Making the US the World’s Arsenal of Clean Energy

With Russia’s invasion of Ukraine, democracies of the world got another reminder—as if we needed one—of how dangerous it is to rely on energy imported from aggressive, authoritarian states. Today it is Russia that threatens our security and economy, and that of Europe. It was Iran only five years ago. It could be China next month.

For Europe’s energy switch to succeed, and to help nations throughout the world preserve their own independence from authoritarian resource states, the United States must step in and become the Arsenal of Clean Energy, just as we were the Arsenal of Democracy when fascism threatened Europe 80 years ago. That means we should finance and export clean energy to Europe. This would help protect our own security and economic interests, as well as the sovereignty, democracies, and economies of Europe. Our goals should be to make European energy secure and help shift European countries to cleaner energy by:

• Helping to offset Europe’s reliance on Russian fossil fuel in the immediate term;
• Accelerating Europe’s shift to clean energy, which is already underway, with the aid of American technologies, know-how, and financing; and
• Offsetting some of the cost of the ban on Russian oil with a new Temporary Ukrainian Freedom Fee on top earners.

As the International Energy Agency (IEA) lays out in recent analysis, it is ambitious but possible to eliminate Russian gas from Europe, but the EU must start today. The US can and must help do this in a way that creates a massive clean energy market that spurs supply chains and jobs in the US and minimizes the impact on US consumers or inflation. We should not view this as a cost to the US, but an investment in our own security and prosperity. This is what made the United States the strongest country and leader of an alliance of global democracies in the twilight struggle against authoritarian communism. This is the model we should borrow from today to counter authoritarian aggression by resource states, whether in Ukraine today or other parts of Europe and the world in the future.

Putin’s Price Hike

Oil and gas prices are rising because Russia has long used fossil fuels as an economic weapon to try to manipulate the West. As President Biden has said this is “Putin’s price hike.”  That’s why there is bipartisan support from Congress and the Administration to ban Russian oil and gas imports, with Republicans and Democrats recognizing that this will bring a short-term cost in the form of higher gas prices. As Americans are watching Ukrainian families flee for their lives, they are beginning to understand this is an absolutely crucial step to protect democracy and stand up to an authoritarian bully. 

The Biden Administration and Congress are acting to addressing this crisis now to and protect American energy security and independence in the long term. President Biden approved more permits for oil and gas drilling on public lands in his first year in office than President Trump did during his. Monthly US oil production has grown roughly 20% since Biden’s first full month in office. The number of oil rigs in operation in the US has grown 67% in the past year alone.

Gas prices were already sky high when Russia invaded because, in part, of the oil and gas sector. Demand and production spiked under the Obama administration as the economy took off, but the pandemic brought that to a screeching halt. Oil is a boom-and-bust business, so when the COVID bust arrived, companies stopped pumping oil. Now that the recovery has arrived, demand has driven up prices faster than production could rise to meet it. In fact, there are more than 9,000 unused permits for oil and gas production on federal land that oil and gas companies could be drilling on right now, but they have chosen not to. They should step up and act on these leases for the American public and our security.

Offsetting Russian Fossil Fuels in Europe

The European Union is dependent on Russia for almost half of its natural gas and a quarter of its oil. Germany alone imports 55% of the gas it consumes from Putin’s petro-state. As part of its invasion strategy, Russia thought it could use its natural gas and oil to blackmail Europe into passivity. Europe is belatedly beginning to shut off the Russian spigot, but it will pay a heavy economic price for the delay. To help make Europe energy secure, we must avoid both conventional and magical thinking. This is not about sending cheap Chinese equipment to Europe, or somehow shifting completely to solar power in cloudy regions of Central and Eastern Europe. In Europe, it’s still natural gas and oil that drives the economy. The EU relies on gas to heat buildings, generate electricity, and provide industrial power and heat in about equal measure and the continent’s transportation sector runs primarily on petroleum-based fuel.

The US should start an energy version of the supply lines it ran to Berlin during the Soviet Union’s blockade in 1948. Just as the effort in `48 was a short-term solution to Soviet aggression, this would be a temporary energy “lifeline” to help wean Europe off Russian gas and oil. Under President Biden, the US is on track to have the largest LNG export capacity in the world. This includes approval in October 2021 for expanded production at the Sabine Pass and Corpus Christi terminals, and completion of the Golden Pass LNG export facility by the end of 2022. Over the last year, domestic oil production has already rebounded by 1.6 million barrels per day and there are 9,000 oil leases available for production. As Rep. Elisa Slotkin outlined in her American Energy Act for Europe, the US Department of Energy should oversee actions. These should include:

• Near-term increase in US gas and oil production to help offset the reduction in Russian supplies and refusal of OPEC to temporarily increase oil production;
• Coordinate, with the EU, temporary increases in oil and natural gas supplies from other countries where the US cannot make up for the loss of Russian fossil fuels to Europe;
• Staying on track to permit Liquified Natural Gas export facilities and LNG production;
• Financing, grant, and technical assistance for European countries that consume US fossil fuels to reduce their reliance by switching to other, lower-carbon fuels, heat pumps, and increased energy efficiency, to be provided by American companies wherever feasible.

