AN ENERGY TRANSITION AMIDST GREAT POWER RIVALRY.

• Author: Scholten, Daniel

INTRODUCTION

The transition towards renewable energy is expected to have a fundamental impact on Great Power relations. The abundance of renewable energy sources, growing cross-border trade in electricity, stranded assets, and industrial rivalry will all leave their mark on Great Powers. However, Great Power rivalry itself will shape the speed and direction of the energy transition. A steady growth of renewable energy in the global energy mix is by no means assured in an increasingly multipolar or even fragmented world where myriad global and regional powers defend their economic and political interests. How will this reciprocal interaction play out? Will renewable energy depoliticize energy relations between Great Powers or will Great Power rivalry politicize renewable energy?

This policy perspective explores the complex interplay between renewable energy roll-out and Great Power rivalry. It first discusses how renewable energy impacts geopolitics and then how Great Power rivalry affects the energy transition. It then discusses the role that agency plays next to these systemic forces.

RENEWABLE ENERGY AND GEOPOLITICS

The presentation of the report A New World-The Geopolitics of the Energy Transformation to the International Renewable Energy Agency (IRENA) in January 2019 signalled a watershed moment. Before its publication, only a handful of scholars' had started exploring the geopolitical implications of renewable energy. Still, several geopolitical aspects of the energy transition had been studied in isolation, e.g., critical materials (2), industrial competition (3), stranded assets (4), or high voltage direct current (HVDC) interconnections. (5)

Most research on energy geopolitics and energy security from an international relations perspective, however, focused heavily on oil and natural gas, especially shale gas, liquefied natural gas (LNG), and unconventional oil (6), while more techno-economic works on renewable energy focused on its development, system integration, and market diffusion. (7) The field of political geography succeeded in relating notions of space and territoriality to renewable energy (8), but general attention remained directed to climate and environmental politics. (9) Since the report, the topic has received increasing academic and political attention. (10)

The geopolitical implications of renewable energy can roughly be organized around six clusters of expectations that materialize at different stages of the transition. (11) To start, renewables' abundance implies a shift away from oligopolistic energy markets as many countries are able to produce larger parts of their needs domestically. Countries face a make-or-buy decision and strategic concerns change from access to energy sources and import-dependence towards availability at the right time due to intermittent renewables. Second, renewables facilitate more decentralized energy production by and for a more varied set of local actors, enabling new business models and local empowerment. Third is increasing competition for critical materials and know-how between countries that aspire to be industrial leaders in renewable generation technology and increasing political and economic relevance of countries possessing them. A fourth expectation is the electrification of energy systems (electricity is the energy carrier of most renewables) leading to regionalization of energy relations and managerial concerns due to long-distance losses in electricity transport and storage difficulties respectively. Fifth, energy markets will face shifting trade flows and shrinking volumes in trade in energy sources. An increased focus on flexibility instead of long-term deals is also likely. Finally, the process of creative destruction is already visible. On the one hand, we can observe industrial rivalry in clean generation technologies between the EU, the US, China, and others. On the other hand, we see worries about stranded oil and gas assets and related political unrest in fossil fuel exporting countries.

The transition towards renewable energy seems to both ease and intensify Great Power rivalry, the struggle for economic, political, and military dominance between Great Powers such as the US, the EU, China, India, Russia, and Japan. On the one hand, more domestic energy production, decentralized generation, trade regionalization (implying fewer entanglements in the Middle East and fewer overseas transport bottlenecks) take the sting out of energy vulnerabilities. On the other hand, industrial rivalry in clean tech, stranded fossil assets, access to material resources, and the control of new critical electricity...