Holding on to Fossil Fuel as a Strategic Resource No Guarantee of Future Superpower Status

Events Forces Miscellaneous Research News

A key component of Purdue’s FORCES Initiative and its Technology, War and Strategy Course is our guest speaker series. In spring 2020, Purdue graduate Sean Barnett, Ph.D., a nuclear engineer, RAND corporation energy policy expert, and FORCES Advisory Council member, took part in the speaker series, bringing a wealth of knowledge and strategic leadership to the classroom.

Barnett has 30 years of experience leading research and solving problems in the fields of national security, energy, and law. At RAND, he has been involved in military operational assessments, modernization and force structure requirements, and force management issues. Specific projects have concerned potential conflicts with Russia in Eastern Europe, potential conflicts with North Korea and North Korean nuclear weapon developments, artillery and aviation requirements, theater-level combat modeling, and the Army personnel screening system. He also leads and supports RAND’s wargame development efforts across multiple theaters and potential conflicts.

Before coming to RAND, he worked as a research staff member at the Institute for Defense Analyses, and, before that, practiced administrative law at the firm of Pillsbury Winthrop Shaw Pittman. There, he focused on nuclear energy regulation. He enjoys traveling, military history, and wargaming, and he’s written short books of wargaming scenarios centered on the World War II battles of Villers-Bocage and Operation Epsom.

Curtailed by COVID-19 restrictions, Barnett engaged in a Q & A with FORCES staff and students taking the initiative’s “Technology, War and Strategy class. His written answers to questions about the role of energy policy in shaping national strategy goals were discussed online, and then by engaging via video conference with the students. In this piece, questions are followed by one-two sentence summations, then by Barnett’s full answers which have been edited for brevity and clarity.

Question. Is the energy policy a national strategic asset? Why? What strategic decisions are embedded in our energy policy?

Energy policy is a national strategic asset because of the centrality of energy to our way of life. Decisions include enacting policies to promote the development of energy sources and technologies, protect the environment, and create jobs.

Answer. Energy policy is a national strategic asset because of the centrality of energy to our way of life. If national access to energy is not managed well it, and hence our way of life, can be put at risk. U.S. national security goals (according to the U.S. National Security Strategy) are protect the American people, preserve our way of life, promote prosperity, preserve peace, and advance American influence. The goals of U.S. energy policy (according to the U.S. Department of Energy) are promote the development of energy sources and energy technologies, protect the environment, and create jobs. Historically, we have relied on foreign sources of energy that were potentially vulnerable to interruption. We have also relied on sources of energy whose continued use, without careful management, could be exhausted and harm the environment. Therefore, because energy is essential to our way of life and prosperity, but access to safe and affordable energy is not assured without care and thoughtful action at the national level, energy policy is a national strategic asset.

The strategic decisions embedded in energy policy enable the achievement of our strategic goals. These include the enaction of policies to promote the development of energy sources and technologies, protect the environment, and create jobs. Policy tools used in the past to do this have included tax credits to promote investment in energy sources and energy production, subsidies of energy research, emission credits and taxes to encourage the reduction of energy-related pollution or to discourage use of exhaustible resources, and market controls to conserve resources or correct market distortions where necessary. While not always thought of as energy policy per se, these decisions provide security for energy production and distribution with law enforcement and the military. They also provide security for energy markets using legal and financial policies and instruments. (We have also used our diplomatic influence to encourage our allies and partners to support us in these aims.) In the U.S., some of these decisions are made and policies are implemented at the state level, but these contribute to the collective, de facto U.S. energy policy as well.

Question. Where is the United States in the energy race at the beginning of the 21st century? Is it an innovator or a laggard?

The U.S. is still a world leader in energy, but we lag in transitioning to renewable energy.

Answer. In many respects, the U.S. is still a world leader in energy, but we lag in transitioning to renewable energy. According to the International Energy Agency, in 2018 we were was the world’s second largest investor in the energy sector, at a total of about $350 billion (private sector and government spending), behind China, which invested a total of about $380 billion. The U.S. invested more than any other country in fossil fuel supply, but China and Europe outpaced us in electric power generation and transmission, energy efficiency, and renewables for heat and transportation. 

