Transatlantic Energy Relations

Convergence or Divergence

John R. Deni, Karen Smith Stegen

• Publisher: Taylor & Francis
• Year: 2016
• Print ISBN: 9780415834193
• eBook ISBN: 9781134926404
• Edition: 1
• Topic: History
• Subtopic: Military & Maritime History
• Index: History

Recent upheaval in the global energy system – dramatic increases in demand led largely by developing countries, significant decreases in supply as a result of local or regional conflicts, and the growing nexus between the burning of hydrocarbons and climate change – has unsettled long-held notions of energy security. For many years, transatlantic cooperation helped undergird the system's stability, but Europe and North America have drifted apart in several key ways, potentially undermining the search for energy sufficiency, surety, and sustainability. Will the transatlantic partners continue on separate paths in the face of dramatic change in the global energy system, or does the breadth and depth of the challenges they confront compel them to work more closely together?

In this edited volume, experts from across Europe and North America – including advisors to the executive and legislative branches of both the EU and the United States, to senior military commanders, and to major international organizations and companies – examine the most salient facets of the transatlantic energy relationship and discern whether that relationship is characterized by growing convergence or divergence.

This book was based on a special issue of the Journal of Transatlantic Studies.

Transatlantic energy security: convergence or divergence?

John R. Deni^a and Karen Smith Stegen^b

^a Research Professor of National Security Studies, Strategic Studies Institute, United States Army War College, Carlisle, PA, USA; ^b KAEFER Professor of Renewable Energies and Environmental Politics, Jacobs University/Bremer Energie Institut, Bremen, Germany

Recent upheaval in the global energy system—how energy is produced, transported and consumed—has unsettled long-held notions of energy security. For decades, transatlantic cooperation helped undergird the system’s stability, but how is the relationship faring in the current era of energy uncertainty? In this book, experts from across Europe and the United States, including advisors to the executive and legislative branches of both the EU and the United States, to senior military commanders and to major international organizations and companies, examine various facets of the transatlantic energy relationship and whether it is characterized by convergence or divergence.

Both the United States and Europe today confront an array of similar energy-related dilemmas, including tighter competition for resources, unstable energy prices and greater political instability in producing countries. In other security contexts, most obviously in classic political-military security during the Cold War era, North America and Europe benefited greatly from transatlantic cooperation on policies and strategies when faced with common challenges. Therefore it was no surprise when the United States and Western Europe turned to each other in the face of the 1970s oil crises and coordinated their responses. Energy security, traditionally defined as reliable supply at an affordable price, was achieved through a variety of strategies, including international institutional arrangements, exemplified by the International Energy Agency (IEA), consumer-producer interdependence and an international oil market, as Tammy Nemeth explains in Chapter 2 on the history of post-World War II transatlantic energy relations.

This work is subject to Title 17, United States Code, Sections 101 and 105. It is in the public domain and may not be copyrighted.

The success of these strategies ushered in an era of relative stability in the global energy system. As the United States and Europe became accustomed to cheap, plentiful oil supplies, purposeful coordination fell by the wayside and the transatlantic partners drifted apart. Each side prioritized different facets of energy security, for various political, economic, cultural and historical reasons. Europe pursued sustainability and trusted in global markets and interdependence to ensure secure supplies. Meanwhile, the United States focused on maintaining the health of those markets by using its economic and military might to ensure a constant and abundant flow of oil to market, for example, by encouraging non-OPEC (Organization of Petroleum Exporting Countries) production and by patrolling tanker routes.

During the last ten years, though, energy security has seen a resurgence of interest and has hence been the subject of increasing worldwide attention, including in Europe and North America. This rekindled interest is largely the result of the challenges outlined at the outset of this chapter, plus several other significant developments that have changed the global energy system.

