Read the global energy dialogue 

On June 3, 2021, Columbia University’s Center on Global Energy Policy (CGEP) and the Stiftung Wissenschaft und Politik (SWP, the German Institute for International and Security Affairs), in cooperation with the European Climate Foundation (ECF) and the European Union (EU) Delegation to the US, cohosted a private virtual roundtable focusing on energy security issues during a period of heightened action on climate goals. This document summarizes the June 3 roundtable, which was conducted on a not-for-attribution basis. Participants in the roundtable included just over 50 senior corporate executives, civil society representatives, academic and think tank experts, energy analysts, and government officials from the European Union and United States.

In June 2021, President Joe Biden traveled to Europe, his first overseas trip since his inauguration as president, and he met with European heads of state and government in the context of a British-hosted G7 meeting, a North Atlantic Treaty Organization (NATO) Summit, and a US-EU Summit.[1] The journey signaled a concerted effort by the United States and the European Union to rebuild bilateral relations, which were battered during the Trump administration.

Protecting the global climate and accelerating the transition to clean energy are objectives that unify top leaders on both sides of the Atlantic today. The European Union has a legislated mandate of climate neutrality by the year 2050 and is implementing its comprehensive European Green Deal and elaborating a corresponding legal and regulatory framework for an enhanced 2030 target. In the United States, the Biden administration reentered the Paris climate agreement and announced plans to reach net-zero emissions by midcentury, though climate protection still faces significant political challenges in the US Congress and in certain states.

If the European Union and the United States proceed as these plans indicate, their energy systems face a period of accelerating, unprecedented, and sustained change—new technologies, new supply chains, new business models, and new interdependencies between economic sectors.

The Importance of Transatlantic Engagement on Energy Security

Widespread change is afoot in the energy systems of Europe and the United States. In the EU, leaders have agreed to cut emissions by at least 55 percent compared with 1990 levels by the year 2030, a waypoint to the midcentury decarbonization goal. In the United States, legislators are considering national measures to reduce emissions from vehicles, the electricity system, the oil and gas industry, and industrial sources. Numerous recent analyses, including by the International Energy Agency, highlight the need for accelerating the energy transition, as overall emissions levels are inconsistent with trajectories needed to limit average warming to 1.5 degrees Celsius.[2] According to roundtable participants, the future energy mixes of the United States and the European Union are likely to include a larger share of electricity than is currently the case, and the energy systems will depend more heavily on information and communications technology and on certain minerals and equipment (especially semiconductors). From this change, certain new energy security challenges arise, including in regard to supply chains, security electricity systems, and the ability to provide molecules on a sustainable basis where requirements so dictate.

While the world may be more accustomed to the energy security risks associated with the energy systems of the 20th century, other risks have emerged in recent years, including cyberattacks such as the one on the Colonial Pipeline system this year. The evolution of the EU and US energy systems could create other challenges that would threaten the speed or effectiveness of the clean energy transition. Close alignment on energy security issues and on other aspects of security and economic policy is a foundational concern for the United States and Europe. Companies, research communities, and security institutions operate hand in hand despite differences in sociopolitical systems, some specific priorities, and legal-structural contexts. Event attendees noted this is especially true in the financial world, where Euro-Atlantic institutions have the potential to help set standards and prevent greenwashing in a time when ever-greater attention is being paid to the environmental, social, and governance performance of companies around the globe. Joint clean energy innovation and technical standards are other important areas for cooperation, as they can promote interoperability of products in the two markets.

Participants noted that interactions with the developing world hold particular importance for the energy security interests of the European Union and the United States. Many raw materials that are critical for emerging clean energy systems are sourced predominantly from developing countries, including those in sub-Saharan Africa, where citizens and local economies have remained impoverished and lack adequate energy investment. The US and EU need to “raise their game” by increasing engagement and investment, one speaker noted. In figurative terms, American and European representatives engage developing-country partners with PowerPoint slides, whereas representatives from China engage those countries with power plant investments.

