Energy security tops global priority for 2023 – The Washington Post

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As nearly 200 nations gathered at the COP27 UN climate summit last week, Japan announced a little-noticed change that sheds light on what’s going on behind the scenes with global energy and climate change diplomacy. Without fanfare, Tokyo has renamed its state-owned natural resources company, which helps local companies invest in oil, natural gas and mining projects overseas, as the “Japan Metals and Energy Security Organization.”

It may seem like a trivial name change, but it’s an important indication of what the priority is for many nations, particularly in Asia. Energy security comes first.

It’s also important that Japan leads that focus, because Tokyo will chair the G7 in 2023, giving it a powerful pulpit to shape the global agenda. Japan has not yet announced its G7 priorities, but I have heard from diplomats in Asia that energy security will be important.

In the world of natural resources, policy makers have long grappled with a trilemma: how to achieve security of supply, keep prices low and protect the environment – at the same time and for commodities from crude oil to wheat to all ‘aluminum. Such a trilemma has often meant that one of the three gives way to the other two.

In the 1970s and 1980s, with fresh memories of the first and second oil crises, security of supply and affordability prevailed over sustainability. In 1979, for example, the G7 nations went so far as to pledge at their annual summit “to increase the use of coal as much as possible” to bring down energy costs. The balance of the trilemma began to change in the early 1990s with the rise of the modern environmental movement. And in the last decade, as evidence of global warming mounts, climate change has taken priority.

The current energy crisis is forcing governments to re-evaluate their priorities. Security and accessibility are making a comeback. True, policymakers insist they are not backing down in their fight against climate change. But it is clear that the environment is no longer the top priority. At best, he is first among equals. At worst, it comes in second.

Take the point of view of Yasutoshi Nishimura, Minister of Economy, Trade and Industry of Japan, an extremely powerful body better known by the acronym METI. “Countries share the goal of achieving carbon neutrality while ensuring a stable energy supply,” he explained last week at the Bloomberg New Economy Forum conference in Singapore. Note how it equates climate change and energy security.

The new emphasis on safety is one of the main reasons why COP27 made so little progress on what really matters for the fight against climate change – the need to reduce fossil fuel consumption and global warming gas emissions . Rich countries took a first step to pay poor ones for their losses to climate change, but the summit did little elsewhere. The European Union had to threaten to leave to avoid further fallout on the targets.

In many ways, this shouldn’t be surprising. Despite claims that the energy crisis will not derail the fight against climate change, it is simply impossible for governments not to rethink priorities. Even the richest countries grouped in the OECD club are suffering. This year, they will spend 17.7% of their gross domestic product on energy, according to OECD calculations, the second highest ever and nearly equal to 17.8% from 1980-1981 during the second oil shock.

Fortunately, today’s energy trilemma is not as difficult as the one faced by G7 policymakers in 1979, when they ironically turned to coal as a solution at a summit in Tokyo. Four decades later, renewable energy makes it possible to protect the planet and improve security.

As Vladimir Putin demonstrated this year when he weaponized gas supplies against Europe, fossil fuels confer no more security than green energy. The G7 must push for more wind and solar energy, improve supply chains, increase spending on research and development and speed up project approvals. The target should be a house, a solar panel. Nuclear power is also an excellent tool that combines the environment and safety.

And the biggest contribution Japan could make to solving the energy trilemma is to focus on reducing demand. The best source of energy is the one that is not consumed.

In the past, policy makers have mistakenly tried to address climate change by limiting supply even as demand continued to grow. As a result, the global economy has underinvested in the new supply of oil and gas and prices are likely to remain higher than they should have been. The solution is to work to reduce demand, and quickly.

That’s easier said than done, of course. For now, the demand for fossil fuels is surging, with oil, gas and coal likely to set new consumption records in 2023. As long as that is the case, the world is headed in the wrong direction.

But Japan can show that there is another way. In 1979, it consumed 5.5 million barrels a day of crude oil; this year, it will require only 3.4 million. This is one step toward solving the trilemma, but replicating it elsewhere will require a huge and expensive effort to electrify everything from the heater to the drive. The G7 must step up once again.

More from Bloomberg’s opinion:

• Putin challenges sanctions with increased oil production: Javier Blas

• The Global Coming Out Party of Gambling in Qatar: Lionel Laurent

• As war drags on in Ukraine, expect more cruelty to POWs: Leonid Bershidsky

This column does not necessarily reflect the opinion of the editorial board or of Bloomberg LP and its owners.

Javier Blas is a Bloomberg Opinion columnist covering energy and commodities. A former Bloomberg News reporter and commodities editor at the Financial Times, he co-authored “The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources.”

More stories like this can be found at bloomberg.com/opinion

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