The Cold War Tells Us That the Ukraine War Might Accelerate the Green Transition

An interview with Ted Nordhaus via Raeson Magazine.

The Cold War Tells Us That the Ukraine War Might Accelerate the Green Transition
“By all sorts of metrics, we actually do better under this period of geopolitical competition than we do under the period of economic integration and ostensible international cooperation about problems such as climate change”

Interview with Ted Nordhaus, founder and executive director of the Breakthrough Institute, by Marius Siersbæk. Original article in Danish.

What has been the connection between economic power and fossil fuels historically?

There are a lot of different lenses through which to look at modernization, this remarkable period over the last couple of hundred years where you have the development of an advanced technological civilization, you have this extraordinary expansion of human population, you have this incredible flourishing of individuality, freedoms – all sorts of possibilities in terms of living that was just unimaginable earlier. One view of that is that it is made possible by fossil fuels. Modern techno-society is built upon it and is still heavily dependent on it. About 80 pct. of total primary energy globally comes from fossil fuels.

Thanks to the engine of innovation and technological modernization that the development and exploitation of fossil fuels started, we have also developed several other technologies that have allowed us to figure out how to get 20-25 pct. of global primary energy from non-fossil-based sources, things like solar, wind, nuclear energy, and modern hydroelectric power. All those things are really kind of further elaborations of energy in techno-society that don’t actually depend on fossil fuels. But we are a long way from replacing that 80 pct. of fossil fuels that the world still depends on. So, when you look at contemporary geopolitical realities, efforts to deal with climate change, efforts to address poverty globally, the continuing use of fossil fuels for a significant period is still pretty much implicated in almost all of them.

Is it fair to say that the war in Ukraine has accelerated this transition towards green energy? And if yes, why did this shift not come sooner?

My view is that the war marks the end of what I, in Foreign Policy, call “the post-Cold-war era”. The Soviet Union collapses in the early 1990s. The Cold War era, which goes all the way back to World War II comes to an end. If you look at diplomacy, at resource development, or at geopolitical conflicts all over the world, they are all tied up in this struggle between the Soviet Union and the Soviet system – the soviet orbit of allies, their economic systems, and the trade among them – and then the US-Western European side of that.

That comes to an end, and then you get this period of about thirty years with a reduced number of conflicts, a lot fewer hot- and cold wars. You get this expansion of global trade and global economic integration. In the US and in Europe there is a lot of outsourcing of manufacturing, of resource production, of energy production. Everyone who wants to can buy their oil from the Middle East and associated other places; you can get your natural gas from Russia; over the last decade, you could go and buy all your batteries and solar panels from China. There was this idea that in this more integrated global economy you could go to the UN, and you could do various treaties to make the world a better place. Whether that was the Kyoto Accord, or whether it was sustainable development goals or the biodiversity convention there was this idea that everyone was going to come together and negotiate these global rules that everyone then is going to follow – this would be a more politically- and economically integrated world. But it does not actually work – and especially it does not work on the climate issue. In the 30 years before the end of the Cold War, the world decarbonized its energy system faster than it does in the 30 years after.

By all sorts of metrics, we do better under this period of geopolitical competition than we do under the period of economic integration and ostensible international cooperation about problems such as climate change. And there is a reason for that. As soon as energy policy gets to some significant degree divorced from what I Energy Realpolitik there is no disciplining principle, it just becomes utopian. Germany can go and spend several trillions of dollars on its supposed energy transition which really is solar and wind energy and at the same time they are closing its nuclear plants, it is becoming increasingly more dependent on mining and burning its own lignite which is a very dirty form of energy – and it is becoming dependent on imported Russian gas. There is no geopolitical or economic imperative. Germany is rich, it has several constituencies, such as The Greens, who don’t like nuclear energy, and they have these fantasies about the entire country being sustained by wind- and solar energies. And in the meantime, you can go and connect a couple of pipelines from Russia and the energy economy continues to work.

To varying degrees, you can see the same dynamic all over the world. There is a lot of talk about an energy transition. There is a lot of money being spent on these technologies and there are real benefits to that. Wind- and solar energy gets cheaper – some of it is real technological innovation and some of it is that it gets outsourced to an authoritarian, mercantilist regime in China; that is using forced labor from labor camps in northwestern China. It is using very dirty energy to make the silicon and make the solar panels. So, a part of the history which no one really likes to talk about is that it was not just good technological progress it was just outsourcing to a place where there was no labor-cost, where an authoritarian regime with a mercantilist-industrial policy was leveraging its advantages to capture markets that were being created by Western demand-side subsidies.

When you put all of that together you get a lot of money being spent on very utopian energy concepts that really can’t work in the way they are conceptualized. And what is backing it all up is still huge amounts of fossil fuel use. So, you don’t make a lot of progress on emissions. Not even in the places where they are spending lots of money on these technologies. Now that we need to become independent of Russian gas, outsourcing your clean energy economy to China does not seem to be such a good idea anymore.

