Of all the potential implications of blockchain for the energy sector, the energy use of cryptocurrencies – and bitcoin in particular – has captured the most interest.
As the price of bitcoin skyrocketed in 2017, attention turned to the cryptocurrency’s energy and environmental footprint. High-profile news articles reported that electricity use of the bitcoin network had equalled that of medium-sized countries and was on track to consume as much electricity as the United States in 2019 and all of the world’s energy by 2020. A widely reported article in Nature Climate Change warned that Bitcoin emissions alone could push global warming above 2°C.
In this commentary, we explain why and how bitcoin uses energy; dig into published estimates of bitcoin energy use and provide our own analysis; and discuss how these trends might evolve in the coming years.
Why does bitcoin use energy?
In order to understand why and how bitcoin uses energy, we first need to understand its underlying technology: blockchain. Blockchain offers a new way to conduct and record transactions, like sending money. In a traditional exchange, central authorities (e.g. banks) verify and log transactions. Blockchain removes the need for a central authority and ledger; instead, the ledger is held, shared, and validated across a distributed network of computers running a particular blockchain software.
The lack of a centralised, trusted authority means that blockchain needs a “consensus mechanism” to ensure trust across the network. In the case of bitcoin, consensus is achieved by a method called “Proof-of-Work” (PoW), where computers on the network – “miners” – compete with each other to solve a complex math puzzle. Each guess a miner makes at the solution is known as a “hash,” while the number of guesses taken by the miner each second is known as its “hashrate.” Once the puzzle is solved, the latest “block” of transactions is approved and added to the “chain” of transactions. The first miner to solve the puzzle is rewarded with new bitcoins and network transaction fees. The energy use of the bitcoin network is therefore both a security feature and a side effect of relying on the ever-increasing computing power of competing miners to validate transactions through PoW.
How does bitcoin use energy?
The energy use of the bitcoin network is a function of a few inter-related factors (some of which respond to the changing price of bitcoin):
- mining hardware specifications, notably power consumption and hashrate;
- network hashrate, the combined rate at which all miners on the network are simultaneously guessing solutions to the puzzle;
- “difficulty” of solving the puzzle, which is adjusted in response to the network hashrate to maintain the target block rate of one block every 10 minutes; and
- energy consumption by non-IT infrastructure, such as cooling and lighting.
The rising price of bitcoin, particularly as it rose to all-time highs in December 2017, drove huge increases in hashrate and difficulty, and the development and deployment of more powerful and energy efficient mining hardware.
The IT infrastructure for bitcoin and other cryptocurrencies has evolved rapidly over the past decade. In the early days of bitcoin (2009), hobbyists used standard central processing units (CPUs) to mine bitcoin. By October 2010, miners started to use more powerful graphics processing units (GPUs) as mining difficulty increased. By June 2011, miners – increasingly large and more industrial operations – used more powerful (but less energy-efficient) field-programmable gate array (FPGA) hardware, and a year later, moved to application-specific integrated circuits (ASICs).
ASICs are purpose-built chips, in this case, to mine bitcoin. The latest ASICs are both more powerful and more energy efficient – around 50 million times faster (H/s) and a million times more energy efficient (H/J) in mining bitcoin than the CPUs used in 2009.
How much energy is bitcoin using today?
Diverse methodologies, limited data availability, and highly variable conditions across the industry (e.g. mining hardware used; electricity costs; cooling needs) make estimating bitcoin energy use extremely challenging (Koomey, 2019). Therefore, all estimates must be interpreted with caution.
Recent published estimates of bitcoin’s electricity consumption are wide-ranging, on the order of 20‑80 TWh annually, or about 0.1-0.3% of global electricity use (Bendiksen & Gibbons, 2018; Bendiksen & Gibbons, 2019; Bendiksen, Gibbons & Lim, 2018; Bevand, 2018; BNEF, 2018; De Vries, 2018; Digiconomist, 2019; Krause & Tolaymat, 2018; Morgan Stanley, 2018; Rauchs et al., 2018; Stoll et al., 2019; Vranken, 2017).
