Having led the International Renewable Energy Agency over the last eight years with a privileged insider view of the energy transition, I have become convinced that a new geopolitical reality is taking shape. The result will be a map of energy geopolitics which will look fundamentally different to the one that has dominated the last hundred years.
Where coal powered industrialisation in the nineteenth century, and oil drove nations’ alliance-making in the twentieth, a quiet revolution of renewables will transform the politics of the twenty-first century.
The untold story of renewables is that they’re transforming the global energy system at a speed no one predicted. In recent years, technological advances and falling costs have made renewables genuinely commercially competitive. Price trends suggest that by 2020, the average price of electricity generated by solar and wind sources will be at the lower end of fossil fuel prices.
The other critical factors in this quiet revolution have been agreement on the imperative to counter climate change, leading to ambitious renewable energy targets; action by investors; and a global public opinion increasingly supportive of renewables.
At present, around 80 percent of the world’s people live in countries that are net energy importers. In future, energy production will be dispersed. Renewable sources - such as hydropower, bioenergy, solar, geothermal and wind - are available in some form in most countries. Where the location of fossil fuel stocks was random and unequal, access to renewable energy will be far more evenly spread.
In a renewable energy economy, most countries will be able to achieve higher levels of energy independence: they will have greater energy security and more freedom to decide their own strategic priorities. In a world where over a billion people still don’t have access to electricity, the life-changing benefits of this potential new energy security cannot be underestimated.
Nimble players have already seized the opportunity not only to secure their own future energy supplies but to become new energy leaders. China has put itself in pole position to be the world’s renewable energy superpower. It is the world’s largest producer, exporter and installer of solar panels, wind turbines and electric vehicles, and accounted for over 45% of global investment in renewable energy in 2017. In Europe, Germany generated 40% of its electricity through renewable sources in 2018.
Of course, shifts in energy production won’t single-handedly up-end international relations. But "energy statecraft" will no longer have the same potency.
In years to come, fossil-fuel exporters will see a decline in their global reach and influence unless they can reinvent their economies for the New Energy Age. Over the last 50 years, some countries have used their position as the world’s largest oil and gas exporters to exert political leverage in their near neighbourhood and beyond. Energy choke points, such as the Strait of Hormuz leading out of the Gulf, have been vulnerable to terrorism, piracy, and bilateral flare-ups. As recently as November 2018, the US has flexed its muscles over the global oil supply with sanctions on Iran, albeit with limited short-term success.
The global leaders in the New Energy Era may surprise us. Diverse countries have already made impressive transitions. Countries such as Denmark already generate more than half their electricity from renewables; Costa Rica’s electricity was generated entirely from renewables for 300 days in 2017; the power systems of Germany and Portugal were able to run entirely on renewables for several days last year.
New geographies of energy trade could also emerge. Shipping routes will become less important; those countries with the best connectivity, networks and ‘grid infrastructure’ (power lines, storage facilities, virtual interconnections) will hold the strategic advantage in controlling energy supply routes. China’s Belt and Road Initiative, which seeks to connect Asia, Africa and Europe through infrastructure, is significant in this regard. Countries may also seek to integrate their grids with those of neighbouring countries; for example, in the proposed Asia Super Grid.
But energy transformation is not without risks that could reverberate through international politics. The decline of the conventional energy system will generate stresses – like social tensions, unemployment in some conventional energy industries, and financial risks - which need to be managed effectively. Demand for the minerals essential for renewable technologies, such as cobalt and lithium, may drive tension or conflict: more than 60 percent of the world’s cobalt supply originates in the Democratic Republic of the Congo, for example.
Still, the benefits of the New Energy Age will outweigh the challenges. With the demise of energy statecraft, the contours of foreign policy will shift, and the global distribution of power will change.
Policy makers need to act now to seize the opportunity of renewables and anticipate the challenges that the future holds. The New Energy Age will help shape a very different world, and every country has the potential to benefit.