Strategies for Enhancing Energy and Climate Security: Jonathan Elkind / Senior Research Scholar, Center on Global Energy Policy, Columbia University

Hello and welcome to DEEPER LOOK from New York.

I'm Del Irani, it's great to have your company.

Russia's invasion of Ukraine is causing a dramatic shift in the global energy order.

The EU plans to end its reliance on Russian fossil fuels by 2027.

But it won't be easy - given that 40% of the region's gas and 27% of its imported oil came from Russia prior to the invasion.

Furthermore - Asian countries like China and India are doing the opposite.

They are boosting their oil imports from Russia, bolstering stronger economic ties.

So, what will the new global energy order look like?

And what can be done to stabilize the supply and price of global oil and gas?

Joining me now to talk more about this is Jonathan Elkind.

He worked at the US Department of Energy for eight years on international energy and climate issues, eventually becoming the Assistant Secretary for International Affairs under the Obama administration.

Currently, he's a senior research scholar at the Center on Global Energy Policy at Columbia University.

And he joins me now welcome to the program Dalton Alpine, great to have you with us.

It's my pleasure.

So, put it in perspective for us.

What impact has the Russian invasion of Ukraine had on the global supply chain of oil and gas?

It's been widely said in the last months that this is the greatest energy crisis that our globe has ever faced.

People of my age, remember well, the disruptions that occurred in the 1970s, when oil supply from the Middle East was disrupted to the United States and to certain other countries as well.

And that had a very big impact that is remembered until the present day.

But the impacts that one is seeing arising from Russia's invasion of Ukraine are larger still.

And affects not only oil, but also natural gas and coal and other energy products.

So, it's a very, very far-reaching impact.

It's one that has driven up prices, stressed household budgets, and in some particularly devastating impacts, has left certain energy consumers simply without supply.

The EU has set a 2027 deadline to end its reliance on Russian fossil fuels.

What type of task are we talking about when we talk about ending reliance on Russian fossil fuels for European countries?

Well, it's a really heavy impact that one can expect if one is sitting in Europe, but it's also something that is going to alter trading patterns themselves and also prices around the globe.

There are certain locations in Central Europe where you have refineries that have been historically fed from pipelines originating in Russia,

and they will see some rather considerable increases in price.

So, getting away from that natural gas supply, again, much of it coming by pipeline, which is very inexpensive.

That will result in even bigger price impacts in Europe, because Europe will have to import gas in the form of liquefied natural gas.

That super chilled form of natural gas that can be moved by a tanker.

And it's not just the Europe story, it's a Europe and everywhere else story as well.

China and India are going in the opposite direction.

They're actually increasing their reliance on Russian oil.

To what extent does this, I guess, counter efforts by the West who are very clearly trying to end their reliance on Russian oil and gas?

Indian buyers are taking advantage of the opportunity to buy discounted barrels from Russia.

Now, on the other hand, India itself has a pretty strong interest in not reinforcing the notion that a country can, with impunity, roll over a border and into its neighbor's territory,

which is exactly what Russia has done here.

So, the decision which must be made both by Indian corporations but also by the Indian government, is not uncomplicated.

And the same goes for China as well.

It is also a paradox that if Russia's oil producers are still able to sell some of their oil in global markets, that reduces the shock impact that otherwise would be felt by the global oil market as a whole.

And that's something where again, paradoxically, all parties, including the United States, and Europe have a positive interest.

The US ramping up its oil and gas production to increase supply to Europe.

Now, this is of course, in order to help the EU, reduce its reliance on Russian oil and gas.

What do you think about this decision? Is this the right decision by the US to ramp up its LNG oil and gas production?

Well, remember, first and foremost, that in the United States, most decisions about oil and gas production are taken by independent corporate actors.

There are of course, approvals and, and permitting decisions that one needs from different levels of government.

Sometimes from the federal government, often from state level authorities.

But for the most part, these are decisions that are profit oriented and made by individual corporations.

Those corporations realize that for the last five years or more, there has been a problem of under investment in the entire energy sector in the United States,

but included in that oil and gas has been under invested.

And so, in response to signals from the marketplace, oil and gas producers are planning to increase their production in the course of 2022.

And it is anticipated the same in 2023.

And as a part of that, they will engage in determining who the off takers who the buyers are of their production.

And that will be determined by price.

