THE NEW ENERGY REVOLUTION AND THE WESTERN HEMISPHERE: OBSTACLES, ALIGNMENTS & OPPORTUNITIES

7/28/2019 THE NEW ENERGY REVOLUTION AND THE WESTERN HEMISPHERE: OBSTACLES, ALIGNMENTS & OPPORTUNITIES

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The New Energy Revolution andthe Western Hemisphere:

Obstacles, Alignments ANDOPPORTUNITIES

by

Regina Joseph

Masters of Science DEGREE THESIS

New York university center for global affairs

SPRING 2012

Thesis advisors:

Professor Carolyn kissane

Professor Michael f. oppenheimer


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ABSTRACTNew gas and oil discoveriesa great majority centered in the Western Hemispherehave

changed the geological balance of energy in the world. The geopolitical implications of this

disruptive revolution in hydrocarbon availability may set the stage for conflict in the Middle

East, where regional instability has long been the driver behind increased defense costs and

foreign policy campaigns that have not improved Americas security. As the US defense stance

tacks towards confrontation in Asia and away from the burdens of the Middle East after a

decade of counterinsurgency approaches, I argue that the reach of US foreign policy may be

compromised by a crucial oversight: it overlooks the critical obstacles, potential alignments and

real opportunities that the emergent fossil fuel environment presents. If the US tactically

marshals its domestic resources and strengthens its foreign policy engagements in the Americas

around sustainable energyin cooperation with Chinaas a matter of national defense,

instead of advocating provocative military and economic balancing options, American security

may be better assured.


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TABLE OF CONTENTS

I.

INTRODUCTION.......................................................................

.............4

A.

THESIS.............................................................................

5

B.

BACKGROUND..........................................................................

...7

C.

METHODOLOGY..........................

..10

D. STRUCTURE OF THE

THESIS.....................................................12

II. A DISRUPTIVE ENERGY REVOLUTION

A. THE EVOLVING ENERGY

ENVIRONMENT...................................14

B. THE MIDDLE EAST POST-ARAB

SPRING....................................17

C. THE 2012 STRATEGIC DEFENSE

GUIDANCE..........................21

D. CHINA: A US

FOE?......................................................................26

E. RUSSIA: PUTIN, POWER aND

PETROLEUM................................30

F. A REBALANCING OF ENERGY

GEOPOLITICS..............................33

III. ALIGNMENTS OLD AND NEW

A. THE WESTERN HEMSIPHERE: DEJA VU

ALL OVER AGAIN?........36

B. THE ENVIRONMENT, KYOTO AND A G-ZERO

world.......41


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C. A

CURE?.....................................................................................43

IV. OPPORTUNITIES IN DISCORD

A. JOBS, DOMESTIC APATHY AND POLITICAL

GRIDLOCK.48

B. ALIENS, JIMMY CARTER AND

ENGINEERING CONSENT............52

C. A WAY FORWARD: LEVERAGING THE

DEPT. OF DEFENSE......56

V.

CONCLUSION

..61

VI.

BIBLIOGRAPHY......................................................................

...........63

TABLE I: ENDURING NATIONAL

INTERESTS...22

TABLE II: HEMISPHERIC ENERGY STEERING

COMMITTEE WORKING

GROUPS.

.38

CHART i: GLOBAL SHALE

GAS.36


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I. INTRODUCTIONEnergy issues constitute major drivers behind national security: the price and availability of

hydrocarbons; the environmental consequences of fossil fuel consumption; and the

transnational politics that derive from energy supply and demand. Though energy is a matter of

vital national interest over which wars have been fought, political and defense strategic

platforms do not always astutely integrate the leverage and opportunity that energy affairs

offer. At a time when analysts breathlessly proclaim an unprecedented abundance of

hydrocarbon resources through new discoveries, I argue that the US has not yet developed a

cohesive grand strategy that accounts for the central role that energy plays in geopolitics and

American security. Instead, the current policy approach appears reactive and haphazard,

ranging from provocative and potentially misdirected remonstrations against Chinese resource

pursuits; lack of sophistication and indifference towards potential Western Hemisphere energy

allies; inapt tactics in the Middle East; and flip-flopping on North American pipeline issues.

To be sure, domestic political sectarianism augments the difficulty of producing a useful

grand strategy to an exponential degree. However, this thesis serves to present a simple

recommendation with the aim of circumventing the current US legislative and populist

quagmire that bogs down good policymaking. The exigencies of rapidly changing energy

markets and the choices made by states under pricing and supply pressures demand a clearer

national planone that encompasses a feasible pathway to sustainable energy security. That

security includes not only market-based facets of conventional and unconventional

hydrocarbons as well as alternative and renewable resources, but also the environmental

consequences of increased energy consumption.


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The US cannot afford to postpone articulating such a strategy: as events in the Middle

East quickly shift the stakes of engagement between the US, its allies and states that seek

opportunity in conflict, a rise in oil prices lurks as a constant, destabilizing threat; China has

spent a sizeable proportion of its sovereign wealth fund on acquiring stakes in unconventional

fuel discoveries in North and South America as the US dawdles on its own options to work with

Western Hemispheric partners; and despite President Obamas support for sustainable energy

initiatives as stated in the National Security Strategy of 2010, his administrationsall of the

above energy policy can be at cross-purposes with his foreign policy (a problem compounded

by an obstructive legislature). The consequences of allowing the US to proceed much longer

without commitment to a national framework may result in not only political and economic

dangers, but also almost certainly in serious environmental hazards that will adversely affect

the living conditions of Americans.

A. THESISThe primary assertion of this thesis is that the worlds current geopolitical realities

require the US to alter its approach to energy as a component of policy-making. Until the 1973

oil crisis and the subsequent creation of the Department of Energy in 1977, energyaside from

nuclear concernswas never treated in the US as a substantive policy issue. From that point

on, energy assumed relevance as matter of national political importance, but energy policy has

typically been articulated as its own separate area in the federal systema component of

defense and foreign policies surely, but yet still a topic apart. I argue that the changes of the


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B. BACKGROUNDIn the first decade of the 21st century, the relationship between the US and the Middle

East was marred by conflict and high oil prices. The strains of the Iraq war, the lack of a

resolution in the Israel-Palestine peace talks and the constant threat of nuclear breakout in Iran

were compounded by oil reaching a record price of USD$145 in 2008 on the NYMEX Exchange.1

As mature economies worldwide nosedived under mounting financial crises, analysts pondered

the possibility of oil tipping past $200 a barrel.2

Peak oil was the predominant narrative in the

energy field, evidenced by such then-blockbusters as energy banker Matthew Simmons book

Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.

Today, that narrative seems like ancient history. Within a span of months, fears of

energy scarcity have been replaced by excitement over energy abundance via new oil and gas

discoveries inamong other localesthe US, South America and Canada, thus turning the

global focus away from turbulence in the Eastern Hemisphere to new possibilities in the

Western Hemisphere. In a March 2012 Wall Street Journal op-ed Citigroup energy analyst Ed

Morse heralded a domestic energy revolution with the provocative heading Move Over OPEC--

Here We Come.3

For the first time since 1949, the US has returned to being a net petroleum-

product exporting country, exporting more than 1.2 million barrels per day by the start of

1Anonymous. NYMEX crude steady above $145 after record. Reuters UK, 4

thJuly, 2008,

http://uk.reuters.com/article/2008/07/04/markets-nymex-crude-idUKT34838720080704(accessed 5 January,

2012).2

Among many others, oil billionaire T. Boone Pickens predicted $200-$300 a barrel by 2011 in 2008, and at the

same time, Goldman Sachs analysts promoted their super-spike theory which supported the same conclusion as

Pickens: Steve Gelsi. New super-spike might mean $200 a barrel oil. Wall Street Journal Market Watch, 7

March, 2008, http://www.cbsnews.com/8301-502163_162-4390453-502163.html(accessed 7 March, 2008) and

Scott Conroy. T. Boone Pickens Predicts $200 A Barrel Oil. CBS News, 27 August, 2008,

http://www.cbsnews.com/8301-502163_162-4390453-502163.html(accessed 27 August, 2008).3Ed Morse. Move Over OPECHere We Come. Wall Street Journal, 20

thMarch, 2012, p.A15.
http://uk.reuters.com/article/2008/07/04/markets-nymex-crude-idUKT34838720080704http://uk.reuters.com/article/2008/07/04/markets-nymex-crude-idUKT34838720080704http://www.cbsnews.com/8301-502163_162-4390453-502163.htmlhttp://www.cbsnews.com/8301-502163_162-4390453-502163.htmlhttp://www.cbsnews.com/8301-502163_162-4390453-502163.htmlhttp://www.cbsnews.com/8301-502163_162-4390453-502163.htmlhttp://www.cbsnews.com/8301-502163_162-4390453-502163.htmlhttp://www.cbsnews.com/8301-502163_162-4390453-502163.htmlhttp://uk.reuters.com/article/2008/07/04/markets-nymex-crude-idUKT34838720080704


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2012a remarkable point after more than 60 years of being a net petroleum-product import

consumer.4

All of a sudden, the possibility of energy self-sufficiency appears achievable.

