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Prepared by the
Institute for the Analysis of Global Security

November 11, 2004
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Energy Security Current Issue

Baku-Tbilisi-Ceyhan pipeline: not yet finished and already threatened
The long-delayed 1000-mile Baku-Tbilisi-Ceyhan (BTC) pipeline to transport 1 million barrels of oil a day from the Caspian to the Turkish port of Ceyhan is progressing toward completion as early as 2005. But even before the construction is finished, terrorist elements may already be planning attacks on this high quality target. IAGS' Gal Luft discusses the threats.

A strategic approach to pipeline security
Aside from BTC, a consortium of Western energy companies has already started the construction of the South Caucasus Gas Pipeline. Thus far the host countries of the pipelines along with the Western energy companies have taken responsibility for the protection of the critical energy infrastructure. Yet, it is clear that by sole attention to the military aspects of the pipeline protection it will be impossible to guarantee their full protection. The host countries can upgrade their pipeline protection units and patrol teams and purchase the most advanced technology in the world. Baku based analyst Fariz Ismailzade argues that to achieve longterm security the communities along which the pipelines will pass be must be involved in the protection process.

Terrorism Goes to Sea
New evidence suggests that piracy is becoming a key tactic of terrorist groups. In light of al Qaeda's professed aim of targeting weak links in the global economy, this new nexus is a serious threat: most of the world's oil and gas is shipped through pirate-infested waters. In a recent Foreign Affairs article, IAGS' Gal Luft and Anne Korin analyze the situation and recommend policies to mitigate the risk.

Radical Islam and LNG in Trinidad and Tobago
Trinidad and Tobago alone account for 80% of all U.S. LNG imports. Security analyst Candyce Kelshall warns that Islamist terrorist groups are active on the island and might find LNG shipping an attractive target.

Chinese Quest for Crude Increases Focus on Africa
Leading oil sector analysts have warned of growing conflict between Western and Asian countries as they seek to outbid each other for key hydrocarbon assets in Africa. These forecasts have been largely based on the expectation that China will become the major player in nontraditional oil and gas producing regions on the continent. IAGS Associate Fellow Cyril Widdershoven discusses.

Terror's Big Prize
Since September 11, pipelines, tankers, refineries and oil terminals have been attacked frequently. Except for a sharp increase in maritime insurance premiums in these regions these attacks had marginal strategic consequences. But in at least two cases oil terrorism could have rattled the world.

Needed: Three 1-billion-barrel oil banks
The lesson from the recent oil price jump is that the oil market has too little wiggle room to deal with supply disruptions. It's time for consuming nations to think about providing their own liquidity mechanisms.

On the technology front

Fuel Cell power plant installed at NJ College
The fuel cell will provide 250 kilowatts of electric power as well as heat, to several buildings on the campus.

Biomass-to-Ethanol Progress
The enzyme costs of converting cellulosic biomass into sugars for fuel ethanol production have been reduced approximately twenty-fold with technology developed by the National Renewable Energy Laboratory (NREL) and Denmark based Novozymes, biotech-based leader in enzymes and microorganisms.

EU study: Methanol from biomass - competitive with gasoline
A study of a new patented Swedish technology concluded that the alchohol fuel methanol can be produced from biomass via black liquor gasification at a cost competitive with that of gasoline and diesel.

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Back Issues

National security experts call to reduce dependence on oil

On September 27, 2004 a group of national security experts and representatives of prominent Washington think tanks and public policy organizations including the Institute for the Analysis of Global Security (IAGS,) Foundation for Defense of Democracies (FDD,) Center for Security Policy, Hudson Institute, National Defense Council Foundation (NDCF), and the American Council on Renewable Energy (ACORE,) released an open letter to Americans and an accompanying blueprint for energy security called "Set America Free," calling for immediate action toward reduction of America's demand for oil. The document spells out practical steps which can be undertaken over the next four years and beyond to dramatically improve America's energy security. Members of the group called upon America's leaders to adopt the plan, with a view to rapidly expanding fuel choice in the U.S. transportation sector beyond petroleum while exploiting currently available technologies and infrastructures. If the plan is carried out in full, U.S. oil imports would drop by as much as 50 percent.