First, since the beginning of the past decade, oil markets have been both tight and volatile. The increased appetite for oil by developing countries, such as China and India, dramatically drove up worldwide demand, resulting in a 2004 “demand shock” when the increase in oil consumption doubled over that of the decade before. Concomitant with the rise in demand were production decreases in some of the world’s major producing countries. In 2002 and 2003, Venezuela underwent an internal crisis regarding its oil industry and experienced a subsequent drop in production, from which it has still not recovered. Following the US invasion of Iraq in 2003, Iraq’s oil production plummeted and the much heralded recovery of mid-2012, with production reaching 2.5 million barrels per day, is still a million barrels per day below Iraq’s 1978 peak.¹ These production-consumption disconnects, along with other problems, shot the oil price up from $20–30 in 2003 to $147 in mid-2008. The era of cheap oil appears to have ended, and in mid-2012 prices hovered between $80–90.

Second, the global energy system has been unsettled by political uncertainty. Not only have several major producing countries veered in and out of political crises—in addition to Venezuela and Iraq, also Libya, Egypt, Nigeria, Russia and several Gulf states—but almost 80 percent of the world’s hydrocarbon gas reserves are now under state control. Such developments “create new worries for the consuming countries.”²

Finally, the global energy system is being transformed by concerns over climate change. In recognition that hydrocarbon combustion emits greenhouse gases and thereby causes global warming and other measurable changes in the earth’s climate, many developed countries have begun to incorporate energy conservation and efficiency and the promotion of renewable energies into their energy security strategies. As producers rely on long-term demand, the prospect of their major, traditional customers reducing their consumption has given rise to uncertainty and consequently to a search for new customers, which introduces further uncertainty into long-established consumer-producer relationships and the global energy system.³ In sum, as Daniel Yergin posited in 2006, these myriad changes mean that, “… what has been the paradigm of energy security for the past three decades is too limited and must be expanded to include many new factors.”⁴ In other words, as the global energy system is in flux, so too are the methods and strategies for achieving energy security.

Given these recent changes and the subsequent heightened focus on energy security—as well as the ongoing reformulation of what energy security is or should be—now is an opportune moment to evaluate the transatlantic energy relationship. What are the areas of convergence and divergence? More importantly, is there reason to believe that the countries of Europe and North America would again realize significant benefits from greater convergence in energy security goals and strategies? Even if cooperation is beneficial, converging goals and cooperative strategies among the countries of the transatlantic community might remain elusive for a host of geopolitical, cultural, bureaucratic, organizational and domestic political reasons. Moreover, whether the transatlantic community can overcome these and other obstacles in an era of budgetary austerity remains to be seen. These questions and issues form the terrain over which the contributing authors in this book seek to navigate.

The authors in this book come from a variety of public and private entities across Europe and the United States—and include university and think-tank scholars and energy consultants, including several who have served as advisors to both the European Commission, senior US military commanders, major international organizations and the US Senate—and their combined wisdom and insights offer a unique window into the energy security path unfolding before Europe and the United States. Most of their contributions had origins in a May 2011 workshop on transatlantic energy security issues held in Heidelberg, Germany, at the Heidelberg Center for American Studies, an interdisciplinary program of the University of Heidelberg.

Whether or not the United States and Europe have the capacity or even the willingness to come together to address broad, common energy security challenges depends in part on the degree to which they share similar perceptions. Three authors in this book seek to address this by surveying the perspectives of energy security experts in what might be considered the two most significant actors on either side of the Atlantic: the United States and Germany.⁵ As Karen Smith Stegen and Julia Kusznir make clear in their chapter, “Transatlantic energy relations: a view from Washington,” the United States prioritizes the supply security aspect of energy security and has encouraged Europe to do the same. In contrast, Europe has focused on sustainability and has encouraged the United States to also shift towards efficiency and renewable energies, hence creating a standoff that would seemingly put the transatlantic partners at odds with each other. As US experts in Smith Stegen and Kusznir’s survey indicated, climate change is indeed the most contentious transatlantic issue, but they see convergence—either already emerging or still just inchoate—on other energy issues. Recent events have prompted Europe to align more closely with the US perspective on supply security and, as the US experts perceive it, the transatlantic partners are in agreement on the need for greater EU diversification and for the development of an internal EU energy market. This convergence does not, however, carry over to shale gas exploration in Europe, which the US experts felt would enhance European energy independence, particularly from Russian gas. At the same time, there appears to be a softening of the US perspective with regard to the role of Russia, with many acknowledging what Europeans have long known—that Russian energy resources are and will remain for the foreseeable future integral to Europe. However, even as America takes a more pragmatic stance towards Russia as an energy supplier, US experts remain skeptical of European approaches to climate change and the pace with which Europe lays the groundwork for creating an internal market. Nonetheless, many American experts believe greater convergence in the energy security dimension of the transatlantic relationship is both likely and potentially very beneficial.

