement. Just a small twist to that is they also legislated essentially that the energy secretary could go to jail if we don’t do it. So when I say I’m working on this night and day, I mean night in particular because that’s when you start to worry about this stuff. For truth, it would have to be for a contempt of court. It would have to be because I wasn’t seriously addressing the issues. But, nonetheless, we have that political consensus.

In the US, clearly it creates a big dividing line. And because it creates a big dividing line it seems to me—I mean, correct me if I’m wrong because I’m just saying this from observing the US political scene—Congress actually in the end sort of got to the same place. But not by using mandates and laws and—but instead by using tax breaks and, you know, on the other side of that, obviously having to raise the tax in the first place or add it to debt. But that’s the consensus that has come about and created not just the IRA but also some of the other large acts which have now passed.

Frankly, I think, on balance, the world needs to get to this position of energy security. So, you know, whatever wills—means to the ends, I think is right. There are one or two rough edges that we’ve been talking about, including critical minerals, which we’re working through. But I think the world will be a better place for the biggest economy in the world actually being, you know, in the driving seat as far as switching to renewables and more nuclear, which I think is a very big part in this story.

RICHARD MORNINGSTAR: Are you concerned about issues that—again, I think they’re beginning to dissolve some—but competition issues related to IRA or other, you know, issues that might put Britain or other countries at a disadvantage, or?

GRANT SHAPPS: Yeah. So there are a couple of parts of guidance which have now been issued, which have helped sort of take off some of these rough edges, as you know. And we’re just working with the administrations in London and in Washington to deal with the final parts of that jigsaw. But, as I mentioned in the kind of intro, the opportunity is not just at a global to have the world’s biggest economy actually moving towards this energy transition in a big way, but then also from an entirely national point of view to have so many businesses and organizations asking for assistance, help, experience by British expertise. And I think British companies coming here are doing it.

I mean, a lot of—a lot of time I spend talking to companies who are, you know, for example, going to the West Coast—which is where I’m going tomorrow, to California—because, you know, we’ve got, you know, gigawatts of offshore wind now and we want to get to fifty gigawatts in the next six-and-a-half years off our coasts. You know, California wants to—I think I saw their figure was forty gigawatts or forty-five, something like that. They need the expertise. So it’s a massive opportunity to work together and, you know, to provide goods and services to each other as well.

RICHARD MORNINGSTAR: Let’s talk a little bit about the EU. We’ve talked about the US-UK energy relationship and areas of cooperation and so forth. Post-Brexit relations with the EU, how closely do you work with Brussels on energy issues?

GRANT SHAPPS: Yeah. Well, let me be completely candid with you. They weren’t happy that we left the club. We wanted our independence. I didn’t actually happen to vote for Brexit personally, but I am a democrat and I believe in democratic outcomes. The country voted to leave. And actually, I was always torn on it because, you know—you know, to an American audience, I ask you: Would you—would you give up control over your borders, many of your laws, you know, finances? Although we weren’t in the euro itself. Answer, definitely no. You know, and actually, why would Britain do something like that as well? Which is gradually what the EU was becoming, ever more so.

So, yes, it’s been—I think it’s fair and candid to say it’s been a little bit tricky for a while. However, very, very pleased to report since Rishi Sunak became prime minister and he helped to settle the Northern Ireland protocol issue through this thing called the Windsor Framework, it’s been transformative. So just last month I was out in Belgium, for example, at a leaders summit on energy, to which Britain wasn’t actually invited last year. Actually, a number of other countries weren’t as well, so it wasn’t just us. But now we are very much more working together. I have constant contact with my French, you know, counterpart, my Belgian counterpart, my, you know, Netherlands, German, et cetera. So we are now working very, very closely.

The other thing which has changed is not just the Windsor Framework. This winter, when Putin was holding Europe in particular hostage to energy blackmail, Europe as in the EU, continental Europe, discovered that Britain, as ever, was the absolutely indispensable, reliable partner. France happened to have a lot of their nuclear power down over the summer, some scheduled, some not. They power most of their electricity from nuclear. Their fleet was down. We were exporting renewable energy to France through the interconnectors. And they saw that, you know, we left the EU but we didn’t leave Europe, and we’re still there as partners. And did so, actually, with the war in Ukraine, where, as I mentioned before, our response has, I think, been foremost in the European countries.

So, you know, very much better is the simple answer.

RICHARD MORNINGSTAR: Speaking of Ukraine—and I don’t know whether this is within your—you know, your area, but on sanctions questions, energy sanctions questions, are there any differences in approach between, you know—there’s sort of a consistent G7 approach, but looking behind—you know, behind the scenes, are the views towards sanctions pretty much consistent with the US, Britain, with the—Brussels and the member states, key member states?

GRANT SHAPPS: Yeah. I think—I think, actually, broadly speaking it’s been one of the surprising—I think people may have doubted before February 24 last year whether the West would come together and properly react to what Putin’s done. But I think beyond any shadow of a doubt, that’s what’s happened.

And I mean, in terms of the UK’s position, at the time I happened to be transport secretary. And you know, I made sure that we were the first to ban Russian aircraft in our skies, the first to ban Russian ships from our ports—and not just Russian ships, but ships that were being leased or had some funding behind them or were flagged or, you know, whatever else. And again, actually, one of the things about being able to make those policies independently is that we can be more fleet of foot, we can move faster. And we tried to do that through transport, but also through energy policies where I’d say we weren’t actually buying very much Russian hydrocarbon but we immediately suspended the sale—announced the suspension of the purchase, rather.

But I—you know, actually, frankly, the EU got there, slightly slower timescale but not critically. The US got there. I remember the transportation secretary, Pete Buttigieg, calling me and saying it’s going to be in the—I think it was in the State of the Union, actually, as I recall—it’s going to be in tonight’s State of the Union. I’ve been pushing to make sure that, you know, the same things that we had already done on transport were matched.

So, you know, I think actually the West has impressively moved in lockstep and that’s exactly as it should be.

RICHARD MORNINGSTAR: Well, you know, sanctions are never a zero-sum game. How do you think they’re working? Are you happy with how the energy sanctions are working with the price caps and other sanctions?

GRANT SHAPPS: Yeah. So I think you’re absolutely right. I think sanctions are rather like this. If you put a sanction here then, you know, the thing, whatever it is—it could be energy but it could be anything else—finds its way around that, you know, and if you just give it enough time a new avenue, a new pathway—it’s like business. It’s very—you know, it’s very enterprising and it will find its way around that sanction and I think we see evidence of that in the way that the Russian economy has responded over a period of time. I think we have to be honest about the limitations of that.

Having said that, when the world acts in unison I think it still matters. It matters hugely because—not just in the case of Putin, Russia, and Ukraine but also what other countries might think if we don’t respond convincingly and together.

So I have no doubt that oil still finds—somehow finds a way around. I know that there were many arguments in favor and against a cap and floor prices and all these other—these other things. The important thing, I think, is not the exact measure. I think the important thing is the cooperation in those measures and I think we’ve seen terrific cooperation.

RICHARD MORNINGSTAR: Right. And it’s, certainly, been better than not having them.

GRANT SHAPPS: Definitely. Oh, yeah.

RICHARD MORNINGSTAR: So, again, thinking about Ukraine, it’s been a pretty good—I think we all would agree, better than expected winter, part of it being luck, part of it being good policy. Concerns about next winter—how concerned are you?

GRANT SHAPPS: Well, as I say, I spend my day and nights thinking about these issues. But we got through the first winter and that will have been the hardest one because we had to divert or find replacement for all of that Russian hydrocarbon.

So logic tells you that winter 2023-24 should be better but we should not rest on our laurels and that is one of the reasons why, you know, I think, pay tribute to the United States the way that the US has responded with LNG, the way that we already had LNG ports and so we brought it into the UK and then exported to Europe, the way that Germany now has built new capacity to bring LNG and other countries now—the United Arab Emirates, for example, will be coming on stream, if not this year next year. So the world has found its way around these things.

What I think now is really important—and I’m going to be saying and doing more on it, and this is what I’ve been speaking with my American opposite number with today—is thinking about the more medium term. So in the UK, as in the US, we’ve allowed nuclear civil power to reduce as a proportion of our power partly because we both have oil and gas. It became unfashionable. There were lots of protests about it.

But, actually, we are reversing that policy. We want a quarter of our energy to be nuclear civil and we want to exploit not just the gigawatt size of it but also the small modular reactors, and, you know, there are many different designs from Rolls Royce to Westinghouse and others and we think the time has come for those things.

I’ve just set up something called Great British Nuclear to take this forward. I’ve appointed a minister in the British government in my department who for the first time ever is responsible as the minister for nuclear. We’ve never had somebody with that title and wakes up every day and that’s what he focuses on.

So I think, again, with caution, if last winter was OK then this winter will be but nothing is set in stone. We could have terrible weather or something else. We need to keep making sure that we make sure the markets work properly. The price of, you know, gas has fallen dramatically at the moment. Again, we have to keep an eye on these things. But the medium term is where my focus is shifting to because we need to get the energy mix right and secure in the long term.

RICHARD MORNINGSTAR: On nuclear, are you sensing a shift of opinion on nuclear? I mean, Britain and other places as well, the US and Europe, or at least certainly parts of Europe, other parts of the world. Do you believe that in 2050, when you need to be at net zero—unless you’ve gone to jail in the meantime—do you think that nuclear is going to be a major part of the clean-energy world?

GRANT SHAPPS: I do. And I think, to answer the first part of your question, yes, attitudes have changed tremendously. You know, for example, of all the nuclear reactors—we’re producing about 16 percent of our electricity through nuclear right now in the UK. It’s fairly similar to the US. Of all the reactors that are still operational right now in the UK, every single one of them was commissioned under a conservative government, under the Tory Party, my party.

Now, I’m not making that as a political point. I’m making it because it demonstrates the fact that this was a deeply politically divisive issue in the past. It isn’t now, and partly because of the war in Ukraine and the need for energy security, but also partly because of climate-change issues and the rest.

We have reattributed the taxonomy to say that nuclear power is clean power in order to get the finance into that area as well. So I think, yeah, I think there is a general acceptance. I think with things like—with technologies like small modular reactors, more countries who weren’t using nuclear civilly, for civil power before, I think are likely to in the future. And it’s becoming much more practical than it was in the early days because the technology has moved in in seventy years.

RICHARD MORNINGSTAR: Two more quick questions on nuclear come to mind. Is there cooperation today between either UK and US companies or UK and US laboratories on small modular reactors? And then I guess a somewhat unrelated question: Is the argument that nuclear development in the West is critical from a national-security standpoint, relating to things like nonproliferation, concern about how nuclear power may be used by, you know, Russia, China, maybe other countries, is that a salient argument? And also then the cooperation with the US

GRANT SHAPPS: Yes. Yeah. Well, on the cooperation front, yes. I’ll tell you openly, it’s one of the subjects we’ve been discussing today. Actually, I think there’s a really interesting part of this which harks back to one of your previous questions on the supply-chain side of things. We talked about supply chains of, you know, hydrocarbons. But actually there’s also a supply chain in uranium enrichment and so on and so forth. So there’s lots of work to go on there.

Both the UK and the US have pretty unique skills and knowledge in these areas. And very few countries in the world are in a position to carry out the enrichment and some of the processes that come after enrichment. We’re both signed up to nonproliferation. So it’s very important. The way this is done is internationally responsible. And again, I think it’s one of the very good reasons why the UK and the US should and are starting to work very closely together on nuclear.

And, you know, uranium has to be enriched to a very different level for nuclear and some of the SMRs, and then advanced modular reactor, AMR, technologies in particular to—if you want to turn it into a weapon at 80 or 90, 95 percent enriched, so that we’re talking about two very different things.

And I think some of these new technologies are incredibly exciting. I was with a British firm who are working on a Magnox system, which is technology which has been around for a while. But the advantage of Magnox is if you had a leak, it comes into the air and it freezes immediately if it’s anything less than 550 degrees C.

So there’s lots of very interesting work going on, lots of great science going on. And, of course, even way beyond that, I just—quick—we’ve talked about fission. If you just talk about fusion, I went with the prime minister when I launched the document you mentioned, Powering Up Britain, to Oxford, where we have a research center in Culham, and we stood next to the hottest place in, certainly, the solar system, ten times hotter than the Sun at Tokamak there. So, you know, it’s always twenty years away to get to fusion…

RICHARD MORNINGSTAR: You know, and I want to get to audience questions. If anybody has a question, please come up—come up to the microphone over there. I mean, I’ve got enough questions to last for the next hour and a half, but we’d like to—we’d like to get some questions.

While you’re going up, you know, it sounds like, you know, that you take—I think what we do—an all-of-the-above approach towards and maybe agnostic on technologies as to—as to how we’re going to achieve net zero. Do you have priorities? I mean, as you’re thinking about what you have to do, do you have a list of priorities like—and I’m not saying it’s this—but, like, nuclear first, or hydrogen second, and something else third? Or is it sort of like we’re going to look at all of these things and see how they develop?

GRANT SHAPPS: I do. But the overriding principle is we must never be in—we must never be driven by a single technology, right? If it’s oil and gas—and we went a long way to oil and gas, not least because we were producing a lot of it in the North Sea—then, as that starts to run down, we’re starting to import it, and then you start to get reliant. Or in France, nuclear. They have a terrific nuclear industry. They’re building two of our nuclear power stations at Hinkley Point and at Sizewell, and they’re running the rest. But actually, you know, as they would say, this summer a lot of them are down for scheduled and, unfortunately, some unscheduled maintenance, and suddenly they’re short in power. And so on and so forth: the wind doesn’t always blow, the sun doesn’t always shine. So we have the—you know, we produced last year—57 percent of our electricity in the last twelve months has come from renewables and nuclear together. That’s great. But if the sun’s not shining and the wind’s not blowing, you need to rely more on that nuclear, and so on and so forth. So—

RICHARD MORNINGSTAR: I though the sun always shined on the—

GRANT SHAPPS: Of course. I know, I know, I know. But amazingly, there are occasions. So I think, first of all, energy mix.

Secondly, you ask: To what extent are we directing that? Well, we have set out in a lot of detail how much of our energy we want to get from these different forms. So offshore wind, fifty gigawatts by 2030, in six-and-a-half years’ time. You know, we’re saying we want on hydrogen ten gigawatts, half—at least half of which has to be green rather than blue. We set out on nuclear twenty-four gigawatts into the future to get to a quarter of our power. So, yeah, we’re doing that.

And probably the most exciting thing—I just want to say this before we take the questions—carbon capture, utilization, and storage, CCUS—four initials that I bet actually if I polled at home in Britain most people won’t have heard of—could be a trillion-pound/trillion-dollar industry. And I’m very excited about that, not least because geographically or geology—from a geological point of view the North Sea, in fact in many cases where we took the oil and gas out of, has a lot of storage potential.

RICHARD MORNINGSTAR: That’s great.

Well, let’s get a question from the audience. If you could identify yourself and ask the question.

Q: Thank you. Mr. Secretary, I’m George Pickart with the General Electric Company. We’re very pleased to be deeply embedded in UK’s electricity sector, working across all of the technologies that you’ve mentioned whether it’s onshore or offshore wind, or nuclear SMR, grid equipment, technology, et cetera.

You couldn’t have teed up my question any better. You know, we’ve been spending a lot of time and investing a lot of money in how you decarbonize gas because we don’t see a future of the electricity system without that large rotating equipment on the grid. So the issue is, how do you produce that with fewer carbon emissions? And so we’re pursuing both expanding our hydrogen capability and also working with a number of different collaborators on carbon capture and storage.

And I wanted to commend you and your government for the strategy that you’ve put in place on carbon capture. We’re quite interested, as you probably know, in collaborating on the Net Zero Teesside project, and you’ve put together a very good vision, a strategy, the financial mechanisms, the funding. I think what’s missing, really, is sort of the timebound element of it. I just wondered if maybe you could tell us, do you expect a decision on these projects to go forward within the next year? And can we look forward to that?

GRANT SHAPPS: Yeah. So, well, I should explain. Thank you for the question. And thank you for what GE does, as well, because it’s a great partnership. It’s a very good example.

The strange thing is I spend my time going around the world to countries saying how have you done it, and that’s actually largely with the help of your businesses who have come in and invested in these renewables and much else. And that is a great—I mean, you know, we’re capitalists. We believe this is the way to bring the best technologies together, and then often re-export them as well. So, you know, thanks for that.

Secondly, on CCUS, in that Powering Up Britain document we announced a twenty-billion-pound initial program. This is track one of our CCUS clusters. And, as you mentioned, Teesside, which is in the northeast, and the northwest are the two kind of areas where this has developed. And then we’re going to have expansions to those, and there’s clusters in Scotland and also in Humber, also on the east coast. Track one expansion will be this year, and then we’re actually going to have track two as well. So that is—you know, the 20 billion is the first part of it over 20 years.

So we’re—and the reason, I should just explain, actually, Ambassador, to our audience. The reason that I’m saying all this, and so excited about it, and why the question is so relevant is that we know that by 2050 we will still need oil and gas. This isn’t just me saying this. This is because the IPCC, the—you know, the global sort of experts say that there will still be oil and gas being required. In which case, you got to deal with the CO2. We have enough space in the North Sea for seventy-eight billion tons of CO2. Now, what is seventy-eight billion tons? It’s fifteen billion elephants, well-fed ones. It’s two-hundred million St. Paul’s Cathedrals, for the British audience here online. It’s a lot of space. It would take probably one-hundred-years’ worth of British CO2 and one hundred years of all of European CO2, which we can bury under the North Sea.

So this is very much in line with the overall mission of both energy security and net zero. And, you know, projects which look to help with that are already getting our backing. So, I mean, I’m not quite sure on the project that GE’s particularly interested, but it may be that it’s, you know, track-one expansion or track-two path right now, I guess.

Q: Thank you.

GRANT SHAPPS: Thanks.

RICHARD MORNINGSTAR: Thank you.

I think we have two more questions that I see right now. And we’re running—we have about four or five minutes left. And I also think it’s important before we finish, I don’t know if 3:45 is an absolute cut off, but Ukraine reconstruction. And there’s a conference on the 21st to 25th, and your views on that. Maybe we take these two questions—why don’t we take the two questions and then answer them together, and then if you have any comments on Ukraine, and then we’ll call it day.

Q: Yeah, thank you very much, Mr. Secretary. My name Kevin Gundersen. I’m with Huntsman Corporation. And we are the world’s leading spray foam insulation company.

And in your remarks, you discussed many options for energy security. But your government has done the one thing that no other government has done, which is make insulation the centerpiece of its energy policy. When you talk about medium- and long-term solutions, we feel very strongly and are very supportive of what you are doing, that insulation is a short- and medium-term solution to the energy crisis. It’s a relatively old technology and people don’t really think about it, but it does work in lowering greenhouse gas emissions and lowering utility bills.

The British government has had various iterations in the past of insulation schemes. And given the amount of funding and the support this time around, what are you and the government doing to make sure that the execution of this program works this time around, given the importance of the issue at the moment?

RICHARD MORNINGSTAR: Thank you. Let’s have Lee’s question, and then maybe you can respond to that, and maybe say a little something on Ukraine.

Q: Thank you, Ambassador. Thank you so much, Mr. Secretary. My name is Lee Beck. I’m with the Clean Air Task Force. We’re a global climate organization.

Thank you so much for your fantastic remarks about technology optionality and next-generation technologies, carbon capture, nuclear, fusion. It’s really, really fantastic. And you said something really important, that oil and gas will likely be around still by 2050. COP26 saw the launch of the Global Methane Pledge. COP28 will be where we’re going to be really talking about the decarbonization and reducing emissions from the fossil fuel sector. What are—what is your vision for methane mitigation, one of the fastest ways to act on climate in the near term?

RICHARD MORNINGSTAR: Great, so I’d say let us—yeah, why don’t you just take those two and then if you could say a little bit about Ukraine.

GRANT SHAPPS: Sure. So, first of all, I love your point about insulation. I mean, the best energy is the energy you don’t have to use in the first place. And it’s kind of—the high energy bills that people are being paying has suddenly both changed the maths—or, math, as you would say—and it has also changed the—you know, made people have another fresh look at, even though the technology, as you rightly say, has by and large been around. But so I think it’s enormously important.

We’re always being pushed to go further, but it’s worth saying that when we came to power, this conservative administration, which is in 2010, only about 14—one-four—percent of homes were adequately insulated, A to C on an energy rating. It’s now just approaching half of homes. So we’ve done half the job. Right now, in terms of size and scale, we have twelve billion pounds in the current periods going into this, I think up till 2028. And we’re working on new ways to target that. So we’re about to launch something called the Great British Insulation Drive, which you’ll be hearing more of very soon.

But, yeah, massively important, obviously, when new homes go up they’re much better insulated. We have a lot of Victorian housing stock. And they were very good builders, the Victorians, but not very good at building well-insulated, warm buildings, necessarily. So, yeah, more to happen on that front.

I’m just furiously looking at my notes actually on methane, because I noticed a stat when I was having to think about this earlier, which I was blown away by, which was something like a 60 percent reduction in our methane. But I’m afraid I cannot spot the exact number right now. But that pledge from COP26—our 60 percent reduction is not from COP26, it’s from earlier than that—but that pledge is incredibly important. And we mustn’t lose sight of the fact that we will go without CO2, but there are many other forms of greenhouse gases, and there are a lot of different responses that we need to take.

The brilliant thing about all this stuff is, you know, again, Ukraine and the high prices has made us look differently at it. Energy security—national energy security—you know, in my case, I say it’s powering Britain from Britain, I always say. You know, it’s just the flipside of the coin of net zero. That’s why we named the department Energy Security and Net Zero. They’re actually the same thing. You know, to get there, to be really secure, you know, we need to go through that whole transition. So and that’s our stated direction.

And you very kindly asked about the Ukraine reconstruction conference. It’s in London this summer. I actually took over the presidency on behalf of the UK from the Swiss, who ran the conference last year. There’s a huge amount of activity going into that. I’m speaking to my Ukrainian counterparts. I know the whole world—the whole civilized world will be there to help and support Ukraine, which we must do because, in my view, Ukraine could be lost in two different ways. We could lose it because we don’t stick together, we don’t have these different sanctions, we don’t respond to the energy crisis. But we could equally lose it by allowing Ukraine to be destroyed, even if they win. And that would be completely and utterly unacceptable.

RICHARD MORNINGSTAR: And, just very briefly, because we have run out of time, how would you—how would you begin to approach Ukraine energy reconstruction? And, you know, with the potential of ultimately Ukraine becoming a real energy powerhouse in Europe?

GRANT SHAPPS: Yeah. Well, I think—I’ve been speaking—on a personal basis, I’ve been speaking to my opposite numbers. Initially Oleksandr Kubrakov, who was minister for reconstruction and infrastructure and transport, at the time, now deputy prime minister. And also my opposite—direct opposite number, and actually I’m speaking to them—the first thing I do when I get home is speaking to them again in advance of this conference as well. And Ukraine has huge potential assets. I mean, in the same way as they’re the breadbasket of the world, or certainly of Europe and perhaps Africa, they also have the potential to be both in renewable energy but also in modernized nuclear civil energy as well.

So, you know, we’re very keen to make sure for their sake, but also, I think, for the world’s sake, that they are assisted in being brought back to what they’ll need to be to rebuild that industry and rebuild the country’s economy as well. It’s very close work. I’ve been personally very committed to all this. I’ve had Ukrainians living in my house for the last year, a family of three, and their dog as well, Mad Max. So every time I’ve gone home, I’ve been reminded of how evil that war has been. And Britain, and I know America, are committed to Ukraine’s future.

