Proposal for AICGS DAAD Fellowship, 31 August 2014

U.S. expert perspectives on German

energy vulnerabilities
Thomas W. ODonnell, PhD1

Contents
PROPOSAL OVERVIEW .................................................................................................................................. 1
1. Substantive Thrust of the Research .......................................................................................................... 3
1.1. Natural gas ......................................................................................................................................... 3
1.2 Energy costs and competitiveness ...................................................................................................... 4
1.3. Research questions ............................................................................................................................ 5
2. Relevance to the AICGS mission ............................................................................................................... 6
3. Reasons for conducting research at AICGS & in Washington, DC ............................................................ 6
Table 1 US energy experts to be interviewed in Washington............................................................... 7
APPENDIX I: CV .............................................................................................................................................. 7

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PROPOSAL OVERVIEW
Over the past 30 months in Berlin I have conducted research and established contacts related to
the German and EU energy sectors, especially in the context of international relations. Two
questions I came to focus on are:
1. The structure of the EU natural gas sector and, in particular, German and EU states
vulnerability to a Russian gas embargo [my article2].

1
2

E-mail: twod@umich.edu Cell: +49 (0)176 92 11 89 28 Mail: Knigin-Elisabeth-Str. 58, 14059 Berlin.

ODonnell, Thomas W., Addressing Europe's Energy Dependence on Russia: Globalizing gas market, creating
OECD strategic reserves could make embargoes history. IP Journal, 6 May 2014. https://ipjournal.dgap.org/en/ip-journal/topics/addressing-europes-energy-dependence-russia

2. Reduced competitiveness of German business from being caught between greater-thanexpected domestic energy-price increases in the Energiewende and the fall in energy costs
for their U.S. competitors as a result of the North American energy revolution (i.e.,
fracking) [my article3]. This echoes consumer complaints of rising energy costs in the
Energiewende.
These topics received detailed treatment in a post-graduate seminar I taught on The Global Oil
System & US Policy, at the JFK Institute, Freie Universitt. [see Homepage and Syllabus4] as
well as in my articles during the past year for the IP Journal of the Deutsche Gesellschaft fr
Auswrtige Politik e.V. (DGAP) in Berlin.5
These vulnerabilities pose serious threats to German political and economic security.
Accordingly, my proposed project in Washington at AICGS is to continue my present energy
investigations from the other side. That is, to critically survey US energy and geopolitical
experts viewpoints and recommendations on these matters through interviews and meetings.
From my work to date in Germany, I feel a critical examination of these viewpoints would be of
particular interest to the German side. US-German understanding and collaboration, should an
embargo be affected by Moscow, will be as crucial in the coming weeks and months as it was
during the four previous post-War energy crises that befell Western Europe.6 From having
followed the work of AICGS in furthering the transatlantic partnership, in particular on energy
and trade issues, it seems to me this research would significantly support the AICGS mission.

ODonnell, Thomas W., Energiewende vs. Shale Gas: Can German industry compete? IP Journal, 30 Dec. 2013.
https://ip-journal.dgap.org/en/ip-journal/topics/energiewende-vs-shale-gas
4
Seminar homepage & Syllabus for: The Global Oil System and US Policy,+ Summer 2014, Instructor: ODonnell,
T.W., http://www-personal.umich.edu/~twod/oil_s2014/
5
IP Journal, DGAP. Articles by Thomas ODonnell https://ip-journal.dgap.org/en/ip-journal/authors/15761
6
These previous energy crises are summarized in my article [see footnote 2]. Sharp differences between the USA
and Germany since 1991 on Gulf-regional policies were contained within the global, market-centered, collective oil
security system. See, e.g., http://GlobalBarrel.com and ODonnell, T.W., "The Political Economy of Oil in the U.S.Iran Crisis," http://www-personal.umich.edu/~twod/writing/iran_oil_usc_01jul09-draft.pdf

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AICGS/DAAD Fellowship Application, Aug 2014

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I feel I am particularly well prepared and positioned to carry out this project, especially in the
limited time (two months) allotted, as I already have extensive contacts with key US energy
experts and diplomatic personnel in Washington from previous years of work in US academia
and as an energy-and-international-affairs analyst. 7
To concretize what I am proposing, Table 2, in Section 3 below, lists the specific experts in DC
whom I propose to interview or speak with. The Table describes the relevance of each expert
and indicates those with whom I am already acquainted. I would very much welcome the
opportunity to write analyses of this work for AICGS and to give related talks in DC.

