Dan Baer, Senior Vice President for Policy Research: Welcome everyone to the Carnegie Endowment for International Peace. My name is Dan Baer. I’m the SVP of policy research here, and it is a great pleasure today to have Ambassador, Assistant Secretary Geoff Pyatt. If we were in Austria or Germany still, we would list all of your titles-
Assistant Secretary Geoffrey Pyatt: Exactly.
Dan Baer: … at once and add a few for good measure, but Ambassador Pyatt needs no introduction to people in Washington. Generally, he’s had a, sorry, it’s now long diplomatic career, though he remains young-
Assistant Secretary Pyatt: Thank you.
Dan Baer: … starting in 1990. So he’s been a professional diplomat in the State Department for over three decades, including posts as DCM in India, DCM at the U.S. mission to the UN and Vienna, including the IAEA, and as ambassador to Ukraine, and more recently as ambassador to Greece, where he spent five and a half years representing the United States, both doing an excellent job of representing the United States and possibly setting a record as a career diplomat for remaining in a really great post for five and a half years.
Assistant Secretary Geoffrey Pyatt: Through three administrations.
Dan Baer: Including the entire Trump administration, and now has taken on a new challenge as Assistant Secretary for the Department of Energy and Resources at the State Department. Hey, Bob, welcome. It’s a great privilege to get to talk to you as you are now three or four months in, and I think the conversation that I’d like to have, and we will take questions from the audience and from people online so feel free to submit online. They will show up on my iPad in a little bit, but to start, I wanted to do a conversation in three acts. The first one about ENR and the moment we’re in. The second, go around the world a little bit and dip into a few places and talk about how the issues play out in those places. Then I want to finish on Ukraine because Ambassador Pyatt and I worked together on Ukraine for several years when I was at the OSCE and have traveled to Eastern Ukraine together and I want to finish there-
Geoffrey R. Pyatt: Great.
Dan Baer: … because I know it’s close to your heart and to mine. So to start out, it seems to me that, having been in the State Department, that ENR’s issues and ENR as a bureau is more front and center than it has ever been, which is not a commentary on past occupants of your office but more on the moment that we’re in. I wanted to see what you think, as I was thinking about it, it strikes me that this is a result of the intersection of three trends or three mega trends or factors about the world we live in today.
One is decarbonization and the fact that in the last, since industrialization, the main way that we have found to improve people’s welfare in the world is through consuming more carbon and trying to reckon with decarbonization and that fact. The second is the return of geopolitics and with that the weaponization of energy. The third is the resurgence of material drivers of political realities that comes as existing institutions increasingly come under strain, so a resurgence of political economy as well as of geopolitics. Does that strike you as the right explanation for why E&R is suddenly in the secretary’s speeches more often and more front and center?
Assistant Secretary Pyatt: I think that’s a lot of it. The key fact is that we’re living through what’s arguably the most dynamic moment of international energy policy of the modern era certainly since ENR was created under Secretary Clinton’s leadership with inspiration from Senator Lugar and many others. The mission of ENR was to give the State Department a toolkit to work on the geopolitics of energy, and that geopolitics has become much more complicated and dynamic. I think the factors that I see coming together to create this particular moment and make my job and the work that the ENR team does so interesting right now are several.
One, of course, is the invasion of Ukraine and the weaponization of Russia’s oil and gas resources and the way that has rippled across global markets. Everybody in Washington here, we properly focus a lot of time talking about the transatlantic relationship and the importance of that, but one thing that’s come through so clearly to me in my travels in my first four months in this job is how the invasion of Ukraine has also impacted on Africa, on South Asia, the cost of fertilizer, financial plans in developing countries in South and Southeast Asia, in Japan, our core allies in the Asia Pacific. So all of that comes together to give particular moment to this.
Second is the climate crisis and the recognition of the urgency of this moment. I will say the good news that I would report from my first couple of months on the job is just the degree to which there is today a consensus across the international community, across business and government and private sectors that energy transition has to happen, that the climate crisis is real, and that we need to bring to bear all the tools that we have and the United States is going to be at the center of that conversation for reasons that I can talk about later. So, I think those are the two giant macro factors that are driving this.
The other one is what you allude to, that we are living through a moment where energy has become fundamental to so much of the conversation in the global south. It is the fundamental input for the aspirations that hundreds of Africans and South Asians and Southeast Asians and Latin American citizens have to better themselves. Right now, we have an opportunity to change the conversation, so that discussion, which for a hundred years has been about how to get enough molecules for a fossil fuel oriented energy system to an environment where now people are more focused on electrons. It’s right at the intersection of technology and policy, which is also part of what makes my job so interesting.
Dan Baer: You mentioned Senator Lugar, who was a driving force legislatively around the creation of the bureau and who passed away a few years ago. If you had to guess given your first … You’re still in the bad wallpaper stage of the job and I-
Assistant Secretary Pyatt: All of my stuff is sitting in boxes next to my bookshelves.
Dan Baer: So, you’re literally still in the bad wallpaper stage of the job. I talk about jobs as having a bad wallpaper stage for the first few months like when you move into a new apartment and you open the guest bathroom and you think, “God, how did they live with that wallpaper? It’s terrible.” Then you let it go for a few months and you start living with it and everybody else who comes in thinks, “Why does he live with that wallpaper? It’s terrible.” You can still notice the things that are surprising. You’re not deep enough in that you’ve stopped noticing the things that are surprising. What do you think would’ve been surprising to Senator Lugar today given what his motivations were to create the bureau about what you’ve experienced so far, and obviously a sub question there is, what has surprised you?
