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  • Author: Daniel F. Runde, Romina Bandura
  • Publication Date: 01-2018
  • Content Type: Working Paper
  • Institution: Center for Strategic and International Studies
  • Abstract: The U.S. Trade and Development Agency (USTDA) is a small independent federal agency whose mission is to help American “companies create U.S. jobs through the export of U.S. goods and services for priority development projects in emerging economies.” USTDA links American businesses to export opportunities in emerging markets by funding activities such as project preparation and partnership building in sectors including transportation, energy, and telecommunications. Since it was established 25 years ago, the agency has generated a total of $61 billion in U.S. exports and supported over 500,000 American jobs. In connecting American business to such opportunities, USTDA also links American technology’s best practices and ingenuity with U.S. trade and development policy priorities. USTDA is an instrument to enable American-led infrastructure development in emerging economies and, therefore, frequently sees increasing competition from government-backed Chinese firms and the challenge they can pose to American commercial engagement under the flag of One Belt, One Road (OBOR). OBOR is paving the way for Chinese engineering, procurement, and construction companies to prepare and develop infrastructure projects in OBOR countries in a way that favors Chinese standards, thereby exerting significant pressure to select Chinese suppliers. This creates a potentially vicious cycle—the more China builds, the faster their standards become the international norm, and, ultimately, this cycle could foreclose export opportunities for U.S. businesses and harm American competitiveness in global infrastructure development. U.S. exporters are increasingly requesting USTDA intervention at the pivotal, early stages of a project’s development, to compete in markets, such as the OBOR countries, where they frequently face Chinese competition. Of note, 40 percent of USTDA’s activities in 2016 were in OBOR countries across South and Southeast Asia, Central Asia, the Middle East, and Africa. Although there are other agencies that may seem to do work similar to USTDA, there are various aspects that make it a unique agency. This paper provides a brief description of USTDA, its origin and evolution, the impact on the U.S. economy and its proactive collaboration across U.S agencies. Finally, it offers a set of recommendations for USTDA on how to improve its operations and strengthen its role in the developing world.
  • Topic: Development, Energy Policy, Communications, Infrastructure, Trade, Transportation
  • Political Geography: Africa, United States, Middle East, Asia, North America
  • Author: Edward C. Chow, Andrew J. Stanley
  • Publication Date: 02-2018
  • Content Type: Working Paper
  • Institution: Center for Strategic and International Studies
  • Abstract: After the Soviet Union collapsed and Russia was roiled by political and economic chaos, many state-owned assets were privatized based on political connections and corrupt practices. The oil sector was a particularly attractive, but by no means the only, target for these privatizations. By the end of the 1990s, almost all of Russia’s oil production was privately owned. In spite of continued nontransparency, the oil sector began to resemble a competitive market with private investors introducing Western technology, financial accounting, and operating and management practices. It also started to attract major foreign investments. The remaining state oil assets were managed by a sleepy state enterprise named Rosneft that, in spite of its name (Russian Oil), produced less than 5 percent of Russia’s oil. Today, majority state-owned Rosneft produces almost half of Russia’s oil. Its daily oil production of 4.6 million barrels, according to its last reported quarterly results, is double that of the world’s largest oil company by market capitalization, ExxonMobil, which last reported daily liquids production of 2.3 million barrels. Rosneft’s rapid rise coincided with the rule of Vladimir Putin, who first became president of Russia in 2000. Its production increases were built largely on the backs of controversial acquisitions of assets previously held by private companies such as Yukos, TNK-BP, and Bashneft. Rosneft’s acquisition spree accelerated after Putin’s close associate and Russia’s then-deputy prime minister Igor Sechin became chairman of its board of directors in 2004. Sechin left government in 2012 to take over as Rosneft’s chief executive officer. Rosneft’s board of directors is now chaired by former German chancellor Gerhard Schroeder. Rosneft’s transformation as Russia’s national oil champion is consistent with Putin’s policy of regaining state control over the commanding heights of the Russian economy, which is more reliant on oil income today than the Soviet Union ever was. Rosneft is Russia’s largest taxpayer and contributed a quarter of government revenue in 2014. Until recently, Rosneft concentrated mainly on consolidating its dominance over the domestic oil patch. It is also Russia’s leading refiner and is increasing natural gas production for direct sales to domestic gas users, producing 67 billion cubic meters in 2016. In 2014, Russia was hit by the twin shocks of a global oil price collapse and Western economic sanctions enacted after its aggression against Ukraine in the Donbas region and annexation of Crimea. These developments affected Rosneft severely since it involved the value of the commodity it produces and sells and restricted Rosneft’s access to international financing when it was heavily indebted from the aforementioned acquisitions. A normal company might hunker down, repair its balance sheet, and wait for external conditions to improve. Instead Rosneft has done the exact opposite and expanded its international business aggressively. As part of the 2014 U.S.