Between Tragedy and Techno-Optimism: The New Climate Realpolitik

Empire

The Prado and the Reina Sofia museums were closed to the public for the two-day NATO summit held in Madrid in the last week of June. A day before the summit, at the Sophia, in front of Picasso’s Guernica, Extinction Rebellion, and Fridays for Future staged a die-in. Five thousand NATO delegates had descended upon Madrid. They were doubled by a security entourage numbering ten thousand. That same week the US Supreme Court had rescinded the reproductive rights of women, clamped down on the US Environmental Protection Agency’s ability to curb greenhouse gas emissions, and eased the right to carry concealed weapons in the United States. Yet the chaos that America’s legal machine had unleashed, was temporarily set aside by Biden’s team at the Madrid summit, replaced by revivified notions of hegemonic stability. 

In NATO’s hierarchy, the US occupies the role of supreme commander. NATO’s Strategic Concept, its vision statement, explicitly affirms America’s nuclear capability as the crux of North Atlantic security ¹ . Following Russia’s war on Ukraine, NATO’s newly updated policy manifesto strikes out its planned strategic partnership with Russia in 2010 to an aggressive stance against the Eurasian power. A more constant feature of the Strategic Concept over the decades is the reminder that if one NATO member is attacked, Article 5 may be invoked, allowing the alliance to engage in retaliatory attack. Ukraine’s EU membership may take years but over a hundred thousand US troops are now stationed in Europe. Since January, this number has increased by twenty thousand. 

America’s largest military expansion in Europe since the Cold War—is accompanied by its refueling of Europe. US liquified natural gas now accounts for almost half of European LNG imports, a stunning reversal from just last year when US LNG was shunned by Europe out of ESG concerns. Much to the chagrin of climate activists, the EU parliament has voted to include gas, a fossil fuel, in its taxonomy of sustainable energy. Securing its largest foreign market while rewriting the rules (ESG taxonomies) of the game, the foreign policy hawks in the Biden administration have pulled off a remarkable coup d’état for the hydro-carbon dollar. 

Henry Kissinger recently remarked: ‘A curious aspect of this war it that it almost looks like World War I.’ ² A common myth propagated by economists, is that in breaking down international trade and investment, wars interrupt globalization. Adam Tooze and Ted Fertik ³ complicate this narrative. They argue that World War I activated the networks of 19th century globalization and violently realigned them. The war in Ukraine has irrevocably altered the global landscape. The invasion was followed by the Group of 7 nations expelling Russia from the Western-controlled global financial system. The West’s counter-warfare against the Russian incursion has been fought on economic turf via embargoes on Russian trade, seizures of Russian foreign exchange reserves, and significant military support to Ukraine. The coordinated expulsion of Russia from global financial and trade infrastructures has been unprecedented in scale if not complexity. 

When the European Union launched its sixth round of sanctions against Russia this summer, it agreed to join the American and the British in embargoing Russian oil. Soon after the US Treasury’s plan to cap the price of Russian crude oil was accepted by European governments, on September 2, 2022, Putin suspended the supply of natural gas flows to Europe via the Nord Stream I pipeline. The Russian autocrat promises that the gas will only flow again if the West’s sanctions are removed. Initially proposed by Janet Yellen, the US Treasury Secretary, with the expressed purpose of reducing domestic inflation, it has been repackaged as a benevolent gesture to enable the flow of cheaper Russian oil to low and middle-income economies. 

Before the war, 40 percent of Europe’s gas was supplied by Russia. In its immediate aftermath, Russian commodity exports were exempted from Western sanctions. Taking out Russia, a major hydrocarbon producer—which, before the war, supplied 14% of global oil and gas—has created energy shortages and escalated prices, especially in Europe. ⁴ The ratcheting up of global commodity prices, particularly those of fuel and food, has made for levels of inflation not seen in over forty years. The war in Eastern Europe has reassembled the entire global economic and energy system.

A major decision that came out of the Madrid summit was the establishment of a permanent US military base in Poland. NATO represents the concentration of global financial, legal, and military power in the North Atlantic. It is primarily a transatlantic military alliance. In its self-described 360 degree approach to integrated deterrence—involving cyber-tech and ‘interoperability’ between Allied defense systems—it is a 21st century Benthamite panopticon, under whose gaze lies the rest of the world. In the name of upholding democratic values and institutions, NATO has assigned itself the role of global crisis manager. Its extra-territorial mandate now spans the gamut from ‘conflict-related sexual violence’ to climate adaptation. 

