It's Time to Get Serious About Energy
“And so, I hope President Putin will help us to stay on track with respect to what we need to do for the climate.” – John Kerry, February 23, 2022
In the pantheon of unserious statements by a leading US official on the literal eve of war, it will be tough to top the one quoted above from former Secretary of State and current Special Presidential Envoy for Climate John Kerry. Kerry’s sober concern for the emissions that will result from Putin’s aggression is only topped by his worry that kinetic war will distract attention away from the climate crisis.
Is there any doubt how we got here?
A regular theme of our writing is centered on the criticality of energy, the dangerously naïve structure of US and European energy policies, and the West’s unwise delegation of our energy needs and critical manufacturing inputs to regimes that don’t like us. In Putin’s Fool Rush In, a piece we wrote last October, we correctly assessed the dangers of Europe’s energy strategy but incorrectly predicted the outcome. We assumed Germany would be forced to give the Nord Stream 2 pipeline full and final approval, handing Putin a clear geopolitical victory. Instead, Germany shelved the project and now we have war. Getting into the head of a dictator is tough, and only Putin knows why he went all-in on Thursday, but he clearly believes his hand is strong enough for such drastic measures. We closed the piece as follows (emphasis added throughout):
“Energy is life. Those projects will get developed. The geopolitical power vacuum we are creating will get filled. We might not be serious, but our enemies are ruthlessly so. They raise a toast to our self-inflicted demise.”
Until Putin officially ordered his troops into Ukraine, we strongly doubted an attack would come despite the ever-increasing and specific warnings from the US intelligence community. We were wrong. One basis for our skepticism was a report that hit Bloomberg on February 22, 2022, a mere 48 hours before the conflict began:
“The Biden administration has delayed issuing permits for new oil and gas drilling on federal land, a move that could complicate efforts to tame gasoline prices that are poised to top $4 per gallon amid the Russia-Ukraine conflict.
The Interior Department warned of delays in new drilling permits after a Louisiana-based federal district judge blocked the administration’s method for assessing how its permit approvals affect climate change.”
We could never have imagined a scenario in which the US would continue to impede domestic development of critical energy projects on the eve of the most serious conflict in Europe since the end of World War II. But here we are. Energy is at the core of our flexibility to respond in a meaningful manner. Reports out of Europe indicate significant division among NATO allies as to the severity of the sanctions that should be imposed on Putin. No wonder. Here’s a summarized series of headlines that crossed the wires shortly after hostilities broke out:
Funny thing, that. Despite the bluster from President Biden about how devastatingly tough our sanctions would be, we aren’t kicking Russia out of SWIFT, we aren’t sanctioning Putin directly, and we aren’t sanctioning their energy sector. How could we? The entire German economy is dependent on the whims of Putin, and by extension so too is the economy of broader Europe. Food inflation is running hot globally, and we can’t afford a tit-for-tat escalation with Russia unless we are prepared for significant economic sacrifice on the home front. We aren’t. Lest there be any doubt, we found this exchange quite telling:
We are left with a simple choice in the US: get serious about our energy policy and preserve our place in the geopolitical order or be forced to stop play-acting as a superpower. The laws of physics make our cards transparent to our political enemies, and it’s all too easy for them to call our bluff when they know in advance what we’re holding.
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