Common Tragedies

Thoughts on Environmental Economics

John Deutch on energy security

Posted by Daniel Hall on October 29, 2008

I attended a portion of today’s event at RFF on energy policy challenges.  MIT Professor John Deutch — who has an absurdly broad and interesting personal biography — spoke on energy policy and national security just after lunch.  He had three headline points:

  1. Energy independence is not feasible for the U.S. (or its allies).  We can talk about improving energy security but basically people should stop using the term energy independence.
  2. Our domestic political institutions are not set up in a way that acknowledges or deals with the links between domestic energy issues and foreign policy decisions.  As examples he pointed out the disconnect between the House Energy and Commerce Committee and the Senate Foreign Relations Committee; the inconsistency of our long-standing (though recently expired) restrictions on domestic drilling and our persistent requests to overseas producers to ramp up production; and the necessity of U.S. domestic action on climate change as an essential pre-condition for a robust international agreement on climate change.
  3. Increasing energy security will require incremental changes and a long-term perspective — you are not going to get an overnight overhaul of U.S. energy policy or practice.

Deutch proposed that there were four key areas where energy policy has significant intersection with foreign policy and national security:

  • Oil and gas import dependence
  • The vulnerability of energy infrastructure to disasters both natural and man-made (including terrorist attacks)
  • Nuclear proliferation
  • Climate change, including its growing role in the North-South diplomatic dialogue, its growing importance to U.S. standing abroad (and the diplomatic capital it will require in future), and its role in causing migration and conflict in some of the less stable parts of the world in the coming years

He made many other points along the way which I found interesting.  I’ve placed these below the fold in no particular order:

— Some have called for a a national security premium on energy.  (Imagine a tax for the ‘security externality’ imposed by foreign energy imports.)  Deutch was skeptical of such proposals.  He is uncertain you can clearly assign costs to this externality: are we in Iraq for oil?  Most would say no (at least not primarily).  If you assign a portion of the cost, what portion?  I also wondered whether he thought the benefits of imposing some kind of security tax would be outweighed by the diplomatic repercussions (for example, among OPEC members, particularly OPEC).

— Deutch pointed out that the definition of energy security expanded in the 1970s to include the performance of energy markets and then economic growth writ large, such that today discussions of energy security will sometimes focus almost exclusively on economic growth.  He didn’t offer commentary on whether he viewed this as a positive development or not; I was curious.

— Deutch observed that energy security issues frequently pit economists against national security guys.  Deutch recalled debates in the 1970s about whether we should export diamond drill bits to the USSR.  The economists argued that this would let the Russians drill their oil more efficiently, increase production, lower world oil prices, and benefit everyone.  The national security guys — and Deutch unabashedly claimed this affiliation — were apopleptic that we would send improved energy technology to an enemy of the U.S.

— Deutch pointed out that most of our important international relationships that are… problematic, shall we say, include disagreements over energy: Russia, Iran, Saudi Arabia, and China.  In Russia Putin is making no bones that he will use energy policy to accomplish national political objectives.  (Deutch recalled worrying in 1980 about Russia’s ability to project force into Iran and essentially embargo Western oil at a time when most observers were far more concerned about the forces that could move on Europe.)  Iran has numerous security issues: involvement in Iraq, nuclear weapon ambitions, 3 billion barrels a day of oil production, and the Strait of Hormuz.  Saudi Arabia — well, duh.  And China is “going out for oil” in Africa (Deutch’s phrase), particularly in Sudan and Angola, and not really even pretending to care about the actions of the governments in the countries where it operates.

— Speaking of China and acquiring oil, Deutch wondered why they are making this play in Africa when the U.S. Navy still stands between them and the oil and hence it does not necessarily enhance their energy security.  The thing that struck me about his comment was the reminder that the U.S. is truly the only global military power, and this is perhaps nowhere truer than on the ocean.

In conclusion I will say that my favorite point that Deutch made is the one about our domestic political institutions being ill-designed to consider both questions of energy policy and foreign policy.  My critique would be that as much attention as China got in Deutch’s talk I am not sure it got enough.  Particularly once you link energy markets and economic growth to security issues then China must be in the conversation in a big way, since they account for so much of current and near-future growth in global energy consumption and greenhouse gas emissions.  I have said it before but it bears repeating, China is the most important bilateral relationship for the U.S. in the next generation.

One Response to “John Deutch on energy security”

  1. epc said

    great article, we are looking into natural energy resources. Anybody know of good resourceful websites which discus new energy?…..and what about the new nano solar technology?

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