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The Complexities of the Energy Security of Supply in an Unstable Balance of Power at Uncertain Times

Updated: Mar 31

Joanna Kola

While climate change calls for a total abandonment of fossil fuels, the uncertainty of the shifting balance of power cannot call for the opposite: how can we best diversify the renewable energy sources for civilian life, and where do fossil fuels come in handy? Diversity in the energy sources a nation relies on and their supply origins serve as a safeguard against the adverse impacts of inflation, disruptions in supply, or any other challenges that energy consumers may encounter.


The Shift Towards Clean Energy

The United States and the European Union formed a collaborative Energy Security Task Force with the goals of ensuring a reliable flow of LNG from the United States to Europe and accelerating the shift towards clean and sustainable energy alternatives. As of 2022, renewable energy only makes up for 13% of the energy consumption in the US, but the clean energy future is rapidly approaching with the United States pivoting away from fossil fuels. The expense of generating electricity using solar and wind power is rapidly declining, often surpassing the affordability of gas, oil, or coal in numerous regions. Private investments are pouring into firms competing for a leading position in emerging green sectors. The Inflation Reduction Act stands as the United States' most substantial and pivotal national policy aimed at addressing climate change. This legislation allocates an estimated $300 billion in subsidies over the next decade to promote a shift towards low-carbon practices and to encourage the domestic manufacturing of renewable energy resources. While the endeavor to revitalize renewable energy production on American soil is a noteworthy accomplishment, there remains uncertainty regarding the feasibility of this goal without potentially disrupting the global supply chain, in which China plays a significant role. At present, the renewable energy sector in the United States relies significantly on foreign supply chains. Chinese exports hold a predominant position in providing solar panels for both commercial and residential energy generation. This dominance is primarily attributed to years of Chinese subsidies, investment in research and development, as well as what the United States and European Union have classified as prohibited dumping practices.


Reliance on Fossil Fuels

Despite the remarkable rate of transformation in the United States, which has taken many by surprise, fossil fuels continue to maintain a dominant position in both domestic and international energy production. Companies are actively constructing fresh coal mines, oil drilling platforms, and natural gas pipelines, while the government persists in granting leases for drilling initiatives on public lands and in federal waters, all the while continuing to provide subsidies to these industries. If governments eliminate explicit subsidies and introduce corrective taxes, fuel prices would experience an increase. Consequently, businesses and households would factor in environmental costs when making choices related to consumption and investments. This would ultimately lead to a substantial reduction in global carbon dioxide emissions and improved air. However, the process of removing fuel subsidies can be intricate. Governments must meticulously plan, communicate, and execute reforms as part of a comprehensive policy framework that emphasizes the advantages. A portion of the additional revenue should be allocated to compensate vulnerable households for the higher energy prices. The magnitude of change needed to overhaul the systems underpinning the United States - including the extensive infrastructure that must be

dismantled, reengineered, and substituted - is staggering. There are significant hurdles associated with integrating substantial quantities of renewable energy into outdated electrical grids and sourcing sufficient minerals for clean technologies. Fossil fuel subsidies increased by $2 trillion in the last two years, with explicit subsidies (where supply costs are not fully charged) more than doubling to reach $1.3 trillion.


Need for Energy Diversification

A transformation in American energy consumption is already in progress. This shift poses a myriad of intricate legal, economic, and environmental questions, signaling the nation's entry into a new era of diversified energy sources. The drawbacks associated with expensive and environmentally harmful fossil fuels have prompted a reevaluation of energy alternatives that were once deemed too costly or technically challenging. In this evolving energy landscape, the imperative to reconfigure patterns of American energy production and consumption has gained heightened importance, anticipating potential future penalties for carbon emissions. Consequently, pioneering energy sources are no longer seen as experimental or exotic, but rather integral components of the evolving energy landscape. For instance, renewable energy sources like solar, wind, and hydro-power are now being seriously considered as substantial contributors to America's future energy portfolio. A comparable transition is already in progress in certain regions of Europe. If the United States were to undergo a similar transformation, it could yield significant environmental and economic advantages for both the nation and the global community. The United States is currently in the process of diversifying its energy sources towards wind power, and the key question revolves around whether this trend will gain momentum to reach the ambitious electricity generation targets established by government policymakers and proponents of wind power.

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