The United States is a global leader in geothermal, advanced nuclear, next-generation wind, and battery storage technology, as well as the data systems behind every modern power grid. Thanks to advances in extraction technology, the United States produces more oil and gas today than any country in human history. At the same time, the role of energy security in geopolitics and global stability has never been starker, as the massive dislocations in global energy markets during the COVID pandemic and following Russia’s invasion of Ukraine made clear. Helping key U.S. allies achieve energy security is one of the most powerful ways Washington can bolster its friends, reduce their dependence on authoritarian adversaries, and support innovation at home. Yet despite bipartisan interest and a bevy of existing international energy programs, the U.S. government currently has no effective way to deliver on that promise.
The United States is a global leader in geothermal, advanced nuclear, next-generation wind, and battery storage technology, as well as the data systems behind every modern power grid. Thanks to advances in extraction technology, the United States produces more oil and gas today than any country in human history. At the same time, the role of energy security in geopolitics and global stability has never been starker, as the massive dislocations in global energy markets during the COVID pandemic and following Russia’s invasion of Ukraine made clear. Helping key U.S. allies achieve energy security is one of the most powerful ways Washington can bolster its friends, reduce their dependence on authoritarian adversaries, and support innovation at home. Yet despite bipartisan interest and a bevy of existing international energy programs, the U.S. government currently has no effective way to deliver on that promise.
When the United States partnered with other countries to help South Africa end debilitating power outages and transition away from coal, the U.S. Treasury Department cobbled together an unimpressive package consisting of one small grant plus promises of possible loans. A similar deal for Indonesia is even less certain. And when Nigerian officials arrived in Washington recently to pitch an energy transition partnership, the U.S. had little to offer. The United States is now preparing to help Ukraine protect and rebuild its energy system, with multiple agencies scrambling to figure out what they can offer.
International energy partnerships are not charity. Boosting the energy security of U.S. allies helps the United States in its strategic goals. To counter the Russian threats to Poland, Romania, and other Eastern European countries, the U.S. must help diversify how those countries get their energy. If the U.S. wants to tackle climate change, it has to spark far greater and faster deployment of clean energy, especially in carbon-intensive emerging markets like Indonesia and Vietnam. If Washington is serious about diversifying global clean energy supply chains, it must work with mineral-rich countries like Zambia to build energy systems to power large-scale mining and processing operations. And if the United States wants to provide a credible alternative to Chinese or Russian investment in places like the Philippines or Nigeria, it has to put far more on the table than lofty rhetoric. In short, energy security is the thread that supports nearly every major foreign-policy objective.
The challenge is clear. Between 2016 and 2021, China provided more energy project finance than all major Western-based development banks combined. The U.S. International Development Finance Corporation (DFC) formed in December 2019 explicitly to boost investment in overseas infrastructure yet has approved less than $1 billion per year for new utility-scale power generation projects. At the 2022 G-7 summit, the White House pledged to mobilize $200 billion of new infrastructure investment within five years. So far, the initiative has resulted in a series of projects along a railway corridor connecting Zambia to a port in Angola. Replicating something similar in other locations at the scale required to meet the G-7 target in time will be nearly impossible.
The contrast is especially startling in nuclear power. Russia is building massive nuclear reactors in Bangladesh, Egypt, India, and Turkey, and it has signed nuclear agreements with at least 40 other countries. By comparison, the United States has a promising advanced nuclear industry but barely a dozen similar agreements. Russia sells its nuclear reactors with end-to-end packages, conveniently financed by Russian state banks. In contrast, the fragmented nature of the U.S. government requires nuclear firms to navigate a gauntlet of at least 25 offices across eight different federal agencies. The long-standing policy bias against nuclear power that still lingers within Western institutions should also be shed faster: The DFC lifted a ban on financing nuclear technology in 2020 but is still only tooling up to support such projects, while the World Bank still has a ban in place.
