How the Energy Transition Will Reshape Geopolitics

COMMENT EMISSIONS Permafrost collapse EVOLUTION Does explaining PHOTOGRAPHY A hymn to the NEUROSCIENCE Sex could double predicted the origin of life call for new artform’s relationship differences are gateway warming p.32 physics? p.36 with science p.38 to precision medicine p.40 ASHRAF MOHAMMAD ALAMRA/REUTERS

Solar panels decorate the desert in Dubai. How the energy transition will reshape geopolitics Paths to a low-carbon economy will create rivalries, winners and losers, warn Andreas Goldthau, Kirsten Westphal and colleagues.

nergy is at the root of many political world to a low-carbon economy. by issues such as equity, health care and ructions. President Donald Trump’s The future benefits of clean energy can national security. intention to pull the United States seem distant when weighed against pay This bumpy ride is no surprise. Eout of the Paris climate agreement in 2020, packets or votes now. Despite the impacts Historically, most major transitions have the European Union’s restrictive policies of climate change becoming increasingly proceeded in unexpected ways. Climb- against importing Chinese photovoltaic evident in devastating cyclones, heatwaves ing the energy ladder from wood to coal cells and the political hostility towards the and floods, politicians want to protect local between the eighteenth and nineteenth school strikes over climate-change inaction jobs and incumbent industries, such as coal centuries, for instance, enabled industriali- are all reactions to attempts to shift the and manufacturing. Voters are swayed zation. But it also disenfranchised large

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parts of the working class, prompting Karl Marx and Friedrich Engels to write FOUR FUTURES The Communist Manifesto. The transition Geopolitics in the next decade (hashed regions) will dictate whether or how fast energy to renewable energy sources will be disrup- from renewable sources will outpace that from fossil fuels, as these four scenarios depict.

tive, too. Yet the geopolitical implications AL. SOURCE: A. G. ET are, for the most part, yet to be analysed. B D BK Policies, funding and cooperation drive Renewables surge then slow as International energy organizations have rapid decarbonization. competition limits their spread. flagged some issues. Oil exporters might lose global influence, whereas importers will be empowered, concluded a report from the International Renewable Energy Agency (IRENA) published earlier this Fossil fuels year1. Economies that produce oil and gas could lose US$7 trillion by 2040, the Inter- 2 energy Total A scienti c national Energy Agency has warned . And advance creates wider strategic quarrels will also emerge. Renewables competition With their huge markets, industry leaders China and the United States are vying 1980 2100 1980 2100 to dominate the clean-technology sector. And new relationships and allegiances, D SM MDD Fossil-fuel industries are protected and Fossil fuels dominate and renewables fail such as the Global Energy Interconnection energy markets fragment. to mitigate climate change. Development and Cooperation Organiza- tion (a platform for companies and enter- prises) might replace state-led clubs of old such as OPEC, the Organization of the Some oil companies Petroleum Exporting Countries. Compe- and states go bankrupt tition over the use of land for energy production will have implications for food and Total energy Total water security and migration in developing countries. And energy is woven into the infrastructure investments and relationships that form China’s Belt and Road 1980 2100 1980 2100 Initiative. We present here four geopolitical scenarios to illustrate how varied the transi- goal in the Paris climate agreement. Finan- These blocs seek to control the materials tion could be by 2030 (see ‘Four futures’). cial markets divest fossil-fuel assets and needed, such as rare-earth metals, cobalt To minimize conflict and maximize equity, reallocate capital to low-carbon firms. and lithium. They might also withhold states’ policy choices over the next decade Green-technology corporations dominate access to technologies from nations out- will be crucial. Researchers and decision- the Fortune 500 by 2030. side their groups. makers should widen their focus to exam- A wave of green globalization, as The renewables race helps to mitigate ine the implications of such alternative enshrined in the United Nations sustain- climate change, and displaces fossil fuels pathways to decarbonization — issues able development goals (SDGs), allows all quickly, but some regions lose out. For that go well beyond technology. Smoothing countries to share in the benefits of decar- instance, Europe lags behind China and the road will take multilateral agreements, bonization. Petro-states are compensated the United States because its single market generous funding and cooperation. to transition smoothly to a sustainable remains less integrated. Russia might align economy, avoiding a last-ditch attempt to with China. Some developing nations are ALTERNATIVE FUTURES flood the world with cheap oil and gas. The excluded from advanced energy know-how These four trajectories were explored result is a win–win for climate and security. altogether, compromising the SDGs. by a group of international energy and Geopolitical friction is low. Fossil-fuel producers have to adapt rap- foreign-policy researchers in two work- idly to falling demand. Some don’t manage, shops, in which we all took part. Partici- 2. Technology breakthrough. A major and political tensions rise in sub-Saharan pants discussed what drives global energy technological advance steers the world Africa, the Middle East and Central Asia. transformation, where and at what pace. along a different path. A step change, for The meetings were held in Berlin in 2018 example in energy storage, makes solar 3. Dirty nationalism. Elections bring at the German Institute for International and wind power easier to integrate into populists to power in the world’s larg- and Security Affairs (SWP), convened by the grid and even cheaper. The United est democracies, and nationalism grows. the Geopolitics of Energy Transformation States and China take the lead in scaling up Nation-first policies put a premium on 2030 (GET 2030) project in parallel with the technology, given their large markets, self-sufficiency, favouring domestic energy the 2019 IRENA report, and funded by the tech-friendly regulatory environments sources over imported ones. This drives the German Foreign Office. and industry giants, such as Google and development of fossil fuels, including coal the State Grid Corporation of China. But and shale production, as well as renewables. 1. Big green deal. This scenario assumes competition between nations also spikes. States ring-fence their industries and full cooperation — a global consensus for The world fractures into two camps in zero-sum logic returns — one country’s action on climate change leads to a con- a clean-tech cold war. Technology leaders gain means another’s loss. Public opinion certed international policy drive. G20 hold the power. Other countries gravi- turns against foreign energy investors. countries build a generous Green Climate tate towards one of the leaders, reinforc- Energy markets fragment in the face of Fund, well above the $100-billion-a-year ing regional blocs and increasing rivalry. protectionism, which limits economies of