Similarly, German experts see increased transatlantic cooperation as beneficial and, with regards to halting global warming, even necessary. However, as Sybille Röhrkasten and Kirsten Westphal point out in their chapter, “Energy security and the transatlantic dimension: a view from Germany,” many in Germany are pessimistic regarding the odds of a common transatlantic approach being forged. Indeed, beyond recognizing the potential for transatlantic cooperation in general, few German experts identified the United States as a partner for energy cooperation. Additionally, German experts remain concerned that the American emphasis on shale gas as a “transition fuel” or alternative to classically sourced fossil fuels comes at the expense of the preferred European means of addressing sufficiency and sustainability, namely renewable energies. Despite such differences though—and largely thanks to Russian-instigated gas shortages in 2006 and 2009—German experts acknowledge the growing convergence between Europe and America with regard to the importance of supply diversification generally and the so-called “southern corridor” supply infrastructure specifically.

Indeed, as one US expert related, the EU and the United States appear to be on the “same page” with regard to the southern corridor and Caspian region. Julia Nanay and Karen Smith Stegen explore this further in their chapter, “Russia and the Caspian region: challenges for transatlantic security?,” arguing that although transatlantic objectives for this region may converge, success in terms of achieving those goals is usually contingent upon agreement regarding specific strategies. The EU is highly dependent on Russian oil and gas and has already started to import oil from the Caspian region, and as a result will remain heavily engaged in the region in order to protect its immediate interests there. The United States, on the other hand, receives very little oil and no gas from Russia or the Caspian region, hence American interests are relatively more general—namely, to bring non-OPEC supplies to world markets and to decrease the geopolitical power of Russia and Iran. Underlying the interests of both transatlantic partners are the potentially lucrative plays in which both US and European energy companies potentially could partake (or already are). Nanay and Smith Stegen note that, at the moment, the EU relies on cooperation with its transatlantic partner to help achieve its southern corridor diversification goals, but they also point out that for the EU to achieve greater leverage in the region, it will have to forge a common foreign policy for energy. Speaking with one voice has been difficult to achieve, however, as it entails member states ceding greater decision-making power in the energy sphere to Brussels. Additionally, a more collective European approach would have to overcome the hurdle that many member states benefit from striking their own bilateral energy deals.

In addition to using diversification to enhance energy security, members of the transatlantic community can also increase indigenously sourced energy. In recent years, this has roughly translated into an emphasis on shale gas in the United States and on renewable energies in Europe. Marianne Haug explores whether these different focuses will lead to divergence or convergence in her chapter, “Shale gas and renewables: divergence or win-win for transatlantic energy cooperation?” In 1993, the US, European and other IEA (International Energy Agency) member countries adopted the IEA’s “Shared Goals” to balance energy security, environmental sustainability and economic competitiveness objectives; however, the transatlantic partners have pursued different methods for fulfilling those goals. Their respective strategies further diverged when technological advances in “fracking” to exploit shale gas transformed the United States from a net importer of natural gas to self-sufficiency. However, a similar shale gas revolution across all of Europe is unlikely, due to myriad geological, technical and environmental reasons; hence most European countries are expected to emphasize renewable energy. Rather than viewing these differences as a threat to the transatlantic relationship, Haug concludes that the divergent strengths of both partners—that is, US fracking technology and European renewable technology and policy expertise—will offer new opportunities for transatlantic cooperation. As the new abundance of shale gas will shake up worldwide gas markets and lead to a new demand/supply balance, and investments in renewable technologies make them increasingly competitive, Haug argues that energy security of both the EU and the United States will improve.

