A Qualification of Terms
The intention of this report is to capture the essence of discussion at Ditchley, and so will use phrases as used in the Director’s Notes (a formal write up by the Ditchley Director after each conference) in order to not place an undue modern lens onto the discussion. The most noticeable ‘older’ terminology is over what would now be described as the Global South. Ditchley attendees have used a variety of words to get across this concept, including and not limited to ‘Third world’ and ‘Developing’. Similarly, some discomfort can be seen in the frank discussion of conflict in the Middle East. It should be acknowledged that though these words may no longer be fit for purpose, they were, in some cases, written 50 years ago, and so must be understood as part of the conversation of the time. It is my hope that this does not distract the reader but allows them to be engaged in the conversations as they happened.
Nuclear: A Mystique
Ditchley’s discussion of nuclear energy has always been clouded with fear of proliferation, with a constant awareness of the connection between capacity for nuclear energy and nuclear arms. During the 70s, against the backdrop of the Cold War, nuclear energy could not be discussed without this caveat. This induced a variety of responses. In 1977, the Ditchley conference on ‘The Regulation of Technological Advance’ concluded that Non-Proliferation Treaties must be strengthened to manage this risk. However, in 1977 and throughout Ditchley’s many nuclear conferences, there was an awareness that this was not the only way to reach a capacity for nuclear weapons, as illicit deals were also an option. International agencies have been sternly criticised in Ditchley’s conversations on proliferation, with the London Supplier’s Club, International Atomic Energy Agency and United Nations all chastised for not being fit for purpose [1977: The Regulation of Technological Advance]. More recently, P5 +1 (The United Nations Security Council and Germany) have been tasked with the handling of Iran’s attempt to develop a nuclear capacity. On this topic, there have been calls from Ditchley attendees to increase multilateral talks to avoid isolating Iran. In Ditchley’s most recent 2016 conference on nuclear energy this was a particularly significant point, as attendees agreed the risks of proliferation differed among global regions, with the Middle East perceived as the most troubling. Also, troubling was the risk of nuclear technology spreading to non-state actors, though attendees were more concerned about Russia and China.
There has been more than one debate on proliferation at Ditchley. In 1978, the argument was made that increased oil consumption would cause instability to such a degree that nations would seek out their own nuclear programmes, making proliferation more likely. The conclusion, therefore, was for the West to invest in nuclear more heavily, so that it may export its own technology without the aggressive capabilities. Another participant questioned whether proliferation might enhance world stability. This argument is particularly interesting, as it is one of few times that Ditchley attendees acknowledge that the Western narrative is not universal. While these debates did not reach a consensus, it is evident that nuclear energy and its proliferation risks have been thoroughly considered at Ditchley.
Also, worth noting are the technological developments of proliferation, which particularly concerned Ditchley’s 1978 conference on nuclear developments. Here the development of Laser Isotope Separation (LIS) was feared due to its ability to achieve weapons grade enrichment with few space and power requirements, where previously the size of nuclear stations made clandestine operations impossible. This would make it difficult to identify those with nuclear capacity. Other attendees stressed the need to stop all unclassified research in this field and prevent any leakage of information on this topic. As further technological developments are made, Ditchley has continued to be concerned with the increasing accessibility of proliferation. However, without the backdrop of the Cold War nuclear fears have been somewhat dulled.
Throughout Ditchley’s discussions on nuclear energy the question of the free market has loomed overhead. Throughout the 80s, attendees made it quite clear that the commercialisation of nuclear energy should not be subsidised so that no artificial bias exists in investment choices. In fact, during a 1991 conference the argument was put forward that there should be no government ‘energy policy’ and it should be wholly left for the market to decide. This was, however, an argument of its time. As the global economic policies became less neoliberal, so did opinions at Ditchley. By the 2010s, there was an acceptance that it is the government’s duty to supply electricity to its country at an affordable cost, and therefore subsidies and intervention were warranted. This was seen to be especially important for nuclear energy at a 2016 conference, as the question was raised if nuclear energy could ever be viable on an unregulated market. The necessity of large-scale operations and standardisation for nuclear meant government oversight was almost a necessity. It was due to these needs that the US’s fragmented utility system was seen as unsuitable for nuclear energy, while the centrally planned, state economies in the USSR or France allowed for more successful utilisation. These questions were also raised as the UK privatised its utilities sector, beginning in 1986.
The need for government intervention in nuclear energy was based in the incredibly high capital cost of construction, which, it was argued, could not be done with private investment alone. This was especially unpopular as a recession in the early 1980s made new government schemes unpopular and oil continued to supply affordable and reliable energy. It was not until the early 2000s that the merit of limited CO2 production was seriously considered. Another issue here was the uncertainty of the market, coupled with long lead times of nuclear energy construction. This left a risk of sunk costs for investors, if oil prices dropped or nuclear regulation changed, they would see significant financial loss. However, it should be noted that the cost of duration of construction could be limited, as in countries where there had been a steady, continuous nuclear programme, there was enough efficiency and confidence in the market for nuclear energy to be viable, as is the case in Japan and South Korea.
The long construction timelines raise issues in connection with technological development. For example, Fast Breeder Reactors (FBR), first mentioned at Ditchley in 1978 but developed earlier, were a promising new development that delivered lower fuel costs than Pressurised Water Reactors and complete use of uranium fuel, meaning uranium supply was not an issue. Ditchley conferences in the 1980s asked if development of Fast Breeder Reactors should be continued as it was unclear whether they could be economically viable. It was predicted that along with high lead times FBR would not be in use until at least 2030, too long a time scale for energy policy. This incongruity, as well as a steady supply of uranium, meant that Fast Breeder Reactors lost popularity at Ditchley, reflecting a broader turn away from the technology. It was thought focus should be on increasing efficiency rather than developments in function.
