Handbook on the Geopolitics of the Energy Transition 1800370423, 9781800370425

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HANDBOOK ON THE GEOPOLITICS OF THE ENERGY TRANSITION

ELGAR HANDBOOKS IN ENERGY, THE ENVIRONMENT AND CLIMATE CHANGE This series provides a definitive overview of recent research in all matters relating to energy, the environment, and climate change in the social sciences, forming a comprehensive guide to the subject. Covering a broad range of research areas including energy policy, the global socio-political impacts of climate change, and environmental economics, this series aims to produce prestigious, high-quality works of lasting significance. Each Handbook consists of original contributions by leading authors, selected by an editor recognized as an international leader within the field. Taking an international approach, these Handbooks emphasize both the widening of the current debates within the field, and an indication of how research within the field will develop in the future. For a full list of Edward Elgar-published titles, including the titles in this series, visit our website at www​.e​-elgar​.com.

Handbook on the Geopolitics of the Energy Transition Edited by

Daniel Scholten Strategic Advisor Energy and Sustainability, the Netherlands Authority for Consumers and Markets (ACM), the Netherlands

ELGAR HANDBOOKS IN ENERGY, THE ENVIRONMENT AND CLIMATE CHANGE

Cheltenham, UK · Northampton, MA, USA

© Daniel Scholten 2023 Cover image: Romolo Tavani on Adobe Stock All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library Library of Congress Control Number: 2023945120 This book is available electronically in the Political Science and Public Policy subject collection http://dx​.doi​.org​/10​.4337​/9781800370432

ISBN 978 1 80037 042 5 (cased) ISBN 978 1 80037 043 2 (eBook)

EEP BoX

Contents

viii

About the authors 1

Introduction: the geopolitics of the energy transition Daniel Scholten

1

PART I   ENERGY GEOPOLITICS AND THE ENERGY TRANSITION 2

Geopolitics, geoeconomics, and energy security in an age of transition towards renewables David Criekemans

3

Energy systems – making energy services available Aad Correljé

4

The political history of fossil fuels: coal, oil, and natural gas in global perspective Per Högselius

5

The facts and figures of the energy transition Dolf Gielen and Francisco Boshell

6

US–China rivalry and its impact on the energy transformation: difficult cooperation fraught with dilemmas Jacopo Maria Pepe, Julian Grinschgl, and Kirsten Westphal

20 44

67 84

107

PART II  TWO STEPS FORWARD, ONE STEP BACK: THE GEOPOLITICAL IMPLICATIONS OF THE ENERGY TRANSITION 7

8

Transition to renewable energy and the reshaping of consumer–producer power relations Kamila Pronińska

125

The geopolitics of energy transportation and carriers: from fossil fuels to electricity and hydrogen Karen Smith Stegen, Julia Kusznir, and Cäcilia Riederer

141

9

Industrial competition – who is winning the renewable energy race? Thomas Sattich and Stella Huang

158

10

Barrels, booms, and busts: the future of petrostates in a decarbonizing world Thijs Van de Graaf

183

v

vi  Handbook on the geopolitics of the energy transition

11

Critical materials – new dependencies and resource curse? Emmanuel Hache, Gondia Sokhna Seck, Fernanda Guedes, and Charlène Barnet

12

Changing energy systems and markets from the ground up – citizens, cooperatives, and cities Colin Nolden

217

Exploring the geopolitical impacts of energy justice: an interdisciplinary research agenda Christine Milchram and Morena Skalamera

232

The politics of sustainability: energy efficiency, carbon pricing, and the circular economy Michaël Aklin and Patrick Bayer

247

13

14

197

PART III   NEW TECHNOLOGIES, NEW INTERDEPENDENCIES 15

Solar powers – renewables and sustainable development around the world or geostrategic competition? Thomas Sattich, Stephen Agyare, and Oluf Langhelle

264

16

Wind energy – experiences with onshore and offshore projects Yaroslava Marusyk

282

17

A new life for old giants: hydropower and geothermal Victor R. Vasquez

300

18

The potential of biomass Joana Portugal-Pereira, Francielle Carvalho, Régis Rathmann, Alexandre Szklo, Pedro Rochedo, and Roberto Schaeffer

334

19

Hydrogen as carbon-free energy carrier and commodity Ad van Wijk

351

20

A new hope for nuclear? Elina Brutschin

372

PART IV  RECALIBRATING ENERGY, INDUSTRY, FOREIGN, AND SECURITY POLICY 21

US defense strategy: forging an industrial orientation towards energy security and foreign policy Amy Myers Jaffe

388

22

The EU’s external energy governance in the age of the energy transition Marco Giuli and Sebastian Oberthür

404

23

China and the geopolitics of the energy transition Duncan Freeman

420

Contents 

24

The India story: ensuring energy access, security, justice, and sustainability for a fifth of humanity Shuva Raha, Nandini Harihar, and Tulika Gupta

vii

431

25

Energy transition dynamics in Southeast Asia Muhamad Izham Abd Shukor, Nurjuanis Zara Zainuddin, and Noor Miza Razali

449

26

A renewable power in waiting? Australia’s changing energy geopolitics Christian Downie

468

27

The global energy transition and Russian structural power: scenarios and strategic options Filippos Proedrou

483

28

Geopolitical challenges of renewable energy adoption in MENA Emre Hatipoglu, Aisha Al-Sarihi, and Brian Efird

29

Energy transformation and energy challenges in sub-Saharan African countries: a new paradigm for the 21st century? Gondia Sokhna Seck, Emmanuel Hache, Edi Assoumou, and Rebecca Martin

513

Renewable energies in Latin America: resources, public policies, and geopolitics Gonzalo Escribano, Lara Lázaro, and Eva Pardo

535

30

Index

498

550

About the authors

Stephen Agyare is a graduate of the Master in Energy of Environment and Society programme at the University of Stavanger, Norway. He has a strong research interest in the geopolitics of renewables, sustainability, and digitization. He also works as a teaching assistant at the UiS and as a product designer. Michaël Aklin is Associate Professor of Political Science at the University of Pittsburgh, US. He also holds a courtesy affiliation in Public Policy at the Graduate School of Public and International Affairs (GSPIA) at the University of Pittsburgh. Aisha Al-Sarihi, Ph.D., is Research Fellow at the Middle East Institute, National University of Singapore. Previously, she was a researcher at the Climate Team in King Abdullah Petroleum Studies and Research Center (KAPSARC). Edi Assoumou has been working as senior researcher in energy system modelling and analysis at the Centre for Applied Mathematics of Mines Paris – PSL University. Charlène Barnet worked as a research economist at IFP Énergies Nouvelles and in the energy economics research department of the Alternative Energies and Atomic Energy Commission (CEA). She is currently doing a Ph.D. at the Center for Applied Mathematics of Mines Paris – PSL. Patrick Bayer is a Reader in International Relations in the School of Government & Public Policy and Chancellor’s Fellow in the Centre for Energy Policy at the University of Strathclyde, UK. Francisco Boshell leads the work on Innovation for Renewable Energy Technologies at the International Renewable Energy Agency (IRENA). He focuses primarily on providing policy advice and guidance to countries regarding technology innovation, quality control and standardization programs for a successful deployment of renewables. He previously worked for UNFCCC, KEMA consulting, and General Motors. Elina Brutschin is a research scholar at the IIASA Energy, Climate, and Environment (ECE) Program, with a research focus on bridging insights from the political economy and modelling studies of energy. She has published on the political economy of natural gas, nuclear energy, and coal phase-out. Francielle Carvalho is Associate Researcher at the International Council on Clean Transportation (ICCT). She holds a DSc in Energy Planning from the Federal University of Rio de Janeiro, Brazil. Her main interests are maritime transport, energy planning and energy transition, bioenergy, and alternative fuels. Aad Correljé is Associate Professor of Economics of Infrastructures at the Faculty Technology, Policy, and Management (TBM), TU Delft, the Netherlands. Since 1989 he has combined political science and economics in an institutional economics approach to public policy, regulation, and private strategy development in the energy and water domain. viii

About the authors 

ix

David Criekemans is Associate Professor International Relations at the University of Antwerp and KU Leuven (Belgium). He also teaches at the University College Roosevelt in Middelburg, Utrecht University, the Netherlands; the Geneva Institute of Geopolitical Studies, Switzerland; and Blanquerna, Ramon Lull University in Barcelona, Spain. Christian Downie is an Associate Professor in the School of Regulation and Global Governance at The Australian National University. His main fields of research are global energy governance, global climate governance, business actors, and international organizations. His latest book is Business Battles in the US Energy Sector. Brian Efird, Ph.D., is the Director for Strategic Partnerships and Senior Fellow at King Abdullah Petroleum Studies and Research Center (KAPSARC), Saudi Arabia. His research interests focus on the nexus between geopolitics, domestic and local politics, and energy. He was Senior Research Fellow at the National Defense University in Washington, DC, and a consultant on defense and international security matters in Washington. Gonzalo Escribano is Professor of Applied Economics at Universidad Nacional de Educación a Distancia (UNED) Spain; Senior Analyst and Director of the Energy and Climate Change Programme at The Elcano Royal Institute, Spain. Duncan Freeman lectures at the Brussels Management School (ICHEC), Belgium, and has previously been Research Fellow at the EU–China Research Centre of the College of Europe and Senior Research Fellow at the Vrije Universiteit Brussel (VUB), Belgium. He has also lived and worked in Beijing and Hong Kong for a total of 17 years and is fluent in Chinese. He has a BA in Politics and Modern History from the University of Manchester, UK; an MSc in Chinese Politics and a Postgraduate Diploma in Economic Principles from the School of Oriental and African Studies, University of London, UK; and a Ph.D. completed at the VUB. Dolf Gielen is Director of IRENA Innovation and Technology Centre since 2011. He has a Ph.D. from Delft University of Technology, the Netherlands. Marco Giuli is a Ph.D. researcher at the Research Centre for Environment, Economy, and Energy of the Brussels School of Governance of the Vrije Universiteit Brussel (VUB), Belguim. He is also Scientific Advisor at the Istituto Affari Internazionali (IAI), Italy, and Associate Policy Analyst at the European Policy Centre. Julian Grinschgl was a research assistant at the Stiftung Wissenschaft und Politik (SWP) – the German Institute for International and Security Affairs in Berlin, where he worked on the “Geopolitics of Hydrogen” project. Currently, he works as an energy analyst at Berlin Economics. Fernanda Guedes holds a Ph.D. in Energy Planning, with more than nine years of experience in the energy and climate sectors. She has worked as Economist Engineer at IFP Energies Nouvelles, and as Project Manager at Adam Smith International (ASI) for the UK–Brazil Energy Programme (BEP). She currently works as an independent consultant. Tulika Gupta is a lawyer turned policy research analyst at the Council on Energy, Environment and Water. Her work covers the trade and global governance of strategic resources and the geopolitics of energy transition. She frequently engages with high-level government and industry stakeholders and enjoys debating current affairs.

x  Handbook on the geopolitics of the energy transition

Emmanuel Hache has been working as a senior researcher in the Economics & Environmental Evaluation Department at IFP Energies Nouvelles on energy and natural resources foresight. He is Senior Research Fellow at the French Institute for Foreign Affairs (IRIS) and associate researcher at Economix, University Paris-Nanterre. Nandini Harihar is a Programme Associate at the Council on Energy, Environment and Water. She researches the governance of the global commons in the context of domestic and foreign policy amidst shifting geopolitics. This includes climate risk, energy security, ocean governance, technology collaboration, and geoengineering. Emre Hatipoglu, Ph.D., is Fellow at the Oil and Gas Program at King Abdullah Petroleum Studies and Research Center (KAPSARC), Saudi Arabia, and Associate Professor of international relations. He previously taught at Sabancı University, Turkey and was Fulbright Scholar at Sakip Sabancı Center of Turkish Studies at Columbia University, US. Per Högselius is Professor of History of Technology and International Relations at KTH Royal Institute of Technology, Sweden. His books include the award-winning Red Gas: Russia and the Origins of European Energy Dependence (2013), Europe’s Infrastructure Transition: Economy, War, Nature (co-authored with Arne Kaijser and Erik van der Vleuten, 2016), and Energy and Geopolitics (2019). Stella Huang is an early-stage researcher at Linköping University. In her research she integrates engineering and social science backgrounds to offer a distinct perspective in her writing. She passionately advocates for interdisciplinary collaboration to drive innovation and shape the future of technology through insightful research. Muhamad Izham Abd Shukor has more than 15 years of experience in energy policy in Malaysia, as well as in the ASEAN and APEC regions. He graduated as an Electrical Engineer in 2006 and immediately started working with the then Ministry of Energy, Green Technology, and Water and became an energy researcher at APERC from 2014 to 2018. Julia Kusznir is Research Associate and Member of the Bremer Energy Research Workgroup at Constructor University, Germany. She studied International Relations at the University of Warsaw, Poland and received her doctorate from the University of Bremen, Germany. Her research focuses on national and EU energy policy in the field of gas, renewables, and electricity, including governance structures, regulation, and market design; energy security of supply and its impact on the politics of the European countries. Lara Lázaro is Lecturer in Economic Theory, Department of Business Administration, Centro de Enseñanza Superior Cardenal Cisneros (attached to Universidad Complutense de Madrid, Spain); Senior Analyst, Energy and Climate Programme, The Elcano Royal Institute, Spain. Oluf Langhelle is Professor in Political Science at the Department of Media and Social Sciences, University of Stavanger, Norway. His research has focused on the concept of sustainable development and follow-up, strategies for sustainable development, environmental politics, and policy and transitions towards low carbon societies. Rebecca Martin has been working as an energy analyst on the techno-economic trends and barriers for the energy transition in the Economics & Environmental Evaluation Department at IFP Energies Nouvelles.

About the authors 

xi

Yaroslava Marusyk is a Ph.D. candidate and Lecturer at the Department of International Relations and International Organizations at the University of Groningen, the Netherlands. Her areas of expertise are energy security, geopolitics of energy transition, climate change, and global energy governance. Her most recent research focused on EU–China climate cooperation and competition in energy transition. Christine Milchram is a postdoctoral researcher at the Institute of Technology Assessment and Systems Analysis at Karlsruhe Institute of Technology, Germany. Her work focuses on questions of justice in the transformation to carbon neutral energy and mobility systems. She holds a Ph.D. from Delft University of Technology (the Netherlands). Noor Miza Razali has worked in several roles in Tenaga Nasional Berhad, in the area of sustainability, industry analyses and energy policies. Trained as a power engineer, she spent the first half of her career in academia with Universiti Tenaga Nasional, Malaysia, before specializing in electricity market design and operation with the International Energy Agency. Amy Myers Jaffe is Research Professor and director of the Energy, Climate Justice, and Sustainability Lab at New York University’s School for Professional Studies. Her recent book, Energy’s Digital Future: Harnessing Innovation for American Resilience and National Security was published by Columbia University Press in 2021. Colin Nolden is a Researcher at the Environmental Change Institute, University of Oxford, UK, where he works for the Centre for Research into Energy Demand Solutions and is Research Fellow at the Law School, University of Bristol, UK, where he works for the UK Energy Research Centre. Sebastian Oberthür is the Director of the Research Centre for Environment, Economy and Energy and Professor for Environment and Sustainable Development at the Brussels School of Governance of the Vrije Universiteit Brussel (VUB), Belgium. He is also Professor of Environmental Policy and Law at the Centre for Climate Change, Energy and Environmental Law at the University of Eastern Finland. Eva Pardo is Lecturer in Applied Economics at Universidad Nacional de Educación a Distancia (UNED), Spain. Previously she worked at the Central American Bank for Economic Integration (CABEI) developing the impact assessment framework and as technical assistant to the Executive President and Vice President. Jacopo Maria Pepe is Senior Researcher at the Stiftung Wissenschaft und Politik (SWP) – the German Institute for International and Security Affairs in Berlin, where he works on global energy issues and the geopolitics of energy transition. Since 2022 he has headed the “Geopolitics of Hydrogen” project funded by the German Foreign Ministry. Previously he worked at DGAP – German Council on Foreign Relations and as Lecturer on energy, transport, and trade geopolitics at SAIS-Johns Hopkins University, US. Joana Portugal-Pereira is Assistant Professor on Environmental Engineering at the Federal University of Rio de Janeiro, Brazil. She holds a Ph.D. in Environmental Planning from the University of Tokyo, Japan. Professor Joana has been a senior scientist at the Technical Support Unit of the Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Reports. She is an Associate Editor of the Journal of Environmental Science and Policy.

xii  Handbook on the geopolitics of the energy transition

Filippos Proedrou is Senior Lecturer in Global Political Economy at the University of South Wales, UK. His areas of expertise are EU–Russia relations, energy geopolitics and energy and climate policy. He has also been an Academic Fellow with the Welsh Parliament advising on climate policy. Kamila Pronińska is Professor at the Faculty of Political Science and International Studies, Department for Strategic Studies and International Security, University of Warsaw, Poland. She specializes in global and European energy security and linkages between natural resources and armed conflicts. Shuva Raha heads strategic new initiatives at the Council on Energy, Environment and Water, at the intersection of energy, development, and climate geopolitics amid economic transformations. This includes energy security and transition, industrial decarbonisation, sustainable production and consumption, and climate resilience. She engages with governments, industry, and institutions to impact sustainable development at scale, expand CEEW’s influence as a voice for emerging economies, and take the ‘India Story’ global. Shuva has more than 22 years of experience in public policy and project management. Régis Rathmann is an Energy Consultant at the Brazilian Ministry of Science and Technology. He is an Economist and holds a DSc in Energy Planning from the Federal University of Rio de Janeiro, Brazil. He coordinated several international consortiums to develop future energy transition pathways and assess costs of adopting low carbon technologies in hard-to-abate sectors. Cäcilia Riederer is a graduate student at the Geneva Graduate Institute, Switzerland, pursuing a degree in International Affairs, Global Security, and Gender. She received her bachelor’s degree in International Relations from Jacobs University Bremen, Germany, in 2021. Pedro Rochedo is a Chemical Engineer and Assistant Professor at the Federal University of Rio de Janeiro, Brazil. He is an expert on integrated assessment modelling frameworks and his research interests include energy system analysis, environmental modelling, climate change mitigation. Professor Rochedo is a certified trainer for the IAEA’s analytical tool for energy modelling. Thomas Sattich is Associate Professor at the Department of Media and Social Science, University of Stavanger, Norway. He holds a Ph.D. in Political Science and Economics. The main focus of his research is on the geopolitical implications of the sustainability transition. Roberto Schaeffer is Full Professor in Energy Economics at the Federal University of Rio de Janeiro, Brazil. Professor Schaeffer has been an author and review editor of various Intergovernmental Panel on Climate Change (IPCC) reports since 1998. He is an Associate Editor of Energy, The International Journal. Daniel Scholten is strategic advisor energy and sustainability at the Netherlands Authority for Consumers and Markets. He has spent ten years at Delft University of Technology, the Netherlands, as an Assistant Professor investigating the geopolitics of renewable energy and governance of energy systems and transitions. He was also part of the expert panel of the IRENA global commission on the geopolitics of energy transformation in 2018.

About the authors 

xiii

Morena Skalamera is Assistant Professor of Russian and International Studies at Leiden University, the Netherlands. Before joining Leiden University, she was a Postdoctoral Fellow with the Geopolitics of Energy Project at Harvard University’s Kennedy School. Her academic interests lie in the political economy of the low carbon transition, energy security, and the geopolitics of energy in Eurasia. Gondia Sokhna Seck has been working as a senior researcher on modelling and analysis of the energy transition in the Economics & Environmental Evaluation Department at IFP Energies Nouvelles. Karen Smith Stegen is Professor of Political Science at Constructor University, Germany. Because of her international MBA and work in the energy industry, she bridges the gap between theory and practice. Her publications are found in top-ranked journals, and she is often a featured speaker at conferences. Alexandre Szklo is a Chemical Engineer, Full Professor at the Federal University of Rio de Janeiro, Brazil. He has written around 160 scientific articles (Scopus h-index of 33) and supervised around 150 doctoral and master’s theses. He teaches courses and develops research on topics related to energy transition, energy technology, petroleum economics, and energy modelling. Thijs Van de Graaf is Associate Professor of International Politics at Ghent University, Belgium. His research covers the intersection of energy security, climate policy, and international politics. He is co-author of Global Energy Politics (Polity, 2020) and served as the lead writer on two IRENA reports on the geopolitics of the energy transformation. Victor R. Vasquez is Professor of Chemical and Material Sciences at the University of Nevada, Reno, US. His teaching and research activities involve computational modelling, applied thermodynamics, process systems engineering, and the development of new materials for extreme applications. Kirsten Westphal is Executive Director at H2Global Stiftung and leads the independent Analysis & Research Division. Between 2008 and 2021, she worked at the Stiftung Wissenschaft und Politik (SWP) – the German Institute for International and Security Affairs in Berlin, where she headed the projects Geopolitics of Energy Transition and “Geopolitics of Hydrogen”. Ad van Wijk is Professor Emeritus of Future Energy Systems at TU Delft, the Netherlands. He is guest professor at KWR Water Research Institute to develop and implement the Energy and Water research program. He is special advisor to Hydrogen Europe, representing European industry, national associations, and research centers to develop European hydrogen policies with the EU Commission. And he holds several advisory and supervisory board positions. Nurjuanis Zara Zainuddin works at Tenaga Nasional Berhad, a leading Malaysian utility company in Asia with core activities in the generation, transmission, and distribution of electricity. She graduated with an MEng in Engineering and Computing Science from the University of Oxford, UK, and completed her Ph.D. in Nuclear Engineering at the University of Cambridge, UK.

1. Introduction: the geopolitics of the energy transition Daniel Scholten

1. INTRODUCTION The energy transition is having a profound impact on energy geopolitics. The increasing use of renewable energy sources and associated generation, distribution, and storage technologies are reshaping energy systems and markets from the ground up. At the same time, other means of decarbonization such as carbon capture and storage (CCS) technologies, efficiency measures, nuclear power, or developments in smart grids and demand side management also shape the future energy sector. The combination of these developments implies a change in the nature, volume, and location of trade and investment flows and dependencies among countries. This provides new opportunities and challenges for the energy security and industrial strategies of countries. It also implies new risks and rewards for companies and a variety of other non-state actors. Looking at the turbulent nature of global energy relations in our current fossil fuel-dominated era, one is inclined to view the energy transition with hope for a more stable and less politicized energy future. Still, any transition brings changes and uncertainty, suggesting that turbulent times in the energy sector are not about to end. The transition to a more sustainable energy provision is picking up speed. Renewable energy has grown at an impressive rate over the last decade. Its global installed capacity doubled from roughly 1.223 GW to 2.532 GW between 2010 and 2019 (IRENA, 2020). Solar and wind accounted for most of this growth, which is perhaps not surprising considering the rapid decline in their levelized costs (IRENA, 2018), making them competitive with fossil fuels in electricity generation. Still, renewable energy has a long way to go. At the end of 2018, the share of renewables in total final global energy consumption stood at 11%, with fossil fuels at 79.9%, nuclear at 2.2%, and traditional biomass at 6.9% (REN21, 2020). Perhaps more illustrative is that solar, wind, and modern biomass, those renewable sources that have gained the most attention the last ten years, only accounted for 2.1% combined. Indeed, the world is not on track to meet its climate targets (WMO, 2022) and it remains to be seen whether countries will be able to keep their lofty promises regarding decarbonization of the energy sector. On the upside, however, the era of fossil fuel growth may soon be over (IEA, 2022). Moreover, renewable energy investments remained steady during the COVID-19 pandemic in 2020, whereas fossil fuel demand took a hit and oil prices fluctuated wildly. Most recently, extreme hot and dry summers in the Global North and Russian aggression against Ukraine have demonstrated the undesirable effects of oil and gas use and dependence to everybody; renewable energy can hardly get any better advertising. In addition, the decarbonization of fossil fuel value chains through efficiency measures, CCS technologies, and emission trading have become a fixed part of policies throughout the globe, even though CO2 emissions have not yet shown any significant sign of slowing down (IEA, 2022). The EU, for example, is piling up efforts with its Green Deal, decarbonization 1

2  Handbook on the geopolitics of the energy transition

package, taxonomy, and REpowerEU policy initiatives. On the demand side, developments in smart grids, demand side management, and insulation are set to further incentivize a reduction in energy consumption. Meanwhile, hydrogen is enjoying a revival as a way to decarbonize hard-to-abate sectors and heavy transportation. The possibilities of the energy transition have not gone unnoticed. Policy makers have traditionally viewed renewable energy as a way to address climate change, local pollution, and decrease import dependence, but are increasingly assessing opportunities and challenges to their energy security and industrial strategy. They are eager to capitalize on the benefits and mitigate the drawbacks of the transition. Many have developed sectoral blueprints and scenarios, critical resource strategies, and contemplate decarbonizing heavy industry through hydrogen (Van de Graaf et al., 2020). They are asking when and where existing relations are likely to be replaced with new ones and which strategies need to be in place to handle this transition. How to build and cement trade with future partners, what are the exit strategies for increasingly less relevant relations, and how to manage ongoing but changing relationships? They have not forgotten how the geographic and technical characteristics of fossil fuels have shaped global trade relations and are hence eager to know what will happen once decarbonization efforts change these. In the meantime, companies are doing the same for their supply chains. Where do new business opportunities and markets lie and what are new risks to sustainable energy systems and services? Solar energy, for example, provides new business opportunities in terms of selling new technologies and services (e.g., batteries), but also new dependencies regarding material flows and loss of market share to households generating electricity themselves. While the energy transition may seem to be just beginning, investment decisions for the sustainable energy system of the future need to be made now. Academics are also increasingly paying attention to the geopolitics of the energy transition. Until roughly 2018–2019, unconventional oil, shale gas, and liquefied natural gas (LNG) dominated the energy geopolitical discourse. Most works on decarbonization and renewable energy, for their part, focused on achieving the transition, i.e., technological development and market diffusion. And while the geopolitics of climate change and the environment were well researched, they tended not to focus on (renewable) energy as such (e.g., Dalby, 2013). Overall, focus was on how renewable energy alleviates fossil fuel-related ills; the longer-term political implications of renewable energy were not explored. Still, a number of scholars started exploring the impact of the energy transition on energy relations (Criekemans, 2011; Scholten & Bosman, 2013, 2016; Johansson, 2013; Van de Graaf & Verbruggen, 2015; Paltsev, 2016; Hache, 2016; Fischhendler et al., 2016; O’Sullivan et al., 2017; Scholten, 2018a; Aklin & Urpelainen, 2018; Proedrou, 2018), with prominent outlets and organizations such as The Economist (2018) and Stratfor (2018) picking up the topic as well. What made these works stand out was that they did not study various aspects in isolation, i.e., stranded assets, critical materials, etc., but as part of a larger and coherent phenomenon. The 2019 report by the IRENA Global Commission on the Geopolitics of Energy Transformation can be considered the breakthrough moment. Since then, studies abound and a research community has emerged (Goldthau et al., 2019; Hafner & Tagliapietra, 2020; Vakulchuk et al., 2020; Scholten et al., 2020b; Van de Graaf et al., 2020; Sattich et al., 2021; Hook & Sanderson, 2021; Thompson, 2022). The increased interest has led to a number of expectations regarding the geopolitical implications of the energy transition, but also highlighted some shortcomings in this emerging field.

Introduction 

3

Regarding expectations, the geopolitical implications of the energy transition highlight at least eight clusters if we take the geographic and technological characteristics of renewable energy systems and decarbonization options as points of departure (Scholten & Bosman, 2016; Scholten, 2018a; Scholten et al., 2020b; Vakulchuk et al., 2020). To start, the abundance and widespread nature of renewables are expected to shift an oligopolistic global energy market towards more symmetric energy relations as many countries will be able to produce large parts of their needs domestically. This enables more (potential) producers to emerge and a make-or-buy decision for countries between secure domestic production and cheaper imports. Strategic emphasis shifts from access to energy resources, diversification strategies, and reserves to a focus on availability at the right time and storage capacity due to intermittent renewables, access to key interconnectors, and critical materials for clean technologies. The world is made out of ‘prosumer countries’ instead of clear-cut net exporters, net importers, and transit countries and the use of energy as a weapon or political tool is lessened. A second expectation is a shift from energy sources to energy carriers in defining new geographies of trade, dependence, and control. The focus has primarily been on the electrification of energy systems and the accompanying regionalization of energy trade in this regard. Most renewable energy sources are converted into electricity and electricity transportation suffers from long-distance losses. Coupled with the abundant but intermittent nature of renewable energy, countries are likely to prefer interconnection with neighbors over risky global corridors and pipeline politics. This also makes interconnectors, operational control, and cost-efficient large-scale storage means strategic assets. More recently, however, hydrogen has gained attention. While the amount of hydrogen use and trade is still uncertain, its potential for decarbonizing industry, heat, mobility, and for power-to-gas storage is clear. It is not one or the other, but rather a matter of the ratio between how much the energy system of the future resembles an electric society or a hydrogen economy. What is also clear is that hydrogen (or other new gases such as ammonia or methanol) can be stored and shipped across the globe more easily, possibly nuancing the regionalization that electricity would bring. Besides changing trade flows, the shift from trade in sources to carriers is also likely to result in a decline in trade volumes as electricity and hydrogen can be produced anywhere and an increasing focus on short-term markets as flexibility becomes more important in the future. Third and fourth is the process of creative destruction with industrial rivalry over clean generation technologies on the one hand and worries about stranded oil and gas assets and related political unrest on the other. The transition to renewable energy and other decarbonization options is not merely a way to improve energy security or address climate change, it also offers industrial opportunities, new jobs, and revenues (EC, 2015). Winning the renewable energy race requires the necessary know-how, capital, natural resources, and labor force, and probably a sizeable home market to develop economies of scale. How far countries and companies can reap such benefits also depends on the global market share they can acquire, not only a matter of making the best products, but also well-established broader political ties, historical relations, and cooperation in other sectors. Companies like Tesla may be at the cutting edge now, but rapid technical developments may well see Chinese companies move ahead in electricity storage, for example. At the same time, petrostates and oil and gas companies face stranded assets. A lack of revenues for countries largely reliant on oil and gas exports challenges their economic development and political stability. Still, there is time for these countries to diversify their economies,

4  Handbook on the geopolitics of the energy transition

especially if they have sufficient capital reserves and potential sectors to develop a competitive advantage. In addition, those countries able to produce oil at very low cost, like Saudi Arabia, may not be threatened by the energy transition that much as demand for oil-based products will likely remain much longer than we need petrol for driving cars. Moreover, while energy demand in traditional markets is expected to decline by 2040, energy demand in the Global South is expected to rise more in that same period (IEA, 2017). Fifth is the increasing competition for scarce materials and know-how between countries that aspire to be industrial leaders in renewable generation technology. While this issue has gained a lot of attention, probably due to its similarity with challenges regarding getting access to overseas oil and gas reserves, opinions differ as to how concerned we should be. On the one hand, it is clear that global consumption is outpacing the replenishment rate of natural resources and that certain locations are more cost-efficient to mine than others. On the other hand, there is opportunity for recycling, opening new mines (though this could easily take several years if not a decade), and alternative technologies next to the fact that imports are mostly necessary until sufficient capacity is installed. Once a wind turbine is in place, it runs for 20–30 years and does not require the continuous inputs of a gas-fired power plant. Either way, scarce materials will involve new trade dependencies and potentially the risks of the resource curse in countries whose exports rely too much on them. Sixth, renewables facilitate more decentralized energy production by and for a more varied set of local actors, enabling new business models and local empowerment. The cumulative effect of individuals’ decisions is set to rearrange energy systems and markets from the ground up. The system integration of solar panels, smart meters, electric vehicles, etc. by citizens, cooperatives, cities, and companies reverses the flow of electricity, requires grid reinforcements and storage, new ways of operating existing networks and new micro-grids, new governance and taxation, and reshuffles market shares. Such developments make energy policy both more democratic and complex. Due to its scalability, renewable energy also allows access to energy in hard-to-reach areas and regions that lack (reliable) grid connection. It offers opportunities for local communities to develop skills in operating and maintaining local energy systems. In this fashion, the energy transition does not only contribute to UN Sustainable Development Goals (SDGs) on sustainability and climate, but also on economic development, indirectly contributing to global stability. The potential for local development could nevertheless have a downside as well; regions known for separatism could use renewable energy to increase their independence from the country they are part of. Seventh, measures to lower CO2 emissions and energy demand (e.g., efficiency measures, CCS technologies, insulation, emissions trading, carbon border adjustment mechanisms) extend the life of fossil fuels. Using less implies fewer emissions, but also might slow down the energy transition. While good for the immediate fight against climate change by keeping fossil reserves underground longer and spreading emissions out over time, they might also lock us in a fossil world longer and stall a renewable future. Moreover, while some countries worry about the competitiveness of their businesses and carbon leakage, others might see this as an opportunity to develop an edge at the cost of the global climate. Still, political leadership may be the reward of those countries that are progressive, even if climate and energy negotiations do not progress much in light of the Paris agreement. Finally, the energy transition produces winners and losers, both domestic and international. Foregoing a lengthy discussion on which countries are likely to fall into which category, referring instead to Smith Stegen (2018), Scholten et al. (2020a), and Vakulchuk et al. (2020), it is

Introduction 

5

clear that individual actors and countries alike are not going to benefit equally from the energy transition. Countries differ in their ability or (geographic and institutional) predisposition to seize the opportunities and handle the challenges of the energy transition. They will expect different success in terms of energy security, economic gains, and political leadership, and strategize accordingly, either embracing the energy transition or stalling it. The difference between Germany and Poland would be a case in point (Mata Perez et al., 2019). If we aspire to have a smooth transition process, we will need to find a way to bring everybody on board. The concept of energy justice, generally linked to more domestic issues of energy injustices, might provide valuable lessons to mediate, mitigate, or address potential strife. Combined, these expectations invoke the impression of an overall positive change, albeit one that raises new challenges that materialize at different stages of the transition (Scholten & Bosman, 2018; Scholten et al., 2020b). It is a matter of two steps forward and one step back and a process where 2050 only seems to be the half-way point. Despite such expectations, the geopolitical implications of the energy transition remain far from fully understood. Three main shortcomings stand out. First, the foundations of our expectations are academically weak; there exists no theory of energy geopolitics that backs them up (see also Vakulchuk et al., 2020). The literature on energy geopolitics is known for its detailed descriptive accounts of the history of oil and gas but lacks theories or attempts at generalization even if they provide frameworks of analysis (e.g., Yergin, 1991, 2011, 2021; Högselius, 2019). As a result, insights remain highly context specific. The works that are more conceptual, in turn, tend to focus on geopolitics in the broader sense and do not explicitly focus on (renewable) energy or decarbonization of the energy sector (e.g., Dodds, 2005). They also tend to struggle with creating predictive value. Similarly, energy security literature (e.g., Winzer, 2012; Sovacool & Mukherjee, 2011; Chester, 2010; Kruyt et al., 2009) generally presents definitions, frameworks, and operationalizations, but no theory. It lends itself to country assessments and strategic advice but does not venture into generalizations on energy relations. The fields of international relations and political economy, in turn, possess plenty of theories on stability and trade, but do not explicitly link geography and the technical features of energy systems to global markets and politics, though recent works on the political economy of energy are making interesting inroads (Van de Graaf & Sovacool, 2020). Political geography fared better in this regard, as it examines renewable energy in terms of space and territoriality (e.g., Stoeglehner et al., 2011; Bridge et al., 2013), though it does not link this explicitly to great power rivalry. In the end, current works on the geopolitics of the energy transition have worked with an eclectic array of insights from a diverse set of literature and lacked a dedicated framework or specifically fit-for-purpose theory (Vakulchuk et al., 2020), despite some efforts like e.g., Scholten (2018b) as we will see in Section 4. This makes it hard to move beyond expectations based on the geographic and technical characteristics of renewable energy systems and decarbonization options. It also does not help in this regard that current conceptualizations of energy geopolitics and energy security are largely based upon insights from our experience with fossil fuels and might require an update if we are to understand the complex geopolitical implications of the energy transition (Vakulchuk et al., 2020). To better understand, predict, and prepare for the geopolitical implications of the energy transition, a thorough grasp of the relationship between the geographic and technical characteristics of energy systems and interstate energy relations is essential. How do renewable energy and other decarbonization options reshape energy system characteristics

6  Handbook on the geopolitics of the energy transition

(energy sources, generation technologies, distribution modalities, and demand)? How do they change energy markets (business models, market structure, trade flows, and distribution of welfare)? And most importantly, how do they shape countries’ energy security (policy), industrial strategy, and especially patterns of cooperation and conflict between them? How will the abundance of renewable energy sources, for example, affect trade flows and dependencies among countries and will grid politics be all that different from pipeline politics? Why? How will decentralized generation and industrial competition affect welfare distribution within and among countries and does securing critical materials lead to similar conflicts as securing oil? In addition, and more fundamentally, to what different types of conflict do various energy systems lead? Under what contextual conditions and through which avenues and mechanisms do they do so? When do geotechnical characteristics, for example, outweigh contextual factors such as great power rivalry, technological breakthroughs, or vested business interests in determining patterns of interstate energy relations? Many questions remain. That being said, existing insights have proven invaluable thus far and ensure that we need not start from scratch. There is abundant literature from the fields of international relations, political economy, and political geography that addresses energy geopolitics and energy security. There are also uncountable works on decarbonization and renewable energy technologies, their integration into energy systems and markets, energy policy, and sustainability transitions. What is needed is to detail how we can use available concepts, frameworks, and theories to make better sense of what to expect geopolitically from the energy transition. Moreover, what can we learn from past energy transitions and experiences with fossil fuels that can help guide research towards this transition? Second, there is a noticeable lack of a systematic and comparative analysis of cases on the geopolitical implications of renewable energy and other decarbonization options. Only a handful of analyses exist (e.g., Fischhendler et al., 2016; Escribano, 2018; Hafner & Tagliapietra, 2020). Most writings do not detail what is, but rather focus on future implications if current developments persist. They are more about the long-term future implications than what we can actually already observe. This is not surprising. Energy geopolitics will be a blend of fossil fuels and renewable energy well into the second half of this century. Any contemporary empirical account faces the limitation of looking at the geopolitics of the energy transition in a setting that is fossil fuel dominated. For example, it is easier to attribute US foreign policy towards the Middle East as a result of their development of shale gas at home rather than their renewable energy policies. Still, we should not hide behind the fact that the energy transition is just beginning. We can already start looking at countries that have seen large enough changes in their energy mix due to energy transition projects that their trade relations and dependencies have been affected in some way. Nevertheless, the lack of empirical studies further weakens our expectations as there is less evidence to support them. Additionally, studies that compare the geopolitical consequences of individual renewable energy sources or decarbonization options are largely missing. Emphasis is generally on renewables as a group (Vakulchuk et al., 2020). Which challenges and opportunities do the different technologies present and to which countries? It is remarkable how little we have analyzed the similarities and differences between the geopolitical impact of solar and wind projects or the specific challenges of electrification and new gases such as hydrogen, for example. This stands in contrast to the many studies on the different experiences and strategies of countries with regard to oil and natural gas.

Introduction 

7

While our empirical understanding is in its infancy, it is nonetheless urgent that we engage ourselves. The energy transition is starting to impact energy relations, whether in investment decisions, by changing infrastructures from the ground up, or the performativity of expectations about the future. We need to ask ourselves what we can already observe regarding our expectations, the differences between the geopolitics of solar, wind, hydrogen etc., and the experiences of different countries. A discussion of implications from different angles, while creating some overlap, is critical to provide the empirical detail to understand current developments and expectations about the future. Third, there is a lack of attention to the collective facilitation of a smooth energy transition, i.e., one that is fast, stable, and inclusive. Even if the transition outcome would be generally positive, we still need to manage the process thereunto (in geopolitical terms). There will be winners and losers, and the transition period is likely to take place within a setting of increasing great power rivalry. Will the energy transition depoliticize energy relations, or will great power rivalry determine the speed and direction of the energy transition (Scholten et al., 2020a)? In this light, what is the role of international organizations such as IEA, OPEC, UN, and IRENA to prevent, mitigate, or mediate potential strife? The studies that focus on policy advice (often consultancy reports) seem to target individual countries and companies. They provide energy security and/or industry assessments to optimize individual country or company strategy, but do not consider collective considerations for the environment or stability. They aim to win the game, not smoothen it. Hence the question remains how to facilitate a smooth global energy transition. This Handbook picks up the first two of these challenges. It summarizes the existing body of knowledge, presents the relevant analytical tools to study the topic, and provides an overview of current experiences from the perspectives of expectations, technologies, and countries. In this fashion it contributes to our understanding of the geopolitics of the energy transition beyond mere expectations and prepares policy makers and academics for the changes to come. However, it does not solve the dilemma of ensuring a smooth energy transition, i.e., propose a way forward beyond winners and losers. This would require a more governance-oriented perspective. Still, the Handbook provides a stepping-stone for recommendations for global energy governance. It must be kept in mind, however, that much uncertainty will undoubtedly remain surrounding the geopolitical implications of the energy transition. A myriad of contextual circumstances and/or technical, environmental, social, economic, political developments are set to shape future energy systems next to renewable energy and other decarbonization options. Obvious examples are US–China rivalry, material and spatial limits to renewable energy, technical breakthroughs, corporate lobbying, climate developments, and existing political– economic and institutional lock-ins and path-dependencies (Scholten et al., 2020b). In addition, how countries respond to the energy transition and changing energy relations also depends on their capabilities.

2. OBJECTIVE This Handbook aims to provide a thorough understanding of the geopolitical implications of the energy transition. It stands on the shoulders of existing works and deepens the theoretical and empirical analysis in order to provide the quintessential starting point for scholars and

8  Handbook on the geopolitics of the energy transition

practitioners and prepare them for the changes to come. More specifically, this Handbook aims to describe and analyze how the geographic and technical characteristics of renewable energy and other decarbonization options shape a) energy system characteristics (sources, generation technologies, distribution modalities, and demand), b) energy markets (business models, market structure, trade flows, and welfare effects), and c) interstate energy relations (countries’ energy security (policy), industrial strategy, and especially patterns of cooperation and conflict between them). To this end, it first summarizes established insights and delivers suitable notions and analytical frameworks to investigate the phenomenon. It then provides a detailed and comparative overview of the geopolitics of the energy transition from different perspectives: expectations, technologies, and countries. Emphasis is on contemporary experiences and how they may influence the coming decades. In doing so, the Handbook also paves the way for the translation of insights into policy strategies and recommendations for global energy governance. The Handbook takes a particular perspective and scope. Its focus is on how the energy transition affects energy geopolitics, not the opposite causality, i.e., how global political rivalry affects the speed and direction of the energy transition. Similarly, it focuses on how changes in energy supply affect energy relations, not how changes in energy demand, for example the shift in energy demand from traditional OECD markets towards the Global South (IEA, 2017), reshape energy relations. In addition, it is important to clarify that while this Handbook focuses on states in its general narrative, this does not imply that the role of companies and other non-state actors is considered less relevant or can be ignored. Quite the opposite, one cannot discuss the energy sector without them: energy policy is both affected by and affects such actors. Somewhat similarly, the focus on global energy relations does not make domestic developments irrelevant. National goals and energy transition policies have external effects via markets and trade. Last, the Handbook focuses on the energy transition and does not address the broader climate and/or environmental geopolitics. While such topics are certainly worthy of academic scrutiny, their inclusion would require a different focus and approach to the Handbook altogether. Such matters are, of course, touched upon when necessary. It is also important to clarify at this point what we mean by the energy transition and geopolitics, though Chapters 2 and 3 do so in more detail. The Handbook defines the energy transition to be the complex process of decarbonizing the global energy sector (see e.g., IRENA website 2021 and Kuzemko et al., 2020). While the transition includes all means of decarbonization, renewable energy, as defined by the IEA (2004, p. 12), is generally considered the core aspect of this transition, mostly as other options tend to be limited to decreasing the emissions of fossil fuels. The energy sector is itself perceived as a socio-technical system (Geels, 2004; Scholten & Kunneke, 2016; Högselius, 2019) or geotechnical ensemble (Deudney, 1989) in which technologies, actors, and institutions continuously interact. Renewable energy is hence more than its sources. It also involves the production and infrastructure technologies, a wide variety of state and non-state actors, and a diverse set of rules and regulations that make the system work. Geopolitics generally refers to great power rivalry or “politics, especially international relations, as influenced by geographical factors” (Oxford Dictionary, 2012). It emphasizes the strategic importance of natural resources, spatial features, and specific locations for trade or military purposes (Vakulchuk et al., 2020). Foregoing a lengthy discussion of the various interpretations of geopolitics, it suffices to say that this conventional understanding fits our purposes nicely. Still, two specifications are in order. First, this Handbook focuses on the

Introduction 

9

energy dimension of geopolitics. Second, technology should also play a role in our discussion of energy geopolitics, as our definition of renewable energy already indicated. While (renewable) energy has very specific geographic characteristics, a focus on those alone would not capture the full implications for energy relations. Industrial rivalry and stranded assets, for example, are not exactly typical geographic factors, yet are at the heart of what most consider energy geopolitics to be about. As such, the Handbook considers geopolitics synonymous with interstate energy relations as influenced by geotechnical factors.

3. HANDBOOK STRUCTURE The Handbook has four parts beyond this introductory chapter. Part I addresses the first objective, Parts II, III, and IV the second. As such, Part I sets the scene for the empirical analysis of Parts II, III, and IV. They are elaborated in turn below. Afterwards, this chapter rounds up with a few final thoughts. Part I (Chapters 2–6) lays the groundwork for an understanding and analysis. It presents the relevant concepts, theories, and frameworks and the necessary background information on energy geopolitics and the energy transition. It starts with two chapters that define, conceptualize, and operationalize energy geopolitics and security on the one hand and energy systems and markets on the other, also introducing the relevant actors and contextual factors. This brings together literature from a variety of fields. For geopolitics: international relations, (energy) geopolitics, energy security, international political economy, and political geography. For energy systems and markets: (renewable) energy technology, energy systems, (institutional) economics, energy economics, energy policy, socio-technical systems, and sustainability transitions. Combined, the two chapters frame the core relationship under study, i.e., between energy system characteristics and interstate energy relations. Chapters 4 and 5 then provide a historical backdrop by looking at the political history of fossil fuels since the industrial revolution and elaborate the technologies, projections, and facts and figures of the energy transition respectively. It ends with a specific look into how energy transition pathways and great power rivalry mutually influence each other. Parts II, III, and IV investigate the geopolitical implications of the energy transition from three different angles: expectations, technologies, and countries. The parts do not envision the rigid application of a single framework, but rather organize the chapters along sections that address similar questions. The chapters have an empirical focus and summarize and analyze past and current developments through literature reviews and/or case studies. Their output is an overview of the implications of the expectation, technology, or policy for energy systems, markets, and trade relations, for countries’ energy security (policy) and industrial strategy, and for patterns of cooperation and conflict between them. To this end, each chapter first describes the topic (expected change), technology (energy system), or country (policy history), providing the necessary explanation, background, and context regarding the independent variable of this Handbook. It then turns towards an analysis of its geopolitical implications and debates the likely effects on trade relations and political dependencies and resulting country and company strategies, i.e., the dependent variable. This also sheds light on how countries can handle challenges, either individually through strategies or collectively via global energy governance. Part II (Chapters 7–14) deals with topical challenges along the expected geopolitical implications of the energy transition and/or emerging realities in energy trade and politics. What

10  Handbook on the geopolitics of the energy transition

can we already witness today of the changes that the energy transition is expected to bring and what are the benefits and drawbacks for current net-exporting, transit, and net-importing countries? First is a set of chapters on the rise of prosumer countries and decline of the energy weapon in global markets and new geographies of trade as shaped by renewable-driven electrification and new gases such as hydrogen. Next are a set of chapters on industrial competition for clean generation technologies, the accompanying challenges surrounding critical materials for their exporters and importers, and the stranded assets of petrostates. How will global markets, supply chains, and business strategies evolve and how will this affect companies and countries? Another chapter deals with local developments and new non-state actors such as households, cooperatives, and cities that challenge current centralized energy systems and markets with new business models. The part concludes with chapters on energy justice and the politics of sustainability. How does renewable energy generate winners and losers among countries and how do decarbonization options such as energy efficiency measures, carbon pricing, and the circular economy reshape energy relations? Part III (Chapters 15–20) focuses on the similarities and differences in geopolitical implications of various renewable energy sources, nuclear power, and hydrogen. Taking a technology perspective, it analyzes how contemporary developments and/or specific projects are changing the energy realities of countries and regions. It looks at the potential of renewable energy in general and solar power in particular for achieving the UN’s SDGs and how wind power can contribute to self-proficiency in energy and political matters, for example. It also looks at the future of hydropower and geothermal energy and the role of biomass in decarbonizing energy systems and their contribution to a smooth transition. Finally, it discusses the potential rebirth of nuclear energy and the impact of new gases, mostly hydrogen, in providing storage, heat, and mobility in a more renewable world. Part IV (Chapters 21–30) takes a closer look at the geopolitical implications of the energy transition from a country or regional perspective. How do different countries perceive the energy transition, what sources and technologies do they prefer, what is their energy security and industrial strategy, and how does this recalibrate their foreign and security policy? Moreover, what is the collective result of individual energy transition strategies; how do trade relations shift, what new energy partnerships replace older ones, and how does this reflect on regional and global stability? Countries are selected for their prominence in global politics, the energy sector, and for global coverage. They include traditional actors such as the US and the EU, upcoming players such as China, India, and South-East Asia, traditional exporters such as Russia, the Middle East, and Australia, and the Global South as represented by Latin America and Sub-Saharan Africa.

4. FINAL THOUGHTS To round up this introductory chapter, a few concluding remarks and final thoughts along the lines of the conceptual and empirical parts are in order. From Frameworks to Theory When it comes to estimating the geopolitical implications of the energy transition, there would be “nothing as practical as a good theory” (Lewin, 1943, p. 118). Looking at current

Introduction 

11

concepts and frameworks, we are far from one. Still, the abundance of literature on energy systems, markets, and transitions on the one hand and geopolitics and international relations on the other allow us to define and operationalize independent and dependent variables, while analyses of energy security show how we may relate energy system characteristics to their economic and political risks and opportunities. Taking this as a point of departure, a basic framework for analyzing the relationship between the geotechnical characteristics of energy systems and the stability of interstate energy relations was suggested in Scholten (2018b). It can be used for analyzing the general effects of changes in energy systems on a regional or global scale as well as empirical cases of individual countries, with some adjustments. In both instances, its application involves taking two geopolitical snapshots, before and after certain changes in energy systems, for example a sizeable project that introduces a sufficiently large offshore wind capacity to influence trade flows. By detailing the variables of the before and after snapshots and analyzing the differences, it establishes the changes a project or development has made to interstate energy relations for a relevant country or region. Allow me to briefly recap before moving on (see Figure 1.1). The framework is applied in four steps. The first charts the geographic and technical characteristics of energy system components, i.e., the independent variable. A distinction is made between finite or renewable sources (the former scarce or abundant and the latter stable or intermittent, with varying daily and seasonal predictability) and concentrated or widespread sources (distributed evenly across the globe or not). Similarly, production can be central or decentral in nature (and involve strong economies of scale or not), involve local or global pollution or not, and require scarce materials, specialized know-how, and be capital-intensive or not. Distribution can offer easy storage or have stringent operational requirements, networks may involve/suit a local, national, regional, or global scope, and harbor vulnerabilities to cutoffs and bottlenecks. Demand, finally, can be strong globally or concentrated in a few countries or regions while prices and elasticity may be high or not. The second, intermediary, step investigates the associated business models, (international) energy markets, trade flows, and welfare effects of an energy system (within and among countries). I distinguish between different business cases; market structures and types of contracting; the volume, nature, routes, and distance of trade; and the distribution of costs and benefits respectively.

Source:   Adapted from Scholten 2018b, p. 17.

Figure 1.1  Analytical framework for the geopolitics of renewable energy

12  Handbook on the geopolitics of the energy transition

The third step studies the dependent variable, the stability of interstate energy relations. Here I first assess the strategic reality facing a country or region as caused by an energy system, excluding all else. I look at the energy security situation, with energy security defined as an “uninterruptible supply of energy, in terms of quantities required to meet demand at affordable prices” (World Energy Council, 2008, p. 1), using various dimensions and indicators (e.g., Sovacool & Mukherjee, 2011; Winzer, 2012; Chester, 2010; Kruyt et al., 2009). In addition, I assess the industrial opportunities and risks (in terms of jobs, revenues, resources, and knowhow) that an energy system entails. Both assessments include the policy options available to address possible challenges, irrespective of countries’ power capabilities. Finally, I analyze the patterns of cooperation and conflict that result from the characteristics of an energy system and its associated strategic reality. The patterns are defined in terms of stability: the nature, frequency, and scale of cooperation (e.g., long term or short term, via markets or bilateral contracts) and conflict (diplomatic, legal–institutional, political–economic pressure and sanctions, military intervention). Stability itself is defined as the absence of conflict, where energy is traded as a regular commodity on the one hand or as a highly politicized good on the other. The final step links the previous steps together and reflects on the relationship under study in light of contextual factors, with the economic middle step clarifying the causality between geotechnical characteristics and stability. It is here where the influence of contextual variables such as power capabilities and/or historical patterns of cooperation and conflict on the relationship under study is scrutinized. What can be attributed to an energy system’s characteristics and what to other variables? In all, the framework catches the relationship in a simple yet effective manner and structures a line of reasoning. For a more thorough, yet older and slightly different operationalization, see Scholten (2018b, pp. 12–18). The framework was made with empirical studies in mind but offers inroads for theorization. While utilizing it, I have generally and implicitly worked with the hypothesis that the more an energy system’s characteristics (of sources, generation, distribution, or demand) challenge energy security and industrial strategy, the more conflict we may expect in energy relations. The underlying logic is that the more energy security challenges and industrial gains an energy system inherently possesses due to its characteristics, the more aggressive behavior or strategies will be considered warranted, justified, or necessary by states in the pursuit of their goals, leading to more instability. What is different here from the empirical application of the framework is that patterns of interaction are derived from the strategic reality (the energy security situation and industrial opportunities and risks). Patterns are hypothetical as behavior is assumed, not empirically observed. Put differently, while the framework looks at both the board and play of the game, the hypothesis treats the ‘play’ as the result of the board, much like economists see market outcomes as the result of market structure, given certain actor behavior. For the sake of theorization, it is meanwhile assumed that all countries, in principle, have access to the same policy options (states are ‘like units’ (Waltz, 1979)), while differences in power/capabilities and other things like historic patterns of interaction are relegated to contextual variables. In this way, we focus on the core relationship between the geotechnical characteristics of energy systems and their impact on the stability of interstate energy relations, all other things being equal or contextual. While such a hypothesis is very broad and basic, it does present a convenient starting point and immediately presents a number of avenues for further research. First, investigating the hypothesis requires expressing the geotechnical characteristics of energy system components in terms of energy security dimensions and industrial opportunities

Introduction 

13

and link those to stability, categorizing them from challenging stability to not, i.e., from leading to politicized relations to the trade of energy as a ‘mere’ commodity. If we look at energy security, we see that dimensions such as geological availability and political accessibility are directly related to characteristics of sources. For example, when sources are finite, scarce, and concentrated, they are more challenging to security of supply than when they are renewable, abundant, and widespread. In this sense, depending on the energy system, source characteristics make it either highly politicized, a ‘mere’ commodity, or something in between. Similarly, there is a difference between distributing oil via tankers (easy storage, compartmentalizable infrastructure parts) or solar power via an electricity grid (instantaneous balancing and tightly interconnected networks). Identifying and operationalizing the extremes and intermediate categories in this fashion for the characteristics of system components (sources, generation, distribution, demand) enables us to come to a continuum along which energy systems can be ranked. Such a hypothetical ‘stability score’, in turn, would represent a prediction of an energy systems’ propensity for conflict based on its geotechnical characteristics. Second, the different components of energy systems, i.e., sources, generation, distribution, and demand, may have different ‘weights’ in determining the overall stability of energy relations. If oil, for example, would score bad in terms of sources due to its scarce and concentrated nature, but good on other components, would that be necessarily the same in terms of stability when compared to a solar PV-based system that would score bad in terms of distribution due to its electric nature, but good on other components? As the answer is likely to be ‘probably not’, we need to address the decisiveness of components. Are sources, generation, distribution, or demand characteristics more decisive in determining stability of energy relations? Answering this question would be especially valuable for predictions about the geopolitical implications of renewable energy. Third, and related to the above, since we are looking at geographic and technical characteristics of these components, it will be interesting to see whether geographic considerations outweigh technical ones or vice versa. I find myself frequently assuming that geographical features of energy systems such as the locations of sources and demand are more fixed, given, or hard to change than technical ones such as network facilities and generation technologies, which are more flexible, adaptable, or alterable by human effort. In many ways, geography is a systemic given and/or restraining factor that sets the broader stage within which technology operates as an enabling factor subject to human agency. In this sense, technology can alleviate geography, but geography does not alleviate technology. Such a guiding logic of ‘geography trumps technology’ is, however, more of a gut feeling than anything else. Next to that, the simplicity of that statement hides a very complex reality. Energy system characteristics pertaining to sources, generation, distribution, and demand involve different mixes of geographical and technical elements, both of which can be more or less fixed and hard to change. Still, to me it appears that source and demand characteristics are mostly geographic in nature, whereas generation and distribution are more technical. In the end, this framework and hypothesis are of course just one of many possibilities to move forward. Whatever the route chosen, the challenge that remains for testing hypotheses will be contextual variables. The hypothesis is set up in a convenient abstract vacuum taking only the geographical and technical characteristics of energy systems as point of departure. It is obvious that reality is far more complex and that contextual factors interfere and mediate the causal link between these characteristics and the stability of interstate energy relations. A prominent one is the role of power differences between countries in general and great power

14  Handbook on the geopolitics of the energy transition

rivalry in particular. The US simply has more options to handle any energy security challenges than Luxemburg. Power differences have proven themselves to be a major explanatory variable in international relations, so why should they not also be a, or even the, dominant factor in interstate energy relations? From Cases to Patterns The chapters that follow show that the energy transition poses different opportunities and challenges for different technologies and countries at different stages of the transition. To better understand and handle the geopolitical implications of the energy transition we need to make an active effort to move from fragmented cases and energy security strategies to analyses of patterns of interactions and governance of issues. A number of suggestions in this regard: Looking at our expectations, we can see some more clearly than others. Such matters as scarce materials, industrial competition, stranded assets, efficiency measures, and electricity and hydrogen trade have been clearly visible considerations in the strategies of states. The effects of decentralized generation, energy justice issues, abundance of renewables, and other sustainability options have been less so. This raises the questions whether they are less relevant and/or whether they simply will emerge later in the transition. I have always assumed the latter and as such pointed to an area of research that deserves more attention: what are the different implications of the various stages of the transition? Imagining a world fueled 100% by renewable energy makes a thought experiment simple (Scholten & Bosman, 2016), but negates what it means to have worlds of 20/80%, 50/50%, 80/20% of renewable and fossil energy respectively (see e.g., Scholten & Bosman, 2018). Moreover, if past energy transitions are something to go by, then renewables will be added to fossil fuels, rather than replacing them in the coming decades. We may well live in a world with a 50/50 share of renewable and fossil sources for quite a while, though hopefully with sufficient CCS or other means to make fossil fuels less damaging to the climate. It also would be interesting to place our expectations within scenarios that represent different contextual settings (e.g., Goldthau et al., 2019; Correlje & van der Linde, 2006). How do our expectations differ in settings of strong or weak great power rivalry, different shares of hydrogen vs electricity in the mix, or a strong growth of decentral generation as opposed to central facilities? And what if nuclear fusion or cheap electricity storage have their breakthrough? This way, we might be able to say more about longer term effects under different conditions. Concerning technologies, it is interesting to see which renewable energy system or decarbonization technology is the most disruptive in its end result and transition process. When it comes to the end result, solar power comes to mind, with its wide availability, scalability, and electric nature, allowing for decentral generation like no other. It replaces the coal- and gas-fired power plants of big companies and associated transport corridors and bottlenecks. Decarbonization policies might do the least as they clean the fossil industry, not replace it. Wind and biomass are probably stuck in the middle. When it comes to the disruptive potential of transition dynamics, the literature on socio-technical transitions (Geels, 2004; Verbong & Geels, 2007) is well suited for analyzing the likely transition pattern resulting from an increase of solar energy in energy systems and markets. While that framework is generally applied to national contexts, with a bit of effort, one might develop a similar framework for global transitions. The landscape level, for example, would then be replaced by the structure

Introduction 

15

of the global political economy and contain systemic features as identified by International Relations theory like polarity and its anarchic nature, next to geographic features and physical limits of this planet. The regime level would replace the domestic actors like policy makers, companies, etc. with countries, international organizations, multinational companies, etc. that together constitute the key actors in global markets and decision making. The niche level could then refer to technological and country internal developments that might, if big enough, affect regional and global developments. Things are certainly not as easy to frame as depicted here, but it is nonetheless an interesting avenue for further research. Also, that literature harbors interesting lessons about what can be done in different stages of the transition to facilitate change from one regime to the next, bringing both an awareness of the phases of the transition to consider as well as governance advice. Regarding countries, the diversity of experiences and strategies makes it difficult to generalize, identify patterns, and advise. To make sense of the complexity of future country interactions and strategies, I have generally divided countries into four rough categories. Those that move from being fossil fuel (technology) exporters to renewable energy (technology) exporters; those that move from being fossil fuel (technology) exporters to renewable energy (technology) importers; those that move from being fossil fuel (technology) importers to renewable energy (technology) exporters; and those that move from being fossil fuel (technology) importers to renewable energy (technology) importers. The idea behind this classification is that you either earn money from or pay for energy (technologies) and related materials. In this sense, current net importing countries that manage to become net exporters during or due to the energy transition are in a win–win situation. The opposite in a lose–lose situation. The others win some and lose some. Such a classification opens up a more stylized view of how countries, as part of one of these types, interact with each other or should strategize vis-àvis another. Future renewable energy (technology) exporters would, for example, be expected to compete over markets, whereas future exporters and importers might be good matches for trade. Countries need to ask themselves how they should handle diminishing trade relations with established partners, the development of relations with new energy partners, or handle changing relationships in light of the four categories. Moreover, they should ask themselves whether there is a need to trade for more strategic reasons. Even if it turns out that the EU might not need Moroccan solar power to secure its energy needs, can it risk Chinese investments and influence so close to its border? The classification also helps us understand why some countries might be more enthusiastic about the energy transition than others. While all benefit from less air pollution and limiting climate change, the chances for improving energy security and industrial opportunities differ (Mata Perez et al., 2019). This begs a question about agency as well; to what extent can countries develop and maneuver themselves to become ‘winners’? When it comes to strategies and governance, emphasis in studies tends to be on how to win/gain as a country or company, not on how to manage potential strife. A key question for future research should, in my opinion, be how to govern relations in an increasingly multipolar world. While our expectations foresee less trouble with renewable energy than for fossil fuels, issues such as scarce materials, industrial competition, and access to markets are for example obvious points to manage. How to develop and enforce agreements in a setting of increasing great power rivalry? Will this be a world of trade blocks with their own rules instead of global markets? In addition, how to get everyone on board; is sharing capital and know-how agreeable, and under which conditions? Should international organizations such as IEA, OPEC,

16  Handbook on the geopolitics of the energy transition

UN, or IRENA start to mediate actively between winners and losers? Energy justice, political–economic, and governance literature offers many theoretical solutions to such challenges. Alternatively, serious gaming simulates the decisions that countries face when managing the energy transition at home and abroad. Policy makers learn how to balance national interests with collective interests in climate change prevention. Still, both have so far been ineffective in sufficiently changing global political practice and lowering CO2 levels. One can of course also hope for technology to save the day, but if humans don’t learn to adjust their behavior, we are probably merely postponing the inevitable. Hence, it is here where the most difficult challenge lies with regard to capitalizing on any understanding about the geopolitical implications of the energy transition for the greater good.

REFERENCES Aklin, M., & Urpelainen, J. (2018). Renewables: The Politics of a Global Energy Transition. Cambridge: The MIT Press. Bridge, G., Bouzarovski, S., Bradshaw, M., & Eyre, N. (2013). Geographies of energy transition: Space, place and the low-carbon economy. Energy Policy, 53, 331–340. Chester, L. (2010). Conceptualising energy security and making explicit its polysemic nature. Energy Policy, 38, 887–895. Correlje, A., & van der Linde, C. (2006). Energy supply security and geopolitics: A European perspective. Energy Policy, 34, 532–543. Criekemans, D. (2011). The geopolitics of renewable energy: Different or similar to the geopolitics of conventional energy? Conference paper. ISA Annual Convention 2011, 16–19 March 2011, Montréal, Canada. Dalby, S. (2013). The geopolitics of climate change. Political Geography, 37, 38–47. Dodds, K. (2005). Global Geopolitics. A Critical Introduction. New York: Routledge. Deudney, D. H. (1989). Global Geopolitics: A Reconstruction, Interpretation, and Evaluation of Materialist World Order Theories of the Late Nineteenth and Twentieth Centuries. Princeton University Press. European Commission (EC). (2015). EC on Twitter, 16 June 2015. European Commission EU on Twitter: “LIVE 9hCET @MAC_europa: Renewable energy progress report #EnergyUnion #EUSEW15 #RESolution http://t.co/cAWAOVeEpe http://t.co/p9c3JbAtUg” / Twitter Escribano, G. (2018). The geopolitics of renewable and electricity cooperation between Morocco and Spain. Mediterranean Politics. https://doi​.org​/10​.1080​/13629395​.2018​.1443772 Fischhendler, I., Herman, L., & Anderman, J. (2016). The geopolitics of cross-border electricity grids: The Israeli-Arab case. Energy Policy, 98, 533–543. Geels, F. (2004). From sectoral systems of innovation to socio-technical systems: Insights about dynamics and change from sociology and institutional theory. Research Policy, 33(6–7), 897–920. Goldthau, A., Westphal, K., Bazilian, M., & Bradshaw, M. (2019). How the energy transition will reshape geopolitics. Nature, 569, 29–31. Hache, E. (2016). La geopolitique des energies renouvelables: amelioration de la securite energetique et / ou nouvelles dependances? (The geopolitics of renewables: Does more energy security come with more energy dependencies?). Revue Internationale et Strategique, 1(101), 36–46. Hafner, M., & Tagliapietra, S. (Eds.). (2020). The Geopolitics of the Global Energy Transition. Cham: Springer Nature. Högselius, P. (2019). Energy and Geopolitics. New York: Routledge. Hook, L., & Sanderson, H. (2021, February 4). How the race for renewable energy is reshaping global politics. Financial Times. How the race for renewable energy is reshaping global politics | Financial Times (ft​.c​om) International Energy Agency (IEA). (2017). World energy outlook 2017. www​.iea​.org International Energy Agency (IEA). (2022). World energy outlook 2022. www​.iea​.org

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17

International Renewable Energy Agency (IRENA). (2018). Renewable Cost Database. Statistics Time Series (irena​.o​rg) International Renewable Energy Agency (IRENA). (2019). A New World – The Geopolitics of the Energy Transformation. Report by the Global Commission on the Geopolitics of Energy Transformation. Abu Dhabi: IRENA. International Renewable Energy Agency (IRENA). (2020). Renewable Energy Statistics 2020. IRENA​​ _Rene​​wable​​_ Ener​​gy​_ St​​atist​​ics​_2​​​020​.p​​df International Renewable Energy Agency (IRENA). (2021). IRENA Website (March 2021). www​.irena​ .org Johansson, B. (2013). Security aspects of future renewable energy systems – A short overview. Energy, 61, 598–605. Kuzemko, C., Bradshaw, M., Bridge, G., Goldthau, A., Jewell, J., Overland, I., Scholten, D., Van de Graaf, T., & Westphal, K. (2020). COVID-19 and the politics of sustainable energy transitions. Energy Research and Social Science, 68, 101685. Kruyt, B., van Vuuren, D., de Vries, H., & Groenenberg, H. (2009). Indicators for energy security. Energy Policy, 37, 2166–2181. Lewin, K. (1943). Psychology and the process of group living. Journal of Social Psychology, 17, 113– 131. Citation taken from K. Weick, Theory and practice in the real world, in Tsoukas et al. (eds.), The Oxford Handbook of Organization Theory. Oxford University Press, 2003. Mata Pérez, M. E., Scholten, D., & Smith Stegen, K. (2019). The multi-speed energy transition in Europe: Opportunities and challenges for EU energy security. Energy Strategy Reviews, 26, 100415. O’Sullivan, M., Overland, I., & Sandalow, D. (2017). The geopolitics of renewable energy. Working paper. Columbia University, Harvard Kennedy School, and Norwegian institute of International Affairs. Oxford Dictionary. (2012). Definition of geopolitics. http://oxforddictionaries​.com​/definition/geopolitics (accessed January 31, 2012). Paltsev, S. (2016). The complicated geopolitics of renewable energy. Bulleting of the Atomic Sciences, 72(6), 390–395. Proedrou, F. (2018). Energy Policy and Security under Climate Change. Palgrave Macmillan. Renewable Energy Policy Network for the 21st Century (REN21). (2020). Renewables 2020 Global status report. Sattich, T., Freeman, D., Scholten, D., & Yan, S. (2021). Renewable energy in EU-China relations: Policy interdependence and its geopolitical implications. Energy Policy, 156, 112456. Scholten, D. (Ed.). (2018a). The Geopolitics of Renewables. Cham: Springer Nature. Scholten, D. (2018b). The geopolitics of renewables – An introduction and expectations. In D. Scholten (Ed.), The Geopolitics of Renewables. Cham: Springer Nature. Scholten, D., & Bosman, R. (2013). The geopolitics of renewables; A mere shift or landslide in energy dependencies? Conference paper. PoliticologenEtmaal 30–31 May 2013, Ghent, Belgium. Scholten, D., & Bosman, R. (2016). The geopolitics of renewables; exploring the political implications of renewable energy systems. Technological Forecasting and Social Change, 103, 273–283. Scholten, D., & Bosman, R. (2018). The strategic realities of the emerging energy game – Conclusion and reflection. In D. Scholten (Ed.), The Geopolitics of Renewables. Cham: Springer Nature. Scholten, D., & Künneke, R. (2016). Towards the comprehensive design of energy infrastructures. Sustainability, 8(12), 1–24. Scholten, D., Criekemans, D., & van de Graaf, T. (2020a). An energy transition amidst great power rivalry. Journal of International Affairs, 73(1), 195–203. Scholten, D., Bazilian, M., Overland, I., & Westphal, K. (2020b). The geopolitics of renewables: New board, new game. Energy Policy, 138, 111059. Smith Stegen, K. (2018). Redrawing the geopolitical map: International relations and renewable energies. In D. Scholten (Ed.), The Geopolitics of Renewables. Cham: Springer Nature. Sovacool, B., & Mukherjee, I. (2011). Conceptualizing and measuring energy security: A synthesized approach. Energy, 36, 5343–5355. Stoeglehner, G., Niemetz, N., & Kettl, K.-H. (2011). Spatial dimensions of sustainable energy systems: New visions for integrated spatial and energy planning. Energy, Sustainability and Society, 1(2).

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Stratfor. (2018). How renewable energy will change geopolitics. https://worldview​.stratfor​.com​/article​/ how​-renewable​-energy​-will​-change​-geopolitics Thompson, H. (2022, March 11). The geopolitics of fossil fuels and renewables reshape the world. Nature, 603, 364. The geopolitics of fossil fuels and renewables reshape the world (nature​.c​om) Tricks, H. (2018, March 15). The new power superpowers; clean power is shaking up the global geopolitics of energy. The Economist. Vakulchuk, R., Overland, I., & Scholten, D. (2020). Renewable energy and geopolitics: Literature review. Renewable and Sustainable Energy Reviews, 122, 109547. Van de Graaf, T., & Verbruggen, A. (2015). The oil endgame: Strategies of oil exporters in a carbonconstrained world. Environmental Science and Policy, 54, 456–462. Van de Graaf, T., & Sovacool, B. (2020). Global Energy Politics. Cambridge: Polity. ISBN: 9781509530489. Van de Graaf, T., Overland, I., Scholten, D., & Westphal, K. (2020). The new oil? The geopolitics and international governance of hydrogen. Energy Research and Social Science, 70, 101667. Verbong, G., & Geels, F. (2007). The ongoing energy transition: Lessons from a socio-technical, multilevel analysis of the Dutch electricity system (1960–2004). Energy Policy, 35, 1025–1037. Waltz, K. (1979). Theory of International Relations. Long Grove: Waveland Press. Winzer, C. (2012). Conceptualizing energy security. Energy Policy, 46, 36–48. World Energy Council. (2008). Europe’s Vulnerability to Energy Crisis, Executive Summary. http:// www​.worldenergy​.org​/publications​/2008​/europes​-vulnerability​-to​-energy​-crisis World Meteorological Organization. (2022, November 6). Press Release Number:  06112022. Eight warmest years on record witness upsurge in climate change impacts | World Meteorological Organization (wmo​.i​nt) Yergin, D. (1991). The Prize: The Epic Quest for Oil, Money, and Power. New York: Simon & Schuster. Yergin, D. (2011). The Quest: Energy, Security, and the Remaking of the Modern World. Penguin Press. Yergin, D. (2021). The New Map: Energy, Climate, and the Clash of Nations. Penguin Books.

PART I ENERGY GEOPOLITICS AND THE ENERGY TRANSITION

2. Geopolitics, geoeconomics, and energy security in an age of transition towards renewables David Criekemans

1. INTRODUCTION This chapter, together with the next, lays the groundwork and necessary background for a better understanding and analysis. What exactly are ‘geopolitics’, ‘geopolitics of energy’, ‘geoeconomics’ or ‘energy security’? Answers to these fundamental conceptual and theoretical questions will help us in the following parts of this book to better grasp the complexity of the geopolitics of energy transition. And interestingly, humanity has been here before, since this is not the first time that an energy transition has changed global politics, economics and security. When one takes a long view at the ontological assumptions of many schools of thought in academic fields such as Geopolitics and International Relations, one realises that most of the foundational academic work conducted in each of them emerged in a world of centrally statecontrolled, fossil energy sources such as coal, oil and later natural gas. That world gradually took shape in the latter part of the nineteenth century and speeded up into the twentieth century. One could say that academic work in this long time period has been ‘fuelled’ by the ‘energy building blocks’ of each phase of human development in this new era. In many ways the energy regime of the Late Modern Age coincided with the consolidation of the national state system on the world stage. This process was clearly visible during Europe’s industrialisation process. In the German territories, the customs union or ‘Zollverein’ of 1834 created the conditions under which capital, markets and politics were ‘optimised’ into a much bigger territorial entity, what would later morph into an integrated German state from 1871 onwards. Similar processes arose, for instance, in Belgium (1830), France (1848– 1852), Italy (1832–1871), etc. Competition among European territorial state-entities intensified this process, with Great Britain taking the lead. Coal and steel, together with technological innovation, became the drivers of industrialisation. As Osterhammel states, “Energy was the leitmotif of the whole [nineteenth] century”, with coal and later oil playing a major role (Osterhammel, 2014, pp. 637–672). Moreover, the urgent need for ever more natural sources and access to markets morphed capitalism into a higher gear in the last decades of the nineteenth century; imperialism (Wesseling, 1991, 2003; Hobsbawm, 1994). Competition between major European powers became global. This sense of ‘geopolitical struggle’ was also reflected in the ontological foundations and early emanation of such fields as Political Geography (starting from 1897 with Friedrich Ratzel in Germany) and Geopolitics (starting from 1899 with Rudolf Kjellén in Sweden) (Criekemans, 2007, 2022c). Whereas Charles Darwin had revolutionised the natural sciences via his idea of ‘Survival of the Fittest’ in the natural world (Stone, 2021, p. 277), thinkers such as Ratzel and Kjellén suggested something similar was going on in political geography and geopolitical relations around the world. Hence a ‘social Darwinism’ amongst ‘consolidating’ states vying for access to resources, markets and ultimately power was shaping the geopolitics of the Late Modern Age (Criekemans, 2022c, 20

Geopolitics, geoeconomics, and energy security  21

pp. 103–104). Moreover, it was welcomed, indeed ‘championed’, in national politics by socialists and liberals throughout Europe (Hobsbawm, 1997, p. 305). The ‘energy transition’ of the nineteenth century was essential in the formation of a new energy geopolitics and security. That process was further accelerated by an energy transition from coal to oil in the twentieth century, again affecting the geopolitical building blocks of that new world, as well as the ontological assumptions of new schools of thought in Geopolitics. The British Empire famously led the energy transition from coal to oil, with the British First Lord of the Admiralty Sir Winston Churchill ordering, from 1912 onwards, a fundamental overhaul of the British fleet (Yergin, 1992, p. 12). In the first part of the twentieth century, the French, Germans and British competed with each other over access to oil found in the Middle East, in which railways played a major role (Clark, 2012, pp. 337–338). During the Second World War, access to oil resources proved crucial in conducting major military operations. Much of the wealth of the post-1945 ‘superstates’ of the twentieth century was based upon (access to) oil. Both the United States of America and the Soviet Union built their own ‘power position’ upon this source of energy – first nationally, later internationally (Evans, 2017, pp. 298–299). Whether one analyses Nazi Germany or Imperial Japan during the Second World War, or the United States of America and the Soviet Union during the Cold War, there always was a close interconnection between the ‘energy regime’ of a specific era (coal, oil) and the actual ‘power position’ of specific countries and territories at a given time. Not only did the location of those key resources at a specific time play a key role, what was also essential was whether states as the main geopolitical actors of that epoch were able to master the technological know-how involved in order to seize, transport and utilise these sources of energy. They also had to develop strategies towards other faraway places in the world in order to solidify their position in the new energy regime that became the foundation of the international relations (IR) of that era. The energy regime of the twentieth century thus formed the building blocks of a stateoriented geopolitical order, in which key states such as the United States of America and the Soviet Union now were becoming the major power centres. Moreover, energy played a role in Washington’s ultimate victory over the Soviet Union at the end of the Cold War; after the oil crises of the 1970s, US President Ronald Reagan together with the British Prime Minister Margaret Thatcher realised that they had to encourage their energy multinationals to seek out new sources of oil around the world. The increased global supply that emanated from this Anglo-American policy initiative indirectly curbed the power position of the Soviet Union and OPEC countries. Without such a geopolitical strategy in the energy domain, the ‘victory’ of the West and capitalist democracies in 1989/1991, would perhaps not have materialised. The definitions of ‘geopolitics’ and the ‘geopolitics of energy’ used by academics in the Cold War were affected by what Daniel Yergin, by analogy to Churchill, called “the epic quest for oil, money and power” (Yergin, 1992). Whereas ‘energy security’ had already been discussed in terms of the wake of the oil crises of the 1970s, the Gulf Crisis of 1991 in which Saddam Hussein’s Iraq was pushed out of Kuwait, showed that ‘security capacity’ would henceforth play a major role in ‘the race between demand growth and production capacity’. Yergin already stated in 1992 that a “greater utilization of natural gas” and “solving environmental problems” would henceforth play a major role to meet the requirements of security. This sparked new debate in which ‘innovation’ and technological breakthroughs would increasingly take centre stage, not only in terms of renewable energies but also in energy efficiency (Yergin, 1992, p. 786).

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Around 2000, renewable energy in all its forms and dimensions constituted just a fraction of the total global energy mix. But through technological breakthroughs, political voluntarism in pioneering countries for a ‘green sector’ such as Germany and a gradual rising interest from investors, a new geopolitics of renewables very slowly but surely rose. During the summer of 2008, a barrel (159 litres) of London’s Brent North Sea oil jumped to as high as US$147.50. In hindsight this constituted the last tipping point that ignited the ‘Great Recession’ in the United States and around the world. It thus was not a coincidence that around 2010, a more consistent public debate and gradual academic body of literature started to emerge on the geopolitics of renewable energy or renewables. The question was what geopolitical impact an energy transition towards renewables could entail. Much was left to speculation as the percentage of renewable energy in the global energy mix was still too low to matter. A real systemic revolution, however, was expected from the mid-2020s onwards into the 2030s. Moreover, there was the realisation by some that the ‘geopolitics of renewable energy’ could not be seen separately from the ‘geopolitics of energy transition’. This suggested the need for more systemic thinking (Criekemans, 2011). As a paradox, some predicted that the ‘geopolitics of natural gas’ would become temporarily more important as a ‘bridge fuel’ (Grigas, 2017), or that there would be ‘winners and losers’ reconfiguring into the building blocks of a new geopolitical order (Criekemans, 2018; Scholten et  al., 2018, 2020). In his latest book The New Map. Energy, Climate, and the Clash of Nations, Yergin shows the shifting balance and rising tensions among nations today, in which global supply and demand flows over territorial locations, renewables and climate politics ‘rebalance’ geopolitics around the world via an empirically rich analysis (Yergin, 2020). However, there still remains a quite fundamental hurdle in this emerging literature on the ‘geopolitics of energy transition’. As Vakulchuk, Overland and Scholten underline, there is an almost systematic failure to define what ‘geopolitics’ means, including a lack of theoretisation and the analytical frameworks to handle the complexity of the topic (Vakulchuk et al., 2020). What does ‘energy geopolitics’ entail, how is it related to ‘energy security’? Moreover, how does the literature of ‘geoeconomics’ fit into this broader conceptual picture? Answers to these questions can help us both in our conceptual grounding and ontological theoretical assumptions as well as applying such concepts and frameworks to comparative empirical studies. Rightly so, Vakulchuk, Overland and Scholten, in addition argue that there exists only a limited use of established forecasting, scenario-building and foresight methodologies in the available literature. ‘Creating’ more conceptual clarity at the level of basic concepts in (energy) geopolitics, geoeconomics and security will also contribute to that broader academic endeavour to investigate what an energy transition towards renewables entails. Some have argued that the ‘DNA’ of renewables is much more decentralised (Rifkin, 2011), and that this might foreshadow a world in which sub-state actors such as cities and regions could also play a role via a new ‘geotechnical ensemble’ (Criekemans, 2011, 2022b). As we approach the mid-2020s, the world is now undergoing a much more systemic energy transition towards a renewable energy future, a process deepening as 2050 nears. Although the upscaling of renewables will be impressive, seen from a global perspective fossil energy will still be around after 2050. The renewable energy transition, made more pressing by climate change, has a long road ahead. Hurdles are cluttering the path forward; environmental, technological, political, sociological, etc. This may even force us to revisit some of the very concepts of ‘energy geopolitics’ and ‘energy security’ in the future. Some, for instance, conceptualise a ‘new global order’ via extrapolating local schemes of sustainability into ‘confederal

Geopolitics, geoeconomics, and energy security  23

municipalism’ (Laferrière & Stoett, 1999, p. 173). This is just one strand of ecological thought yet to be tested by time. New ideas may in turn affect the basic ontological assumptions of (future) theories in Geopolitics and International Relations. As scholarly ‘children’ of a world dominated by fossil energy regimes, and their schools of thought being products of subsequent Zeitgeists, they themselves may have to be partly re-imagined. This chapter hence constitutes an explorative conceptual contribution, upon which the subsequent chapters in this book are inspired and ‘anchored’. It is structured as follows: •

• • •

First, we briefly investigate how geopolitical schools of thought in Geopolitics and International Relations as academic fields each reflect(ed) a specific geopolitical Zeitgeist. Geopolitics is taking centre stage in this analysis, and a more neutral definition is formulated as the basis for a geopolitical framework for analysis. Second, we investigate the (scholarly evolution of the) concepts of both ‘energy geopolitics’ and ‘energy security’. Third, we highlight the literature of ‘geoeconomics’, its various related components and their unique selling proposition or added value in a geopolitical analysis of energy transition. Finally, we reflect upon energy geopolitics, geoeconomics and energy security in a renewable energy world. To what degree do these concepts help us to understand the current energy transition and what conceptual or theoretical hurdles lie beyond the academic horizon?

2. HOW GEOPOLITICS AND INTERNATIONAL RELATIONS REFLECTED SPECIFIC GEOPOLITICAL ZEITGEISTS In the introduction of this chapter, it was stated that one must not forget that the fields of Geopolitics and International Relations both emerged in a world of centrally state-controlled, fossil energy sources such as coal, oil and later natural gas. The energy regime of the world has undergone several changes since the end of the nineteenth century. This has affected the very nature of power and its energy base, and has affected how academia looks at power, power projection and power distribution in the world. It also has strengthened those very national states and even has produced some ‘superpowers’. The energetic base for this was (access to) energy resources combined with technology. But as this has changed in a world in which subsequently coal, oil and/or natural gas were and are the major forces of energy (transition), so too it can be expected that this may change again in the future. Hence, if we try to define Geopolitics and its relation to International Relations, it remains important to keep in mind that there are many different schools of thought in each field. A comprehensive overview is offered in the recent book, Geopolitics and International Relations. Grounding World Politics Anew (Criekemans, 2022a). In this particular chapter it is interesting to briefly explore the energy foundations of some of these schools of thought, after which we come with a more neutral all-encompassing definition of geopolitics. Interesting to note is that Geopolitics as a body of academic endeavour is exactly 20 years older than International Relations. Geopolitics was created as a field of science around 1899 by the Swedish political geographer Rudolf Kjellén. He understood the relevance of territorially embedded factors. Geopolitics was devised by Kjellén as an instrument which could help the state in steering a safe course for the country in a world that was becoming more and more competitive. Geopolitics was thus designed as an academic body of literature which applied

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the insights of Political Geography to the European state system. Kjellén claimed the physical character, size and relative location of the territory of the state were central to its power position in the international system (Holdar, 1992, p. 319). From the very beginning, the location of natural resources above and beneath the ground, or the lack thereof, was already considered to be essential in order to understand the geopolitical context. However, this fin de siècle geopolitical literature only saw the state as the most relevant actor. Inspired by the work of Friedrich Ratzel, the state was likened to a living organism locked in a social Darwinist struggle of the fittest (Ratzel, 1896, 1897; Ratzel et al., 1969 [1896]). These ontological assumptions led to what in International Relations would later grow into the school of thought of Realism, although including also other ontological variables. Kjellén underlined that states as ‘living organisms’ in relation to one another spoke a wholly different language: the concept of ‘power’ stood central in this. In their role as ‘powers’, national states should be understood as geographical entities (Thermænius, 1938, p. 166). Kjellén’s analysis in 1914 was that he believed that the future would lie with those land powers that succeeded in achieving autarky within their own territory (Kjellén, 1924; Kjellén, 1944 [1924]). The railways over land would considerably reinforce the capacity for “internal communication and power concentration” (Holdar, 1992, p. 314; Herwig, 1999, p. 220, p. 226; Ó Tuathail, 2001, p. 21). Eventually, only a few world powers would survive (Dolman, 2002, p. 51). Kjellén suggested in 1897 that in the long run only three big continental political and economic zones would remain: a PanAmerican system under the leadership of the United States of America, a Middle-European system (possibly even a Eurafrican system) under the leadership of Germany and an Eastern system under the leadership of Japan (Holdar, 1992, p. 314). The British geographer Halford John Mackinder echoed some of the thinking of Kjellén. His ‘New Geography’ wanted to offer a comprehensive framework to place human events in a broader perspective (Ó Tuathail, 1996, pp. 86–88), a conceptual bridge between the natural and social sciences (Heffernan, 1998, pp. 63–66) that tried to provide an answer to the problem that ‘power’ had become more difficult to measure in an industrialising world in which the ‘natural seats of power’ also were affected by the introduction of new technologies. Mackinder believed that in the post-Columbian epoch, the dominance of sea power (e.g., Great Britain) could come to an end as a result of a combination of new technologies (in particular railways) and demographic trends (to be more concrete, Russia’s growing population). He predicted that the area which later would turn out to be the Soviet Union, constituted ‘the geographical pivot of history’, a potential new world power which could eventually force the other naval powers (especially Britain) out of their positions in e.g., Asia. Amongst others, that ‘pivot area’ (1904) or ‘heartland’ (1919, 1943) was endowed with vast natural resources which could now be extracted via railways and ‘man power’ (read: a growing human geographical demography). Russia would become a power, potentially challenging the British Empire – first in Asia, later in Central Europe (Mackinder, 1887; Mackinder, 1919; Mackinder, 1943; Mackinder, 1994 [1904]). The American naval historian and Captain (later Rear Admiral) Alfred Thayer Mahan can be considered as one of the fathers of American geostrategic thinking. Social Darwinism constituted an inherent dimension in Mahan’s thinking: he conceptualised IR as a dynamic condition of a continuing battle between nations in which acquiring ‘sea power’ is decisive (Sloan, 1988, p. 90; Raffestin, Lopreno et  al., 1995, p. 104, p. 107). Driven by social Darwinist thinking, Mahan believed (in comparable neo-Lamarckian terms to Ratzel) that a nation should expand territorially, or else be ruined (Sprout & Sprout, 1944 [1939], p. 214;

Geopolitics, geoeconomics, and energy security  25

Criekemans, 2022c, p. 105). But Mahan also included the changing power base of the world into his models; the switch from sailing ships to coal as the basis for a new to-be-built US Navy with new ships from the Industrial Age. Such US leapfrogging meant that every 2,000 nautical miles so-called ‘coaling stations’ became essential for Navy power projection. In a world without free trade, one of the future roles of the Navy would be to protect trade overseas, in particular with Asia where Japan constituted a potential competitor. Mahan deemed it crucial that the United States would need to possess some of the strategic islands in the Pacific, which constituted a highway to the future markets in Asia, with coaling stations built along the way (Mahan, 1890, 1898, 1900, 1957 [1890]). These authors in Classical Geopolitics thus believed in a social Darwinist world of competition, whereby material forms of power including energy sources and technology would play a major role in defending both the geoeconomic and geostrategic interests of nations (Criekemans, 2022). There are some interesting indications that this literature also affected the thinking in more realist schools of thought later in the 1930s and 1940s, both directly and indirectly (Criekemans, 2007). Also in Realist strands of theory within IR, the material capabilities of states including their resource bases or abilities to project power in order to get access to (power) resources played a role. Later scholars such as Harold and Margaret Sprout were more interested in the uneven distribution of physical and human resources including energy, and the potential for technologies to overcome some of these problems (Criekemans, 2022c, p. 125; Sprout & Sprout, 1971 [1965]). Next to Classical Geopolitics, many forget that a ‘Possibilistic Geopolitics’ also existed, as developed and exercised by the French geographers during the interbellum period. In this approach, the environment is conceived as being both ‘constraining’ and ‘enabling’, and man is considered to be able to make choices (Vidal de la Blache, 1898, 1926). The environment provides a number of parameters or limitations to the whole spectrum of foreign policy actions which can be undertaken by an entity (‘constraining’), but the environment also provides a political entity with a number of important opportunities (Sprout, 1971 [1965], p. 83). ‘Man’ or human agency stood central in Possibilist Geopolitics because in the end the political decision-makers try to maximise the opportunities, and to minimise the limitations with which they are confronted. Thus, nature only laid the foundation for human development; the actual cultural and political progress depended on ‘man’ himself. Hence ‘strategies’ were needed (Criekemans, 2022, p. 117). Later schools of thought in the 1990s such as ‘Critical Geopolitics’ started from the assumption that ‘geography’ does not constitute an innocent product of nature. On the contrary, it is the result of the history of the battle between competing authorities about the power to organise, occupy and manage space. Via discourse analysis, Critical Geopolitics tries to achieve insight into the way in which foreign policy elites of territorial entities think about the relation of this entity vis-à-vis the “external environment” (Criekemans, 2022c, pp. 130–137). This critical analysis of the geopolitical reasoning about central variables such as energy and climate, were studied over the years by authors such as Simon Dalby (1991, 1998, 2020) and Klaus Dodds (2015, 2021), and more recently in books by Moore (2020) and Wehrmann (2020). An author who more explicitly applied Critical Geopolitics to resources is Phillippe Le Billon (2013). In his book on ‘Environmental Geopolitics’, Shannon O’Lear discusses scholarship on Critical Geopolitics and environmental issues (O’Lear, 2018, pp. 19–21). This school of thought also has connections with Constructivism in IR, but then focuses more on how territorial factors are ‘imagined’, fitting a wider (geo)political agenda.

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Hence, various schools of thought in Geopolitics over time approached energy (transition) in quite different ways. Geopolitics in fact constitutes a joint project or common field of study between Political Geography on the one hand, and International Relations on the other (see Figure 2.1). One could define it as follows (Criekemans, 2007, 2022a, pp. 99–100): Geopolitics is the scientific field of study belonging to both Political Geography and International Relations, which investigates the interaction between politically acting (wo)men and their surrounding territoriality (in its three dimensions; physical-geographical, human-geographical and spatial).

Energy can thus be part of a study on ‘energy geopolitics’, via location, the actual physical geographical resources, the human geographical variables of local culture and adoption, but also the spatial dimension such as the state system and regional or global political dynamics.

3. THE EVOLUTION OF ‘ENERGY GEOPOLITICS’ AND ‘ENERGY SECURITY’ DURING THE PAST CENTURY The literature on ‘energy geopolitics’ and ‘energy security’ has a long tradition and connection (Biresselioglu, 2011). The earliest concerns around these issues date back to a century ago (Prontera, 2017, p. 4), in the midst of an earlier energy transition we sketched in the introduction of this chapter. Academic literature on energy security theory started to develop in the 1970s, as a result of the oil crises. These were ‘artificial’ supply side crises whereby OPEC countries pressurised Western governments’ support of Israel by ‘turning the tap’ several times. It was not a coincidence that the International Energy Agency (IEA) was set up in 1973 within the Organisation for Economic Cooperation and Development (OECD) to study supply and demand issues, and the impact of new technologies in the energy sector. This helped Western countries to deal with the major impact of the energy crises of the 1970s. In 1979, David Deese defined ‘energy security’ in the journal International Security: “a condition in which a country perceives a high probability that it will have adequate energy supplies at affordable prices” (Deese, 1979, p. 140). There were two principal economic and political components of energy security. First, the set of all behaviours which are affected by

Figure 2.1  Geopolitics as a ‘joint project’ of both Political Geography (PG) and International Relations (IR)

Geopolitics, geoeconomics, and energy security  27

the reliability and quantity of energy supplies. Second, the set of all behaviours which are affected by external energy supplies, and more in particular the relationship between demand and supply. But until then, the geopolitical or geostrategic dimension remained underexplored. This changed radically only a year later via the so-called ‘Carter Doctrine’. On 23 January 1980, the then US President Jimmy Carter declared in his State of the Union Address that the United States would use military force, if necessary, to defend its national interests in the Persian Gulf. This statement was geopolitical and geostrategic in nature, a response to the Soviet Union’s intervention in Afghanistan in 1979. It was intended to deter the Soviet Union from seeking further influence in the Persian Gulf. ‘Energy geopolitics’ and ‘energy security’ now seemed to become extensions of each other. However, the definition of ‘energy security’ in practice still remained somewhat unclear. During the 1980s, David Deese (MIT) and Joseph Nye (Harvard) contributed to a broader conceptualisation of ‘energy security’ (Deese & Nye, 1981; Biresselioglu, 2011). They focused on the energy security threats that consumer governments face; demand reduction and restructuring, stockpiles and emergency plans, development of alternative domestic supplies, development and diversification of sources of external supply, as well as diplomatic, industrial and military measures. During those years, Western literature became deeply entrenched in a Cold War East–West context; the risk of the dependency of the ‘West’ on the ‘East’ – most notably via oil and natural gas. At the end of the 1980s and the beginning of the 1990s, authors started to talk increasingly about the eclipse of the ‘oil age’ and the ‘geopolitics of oil’, the structural shortages between demand and supply, and their geopolitical consequences. Michael T. Klare can be considered as one of the authors who was quoted often and who also managed to open up a broader public debate, together with many other contributions from think tanks around the world. Especially Klare’s Resource Wars. The New Landscape of Global Conflict (Klare, 2001) and The Race for What’s Left. The Global Scramble for the World’s Last Resources (Klare, 2012) can be mentioned in this regard. From conventional oil and gas, over to unconventional oil and gas (shales, tar sand) into rare earths and other critical materials, Klare sounded the alarm bells that countries needed to prepare for what was coming. The author seemed to lean more towards the scarcity side of the spectrum, whereas others would later predict an age of abundance due to technological revolutions. However, Klare did realise that energy innovation would also become a major factor in a ‘clean energy race’ in which China and perhaps the United States would become major players or competitors (Klare, 2012, pp. 230–234). From mid-2001 to July 2008, the oil price rose from US$20 a barrel to US$147.50. This created a new dynamic in the literature on the Geopolitics of Energy, discussing the need for alternative supplies and demand reduction via energy efficiency. One year earlier, in 2007, Mathew Burrows and Gregory Treverton developed a new energy paradigm in the journal Survival (Burrows & Treverton, 2007). They discussed a much more nuanced definition and approach to ‘energy security’. Taking into account the latest societal and international developments, Burrows and Treverton saw the concept more as a set of complex ‘trade-offs’ that decision-makers had to make between three sides of a triangle; security and foreign policy objectives, economic objectives and now also environmental objectives. Many different technologies and forms of energy ticked one but not always necessarily all three of these boxes. Political choices sometimes had to be made as a consequence. In the middle of the triangle however, Burrows and Treverton placed ‘energy efficiency’. The best energy that ticks all three sides of the triangle at the same time, is the energy which you do not consume.

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From the year 2000 onwards, the debate on ‘energy security’ gradually came of age. Academia produced certain criteria which together could make up a good definition of ‘energy security’. Hence, in 2005, Barton, Redgwell, Rønne and Zillman, defined the concept as follows: “A condition in which a country or several, or most of its citizens and businesses have access to sufficient energy resources at reasonable prices for the foreseeable future, free from any serious risk of major disruption of service” (Barton et al., 2005, p. 5). Next to the security of supply issues (important for consumer countries and territories), there also existed security of demand (important for producer countries and territories). The reliability of supply was closely connected to the functioning of energy markets. The only actors which this definition of ‘energy security’ did not completely address were transit countries and regions, for instance the predicament of countries such as Ukraine, which in the past already had major pipelines (Brotherhood, Yamal) running over its territory from the East (Soviet Union and later the Russian Federation) towards the markets in the West. In a comprehensive book from 2008, Foreign Policy. Theories, Actors, Cases, Amelia Hadfield used the case study of EU–Russia energy dynamics to gain a better understanding of ‘energy’ and ‘foreign policy’. She concluded energy is a key mediating factor through which national and regional power is affected and by which influence is made, and felt. In addition she argued that major foreign policy clashes in which energy operates as a proximate problem will remain a key international feature, qualifying and conditioning issues, from national interest to regional influence (Hadfield, 2008, p. 336). In a recent book, The New Politics of Energy Security in the European Union and Beyond, Prontera uses the traditional definition of ‘energy security’, referring to such matters as “long term security of supply and its connection to international politics in the areas of diversification, infrastructure, investments and market governance” (Prontera, 2021, p. 7). Prontera stresses that the European debate around ‘energy security’ really started around the 2006 and 2009 gas disputes between Russia and Ukraine, which highlighted the vulnerability of some eastern members of the European Union (Prontera, 2021, p. 4). This problem turned into one of the most fundamental energy crises in Europe since the end of the Second World War after the invasion of Ukraine by the Russian Federation on 24 February 2022 and the subsequent titfor-tat energy sanctions between Moscow and Brussels in its wake. Hence, ‘energy security’ and the ‘geopolitics of energy’ are very closely linked. Germany exemplifies the problems of its central position in Europe, the ‘Mittellage’, and its implications for energy security and geopolitics. Previous German governments under Chancellors Schröder and Merkel believed in ‘Wandel dürch Handel’; economic relations between Germany and the Russian Federation would create interdependence and hence could ‘link’ Moscow to the European geopolitical order and its ‘rule of law’. At the same time, Berlin became increasingly dependent on Russian gas via the Nord Stream 1 pipeline because it was busy with a renewable energy transition whilst phasing out nuclear. The cheapest natural gas came from Russia, and was needed to restart the German economy as an exporting country. At the same time, others during this period stressed the geopolitical consequences of putting so much energy demand in the Russian gas basket, and warned that Moscow could use these gas exports to Germany as a way to blackmail Berlin and try to achieve other geopolitical goals whilst gradually weakening Ukraine via the Nord Stream 1 and 2 pipelines (Vanmaele & Criekemans, 2010). A recent, two-part book is The changing world of energy and the geopolitical challenges by Samuel Furfari. Its second volume is solely devoted to the ‘geopolitics of energy’. He sees geopolitics as “a methodology based on multidisciplinary analysis”, which brings together

Geopolitics, geoeconomics, and energy security  29

variables such as geography, demography, history, economic and financial power, transport routes, technology, etc. (Furfari, 2017, pp. 45–48). His approach comes quite close to the ‘geopolitical method of analysis’ as explained and developed by Gyula Csurgai at the Geneva Institute of Geopolitical Studies in Switzerland (Csurgai, 2022a). Out of the analysis in this section, it becomes clear that ‘energy security’ and ‘geopolitics of energy’ cannot be seen separately from ‘geoeconomics’. In the next section, we explore that literature further.

