Russia’s Invasion Stresses the Need for an Energy Transition Plan

 


Photo by American Public Power Association | Unsplash

The Russian invasion of Ukraine has created dramatic energy price shocks around the world and surfaced new concerns over global energy security. Consequently, Europe has overhauled its energy policy and allies have shown solidarity in their protest of Russian oil. But long-term energy security questions still hang in the balance — even as economies around the world are still reeling from the pandemic and now staggering levels of inflation.

The United States is taking steps as well, such as releasing oil from the strategic petroleum reserve and sending liquefied natural gas to Europe for some relief. And yet, as is true of most energy supply disruptions, there is little that any government can do in the short term to relieve price shocks and energy supply insecurity. The long-lasting harm from this energy crisis means the American government must prepare for medium- to long-term energy security insulation and set us up for a viable, sustainable energy transition to cleaner, more secure domestic sources of energy. It is clearer than ever that energy is a strategic resource, and the health of the domestic energy industry — not unlike the defense industry — is a matter of national security.

In recognition of that reality, the Biden administration recently invoked the Defense Production Act (DPA) to accelerate domestic production of solar panels, heat pumps, energy-saving building insulation, electrolyzers for hydrogen production, fuel cells, and electric grid components like transformers. It’s the second time the administration has used the DPA to support the development of domestic clean energy industry. The first was in support of critical minerals supply chains for large-scale batteries.

 

Still, even though the move will support domestic production and aid energy security efforts, using the DPA is not nearly enough to fully domesticize or even substantially increase the capacity of US domestic production of these technologies. Congress must act too. Energy proposals being debated in the reconciliation budget — like clean energy tax incentives — are critical to ensure the United States can develop domestic clean energy industries to build a more resilient future.

During times of peace and stability, we tend to think of energy as a commodity: a routine input to our economy that is readily available, relatively affordable, freely traded, and secure. This “business as usual” mindset toward energy has historically undermined its strategic importance.

The reality is that paying more for gasoline, experiencing more frequent power outages, and depending on short-term interventions isn’t just inconvenient for average citizens, but is also damaging to economic well-being, social satisfaction, and public health. Countries without access to reliable and affordable energy supplies struggle to attract economic and social development — increasing the prevalence of poverty and instability.

Right now, the United States is vulnerable both to energy instability and to losing economic ground in deploying the long-term solutions we need for an energy system that helps avert the worst impacts of climate change. Despite being the largest producer of oil and natural gas in the world, it is clear whenever we see the price of gas that we are not effectively insulated from price volatility. And when it comes to clean energy technologies — like solar, wind, batteries, and electrolyzers — the United States remains overly dependent on supply chains dominated by China.

 

Taking steps to ensure the United States has strong domestic capabilities to produce and deploy critical technologies sends signals to our allies that we are to contributing to our collective security. Energy supply chain security partnerships — like those between the EU and United States or India, Australia, Japan, and the United States — are increasingly common as part of economic and security alliances. This trend will likely persist in the face of heightened energy and climate security concerns.

 

This type of strategic energy planning is not new. For decades, oil has been viewed as a strategically important resource where globally adequate supplies were an important foreign policy and security objective. Over time, natural gas has increasingly been viewed this way as well. Now, clean energy technologies are becoming more and more important to our economic and national security – both in terms of conventional security and our ability to combat and withstand the impacts of climate change. Across the globe, clean energy technologies will increasingly be viewed as strategically important assets that require strong and reliable supply chains.

 

And we cannot leave out the critical point that investing in these clean energy technologies provides an enormous opportunity to enhance US competitiveness and global leadership. The global market for clean energy technologies is set to grow by a factor of four in the next few years — reaching annual revenues of $5 trillion by 2030. This growth is driven by the economic and security benefits of cheap, stable, and plentiful clean energy and a growing recognition that reaching net-zero greenhouse gas emissions by mid-century is a global imperative. 

 

The United States can be a leader in this global energy transition, but frankly, we have not done enough to position ourselves for this opportunity. Countries around the world are competing to invent, manufacture, and sell clean energy technologies by capitalizing on the power of their domestic markets, institutional manufacturing and innovation capacities, and increasingly sophisticated export strategies.

 

There is no reason why we shouldn’t be competitive, even outpacing other countries, in this race. The United States is one of the most energyadvantaged countries on the planet. We are endowed with the natural resources, workforce, and government infrastructure to produce abundant amounts of almost any energy technology or resource we choose.

 

The current energy security crisis has reminded us of energy’s true nature as a strategically important resource. Now, to insulate us from future harm and reap the benefits of economic development, we must do as much as we can to build a more secure energy future.




Sarah Ladislaw

Sarah Ladislaw is a Managing Director at RMI, where she leads the US Program. She also works on other global initiatives like the Mission Possible Partnership to reduce industrial-sector emissions and supports the development of green banks. She is also a member of the Strategic Advisory Council for Georgia Tech’s Strategic Energy Initiative and the University of California, Davis, Institute of Transportation Studies Board of Advisors.


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