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Is a Green World a Safer World?

A guide to the coming green geopolitical crises.

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Greening the world will certainly eliminate some of the most serious risks we face, but it will also create new ones. A move to electric cars, for example, could set off a competition for lithium -- another limited, geographically concentrated resource. The sheer amount of water needed to create some kinds of alternative energy could suck certain regions dry, upping the odds of resource-based conflict. And as the world builds scores more emissions-free nuclear power plants, the risk that terrorists get their hands on dangerous atomic materials -- or that states launch nuclear-weapons programs -- goes up.

The decades-long oil wars might be coming to an end as black gold says its long, long goodbye, but there will be new types of conflicts, controversies, and unwelcome surprises in our future (including perhaps a last wave of oil wars as some of the more fragile petrocracies decline). If anything, a look over the horizon suggests the instability produced by this massive and much-needed energy transition will force us to grapple with new forms of upheaval. Here's a guide to just a few of the possible green geopolitical tensions to come.

 

The Green Trade Wars

One source of international friction is far more certain to be a part of our energy future than many of the new technologies being touted as the next big thing. Consider the new U.S. approach in the energy and climate bill recently passed by the House of Representatives, which contains provisions for erecting trade barriers to countries that do not adopt measures to limit emissions. Proponents say these are necessary to reduce the chances of companies relocating to countries with lower emissions standards in order to get an unfair competitive edge. Such tariff regimes are also seen as keeping corporations from relocating to places where climate laws may be more lax, such as China.

Green protectionism is already a growth business. When the European Union considered restricting entry of biofuels based on a range of environmental standards, eight developing countries on three continents threatened legal action in the fall of 2008. In fact, there is a long tradition of such disputes (dolphin-safe tuna, anyone?), but the business community is worried that green protectionism could be a defining feature of international markets in the decades ahead. And of course, the prospect of green trade wars or even just opportunistic fiddling with trade laws to "protect" local jobs suggests a period of related international tensions, especially between developed countries and the emerging world.

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The Rise and Fall of the Oil Powers

We're also going to witness the complex consequences of the simultaneous rise and decline of petrostates. First, the soaring price of oil -- which could skyrocket to $250 a barrel, according to some recent Wall Street estimates -- will fill their coffers. Sovereign wealth funds will grow fat again, and with the dollar likely to be weak for years to come, oil fat cats will be buying cheap U.S. assets and making American nationalists uncomfortable all the while.

Those fat cats still have a few good decades ahead of them. Twenty years from now, the world will still be getting at least three quarters of its energy from oil, coal, and natural gas. Today's energy infrastructure took years to develop, and even with revolutionary technological change, the energy mix can shift only marginally in the short term. So, as much as the West may wish to reduce its dependence on the likes of OPEC -- because it's not good to be too dependent on anyone, because oil is dirty and killing the environment, because Providence has seen fit to identify the world's most dangerous regions by locating oil beneath them, and because oil is a drug that has corrupted the character of many of its producing nations -- these countries will have considerable power for the foreseeable future.

But even as these states reach an apotheosis of power due to the price and scarcity of oil, the writing is on the wall. There is no return to oil once the supply peak has eventually been reached, and it is likely that the demand peak will come even before then. Burning oil at today's rate is just not a sustainable course unless you live inland or in far northern latitudes or own a company that manufactures hip waders.

So, the oil states will be rich, influential, and, paradoxically, in decline. The forward-looking among them might use the time they have to plan, to hedge their bets. But the slow death of the oil economy will undoubtedly lead to flare-ups as social pressures translate into political fractures and opportunistic politicians cling to wealth the old-fashioned way -- by grabbing it from their neighbors.

Predicting just where these fractures will occur is difficult. But it doesn't take much imagination to conclude that a Russia dependent on oil exports but faced with declining demand, dwindling reserves, and an unprecedented demographic meltdown will feel diminished in ways that are likely to be dangerous for its neighbors. Or consider how oil's inevitable decline will impact the succession struggle in Saudi Arabia, and that's if the current structure hasn't already collapsed under the weight of the ruling family's mismanagement and neglect of its people. Economic powers with a geological death sentence on their heads are likely to be erratic. One way or another, they will make the rest of us feel their pain.