4. THE LITERATURE OF ‘GEOECONOMICS’ AND ITS UNIQUE SELLING PROPOSITION At the beginning of the 1990s, some authors suggested that as a result of the end of the Cold War and the globalisation of the economy, competition between states was shifting “from the political-military to the economic-technological field” (Labohm, 1998, p. 54). Richard Rosecrance was an early proponent of this idea; in his 1986 book, Rise of the Trading State: Commerce and Conquest in the Modern World. He predicted that leaders would increasingly realise that material production and trade were a more effective method of increasing a state’s power potential than military conquest and occupation (van Staden, 1999, p. 613). Rosecrance drew a very optimistic conclusion; the chances of interstate conflict would, in his view, largely or almost entirely disappear (Labohm 1998, p. 54). Ten years later, Rosecrance published an article entitled ‘The Rise of the Virtual State’ in Foreign Affairs, in which he turned his prediction into a conclusion (Rosecrance, 1996). It is no longer the geographical size of a state that determines the success of a country, he argues (‘territory becomes passé’), but the size of the market. The more open the economy, the bigger the market (as long as it exceeds that of the country). Small countries in particular can therefore benefit from this situation. Instead of accumulating territory, capital and labour, ‘virtual states’ (i.e., states that have dismantled their territorially embedded production capacity and reorganised it elsewhere) emphasise strategy (e.g., attracting foreign direct investment), as well as investing in people, Rosecrance believed. Other authors such as Lester Thurow and Edward Luttwak argued that this ‘economisation’ of IR is taking us into a new phase of interstate and interregional conflict, this time focused on the control of markets and capital. In this context, the American Edward Luttwak believed that there would be an evolution “from geopolitics to geo-economics”,1 or as he likes to put it “from violence to money”. As a former strategic thinker, Luttwak associated geopolitics with military strategies, which may partly explain his preference during the 1990s for the paradigm of geoeconomics. According to Luttwak, there is still competition in the international political arena, but it is now mainly settled through an economic struggle between nation states (as opposed to the paradigm of borderless capitalism, as suggested by Kenniche Ohmae during the same period) (Ohmae, 1993, 1996). In 1993, Samuel P. Huntington wrote an essay, ‘Why International Primacy Matters’ in the journal International Security (Huntington, 1993). This analysis was fairly close to Luttwak’s. Huntington expanded on Daniel Bell’s assertion: “economics is the continuation of war by other means” (Bell, 1990). Samuel P. Huntington asserted that in the coming years, the main conflict of interest between the United States and the great powers would probably be over economic issues (especially the relationships with Japan and the European Union). Huntington believed that economists are blind to the fact that economic activity is a source of power, as

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well as ‘wellbeing’. In the realm of economic competition, the instruments of power are productive efficiency, market control, trade surplus, strong currencies, foreign exchange reserves, ownership of foreign companies, factories and technology (Baru, 2012). A third author worth mentioning in this context is Mark P. Thirwell. He too examined the interrelationship between geoeconomics and national security, stating in 2010 that if one is to “understand many of the key strategic developments facing the world in the coming decades, then one will need to spend a reasonable amount of time thinking about what is going on in the international economy” (Thirwell, 2010, p. 2). Thirwell lists a number of reasons why geoeconomics has made a comeback since Luttwak’s time: the evolution towards a multipolar global economy, the possible degradation of Washington’s willingness to continue to provide the international public goods needed to sustain a (relatively) smoothly functioning global economy, the rise of the dark side of globalisation such as transnational crime, the rise of state capitalism, the financial and economic crises since 2008 and the era of scarcity (Thirwell, 2010). Earlier, Luttwak almost seemed to suggest that in the post-Cold War era, the geostrategic struggle would be subordinate to the geoeconomic struggle. In a case study on EU–Russia natural gas relations between 2013 and 2016, Criekemans argued however that geoeconomic and geostrategic competition can exist simultaneously and can reinforce each other. It could even be argued that those actors in IR who manage to align their geoeconomic and geostrategic strategies have a greater chance of achieving their goals in a timely manner. As a unitary actor, the Russian Federation seemed much more capable of integrating both than the European Union. This led to a situation in Ukraine where Russia was effectively waiting for the West to blink first. A similar scenario developed later in the war in Syria (Criekemans, 2017). The thesis of ‘geoeconomics’ has received increasing support since the end of the 1990s. For example, the success of the neologism ‘géoéconomie’ in France is striking, and even somewhat contradictory. After all, in 1997, a new journal was founded that tried to investigate the geoeconomic thesis: the Revue française de Géoéconomie (now called simply Géoéconomie). Its founders are people like Pascal Lorot, previously known for their popular science books on geopolitics, such as Histoire de la géopolitique (Lorot, 1995) and La géopolitique (Lorot & Thual, 1997). In this sense, the success of the geoeconomic paradigm in France is somewhat contradictory; Lorot had made interesting contributions to French geopolitical literature as an author, but now switched to geoeconomics. The fact that he was trained as a political economist might have something to do with that. The first issue of the journal Revue française de Géoéconomie contains an interview with the French geopolitical writer, Lacoste. Géoéconomie is presented here as complementary to géopolitique, an idea that also appeared in Lorot’s books from the mid-1990s. Lorot defines geoeconomics as follows: the analysis of economic strategies – notably commercial – decided upon by states in a political setting aiming to protect their own economies or certain well-identified sectors of it, to help their national enterprises acquire technology or to capture certain segments of the world market relative to production or commercialization of a product. The possession or control of such a share confers to the entity – state or national enterprise – an element of power and international influence and helps to reinforce its economic and social potential. (Lorot, 1999, p. 15)

The question arises whether the economisation thesis can be empirically ‘proved’. After all, as the Dutch IR specialist van Staden rightly points out, this thesis seems to be at odds with

Geopolitics, geoeconomics, and energy security  31

what we observe in the world on a daily basis (van Staden, 1999, p. 615). Although the number of armed conflicts may have decreased since the fall of the Wall, the conflicts that remain or resurface are of a more profound and long-term nature, and often have an intra-state character. Moreover, van Staden (1999, p. 615) rightly notes that: “By far the most important and potentially most dangerous disputes that we face in the world today are precisely those that have a clear territorial dimension” (e.g., Israel and the Palestinians, India and Pakistan, but also Afghanistan, Iraq, etc.). Aside from this, a second, more important reservation can be formulated with regard to the economisation thesis, according to van Staden: “the suggestion that one could conceive of security and economy as separate compartments should be particularly objected to” (van Staden, 1999, p. 615). This remark is very justified. Economics and politics cannot be regarded as separate spheres. It may be true that nowadays in the West relatively more attention is being paid to territorial political themes of a predominantly economic nature (e.g., impact of the Eurozone, geoeconomic integration along the borders of Europe, etc.), but the question remains whether there are no questions of politics involved. Who has the ‘last word’ in such international questions: economics or politics? As political scientists, we would tend to choose the latter option. Economists may have a different view ... The division between geopolitics and geoeconomics may therefore be artificial. The proposition can be defended that geopolitics originally also took account of the politicisation of ‘(geo)economic issues’, but that this is not always (anymore) recognised by the current authors. Kjellén’s ideal type in the economic realm was for instance for the state to achieve ‘autarky’ in key essentials such as food and resources. Nevertheless, some contemporary authors have in recent years pleaded for a reintegration of geopolitics and geoeconomics into one whole. More recent authors such as Braz Baracuhy come to quite similar conclusions. In his book chapter “Geo-economics as a dimension of grand strategy. Notes on the concept and its evolution”, Baracuhy stresses that geoeconomics and geopolitics constitute two sides of the same coin. Although they are different in terms of their instrumental and operative logics, they both constitute expressions of the geostrategic competition among great powers, acquiring relevance and meaning in foreign policy (Baracuhy, 2019, pp. 14–15). What does remain striking is that geoeconomics is often associated in the Anglo-American literature with great power politics, whereas some French authors and also others seem to be more open to the idea that also smaller territorial entities such as regions or even cities could play a geoeconomic role. This in itself could also be connected to energy transition; not only major states with a technological base but also regions or even cities could play a role in a renewable energy future provided they invest in the necessary technological know-how in combination with renewable energy opportunities. In his book chapter “The Increasing Importance of Geoeconomics in Power Rivalries: from the Past to the Present”, Gyula Csurgai underlines that relations between states in the post-Cold War period have been shaped by an increased economic competition. This includes non-market factors such as intelligence sharing between state agencies and private businesses, successful economic diplomacy and different techniques to influence and manipulate nongovernmental organisations to weaken an economic adversary, among other things. The considerable influence of these non-market factors illustrates the limits of the liberal economic theories that emphasise the dominant role of market forces and the rather limited role of the state in economics (Csurgai, 2022b, p. 244). One could also apply these thoughts to the energy domain; in the Western world over the past decades, the main investment decisions have been left to the private sector, with the national capitals by the end of the 1990s realising that they

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had to guide the main decisions of these large energy multinationals behind the scenes, as energy comes very close to the national sovereignty of a state. This explains why for instance in France the Presidential Elysée has played such a major role in matters of energy policy. This brings us to another often-forgotten concept in geopolitics and geoeconomics; the ‘geotechnical ensemble’. In our recent book chapter “Geotechnical ensembles: how new technologies change geopolitical factors and contexts in economy, energy and security”, the interaction between technology and geopolitics is discussed at length (Criekemans, 2022b). The evolution towards a world increasingly run on renewable energy will also mean that the needs of many countries will shift; from conventional oil over natural gas towards the critical materials that will power a renewable energy future. This could lead to scarcity and supply problems and geopolitical competition over key resources such as nickel, cobalt, copper, silver, scandium, lithium and rare earth elements (Criekemans, 2018). In summary, the interaction between technologies and geopolitical factors may also have consequences for the foreign policy and diplomacy of nations; patterns of conflict and cooperation may be affected.2 The thesis which we developed in this recent publication states that territorial entities (states, regions or cities) which invest in ground-breaking technological knowhow, both fundamental and applied innovation, as well as in the industrial base that comes with it, will in many ways be able to shape tomorrow’s world in its geo-economic, geopolitical and geostrategic dimensions. (Criekemans, 2022b)

Already many authors in Classical Geopolitics (e.g., Mackinder, Spykman, Sprout) developed hypotheses with regard to the impact that new technologies could have upon geopolitical and geoeconomic relations. Geopolitical hypotheses in this context were defined by Sprout as “propositions that purport to explain or to forecast the geographical distribution and patterning of political potential (power)” (Sprout, 1963, p. 190). One of the types of geopolitical hypotheses in technological perspective dealt with the uneven distribution of natural resources. According to Harold Sprout, these geopolitical hypotheses generally start from the proposition that a nation’s political position in international politics is significantly related to its capacity to provide military instrumentalities (Sprout, 1963, p. 201). That may have been true in the decades after the Second World War. However, today’s literature also investigates how (the changing demand for) resources impacts the geoeconomic and overall geopolitical position of territorial entities other than the state; sub-state entities such as a region, or for instance the European Union as an emerging foreign policy actor. More recent emanations of this body of literature tackle a wide range of issues. One can think of publications on resource war and the scramble for resources (Klare, 2001, 2012), oil geopolitics (Yergin, 1992), natural gas geopolitics (Grigas, 2017), the geopolitics of renewables (Criekemans, 2018b), the interconnection between energy and climate (Yergin, 2020) or even the geopolitics of the deep oceans (Hannigan, 2016). Technological advances may once again change the geoeconomic and geopolitical situation and consequences. Harold Sprout had already referred to “geo-technic politics” (Sprout, 1963, p. 192). Daniel Deudney believed geopolitical scholars should describe the base or infrastructure as combinations of particular geographic features and technological capabilities. He termed these “geotechnical ensembles”. Whereas ‘global geopoliticians’ treated combinations of geographical and technological factors as exogeneous factors acting upon or shaping human institutions, IR scholars primarily saw technology as derivative of human and political choice (Deudney, 1989, p. 13). Deudney believed that by

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incorporating technology, with some changes, into their concept of the base or non-social environment, ‘global geopoliticians’ were able to advance beyond the impasse of the naturalist theories (Deudney, 1989, p. 14). They were all theorists of change, looking at the impact of new technological forces and new aspects of geography. ‘Classical Geopolitics’ “inferred that the existing natural resource base was fixed, subject only to the question of distribution – which might grow in a zero-sum environment”. Deudney believed this inference was flawed. The continued growth of scientific knowledge and technical know-how has altered in many important ways the effective uses to which human institutions can put materials and energies drawn from the fixed or closed Earth (Deudney, 1989, p. 627). The same can be said of technologies today. How can this be applied to questions of energy transition in today’s world? First, changes to existing energy mixes might provoke geoeconomic and geopolitical ‘fall out’. Conventional oil will, in the coming decades, diminish in relative importance. This may provoke crises in the business models of traditional oil producers such as in the Middle East, which could produce societal instability. Second, a growing need to get access to the critical materials that will power a renewable energy future could lead to scarcity and supply problems and geopolitical competition over key resources such as nickel, cobalt, copper, silver, scandium, lithium and rare earth elements. Third, a race over technological advances and intellectual property in the energy domain could erupt, most notably in the field of battery efficiency and recycling technologies. In conclusion, the debate in the West on ‘strategic autonomy’ may also be relevant for the domain of energy. The interaction between technology and geopolitics also changes the economic relations, both on the supply side, the demand side, and the dimension of transit countries. If electrification further grows to connect, for instance, more windy or sunny regions with lesser-endowed ones, then those territories through which power lines pass may be able to develop a new business model, hence rising in geopolitical importance (Criekemans, 2021). Another neologism one can find in the literature is ‘geopolitical economy’. This term originated with the American political geographers John Agnew and Stuart Corbridge. They first launched this concept in an article about American trade deficits from a global perspective (Corbridge & Agnew, 1991). In their joint book Mastering Space. Hegemony, Territory and International Political Economy they developed this concept further (Agnew & Corbridge, 1995). Their contribution lies in bringing the concept of ‘territoriality’ explicitly into International Political Economy. The term ‘geopolitical economy’ has enjoyed some diffusion within International Relations, (Political) Geography3 and Political Economy (Williams, 1998; Hudson, 2001; Ó Tuathail, Herod et al., 1998; Oßenbrügge, 2000; Dodds, 2001), but not so far that it can be considered a fully-fledged alternative to Geopolitics. In more recent literature, we see the concept of ‘geopolitical risks’ helping to bridge the world of geopolitical scholars, specialists in International Political Economy and financial or supply chain analysts (Suder & Kallmorgen, 2022). One can also see clear global projects in geopolitical economy being conceptualised and rolled out, such as China’s ‘Belt and Road Initiative’ or its newer US-led competitor together with G7 partners, the ‘Partnership for Global Infrastructure and Investment’ which was unveiled in June 2022. Both initiatives combine geopolitical and geoeconomic goals with values, but it must not be forgotten that the investments in these large infrastructure networks will become essential in guaranteeing access to crucial energy resources needed in the unfolding energy transition. Yet other authors emphasise ecological issues and crises that “threaten to radically alter the very nature of international relations” (Ó Tuathail, 1997, p. 36). According to Mustafa Tolba,

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executive director of the United Nations Environment Program, a transition needs to be made “from geopolitics to ecopolitics” (Tolba, 1990). According to Simon Dalby, ecological issues have been regarded as having a fundamental, ‘global’ dimension since the 1970s. Dalby and more recently O’Lear rather use the term ‘environmental geopolitics’ (Dalby, 1998; O’Lear, 2018), which partly reflects the fact that the term ‘ecopolitics’ has never really gained a foothold in the literature. According to Dalby, the new element lies in the fact that, since the mid1990s, the ‘global environment’ has been increasingly explicitly regarded as both an object of research and the object of prescriptive policy recommendations. Also, outside of this, in the more ‘popular’ IR literature of the mid-1990s, ‘ecological degradation’ was identified as one of the causes of state disintegration and chaos. Consider, for example, the well-known article “The Coming Anarchy” by the American foreign correspondent and writer on international relations Robert D. Kaplan, in the magazine The Atlantic Monthly (February 1994). In it, the author argued that the microcosm of failed states in Africa foreshadows what awaits us internationally as a result of disruptive global demographic, economic and ecological dissolution processes. Kaplan’s ideas are an archetype of what is often referred to in textbooks on IR as the ‘anarchy model’. From a geopolitical perspective, however, it becomes more difficult to maintain the classic assumption that only states play a role in global ecological issues; multinational corporations and grass roots movements also fulfil their function (Dalby, 1998, pp. 184–185). In more recent literature on energy geopolitics, it has become apparent that this can no longer be seen separately from climate politics (Faye, 2022; Yergin, 2020). In her study Geopolitics of Climate Change and Sustainable Development, Faye develops an actor-centred approach (Faye, 2022). Human agency of not only state actors but also non-state actors such as multinationals becomes important in order to understand these processes. Realist and neorealist paradigms rather suggest states as the main actors without whom joint management cannot be imagined, but there exist also more liberal paradigms that can help us to tap into energy transition with a broader, perhaps more accurate portrayal (including the role of individuals, private companies, multinationals) (Faye, 2022, pp. 63–65). The author is right in this analysis, yet there are also territorially embedded and geographical issues at play here. In that sense ‘energy geopolitics’ and ‘environmental geopolitics’ touch upon different dimensions of the geopolitical challenges related to energy transition. In his book Anthropocene Geopolitics. Globalisation, Security, Sustainability, Simon Dalby outlines a number of important issues (Dalby, 2020). Among other things, he discusses the use of chemicals and the long-term viability of the current agricultural sector. Dalby also questions the limits and finiteness of what is possible on this planet Earth, indirectly interacting with earlier debates on the ‘end of growth’. Geopolitics can also reflect on the extent to which and with which humanity moves or organises its production chains. Sustainability comes to the fore as a central concept in human survival. The implicit message is that this is only possible by coming back into balance with ‘environmental variables’. A combination of technological innovations and a new geoenvironmental awareness should provide solace in this, although, according to Dalby, it is not certain that a ‘good Anthropocene’ can emerge from this. In future literature, authors could again be inspired by the Environmental Possibilism of the French geopolitical schools pre-1945, the so-called ‘Possibilists’ (Criekemans, 2022c, pp. 116–117). These scholars argued, in contrast to the German geographical determinists of the interbellum, that the environment should be approached as being both ‘constraining’ and ‘enabling’, and man is considered to be able to make choices (Vidal de la Blache, 1898, 1926). The environment provides a number of parameters or limitations to the whole spectrum of foreign

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policy actions which can be undertaken by an entity (‘constraining’), but the environment also provides a political entity with a number of important opportunities (Sprout, 1971 [1965], p. 83). As stated earlier, ‘man’ stood central in ‘Possibilist Geopolitics’ because in the end the political decision-makers try to maximise the opportunities, and to minimise the limitations with which they are confronted. In addition, Possibilism makes active connections between elements of physical geography (again relevant in energy transition in terms of resources or ideal locations to pursue solar or wind power), human geography (think about social acceptance of these technologies) and spatial factors (needed to take into account for instance in the development of power lines and grid infrastructure over longer distances). Good statesmanship maximises the opportunities, and minimises the disadvantages. Also in complex questions of energy transition these lessons still are very relevant indeed (Criekemans, 2022b, pp. 116–117), and await further exploration. Another neologism that tries to present itself as an alternative to ‘geopolitics’ is the term ‘geogovernance’, which originated with the American IS specialist Richard Falk. Falk can be regarded as one of the central figures behind the so-called ‘World Order Models Project’ (WOMP), a loose alliance of scientists who since the mid-1970s have been working on the ‘thorny global issues’ (Dalby, 1991, p. 263).4 One of the journals in which they tried to disseminate their ideas is Alternatives: Social Transformation and Human Governance. It was here that Falk first launched his neologism ‘geogovernance’, which he further elaborated on a year later in his book On Humane Governance. Toward a New Global Politics (Falk, 1995). Falk places the concept of ‘geogovernance’ as an alternative to ‘geopolitics’, whereby it is immediately apparent how much he associates geopolitics with ‘the military’ and ‘the state’ (because of his own association of ‘Classical Geopolitics’ with Realism?) (Falk, 1995, p. 1): The world is moving rapidly toward a more integrated economic, cultural and political reality, a set of circumstances identified here as geogovernance. One consequence of this trend is to diminish the capacity of the sovereign territorial state, as a political actor, to shape the history of humanity, and thereby to dominate geopolitics.

According to Falk, the capacity of the sovereign, territorial state as an actor to ‘manage’ the history of mankind has been significantly reduced. In his view, the state today is undergoing fragmentation; it no longer has an absolute grip. The dilemma of IR no longer lies in geopolitics, but in geogovernance. The world order at the beginning of the twenty-first century is likely to be an example of ‘inhumane governance’ on a global scale. The question according to Falk is therefore: how can the immature multilateral economic, cultural and political spheres be humanised (hence; ‘humane governance’) (Ó Tuathail, 1997, p. 37)? Also, in the more recent literature on the geopolitics and renewables, we can find several references to the need for more governance. For instance, in the recent comprehensive study The Geopolitics of Global Energy Transition, governance is recommended not only to move forward with energy transition, and to transform the system, but also to deal with the geopolitical aspects which the energy transition brings about (Hafner & Tagliapietra, 2020, pp. 358–359). The authors state that governance will make the energy transition faster, smoother, and more even. The rise of great power rivalry and the subsequent crisis in multilateralism are clearly complicating the global energy transition according to the authors. They therefore recommend more energy regionalisation and connectivity so as to reshape regions and putting in place new governance schemes, a common set of global rules, investments, and technology-specific schemes and mechanisms. In addition, the authors would like the promotion of a consumer–producer

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dialogue, an enhanced technical and regulatory dialogue at the global level, as well as a continuous exchange of best practices among countries, regions and communities. Last but not least, in terms of global energy governance, the authors highlight the need for ‘global tandems’ between the Global North and South, investments in education, research and information, as well as approaching climate and energy security through the lens of public goods (Hafner & Tagliapietra, 2020, pp. 359–361). Governance will indeed become essential in managing the energy transition taking into account the opportunities and difficulties of new ‘geotechnical ensembles’. The geoeconomics literature in its various strands is rich and multi-faceted. It constitutes the ‘other side of the coin’ of geopolitics and geostrategy. And each of its component parts, whether it is the substrand literature on ‘technology and geopolitics’, ‘geopolitical economy’ or ‘geogovernance’ each entails certain relevance for students of the geopolitics of energy transition. In conclusion, all of the above approaches in some fashion affect dimensions of energy relations. In that sense, they become potentially complementary conceptual tools in our toolbox, so as to better grasp various aspects of the energy transition in all its complexity.

5. CONCLUSION: GEOPOLITICS, GEOECONOMICS AND ENERGY SECURITY IN A TRANSITION TOWARDS RENEWABLES Based upon the analysis above, one can try to reimagine energy geopolitics and energy security in a renewable energy world. First, the conceptual difficulty surrounding ‘geopolitics’, ‘geoeconomics’, ‘geopolitical economy’ and ‘geogovernance’. This chapter has tried to offer some clarity as regards the core of each of these and some of their theoretical underpinnings. In his article “In Defense of Classical Geopolitics”, the American military officer Mackubin Thomas Owens reacted against a number of neologisms such as ‘globalisation’, ‘geoeconomics’, ‘end of history’, which have become “rife with usage” in IR literature since the early 1990s (Owens, 1999): Real international relations occur in real geographical space. The relative importance of a given geographical space may be modified by technology or the infusion of capital, but geographical space cannot be ignored, as several of these approaches do. [...] Geopolitics is based on the undeniable fact that all international politics, running the gamut from peace to war, takes place in time and space, in particular geographical settings and environments. [...] it is based on the assumption that geography defines limits and opportunities in international politics: states can realize their geopolitical opportunities or become the victims of their geopolitical situation.

Another way of looking at geopolitics is to recognise that geoeconomics, geostrategy, even the sometimes suggested ‘geoculture’5 and ‘geoinformation’ (think about satellites and highspeed communication technologies) also have political implications within given geographical areas. Specifically for matters of energy transition, this is highly relevant. If the policies which guide (parts of) the world towards energy transition do not take into account the limitations and opportunities6 of a given geographical area, they could ultimately fail. The introduction of this chapter ended with the realisation that academic fields such as Geopolitics and International Relations themselves have been scholarly ‘children’ of a world dominated by a fossil energy regimes, and their schools of thought being products of

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subsequent Zeitgeists. They themselves may have to be partly reimagined, in particular the ontological assumptions of some of the theoretical approaches within each of these scholarly fields. This may very well take us deep into the next century. As has been the case in the past, each of these fields has had to adapt to a world being reshaped by energy transition and the subsequent rise of new power centres. At a global level, we may very well end up with a duo-multipolar order around the United States and China – also in terms of the spearheading of forms of ‘energy transition’ (Criekemans, 2011). However, at a more regional geographical level, ‘energy transition’ is poised to reset local supply lines and geographical interdependencies because of mixes of challenges involving access to the resources needed for energy transition, power grids and innovative ways to bring energy demand and supply together. National states will not be the only actors playing major roles in that world. Also sub-state entities and cities spearheading new technologies in renewables and efficiency may very well become major players. Instead of ‘International Relations’, we may have to label these anew as a kind of ‘Regional Interactor Relations’ that bring together public and private actors with expertise in resources, technologies and know-how and the necessary capital to make things happen around new sustainable energy models and solutions. An author who has already spearheaded envisioning the geopolitical dimensions of a new geopolitical world, is Parag Khanna. According to Khanna, today’s world localities such as cities and regions have also become geopolitical entities to which power is devolved. In such a world, connectivity has become intensely geopolitical (Khanna, 2016, p. 18). The march of connectivity will bring beliefs to collapse, such as the idea that states are the main ordering entities in IR, or that “national identity is the primary source of people’s loyalty”. In this context, Khanna mentions among others forces such as devolution (the fragmentation of authority towards provinces), urbanisation (the growing size and power of cities), mega-infrastructures (new pipelines, new railways, and canals that morph geography) and digital connectivity (enabling new forms of community). They necessitate a reimagination of how human life is organised on Earth. Central in his analysis are supply and demand as dynamic forces in search of equilibrium in all aspects of human life (Khanna, 2016, p. 19). Supply chains between hubs in the world, often urban centres, are essential in the world in which we live. Khanna refers in this context to a ‘Great Supply Chain War’, a race not to conquer but to connect physically and economically to the world’s most important supplies of raw materials, high technology, and fast-growing markets. In this ‘Great Supply Chain War’, Khanna believes that great powers (such as the United States of America and China) consciously seek to avoid costly military confrontations that could be ‘self-defeating’, because they disrupt these essential supply chains (Khanna, 2016, p. 28): “In the Great Supply Chain War, infrastructure, supply chains and markets are as crucial as territory, armies and deterrence. The largest power does not always win; the most connected one does”. While twentieth-century territorial geopolitics was inspired by Mackinder, Khanna believes that in a supply chain world, it matters less who owns (or claims) territory than who uses (or administers) it. Instead of a de jure world “This is my land”, the motto of Khanna’s de facto, supply chain world is “Use it or lose it” (Khanna, 2016, pp. 28–29). For Parag Khanna, connectivity apparently constitutes both the main cause and effect of the current complexity in the world today. It is reshaping the human condition in the early twenty-first century around adapted geoeconomic, geopolitical and geostrategic realities. Deudney’s insightful analysis of ‘geotechnical ensembles’ together with Khanna’s attempt at understanding the changed role of territory in which supply chains have become so central

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to both our lives and the fates of nations, offer us a stimulating conceptual framework that also might become useful for scholars working on the geopolitics of energy transition. Such an approach realises that these processes shape and reshape the wider geoeconomic and geostrategic theatre within which to analyse the contemporary interaction between ‘technology’ and ‘geopolitics’. This chapter has tried to offer conceptual and theoretical clarity around ‘geopolitics’, ‘geoeconomics’ and ‘energy security’. It has shown how closely connected each of these are, and how their conceptualisation also was, and again will be in the future, a product of the energy regime upon which the world was and will be powered. Future scholars are recommended to view these tools in our common toolbox from an open but also critical perspective. There may also be a deep divide between what is possible and what is desirable in terms of energy transition, and the so-called societal and geopolitical revolutions some have claimed would lie around the corner. Renewable energy, under current technology, is not necessarily already sustainable or feasible, or may still have grave environmental consequences (e.g., the renewed mining for scarce resources and subsequent competition). Jeremy Rifkin once predicted it would herald a new era of “power to the people” and hence a new bright geopolitical future (Rifkin, 2002, 2011). The reality might be much more complex. We will need further conceptual and theoretical refining in order to better understand supply, transit and demand problems in circumscribed areas, each with their own geographical opportunities and limitations. Through such a bottom-up analysis, a global picture of the geopolitics of energy transition may become clearer.

NOTES 1. About the term ‘geoeconomy’, Luttwak writes: “This neologism is the best term I can think of to describe the admixture of the logic of conflict with the methods of commerce -– or, as Clausewitz would have written, the logic of war in the grammar of commerce’” (Luttwak, 1998, p. 126) (our underlining). However, the concept of ‘geoeconomics’ is not new. The political scientist Kristof used it as early as 1960, for example: “Contemporary geopolitics [...] rejecting the theory of nature-molded human character [...] has concentrated on geostrategy and the foreign-policy implications of geo-economics” (Kristof, 1960, pp 19–20). 2. In their book chapter “Technologies for the Global Energy Transition” in the book The Geopolitics of the Global Energy Transition, Manfred Hafner and Michel Noussan offer an interesting overview of some of the more recent technological developments (Hafner & Noussan, 2020), but do not always explicitly link to geographically embedded opportunities and limitations. This however is essential to also more explicitly connect to a ‘geopolitical analysis’ in the body of literature, and can be approached in many different ways. 3. The geographer Alan Hudson sees ‘geo-political economy’ and its relation to geopolitics and geoeconomics as follows: “Geo-politics is about boundaries, identities and territories; geo-economics is about flows and exchanges; geo-political economy is about flows and exchanges which take place over, and in turn reshape, a landscape of borders and places. Through investigating this reshaping of the regulatory landscape we can begin to understand and explain - and perhaps even shape in fairer and more sustainable directions - processes of globalization. Geographers working from a geo-political economy perspective have sought to examine processes of globalization in terms of their geographies, employing, and further developing, ideas about scales and scaling, places and placing, territories and territoriality, borders and border-crossing, and landscapes & landscaping” (Hudson, 2001) (our underlining). 4. According to Simon Dalby, one of the strengths of the WOMP literature is that it challenges conventional categories of thought within international relations, and approaches ‘politics’ in different ways. It is particularly noteworthy that WOMP challenges the preconceived assumptions about

Geopolitics, geoeconomics, and energy security  39

the state as the ‘only’ level of international relations. In the process, a number of pressing global issues receive ample attention: ecology, survival, democracy, justice and so on (Dalby, 1991: 264). Incidentally, in a later article, Simon Dalby argues that WOMP can contribute to the school of ‘Critical Geopolitics’; particularly through its focus on connections and movements, rather than the traditional exclusive focus on territorially embedded political entities (Dalby, 1999). 5. The ‘Possibilists’ used the concept ‘genre de vie’ to indicate that culture and geography in given territorial areas had over time become closely intertwined as a result of man’s choices (Criekemans, 2022c, pp. 116–117). 6. We refer here to limitations and opportunities in terms of needed resources, transit infrastructure and supply side distribution, in confrontation with demand side approaches and social acceptance and adoption. This also taps into an earlier remark by Blondeel, Bradshaw, Bridge and Kuzemko; they advocate for a “whole systems geopolitics” whereby scholarship in Geopolitics “must also transcend its current bias towards energy supply and start engaging with the growing impact of demand-side measures such as improvements in energy efficiency and demand reduction” (Blondeel et al., 2021, p. 12). Building further upon this important remark, we believe researchers also need to be aware of the complex interconnections between the three main dimensions of geopolitical explanatory factors that are at play alongside these issues, and their inter-relationship in a given circumscribed area; physical geography, human geography and the spatial dimension.

REFERENCES Agnew, J., & Corbridge, S. (1995). Mastering Space. Hegemony, Territory and International Political Economy. London: Routledge. Baracuhy, B. (2019). Geo-economics as a dimension of grand strategy: Notes on the concept and its evolution. In M. Wigell, S. Scholvin, & M. Aaltola (Eds.), Geo-economics and Power Politics in the 21st Century. The Revival of Economic Statecraft (pp. 14–27). Abingdon & New York: Routledge. Baru, S. (2012). A new era of geo-economics: Assessing the interplay of economic and political risk: Understanding geo-economics and strategy. IISS Seminar, 23–25 March 2012, 11 p. Barton, B., Redgwell, C., Rønne, A., & Zillman, D. N. (2005). Energy Security – Managing Risk in a Dynamic Legal and Regulatory Environment. Oxford: Oxford University Press. Bell, D. (1990). Germany: The enduring fear. Dissent, 37 (Fall). Biresselioglu, M. E. (2011). European Energy Security. Turkey’s Future Role and Impact. New York: Palgrave MacMillan. Blondeel, M., Bradshaw, M. J., Bridge, G., & Kuzemko, C. (2021). The geopolitics of energy system transformation: A review. Geography Compass, 15(7), 22p. https://doi​.org​/10​.1111​/gec3​.12580 Burrows, M., & Treverton, G. F. (2007). A strategic view of energy futures. Survival, 9(3), 79–90. Clark, C. (2012). The Sleepwalkers. How Europe Went to War in 1914. London: Penguin Books. Corbridge, S., & Agnew, J. (1991). The US trade and budget deficits in global perspective: An essay in geopolitical-economy. Society and Space, 9, 71–90. Criekemans, D. (2007). Geopolitiek, ‘geografisch geweten’ van de buitenlandse politiek? Antwerpen/ Oud-Turnhout: Garant/Maklu. Criekemans, D. (2011). The geopolitics of renewable energy: Different or similar to the geopolitics of conventional energy?, ISA's 52nd Annual Convention “Global Governance: Political Authority in Transition”, Panel SB13: Geopolitics, Power Transitions, and Energy, Le Centre Sheraton Montreal Hotel, Montreal, Québec (Canada), 16–19 March 2011 – Québec, 2011, p. 52. https:// www​.researchgate​.net ​/publication ​/265115144​_The​_geopolitics​_of​_ renewable​_energy​_ Different​_or​ _similar​_to​_the​_geopolitics​_of​_conventional​_energy​#fullTextFileContent Criekemans, D. (2017). Where geoeconomics and geostrategy meet: The troubled relations between the European Union and the Russian Federation. In J. M. Munoz (Eds.), Advances in Geoeconomics (pp. 113–120). New York, NY: Routledge. Criekemans, D. (2018). Geopolitics of the renewable energy game and its potential impact upon global power relations. In D. Scholten, et  al. (Eds.), The Geopolitics of Renewables (Lecture Notes in Energy, 61, pp. 37–73). Cham: Springer.

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Criekemans, D. (2021). Energy transition, Europe, and geopolitics. In M. Foulon & J. Thompson (Eds.), Forum: The Future of European Strategy in a Changing Geopolitical Environment: Challenges and Prospects (4 p). The Hague: The Hague Centre for Strategic Studies. Criekemans, D. (Ed.). (2022a). Geopolitics and International Relations. Grounding World Politics Anew. Leiden & Boston: Brill Nijhoff. Criekemans, D. (2022b). ‘Geotechnical ensembles’: How new technologies change geopolitical factors and contexts in economy, energy and security. In D. Criekemans (Ed.), Geopolitics and International Relations. Grounding World Politics Anew (pp. 61–93). Leiden & Boston: Brill Nijhoff. Criekemans, D. (2022c). Geopolitical schools of thought: A concise overview from 1890 till 2020, and beyond. In D. Criekemans (Ed.), Geopolitics and International Relations. Grounding World Politics Anew (pp. 97–155). Leiden & Boston: Brill Nijhoff. Csurgai, G. (2002). Geopolitics, geo-economics and competitive intelligence. Geofocus: Official Journal of the Council of Geopolitics, 1(1). Csurgai, G. (2022a). The main components of geopolitical analysis. In D. Criekemans (Ed.), Geopolitics and International Relations. Grounding World Politics Anew (pp. 13–60). Leiden & Boston: Brill Nijhoff. Csurgai, G. (2022b). The increasing importance of geoeconomics in power rivalries: From the past to the present. In D. Criekemans (Ed.), Geopolitics and International Relations. Grounding World Politics Anew (pp. 244–257). Leiden & Boston: Brill Nijhoff. Dalby, S. (1991). Critical geopolitics: Discourse, difference and dissent. Environment and Planning D: Society and Space, 9, 261–283. Dalby, S. (1998). Crossing disciplinary boundaries: Political geography and international relations after the cold war. In E. Kofman & G. Youngs (Eds.), Globalization. Theory and Practice (pp. 29–42). London: Pinter. Dalby, S. (1999). Against ‘globalization from above’: Critical geopolitics and the world order models project. Environment and Planning D: Society and Space, 17, 181–200. Dalby, S. (2020). Anthropocene Geopolitics. Globalization, Security, Sustainability. Ottawa: Ottawa University Press. Deese, D. A. (1979). Energy: Economics, politics, and security. International Security, 4(3) (Winter, 1979–1980), 140–153. https://doi​.org​/10​.2307​/2626698 Deese, D. A., & Nye, J. S. (Eds.). (1981). Energy and Security: A Report of Harvard’s Energy and Security Research Project. Cambridge: Ballinger. Deudney, D. H. (1989). Global Geopolitics: A Reconstruction, Interpretation, and Evaluation of Materialist World Order Theories of the Late Nineteenth and Twentieth Centuries. Princeton: Princeton University Press (unpublished PhD-manuscript). Dodds, K. (2001). Political geography III: Critical geopolitics after ten years. Progress in Human Geography. An International Review of Geographic Work in the Social Sciences and the Humanities, 25(3), 469–484. Dodds, K. (2021). Border Wars. The Conflicts that Will Define Our Future. London: Ebury Press. Dolman, E. C. (2002). Astropolitik. Classical Geopolitics in the Space Age. London and Portland, OR: Frank Cass. Evans, R. J. (2017). The Pursuit of Power. Europe 1815–1914. London: Penguin Books. Falk, R. (1994). From geopolitics to geogovernance: WOMP and contemporary political discourse. Alternatives. Social Transformation and Humane Governance, 19(2), 145–154. Falk, R. (1995). On Humane Governance. Towards a New Global Politics. The World Order Models Project Report of the Global Civilization Initiative. University Park, PA: The Pennsylvania State University Press. Faye, N. (2022). Geopolitics of Climate Change and Sustainable Development. Analysis of Actor Logics and Global Governance Issues in International Relations. Chisinau: Sciencia Scripts. Furfari, S. (2017). The Changing World of Energy and the Geopolitical Challenges. 2. Shifting Sands: The Geopolitics of Energy. S.l.: CreateSpace, Amazon. Grigas, A. (2017). The Geopolitics of Natural Gas. Cambridge, MA: Harvard University Press. Hadfield, A. (2008). Energy and foreign policy: EU-Russia energy dynamics. In S. Smith, A. Hadfield, & T. Dunne (Eds.), Foreign Policy. Theories. Actors. Cases (pp. 321–338). Oxford: Oxford University Press.

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Hafner, M., & Noussan, M. (2020). Technologies for the global energy transition. In M. Hafner & S. Tagliapietra (Eds.), The Geopolitics of the Global Energy Transition (Lecture Notes in Energy 73) (pp. 177–202). Cham: Springer Open. Hannigan, J. (2016). The Geopolitics of Deep Oceans. Cambridge: Polity Press. Heffernan, M. (1998). The Meaning of Europe. Geography and Geopolitics. London: Arnold. Herwig, H. H. (1999). Geopolitik: Haushofer, Hitler and Lebensraum. In C. S. Gray & G. Sloan (Eds.), Geopolitics, geography and strategy (pp. 218–241). London: Frank Cass. Hobsbawm, E. (1994). The Age of Empire. 1875–1914. London: Abacus. Hobsbawm, E. (1997). The Age of Capital. 1848–1875. London: Abacus. Holdar, S. (1992). Political geographers of the past. The ideal state and the power of geography. The life-work of Rudolf Kjellén. Political Geography, 11(3), 307–323. Hudson, A. (2001). Towards a global geo-political economy. In A. Kent (Ed.), Reflective Practice in the Teaching of Geography (pp. 57–67). London. Huntington, S. P. (1993). Why international primacy matters. International Security, 17(4) (Spring), 68–83. Kaplan, R. D. (1994, February). The coming anarchy. How scarcity, crime, overpopulation, tribalism, and disease are rapidly destroying the social fabric of our planet. The Atlantic Monthly. https://www​ .theatlantic​.com ​/magazine​/archive​/1994​/02​/the​-coming​-anarchy​/304670/ Khanna, P. (2016). Connectography. Mapping the Future of Global Civilization. New York: Random House. Kjellén, R. (1924). Der Staat als Lebensform. Berlin-Grunewald: Kurt Vowinckel Verlag. Kjellén, R. (1944 [1924]). Autarchy. In A. Dorpalen (Ed.), The World of General Haushofer. Geopolitics in Action (pp. 241–248). Port Washington, NY: Kennikat Press, Inc. Klare, M. (2001). Resource Wars. The New Landscape of Global Conflict. New York: Henry Holt and Company. Klare, M. (2012). The Race for What’s Left. The Global Scramble for the World’s Last Resources. New York: Picador. Kristof, L. K. D. (1960). The origin and evolution of geopolitics. Journal of Conflict Resolution, 4(1), 15–51. Labohm, H. H. J. (1998). Van geopolitiek naar geoeconomie: een paradigmawisseling. Liberaal Reveil, 39(2, April), 53–57. Laferrière, E., & Stoett, P. J. (1999). International Relations Theory and Ecological Thought. Towards a Synthesis. London: Routledge. Le Billon, P. (2013). Resources. In K. Dodds, M. Kuus, & J. Sharp (Eds.), The Ashgate Research Companion to Critical Geopolitics (pp. 281–303). Farnham & Burlington: Ashgate. Lorot, P., & Thual, F. (1997). La géopolitique. Paris: Montchrestien. Lorot, P. (1999). Introduction à la géoéconomie. Paris: Economica. Luttwak, E. N. (1998). From geopolitics to geo-economics: Logic of conflict, grammar of commerce. In G. Ó Tuathail, S. Dalby, & P. Routlegde (Eds.), The National Interest (1990), The Geopolitics Reader (pp. 125–130). London: Routledge. Mackinder, H. J. (1887). On the scope and methods of geography. Proceedings of the Royal Geographical Society and Monthly Record of Geography, 9, 141–160. Mackinder, H. J. (1919). Democratic Ideals and Reality: A Study in the Politics of Reconstruction. London: Constable and Company, Ltd. Mackinder, H. J. (1943). The round world and the winning of the peace. Foreign Affairs, 21(4), 595–605. Mackinder, H. J. (1994 [1904]). "The geographical pivot of history" from geographical journal (1904). In G. Ó Tuathail, S. Dalby, & P. Routledge (Eds.), The Geopolitics Reader (pp. 27–31). London: Routledge. Mahan, A. T. (1890). The United States looking outward. Atlantic Monthly, LXVI(December), 816–824. Mahan, A. T. (1898). The Interest of America in Sea-Power. London: Sampson, Low and Marston. Mahan, A. T. (1900). The Problem of Asia and Its Effect upon International Policies. London: Sampson, Loe and Marston. Mahan, A. T. (1957 [1890]). The Influence of Sea Power upon History, 1660–1783. Boston: Little, Brown.

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Moore, S. (2020). Sustainable Energy Transformations, Power and Politics: Morocco and the Mediterranean. Abingdon: Routledge. Ohmae, K. (1993). The rise of the region state. Foreign Affairs, (Spring), 78–87. Ohmae, K. (1996). Het einde van de natiestaat. De opkomst van de regionale economie. Amsterdam/ Antwerpen: Uitgeverij Contact. O’Lear, S. (2018). Environmental Geopolitics. Lanham: Rowman & Littlefield. Ó Tuathail, G. (1996). Critical Geopolitics. London: Routledge. Ó Tuathail, G. (1997). At the end of geopolitics? Reflections on a plural problematic at century's end. Alternatives, 22(1), 35–55. Ó Tuathail, G., Herod, A., et al. (1998). Negotiating unruly problematics. In A. Herod, G. Ó Tuathail, & S. M. Roberts (Eds.), An Unruly World? Geography, Globalization and Governance (pp. 1–24). London: Routledge. Ó Tuathail, G. (2001). Geopolitik - zur Entstehungsgeschichte einer Disziplin. In R. Zeilinger, C. Rammer, E. Binder, G. Menschik, & P. Oberdammer (Eds.), Geopolitik. Zur Ideologiekritik politischer Raumkonzepte (pp. 9–28). Wien, Österreich: Promedia Druck- und Verlagsgesellschaft. Oßenbrügge, J. (2000). Entwicklungslinien der Politischen Geografie nach 1945. Konzeptionen der internationalen und globalen Maßstabsebene. In I. Diekmann, P. Krüger, & J. H. Schoeps (Eds.), Geopolitik. Grenzgänge im Zeitgeist. Band 1.2 1945 bis zur Gegenwart (pp. 383–402). Potsdam, Duitsland: Verlag für Berlin-Brandenburg, GmbH. Osterhammel, J. (2014). The Transformation of the World. A Global History of the Nineteenth Century. Princeton: Princeton University Press. Owens, M. T. (1999). In defense of classical geopolitics. Naval War College Review, 52(Autumn), 59–76. Prontera, A. (2017). The New Politics of Energy Security in the European Union and Beyond. States, Markets, Institutions. Abingdon: Routledge. Prontera, A. (2021). The New Politics of Energy Security in the European Union and Beyond. States, Markets, Institutions. Abingdon: Routledge. Raffestin, C., Lopreno, D., & Pasteur, Y. (1995). Géopolitique et Histoire. Lausanne: Editions Payot. Ratzel, F. (1896). The territorial growth of states. Scottish Geographical Magazine, 12, 351–361. Ratzel, F. (1897). Politische Geographie. München/Leipzig: Verlag von R. Oldenbourg. Ratzel, F., & Bolin, R. L. (1969 [1896]). The laws of the spatial growth of states. In R. E. Kasperson & J. V. Minghi (Eds.), The Structure of Political Geography (pp. 17–28). Chicago: Aldine Publishing Company. Rifkin, J. (2002). The Hydrogen Economy. The Creation of the Worldwide Energy Web and the Redistribution of Power on Earth (294 p). Oxford: Blackwell Publishing. Rifkin, J. (2011). The Third Industrial Revolution: How Lateral Power is Transforming Energy, the Economy, and the World (304 p). New York: St. Martin's Griffin. Rosecrance, R. (1986). Rise of the Trading State: Commerce and Conquest in the Modern World. New York: Basic Books. Rosecrance, R. (1996). The rise of the virtual state. Foreign Affairs, 75(4) (July/August), 45–62. https:// www​.foreignaffairs​.com​/articles​/1996​- 07​- 01​/rise​-virtual​-state Scholten, D., et al. (2018). The Geopolitics of Renewables (Lecture Notes in Energy, 61). Cham: Springer. Scholten, D., Criekemans, D., & van de Graaf, T. (2020). An energy transition amid great power rivalry. Journal of International Affairs (Columbia University), 73(1), 195–204. Sempa, F. P. (2002). Geopolitics. From the Cold War to the 21st Century. New Brunswick & London: Transaction Publishers. Sloan, G. R. (1988). Geopolitics in United States Strategic Policy, 1890–1987. Brighton, Sussex: Wheatsheaf Books Ltd. (Simon & Schuster). Sprout, H. H., & Sprout, M. T. (1944 [1939]). The Rise of American Naval Power, 1776–1918. Princeton: Princeton University Press. Sprout, H. H. (1963). Geopolitical hypotheses in technological perspective. World Politics, XV, 187–212. Sprout, H. H., & Sprout, M. T. (1971 [1965]). The Ecological Perspective on Human Relations with Special Reference to International Politics. Westport, CT: Greenwood Press, Publishers. Stone, N. (2021). The 1860s. In K. Almqvist & A. Linklater (Eds.), The Return of Geopolitics. A Global Quest for the Right Side of History (pp. 277–283). Stockholm: Bokförlaget Stolpe.

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Suder, K., & Kallmorgen, J. F. (2022). Das Geopolitische Risiko. Unternehmen in der Neue Weltordnung. Frankfurt am Mein: Campus Verlag. Thermænius, E. (1938). Geopolitics and political geography. Baltic and Scandinavian Countries, IV, 165–177. Thirwell, M. P. (2010). The Return of Geo-economics: Globalisation and National Security. Lowy Institute for International Policy, September 2010, 43 p. Tolba, M. (1990). From geopolitics to ecopolitics. New Perspectives Quarterly, 7(Spring), 60–62. Vakulchuk, R., Overland, I., & Scholten, D. (2020). Renewable energy and geopolitics: A review. Renewable and Sustainable Energy Reviews, 122 (April). https://doi​.org​/10​.1016​/j​.rser​.2019​.109547 van den Assem, A. (1998). Strategische denkers en het einde van de Koude Oorlog. Een politiekpsychologisch onderzoek naar de reactie van Kissinger, Brzezinski, Luttwak en Gray op de spanning tussen waarneming en theorie. Leiden: Rijksuniversiteit Leiden. Vanmaele, S., & Criekemans, D. (2010). Geopolitiek van de Energie en de rol van Rusland als motor in mondiale machtsverschuivingen (147 p). Antwerpen: Steunpunt Buitenlands Beleid. van Staden, A. (1999). Economisering van de internationale betrekkingen? Internationale Spectator, 53(11), 612–616. Vidal de la Blache, P. (1898). La géographie politique à propos des écrits de Mr. Frederic Ratzel. Annales de Géographie, 7(32), 97–101. Vidal de la Blache, P. (1926). Principles of Human Geography. New York: Henry Holt and Company. Wehrmann, D. (2020). Critical Geopolitics of the Polar Regions: An Inter-American Perspective (Series ‘InterAmerican Research: Contact, Communication, Conflict). Abingdon: Routledge. Wesseling, H. L. (1991). Verdeel en Heers. De deling van Afrika, 1880–1914. Amsterdam: Uitgeverij Bert Bakker. Wesseling, H. L. (2003). Europa’s Koloniale Eeuw. De koloniale rijken in de negentiende eeuw, 1815– 1919. Amsterdam: Uitgeverij Bert Bakker. Williams, A. (1998). Failed Imagination? New World Orders of the Twentieth Century. Manchester: Manchester University Press. Yergin, D. (1992). The Prize. The Epic Quest for Oil, Money and Power (885 p). New York: Free Press. Yergin, D. (2020). The New Map. Energy, Climate, and the Clash of Nations (492 p). New York: Penguin Press.

3. Energy systems – making energy services available Aad Correljé

1. INTRODUCTION All human activities and behaviour depend on the availability of energy. Looking back into human history, we observe that energy has always been critical in what we call the process of civilization. The activities undertaken in societies, their size, their wealth and wellbeing, their power, their growth; it all depends to a large extent on their ability to make sufficient energy available. And to effectively use this energy in supporting, expanding and creating human activities (Smil, 1994, 2018). Yet, apart from some food, nobody needs pure energy … What we care for are energy services, like light, heat, force, processes of chemical and physical conversion and the movement of electrons. Over time, by combining tools and technological devices with more or less specific sources and forms of energy, we have been expanding and extending our capabilities in doing and creating things, in moving around and in living in comfort. Indeed, it is through the fruitful combination of human needs, human curiosity and ingenuity and the creation of technologies making energy available to use it in useful ways, that human civilization exists. From the perspective of the individual human being, it is in the access to appropriate forms of energy given available appliances, that he or she is able to act physically and socially, to observe, to create and to live. Locations, levels of income, traditions and culture, the degree of urbanization and the type of our economic activities are highly influential in defining the kind of energy services we use, and how these are provided, with what kind of technologies and energy. Lighting, heating, cooling, cooking, transport, manufacturing, industrial and agricultural energy use show up in markedly different patterns in different places. What particular energy sources or carriers we depend on is strongly determined by the technologies we use in providing ourselves with energy services. Yet, these technologies generally evolve in the presence of particular sources of raw, or primary, energy. In history, we see quite a development in this respect. The supply of light, for example, evolved from using candles and burning animal fats, via petroleum lamps and gas light, to electricity-powered light bulbs and fluorescent tubes and the current LED illumination (Fouquet & Pearson, 2006). But also, the geographical presence of particular natural energy resources at specific locations has a huge impact. Even today, there is quite some variation in the technologies and sources of energy that are used for lighting by people around the world, involving kerosene, butane and propane, electric power from coal- and gas-fired power plants, nuclear power stations, hydro dams, diesel generators, a variety of solar- and wind-based solutions and more. An abundant literature has been created drawing on a variety of disciplines, in which parts of the energy system are analyzed from all kinds of perspectives. Many papers and books are written on particular types of energy, the segments in the energy supply systems, 44

Energy systems – making energy services available  45

determinants of supply, demand and consumption, the role of the industry and governments, social and cultural aspects and lately energy justice and social acceptance. To an increasing extent, often inspired by the urgency of a transition to a low- or no-carbon economy, many contributions to this literature take a ‘systems’ perspective. On the one hand this involves formalized, mathematical, computational techno-economic energy models. On the other, the notion of system is used to refer to its socio-technical nature (see for example the overviews provided by Andrews-Speed, 2016; Sovacool & Hess, 2017; Geels, 2020; Blondeel et al., 2021; Hoffman et al., 2021; Kok et al., 2021). As it happens, however, in this literature the ‘system’ often appears as a highly abstract concept, regarding both the ‘socio’ as well as the ‘technical’ aspects. Indeed, the latter aspects are reduced to the materiality or non-human aspects or the geographies of systems, whereas the socio-aspects are abstracted in terms of agency, power, multi-actor interactions and regimes, as examples. These high-level abstractions may fit the ambition to construct a general theory of socio-technical change. Yet, their use reduces the practical applicability of the insights derived, which are also highly abstract and non-specific. Indeed, such levels of abstraction ignore the evolution in the dependencies and interaction between the natural resources and the technologies (available), and the way in which they are locally employed to create and supply useful and societally acceptable energy carriers. Too much abstraction disconnects this evolution from the patterns of governance, determining how particular energy carriers are valued and employed (or not) to provide the energy services sought by societies and individual human beings. Making progress in the energy transition requires a more concrete conceptualization of the way in which the energy system works and its governance (see Correljé et al., 2022). In the following sections we construct a simple conceptual framework that will help to analyze and understand the way in which communities of human beings provide themselves (more or less effectively) with the energy they need to support their social and economic activities. Section 2 provides an insight how the notion of a supply chain helps us to understand the geophysical and technical aspects of ‘harvesting’ the raw energy, as found in nature, and bringing it as practically usable energy carriers to societies. This perspective is illustrated in Figure 3.1 and it applies to the (hopefully) sustainable system the future, as it did to the past. Section 3 explains how humans and societies make this supply chain of geophysical aspects and technical solutions actually work, turning it into a constantly evolving value chain by means of the institutional and economic coordination of the activities, driven by the values they (are forced to) maintain. Obviously, the meaning of value here is not limited to monetary values. Section 4 concludes.

Discovery of Segments in exploitable Provision primary of Energy sources

Harvesting of primary sources

Transport and/or storage

Conversion of primary energy into carriers

Payments for Energy Provision

Figure 3.1  Schematic supply chain for energy provision

Transport and/or storage

Delivery of energy carriers

End-use of carriers providing services

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2. HOW ENERGY IS MADE AVAILABLE Primary Sources The way in which energy is made available to provide light, heating, force and other services to the so-called end-users starts with the presence or availability of primary energy sources. And there is quite a variety in the way in which these primary energy sources occur, either deep in the Earth’s crust, or on the surface of the planet and in the atmosphere. More or less deep under the ground we have deposits of fossil energy in the form of different varieties of carbonized vegetation, ranging from peat, brown coal or lignite, to bituminous coal and anthracite. There is petroleum, originating from ancient fossilized organic materials, like zooplankton and algae on sea or lake bottoms that were covered by layers of sediments, under increasing pressure and temperature. Today petroleum can be found in a large variety of crude oils, all with a different composition, or in the form of bitumen, tar sands or shale oil. Then there is natural gas, a naturally occurring mixture consisting primarily of methane, but present in a huge variety of compositions of gases and materials. Natural gas is often found in association with petroleum deposits, but also emerges from coal fields and it exists even as frozen methane hydrates deep on the floor of the oceans. The Earth’s crust also contains deposits of uranium that in a processed form is the main fuel for nuclear power plants. And, finally, the high temperatures deep down in the Earth may provide geothermal energy. This appears generally in the form of hot water or steam that can be ‘harvested’ either close to the surface or at greater depths, depending on the local geology. On the surface of the Earth, humans find and use all kinds of biomass in a more or less processed form, like firewood, peat and materials and residual waste from a variety of crops. Even animal fats are used, like whale oil. Moreover, there is the energy contained in flowing water in rivers or stored in natural or artificial lakes or in tidal sea movements. In the atmosphere, primary energy is available in the form of wind energy and by the radiation of the sun, either as heat or light. The presence of all these sources of primary energy at particular locations and areas is a consequence of historical and geophysical conditions, which can be summarized as an interaction between the geological, biological and climatological history. And obviously, also the current local climate has a main impact via the exposure of the Earth’s surface to sun and wind and also the water cycle, which creates the conditions for the growth of bio-based fuels and the availability of water for hydro plants. Therewith, the feasibility of ‘harvesting’ these primary sources of energy is by and large geophysically and geographically determined (see Figures 3.2 and 3.3). This implies that the distribution of these sources is highly uneven, not only on a global scale, but also regionally, or even locally. Some areas are endowed with a wealth of different easily accessible sources, while others are facing sheer scarcity. Obviously, on the one hand, this has attracted humans and their particular activities to those places where the resources were readily available. On the other hand, it induces attempts to transport the energy from the places where it can collected to the places where it is wanted. The ability to ‘harvest’ and to ‘move around’ energy, but also other resources and produced goods and people, is a function of the development of technologies. In essence, this comes down to processing the raw, primary, sources of energy in such a way that they can be

47

Figure 3.2  Distribution of oil and gas reserves

Source:  BP Statistical Review of World Energy, 2021.

Smaller oil and gas reserves holders

10 largest oil reserves holders 10 largest gas reserves holders 10 largest oil and reserves holders

48

Figure 3.3  Generation of renewable energy including wind, geothermal, solar, biomass and waste, and not accounting for cross-border electricity supply

Source:  BP Statistical Review of World Energy, 2022.

Less than 1 % of global renewable energy generation

More than 1 % of global renewable energy generation

More than 10 % of global renewable energy generation

Energy systems – making energy services available  49

transported and/or stored, and in creating the ways of using and managing this process in an effective way (see De Gregori, 1987; Zimmermann, 1951). Conversion Some sources of so-called primary energy can be used directly without being fundamentally ‘processed’, like trees that can be cut and turned into firewood, coal that can be mined and be burned immediately thereafter. Peat only requires dredging and drying for some time. Natural gas just requires a ‘light’ treatment to get rid of the liquid components and contaminations. Low temperature geothermal energy in the form of hot water can, with heat exchangers, be applied directly in district heating. Some wood may also be turned into charcoal or pellets, to improve the quality of the fuel. Yet, other primary sources have to be radically converted into the kind of end-use energy ‘products’ that fit the appliances in use. Crude oil is transformed into a range of petroleum products in a complex refining process, yielding fuels like heating oil, transport fuels like gasolines, diesel, liquid petroleum gas (LPG) and kerosene for aviation and domestic purposes. Also, other gases and petrochemical feedstock emerge from this process. Uranium has to be processed intensively before it can be used in nuclear plants. And thereafter an equally complex treatment and processing of the waste starts. Similar fuels and materials may be manufactured using alternative primary sources. Gasoline, for example, can be replaced by automotive ethanol produced from sugarcane. Biodiesel can be manufactured from rapeseed or a variety of other vegetable oils and fats. The Fischer–Tropsch process enables the conversion of carbon monoxide and hydrogen or water gas into liquid hydrocarbons like diesel or gasoline, using coal, natural gas or biomass in the process. Many primary sources are converted into electricity or hot water as energy carriers, to bring the energy to the end-users. Electricity as a form of end-use energy can be generated using primary or manufactured energy sources, like fuel oil or diesel, coal, natural gas, biomaterials, residual waste and uranium in nuclear plants. The use of flowing water in rivers or water stored in reservoirs generates hydroelectricity. Power can also be produced by converting solar radiation, either the light or the heat, or with wind turbines. Geothermal energy can be turned into electricity too, particularly when the temperatures of the water (or steam) flowing from the Earth’s crust are high. A relatively new phenomenon is hydrogen as an energy carrier. For a long time, hydrogen has been used as an essential component in many chemical processes, particularly in the manufacturing and desulphurization of petroleum fuels and petrochemical products. Traditionally, hydrogen gas is produced from fossil fuels, either by steam reforming of natural gas and other light hydrocarbons, or partial oxidation of heavier hydrocarbons and coal gasification. Yet, it can also be produced from biomass gasification, with zero CO2 emission methane pyrolysis, or by electrolysis of water with any source of electricity: solar, wind, geothermal power, coal, nuclear, etc. It is particularly in the fact that hydrogen can replace storable fossil liquid fuels and gases, while potentially being produced with low CO2 emissions, that the interest in hydrogen as a carrier of end-use energy has recently gained great attention. There is a huge variation in the scale of the processes and plants with which electric power and other energy carriers can be produced. This is a consequence of the technical characteristics of these processes and economic and other considerations. Some of the technologies mentioned above preferably require power plants with large-scale generating

50  Handbook on the geopolitics of the energy transition

capacities, like nuclear energy, coal-fired plants and hydroelectric dams. Other technologies can be applied at different scales, like natural gas, diesel and biofuels that can be burned in larger plants, but also in relatively small or even portable units. Solar plants and wind turbines have a relatively small scale per unit, but they are often combined in ‘parks’ with a significant capacity. It can be observed that the scale of these processes is not a static given. Innovation and the ongoing development of technologies are both expanding the feasible generation capacity of wind turbines, solar panels and hydrogen electrolysis for example, while also enabling a miniaturization of other technologies, like nuclear reactors and gas- or hydrogen-fired units. Another crucial characteristic of these conversion processes, either large or small scale, is the ability to control their output of usable energy. First of all, there are those processes which for their operation depend on the actual presence of their primary energy input, like solar, wind and hydro energy. To some extent this is a function of their location and the seasonal effects on the daily and annual variation of the weather. The latter is also true for the availability of residual or dedicated biomaterials, which may depend on the local agricultural seasonal cycle and rainfall – or actually the prevailing local system of water management. Then, there are processes which just have to be fed with sufficient dedicated primary energy resources, to be delivered at the plant at the right time, like oil refineries and gas- and coalfired and geothermal and nuclear power plants. Smaller electricity generators use either gas or liquid petroleum fuels. Yet, in these processes the technicalities (and the associated economics) determine the feasibility of more or less rapidly adjusting the operation and output of the plant, in response to the actual momentary demand for energy. Large coal and nuclear plants are preferably operating as constantly as possible, without fluctuations. The same goes for geothermal facilities, in which the flow of the water should be constant to avoid obstruction in underground layers through which the water flows. Also, the process of adapting the output of oil refineries, in terms of the structure and the volumes of the several fuels produced, is fairly rigid. In contrast, other technologies, like natural gas-, diesel- and biofuel-driven generators, and hydroelectricity with dams, can be turned on and off at will, without negative consequences for their functioning and efficiency. Transport From the above, it can be concluded that there is a large variety in conversion processes providing the various sorts of end-use energy carriers. As stated, it is a fact that the location of many sources of primary energy is given, as a consequence of their natural and geophysical characteristics. This implies that either the end-users will have to locate near the source of their energy, or that transport is required. Often the conversion or end-use of the energy takes place elsewhere. This is in part a consequence of the minimum efficient scale of the facilities, which indicates a bundling of capacity at a certain location, or the clustering of units like turbines in a wind park. Moreover, in their control and operation, some of these processes depend on external circumstances, like the weather. So, there should be substitute back-up facilities available to serve the end-users’ demand for energy services, that can be managed at will. And then there are technologies which allow for moderation of their output at short notice, whereas others are more rigid in their employment. Therefore, transport is an essential component in the final provision of energy services to end-users.

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Primary energy resources, like crude oil, coal, uranium and natural gas generally have to be transported from where they are extracted from the Earth to processing or conversion plants, like oil refineries, power plants or hydrogen electrolysis plants. This may involve large-scale, long-distance transport by pipelines, ships or railroads. Figure 3.4 shows the global trade movements of natural gas by pipelines and ships. In contrast, hydro, geothermal and wind and solar energy resources are converted into electrical power on site, requiring the transport of electricity to the end-users. Biomass, with a relatively low density of energy per unit of weight or volume, is often used locally in many forms. But it is also transported over larger distances. The manufactured energy carriers, or fuels, are transported by ships, pipelines and railroads to large scale users, like power plants or (petro)chemical and other industries, and to the areas of consumption. This is illustrated in Figure 3.5 for both traditional crude oil-based and bio-based fuels. There, local distributors, vendors and petrol stations take care of the distribution to the end-users. The electricity generated in power plants is, via high-voltage transmission lines, transported to regional distribution grids which supply domestic consumers, small commercial users, or public services. Similarly, natural gas is transported via high-pressure transmission pipelines to regional distribution grids which supply the consumers. Geothermal energy has its limitations in being transported over longer distances without large energy losses, but also requires its distribution by pipelines among the end-users. Hydrogen, in its infancy as an end-use energy carrier, is currently mainly transported by truck, but plans exist to create larger scale hydrogen grids, to facilitate an expansion of its use. Depending on the type of end-use energy, the final distribution varies strongly. Petroleum products, firewood and biofuels are offered to consumers by service stations and retail vendors, supplied from refineries or regional depots. However, the supply of electricity, natural gas and district heating is taken care of by local distribution grids, connecting each and every house or building or business with the supply system. This implies that the expansion and adaption of these distribution systems has to be carried out in close coordination with the patterns of location and of energy consumption and the shifts therein. To a growing extent, the development of so-called decentral generation of solar electricity and the production of green biogas has an impact in functioning of these systems. Indeed, traditionally being operated as one-way supply systems, these developments impose the need to evolve towards a bi-directional modus. As a consequence, a multitude of possible connections exists between the locations of primary energy production, among the several types of conversion units and with the different end-users. It is obvious that the location of these connections, the modes of transport and the throughput capacities determine the pattern of the energy flows that can be facilitated. Moreover, this pattern is partly a consequence of natural and geophysical and also social characteristics. Indeed, pipelines or wires cannot be constructed in deep seas or across high mountains. Also, their acceptance by the people living in their neighbourhood is becoming a debatable issue lately. Also, scale is important in relation to the mode of transport. Large volumes of energy, like natural gas or oil that are continuously transported between fixed locations, may benefit from having pipeline connections, if possible. Generally, the larger the scale of the transport capacities in pipelines, the lower the cost per unit of energy transported. This indicates the need to build pipelines which can be used by multiple users. Alternatively, shipping may be a solution, also to transport end-use fuels, which provides more freedom in origin and destination. On land, an alternative may be railroad or trucks, as relatively high-cost options.

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Figure 3.4  Major trade movements of natural gas

Source:  BP Statistical Review of World Energy, 2021.

Pipeline gas transport Liquefied Natural Gas (LNG) transported by tanker

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Production of crude oil

Harvesting of biomass

Exploration for crude oil reserves

Selection of adequate locations for biomass Trucks, railroad, shipping

Seaborne tankers pipelines tanks Conversion of biomass into fuels

Oil refining and petrochemical Industry Shipping, railroad, trucks

Shipping, railroad, pipelines trucks,

Figure 3.5  Supply chain for petroleum products and biofuels, serving the same type of end-users

Provision of Biofuels

Provision of Petroleum products

Delivery of gasoline, ethanol, (bio)diesel, fuel oil, pellets, etc.

End-use in transport, domestic use, inductry electricity generation, etc.

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Storage In the production, conversion and transport segments of the supply of energy outlined above, variations in supply and demand may happen which affect the availability of end-use energy and therewith the quality of the services desired. Such variations may have many origins. They may have economically driven causes, such as shifts in supply and demand and prices, sometimes as a consequence of seasonal variations in availability or the need for energy. Other economic causes may involve firms going bankrupt, lagging investments, sudden shifts in the costs of materials and equipment. There may be accidents and technical failures, like fires and explosions in installations and pipelines, collisions with ships, trains, broken cables, etc. These may have natural causes like hurricanes, flooding or lack of water, snowfall and earthquakes. But there also political issues, like wars, strikes, boycotts, embargos, trade conflicts. And there may be social issues, like trade union activism, local protests, civil unrest, extremist environmentalism. In the worst case, such disturbances may cause a breakdown of supply (or demand) on a local, regional or even international scale. In milder cases, disturbances reduce the availability or affect the quality of the energy service supplied (Correlje & Van der Linde, 2006). Ideally, given the importance of energy as a basic component for the functioning of societies and their economies, the supply chain should have the operational capacity to produce and transport sufficient energy to match peak demand at all times. That, however, would require production, conversion and transport capacities that would go unused much of the time. Indeed, so-called demand peaks occur only occasionally and are often – but not always – predictable. In particular, energy use for heating or cooling purposes exhibits a strong seasonal pattern. The same goes for the production and conversion segments. Nevertheless, since such problems are bound to happen and supply and demand will always fluctuate, there should be some buffering or storage capacity to overcome disturbances in the production of raw energy, its conversion and transport to the end-users and the variation in end use. So, storage in the several segments of the chain is an important component in the provision of energy. This may involve so-called commercial storage to be employed by firms to manage the more or less predictable day-to-day and seasonal supply and demand fluctuations. But there may also be the need for so-called strategic storage, to overcome supply disruptions of several weeks or even months. These could be operated either by firms or governments. Moreover, there should be some redundant capacity and optionality in the production, conversion and transport of energy. A demand-side alternative is to ensure that end-users can switch to a substitute energy service. It is important to realize that the feasibility and the cost of storage varies for the different primary resources and end-use forms of energy. Large-scale storage of crude oil, refined fuels, biomaterials and coal is not complex, given sufficient space. Natural gas can be stored in empty gas fields or aquifers at relatively low cost, when these are locally present. Alternatives are more expensive, however. Also, hydrogen can be stored, although this technology is still in development. Local storage of all these fuels is also possible, but the smaller the scale the higher the cost. Electric power, however, is not easy to store on a large scale and it is still quite expensive on a small scale, like in batteries. Generally, for power the solution is to store the primary energy and convert it into electricity when needed. The storage of heat is also a problem, because of the losses over time.

Energy systems – making energy services available  55

A critical problem for storage is in the provision of sufficient capacity to cover the daily, monthly, seasonal and strategic needs for storing whatever form of energy. But it is economically unwanted to create too much expensive capacity, because then the facility won’t be used, and the investment does not create revenues. So, the risk arises that there is underinvestment in sufficient (strategic) storage capacity to cover critical shortages. Moreover, there exists a complex relationship between the price-signalling functioning of a market, for whatever type of energy, and the presence of energy in storage. In short, there exists a discrepancy between ‘need for storage’ from the social and the system perspective and the incentives for individual firms and operators to create sufficient storage capacity at the ‘right’ locations. Supply Chains From the above, it is obvious that the provision of energy to fulfil the services a society depends on a balanced interaction of a chain of technical functions facilitating the production, the conversion, the storage, the distribution and the end use of the different types of energy (see Figure 3.1). This is true in today’s complex society, with a range of sources of primary energy and a variety of types of end-use energy for different purposes and tasks, as much as it was in the past. It is important to realize that the provision of these various types of energy involves actual supply chains, in which the consecutive segments or functions are connected and interdependent. Figure 3.5 shows the supply chain for petroleum products and for biofuels, serving the same type of end-users. Problems in upstream segments of a supply chain may cascade to downstream segments and cause unwanted shortages in end-use energy. Mid-stream problems may affect both sides of the chain. This primarily affects today’s systems in which the supply chain segments are actually physically connected, like in electricity or gas systems, where the networks constitute so-called essential facilities. Yet, also less tightly connected systems now and in the past, like the supply of coal, firewood, peat and petroleum products, are vulnerable to supply disruptions when conversion plants, means of transport, storage facilities or distribution centres are malfunctioning. So, an actual coordination of the functioning and the interaction of the several segments of the system is necessary. On a day-to-day and a seasonal basis supply, conversion, transport and storage facilities have to work together in providing the right volumes of the energy demanded to the end-users in specific locations, at the right time. Modern energy supply, like electricity for example, often involves a number of these supply chains which are (inter)connected at the several stages, as is shown in Figure 3.6. Indeed, enduse electricity can be produced with coal, gas, hydro or nuclear energy, or in wind, solar and biomass facilities. The operator of the transmission grid selects the plants to provide the electricity needed. Yet, decentral wind and solar generation may also be coupled directly to the distribution grid, or even to the domestic system of the end-user. In end use, alternatives exist for heating and cooking, like electric power, gas, geothermal energy, oil products, and even wood and peat-based fuels. And in transport and the industry, petroleum fuels compete with bio-based fuels, gases and electricity. Hence the question arises how all these technical functions are selected, connected and matched, so that an adequate provision of energy is created. Over the longer term, energy supply and demand have to deal with other types of potential disruptions and transformations. Here, the problem is in the uncertainties about the development of primary energy resources and technologies in the future, in the development of future demand for energy-specific services and in changing locational and demand patterns.

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Selection of locations for wind, solar and hydro

Provision of renewable electricity

Shipping railroad pipelines trucks Generation of electricity High voltage trans-mission grids

Generation of electricity

Generation of electricity

Generation of electricity

Aquisition of coal, natural gas, nuclear fuel

Figure 3.6  Interconnected supply chains in electricity supply

Selection of locations for wind and solar

Selection of locations for wind, solar and hydro

Selection of adequate primary resources

Provision of non-renewable electricity

Distribution and delivery of electricity

End-use in transport, domestic, industry, etc

Energy systems – making energy services available  57

To ensure the availability of energy services in the future, either or not anticipated shifts in the production and end use of energy services must be taken into consideration as far as possible. And they have to be translated by the industry into investments in additional production, transport and storage capacities, in a timely manner and at the right locations.

3. WHAT MAKES THIS WORK? Value Chains Once we realize that these supply chains consist of connected technical functions and processes, enabling the manipulation of natural and physical occurrences, stocks and flows of primary energy and energy carriers from the sources to their end use, the issue of coordination becomes important. In the past, the cutting of trees, the gathering of the wood, the transport to areas of end use and the packaging and selling of the firewood in the cities before the cold winter started required a well-timed process of organizing all these activities. Indeed, the right people with their tools and their transport and storage facilities had to be coordinated in their activities, to ensure the availability of sufficient people, tools and firewood at the right time and place. If coordination failed, the consequences were either shortages in wood and hardship, or over-supply, with potentially large economic consequences for the suppliers. The same goes for the provision of other energy carriers, like whale oil, peat and coal, petroleum, electricity and gas later in history. And also today, the energy transition involves the gradual expansion of solar, wind, modern bio-based and other technologies, which has to ‘fit’ with the decline of fossil fuels, unless the latter are combined with CO2 sequestration technologies. So, the manipulation of physical phenomena, like growing trees, peatlands, whales or deposits of coal and petroleum, and the use of wind and solar energy in such a way that they can be turned into useful energy resources, requires a variety of cooperating people (often organized in firms), that see an incentive in engaging in the process of exploitation and provision. Moreover, these people are to be incentivized and enabled to develop and employ the required and socially accepted tools and technologies to operate the separate – but dependent – parts of the supply chain in a more or less harmonized manner. This implies that, apart from their technical functioning as a supply chain, public and private actors in the several segments have to be able and willing to conclude economic transactions with one another. These transactions arrange for the primary sources to be harvested or mined, and that they are processed, that the fuels or the electricity are transported and or stored and that they are eventually distributed and provided to the end-users. In return, as shown in Figure 3.1, these transactions provide a valuable flow of money from the paying endusers to the operators of these segments of the supply chain. So, the supply chain also functions as a value chain. To be sure, ‘value’ is not only about the ‘simple’ exchange of volumes of energy at a price. There are many more aspects to energy transactions, like quality, reliability, ecology, origin, etc., that determine the ‘value’ to both producers and users. People, Supply, Demand, Scarcity and Prices The incentives to supply and to consume are considered to be created in a ‘market’ were producers and consumers exchange goods or services. They do so at a price reflecting the value

58  Handbook on the geopolitics of the energy transition

suppliers and consumers consider respectively profitable given their cost of production, or acceptable in the light of the utility they acquire. In such a market, prices are determined as a function of scarcity; the balance between the availability of a good via supply and demand, as a function of profits, usefulness and utility. Scarcity creates a high price, which is a signal to start providing something, or to reduce its use and shift to an alternative. This also applies to the separate segments of the supply chain where firms specialize in undertaking specific intermediate tasks, like buying and (re)selling semi-finished products up until the final end use of the good, or providing services such as conversion, transport or storage. Moreover, the creation of new tools and technologies or attempts to ‘harvest’ new resources are also taken care of by ‘entrepreneurial’ innovators and creators, in the expectation of generating value and profits by producing new useful technologies, eventually. The basic understanding of how and when all these people and firms take part in operating the value chain is that they act on their expectations as to what they see as profitable or valuable money-wise. This is essentially how the standard approach to economics explains the coordination of how the several actors involved in the process of production and supply and the consumers act and decide in an ‘ideal’ market. Nevertheless, in the real world, what people or industries see as profitable, or valuable, or even worthwhile to engage in, is not only a simple matter of given costs, prices and profits or utility. Market Failures As explained above, a major issue in the energy system is that it requires coordination between the evolution of demand for energy and the use of capacities in the several segments, to avoid either bottlenecks and shortages, or expensive unused excess capacities. As is generally acknowledged, in the energy system there are serious impediments to the functioning of an ‘ideal’ market in which supply and demand interact in a balanced manner, swiftly reacting upon the information embedded in prices. The origins of these reservations are various and differ for the various value chains, like petroleum, gas, coal, biomass, electric power, etc. Generally, they are labelled as market failures or market imperfections. As for the impact of market failures, it is argued that the energy market is not to be trusted because of the interaction of large sunk investments involved in production, conversion and transport assets, the lack of information, long lead times of investments and construction, economies of scale, a weak price elasticity of demand, the geological, technical, economic and political uncertainties risk, the small number of producers and the possibilities for opportunistic behaviour. As regards demand, a crucial aspect of the energy market is that the demand for electricity or fuels is a derived demand. Indeed, energy enables end-users to secure specific services, like transportation, heating, illumination, etc. Yet, as such, there is no objective demand for a particular type of energy, but for the most appropriate form of end-use energy. This may be electricity, gas, a petroleum product or even wood, given end-use characteristics and the market and social context. For the shorter term, generally, there are no readily available alternatives, as users will have invested in their appliances and installations at home. When, however, they have to decide upon new appliances there is a possibility to switch to other sources of energy. As a consequence, the short-term price of elasticity of demand for energy is fairly low. The amount of energy consumed is generally dependent on levels of income, economic activities and the weather. Obviously, when prices for a particular energy carrier rise substantially, the inclination to shift to alternatives becomes greater.

Energy systems – making energy services available  59

Adjustment of the production of different types of energy to shifts in demand does not happen easily either. Investments in production, transport and storage assets are sunk and the capital costs are high and fixed, as compared to the variable cost. Hence, producers of primary energy and conversion facilities will keep on going, as long as their revenues are sufficient to cover the relatively modest variable cost. So, despite oversupply and low prices in the market, firms continue producing while not recovering their full costs. But the corollary is that industry is also slow in committing investments in new capacity when demand surges. Wait and see … Adjustment is slow. The availability of energy services is a fundamental aspect of each and every society. As is argued above, this is all about the interaction of the technological shape and structure of the different supply chains, with their economic aspects, and the way in which these systems are coordinated. This coordination brought about by the institutional framework that governs both the technical operation of the supply chains, as well as the economic transactions taking place therein. To a greater or lesser extent, the technical and economic characteristics of a system, determine the (necessary) contracting practices and joint ventures of the firms in the chains and their customers. Vice versa, the organization of the system influences the selection of technological options (see Correljé et al., 2014). Industry Coordination As stated, the value chain for most types of energy involves a number of interfaces, where primary energy, semi-finished and end-use products change hands between the firms active in the several segments of the industry. These interfaces could take the shape of ‘markets’. Yet, as stated above, the market is not trusted. This implies that forms of explicit coordination have always been sought in the energy industry to protect investments and ‘appropriate’ margins to survive business cycles. Here the argument is that commercial and other risk has to be covered, including the risk of potential opportunistic behaviour of other firms in the chain. Historically, a variety of contractual and ownership structures have been used to coordinate the exchanges, ranging from vertical and horizontal integration to more or less detailed longterm contracts, collective agreements among firms, industries demanding state regulation and spot markets with standardized contracts. Moreover, firms have integrated, forward and backward, into those segments of the value chain where high rents are generated or withdrew when rents were too low. Hence, horizontal cartels have been established between firms to ban competition and coordinate investments. Prominent examples of private ‘market coordination’ are Rockefeller’s Standard Oil in the US at the end of the 19th century and the Seven Sisters cartel of the big international oil companies between 1928 and 1959. Also, OPEC is such a producers’ cartel since the mid-1970s, but then under control of oil producing states (Correljé & Van Geuns, 2011). In the coal, gas and electricity industry, cartels and long-term contracts are a well-known phenomenon, while also the exploitation of biomaterials, like wood, peat, sugarcane, etc. is often ‘managed’. Public Coordination Among governments there also is a distrust that reliance on the unfettered market will yield maximum welfare to their economies, however. There is a strong notion that the both the exploitation of energy resources and the provision of energy belong to the ‘national interest’

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of a country, not only as drivers of economic activities and social and political stability, but also as a requirement for military strength. So, many governments from producing as well as consuming countries intervene in the energy sector. Traditionally, public authorities have taken a variety of roles, as policy-makers, tax-collectors, in awarding concessions, providers of subsidies, regulators and as owners and operators of public enterprises. So, changing policies, shifts in tax regimes, nationalization or privatization, adjustments in regulatory regimes, geopolitical and strategic objectives and safety issues have an impact on the technical and economic functioning of the value chains. Therewith, public authorities have a strong influence on the use of natural energy resources and the provision of energy services to the end-users. Moreover, the activities in the value chain may take place in different countries. So, these value chains are international and involve several jurisdictions; sometimes cooperating in arranging their energy supply, but also competing with conflicting aims and interests. Often the coordinative mechanisms and cartels of the industry have been interpreted as market imperfections; as firms’ collusive attempts in abusing their market power to collect high monopoly rents, by curbing industry output, by fixing prices or by dividing markets among the ‘competing’ firms. This interpretation has brought about corrective forms of state intervention, ranging from competition policy and the regulation of private firms’ monopolistic behaviour to industry nationalization and the establishment state-owned enterprises. Obviously, such interventions by governments have been influenced and inspired by their ideological perspective and by their interests regarding the distribution of the rents in the value chain. Besides, states have also intervened, responding to demands from the industry and consumers for support and protection. Indeed, a crucial element in the energy value chains is the struggle over the rents between producer countries, consumer countries and the industries, governments and consumers involved. This struggle is a consequence of the significant distributional effects that emerge from the different forms of organization and coordination of the firms in the value chain. Forms of state intervention There are five basic forms of state intervention in energy systems. The first, most general form of intervention involves the provision of permits and concessions that allow firms to undertake specific activities. Historical examples are the permits to construct wind or water mills and to collect wood from forests, peat concessions, etc. Today, almost every exploitative activity is subject to public planning and permitting procedures, which also establish norms and standards in respect of safety, environmental protection, land-use and spatial planning, emissions, health impacts, etc. Other generically applicable requirements to parties (or substances) concern, for example, the obligation to maintain emergency stocks and quality standards. Such rules apply in varying ways to the segments of the value chain. However, it can be observed that there are large differences in the stringency of these norms between different countries. This variation in stringency does not only apply to the norms as such, but also to the local enforcement of such norms. The second form of intervention involves the establishment of taxes and levies on specific products and activities, or their subsidization. Such instruments may serve a number of purposes like the redistribution of rents between the several types of consumers, the stimulation or discouragement of specific activities of an industry and among consumers, the protection of the national industry or region and generating income to the state. Important examples are the taxation and levies on production, sales, and export and import of specific energy

Energy systems – making energy services available  61

resources, CO2 emission taxes and subsidies for renewable energy production or consumption and for innovation. The third form of intervention implies the outright regulation of activities of an industry. Examples are the granting of (partial) monopoly rights to firms undertaking specific activities, like the exploration for energy resources in a particular area, their production, conversion, transport, storage and retail trading. Also, production, supply and other quota are established for specific types of energy and firms. Import and export of specific types of energy may be controlled. In many countries there is regulation of wholesale or retail prices of crude oil and products, coal and gas and of transport tariffs. Also, investments, the returns on investments and financial elements are controlled. And finally, there are rules in respect of industry locations and obligations for foreign investors to use local labour and other resources; the local content rules. The fourth form involves public ownership in the industry, either directly controlled by the state or municipalities, or at arms’ length via public shareholdings in firms. In the former case, generally, the aim is to actively influence the industry and/or control over the local market, reducing the power of other (foreign) firms. In the latter case the objective is often either revenue generation or financial support. Other arguments for public ownership are the acquisition of technology and access to up- and downstream markets. Public firms may also establish joint ventures with national or foreign private firms. The fifth approach involves competition policy, under which states seek to reduce the market power of firms, consortia and cartels. This may happen, either through the traditional remedies of competition policy, like a forced fragmentation of the dominant firms or competitive bidding for retail and other concessions, or via the establishment of a countervailing power; often a state-owned firm. Restructuring the Energy Market As from the end of the 1970s, the above forms of public intervention and market coordination were increasingly criticized, initially in the Anglo-Saxon world. ‘Rolling back the state’ á la Margaret Thatcher and Ronald Reagan and the introduction of competition would allow for a more efficient provision of energy, water, public transport and other public services. The traditional perspective had denied the feasibility of effective competition in these sectors. The new hypothesis was that competition would be possible in some segments of the supply systems and that this would improve the performance of the system as a whole. In the energy sector, essentially, only the transportation and distribution segments of the industry were accepted as being a natural monopoly, because of economies of scale and scope, high, sunk, fixed costs of pipeline and power line construction, and low variable costs. The other segments, upstream power and gas production and wholesale and retail trade, were considered to be potentially competitive markets if the industry would involve a sufficient number of firms. As from the early 1980s, the intervention of states in the energy industry shifted from the direct regulation of private firms’ activities and transactions and public ownership, towards the creation of markets by altering the structure of the industry. By providing the consumers, or traders, with a choice with respect to their suppliers and the type of contracts, they would be enabled to select the supplier offering the most attractive conditions. Suppliers, traders and retail sellers were assumed to increase, or protect, their market share by improving supply and price conditions and by developing new marketing strategies. Moreover, they were expected

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to adjust their operations through the selection of more efficient technologies and mergers and acquisitions, so that they would be able to survive in the newly emerging competitive market. To enable competition in the traditionally vertically integrated utility companies, a variety of stylized models can be distinguished, which have been implemented by national governments, as is shown in Figure 3.7 (see Correljé & De Vries, 2008). The simplest model separates the production or conversion activities from the supply networks and introduces competition among these producers. Producers of gas and power sell in competition with each other to a ‘single buyer’ utility company. The price of the gas and power sold to the utility is determined through competitive bidding among the producers for a supply contract. The utility takes care of the transmission and the distribution to the consumers. An anticipated dynamic result of this approach is that producers are free to select their production technologies, locations and primary energy sources (coal, gas, wind, etc.), with the objective of enhancing their expected competitive advantage vis-à-vis each other. A more ambitious model requires utility companies to provide ‘third-party access’ (TPA) to traders in their transport systems. The essence of this model is that, in competition with the incumbent utilities, new traders appear that purchase gas and power from producers, to sell that to consumers, while using the transport system of the incumbent utility. These new traders would be allowed to sell to large industrial users, in competition with the pre-existing incumbent utility. So, an industrial wholesale market would also emerge. Producers may then benefit because of the increase in the number of potential buyers, whereas large end-users benefit from a greater choice in suppliers and competitive conditions. Incumbent utilities retain the monopoly of supply to small consumers, but they may be able to purchase and resell energy at lower prices too. In addition to the dynamic advantages from the simple model above, this model also creates a certain freedom of contracting, in which traders are able to bargain with industrial consumers over the preferred price structures and supply conditions, including the choice of primary energy sources. An even more radical model fully separates natural gas and power supply and trading from pipeline transmission, distribution and storage activities. This so-called ‘unbundling’ should facilitate competition in wholesale and retail markets, by terminating incumbent firms’ advantages in controlling access to the transport systems and creating a level playing field for all trading parties. It creates a number of competing supply companies that purchase gas and power in the wholesale markets and resell it to their large and small customers, using the transportation systems of dedicated transmission and distribution companies. Effective wholesale and retail competition should reduce the need for end-use price regulation. Shortterm contracts balance supply and demand and provide market participants with the flexibility they need. Liquid wholesale spot markets are expected to emerge, yielding prices that continuously reflect the market value of natural gas and power. In this model, traders are able to bargain with all large and small consumers over the preferred price structures and supply conditions. This latter model obviously opened the way for all kinds of contracts incorporating qualitative and contractual consumer preferences, like different types of more-or-less green energy, locally generated energy, contract duration, price linkages with the wholesale market. It also opened the door for consumer collectives either buying particular types of energy, or collectively investing in their own local, decentral, production of energy. A corollary of this market restructuring was that many of the traditional forms of state intervention had to be abandoned, as they would distort the competitive market process.

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Figure 3.7  Models of electricity system organization

Source:   IEA/OECD (2016) Repowering Markets: Market design and regulation during the transition to low carbon systems, Paris.

Vertically integrated monopoly

Single buyer with independent producers

Third Party Access with independent producers

Unbundling with wholesale market

Wholesale and retail competition

Varying by State

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Nevertheless, public policy still seeks to achieve particular objectives, like environmental improvements, CO2 emission reductions, energy efficiency measures, regional economic development, etc. To this end, the notion of market-based instruments emerged. Such policy instruments provide incentives to firms and consumers to alter their activities through taxing or subsidizing processes or products, or by creating tradable property rights for emissions. As a consequence, they are assumed to create competition and innovation among firms in the market in achieving the objectives sought.

4. CONCLUSIONS AND DISCUSSION The sections above have briefly shown how communities are supplied with the energy they need to support their social and economic activities. The generic overview that we presented here is that of a system in which a variety of natural, or geophysical, primary sources of energy are converted into practically usable and attractive energy carriers of various kinds. Providing these energy carriers to the end-users requires the conversion(s), transport, storage and distribution and trading of both primary and end-use energy. These different activities in the several phases of the supply chain are undertaken by means of humans employing particular technologies. Over time, these technologies have been created, selected and employed, drawing on human ingenuity and experience. And this will continue in the future. In order to make the energy supply chain work, these human activities are to be coordinated. This coordination is organized in ‘the market’ which provides certain incentives, creating value to human actors in a variety of roles and positions in the value chain. The way in which these incentives arise in such a ‘market’ and what activities in the chain they support or discourage is strongly determined by the public–private governance of the system, within its broader societal context. It is obvious that the notion of ‘value’ in the chain is not necessarily limited to the classical economic values like prices, revenues, cost and profits. It also requires the consideration of a much wider set of private and public values that (will) play a role in the choices and approaches made by individuals, collectives, business and public policy in respect of the organization of the supply of energy. This conceptualization of an energy system enables us to observe and discuss the interactive process in which particular primary sources of energy are employed, the way in which technologies and locations are developed, selected and used to enable this, and how patterns of governance create the particular incentives to actors to produce, convert, transport, buy, sell and use them in a specific way. It helps us in distinguishing and understanding the consequences of local differences in the way this process may evolve. This also includes situations in which the system spans different countries, where both public and private actors have to interact in a more-or-less dependent setting, while the governance in each of these may be different. In the introduction it was argued that a techno-economic systems approach often involves formalized, mathematical, computational energy models. In parallel, much of the socio-technical systems literature has a tendency to reduce the socio aspects to terms of agency, power, multi-actor interactions and regimes, while the technical aspects are reduced to the materiality or non-human aspects or the geographies of systems. Of course, such notions provide a nice high-level characterization of the issues at stake. Yet, the message of this chapter is

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that such levels of abstraction discount the very concrete connections and interdependencies between natural resources and the way in which available or innovative technologies are (or can be) employed to create and supply useful and societally acceptable energy carriers. This is all about the interaction between public and private actors in value chains, where concrete patterns of values and instruments of governance eventually determine how particular resources, technologies and energy carriers are valued and either or not used to provide energy services to societies. Obviously, today, the notion of ‘a value chain’ is an overly simplistic concept, as the energy system is evolving into a complex grid of interconnected value systems, instead of the neatly separated systems for firewood, wind, peat, oil, coal, gas and electric power of the past. Understanding the complexities of energy system integration in a more detailed manner demands a structured approach that connects the nature of the resources, with relevant and newly emerging technologies and the way in which they can be applied in a particular economic and socio-political context, adapting the governance in place, while taking into consideration the prevailing and emerging societal values (Correljé et al., 2022). It is only through such a fine-grained understanding of the complex socio-technical system of energy provision and the conflicts and tensions that arise in the transition that we will be able to replace the unwanted effects and components of the prevailing system.

LITERATURE Andrews-Speed, P. (2016). Applying institutional theory to the low-carbon energy transition. Energy Research & Social Science, 13, 216–225. https://doi​.org​/10​.1016​/j​.erss​.2015​.12​.011 Blondeel, M., Bradshaw, M. J., Bridge, G., & Kuzemko, C. (2021). The geopolitics of energy system transformation: A review. Geography Compass, e12580. https://doi​.org​/10​.1111​/gec3​.12580 Correljé, A., Groenleer, M., & Veldman, J. (2014). Understanding institutional change: The development of institutions for the regulation of the natural gas supply systems in the United States and the European Union. Competition and Regulation in Network Industries, 15(1), 2–31. https://doi​.org​/10​ .1177​/178359171401500101 Correljé, A., Pesch, U., & Cuppen, E. (2022). Understanding value change in the energy transition: Exploring the perspective of original institutional economics. Science Engineering Ethics, 28, 55. https://doi​.org​/10​.1007​/s11948​- 022​- 00403-3 Correlje, A., & Van der Linde, C. (2006). Energy supply security and geopolitics: A European perspective. Energy Policy, 34(5), 532–543. https://doi​.org​/10​.1016​/j​.enpol​.2005​.11​.008 Correljé, A., & van Geuns, L. (2011). The oil industry: A dynamic patchwork of approaches? In International Handbook of Network Industries. Edward Elgar Publishing. https://doi​.org​/10​.4337​ /9780857930477​.00018 Correljé, A., & Vries, L. de. (2008). Hybrid electricity markets: The problem of explaining different patterns of restructuring. In F. P. Sioshansie (Ed.), Competitive Electricity Markets: Design, Implementation and Performance. Elsevier Global Energy Policy and Economics Series, February 2008. ISBN: 978-0-08-047172-3 De Gregori, T. R. (1987). Resources are not; they become: An institutional theory. Journal of Economic Issues, 21(3), 1241–1263. https://doi​.org​/10​.1080​/00213624​.1987​.11504702 Fouquet, R., & Pearson, P. J. (2006). Seven centuries of energy services: The price and use of light in the United Kingdom (1300–2000). The Energy Journal, 27(1). https://doi​.org​/10​.1016​/S1469​3062(01)00002-X Geels, F. W. (2020). Micro-foundations of the multi-level perspective on socio-technical transitions: Developing a multi-dimensional model of agency through crossovers between social constructivism, evolutionary economics and neo-institutional theory. Technological Forecasting and Social Change, 152, 119894. https://doi​.org​/10​.1016​/j​.techfore​.2019​.119894

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Hoffman, J., Davies, M., Bauwens, T., Späth, P., Hajer, M. A., Arifi, B., Baza, A., & Swilling, M. (2021). Working to align energy transitions and social equity: An integrative framework linking institutional work, imaginaries and energy justice. Energy Research & Social Science, 82, 102317. https://doi​.org​/ 10​.1016​/j​.erss​.2021​.102317 IEA/OECD. (2016). Repowering Markets: Market Design and Regulation during the Transition to Low Carbon Systems. Paris: IEA/OECD. Smil, V. (1994). Energy in World History. Boulder, CO: Westview Press. ISBN: 0-8133-1901-3 (hc) Smil, V. (2018). Energy and Civilization: A History. Cambridge, MA, London: The MIT Press. ISBN: 978026220536165 (pb) Sovacool, B. K., & Hess, D. J. (2017). Ordering theories: Typologies and conceptual frameworks for sociotechnical change. Social Studies of Science, 47(5), 703–750. Zimmermann, E. W. (1951). World Resources and Industries (2nd ed.). New York: Harper & Brothers.

4. The political history of fossil fuels: coal, oil, and natural gas in global perspective Per Högselius

1. INTRODUCTION This chapter examines the history of fossil fuels and their increasingly complex intertwinement with geopolitics and international relations. Exactly what constitutes a fossil fuel and how these fuels should be classified remains subject to debate. For the purpose of this chapter, it suffices to group them, as is commonly done, into three broad categories: coal, oil, and natural gas. It is important to be aware that no coal seam, oil deposit, or natural gas reservoir is exactly similar, in a geological and chemical sense, to another. This has geopolitical implications in terms of, for example, the substitutability of fuels originating in different countries. In the case of coal, differences in terms of energy contents are so large that low-value coals such as lignite (brown coal) hardly ever make it across a political border, while the highest-value specimens (anthracite and coking coal) can be profitably shipped all the way from Australia to Europe and from South Africa to Japan. Coal, oil, and natural gas were far from unknown natural resources in pre-industrial times. From around 1750, however, a combination of push and pull factors led to a radical boost in production and consumption, a development that continued in an even more impressive – and scary – way during the nineteenth and twentieth centuries. In 1913, just before the outbreak of World War I, the world production of coal – the key fuel at the time – already amounted to 1,342 Mt. This figure pales, however, in comparison with the nearly 8,000 Mt – roughly 1 t per person – that were annually extracted 100 years later. The growth in extraction and use was even more spectacular in the case of petroleum, which grew 36-fold from 124 to 4,485 Mt (or 4.5 barrels per person) over the same period, and natural gas, which was hardly used at all 100 years ago but then grew to become a critically important input to modern societies, featuring a staggering production of 3,989 billion m3 (520 m3 per person) (Imperial Institute, 1925; US Geological Survey, 2020; BP, 2020; IEA, 2020). As of 2019, the three broadly defined fossil fuels provided 84% of world primary energy, with oil still in the lead at 33%, followed by coal at 27% and natural gas at 24% (BP, 2020). The actual mobilization of such immense volumes of fuel for consumption must be regarded as one of the most astounding – and fateful – feats in human history. However, it was in no way a straightforward, let alone pre-determined or automatic process. It was a process led by human actors, who had to overcome a never-ending range of obstacles along the way. A key challenge in scaling up fossil fuel consumption stemmed from the fact that the world’s fossil fuel deposits were – and are – unequally distributed. Since the fuel resources were almost never located next to prospective users, fossil fuel actors depended critically on efficient transport and communications systems. The construction of waterways, railways, and roads – along with specialized tanker ships, freight cars, oil and gas pipelines, and so on – should for this reason be regarded as part and parcel of the fossil fuel complex. Some 67

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countries were able to rely on domestically available fuel deposits and domestic transport and communications systems. Most countries in the world, however, could only access coal, oil, and/or gas by relying on supplies from abroad. Since fossil fuels were early on considered to be of “strategic” importance, such cross-border links pulled fossil fuels into the realm of geopolitics. And while importing countries early on started worrying about security of fossil fuel supply, exporting nations looked for ways to strengthen security of demand. They did not want to become dependent on revenues from fuel exports for balancing state budgets. The geopolitics of fossil fuels was further shaped, often dramatically so, by technological dependencies and the complexity of supply chains. More often than not, such complexities were fully exposed only in times of crisis.

2. THE GEOPOLITICS OF COAL Coal started to be mined and used in different regions at different moments in history. In northern China it had already become the dominant source of energy 1,000 years ago, during the Northern Song dynasty. Britain followed suit in the early seventeenth century, whereas for the rest of Western Europe and North America the transition was completed only in the nineteenth and twentieth centuries (Freese, 2005). By the mid-twentieth century, households used coal widely around the world for cooking and heating. Coal became the basis for production of town gas, for railway and steamship transportation, and for industrial steam engines. It also became the most important source of electricity production and the basis for a rapidly growing organic chemical industry (Brüggemeier et al., 2018). On the international arena, coal opened up a new chapter in the history of Western military, political, and cultural dominance over the rest of the world. Imperialism entered a new phase in the late nineteenth century, now equipped with formidable tools like steam-powered warships and coal-fired riverine gunboats, with which the imperial powers subdued one region after the other. Moreover, once colonial rule had been established, steamboats and locomotives brought colonial natural resources from the “dark” interiors of conquered continents to the seaports, from where oceangoing steamers ensured their further distribution to swelling markets (Headrick, 1981; Wu, 2015; Barak, 2020). European emigration to the United States was also fueled by coal, as millions of migrants caught the train down to the coast, where giant coal-fired ships waited to carry them across the Atlantic. Meanwhile, Europe saw the emergence of cross-border coal dependencies. By the late nineteenth century, a major intra-European coal trade had emerged. Through the intense efforts of mainly private coal dealers, much of the fuel produced in the leading coal mining regions – Britain, Belgium, northern France, and increasingly the Ruhr and Silesia in Germany – was exported. Regions such as Scandinavia, northwestern Russia, Italy, and Portugal became highly dependent on coal from these sources (Cordovil, 2008; Del Curto & Landi, 2008; Kaijser, 1986). Some relied on imports despite the availability of abundant domestic coal resources. In Russia, for example, the lack of railway connections from the coal mines of the Donets Basin (Donbas) made domestic coal more expensive than foreign supplies. This prompted St. Petersburg’s gasworks and industrial enterprises to import large volumes of both British and German coal, which could be transported cheaply by ship across the Baltic Sea (Izmestieva, 1998). Imports to Europe from faraway regions such as Australia or the Americas, however, were still “prohibitively expensive” by the First World War (Barbier, 2011).

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The coal trade had both economic and political consequences. The price of household and industrial coal in Helsinki or Athens became linked to the corresponding market prices in Dublin or Moscow, and a strike, blockade, or accident in a major coal mine sometimes had repercussions for the energy supply throughout the continent (Högselius et al., 2016). A devastating British “coal famine” in 1872–1873 produced one of the first alarms in the importdependent countries (Hölsgens, 2019). By 1900, governments in the importing nations pointed to the rapidly rising coal supplies from foreign lands as a “Damocles sword” constantly hanging over them (Kaijser & Högselius, 2019). Labor strikes in Britain’s coal mining regions and supply disruptions due to bad weather were usually at the root of these early coal fears. The outbreak of World War I led to a collapse in the coal trade. Several European cities and industrial regions were cut off from much of their supplies and forced to ration the rest. At stake was not only coal use as such, but also the production of secondary energy sources on its basis, such as town gas and, increasingly, electricity. As a result, factories stopped working and numerous cities went cold and dark, while old lighting fuels such as vegetable oil made a comeback (Cordovil, 2008; Del Curto & Landi, 2008). After the war, Czechoslovakia emerged as a new important coal exporter. In this context the Czechs were able to use coal supply disruptions to Hungary as a tool in negotiating the post-Habsburg border between the two countries (Campbell, 1970). Military actors also needed coal. In the nineteenth century, the navies of many coal-poor nations faced the difficult choice between remaining in the age of sail, which was more secure from an energy supply point of view or investing in more powerful warships fueled by imported coal. In the end all countries opted for the latter path. As for the great powers, most of them had access to domestic coal deposits. Yet they, too, worried, fearing that coal might not be available in one or the other place where their warships went. The US Navy, for example, was preoccupied with the issue of coal supply risks in the Mediterranean and other distant seas (Shulman, 2015). The vulnerability that had been exposed by World War I generated an interwar wave of prospecting and exploration for domestic fossil fuel resources. Governments increasingly identified a coal supply as a national security concern – and thus as a field in which the state must assume a leading role. National geological surveys had been set up in most European countries by the end of the nineteenth century (Avango et al., 2018). Together with private explorative initiatives, these institutions became tools in the quest for greater autonomy in fossil fuel supplies. Identifying domestic coal deposits was perceived as the most important task here, but high hopes were also placed in, for example, domestic peat resources. These were seen to open up new paths to energy independence, as is clear from the energy histories of countries like Sweden, Latvia, and Lithuania (Högselius & Kaijser, 2019). Some countries did manage to find and mine domestic coal deposits. However, the import-substitution strategy was not always unproblematic, as the domestic resources were typically more expensive – and their mining and combustion often more hazardous for the environment – than imported coal. Domestic coal mines and peat fields were often unable to compete on a free-market basis against cheap foreign fuel supplies. Hence their operation became dependent on large tax subsidies, high import tariffs and the like (Kaijser & Högselius, 2019). The fact that a range of countries still opted to pursue local fuel production testifies to the fears of being dependent on other countries for fuel. In terms of environmental factors, the case of Spain illustrates what was at stake. Here, Francoist propaganda in the late 1940s argued that “northern Spain must sacrifice the beauty

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of its landscapes for the nation” (Camprubi, 2019); from a geopolitical point of view, it did not make sense to protest, as many locals had already done for decades, against local coal mining, however dirty it was. Bulgaria, Estonia, Poland, and Greece are other examples of countries that deliberately sacrificed local environments for the sake of domestic coal mining and energy independence (Tchalakov & Mitev, 2019; Holmberg, 2008; Arapostathis & Fotopolous, 2019). The fact that Europe today remains a world superpower in lignite production, in particular, is a remnant of this historical quest for “dirty” energy autarky. Europe nowadays produces over half of the world’s lignite, with Germany to this day remaining the world’s lignite champion. Russia, Turkey, Poland, Greece, the Czech Republic, Serbia, Bosnia and Herzegovina, Bulgaria, Romania, Albania, and Hungary are also massive producers (EURACOAL, 2021). But the development of domestic energy sources – to which hydropower, the “white coal”, also contributed – was not the only way to strengthen energy security. An alternative way forward was to reduce vulnerabilities by diversifying imports. The Netherlands in the nineteenth century, for example, managed to counter Britain’s dominance as a coal supplier by drawing on Belgian and German supplies (Hölsgens, 2019). Sweden and Denmark, in the interwar era, similarly found that they could use Polish coal imports to diversify their supplies away from Britain and Germany (Olsson, 1975; Rüdiger, 2019). Such diversification fulfilled an important function not only politically, but also economically, as the importers could put pressure on competing suppliers to come up with attractive offers. The importers further sought to develop trustful relations with exporting countries and companies. During World War I, for example, the (neutral) Netherlands managed – initially – to avoid coal shortages thanks to a crucial agreement with Imperial Germany through which the Dutch supplied the Germans with food products in return for fuel (Hölsgens, 2019). During World War II, Sweden similarly – and controversially – managed to avoid a national coal crisis by negotiating large coal imports with Hitler in return for Swedish iron ore (Kaijser & Högselius, 2019). A related strategy was to forge alliances with other importing countries. An early example was the Scandinavian Coal Importers’ Federation, which was established in 1923 by Danish, Swedish, and Norwegian coal companies. Its purpose was to obtain as favorable trade agreements as possible with British, German, and Polish coal exporters by coordinating negotiations (Kaijser & Högselius, 2019). In 1913 British coal production peaked and then started to decline. In the interwar years several other large coal-producing countries found their coal deposits being depleted at an alarming rate. After World War II, France, facing depletion, desperately sought access to German coal; this became a major motivation for creating the European Coal and Steel Community (ECSC) in 1951. The ECSC strengthened intra-European coal dependencies while paving the way for (West) European political and economic integration in a wider sense. But then in 1956 German coal production also peaked, and unsurprisingly intra-European coal became more and more expensive in the decades that followed. At the same time, transportation costs, thanks to new oil-propelled ships, declined rapidly, while new institutional conditions in the world economy favored trade. The effect was that hard coal from very far away started to become competitive in Europe. The intensifying intra-European coal transnationalism that had been institutionalized through the ECSC was thus counterbalanced – and challenged – by a surge in new coal relations between Europe and other coal-producing regions (Högselius, 2022). Hard coal from overseas became so cheap that all the state subsidies that European governments poured into their domestic coal industries did, in the end, not have much of an effect. Steelworks, cement producers, and power plants found themselves negotiating for coal imports with producers from distant countries

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like Colombia, South Africa, Australia, and the United States. European electricity demand made it economically feasible to launch breathtaking new mining projects, as exemplified by Colombia’s huge open-pit mine at El Cerrejón and Australia’s Drayton Mine. Ever since, a vast majority of Europe’s hard coal has been imported from far away, rather than produced locally. By the early 2020s Poland was the only remaining EU member state with any significant domestic production (EURACOAL, 2021). In parallel with the geopolitical shifts in coal, the coal industry has seen several shifts in the power balance between private and public enterprises. In the nineteenth century, business actors and private capital played a dominant role in coal industries almost everywhere. In contrast to oil, where a few extremely powerful actors came to dominate the world market, coal production was in the hands of a very large number of companies, none of which was particularly dominant. This was the case in both Europe and North America as well as in Asia. At times, notably during the interwar era, groups of coal companies joined forces to create cartels or syndicates of one kind or another – the most famous being the Rhenish-Westphalian Coal Syndicate in Germany – but occasional warnings that a “Coal OPEC” might be in the making never materialized. As a matter of fact, no single producing country or group of countries has ever been able to dictate world market prices. This has generated a perception of coal imports as more secure (in both physical and economic terms) than other fossil fuel imports. This has contributed greatly to the interests of many actors in retaining a large share of coal in their domestic energy systems (Högselius, 2019). After World War II, coal production was nationalized in Britain and France as well as in Mao Zedong’s China and the communist countries of Central and Eastern Europe. From the 1980s, then, the trend turned towards the privatization of state-owned coal companies in both Eastern and Western Europe. In recent decades, however, coal production in Western Europe (where the hard coal industry has essentially ceased to exist), Eastern Europe, and North America has been dwarfed by the spectacular rise of the Chinese and Indian coal industries, which now together account for a staggering 59% of total world coal production (BP, 2021), and whose coal companies are state-owned. In other words, the global shift in the coal production geography has had the effect – if we take a global perspective – of moving the power over coal from the private to the state sector. To illustrate this, we may compare the revenues of China’s largest coal producer, the Shenhua group, which in 2014 amounted to US$53 billion, with those of the world’s largest privately controlled coal company, US-based Peabody (with headquarters in St. Louis, Missouri), which amounted to a mere US$4 billion in 2016 (Högselius, 2019). During the second half of the twentieth century, however, coal was gradually replaced by alternative energy sources. Heaps of coal stored in backyards may still be a common everyday sight in rural China and India. In the rich world’s household sector, by contrast, it has been totally phased out, while the coal-chemical industry has long given way to petrochemistry. By the early twenty-first century most coal extracted worldwide was used for three major purposes only: electricity generation and steel and cement production (Smil, 2003). It was no longer a universal fuel.

3. THE GLOBAL OIL DRAMA The modern petroleum industry emerged during the second half of the nineteenth century. It was spearheaded by American entrepreneurs, with a take-off phase in the 1850s and 1860s. Pretty soon American kerosene, the main refined product, started to be exported, ushering in

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an era of international trade and thus of oil as a fuel with geopolitical potential. A number of European and Russian entrepreneurs set out early on to challenge the American dominance. They did so by turning to colonial oil regions such as the Baku area in Russia, the Dutch East Indies, and the Middle East, as well as to Venezuela, where Shell initially led the development. In this way oil had already become a globalized fuel by the end of the nineteenth century (Högselius, 2022; Garavini, 2019). Then, in the 1910s, oil started to be regarded as a strategically important energy source. This had to do with its emerging role in propelling warships, tanks, and airplanes (Yergin, 1991). As a result, oil imports were increasingly identified as something for state agencies to look into. Many Western governments decided that they wanted greater control over their oil supply. This led them, as in the case of coal, to initiate domestic prospecting and exploration on varying scales, but also to acquire their own oil fields abroad. The result was a second, more aggressive wave of oil colonialism (Högselius, 2022). While very little oil was found in Europe, remarkable finds were made overseas. Britain with its Anglo-Iranian company (later renamed BP) led the way, with the multinational Turkish Petroleum Company (later renamed the Iraq Petroleum Company) not far behind. While European companies initially dominated the emerging Middle Eastern oil industry, where Iran and Iraq became early extractive hotspots, they were subsequently accompanied by the American majors. The Americans rose to dominance in Saudi Arabia, whose Ghawar oil field, the world’s largest, was discovered in 1948 (Yergin, 1991). After World War II, which demonstrated the strategic role of oil on an unprecedented scale, the Western quest for Middle Eastern and North African oil continued at an accelerated pace. Italy became very active from around 1954 in regions such as Egypt and Iran, while Spain, in cooperation with the oil majors, tried but failed to find oil in the Spanish Sahara. In the 1960s Germany entered the game through a company called Deminex (Duffield, 2015). Even smaller nations such as Sweden tried to find oil in foreign territories (Kaijser & Högselius, 2019). Most amazingly, some of the countries behind the Iron Curtain eventually emerged as oil colonialists; this concerns not only the far-reaching involvement of the Soviet Union in third-world oil exploration projects, but also countries such as Bulgaria, which thanks to the friendship between its dictator Todor Zhivkov and his counterpart in Libya, Muammar al-Gaddafi, was able to tap into Libyan oil (Tchalakov & Mitev, 2019). American and European bids for dominance over the global oil industry were countered by efforts from the side of colonial regions to liberate themselves from foreign rule and take control of their own natural resources. The history of oil is tightly interwoven with the history of decolonization, which coincided with the transition from coal to oil as the most important fossil fuel in Europe, North America, and Japan. Having succeeded in becoming formally independent, the former colonies – now referred to as “developing countries” – continued their struggle against the continued dominance of Western oil companies in the extraction of their crude oil resources (Black, 2012; Garavini, 2019). The new political leaders demanded greater influence over oil production on their territories and a greater share of the oil companies’ profits. The foreign companies were initially able to retain control thanks to capital and technology, but even so, they felt threatened by a possible expropriation of their assets. By the early 1950s it seemed that a certain stability had been achieved. Governments in oil-rich developing countries and foreign oil companies concluded agreements with each other, centered on the principle of sharing profits equally. Venezuela pioneered this “fifty-fifty” principle, which then spread to the Middle East. But the specter

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of nationalization did not disappear. In 1951 the Shah of Iran nationalized the country’s oil industry, which up to then had been controlled by the Anglo-Iranian Oil Company. (Two years later, however, the foreigners were able to return following a CIA-sponsored coup d’état.) In July 1956, then, the most important transport route for crude oil, the Suez Canal, was successfully nationalized by Egypt’s radical president Nasser. Nasser’s triumph symbolized the return of the Arab world as a force to be reckoned with in world politics. In what followed, Egypt and Syria jointly created the United Arab Republic and in July 1958 the British-supported Iraqi monarch, Faisal II, was removed in a bloody, Nasser-inspired, coup. The Iraqi events greatly changed the prospects for the Western oil companies that for several decades had operated in that country, exploiting its oil in a colonial fashion (Yergin, 1991). Oil was central to the emerging Arab nationalism. An early topic for discussion, in this context, was the potential use of oil as a “weapon” in economic warfare against Israel. Another concerned the proposal to set up an Arab international consortium or organization to govern Middle Eastern oil production, increase state profits, and act as a counterforce against the power of the foreign oil companies. But soon it was realized that an Arab-only organization would not suffice. To really take control over its own oil resources the Arab governments needed to join forces with large non-Arab oil producers, such as Iran and Venezuela. Venezuela’s oil minister Juan Pablo Pérez Alfonzo played a key role in making this happen. He had lived in the United States, where he had become fascinated by a peculiar organization, the Texas Railroad Commission, which in the 1930s had been charged with regulating oil production in Texas for the purpose of keeping up prices. Pérez Alfonzo thought the Global South could do something similar – on a world-wide scale. The issue became acute in the late 1950s when a surge in Soviet oil exports forced Western oil companies to lower their prices, while US President Dwight Eisenhower, at the same time, introduced import duties on foreign oil for the purpose of protecting the country’s domestic oil producers. Venezuela, Iran, and the Arab oil producers reacted vehemently. In 1960 this led to the formation of a new international organization: OPEC (Yergin, 1991). Many people in the West tend to think of OPEC as a primarily “Arab” organization, but in reality, it included an impressive diversity of countries and cultures from the very beginning. Venezuela, Iran, Iraq, Saudi Arabia, and Kuwait were the founders, soon joined by Qatar, Indonesia, and Libya. Later on, the United Arab Emirates, Algeria, Nigeria, Ecuador, and Gabon became members (in that order). As Garavini (2019) notes, OPEC countries found themselves on opposite sides of the Cold War divide, and even on opposing sides of various regional ‘cold wars’ as highlighted in the tensions between Iraq, Saudi Arabia, and Iran. Their citizens spoke different languages, belonged to different religious faiths, ate different foods, inhabited regions that varied from tropical forests to deserts, and organized themselves politically in different systems, including democracies, socialist regimes, and absolute monarchies.