By the close of the 2022 summit, NATO had committed that its military forces would achieve net zero carbon emissions by 2050. Out of Madrid emerged a new security framework, one which embeds climate in NATO’s framework of ‘military and political adaptation.’ In a naked power grab, NATO proposed that it ‘should become the leading international organization when it comes to understanding and adapting to the impact of climate change on security.’ It intends to do this by ‘investing in the transition to clean energy sources and leveraging green technologies, while ensuring military effectiveness and a credible deterrence and defence posture.’ Call this ‘militarized adaptation’: a new climate framework in which the energy transition has effectively been co-opted into an imperial project. 

War Ecology Meet Militarized Adaptation

In weaponizing the linkages between national defence, energy independence, and economic security, NATO’s new climate framework is a militarized version of Charbonnier’s ‘war ecology’ ⁵ : a framework in which decarbonization is integrated into geopolitics. Charbonnier’s own conceptualization of war ecology is somewhat orthogonal to NATO’s ‘militarized adaptation’. At first glance, Charbonnier’s appears to be a peculiarly European vision, one which proclaims energy austerity as Europe’s resistance to its Russian ‘toxic resource’ addiction. Charbonnier urges that Europe break its dependence on imported fossil fuels and reclaim energy and economic sovereignty via decarbonization. He also argues that political ecology should harness decarbonization to a grand narrative—one that links the energy transition to broader social transformation. A grand narrative, Charbonnier claims, will enable a broad-based coalition around decarbonization. 

Large-scale financial, technological, and administrative mobilizations required for a clean energy transformation have historically been associated with ‘total war.’ This vision is now manifest in the European Union’s RePowerEU agenda. Its American counterpart—originally a trillion plus omnibus climate and social spending bill known as Build Back Better—has been whittled down in the newly passed Inflation Reduction Act (IRA), which legislates $370 billion in climate spending but also contains various incentives for oil and gas production. Meanwhile policies to reduce child poverty in the United States such as universal pre-school and paid family leave were axed from the IRA.

The weaponization of energy that has followed in the wake of the Ukraine war has accelerated the commitment to the energy transition—six months into this conflict only confirms Charbonnier’s ‘war ecology’ thesis. His geopolitical understanding mediates between the tragic view—that declares the impossibility of limiting carbon emissions to avoid the most catastrophic impact of climate change—and the naïveté of techno-optimists for whom carbon sequestration technologies can be scaled up in time to limit planetary warming to 1.5 degree Celsius. Cognizant of the asymmetric nature of economic warfare waged by the West in response to Russia’s invasion of Ukraine and the suffering it entails for ordinary people, Charbonnier warns of the possibility of political ecology’s subordination to the war imperative. He cautions that ‘war ecology’ may transpire into ecological nationalism. While a realpolitik around the energy transition is the call of the hour, climate advocates must disrupt its complete co-optation by powerful (financial and fossil fuel) interests while channeling the financial, logistical, and administrative capacities of ‘big states’ and ‘big energy’ towards green investment and infrastructure. 

Charbonnier’s ‘war ecology’ concept prompts those of us in the US to consider the possibilities of linking the transformative growth agenda of the energy transition to the one place exempt from the inertia of American procedural legalism—its military-industrial complex. 

Defense is the only element of American politics that is truly non-partisan, (Even before Russia’s invasion of Ukraine, in the midst of a pandemic, world military expenditures surpassed an unprecedented $2 trillion in 2021. US spending alone amounted to an entire 40 percent of the total: about $800 billion a year. Whilst the National Defense Authorization Act, enabling greater defense spending got the green light across the partisan divide, the child tax credit, a wildly successful Covid-era experiment to lessen child poverty in the US expired in December 2021 and was not extended. Given what Cass Sunstein ⁶ calls ‘the dark cloud that now looms over the administrative state’ enfolding climate financing into the US department of defense budget may be the path forward. 

At first glance, ‘militarized adaptation’—the NATO version of war ecology—appears as an immaculate solution to otherwise delayed climate action. (As interest rates rise, financing climate change mitigation and adaptation becomes more costly.) Militarized adaptation is the evolutionary outcome of the normalization of emergency powers over the pandemic. In the US, the Defense Production Act has been activated several times over the last two and a half years, to produce ventilators and vaccines, import infant formula and, also, to seize the foreign assets of other governments. Declarations of emergency might ire libertarians as well as Agamben ⁷ but pass under the radar, not opposed to by much of the American public. 