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scale and slows progress towards decar- renewables; and whether low-carbon know- hardship for most of the former communist bonization. Fossil-fuel exporters rush to how finds its way from the global north to bloc; it also showed how elites can hijack produce as much as they can, despite fall- the global south. transition processes for personal gain. ing prices and constraints on trade. Second, a zero-carbon world does not Third, abating carbon will create losers. So Power rivalries marginalize the UN and do away with zero-sum games. It produces far, the policy focus has been on empowering undermine multilateral institutions such as different ones. In the current energy sys- the early winners of an unfolding renewable- the UN Framework Convention on Climate tem, the struggle is over secure and afford- energy race. It now needs to switch to the Change (UNFCCC). EU nations disagree, able access to oil, coal and gas. The United potential conflicts resulting from falling weakening joint policies. This wrecks the States has historically cultivated a special fossil-fuel demand, and the related economic Paris climate agreement and the mecha- relationship with Saudi Arabia over oil, and security risks. For example, rich coun- nism of voluntary emission cuts underpin- and the EU with Russia over natural gas. tries such as Germany can throw billions ning it. With climate change unmitigated, In a low-carbon world, the struggle will be of dollars at their coal sector to ease their food prices rise as a result of droughts and how to finance the infrastructure and to transition pain, offering generous financial tariffs. Water and other shared resources control the technology needed to harness aid to lignite-producing regions. Nigeria are fought over as climate change amplifies wind, solar and other renewable power or Algeria cannot do the same for their oil stresses and multiplies risks. sources, and how to secure access to the industry. Saudi Arabia and Kuwait might5, materials required for the manufacture of and should be encouraged to do so. 4. Muddling on. Business as usual results that technology. Who should take the lead on managing in a mix of energy clubs, with little cooper- Third, the pace of change matters. For the transition? The G20 is one clear can- ation. As unit costs keep declining, renewa- example, should a tech breakthrough bring didate. The UNFCCC involves 197 parties bles claim an increasing share of the energy rapid change, but, for all its achievements, it has failed mix by 2030. But fossil fuels remain domi- unstable fossil-fuel “A zero-carbon to slow the growth of emissions. The G20 nant. The speed of the energy transition producing states world does states account for nearly 80% of global is too slow to mitigate climate change, but such as Venezuela not do away emissions, and so could provide global too fast for the fossil-fuel industry to adapt. or Algeria might with zero-sum leadership and financial support, building Some national oil companies go bank- not have time to games.” on their Climate and Energy Action Plan rupt and others consolidate into a handful adapt, and their for Growth and cemented by a tripartite of global energy giants. Exports concen- internal conflicts could spill over into neigh- agreement between China, the EU and the trate in fewer countries and companies, bouring regions. The problem here is not so United States. which compete rather than cooperate. much stranded assets3, as it is the degree to The journey to zero carbon is fraught Exporting fossil fuels becomes a risky which countries share in the benefits of trans- with geopolitical risk. By asking the right business, revenues falter and OPEC col- formation. questions, identifying threats and offering lapses. Oil-producing countries in the Fourth, some pathways might not be solutions, we can get on the road to a just, Middle East, Russia and Africa see politi- politically palatable to