They had only one thing in common: oil. In the context of the 1967 Six-Day War, the Arab countries for the first time tried to issue an oil embargo. It failed, because other countries, especially the United States, had a large spare production capacity that could easily compensate for the missing Arab oil. But during the next couple of years that reserve capacity quickly dwindled following a rapid surge in US and global demand, and the oil-importing nations of the world became increasingly vulnerable. OPEC was not late to take advantage of this new situation. In 1971 it succeeded in enforcing a substantial increase in the export price and subsequently several countries – from Libya

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and Algeria to Iraq and Venezuela – took radical decisions to nationalize their oil industries (Yergin, 1991; Garavini, 2019). The Western world and Japan, meanwhile, faced severe oil shortages. The US East Coast found itself struggling with electricity blackouts caused by lack of fuel. In Japan, too, blackouts became common. In early 1973 many countries were struggling with enormous problems in terms of their oil supply and gasoline shortages. Oil consumers were thus already very vulnerable when, on October 6, 1973, Egypt and Syria attacked Israel, launching the Yom Kippur War. The American decision to support Israel militarily caused outrage among the Arab OPEC member states. They retaliated by launching an oil export embargo, organized in such a way that overall production was reduced by 5% every month until their political goals had been reached. Oil deliveries to “friendly countries” continued as before, but shipments to the United States and a few other countries were totally stopped. In parallel with the embargo, OPEC – including the non-Arab producers – decided to raise the oil price by 70%. In December 1973, OPEC decided to double that price. In total this meant a near-quadrupling of the oil price in just three months (Yergin, 1991). In contrast to 1967, the 1973 oil embargo had unprecedented consequences. Suddenly the whole world became aware of its dependence on oil and on the oil-producing countries. In the United States, car owners were greeted at gas stations by new, previously unknown signs: “Sorry, No Gas Today” (Jacobs, 2016). In Britain, the oil crisis coincided in an unlucky way with a series of radical strikes in the national coal industry. Electricity supply went down, the economy was paralyzed, and a three-day working week was instituted in industry (Duffield, 2015). Other countries, notably Japan, which was heavily dependent on Arab oil, found themselves forced to adapt their foreign policy to the new situation, taking a more Arab-friendly stance in world politics (Yergin, 1991). In terms of long-term responses to the crisis, importing countries adapted their supply strategies in a variety of ways. To a great extent the adaptations built on their previous experiences in coal. Thus, there were immediate efforts to find new ways of cooperating both with the oil exporters and internally in the “club” of importing countries. While the attempted cooperation between importers and exporters was formalized in a series of UN-led conferences, which were led by Algeria and centered on the quest for a “New International Economic Order”, the latter led to the creation of the International Energy Agency (IEA) under the auspices of the OECD in 1974 (Garavini, 2019; Türk, 2014). The oil crisis also seemed to confirm the relevance of investing in oil exploration in the North Sea and other “new” promising oil regions, such as Alaska, the Mexican Gulf, and offshore Brazil, which potentially offered a powerful way of diversifying supplies in a geographical sense. For Europe, the geopolitical importance of North Sea oil, produced mainly in British and Norwegian waters, can hardly be exaggerated – and with the rapid rise in the oil price it now definitely seemed that this oil, being located in a challenging physical environment, could be extracted profitably (Priest, 2016). But there was also far-reaching support in many countries for research and development targeting energy efficiency and the development of “alternative” energy sources such as wind and solar energy along with electric vehicles and other technologies with a potential to lower oil consumption. In some countries, notably France, nuclear power was identified as the key alternative source of energy (Duffield, 2015). The oil embargo was removed in March 1974, but the oil price remained at an exceptionally high level throughout the next five years, causing enormous economic problems across the world. And in 1979 the time had come again: a new oil price shock occurred; this time

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linked to the Iranian revolution. Then, the tide turned: from 1981 the oil price started to fall and in 1986 the market totally collapsed in what has been called the “reverse” oil price shock. This had largely to do with what the Saudi oil minister Zaki Yamani referred to as the “divine laws of supply and demand”. It was also linked to the failure of OPEC members to cooperate in a time of growing regional tensions, especially in terms of the war between Iraq and Iran (1980–1988). Until the late 1990s oil remained cheap and for some time it even seemed, in view of OPEC’s lost power, that oil was becoming “just another commodity” (Yergin, 1991; Garavini, 2019). During the 1970s and 1980s the heavy reliance on oil started to be questioned not only against the backdrop of geopolitical fears, but also on environmental grounds. Maritime oil spills constituted an obvious threat. Acid rain, eutrophication, and smog were likewise associated with growing oil – and coal – consumption. And as if this was not enough, from the late 1980s the combustion of fossil fuels was increasingly identified as the cause of global warming. In what followed, oil consumption actually declined in the Western world. Elsewhere, however, it continued to increase. From the 1990s it was radically boosted by a new industrialization wave that swept through the Global South. China spearheaded this development, closely followed by India, Brazil, South Africa, Indonesia, and a range of smaller developing countries. Everywhere the dream was the same: to build a quality of life on par with that of the Western nations, with car ownership and mass consumerism at the center – a dream that more or less automatically translated into excessive levels of oil use. This also meant that more countries became directly involved in the geopolitics of oil. By the early twenty-first century, the oil supply was once again becoming tight. The oil price rose rapidly, eventually peaking in summer 2008. The large oil companies harvested enormous profits and in 2009 no fewer than seven out of the ten largest listed companies worldwide were oil companies. For the oil-importing countries the situation was more problematic. Oil and oil dependence was once again on everyone’s lips. In the United States, President George W. Bush famously acknowledged that “America is addicted to oil”. The struggle against oil seemed to be on its way to a new climax. Oil had become the very symbol of a dangerous and unsustainable world. But how much oil was there actually down there, under the surface of the Earth? That question had been hotly debated for decades. There was no clear answer. On the one hand, as argued by Michael Klare (2012) in a much-cited book, the world seemed to be heading towards an epic struggle between the great powers – which by now also included China and India – for the little remaining oil that had not yet been discovered or exploited. These remaining resources were located partly in politically unstable, corrupt, and totalitarian countries such as the Democratic Republic of the Congo (DRC), Sudan, and Kazakhstan, and partly at great depths under the world’s oceans or in inaccessible regions like the Arctic. Many oil companies opted to follow both pathways. But the problems were enormous. In countries such as the DRC, oil exploitation fueled corruption, financed civil wars, and generated enormous social injustices. Extraction at sea, for its part, was only possible to the extent that companies and regulators accepted immense environmental risks, a circumstance that came to its most tragic expression in spring 2010, when BP’s Deepwater Horizon oil platform was violently destroyed in the Gulf of Mexico. Florida’s beaches were totally destroyed by the resulting oil spill. On the other hand, new technical innovations ensured that large quantities of oil could be extracted from geological formations that had not been considered exploitable before. A set

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of methods that were collectively referred to as “unconventional” oil production started to be applied on a massive scale, especially in the United States and Canada. The result was that North America’s oil production increased to levels that would have been considered impossible just a few years earlier. The only dilemma was that the unconventional oil was harvested at the price of far-reaching environmental destruction in the producing regions – and that it boosted global oil consumption, thus jeopardizing the efforts to halt global warming.

4. TOWARDS A GOLDEN AGE FOR NATURAL GAS A look at the global energy mix and its recent evolution reveals that only two types of energy sources have increased their aggregate shares of total energy supply during the past decade: renewables and natural gas. Coal, oil, and nuclear energy have all gradually decreased in relative importance, while hydropower has roughly retained its share (BP, 2021). It is hardly surprising that renewable energy sources have grown so fast. But how can it be that natural gas, a fossil fuel, has advanced so considerably in importance and popularity? The IEA has called our era a “golden age” for natural gas. Natural gas now contributes roughly a quarter of all energy that is produced and consumed worldwide. That is quite impressive for a fuel that for a long time was not even regarded as a resource. The gas, which escaped from oil wells (and sometimes from coal mines, where it at times caused dangerous explosions), was for decades and even centuries regarded as an unwanted waste product that accompanied the extraction of crude oil. Usually it was flared, producing the typical fires that still today can be seen in many oilfields and which are now increasingly looked upon as a threat in the context of climate change. It is important to distinguish between natural gas and manufactured gas, the latter resulting from industrial production processes. When gaseous fuels started to be used on a large scale in the nineteenth century in Europe and North America, they were produced from hard coal. This gas was marketed as “town gas” as it was largely used in urban settings for lighting, cooking, and even space heating (Tomory, 2011; Kaijser, 1987). The notion of “natural” gas was introduced to separate it conceptually from manufactured gas. Environmental activists nowadays avoid using the term “natural gas”, preferring, instead, alternative terms like “fossil gas”, to make clear that natural gas is a fossil fuel and part of the same family of fuels as coal and petroleum (Lacroix et al., 2021). It may seem strange that natural gas was not already made use of from the beginning. Its main constituent – methane, the simplest of all hydrocarbons – is an exceptionally attractive source of energy: the gas burns with a hot and even flame and its combustion generates almost no polluting substances – except carbon dioxide. Natural gas was thus much cleaner and more environment-friendly than town gas, which contained dangerous compounds such as carbon monoxide. Moreover, the energy density of natural gas was twice as high. The only problem was that large and risky investments in long-distance gas pipelines were necessary for conveying the gas from the deposits to the customers. Usually, the volumes extracted were not sufficiently large to make the construction of such pipelines profitable (Tarr, 1999). This changed in the 1920s as a result of rapidly growing oil production in the United States. Companies and investors grew increasingly willing to take the risks linked with large pipeline projects. American engineers devised new, efficient solutions for building and managing such systems, with the high-quality welding of steel pipes and mathematical models for optimizing

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gas flows as key technologies. By the 1930s, large parts of the United States were already covered by an impressive network of natural gas pipelines (Tarr, 1999). Before the gas was pumped into this transmission system, higher gaseous hydrocarbons like ethane, propane, and butane were separated out; they could easily be compressed into liquids and thus be brought to customers using the general-purpose transport infrastructure. These “liquid” energy gases came to play an important role for energy supply in locations that were beyond the reach of pipeline networks. The liquids could be sold at higher prices than natural gas itself, and in this way, they contributed to making the gas industry in its entirety profitable (Bradshaw & Boersma, 2020). In Europe the development was much slower than in the United States. This was essentially due to the fact that the European oil industry was less developed. The interest in natural gas in Europe was initially linked to a vision of phasing out or at least reducing dependence on imported energy. This may sound paradoxical in view of the present-day situation in Europe, where many actors and analysts are deeply worried about Europe’s dependence on imported natural gas. But in the mid-twentieth century the situation looked different. At that time, as we have seen, coal was the most important fuel and many countries worried about their dependence on foreign coal supplies. When Italy, France, and Austria – countries that did not possess any significant domestic coal deposits – made sizeable domestic oil and gas finds in the 1940s and 1950s, they spotted an opportunity to reduce their coal import dependence. In what followed, Europe’s coal-poor countries spearheaded the introduction of natural gas in the European energy system (Högselius et al., 2013). Over time, natural gas became enormously popular in Europe. The result was a greatly increased demand, stimulating state and regional energy companies to build regional pipeline grids around the gas-producing regions. By the 1950s, however, the very popularity of natural gas had already become a problem: supply was no longer able to meet demand. In this situation several European gas companies faced an existential choice: either they would have to accept that their domestic gas fields were about to be depleted and tell their customers that they would have to switch to alternative fuels, or the companies could try and access gas from farther away and in that way keep domestic customers happy. All European gas companies opted for the latter possibility, paving the way for large-scale gas imports. In what followed, the European natural gas system entered a new developmental phase (Högselius et al., 2013). The region that seemed most attractive as a source for gas imports to Western Europe was Algeria, which in the 1950s was still a French colony. In 1956 French geologists discovered an enormous gas field, Hassi R’Mel, deep inside the Sahara Desert. The deposit was so large that it seemed to have the potential to cover all of Europe’s gas needs for the foreseeable future. The French, naturally, thought of their own country as the primary future destination for Algerian gas. But a range of other European countries also took interest in the find, including Italy, Spain, Britain, Austria, and West Germany. They dreamed up a vision of a possible Eurafrican energy system, in which the Saharan gas would be pumped through the desert, across the Mediterranean, and onwards to industries and cities in Southern and Western Europe. International organizations such as the United Nations endorsed this ambition. In 1959, however, a giant gas find was made in Western Europe itself: in the Netherlands. It turned out to be so large that the Dutch would not be able to use up the gas on its own. Negotiations were initiated with neighboring countries for gas exports, and from the mid1960s Dutch gas started flowing through newly built pipelines to Belgium, France, and West Germany (Kaijser, 1999).

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In spite of this important addition to intra-European gas production, several gas companies continued to take an interest in Saharan gas. This was because they were reluctant to make themselves dependent on a single exporting country. It was seen as strategically important to avoid a Dutch monopoly on Western European gas supply. The importing countries hoped to diversify their supplies and negotiate a better gas price. In addition, a diversified supply structure reduced the risk of being left without gas in a crisis situation. As a result, the gas from Algeria, which in the years around 1960 was undergoing a violent decolonization process, was, paradoxically, regarded as a source of greater security of supply! For similar reasons several Western European countries, starting in the late 1960s, set out to negotiate gas imports from the Soviet Union. Over time Western Europe in this way managed to construct a European gas system in which several gas streams from different geographical directions balanced each other. Competition meant that prices were kept low. Low prices stimulated European gas consumption. This in turn inspired new, additional gas pipeline projects and growing gas imports, in a self-sustaining positive feedback loop (Högselius et al., 2013). Natural gas hence came to play an ever more important role in Europe’s energy supply. From the 1970s housewives in Munich were able to cook on Siberian natural gas, while government offices in Paris were heated by Dutch and Algerian gas. The gas made it possible to phase out coal in European space heating. In this way it also contributed decisively to reducing urban air pollution and dangerous smog in cities across Europe, from London to Moscow. In terms of imports from the East, natural gas further contributed to geopolitical détente between East and West. Inspired by Western European coal transnationalism, political leaders such as Willy Brandt in West Germany saw the emergence of international gas pipelines that crossed the Iron Curtain as a way to reduce the risk of future wars in Europe. The East–West gas trade became, just like the ECSC, a way to cement peace between earlier enemies (Högselius, 2013). A key technical challenge in the case of natural gas transmission from Algeria was to move the gas across the Mediterranean. Laying a pipeline on the bottom of the sea proved more difficult than initially expected (Hayes, 2006). As an alternative, the gas companies started to take an interest in the possibility of liquefying the gas, so that it could be loaded onto tanker ships, just like oil. In order to condense the gas, it needed to be cooled to −162°C (−260°F). Experiments with such liquefied natural gas (LNG) started in the late 1950s through a BritishAmerican project. French and Algerian interests then joined in and from 1964, Algerian gas could be exported in large volumes by LNG carriers to both France and Britain. The Algerian success inspired others. Japan, in particular, decided to invest heavily in LNG, as an alternative to the geopolitically problematic oil from the Middle East. Japanese companies financed many of the liquefaction plants that were built in new LNG-exporting countries such as Indonesia and Brunei. Towards the late 1980s South Korea joined the group of large-scale LNG importers, followed by Taiwan in the early 1990s. In this way East Asia became by far the most important LNG-consuming region (Bradshaw & Boersma, 2020). On the export side, Qatar appeared to be the most promising LNG supplier, based on a giant gas field discovered in the Persian Gulf in 1971. Qatar’s initial vision was to make this gas available throughout the Middle East, with long-distance pipeline transport just like in North America, the Soviet Union, and Europe. The vision failed, partly because the countries in the region did not trust each other sufficiently and hence were not prepared to enter such a dependence-generating cooperation. One single export pipeline – the “Dolphin” – was

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eventually built: it enabled Qatari gas to be shipped to the United Arab Emirates and Oman (Dargin, 2007). At the same time Qatar started exploring the possibilities of liquefying its gas resources and shipping it to more distant countries. These plans initially failed, largely due to the hostilities in the Persian Gulf that were linked to the war between Iran and Iraq in the 1980s and the ensuing First Gulf War in 1991. LNG exports from Qatar eventually started only in 1996. They subsequently grew rapidly, turning Qatar into the world’s LNG superpower (Dargin, 2007; Bradshaw & Boersma, 2020). In parallel with the emergence of the LNG trade, several countries invested in new, innovative extraction methods. The main success here came in the United States, where the focus was on the large quantities of methane that were buried in geological shale formations. These had earlier not been regarded as commercially exploitable. The new geopolitical situation and the higher energy prices in the wake of the oil price shocks, however, motivated Washington to support companies that experimented with technologies for extracting these resources. The research was financially supported by the Department of Energy and its National Energy Technology Laboratory. It was to a great extent such state-sponsored investments that created the basis for the “shale gas revolution” of the early twenty-first century. The new technology, based on hydraulic fracturing (“fracking”) of the bedrock, paved the way in the early twentyfirst century for a spectacular – and environmentally controversial – growth in American natural gas production. Yet it was fraught with environmental controversy, which prevented it from spreading to Europe (Bradshaw & Boersma, 2020; Cantoni, 2018). From around 2010, the global gas industry entered a phase of particularly rapid growth. While Europe’s gas consumption stabilized, Asia’s gas consumption grew by 70% in just a decade (BP, 2021). LNG and shale gas created the technical prerequisites on the supply side, while demand was driven by new energy and environmental policy trends in Asia. Just like in North America, Western Europe, and the Soviet Union half a century earlier, Asian governments increasingly identified natural gas use as an effective way of coming to grips with urban air pollution, in the form of dangerously high levels of nitrogen oxides, sulfur dioxide, and airborne particles. This formed the basis for a radical increase in China’s gas consumption, which grew three-fold over the 2010s. In Beijing, where an ever more self-confident middle class refused to tolerate the capital city’s notoriously bad air, a systematic reconstruction of district heating plants was initiated, replacing coal with natural gas as the main fuel. At the same time new regulations forced transport companies to substitute gas-driven (and electric) vehicles for diesel-fueled ones. A similar development is now predicted in India, where nine of the world’s ten most polluted cities are located, as well as in other emerging economies like Indonesia, Bangladesh, the Philippines, and Pakistan. The transition to natural gas is facilitated by a trend towards smaller-scale, flexible technologies for gas transmission and distribution, including floating terminals for receiving and storing LNG. The latest trend centers on even smaller LNG facilities of this kind, designed for small-scale gas-fired power plants, a function that is much desired by, for example, smaller island nations that wish to switch from coal and oil to cleaner, gas-based electricity. In total, this has meant that the number of countries that import LNG has doubled in just a decade (Bradshaw & Boersma, 2020). The transition from coal and oil to natural gas in Asia and elsewhere changed international energy relations, as the gas suppliers were as a rule not the same as the coal and oil suppliers. The environmentally motivated transition to natural gas was especially fateful when imported gas replaced domestic coal. This was to a very significant degree the case in China, which

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became a net importer of natural gas in 2007; a decade later, imports already account for roughly half of total domestic consumption (Zou et  al., 2018). To meet demand, China set out both to massively scale up its LNG imports and to forge cooperation with Russia and the ex-Soviet Central Asian republics for the construction of new long-distance pipelines from Eurasia’s interior. In this way Beijing’s struggle against air pollution became directly linked to political and economic developments in Turkmenistan and other former Soviet republics. There, gas (and oil) exports to China emerged as the new main source of national income (Xu & Klaiber, 2019). Natural gas also came to play a main role in countries that faced problems with their nuclear energy programs. After the Fukushima disaster in 2011 all of Japan’s nuclear power plants were closed. In that situation, an immense increase in LNG imports contributed in a highly significant way to Japan’s energy supply, and the country managed to avoid a total collapse of its electricity system. Several European countries also decided, in the wake of Fukushima, to abandon nuclear energy, and here, too, natural gas played an important role in compensating for the shortfall of nuclear electricity. In the United States it can further be seen that the planned construction of new nuclear power plants has been postponed or canceled as it appears unlikely that new nuclear electricity will be able to compete with power plants fueled by cheap shale gas. All in all, natural gas in this way is a key factor behind the failure of what until recently was touted as a coming “nuclear renaissance”. The “golden age for gas” has thus been strongly linked to the fuel’s role in managing crises of different kinds, from Beijing’s killer smogs to the disaster at Fukushima. The question is now if natural gas can contribute positively to combating climate change, too. In the United States and Asia this is in practice already the case. The transition from coal to natural gas in the US electricity industry largely explains the reduction in total US carbon emissions by 28% from 2005 to 2017 (Bradshaw & Boersma, 2020). Asia’s large investments in natural gas have also led to substantial decreases in carbon dioxide emissions per produced kWh – although this was not actually the transition’s purpose! In Europe, by contrast, the situation looks very different. Not long ago, European gas companies could still argue convincingly that gas, when it replaced coal, helped to reduce carbon emissions and that gas played an important role in stabilizing the electricity grid at a time when growing volumes of wind and solar energy were fed into the system. These arguments are now accepted by a shrinking number of actors and natural gas’s reputation has quickly worsened. The geopolitically problematic dependence on Russian natural gas, which was dramatically highlighted in connection with Vladimir Putin’s decision to invade Ukraine in February 2022, further strengthens the opposition. As a result, most scenarios predict that natural gas consumption in Europe will soon start to decrease, driven by a quest for phasing out this last fossil fuel. In this way Europe follows a trajectory that is very different from the rest of the world, where natural gas has become something like a savior in the energy field.

5. CONCLUSION Having dominated the global energy supply over the past two centuries, fossil fuels have shaped the modern world and modern societies in almost every respect. This has been a geographically uneven development, as the production and consumption of coal, oil, and natural gas grew at different rates in different parts of the world. At an aggregate level, however, the

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history of fossil fuels has been characterized by rapid and intensifying growth, with a “great acceleration” setting in after 1945. In the process, fossil fuels have interacted in numerous ways with (geo)political developments – and they continue to do so in the twenty-first century. Fossil fuels have affected and been affected by international wars and other cross-border conflicts. They have occasionally been mobilized as metaphorical “energy weapons”. They have also played a key role in colonialism and empire-building. At the same time, fossil fuels have sparked international cooperation and brought together countries that would otherwise have found it difficult to sit around the same table. As the world enters an intense phase of renewable energy investments, it remains to be seen how and to what extent the geopolitics of fossil fuels will continue to shape world developments.

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Tomory, L. (2011). Building the first gas network, 1812–1820. Technology & Culture, 52, 75–102. Türk, H. (2014). The oil crisis of 1973 as a challenge to multilateral energy cooperation among Western industrialized countries. Historical Social Research, 39(4), 209–230. US Geological Survey. (2020). Mineral Commodity Summaries 2020. US Geological Survey. Wu, S. X. (2015). Empires of Coal: Fueling China’s Entry into the Modern World Order, 1860–1920. Stanford University Press. Xu, S., & Klaiber, H. A. (2019). The impact of new natural gas pipelines on emissions and fuel consumption in China. Resource and Energy Economics, 55, 49–62. Yergin, D. (1991). The Prize: The Epic Quest for Oil, Money and Power. Simon and Schuster. Zou, C., Zhao, Q., Chen, J., Li, J., Yang, Z., Sun, Q., Lu, J., & Zhang, G. (2018). Natural gas in China: Development trend and strategic forecast. Natural Gas Industry B, 5, 380–390.

5. The facts and figures of the energy transition Dolf Gielen and Francisco Boshell

1. INTRODUCTION: THE STATE OF ENERGY TRANSITION Under the Paris Climate Agreement, countries have committed to limit temperature rises to well-below 2°C for a target of 1.5°C. In recent years, the consequences of climate change are better understood as there is a general understanding that the objective must be to hold climate change to 1.5°C. This requires a halving of global greenhouse gas emissions by 2030 and net zero CO2 emissions by mid-century. There are now over 30 countries and the European Union with political, and in some cases regulatory, commitments to a net-zero goal, covering 70–80% of global CO2 emissions. In addition, a growing number of sub-national regions, cities and companies are committing to achieving net-zero emissions. The World Economic Forum has developed a global index that tracks the performance of energy systems and transition readiness at the country level. It also incorporates macroeconomic, institutional, social and geopolitical considerations that provide enabling conditions for an effective energy transition (Figure 5.1). The analysis indicates that countries are at very different stages of energy transition (Singh et al., 2019). The policy signals are mixed. As of April 2021, the 50 largest economies had pledged an estimated US$14.6 trillion for post-pandemic recovery but less than one-fifth is being directed toward green initiatives (O’Callaghan & Murdock, 2021). As of 14 July 2021, 62 countries and the EU have submitted new NDCs, covering nearly 50% of global emissions. Analysis of the NDC targets as of the end of 2020 shows that while the majority of nations represented increased their individual levels of ambition to reduce emissions, their combined impact puts them on a path to achieve a less than 1% reduction by 2030 compared to 2010 levels (UNFCCC, 2021). Decarbonisation requires an energy transition, and renewable energy is one of the pillars of this energy transition (Gielen et al., 2019). Recent advances in technology and accelerating deployment of clean technologies gives us growing cause for optimism about the coming decades. This transition is driven by low-cost renewable energy supply, with average onshore wind at US¢3.9/kWh and utility scale solar PV at US¢5.7/kWh (IRENA, 2021e). The lowest cost solar and wind power generation are in the range of US¢1–2/kWh, well below those for fossil-based generation. The year 2020 saw a new record of 261 GW renewable power capacity additions, an all-time high and 50% above the level of 2019 (IRENA, 2021b). Also, electromobility has been picking up with a record level of 3.1 million plug-in electric vehicles (EVs) that came into service in 2020, around 4% of the total global car market volume (EV Volumes, 2021). Battery pack costs have also witnessed spectacular reductions, and performance continues to improve apace. Yet more needs to be done. What Makes an Energy Transition? Fossil fuels need to be phased out, starting with coal in this decade, followed by oil by midcentury. Also, natural gas use needs to decline substantially (Gielen et al., 2019; Gielen & 84

The facts and figures of the energy transition  85

Source:  Singh et al (2019).

Figure 5.1  System performance/transition readiness index Bazilian, 2021). There is an emerging consensus as to what are the key elements of a successful energy transition (Gielen et al., 2021). Three no-regret areas have been identified for action to help navigate the current crisis while moving toward a cleaner energy future (Figure 5.2): Efficiency first: we need to drive economic activity up and emissions down. Recent trends indicate that global progress on energy efficiency is not only inadequate for reaching international climate goals but also slowing down even further. This calls for urgent policy action. Efficiency reduces energy supply needs, which reduces import dependency in

86  Handbook on the geopolitics of the energy transition

Source:   IRENA (2021a). BECCS Bioenergy with Carbon Capture and Storage.

Figure 5.2  Key components of the global energy transition many cases. Global efficiency and energy intensity efforts have been stalling in recent years. Renewables can accelerate energy transitions and job creation. Almost 30% of global electricity today comes from renewable sources like hydropower, wind and solar. Renewables are now the cheapest option to produce electricity in most parts of the world. They are set to overtake natural gas and coal in the coming years. We need to electrify end use. Electromobility and heat pumps are prime examples, but these need to be supplemented with green hydrogen and its derivatives.

2. ENERGY TRANSITION PROGRESS IN RECENT YEARS AND TECHNOLOGY OUTLOOK This section discusses the realistic technology potential across five key strategy categories: • • • • •

Energy efficiency Power systems transformation Electrification of end-use sectors Bioenergy deployment CO2 capture, use and storage (CCUS)

Energy Intensity and Energy Efficiency Trends Energy intensity refers to the energy consumption per unit of GDP. Changes in energy intensity are the net result of technical energy efficiency gains (for example, a building’s energy efficiency measures) and lifestyle/structural change (for example, use of public transportation instead of cars). Since 2015, global improvements in primary energy intensity have been

The facts and figures of the energy transition  87

declining. Energy intensity improved by only 0.8% in 2020, roughly half the rates, corrected for weather, for 2019 (1.6%) and 2018 (1.5%). These gains would have to double (3%) to be consistent with energy transition needs. Changing consumption patterns are playing a part in the slowdown. While technologies and processes are becoming more efficient, structural factors, like changes in transport modes, a shift to heavier SUV cars and more building floor area per person, are dampening the impact of these technical efficiency gains and slowing global energy intensity improvements. IEA analysis suggests (2019a, 2020a) that structural change has shaved 0.5 to 1% of the technical efficiency gain in recent years. How much efficiency potential remains depends very much on the scope of the analysis. If a bicycle or public transportation is seen as an alternative for an SUV in a city environment, the potential is significant. Yet social acceptance is a major stumbling block. For example, in Europe, the agreed target is an efficiency gain of 32.5% by 2030, compared to 20% in 2020. However, aggregation of country plans yields only 29% by 2030. This example showcases the practical barriers. Buildings, transport and industry are discussed in more detail. Buildings The importance of heating and cooling in total building energy use varies from 18 to 73% across world regions. In total, globally space heating accounted for 32% and water heating for 24% of final building energy use, while cooling accounted for 29%. Per capita total final residential building energy use has been stagnating in the vast majority of world regions for the past three decades, despite the very significant increases in energy service levels (ÜrgeVorsatz et al., 2015). In fact, modern buildings do not need heating. The problem is the heating use of the existing building stock. However, it has proven to be difficult to accelerate energy efficiency retrofits, and the cost often exceeds the heating cost savings. Moreover, the uneven distribution of cost and benefits for landlord and tenant can make such renovations unattractive. The Global Alliance for Buildings and Construction reports that current renovation rates generally amount to 1% or less of the existing building stock each year. To achieve the 100% net zero carbon by the 2050 goal, renovation rates must increase to 3% per year (WGBC, 2017). In hot climates, a properly designed and operated building can reduce cooling load substantially. The use of energy for space cooling is growing faster than for any other end use in buildings, it tripled between 1990 and 2016. Global sales of air conditioning systems (ACs) have more than tripled to 135 million units since 1990. There are now about 1.6 billion units in use, with over half in just two countries – China and the United States. Those ACs vary enormously in energy efficiency and keeping them running consumes over 2,000 terawatt hours (TWh) of electricity every year, around 8% of total global electricity use. In a business-asusual scenario, global energy use for space cooling in 2050 reaches 6,200 TWh and the share of space cooling in total electricity use in buildings grows to 30%. More stringent minimum energy performance standards (MEPS) and other measures such as efficiency labelling could more than double the average AC efficiency between now and 2050, which could reduce this growth (IEA, 2019). Transport Transport sector energy use is dominated by road vehicles, which can be split into passenger cars and commercial vehicles (notably delivery vans and trucks). Total vehicle sales have

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increased from 66 million units in 2005 to 91 million units in 2019. However, sales have been declining in recent years and dipped to 78 million units in 2020 (OICA, 2020). This included 54 million cars and 24 million commercial vehicles. Within the category of commercial vehicles, around 22% are heavy- and medium-duty trucks (more than 3.5 t), the remaining 78% are light commercial vehicles (less than 3.5 t) (Statista, 2021). The reduction of the average fuel consumption per kilometre slowed down in advanced economies to only 0.2% per year, on average, between 2015 and 2017, with more than 20 countries experiencing a reversal in the evolution of their fuel economy. In contrast, the improvement of fuel use per kilometre in emerging economies accelerated to 2.3%. A continued trend towards larger cars, notably SUVs and pick-ups, reduces efficiency gains. It should also be noted that the gap between fuel consumption measured according to test values and in real driving conditions grew over the past decade – up to 50% of tested fuel consumption per kilometre (IEA, 2018). Electromobility represents a break of the trend in recent years as the energy efficiency of EVs is 2–3 times that of the internal combustion engine (ICE). The prospects of EVs are elaborated in more detail below. Industry Industrial energy use is dominated by a few energy-intensive industries, notably chemical and petrochemical, iron and steel, aluminium, cement and other ceramic materials and pulp and paper. As energy is a key part of total production cost and processes are fairly standardised, these industries tend to be efficient. The potential for efficiency gains is therefore limited. Whereas process energy efficiency potentials are limited, motor systems offer efficiency potential. The materials/product life cycle offers particular opportunities that can reduce demand for primary materials. Recycling and reuse of materials as well as materials efficiency and materials substitution can reduce the need for energy and carbon-intensive primary production. The circular economy concept has been known for decades (von Weizsäcker et  al., 1996; Gielen, 1999), but so far efforts have not been able to decouple primary material demand from economic growth. As a rule of thumb, a quarter to a third of CO2 emissions in industry can be reduced though materials efficiency (Gielen, 1999). However specific materials–product combinations must be considered, and new policy approaches are needed. Trends in Power Systems Transformation Renewable power generation capacity has increased from around 1,200  GW in 2010 to 2,799 GW in 2020 (Figure 5.3). The majority of the growth can be attributed to solar PV and wind. In fact, hydropower accounts for the largest share of installed capacity (1,211 GW excl. pumped hydro) but solar and wind are catching up fast. Wind and solar energy accounted for equal shares of the remainder, with capacities of 733 GW and 714 GW respectively. Other renewables included 127 GW of bioenergy and 14 GW of geothermal, plus 500 MW of marine energy. In 2020, 127 GW and 111 GW of new installations were added for solar and wind, respectively (IRENA, 2021b). The record capacity additions in the pandemic year show the resilience and newfound confidence of this emerging industry. The surge in renewable capacity expansion in 2020 increased the share of renewables in total capacity expansion, which reached 82% in 2020 (Figure 5.4). The renewable share of total generation capacity rose by two percentage points from 34.6% in 2019 to 36.6% in 2020.

The facts and figures of the energy transition  89 Growth in cumulave renewable power capacity (GW)

3,000

140 120

2,500

100

2,000

80

1,500

60

1,000

40

500 -

Capacity added in 2020 (GW)

20 2016 hydropower

2017 wind

2018 solar

2019 bioenergy

2020

hydropower

wind

solar bioenergy

geothermal

geothermal

Source:   IRENA (2021b).

Figure 5.3  Global renewable power generation capacity 2010–2020

Source:   IRENA (2021b).

Figure 5.4  Renewable share of global power capacity expansion 2001–2020 The share of renewables in generation is slightly lower than the capacity share. Worldwide, around 28% of power was generated from renewables in 2020, an increase of around 1.8% compared to the previous year (Enerdata, 2021). The rise of renewables’ share in 2020 was caused by a combination of falling electricity demand in combination with continued renewable capacity additions and their favourable net zero marginal production cost. Some countries

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and regions achieve even higher shares (e.g., 40% renewable power generation in Europe). It is expected that renewable power generation growth will continue in the coming decades because of the superior economics of renewables. Global electricity demand rose by 5% in the first half of 2021 compared to pre-pandemic levels (2019), which was mostly met by wind and solar power (57%) but also an increase in emissions-intensive coal power (43%) that caused a 5% rise in CO2 emissions. Gas was almost unchanged, while hydro and nuclear saw a slight fall. For the first time, wind and solar generated over a tenth of global electricity and overtook nuclear generation (Ember, 2021). Around 90% of the increase in the world’s electricity demand was from China. Wind and solar generation growth met 29% of China’s increase in electricity demand, while 68% was met with coal. China’s demand growth is driving global demand growth and Chinese per capita electricity consumption has reached the European level of around 6 MWh per capita. China also accounts for 53% of global coal power generation (Ember, 2021). Flexibility needs Power systems will need to become much more flexible as the share of variable renewable energy (VRE) rises. Flexibility in power systems is a key enabler for integrating high shares of VRE – the backbone of the electricity system of the future. According to the IRENA 1.5°C scenario, 73% of the installed capacity and 63% of all power generation in 2050 would come from variable resources (solar PV and wind), up from 20% of the installed capacity and 9% of power generation globally today. Such a level is manageable with current technologies leveraged by further innovations. There are several best practices in terms of VRE integration from countries around the world. For example, in 2019, the share of VRE in the power generation mix in Denmark was over 50% (47% wind and 3% solar PV);1 it was over 40% in Lithuania and 34% in Germany (23% wind and 11% solar PV).2 Systemic innovations are needed that go beyond enabling technologies to integrate innovations in business models, markets and regulations and system operations to unlock the flexibility of the power system and integrate rising shares of VRE. IRENA has identified 30 flexibility options that can be combined into comprehensive solutions, taking into account the national and regional power system specifics Figure 5.4).3,4 Moreover, power system organisational structures (including markets) can be redesigned to foster and support renewablebased energy systems.5 Innovations across two or more dimensions need to be combined to form an innovative solution. Since there is no “one-size-fits-all” solution, these need to be tailored to the specific power system characteristics of each country. As more countries adopt ambitious policy targets of very high or 100% renewable power systems, systemic innovation will become more important. To deliver electrification at scale, investment will be needed to build or upgrade key infrastructure. This includes the production of electricity (and hydrogen), energy transmission and distribution networks (such as the electricity grid and gas and thermal pipelines) and end-user infrastructure (such as information and communications technology (ICT) devices, retrofits and distribution stations). RE-electrification strategies could bring significant cost reductions by reducing investment needs in peak-load infrastructure, achieving higher utilisation rates of power generated by VRE and reducing the need for investment in additional flexibility measures, such as storage. Multiple RE-electrification technology pathways exist for any given

The facts and figures of the energy transition  91

sector. Often the best strategy involves a combination of technology pathways that balances the need for different infrastructure requirements across sectors, with a particular focus on avoiding excessive new investment in power distribution. Public investment must be channelled away from fossil fuels and towards the energy transition, including enabling infrastructure for the efficient use of renewable power (e.g., smart grids, cross-country interconnectors), heat (e.g., district heating and cooling networks) and transport (e.g., charging stations for EVs). Public investment should also be leveraged to mobilise private sector energy transition-related investment. Important government actions include the provision of risk-mitigation instruments (e.g., guarantees, currency hedging instruments and liquidity reserve facilities) to attract and de-risk private capital; creation of pipelines of bankable renewable energy projects; establishment of sustainability requirements for investors (e.g., climate risk analysis and disclosure); provision of reviewed investment restrictions and sustainability mandates for institutional investors; and adoption of standards for green bonds in line with global climate objectives. Electrification of End Use Sectors • • •

Electric vehicles Heat pumps Production of green hydrogen and synfuels

Electric vehicles and battery trends Passenger EV sales increased from 0.45 million in 2015 to 3.1 million in 2020, around 4% of the total global car market were plug-in EVs (EV Volumes, 2021). Around three quarters are pure battery EVs while the remainder are plug-in hybrid vehicles (BNEF, 2020a; TheDriven, 2020). Also, delivery vans and buses are increasingly going electric. Still, the share of EVs in heavy-duty vehicle sales (above 3.5 t weight) is much smaller than for the car segment. But this is changing, and various manufacturers offered new electric models in 2020 (Gielen et al., 2020). Battery performance continues to improve with longer drive ranges and shorter recharging times. The success of EVs depends to a large extent on the battery pack cost reduction from US$157/kWh to US$137/kWh, and even US$100/kWh for bus batteries in China (BNEF, 2020b). This cost reduction is expected to continue, although recent rises in battery material costs have halted some of the cost decreases. Apart from the cost reductions, government policies play a key role such as CO2 emission standards for car sales in Europe and the planned phase-out of ICEs. Heat pumps Heat pump statistics show widely different numbers, depending on definitions. The Interational Energy Agency (IEA) states that nearly 20 million households purchased heat pumps in 2019 (IEA, 2020c) while BSIRA (2020) reports that the global heat pump market amounted to 3 million units in 2019. More than 80% are air source units, the remainder are ground source and water source units. Residential units account for 80% of the market (KBVresearch, 2020). Although heat pumps have even become the most common technology in newly built houses in many countries, they meet only 5% of global building heating demand (IEA, 2020c).

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Green hydrogen There is approximately 20 GW of electrolyser capacity in operation for chlorine production that produces hydrogen by-product (around 4% of all hydrogen). Dedicated green hydrogen production electrolyser capacity using renewable power is much smaller. There is approximately 0.3 GW of such electrolysers in operation, yielding approximately 0.07 Mt of hydrogen. The expectation is that 2  GW of electrolyser capacity will be installed in 2020 (PV Europe, 2021). There is a pipeline of more than 200 GW electrolyser capacity under development. Thousands of GW of electrolyser capacity will be needed for the decarbonisation of existing hydrogen production and the development of additional green hydrogen capacity for new applications. As of the start of 2021, there were more than 200 hydrogen projects in development globally (World Hydrogen Leaders, 2021). Various governments have announced tens of GW of electrolysers by 2030. The Catapult and HyDeal are private sector initiatives respectively aiming for 25 GW by 2026 and 95 GW of solar and 67 GW of electrolysis capacity by 2030 (FT, 2021; PV Magazine, 2021; Photon, 2021). Other notable 2020 announcements on the demand side include a 1.2 Mt/yr green ammonia project in Saudi Arabia and an LKAB US$55 billion hydrogen direct reduced iron investment plan in Sweden. Around 35 green ammonia projects are currently under development and a pipeline exists for 50 Mt green ammonia production, which equals a quarter of total annual ammonia production (IRENA and Ammonia Energy Association, in preparation). Also, other commodities such as iron and methanol can be synthesised from hydrogen and sustainably sourced CO2 (Gielen et  al., 2019; IRENA, 2021d; Saygin & Gielen, 2021). Bioenergy Biomass is the largest source of renewable energy today. In 2018, the domestic supply of biomass was 55.6 EJ globally, around 10% of global primary energy supply. The following discussion addresses liquid biofuels, biogas, solid biomass and wood pellets. Liquid biofuels Liquid biofuels accounted for around 4% of global road fuel supply in 2020, in total about 150 billion litres. Around two-thirds is ethanol and a third biodiesel. Globally about 5 billion litres of advanced biofuels were produced in 2020, about 3% of total liquid biofuel production. This includes small amounts of cellulosic ethanol (around nine plants in operation, a further 13 plants are in development). Second-generation biodiesel dominates advanced biofuel production, there are currently about 15 large-scale commercial plants for the production of hydrotreated vegetable oils, a technology with limited growth potential (Nyström et al., 2019). Methanol is a key building block in the chemical industry, but it can also be used as a diesel substitute for trucks and ships. Around 15 methanol-fuelled oceangoing ships are in operation worldwide and more are under construction. Around 98 Mt of methanol are produced per annum, nearly all of which is produced from fossil fuels (either natural gas or coal). Biomethanol is produced from biomass, either through gasification or from biomethane. Key potential sustainable biomass feedstocks include forestry and agricultural waste and by-products, biogas from landfill, sewage, municipal solid waste (MSW) and black liquor from the pulp and paper industry. Currently less than 0.2 Mt of biomethanol is produced per year. Also, in the future methanol can be produced from hydrogen and CO2. A number of new plants are in various stages of development (IRENA, 2021).​

The facts and figures of the energy transition  93

Source:   IRENA (2021a).

Figure 5.5  Emerging innovations for the integration of variable renewable energy sources – enabling technologies, market design, business models and system operation Prior to Covid-induced reductions, annual jet fuel consumption was about 360 billion litres/ year. Current biojet production is about 140 million litres/year, less than 0.1% of jet fuel supply (2019). The aviation sector’s emission reduction target of 50% will require in the region of 100–200 billion litres of biojet by 2050 (IRENA, 2021c). New blending mandates in Europe, the United States and elsewhere are likely to increase demand substantially in the coming years. Biogas and biomethane Biogas is produced by anaerobic digestion of organic matter. Biogas is composed of methane (CH4) and carbon dioxide (CO2). Removal of CO2 and other contaminants yields biomethane that can substitute for natural gas or be used as vehicle fuel. Global biogas supply equals almost 1% of global gas supply (WBA, 2019). Biomethane use is growing in Europe with new attention in the United States and elsewhere (Gielen et al., 2019; Gas for Climate, 2020). Yet,

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at present its relevance is less than 0.1% of global natural gas supply from around 900 existing projects, with many more under construction worldwide (EBA, 2020; The Coalition for Renewable Gas, 2020). Biomethane use is growing rapidly in a few European countries such as Denmark, Germany, Italy and Sweden (EBA, 2018; Eyl-Mezzega & Mathieu, 2019). A recent study for Europe concluded that it is possible to scale up to 98  BCM of biomethane by 2050. This quantity would equal around 20% of European gas demand (Ecofys, 2018). On a global scale, potentials are even more significant. Navigant (2007) indicates a global market growth potential to 200 BCM of biogas by 2024 (around 5% of global natural gas use). In France, Italy, Switzerland, Sweden and Norway more than half of biomethane is used as transport fuel (Dena, 2019; IRENA, 2017a; Heyne et al., 2019). In the summer of 2021, a 70% share of biomethane was achieved in the Danish gas supply (Figure 5.6). France plans for 90 TWh production of biomethane by 2030 (around 9 BCM), in comparison to 1 to 2 TWh today and to inject 10% of biomethane into the country gas pipeline by 2030. GRDF in France proposes a 30% injection target by 2030. Also, Italy plans to inject biomethane and hydrogen; a plan was released in 2019. In the United States, so-called Renewable Natural Gas (RNG) projects have been growing robustly. Thirteen RNG projects were brought online in 2019, bringing the total to 99, while 39 more projects were under construction. A potential for 13,000 plants exists across the Unites States. The energy potential of biogas in the United States was assessed at 18.5 BCM of biogas/year (Mingle, 2019; Patterson, 2020). In conclusion, biomethane can play an important role in the future. On a global scale up to 20% of natural gas substitution with biomethane seems feasible by 2050 but this implies a 20-fold growth of biogas production and 300-fold growth of biogas cleaning from today’s levels. Share biogas

100 90 80

Biogas share [%]

70 60 50 40 30 20 10 0

0 2018

365

730

1,095

Source:   Energinet (2020, 2021).

Figure 5.6  Biogas in the Danish gas mix, 2018–2021

1,460

1,825 2023

The facts and figures of the energy transition  95

Solid biomass Solid biomass is the single most important source of renewable energy (WBA, 2020). In 2019, 1.9 BCM of wood fuel was produced globally representing around 35 EJ of bioenergy. Africa and the Americas had the highest share of wood fuel production with a contribution of 36% and 37% respectively. Wood charcoal is another key bioenergy sector with significant volumes being produced globally. In 2019, 53.1  Mt of wood charcoal were produced globally, with Africa accounting for 65% of the global charcoal production. Traditional biomass accounts for two thirds of all bioenergy. The majority is wood fuel and charcoal that is used for cooking. The supply is not sustainable, and the use is a significant source of methane emissions and local air pollution. Universal access to clean and modern cooking fuels and technology is part of UN SDG 7 – universal access to modern energy services – to be achieved by 2030. Around 2.8 billion people still rely on traditional biomass cooking systems; to reach the goal a transition acceleration of two orders of magnitude is needed (Cleancookingalliance, 2021). More than half of all annual deaths from air pollution, as many as 4 million a year, are caused by indoor air pollution, overwhelmingly from cooking with wood, charcoal, coal, dung or kerosene. Even 12% of all outdoor ambient air pollution comes from indoors, or from household sources, mostly cooking. For example, indoor air pollution from cooking and heating accounted for one-quarter to one-third of all ambient air pollution in India (Forbes, 2019; CCAPC, 2019). Traditional cooking stoves also account for about 20% of black carbon emissions globally. More sophisticated stoves combat climate change and improve public health simultaneously (Persad & Caldeira, 2018; NCBI, 2019). Modern biomass is largely accounted for by the use of residues in the pulp and paper industry, sugar industry, wood processing industry. Additionally in 2018, the domestic supply of energy from municipal and industrial waste was 2.59 EJ with 56% from municipal waste and the remainder from industrial waste. This refers mainly to waste that is combusted in waste incinerators. Small amounts of refuse-derived fuels are used in the cement industry. Pellets Pellets are used for co-combustion in coal plants but also for district heating systems and in household stoves. More than 60  Mt of pellets were produced in 2019 (equivalent to around 1 EJ or 0.2% of global energy use) (EUWID, 2020). Clearcutting and pelletising is criticised in terms of its GHG benefits as well in terms of its impact on biodiversity. Internationally accepted sustainability standards and strict certification are critical elements for this industry to flourish. Deployment of CCUS Carbon dioxide Capture and Storage (CCS) has been expanded to CCUS where the “U” is meant to indicate that the captured carbon is “utilised” for a product or a process. The absence of the “U” implies that the captured carbon is stored rather than being “utilised”. According to the Global CCS Institute (GCCSI), nearly 40 Mt of CCS capacity was operational in 2020, with around 70 Mt in various stages of preparation. The growth in operational CCS between 2010 and 2020 was modest, with an increase of 10 Mt. There has been an uptick of projects in preparation from 2017 to 2020 (GCCSI, 2020a). The total of early development, advanced development, under construction and operational amounted to 115 Mt in 2020 (GCCSI, 2020a). It should be noted the actual capture is lower than the installed capacity.

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CO2 capture deployment is largely concentrated in natural gas processing (where CO2 needs to be removed anyway in order to produce natural gas according to specifications). At only five locations, the captured CO2 is stored in aquifers: two offshore in Norway (at Sleipner and Snohvit gas processing plants), one in Australia (Gorgon gas processing plant6), one in Canada (at a hydrogen factory) and one in the United States (at an ethanol factory). The amount of CO2 that is stored in saline aquifers is less than 10 Mt per year. More facilities exist where CO2 is used for enhanced oil recovery (around 21 additional projects up to 30 Mt per year). The fate of this CO2 is unclear; part of it stays underground. Two decades ago, CCS was mainly considered as a key end-of-pipe technology to mitigate CO2 emissions from coal power plants (IEA, 2004; IEA, 2008). This development has failed. The recent record shows massive cost runovers and project closures: the Kemper and Petra Nova projects in the United States have been closed (NRG, 2021). The Boundary Dam Power Station in Canada is the only remaining power station in the world to successfully use CCS technology. The unit produces 115 MW of power and captures 90% of CO2 emissions (0.65 Mt CO2 per year) (Saskpower, 2020). There is no commercial-scale gas-fired power plant with CCS in operation (Global CCS institute, 2020). The progress in CCS has been disappointing. Whereas 20 years ago emphasis was on CCS use in power generation, its prospects have reduced significantly due to the rapid cost reduction of renewable power generation options. However, the expectation is that CCS will be needed in industry and perhaps in connection with hydrogen production from natural gas. An emerging area is carbon removal from the atmosphere based on biomass combustion in combination with CCS (BECCS) and direct air capture in combination with CCS (DAC). These options may be needed for net zero 2050 as the carbon budget is being exhausted rapidly. In certain industry sectors process CO2 emissions arise. These cannot be abated with renewable energy. There is a role for CCS in mitigating these emissions. Notably in the cement industry this is the case, and two plants are being developed (a 0.4 Mt/yr plant in Breivik, Norway, and a 1.8 Mt plant in Slite, Sweden). Moreover, one producer is planning to retrofit five cement plants. But this must be seen in the light of around 7,000 cement kilns in operation worldwide. Also, in iron making CCS can play a role in connection with Direct Reduced Iron production (one plant in operation in the UAE), or in connection with blast furnaces or smelt reduction processes. So far, no blast furnace operates with CCS. In waste incineration there is a role for CCS (notably combustion of plastics and other synthetic organic materials); a demonstration plant is being built in Norway. Also, CCS can be deployed in hydrogen production from fossil fuels, with around five such projects in operation today. Ammonia plants produce hydrogen in a first step, CO2 separation is routinely deployed in this manufacturing process. Around 300 Mt of CO2 are removed on an annual basis. However, most of this CO2 is nowadays either used for urea fertiliser production (where it is released in the field shortly after use) or it is vented or used for CO2 EOR (around 5 plants, 5 Mt CO2/yr). Opinions diverge regarding the climate benefits of so-called blue hydrogen.

3. THE NEED FOR AN ACCELERATED ENERGY TRANSITION AND STRATEGIES TO MAKE THIS HAPPEN Energy transition needs to be accelerated substantially. Energy efficiency, renewable power and electrification of end use are the key components. Based on the IRENA World Energy Transitions Outlook (Figure 5.7) (IRENA, 2021):

The facts and figures of the energy transition  97

Source:   IRENA (2021a).

Figure 5.7  The change needed in final energy use in the 1.5°C scenario •

• • • •

•

Annual energy intensity improvements must rise from 1.2% in recent years to 3%. Renewable power, electrification and circular economy have key roles to play on top of the conventional energy-efficient technologies. Primary supply stabilises during this period despite a 2.5-fold GDP growth. The share of renewable energy in primary supply must grow from 14% in 2018 to 74% in 2050 in the 1.5°C scenario. This requires an eight-fold increase in annual growth rate, from 0.25 percentage points (pp) in recent years to 2 pp. Renewable power generation needs to grow from 2,500 to 27,500 GW by 2050, a growth of 800 GW per year, a 4–5-fold increase of the annual capacity additions from recent years. EV sales need to grow from 4% to 100% of all vehicle sales and EV stock needs to grow from 7 million in 2020 to 1.8 billion in 2050. Hydrogen demand needs to grow from 120 Mt to 613 Mt in 2050, a five-fold increase. The share of clean hydrogen needs to grow from 2% to 100%, with on average 160 GW electrolysers added every year between now and 2050 (from a base of 0.3 GW installed capacity in 2020). Around two thirds of supply would be green hydrogen, one-third blue hydrogen. The total primary supply of biomass needed to realise the 1.5°C scenario is just over 150 EJ, nearly a tripling of primary biomass use in 2018. Based on a detailed assessment of the sustainable biomass supply potential, this is feasible.

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•

CCS use needs to grow from 0.04  Gt/yr. in 2020 to 7–8  Gt/yr in 2050, with BECCS accounting for around half this amount.

Each one of these steps is challenging; all of them must be put in place simultaneously in order to stay within the carbon budget. The key strategy components are robust and in line with other scenario studies. Most of the technologies are available today and while technology cost must be reduced further and deployment can be accelerated through innovations, it is imperative to ramp up the deployment now. The share of renewables in primary energy supply must grow from 14% in 2018 to 74% in 2050 to meet the 1.5°C scenario. Fossil fuel use will simultaneously decline by 77%, which has profound geopolitical implications. Use of natural gas will most likely be limited to producing “blue” hydrogen, coupled with carbon capture and storage technology, and some industrial processes and power generation. The transition is affordable. Total energy investments increase from US$98 trillion in the reference case to US$131 trillion in the 1.5°C scenario, a 34% growth (Figure 5.8). The types of investment change dramatically with energy transition investments growing from 56% to 83% of total investments. Average annual energy investments would amount to US$4.4 trillion per year. To put that number in perspective, global GDP amounted to US$81 trillion in 2019 and GDP is projected to increase 2.5-fold until 2050. A climate-safe future calls for redirection of investments from fossil fuels towards energy transition technologies – renewables, energy efficiency and electrification of heat and transport applications. High upfront investment is crucial mainly to enable accelerated deployment of key renewable energy technologies such as wind and solar PV in the power sector, massive scale-up of electrification of transport and heat applications along with expansion of infrastructure followed by large-scale green hydrogen projects. Electricity generation grows three-fold from 26,380 TWh in 2018 to close to 78,700 TWh in 2050. The share of renewables would grow to 90% in 2050 from 28% in 2020. Following a sharp decrease in coal generation over the current decade, by 2040 coal generation would be a quarter of today’s level and eventually would be phased out by 2050. The remaining 10% of total power generation in 2050 would be supplied by natural gas (around 6%) and nuclear (around 4%). Notably, variable renewable sources like wind and solar would grow to 63% of all generation in 2050, compared to 7% in 2018. Electricity will dominate final energy consumption either directly or indirectly, in the form of hydrogen and other e-fuels such as e-ammonia and e-methanol. Around 58% of final energy consumption in 2050 is electricity as well as green hydrogen and its derivatives. By 2050, electricity will be the main energy carrier with over 50% (direct) share in total final energy use from 21% today. In this decade global renewables capacity additions need to increase threefold from the record levels seen in 2020 for a 1.5°C pathway (IRENA, 2021a). The buildings sector would see the highest direct electrification rates, reaching 73% compared to 32% today. A rise would also be observed in the industry sector, where the direct electrification rate would be 35% by 2050, up from 26% today (including indirect electrification, this would approach 40% by 2050). In terms of acceleration, transport would see the highest growth of electrification in the coming decades with the share of electricity reaching 49% in 2050, up from just 1% today. The stock of electric cars would rise from 10 million today to over 380 million by 2030 and 1,780 million by 2050; the stock of electric trucks would rise to 28 million by 2050. EVs would account for more than 80% of all road transport activity by

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Source:   IRENA (2021a).

Figure 5.8  Additional energy sector Investment needs 2021–2050 in the 1.5°C scenario 2050 (88% of the light-duty vehicles stock and 70% of heavy-duty vehicles). Hydrogen will offer a solution to energy demand that is hard to directly electrify in industry and transport, mitigating close to 12% and 26% of CO2 emissions, respectively, in the 1.5°C scenario compared to the PES. Today, around 120 Mt (14 EJ) of hydrogen are produced annually. In the 1.5°C scenario, by 2050, there will be a demand for 613 Mt (74 EJ) of hydrogen, two-thirds of which will be green hydrogen. The electricity demand to produce hydrogen will reach close to 21,000 TWh by 2050, almost the level of global electricity consumption today. This requires significant scale-up of the manufacture and deployment of electrolysers. Green hydrogen also offers solutions to challenges with the increasing uptake of renewables; capturing excess renewable energy from wind and solar; addressing the intermittent delivery of electricity from variable wind and solar resources; reducing energy losses over

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long distances; and being able to store the energy. The complementary role of a large gasbased storage system is essential for renewable energy storage and electricity grid stability. Hydrogen can be stored in underground gas storage caverns and extracted to balance gaps in electricity supply, from hourly to seasonal timeframes. Hydrogen storage avoids the loss of excess renewable energy. The potential is significant, for example 159 existing gas storage facilities across Europe can hold a total of 1,131 TWh, representing 21% of Europe’s annual gas consumption. Such storage has significant geopolitical advantages.

4. ENABLING FRAMEWORKS FOR AN ACCELERATED TRANSITION The energy transition requires innovation across four key dimensions: 1. Enabling Technologies: technologies that play a key role in facilitating the integration of renewable energy. 2. Business models: innovative models that create the business case for new services, enhancing the system’s flexibility and incentivising further integration of renewable energy technologies. 3. Market design: new market structures and changes in the regulatory framework to encourage flexibility and value services needed in a renewable-based power energy system, stimulating new business opportunities. 4. System operation: innovative ways of operating the electricity system, allowing the integration of higher shares of variable renewable power generation. 1. Fostering Technology Breakthroughs via R&D Patent data can provide useful insights into research and development trends. IRENA has developed the interactive online tool INSPIRE (http://inspire​.irena​.org​/ Pages​/patents​/ Patents​ -Search​.aspx) to assess patent trends for renewable energy technology and enabling technologies. In the last decade the quantity of renewable energy generation-related patents filed has tripled for solar, wind and bioenergy technologies. Between 2001 and 2017 the CAGR for RE patents has been 16.23%, a quite remarkable growth. Solar (mainly PV) is the leading technology in number of patents filed followed by wind and bioenergy (Figure 5.9). Nearly 700,000 patents have been filed to date in relation to renewable energy generation. Looking at the geographical distribution of those patents Asia dominates (China, Japan, South Korea), followed by countries in North America (United States, Canada) and Europe (Germany, Spain, Russia, United Kingdom, Denmark, France, Austria). In addition to the cumulative patent trends, it also important to look at the annual patent filing trends with a peak in 2011 (ca. 60,000 patents) followed by a sustained declining trend until 2016 when a reversal is observed that suggests an increased R&D effort in this area. When looking into patent trends for enabling technologies for renewable energy for the period until 2020, significant invention activity is focused on electro-mobility (storage, charging stations and machine-related technologies, 339,000 patents), followed by batteries (49,000 patents), fuel cell and hydrogen technologies (97,000 patents). Overall, those enabling technologies show a continuous year-on-year patenting activity. Particularly for hydrogen

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Note:    Data is based on EPO PATSTAT database. Source:   inspire​.irena​.​org (June 2020).

Figure 5.9  Patent trends for renewables 2000–2019 technologies, a slight increase is noted in recent years, in the order of close to 3,000 patents filed per year. Nonetheless, such patent trends signal a possible stagnation in invention activity for renewable and enabling technologies. This evidence of a stagnating trend in invention activity runs counter to the urgency to strengthen R&D activity for the energy transition. The data suggest that an effort is needed to strengthen global R&D efforts. 2. Business Models with Consumers at the Core Renewable energy has propelled a decentralisation trend for the power sector. New business models are emerging with consumers and prosumers at the centre. An example is the peerto-peer (P2P) electricity trading business model, which was born as a consequence of the increasing deployment of distributed energy resources increasingly owned by the end consumers. P2P electricity trading is based on an interconnected platform that serves as an online marketplace where consumers and producers “meet” to trade electricity directly, without the need for an intermediary. The potential for these types of business models is significant. There are more than 3,500 community energy initiatives in Europe with Germany as a front-runner followed by Denmark, the Netherlands and the United Kingdom (REScoop MECISE, 2019). A study for Portugal

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analysed the economic benefits for residential consumers and solar prosumers and concluded that economic gains can reach 28% for consumers and 55% for prosumers (Neves et al., 2020). In addition to the physical layer of P2P electricity trading, for which an electrical network is needed, another important layer refers to a virtual, digital layer. P2P trading is facilitated by digital platforms where a large number of peers can interact. Smart grids and smart homes, including broadband communication infrastructure, network remote control and automation systems are fundamental enablers of the P2P electricity trading model. 3. Enabling Market Designs for Integration of Innovative Technologies New technologies come with new types of services that can be provided to energy systems, but those services need to be properly monetised via adjusted market designs. This is the case of battery technologies. For example, as an alternative to expensive upgrades to the infrastructure needed for the grid integration of variable renewable energy sources, like solar and wind, non-wire alternatives, also called virtual power lines (VPL) are being rolled out in several parts of the world. VPLs are utility-scale batteries connected at least at two locations in the grid: one battery at the supply-side, close to the renewable generation source, which stores surplus electricity production that cannot be transmitted to the demand side due to grid congestion (and which would otherwise be curtailed); and another battery placed at the demand area, which would be charged whenever transmission capacity is available, and demand is low. To unlock innovative business models that make VPLs more economically attractive, market designs should permit those utility-scale batteries to provide a range of services including storage to reduce congestion, which would help to defer network investment, as well as ancillary and balancing services, such as frequency and voltage regulation. Allowing the stacking of multiple revenues is key to improving the business case for storage. 4. New Ways to Operate Power Systems The operation of power systems is evolving. An example is the use of advanced weather forecasting. Accurate forecasting allows for more precise estimates of the amounts of VRE likely to be available in specific time frames, both short and long term. This, in turn, improves system stability and system planning, guiding long-term VRE geographical plant placement, among others. There are two main pieces to the advanced weather forecasting puzzle: hardware and software. While meteorological devices capture real-time, site-specific weather data, artificial intelligence (AI) can produce advanced forecasts for solar irradiation and wind speed output based on this data. At its core, AI involves identifying patterns and trends within data sets in order to generate predictive analytics, provide actionable insights, and automate actions based on predictions. The most obvious enabler of powerful, accurate advanced forecasting using AI is data. The abundance of big data, along with the exponential growth in processing power witnessed over the past few decades, has created the ideal setting for AI (IRENA, 2019).

5. CONCLUSIONS There is a consensus that we need to transition away from fossil fuels to renewable energy. Policy makers look at energy transition as a potential engine of new economic activity. The overview in

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this chapter shows that there are encouraging signs of energy transition, but a significant acceleration of the clean energy transition is needed in the coming years. Existing technologies can be the basis for such acceleration, innovation will continue and yield further cost reductions and a broadening of the field of applications. In this decade emphasis will be on the replacement of fossil fuels in power generation with renewables; notably, solar and wind capacity additions must continue to rise from 2020 record levels. The growth of the variable renewable power generation share requires a high level of power systems flexibility. Technology, market design and regulations, operational practices and business models need innovation to create more flexibility. A start must be made with energy transition for end use sectors (buildings, industry and transport). Electrification and use of green hydrogen have an important role to play. Growing the supply of renewable energy is critical in order to enable this transition. International trade in electricity, bioenergy, green hydrogen and other green commodities such as ammonia is likely to grow. Such development will result in new trade, and it will have geopolitical implications. While renewable energy will raise the share of local energy, new dependencies may arise. However, at this moment in time it is premature to speculate what the impacts will be. Technological progress and smart energy systems have received less attention to date, but they are also critical for a successful energy transition. Patents contain valuable information about technology trends and progress rates in the years to come. It is recommended to expand the set of indicators in this area. Energy transition can require increased production of scarce and strategic minerals and metals. A lot of attention is focused on this topic. However, innovation can reduce such dependencies, as can be witnessed for example in the case of batteries. Indicators should be deployed in a flexible way in order to account for the fluid character of the energy transitions. It is critical to track the progress on a regular basis and to adjust strategies according to the needs and the latest developments.

NOTES 1.

Business Day (2020), “Denmark Gets Nearly 50% of Its Electricity from Wind Power”, 2 January 2020, https://www​.businesslive​.co​.za​/ bd​/world​/europe​/2020​- 01​- 02​-denmark​-getsnearly​-50​-of​-its​ -electricity​-from​-wind​-power/, (accessed 20 January 2021). 2. RENEWEconomy (2019), “Renewables Deliver 47% of Total Generation in Germany So Far in 2019”, 4 October 2019, ttps:​//ren​​eweco​​nomy.​​com​.a​​u​/ren​​ewabl​​es​-de​​liver​​- 47​-o​​f​-tot​​​algen​​erati​​on- ingermany-so-far-in-2019/, (accessed 21 February 2021). 3. IRENA (2019), Innovation landscape for a renewable powered future: Solutions to integrate variable renewables, International Renewable Energy Agency, Abu Dhabi. 4. IRENA (2020), Innovation toolbox, www​.irena​.org​/innovation​/ Toolbox. 5. IRENA (2020), Power system organisational structures for the renewable energy era, International Renewable Energy Agency, Abu Dhabi. 6. Gorgon has not met agreed storage volumes due to siltage problems of injection wells

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Global CCS Institute. (2013). Technical aspects of CO2 enhanced oil recovery and associated CO2 storage. https://www​.globalccsinstitute​.com​/archive​/ hub​/publications​/118946​/technical​-aspects​-co2​ -enhanced​-oil​-recovery​-and​-associated​-carbon​-sto​.pdf Global CCS Institute. (2020a). Global status of CCS. https://www​.globalccsinstitute​.com​/wp​-content​/ uploads​/2020​/12​/Global​-Status​-of​-CCS​-Report​-2020​_ FINAL ​_ December11​.pdf Global CCS institute. (2020b). Facilities database. https://co2re​.co​/ FacilityData Global Commission Energy Transformation. (2019). A New World: The Geopolitics of Energy Transformation. Abu Dhabi: IRENA. IEA. (2004). Prospects for CO2 capture and storage. www​.iea​.org IEA. (2008). CO2 capture and storage. A key carbon abatement option. www​.iea​.org IEA. (2018). https://www​.iea​.org​/reports​/fuel​-economy​-in​-major​-car​-markets IEA. (2019a). https://www​.iea​.org​/reports​/energy​-efficiency​-2019 IEA. (2019b). The Future of Cooling. Opportunities for Energy-efficient Airconditioning. Paris. IEA. (2020a). Energy efficiency 2020. https://www​.iea​.org​/reports​/energy​-efficiency​-2020 IEA. (2020b). CCUS in clean energy transitions. https://www​.iea​.org​/reports​/ccus​-in​-clean​-energy​ -transitions​/ccus​-in​-the​-transition​-to​-net​-zero​-emissions​#abstract IEA. (2020c). https://www​.iea​.org​/reports​/ heat​-pumps IRENA. (2017a). Biogas for road vehicles: Technology brief, international renewable energy agency, Abu Dhabi. https://www.irena.org/publications/2017/Mar/Biogas-for-road-vehicles-Technologybrief IRENA. (2020). Reaching zero with renewables. https://www​.irena​.org​/publications​/2020​/Sep​/ Reaching​-Zero​-with​-Renewables IRENA and Methanol Institute. (2021). Innovation outlook renewable methanol. https://www​.irena​.org​ /publications​/2021​/Jan ​/ Innovation​-Outlook​-Renewable​-Methanol IRENA. (2021a). World energy transitions outlook – 1.5 C pathway. https://www​.irena​.org​/publications​ /2021​/Jun​/ World​-Energy​-Transitions​-Outlook IRENA. (2021b). Renewable capacity highlights. https://www​.irena​.org/-​/media​/ Files​/ IRENA​/Agency​ /Publication ​/2021​/Apr​/ IRENA_​-RE ​_Capacity​_ Highlights ​_ 2021​.pdf ​?la​= en​&hash=​​1E133​​68956​​ 4BC40​​C2392​​E8502​​6F71A​​0D7A9​​C0B91​ IRENA. (2021c). Reaching zero with renewables – Biojet fuels. https://irena​.org/-​/media​/ Files​/ IRENA​/ Agency​/ Publication​/2021​/Jul​/ IRENA​_Reaching​_ Zero​_Biojet​_ Fuels​_2021​.pdf IRENA. (2021d). Innovation outlook renewable methanol. https://www​.irena​.org​/publications​/2021​/Jan​ /Innovation​-Outlook​-Renewable​-Methanol IRENA. (2021e). Renewable power generation cost in 2020. https://www​.irena​.org​/publications​/2021​/ Jun ​/ Renewable​-Power​-Costs​-in​-2020 KBVresearch. (2020). https://www​.kbvresearch​.com ​/ heat​-pump​-market/ Levi, P. G., & Cullen, J. (2018). Mapping global flows of chemicals: From fossil fuel feedstocks to chemical products. Environmental Science & Technology, 52, 1725−1734. https://pubs​.acs​.org​/doi​/ pdf​/10​.1021​/acs​.est​.7b04573 Mingle, J. (2019). Could renewable natural gas be the next big thing in green energy? https://e360.yale. edu/features/could-renewable-natural-gas-be-the-next-big-thing-in-green-energy Mission Innovation. (2020). https://cem​-mi​-saudi2020​.sa​/tracking​-progress​-and​-demonstrating​-impacts​of​-clean​-energy​-innovation​-through​-innovation​-output​-indicators/ Navigant. (2017). Distributed natural gas: Five trends for 2017 and beyond. https://guidehouseinsights. com/-/media/project/navigant-research/reportfiles/wpdng5t17navigantresearchpdf.pdf NCBI. (2019). https://www​.ncbi​.nlm​.nih​.gov​/pmc​/articles​/ PMC3278415/ Neves et al. (2020). Peer-to-peer energy trading potential: An assessment for the residential sector under different technology and tariff availabilities. https://www.sciencedirect.com/science/article/abs/pii/ S0360544220311300 NRG. (2021). Carbon capture and the future of coal power https://www​.nrg​.com​/case​-studies​/petra​ -nova​.html Nyström, I., Bokinge, P., & Franck, P.-A. (2019). Production of liquid advanced biofuels - global status. CIT Industrell Energi. https://www​.miljodirektoratet​.no​/globalassets​/publikasjoner​/m1420​/m1420​ .pdf

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O’Callaghan,B., & Murdock, E. (2021). Are we building back better? Evidence from 2020 and pathways for inclusive green recovery spending. https://recovery​.smithschool​.ox​.ac​.uk​/are​-we​-building​-back​ -better​-evidence​-from​-2020​-and​-pathways​-for​-inclusive​-green​-recovery​-spending/ OICA. (2020). https://www​.oica​.net ​/category​/sales​-statistics/ Parkinson, B., Balcombe, B., Speirs, J. F., Hawkes, A. D., & Hellgardt, K. (2018). Levelized cost of CO2 mitigation from hydrogen production routes. Energy & Environmental Science, Issue 1. http://www​. rsc​.org​/suppdata​/c8​/ee​/c8ee02079e​/c8ee02079e1​.pdf Patterson, T. et al. (2020). Utilizing grass for the biological production of Polyhydroxyalkanoates (PHAs) via green Biorefining: Material and energy flows. https://pure.southwales.ac.uk/en/publications/ utilizing-grass-for-the-biological-production-of-polyhydroxyalkan Persad and Caldeira. (2018). https://www​.nature​.com​/articles​/s41467​- 018​- 05838-6 Photon. (2021). https://www​.photon​.info​/de​/node​/24234 PV Europe. (2021). Electrolyzer market expected to reach 2 GW next year. https://www​.pveurope​.eu​/ markets​/clean​-hydrogen​-electrolyzer​-market​-expected​-reach​-2​-gw​-next​-year PV Magazine. (2021). https://www​.pv​-magazine​.com​/2021​/02​/12​/new​-european​-project​-to​-drive​-95​ -gw​-of​-solar​-and​-67​-gw​-of​-hydrogen/ REScoop MECISE. (2019). Mobilising European citizens to invest in sustainable energy, clean energy for all Europeans. https://www.rescoop.eu/uploads/rescoop/downloads/Mobilising-EuropeanCitizens-to-Invest-in-Sustainable-Energy.pdf .saskpower​ .com​ /about​ -us​ /our​ Saskpower. (2020). PD3 status update: November 2020. https://www​ -company​/ blog​/ bd3​-status​-update​-november​-2020 Saygin, D., & Gielen, D. (2021). Zero-emission pathway for the global chemical and petrochemical sector. Energies, 14(13). https://www​.mdpi​.com​/1996​-1073​/14​/13​/3772 Singh, H., Bocca, R., Gomez, P., Dahlke, S., & Bazilian, M. (2019). The energy transitions index: An analytic framework for understanding the evolving global energy system. Energy Strategy Reviews, 26, 100382. https://doi​.org​/10​.1016​/j​.esr​.2019​.100382 Statista. (2021). Commercial vehicles -worldwide sales by main type, 2018. https://www​.statista​.com​/ statistics​/1100203​/commercial​-vehicle​-sales​-worldwide​-by​-type/ The coalition for renewable natural gas. (2020). RNG production facilities in North America. https:// www​.rngcoalition​.com ​/rng​-production​-facilities TheDriven. (2020). https://thedriven​.io​/2020​/12​/02​/model​-3​-leads​-global​-ev​-market​-while​-model​-y​ -beats​-id​-3/ UNEP. (2020). Emissions gap report. https://www​.unep​.org​/emissions​-gap​-report​-2020 UNEP. (2021). Are we building back better? Evidence from 2020 and pathways for inclusive green recovery  spending.  https://www​.unep​.org ​/resources​/publication​/are​-we​-building​-back​-better​evidence​-2020​-and​-pathways​-inclusive​-green UNFCCC. (2021). NDC synthesis report. https://unfccc​.int ​/process​-and​-meetings​/the​-paris​-agreement​ /nationally​-determined​-contributions​-ndcs​/nationally​-determined​-contributions​-ndcs​/ndc​-synthesis​ -report Ürge-Vorsatz, D., Cabeza, L., Serrano, S., Barreneche, C., & Petrichenko, K. (2015). Heating and cooling energy trends and drivers in buildings. https://www​.sciencedirect​.com​/science​/article​/pii​/ S1364032114007151 von Weizsäcker, E. U., Lovins, A., & Lovins, L. H. (1996). Faktor Vier : doppelter Wohlstand - halbierter Naturverbrauch ; der neue Bericht an den Club of Rome. https://epub​.wupperinst​.org​/frontdoor​/index​/ index​/docId​/4075 World Bioenergy Association. (2020). World bioenergy statistics 2020. https://worldbioenergy​.org​/ uploads​/201210​%20WBA​%20GBS​%202020​.pdf World Biogas Association. (2019). Global potential of biogas. https://www​.wor​ldbi​ogas​asso​ciation​.org​/ wp​-content​/uploads​/2019​/09​/ WBA​-globalreport​-56ppa4​_digital​-Sept​-2019​.pdf World Green Buildings Council. (2017). From thousand to billions. Coordinated Action towards 100% Net Zero Carbon Buildings By 2050. https://www​.worldgbc​.org​/sites​/default​/files​/ From​%20Thousands​ %20To​%20Billions​%20WorldGBC​%20report​_ FINAL​%20issue​%20310517​.compressed​.pdf World Hydrogen Leaders. (2021). Hydrogen pipelines and projects.

6. US–China rivalry and its impact on the energy transformation: difficult cooperation fraught with dilemmas Jacopo Maria Pepe, Julian Grinschgl, and Kirsten Westphal

1. INTRODUCTION Climate change seems to be one of the few fields where China and the US are set to cooperate even in times of growing systemic rivalry. Both manifest the shared intention to fight climate change, as this puts humanity and their own national security at risk, and both have an interest in profiling themselves as a responsible stakeholder in the fight against climate change in front of international public opinion. Moreover, as major emitters, coordinated action and cooperation on climate between the US and China in the coming years is essential. The US and China have indeed seemingly moved toward cooperation on climate issues, their growing rivalry notwithstanding. In the joint declaration both countries issued in April 2021, they affirm that they “are committed to cooperating with each other and with other countries to tackle the climate crisis … both enhancing their respective actions and cooperating in multilateral processes” (United States Department of State, 2021a), while contrary to expectations, at COP26 in Glasgow in 2021, the US and China signaled their willingness for intensified cooperation in regards to climate change and adopted an agreement which focusses on short-term measures in the 2020s, including cooperation on regulatory frameworks and environmental standards as well as curbing the methane emissions of both countries. However, the energy transition underpinning the fight against climate change translates into a new industrial revolution, while control over energy sources, transport routes and technologies remain an essential part of the strategic equation determining the outcome of great power rivalry. Against this backdrop, energy and climate policy can hardly be insulated from this mounting competition. This chapter sheds light on the complexities and dilemmas associated with the energy transition and cooperation on climate amidst geopolitical competition.

2. SETTING THE STAGE: DIFFERENT STARTING POINTS AND PRIORITIES FOR THE ENERGY TRANSITION To start with, China and the US are vastly different countries, not only in terms of their level of development or their political and economic systems, but also in regard to their energy systems, resource base, and thus their energy and climate policy priorities. The US is an energy-abundant country. These fundamentals are there to stay. Since the shale oil and gas revolution in the US, the country has become to a large extent self-sufficient and even became a net exporter of petroleum products and of liquefied natural gas (LNG) – including to China (Aizhu & Jaganathan, 2021). Furthermore, in the US, the sustainability 107

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aspect and climate policies have grown in importance and arguably have become dominant and contested. The US under President Obama until 2017, and again under President Biden since 2021, who returned to the table of climate negotiations after President Trump’s withdrawal, are strong supporters for the Paris Agreement. The Biden administration plans to unleash unseen levels of fiscal spending to expand renewable energies and modernize the country’s infrastructure, needed for a net zero carbon economy by 2050. China, by contrast, is a rather energy-poor country. With the exception of large bituminous coal reserves, it is largely dependent on energy imports of oil, pipeline gas, LNG and coking coal. Industry dominates demand, accounting for almost half of China’s total final consumption. Its continued export-fueled economic growth is thus reliant on cheap and reliable energy input. Between 2000 and 2020, China’s annual CO2 emissions more than tripled. This poses the question whether its continued economic rise is achievable without coal power and is compatible with its pledge to become carbon-neutral by 2060 (Hook, 2020). While the energy transition in China also serves the goal of fighting environmental pollution, China’s other vital goal is to secure a stable and continuous energy supply to its own industry, and to secure economic growth, via both domestic production and exports. Coal and coal-fired power plants powered by China remain paradoxically at the very core of renewable energy value chains. Large parts of the renewable supply chain, in particular solar PV panels, batteries, and rare earth processing are powered by Chinese coal plants. China is the largest consumer of fossil fuels and as a result also the largest polluter, but at the same time it is the biggest producer and exporter of renewable energy technologies and also the largest investor in clean energy projects in China and worldwide (Bloomberg New Energy Finance, 2021) while the country holds, as of 2018, by far the most clean energy patents worldwide (IRENA, 2019, p. 41). This means that the trajectory of energy transition as of now relies to a large extent on China’s coal fleet and an uninterrupted and affordable supply of fossil fuels into China. And while China announced it will stop financing coal power plants abroad and along the Belt and Road route, domestically the picture looks very different. In 2020, China installed 38 GW of new coal-fired power capacity which roughly equals all currently installed coal power capacity in Germany and raises its total coal power capacity to 1,095 GW. Globally in comparison, China only finances 20 GW of coal power plant capacity. Political-economic structures are further strengthening its reliance on it. Coal mining is one of the largest employers and major sources of economic activity in the north-eastern Chinese provinces, while subsidized and cheap electricity from it is one of China’s economic advantages (Herrero & Tagliapietra, 2021). Compared to the US, China remains, despite its enormous progress since 1990, a rather poor country with a GDP/capita on the level of Malaysia and at less than a sixth of the US (World Bank, n.d.). The growth of its economy, and social and political stability as a result thereof, remains of utmost priority to Beijing. Thus, sustainability has lower priority than cheap and reliable energy inputs to fuel growth while clean air reigns more important than lower CO2 emissions, but that does not mean that less coal is produced, just that coal plants are being moved away from urban centers. The non-simultaneity and the varying depth in their decarbonization pathways, as well as diverging priorities between the US and China are set to negatively impact the energy transformation as they exacerbate the so-called “Green Paradox” (Sinn, 2015). If only some countries adopt policies to significantly curb demand, then their reduction could not only be outweighed by increased consumption in other demand centers but also incentivize carbon leakage whereby firms reshore production to countries with less regulation and cheaper energy prices.

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The location of industrial activity and value-added manufacturing is a key concern for policymakers. Energy-intensive industries like steel, chemicals, cement, and associated industries like automotive are sensitive to changes in electricity and gas prices and rely on a cheap, stable, and uninterrupted energy supply. Declining investments in fossil fuel extraction results in energy crunches if demand for them is not declining too. Price spikes all over the world in 2021 are an example of that. As electrification and hydrogen will slowly take over traditional industrial processes and supplement the usage of coal, gas, and naphtha, the possibility that industries with tightly integrated production steps and which are exposed to strong international competition relocate to places with cheap and affordable (clean) energy is given. Given the importance in terms of employment, linkages to other industries, and the high degree of technology used in such industries, they yield significant geoeconomic weight. In the IEA net zero pathway scenario the estimated market share for solar, wind, electrolyzers, fuel cells and batteries in 2050 alone is projected to be at US$1200bn (IEA, 2021). On top of this comes the electric vehicle (EV) fleet which could reach 700 million by 2050 with more than 60 million annual sales, or new propulsion technologies and aircraft design for aviation (WoodMackenzie, 2021). But the energy transition will also require innovations in associated areas, ranging from green steel to chemicals to smart grids and electric heat boilers. Such a large market size incentivizes a race to dominate clean energy technologies which, all else being equal, fosters innovation, and brings down prices allowing for large-scale deployment. So far, China leads the market when it comes to EVs and solar PV but it remains unclear yet who will dominate the evolving hydrogen market or lead sustainable aviation and green steel.

3. COOPERATION ON ENERGY AND CLIMATE AMIDST SYSTEMIC COMPETITION Sino–US rivalry has many battlegrounds, from competition over technology and infrastructure, to flows of goods and capital, as well as the cyber-domain and control over the major sea lanes of trade and communication. All these areas link not only China and the US, but all nations to one another and create a dense web of interdependence. Unlike in the Cold War, where the two confronting blocs hardly experienced any level of interconnectedness besides through global markets for steel, oil, and grain, the new confrontation plays out in a very different setting. As the ECFR highlighted in 2016, modern geopolitical and geoeconomic rivalry will be about “the interconnected infrastructure of the global economy” (Franke & Leonard, 2016, p. 13) aiming to form one sided and unequal dependencies and reduce one’s own vulnerability. However, globalization and the emergence of global production and information networks brought about complex systems with asymmetric power structures, in which in particular the US and Western industrialized countries became central hubs for connectivity, which yield enormous leverage to exploit interdependence by having informational advantages as well as being able to cut off adversaries from flows of data, finance, or goods and energy supply. Once established, central nodes and hubs are hard to challenge as network effects and returns to scale tend to reinforce and strengthen the status quo (Farrell & Newman, 2019). Only China, first covertly and now openly, has the potential as well as the aim to upend these existing structures and reposition itself as the center of the global economy and its nodes of connectivity – with far-reaching implications for the global energy transition and climate policy.

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Also, rivalry unfolding in each of these sectors – including most prominently the connectivity and supply chain fields – is increasingly geographically concentrated, as it mostly plays out in the broader space of the Indo-Asia-Pacific, from Asia to the Middle East, North and East Africa. Each of these subregions is home to major developed or developing economies, CO2 emitters (in 2020, eight out of ten countries in the top ten emitter list were located in this broader space) (Statista, 2021), high-tech nations, oil and gas producers, as well as countries with high solar and/or wind power potential or rich in raw materials and minerals. The most important sea trade lanes crisscross this space, making it essential for securing supply chains. 3.1 Technology and Trade – Decoupling Dilemmas and Fierce Competition Besides different resource bases and diverging energy and climate policy priorities, the US and China are therefore already entangled in a fierce technological-industrial-regulatory competition, with green energy value and supply chains at its very core. This makes deeper cooperation on climate policies and energy transition utterly difficult. While China attempts to move up the industrial value chain and reach the technological edge, the US attempts to revive its own manufacturing industries and keep its technological edge. Both countries aim not only at controlling and developing new technologies, but also to gradually disentangle their economies while exclusively controlling or protecting international production networks, raw material supply chains via access denying strategies, especially when it comes to trade in intra-industrial goods like semiconductors or minerals and rare earths. China follows a three-pronged strategy: industrial-technological, regulatory, and political economic. With its state-funded program “Made in China 2025” (State Council of the People’s Republic of China, 2015) Beijing has, since 2015, set the ambitious goal to move up the value chain and to secure China’s position as a global powerhouse of cutting-edge, highend technologies. Among the ten industries targeted by the plan are energy saving and new energy vehicles and power equipment, advanced information technology, industrial digitalization, artificial intelligence and new materials, all sectors which are key for the energy transformation. Mixing preferential tied loans from state banks and subsidies to own companies, the Chinese government aims not only at fostering China’s competitive advantage vis-à-vis hightechnology countries like Germany, Japan and the US. It also aims at reducing its dependence from advanced economies and developing strategic autonomy along the entire supply and value chain, in down-, mid-, and upstream, from raw material extraction and refining to research and development, industrial production and assembly, market ramp-up, and export. China already leads in clean energy manufacturing: Chinese companies have a 73% share in the global production (downstream) of lithium-ion batteries (Moores, 2021, p. 4), 72% for solar modules, 66% for polysilicon, 78% for solar cells (BNEF & CSIS, 2021, pp. 2–4) and 58% for wind turbines global installation (Global Wind Energy Council, 2021, p. 44). China is already the biggest market for EVs worldwide. Even though its brands lag behind in international competition, they are rapidly closing the gap and catching up. In terms of raw materials and minerals, while 90% of the rare earths are concentrated in China, this does not necessarily mean China is a raw material monopolist. Key raw materials like lithium or cobalt are not necessarily concentrated only in China. For instance, China domestically mines only 23% of the raw materials needed for battery production, but already controls the midstream, from refining to further manufacturing, accounting for a production share of 70–80% globally (Moores, 2021, p. 4).

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With the announced “China Standard 2035” (Gargeyas, 2021) originally set for release at the beginning of 2021, the country also tries to create a regulatory platform to underpin this industrial-technological leapfrog. The announced strategy aims at implementing its own technological standards using frameworks like the Belt and Road Initiative (BRI), regional trade agreements, and the increased Chinese participation in the international standardization bodies ISO and IEC as catalysts. Other than in the US or Europe, where industrial standardization is largely driven by the industry itself and the state has a subordinate role, in China standardization is much more state-driven (as standards are developed and implemented by SOC) and thus strategically oriented (BDI, 2020). In August 2021, the Ministry of Energy and Environment and the Ministry of Commerce jointly issued the new green development guidelines for overseas investment and cooperation (Secretariat of the BRI International Green Development Coalition, 2021, p. 5). For the first time, the document clearly emphasizes “international green rules and standards”, driving Chinese overseas investments to go beyond “host country rules”. For example, Chinese enterprises are encouraged to follow international common practices for the environmental impact assessment and due diligence. While this is a welcome development aligning China’s SOEs and commercial banks’ activities abroad with international standards for sustainable and green investments, it also testifies to China’s growing self-confidence in co-defining – and not just promoting – international standards, particularly when it comes to technical standards and certification for green technology manufacturing. Finally, facing an increasingly hostile international environment and the prospect of decoupling with the US and its allies, China has formulated a plan on its own. The “Dual Circulation Strategy” introduced by President Xi Jinping at a meeting of the Standing Committee of the Politburo (Yanran, 2020) is meant as a proactive attempt to shape the circumstance of such bifurcation. Far from being only a political economy strategy to foster domestic demand, the strategy aims at diminishing China’s dependence on imports while keeping on dominating export markets in more sectors (particularly high-end sectors). Also, the BRI should be seen in that light. It attempts to create alternative import corridors to mitigate exposure to US dominance in maritime waters while at the same time it looks at creating export opportunities for Chinese industry with overcapacity. The creation of industrial centers along the BRI is also a way to absorb Chinese overproduction, also in sectors like solar PV, and make up for possible faltering demand from the US, while at the same time nurturing Chinese companies into global champions (Eder & Mardell, 2019). Against this backdrop, the US considers China’s three-pronged approach as a growing menace to US national security, industrial and manufacturing capabilities, and technological edge. Since 2018, the US has articulated a domestic and international response based on a mix of decoupling, diversification, and reshoring attempts to decrease dependencies, international initiatives to establish globally accepted technical standards and certification rules as an alternative to the Chinese model, and higher tariffs for imports of critical industrial components originating from China. While the administration assumed a tougher stance on China, the US approach has not significantly changed after the Biden took power in early 2021. In February 2021, President Biden issued an executive order “on supply chains” aimed at strengthening the resilience of US supply chains to “revitalize and rebuild domestic manufacturing capacity, maintain America’s competitive edge in research and development, and create well-paying jobs” (The White House, 2021a). Following that executive order, the US published a supply chain review

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as a response to the major disruptions caused by the Covid-19 pandemic which unveiled wideranging vulnerabilities and dependencies with national security implications (The White House, 2021b). Besides pharmaceuticals, large capacity batteries, critical minerals, and materials, as well as semiconductors were identified, all of them are crucial for the success of the energy transition. The situation is even more severe when it comes to critical minerals and materials which are also crucial for everything from batteries to jet engines and defense equipment. Among the most crucial materials are lithium, cobalt, and graphite, which are and will experience a drastic rise in demand. According to the report, China controls 55% of rare earth mining capacity and 85% of refining (see paragraph above). Yet, the review also refers to semiconductors, as a crucial ingredient to all segments of the economy, and are essentially used in every technology, hence also in advanced military systems and control centers for grid infrastructure. With the rise of smart grids and electric and autonomous vehicles, the latter will play an even bigger role in the energy transition. Against the backdrop of the identified main vulnerabilities vis-à-vis China, the Biden administration’s concerns about one-sided dependence on strategic industry sectors have resulted in an even greater call for “reshoring, rerouting and rebalancing supply chains” (Tsafos et  al., 2021) – particularly those related to renewable energy systems – as the Trump administration did. As China’s dominance in this field has also raised concerns in other countries, the US has speeded up efforts to engineer new alliances with like-minded partners to diversify and strengthen the reliance of critical supply chains. By doing so, it has increasingly “securitized” the issue. In this sense, the Quad format featuring US, Japan, Australia, and India started supply chain talks with a focus on semiconductors and rare earth materials. Among the four members, Japan and the US are importers of rare earths while India, but especially Australia and its enormous mineral wealth, hold key roles here for rare earth supplies. The Pentagon is already in talks with Australia to secure rare earth material supplies to break Chinese dominance. Besides the mining part, such an arrangement within the Quad would focus on the processing of these materials (Pollard, 2021). The increased importance of Australia for US defense planning is also highlighted by the recent AUKUS alliance between the US, UK, and Australia. AUKUS entails making Australia the ninth country possessing a submarine fleet with nuclear propulsion technologies and is part of the wider effort to ensure a balance of power in the Indo-Pacific (Roaten, 2021). Furthermore, the US Congress has given the US Export-Import Bank (EXIM) the mandate for its “China and Transformational Exports Program” which aims to help US exporters against Chinese competition and to “directly neutralize export subsidies for competing goods and services financed by official export credit, tied aid, or blended financing provided by the PRC” (Export Import Bank United States, n.d. a). It applies to ten export and technology areas, including, artificial intelligence, renewable energy, storage, and efficiency, and semiconductors (Export Import Bank United States, n.d. b) In that regard, talks about a “Chinafree tech sphere” have emerged. Spearheaded by the US, it envisages partnerships with Japan and South Korea, as well as Taiwan and Australia and aims at creating production and information networks, as well as strategic stockpiles for essential products which can be accessed and shared among members in case of supply shortages and emergencies. Meanwhile, the largest producer of semiconductors situated in Taiwan, TSMC, is thinking about expanding its production capacity in the US which is worried about the island’s exposure to China (Novama & Nakaira, 2021).

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Meanwhile, the US has taken on China’s attempts to set its own technical standards for green technologies along with funding for green infrastructure as part of its BRI. The Biden administration has revitalized a multilateral initiative – together with Japan and Australia – originally developed by the Trump administration, the “Blue Dot Network” (US Department of State, 2021b). The initiative aims at creating a mechanism to certify infrastructure projects that meet international quality standards in an effort to promote principles of sustainable infrastructure development around the world, with a major focus on digital and green infrastructure. However, while the envisaged measures might bear fruit only in the mid to long term, to date, the US still lacks an implementable plan on how to decouple, diversify, and support both domestic production of green technologies and global standards for green infrastructure rapidly and significantly. In the short term, this leaves the US with the sole tool of a “tariff war” on Chinese products, and with a major dilemma. Since 2018, the US has engaged China in a “tariff and trade war” targeting key industrial imports, including most prominently, solar panels, or EV batteries. In 2020, tariffs on these products were more than six times higher than before the “trade war” began in 2018 (Bown, 2022). Under President Biden, the US aims at fully decarbonizing the power sector by 2035 and reaching a 50% share of electric car sales by 2030. About 40% of that electricity is envisaged to come from solar power alone and from domestically manufactured green products like solar panels, wind turbines, and rare earth processing mechanisms (Volcovici, 2021). However, US tariffs have already led to a situation where costs for solar PV are significantly higher than in other regions. Ending the reliance on China when it comes to solar PV manufacturing, batteries for electric cars and associated supply chains would drive up prices even more which in turn would undermine their economic viability and so the economic rationale of domestic US energy and climate goals. Against this backdrop, a further increase in tariffs on renewable energy technology equipment from China and building rare earth processing capacity elsewhere would not only take time, but also prove very costly. 3.2 Finance Competition: Alternative Green Funding Models, Diverging Regulations and the Dollar Dilemma The growing US–China rivalry increasingly manifests itself also in the financial realm, with far-reaching implications for the energy transition. Here, competition between the US and China plays out at three different levels: one level relates to different sources of funding to catalyze investment for green energy projects at home and abroad and different players involved (SOE vs private companies); a second level relates to different finance regulations; and a third level involves US monetary policy and the potential weaponization of the US dollar as an asymmetric response to China’s growing investments in cutting edge green energy technologies, initiatives, and projects abroad. China is currently the biggest founder of renewable energy projects worldwide. While China’s National Energy Administration (NEA) and the National Development and Reform Commission (NDRC) in 2017 (National Energy Administration, 2017) planned to spend more than US$360 billion developing renewable energy by 2020, China also leads by investing in a growing number of international renewable energy projects. China usually channels its investments in two ways: first, through increasing contributions to multilateral organizations, which

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includes the BRICS-Bank or the AIIB, and second, through tied loans from state political banks to own SOE companies. Conversely, the US has most recently tried to counter China’s initiatives by promoting its own alternative funding plan. Domestically, it has launched the Build Back Better Framework, which among other sectors, pledges to invest US$555 billion in funding on clean energy programs, with investments in renewable power, EVs, energy infrastructure, and resilience. Globally, the Biden administration has promoted in the G7 framework and, with other likeminded partners, the creation of a new global infrastructure initiative – Build Back Better World (B3W), “a values-driven, high-standard, and transparent infrastructure partnership” (The White House, 2021c) aimed at countering China’s BRI with a strong focus on green technologies and infrastructure. Both plans are in fundamental opposition to China’s goals, approach, and initiatives in terms of financial leverage actors involved, and funding capacity. The domestic component of the Build Back Better Framework aims at mobilizing funding by a mix of tax increases, budgetary means repurposing, and private–public partnerships, thus largely counting on the contribution of the private sector on the one side and on Congressional approval on the other side. The international component – B3W – hasn’t so far made any financial commitment and remains a largely political initiative. The US – along with its G7 partners – seeks to mobilize private capital by leveraging national, bilateral, and multilateral tools like involvement in and cooperation among multilateral development banks and institutions, like ADB, EBRD, EIB, JBIC, USAID and tools like blending mechanisms, ad hoc funds, investment guarantees, nondiscriminatory, and untied loans (The White House, 2021d). The successful mobilization of private capital, however, remains questionable. When defining different funding mechanisms, a sphere of potential rivalry between the US, China – as well as other players like the EU and the UK – is the area of financial regulation and in particular sustainable finance taxonomies but also disclosure rules and sustainable reporting standards. Society, as well as pressures from investors and governments, led to the emergence of ESG criteria which are increasingly incorporated into the sustainable finance agenda. Being able to set global standards can provide enormous geoeconomic leverage as it can redirect global capital flows. As of now, the field is a highly fragmented one and US, European, and Chinese initiatives to harmonize standards are hardly aligned (Vallee & Kammourieh, 2021). Another related important feature is the emergence of a green bond market which holds enormous potential for growth and to raise capital. To date, green bonds represent only a fraction of the total bond market, but this also shows the significant upside potential (IRENA, 2020). This means that not only the setting of standards for technology and production routes, but also for financial products and investment guidelines is a field of geoeconomic tension. Finally, a third – often overlooked – level of competition with potential impact on the green transformation refers to US monetary and fiscal policy. Here the US has a unique geoeconomic tool at its disposal to reorient capital flows. In fact, the US remains at the very center of the global financial system. This is strengthened and underpinned by network effects and naval dominance along the major sea lines of communication. The US dollar is used for about half of all cross-border loans and dollar-denominated debt securities, it accounts for 85% of all foreign exchange transactions, 61% of foreign exchange reserves and around half of all international trade is invoiced in US dollars (Committee on the Global Financial System, 2020, pp. 1–5). Partly, the rise of the US dollar to become the world’s reserve currency is also

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related to the pricing of energy contracts in US dollars, particularly oil, and to the petrodollar market established after the end of the Bretton Woods system (Tun, 2021). While the importance of the petrodollar system diminished over time, in particular as the US became a net energy exporter itself, the US continues to enjoy this privilege as many currencies of exporting countries, including China’s, became pegged to the US dollar, thereby continuing financing US debt (McKinnon & Schnabl, 2004). This dominant role of the US dollar yields significant benefits for the world economy and the Federal Reserve regularly props up other central banks around the world with much needed US dollar liquidity in times of crisis, thereby stabilizing international markets and acting as a lender of last resort (Bahaj & Reis, 2020). But it also gives the US enormous foreign policy advantages and significant leverage in regard to sanctions and cutting off countries from funding and trade with others. Over the past decade, China and Russia have attempted to break the wide usage of the US dollar in international trade, but so far with only limited results (Congressional Research Service, 2021). The size of US capital markets and the central role of the Federal Reserve and the US dollar also poses a dilemma often overlooked and relevant for the context of this chapter. China’s rise is partly a result of easy US monetary policy. In 2000/1, the dotcom bubble burst, the Federal Reserve drastically lowered the interest rate. In search of profit, vast sums of capital flew into China, financing its economic rise, also leading to a boom in commodity and energy prices (Radetzki, 2006). Conversely, if significant rate hikes occur in the US, as is already happening, then this would surely have a negative impact on the US dollar exchange rate and on the competitiveness of US exports and potentially on domestic employment. A much larger impact could be expected on the global capital market though, as the rate hikes could shift capital away from China and developing Asia – as already happened in 2015 – as investors seek risk-free profit in government bonds. This in turn impacts commodity and energy prices, also affecting the course of the energy transition at home. But this could also negatively impact China’s financial stability and investment capacity abroad, including in green infrastructure and technology, by putting pressure on China and exposing a dramatic trade-off between internationalization of its own currency and de-dollarization aspirations on the one side and domestic capital controls to insulate the own economy under the “dual circulation” scheme on the other. Since the early 2000s China has seen international bond investors moving a sizeable amount of money into the still relatively young Chinese domestic bond market, but since 2018 the country has tightened its control over capital outflows (Shen & Galbraith, 2018) to avoid pressure on the renminbi and on its foreign exchange reserves. By implementing capital controls, China can control domestic savings and channel them to the industries it wants to develop, thus limiting the impact of possible capital outflows. By “recycling” accumulated exchange reserves instead of converting them to local currency it also avoids inflationary pressures. However, by doing so, China has hampered the chances for internationalizing its own currency and de-dollarizing both its reserves and its investment deals abroad (Somya & Bansal, 2021, p. 20). As China wants to dominate high-end global value chains, particularly when it comes to green technologies, and increase its strategic autonomy as it is confronted with both growing domestic labor costs and external tariffs, it definitely needs to internationalize its currency and speed up de-dollarization. This would convince international borrowers to hold not only renminbi-denominated assets but also to accept loans for financing projects or to denominate contracts in renminbi or to hold it as strategic reserve currency. This would expand China’s

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strategic autonomy when it comes to cross-border trade, trade in intra-industrial, final goods but also raw and refined energy products, which today depend heavily on the dollar and its payment systems. To do so, however, a free-floating and internationally tradeable currency is needed. A precondition hereof is reducing capital outflow controls. Therefore, China faces a major dilemma. Its own growing industrial-technological ambitions require reducing capital outflow controls and liberalizing the capital market to accelerate de-dollarization, but this very move could in a long transition period make the country more prone to the Federal Reserve’s monetary policy decision and give Washington a crucial strategic advantage. 3.3 Security: Guarding the Seas and the Cyber-Dilemma A further aspect to be considered when it comes to the energy transition and rising power competition is on the one side the growing contestation of maritime spaces and trade routes as well as the ever-growing sophistication of modern computer systems, and on the other, the increasing complexity of modern energy networks (and their digital twins) which increases the vulnerability to cyber-attacks. Economic globalization as we know it today was to a large extent enabled by a reduction in transport costs and the rise of maritime container freight. This was underpinned by a commitment from the US to guard the major sea and trade routes which brought down the risk premium demanded by insurance companies but also granted it significant coercive leverage in the maritime midstream part and thus the ability to deny access and enforce sea blockades (Hughes & Long, 2015). Growing competition and the building of a Chinese blue water navy as well as the security aspect of the maritime part of the BRI might lead to a deterioration of the current regime and to more fragmented, contested, and exclusive maritime spaces. The energy transition can also lead to a new geography of energy trade, one in which new traditional choke points and suppliers wane in importance and future emphasis is put on securing maritime transport of rare earth material supplies and hydrogen derivatives instead of oil and LNG. However, all else being equal, any impediment to the freedom of navigation will increase transport costs and thereby raise prices for everything, including energy products. Also, the digital sphere will encounter new security challenges. The power grid is the backbone of every modern nation and, as all others depend on it, the most important critical infrastructure. The growing digitalization of national power grids – key to the energy transformation – makes cyber-security another field of potential competition between the US and China. Recent efforts undertaken by the US administration highlight the importance of and vulnerability to cyber-attacks. In 2020, the US energy secretary banned certain power system items from China from being used in US electricity utilities (Gardner, 2020) while in 2021, the US energy secretary and the threat assessment of the US intelligence community warned that China, Russia, Iran, and North Korea and others have the capability of shutting down, at least temporarily, critical infrastructure, including pipeline systems and power grid operations (ODNI Office of the Director of National Intelligence, 2021, pp. 20–21). The SolarWinds hack in late 2020, which injected malicious software in more multiple critical infrastructure companies and their industrial control systems, including in the electricity and oil industries, is an example of adversaries’ capabilities (Zetter, 2020). The US administration is now speeding up safety measures (The White House, 2021e). Since the hacks of the Ukrainian power grid which also involved the destruction of physical infrastructure, concerns over malicious cyberattacks have also become a top priority in China. The rapid expansion of its grid alongside

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plans to establish transcontinental interconnections between power grids will require enormous bandwidths of dataflows and safe gateways. So far, Chinese attempts to counter vulnerability by a mix of better training, management, and new emerging technologies like quantum communications and artificial intelligence (Stefanick, 2022). The nature of cyber-attacks and its features of low cost but possible high impact paired with plausible deniability can incentivize targeted hostile operations on critical infrastructure. At the same time, does mutual vulnerability also constitute a form of deterrence? Increasing electrification in the course of the energy transition and advances in cyber-capabilities can make this issue a pressing topic as it can undermine cooperation and give yet another reason for decoupling in the technological sphere.

4. THE PATH AHEAD: CLIMATE CLUBS? Considering the dilemmas posed to a successful energy transition by a US–China rivalry, it remains an open question as to how successful cooperation can be achieved and what a viable pathway for the future can look like. One option that has recently gained traction is the formation of climate clubs. The protection of the climate shares all the characteristics of a global public good and a prisoner’s dilemma and thus inherently suffers from free-riding problems. The underlying incentive structures of cooperation on climate protection have long been ignored and were not addressed in the architecture of existing climate treaties like the Kyoto Protocol or the Paris Agreement. Neither of those addressed the problem of free riding, which in that context means states have incentive to rely on the emission reductions of others instead of pursuing painful reforms, resulting in a suboptimal non-cooperative equilibrium in which climate protection, and thus the rapid transition to sustainable energy sources, is not achieved. Nobel prize laureate Nordhaus addressed this problem by suggesting the formation of exclusive climate clubs instead (Nordhaus, 2021). Accordingly, the most effective club would feature both the US and China alongside the EU which so far is most inclined to form such a club, eyeing the US as a first partner. However, a big question mark surrounds the matter of whether China would join such a club or take it as yet another incentive to create its own standards and reduce exposure to Western trade. Furthermore, it is not said that renewed commitment to climate protection in the US will hold for more than one legislative period, particularly if conflicting with domestic economic policy goals. Some propose that such a climate club should manifest itself with a coalition featuring US allies in the Anglosphere and the EU as well as Japan, thereby giving it even more of a geoeconomic notion, in order to change Chinese coal addiction and address trade imbalances as well as prevent carbon leakages and protect manufacturing jobs. However, it is also important to note that such climate clubs would only work if Western economies and China were not already be decoupled, as tariffs on imports would no longer be effective (Collins, 2021).

5. DISCUSSION One of the key arguments of this chapter is that while climate policy might emerge as one of the few fields of potential cooperation between China and the US, control over energy

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sources, transport routes, and technologies underpinning the fight against climate change remain an essential part of the strategic equation determining the outcome of great power rivalry. Against this backdrop, energy and climate policy can hardly be insulated from mounting US–China competition. Both sides seem to share the vision to decouple at least to a certain extent in order to reduce perceived vulnerability arising from hyper connectivity and the risks of asymmetric dependencies. This has a strong effect on the pace and paths of the energy transition and the diffusion of technology. As pointed out by others, the degree to which the world economy, including the renewable energy industry, still depends on fossil fuels is often neglected (Yergin, 2022). While the enormous cost reductions in the past made renewables like solar PV competitive and their adoption has become widespread, this progress was in part only possible due to large-scale Chinese manufacturing powered by low fossil energy prices. Reshoring of production to less efficient producers and energy crunches due to underinvestment in fossil fuels have the potential to negatively impact the learning curve of renewable energies and thus impede their further diffusion. The same holds true for other technologies like batteries and fuel cells. A fragmented energy technologies landscape with competing standards is detrimental to their widespread use but as great power competition intensifies these issues are becoming more and more prevalent. However, even if the US decoupled from China while at the same time managing to manufacture renewable energy technologies elsewhere, they would still be linked – through energy markets where the price is set globally, and thus gives rise to the “green paradox” arising from the non-simultaneous energy transition globally and therefore slowing the speed of transformation. At the same time, could the location of energy-intensive industries increasingly be determined by the availability of cheap and reliable energy inputs, leading to carbon leakages and hence negatively impact domestic employment? Such danger coupled with the possibility that the energy transition becomes associated with increasing costs for consumers could shift public opinion and reduce support for renewables. In particular the US, having no price controls and a political system responding to swings in the electorate’s opinion, is susceptible here. In this chapter we further looked at the competition in a less considered field, the financial sphere, and identified three major sources of conflict between the US and China which are directly or indirectly linked to the trajectory of the energy transition. The first two concern the questions of how capital is raised, whether SOEs or private capital are the major sources of funding, via which channels capital will flow, as well as who will set the standards for financial regulations. Whether US-driven initiatives like B3W can gain momentum and raise sufficient private capital to really challenge Chinese outward investment remains to be seen, but the clear focus on green technologies and infrastructure could alter the balance of energy investments in emerging markets. China recently committed to end financing coal power abroad, but its debt-trap diplomacy has made many countries wary of accepting Chinese loans. Which funding mechanism the power-hungry emerging market will choose in the future will be become more politicized as the US–China confrontation grows and each country at some point will have to pick sides – and with that choice different rules, standards, and companies will be applied and become involved. The best case scenario would be a globally accepted sustainable finance taxonomy but as the status quo is a fragmented one there is still significant advantage to be gained for those who first establish a widespread, though not global, framework as this can significantly alter the direction of capital flows.