More recently, at a Ditchley conference in 2016, Small Modular Reactors were seen as the most promising new development. They were seen to avoid traps of large reactors with high capital cost, long construction and unpredictable regulatory requirements and could be used in remote places to serve smaller communities. However, Small Modular Reactors were not taken to be a complete panacea, with inefficiency in economy of scale and higher vulnerability to attacks as two of the main issues. Overall, technological development is often at odds long lead times of nuclear construction and inconsistency of government policy. These were seen to be the most critical issues by Ditchley attendees.
The final key economic consideration of nuclear energy at Ditchley has been their suitability for the Global South. While the development of nuclear energy may seem attractive for industrialising nation, as it gives energy independence, employment opportunities and aids in industrialisation, attendees at Ditchley largely saw it as unsuitable. This has been the case from the 1980s until today. A first issue was identified in nuclear energy’s unsuitability for World Bank Loans, as nuclear is often not the cheapest or most efficient energy source available. Furthermore, inadequate grid systems, lack of skilled workers and nuclear proliferation anxieties made investment of this kind unattractive. This was seen to be especially relevant in Ditchley’s 1987 energy conference, at a time in which developing nations had amassed masses of debt. Fundamentally, a lack of capital investment and an unclear political and regulatory environment meant nuclear investment was seen as an unlikely development opportunity.
In 1987, Ditchley participants declared that energy was no longer an economic issue, but an environmental one. Nuclear energy’s environmental impact was considered across three main issues: waste, carbon emissions and radiation. Of chief concern here was waste. Several solutions were proposed. Long term deep storage was seen to be the first solution, and likely practiced in France and Finland, but there was a question of impact on the surrounding rock bed and the long-term implications of this. This also placed a burden on smaller countries without suitable sites. Because of this, another solution suggested was international storage sites, with it suggested that a country could attempt to do this commercially, but this was not pursued further in the discussion. Finally, and perhaps the most useful suggestion, was the use of fast-breeder technology to reduce radioactive waste as a result of increased efficiency. They had been thought to be 60% more efficient than current fission plants. Other suggestions such as sending waste to space or surface storage were deemed too expensive to be viable. The problem of nuclear waste has consistently concerned Ditchley conversations but has not yet been solved.
By 1999, it had been accepted that nuclear was key to reaching the Kyoto goal, established two years prior. The reduced carbon emissions from nuclear were seen to be worth the risks of radiation and nuclear waste. However, this took attendees at Ditchley much convincing, as many in 1999 and beyond were not confident in the urgency of climate change, or if it even was an issue at all. By the late 2000s however, it was accepted that if sustainable development was the goal then nuclear had to be used. One key issue here was the question of subsidies. Nuclear was, as one participant put it, “illogically” subject to carbon taxes, despite its emissions being greatly reduced in comparison to fossil fuels. Confusion over carbon emissions did a disservice to the use of nuclear. As has become the familiar refrain when discussing nuclear, it was thought more certainty and clarity was needed.
Throughout their conferences, Ditchley participants were not concerned with radiation as a risk of nuclear energy. Despite holding nuclear conferences after Three Mile Island, Chernobyl and Fukushima, participants believed radiation was not the chief environmental concern of nuclear. In fact, many thought that these events would lead to improvement in safety measures and radiation risks would decrease. Participants were also aware of the risk of cumulative radiation dose to operators but were again not concerned with the level of radiation. Overall, the main question plaguing nuclear seemed to be waste, not risk of radiation or carbon emissions.
The main safety issue facing nuclear was not located within the nuclear plants. Throughout Ditchley conversations on energy, it was broadly accepted that the issue lay more in the public perception of risk, than the risk itself. A combination of media exaggeration and government secrecy led nuclear to adopt, as one participant put it, “a certain mystique”. This ‘mystique’ led the public to distrust nuclear as an energy source, despite other sources also having major accidents with similar fatalities. Of course, the Three Mile Island, Chernobyl and Fukushima incidents did not help with this image.
There were also legitimate concerns. As more plants were constructed, plants aged and plants were built in countries with less regulation, accident risks did grow. Not only that, but newer technology such as Fast Breeder Reactors brought with them unique risks such as sodium fires. Despite these concerns, it was public perception that really worried Ditchley conference attendees. In the eyes of the public, nuclear energy was inextricably linked to nuclear weapons, and was therefore deeply distrusted.
The Geopolitics of Oil: The Middle East
Saudi Arabia and the US: A Special Relationship
The relationship between Saudi Arabia and the US is one of constant interdependence. The US has seen Saudi Arabia both as a close partner and as a liability, one they would be willing to go to war for. This is no surprise, as in 1981 the US was the largest oil consumer, purchasing 23% of internally traded oil and Saudi Arabia providing 20% of global oil supplies. Just as the US is dependent on Middle Eastern oil, the Middle East is increasingly dependent on American consumption. In 1981, a Ditchley attendee predicted that because of decreasing American supplies, coupled with continued high consumption, the US-Saudi partnership would become increasingly close in the future. Saudi Arabia was seen as the nation with the greatest potential surplus oil production capacity, and therefore the critical counterpart for the US. However, Ditchley attendees also feared Saudi Arabia’s power in this capacity, with the option to include both Iran and Iraq in the GCC in an effort to further control oil supply, which some thought would spook the US out of its dependence.
Conversations at Ditchley fell into two camps: discussions on military intervention in Saudi Arabia and discussion of a special relationship. Military intervention was brought up in multiple conferences throughout the 80s, by American Ditchley attendees as a response to the threat of use of the ‘oil weapon’. The use of this oil weapon was seen to be likely due to the unity of purpose of OPEC, despite ideological differences between Saudi Arabia and Iran. However, feasibility of this intervention was seen to be dependent on timing and internal degree of support for US intervention. Ultimately, this was consistently believed to be too high a risk as intervention would likely prolong loss of oil supply and causing destabilising coups. For a conference held in 1987, pre first and second gulf wars, the Ditchley discussion showed notable foresight and insightful deliberation.