RICHARD MORNINGSTAR: And I can assure you, everybody here, I think, is likewise committed.

You know, unfortunately, we have come to a close. I’ve been getting sort of dirty looks from our events staff because I think we’ve gone over time. But—and we could have—I think we could have gone for another hour or two. But it’s been great. And I really want to thank Secretary Shapps for joining us and offering his insights on Britain’s path forward on energy and climate—not just Britain; you know, looking at it from a more global standpoint. And I hope you’ll be visiting us many times and maybe come back to our Global Energy Forum.

But I also would like to thank all of you who joined us in studio, as well as those around the world who are watching this virtually. And I would remind everybody that there is a recording of this conversation that’s available or will be available on YouTube, Twitter, Facebook, and the Atlantic Council webpage.

I’d also like to thank those here who made the event possible: Olga Khakova, who’s the deputy director at the Energy Center responsible for European energy security; Katie Kenney; Paddy Ryan; Frank Willey; Max Zandi; and our events—wonderful events staff.

So please join us for future events, Atlantic Council events. We will be having our eighth annual—I’ve been here eight years, so I guess I started it the first year—eighth annual Central and Eastern European Energy Conference—Energy Security Conference. That takes place on June 15 in person and online, and there will be more information on that on the webpage. And just, you know, keep watching our webpage for events.

So, again, this was on the record, and take care. See you next time.

GRANT SHAPPS: Thank you very much.

Watch the event

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Webster in The Diplomat: Sensing opportunities, China weighs its diplomatic options in Europe

mzandi — Tue, 16 May 2023 20:40:17 +0000

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Riley quoted in Jutarnji List on Russia-Ukraine energy security

mzandi — Tue, 16 May 2023 20:29:20 +0000

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Riley in Financial Times: Let Russian gas exports fund Ukraine’s reconstruction

mzandi — Tue, 16 May 2023 20:22:17 +0000

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Ellinas in Cyprus Mail: EuroAsia interconnector becoming a reality

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Ellinas in Financial Mirror: Energy markets sees prices stabilize

mzandi — Mon, 15 May 2023 20:33:10 +0000

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Webster quoted in Table Media on wind power

mzandi — Thu, 11 May 2023 18:49:09 +0000

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Arslan joins Bloomberg to discuss the implications of the upcoming Turkish elections

Grady Wilson — Thu, 11 May 2023 17:54:53 +0000

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Webster in The China-Russia Report: Putin’s strategy in Ukraine runs through Western elections

mzandi — Wed, 10 May 2023 19:00:33 +0000

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Russia’s invasion fails to prevent progress in Ukraine’s energy sector

Aura Sabadus — Tue, 09 May 2023 20:28:02 +0000

For the past seven months, Russia has been waging a campaign of airstrikes against Ukraine’s civilian energy infrastructure with the goal of plunging the country into darkness. These regular bombardments left millions without heating and electricity for much of the winter season but failed to break Ukraine’s spirit. Crucially, Russia has also been unable to disable the country’s energy system. On the contrary, recent months have witnessed a number of encouraging developments which promise to further integrate Ukraine into the wider European energy industry.

One of the most interesting but under-reported achievements so far in 2023 has been the connection of Ukraine’s first biomethane production plant. This facility is one of a series of similar projects that are expected to position Ukraine firmly at the center of Europe’s energy transition. Situated in northern Ukraine’s Chernihiv region, the plant connected to the gas distribution grid in early April. A further four plants are expected to follow suit before the end of the current year.

With more facilities in the pipeline, Ukraine could be producing up to three billion cubic meters of biomethane annually by 2030, which would represent 10% of the EU’s total targeted production. By 2050, Ukraine could scale up production sevenfold to reach an annual level representing around two-thirds of the country’s total prewar natural gas consumption.

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Since the biomethane molecule is similar to that of natural gas but non-polluting and fully compliant with decarbonization goals, investments to support production and transmission infrastructure are expected to be affordable. This can already be seen in a number of swift upgrades that have allowed existing Ukrainian power generation plants using biomass to undergo partial conversions to biomethane.

Soaring energy prices in the wake of Russia’s full-scale invasion of Ukraine and the blockade of Ukrainian grain exports have helped producers to fast-track their investments in this budding sector. With traditional export routes severely restricted by the Kremlin’s Black Sea grain blockade, some agricultural businesses have used their crops to produce biogas and biomethane. Meanwhile, with European electricity and gas prices reaching record levels last year against a backdrop of Russia’s invasion, biomethane production is now five times more profitable than grain production.

Analysts say Ukrainian-produced biomethane is cheaper for European buyers than volumes produced in EU countries. Thanks to support from DENA, the German biogas register operator, Ukraine will also soon be able to set up its own register, which should allow sellers to provide proof of origin for exported biomethane by the end of this year.

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Of course, much of Ukraine’s ability to scale up this segment of the energy industry will depend on how quickly the war ends and on the ability of producers to attract funding. There are signs, however, that international appetite to work with Ukrainian energy industry partners is already growing, even as Russia’s invasion continues.

At the beginning of May, Ukraine’s gas transmission system operator, GTSOU, said it had received interest from non-resident companies looking to import natural gas to the country and possibly store it in underground facilities over the summer months. Prior to the war, more than 100 non-resident companies had signed up to import and store gas in Ukraine. In 2020, for example, a third of the gas stored in Ukraine’s 30 bcm underground facilities belonged to foreign entities. Following the start of Russia’s full-scale invasion last year, this figure dropped to just 2%. However, the latest capacity bookings reported by GTSOU signal renewed international interest in injecting gas despite the ongoing war risk.

This interest is largely driven by a widening spread between current and winter prices, which means traders have an incentive to buy cheaply now hoping to sell at much higher prices later this winter. Storage facilities across the EU are also filling up fast, effectively prompting companies to turn to Ukraine’s vast facilities to store surplus volumes.

Undoubtedly, this will increase Europe’s overall security of supply, particularly during the winter months when gas can be withdrawn and used across the EU. One could argue that Ukraine’s comparatively cheaper storage and transmission tariffs, together with the work carried out both by GTSOU and the storage operator UTG in previous years to attract customers, have also been instrumental in attracting international interest.

Further progress in the storage sector now seems increasingly realistic. Discussions are currently underway at the government and private sector levels to issue war risk insurance for companies looking to store gas in Ukraine. This could provide an extra measure of safety for existing or new clients. Whatever format these insurance measures take, it seems clear that wartime Ukraine remains a critical energy partner for Europe, and will continue to play an important role in the continent’s complex energy transition.

Dr. Aura Sabadus is an 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. You can follow her on Twitter @ASabadus.

Kicking off the conversation, Derentz addressed Iraq’s dire economic situation, highlighting the recent devaluation of the dinar and inadequate foreign direct investment (FDI) inflow in the country, particularly from the US and European countries. He also emphasized that despite being the second-largest oil producer in OPEC, Iraq still faces energy security challenges, and the government has been forced to import electricity from neighboring countries such as Iran, Kuwait, and Saudi Arabia. This is noteworthy as oil revenues comprise a considerable proportion of Iraq’s government revenues, GDP, and exports.

Meanwhile, al-Rahim shared her insights on Iraq’s precarious business environment, citing corruption, infrastructure, and judiciary system, that have contributed to the country’s perilous and unpredictable environment, discouraging both foreign and domestic investors. To begin with, she referred to the rampant corruption in Iraq that is in part due to the Muhasasa system fostering political patronage, resulting in inefficient public services. The system, she said, “is enough to deter anyone from dealing with the government.”. Additionally, she asserted that this risky business environment may pose severe consequences for foreign companies suspected of engaging in corrupt practices in Iraq. Moreover, insufficient infrastructure and political instability yield an unpredictable political environment, deterring FDI. Finally, investors face many obstacles when engaging with the judiciary system due to its complex structure and the political interference that often protects it.

Lastly, Jafar, identified factors such as decades of wars, sanctions, European colonialism, corruption, and poor transparency that have impacted the country’s oil production and levels of FDI. While there has been a significant increase in oil production since the US invasion in 2003, Jafar noted that the country has yet to realize its full potential. He also cited the contract model as the primary reason most Western companies leave the Iraq energy sector, noting that fixed fee-per-barrel agreements are rare for international investment in this field. Although Iraq has revised its contract framework, earlier contracts have yet to be retroactively subjected to the updated model. Regarding policy reforms, Jafar mentioned that the Iraqi government plans to approve a positively impactful three-year budget that includes revenue-sharing principles between the Federal Government and the Kurdistan Regional Government (KRG). Furthermore, Jafar emphasized the importance of Iraq’s electricity needs as the current government of Prime Minister al-Sudani prioritizes gas production to provide power generation. Jafar stated that the exploration and development of Iraq’s undeveloped gas fields should be a critical area of focus for the future. The electricity sector needs comprehensive reforms, including power generation, transmission, and distribution, to reduce losses and develop the necessary infrastructure.

Collaboration for energy security: overcoming geopolitical challenges in gas production in Iraq

When asked about the main geopolitical challenges in gas production, Tabaqchali, referred to the political relationship between Baghdad and Erbil and argued that Iraq should focus on fulfilling its own needs by integrating its economy with the KRG. In terms of Iraq’s growing demand for electricity, he also mentioned that Iran cannot meet Iraq’s demand due to their own power generation needs and lack of investment. Therefore, the KRG and the Iraqi Federal Government should collaborate to resolve these issues and work with their neighbors.

To do so, Tabaqchali stated that Baghdad and Erbil first must reach a consensus on how they interpret the Constitution, whether they view Iraq as a strong centralized state or a federation with everyone contributing to it. Then, a win-win formula needs to be reached in agreements between Iraq and oil companies to benefit from their resources and technology.

Jafar echoed Tabaqchali’s viewpoint that the main problem affecting Iraq’s electricity generation is the shortage of fuel. He elaborated that Iraq needs to enhance its gas and oil production to meet its actual demand of 4 billion cubic feet per day, which could easily double to 8 billion cubic feet per day by the end of the decade. Jafar predicted that there may still be a 2 billion cubic feet deficit per day, which could require imports unless exploration efforts are increased in Iraq. The goal should be providing 24-hour electricity for Iraqi citizens, which is critical for stability and economic development. Once the power needs are fulfilled, the priority is to use gas for industrial development and job creation, with any surpluses being exported.

Maximizing value for Iraq: balancing contract types and resource nationalism in the energy sector

When asked about contract types and their impact on Iraq’s energy sector, Jafar clarified the difference between product-sharing and service contracts. He also explained that it is a misconception that production-sharing agreements or investment contracts are more profitable for investors. Unlike some of its regional neighbors, such as Iran and Kuwait, Iraq’s Constitution allows private investment in the oil sector if the investment model aligns the interests of investors with those of the host government.

Al-Rahim also highlighted three factors that have impacted Iraq’s oil contracting: a socialist mindset of preventing foreigners from controlling the sector, a lack of technical expertise, and a sense of arrogance that has affected Iraqi decision-making.

The panelists agreed that there is a sense of resource nationalism in the Iraqi mindset, a consequence of Iraq’s colonized history as large Western majors had formerly monopolized the oil sector. However, according to Tabaqchali, a mutually beneficial deal is the only way to ensure success. Jafar added that Iraq should focus on maximizing the value of oil efficiently, rather than interpreting contracts as a zero-sum game with investors.

Opportunity costs in face of high operational costs

Currently, a significant portion of Iraq’s revenues go toward the government’s operating budget. The panelists agreed that while the federal budget should focus on rebuilding destroyed infrastructure and service provision, the Central Government allocates upwards of 76% of the budget to government expenses such as employee salaries, subsidies, pensions, and operating costs. These costs produce no tangible positive impact, such as diversification of the economy and long-term investment in public goods.

Employment opportunities also contribute to the problem: according to Tabaqchali, while approximately 700,000 jobs were added to the payroll this year in Iraq, only 75,000 of those positions were marketed for the 400,000 newly graduated Iraqis seeking to enter the workforce.

A double-edged sword? reforms and accountability measures for the new administration

In line with Iraqi Prime Minister al-Sudani’s idea of establishing a “service government”, al-Rahim claimed that al-Sudani, “is not necessarily concerned with [political reform]; he is concerned with economic reform.” Referencing the White Paper for Economic Reforms, authored in part by Iraq’s former Deputy Prime Minister and Minister of Finance, Dr. Ali Allawi, as an example, al-Rahim suggested that she sees al-Sudani trying to implement elements of this economic roadmap—including reforms in foreign remittance policies and the overall banking sector—without crediting it. On the other hand, al-Sudani’s administration has also introduced unprecedented structural and internal reforms within Iraq’s executive branch, including evaluation processes to measure government performance and confront corruption.

What has motivated these reforms? Twenty years of government nonperformance has created popular discontent. Thus, to secure popular support and maintain future approval of his administration, said al-Rahim, al-Sudani’s reforms resulted from the Iraqi public’s pressure on the new government to meet their needs for improved healthcare, education, and jobs. Jafar echoed this, adding that implementing reforms that keep director generals and ministers accountable for their performance, “is a welcomed first step.”

However, the current politicization of the civil service in Iraq prompted al-Rahim to regard accountability-prioritizing reforms as a double-edged sword. In light of Iraq’s current Muhasasa system, “we’re not holding the political leadership accountable,” she claimed. This is because in cases of a director general or minister’s potential dismissal due to failing performance, the political party to which the official belonged may not necessarily find an improved replacement. Subsequently, a constant overturning of ministry leaders would create a loss in the ministry’s technocratic capabilities while neglecting to hold political parties accountable.

Iraq in the global community: addressing climate change and mobilizing the youth

The panelists also assessed the role of Iraq within the global energy transition and multilateral climate action to face climate change. Jafar commented on the negative impact of climate change on Iraq, citing, “over a third of Iraq’s electricity is generated by burning liquid fuels, which is terrible for the budget and climate.”

According to Jafar, current operations in Iraq, like reducing carbon dioxide emissions and using natural gas to enable renewable sources, are vital to developing energy sustainability and contributing to the global climate agenda. As CEO of Crescent Petroleum, Jafar stated that his company maintains carbon neutrality by nearly eliminating gas flaring and emissions while using carbon credits that support wind power in Asia to offset the remainder.

Regarding mobilizing youth to inspire economic and combatting climate change in Iraq, al-Rahim emphasized that Iraqi youth feel particularly connected to the global community—motivating the population’s collective ambition and entrepreneurial spirit. Having met with young entrepreneurs in the tourism, food production, and information technology industries, al-Rahim stated that the government and international donors would benefit from investing in their activities that currently take place across the country, including enterprise-building and environmental relief efforts.

Closing thoughts: the role of investors, industries, and the global community in unlocking Iraq’s potential

Speaking about the role of international partners in Iraq’s economy, Tabaqchali affirmed that addressing the crux of fundamental economic issues, like declining water levels, is essential to tackling Iraq’s energy crisis.

Jafar added that helping Iraq transition into a private sector-led diversified economy is the only way to reduce youth unemployment and alleviate corruption. Moreover, Iraq’s overall positive relations with regional and global powers reinforce its role in establishing diplomatic channels between those powers. Such a role can be leveraged to enhance regional FDI coming into Iraq.

As the newly elected administration governs over a relatively peaceful era in Iraq, al-Rahim advised that investors face new opportunities that can help meet Iraq’s needs. Both foreign and domestic industries can also encourage modest applications of venture capitalism in Iraq to advance young entrepreneurs’ participation in the economy.

Altogether, the panelists expressed their optimism toward a hopeful future for Iraq. Today, the energy and engagement of the Iraqi public is high, so it is more vital than ever to bolster private citizen participation in the financial and energy sectors, even if that means taking risks. As Derentz summarized, “Every risk is an opportunity. We need to maintain the moment because Iraq’s people are its greatest resource and Iraq’s true energy and hope.”

Mahnaz Vahdati is a Young Global Professional with the Atlantic Council’s Middle East Programs.

Amna Haider is a project assistant with the Atlantic Council’s Middle East programs, where she supports the Center’s work on Iraq.

The post Reimagining a way forward: Iraq’s economy and energy sector in the post-invasion era appeared first on Atlantic Council.

Shaffer in Foundation for Defense of Democracies: President Aliyev: “Relations between Azerbaijan and Iran are at the lowest level ever”

mzandi — Mon, 08 May 2023 20:16:56 +0000

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To secure the Black Sea, the West must help Moldova stand up to Russian aggression

Arnold C. Dupuy — Fri, 05 May 2023 17:58:12 +0000

In recent months, Moldova has withstood Russia’s relentless attempts to draw Chisinau into the Kremlin’s political orbit. But it needs the support of its allies in the West to send a clear, unmistakable message to Moscow that it will not fall into the Kremlin’s grasp.

Moscow has led its coercion campaign ever since pro-European Union (EU) candidate Maia Sandu won the presidential election in a landslide in November 2020—much to the Kremlin’s displeasure. Then, Sandu’s Party of Action and Solidarity won the 2021 parliamentary elections, paving the way for Sandu to officially apply to join the EU. A sustained effort by the Kremlin to undermine the Moldovan government’s credibility followed, and with the February 2022 invasion of Ukraine, this intimidation campaign moved into high gear, notably through airspace violations, energy-supply manipulation, and official comments about Moldova being “the next Ukraine.” In the most recent example of this campaign, Russian armored forces conducted unannounced military maneuvers in the pro-Russian breakaway region of Transnistria last week.

On February 10 this year, Moldovan Prime Minister Natalia Gavrilita resigned following months of protests over inflation and high energy prices, resulting from Moscow’s decision to limit gas exports to Moldova, which is almost completely dependent on Russian energy. Then on February 21, Russian President Vladimir Putin abrogated a 2012 decree that acknowledged Moldovan sovereignty in resolving questions over the future of Transnistria. That cancelation, viewed in Moldova as a hostile act, de facto signaled Putin’s willingness to use force to achieve his aims, as Russian troops in the region lost their status as “peacekeepers” and instead became more like occupation forces. It also shows the lengths to which the Kremlin will go to open a new front in its invasion of Ukraine and to advance its interests in the Black Sea.

Moldova’s gross domestic product (GDP) per capita is roughly $5,200 a year (one of the lowest in Europe), and its inflation rate peaked at 34 percent after Russia invaded Ukraine and reduced fuel supplies. Yet many Moldovans blame their own government, not the Kremlin, an indication of Russia’s disinformation efforts that inflame the already tense domestic political divide.

While it is landlocked, Moldovan territory includes the Prut, the Dniester, and the Danube rivers, which empty into the Black Sea. Moreover, because it borders Ukraine and is only fifty kilometers from Odesa (Ukraine’s largest seaport), instability in Moldova—especially in Transnistria, which is effectively controlled by Moscow—could directly impact its neighbor’s security. A Russian-dominated Moldova could effectively become a southern Kaliningrad, and in conjunction with Crimea, it could provide Moscow with more control over the northern Black Sea and also possibly the ability to hamper Ukraine’s maritime activities. And, should Russia gain access to more Moldovan territory and flip Chisinau in its favor, Moscow’s expanded presence would also threaten Romania’s security and put even greater pressure on NATO’s southeastern flank.

Moldova has maintained its neutrality, which it had enshrined in its constitution. Despite this sentiment, Moldova is a member of the Partnership for Peace, which allows cooperation with NATO on a variety of activities. Yet Moldova has starved its security sector for decades, hoping its neutrality and Ukraine would protect it. Since Russia launched its full-scale invasion of Ukraine last year, Chisinau has sought to reverse this neglect of its military; for example, it expanded its 2024 defense budget by 68 percent compared to its budget in 2022—but that’s still only an increase of approximately eighty million dollars, or 0.55 percent of its GDP.

On paper, Moldova can field a security contingent of 45,000 personnel; however, this force is poorly trained and equipped with virtually no air support. In Transnistria, Russia has 1,500 troops, mainly comprising local recruits. While Moscow might seek to augment these forces, that would be logistically difficult given its failure to take Odesa. Moscow does, however, have significant agents of influence in Moldova who could work more forcefully against the government.

Keeping Moldova out of the Kremlin’s grasp is vital to Eastern European security and NATO’s Black Sea mission. Moldova, NATO, and the West must send clear, unmistakable signals to the Kremlin:

The EU should approve the fast-tracking of Moldova’s EU accession, a plan for which Poland recently made the case.
While it would be problematic to offer Moldova a fast track to NATO membership—as the Alliance is viewed unfavorably in Moldova, and leaving the policy of neutrality is unpopular there—NATO or its members can take other actions. For example, the promise of air defense and heavy weapons and training in the case of conflict with Russia/Transnistria would be a deterrent.
Moldova and the West should provide Moldova’s armed forces with more training and modern equipment, ultimately to improve capabilities and interoperability. Ukraine demonstrated how a Western-oriented training program can give a smaller country’s military an edge over Russia’s armed forces. This could be accomplished without violating Moldova’s neutrality as it would not require deploying foreign forces on Moldovan territory.
Moldova should institute a robust strategic-communications and cyber-defense platform to counter Russian malign influence—and the West should help. A platform designed to counter misinformation and disinformation could help galvanize domestic support for greater alignment with NATO and the West.
Finally, Moldova is one of the world’s least energy-self-sufficient countries. While Chisinau, with the West’s support, has made progress in source diversification and sector reform, it should continue to wean itself off of Russian oil and gas and electricity from Transnistria. Moldova must build a more resilient energy infrastructure that is not dependent on Russia.

Through its energy manipulation, military intimidation, and official threats, the Kremlin is conducting a classic hybrid warfare campaign against Moldova. In comparison to early 2014—when the world stood stunned in the wake of ‘little green men’ and the effective dismemberment of Ukraine—NATO and Western allies have become more sophisticated in detecting and combating hybrid warfare tactics. Additionally, NATO members’ support to Ukraine, while belated and arguably still inadequate, has been instrumental in Kyiv’s successful defense against Russia’s full-scale invasion. The lessons in Ukraine are unmistakable and should not be lost on Western and Moldovan leadership. Strong leadership, a determined population, and NATO support are indispensable in halting Russian aggression.

Arnold C. Dupuy is a nonresident senior fellow at the Atlantic Council IN TURKEY, a faculty member of the US Naval Postgraduate School, and chair of the NATO Science and Technology Organization’s SAS-183, “Energy Security Capabilities, Resilience and Interoperability.”

The post To secure the Black Sea, the West must help Moldova stand up to Russian aggression appeared first on Atlantic Council.

#AtlanticDebrief – Are we in a new era of globalization? | A Debrief with Morten Bødskov

nlawler — Fri, 05 May 2023 16:06:03 +0000

IN THIS EPISODE

How does the convergence of geopolitics, hard security, and technology—accelerated by Russia’s illegal war in Ukraine and China’s challenges to the rules-based international order—impact Denmark and Europe’s economic policies and outlook? From Denmark’s point of view, does Europe have the right industrial policy response, including the loosening of state aid rules at the EU level? What are Denmark’s priorities to address potential “fragmentation” in the EU’s single market? How is Demark working to support Ukraine’s fight against Russia and Ukraine’s future reconstruction?

On this episode of #AtlanticDebrief, Jörn Fleck sits down with Morten Bødskov, Minister for Industry, Business, and Financial Affairs of Denmark, to discuss Denmark’s perspective on fragmentation and regionalization in this new era of the global economy.

You can watch #AtlanticDebrief on YouTube and as a podcast.

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The post #AtlanticDebrief – Are we in a new era of globalization? | A Debrief with Morten Bødskov appeared first on Atlantic Council.

Green hydrogen: Loaded up and (long-haul) trucking

Joseph Webster, William Tobin — Fri, 05 May 2023 16:00:42 +0000

Long-haul trucking is a highly promising use case for the US hydrogen industry, and California and Texas are two large potential markets for pioneering hydrogen-fueled trucking. Both states have excellent green hydrogen potential and are taking initial steps to become hydrogen trucking hubs. When it comes to decarbonizing heavy-duty transportation, hydrogen is here for the long-haul.

