Center for a New American Security

Alex and I were both out at a thing Wednesday evening so we’re going to take it easy today and  just give you all a little food for thought. I’ll call it my Ode to Will since he’s still in Japan. Last week I finished reading Richard Samuels’ Securing Japan (I know, way long overdue) and was struck by the vivid descriptions of how energy colors the U.S.-Japan alliance. Of course I knew well Japan’s resource vulnerabilities and the importance of secure energy supplies to its leaders. However, I did not know that Japan did not cease importing oil from Iran during the hostage crisis. Says Samuels:

[T]errorist links to the Middle East have more immediacy for the United States than for Japan. These are precisely the sorts of differences, born in part from different geopolitics and different resource endowments, that contribute to the growing gap in threat perceptions even when interests are shared. The original energy-based divergence in U.S. and Japanese interests was in 1973…A second, well-remembered divergence occurred in 1979-80, when Japan continued its purchases of Iranian oil even after U.S. hostages were taken in Tehran.

The case of Iran in the 2000s is potentially the most consequential, because Japan’s commitment to nonproliferation and its alliance with the United States collide head-on with threats to its energy security.

Samuels proceeds with a few more pages of description how the Iran/enrichment/energy issue has affected relations between our two countries over the past decade. It wasn’t until late 2006 that Japan agreed to elevate Iran’s nuclear program to a higher priority above deals on Iranian oil fields. If you haven’t yet, skim through it here or on your favorite reader. As much as I’ve concentrated on Iran, I’ve paid far more attention to the China and Russia angles than Japan’s role, as I bet many of us do. I know I’m going to dig more into this, but start with Samuels as a good overview if you’re in the same camp as I was.

• Lack of electricity and water evokes anger in Iraq, from The Washington Post.
• From BBC, Russia’s Gazprom shuts off more gas to Belarus, provoking warnings of a potential “gas war” by President Alexander Lukashenko.
• A meeting convened by Health and Human Services Secretary Kathleen Sebelius discusses the potential human health effects of the Gulf oil spill, according to NPR.
• According to The New York Times, the European Commission is debating whether to pursue a new tax on emissions from heating oil and motor fuels to promote "clean" energy.
• According to CNN, at least 42 people are dead and 115,000 homeless or displaced in Brazil floods.

Yesterday über-officemate Commander Herb Carmen sent us this Robert Samuelson column from yesterday’s Washington Post, which I had until that point missed. Samuelson provides a range of statistics that show how very, very difficult it will be to scale up renewable fuels to levels that could displace fossil fuels in a major way. He uses the U.S. Energy Information Administration’s (EIA) Annual Energy Outlook 2010 to back his points. I hadn’t looked at this year’s Outlook yet, but am focusing much on energy through this summer, so decided it was as good a time as any to browse through it. I did not read the entire document yesterday word for word, but the more I read, the more I grew to think that Samuelson (I hope unknowingly) should have put these projections in context for his readers.

Anyone who looks at a lot of energy projections knows that these are commonly used methods – and should know that reality nudges these trajectories off course constantly. I’m of the mind that these kinds projections (especially business-as-usual scenarios) are a good way to show which trajectories need changing and where RD&D funding could be useful. They do not present a hard, unchangeable reality.

In the same publication Samuelson cites, the EIA is clear about the underlying logic (and limits) of its Reference scenario. I’m going to quote a bit extensively here to clarify that I’m not cherry-picking short phrases that fit a specific conception of the world that I’m pushing. You can skim these if I’m preaching to the choir. The Preface states the following:

The analysis in AEO2010 focuses primarily on a Reference case, Low and High Economic Growth cases, and Low and High Oil Price cases. Results from a number of other alternative cases also are presented, illustrating uncertainties associated with the Reference case projections for energy demand, supply, and prices…AEO2010 projections are based on Federal, State, and local laws and regulations in effect as of the end of October 2009. The potential impacts of pending or proposed legislation, regulations, and standards (and sections of existing legislation that require implementing regulations or funds that have not been appropriated) are not reflected in the projections…Projections by EIA are not statements of what will happen but of what might happen, given the assumptions and methodologies used for any particular scenario. The Reference case projection is a business-as-usual trend estimate, given known technology and technological and demographic trends. EIA explores the impacts of alternative assumptions in other scenarios with different macroeconomic growth rates, world oil prices, and rates of technology progress. The main cases in AEO2010 generally assume that current laws and regulations are maintained throughout the projections. Thus, the projections provide policy neutral baselines that can be used to analyze policy initiatives.

