Geopolitics of Renewable Energy

To begin with, the geopolitics of renewable energy have received less attention than they should. Oil and gas have been at the forefront of renewable energy geopolitics for over a century. According to Bhaskar (2013), oil and gas consumption accounts for more than half of global energy consumption, which equates to almost 70% of overall energy investments. Almost every country relies on oil for transportation. However, many shifts in the global energy economy and geopolitics have occurred. The geographical influence on a state’s foreign relations is referred to as geopolitics. Since the end of the Second World War, several challenges have been experienced in relation to renewable energy geopolitics (Meghan, 2017). The paper will focus on the geopolitical implications of the changes in renewable energy.

Factors Determining a Country’s Geopolitical Power

It is commonly believed that other technologies such as solar and wind electricity would reduce the traditional energy producers’ geopolitical power due to the low carbon alternatives which provide increased and diversified energy security. However, it is not easy to predict who will win or lose given that several issues need to be considered. In geopolitics, clear power centers can be found in both the demand and supply side. Saudi Arabia, Russia, and America have dominated on the supply side while China, the EU, and the United States are important markets. Instead of paying much attention to oil and gas as the major resources, it is also important to take low-carbon energy into consideration (Sergey, 2016). Such geopolitics is associated with a number of factors like power lines, access to technology, patents, rare earths materials, dispatch, and rare earths materials. As the world is seeking to lower emissions of carbon dioxide, how will countries be affected in gaining or losing power? What are some of the factors to be considered?

Clean Energy versus Fossil Fuels

Recently, the production cost for some non-fossil-fuel energy has reduced. However, to achieve a considerable market penetration, it is important to have supportive government policies such as carbon pricing, direct subsidies, renewable use regulations, as well as feed-in tariffs. Such policies can help reduce the demand for fuels, lower the prices of gas, coal, and oil. Subsequently, producers may decide to increase production rather than increasing prices as they take advantage of the increasing demand. Producers would opt to increase the level of supply though at lower prices instead of losing the opportunity of increasing demand while prices cannot be increased (Favennec, 2011). However, such actions would cause more challenges in the development of solar and wind power. The timing and stringency of climate policy would affect the geopolitical power balance for both the non-fossil fuel and fuel energy producers. According to the Paris agreement, countries have recognized the negative effects of climate change and something needs to be done.

Clean energy

According to Boyle (2012), non-fossil-fuel technologies compete with each other. In some countries like the EU, clean energy is equivalent to solar and wind while in other regions, technologies like bio-energy, nuclear, carbon capture receives enough attention. However, it is much easier to obtain capital and acquire approval from the government for a wind farm other than a nuclear plant. Therefore, investors and policymakers pay much attention to solar and wind energy, while the other energy resources remain less attractive and with minimal demand. China is the only country that has continued to develop the program of nuclear energy. The program started from 2011 to 2016 where the country connected almost 22 reactors to its grid (Johansson & Burnham, 2016).

Fossil fuels

The level of carbon dioxide emission depends on the type of fossil fuel used. Coal is known as the most carbon dioxide producer followed by oil and then natural gases. At the same time, coal burning intensively causes air pollution as compared to the emission from oil and natural gas. Due to these reasons, coal became the most discouraged form of energy in most countries such as the United States. The cheap alternative of natural gas worked to discourage people from using coal as a source of energy. Some oil and gas companies made a decision to support the set target. With such unity, individuals were encouraged to use natural gas. Different mechanisms were put in place to ensure that residents make more use of natural gasses than the use of coal (Marjolein, 2013). This initiative is among the reasons why America managed to be among the leading nations in terms of growth and development.

Energy Storage Winners

Different regions have different access to renewable sources of energy due to the different latitude and climate. Therefore, the cost of solar and wind power is different in each region. It is one of the reasons why some countries are enjoying low production costs hence enjoying higher geopolitical powers as compared to others. For instance, Alaska oil producers are not as profitable as those in the Middle East. The same is applied to solar and wind producers in North Carolina who make lower profits as compared to those in Texas. Renewable sources need energy storage such as in the form of batteries, pumped storage hydroelectricity, and hydro resources (Ebel, 2009). The formation of batteries has created a lot of concern. For instance, Lithium is among the major requirements in generating batteries which have increased its demand. As a result, Lithium prices have highly increased, translating to an increase in its value.

Amid Transition Decisions

Low-carbon producers have been trying to win political partners in advocating for their technologies’ preferential treatment in the form of loan guarantees, grants, tax credits, and renewable power. It is not easy to remove such treatments once they are introduced. Spain and Germany can be the best examples of how the financial support for renewable has dramatically changed over time. In 2005, Germany lowered its subsidy for solar power from 55 Eurocents to 12 Eurocents for every kilowatt in 2016. At the same time, solar photovoltaic installation in Spain reduced from 2700 MW to 160 MW between the period of 2008 and 2012. It is important for a country to make substantial decisions with large implications of geopolitics during the low carbon energy transition (Amineh & Guang, 2012). For instance, Massachusetts made a decision to buy offshore wind and other forms of renewable power to lower emissions of carbon dioxide in 2016. However, the purchase of wind is most likely to benefit European investors, while hydropower will benefit those from Canada.

