Opening proceedings at this two-day international conference was the observation that 2014 marked a definitive return to the limelight for geopolitics. The transition towards a more unstable era and the ability of the international, institutional and business communities to cope with it served as the central focus for a debate that also sought to map the new geographic and sector-specific risks at play.
Kick-starting the debate at this third workshop of the Aspen Energy Forum was the observation that low oil prices and the consequent volatility are causing instability in energy markets, with the situation unlikely to change at least for a while.
The panel discussion for the launch of Aspenia 67 focused on the – if not insurmountable, then certainly worrying – energy gap that has arisen between the United States and Europe. On one side is the United States, which has almost achieved energy self-sufficiency thanks to its growing production of shale gas, and on the other is Europe, a sluggish continent which lacks coordinated infrastructure and a common regulatory framework, and which is exposed to serious geopolitical risks to the East (Russia and Ukraine) as well as to the South (the Maghreb and the countries of North Africa).
The ongoing efforts to build a well functioning Energy Union in Europe should be seen in the context of major global changes related in various ways to the energy sector – possibly a whole new phase of globalization, featuring new actors, new forms of balance of power, new conflicts (actual or potential).
With issue 64 of the Institute’s Aspenia journal dedicated to Brazil, the panel discussion for the launch of the volume focused on examining recent developments in a country that has come through several consecutive years of internal political stability, during which the foundations were laid for its sustainable economic growth and greater international influence.
Discussions at this National Interest event were kicked off with the observation that Italy needs a more systemic and cross-cutting culture of sustainability and efficiency: the former in order to build a green society, and the latter to achieve improved energy efficiency and a more prudent use of natural resources. To that end, it was deemed essential that a strategic plan be devised which takes the Italian public duly into account, with efforts made to raise wider awareness particularly with respect to energy costs.
Kick-starting talks at this session of the Aspen Mediterranean Initiative was the observation that the arduous and variegated evolution of the Mediterranean region needs to be viewed within the prevailing global context.
Given the unique role played by the energy sector in the global economy, the current recession makes it imperative to take stock of the major trends unfolding in the industry. Before the crisis, the sector seemed on the verge of a major restructuring, due to the combined impact of new sources of natural gas and mounting environmental concerns. The effects of the intervening global downturn, though yet to be fully gauged, are in any event set to be asymmetrical.
The Mediterranean region is very diverse and simultaneously presents elements of close interdependence: the economic crisis of the past few years has shown that each country reacts to the challenges and opportunities on the basis of specific institutional and social features, even in the presence of important contagion effects. The political transitions in some Arab countries, starting with Tunisia and Egypt, confirm these twin tendencies whereby endogenous and local factors interact with regional and international ones.
During this roundtable session, a number of factors were identified as contributing to the volatility in energy, agricultural commodity and food prices, including: the significant increase in demand from the major emerging countries, speculation in derivatives markets (and, more generally, the growing importance of the financial – as opposed to the real – economy), the management of energy production by many governments according to political criteria, and the increasing correlation between the (historically high) volatility of oil prices and that of other commodity prices.
The Aspen Mediterranean Initiative participants concurred that the Mediterranean area is becoming even more diverse than it has been in the past, a fact which calls for special attention to be paid to the situation unfolding in various locales in the region, especially at a time of uncertain political transition in which social forces have a potentially crucial role to play.
The panelists at the presentation of the latest issue of Aspenia emphasized that the search for a better energy mix should start with the premise that there is no magic formula. The most prudent choices – whether political or business – must be forward-looking, that is, not merely focused on short-term needs. It was conceded, however, that no energy mix can fully meet all the criteria for an ideal blend, including: security of supply, market competitiveness, and low environmental impact.
It was remarked during this AJF Breakfast meeting that the Mediterranean has been an area of ongoing interest throughout the history of Aspen Institute Italia, particularly during the 1990s, with specially-themed conferences dealing with the subject, and over the last decade, with a focus on the impact of the socio-political prospects of the region on access to energy resources. Acknowledged as a place of encounter and of conflict for thousands of years, the participants also noted its role as a trading space, a “liquid plain” hemmed in by numerous borders, to use Braudel’s description.
The key objective to emerge from the discussions at this National Conference was that of transforming a constraint into an opportunity. The green economy must be made the cornerstone of a new, more sustainable and enduring development model. It was observed that, in recent years, particularly in the wake of the protracted effects of the worst economic and financial crisis in recent history, the world has begun to stop treating the “environmental factor” as a possible limitation on freedom of enterprise, but rather to see it from a more comprehensive perspective.
Three major issues stand out in the list of challenges currently facing the Western world: (1) medium-term trends in the global economy, with special focus on new sources of growth, rebalancing and decoupling; (2) the European debt crisis, its outlook and possible solutions; and (3) green energy as a growth driver.
The theme of the Ninth Annual Conference of the Aspen Junior Fellows, held in Milan on May 7-8, was “Reconciling the environment and development. New ideas from the Y generation to beat weak economic growth”. The Conference proceedings were divided into three sessions which focused on: the ecological deficit and measures to establish cross-generational solidarity on environmental values; Italy’s energy strategies viewed from an international comparative perspective; and the environment and food security in a more crowded, hotter, and “flatter” world.
The roundtable participants began their examination of the mobility issues affecting Italy today with the observation that, last year alone, Italian households spent on average more than 35 billion euro on getting from one place to another. Also in 2009, the cost of congestion in metropolitan areas was around 9 billion euro. Just in Rome, for example, fuel consumption totaled between 12-15 million euro in the same year – to which must be added the costs generated by rising pollution in cities and areas beyond city limits, as well as by road traffic accidents.
Given the current uncertainty over the global economy’s recovery, interest in the prospects of the South American continent, which seems finally able to express its true potential, has increased. All too often the expectations over the EU / Latin American accords have been set too high. Today, the increase in commercial and financial exchange are guided by a bottom-up logic; promising forms of interdependence are emerging in a pragmatic way and are producing concrete benefits.
The comeback being staged by atomic energy is currently a hot topic of debate in many countries around the world, just as it is in Italy. During this roundtable discussion devoted to the issue, official figures were cited confirming the ferment of activity in this sector, with 65 new nuclear power plants under construction in 16 different countries. According to some of the participants in attendance, there are many technical, economic and geopolitical factors which justify the nuclear option for Italy, whilst others went further, describing it as an almost “inevitable” choice.
The global economic crisis is reshaping the energy system in a fundamental way, as extraordinary events have occurred in a very short time span. Six issues appear the most crucial in the current context: i) the discovery of shale gas, a transformational event which was also a consequence of high natural gas prices. According to a recent account, this discovery could potentially turn the US into a permanent net exporter, with dramatic implications on the market for liquefied natural gas (LNG) which now seeks markets when global demand is contracting.
