ENERGY SECURITY ENERGY AND U.S. PUBLIC POLICY INSTRUCTOR: JOEL HICKS

Transcription

1 ENERGY SECURITY ENERGY AND U.S. PUBLIC POLICY INSTRUCTOR: JOEL HICKS

2 GLOBAL OIL MOVEMENTS

3 GLOBAL NATURAL GAS MOVEMENTS

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5 KAYA IDENTITY Energy Intensity GDP per capita Carbon Intensity

6 IEA World Energy Outlook Report

7 ENERGY USE BY SECTOR (U.S.) 2015 [EIA]

8 Global energy demand Billion toe Energy consum ption by region Other Africa Other non-oecd Asia India China OECD % per annum 6% 5% 4% 3% 2% 1% 0% -1% -2% -3% Growth in GDP and primary energy Energy intensity GDP Energy Outlook 8 BP p.l.c. 2017

9 Fuel mix Primary energy consum ption by fuel Billion toe Renewables* Hydro Nuclear Coal Gas Oil *Renewables includes wind, solar, geothermal, biomass, and biofuels Shares of primary energy 50% Oil 40% Coal 30% Gas 20% 10% Hydro 0% Energy Outlook 9 BP p.l.c. 2017

10 China s declining dependency on coal Coal consum ption growth by region Shares of primary energy in China Billion toe OECD Other non-oecd Asia India China Other Total 80% 70% 60% 50% Coal % % 20% Oil Non-fossil % % Gas 2017 Energy Outlook 10 BP p.l.c. 2017

11 Renewables Renewables as a share of power generation Shares of renewable power grow th 40% 30% EU US World China 40% 30% % 20% % 10% 0% % EU China US OECD Asia India Africa 2017 Energy Outlook 11 BP p.l.c. 2017

12 Growth of the power sector 50% 40% 30% Power sector s share of primary energy consum ption MWh Electricity consum ption per capita OECD China World India Africa 20% Energy Outlook 12 BP p.l.c. 2017

13 Mobility revolution scenarios Mb/d 25 Digital revolution: Impact on oil demand in cars in 2035 Mb/d 25 Electric revolution: Impact on oil demand in cars in Energy Outlook 13 BP p.l.c. 2017

14 Carbon emissions % per annum 2.5% Contributions to slower growth of carbon emissions Billion tonnes CO 2 40 Carbon emissions 2.0% GDP 30 IEA 450 Base case 1.5% Energy intensity 1.0% Fuel m ix % % Energy Outlook 14 BP p.l.c. 2017

15 THE PETROSTATE Resource Curse and Dutch Disease Rentier or Allocation State 1. Income from natural resources is the major input to economy 2. The majority of this revenue is from abroad 3. A small part of the population is engaged in generating these revenues 4. The state is the primary recipient of the rent revenue In 2006, Friedman formulated "The First Law of Petropolitics, which posits the following: The price of oil and the pace of freedom always move in opposite directions in oil-rich petrolist states. Karl would suggest that petrostates are rentier states par excellence. Why? According to the IEA s estimates, 40 mostly developing countries spent a total of $550 billion on subsidizing fossil fuel use in More than half of this amount was used to keep prices at artificially low prices

16 $/bbl Oil-revenue dependency and breakeven prices Break Even Price 250 Yemen Russia Algeria Nigeria Iran Bahrain 100 Venezuela Libya Saudi Arabia Iraq Angola 50 Qatar Kuwait 0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Break Even Price Percent of budget from oil and gas revenues

17 YERGIN S 10 PRINCIPLES OF ENERGY SECURITY 1. Diversification 2. The position of the U.S. in the global oil market 3. Security margin 4. Well-functioning energy markets 5. Consumer nation relationships with exporting nations 6. Relations amongst consuming nations 7. Information transparency 8. Robust domestic energy industries Standard definition of energy security: the availability of sufficient supplies at affordable prices 9. R&D 10. Planning for disruptions/resiliency

18 ENERGY SECURITY NARRATIVE Producer + Consumer Petroleum Organizations IEA OPEC JODI National Security Infrastructure Security (Natural and direct threats) Global State Militaries U.S. U.K. China International and Regional Security Organizations U.N. E.U. NATO AU IAEA National and International Environmental Protocols and Conventions Horizon 2020 Kyoto Protocol Paris Accord RGGI CAFÉ Standards Environment Diversity of Energy Sources Economics International and Regional Trade and Economic Organizations WTO G-8/G20 ASEAN OECD

19 O SULLIVAN ENERGY INDEPENDENCE ALONE WON T BOOST U.S. POWER North American energy independence by Hydrocarbon expansion gives U.S. foreign policy leverage Iran Russia? Does non-reliance on M.E. oil free the U.S. from taking key role in region? Effects of oil glut on Petrostates could be devastating. and quickly Power of LNG markets EU concerns Gazprom dominance in question

