• September 26, 2022

Will The U.S. See A Recession?

Many forecasts are now calling for a U.S. recession. In fact, the first and second quarter of 2022 saw negative growth in the U.S. economy of -1.6% and -0.6% respectively on …

Just Two Cheers For Patagonia’s Chouinard: Why Ignore An ESOP?

As a business advisor and outdoors enthusiast, I’ve long admired Yvon Chouinard. Protecting nature is one of four core values of Patagonia, the global outdoor apparel and equipment company he founded …

Retail Has Endured Quiet Quitting For Years. Is It Worse?

Lament about the challenges of quiet quitting to members of the retail industry, and chances are they’ll say, “I’ve got a story for you.” Quiet quitting, a term that gained momentum …

Convergence, which has transformed the information telecommunications and media sectors over decades, is also underway in the energy and renewables industry. I sat down with former Department of Homeland Security policy expert Adam Stahl to review green energy and geopolitics. Stahl, who advises the private green energy sector, worked in various US government policy roles and studied global affairs at Oxford. Here are the key takeaways.

Digitization of the energy sector both strengthens and weakens nation states.

Growing demands for cleaner, more efficient fuel-sources have profoundly changed the geopolitics for energy suppliers and consumers. The technology to manage the generation, distribution, and transmission of energy is increasingly robust and integrated. However, this digitization expands the surface attack area for both nation-state actors and cyber criminals. Both renewable and traditional energy industrial control systems like pipeline distribution management, solar or wind generation, and bulk electricity systems, are increasingly internet-enabled, introducing greater cybersecurity risks, in both scope and scale.

Malicious actors from the People’s Republic of China (PRC) and Russia, can now probe, disrupt, and inflict significant damage on key pieces of energy infrastructure with the click of a button. The ransomware attack on Colonial Pipeline systems is just the beginning. It The event disrupted a major gas and jet fuel distribution artery across 17 states.

The policy effort to accelerate renewable energy garners nation state power for democratic and authoritarian regimes alike. Just as the US projected soft power with the internet, Beijing seeks to catalyze green R&D, resource extraction, and chemical processes to plans advance its global objectives.

There are pros and cons to global economic and energy interdependence.

Russia’s invasion of Ukraine has elevated geopolitical tensions. Russia’s weaponization of its energy supply has raised prices at the pump. The people, governments, and enterprises of the democratic world have come together to condemn Russian aggression. More than 1000 companies have suspended business in Russia, though notable Chinese companies like Huawei and Lenovo remain.

Companies and countries now recognize technological vulnerabilities tied to critical infrastructure. Growing attacks by Moscow-linked cyber-crime organizations like Conti and Killnet target, disrupt, and expose weakness in U.S. and European energy infrastructure, including public utility commissions, wind turbines, and LNG facilities.

Like Russia, China can use its energy resources for coercion.

Beijing, like Moscow, also possesses both the economic levers and sophistication to degrade and disrupt critical infrastructure, a blueprint the PRC could replicate in Taiwan. Though Beijing and Moscow have different styles to project power, both states possess “chokeholds” in the energy sector to undermine Western interests. Putin’s disruption of energy supplies to curb support of Ukraine is just one example of a coercive diplomatic tool. China may lack oil, but has cornered the green energy manufacturing market, notably the production of solar panels and EV batteries. Over 60 percent of solar panels and almost all rare earth minerals within electric batteries are processed in China. Of the 129 lithium-ion battery plants planned for construction by 2029, 100 of those facilities will be based in China.

Corporate supply chains are national security, a fact showcased by Covid-19.

Supply chains are all-encompassing. They incorporate device reliability, distribution resiliency, and production integrity at multiple layers. Global events heighten the importance of supply-chain security to senior-level decision-making in the public and private sectors. This shift can be attributed to the need to correct china’s longstanding manipulation of the global economy and its glaring control over manufacturing. It produces some 60 percent of the world’s supply of solar panels with forced labor and more than 90 percent of its rare earth minerals needed in advanced batteries including lithium, cobalt, graphite, and nickel. Washington and Beijing are racing to consolidate limitedly available raw materials needed to meet electronic vehicle demand that could climb to 300 million by 2040, a 60,000% increase from 2018.

Advertisement

The energy sector has not been immune to these pressures, given counterfeit production as well as cyber-espionage in both carbon and renewable industries. Examples include the theft of energy innovation trade secrets, pipeline tech, wind turbine designs, and specialized software.

New US protections on semiconductors (including news of coming restrictions on Chinese military fab YMTC, which should help Apple reconsider a flawed deal), fiber and other critical inputs are welcome, but adversaries have exploited US policymakers’ slow and inconsistent response.

Adam Stahl is a national security professional with stints at the Senate Commerce and Foreign Relations Committees and the Department of Homeland Security. A former deputy chief of staff in the DHS Office of Strategy, Policy and Plans, he led the development of the department’s China and Arctic strategies. He now works for an energy company. His articles are available in The Hill and RealClearPolicy.

Advertisement

Leave a Reply

Your email address will not be published.