-led sanction efforts, Igor Sechin, as the leading figure of Russia’s largest petroleum company and his having “shown utter loyalty to Vladimir Putin,” was directly sanctioned. Further Russian sanctions enacted by Congress in 2017 called on the U.S. Department of the Treasury to submit a detailed report on senior political figures, oligarchs, and parastatal entities as determined by their “closeness to the Russian regime and their net worth.” While the unclassified version of the report released to Congress on January 29 included Igor Sechin, the report was poorly received and largely regarded as nothing more than a “rich list” by Russian experts. However, the report also contains classified annexes, including a list of parastatal entities and supporting analysis, which by definition would have included Rosneft. Although Rosneft’s rapid international expansion is too recent to assess definitely, this paper describes some of Rosneft’s overseas ventures and explores possible motivations, economic and political, behind them.
  • Topic: Energy Policy, Oil, Foreign Direct Investment, Sanctions, Gas, Transparency, Private Sector
  • Political Geography: Russia, United States, Europe, Eastern Europe
  • Author: Jane Nakano, Sarah Ladislaw
  • Publication Date: 03-2018
  • Content Type: Working Paper
  • Institution: Center for Strategic and International Studies
  • Abstract: The United States, China, and India together constitute about 70 percent of global coal consumption and 64 percent of global coal production. Each country is an important contributor to the global coal supply and demand picture and yet each stands at a very different stage in its relationship with coal. The history of coal in the United States is predicated on a long-term decline in its share of the electricity fuel mix, but deep regional socioeconomic ties give the fuel an outsized role in national energy politics. Coal makes up 15 percent of the total U.S. energy mix and 30 percent of the electric power mix while the power sector accounts for about 90 percent of coal use in the United States. Over the years, electricity demand has flattened thanks to strong efficiency gains. Moreover, the abundance of inexpensive natural gas and rapid decline in renewable energy costs have significantly diminished the competitiveness of coal-fired power generation. Unlike in China and India, the U.S. coal fleet is in contraction as a wave of retirements is underway, with little evidence of reversal, indicating that the current downturn appears structural and not cyclical. After a recent period of decline and bankruptcy for the U.S. industry, a political movement to revitalize the coal sector has emerged from the current presidential administration. Notwithstanding the renewed political support, however, the regulatory uncertainty clouds a future pathway for a coal power resurgence. The notion of economic and energy security benefits long associated with the use of coal has effectively disappeared in one of the largest producer and consumer markets for coal in the world. China is far and away the largest coal consumer and has built coal-fired power generation capacity at an unprecedented rate over the past couple of decades. As it enters a new phase of development, China seeks to reduce the role of coal in its economy both to mitigate the environmental impacts of coal production and use but also to harness its domestic power consumption to drive its competitive advantage in things like solar, wind, and nuclear power generation. China has concrete targets to reduce greenhouse gas emissions and ambitious plans, such as a nationwide emissions trading system, that can influence the pace and scope of shift in its power supply mix. Despite these government targets and the ongoing industrial structural reform that can reduce coal’s dominance in the electric power sector, the trajectory for coal use remains significantly subject to the future of state-owned enterprises and economic liberalization. In contrast to the United States and China, India is a fast-growing market for coal where economic development and universal energy access goals often override concerns about environmental pollution and climate change. India also sees enormous opportunity in renewable energy development—for the positive environmental attributes, the potential commercial opportunities, and the ability to lessen reliance on imported sources of energy like oil, gas, and coal. The Indian central and state governments have set up ambitious policies to foster a greater share of renewable energy in the electric power mix. The growth in renewable power-generation capacity shows early indications that renewables as an indigenous resource have the potential to challenge not only coal’s economic advantage but also its energy security value propositions as an indigenous resource, warranting close attention for some potentially valuable lessons for power-sector management in