Mechanisms through which Renewable Energy could Shape Geopolitics

Critical Materials Supply Chain

According to Sergey (2016), the changes in renewable energy made cartels develop critical materials for renewable energy technologies. The author explains that rare earths are in dilute concentrations making it difficult to separate them, leading to several challenges in production, mining, and processing. Currently, much work in production, mining, and processing is always done in China. Rare earths extracted from other places have to be exported to China for the purpose of processing. Due to the increasing demand for renewable energy, countries are reluctant to possess rare elements of rare earths in reserve. Various strategies have been put in place to avoid geopolitical tensions and cartel development in relation to rare earths. Some of these strategies are the development of more supplies in other countries, minimizing the demand for rare earths through technological improvement, encouraging energy recycling. According to Marjolein (2013), Lithium batteries are helpful in managing the intermittency of wind and solar energy. These sources of energy are also used in other industries such as in personal electronics. Further investigations reveal that Australia, Argentina, and China are the largest producers of Lithium. Some of the critical minerals for renewable energy are mined as other minerals’ by-products.

Technology and Finance

As explained by Favennec (2011), intellectual property is important, especially in a world that is dominated by renewable energy. A country with limited technology and fossil resources can never obtain significant revenues. Resources are widely distributed in the sector of renewable energy, making intellectual property rights considered to be of more importance. Technology and investments are essential for cooperation in the case where renewable is a leading source of energy. Countries investing in technology and renewable energy sources are most likely to become the leading geopolitical players in the future (Boyle, 2012). It is, therefore, crucial to assess a country’s research and development not only from an economic perspective but also from a geopolitical perspective.

At the same time, it is significant to consider the way in which multilateral organizations and private sectors could cause technology transfer. In the case here a country views technology as geopolitical and not in the aspect of environmental or economic assets; it becomes essential to consider the way companies may try to incentivize diverse countries to cooperate. In Germany, companies are experiencing deep transformations as they adapt to the emerging energy landscapes. The nature of renewable energy is argued to influence its development to be more suitable for small companies as compared to the multinational organizations.

New Resource Curse

According to Bhaskar (2013), the high rents resulting from the production and sale of fuels have led to the resource curse. When such fuels are produced in regions with weak institutions, the extracted rents may lead to an overvalued exchange rate, increased corruption, and international and domestic violence. As oil and gas continue losing their dominance, the associated production rents also reduce. Therefore, countries that produce oil and gas become unable to access the high rents in relation to the resource curse. Rents are helpful in providing supplemental income streams to some countries, and without them, a country is exposed to domestic unrest.

Are the countries producing excessive renewable energy at a higher risk of the resource curse just like what is happening among the oil and gas producers? No, a resource curse may fail to occur due to some reasons. First, sources of renewable energy are not always point sources, and they may need a surface area that is concentrated and less scarce than oil and gas. Some regions like Chile have higher potentials of renewable energy as compared to others. It is important for the country to have a higher capacity of governance to successfully deploy renewable energy (Amineh & Guang, 2012). The higher capacity of governance may include rare earths, technology, metals, skilled labor, and construction and manufacturing.

According to Sergey (2016), the increase in renewable energy is most likely to enhance a country’s dependence on raw materials in building the various machines required to produce things like wind turbines and solar panels. The production of such elements would require significant rents which can shape the growth and development of institutions, mostly in oil and gas places.

Conclusion

To conclude, irrespective of the several uncertainties and limitations that come along with renewable energy, power balance in geopolitics is changing from fossil fuel producers to those regions developing low-carbon solutions. China is trying to lead in nuclear, wind, and solar technologies. The support for low carbon energy has at times caused price wars for solar and wind power. As players are negotiating on which direction to be taken concerning access to resources, it is crucial to seek more methods and techniques that will be useful for energy transmission. There is the need for the government to keep on seeking better solutions. As time continues and technology keeps on improving, the demand and supply for energy will keep changing, hence influencing the worldwide balance of geopolitical power in the future.

References

Amineh, M.P., & Guang, Y. (2012). Secure oil and alternative energy: The geopolitics of energy paths of China and the European Union. Leiden: Brill.

Bhaskar, B. (2013). Energy security and economic development in India: A holistic approach. New Delhi: Teri Press.

Boyle, G. (2012). Renewable energy: Power for a sustainable future. Oxford: OUP Press.

Ebel, R. (2009). Energy and geopolitics in China: Mixing oil and politics. Washington, DC Center for Strategic and International Studies.

Favennec, J.P. (2011). The geopolitics of energy. Paris: Editions Technip.

Johansson, T.B., & Burnham, L. (2016). Renewable energy: Sources for fuels and electricity. Washington, DC: Island Press.

Marjolein, R. (2013). The Geopolitics of mineral resources for renewable energy technologies. Den Haag, Netherlands: The Hague Centre for Strategic Studies. Retrieved from http://hcss.nl/sites/default/files/files/reports/The_Geopolitics_of_Mineral_Resources_for_Renewable_Energy_Technologies.pdf

Meghan, O. (2017). The geopolitics of renewable energy. Harvard: Belter Center for Science and International Affairs-Harvard Kennedy School. Retrieved from https://www.belfercenter.org/publication/geopolitics-renewable-energy

Sergey, P. (2016). The complicated geopolitics of renewable energy. Bulletin of the Atomic Scientists. Retrieved from http://www.tandfonline.com/doi/full/10.1080/00963402.2016.1240476