In a shifting global landscape, the United States is leveraging its energy resources to strengthen ties with international allies. By intertwining defense promises and trade access, the US is encouraging Europe and Asia to increase long-term fossil fuel imports from America.
The European Union (EU) plans to import a staggering A$1.15 trillion in US energy, mainly liquefied natural gas (LNG), by 2028. This would significantly raise its current energy imports, although some doubt its feasibility.
Indonesia has committed to a $24 billion deal for US energy imports, while Japan is considering a similar path. These arrangements highlight the US’s strategic use of trade to maintain fossil fuel dominance amidst growing clean technology competition, especially against China.
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Historically an energy importer, the US has transformed into a leading exporter due to the fracking boom, surpassing Qatar and Australia in LNG exports by 2023. The US administration’s push for increased fossil fuel purchases by allies is a calculated move to maintain economic and geopolitical influence.
Preserving Business
With the US producing 22% of the world’s oil and 25% of its gas, the administration aims to stabilize the fossil fuel market as it faces potential decline by 2030. Long-term contracts are seen as a way to ensure continued profitability.
Maintaining Dominance
US energy strategy relies on controlling global energy flows and maintaining the dollar’s role in oil trade settlements. The shift towards renewables threatens this dominance, so the US is encouraging allies to remain tied to its gas exports.
Kneecapping China
China’s control over a significant portion of clean technology manufacturing poses a challenge to US interests. By promoting fossil fuels, the US aims to delay the global energy transition and limit China’s influence.
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Economic and Environmental Implications
Allies entering these agreements may face economic disadvantages. Despite being a major electricity source, LNG is costlier than solar and wind, which have been the most economical power sources for nearly a decade. The declining costs of batteries further enhance the competitiveness of renewables.
Energy security is another concern. Dependence on foreign fuel suppliers can compromise national sovereignty. Countries like Nepal are turning to electric vehicles to reduce reliance on unreliable fossil fuel sources.
Environmental considerations are crucial. New fossil fuel projects have long-term implications for climate change, as they lock in emissions for decades. Investment in such infrastructure diverts funds away from clean technology initiatives.
Australia, as both a competitor in LNG exports and a nation vulnerable to climate impacts, faces a complex decision. With climate-related disaster costs projected to rise significantly, aligning with the US’s fossil fuel-focused policies could compromise its economic and climate security.
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Weighing Options for the Future
US policies aim to preserve fossil fuel profits, slow the clean energy shift, and curb Chinese influence, often at the expense of allies and environmental goals. However, nations can choose an alternative path.
Asian and Australian policymakers can prioritize green transitions, fostering economic growth and energy independence. With abundant resources and industrial capabilities, the region has the potential to lead in renewable technology and infrastructure.
By investing in renewables and cross-border electricity trade, these nations can enhance energy security, reduce costs, and play a pivotal role in the industrial transformations of the future.
Original Story at theconversation.com