Cleaning up hydrogen

Today, the vast majority of hydrogen is produced from reforming the methane in coal or natural gas in a process that produces ten times more carbon dioxide than hydrogen by mass. It is principally used for refining heavy sour oil and producing ammonia for fertilizer.

The most promising pathways to create zero-carbon clean hydrogen at scale are through renewables-produced green hydrogen or nuclear-powered pink hydrogen, both of which use zero-carbon electricity to separate hydrogen and oxygen via electrolysis. There is also blue hydrogen, which comes from natural gas in a process paired with carbon capture. Blue hydrogen’s role in decarbonization, however, is contingent on the mass buildout of carbon transportation and storage infrastructure.

If deployed judiciously, clean hydrogen can have a meaningful impact on lowering emissions in hard-to-electrify sectors, which require a chemical feedstock, long-duration energy storage, or extreme heat.

Long-haul trucking is a viable clean hydrogen offtaker

For most forms of transportation, growing economies of scale have given batteries an edge over hydrogen fuel cells. However, long-haul trucking—which accounts for 7 percent of transportation emissions—may be too high a fence for batteries to climb.

As a vehicle becomes heavier, its battery must expand proportionately in volume to provide the requisite power. Electric freight tractors use battery packs that are significantly heavier than the weight of diesel a truck typically carries, which decreases range and payload capacity while requiring more frequent charging. This is meaningful in the freight industry, where time is precious, and downtime can come at a cost of over $50 per hour before accounting for costs of charging. An electric long-haul truck takes thirty minutes to charge to only 70 percent capacity even with megawatt charging. In comparison, hydrogen re-fueling can be done quickly. Refueling a hydrogen truck takes ten minutes.

Hydrogen fuel cell trucks are therefore likely to edge out batteries for trips surpassing 180 miles and payloads above 24,000 pounds, according to an industry study.

The US Department of Energy estimates that total cost of ownership for hydrogen fuel cell long-haul vehicles will become affordable by 2030 thanks to new production tax credits for clean hydrogen. Furthermore, the department cites evidence that the long-haul trucking sector is willing to pay a premium for clean hydrogen. This outcome, however, is contingent on a buildout of refueling infrastructure along freight corridors. To boost demand, infrastructure could be built along freight lines that support high volumes of freight, such as near seaports. This can help medium-sized refueling stations reach their breakeven utilization rate. To do so, industry and policymakers must overcome a chicken-and-egg problem. The development of refueling infrastructure is critical to enable hydrogen-powered long-haul trucks, and—conversely—hydrogen refueling stations will rely on long-haul trucking for their income, as hydrogen uptake in transportation is likely to be confined to this sector.

California and Texas: Unlikely hydrogen trucking partners

California and Texas are important players in both green hydrogen and long-haul trucking.

Not only do the two states have the largest populations and economies in the country, but they also have outstanding green hydrogen potential.

Both California and Texas have excellent renewable resources, including solar and wind. The two states have deployed nearly 74 gigawatts of solar and wind capacity with another 36 GW in development.

Texas and California are the nation’s largest and second-largest renewables generators. As more renewable electricity production grows in these states, so will green hydrogen capacity—although there will be tensions between providing renewables for power generation or hydrogen.

Long-haul trucking is a natural use case for green hydrogen in both states. Texas and California are the country’s largest users of diesel for the transportation sector, consuming 633,000 barrels per day in 2021, or about 21 percent of total US diesel demand. Both states rely heavily on trucking to transport cargo from ports along the coast of California and Texas to destinations further inland. Indeed, Los Angeles, Long Beach, and Houston are the country’s first, second, and fifth-largest container ports by volume, respectively.

There is already evidence that Texas and California’s long-haul trucking sectors could see synergies between ports and green hydrogen production. California provides fiscal support for zero-emissions vehicles, plans to end the sale of fossil fuel-powered medium- and heavy-duty trucks by 2036, and continues to develop hydrogen refueling infrastructure. Tellingly, Hyundai Motor will soon operate thirty fuel cell electric trucks in California; Hyundai states this deployment will mark the largest commercial deployment of fuel cell electric trucks in the United States in the super-large vehicle class. In North Texas, Air Products and AES are teaming up to construct the country’s largest green hydrogen facility to service the trucking industry.

The trucking fleet is replaced very rapidly: the average lifespan of a super-large class truck is eight years, while the median truck on the road today is approximately six years old. In comparison, personal vehicles are replaced on average only every ten and a half years. Moreover, unlike the personal vehicle segment, most long-haul trucks are procured by fleet owners who pay very close attention to the total cost of ownership, not just the sticker price. If hydrogen-fuel trucks become more competitive than their diesel counterparts, there could be a relatively rapid adjustment.

Hydrogen: Here for the long-haul

Hydrogen’s technical and economic fundamentals are likely to improve as technology advances and the Inflation Reduction Act incentivizes investments in renewables. Owing to their renewables potential, large ports, and significant diesel demand, California and Texas are primed to lead the trucking market’s transformation. While trucking fleet turnover will take time, hydrogen appears poised to disrupt the US trucking market.

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

William Tobin is a program assistant at the Atlantic Council Global Energy Center.

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EnergySource Mar 14, 2023

Harmonizing hydrogen ambitions and realities

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Green hydrogen has the potential to turn sub-Saharan Africa’s abundant renewable resources into fuel for a sustainable economy. If supporting infrastructure can be built to harness this potential, the entire region could see the benefits.

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The post Green hydrogen: Loaded up and (long-haul) trucking appeared first on Atlantic Council.

Wald joins Bloomberg’s Sound On to discuss the recent oil market

mzandi — Thu, 04 May 2023 18:45:21 +0000

The post Wald joins Bloomberg’s Sound On to discuss the recent oil market appeared first on Atlantic Council.

Ukraine seeks more German support on Russia’s invasion and EU accession

Alyona Getmanchuk — Thu, 04 May 2023 16:16:31 +0000

Ukrainians have long admired Germany for its high standard of living and rule of law. However, for the past nine years, Berlin’s response to Russian aggression against Ukraine has often been a source of disappointment. With Ukrainian President Volodymyr Zelenskyy expected to visit Berlin on May 13, many Ukrainians are hoping Germany will soon be doing more to defeat Russia’s invasion and advance their country’s European integration.

The first major milestone in Ukraine’s disillusionment with Germany was the 2008 NATO summit in Bucharest, when German Chancellor Angela Merkel was instrumental in vetoing a membership action plan for Ukraine. At the time, this was justified by the need to avoid provoking Russia. The mood of disappointment in Kyiv grew with Berlin’s subsequent support for the Nord Stream II gas pipeline, which appeared designed to bypass Ukraine and promised to leave the country exposed to the threat of increased Russian aggression. Germany defended this decision on purely economic grounds, but many Ukrainians argued that the economic benefits did not justify the geopolitical risks.

Germany’s involvement in the Minsk peace process from September 2014 further strengthened perceptions in Kyiv that Berlin’s priority was to avoid any decisive split with Moscow, with limited support for Ukraine often balanced by efforts to accommodate the Kremlin. For many Ukrainians, Germany’s position highlighted the inadequacy of the wider European response to Russian aggression. It was yet another example of the West’s reluctance to do anything that might be considered provocative by the Kremlin.

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With the benefit of hindsight, it is now painfully clear that policies designed to avoid provoking Putin are likely to do exactly that. The refusal to grant Ukraine a pathway to NATO in 2008 confirmed the country’s vulnerability, while Germany’s continued commitment to Nord Stream II following Russia’s 2014 invasion of Crimea and eastern Ukraine reinforced the Kremlin’s conviction that hunger for profits outweighed any commitments to European values in Berlin. These developments helped set the stage for the full-scale invasion of Ukraine in February 2022.

Ukrainian frustration toward Germany has remained tangible since the start of Russia’s full-scale invasion, but has been tempered by Germany’s increasing willingness to cut ties with Russia and provide Kyiv with vital military aid. Berlin has faced significant criticism over the speed of weapons deliveries to Ukraine, but has emerged over the past fourteen months as a key partner. The early 2023 decision to provide Leopard tanks was a watershed moment in this process that reflected Chancellor Olaf Scholz’s talk of an historic “turning point” in relations with Russia almost one year earlier in the first days of the invasion.

In additional to military aid, Ukraine counts on German support in other areas. Post-war reconstruction is seen as a more straightforward issue for German involvement, with the Ukrainian authorities already expressing their gratitude for Germany’s readiness to contribute. However, any reconstruction requires a sustainable peace. This is simply not realistic until Ukraine defeats Russia militarily, which will not be possible without the expanded delivery of weapons from key Western partners such as Germany.

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Kyiv officials would also like to see Berlin adopt a more supportive stance on the issue of future Ukrainian EU membership. Germany has previously played this role for other countries seeking to join the European Union, but is still regarded by many in Ukraine as being somewhat skeptical of the country’s EU ambitions and was among the last to back EU candidate nation status for Ukraine in summer 2022. This is unfortunate. After all, Ukraine’s EU membership bid has major geopolitical and security implications for the entire continent.

As part of the EU, Ukraine would no longer be viewed as a potential component part of a revived Russian Empire. Progress toward Ukrainian EU membership would also fit well with Germany’s stated objective of a post-war Ukraine with less corruption, greater rule of law, transparent business climate, and resilient institutions. I am therefore convinced that Germany will match recent statements in favor of Ukraine’s EU accession with practical support.

In addition, there are hopes in Kyiv that German attitudes toward Ukrainian NATO membership will also change. On the positive side, Chancellor Scholz and other German leaders now appear to recognize that Ukraine’s NATO aspirations were not the cause of the current Russian invasion. The challenge is to convince them that the threat of further Russian aggression will continue unless Ukraine receives security guarantees equivalent to NATO membership, regardless of whether Putin himself remains in the Kremlin.

Any lasting peace settlement must also include justice for the Ukrainian victims of Russian war crimes. Kyiv expects Germany to back the push for accountability. Key issues include the establishment of a special international tribunal and the use of seized Russian assets to help finance the reconstruction of Ukraine. It seems highly unfair for the international community to pay for damage caused by Russia. Instead, Russia should fund efforts to rebuild Ukraine.

Rebuilding Ukraine will be an historic undertaking. German companies can be expected to play a major role in what promises to be the largest European construction initiative since the years following World War II. Reconstruction will enable millions of Ukrainian refugees to return home, while creating opportunities for thousands of German businesses.

Despite the disappointments and frustrations of the past fifteen years, Germany remains a key partner for Ukraine with a critical role to play in the twin tasks of winning the war and achieving a sustainable peace. The immediate priority remains weapons; Ukraine desperately needs everything from anti-aircraft systems to tanks and ammunition in order to defeat Putin’s invasion. Looking ahead, Berlin’s backing will be vital as Ukraine seeks to rebuild, integrate further into the EU, and attain the kind of comprehensive security guarantees through NATO membership that can prevent any repeats of Russia’s current invasion.

Alyona Getmanchuk is director of New Europe Center think tank and a nonresident senior fellow at the Atlantic Council’s Eurasia Center. An expanded German-language version of this article was originally published by Aus Politik und Zeitgeschichte (APuZ).

Joseph Webster — Mon, 01 May 2023 17:57:46 +0000

The Chinese wind industry’s expansion is an undeniably impressive story. The world’s second-largest economy is the world’s largest onshore and offshore wind market in terms of both generation and capacity. China is not only firmly embedded across wind energy value chains—particularly in the mining and processing of rare earth elements—but it is also at the forefront of developing the world’s largest and most efficient wind turbines.

Yet China’s emergence as the world’s leading player in wind has been costly. Beijing’s wind capacity deployment to less-than-ideal locations has been inefficient, while its failure to build corresponding transmission connections stunted growth in some of its windiest provinces. Moreover, Beijing’s acquisition of wind technology—sometimes by outright theft—has increased tensions with the West. China has risen to the top of the global wind industry, but at tremendous financial and diplomatic cost. China’s successes and failures provide lessons to other countries seeking to use their own wind industrial policies to address climate challenges and strengthen economic growth.

China’s expansive industrial policy

China’s total industrial policy spend comprised at least 1.73 percent of total GDP in 2019, more than four times that of the United States. China’s wind industry policies included enforcing localization requirements, using a feed-in tariff for initial sectoral development, employing massive direct and indirect subsidies, and obtaining—many would say stealing—foreign intellectual property.

China’s wind industrial policy began with feed-in-tariffs introduced in 2009 and domestic content requirements to achieve 1 percent of the country’s energy mix by 2010.

In addition to localization requirements and feed-in tariffs, China’s wind industry also benefitted from a range of direct and indirect industrial subsidies.

Chinese provinces often extend their own subsidies for wind energy. In 2021, Guangdong province issued subsidy standards for grid-connected offshore wind projects at 1500 Renminbi per kilowatt. At this scale, a similar program in the United States would yield about $109 million in subsidies for a 500 megawatt turbine, a remarkable level of support from a subnational government.

Chinese wind industrial policy’s supply chain secrets: subsidies for steel, ships—and even coal

The Chinese wind industry has received fillips from “cross-subsidies” for steel, coal, and shipbuilding.

Steel is an important cost driver for wind projects, accounting for about 90 percent of the materials used for an offshore wind turbine, which in turn represents nearly 40 percent of the installation cost for offshore wind projects. Steel is also a key component for onshore wind projects, although those installation costs vary far more dramatically.

In China, steel and coal are inseparable.

China’s steel production primarily employs blast furnace-basic oxygen furnace, which uses coal for 90 percent of the production processes. This reliance on coal makes China’s steel, which is heavily subsidized, highly carbon intensive.

Coal generation has long been subsidized by the Chinese government, with one estimate finding support of at least $37.7 billion in 2014; China’s total electricity sector subsidies stood at $30 billion in 2021, with much of that spending still directed to coal. Beijing also quadrupled the amount of new coal power approvals in 2022 compared to 2021, contradicting China’s climate pledges.

China’s steel-coal nexus has provided significant support for the development of its wind industry, but at significant environmental cost. To be clear: even China’s carbon-intensive wind turbines are orders of magnitude less polluting than coal or natural gas, and China’s wind turbine deployment is unambiguously a positive for the climate. However, these climate benefits are reduced by the Chinese wind industry’s dependence on a carbon-intensive, coal-consuming steel industry.

Finally, China’s steel and coal subsidies complement another industry vital for offshore wind: shipping. Beijing subsidized its shipping and shipbuilding industries to the tune of $132 billion between 2010 and 2018. Its ship manufacturing capabilities ensure it can produce wind turbine installation vessels and other ships for use in offshore wind deployment. China dominates this industry; in 2019, China accounted for about 55 percent of global shipbuilding orders, and employs 33 out of the 49 existing wind turbine installation vessels. Given its low-cost steel and extensive shipbuilding complex, China is extremely well-positioned to continue to deploy offshore wind rapidly.

Forced technology transfer and espionage

The PRC has obtained foreign intellectual property related to the wind industry via forced technology transfers and industrial espionage. In exchange for operating rights within China, Spanish company Gamesa was obligated by the Chinese government to train in-country competitors. As a result, the company’s share of the Chinese market fell from 33 percent in 2005 to just 3 percent by 2010. Many foreign companies saw their intellectual property stolen by Chinese firms, often with the support of Chinese intelligence services. For instance, American Superconductor Corp (ASMC), a computer systems supplier to wind turbines, had its source code hacked and its contracts with Chinese suppliers terminated in the early 2010s. Stories like ASMC’s abound throughout the wind industry.

China’s wind industrial policy has been, at best, a highly ambiguous success. China is indisputably the leader in wind energy markets, as it historically accounts for about half of all new wind installations by capacity. It is also the world’s leader, by far, in offshore wind deployment by capacity.

However, this progress has come at great and often unnecessary cost. China’s generous and holistic industrial subsides should have been deployed in a technologically agnostic manner, as much of its wind industrial policy spending was wasted. The Chinese wind market’s overall capacity factor has historically lagged other markets, with some research showing real capacity factors below 23 percent as late as 2019, compared to utilization factors of over 34 percent in the US market. This low rate is due in part to the stunted growth in China’s most wind-rich provinces in the early 2010s due to a lack of transmission capacity, leading to significant curtailment. China’s actual wind generation is much less impressive than its deployment of wind capacity.

Moreover, Beijing’s aggressive—often illegal—actions to secure wind energy intellectual property has alienated the West and provoked political distrust. Chinese leaders may now complain about economic de-risking, but their arguments ring hollow, as Chinese firms aggressively pushed Western companies out of their domestic wind market.

China’s wind energy industrial policy has ensured it is the world’s largest and most important wind producer, but it remains to be seen if the benefits will outweigh the considerable costs. Other countries considering their own wind industrial policies should apply lessons from China’s experience. To accelerate decarbonization, countries must be mindful of the unintended consequences of subsidies; nimbly adjust transmission networks to accommodate onshore and offshore wind generation; respect fundamental intellectual property rights; and use market mechanisms, such as a pollution fee on carbon. Otherwise, they risk misallocating resources and alienating vital partners, as China has done.

Joseph Webster is a Senior Fellow at the Atlantic Council’s Global Energy Center and edits the China-Russia Report. The opinions expressed in this article are those of the author.

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EnergySource Mar 31, 2023

Green investment takes the lead: Japan’s revamped approach in Africa

By Emi Yasukawa

Africa Energy & Environment

EnergySource Mar 30, 2023

The US clean energy transformation can’t happen at the expense of national security

By Francis R. Fannon

The pace of the energy transition has, to this point, depended on low-cost Chinese production. But the supply chains that have driven clean tech deployment jeopardize US national security and must be remade.

Energy & Environment Energy Transitions

EnergySource Mar 28, 2023

Country spotlight: Unlocking a high-energy future for Zambia

By Maia Sparkman, William Tobin

Smart private sector investment in Zambia could drive a high-energy, high-growth future as the country reforms. This could make Zambia a model for neighboring countries looking to advance their own energy transformations.

Energy & Environment Energy Transitions

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Russian soldier allegedly captured in Ukraine claims Gazprom formed military units

The post China’s wind industrial policy “succeeded” – but at what cost? appeared first on Atlantic Council.

Lithium drives the energy transition. Will Chile’s plan to nationalize production be a speed bump?

Ignacia Ulloa Peters, William Tobin — Sat, 29 Apr 2023 00:37:16 +0000

Chilean President Gabriel Boric caused a jolt on April 20 when he announced plans to partially nationalize his country’s lithium industry. This decision would grant the government 51 percent control of the country’s lithium production via a state-owned company created to oversee and participate in the mineral’s entire production cycle. The announcement generated controversy in Chile and abroad, with a range of key players speaking in favor or against the initiative. While it is true that instances of nationalization of natural resources often result in debilitated industries, Chile’s strong institutions, recognition of the imperative to partner with private industry, and previous success with mineral nationalization ventures create a positive outlook for the country’s ability to deliver. While this may be the only path forward for the lithium industry to progress, policymakers should exercise caution with similar approaches to other industries.

Chile is one of the highest-volume lithium producers in the world, producing 26 percent of global supply in 2021, and possesses the world’s largest proven reserves. With the energy transition underway and demand for the metal estimated to increase by 450 percent through 2050, the country is uniquely positioned to benefit from a technologically and commercially mature lithium industry that, to date, has struggled to grow.

While the nationalization of resources in Latin America regularly raises alarms within demand centers and investor groups, Chile has demonstrated success in nationalizing its other abundant mineral resource—copper. Codelco, Chile’s state-owned copper company, has high technical expertise and standards with its main issues deriving from its misfortune of declining resources, not from mismanagement. Chile currently ranks thirty-fourth and thirty-third on the Atlantic Council’s Freedom and Prosperity Indexes, respectively, reflecting its institutions’ strong commitment to transparency, accountability, and integrity in economic, political, and legal spheres. While Codelco’s past success could steward the creation of Chile’s state-owned lithium business, there is limited precedent that this approach could benefit other industries.

Opponents of the initiative argue that the move could jeopardize foreign direct investment in lithium development in the country and ‘kill the golden goose’ for Chile’s economic diversification. However, the decision to nationalize could deliver overdue clarity and provide transparent foundations upon which industry development can proceed, providing businesses and investors with a degree of certainty for future operations and arguably more predictability than had existed previously. Boric has stressed that no existing contracts will be altered without being the “fruit of an agreement” with SQM or Albemarle, the two existing lithium mine operators—and that existing contracts will otherwise be respected.

This announcement extends beyond national economics. Boric’s administration designed the proposal to directly address longstanding grievances, such as inequality and water rights, that were highlighted during Chile’s Estallido Social in 2019. While Chilean state-owned enterprises have a complicated history concerning the well-being of local communities, this plan’s priority and primary purpose is to ensure that the population benefits from the lithium boom.

For instance, Chilean Minister of Mining Marcela Hernando announced that private companies that want to take advantage of lithium must do so by direct lithium extraction (DLE) and not through brine evaporation, a system that involves an ecologic loss of two million liters of water for each ton of lithium carbonate produced. This comes in direct response to Chile’s decades-long drought, which has led to anxiety from local communities, particularly in the Atacama Desert, regarding lithium brine extraction’s intense water use. Interestingly, DLE technology companies have said that state support could prove beneficial for growing this technology in Chile’s lithium operations.

The expertise and infrastructure of existing private-sector enterprises will be a continuing feature of Chile’s lithium industry for the foreseeable future.

Provided that the national lithium company will partner with private lithium firms already operating, this initiative is also set to enhance the public-private partnership model, which according to the administration is key to the successful implementation of the national lithium strategy. In fact, it is necessary to include the private sector in this venture, as the process of identifying reserves, as well as progressing from brine to lithium carbonate—the product that is exported—is technologically intensive. The expertise and infrastructure of existing private-sector enterprises will be a continuing feature of Chile’s lithium industry for the foreseeable future.

In this scenario, the United States has the unique opportunity to collaborate with Chile to make the most of its natural resources while identifying ways to establish regional supply chain partnerships. As one of the United States’ free-trade agreement partners in the region, Chile represents a strong partner to promote the diversification of supply chains for raw materials associated with the manufacturing of electric vehicle batteries, in line with the goals of the Inflation Reduction Act.

More broadly, Chile has the potential to participate as a valued partner in creating a more robust, diverse, and resilient global supply chain ecosystem as the new energy system develops. To realize this vision, Washington should not treat Chile’s nationalization of lithium as an impediment, but rather distinguish it from other nationalization trends in the region. Engagement with Chile in building this partnership should focus on maximizing the value of the country’s resources. By the same token, Chile’s inclusion in these partnerships will be part and parcel of ensuring that it feels it is obtaining the best deal from its resources for its economy and citizens, a precursor for obtaining the political consensus for its lithium industry to bring critical supplies to global markets.

Existing mechanisms such as the Americas Partnership for Economic Prosperity and the Minerals Security Partnership present ideal fora to engage with Chile through remaking those supply chains. These channels can be utilized to facilitate private-sector-public-sector interactions between lithium industry participants and the government of Chile as well as the new national business.

Chile’s national lithium strategy, if successful, could serve as a model for natural resource exploitation across the region. However, it is too early to extrapolate this historically successful approach of nationalization from mining to other industries. Such international collaboration, and facilitation of public-private partnerships, may yet facilitate the sustainable and equitable development of this particular industry that has struggled to scale.

Ignacia Ulloa Peters is an assistant director at the Atlantic Council’s Adrienne Arsht Latin America Center.

William Tobin is a program assistant at the Atlantic Council Global Energy Center, where he focuses on energy and climate policy.