I think we are going to see is more hardheaded investments; both in securing necessary fossil fuel resources – across the West particularly – but also investing in technology and infrastructure to become less dependent on fossil fuels. We are going to see more nuclear energy. We will see a lot more infrastructure to support the variable renewable energy systems that countries have built out. I think we will see a variety of efforts to insource both fuels and technology that have been outsourced during this period of greater economic integration that is ending now.

When we want to move away from gas we will have to look toward other sources of energy and then, new preferences will arise. Take lithium for example; countries in Latin America, such as Chile and Bolivia, have a huge amount of. With new energy preferences, do you think new countries will get a new geopolitical advantage or just an economic advantage which would not have been imaginable before?

I think I have a slightly different view on this. I mean, of course, all nations are to a certain degree, geopolitical actors. Bolivia has a lot of lithium. The decision for them is going to be which supply chain their lithium is going to supply. Part of what will inform that choice will be who offers them opportunities; instead of just digging our lithium out of the ground and sending it off to a state-owned factory in China or a Tesla factory in Nevada. I argue that if the West wants the Bolivias of the world to be part of ‘our world" then we must think about how we entangle them into our supply chains, creating more jobs and economic opportunity and economic development in their domestic economies through those supply-chains.

I can understand by your line of reasoning that fossil fuels will be part of the ‘energy landscape’ for a long time. I would like to hear your opinion regarding a goal which the EU has put forward recently. They want to become independent of Russian gas well before 2030. Is this a realistic goal?

Maybe. I think there are several things which need to happen for that to be the case. I think they will use a lot more heat pumps for space heating. Germany and some other places are already starting to burn more coal which is not so good for an energy transition. It would help if they restarted their nuclear plants. We will also start to see more nuclear power, particularly in Eastern Europe and in France. The UK has already made some significant commitments to new nuclear. But it will also be necessary to get gas from other places. You are already seeing a lot of focus on new LNG facilities, in Spain, in Germany, and several other places.

One way the Europeans would show their dedication to the climate cause on the global stage was by advocating for cutting of development finance for fossil fuel development in Africa and other poorer parts of the world. But now, of course, Europe has realized that Africa has a lot of natural gas and if they want to get off Russian natural gas then they need it. So, we are going to see development of a fair amount of African gas with pipelines and other forms of infrastructure to get it to Europe. If it is done in an equitable and just way, it will also allow for the use of a fair amount of additional new gas across Africa, which desperately needs more gas. While Europe is trying to get off gas, a lot of Africa needs to get on gas for all sorts of reasons which are connected to fundamental things, economic development, and modernization.

So, it is not infeasible to become independent of Russian gas by the end of the decade, and depending on how this war goes, Europe might not have a choice. But it will not mean that Europe gets off gas – it means it will source its gas from other markets.

The EU also recently declared that as a replacement for Russian gas they will, on a short term, start importing gas from other countries. How long do you think that Europe will need to import gas?

I think that Europe, over the course of a decade, could get rid of most gas for electricity generation. Some combination of more renewable energy, more nuclear and obviously they could burn more coal – which hopefully, they will not do. Electrification of a fair amount of space heating reduces dependence on gas for that use. Now then you start getting to the hard stuff. And that is like, huge amounts of gas used for industrial processes such as fertilizers, the production of synthetic fertilizers. Here, it will be a lot harder to get rid of gas quickly. You can wave your hands about hydrogen but that is really expensive, and we don’t have the infrastructure for it. And the cheapest form of hydrogen requires natural gas. It is not made from green electricity. So, you get to 2035-2040, or maybe 2050? Is that feasible? Sure. But by 2030? Extremely unlikely in my view.

Do you wish to add anything?

I think there is a silver lining here for an energy transition. As energy security takes center stage, there are some places where various sorts of fossil fuel production can be increased – but it can’t be increased that much. In the meantime, there are huge incentives to make all sorts of investments in non-fossil technology and infrastructure to reduce dependence on fossil fuels – for geopolitical reasons, not climate reasons. And I think that will do more to accelerate the energy transition than anything else that we have seen over the last 30 years.

That said, it is a silver lining on a pretty bad situation. What is happening in Ukraine is terrible. There are huge threats of escalation of the war, it has huge consequences for global food security and much else – so, to be clear, it is an extremely bad situation. But it creates this one unique and quite different opportunity to accelerate the transition away from fossil fuels which is salutary. But we should not delude ourselves, climate change is far from the only problem the world is faced with today and the war should remind us that being monomaniacally obsessed with the supposedly existential risks associated with climate change – which really mostly are not existential risks – and not paying attention to the whole suite of challenges that human societies are faced with, and the risks associated with war, and conflict, and poverty, and so much else.

That can get us into the situation which Europe is in now where because it really forgot about a lot of these other challenges. Western Europe finds itself in this place where it is literally in the midst of a proxy war with Russia, but they are still sending billions of dollars to fund the war because they are dependent on Russian fuel. So, it is a great example of why we should be suspicious of these apocalyptic and monomaniacal stories. In modern, advanced Western societies these environmental discourses have always played this role. And they bring real costs and consequences for the world when we get singularly focused on them.