1. Substantive Thrust of the Research

1.1. Natural gas
The most dramatic energy vulnerability Germany faces involves interruption(s) of Russian gas
supplies to the EU as part of the geopolitical confrontation over Ukraine or over other central
and southeastern FSU statesthough vulnerabilities to other Russian energy imports also exist8.
To be frank, Germany and Brussels presently have no energy defense against a Russian decision
to wield natural gas as a weapon, were it to do so in earnestthat is, if interruptions were also
significant in any of the other three major pipeline routes to the EU in addition to the principal
route via Ukraine. Much has been done to implement interconnections and reverse-flow
capacity across the EU; nevertheless the impact of something like an all-out confrontation
would be costly and transformative for Germany and the EU. 9 A major reordering of the
relative importance of security-of-supply as versus sustainability in German and EU energy
7

Over time, my energy work has focused on the OPEC states of the Middle East and Latin-America, on Chinese, EU
and especially U.S. energy policy.
8
Russia also supplies 26% of the EUs hard coal and is the sole supplier of fuel rods to nuclear power plants in
several countries. Fitch Ratings, 26 August 14. https://www.fitchratings.com
9
A balanced, data- and historically driven assessment of a Ukraine-only interruption is provided by: Sharples, j.
and Judge, A. Russian Gas Supplies to Europe: the Likelihood, and Potential Impact, of an Interruption in Gas
Transit via Ukraine, European Geopolitical Forum, 24 Mar 14. http://gpfeurope.com/forum/?blog=energy&id=157

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policies would likely occur, as well as a reshuffling of relative reliance on gas, coal, nuclear and
renewable fuels for electric power.10 Any lesser confrontation would also trigger significant but
difficult to forecast transformations. I am anxious to learn what US experts envision as the
transatlantic response to these crises.
The possibility of protracted Russian use of natural gas exports as a weapon must be taken
seriously given Moscows present military intervention in eastern Ukraine, its having already
conducted limited interruptions in 2006 (1 day) and 2009 (14 days)11 and its present willingness
to weather US-EU sanctions. By all accounts, German and EU dependence on Russian gas
imports cannot be significantly diminished for a decade or more.12 Meanwhile, German and EU
commercial and diplomatic efforts over the last decade to construct new pipelines to import
Caspian and other gas to Europe beyond Russian control have failed (e.g. Nabucco).
At the same time, conflicts within North African and Persian Gulf states that supply Europe with
gas, as well as developments in Turkey that put into question its role as a transit state, have
furthered German and EU vulnerability to any Russian gas interruption(s). Meanwhile,
German/EU capacity to import liquefied natural gas (LNG) is limited by a lack of infrastructure,
and insufficient commercial incentives.13 The possible role of US LNG from fracked gas to
relieve German and EU reliance on Russia has been a topic of considerable debate in the USA.

1.2 Energy costs and competitiveness

The other major energy vulnerability of interest is the effect of the Energiewende on German
economic competitiveness. My own data-driven research indicated there have been significant
affects, especially for energy-intensive business, and competitiveness problems were especially
10

The forms and level of dependence on oil for German transport would not change as it has not during the
Energiewende to date or in EU transport integration/reconfiguration programs since ca. 1999.
11
Commission of the EC, Brussels, 16.7.2009 ; SEC(2009) 977 final.
http://ec.europa.eu/energy/strategies/2009/doc/sec_2009_0977.pdf
12
Ibid, Fitch 2014.
13
Wood McKensie analysts for upcoming European Gas Cconference), Future of LNG in Europe uncertain. 28
Aug 2014. http://www.lngworldnews.com/future-role-of-lng-in-europe-shrouded-in-uncertainty/