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Russian War Report: Updated Google Earth imagery details destruction in Mariupol

Digital Forensic Research Lab — Fri, 28 Apr 2023 15:07:47 +0000

Security

Google Earth updates to satellite imagery reveal destruction in Mariupol

Russia strikes residential building in pre-dawn missile barrage

Russian soldier allegedly captured in Ukraine claims Gazprom formed military units

A video has surfaced online showing a Russian soldier allegedly captured in Ukraine talking about military units formed by the state-owned energy corporation Gazprom. In the footage, he identifies himself as Alexei Tkachenko and claims to be a contractor for Russian private military company (PMC) Redut (“Redoubt”), where he “got through Gazprom.” Tkachenko claims that Gazprom created a military unit called Potok (“Stream”), which the energy corporation handed over to PMC Redut. He added that Gazprom also created two other military units named Fakel (“Torch”) and Plamya (“Flame”). According to Tkachenko, Gazprom handed over the Torch and Flame units to Russia’s Ministry of Defense, while giving Stream to Redut. The video footage then continues with Tkachenko telling a story on how he was wounded, left in the field by his compatriots, and crawled to Ukrainian positions. The author of the tweet wrote in the caption of the video that Tkachenko is a “first captured russian from the “Redut” PMC.”

It is unknown whether the soldier’s testimony is accurate or voluntary; as the Washington Post noted last year, the International Committee of the Red Cross considers the sharing of POW footage as prohibited by the Geneva Conventions. Ukrainian military intelligence previously claimed in February 2023 that Gazprom had created its own PMC.

According to Meduza, Novaya Gazeta was the first to report about Russian PMC Redut in 2019. Prior to Russia’s 2022 invasion of Ukraine, Redut was engaged in the protection of Stroytransgaz’s facilities in Syria, which is a Russian engineering construction company in the oil and gas industry. Based on sources that include “one of Redoubt’s own former commanders,” Meduza reported that “Redoubt, which still has a substantial number of combatants in Ukraine, is under the Russian Defense Ministry’s complete control.” According to an interview that the Gulagu.net project recorded with a former Redut contractor, the PMC was also backed by Russian oligarchs Oleg Deripaska and Gennady Timchenko.

—Eto Buziashvili, Research Associate, Tbilisi, Georgia

*A representative for Oleg Deripaska contacted the DFRLab and insisted that Deripaska has never provided any form of support, financing, or backing to any military companies or groups. He also took issue with referring to Deripaska as an “oligarch,” and added that Deripaska has consistently called for peace in Ukraine as well as for military spending to be reduced globally.

Google Earth updates to satellite imagery reveal destruction in Mariupol

Recently updated Google Earth imagery reveals the extent of the Russian bombing of Mariupol that occurred on March 26, 2022. The update, first reported by Meduza, also includes details of the dire condition in which the national drama theatre of Mariupol was left after the bombing. This facility was notably used for shelter by the civilian population and children, featuring the inscription “children” (“ДЕТИ“) in Russian in front of the theatre.

March 2022 Google Earth screengrab of the Mariupol drama theatre. (Source: Google Earth)

Other key locations featured in the imagery update include the Azovstal plant, which the Russian air force had struck. The plant operated as a stronghold for the Ukrainian resistance in Mariupol until May 2022. Google Earth imagery posted by Meduza also shows a line of civilians in front of the humanitarian aid established by United Russia.

The update also reveals how burial sites in Mariupol have expanded as a result of the Russian occupation of the city. Other OSINT sources including Planet Labs imagery posted on Twitter by Benjamin Strick of the Center for Information Resilience indicate how the Staryi Krym graveyard in Mariupol has been expanding under Russian occupation. According to estimates by the OSINT project GeoConfirmed, the cemetery could have grown by around 15,000 graves between May 2022 and April 2023.

Location of newly dug gravesites in the Starokrymske cemetery of Mariupol, Ukraine (Source: Google Earth; Annotations: DFRLab)

–Valentin Châtelet, Research Associate, Security, Brussels, Belgium

Russia strikes residential building in pre-dawn missile barrage

In the early hours of April 28, Russia launched a barrage of missiles on Ukraine, killing more than twenty people. A residential building was struck in the central Ukrainian city of Uman, leaving multiple people dead and wounded. In Dnipro, a woman and her three-year-old child were killed, according to the city’s mayor, Borys Filatov.

On April 27, the General Staff of the Ukrainian Armed Forces reported fifty-four attacks by Russian forces in Bakhmut, Marinka, and individual villages in the direction of Avda. On April 25, Ukraine said it recorded forty-three attacks by the Russian army over the preceding twenty-four-hour period. The geography of the attacks followed the pattern observed in recent weeks, with fierce battles continuing in Bakhmut and Marinka and separate assaults on positions around Avdiivka. Artillery shelling was recorded in the direction of Lyman and the area around Vuhledar, but Russian forces appear to be decreasing their attacks on Lyman.

According to an April 23 assessment from British military intelligence, the number of casualties among Russian personnel in Ukraine has likely decreased by about 30 percent in April compared to the high casualty period of January to March 2023. The reduced losses are likely due to the gradual curtailment of Russian offensive operations, which have failed to achieve their objectives, and the gradual transition to defensive operations.

Ukrainian forces shot down nine drones on April 24, six Iranian-made Shahed drones in the eastern direction, two Russian Lancet drones, and one operational-tactical drone in the southern direction. On April 25, one person was killed, and ten were wounded due to a Russian missile strike with an S-300 missile on the museum in central Kupiansk. A second body found later in the day was also attributed to the attack. On the same day, explosions were reported in the occupied town of Tokmak, according to Melitopol Mayor Ivan Fedorov, as well as in Kherson.

Meanwhile, five villages in Russia’s Belgorod region were left without electricity after Ukrainian shelling, according to Belgorod Governor Vyacheslav Gladkov. Reportedly, projectiles damaged power lines around Cheremoshnoe, Ustinka, Yasnye Zori, Bochkovka, and Rovenek.

Ukraine continues to diversify its arsenal with locally made weapons. Soldiers of the 68th Chasseur Brigade showcased the Ukrainian Shablya firing system. The remote-controlled robotic machine gun turret allows the operator to remain at a safe distance without exposure to return fire. These types of weapons are critical during military operations, such as those in eastern Ukraine, where soldiers are directly exposed to enemy fire.

Footage of newly produced Bulgarian Arsenal MG-1M machine guns, delivered by the Come Back Alive Foundation, has appeared online. The machine guns and ammunition were produced in 2023, with 1,460 guns purchased, and distributed to twenty-one combat brigades within the Ukrainian Army, along with 7.62 x 54r FMJ/SC ammunition. According to the foundation, the weapons were purchased for €6.5 million (USD $7.1 million).

Ukrainian engineers are closely examining Russian drones after changes in UAV design were observed. Serhiy Speshilov, head of the department studying robotic systems at the Center for Research of Captured and Advanced Weapons and Military Equipment within the Ukrainian army, said significant changes were noted in Iran-produced Shahed drones. According to Speshilov, the UAVs previously had relatively new microcircuits and chips, but recently there has been a degradation of components. Speshilov said this is due to the effect of sanctions. In one example, Speshilov’s team discovered a relay manufactured in Armenia in 1996. In addition, Speshilov noted the use of interference-proof satellite navigation receivers and said Ukrainian forces are working to counter the effects with anti-jamming equipment.

—Ruslan Trad, Resident Fellow for Security Research, Sofia, Bulgaria

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Kazakhstan could lead Central Asia in mitigating the world’s energy and food shortages

Margarita Assenova, Ariel Cohen, and Wesley Hill — Fri, 28 Apr 2023 12:00:00 +0000

Online Event Fri, April 28, 2023 • 10:00 am ET

Russia’s war against Ukraine has had significant economic and political repercussions across the globe, including energy shortages and growing food insecurity. The war has forced Central Asian states to emphasize their independence from Moscow and accelerate their economic diversification. Central Asia—comprising Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan—has the potential to mitigate global shortages of energy, food, and fertilizers, caused by Russia’s war of aggression.

The primary challenges for Central Asia and its Western partners remain diversifying export routes and expanding the capacity of alternative transportation corridors, especially the Trans-Caspian International Transportation Corridor, or the “Middle Corridor.” Kazakhstan is the leading producer of uranium ore in the world, grows 2 percent of the world’s wheat, and has major hydrocarbon reserves. Kazakhstan has the opportunity to lead Central Asia forward on the path to becoming an important supplier of energy, grain, fertilizers, and nuclear fuel to world markets.

The energy crisis in Europe spurred renewed interest in the long-planned Trans-Caspian natural gas pipeline. A potential United States and European Union ban on uranium civilian-reactor fuel exports from Russia could ensure Kazakhstan’s importance as a nuclear fuel exporter to Europe. To do this, Kazakhstan first needs to build its own conversion and enrichment facilities. This would allow it to double its share in the European market while utilizing the Middle Corridor.

By encouraging Western investment, the states of Central Asia can become an important force in global commodity markets. To this end, they should implement the recently signed far-reaching regional agreements on cooperation and integration, so that they are less susceptible to “divide and conquer” strategies from predatory foreign powers and can exercise greater leverage when negotiating as a bloc.

The US and the EU should also recognize that Central Asia’s energy and agricultural potential and resources make the region an area of strategic interest with promising business opportunities. The Central Asian states need to intensify their Western-oriented diplomatic outreach to attract support from state and private actors for investment and technological partnerships. Geographic proximity to Russia and China means Central Asian countries will always have economic relationships with Moscow and Beijing. But greater Western engagement in the region can diminish the chances for Russo-Sino cooperation in Central Asia.

Russia’s war against Ukraine has weakened its geopolitical position and the Western sanctions on its economy have opened up new opportunities for Central Asia to supply critical energy and food commodities to world markets. Kazakhstan, as the region’s largest economy and its largest producer of oil, uranium, and grain, is well-positioned to lead this transition.

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How can Kazakhstan and Central Asia help power and feed the world?

Central Asia has the potential to mitigate the global energy and food shortages that have been exacerbated by Russia’s war of aggression. What are the most significant challenges facing Central Asia’s energy and food export potential?

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Between East and West

Central Asia

The Central Asian Republics—Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan—are located at the nexus of Russia, China, South Asia, and the Middle East. Leveraging their critical geography, these nations are renewing their role as the crossroads of trade between the West and Asia—resulting in significant economic development, especially in the sectors of energy and natural resources. While moves toward reform and democracy have been made since independence in 1991, corruption and human rights issues remain prevalent throughout the region.

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UkraineAlert May 11, 2022

Kazakhstan cancels Victory Day in protest over Putin’s Ukraine War

Kazakhstan’s recent decision to cancel the country’s annual WWII Victory Day parade was a small but significant indication of Nur-Sultan’s opposition to the Russian invasion of Ukraine.

New Atlanticist Mar 23, 2022

Not just Russian oligarchs: Britain must block Kazakhstan’s kleptocrats from securing a safe haven

By Francis Shin

There is a strong chance to extend some of the regulatory reforms directed towards Russian oligarchs to also apply to the Nazarbayev family.

Central Asia Economy & Business

UkraineAlert Nov 30, 2022

As Putin retreats in Ukraine, he is also losing Kazakhstan

By Kamila Auyezova

Putin’s rapidly unraveling invasion of Ukraine is eroding Russian influence throughout the former Soviet Empire. This process of imperial retreat is nowhere more visible than in Kazakhstan, writes Kamila Auyezova.

Central Asia China

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Webster quoted in Ukrainska Pravda on commodity prices and China

mzandi — Thu, 27 Apr 2023 18:25:07 +0000

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Putin’s dreams of a new Russian Empire are unraveling in Ukraine

Mark Temnycky — Tue, 25 Apr 2023 20:09:04 +0000

Over the past year, Russian President Vladimir Putin has openly compared his invasion of Ukraine to eighteenth century Russian Czar Peter the Great’s imperial conquests, and has boasted of “returning” historically Russian lands. However, his dreams of a new Russian Empire are now in danger of unraveling as military setbacks in Ukraine undermine Moscow’s position throughout the entire former USSR.

The invasion of Ukraine has clearly not gone according to plan. Putin anticipated a short and victorious war that would extinguish Ukrainian statehood and force the country decisively back into the Russian orbit. Instead, his army has lost tens of thousands of soldiers and vast amounts of equipment while struggling to achieve its military objectives. With the war now in its fifteenth month, Russia is struggling to advance in Ukraine and finds itself subject to unprecedented international sanctions that pose a grave threat to the country’s long-term development.

Crucially, the faltering invasion of Ukraine has also undermined Russian influence throughout the post-Soviet region. Following the 1991 collapse of the USSR, Russia remained deeply reluctant to concede full sovereignty to the 14 non-Russian countries that emerged from the wreckage of the Soviet Union. While Baltic states Estonia, Latvia, and Lithuania soon began pursuing a path of Western integration leading to EU and NATO membership, Russia was initially able to maintain its dominant position in relation to most of the newly independent post-Soviet nations.

Over the past three decades, relations between Russia and its former Soviet vassals have varied greatly, with some welcoming continued strong ties and others seeking to turn away from Moscow. Putin has made no secret of his desire to revive Russian influence throughout his country’s former imperial domains, and has publicly lamented the fall of the USSR as the “disintegration of historical Russia under the name of the Soviet Union.”

The Kremlin has employed a mixture of carrot and stick tactics in order to retain and strengthen its influence across the former USSR. Measures have ranged from elite enrichment, customs unions, and security cooperation to trade wars, military interventions, and the creation of “frozen conflicts.”

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The 2014 invasion of Ukraine’s Crimean peninsula and Donbas region was a major landmark in Russia’s post-Soviet empire-rebuilding efforts, but the full-scale invasion of Ukraine eight years later was to prove the biggest turning point of all. Since February 24, 2022, countries throughout the former Soviet Empire have rallied in support of Ukraine and have sought to distance themselves from an increasingly isolated and humbled Russia.

Throughout the war, the three Baltic states have supplied large amounts of defense, financial, and humanitarian aid to Ukraine while welcoming thousands of Ukrainian refugees. Estonia, Latvia, and Lithuania have also been very supportive of Ukraine’s EU and NATO membership bids. During a recent Kyiv visit, Estonian PM Kaja Kallas underlined this backing, commenting, “For peace in Europe, we need Ukraine in the EU and NATO. The way to lasting peace is to end grey areas in European security.”

In the South Caucasus region, Russia’s status has clearly been diminished by the invasion of Ukraine and the embarrassing failures of Putin’s once-vaunted military. The Kremlin has long served as peacekeeper and arbiter between Azerbaijan and Armenia in the region, maintaining a significant military presence in Armenia. However, the war in Ukraine has prevented Russia from fulfilling its commitments, with Moscow unable to stop renewed fighting. This has encouraged the Armenians to reconsider their relations with Russia.

With Russian influence in decline, the Armenian government has deepened cooperation with both the United States and the European Union, including the opening of a new EU Mission in Yerevan. Armenia has also begun to distance itself from the Collective Security Treaty Organization (CSTO), the Russia-led military bloc bringing together six former Soviet republics.

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After Vilnius: What’s next on Ukraine’s path to NATO?

Eastern Europe NATO Security & Defense Ukraine

In Central Asia, the invasion of Ukraine has amplified existing distrust of Russia. This is most apparent in the region’s largest nation, Kazakhstan. Like Ukraine, Kazakhstan has a significant ethnic Russian population, leading to concerns that the country could become the next target of Russian imperial aggression. These fears have been further fueled by Kremlin propagandists, who have warned that Kazakhstan will pay a high price for the country’s alleged disloyalty to Moscow. Kazakh officials appear unmoved by these threats, and have recently canceled Victory Day celebrations for the second consecutive year in what many see as a direct snub to Putin.

Since the invasion of Ukraine began, Kazakhstan has attempted to strengthen ties with China, Turkey, the EU, and the US, while questioning its relationship with Russia and the CSTO. This geopolitical shift was perhaps most immediately obvious in summer 2022, when Kazakh President Kassym-Jomart Tokayev made international headlines by rejecting recognition of Russian territorial claims against Ukraine while standing alongside Putin at a flagship economic forum in Saint Petersburg.

Over the past fifteen months of the invasion, Kazakhstan has demonstrated its support for Ukraine via the donation of considerable quantities of humanitarian aid. Other countries throughout the former Soviet world have done likewise. Azerbaijan has sent nearly €20 million in humanitarian and medical assistance. Turkmenistan has dispatched a cargo plane filled with medicines and medical supplies. Uzbekistan sent several tons of humanitarian aid. Given continued Russian leverage in the region and Moscow’s traditional expectations of loyalty, these relatively innocuous moves should be seen as bold gestures that reflect a changing geopolitical climate.

The invasion of Ukraine has exposed the extent of Kremlin control over Belarus, with Russia using its neighbor as a platform for airstrikes against Ukraine and the failed Kyiv offensive of early 2022. However, Belarusian dictator Alyaksandr Lukashenka has so far resisted pressure to directly enter the war, despite being heavily dependent on the Kremlin for his political survival. With the Belarusian public and military both believed to be strongly against any direct participation in the invasion, Lukashenka finds himself in a difficult position. He understands that if he were to involve Belarusian forces in the war, this would likely lead to a strong and unpredictable domestic backlash.

Putin saw the invasion of Ukraine as a key step toward rebuilding the Russian Empire. Instead, it has forced countries across the former Soviet Union to distance themselves from the Kremlin. These countries feel able to do so in part due to the poor performance of the Russian army in Ukraine, which has made a mockery Moscow’s claims to military superpower status while reducing Russia’s ability to intimidate its neighbors. The invasion of Ukraine is still far from over, but the damage done to Russia’s regional influence and to Putin’s own imperial ambitions is already impossible to ignore.

Mark Temnycky is a nonresident fellow at the Atlantic Council’s Eurasia Center. He can be found on Twitter @MTemnycky.

Tantardini in Longitude on the geopolitics of energy.

Atlantic Council — Tue, 25 Apr 2023 13:56:00 +0000

In the April 2023 Issue of Longitude, Forward Defense Nonresident Senior Fellow Marco Tantardini published an article on the evolution of energy markets in the past decades and how they have reshaped global politics.

Energy independence not only has the potential to strengthen the US alliance with Europe, though an increasing amount of exported LNG [Liquified Natural Gas], but is also letting America pivot its focus to Asia, after decades of close involvement (and wars) in the Middle East

Marco Tantardini

Fellow

Marco Tantardini

Forward Defense Scowcroft Center for Strategy and Security

Italy Space

Forward Defense, housed within the Scowcroft Center for Strategy and Security, generates ideas and connects stakeholders in the defense ecosystem to promote an enduring military advantage for the United States, its allies, and partners. Our work identifies the defense strategies, capabilities, and resources the United States needs to deter and, if necessary, prevail in future conflict.

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The imperative of the Versatile Test Reactor for nuclear innovation

Jackie Toth, Khalil Ryan — Mon, 24 Apr 2023 15:21:32 +0000

In 2018, Congress passed legislation with bipartisan support to investigate the need for a domestic fast neutron irradiation testing capability, based on the argument that the existing test reactors in the United States would be insufficient to meet new demand for materials and fuels testing from the next generation of advanced reactors. However, in 2021, Congress zeroed out the budget for the Versatile Test Reactor (VTR), leaving the United States without plans to build a domestic advanced test reactor.

In this report, “The Imperative of the Versatile Test Reactor for Nuclear Innovation,” authors Jackie Toth and Khalil Ryan argue that the United States will lose its competitive edge against adversaries (especially Russia) if it lacks a fully realized nuclear energy innovation ecosystem, of which the VTR is a crucial component.

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AUTHORS

Jackie Toth is deputy director of Good Energy Collective, a research organization making the progressive case for nuclear energy to contribute toward a climate-constrained, equitable energy future. A former journalist, from 2015-2019 Jackie reported on federal energy and environmental law and regulations for CQ Roll Call and Morning Consult. Afterward, she led public opinion research and developed policy and communications strategies on nuclear energy and other technologies for the Climate and Energy Program at Third Way, a D.C.-based think tank. Jackie holds a B.A. in international studies and a minor in linguistics from American University.

Khalil Ryan is a policy analyst with the Good Energy Collective, focusing on a project concerning nuclear diplomacy to aid in the gradual decarbonization of global energy sources. Khalil’s main area of work is introducing civil nuclear energy to nations seeking to move away from the traditional carbon-based energy infrastructure through partnerships with the United States civil nuclear export regime. Besides his main focus of work, Khalil is also working on several short papers concerning the global fuel supply chain and the current leading global nuclear export regimes.

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Ellinas in Financial Mirror: More natgas investments needed

mzandi — Sun, 23 Apr 2023 18:30:27 +0000

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Webster in China-Russia Report: Is Western SIGINT deterring Chinese arms transfers to Russia?

mzandi — Sun, 23 Apr 2023 17:53:18 +0000

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Ellinas in Financial Mirror: Oil price volatile to output decisions

mzandi — Sat, 22 Apr 2023 18:33:14 +0000

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Springtime in Iran signals the renewal of an environmental movement

Shirin Hakim and Karen Makuch — Fri, 21 Apr 2023 18:06:06 +0000

Across diverse cultures, the arrival of Spring evokes literary connotations as a period of hope and revival. The term often appears in association with political upheavals—consider the example of the Arab Spring.

For Iranians, Spring is particularly significant as its arrival coincides with the start of the Iranian New Year, Nowruz, which translates to “new day.” It is celebrated with thirteen days of rituals centered around rejuvenation and nature. This year, however, the dawn of Spring was particularly bittersweet for most Iranians around the world, as it marked six months since the mid-September 2022 murder of Mahsa Jina Amini, while in police custody for “violating” the Islamic Republic’s dresscode. This ignited widespread protests across the country and coincided with a growing desire among Iranians for revolutionary change.

Although there has been a decline in the size and frequency of protests in recent months, the onset of Spring serves as a reminder that the goals of the Woman, Life, Freedom movement are perennial. Moreover, the transition to Spring and the anticipation of warmer months brings to light environmental issues that direct attention to the Islamic Republic’s ongoing failures.

Environmental degradation

As temperatures rise, existing seeds of discontent are likely to germinate. The Iranian environmental movement is deeply rooted in the nation’s social and economic issues. Given the country’s scarce water resources and disproportionate vulnerability to the impacts of climate change, environmental issues can act as a “threat multiplier” to the viability of the Islamic Republic.

Exacerbated by decades of isolation, mismanagement of local resources, and the consequences of a prolonged drought, Iran’s water crisis has entered a critical phase. Overexploitation of ground and surface water, compounded with the effects of climate change, have contributed to the desiccation of local bodies of water, dwindling groundwater reserves, and land subsidence. This water scarcity has been worsened by the nation’s heavily inefficient agricultural sector, as well as ill-conceived dam and hydraulic constructions and water transference schemes that have disrupted the natural flow of water. Iranian cities—provoked by increasingly frequent dust and sandstorms and by the use of poorly refined petroleum— routinely rank amongst the world’s most polluted. Moreover, the nation continues to experience significant biodiversity loss.

Environmental disasters, land degradation, dust, and sandstorms, as well as floods and drought, are driving patterns of internal migration within Iran. These transformations are contributing to increased pressures on urban settings, namely the nation’s capital Tehran, which has seen an average influx of a quarter million people per year for the previous two decades.

Currently, more than 70 percent of Iran’s population resides in cities, increasing ecosystem stress on urban areas. Demographic issues have further complicated Iran’s sustainable development potential, as population growth has strained the country’s already troubled labor market, exploited water resources, and contributed to excessive energy use. These challenges highlight how Iran’s environmental issues are deeply embedded in the nation’s social and economic realities.