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The EU will be a key player here which could give either side a critical mass of support to spread such taxonomy. The content of such taxonomy will then decide which technologies will receive funding or not, and thus remains a highly sensitive and normative undertaking impacting the importance of energy sources in the global mix, i.e., if nuclear power and natural gas are considered sustainable or not as recently proposed by the European Commission. The third identified conflict spins around monetary policy, control over the global payment infrastructure, and their impact on growth prospects, capital allocations, and the ability to block financial transactions and enforce sanctions. It therefore is only indirectly linked to the energy transition but still plays an important part in the equation as it impacts overall economic performance and therefore boom-and-bust cycles in commodity and energy markets, as well as because the success of de-dollarizing would impact China’s ability to realize its industrial-technological ambitions – including in the energy technology segment. We further elaborated on two other competition fields, where the connectivity issue assumes particular relevance – cyber-space and international waters. Both are the realm through which central ingredients for the energy transition flow – information and as well as everything physically traded and transported via maritime routes – including energy products and technologies. The trend towards electrification and digitalization will require regulators and governments to significantly step up cyber-defense measures to shield industrial control systems and their power grids from hostile intrusion. Neither side is immune to attacks nor has a significant advantage. This mutual vulnerability is likely to strengthen the trend of decoupling but also lead to wider use of cyber-defense equipment in the energy sector and possibly an urge to diversify and reshore the sources of components for the power grid. One other way to engage the complexity and vulnerability of the power grid is to introduce de-centralized, smart mini grids which could prove more resilient and thus emerge gradually in the wake of the energy transition. In regards to control over maritime waters, the US is unlikely to be challenged here on a broad scale any time soon, however, disruption to central nodes of the major shipping ways – many of those are in close proximity to China – will impact freight rates which so far do not price in geopolitical risk. Overall, the US has the sole capacity to enforce sea blockades worldwide and thus to theoretically stop energy imports into China – this will further the trend of using alternative, land-based, energy import corridors and the usage of local modes of energy production – renewables, but also coal and nuclear power. Lastly, we pointed to the discussions about climate clubs which have gained traction in recent months and years. Such formations could on the one hand change the incentive structure of both actors and foster decarbonization efforts and hence the spread of low-carbon technologies. On the other hand, they might give further impetus and reason for decoupling to avoid the negative effects of carbon tariffs if one does not belong to said club and hence lead to fragmentation into a more regional world economy with different sets of rules, standards, and less interaction between blocs and their respective energy systems.

6. CONCLUSION In the end, the future remains uncertain. US–China rivalry will shape the 21st century and determine the course and speed of the energy transition. How and if there will be a decoupling

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as well as cooperation on climate issues will play a central role in the unfolding systemic competition and impact the direction and speed of the energy transition. As in most transnational challenges, global solutions and international collaboration are preferable. But concerns about relative gains in the competitor’s strategic posture tend to prevail in the absence of a central enforcement mechanism in the international system (Grieco, 1988). Climate clubs featuring both nations can be an effective arrangement on how to tackle emissions and foster the energy transition, but still wouldn’t address all the underlying geopolitical and geoeconomic issues discussed in this chapter. Energy and raw materials will remain a central component in the great power equation, in particular as the energy transition is also an industrial-technological revolution promising enormous potential gains if one manages to leverage it for geopolitical aims and as it determines the spatial location of high-value-added manufacturing jobs. A bifurcation and disruption of the global system and its central nodes of connectivity would undermine efficient use of the world’s energy resources and possibly slow diffusion of renewable technologies and thus decarbonization, while increasing and costly military competition could come at the expense of funding the energy transition and cooperation surrounding climate policy.

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Franke, U., & Leonard, M. (2016, January 20). Connectivity Wars. ECFR. https://ecfr​.eu​/publication​/ connectivity​_wars​_ 5064/ Gardner, T. (2020, December 17). U.S. bans utilities supplying defense facilities from buying power grid items from China. Reuters. https://www​.reuters​.com​/ business​/energy​/us​-bans​-utilities​-supplying​ -defense​-facilities​-buying​-power​-grid​-items​-china​-2020 ​-12​-17/ Gargeyas, A. (2021, September 17). China’s ‘standards 2035’ project could result in a technological cold war. The Diplomat. https://thediplomat​.com ​/2021​/09​/chinas​-standards​-2035​-project​-could​-result​-in​ -a​-technological​-cold​-war/ Global Wind Energy Council. (2021). Global Wind Market Report 2021. https://gwec​.net​/global​-wind​ -report​-2021/ Grieco, J. M. (1988). Anarchy and the limits of cooperation: A realist critique of the newest .org​ /10​ .1017​ / liberal institutionalism. International Organization, 42(3), 485–507. https://doi​ s0020818300027715 Herrero, A., & Tagliapietra, S. (2021, October 5). Xi’s pledge on financing coal plants overseas misses point. Asia Times. https://asiatimes​.com ​/2021​/10​/xis​-pledge​-on​-financing​-coal​-plants​-overseas​misses​-point/ Hook, L. (2020, September 22). China pledges to be ‘carbon-neutral’ by 2060. Financial Times. https:// www​.ft​.com​/content​/730e4f7d​-3df0​- 45e4​-91a5​-db4b3571f353 Hughes, L., & Long, A. (2015). Is there an oil weapon?: Security implications of changes in the structure of the international oil market. International Security, 39(3), 152–189. https://doi​.org​/10​.1162​/isec​_a​ _00188 IEA. (2021). Estimated Market Sizes for Selected Clean Energy Technologies by Technology and Region, 2020–2050 – Charts – Data & Statistics. Retrieved November 9, 2021, from https://www​. iea​.org​/data​-and​-statistics​/charts​/estimated​-market​-sizes​-for​-selected​-clean​-energy​-technologies​-by​ -technology​-and​-region​-2020​-2050 IRENA. (2019). A New World: The Geopolitics of the Energy Transformation. https://www​.irena​.org​/ publications​/2019​/Jan ​/A​-New​-World​-The​-Geopolitics​-of​-the​-Energy​-Transformation IRENA. (2020). Renewable Energy Finance: Green Bonds. https://www​.irena​.org​/publications​/2020​/ Jan​/ RE​-finance​-Green​-bonds McKinnon, R., & Schnabl, G. (2004). The East Asian dollar standard, fear of floating, and original sin. Review of Development Economics, 8(3), 331–360. https://doi​.org​/10​.1111​/j​.1467​-9361​.2004​.00237.x Moores, S. (2021, February). The Global Battery Arms Race: Lithium-ion Battery Gigafactories and Their Supply Chain. Oxford Institute for Energy Studies. https://www​.oxfordenergy​.org​/wpcms​/wp​ -content​/uploads​/2021​/02​/ THE​- GLOBAL​-BATTERY​-ARMS​-RACE​-LITHIUM​-ION​-BATTERY​ -GIGAFACTORIES​-AND​-THEIR​-SUPPLY​-CHAIN​.pdf National Energy Administration. (2017). During the 13th Five-year Plan Period, the Total Investment in Renewable Energy will Reach 2.5 trillion Yuan (in Chinese). https://www​.nea​.gov​.cn​/2017​- 01​/05​ /c​_135956835​.htm Nordhaus, W. (2021, November 5). The climate club: How to fix a failing global effort. Foreign Affairs. https://www​.foreignaffairs​.com ​/articles​/united​-states​/2020 ​- 04​-10​/climate​-club Novama, T., & Nakaira, Y. (2021, February 24). US and allies to build ‘China-free’ tech supply chain. Nikkei Asia. https://asia​.nikkei​.com​/ Politics​/ International​-relations​/ Biden​-s​-Asia​-policy​/ US​-and​ -allies​-to​-build​-China​-free​-tech​-supply​-chain ODNI Office of the Director of National Intelligence. (2021). 2021 Annual Threat Assessment of the U.S. Intelligence Community. https://www​.dni​.gov​/index​.php​/newsroom​/reports​-publications​/reports​ -publications​-2021​/item ​/2204​-2021​-annual​-threat​-assessment​-of​-the​-u​-s​-intelligence​-community#:~​ :text​=2021​%20Annual​%20Threat​%20Assessment​%20of​%20the​%20U​.S.​%20Intelligence​,to​%20the​ %20national​%20security​%20of​%20the​%20United​%20States Pollard, J. (2021, September 26). Quad nations to cooperate on rare earths, chips and tech supply chains. Asia Financial. https://www​.asiafinancial​.com​/quad​-nations​-to​-cooperate​-on​-rare​-earths​-chips​-and​ -key​-tech​-supply​-chains Radetzki, M. (2006). The anatomy of three commodity booms. Resources Policy, 31(1), 56–64. https:// doi​.org​/10​.1016​/j​.resourpol​.2006​.06​.003 Roaten, M. (2021, October 1). AUKUS sub deal sends warning to China. National Defense Magazine. https://www​. nat ​ iona ​ l def​ e nse ​ m agazine​ .org ​ /articles ​ / 2021 ​ /10 ​ /1 ​ / hicks ​ - aukus ​ - submarine ​ - deal​ -highlights​-allies​-concerns​-about​-china

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Secretariat of the BRI International Green Development Coalition. (2021). BRI Green Review. https:// en​.brigc​.net​/ Media​_Center​/ BRI​_Green​_Review​/2021​/202107​/ P02​0210​7294​6537​6906569​.pdf Shen, S., & Galbraith, A. (2018, October 11). China constricts capital outflows with eye on Yuan stability. Reuters. https://www​.reuters​.com​/article​/us​-china​-markets​-soft​-landing​-analysis​ -idUSKCN1ML1SW Sinn, H. (2015). The green paradox: A supply-side view of the climate problem. SSRN Electronic Journal. https://doi​.org​/10​.2139​/ssrn​.2621998 Somya, S., & Bansal, B. A. (2021). China’s Digital Yuan: An Alternative to the Dollar-Dominated Financial System. Carnegie Endowment for International Peace. https://carnegieendowment​.org​/files​ /202108​-Bansal​_ Singh_-​_Chinas​_ Digital​_Yuan​.pdf State Council of the People’s Republic of China. (2015). Note of the State Council on ‘Made in China 2025 (in Chinese). https://www​.gov​.cn​/zhengce​/content​/2015​- 05​/19​/content​_9784​.htm Statista. (2021, November 4). CO2 Emissions Worldwide by Key Country 2020. https://www​.statista​ .com ​/statistics​/270499​/co2​-emissions​-in​-selected​-countries/ Stefanick, T. (2022, March 8). Secure Power: Gigawatts, Geopolitics, and China’s Energy Internet. Brookings.  https://www​.brookings​.edu ​/research ​/secure​-power​-gigawatts​-geopolitics​-and​- chinas​ -energy​-internet/ Tsafos, N., Nakano, J., Ladislaw, S., & Carey, L. (2021, May). Reshore, Reroute, Rebalance: A U.S. Strategy for Clean Energy Supply Chains. Center for Strategic and International Studies. https:// www​.csis​.org​/analysis​/reshore​-reroute​-rebalance​-us​-strategy​-clean​-energy​-supply​-chains Tun, Z. T. (2021, July 29). How petrodollars affect the U.S. dollar. Investopedia. Retrieved November 9, 2021, from https://www​.investopedia​.com​/articles​/forex​/072915​/ how​-petrodollars​-affect​-us​-dollar​ .asp United States Department of State. (2021a, April 19). U.S.-China Joint Statement Addressing the Climate Crisis. https://www​.state​.gov​/u​-s​-china​-joint​-statement​-addressing​-the​-climate​-crisis/ US Department of State. (2021b, September 30). Blue Dot Network. https://www​.state​.gov​/blue​-dot​ -network/ Vallee, S., & Kammourieh, S. (2021, December 22). The Political Economy of Green Financial Regulation. E3G. https://www​.e3g​.org​/publications​/the​-political​-economy​-of​-green​-financial​ -regulation/ Volcovici, V. (2021, September 9). Solar energy can account for 40% of U.S. electricity by 2035 -DOE. Reuters. https://www​.reuters​.com​/ business​/energy​/ biden​-administration​-set​-goal​- 45​-solar​-energy​ -by​-2050​-nyt​-2021​- 09​- 08/ The White House. (2021a). Executive Order on America’s Supply Chains. https://www​.whitehouse​.gov​/ briefing​-room ​/presidential​-actions​/2021​/02​/24​/executive​-order​-on​-americas​-supply​-chains/ The White House. (2021b). Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based Growth. https://www​.whitehouse​.gov​/wp​-content​/uploads​/2021​/06​/100​ -day​-supply​-chain​-review​-report​.pdf The White House. (2021c). President Biden Announces the Build Back Better Framework. https:// www​.whitehouse​.gov​/ briefing​-room ​/statements​-releases​/2021​/10​/28​/president​-biden​-announces​-the​ -build​-back​-better​-framework/ The White House. (2021d). FACT SHEET: President Biden and G7 Leaders Launch Build Back Better World (B3W) Partnership. https://www​.whitehouse​.gov​/ briefing​-room ​/statements​-releases​/2021​/06​ /12​/fact​-sheet​-president​-biden​-and​-g7​-leaders​-launch​-build​-back​-better​-world​-b3w​-partnership/ The White House. (2021e). National Security Memorandum on Improving Cybersecurity for Critical Infrastructure Control Systems. The White House. https://www​ .whitehouse​ .gov​ / briefing​ -room​ / statements​-releases​/2021​/07​/28​/national​-security​-memorandum​- on​-improving​- cybersecurity​-for​ -critical​-infrastructure​-control​-systems/ WoodMackenzie, W. (2021, February 8). 700 million Electric Vehicles will be on the Roads by 2050. Wood Mackenzie | Energy Research & Consultancy. https://www​.woodmac​.com​/press​-releases​/700​ -million​-electric​-vehicles​-will​-be​-on​-the​-roads​-by​-2050/ World Bank. (n.d.). GDP per capita (Current US$) – China, United States. World Bank Open Data | Data. https://data​.worldbank​.org​/indicator​/ NY​.GDP​.PCAP​.CD​?locations​= CN​-US​&most​_ recent​_ value​_desc​=false

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Yanran, Z. (2020). High level meeting first mentioned the “domestic and international dual circulation” (in Chinese). Yicai News. https://m​.yicai​.com​/news​/100631002​.html Yergin, D. (2022, September 30). Why the energy transition will be so complicated. The Atlantic. https://www​.theatlantic​.com ​/international​/archive​/2021​/11​/energy​-shock​-transition ​/620813/ Zetter, K. (2020, December 24). SolarWinds hack infected critical infrastructure, including power industry. The Intercept. https://theintercept​.com ​/2020​/12​/24​/solarwinds​-hack​-power​-infrastructure/

PART II TWO STEPS FORWARD, ONE STEP BACK: THE GEOPOLITICAL IMPLICATIONS OF THE ENERGY TRANSITION

7. Transition to renewable energy and the reshaping of consumer–producer power relations Kamila Pronińska

1. INTRODUCTION The domination of fossil fuels in energy production and consumption has been shaping geopolitics for decades. Access to unevenly distributed oil and gas reserves has provided sources of power and influence in the energy market and has enabled oil and gas producers to enjoy a special position in international affairs. The growing dependence on imported hydrocarbons has opened space for the use of import dependencies as a foreign policy tool and aroused security of supply concerns. Security of transportation routes, the stability of producing regions, and reliability of individual suppliers have become major issues for consumer countries. Fears of fossil fuel shortages have been the source of geopolitical tensions, rivalries, and conflicts (Klare, 2005). The threats of the use of the ‘energy weapon’ have been raising questions about the political costs of import dependence, and military activities in oil-rich regions have provoked questions on the energy dimension of such interventions (Pronińska, 2019). In the fossil fuel-dominated energy system, the global and regional energy security landscape continues to be defined by oil and gas demand and supply trends, price fluctuations, and complex relations between consumers and producers. Due to climate change pressure, the existing model of energy consumption and production will be changing. The upcoming energy transition will be the transition away from fossil fuels toward low-carbon energy sources and a more sustainable energy system. Dynamic development of renewable energy sources (RES) for electricity and heat production, the gradual use of biofuels and electrification of transportation, and improvements in energy efficiency have been the most already visible manifestations of the changes. Along with the transition to RES, we will observe the transformation of producer–consumer relations and energy geopolitics. Considering the complexity of energy transition – in terms of both development and expansion of new technologies, different levels of socio-economic, technical, and political readiness of individual countries, but also “a turbulent process of diffusion and assimilation”, when incumbent industries, and the established technologies are being replaced by new emerging ones (Perez, 2009, pp. 19–20) – it is very difficult to assess the pace of the transformative changes. According to the logic of revolutionary change – the development of low-carbon technologies for the power, heat, and transportation sector will be driven by government interventions, strong societal pressure, or energy/geopolitical crisis (Ashford & Hall, 2019, p. 277). It won’t be the scarcity of fossil fuels to drive the next energy transition, but socio-political choice – a response to climate change-related threats. This perspective provokes questions about the geopolitical implications of the energy transition for producer and consumer countries. The assumption taken in this chapter is that some of the changes in producer–consumer 125

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relations will already manifest themselves in the transitional period – very likely a turbulent time of competition over a future position in the energy market. Another time horizon starts when a massive deployment of RES will replace traditional power generation, and the next one with the use of renewables or electricity produced from renewables in other sectors. This will be a new era for the energy market, with electricity becoming a major energy carrier, new players becoming energy producers and consumers, and new areas of cooperation and conflicts. The chapter sets out to explore the possible changes in power relations between present and future major energy producers and consumers. For this purpose, several specific questions are addressed. How will the relative producer and consumer power be impacted? What will become a major power asset in the hands of producer and consumer countries? How will producer–consumer interdependencies be changed? Will transition to RES diminish in importance the use of an energy weapon? What will be the new areas of cooperation and geopolitical tensions in energy relations? Considering that there are many unknowns regarding the dynamics of the energy transition, for analytical purposes, it is important to make two distinctions: (1) between the changes regarding contemporary major consumers and producers (especially the group of petrostates) and the changes in relations between future energy consumers and producers; (2) between geopolitical tensions, which may occur during the transitional period and in the future post-energy transition energy market. In this chapter, the state-centric approach is presented. Yet, it should be noticed that the more decentralized the future energy system becomes the more actors need to be taken into geopolitical consideration and analyzed. The role of energy companies, provinces of states, local authorities, social movements, and other non-state actors will be growing in importance. This process can lead to a much more chaotic and diffused distribution of power in international energy relations.

2. FROM FOSSIL FUELS TO RENEWABLE ENERGY MARKET – MAJOR ENERGY CONSUMERS’ AND PRODUCERS’ PERSPECTIVES Renewable energy is a key to necessary reductions in carbon emissions and a carbon-neutral future. Although its present share in the global energy supply is still relatively low, the use of RES in electricity generation has been increasing significantly. In 2020, renewables contributed to 13% of primary energy consumption and 28% of global electricity generation (BP, 2021) and were set to expand at a record pace, with PV and wind energy playing a leading role (IRENA, 2020). In the new energy era – when a world economy is powered by RES – electricity will become the dominant energy carrier (Scholten & Bosman, 2016; Blondeel et al., 2021; IRENA, 2019), and the role of fossil fuels will be greatly limited. This transition will involve deep changes from institutions and socio-technical regimes, through material artifacts and practices, including infrastructure and services, up to political power and space (Gailing & Moss, 2016). Even if we are in an early stage of the energy transition, the dynamic increase of renewables in the global energy supply is a powerful trend. Just like the historical energy transitions, the transition to RES has the potential to transform energy market structure, energy regimes, and international relations, which go beyond the energy field. To understand the possible scope of

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these implications one must realize that renewables will gain momentum at different paces and scales in different regions. Moreover, until the technological paradigm shift becomes a new energy reality, the energy market will continue to rely on stable supplies of hydrocarbons. In this transitional period, producer–consumer relations will face old and new challenges. Some of them will be related to traditional energy geopolitics, while others will result from the ongoing energy transition. There are many factors, which will influence the dynamic of the energy transition. Climate change together with economic and energy security concerns will impact political decisions and an investment environment. Continuous technological development will help in accelerating the decarbonization of energy production and providing the energy sector with more options. The political conflicts surrounding climate policy should also be taken into consideration, as they can delay energy transition. Observation of COP negotiations proves that the future developments in global energy transition largely depend on the changing political agendas of the world’s major energy consumers. US–China relations were a critical factor in global energy security in the recent decade (Yergin, 2011, p. 719), their attitudes towards climate policy, including their cooperation or competition, will be also crucial for the changes in the global energy market. If they clash over climate policy, this may weaken the will of other countries to take more ambitious climate actions (Bordoff & O’Sullivan, 2022) and affect the deployment of renewables. While their increased investment in renewables will be a powerful market signal. In 2020, China announced that its economy would become carbon neutral by 2060. The promotion and expansion of RES technologies are perceived as critical in the transition of Chinese power sector (Zhang & Chen, 2021), which contributes to the majority of China’s CO2 emissions. Today as the world’s major energy consumer, China is strongly dependent on coal and imported hydrocarbons. Growing energy demand and imports together with an expansion of Chinese oil companies have made China a prominent player in the global energy market. During this time, China had to go out of its comfort zone of “self-reliance”, which had been an imperative of energy policy for decades (Yergin, 2011, p. 202). Considering the role China plays in global energy affairs, its energy choices will strongly impact global market and energy transition dynamics. Investments in RES technology are perceived as a tool to mitigate climate change, keep China’s energy independence and global leadership in RES deployment, and finally enhance energy security (Zhang & Chen, 2021). It is also a part of a wider geopolitical project, involving the expansion of grid interconnections with neighboring countries and far away regions, some of which are linked to the Belt and Road Initiative (Westphal et al., 2022, pp. 33–34). In the case of the US, after years of uncertainty about the future of energy transition in this country, it is expected that the use of renewables will expand under new policy support at the federal level (IEA, 2020). The goal set by the Biden administration to reach 100% carbon pollution-free electricity by 2035 is an important step toward encouraging technology innovation and the deployment of renewable generation. Nevertheless, in contrast to many developed economies, which implemented coal phase-out policies, during COP26 in 2021 the US did not sign the declaration on coal phase-out in the 2030s, putting itself in line with other largest producers of coal. The US plays a unique role in the present global energy market. From the role of the world’s major net importer of hydrocarbons, it managed to turn back to the position of the world’s largest producer of oil and gas. This extraordinary shift has given the US a different perspective on energy security and how it can be achieved. While the developed

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countries, which are net importers of hydrocarbons, perceive investments in RES not only as a way of decarbonizing the energy systems but also as means to decrease dependence on petrostates and increase energy security. In the US, renewables will be replacing other domestic energy sources and are expected to surpass natural gas as a predominant source of generation by 2030 (EIA Admin, 2021). The third key player to shape energy transition dynamics will be the EU. If China is perceived as one of the leaders in RES technology, the other front runner is the EU (Espa, 2018). In contrast to the US, the EU’s dependence on imported fossil fuels has been increasing for the last decade. Investment in RES together with the development of electricity grid integration, and extension of cooperation with other regions’ electricity systems are part of the European Green Deal and a way to enhance energy security. The position of one of the top export markets for oil, gas, and coal brings benefits but also many vulnerabilities, which were particularly visible during times of high prices of imported fuels, and/or political crises in relations with Russia. Under European Climate Law adopted in June 2021, the EU aims to reach net zero GHG emissions by 2050 and increase the target for RES production to 40% by 2030 (in 2023 the provisional agreement was reached to increase the target to at least 42.5% by 2030). The increasing ambitions aim at “showing global leadership on renewables” (European Comission, 2019) and paving the way toward a more sustainable, integrated, and self-sufficient energy system. Interestingly, in the field of RES development, the growing policy interdependency between China and the EU has been observed. It means that changes in the domestic RES policy of one side often involve the need for adjustments in the other and determine the character of bilateral political relations (Sattich et al., 2021). Present major energy consumers hold most renewable investments and adopt long-term decarbonization strategies, though their transition paths will be different. The important risk factors, which may play a role in the energy transition, involve both economic shocks and changing political conditions. They include the trends in hydrocarbon supply and the behavior of major exporters. The group of oil and gas exporters is very diverse in terms of income structure, level of economic development, political system, or their function to global energy security. Producers belonging to a group of major industrialized developed economies and democracies (the US, Canada, the Netherlands, Norway, Australia) have played an important role in providing new diversification options for importers. The US’s surge in unconventional oil production gave an additional counterbalance to OPEC power in the recent decade. Except for Canadian oil reserves, all of these producers present lower than 20 years reserves to production ratio (R/P) for oil and gas deposits (BP, 2021). They will face quite different challenges of energy transition than the group of developing petrostates, with the less diversified structure of incomes and considerably higher R/P. Petrostates’ key concerns regard the pressure on fossil fuel prices and the problem of “unburnable carbon” (Goldthau & Westphal, 2019), which most likely will strongly impact their economic growth and may further destabilize them, leading to socio-political unrests (IRENA, 2019, p. 32). Today, petrostates – countries highly dependent on the export of hydrocarbons – play a central role in the energy market and energy geopolitics. Starting from the Middle Eastern and African producers, through Russia and Central Asia, ending with South and Central America, they will all face major challenges in finding adaptation strategies. Many of them are autocracies, which have been developing military capabilities via energy export revenues. For years, the high concentration of oil and gas exports in the hands of undemocratic regimes has been perceived as a factor increasing geopolitical risks to the security of supply. Their increasing

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military might has been an additional point of concern. Energy transition has the potential to radically change these conditions.

3. IMPLICATIONS OF RES DEVELOPMENTS FOR CONSUMER– PRODUCER POWER RELATIONS 3.1 In the Search for New Power Capabilities The contemporary distribution of power between energy consumers and producers is an effect of decades-long changes in the supply chains, technological and economic trends, and geopolitical factors. The transition to RES will bring many changes to this incumbent energy market structure, challenging the existing energy governance and power relations in the energy market. The starting point in understanding the possible power shifts and their geopolitical implications for consumer–producer relations is to determine new power assets, i.e., means and channels for the exercise of power in future energy relations. In the present energy system, the control over the upstream and downstream hydrocarbon supply chain is an important source of power and influence. Geographical distribution of RES, which are much less concentrated than fossil fuels, together with technical features of RES generation will transform global and regional energy supply chains providing new sources of power capabilities. Countries will need to secure the supply of electricity produced from RES, thus control over the transfer of electricity, access to production and storage technologies, and access to raw materials, necessary for the renewable industry will be crucial assets (Hatipoglu et al., 2020, p. 358). Those with greater RES potential and more advanced in the deployment of RES generation have a greater potential of becoming important electricity production centers. The source of power will be shifted from securing supplies of fossil fuels to strategically positioning efficient generation from RES (O’Sullivan et al., 2017, s. 25). In this new energy market, two groups of countries will occupy a strategic position – consumers with most cost-effective production of RES and countries being able to deliver balancing and storage services (Scholten & Bosman, 2016). As electricity becomes the main energy carrier, the interconnected cross-border electricity infrastructure will play a special role in shaping the new energy landscape and expanding “techno-political spheres of influence” (Westphal et al., 2022, p. 8). Within interconnected grid systems, the power of countries that control flows of electricity and regulate access to it significantly increases. Westphal expresses the view that via cross-border electricity infrastructure “outside powers” will “reconfigure spaces inside the borders of third states”, which includes the ability to change the economies and societies of other states (Westphal et al., 2022, p. 9). In the transitional period, countries will search for this new source of influence, so their decisions to build new interconnectors might be determined by geopolitical considerations. The links between geopolitics and energy infrastructure have been always shaping the energy security landscape. Yet, consumer–producer power relations within interconnected electricity grid are expected to be more complex than those in the fossil fuel-dominated market (Scholten, 2018; Vakulchuk et al., 2020). To a large extent, it is a function of changing intraregional and cross-regional dynamics and the nature of energy interdependencies. With technological, infrastructural, and institutional development, the relative value of different countries within the interconnected electricity system will continue to change.

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Apart from the potential struggles for power in the growing regional electricity markets, at the global level, access to capital, products, and technologies needed for RES development will be of strategic value. In the market where RES are widely distributed, intellectual property rights may become a relatively more important power asset and give an advantage to the most innovative countries with the largest R&D capacities (O’Sullivan et  al., 2017; Criekemans, 2018; Scholten, 2018). Technological advances in RES technologies may determine the position of individual countries in the future distribution of power not only in the energy market. Those countries which win today’s race over RES and technology, as Criekemans expresses “may become the dominant geopolitical players tomorrow” (Criekemans, 2018, p. 41). This global competition for position and power in the future energy market is likely to involve current major energy consumers, including China, the US, the EU, and other major markets for RES. Energy transition provides many opportunities for them, however, their respective annual growth rates, the share of RES in energy consumption, and RES targets for upcoming decades will matter in the race for leadership and power. They also present different approaches to the development of specific renewable technologies and the organization of the future energy system (deCastro et al., 2019). At the same time, major consumers watch each other’s moves and changes in RES policy of one actor may involve the need to adjust the policy of the other (Sattich et al., 2021). These choices will impact their relative power. China is considered the main rival of the West on many grounds. As a potential challenger state to the Western order, China continues to search for new channels of exercising power in international relations. RES and control over the supply chain may become one of them. In this context, one area of geopolitical competition attracts special attention – access to critical raw materials, including rare earth elements (REE). A variety of critical materials, which today cannot be replaced by other elements or substituted with other technology designs, are needed for RES production. Studies, which focus on the geographic concentration of REE and other critical materials, stress that countries with vast reserves will gain in importance (Gholz, 2014; Kamenopoulos & Agioutantis, 2020; O’Sullivan et al., 2017; Smith Stegen, 2015). With the growing demand for specific raw materials, access to them will become an important future power asset. If for example REE are mined in relatively few countries, the geopolitical risk of supply shortages, and/or overreliance on a single supplier will become real. In terms of the new distribution of power – countries with such a power capability could dampen renewable energy capacity build-up (Smith Stegen, 2018, p. 90) and impact the emerging balance of power in the energy market. Indeed, today global supplies of REE rely on a limited number of suppliers, including China. However, it is argued that this is more a result of the current preferences of advanced countries, which want to avoid higher costs and environmental pollution than a matter of lack of alternatives (Hatipoglu et al., 2020, p. 367; Månberger & Johansson, 2019). Authors point out that due to technological improvements, cost reductions, and the fact that most critical materials for the RES industry can be recycled we may have more options in the future (Overland, 2019, p. 37; Månberger & Johansson, 2019). This could change the relative power of current major suppliers of critical raw materials. When the transition to renewables creates new regional and global centers of power, the old ones may face troubles. The diminishing role of fossil fuels means that the power of petrostates will be dramatically changing. From the win–lose logic, many petrostates will be highly exposed to the negative economic and geopolitical implications of the transition. The more a country depends on hydrocarbon export revenues, the more its position will be

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challenged in the future RES market. The negative impact of the transition on the individual petrostate will be divergent. Their role in the future distribution of power in the energy market will be dependent on the ability to adjust and change the present model of economic development. Some producers will try to compensate for the loss in oil and gas revenues by entering new branches of the energy market. In years after COP21, we could observe a few attempts to prepare petrostates’ economies for the post-peak oil demand scenario. Economic reforms were launched among others by Saudi Arabia, UAE, and Indonesia. These efforts haven’t been successful so far due to the strong path dependency of these carbon-intensive economies, the economic monoculture, and the domestic political economy (Goldthau & Westphal, 2019). Many other producers have not even started to diversify their economies and prepare for the long-term changes. For producers, the pace of energy transition matters even more than for any other country. How long will the world rely on imported fossil fuels is a question of existential importance for them. They can prepare and adjust, they can also try to stall, procrastinate, and resist the upcoming changes. It is argued that the decline of petrostates doesn’t have to be “as automatic as often described” (O’Sullivan et  al., 2017, p. 26). Producers with the lowest costs of oil production, mostly the Middle East, will try to use this cost advantage to stay in the market as long as possible, which could bring them geopolitical power (Goldthau & Westphal, 2019; O’Sullivan et  al., 2017). In other words, the position of oil-and-gas-abundant but high-cost producers may be faster challenged. 3.2 Symmetry and Asymmetry in Consumer–Producer Relations – the Demise of the Energy Weapon? The emergence of new consumer–producer interdependencies will be an inevitable consequence of the transition to RES. Starting with the electricity market, through the transfer of technologies, up to supplies of critical materials – in all these areas of the new energy landscape we can expect changes in producer–consumer relations. Although it is not clear which management and organizational model of the renewablebased energy system will dominate in the future, it is acknowledged that it will require much greater interconnectivity (Blondeel et  al., 2021; IRENA, 2019; Scholten & Bosman, 2016; Westphal et al., 2022). Of course, if the market is based on super-grid solutions, it will bring different requirements for interconnectivity than if it goes in the other direction, i.e., towards micro-grids and off-grid developments. The interconnection will be needed for energy security reasons – to utilize large-scale intermittent RES the energy system must be more flexible in terms of decoupling demand and production (Thellufsen & Lund, 2017). The way to increase this flexibility is by providing high-capacity cross-border and cross-sector interconnections (Brouwer et  al., 2014; Thellufsen & Lund, 2017). Interconnected energy systems increase the need for cooperation. They give an option to import electricity for countries with insufficient local RES and/or with high electricity prices. The growing import needs will create new import dependencies on countries participating in the interconnected grid. In the conditions of large-scale grid development, importers might be dependent even on very far away suppliers. In terms of possible geopolitical challenges derived from import dependence, the difference between the electricity and fossil fuel market is considerable. The disruptions in electricity transmission within interconnected grid systems would affect every participating country (Scholten & Bosman, 2016). This mutual energy security vulnerability changes the

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conditions of producer–consumer relations. Strong interconnectivity and “an in-built safety mechanism” (Smith Stegen, 2018) facilitates more symmetrical producer–consumer relations and cooperation which in turn could diminish the use of energy weapon. On the other hand, there are voices that in the future market electricity cut-offs could also become a foreign policy tool and a new energy weapon (O’Sullivan et al., 2017, pp. 19–20). In this scenario, an electricity interconnector entails geopolitical risk because it could be used for “political blackmail” (Goldthau & Westphal, 2019). In the super-grid region, both the producer and transit states could disturb energy supplies to exert political pressure. It is claimed that such electricity supply manipulations could especially occur on the long-distance high-voltage direct current transmission lines (Smith Stegen, 2018, p. 88). To minimize the risk of the use of electricity as a weapon, importer countries will need to consider reducing dependence on the super-grid or try to tie electricity cross-border trade agreements to other issues, like finance, infrastructure, security (O’Sullivan et al., 2017, p. 20). Nevertheless, there are more reasons to believe that using energy as a political tool will be less likely in the future RES market. One of the key differences is that today much of the oil and gas reserves are in the hands of autocratic regimes and the OPEC cartel. Petrostates have proved that import dependency can be used to achieve political ends, while export revenues serve to build up military capacity and keep the regimes in power. The geographic concentration of hydrocarbons makes consumers dependent on a limited number of foreign suppliers, transport routes, oil/LNG chokepoints, and are vulnerable to supply disruptions and price shocks. In contrast to fossil fuels, RES are ubiquitous, and most countries will be able to decide if they want to produce or import electricity. Greater access to domestic RES and the possibility of becoming self-sufficient in electricity production “fundamentally changes power relations” (Scholten & Bosman, 2016, p. 277). When more countries can become producers and when disruption of electricity supplies affects all the participants of the synchronized grid, more symmetrical importer–exporter relations may be established. Researchers speak of the emergence of “grid communities” (Scholten & Bosman, 2016, p. 279) and “electricity solidarity” (Westphal et al., 2022). This new grid solidarity mentality in producer–consumer relations together with more options available for consumers in their energy policy disturbs the current understanding of producer vis-à-vis consumer power. The logic and technical features of the interconnected renewable energy systems – including bidirectional flows, less exclusive relationship with one supplier, open alternatives, and the safety mechanisms of interconnected grid systems – change energy geopolitics considerably and reduce the risk of using electricity as a weapon (Blondeel et al., 2021; IRENA, 2019; Overland, 2019; Scholten & Bosman, 2016). The extent to which consumer–producer interdependency is symmetrical or asymmetrical is an important factor influencing the dynamics of energy relations. As it has been shown, the geopolitical weight of the various actors in the RES market will be different. Access to RES, technology, infrastructure, capital, and REE is among the key assets which will determine the future geopolitical landscape and thus possible asymmetry in consumer–producer relations. The future regional RES-based electricity markets will be largely dependent on other markets for technologies, products, or raw materials needed for RES production. These areas have a greater potential of producing asymmetric trade relations and thus give more options for using new dependencies as a weapon. Authors indicate that asymmetry in import–export relations may arise, especially in the field of some raw materials, including REE and biofuels (O’Sullivan et al., 2017, Smith Stegen, 2018, p. 87; Blondeel et al., 2021, s. 9–10). The other field of asymmetrical interdependencies might be the hydrogen market. It is stressed

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that hydrogen supplies have the potential of becoming a new energy weapon and an area of increasing geoeconomic rivalry (Blondeel et al., 2021, p. 11).

4. DISCUSSION New interdependences in producer–consumer relations, along with the position of individual countries in the future RES-based electricity market will affect the emergence of new conflict and cooperation patterns. Certainly, the RES market creates much room for cooperation. Cooperation can be facilitated by the rising awareness of the advantages of integrated power systems. Studies prove that even if countries could provide 100% of energy demand from domestic RES, the interconnection of the electricity grid serves as an additional benefit to cost reduction and grid stability (Jacobson, 2021). Among other issues, cooperation will be needed to boost the resilience of electricity infrastructure to severe weather events. It is expected that due to climate change the future electricity grid will be more often exposed to extreme weather events. Within the interconnected grid, countries will cooperate to increase the ability of the power system to withstand extreme weather events, rapidly recover, absorb lessons, and prevent disruptions in the future (Panteli & Mancarella, 2015). Achieving security of electricity supply within an interconnected system requires cooperation on many levels – organizational, market, technical, and regulatory. Another important area of future cross-border cooperation is the development of RES. Large-scale projects, such as offshore wind farms, may require greater internationalization. Capital needs and the management of supply chains, but also security are among the reasons for the development of international strategic partnerships and cross-border cooperation (Pronińska & Księżopolski, 2021). The need for fast and radical changes in the energy system could also encourage cooperation on the development and transfer of RES technologies. It is argued that technologies in the clean energy sector are so complex that their development requires international cooperation (Criekemans, 2018). However, the new energy reality won’t be free of geopolitical tensions, power struggles, and conflicts. They will arise on many fronts, across various sectors and regions. It is likely that at the center of these tensions will be the control over components of the supply chain for the RES market. There are four main areas of possible geopolitical struggles. The first one regards the organization, security, and management of the interconnected electricity market and the respective benefits and losses for individual countries. The three other areas concern a wider supply chain for the RES market, they include trade and access to raw materials; development and trade with technologies; and development of production from various RES. To understand the dynamics of geopolitical tensions, which may arise in all these areas, it is important to define the referent time frames. Some of the conflicts will be appearing already in the transitional period, i.e., on the path toward decarbonization and struggle for position in the future energy market. Others will materialize in the conditions of a new low-carbon energy system with RES dominating in electricity production. In the electricity market, we have already been observing how geopolitical interests in different regions have been driving grid expansion and hampering the development of regulatory measures (Goldthau & Westphal, 2019). The different experiences of Europe, Asia, Eurasia, and the Americas with the development of interconnectors, and regulatory-operational measures, prove that the geopolitics of electricity markets will vary across the regions. The EU electricity market integration involves shared regulatory, solidarity, and authority mechanisms,

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providing a good base for developing symmetrical relations and cooperative behaviors. There are regions, which may be organized around a hegemonic power (like India, China, Russia), or where wider grid integration will be impossible due to existing geopolitical tensions and mistrust (e.g., Central Asia, South Asia). These regional developments will impact struggles over the shape of future production–consumption centers and the operational-regulatory environment. In the transitional period, the most likely conflicts will regard the location and density of grid interconnections, grid management, ownership, operational security responsibilities, and the respective allocation of costs and benefits within the new RES system (Scholten & Bosman, 2016, p. 279; Goldthau & Westphal, 2019; Hatipoglu et  al., 2020, p. 362). These technical, political, and legal issues must be set before intermittent sources dominate power generation. It is a matter of providing a stable base for cooperative relations and the security of energy supply. To alleviate the risk of future conflicts, a clear regulatory framework, and international agreements on the technical, market, and organizational aspects of the interconnected system will be needed. Apart from the intraregional dynamic, attention should also be given to inter-regional producer–consumer relations. In theory, the intermittency of power generation and the growing need for RES should encourage wider cooperation between regions. Consumers should be interested in developing import capacity from regions with abundant RES and cheaper electricity production. The inter-regional integration could provide lower-cost energy sources and additional flexibility in the system. It would also help to optimize the total energy production mix, decrease storage utilization and increase system stability due to more distributed generation (Bogdanov et al., 2016). However, the practice has already shown that despite potential benefits, the win–lose approach often dominates and may block the development of interconnectors. Geopolitical considerations, and preferences to develop domestic RES have already jeopardized the development of some inter-regional grid interconnections projects. This was the case of EU-MENA grid integration, which was blocked due to conflicting geopolitical interests (Goldthau & Westphal, 2019, p.21). In the case of Asia and Oceania, there are scientific considerations on the benefits of various inter-regional interconnections (Halawa et al., 2018; Xunpeng et al., 2019). Nevertheless, the geopolitical reality and tensions between countries potentially involved in the projects are one of the key obstacles to their development. In the transitional period, we may observe more geopolitical tensions over cross-regional grid interconnections, and ultimately the different options of inter-regional market interconnection may be chosen (Bogdanov et al., 2016). Over a long time, the cross-regional dynamics of producer–consumer relations will be dependent on the chosen option, which will determine the level of a region’s interconnectivity and independency in power generation. Energy producer–consumer relations will be also dependent on the practices across the RES supply chain. Access to critical materials, such as REE, and access to technology are among key areas of potential geopolitical tensions. Scarcity logic, the geographic concentration of REE, and experiences with Chinese REE exports can explain why the supply of critical materials necessary for the development of RES generation is presented as a potential area of geopolitical conflicts (Kamenopoulos & Agioutantis, 2020; Smith Stegen, 2015; Rabe et al., 2017). As the RES system is increasingly dependent on some critical materials, countries may need to compete for access to them. Geopolitical tensions may also arise from the danger of REE becoming a new geopolitical tool in the hands of a few suppliers, which could monopolize supplies (Rabe et al., 2017; Smith Stegen, 2018) or carry out OPEC-style market cartelization to exert influence over importers

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of critical materials (O’Sullivan et  al., 2017, p. 22). Potential supply disruptions caused by countries that would control the market need to be taken into consideration in the assessment of future geopolitical risks related to dependence on specific critical materials or suppliers. The availability of substitutes for one or another green technology together with the strategies of exporters will impact the risks of supply shortages, price hikes, and the respective geopolitical tensions (Månberger & Johansson, 2019). However, there are voices that state the race to take control of REE doesn’t have to be inevitable and that the REE scarcity issue is exaggerated (Overland, 2019, p. 49; Vakulchuk et al., 2020, pp. 7–8; Gholz, 2014; Månberger & Johansson, 2019). From this perspective, export restrictions imposed by exporters would have a rather short-term impact. It is argued that alternative suppliers and substitution by the use of another technology design would alleviate shortages of particular critical material (Månberger & Johansson, 2019). This reasoning leads to a belief that growing dependence on REE for the RES market may bring fewer security risks and geopolitical tensions than dependence on imported hydrocarbons. The capital investments and technological advances which continue to increase the availability of alternatives, will play a crucial role in the transformation of the REE market and reduce the risks of future tensions. Regardless of future technological solutions, various critical materials will be needed for the energy transition, and gaining access to them will become an integral part of energy geopolitics. This leads us to perhaps the most important area of tensions arising during the transitional period and over a longer time horizon – access to technologies, both software and hardware solutions for the RES sector. On one hand, the transfer of green technology is a key element of the energy transition. It should be fast enough to allow the reduction in vulnerability to climate change and help developing countries with radical technological changes in the energy system (Karakosta et al., 2010). On the other hand, when the development and transfer of green technology are perceived as a geopolitical asset, tensions can arise between different regions, including between developing and developed countries (O’Sullivan et al., 2017, p. 15). The technological race and efforts to take the lead are an integral part of energy geopolitics in the transitional period. Today’s leaders of innovations for the RES industry may enforce their future position, but there is still room for new actors to join this innovation race. The pace and timing of the energy transition may play a crucial role in drawing a map of the suppliers and buyers of new technologies. Countries with ambitions to win the technological race may try to apply a variety of strategies, which can be a source of tensions in bilateral or multilateral relations. Government support for RES may result in price wars and/or political disputes, like in the case of EU–China relations, when anti-dumping measures were imposed on imports of Chinese solar cells and panels or as a result of the Carbon Border Adjustment Mechanism proposal. Power struggles regarding the development and transfer of innovative technologies may also affect the dynamics of energy relations by making some technological solutions more attractive, or accessible than others. It is unclear which technologies will dominate, and/or what will be the market share of individual RES. Why is it important to the analysis of potential geopolitical tensions? Regarding the specific requirements of energy production from different RES, some sectors can produce more international tensions than others. There are views that electricity produced from renewables, which require more area than traditional fossil fuel generation, may trigger conflicts over territory, including land and maritime disputes (Hatipoglu et al., 2020). In the case of bioenergy, if it is not produced sustainably on existing farmland and grassland, if it encroaches upon rainforests and threatens food production, the potential for international tensions, as well as local land use, conflicts

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significantly increases (IRENA, 2017). Still, if compared to the oil and gas market, the RES landscape seems to be much more peaceful. Most importantly, the widespread use of RES, which implies a declining dependency on imported hydrocarbons, will reduce the risk of traditional inter-state conflicts over access to energy resources, including the risk of military interventions motivated by energy security interests. Before energy transition moves us toward rather low-conflict energy relations we may experience a turbulent transitional period. A situation when traditional oil and gas exporters feel insecure about their future market position and power capabilities can lead to many geopolitical tensions and even armed conflicts. Will they be waiting in calm acceptance of the upcoming changes in the global distribution of power in energy and wider international relations? Or maybe they will try to win as much as possible now, i.e., when they feel relatively strong. As it has been said, oil and gas producers are not a homogenous group. They will adopt different strategies and not all are doomed to lose. In this context, researchers discuss the potential conflict between the winners and losers of transformation (Blondeel et al., 2021, s. 8; Smith Stegen, 2018). In the case of petrostates, many of them used export revenues for a military buildup. From Saudi Arabia and the UAE, via Algeria and Nigeria, up to Russia and Central Asian producers, an increase in military spending of the last two decades was a result of a combination of petrodollars and geopolitical ambitions. Petrostates are among the top military powers in their regions, and in some cases also in the world. Those petrostates who feel the most threatened by the energy transition, and are dissatisfied with the existing international order, might be a source of geopolitical, including military threats. Russia’s hostile behavior and its aggression on Ukraine is the most striking example of this mixture of geopolitical considerations, fears of the declining power and influence derived from fossil fuel export, and the feeling of running out of time. Russia, with around 40% of federal budget revenues covered by oil and gas exports, is among the petrostates facing the biggest challenges in adapting to a RES world. The energy transition is approaching and Russia lags far behind other major powers in terms of RES development and patents for RES technologies (IRENA, 2019, s. 30). The decision, which destroyed international order and peace in Europe was made by the Russian authoritarian regime in the context of record-high gas prices and high Europe’s import-dependence on Russian resources. In the era of the energy transition, the ability of authoritarian petrostates to project their power will decline. Not only will oil and gas revenues not be sufficient to finance military spending, but also their calculation of the use of force will have to change.

5. CONCLUSIONS This chapter was to explore how the switch to RES would change the sources of power and influence in the energy market and transform consumer–producer relations. Several paths of possible changes were described and analyzed with information obtained from the review of scientific literature regarding the energy transition, and geopolitics of energy relations. The key findings confirm that the relative producer–consumer power will be impacted by the process of the energy transition, though the outcome will be dependent on the pace of transition and the distribution of new power capabilities across the supply chains. It is not clear how long the transitional period will last, yet it will be decisive in determining which power assets become crucial for future energy relations and which countries gain the most from the energy transition.

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The first step in understanding the nature of changes in producer–consumer relations was to find out what will become the major power asset in the hands of producer and consumer countries, i.e., what will be the channels for exercising power in energy relations. An analysis of the anticipated structural changes in the global energy market shows that when electricity becomes the main energy carrier and RES dominate the primary energy mix the main source of power will be shifted from control over the hydrocarbon supply chain to access to the most efficient electricity generation from RES. As result, the future energy landscape will be shaped by the distribution of RES production centers, interconnected cross-border electricity infrastructure, storage, and balancing capacities, but also control over a wider RES supply chain, including trade with critical materials, and technologies for the RES market. The possession of these assets will be crucial in the strategic positioning of an individual country in the future energy market. Regardless of some regional differences, within interconnected grid systems, the role and power of countries controlling the flow of electricity will be significantly stronger. They might try to use this position to expand new spheres of economic-political influence. The future distribution of power assets in the energy market and the creation of new supply chains will have implications for producer–consumer relations. In this context the chapter was asking about the respective changes in producer–consumer interdependencies, the new areas of cooperation and conflict, and if transition to RES would diminish the use of energy as a weapon. It showed that quite new interdependencies will be established along the supply chains from the electricity market, through the transfer of technologies needed for the development of RES, up to the market for critical materials. One of the key features is that in the RES-based electricity system, strong interconnectivity requirements facilitate more symmetrical producer–consumer relations than those in the fossil fuels market. In the case of both super-grid and micro-grid solutions based on intermittent RES, the interconnectivity will be needed to provide greater flexibility of the energy system, grid stability, and cost reduction. Interconnectivity and cooperation will be also needed to boost the resilience of critical infrastructure to severe weather events, which are expected to threaten security of electricity supplies more often in the future. The chapter supports the view that technical features of regional electricity markets – interconnected energy systems increase the need for cooperation and create mutual producer–consumer energy security vulnerability – together with the decrease of import dependencies on autocratic regimes should diminish the use of energy as a weapon. Yet, future producer–consumer relations won’t be free of geopolitical tensions, or conflicts, and some market areas may be more susceptible to political manipulation. In the electricity market, some of the interconnections might pose greater risks of supply cut-off behavior, and it is also possible that in the large-scale grid system, importers might be dependent on faraway suppliers. There can be also considerable differences between the regions in terms of market interconnectivity, regulatory mechanisms, and the respective symmetry and asymmetry in electricity trade relations. The chapter argues that the final market structure, institutional framework, scale of grid interconnections, and grid configuration will determine the level of cooperativeness and/or conflict in producer–consumer relations. If there are considerable gaps in energy governance, and unsolved technical and security problems, the likelihood of tensions and conflicts will increase. The other areas, which were identified as having potential for more asymmetrical trade relations and geopolitical tensions regard the market for RES technologies and critical materials, including REE. In a world increasingly dependent on rare metals and minerals, which

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are critical for renewable hardware production, producer and consumer countries may need to compete for access to them. If they are mined in relatively few countries, the geopolitical risk of supply shortages and overreliance on a single supplier will considerably increase, becoming a threat to energy security. Despite this, it seems that the capital investments and technological advances, which continue to increase the availability of alternatives, can significantly reduce the risks of future conflicts in this field. Thus, development and access to various RES technologies seem to be critical assets. Already in the transitional period, intellectual property rights and access to hardware and software technologies for RES development have gained strategic value. Today’s decisions of major consumers and producers on the development and transfer of innovative technologies should be perceived through the prism of competition for future market power, and position in energy relations. These power struggles may affect the dynamics of future energy relations making some technological solutions more accessible than others. Energy consumers and producers face a variety of geopolitical challenges due to the increasing deployment of renewables, yet they also understand that present political and technological choices will determine their future role on the global energy map. The chapter finds that this will be particularly challenging for petrostates. On one hand, not all petrostates are bound to decline to a similar extent and their adaptation strategies will play an important role here. Some of them may enter new branches of the future energy market, trying to compensate for the loss in oil and gas revenues. On the other hand, considering the challenge of transforming the economic monoculture of petrostates, most of them are rather expected to procrastinate and resist the upcoming changes. The behavior of petrostates which might feel threatened by the energy transition was identified as one of the likely sources of geopolitical tensions and conflicts. Finally, while the transitional period is expected to generate geopolitical tensions in consumer–producer relations due to conflicting geopolitical interests, struggles for future power, and the resistance of some state actors, in the long run the transition to RES, which will replace old producer–consumer interdependencies with new ones, should bring a more cooperative and peaceful energy landscape.

REFERENCES Ashford, N., & Hall, R. (2019). Technology, Globalization, and Sustainable Development: Transforming the Industrial State. Routledge. https://www​.routledge​.com​/ Technology​-Globalization​ -and​-Sustainable​-Development​-Transforming​-the​/Ashford​-Hall​/p​/ book ​/9781138605534 Blondeel, M., Bradshaw, M. J., Bridge, G., & Kuzemko, C. (2021). The geopolitics of energy system transformation: A review. Geography Compass, 15(7), e12580. https://doi​.org​/10​.1111​/gec3​.12580 Bogdanov, D., Koskinen, O., Aghahosseini, A., & Breyer, C. (2016). Integrated renewable energy-based power system for Europe, Eurasia and MENA regions. 2016 International Energy and Sustainability Conference (IESC), 1–9. https://doi​.org​/10​.1109​/ IESC​.2016​.7569508 Bordoff, J., & O’Sullivan, M. L. (2022). Green upheaval. The new geopolitics of energy. Foreign Affairs, 101(1), 68–84. https://www​.foreignaffairs​.com​/articles​/world​/2021​-11​-30​/geopolitics​-energy​ -green​-upheaval BP. (2021). Statistical Review of World Energy 2021 70th Edition. BP. https://www​.bp​.com​/content​/dam​ /bp​/ business​-sites​/en ​/global ​/corporate​/pdfs​/energy​- economics​/statistical​-review​/ bp ​-stats​-review​ -2021​-full​-report​.pdf Brouwer, A. S., van den Broek, M., Seebregts, A., & Faaij, A. (2014). Impacts of large-scale Intermittent Renewable Energy Sources on electricity systems, and how these can be modeled. Renewable and Sustainable Energy Reviews, 33, 443–466. https://doi​.org​/10​.1016​/j​.rser​.2014​.01​.076

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Criekemans, D. (2018). Geopolitics of the renewable energy game and its potential impact upon global power relations. In D. Scholten (Ed.), The Geopolitics of Renewables (pp. 37–73). Springer International Publishing. https://doi​.org​/10​.1007​/978​-3​-319​-67855​-9_2 deCastro, M., Salvador, S., Gómez-Gesteira, M., Costoya, X., Carvalho, D., Sanz-Larruga, F. J., & Gimeno, L. (2019). Europe, China and the United States: Three different approaches to the development of offshore wind energy. Renewable and Sustainable Energy Reviews, 109, 55–70. https://doi​.org​/10​.1016​/j​.rser​.2019​.04​.025 EIA admin. (2021). EIA Projects Renewables Share of U.S. Electricity Generation Mix Will Double by 2050. http://119.78.100.173/C666//handle/2XK7JSWQ/313338 Espa, I. (2018). Climate, energy, and trade in EU–China relations: Synergy or conflict? China-EU Law Journal, 6(1), 57–80. https://doi​.org​/10​.1007​/s12689​- 017​- 0076-0 European Commission. (2019). Clean Energy for all Europeans (s. 24). European Union. https://op​ .europa​.eu​/en​/publication​-detail/-​/publication​/ b4e46873​-7528​-11e9​-9f05​- 01aa75ed71a1/ Gailing, L., & Moss, T. (2016). Conceptualizing Germany’s Energy Transition: Institutions, Materiality, Power, Space. Palgrave Macmillan: Imprint: Palgrave Pivot. http://ezproxy​.eui​.eu​/ login​?url​=http:/​/dx​ .doi​.org​/10​.1057​/978​-1​-137​-50593-4 Gholz, E. (2014). Rare Earth Elements and National Security. Council on Foreign Relations. https:// www​.jstor​.org​/stable​/resrep00311 Goldthau, A., & Westphal, K. (2019). Why the global energy transition does not mean the end of the petrostate. Global Policy, 10(2), 279–283. https://doi​.org​/10​.1111​/1758​- 05899​.12649 Halawa, E., James, G., Shi, X. (Roc), Sari, N. H., & Nepal, R. (2018). The prospect for an Australian– Asian power grid: A critical appraisal. Energies, 11(1), 200. https://doi​.org​/10​.3390​/en11010200 Hatipoglu, E., Muhanna, S. A., & Efird, B. (2020). Renewables and the future of geopolitics: Revisiting main concepts of international relations from the lens of renewables. Russian Journal of Economics, 6(4), 358–373. https://doi​.org​/10​.32609​/j​.ruje​.6​.55450 IEA. (2020). Global Energy Review 2021. International Energy Agency. https://www​.iea​.org​/reports​/ global​-energy​-review​-2021​/renewables IRENA. (2017). Bioenergy from Degraded Land in Africa: Sustainable and Technical Potential under Bonn Challenge Pledges. Abu Dhabi: International Renewable Energy Agency. IRENA. (2019). A New World – The Geopolitics of the Energy Transformation (ISBN 978-92-9260097-6). International Renewable Energy Agency. http://geo​poli​tics​ofre​newables​.org​/ Report IRENA. (2020). Global Renewables Outlook: Energy Transformation 2050. Abu Dhabi: International Renewable Energy Agency. https://www.irena.org/publications/2020/Apr/Global-RenewablesOutlook-2020 Jacobson, M. Z. (2021). The cost of grid stability with 100 % clean, renewable energy for all purposes when countries are isolated versus interconnected. Renewable Energy, 179, 1065–1075. https://doi​ .org​/10​.1016​/j​.renene​.2021​.07​.115 Kamenopoulos, S., & Agioutantis, Z. (2020). Geopolitical risk assessment of countries with rare earth element deposits. Mining, Metallurgy & Exploration, 37, 51–63. https://doi​.org​/10​.1007​/s42461​-019​-00158-9 Karakosta, C., Doukas, H., & Psarras, J. (2010). Technology transfer through climate change: Setting a sustainable energy pattern. Renewable and Sustainable Energy Reviews, 14(6), 1546–1557. https:// doi​.org​/10​.1016​/j​.rser​.2010​.02​.001 Klare, M. T. (2005). Geopolitics reborn: The global struggle over oil and gas pipelines. Current History, 103(677), 428–433. https://www​.jstor​.org​/stable​/45317996 Månberger, A., & Johansson, B. (2019). The geopolitics of metals and metalloids used for the renewable energy transition. Energy Strategy Reviews, 26, 100394. https://doi​.org​/10​.1016​/j​.esr​.2019​.100394 O’Sullivan, M. L., Overland, I., & Sandalow, D. (2017). The Geopolitics of Renewable Energy. Center on Global Energy Policy Columbia University|SIPA; The Geopolitics of Energy Project Belfer Center for Science and International Affairs Harvard Kennedy School. https://www​.hks​.harvard​.edu​ /publications​/geopolitics​-renewable​-energy Overland, I. (2019). The geopolitics of renewable energy: Debunking four emerging myths by Indra overland: SSRN. Energy Research and Social Science, 49, 36–40. https://ssrn​.com​/abstract​=3506589 Panteli, M., & Mancarella, P. (2015). Influence of extreme weather and climate change on the resilience of power systems: Impacts and possible mitigation strategies. Electric Power Systems Research, 127, 259–270. https://doi.org/10.1016/j.epsr.2015.06.012

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Perez Carlota. (2009). Technological revolutions and techno-economic paradigms. Working Papers in Technology Governance and Economic Dynamics, 20, Article 20. http://hum​.ttu​.ee​/wp​/paper20​.pdf Pronińska, K. (2019). The significance of the resource and energy factor in military interventions of the west after the cold war. In M. Madej (Ed.), Western Military Interventions after the Cold War. Evaluating the Wars of the West (pp. 230–251). Routledge. Pronińska, K., & Księżopolski, K. (2021). Baltic offshore wind energy development—Poland’s public policy tools analysis and the geostrategic implications. Energies, 14(16), 4883. https://doi​.org​/10​ .3390​/en14164883 Rabe, W., Kostka, G., & Smith Stegen, K. (2017). China’s supply of critical raw materials: Risks for Europe’s solar and wind industries? Energy Policy, 101, 692–699. https://doi​.org​/10​.1016​/j​.enpol​ .2016​.09​.019 Scholten, D. (2018). The geopolitics of renewables—An introduction and expectations. In D. Scholten (Ed.), The Geopolitics of Renewables (pp. 1–33). Springer International Publishing. https://doi​.org​/10​ .1007​/978​-3​-319​-67855​-9_1 Scholten, D., & Bosman, R. (2016). The geopolitics of renewables; exploring the political implications of renewable energy systems. Technological Forecasting and Social Change, 103, 273–283. https:// doi​.org​/10​.1016​/j​.techfore​.2015​.10​.014 Sattich, T., Freeman, D., Scholten, D., & Yan, S. (2021). Renewable energy in EU-China relations: Policy interdependence and its geopolitical implications. Energy Policy, 156, 112456. https://doi. org/10.1016/j.enpol.2021.112456 Smith Stegen, K. (2015). Heavy rare earths, permanent magnets, and renewable energies: An imminent crisis. Energy Policy, 79, 1–8. https://doi​.org​/10​.1016​/j​.enpol​.2014​.12​.015 Smith Stegen, K. (2018). Redrawing the geopolitical map: International relations and renewable energies. In D. Scholten (ed.), The Geopolitics of Renewables (pp. 75–95). Springer International Publishing. https://doi​.org​/10​.1007​/978​-3​-319​-67855​-9_3 Thellufsen, J. Z., & Lund, H. (2017). Cross-border versus cross-sector interconnectivity in renewable energy systems. Energy, 124, 492–501. https://doi​.org​/10​.1016​/j​.energy​.2017​.02​.112 Vakulchuk, R., Overland, I., & Scholten, D. (2020). Renewable energy and geopolitics: A review. Renewable and Sustainable Energy Reviews, 122, 109547. https://doi​.org​/10​.1016​/j​.rser​.2019​.109547 Wang, B., Wang, Q., Wei, Y.-M., & Li, Z.-P. (2018). Role of renewable energy in China’s energy security and climate change mitigation: An index decomposition analysis. Renewable and Sustainable Energy Reviews, 90, 187–194. https://doi​.org​/10​.1016​/j​.rser​.2018​.03​.012 Westphal, K., Pastukhova, M., & Pepe, J. M. (2022). Geopolitics of Electricity: Grids, Space and (political) Power [SWP Research Paper 6]. Stiftung Wissenschaft und Politik German Institute for International and Security Affairs. https://www​.swp​-berlin​.org​/publications​/products​/research​ _papers​/2022RP06​_Geo​poli​tics​OfEl​ectricity​.pdf Xunpeng, S., Lixia, Y., & Han, J. (2019). Regional power connectivity in Southeast Asia: The role of regional cooperation. Global Energy Interconnection, 2(5), 444–456. https://doi​.org​/10​.1016​/j​.gloei​ .2019​.11​.020 Yergin, D. (2011). The Quest: Energy, Security and the Remaking of the Modern World. Penguin Press. Zhang, S., & Chen, W. (2021). China’s energy transition pathway in a carbon neutral vision. Engineering. https://doi​.org​/10​.1016​/j​.eng​.2021​.09​.004

8. The geopolitics of energy transportation and carriers: from fossil fuels to electricity and hydrogen Karen Smith Stegen, Julia Kusznir, and Cäcilia Riederer

1. INTRODUCTION As the world decarbonizes and transitions to renewable energies, the dominant energy carriers will likely change and the use of electricity and hydrogen will increase. How will this affect the geopolitics of energy transportation? What could be the new relationships and configurations of dependence? To address these questions, this chapter summarizes the main geopolitical issues associated with pipelines and tankers—to create a ‘baseline’—and peers into the future by reviewing key insights from two interrelated and relatively new fields of study, the geopolitics of renewables and the geopolitics of the energy transition. A general assumption we found in the literature is that a buildout of renewable energies will increase electrification and stimulate cross-border trade in electricity. Electricity grids and high voltage direct current (HVDC) export lines will therefore play an increasingly important role in the international energy trade. Some scholars surmise that the interconnectedness of electricity grids will lead to greater symmetry in trade relationships. They might additionally foster regional cooperation, which could enhance political cooperation and stability. However, the creation of international grid networks could pose significant challenges for partner countries, ranging from decisions over ownership and managerial rights to cost sharing and regulatory alignment. A high level of mutual trust is necessary for states to enter the fixed and serious relationships that interstate grid networks require. Trust would also be necessary for the importers of electricity through HVDC lines, which are similar to pipelines in that they can be manipulated by the exporter. Such cutoffs have historically been technically difficult, but this might change in the future, if exporters could shift the electricity that was not exported to storage or hydrogen production. The potential of hydrogen as a power source has been known since the 1800s, but the lack of scalable technologies and the need for substantial infrastructure investments have hampered its wide-scale diffusion. Recent technological innovations and the urgent need for decarbonization to mitigate climate change, however, have moved hydrogen from chimera to near-reality. In recent years, many countries have released national hydrogen strategies and roadmaps. Hydrogen can be made either as a liquid or gas and can be delivered in the same ways as oil and natural gas, for example, via ships and pipelines. Hence, hydrogen delivery could face the same geopolitical problems as oil and gas delivery. However, since hydrogen production is possible almost anywhere in the world, and in regions other than where current oil and gas exporters are located, new pipeline and tanker routes could bring about new or different 141

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challenges. As hydrogen can be domestically produced, there is also the chance that international energy trade, in the distant future, could be reduced. In addition to the transportation issues associated with hydrogen, this chapter provides a general assessment of hydrogen’s geopolitical implications, which range from technological rivalry and the implications of different value chains to the likely major exporters and importers as well as the ensuing new trade relationships and configurations of dependence. The chapter proceeds as follows: in the next section we briefly cover the geopolitics of pipelines and maritime delivery and provide an example of the geopolitical jousting that can occur over oil pipelines. We then outline how the energy transition from fossil fuels to renewable energies will affect energy delivery methods. In the third section, we explore the geopolitical risks of electrical grids, HVDC lines, and hydrogen. We then discuss, in the fourth section, the similarities and differences between the geopolitics of fossil fuel transportation and electricity and hydrogen. We also introduce several new concepts that we believe could become part of the future vocabulary of energy. We present our conclusions in the final and fifth section.

2. THE CURRENT SITUATION AND THE TRANSITION TO RENEWABLE ENERGIES 2.1 Oil and Natural Gas Pipelines Since the twentieth century, pipelines have served as one of the major means of energy supply. The geopolitical issues associated with pipelines often start during the planning phase, when countries might tussle over the transit routes. A classic example is the jostling that occurred in the 1990s over transporting oil from the Caspian region to market. Before the agreement on the Baku–Tbilisi–Ceyhan (BTC) pipeline was signed, there was intense political activity by the countries directly involved, in terms of geography, and thirdparty countries. For example, both Russia and Iran wanted to transport Caspian oil through their territories to ensure not only the potential transit fees but also political influence over the Caspian area. In contrast, the United States (US) was highly interested in the prospect of having more non-OPEC oil in the international market and was vehemently against Caspian oil going through Russia or Iran—the US preferred a route that would benefit its strategic allies and companies. After a long negotiation process, Azerbaijan decided to export its oil through Georgia and Turkey thereby avoiding Russian or Iranian territory. The BTC pipeline consequently reduced Azerbaijan’s and Georgia’s dependence on Russia, changed the geopolitical landscape in the Caspian region, and increased the region’s geopolitical significance (Shaffer, 2009; Smith Stegen & Kusznir, 2015). Once the oil flows through a pipeline, new geopolitical issues may arise, namely concerns over disruptions. As oil delivery relations are typically market-based arrangements, outright manipulation by suppliers has been rare. However, oil pipelines, as well as other oil infrastructure, such as tankers, refineries, and oil fields, are prime targets for terrorists (Ackerman et al., 2006; Dancy & Dancy, 2016). Regardless of the source of a disruption, the international oil market, which emerged after the 1970s oil crises, allows importers some flexibility to replace pipeline oil, which might make disruptions more manageable—if importers have coastlines

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or ready access to tanker oil. The relative ease with which pipeline oil can substituted means that dependence issues are less salient than for natural gas. Natural gas can be transported by pipeline or, as liquified natural gas (LNG), in tankers, although the latter is more technically difficult than the former (Shell Deutschland Oil GmbH, 2019). Most international gas supplies are thus delivered through pipelines. However, in some regions, such as Asia, geography makes pipelines cumbersome, and tankers are the preferred method. During the last half century, the discovery of new gas fields and a global increase in demand have led to a significant expansion of gas production. During this time, two forms of pipeline transport emerged: (1) pipelines that directly connect a producer and consumer, such as the troubled Nord Stream 1 and 2 pipelines between Russia and Germany (Stefanova, 2012); and, (2) multi-state transport entities, which may have several suppliers and/or several customers (Shaffer, 2009). The failed Nabucco pipeline project, which was envisioned to transport Caspian and Middle Eastern gas to several European countries, is a prime example of a multistate pipeline. Similar to the routing of oil pipelines, the planning stage of cross-border gas pipelines is often accompanied by a great deal of geopolitical maneuvering. For example, Russia pushed for the first Nord Stream pipeline as a way to circumvent Ukraine as a transit state. The US, as well as several European states, was critical of the project. The Nabucco pipeline was even more contentious: the European Union (EU), as well as several powerful states, including Russia, the US, and Turkey, all tried to influence the routing. As potential consumers, various EU member states attempted to ensure they would be recipients of the gas. Because of the fixed nature of pipelines and the difficulties in transporting LNG, gas relationships are typically asymmetrical. Consequently, the potential exists for producing (and transit) states to use their control over natural gas pipelines for political purposes. For example, Russia’s gas export to Europe and countries of the former Soviet Union has provided Moscow with revenue as well as a political lever, the so-called ‘energy weapon’. Moscow has used disruptions or price manipulation—or even just threats—to politically influence its customer or express its displeasure (Shaffer, 2009; Smith Stegen, 2011). Because of their vulnerability to manipulation, natural gas consumers have actively sought ways to decrease their dependence. For example, the EU has, for decades, discussed (and tried to implement) various diversification and decarbonization strategies that would, among other objectives, reduce EU dependence on Russian gas. The measures include the development of alternative energy sources (renewables and hydrogen), new pipelines for natural gas imports (i.e., Southern Gas Corridor), and building LNG terminals (for alternative suppliers, such as Qatar or the US). Unfortunately, after Russia’s invasion of Ukraine in 2022, it became clear that the EU had been too slow in its efforts to reduce its dependence and several EU member states were (and still are) heavily reliant on Russian gas imports. 2.2 Tanker Delivery and Maritime Routes Themistocles famously said: “He who commands the sea has command of everything”. These words still ring true for the maritime trade of fossil fuels. Since the pipeline infrastructure for oil trade is limited, large amounts of oil must be transported by tankers. Therefore, global energy markets rise and fall on the reliability of maritime routes (EIA, 2017). As approximately

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one-third of the world’s energy trade is transported by tankers, maritime security is a key aspect of national and global energy security and essential for the global energy trade (Narula, 2019; Nincic, 2009). Maritime routes face myriad threats, including piracy, terrorism, and disputes over territorial boundaries, which can lead to blocked access to ports (see Schöttli, 2013). Countries with naval power have long sought to stake their claims and secure geopolitical influence over maritime routes. Of particular salience are maritime chokepoints, which are defined “as narrow channels along widely used global sea routes, some so narrow that restrictions are placed on the size of the vessel that can navigate through them” (EIA, 2017). Three strategic maritime chokepoints are of great importance: 1) Bab el-Mandeb, a chokepoint between the Horn of Africa and the Middle East, links the Mediterranean Sea and the Indian Ocean via the Red Sea and the Suez Canal. In 2016, about 4.8 million barrels per day (p/d) of crude oil and refined petroleum products moved through this chokepoint on the way to Europe, the US, and Asia (EIA, 2017). The chokepoint is known for terrorist activities and piracy, predominately from Somalia (Nincic, 2009; Verhoeven, 2018). Consequently, keeping the chokepoint operational is a huge challenge for fossil fuel exporters. The Gulf states (particularly Saudi Arabia, the United Arab Emirates (UAE), and Qatar), Egypt, and Turkey as well as China and the US, are expanding their economic and military activity in this region and the surrounding maritime space. This convergence of economic interests and geopolitical considerations increases the potential for disputes and instability (Verhoeven, 2018). 2) The Strait of Hormuz, located between Oman and Iran, links the Persian Gulf with the Gulf of Oman and the Arabian Sea. In 2016, the total flow of crude oil and other liquids through this chokepoint was 18.5 million b/d, accounting for more than 30% of global seaborne oil trade (EIA, 2017). The brunt of oil exports from the Persian Gulf is delivered through this strait to US and Asian markets, including Japan, South Korea, and Singapore. Moreover, more than 30% of globally traded LNG, mostly from Qatar and Kuwait, passes through the Strait of Hormuz. The 1980s ‘Tanker War’, between Iran and Iraq, revealed the Strait’s vulnerability (El-Shazly, 2016; Nincic, 2009). As political tensions between Iran and the US and its Gulf-region allies have escalated, so too have the number of Iranian-backed military attacks. With the lack of long-term political solutions to these tensions, there are fears that risks to tankers transporting oil and LNG could greatly increase (Shepard & Pratson, 2020). 3) The Strait of Malacca is the sea route between Indonesia, Malaysia, and Singapore, linking the Indian Ocean and the Pacific Ocean, and is the shortest route between the Middle East and Asian countries (EIA, 2017). The strait also connects Europe with China as an alternative to the Northern ‘Silk Road’. It is estimated that nearly 30% of world seaborne oil moves through this strait. The Strait of Malacca is also an important transit route for LNG from the Persian Gulf to Japan and South Korea (Dannreuther, 2011; Weitz, 2018). Due to its geographic location and maritime trade, the Strait of Malacca is a piracy hotspot and also a geopolitical tension point because a naval blockade would affect not only maritime traffic, but the entire Asian economy (Weitz, 2018). The lack of alternatives for oil transport was described in 2003 by then president of China, Hu Jintao, as the “Malacca Dilemma”. The Chinese government is concerned that the US, which controls

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the regional sea lines of communication, could easily block the traffic in the strait and cut China off from oil imports (Smith Stegen, 2015). Disrupting China’s flow of oil is one way in which the US could retaliate if China moves against Taiwan (Zhang, 2011). As the first sections of this chapter demonstrated, the transportation of oil and gas, from planning to chokepoints, has often triggered or been intertwined in geopolitical jostling. States are particularly concerned about control over resources and how they are delivered, as this endows economic and political advantages. The more dependent an importer is, particularly on pipelined resources, the more leverage a supplier or transit state might have. But even exporters have reason to worry, as maritime chokepoints are a source of vulnerability. In short: a significant security risk is disruptions, either from suppliers or third parties. However, as discussed next, the energy world is in flux and fossil fuels will eventually be supplanted by renewable sources of energy and the main energy carriers will change. 2.3 The Energy Transition The two main climate treaties, the earlier Kyoto Protocol and the current Paris Agreement, have been important steps in holding countries accountable for greenhouse gas emissions and global warming. The 191 signatory countries to the Paris Agreement have committed themselves to reducing the rise in average global temperature to below 2°C (compared to preindustrial levels). This goal can only be attained through the implementation of decarbonization measures and the rapid deployment of renewable technologies. In recent years, wind, solar, and other renewables have become more cost-competitive against fossil fuels and are taking a leading role in the power sector. New technologies, including electric vehicles and heat pumps, are extending the deployment of renewables and enabling the green transformation in transportation and other industrial sectors. After the long dominance of oil and natural gas in the global energy landscape, renewable energies are going to play a greater role in international relations. Consequently, a global energy transition will significantly transform the geopolitics of energy (IRENA, 2019). Some countries will be geopolitical winners and others will be losers (Smith Stegen, 2018). Configurations of dependencies will likely change. Countries that have historically imported energy may become exporters, and the position of the petrostates may be weakened, particularly those with less diversified economies and high dependence on export revenues. Many countries in the Middle East–North Africa (MENA) region have not progressed with their plans for economic diversification and would be seriously disadvantaged if the global energy transition were to quickly take place (Tagliapietra, 2019). These countries will have to reinvent themselves to keep developing in the new renewable energy era. The impact of the growth of renewables, such as solar and wind, has mostly been felt in the electricity sector. According to recent prognoses, both electrification and interstate electricity trade will increase. Electricity will therefore play an increasingly important role as an energy carrier. The other energy carrier, hydrogen, is regarded as a key component of the transition to a decarbonized future, because it generates zero emissions when burned and can be used in wide variety of applications, including as heating, feedstock, storage, or battery-like fuel cells (IRENA, 2022). With both electricity and hydrogen on the rise, questions arise as to their potential effects on international relations and interstate rivalry. In the next sections, we examine these questions for each energy carrier.

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3. GEOPOLITICAL IMPLICATIONS OF ELECTRICITY AND HYDROGEN 3.1 Electricity Outlook Electricity is the fastest growing energy segment (IRENA, 2019), due to the increase in renewable energy production and the ever-increasing number of sectors, such as transportation and heating, that have been (and can be) converted to electricity (Reusswig et al., 2018). Developing economies will see a drastic increase in electricity demand due to the rising levels of household appliances and increasing consumption rates (IEA, 2021b). Electricity from renewable energy sources is produced both on a large scale, for example in big offshore wind parks, and on a small scale, for example through household solar panels (Dignum, 2018). Under the assumption that countries will fulfill their climate commitments, current predictions foresee that, by 2025, renewable energy will become the primary source for electricity (IEA, 2021b). In the next section, we explore the geopolitics associated with electricity, which can be delivered in traditional export-import HVDC lines or shared via interconnected electricity grids. 3.1.1 The emergence of grid communities and their geopolitical implications Electricity grids can range in size from local ‘small’ networks to ‘super’ grids that cover one or more regions. Rural mini grids, for example, are viewed as a key technology for providing electricity access to the billion or more people who lack it (Chatterjee et  al., 2019). In most countries with electricity production, national grids have been the historical norm. In the future, however, grids will more likely encompass several countries. This is due to three interrelated reasons. First, not all countries will be able to meet 100% of their electricity demand with domestically produced electricity, either because demand outweighs supply or because, in the short to medium term, they lack the technological prowess to ramp up their production (Brinkerink et al., 2019; Tiewsoh et al., 2019). Second, the variable nature of many renewable energies, such as solar and wind power, requires flexible power systems that are able to balance supply and demand in real time, which is more easily achieved in a larger network (Benasla et  al., 2018; IRENA, 2019). Third, electricity storage is technologically limited (Hatipoglu et al., 2020). For any or all of these reasons, neighboring countries may decide to form interconnected regional grids, as seen in the EU (Brinkerink et al., 2019) and Scandinavia, and proposed for Northeast Asia (Yilmaz & Li, 2018) and the North Sea region (Konstantelos et al., 2017). This greater regionalization dimension of electrification has given rise to the concept of “grid communities”, which conveys the greater trust, mutual benefit and “geopolitical interdependence” that creating a regional grid both requires of and endows upon the member states (Scholten & Bosman, 2016, pp. 279–280; Bordoff & O’Sullivan, 2022). Several advantages of being a grid community member obtain. First, members of grid communities will more likely be in symmetrical rather than asymmetrical relations with each other, in other words, dependence will be mutual and most likely equal (Blondeel et al., 2021). Why? Because the interconnected nature of electricity grids, unlike oil or gas pipelines, provides a built-in protection against political manipulation. One member of a grid system cannot easily disrupt electricity supply to another member without affecting itself (Scholten & Bosman, 2016). How ‘safe’ a grid is from internal manipulation depends on the grid’s management protocols. Presumably

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all members of a grid community would insist on protocols that would make such interference extremely difficult, especially since electricity grids constitute critical infrastructure (Westphal et al., 2022). Second, cross-border electricity trade can foster and intensify regional cooperation and thereby reduce the risk of conflicts (Blondeel et al., 2021). The third interconnector between Spain and Morocco, for example, has been touted as a way for the two countries to view each other as “energy transition companions” and ease their tensions over disputed territories (Escribano, 2019). Third, following the functionalist theory that low-level technical cooperation between states can “spill over” into higher level political and security cooperation, some scholars view electricity interdependence as potentially leading “to political cooperation and stability” (Smith Stegen, 2018, p. 92). But grid communities might also present chances for conflict, particularly in the early decision-making phases. For example, struggles could emerge over who has “ownership and decision rights with regards to the grid and its management” (Scholten & Bosman, 2016, p. 279). Such conflicts would presumably have an economic basis, for example, the countries that host key elements of the infrastructure would accrue greater benefits, such as employment. Because trust is required between participant countries in a grid community, states have already been very selective about their partners (which is also true for HVDC lines). To accept the mutual dependence inherent in an interconnected grid, states must have confidence in each other’s intentions and technological aptitude. The partners must also agree on the governance arrangements, and technological standards must be aligned (Bordoff & O’Sullivan, 2022). Moreover, the management structure must be agreed upon as well as its physical location. All members must have trust and faith in the country that hosts the management of the grid or HVDC line. Without mutual trust, plans for grids—even if they make practical sense—will not come to fruition. Indeed, distrust was the main factor hindering the creation of a grid community between Israel and its Arab neighbors (Fischhendler et al., 2016). States have also left international grid networks because they lost trust in their partners, such as when the Baltic states delinked their electricity grids from Russia’s (Scholten et al., 2020). The grid communities discussed thus far have been regional, but super grids that could span continents have also been considered. For example, the possibility of an Africa-wide network has been explored (Trotter et  al., 2018). The global Desertec initiative envisioned multiple super grids across the world that could have potentially met 90% of the world’s consumption with renewable energy-sourced electricity. The initial pilot project foresaw the creation of a super grid between Europe and the MENA region, with HVDC lines supplying Europe with electricity in the early stages (Smith Stegen et al., 2012). Thus, the discussions around the geopolitical dimensions of the Desertec project covered both the ‘grid community’ aspects and the exporter–importer HVDC dimensions. With regards to the former, proponents of Desertec emphasized the benefits of tightly binding these two regions, ranging from employment gains to improvements in the political relationship (Slaoui, 2012). However, as discussed next, some in Europe were nervous about the HVDC links. 3.1.2 The geopolitics of bilateral electricity supply For myriad reasons, some countries may opt to import electricity, for example, because it might be more economical to purchase rather than generate (Scholten & Bosman, 2016). Examples of such export-import relationships include the Australia-Asia PowerLink project, which envisions a 4,200 km submarine cable providing Singapore with electricity (Sun Cable,

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2022). As long-distance HVDC lines become more efficient, some countries that have hitherto been energy importers could, because of their renewable energy potential, become exporters of electricity. New exporters could include Morocco (Boulakhbar et al., 2020) and Mongolia (Otsuki, 2017). We are perhaps at the start of a new era, in which long-distance one-way delivery of electricity is as common as natural gas export pipelines are now. But could HVDC export lines be as vulnerable to manipulation as gas pipelines? Although it is difficult, HVDC export lines could potentially be manipulated by the exporters, depending on how the system was designed (Benasla et al., 2018; Smith Stegen, 2018). However, such manipulation, as well as outright attacks, is rare. The prime example of politically motivated electricity disruption occurred in 2006 during a conflict between Russia and Georgia, when gas pipelines and an HVDC line, both supplying Georgia from Russia, were blown up (CNN, 2006). However, during the war between Russia and Georgia in 2008, no electricity lines were targeted. Perhaps because of the 2006 incident, other electricity customers of Russia became concerned about potential disruptions. A report by a governmentsponsored Estonian think tank emphasized such risks and issued the warning that “Russia is capable of sabotaging both submarine and overland electricity infrastructure” (Bahşi et al., 2018, iv). Finnish experts have also expressed concern about their country’s HVDC imports from Russia (Smith Stegen, 2018). In addition to political manipulation, another concern we found in the literature was the vulnerability of electricity infrastructure to third-party attacks. 3.1.3 Greater electrification and vulnerability to third-party attacks One concern regarding Desertec’s envisioned MENA-to-Europe HVDC line(s) was vulnerability to terrorist attacks. As a key European statesman said: “I am not sure we want to be dependent on North Africa for our electricity supply when anyone with a shoulder-launched missile can take out the electricity supply for Europe” (Smith Stegen et al., 2012, p. 4). Later studies, however, have indicated that physical terrorist attacks would have difficulties in halting an entire super grid system (Lilliestam, 2014). However, cyberattacks, which could be undertaken by terrorists or third-party states, are still a concern. A 2021 study indicates that China launched a cybercampaign against an Indian city and succeeded in shutting down power to 20 million people (Sanger & Schmall, 2021). Others have raised red flags over the political and security concerns resulting from the acquisition of CDP Reti S.p.A., which controls Italy’s electricity grid, by a subsidiary of a Chinese state-owned corporation (Otero-Iglesias & Weissenegger, 2020). It thus appears that geopolitics, with regard to electricity will change in some respects, but several core concerns, such as disruptions, will still be a risk. How will geopolitics play out for hydrogen, the other energy carrier we examine in this chapter? 3.2 Hydrogen Regardless of whether hydrogen is in liquid or gaseous form or carried by another substance, the delivery options are similar to those of oil and gas: trucks, trains, ships, and pipelines (European Commission, 2021; Lebrouhi et  al., 2022). The production, transportation, and storage of pure hydrogen and hydrogen derivatives entail complex and expensive equipment and processes; and the long-term effect on pipelines and other equipment is unknown (for more on the basics of hydrogen, see Chapter 19 in this volume, and Hydrogen Council, 2017; IEA, 2021b). These issues are mitigated, however, if hydrogen is transported as a component of another less corrosive or volatile substance, such as ammonia.

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Depending on how it is produced, hydrogen is classified according to colors. The ‘clean’ forms of hydrogen include ‘green’, made through electrolysis with renewable electricity; ‘blue’, produced through steam methane reforming of natural gas or coal, with carbon capture and sequestration (CCS); and ‘purple’, which uses nuclear power and electrolysis (IRENA, 2022; Lebrouhi et al., 2022). Our study focuses on green and blue hydrogen, as these are the colors that appear in most climate mitigation strategy plans. Because of its properties and flexibility, hydrogen could potentially be used to decarbonize hard-to-abate industries, including chemical, iron, and steel manufacturing (IRENA, 2022). It could also be used to power transportation fleets, such as buses, trains, and planes (at the moment, hydrogen is not considered an ideal option for passenger cars) (IEA, 2021a). Because of its potential and flexibility, hydrogen is becoming an increasingly important feature of many national and international climate strategies. For the EU, green hydrogen is particularly attractive, but it should be noted that green (and blue) hydrogen is not yet scalable. Indeed, 99% of the hydrogen currently produced generates emissions (Blondeel et al., 2021). Over the past two to three years, at least 20 countries, including Germany, France, South Korea, Australia, and Japan, as well as the EU, have produced hydrogen roadmaps (Lebrouhi et al., 2022). These range in ambition and detail, but most cover deployment as well as legal and financial mechanisms. Private companies worldwide have also publicized their plans for research and development, production, and demonstration projects (Albrecht et  al., 2020). If all these and other imminent plans are implemented, hydrogen could cover up to 18% of global final energy demand by 2050 (Hydrogen Council, 2017). The successful implementation of these strategies, however, will be influenced by the production and delivery costs of hydrogen, including the costs of the source energies and the delivery costs to customers. Most of this infrastructure has not yet been built (European Commission, 2021), and the price tag is in the trillions (Van de Graaf et al., 2020). Complicating these plans are the lack of dedicated customers and a global market. The early years of hydrogen trade might thus look like those of natural gas, characterized by regional markets and bilateral deals. In later years, the hydrogen trade may look like the diversified global oil market. Both types of trade will have geopolitical implications, but some believe the initial geopolitical rivalry will be over technological leadership (Blondeel et al., 2021). 3.2.1 Geopolitical implications of hydrogen Although the geopolitics of renewable energy field is about 10–15 years old, hydrogen has received scant attention. In the past two to three years, however, there has been a notable uptick in activity, ranging from workshops to think tank reports to scholarly articles. In the following section, we have grouped the common themes into five overarching categories. 3.2.1.1 Technological competition As with renewable energy technologies, significant fiscal and economic benefits will accrue to the countries that develop hydrogen technologies. As portrayed by one scholar, “hydrogen is just another battleground for technological and economic supremacy between the established and rising powers of this world” (Van de Graaf, 2021, p. 32). Indeed, a race is on for developing the myriad technologies that will be needed for hydrogen (Blondeel et al., 2021). China is already emerging as a strong technology and innovation competitor (Westphal et al., 2020) and may have already won the race in manufacturing the lowest cost electrolyzers (Bloomberg NEF, 2020).

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3.2.1.2 Dependencies and asymmetrical relationships A key driver of the geopolitical tussling in the fossil fuel world has been the asymmetrical relations between exporters and importers. Thus, it is no surprise that this topic—the possible constellation of dependencies—is a constant theme with regard to hydrogen. The general consensus is that dependencies will change (IRENA, 2022; Pflugmann & De Blasio, 2020; Van de Graaf, 2021; Van de Graaf et al., 2020). As summarized by one scholar, Some importing countries will replace one dependence with another, while some exporting nations will substitute one commodity with another. There will be some new entrants though, notably the ones with record-low renewables prices, which will be able to alter some balance of power. (Palti-Guzman, 2021)

Also, as hydrogen can be produced by any country with access to electricity, the need for imports may be reduced or nil (depending on the costs a country is willing to incur to produce hydrogen). Each country’s potential for dependence is shaped by its preferred color of hydrogen and its financial and technological ability to produce that color. If a country opts for blue hydrogen and must import natural gas, then dependence on gas suppliers would continue or even increase (IRENA, 2022). A preference for green hydrogen may, in turn, require imports of green electricity. Whether hydrogen dependence can be exploited hinges on whether hydrogen imports are on a bilateral or diversified market basis. In a global market situation, in which hydrogen is produced in numerous locations, the opportunities for exploitation would be unlikely. Thus, some observers expect less exploitation in general (Blondeel et al., 2021). However, in traditional supplier–customer relationships, with largescale imports, dependencies would likely persist. Under such scenarios, some believe there could be potential for the political weaponization of hydrogen (Blondeel et al., 2021; IRENA, 2022). Not only will dependencies likely change, but also the constellation of exporters and importers. 3.2.1.3 Likely exporters and importers Some large countries such as the US, China, and India may achieve hydrogen self-sufficiency and others, such as Australia, Russia, and Chile, could not only attain self-sufficiency, but produce enough surplus to become major exporters (Lebrouhi et al., 2022; Umbach & Pfeiffer, 2020; Van de Graaf, 2021; Van de Graaf et al., 2020). Many countries in the African continent, particularly coastal regions, could play a significant role in a future hydrogen economy (IRENA, 2022). Quite a few countries in the MENA region, including Morocco, Jordan, Oman, and the Gulf states, have sufficient solar capacity and potential underground storage facilities to allow them to turn green hydrogen into the “new oil” (Blondeel et al., 2021; Matthes et al., 2020; Westphal et al., 2020). However, some of these countries may be hampered by insufficient water, such as Saudi Arabia (Lebrouhi et al., 2022). Each kilogram of hydrogen requires 9 kg of water and blue hydrogen needs 13–18 kg (Grinschgl et al., 2021). However, fossil fuel production uses water and, as this industry declines, water could potentially be freed up for hydrogen production. Who will be the customers, or the importers, of hydrogen? Recent studies pinpoint the resource-poor industrial countries, such as Japan, Germany, and South Korea, as potential large-scale importers of hydrogen (Albrecht et al., 2020; IRENA, 2022; Lebrouhi et al., 2022).

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3.2.1.4 New trade relationships and transportation routes The export and import of hydrogen will create new trade pairings. Some that have been mentioned in the literature include Chile and Japan, Morocco and Germany, and Oman and Belgium (Van de Graaf, 2021). The implications for hydrogen trade routes are considered to be essentially the same as for oil and gas (Noussan et al., 2021; Van de Graaf et al., 2020). For example, the Strait of Hormuz could remain highly relevant also in a low carbon economy, if renewable hydrogen produced in the Middle East were to be exported. Transporting renewable hydrogen from North Africa to Europe using pipelines faces the same geopolitical uncertainties as the current system transporting natural gas. However, new supply routes (e.g., between Australia and/or Southeast Asia) could also pose geopolitical risks. In this case the main shipping routes would likely run through the East China Sea, which regularly draws international attention due to territorial disputes between China and Japan, yet with less media scrutiny than the multi-stakeholder dispute in the South China Sea. (Pflugmann & De Blasio, 2020, p. 33, see also Grinschgl et al., 2021; IRENA, 2022)

3.2.1.5 Technological color pathways and value chains The buildout of hydrogen presents governments and companies with myriad decisions (Van de Graaf et al., 2020). For example, what type of hydrogen and which process? Should hydrogen be domestically produced or imported? Which form of hydrogen (pure or derivative) should be produced and who is the target consumer? The answers then determine the transportation and ancillary infrastructure. The choices for a hydrogen buildout can be thought of as different nodes on a decision tree, with hundreds of possible ‘value chain’ branches. Each of these “creates its own set of winners and losers” and the “struggles and conflicts between different stakeholders in the value chain will shape the creation of a global hydrogen market and affect the pace of the energy transition” (Van de Graaf et al., 2020, p. 1). In terms of the green and blue pathways, states and regions that do not have sufficient renewable electricity or natural gas would have to import either green hydrogen (or renewable electricity) or blue hydrogen (or natural gas). For resource-poor countries that prefer green or blue hydrogen (such as in Southeast Asia and Europe), the chances are high that they will continue their energy import dependencies (Pflugmann & De Blasio, 2020). The EU’s hydrogen plan, for example, foresees green hydrogen for many of the western member states and blue for the eastern member states, which would result in different maps of dependencies (Kusznir & Smith Stegen, 2020). The western member states might be able to reduce their reliance on Russia for natural gas, but “might become heavily import dependent on hydrogen from new politically unstable countries and regions” (Umbach & Pfeiffer, 2020, p. 7). Indeed, it seems many countries may have to contend with some form of energy dependency for the foreseeable future.

4. DISCUSSION Our study addresses several questions, including whether energy dependencies in a decarbonized era will lessen, particularly when electricity and hydrogen are the dominant energy carriers. The answer is ‘Yes, but …’. The energy dependencies of individual countries will

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change, but energy dependence writ large will remain. The geography of dependency will certainly be altered by the emergence of a global hydrogen economy. If oil-rich countries, such as Saudi Arabia and its OPEC compatriots, delay embracing renewables and hydrogen, they could eventually lose their energy heavyweight status to countries and regions that historically have been energy importers, such as Morocco, Mongolia, and several African coastal states. After the 1970s oil crises and OPEC’s use of oil supply disruptions to politically coerce its client states (the ‘oil weapon’), energy analysts and policy makers became concerned with the potential weaponization of resource dependence. In a decarbonized world, in which the primary carriers are electricity and hydrogen, the exploitation of export–import relations for political gain seems less likely. Countries in a highly interconnected grid community would most likely be unable to harm their targets without harming themselves. Grids, however, are vulnerable to third-party attacks, from either terrorists or state actors. Terrorists may not have the technological wherewithal to launch sophisticated cyberattacks, but some states certainly do have this capability and, it seems, the willingness to use it. As long as traditional large-scale imports of energy from single suppliers continue to obtain, so does the potential for manipulation. This type of asymmetrical relationship, regardless of whether the commodity is crude oil, natural gas, hydrogen, or critical materials, will always endow the supplier with an ‘off switch’. But this vulnerability does not automatically mean that the supplier has gained the political upper hand. Part of the calculus of vulnerability is whether the targeted importer can substitute the commodity or quickly find other supply options. A target state might also decide that the pain of the shortage is less painful than making political concessions. A prime example of this is Lithuania’s resistance to Russia’s pressure tactics and natural gas cutoffs in the 1990s (Smith Stegen, 2011). The research covered in our review indicates that energy relations in a decarbonized world will look very different than those of the fossil fuel era. In the best-case scenario, the optimal technologies will be affordable and seamlessly available on a global scale. Energy poverty will be relieved and climate change mitigated. To achieve this vision, governments and companies would have to invest trillions—not just billions—into cultivating technologies and market demand. However, those who benefit from the status quo, including incumbent industries and habit-prone humans, would have to accept change. Unfortunately, the sustainable transition literature is replete with studies showing just the opposite—there is a certain stickiness to hydrocarbons and related products and infrastructure (Richter & Smith Stegen, 2022). What governments and international agencies could and should do, to encourage a buildout of hydrogen, is heed the advice of Van de Graaf et  al. (2020), Westphal et  al. (2020), and Grinschgl et al. (2021), who call for international standards and certification. Some have warned of market fragmentation if competing standards emerge (Grinschgl et al., 2021). In such a scenario, either different hydrogen blocs emerge or the manufacturers and consumers who opted for the standards that become obsolete are seriously disadvantaged. In addition to competing standards, another source of fragmentation could be different value chains. The transition to a hydrogen economy will require the construction of expensive infrastructure, and each decision on a technological pathway will create selfreinforcing path dependence, vested incumbents, and lock-in effects. In the future, the term ‘carbon lock-in’ may be replaced by ‘hydrogen lock-in’. This would be a new term. Indeed, our vocabulary about energy and sustainability—and our consumption decisions—may very well change. Consumers are already encouraged to think about their carbon footprints when

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making purchases. But what about ‘colors’? For example, whether a building is constructed with ‘green’ or ‘blue’ steel?

5. CONCLUSION This chapter had manifold objectives, including summarizing the geopolitics of oil and gas transportation and exploring the geopolitical implications of electricity and hydrogen. As the BTC oil pipeline example showed, geopolitical jousting can occur when countries seek to gain control over resources and avoid dependence on (or benefiting) particular countries. The routing of natural gas pipelines can also be contentious, such as the disputes over the Nabucco and Nord Stream pipelines. But gas pipelines carry an additional risk: their vulnerability to disruptions, particularly in the absence of ready substitutes (partly caused by the lack of an international gas market). The asymmetrical relations between producer and supplier endows the producer with potential political leverage (the ‘energy weapon’). Consequently, one driver of the EU’s buildout of renewable energies has been its desire to reduce energy dependence on Russia. Tankers currently carry a third of the world’s energy supplies. The vessels themselves are vulnerable to attack, but the main geopolitical issues pertain to the sea lanes and strategic chokepoints, where tankers must pass through narrow passages. These chokepoints could potentially allow one or more countries to block deliveries to other countries. Again, dependence and control are critical issues. For the past century, the drive for energy security—particularly the supply security dimension—has strongly influenced the behavior of states with regards to the transportation of oil and gas. But a transition from fossil fuel to renewable sources of energy is already underway and the dominant energy sources and energy carriers of the future will change. Thus, in the second half of the chapter, we mined the literature of two relatively new fields dedicated to renewable energies to ascertain the latest thinking on the geopolitical implications of electricity and hydrogen. The international trade of electricity can transpire either through cross-border grids or via HVDC lines. Some scholars have proposed that countries that share a highly interconnected grid might develop into a ‘grid community’, in which mutual interdependence leads to greater political cooperation. The proof that a country’s decisions about grid partners extend beyond practical or technical considerations is evidenced by the examples of countries taking efforts to avoid grid partners they deem politically untrustworthy. Once a grid community is formed, the chance of one country using its electricity to exert political leverage over a partner is almost nil, because the grid’s interconnectedness means that harming any other member would be harming oneself. Grid networks, however, are vulnerable to third-party terrorist and cyberattacks, as are HVDC lines. The main ‘energy weapon’ concern about HVDC lines is the potential for the supplier to cut or reduce power to exert political leverage, but a line would have to be built in a way that would technically allow this (which is unlikely). Because of these difficulties, only a few examples of HVDC line interruptions obtain. Recent technological advances and the need for decarbonization have brought hydrogen to the forefront, and numerous countries have recently released hydrogen strategy plans. Our literature review revealed five categories of potential geopolitical implications. First, in the early years, interstate rivalry will be over technological prowess. Second, the issue of energy

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import dependence will most likely continue, but as the circumstances of individual countries change, so will the global cartography of dependence, influenced by whether hydrogen is traded bilaterally or if a global market develops. Third, the countries likely to play a key role in a future clean hydrogen economy will be those who have surplus renewable electricity, storage capacity, sufficient water, and coastlines. Major importers would be the resource-poor industrial giants. The constellations of exporters and importers will lead to new relationships and transportation routes. The literature we reviewed indicates that, because hydrogen will still require transportation via pipelines or tankers, many of the associated geopolitical issues will remain. Fifth, each branch of the technological pathways and value chains of hydrogen could create “its own set of winners and losers” (Van de Graaf et al., 2020, p. 1). As we discussed in the fourth section, new concepts and phrases might be added to our energy vocabularies, for example, we might speak of ‘hydrogen lock-in’, particularly for certain colors. We also emphasized the points made by several scholars about the urgent need for international hydrogen standards and color certification. These would accelerate the development of a global market for clean hydrogen, which could play a major role in mitigating climate change. The time for policy makers, administrators, and regulators to act is now.

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Dancy, J. R., & Dancy, V. A. (2016). Terrorism and oil & gas pipeline infrastructure: Vulnerability and potential liability for cybersecurity attacks. ONE J: Oil and Gas, Natural Resources, and Energy Journal, 2(6), 579–620. Dannreuther, R. (2011). China and global oil: Vulnerability and opportunity. International Affairs, 87(6), 1345–1364. https://doi​.org​/10​.1111​/j​.1468​-2346​.2011​.01040.x Dignum, M. (2018). Connecting visions of a future renewable energy grid. In The Geopolitics of Renewables (pp. 257–276). Cham: Springer. EIA. (2017). World Oil Transit Chokepoints. International – US Energy Information Administration (EIA). https://www​.eia​.gov​/international​/analysis​/special​-topics​/ World​_Oil​_Transit​_Chokepoints El-Shazly, N. E.-S. (2016). The Gulf Tanker War: Iran and Iraq’s Maritime Swordplay. Springer. Escribano, G. (2019). The geopolitics of renewable and electricity cooperation between Morocco and Spain. Mediterranean Politics, 24(5), 674–681. https://doi​.org​/10​.1080​/13629395​.2018​.1443772 European Commission. (2021). Assessment of Hydrogen Delivery Options. https://ec​.europa​.eu​/jrc​/sites​ /default ​/files​/jrc124206​_assessment​_of​_ hydrogen​_delivery​_options​.pdf Fischhendler, I., Herman, L., & Anderman, J. (2016). The geopolitics of cross-border electricity grids: The Israeli-Arab case. Energy Policy, 98, 533–543. https://doi​.org​/10​.1016​/j​.enpol​.2016​.09​.012 Grinschgl, J., Pepe, J. M., & Westphal, K. (2021). A new hydrogen world: Geotechnological, economic, and political implications for Europe. SWP Comment, 58/2021. Berlin: Stiftung Wissenschaft und Politik -SWP- Deutsches Institut für Internationale Politik und Sicherheit. https://doi.org/10.18449/20 21C58 Hatipoglu, E., Al Muhanna, S., & Efird, B. (2020). Renewables and the future of geopolitics: Revisiting main concepts of international relations from the lens of renewables. Russian Journal of Economics, 6(4), 358–373. https://doi​.org​/10​.32609​/j​.ruje​.6​.55450 Hydrogen Council. (2017). Hydrogen—Scaling Up. A Sustainable Pathway for the Global Energy Transition.   https://hydrogencouncil​ .com​ / wp​ - content​ / uploads​ / 2017​ /11​ / Hydrogen​ - scaling​ - up​ Hydrogen​-Council​.pdf IEA. (2021a). Global EV Outlook 2021. 101. IEA. (2021b). Hydrogen. IEA. https://www​.iea​.org​/reports​/ hydrogen IRENA. (2019). A New World: The Geopolitics of the Energy Transformation. IRENA. (2022, February 2). Geopolitics of the energy transformation, the hydrogen factor. Hydrogen Central. https://hydrogen​-central​.com ​/irena​-geopolitics​-energy​-transformation​-hydrogen​-factor/ Konstantelos, I., Pudjianto, D., Strbac, G., Decker, J., Joseph, P., Flament, A., Kreutzkamp, P., Genoese, F., Rehfeldt, L., Wallasch, A., Gerdes, G., Jafar, M., Yang, Y., Tidemand, N., Jansen, J., Nieuwenhout, F., van der Welle, A., & Veum, K. (2017). Integrated North Sea grids: The costs, the benefits and their distribution between countries. Energy Policy, 101, 28–41. https://doi​.org​/10​.1016​/j​.enpol​.2016​ .11​.024 Kusznir, J., & Smith Stegen, K. (2020). Europe’s new green deal’s hydrogen strategy and EU energy issues. Baltic Rim Economies Review, 4. Lebrouhi, B. E., Djoupo, J. J., Lamrani, B., Benabdelaziz, K., & Kousksou, T. (2022). Global hydrogen development—A technological and geopolitical overview. International Journal of Hydrogen Energy, 47(11), 7016–7048. https://doi​.org​/10​.1016​/j​.ijhydene​.2021​.12​.076 Lilliestam, J. (2014). Vulnerability to terrorist attacks in European electricity decarbonisation scenarios: Comparing renewable electricity imports to gas imports. Energy Policy, 66, 234–248. https://doi​.org​ /10​.1016​/j​.enpol​.2013​.10​.078 Matthes, C., Aruffo, V., & Retby-Pradeau, L. (2020). The Risks and Opportunities of Green Hydrogen Production and Export form the MENA Region to Europe. Friedrich-Ebert-Stiftung. https://dii​ -desertenergy​.org ​/wp ​- content ​/uploads​/2020​/12​/Green​-Hydrogen​-from​-MENA​-to ​-Europe​-Policy​ -Paper​.pdf Narula, K. (2019). Energy supply chains and the maritime domain. In K. Narula (Ed.), The Maritime Dimension of Sustainable Energy Security (pp. 53–72). Springer. https://doi​.org​/10​.1007​/978​-981​-13​ -1589​-3_3 Nincic, D. J. (2009). Troubled waters: Energy security as maritime security. In Energy Security Challenges for the 21st Century: A Reference Handbook (pp. 31–43). Noussan, M., Raimondi, P. P., Scita, R., & Hafner, M. (2021). The Role of Green and Blue Hydrogen in the Energy Transition—A Technological and Geopolitical Perspective. 26.