In fact, climate activists pushed President Biden to declare a climate emergency and to deploy emergency powers to enact a green new deal. Biden responded with his June 6 executive order: the Defense Production Act For Clean Energy ⁸ . Passed before the IRA, this executive order bypasses electoral gridlock to expand green infrastructure, for instance, wind farms on federal land. The order also mandates fair labor practices to build America’s clean energy arsenal ⁹ . A double-edged sword in terms of foreign relations, this new legislation simultaneously rolls back tariffs on Asian solar technology imports (critical to US solar manufacturing capacity) while avowing to ‘friend-shore’ green supply chains between Allies.

Market Turmoil

About a third of the world’s energy supply comes from oil, a bit less than a third from coal, and about a quarter from natural gas. Renewables comprise less than a tenth of global energy supply. The war has been hugely profitable for oil and gas producers whose income has more than doubled ¹⁰ its five-year average. Surging oil prices have made Saudi Aramco overtake Apple as the world’s most profitable firm. The world’s biggest oil company is also its greatest carbon emitter. However the US is the world’s biggest oil and gas producer. 

For various reasons—including the collapse in crude oil prices in 2020 as well the fear of stranded fossil fuel assets as the energy transition accelerates—oil and gas producers are increasingly reluctant to ramp up investment. This has translated into low inventories and high prices. While Saudi Arabia has the largest inventories, globally, the biggest upstream investment increases in the industry are expected from US oil and gas firms. Investment in liquified natural gas has been the strongest across fossil fuel asset classes. Following the Ukraine crisis, the US is poised to become the leading LNG exporter. The war has been a boon for the US fossil fuel industry. Windfall oil and gas profits this year alone are enough to fund a decade of investment in low emission fuels that could meet the global net zero emissions target. As is clear following the blowback against the Russian sanctions which have dislocated global energy supply and prices, big states interfering in global markets compromises efficiency. But governments not interfering in markets can be costly on a planetary scale. War-profits earned by the fossil fuel industry should be taxed so as to fund the clean energy transition.

As fossil-fuel prices have soared, wind and solar alternatives become all the more cheaper. The largest increase in investment in clean tech is overwhelmingly driven by European oil and gas majors. The energy shock in Europe will accelerate the demand for renewable sources of energy. However upstream disruptions (e.g. in the supply of rare-earth minerals—of which China is the largest supplier) have slowed down green production chains. While the boom in oil prices benefits petroleum producers, rising prices at the pump are a significant driver of US voter dissatisfaction. 

Forecasts that democrats will hemorrhage votes in the upcoming US midterm elections has propelled a massive bid by the Biden administration to tamp down gasoline prices. Progressives have jumped on the bandwagon. Recent proposals by left-leaning think tanks in the US include state-backed funding for new domestic drilling and building state-owned oil refineries. The desire to tamp down commodity inflation has prompted the administration to U-turn on former promises. The Biden administration has conducted its first onshore oil-lease sales on public land, released a plan for offshore oil drilling, and supplicated a tarnished Saudi monarch in an attempt to bring more Saudi oil online. How this will pan out is unknown. The American stance is that building new fossil fuel infrastructure or orchestrating regime change, is preferable to drawing down Russian sanctions in exchange for more Russian energy exports. 

Core Vs. Periphery

In the cross-hairs of a weaponized world economic order lie the climate futures of developing countries. As the world’s manufacturing powerhouse, China’s energy consumption is about a quarter of the global share. Asia consumes almost half of all global energy supply; the US about 16%, and Europe about 14%. Weaponizing financial and trade infrastructures has compounded the energy and economic crisis which now engulfs large parts of the world economy. Global supply-chain disruptions have also contributed to broad-based inflation ¹¹ . The confluence of inflation, interest rate hikes, and relentless dollar appreciation has catapulted debt crises in fifty four economies. (Russia, too, has defaulted on its debt, not for a lack of finances but because West refuses to process Russia’s dollar-debt repayments.) ¹²

Germany’s new rearmament commitments (beyond 2% of GDP) and the push for a new joint European armed force (EU Rapid Deployment Capacity) run parallel to commitments to deepen and stabilize European sovereign bond markets. Reforms to the EU’s Stability and Growth Pact that remove military and green spending from SGP deficit and debt strictures have been proposed. The drive for renewables in Europe is inextricably tied to energy independence from Russia. The energy shock has prompted the European Central Bank to commit to greening its central bank asset purchases, distinguishing it from the US Federal Reserve and the Bank of England that have shelved their green asset purchasing programs. As the euro hits a twenty year low against the dollar, bolstering European public finances and defence is a bulwark against threats to European sovereignty, not only from Russia but also from American monetary and military encroachment. 