In the wake of the Islamic Revolution and due to anti-Western sentiment, autarkic policy objectives emerged to insulate Iran in the face of sanctions. Self-sufficiency schemes enacted by the Islamic Republic have nipped opportunities for environmental progress in the bud. The regime’s manipulation of natural resources for short-term economic benefits at the price of long-term environmental stability is evident in almost every environmental issue the country now faces. As a sign of government opposition to environmental protection, wildlife conservationists have come under increased scrutiny and persecution in recent years. Most notably in 2018, Kavous Seyed Emami, along with eight of his colleagues, were detained on accusations of espionage. Emami died in prison under suspicious circumstances in February 2018 and the remaining conservationists are still in prison today.

As revolutionary demands have continued to develop since September 2022, reminders of Iran’s environmental decline have not subsided. In light of natural gas shortages in the winter months, various power plants in the country resorted to the burning of mazut, a highly polluting byproduct of refined petroleum. The United Nations Special Rapporteur on Human Rights and the Environment, David Boyd, referred to the use of mazut as a violation of the right to a healthy environment. Dangerously polluted air has led to the closure of businesses and schools in Iran, contributed to health conditions, and has had stark implications for economic productivity.

Adding to Iranians’ social and environmental concerns, citizens have been burdened by an escalating economic crisis. In February, the national currency, the rial, more than halved in value since the previous year, contributing to a rise in inflation exceeding 50 percent and fueling further discontent against the clerical establishment. While Iran remains under hefty economic sanctions, Ebrahim Raisi’s administration is under heavy scrutiny for mismanagement of the economy and endemic corruption.

‘For’ Iran’s environment

Following the death of Amini, Iran-based singer Shervin Hajipour wrote and performed what became a Grammy-award-winning song that has emerged as the de facto anthem for the Woman, Life, Freedom movement. The song includes several lines acknowledging Iran’s environmental decline, including anguish over worsening air quality, Tehran’s diminishing trees, and the threat of extinction posed to Pirouz—the last of three surviving critically-endangered Asiatic Cheetahs born in captivity in Iran.

Shervin was arrested and detained shortly after the song’s release and, in the following months, Pirouz died in captivity. The cheetah’s death ignited a national outcry and fueled increased resentment towards authorities for environmental mismanagement. The song encapsulates connections between the Woman, Life, Freedom movement and the environmental movement and underscores growing social unrest in Iran.

With warmer months ahead, many Iranians on social media are encouraging women and men to wear shorter clothing as an act of civil disobedience. Apart from the mandatory hijab, women are required to wear clothing that extends to their ankles and a manteau, a knee-length coat with sleeves that extend to their wrists. Although men are permitted to wear short-sleeved shirts, they are forbidden from wearing shorts. Increased efforts to defy these laws may add additional pressures on the regime. Since September 2022, many women have joined the revolutionary movement by removing the mandatory hijab in public spaces. In response, the government has initiated a brutal crackdown and committed to new security technologies that started surveilling citizens’ adherence to these rules beginning on April 15. Instead of containing dissent, this move has backfired and is fueling further defiance of these laws.

Yesterday, April 15, was a national day of protest in Iran organized by university student groups against the state's mandatory hijab-law, which the government is trying to broaden.

Here, a hijab-less woman poses by posters of Iran’s religious leaders.#WomanLifeFreedom pic.twitter.com/FkJU8qM5KR
— IranHumanRights.org (@ICHRI) April 16, 2023

Recent evidence suggests that associations between climate and social movements may be more integrally woven than previously considered. A publication in the Journal of Peace Research finds a statistically significant relationship between rising temperatures and the occurrence of urban unrest in Asia and Africa. The article directs attention to the Arab Spring and riots in India and Nigeria and concludes that, although it is not heat that causes urban uprisings, the economic, political, and cultural factors that motivate such incidents are more frequent and associated with greater violence during periods of warmer temperature.

Iran’s environmental issues have the potential to tap into communities that may not have already mobilized their support for the Woman, Life, Freedom movement. In previous years, Iran has witnessed increased protests relating to water shortages during the summer. While the ongoing movement remains focused on women’s rights, the importance of environmental issues has not been absent in calls for change. Opposition leader Hamed Esmaeilion has referred to the significance of the environment in his recent speeches. Furthermore, on April 1, prominent female political prisoners in Iran, including Niloufar Bayani and Narges Mohammadi, released a statement on the “urgency of the climate crisis,” calling on the Islamic Republic to ratify the Paris Agreement and transition to a low-carbon economy.

The Iranian government’s lack of reformation in the wake of the Woman, Life, Freedom movement, combined with the deteriorating state of the economy and escalating environmental concerns, makes conditions ripe for action. Rachel Carson’s 1962 book “Silent Spring” ignited a paradigm shift that spurred the global environmental movement and led to the formation of Earth Day in 1970—an annual event that is celebrated on April 22 and dedicated to raising awareness of environmental issues. As the culmination of Spring approaches, Iran’s perennial history of revolutionary discontent is likely to bloom.

Like the bees and flowers themselves, the pollination and blossoming of this movement remains dependent upon the interactions between the people and environmental conditions. In the words of Pablo Neruda, “you can cut all the flowers, but you cannot keep spring from coming.” As the Northern Hemisphere enters warmer months, Iran analysts and policy communities should recognize the nexus between climate and security issues and the possibility of a less than silent Spring.

Shirin Hakim is a Bretton Woods 2.0 fellow at the Atlantic Council’s GeoEconomics Center and an expert on environmental issues in Iran. Follow her on Twitter: @ShirinHakim.

Karen E. Makuch is a senior lecturer at Imperial College London’s Centre for Environmental Policy. Follow her on Twitter: @makuch_k.

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Virtual reality for global climate leadership

Peter Engelke and Rosemary Mann — Tue, 18 Apr 2023 21:25:51 +0000

A better future is possible. Virtual reality can’t solve the climate crisis, but it can incentivize leaders to build climate-resilient futures through substantive policy and investment.

This report explores the role of virtual reality (VR) as a policy tool that can shift leaders’ perceptions of the climate crisis. Authors Peter Engelke, deputy director and senior fellow for foresight at the Scowcroft Center for Strategy and Rosemary Mann, director of strategic initiatives and partnerships at the Adrienne Arsht-Rockefeller Foundation Resilience Center, examine how VR technology can be honed and applied to high-level global climate leadership. If the technology is leveraged impactfully, VR can drive innovative policy and investments by shaping the ways leaders understand the impacts of climate-altered futures.

VR is an innovative tool that can transform how leaders perceive climate change. Leading organizations, therefore, should embrace the technology as a starting point for structured, systematic, and ongoing engagement with global leaders.

By providing audiences with intense and motivating experiences to associate with climate-altered futures, VR can incentivize policy and investment aimed at adapting to climate change and building a more sustainable, resilient future.

Read the report

About Arsht-Rock and VR

The Adrienne Arsht Rockefeller Foundation Resilience Center (Arsht-Rock) engages in work with the gaming industry as a key climate intervention. More than three billion people globally are now “gamers,” making gaming a valuable tool to deliver messaging about responding to the climate crisis to a mass audience. VR offers a unique opportunity to impact high-level leaders through gaming by allowing them to virtually experience the human impacts of climate-altered futures. Arsht-Rock conducted a yearlong study on VR that led to three products: this report on VR’s potential as a tool to drive climate adaptation policy, a technical paper on best practices for building climate-related VR experiences, and a VR prototype.

About the Scowcroft Center for Strategy and Security

The Scowcroft Center for Strategy and Security works to develop sustainable, nonpartisan strategies to address the most important security challenges facing the United States and its allies and partners.

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Decarbonization solutions for addressing Europe’s green industrial policy challenge

Transform Europe Initiative — Tue, 18 Apr 2023 18:55:38 +0000

On March 20, the Atlantic Council co-hosted a high-level workshop on “Decarbonization solutions for addressing Europe’s green industrial policy challenge” in Paris with the German Council on Foreign Relations (DGAP) and Groupe d’études geopolitiques (GEG). The event was the second in a series of six (the first was held in Berlin in January) which aim to bring together policymakers, analysts, and the private sector to discuss decarbonization strategies in Europe.

Distinguished guests at the workshop included H.E Laurence Boone, Minister of State for Europe for the French Foreign Ministry; Ms. Kerstin Jorna, Director General of the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW); Mr. Olivier Guersent, Director-General of the Directorate General for Competition; Mr. Emmanuel Moulin, Director General at the French Treasury; and Mr. Benoît Potier, Chief Executive Officer of Air Liquide, among others. In addition to these guests, the Atlantic Council, DGAP and GEG were honored to host other key policymakers, analysts, and private sector representatives.

One year on from the Russian invasion of Ukraine, Europe has managed to mitigate the worst effects of the energy crisis and maintain its support for Ukrainians’ defense of their homeland. Participants noted the significant number of initiatives taken at the European level on a vast array of subjects, including diversifying imports, deploying clean energy, and building supply chain capacity. The conversation in Paris ranged from how to meet basic energy needs now to building a resilient net zero economy in the future, with a focus placed on industrial strategy, infrastructure needs, and scaling up public and private funding, and infrastructure needs.

Whereas participants at the first workshop in Berlin highlighted the successful cooperation between European member states in the face of the energy crisis, discussants in Paris underscored increasing tensions between member states on several vital issues. Attendees emphasized the crisis of trust between member states, evidenced by disagreements on electricity market reform, divergences on the role of nuclear and natural gas in the energy transition, state aid rules, and even the lack of progress made towards a Capital Markets Union. Some panelists argued that Franco-German disagreements on nuclear energy inhibit Europe’s ability to make progress in its energy transition, while others expressed concerns around the necessity of nuclear support schemes at the EU level. There were also diverging perspectives around how loosening the state aid rules would impact market unity.

Participants also emphasized the need for European cooperation, especially in building common energy infrastructure. Indeed, renewable energy deployment must go hand in hand with infrastructure investments, such as electricity grids, hydrogen pipelines, and electric vehicle charging stations. Panelists shared the view that, to meet these many goals, Europe would need to strengthen its infrastructure planning capacities, accelerate reforms in project permitting, and scale up access to funding if it is to meet its ambitious decarbonization objectives. Increasing and diversifying the number of long-term energy contracts signed with producers, such as contracts for difference and power purchase agreements, could help incentivize investments in clean power.

Looking beyond the continent, European participants described the United States’ Inflation Reduction Act (IRA) as a welcomed shift in US climate policy and positive shock for Europe’s own decarbonization efforts. Several participants argued that the IRA would encourage Europe to build its own resiliency in clean industry supply chains and open potential avenues of cooperation with the United States. But European panelists also expressed concerns regarding its impact on European industry due to the law’s national preference rules, seen as discriminatory against European manufacturers, even though the EU offers comparable, but perhaps harder to navigate incentives. This highlighted a remarkable shift in focus from the workshop in Berlin a few months prior, where policymakers and analysts had debated Europe’s capacity to meet energy demand. In Paris, however, the conversation focused not on energy supply, but on low-cost, low-carbon energy as a prerequisite for a competitive industry.

The Atlantic Council looks forward to continuing this workshop series throughout 2023.

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TEI leverages a robust body of work in strategic decarbonization.

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Ellinas in Cyprus Mail: Cyprus scores below EU average in 2022 competitiveness index

mzandi — Mon, 17 Apr 2023 18:16:43 +0000

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Ellinas in Cyprus Mail: Grid flexibility in Cyprus is critical for RES uptake

mzandi — Sun, 16 Apr 2023 17:43:00 +0000

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Ukrainian victory “could help ensure Europe’s future energy security”

Diane Francis — Fri, 14 Apr 2023 23:37:20 +0000

Ukraine could become the next European energy powerhouse, with enough natural gas reserves to replace Russian exports to Europe as well as enormous potential in hydrogen and renewable energy. However, development of the country’s energy sector has been impeded by Russian invasions in 2014 and 2022.

Oleksiy Chernyshov, who serves as CEO of Ukraine’s state-owned energy giant Naftogaz, believes Ukrainian victory in the current war with Russia could help ensure Europe’s future energy security. “In terms of overall reserves, Ukraine is second or third in size among European countries after Norway and the United Kingdom,” he says. This estimate does not include undersea gas potential in the Black Sea off Crimea, where preliminary drilling some years ago by Western multinationals indicated “enormous” deposits.

Ukraine has continued to expand production since the onset of Russia’s full-scale invasion in February 2022, with the country set to become self-sufficient in natural gas this year. Looking ahead, Chernyshov believes Ukraine’s domestic gas production can be further increased to replace Russian gas exports to Europe. “Theoretically, we can double or triple the production of natural gas even without Crimea, but we need big investment to do so. We need partners to increase the speed.”

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There was good news for Naftogaz in mid-April when The Hague Arbitration Tribunal ruled that Russia must pay the company $5 billion in compensation for some of the energy assets it unlawfully expropriated following the Russian military occupation of Crimea in 2014. Chernyshov describes the ruling as a “key victory” and says refusal to pay will result in court actions to seize Russian assets around the world. Billions more in claims are pending concerning Crimea’s offshore gas potential as well as Russian seizures of energy assets in other regions of Ukraine.

Today’s war in Ukraine is not just a fight against the resurgent authoritarian imperialism of Putin’s Russia. Due to the country’s vast gas, hydrogen, renewable, and nuclear power potential, Chernyshov argues that liberating Ukraine will also help guarantee energy security for the whole of Europe.

At present, about 80% of Ukraine’s natural gas production is located at sites in the Poltava and Kharkiv regions in the northeast of the country, which are under Ukrainian government control. The remainder is produced in western Ukraine close to Lviv. Military realities create significant risks, with some production sites less than 50 kilometers from the fighting. Total Ukrainian gas production is currently estimated at 18.5 billion cubic meters per year, with 13.5 billion produced by Naftogaz and 5 billion by other producers. Chernyzhov notes that this is more than any other country in Europe except Norway, which produces 100 billion cubic meters annually.

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Despite the ongoing war between the two countries, Russian gas continues to flow through Ukraine’s transit pipeline network to EU markets. However, with European customers increasingly looking elsewhere for their energy supplies, annual volumes have fallen to around 14.5 billion cubic meters.

Another major Ukrainian energy asset is the country’s natural gas storage capacity, consisting of underground facilities that were first developed during the Soviet era. “This is the biggest storage in Europe, is safe from attack, and could be used to store supplies from all over the world for use in European countries. Ukraine could be Europe’s energy bank,” says Chernyshov. “This would help provide energy security to landlocked countries like Austria, Slovakia, the Czech Republic, and others that have no sea access.”

Ukraine has asked the European Union to provide war risk insurance for this storage capacity in order to increase its use to pre-war levels. “Our storage is certified and in full compliance with the most recent European regulations,” notes the Naftogaz CEO. “The only thing missing is additional guarantees for commercial companies so that thousands will come back and utilize this capacity. This will allow Europeans to bank energy and save money.”

In addition to the country’s sizable untapped gas reserves, Ukraine’s other key energy advantage is likely to be hydrogen production, predicts Chernyshov. “This requires electricity and clean water, which Ukraine has in abundance. Ukraine is and will be a serious net exporter of electricity, but you cannot store it unless you convert it into hydrogen. And Ukraine has huge pipelines to Europe which can transfer hydrogen or anything in gas form. Hydrogen production is not cheap, but many countries want to get involved after our victory.”

Ukraine’s large land base and favorable climate also provide extensive opportunities for major wind and solar power projects. Chernyshov says the country’s enormous energy potential underlines Ukraine’s importance as a strategic partner for the EU. “Everyone must stop treating Ukraine as country that will require constant assistance in the energy sector. In fact, we are positioned to become an energy hub for Europe.”

Diane Francis is a nonresident senior fellow at the Atlantic Council’s Eurasia Center, editor-at-large with the National Post in Canada, author of ten books, and author of a newsletter on America.

Robert F. Ichord, Jr. — Wed, 12 Apr 2023 19:36:00 +0000

The March 20, 2023 summit meeting in Moscow between Chinese President Xi Jinping and Russian President Vladimir Putin, combined with the coinciding remarks of United Nations (UN) Secretary General António Guterres for a “G20 Climate Solidarity Pact,” provide important context for considering the role of South Asia and its energy position and prospects.

The countries of South Asia are caught in the geopolitics of “great power competition,” with India, Pakistan, Bangladesh, and Sri Lanka all abstaining on the February UN resolution condemning Russia’s invasion of Ukraine. They are also on the front lines of the climate crisis and are experiencing severe impacts from floods, droughts, and heat while continuing to grow their carbon dioxide emissions. As a low per capita income region, South Asia demands increasing energy supplies to foster economic growth for its large and growing population, which is approaching two billion people.

In its efforts to meet these needs, the region faces the triple challenges of energy security, energy equity, and environmental sustainability, termed the “energy trilemma” by the World Energy Council. This blog provides an overview of the difficult and complex situation faced by countries in the region and the market and geopolitical factors influencing developments there. It concludes that while countries are taking positive steps in the transition to a sustainable energy mix, they face the risk of backsliding in their policies and investment efforts.

While countries in Africa and Southeast Asia are entering into Just Energy Transition Partnerships with Western and international organizations, South Asian countries are instead being subjected to the consequences of China and Russia’s efforts to expand their political and economic influence in the region. In this complex geopolitical context, expanded US and G7 clean energy efforts are needed.

The state of play

Energy security
Energy security is an important concern since South Asia—a major importer of oil, gas, and coal—has become more dependent on the volatile global energy market in recent years. The region consumed about 7 percent of world primary energy in 2021, with about 85 percent of this in India. Growth in energy consumption since 2011 has averaged about 4 percent per annum.

India is the third largest global importer of crude oil and products with over 82 percent of its consumption imported. Liquefied natural gas (LNG) imports constitute about 45 percent of Indian domestic gas consumption, with the US providing about 17 percent of these imports. With the cut-offs of oil and gas exports to Europe after the invasion of Ukraine and ensuing sanctions packages, Russia has been desperate to find outlets for its oil, and India has used the opportunity to buy discounted Russian oil well below the $60 G7 cap price, saving last year by one estimate $3.6 billion in import costs. Reported crude oil imports from Russia in December 2022 were one million barrels per day or about 25 percent of India’s normal imports.

Pakistan and Bangladesh are looking at importing discounted Russian crude oil and refined products after March 2023, but it is not clear whether the discounts will match those of India. High LNG prices and lower demand resulted in decreased LNG imports by both (six and fifteen million tons reduction respectively in 2022 compared with 2021) as LNG suppliers were focused on replacing Russian gas in Europe. With China’s economic recovery spurring a rebound in LNG imports, Europe’s continuing efforts to diversify gas supplies and refill stocks, and no new major supply coming online until 2026 due to lead times in new liquefaction capacity projects (especially in Qatar and the United States, although the Freeport LNG facility in Texas recently returned to full production capacity after an explosion last summer), the prospects are for a tight LNG market in the next few years.

Although Bangladesh is moving to resume LNG imports with the recent easing of spot prices, it hopes to reduce natural gas imports and convert its regasification plants to handle green hydrogen by 2030. Pakistan is reconsidering its position on new gas power plants and further imports of LNG. India, however, seems to be continuing with plans to increase the role of gas in its energy mix with regasification capacity expected to increase from the current forty-two million tons to seventy million in 2030.

In the face of growing energy demand, increasing imports, and geopolitical and energy security concerns, South Asian countries need to ramp up their domestic clean energy development to limit import dependency, reduce poverty, and improve environmental performance.

Energy equity
Over seventy-seven million South Asians lack electricity. India, Bangladesh, Nepal, and Sri Lanka have all made major progress since 2010, connecting almost 350 million people. However, World Bank data suggests that Pakistan has made little progress in reducing its unserved population of around fifty-four million.

This problem stems from many factors, including the lack of a focused government effort, the financially weak position of Pakistan’s electricity distribution companies, devastating floods and glacial melt that have destroyed electricity infrastructure, widespread corruption, and the remote location and security issues of villages in the north and west. Proposals have been offered to create a Rural Electrification Board, as in Bangladesh, to spearhead a serious program to reach off-grid villages and introduce solar household and mini-grid systems. Yet progress remains slow.

In addition to conventional grid extension and the US Agency for International Development (USAID) and World Bank-supported system of rural electric cooperatives, Bangladesh also has pioneered a rural solar energy program. It is being carried out by the quasi-governmental Infrastructure Development Company Limited in cooperation with non-governmental organizations and local companies and with support from the World Bank, USAID, and other donors. This effort has helped to deploy over six million solar home and microgrid systems to over twenty million people. The World Bank believes it is the largest-off grid program in the world.

The Indian government also funds rural solar deployment, but private companies have increased their presence in this area. Notably, the Tata conglomerate has established a subsidiary, TP Renewable Microgrid, dedicated to microgrid development. They have installed 161 microgrids in their start-up phase and aim to deploy ten thousand.

Through its roll out of innovative business models and technology, the private sector has an important role to play when it comes to access and equity in the power sector, building on and stop-gaping government policies.

Environmental sustainability
The environment in South Asia is under tremendous pressure from industrial development, urbanization, population growth, and climate change. With the region accounting for about 8.6 percent of global energy-related carbon dioxide emissions in 2021, international attention has focused on the future of coal. India is the second-largest global coal consumer and where coal in 2021 accounted for 57 percent of primary energy and 71 percent of electricity generation. Although the Indian government is making progress on an ambitious diversification program, including five hundred gigawatts (GW) of renewables by 2030, the government does not envision the country reaching net-zero emissions until 2070. Further, the Central Electricity Authority’s plans call for twenty-five GW of new coal-fired capacity by 2027.

In Pakistan and Bangladesh, after building several coal plants with Chinese, Japanese, and Korean financing, the governments adopted coal moratoriums in 2021 and were on a path to substitute LNG, renewables, and nuclear for coal; however, energy security and price factors led Bangladesh in September 2022 to announce plans to add 4.3 GW of coal-fired capacity, and in February 2023, Pakistani Federal Minister for Energy Khurram Dastgir Khan reversed policy and called for ten GW of domestically-fired coal plants over the next decade. Whether these coal plant additions can be financed given these countries’ serious debt problems and the announced policies of China, Japan, and South Korea to stop financing overseas coal plants remains to be seen.

Despite these policy shifts, Pakistan continues to pursue the former Imran Khan government’s target of 60 percent hydro and renewable energy by 2030, while Bangladesh aims to reach 4.1 GW of renewables by 2030 and 40 percent clean energy (renewable, hydro, and nuclear) by 2041. The smaller countries of the region have set more ambitious targets. Nepal, with its large hydro capacity, has advanced its net-zero target to 2045 and Sri Lanka, despite its current dependence on oil and coal for two-thirds of electricity generation, embraced a 2050 target with 70 percent renewables by 2030.

The pursuit of nuclear power is a small but significant dimension of the energy transition plans in India, Pakistan, and Bangladesh, and these countries have turned to China and Russia for technology and financing. As part of an overall push to export its indigenous technology, China has supplied and brought online two Hualong One reactors in Karachi under a $6 billion loan. As part of its $120 billion global nuclear export program, Russia has provided two VVER-413 reactors which went into operation in 2013 and 2016 at Kudankulam and is working with India on four additional one thousand MW reactors. Russia loaned Bangladesh over $11 billion for two VVER-1200 V-523 units which are under construction at Rooppur and are expected to be completed by 2024 and 2025.

Protecting the region’s environment is critical for its human security; but cost and political interference make the line of equilibrium between clean and affordable energy hard to find—let alone to walk—for the countries of South Asia.

What should be done

In conclusion, global energy security and climate change issues will continue to play out in South Asia with Russia and China expanding their influence through oil, renewable, and nuclear technology exports and project financing.

