Energy Security = National Security: How the West Needs to Reindustrialize, Rethink Energy Policy

The current geopolitical crisis spurred by the Russian invasion of Ukraine should provide a rude awakening in the West to our misguided and flawed policies toward energy development by government and major pension plans, university endowments, and banks. Domestically produced, reliable, and affordable energy, including liquefied natural gas (LNG), crude oil, and ammonia fertilizer, as well as thermal power when combined with carbon capture and storage (CCS), are foundational to our national security and essential tools in the arsenal of democracy. If we fail, we will continue to be hijacked and at the mercy of a Russian-Chinese alliance to control the production and supply of many vital resources, including the essential supply chains for renewable energy, amid an interdependent global energy and agricultural complex.

The message received is now loud and clear, even to those that have been tone deaf and swayed by the deeply flawed agenda to simplify energy policy into a binary “oil and gas (O&G) bad” versus “wind and solar good” framework. We need to increase energy production and energy infrastructure alongside an increase in overall manufacturing and industrialization. Electricity consumption will increase significantly, and the need to reindustrialize production and bring the bargaining chips of true, tangible power back to the U.S. is paramount to our national security and ability to defend democracy globally.

CCS: Proven and Available

CCS is critical to enable this broad increase in energy production and reindustrialization process while addressing the need to reduce greenhouse gas (GHG) emissions. CCS can enable building of LNG, ammonia, hydrogen, enhanced oil recovery, methanol, and thermal power plants to produce clean energy while capturing GHGs.

We have viable and large-scale CCS case studies for hydrogen, ammonia, and LNG that prove technical feasibility and cutting-edge innovations, such as NET Power’s demonstrated industry ingenuity in creating new processes. NET Power has made major advances in power production with CCS, and is a proof point that innovation can allow thermal power plants to contribute to a net-zero framework.

The current energy crises in Europe provides a direct case study in an alternative dystopia, where government policies and public pensions agreed to cancel coal, nuclear, and O&G production. Today, energy is increasingly unavailable and unaffordable, dependent on the whims of the wind blowing and the sun shining, and on Russian imports. The European industrial economy is essentially bankrupt, given energy costs that make European production broadly uneconomic.

The anti-fossil fuel movement (broadly embraced by governments, pension funds, and banks) have subscribed to a deeply flawed argument that reduced supply (and resultant higher price) of fossil fuel energy will force rapid substitution to renewables. In fact, high energy costs are driving massive increases in the cost of renewables because solar panels, wind turbines, and batteries are made from raw materials based on fossil fuels. Higher cost raw materials drive increases in the costs of producing all forms of energy. We are in a self-defeating feedback loop.

To correct this vicious circle of energy shortages causing inflation, and in turn, higher energy costs, a new capital investment cycle is needed in fossil fuels and nuclear. This capital investment cycle must also directly address GHG emissions. CCS provides the reconciliation to increased fossil fuel investment and GHG reductions.

Policy Changes Could Help

The U.S. must move to a massive revaluation of the 45Q tax credit to appropriately value avoided emissions and acknowledge that our self-imposed energy polices have created an inflation that has eroded the value of the existing tax credit. With a defined and measurable solution to GHG emissions, CCS can unlock capital investment in domestic energy production by providing certainty for long-term investors that energy projects equipped with CCS are sustainable.

Combining a capital investment cycle in fossil fuels, combined with CCS, does not mean turning our backs on renewables, but it does mean understanding that reliability and affordability comes with using all tools in the portfolio and renewables alone are not feasible. Renewables require affordable and reliable fossil fuels because they are made from fossil fuels.

The European Union, Canada, and the U.S. are all guilty in appeasing the environmental lobby by shutting down coal and nuclear, while explicitly limiting O&G developments and export infrastructure. We need to acknowledge the foolishness of our current approach, and that a multitude of unintended and dire consequences have already been unleashed.

Ammonia fertilizer is made from natural gas and the production of ammonia in Europe has been severely constrained due to natural gas shortages. The combination of ammonia shortages in Europe with the “breadbasket” of eastern Europe, Ukraine, embroiled in conflict, has the potential to create a global famine. As per a recent Wall Street Journal article, “fertilizer is about three to four times costlier now than in 2020, with far-reaching consequences for farmer incomes, agricultural yields and food prices.” We need leaders who are ready to confront this unfortunately self-imposed reality with a response to massively increase our energy production and exports with a broad reindustrialization of our economic systems.

Craig Golinowski is managing partner at Carbon Infrastructure Partners.

SHARE this article