But the journey towards strengthening US sovereignty through energy self-sufficiency

contains a variety of obstacles. Riven by war, sectarian insurgencies and governance transitions,

the Middle East poses a minefield of foreign policy traps for the US, especially as Syria unravels

and Iran plays a game of nuclear brinksmanship. A regional conflagration would directly impact

oil prices and pressure American leadership to act decisively, a potential made all the more

complicated by the repositioning of the Department of Defenses priorities away from countries

positioned around the Persian Gulf and towards China and the Pacific. Nonetheless, I argue that

an unfolding Middle Eastern scenario could actually assist an American attempt to construct a

grand strategy with energy security at its core.

To advance that goal however, the US will need to reconsider its relationships with its

Western Hemispheric neighbors, as well as China. Canada, Brazil and others offer potential

resources and markets that offer a counterweight to the Middle East. In Canada alone, oil sands

crude production is expanding at a rate of one million barrels of oil per day every five years;5

but without a pipeline solutionin this case, the hotly contested Keystone XLto get oil sands

crude to American refineries and ports near the Gulf of Mexico, the US must face losing that

option as Canada considers outlets via its Pacific coast to reach China as a customer. Beyond

import and export issues around hydrocarbons, an impending future where emissions-induced

climate change will increase the value of water and agricultural resources heightens the need

4Ibid.

5Ibid.


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for the US to consider deepening ties to Canada and Brazil, the third and first largest freshwater

reserves in the world respectively. This will however require improved diplomatic and trade

relations with the US neighbors.

Climate change caused by our burning of fossil fuels requires the US to also reconsider

its attitude towards China. By treating the rapidly growing economy as an adversary,

particularly within the context of the DoDs 2012 guidance report, the US is building a barrier

that will make global greenhouse gas reduction more difficult, if not impossible. Sustainable

energy initiatives require cooperation with China. Energy efficiency concepts that embrace

China, like the CURE multilateral coal efficiency theory put forth by Kevin Jianjun Tu at the

Carnegie Endowment for International Peace are a step forward in the right directionbut for

such an idea to be viable, it may yet require a Western Hemispheric context, as well as the

construction of a grand bargain the US must make with its citizens.

To that end, the US will also need to consider how to direct its message to its people if it

intends to implement an energy-centric grand strategy with sustainable self-sufficiency as its

goal. National programs with green efficiency reforms demand behavioral changesa process

which proceeds slowly and not without recalcitrance. A message that encourages and

incentivizes compliance must be developed, although I note that such a message has its

historical precedents. American presidents Woodrow Wilson and Jimmy Carter both tried to

build support for unpopular national objectives, but with diametrically opposed results. Keeping

their successes and failures in mind, I attempt to reconcile their ideas into a more practical

suggestion that utilizes the central importance of the Department of Defense in energy matters.


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data sources, including papers and published material by such well known energy industry

analysts as Ed Morse, Steve LeVine, and Philip K. Verleger Jr., among others.

Two critical documents on which this studys argument is based are the Department of

Defenses 2012 strategic guidance report entitled Sustaining US Global Leadership: Priorities for

21st

Century Defense and its antecedent, the White Houses National Security Strategyof 2010.

The former adds definition to the latter by outlining the DoDs security priorities for the

foreseeable future, and has received much public attention for its identification of the so-called

pivot to China and East Asian security as the US focus on the Middle East winds down.

The collection of essays found in the Center for Strategic and International Studies book

Energy Cooperation in the Western Hemisphere: Benefits and Impediments provided significant

historical guidance for the thesis sections on past alignments and the possibilities for future

ones. Even though the book was published five years ago, much of its data is still relevant.

Historical antecedence was also provided by two major sources: former President Jimmy

Carters 1977 Moral Equivalent of War speech, and Edward Bernays 1947 pamphlet, The

Engineering of Consent.

Interviews were conducted separately with global affairs expert Thomas P.M. Barnett;

David Pumphrey at the Center for Strategic and International Studies and Sarah Ladislaw,

currently at Statoil in Washington D.C., both of whom worked directly on research and

hemispheric energy initiatives together; the CURE initiative developed by Kevin Jianjun Tu at

the Carnegie Endowment for International Peace led to two extensive interviews with him to

establish more depth on Chinas energy concerns; and critical insight on policy matters was


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provided by Michael Emmerman, an intelligence analyst at the Department ofJustices Strike

Force. These interviews constitute key source material that helped shape this thesis.

D. STRUCTURE OF THE THESIS

The thesis is arranged around a three-part structure: the first part is descriptive,

culminating in a scenario that conjures one potential outcome from current events; the second

is both explanatory and exploratory; and the third emancipatory.

In the first part, A Disruptive Energy Revolution, I document changes in how new

hydrocarbon discoveries have altered the global dialogue on resources. Pricing and availability

have caused ripple effects at a regional level, especially for countries whose economies depend

most upon fossil fuel extraction and export. I describe the current status of the Middle East,

where conflagration and instability compound the overall security environment the US must

reconsider. This reconsideration is expressed via the White Houses National Security Strategy

and the Department of Defenses 2012 strategic guidance report, which I outline and analyze.

Both invite closer scrutiny of the USs position on China, whose voracious need for fuel to

support its growth generates condemnation and antagonistic projection from the US that may

ultimately prove counterproductive. My focus subsequently turns to Russia, which seeks

advantage from the Middle Easts shifts, thanks to vast energy reserves that put it on par with

Saudi Arabia as well as an economic dependency on arms exports. Taken together, I craft a

potential scenario that highlights what could happen should current conditions worsen.

The second part of the thesis, Alignments Old and New, takes as its premise the

possibility of opportunities for partnership among states as a result of the evolving energy


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milieu. I start by exploring the potential for a regional Western Hemispheric energy framework,

given the position of the US and its geographical and economic relationships with Canada and

countries in South America like Brazil. This investigation, however, requires a recounting of a

previous historic attempt to create a hemispheric energy alliance in order to dissect the

plausibility of a regional cooperative union. To address gaps and divergences in a strictly

Western Hemisphere conception, I turn my attention to the CURE concept developed by Kevin

Jianjun Tu at the Carnegie Endowment for International Peacea proposed regional alignment

that hinges on energy efficiency around coal as a way to unite the shared interests between

China, the US, Russia and Europe. I close this section by suggesting a Western Hemispheric

modification that builds upon Tus original concept.

After identifying the dangers and the promise in first and second parts respectively, I

attempt to create a prospect for action in the third, Opportunities in Discord. To lay out a

possible path for achieving the ambitious and complicated goal of a sustainable national energy

security policy, I first address the political barriers and then invoke the prescience of Jimmy

Carter and Edward Bernays; Bernays idea, the engineering of consent, served as a powerful

messaging concept in an earlier time when action was required but paralysis reigned due to a

deeply divided, partisan American populace. By leveraging the scenario found in the first part of

the thesis, I suggest constructing a strategic plan that puts energy squarely at the heart of

American policy-making. Reviewing the initiatives already undertaken and incentives that make

sense for the Department of Defense, I conclude that a new grand strategy could serve as the

mechanism in which government can lead on energy without inviting reflexive populist and

political push-back.


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II. A DISRUPTIVE ENERGYREVOLUTION

A.THE EVOLVING ENERGYENVIRONMENT

When Goldman Sachs analyst Arjun N. Murti ventured his super spike theory of oil in a

report in 2005, traders quaked and media outlets expressed outrage.7

But by 2008, pundits

congratulated him on his prescience: his predictions of the mounting price of crude had been

right, and given the burgeoning fears of a peak oil scenario, his projection of oil hitting $200 a

barrel within the next five years seemed appropriate for that apocalyptic period in the global

economy.8

After all, oil had already pierced a $145 record ceiling in US-traded prices that year.

In 2011, the war in Libya and Arab Spring uncertainty caused the Brent crude

benchmark price to hit its highest annual average in history in both inflation-adjusted and

nominal terms; it averaged $111 by the end of 2011, significantly above its $97 annual average

during super spike-crazed 2008, according to IHS Cambridge Energy Research Associates.9

Today however, in spite of price increases, the dread of peak oil and super spikes has been

overridden by fervent announcements of a new era of energy profusion.

New oil and gas finds in North and South America, Africa and Eurasia yield the promise

of a true long-term revolution in energy geopolitics. Despite their predominance in production

7Andy Serwer. Are oil prices headed for a super spike? Fortune, 2 May, 2005.