Subsequent discussions at Ditchley focused on a deepened connection to Saudi Arabia. There were fears that a US bilateral agreement with Saudi Arabia would be seen as a colonial endeavour, so it was thought that agreements would have to be multilateral on both sides. Bilateral agreements also had the issues of a “scramble for the Middle East” where consuming nations would push for partnerships with ‘stable’ partners. In this instance, developing nations oil needs would be ignored and Western dependence would narrow even further. It would also serve to alienate those excluded from agreements, especially concerning in the case of Iran and the US. There was a consensus therefore that multilateral agreements had to be pursued, but the US should continue to nurture its relationship with Saudi Arabia, not pressuring it on human rights, corruption or democratisation – though it was acknowledged by attendees that major abuses could not be ignored completely.
In the later decades of the 20th century, the US and Saudi Relationship was chiefly concerned with oil production. More specifically, how to keep Saudi Arabia producing high quantities of oil, even when it was against their economic interest. Such was the US need for oil that its main task was to convince the Saudis to keep producing. Ditchley participants identified that inducing oil production elsewhere dis-incentivise Saudi Arabian production, as they attempt to maintain oil prices, leaving the US with few options. However, overproduction would not only be economically disastrous for Saudi Arabia, but the political instability it would cause could risk internal revolution and loss of credibility in OPEC. Conferences had no solution to this dilemma.
This relationship was further complicated in 2014, by the growing US supplies of shale gas, which allowed a reduced dependence on Saudi oil and thus their influence. However, it was concluded that the US was unlikely to be any less committed in the region, due to the need to protect existing oil and gas routes.
In 2016 Ditchley attendees considered internal pressures on The Kingdom. Low oil prices left Saudi Arabia (as well as Bahrain, Algeria and Oman) vulnerable due to their high spending and debt levels. Due to this, Ditchley attendees believed there was some drive for reform of the economy by educated Saudis. Participants identified the possibility of Saudi Arabia transitioning to a nation with a growing middle class and a functioning private sector. However, inherent to this was risk of destabilisation with conflict between traditional structures and rapid modernisation. While ARAMCO was filing more patents than Royal Dutch Shell, fears of revolution hampered the Royals’ desire for investment and development. Ditchley attendees thought this would be the central conflict in Saudi Arabia’s future.
Before the Iran-Iraq war there was an awareness at the 1980 Ditchley conference of the importance of Iraq to US strategic interests, However, there was debate to the extent oil consuming governments –in this case, the West, - should ‘prop up’ or align with producing governments, having learnt the lessons from the Iranian Revolution. This was further complicated by the influence of the private sector in energy exploration. The US and Western European nations had limited control of the actions of private investors, despite them having a clear geopolitical impact. At the time Iraq was seen as a stabilising force against Iran but could be problematic should Iraq reassert its claim to Kuwait, with Ditchley attendees again demonstrating impressive foresight.
In 1987, deep into the Iran-Iraq war, further discussion of Iran and Iraq was held. There was a consensus here that the best-case scenario was an end in which neither country wholly dominated the other, but reconstruction of economies was quickly pursued in order to maintain oil supply. The worst-case scenario was seen to be complete domination of one nation by the other, where there was no check on either power. The Western attendees of this Ditchley conference seemed chiefly concerned with stability so that their oil interests were met and maintained. However, any Western influence on the region was seen to be challenging without a coordinated Western effort.
By 1995, the conversation on Iran and Iraq had understandably shifted. While the US achieved their aim of no dominant actor in the region, both Iran and Iraq were becoming increasingly problematic. It was argued by attendees that oil sanctions were unhelpful in Iraq, though their manipulation or removal would be difficult due to potential instability of the oil market. The issue of Iranian oil was no simpler, with increased cost due to growing domestic consumption. One participant even argued that Iran would cease to become a significant exporter by the end of the century. While there was potential for development in their gas supplies, they would need external investment to access them. This investment was seen to be unattractive for investors chiefly concerned with stability, and so this had not yet been pursued. Throughout Ditchley conferences, Iran and Iraq have been seen as valuable but fragile entities.
Due to the Western experience of the 1973 oil embargo, a resolution to the Arab-Israeli dispute was considered paramount to Ditchley attendees in ensuring oil stability. However, failing this, participants stressed the necessity of separating the oil and Israel question. It was thought that this should be done by adopting a passive policy to inter-Arab disputes. This policy was brought up again in the 1980s where renewed Arab –Israeli tensions emerged. The continued absence of a Palestinian settlement was thought to also increase instability in the region. At one conference the threat of Palestinian factions sabotaging key oil instillations was raised. Other responses that were feared to threaten Western oil interests was a general Arab embargo, either in solidarity or to prevent Palestinian extremism in their own regimes. For the US, this was seen to be particularly difficult, with discussions in 2016 identifying the continued links to Israel as complicating US interests in the region.
There was also the issue of Israel’s responses to external threats, which concerned some participants. It was seen as likely that if Israel were to provoke to Jordan or Syria, the ‘oil weapon’ would be invoked, threatening the West’s interests. It was not seen to be probable that Israel would directly attack opponent’s oil wells unless under existential threat, though nevertheless this option was raised at a 1980 conference. Overall, Israel’s interaction with their Arab neighbours was seen by attendees as a threat to oil stability in the region. However, it should be noted that new developments in the détente between Israel and Saudi Arabia could change the direction of this conversation at Ditchley in the future.
Ditchley often saw OPEC’s role not only as a financial entity but as a tool for development. In the 1974 ‘One Earth’ lecture at Ditchley, it was suggested that OPEC should donate both oil and capital to developing nations, such was its power and influence. In other conferences, there had been calls for an ‘Arab Marshall Plan’ with similar justification. This was considered to be fitting as the major increase in demand for OPEC oil would come from these industrialising nations. Until they could develop an indigenous supply, it was thought OPEC should coordinate and lead this effort. Also suggested, was a role in the IMF of financial leadership, as it was thought this would satisfy OPEC desire for authority, thus reducing their insecurity of power and the risk of an embargo to demonstrate this. However, issues were identified here in the limited availability of strong development projects for investment, leaving industrial development sporadic despite strong potential financial backing from OPEC.
