How very shocking! Brendan
Nelson, Australia’s defence minister, has caused sharp intakes of breath by
saying something that is obviously true. He remarked last week that the Middle
East was “an important supplier of energy, oil in particular” and that – as a
result – people “need to think what would happen if there were a premature
withdrawal from Iraq”. Mr Nelson did not say that Iraq was a “war for oil”. He
merely noted that there was a lot of the stuff sitting under the ground there –
and that this mattered.
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This is not news. If you
look at the biggest geopolitical questions facing the world, energy is at the
heart of most of them. The world is, in fact, facing two energy crises. The
first is rooted in scarcity and traditional power politics. It involves the
struggle by the world’s largest and most energy-hungry economies to get hold of
the natural resources they need. Just yesterday the International Energy Agency
warned that the world oil market would be “extremely tight” over the next five
years. Demands from China and other emerging economies are rising. But Mary
Kaldor – co-author of a new book called Oil Wars (Pluto) – points out the
struggle to find new oil is a familiar sort of conflict, reminiscent of the
19th century “great game” or earlier imperial clashes.
The second energy crisis
is new. It is driven by climate change. It demands international co-operation
rather than competition. While the first crisis leads politicians and
businessmen to search out ever more oil and gas, the second demands that they
radically reduce their economies’ dependence on hydrocarbons.
Politicians find
themselves pulled in two directions. Tony Blair, the former UK prime minister,
spent much of his last few months in office trying to promote an international
agreement on climate change. But he also thinks that one of his most important
– if least heralded – achievements was to secure a long-term deal for Britain
on gas supplies from Norway.
In theory, the two energy
crises could point in the same direction. The development of alternative,
“clean” energies would reduce dependence on oil and gas. It is also crucial to
any effort to cut emissions of carbon dioxide. The trouble is that there is
little sign that alternative energy can be developed fast enough to rein in
demand for oil and gas. Mr Blair is a firm believer in the need to develop
nuclear energy. But even this policy – controversial as it is – seems unlikely
to fill the gap. One report published last week argued that four new nuclear
reactors a month would have to be built from now to 2070 to make any difference
to global carbon dioxide emissions (Too Hot to Handle? The Future of Civil Nuclear
Power, Oxford Research Group).
But while the debate about
global warming continues to generate more hot air than real change, the pursuit
of new sources of oil and gas is now central to the foreign policies of all the
world’s biggest powers. China’s controversial foray into Africa is its first
real effort to build power and influence outside Asia. The search for oil is
fundamental to this policy – in particular, China’s controversial relationship
with the government of Sudan. At home, China is opening a new coal-fired power
station every week, to the despair of global-warming activists.
Energy is also now
probably the most important – and divisive – issue facing the European Union.
Tensions between Poland and Germany have been raised by a Russo-German plan to
build a new gas pipeline under the Baltic Sea. But while the Germans are
placing their bets on securing long-term supplies from Russia, some other EU
countries are scrambling to diversify their sources of supply – alarmed by the
prospect that Russia could threaten to turn off the gas, as it did with Ukraine
in 2006. Britain has its deal with Norway. The Balts and the Finns are
constructing big new nuclear power stations.
Few in Europe will be
comforted to hear Alexander Medvedev of Gazprom, the giant Russian energy
company, remark matter-of-factly that: “In 25 years’ time, there will be only
three major suppliers of natural gas – Russia, Iran and Qatar.” Meanwhile the
Russian economy is growing fast and Russian foreign policy is becoming more
assertive – fuelled by a booming energy industry.
The US has its own energy
dilemma. It accounts for 25 per cent of the world’s oil consumption, but around
9 per cent of world oil production and 2 per cent of world oil reserves.
America’s demand for hydrocarbons keeps rising and the economy is still utterly
dependent on the stuff – 97 per cent of the US transport system is fuelled by
oil.
The Iraq war has done
nothing to ease this problem. If it was a “war for oil”, it was singularly
unsuccessful. Just before the invasion, oil was trading at around $30 a barrel.
On Monday it hit an 11-month high of more than $76 a barrel. President George
W. Bush announced last year that he intended to end his nation’s “addiction to
oil”. Billions are being poured into research on alternative energy.
All of this is reminiscent
of the last big energy panic in the 1970s. In 1973, President Richard Nixon
launched “Project Independence” – to free the US of reliance on foreign energy.
Jimmy Carter called energy independence “the moral equivalent of war” – and
said that by 2000 the US should get 20 per cent of its energy from solar power.
Since then US oil consumption has risen by 15 per cent and it is projected to
grow by another 24 per cent by 2025. Solar power currently accounts for less
than 1 per cent of US energy needs.
The US government is
doubtless sincere in its protestations that it means to kick the oil habit.
But, like many an addict, it has said similar things before – and the addiction
has only grown worse. Now the US is competing for energy supplies with new and
hungry addicts. Chinese oil consumption is currently growing by more than 7 per
cent a year.
Climate change has only
increased the moral and strategic case for alternative energy. Speaking at the
London School of Economics last week, Sir Nicholas Stern – author of an
influential report on climate change – struggled to sound optimistic. He
admitted that finding and deploying alternative energy fast enough to avoid
climate disaster would be very difficult, but added: “It is possible. And if
it’s not possible, we’re in real trouble.” I would say we’re in real trouble.
(By Gideon Rachman, Financial
Times, 09/07/2007)