NS4054 Realism and Idealism in the

Energy Security Debate

Jung, Jinhak(Gal Luft and Ann Korin, 2009)

Contents

2

Ⅰ. Introduction

Ⅱ. Summary 1. Variety but Not Variety Alone 2. Redundancy and Liquidity 3. Realists vs. Idealists 4. Environment and Security 5. The Choice to Have Choice is Ours

Ⅲ. Critiques/Questions

Introduction

3

• Co-director of the Institute for the Analysis of Global Security (IAGS)

• Washington based think tank focused on energy security• Senior adviser to the United States Energy Security Council

Gal Luft & Anne Korin

Energy Security Challenges for the 21st Century (2009) Turning Oil into Salt: Energy Independence through Fuel Choice (2009)Petropoly: the Collapse of America's Energy Security Paradigm (2012)

Co-author of

Introduction

4

Thesis Question

• How are different actors in the global energy system view energy security?

• Why do we face today the gravest risks to our energy supply?

The short answer

• Every country competes over access to cheap and depleting energy sources

• G.W. bush: “Demand for energy is increasing while supplies of oil and natural gas are diminishing

Introduction

5

Importer:Compromising energy security

Exporter:Nationalizing

No uniform of energy security

SomeSomeChinaChina

RussiaRussiaNorwayNorway

Produce Produce More More

EnergyEnergy

SecureSecureSupplySupply

SecureSecureDemandDemand

EnvironEnvironmentment

Summary

6

• Variety

• Consumers: variety of supplier

• Producers: diversify their supply lanes

Variety but Not Variety Alone

<Few Universal Principle>

“Safety and certainty in oil lie in variety

and variety alone.”

• The definition of variety

• From: geographical variety

• To: variety of energy sources

Winston Churchill

Summary

7

Variety but Not Variety Alone

Coal-bed methane Shale gas Tight sandstone gas

Conventional forms of petroleum

Nuclear energy Renewable energy

Summary

8

Redundancy and Liquidity• Redundancy

• How to secure the supply chain or vast pipeline networks

• Liquidity

• How to bring the market to equilibrium

• Without Redundancy & Liquidity

• Only one mechanism for equilibrium is rapid and uncontrolled price increases

Summary

9

Liquidity

• To compensate for the erosion in OPECs spare capacity

• Strategic reserves can create liquidity

• Strategic purposes only? (IEA)

• Insufficient international cooperation

• When and how to fill the stocks

• When oil can be released

• China & India

• Not part of the IEA

• Tempted to build massive stockpiles (Caches)

• The logic of Security Dilemma: Energy Dilemma

Summary

10

Redundancy

Vulnerable to Terrorist Acts

Oil Field-GhawarPersian Gulf Strait of Hormuz Caspian Energy

Summary

11

Realists vs. Idealists

Michael KlareEnergy Security Realists

Christopher FettweisEnergy Security Idealists

• Realists

• Challenges will get worse by time goes by

• Energy as a subject of global power politics

• Energy is the prime catalysts for armed conflict

• Focused on Oil Cartel and Muslim countries’ nationalized resources

• States should reduce the strategic value of oil and gas

• Idealists

• View a slightly rosier future

• Focused on power of market and interdependence

• Market players are rational and motivated by profit maximization

• Insulate self-reliance as tension reducers

• The idea of “grand bargain” will improve multilateralism on energy security

Summary

12

Realists vs. Idealists• Gal luft & Ann Korin: Realists’ view (1/4)

• Idealism seems not to work: 2008 tensions between producers and consumers worsened further despite of diversify energy supplies

• The belief in the rationality of markets causes idealists to play down the notion that producers would use their energy as a weapon (The Arab oil embargo of 1973)

• The notion of energy interdependence do not reduce the risk of conflicts (Japan in the 1920s and Germany in the 1930s: had a high level of energy interdependence, but nonetheless embarked on aggressive imperialism)

• National oil companies have wide latitude to shut off the spigot for political reasons (Libya in 2008: stopped oil supply to Switzerland due to the arrest of the son of Muammar Gaddafi)

• OPEC countries (and Russia) that rely heavily on energy revenues are inclined to keep price high (by restricting production)

Summary

13

Realists vs. Idealists• Gal luft & Ann Korin: Realists’ view (2/4)

• Also, trade barriers on alternative fuels are still prevalent in the United States and EU and are blocking the road to the international free and open trade among consumers and producers

• Make no mistake! The Middle East remains and will continue to remain the world’s primary supplier of crude oil (Despite of sand oil of Canada, etc.)

