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Shift to green energy may lead to great changes in global power structures

By State of Green, January 18, 2019

A new report concludes that the growth of renewable energy will change the global power structures. Notably, China will profit from the changes, while countries like Russia and Saudi Arabia, who continue to base most of their economy on fossil fuels will face detrimental consequences from the developments.

As the growth of sustainable energy continues, the world is facing massive geopolitical changes, which will contribute to China’s rise in power.

The country has gained a leading position in regards to the production of sustainable energy, as well as technology related to electric vehicles – other countries have to fight to keep up with China’s development. At the same time, these changes will undermine the influence of large oil exporters, such as Russia and Middle Eastern countries like Saudi Arabia, writes Forbes.

“No other country has placed itself in a better position to become the global superpower for sustainable energy like China”, states a new report regarding geopolitical consequences in connection to new energy sources.

The report “A New World: The Geopolitics of the Energy Transformation” is written by the Global Commission on the Geopolitics of Energy Transformation (GCGET), which was set up by the International Renewable Energy Agency (IRENA) in 2018. Iceland’s former President Olafur Grimsson chairs GCGET.

Olafur Grimsson, Chair of GCGET (photo: IRENA)

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Profound geopolitical and socio-economic consequences

One of the most important conclusions from the report is that the geopolitical and socio-economic consequences from the accelerated growth in regards to sustainable energy could become as prominent as those that followed the shift from biomass to fossil fuels two decades ago. According to the report, the changes could include the appearance of new global energy-leaders, changes in trade patterns and the formation of new alliances. This could cause instability in the countries that rely on income from oil and gas.

“The renewable energy revolution increases China’s global leadership, reduces the influence of fossil fuel exporters and creates energy independence in countries around the world,” said Olafur Grimsson when he presented the report results at IRENA’s annual gathering earlier this month. “The transformation of energy will lead to great power changes”.

“The global energy transformation driven by renewable energy, could reduce energy-related geopolitical tensions as we know them, and might promote greater cooperation between states. This transformation could also spread to the social, economic and societal challenges, that often arise from geopolitical instability and conflict”, said Adnan Amin, IRENA Director General.

However, he also acknowledged that the changes that are taking place creates both opportunities and challenges: “The benefits will outweigh the challenges, but only if the right policies and strategies are in place. It is crucial for leaders and policymakers to anticipate these changes, and be able to steer and navigate the new geopolitical environment.”

Adnan Amin, Secretary General, IRENA (photo: IRENA)

RE sources widely available

One of the most crucial factors that drive the development is that, unlike fossil fuels, renewable energy sources are widely available around the globe. No matter if it is solar or wind energy, energy from the tidal waters or hydropower plants, most countries have the opportunity to develop clean energy sources themselves. This means that many countries that today have to import most of their energy will in the future be able to generate their own energy – helping to improve their trade balance and reduce their vulnerability to changing energy prices.

Even though these changes will democratise access to energy, not all countries will be as successful in the new view of the world. The report points out that China has taken the lead in renewable energy, and that they are now the world’s largest producer, exporter and installer of solar cells, wind turbines, batteries and electric cars.

China has a clear advantage in correlation to the underlying technology, with well over 150,000 renewable energy patents in 2016, which is equivalent to 29 per cent worldwide. The US lies in second place, with just over 100,000 patents, while Japan and the EU are close to having 75,000 patents each.

Even though not all patents are useful or meaningful, the numbers give a clear indication of how many investments the countries have put in the transition.

At the opposite end of the scale, large oil exporters such as Russia, Indonesia and Saudi Arabia have a negligible number of renewable energy patents.

-Related news: China’s electric power sector holds the key for the planet’s future

Countries with a high export of fossil fuels in danger

Australia, Chile, Bolivia, the Democratic Republic of the Congo and Mongolia are also mentioned in the report as countries that could benefit from the developments.

Conversely, other countries that have a substantial export of oil may face increased political instability as revenues decline.

Here, countries in the Middle East, North Africa, Russia and other members of the Commonwealth of Independent States (CIS) are mentioned as most threatened, since these regions, on average, export fossil fuels for more than a quarter of their GDP.

“Decreasing export income will affect their prospects for economic growth and national budgets. In order to avoid economic disruption, they must adjust their economy and reduce their dependency on fossil fuels”, the Commission writes in the report.

While the report paints a quite gloomy picture of the aforementioned countries, it is more positive in relation to the sub-Saharan African countries. These countries could benefit from the low energy costs that could occur if they develop sustainable energy solutions themselves. The same can be said for countries in South Asia and other importers of energy from EU-countries, China and Japan.

Sources

CSR.dk

Forbes

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