Assistant Secretary Pyatt: So, I think one thing he would be surprised about is how much doubt we have among ourselves and how contentious the domestic debate on some of these issues is at a moment when the world is still looking to the United States to lead. As somebody who had the opportunity to be an American ambassador overseas for nine years, I mean, the most humbling part of being an American ambassador at this moment in time is having random people come up to you on the street say, “Thank you, Ambassador, for what the United States is doing to help my country.”
The vast majority of the world still wants us to be successful because our success is their success. That’s why the Biden administration’s fundamental day one priority on strengthening allies and partnerships is so important and so correct, and no issue lends itself more to that, I think, than energy and climate because of what you alluded to, the focus on CO2 and the climate crisis. We’re 15% of the world’s footprint. So, if we can’t bring along the other 85% of the world, we’re not going to be successful in meeting the needs of the moment.
What has surprised me? I’m surprised how much time we all spend in interagency meetings.
Dan Baer: You have been away from Washington for a while.
Assistant Secretary Pyatt: Exactly, exactly. I think the fun thing about having my job at this moment in time is as you alluded to, I mean, it’s squarely in Secretary Blinken’s priority list and he’s actually doing a series of speeches and interviews right now talking about those priorities. Energy and climate are always tied together. It’s amazing to me the number of briefing memos for ministerial engagements that come across my desk now because everybody wants to talk about this issue. Sometimes they have complaints about us, but most of the time, it’s how do we work together to achieve our shared objectives.
I think, again, that goes to this point that most of the world wants us to be successful and that we have some fabulous examples of progress on climate in the United States, the innovations that are happening and, of course, we can talk a little later about IRA and what I think is going to happen in terms of how that’s going to drive our own energy ecosystem, but also the foreign policy benefits that that’s going to bring to the US.
Dan Baer: I want to ask you a potentially thorny inside baseball question, which is when this administration started, there were, among our friends at the State Department, there were some jokes about the fact that there were two secretaries of state in the building. Obviously, Special Presidential Envoy Kerry has been carrying the mantle on the climate beat for the last two years. ENR is increasingly inextricable from climate, the issues that you’re tackling.
There was a time when ENR was seen as the place where the oil and gas companies came to do their business and plead their case at the State Department. It’s not that anymore. How do you sort out what stuff is John Kerry’s remit and what stuff is Geoff Pyatt’s remit and your respective teams?
Assistant Secretary Pyatt: So, it has not been a problem. I’m very grateful to have a great relationship with Secretary Kerry, who was so important to my time in Ukraine. The ENR and SPEC teams talk to each other every single day. I meet with Secretary Kerry. Every time he’s not in motion somewhere, he’s in Washington. I was with him. We were together in Abu Dhabi. We were together in Sharm El-Sheikh for COP27. We will be together as we continue marching towards the next COP.
I think, certainly, the SPEC team appreciates what ENR brings to bear, both in terms of what we’ve been asked to lead on and you mentioned Ukraine, but European energy security, critical minerals, all of the issues around supply chains, but also how we leverage what Secretary Kerry has, which is the brand identity and the ability to walk into the room with any CEO or head of state or foreign minister and have a really serious conversation about how we work together.
I’ll share an anecdote since we’re in this setting. I joined Secretary Kerry in Abu Dhabi when we met with Minister Singh, the Indian Minister of Energy, who’s, of course, an important counterpart because India’s decisions on energy and climate are so consequential for all of us. Minister Singh and Secretary Kerry have had an ongoing dialogue on some of the difficult issues, but as the minister was looking across the table, he looked at me and said, “I know you from somewhere.”
I said to him, I said, “Well, Minister, it’s because I lived and worked in Delhi for seven years when you were home secretary and joint secretary for this and this and that,” which gave all the people on the Indian side of the table a good laugh, but, no, it’s a really positive relationship. I also think it’s good for the United States. The State Department senior climate advocate and energy and climate advocate is Tony Blinken. I mean, Secretary Blinken really believes in these issues. Again, I think back on all of the strategic dialogues and the other conversations that we have, always have energy and climate as part of the conversation.
Dan Baer: You mentioned a couple places where this is playing out in real-time and I want to move to the around the world tour and starting with Japan and India, actually. Japan is the chair of the G7, India is the chair of the G20. Energy in different ways is on the agenda for both of those. How do you think about … US is not in the chair for either. How do you think about US leadership in the G7 and G20 on these issues working with those two partners and how are they different?
Assistant Secretary Pyatt: Well, very different conversations both because of the character of the countries and the relationships, but also the institutions. The G7 as a club of developed economies, we have a very, very strong energy partnership with Japan. I was in Tokyo last month for the launch of a new US-Japan energy security dialogue, which involved both MOFA and METI. Outstanding convergence of views, a very strong desire from the Japanese to partner with us in building their G7 agenda. My colleagues in EAP (Bureau of East Asian and Pacific Affairs) called two weeks ago Japanuary because we had the METI minister, the MOFA minister, and then Prime Minister Kishida all in Washington in the space of five days. Energy was a facet of every single one of those meetings.
Just yesterday, this is leaning towards the Ukraine conversation, we had a meeting of the G7 Foreign Ministers’ Energy Group that was chaired jointly by Secretary Blinken and Foreign Minister Hayashi. So, we’ve got a huge amount to do. Japan is also in a unique place because our energy economies are so deeply intertwined. Japan is a major importer of U.S. LNG, JBEC, investment partner with the United States across Southeast Asia in energy transition. Japanese companies deeply invested here in the United States and Japan, one of a handful of countries that has the potential like the United States to make truly significant contributions along the technology stream.