Ditchley attendees also discussed OPEC in its traditional perception as a cartel. While it was thought that OPEC had learnt from its troubles in 1986 to not remove controls on production prices - as consumers drove price down by 50% of 1985 price- it manipulation of oil price was far from over. As a result, Ditchley attendees discussed options for the cartel, from a commodity agreement -though this was seen as unacceptable to the West- to carefully balanced production targets. In later conferences, OPEC’s relevance was even questioned, as it had no mechanism for oil distribution in times of scarcity, lacked key producers such as the UK and Norway, and no longer held a monopoly on the market. At other conferences, new ideas were raised, with the suggestion of a Western-OPEC agreement, which guaranteed supplies in exchange for a long-term increase in the real price of oil or for other concessions such as technology transfers. However, this too was criticised with OPEC’s heterogeneity resulting in too varied interests to be functional, with nations as varied as Venezuela, Nigeria and Saudi Arabia, all with unique interests. Ultimately, consumers wanted to regain control and avoid economic shocks while OPEC needed to keep prices profitable. This was bound to create friction and this tension was reflected in the Ditchley conversations.
The Geopolitics of Energy: Other Relationships
The Soviet Role
Other major players in energy include Russia, which Ditchley discussed both as The Soviet Union and after its collapse. Russia has also been discussed both as a superpower and in its role as a major consumer and producer. In 1973 Ditchley discussion focused on the USSR’s strategic interests in the Middle East. It was thought that the Soviets had two conflicting interests in this region. On one hand, the Soviets wanted to increase Middle Eastern oil prices to slow industrial development in the West. On the other hand, there was an awareness that the Soviets may need that Middle Eastern oil for development in Eastern Europe. While these were the two main priorities for the East, of an even greater priority was strategic defence of bordering territories.
In 1980, a year after the Soviet invasion of Afghanistan, Ditchley attendees again discussed Soviet interests in the Middle East. Here it was agreed that the Soviets were now likely to exercise greater caution in the region, despite still needing Middle Eastern oil. It was agreed that the greatest threat the Soviets could pose was its ability to support surrogates where there had already been a deterioration of relations with the West. A chief example of this was seen to be the support of the Palestinian Liberation Organisation (PLO), in order to erode Western influence in the region and promote further instability. Other areas of concern for the Ditchley attendees were Soviet interests in Yemen and Iran, however both depended on internal conditions.
More concerning to Ditchley attendees were Western interests. It was seen as a necessity for Western Europe and the US to coordinate their efforts in the Middle East, so that the Soviets would not benefit from their confusion. For example, if the West allowed the Middle East to descend into instability, the West would be forced to turn to Soviets for oil and gas as other sources such as Canada and Venezuela had gone beyond peak oil. This would be economically and politically uninviting and would give Soviets the capital to open new gas fields near Moscow, giving them an even tighter grasp on the oil market and political leverage.
The Soviet Union’s duel role as a consumer and producer was also discussed at Ditchley. In a 1987 conference, it was acknowledged that as the world’s largest oil producer, fluctuating prices in the Middle East heavily affected their economy. There was also awareness of the possibility of a Sino-Soviet conflict for resources in the East China Sea. In its role as a consumer, there was some uncertainty at Ditchley on the Soviet need for oil. It was clear that the Middle East was a key region in their consumption, so was likely to seek influence in this region. Demand was also likely to rise, so there was interest as to what region would satisfy this need. Somewhat unsurprisingly at Ditchley during The Cold War, there was some opacity in The Soviet Union’s role as a producer and consumer.
More recently, at a 2014 conference, Russia’s modern role as an energy producer was discussed in the context of the ‘revolution’ of US shale gas. It was thought here that Russia would be the biggest ‘loser’ as the traditional gas producer. With an economy with an excessive dependence on oil and gas, it was left highly vulnerable. This would not only limit Russia’s economic standing, but it’s influence on the world stage, with OPEC and Russia losing its monopolistic control of the energy market, and the influence of the ‘oil weapon’. However, it was argued that if Russia used this opportunity to force economic reform and diversification, it could increase its standing in the long term. Furthermore, Russia itself could have significant shale gas reserves, so the impact of shale gas on Russia was seen to be far from a death sentence. The shale gas revolution in the US was seen as unlikely to significantly change relations with Russia, as the US would not infringe on the Russian supply of gas to Western Europe, as price was likely to be higher in Asia, meaning both US and Western European relations were likely to remain stable.
Since 1973, Ditchley attendees have shown concern with Western Europe’s Energy dependence in Russia. At the 2014 annual lecture, Professor Michael Ignatieff argued that this dependence had torn Europe between values of democratic freedom and economic interests, most clearly seen in Russian actions in the Crimea in 2014. It is clear therefore that since the Cold War and continuing to the present, Ditchley attendees have highlighter their concern over Russia in its producing role.
China’s relationship with oil and energy has been seen by Ditchley as one of frustration. Since 1991 and the advent of the climate crisis, China has repeatedly been blamed for its exploitation of its coal reserves and rapid industrialisation, with 80% of China’s energy mix coming from coal and taking over from the US as the largest global CO2 emitter as of 2007. While Ditchley conferences often lack direct Chinese representatives, those there acknowledge China’s frustration at being penalised for developing in the same way as the West. However, in equal measure there was an awareness that the environmental crisis can simply not be tackled without China.
One solution often discussed at Ditchley was Chinese capacity for technological development. China is the most likely candidate for employment of Carbon Capture and Storage (CCS) technology and is also the only nation currently looking to go forward with nuclear fusion to deliver electricity by 2050. China has also shown willingness to make colossal sacrifices for their energy security that other states are not. While Russia showed hesitancy in destroying agricultural land for hydropower technology, China was willing to displace 1.5 million of their citizens for the construction of the Three Gorges Dam. Furthermore, Ditchley attendees acknowledged that China’s more authoritarian style of government serves as a better tool to tackle climate change. While in the West there is an incongruence between the 5-year timescales politics operates on and the decades of dedication needed to tackle climate change, China avoids this issue due to its authoritarian and unchanging government.
