Framing the Great Game 2.0:
Safety, security and stability

The past few years have seen several crises that absorbed analysts and seemed to augur significant changes in the energy industry—natural disasters like the Japanese earthquakes that shook up the nuclear calculus, political upheavals in North Africa and the Middle East that looked ominous for oil (think Iran and Libya), and man-made environmental accidents like the Gulf of Mexico oil spill. All were grave in their own way. But none ultimately have been of truly significant consequence for global energy supplies.

The reason for this is that deeper, more profound, longerterm trends are powering the energy equation. By far, the most significant one is this: Energy is a central force in global economics and politics. It is at the heart of the major global issues—economics, poverty reduction, climate change, clean water, and so many more. As a result, governments are pursuing an energy triptych—security, safety, and stability. This pursuit is at the heart of the ‘Great Game 2.0’.

In the ‘Great Game 2.0’, “security of supply” trumps. Unpack “security of supply” and you discover several essential components beyond the physical access to resources, including the technology needed to tap those resources, the human talent to invent and manage that technology, and the ability to securely transport energy through vulnerable channels, from the Strait of Hormuz and the Gulf of Malaca. Absent “security of supply,” national sovereignty is potentially at risk.

The other two “s” words in the energy triptych are safety and stability. Real security of supply will demand that energy can be accessed with minimal environmental impact and risk to human safety. And it also will depend on the long-term stability of a country’s legal and regulatory framework, which allows companies and consumers to invest for the long haul.

The scale of investments being made in new energy technologies is unprecedented—and nowhere more so than in China. Beijing is investing $1.7 trillion in “strategic sectors,” a major portion of it targeted to clean energy and clean energy technology. Specifically, Beijing says the package—equivalent to Italy’s GDP and four times China’s 2008 fiscal stimulus—will focus on “alternative energy, biotechnology, new-generation information technology, high-end equipment manufacturing, advanced materials, alternative-fuel cars and energy-saving and environmentally friendly technologies.” 8 China has become proficient in the design of nuclear reactors, solar, wind, and other energy technologies. While the Chinese are ramping up their own R&D, they have been especially skilled at adopting and adapting technologies and reengineering them to lower their costs.

The countries that leap ahead in this energy technology game should be better positioned to protect their sovereignty and to benefit from sustainable development. But they also will be able to multiply their gains by being the beneficiaries of a “virtuous cycle of innovation” in much the same way that the initial discovery of fossil fuels and, a century later, the technology behind the internet redefined the economic landscape.

Take wind and solar energy, for example: As these sources approach grid parity, they have helped accelerate the pursuit of energy storage. And energy storage is likely a game-changer in every realm, from extending the battery life on mobile phones and laptops, to powering cars, to decentralizing energy production. >>>

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