Supply Chain Challenges

With the energy systems of the United States and the European Union in a time of accelerating change, supply relationships are a central issue for governments and industry leaders to consider. In the past, supply chains chiefly determined where and from whom importing countries and individual consumers purchased commodities such as conventional fuels. In the clean energy economy, supply chains are much more complex and multifaceted; they depend more on the sourcing of minerals that are essential for a host of clean energy applications and the manufacture of complicated infrastructure hardware (such as semiconductors and bulk power system equipment), and therefore, tensions can arise between international trade and domestic manufacturing of vital equipment and components. As the US and EU seek to accelerate their energy transitions, a sensitive balance must be struck between policies aiming at reshoring and/or those favoring international trade, which under the right circumstances can be a vital enabler of the decarbonization effort.

Participants noted increasing attention is being paid to several dozen critical minerals that play a number of vital roles, including permanent magnets for wind turbines and electric vehicles, thin films and other components for photovoltaic panels, and anodes for batteries. Extraction of certain critical minerals (e.g., lithium, silicon, copper, alumina) occurs mainly in developing countries, and attendees noted that overall supply chains for critical minerals are dominated by Chinese companies. As much as 98 percent of the separation and processing is carried out by China, a point that has caused increasing concern over time; in 2010, Chinese decision-makers suspended the sale of certain minerals to Japan after an unrelated fishing dispute. Participants recalled that Chinese officials have since then alluded to the possibility of critical mineral supply cutoffs as potential retaliation for unwelcome policies of purchasing countries.

In the view of one roundtable participant, the European Union and the United States need to place greater emphasis on identifying and implementing a risk-mitigated approach to the clean energy transition. Such an approach to critical minerals might take advantage of manufacturing advances in clean energy equipment that require radically less inputs such as cobalt (in battery systems) or use equipment that employs recycled minerals. Attendees saw promise for future collaboration on mineral-recycling policies and standards as well as technology development.

Equipment used for operating the bulk power systems in the United States and Europe stands to play an ever-more prominent role in clean energy supply chains—especially as electrification increases for uses such as personal vehicles, public transportation systems, commercial and residential heating and cooling, and electrolysis for producing clean hydrogen. Moreover, bulk power systems are costly, have long operating lifetimes, and use large quantities of critical minerals, so it is vital to manage their supply chains. Such systems also require security attention to both their hardware and software and especially to the algorithms that manage power electronics. Participants noted that standards may be a particularly important area for collaboration in regard to equipment for bulk power systems.

A politically sensitive issue arises from energy security concerns such as those just discussed: tensions between domestic manufacturing and international trade. On the one hand, energy security vulnerabilities that could result from our changing energy sectors could lead to a “build at home” sentiment for all potentially sensitive equipment and materials. Such an impulse may find firm footing in the current moment, when political leaders are placing a high priority on economic recovery as the global pandemic recedes—when domestic job creation can also help increase social equity and resilience. In fact, some discussants argued that ultimately the chances of a successful decarbonization effort are enhanced by the use of policies that appeal to the public as fostering social cohesion and justice.

Nonetheless, other participants countered that if taken to an extreme, support for domestic manufacturing could ignore the fact that no economy exists in a vacuum. In their view, instead of favoring blanket bans on imports or other blunt policy instruments, such as trade wars or reshoring efforts regardless of cost, challenges arising from the energy transition require serious strategies that encourage both innovation and widespread deployment of new energy technologies. Industrial policy, long a sensitive topic in the United States (less so in Europe), must be paired with a strategic assessment of value chains, market opportunities, and sustained growth.

Electricity Systems

Enhancing the security of rapidly changing electricity systems in the European Union and the United States requires attention to a host of issues, such as cyberdefenses, grid planning and modernization, the twin needs for power system reliability and resilience, and the different roles of companies and governments in protecting the changing and expanding electricity systems.

In the United States, the recent ransomware attack on the Colonial Pipeline Company, a refined petroleum midstream company, served what was referred to by one speaker as a “Sputnik moment” for many industry leaders—including those in the electric power sector. The successful attack convinced many executives and government officials alike that no one in the energy industry is immune to cyberthreats. Given the increase in digitalization, evolving power systems are expected to have steadily greater numbers of “attack surfaces,” or niches through which cyberattacks can be funneled. In addition to better defense, participants noted that the electricity industry will require more systems to provide standby power—including from interconnections, imbalance markets, and cross-border trade capability.

An important but tricky topic related to power sector security and cyberdefense is the proper role of companies and government authorities. Some attendees argued there is a need for a deterrent role of the sort that can only, or most effectively, be played by governments. Others expressed reluctance over potential government roles, for reasons ranging from personal data security to basic effectiveness of government cyberdefense efforts; as one roundtable participant said, “Governments get hacked as well.”