So, Japan has made major commitment to hydrogen, probably ahead of us in some ways in rolling out the hydrogen economy thinking what that means. Japan committed to electrification of transport. All of the innovations that are happening in the United States in California on areas like energy storage, Japan will be in lockstep with that. Japan, among the G7, probably the most energy vulnerable G7 economy because it is such a major importer, so profoundly affected by Russia and the disruption that Vladimir Putin has caused in global markets, strongly committed to energy transition including all of our net zero goals and the commitments we’ve made to each other. So, the Japanese partnership is very important in that regard. India, I haven’t gotten there yet, but I’m traveling to India next month, going back after about a decade. I’m told things have changed. I will be-
Dan Baer: We had a conversation about political economy recently here, and one of our colleagues from India made the point that the Indian economy is growing so fast that the economy itself is different every three years. You can’t really study political economy as such because it’s changing so quickly.
Assistant Secretary Pyatt: Well, I lived through that in my own experience. I went to India first in 1992, which was the moment when India staged a shotgun wedding with a global economy when there was a national trauma over the export of India’s gold assets, India’s engagement. The rise of the Indian private sector was just a distant glimmer on the horizon in Bangalore and Hyderabad without people understanding what would happen when you had truly global Indian companies on the scene like Reliance and Tata and all the rest of them.
So, I’m very excited to go back. Going to spend some time in Mumbai connecting with the business community in Pune, visiting, for instance, GE’s wind manufacturing facility and seeing the electric vehicle work that Mahindra is doing. So India is a critical partner for the United States because it looms so large in the overall energy and climate story, but also because it’s one of the handful of countries that is in a position to help us develop a truly diversified and secure supply chain on clean technology.
We’ve got a great partnership with India already, for instance, with the International Solar Alliance and all the work that ISA is doing in Africa and elsewhere on microgrids and all these innovative technologies that are going to look very, very different from what we have in the United States. So I’m excited about that aspect of the visit and then spending some time in Delhi, including with all the different ministries and talking about exactly the issues you allude to.
As I said, it was one of Secretary Kerry’s priorities when we were together in Abu Dhabi was to meet the Indian delegation and to talk to them about how we work together on this climate agenda, but India, it’s a perfect example of a country which has huge energy requirements, which has been buffeted badly by Russia’s weaponization of its energy assets and which is extremely affected. Probably one of the most vulnerable countries to the effects of climate change because you still have hundreds of millions of Indians whose livelihood depends on the monsoon. The rhythms of the monsoon which has become less predictable comes more and more not late July but sometime in August and all of the economic and social implications that that has.
As I said, I’m very much looking forward to updating my India database and looking at all the areas where we can work together, including the civil nuclear work that started when I was in New Delhi in the early 2000s and S. Jaishankar was the Joint Secretary America instead of being the foreign minister.
Dan Baer: Yup. I had the chance to meet with him last month or the month, yeah, last month at Carnegie’s tech conference in India, Global Technology Summit, and Evan Feigenbaum who’s now here was at the State Department working in Washington on that deal at the time that you were in India, and there was a happy reminiscence of earlier times. Going forward, obviously, that relationship, as you said, is so pivotal but also not always easy, and it will be interesting to see how India chooses to use the G20 to step out on these issues and to take a leadership role and whether there’s friction in the partnership because there are slightly different goals given their focus on the welfare of the 500 million Indians who are still needing more energy and their desire to rapidly scale that up, which obviously right now the things that are available are largely carbon intensive.
Assistant Secretary Pyatt: Also, the other bucket I would flag is the quad, how we work on energy, energy security, energy transition in the quad context as well.
Dan Baer: Moving a little bit further, I guess west from India, east from here, you mentioned the IRA. Your confirmation as Assistant Secretary happen to coincide in a happy coincidence, I assume for you, happen to coincide with the signing of the IRA. The IRA is the single largest investment in green tech by any government in the world to date, and it caused some significant consternation, particularly in Europe, but also from some of our Asian allies. It was seen as being anti-competitive or US industrial policy dressed up as climate policy by some. How do you think this plays out? Is this going to remain an irritant for us in our relationships with some of our closest allies or is this a catalyst for innovation that will benefit them as well as us in the long term?
Assistant Secretary Pyatt: No, I think it’s already benefiting, and I think it’s very much a catalyst. I think the differences are going to get worked out. President Biden has made that clear. That was certainly the case in my conversations with the Japanese, with the Koreans, and others. The IRA is going to do a couple of things. First of all, it puts us back at the table on climate and energy. It says to the world that the United States is serious about meeting our goals, both net zero and President Biden’s goal of getting us halfway there by 2030. That was not the case before IRA came onto into the picture.
Second, it’s going to be a massive stimulant to innovation and deployment of new energy technologies. If you just look at how fast the US energy system has shifted, I mean, if you and I were having this conversation a decade ago, Dan, we wouldn’t have really been talking about shale gas. Now, the United States is the world’s largest LNG exporter and is going to retain that position neck and neck with the Qataris for years to come. I think in the same way, you’re going to see in the energy transition area new technologies for storage, application of hydrogen, innovation on scale for wind and solar, new ideas for how to manage base load requirements.
