If you’re in the energy business, here is a new manual for you that lays out the essentials of what energy is and how it shapes geopolitics today. Professor and long-time European Commission official Samuele Furfari has condensed his 39 years of experience in the energy sector into a two-volume tome of more than 1,250 pages that goes right from the fundamentals of physics through Britain’s rule of the Middle East to modern day realities such as “Rosatom, the undisputed nuclear leader”, “Biofuels, a subsidised reality”, smart cities and the latest gas discoveries in the Eastern Mediterranean. Energy Post spoke with the author about his new book.
The changing world of energy and the geopolitical challenges: Understanding energy developments (part I) and Shifting sands: the geopolitics of energy (part II) is a work inspired by students. Furfari wrote it at the behest of his energy geopolitics class at the French-speaking Free University of Brussels. It is in effect a completely revised and updated English-language version of a book Furfari originally wrote in French over a decade ago.
Needless to say, a lot has changed since then. “When I wrote the French book in 2006, I did not mention shale gas – it did not exist!” he tells Energy Post in an interview. In his new opus, Furfari writes about why and how the world of energy is changing.
His views are personal and do not necessarily reflect those of the Commission, where he has worked since 1982 and currently advises the Director General for Energy.
Oil “continues to reign supreme” and gas is “blue gold [which] will play a major role in supplying the world’s energy for at least the next 40 years”
Furfari presents a vision of the energy system and its geopolitical effects that is meticulously researched, comprehensive and, lest you fear getting bored at this point, controversial. His core thesis – perhaps no surprise since he is a chemical engineer by training – is that most of the changes we see in the energy system come from technology. “What I try to demonstrate is that technology evolves and policy adapts to these changes. Many people think policy drives technological change. I am clearly convinced it is the reverse.”
It is technological change that has led to a new era of fossil fuel abundance, which has in turn completely reshaped energy geopolitics, he explained to Energy Post in an interview back in 2014. That premise also underpins this book. Furfari gives many examples of the dominance of technological change. He notes that the price of oil is low despite the war in Syria.
“Normally it should have exploded,” he says. “But technologies have improved so much for the exploration of oil, field development, and costs of production and transport that OPEC has had to adapt to a new reality.” Shale oil and gas have changed the global balance on power on energy, with the US suddenly offered the prospect of energy independence.
Widely off the mark
The sustainable development agenda has grown in importance. It has revived interest in energy efficiency (a concept dating back to 1924, Furfari notes) and laid the foundations for a renewable energy revolution. This will come, Furfari believes, but he also reckons it will take longer than many think (or hope). One of his book’s main messages is that although energy efficiency is a no-brainer and renewables are being pursued everywhere, this will not suffice to avoid the development of fossil fuels in many parts of the world. “Of course we are making progress in renewables, but the other energy technologies are also developing a lot,” he says.
In his review of the world’s main energy sources in part I of his book, Furfari says oil “continues to reign supreme” and gas is “blue gold [which] will play a major role in supplying the world’s energy for at least the next 40 years”. He calls coal “unavoidable” and says public understanding of it in Europe is “widely off the mark”. It has “a bright future” despite “pugnacious” attacks by NGOs, thanks to “widely available” clean coal technologies. Nuclear, “the scientific energy source”, is also “still very much alive”. The greatest risk he sees here is that anti-nuclear sentiment in the West puts nuclear technologies “exclusively into the lap of Russia, China and Japan”. Other chapters deal with electricity, renewables and the “first fuel”, energy efficiency.
He explains how Europe invented the “take-or-pay” clause to pay for new gas pipelines and why the gas price was originally pegged to the oil price. Neither practice can be defended today
Part II brings all this to bear on present-day energy geopolitics. Furfari pays particular attention to historical context. “You need to understand the past to prepare for the future. Especially in energy, what occurred in the 1970s is fundamental to understand the energy situation of today,” he says.
He starts off with the history of the oil industry, which is in his mind “most significant and essential” to understand how global and European energy policy have developed from WWI to today. From British rule in the Middle East he continues all the way through to why the oil price today has returned to a “more rational level”. He explains how Europe invented the “take-or-pay” clause to pay for new gas pipelines and why the gas price was originally pegged to the oil price. Neither practice can be defended today, he argues.
New gas corridors
He describes EU energy policy, including the “incomplete and unsatisfactory state” of the internal energy market and assesses the new gas corridors under construction (e.g. Nord Stream 2) in the context of security of supply.
Russia, a “historical energy partner”, Turkey and Central Asia, and the Middle East and North Africa all get their own chapters, with the latter including sub-chapters on Saudi Arabia, “the oil giant” and Iran “the gas giant” for example. Canada, Australia, Mexico, Brazil, Venezuela and Trinidad & Tobago, China, Taiwan, Japan, South Korea, Africa and of course the US all get an analysis too. In addition, Furfari dedicates a chapter each to transport (especially the shift from oil to LNG in maritime and freight, with benefits for air pollution) and smart cities (where the battle for sustainable development will prevail).
Furfari argues that today’s mantra of “saving the planet” is also about getting rid of the market economy altogether. For him, this is a big mistake
Furfari’s parting message is unequivocal: free the market. It used to be controlled by oil companies; today it is in the hands of policymakers steered by special interests. Furfari homes in on the problem of subsidies, which kill the case for energy efficiency.
“The market is there to put a price on a very valuable product,” he cautions. Of course, legislation is needed in certain circumstances, but Furfari argues that today’s mantra of “saving the planet” is also about getting rid of the market economy altogether. For him, this is a big mistake. He wants to persuade his students – and other readers of his new book – that energy, technology and free markets have delivered and can still deliver for the benefit of all citizens.
About Samuele Furfari
Samuele Furfari is a PhD and a Chemical Engineer from the Free University of Brussels. Up till now his whole professional life has focused on energy issues and more specifically on energy policy. He is a senior European official at the European Commission where he has worked for 35 years in this field. He also teaches Geopolitics of Energy at the Free University of Brussels. He has published 9 other works, some of which have been translated into Spanish and Portuguese.