other developing economies where renewables increasingly beat out coal. How India will calibrate its desire to phase out coal imports despite the quantitative and qualitative issues its domestic supply has is another issue with major implications for both global coal markets and the future of its power supply mix, particularly solar and wind. Even as each market navigates a unique set of circumstances surrounding the role of coal-fired power generation, the availability of midstream infrastructure looms large as a universally important determinant of the competitiveness of coal resources, and thus the fuel hierarchy. Railways are the dominant mode for transporting coal in China and the capacity constraints continue to intensify, disadvantaging domestic resources to imports. Midstream is also a major topic in the United States, where a lack of west coast export terminals limits the U.S. ability to take advantage of continued demand growth in Asia. Low utilization rates also reflect the headwinds facing coal-fired power generation in all three countries. For example, U.S. coal-fired power generation experienced a 20 percent decrease in coal fleet utilization rates and a 12 percent decrease in the generation capacity from 2015 to 2016. Also, while China is expected to add another 200 GW of new coal-power capacity by 2020, the utilization rate of 47.5 percent for the thermal power fleet in 2016 indicates a complex nexus between capacity investment and power demand in the country, where the capacity growth does not give a solid indication of electric power output or fuel consumption. The local air pollution and climate implications of coal-fired power generation in each country also depend on the age of their fleet and capital stock turnover. The perceived future direction of coal in each country impacts the willingness of investors to upgrade or build new, more efficient plants. Whereas the ever-weakening coal-power demand in the United States is diminishing investor appetite for new coal plants with higher efficiency, lower emissions (HELE) technology, the capacity expansion in China is enabling the modernization of its fleet that includes more HELE plants. The pace and scope of modernization for India’s coal fleet, which is much younger yet remains low efficiency and high emissions today, will be an important indicator for its future emissions profile. Lastly, various noneconomic forces at play can generate a tension between the needs of a changing electricity market and the political-economic pressures of expanding coal-power capacity. The coal sector enjoys a powerful narrative on its socioeconomic benefits like jobs and tax revenues for coal-mining communities, but enabled by technology advancements, the emerging focus on values like flexibility in the power sector has elevated attributes of many alternative sources of electricity, including renewables and natural gas in the United States. Likewise, the Chinese expansion of coal capacity appears to be misaligned not only with the projected level of power demand growth but also with government efforts to expand alternative sources of electricity, thus raising the risk of stranded or severely underutilized coal plant assets.
  • Topic: Energy Policy, Natural Resources, Renewable Energy, Coal
  • Political Geography: United States, China, India, Asia
  • Author: Nikos Tsafos
  • Publication Date: 05-2018
  • Content Type: Working Paper
  • Institution: Center for Strategic and International Studies
  • Abstract: The Issue Russian energy has divided the transatlantic alliance for over 60 years. Tensions normally just simmer, but they flare up when a new project is proposed, especially after a political crisis. In the 1960s, it was the prospect of increased Soviet oil exports following the Cuban missile crisis. In the 1980s, it was more Soviet gas for Western Europe after the Soviet Union had invaded Afghanistan and martial law had been declared in Poland. Today, it is the proposed Nord Stream 2 gas pipeline after Russia’s annexation of Crimea and its war against Ukraine (among other actions). Disagreements are natural in a broad alliance with diverse interests and perspectives. But it is now almost impossible to discuss Russian gas with any sense of calm (increasingly true for all things related to Russia). Russian initiatives are infused with perceptions and fears that range from the simple and legitimate to the obscure and far-fetched. In reality, arguments about Russian gas are rarely about Russian gas; they are about history, strategy, and geopolitics. Gas is just the spark. The end result is confusion and discord at a time when the transatlantic alliance has enough problems—without needing to add gas to the fire. It is time to separate Russian gas from the broader Russia agenda. Doing so will boost energy security, protect and strengthen the transatlantic alliance, and allow us to focus where the West can resist Russian power more meaningfully. This argument rests on three propositions. First, that energy does not give Russia as much power as we usually assume; second, that an antagonistic strategy is unlikely to be sustained or succeed in bringing about change, whether in energy or geopolitics; and third, that the best response to Russian gas is a set of policies that Europe should pursue anyway and that are unrelated to Russia. In short, we need to radically rethink Russian gas; how much it matters; and what the United States and Europe should do about it.
