The New Geopolitics of the Energy Transition

A transition from fossil fuels to renewable energy will radically transform power relations, mirroring the changes produced when oil became the centre of energy production. This has strong implications for political risks deriving from energy transition.

The leading players: USA and China

2021 will be a crucial year for the energy transition and those political risks related to its development.

The United States will present itself as one of the major players in this new run, heading the green energy hegemony through a new presidency that sets energy transition at the top of the political agenda. Joe Biden, the 46th President of the United States, is about to start a new rolling-back era in which the new government will gradually reverse policy measures embraced by former President Donald Trump in order to reach net-zero emissions by 2050 or sooner.

The United States are well aware that the energy transition will bring substantial national security risks, and its relationship with China will be the most delicate piece of the puzzle. It will not be comfortable for both countries to properly behave in a situation where cooperation is almost as crucial as competition to complete each’s ambitious missions. To fully perform in the transition race, each country will need a trust-worthy production chain made by nations allies and a large focus on domestic production.

Within China’s hegemonic race, the energy transition plays a fundamental role. Dominating new technologies and new sources of energy can guarantee China a much greater role on international tables. Furthermore, ridding itself of the title of  “country that pollutes the most” will undoubtedly help China increase its soft power and reputation in the world’s eyes.

The shift from petrostate to electrostate will raise the significance of some national assets like semiconductors, microchips and artificial intelligence. Perhaps it is possible to forecast that the two countries will battle to gain hegemony over this field.

Graphic source: BP, IRENA

The two most important factor that demonstrate how countries are approaching energy transition are fossil fuels net imports and green energy technology and patents.

The graph above showes us that China and the United States are utilizing two different strategies. The United States is gradually becoming less dependent on oil imports, while they are not as fast as China in terms of renewable patents and technology. Despite China being predominantly the most advanced country in renewable manufacturing, it is more dependent on fossil fuels imports. These two opposing strategies reflect each country’s approach to power; while China is working on becoming the most prominent manufacturer, aiming to gain leverage through competitive prices and innovative products, the United States is working on positioning itself as an ideological lighthouse, guiding other countries to change and adapt to green energy. This soft power technique has the scope of maintaining the lead over other manufacturers economies.

What about the other players?

Russia fears that a developed global energy transition could damage its oil and natural gas exports. The emerging sector of zero-carbon nuclear energy could boost Russia’s leverage in the geopolitical arena.

The Middle East will have to diversify to maintain the geopolitical status gained in the last years. Remarkably, the preservation of conflicts and the United States’ relationship will be affected by the Middle East’s ability to renovate itself in a new world.

Europe is still a sensitive area when it comes to the energy transition. The policy agenda is given by the European Union’s “soft leader”, Germany, that has the principal aim of not suffering a so-called “Washington Consensus” about energy transition themes. That situation could negatively impact Germany’s manufacture sector. For that reason, Germany, and of course, the entire European Commission, is trying to boost all other countries’ resources to develop a harmonised and effective energy transition plan properly. It is not a surprise that the energy transition will be at the centre of the European financial mechanism of recovery from the COVID-19 pandemic, the so-called “NexGeneration EU” plan.

The European Union, despite the other two hegemonic forces, China and the United States, is more likely to act more as a policymaker rather than a market power; perhaps “pricing” and “taxes” will be more essential keywords than “production” and “innovation”.

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Herz, S. Guy, B. Schmidt, J. (2020).Foreign Affairs. Avaible at https://www.foreignaffairs.com/articles/united-states/2020-11-25/climate-first-foreign-policy#author-info [accessed 16/02/2021]

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