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Otero-Iglesias, M., & Weissenegger, M. (2020). Motivations, security threats and geopolitical implications of Chinese investment in the EU energy sector: The case of CDP Reti. European Journal of International Relations, 26(2), 594–620. https://doi​.org​/10​.1177​/1354066119871350 Otsuki, T. (2017). Costs and benefits of large-scale deployment of wind turbines and solar PV in Mongolia for international power exports. Renewable Energy, 108, 321–335. https://doi​.org​/10​.1016​ /j​.renene​.2017​.02​.018 Palti-Guzman, L. (2021, June 4). Hydrogen may be the ‘Fuel of the future’—But geopolitics could look a lot like gas. The Hill. https://thehill​.com ​/opinion ​/energy​-environment ​/556825​-hydrogen​-may​-be​-the​ -fuel​-of​-the​-future​-but​-geopolitics​-could​-look Pflugmann, F., & De Blasio, N. (2020). The geopolitics of renewable hydrogen in low-carbon energy markets. Geopolitics, History, and International Relations, 12, 2374–4383. https://doi​.org​/10​.22381​ /GHIR12120201 Reusswig, F., Komendantova, N., & Battaglini, A. (2018). New governance challenges and conflicts of the energy transition: Renewable electricity generation and transmission as contested socio-technical options. In D. Scholten (Ed.), The Geopolitics of Renewables (pp. 231–256). Springer International Publishing. https://doi​.org​/10​.1007​/978​-3​-319​-67855​-9_9 Richter, I., & Smith Stegen, K. (2022). A choreography of delay: The response of German auto incumbents to environmental policy. Environmental Innovation and Societal Transitions, 45, 1–13. Sanger, D. E., & Schmall, E. (2021). China appears to warn India: Push too hard and the lights could go out. The New York Times. Scholten, D., Bazilian, M., Overland, I., & Westphal, K. (2020). The geopolitics of renewables: New board, new game. Energy Policy, 138, 111059. https://doi​.org​/10​.1016​/j​.enpol​.2019​.111059 Scholten, D., & Bosman, R. (2016). The geopolitics of renewables; exploring the political implications of renewable energy systems. Technological Forecasting and Social Change, 103, 273–283. https:// doi​.org​/10​.1016​/j​.techfore​.2015​.10​.014 Schöttli, J. (2013). Special issue: Power, politics and maritime governance in the Indian Ocean. Journal of the Indian Ocean Region, 9(1), 1–5. https://doi​.org​/10​.1080​/19480881​.2013​.793907 Shaffer, B. (2009). Energy politics. In Energy Politics. University of Pennsylvania Press. https://doi​.org​ /10​.9783​/9780812204520 Shell Deutschland Oil GmbH (Ed.). (2019). Shell LNG Study Liquefied Natural Gas—New Energy for Ships and Trucks? Shell Deutschland Oil GmbH. https://elib​.dlr​.de​/132990​/2​/ lng​-study​-uk​-18092019​ -einzelseiten​.pdf Shepard, J. U., & Pratson, L. F. (2020). Maritime piracy in the Strait of Hormuz and implications of energy export security. Energy Policy, 140, 111379. https://doi​.org​/10​.1016​/j​.enpol​.2020​.111379 Slaoui, A. (2012). Editorial: Desertec project—when science joins politics. Journal of Renewable and Sustainable Energy, 4(1), 010401. https://doi​.org​/10​.1063​/1​.3687000 Smith Stegen, K. (2011). Deconstructing the “energy weapon”: Russia’s threat to Europe as case study. Energy Policy, 39(10), 6505–6513. https://doi​.org​/10​.1016​/j​.enpol​.2011​.07​.051 Smith Stegen, K. (2015). Understanding China’s global energy strategy. International Journal of Emerging Markets, 10(2), 194–208. https://doi​.org​/10​.1108​/ IJOEM​- 04​-2014​- 0059 Smith Stegen, K. (2018). Redrawing the geopolitical map: International relations and renewable energies. In The Geopolitics of Renewables (pp. 75–95). Cham: Springer. Smith Stegen, K., Gilmartin, P., & Carlucci, J. (2012). Terrorists versus the sun: Desertec in North Africa as a case study for assessing risks to energy infrastructure. Risk Management, 14(1), 3–26. Smith Stegen, K., & Kusznir, J. (2015). Outcomes and strategies in the ‘New Great Game’: China and the Caspian states emerge as winners. Journal of Eurasian Studies, 6(2), 91–106. https://doi​.org​/10​ .1016​/j​.euras​.2015​.03​.002 Stefanova, B. (2012). European strategies for energy security in the natural gas market. Journal of Strategic Security, 5(3), 51–68. Sun Cable website. (2022). https://suncable.energy/australia-asia-power-link/ Tagliapietra, S. (2019). The impact of the global energy transition on MENA oil and gas producers. Energy Strategy Reviews, 26. Tiewsoh, L. S., Jirásek, J., & Sivek, M. (2019). Electricity generation in India: Present state, future outlook and policy implications. Energies, 12(7), 1361. https://doi​.org​/10​.3390​/en12071361

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9. Industrial competition – who is winning the renewable energy race? Thomas Sattich and Stella Huang

1. THE GEOPOLITICS OF RENEWABLES AND INDUSTRIAL COMPETITION Globally, the energy sector is marked by two broad developments: • •

Emergence of sustainable forms of energy production and resource use (IRENA, 2021b). Relative decline of carbon-intensive development models based on the production and burning of fossil fuels (Van de Graaf and Bradshaw, 2018).

Worldwide, these two trends affect established patterns of economic and political power. More and more frequently, these trends are therefore discussed from a geopolitical perspective (Scholten, 2018). This literature asks how the relations between countries affect the transition away from fossil fuel and towards renewable energy (Bazilian et al., 2019); conversely, the energy transition is being studied as a factor suited to affect the relations between nations (Leonard et al., 2021). This chapter takes the second point of view. In this perspective, the socioeconomic changes that come with the shift to renewables will imply geopolitical reverberations. Authors who take that position argue that due to its significance, the energy transition will bring a geopolitical and strategic reshuffling – in other words the emergence of new winners and losers (Vakulchuk et al., 2020, p. 5). Scholars such as Smith Stegen (2018) and Overland et al. (2019) have tried to systematically work out which countries or regions could be the main potential losers and winners (Vakulchuk et al., 2020, p. 5). However, identifying winners and losers is not as clear-cut as it may seem. A largely underscored factor in this regard is the manufacturing of renewable energy equipment and infrastructure elements. The efforts of states to invest in manufacturing and technology development are somewhat overlooked (Lachapelle et al., 2017), possibly because the geopolitics of renewables literature is focused on installed renewables capacity. Yet beyond growing renewable energy capacities in the energy sector, the energy transition is also part of an industrial revolution (Westphal, 2021, p. 11), and it is in this context that the energy transition makes a difference. Simply put, renewable energy such as wind and solar is readily available at many places – but the industry that provides the necessary tools to exploit it, is not (IRENA, 2019). In a world where renewables provide much of the globe’s energy, the control of energy will therefore lose much of its geopolitical importance. Instead, geopolitical power will come with the control of industry, manufacturing, and technology. In view of this, gaining geopolitically from renewable energy seems to depend largely on industrial advances. However, (further) developing industries takes a lot of time and money 158

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(Yergin, 2020, p. 406). Whether a given country can exploit the geopolitical potential of renewable energy therefore depends on the availability of the necessary economic means and resources. Moreover, it depends on a set of capabilities to use the transformation of the energy sector in a wider sense (essentially: knowledge and management skills). Hence, the ability of individual countries to achieve industrial development through renewables varies greatly. Existing path-dependencies such as technology leadership make it even more difficult to achieve a globally just contribution of renewable energies to industrial development (Bazilian et  al., 2019; Eicke & Goldthau, 2021; Overland, 2021, p. 45; Van de Graaf, 2021, p. 30). Conversely, uneven access to renewable energy technologies may give rise to growing discrepancies in political power (Eicke & Goldthau, 2021). Leaders in technological innovation therefore seem particularly well positioned to gain from the global energy transformation in a geopolitical sense (IRENA, 2019, p. 40). Transition latecomers, on the other hand, seem to be at risk of losing competitiveness and thus influence and power. In order to contribute to the existing literature on this topic, we base the chapter on the idea that all major geopolitical shifts in the world have followed alterations in the productive balances (Kennedy, 2017, p. 567). Renewables clearly have the potential to affect energy flows, economic development, trade balances, and economic linkages (Mercure et al., 2021; Financial Times, 2021). They create a new economic environment for individual states (Mastanduno, 2016) and thus involve shifts in political power. However, despite the connection between renewable energy and industrial competition, surprisingly little research has been carried out to systematically analyse the geopolitical implications of renewables from an industrial perspective. In the following sections, we present different perspectives on the subject of industrial competition (Section 2) and discuss the strategies of leading states in the field of energy transition (Section 3). Furthermore, we present a number of newcomers (Section 4). Discussing what characterises ‘winners’ of the industrial race is a necessary step (Section 5) before the potential ‘winner’ can be presented (Section 6).

2. DIFFERENT PERSPECTIVES ON INDUSTRIAL COMPETITION AND THE RENEWABLE ENERGY RACE The energy transition is well underway and shows signs of accelerating in many countries (Reuters, 2020). As a consequence, markets for renewable energy technology, equipment, and infrastructure are big and growing. In particular, this concerns the electricity sector, where renewable energy technologies such as wind and solar are becoming cost-competitive and according to the International Renewable Energy Agency (IRENA) now dominate the global market for new electricity generation capacity (IRENA, 2021b, pp. 5–6). This development is not without geoeconomic side-effects (Goldthau, 2021). This section presents four different perspectives on this dimension of the energy transition. 2.1 Sustainability and Energy Transition Already in the early phases of what is being referred today as ‘sustainable development’, various authors speculated about different development paths. An early expression of a low carbon energy future is Amory B. Lovins’s (1976) concepts of ‘hard’ and ‘soft’ technologies depicting

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two very different energy strategies or contrasting energy paths for the United States to follow for the next 50 years. The first, the hard path, Lovins described as an ‘extrapolation of the recent past’, relying on ‘rapid expansion of centralized high technologies to increase supplies of energy, especially in the form of electricity’ (Lovins, 1976, p. 65), based on fossil fuels and nuclear energy. The second path, the soft path, was characterised as a path combining ‘a prompt and serious commitment to efficient use of energy, rapid development of renewable energy sources matched in scale and in energy quality to end-use needs’. For Lovins, the hard and soft energy paths were ‘mutually exclusive’ (Lovins, 1976, p. 65). The discussion around different development paths continues to this day. Currently, research efforts are aimed at understanding the role of the state in transitions (Johnstone & Newell, 2018, p. 72). This includes perspectives on the motivations of states to engage in the energy transition (Lachapelle et al., 2017, p, 312) and the state (and its means) as an enabler/driver or hindrance to energy transition (Meadowcroft, 2011). In this context, it has been argued that the literature on energy transition overemphasises the domestic development of clean energy, and thus greatly misses the ways in which it is global interactions and patterns that enable or prevent transitions to occur (Lachapelle et al., 2017, p. 312). There is, however, increasing interest in international dynamics of the energy transition, for example macro-political institutions (Köhler et  al., 2019, p. 9), their development over time (Kern and Rogge, 2018), and policy feedback across jurisdictions (Meckling, 2019; Lindberg & Kammermann, 2021). Consequently, the sustainability transition literature increasingly discusses how governance beyond the state affects sustainable energy policies (Aalto et al., 2021, p. 6). This concerns, for example, the creation and influence of IRENA (Colgan et al., 2012) and its potential impact on the sustainability transition (Asmelash et al., 2020). Scholars in the field of sustainability transitions also ask more and more often what the growing importance of sustainability in international relations implies for the climate strategies of individual polities (Oberthür & Dupont, 2021; von Homeyer et  al., 2021). Finally, the influence of global power shifts on the sustainability transition is being discussed more frequently (Schmitz, 2013), for example through policy diffusion (Köhler et al., 2019, p. 14). The geopolitics of renewables literature can be understood as a contribution to this research. 2.2 Renewable Energy Markets On the side of consumers of renewable energy technology, a record level of 260 gigawatts (GW) of renewables-based generation capacity was added globally in 2020 (IRENA, 2021a). According to the World Economic Forum, this equals a global market of US$282.2 billion for clean energy technologies in 2020 (WEF, 2020c). Following a recent report, this market can be expected to grow at a compound annual growth rate of 6.9%, to reach to US$423.7 billion by 2026 (GlobeNewswire, 2021), which is roughly equal to the yearly GDP of an average OECD country such as Belgium or Poland, or the yearly import of goods of the United States from China (Census Bureau, 2021). Other estimates assume a future annual market of US$790 billion (Department of Energy, n.d.a) or over a trillion US dollars (Statista, 2021) by 2030. Moreover, the emerging hydrogen economy offers the prospect of a further expansion of the market for clean energy infrastructure (IRENA, 2022; Deloitte, 2021; Van de Graaf et al., 2020). All in all, the global energy transition is believed to create a market of US$12 trillion by 2050 (Financial Times, 2021).

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When it comes to the producers, a significant number of manufacturing companies fabricates the technology to satisfy the consumers of renewable energy technology. This comprises companies in different branches such as solar and wind, and also very different components such as magnets and belt drives. Beyond the production of goods, the providers of renewable energy services of all kinds need to be taken into account. In total, the number of companies competing for the increasing market for renewable energy technology is considerable. For example, in the United States, there are currently more than 500 manufacturing facilities specialising in wind components such as blades, towers, and generators, as well as turbine assembly (Department of Energy, n.d.b). An upward trend in employment in the renewable energy sector (deployment and manufacturing) reported by IRENA (2020) further strengthens the impression that renewable energy is indeed an increasingly important economic factor for economic development worldwide. The 11.5 million employees in the renewable energy industry would probably concur with this assessment (ibid., pp. 6–7). From a purely economic point of view, these markets can be understood as the relations between consumers and producers of manufacturing goods. Moreover, in this perspective it could be expected that competition between economic actors will generate an optimal allocation of economic resources, appropriate price signals, and eventually the aggregation of wealth (Kuzemko et al., 2016, p. 15). Based solely on an economic understanding, it could also be expected that the wide variety of individual technology suppliers that exists in the renewables segment may increase access to energy supply, broaden the possibilities for producing energy, and thus provide new economic stimuli for society at large. However, energy is the lifeblood of our society, a significant component of economic development (Aalto et al., 2021). Beyond its economic dimension, (renewable) energy is a strongly politicised issue. Accordingly, more than 145 states have regulatory policies in place that promote renewable energy (REN, 2022) and drive technological innovation (Schmidt & Sewerin, 2017). Yet countries differ strongly regarding their capability and/or willingness to make renewable energy the basis of wider industrial development. As a consequence, manufacturing industries are concentrated in only a handful of countries (IRENA, 2021b, p. 10). The fact that only four countries (Japan, the United States, Germany, and China) account for circa two thirds of energy innovation (Kuzemko et al., 2016, p. 208) is suited to highlight the existing imbalance. 2.3 Energy and Industrial Competition Renewable energy policies will affect the global economy, for example by changing the demand for certain manufacturing and industrial products. The geopolitics of renewables literature represents an attempt to understand these economic shifts and how they translate into geopolitical power (Bazilian et  al., 2019). Where exactly the frontier between politics and economic activity is in world affairs could never be settled (Lindblom, 1977, p. 8; Yergin & Stanislaw, 2008, p. xi; Mann, 2012). What is clear, however, is that (successful) economic policies can have severe implications for international politics: Even a national economic success that has been achieved peacefully and fairly often takes on a life of its own and creates ever more far-reaching and aggressive pressures that can become the cause of conflict: The more successfully a country industrializes, the more raw materials need to be produced and the larger the sales areas become, and ever longer supply and distribution routes require ever more infrastructure. The more the corresponding network of trading posts and foreign investments,

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of mining and transport rights, supply contracts and economic agreements (...) expands, the more this network becomes, as if by itself, an international factor of influence (…) All this all too easily arouses the suspicion of others. They may see even in fair trade and financial relations an exchange relationship from which they benefit relatively less than the other side. (Oermann & Wolff, 2019, p. 15 [own translation])

It is important to note in that context is that the ‘neo-mercantilist’ interpretation of international energy politics is gaining in importance (Van de Graaf & Sovacool, 2020, p. 17). In this view, economic development in the field of energy is – to varying degrees – politically directed: it suggests that the state is the key actor when it comes to determining economic activity in the field of energy (ibid.; Blackwill & Harris, 2017. p. 20). According to Gilpin (2001, p. 11), the direction states are setting with regard to economic policies can be traced back to pressures at the international level (Gilpin, 2001, p. 11). In other words, energy and industrial policy can be understood as a response to developments at the level of the international system (Blackwill & Harris, 2017, p. 20). In the field of energy, this seems particularly true. Theoretical assumptions suggest that somewhat analogous to the mercantilism of the 17th and 18th centuries (Taylor, 2000, p. 377), states are taking energy policy measures as being more than economic policy, namely a strategic tool for achieving political goals such as national security (Van de Graaf & Sovacool, 2020, p. 17). Moreover, energy policy has been portrayed as an instrument that serves the building-up of those industrial structures that are necessary for playing an active role at the international level (Blackwill & Harris, 2017, pp. 33–34). In turn, this high concentration of the manufacturing industry leaves some countries with a stronger position in world affairs, while other nations struggle for influence. The country of Germany is suited to exemplify this. Its engineering and manufacturing base generates much of the economic underpinning necessary to drive political projects at the international level. For example, having a thriving renewables industry provided the country with a good starting position for setting up IRENA (Van de Graaf, 2013, p. 27), and thus new possibilities for gaining influence and prestige.1 Other countries do not have the ability to influence world affairs in this manner. In short, leading scholars in the field of energy by and large maintain that changes related to the energy sector cannot be understood by merely focusing on market dynamics; a full understanding of the impact of renewables requires taking political issues into consideration. In particular, this concerns the state and the political pressures countries are facing at the international level. The implications of this notion can be highlighted by the decision of British Prime Minister Boris Johnson to spend £12 billion on green industrial policy (Johnson, 2020). This initiative – a ‘Green Industrial Revolution’ according to Johnson (ibid.) – includes the commercialisation of new low-carbon technologies and the idea to ‘make the UK the Saudi Arabia of wind’ (ibid.). Obviously, policy of such magnitude does not follow a neoliberal or laissez-faire approach to economics. Where ‘green and growth … go hand-in-hand’ (ibid.), the state apparently plays a major role. 2.4 Green Industrial Policy Today, the economic importance of environmental goals is largely undisputed (Ghisetti et al., 2015). Support for renewable energy plays an important part in this context, because beyond energy value chains, the energy transformation will reconfigure infrastructures, production chains, and industrial clusters (Pastukhova & Westphal, 2020, p. 353). Simply put, the

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large-scale promotion of renewable energy is industrial policy, that is government actions to alter economic structures, for example by encouraging resources to move into politically chosen sectors and technologies. In that sense, renewables are frequently portrayed as an essential indicator of a country’s potential in industrial competition (e.g., in Kuzemko et al., 2016). Green industrial policy is primarily focused on achieving environmental goals. However, not unlike other types of industrial policy, directing industrial development towards green solutions, serves the purpose of creating wealth (Allan et al., 2021, p. 7; Altenburg & Assmann, 2017, p. 2). There is, in fact, growing empirical evidence that green industrial policy is a key to opening future markets, even for economic latecomers (Altenburg & Assmann, 2017, p. xi; Rodrik, 2014, pp. 469–470). Notwithstanding its ‘green’ aspects, this type of industrial policy is therefore suited to cause structural transformation of economies and can thus expected to imply international reverberations (Aiginger & Rodrik, 2020, p. 190) such as interferes with international trade flows (Allan et al., 2021, p. 3). What is more, today renewable energy has, in many ways, become a central feature of the industrial competition between power blocs such as the United States, China, and the European Union.2 One essential element in this context is world markets. Pursuing green industrial policies offers potential advantages in terms of economic competitiveness and exports of manufacturing goods and other industrial goods (e.g., green energy technology equipment; Szalavetz, 2021, p. 106), and therefore the potential to change a country’s trade relations with other countries (Jordan-Korte, 2011). Under President Obama, for example, US renewables policy had the following goals: stimulating demand and employment, spearheading new technologies, environmental benefits – and competing with China (Rodrik, 2014, p. 480; Department of Energy, 2013). Also, green industrial policy may be suited to affect what place in the global division of labour a county holds, which results in global competition for technology leadership and industrial competition for products and markets. Geopolitical competition is therefore seen more and more as a driver of green industrial policy (Financial Review, 2021). Vice versa, efforts to build green industry have raised the geopolitical stakes (Allan et al., 2021). This concerns economic developments worldwide. In anticipation of potential economic benefits, many countries have in the recent years begun to engage in the development of ‘green’ industries (Rodrik, 2014; Altenburg & Assmann, 2017). Today, this comes with geopolitical side-effects. The view of the Trump administration of the European Green Deal as a threat to the American industrial basis (Leonard et al., 2021, p. 15) is suited to highlight this trend. Similarly, the increasing concerns of the US national security establishment about technology transfers to strategic and geopolitical rivals and the loss of US technological edge is telling (Aiginger & Rodrik, 2020, p. 190). Empirically founded knowledge about the geopolitics of ‘green industrial policy’, is still limited. But various literatures have picked up the topic. For example, it is being speculated whether green industrial policy leads to the formation of climate clubs (countries focusing on sector- or technology-specific green industrial policies), or alliances of nations with common interests in specific types of technologies (Malhotra & Schmidt, 2020, p. 2265).

3. STRATEGIES OF LEADING RENEWABLE ENERGY POWERS A growing number of countries is committed to reaching the goal of a net zero carbon economy. Yet, the increase in renewable energy use is not consistent across countries or over time (IRENA, 2021b, p. 18; WEF, 2020a, p. 6; WEF, 2021b, p. 16). Significant differences between

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countries remain. In this section, we ask about the position of individual countries currently in the ‘renewable energy race’. Using several indicators, we aim at drawing a picture of where the pursuit of a renewables-based energy strategy left individual countries. This includes the political support systems for renewable energy, its impact on renewable energy capacity and the industrial base, and where pursuing a renewables-based strategy leaves individual countries geopolitically. 3.1 Different Starting Positions in the Global Division of Labour Across the world, renewable energy markets are emerging rapidly, with annual growth rates of 11% in the wind sector, and 28% in solar (Eike & Goldthau, 2021, p. 371). In terms of investments, these growth rates accumulated to US$2.9 trillion since 2004 (UNEP, 2018), that is about US$300 billion each year between 2013 and 2018 (IRENA & CPI, 2020, p. 12). In 2019, the world financed renewable energy projects worth of US$282 billion (onshore and offshore wind: US$138 billion; solar: US$131 billion; Bloomberg Green, n.d.). Only a handful of countries attracts the lion’s share of these investments. According to IRENA (n.d.), only five jurisdictions – China, United States, Japan, Germany, India – hold circa two thirds of installed capacity3 worldwide (see Figure 9.1). Similarly, of the 11.5 million globally in the renewable energy industry (in 2019), China, Brazil, India, the United States, and the European Union hold the big majority of about 8.5 million jobs (IRENA, 2020). In other words, a small minority of countries benefits from the vast majority of the abovementioned investments.4 According to Meckling (2019), this strong focus of investments on a limited number of countries can be explained by early policy developments and incentive schemes (p. 318). From

Source:   IRENA (2021a).

Figure 9.1  Total installed renewable energy capacity, 2021 (in GW)

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1990 to 2003, renewable energy support policies emerged primarily in countries belonging to the OECD, with a strong geographical focus on the European Union, Japan, and the United States (ibid., p. 322). 3.2 Manufacturing and the Pace of Renewables Roll-Out A more nuanced picture of the current state of the renewable energy race can be drawn when the generation of electricity from renewable sources (in kWh) is being calculated on a per capita basis. Given that the generation of electricity of renewable energy (in kWh) was (quasi) at zero in most countries some three decades ago (see Our World in Data, n.d.a; Our World in Data, n.d.b), these numbers can be taken as the pace of the roll-out of wind and solar generation capacity in individual countries. From this point of view (see Figures 9.2 and 9.3), the positions in the renewable energy race change dramatically. Most notably, Chinese renewables deployments appear much lower relative to other countries (Lachapelle et al., 2017, p. 315). Conversely, smaller countries such as Denmark appear to be much faster in deploying high numbers of renewables, particularly when it comes to wind power. In other words, a strong pace in renewable energy capacity increase per capita (for example in Denmark and Spain) correlates positively with the presence of a sizeable manufacturing industry producing wind power equipment (Table 9.1). Hence, in addition to suitable policies, the presence of a large-scale manufacturing base appears to represent an important precondition for a successful energy transition. Large-scale manufacturing helps bring down costs and thus encourages deployment of renewable energy technology (Lachapelle et al., 2017, p. 317).

Source:   Our World in Data.

Figure 9.2  Annual electricity generation from wind energy per capita, 2020 (in kWh)

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Source:   Our World in Data.

Figure 9.3  Annual electricity generation from solar energy per capita, 2020 (in kWh) Table 9.1  Largest onshore wind turbine manufacturers by installed capacity, 2020 Country

Main manufacturers

Share of net capacity additions worldwide (2020, 60 GW)

China

Goldwind (7.64 GW); Envision (5.11 GW); Ming Yang (3.9 GW); Windey (2.06 GW); Dogfang (1.42 GW)

33.25%

Denmark

Vestas (9.6 GW)

16%

United States

GE Energy (6.98 GW)

11.6%

Germany/Spain

Siemens Gamesa (5.49 GW)

9.15%

Germany

Nordex (1.96 GW); Enercon (1.37 GW)

5.55%

Source:   Statista (https://www​.statista​.com​/statistics​/262350​/ largest​-wind​-turbine​-manufacturers​-worldwide​-by​capacity/) and IEA (https://www​.iea​.org​/reports​/renewables​-2020​/wind).

The presence of a capable and sizeable industry can therefore be taken as an important factor in setting the pace of individual countries adjusting their energy sector. The numbers presented in this section reflect that. Similarly, the example of Germany points towards the important role of industry when it comes to the speed of the renewable energy build-up. It can, therefore, be expected that a strong renewable energy manufacturing base translates directly into capacity increase. However, when it comes to solar power, the German example also points to the increasing

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Table 9.2  Leading solar module manufacturers worldwide based on production, 2019 Country

Main manufacturers

Share of net capacity additions worldwide (2019, 109 GW)

China

Tongwei (12.8 GW); LONGi (11 GW); JinkoSolar (9.7 GW); Aiko (7.6 GW); JA Solar (7.6 GW); Trina Solar (6 GW)

50.18%

Canada

Canadian Solar (8.6 GW)

7.88%

US

First Solar (5.4 GW)

4.95%

Germany

Hanwha Q-Cells (5.2 GW)

4.77%

Taiwan

UREC (4.2 GW)

3.85%

Source:   https://www​.statista​.com​/statistics​/269741​/the​-biggest​-solar​-module​-manufacturers​-worldwide​-based​on​-production/.

Table 9.3  List of countries with high innovative performance in the field of renewable energy technology Canada China Denmark France Germany Japan Korea Spain United Kingdom United States Source:   Lachapelle et al., 2017, p. 315. To some degree the composition of that group of countries is determined by the dominance of the included countries in terms of competitiveness and innovation beyond energy (see WEF, n.d.).

role of world markets for supply with renewable energy equipment. Undoubtedly, the presence of a solar PV industry in Germany contributed to the fast pace of the solar energy roll-out (Table 9.2), but in that case a domestic industry was not a requirement for maintaining the speed of the transition (Statista, 2022). Another important variable in determining the winner of the renewable energy race is the innovative potential of individual countries and their manufacturing industries in the field of renewable energy. Beyond components for generating renewable energy, this includes technical components important for running renewable energy systems, for example smart grid solutions. The capability to generate innovations in these areas promises to widen technical bottlenecks for renewable energy deployment such as grid stability. Thus, they are believed to also have the ability to stimulate renewable energy growth in otherwise stagnant economies (IEEE, n.d.). However, the ability to produce innovation in the clean energy sector is concentrated in a handful of countries (listed alphabetically in Table 9.3).​

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3.3 Leading Racers: The Top Six in the Renewable Energy Race In this section, we present some impressions of six of the bigger powers in renewable energy and their current position in the renewable energy race. Of course, factors such as the output of the manufacturing industries change over time (see e.g., GWEC, 2021).5 The presented impressions do, hence, merely represent a snapshot – after all, the renewables race is ongoing. China: accelerated renewable additions Since China promulgated its first renewable energy law in 2006, renewables have entered a comprehensive, rapid, and large-scale development stage. Today, according to Thijs Van de Graaf, (w)e have one country in pole position (of the renewable energy race), China … If you talk about the clean energy technology race, in many ways, it looks as if the race has already been run, and the winner is China … Other players are trying to catch up. (Financial Times, 2021).

China’s initial growth came from policies that subsidised both domestic demand and supply, serving both the domestic market and the goal of exporting to Western Europe, Japan, the United States, and other developed countries (Ladislaw et al., 2021). Domestically, however, renewable energy still accounts only for a relatively small proportion of China’s total energy consumption (Liu et al., 2021, p. 1386). In 2020, the share of electricity generated by non-fossil fuels reached 32%. To increase this number, China is gradually shifting its policy focus from large, central plants to distributed energy, agricultural energy, building-integrated energy, offshore wind, and floating PV (BMWi, 2021). Following these measures, Chinese domestic investments in clean energy are the highest worldwide. In 2019 alone, China pumped some US$83.4 billion into clean energy research and development (Statista, 2020a). Consequently, China took the global lead in renewable energy growth, accounting for circa 45% of renewables added (in 2018; Liu et al., 2021, p. 1386). Electricity generated by renewable energy grew steadily in 2020 despite the impact of the pandemic (BMWi, 2021). In that year, a record of 120 GW of new wind turbines and solar panels were installed domestically, more than double the year before (Financial Times, 2021). Despite this high growth domestically and in terms of exports, the total share of renewable energy in the manufacturing sector is projected to be just above 15% by 2030 (IRENA, 2014). Although it does not appear on top of the innovative economics, 39% of the 12 million renewable energy jobs are in China (Irena & ILO, 2021). With its variety of industrial subsectors, the Chinese economy also has one of the largest realisable potentials to increase its share of renewable energy in the world (IRENA, 2014). The main barrier to additional renewable energy deployment will be low coal prices. Germany: European leadership and stagnation Germany is a leading industrial nation, and closely affiliated with the European Union. In 2021, with EU member states accounted for US$154 billion of worldwide investments into renewable energy (BloombergNEF, 2022, p. 8). This would place the European Union as a bloc in second place behind China, and ahead of the United States. The European Commission puts sustainability at the centre stage of its industrial policy. The goal to reduce greenhouse gas

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emissions by as much as 80–95% was already set a decade ago (European Union, 2012), and since then the European Union has constantly updated its policies. Becoming the world’s first climate-neutral continent by 2050 is also the objective of the European Green Deal (European Commission, 2019), a new and ambitious package of measures that should enable European citizens and businesses to benefit from sustainable green transition. Individual European countries are renewables investors in their own right, with Germany having a leading position among them. In 2021, the country invested about US$47 billion in the energy transition, more than US$10 billion of which went directly into the build-up of renewables (BloombergNEF, 2022, p. 8). In November 2021, the new German government unveiled more ambitious renewable energy targets, envisaging 200 GW of installed solar capacity and at least 30 GW of offshore wind by 2030 in order to speed the transition (Renewables Now, 2021). The German government aims to increase the solar and onshore wind power capacity under the country’s Renewable Energy Act in 2022 by 4.1 and 2.1 GW, respectively. The European Union also approved a number of other measures taken by the German government that aim to increase renewable capacity. These proposed measures will support the expansion of renewable energy in Germany in line with the EU Green Deal. Germany’s main advantage in the renewable energy race should be its innovative potential (Gosh, 2020). Germany has historically been a global leader in renewable energy research, thanks to its sustainable energy agenda and high levels of public funding. According to the Federal Ministry for Education and Research, there are now more than 180 universities and 120 research institutes involved in the country’s energy transition programme, the Energiewende. With nuclear energy off the table, policymakers and academics realised that achieving the emissions reduction targets required major investments in energy research. The funding for renewables and R&D also fuelled a boom in manufacturing capabilities and innovation: between 2000 and 2013, Germany ranked third in the world in patent filings for renewable energy technologies, behind China and the United States in 2019 (Curry, 2019), and newer figures indicate further advances in the mentioned areas (Gosh, 2020). Given the advanced stages of the energy transition in Germany, research priorities have changed a situation where renewable energy technology needs to be coordinated with an electricity grid capable of supplying industry and society with reliable power (Curry, 2019). Although Germany is leading the renewable investment and research in the European Union, there are also problems. Once a poster child of renewable energy policy, Germany scores poorly on wind power investments due to complex approval procedures which often deter investors. Energy experts relate this to the fact that in the current market structure and organisation, investors do not really believe in the long-term attractiveness of alternative power generation (Statista, 2020b). There is also work to be done when it comes to encouraging societal adoption of renewable energy and support from businesses. USA: carbon neutrality dream and geopolitical risks Consumption of renewable energy in 2019 was nearly three times greater than in 2000. However, in recent years, the United States has experienced several policy and political shifts related to energy consumption and climate change. As a consequence, the country is faced with a high level of uncertainty regarding the energy mix, which in turn may influence the business environment, decision making of industries and manufacturing corporations; in such an environment, advances in renewable energy and energy efficiency may be compromised (Nakhli et al., 2022). Geopolitical risks in the international environment seem to have a

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significant and surprisingly positive effect on the United States renewable energy deployment (Sweidan, 2021). The new US President, Joe Biden, made climate change a key issue during his campaign and has set an unwavering commitment to carbon neutrality by 2050. In 2020, approximately 12% of energy production relied on renewable sources, and the annual energy consumption from renewable sources exceeded coal consumption for the first time since before 1885 (EIA, 2020). The US Energy Information Administration projects that US renewable energy consumption will continue to increase through 2050 (EIA, 2021). In view of the overall high investments and prior programmes to support renewables manufacturing (see above), it appears therefore likely that the United States will be able to translate renewable energy into an opportunity for domestic development and a geopolitical asset. However, political instability and low gas prices might represent a strong bottleneck for renewables. Japan: any different this time? Japan is a highly-industrialised country with a severe lack of hydrocarbon resources. Using renewables in combination with hydrogen is seen as having multiple advantages, including energy security, industrial competitiveness, and carbon emissions reduction. In 2017, Japan issued the Basic Hydrogen Strategy (METI, 2017) becoming the first country to adopt a national hydrogen framework. Moreover, in October 2020, the country committed to the aim of net zero in carbon emissions by 2050. Prior to these announcements, Japan was generally regarded as a lagging contender in the accelerating global shift to making decarbonisation the focal point of industrial policy. Among Japan’s strengths is an increasingly inclusive and integrated platform style of industrial policy. The country’s weaknesses appear most evident in resource endowments, notably of the critical raw materials required for decarbonisation. Therefore, Japanese industrial policy is built on the idea of material efficiency and circularity. The national government has also issued several strategic documents covering technological and economic aspects, such as the Strategic Roadmap for Hydrogen and Fuel Cells (METI, 2019) and an updated Green Growth strategy (June 2021). The latter outlines future global market potential for hydrogen technologies and products in key sectors. Moreover, it identifies what needs to be overcome (mostly technical obstacles, but some regulatory), and provides timelines and numeric targets, such as units of deployed equipment (e.g., refuelling stations) and end-use products (e.g., cars and residential fuel cells), as well as hydrogen volume used (e.g., steel making and electrolysing) (Nakano, 2021). Japan has a broad end-use approach that looks at power, transportation, residential, heavy industry, and potentially, refining. Meanwhile, Japan is a leader in fuel cell technology, especially fuel cell vehicles (FCVs), and Japanese leaders would like to export this technology to the rest of the world. The Japanese government provides robust funding for research, development, demonstration, and deployment. Growing competition from European governments and businesses is a major concern. The national government therefore seeks to increase public spending, technological innovation work, and collaboration with industrial stakeholders to expand a society-wide adaptation of hydrogen and fuel cell technology. Japan is highly focused on securing access to hydrogen feedstocks. It has therefore begun to test various options for sourcing hydrogen and there is a question about how its diplomacy might adjust to that need. In all, it appears that with its hydrogen strategy, Japan switched from a laggard to a leading position in an increasingly important segment. Whether this will pay

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off geopolitically will depend largely on the future volume of the hydrogen economy as well as the structure or the new interdependencies that will arise with it. India: leader in potential India’s long-term development model aims at ensuring a tight coupling between economic growth and environmental sustainability. According to some authors, this will require the creation of new green industries in the next decade or so, with significant potential to do so if the right moves are made now (Sinha, 2019). In its Nationally Determined Contributions (NDCs) under the Paris Agreement, India committed itself to a target of 40% renewable energy installed capacity by 2030. The target is somewhat modest, considering the advances in non-conventional energy generation, both in India and globally. A report by India’s Central Electricity Agency confirms this by indicating that the non-fossil fuel component of India’s installed power capacity could rise to as much as 64% by March 2030. Measured in total capacity, India is the world’s fourth largest wind and solar market. Central subsidies to the renewable energy sector grew almost six-fold between 2014 and 2017 (from US$431 million to US$2.2 billion). During the same period, subsidies for energy powered by oil and gas reduced by 76% from US$26.1 billion to US$5.5 billion. Subsidies for coal-based power have fallen too, but only marginally. As a result of these trends, renewable energy production in India has grown massively, with installed capacity more than doubling since 2012. By the end of 2017, India had the world’s fourth largest wind-installed capacity and the sixth largest solar-installed capacity. Recently, however, annual installations have waned (IRENA, 2020, p. 24). India’s industrial structure is suited to explain this performance. Some states in India promote wind manufacturing, but high initial costs and a lack of national policy led to slow progress. Recently, many fiscal strategies aligned with ‘Make in India’ may be implemented to stimulate wind turbine and related accessory manufacture (Kumar et al., 2022). Moreover, incentives and subsidies to lower the overall cost of wind project development may be offered (ibid.). However, in the area of solar, matching demand for manufacturing goods with supply remains unsolved. Lack of financing, inconsistent government policy, lack of scale, and competition from low-priced Chinese imports have underrun India’s domestic module manufacturing (Jain et al., 2022). Denmark: leader in technical maturity Since the 1970s, Danish energy policy has supported long-term planning for a transition to a renewable energy supply. Various policy initiatives stimulating technological development and investments in wind deployment have been adopted. On the basis of the so-called Danish Energy Model, Denmark pursued a persistent and active energy policy. This model combines ambitious renewable energy goals, enhanced energy efficiency, and support for technical innovation and industrial development (Danish Energy Agency, 2015, p. 40). As a result, Denmark is one of the leading countries in wind energy supply with wind delivering 43% of the national electricity supply in 2017 (Energinet, 2018; Danish Energy Agency, 2015). Wind energy has been prioritised in this strategy (Rønne, 2016), leading to its technical maturity and economic competitiveness. Denmark’s long-term goal is to become a low-emission society by 2050, with an interim target of 55% of renewable energy by 2030. Denmark is also a world-leading country in wind energy production and wind turbine production. Only a small number of companies, located in a few countries, have specific

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technological expertise in wind turbine manufacturing. Denmark is one of them. Such technological expertise is found to be a significant driver of trade in wind turbines (Garsous & Worack, 2022). In 2018, Denmark-based wind turbine manufacturer Vestas had a global market share of around 20.3%, along with many component suppliers. Moreover, Denmark is excellent at integrating variable renewable energy due to the high interconnection and flexible power system (Djørup et al., 2018). The 2018 Energy Agreement envisages a shift from onshore to offshore wind that will be affected by increasing offshore capacity by 2,400 MW and reducing the number (but not the capacity) of onshore wind turbines from the present 4,300 turbines to 1,850 by 2030. Given the emphasis in neighbouring countries such as Norway on offshore wind power, new growth options for the new offshore capabilities in manufacturing might be around the corner.

4. NEW RACERS: THE UPCOMING FOUR IN THE RENEWABLE ENERGY RACE In view of the formation of early markets for wind and solar equipment in Europe, Japan, and the US, manufacturers from industrialising countries started their own support policies for renewable energy (Sattich et al., 2021, pp. 5–6). In some cases, these measures showed tremendous successes in terms of attracting investments and building up generation capacity. Under the Paris Agreement, national governments are again accelerating the deployment of low-carbon technologies (Malhotra & Schmidt, 2020, p. 2259). It therefore seems plausible that new players will be able to replicate earlier developments (Altenburg & Assmann, 2017, p. 46). 4.1 Southeast Asia: Small Technology Islands These countries find their niches in combining low-wage labour with reasonable infrastructure and facilitative investment policies (Lachapelle et  al., 2017). The island of Taiwan is representative of one of the ‘classical’ success stories in that regard. Like many developing regions in Southeast Asia, Taiwan’s approach is to build a thriving green manufacturing sector, particularly for export markets (e.g., Kletzer, 2002). Towards world markets, Taiwan added renewables technology to its portfolio of exports. It is believed that this move comes with wide-ranging economic benefits in terms of job creation and additional economic stimulus. However, enormous investments will be required to further stimulate growth in the renewables segment. Given the growing competition among producer countries, past successes based on an export strategy will be difficult to expand. Decarbonisation on the domestic level will therefore be key to achieving further expansion. Internally, the share of renewable energy in the power sector is projected to grow from 4.8% in 2016 to 20% in 2025 (Wu et al., 2021). The sectors that are expected to benefit from such a strategy include iron/steel/miscellaneous metals, electrical equipment, and mechanical equipment (Wu et al., 2021). The build-up of industrial parks specialising in renewable energy and the promotion of talent and technological innovation may go hand in hand with upward movements in the global division of labour. These changes will necessitate a reorganisation of the workforce through government–academia–industry cooperation (Wu et al., 2021).

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4.2 South Africa: Renewables and Population Growth By 2016, South Africa became one of the top ten countries for renewable energy development, in Africa and worldwide (Murray, 2017, p. 2). A wave of local public policies favoured the diffusion of renewable energy technology (Ayamolowo et al., 2022) and led to a strong presence of global renewable energy firms. Further, the national government developed renewable energy manufacturing policy in conjunction with larger efforts to industrialise the national economy (Murray, 2017). Like other African nations, South Africa is prioritising industrialisation (Murray, 2017, p. 2) to cope with overdependence on natural resource extraction, economic stratification, and unemployment. Partly, green industrial policy was also driven by the country’s integration in global value chains (ibid.). Renewable energy and green industrial policy in South Africa meet several bottlenecks. Energy and electricity policy, planning, and regulation in South Africa are said to be slow and bureaucratic, and characterised by a lack of vision. The policy uncertainty, together with a rapid turnover of ministerial leadership at the Department of Energy, has resulted in planning being intermittent, uncoordinated, and lacking coherence (Yelland, 2020). At the same time, South Africa is facing notable pressure from population growth. Population growth (1.43% per year) is one of the country’s biggest socioeconomic problems (Bohlmann & Inglesi-Lotz, 2018; Ateba et al., 2019). This increasing population constantly puts pressure on the power system as the energy demand increases (Thopil et al., 2018). Established experience with coal as a fuel might therefore trump renewables as a growth strategy. 4.3 Brazil: Winning the World Cup of Renewables? In many ways, Brazil is a global leader in the energy transition: more than 46% of Brazil’s energy mix is powered by renewable energy sources. Brazil also has the third largest renewable electricity generation capacity globally (WEF, 2021a). Labour statistics reflect that. As of 2019, the South American country employed more than 1.1 million workers in the renewable energy sector (IRENA, 2020, p. 20), and the opportunities in the segment are increasing (ibid.). With over 1 million vacancies in the sector, Brazil is one of the largest job creators in renewable energy (ibid.). Since 2018, the country has the highest number of renewable energy jobs in Latin America (ibid.). This includes jobs related to biofuels, hydroelectric, wind and solar energy, as well as biomass and biogas (ibid.). Despite these promising signs, three key opportunities for further use of renewables as a comparative advantage remain partly unexploited: • • •

Expansion of non-hydro renewables Digitalisation of transmission and distribution systems Investment in smart and efficient cities, innovation, and financing (WEF, 2021a)

4.4 Australia: Renaissance of Manufacturing? According to some authors, Australia’s abundance of renewable energy resources will offer a competitive advantage for heavy industry and manufacturing (Venkataraman et  al., n.d.; Dean et al., 2021; Nahum, 2020). In this view, a renewables-focused strategy for revitalising the Australian economy would focus on fostering the domestic production of manufactured

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goods with a direct connection to renewable energy. Beyond manufacturing, green steel production is portrayed as a possibility. According to the authors, pursuing this development path would be economically viable as Australian manufacturers could save around a quarter of their energy costs by switching to renewables (Nahum, 2020, p. 4). Accelerating the shift towards renewable energy would also support the needed shift away from resource extraction towards value-added production. Such a move is believed to support greater international competitiveness and more high-quality Australian manufacturing jobs. Nahum (2020) concluded that Australia can attain both global manufacturing success and timely reductions in greenhouse gas emissions. Whether these comparative advantages can indeed be reached depends to a large degree on the question of whether human resources and raw materials can be organised to implement the infrastructure changes involved with building a large enough renewables sector (Venkataraman et al., n.d.).

5. WINNING THE INDUSTRIAL RACE ALONE? Policy makers in the field of industrial policy have begun to perceive the move to renewable energy technologies as more than ‘just’ the development of a more environmentally friendly form of energy production. Renewables have become a central element of industrial policy in many countries. In terms of the potential geopolitical gains related to the energy transition, the winner of the green technology race is said to be sure of finding economic and geopolitical rewards at the finish line (WEF, 2020b, p. 8). But what makes a country a winner in the industrial race? Two levels can be distinguished in that regard: geopolitical power and human development. 5.1 Geopolitical Power How exactly industrial competition will play out geopolitically is up to speculation at this point. It can be said that industrial competition is an important driver of green policies, including renewable energy. It is, however, difficult to identify what makes a given country a winner in a geopolitical sense. An often-referred example is the rivalry between the United States and China. In terms of renewables, the latter seems to have the upper hand and thus the outlook on strengthened global influence (WEF, 2020b, p. 56). If that is the case, and if energy is looked at from a zero-sum perspective, there will also be geopolitical losses. The exact nature of these wins and losses needs to be defined more closely. In that regard, human development plays a surprising role. 5.2 Human Development Renewable energy is directly linked to at least three different layers of the economy: the supply infrastructure, the demand infrastructure, and the social infrastructure (Van de Graaf & Sovacool, 2020, p. 13). The latter includes a wide array of societal matters (ibid., p. 16). Renewable energy is therefore increasingly framed as an important contribution to overall socioeconomic renewal. The core idea is that renewable energy will not only lead to a better environmental profile, but also provide new impulses for industrial change, innovation, and generally the way human society is being organised. Seen from this point of view, renewable

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energy is motivated by a commitment to climate protection and driven by the hope of positive spill-overs such as industry-wide learning and skill development (Rodrik, 2014, p. 470). What characterises a ‘winning’ nation in the renewable energy race can hence not be understood without taking a broad set of human competencies into consideration. The global division of labour may serve as a good indicator in that regard (Szalavetz, 2021). An international approach to industrial policy? Many countries have entered the industrial in pursuit of the economic gains implicit to renewable energy. The hope to increase the overall competitiveness of a given nation is one of the motivations behind the move towards renewable energy. Thereby, renewable energy plays into a new kind of geopolitical power struggles. To make sure that everybody profits most from the possibilities of renewable energy, it seems therefore necessary to develop a multilateral approach to green industrial policy. Such an approach could help to identify trends detrimental to reaching the goals of sustainable development. Moreover, such an approach could help to focus the activities of states on reaching responsible globalisation instead of GDP growth at the cost of others. Finally, regular discussions of green industrial growth could counterbalance a logic that sees increases in economic scale and political power as the most important outcomes of industrial policy. It therefore appears beneficial to consider an international forum for industrial policy as it may open new avenues for mutual learning among countries (Aiginger & Rodrik, 2020).

6. THE FINISH LINE: WHO IS THE WINNER? Over the years, renewable energy has become an important element of industrial policy. This has great implications for global industrial competition. In an optimistic view, the industrial competition could be seen as a factor that is fostering the transformation towards renewable energy worldwide. Technology breakthroughs, new synergies, and complementarities would be the logical result, and with it the diffusion of environmentally friendly energy technologies and advances in societal development. Seen in a more pessimistic light, however, the increasingly competitive dynamic around renewable energy may have detrimental effects. A ‘geopolitics of renewables’ is clearly one of them. If efforts to support renewables serve development in only a few countries, and if green industrial policy feeds into senseless power games between highly industrialised actors, then this development partly misses the point. In view of this second perspective, we therefore conclude with four propositions: • •

•

First, the principal objective of green industrial policy should be sustainable development and wellbeing worldwide, instead of winning and losing in a zero-sum sense. Second, the social and economic benefits of the energy transition should be achievable across the globe; differences in policy mixes and performance of different forms of industrial policy should be transparent and easy to compare; the means to foster industrial development should be equally available to every country. Third, in view of the initial question (‘who is winning the renewable energy race?’), we argue for a renewed evaluation of the differences between developing and advanced economies (technology leaders) and their implications in terms of geopolitics.

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•

Finally, the energy transition should be removed from the sphere of geopolitics in a zerosum sense; instead, the topic should be high on the agenda of existing or newly created international discussion fora.

NOTES 1.

Another example would be India’s investments into solar energy, which provide the country with a basis for running the Solar Alliance. 2. During the Cold War, industrial policy was in many ways equivalent to armaments. Since the early 2000s, industrial policy made a quick return. Now, deindustrialisation means disarmament (Helberg, 2020). 3. Hydropower has been excluded from this analysis. 4. Other sources mention the following numbers: 90% of investments in G20 countries China, the US, and Japan (PEW, 2014, p. 1 and 7); circa 75% investments in OECD countries plus China (IRENA and CPI, 2020, p. 24); and ‘vast majority of clean energy deployment’ in the United States, China, and some Western European countries (Lachapelle et al., 2017, pp. 314–315). 5. For example, in 2020 Siemens Gamesa lost some of its position in global markets for renewables equipment (GWEC, 2021).

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Meckling, J. (2019). Governing renewables: Policy feedback in a global energy transition. Politics and Space C, 37(2), 317–338. Mercure, J.-F., Salas, P., Vercoulen, P., Semieniuk, G., Pollitt, H., Holden, P. B., Vakilifard, N., Chewpreech, U., Edwards, N. R., & Vinuales, J. E. (2021). Reframing incentives for climate policy action. Nature Energy, 6, 1133–1143. METI. (2017). Basic hydrogen strategy determined. Ministry of Economy, Trade and Industry. Retrieved from https://www​.meti​.go​.jp​/english​/press​/2017​/1226​_003​.html (accessed 22 January 2022). METI. (2019). Formulation of a New Strategic Roadmap for Hydrogen and Fuel Cells. Ministry of Economy, Trade and Industry. Retrieved from https://www​.meti​.go​.jp​/english​/press​/2019​/0312​_002​ .html (accessed 22 January 2022). Murray, D. (2017). Exploring green industrial policy in South Africa through the lens of vertically specialized industrialization. Thesis Presented for the Degree of Masters of Philosophy in Energy and Development Studies. University of Cape Town, March 2017. Nahum, D. (2020). Powering Onwards: Australia’s Opportunity to Reinvigorate Manufacturing through Renewable Energy. Canberra, ACT: The Australia Institute Centre for Future Work, May 2020. Retrieved from https://apo​.org​.au​/sites​/default ​/files​/resource​-files​/2020 ​- 05​/apo​-nid303735​.pdf (accessed 31 January 2022). Nakano, J. (2021). Japan’s Hydrogen Industrial Strategy. Commentary, CSIS Center for Strategic & International Studies, 21 October 2021. https://www​.csis​.org​/analysis​/japans​-hydrogen​-industrial​ -strategy (accessed 22 January 2022). Nakhli, M. S., Shahbaz, M., Jebli, M. B., & Wang, S. (2022). Nexus between economic policy uncertainty, renewable & non-renewable energy and carbon emissions: Contextual evidence in carbon neutrality dream of USA. Renewable Energy, 185, 75–85. Oberthür, S., & Dupont, C. (2021). The European Union’s international climate leadership: Towards a grand climate strategy? Journal of European Public Policy, 28(7), 1095–1114. Oermann, N. O., & Wolff, H.-J. (2019). Wirtschaftskriege. Geschichte und Gegenwart. Freiburg im Breisgau: Herder. Overland, I. (2021). Is this Russia’s Kodak moment? Oxford Energy Forum, 126, 45–48. Overland, I., Bazilian, M., Uulu, T. I., Vakulchuk, R., & Westphal, K. (2019). The GeGaLo index: Geopolitical gains and losses after energy transition. Energy Strategy Reviews, 26. https://doi​.org​/10​ .1016​/j​.esr​.2019​.100406 Our world in data. (n.d.a). Wind electricity per capita. Retrieved from https://ourworldindata​.org​/ grapher​/wind​-electricity​-per​-capita (accessed 01 January 2021). Our world in data. (n.d.b). Solar electricity per capita. Retrieved from https://ourworldindata​.org​/grapher​ /solar​-electricity​-per​-capita​?tab​=table (accessed 01 January 2021). Pastukhova, M., & Westphal, K. (2020). Governing the global energy transformation. In M. Hafner & S. Tagliapietra (Eds.), The Geopolitics of the Global Energy Transition. Lecture Notes in Energy, Vol 73. Cham: Springer. https://doi​.org​/10​.1007​/978​-3​- 030​-39066​-2​_15 PEW. (2014). 2013. Who’s Winning the Clean Energy Race? Philadelphia: The PEW Charitable Trust. Retrieved from https://www​.pewtrusts​.org/~​/media ​/Assets​/2014​/04​/01​/cle​nwho​swin​ning​thec​lean​ ener​gyra​ce2013pdf​.pdf (accessed 01 January 2022). REN21. (2022). Renewables 2022. Global Status Report. Retrieved from https://www.ren21.net/ wp-content/uploads/2019/05/GSR2022_Full_Report.pdf (accessed 29 September 2022). Reuters. (2020). Global energy transition already well underway: Kemp. Reuters, September 11, 2020. Retrieved from https://www​.reuters​.com​/article​/us​-global​-energy​-kemp​-idUSKBN2621XD (accessed 19 November 2021). Rodrik, D. (2014). Green industrial policy. Oxford Review of Economic Policy, 30(3), 469–491. Rønne, A. (2016). Opposition to wind farms and the possible responses of the legal system. In L. Barrera-Hernández, B. Barton, L. Godden, A. Lucas, & A. Rønne (Eds.), Sharing the Costs and Benefits of Energy and Resource Activity (pp. 173–191). Oxford: Oxford University Press. https://doi​ .org​/10​.1093​/acprof​:oso​/9780198767954​.001​.0001 Sattich, T., Freeman, D., Scholten, D., & Yan, S. (2021). Renewable energy in EU-China relations: Policy interdependence and its geopolitical implications. Energy Policy, 156, 112456. https://doi​.org​ /10​.1016​/j​.enpol​.2021​.112456 Schmitz, H. (2013). How does the Global Power Shift Affect the Low Carbon Transformation? Brighton: Institute of Development Studies.

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Schmidt, T., & Sewerin, S. (2017). Technology as a driver of climate and energy politics. Nature Energy, 2(6). http://doi​.org​/10​.1038​/nenergy​.2017​.84 Scholten, D. (2018). The Geopolitics of Renewables. Cham: Springer. Sinha, J. (2019). India needs green industries to ensure economic growth. The Economic Times, November 17, 2019. Retrieved from https://economictimes​.indiatimes​.com​/news​/economy​/policy​ /view​-india​-needs​-new​-green​-industries​-to ​- ensure​- economic​-growth ​/articleshow​/ 72099078​.cms​ ?from​=mdr (accessed 22 January 2022). Smith Stegen, K. (2018). Redrawing the geopolitical map: International relations and renewable energies. In D. Scholten (Ed.), The Geopolitics of Renewables (pp. 75–95). Cham: Springer. Statista. (2020a). Investment in clean energy globally in 2019, by select country. Retrieved from https://www​.statista​.com ​/statistics​/799098​/global​-clean​-energy​-investment​-by​-country/ (accessed 30 January 2022). Statista. (2020b). Who is driving investment in renewable energy? Retrieved from https://www​.statista​ .com ​/chart​/22877​/investment​-in​-renewable​- energy​-by​- country​-region/ (accessed 30 January 2022). Statista. (2021). Renewable energy market size worldwide in 2020, with a forecast for 2027. Retrieved from https://www​.statista​.com ​/statistics​/1094309​/renewable​-energy​-market​-size​-global/ (accessed 13 October 2021). Statista. (2022). Cumulative solar photovoltaic capacity in Germany from 2013 to 2019. Retrieved from https://www​.statista​.com ​/statistics​/497448​/connected​-and​-cumulated​-photovoltaic​-capacity​-in​ -germany/ (accessed 22 January 2022). Sweidan, O. D. (2021). The geopolitical risk effect on the US renewable energy deployment. Journal of Cleaner Production, 293, 126189. https://doi​.org​/10​.1016​/j​.jclepro​.2021​.126189 Szalavetz, A. (2021). Green industrial policy and development – Taking advanced economies over. In T. Gerőcs & J. Ricz (Eds.), The Post-Crisis Developmental State. Perspectives from the Global Periphery (pp. 103–124). Cham: Palgrave Macmillan. Taylor, P. J. (2000). Geopolitics, political geography and social science. In K. Dodds & D. Atkinson (Eds.), Geopolitical Traditions. A Century of Geopolitical Thought (pp. 375–379). London: Routledge. Thopil, M. S., Bansal, R. C., Zhang L., & Sharma, G. (2018). A review of grid connected distributed generation using renewable energy sources in South Africa. Energy Strategy Review, 21, 88–97. https://doi​.org​/10​.1016​/j​.esr​.2018​.05​.001 UNEP. (2018). Banking on sunshine: World added far more solar than fossil fuel power generating capacity in 2017. Press release, UN Environment Programme, Frankfurt/Nairobi, 05 April 2018. Retrieved from https://www​.unep​.org​/news​-and​-stories​/press​-release​/ banking​-sunshine​-world​ -added​-far​-more​-solar​-fossil​-fuel​-power (accessed 26 December 2021). Vakulchuk, R., Overland, I., & Scholten, D. (2020). Renewable energy and geopolitics: A review. Renewable and Sustainable Energy Reviews, 122, 109547. https://doi​.org​/10​.1016​/j​.rser​.2019​.109547 Van de Graaf, T. (2013). Fragmentation in global energy governance: Explaining the creation of IRENA. Global Environmental Politics, 13(3), 14–33. Van de Graaf, T. (2021). The next prize: Geopolitical stakes in the green hydrogen race. Global energy governance: meeting the challenge of the energy transition. Oxford Energy Forum, 126, 9–12. Van De Graaf, T., Overland, I., Scholten, D., & Westphal, K. (2020). The new oil? The geopolitics and international governance of hydrogen. Energy Research & Social Science, 70, 101667. https://doi​.org​ /10​.1016​/j​.erss​.2020​.101667 Van de Graaf, T., & Sovacool, B. (2020). Global Energy Politics. Cambridge: Polity Press. Van de Graaf, T., & Bradshaw, M. (2018). Stranded wealth: Rethinking the politics of oil in an age of abundance. International Affairs, 97(6), 1309–1328. Venkataraman, M. B., Csereklyei, Z., Aisbett, E., Rahbari, A., Jotzo, F., Lord, M., & Pye, J. (n.d.). Zero-carbon steel production: The opportunities and role for Australia. Energy Policy (forthcoming). WEF. (n.d.). Competitiveness rankings. Retrieved from http://reports​ .weforum​ .org​ /global​ -competitiveness​-report​-2014 ​-2015​/rankings/​?doing ​_wp​_ cron​=1636547395​.675​0 659​9 426​2 695​ 3125000 (accessed 02 January 2022). WEF. (2020a). Fostering effective energy transition. World Economic Forum. Retrieved from http:// www3​ .weforum ​ .org ​ /docs ​ / WEF​ _ Fostering ​ _ Effective ​ _ Energy​ _Transition ​ _ 2020 ​ _ Edition ​ .pdf (accessed 13 July 2021).

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WEF. (2020b). Shaping a multiconceptual world 2020. Special Report, World Economic Forum, Geneva. Retrieved from https://www3​.weforum​.org​/docs​/ WEF​_ Shaping​_a​_ Multiconceptual​_World​ _2020​.pdf (accessed 01 February 2022). WEF. (2020c). This is how much was invested in clean energy in 2019. World Economic Forum, Geneva. Retrieved from https://www​.weforum​.org​/agenda​/2020​/06​/global​-clean​-energy​-investment​ -research/ (accessed 02 October 2021). WEF. (2021a). Balancing economic growth and the environment: lessons from Brazil. World Economic Forum. Retrieved from https://www​.weforum​.org​/agenda​/2021​/03​/ balancing​-economic​-growth​-with​ -sustainability​-lessons​-from​-brazil/ (accessed 30 January 2022). WEF. (2021b). Fostering effective energy transition. World Economic Forum. Retrieved from http:// www3​.weforum​.org​/docs​/ WEF​_ Fostering​_ Effective​_ Energy​_Transition​_2021​.pdf (accessed 13 July 2021). Westphal, K. (2021). Global energy governance: Meeting the challenge of the energy transition. Oxford Energy Forum, 126, 9–12. Wu, K. J., Huang, Y.-H., & Wu, J.-H. (2021). Economic analysis for renewable electricity development with professional disaggregation: The case of Taiwan. Journal of Cleaner Production, 279, 123346. https://doi​.org​/10​.1016​/j​.jclepro​.2020​.123346 Yelland, C. (2020). South Africa’s energy policies: Are changes finally coming? Éditon Énergie, Ifri, December 16, 2020. Retrieved from https://www​.ifri​.org​/sites​/default​/files​/atoms​/files​/yelland​_south​ _africa​_energy​_policies​_2020​.pdf (accessed 01 February 2022). Yergin, D. (2020). The New Map. Energy, Climate, and the Clash of Nations. New York: Penguin Press. Yergin, D., & Stanislaw, J. (2008). The Commanding Heights. The Battle for the World Economy. New York: Free Press.

10. Barrels, booms, and busts: the future of petrostates in a decarbonizing world Thijs Van de Graaf

1. INTRODUCTION The world is in the midst of a monumental shift, namely a global transition away from fossil fuels and toward more efficiency, more electricity, and more renewables. Just like historical energy transitions, the renewable-led global energy revolution could lead to major shifts in geopolitical power. Countries endowed with sizeable oil and natural gas reserves, in particular, stand to lose a large chunk of their revenues as the energy transition progresses. If these producer countries do not succeed in diversifying their economies in time, falling oil and natural gas revenues could compromise their economic, social, and political stability. This would have significant consequences for world politics. The largest and most wealthy petrostates have come to play an outsized role in world affairs (Ashford, 2022). Many petrostates have translated their oil wealth into geopolitical influence, whether through purchasing weapons, supplying foreign aid, or supporting violent proxies. They have become a key linchpin of global economic growth and financial stability. Petrostates have also been at the heart of some of the most notorious and bloody conflicts in recent decades.

2. THE CHALLENGES FACING PETROSTATES 2.1 Defining Petrostates The term “petrostate” has become shorthand to discuss the political and economic issues facing major oil-producing countries. A petrostate is not defined by the presence of an oil and gas industry, but rather by the extent to which the government relies on oil and gas rents. This differentiates countries like Saudi Arabia or Nigeria, where the state’s revenues are mainly derived from oil wealth, from countries like Canada, Norway, and the United States, which are also major oil producers but have well-diversified economies and a broad tax base. The term “petrostate” has a negative connotation and therefore alternative terms are sometimes used. The International Energy Authority (IEA), for instance, uses the more neutral label of “producer economies” (IEA, 2018). The World Bank prefers the term “fossil-fuel dependent countries” (Peszko et al., 2020), while the International Monetary Fund uses the categories of “resource-rich” or “resource-dependent” countries. There are various indicators to measure such resource dependence. The classical approaches are to look at whether a country derives a large share of its GDP, export receipts, or government revenues from natural resource wealth. Some definitions build on a combination of those indicators. The IEA, for example, defines “producer economies” as countries where (1) oil and natural gas exports make up at least a third of the total exports of goods and (2) revenues 183

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from oil and natural gas make up at least a third of total fiscal revenue (IEA, 2018). This definition covers Angola, Azerbaijan, Iran, Iraq, Kuwait, Nigeria, Oman, Russia, Saudi Arabia, Turkmenistan, United Arab Emirates, and Venezuela. Others define petrostates as countries in which oil rents exceed 10% of gross domestic product (GDP) (Colgan, 2013). Oil rents are the difference between the value of crude oil production at world prices and the total cost of production (World Bank, 2022). They are not the same as government revenue from oil sales, because rents are typically divided between what the government gets and what companies get (Cust & Ballesteros, 2021). Almost all definitions of petrostates focus exclusively on oil-producing countries, only a few incorporate natural gas producers, and virtually none take into account coal producers (Åhman, 2021). The primary reason is that oil rents far exceed natural gas and coal rents. This is evident in Figure 10.1, which shows the top 25 countries in terms of the share of fossil fuel rents in their GDP in 2018. In most countries, oil rents dominate, yet there is also a handful of countries where natural gas rents exceed oil rents (and this does not take into account the extraordinary rise in natural gas prices in many parts of the world in late 2021 and continuing in 2022). There was only one country in 2018 where coal rents were dominant (Mongolia). Taking into account all fossil fuel rents, petrostates can be found across the entire world, from Iraq and Libya in the Middle East and North Africa (MENA) to Equatorial Guinea in sub-Saharan Africa, Azerbaijan in Central Asia, and Trinidad and Tobago in Latin America and the Caribbean. Note that this list does not include some of the world’s biggest oil and gas producers, including Australia, Canada, China, the United States, and Norway, because

Source:   World Bank, World Development Indicators.

Figure 10.1  Countries with the highest dependence on fossil fuel rents

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(as explained above) they have more diversified economies. These countries thus face lower energy transition risks. The combination of high oil rents and high oil income per capita typically marks the situation of a “rentier state”: a state where the government relies heavily on external, nontax revenues from the export of natural resources, especially oil and gas (Mahdavy, 1970; Beblawi & Luciani, 1987; Anderson, 1987). Rentier states have an implicit social contract in which rulers tend to use their oil revenues to “buy off” support from the population. Democratic input from society is thus sacrificed in exchange for a share of the extractive wealth accrued through foreign sales of crude. Those who do not accept this so-called “rentier bargain” are confronted with the strong repressive apparatus affordable to the rentier state (Gray, 2011; Ross, 2012). The reliance on oil wealth thus gives these states a large degree of autonomy vis-à-vis their citizenry, and it is often associated with incoherent economic policies, the entrenchment of crony capitalists and military elites, and the decline of agriculture and industry through a process known as the “Dutch disease” (Gelb, 1988; Morrison, 2009; Ostrowski, 2013). 2.2 Emerging Transition Risks for Petrostates The global energy transition is often talked about in the future tense, as something that might or will happen in the next few decades. In reality, the transition is already well underway and even shows signs of accelerating. Over the last decade (2011–2021), renewables demand grew at a compound annual rate of 12.6% while fossil gas demand increased at a rate of 2.2%, both much faster than total energy consumption growth of 1.3%. By contrast, oil consumption grew more slowly than consumption as a whole (+0.6%) and coal consumption stagnated (+0.1%) (BP, 2022a). Renewable energy was once referred to as “alternative” energy, too expensive to expand beyond niche markets. Today, that perception has fundamentally changed. As oil company BP noted even before the COVID-19 pandemic, “renewables are penetrating the global energy system more quickly than any fuel ever seen in history” (BP, 2019). This is so across all of its scenarios. In its Rapid Transition Scenario, which is largely aligned with the 2°C goal of the Paris Agreement, the growth of renewables would be “literally off-the-charts relative to anything seen in history” (BP, 2019). The COVID-19 crisis seemed at first instance to accelerate these trends as renewables were the only energy source for which demand increased in 2020 despite the pandemic. Yet, global energy demand (and, with it, global CO2 emissions) quickly rebounded in 2021, muting hopes that the pandemic would be a systemic shock that would definitively set the world on track for a more sustainable energy future. Russia’s invasion of Ukraine in February 2022 and the accompanying global energy crunch are once again infusing massive uncertainty into the energy markets. This huge uncertainty translates into widely diverging projections for future oil demand. Figure 10.2 shows a number of scenarios from BP and the IEA. The gap between the most divergent 2050 projections is 57 million barrels per day (mb/d), more than half of the size of the current oil market. Despite the divergences, however, the consensus is that global oil consumption will peak within the next 20 years. Moreover, all scenarios that are compatible with the Paris climate goals of limiting average global warming to 1.5–2°C project an imminent peak and rapid decline in oil consumption. Given the fast depletion of the world’s carbon budget,

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Source:   historical data based on BP (2022a). Future projections based on BP (2022b) and IEA (2021).

Figure 10.2  Contrasting projections of future oil demand meeting the Paris climate goals inevitably means that a large chunk of fossil fuel reserves would need to stay in the ground. It has been estimated that developed oil and gas fields—that is, extraction projects that have received a final investment decision—exhaust more than fourfifths of the 1.5°C carbon budget. In other words, some developed oil and gas reserves, alongside coal reserves, would need to stay in the ground (Trout et al., 2022). For many producer countries, this would imply a permanent loss of value of their underground wealth.

3. IMPACT ON PETROSTATE STABILITY AND FOREIGN POLICY 3.1 Which Producer Countries Are Most at Risk? Not all producer countries will be equally affected by the energy transition. There are various ways to measure the relative fragility of fossil fuel-producing countries (Manley et al., 2017; Vandyck et al., 2018; Peszko, 2020; UNEP, 2020; Carbon Tracker Initiative, 2021; LockhartSmith & Wolf, 2021). Figure 10.3 shows a crude but nifty framework based on two dimensions (Global Commission on the Geopolitics of Energy Transformation, 2019). The first dimension, “exposure” (Y-axis), captures the degree to which countries rely on rents from fossil fuels. The second dimension, “resilience” (X-axis), measures income in relation to the population as a proxy for how robustly an economy can respond to the risks posed by the energy transition. By this measure, there are basically four groups of oil producers: •

Highly exposed and low resilience countries (upper left quadrant): here you can find countries like Iraq, Libya, Venezuela, and Nigeria, which are already suffering from conflict and social unrest. These countries are highly dependent on fossil fuel rents (typically for more than 20% of their GDP), but they lack resilience due to their low per capita GDP and general lack of financial buffers. These countries are most at risk.

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Note:    Qatar is not depicted due to its very high per capita GDP. Source:   IMF, World Economic Outlook Database, April 2018, and World Bank, World Development Indicators.

Figure 10.3  Exposure and resilience of petrostates to transition risks •

•

•

Moderately exposed, moderately resilient countries (lower left quadrant): this group comprises countries like Iran, Russia, Algeria, and Azerbaijan. These countries are quite exposed, but their economies are moderately resilient. They should be able to manage the transition if they implement the right policies. Highly exposed, highly resilient countries (upper right quadrant): Countries like Kuwait, the United Arab Emirates, and Saudi Arabia are somewhat more resilient, but they are still highly exposed to the energy transition. The key challenge for them is that, as oil revenues decline, the social contract upon which these societies are built, begins to unravel. Relatively low exposure countries (lower right quadrant): In these countries, fossil fuel rents comprise less than 10% of GDP, so their economies are already somewhat diversified. This group includes Malaysia, Bahrain, Colombia, and Norway.

3.2 Factors Mitigating Carbon Risk to Petrostates In reality, there are many other factors that will determine the vulnerability of oil producer countries to shrinking oil demand and falling oil rents. They include (1) fiscal buffers; (2) the size and characteristics of fossil fuel reserves; (3) governance capacity; and (4) demographic trends.

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First, countries have different fiscal buffers. When oil prices go down, each petrostate is hit differently. That is not just a consequence of the different lifting costs—that is, the cost of extracting a barrel of oil, but also varying fiscal break-even prices—that is, the oil price they need to balance the budget. The latter is often referred to as the “social cost” of production (Dale & Fattouh, 2018; Goldthau & Westphal, 2019). Another way to estimate the required revenues for a producer country is to look at external break-even prices—that is, the oil price they need to pay for their imports. If oil prices are too low to cover their imports, they have limited choice but to draw down foreign exchange reserves (if they have those) like Saudi Arabia has done since 2014 or devalue their currency like Iraq and Nigeria in 2020, effectively rebalancing their exports and imports at the expense of living standards (Lockhart-Smith & Wolf, 2021). Some countries have set up strong sovereign wealth funds (SWFs) that can help to invest in new economic sectors, while others have substantial net sovereign external liability positions (Fitch, 2021). Second, countries have different volumes and types of untapped fossil fuel reserves. Countries with high oil, gas, and coal reserves relative to current production have cumulatively more to lose and are faced with a higher risk of stranded assets (Fitch, 2021). Oil companies could face stranded assets, but they might be able to shift capital around more quickly than producer countries. Producer countries could be left with large amounts of stranded reserves. Most fossil fuel-rich developing countries (middle to low-income countries) will take at least 45 years to liquidate their fossil fuel wealth unless they can increase production rates (see Figure 10.4). Developing countries such as Ghana, Tanzania, Guyana, and Mozambique that have recently discovered and developed new fossil fuel reserves are particularly at risk of asset stranding (Bradley et al., 2018). Conversely, countries with lower levels of reserves and/ or higher production capacity may be able to monetize their oil and gas in the ground before demand recedes. Moreover, it is not just the size of reserves that differs, but also the emissions intensity of oil production. Two of the most significant differentiating factors here are the extent of gas flaring and fugitive methane emissions (IEA, 2018). One could expect the oil fields with the lowest

Note:   Venezuela’s high R/P ratio (>1500 years) is cut off since Y-axis is limited to 500 years. Source:   BP (2022a).

Figure 10.4  Oil reserves-to-production rates for selected countries.

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emissions intensity to keep on producing the longest in an energy transition (Johnston, 2021). Countries like Saudi Arabia and the United Arab Emirates appear far better positioned here than, for instance, Venezuela with its extra-heavy oil, which must undergo a more complex refining process. Third, countries have different economic diversification capacities. Countries with strong governance and business climates are more likely to succeed, while those which suffer from political instability, corruption, low levels of labor productivity (because of high state employment), and a general lack of infrastructure and human capital may not be able to reform their way out of trouble (Tagliapietra, 2019; Lockhart-Smith & Wolf, 2021). Fourth, countries face different demographic changes. Preserving wealth per capita during the energy transition is by definition easier for large producers with small populations like Qatar, Kuwait, and the United Arab Emirates. However, in Nigeria (+140 million increase in population anticipated by 2040), Iraq (+28 million), and Saudi Arabia (+10 million), per capita oil income could be substantially reduced as a result of demographic change (IEA, 2018). Some of these countries already face high levels of youth unemployment, which was one of the drivers behind the Arab Spring uprisings. The extremely unbalanced labor markets in the Gulf monarchies pose another profound challenge at economic reform. The vast majority of the private sector labor force in the countries of the Gulf Cooperation Council (GCC) is composed of foreign workers, and in four of the six GCC countries, foreign residents outnumber citizens in the population as a whole (Herb & Lynch, 2019). Any attempt to diversify the economy will have to address these imbalances. 3.3 Feast before the Famine? While this chapter has so far painted a bleak picture of the fate of petrostates in rapid energy transition scenarios, there is an argument to be made that the energy transition will not mean the end of the petrostate (Goldthau & Westphal, 2019). Indeed, research has highlighted that most petrostates were able to maintain their levels of political stability even during prolonged oil busts, like the one that followed the 2014 oil price crash (Meierding, 2022). Some analysts go even further and argue that some petrostates such as Saudi Arabia will only grow stronger as the energy transition progresses and could have a veritable “feast before the famine” (Bordoff, 2020; O’Sullivan & Bordoff, 2022). Yet, some of the underlying premises and assumptions seem debatable. The first argument is that oil and gas demand is not going to dissipate overnight, and lowcost producers might increase their market share. Indeed, if oil demand peaks and follows a pathway consistent with the 1.5°C temperature goal, supplies will most likely be concentrated in a small number of lowest-cost, lowest-emission producers. In the IEA’s Net Zero Scenario, for instance, OPEC’s market share grows from around 37% in recent years to 52% in 2050, a level higher than at any point in the history of oil markets (IEA, 2021). OPEC and its partners will make up a growing share of a shrinking pie, giving them outsize influence. The key point here is that the pie may shrink faster than their share grows. The IEA’s Net Zero by 2050 report notes: “Some countries with the lowest cost oil resources (including OPEC members), gain market share in these circumstances, but even they would see large falls in revenues”, given the general downward long-term pressure on oil prices (IEA, 2021). A huge drop in long-term oil income would be particularly hurtful for petrostates where oil and gas sales often cover a large share of public spending on education, healthcare, and other public services.

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The second argument goes like this: the clean energy transition will cause more price volatility, and this will strengthen the geopolitical hand of petrostates. In reality, volatility has been a permanent fixture of fossil fuel markets (McNally, 2017). If anything, renewables bring more fuel diversity to the energy system and lower price volatility (Bordoff, 2021). Moreover, price volatility is not a boon for petrostates. It is a potential source of instability. When oil prices tanked in 2016, Saudi Arabia introduced a value-added tax (VAT) of 5%, later raised to 15%, and floated shares in Aramco, the country’s crown jewel. These moves are politically sensitive and not exactly evidence of increased geopolitical clout. The third argument is that oil and gas production is shifting away from private international oil companies (Shell, BP, etc.) to national oil companies (NOCs) such as Saudi Aramco, Rosneft, ADNOC, etc. which, as a result, will be able to flex their muscles more. It is true that the socalled majors — the global producers such as Shell, Chevron, Exxon, BP, and Total — produce only 15% of the world’s oil and gas (O’Sullivan & Bordoff, 2022). However, this does not mean that NOCs control 85% of production. NOCs control just over half of the production (IEA, 2020). Attention often focuses on the majors, but independents also play a key role. Moreover, there is a huge diversity among NOCs. In a net-zero scenario, NOCs will not just be winners, but also face huge risks from the energy transition (Manley & Heller, 2021). It is also important to point out that, even as petrostates may survive and thrive in some periods of the energy transition, many of them are extremely vulnerable to the physical effects of climate change, particularly producers in the MENA region. Rising temperatures would, among other things, exacerbate water shortages in a region which is already designated as the most water-stressed in the world (Hofste et  al., 2019). Climate change could also lead to desertification and sea level rise affecting vast low coastal lands (IPCC, 2018). Under a business-as-usual scenario, continued high rates of greenhouse gas emissions would create intolerable heat and humidity combinations within the current century (Pal & Eltahir, 2016). Oil-export-focused economies and political systems must therefore “carefully weigh the costs of decarbonization against the costs of climate damage” (Krane, 2020).

4. PETROSTATE TOOLKIT What strategies can petrostates employ to reap the benefits and mitigate the drawbacks of the energy transition? Generally speaking, fossil fuel producers have four basic strategies (see Table 10.1), two relating to their extraction policies and two relating to their economic diversification policies. The repertoire of responses is even larger if one takes into account attempts to seek international compensation for foregone oil revenues (Van de Graaf & Verbruggen, 2015) or measures to contain popular uprisings and opposition (Meierding, 2022). 4.1 Race to Sell Oil In response to the threat of peak oil demand, producer countries could battle it out, fight for market share, and try to sell as much of their oil now before demand declines as a result of a switch to cleaner energy sources. This is a strategy that low-cost producers like Saudi Arabia might be tempted to pursue. In fact, in March 2020, the Saudi Ministry of Energy instructed Saudi Aramco to increase its production capacity from 12 to 13 mb/d (Saudi Aramco, 2020). Saudi Aramco’s April 2019 bond prospectus, released ahead of its initial public offering, reads

Barrels, booms, and busts  191

Table 10.1  Potential strategic responses of producer countries to peak oil demand Extraction policies

Diversification policies

Race to sell oil

Restrain production

Hedging

Adapting

Expand resource extraction quickly, go for fast depletion, to monetize existing reserves and assets before they lose value.

Curb oil output to sustain higher prices and revenues. Can be achieved via cooperation (OPEC+) or coercion (sanctions, interventions, attacks).

Preserve the existing business model through incremental reforms, such as “diversifying” to other parts of the fossil fuel supply chain.

Producer countries diversify and grow the non-oil sectors of their economies.

like a strategy to be the “last man standing” in the oil market (Krane, 2021). Similarly, the United Arab Emirates’ Abu Dhabi National Oil Company (ADNOC) had plans to increase its production capacity to 5 mb/d, up from 3.1 mb/d in October 2018 (Kerr, 2018). The idea here is that climate policy and the anticipated depreciation of reserves undermines incentives to leave oil in the ground, instead provoking a “panic and pump” strategy to monetize as much of those reserves before the window closes. It is also built on a belief that oil will remain indispensable for some time to come, and that NOCs may be at an advantage compared to international oil companies, which face mounting pressure from shareholders, courts, and public opinion. However, by rushing to develop reserves and make the most out of what could be the last oil boom, price wars may erupt between oil exporters, thus depressing prices and revenues for all. It could lead to “green paradox” effects, whereby lower oil prices slow down the energy transition itself (Sinn, 2012). Moreover, rapacious oil extraction is a short-term strategy which does not improve long-term prospects for growth (van der Ploeg, 2016). 4.2 Restrain Production Another strategy for producer countries is to restrain production in order to sustain oil prices and revenues. Restraining production can happen in a cooperative manner. This is the approach taken by OPEC+, a group of more than 20 oil producers led by Russia and Saudi Arabia that has jointly implemented production cuts since 2016. Such cooperation is difficult to sustain, however, and individual producers will always be tempted to free ride and cheat on their quotas (Colgan, 2014; Van de Graaf, 2017; Claes, 2001). This was most vividly illustrated in March 2020 when a price war erupted between Russia and Saudi Arabia, the two informal leaders of the OPEC+ grouping (Yergin, 2020). Together with the devastating impact of COVID-19 on the demand for oil, this led oil prices to nosedive. Future WTI prices even went negative for a short moment in late April 2020. Restraining production could also happen in a less cooperative manner (Verbruggen & Van de Graaf, 2013). The United States, for example, is not part of the OPEC+ coalition but it has helped to restrain global production in recent years through its oil sanctions against Russia, Iran, and Venezuela. While the primary motive of the oil sanctions in each of these cases has to do with geopolitical rivalry, the ancillary benefit is that it keeps rival oil in the ground, which is beneficial to the US oil industry and the oil interests of its allies such as Saudi Arabia and the United Arab Emirates.

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4.3 Hedging Strategies Another set of responses involves efforts to preserve the business model centered on oil and gas. Petrostates can invest in the downstream segment of the fossil fuel value chain, and particularly in the refining and petrochemical industries. This is the approach followed by Saudi Arabia and some other Arab oil producers, which have set up special purpose industrial parks to move into petrochemicals and even manufactured goods (Åhman, 2021). They could also move to curb wasteful oil consumption on the demand side, through pricing reforms (i.e., phasing out fossil fuel subsidies), fuel switching (e.g., to renewables, gas, or nuclear), and efficiency measures (Fattouh & Sen, 2021). These measures could reduce the pressure on government budgets and free up oil for exports. On the production side, the emissions of oil and gas extraction can be brought down through carbon capture, utilization, and storage (CCUS), enhanced oil recovery (EOR) techniques, the reduction of flaring and methane leakages, and direct air capture (DAC). These technologies are underpinning the Saudi strategic goal of realizing a “circular carbon economy”, a concept that was endorsed at a G20 energy ministerial in September 2020. A lot of oil exporters are also looking into setting up hydrogen export capacity to take advantage of what is thought to become a lucrative market (Van de Graaf et al., 2020). While they could perhaps one day pivot to green hydrogen, made from renewables, many of them are exploring the pathway of blue hydrogen, made from natural gas but combined with CCUS. 4.4 Economic Diversification The above-mentioned hedging strategies fall well short a full-fledged diversification of the whole economy, which is arguably the only viable long-term strategy available to oil exporters. Economic diversification entails growing the non-oil sectors of the economy. Saudi Arabia and the rest of the Gulf producers have realized the threat and adopted national diversification strategies, while other petrostates such as Russia, Nigeria, Libya, Iraq, and Venezuela have so far not developed any comprehensive strategies (Bradshaw et al., 2019; Peszko, 2020). The trouble here is that many diversification plans are being announced, but only a few producers have successfully diversified (Ross, 2017). Countries with large fossil fuel reserves have developed economies that are more carbon-intensive—a phenomenon that Inderwildi and Friedrichs described as the “carbon curse” (Friedrichs & Inderwildi, 2013). This makes the task of adapting to a low-carbon future more arduous and exposes these countries to greater carbon market risk. Unlocking a post-oil development path requires much more than creating new industrial growth sectors. It requires a broader reconfiguring of the state, and its interactions with the economy and with society at large. The political economy of the rentier state is often well entrenched in producer economies. It means that the state’s primary function is to capture and redistribute rents. The legitimacy of the regime and even the regime’s survival hinge on its capacity to redistribute rents to a broader constituency. This creates a wide-spanning coalition of vested interests, which includes the broader state bureaucracy, the NOC, and even society at large. Overturning the rentier nature of the state thus unleashes pressure to overturn the authoritarian, patrimonial and/or clientelistic regimes (Yamada, 2020).

Barrels, booms, and busts  193

5. DISCUSSION AND CONCLUSION The energy transition is in full swing. Renewables are penetrating the global energy system faster than any fuel ever seen in history. Even if global fossil fuel demand has rebounded sharply in the wake of the pandemic, Russia’s war in Ukraine has given a new strategic urgency and resolve in Europe and elsewhere to move away from fossil fuels. The key question is no longer whether the world is moving away from fossil fuels and towards renewables but whether it will do so fast enough to ward off the worst effects of climate change. Except for 2020, when the pandemic struck, global CO2 emissions keep on rising and the effects are on full display in the proliferating heatwaves, forest fires, and floods. Due to years of inaction, it is no longer possible to talk about an “orderly” transition to a climate-safe future. The rate at which emissions should come down in the coming years and decades has become so high that it will cause disruption among established markets and industries. Petrostates are caught in the crossfire but, as this chapter has demonstrated, they are impacted in different ways. Producer economies with large and dirty fossil fuel reserves, small fiscal buffers, weak governance capacity, and rapid demographic change will be hit the hardest. Other petrostates may survive, or even thrive, during much of the energy transition, but it is clear that for them too, the golden age of the petroleum business has passed. As soon as global oil demand peaks, the entire sector becomes an ex-growth industry with more risk tied to new investments and more uncertainty over future demand. However, petrostates have different strategies at their disposal to shape their fate during the energy revolution. They could close or open the taps to influence the oil price (and their revenues), they could hedge their bets by going for fossil fuel-compatible climate solutions like carbon capture storage or blue hydrogen, or they could pivot away from fossil fuels altogether by implementing comprehensive economic diversification policies. The world is currently experiencing a complex “polycrisis” consisting of climate change, the energy transition, geopolitical shifts, health shocks, etc. Each of these shocks poses challenges to petrostates, but their combination is creating an entirely new context for fossil fuel producer countries. This opens up new research questions and calls for a more integrated research approach that spans across the disciplinary boundaries of area studies, political economy, geopolitics, and other research strands.

REFERENCES Åhman, M. (2021). When Gold Turns to Sand: A Review of the Challenges for Fossil Fuel Rich States Posed by Climate Policy (No. 124). Miljö-och energisystem, LTH, Lunds Universitet. Anderson, L. (1987). The state in the Middle East and North Africa. Comparative Politics, 20(1), 1–18. Ashford, E. (2022). Oil, the State, and War: The Foreign Policies of Petrostates. Georgetown University Press. Beblawi, H., & Luciani, G. (Eds.). (1987). The Rentier State. Beckenham: Croom-Helm. Bordoff, J. (2020, October 6). Everything you think about the geopolitics of climate change is wrong. Foreign Policy. Bordoff, J. (2021, September 24). Why this energy crisis is different. Foreign Policy. BP. (2019). Energy outlook 2019 edition. https://www​.bp​.com​/content​/dam​/ bp​/ business​-sites​/en​/global​/ corporate​/pdfs​/energy​-economics​/energy​-outlook ​/ bp​-energy​-outlook​-2019​.pdf BP. (2022a). Statistical review of world energy, June 2022. https://www​.bp​.com​/en​/global​/corporate​/ energy​-economics​/statistical​-review​-of​-world​-energy​.html

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BP. (2022b). Energy outlook 2022 edition. https://www​.bp​.com​/content​/dam​/ bp​/ business​-sites​/en​/ global​/corporate​/pdfs​/energy​-economics​/energy​-outlook ​/ bp​-energy​-outlook​-2022​.pdf Bradley, S., Lahn, G., & Pye, S. (2018). Carbon Risk and Resilience. London: Chatham House. Bradshaw, M., Van de Graaf, T., & Connolly, R. (2019). Preparing for the new oil order? Saudi Arabia and Russia. Energy Strategy Reviews, 26, 100374. Carbon Tracker Initiative. (2021). Beyond petrostates: The burning need to cut oil dependence in the energy transition. Accessed October 8, 2021 at https://carbontracker​.org​/reports​/petrostates​-energy​transition​-report/. Claes, D. H. (2001). The Politics of Oil-Producer Cooperation. London: Routledge. Colgan, J. D. (2013). Petro-Aggression: When Oil Causes War. Cambridge University Press. Colgan, J. D. (2014). The emperor has no clothes: The limits of OPEC in the global oil market. International Organization, 68(3), 599–632. Cust, J., & Ballesteros, A. R. (2021). The nonrenewable wealth of nations. In The Changing Wealth of Nations 2021: Managing Assets for the Future. Washington, DC: World Bank. Dale, S., & Fattouh, B. (2018). Peak oil demand and long-run oil prices. Energy Insight, 25, 1–11. Fattouh, B., & Sen, A. (2021). Economic diversification in Arab oil-exporting countries in the context of peak oil and the energy transition. In G. Luciani & T. Moerenhout (Eds.), When Can Oil Economies Be Deemed Sustainable? (pp. 73–97). Singapore: Springer Singapore (The Political Economy of the Middle East). Fitch. (2021). Climate change “stranded assets” are a long-term risk for some sovereigns. https://cdn​ .roxhillmedia​.com ​/production ​/email ​/attachment ​/840001850000​/d0e​94bc​4 041​1fc9​1bef​18c8​462d​ 8e47​4d367f31f​.pdf (accessed October 8, 2021). Friedrichs, J., & Inderwildi, O. R. (2013). The carbon curse: Are fuel rich countries doomed to high CO2 intensities? Energy Policy, 62, 1356–1365. Gelb, A. (1988). Oil Windfalls: Blessing or Curse? New York: Oxford University Press. Global Commission on the Geopolitics of Energy Transformation. (2019). A new world: The geopolitics of the energy transformation. International Renewable Energy Agency. http://geo​poli​tics​ofre​ newables​.org ​/assets​/geopolitics​/ Reports​/wp ​- content ​/uploads​/2019​/01​/Global ​_ com ​m iss​ionr​enew​ able​ener​gy2019​.pdf (accessed October 26, 2021). Goldthau, A., & Westphal, K. (2019). Why the global energy transition does not mean the end of the petrostate. Global Policy, 10(2), 279–283. Gray, M. (2011). A theory of ‘late rentierism’ in the Arab states of the Gulf. CIRS Occasional Paper, (7). Herb, M., & Lynch, M. (2019). The politics of rentier states in the Gulf. https://pomeps​.org​/wp​-content​ /uploads​/2019​/02​/ POMEPSStudies33​.pdf (accessed October 26, 2021). Hofste, R. W., Reig, P., & Schleifer, L. (2019, August 6). 17 countries, home to one-quarter of the world’s population, face extremely high water stress. https://www​.wri​.org​/insights​/17​-countries​-home​-one​ -quarter​-worlds​-population​-face​-extremely​-high​-water​-stress (accessed July 5, 2021). IEA. (2018). Outlook for Producer Economies – What do Changing Energy Dynamics Mean for Major Oil and Gas Exporters? IEA/OECD Cedex Paris. IEA. (2020). The Oil and Gas Industry in Energy Transitions. Paris: OECD/IEA. IEA. (2021). Net Zero by 2050: A Roadmap for the Global Energy Sector. Paris: OECD/IEA. IEA. (2022). World Energy Investment 2022. Paris: OECD/IEA. IPCC. (2018). Global warming of 1.5°C. https://www​.ipcc​.ch​/sr15/ (accessed October 26, 2021). Johnston, R. J. (2021). Shifting gears: Geopolitics of the global energy transition. Atlantic Council. https://www​.atlanticcouncil​.org ​/in​-depth​-research​-reports​/report ​/shifting​-gears​-geopolitics​-of​-the​ -global​-energy​-transition/ (accessed October 26, 2021). Kerr, S. (2018, November 4). Adnoc plans to boost oil production to 5m b/d by 2030. Financial Times. https://www​.ft​.com​/content​/a12ecad4​-e048​-11e8​-8e70​-5e22a430c1ad (accessed July 5, 2021). Krane, J. (2020). Climate action versus inaction: Balancing the costs for Gulf energy exporters. British Journal of Middle Eastern Studies, 47(1), 117–135. Krane, J. (2021). The bottom of the barrel: Saudi Aramco and global climate action. Rice University’s Baker Institute for Public Policy, Working Paper. https://www​.bakerinstitute​.org​/media​/files​/files​ /4920158a​/ces​-wp​-saudiaramco​- 010821​.pdf (accessed October 26, 2021). Lockhart-Smith, J., & Wolf, F. (2021). Energy transition a political risk nightmare for least competitive oil producers. Verisk Maplecroft. https://www​.maplecroft​.com​/insights​/analysis​/energy​-transition​-a​ -political​-risk​-nightmare​-for​-least​-competitive​-oil​-producers (accessed July 5, 2021).

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Mahdavy, H. (1970). The pattern and problems of economic development in rentier states: The case of Iran. In M. A. Cook (Ed.), Studies in the Economic History of the Middle East (pp. 129–135). Oxford: Oxford University Press. Manley, D., Cust, J., & Cecchinato, G. (2017). Stranded nations? The climate policy implications for fossil fuel-rich developing countries. OxCarre Policy Paper 34, Oxford: Oxford Centre for the Analysis of Resource Rich Economies. Manley, D., & Heller, P. R. (2021). National oil companies in the energy transition. Natural Resource Governance Institute. McNally, R. (2017). Crude Volatility: The History and the Future of Boom-Bust Oil Prices. Columbia University Press. Meierding, E. (2022). Over a barrel? Oil busts and petrostate stability. Comparative Politics. https://doi​ .org​/10​.5129​/001​0415​22X1​6337​326788795 Mercure, J. F., Salas, P., Vercoulen, P., Semieniuk, G., Lam, A., Pollitt, H., ... Vinuales, J. E. (2021). Reframing incentives for climate policy action. Nature Energy, 6(12), 1133–1143. Morrison, K. M. (2009). What can we learn about the management of natural resources from the management of foreign aid?. Prepared for workshop on “Poorly Governed Resource Dependent States” March 13, 2009 Center on Democracy, Development, and the Rule of Law Stanford University. Ostrowski, W. (2013). The political economy of global resources. In Dannreuther, R., & Ostrowski, W. (Eds.), Global Resources (pp. 98–115). London: Palgrave Macmillan. O’Sullivan, M., & Bordoff, J. (2022, January 27). Russia isn’t a dead petrostate, and Putin isn’t going anywhere. New York Times. Pal, J. S., & Eltahir, E. A. B. (2016). Future temperature in southwest Asia projected to exceed a threshold for human adaptability. Nature Climate Change, 6(2), 197–200. Peszko, G., Van Der Mensbrugghe, D., Golub, A., Ward, J., Marijs, C., Schopp, A., Rogers, J., & Midgley, A. (2020). Diversification and Cooperation in a Decarbonizing World: Climate Strategies for Fossil Fuel-dependent Countries. World Bank Publications. Peszko, G. (2020). Diversification and cooperation in a decarbonizing world. Diversification and Cooperation in a Decarbonizing World: Climate Strategies for Fossil Fuel-Dependent Countries. Climate Change and Development, Washington, DC: World Bank. https:// openk​​nowle​​dge​.w​​orldb​​ ank​.o​​rg​/ ha​​ndle/​​10​986​​/3401​1 (accessed October 26, 2021). Ross, M. L. (2012). The Oil Curse. Princeton: Princeton University Press. Ross, M. L. (2017). What do we know about economic diversification in oil-producing countries? SSRN Electronic Journal. https://doi​.org​/10​.2139​/ssrn​.3048585 Saudi Aramco. (2020). Press release: Ministry of Energy directed Saudi Aramco to raise maximum capacity. https://www​.aramco​.com ​/en ​/news​-media ​/news​/2020​/aramco​-to​-raise​-maximum​-capacity (assessed July 5, 2021). Sinn, H. W. (2012). The Green Paradox: A Supply-Side Approach to Global Warming. Cambridge, MA: MIT Press. Tagliapietra, S. (2019). The impact of the global energy transition on MENA oil and gas producers. Energy Strategy Reviews, 26, 100397. Trout, K., Muttitt, G., Lafleur, D., Van de Graaf, T., Mendelevitch, R., Mei, L., & Meinshausen, M. (2022). Existing fossil fuel extraction would warm the world beyond 1.5° C. Environmental Research Letters, 17(6), 064010. UNEP. (2020). Production gap report. https:// www .unep .org/ resources/report/ production -gap -2020 (accessed October 26, 2021). Van de Graaf, T., & Verbruggen, A. (2015). The oil endgame: strategies of oil exporters in a carbonconstrained world. Environmental Science and Policy, 54, 456–462. Van de Graaf, T. (2017). Is OPEC dead? Oil exporters, the Paris agreement and the transition to a postcarbon world. Energy Research and Social Science, 23, 182–188. Van de Graaf, T., et al. (2020). The new oil? The geopolitics and international governance of hydrogen. Energy Research and Social Science, 70, 101667. van der Ploeg, F. (2016). Fossil fuel producers under threat. Oxford Review of Economic Policy, 32(2), 206–222. Vandyck, T., et  al. (2018). Economic exposure to oil price shocks and the fragility of oil-exporting countries. Energies, 11(4), 827.

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Verbruggen, A., & Van de Graaf, T. (2013). Peak oil supply or oil not for sale?. Futures, 53, 74–85. World Bank. (2022). Glossary databank. https://databank​.worldbank​.org​/metadataglossary​/adjusted​-net​savings​/series​/ NY​.GDP​.PETR​.RT​.ZS Yamada, M. (2020). Can a rentier state evolve to a production state? An “institutional upgrading” approach. British Journal of Middle Eastern Studies, 47(1), 24–41. Yergin, D. (2020). The oil collapse. May 4. https://www​.foreignaffairs​.com​/articles​/2020​- 04​- 02​/oil​collapse (accessed July 5, 2021).

11. Critical materials – new dependencies and resource curse? Emmanuel Hache, Gondia Sokhna Seck, Fernanda Guedes, and Charlène Barnet

1. INTRODUCTION Decarbonization of the energy mix and the various sectors (transport, residential, etc.) of the global economy have become the priorities of governments to meet national or international climate targets. In this context, investments in renewables have been favored as they can achieve a double dividend, the decrease of greenhouse gas (GHG) emissions and the reduction of fossil fuel dependency. Investments in renewables reached around US$3,300 billion between 2010 and 2021 (BNEF, 2022). In 2021, investments in renewables and transitionrelated technologies1 reached more than US$750 billion. Those investments are set to increase significantly over the next decades (around US$1.5 trillion/year) to limit global warming to below 2°C by 2100. Many authors (Criekemans, 2018; Hache, 2016, 2018; O’Sullivan et al., 2017; Scholten & Bosman, 2016) have studied the potential consequences of global energy mix transformations from a political, geopolitical, technological, or economic perspective. Among these questions, those related to ever-increasing consumption of raw materials for the energy transition have found an important place.​ Achieving the Paris Agreement goals requires a wide and rapid diffusion of low-carbon technologies. However, the latter needs more minerals and refined metals compared to traditional technologies (Graedel, 2011). Ore-producing countries have already established themselves as key suppliers of strategic metals needed for transition-related technologies. Recent foresight and modeling work suggest that their position will be strengthened in the future (Hache et  al., 2019a, 2019b). While the energy transition seemed to promise an end to oil dependency, a new one is looming, with new protagonists entering the world chessboard. Dependency issues can be addressed in several ways. They can be studied in terms of criticality and pressure on existing resources. As most of those players are emerging or developing countries, several key questions arise. What is the impact of these expanding mining activities on their development? Will these states enjoy positive economic benefits and be the winners in the global energy transition? The needed investments in low-carbon technologies could lead to a marked increase in the demand for materials or metals and supply limitations in the coming decades. It could generate major transformations in the raw material markets as they all have their own geopolitical or economical characteristics. In this context, the aim of this chapter is to study both sides of the energy transition consequences related to raw materials. The deployment of renewable energies could be accompanied by new market powers on the raw materials markets. The factors that explain price formation (concentration of reserves and companies on the markets, existence of financial markets, etc.), the industrial and technological strategies of states and environmental or social 197

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Table 11.1  Raw materials used in energy transition technology

Aluminum

Solar

Wind

Transportation/Storage

X

X

X

X

X

Cobalt Copper

X

X

X

Lead

X

X

X X

Lithium Nickel Rare earth elements (REEs)

X

X X

Platinum group metals

X X

Source:  USGS.

constraints (growing demand for more environmentally friendly extraction processes, water stress, etc.) need to be clearly explained to understand, in fine, the future international power relations in this new environment. We thus assess the new market powers of producing countries in a context of global energy transition and the role of these strategic materials (lithium, cobalt, copper, etc.) in reshaping future international relations. We then study the new dependency that would occur for raw material consuming countries, while studying the potential consequences of this new paradigm on producer countries regarding a possible new resource curse. Finally, we focus on the weight of China on the commodity markets in this new context and on the consequences of China’s role for producing and consuming countries.

2. THE RESOURCE CURSE CONCEPT Two divergent perspectives on the role of natural resources on an economy have been observed in the literature. The first perspective is based on an optimistic view that natural resource abundance has a beneficial impact on economic development and wealth. This was the dominant idea back in the 18th century with Adam Smith (Smith, 1776) and John Cairnes (Bordo, 1975) until the 1970s with most post-war development economists. The latter continued to argue that resource abundance is an asset that would help the “backward” states, not harm them (Ross, 1999) as observed in the US, Australia, and Great Britain. However, in the early 1980s, a more pessimistic perspective started to emerge with the so-called “Dutch disease”, a term coined by The Economist magazine in 1977 to explain the negative impact that the discovery of large natural gas fields had on Dutch industrial production. Badeeb et al. (2017) reminded that the “Dutch disease” can be considered as an immediate predecessor of the “resource curse” thesis. The terms “Dutch disease” and “resource curse” are two separate issues, although they are often considered synonymous (Davis, 1995). Auty (1993) is the one who coined the term “resource curse” to describe this bewildering trend where natural resource wealth does not necessarily lead to economic prosperity. This pattern was empirically demonstrated by Sachs and Warner (1995) by analyzing 97 countries over a 19-year period (1970–1989). They summarized and extended previous studies showing evidence that the countries with a high value of resource-based exports to GDP tend to have lower growth rates.

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According to resource curse literature, the transmission from natural resource abundance to slow economic growth can be grouped into two categories: economic and political dimensions. Dutch disease is certainly the most prominent economic channel for the natural resource curse. In essence, it is a concept that describes an economic phenomenon that is characterized by the coexistence within the traded goods sector of progressing and declining, or booming and lagging, sub-sectors (Corden & Neary, 1982). The Dutch disease theory postulates that a natural resource boom causes a country’s exchange rate to appreciate, making its manufacturing exports less competitive. This can lead to a decrease in the investments they attract, and therefore hamper the “learning-by-doing”, further contracting the traded sector and lowering productivity growth (Gylfason et al., 1999). In addition, it can shift labor and land to the natural resource sector, crowding out manufacturing (so-called “deindustrialization”) and agriculture sectors. If exports from these sectors drive growth and resource exports do not, then a natural resource boom that crowds them out will retard growth. The volatility of natural resource prices has been pinpointed to have negative effects on economic growth in resource-rich countries due to market uncertainties which reduce the planning efficiency for economic growth. These adverse effects are more severe in countries with underdeveloped financial systems. And the volatility is particularly high in sub-Saharan Africa, the Middle East, North Africa, and to a lesser extent in Asia and Latin America and the Caribbean. In the early 2000s, the resource curse literature extended works to broader economic channels with variables thought to be closely related to growth performance. Some economists found empirical evidence of a negative relationship between a heavy dependence on natural resources and human capital investment (Gylfason et al., 1999, 2006). They argued that nations that are confident that their natural resources are their most important asset may inadvertently, or even deliberately, neglect the development of their human resources, by devoting inadequate attention and expenditure to education. Under political causal channels for the resource curse, rent-seeking, institutional quality and corruption, political instability, and armed conflict are the main mechanisms or variables related to growth which have been identified in recent literature. Several papers have stressed a positive link between natural resource wealth and political instability and armed conflict (Collier et al., 2009; Ross, 2004). Nevertheless, Collier and Hoeffler (1998) found that this effect on natural resources is non-monotonic, the possession of natural resources initially increases the duration and the risk of civil war but then reduces it for sufficiently high levels of mineral wealth. The evidence results above are by no means universal. A stream of studies has focused on resource-rich countries which have avoided the resource curse: Botswana (Sarraf & Jiwanji, 2001), Norway (Gylfason, 2011), the US (Papyrakis & Gerlagh, 2007), Chile (De Gregorio & Labbé, 2011), Canada (Parlee, 2015), and China (Zhang & Brouwer, 2020). If the resource curse theory was originally mostly applied to oil, natural gas, and traditional or precious metals (gold, diamonds), the climate challenge has brought to the forefront new materials that were previously little known or used.

3. THE 2°C GOAL: A MATERIAL-INTENSIVE PATHWAY? Meeting the Paris Agreement goal to limit the global temperature increase in this century to 2°C above preindustrial levels, while pursuing the means to limit the increase to 1.5°C, requires major shifts towards decarbonized energy sources. In this perspective, the

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TIAM-IFPEN2 model has been developed to analyze new and unexpected interdependencies, including raw material dependencies, while reducing fossil fuel dependencies to achieve the energy transition. The main findings are valuable for any energy analyses to examine the geological, geopolitical, and production, risks related to raw material supply availabilities, the impact of urban mining and recycling, and how they could hamper the energy transition. Two climate scenarios (2°C and 4°C) were analyzed, each with two different transport mobility scenarios to consider the impact of the use of public and non-motorized transport, as well as an integrated planning and investment approach related to regional development and urban transport on future mobility. The level of primary production required by 2050 to meet climate targets was then assessed and compared with United States Geological Survey (USGS) resource assessments to determine an indicator of the criticality of different materials in the energy transition (Table 11.2). Copper appears to be the most constrained raw material in the energy transition dynamics, followed by cobalt and nickel. Around 90% of the current copper resources could be extracted by 2050, driven by the development of the energy, transport, and other sectors such as consumer goods, industry, and construction, which are expected to grow considerably over the coming decades. Electric vehicle (EV) uptake and the associated electronics and battery production requirements imply higher demand for lithium, cobalt, and nickel. The Latin American countries of the Lithium Triangle (Chile, Argentina, and Bolivia) (Oyarzo & Paredes, 2019; Obaya et  al., 2021) or the Asian mining countries (Lu et  al., 2018) have recently been the subject of studies analyzing the scope of resource-based development policies and, in particular, the strong growth of mining activities and questioning the existence of a resource curse. The emerging and developing countries, whose metal production is so essential to low-carbon technologies, are therefore facing a threefold challenge: a future industrialization for their economic development while ensuring their own low-carbon transition, and providing these materials needed for the global energy transition.

Table 11.2  Maximum ratio of cumulative primary production for materials by 2050 to identified resources Metal

4°C scenario

2°C scenario

Lithium

20%

32%

REEs

1.6%

3.4%

Cobalt

64%

83.2%

Copper

78.3%

89.4%

Nickel

52.8%

61.3%

Notes:   Comment on Table 11.2. Read the table as follows: for lithium, in a 4°C scenario, the cumulative global primary production will represent 20% of the world’s proven resources in 2020, compared to 32% in a 2°C scenario. REEs = rare earths elements.

201

Figure 11.1  Map illustrating global lithium production and reserves in 2021

Source:  U.S. Geological Survey, Mineral Commodity Summaries, January 2022.

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4. IS THERE AN “ENERGY TRANSITION CURSE” IN THE DEVELOPING COUNTRIES, MAIN PRODUCERS OF RAW MATERIALS? The rapid growth of battery innovation, mainly rechargeable lithium-ion batteries, used in consumer electronics, electricity storage and EVs, is playing a key role in clean energy transition. Recent assessments of battery technologies suggest that lithium-ion will remain the technology of choice for the next decade (IEA, 2018). EV adoption and related battery production requirements will significantly increase the demand for lithium in the future. In a 2°C scenario, the global fleet of EVs3 on the road could reach 785–900 million units, and lithium demand could consequently reach around 800 kt in 2050 (Seck et al., 2020). Still, for the same scenario, the cumulative mine production for lithium between 2005 and 2050 could reach around 27.1 Mt, a value corresponding to 1.3 times the current level of lithium reserves.4 In Figure 11.1, the Lithium Triangle (Chile, Argentina, and Bolivia), holds over 50% of the world’s known lithium reserves and 56% of the world’s lithium resources (USGS, 2022). While Chile holds the largest worldwide reserves of lithium at 9.6  Mt, Bolivia possesses around 21 mt and Argentina 19 Mt of lithium resources. Between 2010 and 2020, Argentina and Chile were among the largest global lithium producers. Under these conditions, it might be expected that these countries would have levels of development and economic growth compatible with the growth of their lithium mining industry. However, the reality is quite different. The average annual GDP per capita growth between 2010 and 2019 was – 0.33% in Argentina, 2.14% in Chile, and 3.0% in Bolivia (World Bank, 2020a). Over the same period, the Gini index varied between 0.41 and 0.49 across the three countries – representing median inequality – with Bolivia having the highest value, and Argentina the lowest (World Bank, 2020b). Comparing these figures with those of resource-poor developed countries such as Singapore, which recorded a GDP per capita growth of 3.5%/year between 2010 and 2019, or Belgium, whose Gini index was between 0.27 and 0.29 over the same period, the misalignment between the evolution of mineral production and the political and economic development of the Lithium Triangle countries becomes even more evident. The energy transition is also likely to have an impact on the demand for more traditional metals such as copper. In most climateconstrained scenarios, annual copper demand by 2050 could reach 102 Mt, almost four times the 2015 level (Seck et al., 2020). According to Figure 11.2, Peru is the world’s second largest copper producer and has the second largest reserve, 77 Mt, just behind Chile (USGS, 2022). The mineral resources industry is dominant in the Peruvian industrial sector, and mineral exports are the protagonists of the country’s international trade. Extractive activities are operated by both the state, that owns the mineral subsoil, and by private companies, which have mining concessions and pay high taxes to explore. It is important to mention in this context the inconsistent expectations and interests of the country’s main mining actors – government, private companies, and local communities. Government presence in mineral-rich regions is scarce. Private companies are in charge of developing mining projects, providing basic facilities to gain the agreement of local communities who usually do not benefit much (Radon et al., 2016). Such decentralization ultimately generates political fragmentation, instability and creates circumstances that allow corruption at both regional and local levels. It leads to increased social conflicts across the country, which is reinforced by local communities’ concerns on the environmental effects of mining activities.