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highlighted by the IEA in late 2013.14 I have stressed the importance of taking seriously any
difficulties imposed on businesses by the Energiewende because a major reason for EU and
member-states progressive energy and transport reforms falling short of their goals since 1999
has time-and-again been not sufficiently facing up to the stubbornly lower costs of hydrocarbon
fuels as versus alternative energy. In times of economic downturn, this has caused EU and
member states progressive environmental goals to be scaled back or overturned.

1.3. Research questions

Quite negative assessments can be heard from the US side about the trajectory of EU energy
security [e.g., 15] including Germanys. U.S. expert views on German domestic and foreign
energy policy are particularly important to engage with as any response to a gas-cutoff crisis
would entail detailed US cooperation and assistance as did the previous four post-WWII energy
crises affecting Germany and Western Europe [footnote 6].
Perhaps complicating the transatlantic energy partnership is the view by some European gassector experts that US experts are unprepared and unawares of the nature of the German and
European gas system, especially as pertains to Russia, the Caspian states and other regional
actors.16 While there is undoubtedly some truth in this, I find that there is a European current
which avers that gas questions should be allowed to evolve as purely commercial questions,
diminishing the usefulness of diplomatic interventions which US experts more rapidly embrace.
I am interested in testing these conceptions via my interviews with US experts.

14

World Energy Outlook, 2013 IEA, Paris http://www.worldenergyoutlook.org/publications/weo-2013/

For example, at a recent forum chaired by Dr. Zbigniew Brzezinsk at CSIS in Washington, the head of the Europe
Program began her remarks by commenting that, in their recent review of the energy situation of Europe, there
was really nothing at all positive to report, save the potential for some new gas production by Cyprus.
16
Talk by xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx, at the xxxxxxxxxxxxxxxxxxxxxxxxxxxx, Berlin on 19 July 14 following
his Russian-gas book tour in Washington. This is significant as Since 2011 he has been the EU speaker for the EURussia Gas Advisory Council" http://xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
15

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However, there is a tendency towards greater German participation in Middle East and North
African (MENA) regional crises where energy-supply security is of particular concern [my
article17]. US expert perspectives on cooperation in these geopolitical crises are of interest.
After having gotten to better understand the German energy-and-diplomatic elites perspectives
on these questions I feel that the discussions with US experts that I am proposing would be
important to understanding how the two sides might jointly cope with any such events, and,
more generally, what is the prospect for enhanced energy cooperation generally in light of
TTIPPespecially given the conflicting competitive and security trajectories of the
Energiewende as versus the North American Energy (i.e. fracking) Revolution.

2. Relevance to the AICGS mission

As described above, the proposed energy topics are one of mutual concern and high priority for
both Germany (and the EU) and the USA. The particular programmatic overlap would be with
both the AICGS Business and Economics Program and the Foreign & Domestic Policy Program.
In addition, a constant theme of the AICGS work, in my experience, has been to foster transAtlantic cooperation on TTIPP negotiations, the Ukraine crisis, matters of energy and
environment, trade, business integration and geopolitical security. My proposed research has
clear relevance to furthering such trans-Atlantic dialogue and partnership.

3. Reasons for conducting research at AICGS & in Washington, DC

As described above, the reason is to interview US energy and foreign relations experts (see Table
1, below). As many are known to me from previous work there is a high likelihood of success in
arranging meetings.

17

ODonnell, T.W., IP Journal, US-EU Cooperate on Iranian Nonproliferation , 18 Aug 14. https://ipjournal.dgap.org/en/ip-journal/topics/us-eu-cooperate-iranian-nonproliferation

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Table 1 US energy experts to be interviewed in Washington

[NOTE: This section has been removed. TOD. 05 April 2015]

APPENDIX I: CV
CV begins next page -> [Note, this
has been removed. T.OD.]

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