The United States and Europe also have relied for far too long on Russia for enriched uranium to power our domestic nuclear fleet, which generates 20% of America’s electricity. The US is moving forward with the next generation of advanced nuclear reactors, which many countries in Eastern Europe are also interested in deploying to replace coal or natural gas for electricity generation and industrial processes. Many of the next generation nuclear plants will require a new form of enriched uranium - called High-Assay, Low-Enriched Uranium (HALEU). Russia is currently the only country to produce HALEU. There is no way we should or can rely on Russia to provide this material. As we outlined in 2021, the US needs to create a domestic supply of this critical resource for American advanced nuclear power plants under development today and to become a supplier to our allies as well. Congress should appropriate the roughly $2 billion that the Department of Energy will need over the coming years to produce HALEU for America’s future reactors domestically, provide a secure supply to our European allies, and finally loosen Russia’s chokehold on nuclear energy.

Accelerate Europe’s Shift to Clean Energy

Neither Europe nor the US can run on unmitigated natural gas for one day longer than is absolutely necessary. The natural gas that stays online to help produce hydrogen or chemicals, must have carbon capture to limit its climate impact. The rest must be replaced by resources that can meet Europe’s need for heat and power.

To ensure there’s something clean at the other end of the energy bridge, the United States should create an American Clean Energy Sovereignty Fund. This would provide $10 billion per year for the next decade ($100 billion total over 10 years) to finance the export of US clean energy technologies and services to be deployed across Europe. This should include anything -- heat pumps, industrial efficiency upgrades, hydrogen electrolyzers, nuclear power plants, and carbon capture and removal technology – that an EU member state wants to deploy that will increase its energy sovereignty and security and reduce emissions.

The new technologies should be supported by both US and European supply chains and workers to ensure economic growth across both continents. This government-backed entity would provide a significant cost-share or low or no-cost financing for countries importing US clean energy, particularly technologies that will be primarily made and exported in the US. As we are seeing now with Germany’s reconsideration of its decision to close its nuclear plants, even renewable-heavy countries need firm clean energy provided by technologies like nuclear power. This is even more important in industrial areas of Eastern Europe that need both the steady electricity and high heat that nuclear, or hydrogen, can provide.

To underscore the urgency of this mission, the Biden Administration should create a new, senior position at the National Security Council to manage clean, firm energy and coordinate the alphabet soup of agencies involved in technology development, manufacturing, export financing, market analysis, etc. This position would oversee a new “American Energy Team” of public and private sector experts who can cut through the bureaucracy.

Ban Russian Oil and Gas, and Pay for it with a Temporary Ukrainian Freedom Fee (TUFF)

The Biden Administration and bipartisan voices in Congress are right to support a ban on Russian oil and gas. The US has much more extensive oil and gas resources than Europe. Yet, we imported more than 236 million barrels of crude oil and petroleum products from Russia in 2021. This is about 8% of US oil consumption. While not necessary for the US economy, Russian oil is currently imported to balance different refining and production needs. The cost of financing Russia’s war in Ukraine and threat to American, European, and global security, far outweigh the benefits.

Oil prices are already at record highs due to the global recovery from the pandemic, concerns about the impact of Russia’s invasion of Ukraine, and OPEC’s unwillingness to increase oil production. While increases US energy prices would be marginal, the impact of a ban on Russian oil imports can’t be ignored or dismissed. Inflation is already putting too high a burden on American families. To offset this, the US should impose a temporary 1% surcharge on high-income earners (over $400,000 annually) to help make up for higher costs caused by oil prices going above $75 per barrel. The US Treasury Department would oversee imposition of the fee and would eliminate it when the price of oil dropped below $75 for three months. This Temporary Ukrainian Freedom Fee would raise $32 billion annually. The Treasury should give this revenue – which would be $300 per year to working families making under $150,000 annually to use to offset higher gas prices.

Conclusion

All of this, of course, begs the question of whether America can become the Arsenal of Clean Energy, given today’s bitterly divided politics. Clean, firm energy, or energy that is always on, remains one of the few areas where there is deep, bipartisan support in Congress. And now that Republicans have embraced defending the sovereignty of Europe against the immediate threat from authoritarian Russia, the moment should be met with urgency.

The invasion of Ukraine is not an aberration. It is the start of a frightening new era that requires bold American and global democratic leadership and a long-overdue recognition that energy and security are inextricably linked. Russia and China have acted on this reality to push their authoritarian, expansionist agenda for more than a decade. It is time we build on the legacy of US leadership in World War II and the Cold War and meet this moment. If we become the Arsenal of Clean Energy, we can support democracy, address the climate crisis, and create new economic opportunities across America.