The Foreign Service Journal, February 2009

will continue to erode, as new global players and emerging trends shape the energy system going forward. The urgent need to address cli- mate change presents a strategic op- portunity for the United States to shift global energy priorities in favor of low-carbon alternatives and, in so doing, to fundamentally alter the world’s geopolitical, economic and environmental dynamics. Our Current Path Over the next couple of decades the world’s population is projected to grow from six to eight billion people, and standards of liv- ing are likely to increase in densely populated areas of the world. Societies will require greater resources (water, food, land, energy and other basic materials) to fuel and sustain this economic and population growth. As the world strug- gles to meet these energy needs, new trends and dynam- ics will be at work. According to the most recent projections by the Inter- national Energy Agency, global energy demand will in- crease by approximately 45 percent by 2030, with nearly 87 percent of that growth coming from developing economies — 51 percent from China and India alone. In fact, energy demand from developing economies (i.e., non- members of the Organization for Economic Cooperation and Development) has now overtaken energy consump- tion in the developed world for the first time. Going for- ward, supplies are projected to come from approximately the same sources (mainly fossil fuels) and the same major resource holders as they do today. While the recent eco- nomic downturn raises doubts that demand will achieve projected levels of growth, the underlying factors driving it are likely to persist. The world is not running out of energy, but it is be- coming more difficult to gain access to, produce and con- vert the world’s energy resources and deliver them to the people who need them. Many of the remaining conven- tional oil and natural gas reserves are located in a handful of countries in the Middle East and Eurasia, while the Western Hemisphere is rich in unconventional fuels such as oil sands, oil shale, extra-heavy oil deposits and uncon- ventional natural gas resources. The adequacy and security of the delivery infrastruc- ture required to transport larger volumes of oil and gas resources over increasingly long distances and through already crowded tran- sit points will also remain a major concern. In the coming years, en- ergy trade flows will be affected by a concentration of supply and de- mand centers that are not geo- graphically proximate. Already coal, biomass and other resources are being transported longer dis- tances to reach foreign markets. Geopolitical trends continue to have a strong impact on energy pro- duction and trade. For instance, the high-price environ- ment of the last several years resulted in a resurgence of resource nationalism and greater state control over the re- source base. While sovereign nations have always guarded their resources, the revision of legal and regulatory struc- tures has created an atmosphere of investment uncertainty. This, along with higher costs for basic materials, has de- layed investment. Other factors, such as the changing role of geopolitical alliances in forming energy deals; poor governance and po- litical instability; threats to facilities, infrastructure and transit areas; and a greater focus on human rights, envi- ronmental degradation, poverty alleviation and energy eq- uity issues, have all emerged as elements of the changing geopolitical landscape. As a result of these factors, gov- ernments have become increasingly concerned about their immediate and long-term energy security. At the same time, the world has grown more cognizant of the enormously damaging effect that the production and use of fossil fuels is having on the natural environ- ment. A major contributor of anthropogenic greenhouse gas emissions into the atmosphere, fossil fuels are a key factor in global warming. Scientists state with increasing levels of certainty that atmospheric concentrations of these gases must be stabilized in order to avoid the most dangerous effects of climate change. Thus, a key com- ponent of national policy must be to slow, stop and re- verse the growth in greenhouse gas emissions from human activity, chief among them the carbon dioxide emitted by the burning of fossil fuels. The world relies on that source for nearly 85 percent of its energy needs, and that share is not projected to change significantly, absent 22 F O R E I G N S E R V I C E J O U R N A L / F E B R U A R Y 2 0 0 9 F O C U S The pillars of a new U.S. energy and climate strategy should include strong domestic leadership on climate and energy policy and a grand bargain with major emitters.