Energy security has traditionally denoted reliability and price stability, but, as Frank Umbach points out in his chapter, “The intersection of climate protection policies and energy security,” concerns about climate change have prompted the broadening of the concept to include environmental protection, resulting in the so-called energy triangle comprised of supply security or surety, economic competitiveness and environmental/climate sustainability. Neglected by most scholars and analysts, however, is that the three energy objectives contradict each other in practice. Surety, for example, could be easily achieved by burning domestic coal, but this contradicts the sustainability imperative. States must therefore seek policies that balance the three objectives. Umbach examines how the United States and the EU have attempted to attain this balance and concludes that the United States, with its view that burning shale gas is better for the climate than burning coal, has miscalculated the overall impact of combusting any hydrocarbons on global warming and thus does not achieve an energy security balance. His analysis of Europe indicates that the EU faces a conundrum in the pursuit of balance as well, but in a different dimension of the energy triangle. Despite the fact that the EU has come around to the long-held American perspective of viewing surety in a strategic, even political context—largely because of Russian-induced gas shortages in 2006 and 2009—Europe remains overly focused on sustainability goals. While both transatlantic partners struggle towards balance in their approaches, it remains to be seen—for cultural, economic and political reasons expounded upon by Umbach—whether they can achieve their commonly held objectives.

Intergovernmental organizations, such as the North Atlantic Treaty Organization (NATO)—billed as the most successful alliance in history—may provide a mechanism or forum through which the transatlantic community might collectively work through some of the thorniest challenges. Indeed, Michael Rühle argues in his chapter, “NATO and energy security: from philosophy to implementation,” that despite European concerns of overly militarizing an otherwise non-military sphere of public policy—as well as a host of member-specific reasons for NATO to tread lightly here—the alliance finds itself virtually compelled by real-world events to address energy security. Increasing attacks on NATO fuel supply convoys in Afghanistan, growing instability among the countries supplying much of Europe with fuel and greater concern among all allies with the security of transit routes, shipping lanes and other critical energy infrastructure elements have collectively pushed a reluctant alliance into taking on an increased role. Nonetheless, as member states have different sensitivities vis-à-vis energy, NATO is caught between protecting the collective interests of its member states on the one hand and avoiding trespassing on the individual prerogatives of those same countries on the other. For example, there remains great division in the alliance over how to treat Russia in an energy context, with some allies viewing Moscow as a strategic partner and others holding a completely opposite perspective.

Although individual member state interests may constrain NATO’s role, the potential exists for several allies to benefit substantially from aligning their energy goals and strategies bi- or multi-laterally outside the context of the alliance. In his chapter, “Culture, institutions and defence cuts: overcoming challenges in operational energy security,” John R. Deni posits that although the time may seem ripe for greater bilateral or multi-lateral cooperation in operational energy security—that is, the energy necessary to prepare for, deploy to, conduct and return from military operations—a host of factors stand in the way. In particular, several European allies with which the United States has otherwise robust bi- or multi-lateral military relationships face institutional, organizational and budgetary restraints that will frustrate any major short-term efforts at increased collaboration in operational energy security. And in the long run, the absence of an enduring, sufficiently mature energy culture in the United States will hinder American efforts to solidify immediate gains in terms of greater bilateral or multilateral transatlantic cooperation in operational energy security. Although the outlook for convergence of goals and strategies in this niche field of energy security is therefore somewhat pessimistic, Deni argues that there are, nonetheless, some options the transatlantic community can pursue in order to best take advantage of some currently favorable trends, however fleeting.

Regardless of whether the transatlantic community takes advantage of what may be limited or ephemeral opportunities, such as those suggested above, the collection of chapters in this book clearly conveys the sense that the transa...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Citation Information
• 1. Transatlantic energy security: convergence or divergence?
• 2. A brief history of transatlantic energy security relations: the pursuit of balance and stability through interdependence
• 3. Transatlantic energy relations: a view from Washington
• 4. Energy security and the transatlantic dimension: a view from Germany
• 5. Russia and the Caspian region: challenges for transatlantic energy security?
• 6. Shale gas and renewables: divergence or win-win for transatlantic energy cooperation?
• 7. The intersection of climate protection policies and energy security
• 8. NATO and energy security: from philosophy to implementation
• 9. Culture, institutions and defence cuts: overcoming challenges in operational energy security
• Index