Colder weather is settling in around much of the globe and after a year and a half of managing a global pandemic, energy markets are more complicated than ever.  The U.S. petroleum inventory is at its lowest level since 2015, the UK is experiencing a severe energy crisis, Russia continues to push Germany on the Nordstream II pipeline and winter has already come to China, which has experienced weeks of rolling blackouts. What does all of this mean as both state and non-state cyber actors continue to take aim at energy infrastructure?

The Cipher Brief spoke with energy expert Norm Roule, a top adviser on energy issues, to get a sense of where we’re headed.

Norman T. Roule served for 34-years in the Central Intelligence Agency, managing numerous programs relating to Iran and the Middle East.  He served as the National Intelligence Manager for Iran (NIM-I) at the Office of the Director of National Intelligence from November 2008 until September 2017.  As NIM-I, he was the principal Intelligence Community (IC) official responsible for overseeing all aspects of national intelligence policy and activities related to Iran, to include IC engagement on Iran issues with senior policy makers in the National Security Council and the Department of State.

The Cipher Brief: Give us a brief snapshot of the global energy market today and what you think we will see in the coming months.

Roule: The energy market is working through what will hopefully be the final phase of a perfect storm of market distortions ignited by the pandemic and influenced by shifts in capital markets and climate change initiatives. I say the final phase because most countries are returning to growth and pre-pandemic energy consumption. Most of the drivers of this final phase will likely push prices upward in the near term. A few involve long-known issues that are now coming into play. A few remain unpredictable. Ancillary industries that rely on oil, gas, or distillates as significant feedstocks will either raise prices or shift production to areas with less exposure to hydrocarbons. In short, in the coming weeks, consumers should expend to not only pay more at the gas pump but at the supermarket and mall.  We are likely to see relief in the Spring as the pandemic and supply chain distortions wane, seasonal demands on oil and gas pass, and energy producers ramp up operations to exploit high prices. China’s economy also shows signs of slowing, and financial packages meant to jump-start global economies will run their course.

The Cipher Brief: Energy markets seem more complicated than ever. What are the primary variables at play?

Roule: Global oil consumption is now back to 100 million barrels per day, a statistic last seen when the pandemic hit. Production is up, but the most crucial trend in recent months has been the deep draw on the glut of oil stocks during the pandemic. Producers – especially OPEC – have constrained production to reflect their cautious approach to market stability and their desire to reduce the stockpiles accumulated during the pandemic. As a result, stocks are now lower than before the pandemic. If you exclude the strategic petroleum reserve, the U.S. petroleum inventory is at a level not seen since 2014-2015. Stockpiles at Cushing are at a similar level. U.S. gasoline stocks are around five million barrels below pre-pandemic seasonal averages.

U.S. producers have consolidated, and the industry prioritizes return on equity over expansion, particularly in a political environment that is increasingly hostile to hydrocarbon production. As a result, U.S. oil production is still about 1.7 million barrels a day below pre-pandemic levels. Add to this the push to reduce carbon emissions, gas supply cuts, and some supply chain distortions, and you get a surge in gas prices and a need for oil (and coal) to replace gas in electricity production, as we see in China.

The Cipher Brief: The administration seems to be blaming OPEC plus for high oil prices. What’s happening within the cartel?  How does the cartel see the current energy market?

Roule: OPEC’s role in oil markets remains deeply significant. The cartel produces 40 percent of the world’s oil, but 60 percent of the world’s total traded exports. That inevitably gives it an important voice. It is also clear that OPEC+ leaders remain confident in their strategy to maintain market stability and benefit from prices that are not so high that they ignite demand destruction. OPEC discipline during this turbulent period has been quite good, especially given that it is far from a monolith of views and capabilities. For example, the UAE would likely support additional production. Moscow makes positive noises about its willingness to increase production, but it follows Riyadh’s lead for the revenue and political advantage it derives from the current market.  

Riyadh remains the architect of OPEC’s approach. Kuwait and Baghdad seem comfortable with this strategy. Production restraint is made easier because about half of OPEC’s members reportedly are unable to meet production quotas due to technical problems, mismanagement, or a lack of capital investment. This list includes Angola, Gabon, Equatorial Guinea, Nigeria, Libya, and Venezuela.  

OPEC decision-making likely rests on a handful of variables, some predictable, others not. The cartel has done well in its assessments of global recovery and pandemic impact. But questions remain on aviation recovery. Likewise, even their best analysts have a tough time predicting the impact of speculators, weather trends, and the future of sanctions on Iran and Venezuela. Riyadh and Abu Dhabi will do what they can to avoid the financial and political consequences of inflation and any energy-instigated recession.

The strains in US-Saudi relations appear to have undermined Riyadh’s sympathy for Washington’s challenges. The Saudis are tired of being a political target within the U.S. They also seem to believe that while the U.S. touts itself as being interested in only renewable energy sources, it has no problem criticizing the Kingdom when high gas prices become a political issue. Last, we should recall that it was only in May 2020 that a group of Republican Senators publicly called on Saudi Arabia, demanding that it stabilize the energy market. From Riyadh’s perspective, it has done precisely that.