It also notes the following:

While energy markets are complex, energy models are simplified representations of energy production and consumption, regulations, and producer and consumer behavior. Projections are highly dependent on the data, methodologies, model structures, and assumptions used in their development. Behavioral characteristics are indicative of real-world tendencies rather than representations of specific outcomes. Energy market projections are subject to much uncertainty. Many of the events that shape energy markets are random and cannot be anticipated. In addition, future developments in technologies, demographics, and resources cannot be foreseen with certainty. Many key uncertainties in the AEO2010 projections are addressed through alternative cases. (Emphasis mine)

And:

… the Reference case assumes that the PTC [production tax credit] available for electricity generation from renewables sunsets in 2012 (wind) or 2013 (other technologies) as specified in current law, but it has a history of being renewed and could be extended again. In the Reference case, renewable generation accounts for 45 percent of the increase in total generation from 2008 to 2035. In alternative cases assuming the PTC for renewable generation is extended through 2035, the share of growth in total generation accounted for by renewables is between 61 and 65 percent.

Let’s look at one example. Samuelson cites this EIA Reference case projection to indicate only modest renewable growth outlook:

Although wind, solar and biomass are assumed to grow as much as 10 times faster than overall energy use, they provide only 11 percent of supply in 2035, up from 5 percent in 2008.

Luckily, the EIA provides a handy tool for comparing data across its multiple cases. You can select which tables and data you’d like to compare, and up to 4 scenarios at a time. Just playing around with the EIA’s other scenarios for wind power generating capacity by 2035, projections include 68.87 gigawatts in the Reference case, 79.52 gigawatts in the High Growth case, 53.46 in the Low Growth case, and 82.92 gigawatts in the case in which current tax credits and regulations have no sunset (this is all compared to 24.88 gigawatts in 2008). In other words, the EIA provides a range of projections, not a single, set percentage of the 2035 power supply. These variations don’t make a stark difference as compared to Samuelson’s selected projection, but it is important to note the full range of possibilities (albeit all only based on current technology).

In these kinds of projections, once you run the numbers, you can often see some strange underlying assumptions in the models. If you can see my blurry netbook screenshots in Scribd here, the EIA is projecting that solar thermal grows 3.5% and solar PV at 14.2% between 2008 and 2035 in each of these different scenarios for electricity generation. So I repeated the exercise for three additional cases (the second screenshot below), and again see 3.5% and 14.2% for every case. I find it a little hard to believe that none of the policy options in any of these different scenarios would cause any changes to growth rates for solar. Looking to the note at the bottom, I see that the EIA states that these figures do “not include off-grid photovoltaics (PV)” and that the projections are based on annual PV shipments from 1989 to 2007. This is probably the soundest way for the EIA to come up with a reliable projection without guessing about technological development. But that does not mean that it will prove to be accurate over the next 25 years. 

This is a relatively small additional gripe, but I’m also bothered by the Post’s choice of hyperlinks. The link to this massive EIA report (in the sentence: “The U.S. Energy Information Administration (EIA) expects energy consumption to grow only an average of 0.5 percent annually from 2008 to 2035, but that's still a 14 percent cumulative increase.”) is only to the 10-page section on U.S. energy demand. I understand not wanting to link to the full 231-page document, but the Post could have at least linked to the EIA page where readers can access all sections of the report and all available information.