203

Figure 11.2  Map illustrating global copper production and reserves in 2021

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The case of cobalt is also of high interest regarding the natural resource curse theory. In recent years, this increasingly popular metal has seen its consumption increase, driven by lithium-ion batteries. The mined production reached 170 kt in 2021 (USGS, 2022), which is a fourfold increase since the early 2000s. This craze for cobalt is expected to persist in the coming decades. In 2021, the Democratic Republic of the Congo (DRC) represented more than 70% of the world's supply (Figure 11.3). Seck et al. (2021) highlighted some future trends. The DRC should remain the largest cobalt producer in 2050, with a share between 60% and 67% while Africa will account for no more than 4.5% of global cobalt consumption. Despite its rich subsoil and rapid economic growth in recent years, the DRC is nevertheless still one of the poorest countries in the world. It has a GDP/capita of US$581 and an under-diversified economy where the mining sector still accounts for over 80% of export value. The mining sector has been developed for several decades but the country hardly benefits from it because of its upstream position in the value chain – it represents nearly 70% of global primary production but only 3% of refined cobalt production in 2015 – and the domination of foreign companies despite the existence of the state-owned company Gecamines. The fiscal framework that prevailed until 2018 was very favorable to private companies, which did not allow for the redistribution of revenues generated from the mining sector. The literature on corruption, rent-seeking behavior, and conflict in the DRC is abundant. More recently, in a context where cobalt exports are booming, authors have been interested in the direct application of the resource curse concept to the DRC. Noting that the strong growth in Congolese GDP since the early 2000s has brought only limited poverty reduction. Otchia (2015) confirmed the Dutch disease effect linked to the DRC’s mine-based development model. After undertaking a qualitative historical analysis, Nichols (2018) concluded that there is a clear and direct link between the country’s natural resource abundance and its political and economic instability. Nickel is another suitable case study to analyze the transferability of the concept of the resource curse to energy transition metals. This metal is becoming increasingly popular in the field of lithium-ion batteries. Nickel reserves are estimated at 95  Mt, almost half of it being encountered in Indonesia (22%) and in Australia (22%). World primary nickel production reached approximately 2.7 Mt in 2020, double the level of 2000 (Figure 11.4). In a 2°C scenario, annual nickel consumption should reach 10.3 Mt compared to less than 3.4 Mt today. In such a configuration, the EV battery sector alone would account for more than 40% of final demand against 5% in 2020. More than a third of the world’s nickel production is dominated by the Indonesian archipelago (36% in 2021), followed by a myriad of medium and small producers including the Philippines (13.5%) and Russia (9.1%). Southeast Asia is expected to remain the world’s largest nickel supplier. Indonesia is the largest economy in the Association of Southeast Asian Nations (ASEAN) and has experienced steady and strong economic growth since the late 1990s. The country has also successfully led the fight against poverty, which has dropped significantly to around 10% today.5 The mining industry’s contribution to the Indonesian GDP was 4.7% and mining products represented 14% of total exports in 2017 (PwC, 2018). Indonesia’s nickel production has grown tremendously in recent years. Although it was established in the late 1990s and early 2000s that Indonesia had successfully circumvented the threat of the resource curse (Rosser, 2004), surprisingly few articles have since analyzed this country despite recent changes in the mining sector. The few existing examples are more related to hydrocarbons (Hilmawan & Clark, 2019), or do not focus on a particular metal (Komarulzaman & Alisjahbana, 2006).

205

Figure 11.3  Map illustrating global cobalt production and reserves in 2021

Source:  U.S. Geological Survey, Mineral Commodity Summaries, January 2022.

206

Figure 11.4  Map illustrating global nickel production and reserves in 2021

Sources:  U.S. Geological Survey, Mineral Commodity Summaries, January 2022.

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207

While the impact of metal mining on Indonesia’s energy transition has not yet been addressed in the literature, the press has dubbed it the “new nickel Eldorado”.6 Indeed, investments and partnerships with foreign companies in the downstream part of the value chain are pouring in. It remains to be seen whether this strategy of integrating the battery industry downstream proves successful and confirms the Indonesian “energy transition blessing” that is seemingly unfolding. It is impossible not to mention the case of rare earth elements (REEs). China dominates the REEs markets being the world’s largest producer, consumer, transformer, exporter, and importer (Figure 11.5). Currently, Beijing dominates heavy REEs production, which is geologically more critical than light REEs. While China’s weight in world production has decreased since 2010 (from 97% of world production at that time to 60.6% in 2021) (USGS, 2022), its influence has not been limited to upstream in the value chain. Beijing also has a near-monopoly in the REEs separation and the production of intermediate products. REEs demand would increase tenfold in a climate scenario consistent with the Paris Agreement (Hache et al., 2019c). However, no pressure on geological resources is observed. The results identify a strategic and economic risk. Under any scenario, China should remain the largest REEs producer and consumer by 2050. China has successfully turned its REEs endowment into an industrial advantage. A resource curse specifically related to the REEs exploitation seems difficult to envisage in this configuration. However, some evidence shows that, although not necessarily strictly linked to REEs mining, the resource curse phenomenon exists at provincial and city level, particularly in the central, western, and northeastern regions of China, while not in the eastern region, or that the relationship between natural resource subsidies and economic growth is irrelevant (Zhang & Brouwer, 2020). Still, the recent strategy of restricting REEs exports can also be understood to avoid the risk of the resource curse (Ebner, 2014). Illegal production, insufficient innovation, and excess production capacity, combined with weak legal and regulatory mechanisms to address the industry’s environmental impact have caused terrible ecological and health damage to the country and its population (Chen et  al., 2018). The Chinese authorities are seeking to tackle the much-publicized issue of air pollution, but they must also tackle the crisis of natural ecosystems, and in particular water and soil contamination (Hache, 2019a, 2019b). China is not the only country to face the ecological scourge of exploiting and supplying the world with the metals needed for the energy transition. The Philippines government ordered the closure of 23 mines, mainly nickel ore mining sites, in 2017 due to environmental degradation and damage to the population. Indigenous communities and environmental groups in Latin America regularly denounce the amount of water and land required for lithium production (Early, 2020). Mining projects encounter community opposition in various parts of the world, and waterrelated and land issues are often seen as the main sources of these social conflicts. Recent literature has focused on these resource conflicts in Latin America (Salem et al., 2018), in Asia (Lander et al., 2021), in Africa (Moomen & Dewan, 2016). Ultimately, it seems that emerging or developing countries are bearing the environmental costs of producing the metals needed for the energy transition. It is therefore perhaps in these ecological and environmental justice issues that the existence of an “energy transition resource curse” lies. It seems more than uncertain that China, and other mining economies, will continue to bear the negative externalities of these industries while sharing the benefits, i.e., cheap metals production.

208

Figure 11.5  Map illustrating global REE production and reserves in 2021

Source:  U.S. Geological Survey, Mineral Commodity Summaries, January 2022.

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209

Finally, the application of the notion of the resource curse to the Australian case may seem inappropriate as it is one of the world’s richest countries and is said to have avoided the resource curse through repeated diversification of its economy. A producer of copper, nickel, cobalt, and REEs, Australia has, above all, become the world’s largest supplier of lithium as of 2018, accounting for 52.5% of the global production in 2021. In 2018, the mining sector accounted for 8% of its GDP and 57% of its total exports. Although Australia’s GDP per capita is above the OECD average, reflecting a high level of development, recent literature has examined the relevance of the resource curse in the context of its mining booms in recent decades. Koitsiwe and Adachi (2015) tested the Dutch disease theory’s validity for the Australian economy and found out a correlation between mining shocks and exchange rates. Langton and Mazel (2015) demonstrated that the curse theory was partially applicable at the level of aboriginal communities whereas Fleming et al. (2015) found out mining boom to be a blessing for local economies.

5. STRATEGIES ADOPTED BY OTHER COUNTRIES TO OVERCOME THE RESOURCE CURSE SPECTRUM There are several ways and strategies adopted by mineral-rich countries to avoid the economic, social, and environmental risks and consequences associated with economic development based on mineral extraction. Although many countries base their strategies on economic diversification, good governance initiatives are also proposed, with a focus on improving efficiency in revenue management, transparency, and accountability (Bourgouin & Haarstad, 2013), encouraging local industry and more sustainable mining practices, in addition to changes in fiscal, monetary, and structural policies, and the implementation of export taxes. Many initiatives are successful, but many others fail to overcome the pitfalls of the resource curse. In Argentina, a linkage-development policy agenda has been proposed for lithium-ion battery production. One is to develop new capacities in local actors and institutions, seeking to improve the assessment of lithium resources and to provide new knowledge for more efficient and sustainable exploitation of the salt flats (backward linkage-development). Another is to “process” lithium carbonate domestically, bringing more benefits than its export (forward linkage development). However, the agenda fragmentation reflects the different views on the potential contribution of lithium to economic development and the lack of mechanisms to articulate them in a coordinated strategy (Obaya et  al., 2021). A more backward linkagefriendly approach was promoted in Chile in 2008 with the World Class Suppliers Program focusing on fostering technological collaboration between mining firms and their suppliers by reducing information asymmetries, coordination, and transaction costs. Although some of the selected projects were successful in addressing technological challenges, they failed to scale up innovations and replicate them in other environments, fostering export diversification. Moreover, the most knowledge-intensive activities remained located in large, high-income urban centers (Atienza et  al., 2018). The creation of a state-owned company in Bolivia to manage the entire lithium value chain can be considered as a national strategy to avoid some adverse effects of an economy based on mineral extraction. However, this plan demonstrated that a post-neoliberal policy does not exactly translate into a redistribution of economic gains,

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more empowered and informed communities, or better environmental practices towards sustainability. Neo-liberal policies in Peru, implemented in the mid-1990s, led to structural reform of the country. They focused on attracting investment and promoting economic growth and alleviated many of the effects of the diseases associated with the resource curse. This policy shift allowed the Peruvian economy to grow and fostered productive capacity development in areas other than mining. Nonetheless, a lack of transparency and corruption could be a hindrance in the future despite the economic progress. Recognizing that its mining sector has limited impact on its population but very favorable to the foreign privately owned mining industry, the DRC government enacted a new mining code in 2018. Cobalt, coltan, and germanium were declared strategic minerals and the royalty rate on their extraction was increased from 3.5% to 10%. The new mining code also reaffirms the obligation for mining companies to process and transform the extracted minerals locally and gives them three years to act. The aim of this new text is clearly to increase the revenues generated by the state and to promote the downstream development of the sector in the country to generate skills gains and higher value-added products. However, there are obstacles to achieving these goals. First, the reform has met with hostility from foreign mining companies, which threaten to relocate production. Second, the country’s weak energy infrastructure partly prevents the local processing obligation from being implemented, which is currently under a moratorium that could be extended. Indonesia had also opted to ban exports of unprocessed ores, a measure that was implemented first in 2014 and then in 2020 and has proved to be quite successful. At the same time, Indonesia has put in place an industrial strategy to conquer the downstream part of the value chain by investing in metal processing activities. To this end, the country is increasing its partnerships with foreign firms and building a more business-friendly climate. Hilmawan and Clark (2019) also suggested that the decentralization policy initiated in the early 2000s improved the country’s institutional quality, thanks in particular to increased transparency. Strengthening a state institution has often been highlighted as an effective way to contend the perverse effects of economic development based on natural resource exploitation. The Chinese case is also another one to pinpoint because of the ambitiousness of the objectives set, but above all because of their repercussions on the international supply of many raw materials. The REEs export restrictions introduced by China in 2010 is an example. Often interpreted as a demonstration of power or a desire to favor Chinese downstream companies, it was mainly, for some, a reaction to escalating environmental issues (Seaman, 2019). After the US, Europe, and Japan filed a complaint with the WTO, export quotas were abandoned but replaced by a range of measures such as increasing tax rates, tackling informal mining, and consolidating the sector within state-owned enterprises (SOEs) (Chen et al., 2018). The latest example is the implementation in March 2021 of aluminum production restrictions in the Inner Mongolian city of Baotou after it failed to meet its energy consumption targets. The closure of mines in the Philippines or the assertion of Latin American environmental institutions against mining companies can also be a growing opposition of mining countries to the ecological burden. In the same way that the traditional conception of the resource curse called for remedies that are now well known, the “energy transition resource curse”, if it exists, presents new challenges whose answers jeopardize the strategic material supply balance as it is defined today.

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211

6. DISCUSSION AND CONCLUSION: NEW DEPENDENCIES ON RAW MATERIALS: CHINA’S ADVANTAGE For several decades, China has pursued an economic growth strategy based on the export of manufactured goods and supported by strong industrialization. More recently, China is looking to ramp up its industries, a project supported by the Made in China 2025 plan published in 2013, one of whose objectives is to become a leader in all energy transition-related technologies. As the world’s largest consumer of many metals, Beijing seeks to secure its supplies and competes with other countries for these resources. China has initiated a takeover of various technological value chains, notably through a significant research and development (R&D) effort, combined with investments in all commodity markets. In 2001, Beijing launched its “Go out strategy”, i.e., an economic and commercial development strategy encouraging Chinese companies to expand internationally. Between 2005 and 2022, China has invested around US$2.26 trillion overseas, of which nearly US$803 billion was in the energy sector, US$102 billion in the agriculture sector, and US$203 billion in the metals sector. Thus, commodities (energy, metals, and agriculture) account for 49% of China's foreign direct investment (FDI) (Figure 11.6), and it is now rare for a commodity-rich country not to have been affected by Chinese investments. This plan of action was reinforced in 2013 by the launch of the Belt and Road Initiative (BRI). This initiative can be analyzed as Beijing’s desire to channel raw material flows into the country. This global vision goes far beyond raw material markets; it is common to identify multiple

120000

100000

80000

60000

40000

20000

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Agriculture

Energy

Metals

Figure 11.6  Chinese investments from 2005 to 2022 (US$ billion)

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offers combining diplomatic or trade agreements, infrastructure construction or financing proposals. As of July 2019, the Chinese government estimated that 195 intergovernmental cooperation agreements had been signed with 136 states across all continents.7 Moreover, the BRI is a true catalyst for internationalization and technological upgrading for Chinese companies. In 2020, 124 Chinese companies appeared in the Fortune Global 500 compared to fewer than 30 in the late 2000s. Among them are the leading Chinese companies in the energy (oil, coal, nuclear), commodities (metals and materials), and finance sectors. In the raw materials sector, 15 of the 23 companies in the ranking are Chinese, and 12 of the 20 in the metals sector. The new Chinese market powers could be exercised in the coming decades in all raw material markets dedicated to energy transition. Currently, China is the major player in the production or refining of a dozen strategic metals, making the risks of economic confrontation with the US or Europe quite real. China already has a definite advantage through its strategy of securing raw material supplies. The rise of Chinese companies in the lithium market, for example, since the early 2010s shows the extent to which lithium is considered a strategic material by China. And Chinese companies are currently pursuing a policy of buying concessions from producer countries or buying out companies already present in the market. They are thus seeking to consolidate access to resources to control the entire lithium production chain, from refining to battery manufacturing. In the lithium refining sector, China is responsible for more than 60% of operations. For example, Beijing refines nearly 80% of Australia’s lithium and much of the lithium produced in Chile. China’s hold on the lithium market could be a challenge for other consumer countries, especially for all the new lithium-intensive technologies linked to the energy transition (storage, batteries, etc.). The same kind of strategy is observed for cobalt ores, for which Beijing represents only 1.3% of world production and 1.0% of reserves and 67% of refined cobalt. To secure its cobalt supplies, China has been investing in the DRC’s mining landscape since the mid-2000s. As of 2018, it controlled eight of the country’s 14 largest cobalt mines. China’s dominance of this market is expected to grow even stronger in the future, as its domestic consumption increases. In the same vein, the copper market has also been at the heart of Chinese global geoeconomic concerns for several years. With the massive development of infrastructure and construction within the country during the 2000s, China quickly became the world’s largest consumer of copper (nearly 50% of the global total) and Beijing quickly realized the need to secure its supplies. With only 3% of copper reserves on its territory and 8.6% of world production, China remains largely dependent on external supplies and is estimated to account for more than 45% of world copper imports. To satisfy its needs, China has, during the 2000s, largely developed the copper refining sector, of which it now controls nearly 40% of the market. However, during the same period, China also sought to reduce its copper ore dependence, which reached nearly 70% in 2013. All international development strategies of Chinese companies since 2001 have involved copper resources at one time or another. Partnerships in Latin America with Peru and Chile or with African countries (Congo, Zambia) are justified by the objective of ensuring the country’s copper independence. China’s growing role in raw materials markets is also visible in the REEs market. The Chinese government, which very quickly understood the economic and strategic importance of REEs, has gradually built up control over the REEs value chain since the 1980s. China has found its place due to a combination of several factors. On the one hand, it has rapidly imposed itself thanks to its extremely strong cost competitiveness. On the other hand, Beijing did not

Critical materials 

213

impose extremely strict environmental constraints in the 1990s, which precipitated the relocation of certain segments of the American or European REEs industry to China. This Chinese stranglehold on the extraction, refining, and processing of many strategic metals for the transition is not without consequences for the global geopolitical landscape, but also for the country’s political stability. At the international level, China’s maneuvers exacerbate competition in the markets for strategic materials and generate tensions with other consumer countries that could evolve into more direct forms of confrontation in the future (Hache, 2020). A perfect illustration of this late awakening refers to the Chinese embargo on REEs exports in the early 2010s. This episode revealed the extreme dependence of OECD countries on Chinese REEs exports and had the effect of pushing the US, Europe, and Japan to undertake policies to diversify their supplies. Many other critical and strategic metals should be subject to such policies. In a recent report,8 Foreign Policy explains that in technology products requiring speed, performance and conductivity and incorporating the six main elements (cadmium, gallium, graphite, indium, tantalum or REEs), China is the major producer for five of them, controls more than 75% of production for three of them and is strengthening its presence in all of these metals.

With 19 countries participating in the BRI and approximately US$180 billion invested in the region, Latin America is another example that could be another sticking point in Sino–US relations. Moreover, as a major investor in many mining activities, the Chinese strategy carries the risk of a form of “reprimarization” of certain producing countries and hinder their upscaling and development; although they possess wealth that could be a source of economic development and market power if managed effectively and for the benefit of the population. China’s strategy could therefore be one of the catalysts of a kind of energy transition resource curse for these countries. However, the new geopolitics of energy transition materials also places its share of responsibility on China. Eager to limit its external dependence, China has welcomed numerous extraction and refining activities on its territory since the mid-1990s, taking advantage of its low-cost labor force and its poor environmental standards. The country is now paying the ecological and social price, as shown by the example of REEs, the extraction of which is causing terrible environmental and health damage for the country and its population. While Beijing has developed a pragmatic policy of conquering markets, other countries, notably European countries, remain, despite various initiatives, not very dynamic in their perception of future risks on the markets. The recent strategies of Europe (EC, 2020), the US, and Japan (Schmid, 2019) are also evidence of this national awareness. All countries have many tools at their disposal to improve supply management: geographic diversification of supplies, industrial relocation, or development of activities within the country, reconstitution of strategic stocks, improvement of recycling policies, and optimization of FDI. For material-producing countries, the question is quite different. With increasing demand for raw materials, some countries risk being locked back into a primary sector that generates little added value. This “reprimarization” of economies is a risk for many of them, especially as the Chinese appetite for markets is great. The BRI, mixing economics, diplomacy, and securing supply routes (Carcanague & Hache, 2017; Hache & Rol, 2017) can be considered as a straw absorbing the raw materials needed for Chinese growth. To avoid falling back into an energy transition curse, producing countries will have to find efficient economic tools, but also an adapted mode of governance.

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NOTES 1. Hydrogen storage, CO2 capture and storage, and electric vehicles (EVs). 2. The TIMES Integrated Assessment Model (TIAM-IFPEN) is the first bottom-up linear programming model, was developed at IFP Énergies nouvelles (IFPEN). It is the first IAM model with endogenous raw material supply chains from the resources to the end-use sectors considering the availability constraints on resources and the trade balances between all regions around the world. 3. Two and three-wheelers excluded. 4. The reserves are indicated to be at around 21 Mt by the USGS in 2020. 5. The World Bank in Indonesia – Overview: https://www​.worldbank​.org​/en​/country​/indonesia​/overview (accessed 04/12/2021). 6. https://la1ere​.francetvinfo​.fr​/nouvellecaledonie​/ l​-indonesie​-maitre​-en​-strategie​-du​-nickel​-909876​ .html. 7. “Six Years of Belt and Road”, Belt and Road Portal, 2019. 8. “Mining the Future. How China is set to dominate the next Industrial Revolution”, Foreign Policy, May 2019.

BIBLIOGRAPHY Atienza, M., Lufin, M., & Soto, J. (2018). Mining linkages in the Chilean copper supply network and regional economic development. Resources Policy, 70, 101154. Auty, R. M. (1993). Sustaining Development in Mineral Economies: The Resource Curse Thesis. London: Routledge. Badeeb, R. A., Lean, H. H., & Clark, J. (2017). The evolution of the natural resource curse thesis: A critical literature survey. Resources Policy, 51, 123–134. BNEF. (2022). Energy Transition Investment Trends. https://about​ .bnef​ .com​ /energy​ -transition​ -investment/ Bordo, M. D. (1975). John E. Cairnes on the effects of the Australian gold discoveries 1851–73: An early application of the methodology of positive economics. History of Political Economy, 3, 337–359. Bourgouin, F., & Haarstad, H. (2013). From ‘good governance’ to the contextual politics of extractive regime change. In J. N. Singh & F. Bourgouin (Eds.), Resource Governance and Developmental States in the Global South: Critical International Political Economy Perspectives. Basingstoke: Springer. Carcanague, S., & Hache, E. (2017). Les infrastructures de transport, reflet d’un monde en transition. Revue internationale et stratégique, 107, 55–60. Chen, J., Zhu, X., Liu, G., Chen, W., & Yang, D. (2018). China’s REE dominance: The myths and the truths from an industrial ecology perspective. Resources, Conservation & Recycling, 132, 139–140. Collier, P., & Hoeffler, A. (1998). On economic causes of civil war. Oxford Economic Papers, 50, 563–573. Collier, P., Hoeffler, A., & Rohner, D. (2009). Beyond greed and grievance: Feasibility and civil war. Oxford Economic Papers, 61, 1–27. Corden, W. M., & Neary, J. P. (1982). Booming sector and de-industrialisation in a small open economy. Economic Journal, 825–848. Criekemans, D. (2018). Geopolitics of renewable energy game and its potential impact upon global power relations. In D. Scholten (dir.), The Geopolitics of Renewables. Bâle: Springer. Davis, G. A. (1995). Learning to love the Dutch disease: Evidence from the mineral economies. World Development, 23(10). De Gregorio, J., & Labbé, F. (2011). Copper, the real exchange rate and macroeconomic fluctuations in Chile (Chapter 12). In R. Arezki, T. Gylfason, & A. Sy (Eds.), Beyond the Curse: Policies to Harness the Power of Natural Resources (pp. 203–233). Washington, DC: International Monetary Fund. Early, C. (2020). The new « gold rush » for green lithium. BBC, Future Planet. Ebner, J. (2014). Europe’s REE dependence on China future perspectives. EIAS Briefing Paper, 2014-07.

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European Commission. (2020). Report on the 2020 list of Critical Raw Materials for the EU. European Commission (EC), Brussels, Belgium. Fleming, D. A., Measham, T. G, & Paredes, D. (2015). Understanding the resource curse (or blessing) across national and regional scales: Theory, empirical challenges and an application. Australian Journal of Agricultural and Resource Economics, 59, 624–639. Graedel, T. E. (2011). On the future availability of the energy metals. Annual Review of Materials Research, 41, 323–335. Gylfason, T., Herbertsson, T. T., & Zoega, G. (1999). A mixed blessing. Macroeconomic Dynamics, 3(02), 204–225. Gylfason, T. (2006). Natural resources and economic growth: From dependence to diversification. In H. G. Broadman, T. Paas, & P. J. Welfens (Eds.), Economic Liberalization and Integration Policy. Berlin, Heidelberg: Springer. Gylfason, T. (2011). Natural resource endowment: A mixed blessing?. CESIFO Working Paper n° 3353. Hache, E. (2016). La géopolitique des énergies renouvelables : amélioration de la sécurité énergétique et / ou nouvelles dépendances ? Revue Internationale et Stratégique, 10, 36–46. Hache, E., & Rol, S. (2017). Géopolitiques chinoises internationales. Nouvel accord du Quincy ou consensus de Pékin  ? Revue Internationale et Stratégique, n°105. https://www​.cairn​.info​/revue​internationale​-et​-strategique​-2017​-1​-page​-34​.htm Hache, E. (2019a). Chine : de la pétro-diplomatie à la diplomatie verte. Revue Internationale et Stratégique, n°115, Automne 2019, pp.127–137. Hache, E. (2019b). La Chine, nouveau laboratoire écologique mondial ? Revue Internationale et Stratégique, n°113, Printemps 2019, pp.133–143. Hache, E., Carcanague, S., Bonnet, C., Seck, G., & Simoën, M. (2019c). Vers une géopolitique de l’énergie plus complexe?. Revue Internationale et Stratégique n°113, 73–81. Hache, E. (2020). La diplomatie des ressources au cœur de la relation Chine-Etats-Unis ? Revue .cairn​ .info​ /revue​ Internationale et Stratégique, n°120, Hiver 2020, pp.49–58. https://www​ -internationale​-et​-strategique​-2020 ​- 4​-page​- 49​.htm Hache, E., Bonnet, C., Carcanague, S., Seck, G. S., & Simoën, M. (2019a). Vers une géopolitique de l’énergie plus complexe ? Une analyse prospective tridimensionnelle de la transition énergétique, IRIS (The French Institute for International and Strategic Affairs), Policy Research Working Paper. Hache, E., Seck, G. S., Simoën, M., Bonnet, C., & Carcanague, S. (2019b). Critical raw materials and transportation sector electrification: A detailed bottom-up analysis in world transport. Applied Energy, 240, 6–25. Hilmawan, R., & Clark, J. (2019). An investigation of the resource curse in Indonesia. Resources Policy, 64, 101483. International Energy Agency (IEA). (2018). Global electric vehicle outlook: Towards cross-modal electrification. IEA/OCDE. Retrieved from https://www.iea.org/reports/global-ev-outlook-2018 Komarulzaman, A., & Alisjahbana, A. S. (2006). Testing the natural resource curse hypothesis in Indonesia: Evidence at the regional level, Center for Economics and Development Studies, Department of Economics, Padjadjaran University, No. 200602. Koitsiwe, K., & Adachi, T. (2015). Australia mining boom and Dutch Disease: Analysis using VAR method. Procedia Economics and Finance, 30, 401–408. Lander, J., Hatcher, P., Bebbington, H. D., Bebbington, A., & Banks, G. (2021). Troubling the idealised pageantry of extractive conflicts: Comparative insights on authority and claim-making from Papua New Guinea, Mongolia and El Salvador. World Development, 140, 105372. Langton, M., & Mazel, O. (2015). Poverty in the midst of plenty: Aboriginal people, the ‘resource curse’ and Australia’s mining boom. Journal of Energy & Natural Resources Law, 26(1). Lu, C., Wang, D, Meng, P., Yang, J., Pang, M., & Wang, L. (2018). Research on resource curse effect of resource-dependent cities: Case study of Qingyang, Jinchang and Baiyin in China. Sustainability 11, 91. Lopez, 2017. Moomen, A.-W., & Dewan, A. (2016). Investigating potential mining induced water stress in Ghana’s north-west gold province. The Extractive Industries and Society, 3, 802–812. Nichols, E. (2018). The resource curse: A look into the implications of an abundance of natural resources in the democratic Republic of Congo. Scholarly Horizons: University of Minnesota, Morris Undergraduate Journal, 5(2), Article 6.

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Obaya, M., López, A., & Pascuini, P. (2021). Curb your enthusiasm. Challenges to the development of lithium-based linkages in Argentina. Resources Policy, 70, 101912. OECD. (2019). Global Material Resources Outlook to 2060: Economic Drivers and Environmental Consequences. Paris: OECD Publishing. https://doi​.org​/10​.1787​/9789264307452​-en. O’Sullivan M., Overland I., & Sandalow D. (2017). «The geopolitics of renewable energy», Faculty Research Working Paper Series, Harvard Kennedy School. Otchia, C. S. (2015). Mining-based growth and productive transformation in the Democratic Republic of Congo: What can an African lion learn from an Asian tiger? Resources Policy, 45, 227–238. Oyarzo, M., & Paredes, D. (2019). Revisiting the link between resource windfalls and subnational crowding out for local mining economies in Chile. Resources Policy, 64, 101523. Papyrakis, E., & Gerlagh, R. (2007). Resource abundance and economic growth in the United States. Eur. Econ. Rev. 51 (4), 1011–1039. Parlee, B. L. (2015). Avoiding the resource curse: Indigenous communities and Canada’s oil sands. World Development, 74, 425–436. PwC. (2018). Mining in Indonesia Investment and Taxation Guide May 2018, 10th Edition. Radon, J., Avila, J., Balan, Y. J., De La Cruz, A., Javed, M. A., Jia, S., Khan, M., Lee, J., Maberry, J., Natarajan, A., Sahay, V., & Takahashi, N. (2016). The Peruvian mining sector: Exploring issues related to social license, corruption and the trans-pacific partnership treaty. School of International and Public Affairs (SIPA) at Columbia University, SIPA Capstone Report 2016. Ross, M. L. (1999). The political economy of the resource curse. World Politics, 51, 297–322. Ross, M. L. (2004). What do we know about natural resources and civil war? Journal of Peace Research, 41(3), 337–356. Rosser, A. (2004). Why did Indonesia overcome the resource curse? Institute of Development Studies Working Paper 222. Sachs, J. D., & Warner, A. M. (1995). Natural Resource Abundance and Economic Growth. National Bureau of Economic Research. Salem, J., Amonkar, Y., Maennling, N., Lall, U., Bonnafous, L., & Thakkar K. (2018). An analysis of Peru: Is water driving mining conflicts? Resources Policy, 101270. Sarraf, M., & Jiwanji, M. (2001). Beating the resource curse: The case of Botswana. The World Bank, Environmental economic series, paper no. 24753. Schmid, M. (2019). Mitigating supply risks through involvement in REE projects: Japan’s strategies and what the US can learn. Resources Policy, 63, 101457. Scholten D., & Bosman R. (2016). The geopolitics of renewables; Exploring the political implications of renewable energy systems. Technological Forecasting and Social Change, 103. Seaman, J. (2019). REE and China: A Review of Changing Criticality in the New Economy, Notes de l’Ifri, Ifri. Seck, G. S., Hache, E., Bonnet, C., Simoën, M., & Carcanague, S. (2020). Copper at the crossroads: Assessment of the interactions between low carbon energy transition and supply limitations. Resources, Conservation & Recycling, 163, 105072. Seck, G. S., Hache, E., & Barnet, C. (2021). Potential bottleneck in the energy transition: The case of cobalt in an accelerating electro-mobility world. Resources Policy, 75, 102516. Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. Oxford: Clarendon Press, 1976. US Geological Survey (USGS). 2022 - Mineral commodity summaries (Cobalt, Copper, Lithium, Nickel, REEs). World Bank. (2020a). Annual GDP per capita growth, WB database (accessed 22 March 2021). World Bank. (2020b). Gini index estimate - Peru, Chile, Bolivia, Argentina, WB database (accessed 22 March 2021). Zhang Q., & Brouwer R. (2020). Is China affected by the resource curse? A critical review of the Chinese literature. Journal of Policy Modeling, 42, 133–152.

12. Changing energy systems and markets from the ground up – citizens, cooperatives, and cities Colin Nolden1

1. INTRODUCTION Historically, fossil energy and mobility systems evolved into interlinked yet independently regulated centralized ‘industry regimes’ supported by national policies embedded in science, technology and innovation systems that operate at national and transnational scales (Turnheim & Geels, 2012; Geels, 2014; Lockwood et al., 2019). Traditional geopolitics was synonymous with this ‘industry regime’ of fossil fuels, especially oil and gas (O’Sullivan et  al., 2017; Scholten, 2020). Associated energy markets are characterized by predefined groups of passive consumers, distinct suppliers and innovating experts with siloed policy maintaining industry codes, safety standards and security of supply. Nuclear power takes this to an entirely different level through its geopolitical clout and the strict separation of experts, shrouded by military-industrial secrecy, and passive, uninformed consumers (Smith, 2014; Johnstone & Stirling, 2020). Despite such path-dependent characteristics, these systems are undergoing change. In the electricity sector it is evident that the centralized ‘industry regime’ is being challenged by increasingly renewable and decentralized systems (Burger et  al., 2020). This transition is driven by decades of subsidies, which have grown the economic competitiveness of renewable energy technologies, attempts to factor in externalities of burning fossil fuels through carbon pricing, as well as socio-technical change driven by rapid advancements in technologies (Ives et al., 2021). To date, the winners of this transition include wind and solar power developers, often utilities, which can generate at scale using existing transmission and distribution infrastructures (Judson et al., 2020). At the same time, we are witnessing a diversification of non-state actors engaging in energy markets which engender significant potential to alter fundamental energy system characteristics. Citizens, cooperatives and cities are challenging the status quo through the spatial reorganization of governance arrangements, business models, skills, control and infrastructures at a regional and local level in energy generation, storage, demand reduction and management and the provision of ancillary services (Webb et al., 2016; Brown et al., 2019; Heldeweg & Saintier, 2020; Nolden et  al., 2020; Scholten, 2020; Wittmayer et  al., 2020; Berthod et al., 2022). Following Russia’s invasion of Ukraine, energy security and geopolitics have once again moved center stage (IEA, 2022). The consequential prioritization of supply security has in many cases been accompanied by the nationalization of energy supply companies and infrastructures. While this trend is putting the decentralization of such governance arrangements into question, the increasing realization that decarbonization hinges upon the engagement of 217

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citizens at the point of demand through multi-level governance is solidifying their recognition as demand-side actors (Tingey & Webb, 2020; IPCC, 2022). Decoupling energy demand from economic activity (reduction of the energy intensity by improving efficiency) has been the main driver of carbon emission reductions to date (IPCC, 2014), and accounts for 40–70% of the emission reductions we need to limit global warming to 2°C above the pre-industrial level (IPCC, 2022). By downscaling energy systems, energy demand reductions facilitate rapid decarbonization and system transformation (Grubler et al., 2018). Understanding the role of citizens, cooperatives and cities, and the multi-level governance necessary to harness their full potential in the emergent energy geopolitics, will increase in importance if commitments to decarbonize are to be honored. This chapter analyses the role of citizens, cooperatives and cities in shaping energy system characteristics, governance and markets from the ground up through innovative institutional arrangements, business models and routes to market. Section 2 discusses different profiles of energy supply technologies before introducing a framework developed by Heldeweg (2017) and evolved by Heldeweg and Saintier (2020) and Wittmayer et al. (2020) to help conceptualize the changing role of citizens, cooperatives and cities in energy systems and market structures. Drawing on this framework, Section 3 analyses their changing role like a Russian doll, starting with the prosumer as the individualized challenger of energy systems and markets before moving on to cooperatives, community initiatives and platforms before discussing the changing role of cities and local authorities in energy supply and demand. It subsequently uses the case study of Great Britain to provide an insight into the potentially transformative engagement of citizens, cooperatives and cities vis-à-vis the competing pressures of liberalized markets and energy security concerns in shaping energy demand and supply. Section 4 provides insights into the electricity market and (geo)political consequences of citizens, cooperatives and cities challenging governance arrangements, market structures and business models. Section 5 discusses the implications thereof in the context of energy politics and policy as well as the geopolitics of energy supply and demand. This chapter concludes in Section 6.

2. THE CHANGING ROLE OF CITIZENS, COOPERATIVES AND CITIES IN ENERGY SYSTEMS AND MARKETS To understand the cultural implications of this change, this section compares the risk profile of generation technologies and explores their relationship to the ‘institutional nexus’ of sustainable energy. It subsequently analyses the often undervalued and poorly understood role of energy demand reduction efforts in reducing carbon emissions and progressing towards the sustainable development goals. 2.1 The Institutional Nexus of Energy Supply Current electricity generation technologies are characterized by three dominant risk and lifecycle cost profiles regarding build-up, operation and build-back of generation plants (Profiles 1–3 below). Build-up includes everything from feasibility studies to arranging transmission and distribution and constructing the generation plant. Operation includes the functions, duties and labor associated with day-to-day activities to ensure that systems and equipment

Changing energy systems and markets from the ground up  219

perform their intended function, including operation, maintenance and fuel supply. Builddown includes decommissioning, deconstruction, demolition and disposal. One risk and life-cycle cost profile requires de-risking and financial outlay mainly for operation, but less so for build-up and build-back (Profile 1; see Table 12.1). Most fossil fuels fall into this category, as well as dispatchable renewable energy sources such as electricity and heat generation using biomass. Another requires de-risking and financial outlay mainly for build-up and build-back, with strong regulatory systems necessary to ensure smooth operation associated with nuclear power (Profile 2; see Table 12.1). The final one requires de-risking and financial outlay for build-up and operation, with an emphasis on the former and the latter dependent on an energy system’s capacity to smoothen out fluctuating load profiles. This applies to many renewable energy technologies such as wind and solar (Profile 3; see Table 12.1). Profile 1 applies mainly to traditional baseload power stations such as coal-fired plants involving relatively low capital expenditure per kWh and high, sometimes fluctuating, marginal costs. It emerged out of both constitutional orders (nation states) and competitive markets (see Figure 12.1). The latter requires high capital expenditure and hinges upon consensual exchange in pursuit of private interest in a competitive context, checked and balanced through consumer protection and competition (Heldeweg, 2017; Heldeweg & Saintier, 2020). This risk and life-cycle cost profile emerged with the age of production in the 19th century where supply chains were developed and needs were satisfied on a large scale (Lord, 2014; Smil, 2017). Profile 2 involves very high capital expenditure per kWh and low marginal costs. This applies to nuclear energy which is most economically run at very large scale and requires support, intervention and organization by constitutional orders (states) to de-risk (military-) industrial nuclear fuel supply, reprocessing, waste storage and decommissioning (Smith, 2014; Johnstone & Stirling, 2020). Constitutional orders in this case determine the public interest and pursue this interest unilaterally and hierarchically through powers of command and control, checked and balanced through the separation of power (see Figure 12.1; Heldeweg, 2017; Heldeweg & Saintier, 2020). This category only became economically viable when demand became codified and consumption conspicuous in the 20th century (Lord, 2014; Smil, 2017). Profile 3 is associated with renewable energy sources such as solar and wind power and involves high capital expenditure per kWh and relatively low marginal costs, although this depends on the resources required to balance intermittency. It emerged out of civil network innovation, especially in countries such as Denmark, and diffused through technological forcing in heavily subsidized markets supported by constitutional orders, often using feed-in tariffs, with increasing support by civil networks (see Figure 12.1; Nolden et al., 2020). The latter are checked and balanced through safeguards for social inclusion and non-discrimination of Table 12.1  Dominant risk and life-cycle costs of generation plants Build-up

Operation

Build-back

Profile 1

+

+++

++

Profile 2

++

+

+++

Profile 3

+++

++

+

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Source:  Adapted from Heldeweg, 2017.

Figure 12.1  The institutional nexus of sustainable energy not-for-profit services (Heldeweg, 2017; Heldeweg & Saintier, 2020). Lord (2014, p. xii) argues that because renewables were “born of an awareness of potential or actual scarcity” they have the potential to lead us back to abundance through a culture of stewardship. Renewables facilitate change by providing new opportunities for non-traditional actors, especially civil networks, beyond constitutional orders and competitive markets through scalable decentralization vis-à-vis static and centralized fossil fuel and nuclear energy (see Figure 12.1; Burger et al., 2020; Heldeweg & Saintier, 2020; Nolden et al., 2020). Together, they shape the institutional nexus of sustainable energy: Civil network engagement in sustainable energy supply depends on collaborative and sharing relationships in pursuit of social and community interests. Increasingly, they are challenging energy systems and markets from the ground up. Cultural change from production and consumption, inherent in fossil fuel and nuclear supply with their associated risk profiles, towards prosumtion and stewardship, inherent in renewables and their associated risk profile, coincides with new roles and responsibilities for civil network actors. While their effect on energy systems and markets has been negligible to date, especially on the supply side, this underlying cultural change is emerging as a significant driver for changing demand, supply and geopolitical implications (Lord, 2014).

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2.2 Changing Market Structures of Energy Demand Fossil energy and nuclear systems (Profiles 1 and 2) are associated with three distinct market structures: one around feedstocks and fuels, one around generation technologies and one around wholesale electricity markets. In contrast, renewable energy systems such as wind and solar (Profile 3) require few, if any, feedstock and fuels. Other renewable energy systems, such as biomass (Profile 1), are driving the emergence of new feedstock and fuel markets derived from vegetal labor (Palmer, 2021). Overall, a shift is underway from energy sources and carriers (Profiles 1 and 2) towards generation technologies and energy services (Profile 3; see also Scholten, 2020). If this entails a shift from long-term deals that secure supply towards intraday markets to manage intermittency, market design, regulation and energy policy practices need to change accordingly. On a global scale, however, the market share of renewables is still very small, and it is not a strategic factor in the geopolitics of energy (Scholten, 2020). This has been painfully evident in the European response to Russia’s invasion of Ukraine, which focuses nearly entirely on securing the supply of fossil fuels (IEA, 2022). Nevertheless, the increasing ‘domestic orientation’, which has been amplified by increasing geopolitical tension, is driving the revival of domestic production capacities in many countries as the make-or-buy decision appears to be tilting towards the former, as increasingly expressed in industrial policies centered on inshoring (Freeman, 2018). Market structures to reduce energy demand, on the other hand, are exclusively domestic but their implications for geopolitics can be as far-reaching as markets changing through the supply transition to renewable energy. Creating revenues from energy demand reductions requires similarly sophisticated, and sometimes even more complex institutional arrangements, market structures and business models as those for renewable energy technologies with high capital expenditure per kW and relatively low marginal costs per kWh. However, such market structures tend to place greater emphasis on operational expenditure (OPEX) than capital expenditure (CAPEX), especially where the CAPEX of energy demand reduction measures is paid for through a share of the reduced OPEX, as is the case in energy service and performance contracting markets (Sorrell, 2007). Such markets benefit from intermediaries to reduce transaction costs associated with their contractual arrangements (Nolden et  al., 2016). Targeted intermediation through technical assistance by the European Investment Bank for example has delivered a return on investment of 37:1 (EIB, 2019; Tingey & Webb, 2020). Associated energy demand reduction, and the consequent reduction in size of the energy system, represents the most cost-effective, timely and lowest-risk option to decarbonize (Barrett et al., 2022). Reducing energy demand, compared to decarbonizing supply, is also associated with many more synergies than trade-offs regarding the achievement of the Sustainable Development Goals and “consistent with improving basic wellbeing for all” (IPCC 2022). At the intersection of demand and supply lie interventions which combine targeted energy demand reduction interventions with local renewable energy supply. These are driven by an ever-increasing diversity of ‘prosumer’ business models and intermediaries (Brown et  al., 2019). Whether in combination with solar home systems, micro or nano grids, we are witnessing their application in urban settings alongside more traditional remote rural locations (Kennedy et al., 2019).

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3. CHALLENGING ENERGY SYSTEMS FROM THE GROUND UP The following sections analyze the roles of citizens, cooperatives, social enterprises, local authorities and cities in shaping the energy transition from the bottom up. Particular emphasis is placed upon institutional arrangements, market structures and business models regarding both energy supply and demand. 3.1 The Role of Citizens, Cooperatives and Cities While changes in energy supply structures are more visible and obvious, energy demand reductions, through non-industrial energy efficiency improvements and avoidance, are highly diffused, often invisible and best understood as a ‘bottom-up’ business. Although national supportive policy is crucial, the implementation of energy demand reduction measures is highly dependent on local initiatives at city or local authority level as well as individual and cooperative action (Grubb et al., 2014, p. 161). 3.1.1 Citizens With an increasing share of electricity generated on domestic properties, and changing institutional arrangements, market structures and business models increasingly also facilitating buyin to the energy transition among those without property, prosumerism has come to epitomize citizen engagement in energy systems. Initially supported by rich-world subsidies such as feedin tariffs, declining subsidies have made financial viability of solar home systems increasingly dependent on maximizing self-consumption (Nolden, 2015; McKenna et al., 2018). With falling technology costs and increasing energy prices due to geopolitical uncertainty, it is becoming increasingly economically viable to install such systems without subsidies (Brown et  al., 2019; Nolden et  al., 2020; Ives et  al., 2021). From a grid perspective, such systems are nevertheless associated with ‘uncontrollable’ outflows of electricity. However, in combination with smart meters and storage such outflow can be converted into a grid resource. This implies that owners of solar home systems combined with batteries and smart meters can choose to supply the electricity market where previously, without such systems, they only demanded and were supplied with electricity. Under a peer-to-peer (P2P) energy trading scenario, prosumers might take control over where the electricity flows to by creating provenance through meter data (Schneiders et al., 2022). In combination with energy demand reduction measures, such as insulation and the switch from fossil fuel heating to electric heating (which are associated with efficiency increases from 80–90% to 300–350%), such systems can significantly decrease the dependency of grid supply electricity. Given the abovementioned importance of energy demand reduction measures for limiting climate change, it is pertinent to combine increasingly economic domestic supply opportunities with demand reduction measures. For citizens, this change from fuel purchaser to asset owner allows them to challenge the energy work nexus. Prosumption in this context embodies alternative values beyond production and consumption which “free energy from the bindings of exploitative work” (New Daggett, 2018, p. 12). However, the combination of lower energy demand with hybrid systems combining solar home systems combined with batteries and smart meters can also encourage grid defection. This occurs when those who can afford to do so reduce and shift their energy demand from grids towards self-generated power, usually electricity. The more power is generated and

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managed beyond the scope of policy and taxation, the more those who cannot afford such systems pay for the maintenance of the gird, which can undermine the democratic accountability of energy political decision-making (Nolden, 2019). Such solutions might be more appropriate in other contexts, especially where solar home systems closely follow demand curves of cooling technologies, such as air conditioning. In practice, however, certain local and national factors may prevent their adoption. In South Africa, for example, decentralized/distributed energy sources are associated with poverty because only white settlements were connected to the grid during Apartheid while the black townships relied on other sources. The result is that there is a strong cultural drive towards (coal fired) grid electricity (Personal communication, 2018). 3.1.2 Cooperatives Emergent institutional arrangements, market structures and business models concerning civil networks are an indirect consequence of changes to how labor and markets were organized from the 1980s onwards. In the energy sector, this change coincided with a politically motivated desire to increase the share of renewable energy technologies, especially from the 1990s onwards. Generous subsidies and their inherent scalability have diversified the energy supply landscape and the operation of electricity grids (Burger et al., 2020; Schneiders et al., 2022). Government backing of such payments implied that renewable energy developers took on project risk but not revenue risk. Such guarantees also de-risked the build-up of generation plants (see Profile 1 above) by providing predictable cash flows and lowering transaction costs (Nolden et al., 2020). In Europe in particular, tariff banding among feed-in tariffs countering economies of scale led to a proliferation of non-traditional organizations engaging in energy supply arrangements, ranging from charities to social enterprises (Bauwens et al., 2016). Following the termination of such market-based mechanisms, associated business models are shifting towards establishing routes to market for both supply- and demand-side solutions. Such routes to market on the supply side rely on the sale of electricity, either to an electricity supplier or organizations directly through Power Purchase Agreements (PPAs), to overcome revenue risk associated with exposure to the wholesale market. Such PPAs reduce such risk by creating a stable, long-term revenue stream which provide the basis for investment (Nolden et al., 2020). On the energy demand side, cooperative and social enterprise engagement in Europe in particular has focused primarily on energy poverty alleviation. With rising energy prices and the complexity of PPAs discouraging supply arrangements, the focus is increasingly shifting towards flexibility and demand reduction business models. Rather than treating flexibility as an individual household responsibility, cooperative business models enable pooling to provide a vital power system resource (Yule-Bennett & Sunderland, 2022). Regarding demand reduction, cooperatives have a trusted intermediary role to play between energy service providers, financiers and households (Nolden et  al., 2016; BraunholtzSpeight et al., 2021). In general, it is increasingly recognized that non-profit intermediaries have a crucial role to play between citizens, local authorities and national energy policy (Nolden et  al., 2016, 2020; Tingey & Webb, 2020; Braunholtz-Speight et al., 2021). Their engagement is necessary to both reduce the transaction costs of energy service provision and establish trusted communication channels regarding options and benefits of proactively contributing to the energy system transition towards zero carbon.

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3.1.3 Cities Cities rank among the most “stark illustrations of the evolutionary and path-dependent nature of our system” (Grubb et al., 2014, p. 379). At the same time, they represent arenas where ‘industry regimes’ associated with constitutional orders and competitive markets predominantly interact with ‘grid-edge’ civil networks. As a result, cities are increasingly considered the ‘interface’ where solutions to overarching sustainability and climate change issues are likely to emerge and take effect (Broto & Bulkeley, 2013; UNFCCC, 2015; Reckien et al., 2018). Cities already host over 50% of the global population, account for about two-thirds of primary energy demand, emit 70% of total energy-related CO2 emissions and account for about 80% of the world’s Gross Domestic Product (Reckien et al., 2018; UNEP, 2019). In recent years, many local authorities have responded to the climate crisis with the declaration of climate and ecological emergencies. These often involve zero carbon targets before 2050 and ambitions for inclusive economies which require significant societal shifts and transitions to new ways of living and working (Tingey & Webb, 2020). As a result, local authorities in charge of city and regional governance have the potential to act as powerful intermediaries in energy transitions, similar to cooperatives but at a much greater scale, if they have the mandates, capacities and skills to coordinate interaction (Kuzemko & Britton, 2020). As energy supply, and electricity supply in particular, is usually of strategic importance and consequently the remit of national energy policy, cities have a disproportionate role to play in governing the reduction of energy demand. Thanks to a certain degree of responsibility over housing and transport, their influence on energy systems is often indirectly through the fabric and geography of urban form (Barr et al., 2017). They often share direct control, if not ownership, over public-sector property, such as buildings, street lighting, or vehicles, which provides opportunities to encourage more sustainable usage patterns and implement innovative technologies, business models and governance arrangements in relation to mobility, local energy networks and buildings (Kuzemko & Britton, 2020; Tingey & Webb, 2020). Some cities may also be directly or indirectly involved in the provision of utility services such as water and waste removal alongside energy services and in their role as public procurers they can specify environmental and social criteria alongside economic priorities in their provision (Uyarra et al., 2014). Other cities may act as metropolitan leaders for inter-municipal initiatives, which may include technical infrastructure or transport provision that transcends city borders. Cities may also encourage citizen-led innovation by providing appropriate governance frameworks (Bulkeley & Betsill, 2003; Broto & Bulkeley, 2013; Reckien et al., 2018). Cities are also increasingly the focal point of transformative change and increasingly provide the institutional framework for low-carbon experimentation (Webb et al., 2016; Kronsell & Mukhtar-Landgren, 2018). Governments as well as supranational bodies such as the EU are actively providing funding and support for cities to engage in innovative low-carbon experiments, projects and demonstrations through collaborative development and knowledge exchange. On the other hand, cities, like countries, face a unique set of challenges. In emerging economies, many cities are experiencing rapid planned and unplanned expansions with public services barely able to keep up. In rich countries, cities are aging unevenly with differentiation already evident between as well as within countries. What they tend to have in common is lack of access to finance and restrictive budgeting cycles, which tend to conflict with longterm developments and planning horizons required for deep socio-ecological transformation (Bulkeley & Betsill, 2003).

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Other issues relate to the lack of skills and capacities among many local authorities to engage with the long-term governance required to tackle intergenerational issues, especially regarding legitimization by the local population (While et  al., 2004; Martin et  al., 2019). Where cities carry educational responsibilities, the lack of in-house energy transition skills can have cascading knock-on effects on the entire skill structure among the local population (Chitchyan & Bird, 2021). 3.2 Citizen, Cooperative and City Engagement in Liberalized Electricity Markets Since the liberalization of electricity markets in many European countries, civil networks in the form of citizens, cooperatives and cities predominantly feature as consumers (see bottom right of Figure 12.2), despite their importance in shaping energy demand and human interaction with supply and energy system change (see Section 3.1 above). The institutional environment of electricity supply, in contrast, has been dominated by utilities (dark grey circle) regulated (light grey arrow) by constitutional orders (relevant government energy departments and ministries, regulators, transmission grid operators and industry code panels) (Heldeweg, 2017; Heldeweg & Saintier, 2020). Utilities operating in such highly regulated supply markets

Source:   Adapted from Heldeweg. 2017).

Figure 12.2  The institutional nexus of liberalized electricity markets

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sell power (orange arrows) to organizations representing constitutional orders (government, local authorities, government owned organizations), competitive markets (industry, services) and organizations and individuals (consumers) that make up civil networks (NGOs, charities, cooperatives, social enterprises and citizens). In more liberal markets, prices are set by utilities while in more heavily regulated markets, prices are set by the regulator, with the emphasis shifting towards the latter in times of crisis, such as Russia’s invasion of Ukraine. In more liberalized markets, regulatory frameworks over time have simplified the contractual process of changing supplier for consumers and the establishment of long-term supply contracts for organizations with large electricity demands. But the relationship between such consumers and energy systems is changing, not least a result of the cost-of-living crisis and mounting energy security concerns (Nolden et al., 2022). 3.2.1 Conventional supply arrangements vs societal engagement – a case study of Great Britain The following case study of Great Britain serves to highlight how non-state actors such as citizen-led initiatives, often institutionalized around cooperatives and social enterprises, as well as cities, usually through local authorities who lie at the intersection between civil networks and competitive markets, can contribute significantly to the diversification of electricity markets. This is particularly evident in the context of socio-technical change around demand reduction and decentralized electricity supply from renewable sources. Increasingly, this is also recognized by a wide range of organizations, including electricity grid operators, such as Britain’s transmission grid operator National Grid. Among the multiple decarbonization scenarios it has modeled, those that maximize civil network engagement, either as consumers or citizens, and socio-technical solutions foresee the lowest electricity demand (and energy demand more generally) and the highest uptake of distributed demand and supply solution). Scenarios that assume low public engagement and emphasize technological solutions driven by competitive markets, in contrast, foresee lower uptake of distributed solutions and much higher electricity demand (National Grid, 2020). The technological substitution of fossil-powered end-use energy demand technologies with low-carbon alternatives therefore rests upon a willing citizenry to adopt them and lifestyle changes through greater engagement, empowerment and facilitation. Cooperatives and cities can be considered essential intermediaries which enable such a transformation through citizen engagement. Pursuing National Grid scenarios with high public engagement could lead to an energy system with an annual end consumer energy demand in 2050 of around 600 TWh (Consumer Transformation and Leading the Way scenarios) compared to around 900 TWh for the technological fix scenario (System Transformation). In 2019, annual end-consumer energy demand stood at just over 1,400 TWh. Crucially, around 400  TWh of the demand projected Consumer Transformation and Leading the Way scenarios is expected to be supplied through electricity. This will require a huge increase in electricity supply, but the scalability of electricity generation technologies suggests that civil networks, including citizens and cooperatives, and constitutional orders, including cities and local authorities, can and will play a more significant role in the provision of electricity compared to more path-dependent scenarios. By combining environmental and social objectives with an economic one often based on the reduction of energy ‘leakage’, citizens, cooperatives and cities seek to ensure revenue recycling by retaining upfront investment and returns within a local economy. Their engagement thus constitutes a driver of changes to energy system characteristics and interstate relations.

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4. BROADER MARKET AND GEO(POLITICAL) IMPLICATIONS Although the combined impact of citizens, cooperatives and cities vis-à-vis strategic energy supply decisions at national level shaping fossil energy supply chains might appear negligible, their impact on energy markets over time is profound, especially regarding market structure, business models and welfare considerations (Kuzemko, 2019). This is slowly having knockon effects on energy systems characterized by path-dependencies and burdened with legacy infrastructure. This section reflects upon the implications thereof. While the direct effects on interstate energy relations might be difficult to trace or directly attribute, they play a role in the overall geopolitical shift induced by the transition to renewable energy. 4.1 Effects on Energy Policy and Politics Rapid changes to energy systems and associated competitive markets regulated by constitutional orders require a rethink of energy market design, especially in the context of energy security challenges and a cost-of-living crisis. What most commentators agree on is that an increasingly diverse range of actors will engage in multiple ways in managing demand and supply across time and space. What they cannot agree on is the nature of engagement. If we conceptualize people as citizens, cooperatives as the means for citizens to engage in energy systems and markets without bowing to competitive pressures and cities as arenas where such engagement can be scaled up and replicated, we can conceptualize risk minimization in build up (Profile 3), the context for creating alternative value and values to those imposed by competitive markets. This perspective supports the provision of patient capital and embedded business models which create social and environmental value and deliver multiple benefits while reducing financial leakage (Tingey & Webb, 2020). Under such a scenario both locally procured and institutionally provided patient capital supporting engaging business models will help shift the determinants of energy demand from competitive markets towards both constitutional orders and civil networks through demand reduction and prosumtion. The greater the number of active market participants, however, the greater the challenge of system integration, maintaining stable grid voltage and frequency, and associated institutional arrangements (Nolden, 2019). On the other hand, more distributed supply and demand management capabilities might enhance overall resilience through spatial and scalar diversity of such capabilities, especially when faced with increasing natural or political security threats. If this is considered desirable, constitutional orders, through energy policy and politics, should facilitate place-based approaches which manage supply and demand across vectors. The challenge lies in ensuring that opportunities do not favor affluent and well-educated citizens and associated cooperatives or particular cities to the detriment of those unwilling or unable to exploit them. Institutional governance arrangements therefore need to ensure that business model innovation and market structures deliver just transitions across administrative boundaries and jurisdictions. 4.2 Effects on Energy Trade and Geopolitics The question is how this translates into energy trade and geopolitics. It is obvious that integrated energy systems accommodating millions of citizens as increasingly interconnected prosumers, in empowered cooperatives or supported through city and local authority intermediation, would send different demand and supply signals compared to liberalized (albeit

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heavily regulated) power markets with a couple of hundred major players. Judging by the scenarios developed by National Grid for Great Britain, total energy demand could be reduced by around a third without significant citizen engagement and by more than half with full citizen engagement and lifestyle changes (National Grid, 2020). As most of this demand would be covered by electricity, a significant share of which would be supplied domestically, the amount of imported energy especially in the form of fossil fuels, would be drastically reduced. Following current trends, bioenergy demand and vegetal labor would replace fossil fuels as the main imported dispatchable energy source and natural resource extraction and subsequent embedding in the supply chains of low and zero-carbon technology would replace fossil fuel extraction, both associated with different but very significant social and environmental degradation, conflict and tension (see UNEP, 2019; Palmer, 2021). Supply chain congestions in the wake of the Covid-19 pandemic and Russia’s invasion of Ukraine suggests that this substitution process is far from certain. On the other hand, the conventional approach, which assigned risk among actors with the largest balance sheets and succeeded in doing so by expanding and diversifying commodity supply chains, is being challenged by a much wider range of considerations, ranging from concerns about climate change to the unease about cementing dependencies on autocratic petrostates. This significantly complicates the make-or-buy decision as the inshoring of entire supply chains is likely to result in much higher overall costs but increased energy security. It might be a price worth paying in light of increasingly evident negative consequences of climate change and fossil fuel import dependencies.

5. DISCUSSION To sum up, there are two dimensions to citizens, cooperatives and cities changing energy systems and markets from the ground up in the context of this Handbook: i) a domestic dimension with sectoral and institutional consequences and ii) geopolitical dimension with energy policy-related consequences for trade and politics. The domestic dimension is characterized by the slow but steady reorganization of energy supply and falling energy demand. The former is driven by policy-induced and increasingly market-driven business model innovation around decentralization and flexibility. The latter is driven by local authorities and cities who lack the strategic capacity to significantly alter supply arrangements focusing on the demand side. The geopolitical dimension is characterized by the slow but steady reorganization of supply chains to support this decentralization tendency and the politicization thereof. This is a result of increasing public (and business) interest in social and environmental dimensions of energy systems from well-to-wheel, from cradle-to-grave and from farm-to-fork, and knee-jerk reorganization as a result of energy security concerns. However, this chapter also stresses the highly heterogenous nature of these dimensions. While national energy systems and markets are considered strategic priorities, the actions of citizens, cooperatives and cities have mostly contributed to the spatially and temporally highly variable complication of supply and demand structures from a grid management or global supply chain perspective, rather than their disruption. If this were to change, energy policy and politics will need to pay more attention to changes arising from the ground up. If lower energy demand and the benefits of decarbonizing smaller energy systems were to become a strategic energy transition priority, for example as a result of sustained geopolitical tension, such attention will necessarily move center stage (see Barrett et al., 2022).

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6. CONCLUSION While constitutional orders and competitive markets are active agents in the transition of energy systems, citizens, cooperative and cities, and civil networks in general, play a more passive role. However, the latter are often part of other networks and institutions that span borders and continents, which can be harnessed to accelerate more decentralized aspects of this transition. The greater the involvement of citizens, cooperatives and cities in energy supply and demand decision-making, the greater the effect on institutional arrangements, market structures and business models, and ultimately energy security. A more human-focused energy system could be the result with much greater potential for energy demand reduction and integrated solutions. The consequences for the geopolitics of energy could be as profound as the shift from fossil fuels to natural resources.

NOTE 1.

I gratefully acknowledge receipt of grant funding from Centre for Research into Energy Demand Solutions, UK Research and Innovation, Grant agreement number EP/R035288/1 and the UK Energy Research Centre, UK Research and Innovation, Grant agreement number EP/S029575/1.

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13. Exploring the geopolitical impacts of energy justice: an interdisciplinary research agenda Christine Milchram and Morena Skalamera

1. INTRODUCTION The transition to renewable energy systems (RES) has profound impacts on energy relations between and within countries. The past decades have seen a surge in research addressing these relations from (geo)political, economic, social, and ethical perspectives. This has led to work in a number of disciplinary and scholarly niches addressing similar problems through complementary lenses. This chapter unpacks how two of such growing fields – the Geopolitics of Renewables (GPRES) and Energy Justice (EJ) – have investigated the consequences of RES. The GPRES addresses the influence of geographical and technical aspects of renewables on business models, energy markets, trade patterns, and welfare, and asks how these might affect interstate energy relations (Goldthau et al., 2019; Overland, 2019; Scholten, 2018). EJ is concerned with the equitable distribution of benefits and harms stemming from the production and consumption of energy services, with particular attention to how the energy transition affects sustainable growth, energy poverty, and access to affordable energy for all (Jenkins et al., 2021; Sovacool & Dworkin, 2015). At first sight, the two fields, EJ and GPRES, address very similar questions: both are interested in relationships, be it between countries, groups, or individuals across different geographic scales and levels of governance, and how these relationships are reshaped due to the transition to renewable energy (RE). Both fields place particular emphasis on how this transition alters the distribution of benefits and harms, and are interested in the ‘winners’ and ‘losers’ of the transition. However, EJ differs from GPRES in its level of analysis. Whereas EJ focuses on how RES impact individuals, such as citizens or workers (McCauley, 2018), GPRES targets the relationship between countries (Scholten, 2018). In addition, they pursue different agendas. EJ’s agenda is ethically normative and as such interested in problematizing inequalities in RES, arguing why these might constitute an injustice, and should thus be remedied on moral grounds. Moral issues are not on the agenda of GPRES research. Rather, GPRES is more descriptive and analytical in nature, as it highlights how patterns of cooperation and conflict between energy producing, consuming, and transit countries may be reshaped by the RE energy transition. What is more, EJ and GPRES have largely existed within their own disciplinary boundaries. EJ is a broad social science field with contributions, for example from (human) geographers, sociologists, and management scholars (Jenkins et al., 2021); the GPRES is rooted in international relations (Scholten et al., 2020). To the best of our knowledge, to date there is no research that addresses potential synergies and the room for crossfertilization between these two fields. Since the two fields address similar questions but within different levels of analysis, have different agendas, and speak to different research communities, it is worth asking what they might learn from each other, and particularly what insights the EJ literature might contribute 232

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to GPRES. This chapter explores linkages and opportunities for cross-fertilization between EJ and GPRES. More concretely, we explore if and how issues in the transition to RES that are discussed in the EJ literature might influence interstate energy relations. By doing so, we aim to show that both fields might profit from increased interdisciplinary collaboration. For example, GPRES can gain insights from EJ regarding how the unfair treatment of vulnerable groups within certain countries might impact national energy policy. For EJ, findings from GPRES about how geographical and technical characteristics of renewables create winners and losers are relevant. Understanding patterns of cooperation and conflict between states is useful to create more effective policies for global EJ. Both fields are interested in the inequalities that are perceived by ‘losers’ of the transition, and how they, in turn, influence political relationships between states. The interplay between justice-related and interstate tensions is largely underexplored, since EJ focuses mostly on tensions within countries whereas geopolitics is interested in relations among them. The chapter proceeds with an overview of the EJ field (Section 2). Section 3 briefly touches on some foundational literature in GPRES, before discussing linkages between the two. Subsequently, Section 4 presents a concrete empirical example and application of the linkages between injustices and geopolitical tensions, which we argue would deserve more academic attention. The section analyzes how the pursuit of just and RES at the sub-national level within the European Union (EU) has had adverse consequences for interstate energy relations between single EU member states and Russia. Section 5 concludes with a brief summary and an outlook for future research.

2. ENERGY JUSTICE Research on EJ has gained prominence in the past ten to 15 years, particularly in energyrelated social science and humanities, drawing together academic research on the uneven social impacts of energy systems on different societal groups, with particular focus on transitions to RE (Graff et al., 2019; McCauley et al., 2013). Much of this research is motivated by the endeavor to counter the dominance of techno-economic approaches in energy systems research, to put more emphasis on social, ethical, and political impacts, and to develop decision-making tools for energy policymakers (Jenkins et al., 2021; Milchram et al., 2020; Sovacool et al., 2016). 2.1 Defining Energy Justice In this chapter, we follow Miller et al.’s (2013, p. 143) definition of energy justice as addressing the “equitable access to energy, the fair distribution of costs and benefits, and the right to participate in choosing whether and how energy systems will change”. This definition highlights that energy justice involves a critical analysis of how benefits and burdens of energy systems (e.g., energy production, consumption, energy security, and climate change repercussions) are distributed, but it also draws attention to how unfair distribution is related to lack of inclusion and participation in energy-related policymaking. In line with this definition, the dominant conceptual and analytical framework to unpack injustices related to energy systems distinguishes between three dimensions of justice: distributive, procedural, and recognition (McCauley et al., 2013; Schlosberg, 2007; Walker, 2009).

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Distributive justice is about the division of benefits and burdens connected to energy systems, recognizing that their impacts tend to be distributed unevenly both in terms of spatial and temporal contexts (Jenkins et al., 2016; Walker, 2009). Procedural justice is concerned with fair decision-making processes, calling for participatory and transparent procedures that involve all affected stakeholders in a non-discriminatory way (McCauley et al., 2013). Justice as recognition involves questions of equitable respect and appreciation of stakeholders, addressing misrecognition in terms of the “disrespect, insult and degradation that devalue some people and some place identities in comparison to others” (Walker, 2009, p. 615). EJ puts particular emphasis on revealing vulnerabilities among (energy) consumers and marginalized communities (Lacey-Barnacle et al., 2020). Many contributions aim at facilitating research on and with communities that are seen as relatively powerless and/or as having no voice in economic development processes, such as indigenous, rural, or poor communities (e.g., Baker, 2016; Shirani et al., 2020; Yenneti & Day, 2015). 2.2 Energy Justice and the Transition to Renewable Energy In the context of renewable energy, the EJ literature focuses on how technological and social innovation can contribute to more just energy systems, and on problematizing inequalities that might be connected with the implementation of RE. In the following paragraphs, we provide a short overview of some of the most prominent energy justice issues related to the renewable energy transition. It is worth mentioning that many of these issues are not inherent to technological development but regard the social and institutional context of RES development and implementation, and related choices regarding scale, location, and ownership structure (Banerjee et al., 2017). RES’ potential in improving energy access and alleviating energy poverty Energy justice researchers have studied and discussed the potential of RES to improve households’ and communities’ access to affordable energy. Although ‘energy access’ seems to be more prominent in a Global South context, and ‘energy poverty’ tends to be used more frequently in Global North contexts, both terms address the lack of access to affordable energy services, energy infrastructure, or both (Banerjee et al., 2017; Walker & Day, 2012). Globally, the majority of people experiencing a lack of access to affordable energy services live in subSaharan Africa and Asia. Particularly in such Global South contexts, research has investigated how decentral renewables – especially solar and wind energy – can increase access to energy for remote rural communities (cf., Banerjee et al., 2017; Lacey-Barnacle et al., 2020). A lack of access to affordable energy services has long been recognized as a distributive injustice due to the importance of energy as a basic requirement for development and human well-being. It often results from the interaction between income inequality, housing inequality, and energy prices (Banerjee et al., 2017; Walker & Day, 2012). For example, energy poverty has been found to be correlated with the Gini index as measure of inequality (Galvin, 2019), and with inferior housing, bad health, inability to afford mobility, as well as lower access to culture and recreational activities, and perceived security (Bartiaux et al., 2018, 2019). RES’ potential in enabling community-led energy projects A second theme often featured in EJ literature is the potential of RES – particularly due to the relatively small-scale and decentralized nature of wind and solar parks – to facilitate

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community-led energy projects (renewable energy communities, or RECs). RECs are grassroots initiatives that propose collective solutions to RE production, for example in the form of cooperatives that finance, implement, and operate a wind or solar park. Other activities include the ownership of local distribution network, energy retail, or the provision of energy efficiency consulting services (Roberts, 2020; Wierling et al., 2018). Due to their capacity of implementing RE projects with local benefits and the associated benefits on social acceptance of renewables, RECs are considered an important social innovation for the energy transition and play a key part in the pursuit of more just, democratic, and citizen-led energy systems (Van Der Schoor et al., 2016). RECs can help to facilitate just energy transitions, because they envision and enact alternative forms of local energy system governance, putting citizens at the center of the energy transition through community-based ownership and participation in energy-related decisionmaking processes (Forman, 2017). Typically, RECs focus on local co-benefits such as community cohesion and the creation of jobs, creating business models that allow those who bear the burdens of renewable generation siting to also enjoy the benefits (Bauwens et al., 2016; Cowell et al., 2011). The organizational form of a cooperative, which ensures voting rights for all members, and the strong focus on inclusion and participation that goes with it, are conducive to procedural and recognition justice. We pick up the development of RECs in greater detail in Section 4, illustrating influences on interstate energy relations between the EU and Russia. RE infrastructure and the misrecognition of local communities Despite the potential of RE to facilitate community engagement and participation in energy systems, as outlined above, research has found that the construction of RE infrastructure – like so many other infrastructures – often comes with misrecognition and marginalization of local communities (Martínez & Castillo, 2016; Otte et al., 2018; Velasco-Herrejon & Bauwens, 2020; Yenneti et al., 2016). Under the impetus of decarbonizing energy systems, it is particularly the less powerful voices from rural, indigenous, or minority communities and their rights who tend to be disregarded (Banerjee et al., 2017). Frequently, the source of misrecognition lies in institutional instability and corruption (Lacey-Barnacle et al., 2020). Misrecognition of local communities occurs globally with all forms of RE infrastructure. For example, Yenneti et al. (2016) reveal exploitation and land grab from subsistence farmers and pastoralists in the development of a large-scale solar energy project in Gujarat, India. The bulk of this solar park was built on land that the government classified as ‘waste’ land, but that had been used by pastoralists and farmers, who lost their traditional livelihoods as a consequence of the project. In the context of wind parks, Otte et al. (2018) highlight misrecognition of the South Sámi population in the development of the (at the time) largest onshore European wind power project on the Fosen peninsula in Norway. The area of the wind park is an important land for the South Sámi population; it is used for reindeer herding, a practice that is crucial for the continuing existence of their culture and language. This is problematic; expert reports reveal that wind energy development leads to the most extensive loss of reindeer migratory routes in recent Norwegian history (Otte et al., 2018). Similar types of injustice, by which minorities have been displaced, or had their lives significantly disrupted, are characteristic of large hydropower development projects (e.g., Llamosas & Sovacool, 2021b; Martínez & Castillo, 2016; Siciliano et al., 2018).

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RE technologies and supply chain injustices Another issue pertains to social burdens in the supply chain of critical materials at the heart of the energy transition. ‘Critical materials’ are raw materials that are necessary for current RE technologies, that are non-fungible, and produced by a small number of countries (Overland, 2019). Examples include cobalt, copper, lithium, silver, tellurium, manganese, selenium, and rare earths (Bazilian, 2018; Vakulchuk et al., 2020). They are used among others for photovoltaic modules, wind turbines, and batteries for electricity storage and electric vehicles (Junne et al., 2020). These materials are also used for a vast array of non-energy technologies, and it is difficult to assess the impact of the rapid growth in renewables (along with electric vehicles) on their criticality. Growing demand in the materials essential to the energy transition, however, carries its own geopolitical risks, leading to increased resource dependencies, and international competition (Bazilian, 2018; Junne et al., 2020). EJ researchers are particularly concerned with the uneven social impacts of mining critical materials and their concentration in the Global South. Sovacool et al. (2020), for example, document the extent of public health risks associated with cobalt mining in the Democratic Republic of Congo, where 20% of cobalt extraction happens in artisanal and small-scale mines. These mines are seldom more than holes in the ground, and miners work without any safety equipment. Women are often engaged in some of the most difficult tasks, for example in cleaning and processing, and receive less pay. Mining activities also see a high level of child labor. The situation is exacerbated as cobalt mining is seen by entire communities as a way out of poverty and the dependence on the mining income traps miners in precarious health and safety conditions. Another example is the growth in lithium production, a material that is used in batteries for electric cars and electricity storage. Its production has vast impacts on the livelihoods of indigenous communities in the so-called ‘lithium triangle’, an area spanning Chile, Bolivia, and Argentina that holds around 60% of the world’s largest lithium reserves and has already seen large ecological and social damage from copper mining (Voskoboynik & Andreucci, 2021). Demand for lithium is projected to increase tenfold over the next decade, suggesting that the problem is likely to become even more severe. Solutions to such challenges are made complicated by the concentration of critical materials in countries with ‘weak’ or ‘poor’ social and environmental governance (Rilley & Manley, 2017), as well as the economic dependence on the export of resources at the level of individuals, communities, and countries. The manufacturing of ‘clean’ energy technologies is thus related to supply chain conditions that perpetuate neo-colonial dependencies and destroy local ecosystems (Bazilian, 2018; Sovacool et  al., 2020). Addressing these issues requires both social policy solutions (e.g., improving safety standards, or preventing child labor) and technological innovation (e.g., developing batteries with less cobalt).

3. ENERGY JUSTICE AND GEOPOLITICS OF RENEWABLES Following the overview of energy justice research above, the question arises whether the issues around RES discussed in the EJ literature have international ramifications and/or impacts on interstate energy relations and are thus of relevance to GPRES. Before addressing this question, we turn to a brief overview of the new socio-economic and political challenges that have emerged with the onset of the energy transition, and their evolving repercussions across different geographic scales and levels of governance. We argue that these developments have

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added complexity to the research agendas of both EJ and GPRES, making the benefits of cross-pollination all the more obvious. 3.1 The Energy Transition Adds Complexity to International Political Relations Since the industrial revolution, the geopolitics of energy –  the effect that the location of resources has on the politics of states – have been a driving factor in global prosperity and security.  In International Relations, geopolitics is a method of studying  foreign policy  to understand, explain, and predict international political behavior through geographical variables. These include the endowment in ‘strategic resources’, such as oil, gas, minerals, and other natural resources.  Energy geopolitics,  then, is the  study  of how a country’s  peculiar resource endowment influences its grand strategy and how such actions have implications for other countries and the international system. Geopolitics  has traditionally been associated with ‘power politics’, and terms such as “spheres of interest”, “great powers”, “heartlands”, and thus the realist school in international relations (Hogselius, 2019, p. 7). With the advent of the post-Cold War era, however, there was a widespread belief that the world would move past geopolitical questions of territory and military power and focus instead on ones of world order and global governance: trade liberalization, nuclear non-proliferation, human rights, the rule of law, and climate change (Mead, 2014). In the energy debate, this went hand in hand with a consensus that market-oriented approaches to energy security provided better security than locking in supply and that energy security “needed not to be a zero-sum game” (Hancock & Vivoda, 2014). Enhancing global trade in hydrocarbon markets by upstream liberalization and market integration and ensuring sustainability by encouraging efficiency were considered to be the best ways to deliver lasting energy security (Kirton, 2010). In the 2010s, the energy transition led to a shift in investment away from the ‘traditional’ energy sector and into renewables.  In this spirit, some observers, once again, argued that with a rise in renewables international energy affairs would become less about locations and resources, and thus less geopolitical in nature (Overland, 2019). Energy security would now entail a shift from a strategic emphasis on energy sources to a focus on energy distribution. Others, however, cautioned that the rise of renewables and hydrogen (van de Graaf et  al., 2020) is not premised on the end of geopolitics; rather, it is about how to answer the new big questions of the geopolitics of energy. Transitioning to a low-carbon world will create new rivalries, winners, and losers (Bazilian et al., 2019); it is giving rise to a whole new constellation of bilateral trade relationships and a new class of energy exporters. Countries that are able to innovate more in renewables, batteries, and electric cars will also be able to reap the industrial and economic benefits of this transition, generating jobs and economic growth (Tagliapietra, 2019). But  the energy transition may give rise to new strategic rivalries and geopolitical vulnerabilities as competition over resources critical for a sustainable transition to a low-carbon economy, such as critical minerals and metals, intensifies. This means that with a global energy transition, traditional geopolitical considerations have become more complex rather than going away. A handful of studies have begun exploring how petrostates are affected by the energy transition (Van de Graaf & Verbruggen, 2015); whether collapsing hydrocarbon markets may threaten widespread protest, domestic political strife, and violent conflict in such regimes (Skalamera, 2020); and how the energy transition may  leave fossil fuel-dependent regimes with large numbers of what are known as “stranded assets” (Van De Graaf & Bradshaw, 2018).

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The current world of tensions between great powers has validated the thrust of Scholten et al.’s (2020) observations about the complex and uncertain impact of renewables on interstate energy relations. Recently, the geopolitical implications of the EU’s ‘Green Deal’ have started to attract academic and political attention, adding yet more complexity. The traderelated repercussions of the ‘Green Deal’ and the implications for the EU’s relations with its main external hydrocarbon partners are both hotly debated (Leonard et al., 2021). Renewable sources have the great advantage over traditional fossil fuels in that they are more universally available and will rely on integrated regional power grids, although ways have to be found to reconcile them with issues of energy justice, since the poor, who are very often the hardest hit by climate change, may struggle to harness the latest technological innovations. The politics of this debate, particularly how to pay for the costs and dissemination of new technologies, and how to compensate those who contribute little to climate change but will most severely experience its tragedies, are emerging as a new focal point in both the GPRES and EJ. 3.2 Energy (In)justice’s Influence on International Relations Now let us address the question of whether issues in the transition to renewable energy systems which are discussed in the EJ literature might be relevant for the broader GPRES literature outlined above. When looking at Section 2, we can observe that the majority of RES’ impacts discussed in EJ occur at a very local level, as they are experienced by citizens and workers (Banerjee et al., 2017). As McCauley (2018, p. 60) points out: “inequalities are not so much international or transnational, but rather intra-national”. This holds true whether research highlights the potential of renewables to increase energy access, and facilitate community-led energy projects, or whether studies investigate injustices experienced by communities close to infrastructure development and by workers in RE supply chains. Here, it is not only the findings which pertain to the local level, but that the majority of EJ’s research designs are about investigating in-country case studies (Jenkins et al., 2021). Energy justice thus addresses a type of energy impact at the local level that is typically not of interest to GPRES scholars, who are more interested in the national, regional, and international scales in energy policy. Local energy (in)justices, however, are connected to international and global relations. Consider, for example, the distributional impacts of hydropower plants such as the relocation of upstream communities and the socio-ecological effects (e.g., on agriculture or biodiversity) in downstream areas, and the fact that a large number of hydropower plants are situated on water bodies that cross or form country borders. Such ‘transboundary’ hydropower projects might create international tensions, and whether they realize benefits for energy access and security depends on cross-country governance mechanisms that distribute benefits among countries (Llamosas & Sovacool, 2021a; Zarfl et  al., 2015). Another example is the global nature of the supply chain of RE technologies and the social injustices along this chain, such as child labor and the precarious health and safety conditions in mining. As critical materials needed for RE technologies are concentrated in countries lacking effective governance, they also raise security of supply concerns. It is still a matter of debate, however, whether the risk of geopolitical competition for critical materials is only low (Overland, 2019), or whether growing demand and the concentration of mining activities in countries with weak or poor governance structures is likely to lead to supply shortages, international tensions, and geopolitical instability (Bazilian, 2018; Vakulchuk et al., 2020).

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Our aim in this chapter is not to argue that all issues of energy justice have international relevance, but to explore some new and evolving EJ challenges that are manifested at an interstate level of energy governance. Further research is needed to investigate more systematically how EJ and GPRES coexist and interact at different scales. This chapter aims to show that the international relevance of energy (in)justices is subtle, as sustainable energy policymaking at the local, micro level, might have repercussions far beyond its immediate scale and, by so doing, influence political debates at national and international levels. We illustrate this point by using the case of renewable energy communities within the EU (relevant to EJ debates) that have impacted the bloc’s energy ties with its most important external partner, Russia, thus ‘elevating’ it to a geopolitical issue. We discuss this in the next section.

4. COMMUNITY ENERGY: EFFECTS ON EU–RUSSIAN ENERGY RELATIONS This section dives deeper into a prominent issue discussed in the EJ literature: the development of RECs. We use this case to explore the linkages between energy justice and geopolitical tensions and underpin our argument that they warrant more academic attention. For our analysis of the EU’s REC development, we distinguish explicitly between three levels of analysis, in line with Skalamera (2016) and Sovacool et al. (2019): the micro level, which concerns energy system changes at the local, sub-national level in close proximity to RE production; the meso level, with developments in national energy policy; and the macro level, which relates to EU energy policy and activities by the European Commission. We trace how the pursuit of energy justice at the micro level has had repercussions for the ultimate RES development at the macro level of the EU, thereby strongly affecting Russia’s grand strategy. Russia failed to recognize the geopolitical ramifications of increased direct micro–macro interactions in the realm of Europe’s low-carbon politics that disintermediated its usual alliances with selected EU member states at the meso level. 4.1 The Rise of Community Energy within the EU In the EU, the development of RECs with their focus on putting citizens at the center of the energy transition is closely related to the struggle for more just renewable energy systems, as discussed in Section 2 (Forman, 2017). Community energy has a relatively long history, dating back for example to municipal and cooperative electricity operations in the early 20th century and a strong wind energy community movement in Denmark as an alternative to nuclear energy. These communities, together with others (for example, in the Netherlands and Germany), have helped pioneer the REC movement in Europe since the 1980s (Roberts, 2020). Since the 2000s, political support for RECs at the meso and macro level has been inconsistent. On the one hand, policies supporting renewables were beneficial for RECs. Examples include feed-in tariffs, tax incentives, and rules that allow citizen ownership of electricity generation facilities (Roberts, 2020). In Germany, fixed tariffs and priority feed-in between 2000 and 2014 have reduced market risk for RE plants. In Denmark, a majority in parliament by parties favorable to wind and RE led to 40% of wind turbines being owned by cooperatives in 2002 (Bauwens et al., 2016). Some local and regional governments even established

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community energy targets. In 2011, Scotland set a community-owned RE target of 500 MW by 2020 (Roberts, 2020). In 2013, Wallonia made 24.99% ownership share in wind parks for citizens and municipalities compulsory (Bauwens et al., 2016). On the other hand, however, regulatory uncertainty, withdrawal of financial support, and market competition have put RECs at a disadvantage relative to incumbent energy corporations (Roberts, 2020; Wierling et  al., 2018). At the macro level, since the liberalization of European energy markets and the first Renewable Energy Directive in 2008 (Directive 2008/28), rules that were set up for large energy companies operating in a centralized system prevailed, and RECs had to comply with the same rules as those larger market incumbents (Roberts, 2020). In 2014, EU policy revisions forbade fixed remuneration like feed-in tariffs and foresaw a transition towards tenders and auctions for renewable generation projects. This created market entry barriers for RECs in countries such as Germany, which relied on feed-in tariffs (Grashof, 2019). Planning policies also played an important role in this and have acted as a barrier for RECs in some countries. In Belgium, for example, the scarcity of suitable sites for renewable power plants has led to high competition for permits, and applications for permits are processed on a first-come-first-served basis. This procedure has put RECs at a disadvantage, because they tend to have fewer resources for fast permit applications (Bauwens et al., 2016). To gain economic and political power in a largely unfavorable environment, cooperatives have acted strategically: they have coordinated their efforts at the regional and European level. In Denmark, for example, ‘Vindenergi’ has been set up to purchase and trade electricity on the spot market on behalf of RECs (Bauwens et  al., 2016). Coordinated REC lobby groups such as ‘hier opgewekt’ in the Netherlands also play an important role in building the technical and legal capacity needed for setting up and running RECs (Brisbois, 2020). Across countries, RECs have coordinated through the European federation ‘REScoop’, which has approximately 1,900 members and has lobbied for strengthening community participation in the energy transition through EU energy legislation (REScoop​.e​u, 2017, 2021). Against the background of a largely unfavorable political environment for RECs but a concomitant growing recognition that the future will be renewable and decentralized (and that the energy transition should be inclusive for all citizens), calls for EU policy to support RECs have been on the rise (Brisbois, 2020). The most recent EU energy policy package “Clean Energy for all Europeans” for the first time ever recognizes RECs as distinct formal entities (Savaresi, 2019). The Renewable Energy Directive II (Directive 2018/21; RED II) requires EU member states to establish legal frameworks that support RECs and to ensure that they encounter a ‘level playing field’ vis-à-vis incumbent commercial energy corporations. This makes it possible for member states to directly support RECs through targeted national policies, e.g., bank guarantees or simplified procedures in becoming licensed suppliers (Roberts, 2020). It is yet to be seen how this nascent recognition and support of RECs will materialize in the application of EU law to national legislation. That said, the Clean Energy Package is seen as a first larger step in EU energy policy to empower citizens and consumers in becoming active participants in the design of future energy systems (Roberts, 2020; Savaresi, 2019). 4.2 Community Energy: Russia Miscalculates The development outlined above shows the close linkages between grassroots REC developments (at a micro level) and energy policy at local, regional, national, and the EU level (at

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the meso and macro levels). However, traditional models in GPRES overemphasize the static collective action required by national states (and the associated free-riding problems) in transitioning towards low-carbon energy systems (Colgan et al., 2020). As seen above, individual countries (or groups of countries), companies, and business networks are not the only agents involved in active policy to counter global warming and promote low-carbon energy systems. In the global age, many influences come in below the level of the nation state, impinging directly upon localities, which in turn can have an impact much greater than their size would suggest. Responding to the demands of EU constituents at levels above and below the national state (macro and micro) climate ambitions have taken center stage in the EU’s climate policy under the leadership of Ursula von der Leyen, especially since many RECs (grassroots movements) want emissions reductions regardless of what their national governments are doing. At the micro level, major efforts are underway across Europe to increase the resilience of local communities in areas under particular threat of climate change, drawing upon local expertise and involvement. We must recognize the importance of such local, grassroots-based initiatives. At the macro level, the current coronavirus crisis has prompted excited talk of a low-carbon ‘New Deal’ that would promote economic recovery through EU-led investment in energy conservation and renewable technologies. As the section above demonstrates, when they act together, local, regional, and city leaders can have a major influence on national governments, or at times bypass the meso level of national policy to influence the EU’s macro, supranational policy. Such dynamics have affected several hydrocarbon exporters in the EU’s neighborhood, above all Russia. Russia’s quest to return to great power status has been based on the sale of its large oil and gas resources, especially to the EU. In turn, its quest to maintain a dominant position as a hydrocarbon (especially gas) supplier to Europe has traditionally been based on the alliances it built at the meso level, with selected European nation states, such as Germany, Italy, and France. For years, on the back of high oil and gas prices, Russia adopted a forceful stance in international relations; doing favorable individual deals with selected EU member states, thereby undercutting European unity and solidarity and, in the process, defending Russia’s geopolitical prominence on the continent. This strategy has had some success, but Moscow overlooked the emerging condition of the EU’s interconnectedness, in which national politics is enmeshed in a web of interdependencies that operate both within, and across regional, national, and subnational levels. As climate action became a question of increasing mobilization from below, at the micro level, the European Commission finally looked ready to take serious steps to cut greenhouse gas emissions. The ‘European Green Deal’ is the result of these burgeoning micro–macro interactions that go beyond the nation state and that – along the way – eroded the influence of geopolitical relations and alliances that Russia cultivated with selected countries to safeguard its energy interests within the EU. In the face of a rise in multilayered global governance, Russia favored a system increasingly embedded in Westphalian notions of international relations, with large states as the primary guardians of the global order, free to pursue their national interests while respecting one another’s primacy within a circumscribed sphere of influence (Mankoff, 2011). In such a system, authority is divided between global and national levels. The Russian leadership has developed a confrontational approach to the EU, while underestimating the EU’s multi-level governance, stretching downwards to regions, cities, and localities with consequences that

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also spill over into the area of climate policy and Europe’s low-carbon transition. Heavily dependent upon Russia for its oil and gas supplies – the EU had proven an easy target for a resurgent Russia, which has had no problems dividing its member states and concluding bilateral energy deals with some of them. But the state took a back seat during the above-described period of accelerating decarbonization, promoting more ambitions climate targets, and enhancing energy efficiency by decentralized network systems rooted in local communities. All of this entails a significant change in the nature of Russia–EU energy relationship. By 2040, the EU’s demand for gas is expected to sharply decline despite the depletion of indigenous sources (IEA, 2019). This casts increasing doubt about Russia’s role in the EU’s gas market from the 2030s onwards, as 90% of Russia’s current long-term gas contracts with European customers are due to expire around that date. At the moment, Russia is still working to maximize income from oil and gas without the modernization that could have come about had the country permitted the introduction of outside investment and encouraged effective management. Some change, however, is visible from reading the country’s official strategic planning documents. Russia’s 2019 “Energy Security Doctrine” for the first time recognizes the introduction of increasingly stringent long-term emissions reduction targets in the EU as a major political and economic challenge (Energy Security Doctrine of the Russian Federation, 2019). Domestically, Moscow produces the socalled yellow and blue hydrogen (from nuclear and natural gas) and there is increasing talk about how Russia could, in principle, export hydrogen to the EU, therefore striving to remain relevant in Europe’s new energy order. The potential details of these developments are peripheral to this chapter; however, what is of concern is how the EU’s accelerating decarbonization plans might become a flashpoint for new tensions with Russia in an increasingly multipolar international fabric (Scholten et al., 2020). The key point, however, is how over time, developments within the EU that came in below the level of the nation state, impinging directly upon current forms of state-centered energy policy, have had an enormous impact on the fundamentals of the EU–Russia oil and gas trade, and are likely to fundamentally reshape the EU’s energy and climate diplomacy toward Russia. Its international repercussions notwithstanding, a rise of community energy essentially stems from the pursuit of more just and democratic energy systems. Research in the field of energy justice can offer a more granular understanding of the potential of RECs to change local and regional energy systems with related interstate impacts and is therefore likely to be increasingly relevant for scholars of GPRES. Our analysis draws attention to (1) how the rise of RECs as domestic sources of the EU’s multilevel energy policy has had strong geopolitical ramifications and (2) how in the global age the traditional thinking highlighting climate change as a static collective action problem between states is increasingly challenged by empirical accounts of actor interactions at different levels and the proliferation of action on climate change at a sub-national level.

5. CONCLUSION This chapter has addressed the relevance of energy (in)justice for interstate energy relations. We have explored opportunities for cross-fertilization between the research agendas of energy justice and the geopolitics of renewables, uncovering how the global transition to renewable

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energy affects energy relations both within and across countries, with increasing areas of overlap. To explore the linkages between these two fields, we first gave an overview of energy justice in context of a rise in renewables (Section 2) and the resulting new geopolitics of renewables, in addition to providing some observations on how the two fields display important links (Section 3). We observe that EJ addresses social impacts of renewables at a local level, for citizens and workers, and shows that these local developments have repercussions far beyond their immediate geographical scale and across national and international levels of governance. To further test this proposition, Section 4 delves into a concrete empirical case: the development of community energy in the EU and its impact on EU–Russia energy relations. The case has been useful to show how the pursuit of a more just energy transition at the micro level has had international repercussions. However, research that addresses potential synergies and the room for cross-fertilization between these two fields remain at an embryonic stage. Thus, we would encourage more systematic work into how EJ might add a fruitful lens to GPRES in terms of identifying and addressing social and political impacts of the global transition to renewable energy. An interesting case for future research is the supply chain of critical materials such as copper, graphite, lithium, and cobalt that are needed to produce renewable energy technologies. Energy justice researchers have already gone as far as arguing that the concentration of these materials’ production in a few countries of the Global South, with weak social and environmental standards, represents a form of modern colonialism (Sovacool et al., 2020). Meanwhile, researchers in GPRES have debated whether such concentrated production might lead to new resource dependencies and new forms of international conflict (Vakulchuk et al., 2020). In sum, the minerals at the heart of the energy transition will carry their own geopolitical risks and give rise to new injustices. To conclude, issues of justice or fairness in energy systems are important factors in influencing energy policy and governance (Stern et al., 2016). As different countries embrace the energy transition at different speeds (e.g., the EU and Russia), international governance organizations such as the UN, the IEA, and IRENA can play a new role in facilitating a smooth transition. We therefore need to integrate the consideration of new energy injustices and shifting geopolitical dynamics in evaluating how the global energy transition will not, per se, lead to the end of the geopolitics of energy, but rather to its transformation, which will entail – as in any revolution – both winners and losers.

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Leonard, M., Pisani-Ferry, J., Shapiro, J., Tagliapietra, S., & Wolff, G. (2021). The geopolitics of the European Green Deal. European Council on Foreign Relations. https://ecfr.eu/wp-content/uploads/ The-geopolitics-of-the-European-Green-Deal.pdf (accessed 25 June 2023) Llamosas, C., & Sovacool, B. K. (2021a). The future of hydropower? A systematic review of the drivers, benefits and governance dynamics of transboundary dams. Renewable and Sustainable Energy Reviews, 137(October 2020), 110495. https://doi​.org​/10​.1016​/j​.rser​.2020​.110495 Llamosas, C., & Sovacool, B. K. (2021b). Transboundary hydropower in contested contexts: Energy security, capabilities, and justice in comparative perspective. Energy Strategy Reviews, 37(July), 100698. https://doi​.org​/10​.1016​/j​.esr​.2021​.100698 Mankoff, J. (2011). Russian Foreign Policy: The Return of Great Power Politics (2nd ed.). Rowman & Littlfield. Martínez, V., & Castillo, O. L. (2016). The political ecology of hydropower: Social justice and conflict in Colombian hydroelectricity development. Energy Research and Social Science, 22, 69–78. https:// doi​.org​/10​.1016​/j​.erss​.2016​.08​.023 McCauley, D. (2018). Energy Justice. Palgrave Macmillan. https://doi​.org​/10​.4324​/9780429029585​-15 McCauley, D., Heffron, R. J., Stephan, H., & Jenkins, K. (2013). Advancing energy justice: The triumvirate of tenets. International Energy Law Review, 32, 107–110. Mead, W. R. (2014). The return of geopolitics. Foreign Affairs, 93(3), 1–7. https://doi​.org​/10​.1017​ /9781316344033​.004 Milchram, C., Künneke, R., Doorn, N., Kaa, G. Van De, & Hillerbrand, R. (2020). Designing for justice in electricity systems: A comparison of smart grid experiments in the Netherlands. Energy Policy, 147(October), 111720. https://doi​.org​/10​.1016​/j​.enpol​.2020​.111720 Miller, C., Iles, A., & Jones, C. (2013). The Social Dimensions of Energy Transitions. Science as Culture, 22(2), 135–148. https://doi​.org​/10​.1080​/09505431​.2013​.786989 Otte, P. P., Rønningen, K., & Moe, E. (2018). Contested wind energy discourses on energy impacts and their significance for energy justice in fosen. In A. Szolucha (Ed.), Energy, Resource Extraction and Society: Impacts and Contested Futures (p. 19). Routledge. https://doi​.org​/10​.4324​/9781351213943 Overland, I. (2019). The geopolitics of renewable energy: Debunking four emerging myths. Energy Research and Social Science, 49, 36–40. https://doi​.org​/10​.1016​/j​.erss​.2018​.10​.018 REScoop​.e​u. (2017). What local energy communities need from the Clean Energy Package. https:// www​.rescoop​.eu​/ blog​/energy​-communities​-and​-the​-renewable​-energy​-directive REScoop​.e​u. (2021). About Our Federation. https://www​.rescoop​.eu/ Rilley, A., & Manley, D. (2017). In a Low-Carbon Future , Better Mineral Governance Could Power Development. https://resourcegovernance​.org​/ blog​/ low​-carbon​-future​-better​-mineral​-governance​ -could​-power​-development Roberts, J. (2020). Power to the people? Implications of the Clean Energy Package for the role of community ownership in Europe’s energy transition. Review of European, Comparative and International Environmental Law, 29(2), 232–244. https://doi​.org​/10​.1111​/reel​.12346 Savaresi, A. (2019). The rise of community energy from grassroots to mainstream: The role of law and policy. Journal of Environmental Law, 31(3), 487–510. https://doi​.org​/10​.1093​/jel​/eqz006 Schlosberg, D. (2007). Defining Environmental Justice: Theories, Movements, and Nature. Oxford University Press. Scholten, D. (2018). The geopolitics of renewables. In Lecture Notes in Energy Volume 61. Springer International Publishing. https://doi​.org​/10​.2478​/ hssr​-2013​- 0035 Scholten, D., Bazilian, M., Overland, I., & Westphal, K. (2020). The geopolitics of renewables: New board, new game. Energy Policy, 138(August 2018), 111059. https://doi​.org​/10​.1016​/j​.enpol​.2019​ .111059 Shirani, F., Groves, C., Henwood, K., Pidgeon, N., & Roberts, E. (2020). ‘I’m the smart meter’: Perceptions of smart technology amongst vulnerable consumers. Energy Policy, 144(June), 111637. https://doi​.org​/10​.1016​/j​.enpol​.2020​.111637 Siciliano, G., Urban, F., Tan-Mullins, M., & Mohan, G. (2018). Large dams, energy justice and the divergence between international, national and local developmental needs and priorities in the global South. Energy Research and Social Science, 41(July 2017), 199–209. https://doi​.org​/10​.1016​/j​.erss​ .2018​.03​.029

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14. The politics of sustainability: energy efficiency, carbon pricing, and the circular economy Michaël Aklin and Patrick Bayer1

1. INTRODUCTION The clean energy transition requires a complete transformation of energy systems, substituting fossil fuels for energy sources that emit little or no greenhouse gases (GHGs). Historically, energy transitions have operated according to a logic of efficiency. New energy sources that could unleash more energy at an affordable price gradually replaced older technologies (Smil, 2018). Until recently, the era of fossil fuels, from the 19th century onward, marked the latest stage of this process (Wrigley, 2013). The clean energy transition responds to a different logic: its aim is to reduce the environmental footprint of the energy system. This ambition makes the clean energy transition more difficult than previous ones. The side effects of fossil fuel consumption, such as air pollution, were an inconvenience that seldom limited their deployment in the past. These negative externalities, in turn, solidified the dominant position of fossil fuels (Unruh, 2000; Oberthür, 2016; Aklin & Urpelainen, 2018). Fossil fuels also benefited from a remarkable ability to organize and mobilize politically, further entrenching them as the dominant energy source in modern economies (Mildenberger, 2020; Stokes, 2020). Cleaner competitors, such as renewable energy, were not rewarded for their benign impact, nor did they possess the kind of political resources available to the fossil fuel sector. As a result, the clean energy transition cannot solely rely on market forces. Instead, it requires aggressive public policies (Unruh, 2002; Meckling et al., 2015). To simplify, there are two primary paths that political leaders can take to speed up the clean energy transition (Breetz et al., 2018): first, policymakers can promote clean energy; for instance, by cutting costs of deployment via subsidies or guaranteed contracts (Mendonca et al., 2009; Bayer & Urpelainen, 2016). These and their geopolitical implications are discussed elsewhere in this edited volume (see also Scholten, 2018; Scholten et al., 2019; Vakulchuk et al., 2020). Second, policymakers can try to curb the use of fossil fuels. Several strategies exist to achieve this goal: some focus on discouraging demand for fossil fuels specifically (e.g., Rabe, 2018); others try to reduce demand for energy altogether by reducing or reusing waste. Policies promoting higher energy efficiency of heating systems and retrofitting of buildings are examples. At the extreme end, policymakers may implement reforms in support of a circular economy. While definitions vary greatly, this perspective emphasizes the need to minimize waste and demand for goods and services (Kirchherr et al., 2017; Korhonen et al., 2018). Some of these policies may indirectly affect clean energy supply, but their primary targets are carbonintensive energy sources and technologies. This chapter investigates the second path – the means by which states can decarbonize aside from renewable energy – and its geopolitical implications. Section 2 discusses some of the most important policy instruments that fit this definition and our current state of knowledge 247

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regarding their origins and effectiveness. As will soon become clear, many (but not all) of these policies have important distributional consequences both within and across countries (Bazilian et al., 2019; Bayer & Genovese, 2020). However, we do not believe that decarbonization policies always have a geopolitical impact. In Section 3, we present an analytical framework to understand when and how such policies have geopolitical implications. We draw on work on geoeconomics (Luttwak, 1990) to clarify the conditions under which decarbonization policies may redistribute power across countries and create new tension points in international relations. Section 4 demonstrates the usefulness of our framework for policies that promote clean energy. It allows us to parse similarities and differences of renewable policies and decarbonization policies for geopolitical conflict. Section 5 concludes.

2. OVERVIEW OF DECARBONIZATION POLICIES The clean energy transition requires simultaneously (a) the deployment of massive amounts of carbon-free energy sources (and accompanying infrastructure) and (b) reducing the consumption of fossil fuels. This chapter focuses on the policy instruments that can be used to achieve the latter. We distinguish between two broad families of policies. In the first, the focus lies on discouraging demand for fossil fuels specifically. Lawmakers may try to impose a penalty on fossil fuels to improve the relative prospects of clean energy sources. In theory, penalties range from imposing a price or a cap on GHG emissions to outright outlawing certain fossil fuels altogether. In practice, the former has been the preferred approach in many jurisdictions, even though it is not always a popular strategy (Rabe, 2018; Klenert et al., 2018; van den Bergh & Botzen, 2020). The second family is comprised of policies that reduce or reuse waste. These include measures promoting energy efficiency and setting higher energy standards. Likewise, they include policies in favor of technologies that use various forms of waste. For instance, heat pumps rely on ‘wasted’ heat. The goal here consists of reducing energy consumption overall and not only the use of fossil fuels. In contrast to the first family, these policies do not impose constraints on fossil energy directly. Instead, they target the way energy is used and try to reduce demand altogether. 2.1 Reducing Demand for Fossil Fuels The first set of policies that we consider consists of attempts to reduce the use of fossil fuels specifically. These policies acknowledge the existence of a mismatch between fossil fuels and clean energy sources. Market failures prevent the replacement of the former with the latter (Gillingham & Sweeney, 2010). Policies that fall in this category range from carbon pricing to command-and-control measures. Carbon pricing represents a set of policy tools frequently used to incentivize the reduction of carbon emissions (Farzin, 1996; World Bank, 2019). The logic justifying carbon pricing has been known for a century. Arthur Pigou (1932, pp. 174–179) famously noted that externalities lead to welfare losses and that taxing these externalities can address this. Applied to climate change, this rationale calls for the imposition of a cost on the use of fossil fuels. Individuals, business, and government generate emissions through their activities. In the absence of

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legislation stating otherwise, these actors do not pay the total cost of their emissions. Negative externalities associated with emitting GHGs, such as pollution, health problems, and climate change are not reflected in the market price of fossil fuels. By placing a price on carbon, these policies internalize (at least part of) the costs. Known as the “polluter pays principle,” internalizing the cost of negative externalities associated with carbon-emitting activities increases the costs faced by businesses and should prompt actors to reduce their emissions (Stavins, 2011). Revenues collected from these different policies can then be reinvested into mitigation and adaptation efforts or lower citizens’ tax bills, even though such rebate programs seem to have little effect on popular support for decarbonization instruments (Mildenberger et  al., 2022). Pricing GHG emissions has been at the center of economists’ and policymakers’ strategies to tackle climate change. William Nordhaus (1977, p. 344) had already suggested in the late 1970s that global carbon taxes may achieve this goal. Some environmental nonprofits soon started advocating for the implementation of carbon pricing. In the United States, the World Resources Institute published a report in 1992 encouraging the adoption of a carbon tax (Dower & Zimmerman, 1992). Governments can use different types of carbon pricing instruments (Stavins 2019). First, greenhouse gas taxes raise the price of activities that emit such gases. In a Pigouvian model, an appropriately calibrated tax forces emitters to internalize the social consequences of their action. In practice, designing and implementing a GHG tax creates challenges (Metcalf & Weisbach, 2009). One must know how high it ought to be set. Furthermore, regulators must decide which industries and which gases to target. Typically, these will include the energy production, heavy manufacturing, transportation, and mining sectors. In any case, governments must also figure out how to measure greenhouse gas emissions to set accurate tax bills. Setting these practical problems aside, one of the biggest challenges consists in regulatory differences across jurisdictions. In the absence of international coordination, GHG taxes create distortionary incentives: at the margin, a firm may find it more appealing to outsource production to countries with more lenient environmental regulations (Aklin, 2016). In turn, the risk of leakage has led to calls to either impose GHG taxes internationally, or to impose border tax adjustments (Metcalf & Weisbach, 2009). Second, policymakers may wish to impose a cap on GHG emissions. Cap-and-trade systems begin by setting a total amount of emissions over a given period of time. Then, emission rights are allocated to producers in the private sector. Firms may only emit up to the amount of the permits they own; additional emissions require them to buy permits from other firms. This sets a price for GHGs that may vary considerably over time.2 Cap-and-trade systems avoid one of the pitfalls of GHG taxes: the quantity of emissions can directly be set by the ruler. It also creates potential rents to producers if the permits they wish to sell have a higher price than what they paid for them. At the same time, cap-andtrade systems require a more consequent infrastructure than taxes, including the creation of a mechanism to allocate permits (such as an auction), a market, and a legal infrastructure to sustain trading and enforcement. As a result, cap-and-trade systems remain less common. The European Union Emissions Trading System (EU ETS) remains the best known, and probably most successful attempt so far (Ellerman & Buchner, 2007; Calel & Dechezleprêtre, 2016; Bayer & Aklin, 2020). As with GHG taxes, carbon leakage and relocation threats raise difficult questions regarding the overall effectiveness of regional cap-and-trade systems (Bayer, 2022).

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GHG pricing represents the most conventional tools used by governments to reduce the consumption of fossil fuels. As of early 2022, 45 countries had adopted a form of carbon pricing according to the World Bank.3 A meta-analysis found that their effect on emissions tends to be limited (Green, 2021). As a result, some have called for new tools to reduce fossil fuel consumption. GHG pricing is often compared to so-called ‘command-and-control’ measures. Governments are deemed to use such measures when they impose a particular set of standards and pollution requirements on firms. Firms may, for instance, be given specific emissions targets by state authorities, such as in Switzerland (Hintermann & Zarkovic, 2020, p. 38). Economic theory generally highlights the efficiency of GHG pricing over command-andcontrol. The latter is inflexible, because it does not give firms the freedom to decide which additional unit of GHG emissions is worth emitting and which one is not. Yet one may note that command-and-control is, in fine, an extreme form of GHG pricing. The cost is set by the law at whatever the punishment for disobedience is. 2.2 Reducing Energy Demand Instead of discouraging demand for fossil fuels, policymakers sometimes find it advantageous to reduce demand for energy writ large. The European Union’s (EU) “2020 Climate & Energy Package,” for instance, called for a 20% improvement in energy efficiency across its then-28 member states by 2020; the more ambitious target of reducing the EU’s greenhouse gas emissions by at least 55% by 2030 calls for even steeper energy efficiency improvements and major realignment of the EU’s Energy Efficiency Directive. Consistent with this, studies have shown that improving energy efficiency can be a significant element in a strategy to keep global warming below 1.5°C (Grubler et al., 2018). 2.2.1 Energy efficiency Energy efficiency policies are standards and regulations, as well as procedures, that result in the use of less energy to produce the same output (Gillingham et al., 2009). As noted earlier, energy sources that exhibit high levels of negative externalities (such as fossil fuels) tend to be underpriced. At the individual or at the firm level, this leads to wasteful consumption. Energy efficiency measures seek to reduce such waste (Jaffe et al., 2004). The gap between wasteful and optimal consumption in energy has several sources (Jaffe & Stavins, 1994; Jaffe et al., 2004; Gillingham et al., 2009). The first constraint consists in underdeveloped technology. New products need time to become energy efficient. For instance, incandescent light bulbs could only be replaced once more efficient alternatives, such as LED, had been developed. Second, even though energy-efficient technologies reduce spending on energy inputs, their upfront cost may deter investors and consumers. When people and firms cannot easily and cheaply borrow to fund such investments, they may decide to stick with less energy-efficient products. Lastly, energy efficiency must be rewarded. As long as fossil fuels remain underpriced, using them more efficiently only yields a fraction of the savings that ought to be accrued by consumers. Thus, potential investors may not see it in their interest to spend resources on energy efficient technologies. Externalities create entry barriers that deter efficiency-improving innovations (Jaffe et al., 2004, p. 82).