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Aftershocks of the Coming Nuclear Boom

 Sorry, Mike Grunwald (see page 130), there is simply no way to reverse the effects of climate change without much more broadly embracing nuclear energy. Not only is it essentially emissions free, scalable, and comparatively energy efficient, but just 1 metric ton of uranium produces the same amount of energy as approximately 3,600 metric tons of oil (about 80,000 barrels). It is a far more sophisticated and proven technology than virtually all of the other emerging alternatives. These facts have already led to a very real renaissance in nuclear energy, one that is concentrated in the energy-hungry developing world (more than two thirds of announced projects are in developing countries).

Unfortunately, nuclear power is also fraught with real and perceived risks. Plant-safety hazards are pretty minimal, if history is any indicator. However, two real issues loom. One is how to safely dispose of spent fuel, a dilemma still hotly debated by environmentalists. And another is how to ensure the security of the fuel at every other stage of its life cycle, particularly in comparatively cash-strapped emerging countries, which are often in regions scarred by instability and home to terrorist organizations with their own nuclear ambitions.

With each new program, the chances of a security breach increase. Nor is the danger of a bad actor diverting fuel to produce an atomic bomb the only nuclear nightmare we're facing. Radioactive waste could be used to produce a dirty bomb with devastating impact. And fiddling with weapons programs behind closed doors might be the greatest security risk of all.

Nuclear-weapons expert Robert Gallucci once told me that, considering these growing risks, a deadly nuclear terrorist incident was "almost certain." Such an event would have broad global aftershocks affecting areas as diverse as civil liberties and trade. Imagine, for example, trying to ship anything anywhere in the world the day after. To give just one example, only 5 percent of shipping containers today are subject to visual inspection in the United States. Pressure to make inspection absolute in the wake of a nuclear event could easily lead to the buildup of millions of goods at U.S. ports, driving up consumer-goods prices as market supplies dwindle.

A new nuclear nonproliferation treaty is already on the drawing board, but even as U.S. President Barack Obama works to fulfill his dream of a world free of nuclear weapons, it is already clear that the risks posed by old-fashioned national stockpiles are being eclipsed by those associated with small groups exploiting cracks in an increasingly complex worldwide nuclear infrastructure.

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Water Wars and Worse

Today, 1.1 billion people don't have ready access to clean water, and estimates suggest that within two decades as many as two thirds of the Earth's people will live in water-stressed regions. It has become a new conventional wisdom that water will become "the new oil," as Dow Chemical Chief Executive Andrew Liveris has said, both because of the new value it will have and the new conflicts it will generate.

Ironically, the hunt for energy alternatives to replace oil could make the water problem much worse. Some biofuels use significant amounts of water, including otherwise efficient sugar cane (unlike rain-soaked ethanol giant Brazil, most sugar-cane producers have to irrigate). Similarly, the various technologies that are seen as essential to the clean use of coal are water hogs. Plug-in hybrid cars also increase water use because they draw electricity, and most types of power plants use water as a coolant. Even seemingly unrelated technologies, such as silicon chips (key to everything from smart-grid technologies to more efficient energy use) require a great deal of water to produce.

Many countries could begin to address this by working out schemes to charge for water, the single best way to grapple with this problem. Alternatively, they may build nuclear desalination plants that make saltwater drinkable. Neither course is perfect. A de facto privatization of water has occurred throughout the world, with low-income populations forced to purchase bottled water to avoid contamination, but even so, the ideal of the right to free water has held firm and governments have found it politically untenable to charge even nominal sums. And those nuclear desalination plants? As countries that have deployed this technology, such as India, Japan, and Kazakhstan, have found, they're bloody expensive, at hundreds of millions of dollars a pop.

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The Great Lithium Game

In Asia, Europe, and the United States, people are getting excited about the electric car -- and for good reason. Electric cars will enable greater independence from oil and could play a significant role in lowering carbon dioxide emissions. But the major fly in the ointment for the electric car is the battery.

