Thread by @JasonBordoff

Just back from @MunSecConf, where @ColumbiaUEnergy organized a side event on energy’s use as a geopolitical weapon, and I moderated a breakfast discussion on #NordStream2. Here are a few reflections from this year’s #MSC2019 & intersection with energy/climate. (Thread)

At a broad level, the dominant theme was concern among participants about the perception that America was retreating from the global stage and its leadership role in the rules-based international order.

It was notable that the US sent its largest contingent ever of members of Congress from both sides of the aisle, perceived by many as an effort to send a signal that the USG is comprised of more than just the White House.

German Chancellor Angela Merkel received a sustained, standing ovation after delivering an impassioned defense of multilateralism and criticizing the U.S. for its withdrawal from the Iran nuclear agreement, from Syria, from the INF treaty, and much more.

Participants expressed concern that the breakdown of the transatlantic alliance was being exploited by Russia and China—although I was struck that there was not more attention paid to those challenges not just the transatlantic rift.

On energy, natural gas supply into Europe was a dominant topic of discussion as usual at MSC.

Merkel also defended Germany’s desire to continue importing Russian gas and promised several times to protect the role of Ukraine as a transit country. A topic of discussions was how exactly she might achieve that.

She said Germany would import U.S. LNG if it is “affordable” and “commercially viable,” but effectively told the U.S. that Germany did not need the U.S. to protect it from Russian gas dependency by blocking Nord Stream 2, thank you very much.

Merkel observed that security of supply depends not merely on where the gas molecules come from, but from how interconnected a country’s gas system is in a well- functioning gas market.

This is supported by @ColumbiaUEnergy research finding that US LNG is already helping boost European energy security by forcing Gazprom to behave more like a market player & by undermining its revenue & oil-linked pricing model energypolicy.columbia.edu/research/repor…

For its part, the US continued to express strong opposition to Nord Stream 2, as did Ukrainian and some other officials.

Despite public jousting over #NordStream2, in private there was increased recognition that the project was likely to be completed. Participants took note that the new Senate sanctions bill is aggressive on Russian energy investment but not NS2. See energypolicy.columbia.edu/research/comme…

Also discussion of new EU Gas Directive. Though final text yet to be published, draft calls for all import pipelines to meet EU energy mkt rules. View was this would likely require unbundling so Gazprom could not be operator, & would likely raise price of Russian gas into Europe

Climate change was a top agenda item as well, mentioned by nearly all world leaders (notably not Pence tho). This year’s discussion had more of a tone of urgency and despair, whereas prior years brought optimism about the Paris Agreement and the pace of clean energy growth.

In a panel discussion devoted to climate change in the Main Hall, former Sec of State John Kerry offered a passionate intervention from the floor to remind the audience how far away the world is from achieving the goal of limiting temperature increase to 1.5-2 degrees Celsius.

There were also discussions about how a shift away from hydrocarbons would affect energy security and geopolitical issues.

Some attendees expressed a view that the very nature of globally traded natural resources makes them uniquely subject to geopolitical risk and use as a geopolitical tool so a shift away from hydrocarbons and toward electrification and renewables would reduce geopolitical tensions

Others noted even if that's true for an eventual world w/o hydrocarbons, the Q is about a multi-decade transition. E.g., as oil demand declines, a larger share may come from less stable parts of the world if they are lower cost. Nat gas will play a major role for decades in 2D

Also, even in a 2D world, we would still need huge investment to offset annual decline rates, and underinvestment may result if investors are reluctant to put capital into what is perceived to be a declining industry, triggering more price volatility.

We also discussed new geopolitical risks that may emerge in a low-carbon world, such as cybersecurity, dependence on critical materials, rise of China in clean energy tech & manufacturing, & cross-border electricity trade. For more see energypolicy.columbia.edu/research/repor…

The U.S. shale revolution was discussed often, with widespread recognition for just how remarkable the turnaround has been in the U.S. supply outlook.

There continued to be a perception that US shale would have dramatic geopolitical consequences although others (like me) cautioned these can be overstated given that the U.S. remains part of an integrated global oil market. See energypolicy.columbia.edu/research/op-ed…

There was broader agreement that the geopolitical consequences of the shale gas revolution are more consequential for the impact they are having on global gas markets. See foreignaffairs.com/articles/2016-…

Several participants noted the reputation of the US as a reliable energy supplier is suffering as a result of an unpredictable foreign policy. There was concern about how the Administration’s continued trade wars, eg China, might undermine the Admin's goals re energy exporter.

There was concern re potential overuse of sanctions as @RichardMNephew has written. Qs about how other nations might react, eg shifting away from dollar as reserve currency & US financial system, although skepticism such efforts would be successful energypolicy.columbia.edu/research/artic…

Much talk of Venezuela, pessimism about outlook, although disagreement about how long Maduro will last. View that Venezuela would struggle to find other buyers for its crude, require steep discounts, and as the sanctions kick in, PDVSA’s collapse would accelerate.

Concern about security of supply re nuclear fuel cycle & disposal of nuclear waste. US decision to withdraw from INF treaty was widely criticized for dividing NATO and weakening America’s ability to lead the world in preventing the spread of nuclear weapons.

Along with energy’s importance as an environmental & economic issue, we @ColumbiaUEnergy recognize the key role energy plays in foreign policy, national security & geopolitics. This has been central to our research agenda and will remain so. Much more to come. Thx for reading END

And a few highlight photos to end the thread! Thx again