In many ways Samuelson is correct – it will take a massive effort and much new technology to make significant advances in renewable energy generation capacity. And I would lean toward agreeing with him that taxing carbon or oil may be better than a cap-and-trade system. And presidents have always been less than frank about energy realities, without exception in recent history. But understanding the future of energy supply and demand is important to our security, and especially with those dependent on reliable fuel supplies like the armed services. None of us can know for certain what the future will be, but we could all be more rigorous in scrutinizing future projections, selecting data, and explaining any critical assumptions behind that data to readers. I don’t exempt us from that, and if anything, Samuelson’s article is a reminder to carefully select and explain what data we choose to use.

Much has been said of last week’s big minerals-in-Afghanistan news. Most critiques of the timing of the news and of the many difficulties in producing these potential reserves were raised in the media and by commentators through last week and this weekend (though if you missed it somehow, just read this from New Security Beat), so I won’t repeat it all.

Instead, I thought it would be fun to apply the concepts that Will (from whom you will not hear this week while he presents a paper in Tokyo) and I laid out in our recently released natural security report to the case of minerals in Afghanistan. In Sustaining Security, we outline two categories of approaches that we think could be useful concepts as security types increasingly consider natural resources issues in their security analysis (while the report focuses much on renewable resources, it works for nonrenewable resources as well if you alter the terminology appropriately for preservation, extraction, etc.). The minerals assessment by the Pentagon is a clear case of this type of work in action – a positive step forward, however the federal government doesn’t really have a solid framework yet for going about asking what does this mean in these circumstances. We described our recommended approaches thusly:

A targeted approach would consider the role that natural [resources play] in specific geographic areas, particularly in current or potential zones of conflict. When taking this approach, analysts should assess how natural resource conservation could ameliorate drivers of conflict and assist the national security community in addressing current or potential instability in the near term…a systemic approach would consider the interconnection of natural resources and their broad strategic consequences. For instance, food and land use, hydrological and forest systems, energy and climate change are all tightly interrelated, and to address any one of them carries implications for the others, as well as for economic development, politics and national security. Analysts taking a systemic approach must look regionally or globally and consider the potential impact of conservation and environmental restoration in bolstering traditional security strategy.

We would label our handling of the current case of vast mineral deposits in Afghanistan an example of the targeted approach to integrating resources into security analysis. The United States did not seek to consider minerals as part of its Afghanistan strategy; it is an opportunity that U.S. and Afghan officials stumbled upon, and an opportunity that policy makers are now targeted. The immediate task should be to game out (hopefully with the help of trusted Afghans) the various ways in which minerals extraction and management may affect stability and internal dynamics in Afghanistan, work with central government and local leaders to choose a preferred development roadmap for these minerals that ensures that profits contribute to the country’s economic growth, and leverage related U.S. government and ISAF efforts toward that path. Though much of the necessary decision making on these minerals will not be in U.S. or ISAF hands, the coalition does have the opportunity to be deliberate in gaming out how these resources could fit into the current strategy; the alternative, which most often happens with natural resources issues, is not ideal: conducting work related to these potential deposits without considering broader U.S. goals, its broader strategy and military operations, or planned timelines. (My impression is that DOD is doing the former, not the later, in some form.)

A systemic approach would mean us, U.S. government folks, you, your drinking buddies, and any interested security types pondering and debating the interconnections among natural resources and the broad strategic environment, including analysis of the important regional and global trends that these newly discovered deposits could affect depending on how Afghanistan’s government manages them. What does an Afghan economy centered on extractive industries mean for its long-term bilateral relationships? How might Afghanistan’s new mineral supplies affect feelings of cooperation or competition between the United States and China, depending on the structure of future contracts? If new-found resource wealth destabilizes Afghanistan, how is the full range of U.S. interests in the region affected? How would this destabilization affect Pakistan and India? Does Afghanistan’s natural security base provide many economic options that could provide more stable development paths? And where is Russia in all of this?

See, doesn’t natural security make for fun parlor games? Though not as much fun as Colbert's assessment in The Word last week, flagged for us by recently departed intern Dan.