Many solutions are being considered, including "air" batteries that produce electricity from the direct reaction of lithium metal with oxygen. The most likely option for now, though, is the lithium-ion battery used in cameras, computers, and cellphones. Lithium-ion batteries offer better storage and longer life than the older nickel-metal hydride models, making them ideal for a space-constrained, long-running vehicle.

All this means that lithium is likely to be a hot commodity in the years immediately ahead. It so happens that about three quarters of the world's known lithium reserves are concentrated in the southern cone of Latin America-to be precise, in the Atacama Desert, which is shared by two countries: Chile and Bolivia. Other than these reserves and the Spanish language, the one thing these two countries have in common is a historical animosity, cemented by their late 19th-century War of the Pacific. Chile was able to cut off Bolivia's access to the sea, a maneuver that rankles bitterly in La Paz to this day.

Bolivia's lack of coastline could become an issue again if the two lithium powerhouses start jostling to attract investors. Competition between Bolivian and Chilean lithium mines and, potentially, over domestic production of lithium batteries could very well bring about a second War of the Pacific -- to say nothing of the huge environmental costs that lithium mining incurs. Any such tension could jeopardize U.S. efforts to adopt electric vehicles, as the United States already gets 61 percent of its lithium imports from Chile. China and Russia, which also hold significant reserves, would be poised to ride out and profit from such an event. Further, conflict between the two Latin American states would likely bolster the fortunes of batteries made from less efficient resources, such as those used in nickel-metal hydride batteries, or boost other technologies that use different substances with their own drawbacks. And in any event, the possibility of a regional lithium rush reminds us that whatever technologies take hold, demand will emerge for the scarce commodities on which they depend … and we know well where that can lead.

These are just a few, fleeting glimpses of the future, but many geopolitical ramifications of moving toward green energy are very much with us already. In India, anxiety among some in the business community is growing as the United States and China meet secretly and not-so-secretly to try to hammer out an agreement on climate change. It's fast dawning on some Indians that their government's tough stance (resisting mandated emissions caps and offering only to keep India's per capita emissions at or below the average emissions in developed countries) could effectively keep it from having a seat at the table when the core elements of a global deal are worked out in the conversation between the world's two leading emitters and a handful of others. Brazil has a very different view on where such talks should come out because it wants credit for its role as the world's largest absorber of carbon. Russia also has its particular stance, that of an energy provider, and, as with other countries in northern climes, global warming could increase Russia's tourism income, boost its agricultural output, and produce other economic benefits.

Add in the tensions associated with differing views on green protectionism, the shape of relevant international institutions, and the competition for resources, and you can easily see how this contentious climate conversation is going to increasingly reshape the world. And who knows which new technologies could make much of today's speculation moot?

The bottom line: A shift away from dirty old fuels is the only path toward reducing several of the greatest security threats the planet faces, but we must step carefully and avoid letting our optimism run away with us. By acknowledging that a greener world will hardly be devoid of geopolitical challenges and preparing accordingly, we may find a path to defusing our threats today, while largely avoiding the inadvertent drawbacks of desperately needed innovation.

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Don't Be Crude

Why Barack Obama's energy-dependence talk is just demagoguery.

"Energy independence" has become a byword on the American political scene, and invoking it is now as essential as baby-kissing. All the recent U.S. presidential candidates employed it, and to this day, the White House Web site lists as a guiding principle the need to "curb our dependence on fossil fuels and make America energy independent." Expect a whole new round of such rhetoric when the global economic recovery begins, and with it, higher oil prices return.

But this "energy independence" motto is political posturing at its worst -- a concept that is unrealistic, misguided, and ultimately harmful to energy-producing and -consuming countries alike. And it is often deployed as little more than code for arguing that the United States has a dangerous reliance on my country of Saudi Arabia, which gets blamed for everything from global terrorism to high gasoline prices.