On the other hand, investment in total energy supply grew more in the U.S. in the last decade than anywhere else in the world. With respect to government energy research, development, and demonstration, as a fraction of GDP, the U.S. is on par with the world’s major economies other than China, at about 0.04%. The Chinese government, as a fraction of GDP, spends about twice as much (about 0.08%). This makes the U.S. government second in the world in total energy investment. Renewable energy is a critical exception to these successes. In the past decade, China invested $758 billion in renewable energy and Europe $698 billion, while the U.S. invested only $356 billion. In transitioning away from fossil-based electricity, the U.S. is well behind Germany, for example, which will produce two-thirds of its electricity from renewables in 10 years; the comparable U.S. fraction is expected to be less than 25 percent. While the U.S. is generally not behind China and Europe in renewable technology, it does lag in the transition to using renewable energy.

Question. Can the U.S. be truly energy independent? What does it mean to be energy independent? How can this help us forge a strong defense strategy?

The U.S. should become energy self-sufficient again in 2020. This means that while we may be freer to avoid conflicts in volatile [energy producing] regions, that freedom may not be absolute.

Answer. The U.S. should become energy self-sufficient again in 2020, for the first time since 1953. It is expected to remain so at least into the 2050s. This frees the U.S. from dependence on foreign energy sources that has historically caused us to become involved in conflicts, particularly in the Middle East, that it might not have been involved in otherwise. In that sense, we are becoming energy independent. Our self-sufficiency will give us the freedom to remain uninvolved in certain foreign disputes because the energy that we depend on to maintain our national well-being will not be threatened.

On the other hand, many of our important partners and allies around the world, particularly in Europe and Asia, still depend on foreign energy, including from the volatile Middle East. While we could take the position that other nations ought to be more responsible for their own security, since World War II, the U.S. has taken on the role of the defender of the global commons, the oceans and airspace through which international commerce flows. It is unlikely that the U.S. will be able to shed that burden because none of our partners or allies has the capacity to replace us.

We will also remain connected to the rest of the world through the growing international economy. This means that while we may be freer to avoid conflicts in volatile world regions, that freedom may not be absolute. Threats may arise that would cause us to fight in order to prevent disruptions to the flow of world energy supplies. These disruptions could be so powerful as to ripple through global energy markets, significantly impact our economy, and hence our well-being.

An implication for our defense strategy is that we should feel less compelled to secure the Middle East and other energy producing regions of the world. This should allow us to avoid repeating some costly conflicts over the past several decades. It should allow us to reduce our military presence in those regions, and potentially maintain a smaller military. In that case, if threats did arise in the world’s energy-producing regions, our energy self-sufficiency should give us both more flexibility in how to respond, and more time to decide how to do so. That in turn will insulate us from immediate adverse effects of the threats. Finally, this should reduce the risk that we are drawn into conflicts with unexpected costs and consequences.

Question. What is the main conclusion of the Energy Outlook report? 

The U.S. becomes a net energy exporter in 2020 and remains so through 2050 as a result of large increases in crude oil, natural gas, and natural gas plant liquids production, coupled with slow growth in U.S. energy consumption.

Answer. The Energy Outlook report is prepared every year by the U.S. Energy Information Administration, Office of Energy Analysis, of the U.S. Department of Energy. It provides long-term energy projections for the nation. It is published to satisfy the Department of Energy Organization Act of 1977, which requires the Administrator of the Energy Information Administration to prepare annual reports on trends and projections for energy use and supply.

Its principal findings for 2019 were:

  • The U.S. becomes a net energy exporter in 2020 and remains so through 2050 as a result of large increases in crude oil, natural gas, and natural gas plant liquids (NGPL) production, coupled with slow growth in U.S. energy consumption.
  • Of the fossil fuels, natural gas and NGPLs have the highest production growth, and NGPLs will account for almost one-third of cumulative U.S. liquids production.
  • Natural gas prices remain comparatively low during the compared with historical prices, leading to increased use of this fuel across end-use sectors and increased liquefied natural gas exports.
  • The power sector experiences a notable shift in fuels used to generate electricity, driven in part by historically low natural gas prices. This shift will be marked by increased natural gas-fired electricity generation, larger shares of intermittent renewables, and additional retirement of inefficient coal and nuclear plants.
  • Increasing energy efficiency across end-use sectors keeps U.S. energy consumption relatively flat, even as our economy expands.

Question. Who are the next energy superpowers? Will the U.S. be an energy superpower in, say, 50 years?

A nation’s future status as an energy superpower will depend on the same factors as today, but also with respect to the dominant energy sources of that time. With the world transitioning away from fossil fuels (to combat climate change), holding on to superpower status is by no means guaranteed in the future.