More recently, Ditchley attendees argued China is taking a more prominent role in the geopolitics of oil. In the 2014 Ditchley annual lecture, it was argued that China was no longer content with a ‘quiet rise’ but taking a more active and aggressive role. Now a major player in the purchase of Middle Eastern oil, it was thought that China may seek influence here. Furthermore, continued exploration in the disputed waters of the East China Sea has made China a major geopolitical energy player.
Furthermore, in the development of shale gas, China could majorly benefit in the long term. While extraction and development are currently limited to North American sources, if pursued in China, it could have a major effect on Chinese energy capacity. A flooding of large volumes of affordable energy from the US would also be beneficial for China, as it would allow the continued velocity of their industrialisation. It would also reduce reliance on their coal stores, allowing an important bridge to effective climate change action. Furthermore, some at Ditchley thought that if China was less concerned about access to energy, the nation would be less aggressive in its scramble for Africa and be less territorial in the South and East China Seas. However, other participants thought this was driven more by sovereignty and national pride, and therefore limiting shale gas’ effect on their geopolitical role here.
Some Western Ditchley participants at a 2014 conference on shale gas were concerned with the recently signed Russo-Chinese gas deal, but their worries were satiated as other participants argued there were still great barriers to a broader Russia-China alliance. Furthermore, the gas involved in the alliance was located in Eastern Siberia and therefore was inaccessible to Western Europe, so consensus was reached that this was little cause for concern. Some US participants raised the possibility that shale gas could actually be beneficial for the US and China’s relationship, with the possibility of technology transfer to reduce Russian dependence and carbon emissions. However, it was thought that the US and China’s relationship was not yet warm enough for this to occur.
It is clear China is an important part of the geopolitical picture moving forward, in energy and beyond.
The Producer vs The Consumer: The Price of Oil
Ditchley conferences could not escape the most basic division in oil trading: producers and consumers. Ditchley attendees identified that oil profits can be problematic for both oil producing and consuming nations. Critical for the oil producers in the 70s, was the lack of a stable unit of value in which to hold surpluses of liquid currency. This has many effects, but most concerning for consumers is the disincentive to increase production. Other issues identified by attendees from the surplus of liquid currency was the potential disruption on the international monetary system and the value of currency reserves. It was suggested by attendees that it was the producers that had to resolve this issue, with attractive investment opportunities for diversification seen as one solution, though technology and information trades were also considered. Arms trades were seen as an unproductive solution, as it would only increase instability in the region. Also noted as a concern was the preservation of consumer’s cultural heritage. Main concerns for oil consumers were seen to be oil dependence. Therefore, maintaining political stability in the Middle East, and economic stability in the world economy were seen as the chief objectives.
Finally, there was a suggestion of a formal dialogue between producers and consumers, for example between the GCC and the European Economic Community. While this was considered by Ditchley attendees, the US’s clear refusal to undertake multilateral dialogue on oil supply and pricing resulted in disagreement. With the US a critical producer and consumer, multilateral talks without this clear player would be unproductive. Energy policy seemed to be facing a paralysis with consumers and producers unable to answer key questions and facing much disagreement even within these two categories. The director of the 1985 conference summed up this paralysis in his description of oil policy acquiring “a curiously antique flavour”, with these discussions a repeat of the recently held Washington Energy Conference and Conference on International Economic Co-operation. Clearly, there were some questions that could not be answered.
Free Market or intervention?
Throughout energy discussions, the overarching question facing Ditchley participants was the extent to which it is acceptable to intervene in the market. This has been discussed with a number of intentions, but chiefly focused on securing oil supply and environmental concerns. This section will deal with these arguments.
In terms of securing oil supply, participants have been more lenient in accepting some level of government intervention, but generally believe neoliberal, free market strategies will produce the best results. For example, at the 1985 conference on energy policy, some participants claimed that the tendency of oil to fluctuate cyclically by the decade was a distortion engineered by political interference with the free market. Implied here was that unfettered access to the market would result in greater stability and prosperity. Others accepted some intervention from governments to ensure physical security and some level of stockpiling to ensure supplies in times of crisis. However, most pro free market participants rejected any attempts for international organisations to regulate the market.
On the other hand, those who were in favour of intervention raised concerns on the difficulty of separating energy policy from larger economic and political relations, meaning there was a necessity for energy policy. It was thought that leaving it to the free market was impossible in a world of international interdependence. They argued the key was not to identify if there should be intervention, but what the scope of this intervention should be. Other concerns raised included national security, domestic fuel industries and foreign vulnerability.
The author of the conference report, Ian Smart, writes about criticisms made of free market policy. He argues that though energy free markets are efficient, this efficiency is measured by narrow criteria, and the result must then be fed through a wider set of societal values:
“They are efficient, in fact, just as the medieval trial by combat was efficient. As then, however, the acceptability of their results, when measured by some wider set of social, political or economic standards, is another matter.” (Smart, 1985)
The other question that is being asked in the free market debate is that of the environment. Though not helped by the fact that many participants do not believe in the reality of climate change, some argued strongly against intervention for this end. Some believed that technological progress would satisfy the needs of the environment, and to intervene in the market would be to undermine potential prosperity. Others believed that getting the price of energy correct at the point of consumption will automatically solve the problems of environmental degradation. If this price reflects full long run costs including externalities from environmental considerations, energy will automatically be used efficiently, and therefore our environmental concerns will be resolved. This, however, was faced with criticism due to the international under-pricing of oil outside the OECD in the face of political or social concerns.
By 2003, where neoliberals held a less firm grip of economic policy and the urgency of the climate crisis was being realised, participants shifted in their beliefs. It was thought that markets on their own could not deliver public or social goods, and it was government’s responsibility to intervene. It was thought that politicians could be braver; that they had underestimated the degree of cost which the public was willing to bear. For an argument so central to our governance, it is unsurprising that this has concerned so many Ditchley events. It is yet to be seen the extent to which the continuing urgency of the climate crisis will in any way shape this conversation in the future.
