Search for energy is a worldwide race

By Paul Reynolds
World affairs correspondent, BBC News website

Russia wants to play capitalist on the global stage

Energy is becoming an increasingly contentious issue worldwide as countries battle with rising consumption and dwindling supplies.

In the UK, the recent Energy Review backed proposals for a return to nuclear power, despite critics claiming that the option should be a last resort.

The race for energy is a complicated one as formerly popular resources such as coal are now being questioned amid concerns about the risk they pose to the environment.

That simply intensifies the search and competition for others, which in turn can lead to higher prices and political tensions.

Chinese whispers

The British Foreign Office has just appointed a special representative for climate control, John Ashton.

"We must build a policy across the board to bring in energy security, climate security and foreign policy," he says.

Mr Ashton points out that the impact on climate control efforts of China alone is huge.

"China is building a large coal power station every four days," he says.

"By itself China could negate the whole debate about climate control that the Kyoto agreement was supposed to address."

Diversity through competition

Competition has opened up a new front in diplomacy as countries manoeuvre for advantage.

By 2070, nuclear power will become a net energy user The Oxford Research Group Investors eye nuclear returns

And it has knock-on effects on other world issues because a state with energy interests somewhere might place those above the political demands of rivals.

That is not new in world affairs.

For generations, the West has protected friendly oil-rich governments in the Middle East precisely in order to safeguard supplies.

But in the modern world, the phenomenon is evident in new ways.

For instance, China has huge oil investments in Iran and Sudan, part of its determined effort to secure oil supplies for its hugely growing economy.

It has, for example, recently paid $1bn for exploration rights off Angola, regarded as a huge price by the oil industry.

Both Iran and Sudan are currently in the dock at the United Nations and facing possible sanctions, but China is likely to oppose any measures that would affect its supply of oil

Yet only sanctions against the oil industries would have any effect.

There are some who are fairly confident that the world will cope with future demand just as it has in the past.

"I am sceptical about a crisis over energy security," says John Mitchell, associate research fellow on energy at The Royal Institute of International Affairs in London.

"The keys to success are diversity of supply and functioning markets. The markets have been good in most places by ensuring this diversity through competition."

Capitalist player

Diversity is not everyone's choice.

France went headlong for nuclear power after oil scares and boycotts of the West by the Opec oil producers' cartel in the early 1970's.

Russia now has the political and economic sense to play to its strengths John Mitchell, associate research fellow on energy at The Royal Institute of International Affairs Russia: key facts and figures

It has no intention of changing this.

Britain on the other hand is relying on diversity in which a mix of gas, renewables, some coal and a return of nuclear are the main mix. Britain was for years energy self-sufficient, with oil and gas from the North Sea.

This is changing rapidly and means that the UK has to pay attention to its sources of supply, like Russia for gas as well as new suppliers in Algeria and Venezuela.

Russia is a good example of how adjustments have to be made in the new energy race.

"Russia now has the political and economic sense to play to its strengths," says Mr Mitchell.

"It no longer simply wants to send gas to Western Europe, but wants to be a player on its own terms.

"This means it has been putting its own house in order by creating huge companies and is moving abroad to buy into distributions systems.

"It is an aggressive producer with strong government controls, though, as we saw over Ukraine, it is often ineffective in explaining its intentions."

The implication is that those who want to buy from Russia will have to accept it as more than just a supplier.

It wants to play the capitalist game.

Nuclear returns

The search for energy is bringing attention to all kinds of places neglected in the past.

The UK is increasingly dependent on imports Malcolm Keay, senior research fellow at the Oxford Institute for Energy Studies Electricity calculator: how would you power UK in 2020?

In 1996, the Prince of Wales was despatched by the British government on a nine day trip to the ex-Soviet republics of Turkmenistan, Uzbekistan and Kazakhstan, designed to establish some British influence in countries with energy and a new found independence.

"The UK is increasingly dependent on imports," says Malcolm Keay, senior research fellow at the Oxford Institute for Energy Studies.

"So it is looking in new places.

"The political implications are different to what they were in the days when Opec controlled the world oil supply and there was plenty of oil from the North Sea and Alaska.

"The UK is finding itself in a very difficult position. It is finding that renewables like wind power are proving difficult and is finding itself backed into a corner over the need for nuclear power."

Energy user

Not that everyone believes that nuclear has an indefinite future.

The Oxford Research Group has just published a paper saying that "there is not enough high-grade uranium ore available to fuel the operational lifetime of a new nuclear build (assuming world nuclear capacity remains at 2005 levels).

"From 2034, ore grades will fall dramatically, causing nuclear power to become increasingly inefficient and expensive, leading to an increase in CO2 emissions," the paper says.

"By 2070, nuclear power will become a net energy user."

So the issue of energy security will occupy the world for the whole of this century.

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