20 SHIFTS IN RELATIVE POWER Technology OPEC Western Hemisphere trending toward self -sufficiency Global energy demand PREDICTIONS are trending downward Share of petroleum 38 to 30 percent but fossil fuels still close to 80 percent of global consumption [2030] Growth of nuclear power shifting eastward.away from Europe toward M.E. and Asia

21 PRESIDENT TRUMP S VISION OF ENERGY SECURITY The Trump administration will make America energy independent. Our energy policies will make full use of our domestic energy sources, including traditional and renewable energy sources. America will unleash an energy revolution that will transform us into a net energy exporter, leading to the creation of millions of new jobs while protecting the country s most valuable resources our clean air, clean water and natural habitats. According to EIA, market forces, technology and policies in place have already put the country on track to become a net energy exporter (oil, gas and coal) by about 2028 (or 2019 in high resources scenario).

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23 TOTAL PRIMARY ENERGY DEMAND AND GDP IN SELECTED COUNTRIES,

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25 EVENTS THAT HAVE SHAPED HOW WE VIEW ENERGY SECURITY Winston Churchill Naval Arms race with Germany Nixon Energy Independence speech after OPEC embargo of Iranian Revolution First and Second Gulf Wars 9/11 Chernobyl, Fukushima, Three-mile Island IPCC results Hurricane Katrina/Superstorm Sandy The Arab Spring The Shale Gas and Tight Oil revolution

26 JHU/APL Rethinking Seminar Series: Rethinking U.S. Enduring Strengths, Challenges, and Opportunities December 17, 2014 Shaking Energy Landscape Edward C. Chow Senior Fellow

27 YERGIN Energy Security is about relations among nations. On no one quality, on no one process, on no one country, on no one route, and on no one field must we be dependent Does The availability of sufficient supplies at affordable prices suffice as a definition of energy security? Dimensions of security: 1. Physical 2. Accessibility 3. System (actually a system of systems) 4. Investment Project Independence International Energy Treaty of 1974

28 ELEMENTS OF ENERGY SECURITY Disputes still exist over causation vs. correlation between large oil exporters and likelihood of conflict Resource Curse and Dutch Disease Rentier or Allocation State 1. Income from natural resources is the major input to economy 2. The majority of this revenue is from abroad 3. A small part of the population is engaged in generating these revenues 4. The state is the primary recipient of the rent revenue In 2006, Friedman formulated "The First Law of Petropolitics, which posits the following: The price of oil and the pace of freedom always move in opposite directions in oil-rich petrolist states. Four components to energy security 1. Reliability 2. Affordability 3. Environmental Friendliness or- sustainability Top 10 Petroleum Exporting Countries (2012) 1 Saudi Arabia 8,865 2 Russia 7,201 3 United Arab Emirates 2,595 4 Kuwait 2,414 5 Nigeria 2,254 6 Iraq 2,235 7 Iran 1,880 8 Angola 1,778 9 Venezuela 1, Norway 1,684

29 AUERSWALD THE MYTH OF ENERGY INSECURITY What is his argument? What does this mean? But what about other sources of energy? Suppliers are acting against self-interest when they limit supplies So, why do we still have price shocks if a globally traded commodity (like oil) can overcome many supply shortages?

30 U.S. Imports from ME/Gulf 2.1 million barrels daily <25% total net U.S. oil imports Global Oil Demand 92 million barrels daily Strait of Hormuz Traffic % million barrels shipped daily globally traded oil Europe Japan 11% U.S. 26% Non-Asian markets 4% Others 11% China India 12% 15% 74% Asian and eastern markets 18% 6% 22% Singapore Others

31 ENERGY AND SECURITY Why has U.S. been unable to integrate energy and foreign policy more effectively? How have energy costs not been internalized? Energy Security = the assurance of the ability to access the energy resources required for the continued development of national power How does a nation help preserve this? Reduce volatility ==== stockpiling (Strategic Reserves) Energy diversification What about a world powered by renewables? How does this reshape international relations? What are the new vulnerabilities?

32 THE IEA

33 U.S. ENERGY BREAKDOWN Which sector(s) have the most diversity in fuel sources?

34 QUESTIONS YOU SHOULD ASK YOURSELF AS YOU READ KALICKI What is the contribution of energy resource revenues to GDP? How does that affect the political and power structure of society? What are the trends? Are policies becoming more nationalized, regionalized, or internationalized? What are the acute vulnerabilities due to dependencies on imports? Peace Pipelines Can they work? How have energy resource-rich nations succumb to or avoided Dutch Disease? Is corruption exogenous in countries that suffer from the resource curse?

35 KORIN AND LUFT Threats to supply side Infrastructure underinvestment Govt. instability/poor policies Terrorism/criminal activity Demographics Subsidies Encourages overconsumption for exporting nations Threats to demand side Conservation policies Culture Diversification Dependency via electricity and/or transportation energy sources Other actors

36 THREATS TO ENERGY SECURITY Supply side disruptions Demand side disruptions Transportation Environmental and health concerns Nuclear proliferation