These figures can appear large when compared to countries like Ireland (26 TWh) or emerging technologies like electric vehicles (58 TWh in 2018), but small when compared to other end-uses like cooling (2 020 TWh in 2016). Nonetheless, bitcoin mining is a highly mobile industry, allowing it to migrate quickly to areas with cheap electricity. Localised hotspots and electricity supply issues can emerge quickly, generating strong backlash from regulators and the public.
Bitcoin has also been compared on a per-transaction basis to VISA payments, the broader banking system, and gold mining. However, comparisons on a per-transaction basis are not meaningful in the context of PoW blockchains, particularly because the energy required for the networks to function is independent of the number of processed transactions. A recent peer-reviewed article compared the energy intensity of mining bitcoin (17 MJ/USD) to the mining of other metals like aluminium (122 MJ/USD) and gold (5 MJ/USD).
By far, the most frequently cited estimate in news media is the Bitcoin Energy Consumption Index (BECI), which uses a top-down approach that assumes miners spend (on average) 60% of their revenues on electricity at a rate of 0.05 USD/kWh. These key assumptions have been criticised to overestimate electricity consumption; indeed, BECI estimates represent the high range of published estimates to date.
Bendiksen, Gibbons (2018; 2019) & Lim (2018) also use a top-down approach, but undertake significant data collection efforts on existing mining hardware and mining locations to inform their assumptions and analysis. They also conduct sensitivity analyses around key uncertainties, including electricity costs and capital depreciation schedules. Under their central assumptions, they estimate that the bitcoin network consumes between 35 TWh (May 2018) and 41 TWh (November 2018; June 2019) per year.
Other researchers have calculated lower-bound estimates using a bottom-up approach (e.g. Deetman, 2016; Morgan Stanley, 2018; Valfells & Egilsson, 2016). This approach assumes that all miners are using the most efficient mining hardware to achieve the network’s hashrates (TH/s). The Bitmain Antminer S9 series (0.1 J/GH), used by two-thirds of miners worldwide, is typically used as a benchmark.
Using this approach, we can estimate that thebitcoin network (excluding cooling) consumed 31 TWh in 2018. Based on data collected from mining facilities in China, cooling and other ancillary demands accounts for 30% of electricity use overall, thereby adding another 42% to the lower-bound estimate. Therefore, we estimate that bitcoin mining consumed around 45 TWh in 2018, which aligns well with the latest peer-reviewed estimate of 45.8 TWh as of November 2018 (Stoll et al., 2019).
With the recent run up in price and hashrate, energy consumption is expected to be much higher in 2019. Through the first six months of 2019, bitcoin mining has already consumed an estimated 29 TWh.
While these early estimates provide a rough indication of bitcoin energy use today, it is clear that researchers need more data, in particular from mining facilities, to develop more rigorous methodologies and accurate estimates.
Bitcoin and climate change
Headlines concerning the environmental impacts of bitcoin re-emerged last October, when a commentary article from Mora et al. in Nature Climate Change concluded that “…projected Bitcoin usage, should it follow the rate of adoption of other broadly adopted technologies, could alone produce enough CO2 emissions to push warming above 2°C within less than three decades”.
A closer look reveals serious issues in the study’s methodology and assumptions, notably around bitcoin adoption rates, the efficiency of mining hardware, and the assumed electricity mix (Masanet et al., 2019, Nature Climate Change, In Press). Crucially, the use of country average (and in some cases, world average) emissions factors inflates the GHG estimates, since bitcoin mines are typically concentrated in renewables-rich states and provinces.
Indeed, the selection of mining locations depend on a balance of several key factors, including access to low-cost electricity, fast internet connections, cool climates, and favourable regulatory environments. For these reasons, China, Iceland, Sweden, Norway, Georgia, the Pacific North West (Washington State, British Columbia, Oregon), Quebec, and upstate New York are key bitcoin mining centres.
Around 60% to 70% of bitcoin is currently mined in China, where more than two-thirds of electricity generation comes from coal. But bitcoin mining facilities are concentrated in remote areas of China with rich hydro or wind resources (cheap electricity), with about 80% of Chinese bitcoin mining occurring in hydro-rich Sichuan province. These mining facilities may be absorbing overcapacity in some of these regions, using renewable energy that would otherwise be unused, given difficulties in matching these rich wind and hydro resources with demand centres on the coast.
