Managing Resource Risks in the 21st Century
On Friday June 1, the German Marshall Fund of the United States and the German Institute for International and Security Affairs (SWP) hosted a roundtable workshop on the transatlantic governance of resource risks. This event also served as the launch of a major new report by the Transatlantic Academy, “The Global Resource Nexus – The Struggles for Land, Energy, Food, Water and Minerals”. Following introductory remarks by Stormy-Annika Mildner from SWP and Stephen Szabo, Director of the Transatlantic Academy, TA Senior Fellow Geoff Kemp provided an overview of the “hotspots” around the world, choke-points where a combination of resource scarcity, poor governance, and geographical factors create conditions of particular vulnerability. Daniel Guyader, Head of Division for Global Affairs at the European External Action Service, responded.
Sir Michael Leigh, GMF Senior Advisor, moderated the first panel on strategies to handle risks on the energy markets. Petra Dolata, from King’s College in London, highlighted some differences in the narratives on energy security between the United States and the EU member states, particularly Germany. While the former works towards energy independency and relies on strategic policies, the latter focuses rather on the management of dependency and relies on markets. Dolata also emphasized the diversification of energy sources – in addition to the diversification of geographical areas – to her set of responses to energy supply risks. Kirsten Westphal from SWP pointed out the detrimental effects on investments due to the lack of a long-term perspective in the energy sector. Susanne Nies from Eurelectric underlined the need for an integrated EU policy regarding energy and gas grids. Jeff Piper from the European Commission’s DG Energy talked about how the EU handles its energy interdependency, and referred as one example to the memorandum of understanding of the EU with the Ukraine.
After the lunch break, TA fellows Corey Johnson and Tim Boersma presented some key facts and figures about shale gas. Besides the more technical aspects of the hydraulic fracturing (or “fracking”) process, they pointed out the differentiation of “early adopters” and “contemplators” in the regulatory environment for shale gas projects both in the United States and Europe. Dale Eppler, Chief of the Energy, Environment, and Science Unit at the U.S. Mission to the EU, explained why shale gas took off in the United States at a much faster pace than elsewhere: Less-populated areas, a sped up regulatory process, and open access to the gas pipeline grid all facilitated the shale gas boom in the United States. Caroline Broun (Environment Officer at the U.S. Mission) pointed to the declining US emissions of carbon dioxide due to the massive switch from coal to natural gas in power generation. The open discussion looked at the opportunities for transatlantic cooperation on shale gas, despite the differences in the sectors on either side of the Atlantic.
The final panel of the day focused on risks in the metal and mineral markets. Stormy-Annika Mildner noted a similar pattern in the different views of the United States and the EU on rare minerals. TA fellow Philip Andrews-Speed spoke about the static view on critical resources, which is restricted to the attribution of a certain economic importance and a significant risk of supply shortages. Because of the dynamic demand for rare minerals caused by rapidly changing technologies, these classic criticality studies have only a limited long-term use. Policy makers should instead give more attention to intentional supply disruptions by producers or exporters and governance concerns related to the resources sector. An industry representative specified stockpiling, risk hedging and long-term cooperation with mines as common strategies to deal with scarcity of critical metals and minerals, to which TA fellow Stacy VanDeveer, moderating, added lobbying to the list of strategies, and still another strategy is the re-nationalization of resource companies, noted Steve Szabo, referring to recent cases in Latin America.