Saudi Arabia holds about 25 percent of the world's proven oil reserves, is by far the largest exporter of oil, and maintains the largest spare production capacity in the world. U.S. oil production started to decline in 1970, while U.S. energy needs have skyrocketed since that time, and the United States is now the world's largest oil consumer. There is no technology on the horizon that can completely replace oil as the fuel for the United States' massive manufacturing, transportation, and military needs; any future, no matter how wishful, will include a mix of renewable and nonrenewable fuels.

Considering this, efforts spent proselytizing about energy independence should instead focus on acknowledging energy interdependence. Like it or not, the fates of the United States and Saudi Arabia are connected and will remain so for decades to come. This realization need not strike fear into the hearts and pocketbooks of Americans. Saudi Arabia has a long record of specific actions that prove its strong commitment to providing the world with stable energy supplies. We have consistently pushed for lower prices than any other OPEC members have, and we sharply increased supplies after the Iranian Revolution, during the first Gulf War to replace the loss of Iraqi production, and immediately after the Sept. 11, 2001, terrorist attacks -- all in order to calm jittery global markets.

In fact, Saudi Arabia's oil policy has been consistent for the last 30 years: work to ensure the stability of the world's energy supply. Today, a barrel of oil generally costs around $70. To put this into context, we should recall that even during the spike of 1973, the price of oil in 2008 dollars was just slightly over $100.

High oil prices have undoubtedly given those calling for U.S. energy independence a new talking point. But here, too, it's important to understand what is really going on. Following the irrational and unsustainable price spike of the past few years, Saudi Arabia undertook investments to make sure the world would not be surprised by such a supply failure again. After investing almost $100 billion to reach 12.5 million barrels per day of sustained capacity, today we hold about 4.5 million barrels per day of spare capacity (or more than 90 percent of the global total), enough to replace the second- and third-largest OPEC producers overnight if the world needed more oil.

We admit that, like the United States and other countries, we were surprised by the way prices escalated in recent years. Many people blame demand from China and other emerging markets. But the sad fact is that four oil-producing countries failed to live up to production expectations. In 1998, Iran, Iraq, Nigeria, and Venezuela were producing 12.7 million barrels per day. Everyone -- including major companies such as BP and our own planners at Saudi Aramco -- expected them to be producing 18.4 million barrels per day in 2008. Instead, due to civil strife, failed investments, or in the case of Iraq, a U.S. invasion, they were producing only 10.2 million barrels per day. That drove the price part of the way up. Then speculators, in the form of hedge funds, did the rest.

Another factor in rising oil prices is the shortage in the world's refining capacity. In the United States, for example, not one new refinery has been built in more than 30 years. Add to this problem another: "boutique oil," the different grades of gasoline required in different localities. I encountered one of these anomalies when I visited Chicago three years ago. There is an oil refinery 50 miles from Chicago, but it does not supply the city with gasoline because the grade does not comply with Chicago's standards. Instead, Chicago has to import its gas from the East Coast. Prices at the pump would be much lower if there were direct supplies from the refinery to the city.

There are many causes behind last year's oil price spike, but Saudi Arabia is not one of them. Unlike large oil companies, which have been slow to respond to the supply crunch with more capital investments, the kingdom realized that such investments -- even if they seem counterintuitive in the short term -- are essential to avoiding catastrophic energy shocks. We have proposed a billion-dollar fund to promote research into making fossil fuels more environmentally friendly and have promoted the International Energy Forum to bring together producers, consumers, and the oil companies that extract, refine, and sell oil. Although it has yet to get the full support of consumers, the forum has held regular meetings to discuss relevant issues.

But Americans don't hear all this from their political leaders. In one of his very first speeches as U.S. president, for instance, Barack Obama declared that "America's dependence on oil is one of the most serious threats that our nation has faced." He said that it "bankrolls dictators, pays for nuclear proliferation, and funds both sides of our struggle against terrorism," and announced what he called "the first steps on our journey toward energy independence."

The allure of demagoguery is strong, but U.S. politicians must muster the courage to scrap the fable of energy independence once and for all. If they continue to lead their people toward the mirage of independence and forsake the oasis of interdependence and cooperation, only disaster will result.

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