Does the West need energy partners to take on the energy superpower Russia-OPEC+?

Does the West need energy partners to take on the energy superpower Russia-OPEC+?

With Russia, China, Saudi Arabia, and OPEC+ maneuvering to take advantage of global energy and cost-of-living crises, the world’s democracies can no longer ignore their chronic vulnerability to the militarization of critical resources. Fortunately, to mitigate the threat, they don’t need to reinvent the wheel.

History does not repeat itself, but it often rhymes”, as Mark Twain likes to say, is an apt description of the evolving relationship between the West and its adversaries. During the Cold War, the Soviet Union was a world superpower, due to its military prowess. Today, Russia’s military appears to be in a miserable state, but the country has become an energy superpower that is using its vast natural gas reserves as a potent weapon. Similarly, today’s confrontation between the West and Russia over Ukraine largely echoes the Cold War confrontation.

Europe will freeze without power this winter

With winter looming, the Kremlin’s shutdown of gas flows to the European Union could have dire consequences and trigger the biggest energy crisis in 50 years. Although increased gas deliveries from the US, UK and Norway will help mitigate the EU’s reliance on Russian supplies in the short term, it may not act as a long-term solution.

The Alternative Energy Security Association is the need of the hour

The militarization of energy resources underscores the need for a new kind of partnership among the world’s democracies. At the Baltic Sea Energy Security Summit in Copenhagen in August 2022, Germany, Poland, Lithuania, Latvia, Estonia, Finland, Sweden and the European Commission signed a joint declaration to strengthen energy security in the Baltic Sea region by increasing its combined renewable energy. wind power capacity by almost 7 times in the next eight years. By 2030, offshore wind farms in the Baltic Sea region should be capable of producing 19.6 gigawatts per year, enough to meet the electricity demand of 28.5 million European homes (roughly equivalent to the combined number of homes in all Baltic Sea countries except Germany). and Russia).

The geopolitics of energy is on the cusp of a major shift

The world has to consider that the ‘Geopolitics of Energy’ is on the cusp of a great change. Over the last decade, the costs of wind and solar power have fallen below fossil fuels in most countries. The immense growth of renewable energy will have two significant consequences. First, the ability of fuel-exporting countries to weaponize energy resources will not be as strong. Second, as the geopolitical importance of fuel resources decreases, the importance of critical raw materials such as rare earths, minerals, and metals will increase.

China’s Adverse Record of Weaponizing Its Resources Is a Cause of Serious Concern

For the past two decades, China has secured global dominance over the extraction and refining of minerals and metals. Today, China mines 58% and processes 85% of the world’s rare earth elements, giving it control of key parts of the supply chains needed to build wind turbines, solar panels, and electric vehicles. To put this position in perspective, Saudi Arabia’s share of world oil production stands at just 11%.

China’s dominance is a concern in itself; as it has an adverse history of turning its resources into weapons. In 2010, after a Chinese trawler collided with a Japanese coast guard ship in the waters around the disputed Senkaku Islands, China halted its exports of rare earth elements to Japan. In response, Japan took steps to reduce its dependence on China, including working with mining companies to find new sources of the same materials and developing its domestic refining capacity.

Europe should learn lessons from the 2010 Senkaku Island incident

Europe, the US and other democracies should heed the lessons of the 2010 Senkaku Islands incident and start forging a new alliance to secure supplies of energy and critical raw materials. We already know that the International Energy Agency, created by OECD members after the 1973 oil crisis, has offered a powerful defense against OPEC’s use of oil as a weapon.

AAAP (Alternate Energy Alliance Partners) will be the future world order

A new energy and raw materials alliance could begin including Japan, Australia, New Zealand, South Korea and those Latin American democracies that support a global order based on ethics. Following the IEA model, it can develop a joint analytical capability to produce regular supply and demand forecasts for critical raw materials. And just as IEA members have emergency oil reserves equivalent to at least 90 days of net oil imports, members of the new alliance would hold reserves of strategically important raw materials.

Ultimately, the alliance partners would insist on a market-based international trading system for critical raw materials through the G7, the G20 and the World Trade Organization. They can coordinate and promote research aimed at diversifying mineral demand while creating new public-private partnerships to build a pipeline of upcoming mining and refining projects.

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In addition to powering the green transition, critical raw materials and energy resources could also become a source of peace, cooperation and stability. Drawing on the lessons of the 1973 oil crisis, we can ensure that history does not repeat itself. Therefore, in the current geopolitical scenario, the world’s democracies must come together to act prudently and avoid further militarization of essential economic assets.

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