The New Map: Energy, Climate, and the Clash of Nations

by Daniel Yergin

“Energy transition” certainly means something very different to a developing country such as India, where hundreds of millions of impoverished people do not have access to commercial energy, than to Germany or the Netherlands.

As late as 2007, coal generated half of U.S. electricity. By 2019, it was down to 24 percent, and natural gas had risen to 38 percent. That was the main reason why U.S. carbon dioxide (CO2) emissions dropped down to the levels of the early 1990s, despite a doubling in the U.S. economy.

By comparison, according to the Fish and Wildlife Service, half a million birds a year are killed by wind farms, sixty million birds a year by cars, and one hundred million by flying into windows. A federal judge finally threw out the case in 2012, saying a conviction would criminalize many everyday activities, including trimming and cutting trees, harvesting crops, driving a car, and owning a cat (estimated to be responsible for up to 3.7 billion bird deaths a year in the United States).5

Altogether, in a very short time the new technology transformed Texas, putting it on an extraordinary growth path. Between January 2009 and December 2014, the state’s total crude oil output more than tripled. By this time, Texas was producing more oil than Mexico, and more than every OPEC country except Saudi Arabia and Iraq.

Between the end of the Great Recession, in June 2009, and 2019, net fixed investment in the oil and gas extraction sector represented more than two-thirds of total U.S. net industrial investment. In another measure, between 2009 and 2019, the increases in oil and gas have accounted for 40 percent of the cumulative growth in U.S. industrial production.

Anti–fossil fuel activists seized on blocking pipelines that would connect new resources to markets, and the twelve-hundred-mile Keystone segment became their galvanizing and highly visible symbol. Less noticed was that the proposed pipeline length was equivalent to about one-half of 1 percent of the over two hundred thousand miles of oil pipelines that already lay beneath the soil of the United States.

Between 2000 and 2019, Canada’s crude oil output more than doubled, reaching 4.5 million barrels a day—more than Iraq or Iran, pre-sanctions.

For more than a century, energy—its availability, access, and flows—has been intertwined with security and geopolitics. As a Brookings Institution study put it, “In the modern era, no other commodity has played such a pivotal role in driving political and economic turmoil, and there is every reason to expect this to continue.”

IN THE AUTUMN OF 2018, THOUGH IT WAS HARDLY NOTED AT the time, something historic occurred: The United States overtook both Russia and Saudi Arabia to regain its rank as the world’s largest oil producer, a position it had lost more than four decades earlier.

Russia’s supply of natural gas to Europe—about 35 percent of Europe’s total gas consumption—is at the center of a geopolitical clash.

The negotiations in Shanghai were difficult and dragged on. But neither side could afford to leave without a deal. The final negotiations went on until four in the morning. Later that day came the announcement of the big deal—valued at $400 billion over thirty years. The contract would make China the second-largest market for Russian gas, after Germany.

In one three-year period, 2011–13, China consumed more cement than the United States did in the entire twentieth century.

In 2009, China overtook the United States to become the world’s largest energy consumer; today it alone represents almost 25 percent of world energy consumption.

What really counts for China’s energy security is not the unproven resources that may lie deep under the seabed, far beneath the sea lanes, but rather the sea lanes themselves and what traverses them.

Trump denounced the 2001 WTO agreement as “the greatest job theft in history.” Once in the White House, he declared, “Trade wars are good, and easy to win,” although not indicating which ones he had in mind. Those of the 1930s had proved neither good nor easy to win, and ended badly for all concerned.

Belt and Road is focused on energy, infrastructure, and transportation with an overall potential investment estimated at about $1.4 trillion—a scale never before seen and at least seven times larger, measured in today’s dollars, than the Marshall Plan, the U.S. initiative to rebuild Europe after World War II.

Sixty percent of Israel’s power is now generated with its own natural gas, rather than imported oil or coal.

For they saw the abundance of shale oil and gas as an adjunct to U.S. foreign policy, giving the U.S. a free hand to impose sanctions on the Russian energy sector, as it had done only a few months earlier, in forcing a halt to the almost-completed Nord Stream 2 pipeline. U.S. shale, they expected, would inevitably be a major casualty of a price war, owing to its higher costs and the constant drilling it required, compared to Saudi and Russian conventional oil.

But as energy scholar Vaclav Smil observes, “Even with the rise of industrial machines, the nineteenth century was not run on coal. It ran on wood, charcoal, and crop residues.” It was not until 1900 that coal reached the point of supplying half of the world’s energy demand. Oil was discovered in northwest Pennsylvania in 1859. But it took more than a century—not until the 1960s—for it to supplant coal as the world’s number one energy source. Even so, that hardly meant the end of coal, for consumption has continued to grow. As for natural gas, global consumption has increased 60 percent since 2000.

Microsoft founder Bill Gates, who is investing billions in seeking technology breakthroughs for lower-carbon energy, has said, “Divestment, to date, probably has reduced about zero tons of emissions.” Consumer demand still has to be met. There is no obvious way that people around the world can any time soon dispose of their 1.4 billion cars that run on oil, and people will still need to heat and air-condition their homes. There are other aspects as well. Dividends from BP and Shell were funding 20 percent of all pensions in Britain.

Even Denmark, which at times produces more wind electricity than it can consume, also depends on imports of electricity generated by nuclear in Sweden, hydropower in Norway, and coal in Germany to maintain the stability of its power supplies.