The Cipher Brief: Are the Gulf oil producers serious about renewable energy? 

Roule: Absolutely. Regional leaders certainly understand the consequences of climate change for their people. In recent years, the region has experienced some of the highest temperatures on record, causing concern that, if unchecked, the trend could make portions of the Middle East unlivable.

But their approach is different from ours and as we all know, Gulf economies rely heavily on revenues from hydrocarbons. To varying degrees, all the Gulf states are trying to diversify their economies. But they also want to avoid a situation in which they are stuck with stranded strategic assets. In the West, our climate narrative tends to focus on ending the use of hydrocarbons. As with Norway, Gulf producers claim that they will use the resources from their oil revenues to fund the transition to a new energy economy.

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Their focus tends to be a balance between a reduction of emissions and reduction of hydrocarbon use. Recent weeks have seen multiple significant events in the Gulf in which they tried to highlight their decision to expend resources and political bandwidth on green technologies, hydrogen production, and carbon capture solutions. We will also see increasing efforts to plant trees and to rely on natural gas instead of oil for power generation. They also claim they will try to end gas flaring and reduce methane emissions. I don’t think these efforts will satisfy Western environmental activists who demand an end to oil use, but the trend is undeniable.

The Cipher Brief: What is happening with U.S. oil and gas producers?  How are they responding to changing conditions?

Roule: Much has changed in the last two years. First, the sector underwent significant consolidation. The larger publicly-held companies must satisfy investors and financial institutions with a steady return on equity over the growth. Washington has cooled on its support for the industry. The decision to kill the Keystone Pipeline and limit drilling on federal property has contributed to industry reluctance on expansion. Last, some investors are pushing for companies to devote more attention to renewable energy sources.  During the pandemic, this reduced capital investment to about half of average expenditure, thus producing our current limited production capacity. U.S. rig count has significantly improved over the past year, but not on a scale that would return U.S. production to pre-pandemic levels. In the near term, smaller privately-held firms are likely to spend the resources to expand production with public firms following once they get a sense of what 2022 will bring.

The results speak for themselves. At the beginning of the pandemic, the U.S. produced around 12.8 million barrels of oil per day (BPD). By May 2020, production declined to 9.7 million BPD, and with recovery is now approximately 11.3 million BPD.  We are once again a net importer, bringing in about 1.3 million BPD in October.

We have seen a broader recovery in gas production, particularly in Texas. But a lack of production, low stockpiles, and unprecedented demand from abroad means consumers will face high bills if winter is severe or the risk of short supplies. Beyond heating, gas-fired power plants produce more than 50% of New England’s electricity, for example, so that any price spike will play out elsewhere in the economy.

The Cipher Brief: Is there a policy response to this situation?

Roule: I think policymakers globally are praying for a mild winter. But beyond this, policy options are few in the near term. A release from the strategic petroleum reserve (SPR) is conceivable. Still, we should remember the SPR was established for national emergencies and not a piggy bank to manage gas prices in an election year. Domestic producers will take a while to ramp up production, but policymakers will find this tough to seek in the current political environment. The administration could ban oil and gas exports or allow Congress to pass legislation enabling the federal government to sue OPEC for its cartel activities. Either step would invite predictable and unwelcome diplomatic consequences. 

Although the American public demands cheap energy, it isn’t enthusiastic about supporting the infrastructure needed to achieve this, even if the power is produced elsewhere.  Let me cite a couple of recent examples:

• Maine voters just rejected the construction of a billion-dollar electric line that would have delivered Canadian hydro-power electricity to New England.

• The administration is wrestling with a decision as to whether it should shut a pipeline that carries crude oil from Canada to refineries across Wisconsin, Michigan, and the Great Lakes region. 

If the administration hopes to convince OPEC members to increase production, it will improve relations with Gulf Arabs. It might be possible to convince Saudi Arabia, Kuwait, and the UAE to lift production to cover the exports of OPEC members unable to meet their production quotas. In an extreme situation, the administration might consider a temporary oil export waiver to Iran as a sign of goodwill. I think the political blowback on the latter rules it out, but the possibility is there. 

The Cipher Brief: The United Kingdom seems to be working its way through a severe energy crisis. How did this happen, and what are its policymakers doing in response?

Roule: The United Kingdom’s energy challenge is significant. As with other countries, it faces consequences of production limitation and the need to turn to more climate-friendly energy sources.

A few basics.  Gas produces about 40% of the country’s electricity and heats many of its homes. Once London could rely on the North Sea for its gas; it now imports about half of its gas requirements.  Norway is its primary gas source, but it also depends on gas producers in the U.S., Russia, Qatar, Belgium, and the Netherlands. To add to its woes, the U.K.’s storage capacity would survive only a short period of peak consumption. In 2017, London closed a massive Rough, which accounted for 70% of the country’s entire gas storage system. At the time, London believed it could rely on the global LNG market for reliable and cheap gas. Unfortunately, most LNG tankers head to Asia, a trend that can only increase as power-hungry Asian countries wean themselves from coal and oil.