8Louise Story. An Oracle of Oil Predicts $200-a-Barrel Crude. New York Times, 21

stMay, 2012,

http://www.nytimes.com/2008/05/21/business/21oil.html(accessed 15 December 2011).9Dan Burrows. Oil poised to hit 150-year high. CBS News, 15

thDecember, 2012,http://www.cbsnews.com/8301-

505123_162-57343439/oil-prices-poised-to-hit-150-year-high/(accessed 15 December, 2011).
http://www.nytimes.com/2008/05/21/business/21oil.htmlhttp://www.nytimes.com/2008/05/21/business/21oil.htmlhttp://www.cbsnews.com/8301-505123_162-57343439/oil-prices-poised-to-hit-150-year-high/http://www.cbsnews.com/8301-505123_162-57343439/oil-prices-poised-to-hit-150-year-high/http://www.cbsnews.com/8301-505123_162-57343439/oil-prices-poised-to-hit-150-year-high/http://www.cbsnews.com/8301-505123_162-57343439/oil-prices-poised-to-hit-150-year-high/http://www.cbsnews.com/8301-505123_162-57343439/oil-prices-poised-to-hit-150-year-high/http://www.cbsnews.com/8301-505123_162-57343439/oil-prices-poised-to-hit-150-year-high/http://www.nytimes.com/2008/05/21/business/21oil.html


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billion barrels in May 2012.17

This same geological formation extends to deepwater

opportunities off Angolas West African coast; the estimated total 60 billion barrels of oil and

gas found in Angola and other West African nations like Nigeria, Cote dIvoire and Equatorial

Guinea vie for investment against discoveries made in Spring of 2012 in East Africanow

dubbed an energy El Dorado, thanks to finds in Kenya, Uganda, South Sudan, Ethiopia,

Tanzania and Mozambique, their estimates totaling well over several billion barrels.18

New and unexpected discoveries in Asia, such as a potential billion-barrel field in

northern Afghanistan, and even in the Middle East in Israel add to the increasing diversity of

energy resources beyond the Middle East. And estimates have yet to be made for as-yet-

unproven reserves under melting Arctic Circle ice. Without question, Saudi Arabia and other

Gulf states maintain a reserves-to-production hegemony that is unlikely to change in the near

future. However, with International Energy Agency estimates of potentially recoverable

unconventional resources up to 1.5 times larger than remaining conventional proven

reserves,19

a sea-change in global energy is at the cusp of evolution.

B. THE MIDDLE EAST POST-ARABSPRING

Against the backdrop of changing energy fortunes beyond its regional boundaries, the

Middle East continues to go through its own governance transformations. While resource-poor

Egypt and Tunisia continue to work through the difficult and occasionally violent process of

17Kjetil Malkenes Hovland. Statoil upgrades Brazil pre-salt discoveries to 1.24 bbl. World Oil, 29 May 2012,

http://www.worldoil.com/Statoil_upgrades_Brazil_pre_salt_discoveries_to_1_24_billion_bbl.html18

Anonymous. Eastern El Dorado? The Economist, 7 April, 2012, http://www.economist.com/node/21552265.19

Daniel Mockli. Strategic Trends 2012: Key Developments in Global Affairs. Center for Security Studies, ETH

Zurich, 2012, p.84.
http://www.worldoil.com/Statoil_upgrades_Brazil_pre_salt_discoveries_to_1_24_billion_bbl.htmlhttp://www.worldoil.com/Statoil_upgrades_Brazil_pre_salt_discoveries_to_1_24_billion_bbl.htmlhttp://www.worldoil.com/Statoil_upgrades_Brazil_pre_salt_discoveries_to_1_24_billion_bbl.html


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2.6 million barrels a day24

were a boon in helping offset the loss of Libyas supply, but it was

Iraqs fellow OPEC states that really made the difference in preventing a global supply

meltdown. Saudi Arabia, the United Arab Emirates and Qatar were able to rapidly escalate oil

production, making 2011 a record year for these OPEC members (including Kuwait and others)

as they almost entirely accounted for an annual world net increase of 1.1 million barrels of oil

per day.25

However, the turbulence of the Arab Spring is being felt in the Gulf states too, as they

grapple with sectarian and ethnic opposition; resistance to monarchic rule; questions of

dynastic succession; employment issues and economic inequality; and the long-term problem

posed by steadily declining global oil consumption. Given Gulf states central importance in

keeping global oil prices stable and supply flowing, any threat to regime stability among these

countries usually results in swift countermeasures. For example, protests that roiled Bahrain,

Kuwait and Oman in 2011 have spurred the UAE to curtail dissent by limiting both foreign and

domestic democratic organizations;26

Saudi Arabia, whose aging ruling family lost yet another

member in 2012, has offered a few small concessions to reform, particularly with regards to

women, but it still actively preserves the status quo via censorship and restrictions.

While the Gulf states contemplate internal risks to their governments post-Arab Spring

however, they now confront the wider perils of disruption in neighboring Syria and Iran.

24Iraq: Country Analysis Brief, US Energy Information Administration,http://205.254.135.7/countries/country-

data.cfm?fips=IZ(accessed 15 December, 2012).25

BP Statistical Review of World Energy June 2012, p.3.26

In March 2012, the UAE shuttered offices of the German-backed Konrad Adenauer Stiftung and the American-

backed National Democracy Institute: Concerns as UAE shuts down rights groups. Al-Jazeera, 1 April, 2012,

http://www.aljazeera.com/news/middleeast/2012/04/2012415259223454.html(accessed 1 April, 2012).
http://205.254.135.7/countries/country-data.cfm?fips=IZhttp://205.254.135.7/countries/country-data.cfm?fips=IZhttp://205.254.135.7/countries/country-data.cfm?fips=IZhttp://205.254.135.7/countries/country-data.cfm?fips=IZhttp://www.aljazeera.com/news/middleeast/2012/04/2012415259223454.htmlhttp://www.aljazeera.com/news/middleeast/2012/04/2012415259223454.htmlhttp://www.aljazeera.com/news/middleeast/2012/04/2012415259223454.htmlhttp://205.254.135.7/countries/country-data.cfm?fips=IZhttp://205.254.135.7/countries/country-data.cfm?fips=IZ


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Further deterioration in the Syria and Iran situations could become the catalyst for just

the kind of super spike Goldman analyst Murti anticipated. While oil prices have stayed

significantly low during the first half of 2012 due to a combination of global economic malaise

and US crude stocks at 12% above the five-year average (resulting in Brent crude dropping

under $90 in June27

), a regionalpossibly nuclearconflagration that draws in Western

powers, Russia and the Middle Easts largest oil producers could send prices back into 2008

territory or higher.

C. THE 2012 STRATEGIC DEFENSEGUIDANCE

Given the recent combined effects of the morphing global energy production

environment and destabilizing long-term change in the Middle East, its reasonable to expect

that fortifying the American energy stance to avoid further disruption in an unsteady and

interdependent world system would be of utmost priority to the US from a national security

standpointand thus integral as part of a larger grand strategy. But as outlined in the Obama

White Houses first national security strategy, energy accounts for only brief mentions.

Released in 2010, the strategy carefully repositions American objectives away from the

aggressive nation-building agenda of the previous George W. Bush administration that sunk the

country into economically devastating wars and increased anti-American sentiment worldwide.

Instead, this articulated variant of a grand strategy focuses on regaining international trust by

renewing American leadership so that we can more effectively advance our interests in the 21st

27Anonymous. Benchmark crude price slides on concerns about US and global economies. The Washington Post,

5 July, 2012, p. D3.


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century.28

To achieve that aim, the plan identifies four enduring national interests: Security,

Prosperity, Values and International Order. Objectives under each interest are grouped in the

following table:

SECURITY PROSPERITY VALUES INTERNATIONAL ORDER

Strengthening Security

and Resilience at Home

Strengthen Education

and Human Capital

Strengthen the Power

of Our Example

Ensure Strong Alliances

Disrupting, Defeating and Dismantling

al-Qaida and Violent Extremist Affiliates

Enhance Science,

Technology and

Innovation

Promote Democracy

and Human Rights

Abroad

Build Cooperation with

Other 21st

Century Centers

of Influence

Reversing the Spread of Nuclear and Biological

Weapons & Securing Nuclear Materials

Achieve Balanced and

Sustainable Growth

Promote Dignity by

Meeting Basic Needs

Strengthen Institutions and

Mechanisms for Cooperation

Advancing Peace, Security and

Opportunity in the Greater Middle East

Accelerate Sustainable

Development

Sustain Broad Cooperation

on Key Global Challenges

Invest in the Capacity of

Strong and Capable Partners

Spend Taxpayer Dollars

Wisely

Secure Cyberspace

Table I: ENDURING NATIONAL INTERESTS Data provided by White House National Security Strategy 2010

Interestingly, within the entirety of the strategic plan, the subject of energy only really

appears under Prosperity (and not under Security, despite the billions of dollars spent in

defense of fossil fuel supplies) as a subcategory in Enhancing Science, Technology and

Innovation as a matter of transforming the energy economy. This limited focus ties jobs and

prosperity primarily to clean and renewable energy development. Energy as a subject comes

up only twice more in the document under International Order, where it rates the briefest of

mentions in Build Cooperation with Other 21st

Century Centers of Influence in a passage

regarding interdependent relations in the Americas, and then in a slightly larger explication

under Sustain Broad Cooperation on Key Global Challengeswhere climate change matters

28The White House. National Security Strategy. May 2010.http://www.whitehouse.gov/sites/default/files/rss_viewer/national_security_strategy.pdf, p. 1.
http://www.whitehouse.gov/sites/default/files/rss_viewer/national_security_strategy.pdfhttp://www.whitehouse.gov/sites/default/files/rss_viewer/national_security_strategy.pdfhttp://www.whitehouse.gov/sites/default/files/rss_viewer/national_security_strategy.pdf


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at home and abroad are predicated (and laid to rest, thereby obviating a US responsibility to

lead) on global legislation and implementation.

