As motorists make plans for the summer driving season, U.S. gasoline prices are near record highs. Yet some relief may be in sight: Falling oil prices mean pump prices should dip below $4 per gallon in the coming weeks—though the looming risk of further disruptions to Russian oil supply means the relief risks proving short lived.
A key reason for the lower oil prices was the Biden administration’s recent announcement of the largest release of oil in U.S. history from the nation’s strategic stockpiles, followed by a smaller, but still sizable, release from European countries. In explaining this move, U.S. President Joe Biden acknowledged a difficult truth: More fossil fuels are required at this time to meet the world’s current energy needs. But Biden also acknowledged another difficult truth: The world needs to move much more quickly toward a clean energy future.
This energy two-step is the only way the world can successfully navigate both the current crisis with Russia and ensure a cleaner energy future. Achieving both of these objectives will take forming a coalition that bridges the current divides in the energy debate as well as brings together climate scientists, environmentalists, national security hawks, and the oil and gas industry in support of meeting energy needs today but sharply reducing demand for fossil fuels tomorrow.
While talk of any bipartisan coalition may seem pollyannish, there is a precedent for such a coalition. In 2004, in the wake of the Sept. 11, 2001, terrorist attacks and the U.S. invasion of Iraq, conservative national security hawks reached out to environmental activists to urge Congress to cut oil use in half by 2025 because oil imports were both a national security and environmental risk. Nearly 20 years later, this coalition—which lost its glue due to the U.S. fracking boom—is hardly remembered, and U.S. oil demand remains unchanged.
Yet the opportunity to revive a coalition exists in the aftermath of the Russian invasion of Ukraine—again, based on national security grounds. On the one hand, the invasion has exposed how the imperative of meeting immediate energy needs has limited the tools available to pressure Russian President Vladimir Putin fully. As German Chancellor Olaf Scholz put it, an embargo on Russian oil “would mean plunging our country and the whole of Europe into a recession”. Germany’s ambassador to the United States just argued the same on Twitter. On the other hand, the crisis has also revealed how a collective failure to reduce dependence on fossil fuels has left the world vulnerable to geopolitical blackmail.
Just six weeks after the invasion of Ukraine, two points seem obvious: The United States must better overcome challenges to immediate energy security needs and, at the same time, remake the future to be a green one.
Both imperatives face opposition. Many environmentalists and Democrats in Congress are dead set against increased investments of any sort into fossil fuel production or infrastructure. At the same time, many in the fossil fuel industry, along with most Republicans in Congress, have resisted approving spending and other measures necessary to expedite the energy transition. On its face, this stalemate presents little room for compromise.
Now is the time for leaders on both sides of the energy and climate spectrum to take a step back from their entrenched positions to explore what the country really needs: a grand bargain that meets today’s energy needs but ensures more ambitious climate action in the future. This consensus would require all sides to accept actions they regard as anathema but to ultimately foster an outcome that is preferable to a host of far worse alternatives.
Specifically, the climate community would do well to acknowledge the need for some near-term investments in today’s energy system to ensure affordable, secure, and reliable energy supplies in the face of Russia’s aggression. A failure to make such investments now will itself constitute a threat to the energy transition; as difficult as the politics of climate change have been, they will be infinitely pricklier in a world where the most vulnerable consumers feel overburdened by the cost of energy.
From France’s infamous “yellow vest” protests to more recent trucker protests in Ireland over high fuel prices, it is increasingly clear that if people are struggling to pay bills to heat their homes or drive their cars, the political imperative will be to immediately bring down energy costs. Support for more ambitious—and potentially costly—climate policies will then wane.
Indeed, in response to eye-popping energy bills across Europe today, governments are slashing fuel taxes and subsidizing energy costs—precisely the opposite of what they should be doing to encourage conservation and a shift to alternative sources of energy. High market-based energy prices themselves may do that, but they are much more painful than government policies like fuel taxes, which also generate government revenue that can be used to cushion the impact, particularly for low-income households.
Some permitting and development of oil and gas infrastructure will be necessary to bolster supply in the near to medium term, such as on existing leases. There is also still a need for financial institutions to invest in some hydrocarbon projects during a transition that will not happen overnight, as BlackRock CEO Larry Fink recently wrote.
As the most recent Intergovernmental Panel on Climate Change report makes clear, letting existing and new fossil fuel infrastructure operate to the end of their normal economic lives is incompatible with limiting warming to 1.5 degrees Celsius. Some infrastructure built today may thus need to be considered “transition assets” and be retired earlier than the normal time period that investors would earn their expected return in if the world achieves its climate goals. Some natural gas infrastructure will also displace coal, which will otherwise be how some shortfalls of Russian gas are offset, as China is already doing by ramping up coal output to make up for liquified natural gas (LNG) supplies being diverted to Europe.
Shale oil and gas are actually well suited to the transition because their production declines very steeply when absent continued investment. As a result, shale production can be more quickly phased down as clean energy causes oil and gas use to fall. The investments that are needed include not only those that support supply in the United States but also expand LNG shipments to Europe if that continent is to meet its energy needs securely without reverting to coal.
On the other side of the grand bargain, the oil and gas industry needs to get on board with the energy transition more fully and acknowledge that reliance on such fuels over the medium and long term poses hazards to the United States’ environment, economy, and national security. Doing so offers an opportunity for industry to acknowledge the inevitable course toward a clean energy future, especially as the growing urgency to address climate change and dramatic cost declines in clean energy will now combine with the national security imperative to reduce oil and gas use made evident by the Ukraine crisis.
Measures to boost oil and gas production in the short term should be met not only with stringent requirements for high environmental standards, such as eliminating methane leaks and flaring, but also with binding commitments by companies to immediately support stronger measures that will reduce oil and gas use over the longer term.
Strong policy signals, backed by a wider consensus, including industry, and judicious government permitting will help ensure that any additional investments in hydrocarbon infrastructure do not exceed what is needed to meet energy needs while also accelerating a transition.
This will require more than paying lip service to bills with little chance of passing; in exchange for an easier time supplying energy today, it will require oil and gas companies to support a broader variety of measures to reduce hydrocarbon use in the future, such as the clean energy components of Biden’s Build Back Better legislation.
The long-term climate benefits of such measures would vastly exceed the emissions associated with the additional infrastructure and production needed to keep the lights and heat on today. Moreover, companies should disclose their lobbying on climate to ensure their private efforts on Capitol Hill are aligned with their public statements.
The energy transition will be as complex and geopolitically fraught as it is necessary. Smoothing its jagged path requires more societal consensus. The Russian invasion of Ukraine, for all its tragedy, offers an opportunity to forge such a consensus—not by lurching to the left or to the right but by bringing together a motley coalition to collectively seize the future without forsaking the present.
Jason Bordoff is a columnist at Foreign Policy, the co-founding dean of the Columbia Climate School, the founding director of the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs, a professor of professional practice in international and public affairs, and a former senior director on the staff of the U.S. National Security Council and special assistant to former U.S. President Barack Obama. Meghan L. O’Sullivan is the Jeane Kirkpatrick professor of the Practice of International Affairs at the Harvard Kennedy School and author of Windfall: How the New Energy Abundance Upends Global Politics and Strengthens America’s Power. She served as special assistant to the president and deputy national security advisor for Iraq and Afghanistan during the George W. Bush administration.