The exploitation of new energy sources in the U.K. is no less contentious than in the U.S. A good illustration of this would be the tussle over the development of the Cambo oil and gas field in the waters near Scotland. Opposed by environmentalists who cite the inevitable carbon emissions the project and its oil would produce, the project offers to ease London’s energy woes and provide around a thousand jobs. The Johnson government has yet to indicate whether it will approve the project.

London’s options are few and leaving the country reliant on market conditions means risking shortages. For this reason, it has reportedly asked Qatar to agree to become the “supplier of last resort” in case global suppliers are unavailable. 

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The Cipher Brief: What’s the Russian angle to the energy story?

Roule: Upfront, I think we should worry whether Russia will perceive the energy crisis as offering an opportunity for aggression. What if Moscow decides its gas hold over Europe allows it to invade Ukraine without penalty? Or as a means of pushing German regulators to accelerate their approval of the Nordstream II pipeline?

Moscow insists that it is meeting contractual obligations and that its exports have increased in the past year. At the same time, there are routine reports that Russia’s gas supplies to Europe have not only not met requirements, but that gas flow reversed in the Yamal-Europe pipeline. Russia also maintains eight gas storage sites in Europe to help manage supply during high-demand periods. Gas levels at these sites are currently low. Critics claim Gazprom diverted production to Russian domestic storage and that exports in October fell to the lowest level since 2014. When pressed, Moscow explains shortages saying that it must fill its winter supply stocks and expects to send Europe additional gas this week. 

But if the current energy dynamic seems to be in Russia’s interest, Moscow’s long-term prospects are dim. A global shift to renewable energy sources forces Moscow to reckon with the prospect of holding a massive oil infrastructure of little commercial value. If so, future historians may look at the recent Glasgow climate summit as a significant step in accelerating Russia’s decline, possibly a new era of aggression as it seeks to accumulate power ahead of this decline or a more competitive race for market share against OPEC members.

The Cipher Brief: What about China?

Roule: No major country has endured such energy problems in recent months as China. After weeks of rolling blackouts, China looks well on its way to solving its coal problems that partially contributed to this situation. That won’t delight environmentalists, but it should ease China’s electricity problems and ensure its citizens stay warm this winter. Winter arrived early, and Beijing is about to see its first snow of the season. China’s efforts will be put to the test in a winter that many expect to be colder than 2020.

Longer-term, China still must work through the causes of this crisis. If the global economy continues to surge demand for Chinese products, its energy requirements will grow. Weather problems cut wind production; floods shut mines. We shouldn’t be surprised if such problems continue. Inevitably, China can only meet its climate goals by shifting from coal to natural gas, raising prices for other consumers.

The Cipher Brief: Let’s shift to North Africa.  Algeria recently closed a long-established pipeline that transited Morocco to deliver gas to Spain.  Will this impact Europe’s already tight gas situation? What’s the story here? 

Roule: Over the past year, Algerian relations with Morocco have steadily deteriorated.  In addition to their traditional disagreement over the status of Western Sahara and the Polisario, Algiers criticized Morocco’s renewed ties with Israel and accused Rabat of supporting an opposition group that Algeria claims ignited forest fires. Algiers closed its airspace to Moroccan flights and accused Morocco of killing several Algerian citizens in the Sahara region.

Here’s how it touches the energy picture. On 31 October, Algiers closed an 800-mile pipeline that carried Algerian gas to Spain via Morocco and the Strait of Gibraltar.  The closure cost Morocco a portion of the gas it used from the pipeline. Morocco used this gas to produce about a tenth of its electricity. Rabat claims it can use other energy sources for this purpose. However, Spain has little gas and derives a significant portion of its electricity from that which it must import. Algiers claims it will make up the loss through a secondary pipeline, but the loss of gas will compound the energy problems of Spain and Europe in general.

The Cipher Brief: Any other issues on the horizon we should consider?

Roule: A growing number of aging refineries in the West will be closed in the coming years.  However, Asia is the new center for refinery construction. This expansion will draw even more crude to the region for processing with the inherent impact on local economies and global consumers.

The Cipher Brief: Last, let’s touch on wild cards. What are the grey swans that might impact markets in 2022?

Roule: With low stockpiles and supplies, the energy topography is ill-prepared to sudden shocks to its production or distribution architecture. Yet, it faces three threats that have grown in the last decade.

First, we have climate change issues.  Increasingly harsh weather events have shut down large portions of the production and refinery sectors in the United States and Mexico, sometimes taking weeks to restore normal production. Second, we have the universe of cyber threats.  State and non-state cyber actors routinely probe or attack every aspect of the energy industry. Last, we have new geopolitical pressures.  Tensions are rising with China as well as Iran and its proxies. Three of the world’s six most significant shipping channels are in the Middle East and a fourth in Asia.