So all of that is going to benefit the United States. That’s good for the world because it advances our global climate agenda, but it’s also going to stimulate innovation that’s going to spill out. It’s going to create opportunities for the supply chain. You already see that. I mean, I remember talking with the governor of Indiana about the conversations that he was having with a major European wind power manufacturer about siting a new manufacturing facility in Indiana to leverage the opportunities IRA will provide, another European wind power company looking to expand its manufacturing in Colorado for exactly the same reason.
Dan Baer: That’s Vestas from Denmark.
Assistant Secretary Pyatt: Yeah, and a story repeating itself over and over again in the area of solar, in storage. So we will work through the differences and the concerns on the EV side, which are relatively time limited. I think what people will begin to focus on more is what happens when the federal government puts $36 billion a year over 10 years and the predictability that provides to the private sector into a sector like this. I always make the analogy to the Apollo project. If you look at how much innovation Apollo investments drove in computing, in semiconductors, in advanced materials, in aerospace, I think we’re going to be seeing the same kind of a story over the next decade.
Dan Baer: Some of those you’ve mentioned several times, Russia’s weaponization of its energy assets. Obviously, the energy transition requires new kinds of inputs to create the electrons on which we will fuel the future rather than molecules, but those electrons don’t come from nowhere. There’s been an increasing amount of focus on the new dependencies that we might have in a green energy era on critical minerals, on the processing of those critical minerals. One of the asymmetries between the United States and other major competitors, including China, is that the United States does not … Jake Sullivan and Joe Biden cannot simply point to three mines in Chile or DRC and say, “Go buy those three mines for the United States,” whereas some other governments can. What are we doing? What do you see as the biggest challenge in terms of preventing new dependencies that could result in coercive action by other states and what’s the hardest nut to crack there?
Assistant Secretary Pyatt: So I think there’s widespread agreement, especially with our key allies, that we don’t want to end the era of European dependence on Russian oil and gas and replace it with a new era of dependence on a single unreliable supplier of these critical minerals and all of the issues around the clean tech supply chain. There’s a lot that’s already happening. First of all, everybody is talking about it in a way that wasn’t the case even a year ago.
Second, in terms of what the State department is doing, we’ve got the Mineral Security Partnership, which is a department initiative bringing together key consuming countries with key supplier countries to uphold high ESGs, to get past the narrative of dependency in colonialism that surrounds a lot of the mining industry, and to identify some signature projects that will help to demonstrate what right looks like.
Similarly, what Amos is doing with the partnership with global infrastructure and investment, PGII, mobilizing capital to present an alternative, to say to the developing world especially, “You don’t have to only go with door number one, which involves lack of transparency, which involves taking a lot of rocks and putting them on ships and moving them someplace else for all the value addition, for the processing and the manufacturing, but rather, which will create opportunities for your own citizens.”
It was interesting. I had the opportunity at UNGA in September to be part of the Mineral Security Partnership ministerial that Secretary Blinken launched along with Jose Fernandez and Rita Jo Lewis at EXIM. One of the African foreign ministers who was there came up to me afterwards and she said, she said, “Ambassador, what I really appreciate is that you Americans are actually talking to us about this because we didn’t hear from you.” I think that was the mistake we made. We left the field open, and now we’re having conversations in Asia, in Africa, in Latin America, in the countries that have these resource endowments about how to leverage those endowments and build bridges with the private sector.
Then the last point I would make in terms of what’s happening on this side is just to zero in on what our private sector is doing. Having talked with our big auto companies and some of our other clean tech companies, it’s fascinating to me. It reminds me of the days when Ford Motors was growing rubber trees in Malaysia to get rubber for tires. We’re back to that business model because everybody recognizes that there’s an enormous shift that’s coming, especially in the transportation sector, and that we want to ensure both reliability, but also if you are a US auto manufacturer, you’ve got shareholders and you’ve got social responsibility committees, and you can’t get away with the behaviors that, to put a sharp point on it, China in particular has been guilty of in some of its exploitative industries.
Dan Baer: Diplomacy, I mean, coming back on the field can mitigate some part of the-
Assistant Secretary Pyatt: A lot.
Dan Baer: … some part of that challenge, but doesn’t, I mean, when you look at the numbers of how much we will need of some of these raw materials in order to, say, have a United States of America or much less an India that is fully adapted to green tech, doesn’t it ultimately require that we are in some sense dependent on what we would now characterize as unreliable actors?
Assistant Secretary Pyatt: I think that’s the challenge to our diplomacy. That’s what we’re trying to address with these initiatives. I think it’s really early days to tell. Some of this is going to be domestic. I mean, the Biden administration, you’ve got things like the battery minerals initiative committed to moving faster on licensing to build an infrastructure in the United States so that we can do some of this stuff again here in the US, but you and I are both from the West and you’ve always got to balance the local community interests against what all of us bicoastals need to power our Teslas and everything else.
On that point, I would also, and this is, again, why India is so interesting to me, and this came through in the conversation we had in Abu Dhabi, India is extremely committed to electrification of transport, but it’s electrification. It’s not going to involve Teslas and Rivians, at least to the majority part. It’s going to be electrification of buses, electrification of tuk-tuks, micromobility. So we are in the very early days, and I think thinking back to what the US auto industry looked like at the dawn of the internal combustion age, we were in that same infancy now.
So again, that’s why it’s so powerful for the State Department to have a toolkit that lets Secretary Blinken, when he sits down with a foreign minister counterpart, draw on the best advice of geologists and people who’ve been involved in dialogues that we’re conducting all around the world with ministries to try to help build regulatory frameworks, to harmonize standards, and to make sure that we don’t fall into the trap that you identified.
