The next Assistant Secretary of State for Energy Resources will assume the office at a pivotal time both in terms of U.S. energy security and global economic statecraft. The role has no rulebook, training program, or safety net — but it is critical for America and free nations around the world that our next “energy diplomat” succeed.
The State Department is the foundation of America’s security apparatus, and energy diplomacy is — at its core — a matter of national security.
Throughout history, nations have sought to coerce rivals by restricting or controlling critical resources. Secretary of State Henry Kissinger understood this lesson well. In response to the 1970s oil embargo, he co-founded the International Energy Agency in order to provide a countermeasure against the “oil weapon.” Today, America’s private sector-led energy abundance offers countries an alternative to Russian energy dependence and a buffer against countries like Iran that use oil sales to fund terrorism.
The clean energy transition does not abolish this realpolitik of energy and resource diplomacy. Rather, it calls into question who will control the commanding heights of the new economy, and under what rules. Clean energy technologies — like solar, wind and batteries — require significant quantities of critical minerals, processing capabilities, and manufacturing at scale. Over the last two decades, the U.S. and Europe, hungry for cheap goods, effectively outsourced all three of these core industries to China — which saw an opportunity and focused its state industrial policies to control the supply chain, including through communist party-controlled and Belt and Road-branded mining projects.
The Biden administration was wise to continue the Energy Resources Governance Initiative, a multinational coalition dedicated to sustainable mining. The U.S. should expand on this effort and encourage the EU to integrate ERGI principles into its procurement decisions.
Not all countries are beginning the energy transition from the same starting point. U.S. decisions, preferences, and points of view can have dramatic impacts on countries — especially in the developing world, where oil and natural gas are important drivers of many economies. We should be mindful that the West’s increasing aversion to investment in fossil energy, however well-intentioned, can have perverse effects on fragile economies. Developing nations should not be put into the bind of going it alone or resorting to foreign investment from predators peddling debt diplomacy. One impassioned sub-Sahara African Minister put it to me this way over dinner one evening: “The West’s obsession with environment, social, governance means that my people can breathe clean air in the dark.” American energy companies can help developing countries meet their energy demand, promote economic growth responsibly, and safeguard the environment — help them breathe clean air in the light, and provide greater economic opportunity for their people.
The confluence of great power competition, the energy transition, and COVID-related economic restructuring are shaping energy markets and relationships. These energy-based relationships can lead to broader cooperation. For example, natural gas discoveries across the Eastern Mediterranean has fostered regional energy trading and political cooperation unthinkable a few years ago.
The United States should continue to promote such arrangements to support a more resilient, reliable, and secure clean energy supply chain. The Biden administration’s commitment to work with Canada to build a North American clean energy supply chain is a good start. The administration has an opportunity to mobilize the private sector and ensure that energy trading relationships are built on shared democratic, liberal values that prioritize environmental quality and human rights.
America’s next energy diplomat has a tremendous responsibility, but also the opportunity to advance U.S. security and that of our partners and allies around the world.
The energy transition is well underway. The U.S. can help lead the world. We must recognize the needs of each partner nation, and leverage America’s values-based comparative advantages, our world-leading innovators, and entrepreneurial private sector.
Frank Fannon served as the inaugural Assistant Secretary of State for Energy Resources. He is currently managing director of Fannon Global Advisors, and a (non-resident) senior adviser to the Center for Strategic and International Studies.