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As a result, public policy may be needed to support energy-efficient technologies and products (Levine et al., 1994). And indeed, countries around the world have adopted instruments to reduce energy consumption in virtually all economic sectors, including buildings, transport, and industry. Whether these policies have been effective depends considerably on the context. Lipscy (2012), for instance, notes that conflicting interests limited the ability of the Japanese government to make good on its electoral promises to increase energy efficiency. Regardless of the sector, a technology (or product) is energy efficient if it reduces the amount of energy needed to provide the same service. As such, it does not necessarily follow that total energy consumption declines with higher levels of energy efficiency. The so-called “rebound” effect represents a case in which energy efficiency reduces the marginal cost of energy sufficiently to stimulate demand for it (e.g., Gillingham et al., 2009, p. 20). Studies generally suggest that such a rebound effect, if it exists, tends to be small (Gillingham et al., 2016). Thus, with appropriate caveats, we will consider in the next section that energy efficiency measures lead to a decline in aggregate energy consumption. 2.2.2 Circular economy A circular economy refers to an economic system designed to minimize the use of finite resources by reducing and reusing waste (Pearce & Turner, 1990; Kirchherr et  al., 2017; Winans et al., 2017; Korhonen et al., 2018). This is achieved through disposing of the ‘endof-life’ linear model, instead focusing on systems-based thinking in which (most) outputs are continually restored or used as new inputs. In a linear economy, inputs are combined to produce a product which is then used, with any waste thrown away. In a circular economy approach, designing out waste and pollution, reusing raw materials and products, and regenerating natural systems are at the core. While the idea of circular economy is not new – Boulding’s (1966) “spaceship earth” captured its spirit – it has gained considerable interest since the early 2000s (Li et al., 2010; Kirchherr et al., 2018). While much has been written about a circular economy, practical recommendations and policy proposals for the clean energy transition are scarcer. From an energy viewpoint, a circular economy program would emphasize a reduction of the reliance on fossil fuel, which cannot straightforwardly be reused. It would also generally recommend a shift toward either lower levels of energy consumption, or at the very least toward the use of renewable sources such as solar and wind power. To achieve this, the advocates of a circular economy often suggest using policy instruments similar to the ones mentioned above. Stahel (2016), for instance, suggests the imposition of a tax on non-renewable resources, and Hoo et al. (2020) evaluate the feasibility of feed-in tariffs to promote biogas. Other policy tools include various forms of legislation to prop up secondary markets, establish quality and transparency standards, and so on (Milios, 2018). Whether circular economy instruments work in practice remains to be seen. Rebound effects may limit their ability to cut consumption, just like they constrain energy efficiency measures. Furthermore, many barriers exist that slow down the shift toward a circular system, such as a lack of circular culture within key firms (Zink & Geyer, 2017; Kirchherr et al., 2018). Nevertheless, political leaders around the world, led by the EU and China, have started adopting policies in the spirit of a circular economy (Su et al., 2013; Kirchherr et al., 2018). Other countries such as Japan have also implemented recycling and reuse regulations in line with a circular economy (Morioka et al., 2005).

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To summarize, we reviewed some of the most commonly used policy instruments to decarbonize energy systems, aside from those focusing on renewable energy. To prepare the ground for the next section, we divided them into two main groups: those that try to discourage the use of fossil fuels and thus help renewables; and those that aim at a reduction of energy consumption and waste altogether. This division, to be certain, is arbitrary. Yet as we will see in the next section, it offers us analytical leverage to think systematically about the geopolitical effects (or the lack thereof) of these policy tools.

3. THE GEOPOLITICS OF DECARBONIZATION POLICIES Historically, in a world dominated by fossil fuels, countries derived geopolitical influence from geographically concentrated deposits of resources, such as oil and gas (Sidaway, 1998, p. 229; Hughes & Lipscy, 2013). Resource-exporting countries like Saudi Arabia, accounting for 13% of global oil production, are powerful enough to influence market prices, and Russia, holding the largest gas reserves worldwide, has been threatening multiple times to cut Europe off from its vast gas supply. In the Russian war against Ukraine, Gazprom did cut supplies and stopped gas exports to several European states, including Italy, Austria, France, Poland, the Czech Republic, and Slovakia. Despite these examples, the academic literature cautions against the idea of an omnipotent “energy weapon” (van de Graaf & Colgan, 2017) and points to greater nuance in energy geopolitics. The clean energy transformation is shaking up the geopolitical power balance that emerged in the aftermath of the 1970s oil crisis.4 While existing research on the geopolitical effects of this renewable energy transformation has characterized fossil fuel producers as the likely losers from declining global demand for oil and gas (van de Graaf & Bradshaw, 2018), it has also emphasized that the geopolitics of energy policy will not become less contested (Bazilian et al., 2019); rather, geopolitics will shift its focus (Scholten & Bosman, 2016). Interestingly, despite scholarly attention to the geopolitical consequences of the clean energy transition, previous work primarily studies the role played by renewable energy. In contrast, we know little about the geopolitical effects of decarbonization policies whose primary goal is to reduce carbon consumption and drive down energy use altogether. This section addresses this gap. First, we develop an analytical framework for studying the geopolitical implications of decarbonization policies, especially in the context of global markets. Drawing on the concepts of geoeconomics (Luttwak, 1990) and weaponized interdependence (Farrell & Newman, 2019), we identify country-level and policy-level conditions that need to be met for decarbonization policies to have geopolitical effects. Second, we use this framework to contrast likely geopolitical effects of the different decarbonization policies discussed in Section 2 and sketch practical implications from the ongoing discussion about the EU’s carbon border adjustment mechanism. Section 4 briefly compares the geopolitical consequences of policies that seek to cut back carbon consumption to those that aim at promoting renewables. This will allow us to systematize similarities and differences in how these two types of policies shape the currently emerging geopolitical energy landscape. 3.1 The Geoeconomics of Decarbonization Policies Decarbonization policies like carbon pricing, command-and-control measures, or efficiency standards aim at cutting back GHG emissions or minimizing waste from energy consumption.

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These policies do so by changing the incentives for market participants. Pricing carbon-intensive economic activities or imposing new regulations creates costs for firms. As long as these policies are adopted unilaterally, without international coordination, they will threaten bottom lines and market shares of firms that operate in competitive, global markets. In this context, we focus on two types of geopolitical consequences. First, we consider (economic) conflicts that arise from the reallocation of resources in globalized markets. Geopolitical effects from decarbonization policies materialize through changes in relative prices for various energy sources. Concretely, decarbonization policies may have implications for the rents obtained by fossil fuel producers and their influence in regional politics; carbon-intensive sectors more broadly may take a hit as a result of introducing decarbonization policies. Second, we evaluate whether decarbonization policies create new forms of contestation. Among them, the most salient for us are conflicts over trade policies. As we discuss below, decarbonization policies can create new fault lines. For instance, a country that wants to strengthen the effect of carbon taxes may consider the implementation of border adjustment taxes, which may displease its trading partners. In either case, conflict between nations, as a result of the politics of sustainability, is as likely (and probably more likely) to unravel in markets as on battlefields. Relying primarily on market power, the most salient geopolitical consequences from decarbonization policies will be felt as geoeconomic ones in global markets (Luttwak, 1990): taxing GHGs from electricity production increases power prices in the national economy, challenging a country’s international competitiveness; energy efficiency standards not only minimize wasting energy, but can also serve as a market entry barrier to foreign competitors whose products are not compliant with new regulatory standards; banning combustion engine cars by 2030 impacts not only car manufacturing at home, but reverberates through international supply chains (Meckling & Hughes, 2018). In the longer run, decarbonization policies may create geoeconomic effects from the emergence of leading sectors that benefit from first-mover advantages. Decarbonization policies often double as green industrial policy (Meckling et al., 2015; Nahm, 2021). Regulatory standards, for instance, shield infant industries in new technologies from international competition; as these technologies mature, they become more competitive, both commercially and politically (Breetz et al., 2018). The UK Government’s “Ten Point Plan for a Green Industrial Revolution” (UK Government, 2021) proposes massive investments in hydrogen production capacity and deployment of heat pumps to champion global UK industrial leadership in green heating solutions for domestic and commercial housing. Decarbonization policies may hence create the conditions for future geoeconomic influence if governments manage to support industrial growth in sectors that are, or can become, strategic assets in the global race to “net zero.” The geopolitical effects of decarbonization policies, and whether they materialize at all, vary across contexts. Some of these policies will matter only domestically without creating geopolitical effects. Others may challenge international economic stability and send shockwaves through global markets. We argue that both country-level and policy-level factors matter for understanding geopolitical consequences from the politics of sustainability, and that they each shape a different type of conflict. As a starting point, geopolitical effects from decarbonization policies are only possible when the country that introduces such policies has a high demand for carbon. A new carbon tax in Switzerland is unlikely to create major geopolitical upheaval, while new energy

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efficiency standards in the EU may trigger a different international response. Highly carbondependent and large economies have the potential to change relative prices for carbon-intensive products. In turn, this will change demand for these products and associated trade flows, causing distributional effects from the reallocation of resources in economic markets. Bigger markets are attractive for international producers due to economies of scale. Since decarbonization policies may challenge access to these markets, imports into the EU’s 450-million-customer strong Single Market need to comply with extensive environmental regulation, health and safety provisions, and consumer protection laws. Even though international competitors may ultimately adopt, for instance, stricter energy efficiency standards for their products in order to maintain access to profitable markets (Vogel, 1995), the introduction of these policies will create winners and losers among importing firms. Those which are quicker to adjust to new regulation will come out on top, while others will lose out (Kennard, 2020). Such distributional effects from resource reallocation due to decarbonization policies can result in geopolitical conflict when those countries that introduce policies to cut down carbon emissions are characterized by high carbon demand. We capture the logic of the first step of our framework in Figure 14.1. When an economy’s carbon demand is large enough, so that the introduction of decarbonization policies affects relative prices, geopolitical conflict ensues. This conflict will bear out in economic markets from distributional effects. A second form of conflict is, however, also possible. While the distributional conflict in economic markets largely evades direct political influence as it depends critically on a country’s carbon demand – which, at least, in the short-term cannot be controlled by governments – geopolitical conflict can also arise from policy design. Specifically, we argue that governments can ‘weaponize’ decarbonization policies for geopolitical or geoeconomic purposes. Carbon pricing policies can serve as a useful illustration here. A standard cap-and-trade system, for example, regulates domestic producers of carbon-intensive products in the country

Figure 14.1  Two-stage framework of geopolitical effects from decarbonization policies

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that establishes such a policy. International competitors who do not face similar regulation, therefore, benefit from a comparative advantage. To compensate for this unfair economic advantage and to minimize fears of carbon leakage (Aklin, 2016) – the concern that carbon emissions are moved from regulated to unregulated jurisdictions – discussions about carbon border adjustment mechanisms have become vocal. These adjustments would essentially function as taxes on carbon-intensive imports to create an economic level playing field. Such policy designs are purposefully layered on top of standard carbon pricing policies and have caused controversy of whether they are compliant with free trade provisions under the World Trade Organization (WTO). While this example draws on carbon pricing policies, other decarbonization policies such as efficiency standards or command-and-control regulation could have similar effects whenever trading partners fear that these policies are disguised trade impediments and ways to protect domestic industries. This is why we expect that decarbonization policies can create new geopolitical conflict points from policy design, especially in trade policy. Notwithstanding how dysfunctional the WTO system currently is, it nonetheless offers, at least in theory, formalized procedures under the Dispute Settlement Proceedings to challenge decarbonization policies that could limit free trade. Farrell and Newman (2019) argue that governments can only benefit from weaponized interdependence when their economies serve as central hubs in global economic networks. Similarly, in our case, the necessary condition to turn weaponized decarbonization policies into a reality is that the country introducing such a policy must have a considerable carbon demand. The second type of geopolitical effects in our framework hence results from newly created conflict points in international trade. While each economy’s carbon demand shapes the geopolitical conflict that decarbonization policies can produce, governments can be strategic about when, how, and against whom to weaponize decarbonization policies. Before we apply this analytical framework to the various decarbonization policies discussed in Section 2 above, a note on the timing of the resulting geopolitical effects is useful. When we talk about geopolitical and geoeconomic effects from decarbonization policies, we are most interested in the direct, i.e., short-term effects of these policies that would accrue sufficiently quickly after these policies are introduced. This contrasts with more indirect, longer-term effects, where domestically targeted carbon regulation fast-tracks technological innovation (Calel & Dechezleprêtre, 2016) and creates new competitive advantage in international markets. While these effects may trigger geoeconomic conflict further down the road, this is more difficult to control from a policymaker’s perspective. If governments intend to use decarbonization policies for geopolitical purposes, deliberate policy design with strong immediate effects is preferable. 3.2 Variation in the Geoeconomic Effects of Different Decarbonization Policies We now apply our two-stage framework of geopolitical conflict to the decarbonization policies discussed in Section 2. In a first instance, we assess the potential that decarbonization policies have of triggering geopolitical and geoeconomic conflict and we explicitly distinguish between the two types of geopolitical conflict in our framework: first, distributional conflict from reallocated resources as a result of a shift in relative prices, and second, new conflict from deliberate, weaponized policy design. We also briefly assess the actual implications of our framework in the context of the current discussion about the carbon border adjustment mechanism in EU carbon markets.

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Table 14.1 provides an overview of the potential geopolitical conflict from decarbonization policies. As discussed above, we assume in all cases that the country that adopts a decarbonization policy is characterized by an economy with high carbon demand. Put differently, we assume that the necessary condition for conflict from weaponized decarbonization policies is met. Beginning with policies that seek to reduce demand for fossil fuels, we argue that there is considerable scope for geoeconomic effects, both in terms of redistribution and new conflict lines. Carbon pricing and command-and-control instruments can have strong competitive effects. The potential to divert resources elsewhere and to thereby create distributional geoeconomic conflict is particularly pronounced in the case of carbon pricing as these policies apply, at least in theory, to all products from across all industries without a zero-carbon footprint. In contrast, command-and-control policies are more tailored to particular sectors. A ban on petrol and diesel cars, for instance, targets road emissions, while carbon pricing can be encompassing. The global economy’s far-reaching dependence on carbon emissions makes distributional conflict very likely. Both policies are also well suited to create new conflict lines. Carbon pricing and command-and-control policies have been contested as disguised trade impediments under WTO rules. When environmental, energy, or technology standards tilt the regulatory political economy in favor of domestic producers, foreign competitors may cry foul over unfair competition. Aside from these policies’ immediate distributional conflicts, governments have design options available that are likely to trigger new conflict, specifically, in trade. Relative to this first policy family, policies that seek to reduce energy demand altogether are much less likely to produce geopolitical or geoeconomic conflict. They do still have some conflict potential, but to a smaller extent than instruments focusing on fossil fuels alone. Energy efficiency standards trigger resource reallocation as they also affect relative prices and often require large capital investments. When upfront costs are prohibitive, reallocation can be considerable. Efficiency standards may unleash new conflicts when they systematically Table 14.1  Overview of geoeconomic effects from different decarbonization policies Policy

Geoeconomic effects Distributional conflict

New conflict lines

Policy family I: reduce demand for fossil fuels   Carbon pricing policies

Very likely

Very likely with carbon border adjustment

 Command-and-control

Likely

Very likely when used to restrict market access

Policy family II: reduce overall energy demand   Energy efficiency

Possible

Possible

  Circular economy

Possible

Unlikely

Notes:   The first column describes the four main policies described in Section 2, separately for whether they are aimed at reducing demand for fossil fuels or energy demand overall. The second and third column show how likely geoeconomic effects from decarbonization policies are, separately for geoeconomic effects that result from the reallocation of resources (column 2) or from new conflict lines, specifically in trade policy (column 3).

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disadvantage foreign competitors, but this has so far been much less common. In formulating energy efficiency standards, governments might tie them to particular technologies, which could result in conflict around market access and fair competition. As long as efficiency standards are, however, non-prescriptive, new geopolitical conflict lines are unlikely. Adopting a circular economy model is least prone to strong geopolitical effects. Since the use of fossil fuels is generally incompatible with a circular economy built on recycling and reuse, distributional conflict follows a similar pattern to other policies in this policy family. Thus, distributional conflicts are possible. The question is whether a circular economy could create new fault lines. While speculative, we believe that the odds are relatively small. With a clear focus on local economies and often city-level initiatives, circular economy approaches, at least how they are proposed and discussed at the moment, are unlikely to produce major new forms of geopolitical conflict. Many of the key initiatives proposed under the circular economy heading do not require policy action of a kind that may trigger cross-national crises. This is the case, for instance, of pushes for norms against consumerism (McDowall et  al., 2017). This is not to say that circular economy policies generate no risks at all. Policies such as product labeling and trade standards could lead to contentious trade disputes (Barrie & Schröder, 2021). So far, we have discussed the potential of decarbonization policies to trigger geopolitical conflict, but do any of these expectations bear out in practice? An obvious challenge for parsing the actual implications of our framework is that many countries are still grappling with finding the right policies to underpin their carbon reduction commitments. The number of countries with carbon pricing instruments is rising steadily, but prices differ across jurisdictions (World Bank, 2021). During the United Nations climate conference in Glasgow in 2021, some states committed to transition rapidly to zero emission vehicles, while others agreed to reducing methane emissions. All these policies are in the making, and any of these can result in geopolitical conflict, as described in our framework once pressures on governments to implement these policies mount. The most useful example for an initial validity check of our argument is indeed the EU’s legislative proposal to introduce a carbon border adjustment mechanism (CBAM). The basic idea is simple: in the absence of any political intervention, European producers, who come under increasingly more stringent carbon regulation from Brussels, would lose market share to their international competitors (Marcu et al., 2021). To avoid the decline or relocation of Europe’s industrial base, a CBAM policy would act like a tariff (based on imports’ carbon content) to offset cost advantages for foreign producers from less ambitious climate policy. Almost immediately after the EU had published its plans, Brazil, South Africa, India, and China, in a joint statement, expressed “grave concern regarding the proposal for introducing trade barriers such as unilateral carbon border adjustments” (Lo, 2021, emphasis added). This observed behavior directly speaks to our framework in two important ways: first, major economies from the Global South, with considerable exports into the European single market, perceive the CBAM policy as discriminatory as it abuses the EU’s market power to weaponize decarbonization policies. Second, soliciting a breach of international trade laws under the WTO, the geopolitical conflict plays out as one of international economic cooperation and trade. Thus, by the very design of the CBAM policy the EU proposal purposefully creates a new fault line of geopolitical conflict. This is just one example, but it illustrates the usefulness of our analytical framework while drawing on a real-world case. The discussion of CBAM also highlights the importance of

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intentional policy design for geopolitical conflict alongside distributional effects from resource reallocation due to changes in relative market prices.

4. APPLYING OUR FRAMEWORK TO RENEWABLE ENERGY POLICIES Next, we evaluate the degree to which our conceptual framework can be applied to other facets of the clean energy transition, such as the geopolitical and geoeconomic consequences of policies that promote renewable energy. We then sketch hypotheses regarding future patterns of geopolitical conflicts born from decarbonization policies. Our framework suggests that we can partition the geopolitical implications of decarbonization into two. First, decarbonization can reallocate resources across countries and regions. As demand for fossil fuel declines, considerable resources could be redirected from petrostates and other fossil fuel producers to other countries. This is the distributional effect of decarbonization. Second, policies enacted to speed up decarbonization could create new conflict areas. The most straightforward example is the implementation of carbon border tax adjustments. These represent new tension points in global politics. How useful is such a framework to understand other parts of the clean energy transition, such as the rise of renewable energy? There are important analytical differences between renewable energy policies and the decarbonization strategies discussed here. For instance, they can differ considerably in terms of the domestic cleavages that they generate. Promoting solar power opposes different actors than, say, promoting energy efficiency measures (Aklin & Urpelainen, 2018; Stokes, 2020). Setting domestic politics aside, it remains to be seen how much our model can help us understand the geopolitics of renewables. Our first parameter – the importance of a country in terms of the global demand for carbon – already suggests some important differences between decarbonization and renewable energy policies. Our discussion of decarbonization programs emphasizes that they primarily aim at reducing fossil fuel consumption. As such, geopolitical implications are more likely when these programs are pushed by countries that represent sizable shares of global demand for fossil fuels and carbon-intensive goods. Smaller countries are unlikely to move (relative) prices enough to affect the distribution of carbon rents. The same is not necessarily true for renewable energy policy, where small countries can have effects that go beyond their size. This is because they can contribute to the growth of renewables in a wide range of ways that is not limited to the demand that they generate. In particular, small countries can help promote renewables by investing in research and development. To offer a concrete example: if Scotland decided to adopt circular economy policies, one may be doubtful that doing so will generate global ripple effects via a change in fossil fuel consumption. However, if Scotland funds research in the development of new technologies (say, such as perovskite cells), then it may affect global energy markets in a disproportionate way. Our second parameter focuses on the ability of policies to create new tensions or to redistribute resources across the world. Here, we believe that our model may be more readily applicable to renewable energy policies. Some policies such as feed-in tariffs (a long-term contract for renewable energy producers), for instance, generate few international conflicts, even if they do reallocate resources globally. Aside from contributing to a decline in demand for fossil

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fuels, they do not create crises that would lead to international tensions. But other policies are more prone to escalating conflicts. Aggressive tariffs to protect domestic solar producers (Aklin, 2018) or industrial policies to develop an electric car sector are more likely to generate crises (Meckling & Nahm, 2019). And indeed, the international system has seen a growth in conflicts triggered by green policies. The EU and Japan, for instance, lodged a complaint in 2010 against Canada at the WTO. The Canadian province of Ontario had implemented a feed-in tariff that was hiding subsidies for Canadian renewable energy producers (Kucik & Pelc, 2016). Given the popularity of green industrial policies across the world, such conflicts are likely to become more common in the future. Yet this does not have to be the case. As our framework suggests, not all policies are equal in their global impact. Policies that target a reduction in energy demand should be less likely to generate new conflict points in the international system. This is especially true for those that are not designed to focus on fossil fuels in particular and instead favor lower levels of energy consumption overall. The reason is that such policies do not typically require legislation that penalizes foreign firms or that is of dubious legality according to international law. While these policies cannot prevent a redistribution of resources away from carbon-intensive economies, which is unavoidable under any decarbonization program, they can at least avoid the creation of new conflicts. Students of geopolitics and international relations may want to give a closer look at the relative benefits of such approaches.

5. CONCLUSION This chapter attempted to complete two tasks. First, we discussed the most commonly used policy instruments to slow down fossil fuel consumption (setting aside renewable energy policies, discussed elsewhere in this book). Second, we presented a framework to understand the consequences of these policies. In summary, our argument is that their effect depends on their distributional consequences as well as their design. Some of these policies can reallocate resources and some of them can create new forms of contestation. One implication of our framework is that policies that target fossil fuels (and not energy demand writ large) are more likely to generate distributional conflicts and new conflict areas. In contrast, policies that promote a circular economy appear less prone to feed old and create new tensions. It remains to be seen how accurate our simple framework is when tested against data. Yet regardless of its empirical traction, it brings up what we believe is an important point. It is customary to evaluate policies against the costs and benefits – typically evaluated at the domestic level – that they generate. To our knowledge, the policies we have reviewed in this chapter are seldom evaluated by policymakers against their global impact. Yet, in a world with disintegrating international institutions, one may find it useful to think carefully about the international implications of domestic green policy.

NOTES 1. Acknowledgment: We gratefully acknowledge research assistance by Jacob Myers. 2. There are other types of emission trading mechanisms, such as baseline-and-credit systems. For the purpose of this chapter, the differences between them are minor.

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3. See the World Bank’s Carbon Pricing Dashboard, available at https://car​bonp​rici​ngda​shboard​. worldbank​.org​/map​_data (accessed March 7, 2022). 4. Oil was of course already an important resource prior to the 1970s oil crisis (e.g., Yergin 2011).

REFERENCES Aklin, M. (2016). Re-exploring the trade and environment nexus through the diffusion of pollution. Environmental and Resource Economics, 64(4), 663–682. Aklin, M. (2018). How robust is the renewable energy industry to political shocks? Evidence from the 2016 US elections. Business & Politics, 20(4), 523–552. Aklin, M., & Urpelainen, J. (2018). Renewables: The Politics of a Global Energy Transition. Cambridge, MA: MIT Press. Bayer, P., & Aklin, M. (2020). The European Union emissions trading system reduced CO2 emissions despite low prices. Proceedings of the National Academy of Sciences, 117(16), 8804–8812. Bayer, P. (2023). Foreignness as an asset: European carbon regulation and the relocation threat among multinational firms. Forthcoming in the Journal of Politics. Bayer, P., & Genovese, F. (2020). Beliefs about consequences from climate action under weak climate institutions: Sectors, home bias, and international embeddedness. Global Environmental Politics, 20(4), 28–50. Bayer, P., & Urpelainen, J. (2016). It is all about political incentives: Democracy and the renewable feed-In tariff. Journal of Politics, 78(2), 603–619. Barrie, J., & Schröder, P. (2021). Circular economy and international trade: A systematic literature review. Circular Economy and Sustainability, 1–25. Bazilian, M., Bradshaw, M., Gabriel, J., Goldthau, A., & Westphal, K. (2019). Four scenarios of the energy transition: Drivers, consequences, and implications for geopolitics. WIREs Climate Change, 11(2), e625. Boulding, K. (1966). The economics of the coming spaceship earth. In H. Jarrett (Ed.), Environmental Quality in a Growing Economy. Baltimore, MD: Johns Hopkins University Press. Breetz, H., Mildenberger M., & Stokes, L. C. (2018). The political logics of clean energy transitions. Business and Politics, 20(4), 492–522. Calel, R., & Dechezleprêtre, A. (2016). Environmental policy and directed technological change: Evidence from the European carbon market. Review of Economics and Statistics, 98, 173–191. Dower, Roger C., & Zimmerman, M. B. (1992). The Right Climate for Carbon Taxes: Creating Economic Incentives to Protect the Atmosphere. Washington, DC: World Resources Institute. Ellerman, A. D., & Buchner, B. K. (2007). The European Union emissions trading scheme: Origins, allocation, and early results. Review of Environmental Economics and Policy, 1(1), 66–87. Farrell, H., & Newman, A. L. (2019). Weaponized interdependence: How global economic networks shape state coercion. International Security, 44(1), 42–79. Farzin, Y. H. (1996). Optimal pricing of environmental and natural resource use with stock externalities. Journal of Public Economics, 62(1–2), 31–57. Gillingham, K., Newell, R. G., & Palmer, K. (2009). Energy efficiency economics and policy. Annual Review of Resource Economics, 1(1), 597–620. Gillingham, K., Rapson, D., & Wagner, G. (2016). The rebound effect and energy efficiency policy. Review of Environmental Economics and Policy, 10(1), 68–88. Gillingham, K., & Sweeney, J. (2010). Market failure and the structure of externalities. In B. Moselle, J. Padilla, & R. Schmalensee (Eds.), Harnessing Renewable Energy. Washington, DC: RFF Press. Green, J. F. (2021). Does carbon pricing reduce emissions? A review of ex-post analyses. Environmental Research Letters, 16(4), 043004. Grubler, A., Wilson, C., Bento, N., Boza-Kiss, B., Krey, V., McCollum, D. L., Rao, N. D., Riahi, K., Rogelj, J., De Stercke, S., & Cullen, J. (2018). A low energy demand scenario for meeting the 1.5 C target and sustainable development goals without negative emission technologies. Nature Energy, 3(6), 515–527. Hintermann, B., & Zarkovic, M. (2020). Carbon pricing in Switzerland: A fusion of taxes, commandand-control, and permit markets. ifo DICE Report, 18(1), 35–41.

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Hoo, P. Y., Hashim, H., & Ho, W. S. (2020). Towards circular economy: Economic feasibility of waste to biomethane injection through proposed feed-in tariff. Journal of Cleaner Production, 270, 122160. Hughes, L., & Lipscy, P. Y. (2013). The politics of energy. Annual Review of Political Science, 16, 449–469. Jaffe, A. B., Newell, R. G., & Stavins, R. N. (2004). Economics of energy efficiency. Encyclopedia of Energy, 2, 79–90. Jaffe, A. B., & Stavins, R. N. (1994). The energy paradox and the diffusion of conservation technology. Resource and Energy Economics, 16(2), 91–122. Johnson, C., & VanDeveer, S. D. (2021). Energy regionalism in theory and practice. Review of Policy Research. DOI: https://doi.org/10.1111/ropr.12422. Kennard, A. (2020). The enemy of my enemy: When firms support climate change regulation. International Organization, 74(2), 187–221. Kirchherr, J., Piscicelli, L., Bour, R., Kostense-Smit, E., Muller, J., Huibrechtse-Truijens, A., & Hekkert, M. (2018). Barriers to the circular economy: Evidence from the European Union (EU). Ecological Economics, 150, 264–272. Kirchherr, J., Reike, D., & Hekkert, M. (2017). Conceptualizing the circular economy: An analysis of 114 definitions. Resources, Conservation and Recycling, 127, 221–232. Klenert, D., Mattauch, L., Combet, E., Edenhofer, O., Hepburn, C., Rafaty, R., & Stern, N. (2018). Making carbon pricing work for citizens. Nature Climate Change, 8(8), 669–677. Korhonen, J., Honkasalo, A., & Seppälä, J. (2018). Circular economy: The concept and its limitations. Ecological Economics, 143, 7–46. Kucik, J., & Pelc, K. J. (2016). Do international rulings have spillover effects: The view from financial markets. World Politics, 68, 713. Levine, M., Hirst, E., Koomey, J., McMahon, J., & Sanstad, A. (1994). Energy Efficiency, Markel Failures, and Government Policy. No. LBL-35376. Lawrence Berkeley Lab. Li, H., Bao, W., Xiu, C., Zhang, Y., & Xu, H. (2010). Energy conservation and circular economy in China’s process industries. Energy, 35(11), 4273–4281. Lipscy, P. Y. (2012). A casualty of political transformation? The politics of energy efficiency in the Japanese transportation sector. Journal of East Asian Studies, 12(3), 409–439. Luttwak, E. N. (1990). From geopolitics to geo-economics: Logic of conflict, grammar of commerce. The National Interest, 19(2), 17–23. Lo, J. (2021, April 12). Emerging economies share ‘grave concern’ over EU plans for a carbon border levy. Euractiv. https://www​.euractiv​.com​/section​/energy​-environment​/news​/emerging​-economies​ -share​-grave​-concern​-over​-eu​-plans​-for​-a​-carbon​-border​-levy/ Marcu, A., Mehling, M., Cosbey, A., & Maratou, A. (2021). Guide to the European carbon border adjustment. ERCST Discussion Paper. McDowall, W., Geng, Y., Huang, B., Barteková, E., Bleischwitz, R., Türkeli, S., Kemp, R., & Doménech, T. (2017). Circular economy policies in China and Europe. Journal of Industrial Ecology, 21(3), 651–661. Meckling, J., & Hughes, L. (2018). Global interdependence in clean energy transitions. Business and Politics, 20(4), 467–491. Meckling, J., Kelsey, N., Biber, E., & Zysman, J. (2015). Winning coalitions for climate policy: Green industrial policy builds support for carbon regulation. Science, 349(6253), 1170–1171. Meckling, J., & Nahm, J. (2019). The politics of technology bans: Industrial policy competition and green goals for the auto industry. Energy Policy, 126, 470–479. Mendonca, M., Jacobs, D., & Sovacool, B. (2009). Powering the green economy: The feed-in tariff handbook. London: Earthscan. Metcalf, G. E., & Weisbach, D. (2009). The design of a carbon tax. Harvard Environmental Law Review, 33, 499–556. Mildenberger, M. (2020). Carbon Captured: How Business and Labor Control Climate Politics. Cambridge, MA: MIT Press. Mildenberger, M., Lachapelle, E., Harrison, K., & Stadelmann-Steffen, I. (2022). Limited impacts of carbon tax rebate programmes on public support for carbon pricing. Nature Climate Change, 12, 141–147. Milios, L. (2018). Advancing to a circular economy: Three essential ingredients for a comprehensive policy mix. Sustainability Science, 13(3), 861–878.

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Morioka, T., Tsunemi, K., Yamamoto, Y., Yabar, H., & Yoshida, N. (2005). Eco‐efficiency of advanced loop‐closing systems for vehicles and household appliances in Hyogo Eco‐Town. Journal of Industrial Ecology, 9(4), 205–221. Nahm, J. (2021). Collaborative Advantage: Forging Green Industries in the New Global Economy. Oxford: Oxford University Press. Newell, P. (2021). Power Shift: The Global Political Economy of Energy Transitions. Cambridge: Cambridge University Press. Nordhaus, W. D. (1977). Economic growth and climate: The carbon dioxide problem. American Economic Review, 341–346. Oberthür, S. (2016). Where to go from Paris? The European Union in climate geopolitics. Global Affairs, 2(2), 119–130. Pearce, D. W., & Turner, R. K. (1990). Economics of Natural Resources and the Environment. Baltimore: Johns Hopkins University Press. Pigou, A. C. (1932). The Economics of Welfare. London: MacMillan. Rabe, B. G. (2018). Can We Price Carbon? Cambridge, MA: MIT Press. Scholten, D., & Bosman, R. (2016). The geopolitics of renewables; exploring the political implications of renewable energy systems. Technological Forecasting & Social Change, 103, 273–283. Scholten, D. (Ed.). (2018). The geopolitics of renewables. New York, NY: Springer. Scholten, D., Criekemans, D., & Van de Graaf, T. (2019). An energy transition amidst great power rivalry. Journal of International Affairs, 73(1), 195–204. Sidaway, J. D. (1998). What is in a Gulf? In G. Ó. Tuathailand & S. Dalby. Rethinking Geopolitics. London: Routledge. Smil, V. (2018). Energy and Civilization: A History. Cambridge, MA: MIT Press. Stahel, W. R. (2016). The circular economy. Nature News, 531(7595), 435. Stavins, R. N. (2011). The problem of the commons: Still unsettled after 100 years. American Economic Review, 101, 81–108. Stavins, R. N. (2019). The future of U.S. carbon-pricing policy. NBER Working Paper 25912. Stokes, L. C. (2020). Short Circuiting Policy: Interest Groups and the Battle Over Clean Energy and Climate Policy in the American States. New York: Oxford University Press. Su, B., Heshmati, A., Geng, Y., & Yu, X. (2013). A review of the circular economy in China: Moving from rhetoric to implementation. Journal of Cleaner Production, 42, 215–227. UK Government. (2021). Ten point plan for a green industrial revolution. UK Government Policy Paper. https://www.gov.uk/government/publications/the-ten-point-plan-for-a-green-industrial-revolution Unruh, G. C. (2000). Understanding carbon lock-in. Energy Policy, 28(12), 817–830. Unruh, G. C. (2002). Escaping carbon lock-in. Energy Policy, 30(4), 317–325. Vakulchuk, R., Overland, I., & Scholten, D. (2020). Renewable energy and geopolitics: A review. Renewable and Sustainable Energy Reviews, 122, 109547. van de Graaf, T., & Bradshaw, M. (2018). Stranded wealth. Rethinking the politics of oil in an age of abundance. International Affairs, 94(6), 1309–1328. van de Graaf, T., & Colgan, J. D. (2017). Russian gas games or well-oiled conflict? Energy security and the 2014 Ukraine crisis. Energy Research & Social Science, 24, 59–64. van de Graaf, T., & Sovacool, B. (2020). Global Energy Politics. Cambridge: Polity. van den Bergh, J., & Botzen, W. (2020). Low-carbon transition is improbable without carbon pricing. Proceedings of the National Academy of Sciences, 117(38), 23219–23220. Vogel, D. (1995). Trading Up. Cambridge, MA: Harvard University Press. World Bank. (2019). Report of the High-Level Commission on Carbon Pricing and Competitiveness. Washington, DC: World Bank Group. World Bank. (2021). State and Trends of Carbon Pricing 2021. Washington, DC: World Bank Group. Winans, K., Kendall, A., & Deng, H. (2017). The history and current applications of the circular economy concept. Renewable and Sustainable Energy Reviews, 68, 825–833. Wrigley, E. A. (2013). Energy and the English industrial revolution. Philosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences, 371(1986), 20110568. Yergin, D. (2011). The Prize. New York: Simon and Schuster. Zink, T., & Geyer, R. (2017). Circular economy rebound. Journal of Industrial Ecology, 21, 593–602.

PART III NEW TECHNOLOGIES, NEW INTERDEPENDENCIES

15. Solar powers – renewables and sustainable development around the world or geostrategic competition? Thomas Sattich, Stephen Agyare, and Oluf Langhelle

1. EARLY MOVES TOWARDS SUSTAINABLE DEVELOPMENT, RENEWABLES, AND INTERNATIONAL POLITICS A transformation of the energy sector towards renewables can help meet present-day energy needs while reducing environmental impact (IPCC, 2018, p. 9). Based on that premise, many decision-makers and practitioners worldwide no longer consider the economic costs of promoting environmental sustainability in the energy sector a barrier to economic and societal development; instead, sustainability is increasingly seen as a promising investment in future industries and innovation (OECD, 2019), and thus future generations. Consequently, international agreements such as the Paris Agreement or the United Nations (UN) Sustainable Development Goals (SDGs) bring together a majority of countries worldwide behind goals such as limiting global warming and affordable and clean energy. Seen in this light, it appears that support for renewable energy and sustainability lead directly not only to economic development but also greater accord at the international level. Solar power plays a particular role in this context, as it offers an opportunity to bring energy security, prosperity, and sustainability to countries categorized as Least Developed Countries (ISA, 2015). Solar power therefore stands in the center of many national and international efforts to make sustainable energy technologies a path to development. Possible applications reach from solar vaccine refrigerators to solar water heaters (SciDevNet, 2010). Moreover, with the International Solar Alliance, a new organization for coordinating efforts worldwide has emerged (ibid.). According to this organization, the future of energy is decarbonized, decentralized, digitized, and democratized (ISA, 2021) – with solar power being an important part of the energy system and the member countries at the forefront of global development (ibid.). When it comes to energy, new development paths and cooperation are, however, only one part of the story; geopolitical rivalries are the other: economic divisions, questions of sovereignty and energy security, power struggles, and the continued use of fossil fuels still mark global energy politics. In this chapter, we address the relationship between renewable energy and the UN SDGs. We ask whether contributions to sustainable development by renewable energy translate into global stability or a new kind of geostrategic competition. In the following, we explore the links between renewable energy, sustainable development, and geopolitics, first through a historic account of these relationships leading up to the adoption of the SDGs in 2015. We make the argument that renewable energy – first as an idea and later as a necessity – has been intimately attached to the evolution of the concept of sustainable development and the SDGs. As part of a quest for a just global order, renewables can thus be seen as an attempt to bypass geopolitics. 264

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However, with the global success of sustainable development and renewables, new geopolitical trade-offs may emerge. We therefore take an empirical look at the linkages between the SDGs, renewables, and climate change mitigation policies and their potential geopolitical implications. Moreover, we discuss the geopolitical dilemmas raised by renewable energy. Special emphasis is put on solar energy as it encapsulates many of the promises of renewable energy. Throughout the chapter, we highlight solar energy to examine the historically close relationship between the concept of sustainable development, renewable energy, and geopolitics. Moreover, we present solar energy in order to present possible geopolitical downsides of sustainable development.

2. THE ORIGINS OF SUSTAINABLE DEVELOPMENT: ENVIRONMENT, DEVELOPMENT, AND GEOPOLITICS In a brief historical outline, this section introduces the efforts to make human activity on planet Earth more sustainable. The intellectual effort to define ‘sustainable development’ and what is referred to as geopolitics may seem rather distant from one another, but they are deeply related. As a matter of fact, sustainability can be seen as a reaction to geopolitical struggles that threaten to end life as we know it. For example, the report Our Common Future from the World Commission on Environment (WECD) and Development was a call for multilateralism (Langhelle, 2017). With sustainability becoming a viable development path, the opposite may have become true: geopolitical interaction between nations may become more and more determined by the attempts to achieve sustainability. 2.1 The Early Days of Sustainable Development: Inspired by Geopolitics Sustainable development is intimately linked to issues of the environment, energy – and geopolitics. Svante Oden’s thought-provoking article. “An insidious chemical warfare among the nations of Europe” (Levy, 1995), is suited to exemplify the deep relationship between the different subject areas. In 1967, it opened the view on a new emerging environmental issue – acid rain. It was identified that the long increase in the emission of sulfur dioxide in Europe had contributed significantly to the decrease in the pH levels of surface and rainwaters. The issue was then presented to the Organisation for Cooperation and Development (OECD) by the Swedish delegate. After a long-standing debate and differing opinions on the matter, backed by evidence of intercontinental transport of radioactivity from Chinese nuclear bomb experiments, the OECD and other superpowers came to the realization that air pollution is no longer a local problem but has an international political ambit (Grennfelt et al., 2019, pp. 849–864). This report on acid rain gained traction both from the public and scientific fields in Europe, in fact, based on this report, the first world conference on the environment was organized by the UN in Stockholm, Sweden. Also, this initiative resulted in the collaborative efforts of Western European countries to investigate the depths of transboundary transport of emissions (Handl, 2012). The work of Amory B. Lovins (1976) – an early intellectual expression of a low carbon and renewable energy future – is suited to further demonstrate the interlinkages between the mentioned topics. Lovins dedicated his professional career to developing an alternative energy policy that relies on small-scale, clean, renewable energy production instead of large-scale,

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dirty, fossil-fuel energy and nuclear-generated electricity. These two technological pathways – ‘soft’ and ‘hard’ according to Lovins – depict two very different and “mutually exclusive” (Lovins, 1976, p. 65) energy strategies for the next 50 years: • •

The ‘soft path’ was characterized as an approach combining a prompt and serious commitment to efficient use of energy, rapid development of renewable energy sources matched in scale and in energy quality to end-use needs. The ‘hard path’ describes an ‘extrapolation of the recent past’, relying on “rapid expansion of centralized high technologies to increase supplies of energy, especially in the form of electricity” (Lovins, 1976, p. 65), based on fossil fuels and nuclear energy.

Lovins’s motivation for describing an alternative to the ‘hard path’ was strongly inspired by the geopolitical tensions of the time. While he mentions that the ‘soft path’ is the more environmentally friendly of the two alternatives, his focus was to avoid nuclear proliferation (Tomain, 2006, pp. 435–437).1 Later in the 20th century, however, the environmental benefits of the ‘soft’ path became more central in public perception. When global environmental concerns were first put on the political agenda at the UN Conference on the Environment in Stockholm in 1972, renewable energy was still just a possibility. Solar power was among the first renewable energy technologies that captured the minds of a broader audience. This technology therefore played an important part in making the concept of renewable energy more graspable. In Only One Earth (1972), Barbara Ward – who played an important role in the preparations for the Stockholm Conference – and René Dubos wrote the following about what we now refer to as renewable energy: the sun itself, safely shielded from us by banks of oxygen and ozone, streams down day after day its inconceivable energies upon our planet. Is there no more direct way of plugging ourselves into these daily supplies of which we use only one-third of 1 percent? If any such technological breakthrough proved possible, we could then look back upon man’s [sic] rapid exhaustion of fossil fuels as simply the ‘self-starter’ for his vast energy system which, invented by the technologies which fossil fuel made possible, plugs the planet into cosmic supplies and carries it along at acceptable levels of selfrenewing and inexhaustible energy. (Ward & Dubos, 1972, p. 128)

The writings of Ward and Dubos were also placed within the context of possible effects of energy use on the global climate. As they argued: Industrial man, by using the air as a giant sewer, can have profound and unforeseen effects on the earth’s climate and thus the possible consequences will be borne not simply by the polluting agencies but by the biosphere as a whole. (Ward & Dubos, 1972, p. 195)

This, they argued would have huge implications for global governance: The global interdependence of man’s [sic] airs and climates is such that local decisions are simply inadequate. Even the sum of all local separate decisions, wisely made, may not be a sufficient safeguard and it would take a bold optimist to assume such general wisdom. Man’s [sic] global interdependence begins to require, in these fields, a new capacity for global decision-making and global care. (Ward & Dubos, 1972, p. 195)

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In the early phases of renewables and sustainable development, geopolitics was an important background variable. On the other hand, the emergence of technologies such as solar power contributed strongly to real-world efforts to promote development on the basis of low-carbon energy. From the start, it was considered an important energy alternative for countries that, through no fault of their own, lack the energy that benefited other parts of the word in terms of economic development (Sachs, 2015, p. 114). In India, for example, more than a million households are benefiting from solar energy, with over 10,000 remote villages securing basic electricity through distributed renewable power alone (O’Sullivan et al., 2017, p. 2). Today, nations such as China are profiting strongly from the boom in the manufacturing of solar panels, and thus in terms of industry and economic activity. Unsurprisingly, solar energy has therefore become an important aspect of international politics, with new rivalries evolving around the potential of this technology. One can, therefore, not ignore the possible impact of renewables on international politics. Renewables contribute directly to development; if the resulting growth effects are strong enough, building up renewables changes power structures at the international level, which requires a certain level of coordination. Energy security plays a particularly important role in connecting the issue areas of sustainability, renewables, and geopolitics – today as much as in the past. At the time renewables and the concept of sustainability and sustainable development emerged, the US and other powers were becoming increasingly reliant on oil imports from the Middle East. OPEC was becoming a powerful organization due to the high demand for oil. In reaction, the US and other major powers were convinced that their energy security was under threat. On November 7, 1973, President Richard Nixon, addressed America as follows: I want to talk to you tonight about a serious problem, a problem we must all face together in the months and years ahead. As America has grown and prospered in recent years, our energy demands have begun to exceed available supplies. In recent months, we have taken many actions to increase supplies and to reduce consumption. But even with our best efforts, we knew that a period of temporary shortages were inevitable. Unfortunately, our expectations for this winter have now been sharply altered by the recent conflict in the Middle East. Because of that war, most of the Middle eastern oil producers have reduced overall production and cut off their shipments of oil to the United States. By the end of this month, more than 2 million barrels a day of oil we expected to import into the United States will no longer be available. (CVCE, 2013)

As a consequence of energy security concerns such as those expressed by President Nixon and others, countries like the US and Canada began extensive exploration of their reserves and new drilling to increase the level of self-sufficiency (Campbell & Laherrere, 1998). The increasing supply of fossil energy first presented a hurdle for progress towards the use of renewable energy. However, at the same time, some countries that were heavily reliant on fossil fuel production were also hit by the reality of price volatility in the world oil markets, and therefore took bold first steps to invest in renewables. This trend included producers (e.g., Denmark) as well as importers of fossil fuel (e.g., Germany). In the US, as part of energy diversification, efficiency, and independence policies under President Carter, the Department of Energy (DOE) was established to oversee research and development in efforts to broaden the energy mix (Barry, 1995). According to data compiled from the DOE’s Conservative and Renewable Energy Base Table 1990, about US$1.7 billion were spent on renewable energy research and development in the US between the years 1973 through 1977 (Clark, 2018, p. 3). Out of these efforts by the US government, industries were able to advance wind, solar, and

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geothermal energy on a commercial scale with the help of the National Aeronautics and Space Administration (NASA). The famous White House Solar Panel played an important role in opening the pathway for renewable energy. As a symbol of his faith in ‘the power of the sun’, Jimmy Carter had 32 solar panels installed on the White House roof in the summer of 1979; these panels were used to heat water in the household for seven years until President Ronald Reagan had them removed in 1986 (Smithsonian, n.d.). 2.2 The Situation Today: Sustainability at the Forefront of Global Development? In the 1980s, climate change moved to the forefront of global environmental problems, and with it, renewable energy has gained a central position in discussions related to sustainable development. The Brundtland report, also known as Our Common Future (1987) was the turning point and a milestone for sustainable development (Langhelle, 2017). In the report, the WECD argued that global economic development is likely to exceed the availability of energy and the biosphere’s capacity to absorb the by-products of energy use (WCED, 1987, pp. 58–59). In response, the WCED chose to place energy efficiency at the cutting edge of national energy strategies (WCED, 1987, p. 196). In particular, Our Common Future recommended a low-energy scenario of a 50% reduction in primary energy consumption per capita in industrialized countries, in order to allow for a 30% increase in developing countries within the next 50 years (WCED, 1987, p. 173). This, it was argued, “will require profound structural changes in socioeconomic and institutional arrangements and it is an important challenge to global society”’ (WCED, 1987, p. 201; emphasis added). But equally clear from Our Common Future was that energy and material efficiency are a necessary but not sufficient condition for sustainable development: “Energy efficiency can only buy time for the world to develop ‘low-energy paths’ based on renewable sources, which should form the foundation of the global energy structure during the 21st century” (WCED, 1987, p. 15). The wide acceptance of the Brundtland report represented a compelling basis for multilateral cooperation and international solutions to global environmental problems (Borowy, 2013). Henceforth, environmental issues became a matter of priority on the international scene. Moreover, the report also marked the beginning of a starting dialogue between countries around the globe to tackle environmental problems holistically (Handl, 2012). The Montreal Protocol can be linked to this development. This diplomatic success is said to be the first treaty that was ratified by all countries and spurred the move of global investments in alternate technologies (USDS, 2021). Recently, sustainable development has made some significant advances. In 2015, the Agenda 2030 was adopted. The goals are ambitious and multidimensional, based on the idea that economic prosperity, environmental protection, and social wellbeing are interconnected factors which cannot be separately addressed (Hull & Malik, 2021). In other words, it will take the concerted efforts of all to help achieve these goals. The ratification and political endorsements of the SDGs by various countries did not come by mere chance. Global leaders were looking for alternatives and pragmatic solutions to raising environmental and economic problems, and the SDGs presented an opportunity to tackle these problems multilaterally. As a result, it was imperative and pragmatic for the international diplomatic communities of the world to subscribe to the 17 goals of the UN SDGs to help foster development. However, it

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is not certain yet whether the concept of sustainable development will indeed have a largely pacifying impact on international relations.

3. RENEWABLES AND ECONOMIC DEVELOPMENT: CAN SOLAR POWER DRIVE THE ECONOMY? Solar power in EU–China relations is suited to exemplify the potential difficulties in aligning sustainable development and turning to more accord at the international level (Sattich et al., 2021). As of early 2017, five of the world’s six largest solar module manufacturing companies were Chinese (Chiu, 2017) with major markets in the EU (Reuters, 2019). These overseas markets rank amongst the main driving forces behind the maintenance of growth in China’s solar manufacturing (ibid.). At the same time, growth in China’s manufacturing capacity provides solar equipment at low prices which may help to achieve sustainable growth elsewhere. However, the increasing predominance of China’s manufacturing industry (JRC, 2019a) is to the detriment of the European industry, and with the European industry losing ground solar energy became an area of contestation between the EU and China (JRC, 2019b). Beyond competition on world markets for equipment, the geopolitics of energy is closely linked to energy security issues and matters of sovereignty (Hansen & Moe, 2022). If a given nation is to compete geopolitically, national energy sovereignty is a key issue as it is the basis for having a viable and competitive industrial base. But can solar power be the main driver of an entire economy? The question can be approached in two different ways. One approach is to look at the actual growth rates of solar, the other approach is more one of necessity – how much solar is needed to reach global net zero by 2050. Solar PV had yet another record in 2021, adding 175 GW new capacity, reaching a cumulative total of 942 GW. As such, solar is already driving the economy with record investments. Global new investment in renewable power and fuels reached an estimated US$366 billion in 2021, of which solar PV accounted for 56% of the total and wind power for 40% (REN21, 2022). However, solar is not only solar PV. It includes concentrating solar thermal power (CSP), and also solar thermal heating and cooling. Although CSP market growth declined in 2021, “more than 1  GW of combined CSP capacity was under construction in Chile, China, the United Arab Emirates and South Africa. Most of this is based on parabolic trough technology and is being built in parallel with thermal energy storage (TES)” (REN21, 2022, p. 28). “The global solar thermal market grew 3% in 2021, to 25.6 GWth, bringing the total global capacity to around 524 GWth”, with China leading in new installations, followed by India, Turkey, Brazil, and the US (REN21, 2022, p. 29). Yet, as also shown in Figure 15.1, renewables must quadruple to be in accordance with most net zero scenarios. If they indeed do, solar energy is not only predicted to be a key mitigation strategy for reaching net zero by 2050 but will eventually also play a key function in the future economy of many countries. For solar PV, this is equivalent to installing the world’s current largest solar park roughly every day (IEA, 2021, p. 14). Thus, as climate change concerns increase, investments in solar will go up in the years to come, thereby becoming a factor in the sphere of geopolitical struggles between nations. Possible implications may concern increased struggles for certain raw materials, but also for knowledge and expertise in the field. Hence, it is questionable whether optimistic accounts regarding the potential of sustainability and renewable energy for more cooperation will materialize.

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Source:   IEA, 2021, p. 15.

Figure 15.1  Solar and wind power ramp-up by 2030

4. SDGs AND GEOPOLITICS – IMPLICATIONS, SYNERGIES, AND TRADE-OFFS In the words of Olafur Ragnar Grimsson, the former president of Iceland, the clean energy transition will birth a new type of politics. As fossil fuels gradually go out of the energy system, the old geopolitical model of power centers that dominate relations between states also goes out the window. Gradually the power of those states that were big players in the world of the fossil fuel economies or big corporations like the oil companies, will fritter away. (Hook, 2021, p. 3)

Using this statement as a point of departure, it can be said that the moves to sustainable development and renewable energy imply strong shifts in international politics. They help to avoid events such as droughts, food shortage, rising sea levels, etc. It can be assumed that this has a pacifying effect on international relations. On the other hand, renewables offer the ability for more energy self-sufficiency and thus will contribute to sporadic disruptions of the international system in the short term (Scholten et al., 2020, p. 2). According to Nilsson et al. (2016), synergies of the SDGs occur when many of the SDG targets interact concurrently while trade-offs of the SDGs occur when one or more targets of one or multiple targets are enhanced at the cost of hampering other targets. Thus, when the progress of one SDG affects the other SDG positively or negatively, it is considered a synergy or trade-off, which arguably affects geopolitical dynamics, trade relations, and foreign policy. Using this backdrop as a point of departure, we identify some of the SDGs and how renewable energy can contribute to achieving these goals, considering implications from a geopolitical point of view. Some of these can be highlighted by focusing on SDGs 6, 7, 9, and 11.

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4.1 SDG 6: Hydropower – New Conflict Lines? SDG 6 concerns the availability and sustainable management of water and sanitation. It highlights the substantial increment in water-use efficiency across all sectors and stresses implementing integrated water resources management at a level. With this goal in mind, one could make a case that hydropower dams could help achieve this goal. Hydropower remains, by a wide margin, the largest source of renewable electricity around the world, both in terms of installed capacity and global investment flows (Sovacool & Walter, 2019, p. 50). Hydropower is also seen to be ahead of its energy-generating peers in terms of its exceptional durability and reliability as it has a long period of operation, is highly efficient, and has a low operation cost, coupled with the ability to regulate water flows, provide fresh water, mitigate the effects of foods and irrigate crops (Lejeune & Hui, 2012). The case for hydropower is substantial and could serve as a propelling force to spur the achievement, i.e., a synergy of subsequent SDGs such as SDG 7 (affordable and sustainable clean energy) and SDG 2 (zero hunger). That being said, there are geopolitical implications and twists to the development of hydropower (Huang et al., 2021). Hydropower dams are mostly constructed on rivers, and most rivers travel transboundary from an upward stream to a lower stream. In light of this, hydropower could create the impetus for internal and external conflicts. Literature even suggests that the large-scale development of hydropower can be used as a geopolitical tool to manipulate or interrupt water and electricity supplies over those at the downstream end (Sovacool & Walter, 2019; Huang et al., 2021). A typical example is the Grand Ethiopian Renaissance Dam disputes on the Nile River in Africa between Egypt and Ethiopia. Also around the Middle East is the dispute between Turkey and Iraq over the Ilisu Dam on the Tigris River (Johnson, 2014). In Asia, the usual suspect China has built 11 mega-dams on the Mekong River, which has led to unannounced water supply fluctuations in neighboring Thailand, Vietnam, and Myanmar (Huang et al., 2021). These and many other water disputes from the construction of hydropower have reached cascading geopolitical consequences and bruised healthy international relationships. These issues coincide with some geopolitical schools of thought that the geopolitics of renewables will lead to conflicts similar to those of fossil fuels but in a different form (Campbell & Laherrère, 1998; Mata Pérez et al., 2019; Rothkopf, 2009). 4.2 SDG 7: International Power Shifts? SDG 7 emphatically states that by 2030, the world will have to ensure an affordable, reliable, sustainable, and modern energy for all. Pursuing this goal will mean an increase in financial investments for sustainable and green technology and infrastructure, expansion to a substantial amount of the share of renewable energy in the global energy mix and an increase in the proportion of the population with primary reliance on clean technology and fuels (Gielen et al., 2019). The geopolitical implication of this goal is that countries such as Denmark, Sweden, Norway, and Germany that have set ambitious targets in accordance with this SDG in the production of renewable energy and are already closer to achieving some of these indicators in SDG 7 and will emerge the new exporters of energy or largely reduce their imports. A typical example is the recent completion of the world’s longest subsea electricity cable, i.e., the North Sea Link, which will enable Norway to export its abundant hydropower to the UK and other neighbors (Hook & Sanderson, 2021). Also, Denmark is regarded as one

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of the biggest suppliers of wind technology to the global market and had a share of around 20.3% in 2018 (Jaganmohan, 2021). Furthermore, in Sweden, the obvious energy security and environmental concerns created the propulsion for investment and much focus on the use of bioenergy as an economically viable alternate energy source. Broad research programs were initiated which involved research institutes, the state energy company, and energy agencies. Environmental concerns, being a growing subject matter in Sweden’s political discourse, also enabled the creation of a carbon tax which served to be one of the most important factors in the promotion of bioenergy in Sweden (IRENA, 2019). These examples illustrate how countries possessing expertise in renewables technologies are engaging with international markets through energy transitions. Other countries will struggle to profit geopolitically from the transition. In particular, this concerns current energy exporters, for example Middle Eastern countries (OPEC), especially Saudi Arabia and the United Arab Emirates. A decision to fully transition will mean a loss of bargaining power and leverage on the international markets and loss of jobs domestically, particularly in the wake of Covid-19. (Hook & Sanderson, 2021, p. 7). Analysts believe that even though these two countries have been increasingly aware of the consequences transitions pose to them, their efforts to diversify their energy mix are not sufficient to rescue them from these impending dilemmas of transitions (Vakulchuk et  al., 2020). Russia, which is tagged as setting unambitious targets towards the SDGs and Paris Agreement is also forecasted, based on the fall of oil prices in 2014, to suffer economic and political turmoil when renewables finally dominate world energy markets (Van de Graaf, 2018). Consequently, it will be in Russia’s interest, even though unclear, to invest and develop renewables on a large scale to avoid losing its geopolitical relevance and weight in the international playground, analysts propose. For a country like the US, the security of energy supply is a priority, and the US plans on investing about US$2 trillion in climate policies and renewables. However, as analysts have forecasted, China is leading the race to renewables in terms of manufacturing and critical materials. Hence, for every investment the US makes in transitions, China stands to benefit a great deal. The US does not suffer this dilemma alone, the EU and Japan are faced with a similar fate (Hook & Sanderson, 2021, p. 13). Contrarily, China finds itself at the crossroads of a synergy or trade-off. On the one hand, China is an important importer of fossil fuels, and also the world’s biggest emitter of greenhouse gases. Renewable energy can improve the country’s import structure; exports of other commodities per capita could rise as a result. On the other hand, China is strategically positioned to reap the benefits of transitions domestically and on the international markets. In recent years, China has dominated the clean technology markets as a main supplier, i.e., China supplies the majority of solar panels, critical materials, and batteries to the international markets. As a matter of fact, it is virtually impossible now not to involve China in the making of clean technologies (Hook & Sanderson, 2021) Potentially, this position of China on the international markets poses a threat to other economies that depend on renewables. In short: some of the regions that dominate the world’s energy system today will potentially see a decline in power (Scholten, 2018). In contrast, countries or regions that invest in renewables, export clean energy, or depend less on fossil fuel imports may emerge as potential winners in a clean energy era (Scholten et al., 2019, 2020). With these shifts, sustainable development and renewable energy can involve a number of paradoxes with regard to international politics.

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4.3 SDG 9: Struggles for Technology Leadership, Industries, and Rare Earths Every country is particular when it comes to the promotion of industry, trade, investments, and the building of infrastructure. Changes come with ripple effects such as job creation and empowerment. SDG 9 (industry, innovation, and infrastructure) addresses these issues. This goal highlights the building of resilient infrastructure, promotes sustainable industrialization, and fosters innovation. It also stresses the need for an upgrade in the sustainable technological capabilities of industrial sectors in all countries by 2030 and the adoption of clean and environmentally sound technologies. With this goal in mind, countries and their respective industries have adopted sustainable policies and measures to help achieve this goal and also to reduce CO2 emissions. These activities do, however, remain not without geopolitical dilemmas. The automobile industry is a good example in that regard. Cars are historically one of the biggest emitters of CO2. US brands of cars were particularly gas-guzzling in the past. To keep its head up in the oil crises of the 1970s, the main targets for the US economy were diversification and efficiency. However, Asian (Japanese) cars were more fuel efficient and had also passed the US strict clean air act against air pollution. This changed the dynamics of US automobile markets allowing Asian technology to take over the markets based on fuel efficiency (Jozuka, 2019). This led to economic contraction in the US economy which in turn contributed to the creation of political phenomena such as the Trump administration and its protectionist take on trade relations. In recent times, the focus of the car industry has shifted to the production of electric cars. Volkswagen, for example, has planned on investing €35 billion in the making of electric vehicles (EVs) by 2025, also introducing 70 different fully electronic car models by 2030 and is projected to have already overtaken Tesla in terms of sales on the European market with a sales rate of about 214% (Riley, 2021; Yurkevich, 2021). In the US, General Motors has set ambitious targets to invest about US$27 billion in battery-powered EVs, and also plans on sourcing its domestic and global car making plants with 100% renewables by 2030 and 2035 respectively (Yurkevich, 2021). The story is not different in Asia today. China, as part of its carbon neutral goals by 2060 has put in place strategic policies to reap the benefits of transitions. China accepted the idea of manufacturing renewable energy technologies earlier with a focus on solar panels, LEDs and electric car batteries. Currently, the Contemporary Amparex Technology company in China is the biggest producer of EV batteries, supplying to European and US EV manufacturers (Hook & Sanderson, 2021, p. 11) it is estimated that China produces half of the world’s EV. These are all efforts around the globe to ensure SDG 9 is realized. However, there are some geopolitical implications to this. First, sustainability measures implemented in various industries will reinforce ongoing shifts in industrial production. Some countries will win, some will lose from these shifts. Moreover, only a few countries are going to profit in terms of raw material exports. Developing new industries and the renewables to generate green electricity will require huge amounts of raw materials. Only a few suppliers have access to these rare earths. The cobalt supply market, for example, is an essential component in the manufacturing of lithium-ion batteries. It is dominated and possessed by China (Hook & Sanderson, 2021, p. 10). Other critical materials that are indispensable in the making of renewable energy technologies are also mined by China. While renewable energy reduces dependence on fossil fuel and petroleum resources, it creates and increases new geopolitical dependencies on critical

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materials which is a likely security threat and an avenue for geopolitical tensions (Valkuchuk et al., 2020). 4.4 SDG11: Stability through the Growth of Cities? SDG 11 highlights the making of cities and human settlements inclusive, safe, resilient, and sustainable. According to the UN, 3.5 billion people live in cities today. It is estimated that by 2030, 5 billion people will be living in cities. While the cities of the world occupy an approximate 3% of the world’s land today, they are responsible for the consumption of approximately 60–80% of the world’s energy, and about 75% of carbon emissions comes from the world’s cities (United Nations, 2015). With cities switching from fossil fuel-based electricity generating plants (and grids) to renewable energy (and grids/storage), renewables can help achieve more sustainable cities. For example, in February 2021, Texas City experienced an unprecedented power outage and blackouts as a result of an extreme and prolonged winter storm, this caused the deaths of thousands and left many devastated. Texas has 80% of its energy produced from natural gas, coal, and nuclear energy when the unprecedented winter storms hit, leading to the shutting down of the fossil fuel power stations which led to the disaster (Douglas & Ramsey, 2021). This is where renewable energy makes a strong case for itself. Establishing resilient and sustainable cities with the help of renewables in particular will eventually lead to a shift of energy generation from central production to a decentral form of production. In other words, renewable energy makes cities more independent from their surroundings – technologically, economically, and politically. This may further strengthen the increasingly strong position of cities in today’s world politics (Barber, 2013). However, it is far from certain whether the increasingly strong position of cities will indeed lead to more stability. Analysts assert that even though decentralized energy generation may reduce energy poverty, empower local communities, and spur local development, the geopolitical implication for achieving this goal might be that decentralized cities may destabilize and undermine the capability of central governments to effectively govern their countries (Scholten, 2018. p. 21). Also, possible tradeoffs to this goal may be that while renewables may create new jobs and investments, jobs in the fossil fuel energy sector may be rendered redundant and cause possible lay-offs and unemployment, thereby contributing to new waves of migration into cities, potentially across borders.

5. ACHIEVING THE SDGs WITH SOLAR POWER – IS THERE A GEOPOLITICAL DILEMMA? As countries are looking to achieve the SDGs and subsequently the Paris Agreement, policies to attain the set goals are currently resulting in new geopolitical dilemmas and new energy security concerns (Atlantic Council, 2021). A whole literature has sprung up to discuss these implications, and it seems that optimistic accounts of sustainability and renewables becoming the basis for peaceful relations between nations are at least premature. Solar power is no different. For example, there is discussion of Australia’s potential for becoming a renewable superpower thanks to its abundance of wind and solar resources (Financial Time, 2021). Clearly, this type of reporting indicates that renewable energy is not, per se, an antidote to

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geopolitical struggles. In order to specify a course of action that prevents sustainability and renewables from becoming a vehicle of geopolitical struggles, it is worth speculating what a major solar power could look like. A classic indicator of a powerful country is the availability of energy. Moreover, such a country needs to have the ability to use the energy it has available. Finally, to be regarded as powerful, a country has to have the means to use energy for the production of goods and services. For Hyman G. Rickover, a renowned admiral in the US Navy, things were therefore clear: High-energy consumption has always been a prerequisite of political power.

(Rickover, 1957)

When Rickover made these remarks in 1957, evaluating the world’s past and present energy situation, he mainly referred to fossil fuel: We live in what historians may some day call the Fossil Fuel Age. Today coal, oil, and natural gas supply 93% of the world's energy; water power accounts for only 1%; and the labor of men and domestic animals the remaining 6%. This is a startling reversal of corresponding figures for 1850 – only a century ago. Then fossil fuels supplied 5% of the world's energy, and men and animals 94%. (Rickover, 1957)

However, Rickover was also reflecting upon an alternative source beyond fossil and metabolic energy. This alternative was widely believed to be nuclear power. Building on this new alternative, he planned the American nuclear navy – a classical instrument of power projection fueled by a novel type of energy technology. Fifty years later, renewables – not nuclear – are the fastest growing group of energy technologies. Within that group, solar is perhaps the fastest growing, most mature, and costcompetitive one. On average, solar energy grew at average annual rates of 36% between 1990 and 2019 (IEA, 2021) and at a rate of 27% annually during the five years up to 2019 (IEA, 2019). As a result, solar PV now accounts for approximately 40% of the total renewable electricity production from new production assets, and 5% of the world’s electricity generation (IEA, 2022). As seen in Section 4, this trend does not necessarily lead to a world without tensions of a geopolitical kind. It can therefore be assumed that the energy transition won’t fundamentally alter the international system in a sense that states will give up on seeking power or other geopolitical advantages. Seen in that light, the newly installed generation capacity may provide individual countries simply with new possibilities to acquire, defend, and increase positions of power. The question, hence, is in what sense solar energy may become an instrument of geopolitical power. Three dimensions can be distinguished in that regard: changes in the energy system, changes in the industrial system, changes in the instruments of power projection available to states. 5.1 Changes in the Energy System Additional capacity for exporting energy may give individual countries a better standing towards their neighbors. For example, the potential of the MENA countries to export solar energy to Europe was discussed extensively as a possibility for them to improve their position

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towards EU member states across the Mediterranean Sea (PV Magazine, 2022). If total installed capacity of certain energy technologies is to be taken as an indicator of power, the list of solar powers is as depicted in Figure 15.2. However, power in a geopolitical sense is obviously more than just adding the needed electricity generation capacity. For example, rooftop solar PV may, one way or the other, contribute to a country’s productivity (about 40% of installed solar PV capacity concerns this technology; IEA, 2022). Yet in a geopolitical sense, that is beyond the level of security conditions on the ground (Mitzva et al., 2022), only a few prerequisites of power are generally considered good indicators of state power. The ability to use electricity for industrial purposes is one of them. More specifically, steel production is one of the classic indicators of powerful states (Kennedy, 2017). Green steel – that is steel made without using coal, but electricity generated by renewables – is becoming a reality (Arens & Vogl, 2020). It can, therefore, be considered an opportunity to study the potential of solar energy to contribute to the power of a state, and thus also the implications of potential power shifts that come with building up solar capacity. 5.2 Changes in the Industrial System Australia has one of the highest penetrations and per capita shares of solar in the world (15.5%, 990 W/capita; IEA 2022). The question is whether its endowment with solar radiation will also provide it with an opportunity to add to its industrial base. According to Venkataraman et  al. (2022), this is indeed the case. They point out the availability of iron ore as well as solar resources in the western part of the country. To bring the two together in the form of green steel production, building up an immense energy infrastructure would be required, which comes with constraints in terms of the availability of i) resource and ii) human capital (ibid.). However, they conclude that green steel production on the basis of Australia’s rich solar energy resources may be a possibility; therefore, the authors consider it a chance to engage successfully in industrial competition with steel producers in other parts of the world, particularly China (ibid.; Arens & Vogl, 2020). While this leaves many questions open, the

Source:   IEA, 2022.

Figure 15.2  Top ten countries for installations and total installed capacity in 2021

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implications of this analysis are far reaching, as they indicate that renewable energy may be a firm enough basis not only for supplying an economy with electricity, but also for growth in categories of industry that really matter in a geopolitical sense. An important technological category in that regard is utility-scale applications (larger than 1 MW). Across the globe, the interest in solar thermal systems for industrial processes has grown steadily. Several promising projects undertaken in the last couple of years range from small-scale demonstration plants to large 100 MW systems. The share of this category in annual PV additions is therefore forecast to increase from over 55% in 2020 to almost 70% in the near future (IEA, 2022), which makes green steel and other heavy industry applications of solar energy appear more likely. Concentrated solar may be another important link to exploit solar energy for industrial purposes. Just like in the case of green steel, many industrial processes demand vast amounts of heat, making this sector a promising market for solar thermal applications. Depending on the temperature level of the required heat, different types of solar thermal collectors are available for temperatures up to 400°C. Finally, the technology for the conversion of solar electricity into green hydrogen is increasingly available, which may complete another link for the industrial usage of solar power. Germany, for example, has plans to increase production and import of green hydrogen for the use in German industry (BMBF, 2022; Deutschlandfunk, 2022). 5.3 New Instruments of Power Projection Military aspects are an important element of geopolitics. If the geopolitical side effects of energy technologies such as solar are to be discussed, these applications need to be included. At least for about a decade or so, the potential usefulness of solar energy and other renewables for military purposes have been evaluated (The White House, 2012). This includes, for example, research in energy technologies for combat vehicles (ibid.). Storage modules are another key application as they have the potential to increase the range and duration of whatever system they are being used for; at the same time, they decrease the need for refueling as well as weight (ibid.). Solar energy, therefore, appears to be attractive as a partial replacement for fossil fuel in the military. This may be particularly true for drones and portable electronic devices. This may be one of the reasons why maritime sail drones (Saildrone, 2022) represent a valuable asset in geopolitically tense areas (The Guardian, 2022). Last but not least, today, solar-driven space technology such as satellites is once more a key element of ongoing conflicts, such as the war in Ukraine. The latest renewable energy technologies may increasingly come out of research projects driven by the security complex. This may have implications for access to these technologies, as well as technologies connected with them, for example semiconductors, batteries, and sensors. These technologies make tangible differences in terms of military capabilities; renewables will therefore become increasingly militarized, both in terms of a vital energy source that powers industries as well as direct application in weapons and support units. What is more, the availability of these technologies will, most likely, increasingly decide what country or group of countries has the ability to decide military conflicts. The military application of renewable energy is therefore suited to limit the pacifying effect of renewables. All of this suggests that the diffusion of renewable technology, and solar power in particular, is indeed not necessarily a catalyst for peace only (Mitzva et al., 2022). However, compared to new technologies such as tanks in the First World War or nuclear warheads in the Cold War, the impact on global power structures is probably less dramatic.

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6. CONCLUSION Historically, the idea of renewable energy and sustainable development are closely intertwined. They both link to pollution issues and the exhaustion of fossil fuels as a possible constraint on global development; later, it became mainly seen as a solution to the problem of climate change. Given the international character of environmental issues, renewables and sustainability are also inextricably linked to politics at the international level. On the one hand, global governance was and is an important arena for the conceptual development of sustainability. On the other hand, there is no denying the fact that pursuing some of the goals and targets in the SDGs transcend national and regional boundaries. This involves significant questions such as the place of individual countries in the global division of labor and power structures within and between individual countries. To cut a long story short, sustainable development and renewable energy embody the hope that a more cooperative, peaceful, and just world is possible. However, sustainable development and renewables do not automatically lead to more cooperation or peace at the international level. In turn, this may represent a strong obstacle to the sustainability transition. Solar energy is no different in this regard. Strong growth in this segment may stimulate development across borders and new possibilities for cooperation. However, as the case of green steel shows, solar energy also presents new possibilities to achieve significant industrial advantages, and thus potential gains in terms of economic power and political prestige. Therefore, the industrial use of solar power (and other forms of renewables) may lead to new contradictions of interests and struggles for competitive advantages. Finally, this may lead increasingly to an incorporation of renewables in military-strategic planning. This includes the infrastructure for industrial use, but also the use of renewables technology by the military. In particular solar energy may become increasingly relevant in a techno-military sense. Many policymakers and practitioners are probably unaware of these and other geopolitical implications. Sustainable development therefore needs to be maneuvered carefully. If this is indeed the case, then the trade-offs of sustainable development need to be emphasized and communicated more strongly in order to avoid unforeseen hurdles. This includes solar power, which – perhaps more than other forms of renewables – promises development for everybody, yet also has important security implications.

NOTE 1. Albert Einstein can be considered an important inspiration to both of Lovins’s development paths. Firmly rooted in the popular imagination is his contribution to the atom bomb. Less well known is Einstein’s contribution to the development of renewable energy. In 1905, he first explained the physical phenomenon underlying the conversion of light rays into electricity (Sachs, 2015, p. 419).

REFERENCES Arens, M., & Vogl, V. (2020). Can we find a market for green steel? Steel Times International, 43(4), 59–63. Atlantic Council. (2021). The global energy agenda. Report, Washington, DC. Barber, B. (2013). If Mayors Ruled the World: Dysfunctional Nations, Rising Cities. Yale University Press.

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Barry, J. (1995, November 9). How to Close Down the Department of Energy. The Heritage Foundation. Retrieved from https://www​.heritage​.org​/environment ​/report ​/ how​-close​-down​-the​-department​ -energy (accessed 06 February 2022). Borowy, I. (2013). Defining Sustainable Development for Our Common Future: A History of the World Commission on Environment and Development (Brundtland Commission). New York: Routledge. BMBF. (2022). Grüner Wasserstoff aus Afrika: Namibia wird Forschungspartner. Retrieved from https:// www​.bmbf​.de​/ bmbf​/shareddocs​/ kurzmeldungen ​/de​/2022​/10​/gruener​-wasserstoff​-aus​-namibia​.html (accessed 22 October 2022). Campbell, C. J., & Laherrere, J. H. (1998). The end of cheap oil: Global production of conventional oil will begin to decline sooner than most people think, probably within 10 years. Scientific American, 278(3), 78. Chiu, D. (2017). The East is green: China’s global leadership in renewable energy. Center for Strategic International Studies. Retreived from https://csis-website-prod. s3​.am​​azona​​ws​.co​​m ​/s3f​​s​-pub​​lic​/1​​ 71011​​_chiu​​_chin​​a ​_ Sol​​a r​.pd​​f​?​i70​​f0uep​​_pGOS​​3iWh vwUlBNigJMcYJvX (accessed 4 August 2020). Clark, C. E. (2018). Renewable Energy R&D Funding History: A Comparison with Funding for Nuclear Energy, Fossil Energy, Energy Efficiency, and Electric Systems R&D. CRS Report, 18 June 2018. Retrieved from https://sgp​.fas​.org​/crs​/misc​/ RS22858​.pdf (accessed 06 February 2022). CVCE. (2013). Address given by Richard Nixon, 07 November 1973. CVCE, Université du Luxembourg. Retrieved from https://www​.cvce​.eu​/content​/publication​/2003​/7​/3​/1158015d​-8cf9​- 4fae​-8128​- 0f1ee 8a8d292​/publishable​_en​.pdf (accessed 09 February 2021). Deutschlandfunk. (2022). Testlauf für industriellen Einsatz. Erste Wasserstofflieferung aus den Vereinigten Arabischen Emiraten erreicht Deutschland. Retrieved from https://www​.deutschlandfunk​ .de​/erste​-was​sers​toff​l ieferung​-aus​- den​-vereinigten​-arabischen​- emiraten​- erreicht​- deutschland​-100​ .html (accessed 22 October 2022). Douglas, E., & Ramsey, R. (2021). No, Frozen Wind Turbines Aren’t the Main Culprit for Texas’ Power Outages. The Texas Tribune. Retrieved from https://www​.texastribune​.org​/2021​/02​/16​/texas​-wind​ -turbines​-frozen/ (accessed 09 February 2021). Gielen, D., Boshell, F., Saygin, D., Bazilian, M. D., Wagner, N., & Gorini, R. (2019). The role of renewable energy in the global energy transformation. Energy Strategy Reviews, 24, 38–50. https:// doi.org/10.1016/j.esr.2019.01.006 Grennfelt, Engleryd, A., Forsius, M., Hov, Øystein, Rodhe, H., & Cowling, E. (2019). Acid rain and air pollution: 50 years of progress in environmental science and policy. Ambio, 49(4), 849–864. https:// doi​.org​/10​.1007​/s13280​- 019​- 01244-4 Handl, G. (2012). Declaration of the United Nations conference on the human environment (Stockholm Declaration), 1972 and the Rio declaration on environment and development, 1992. United Nations Audiovisual Library of International Law,  11. Retrieved from https://legal​.un​.org​/avl​/ ha​/dunche​/ dunche​.html (accessed 09 February 2021). Hansen, S. T., & Moe, E. (2022). Renewable energy expansion or the preservation of national energy sovereignty? Norwegian renewable energy policy meets resource nationalism. Political Geography, 99, 102760. https://doi​.org​/10​.1016​/j​.polgeo​.2022​.102760 Hook, L., & Sanderson, H. (2021). How the race for renewable energy is reshaping global politics. Financial Times. Retrieved from: https://www​.ft​.com​/content​/a37d0ddf​-8fb1​- 4b47​-9fba​ -7ebde29fc510 (accessed 09 February 2022). Huang, S., Stavland, B., Dogan, G. B., Shelke, R., & Abbas, Z. (2021). Hydropower and the dilemma of water security between upstream and downstream countries. In R. Staupe-Delgado & S. Huang (Eds.), Dilemmas, Contradictions and Paradoxes in Sustainability Thinking (pp. 153–166). University of Stavanger. https://doi​.org​/10​.6084​/m9​.figshare​.21505884​.v1 Hull, H., & Malik, N. (2021, March 8). Tesla is plugging a Secret Mega-Battery into the Texas Grid. Bloomberg. Retrieved from https://www​.bloomberg​.com​/news​/features​/2021​- 03​- 08​/tesla​-is​ -plugging​-a​-secret​-mega​-battery​-into​-the​-texas​-grid (accessed 09 February 2021). IEA. (2019, February 06). Is exponential growth of solar PV the obvious conclusion? Commentary. Retrieved from https://www​.iea​.org​/commentaries​/is​-exponential​-growth​-of​-solar​-pv​-the​-obvious​ -conclusion (accessed 31 July 2022). IEA. (2021, October). Net Zero by 2050. A Roadmap for the Global Energy Sector. Revised version. International Energy Agency. Retrieved from https://www​.iea​.org​/reports​/net​-zero​-by​-2050 (accessed 30 January 2023)

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IEA. (2021). Renewables Information: Overview. Paris: IEA. Retrieved from https://www​.iea​.org​/ reports​/renewables​-information​-overview (accessed 30 July 2022). IEA. (2022, April). Snapshot of global PV markets 2021. Retrieved from https://iea​-pvps​.org​/snapshot​ -reports​/snapshot​-2022/ (accessed 30 July 2022). IPCC. (2018). Summary for policymakers. https://doi​.org​/10​.1017​/9781009157940​.001 IRENA. (2019). Bioenergy from boreal forests: Swedish approach to sustainable wood use. Retrieved from   https://www​. irena ​ .org ​ / publications ​ / 2019​ / Mar ​ / Bioenergy​ -from ​ - boreal​ -forests ​ - Swedish​ -approach​-to​-sustainable​-wood​-use (accessed 19 July 2021). ISA. (2015). Framework Agreement on the establishment of the International Solar Alliance. New Delhi: International Solar Alliance. ISA. (2021). Ease of doing solar In ISA member countries (International Solar Alliance). Retrieved from https://isolaralliance​.org​/uploads​/docs​/e16​620e​d199​52f0​2d86​ed63​dfde463​.pdf (accessed 28 July 2022). Jaganmohan, M. (2021). Global Market Share of the World’s Leading Wind Turbine Manufacturers in 2018, Based on Sales. Statista. Retrieved from https://www​.statista​.com​/statistics​/272813​/ market​-share​-of​-the​-leading​-wind​-turbine​-manufacturers​-worldwide/​#statisticContainer (accessed 09 February 2021). Johnson, P. (2014, August 11). Three International Water Conflicts to Watch. Geopolitical Monitor. Retrieved from https://www​.geopoliticalmonitor​.com​/three​-international​-water​-conflicts​-watch (accessed 09 February 2022). Jozuka, E. (2019). Made in America: How Japanese Cars Became a US Success Story. CNN Business. Retrieved from https://edition​.cnn​.com ​/2019​/06​/26​/ business​/japan​-american​-honda​-hnk​-intl​/index​ .html (accessed 09 February 2022). JRC. (2019a). Reassessing the decline of EU manufacturing: A global value chain analysis. Technical report by the joint research Centre. Retrieved from https://publications​.jrc. ec​.eu​​ropa.​​eu​/re​​posit​​ory​ /b​​itstr​​eam​/J​​RC118​​905​/j​​rc118​​905​_m​​a rs​ch​​inski​​_mart​​ine z​_2019​_ reassessing​_eu​_manufacturin​g​.pdf (accessed 8 May 2020). JRC. (2019b, February). China: Challenges and Prospects from an Industrial and Innovation Powerhouse. Luxembourg: Joint Research Centre. Kennedy, P. (2017). The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000. Paperback edition. London: William Collins. Langhelle, O. (2017). Sustainable development – Linking environment and development. In J. Meadowcroft & D. Fiorino (Eds.), Conceptual innovations in environmental policy. Cambridge, MA: MIT Press. Lejeune, A., & Hui, S. L. (2012). Hydro power: A multi benefit solution for renewable energy. Comprehensive Renewable Energy, 6, 15–47. Levy, M. A. (1995). International cooperation to combat acid rain. In H. O. Bergesen & G. Parmann (Eds.), Green Globe Yearbook of International Cooperation and Development (pp. 59–68) Oxford: Oxford University Press. Lovins, A. B. (1976). Energy strategy: The road not taken? Foreign Affairs, October 1976. Liu, H. W., Ma, S., Li, W., Gu, H. G., Lin, Y. G., & Sun, X. J. (2011). A review on the development of tidal current energy in China. Renewable and Sustainable Energy Reviews, 15(2), 1141–1146. Mata Pérez, Scholten, D., & Smith Stegen, K. (2019). The multi-speed energy transition in Europe: Opportunities and challenges for EU energy security. Energy Strategy Reviews, 26, 100415. https:// doi​.org​/10​.1016​/j​.esr​.2019​.100415 Mitzva, O., Fischhendler, I., & Herman, L. (2022) The impact of precarious security conditions on renewable electrification: The case of the West Bank. Political Geography, 97, 102626. https://doi​ .org​/10​.1016​/j​.polgeo​.2022​.102626 Nilsson, M., Griggs, D., & Visbeck, M. (2016). Policy: Map the interactions between sustainable development goals. Nature, 534, 320–322. https://doi​.org​/10​.1038​/534320a. OECD. (2019). Regions in Industrial Transition: Policies for People and Places. Paris: OECD Publishing. Retrieved from https://read​.oecd​.org​/10​.1787​/c76ec2a1​-en​?format​=pdf (accessed 09 February 2022). O’Sullivan, M., Overland, I., & Sandalow, D. (2017). The geopolitics of renewable energy. Working Paper, June 2017. Center on Global Energy Policy. Retrieved from https://energypolicy​.columbia​.edu​ /sites​/default ​/files​/CGE​PThe​Geop​olit​icsO​f Ren​ewables​.pdf(accessed 22 October 2022). PV Magazine. (2022). Dreaming of a MENA integrated electricity grid. Retrieved from https://www​ .pv​-magazine​.com ​/2022​/01​/22​/the​-weekend​-read​-dreaming​-of​-a​-mena​-integrated​- electricity​-grid/ (accessed 31 July 2022).

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16. Wind energy – experiences with onshore and offshore projects Yaroslava Marusyk1

1. INTRODUCTION The global wind power market has approximately quadrupled in size in the last ten years. It is one of the most cost-competitive and resilient powers worldwide. Despite the Covid-19 pandemic, the wind power sector kept growing (Nehls, 2021) and in the words of Feng Zhao, Head of Strategy and Market Intelligence at the Global Wind Energy Council, findings from the supply side confirm that 2020 was an incredible year for the wind sector (GWEC, 2021). New installations surpassed 90 GW, a 53% growth compared with 2019 data. Installations in onshore wind reached 89.6 GW, while the offshore market reached 6.1 GW. The growth of installations in China and Asia Pacific grew enormously; therefore, they have the lead concerning wind power development on the global market (GWEC, 2021, p. 46). They are closely followed by the US, which in 2020 reported an 18.4% increase in wind power installations, with 15.9% from Europe. In Latin American, wind energy production is the fourth largest market and grew 5%, followed by 0.9% from Africa and the Middle East. (ibid.). Thus, “the world’s top five markets in 2020 for new installations were China, the US, Brazil, Netherlands, and Germany … which combined make up 80.6% of global installations” (ibid.). An increasing amount of scientific literature also points towards offshore wind being the future of the wind energy sector (Sherman et al., 2020; Poudineh et al., 2017). Offshore wind is currently meeting about 3% of the electricity demand, but it is “set to become Europe’s number one source of electricity by around 2040” (Dickson, 2021). Despite offshore wind still forming a relatively small part of the total wind energy sector, the future (or current) benefits of it are very promising (Sherman et al., 2020, p. 1; Soares-Ramos, 2020, p. 1). Every year the International Energy Agency (IEA) forecasts about growth rates for deployment of offshore and onshore wind energy surpass previous expectations. The role of renewables in peacebuilding, global peace potential of green energy, and the impact of renewable energy consumption on terrorism, have been addressed by a few studies in the recent past. However, this chapter addresses the two cases of the Russia–Ukraine war and the escalation of geopolitical tensions in the Taiwan Strait area while focusing on offshore and onshore wind energy. In particular, the chapter discusses the pre-war state and current war and period of geopolitical tensions in both cases as well as energy security challenges and the obstacles to wind energy development. It analyzes whether the deployment of wind energy has a peace potential and whether it can reduce the energy security risks and dependency on fossil fuel exports. Focusing on the case of Taiwanese offshore wind farms, the chapter addresses the question of whether European investors and wind turbine companies downplay the geopolitical risks involved with investing in offshore wind in the Taiwan Strait as they did in investing in onshore wind in Ukraine. After conducting a number of expert interviews,2 the author concludes that heightened geopolitical tensions, or a full-scale war, do not derail attempts of 282

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energy-dependent Ukraine or the Taiwanese government from addressing their immediate energy security threats by diversifying their energy sources, diminishing their dependence on fossil fuel producers, and thus boosting the use of clean energy in the future, in particular offshore and onshore wind farms. At the same time, in the case of interstate war (like that between Russia and Ukraine) deployment of offshore and onshore wind farms did not prevent their area from being excluded from a potential zone of military action. Thus, the peace potential of Taiwan’s offshore wind farms, despite European investments in the second largest wind market behind mainland China, may be also limited in creating a ‘no war zone’ if hostilities escalate. Perhaps not as drastically as solar panels, the price of wind turbines has declined in recent years due to supply chain advances (Watson et al., 2019; Hassan, 2018). Other technological advances that increase energy ‘production’ can also decrease the cost involved in all aspects of the wind energy supply chain (ibid.). While it is clear that technological innovations are not made only with financial benefits in mind, economic sustainability is crucial for investments in relatively new renewable technologies such as wind energy. Taking into account the latest technological advancements in the field of wind energy, the next section addresses current and former problems (both on- and offshore) and pinpoints current technological boundaries for wind energy.

2. TECHNOLOGY OVERVIEW. TRENDS IN WIND DEVELOPMENT AND ONGOING TECHNOLOGICAL ADVANCEMENTS There has been a significant increase in the production of wind energy over the last two decades (Blaabjerg & Ma, 2017, pp. 2117–2119; IRENA, 2016, p. 8). Wind turbines have become increasingly larger, i.e., bigger diameter of the rotor and higher power output. The biggest wind turbine in the world (as of end of 2021) is an offshore hybrid drive wind turbine from a Chinese manufacturer, MingYang Smart Energy. Its blades are 118 meters long, its nameplate capacity is 16 MW and one turbine can power about 20,000 homes (NES Fircroft, 2021). Wind turbines need to stay at a certain angle in order to be as efficient as possible. The extraction of wind energy by turbine blades is based on the same principle that gives airplane wings their lift. The wind causes a pocket of low-pressure air on the downside of the blade. This causes the blade to move toward the low pressure causing the rotor to turn. (Letcher, 2017, p. 6)

“A combination of the lift and drag causes the rotor to spin. This turns the generator and makes electricity” (ibid., p.6). In order to increase the amount of energy that can be produced by one wind turbine, increasing the radius (by making larger wings) will allow the wind turbine to create more energy (ibid., p.7). However, creating larger and longer wings also inherently creates other problems. First, the larger wings cause higher speed at each wing tip. This is not only problematic for wildlife, but also for the windmill as the whole structure is confronted with more stress. The wings themselves also endure more stress and flex due to their length. The increased wingspan causes not only problems with speed at the wingtip, but also with production itself. Ever increasing the size of wind turbines is therefore also not ideal. In order not to cause too much stress on the structure and the production/logistics, the

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increased size necessitated the development of power electronics and improved transmissions and generators. These developments have allowed wind turbines to be more efficient and to turn more slowly, while not generating less power. They do not have to rely on fast spinning blades anymore but on torque in order to produce energy (more efficient combinations of generators and gearboxes). Another milestone in the development of wind turbines during the past two decades was achieved in power electronics, which allowed turbines to produce energy with variable wind speeds. Older fixed-speed wind turbines relied on specific (set) wind speeds that would most likely occur in the placed location. Not only is this likely to decrease the efficiency of the turbine itself, the current fluctuations of the generator, because of the intermittent nature of wind, also affects the grid, as it requires a stiff grid (Blaabjerg & Ma, 2017, p. 2116). Technological advances in power electronics enable wind turbines to produce electricity at variable wind speeds (Letcher, 2017, p. 154, 159). However, fixed-speed wind turbines require less maintenance, are less prone to failures but more disposed to mechanical stress (Blaabjerg & Ma, 2017, p. 2116). Fixed-speed turbines are still applicable for certain applications and locations. In the past, windmills were considered almost maintenance-free because of a common perception that the air was clean. However, through the years, wind farms have faced problems with delaminating blades due to particles in the air (Sareen et al., 2013, pp. 1531–1532). While these particles might not form a problem in itself, longer exposure can lead to small scratches causing delamination over time. In offshore locations, the conditions can be even more severe due to the saltwater conditions. Besides solving existing problems and furthering the efficiency of current and future offand onshore wind farms, there have also been completely new ideas regarding wind energy. Darwish and Al-Dabbagh, who argue that offshore floating wind farms have the potential to decrease cost and increase energy production (Darwish & Al-Dabbagh, 2020, p. 7), present one of these developments. The increased energy production is due to the overall “higher and steadier wind speeds” in deeper waters (as opposed to offshore wind farms near the coast) (ibid.; WindEurope, 2018, pp. 3–4). The “floating wind turbines are utility-scale and costeffective energy sources that experience lower offshore wind turbulence enjoying longer farm life ~25–30 years”, ultimately reducing maintenance costs (Darwish & Al-Dabbagh, 2020, p. 7; Watson et al., 2019, pp. 4–5). Large floating projects are predicted to lower cost once capacity increases (Dickson, 2021). To sum up, offshore wind has much higher potential in the future of wind energy development than onshore wind for two major reasons. Firstly, wind speeds at sea are more constant and stronger. Due to these stronger wind speeds, wind turbines are able to drive stronger wind generators (which require more torque to initiate) that produce more electricity (Letcher, 2017, p. 7). The second reason that benefits the development of offshore wind is the geographical distribution of cities. Locating most offshore wind farms near the coast reduces the electricity transmission costs to urban consumers (ibid.). The Deloitte 2022 Renewable Energy Industry Outlook highlights the development of transmission infrastructure for offshore wind as one of the main trends that will dominate the global energy transition. Transmission development “which is key for connecting new, often remotely located renewable energy capacity to electricity consuming centers” and will be one of the cornerstones of the renewable industry agenda throughout 2022 (Deloitte, 2022, p. 5). The report also addresses the problems with waste generation and circular economy. Solar, wind, and battery installations are increasing and so is the waste; approximately 8,000

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wind blades are expected to be removed in 2022 alone and the accumulated blade waste in 2050 could total 2.2 Mt (ibid., p.7). Thus, the wind industry needs to develop a sustainable supply chain that recovers and recycles renewable energy waste. In the case of the installation capacity, lockdowns caused by the Covid-19 pandemic, created general delays, and the impact was higher in countries with stricter measures. As interstate mobility was limited, installations in some countries were not possible due to domestic rules. Nevertheless, despite the global pandemic, 2020 was the best year in history for the global wind industry; worldwide 93 GW were installed, with this a total of 743 GW of global cumulative wind capacity was reached (GWEC, 2021, p. 8).

3. MARKET OVERVIEW. DRIVING MARKET FORCES FOR TECHNOLOGICAL ADVANCES This section focuses on a general overview of offshore and onshore wind markets as well as pinpointing major companies that dominate the wind power sector. As argued by Crabtree et al., the most important challenge for the wind energy sector is “reducing the cost of energy from wind to economically sustainable levels” (Crabtree et al., 2015, p. 727; Blaabjerg & Ma, 2017, p. 2129). As of 2019, the prices of wind turbines have decreased by a third since 2009 (Darwish & Al-Dabbagh, 2020, p. 8; Sherman, 2020, p. 1). Maintenance and operation costs form the largest barrier for wind energy as an economically sustainable energy source. This is especially true for offshore wind farms because harsh environmental conditions at sea not only expose the equipment to more risk, and thus to probably higher costs, and they also affect whether activities can be conducted (Poudineh et al., 2017, p. 34). Regarding the relation between technical development and costs, Poudineh et al. argue that: government subsidies are often the linchpin that holds together new industries while they are in their early growth phase. These subsidies are justified on the premise that they can help spur economic growth, and job creation in the long term, incentivize innovation, as well as meet other policy objectives such as decarbonization or energy security. (Poudineh et al., 2017, p. 34)

New wind power installations (offshore and onshore) reached 93 GW in 2020, a 53% increase in comparison to 2019. According to Global Wind Report 2021, onshore wind market installations constitute 89.9 GW, while offshore wind market reached 6.1 GW. Due to China’s leading role in wind power installations (56%), the Asia Pacific region has the biggest share of global wind market. North America (18.4%) has the second position, while Europe (15.9%) dropped to third place followed by Latin America (5%), Africa and Middle East (0.9%) (GWEC, 2021, p. 44). With regard to the offshore market in 2020, in Europe the Netherlands took the lead, followed by Belgium, UK, Germany, and Portugal. Also, installations in the US and South Korea were significant during 2020. With these numbers, total offshore wind capacity has passed 35 GW, which represents 4.8% of the total wind capacity (GWEC, 2021, p. 46). Nevertheless, these numbers just show the increase during 2020, but overall, the UK continues to be the leader in offshore wind capacity and China is the second largest market. Partially due to subsidies, Europe is the largest investor in offshore wind with almost 90% of the global capacity for offshore wind being located in the North Sea (Sherman et al., 2020, p. 1).

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The world’s largest markets regarding onshore installations are the US and China. Still, onshore installations also grew in Asia Pacific, North and Latin America; these regions combined installed 74 GW of new onshore wind capacity in 2020, 76% more than in 2019. Due to the big impact that the pandemic had in Europe, installations in this area only saw an increase of 0.6% over 2019 data (ibid.). In spite of that, emerging markets in the Middle East and Africa installed 8.2 GW of onshore wind, almost the same as in 2019 but the numbers did not decrease, which can already be considered as something beneficial. Even though 2020 was a great year for many in the wind sector (onshore and offshore), some regions saw a decrease in installations; this was the case for Europe, the Middle East, and Africa. In the latter, new wind installations dropped by 7 MW compared to 2019 due to low installations in North African countries like Egypt and Morocco (ibid., p. 50). Likewise, India was affected not only due to the Covid-19 pandemic, but also land acquisition challenges and grid connections that caused important delays in project construction and execution. Within the wind power sector, there are ten companies that dominate the development and production of wind turbines; six of them are Chinese and the rest are Western. The leading manufacturer is Vestas, a Danish company that in 2019 had 18% of the world turbine market. The main feature of this company is that it operates in two segments, Project and Service; in the former Vestas is responsible for selling wind power plants and wind turbines, whereas in the latter it provides services related to the company’s offer such as data-driven consultancy services, blade maintenance, power generator repairs, sale of spare parts, and others (Reuters, 2022). Additionally, Vestas is highly diversified, in 2020 it managed to make 32 new installations and maintain a strong presence in Brazil, the Netherlands, Australia, France, Poland, Russia, Norway, and the US (GWEC, 2021). From 2019 to 2020, General Electric (GE) Renewable Energy climbed two positions and became the world’s second largest producer of wind turbines. It achieved this through the explosive growth in its home market (US) and the strong position it has in Spain. Despite several disruptions in the supply chain due to the Covid-19 pandemic, GE managed to install more than 10 GW in the US, which made it the largest wind turbine supplier for the second year in a row (GWEC, 2021). Goldwind Science & Tech is a Chinese energy company that in 2019 controlled 13% of the wind power market and remains the third largest wind turbine supplier in the world and the largest manufacturer in China. Goldwind operates a Wind Turbine and Manufacturing and Sales segment that is engaged in research and development; the Wind Power service that offers power-related consultants, wind farm construction, maintenance, and transportation services; and the Wind Farm Development area. To this date, Goldwind has established wind turbines in more than 20 major countries, and it will continue expanding its influence worldwide (Reuters, 2023). In 2020, the top five companies in terms of Original Equipment Manufacturers (OEM) annual installation capacity that includes onshore and offshore winds were identified as follows (Global Wind Energy Council, 2021). In comparison with 2019, Vestas remained the leading company for the fifth year in a row (16,186 MW installed in 2020); Renewable Energy company moved up two positions since 2019 (14,135 MW); Goldwind (13,606 MW) remained in third position for the past two years; Envision (10,717 MW) moved to fifth position in 2020. Finally, Siemens Gamesa (8,678 MW) dropped from second position in 2019 to fifth position in 2020 (Global Wind Energy Council, 2021).

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At present, wind still represents a small part of the global energy mix. Nonetheless, the wind energy sector is increasing its share and is expected to account for most of the renewable energy generation worldwide in 2026. Within wind power, the element that is predicted will grow the most in the next five years is offshore wind, reaching on its own 1.5% of total energy generation (ibid.). In addition to this, larger turbines are gaining prominence as they can produce more power with fewer turbines; this trend is fundamental because it also presents a big decrease of prices (IEA, 2020).