Electricity generation in other key bitcoin mining centres are also dominated by renewables, including Iceland (100%), Quebec (99.8%), British Columbia (98.4%), Norway (98%), and Georgia (81%). Globally, one analysis estimates that the bitcoin is powered by at least 74% renewable electricity as of June 2019. Another analysis of data from 93 mining facilities (representing 1.7 GW, or about a third of global mining capacity) estimates that 76% of the identified energy mix includes renewables.
Based on these analyses and data from IPO filings of hardware manufacturers and insights on mining facility operations and pool compositions, bitcoin mining is likely responsible for 10‑20 Mt CO2 per year, or 0.03-0.06% of global energy-related CO2 emissions.
Outlook for bitcoin energy use and emissions
Apocalyptic headlines that bitcoin would consume all of the world’s energy by 2020 echo back to warnings from the late 1990s about the internet and its growing appetite for energy, including one Forbes article in 1999 that predicted that “[…]half of the electric grid will be powering the digital-Internet economy within the next decade”.
Since then, researchers have collected real-world data and developed and refined methodologies to establish rigorous estimates of the energy use of data centres and the global ICT sector, including by the IEA. The dire predictions about the energy use of the internet failed to materialise despite exponential growth in internet services, largely because of rapid improvements in the energy efficiency of computing and data transmission networks.
The outlook for bitcoin energy use is highly uncertain, hinging on efficiency improvements in hardware, bitcoin price trends, and regulatory restrictions on bitcoin mining or use in key markets. Bitcoin prices in particular are extremely volatile: between December 2017 and 2018, its value fell by 80%, but has nearly tripled since.
It is important to recognise that bitcoin is just one cryptocurrency, which is one application of blockchain, which is itself one example of distributed ledger technology (DLT). Ethereum (ETH), the second largest cryptocurrency by market value, processes more than twice as many transactions as the bitcoin network while using only about one-third of the electricity consumed by bitcoin. ETH also operates on a Proof-of-Work (PoW) consensus mechanism, but its founder has announced plans to move to Proof-of-Stake (PoS) in an effort to reduce its energy intensity. PoS and Proof‑of‑Authority (PoA) could help reduce energy use while also addressing scalability and latency issues. Other DLTs like Tangle and Hashgraph similarly offer the promise of lower energy use, scalability, faster transactions, and no transaction fees compared to blockchain.
Over the coming years, other applications of blockchain – including those within the energy sector – are likely to garner more attention. As the scope and scale of blockchain applications increases, these trends combined are likely to materially reduce the future energy footprint of its technology.
Sensational predictions about bitcoin consuming the entire world’s electricity – and, by itself, leading our world to beyond 2°C – would appear just that…sensational. That said, this is a very dynamic area that certainly requires careful monitoring and rigorous analysis – particularly, a careful monitoring of local hotspots.
The energy use of bitcoin and blockchain is just part of the blockchain and energy story. In our next commentary, we’ll look at how blockchain is already impacting the energy sector, dive into some of the most promising applications, and explore the technological, regulatory or market design challenges that await.
China’s Unorthodox Intervention in the Global Oil Market
Apparently, China has been the talk of the town for quite some time. While the entire yesteryear passed in a flurry of blame game over the pandemic, this year has been nothing short of a blessing for Xi’s regime. However, while China rapidly compensated for the drastic slump last year, the bustling economy has now cooled down – though a bit prematurely. Due to the expansive outbreak of the delta variant, China – like most countries around the world – now faces surging inflation and a crippling shortage of raw materials. However, while one might get a bolder vibe from China’s recent crackdown on industrial giants, the supposed ‘Second Cultural Revolution’ seems on a divergent path from the government’s latest aspirations for the domestic industry.
China seems to be on a path to harness growth that appears to be slowing down as the global economy battles uncertainty. However, while many expected China to take orthodox measures to prolong growth, hardly anyone expected a drastic change of strategy: intervening in a close-knitted global market like never before.
China recently posted its most robust trade surplus in history, with a record rise in exports jumping 25.6% from last year to stand at $294.3; $10 billion more than any previous month. However, while the glowing figures imply sturdiness, the underlying fragility of the Chinese economy is not disguised. In the past few months, China’s production engine has taken a toll as surging energy costs have inhibited production capacity. The factory-gate inflation stands at a 13-year-high which has forced factories to cut output. Amid declining domestic demand due to covid restrictions, manufacturing surveys show that China’s export orders are eroding as supply bottlenecks coupled with energy costs have weighed heavily on the production function. To counter the problem, China recently supplied its reserves into the domestic market; undercutting the surging global price tag dictated by the petroleum giants.