The Impact of Oil Prices for Developing Nations
At Ditchley, oil price fluctuations were seen to be critical for developing countries, made more problematic by the accumulation of high levels of debt. Developing oil exporting nations were often largely dependent on their oil supplies for generating revenue, and any oil price drop, least of all the 1986 drop, severely curtailed development prospects. With reduced revenue, many nations struggled to follow through with debt repayments, furthering instability. Ditchley participants made a strong connection between the debt crisis of the developing world in the last decades of the twentieth century and the fluctuation of oil prices, though they did not openly criticise the international organisations that led to this crisis.
For those who were not oil exporters, but still dependent on raw material exports, dropping oil prices were no less of an issue. Oil price fluctuations led to instability in world trade which developing nations were not yet robust enough to absorb, unlike the West and the USSR, who were both able to absorb the 1986 oil shock with confidence. Also, an issue for these nations was the need for additional energy to power economic growth, coupled with the need for economic growth to fund the cost of additional energy, leaving nations stuck in a paralysing development trap. This drove a further cycle of debt and global economic instability. Ditchley attendees hypothesised that a solution to these issues needed three elements: the restructuring of individual economies away from their previous dependence on commodity, especially single commodity, exports; a recovery of world trade; and the restructuring of debt and a renewed flow of capital to the developing nations. However, there was also an awareness that this was a long-term goal, leaving nations vulnerable in the short term. There was also no guarantee that these solutions would be effective, furthering these nations' vulnerability. Finally, there was a question of who was to take on this task, with international systems neither designed nor equipped to undertake it.
For conversations pertaining to the economic development of ‘third world’ countries, Ditchley attendees themselves identified a core flaw: the lack of representatives from these nations. There was an awareness that there were many questions that their presence was necessary to answer, and the scope of the answers were limited by their absence.
While this report’s scope does not directly cover climate change’s effects on the environment, it would be inauthentic to leave this topic out of this conversation. Energy security comprises availability, accessibility, affordability and critically sustainability. By the turn of the century, it was accepted that fossil fuels sustainably must be questioned in the coming century. Ditchley conferences, and therefore this report, does not detail the specific effects of climate change on the environment. What it does cover however, is what should be done in the context of energy and how this should be done.
Ditchley attendees lagged in their adoption of climate change as a legitimate threat until the early 2000s. Prior to this, like much of the world, Ditchley conferences flipped from warning that “those who ignore the messages [of climate change] do so at their peril” to arguing that climate change was “provable but not proven” and yielding “no conclusions of absolute certainty.” It was a quagmire of conflicting opinions, largely based on the individual participants invited to different conferences, and it is this uncertainty that exemplifies Ditchley’s discussions on climate change.
The first debate within energy and climate change was examined was the continued availability of resources. Despite the Club of Rome’s 1972 warning that major mineral, agricultural and energy resources were becoming rapidly exhausted, Ditchley attendees were certain that this was not the case. Citing the abundance of fossil fuels and the growing agricultural sector. By the 2000s it was accepted that though fossil fuels were not under threat of running out, we had to keep them in the ground to reduce pollution and reframe the argument.
The second debate centred around human responsibility and what should be done and by whom for our interdependent planet. Even where participants accepted some level of human responsibility for the changing climate, there was the argument that decisions can only be taken on a local level - the ‘polluter pays’ principle- and that no action should be taken that is rash and irreversible. Up until the early 2000s, there was agreement that more scientific evidence was needed (even after the first IPCC report in 1990) and therefore only ‘no regrets’ policies should be taken. These policies would increase efficiency and aim to lower pollution, but only where there was no significant economic toll. It was believed that only if a market approach was shown to be insufficient and/or too slow and if there was convincing scientific evidence of global warming and its adverse impacts, should the option of direct, serious intervention be used. Opinions were varied on if we should act at all, and if so, how quickly it should be done.
By the early 2000s anthropogenic climate change was clearly on the agenda. Despite this, in the US, where energy consumption was likened to a “national religion”, the Bush administration questioned its validity. Still, the debate was about ‘what was to be done’, and this question has led the discussion until today. While levels of public awareness were high, there was lack of leadership, failure to translate public awareness into policy, and a resistance to changing behaviour in response to climate change. These questions remain unanswered.
Economy vs Environment
In the latter half of the twentieth century there was a clear understanding of the trade-off between the economy and the environment. Environmental measures such as ‘scrubbers’ on coal plants and coal taxes were accepted with the understanding they would have a negative effect on the economy. However, to many neoliberals at Ditchley, even this was unacceptable, with one participant going as far as comparing environmental lobbyists to communists, intent on “undermining the capitalist system”. At this 1991 conference many believed growth orientated policies would eventually defeat the environmentalists, much to the distaste of the author of the conference notes. This author mocked the neoliberal support of the free market, saying that if this direction was continued “hey presto, energy/environment problems will melt away like the Alpine snowfields in a period of global warming.”
By 2003, there was an awareness that the narrative of the conversation had to change. Environmental policies and the economy could no longer be in conflict. There was an acceptance that energy was critical, with a 1.5% increase in energy supply equal to 1% in GDP growth. Therefore, energy had to be both profitable and reduce its effect on the environment. The concept of stranded assets had also been raised, further loosening the connection between financial gain and high carbon emitting energy sources. Stranded assets left ‘dirty’ fuels undeveloped as the carbon emissions were deemed morally unacceptable and therefore became unprofitable. However, this did not completely sever the link between profit and the environment, as many of these assets were in the hands of governments rather than private companies so were not susceptible to investor pressure that would lead to these assets becoming stranded. There was also the question of the cost of inaction. Though not discussed at length at Ditchley, there was an awareness of this issue. While there was an acceptance that the economy and the environment shouldn’t be in conflict, it was not entirely clear how this equilibrium was to be achieved.