Two years on from the creation of this document, after a tumultuous Arab Spring and

resource discoveries yielding promises of a US hydrocarbon renaissance, the relevance of

energy to security in both economic and geopolitical terms suggests that the National Security

Strategy markedly underemphasizes the decisive role energy plays in Americas future.

However, even 2012 updates of the strategy do not address this imbalance.

As a more granular version of the National Security Strategy of 2010 with the aim of

identifying $400 billion in defense savings, the 2012 Department of Defense strategic guidance

(titled Sustaining US Global Leadership: Priorities for 21st

Century Defense) outlines a very

different form of power projection compared to previous decades. Posturing, threat reduction,

stability programs and deterring conflict now constitute the cornerstones of American

defense.29

While peace in Israel, defeating extremist groups, and neutralizing Irans WMD

ambitions remain as focal points, the strategys subtext emphasizes a re-orientation away from

armed conflict in the Greater Middle East and towards strategic power balancing in East Asia.

While seeking savings by avoiding more ground wars, the DoD could never turn entirely

away from the Middle East. This history between the US and the region make such a strategy

impossible. After 9/11, when relations between the US and Gulf states were arguably at their

nadir, the US defense apparatus underwent a build-up the size of which was unprecedented

since the end of the Cold Waronly partly due to a recalibration after the post-Soviet era of

29Sustaining US Global Leadership: Priorities for 21

stCentury Defense. Department of Defense, January 2012.


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Information Administration.33

The current trouble over Syria and Iran caused an uptick in the

US consumption of Saudi oil in 2012,34

which serves to underscore the volatility caused by the

ideological and political differences that routinely put the US and the Gulf region on collision

courses. Drops in Gulf oil dependency should be perceived as a welcome trend to American

observersbut principally to a Department of Defense that must seek budget arenas in which

cuts can be made without the risk of reducing American primacy. Amazingly, the defense

guidance plan fails to mention energys strategic role.

By easing dependence on Gulf fossil fuels, the US would have fewer critical national

interests at stake, and thus less incentive to engage in yet more expeditionary campaigns in

which the costs of blood and treasure have become much harder to justify. The Libyan

campaign offered a glimpse of this current sentiment: while the US steering of NATO forces

offered cover for campaign leaders France and the United Kingdom to take putative command,

the idea of American boots on the ground in Tripoli would have been unthinkablein contrast

to a more robust military-led impulse that would have likely prevailed ten years ago.

However, as American deficits demand cuts in the security spending budgets, the

defense apparatus must still seek a floor. The large-scale counterinsurgency operational

capacity that the US has built up over the last ten years through the wars in Iraq and

Afghanistan must be replaced by more budget-conscious approaches but it cannot simply

disappear overnight. In addition, all militaries, at an existential level, seek enemies and conflict;

33Frequently Asked Questions, US Energy Information Administration.

34Clifford Krauss. US Reliance on Saudi Oil is Growing Again. New York Times, 16

thAugust, 2012,

http://www.nytimes.com/2012/08/17/business/energy-environment/us-reliance-on-saudi-oil-is-growing-

again.html?pagewanted=all(accessed 16th

August, 2012).
http://www.nytimes.com/2012/08/17/business/energy-environment/us-reliance-on-saudi-oil-is-growing-again.html?pagewanted=allhttp://www.nytimes.com/2012/08/17/business/energy-environment/us-reliance-on-saudi-oil-is-growing-again.html?pagewanted=allhttp://www.nytimes.com/2012/08/17/business/energy-environment/us-reliance-on-saudi-oil-is-growing-again.html?pagewanted=allhttp://www.nytimes.com/2012/08/17/business/energy-environment/us-reliance-on-saudi-oil-is-growing-again.html?pagewanted=allhttp://www.nytimes.com/2012/08/17/business/energy-environment/us-reliance-on-saudi-oil-is-growing-again.html?pagewanted=all


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thus compel the US to ensure freedom of navigation in the global commons and to deter the

use of force among rising Asian states to settle conflicts and competing claims.

Chinas imperative to maintain growth, however, is not constrained to seeking

opportunities in the Asia-Pacific region. The countrys primary need for energy and mineral

resources has drawn it to invest heavily in Africa, andmore importantly from the economic

and security perspectives of the USin the Western Hemisphere as it takes important energy

investment positions in South America and Canada.

According to the United Nations Economic Commission for Latin America and the

Caribbean (ECLAC) 2011 Report, of the USD$113 billion worth of foreign investment in Latin

Americaan increase of 40% from 2010 to 20119% of that total capital was supplied by

China (which supplied less than 1% of foreign direct investment in Latin America in the years

between 2006 and 2009).35

While the US invested the most capital in the region (accounting for

17% of that USD$113billion), projections estimate that China will overtake the USwith

expectations reaching 25% of the total in 2011.36

Significantly, 90% of Chinas investment is in

extractive resources, and in 2010, China overtook the US as Brazils biggest trade partner with

more than USD$56billion in trade.37

The relationship between Brazil and China is especially

notable, now that in 2011, Brazil surpassed the UK to become the worlds sixth largest economy

35Foreign Direct Investment in Latin America and the Caribbean 2010. United Nations Economic Commission for

Latin America and the Caribbean, 2011,http://www.eclac.org/cgi-

bin/getProd.asp?xml=%20/publicaciones/xml/0/43290/P43290.xml&xsl=/ddpe/tpl-i/p9f.xsl%20&base=/tpl-i/top-

bottom.xslt(accessed March 1, 2012).36

Ibid.37

China boosts foreign investment in Latin America. BBC Online, May 5, 2011,

http://www.bbc.co.uk/news/business-13294360(accessed March 1, 2012).
http://www.eclac.org/cgi-bin/getProd.asp?xml=%20/publicaciones/xml/0/43290/P43290.xml&xsl=/ddpe/tpl-i/p9f.xsl%20&base=/tpl-i/top-bottom.xslthttp://www.eclac.org/cgi-bin/getProd.asp?xml=%20/publicaciones/xml/0/43290/P43290.xml&xsl=/ddpe/tpl-i/p9f.xsl%20&base=/tpl-i/top-bottom.xslthttp://www.eclac.org/cgi-bin/getProd.asp?xml=%20/publicaciones/xml/0/43290/P43290.xml&xsl=/ddpe/tpl-i/p9f.xsl%20&base=/tpl-i/top-bottom.xslthttp://www.eclac.org/cgi-bin/getProd.asp?xml=%20/publicaciones/xml/0/43290/P43290.xml&xsl=/ddpe/tpl-i/p9f.xsl%20&base=/tpl-i/top-bottom.xslthttp://www.eclac.org/cgi-bin/getProd.asp?xml=%20/publicaciones/xml/0/43290/P43290.xml&xsl=/ddpe/tpl-i/p9f.xsl%20&base=/tpl-i/top-bottom.xslthttp://www.bbc.co.uk/news/business-13294360http://www.bbc.co.uk/news/business-13294360http://www.bbc.co.uk/news/business-13294360http://www.eclac.org/cgi-bin/getProd.asp?xml=%20/publicaciones/xml/0/43290/P43290.xml&xsl=/ddpe/tpl-i/p9f.xsl%20&base=/tpl-i/top-bottom.xslthttp://www.eclac.org/cgi-bin/getProd.asp?xml=%20/publicaciones/xml/0/43290/P43290.xml&xsl=/ddpe/tpl-i/p9f.xsl%20&base=/tpl-i/top-bottom.xslthttp://www.eclac.org/cgi-bin/getProd.asp?xml=%20/publicaciones/xml/0/43290/P43290.xml&xsl=/ddpe/tpl-i/p9f.xsl%20&base=/tpl-i/top-bottom.xslt


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and may very soon surpass France to become the worlds fifth largest.38

Brazils predominance

in agricultural resources, water and energy, including its pre-salt deepwater reserves, ensure

that the China-Brazil relationship will grow and mature.

China is also using its enormous sovereign wealth funds, estimated at USD$14.4

trillion,39

to expand its investment assets north of the equator in the Caribbean and Central

America, but also most significantly in desirable North American opportunities.

