MON, APR 04, 2022
He ran for office and entered the White House as the president who was committed to slashing emissions of carbon dioxide and other climate warming gases.
Indeed, upon entering office President Joe Biden stated that the climate crisis was the biggest threat to American national security, and told world leaders gathered for the COP26 climate summit that it was "the existential threat to human existence as we know it".
And when it came to the environment, President Biden put his money where his mouth was, signing executive orders and advancing regulation, including cracking down on methane leases from wells and pipelines and restricting drilling on federal lands.
In fact, 1 of the first decisions that President Biden made was to revoke a key permit needed for a US stretch of the Keystone XL pipeline which was supposed to bring oil from Canada's western tar sands to US refiners.
The move was seen as a major victory for environmental activists, who argued that the pipeline would hamper the US transition to cleaner fuel, and be a setback to the energy sector, and in particular to companies producing liquefied natural gas (LNG) who believed that President Biden posed a major threat to their long-term survival.
President Biden did face stiff opposition from the domestic industry and its supporters in Congress when he tried to promote an ambitious legislative agenda that would have included spending of billions of US dollars on programmes that promised to decarbonise the American economy and in the process challenge the power of the oil companies.
Add to that the growing pressure on these companies and the financial industry to divest from fossil fuels coming from environmental activists, and it was not surprising that many observers expected that the Biden presidency would be recalled as the greenest ever with the energy industry being forced to play defence. Welcome to the age of climate-driven energy transition!
So saying that those of us with a sense of irony were probably pleased when President Biden announced on Thursday that the US would release up to 180 million barrels of oil from its strategic reserves would probably be an understatement.
The president who not long ago was promoting a vision of altering demand for fossil fuels, the main driver of climate change, was now doing everything in his power to increase the supply of oil, natural gas and coal, sounding like pro-oil-industry Republicans, cheering "Drill, Baby, Drill".
You don't have to be an energy-market expert to recognise what has happened. Anyone who has had to pay more for gas at the pump in recent months recognises that Russia's invasion of Ukraine, coming in the midst of surging inflation, is raising energy prices to the stratosphere.
From that perspective, President Biden's decision to kill the Keystone XL and perhaps its entire efforts to battle climate change, may have failed to take into consideration that American energy policy affects not only the business interests of oil companies as well as the environment, but should be regarded as central to US national security.
Indeed, taking into consideration that Russia supplied between 10 per cent and 25 per cent of the world's oil, gas and coal exports on which many economies (in particular in Europe) depend, it was clear that launching a massive economic assault on Russia by Western governments, in retaliation for its invasion of Ukraine, would have powerful impact on the energy markets.
Let's make sense of what has been happening: The decisions that the US and its Western allies have taken in response to Russia's aggression were based on geo-strategic considerations. Russian President Vladimir Putin has threatened core political-military interests of the West and challenged its values. That required taking action even though it meant increasing the costs for Western economies.
When you are attacked by a foreign power you have to do everything in your power to defend your country even if that means lowering the standard of living for your citizens who face rising gas prices, not to mention lessening the national focus on environmental programmes.
It is true that during the era of globalisation, with Russia seen as being integrated into the global economy, the notion of energy security was not placed on the top of the policy agenda. Hey, Russia would have to sell its oil, they said, and who really cared if the Europeans received most of their energy supplies from their neighbour. If anything, that would in theory have helped create more interdependent European economies and help advance stability and peace on the continent.
Now we know that there was an element of wishful thinking that disregarded the potential for Russia, or for that matter, China, to turn out to be a global security threat, requiring Western geo-economic assessments to adjust to geo-strategic interests.
It is now becoming clear that relying economically on Russia whose authoritarian government is committed to challenging the global status quo was a mistake. Similarly, cancelling the Keystone meant making the US more reliant on energy exports from politically unstable Mexico and Venezuela.
Hence the president who was regarded as the enemy of the LNG industry is now pledging to help it deliver an additional 15 billion cubic meter of LNG to Europe which gets about 45 per cent of its imported natural gas from Russia.
If anything, looking ahead, the Biden administration is expected to try to increase US energy export capacity by giving the green light to more LNG projects that would help Europe reduce its dependency on Russian natural gas imports and in the process benefiting the American economy.
And as the international system is gradually taking the shape of a geo-strategic competition between the US, Russia and China, the Biden administration would also have to reassess its earlier approach that was driven by the need to isolate authoritarian regimes that were not committed to Western liberal-democratic values.
Among those regimes are major oil-producing countries, led by Saudi Arabia and the other Arab Gulf states and Venezuela. Hence the Biden administration that has insisted until recently on distancing itself from Saudi crown prince Muhammad bin Salman, and was hoping to replace the authoritarian Nicolas Maduro who rules Venezuela with the a democratic leader, has now changed its political tunes as it calls both Saudi Arabia and Venezuela to flood the markets with more oil exports.
Some environmentalists have suggested that the Ukraine war and the ensuing oil crisis could provide the US and its Western allies with an opportunity to adopt a long-term energy strategy that reduces reliance on fossil fuels altogether, by, among other things, accelerating the development of nuclear power, using electric vehicles and stepping up innovation.
But even under the best-case scenario, shifting to a clean energy system would take years, if not decades, while growing geo-political tensions are expected to create more turmoil in the global energy markets, and force the US and other governments to drill for more oil.