The task of decarbonizing electric power systems presents abundant need for new policy and technical solutions as well as abundant opportunities for transatlantic exchange and cooperation. “Tail risks are becoming more and more common,” said one roundtable participant, so past guidelines (from reliability metrics to weather data) no longer adequately capture future risks to electric power systems. Extreme events from Texas to Greece and beyond have challenged electricity systems, noted another participant.

Roundtable participants saw areas for potential US-EU electricity-related collaboration in offshore wind development, high-voltage direct current transmission, “black start” capability (the ability of electric power systems to reenergize after an event that causes a complete halt in power production), management of renewable energy supply in the face of reduced thermal power production, policies to incentivize investment in decarbonized molecules, efficient buildings as a tool for both energy security and climate resilience, the role of so-called prosumers (customers who produce power generated from distributed systems like rooftop solar panels but who also consume power from the grid) in strengthening energy security, possible applications of vehicle-to-grid and vehicle-to-home systems (which allow users to take advantage of power stored in their vehicle batteries), next-generation electricity storage, and technical standards for decarbonizing grids. While attendees agreed decarbonization is the goal they seek, they observed that success in executing the transition will require operating in increasingly unfamiliar territory: managing a grid with greater than 50 percent wind and solar generation, noted one roundtable participant, poses a much greater challenge than managing a grid with lesser shares of variable renewable power.

Managing the Need for Energy Molecules

Even as energy policy makers and planners work to “electrify everything,” there will still be a residual need for energy in the form of molecules because certain applications require energy that provides high process heat or flexible fuel for mobility. These molecules could be natural gas, which may increasingly be paired with carbon capture and sequestration (CCS) to reduce CO2 emissions, or low- or zero-carbon gases such as hydrogen created through steam methane reforming (SMR) and CCS (so-called blue hydrogen) or through renewables-driven electrolysis of water (green hydrogen). Pipeline gas and liquified natural gas may continue to be used for some time, so participants mentioned the challenges of managing legacy systems to reduce leakage, venting, and flaring of methane (a greenhouse gas that is more than 80 times more potent than CO2 over a 20-year lifetime) and perhaps how to repurpose existing infrastructure around a hydrogen economy.

While expectations for a hydrogen economy are high on both sides of the Atlantic, different regions within the European Union and the United States have different potentials to develop and consume decarbonized hydrogen. Consequently, participants’ viewpoints varied in regard to the speed, extent, off-take patterns, and geographic concentration or dispersion of relevant infrastructure. Today’s booming interest in hydrogen is not the first such swell of interest; in fact, some experienced hands at the roundtable recalled at least two previous circuits of the hydrogen “hype cycle.” Questions during the discussion focused on whether green hydrogen will take precedence, employing low-cost offshore wind or other renewable resources, or whether blue hydrogen will establish at least an initial toehold, even though it will require investments in both SMR and CCS infrastructure.

Other questions centered on the scale of incremental zero-carbon power production that would be necessary simply to replace today’s high-emitting conventional hydrogen (gray hydrogen). Still others mentioned the likely use-cases for clean hydrogen, including for industries—such as steel, chemicals, and cement that require high process heat—or for other applications such as marine shipping (perhaps as ammonia) or heavy-duty freight vehicles. Participants noted that the excitement and promise of hydrogen are translating into major investments of public funds, even as the need for further research, policy, and commercial development remain.

How to manage the challenges of existing systems for the delivery of molecules was an equally contentious topic among attendees. Some felt that existing natural gas systems, for example, can play an important role as decarbonization efforts advance in the United States and Europe. In fact, some mentioned that through the blending of hydrogen into existing natural gas supply lines, the business case could be made for investment in a hydrogen power supply and electrolysis. Others expressed severe skepticism as to whether the hydrogen future (especially in Europe) can be premised on anything less than 100 percent green hydrogen, not blends of hydrogen with natural gas. In the view of several participants, clean hydrogen production is likely to be implemented on the basis of regional hubs, with production and demand centers located close to each other.

