Energy, Climate Change, and the Emerging Global Order

Daniel Yergin’s engaging — and sobering — guide to the forces of energy resources and geopolitics that will shape the 21st century is destined to become a touchstone reference for policymakers, diplomats, and industry players of any nation

By Thomas C. Hayes May 6, 2021

Emerging Global Order

From the Spring 2021 Carnegie Reporter

Henry Kissinger wrote 50 years ago that a nation’s foreign policies will be determined by its internal politics. Rigorous explorations of histories and cultures open windows into those politics. As Daniel Yergin has chronicled now for three decades, so do matters of energy demand, access to supplies, and aspirations for rising living standards.

His treatise on 20th-century charm offensives, bullying, and bloodshedding for primacy in global energy resources and dominance in geopolitics, The Prize: The Epic Quest for Oil, Money, and Power, won the 1992 Pulitzer Prize and became a PBS documentary. The Quest: Energy, Security, and the Remaking of the Modern World, an update published in 2011, was equally exhaustive and compelling.

Yergin returns to these themes of where the complex, turbulent forces of energy and geopolitics are taking the world in The New Map: Energy, Climate, and the Clash of Nations. His pithy narratives and keen observations, unfolding across more than 400 pages, are certain to become touchstones of reference, a shorthand for policymakers, diplomats, and industry players of any nation. For readers on alert for probing backstories to help interpret flashpoints of global energy events and geopolitics — yesterday’s, today’s, and tomorrow’s — it is hard to imagine a better guide.

Vice chairman of industry research giant IHS Markit, Yergin for decades has advised decision makers and served as a global convener for people at the highest levels of the energy business and government. Access to shifting centers of power has been a Yergin trademark as well as a principal currency for his career. He is an energy insider, a trusted witness to the many events and personalities he describes and interprets for readers.

Yergin paints on a vast canvas. Anyone anticipating a retreat of fossil fuel production will not be cheered by his sober conclusions. Advocates of a green energy revolution likely will be dismayed. For example, while leaking methane from natural gas equipment and pipelines poses, as Yergin says, the “most significant” climate risk related to rising natural gas production, he sounded confident as The New Map went to press last June that regulators and industry leaders could contain the threat. (Methane is far more menacing in trapping radiation in the atmosphere than carbon dioxide — 25 times more, according to the Environmental Protection Agency.) Two months later, the Trump EPA rescinded the Obama-era mandate for oil and gas producers and pipelines to monitor methane leaks.

We are nowhere near the end of the age of fossil fuels. Yergin estimates oil demand alone will exceed 100 million barrels a day in 2050, rising by 10 percent compared to pre-pandemic levels. He allows that if climate policies do become “much more” aggressive, that number could fall to between 60 and 80 million barrels a day. The central issue: How to convincingly preserve life on the planet for rising and future generations while increasing energy supplies equitably to answer the hopes of billions of people for a better life, especially the estimated 700 million living on less than $2 a day. Extremely difficult trade-offs must be managed pragmatically.

The $5 trillion global oil and natural gas industry now supplies nearly 60 percent of world demand. Yergin estimates that production of oil and gas combined will have remained stable by 2050, declining modestly as a percentage to roughly half of world demand. Solar, wind, and other sources will comprise the balance. Many energy experts believe that substituting natural gas for coal, especially in India and China, with one-third of total world population, is the most promising path to slowing greenhouse gas output. (Massive gas fields have been discovered recently in coastal waters near Tanzania and in the eastern Mediterranean Sea.) Demand for natural gas is accelerating, promoted as an abundant, low-carbon fuel. Production is expected to increase 60 percent by 2050. More than $20 trillion, nearly equal to the total U.S. federal debt, will be required to produce new oil and gas supplies over the next two decades, according to one industry estimate.

Yergin wonders, if the energy fueling electric cars comes from plants fired by fossil fuels, as much of that energy will be, at least in the near term, what is gained?

Solar and wind energy, growing rapidly, are playing larger roles. Yergin’s firm estimates that these renewable sources combined will contribute about one-third to powering electricity by 2040. Yergin looks closely at electric and self-driving vehicles, agrees they will have a role, but adds how much of a role depends on evolving regulations and technologies. Consumer demand will also be a factor, Ford Motor Company chairman Bill Ford says, but to what extent is not yet known. Yergin wonders, if the energy fueling electric cars comes from plants fired by fossil fuels, as much of that energy will be, at least in the near term, what is gained?

