Summary of the breakout conversation “Geopolitics of Energy” at the 2009 Annual Members’ Conference.


Dr. Daniel Yergin, President, Cambridge Energy Research Associates; Atlantic Council Individual Member; Member, Atlantic Council Business and Economics Advisory Group
In Conversation with Mr. Frederick Kempe, President & CEO, Atlantic Council


This session was held under Atlantic Council Rules, defined by President and CEO Frederick Kempe as “Chatham House Rules with military enforcement.”  Below is a general summary of the topics discussed.

Although not inevitable, global shocks are likely in the energy sphere.  It would be surprising not to be surprised by energy developments in the coming decades.  These will likely be related to one or more of the following major trends:

  1. The Globalization of Demand: rapidly emerging markets outside of North America and Europe mean that energy demand has not only shifted geographically, but is increasingly becoming genuinely globalized.
  2. Climate Change: the drive to reorder the energy market with a focus on carbon emissions increases unpredictability.
  3. Focus on Technology: improvements in technology have allowed for greater industry effectiveness in traditional energy sectors, e.g. drilling deeper and tapping into unconventional gas resources.
  4. Oil as a Financial Instrument: due to speculation and perceptions of future scarcity, oil prices are inflated.  The price of oil increasingly affects global finance, macroeconomics and the world’s distribution of power.
  5. Innovation: a new horse race is on between traditional fossil-fuel-based technologies and innovations (sometimes revisited) such as the electric car.

Due to difficulties with carbon sequestration, emerging markets such as China continue to build traditional coal plants at breakneck speed, and are reticent to participate in global agreements that limit carbon emissions.  That said, the Chinese are pouring investment into the development of green technologies such as wind, supported by a mix of coal, nuclear and gas.  In Europe and North America, however, renewable technologies would not be competitive without government subsidies.

Energy is increasingly a geopolitical concern.  As one of the energy industry’s largest clients, the U.S. military’s priorities can shape the direction of energy development, perhaps anointing algae as a viable biofuel.  As the High North melts, Russia and increasingly NATO are taking an interest in the energy resources that may suddenly become accessible.  Finally, the increasing control of governments over energy resources intensifies the likelihood of geopolitical wrangling over resources.  Progress is achieved when aspects of the energy sector are moved from the strategic realm to the commercial.

– Summary by Alexandros Petersen, Dinu Patriciu Fellow for Transatlantic Energy Security and Associate Director, Eurasia Energy Center

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