State’s New Power Source

Now and again, the times call for a new organizational chart. At the State Department last fall, officials commandeered a wing and installed signage for the brand-new Bureau of Energy Resources. The reorganization capped a five-year bipartisan effort to “focus greater attention on energy diplomacy questions” during a time of unstable markets and emerging new energy sources, says the bureau’s director, Carlos Pascual, a 30-year foreign policy hand who most recently was ambassador to Mexico.

The new entity’s goals are to reinvigorate energy diplomacy with users, producers and consumers; stimulate alternative energy markets; and expand energy access to the world’s poor. “The new bureau marks a recognition that the energy issue plays a central and cross-cutting role in conduct of foreign policy, in U.S. national security issues, in national economic development, and in the availability of affordable and reliable energy,” he says. “Just witness the impact of $130-a-barrel oil last spring when the Libya crisis began.” 

Pascual’s staff of 55—culled from employees originally brought to State for other projects—now is laboring to fulfill his goal of  “gaining credibility within the bureaucracy by adding value and helping others do their jobs more effectively.” 

Concrete steps to winning over any skeptics involve presentations to senior staff on the bureau’s services and travel to key countries as different as Nigeria and Pakistan to meet with U.S. envoys and foreign ministers. “Nothing is more powerful than being asked to present by the secretary of State, which focuses people’s minds on the role we can play,” Pascual says. Also helpful in establishing the bureau’s visibility were Undersecretary for Political Affairs Wendy Sherman and the bureau’s boss, Undersecretary for Economic, Energy and Agricultural Affairs Robert Hormats.

The areas in which Pascual’s team provide expertise include helping Iraq resurrect its oil industry, flagging relevant players in Brazil’s renewable energy field, and strategizing on sanctions against Iran. The one urgent issue that does not involve Pascual is the State Department’s central role in consideration of the controversial Keystone XL pipeline that would traverse the United States from Canada to the Gulf of Mexico. His new bureau is recused from that complicated issue because of a departmental desire to stick with an existing team of specialists.

The idea for an energy bureau got rolling in a 2006 bill championed by Sen. Richard Lugar, R-Ind., who has long been concerned that U.S. dependence on foreign oil is a major national security challenge. But it was Secretary of State Hillary Clinton who steered State into compiling a Pentagon-style Quadrennial Diplomacy and Development Review that set the bureau in motion. Clinton tapped Pascual in May 2011 as her special envoy and coordinator for international energy affairs, and he began assembling a team so the bureau could set up shop in November. 

Asked why such a bureau wasn’t created in the 1970s during the two energy crises, Pascual noted that “markets have changed, global demand has grown and supplies relative to demand are more diversified. Back then the U.S. produced sufficient oil, we were the stability factor” in partnership with Saudi Arabia, he says. “Today, the fastest growing demand is outside the Organization for Economic Cooperation and Development countries—China and India. Addressing our goals effectively requires engaging a wider range of players, both on the consumer and the supply side.”

Much of the work involves liaison with the private sector, “which has all the innovation and resources,” says Pascual, who stands ready to take calls from major oil companies about the bureau’s agenda. Similarly, State officials also coordinate with companies marketing wind and solar power, energy efficiency and clean energy products, as well as environmental groups and nongovernmental organizations advocating for transparency in the policy process.

Equally important is coordination with other agencies, the most intense of which is the relationship with the Energy Department. Energy, which has its own Office of Policy and International Affairs, “is one of the premier technical agencies in the world, and we complement it by bringing geopolitical expertise—advice on market drivers in particular countries such as tariffs, regulation policy and standards,” says Pascual. The bureau also reaches out to the Environmental Protection Agency, the Interior and Commerce departments, and the U.S. Agency for International Development. Energy export policy is coordinated with the Export-Import Bank of the United States, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency.

Whether the energy bureau can grow “will be up to future presidents and secretaries of State,” Pascual says. “Engaging in questions relative to energy is nonpartisan in nature, and support for the bureau is strongly bipartisan.”