In an opinion piece in the journal Nature, a team from the US and Europe suggests that the transition to a low-carbon world will create new rivalries, winners and losers, and that it is therefore necessary to put geopolitics at the heart of debates about the energy transition.

… abating carbon will create losers. So far, the policy focus has been on empowering the early winners of an unfolding renewable-energy race. It now needs to switch to the potential conflicts resulting from falling fossil-fuel demand, and the related economic and security risks. For example, rich countries such as Germany can throw billions of dollars at their coal sector to ease their transition pain, offering generous financial aid to lignite-producing regions. Nigeria or Algeria cannot do the same for their oil industry. Saudi Arabia and Kuwait might, and should be encouraged to do so.

—Goldthau et al.

In their commentary, Andreas Goldthau (Royal Holloway University of London), Kirsten Westphal (German Institute for International and Security Affairs (SWP)), Morgan Bazilian (Colorado School of Mines) & Michael Bradshaw (University of Warwick) present four geopolitical scenarios to illustrate how varied the transition could be by 2030.

• Big green deal. This scenario assumes a full global consensus for action on climate change. G20 countries build a generous Green Climate Fund, well above the $100-billion-a-year goal in the Paris climate agreement. Financial markets divest fossil-fuel assets and reallocate capital to low-carbon firms. Green-technology corporations dominate the Fortune 500 by 2030.

  A wave of green globalization allows all countries to share in the benefits of decarbonization. Petro-states are compensated to transition smoothly to a sustainable economy, avoiding a last-ditch attempt to flood the world with cheap oil and gas. The result is a win–win for climate and security. Geopolitical friction is low.

• Technology breakthrough. A major technological advance steers the world along a different path. The US and China take the lead in scaling up the technology, given their large markets, tech-friendly regulatory environments and industry giants, such as Google and the State Grid Corporation of China. But competition between nations also spikes.

  The world fractures into two camps in a clean-tech cold war. Technology leaders hold the power. Other countries gravitate towards one of the leaders, reinforcing regional blocs and increasing rivalry. These blocs seek to control the materials needed, such as rare-earth metals, cobalt and lithium. They might also withhold access to technologies from nations outside their groups.

  The renewables race displaces fossil fuels quickly, but some regions lose out. Europe lags behind China and the United States because its single market remains less integrated. Russia might align with China. Some developing nations are excluded from advanced energy know-how altogether, compromising the SDGs.

  Fossil-fuel producers have to adapt rapidly to falling demand. Some don’t manage, and political tensions rise in sub-Saharan Africa, the Middle East and Central Asia.

• Dirty nationalism. Elections bring populists to power in the world’s largest democracies; nationalism grows. Nation-first policies put a premium on self-sufficiency, favoring domestic energy sources over imported ones. This drives the development of fossil fuels, including coal and shale production, as well as renewables.

  States ring-fence their industries and zero-sum logic returns—one country’s gain means another’s loss. Public opinion turns against foreign energy investors. Energy markets fragment in the face of protectionism, which limits economies of scale and slows progress towards decarbonization. Fossil-fuel exporters rush to produce as much as they can, despite falling prices and constraints on trade.

  Power rivalries marginalize the UN and undermine multilateral institutions such as the UN Framework Convention on Climate Change (UNFCCC). EU nations disagree, weakening joint policies. This wrecks the Paris climate agreement and the mechanism of voluntary emission cuts underpinning it.

• Business as usual. Business as usual results in a mix of energy clubs, with little cooperation. As unit costs keep declining, renewables claim an increasing share of the energy mix by 2030, but fossil fuels remain dominant. The speed of the energy transition is too slow to mitigate climate change, but too fast for the fossil-fuel industry to adapt.

  Some national oil companies go bankrupt and others consolidate into a handful of global energy giants. Exports concentrate in fewer countries and companies, which compete rather than cooperate. Exporting fossil fuels becomes a risky business, revenues falter and OPEC collapses. Oil-producing countries in the Middle East, Russia and Africa see political turmoil as government coffers empty.

  Motivated by energy security as much as climate change, countries pursue diverse energy strategies. China is keen to improve air and water quality and build ‘national champions’ in industry. Europe is more concerned with climate change, and pursuing bilateral partnerships with like-minded and developing countries. The United States is on the sidelines.

  Because some regions have inadequate regulation or fail to benefit from these partnerships, existing economic and geopolitical imbalances (such as global north–south relations) are reinforced and energy inequality rises.

From these scenarios, the authors derice a set of lessons:

1. The falling costs of technology will deliver a low-carbon world. Politics will be an essential ingredient in success or failure.

2. A zero-carbon world does not do away with zero-sum games; it just produces different ones.

3. The pace of change matters.

4. Some pathways might not be politically palatable to all.

… researchers and decision-makers need to shift their gaze from targets to pathways. Logistics need to be considered, as well as uncertainties. This process will involve more than green growth, economic diversification and energy access. Governments might link low-carbon technology with foreign and security policy, as they did with oil and gas.

Second, policymakers need to draw lessons from past and parallel experiences. For example, digitalization, another deep transition, is doing more than reshaping economies and societies; it is throwing up questions related to individual freedom and political power. The path from planned to market economies meant economic hardship for most of the former communist bloc; it also showed how elites can hijack transition processes for personal gain.

—Goldthau et al.

Resources

• Andreas Goldthau, Kirsten Westphal, Morgan Bazilian & Michael Bradshaw (2019) “Model and manage the changing geopolitics of energy” Nature 569, 29-31 doi: 10.1038/d41586-019-01312-5