Last Thursday, China’s National Food and Strategic Reserves Administrator made a press release, confirming that the world’s second-largest economy tapped into its crude reserves – estimated at 220 million barrels – to “ease the pressure of rising raw material prices.” While China is known to intervene in commodity markets by using its strategic reserves, for example, Copper, Aluminium, or even grains.
Recently, China tapped into its national reserves to intervene in the global commodity market of industrial metals for the first time since 2010. The intervention was situated as a release to normalize surging metal prices and retain domestic manufacturers’ margins. However, it is a novelty that a national agency confirmed an active supply of petroleum buffer via an official press conference. And while no additional details were offered, it is presumed by global strategists that the press release referred to the 20-30 million barrels allegedly poured into the domestic industry around mid-July: when Xi’s government offered to supply crude to the OPEC.
Furthermore, China’s Stockpile Agency claimed that through open auctions, China’s reserve crude was intended to “better stabilize the domestic demand and supply.” It was apparent that as China ventured through a supply crunch when Brent Crude – Global Crude Index/Benchmark – breached the $76 bpd mark, the country instead resorted to utilizing its own stockpile instead of relying on expensive imported petroleum. Thus, it shapes a clear picture of how China managed to clock a phenomenal trade surplus despite not importing its usual crude quota.
While it is common knowledge that economies like the US and Europe maintain strategic petroleum reserves, the buffers held by China were utilized to actively manipulate the price in a ‘normalized’ oil market instead of their designated usage in supply crunches or wars. The situation today is anything but critical for the oil market to warrant such an intervention. As OPEC+ has boosted its output by 400,000 bpd starting August, output has bloomed beyond its peak since the price war back in April 2020. While the oil market is still well below the output capacity, mutually curbed by the OPEC+ alliance, the demand is still shaky and an equilibrium seems set. Yet, when we observe China – the world’s largest oil importer – we extricate reason that despite a growing economy, China continues to experience massive shortages: primarily in terms of oil, gas, coal, and electricity.
Furthermore, with the ensue of Hurricane Ida, massive US crude reserves have been wiped which has majorly impacted China as well. The US and China rarely stand on the same page on any front. However, even the White House recently asked OPEC to pump more crude into the market due to the rising gasoline prices in America. The same scenario is panning in China as energy shortages have led to surging costs while domestic demand is diminishing. The brunt is thus falling on the national exchequer: something China is not willing to haggle. While it is highly unorthodox of China to explicitly announce its intervention, many economists believe that it was a deliberate move on part of China’s communist brass to amplify the impact on the market. The plan seemingly worked as Brent fell by $1.36 to stand at $71.24 on Thursday.
If China’s commitment to normalize domestic energy prices is this significant, it is highly likely that another intervention could be pegged later in the fourth quarter. Primarily to counteract the contraction in export orders by cutting imports further to maintain a healthy trade surplus. In my opinion, it is clear that both the US and China are not willing to let Brent (and WTI) breach the $70-$75 bracket as key industries are at stake. However, while one takes a passive approach, the other is touted to go as far as pouring another 10-15 million barrels of crude by the end of 2021. Yet revered global commodity strategists believe that the downturn in prices is “short-lived” just like any other Chinese intervention in a variety of other commodity markets globally. And thus, experts believe that the pump is simply “not enough physical supply” to quite strike a permanent dent in an inherently flawed market mechanism.
Energy Forum Seeks To Analyze Africa’s Energy Potentials And Utilization
African Energy Week (AEW) 2021 in Cape Town, fully endorsed by the Government of South Africa, is committed to accelerating Africa’s energy growth with the aim of establishing a secure and sustainable energy future for every individual on the continent. Accordingly, AEW 2021 firmly believes in the role that oil and gas will continue to play in Africa and will emphasise the continent’s upstream market through a collaborative, International Oil Company (IOC) forum. Led by IOC executives, as well as government representatives from notable energy markets in Africa, the IOC forum aims to address the upstream challenges faced in Africa, providing solutions and strategies to drive exploration and make Africa more competitive for investment.