Dan Baer: Do you think that the pandemic, that one of the silver linings of the pandemic will be or two of the silver linings of the pandemic will be, first, that it pushed us into an era of big numbers, what I call the era of big numbers, where an investment like the IRA is possible? I don’t think it would’ve been five years ago. I mean, it wouldn’t been too much money for members of Congress to contemplate, and the need for emergency response during the pandemic pushed us to a capability to allocate that much in funding.
The other thing is the speed with which we developed vaccines even though, I mean, you remember the early days of the pandemic where you would hear podcasts or whatever saying, “The fastest we’ve ever been able to develop a vaccine is seven years of this sort,” or whatever. Obviously, we proved that our fastest wasn’t our fastest. Is that also part of what you think we’re about to see on some of the technological changes?
Assistant Secretary Pyatt: No, it’s a really interesting question. I find it really hard to identify silver linings for the pandemic.
Dan Baer: Of course.
Assistant Secretary Pyatt: My COVID experience sucked, and I’ve spent most of it in Greece.
Dan Baer: So everything is relative perfect.
Assistant Secretary Pyatt: I will say this. I think one of the healthy things that our experience taught us is the power of partnerships between government and private sector working together. I will always remember, and I will vividly remember late summer 2020, Albert Bourla, the CEO of Pfizer, Greek American. He came to visit me in Athens and we were sitting on my patio meeting outside because that’s what you did in those days.
He said to me, “I think we’re going to do it.”
I said, “What do you mean you think you’re going to do it?”
He said, “Well, we’ve just started to get some of the trial data and I think we figured out how to make this vaccine work.”
It still gives me chills to think back to that moment. First of all, it was a demonstration of the extraordinary power of the American private sector in our innovation ecosystem in particular, what our scientists and our labs can achieve, but also, none of that, Pfizer wouldn’t have been able to do that or any of the other vaccine manufacturers without a very strong hand up from the federal government. So I think that’s the lesson that comes out of this. Certainly, the Biden administration has identified the climate crisis as a challenge, just as existential and just as consequential as the pandemic.
I think the other analogous aspect to this was if you look at how generous the United States was once we had this innovation in trying to diffuse it as fast as possible because everybody understood that if you didn’t deal with COVID globally, we would never be back in a room like this again in the United States. I think climate is the same way. The investments that our laboratories and our companies and our scientists are making are not just for the good of the United States, they’re for the good of the global commons.
Dan Baer: You are a current representative of the US government, so I will allow you to paint that rosy picture of how quickly we shared the technology and we’ll put in my own two sentences, which is that I’m not sure we either for purposes of public diplomacy or of efficacy did as well as we could have on that front. I think, actually, it would’ve been a smart move for the Biden administration. I understand the domestic politics of needing to take care of people at home first for political reasons, but it would’ve been a smart move for the Biden administration to figure out some way to telegraph sooner that we were prepared to provide the vaccines to the world and to demonstrate American leadership that way.
I think there will be another. It’s possible that there will be another opportunity with respect to green technology to do likewise because as soon as something, if there are breakthroughs, and I don’t know that you expect a silver bullet, but if there are a collection of brass bullets that end up being the breakthroughs, the speed of distribution of those breakthroughs will make a difference for everybody on the planet, and we will need to balance commercial interests, domestic politics, and the interests of every people around the world as we accelerate the distribution of this.
Assistant Secretary Pyatt: I think the high probability outcome is the brass bullets. It’s more efficient turbines. It’s smarter batteries. It’s breakthroughs on carbon sequestration and utilization, which is going to be a big part of the story here. I should have made the point, Dan. I forgot when you talked about reactions and how the IRA experience is rippling globally. Just look at what happened between France and Germany over the weekend. All of a sudden, Europe is now saying, “Okay, the only way we’re going to be able to keep pace with the Americans is if we too make substantial investments in this clean technology area.” I’m quite confident that scientists in laboratories in Berlin and Paris are going to be just as successful as those in the United States.
Dan Baer: Yeah. The catalyst argument in hindsight may be more prominent than the memories of angry-
Assistant Secretary Pyatt: Automobile companies.
Dan Baer: … macro coming to Washington in December. I want to shift now to Ukraine, but remind people that there’s QR codes on your seats if you’re in the room, and you can submit questions on YouTube if you’re watching online because I will turn to questions in a moment, but I’m going to shift to Ukraine and I will ask you two questions. The first one is a practical one. You’ve been appointed as the G7’s coordinator on the reconstruction of Ukraine’s electrical grid. We’ve all watched as Russia has purposefully destroyed civilian infrastructure in Ukraine, which obviously has enormous civilian consequences. Thinking about a country that is still under daily attack and missile strikes, a country of 40 million people that you know well, how do you even begin to think about reconstruction of Ukraine’s electric grid? Where do you start? Who do you call? What are you doing to organize that process?
Assistant Secretary Pyatt: So first, you call the Ukrainians, who have just demonstrated this extraordinary resilience and stick to itness. You’re exactly right. I mean, when we started this work in October, the real focus was how to make sure that Putin could not achieve by attacking civilian infrastructure what he had failed to achieve on the battlefield. It’s clear that the Kremlin’s play was they were going to bring down the grid, cast Ukrainians into darkness and cold, the most difficult part of the winter, and force them to sue for peace. That has not worked. It largely has not worked because of the courage and resilience of the Ukrainians, but also because of what we and many others have done, airlifting transformers. Who imagined on February 24th that we would’ve come to that point?
