Renewables ≠ Kumbaya in Geopolitics
Most debates on energy and geopolitics often revolve around the role oil and gas play in interstate relations. However, we discuss little how renewables will impact international relations. I say that not all is kumbaya. Renewables can lessen geopolitical tensions caused by oil and gas trade disruptions; however, they can also create new geopolitical risks.The rise of renewables impacts interstate relations through two mechanisms: (i) instantaneous transmission of energy, i.e., electricity, and (ii) technology and materials needed to generate and transmit renewable energy.So, let’s think about what challenges renewable energy may bring about in geopolitics. To do this, let’s revisit the famous “4As” of energy security. The 4As framework, coined by the Asia Pacific Energy Research Center, is one of the most popular means of assessing energy security in the global context. Each A refers to a specific pillar of energy security. These pillars are availability, accessibility, affordability, and acceptability.
The sun and the wind give practically infinite amounts of energy. However, “prime” land required to harness this energy with high efficiency is not infinite. Location affects capacity factor, maintenance costs, and investments required for transmission. Solar and wind power installations require up to 100 times more area than thermal power.Geopolitical tensions are implied when these prime renewable energy areas overlap with border areas. Such overlaps may trigger conflicts between states. Territorial and marine exclusive economic zones (EEZ) disputes lead to militarized confrontations between states. As the MENA region increasingly relies on solar and wind power, some of these “prime lands” may fall near demarcation zones, with the potential to activate dormant conflicts.
An advantage of hydrocarbons is that they can be economically transported around the globe at large scale via tankers or pipelines. Storage of hydrocarbons can help adjust for unexpected changes in demand. In contrast, renewable energy must be instantly available. A wide range of critical metals and minerals (e.g., copper, zinc, nickel, lithium, cobalt, molybdenum) are needed to generate, store, and transmit renewable energy. A few countries are beginning to experience geopolitical tensions due to the extraction and processing of metals and minerals. Following various supply chain crises, the EU and the U.S. have started various initiatives to secure these supplies.
Over the past decade, the levelized cost of renewable energy has dropped significantly. Solar power tenders, for example, are expected to break the 1 cent/kWh mark soon. Competition has led to cheaper renewable energy equipment. So, what are the geopolitical implications of these precipitous drops in the cost of renewable energy equipment and generation? A quick delve into this topic leads to an unexpected deduction: the low cost of renewable energy may indeed be a cause of a series of geopolitical tensions.As prices get lower, or, in economic parlance, as marginal revenue nears marginal cost of production, producers operate “theoretically” with zero-profit, unless they are able to differentiate their product. Suppliers of renewable energy equipment or minerals have noted the risk. Suppliers are creating strategies to advance in the production and services value chain.
The social acceptability dimension of energy security has been occupying an increasingly salient place in the global agenda. These risks can be discussed within both local and global contexts, with differing implications for geopolitics.Renewable energy investments have positive impacts globally but impose concentrated costs on local communities. For instance, solar and wind energy can lower emissions and energy costs, but transmission lines can harm farming and tourism along their routes. Additionally, the requirement of certain metals like cobalt and lithium brings up issues such as using child labor, polluting the environment, and rivaling local communities for water resources.
Should such renewable investments exhibit a cross-border nature, consuming countries will have to develop the capacity to deal with local governments and social movements to finalize these investments. This is a task that conventional diplomacy and PR is not historically used to and necessitates a thorough understanding of the local politics and power structures of the host country.
Looking towards the future…
If managed well, the opportunities renewable energy offers towards a sustainable and peaceful future far outweigh the risks it carries. Renewable energy adoption leads to market making and technological progress between countries.Indeed, we are already witnessing the birth pains of this regime. Many ESG debates will help shape the principles and procedures of the new global governance regime of renewable energy.