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Special Bulletin
A Japanese Perspective on the International Energy Landscape (615)

December 16, 2022

Concerns over Deepening Global Divisions and Rising “Me-first” trends
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, Japan
Key words for analyzing the current international energy situation include “the Ukrainecrisis,” “price spikes,” “market destabilization,” “energy security” and “geopolitics.” As a matter ofcourse, “decarbonization,” “carbon neutrality” and other key words regarding climate change are also
important.
Russia’s military aggression in Ukraine has fundamentally transformed international politics
and the global security environment. The Ukraine crisis has also dealt a severe blow to the global
economy. Furthermore, the international energy situation has dramatically changed in a manner totrigger price spikes, market destabilization and concerns or fears about energy shortages, leadingenergy security to loom as a top priority challenge.
Even in the new situation under the Ukraine crisis, efforts to enhance global environment
protection have continued. At the same time, however, energy price spikes and the growing importanceof energy security under the crisis have brought about an increase in CO2 emissions through expanded
coal consumption and other developments that run counter to decarbonization over a short term.
Energy security enhancement initiatives include the promotion of renewable and nuclear energy andother developments that could become a strong driver of decarbonization. In this way, there are amountain of new complicated challenges in the international energy situation.
In such situation, I think that deepening global divisions and rising “Me-first” trends haveemerged as key trends to even aggravate problems and increased their influence.
Global divisions have loomed as a key challenge for the world since the U.S-China
confrontation began to escalate. As China has rapidly increased its national power and expanded its
influence on the world substantially, the United States has recognized China as its challenger andescalated a bilateral confrontation. In countering China, the United States has given priority tocooperation with its allies including Europe and Japan and enhanced the Japan-U.S.-Australia-India
quadrilateral security dialogue and other strategic partnerships. In response, China has enhanced its
relations with Russia that has deepened the confrontation with the United States, forming an axis tocounter the United States.
The Ukraine crisis came in such situation, contributing to deepening and escalating theglobal divisions. Western countries have been united to impose and toughen sanctions on Russia for
its military aggression in Ukraine and to support Ukraine. Even under Western sanctions, Russia hassustained its military aggression and escalated its opposition to and confrontation with the Westernbloc. The global divisions over Russia and the U.S.-China confrontation have been combined to make1

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the confrontation between the Western bloc and the China-Russia alliance even more conspicuous. At
the same time, the Western bloc and the China-Russia alliance have made proactive approaches tomajor third-pole countries and strengthened moves to drive a wedge between each other and thirdpole countries, activating their tug-of-war over the third pole. As noted in A Japanese Perspective on
the International Energy Landscape (614), Chinese President Xi Jinping’s visit to Saudi Arabia can beviewed as part of such approaches.
Global divisions over climate change are also deepening. Regarding the enhancement ofclimate change countermeasures, developing countries have held developed countries as responsible
for climate change, indicating a north-south confrontation. The carbon neutrality trend has accelerated
since 2020 and required developing countries to fundamentally enhance decarbonization initiatives,
adding fuel to the north-south confrontation. As energy price spikes under the Ukraine crisis havecaused great damage to and enormous economic burdens on developing countries with relatively lower
income levels and led them to make desperate energy security efforts, their complaints have begun toexert influence on international climate change talks. As indicated by talks at the 27th Conference ofParties to the U.N. Framework Convention on Climate Change, known as COP27, divisions between
developing and developed countries have deepened and escalated even further.
Another significant problem is the rise of “Me-first” trends. As energy security becomes atop priority challenge, it is natural for each country to essentially enhance maximum efforts to protect
its people and economy. If such efforts become excessively exclusionary to the extent that each country
tries to secure energy supply even at the cost of others, the international energy market may see a zerosum game battle. In such event, the international market’s stability may be threatened, or the market
stability may collapse. In the recent European gas market, countries seemingly focus on their own
energy security alone and wage a race to win liquefied natural gas while remaining reluctant to enhanceinvestment in LNG supply expansion that is essentially important for market stability. This looks likea serious problem.
Another problem is a decoupling trend where countries try to develop supply chains for key
materials and resources domestically or in cooperation with strategic partners as much as possible ata time when economic security becomes extremely important amid deepening global divisions. The
trend deviates from cost minimization through free trade and international division of labor,
positioning costly decoupling as necessary for security. In a move to promote the trend, the UnitedStates under the Biden administration enacted the Inflation Reduction Act of 2022 that could support
domestic industries and affect international trade while being expected to reduce inflation andcontribute to decarbonization through clean energy investment. The European Union and South Korea
are greatly interested in the act from the viewpoint of its impacts on international trade and trying totake some countermeasures. It is a concern that the previous Trump administration’s “America First”
foreign policy could be realized in a different form.
It is natural for any country to make utmost efforts to protect its own national interests. At
the same time, however, any country should refrain from pushing its national interests in a manner toaffect global interests. Regarding energy security, any country must not only enhance policies for
ensuring its own energy security but also consider their impacts on the world and try to maintaininternational energy market stability and order. As for climate change, any country should promote its
own decarbonization efforts and encourage other countries to take measures in line with theirrespective situations and realities so that the entire world will enhance climate change countermeasures.
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In enhancing economic security, any country should avoid excessive protectionism or the formationof economic blocs. The Group of Seven summit in Hiroshima next year should discuss how to stabilize
the world and maximize global interests in consideration of the current situation.
Contact: report@tky.ieej.or.jp
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