Canadas oil sands and Arctic possibilities pose a particular attraction for China. As the

US struggles politically with the implications of the Keystone XL pipeline and delays its build-

out, it restricts opportunities for its Northern ally, which is faced with an oil glut and a need to

generate revenue from reserves in Alberta. In the meantime, China has been steadily pouring

capital into Canadian energy concerns: Chinas CNOOC bought a 17% stake in Calgary-based

MEG Energy Corp in 2005; PetroChina International Investment Company bought a 60%

working interest in Athabasca Oil Sands Corp.s MacKay River and Dover oil sands projects in

2010; Sinopec (China Petrochemical Corp.) bought out a 9% stake in Syncrude Canada from

ConocoPhillips in 2010; China Investment Corporation (CIC) bought a 45% stake in an oil sands

project owned by Penn West Energy Trust in 2010; and in 2011, CIC acquired the bankrupt OPTI

Canada, whose main asset was a 35% working interest in Nexens Long Lake oil sands project.40

In July 2012, China extended its interest in Nexens assets by making a USD$15.1 billion bid for

38Charles Riley. Brazils economy tops United Kingdoms. CNNMoney, March 7, 2012,

http://money.cnn.com/2012/03/07/news/economy/brazil-gdp-united-kingdom/index.htm(accessed March 7,

2012).39

Sovereign Wealth Fund Rankings. Sovereign Wealth Fund Institute, May 2012,

http://www.swfinstitute.org/fund-rankings/(accessed May 1, 2012).40

Jennifer A. Dlouhy. China invests billions in Canada oil sands. The Houston Chronicle, September 19, 2011,

http://www.chron.com/business/article/China-invests-billions-in-oil-sands-2176114.php(accessed March 1, 2012).
http://money.cnn.com/2012/03/07/news/economy/brazil-gdp-united-kingdom/index.htmhttp://money.cnn.com/2012/03/07/news/economy/brazil-gdp-united-kingdom/index.htmhttp://www.swfinstitute.org/fund-rankings/http://www.swfinstitute.org/fund-rankings/http://www.chron.com/business/article/China-invests-billions-in-oil-sands-2176114.phphttp://www.chron.com/business/article/China-invests-billions-in-oil-sands-2176114.phphttp://www.chron.com/business/article/China-invests-billions-in-oil-sands-2176114.phphttp://www.swfinstitute.org/fund-rankings/http://money.cnn.com/2012/03/07/news/economy/brazil-gdp-united-kingdom/index.htm


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the company, the largest overseas energy play to date; although the Canadian government has

yet to calculate whether national security interests will permit the sale to go through, the US

will need to start thinking about the impact such a sale would have on its own national security,

given Nexens assets in the Gulf of Mexico.41

Although China has poured more than

USD$15billion into Canadian energy assets in the last two years alone,42

getting the resources

to China has been more complex, given the political and economic balance the Canadian

government must weigh in its responsibilities to its own fiscal health, to China as an investor,

and to the US as both a staunch ally and business partner. Regardless, the US is facing Chinese

competition to its immediate North and South.

By pivoting its defense strategy towards East Asia, the US subtextually establishes China

as a type of enemy. While it is true that some imprudent remarks made by American

politicians, academics and pundits have openly referred to China as exactly that43

(as does the

US position on China vis a vis cyberdefense specifically), the reality is far more intricate,

requiring a deft position that juggles diplomacy, political acuity, strategic defense policy,

economic sophistication, and above all, foresight. Unfortunately, for a variety of reasons, the

US has been unable to craft these elements into a coherent position. Long-term, attempts to

contain China in a heavy-handed way will backfire on the US enduring security needs.

41Jeffrey Jones and Euan Rocha. Analysis: Phantom fears surround Chinas Nexen deal. Reuters, 27

thJuly, 2012,

http://www.reuters.com/article/2012/07/27/us-cnooc-nexen-deals-idUSBRE86Q18W20120727(accessed 27th

July, 2012).42

Ibid.43

Amitai Etzioni. China: The Makingof an Adversary. International Politics, #48, 2011,http://www.palgrave-

journals.com/ip/journal/v48/n6/abs/ip201127a.html(accessed January 12, 2012).
http://www.reuters.com/article/2012/07/27/us-cnooc-nexen-deals-idUSBRE86Q18W20120727http://www.reuters.com/article/2012/07/27/us-cnooc-nexen-deals-idUSBRE86Q18W20120727http://www.palgrave-journals.com/ip/journal/v48/n6/abs/ip201127a.htmlhttp://www.palgrave-journals.com/ip/journal/v48/n6/abs/ip201127a.htmlhttp://www.palgrave-journals.com/ip/journal/v48/n6/abs/ip201127a.htmlhttp://www.palgrave-journals.com/ip/journal/v48/n6/abs/ip201127a.htmlhttp://www.palgrave-journals.com/ip/journal/v48/n6/abs/ip201127a.htmlhttp://www.palgrave-journals.com/ip/journal/v48/n6/abs/ip201127a.htmlhttp://www.reuters.com/article/2012/07/27/us-cnooc-nexen-deals-idUSBRE86Q18W20120727


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fields in the Arctic Kara Sea and in the Black Sea,52

which was followed shortly thereafter with

another blockbuster deal between Rosneft and Norways Statoil to develop properties in the

Barents Sea and Siberia.53

In the past year, Russia has further expanded its energy portfolio by

investing in European gas-fired power plants, Eurasian pipelines and even American domestic

shale gas and oil fields to extend the reach for its products and fulfill its technology needs.

Russias need for support in its own energy future limits the degree to which Putin can

press his advantage in the Middle East. Regardless, the deals it currently strikes still inspire a

certain amount of caution and concern, given Russias historically heavy hand with foreign

organizations and the global interdependency those deals create with American-owned IOCs

over a contested region such as the Arctic.

So here too, the US must consider strategy through a lens shaped by energy.

F. A REBALANCING OF ENERGYGEOPOLITICS

The world is changing rapidly and the shared interdependencies of economies,

resource-use and climate pose a definitive security challenge. Energy lies at the core of that

challenge. The trajectory of the security challenge follows the effects of the Arab Springs

upheaval, sandwiched between the economic meltdowns of the US and Europe respectively,

52Cathering Belton. Exxon and Rosneft seal Arctic deal. Financial Times, 18

thApril, 2012,

http://www.ft.com/intl/cms/s/0/8b0c869e-8977-11e1-85af-00144feab49a.html#axzz23iTi8kg5(accessed 18th

April, 2012).53

Christopher Helman. In Russian oil Deal, Norways Statoil Follows Exxons Lead On Hostage Taking. Forbes, 7th

May, 2012,http://www.forbes.com/sites/christopherhelman/2012/05/07/in-russian-oil-deal-norways-statoil-

follows-exxons-lead-on-hostage-taking/(accessed 7th

May, 2012). Norways Statoil, along with French IOC Total

and Italian IOC Eni, also made a deal with Russias Gazprom to develop liquid natural gas from the offshore

Shtokman fields.
http://www.ft.com/intl/cms/s/0/8b0c869e-8977-11e1-85af-00144feab49a.html#axzz23iTi8kg5http://www.ft.com/intl/cms/s/0/8b0c869e-8977-11e1-85af-00144feab49a.html#axzz23iTi8kg5http://www.forbes.com/sites/christopherhelman/2012/05/07/in-russian-oil-deal-norways-statoil-follows-exxons-lead-on-hostage-taking/http://www.forbes.com/sites/christopherhelman/2012/05/07/in-russian-oil-deal-norways-statoil-follows-exxons-lead-on-hostage-taking/http://www.forbes.com/sites/christopherhelman/2012/05/07/in-russian-oil-deal-norways-statoil-follows-exxons-lead-on-hostage-taking/http://www.forbes.com/sites/christopherhelman/2012/05/07/in-russian-oil-deal-norways-statoil-follows-exxons-lead-on-hostage-taking/http://www.forbes.com/sites/christopherhelman/2012/05/07/in-russian-oil-deal-norways-statoil-follows-exxons-lead-on-hostage-taking/http://www.forbes.com/sites/christopherhelman/2012/05/07/in-russian-oil-deal-norways-statoil-follows-exxons-lead-on-hostage-taking/http://www.ft.com/intl/cms/s/0/8b0c869e-8977-11e1-85af-00144feab49a.html#axzz23iTi8kg5


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Russia and China as untrue,54

but policymakers should be alert to the growing chorus of South-

South rhetoric being raisednot the least of which occurred during the 2012 BRICS annual

summit in New Delhi. There, Russia, China, Brazil, India and South Africa discussed shoring up

their own economic and security capacities among themselves as a political challenge to what

they view as the irresponsible policies of the US and Europe.55

While hardly an axis, the groups

interests should be taken seriously by the US as impetus for developing new approaches.