With the discovery of sizeable oil and gas reserves across the continent in recent years, regional and international explorers are turning an eye to the world’s final frontier market – Africa. Nigeria’s 200 trillion cubic feet (tcf) of gas reserves and 37.2 billion barrels of oil (bbl); Mozambique’s 11 tcf of gas; Senegal’s 450 billion cubic meters of gas; Libya’s 48 billion bbl and 53.1 tcf; and Egypt’s 77.2 tcf of gas have all made Africa the ideal destination for hydrocarbon exploration. What’s more, with many African countries making significant steps to enhance their regulatory environments, implementing legislation to create an enabling environment for investment, the continent has become a highly competitive market for exploration and production. Nigeria’s recently implemented Petroleum Industry Bill, Gabon’s new Hydrocarbon Code, and Angola’s inclusive petroleum regulation, to name a few, have all ensured a competitive and highly attractive market.
With the world’s six oil ‘supermajors’ – BP, Chevron, Eni, ExxonMobil, Royal Dutch Shell and TotalEnergies – all actively present in mature and emerging markets across Africa, the continent has become an upstream hotspot. AEW 2021 aims to accelerate this trend, promoting new upstream opportunities and ensuring both National Oil Companies (NOC) and IOCs drive the continent into a new era of energy and economic success. Accordingly, Africa’s premier energy event will host an upstream-dedicated IOC forum in Cape Town, led by IOC executives and government representatives. The IOC forum aims to address key challenges in Africa’s upstream market, whereby the diverse speaker panel will offer up solutions to expand exploration and production, while ensuring the continent remains competitive for investment in a post-COVID-19, energy transition era.
In addition to the discussion on upstream activities, the forum aims to highlight the role of IOCs in enhancing capacity building, whereby emphasis will be placed on IOC-NOC collaboration. IOCs have a critical role to play in Africa, not only regarding resource development, but human capital and local business development. In order for the continent to become truly sustainable and competitive, NOCs require support from IOCs. Accordingly, the forum aims to identify strategies to enhance cooperation and partnerships, with IOCs taking the lead in Africa’s energy development.
“AEW 2021 in Cape Town will offer a real discussion on Africa. Oil and gas are critical in Africa’s development and the African Energy Chamber (AEC) will not succumb to the misguided narrative that Africa should abandon its potential. The IOCs in Africa have demonstrated the continent’s potential, and by sharing strategies to enhance growth, address challenges, and accelerate upstream activities, they will be key drivers in Africa’s energy future. The IOC forum will not only offer a description of African reserves, but will provide clear, attainable solutions to exploitation, exploration and production with the aim of using energy to enact stronger economic growth. By coming to Cape Town, attending the IOC forum, and interacting with African ministers from across the continent, you will be able to be a part of Africa’s energy transformation,” stated NJ Ayuk, Executive Chairman of the AEC.
Nord Stream 2: A Geopolitical Tension between Russia and Ukraine and the European Dependence
Nord Stream 2 gas pipeline is a 1,230-kilometer direct linkage between the Russian natural gas producers and the consumer market of Europe. The model was made keeping in mind the successful operation of the existing Nord Stream pipeline after a thorough analysis by Nord Stream AG. The main aim of NS2 is said to be the increase in the annual capacity of the existing pipeline up to 110 billion m³. The pipeline starts from the Russian region of Ust-Luga then stretches through the Baltic Sea and ends at the area of Greifswald in Germany. It is due to this route that the project is mainly considered to be controversial. Bypassing directly through the Baltic Sea, the importance of Ukraine for Russia for exporting natural gas to the European market would reduce significantly which will end the $3 billion transit fees gained by the Ukrainian government in the year 2018 alone, causing a sudden and huge strain on the GDP of the country.
This project worth $11 billion would double the market of Russia in Germany which is the largest market in Europe, possessing a key position in international politics. It is said by the Russian officials that the pipeline has almost been completed and it may get operational by the end of August in the year 2021. Some analysts and International Relations experts have considered this as a geopolitical weapon that gives leverage to Russia to influence future events in the region particularly the ones related to the Crimean annexation.