• Russia would unilaterally claim part of the energy-rich Arctic with the sufficient natural gas

• Natural gas emits less CO2. As a result, total natural gas consumption is projected to increase from 104 tcf in 2005 to 158 tcf in 2030

• Russia, Iran, and Qatar together account for about 57 percent of the world natural gas reserves

• The possibility of a gas cartel? (OPEC was first formed in 1960, but it did not function as a true cartel until 1999)

Summary

14

Realists vs. Idealists• Gal luft & Ann Korin: Realists’ view (3/4)

• The collapse of the world’s energy system (since the 2008 GFC) has reduced the volume of investment in renewable energy from $7 billion in 2007 to $5 billion in 2008 and a forecasted $4 billion in 2009

• Globalization countries became increasingly interdependent in a variety of fields?

- In Europe, idealism is pervasive. But, European action in face of Russia’s

coercion has been week

- EU is in capable to diversify its sources from Russian gas

- But, “NATO for energy is a dangerous nonsense,” believing that the

discussion on energy security in the framework of NATO would send

the wrong signal to Russia

Summary

15

Realists vs. Idealists• Gal luft & Ann Korin: Realists’ view (4/4)

• The Middle East is slow to embrace democracy, but see the Iraqi experiment is a success or not.

- Russia? Kazakhstan? Or Venezuela? Democracy are in retreat

- The Middle East follow Iran’s path and develop nuclear capabilities, albeit

for “peaceful purposes”

Summary

16

Environment and Security

Energy Security EnvironmentPollution

Sufficient Energy

• Energy security at the expense of the environment?

Coal-to-liquids

Tar-sand oil (Canada) Biodiesel (Indonesia)

Vast amounts of CO2

Summary

Environment and Security

“Phase out the country’s coal-mining industrial sector by 2018.”

“Also, phase out nuclear power industry by 2020.”

* Today, 80 percent of Germany’s electricity comes

from coal and nuclear power

Angela Merkel

• Replacing these sources with Russian natural gas (environment) could put the German economy (security) at the mercy of the Kremlin

• India’s coal power for one billion Indians means a lot of CO2 - India’s decide to power its turbines with natural gas is likely to

become increasingly dependent on Iran

- India might send right into the welcoming arms of Iran,

undermining Western efforts to isolate Iran economically

Summary

Environment and Security• Investment in efficiency, conservation, and clean technology

is desirable and should be promoted• Renewable source of energy like solar, wind, and geothermal

are critical• Balance between Security and Environment!• Historically, geopolitical and economic concerns loom larger,

but environment concerns was in the back burner

Recycle CO2Usable liquid

fuels (Methanol)

Biodiesel from algae

Summary

19

The Choice to Have Choice is Ours

• The current realities leave little room for optimism

• Just crimping petroleum demand do not address the roots of

the energy vulnerability

• Answer: Churchill’s variety doctrine to include variety of fuels

Flex-fuel Vehicles Electric cars

Break oil’s monopoly in the transportation sector!

Summary

20

The Choice to Have Choice is Ours

• Maintaining oil’s monopoly in the transformation fuel market

might catalyze the conflict between the U.S. and China over

access to oil as demand increases

• There will be times that aircraft carriers will be put to use in

the service of energy security

Sheikh Zaki Yamani(Saudi former oil minister)

“The Stone Age did not end for lack of stone, and the Oil Age will end long before the world run out of oil.”

Summary

21

The Choice to Have Choice is Ours

Who will pull harder?

To raiseTo bring down

Critiques/Questions

22

• Are flex-fuel and electronic cars competitive with petroleum-based cars?

* In terms of price (supply & demand), isn’t it an idealistic viewpoint?

• Between Security and Environment, which one is critical?

• Authors of this article are Realists (2009). In the 2015 perspective, which arguments

are suitable between Realists and Idealists?