Launch of Set America Free. Visible from right are Frank Gaffney, James Woolsey, Anne Korin. On the far left is Bill Holmberg.
While until recently the alternative fuel message had been the territory of environmentalists this changed September 11, when it became evident that many of America's security and economic problems stem from its dependence on oil imported from unstable parts of the world. In fact, the U.S. is facing today a "perfect storm" of strategic, energy, economic and environmental conditions that demand a dramatic reduction in the quantities of imported oil. Dealing with the problem will no doubt be a daunting task facing the President over the next four years and beyond.

"Set America Free began with the proposition that we have a serious security problem and we need to look at existing vehicle types and processes to make transportation fuels that can run on these vehicles. And we need to do it now," said James Woolsey, one of the effort's leaders. Gal Luft, executive director of IAGS, noted that America's relations with countries that own most of the world's oil reserves are at an all time low. "If you look at every global conflict we have faced in the past, there was always a technological component. We always had technology as a game changer. And this conflict calls for one as well."

Set America Free pillars:
  • Use Available Technologies

  • Use Domestic Energy Resources

  • Use Solutions that Consumers Will Accept

  • Use Existing Infrastructure

  • Frank Gaffney, president of the Center for Security Policy, said: "We are funding terrorism with our petrodollars. The bulk of the funding for terrorism is money that flows from state sponsors of terrorism and from there to terrorist organizations. In other words we're paying them to kill us...As one who approaches this from a pure national security perspective I really believe we have no choice but to seize the opportunity to move the country as rapidly as possible off the vulnerability associated with this current reliance on foreign oil." He called for the next president to take active measures to reduce America's oil dependence. "With the right leadership the effects of the plan can begin to be felt within the next four years." Milton Copulos who heads the NDCF made a strong economic rationale for adopting the $12 billion plan. He described the economic costs associated with gasoline, many of which do not show up at the gas station: "We spend $49 billion every year to maintain the capability to intervene militarily in the Persian Gulf. The U.S. is also losing 828,000 jobs every year due to its dependence on foreign oil." Copulos said that the U.S. is losing $305 billion every year as a result of its dependence. "Isn't it worth to spend one percent of what we spend to subsidize our enemies to create almost a million jobs at home and finally free ourselves from the dangers of our oil supply vulnerabilities?"

    Anne Korin, director of policy and strategic planning at IAGS, explained that the Set America Free project analyzed the costs and benefits, time frame for commercialization, feasibility, and economic impact of each path to energy security. "We worked with energy, technology, and policy experts with a wide variety of expertise to develop a plan that could significantly reduce our dependence on oil within a reasonable time frame and at reasonable cost...Since two-thirds of our oil is consumed in the transportation sector displacing oil in this sector was our focus. Only 2% of electricity in the U.S. is generated from oil so shifting power generation away from oil does not solve our problem. Additionally, we realize that full market transformation of the transportation sector is a very long process – 15 to 20 years. That is exactly why we must start this process without delay."

    Set America Free upholds a number of principles: Due to the urgency of the issue, the coalition believes that there is no time to wait for the commercialization of technologies that are still at the research and development phase. The group believes the U.S. should implement technologies that are ready for deployment and simply need a push to enter the mass market. Bill Holmberg of ACORE, a member of the coalition, remarked that it makes more sense to use electricity to power plug-in hybrid vehicles (PHEV), a technology that exists today, than to use it to produce hydrogen to fuel vehicles in a technology that it still far in the future.

    The coalition also believes that rather than investing significant time and resources in developing new refueling and distribution infrastructure it makes most sense to rely on existing infrastructure to the extent possible. The coalition emphasized that the U.S. should better utilize its domestic energy resources. While America is not rich in oil nor in natural gas, it has a wealth of other energy sources, among them a quarter of the world’s coal supply, abundant biomass, municipal waste, and electricity sources such as nuclear power plants, solar, wind, hydro and geothermal power. All of these resources can be used to produce made-in-America transportation fuels that are not made from petroleum.

    While the group's prime concern is national security, its members recognize the need to be sensitive to environmental concerns and encourage green groups to join the coalition. All the solutions proposed are far more environmentally friendly than the status quo.

    The coalition called upon the American public and its representatives and shapers of public opinion to endorse the Set America Free plan and put energy security at the top of the national agenda. The Natural Resources Defense Council (NRDC) has already responded to the call. "This is a an effort to bring together tree huggers, do gooders, sod busters and cheap hawks to agree on a common approach," said James Woolsey. "It's a very good coalition."