Threat to Ukraine
Recently in a meeting with German Chancellor Angela Merkel, the President of Ukraine appeared to be displeased by the Western recognition of the NS2 pipeline. He called it a “dangerous political weapon” in the hands of the authoritative regime of Russia which has already annexed an integral part of their country to fulfill their geopolitical and economic desires. The desperate opposition of this project by the Ukrainian government has several underlying factors which are very important to discuss.
Firstly, the transit fees earned by Ukraine just by giving passage to the gas going from Russia to Europe make up a fine amount of the GDP of the country. If projects like NS2 get operational then the importance of Ukraine will decline, causing an end to the $3 billion transit fee. Although Russia has ensured to still use Ukrainian passage for the export of their gas, this does not seem to be happening in the future. States are after their national interests and Russia would prefer the direct linkage with the European market instead of paying billions to the Ukrainian government. Currently, out of the quarter of natural gas transported to Europe, around 80% has to pass through the Ukrainian territory.
Secondly, after the expiry of the transit deal between Russia and Ukraine in 2024, it would depend upon the negotiations between the two parties to revive the fate of this deal. Although Kremlin’s Spokespersons have ensured the revival of this deal after its expiry in 2024, debates still exist about the prospects. No one can claim with certitude about the future of this deal between the two states.
Thirdly, Ukraine is intimidated by the future of the country if the Russian gas pipeline bypasses its territory. There already exist many gas-related disputes between the two states which resulted in the cut-off of the gas supply in 2014 and later on in 2015. Russia can pressurize Ukraine for accepting their demands to get their gas supplies back. Recently, Ukraine has started to reduce its dependence on Russian natural gas by switching back to European gas. But this would not be beneficial in any sense if the Russian monopoly over the gas market increases through the NS2 pipeline.
And lastly, the dependence of European markets on Russian gas can undermine the Crimean cause. Once a state has to depend on the other state for the necessities, it has to let go of many important causes and decisions. As Angela Merkel has repeatedly called the NS2 pipeline a geo-economic project rather than a geopolitical “weapon” that can be used by the Russian government as a decisive tool at times of disputes and crises, this already shows the drowning picture of the cause. In addition to this, previously the US administration was very aggressive towards the pipeline but the current government despite its opposition, is unable to do much for stopping the project which can get operational very soon.
Role of US and NS2 Pipeline
The United States of America is well aware of the changing dynamics of the region and the intentions of resurgent Russia. The Republican government under Trump proved to be very destructive for the project. The US did not only oppose the gas pipeline openly but also imposed sanctions on entities aiding Russia in the development of this gas pipeline. In January 2021, Trump imposed sanctions on the gas-pipeline laying ship, “Fortuna” and its owner under the Counter American’s Adversaries Through Sanctions Act (CAATSA). Previously, work on the pipeline had to be suspended as the US imposed sanctions on the main company, Allseas. President Biden was one of the many policy-makers who opposed this pipeline and considered it dangerous for the US and its allies. Although it was not clear what Biden’s policies would be, Blinken ensured to use “persuasive tools” against the pipeline, after acquiring the office. President Biden indeed imposed sanctions on the Russian ships and other companies involved in the laying of pipeline, but analysts think this would not cause any impact on the project as it is almost running towards completion. Rather, anti-sanction policy-makers consider it more important to waive off these sanctions and get into formal negotiation talks with the Russian government.
In May 2021, the President of the US and the Chancellor of Germany gave a joint statement for the agreement signed between the two countries related to the NS2 project. Some of the main features incorporated in the agreement are the announcement of sanctions on Russia in case it violates the peaceful use of the pipeline and utilizes it as a weapon against Ukraine. Germany would not only oppose such a step but would also press on the EU to take counter-measures. Similarly, it was decided to revolutionize the energy sector of Ukraine by the creation of a Green Fund for Ukraine by Germany worth $1 billion. Initially, it was decided that Germany would contribute an amount of $175 million. Also, it is said that Germany would use all its leverage to ensure an extension of the current transit agreement (which is going to expire in 2024) between Russia and Ukraine for at least up to 10 years. This would continue the role played by Ukraine as a transit state, helping its GDP and putting off the security threat over it. There is a sharp criticism on the Biden administration over this agreement which did not involve Poland and Ukraine while deciding their future. Also, the deal does not put any process of hindering the pipeline which is against the aspirations of all Americans and most of its allies.