Join us for a Members Only Brief with Norm Roule on Thursday, November 18 at 1:30p.  Cipher Brief Members receive invitations via email.

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At least two people were wounded by police gunfire in the Dutch city of Rotterdam after a protest over renewed Covid-19 restrictions spiraled into a violent riot, seeing demonstrators torch a squad car and clash with officers.

A large crowd of protesters showed up at Rotterdam’s iconic Coolsingel street on Friday evening to denounce a new round of pandemic measures, including an ongoing partial lockdown, a ban on New Year’s Eve fireworks displays, as well as fears the government will impose a ‘2G’ pass system allowing only the vaccinated and those who’ve recently recovered from the virus to enter a long list of public places.

At least two people were wounded during the demonstration, a local police spokesperson told Reuters, adding the injuries were “probably” due to officers’ “warning shots” but also noting that “direct shots were fired because the situation was life-threatening” to law enforcement.

Footage of the heated protest circulated online, some clips showing a police squad car fully engulfed in flames after it was apparently torched by rioters.

Demonstrators were also seen launching fireworks at police, who appeared to respond with large quantities of tear gas, which at one point blanketed the area.

Local law enforcement said that officers deployed a mobile riot control unit to Coolsingel and unleashed water cannon on protesters who refused to clear the streets, also noting that some arrests were made after an emergency order was imposed to cordon off the area.

The Dutch government announced the fireworks ban earlier on Friday, saying it is meant to “prevent, as much as possible, extra strain on healthcare, law enforcement and first responders.” However, while private displays are prohibited, officials said that local governments may still put on fireworks shows so long as their Covid-19 restrictions allow it.

The Netherlands currently has a ‘3G’ rule in place, allowing the vaccinated, the recently recovered, as well as those who test negative for the virus to enter most public spaces. But as the country remains under a partial three-week lockdown to rein in growing infections, officials are now mulling the stricter ‘2G’ scheme, prompting the intense demonstrations seen on Friday night.

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The EU’s drug regulator has backed the emergency use of Merck’s pill for the treatment for clinically vulnerable Covid-19 patients as cases surge across the continent.

On Friday, the European Medicines Agency (EMA) “issued advice” backing the emergency use of the drug developed by Merck in collaboration with Ridgeback Biotherapeutics, although it has not yet been authorized by national authorities.

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© Reuters / Piroschka van de Wouw
EMA green lights new Covid treatments

In a statement, the drug regulator said the medicine called Lagevrio – also known as molnupiravir or MK 4482 – “can be used to treat adults with Covid-19 who do not require supplemental oxygen and who are at increased risk of developing severe Covid-19.”

It said the treatment should be administered as soon as possible after Covid-19 is diagnosed and within five days of the start of symptoms. The medicine should be taken twice a day for a period of five days.

The EMA listed the potential side effects of the capsules, including mild or moderate diarrhea, nausea, dizziness and headache. The treatment is not recommended for pregnant women.

The watchdog announced earlier on Friday that it had begun reviewing Pfizer’s medicine Paxlovid for Covid-19 with the same goal “to support national authorities” who may decide on its early use prior to marketing authorization in light of rising cases and deaths in Europe.

On Friday, Austria announced it would enter a new nationwide lockdown from Monday and make vaccination mandatory, while Germany’s health authorities claimed the country had turned into “one big outbreak.”

Both Pfizer and Merck have requested approval for their coronavirus medicines from the US Food and Drug Administration, but it is unclear when it might be granted.

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Slovakia has become the latest European country to implement lockdown restrictions on people who haven’t had the Covid vaccine, as it seeks to prevent a resurgence in infections and hospital admissions over the winter.

Slovakian Prime Minister Eduard Heger announced the new measures in a press conference on Thursday, declaring a “lockdown for the unvaccinated” after the country reported a record number of new cases.

The new restrictions in Slovakia, which come into effect on Monday, will require people to have been vaccinated or have recovered from Covid in the past six months to enter restaurants, non-essential shops, or public events.

In the past few days, the European nation has seen record numbers of new infections, including over 8,000 on Tuesday, with hospitals running out of space to treat Covid patients.

Slovakia has one of the lowest rates of vaccination in the European Union, with over 50% of individuals still not jabbed. The country of around 5.5 million has so far only inoculated 2.5 million people against the virus.

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(FILE PHOTO) © REUTERS/David W Cerny
Czechia rolls out new restrictions for unvaccinated

Earlier this week, Austria became the first nation to impose restrictions on unvaccinated individuals, as it sought to limit pressure on hospitals and emergency care units. The move came into effect at midnight on Monday for anyone aged 12 and older who has not received their Covid vaccine or recently recovered from the virus.