As South Asian countries navigate the geopolitics of energy and address their energy trilemma challenge, it is critical that the United States, its allies, and companies expand their cooperation and energy investment in the region. The fall G20 meeting in India will be an opportunity to highlight Western intentions and offer concrete initiatives, such as when Japanese Prime Minister Fumio Kishida pledged $75 billion in regional investment for infrastructure and security as part of the “free and open Indo-Pacific” initiative during his recent visit to India.

As in the Indonesia Just Energy Transition Partnership agreement (co-led by the United States and Japan), Washington should partner with Japan and G7 allies on an expanded clean energy transition initiative in South Asia, with a possible endorsement at the G7 meeting hosted by Japan in May. Building on the US interagency Clean EDGE Asia Initiative and the five-year, $49 million USAID South Asia Regional Energy Partnership program, such an initiative might give special focus to the modernization and strengthening of the electricity transmission and distribution systems in the region. The goal should be to enhance reliability and resilience, improve financial viability, reduce technical and commercial losses, and increase system capacity to integrate the higher levels of intermittent renewables that the countries are aspiring to achieve.

The energy trilemma will represent a fundamental challenge to South Asia’s sustainable development for years to come. Strong government commitments, creative thinking and technology innovation, multilateral partnerships, increased Western support, and public-private collaboration can help this booming, emerging-market region power its people and industries in an efficient and affordable manner while also limiting damage to the environment and contributing to progress on global climate.

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

The South Asia Center serves as the Atlantic Council’s focal point for work on the region as well as relations between these countries, neighboring regions, Europe, and the United States.

The geopolitics of the energy trilemma in South Asia” class=”gta-horizontal-featured–img” />

SouthAsiaSource Sep 9, 2022

Experts react: Catastrophic flooding in Pakistan

By South Asia Center experts

More than one-third of Pakistan is underwater amid catastrophic climate change-induced flooding. South Asia Center experts provide their analyses of the situation.

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SouthAsiaSource May 23, 2022

South Asia’s climate crisis: Policymakers need to feel the heat

By Erum Haider

Few things unite South Asia more urgently right now than the climate crisis. We can only hope that policymakers are listening.

Climate Change & Climate Action Energy & Environment

The geopolitics of the energy trilemma in South Asia” class=”gta-horizontal-featured–img” />

SouthAsiaSource May 12, 2022

Rising sea levels and the climate crisis in Bangladesh, the Maldives, and Sri Lanka

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The South Asia Center brings together a panel of experts to discuss the effects of climate change on the economy, food and energy security, and migration in Bangladesh, the Maldives, and Sri Lanka.

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Ukraine’s energy sector survives winter

Suriya Evans-Pritchard Jayanti — Tue, 11 Apr 2023 20:28:00 +0000

The April 7 decision by Ukraine’s Ministry of Energy to reauthorize the export of electricity represents a symbolic victory on the energy front in the war with Russia. Ukraine banned electricity exports in October 2022 following the initial rounds of a Russian airstrike campaign that targeted the country’s civilian energy infrastructure in a bid to break Ukrainian resistance and freeze the country into submission. That the besieged country can now contemplate a surplus of power is cause for celebration after over six months of Russian attacks that left millions of Ukrainians in the dark.

With Putin’s invasion failing to make progress in the second half of 2022, Russia began systematically targeting Ukraine’s power and heating infrastructure in October with regular barrages of rockets, missiles, and drones. The impact of these airstrikes has been devastating. Every single Ukrainian thermal power plant (TPP) has suffered damage, along with most of the country’s hydroelectric plants.

In total, over 60% of Ukraine’s electricity generation capacity has been hit during the bombing campaign. A full 21 GW of generation capacity was offline as of March 2023. The Ukrainian electricity grid itself has been damaged repeatedly, with hundreds of transformers and transmission lines targeted.

Russia’s relentless infrastructure attacks have created challenging living conditions, with rolling blackouts regularly plunging much of Ukraine into darkness throughout the winter season. During the height of the airstrikes in December and January, Ukraine’s electricity deficit rose as high as 30%. Ukraine’s grid operator, Ukrenergo, imported emergency electricity from neighboring Slovakia, Poland, and Moldova. Shortages peaked in early February, when imports reached record highs.

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In March 2023, the United Nations Development Program (UNDP) estimated damage from Russia’s energy sector attacks at $10 billion and counting, of which $6.5 billion is damage suffered specifically by the Ukrainian power sector. As many as 12 million Ukrainians have been without power, water, or heating at any given moment throughout the bombing campaign.

Given the crisis conditions in the country amid the ongoing Russian invasion, the fact that Ukraine appears to have stabilized its power sector is astonishing. Even while Russia continues its energy infrastructure strikes, Ukraine’s power deficit has vanished, with a surplus of electricity reported in March 2023.

In part, this remarkable recovery is thanks to Ukrainian electricity consumption levels still being roughly 30-35% lower than before the war. This drop in demand is due to a combination of factors including the Russian occupation of entire regions of the country, damage to industrial activity, and a sharp drop in population as millions have fled for the safety of the EU.

However, Ukraine’s ability to stabilize the energy sector and restart nominal power exports of up to 400 MW is thanks to the country’s power sector workers. Ukrenergo has had over 1500 employees in the field at any given time over the past six months. Together with the company’s leadership, they have been performing grid acrobatics while implementing innovations and workarounds to keep the lights on across Ukraine.

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The private sector has also made a major contribution to Ukraine’s energy sector survival. DTEK, Ukraine’s largest private power company, has repaired over 700 energy facilities and 126 km of power lines during the past half year, with almost 200 teams of engineers working day and night. This has often meant taking risks and operating in extremely dangerous conditions. Three DTEK employees have died as a result of Russian airstrikes, while a further 28 have been wounded.

Ukrenergo, DTEK, and their energy industry colleagues have outperformed all expectations to prevent the collapse of the Ukrainian energy sector, but a huge amount of Ukrainian power infrastructure still requires repair before it can be used again. UNDP officials estimate that $1.2 billion is needed merely for emergency power infrastructure and equipment repairs.

Ukrenergo has been struggling especially to replace the large autotransformers that allow voltage transitions from transmission lines, with foreign partners failing to provide sufficient replacement equipment despite efforts. Repairing Ukraine’s energy sector is also considerably complicated by Russia’s precise repeat targeting of infrastructure already hit by drones and missiles. This makes reconstruction and maintenance a dangerous and continuing challenge.

Nonetheless, against the backdrop of an ongoing military conflict and a very difficult economic situation, Ukraine’s ability to reauthorize electricity exports, however nominal they may be, is deeply symbolic. In a war that has seen Ukrainian morale play a key role in keeping the country alive and fighting in defiance of Russia’s larger army and manpower, each victory such as this is crucial.

Suriya Evans-Pritchard Jayanti is a nonresident senior fellow at the Atlantic Council.

Ukraine resumes electricity exports in latest show of wartime resilience

Aura Sabadus — Tue, 11 Apr 2023 19:10:38 +0000

Ukraine’s state-owned energy sector operator Ukrenergo announced in early April that it was resuming commercial electricity exports to neighboring European countries for the first time since October 2022. The news has been widely touted as an example of Ukraine’s remarkable wartime resilience, and is also being seen as further evidence that Moscow’s six-month bombing campaign against the country’s energy infrastructure has failed.

A total of 330 megawatts of border capacity was allocated for exports to Moldova for 11 April. The volumes initially available for export should be enough to single-handedly cover almost half of Moldova’s daily needs. More capacity is expected to be made available to Slovakia, potentially helping Ukrainian energy companies to improve their cash flow position by selling at a premium in neighboring Central European markets.

Earlier in March, Ukrenergo and the European Network of Transmission System Operators for Electricity (ENTSO-E), which the Ukrainian energy giant joined a year ago, decided to increase the capacity for electricity trading with Europe from 700MW to 850MW. Cross-border capacity is under constant review and is expected to increase further in the upcoming months, deepening Ukraine’s integration with European electricity markets.

In addition to the existing ENTSO-E connection with Moldova, Slovakia, Romania, and Hungary, Ukraine also has a separate isolated power link with Poland, which it hopes to increase in the coming months. On April 10, a total of 80MW of capacity was allocated for westward electricity exports from Ukraine.

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The resumption of Ukrainian energy exports allows the country to build on progress made in the first half of 2022 during the early months of the Russian invasion. Ukraine and Moldova unplugged from the Russian and Belarusian grids just hours before Russia’s fall-scale invasion began on February 24. Both countries had been connected to these grids since the Soviet era. Within less than a month and against all odds, Ukraine and Moldova were then able to synchronize with Europe’s ENTSO-E system. By June 2022, Ukraine had even begun exporting electricity to neighboring Romania and Slovakia.

These energy exports proved to be a popular innovation for all parties. Crucially, they provided struggling Ukrainian energy companies with much-needed additional revenues. Falling domestic demand inside Ukraine made it possible for Ukrainian producers to provide cheap electricity to the country’s European neighbors, where prices last summer were two or three times higher than in Ukraine.

When Russia began a campaign of missile attacks against Ukraine’s civilian infrastructure in October 2022, the Ukrainian government decided to temporarily halt exports as part of efforts to support the country’s vulnerable domestic energy system. The recently established ENTSO-E interconnection played a vital role in safeguarding Ukrainian energy security during the winter months as Russia’s bombing campaign continued, allowing Ukraine to reverse flows and import electricity from Central Europe. This helped offset domestic electricity production losses caused by Russian airstrikes.

Eurasia Center events

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The rolling blackouts introduced during the winter months to help stabilize the Ukrainian energy system are now over and the situation in the energy sector as a whole appears to have stabilized. This is in part due to effective countermeasures introduced by Ukraine over the past six months to defend and repair the country’s energy infrastructure. It is also thanks to low seasonal demand along with an increase in renewable and hydro electricity generation.

This means that, at least until the start of the summer season when its nuclear power plants are scheduled to enter planned maintenance, Ukraine should be in a position to provide neighboring European countries with cheaper electricity. This could help to bring a degree of relief to a tight European market, which is still reeling from Russia’s deliberate gas curtailments throughout most of 2022.

The risk of further Russian airstrikes on Ukraine’s energy infrastructure is not completely over, of course. Scaled down attacks continue, while concerns remain that Moscow could attempt a major new campaign in the coming months, particularly as recently leaked documents indicate Ukrainian air defenses may be running dangerously low on ammunition.

At this stage, it is clear that Putin’s winter bombing campaign was unable to achieve its goals of crippling the Ukrainian energy system and forcing Ukraine back to the negotiating table. Instead, Ukraine has survived what was widely billed as the toughest winter in the country’s modern history and is now in a position to resume energy exports to the European Union.

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. You can follow her on Twitter @ASabadus.

Webster quoted in Carbon Brief on Russian crude oil exports to China

mzandi — Tue, 11 Apr 2023 14:16:18 +0000

The post Webster quoted in Carbon Brief on Russian crude oil exports to China appeared first on Atlantic Council.

Webster in The China-Russia Report: China-Belarus trade surged in January and February

mzandi — Sun, 09 Apr 2023 14:11:36 +0000

The post Webster in The China-Russia Report: China-Belarus trade surged in January and February appeared first on Atlantic Council.

Wald in The Hill: Stopping America’s LNG exports would hurt producers and send Beijing to Russia’s doorstep

mzandi — Thu, 06 Apr 2023 16:48:21 +0000

The post Wald in The Hill: Stopping America’s LNG exports would hurt producers and send Beijing to Russia’s doorstep appeared first on Atlantic Council.

Webster quoted in Canary Media on Taiwan’s energy security

mzandi — Thu, 06 Apr 2023 16:45:28 +0000

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Accelerating the energy transition to strengthen European energy security: Key barriers to overcome

Richard L. Morningstar, András Simonyi, Olga Khakova, Paddy Ryan — Thu, 06 Apr 2023 13:55:12 +0000

More than one year on from Russia’s full-scale invasion of Ukraine, Europe must work diligently to prevent potential supply shortages ahead of a challenging winter, while embarking on a long-term transformation of its energy system to secure it against geopolitical volatility. Russia’s weaponization of fossil fuel exports demonstrates the security vulnerabilities inherent in a hydrocarbon-based economy and present an opportunity to accelerate Europe’s climate ambition while tying decarbonization inextricably to energy security fundamentals. By transitioning to a low-carbon economy, Europe can diversify its energy system and avoid dependence on foreign imports. By the same token, it must also build capacity in its clean energy value chain to avoid overreliance on China in a decarbonized future.

In this issue brief, Global Energy Center experts examine the role of decarbonization in European energy security, the obstacles impeding clean energy development, and the opportunities for transatlantic collaboration towards low-carbon energy security.

Founding Chairman, Global Energy Center

I. Introduction

More than one year on from Russia’s full-scale invasion of Ukraine, Europe has risen to the occasion to replace a majority of its Russian gas imports, reduce energy demand, and deploy clean energy in a remarkably short period of time. However, a more difficult winter looms on the horizon, as the global market for liquified natural gas tightens amid resurgent demand in East Asia. Uncertainty lingers as to whether Russia’s remaining exports will continue to flow and whether temperatures will remain mild. Europe must work diligently to prevent potential supply shortages while remaking its energy system to avoid reliance on Russia ever again.

This energy transformation presents an opportunity to accelerate Europe’s climate ambition while inextricably tying decarbonization to energy security fundamentals. As the events of the past year demonstrate, energy security is central to national security. Russia’s weaponization of fossil fuel exports demonstrates the security vulnerabilities inherent in a hydrocarbon-based economy. By transitioning to a low-carbon economy, Europe can diversify its energy system and negate the possibility of reverting to dependence on Russian fuels. By the same token, it must also build diversified capacity in its clean energy value chain to avoid overreliance on China in a decarbonized future.

Natural gas will continue to be important for Europe’s energy system and its energy transition, as the authors described in a previous issue brief, part of a larger project on reducing reliance on Russian energy sources.¹ This paper, part two of four in the project, examines how accelerating clean energy and increasing energy efficiency can defend Europe against Moscow’s weaponization of energy and ensure long-term security and affordability in line with climate targets. The paper also examines the United States’ impactful role in optimizing these efforts through transatlantic public-private cooperation on clean energy supply chains, financing, regulations, and standards.

Europe will remain a net-energy importer for the foreseeable future, but it can address a large portion of its gas supply insecurities by reducing import demand through localized clean energy generation, energy efficiency and other decarbonization measures. The EU demonstrated higher climate ambition with the updated renewables percentage target for 2030 in the Renewable Energy Directive, but targets alone are insufficient to drive faster deployment at the national level. Diversifying Europe’s energy mix while reforming the electricity market can lower prices, increase market stability, and maintain industrial competitiveness. This can insure Europe against backsliding toward Russian energy while also supporting European ambitions for climate neutrality by mid-century.

Decarbonizing electricity generation can be achieved relatively quickly compared to doing so for other energy systems. Already in 2022, wind and solar generated more electricity in Europe than gas for the first time. Notably, record solar generation of 203 terawatt-hours represented the equivalent of 35 billion cubic meters (bcm) of gas demand foregone last year.² Increasing clean baseload generation and energy storage is still needed to balance renewables’ intermittent generation on the grid. More must be done to ensure that hydropower, batteries, geothermal, and nuclear—among others—are expanded and extended to ensure a clean, reliable, and secure power grid in Europe.

In addition to expanding clean energy, other decarbonization strategies will be needed to bolster energy security. Retrofitting buildings to improve energy efficiency can further reduce demand for electricity and heat, thereby reducing reliance on Russian gas. Further down the line, electrifying transport and integrating low-carbon fuels into heat-intensive industry can further cut demand for Russian energy. Building supply chains is also necessary to ensure that Europe does not again become reliant on a single supplier for clean technologies and critical raw materials.

A clear roadmap for low-carbon energy security in Europe has emerged. To proceed at a pace demanded by the current crisis, a number of roadblocks to the deployment of clean energy and energy efficiency must be addressed. Transatlantic cooperation could play a pivotal role in doing so.

II. Regulatory Reforms

Two separate varieties of regulation are holding back investments in clean energy: permitting and electricity market design. Regulatory reforms can reduce investment uncertainty to accelerate clean energy deployment across Europe.

In its current state, the permitting process creates a significant hurdle for increasing the stock of clean power generation, much like in the United States. In Europe, permitting an onshore wind facility can take as long as a decade.³ Regulatory uncertainty took a significant toll on the wind power sector in 2022. Despite being the single largest source of renewable electricity in the European Union, only sixteen gigawatts of new wind capacity were added in 2022, only a modest increase from 2021. Moreover, turbine orders fell 47 percent and no single offshore wind project reached final investment decision.⁴ Creating faster and more predictable permitting procedures can get more projects past the final investment decision phase.

The European Union is aware of the permitting roadblock and has acted swiftly to address it. The Commission’s REPowerEU plan—unveiled in May 2022 and approved by the European Council in December—introduces emergency permitting regulations that require onshore wind and solar project decisions be made within two years and shifts the burden of proof away from developers and toward public agencies. In addition, the plan deploys geospatial data to outline areas of low environmental risk; in these cases, the permitting process may be further shortened to a single year.⁵ The proposed Net-Zero Industry Act would supercharge these efforts by further fast-tracking strategic clean energy technologies.

Europe’s emergency permitting measures are a good start, and offer a model for reform in places like the United States. More measures can add to this model’s success, including increasing staffing for permitting agencies—a perennial source of delay in the process—and broadening the scope of locally generated energy technologies relevant to the emergency measures.

Permitting is far from the only regulatory hurdle impeding clean energy deployment. Emergency measures at the EU state-level, including windfall levies, have created uncertainty for clean energy investments.Specific measures across member states compound the market distortion. Some member states have instituted different tax levels for different technologies, an arbitrary means for the state to pick winners and losers that can frighten investors. Other states have introduced levies that ignore the “profit” part of a windfall tax, often taxing the revenue of companies on long-term contracts that do not enjoy windfall-level profits.

Reforms at the European Union level are needed to create greater certainty in electricity markets. Efforts are underway in Brussels to restructure the electricity market to reflect the cost of production more accurately by removing gas as the de facto price benchmark. This change could remove the uncertainty created by price volatility and member states’ various consumer-support schemes, which introduced new taxes on clean energy producers, even though it could eliminate the large profits otherwise enjoyed by renewables producers prior to the imposition of the windfall levy, thereby potentially impacting investment capacity. To mitigate against this risk, EU member states will be able to offer long-term power purchase agreements and contracts for difference, which can spur investment through steady—if unspectacular—profit assurances, under the latest proposal. However, it will be important that these national-level support schemes do not distort the single market across Europe.

III. Public Financing

In addition to encouraging private investment, Europe must also boost public financing to achieve clean energy and energy efficiency objectives. Europe has a strong track record on energy subsidies and can build on that history to accelerate an energy-secure, decarbonized economy.

In 2020, EU and member state subsidies for renewables and energy efficiency totaled €95 billion, before falling slightly in 2021.⁶ Since then, the market environment has changed significantly with the introduction of the Inflation Reduction Act (IRA) in the United States, which provides $369 billion (€350 billion) in subsidies for clean industries by 2030. Although the intent of the IRA was not to threaten Europe’s green industries, its emphasis on onshoring the manufacturing of key clean energy technologies has invigorated trade tensions between the European Union and United States, as European leaders have raised concerns about investment flows moving across the Atlantic.

The European response to the US law—the Commission’s Net-Zero Industry Act, part of its Green Deal Industrial Plan—aims to marshal existing EU funding facilities toward producing 40 percent of EU cleantech demand within the bloc by 2030. The proposal does not include new funding to incentivize clean tech production, but instead leverages existing EU funding and relaxes state aid rules, which normally limit member-state subsidies to national industry to prevent distortion within the European Single Market. Additionally, the plan seeks to simplify project permitting and optimize approval for funding Important Projects of Common European Interest.

The state aid proposal may be the plan’s most contentious element. The capacity to finance industrial subsidies varies widely among EU member states, and the two largest member states—Germany and France—have accounted for nearly 80 percent of the European Commission’s state aid waivers since the rules were altered following Russia’s invasion of Ukraine.⁷ Italy, despite being Europe’s number two industrial economy, faces borrowing costs that are nearly 2 percent higher than Germany’s.^⁸ EU Internal Market Commissioner Thierry Breton has proposed EU loan guarantees as a way to level the playing field, but fiscally conservative member states have resisted.⁹

EU member states must also consider the joint public investments needed to enable decarbonization. Aging interconnections and insufficient capacity are impediments to the private investment needed to create secure, decarbonized energy systems. Massive quantities of renewable energy generation await interconnection; in Poland alone, solar capacity of twenty gigawatts is idle waiting for permits to connect to the grid.¹⁰ Beyond building out capacity, Europe must invest in new grid-management systems that can facilitate complex demand-response schemes and absorb generation from prosumers, which are households and businesses that contribute to energy supply with their own resources such as rooftop solar panels or batteries.

IV. Transatlantic Collaboration

The United States has a strategic interest in maintaining the cohesion of its allies to limit backsliding as the Russia-Ukraine war draws out. Also, to address climate change, the world needs to scale up clean industry in every jurisdiction possible. The United States thus has an interest in seeing its allies build up these industries in the same manner it aspires to under the IRA, and collaboration in these objectives can be of mutual benefit. By working productively with the EU and member states in support of Europe’s green industrial ambitions, Washington can help mend ties after the IRA and ensure that the law creates a “race to the top” on “friendshored” clean industry, rather than a transatlantic zero-sum game. Key to these efforts should be recognizing products from the other jurisdiction as friendshored under the respective legislation, as well as collaborating on upskilling workers for a low-carbon economy through partnerships on “Net Zero Academies.”

European states have the wherewithal to support industry and are supporting consumers through the current crisis. Member states have spent nearly €800 billion since the autumn of 2021 to subsidize energy bills. Redirecting that funding toward investments that can lower energy prices over the longer term can provide a more sustainable path toward energy-market normality. As gas prices fall, ending price-support subsidies and replacing them with subsidies for heat-pump installation or building retrofits can reduce the need for future emergency measures, particularly for politically sensitive users like industry.

While Europeans will bear the financial responsibilities for these measures, Washington can leverage the US private sector to great effect. The US Export-Import Bank should prioritize financing for exports to Europe of key technologies, like heat pumps, that the United States can provide cheaply and quickly to boost European supply. Ultimately, while the United States should respect Europe’s desire to grow its own on-shore clean industry, measures that focus on enabling a transatlantic cleantech trade will bring mutual benefit. Longer-term solutions should seek to enable an approach based on cooperation across the supply chain.

To enhance the energy security of its allies and turbocharge its global climate ambitions, the United States should collaborate with Europe on commercializing emerging technologies that can provide firm power to achieve a zero-carbon grid, including geothermal, carbon capture, advanced nuclear fission and fusion technologies, and many others. Such collaboration would be of mutual benefit, and by exchanging best practices both sides can find the right policy framework to bring new technologies to market at scale. For example, the European Commission’s announcement of a hydrogen bank that will connect consumers with producers offers a model for how to create the offtake necessary to commercialize new technologies.

Multilateral efforts exist to catalyze this exchange of technology and related policy, including the Three Seas Initiative, US-EU Energy Council, Mission Innovation, US-EU Trade and Technology Council and the Partnership for Transatlantic Energy Security and Climate Cooperation (P-TECC).

These multilateral forums can also facilitate the exchange of best practices on grid management and energy-efficiency standards. US National Laboratories can provide expertise and advise European governments on creating next-generation grid systems that can meet the demands created by electrification, intermittency, and cyber vulnerabilities. The United States and Europe can also strengthen cooperation on energy-efficiency investments by exchanging national and subnational best practices such as the United States’ standards-setting Energy Star program that signals to the private sector what to produce.