I was back in Kiev December amid what at that point was the largest single day of airstrikes by the Russians. I had a country team briefing in a bunker. Hadn’t put that on my bingo card, but it was so apparent to me from that visit that every missile that Putin was sending was simply reinforcing the Ukrainian resolve to prevail and to be successful, and extraordinary courage by energy workers who’ve become heroic figures after the fighters of Azovstal in Mariupol, and iconic heroes of all of this are the electricity workers who are out repairing turbines and transformers.
The Ukrainians have been extraordinarily innovative in cannibalizing from one facility to another. Some of the materials that we airlifted to Poland in December based on work that the Department of Energy had led reaching out to suppliers here in the United States, some of that stuff was actually installed in a matter of days.
That’s why it’s so important that we continue to work on this, but we’re really trying to do two things at the same time, both repair the damage that Putin is doing daily and keep so that the grid can stay up and recognizing that there’s an economic feedback loop from this because right now, Ukrainian industry is dealing with rolling blackouts, which means factories aren’t productive, which means that the fiscal burden continues to grow, but also listen to the Ukrainian’s very clear message that what they want to build back is not a 1990s Soviet energy grid, but a European grid, meaning the highest standards in terms of decentralization, resilience, climate impact, more wind solar biomass, figuring out where do they go with their nuclear infrastructure, and not to forget that, but for the Russian occupation of the Zaporizhzhia nuclear compacts, the largest nuclear complex in Europe, Ukraine would still be an energy exporter to the rest of Europe.
So we’re trying to do two things at the same time. We’re doing it jointly with our partners. I mentioned the G7 call yesterday. The dramatic aspect of the G7 call was that Foreign Minister Kuleba was speaking to us with sandbags behind him because he was in a bunker at Bankova because the whole country was under air raid warnings because the jets had taken off in Belarus yesterday afternoon when he was dialing into us.
So we’re going to stick to this, as President Biden says, as long as it takes, but I’m very, very confident that the best guide of what the future is going to look like is going to come from the Ukrainians themselves. These energy grid supply chains are globalized. So our partnerships with Japan, critically important, with Korea, the work that we do with US companies, I’ve been talking to GE here in the United States, what we’re doing in Europe, and, again, recognizing Ukraine’s destination.
It’s more clear today than when you and I were standing out on Maidan in December of 2013. Today, the only future that Ukraine can see for itself flies in Europe and full European Union membership. I was so impressed to see Foreign Minister Baerbock in Kharkiv a few days ago, a city a couple dozen miles from the Russian border, declaring once again Germany’s commitment to lead Ukraine’s movement towards Europe, and that’s a goal that the United States has shared since the collapse of the Soviet Union.
Dan Baer: One of the things, Russia has historically weaponized winter, and you and I were talking the other day and you mentioned that Francois Heisbourg had quipped that general winter has defected to the other side, to the west. While it’s true that we can be grateful for the gift of a relatively mild winter, particularly in Europe, that has averted some of the worst, although still significant pain in terms of energy prices, has averted some of the worst case scenarios that people envisioned, say, in September for Europeans as a consequence of this war. Although Ukrainian resolve remains strong, how do you answer the question how does this end?
Assistant Secretary Pyatt: Yeah. I think it’s only the Ukrainians that can answer that question. It’s really hard, especially at a moment when Putin has demonstrated zero interest in ending the war. When I was ambassador, I used to say, “This war can end with one phone call,” and that’s still the case today. Vladimir Putin picks up that red phone in the Kremlin today, says, “Okay. Stand down. The war’s over.” In the meantime though, I think we would make a mistake not to recognize the enormous changes that are happening, especially in the domain that I’m responsible for, energy, energy security. The European energy map has been changed beyond all recognition. It’s changed much faster than anybody would’ve predicted on February 24th.
Thanks significantly also to American LNG producers who have played such a key role in helping Europe position itself to weather the energy coercion that Putin has engaged in. I was still in Greece in May, and actually, I was right up on the Bulgarian border in early May with then Prime Minister Petkov right after Gazprom had cut off Bulgaria. That was at Bulgaria, which at that moment was pretty much 100% dependent on Gazprom for its gas supplies.
We all have worked together, the United States working with Bulgaria, working with Turkey, working with our suppliers in the United States to figure out how to solve that challenge, and we’ve repeated that story over and over again in the context of the working group that President von der Leyen and President Biden committed to. As I said, that decoupling of European and Russian energy I believe is permanent with enormous consequences for global markets. It’s also accelerating the energy transition.
So I think that part is clear. I think the Ukrainian story remains to be written, but as the president and Secretary Blinken and so many others have made clear, it’s only the Ukrainians who are going to dictate what this end state looks like. As I said, on the energy side, I am optimistic that the end state, whatever it looks like politically and geographically, is going to involve an energy economy that will be much more European and much more resistant to the energy coercion that Russia really perfected against Ukraine over repeated government’s law before my arrival in Kiev.
Dan Baer: Thanks. I want to turn now to questions from the audience. First question, “Is the administration considering tariffs focused on Chinese electric vehicles and batteries from, say, BYD and other Chinese auto makers?”