  • Topic: Foreign Policy, Energy Policy, Natural Resources, Gas, Transatlantic Relations
  • Political Geography: Russia, United States, Europe, North America
  • Author: Andrew J. Stanley
  • Publication Date: 05-2018
  • Content Type: Working Paper
  • Institution: Center for Strategic and International Studies
  • Abstract: he United States and Canada are each other’s largest energy trading partners as measured by the value of energy commodity trade, which in 2017 stood at U.S.$95 billion. The energy relationship between the two countries extends beyond just the trade of commodities, encompassing a variety of common, though not always identical, economic, security, and environmental priorities. In March 2018, the CSIS Energy and National Security Program undertook a project with the Embassy of Canada in the United States to create a physical map depicting the U.S.-Canada energy trade relationship. The following CSIS brief explains the various aspects of the energy trade relationship using this map, as well as highlights some of the important issues in the development of this partnership moving forward.
  • Topic: Energy Policy, Environment, Regional Cooperation, Trade
  • Political Geography: United States, Canada, North America
  • Author: Stephen Naimoli, Jane Nakano
  • Publication Date: 06-2018
  • Content Type: Working Paper
  • Institution: Center for Strategic and International Studies
  • Abstract: This report provides a summary of the discussion from a CSIS roundtable held on April 13, 2018, as part of the CSIS-Pertamina Energy Initiative. The discussion brought together government, industry, and policy experts to explore the outlook for the region’s energy mix out to 2040, the state of renewable energy in Southeast Asia, and its role in the region’s energy priorities. This was the first in a series of events that will be convened this year to examine the role of renewable energy in Southeast Asia and its security, economic, and political importance in the Indo-Pacific. Southeast Asia is one of the fastest-growing regions in the world. The region’s gross domestic product (GDP) grew 66 percent from 2006 to 2015, and if all 10 countries were one economy, it would be the seventh-largest in the world. This growth is projected to increase, averaging just over 5 percent annually from 2018 to 2022. With economic growth comes demand for energy. From 2000 to 2016, economic growth in Southeast Asia drove a 70 percent increase in primary energy demand. Governments in Southeast Asia have implemented a range of policies and incentives to ensure they meet their energy demand. Renewable energy (wind, solar, geothermal, and sometimes hydro and biomass) is capturing an increasing, although not dominant, amount of attention from policymakers, investors, and the private sector as an important part of meeting this demand. Renewable energy’s share of the electric power mix is driven by a range of factors—the economics of power generation, efforts to reduce greenhouse gas emissions, energy security concerns, and concerns over local air pollution. While renewable energy is set to grow as a share of the region’s energy mix, there are indications that its potential contribution is much higher than is currently on track to be realized. Renewable energy increasingly competes on an economic basis in many countries against all fuels except coal, but sometimes political and socioeconomic factors stand in the way of improving their competitiveness in specific markets. The region is also attracting a great deal of outside investor interest. Countries from around the region and ever farther afield are investing in Southeast Asia’s energy sector because of the rapid growth experienced over the last decade and half, and their investment priorities, along with economics, shape their investment decisions in Southeast Asia. Energy policy and investment decisions are also being driven by the shifting nature of supply-and-demand balances in each country and the shifting domestic realities that come from becoming a net importer of specific fuels, such as in Indonesia. Many Southeast Asian countries have integrated low- or zero-carbon renewable energy into their energy planning efforts, and this report examines the dynamics of the power sector in Southeast Asia and how renewable energy competes with fossil fuel sources of electricity.