Yergin is a talented writer. The book is studded with tightly woven anecdotes and personality profiles. (Data and analyses are enlightening, not obtrusive.) Among his subjects are Vladimir Putin, Xi Jinping, and Mohammed bin Salman; undaunted American shale field entrepreneurs George P. Mitchell and Mark Papa; and technology disruptors Elon Musk and Travis Kalanick. Greta Thunberg and Alexandria Ocasio-Cortez have cameos. Hair-raising tales of Qassem Soleimani, architect and director of Iran’s murderous “axis of resistance” against the United States, Saudi Arabia, and ISIS, read as if they might have been copied from a CIA file. Soleimani was assassinated by U.S. missiles fired from a drone early in 2020.

The most consequential of many urgent geopolitical clashes Yergin analyzes may be this: What will be the shared destiny of the U.S. and China for the rest of the 21st century? Will disagreeable relations descend into a shooting war? The world is watching, warily. “When the United States and China go at it,” a senior official in one industrialized country said, “everybody else in the world suffers.”

These two countries produce about 40 percent of the world’s economic output (GDP) and comprise 50 percent of military spending. Over the past four decades, rising economic interdependence mattered more than irreconcilable political systems. Yergin believes that a new kind of cold war is underway and is probably irreversible. It features escalating tariff wars, a military arms race, and a decoupling of intricately woven technologies, research affiliations, and supply chains. The forecast? A battle for economic models — and primacy — for the rest of this century.

Big Oil vs. the Independents

Globe-straddling oil giants broadly favored the Obama administration’s methane regulations because they bolstered the companies’ assertions that substituting “cleaner-burning” natural gas for oil and coal will slow the growth rate of greenhouse gases over the next few decades as capacity rises for solar, wind power, and other renewables. Small and medium-sized independents, which dominate production in the U.S., opposed the Obama rules. The conflict, not unusual for energy policy matters, was a function of business models and scale.

Big Oil typically refines and transports fuels and chemicals as well discovering, developing, and producing in oil and gas fields. Expenses from tightening regulations can be absorbed by billions of dollars in annual revenues. In contrast, independents mainly explore for and produce only oil and gas and generate a fraction of the majors’ total revenues. Thus, costs from new regulations cut independents’ profit margins more deeply and quickly.

Forty years ago the Iranian Revolution highlighted the strategic significance of the Strait of Hormuz, a flashpoint now in Iran and Saudi Arabia’s deadly struggle for Middle East dominance. Yergin sees Iran gaining the upper hand, with varying successes in Lebanon (financing Hezbollah), Gaza (Hamas), Yemen (Houthis), and parts of Syria, Iraq, Bahrain, and northern Africa. Iran was gleeful over the demise of ISIS.

Ascendant China may be casting a similar arc of confrontation across the South China Sea. China imports 75 percent of its petroleum, much of it through these waters, a vulnerability that is “one of the drivers” of Beijing’s strategic policy. The expanse is claimed more muscularly now by China. Its own map — much disputed across the region and in Washington, flaunted in Beijing — asserts Chinese sovereignty for more than 1,000 miles south of Hong Kong to Malaysia, and for 700 hundred miles between Vietnam and the Philippines. In all, about half the world’s oil tanker shipments and much of its expanding LNG (liquified natural gas) trade move through the South China Sea. The U.S. Navy maintains patrols. Admiral James Stavridis, former NATO supreme commander, sees the South China Sea as “the most dangerous potential confrontation between the United States and China.”

Closer to home, the much-documented surge of oil and natural gas production from shale drilling in the United States, buoyed in part by the daring redesign of LNG terminals in Louisiana and Texas to export rather than import the fuel, elevated the U.S. to equal footing — perhaps more — with Russia and Saudi Arabia as the world’s largest energy exporting nations. These three countries’ combined resources have guaranteed their now dominant roles in shaping the new oil order.

Will the science and technology for the production, use, and conservation of energy advance rapidly enough to avoid a climate apocalypse this century? Yergin does not speculate. Perhaps within the next decade, as more stories, data, and insights accumulate, this septuagenarian sage will again return to his oeuvre and do so. We should welcome it.

Thomas C. Hayes, who formerly reported on the energy and transportation industries for the New York Times, is a freelance writer and editorial consultant.

TOP: Rain clouds pass over a wind farm at Struckum, Schleswig-Holstein, on Germany’s North Sea coast. (Credit: Axel Heimken/Picture Alliance via Getty Images)