How the US Government can (really) spark energy investment – and rebuild its credibility
Sharing the Big New Idea I’m most excited about
The US Government has a problem. It genuinely does want to support allies, diversify global supply chains, fight climate change, and make people around the world richer and more secure. To achieve these goals, the US needs to mobilize a lot more energy investment in many different countries. And we want to show that the West can provide a credible market-based alternative to China or Russia. We have ambitions to be a leader of global energy investment and a healthy self-regard. But, really… we’re not good at it.
The USG is not set up to be an efficient investment machine. And this reality is undermining all of our national security, global development, and climate goals. That’s why Katie Auth and I have spent the past year working on a Big New Idea that we think can solve this problem by filling a structural gap inside our government. The idea: Energy Security Compacts. (Link to proposal and video below.)
“The Interagency”
If you’ve worked inside the USG, that term will evoke emotions. Frustration will probably be among them. The Interagency is the process of different federal agencies debating decisions and acting upon them. If that sounds like a boring management question, it’s not. The Interagency is crucial to whether the USG has any hope of solving complex problems – like strengthening the energy security of our allies or catalyzing a global transition to cleaner energy. And I don't think it’s overly alarmist to say we’re currently flailing – and that US credibility is suffering.
Here’s a fundamental contradiction of the US Government: it’s arguably the most well-resourced and powerful force in human history, yet is often completely unable to get stuff done. In my experience, the source of interagency dysfunction is not about stubborn individual personalities, but rather a logical result of the sheer size and structural fragmentation of our system. We have a lot of agencies. And each agency has its own goals, leadership, staff incentives, culture, etc. which make it really hard to get people to work together. The default is non-cooperation.
Senior officials like to proclaim that America’s big problems will be solved with a “Whole of Government” approach (see e.g., pandemic response, industrial policy, racial equity). Somehow, it’s become fashionable to equate “more agencies” with “a more effective response.” That’s almost always wrong. Indeed, as the always-wise Ruth Levine once joked with me, “Whole of Government is more accurately spelled without the W.” The truth is that, more often than not, different agencies are running around doing their own thing.
Fire drills should be for emergencies
We’re seeing this structural problem play out in real time right now with global energy. The US economy is an energy powerhouse and American companies are churning out incredible new energy technologies. The US should be able to leverage these strengths to help secure energy supplies for our closest allies, counter the influence of China and Russia, fight poverty, and spur faster adoption of clean energy.
Fortunately, the USG already has lots of tools and programs to help make these things happen. The bad news is that they’re spread across State, Treasury, Energy, DFC, ExIm Bank, USAID, USTDA, MCC, Commerce, Labor, Defense, and more. The overworked White House staff can coordinate ad hoc on a handful of issues in a handful of places. But leaning on a few NSC staff is not scalable.
For example, the Partnership for Global Infrastructure Investment (PGI) launched at the G7 two years ago includes a US pledge to mobilize $200 billion as an alternative to China’s Belt Road Initiative. Similarly, Just Energy Transition Partnerships (JETPs) are promises of billion-dollar packages of investments to help clean up emerging market coal economies. Both these initiatives have laudable goals and highly capable people working on them. But each is entirely a fire drill, cobbled together in a painfully frustrating process that is not living up to the lofty goals. And is not at all replicable.
The effect→ the United States is increasingly viewed as an unreliable partner. Across Africa, for example, I often hear that the US delivers lectures rather than investment. This damages our credibility as a global leader, undercuts the energy security of crucial allies, and slows economic growth. And, to state the obvious, our structural problem is a gift to China and Russia.
Lessons from the MCC and Power Africa can help rescue US global energy ambitions
The USG is absolutely capable of solving this problem. We can do big hard things, and even get multiple agencies to cooperate when we have:
Clear goals
Shared playbook
Empowered coordinator
American football is a complicated sport too. Eleven guys running around a field would be chaos if they weren’t all trying to score points, run organized plays, and be led by a quarterback. The USG trying to catalyze energy investment in Indonesia or Poland or Nigeria is the same.
We’re confident these three elements can work because we’ve seen it before. The Millennium Challenge Corporation is a highly effective development agency created in 2004 that has a very clear goal (economic growth), a robust process to identify priorities (constraints-to-growth analysis), and an agreed plan (a 5-year compact). Similarly, Power Africa is a multi-agency initiative launched in 2013 that has two clear goals (30 GW of new generation & 60 million new connections), a coordinator housed at USAID who has successfully used small pockets of flexible money to incentivize agencies to work together, and an interagency working group co-chaired by USAID and NSC.
Proposing a better way: Energy Security Compacts
Applying these lessons, the USG can do a lot more in a lot more countries. Energy Security Compacts would follow 5 steps:
A political decision is made at the White House to initiate a compact with an ally, such as rebuilding Ukraine’s power system, assisting the Philippines to build a clean energy system, or enabling Zambia to have sufficient power for its critical mineral mining operations.
A constraints analysis, conducted jointly with the partner government would identify the top barriers to the growth of energy systems and priority investments.
A multi-year compact is agreed upon with mutual investments and related policy changes.
A dedicated coordinator with flexible funds implements the compact, is responsible for delivery, and is backed by an interagency working group co-chaired by the NSC.
Results are reported to Congress.
Katie and I have gathered lots of feedback about the idea and put down the specifics in this Blueprint, including some institutional options (hosting it at MCC or USAID) and how it could function under different budget scenarios (continuing resolution vs an expansive budget). I’d love to get feedback to make the proposal better. I’m sure we have not yet thought of many ways to make this more politically salient, more efficient, or more attractive to Congress and the Interagency.
Bipartisan or die
I was closely involved with the creation and launch of the Development Finance Corporation in 2020, an experience that holds many lessons for this new effort. That’s why we’ve identified one issue where we won’t compromise: it must be bipartisan. Any Big New Idea pitched in Washington with a hope of survival beyond one term, must, must, must gather support on both sides of the aisle. Energy security is one of the few issues that both parties agree upon. Countering strategic competitors, supporting the global energy transition, and strengthening the economies of the United States and our closest allies are all bedrock national security aims. Achieving them needs a response that’s equally ambitious, durable, and credible.
Let us know what you think.
Read the (15 page) Blueprint here.
Watch our (30 min) briefing here.
I enjoyed reading this article. Coming from (mega) events production as a project manager I recognise processes as we use them. Often building huge sites, within short terms, working together with thousands of people and hundreds of companies towards “the Holy Event Date” with a relatively small project team. Worked more than once together with the White House and know they absolutely are able to perform.