  • Topic: Security, Energy Policy, Oil, Governance, Gas, Electricity, Renewable Energy, Industry
  • Political Geography: Indonesia, Asia, Southeast Asia, Indo-Pacific
  • Author: Michael Wallace, Amy Roma, Sachin Desai
  • Publication Date: 07-2018
  • Content Type: Working Paper
  • Institution: Center for Strategic and International Studies
  • Abstract: The U.S. commercial nuclear energy industry helps the U.S. government meet several key national security objectives. But the industry is struggling to survive. We are not the first to say this and we will not be the last. We are also not the first to call for U.S. government support for this struggling industry—but this call to action is different. We are urging U.S. government action—not with the focus of protecting the commercial sector, but with a focus to protect U.S. government interests impacted by the decline in the commercial nuclear energy sector. This is a key distinction and warrants attention at the highest level of government. This paper is not intended for those in the nuclear energy industry. They know the issues. It is intended for the U.S. government and the U.S. public—to explain the reasons why U.S. government action is critical at this moment, and to explain how we can move forward in a manner that best protects our country’s national security. But what are these national security objectives and how are U.S. government and national security interests undermined by a decline in the commercial nuclear energy sector? In this paper we explain the critical importance of the U.S. commercial nuclear energy industry in support of U.S. defense, research, economics, geopolitics, and international nonproliferation. We walk through how the U.S. commercial nuclear energy industry arose out of and with the support of the U.S. government—and how President Eisenhower’s reasons for bringing nuclear energy to the world in the 1950s are the very same reasons that the United States needs to continue to do so today. We unravel the web of interconnections between the commercial nuclear energy industry and achieving U.S. government and national security goals. And we explain the impact that a declining commercial nuclear energy sector has on achieving those crucial goals. Moreover, we set forth a recommended path forward to come “back from the brink” and preserve critical commercial nuclear energy sector assets—including technology, knowhow, people, and influence—before they are lost forever, and U.S. national security is damaged as a result. This industry must survive—and it can if the U.S. government and private industry work together, recognizing the government and civilian integrated nuclear infrastructure moving forward. Notably, the response must be U.S. government led to take the approach that is best for the country, rather than any particular company or technology. We recommend five core U.S.-government-led actions to move forward that focus.
  • Topic: Security, Energy Policy, National Security, Nuclear Power
  • Political Geography: United States, North America
  • Author: Kartikeya Singh
  • Publication Date: 08-2018
  • Content Type: Working Paper
  • Institution: Center for Strategic and International Studies
  • Abstract: The Issue According to the International Energy Agency (IEA) and the World Bank, approximately 1.06 billion people around the world still lack access to electricity. Furthermore, both institutions predict that despite efforts to expand universal access, the world will fail to meet the 2030 “sustainable energy for all” (SE4All) target. India remains one of the largest contiguous economic markets of unelectrified people, along with the sub-Saharan Africa region. In India, the challenge of electrification is complicated by politics of electricity, which have left state-owned utilities struggling to expand distribution networks and provide reliable power at below-market rates for residential and agricultural needs. Recognizing the limitations of centralized grid extension, the government of India has plans to achieve universal electrification with the help of off-grid systems, suggesting a sizeable potential market for decentralized energy technologies and business models lasting well into the future. Questions remain that if answered could help development practitioners and scholars understand what factors are affecting access to electricity and what kinds of issues need to be resolved to achieve quality universal access. This brief acknowledges that many institutions at the global and country level are hard at work helping address and analyze the energy access challenge. To further their efforts, this brief compiles the key research needs in energy access, based on extensive interviews conducted in-person and via email 1, with scholars and development practitioners in the energy access sector mainly in India, with a special emphasis on solar photovoltaic (PV) technologies used for electrification.
  • Topic: Energy Policy, World Bank, Electricity, Renewable Energy
  • Political Geography: Africa, India, Asia, Sub-Saharan Africa
  • Author: Anthony H. Cordesman
  • Publication Date: 01-2017
  • Content Type: Special Report
  • Institution: Center for Strategic and International Studies
  • Abstract: Ever since the oil embargo following the October 1973 Arab-Israeli conflict, the United States has tended to measure its strategic interests in energy in terms of its dependence on direct imports of oil and gas. The new Annual Energy Outlook of the U.S. Energy Information Administration was issued on January 5, 2017. [i] Taken at face value, it reports that United States has reversed its past dependence on energy imports in spite of massive cut in world oil prices.
  • Topic: Energy Policy, International Political Economy, International Trade and Finance
  • Political Geography: America