Ditchley discussions have seen carbon pricing put forward as the best solution to the issue of carbon emissions. In earlier Ditchley conferences carbon taxes were also raised, with the intention of using these funds for nuclear and solar research and development. It was thought that this could be part of a carrot-and-stick scheme for industrially developed nations. However, it was also understood that this could not necessarily be reconciled with the needs of developing nations, who would be penalised for pursuing the same industrialisation that others had undertaken before them. The developing world’s reduction in carbon emissions would depend on mechanisms such as carbon funds and the Clean Development Mechanism established under the Kyoto protocol. As was often the case at Ditchley, these conferences often lacked representation from nations under discussion, which limited the perspectives discussed.
While international carbon pricing was raised as a way forward, many issues with it were raised in conjunction. Regional or global carbon taxes would require unprecedented fiscal coordination, unlikely to be achievable. More local and national level schemes also had their issues, half-heartedly pursued and generally ineffective as manufacturing can be moved to a carbon tax free area. In 2016 it was argued that the challenge of carbon pricing was too large and other plans should be pursued. Global ‘cap and trade’ schemes, and a central carbon bank were options raised but more achievable goals such as investment in efficiency and renewables were seen as more effective. A familiar refrain in energy policy at the time was a call for consistency and certainty rather than sporadic attempts at revolutionary policies. Also familiar was the slow progress made on climate action.
Shale Gas: ‘the sleeping giant’
In 1977, a Ditchley conference considered shale gas and tar sand extraction [The regulation of technological advance: III - energy production] but were concerned over the need for a large skilled labour force and high volumes of water. However, Ditchley attendees also noted potential for growth of this area and thought there should be an increased focus in research and development.
Moving forward to 2014, Ditchley attendees were now discussing the use of shale gas in North America as a revolution. Clearly much had changed. The implementation of shale gas technology in North America solved the issue of the necessity for a large skilled labour force, and it had been decided that the water use was worth it.
The use of fracking also caused local environmental problems: the triggering of earthquakes and methane release, but these dangers were considered to only be significant in a few cases and manageable otherwise. Furthermore, shale gas’s effect on the reduction of emissions, due to the move away from the more polluting oil and coal, made this change seem worth the risks. Regulation was seen as essential, but the shale gas revolution would go ahead, in North America at least.
Some attendees raised the issue of competition for renewables. They worried that the availability of cheap gas would crowd out renewables in some markets, having a detrimental effect on the US approach to climate change. Others were more hopeful, arguing that gas could be used as a base load in combination with renewables. Another concern was that the renewed abundance of hydrocarbons would skew the climate change debate, as the arguments of peak oil and rising prices of hydrocarbons lost validity. Others argued that the availability of a less polluting hydrocarbon would give the Obama administration much needed flexibility on climate change and energy policy.
There was also the question of the economic viability of shale gas, due to the expensive infrastructure needed for extraction. Therefore, facilities would only be built on a large scale - where it is most economically viable - given the market is attractive in the long term. This would result in the need for long term contracts, inhibiting the development of a spot market and flexible destinations for LGN carriers. Furthermore, there was a concern that if abundance drove prices down, the extraction may no longer be financeable, especially if low interest rates changed. Finally, there was the familiar question of uncertainty. There was the question of the size of reserves, both in North America and globally, and what proportion of these could be extracted, with some estimates as low as 10%.
The 2014 conference concluded that North America’s position is made stronger from the development of shale gas and this would greatly change both the energy industry and climate change. However, this is yet to be followed up on at Ditchley, and so its true impact is yet to be discussed.
Before the turn of the century, there was a broad consensus, across multiple conferences and attendees, that renewable energy was not fit for purpose. It was thought that they could play a minor role, but nuclear would be the replacement for fossil fuels, due to renewables’ long lead times and high cost of investment. It was repeatedly said that renewables were simply insufficient. While there was some interest in hydroelectric energy and the promise of new technological developments in photovoltaic cells and hydrogen were acknowledged, this was the overriding consensus.
One key problem of renewables was seen to be investment. The volatility of oil prices together with rapid technological change, resulted in postponement of investment decisions on renewables. In China and India, the need for large amounts of cheap energy meant investment sat largely, but not exclusively, with increasing volume, not renewables. The introduction of shale gas in the 2010s also complicated the picture, with investment moving toward the reliable hydrocarbon over research into renewables.
While the tone of conversation has changed in more recent years to favour renewables, the conversation is largely the same. Ditchley discussions have repeated ‘more research is needed’ for the past 40 years and it is yet to be seen if the discussion will ever move forward from this. Perhaps the growing urgency of the climate crisis will provide some impetus for this, but incremental changes on global energy policy makes this seem unlikely.
Efficiency and Reduction
Throughout discussions at Ditchley, from nuclear to oil to renewables, one argument has been repeated: it is better to increase efficiency in what is being pursued than change course. This has its merits. It can be pursued on both industrial and domestic scale and will have significant impacts to the reduction of our energy usage and carbon emissions, especially in the short term. It also steers clear of traps of environmental imperialism and allows the development of economies and few lifestyle changes. However, this may not be enough. A concept raised in the 2016 conference ‘Can the earth still sustain us? Biodiversity, resources and pollution’ is the issue of efforts to prevent climate change that do not align with the values and ethics of sustainability. This is relevant here. While efficiency is certainly key in combatting climate change, it offers no willingness on behalf of humanity to admit that we have got it wrong and must fundamentally change our behaviour in order to prevent the 2-degree Celsius rise outlined at COP21. It is my sincere hope that this can be achieved, using every means available to us.
Throughout this report, there has been three lines of enquiry. The first, and most self-contained is nuclear, with the key questions of proliferation, economic efficiency and its use in the future fight against climate change. Ditchley’s conversations about nuclear were more common throughout the cold war but have since tapered out due to fewer proliferation and fossil fuel supply anxieties. With no further discussion since 2016, it may be useful to discuss at Ditchley the future of nuclear in the context of the climate crisis and reflect why its dominance in energy has been limited.