In addition to limiting the role and influence of Russia in the European continent, the US is also looking forward to the opportunities of fulfilling its national interest. If the US becomes successful in hindering the operation of NS2, it can expand its gas buyers in the European countries. This way, like the post-war era the US can get a strategic and decisive role in this part of the world which can ultimately help it to counter the threats related to the rise of China and the Sino-Russian nexus. We can say that the US cannot only use this as an economic incentive but also utilize its importance in the future of great power rivalry.
Why states are against this Pipeline Project?
Along with the direct impacts of this project on Ukraine and Poland (to some extent). The major concerns of the states which oppose the NS2 pipeline include the additional leverage which Russia will gain when its national gas firm would directly export gas supplies between Russia and the European continent. This may result in a sudden disruption of the supplies, influenced by the changing dynamics of the region. The Russian authorities had cut off the gas supplies of Europe in the winters of 2006 and 2009, leaving millions without gas for days. Similarly, the increased dependence of Europe on Russian gas can be counter-productive and may hinder the interests of the states and the US soon. This situation can be utilized by both Russia and China to exploit the bonding between the US and its allies.
From the security perspective, the presence of Russia and its naval forces can cause a security threat to the states surrounding the Baltic Sea. The unsettled conditions may lead to chaos and problems in the region.
If Russia was to get a high stake in the energy market of Europe, this would also allow it to exploit the situation and create a monopoly over the market. This may not also lead to political outcomes and consequences but can also end the game of local and international gas market players in the continent. This is the biggest threat that is encouraging the US to make NS2 a security threat for itself and its allies.
Keeping in view the nature of international politics and changing economic dimensions to the project, the only possible way forward is an agreement between Russia and the US related to the pipeline and the future of Ukraine. If developments can be made over the existing US-Germany agreement then concerns of the states can be mitigated to a huge degree. The options of imposing sanctions on the pipeline are no more practical and can be counter-productive for the US concerning its allies especially Germany.
The Nord Stream 2 Pipeline despite its economic benefits cannot be separated from its geopolitical aspects and consequences. In international politics, the hardest thing to do is to trust the intentions of the other state, especially when it was a superpower previously and has several examples of violating the sovereignty and rights of neighboring states. But presently, all those who oppose the pipeline have no other option than to allow its proper functioning under certain terms and conditions.
Misjudgements in India’s Afghan policy
India’s Afghan policy has always been obsessed with the desire to deny Pakistan the “strategic depth” that Pakistan, according to...
Republic of Korea offers support for smallholder farmers in Mozambique
The Korea International Cooperation Agency (KOICA) donated US$5.7 million through the World Food Programme (WFP) for a project to support...
Global Plastic Action Partnership Making an Impact in Fighting Plastic Pollution
The Global Plastic Action Partnership (GPAP) released its second annual impact report, which highlights strides made over the last two...
Somalia’s Economy Rebounding from ‘Triple Shock’
Somalia’s economy is rebounding from the “triple shock” that ravaged the country in 2020: the COVID-19 pandemic, extreme flooding, and...
World Economic Forum Plans 2022 Annual Meeting in Davos-Klosters
The World Economic Forum plans to convene the world’s foremost leaders for the Annual Meeting 2022 in Davos-Klosters, Switzerland. Taking...
Of Friends And Countries
“The bird, a nest; the spider, a web; man, friendship,” William Blake reminded us in 1790. Much earlier, Confucius warned...
20 years after 9/11: American decline in the Islamic world and China- Russian emergence
The main headlines and axes The first axis: American strategy in the Islamic world, to draw a new political and...
Economy3 days ago
CPEC: Challenges & Future Prospects
East Asia4 days ago
Politicizing the COVID-19 pandemic and Xi Jinping’s vision to reshape the new world order
Defense3 days ago
To include or not include? China-led SCO weighs Iranian membership
South Asia4 days ago
The Junagadh conundrum
Intelligence3 days ago
Russia, Turkey and UAE: The intelligence services organize and investigate
South Asia2 days ago
The Taliban Dilemma and Thucydides Trap
Defense2 days ago
HTS enters Turkey’s plot against the Kurds
South Asia3 days ago
Qatar foreign minister, the first foreign dignitary, to visit Afghanistan