Landon Derentz 0:12
Hi, I’m Landon Derentz, the Senior Director of the Global Energy Center at The Atlantic Council. And we’re here live in Sharm el Sheikh exploring the outcomes and objectives of COP 27. Here in Egypt, I’m really excited to be joined by Ambassador Pyatt, the Assistant Secretary from the Bureau of Energy Resources of the Department of State, covering a broad mandate for certain geopolitics of energy. And there’s never been a more dynamic time I think, in energy markets and certainly not since the 1970s, to kind of dig into these issues. Obviously, today we’re looking at climate change and what’s going on at COP, but I think these issues are increasingly interwoven. And so we’re really excited to have you here, Ambassador Pyatt. Tell us what are you looking to get out of COP? What do you think a win would be here in COP?
Assistant Secretary Pyatt 1:01
Well, thanks Landon. I mean, I would start by emphasizing my commitment, the State Department’s commitment to doing everything that we can to advance President Biden’s energy transition and climate agenda. But as you noted, my job in the ENR Bureau is really to focus on the geopolitics of energy, the nexus between our traditional energy security relationship and our broader diplomatic agenda – our support for our allies and partners around the world, the United States interest in supporting rules-based international order, where as you said, energy is at the white-hot center of International Affairs in a way that it has not been for a long time.
A big part of my message here at COP has been to emphasize the degree to which in our view, these two agendas, energy security, energy transition, are not in conflict with each other. In fact, they’re mutually reinforcing. That is to say, we need to continue to work as the United States has done over many decades to build an energy system internationally, which helps our allies and partners to advance their economies to deliver results for their citizens. But we also need to keep working on energy transition to move away from fossil fuels towards renewables, recognizing that the best energy security of all is an energy system, which is not depending on countries like Russia, which has demonstrated so dramatically since February 24 ‒ its willingness to weaponize its energy resources in a way that threatens our vital interests.
Landon Derentz 2:43
So, Ambassador, as you’re walking around COP, and you’re talking and taking an assessment of what other global leaders, industry, government leaders have taken up saying about both these geopolitics, geopolitical, maybe, perhaps headwinds and also the long-term ambition of our climate agenda. What’s your assessment in terms of where global consensus is right now in terms of how Russia’s invasion, in Ukraine, is having an impact on the broader climate?
Assistant Secretary Pyatt 3:10
So I think Russia will never again be viewed as a reliable energy supplier. And one of the things that’s so apparent to me here at COP and in all of my travels since I started this new role, is the degree to which there is a consensus form, especially in traditionally dependent markets like Europe, that there is no alternative but to diversify and decouple as fast as possible from Russian fossil fuels.
There’s also great appreciation for the leadership that the United States is providing the leadership that we’ve offered in the transatlantic context in terms of accelerating our own efforts to build energy linkages, including LNG supplies with Europe, but also great appreciation for what’s happening in the US. We should talk a little bit later about the Inflation Reduction act and what a game changer that has been.
I think in terms of America’s reputation on these issues, a recognition also that the U.S. energy economy is at a particularly dynamic moment right now, because of this transition that we’re going through at home. You know, one of the ways I think about this is if you look back, the better part of 100 years, energy has been central to America’s influence and power around the world. The interesting thing about the moment we’re in right now is that the form of that energy is increasingly being measured not in molecules, but in electrons. So my job, our job at the State Department, is to make sure that that American leadership, which was so apparent during the fossil fuels era, think about how important our fossil fuel endowment was to the allies’ success in the Second World War, or the reconstruction of Europe in the late 40s, and 50s. To ensure that in this New Energy Transition era, America’s leadership in our partnership with our allies and friends, remains just as strong.
And that’s why I’ve spent time here in COP talking with African partners. A region, which is so central to the critical minerals agenda, and the resources that will be central to powering the energy transition era. So it’s a really exciting time to be doing the ENR stuff because as you said, everything is in flux, sure, but what America does and what we say matters
Landon Derentz 5:42
Well, it’s interesting, you bring up the critical minerals supply chains, because as we look to diversify energy sources and increase global energy security, you know, it’s one thing to diversify away from Russia. But obviously, you know, critical supply chains have an impact and we have new powers globally around the world. How do you ensure that the energy transition doesn’t have the same fears of discord and conflict that maybe are endemic in what Russia is doing?