As the economic forecast looks stormy for the foreseeable future, the US must

strategize shrewdly and prevent political gridlock and lack of a sophisticated understanding of

energy matters (demonstrated by the consistent, erroneous Republican criticism of why oil

prices are high) to detract from a successful grand strategy. The US, like many other countries,

must now capitalize on its good fortune and determine whether newly-envisaged hydrocarbon

riches can be extracted out of the ground in a safe and cost-effective way during this disruptive

period in energy geopolitics. To that end, implementing a comprehensive plan regarding energy

and national security should be regarded as a necessity.

The following scenario of 2012s second half, a worst-case, poses a plausible series of

events the US should consider as a rationale for revamping the current national strategic plan.

54Anonymous. Iran, Russia, China and Syria to hold joint drills. PanArmenian.Net, 19 June, 2012,

http://www.panarmenian.net/eng/news/112456/(accessed 19 June, 2012).55

Simon Tisdall. Can the Brics create a new world order? The Guardian, March 29, 2012,

http://www.guardian.co.uk/commentisfree/2012/mar/29/brics-new-world-order(accessed March 29, 2012).
http://www.panarmenian.net/eng/news/112456/http://www.panarmenian.net/eng/news/112456/http://www.guardian.co.uk/commentisfree/2012/mar/29/brics-new-world-orderhttp://www.guardian.co.uk/commentisfree/2012/mar/29/brics-new-world-orderhttp://www.guardian.co.uk/commentisfree/2012/mar/29/brics-new-world-orderhttp://www.panarmenian.net/eng/news/112456/


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III. ALIGNMENTS OLD AND NEWA.THE WESTERN HEMSIPHERE: DEJAVU ALL OVER AGAIN?

Turning away from the Eastern Hemisphere, the US needs to consider what is happening

within its own region. As stated earlier, the largest and third largest proven reserves of oil in the

world are found in the Western Hemisphere, in Venezuela and Canada respectively. Once Brazil

determines exactly how much pre-salt oil is commercially available off its coast, it can add the

number to its already considerable diversified energy resource portfolio of oil, gas, and

renewable sugarcane ethanol production. The US complements this hemispheric perspective

with its own oil production statistics, which have increased year-on-year for the last three

consecutive years. But much of the excitement in industry circles concerns shale gas.

As a globally distributed resource, shale gas is uniquely concentrated in the Western

Hemisphereas shown in the chart belowwhich suggests unprecedented opportunities:


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energy supplies will grant these democratic Western Hemispheric countries? Could a NAFTA-

like convention arrayed around energy be a way forward for these countries to both enhance

their comparative advantage and fortify a regional security strategy regarding not only oil and

gas resources, but also energy expressed in terms of food and water (two critical resources

required for long-term survival in a hotter world, as well as for production in both extractive

and renewable energy industries. Brazil and Canada are respectively the number one and

number three sources of water reserves in the world.57

)? After all, expanded trading blocs

equal economic leveragean especially important consideration given the size of Chinas

economy, its resource needs, and its current presence in the Western Hemisphere buying up

energy and resources wherever it can.

To answer those questions, one needs to consider the past as prologue: leaders in the

Americas have previously recognized that sustainable economic development requires

hemispheric cooperation in the field of energya fact obscured by short memories in

governance. This notion of regional cooperation in the energy sector was a key mandate of the

first Summit of the Americas in 1994. As part of the summits resulting Miami Plan of Action,

two initiatives of that plan, Initiative 12 (Energy Cooperation) and Initiative 21 ( Partnership

for Sustainable Energy Use), were yoked together to form what became known as the

Hemispheric Energy Initiative. In subsequent follow-up meetings in 1995, 1996 and 1998,

57Food and Agriculture Organization of the United Nations. World Water Resources By Country. 2003


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attendees created a Hemispheric Energy Steering Committee tasked with implementing the

Initiative; to achieve this, the Steering Committee created eight working groups:58

Working Group Name/ Objectives

Coordinator

1. Increasing Investment in the Energy Sector United States2. Promote Clean Energy Technologies in the Electric Power Markets

(OLADE) Colombia3. Advance Regulatory Cooperation in the Hemisphere Argentina4. Increase Economic and Environmental Sustainability of the

Petroleum Sector Venezuela5. Create New Opportunities for Natural Gas Bolivia6. Make Energy Efficiency a Priority Throughout the Hemisphere Brazil7. Develop Workable Hemispheric Rural Electrification Strategies Chile8. Share Information on Voluntary Efforts to Reduce Global Buildup of

Greenhouse Gases Generated in the Energy Sector United StatesTABLE II: HEMISPHERIC ENERGY STEERING COMMITTEE WORKING GROUPS

Data: Summit of the Americas Information Group

To continue the progress of the Initiative, a Coordinating Secretariat was put together in

1998, consisting of one representative of the Venezuelan Ministry of Energy and Mines, one

representative from the US Department of Energy and a representative from OLADE. However,

further work on the Initiative was cut short when Hugo Chavez came into power as president of

Venezuela in 1999; from 2002-2003, an armed forces coup, coupled with strikes by national

energy company Petroleros de Venezuela (PdVSA), resulted in a cementing ofChavez absolute

control over both and a breakdown in diplomatic relations between the US and Venezuela.

Consequently, the Hemispheric Energy Initiative stalled to the point of oblivion.

Circumstances may yet change in the near future, given the electoral situation in

Venezuela and Chavez health. But for a cooperative hemispheric energy conversation to be

58First Summit of the Americas: Energy. Summit of the Americas Information Group,

http://www.summitamericas.org/Miami%20Summit/Energy%20(revised)%20Eng.htm(accessed June 14, 2012)
http://www.summitamericas.org/Miami%20Summit/Energy%20(revised)%20Eng.htmhttp://www.summitamericas.org/Miami%20Summit/Energy%20(revised)%20Eng.htmhttp://www.summitamericas.org/Miami%20Summit/Energy%20(revised)%20Eng.htm


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as tax initiatives) so that free-market objectives align with those of government, then some

potential industry compliance on regional cooperation may yet be achieved.

B. THE ENVIRONMENT, KYOTO AND A G-ZERO worldEstablishing market efficiencies is not the only pressing reason for re-thinking energy

strategy. Security, particularly as it pertains to future global environmental consequences, is a

far more critical long-term objective. But here again, major difficulties lurkspecifically with

regards to the general movement away from compromise within international institutional

frameworks in favor of pursuing national interests.

As we emerge from the hottest half-year recorded in America to more unpredictable

global weather, carbon emissions from fossil fuel burning have hit a red zone. But as the

International Energy Agency affirms in its Energy Technology Trends June 2012 report, we still

have a small chance to reduce our carbon emissions to the level where we do not experience a

global temperature increase of more than two degrees Celsius.60

The problem it asserts is that

government has not done enough, having pushed the matter of environmental action so far

down the political agenda that we are squandering any chance of revocability. It makes clear

that natural gas is not a perfect solution to the problem; without a regulated carbon capture

structure in place, by 2025 gas-fired plants will emit more carbon dioxide per kilowatt-hour

than the entire electric system.61

Onshore wind generators and photovoltaics represent areas in

which progress has been made in carbon-free energy sources, but without direct government

action to empower the growth and maturation of these industries, we will cross the Rubicon.

60International Energy Agency. Executive Summary. Energy Technology Trends, June 2012.

61Ibid.


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And as difficult and complex as it is to reconcile American free-market goals with the

imperatives of our potential energy future, it is even harder trying to get states within the

international system to agree. The Kyoto Protocols failure was an obvious example of politics

trumping security, even though heads of state hardly view the problem from this reductive

perspective. At the concurrent G20 and Rio+20 gatherings in June 2012, leaders were

unprepared to commit to any kind of consensus, if one could even be found. At the G20 summit

in Los Cabos, Mexico , the European economic crisis hung over negotiations as did the American

presidential election, which prevented US representatives from making any substantive

declarations lest they inflame voters demanding focus on domestic and not world problems.

At the Rio+20 summit in Brazil, the most to which the US delegation was willing to

commit was clean cookstoves and local energy projects.62

Twenty years after the 1992

summit in which two landmark treaties on climate change and biodiversity were announced,

neither of which lived up to their promise, participating countries were no closer to a definitive

action plan on how to stop an overheating Earth. So it goes in a G-Zero world, where countries

are less inclined to pursue cooperative arrangements, even as the number of countries within

institutions grow (eg. WTO, NATO, G20, etc.). The capitalist objectives of Big Oil, tied to market

economics and often at odds with political aims, certainly decrease the odds of developing a

global compact. But if a carbon emissions capture system was valued as even more intrinsic to

national security than the pursuit of the Taliban in Afghanistan, then the US might be able to

drive an evolving global consensus. Even with such a development however, establishing any

62Simon Romero and John M. Broder. Progress on the Sidelines as Rio Conference Ends. New York Times, 23

June 2012,http://www.nytimes.com/2012/06/24/world/americas/rio20-conference-ends-with-some-progress-on-

the-sidelines.html?ref=opinion(accessed 23 June, 2012).
http://www.nytimes.com/2012/06/24/world/americas/rio20-conference-ends-with-some-progress-on-the-sidelines.html?ref=opinionhttp://www.nytimes.com/2012/06/24/world/americas/rio20-conference-ends-with-some-progress-on-the-sidelines.html?ref=opinionhttp://www.nytimes.com/2012/06/24/world/americas/rio20-conference-ends-with-some-progress-on-the-sidelines.html?ref=opinionhttp://www.nytimes.com/2012/06/24/world/americas/rio20-conference-ends-with-some-progress-on-the-sidelines.html?ref=opinionhttp://www.nytimes.com/2012/06/24/world/americas/rio20-conference-ends-with-some-progress-on-the-sidelines.html?ref=opinionhttp://www.nytimes.com/2012/06/24/world/americas/rio20-conference-ends-with-some-progress-on-the-sidelines.html?ref=opinion


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meaningful settlement across big unwieldy groups as the G20 or even the G8 is impractical.

