Geopolitics and the Energy Transition: Competition or Cooperation?
Energy transitions have always represented watershed historical moments with profound and far-reaching geopolitical ramifications. During the eighteenth and nineteenth centuries, the industrial revolution and simultaneous shift from wood to coal propelled the ascendance of capitalism and fuelled the imperial ambitions of European colonial powers. In the early twentieth century, the switch from coal to oil formed the backdrop to a century of geopolitical upheaval in the Middle East. Similarly, the climate change propelled shift from fossil fuels to renewable energy sources, is likely to have transformative effects on the geopolitical landscape of the twenty-first century.
New Geographies of Trade
Throughout the fossil fuel era, the geographical distribution of energy resources, concentrated in regions such as the Persian Gulf, Caspian Basin and Gulf of Mexico profoundly shaped patterns of international trade. Green technologies such as wind, solar and hydropower are projected to constitute 49% of global energy consumption by 2050, up from 26.2% in 2019, likely resulting in immense shifts in the global energy trade.
Perhaps the most profound shift to occur will be an increasingly regionalised pattern of energy distribution replacing the global marketplace. Green energy sources are almost universally available, providing most states with the capacity to attain energy self-sufficiency. This contrasts the steep division between fossil fuel-rich nations such as Saudi Arabia and Russia, and less fortunate nations, which depend on heavy imports. A new trend may instead emerge where countries with abundant renewable energy potential become green electricity exporters via regional grids, such as Chile, Morocco, and Australia.
As the shift towards renewables accelerates, states will increasingly derive the bulk of their energy supplies from integrated regional power grids. This is due to the high losses associated with long-distance electrical transmission and the natural variation in weather conditions, which will foster increased energy interdependence between neighbours. For instance, countries with significant hydropower potential such as Nepal may export surplus electricity generation to India during the monsoon season, whilst India could rectify this trade imbalance via the export of solar power to Nepal during the dry season.
A Post-Petroleum Peace Dividend?
Conflicts over hydrocarbon reserves have served as a backdrop for some of the most significant episodes of geopolitical strife over recent decades, from the 1973 oil crisis to more recent events such as the ongoing U.S-Iran standoff in the Persian Gulf.
As fossil fuels are gradually replaced, resource-driven conflicts are set to decline. This may increase the potential for peace in regions plagued by petroleum-related violence, such as the Middle East, Africa and Latin America, although caution should be used when assessing how practical and achievable this would be due to the complex nature of such conflicts. In particular, many fragile, resource-rich states may see violence recede as lucrative oil rents dry up, offering an opportunity to break the cycle of conflict and create an environment amenable for investment in post-conflict reconstruction. Moreover, strategic choke-points at the epicentre of great power tensions such as the Persian Gulf and Malacca Straits will likely see their geopolitical relevance diminish, easing regional tensions between the U.S and its regional allies and strategic adversaries such as Iran and China. Similarly, Europe’s shift towards a carbon-neutral economy by 2050 under Ursula van der Leyen’s ‘European Green Deal’ is set to reduce Russia’s stranglehold over European energy markets and reduce Moscow’s ability to threaten Central and Eastern European states by threatening to cut oil and gas supplies to the continent.
Old Wine in New Bottles: Conflict and the Energy Transition
On the other hand, the energy transition may give rise to new strategic rivalries and geopolitical vulnerabilities as competition over resources critical for a sustainable transition to a low-carbon economy intensify. Rare earth metals such as copper, graphite, lithium and cobalt which are critical for renewable technologies are often concentrated in countries lacking effective governance. These states, such as Bolivia, Colombia, Mongolia and the Democratic Republic of the Congo may be condemned to the ‘resource curse’, ushering in widespread political instability as rival parties seek access to resources, echoing the present-day petroleum-based conflicts.
Furthermore, as governments commission ambitious hydroelectric projects in a bid to attain low-carbon energy self-sufficiency, new conflicts are set to arise over the usage of key water sources. This has been illustrated in recent diplomatic spats between Egypt and Ethiopia over the Grand Ethiopian Renaissance Dam in the Nile Basin. Such crises are exacerbated when they intersect with existing strategic tensions between neighbouring states and often threaten to spill over into open confrontation. Such examples include India and Pakistan’s rivalry over the Indus or between Turkey, Syria and Iraq over the Tigris and Euphrates. Even developed countries are unlikely to avoid the political fallout of a shift from fossil fuels to renewables. Although renewable industries are projected to generate over 11 million new jobs worldwide by 2050, declining demand for coal and fossil fuel extraction may exacerbate economic dislocation in marginalised communities in America’s Appalachian Mountains or the coalfields of Poland, Bulgaria and the Czech Republic.
Perhaps the most disruptive geopolitical consequences of the energy transition stem from the projected collapse in oil and natural gas revenues for fossil fuel-dependent regimes across the Middle East, Africa, Central Asia and Latin America. Whilst several countries such as Norway, Saudi Arabia and the UAE have successfully diversified, many petro-states may struggle with the collapsing market. This may undermine fragile, oil and gas-rich states in Africa (Angola, Nigeria and Gabon), the Middle East (Libya, Iran and Iraq) and Central Asia (Turkmenistan and Kazakhstan). This threatens widespread protest, domestic political strife and violent conflict as these unsustainable regimes collapse. As the energy transition gathers pace, the potential peace dividend stemming from the declining competition over fossil fuels may be superseded by a vast swath of failed states not only deprived of non-renewable revenues but vulnerable to the direct effects of climate change itself.
Conclusions
The energy transition thus presents a crossroads. The transition towards green energy may weaken geopolitical rivalries, increase cooperation and decrease competition, beginning a significant shift in the drivers of geopolitics. Centres of energy production may relocate away from oil and gas-rich states. However, the existence of resource-driven conflict may persist, as states and corporations fight instead over rare minerals essential for green technology. Furthermore, eventual crash of oil and gas revenues leave vulnerable fragile states that currently host resource-focused economies. Those who fail to adjust or diversify may see significant economic collapse as their revenue streams dry up.