V. Clean Energy Supply Chain

Realizing a secure low-carbon European energy system requires a scaled-up and diversified supply chain for clean energy technologies. Already, supply chain bottlenecks are impeding the growth of renewable energy in Europe. In 2022, the European wind industry experienced cost increases of as much as 40 percent; contracts for wind power, however, have largely remained fixed, chilling investment.¹¹

The price stability of raw materials is now a key constraint in clean-power deployment. Nickel, a vital metal for wind turbines and batteries, is heavily impacted by the war in Ukraine. In 2021, Russia accounted for 42 percent of EU nickel imports.¹² In 2021, Russia supplied 17 percent of EU copper imports, a metal central to electrification, among other applications.¹³

Additionally, through its grip on uranium supplies, Russia also looms large in Europe’s nuclear energy sector. Russia supplies 20 percent of the uranium imports that power Europe’s nuclear reactors, the bloc’s largest source of carbon-free power, which are responsible for a quarter of the bloc’s electricity.¹⁴ Russia also has a monopoly over global commercial sales of high-assay low-enriched uranium (HALEU) needed for advanced reactors. New nuclear fuel supply chains are needed, and if the United States, Canada, and other like-minded partners are able to move forward rapidly on plans to deploy small modular reactors in Europe, advanced nuclear could weaken Rosatom’s influence over nuclear operations, despite the Russian state-controlled company’s plans to deploy small modular reactors domestically.

Russia’s central role in the nuclear supply chain has shielded Rosatom from international sanctions. A bid to introduce sanctions on the company at the one-year anniversary of the war failed to gain traction in the European Council.¹⁵ Rosatom operates eighteen reactors in the European Union, and has a monopoly on nuclear power in five EU member states. Two more Rosatom reactors are being constructed in Hungary, and an additional two are about to come online in Slovakia.¹⁶ Implementing enduring sanctions and providing long-term offtake agreements with alternative nuclear fuel suppliers can give investors the confidence to devote resources to this sector.

In addition, Russia enjoys a commanding position in the supply chain for more emergent clean technologies. In palladium and platinum, key components for hydrogen fuel cells, Russia accounted for 43 and 14 percent of global production, respectively.¹⁷ Russia could thus still play a pivotal role in the hardware for a European hydrogen economy, presenting a critical political risk that must be urgently addressed.

Europe’s divorce from Russian hydrocarbons must not merely swap a fuels dependency for a metals one. Nor should Europe swap one monopolistic supplier for another; where Russia does not dominate the European clean-technology metal supply chain, China has an even more formidable grip.

China controls most of the global midstream refining capacity of important clean-technology metals. It supplies the European Union with 47 percent of its natural graphite and 93 percent of its magnesium—both critical to battery technologies—as well as 98 percent of the rare earths elements that are used in permanent magnets for wind turbines and electric vehicle motors.¹⁸ Further along the supply chain, China accounted for 95 percent of Europe’s solar imports, and Europe’s own solar industry relies on chips and other inputs originating from China.¹⁹

Europe faces a significant dilemma. To reduce its demand for Russian energy, it must deploy cleantech as quickly as possible. At the same time, it must avoid becoming overly reliant on a single supplier that can provide these technologies—and the raw materials underlying them—at low cost and with high capacity. In other words, Europe needs China in the short term in order to limit the inflationary consequences of disengaging with existing market incumbents, but must build out its clean energy supply chain to reduce its reliance on China in the longer term. As European policymakers like Commission President Ursula von der Leyen have rightly noted, decoupling from China is not a realistic policy, but de-risking Europe’s economic relations with the country is a necessity.

Europe must be aware of the longer-term risks and act to mitigate them. A forthcoming Critical Raw Materials Act provides a starting point to remedy this situation. The act will aim to increase and diversify the supply of metals needed for the EU’s green and digital transformations by identifying new resources and projects inside and outside the EU. The plan sets a requirement that 10 percent of EU consumption of strategic raw materials be mined within the bloc and that 40 percent be processed within the EU.²⁰

On-shoring of strategic portions of the value chain in Europe, the United States, and other like-minded partners is important for energy security, setting standards on sustainable resource governance, and maximizing the economic benefits of localization for heavy and difficult-to-transport cleantech assets like batteries. However, that does not preclude cooperation on strategic supply chain issues.

The March 2023 agreement between Presidents Joe Biden and Ursula von der Leyen to explore allowing EU-produced minerals to qualify for IRA tax credits through a US-EU trade deal on clean-technology metals provides a valuable starting point for aligning transatlantic supply chains to emerge, where possible, and spur investments in both jurisdictions.²¹ The United States’ own efforts under the IRA and the previous Infrastructure Investment and Jobs Act to subsidize US-managed critical supply chains provide another boost to transatlantic trade in raw materials. Additionally, transatlantic cooperation on critical minerals will be vital to the EU’s goal to phase out the sale of new petrol and diesel cars starting in 2035.

By cooperating through multilateral initiatives like the US-led Minerals Security Partnership and Environmental Resource Governance Initiative (ERGI), the United States and Europe can work together to disseminate best practices in the sector and help partners in the developing world grow their own strategic mineral industries in alignment with these standards, diversifying the global marketplace and building the resource capacity needed to support global decarbonization efforts. By integrating these partnerships with investment initiatives like the European Union’s Global Gateway and the Group of Seven’s (G7) Build Back Better World, the United States and European partners can work to catalyze investment in clean energy resources across the world and outcompete China as it seeks to accumulate raw materials without regard for environmental and labor standards.

Post-war Ukraine can be an important source of metals to power Europe’s clean energy industry. Ukraine is the world’s sixth-largest producer of graphite, and with one of the world’s largest supplies of graphite reserves, Kyiv could increase output and chip away at China’s market dominance in Europe. Ukraine also has significant reserves of copper, lithium, and cobalt, which could be of strategic importance for Europe after the war.²² Looking ahead, Ukraine can be a critical player in Europe’s drive for decarbonized energy security, and this topic will be the subject of our third and final issue brief in this series.

V. Conclusion

To realize low-carbon energy security in Europe, policymakers must remove the roadblocks curtailing rapid deployment of clean energy. Chief among those roadblocks are the regulatory hurdles that slow down permitting and investment, market structures that discourage private capital investments in clean energy, and complications with the clean energy supply chain that make projects too costly. For each obstacle, the United States can play a positive supporting role in removing barriers and ensuring a speedy rollout of clean energy to stiffen its allies’ resolve against Russian aggression.

Europe needs to streamline and clarify its regulations to encourage investment in its clean energy sector. By streamlining rules and building capacity for quicker permitting, projects can be built in a timelier manner, and investors from the continent and beyond can proceed with greater clarity. Implementing market reforms at the European level can likewise create greater certainty for business and prevent the distortions created by unilateral member-state actions.

In tandem with Europe’s efforts, Washington can play a more significant role in catalyzing financing for projects on the continent, including through the Export-Import bank’s ability to steer the US private sector toward areas of significant strategic need in the European energy system. Such moves will help coalesce a common European green industrial strategy.

Transatlantic partnership to build capacity, resilience, and sustainability in the clean-technology supply chain can weaken adversaries’ control of the resources needed to achieve low-carbon energy security. By working at a global scale to set standards for resource governance and tie these standards to investments in clean energy metals and processing, the United States and Europe can diversify the market for these strategic commodities and ensure that supply chain complications do not provide an obstacle to energy security and decarbonization efforts.

Europe and the United States have a unique opportunity to work together amid a hydrocarbon supply crisis to build the foundations for a cleaner and more secure energy system to combat the specters of both climate impact and energy market volatility. To combat climate change and the threats of malign actors looking to bend the geopolitics of energy to their own ends, it is vital that partners on both sides of the Atlantic seize this opportunity with both hands.

Authors

Staff

Richard L. Morningstar

Geopolitics & Energy Security Oil and Gas

Fellow

András Simonyi

Deputy Director, European Energy Security

Energy & Environment Europe & Eurasia

Staff

Olga Khakova

Assistant Director, European Energy Security

Geopolitics & Energy Security Europe & Eurasia

Staff

Paddy Ryan

Energy & Environment Energy Transitions

ACKNOWLEDGEMENTS

The Atlantic Council would like to thank our donor, the Smith Richardson Foundation, for supporting our work on this project.

This issue brief 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 issue brief’s conclusions.

The authors would like to thank Jonathan Joyner and Maxwell Zandi for their assistance with this project.

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The post Accelerating the energy transition to strengthen European energy security: Key barriers to overcome appeared first on Atlantic Council.

Webster in The Diplomat: Could the US block Russian oil exports to China? Yes, but it’s a bad idea

mzandi — Wed, 05 Apr 2023 16:40:45 +0000

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Wald joins NPR to discuss the cut in oil production and what it means for US-Saudi relations

mzandi — Tue, 04 Apr 2023 15:53:04 +0000

The post Wald joins NPR to discuss the cut in oil production and what it means for US-Saudi relations appeared first on Atlantic Council.

Khakova joins BBC World to discuss the US-EU Energy Council

mzandi — Tue, 04 Apr 2023 15:53:01 +0000

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Ellinas in Cyprus Mail: Fears of an energy price surge are real

mzandi — Sun, 02 Apr 2023 16:56:56 +0000

Women Leaders in Energy Fellow

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Israeli-Arab cooperation on agriculture, water, and food security starts with building on existing innovations

Daniel B. Shapiro — Fri, 31 Mar 2023 22:18:56 +0000

The N7 Conference on Agriculture, Water, and Food Security—which I helped organize—convened in Abu Dhabi on March 14-16 with participants from each of the N7 countries: Bahrain, Egypt, Israel, Jordan, Morocco, Sudan, and the United Arab Emirates (UAE). They were joined by attendees from Tunisia, Indonesia, and Burkina Faso, extending far beyond the Middle East and North Africa region. Plus, for the first time, an N7 Conference included Palestinian participation.

Water scarcity, the challenges of desert agriculture, and food insecurity are problems that are common to all these countries. Even so, this was the first opportunity for all of them to come together to discuss how to tackle these issues.

The depth and diversity of the projects that the participants conceived show how the climate crisis in these societies has given rise to a set of issues around which there is much consensus and a true openness to addressing them together. The ideas that had the most currency among participants were those that represented shared solutions, drawing on each country’s strengths and capabilities, that could be executed across the region. In many cases, the participants demonstrated that powerful solutions are already in the field, but their application in broader regional frameworks will make a material difference.

Take wastewater management. Israel has developed technologies and protocols for the use of treated sewage water for agricultural purposes. It is an important efficiency that ensures multiple uses of significant quantities of water. But applying the technology and Israel’s approach, without modification, would not be effective in every other location. Specific details such as the soil chemistry in which the reused water is deployed, the types of crops it irrigates, and education campaigns taking into account local cultural factors all have bearing on how successful these techniques will be in other countries.

Eliminating food waste is another area that calls for regional approaches. Most N7 countries have some programs—either government- or private-sponsored—to rescue food that would otherwise rot or be discarded. But much more can be achieved if the countries work together with cross-border public-private partnerships, harmonize food safety standards, liberalize and increase efficiency of trade in agricultural commodities, and fast-track crisis management and information sharing protocols—all designed to help N7 countries ensure that food gets to where it is needed.

Applying existing research and expanded training to unique conditions in each country to improve food security also received extensive attention. There is no shortage of expertise in desert agriculture in these countries, but what works in one set of geological and climactic conditions, or with one set of crops, may not succeed when those variables change. With precise experimentation and training, the N7 countries could improve the productivity of cereals and fruit trees by 30 percent in five years and reduce crop losses to pests and diseases by 20 percent in the same period.

All of these projects require the pooling of resources, talent, intellectual capital, and creativity across the boundaries of the N7 countries and beyond, coupled with the ability to influence policymakers by bringing them practical solutions. That work will be especially driven by those former British Prime Minister Tony Blair, in his address to the conference, called the “change-makers,” mostly from the younger generation.

The collaborative atmosphere of the conference was notably warm, as these scientists, entrepreneurs, and policymakers forged personal connections that can translate into longer-term relationships. That included an outing to the Abrahamic Family House, the UAE’s newly opened compound with a mosque, a church, and a synagogue that symbolizes interfaith coexistence.

Even in a period of significant regional tension, governments gave their backing and encouragement to these discussions. Israeli National Security Adviser Tzachi Hanegbi, an attendee at the N7 Conference on Education and Coexistence in Morocco in December, engaged the conference in a virtual discussion. Israeli Ambassador to the UAE Amir Hayek was a constant presence.

Nawal Al Hosany, the UAE’s permanent representative to the International Renewable Energy Agency, and Kristofer Hamel, who leads the Food Security Initiative for the UAE as it plans to host the twenty-eighth United Nations Climate Change Conference of the Parties (COP28) later this year, addressed plenary sessions.

From the United States’ side, US Ambassador to Israel Thomas R. Nides and Principal Deputy Assistant Secretary of State for Near Eastern Affairs Yael Lempert—who leads US efforts to advance the Negev Forum—and multiple congressional supporters of the Abraham Accords from both parties addressed the forum virtually. They included House Foreign Affairs Committee Chairman Michael McCaul, Senator Cory Booker, Senator Joni Ernst, and Representative Brad Schneider.

What this participation tells us is that officials charged with managing relationships in the region see value in the work of such Track 1.5 conferences—that is, including government officials in an unofficial capacity along with non-governmental experts. This conference, hosted by the N7 Initiative (a partnership between the Atlantic Council and the Jeffrey M. Talpins Foundation) with the support of the UAE government, mostly consisted of sessions conducted under the Chatham House rule of non-disclosure to ensure the comfort of participants and promote open exchanges between them. At a time when many official exchanges seem stalled or are moving slowly, these kinds of exchanges can have outsized value in finding areas of shared interest and forging common bonds.

Daniel B. Shapiro is director of the N7 Initiative and distinguished fellow at the Atlantic Council’s Middle East Programs. He is a former US ambassador to Israel.

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The US and Argentine presidents left the most important words unsaid

Isabel Bernhard — Fri, 31 Mar 2023 21:57:15 +0000

US President Joe Biden and his Argentine counterpart Alberto Fernández met on Wednesday in a discreet but strategically significant White House visit. Both sides’ official readouts listed a litany of topics covered: Argentina’s debt relief, democracy, food security, technology, exports, and Russia’s war in Ukraine. Yet in doing so, Biden and Fernández sidestepped significant discussion—at least in what they revealed publicly—of two related themes crucial for US-Argentina relations in the long run: lithium and China.

The US-Argentina relationship is increasingly characterized by mutual interest in developing lithium deposits and in defining China’s role in Argentina, in the latter case both in the area of China’s growing lithium investments and in other areas. Wednesday’s meeting coincided with the two hundredth anniversary of bilateral ties, but for this long-standing partnership to continue to grow, each side will have to clearly articulate its national interests and find consensus on those important topics.

Argentina, with one of the world’s largest lithium reserves, has received renewed attention considering lithium’s importance in electric vehicle and grid storage batteries, essential technologies that will be needed at large scale for an energy transition. The country has over twenty-eight lithium projects under exploration, including thirteen ongoing or announced projects with Chinese investment since 2018. Two of the thirteen Chinese projects are valued at or above one billion dollars, a significant promise of funds at a time when Argentina’s economy is contracting.

The Biden administration has also set its sights on lithium acquisition, naming the mineral as a strategic component of its proposed “Made in America” supply chain. Because of this domestic focus and particularly constraints in the 2022 Inflation Reduction Act, the United States has thus far been unable to accommodate Argentina’s efforts at greater bilateral lithium collaboration. If current trends continue, Argentine lithium could be largely channeled either toward Argentine national development or Chinese economic and energy growth, leaving the United States out of this critical mineral market. The Biden-Fernández conversation was a missed opportunity to demonstrate greater US flexibility on lithium sourcing and underscore how US and Argentine interests align on this theme.

Beyond lithium investments, the interest the United States and Argentina share in defining China’s role in Argentina was another key topic left publicly unsaid, even if the ideal scope of Chinese engagement differs for each country. For the United States, in an age of geopolitical competition, any US ally’s engagement with China draws increased scrutiny. Over the past year, attention has turned to Argentina’s agreement with China to build a nuclear power plant and its participation in Beijing’s Belt and Road Initiative.

For Argentina, China remains a strong trade and investment partner, and the country’s public and private sectors are strongly focused on deepening opportunities for exports. In future encounters, Biden and Fernández—or other top officials from the respective countries—should dedicate part of their discussions to further parsing the other’s posture on Chinese engagement. Hearing Argentina’s rationales for engaging with China first-hand would greatly help the United States craft competitive alternatives that fulfill US and Argentine interests.

Fernández may be seeking a second four-year term in October. In an election year, voters are looking for tangible deliverables, which he will not receive from this week’s Biden meeting alone. Without substantive bilateral engagement on two crucial long-term topics, Fernández will return to Argentina with limited guarantees for the future, independent of how discussions develop around restructuring the country’s International Monetary Fund loan. Ultimately, managing Argentina’s critical mineral resources and triangulating between Beijing and Washington will be a long-term challenge for whoever the country’s next president may be.

Isabel Bernhard is an assistant director at the Atlantic Council’s Adrienne Arsht Latin America Center.

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Green investment takes the lead: Japan’s revamped approach in Africa

Emi Yasukawa — Fri, 31 Mar 2023 13:30:00 +0000

Countries have been trying to shift toward an investment-based approach toward Africa for at least a decade. African countries face a $100 billion annual shortfall in infrastructure financing. And while the Chinese Belt and Road Initiative outperformed the world, Chinese lending has been in decline since 2016.

Thus, the various “Africa+1” summits held in 2022 placed significant emphasis on investment and trade deals. The summit between Africa and the United States, which took place in December 2022 after an eight-year hiatus, was a result of the reframing of Africa’s importance to the United States. The Deal Room at the summit struck private sector investments and partnerships worth $15.7 billion. The UK-Africa Investment Summit emphasized the role of British businesses in enabling Africa to reap the benefits of the green industrial revolution. India, the fifth-largest investor in the continent, views the green economy as a source of new opportunities. Furthermore, in March, at the second International parliamentary Conference “Russia-Africa” in Moscow, President Putin said that Russia “has always given and would continue to give to cooperation with African countries,” with an Africa summit planned in July.

Notably, Japan also stepped up. At the Eighth Tokyo International Conference on African Development (TICAD) summit in Tunisia last summer, Japan made a $30 billion pledge, to be financed by both the public and private sectors over the next three years, surpassing its previous commitment made in 2019. The new Green Growth Initiative with Africa (GGA) was launched with a dedicated fund of $4 billion combining public and private financing, aspiring to steadily expand climate change mitigation and adaptation business through proactive investment. The initiative was accompanied by a series of memoranda of understanding (MOUs) between Japanese and African partners.

Despite Tokyo’s political commitment to Africa, trade relations with Africa have been sluggish since the beginning of the 2010s as China and India grew as economic powers. Japan’s market share fell from seventh (over 4 percent) in 2000 to seventeenth (less than 2 percent) in 2018. In 2020, Japanese Official Development Assistance (ODA) to sub-Saharan Africa accounted for only 7.8 percent of all Japanese ODA and has been on a downward trend for the past two decades. While there has been debate over increasing ODA to sub-Saharan Africa in response to the international security environment, with the larger infrastructure gap to fill today, ODA will still remain a limited tool for the growing green infrastructure financing in Africa.

The silver lining for Japan is revamped private interest toward green growth for Africa and the more flexible role of the public in incentivizing and structuring such interests.

Japanese companies with a presence in Africa see “resources/energy” as a promising business arena, doubling the percentage for “natural gas and oil,” according to a recent survey. Major trading houses that have the most local subsidiaries in Africa among Japanese companies, such as Toyota Tsusho and Sumitomo Corporation, are actively investing in renewables and green supply chains. These companies are also exploring opportunities in the green hydrogen value chain. Toyota Tsusho Corp recently acquired SoftBank’s renewable energy unit and announced “Green Economy” agreements at TICAD. The company’s Africa-based businesses doubled their sales in the past five years, reaching 1 trillion yen in 2022. Sumitomo Corporation is partnering with Namibia’s national power utility NamPower to produce ammonia from green hydrogen, with a feasibility study anticipated to be completed by the end of 2023.

Japanese commercial banking institutions have also recalibrated their interests. These interests are incubated by Africa-based institutions such as the Africa Finance Corporation (AFC), a pan-African infrastructure solution provider with an approximately $2 billion investment portfolio and a track record of making climate change adaptation and mitigation investments. AFC secured $389 million through a samurai bond, a type of bond issued in Japan by a foreign entity and denominated in yen, which offers a way for foreign issuers to access Japan’s capital market; many Japanese megabanks participated, and the issuance “was significantly oversubscribed.” Another example is Mizuho Bank—the third-largest financier by assets in Japan and the first major Japanese lender to pledge to stop financing new coal mining projects—which joined the African Hydrogen Partnership (AHP) as its first Japanese member in 2022. Mizuho signed an MOU during TICAD with Namibian Investment Promotion and Development Board for the development of an African green hydrogen hub in Namibia. With Japan as the second-biggest hydrogen patent holder (24 percent) following the EU’s 28 percent, the hydrogen economy is becoming a new frontier platform for Africa-Japan engagement. AFC and Mizuho are in agreement to co-finance infrastructure projects in Africa, and the catalytic role of Africa’s institutional partners will be key in alleviating fears over project bankability.

While Japan still lags in the mobilization of blended financing, it is becoming a viable and strategic instrument to lower risks and incentivize private interests. In particular, the mobilization of a public insurance scheme to structure financing is a critical component of the aforementioned GGA. Egypt’s future onshore wind farms near the Gulf of Suez (announced in December 2022 and March 2023) are being co-financed by a multinational consortium of banks led by Japanese public and commercial banks. These projects are part of Japan’s LEAD Initiative and will receive the highest commercial risk insurance coverage by Nippon Export and Investment Insurance (NEXI). Japan aims to formulate 1 trillion-yen scale deals in total through the LEAD Initiative portfolio by 2025. Although the LEAD Initiative is currently limited to projects in the MENA region, it has been designed to broaden project eligibility for loans, and projects may qualify for this category regardless of whether they involve Japanese exports or investments. Acceleration of this program will help de-risk projects and catalyze investments.

With Japan’s chairmanship of the G7 sure to be defined in large part by heightened concerns over energy security after one year of war in Ukraine, it is imperative that Japan maintains the momentum generated from the promises made at the 2022 TICAD and charts a distinct course from the previous decade while building relationships with countries in Africa. Japan should catalyze mechanisms to incentivize and structure green investment, such as the LEAD Initiative as laid out in the GGA, and look to build out blending financing capabilities. While challenges remain, increased private interest and a flexible public role present a positive outlook for Africa-Japan relations in the future.

Emi Yasukawa is a member of this year’s Women Leaders in Energy and Climate Fellowship at the Atlantic Council. She is the senior researcher of congressional affairs at the Embassy of Japan in Washington, DC. The views and opinions expressed in the article are those of the writer and do not necessarily reflect the views or positions of the Government of Japan.

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Ellinas in Energia: Impact of global development on the European natural gas market

mzandi — Thu, 30 Mar 2023 19:08:07 +0000

The post Ellinas in Energia: Impact of global development on the European natural gas market appeared first on Atlantic Council.

The US clean energy transformation can’t happen at the expense of national security

Francis R. Fannon — Thu, 30 Mar 2023 17:57:27 +0000

The greatest achievements in US history happened through considerable costs, shared sacrifice, and courage. Victory in World War II, the moon landing, and the defeat of the Soviet Union were years-long efforts that cost the nation greatly but have been celebrated around the globe for generations. During these great national challenges, US leaders were honest about the costs and grounded the country in shared ambition, girded with moral purpose.

