Originally published on the CGS blog on June 6, 2007.
While G8 leaders get together in Heiligendamm today through Friday to discuss climate change, aid and international economic issues, another headline should be giving us pause. Today’s front page article in the FT‘suggests that OPEC is beginning to panic about the increasing emphasis the US and Europe are placing on biofuels (energy from corn/sugar). The head of OPEC said that the cartel may be forced to reduce investments in oil production in anticipation of the switchover to biofuels. He suggested that this may lead to dramatic increases in oil prices, especially if the biofuels technology is not able to keep up with demand–a risk that is also linked to food demand.
In my mind, this news story clearly demonstrates why the current debate on energy independence, blogged about by Scott Paul last week, is problematic. The economies of most members of OPEC are entirely driven by oil. A conversation about shifting away from fossil fuel dependence, and oil in particular, must include OPEC. I remember having a conversation with my colleague Raj Purohit early last year about this very issue–how would OPEC economies cope with reduced oil consumption because of global warming worries etc. They stand to lose tremendously from this needed shift and a truly global conversation about energy and climate change must acknowledge that those countries that are almost solely dependent on oil will face challenges that they cannot meet alone–it is time to engage them on how they can transition their economies away from oil dependence too. Many of these countries are also politically weak and potentially unstable. It is crucial that investments are made to create economic opportunities for the people of these countries so that they are prepared to live in a world where having oil under your feet is no longer that valuable.
The energy independence rhetoric is couched in national security terms–we need to reduce our dependence on oil from unstable, unsavory regimes–but by not thinking of energy in global terms, in interdependent terms, the situation in those countries could worsen. And that would be bad for our national security.