Having too many countries within a pact reduces the capacity for agreement. An alternative

framework that keeps consensus among only the most key stakeholders stands a better chance.

C. A CURE?Global warming and the potential resulting economic destruction it can bring should be

recognized as a security threat. Though this was part of the operative discourse behind the

Rio+20 summit in June 2012, the participation of over 100 countries at the summit obviated

reaching any kind of resolution. But what if a multifaceted problem like climate change driven

by fossil fuel consumption was tactically picked apart into more manageable plans and driven

by only the most critical actors?

Kevin Jianjun Tu, senior associate in the Energy & Climate program at the Carnegie

Endowment for International Peace in Washington D.C, is attempting to achieve such a tactical

framework. Tu established the concept of CURE, a cooperative arrangement by which (C)hina,

the (U)S, (R)ussia and (E)urope could work together towards energy efficiency around coal.63

As

stated earlier, the acceleration of coal burning is the primary cause of warming temperatures

and China far exceeds any other country in the use of this fuel. The US is the second largest

carbon emissions culprit after China, and if both countries could establish a mutually beneficial

convention by which their dependencies and advantages are shared (along with the European

Union and Russia), then a possible breakthrough may be reached.

Mass public demonstrations and dissent over pollution are the main factors currently

pushing China to reduce its dependency on coal. But without a massive volte-face towards

63Interview with Kevin Jianjun Tu, May 9, 2012, Washington D.C.


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cheap cleaner-burning alternativessuch as natural gasand a comprehensive energy

efficiency plan, the rate of deceleration will not be sufficient to satisfy either the public or the

mechanics of climate change. China needs the US as a partner in both securing gas supplies as

well as efficiency guidelines. This can only happen however if the US tones down the rhetoric

against China: that is not to say that the US abandons its defensive posture when American

interests are truly threatened. But it would be fair to say that a vital US national interest lies in

preventing the climate change that in fiscal year 2011 alone cost more than $32 billion.64

The

US has a distinct need to encourage a partnership between itself and China; but this is less likely

to happen if the US maintains an offensive stance towards Chinawhether via public

denouncement (as in Secretary of State Hillary Clintons July 2012 remarks in Mongolia in which

she pointedly criticized China for unsustainable anti-democratic governance of its people65

) or

in containment measures such as the development of the Trans-Pacific Partnership (TPP) trade

pact, which targets trade with Asia-Pacific countries but excludes China.

In the same way that the European Coal and Steel Community treaty served as a

mechanism by which the adversarial relationship between Germany and France (and other

European countries) could be mitigated even under the chaos of post-World War II

reconstruction, CURE represents a potential arrangement by which the lack of trust and

jockeying for power and resources around the globe between China and the US could be turned

around a singular focal point. Both the US and China are aware of the environmental impact of

64Climate Science Watch. Federal Disaster Assistance BudgetingAre We Weather-Ready?

ClimateScienceWatch.org, 5 August, 2011,http://www.climatesciencewatch.org/2011/08/05/federal-disaster-

assistance-budgeting-are-we-weather-ready/(accessed 29 May, 2012).65

Jane Perlez. From Mongolia, Clinton Takes a Jab at China. New York Times, 9 July, 2012,

http://www.nytimes.com/2012/07/10/world/asia/in-mongolia-clinton-offers-message-to-china.html(accessed 9

July, 2012).
http://www.climatesciencewatch.org/2011/08/05/federal-disaster-assistance-budgeting-are-we-weather-ready/http://www.climatesciencewatch.org/2011/08/05/federal-disaster-assistance-budgeting-are-we-weather-ready/http://www.climatesciencewatch.org/2011/08/05/federal-disaster-assistance-budgeting-are-we-weather-ready/http://www.climatesciencewatch.org/2011/08/05/federal-disaster-assistance-budgeting-are-we-weather-ready/http://www.nytimes.com/2012/07/10/world/asia/in-mongolia-clinton-offers-message-to-china.htmlhttp://www.nytimes.com/2012/07/10/world/asia/in-mongolia-clinton-offers-message-to-china.htmlhttp://www.nytimes.com/2012/07/10/world/asia/in-mongolia-clinton-offers-message-to-china.htmlhttp://www.climatesciencewatch.org/2011/08/05/federal-disaster-assistance-budgeting-are-we-weather-ready/http://www.climatesciencewatch.org/2011/08/05/federal-disaster-assistance-budgeting-are-we-weather-ready/


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coal consumption, and China is already trying to mitigate the damage it is doing by building

cleaner plants; bonds between the US and China could be strengthened around knowledge and

technology transference to assist in emissions reduction. US natural gas exports to China from

the US at sweetheart pricing could build a customer-client relationship to help wean China off

coal; but most importantly, as hydrocarbons of any kind can only be an interim solution, both

countries can consider the joint development of renewable energy products and the

establishment of a common carbon market. Arrangements such as these could help to

potentially reverse the adversarial relationship that developed between the US and China since

1950 at the advent of the Korean War, and forge an initial anchor for climate-related energy

initiatives. Russia (due to its size and its relationship to client China) and Europe (due to its

technologies, need for new energy options and existing environmental strategies) complement

a union between China and the US on coal energy efficiency pact that could ameliorate or

cure the current status.

The merits of Tus argument are many; however, given the evolving global hemispheric

changes, CUREs Eurasia-plus-America framework does not take into account the importance of

integrated Western Hemispheric participation. Brazil and Canada, given their significance in

carbon emissions from the enormous amounts of unconventional fossil fuels they are now

extracting, should be given consideration as potential partners within an efficiency pact such as

CUREat the very least on an ad hoc basis beyond CUREs core group of four partners.

Canadas oil sands, enormous in size and seeking new customers and markets, present

an energy efficiency problem not dissimilar to coal, since refining it is an immensely dirty


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the minds of the electorate. A narrativepushed by the oil industry and the key political figures

who stand in opposition to the current Obama administrations efforts to deal with energy and

the environmenthas become entrenched among voters and select political action groups:

according to that narrative, the catastrophe on an economic level caused by instigating a

national program around renewable energy will exceed any impending environmental

catastrophe. Indeed, writer and academic Steve LeVine recounts a recent speech given by

ExxonMobil CEO Rex Tillerson to the Council of Foreign Relations in New York, in which he:

suggested that Americans suck it up and adapt to global warming. We have spent our entire existence adapting,

OK? So we will adapt to this, Tillerson said in reply to a question from the audience. Changes to weather patterns that movecrop production areas around -- we'll adapt to that. It's an engineering problem, and it has engineering solutions. For starters,

Tillerson said, ExxonMobil had set out to educate the "illiterate" public as to the facts, and move them away from the purveyors

of "manufactured fear."70

To be sure, economics in reorienting an energy strategy does matter. As David

Pumphrey of the Center for Strategic and Internationals Studies points out, renewable capacity

has received almost as much government investment as fossil fuelsapproximately $256

billion.71

Despite this, renewable energy generation still only accounts for between 6-8% of

total energy generation in the US.72

Renewable capacity is growing, but growing slowly. As

Robert BryceSenior Fellow at the Manhattan Institute and an advocate of natural gas and

nuclear optionspoints out, the scale required by solar and wind renewables obviates their

70Steve LeVine. Inside Big Oils little hint that its picking Romney to win. Foreign Policy, 11 July, 2012,

http://oilandglory.foreignpolicy.com/posts/2012/07/11/inside_big_oils_little_hint_that_its_picking_romney_to_w

in?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheOilAndTheGloryBySteveLevine-

Home+%28The+Oil+and+The+Glory+by+Steve+LeVine+-+HOME%29(accessed 11 July, 2011).71