The German state of Bavaria and the Czech Republic followed Austria in restricting access for unvaccinated individuals. Only people who can show proof of vaccination or that they have recently recovered from Covid will be allowed to enter public spaces, such as restaurants and shops. 

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Libyan military commander Khalifa Haftar is set to challenge Gaddafi’s son for the top job, announcing his presidential bid. The election will take place on December 24.

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Saif al-Islam al-Gaddafi at the registration centre in Sebha. ©Khaled Al-Zaidy / Handout via REUTERS
Gaddafi heir runs for Libyan presidency despite arrest warrant

“I declare my candidacy for the presidential election, not because I am chasing power but because I want to lead our people towards glory, progress and prosperity,” the de facto leader of Eastern Libya said in a televised speech.

Haftar added that the election is the only way out of the severe crisis the country has been plunged into.

The announcement was expected; in September, Haftar announced that he was temporarily stepping down as head of the force known as the Libyan National Army, fulfilling the requirement for presidential hopefuls to suspend public work three months before an election.

Haftar will run against the son of former leader Muammar Gaddafi, Saif al-Islam Gaddafi, who represents the Popular Front for the Liberation of Libya.

Haftar’s presidential bid is likely to anger many who consider him a war criminal responsible for the indiscriminate killing of civilians during his military campaign. A number of civil lawsuits have been filed against him in a US federal court for alleged war crimes. Haftar has both US and Libyan citizenship, and owns property in Virginia.

Following years of civil war and political chaos after the NATO-backed intervention that saw Muammar Gaddafi deposed and brutally murdered, the upcoming election is widely viewed as an opportunity for political settlement and the long-awaited unification of the country, divided now between Haftar’s forces and the Tripoli-based Government of National Accord. However, there is still no consensus on the legal grounds for the election, which could become an obstacle for the peace process.

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Australia’s Jewish community has condemned the repeated displays of Nazi references at anti-vaccine and anti-lockdown rallies in Victoria, some of which saw the state premier depicted as Adolf Hitler.

Daniel Aghion, the president of the Jewish Community Council of Victoria, claims that references to the genocidal regime of the Nazis amid the current unrest over pandemic rules is a false equivalence.

“The Nazis had the intention of wiping from the face of the Earth a race or religion simply because of what they were,” Aghion told Guardian Australia. “Nothing in the current proposals is remotely like that, and the comparison to Nazi Germany is therefore shocking, inappropriate and wrong,” he added.

Aghion’s comments come after demonstrators, protesting against pandemic laws, referenced Nazi Germany in an effort to make their point. Some carried placards depicting state premier, Daniel Andrews, as Hitler. 

 Wendy Lovell, a Liberal MP, had also claimed laws proposed to govern future pandemics were similar to Germany’s 1933 Enabling Act – which allowed the Reich government to issue laws without the consent of parliament and preceded atrocities, most notably the Holocaust.

MP Bernie Finn had gone as far as to share a social media post depicting the state premier as Hitler. It was later deleted.Laws proposed by Andrews seek to grant powers to the state leaders in the event of another pandemic. Under the move, the minister “may make any order… that the minister believes is reasonably necessary to protect public health.” 

Opponents claim the legislation, which would see power concentrated with the head of state and health minister, is too broad and far reaching.

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President Joe Biden commented on reports that US officials are planning to boycott the upcoming Olympics in Beijing over alleged human rights violations – but his answer left journalists perplexed.

When asked on Tuesday if an official US delegation will be traveling to the Winter Games in the Chinese capital in February, Biden responded: “I am the delegation.”

The president, however, did not elaborate, leaving the White House correspondents in a state of confusion, as his response could mean that Biden will attend the Winter Olympics alone or, as some reporters suggested, that he simply did not understand the question.

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A screen at a restaurant in Beijing showing Chinese President Xi Jinping's virtual meeting with US President Joe Biden. © Reuters / Tingshu Wang
Biden & Xi agree to avoid conflict

A recent report by a Washington Post columnist claimed the US won’t be sending an official delegation to Beijing in 2022 over allegations of human rights violations by the Chinese government. According to the sources cited in the article, a formal recommendation for a diplomatic boycott of the Olympics has been already presented to Biden, with the move expected to be approved by the president by the end of November.

The piece was published on the day that Biden held a lengthy virtual meeting with Chinese leader Xi Jinping, in which they discussed a range of issues regarding the strained relations between the two nations – but not the Olympics.

The White House said that during the talks, President Biden challenged his Chinese counterpart over what Washington sees as persecution against the Uyghur population in the Xinjiang region, as well as human rights violations in Tibet and Hong Kong. China has strongly denied the claims, accusing the US of interfering in its internal affairs.

Calls for the Biden administration to boycott the Olympics and refrain from sending a political delegation to Beijing have recently been made by top Democratic and Republican lawmakers. 

If implemented, it won’t affect the American athletes, who will still be taking part in the Winter Olympics.