Assistant Secretary Pyatt: Yeah. So this is the complicated set of issues. I mean, first of all, you’ve got all the questions that reside with the commerce department, anti-dumping, all of those issues. We’ve got the Uyghur Force Labor Prevention Act, which is aimed in particular at or which has consequences in particular for the solar manufacturing sector. I was talking recently to the CEO of one of our largest renewable energy companies here in the United States who was describing to me how projects that were a six-month project a few years ago are now two-year projects just because these supply chains have become so congested.
The challenge is, especially in some key sectors where our dependency is close to total on China, it’s going to take a lot of hard work to get us from 90% to 67, and that’s going to be the definition of success. So I think there are already a variety of trade policy instruments that are being applied in this area, but our approach is a positive one. It’s how to work with other partners to develop alternatives, both reshoring here in the United States, but also developing opportunities elsewhere.
We’ve talked already about India. I think Ukraine’s actually a really interesting one. I think for post-war Ukraine, all the areas that Ukraine excelled at during the Soviet Union, aerospace, metallurgy, these are all transferrable industries in terms of building new supplies and the world’s going to need a lot of supplies of windmills and nacelles and solar arrays and battery electrolyzers and all the rest of that stuff.
So I think what you’re going to see is a State Department where economic officers are much more empowered to go out and to really work on how we build these partnerships because, again, these are issues that we cannot solve domestically in the United States. We can only solve them working with our international coalitions.
Dan Baer: Another audience member asks, “To support an energy transition, climate and energy policies need to be linked to social or development programs. Is this a priority for the US government? What kinds of development programs are we activating?” I guess I might add to that, do you work at all with counterparts at USAID when you’re-
Assistant Secretary Pyatt: Every single day.
Dan Baer: … when you’re thinking about how to do energy diplomacy?
Assistant Secretary Pyatt: Yeah. So there’s the energy justice equation. It’s also immediately connected to our agenda of encouraging, especially developing countries to think more ambitiously about energy transition. So we have our JETPs, for instance, in Indonesia providing specific resources, work mobilized from the United States and other developed country partners in order to incentivize the choice to phase out coal on an accelerated basis and move to more renewable sources of energy. So that’s very much part of the conversation, the challenges, resources.
We talked a lot about this in Sharm El-Sheikh, of course, at COP in the whole loss and damage debate. As I said, my next two big international trips are India and Pakistan. So I’m sure there will be lots of conversation in that setting as well. We can’t do this alone. We have to work with our allies and, ultimately, the private sector is going to play an indispensable role as well.
Dan Baer: This question is from Noah Gordon who’s in the front row and he asked, “Is there a dark side of the trend toward [inaudible 00:49:00] critical mineral production? We’ve recently seen Indonesia ban the export of raw nickel. Zimbabwe banned the export of lithium. Are you concerned that more countries might follow their lead?”
Assistant Secretary Pyatt: So I think the challenge we face is these are industries which historically have been associated with colonialism, with exploitation. That’s the paradigm we’re trying to change with the Mineral Security Partnership, to demonstrate our commitment as the United States as the developed world to having a candid and respectful dialogue with each other and to understand how to build an industry for the future which benefits citizens on both ends of the equation. It is clearly not to the benefit of resource endowed countries to take tons and tons of rocks and put it on a ship and send it someplace else where all the processing and the value addition happens, and that unfortunately is the business model in some of these key areas. So I think that’s what we’re trying to overcome.
I think the other point goes back to what Dan alluded to was it’s just the enormous demand effect. I remember talking to one of our DOE lab scientists focused on lithium, who’s talking about the expected growth in lithium demand just in the United States, times 40. These are astronomical requirements. So there’s going to be plenty of work to go around. It does not surprise me that countries that are endowed with these resources are looking to ensure that they are able to enjoy some of the benefits of those resources as well.
Dan Baer: I want to combine two questions here. The first one is, “How do you see the role of gas and LNG, especially in the African context?” noting the energy crisis and the abundant gas molecules, but more broadly, we have a question about, “How countries in the global south will be part of the US and the global north’s plan to mitigate the climate crisis through an energy transition? What are we doing to make sure that countries in the global south are integrated into those plans as partners?”
Assistant Secretary Pyatt: So that’s what the COP process is about. That’s what the Paris accords were about. We all have this commitment. We have to work towards it. We’re not going to be successful if the climate agenda gets interpreted as the no energy agenda. One of my DOE colleagues made the point once. He said, “In much of Africa, the energy transition is about the transition from not having energy to having energy,” and we have to be sensitive to that.
You asked about gas. I mean, clearly, LNG is going to be an important part of the story in the years ahead. We want that LNG to be mitigated to the maximum extent possible. One of the things that I did when I was in a Abu Dhabi with ADNOC, I went to visit steel mill in UAE, that is the world’s first zero carbon steel manufacturing facility. All of the CO2 from that mill is captured and then re-injected for enhanced recovery in their oil fields, where for the remainder of human history it’s going to be locked underground, but what’s really interesting is that same technology is now going to be transferred or is going to be deployed on a steel mill here in the United States.
So LNG and the LNG market, of course, has been as disrupted as anything has been by Putin’s invasion and the locking in of large volumes of gas that Russia formally sent to Europe via pipeline for which it now has no market and no ability to evacuate that resource. So the United States is going to remain critically important. Qatar, where I also was on this recent trip, is going to have a very large role to play, but you see a lot of other efforts. East MEd, an area that I worked on when I was ambassador, East MEd Gas is going to happen clearly and with American companies working with partners in the Eastern Mediterranean. You have major Chevron commitments and aspirations in South America, and ExxonMobil likewise.
