Authors: Riccardo Bosticco and Michele Mignogna.
The main result that Putin has achieved until now with the aggression of Ukraine is a solid stance from the European Member States to halt gas imports from Russia. This and other green commitments have pushed the EU and the whole world to give renewed impetus to renewable energy. Moreover, the relation between climate and industry policies is increasingly evident. In a broader context of power competition trade, investment policies in the energy and climate sectors play an ambivalent role: energy dependencies have been conceptualized as mutually benefitting; yet, the current war unveils their risky nature. After a brief description of the renewables’ geopolitical dimensions, this article outlines what is at stake for the EU’s primary areas of energy cooperation.
The Impact of Renewable Energy on Geopolitics
Renewable energies have the potential to transform interstate energy relations. Renewables have fundamentally distinct geographic and technological properties than coal, oil, and natural gas. Sources are plentiful but intermittent; their production is increasingly decentralized and utilizes rare earth resources in clean tech equipment and, lastly, their distribution is predominantly electric and entails tight management standards and long-distance losses. This contrasts sharply with fossil fuel resources’ geographically fixed and finite character, their reliance on massive centralized production and processing facilities, and their ease of storage and transit as solids, liquids, or gases worldwide.
The energy transition provides a chance to rethink and revise long-standing trading relationships. It also allows countries to engage in previously closed energy value chains. Significantly, the future of the energy world will likely redefine the concept of energy security. However, in this society, the impulse to produce things domestically will collide with the logic of size and global supply networks. The energy transition will rewire the planet, but how much of it will transcend international borders is still unclear. A crucial element will be the commerce of minerals, distinct from that of oil, gas, and coal in terms of location. Nonetheless, such business will follow a familiar pattern: resources will be harvested in one region of the world, transported to refineries and processing centers, and then transformed into final goods. Diversification, bottlenecks, extraction disputes, and rent-seeking dynamics will all be present, although with different details.
Such developments will require a significant shift in energy strategies, indicating that areas pursuing industrial policies rather than decarbonization may reap climatic advantages. The previous energy map established a link between natural resources and markets. Yet, the new energy map will be much more complex.
The Geopolitics of the Energy Transition and the EU
Bringing together the words ’geopolitics’ and ‘renewables’ leads to the study of renewables and related security risks, the effects of the energy transition on traditional energy relations, possibilities of mutually beneficial ties, and windows of opportunity for countries to move up in the global power hierarchy. The energy transition is indeed a process where the industrial advantage is likely to bring with itself political benefits and leadership status. In the context of the current war in Ukraine, this is becoming clearer every day. Yet, the energy transition is expected to become part of power competition as the most impellent challenge – posed by the war as well as climate change and the security risks with it – of our times and will likely create amities and enmities.
Take the example of Russia. In the past decade, Russia has perceived the EU’s energy transition problematically. The EU-Russia energy relationship was primarily based on gas, oil, and coal. Nonetheless, the association is characterized by different conceptions of energy and energy security, although both actors recognize the potential of energy interdependence. While the EU and European countries are more enthusiastic concerning the transition, Russia’s discourses are more conservative yet try to defend the role of natural gas in the energy transition.
While it is difficult to predict an essential role played by Russia nowadays, given the progressive isolation it is forced to, the energy wire will see China having high stakes in renewable developments and geopolitics. Concerning relations with the EU, some have argued that the energy transition is likely to be the determinant of the future of EU-China relations. Energy in EU-China relations does not play the same role as relations with Russia. While the renewable sector has encouraged interdependence between the two powers in the past, more recently, nationally oriented policies have hindered the precedent path.
Still, the energy transition will significantly shape relations between the EU and the Arab states. While Bahrain, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates are challenged by balancing relating with the US and China, managing regional crises, the pandemic, and containing Iran as the primary regional rival, the last point precisely is preventing some of the Arab states in the Gulf region to act assertively against Russia. Nonetheless, looking ahead to the 2020s, how those countries manage the energy transition will have consequences on internal and external political and economic environments. Especially Gulf countries envision a sustainable future, thus setting the stage for redrawing energy investments. In this context, the EU will play a crucial role, opening to the Gulf’s market interests and advancing regional security interests.
Overall, the current war is not only highlighting the strategic value of energy resources and energy ties but also how the transition to new energy systems is likely to rewire the world. In a context where the main political divide on the global stage is between liberal and illiberal forces and strong energy dependences revealed security threats, future systems of alliances will have to account for this. For the EU, the energy transition will have to deal with Russia, act as cohesively as possible, and strengthen its strategic thinking concerning big partners such as China and the Gulf States. The transitions’ stakes entail a strategic opportunity to avoid past errors.