Obvious mistakes such as Germany shutting down its nuclear energy plants and the US refortification of European security and energy muddy the grand historical narrative of Europe’s march towards energy independence. As does the fact that the drive for greater ‘energy security’ in Europe incurs significant collateral damage on the rest of the world. Liquified natural gas is a much more segmented global market than oil, with starkly different prices in different world regions. Higher spot prices in Europe’s gas market are propelling LNG suppliers to break contracts (invoking force majeure clauses) and reroute tankers originally headed for Asia to Europe. Three quarters of US LNG is now headed to Europe, resulting in acute supply shortages in the periphery of the world economy. Outbid LNG importers such as Pakistan have been flung into a deeper inflationary spiral. China just lent Pakistan $2.3 billion to bolster its dwindling foreign exchange reserves, double the IMF’s promised loan program for the country. Presently, the South Asian nuclear power is reeling from an unprecedented confluence of catastrophic floods on top of an energy and external debt crisis. Militarized adaptation in this context (a third of the country is now underwater) means having the army deliver food and tents to the newly unhoused. 

For those of us under NATO’s nuclear umbrella—which, according to the organization, spans 30 nations or 1 billion people—militarized adaptation increasingly looks like fortress North in a sea of climate refugees. The poly-crisis in the periphery will propel much greater waves of migration, especially from Africa to Europe. The US defense contractor Raytheon—lauded by the US Environmental Protection Agency for its climate leadership—has touted the demand for military products and services in the face of climate emergency. The same set of military assets may be deployed to control an influx of climate refugees.

The war in Ukraine has crystallized the emergence of two distinct energy, economic, and security blocs: one coalescing around the North Atlantic (NATO) and other around centered the large developing economies or BRICS (Brazil, Russia, India, China, South Africa). Monetary tightening by central banks has strained public finances. In a weaponized world economic order, low- and middle-income economies are re-learning cold war logic to secure favors along different geopolitical axes. India—situated in the BRICS but also the Quad (Australia, India, Japan, US)—has been doing this somewhat successfully in the guise of its neutrality stance. Japan is revising its constitution to eliminate its pacificist foreign policy stance—ironically, put in place by its American occupiers—which will enable the US military presence in the Indo-Pacific. The US essentially backstops Japan’s self-defense forces. It is not coincidental that the Japanese have long been the biggest holders of US treasuries. But an intensified ‘war ecology’ can also produce good outcomes: the G-7’s Global Green Infrastructure and Investment plan is, after all, a geopolitical-led responses to China’s Belt and Road Initiative. 

Amidst the many uncertainties of a weaponized world economic order, what is clear is that the energy transition will involve significant macroeconomic instability and inequality, the likes of which we haven’t encountered before. It is also clear that much of the collateral damage will be borne by the periphery. Before the Ukraine war, it was estimated that the global South required $4.3 trillion to recover from the pandemic. The lending provided by leading multilateral lenders such as the IMF and the World Bank has been grossly insufficient. Of the $650 billion in the IMF’s new Special Drawing Rights issuance in 2021, $105 billion was spent by developing and emerging economies (DEEs). However sanctioned states such as Afghanistan or Yemen—with a new internationally recognized government—have been unable to convert their SDRs into hard currency. The G-20 commitment to donate $100 bn in SDRs to DEEs has yet to be realized. The numbers simply don’t add up. 

1. NATO’s Strategic Concept, 29 June 2022.
2. Henry Kissinger, Interview, PBS Newshour, 8 Juillet 2022.
3. Adam Tooze, Ted Fertik. « The World Economy and the Great War.» Geschichte Und Gesellschaft 40, no. 2 (2014): 214–38.
4. Energy Fact Sheet: Why does Russian oil and gas matter?, IEA, March 2021.
5. Pierre Charbonnier, La naissance de l’écologie de guerre, le Grand Continent, 18 March 2022.
6. Cass R. Sunstein, Who Should Regulate?, The New York Review, 26 Mai 2022.
7. Giorgio Agamben, State of Exception, 2003.
8. FACT SHEET: President Biden Takes Bold Executive Action to Spur DomesticClean Energy Manufacturing, Maison Blanche, 06 Juin, 2022.
9. FACT SHEET: President Biden Takes Bold Executive Action to Spur DomesticClean Energy Manufacturing, Maison Blanche, 06 Juin, 2022.
10. IEA, World Energy Investment 2022, June 2022.
11. Determined by the digital movements of supply and demand in highly financialized markets, the prices of commodities—such as wheat, oil, natural gas—are inherently volatile.
12. Right before the war in Ukraine, Russia had $640 billion in foreign exchange reserves. Half of these have been frozen by western sanctions.