Besides the diplomatic fallout and economic damage from Washington’s ad-hoc approach, the direct national security implications are also clear. Russian dominance of global nuclear exports locks countries into partnerships with the Kremlin. Any effective campaign to lessen China’s dominance of batteries and clean tech manufacturing will depend on supporting mining and processing in multiple countries, requiring smarter, more organized U.S. investment.
Washington has many valuable tools available to support global energy investment, but applying them is rarely coordinated and never efficient. The existing U.S. approach is hamstrung in several ways.
First, current U.S. efforts are too narrow. U.S. energy finance almost always targets stand-alone projects, such as individual power plants, rather than considering a country’s broader energy needs and vulnerabilities. U.S. financing tends to be passive and reactive, with agencies depending on companies to request backing, which typically means getting involved only very late in the project cycle. As a result, the U.S. government often winds up investing in a series of fragmented deals that are already close to completion rather than those that might have the largest political or economic impact. For the same reasons, the United States struggles to help countries that do not already have a pipeline of shovel-ready projects. A more effective approach would start with strategic objectives and then target early project interventions toward those goals.
Second, U.S. energy support is spread too thin. For example, the U.S. Agency for International Development (USAID) disperses roughly $100 million each year to African electricity sectors. This sounds substantial—until you realize it’s spread across 30 or more countries. Sprinkling resources like this has some diplomatic and development benefit, but it is not a model for transformational change.
Third, U.S. ideological battles over energy technology have too often become the ends of U.S. investment, rather than putting African and other partners in the driver’s seat of setting goals and making choices, widely recognized in the development community as a prerequisite to success. Yet U.S. policy has often tried to force its own technology choices on other countries, such as promoting U.S. gas exports or pushing a renewables-only policy in poor countries.
Finally, the many different U.S. programs do not reinforce each other because the various departments and agencies rarely work in sync. Foreign energy investment is fragmented across the State, Treasury, Energy, and Defense departments, as well as USAID, DFC, the Export-Import Bank, the Millennium Challenge Corporation (MCC), and the U.S. Trade and Development Agency. Piecing these together—for instance, so that feasibility studies from one agency help build the investment pipeline of another—requires a structure and incentives for tighter collaboration.
Fortunately, the United States already has several proven models to build on. The MCC, created by Congress in 2004, is a development agency that starts with a clear analysis of the gaps in selected countries, negotiates a multiyear compact of investment with a partner government, and has a robust accountability mechanism to safeguard taxpayer resources and track results. The MCC’s mandate is to generate economic growth, but it already identifies energy access and supply as a primary economic constraint in roughly half its analyses, and its model could easily be adapted to energy security.
Another positive lesson comes from Power Africa, launched in 2013 to promote power-sector investment across sub-Saharan Africa. The initiative has shown that interagency cooperation can actually work. It has helped bring 8,000 megawatts in new gas, hydro, solar, and wind power generation capacity online and connect more than 40 million homes and businesses to electricity. (Full diclosure: One of us—Katie Auth—worked as a deputy coordinator at Power Africa.)
The next administration could combine these two models to create energy security compacts to support key partners and deploy existing programs more effectively. A compact would analyze priorities, negotiate multiyear investment plans, and set performance benchmarks. A dedicated coordinator would keep U.S. agencies aligned and track progress as partner countries build out their energy systems. A first step would be for Congress to draft legislation enshrining the objectives of energy security compacts and creating the institutional structure, likely housed in either the MCC or USAID. This could turn U.S. energy strength into foreign policy leverage by helping allies fend off Russian energy bullying, providing credible alternatives to Chinese investments, helping with the clean energy transition, and diversifying global supply chains.
Energy security is a rare issue of bipartisan agreement. Leaders of both parties understand that strengthening the energy security of U.S. allies and partners is necessary for nearly all of the United States’ foreign-policy and security goals. Washington has long promised more than it can deliver for far too long.