It’s time for the United States to lead the global clean energy transition in the same way.

For years, US and European politicians have lauded the consistent decline in the cost of renewables and batteries to increase public support. The World Economic Forum noted that the cost of electricity from utility-scale solar photovoltaic panels plunged 85 percent from 2010 to 2020.

This price reduction correlates with China’s state industrial policy and control of more than 80 percent of global solar manufacturing. The International Energy Agency (IEA) stated that “China has been instrumental in bringing down costs worldwide for solar panels, with multiple benefits for clean energy transitions.”

But China’s role in clean tech cost reductions cannot be recognized anymore without acknowledging—and condemning—how those reductions were achieved: through state-sponsored intellectual property theft, human rights abuse, environmental destruction, and predatory investment practices. The FBI concluded that the “Chinese Communist Party are a grave threat to the economic well-being and democratic values of the United States.”

The United States is conflicted. Policymakers want cheap Chinese clean energy goods but recognize that such reliance undermines US economic strength and security. This conflict yields perverse results, like the waiving of justified tariffs even after the Commerce Department concluded that Chinese firms violated trade rules.

The United States must not jeopardize its national security priorities out of fear of slowing climate progress. And US success cannot be dependent on China, the world’s greatest and ever-growing climate polluter. Instead, the United States should develop a secure, resilient, and responsible clean energy supply chain. Leaders speak about the energy transition as virtuous; we must ensure that the means are as well.

The United States should address this now, as US companies reorient their supply chains from the ground up. The IEA found that the clean energy transition will require an exponential demand growth in critical minerals while also noting that the US permitting system inhibits timely domestic production.

Meanwhile, the Chinese Communist Party has spent over a decade amassing critical mineral mines around the world, and localizing processing and manufacturing at home. President Joe Biden acknowledged that “China controls most of the global market in these minerals.”

The current US administration understands this fact and has taken some notable actions. The Inflation Reduction Act (IRA), for example, included $370 billion worth of “carrots” to encourage domestic clean energy manufacturing. Yet, the Treasury Department is wrestling with how to interpret language in the IRA that restricts federal incentives for electric vehicles (EVs). The law only permits subsidies for EVs if 40 percent of their critical minerals were mined or processed in the United States, or a country with which the United States has a free trade agreement (FTA). The law prohibits subsidies if materials are sourced from China and other malign actors.

Following a meeting with President Biden, European Commission President Ursula von der Leyen said that the EU would qualify for IRA subsidies. Yet many of Europe’s EV Gigafactories are owned by Chinese Communist Party-affiliated companies.

As currently written, the IRA’s subsidy test may create loopholes that could open the door for unscrupulous laundering-like activity. For example, an enterprising commodities trader in an FTA country could potentially import and minimally process Chinese metals and qualify for US subsidies.

The administration should make clear that moving prohibited goods through a friendly port does not—and should not—qualify for US taxpayer-funded subsidies.

Instead, the United States should adopt a focused and prescriptive interpretation that applies to countries and companies, both foreign and domestic. To qualify for subsidies and other federal incentives, companies should have to disclose their critical minerals and processing supply chain. This is the only way for the United States to really know where and how its clean energy goods are produced.

Those who refuse to share this information should be barred from receiving subsidies. After all, if a company chooses to do business with cheaper Chinese inputs, then it already enjoys a cost advantage.

US policy should help make choosing the right path profitable. And we must ensure that the benefits of the US market and federal taxpayer-funded incentives only accrue to those who can demonstrate a transparent, secure, responsible supply chain. Chinese firms have repeatedly failed that test.

Republicans and Democrats are united on the China threat. The administration should build on that rare bipartisan consensus. The United States should close loopholes and prohibit US taxpayer funds from benefiting our greatest strategic adversary. To do otherwise could politically imperil the IRA and substantively undermine our strategic goals—to increase US security and build a responsible clean energy supply chain.

Frank Fannon served as the inaugural US assistant secretary of state for energy resources. He is currently managing director of Fannon Global Advisors, a consultancy finding opportunity in geopolitics and the energy transition, and a nonresident senior fellow at the Atlantic Council Global Energy Center.

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I was part of the Israeli National Security Council. Climate change has been an important security challenge for years.

Efrat Minivitzki Thein — Thu, 30 Mar 2023 14:55:47 +0000

As the global climate continues to warm—with implications that touch every facet of governance—more and more countries are taking the national security challenges associated with climate change seriously. Israel has been doing so for several years.

In 2019, I began working on climate change issues and was then appointed as the first-ever director of climate change policy at the Israeli National Security Council (NSC). The creation of the role was a significant step in recognizing climate change as a matter of national security, and our inter-agency team worked hard to address its various implications.

The decision to establish a climate change department at the NSC was long overdue. It was the outcome of intensive work and internal discussions in parallel with extensive analysis and research, which highlighted the various opportunities and risks that climate change poses to Israel’s national security. The department was eventually established following the recommendation of an NSC task force.

Naturally, the Israeli government decided to treat climate change as a national security issue because of its impact on different aspects of Israel’s security. For example, climate change could lead to more severe and frequent natural disasters—such as floods and wildfires—which could destabilize national infrastructure and lead to the mass displacement of people in the region. In addition, climate change could significantly intensify existing conflicts, such as those over water resources – something that is especially scarce in the Middle East – and could create new economic, social, and political tensions on issues such as food scarcity.

The NSC’s role in addressing climate change implications was critical, as it had the mandate to coordinate and integrate policy across government agencies and ensure that policies are aligned with national security priorities. As I started my new role at the NSC, I decided to convene an inter-agency team, bringing together representatives from various ministries, including the Ministry of Environmental Protection, Ministry of Defense, and the Ministry of Foreign Affairs. The NSC also facilitated broader consultations, engaging representatives from various NGOs, academia, and the private sector, to ensure a comprehensive approach to the challenges that could arise. One of our goals was to reach a consensus among the various aforementioned stakeholders. This included thoroughly reviewing existing work plans and strategies and identifying areas that required further action.

The newly established department has also played a critical role in assessing the impact of climate change on Israel’s national security. This includes monitoring the latest findings on climate change by worldwide experts and international organizations, assessing opportunities and risks for Israel, and developing strategies to assist in the mitigation and adaptation of national and international efforts.

Our team also engaged in strategic discussions on how agriculture, water, and food security are reflected in Israel’s national security policy, and on ways that relevant ministries dealt with them. These three areas are connected and have a significant impact on each other. Our policy recommendations are designed to address the various challenges for these sectors in the face of climate change and to ensure food security for the Israeli population.

The Ministry of Agriculture is responsible for developing policies to promote sustainable agriculture and food security. The NSC works with the ministry and other non-governmental organizations (NGOs) to develop policies that address the impact of climate change on agriculture. Taking advantage of Israel’s unique technology advantages, farmers are encouraged to increase usage of precision agriculture to optimize crop yields while reducing the use of water and other resources. This policy was aimed at improving the efficiency of agricultural yields while reducing the negative impact of agriculture on the environment.

Food security is a critical issue for Israel, given its dependence on food imports and the potential impact of climate change on global food production. The NSC has worked with different ministries and organizations to promote policies aimed at increasing food security, such as developing new varieties of drought-resistant crops, promoting sustainable farming practices, and increasing the use of locally produced food.

While significant progress has been made in addressing these issues, there is still much to be done. The government must keep investing in research and development to ensure that Israel remains at the forefront of innovation in agriculture, water management, and food security. Additionally, policies will need to continue to evolve to address emerging challenges, such as the impact of climate change on pests and diseases that affect crops and the need to reduce greenhouse gas emissions from agriculture.

From March 14 to 16, the N7 Initiative, a partnership between the Atlantic Council and Jeffrey M. Talpins Foundation, held a conference on agriculture, water, and food security in Abu Dhabi. The productive discussions between experts from Israel and ten Arab and Muslim countries demonstrated that there was an appetite for common approaches addressing these climate-driven challenges. Working together on water technology deployment, trade policies, and improved desert agriculture practices were at the heart of these discussions.

However, Israel’s experience of addressing climate change as a national security challenge is also an approach that bears sharing with its regional partners. Among other things, a consensus around climate change as a threat to national security could incentivize governments to adopt, fund, and implement a wide range of the proposals initiated at the N7 Conference and similar gatherings with focus and urgency.

Efrat Minivitzki Thein is a nonresident senior fellow at the Atlantic Council’s N7 Initiative in the Middle East Programs. Thein spent the last fifteen years working for the Israeli government.

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Russia faces long economic decline as isolated Putin turns to China

Diane Francis — Thu, 30 Mar 2023 14:29:59 +0000

In a rare public admission, Russian President Vladimir Putin told government officials in Moscow this week that sanctions imposed over the invasion of Ukraine could indeed have a “negative impact” on the Russian economy. The warning is in stark contrast to Putin’s usual upbeat denials, and hints at Russia’s darkening economic outlook amid a perfect storm of mounting international isolation, rising costs, and falling revenues.

Russia’s economic woes are a result of the faltering Ukraine invasion, which is now in its second year with no end in sight. Western countries have responded to the war by imposing unprecedented sanctions on Moscow while also seeking to dramatically reduce their dependence on Russian energy.

The Kremlin now finds itself caught in an east-west vice, with the democratic world steadily cutting Russia off economically while China and India take advantage of Moscow’s weakened position to import Russian fossil fuels at deeply discounted prices. With access to Western technologies blocked and European customers turning away, Russia looks to be heading toward a future as a resource colony supplying energy and commodities to Asia’s biggest economies.

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Putin’s public acknowledgement of possible looming economic problems suggests the situation may already be far worse than previously thought. Just a few weeks ago on March 14, he was dismissing the impact of Western sanctions and boasting that Russia’s “economic sovereignty” was stronger than ever. Putin’s rosy assessment has been echoed by many international observers in recent months, but critics claim this is due to dubious data that creates an overly optimistic impression of Russia’s true economic health.

“The Russian economy is in a tailspin,” commented Yale University School of Management Professor Jeffrey Sonnenfeld in a recent interview with Germany’s DW. Sonnerfeld claimed that Russia has stopped submitting the required economic information to international financial organizations and accused the Kremlin of “pumping out false data,” which is then recycled by the media. “What we do know is that every key industrial sector in Russia is down,” he noted, before dismissing Russia’s employment figures and the country’s ruble currency exchange rate as “invented numbers.”

Meanwhile, economist Janis Kluge of the German Institute for International and Security Affairs (SWP) calculates that Western sanctions alone have “basically shrunk Russia’s economy by 10 percent,” a larger impact than the 2008 financial crisis. “The way I think about sanctions is that we are shaking the tree on which the regime sits,” said Kluge. “We can’t really tell what’s going to come out of it, what’s going to happen. We are not shaking it enough for it to fall down. But we’re creating problems for them. It consumes a lot of political energy in Moscow. And it makes it clear to everyone, to all insiders, that it was a huge mistake to start this invasion.”

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The key engine of the Russian economy has long been energy exports. Many economists now believe the impact of price caps imposed by the G7 group of nations on Russian energy exports has been underestimated. These caps replaced earlier energy sanctions that proved counter-productive because they caused oil prices to jump and delivered windfall profits to Russia in 2022. In contrast, there are indications that price caps, coupled with Europe’s switch from Russia to other energy suppliers, spell disaster for the Kremlin.

In February 2023, Russia’s oil export revenues fell to the lowest level in more than a year as buyers mostly complied with price caps and sanctions, according to the International Energy Agency (IEA), reported Bloomberg. Monthly revenues were reportedly down more than 40% year-on-year, despite Russia’s relative success in sustaining volumes. This is good news for China and India, with both countries seeking to take advantage of Russia’s drastically reduced bargaining power.

China and India are the key drivers behind rising demand for Russian energy exports that is helping to prop up the country’s besieged economy despite Western-led sanctions, Al Jazeera reported in February. The two Asian economic powerhouses became the biggest buyers of Russian crude oil last year as Western countries restricted imports and imposed sanctions.

While Indian and Chinese energy purchases are welcome news for the Kremlin, it takes capital to keep a commodity-based economy going. This is reportedly becoming a major issue. In March, Russian billionaire Oleg Deripaska warned that Russia is now in danger of running out of cash. “There will be no money next year, we need foreign investors,” the businessman told an economic conference.

More can be done to impose further costs on Russia for the ongoing invasion of Ukraine. In a recent report, the Kyiv School of Economics recommended reducing the current oil price cap to $50 or lower. Russia’s revenues from exporting hydrocarbons are already set to halve this year to about $180 billion, according to Jacob Nell, one of the authors of the KSE report. “Squeezing oil and gas revenues will put Russia on the back foot and shorten the war,” the report concluded.

German economist Kluge believes the impact of sanctions on the Russian economy will be long term, and points to the loss of access to Western technologies such as computer chips as particularly damaging for the country’s future prospects. “The business case for producing something sophisticated in Russia is gone, and it’s not coming back,” she noted.

The Russian economy is not yet in full crisis mode and still has significant resources in reserve to call upon. However, with most avenues for Western partnership now indefinitely closed and dependency on China growing rapidly, Putin’s talk of “economic sovereignty” is starting to sound very hollow.

The priorities of the United States in the MENA region
US perspective on China becoming a major player in the geopolitics of the region
China’s regional diplomatic and peace efforts
Opportunities and challenges for cooperation between China and the US in the MENA region
The impact of the China-Iran relationship on US regional interests

Chapters

[00:00] Introduction
[01:29] US priorities on the MENA region
[06:55] China as a rising global actor
[14:03] US perspective on China’s deepening presence in the region
[20:26] China’s regional diplomatic and peace efforts
[22:22] Challenges and opportunities for cooperation between China and the US
[28:40] Assessing the impact of bilateral China-Iran relations on US interests
[31:30] Cooperation between China, the US, and the Middle East on climate change challenges
[36:34] Final takeaways from our guests

Download Transcript here

In this episode

Chris Backemeyer
Deputy Assistant Secretary for Assistance Coordination and Regional and Multilateral Affairs, Bureau of Near Eastern Affairs
US State Department

In his current position, Chris Backemeyer oversees cross-cutting regional policy issues and coordinates over $7 billion in foreign assistance for the Middle East and North Africa. He is a career member of the Senior Executive Service. Previously, Mr. Backemeyer served as Special Advisor in the Office of the Vice President, advising Vice President Harris on national security and foreign policy issues related to the Middle East, international economics, and climate change. He also has served as Deputy Assistant Secretary for Press and Public Diplomacy and Assistance Coordination in the Bureau of Near Eastern Affairs; Deputy Assistant Secretary for Iranian Affairs and oversaw the Department’s diplomatic efforts toward Iran; Deputy Coordinator for Sanctions Policy; Director for Iran on the National Security Council staff at the White House; and Deputy Director of the Office of Sanctions Policy and Implementation at the State Department. He also holds a Master’s degree in International Affairs from the School of International Relations and Pacific Studies at the University of California San Diego and Bachelor’s degrees in Finance and Political Science from Arizona State University.

Julian Gewirtz
Deputy Coordinator for China Global Affairs
US State Department

Mr. Gewirtz recently joined the US State Department from the White House, where he was Director for China at the National Security Council. His prior government service includes roles on the Secretary of State’s Policy Planning Staff and at the US Department of Energy. He is the author of several books on modern China and was previously a Senior Fellow for China Studies at the Council on Foreign Relations. He received his doctorate in modern Chinese history from Oxford University, where he was a Rhodes Scholar, and his undergraduate degree from Harvard College.

About

Amid a perceived US retrenchment from the Middle East, China has been making greater inroads in the region, most recently by brokering the Saudi-Iranian peace deal. The deal added not only a win for China, but also another layer of complexity to an already intricate regional landscape. China’s expanding role in the Middle East continues to be a major topic of discussion for US policymakers as the country seeks to present an alternative to the US-led global order. To shed light on these issues, we are joined by two esteemed US government officials from the US State Department, Dr. Julian Gewirtz and Chris Backemeyer, who join us in this thought-provoking podcast episode.

Our guests provide unique insights from a US perspective on the potential implications of China’s growing presence in the Middle East. They examine the region’s strategic landscape and China’s efforts to replace US dominance in global governance and discuss the challenges and opportunities for cooperation between China and the US in the MENA region, as well as the priorities of the US in the Middle East. Tune in to gain a better understanding of how the US perceives and reacts to China’s evolving role in the region and how recent developments may shape the region’s future and US response.

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Jonathan Fulton

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

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The US is in favor of any action taken by China or other countries to lower tensions, decrease conflicts or prevent destabilizing actions in the region

Chris Backemeyer

President Biden sees this decade as critical and has a strategy for China: invest, align, and compete

Julian Gewirtz

About the China-MENA podcast

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

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

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

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Khakova quoted in The Washington Times on Russian oil

mzandi — Wed, 29 Mar 2023 19:04:48 +0000

The post Khakova quoted in The Washington Times on Russian oil appeared first on Atlantic Council.

Country spotlight: Unlocking a high-energy future for Zambia

Maia Sparkman, William Tobin — Tue, 28 Mar 2023 14:46:16 +0000

With renewed commitment to democratic principles, growing bilateral relationships with high-income countries, abundant clean energy potential, and critical resources necessary for the global energy transition, the country of Zambia is well positioned to leverage its strengths to build a low-carbon, reliable energy system to spur economic growth and close the poverty gap. President Hakainde Hichilema’s landslide victory over former President Edgar Lungu in August 2021 has placed Zambia back on a path towards inclusive economic growth through attempts to restructure debt, promotion of private sector interest in infrastructure and energy investments, and delivery of economic opportunities to rural communities across the country, where over half of the population lives below the poverty line. Given these developments, Zambia poses a model for expanded collaboration between African economies, the United States, and other allies, with partnership attributes which can be replicated elsewhere on the continent.

Zambia has 2,800 megawatts (MW) of installed electricity generation capacity, with 85 percent of the electricity mix derived from hydropower, and 31 percent of the population has access to energy—the majority being in urban areas. The global disruptions to expected rainfall patterns, linked to the effects of climate change, has directly affected Zambian hydropower. Zambia’s loadshedding challenges made news this past December as their public utility, ZESCO, announced that consumers would experience up to twelve hours of loadshedding a day because of critically low water levels at the Kariba Dam, on the border of Zambia and Zimbabwe. During this time, the dam on Zambia’s side of the border could not deliver even 40 percent of its 1,080 MW capacity, crippling the country’s ability to deliver energy to consumers.

There are notable low-hanging fruits in the development of Zambia’s electricity mix. While Zambia has the potential to generate 2,300 MW of solar and 3,000 MW of wind, only 76 MW of solar has been installed and no wind power to date. And while 67 percent of the urban population has access to energy, the connection is disrupted frequently due to loadshedding and service disruption caused by aforementioned low water levels in hydropower stations. While the rains in early February assisted in shoring up water levels, climate change will continue to impact rainfall levels and create future problems in energy generation unless the energy mix diversifies.

Attracting low-capital cost investment for new energy projects has, until recently, been a challenge. President Hichilema took office shortly after Zambia became the first African country to default on its sovereign debt in 2020 during the COVID-19 pandemic and found that his predecessors had accumulated $30 billion in unserviceable debt. Much of Zambia’s borrowing under former President Lungu’s leadership was part of China’s Belt and Road Initiative (BRI), from which Zambia received $5.23 billion in the energy sector alone. The BRI led to considerable expansion of infrastructure and nearly a two-fold increase in electricity consumption over the previous decade, but left the country unable to balance its payments.

Recognizing the need to diversify Zambia’s energy grid, the government has been working towards securing private sector investment to deploy solar projects throughout the country to close the energy poverty gap. The government has outlined a plan to achieve universal access to energy for all Zambians by 2030 by bringing additional solar, hydro, geothermal, and thermal energy online.

While developed nations look to decarbonize, countries in sub-Saharan Africa, including Zambia, will need significantly more energy to power a high-growth society and achieve development goals. The vast majority of Zambia’s population is comprised of smallholder farmers, producing 80 percent of the country’s agricultural production. That same population is the most vulnerable to climate change impacts, as they rely on rain-fed agriculture. The process of realizing Zambia’s breadbasket potential will require a shift from traditional to modern farming practices, which will require significantly more energy to drive irrigation development and the mechanization of agricultural production. Furthermore, Zambia’s economy has the potential to expand its raw materials sector, and to bolster its GDP by adding value to its products through increased processing and smelting of minerals within Zambia’s borders. Doing this will require more power, and importantly, in continuous supply.

Positively, Zambia has received a recent wave of investment in its power infrastructure, a result of Hichilema welcoming foreign investors and independent power producers. A few notable investments and memoranda of understanding (MOUs) have been announced by key partners from around the world, positioning Zambia as a high prospect for low-carbon energy investments and unlocking opportunities to deliver investments in 24/7 clean electricity systems necessary to power industrial activity such as minerals processing. A few weeks ago, seven British companies announced an investment commitment of $2 billion in renewable energy projects in Zambia, to produce 1,500 MW of clean energy. Earlier this year, ZESCO and the United Arab Emirates’ Masdar signed an MOU to develop solar projects worth $2 billion, meant to generate 2,000 MW. This investment, labeled a “capital injection” by President Hichilema, will nearly triple Zambia’s electric capacity in combination with the investment from the British coalition. Critically, these investments will bolster the Zambian grid’s ability to generate electricity at times when hydropower generation is low and solar irradiance is high.

Providing commitments to develop Zambia’s energy infrastructure is not a matter of aid or charity. It has the potential to bring Zambia into the fold of the global economy—a process which adds value for Zambians and Zambia’s trade partners—and provide critical inputs to the global energy transition.

Recognizing this, during the US-African Leaders Summit hosted by the Biden Administration this past December, the United States, the Democratic Republic of the Congo (DRC), and Zambia signed an MOU to strengthen cooperation to develop a cross-border integrated electric vehicle (EV) battery value chain. This MOU is a welcome example of the form of partnership which the United States and allies should adopt in their commercial partnerships with African nations. Notably, the MOU expresses a desire to support the DRC and Zambia in developing economic activity within the EV battery value chain from the mine to the assembly line, not solely in the extraction of raw materials. Such a partnership provides an area for the US private sector to share knowledge and provide project development services and enable local industry and capacity to grow while firming global supply for critical materials and technologies for the energy transition, a win for all partners involved.

Zambia, as well as other countries across the continent, has held recent high-level diplomatic visits to establish a stronger relationship between the United States and Africa. Secretary of Treasury Janet Yellen visited Zambia in January, and Vice President Kamala Harris has just begun her tour on the continent which includes a stop in Zambia. The trips to the continent have highlighted the US’s mutual interests in strengthening Africa’s security and economic prosperity, but discussions surrounding energy development, the backbone of a prosperous future in Africa, have remained vague. While the diplomatic engagements are notable, the trips should place a heavier emphasis on opportunities for the United States to further strengthen energy development throughout the continent, a critical missing link in driving economic growth and expanding opportunity for communities in Zambia and elsewhere on the continent.

As debt-burdened African nations expand engagement with higher-income countries beyond aid, Zambia serves as an important case study on opportunities to attract investor interest in energy development. In order to keep momentum up, investment transparency and translating MOUs into action will be critical to accelerate progress on achieving sustainable development goals. Notably, the investor interest that Hichilema’s administration is attracting is a positive signal for neighboring countries by showing the outcomes that are associated with a commitment to good governance.

Maia Sparkman is an assistant director at the Atlantic Council Global Energy Center.

William Tobin is a program assistant at the Atlantic Council Global Energy Center.

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