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Hard-line cleric Ebrahim Raisi won Iran’s presidential election on Saturday in a move that is expected to bolster the conservative legacy of the country’s supreme leader, Ayatollah Ali Khamenei.

The decision is not expected to derail ongoing negotiations aimed at restoring the Joint Comprehensive Plan of Action (JCPOA) nuclear deal, even though Mr. Raisi himself is under US sanctions over accusations of human rights abuses.  Many voters stayed away from the polls as the outcome had been predicted for months with many progressive candidates barred from running.

“The Islamic Republic has entered a post-revolutionary dynamic in which a fading revolutionary generation seeks to ensure that the rising political leadership sustains their revolutionary ideals,” says Norman T. Roule, former National Intelligence Manager for Iran at ODNI and Cipher Brief Expert. “The regime’s decision to bar so many candidates and the low turnout make this election a historic embarrassment for the regime and its supporters.”

The Cipher Brief talked with Roule about what the election means and what it doesn’t mean when it comes to relations with the west, the progressive movement within Iran and the election’s impact on the oil markets.

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As part of a special series on climate in partnership with The Intelligence Project at Harvard University’s Belfer Center for Science and International Affairs, and Cipher Brief Expert and Senior Editor Kristin Wood, The Cipher Brief is focusing on the national security implications of climate change. 

This report is derived from a half-day conference in April 2021 co-sponsored by the Intelligence Project and the Environment and Natural Resources Program at Harvard Kennedy School’s Belfer Center for Science and International Affairs, along with the Center for Climate and Security and The Cipher Brief. It explores the requirements of the U.S. IC to fulfill the mission prescribed by President Biden, DNI Haines, and Secretary Kerry. The IC must rise to challenge, unshackled from the past, to re-imagine its role in combatting climate change.

The Authors

Calder Walton, Asst. Director, Belfer Center’s Applied History Project and Intelligence Project, Harvard University

Calder Walton is Assistant Director of the Belfer Center’s Applied History Project and Intelligence Project. Calder’s research is broadly concerned with intelligence history, grand strategy, and international relations. The

Sean Power, Masters in Public Policy Candidate, Harvard Kennedy School

Sean Power is a Masters in Public Policy 2021 candidate at the Harvard Kennedy School. Prior to HKS, he managed the analyst program at Kobre & Kim LLP, where he assisted on matters involving government enforcement defense and internal investigations.

The Report

The U.S. Director of National Intelligence (DNI), Avril Haines, has stated that climate change needs to be at the center of U.S. foreign policy and national security. It is a threat multiplier that impacts every function of government and society: territorial integrity, economic well-being, social stability, and military capabilities are all impacted by climate change, directly and indirectly. However, in addressing climate change, the U.S. Intelligence Community (IC) is currently unsure of its mission space and hitherto has been relying on boilerplate responses to it. In an exclusive discussion, the U.S. Special Presidential Envoy for Climate, Secretary John Kerry, who should be a principal consumer of intelligence about climate change within the U.S. government, stated that the U.S. IC must deliver significantly more.

The increasing effects of climate change are arising at a moment when the nature of intelligence itself is undergoing a revolution—from the collection of hidden secrets to collation of non-obvious (but knowable) data frequently hiding out in the open. This watershed in intelligence and national security requires bold, innovative, ideas for the U.S. IC to adapt and anticipate security threats derived by climate change. It must establish its mission space and alter its own architecture to ensure it is providing its customers with intelligence about them needed. Its mission will not be about spies disseminating secrets to policymakers; rather, it will require a new intelligence and national security paradigm that must reach across society, allowing the general public to consume climate intelligence and hold policymakers to account.

Background

The twenty-first century presents globalized threats that will require globalized solutions, the greatest of which is climate change. As the Covid-19 pandemic has demonstrated, no country is immune from actor-less threats like novel disease outbreaks and climate change. When combined with other security threats like transnational terrorism and ubiquitous cyberattacks, it becomes clear that existing national security frameworks are insufficient. New relationships and lines of communication will need to be forged, both within the U.S. government, in the private sector, and internationally with allies and adversaries. The U.S. IC needs to determine the requirements of its customers regarding climate change and how its unique collection and analytical capabilities fit into this new mission space.

The IC has incorporated climate change into its analysis and threat assessments for decades, but climate has not received the attention it requires given the magnitude of the threat it poses. On January 27, 2021, President Biden issued an executive order on tackling the climate crisis at home and abroad, establishing that “climate considerations shall be an essential element of United States foreign policy and national security.” The order also called for the Director of National Intelligence to prepare a National Intelligence Estimate on the national and economic security impacts of climate change within 120 days.

The Climate Change, Intelligence, and Global Security conference at Harvard’s Belfer Center earlier this year, brought together senior climate experts, current and former intelligence officers, and leaders in the private sector and academia to discuss the climate threat and generate innovative ideas on role the IC will play in combatting that threat. Led by Paul Kolbe, Director of the Intelligence Project, Kristin Wood, Intelligence Project Non-Resident Fellow, and Erin Sikorsky, Deputy Director of the Center for Climate and Security, the conference facilitated an urgent opportunity for productive dialogue on the climate threat.

