Global powerhouses China and India will continue to heavily bet in oil and gas opportunities due to projected demand, despite the global push for green energy, said John Sitilides, senior fellow for national security at the Foreign Policy Research Institute, during the keynote session at the Canadian Investment Review’s 2024 Global Investment Conference in April.
Notably, China’s government has aligned with Russia for mutually beneficial liquified natural gas projects. Both countries are pursuing a reliable energy baseload that will continue to power and grow their economies for years to come, despite investors’ interest to increase sustainable energy sources in the long term.
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“While many here in Canada and in the U.S. and in Western Europe have been talking about net-zero 2050, countries around the world have been paying lip service to it . . . . but where the rubber hits the road, where money’s being spent and political decisions are being made, these countries are embracing fossil fuels because they see it as the surest way to grow their economies and catch up with the advanced industrial West.”
Despite various attempts by investment experts, academics and global organizations at curbing the use of fossil fuels, he said demand for oil, gas and electricity will remain high around the world because of reliance on energy-dense industries that can’t use alternative energy sources. This includes the technology sector and the energy requirements of data centres amid the current artificial intelligence boom.
“There’s been a significant increase in the use of renewable energy sources around the world, from about four per cent in 1980 to about 15 to 16 per cent currently, but the overwhelming preponderance of energy production worldwide is still reliant on oil, natural gas, coal and nuclear power,” he said, adding the likelihood of meeting clean energy targets set for 2035 or 2050 is very low.
While running through a list of ongoing geopolitical threats around the world, Sitilides said he has a gloomy outlook for the ongoing conflict between Russia and Ukraine. However, he commended U.S. President Joe Biden’s administration for the carefulness it has displayed in providing defence aid to its ally.
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“If there was a serious effort . . . . to try to eject Russia from the Crimea peninsula, there’s the possibility that Vladimir Putin would order a tactical nuclear warhead to be blown up over the Black Sea, or over some unpopulated area in Ukraine to shock the NATO alliance into rushing to the table . . . . largely on Vladimir Putin’s terms.”
Russia has proved resilient to the financial sanctions it has faced following its invasion of Ukraine due to its consultations with countries facing similar penalties, including North Korea, Iran and Venezuela. The U.S.-led sanctions on Russia have highlighted the status of the country as a commodity superpower and are beginning to bear heavily on other countries that see the invasion of Ukraine as an intra-European conflict that has no bearing on national security or economic well-being, said Sitilides.
Indeed, what he described as a “Swiss cheese approach” to punishing Russia’s economy has demonstrated the strength of its reliance on its resources, especially liquified natural gas and uranium, which aren’t part of the sanctions and heavily critical for Europe and the U.S., respectively.
Despite all the risk in the geopolitical space right now, Sitilides said he’s confident in the ability of the U.S. to leverage its relationships and partnerships in Canada, Europe and, increasingly, South Asia.
Read more coverage of the 2024 Global Investment Conference.