Mr. Elkind of what impact will this have on the global climate change crisis we're seeing right now?

If these, as you said, private, you know, companies decide to ramp up production in order to meet market needs.

Isn't that going to negatively impact climate change?

Aren't we kind of going backwards instead of moving away from fossil fuels?

Well, you've put your finger on a very important point.

And yes, there are some contradictory short-term versus medium-term or longer-term trends here.

We face as a global community, the necessity of an absolutely fundamental change in how our energy system operates.

And let's remember, there is very little in the economy of any and every country that is more fundamental than the energy sector.

So, if I say kind of breezily that we're looking at a couple of decades of fundamental change in how we create and use energy.

That is a monumentally big and fundamental task.

Now within that there are going to be economic cycles.

There may be, I fear to say, times of military confrontation such as we see today in Ukraine, thanks to the Russians.

There will be all kinds of crosswinds and headwinds that we encounter.

So, in a way, we've been given a foretaste of some of the challenges that are ahead of us.

And yes, in the short run, you are exactly right, there are decisions being made out of necessity, which take us in the wrong direction for climate.

Europe, for example, nobody a year ago would have imagined a future German government, especially one in which the Green Party is playing a leading role on economic affairs.

Nobody would have imagined that German government's electing to reopen coal fired power plants, to create a coal reserve, to push on an accelerated basis the construction of regasification port facilities

to accept LNG shipments and to turn that super chilled, liquefied natural gas back into normal commercial grade gas.

None of these things were elective choices made by the German government.

Who would not have wanted, they would not have wanted to end up here, but necessity drives those decisions in the short run.

They will not, I would assert, they will not change the longer-term focus.

Mr. Elkind, what type of investment in technology and, you know, needs to be made in order to solve these energy problems and the problems of climate change?

Look, we need all kinds of investments in a diverse portfolio of zero carbon energy systems.

We also need lots of investment in energy conservation and efficiency.

By the way, I think often about Japan's experience in the wake of the accident at Fukushima Daiichi.

Where in the priorities of the government and the priorities of the citizenry of Japan resulted in a 17% reduction, one sixth reduction in Japanese electricity demand in the space of several months.

Because there was a necessity for that kind of reduction in consumption after the closure of the nuclear power plants.

Around the globe, the technologies that look promising are many.

It's Zero Carbon Hydrogen will play, I expect, a very important role in a number of specific applications.

Its renewable energy development, especially solar and wind.

There are very exciting things that are happening in terms of the reduction in the costs of offshore wind generation capacity, for example.

There are big steps forward that are happening in storage, not only electrochemical storage, for applications, like electric vehicles, or consumer appliances,

but also long duration storage so that you can go from summer to winter requirements more easily.

The last area that I would mention that is terribly important in almost every jurisdiction is the need for innovation and new investment in the transmission of particularly zero carbon electricity.

If we don't get better at doing that, we're gonna face a world of difficulty going forward.

How do you see the future of the global energy order, and what's the US is role in that?

Well, I am by nature, somebody who is, tends to be very optimistic.

And so, I have the view that humanity will find a way to manage problems.

As long as we focus on them hard and understand the seriousness of them.

Nothing could be more serious than the climate change challenge.

It will define the lives of my kids and their kids.

So, the energy landscape going forward is going to be one of dynamism.

It is going to be one of profound changes in order to move away from the emissions of greenhouse gases.

You can't escape the reality, the necessity for that change all around the globe.

There are lots of countries in the, among the OECD, grouping of countries, the advanced economies that are saying they want to get off of fossil fuels.

If you look at the developing world, however, by contrast, you see that a shift from coal to natural gas would in many respects, be a big climate win for the short-term.

So, what's the role of the United States in this?

I hope that we play an absolutely central role in energy technology, innovation and commercialization, I hope we play a more proactive role in energy policy,

because that needs to change.

And I would hope that we can play a very important role in investing in solutions that will look different in different parts of the globe as we respond to the climate challenge.

So, Jonathan Elkind, thank you so much for your time.

Really appreciate having you on the program.

My pleasure.

Thanks very much.

There's an old saying that goes - "never waste a crisis."

So even as the current energy crisis rattles global markets and potentially changes the global energy order...

There's an opportunity here for policy makers to adopt a long-term strategy and plan for a more sustainable future.

I'm Del Irani, thanks for your company.

I'll see you next time.