all. For example, peaceful and effective energy transition. ■ cal turmoil as government coffers empty. many Western policymakers assume that Motivated by energy security as much as technological progress is best achieved in a Andreas Goldthau is professor of climate change, countries pursue diverse liberal market underpinned by free trade. international relations at Royal Holloway, energy strategies. China is keen to improve This is not necessarily the case. China has University of London, UK, and research air and water quality and build ‘national scaled up renewable energy through top- group leader at the Institute for Advanced champions’ in industry. Europe is more down rule and state planning. Brazil’s suc- Sustainability Studies, Potsdam, Germany. concerned with climate change, and pursu- cess story in biofuels is in part a function of Kirsten Westphal is senior associate in ing bilateral partnerships with like-minded a former military junta seeking self-suffi- the Global Issues Division at the German and developing countries. The United ciency and a more favourable trade balance. Institute for International and Security States is on the sidelines. Thus, the ‘one size fits all’ approach based Affairs (SWP), Berlin, Germany. She leads Because some regions have inadequate on Western norms in international organi- the Geopolitics of Energy Transformation regulation or fail to benefit from these zations should be questioned. project funded by the German Federal partnerships, existing economic and geo- Foreign Office. Morgan Bazilian is director political imbalances (such as global north– NEXT STEPS of the Payne Institute and a professor of south relations) are reinforced and energy Three steps will help to put geopolitics at the public policy at the Colorado School of inequality rises, undermining the SDGs. heart of debates about the energy transition. Mines, Golden, Colorado, USA. Michael First, researchers and decision-makers Bradshaw is professor of global energy at LESSONS LEARNT need to shift their gaze from targets to Warwick Business School, University of What lessons an be drawn from these pathways. Logistics need to be considered, Warwick, Coventry, UK. scenarios? as well as uncertainties. This process will e-mails: andreas.goldthau@iass-potsdam. First, falling costs of technology — the involve more than green growth, economic de; [email protected] focal point of current debates — will not by diversification and energy access4. Govern- 1. Global Commission on the Geopolitics of Energy themselves deliver a low-carbon world. Poli- ments might link low-carbon technology Transformation. A New World: The Geopolitics of tics will be an essential ingredient in success with foreign and security policy, as they did the Energy Transformation (IRENA, 2019). or failure. Some economists suggest a global with oil and gas. 2. International Energy Agency. Outlook for Producer Economies: What Do Changing Energy Dynamics carbon tax as a panacea. But the pace, scope Second, policymakers need to draw les- Mean for Major Oil and Gas Exporters? (IEA, 2018). and direction of the transition will depend sons from past and parallel experiences. 3. Van de Graaf, T. & Bradshaw, M. Int. Aff. 94, on domestic political economies, regula- For example, digitalization, another deep 1309–1328 (2018). 4. Bazilian, M., Sovacool, B. & Moss, T. Glob. Policy tions and access to finance and clean tech- transition, is doing more than reshaping 8, 422–425 (2017). nology. Decisive factors include: the degree economies and societies; it is throwing up 5. Goldthau, A. & Westphal, K. Glob. Policy https:// to which powerful fossil-fuel lobbies are able questions related to individual freedom doi.org/10.1111/1758-5899.12649 (2019). to resist change; whether incumbent regula- and political power. The path from planned M.Ba. and K.W. declare competing interests; see tory environments hold back the advance of to market economies meant economic go.nature.com/2kzsi9s for details.