As mentioned, reducing emissions from existing legacy gas systems is critical and, according to attendees, is an area ripe for dialogue and possible collaboration. The EU is considering a new, more stringent internal legal framework regarding methane emissions monitoring, reporting, and verification as well as leak detection and repair. Participants said this effort reflects a sense in Europe, shared by many experts in the United States, that the true methane emissions profile of the oil and gas industry is poorly understood. Sound industry practices and new tools for methane leak detection and repair offer the prospect of much more effective abatement, especially when new satellite systems are used in concert with big data analytics, aerial surveys, and ground surveys. In addition, the EU is establishing an International Methane Emissions Observatory in partnership with the United Nations Environmental Program and the International Energy Agency.[3]

Future Engagement

The June 3 roundtable ended with many participants underscoring apparent agreement on a number of high-level points. First, many viewed the establishment of a new agenda for US-EU dialogue on energy security as a potentially effective route for advancing shared decarbonization, sustainability, and security goals. Second, all seemed to acknowledge that change, and thus an increasing degree of uncertainty and complexity, is an unavoidable consequence of the accelerating clean energy transition. Third, participants acknowledged that some differences in priorities and perceived opportunities reflect the distinct resource endowments; legacy energy systems; and economic and political systems in the United States and Europe. Most of all, participants seemed united in the view that both the United States and the European Union could benefit from greater engagement on the energy security challenges emerging as the clean energy transition accelerates to meet 2030 and midcentury decarbonization goals. (See the Appendix for a listing of specific topics on which participants saw potential for collaboration.)

Appendix: Suggested Areas for US-EU Energy Security Collaboration

The list below records without evaluation a number of suggestions that emerged during or after the roundtable on June 3, 2021. Not all are equally practicable due to jurisdictional, legal, or other reasons. This list does not attempt to prioritize the suggestions or evaluate their viability.

Institutional Actions

  • Restart the US-EU Energy Council or a similar channel for regular dialogue on energy issues among ministerial-level and expert-level representatives.
  • Include a regulatory dialogue to address governance challenges.
  • Reposition past collaborations, such as the Three Seas Initiative,[4] to have an expanded scope that is less heavily focused on natural gas and more focused on topics that are emerging during the clean energy transition (e.g., cyberdefense, managing variable renewable power, demand response, cross-border energy trade).
  • Expand the US-EU dialogue on building and product standards and innovation, including embodied carbon and materials replacement and environmental performance.

Supply Chains

  • Engage in collaborative research and development on alternatives, recycling, and other approaches to reduce the need for critical raw materials.
  • Examine possible cooperative structures involving the EU, US, and other partners that can respond adequately in case of nonmarket restrictions and shortages in supply of critical minerals.
  • Develop common standards for security of bulk power systems and their interoperability.
  • Address issues of manufacturing and skilled workers in bulk power systems.

Electric Power Sector

  • Collaborate on several key areas, including the following:
  • Offshore wind technology and deployment
  • Next-generation electricity storage
  • “Black start” capability
  • Management of low renewable energy supply in the face of reduced thermal power production
  • Possible applications of vehicle-to-grid and vehicle-to-home systems
  • Technical standards for decarbonizing grids
  • Demand-side policies and technologies, especially for buildings
  • High-voltage transmission (e.g., high-voltage, direct current and ultrahigh-voltage, direct current)

Managing the Need for Molecules

  • Discuss policies to incentivize investment in decarbonized molecules.
  • Enhance methane leakage detection and response systems, possibly including collaboration under the International Methane Emissions Observatory.
  • Focus on the future of hydrogen, technologies, standards, and trade.
  • Collaborate on biogas and liquid biofuels, standards, and research and development in next biofuel generation.

Notes

[1] US-EU Summit Statement, “Toward a Renewed Transatlantic Partnership,” The White House Briefing Room, June 15, 2021, https://www.energypolicy.columbia.edu/sites/default/files/file-uploads/G....

[2] See, for example, International Energy Agency’s report “Net Zero by 2050: A Roadmap for the Global Energy Sector,” May 2021, https://www.iea.org/reports/net-zero-by-2050.

[3] For more on the International Methane Emissions Observatory, see https://www.unep.org/explore-topics/energy/what-we-do/methane.

[4] The Three Seas Initiative has focused on dialogue relating to supplies of conventional energy, especially natural gas, for the countries located between the Black Sea, the Mediterranean Sea, and the Gulf of Finland. For more information, see https://3seas.eu/.