Also see these two quality political cartoons on this minerals news: Ed Gamble and Chip Bok (disclaimer: I’m not saying General Petraeus passing out was funny, as it was not, but just that it is a good political cartoon).

And also in the news, police in Basra killed one Iraqi in protests over insufficient electricity supplies. We’ll be keeping an eye out for more on this through the week.

The Week Ahead

Up on the Hill Monday at 2:00pm, Rear Admiral Cullom, et al. will discuss Biofuels: The Future of Aviation? Implications for Climate Change and National Security, sponsored by the Center for National Policy. Wednesday at 9:00am, Resources for the Future is holding an event marking the release of its new report, Toward a New National Energy Policy: Assessing the Options (I am really looking forward to reading this report, and recommend this highly; you can also webstream the event). At 10:00 the House Committee on Science & Technology also holds Deepwater Drilling Technology, Research, and Development. At 4pm Carnegie Endowment for International Peace will have an event on Prospects and Challenges for U.S.–India Technology Cooperation that promises to look at clean energy in that bilateral relationship. Thursday at 9:00am you can hop over to the Wilson Center for Electricity With Chinese Characteristics: The Complexities of Decarbonizing China's Power Sector. Have a great week everyone!

• Security trumps environmental concerns in China’s energy plan, according to The New York Times.
• Environmental New Network explores how to break the cost of algae-based biofuels.
• The Water Matters @ Columbia blog discusses access to water as a growing challenge in Iraq.
• The Gulf oil spill is a “wake-up call for energy policy” according to a Department of Energy official quoted in the Wall Street Journal.
• The Huffington Post reports on the impact of climate change on global marine ecosystems.   

• The New York Times explores the implications of enduring oil spills in the Niger Delta.
• The European Union, in a study released on Thursday, is sounding the alarm on minerals shortages, according to The New York Times Green blog.
• The Washington Post reports that Afghanistan’s untapped mineral wealth may actually be worth up to 3 trillion dollars according to Afghanistan’s Minster of Mines.
• The “no-fishing” zone has been expanded further in the Gulf by NOAA, according to the Environmental News Network.
• The Navy’s Task Force Climate Change Director Rear Admiral David Titley blogs on Armed with Science about how the Navy is making investments to combat climate change in a fiscally-constrained environment.
• Think Tanked Blog shares the reactions of 5 think tank analysts following President Obama’s Tuesday night Oval Office address, including CNAS’s Christine Parthemore.

So the plan was that I was going to write on any security angles I perceived in President Obama’s address from the Oval Office on the disaster in the Gulf of Mexico. But the speech left me thinking that it’s most important to focus on the situation at hand, address the crisis, and address the economic damage. This is not because there are no consequences for national security, but rather because – let’s be honest – there is no telling what those consequences are at this point.

It is hard to wrestle with what this disaster means for U.S. national security (only a little less difficult if you define security broadly, as we do). One pal suggested to me a week back that this will affect support for the Navy aircraft carrier fleet (I am not totally sure what the logic there was, but happy to hear your guesses). At a roundtable with Hill members yesterday one woman told me that this disaster heightened her concerns about Cuba feeling emboldened (again, kind of a head scratcher). Perhaps a bit more likely, at our annual conference last week I chatted with a guest who was concerned about BP being bought out by another oil company, which would be a major shift in consolidation when the majority of the world’s oil is governed by national oil companies.

• Yesterday’s huge story on the front page of The New York Times on mineral wealth in Afghanistan had several spinoff stories, including from the LA Times, The Washington Post and another from The New York Times.
• In related news, NPR questions whether Afghanistan could fall victim to the natural resource curse.
• NPR also published a story this morning on monitoring conflict minerals and assigning accountability.
• Record-breaking rainfall in Oklahoma has led to severe flooding in the region that has left victims displaced, the Associated Press reports. Meanwhile, the Huffington Post notes that record flooding in America could be the “Pearl Harbor Moment for Climate Change.”
• UPI reports that climate talks in Bonn, Germany failed to produce clear results, which may hamper negotiation in the run up to talks in Cancun in December.