A new report by the Global Commission on the Geopolitics of Energy Transformation says the new energy age will profoundly reshape relations between states and regions. It will bring “A New World” of power, security, energy independence and prosperity. It will also reshape the geopolitical map, just as fossil-fuels have done over the last 200 years. No nation will be unaffected.
Political and business leaders from around the world have outlined the far-reaching geopolitical implications of an energy transformation driven by the rapid growth of renewable energy. In a new report launched at the Assembly of the International Renewable Energy Agency (IRENA), the Global Commission on the Geopolitics of Energy Transformation says the geopolitical and socio-economic consequences of a new energy age may be as profound as those which accompanied the shift from biomass to fossil fuels two centuries ago. These include changes in the relative position of states, the emergence of new energy leaders, more diverse energy actors, changed trade relationships and the emergence of new alliances.
“Just as fossil fuels have shaped the geopolitical map over the last two centuries, the energy transformation will alter the global distribution of power, relations between states, the risk of conflict, and the social, economic and environmental drivers of geopolitical instability.” – A New World: The Geopolitics of the Energy Transformation
“A New World”, no less
The Commission’s report “A New World: The Geopolitics of the Energy Transformation” suggests that the energy transformation will change energy statecraft as we know it. Unlike fossil fuels, renewable energy sources are available in one form or another in most geographic locations. This abundance will strengthen energy security and promote greater energy independence for most states. At the same time, as countries develop renewables and increasingly integrate their electricity grids with neighbouring countries, new interdependencies and trade patterns will emerge. The analysis finds oil and gas-related conflict may decline, as will the strategic importance of some maritime chokepoints.
New energy leaders
The energy transformation will also create new energy leaders, the Commission points out, with large investments in renewable energy technologies strengthening the influence of some countries. China, for instance, has enhanced its geopolitical standing by taking the lead in the clean energy race to become the world’s largest producer, exporter and installer of solar panels, wind turbines, batteries and electric vehicles. Fossil-fuel exporters may see a decline in their global reach and influence unless they adapt their economies for the new energy age.
China leads: world’s largest producer, exporter and installer of solar panels, wind turbines, batteries and electric vehicles
Adnan Z. Amin, Director-General of IRENA, says: “The benefits will outweigh the challenges, but only if the right policies and strategies are in place. It is imperative for leaders and policy makers to anticipate these changes, and be able to manage and navigate the new geopolitical environment.”
Domestic energy generation helps deliver universal energy access, security and equity
The Commission says countries that are heavily reliant on fossil fuel imports can significantly improve their trade balance and reduce the risks associated with vulnerable energy supply lines and volatile fuel prices by developing a greater share of energy domestically. With energy at the heart of human development, renewables can help to deliver universal energy access, create jobs, power sustainable economic growth, improve food and water security, and enhance sustainability, climate resilience and equity. Some states will be able to leapfrog technologies based on fossil fuels. The number of energy-related conflicts is likely to fall.
No nation can ignore the political and economic changes
While the precise scope and pace of the energy transformation cannot be predicted, its impact on countries, communities and companies will be profound.
“This report represents the first comprehensive analysis of the geopolitical consequences of the energy transition driven by renewables, and a key milestone in improving our understanding of this issue,” said Commission Chair Olafur Grimsson, the former President of Iceland. “The renewables revolution enhances the global leadership of China, reduces the influence of fossil fuel exporters and brings energy independence to countries around the world. A fascinating geopolitical future is in store for countries in Asia, Africa, Europe and the Americas. The transformation of energy brings big power shifts.”
Countries must prepare for the changes ahead and develop strategies to enhance the prospects of a smooth transition. At the same time, the energy transformation will generate new challenges. Fossil fuel-exporting countries may face instability if they do not reinvent themselves for a new energy age; a rapid shift away from fossil fuels could create a financial shock with significant consequences for the global economy; workers and communities who depend on fossil fuels may be hit adversely; and risks may emerge with regard to cybersecurity and new dependencies on certain minerals.
Whatever the challenges, the report concludes: “Despite difficulties, the energy transformation will ultimately move the world in the right direction by addressing climate change, combating pollution, and promoting prosperity and sustainable development.”
The Global Commission on the Geopolitics of the Energy Transformation was established as an independent initiative by the International Renewable Energy Agency (IRENA) in January2018. during the eighth IRENA Assembly. Chaired by Mr. Olafur Grimsson, the former President of Iceland and supported by the governments of Germany, Norway and the United Arab Emirates, the Commission was mandated to raise awareness and deepen understanding of the geopolitical implications of the energy transformation driven by renewables. The Commission is made up of experienced leaders from the worlds of energy, politics, trade, environment and development.
The International Renewable Energy Agency (IRENA) is an intergovernmental organisation that supports countries in their transition to a sustainable energy future, and serves as the principal platform for international co-operation, a centre of excellence, and a repository of policy, technology, resource and financial knowledge on renewable energy.