So gas is going to be a significant part of the story, but our philosophy is essentially work as a good partner with the developing world on energy development, but seek an outcome in which as much of that energy development as possible happens in a way that has the least carbon footprint, which means more wind, more solar or more geothermal, more small nuclear. We haven’t talked about small nuclear, SMRs, but I think that will necessarily be part of the story, but LNG isn’t going away. I mean, look at the United States, our own experience with the significant reduction of our CO2 footprint, a large portion of which is attributable to fuel switching, for electricity generation away from coal and towards LNG. So there’s a benefit there and we just need to figure out how to manage that resource in a way that has the lowest possible CO2 impact.
Dan Baer: Okay. I’m going to frame … We talked about brass bullets and silver bullets. So I’m going to frame this next question from the audience. There’s a question about whether or not you believe there’s a technology that doesn’t require the traditional infrastructure for an electric grid. Can Africa go gridless in the same way that some countries leapfrogged hard phone lines and went straight to cellular? I guess the question is whether that’s an analogy that you think applies in this space or whether you think this is more about a rapid passing through previous phases. Is there a leapfrogging that you believe is going to happen?
Assistant Secretary Pyatt: No. I mean, I think every country is going to look different. I talked earlier about my India experience, but I remember leaving in 1994 in what was still a very difficult economic environment. Then coming back in 2002, one of the first things I noticed was a guy digging a ditch outside the embassy wearing a lungi, who had a cellphone tucked into the side of his lungi, and it’s like, “Something has changed here.” A reliance in those days was offering ridiculously inexpensive cellphone plans, and that’s really what accelerated that deployment.
So in the same way, I think in a lot of the developing world you’re going to see a rescaling of some of these technologies. ISA, the International Solar Alliance that we work with, they have some very interesting business models which are rolling out in South Asia but also now to Africa with microgrids, with a small solar package, which is paid for principally by the commercial customers that have to have it, whether those are cellphone operators or local stores, but also offering a product, for instance, to community members, very poor living in villages, who they don’t care about having power all the time, but they really, really want to have it from 7:00 till 9:00 PM, for instance so that they can cook their dinner and their kids can study under a light. So figuring out a business model there is not something that dominion power is going to come up with, but I think you’re going to see evolutions in different directions.
Dan Baer: We have several more questions from the audience, but I’m going to take the liberty of asking you a final one that I hope you’ll … There’s a lot of young researchers in the room, some more mature researchers as well, and I wonder-
Assistant Secretary Pyatt: The young ones are on the stage.
Dan Baer: Thanks. I wonder, given the first few months that you’ve had in this job, what’s one or two problems that you haven’t had, you and your team haven’t had time to step back and examine and that you wish somebody would spend some time thinking about because it would be interesting for you to see the output of?
Assistant Secretary Pyatt: What the energy system is going to look like five or 10 years from now. So the innovations that are near enough to be identified but not so far out that there’s a clear path. I mean, I can give you a pretty good picture of what energy transition is going to look like between now and 2023, but what’s going to surprise us-
Dan Baer: It is 2023.
Assistant Secretary Pyatt: Excuse me, 2024, but what’s going to surprise us as we get to 2030 and 2040, and where the innovation’s going to come from? So that’s the thing every day I wish I had a crystal ball because, again, if I was doing this a decade ago, I would’ve gotten it wrong.
I think the other thing that we always have a need for is just listening. I’ve been 33 years in the State Department, the vast majority of that time overseas, and the most important job I have as an American diplomat overseas is to listen to others. I think helping us here in Washington where you’re consumed by the daily inbox and press guidance to have a clear picture of what’s the conversation look like in Sub-Saharan Africa or West Africa, West Africa, which has its own offshore gas resources in a lot of cases, so area-focused researchers who can do a good job of teeing up, “Here’s how the issues are being framed. Here’s what we in the United States could learn, and here’s how the United States can be the best possible partners,” because that is the fundamental principle of American foreign policy today. We’re the good guys and we want to be strong partners in helping the world to achieve progress on these global issues that are so consequential for American citizens as well, and we’ve talked about a couple of them today.
Dan Baer: Great. I want to thank Assistant Secretary Pyatt for coming to Carnegie today. I will tell you that, actually, your point about the 2030 question or the 2030 timeframe, we had Salman Ahmed, the secretary head of policy planning here and former Carnegie Senior Fellow here a few months ago. When I asked him, “What do you think the incumbent in your seat will think about in 2030 that you are not as focused on today or that you don’t as well understand today?” he said, “The one thing that I think we’re going to be completely taken by surprise by is just how much energy is going to transform the world that we live in, the energy transformation, the climate crisis is going to-”
Assistant Secretary Pyatt: Yeah. Salman and I have been having this conversation on an ongoing basis and then trying to figure out and recognize also though that it’s happening in a world where we have adversaries, and that’s where E&R, that’s where the geopolitics aspect of this comes from.
Dan Baer: Right. It’s not just a trend that is evolving in a vacuum and politics happens on the way.
Assistant Secretary Pyatt: It’s not all rainbows and unicorns. Vladimir Putin comes along and upsets the applecart.
Dan Baer: Right, and there will be others. Thank you very much, Geoff Pyatt. It’s a pleasure to have you here at Carnegie. Thank you to everybody who tuned in online and for those who came on a rainy day in Washington to be with us in the room. We look forward to having you back here again sometime soon.
Assistant Secretary Pyatt: Great. Thanks, Dan, and Congratulations to Carnegie on all of this. Thank you.