In 2011, following the Fukushima nuclear accident in Japan, Germany set out to close its seventeen nuclear reactors by 2022. Yet between 2011 and 2019, China added thirty-four new nuclear reactors, double the number of reactors that have closed in Germany. A few nuclear reactors have closed in the United States because of the difficulty of competing against inexpensive natural gas, but close to a hundred reactors are operating, providing 20 percent of U.S. electricity. As for natural gas, the growth of its contribution to total world energy in 2018 was more than double that of renewables. Adding it all up, energy transition is complex and requires some perspective.

Over half of that total investment in renewables was, again, concentrated in Asia—with the majority in China. It happens to be the country that, by itself, consumes a quarter of all the electricity generated in the world. And its growing economy needs more electric generation capacity. Even as China continues to build out wind and solar at a rapid rate, it is also adding three new highly-efficient coal-fired plants a month.

Of critical importance will be large-scale management of carbon itself. Some dismiss carbon capture because they want a world in which there are no carbon emissions from human activity. But that seems quite unrealistic given what is necessary to get to a “net zero carbon” world. The UN Intergovernmental Panel on Climate Change (IPCC) accords an important role to carbon capture, as does the International Energy Agency.

What those like Sylva see as not taken into account is that three billion people, almost 40 percent of the world’s population—what the World Health Organization (WHO) calls “the forgotten 3 billion”—are subject to indoor air pollution caused by these poor fuels, which the WHO calls “the greatest environmental health risk in the world today.” Close to four million people a year die from this indoor pollution, and many more suffer from a wide variety of illnesses. For children, it can mean stunted development.

About 90 percent of river-sourced plastic pollution in the oceans comes from uncontrolled dumping into ten rivers in Asia and Africa, which, if properly managed, could dramatically reduce the wastage. Plastic bags and straws may be the most visible use of plastics, but they constitute less than 2 percent of plastics.

The omnipresence and versatility of plastics make them a building block of the modern world. They are used in everything from making airplanes lighter (and thus more fuel-efficient) and manufacturing electric cars; to auto dashboards and safety glass in windshields and lenses; to bulletproof vests; to carpets, housewares, pantyhose, clothes, and shoes; to packaging (yogurt containers) and keeping food fresh (and thus preventing disease). They are used for water pipes, eliminating metal piping that rusts, and in solar panels and wind towers and blades, and in the casing of cell phones.

“Petroleum products are intrinsic to modern health care,” is the way an article in the American Journal of Public Health put it. “Plastics are central to the antiseptic model of modern health care.” Look at a hospital operating room—gloves, tubing, the bags for intravenous liquids, instruments, and the tools that insert stents into ailing heart patients. Moreover, “[Ninety-nine percent] of pharmaceutical feedstocks and reagents are derived from petrochemicals.” As for the N95 face masks that became the emblem of the coronavirus epidemic, they are made with petrochemicals.

World natural gas consumption is projected to grow at twice the rate of oil. The LNG segment of the business, which is knitting together a single global gas market, will grow faster. By 2050, natural gas demand is estimated to be 60 percent higher than it is today.

AS THEY GROW, WIND AND SOLAR AND EVSWILL NEED “BIG shovels” to meet their increasing call on mined minerals and land itself. It is estimated that an onshore wind turbine requires fifteen hundred tons of iron, twenty-five hundred tons of concrete, and forty-five tons of plastic. About half a million pounds of raw materials have to be mined and processed to make a battery for an electric car.

Under any realistic scenario, oil and gas will remain significant components of the energy mix three decades from now. A billion cars with internal combustion engines are still likely to be on the road in 2050—and if not a billion, then 750 million. The world will still be using steel, cement, and fertilizer, the production of all of which releases emissions.

“Gray hydrogen” is the hydrogen conventionally produced today as an industrial fuel, most commonly from natural gas (“brown hydrogen” if it is made from coal in China).

With the addition of carbon capture, gray hydrogen is transmuted into “blue hydrogen.”

The greatest excitement is around “green hydrogen,” which would be produced by using electricity to split a water molecule into hydrogen and oxygen molecules. What would make it green is the use of electricity generated by wind and solar.

There’s also a variant—hydrogen produced with nuclear energy, variously known as “yellow hydrogen” or “pink hydrogen,” and other colors generated by other production processes.

China moved early to take a leading position in batteries. It is home to over 80 percent of global battery cell manufacturing capacity.

In 2011, the EU identified fourteen “critical raw materials.” By 2020, it had raised that number to thirty, in the process warning that “access to resources is a strategic security question for Europe’s ambition to deliver the Green Deal.” It noted that 95 percent of Europe’s rare earths, needed both for electric cars and wind turbines, comes from China. While 60 percent of Europe’s cobalt originates from mines in the Democratic Republic of the Congo, over 80 percent of what Europe actually imports is refined in China.

AMONG THE VOICES AT THE BEGINNING OF THE TWENTIETH century arguing that war between Germany and Britain need not be inevitable, none was more powerful than that of a slight, frail-looking sometime-journalist named Norman Angell.

Angell emphasized the benefits of a connected world economy and the costs of conflict, a particularly relevant message for a United States and a China that are so economically interdependent with each other and so embedded in a wider global economy on which their respective prosperities rely.