Global carbon levels have been dramatically rising since the industrial revolution, the impact of this concentration increase is palpable. Icebergs are melting, islands are sinking, and planet-wrecking fossil fuels have remained dominant in the energy industry. With this bleak new reality, nations are finally starting to wake up. Renewable energy is becoming a key player in decarbonising our economies with several nations investing in sustainable energy sources such as wind, solar and nuclear.
2020 was a global turning point. It was the first year the European Union generated more electricity from carbon-free sources than polluting ones. Joe Biden won the US presidency, bringing an ambitious climate agenda to the White House. China, the world’s biggest polluter, finally joined the cascade of nations and companies setting target dates for carbon neutrality.
For nearly a century, the intersection between energy and geopolitics has centred around fossil fuels, but natural resources like oil and petroleum are becoming less relevant to energy production for everyday life. A question many now have is this: What will countries fight over when green energy dominates? What will cause the next invasion, the next conflict, the next war? How will green energy change the world?
According to former Icelandic President Olafur Ragnar Grimsson, “Anyone can now become an energy player, that is the nature of renewable energy”. Grimsson chaired an international commission on the geopolitics of the energy transition and has already seen the green future. Iceland’s energy mix is 85% renewable, with all its electricity being generated from clean sources.“You need a new geopolitical model, you cannot simply put renewables into the old coal and oil model,” Grimsson says. Changing such a fundamental driver of global power could have multiple consequences.
In a world where renewables are the dominant source of energy, capital for investment and technology may increasingly become sources of international cooperation or rivalry. Increased tensions between developing and developed countries could evolve over the transfer of technology. Conflict over renewable energy infrastructure could also develop, especially if new asymmetric dependencies arise between major producers and consumers of renewable energy.
As the transition to renewable energy accelerates, cartels could develop around materials critical to renewable energy technologies. Rare earth elements are crucial to produce clean energy technologies, including solar panels and wind turbines.
While rare earth elements are found in many countries around the world, they are usually found in dilute concentrations and are often difficult to extract. Today most mining, production and processing of rare earth elements takes place in China.
In the future, wealthier nations like China may be able to invest in poorer countries and exploit their natural resources to produce green energy. Resources that those countries could be using to promote economic growth. After all, a secure energy supply is a requirement for a country to develop industries.
In our previous article, we discussed the power play between China and the US to gain authority in the green energy industry. China is already using its power against other countries.
China controls much of the world’s supply of cobalt at 60% which it mines through the Democratic Republic of Congo. Cobalt is a metal that is used to make batteries that fuel our mobile phones and other electronic devices. The Chinese control has triggered a hike in prices. The price of cobalt spiked 59.5% from $31,419 per ton last year, to $50,105 as of April 1, 2021.
All this production power of the cobalt allows China to make it a supplier led market rather than a demand-led one. Studies suggest that by 2026 the global supply will have a shortage of 2,900 tons.
It can pose a big problem for tech-focused countries like South Korea. China can prioritise supplying its battery firms such as BYD and this could limit South Korean technology companies such as Samsung and LG.
The more dangerous situation would be where China uses cobalt as a weapon against countries like South Korea if their relations deteriorate or if South Korea decides to partner with the United States, China’s biggest competition in trade. This theory is rooted in the events of 2010 when China withheld rare earth minerals from Japan.
The US Secretary of State Antony Blinken has said that investments in renewable energy are essential to help America combat China and reassert its global influence, especially with the White House climate summit soon coming.
US diplomats are warning President Biden that America is losing the race of the leading power in the global green economy. Without any renewable energy revolution, China with its solar panels, wind turbines and batteries will beat America.
Losing this battle won’t just leave America out of shaping the Earth’s climate future but also means a loss of millions of jobs for the American people. America must do more to increase its transition to a greener economy.