Answer. The first thing is to consider what might make a nation an energy superpower. Some have defined that status as supplying large amounts of energy resources (crude oil, natural gas, coal, etc.) to a significant number of countries, and thereby potentially influencing them for political or economic advantages. That ability requires a large production capacity relative to domestic needs, low production cost in order to compete in global markets, and large reserves to sustain one’s influence. The predominant world energy sources today are still oil, coal, and gas, so market power in those commodities will contribute to a nation’s energy superpower status.

The world’s top energy exporters today (with shares of global exports of oil, gas, and coal of 10 percent or more) are: Saudi Arabia (oil), Russia (oil, gas, and coal), Qatar (gas), Norway (gas), Canada (gas), Australia (coal), Indonesia (coal), and the US (coal). Of those, the following are in the top 10 in known reserves: Saudi Arabia, Russia, Qatar, Australia, and the United States. With top status in all three predominant energy sources, Russia could be seen as an energy superpower today. With the importance of oil to transportation, Saudi Arabia could claim that status as well. Indeed, we have seen Russia and Saudi Arabia use their market power in energy to extract benefits from consumers like Europe and, in the past, the United States. Qatar has a strong position in gas and Australia and the US have strong positions in coal (with the U.S. position in oil and gas growing due to recently increasing exports). But those nations are typically not thought of as obtaining outsized international leverage through their energy exports. Venezuela has very large reserves in oil and gas, but its market shares of those fuels today are relatively small.

A nation’s future status as an energy superpower will depend on the same factors as today, but also with respect to the dominant energy sources of that time. Today superpower status flows from the possession and extraction of fossil fuel resources. With the world transitioning away from fossil fuels (to combat climate change), holding on to superpower status is by no means guaranteed in the future.

For example, Royal Dutch Shell published a report two years ago that envisioned one scenario in which the world would move to net zero carbon emissions by 2070. If true, national leverage from the possession of fossil fuel resources would collapse. Energy production would be dominated by renewables available to all (with capital equipment potentially produced by any industrialized nation). In such a scenario, there would likely be little energy market power and hence no energy superpowers. Thus, today’s energy superpowers will likely see their power diminish in the latter part of the 21st century. The leverage obtained from possession of natural resources, mostly a geologic accident, will be dissipated by a more distributed and hence egalitarian energy future.

Question. What will be the role of nuclear energy in supporting the claim to leadership among future energy superpowers?

Given the foregoing discussion–the current global status of nuclear power, and the outlook for global electricity generation in the future–the contribution of nuclear to a nation’s energy superpower status is likely to be limited.

Answer. Given the foregoing discussion – the current global status of nuclear power, and the outlook for global electricity generation in the future – the contribution of nuclear to a nation’s energy superpower status is likely to be limited. The role of nuclear energy in obtaining or sustaining energy superpower status depends on the nation’s ability to provide nuclear energy (or generating capacity) to have influence to gain political or economic advantages. That would turn on how much generating capacity the supplier nation provided, to what extent there were competitors, and whether consumer nations (energy importers) had alternative energy sources to mitigate the influence of the nuclear power suppliers.

The first thing to note is that nuclear power currently meets about 4 percent of the world’s energy demand (2019 BP Statistical Review of World Energy). As a source of electricity, it has several competitors. Thus, being a global supplier of nuclear power generating capacity now would be unlikely to contribute much to a nation’s future energy superpower status. If the world were mostly to abandon fossil fuels as sources of electricity (which may be a long time in coming), that would still leave hydropower and renewables as competitors. 

The ability to expand the use of hydropower is limited in some respect by the availability of dam sites, which would still leave renewables as nuclear power’s primary, long-term competitor as non-fossil sources of electricity.  Today, based on the lifetime cost of power generation (the levelized cost of electricity, or the cost of building and operating a generating plant over an assumed financial life and duty cycle), solar and onshore wind are both significantly less expensive than nuclear (and they do not raise the weapon proliferation issue that nuclear can with some potential consumers).  Thus, other renewables look like stronger competitors for future non-fossil electricity generation. 

Question. How did your time at Purdue influence your personal and professional journey post college? Further, what advice would you have for Purdue students today looking to pursue a career in government or foreign affairs?

In my view, the most important thing to do first is to build strong analytical and critical thinking skills. They will allow you to explore issues and answer questions in a great many fields.