The second, most discussed question, is that of fossil fuels. This has been discussed from both an economic and geopolitical perspective. Through both these perspectives however, balance has been key. For the economic discussion, the balance between intervention and a free market, between private or state actors, and between risking new investment or relying on the existing systems have all been questioned. On the geopolitical side, the balancing of national interests - within both the West and Middle East- has been of chief concern. Though the focus of fossil fuel discussions at Ditchley have shifted from Saudi Arabian oil to North American shale gas, this question of balance has prevailed. While Ditchley conferences have no doubt covered fossil fuels in immense detail, there is still much to be discussed. These discussions must cover the future balance of power in the Middle East, the effects of the Covid-19 pandemic, and the future of fossil fuels in a carbon neutral economy.
What is also clear throughout is the need for clarity and certainty. There is an unavoidable conflict between the volatility and fickleness of the energy market and the need for certainty in immense long-term investments. The size and complexity of the energy industry cannot be stressed enough. There is a myriad of factors, each overlapping and intersecting, that dictate energy policy in one nation alone. This policy covers use, extraction, production, marketing, environmental impact and legions more aspects to be debated and finalised. All of which are constantly changing in the face of new technology, public perception and regulation. This then has to be translated into the global economy and done so considering relationships in both the private and public sectors and different temporal scales. Through all this, certainty is needed, especially to change course. Ditchley discussions so far have covered this conflict, but how and if this course can change is a significant question for Ditchley to discuss in the future.
Finally, Ditchley has concerned itself with climate change. While it took some time for attendees to adopt this as a reality, it is now firmly on the agenda. At the time of Ditchley’s establishment, the key question for energy was security of supply. It was this question that led conferences to cover stability in the Middle East, economic policy and balance of fossil fuels. This is no longer what is being discussed. Since the advent of the climate crisis, the scope of energy discussion has broadened significantly. No longer is it about ensuring economic prosperity, but ensuring our survival. The focus has shifted from sustainability of energy supply to sustainability of our impact on the environment. This covers not only how we fuel our cars and homes, but almost every aspect of our lives. Genuine structural change has, as of yet, been slow, with leaders paralysed in indecision due to the immensity of change needed. The sixth IPCC report has shown that this is not enough. This future, and how we chose to manage it, should be of great concern to Ditchley moving forward.
1972 SALT I signed
Club of Rome study published
US’s first Fast Breeder Reactor nuclear power plant decommissioned
1973 Yom Kippur War results in Arab oil embargo
US orders the construction of 41 nuclear power plants after OPEC embargo
Ditchley conference: Choices for Europe and America: The Middle East and the energy situation 1973-1985
1974 Arab embargo ends
International Energy Agency (IEA) is founded
Ditchley lecture: One Earth: the problems and opportunities on a very interdependent planet
1977 Ditchley conference: The regulation of technological advance: energy production
1978 Ditchley conference: Energy and the spread of nuclear technology
1979 Iranian Revolution and Iran hostage crisis
Three Mile Island nuclear plant accident
Panic sends oil from $13 to $34 per barrel
1980 Iran-Iraq war begins
Ditchley conference: Access to Middle Eastern oil
Ditchley conference: Nuclear energy: safety, development and alternative strategies
1981 Ditchley conference: Raw materials: the vulnerability of the west
1982 OPEC introduces first quotas
1983 Congress cuts funding to US only Fast Breeder Reactor
1985 Antarctic ozone hole discovered
Ditchley conference: Do the developed industrial countries need an energy policy to assure adequate future supplies?
1986 Oil price collapse
1987 Ditchley conference: The international economic and political implications of fluctuating oil prices
Ditchley conference: Economic growth and the environment: conflict or opportunity?
Ditchley Conference: The future of nuclear power in energy policy
1989 Berlin wall falls
Exxon Valdez tanker accident
Ditchley Conference: Environmental damage and climatic change
1990 First IPCC report published
1991 First gulf war
START I signed between US and Russia
Ditchley conference: Global climate change and its implications
Ditchley conference: Energy and the environment
1993 Creation of NAFTA
1995: Ditchley conference: The Gulf: problems and prospects
1997 Kyoto protocol on Climate change
Toyota introduces first hybrid vehicle to be commercially available.
1999 First natural gas production from Sable Island cluster of Fields, offshore Nova Scotia, Canada
Ditchley conference: The management and repercussions of nuclear power
2001 9/11- AL Qaeda attacks world trade centre and pentagon
2003 US invasion of Iraq begins
Ditchley conference: Meeting Energy Needs for the 21st Century
2005 Ditchley conference: Nuclear energy: time to move ahead
2006 First UN sanctions aimed at the Iranian nuclear programme
‘An Inconvenient Truth’ published by Al Gore
Ditchley conference: Energy and the environment: the essential next steps
2007 EU introduces new environmental regulations to reduce GHG emissions by 20% by 2020.
China overtakes the US as largest CO2 emitter
2008 Financial crash
Ditchley conference: China, energy and the environment
2009 Price of oil falls to $34 US per barrel.
2010 BP’s Deepwater Horizon Oil Spill
2011 Fukushima nuclear disaster
New START ratified between US and Russia
2014 Ditchley conference: The shale gas energy revolution and geopolitics
2015 The Great Pacific Garbage Patch is mapped
Ditchley conference: Climate and energy risk
2016 Paris Agreement goes into effect
Ditchley conference: Nuclear energy: the future or the past?
Ditchley Conference: Change in the Middle East: new lines in the sand?
Ditchley conference: Can the earth still sustain us? Biodiversity, resources and pollution
2017 Trump pulls out of 2015 Paris Agreement
Ditchley conference: Can Saudi Arabia lead the Gulf to a knowledge economy and a sustainable and stable future?
2019 US is largest oil and gas producer
2020 Oil prices go into the negative for the first time in history as a result of the Covid-19 pandemic.
Biden re-enters US into Paris Agreement
2021 Oil prices recover. ARAMCO profits rise by 300%.
New IPCC report described as a “code red for humanity”
COP26 to take place in Glasgow