Jose W. Fernandez is the United States Under Secretary for Economic Growth, Energy, and the Environment. He leads the State Department’s bureaus and offices that stand at the centre of the Biden-Harris administration’s efforts on climate change, clean energy, health, supply chain security, and other economic priorities. Under Secretary Fernandez is also a United States Alternative Governor to the World Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank. In this session organised by the Foreign Press Centres, Under Secretary Fernandez provided an update on U.S. diplomatic and programmatic efforts to strengthen global energy security and accelerate the transition to clean energy. Excerpts:
Global energy security
The most significant disruption to global energy security that we face was inflicted by Russia’s unprovoked and unjustified war in Ukraine and its weaponization of energy. Putin unilaterally – unilaterally – violated contracts and cut off natural gas supplies to European countries. Putin has demonstrated yet again to the world that Russia is not a reliable supplier of energy, to the detriment of Russia’s economy, to the detriment of the Russian people. It’ll be – and I can tell you this from my approaches in the business world. It will be incredibly difficult for Russia to ever again try and portray itself as a reliable supplier of energy.
In response, we have engaged major producers at home and around the world to support additional natural gas supplies to Europe. We’ve also asked LNG suppliers to add flexibility to old and new contracts, and we’ve encouraged U.S. energy companies to ramp up production and ramp up exports. We are proud of what our companies have done in order to fill the breach caused by Russia’s blackmail.
U.S. LNG companies are now exporting at full capacity and they will bring more capacity online later this year and next. In 2022, we in the U.S. tripled our LNG exports to Europe compared to the exports in 2021, and we became Europe’s largest LNG supplier. To stabilize global oil markets, we worked with the International Energy Agency and our member countries to collectively release 240 million barrels from our Strategic Petroleum Reserves starting last spring. And at the same time, we coordinated with allies and partners on additional measures to curtail Russia’s ability to finance its brutal warfare. An unprecedented number and variety of sanctions and other actions were levied on Russia.
But as prices went up, Russia’s revenues increased, allowing it to further fund its invasion of Ukraine. And so on September the 2nd, the G7 announced that we will – it will be implementing a price cap on Russian oil. If Russia does not adhere to the old price cap, it will not be able to access critical services like banking, insurance, or brokering from G7 countries. This cap will ensure that Russia makes less money from oil exports while helping to keep Russian oil flowing onto world markets.
These actions and previous actions that we’ve taken in response to Russian attacks have been possible because the U.S., its allies, and partners have been united. We understand and we’ve known from day one that no one country can do it alone. The energy map is changing due to Russia’s war. Supply chains have been disrupted. We’ve seen unprecedented volatility. We’re seeing it now, especially in energy markets. Our allies and partners around the globe, not just in Europe, are concerned about their own energy security. At the same time, the rate of climate-related disaster is growing, threatening communities around the world. And that’s why we believe that the clean energy transition is key. It’s key in the long term. It’s key to energy security and expanded access to reliable and affordable energy.
We know that developing and deploying commercial technologies, technologies like renewable energy and battery storage, will be critical to avoiding the worst effects of climate change. We’re also funding research and development to commercialize technologies needed for hard-to-abate sectors like construction and industry, and these sectors include nuclear power from small modular reactors and green hydrogen. These efforts will improve energy security and expand economic opportunity.
However, we also understand that in addition to increasing supply, we’ve got to moderate consumption. Increasing energy efficiency is an effective way to reduce consumer energy costs, reduce emissions, and improve the competitive* of our business. Our European partners are taking this very, very seriously by surging the installation of smart thermostats and mandating energy conservation in public buildings.
We also need to ensure that as new technologies are deployed, the supply chains for those goods are secure. And as we advance a clean energy transition, certain minerals have become increasingly essential. They are critical inputs to new technologies. Transparent, open, secure, and sustainable supply chains for these critical minerals are vital to ensure that these technologies are deployed at the speed and scale necessary to combat climate change effectively.
The Minerals Security Partnership, or MSP, that I launched in June alongside several partners brings together major mineral-consuming countries. And this is a partnership that we hope will promote public and private sector investments in strategic mining, processing, and recycling that adhere to the highest environmental, social, and governance standards.
what we’ve seen is this Russian blackmail on energy. And we need to make sure – and basically what Putin is gambling on is that our solidarity will crumble. It’s nothing – nothing worse – nothing more blackmail. It’s blackmail that ultimately will hurt, and has hurt already, consumers’ willingness to trust Russian delivery promises.
I don’t know – I can’t tell you much about those plans other than to say we are taking every step that we are – that we can. And as I said earlier, our LNG and other producers are going all-out to make sure that this weaponization of energy does not succeed.
With respect to the price cap, it’s a global effort to ensure the oil supply while limiting the benefit to Russia. And it’s a very basic belief that Russia should be constrained from using energy profits to fund its aggression in Ukraine. And this action would show unity in the face of unprovoked – of unprovoked aggression. It’s yet another – it’s yet another example of this unprecedented solidarity that’s been engendered by Russia’s aggression.
Azerbaijan and Putin
On the role of Azerbaijan, look, Azerbaijan knows Putin and what he’s capable of doing quite well, and I think it behooves on all of us to further our energy independence from Russia. We’ve seen what this blackmail leads to. We knew it – we’ve known it from day one. And his willingness to weaponize, to weaponize energy and to try and bring us to our knees through – through – by creating an energy crisis that has led to increased prices around the world, inflation around the world, is something that I think Azerbaijan knows quite well.
What strikes me often as I read the press is that Putin’s blackmail has been – has also been – has included a lot of misinformation, misinformation that for example would say that it’s our – that our sanctions are causing the energy shortage, that our sanctions are causing food insecurity, that our sanctions are causing shortages of fertilizer around the world. Nothing could be further from the truth, and this is an outright lie, and it – this is not an opinion of mine. You can look this up in our regulations that specifically in black and white exempt energy, fertilizers, and food. So the shortages that we’re seeing around the world, the fact that in many parts of the developing world people can’t get enough to eat, that they have to go to bed hungry – is the direct result of Russia’s aggression, which we have one more – one more atrocity that’s being committed by Putin’s people, not just in Ukraine, not just because of mass graves and other atrocities, but also around the world, in Africa and elsewhere, and that they are suffering as a result of this war. I mean, it’s not our sanctions.
Nuclear energy in Germany
Look, we’ve said all along, first of all, it’s – the Germans took a decision and it’s their decision to change that, and we respected their earlier decision, and we will do so whatever they decide to do. But we’ve also said always that nuclear energy can be – can be part of the clean energy future. And you have seen the U.S. support nuclear power in several nations where – there are a number of U.S. companies that are involved in this area, and in Europe. And countries such as France depend on nuclear energy. So we see it – a decision like that, we see it favorably, but it’s ultimately Germany’s decision.
Yeah, that’s – one – something that we are learning from this blackmail and the energy shortages is that we’ve got to ramp up our clean energy technologies. We’ve got to ramp up our development into solar energy and wind and other sources of clean energy. So the answer is to intensify our efforts and – more investments, more development. And that’s what we’re – we’re hoping that that will be one of the lessons that we will have learned from the current situation.