Climate change as a threat to international security

Policymakers and the public need to understand that climate change impacts seemingly unrelated challenges and magnifies existing threats. The direct effects of climate change are readily apparent around the world—melting glaciers, rising sea levels, thawing permafrost, longer droughts, hotter heat waves, persistent wildfires, torrential rains, and catastrophic storm systems. These effects create disastrous consequences for humans like crop failures, fishery collapses, water insecurity, and the inundation of coastal regions, all of which lead to mass migration and displacement. These situations lead to fragile states and regions where increased conflict over scarce resources allows malign actors thrive. In this way, climate change is a threat multiplier that touches every aspect of international security.

Professor John P. Holdren, the Teresa and John Heinz Professor of Environmental Policy at Harvard Kennedy School, noted that the big picture on how climate change will impact the planet is clear, but the detailed effects are difficult to predict with precision and confidence, in part because we do not know exactly how human societies will react. This uncertainty exacerbates the security threat posed by climate change. We know it will increase the number of displaced persons in the world, but we do not know when they will be displaced, how many there will be, or where they will go.

Climate change also impacts the effective functioning of the U.S. military: to meet traditional security threats and protect Americans at home and abroad. U.S. bases around the world function as launching pads for everything from quick tactical operations to large-scale disaster relief missions. When severe weather damages those bases or limits their ability to operate at full capacity, America’s security is put at risk. Disasters like the flooding at Offutt Air Force Base in Nebraska, headquarters for U.S. Strategic Command, and Hurricane Michael’s destruction of Tyndall Air Force Base in Florida show that this threat knows no geographic bounds. Their effects are costly as well—the Air Force requested nearly $5 billion to rebuild those two bases alone.

The overall impacts of climate change on international security are inevitable, consequential, and predictable. Previously the U.S. government has undertaken more extensive, and expensive, actions on the basis of proportionally less intelligence about security threats. The U.S. IC must give climate change the proportional attention it deserves.

Role of U.S. intelligence in addressing climate change

Climate change poses an existential, global, non-state security threat, making it fundamentally different from past threats. Its unprecedented nature will require unprecedented thinking by the U.S. IC and requirements from it. Former Principal Deputy Director of National Intelligence Sue Gordon stated clearly that it is not enough to just say that the U.S. IC should focus more on climate— rather, the challenge lies in determining what its specific contribution will be, and then evaluating what changes need to occur to make that contribution happen. Answering these questions will require difficult, but necessary, upfront work. Without that work, the U.S. IC is likely to lead with its current capabilities, rather than identifying and developing capabilities needed to meet the nature of the new threat we face.

The U.S. IC must play to its strengths in carving out its climate mission. Intelligence is no longer just about stealing secrets; it is about providing policymakers with decision advantages to influence events, which is the same as the past, but with a key difference that doing so now requires mastery of is a vast eco-space of openly-available information. To accomplish its mission, the U.S. IC must leverage its analytic tradecraft to present objective assessments about climate change to policymakers. This means collecting intelligence, assessing it, removing bias, and delivering timely and relevant assessments to customers. The U.S. IC must also leverage its global relationships with partners and competitors in performing these tasks. These relationships lie below politics and can help elicit understanding that allows policymakers to distinguish facts on the ground from prevailing political rhetoric of the day.

The U.S. IC’s workforce and technology will need to advance and adapt to serve the climate mission. It does not need to have the foremost climate experts, but it does need to have dialogue with them, and develop its own climate expertise. Like other threats, the IC needs personnel that are devoted to understanding this new threat and understand its place in larger risk frameworks. Predictive models are critical to understanding climate science, and the IC should invest more resources into artificial intelligence and machine learning capabilities (AI/ML) that can inform them. Intelligence professionals will not need to advance science, and scientists will not need to assess national security; but collaborations between the IC and the federal science community are necessary and will benefit both by allowing them to identify and meet shared objectives.

Climate change intelligence cannot be siloed. As DNI Haines promised, it must be integrated into traditional security threat assessments, and those emerging threats from other globalized challenges, bio-hazards, cyber capabilities, and weaponized information, if we want to understand how they interact and manifest around the globe. Compared to the twentieth century, when intelligence was dominated by governments, the twenty-first century offers more democratic forms of intelligence: the private sector offers major capabilities to collect and analyze intelligence. It has disrupted and transformed the nature of intelligence. The IC’s advantage in this new environment will come from thinking deeply about these issues and using its unique analytical and collection capabilities to identify patterns and trends others might overlook.

