Tuesday, July 9, 2013
Article: Business As Usual Is Finished (energlobe.eu)
Why the "3 Geos" create new global paradigms
CLEO PASKAL | 9. JULY 2013
Ensuring energy security is becoming more and more complex. Energy flow is coming from a wider range of suppliers and technologies, but is still often linked together and delivered by massive, inflexible infrastructures. Any variability in the systems that support the financing, extraction, refining, generating and distribution of energy can disrupt supply. Disruption to supply can have serious economic, political and social implications. Where it is getting increasing tricky is that those supporting systems are being caught up in larger, global shifts.
Geopolitically, Russia, for example, is using petropower and nuclear expertise to affect its negotiating potision with its political allies and foes.
Meanwhile, geoeconomically, the rise of China is resulting in Chinese companies taking up enormous stakes in oil and gas fields around the world, while at the same time it is using its domestic economic policies to gain market advantage in areas such as solar.
And, from a geophysical point of view, changes in the physical environment of the planet (including natural disaster, climate change, shifting demographics, etc.), are increasingly affecting energy distribution and usage. In the past month alone, massive floods triggered major power disruptions in Germany, Alberta and India, and immense forest fires affected supply in Arizona and Quebec.
We are shifting towards a more multipolar world, with the economic balance of power gravitating towards Asia, and with major shocks triggered by environmental disasters (such as Fukushima, super-storm Sandy, and the increasingly costly typhoons hitting China’s east coast). If we want to keep the lights on (literally), the changes in the “3 geos” (the geoeconomic, geopolitical and geophysical) are forcing us to reevaluate existing systems.
All over the globe, these “3 geos” are coming together, and influencing each other, to create new paradigms.
For example, the geophysical changes to the Arctic -- with the Arctic ice retreating, and the permafrost thawing -- is dovetailing with Russia’s existing focus on the use of hydrocarbons to enhance its geopolitical position, and its growing economic (and at times, as with Syria, political) relationship with China.
The result is that the Northern Sea Route (NSR) over the Russian Arctic coast is quickly expanding and coming online, as is potential northern Russian oil and gas exploration, with enormous interest and engagement shown by China.
China, mindful of the 3 geos, is positioning itself well in the Arctic. It has an icebreaker (and another on order), has signed a free trade agreement with Iceland, is engaged with the Arctic Council, is building the largest embassy in Greenland, has announced it will make its first commercial transit of the NSR in 2014, and there are millions of Chinese nationals working in Siberia. All these are things that would have been considered the stuff of fantasy by Western analysts only a few years ago.
Similar complex, interconnected and cascading shifts are happening all over the world.
As another example, the extraordinary Russian fires of 2010 led to the Russian government banning wheat exports. That, combined with other factors such as speculation, created an 80% spike in the price of wheat in a year. Egypt, a major buyer of Russian wheat saw bread prices – even though they were heavily subsidized by the government -- go up by around 30%. That price increase was one of the factors that drove protestors onto the streets, bringing down Mubarak (one of the main slogans chanted by demonstrators was “bread, freedom and social justice”). Continued bread price-increases and the threat of rationing were also major factors in the fall of Morsi. The continuing political transition is weakening Egypt’s leadership role in the region.
Meanwhile, Ethiopia, increasingly backed by both the US (as an ally in the War of Terror) as well as China has found itself much stronger regionally, and especially in relation to a hobbled Egypt. Concerned with its own energy security, Ethiopia is taking advantage of the situation to begin building a major hydro installation on the Nile. If completed, it has the potential to change the region dramatically.
So, geophysical changes in Russia (historic fires), combined with geoeconomics (price of wheat and speculations) and geopolitics (‘Arab Spring’), contribute to a cascade in which (several steps down the line) the balance of power in the geostrategic Nile basin shifts, and Ethiopia potentially becomes much more energy secure (and so stable and prosperous) while Egypt weakens. Again, something very hard to imagine even three years ago.
Another surprise came when Germany, home of some of the world’s best renewable technologies, made its bid to be the headquarters of the new International Renewable Energy Agency (IRENA), an agency it shaped and championed from the start. Germany underestimated the geopolitical and geoeconomic weight of the UAE and the headquarters ended up in Abu Dhabi.
The UAE is now using its position as a renewable energy centre to build even stronger geopolitical ties outside the traditional Western axis. For example, following an IRENA meeting in Abu Dhabi, leaders from the energy poor nations of the South Pacific (counting for around a dozen votes in international fora) attended an Arab League meeting in which they supported League positions on a range of issues, including Iran. Perhaps not coincidentally, the UAE has announced millions in grants for renewable energies in the Pacific. Germany, having learned the hard way how quickly the world is shifting, has since announced the creation of an elite ‘Renewables Club’ of under a dozen countries to try to reposition itself.
The world is changing very fast. And energy is, in a very real sense, power. If we want to have real security, energy or otherwise, we have to start thinking much more broadly about what those changes are going to mean for us. As Germany learned with IRENA, business as usual is finished.
Cleo Paskal is an Associate Fellow at Chatham House, (aka Royal Institute of International Affairs), Adjunct Faculty in the Department of Geopolitics, Manipal University, India and Adjunct Professor of Global Change, School of Communication and Management Studies, Kochi, India. Her book, Global Warring: How Environmental, Economic and Political Crises Will Redraw the World Map (Palgrave Macmillan, 2010) won the 2010 Grantham Prize for Excellence in Reporting on the Environment awards as well as the 2010 Mavis Gallant Prize for Non-Fiction.She also co-authored the bestseller Spielball Erde: Machtkämpfe im Klimawandel (Random House, 2012), with German tv news anchor Claus Kleber