Rachael Finch is a former British Army Officer and works in the defence sector. She is currently a Deputy Chairman of the Conservative Women’s Organisation West Midlands.
When Russia is negotiating with Western countries over the crisis in Ukraine, it is doing so knowing it is in control of 41 per cent of the EU’s gas supply. Having also built up its foreign currency reserves to defend itself from Western sanctions, and with no Western political appetite to commit troops to the crisis, Moscow is in a strong position.
In the long-term, Henry Smith, writing for this website, is likely right: Net Zero, by reducing dependence on natural gas, will weaken Russia’s position.
However, in the short-to-medium-term, the transition to Net Zero will transform geopolitics before a world powered by green energy can take shape. When we consider that almost 60 per cent of Russia’s exports comprise petroleum or coal products, it’s hardly surprising that Vladimir Putin is not the world’s most vocal environmental campaigner.
Consequently, the UK Government needs to look beyond the long-term environmental challenges of global warming, and address the nearer-term geopolitical risks that are present. Geopolitical risks create uncertainty in energy markets as reliability is questioned, pushing up prices for consumers and creating resistance to Net Zero goals.
The move away from oil and gas as sources of power will not happen overnight, and during this period, petrostates will continue to profit from their exports of fossil fuels. However, the combination of pressure on investors to divest from carbon-based fuels and the uncertainty about the future of fossil fuels may result in declining investment in oil and gas.
If oil supplies fall faster than oil demand as a consequence, fuel shortages and higher and more volatile oil prices will be here to stay for a while. Notably, the current increase in UK gas prices is due to a drop in gas supply at the same time as an increase in demand.
Higher oil prices result in higher revenues for petrostates such as Russia, or Saudi Arabia. In addition, as the transition to so-called clean energy develops, the overall reduction in the demand for oil combined with the need to keep costs as low as possible may result in higher-cost producers, such as Canada, being priced out of the market. This leaves room for states that produce cheaper oil, such as Saudi Arabia, to fill the gap increasing their geopolitical clout.
The same logic applies to gas markets. And for Europe, this means an increasing dependence on Russian gas: Russia’s importance to Europe will increase in the short-to-medium term if the Nord Stream 2 pipeline eventually comes online. If Putin wants to push back against the expansion of NATO in Eastern Europe, now is a good time for him to do it.
However, it’s not only fossil fuel exports that could increase Moscow’s geopolitical clout. According to the International Energy Authority, global nuclear energy generation will need to double between now and 2050 if the world is to achieve net zero emissions by the same date.
Many of the nuclear reactors planned or under construction outside Russia are being built by Russian companies. China is also a relatively large investor in nuclear power, meaning that both Moscow and Beijing will increasingly be able to influence industry norms and impose global standards in their favour.
China also controls many inputs required for clean energy technology, dominating both mining and the processing and refining of critical minerals, such as copper, cobalt, lithium, nickel and rare earth metals. An increase in the demand for clean technology will further increase China’s geopolitical influence. China has previously shown its ability to (mis)use this influence when it blocked the export of critical minerals to Japan in 2010 over the disagreement about the East China Sea. It could do so again.
It may seem as though localising supply chains is a way to fix these tensions. Despite the Green Party’s utopic advocacy for reducing emissions in the UK’s imports to zero, the reality is a net-zero global economy will need large supply chains for components, products and global trade in low-carbon fuels and minerals.
Global competition is needed to encourage innovation and to develop new markets, reducing prices for consumers. But, increasing electrification, be it for vehicles or heating, will likely result in more local production due to the difficulties with transporting electricity over long distances. Although local supply chains can be beneficial for security and employment reasons, too much localisation reduces diversification, creates vulnerabilities and raises prices for UK consumers.
Moreover, China’s recent increased use of ‘home-grown’ coal as an energy source is driven in part by the shortage of gas on global markets and the need for more energy security. Germany has also found itself in a similar position after its ban on nuclear power. Localising power supply chains doesn’t necessarily result in a reduction of carbon emissions.
Decarbonisation also poses problems for developing countries. The COP26 highlighted this with lower-income countries calling for developed nations to pay for historical damage allegedly caused by greenhouse gas emissions.
Whether you agree with this statement or not, developed and developing nations have diverging future goals which will increase tensions. The latter need growth to raise their populations out of poverty in the most economically efficient way. The former, by trying to stop the use of fossil fuels to deal with global warming, are preventing this happening. When the reality of life is a diesel-generator backed power grid that keeps blacking out, an electric car is not a sought after item.
For many developing countries, the way out of poverty may involve extracting hydrocarbon resources. However, developed nations are putting pressure on financial institutions not to support extractive projects, but by not assisting with an alternative, the tensions will grow.
China, on the other hand, is providing finance to countries like Cote d’Ivoire, helping to develop their extractive industries and by doing so is feeding internal Chinese demand for raw materials. As far as many developing countries are concerned, rolling back globalisation could do far more damage in relieving poverty and living standards than continued global warming.
The transition to a world powered by clean energy is radical and it will be messy. If, on the way to achieving Net Zero, national energy security conflicts with responses to global warming, there is a real risk of friction on the road to a green planet.
International climate leadership needs to mitigate the national security implications of a transition to green energy, in addition to making promises and signing agreements. Nuclear power and continuing investment in oil and gas reserves are essential tools in dealing with energy market volatility and the inevitable periods of disconnect between supply and demand of fuels; it’s good to see the government beginning to recognise this.
Supply chains need to be diversified to reduce reliance on one main provider – competitive markets are essential in this regard, as well as keeping prices lower for the UK consumer. And there will be a need to support communities dependent on fossil fuels, both domestically and internationally.
New green technologies will solve technical problems, but they will also encourage states to maximise their own interests and policymakers would be naive not to recognise this. However, perhaps the greatest risk of Net Zero is that if the conflict between global warming and national security is ignored, that the transition to a greener planet won’t take place at all.