The future of intelligence cooperation and climate change

Climate change is an indiscriminating challenge unlike anything humanity has encountered before. Understanding how it is different helps illustrate the need for intelligence cooperation among states, large and small, to combat it. Carol Dumaine, Senior Fellow at the Atlantic Council, noted that the impact of the Covid-19 pandemic has highlighted many of the ways in which the climate threat is unique. It is non-state, non-adversarial, non-linear, boundary-less, and its root causes can be found in human economic activity. Unlike pandemics, however, combatting climate change will require something we have never done: decades of consistent cooperation across states with an eye towards tackling a systemic problem that will persist for centuries.

The U.S. IC needs to determine how it will work with other countries to combat the shared threat of climate change. The big first step is determining what the security collective is trying to accomplish. One area ripe for collaboration is foresight and early warning systems. During the Cold War the famous “red telephone” connected the White House and the Kremlin, enabling direct communication to avoid nuclear brinksmanship. Similar innovate thinking will be needed on climate change cooperation. Lt. Gen. Richard Nugee, Climate Change and Sustainability Strategy Lead for the UK Ministry of Defence, emphasized that the biggest danger on climate change is not a morass of bureaucracy, but instead a lack of imagination in understanding its impact and generating solutions for it.

Relying on existing partnerships, such as the Five Eyes alliance or NATO, will not be sufficient. Those agreements will play a role, but they do not include some of largest contributors to greenhouse gases or the countries that will suffer the largest initial impacts from climate change. Intelligence communities are by nature competitive and adversarial, but when it comes to climate change they will need to be cooperative. The U.S. IC needs to identify areas of cooperation even with adversaries like China and Russia. Rolf Mowatt-Larssen, Senior Fellow and former Director of the Intelligence Project, tasked the U.S. IC to look for a peace dividend—areas where collaboration on climate will yield multilateral benefits. Even though spying will still exist, as it always had, we cannot let espionage stand in the way of climate collaboration.

Any collaboration on climate intelligence will certainly require American leadership. That means America needs to treat the climate threat with the seriousness it deserves. Climate change is siloed into a one-page length analysis in the 27-page Annual Threat Assessment issued by the Office of the Director of National Intelligence in April 2021. The six pages focusing on China and Russia make no mention of how those are contributing to climate change or working to combat it. The IC must continually reinforce that climate is a serious and central threat. We cannot wait until the impacts are painfully obvious for every individual across the globe to treat it with the seriousness it requires.

The private sector, intelligence, and climate change

The threat from climate change reinforces the fact that intelligence is no longer a domain solely for governments. Mekala Krishnan, Partner at the McKinsey Global Institute, underscored that the private sector is also seeking to take climate risk out of a sustainability silo and integrate it into all aspects of decision making affected by risk and finance. Companies are thinking about how climate interacts with physical capital, natural resources, labor supply, and food supply—the factors of production in an economy that fundamentally affect our lives and livelihoods. One of the most important factors in a country’s national security is the health of its economy. The U.S. IC needs to be working with the private sector to understand what the economic effects of climate change will be.

In many respects, the U.S. government is still one of the few parties that can afford the costs to collect data on climate change, much like space exploration and early Internet research. The private sector can innovate ways to extract insights from that public data. Harnessing that with government capabilities will require innovative public-private partnerships with a shared strategy to help combat climate change. The U.S. IC must develop a level of transparency on climate data that will allow the private sector to identify where incentives for research and development exist. It will not matter how good the climate intelligence collected by the U.S. IC is if it does not get into the hands of public and private users in the right shape and form.

At the same time, the IC cannot be everywhere at once, collecting troves of climate data at significant cost. Richard Jenkins, CEO of Saildrone, noted that the private sector has the capability to deploy significant private money to develop and test new technologies that advance climate data collection, which the government can purchase at great value and incorporate into climate intelligence analysis. New technology is democratizing intelligence; it will force the U.S. IC to change how it interacts with the private sector— for the better.

Conclusion

In a moderated discussion with Dr. Calder Walton, Secretary Kerry stated unambiguously that the U.S. IC needs to start providing policymakers with a decision advantage on climate change in order for the U.S. government to lead the world on meeting this unprecedented threat. That starts with treating climate change seriously. The U.S. IC will need to determine its requirements, play to its strengths, and adapt its workforce to best serve its mission. It will need to cultivate deeper cooperation with allies and adversaries, develop new relationships with the private sector, and approach climate change with a fresh mindset to seek and find what others overlook.

When it comes to climate change, the U.S. IC should also reframe who its customers are, not just policymakers, to whom it gives secret briefings, but also the public. By publicly disseminating assessments, the U.S. IC can effectively democratize intelligence about climate change, with the public holding policymakers to account for their actions or inactions on the basis of shared intelligence.

The Cipher Brief is proud to be continuing our coverage on Climate with a series of webcast briefings beginning in July 2021.

Read also:

The Climate and US National Security Conversation with Admiral Jim Stavridis (Ret.)

How to Integrate Climate in Future National Security Risk

Russia’s Climate Problem and Opportunity

Why the Intelligence Community Needs a Climate Change Task Force

 

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