Answer. My time at Purdue has been quite beneficial to me, particularly in my professional journey. Purdue provided me with the engineering education that has been foundational to my professional growth throughout my entire career. After graduating with a bachelor’s in nuclear engineering, I attended the Massachusetts Institute of Technology for graduate school where I continued my nuclear engineering studies and obtained my doctorate. My Purdue education gave me the skills and knowledge necessary to succeed at MIT. 

After I graduated from MIT, I pursued a career in defense analysis, taking a position in 1989 as a research staff member with the Institute for Defense Analyses, in the Washington, DC, area. At IDA I applied my technical skills to solving analytical problems on behalf of the Department of Defense and again my Purdue education provided the foundation for doing that. A few years after the Cold War ended, I decided to change directions and I obtained a law degree from Georgetown University. After considering the different areas of the law I might pursue, I settled on nuclear regulatory law with the firm of Shaw, Pittman, Potts, and Trowbridge, one of the nation’s leading practitioners within that specialized field.  In my legal practice, again, the knowledge and skills I acquired at Purdue were invaluable. 

In the mid-2000s, after the United States had turned again to focus more on national security concerns, I decided to return to national security related work, and I rejoined the research staff at IDA. After another 10 years, I decided to move to my current position at the RAND Corporation to pursue somewhat different interests but still within the fields of defense and homeland security. The whole time, my Purdue education has been helpful to me and I believe a Purdue education would be helpful to anyone who wished to pursue a course like mine, even in the broadest sense.

For Purdue students looking to pursue careers in government or foreign affairs, I’d offer this advice for those who are interested, at least initially, in solving analytical problems related to national security and foreign affairs, and then potentially moving to exploring broader questions of policy. (One could pursue a career in policy assessment from the beginning but that wasn’t the path I took, and my observation has been that that track is sometimes more difficult than pursuing more of an analytical path first.) In my view, the most important thing to do first is to build strong analytical and critical thinking skills. They will allow you to explore issues and answer questions in a great many fields. When you find an area interesting, with such skills you will be well positioned to provide analytical services of value to the government directly, or to companies that provide analytical services to the government.

This is the case for national security and foreign affairs and more broadly, in that the U.S. government deals with a great variety of issues.  A good education in most quantitative fields or fields with serious quantitative components should suffice, even if you end up not working specifically in your degree field. (There are many researchers and analysts in the government, and at institutions like RAND and IDA, who do not work in their degree fields.) Firms like RAND and IDA generally consider the analytical skills of potential new researchers to be more important than their specific subject matter knowledge (which can usually be acquired on the job).

After that, I would advise students to take their educations as far as they are willing, ultimately to the doctorate level. It used to be that most of the new researchers hired at places like RAND and IDA (which mostly serve the Department of Defense), had doctorates in engineering or the technical sciences. It’s generally seen that they are most able to step in and work on the issues those firms and their government sponsors deal with. Over the years, those firms have moved to hiring more master’s degree graduates and, within the past 10 years, bachelor’s degree graduates. But the opportunities for master’s and bachelor’s graduates are more limited, with bachelor’s graduates limited mostly to the research assistant level. Finally, when considering where to start to get into a career in government or foreign affairs, one can explore starting with the federal government directly, as the executive departments do hire new graduates. But more new graduates tend to be hired by firms that serve the executive departments, mainly the Department of Defense (since it is the largest department in the government).

Firms like RAND and IDA and the Center for Naval Analyses are federally funded research and development centers that perform research for the government. They are a form of government contractor with certain special abilities and certain limitations on the kinds of business they can pursue. Other firms like better known defense contractors, Lockheed-Martin, Raytheon, and Northrop Grumman, etc., also provide analytical services to the government in addition to manufacturing defense systems. In sum, there are many firms that provide services to the government and thus many opportunities for new graduates to pursue. Because there are so many, looking at them early to see what they do and what they might have to offer is the best course.

About Purdue’s FORCES Initiative: FORCES (4S) stands for Strategy, Security and Social Systems. The initiative, founded in 2019, promotes research and instruction to improve decision-making in present and future global leaders. It supports the use of social scientific research in strategy and security activities to shape long-range and global military, political, and organizational decision-making for a just, stable, and secure world. FORCES is housed in Purdue University’s College of Liberal Arts and was created in collaboration with Discovery Park and the Institute for Global Defense Innovation.

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