Assistant Secretary Pyatt 6:13
Right. So this is why the State Department has worked so hard to put together something we call the Mineral Security Partnership, which is made to bring together countries with an endowment of these critical minerals that are so important to energy transition with countries that will be major consumers in the future. Our goal is to uphold high standards in terms of ESG is to encourage engagement between American companies that are working in this space, and the countries that have to make a choice.
We want to offer an alternative. We’re not coming in and saying we America have all the answers. But if you deal with the United States, you’re going to get transparency. You’re going to get high standards in terms of environmental and social practices. And you’re going to get a commitment to the long term. And that’s what we’re trying. That’s the framework that we’re trying to get ahead. I don’t think that our geopolitical rivals can offer the same package. Coming into a country, putting a lot of money on the table, and taking away a lot of rocks and doing the processing someplace else is not a good book. It’s not, it’s not a good formula for success.
I’m also impressed. Again, this is especially true in so much of the developing world. regions like Africa, like South Asia, are confronted with the reality of the current climate crisis every single day they see this impacting agriculture. And human living conditions and the challenges they face in terms of economic development. They also recognize, and the United States recognizes, that the developing world has the same aspirations that we have in terms of having energy resources. As one of my interlocutors said to me, “A lot of people, most people, don’t care where the energy comes from. They just care that the lights come on.”
And, again, having spent a lot of my career in places like South Asia where I’ve seen this and I’ve seen the extraordinary economic transition that these regions have gone through because of digitization because of global connected productivity. They have an opportunity to choose a different path. And what’s interesting to me is, in contrast to say even a decade ago, now, the price point of renewables has reached a moment where it is no longer a binary choice between fossil fuel development or no energy. There’s another path and this is why I was so encouraged to read the last Global Energy Outlook from the IEA because it made exactly this point that the global energy system has reached a tipping has reached a tipping point in terms of the attractiveness of renewable options.
Landon Derentz 9:19
So you and I have discussed just just putting the United States more in focus, you and I discussed the importance of the inflation Reduction Act previously. And you know, I think we’re here with a global audience. And so a lot of a lot of our international counterparts might look at that as just a domestic piece of legislation is transformational, right $360 billion plus over a decade to really transform energy system states. But how does that impact foreign policy? Where do you see that helping or helping the broader climate agenda?
Assistant Secretary Pyatt 9:50
So first of all, of course, it gives us credibility, when the United States argues for a climate first policy and energy transition. We now are putting our money where our mouth is. Ultimately, government policy is only a small part of the story here what’s really going to drive transition is the decisions of companies, of investors. That’s why I’m so proud of the partnership that we have the ENR bureau with some of our leading American companies. We had a wonderful event the other day for the Clean Energy Demand Initiative. And I was really proud of the fact that we have such a strong partnership there with Google, one of our tech companies, but you look at the other companies that were part of our presentation, we had companies and consumer goods companies in in heavy industrial manufacturing goods, companies and services.
And all of them were offering the same story about the value proposition of energy transition. The IRA is going to accelerate that large incentive to faster innovation, faster deployment, faster transition. And that is going to create opportunities for the global audience because it’s going to create markets in the United States for foreign companies that are active in this space, but it’s also going to drive innovation, which is going to bring benefits to the international community.
I always use the example – look at the federal government’s investments in the space program and Apollo, which was substantially smaller than the investment that the IRA represents. But think about all of the transformations that it brought us – from microprocessors, advanced materials aerospace, all which were essential to putting a man on the moon. But over the past decades have filtered out in almost every aspect of life around the world. And I’m absolutely convinced that Iran is going to do the same thing. But it’s also going to drive an extremely important change. In terms of how we power our economies.
Landon Derentz 12:01
Ambassador Pyatt has been great to have you with us today and have this discussion. It’s really exciting. There’s so much opportunity and hope on the horizon, whether it’s through the IRA or through broader diplomatic efforts at the State Department. Good luck here at COP Thanks, and we’ll be excited to call your adventuring.
Assistant Secretary Pyatt 12:20
Great. I look forward to continuing the conversation Landon and seeing you around the world with our Atlantic Council partners.
Landon Derentz 12:26
Thanks so much