A Conversation on the Geopolitics of Energy

The event started with an introduction of the Global Risk Conference series and the MAGR program by Plummer. The  conversation then began with a focus on the Biden administration. Emerson emphasized that Biden is a multilateralist, the focus will be on China as a contender, and the enormous task of restoring US’ foreign policy. She also noted that Biden is promising a lot, but moving slowly. Fraenkel agreed, and stated that it is too soon to tell, so the focus should be on the Biden proposals. The key sector, he argued, will be hydrocarbons, since Biden’s commitment to an energy transition collides with the recently gained production and exporting power in oil and gas. 

Emerson argued that oil and gas are not a priority for the Biden administration, except to the degree fossil fuels fall under climate policy. While Fraenkel agreed, he posed the question on how that priority would affect domestic politics, particularly in competitive states: Pennsylvania or Texas. So, there are real underlying tensions regarding America’s leading role in climate change. Dell’Aquila, asked about the implications of these tensions. For Emerson, there will be rising tensions with Russia and China, not military tension but economic escalations. These tensions will dampen the possibilities of a transnational response to the transition.  

Dell’Aquila noted that the transition is a long-time process. How can people be engaged in the relevance of the transition given its lengthy time frame? The speakers agreed that the focus should be put on the energy sector, and its relevance on the global economy. Also, noting that there is a human face behind conventional energy, so any transition needs to be equitable. Fraenkel underlined that energy development and demand are about lifting people out of poverty, not forgetting to turn-off the lights. Meaning, demand will continue to rise as we lift people out of poverty, and that should be desirable. The challenge is to accelerate the transition while securing an increasing demand. For  Emerson the key is on capital costs, as the financial sector engages companies that move the climate needle, their borrowing costs will go down.  

The event concluded with  Q&A with the audience where multiple questions were asked on the difficulties and complexities of an energy transition. Both speakers noted that this is a long-term dilemma, and that we do not have all the answers to the questions yet. The work to get to the answers, however, needs to start as soon as possible. Because progress is gradual, and we need to buy as much time as we can for when we have the answers. That means, climate is now geopolitical, the core of geopolitics.