Interview with David Pumphrey, Washington DC, 13 June, 2012.72

US Renewable Energy Factsheets. University of Michigan Center for Sustainable Systems, 2011,

http://css.snre.umich.edu/css_doc/CSS03-12.pdf(accessed 13 June, 2012).
http://oilandglory.foreignpolicy.com/posts/2012/07/11/inside_big_oils_little_hint_that_its_picking_romney_to_win?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheOilAndTheGloryBySteveLevine-Home+%28The+Oil+and+The+Glory+by+Steve+LeVine+-+HOME%29http://oilandglory.foreignpolicy.com/posts/2012/07/11/inside_big_oils_little_hint_that_its_picking_romney_to_win?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheOilAndTheGloryBySteveLevine-Home+%28The+Oil+and+The+Glory+by+Steve+LeVine+-+HOME%29http://oilandglory.foreignpolicy.com/posts/2012/07/11/inside_big_oils_little_hint_that_its_picking_romney_to_win?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheOilAndTheGloryBySteveLevine-Home+%28The+Oil+and+The+Glory+by+Steve+LeVine+-+HOME%29http://oilandglory.foreignpolicy.com/posts/2012/07/11/inside_big_oils_little_hint_that_its_picking_romney_to_win?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheOilAndTheGloryBySteveLevine-Home+%28The+Oil+and+The+Glory+by+Steve+LeVine+-+HOME%29http://css.snre.umich.edu/css_doc/CSS03-12.pdfhttp://css.snre.umich.edu/css_doc/CSS03-12.pdfhttp://css.snre.umich.edu/css_doc/CSS03-12.pdfhttp://oilandglory.foreignpolicy.com/posts/2012/07/11/inside_big_oils_little_hint_that_its_picking_romney_to_win?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheOilAndTheGloryBySteveLevine-Home+%28The+Oil+and+The+Glory+by+Steve+LeVine+-+HOME%29http://oilandglory.foreignpolicy.com/posts/2012/07/11/inside_big_oils_little_hint_that_its_picking_romney_to_win?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheOilAndTheGloryBySteveLevine-Home+%28The+Oil+and+The+Glory+by+Steve+LeVine+-+HOME%29http://oilandglory.foreignpolicy.com/posts/2012/07/11/inside_big_oils_little_hint_that_its_picking_romney_to_win?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheOilAndTheGloryBySteveLevine-Home+%28The+Oil+and+The+Glory+by+Steve+LeVine+-+HOME%29


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change destruction and juxtaposing those costs against the profits to be made by oil and gas

companies if nothing is done. This information campaign must account for true expected job

creation via a sensible energy strategy versus the weak jobs strategy proffered by politicians in

league with such Big Oil personalities as Charles and David Koch of Koch Industries. Public

sentiment must be primed in order for government to wrest control of an American energy

future away from a self-interested hydrocarbon industry and the politicians it dominates.

From a political perspective, the incentive to take this risk is primarily one of legacy and

real change in a currently clogged legislative system. Despite the difficulty of the task, herein

lies opportunity: should President Obama return to the White House for another four years in

2012, another prospect to incentivize implementing a comprehensive national energy security

can be that in a second-term period in which the threat of reelection is no longer germane, the

longstanding GOP strategy of starving the beast (a fiscal agenda designed to force

government into reducing spending rather than restoring appropriate tax levels)74

could be

repudiated and set-back.

the GOP strong-armed America into sacrificing $1 trillion in vital government services including education, health care and

defense all to safeguard tax breaks for oil companies, yacht owners and hedge-fund managers. The party's leaders were

triumphant: Senate Minority Leader Mitch McConnell even bragged that America's creditworthiness had been a hostage that's

worth ransoming."75

[bold emphasis mine]

This 30-year old notion of assisting the wealthyand the oil and gas industryat the

expense of more than 90% of the American population has left the US unable to raise the

74Tim Dickinson. How the GOP Became the Party of the Rich. Rolling Stone, 9 November 2011,

http://www.rollingstone.com/politics/news/how-the-gop-became-the-party-of-the-rich-20111109(accessed 9

November, 2011).75

Ibid.
http://www.rollingstone.com/politics/news/how-the-gop-became-the-party-of-the-rich-20111109http://www.rollingstone.com/politics/news/how-the-gop-became-the-party-of-the-rich-20111109http://www.rollingstone.com/politics/news/how-the-gop-became-the-party-of-the-rich-20111109


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money to pay its bills.76

To be clear, the intent of creating a new offensive would not be to

obliterate the position of oil and gas companies, especially since they play such a critical role in

national security; rather, the focus of a campaign would be on creating a groundswell of

populist support for reducing the almost supra-national control that the oil and gas industry has

wielded, thereby disabling both the leadership capacity of the executive office and the

constitutional mandate of Congress and the Senate to legislate for the common good. By

aggressively laying out this landscape before voters in a media-savvy way, government can pave

a path for alterations that should be executed by a federal agency that has both the desire to

make these changes and the need for payback on cuts.

B. ALIENS, JIMMY CARTER ANDENGINEERING CONSENT

Economist Paul Krugman was not being entirely facetious when he suggested the ruse of

a fake alien invasion to stimulate the American economy. In August 2011, on a CNN television

interview with Fareed Zakaria and Harvard economist Kenneth Rogoff, Krugman insisted that a

threat of such proportions was necessary to simultaneously force government into activist

spending and the Federal Reserve into expansionist policy to jump-start the economy. In much

the same way that entering World War II rallied both citizens and government behind a joint

effort that changed the economic fortunes of the US, Krugmans aliens serve as the kind of

menace that goads unity and action to resolve fiscal calamity.77

76Ibid.

77Fareed Zakaria. Global Public Square 360: Krugman calls for space aliens to fix US economy? CNN.com, 12

August, 2011,http://globalpublicsquare.blogs.cnn.com/2011/08/12/gps-this-sunday-krugman-calls-for-space-

aliens-to-fix-u-s-economy/
http://globalpublicsquare.blogs.cnn.com/2011/08/12/gps-this-sunday-krugman-calls-for-space-aliens-to-fix-u-s-economy/http://globalpublicsquare.blogs.cnn.com/2011/08/12/gps-this-sunday-krugman-calls-for-space-aliens-to-fix-u-s-economy/http://globalpublicsquare.blogs.cnn.com/2011/08/12/gps-this-sunday-krugman-calls-for-space-aliens-to-fix-u-s-economy/http://globalpublicsquare.blogs.cnn.com/2011/08/12/gps-this-sunday-krugman-calls-for-space-aliens-to-fix-u-s-economy/http://globalpublicsquare.blogs.cnn.com/2011/08/12/gps-this-sunday-krugman-calls-for-space-aliens-to-fix-u-s-economy/http://globalpublicsquare.blogs.cnn.com/2011/08/12/gps-this-sunday-krugman-calls-for-space-aliens-to-fix-u-s-economy/


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opportunity of the new energy revolution on a systemic level, I argue that a Bernaysian

strategic campaign on energy security should be developed for the public (which needs to

understand our energy problems as opportunities) and trained against opponents of energy

governancewho should be positioned as threats to the long-term interests of the public. By

establishing this media message, government may then be freer from the kind of blowback that

would prevent it from enacting executive orders to accelerate energy security initiatives

through cooperative agencies, such as the Department of Defense.

It must be acknowledged that such a media message was attempted once before (albeit

without aliens): the oil crisis of 1973 and the national panic that ultimately led to the creation

of the Department of Energy drove President Jimmy Carter to broadcast his own vision for an

energy security strategy. In 1977, Carter delivered an unprecedented televised speech in which

he described a national effort to plan around energy as the moral equivalent of warexcept

that we will be uniting our efforts to build and not destroy.80

He laid out ten fundamental

principlesranging from energy efficiency and the development of new and unconventional

resources to environmental protection to a shared understanding of sacrifices on the part of

both the government as well as the citizenryas the framework for this energy policy. As

prescient, brave and as true today as Carters vision was, his policy was the victim of the

overwhelming events that doomed him to one term: inflation, the negative impact of the oil

crisis, the Soviet war in Afghanistan and the Iran hostage crisis. However, when examined under

a Bernaysian lens, Carters energy policy failed ultimately because its gloomy honesty was no

80Carter, James. Proposed Energy Policy. Televised speech delivered April 19, 1977, transcript:

http://www.pbs.org/wgbh/americanexperience/features/primary-resources/carter-energy/(accessed May 27, 2012).
http://www.pbs.org/wgbh/americanexperience/features/primary-resources/carter-energy/http://www.pbs.org/wgbh/americanexperience/features/primary-resources/carter-energy/http://www.pbs.org/wgbh/americanexperience/features/primary-resources/carter-energy/


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focused, precise handling of message delivery to an audience whose impulses are exhaustively

researched that constitutes the backbone of any energy security strategy.

Given the relatively ineffective media messaging skills of current government, a

successful outreach to the public may require the participation of outside players. Skilled

message handlers, such as advertising agencies or film directors, could provide an aesthetic

designed to appeal to our visually-oriented society; that vision could be enhanced by

participation

Documents

THE NEW ENERGY REVOLUTION AND THE WESTERN HEMISPHERE: OBSTACLES, ALIGNMENTS & OPPORTUNITIES