4. THE GEOPOLITICAL IMPACT OF ONSHORE WIND PROJECTS 4.1 Ukraine: Current State, Energy Security Challenges, and Obstacles of Onshore Wind Energy Development Prior to 2022, Ukraine saw a great increase in renewable energy capacity (both solar and wind). In 2019, renewable energy capacity from both wind and solar almost tripled in size from 2.3 GW to 6.8 GW (Valentin, 2020). During some timeslots renewable energy production even overtook non-renewable energy production (ibid.). But what exactly facilitated this rapid development of renewable energy, and wind energy, in Ukraine? Furthermore, what problems were Ukrainian authorities and organizations facing in developing wind energy before Russia invaded Ukraine in February 2022? After President Yanukovych’s downfall and the subsequent annexation of the Crimean Peninsula, Ukraine implemented reforms in order to mitigate its dependency on Russia and increase its energy security (Bayramov & Marusyk, 2019, p. 74). While these plans for reforming the energy sector were already much needed before the war between Russia and Ukraine, these reforms were only addressed “on a qualitatively new level” after 2014 (ibid.). While energy security and dependency were critical in the development of new energy policy in Ukraine, climate concerns also played a role in decision making (Wageningen University, 2018, p. 3) These efforts to reform the energy sector ultimately became apparent in 2017, when Ukraine unveiled the “Energy Strategy of Ukraine”, which entails a blueprint until 2035. As argued by Bayramov and Marusyk, these reforms were characterized by three main pillars: “pricing reforms; diversifying away from Russian gas supplies; and, working on compliance with the EU energy regulations within the framework of Ukraine’s ‘Association Agreement and Deep and Comprehensive Free Trade Area’ (DCFTA)” (ibid.). The pressing need to implement the above-mentioned regulation directives was portrayed by agreements that were then concluded. First of all, Ukraine signed the Paris Agreement on combating climate change in 2016. And in 2017, Ukraine also adopted the Law “On the Accession of Ukraine to the Statute of the International Agency for Renewable Energy Sources (IRENA)” and finally became a member of IRENA (Khomenko et al., 2019, p. 4). Ukraine has taken several important legislative and strategic steps in order to reform the energy sector. However, despite the rapid increase in renewable energy production between 2016 and 2017 (from approximately 1 to 6% of the domestic electricity consumption), Khomenko et al. argue that Ukraine was still lagging globally in the renewables race (ibid., p.5). Nonetheless, due to several measures, such as the so-called ‘green tariff’, on which the Ukrainian state has put an emphasis since 2017, foreign and domestic investors were incentivized to invest in renewables in Ukraine. While the laws for the feed-in tariffs (FITs) were

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already in place in the early 2000s, with the compliance to EU energy regulations and the goals set in the Energy Strategy of Ukraine, the state started emphasizing its determination on these green tariffs by implementing the 2017 Law of Ukraine “On the Energy Market” (Yaremko, 2020). This law reinforced the government’s obligation to maintain the green tariff at least until the end of 2029 (ibid.). The green (or feed-in) tariffs in Ukraine were among the highest in Europe. These tariffs were furthermore linked to the euro, so they were not dependent on the stability or fluctuations of the Ukrainian currency (ibid.). As a result, these tariffs led to large investments in renewables (such as wind farms) amounting to US$10 billion. In 2019, investments in the renewables sector in Ukraine were so large that they were among “the top five sectors for investment in the Ukrainian economy” (Kozakevich, 2020). In a timespan of only three years (2017–2020), the transition towards renewable energy had led Ukraine to several successes; in March 2020 on several occasions renewable energy sources produced more electricity than coal-based power plants (Valentin, 2020). Despite these positive changes for the renewables sector, 2020 also marked the year in which several problematic aspects of these tariffs became apparent. As a result of a decrease in energy consumption in 2020 due to lowered industrial production, a warmer winter, and the Covid-19 lockdown, the Ukrainian government announced that the energy sector was in a crisis situation, because the FITs had become too financially burdensome (Yaremko, 2020). Consequently, several decisions were taken in May 2020 in order to reduce the financial backlash. Nonetheless, in the following years Ukraine still needed financial help from the EU to relieve the financial burden (ibid. and Interview 1. renewable energy analyst, 2021, minute 9–10). Kharlamova et al. agree that without the ‘green tariff’, investments in renewable energy can still be profitable. Nonetheless, as pointed out by Kozakevich, the Ukrainian government was not only gambling with investors’ trust in investing in the Ukrainian economy (or its investment reputation), but the government was also discerning the fact that “it will not be able to reach its own renewable energy benchmarks without the technological know-how and longterm financing from the investment community” (Kozakevich, 2020). The renewable energy analyst that was interviewed for this chapter also argued that trust was eroded due to a lack of government action (after announcing policies), and also due to sending mixed signals and no long-term perspective for investors (Interview 2. Renewable energy analyst, 2021, minute 15–18). Also, in relation to the FIT, new investments were highly unlikely as older investments (legacy projects before 2020) were not even financed when they were promised by the government to be eligible for the FIT (Interview 2. renewable energy analyst, 2021, minute 8–11). Moreover, new large-scale renewable investments (such as wind farms) could not benefit from the FIT as the Ukrainian government suspended auctions of this FIT for the coming years (ibid.). All these factors, additionally combined with the higher cost of capital in Ukraine and the problems with grid connections (getting a connection) formed a barrier for the development of, and investment in wind farms (ibid., minute 10–14 and minute 23–33). As posed by Antonenko et al., the single most important question was whether Ukraine’s energy sector could escape being “dominated by favored incumbents linked to certain industrial groups and political patrons”. Competition based on transparency and market rules are a necessary ingredient that Ukraine has been lacking for years in order to attract new technologies and investments (Antonenko et al., 2018; Schöning & Zubaka, 2018, pp. 8–9). Despite the adoption of the new Electricity Market Law as a major step in the right direction, political forces steered by their own interests were still problematic as the independence of the regulator continued to be questioned. The large influence of politics over the energy

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markets left lots of room for speculation, which negatively affected foreign investments in renewables (ibid. and Schöning & Zubaka, 2018, pp. 8–9; Gorchinskaya, 2019). The DTEK conglomerate was, for example, able to benefit significantly from a decision regarding a new coal pricing scheme for supplying Ukrainian thermal power plants. Not only did this company own a large share of the thermal power generation capacity, Rinat Akhmetov, the owner of DTEK, also owned coal mines that were “chiefly clustered in the non-government-controlled eastern regions” (Antonenko et al., 2018). Moreover, while privatization of key assets might initially seem like a good way to limit government interference, it might also increase market concentration of a limited number of dominant private companies (ibid.). Again, such a scenario also played out in 2017, when DTEK took over two regional energy companies (ibid.). Combined with the problems of financing, new smaller local companies have a very difficult time getting a foothold in the wind energy sector in Ukraine (interview 1. renewable energy analyst, 2021, minute 19–25 and Gorchinskaya, 2019). Kozakevich also argues that the initiated reforms were under threat by oligarch interest, as the oligarchs had undermined government pricing policies through court litigation questioning transmission system approvals by the regulator and refused to pay for services, which are backed by dubious court decisions. As a result, transmission system operator has a significant gap in the total income. (Kozakevich, 2020)

Besides limiting oligarch influence, Kozakevich also highlighted that due to loopholes in existing legislation, some Ukrainian power customers fell for the price dumping schemes of Russian and Belarussian electricity imports. By doing so, these providers gained preference over local power generators, undermining national energy interests (ibid.). Similar to what happened to gas prices, the government also “needs to gradually raise prices charged for consumer electricity to the market level” (ibid.). However, prior to the 2022 full-scale war, the Ukrainian government feared public backlash in increasing energy costs, so this was not a preferred solution for the government (Interview 2. renewable energy analyst, 2021, minute 9–10). Increasing electricity prices could significantly close the gap between what the guaranteed buyer needed to pay in FITs to renewable energy providers (Kozakevich, 2020). There was a concern among energy experts in Ukraine before the war that, if the government did not take into account the worsened investment climate for renewables, and wind in particular, Ukraine’s investment boost which consisted of a total (including Crimea) of 514 MW realized wind power capacity, could have turned into an investment bust (Pantsyr et al., 2020, p. 5). 4.2 Discussion How do Ukrainian onshore wind energy developments affect patterns of cooperation and conflict between Ukraine and Russia? Russia has a large potential to exploit renewable sources, and in 2024 the share of wind energy could amount to 1.5% of the total energy mix (Kingdom of the Netherlands, 2021). In a scenario of peaceful co-existence between neighboring countries, i.e., Russia and Ukraine, onshore wind developments could have contributed towards creating a dynamic cooperation and achieving economic benefits for both nations. Nonetheless, they both depend on Western technological expertise and know-how regarding wind energy development. Prior the war,

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Ukraine had 1.3 GW of wind energy capacity that was expected to grow into 3 GW by 2025 if the right policies were to be introduced; additionally, each newly constructed wind turbine would add €10 million to the economy, therefore it would not only contribute to achieving its energy security, but also increasing Ukraine’s GDP (Wind Europe, 2021). As pointed out earlier, Vakulchuk et al. argue that systematic empirical evidence on the geopolitics of wind is scarce, which then often translates to publications that seem to rely on anecdotal evidence. The lack of scholarly material affects the scope of statements that can be derived from this research (Vakulchuk et al., 2020, p. 9). Case-specific conclusions should, therefore, not be applied elsewhere without taking into consideration the specific characteristics that shape these individual cases. Similar to Vakulchuk et al., after conducting interviews with wind energy experts and analyzing scientific literature, it can be also concluded that it is very difficult to draw conclusions about the scale of significance of geopolitical influence of renewables; the world, and these countries alike, are still very much fossil-fuel based. Renewables do have the potential to shape geopolitics and change the patterns of conflict and cooperation. However, for wind energy, and in relation to the countries that were discussed, this is especially difficult to assess due to the still-limited market share, especially in the case of Russia and Ukraine. Any specific conclusions on how exactly wind energy could affect a geopolitical situation, if Russia had not invaded Ukraine, would, therefore, would still contain a high level of speculation, especially due to the lack of scientific basis. Moreover, Russia or Ukraine are not dependent on each other in developing wind energy as neither of them are leaders in wind energy technology. Nonetheless, several trends concerning the geopolitics of wind can be drawn from this research, mostly conducted before the full-scale war in Ukraine. Russia and Ukraine are currently in a state of war with each other and their relations are dictated by ‘top-down’ strategic military thinking based on hostilities since 2014 and on the failure to reach a cease-fire in Eastern Ukraine prior to February 2022. Even if deployment of onshore wind continues to grow after the war, it is unlikely that it is going to affect the geopolitical energy relations ‘bottom-up’ (interview with renewable energy analyst, 2021) in the future. While cooperation might work in other cases to foster geopolitical relations, wind energy (and renewables in general), still play a limited role and cannot contribute to significantly normalizing the cooperation between Russia and Ukraine after the war. However, deployment of wind energy still has a peace potential as it can reduce the energy security risks for Ukraine and dependency on gas imports. In recent years, Ukraine was redirecting its focus towards the EU and continuing its integration with the EU’s ENTSO-E power system. Ties between Russia and Ukraine cut various energy fields, which was particularly visible in Ukraine’s decision to finalize disconnecting its grid from Russia (KyivPost, 2021) that took place just before the Russian invasion. This decision will limit any geopolitical leverage of wind energy in terms of renewable electricity grid cooperation between both countries when the war is over. Even if Russia became a big player in the renewables sector (which currently definitely is not the case), there is certainly still a position for fossil fuels as long as there are recipients of these sources of energy. It became clear after the Russian invasion of Ukraine that if demand for Russian gas and oil, particularly from the EU, declines, Russia’s geopolitical leverage to use fossil fuels as a ‘geopolitical weapon’ also declines. The influence of ‘energy as a weapon’ was particularly visible in the EU’s energy policy towards Russia before the war, in which the EU made sure that natural gas remained largely unsanctioned (limiting the impact of sanctions in the conflict between

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Russia and Ukraine). According to O’Sullivan et al., “If the EU were better supplied with solar and wind power and no longer so dependent on Russian gas it is less likely that it would have kept sanctions away from natural gas” (ibid., pp.21–22). The trend, which Ukraine was following (rapid development of renewables such as wind) before the full-scale war, was halted due to budget constraints. As Ukraine itself put brakes on investment incentives, thus undermining investors’ trust, it was enabling Russian ability to exploit fossil fuels as a geopolitical weapon. The scope of leveraging renewables (such as wind energy) as a geopolitical asset was, therefore, very much dependent on Ukraine’s own domestic policy and its ability to implement an efficient energy transition strategy. As already mentioned, it became apparent from the interviews that international cooperation in the development of the wind industry also fosters relations between countries. However, there needs to be incentive to do so (for example: Russia depends on Danish technology for developing a specific wind farm) (Interview with renewable energy analyst, 2021 and interview with CEO of Vestas, 2021). Since the interview with the CEO of Vestas, the Danish turbine manufacturer decided to stop its business in the Russian Federation and close its blade factory and subsidiary, Vestas Rus, by the end of 2022 because of Russia’s war in Ukraine. Nonetheless, before the war started, the EU Green Deal and European wind turbine manufacturers played a significant role in further deepening strategic relations between the EU and Ukraine in the context of the Free Trade and Association Agreement and contributing to depoliticizing energy relations between the EU and Russia. Ukraine was supposed to play an important role in the EU Green Deal (Sabadus, 2021), particularly in the production of green hydrogen. In their article, Pantsyr et al. discuss the impact of the hostilities in the Donbas region on the overall effect on wind energy development in Ukraine. The impact had a negative effect on the development of the wind industry in the following year as development of new wind farms slowed down (Pantsyr et al., 2020, p. 5). Conversely, it remained unclear how exactly the effect was measured and how causality was determined, even more when one takes into account the stark rise in wind energy development that took place a couple years later (difficult to establish the exact effect that remains). Nonetheless, it was very likely that the hostilities in the Donbas had an effect on the development of the wind energy sector in Ukraine. This was, therefore, another aspect that increased Russia’s geopolitical leverage as it undermined investment incentive in Ukraine. Furthermore, Pantsyr et al. discuss wind farms that are located on the Crimean Peninsula. The annexation of the Crimean Peninsula had a negative effect on the development of wind power in Ukraine as almost a fifth of the country’s wind power capacity was located there (ibid.). However, it remained unclear what exactly happened to these wind farms. It was likely that some were expropriated as they were state owned. However, several wind farms were also privately owned, but it was possible that investors were also not reluctant to publish information regarding this (Gerden, 2014). From the geopolitics of renewables perspective, both the war in the Donbas and the annexation of the Crimean Peninsula expedited Ukraine’s energy transition and deployment of renewables (in particular, onshore wind), thus diminishing Russia’s ability to exploit energy resources towards Ukraine for foreign policy goals. Destroying critical electricity and heating infrastructure in Ukraine by launching missiles and drones is a war tactic deliberately exercised by the Russian military forces. They are committed to destroying key infrastructure for the energy transition, i.e., solar panels, wind turbines, and the potential of green hydrogen production. Ukraine’s renewable energy industry

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has been hit heavily since February 2022, also causing unprecedented environmental damage. The regions of Zaporizhzhia, Kherson, Mykolayiv, and Odesa in southern Ukraine contain approximately 47% of Ukraine’s installed renewables capacity; these are precisely the regions where active military hostilities are taking place (Shumkov, 2022). According to data from the Ukrainian Association of Renewable Energy (UARE), 89% of the country’s wind farms are in areas that are subject to active hostilities and 9% are near such regions. In the first months of the war, the economic losses were valued at around US$5.6 billion for infrastructure located in active hostile areas and US$3.6 billion for plants located in adjacent areas. The losses are unspeakable; there are numerous reports of wind turbines and solar panels, electrical equipment, substations, and power transmission lines destroyed, and more than 3,970 MW of renewables are in imminent threat of complete or partial destruction (Shumkov, 2022). Even if Ukrainian renewable energy companies will demand compensation from Russia in international courts, it will take years to renew energy infrastructure destroyed during the war. According to the UARE, it took ten years and more than €10.9 billion that were invested in renewable energy industry to reach installed capacity of 9,500 MW before the invasion. After the war, it is still up to Ukraine to improve its energy security and develop a domestic policy that attracts a stable flow of foreign investments into renewables in order to further decarbonize its economy. It would allow Ukraine to diversify its energy sources beyond the use of fossil fuels and reduce its dependency on external energy sources. At the same time this energy transition requires much more involvement than just constructing wind farms; a thorough long-term plan containing flexible capacities would be needed to maintain power grid stability (Orel, 2021; Pantsyr et al., 2020, p. 8). For Russia, the situation is significantly different as there is still demand for gas and oil on international markets. However, Russia cannot operate from within a vacuum and remain intangible to worldwide paradigm shifts (Lanshina, 2021, p. 34). Russia’s best bet towards the future, therefore, also lies in diversifying its energy mix to secure future export possibilities (green hydrogen, for example). However, energy policy in Russia seems to be motivated by concern of not lagging behind technologically on the one hand and constrained by a challenge that promoting renewables might counteract the fossil fuel industry (with all its geopolitical consequences) on the other hand. By expediting the energy transition and decline of fossil fuel dependency in Ukraine and in the EU, the likelihood of using fossil fuels ‘as an energy weapon’ for Russia will decrease.

5. THE GEOPOLITICAL IMPACT OF OFFSHORE WIND PROJECTS 5.1 The Taiwan Strait: Current State, Energy Security Challenges, and Obstacles of Offshore Wind Energy Development Renewables, wind energy included, are viewed by the Taiwanese government as a credible and reliable source of energy (Chen et al., 2020, p. 1229). Investing in renewable energy sources is considered “an effective approach to enhance energy security and mitigate climate change” (ibid.). Owing to the relatively large recent growth in investments in offshore wind farms, Taiwan has been increasingly relying on renewables to replace current and future energy demand. This is particularly visible in the Taiwan Strait in the form of wind farms and solar

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panels. This commitment to renewables on behalf of the Taiwanese government is powered by several factors. First, it is a large net importer of energy. With an average of 98% of the annual energy demand being imported, the energy dependency of Taiwan is substantial (Chen et al., 2020, p. 1229). Moreover, more than 93% of Taiwan’s overall energy supply comes from fossil fuels. This, as argued by Feigenbaum and Hou, also brings along “an intrinsic security challenge” for Taiwan (Feigenbaum & Hou, 2020). The risks to its energy security as a result of energy import dependency were amplified even more during the Covid-19 pandemic, in which the high volatility of the commodity markets was proven again, when, for example, Brent crude prices dropped by 24% in just a week (ibid.). Because of geopolitical turmoil, technological disruptions, price swings, and ad hoc supply change disturbances are increasingly becoming a problem for Taiwan. The import dependency directly causes the instability of its reserve margins, of which effects have already been tangible in the past. In 2017, as a result of a blackout, Taiwan faced power outages directly resulting from low operating reserve margins (as low as 1.7%) (ibid.). Moreover, as Taiwan’s opportunities for international cooperation are limited, global supply and price shocks can hardly be dampened (ibid.). While these problems by themselves are not new to Taiwan, Feigenbaum and Hou argue that new added dynamics are intertwined with these ‘old’ risks that will certainly affect “future energy security, affordability, and sustainability” (ibid.). These ‘new dynamics’ that Feigenbaum and Hou refer to have to do with the paradigm shift that is taking place as a result of new technologies and pragmatic thinking. Market analysis has moved away from the idea that the number of large-scale oil fields left to find has shrunk forever—or that the world is running out of a depleting, finite resource. Instead, market thinking has shifted toward such issues as stranded assets. (ibid.)

According to the aforementioned authors, it is crucial for Taiwan to use existing infrastructure or technologies to its advantage instead of focusing only on cost and security (as was the primary focus for a long time). By aligning this paradigm shift in global energy markets with new energy policies that take this shift into account, energy dependence can be reduced as the energy mix becomes more diverse. An example of leveraging infrastructure in Taiwan could be the production of renewable natural gas (RNG). These technological advancements can dampen the intermittent nature of wind and solar energy sources (ibid.). The importance of diversification (not only in the form of wind) is also presented by Ng, who argues that other more complex issues, such as geopolitical problems, are on the horizon for offshore wind energy investments. According to Ng: International developers – mainly European – have flocked to grab a share of lucrative wind farm development rights recently awarded on projects mainly in the seas west and northwest of the island, lured by excellent wind resources and high guaranteed long-term power prices. (Ng, 2018)

However, these investors downplay the geopolitical risks involved with investing in offshore wind in the Taiwan Strait. According to Jatin Sharma (president of California-based GCube Insurance Services) these investors are “treating the Taiwan Strait as if it is the North Sea or the Baltic Sea” (ibid.). The geopolitical realities, however, are very different as in the coming five to seven years, investments worth US$22 billion might face war and asset expropriation

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risk (ibid.). The aforementioned argument is substantiated by the fact that China carried out a series of military exercises, in which the island was targeted. Triggered by the Taiwan visit of Nancy Pelosi, US speaker of the House of Representatives, a new escalation between the US and China took place in August 2022. The cross-strait risks for offshore wind farms further raise concerns of heightened tensions and the start of the war earlier than in the next five years. The Taiwanese government has, furthermore, excluded Chinese companies from participating in offshore wind farm construction tenders due to national security concerns (ibid.), According to Bloomberg, Taiwan is likely to be the biggest risk for a clash between China and the US (Scott, 2021). Besides fossil fuels, which undoubtedly play a large role in Taiwan’s energy mix, nuclear energy is also important as it currently constitutes around 4%of the energy mix (Chen et al., 2020, p. 1229). While the Taiwanese government aims to reduce its dependency on fossil fuels, it also wants to phase out nuclear energy completely. It announced in 2017 that all nuclear power sources will ultimately be phased out by 2025 (Chien, 2019, p. 8; Chen et al., 2020, p. 1229). With Taiwan facing the same geographic realities that undoubtedly affected the outcome of the disastrous Fukushima nuclear accident, its policy has also been steered away from nuclear energy development. Another reason for nuclear phaseout is the rise of environmental concerns (Chien, 2019, p. 7). In practice, this means that a loss in energy production can only be covered by an increase in renewable energy (Chen et al., 2020, p. 1229). The 18  TWh in energy production that will be ‘lost’ after the last nuclear power plant is phased out in 2025 has to be replaced by other (renewable) energy sources. However, as argued by Chien, the rise in environmental consciousness is not the only factor to facilitate policy change. Economic reasons are also important for the Taiwanese government as Taiwan’s economy is heavily reliant on the export of manufacturing goods, especially electronic components. Providing renewable energy for the production of these goods would ensure that the exported goods remain competitive on the global markets (Chien, 2019, p. 8). Thus, policy objectives are very much intertwined and dependent on each other. Not only are renewables seen as a way for Taiwan to become ‘green’, but it is also as much seen as an opportunity to facilitate growth and decrease dependency (ibid., p. 13; Song, 2020). In order to achieve this goal, established policies aimed at achieving an energy mix that consists of 50% natural gas, 30% coal, and 20% renewable energy (Filho, 2020). In this context, offshore wind energy is considered as the logical solution, as it is seen as the “twin-engine of economic industry transformation and energy transformation” (Song, 2020). Unlike Danish Vestas, for example, Taiwanese companies do not have offshore wind technology (Chien, 2019, p. 2). There are also no local leaders that “are able to acquire foreign technologies and make them their own” (ibid.). Taiwan, therefore, had to rely on foreign producers and developers in order to develop offshore wind farms. By not applying a free-market doctrine to achieve rapid offshore wind development, the Taiwanese government chose to intervene in facilitating the local offshore wind industry itself (ibid.). It, thus, has put policy frameworks in place that aim to attract international developers to invest in Taiwan on the one hand, while on the other hand implementing industrial land-based policy that requires offshore developers “to implement local procurement, to help Taiwan to establish a local offshore wind power supply chain” (Song, 2020; Marsh​.co​m, 2020, pp. 27–28). The requirement of establishing “a local supply chain requires significant investment, which becomes increasingly challenging in an environment of lower tariffs” (Marsh​.co​m, 2020, p. 28). Taiwan’s goal is to create new business opportunities in the renewable energy industry while also reducing

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its dependency on fossil fuels and nuclear power, therefore, is something that might hamper the pace of foreign investments in offshore wind on which Taiwanese economy is reliant. Still, conditions for investments in wind energy in the Taiwan Strait are favorable, especially for offshore wind farms. As mentioned earlier, the cost of offshore wind energy projects has fallen rapidly. In fact, costs might drop even further as remote monitoring and control system technologies improve (Lin et al., 2015, p. 329). With the great advantage that winds are stronger and more consistent, offshore seems to be the preferred option in Taiwan, as it is integral to its energy transition (ibid.; Chien, 2019, p. 2). While the conditions for the development of offshore wind energy capacity are quite favorable, wind farm developers also have to account for the challenges or downsides, especially during extreme weather. Typhoons and earthquakes form a particular risk to developers, but the water is also saltier than in Europe and America (Lin et al., 2015, p. 330; Ng, 2020). One of the offshore wind farms (Formosa 1) has been impacted by four typhoons since May 2019 (Marsh​.co​m, 2020, p. 28). While a significant wind energy capacity has already been realized, a lot still needs to be done in order to achieve its set goal of 5.5 GW in 2025. 5.2 Discussion How do Taiwanese offshore wind energy developments affect patterns of cooperation and conflict in the Taiwan Strait? The relations between mainland China and the Taiwanese government have always been turbulent and the tensions can escalate further with support of their respective powerful allies, Russia and the US. Additionally, Taiwanese political parties are divided into those that are pro-China and the anti-China ones; and the current president Tsai Ing-wen belongs to the latter. While Taiwan looks forward to becoming a nuclear-free region by 2025, presently it has four operable nuclear reactors which produce approximately 15% of its electricity (ibid.); notwithstanding, fossil fuels and coal have a bigger share of the energy mix. In this respect, Taiwan as a net importer of energy maintains complex trade relations with China and Australia that supply coal and that in turn import several added-value goods. Taiwan’s biggest energy security problem is dependence on energy imports (Feigenbaum & Hou, 2020). Approximately 98% of its energy is imported which is predominantly needed for one of the biggest semiconductor industries. With further deployment of offshore wind in the Taiwan Strait, the dependence upon China’s coal and fossil fuels will decrease. However, a new period of hostilities resulted, and China “imposed economic sanctions on Taiwan and cut military and other cooperation with America” (The Economist, 2022). Thus, heightened geopolitical tensions and democracy vs autocracy opposition create an unstable financial climate for offshore wind development on the one hand, and expedite transition towards renewables in the Taiwan Strait on the other hand. It is worth mentioning that China is the biggest producer of rare earth elements, which are used for manufacturing wind turbines. Taiwan also relies on these elements for developing its offshore wind farms. The Chinese government has the power to cut the supplies and apply economic sanctions (Gries & Wang, 2020, p. 57). In this respect, conflict dynamics overlap with the possible cooperation prospects. Notwithstanding, it is important to remember that China also depends on Taiwan, as the former imports significant amounts of finished goods such as semiconductors, computers, technological and communication equipment, etc. In this regard, China and Taiwan were able to prioritize their economic interests. Concerning

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European investors and wind turbine manufacturing companies, it can be noted that they might downplay the geopolitical risks involved with investing in offshore wind in the Taiwan Strait as they did in investing in onshore wind in Ukraine. The companies that invested in onshore wind development in Ukraine will have to apply to international courts to demand financial compensation for damage to their investments, and it will take years before their claims will be satisfied.

6. CONCLUSION In conclusion, the growth of wind energy surpasses previous expectations and forecasts of its development and deployment every year. There are still barriers to investment, such as the lack of energy policies that promote the use of renewable energy and reduce the dependence on fossil fuels, disruptions in the supply chain that exacerbated with the Covid-19 pandemic, the impact that wind farms have on their environment; the noise they produce, land use, possible damage to the marine ecosystem; damage to birds, and so on. In terms of similarities between onshore and offshore wind regarding their contribution to stable trade relations and energy security, it can be concluded that European investments in wind turbine manufacturers not only accelerate the processes of decarbonization and renewable energy generation but also create favorable dynamics of cooperation rather than conflict. Most of operating onshore wind farms in Ukraine are currently in occupied territories. Nevertheless, there is consensus between the government and society that post-war reconstruction will need to prioritize decarbonization in the framework of the EU Green Deal and renewable energy generation in order to ensure the country’s energy security and climate change mitigation in the long run (Boyarchuk, 2023, p. 69). There is a potential for possible renewable energy cooperation in the Taiwan Strait that can prevail over conflict dynamics between China and Taiwan in case the tensions are deescalated. By protecting their investments and assets, the European wind turbine manufacturers, without downplaying the geopolitical risks in the Taiwan Strait area, can still contribute towards trade and cooperation in wind energy, particularly involving the EU and China in the framework of climate change action. This chapter demonstrated that heightened geopolitical tensions, or a full-scale war, do not derail energy-dependent Ukraine or the Taiwanese government in addressing their immediate energy security threats by diversifying their energy sources, diminishing their dependence on fossil fuel producers, thus boosting the use of clean energy in the future, in particular offshore and onshore wind farms. At the same time, in the case of interstate war (like between Russia and Ukraine) deployment of offshore and onshore wind farms will not prevent them from being excluded from a potential zone of military action. Therefore, the peace potential of offshore wind farms in the Taiwan Strait may be also limited in establishing a no war zone if hostilities escalate.

NOTES 1.

I am sincerely grateful to research assistants Dominic de Vries and María José de la Peña Sánchez from the University of Groningen for providing a great support with collecting data and conducting interviews for this project.

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2. List of Interviews 1. Interviewee 1: Managing Director of a major wind turbine producer in Russia, Microsoft Teams interview (digital), March 2021. 2. Interviewee 2: Renewable energy analyst in Ukraine, Google Meets interview (digital), March 2021. 3. Interviewee 3: Director of an economic research organization in Taiwan, Microsoft Teams interview (digital), April 2021. 4. Interviewee 4: Member of a sustainable development research laboratory in Russia, Microsoft Teams interview (digital), April 2021. 5. Interviewees 5 and 6: Members of a Wind Turbine and Marine Engineering organization in Taiwan, Microsoft Teams interview (digital), May 2021.

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Gries, P., & Wang, T. (2020). Taiwan’s perilous futures: Chinese nationalism, the 2020 presidential elections, and U.S.-China tensions spell trouble for cross-strait relations. https://www​.rvo​.nl​/sites​/ default ​/files​/2021​/06​/ Wind​-energy​-in​-russia​.pdf; 10.1177/0043820020907673 GWEC. (2021). Global wind report 2021. Global Wind Energy Council, pp. 1–80. Hassan, R. (2018). An overview for wind energy technology for electricity generation. http://dx.doi. org/10.2139/ssrn.3182994 IEA. (2020). World energy investment. International Energy Agency [online]. https://www​.iea​.org​/ reports​/world​-energy​-investment​-2020 IEA. (2021a). Renewables 2021: Analysis and forecast for 2026. International Energy Agency, pp. 1–175. IEA. (2021b). World energy investment 2021. International Energy Agency, pp.1–64. IRENA. (2016). Wind Power: Technology Brief [online]. https://irena​.org​/publications​/2016​/ Mar​/ Wind​ -Power IRENA. (2016). Wind Power: Technology Brief. International Renewable Energy Agency and IEAETSAP, pp. 1–28. Jones, S. (2022). Russia’s possible invasion of Ukraine. Center for Strategic & International Studies (CSIS) [online]. https://www​.csis​.org​/analysis​/russias​-possible​-invasion​-ukraine Kharlamova, G., Chernyak, O., & Nate, S. (2016). Renewable energy and security for Ukraine: Challenge or smart way? Journal of International Studies, 9(1), pp.88–115. Khomenko, M., Pryakhina, K., & Latyshev, K. (2019). Prospects for development of Ukraine and EU in the field of renewable energy sources. SHS Web of Conferences, 61, 01008. Kingdom of the Netherlands. (2021). Wind energy in Russia. Kingdom of the Netherlands, pp. 1–4. https://www​.rvo​.nl​/sites​/default ​/files​/2021​/06​/ Wind​-energy​-in​-russia​.pdf Kozakevich, O. (2020). Why Ukraine’s Once Thriving Renewable Energy Sector Could Be At Dire Risk of Failure - Renewable Energy World [online]. Renewable Energy World. https://www​.ren​ewab​leen​ ergyworld​.com​/solar​/why​-ukraines​-once​-thriving​-renewable​-energy​-sector​-could​-be​-at​-dire​-risk​-of​ -failure/​#gref KyivPost. (2021). Ukraine Plans to Disconnect from Power Grid with Belarus, Russia By End of 2023 | KyivPost - Ukraine's Global Voice [online]. https://www​.kyivpost​.com ​/ukraine​-politics​/ukraine​-plans​ -to​-disconnect​-from​-power​-grid​-with​-belarus​-russia​-by​-end​-of​-2023​.html​?cn​-reloaded=1 Lanshina, T. (2021). Russia's Wind Energy Market: Potential for New Economy Development. Library​ .fes​.​de. 2021 [online]. 17606​-20210407​.​pdf (fes​.​de) Letcher, T. (2017). Wind Energy Engineering: A Handbook for Onshore and Offshore Wind Turbines. Elsevier Science & Technology. Lin, Y., Wu, Y., Chen, C., & Donga, J. (2015). Wind energy in Taiwan and the standard of communication for wind turbines. International Journal of Smart Grid and Clean Energy, 4(4), 328–335 Nabiyeva, K. (2016). Energy Reforms in Ukraine: On the Track to Climate Protection and Sustainability? | Heinrich Böll Stiftung [online]. Heinrich-Böll-Stiftung. https://www​.boell​.de​/en​/2016​/07​/19​/energy​ -reforms​-ukraine​-track​-climate​-protection​-and​-sustainability Nehls, G. (2021). GWEC report indicates wind industry resilience, but a need to triple installation for net zero. Composites World: Wind/Energy [online]. https://www​.compositesworld​.com​/news​/gwec​ -report​-indicates​-wind​-industry​-resilience​-but​-a​-need​-to​-triple​-installation​-for​-net​-zero NES Fircroft. (2021). The biggest wind turbines in the world. https://www​.nesfircroft​.com​/ blog​/2021​/12​ /the​-biggest​-wind​-turbines​-in​-the​-world​?source​=google​.com Ng, E. (2018). Insurer Warns Taiwan Offshore Wind Farm Builders: Ignore Risk at Your Peril [online]. South China Morning Post. https://www​.scmp​.com ​/ business​/article​/2147998​/cross​-strait​-risks​-can not​-be​-ignored​-insurer​-warns​-offshore​-wind​-farm​-firms Orel, I. (2021). Looking for Way Out of "Green" Deadlock in Ukrainian Energy Sector [online]. Unian​ .inf​o.  https://www​.unian​.info​/economics​/ looking​-for​-way​- out​- of​-green​- deadlock​-in​-ukrainian​ -energy​-sector​-11346229​.html. Pantsyr, Y., Garasymchuk, І., Duganets, V., Melnyk, M., & Yurchenko, O. (2020). Current state and prospects of wind energy development in Ukraine. E3S Web of Conferences, 154, 06004. Petersen, E. (2017). In search of the wind energy potential. Journal of Renewable and Sustainable Energy, 9(5), 052301. Poudineh, R., Brown, C., & Foley, B. (2017). Global offshore wind market. In Economics of Offshore Wind Power (pp. 15–31). Cham: Palgrave Macmillan. https://doi.org/10.1007/978-3-319-66420-0_2 Reuters (2023). Vestas Wind Systems A/S. https://www.reuters.com/markets/companies/VWS.CO/

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Sabadus, A. (2021).Ukraine Can Play Key Role in Europe’s Energy Green Deal - Atlantic Council [online]. Atlantic Council. https://www​.atlanticcouncil​.org​/ blogs​/ukrainealert​/ukraine​-can​-play​-key​ -role​-in​-europes​-energy​-green​-deal/ Sareen, A., Sapre, C., & Selig, M. (2013). Effects of leading edge erosion on wind turbine blade performance. Wind Energy, 17(10), 1531–1542. Schöning, S., & Zubaka, V. (2018). Energy Transition in Ukraine: Renewable Energy in the Context of Institutional Change. Emecon, 7(1), 1–13. Scott, B. (2021). Why Taiwan Is the Biggest Risk for a U.S.-China Clash [online]. Bloomberg​.co​m. https://www​.bloomberg​.com ​/news​/articles ​/2021​- 01​-27​/why​-taiwan​-is​-the ​-biggest​-risk​-for​-a​-u​-s​ -china​-clash​-quicktake Sherman, P., Chen, X., & McElroy, M. (2020). Offshore wind: An opportunity for cost-competitive decarbonization of China’s energy economy. Science Advances, 6(8), 1–8. Shumkov, I. (2022). Half of Ukraine’s renewables are threatened with destruction. Renewables Now [online]. https://renewablesnow​.com ​/news​/ half​-of​-ukraines​-renewables​-threatened​-with​-destruction​ -industry​-body​-says​-776717/ Soares-Ramos, E., de Oliveira-Assis, L., Sarrias-Mena, R., & Fernández-Ramírez, L. (2020). Current status and future trends of offshore wind power in Europe. Energy, 202(C). https://doi.org/10.1016/j. energy.2020.117787 Song, G. (2020). The Development and Future of Offshore Wind Power in Taiwan [online]. https://www​ .ope​nacc​essg​overnment​.org​/the​-development​-and​-future​-of​-offshore​-wind​-power​-in​-taiwan ​/83975/ Surana, K., Doblinger, C., Anadon, L., & Hultman, N. (2020). Effects of technology complexity on the emergence and evolution of wind industry manufacturing locations along global value chains. Nature Energy, 5(10), 811–821. Vakulchuk, R., Overland, I., & Scholten, D. (2020). Renewable energy and geopolitics: A review. Renewable and Sustainable Energy Reviews, 122. https://doi.org/10.1016/j.rser.2019.109547 Valentin. (2020). The Beginning of the End: Generation from Renewable Sources in Ukraine in Some Hours Already Exceeds Coal [online]. Ekodiya. https://ecoaction​.org​.ua​/vidnovliuvani​-dzherela​-v​ -ukraini​.html Wageningen University. (2018). Trends and Developments in the Renewable Energy Sector in Ukraine [online]. https://www​.agr​ober​icht​enbu​itenland​.nl ​/ bin aries​/agro​beric​htenb​uiten​land/​docum​enten ​/ publ​icati​es/20​18/09​/21/t​rends​-in-b​iomas​s /2018​+trends​+in​+renewable​+sector​+e​ng​.pdf Watson, S., Moro, A., Reis, V., Baniotopoulos, C., Barth, S., Bartoli, G., Bauer, F., Boelman, E., Bosse, D., Cherubini, A., Croce, A., Fagiano, L., Fontana, M., Gambier, A., Gkoumas, K., Golightly, C., Latour, M. I., Jamieson, P., Kaldellis, J., … Wiser, R. (2019). Future emerging technologies in the wind power sector: A European perspective. Renewable and Sustainable Energy Reviews, 113. https://doi.org/10.1016/j.rser.2019.109270 Wind Europe. (2021). Ukraine will benefit from building wind farms, but policy fixes are needed for a quicker expansion. Wind Europe [online]. https://windeurope​.org​/newsroom​/news​/ukraine​-will​ -benefit​-from​-building​-wind​-farms​-but​-policy​-fixes​-are​-needed​-for​-a​-quicker​-expansion/ WindEurope. (2017). Floating Offshore Wind Vision Statement | WindEurope [online]. https:// windeurope​.org​/data​-and​-analysis​/product ​/floating​-offshore​-wind​-vision​-statement/ WindEurope. (2018). Floating Offshore Wind Energy | WindEurope [online]. https://windeurope​.org​/ data​-and​-analysis​/product​/floating​-offshore​-wind​-energy/ Windurance. (2019). What’s the difference between onshore and offshore wind turbine design? https:// windurance​.com​/2019​/10​/23​/whats​-the​-difference​-between​-onshore​-offshore​-wind​-turbine​-design/ Yaremko, V. (2020). Green Tariff In Ukraine - Energy and Natural Resources - Ukraine [online]. Mondaq​.co​m. Available at: https://www​.mondaq​.com ​/renewables​/960346​/green​-tariff​-in​-ukraine

17. A new life for old giants: hydropower and geothermal Victor R. Vasquez

1. INTRODUCTION Hydropower and geothermal are considered classical energy sources for power production, with hydro the most widely used of the two. Both require significant investments, and often from governments in partnerships with the private sector. There are extensive reviews of these technologies in the literature (Li et al., 2020; Llamosas & Sovacool, 2021). These tend to focus on specific areas of these sectors such as current technologies, environmental issues, and sustainability among others (Okot, 2013; Blakers et al., 2021). This chapter summarizes some of the current issues affecting these two energy sectors including basic technology principles, environmental impacts, and social and conflict aspects. The main goal is to provide an overall perspective on these sectors including challenges and future prospects. A basic description of the technological principles is provided at a level that any reader interested in the subject should be able to follow. These include the main governing equations and energy terms associated with hydropower and geothermal as well as a description of the main variables involved in the energy balances. Also covered are the main technologies used and the efficiency of the energy conversion into power generation. Capacity and markets are described at worldwide scales including the main players and trends. Geopolitical aspects include issues related to energy security and opportunities, challenges facing the sectors, as well as some basic information about economics and costs. The sustainability of hydropower and geothermal are reviewed from the point of view of the environmental and social impacts that the sectors are facing today. The issues of community displacement, lack of community involvement, disputes over lands, rights of indigenous people, and disruption of local economies are common to both sectors, although with more disputes in hydropower than geothermal. Sustainability evaluation tends to be more focused on environmental impacts rather than social responsibility and local economic development. Clearly, for these sectors to move forward sustainably at all levels, they need to consider these aspects as well. On environmental issues, in general geothermal is more favorable than hydropower. In particular, the latter seems controversial in forested areas where the elimination of biomass due to flooding from reservoir building can cause significant generation of greenhouse gases (GHGs) including carbon dioxide (CO2) and methane (CH4) among others. Overall, both sectors continue to grow, but it is difficult to estimate at which rate given the uncertainty in the market combined with technological advances and trends. Competing technologies such as wind and solar might play a significant role on the future growth of hydropower and geothermal. The latter has more potential for technological breakthroughs; in particular, in the area of enhanced geothermal systems (EGS) combined with technologies such as solar—hybrid systems. However, there is still significant uncertainty in the geothermal 300

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sector in terms of accurate prediction of costs, operation, and capacity. Most projects still depend heavily on government support for their development.

2. TECHNOLOGY OVERVIEW Hydropower and geothermal are two popular technologies found in many parts of the world for the conversion of either changes in potential energy of water or changes in temperature gradients into other forms of energy, respectively. Early uses of hydropower include the use of watermills to move mechanical devices for applications such as water pumping with Pelton wheels or for grinding materials, for example. On the other hand, geothermal energy found early uses mostly in the heating of living spaces and pools. Today, both of these technologies are mostly used for the production of electricity, although geothermal is still commonly used for direct use, district heating systems, and geothermal heat pumps. 2.1 Hydropower Hydropower is one of the oldest technologies for converting changes in the potential and kinetic energy of water to other energy forms, electricity for example. Four major variables control the energy conversion process, namely the height of the water drop, the velocity of the water, the volumetric flow rate, and the overall conversion efficiency. Note that the first three variables are geographical in nature, and the conversion efficiency is technology driven. This is important as most of the limitations for hydropower are in the first three variables and not so much on the efficiency of the technology used, which is currently very high, and, sometimes close to theoretical limits for high capacity turbines (Liu et al., 2015; Hogan et al., 2014). This is not the case for small hydropower turbines working under low water head conditions (Sritram & Suntivarakorn, 2017). Two scenarios are commonly used for power production. The first uses only changes in kinetic energy (velocity) also called marine hydrokinetics (MHK). In this case a vertical drop of the water flow is not used to generate electric power, only changes in the velocity of the water are exploited. The second scenario is focused on changes of the water height (potential energy) only. This is the typical case of hydroelectric dams. Although it is possible to use both terms for power production at the same time, most designs and technologies focus on one, either kinetic or potential energy changes. In hydroelectric power production, the contributions from the kinetic energy tend to be smaller compared to the change in the potential energy. 2.1.1 Technology The main technological components of hydroelectric power production include the engineering of the water reservoir and flow control to transform the working fluid potential energy into kinetic. This energy is used to rotate a turbine, which turns the generator shaft for electricity generation. The last step is to condition the electric power output using a transformer for distribution in an electrical grid. There are several configurations that are used and are dependent on the needs and scale of operations. Run-of-river hydroelectricity (ROR) is a technology where basically no water is stored in reservoirs or dams; the process consists of using the water flows to harvest kinetic energy into moving a turbine for electricity generation. This technology is more suitable for small operations, and it is in general environmentally friendly

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although it suffers from seasonal water flows and sometimes has to be operated intermittently (Yildiz & Vrugt, 2019). Pumped-storage hydroelectricity (PSH) is a common method to store excess electricity by pumping water between two reservoirs, one at a higher altitude. The idea is basically is to reverse the traditional hydropower production with the purpose of energy storage (Barbour et al., 2016). When the energy is needed, then water is moved to a lower reservoir by passing it through a turbine to generate electricity (Connolly, 2009). Some of the energy is lost due to efficiency issues, but overall, it is an effective way to store excess capacity. Depending on the location, PSH facilities can also be used for direct production of electricity by diverting part of a river flow into the power production loop. Lastly, reservoir hydroelectricity is the most common method of hydropower production. It consists of using man-made dams on rivers to store water in reservoirs and then using the potential energy stored to produce electric power moving turbines for electricity generation as described earlier (Tester et al., 2012). Other types of hydropower include MHK, wave, tidal, and stream current conversion technologies (Güney & Kaygusuz, 2010). Technology for these usually consists of small units that can be operated individually or in arrays. These convert the kinetic energy of flows or waves, for example, into electricity by moving generation devices designed for small operations including horizontal, vertical, and helical turbines (Yuce & Muratoglu, 2015). MHK technologies focus on converting energy from tides and waves into electricity. These are forms of renewable energy, one caused by the gravitational pull of the moon and the other one by winds on the ocean (Tandon et al., 2019). Conversion of wave energy into electricity can be achieved by devices that absorb the energy mechanically, first for example, by changing the position of an internal part, which upon release, the gain in potential energy generates power using electromechanical or hydraulic energy converters. Other possibilities include using the wave energy to move water to elevated positions, which is then released through a converter (Aderinto & Li, 2018). Similarly, tidal energy can be converted into electricity by using damlike structures that produce power using turbines when the water is released back to ocean during the receding of the tides (Chowdhury et  al., 2020). Ocean streams can be used to produce electricity using rotating devices submerged in the water for example (Segura et al., 2017). In general, MHK technologies are of smaller of scale and face significant challenges on deployment due to the complicated logistics of dealing with fish and wildlife considerations as well as issues of infrastructure deployment and management in the ocean. However, technology improves with time and with scale; therefore, the MHK industry will continue to play a significant role in power production, in particular at smaller scales, and for populations in coastal areas (Laws & Epps, 2016). 2.1.2 Efficiency and conversion The efficiency of hydropower production varies with the size of the installation and the size or scale of the power production. This is important, as in general, technology developments drive the increase of efficiency. The conversion efficiency is a specific function of the particular technology and its engineering design and operation. Typical hydropower turbines are designed based on the water drop (potential energy) or hydraulic head. Common designs in the industry are the Pelton, Francis, and Kaplan turbines, where the net head operation range decreases from Pelton to Kaplan. In general, larger facilities are more convenient due to the benefits economics of scale, but it is not always possible as it is a function of the size of the hydro resource. Kaplan turbines,

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for example, are more suitable for lower net head operations. Modern hydroelectric plants have conversion efficiencies around 90%, while older or smaller range between 0.6–0.8%, in general. With conversion efficiencies as high as 90%, there is not much room for improvement from a technological standpoint. In other words, current conversion technologies are already very good or excellent. For MHK technologies, there is a significant push for innovation and research, in particular in the United States and Europe (Lago et al., 2010). Technology such as M3-Wave (Yu, 2019), for example, seems promising due to the capability of deployment at the bottom of the ocean with minimal impact to marine ecosystems, and also without affecting ocean surface activities such as maritime navigation and fishing. 2.1.3 Capacity and markets Hydropower continues to be the most important source of renewable energy worldwide with an estimated power capacity of 1,331,889 MW in 2020 (IRENA, 2021). This represents about 17% of the electricity generated in the world from renewable and non-renewable sources. Estimates of the world theoretical potential of hydropower are about 52 PWh/year, which is about one third of the energy currently required in the world (Hoes et al., 2017). It is important to note that there is significant uncertainty on this type of estimates (Zhou et  al., 2015) making it difficult to accurately pinpoint the potential of hydropower. Even though this is significant potential capacity, there are barriers that hinder its exploitation and development. Table 17.1 shows the top electricity generating countries as well as the top consumers of electricity, in general. The electricity consumption in Table 17.1 includes additional sources. It is interesting to see that there is significant capacity that is underutilized from the top hydroelectric producers and many other countries. There are several factors affecting the used capacity that varies from variation in water flow rates (Q) to maintenance and safety issues. Electricity consumption has been steadily increasing since the 1990s, with an increase of ∼127% since. However, hydropower capacity has not been increasing at similar rates, as other Table 17.1  Largest power generation capacity (IRENA, 2021) and consumers of electricity from hydropower Country

Power capacity

Country

e-Consumption

Country

Capacity utilization (%)

China

370,160

China

6880.1

China

42

Brazil

109,318

USA

4194.4

Brazil

43

USA

103,058

India

1309.4

USA

40

Canada

81,058

Russia

996.6

Canada

54

Russia

51,811

Japan

954.9

Russia

44

India

50,680

Canada

572.4

India

33

Japan

50,016

South Korea

563.1

Japan

33

Turkey

30,984

Germany

558.9

Turkey

24

Venezuela

16,521

Brazil

553.3

Venezuela

17

Notes:   Estimates for 2020. Power capacity is given in megawatts (MW) and consumption in terawatt hours (TWh). The capacity utilization includes electricity from hydroelectric and marine resources and the estimates are for 2018.

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technologies are competing in the market. Capacity additions have been declining for the last five years putting the sector behind about by 3% in terms of expected generation per year to maintain sustainable scenarios according to International Energy Agency (IEA) metrics (IEA, 2020e). In Latin America, generation increased about 2% during the 2019–2020 period due to an increase in water flows in the various regions (IEA, 2020e) where hydroelectric plants are located. The main sectors of electricity consumption are industrial, residential and commercial, and public services. It is expected the use of electricity in the transportation sector will increase with the rise of the electric vehicle (EV) market. It is estimated that 67% of the power generation is still coming from the combustion of fuels, which given the current trend for greener energy sources and worries about climate change, the hydroelectric market continues to be strong. The world is seeking to replace that 67% from combustible fuels with renewable sources. Of course, we have to keep in mind that the hydropower sector also faces substantial challenges and concerns in terms of its sustainability and ability to replace electricity generation from fossil fuels. Competing technologies, such as solar and wind for example, are closing the gap on the economic advantages of hydropower. Figure 17.1 shows hydropower generation as of 2020. It shows the Southeast Asia region as the one with the most generation. 2.2 Geothermal 2.2.1 Geothermal energy systems Geothermal energy systems can be classified in two main categories: (a) systems that spontaneously produce a hot fluid and (b) those that do not (Tester et al., 2012). There are many factors that affect the exploitation of these resources, including temperature gradients, geofluid quantity, and permeability of the reservoir, but ultimately their use and exploitation have to be profitable from an economic standpoint. The most typical geothermal energy systems are those considered high-grade, which produce hot fluids spontaneously with a relative high temperature gradient. These are usually called natural hydrothermal systems and they are convection-dominated. A good conventional hydrothermal system, from the energy and economic standpoints, has good natural permeability, allowing high convective flow rates. There are relatively few large systems in the United States, most located in the west. The largest is the Geysers geothermal field located in California. It contains a complex of 18 power plants and more than 350 geothermal wells producing 20% of the renewable energy in California. Finding this type of geothermal system is expensive because it requires significant exploration, including drilling operations with high dry-hole rates. Once found, the main advantage is that they tend to be economical even for low temperature grades. Other geothermal systems of interest are geopressured reservoirs and hot dry rock (HDR). Geopressured systems tend to have high levels of salinity and have the potential to cause significant surface movement effects limiting their exploitation commercially. On the other hand, HDR systems are formed by HDR structures (temperatures greater than 200°C). The word “dry” in this context means that these systems do not have the capacity to produce geothermal fluids for convection purposes, and also, they tend to be rock formations with low permeability. However, studies (Panel, 2006) show that this type of system has the potential to supply a significant portion of US energy demand, for example. This potential is what makes HDR systems attractive for engineering into EGS or the engineering of systems that mimic the

305

Figure 17.1  Annual hydropower generation in terawatt hours for 2020

Source:   Data and figures from Our World in Data under CC BY 4.0 license.

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typical operation of hydrothermal reservoirs. There are significant challenges to achieve this though, mostly due to the geological variability and uncertainty. There are some important advantages; for instance, the exploration risks are reduced due to adequate rock temperatures can always be found drilling deep enough. The technical challenges include site selection, after which, the reservoir has to be engineered to achieve good convective flow and guarantee its sustainability. Additionally, the system has to be designed to minimize the injection of geothermal fluids and address issues such as micro seismicity. Drilling and reservoir stimulation costs seem to be a major challenge for EGS. The validation of this type of technology requires major efforts in field tests under different geological environments. Currently, computational models play a very important role predicting engineering performance and evaluating life cycle issues such as environmental impacts for design and development of these systems. Natural hydrothermal systems are the most common for commercial exploitation and development. These tend to be located in regions with active geothermal activity such as near volcanos or regions with significant tectonic movement. These systems naturally contain water, which is heated from the energy contained in hot rock due to volcanic activity or the slip of tectonic plates and boundaries. Water depths vary between one and four kilometers (Mock et  al., 1997) in this type of reservoir, and therefore, significant variations in pressure and temperature can occur as function of depth. The presence of liquid, vapor, or both in the reservoir is a function of the pressure and temperature of the system, which are affected by the depth. The lower the pressure the more likely the presence of saturated or super-heated vapor. The energy content of a reservoir can be estimated using an energy balance on the system. It requires detailed geothermal characterization in order to develop good models to estimate the size, thermophysical properties of both geothermal fluids and rock, porosity, temperature gradient, and depth. The last three variables play a proportional role on the production capacity of the reservoir. 2.2.2 Technology The technology for power production from geothermal reservoirs consists mainly of two parts: (a) the characterization of the geothermal resource, which includes exploration, and drilling of production and injection wells, and (b) a power production cycle that uses the geothermal fluid as the heat source. Figure 17.2 shows a general schematic of the main steps involved. Other configurations are possible, but in general the processes available are similar. In this configuration, the primary loop cycles geothermal fluids between production and injection wells. The location and management of injection wells are important for the long-term production of the reservoir. Mixing with extraction wells has to be avoided; otherwise the production efficiency of the reservoir is affected. In general, geothermal fluids are corrosive, and typically, a secondary loop is used for power production. In this scheme, a heat exchanger is used to heat up a secondary fluid that runs through the power cycle. Use of the Rankine cycle configuration is common either with steam or an organic fluid. The choice depends on the temperature of the operating fluids. Combinations of steam turbines with organic Rankine cycles are also possible (DiPippo, 2016). Depending on the characteristics of the geothermal reservoir, it is also possible to draw steam directly, which is sent to a power generation unit. Direct steam can be also obtained from resources near volcanos. For example, Costa Rica produces about 15% of its energy from

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Figure 17.2  Basic flow diagram for binary cycle for power production from geothermal reservoirs geothermal fields along the north volcanic ridge in Guanacaste province. Another example in this category is the direct use of steam from geysers. Flashing is also used to expand high pressure water into steam for power generation in turbines. In this approach, water is at least 182°C before flashing and the combination of high- and low-pressure turbine is possible— double flash plants. For geothermal resources with lower temperatures, typically 107–182°C; binary cycles are common. The main idea is to use the hot water to boil an organic fluid of lower boiling point and then pass it through a turbine for power generation. 2.2.3 Efficiency and conversion The efficiency of geothermal energy conversion into electric power generation is relatively lower than other electricity generation technologies. There are two main factors affecting the overall conversion efficiency. First is the ability to extract energy from the geothermal reservoir, and second, the conversion efficiency of the power cycle or turbine. Estimates indicate that only about 10–17% of the energy extracted from the geothermal reservoir is converted to electricity (Barbier, 2002). The upper limit efficiency is dictated by the Carnot limit. Geothermal-based power generation reaches 25–45% of this limit. It is very plantdependent, but when compared with nuclear, coal, and combined cycle power plants for example, it is significantly lower as the latter achieve efficiencies of 50–75% of the Carnot limit. The efficiency can also be defined as the ratio of power produced over the energy production rate extracted from the reservoir. Using this definition, Zarrouk and Moon (2014) estimated the efficiency of the geothermal power plants across the world, finding that the average

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efficiency is about 12%. Some were as low as 1% and 21% for the highest (Darajet project for example (Zarrouk & Moon, 2014)). 2.2.4 Capacity and markets The geothermal power capacity worldwide is estimated at 14,050 MW as of 2020 (IRENA, 2021). This represents about 0.5% of the total renewable energy capacity, and about 1.22% of the hydropower generated. As mentioned earlier, installed capacity and further development potential are centered around regions of volcanic and tectonic activity such as the Pacific Ring of Fire, mid-oceanic ridges, and rift valleys due to economic and feasibility reasons. In principle, geothermal energy could be extracted from any region, but costs increase significantly with depth of drilling and the engineering of enhanced geothermal systems. Figure 17.3 shows a snapshot of the geothermal generation capacity as of 2020. It shows that the United States, Philippines, Indonesia, Kenya, New Zealand, and Mexico lead the production capacity installed worldwide. Other important producers are Italy, Iceland, and Japan with a combined production capacity of ∼2,300 MW. Interestingly, most countries in Central America are actively using geothermal energy today. Costa Rica has estimated installed capacity of 262  MW, El Salvador 205  MW, Nicaragua 155 MW, and Guatemala 44 MW. According to ThinkGeoEnergy1 there are 522 geothermal plants worldwide as of 2020 with most of them located around the regions of higher geothermal generation shown in Figure 17.3. In addition to power production, geothermal energy has other uses that add to the growth of the sector. For example, it is commonly used for direct heating applications such as swimming pools, space heating, geothermal heat pumps, temperature control of fish farm ponds, and other industrial applications. Some less-common uses include agricultural drying, snow melting, and air conditioning. The combined capacity used towards these additional applications is about the same as that used for power generation. Geothermal power generation capacity has been increasing over the years, but mostly in the largest and dominant markets. The generation capacity grew about 0.1 GW in 2020, but mostly due to new installations in Turkey (Ranalder et al., 2021). During 2019, the sector grew about 3%, which is small according to the sustainable development scenarios proposed by the IEA (IEA, 2020c) of 10% growth per year. This represents a small growth compared to previous years, which is in part attributed to the disruptions caused by COVID pandemic. Overall, since the year 2000, the sector grew about 44% as of 2020. The expansion of the geothermal power market depends strongly on increasing the efficiency of geothermal power plants as well as the development of engineered geothermal systems (EGS). This is an active field of research and development with many efforts funded around the world. There is optimism in the community about the expansion and growth of geothermal markets, mostly in industrialized countries with already significant capacity in place. Other applications of geothermal, in addition to power generation, can boost its use as well as the development and optimization of extraction technology. For example, the United States could increase its geothermal power generation to 60  GW by 2050 (currently about 2.6 GW) with technology improvements and commercialization of EGS (Hamm et al., 2019; GTO, 2019). Another significant advantage of geothermal energy is the ability to improve air quality and reduce CO2 emissions compared to other generation technologies. Geothermal is not a significant emitter of sulfur dioxide, nitrogen oxides, and fine particulate matter, which boosts its sustainability.

309

Figure 17.3  Snapshot of geothermal generation in megawatts for 2020

Source:   Data and figure from Our World in Data under CC BY 4.0 license.

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3. GEOPOLITICAL IMPACTS 3.1 Hydropower 3.1.1 Energy security and opportunities Hydropower in general has several advantages compared to other energy systems. For example, it is a non-polluting air technology as the working fluid, water, is used only for changes in potential and kinetic energy. For most countries, it is a domestic energy source providing energy security for their populations. Dam-based hydroelectric generation also has additional benefits including the use of reservoirs for energy storage and water supply. For example, in the United States alone there are ∼90,000 water dams of which only 2% are used for electricity generation. Most of them have other uses such as agriculture, flood control, irrigation, fishing, and recreation, for example. This adds additional potential capacity for hydropower generation, estimated at an additional 12 GW in the United States (Hadjerioua et al., 2012). Globally, about one third of the hydropower potential is currently used; however, as mentioned earlier, the use of dam-based hydropower has been declining in recent years in industrialized countries, and slightly increasing in developing countries, but the net effect has been a yearly increase in hydropower generation and capacity for the last 20 years (IEA, 2020e; IRENA, 2021). However, the availability of electricity from hydropower sources on a per capita basis varies by world regions, with Southeast Asia showing the steadiest growth for the last 20 years. Figure 17.4 shows the availability per capita for North America, Latin America, Oceania, Europe, Asia, and Africa.2 Note that in some regions the availability is declining or staying mostly flat on average with only Asia showing a steady increasing trend. Opportunities seem to be rising on dam-less hydropower generation, mostly technologies taking advantage of changes in kinetic energy of water flows. Small to micro-hydro (SHP) also represent important opportunities to generate electricity at community or village levels. Networks of these can be also used to supply larger electric grids. The small scales are 1–10 MW, and micro ranges between 5 and 100 kW. Anything in between these two scales is considered mini. The potential of SHP still remains high, with relatively small capacity used. It is estimated that the world SHP potential is ∼230 GW of which ∼78 GW is currently used or installed capacity (Liu et al., 2019). Advances in technology will provide hydropower with new opportunities for growth and deployment of the SHP and MHK sectors. Modular hydroelectric plants for example, can be transported and installed directly at the generation sites. Many hydro installations do not use PSH, which can enhance the sustainability of hydropower projects around the world. The latter is also important for operation and grid optimization, with fast on-demand load balancing abilities, in particular if the PSH facilities can be networked and connected to main distribution electricity grids. In many regions of the world, in particular those located in not so densely forested areas, hydroelectric facilities still provide great value in terms of low carbon renewable energy sources. Environmental sustainability issues do get more complex in areas with dense forest such as the Amazon basin for example. More rigorous environmental impact assessments (EIAs), life cycle analysis (LCA), and social impact assessment (SIAs) can provide better insights in the long-term sustainability of hydropower at all scales—pico to large, 5 kW–100 MW+. Eco-friendly technology will also benefit this energy sector. For example, the use of fish-friendly hydro turbine designs and structures (Robb, 2011).

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Figure 17.4  Availability of energy from hydropower sources in megawatt hours per capita per year across various regions in the world Optimization of regional or country energy supply sources and networks will likely impact the development of hydropower in general. Although growth of this sector might see reductions in certain regions of the world, diversification of energy portfolios would probably provide new opportunities for the hydropower sector with new environmentally and socially sound projects and developments. The energy supply networks would be more renewable-based and

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need to be robust and resilient to uncertainty, such as changes in climate conditions and market forces among many others. Countries around large river basins are likely to continue the development of large hydroelectric projects. For example, there are close to 150 new projects at different stages of development around the Amazon basin, with Brazil leading about 65 of them, of which, the Monte Belo project is of particular significance with an estimated power generation capacity of ∼11.2 GW (Moran et al., 2018). Other river basins of great importance for the development of large projects include the Mekong basin with China and Laos leading most of projects, and the River Congo with a project planned at the Inga Falls. The combined hydropower capacity of these river basins is estimated at ∼143.2 GW (FAO, 2011; Harrison et al., 2016). 3.1.2 General challenges Hydroelectric facilities, in particular those using large dams, are facing significant challenges in terms of environmental and social impacts, and sustainability in general. Dams are inherently dangerous structures as they are exposed to erosion, seismic activity, overflow and failures from heavy rainfall, and limited lifespan ∼50 years (Maclin & Sicchio, 1999). The United States has about of 90,000 dams—not all used for electricity production, of which about 16,000 are classified with a high-hazard potential that likely require decommissioning and removal. The cost of a dam removal is many times higher than its construction (Born et al., 1998), which makes it very problematic from a cost management standpoint. Again, in the United States, about 63% of dams belong to the private sector with an estimated ∼US$66 billion in costs for rehabilitation and upgrades as of 2019 (TCASDSO, 2019). The removal of dams, in addition to being very costly, also has significant environmental impacts as the areas where the dams are need to be restored and re-engineered to avoid issues with sedimentation displacement and downstream flooding (Moran et al., 2018). Climate change challenges are expected to impact significantly the development of hydropower and the operation of the existing facilities. The main issue is the variation or reduction of water flow, which affects the power production of generation facilities proportionally. In Latin America, hydropower provides about 45% of the electricity supply. This generation is currently being threatened by increasing temperatures, fluctuations in rainfall patterns, melting glaciers, and extreme weather events (IEA, 2021). A potential hydropower capacity reduction of 8% is estimated on average for the period 2020–2060 assuming a somewhat favorable scenario on the average temperature rise. Deforestation on tropical rainforest regions can also have long-term negative effects on the development and operation of hydropower facilities. Deforestation initially causes an increase in river flows and discharge, increasing the power output of hydropower; however, this is only a temporary effect. Forest removal basically eliminates barriers for fluid flow—less resistance, but in the long-term deforestation causes a decrease in rainfall and precipitation. Recent studies show that the effect of the latter is more significant in the lifespan of hydropower plants, potentially causing a significant decrease in power production in the long term (Stickler et al., 2013). In addition to technical challenges, hydropower is increasingly facing socioeconomic issues. In particular, in the operation and development of megaprojects, where the relocation of local communities commonly occurs with negotiations and agreements that often are not favorable for locals in terms of property value and economic activities in new locations. Relocation often occurs to areas with decreased potential for fishing and agriculture for example (Van Cleef, 2016). Estimates are that around 80 million people displaced were during the

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last 100 years due to construction of dams, causing many problems with resettling, living conditions, and appropriate compensation (Scudder, 2011). 3.1.3 Disputes and conflicts Social conflicts and disputes around renewable energy projects are not uncommon, in particular with the engineering and development of large hydroelectric dams. The most common source of conflicts is related to the displacement of local communities, environmental issues, and lack of alternative economies for displaced populations. These issues are also more complex on river basins shared by several countries, where geopolitical issues arise on the use and impact of hydro resources. A 2018 study shows the analysis of 220 dam-related environmental and social conflicts reported in the Global Atlas on Environmental Justice (EJAtlas) (Bene et al., 2018). As of 2021, the same source reports 179 conflicts related to hydroelectric dams in various parts of the world. The study reports a variety of issues including repression and criminalizing of community activism coupled with violence and assassinations, e.g., Agua Zarca hydroelectric plant in Honduras, 2016, in particular violence against indigenous people. Social conflicts around these projects are not new (World Commission on Dams, 2000; Sovacool & Bulan, 2013; Grumbine & Pandit, 2013; Fearnside, 2016) and are a clear indication of the need to include social responsibility into the sustainability analysis of this type of project. Renewable energy does not always translate into sustainable energy. A common denominator arising from these conflicts are the displacement of communities with undemocratic decision-making processes from the promoters of the projects, usually governments and private enterprises. There are many cases reported in the literature of ecological and social conflicts around hydropower plants. Some reported examples include impacts around the hydroelectric dams on Rio Chico and Chiriqui Viejo in Panama (Bigda-Peyton et al., 2012), where the local communities were impacted with employment issues, water shortages, limited use of rivers, and lack of community representation during the public development of the projects. Harlan et al. (2020) discuss the social impacts of SHP on the fragmentation of river systems in China’s Red River Basin, which has caused reductions in water availability for irrigation, changes in agricultural practices, and negative impacts on the river’s overall health. In Colombia, issues around ownership, use, and management of occupied lands have caused social disputes and unrest over the years (Martínez & Castillo, 2016); in Brazil, the Monte Belo project is the source of significant conflict with conservationists and local indigenous people. It has caused, so far, an estimated 674 km2 of flooding of rainforest and more than 20,000 people displaced in the middle of the Brazilian Amazon (Ribeiro & Morato, 2020). Other hydroelectric projects in Brazil had faced similar challenges (Hess & Fenrich, 2017). Social and environmental conflicts become more complex and difficult to tackle on hydroelectric projects with transboundary river basins (Moller, 2005). For example, there are about 35 hydroelectric projects at different stages of development on the Salween River, which crosses several regions and countries including Tibet, China, Myanmar, and Thailand. There is a long history of social and political conflicts in these regions involving the development of hydropower dams with many stakeholders involved including governments, domestic conglomerates, international corporations, political groups, ethnic armed organizations, Myanmar’s armed forces, and civil organizations among others (Middleton et al., 2019). There are also benefits with transboundary projects including electricity and commercial trade for example, but governance issues and multilateral agreements are challenging in the long term, and many are still unresolved (Middleton et al., 2019; Lazarus et al., 2019).

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A shift in the main players of the hydropower sector also affects the development of dam construction projects. Brazil, China, and India had become major players in hydroelectric generation with state-owned companies and private financiers leading the efforts. For example, significant disputes continue over the Xayaburi Dam in the lower Mekong basin, where populations in several countries of the area fear that they will be negatively impacted by greater flooding and seasonal lack of water (Hensengerth, 2015). The Mekong River Commission (MRC) was put in place to deal with these issues, but tensions are rising due to China’s reluctance in joining the commission (Chang et al., 2010; Internal Rivers, 2019). More recently, agreements had been worked out for China to provide hydrological data for river monitoring and mitigation strategies in the Mekong countries (MRC, 2020). Local and non-governmental organizations (NGOs) had played a counterbalancing role in negotiating conflict and economic opportunities for local communities (Atzl, 2014). However, there has been a recent shift from this type of organization to be more on the friendly side of the hydropower industry looking for opportunities to set policies that could make existing hydroelectric power plants produce more renewable electricity in an effort to curb climate change (Stanford, 2020). In terms of dispute and conflict, probably one of the best-known cases in recent history is the Three Gorges Dam on the Yangtze River in China. This project has a hydroelectric capacity of 9.8 GW and submerged about 632 km2 of land displacing about 1.3–1.5 million people (Power Technology, 2021). Many disputes and criticisms are centered around poor environmental assessment of the impacts associated with the project, including being the source of droughts and earthquakes in the area, and an increase in the frequency of landslides. During the flooding process, factories, mines, and waste deposits were submerged causing contamination in the Yangtze River (Liu et al., 2020). For many critics, the dam has fragmented biodiversity in the region, with serious erosion in the terrain surrounding the project (Stone, 2008). The socioeconomic impact in Hubei province was also underestimated (Liu et al., 2019b). The economic impact expectations have been significant and positive, but with large populations affected by displacement (Jackson & Sleigh, 2000), and with expensive remediation efforts after the start and operation of the dam (Stone, 2011). The Belo Monte Dam in Brazil is a hydroelectric project with a design capacity of about 11.2 GW when fully completed, and it is located in northern part of the Xingu River in the state of Para. The project had faced significant resistance from the Xingu indigenous population with social unrest movements assisted by international agencies versus massive political and financial support from the Brazilian government and private sector. The opposition, which was mostly driven by the local indigenous groups, failed to halt the dam construction (Fearnside & Fearnside, 2017). Many consider this project a major setback for Amazon conservation efforts (Diamond & Poirier, 2010) and the government is accused of using the green economy agenda to overcome opposition and ignore the environmental impact of the project (Bratman, 2014). Although there are significant benefits in terms of electricity production to power about 20 million homes in Brazil, some authors claim that a more inclusive, and holistic evaluation of the project feasibility and impacts would have provided better insights into the true costs and benefits of this development project (Durst et al., 2018). Another large project that has significant potential for disputes and conflicts is the Grand Ethiopia Renaissance Dam (GERD), which has 6 GW of hydropower capacity at an estimated cost of US$4.8 billion. Neighboring countries such as Egypt and Sudan are already disputing that this project will reduce the water flow downstream from the River Nile, affecting agricultural activities and food availability to the growing population in the area (Yihdego

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et al., 2017). Estimations of the flow reduction are in the order of ∼11–19 m3 billion affecting potentially around 2 million people. Other potential impacts include the downstream saltwater intrusion due to rising sea levels and a lack of a legal framework for water allocation (Kimenyi & Mbaku, 2015). The Ilisu Dam Project in Turkey has given rise to disputes around resettlement and rights to development for locals in the area, with allegations that a large minority population (Kurdish and Arab) is affected, ∼184 villages with around 85 completely displaced (Atzl, 2014). Other problems affecting this project, in addition to social and environmental aspects, are related to historical and cultural aspects of the region with archaeological sites at risk (Kitchen & Ronayne, 2001), as well as, increased potential for international conflict as this project on the Tigris River about 40 km north of the Turkish-Syrian border and about 90 km from the border with Iraq (Hommes et al., 2016). The Narmada Sardar Sarovar Dam in India is a 1.45 GW hydroelectric dam built on the Narmada River. The project has been facing similar dispute issues as the previous cases with complaints about loss of wildlife, flooding, displacement, and rehabilitation of communities, estimated at about 200,000 people, saturation of soils with water (waterlogging), and consequences for agricultural activities (Gupta et al., 2021). Other sources of conflict include underpayment of land acquisitions and problems with allocation of funds, seismicity, pollution, saltwater inflow, and impact on aquatic ecology, among others (Gupta, 2001). Additional sources of conflict and disputes are related to the increasing pressure that dam construction around the world is putting on freshwater fauna, alterations in flow, sedimentation, and temperature changes downstream (Zarfl et al., 2019). For example, a reduction in the reproduction of the Chinese sturgeon has been reported (Wu et al., 2015). There are many regions in the world with very rich freshwater fauna and threatened species that are being affected by dam construction projects. These regions tend to be more centrally located around tropical areas such as Central America, the Black Sea, and Southeast Asia for example (Zarfl et al., 2019). There is also significant uncertainty as to the extent issues like economic growth, corruption, poverty, conflicts, and GHG emissions affect the social and political economy of hydroelectricity in the world. Studies show that the benefits of hydroelectricity are real and so are some of the negative effects mentioned earlier (Sovacool & Walter, 2018). 3.1.4 Economics and costs Electricity prices vary by region, and it is a complex function of technology, local markets, taxes, and regulations, among others. However, hydropower still remains one of lowest-cost sources of electricity, and therefore renewable energy, worldwide. Recent studies show that the levelized cost of electricity (LCOE, US$/MWh) for hydropower is becoming similar to the LCOE values of competing technologies such as solar photovoltaic, and onshore wind (Yao et al., 2021). It has taken solar photovoltaic less than 30 years to reach these values, which suggests that these competitive technologies could provide serious competition for hydropower, in general, in the near future. The initial capital investment of hydroelectric plants is one of the highest and varies significantly with geographical location. Developing countries usually pursue external funding through international organizations such as the World Bank, International Monetary Fund, and Inter-American Development Bank, among others, to finance hydropower projects. The financing of private hydropower is even more difficult and risky (Head, 2000). Private hydropower saw significant development during the 1990s in many parts of the world, but with significant uncertainty in terms of future prospects,

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government policies, and return on the investment. Most developing countries have a major utility company for the distribution and sale of electricity. Private hydroelectric providers usually have to go through the main designated grid for distribution of their generation. This approach does not always work to the benefit of private generators due to the volatile nature of politics and lack of long-term policies that provide long-term guarantees for the operation and sustainability of the business. During the 1990s and early 2000s, Costa Rica (Central America), for example, promoted the development of private hydroelectric and wind generation under Law 7200. The law only allows a maximum of 15% of the national electric capacity to be produced from the private sector and the eligibility of concessions are determined by the electricity management institution in the country, Instituto Costarricense de Electricidad (ICE). After the promotion of private generation, the country reached about 19% of the total installed capacity from private installations (Cornick & Lara, 2020). However, in early 2021, the country decided not to renew the contracts to buy electricity from the private sector leaving about 18 hydroelectric and 10 private wind generation facilities in limbo. These represented an annual production of about 1,184 GWh. The ICE argues that electricity demand in the country is already satisfied, and that without private suppliers, the cost of electricity would be lower for consumers. The initial capital costs of hydroelectric projects are substantially high. On a kilowatt basis, it is more than double when compared to solar, and more than five times that of natural gas for new installations in the United States during 2018 for example (IEA, 2020b). Construction costs often overrun initial estimates and additional debt is also common in hydroelectric projects. It is not uncommon for the cost of large dams to go up to 71–96% more than the initial projected costs, with some cases, going up three times the initial estimates (Ansar et al., 2014). Many factors contribute to this, including the complexity of the projects, construction time and delays, and excavation of subsurface rock, among others (Sovacool & Walter, 2018). 3.1.5 Markets and cross-border trade The overall electricity market remains strong, and it is recovering from a projected drop of ∼2% due to the COVID-19 pandemic, which is closely correlated with the global drop of the GDP—estimated at 4.4% for 2020 (IEA, 2020a). Forecasts estimate an increase in demand of ∼3% in 2021. In the United States, hydropower capacity continues to grow, but with the main use is storage and load management. PSH contributes to 93% of the current grid storage in the United States (Uria Martinez et al., 2021). Global PSH capacity is estimated at 226 GW, with the United States and East Asia leading development with about 157 GW of capacity. The global cross-border electricity trade is estimated to be about 2.8% of the electricity produced with an average annual increase of 2.7% since 2010 (IEA, 2020a). This trade includes all forms of electricity generation; however, there is interest in the promotion and stimulation of the hydropower market to contribute more to cross-border trade. Overall, the largest cross-border trade market is Europe with US$5.6 billion in electricity trade as of 2019. South Asia is also a growing market for cross-border trade where China plays a major role promoting regional integration of the electric grids through initiatives such as the Belt and Road Initiative (BRI) and investments in the energy sector from the Asian Infrastructure Investment Bank (AIIB). In the South Asia region, hydropower potential is estimated to be greater than 350 GW, where only about 20% has been developed. India has also significant potential to grow its hydropower generation. Currently, India’s capacity is estimated at ∼2.5 GW with a theoretical capacity surpassing 50 GW for

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production and ∼90 GW for storage. India has also been promoting initiatives to increase hydropower generation and cross-border trade around the region. The country already exports electricity to Nepal and Bangladesh with future plans to supply as much as 25% of Bangladesh’s electricity needs. Many other examples of cross-border trade of hydroelectric power are found across the world. For example, Costa Rica has been exporting electricity to countries in the Central America region through the Regional Electricity Market (MER). The power transmission is about 220 MW on average as of 2019. The sale of electricity in these markets has been increasing, but there are also challenges that that participants face. Costa Rica sells excess capacity, which can create uncertainty for buyers in terms of supply and demand. Increases in the price of electricity in the region affect the operation of local industry, which in many cases moves its operations in favor of lower prices of the commodity. Other issues of smaller cross-border markets are difficulties or delays collecting payments on electricity exports caused mostly by economic and political instabilities in local regions and markets. Although there are major benefits for the cross-border trade of hydropower, there are some major concerns. Many countries fear the possibility of large providers like China and others to use the supply of energy coercively or for political control in the trade regions. Other potential problems are cybersecurity related to where electricity grids increase exposure in the regions where hackers have more access to the electricity grids and their control systems. These could cause denial of service by requesting ransoms or payments with potential significant cascading effects such as the shutdown of communications, transport, and healthcare networks for example (Hotchkiss et al., 2019; Pearson, 2011). 3.1.6 Sustainability, environmental, and social impacts Hydropower is commonly considered and perceived as a clean technology with low environmental impact, and as a major player in reducing GHG emissions. However, these common qualities and descriptors of this sector have to be put in perspective as there are significant environmental impacts that are very specific to size and geographical locations. Also, there is significant uncertainty in environmental and socioeconomic impact studies of hydroelectric projects in general. This makes that the accurate assessment of its sustainability, social, and environmental impacts challenging and not well understood even today. Other challenges that the sector faces are related to the impact on ecological systems. Fish migration is affected by the blockage caused by dams, in particular if the species are moving upriver. Turbine designs also affect the livelihoods of fish. New fish-friendly turbine designs allow the passage of small fish, which alleviate this problem to some extent (Amaral et al., 2009). Large hydroelectric projects are also well known for their social impacts. For example, the Three Gorges Dam in China displaced about 1.3–1.5 million people from 1,600 villages and 13 cities to allow for the flooding of the dam. In general, locals rarely benefit from this type of mega project as the benefits of electricity generation is for cities and large suburban areas away from the dam location. Local economic activities are also affected. For example, the Tucuri dam in Brazil caused a 60% decrease on fishing activity after its construction (Moran et al., 2018). One of the main issues with the social impacts of hydroelectric projects is that these are rarely developed and built around the local community needs. In other words, the affected communities do not participate in the decision-making process at the government and regulatory entities levels. Social responsibility, in general, has not been a priority in the development of large hydropower projects (Siciliano et al., 2015).

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LCA methods can be used to estimate the environmental impacts of hydropower generation. The main evaluation parameter used is the lifecycle GHG emissions (kgCO2eq/MWh) also known as the carbon intensity (CI), emission intensity, or emission factor. Note that it uses units of equivalence, which can include the effect of other GHGs such as CH4 and nitrous oxide (N2O) for example. Energy usage from non-renewable sources can be included in this metric as well by using standard chemical combustion reactions. Hydroelectric dams consume large amounts of concrete and energy during construction, which amounts to a significant contribution of the CI. The main materials for dam construction are steel and cement. Typical quantities used are 0.5 kg of steel per MWh and 8.3 kg of cement per MWh (Pang et al., 2015). The emission factors are 2.2 for steel and 0.9 for cement (Zhang et al., 2015). Based on these data, the average GHG emissions are estimated as 1.1 kgCO2eq/MWh for steel and 7.1 kgCOeqMWh for cement, respectively. There are other construction materials involved, but these 2 are the main contributors (Song et al., 2018). With these construction estimates as a starting point, we can know take a look at estimates of the overall carbon intensities and other contributing factors. Studies on ∼500 reservoirs rank the hydropower CI in the middle of competing technologies such as coal, gas, solar photovoltaic, offshore wind, nuclear, and onshore wind (IHA, 2018). The estimated CI is about 18.5. However, care must be taken when interpreting this type of average parameter or similar ones when evaluating the environmental, social, and sustainability impacts of hydropower. Geographical location and operation scale play a major role in the impact of this technology. Other studies, focused on specific weather and geographical regions, indicate an enormous variation in the estimates of the CI. In reservoirs located in forested areas, in particular in tropical zones, emissions increase due to decomposition of biomass and other organic matter (Fearnside, 2004). A study by Steinhurst et al. (2012) puts CIs for hydroelectric plants in non-tropical regions at 0.5–152 and for tropical reservoirs at 1,300–3,000. The latter is a range larger than coal or oil-fired power plants (estimated at 790–1,200). More recent studies (Ocko & Hamburg, 2019; Almeida et al., 2019) also suggest the broader impacts of hydropower with very significant differences in tropical regions versus non-tropical and in line with the conclusions of Steinhurst et al. (2012) although with different estimates for the CIs. Temperature plays a significant role on organic matter decomposition in tropical regions, affecting the production of CH4 during anaerobic reactions and the formation of nitrous oxides. The CI in these regions, the Amazon basin for example, is significantly affected the elevation due the changes in temperature. Almeida et al. (2019) provide examples of this behavior where the CI goes as high as that of fossil fuels-based power plants depending on elevation in the Amazon basin. 3.2 Geothermal 3.2.1 Energy security and opportunities Geothermal energy in general, not only electricity generation, offers significant potential for development and energy security in many areas of the world. EGS or “man-made” reservoirs offer the most potential as technology develops and the economics become more attractive. Projections in the United States estimate a potential for EGS up to 100 GW, which is equivalent to 10% of US electricity capacity. EGS development is expensive and often requires government support due the high costs and risks. These issues have slowed down its development and it has been stagnant in recent years. Geothermal direct use for heating and cooling applications has been increasing steadily since 2005, with around 12 MW available at the time.

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For 2020, estimates for direct use are around 100 MW (Lund and Toth, 2020). However, the estimates vary substantially with other sources. For example, according to the latest report on renewables from the REN21 Secretariat (REN21, 2021), the estimate for the current capacity of geothermal direct use is about 32 GW thermal. With climate change issues, direct use applications might become more attractive in the near future as countries look for ways to reduce CO2 generation. China, for example, is the largest user with a total of about 70 TWh during 2020 (REN21, 2021). The main focus of this industry is still on technology development and innovation including drilling, exploration, resource recovery, and minimizing the risks of man-made seismic activity. The recent advances in fracking technology can be applied to geothermal exploration and development. However, the geothermal environments are more corrosive and with harder rock beds and structures, which add additional challenges for drilling and exploration. EGS can offer energy security opportunities in the long term. Currently, there are around 68 EGS projects around the world at various stages of development and operation. Some of these sites (around six) have been shut down due to induced seismicity issues. Other projects, around 24, have been delayed due to technical issues of drilling and plant operations. Others have problems with reservoir creation and circulation of geothermal fluids (around 18). About half (approximately 29) of the projects still continue to operate and produce electric power using stimulation operations in the reservoirs (Pollack et al., 2020). This is encouraging as EGS technology continues to improve. 3.2.2 General challenges Conventional hydrothermal energy systems have several environmental issues that have to be considered. Among these, aquifer contamination, thermal pollution, gaseous emissions, landscape effects, noise pollution, water consumption, and, in some cases, a significant footprint (Tester et al., 2006; Huttrer, 2020), are not uncommon. There are significant studies available in the literature (Bošnjaković et al., 2019; Clark et al., 2012; DiPippo, 2016) about the environmental impact of conventional geothermal energy systems; however, for EGS this type of study is limited. The impact of stimulated rock systems in terms of micro seismic activity is not well known. The depths in EGS and the way these wells have to be operated are significantly different from more traditional geothermal energy systems; therefore, the potential environmental impacts of EGS are expected to be different from conventional geothermal power plants. Because of the limited number EGS projects available, accurate evaluation of life cycle issues and environmental impacts is still difficult to achieve. Therefore, the community still relies mostly on modeling frameworks to produce preliminary information, which can be analyzed and put into context with similar industries such as oil and gas, where there is significant life cycle data available. Even though the EGS potential is enormous in terms of energy extraction and power generation, there are still significant economic and technological barriers (Pan et al., 2019; Wilberforce et al., 2019). In particular, the effect of competing technologies such as solar and wind, whose electricity prices have been decreasing steadily as a function of capacity for the last ten years (Yao et al., 2021). 3.2.3 Disputes and conflicts Geothermal energy development and extraction projects have also been sources of conflicts and disputes around the world. The increasing demand for energy resources, as well as a need to transition to more renewables and environmentally friendly technologies, put pressure on

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sectors such as geothermal to expand causing disputes and conflicts with communities around these projects in the process. The level of conflict has been significantly less than those found in the hydropower sector; however, it has the potential to increase with growth in the sector. The geothermal sector, in terms of power production, is far smaller than hydropower, and the location and nature (typically not very desirable locations for community development due to geohazards) of the geothermal resources make the sector less vulnerable to conflict and dispute. Nonetheless, the sector is not conflict-free, and disputes are commonly associated with land rights and expropriation. Other areas of conflict are related to cultural heritage and religious practices, in particular the relationship that many local groups have with their surroundings and resources. Native Hawaiians have expressed significant opposition to the geothermal development in the “Big Island” of Hawaii on the view of that geothermal development threatens the sacred nature of their lands versus the Western opposing view that such a resource can be managed towards power production (Edelstein & Kleese, 1995). Some geothermal projects have faced land dispute issues with local communities, in particular in developing countries, where negotiations about relocation and compensation are often perceived disadvantageous for locals. Kenya has been very active in geothermal development in recent years with the commissioning of the Olkaria IV and Olkaria I projects, which have projected power production of 280  MW. Negotiations for land acquisition and expropriation gave rise to disputes with Maasai settlements in the region as this community wanted entitlement to these lands. Involuntary resettlement mediated by the courts was necessary for land acquisition in this project (Ngomi, 2018). About 950 people were relocated in 2014 for the Olkaria IV project. The process was challenged due to compensation issues for locals, and human rights violations (Schade, 2017). The lack of regulation and legal frameworks for geothermal energy extraction are also a source of conflict. For example, geothermal development in Indonesia (Aceh Province) has seen significant challenges in terms of the ability of doing business in the country in areas that overlap with protected lands (Haerani et al., 2021). Regulations and authority are mostly delegated to local governments with complex bureaucracy problems to obtain permits, and conflicting rules and regulations (Setiawan, 2014; Lee, 2020). Geothermal projects in Iran (NW Sabalan and others) had also faced similar problems in terms of regulatory issues combined with challenges due to a lack of legislation for the development of the sector at both local and national levels, problems with technology transfer, and poor management of human resources (Noorollahi et al., 2019). Other challenges and sources of dispute are related to the significant differential often found between local communities and transferrers of technologies. Most geothermal technology companies are from Western countries which pursue technology transfer using Western approaches often in regions with very different views on economic development and assessment. Communities in East Africa (Djibouti, Ethiopia, and Kenya for example) are very different in terms of their socio-technology status. These tend to be more agricultural-based and nomadic with a sometimes-limited understanding of the impact and inner works of technologies such as geothermal power production. This type of disconnection or mismatch can result in the failure of effective technology transfer from Western-based companies, and, in some cases, it is also perceived as perpetuation of neo-colonialism (Abdi & Ahmed, 2020). Disputes can also arise from perceived competition for geothermal resources from alternate economic sectors. This has been seen in Japan for example, where hot spring operators and tourist providers perceive that power generation companies would reduce the availability of hot water, and permanently impact the hot spring resources (Masuhara, 2021). Many disputes

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are centered around current socioeconomic conditions of local communities and project location. When these change, opportunities for flexibility and negotiation arise. In the case of Japan, municipalities with high economic activity in the hot springs tourism sector as less likely to develop geothermal power generation as opposed to communities where the main economic activity, such as farming, is in decline (Hymans & Uchikoshi, 2021). Distrust in leadership and political officials can also affect the development of the geothermal sector even in Western countries. Italian geothermal power plants have faced opposition in the Tuscany region due to the significant uncertainty around valid information on the pros and cons, ethics, local, and political issues for example (Pellizzone et al., 2018). 3.2.4 Economics and costs Drilling and field development are the most expensive components of geothermal energy, running as high as 50% of the total cost of the project. The cost of drilling exponentially grows with depth in general, with costs for geothermal wells higher than those for oil and gas due to the characteristics of geothermal reservoir, including highly corrosive environments as well as the need for large well diameters (Tester et al., 2012). The LCOE of geothermal varies from around US$0.04/kWh in established fields to close to US$0.20/kWh in fields under development and in remote areas (Yao et al., 2021). The initial costs of geothermal installations are high; however, the operating and maintenance costs of running the power plants are much lower than that of alternative technologies, typically ranging from US$0.01 to US$0.03/kWh (Annual, 2014). 3.2.5 Sustainability, environmental, and social impacts The social impacts of geothermal are somewhat similar to the issues discussed for hydropower, but on a smaller scale. Issues such as displacement, disputes over lands, rights of indigenous people, disruption, and other environmental problems for example are also found in geothermal development projects. As mentioned earlier, a lot of the geothermal potential has not been developed yet in many regions of the world; therefore, there is significant potential for conflict in the future if developers do not take into consideration social opinion and acceptance, involvement of all stakeholders, indemnification measures, and the creation of benefits and economic development of local communities, among others. The location of the geothermal resource also plays a role on the environmental impact. Many are located in tropical and forested areas where geothermal fluids have the potential to pollute water tables and alter surrounding forests. For example, access roads can be a major cause of social and environmental risks as these have high impact on forests and wildlife (Meijaard et al., 2019). Life cycle considerations are also important in the development and use of geothermal resources. In this context, open-loop systems produce CO2 and other gases such as CH4, hydrogen sulfide, and ammonia, for example. Although the amount of GHGs is smaller than other power production technologies, it is not insignificant for open loops. Other gases such as ammonia and hydrogen sulfide are problematic in terms of odor and irritation to nearby populations and wildlife. These problems are minimized, or eliminated, with closed-loop systems, where the gases are reinjected to the geothermal reservoir (Kagel et al., 2005). For EGS, life cycle issues arise from the energy requirements for drilling and reservoir engineering, and operation including pumping of geothermal fluids. The warming potential for EGS is about twice that of more conventional geothermal energy extraction and operations (Edenhofer et al., 2011).

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Overall, geothermal energy is an environmentally sound source of energy and power generation, particularly when compared with fossil fuel-based power production (Hanbury & Vasquez, 2018). Another advantage of geothermal energy is that once production is in place, the operating costs are fairly constant as these are not dependent on commodities such as fossil fuels.

4. NEW TECHNOLOGIES AND INNOVATION The development of new technologies and innovation would certainly benefit both hydropower and geothermal moving forward. For the hydroelectric sector, the industry needs innovative approaches to optimize not only technical operations, but also to develop innovative strategies to deal with social, political, environmental, and ecological issues more sustainably, where all the stakeholders are taking into consideration in decision-making. Traditionally, the focus has been mostly on techno-economic and environmental analysis (to a limited extent) of main operations, while ignoring social and ecological impacts. On the technology front, there are significant advances and innovations on exploiting changes in kinetic rather than potential energy. The main idea is to design power-producing devices that can be put directly in canals and flow streams using changes in velocities of the water flow. These are also known as “zero-head” devices (Wang & Müller, 2012). This type of technology is part of the more general field of MHK technologies, which has seen significant technological progress over the years (Laws & Epps, 2016). New turbine designs are more efficient and eco-friendlier in terms of protecting fish and other wildlife. These can replace older turbines on operating hydroelectric plants; however, implementation costs can be an issue, particularly for larger installations. New low-head turbine designs operate with very low hydrostatic pressure requirements, somewhere between one and 20 meters of water (Zhou & Deng, 2017). Additionally, significant advances on the process control of the systems are reported, including the digitalization of hydropower operations (Kougias et al., 2019). SHP systems have also seen significant growth. These are particularly suitable for technology development and use in small communities that benefit from local power production or do not have access to major distribution grids. This category includes modular hydropower systems that can be transported to the generation site and are pre-fabricated elsewhere. Advanced PSH systems work with underground water instead of the traditional method of pumping it to higher altitudes and reversing the operation through a generation turbine. Traditional PSH is limited by deployment in suitable geographical locations; however, underwater pumped hydro storage offers a broader spectrum for locations including ocean and water reservoir floors (Hahn et al., 2017). There are also more futuristic applications of hydro resources for the power generation. For example, it is possible to produce power from the mixing of rivers with the ocean. The maximum potential power of the mixing process is giving by the Gibbs free energy of the mixing process, which is driven by the difference in salinity between the seawater and the river water. This potential power is mainly due to the entropy of the mixing as the temperature stays fairly constant during the process. Technology to extract this power has been proposed in recent years, including specially designed batteries (Mantia et al., 2011). This is not a new idea, as this potential is easily estimated by relatively simple thermodynamics of mixing calculations;

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however, developing the technology to harvest this potential energy is where both the challenges and opportunities remain (Service, 2019; Brogioli, 2009). For geothermal energy, the main technology challenges still remain in the area of exploration, reservoir characterization, and drilling. However, research and development (R&D) efforts continue advancing these fields for geothermal energy extraction and power production. For example, high-temperature semiconductors can operate at temperatures above 500°C allowing the design of data acquisition systems to work deep in geothermal wells, substantially enhancing exploring techniques and engineering of geothermal reservoirs (Normann et al., 2005). Advances in the construction of the 3D detailed geological models of geothermal resources also allow for better pinpointing of drilling targets and characterization of resource potential (Siler et al., 2013). Another area of active R&D is drilling technology, focused on cost reduction, and the development of technology suitable for the operating conditions typical of geothermal wells. Geothermal drilling costs are significantly high and tend to be a nonlinear function of well depth. Several factors affect these including the depth of the well, type of rock formation, hole diameter, casing, and site location, among others (Lukawski et al., 2014). Other areas of development are faster drilling methods using mud motors, increasing the lifetime of drill bits, advances in information systems and software platforms for design and analysis, and design of portable rigs, among many others (Thorhallson, 2006). Working fluids for both power cycles and geothermal well operation is a field that has seen advances in recent years. Water is the most common working fluid in geothermal reservoirs, but it is also possible to use CO2 as the working fluid for injection and heat transport to the power cycle, usually an organic Rankine cycle (ORC), is of interest as geothermal reservoirs offer possibilities for the sequestration of this GHG (Wang et al., 2019; Schifflechner et al., 2020). The use of CO2 is of particular interest in HDR systems that require the engineering of EGS. Depending on location, water might not be a suitable working fluid due to availability problems or risk of water table contamination. There are other interesting potential configurations for using CO2 that involve replacing the ORC with a Brayton power cycle that uses supercritical CO2 as the working fluid. The latter is heated by a combination of the geothermal reservoir and concentrated solar energy to obtain appropriate operating conditions for the Brayton cycle. In this type of configuration, a fraction of the CO2 can also be sequestered permanently in the geothermal reservoir (Qiao et al., 2020). Hybrid power systems combined with geothermal energy offer additional possibilities for increasing the market value and potential of geothermal resources. In this type of configuration, geothermal heat pumps can be used to provide part of energy required to operate the boiler of a typical Rankine cycle used for power production, for example one driven by natural gas. In this way, the consumption of natural gas is decreased while increasing the renewable component of the electric power output (Chen et al., 2020). Other combined heat-and-power (CHP) configurations with geothermal energy are possible for better use of low-temperature reservoirs. These are used in combination for power production and direct district heating applications. The basic idea is to find optimal configurations of power production of the ORC while satisfying the demands of the district heating by exploring options in series and parallel between the two applications. For example, one could use the geothermal resource going through the district heating loop first for some level of pre-heating, followed by the ORC for power production, and finally back to the district heating loop before reinjection (Erdeweghe et al., 2018). There is a general interest in the CHP of renewable energy sources and technologies to increase output, decrease environmental footprint, and reduce the use of fossil-based power production

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(Bagherian & Mehranzamir, 2020). Lastly, advanced ORC designs for geothermal power production is an active area of development. The main focus is to increase the efficiencies of these cycles by optimizing their operation and the design of advanced working fluids. New architectures for combining ORCs with CHP operations are also being explored (Eyerer et al., 2020).

5. DISCUSSION Concerns about climate change and its mitigation continue to be a priority for most of the world. Many countries are driving initiatives to reduce emissions, and to promote the use of renewable energy sources. For the next 30 years or so, the world could see a significant shift on the use of more sustainable approaches towards power generation and distribution—the so-called energy transition. It is expected that hydropower and geothermal power generation will continue to play a significant role in this energy transition. More likely, geothermal will see a higher growth rate than the hydropower sector, although the latter is significantly larger and a more established sector. The contribution of renewables in the power sector continues to grow with an estimate ∼29% being provided from renewable sources as of 2021 (IEA, 2020d). Figure 17.5 shows estimates of the current worldwide energy portfolio distribution, and the expected shift by the year 2050. Note that the majority of the growth and shift is in the solar and wind energy sectors with an estimated combined contribution of about 56% for 2050 (Gielen et al., 2019). As mentioned earlier, the LCOE for solar and wind is fast approaching the LCOE of both geothermal and hydropower sources. Assuming a levelized market for these four renewable power sources in the near future, and during the energy transition, then choices are going to be based on local availability of resources as well as the ability for the local regions or investors, including government, to secure development and construction capital. The role for hydropower seems somewhat more uncertain than that of geothermal in terms of development of the new projects. Current hydroelectric installations, or under development, will continue to operate for the foreseeable future, but the development of new ones is questionable given the uncertainty that these have in terms capital investment, environmental, and socioeconomic impacts. The contribution of hydroelectricity to the energy portfolio is expected to stay fairly constant with a decreasing trend in the long term. In terms of sustainability, there are several issues that affect hydropower more than geothermal. The impact on GHGs, mostly CO2 and CH4, may vary significantly with geographical location. Flooding in areas with high biomass content can produce GHGs comparable to coal power plants during the decomposition of the flooded biomass (Fearnside, 2016) in addition to the CO2 equivalent from the concrete used during the dam construction. The most concerning aspect, from the author’s point of view, is the lack of cradle-to-grave LCA of the environmental and socioeconomic impacts of hydroelectric projects. These will eventually reach the end of life with little known about the impact of decommissioning large hydroelectric dams. The potential costs of deconstruction and recuperation of flooded areas could be many times higher that of their construction. Other issues adding uncertainty to the hydropower sector are the consequences of climate change affecting river water flow in many regions of the world. Examples abound, including significant rivers such as the Colorado River in the United States (Milly & Dunne, 2020) and the Xingu River in Brazil (Lucas et al., 2021; Rizzo et al., 2020).

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Source:   Forecast and data from IEA (Gielen et al., 2019).

Figure 17.5  Estimated shift in energy portfolio by 2050

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The picture for geothermal power development is substantially different to that of hydropower using hydroelectric dams. The main difference is the footprint that geothermal power installations have. These are significantly smaller than hydroelectric with relatively small surface installations that do not represent serious challenges for decommissioning at the end of their useful life. However, not everything is positive for geothermal power despite its great potential. The development of geothermal power has been somewhat slow, and it has been restricted to geographical locations near the rim of the Pacific Ocean (the Ring of Fire) where it is relatively easier to access geothermal reservoirs. EGS have great energetic potential in many regions of the world, but techno-economic feasible technologies are not yet widely available for commercial power production. Geothermal research and development efforts continue to be active, with the potential to produce more attractive options in the near future. The increasing demand for renewable electricity will benefit this sector during the energy transition, and in future energy portfolios. Additionally, geothermal is more suitable for smaller operations in many regions of the world. One of the largest barriers to entry in geothermal is the high risk and uncertainty during the early stages of development. These include surveys and exploration, test drilling, project financing, drilling, construction, and start-up. Many geothermal projects were developed with the assistance of governments through financial instruments such as loan guarantee programs, drilling insurance, grants, and government-led exploration programs, among others (Soltani et al., 2021). Operating barriers are mostly due to seismic activity—natural and induced, as well as issues with changing levels of geothermal fluids, which can cause loss of performance in the geothermal reservoir. As mentioned before, other issues such as societal impacts cannot be ignored. These include the health and safety of workers and personnel, and the economic development of the local communities, including educational and training programs, business and services building capacity, and community health improvements.

6. CONCLUDING REMARKS Hydropower generation and geothermal energy continue to be relevant technologies for power production and heating. With increasing demand for electricity and renewable energy sources in general, hydropower and geothermal will remain relevant for the foreseeable future. These sectors also face challenges moving forward mostly from competing technologies such as wind and solar, which now have competitive costs for both infrastructure (initial capital costs) and the price of electricity. Sustainability issues related to social and environmental impacts affect the hydroelectric sector more than geothermal. For the latter, the land footprint tends to be smaller and commonly located in areas not very suitable for human habitation due to the presence of heat sources and seismic activity. On the other hand, hydroelectric plants have a significant land footprint and problems with displacement of populations. Up to this point, most projects are heavily promoted by governments with partnerships from the private sector, with little regard for local communities. Additionally, hydropower faces significant uncertainty with the environmental footprint in forested regions as the decomposition of biomass has the potential to create significant amounts of GHGs. In some cases, predictions are similar to those of coal power plants, which is a significant setback for some of this type of hydropower project. Lowhead and zero-head technologies offer interesting alternatives for traditional hydropower at

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smaller scales. With technology improving, creative solutions might be suitable and commercially available in a reasonable time for smaller operations and communities. For geothermal, heat pumps are more suitable for small operations. Geothermal power production requires larger plants and significantly more investment with great uncertainty at the initial stages of development and planning. Exploration and field development continue to be the greatest barrier to entry in the geothermal sector. EGS have great potential for future development, but significant advances in both technology and economics have to occur in order for these to be more common in the renewable energy portfolio. Hybrid systems and more advanced power cycles—supercritical for example, offer interesting technical alternatives for EGS becoming more feasible. An aspect that seems to be lacking in these two sectors in terms of analysis and planning is studies using cradle-to-grave approaches for both traditional LCA for environmental impacts, but also for social responsibility and local economic development—SIAs. These studies can play a crucial role in policy making and in the long-term development and sustainability of the sectors. For example, these types of studies do not practically exist for hydropower projects. End-of-life and the closing of hydroelectric plants were not considered during their design and economic feasibility analysis for most plants in the world. These would be considered unsustainable if these aspects were part of the analysis from both economic and environmental impact points of view. This suggests that the real cost of electricity is actually higher during the lifetime of hydroelectric power plants, but decision-making has been mostly driven by governments and powerful private stakeholders.

NOTES 1. https://www​.thinkgeoenergy​.com/ 2. Data for this figure was obtained from https://ourworldindata​.org

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Lukawski, M. Z., Anderson, B. J., Augustine, C., Capuano, L. E., Beckers, K. F., Livesay, B., & Tester, J. W. (2014). Cost analysis of oil, gas, and geothermal well drilling. Journal of Petroleum Science and Engineering, 118(nil), 1–14. Lund, J. W., & Toth, A. N. (2020). Direct utilization of geothermal energy 2020 worldwide review. Geothermics, 101915. Maclin, E., & Sicchio, M. (1999). Dam removal success stories. American Rivers. Friends of the Earth & Trout Unlimited. Mantia, F. L., Pasta, M., Deshazer, H. D., Logan, B. E., & Cui, Y. (2011). Batteries for efficient energy extraction from a water salinity difference. Nano Letters, 11(4), 1810–1813. Martínez, V., & Castillo, O. (2016). The political ecology of hydropower: Social justice and conflict in Colombian hydroelectricity development. Energy Research & Social Science, 22(nil), 69–78. Masuhara, N. (2021). Geothermal power developments and related disputes under FIT scheme in Japan. Journal of Environmental Information Science, 2021(1), 20–28. Meijaard, E., Dennis, R., Saputra, B., Draugelis, G., Qadir, M., & Garnier, S. (2019). Rapid Environmental and Social Assessment of Geothermal Power Development in Conservation Forest Areas of Indonesia. Washington DC: PROFOR, The World Bank. Middleton, C., Scott, A., & Lamb, V. (2019). Hydropower Politics and Conflict on the Salween River (pp. 27–48). Knowing the Salween River: Resource Politics of a Contested Transboundary River. Springer International Publishing. Milly, P. C. D. and Dunne, K. A. (2020). Colorado river flow dwindles as warming-driven loss of reflective snow energizes evaporation. Science, 367(6483), 1252–1255. Mock, J. E., Tester, J. W., & Wright, P. M. (1997). Geothermal energy from the earth: Its potential impact as an environmentally sustainable resource. Annual review of Energy and the Environment, 22(1), 305–356. Moller, L. C. (2005). Transboundary water conflicts over hydropower and irrigation: Can multilateral development banks help? Technical report, CREDIT Research Paper. Moran, E. F., Lopez, M. C., Moore, N., Müller, N., & Hyndman, D. W. (2018). Sustainable hydropower in the 21st century. Proceedings of the National Academy of Sciences, 115(47), 11891–11898. MRC. (2020). China to provide the mekong river commission with year-round water data. https://www​. mrcmekong​.org ​/news​-and​- events​/news​/china​-to​-provide​-the​-mekong​-river​- commission​-with​-year​ -round​-water​-data/ (accessed 18 November 2021) Ngomi, G. (2018). Development phases of Olkaria IV geothermal power plant project, Kenya. In Proceedings, African Rift Geothermal Conference, X. Noorollahi, Y., Shabbir, M. S., Siddiqi, A. F., Ilyashenko, L. K., & Ahmadi, E. (2019). Review of two decade geothermal energy development in iran, benefits, challenges, and future policy. Geothermics, 77(nil), 257–266. Normann, R. A., Henfling, J. A., & Chavira, D. J. (2005). Recent advancements in high-temperature, high-reliability electronics will alter geothermal exploration. In Proceedings World Geothermal Congress. Sandia National Laboratories. Ocko, I. B., & Hamburg, S. P. (2019). Climate impacts of hydropower: Enormous differences among facilities and over time. Environmental Science & Technology, 53(23), 14070–14082. Okot, D. K. (2013). Review of small hydropower technology. Renewable and Sustainable Energy Reviews, 26(nil), 515–520. Pan, S.-Y., Gao, M., Shah, K. J., Zheng, J., Pei, S.-L., & Chiang, P.-C. (2019). Establishment of enhanced geothermal energy utilization plans: Barriers and strategies. Renewable Energy, 132(nil), 19–32. Panel, M.-l. I. (2006). The future of geothermal energy: Impact of enhanced geothermal systems (egs) on the united states in the 21st century. Geothermics, 17(5–6), 881–882. Pang, M., Zhang, L., Wang, C., & Liu, G. (2015). Environmental life cycle assessment of a small hydropower plant in China. The International Journal of Life Cycle Assessment, 20(6), 796–806. Pearson, I. L. (2011). Smart grid cyber security for europe. Energy Policy, 39(9), 5211–5218. Pellizzone, A., Allansdottir, A., & Manzella, A. (2018). Geothermal Resources in Italy: Tracing a Path Towards Public Engagement (pp. 159–178). Springer. Pollack, A., Horne, R., & Mukerji, T. (2020). What are the challenges in developing enhanced Geothermal Systems (EGS)? Observations from 64 EGS sites. In Proceedings World Geothermal Congress 2020+1, Reykjavik, Iceland.

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Power Technology. (2021). Three Gorges Dam hydro electric power plant, China. https://www​.power​ -technology​.com​/projects​/gorges/ (accessed 18 November 2021) Qiao, Z., Cao, Y., Li, P., Wang, X., Romero, C. E., & Pan, L. (2020). Thermoeconomic analysis of a co2 plume geothermal and supercritical co2 brayton combined cycle using solar energy as auxiliary heat source. Journal of Cleaner Production, 256(nil), 120374. Ranalder, L., Busch, H., Hansen, T., Brommer, M., Couture, T., Gibb, D., Guerra, F., Nana, J., Reddy, Y., Sverrisson, F., et al. (2021). Renewables in cities 2021 global status report. REN21 Secretariat, Paris, France. REN21 (2021). Renewables 2021 global status report. Technical report, REN21 Secretariat, Paris. Ribeiro, H. M., & Morato, J. R. (2020). Social environmental injustices against indigenous peoples: The Belo Monte Dam. Disaster Prevention and Management: An International Journal, 29(6), 865–876. Rizzo, R., Garcia, A. S., de F. N. Vilela, V. M., Ballester, M. V. R., Neill, C., Victoria, D. C., da Rocha, H. R., & Coe, M. T. (2020). Land use changes in southeastern amazon and trends in rainfall and water yield of the xingu river during 1976–2015. Climatic Change, 162(3), 1419–1436. Robb, D. (2011). Hydro’s fish-friendly turbines. Renewable Energy Focus, 12(2), 16–17. Schade, J. (2017). Kenya’Olkaria IV’Case study report: Human rights analysis of the resettlement process. Technical report, Center on Migration, Citizenship and Development (COMCAD). Schifflechner, C., Dawo, F., Eyerer, S., Wieland, C., & Spliethoff, H. (2020). Thermodynamic comparison of direct supercritical co2 and indirect brine-orc concepts for geothermal combined heat and power generation. Renewable Energy, 161(nil), 1292–1302. Scudder, T. (2011). Development-induced Community Resettlement 1. In New directions in social impact assessment. Edward Elgar Publishing. Segura, E., Morales, R., Somolinos, J., & López, A. (2017). Techno-economic challenges of tidal energy conversion systems: Current status and trends. Renewable and Sustainable Energy Reviews, 77(nil), 536–550. Service, R. (2019). Rivers could generate thousands of nuclear power plants worth of energy, thanks to a new ’blue’ membrane. Science, nil(nil), nil. Setiawan, H. (2014). Geothermal energy development in indonesia: Progress, challenges and prospect. International Journal on Advanced Science, Engineering and Information Technology, 4(4), 224. Siciliano, G., Urban, F., Kim, S., & Lonn, P. D. (2015). Hydropower, social priorities and the rural– urban development divide: The case of large dams in Cambodia. Energy Policy, 86, 273–285. Siler, D. L., Faulds, J. E., Mayhew, B., & McNamara, D. (2013). Advancements in 3D structural analysis of geothermal systems. In 3D Structural Geologic Interpretation: Earth, Mind, and Machine. AAPG Hedberg Conference. Soltani, M., Kashkooli, F. M., Souri, M., Rafiei, B., Jabarifar, M., Gharali, K., & Nathwani, J. S. (2021). Environmental, economic, and social impacts of geothermal energy systems. Renewable and Sustainable Energy Reviews, 140(nil), 110750. Song, C., Gardner, K. H., Klein, S. J., Souza, S. P., & Mo, W. (2018). Cradle-to-grave greenhouse gas emissions from dams in the United States of America. Renewable and Sustainable Energy Reviews, 90(nil), 945–956. Sovacool, B. K., & Bulan, L. (2013). They’ll be dammed: The sustainability implications of the Sarawak Corridor of Renewable Energy (SCORE) in Malaysia. Sustainability Science, 8(1), 121–133. Sovacool, B. K., & Walter, G. (2018). Internationalizing the political economy of hydroelectricity: Security, development and sustainability in hydropower states. Review of International Political Economy, 26(1), 49–79. Sritram, P., & Suntivarakorn, R. (2017). Comparative study of small hydropower turbine efficiency at low head water. Energy Procedia, 138(nil), 646–650. Stanford, U. (2020). U.S. hydropower: Climate solution and conservation challenge. https://woods​ .stanford​.edu​/sites​/g​/files​/sbiybj5821​/f​/ hydropower​_ uncommon​_ dialogue​_ joint​_ statement​.pdf. Accessed: 2021-11-16.X Steinhurst, W., Knight, P., & Schultz, M. (2012). Hydropower greenhouse gas emissions. Conservation Law Foundation, 24, 6. Stickler, C. M., Coe, M. T., Costa, M. H., Nepstad, D. C., McGrath, D. G., Dias, L. C. P., Rodrigues, H. O., & Soares-Filho, B. S. (2013). Dependence of hydropower energy generation on forests in the Amazon Basin at local and regional scales. Proceedings of the National Academy of Sciences, 110(23), 9601–9606.

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Stone, R. (2008). Three gorges dam: Into the unknown. Science, 321(5889), 628–632. Stone, R. (2011). The legacy of the three gorges dam. Science, 333(6044), 817–817. Tandon, S., Divi, S., Muglia, M., Vermillion, C., & Mazzoleni, A. (2019). Modeling and dynamic analysis of a mobile underwater turbine system for harvesting marine hydrokinetic energy. Ocean Engineering, 187(nil), 106069. TCASDSO. (2019). The cost of rehabilitating our nation’s dams: A methodology, estimate and proposed funding mechanisms. Technical report, Task Committee Association of State Dam Safety Officials (TCASDSO) Lexington, KY. Tester, J. W., Anderson, B. J., Batchelor, A., Blackwell, D., DiPippo, R., Drake, E., Garnish, J., Livesay, B., Moore, M., Nichols, K., et al. (2006). The future of geothermal energy. Massachusetts Institute of Technology, 358. Tester, J. W., Drake, E. M., Driscoll, M. J., Golay, M. W., & Peters, W. A. (2012). Sustainable Energy: Choosing Among Options. MIT Press. Thorhallson, S. (2006). New developments in geothermal drilling. In Workshop for Decision Makers on Geothermal Projects in Central America, organized by UNU-GTP and LaGeo in San Salvador, El Salvador, November. Uria Martinez, R., Johnson, M., & Shan, R. (2021). US hydropower market report (January 2021 edition). Technical report, Oak Ridge National Lab (ORNL), Oak Ridge, TN (United States). Van Cleef, A. (2016). Hydropower development and involuntary displacement: Toward a global solution. Indiana Journal of Global Legal Studies, 23, 349. Wang, J., & Müller, N. (2012). Performance prediction of array arrangement on ducted composite material marine current turbines (cmmcts). Ocean Engineering, 41(nil), 21–26. Wang, X., Levy, E. K., Pan, C., Romero, C. E., Banerjee, A., Rubio-Maya, C., & Pan, L. (2019). Working fluid selection for organic rankine cycle power generation using hot produced supercritical CO2 from a geothermal reservoir. Applied Thermal Engineering, 149(nil), 1287–1304. Wilberforce, T., Baroutaji, A., Hassan, Z. E., Thompson, J., Soudan, B., & Olabi, A. (2019). Prospects and challenges of concentrated solar photovoltaics and enhanced geothermal energy technologies. Science of The Total Environment, 659(nil), 851–861. World Commission on Dams. (2000). Dams and Development: A New Framework for DecisionMaking: The Report of the World Commission on Dams. Earthscan. Wu, J., Wang, C., Zhang, H., Du, H., Liu, Z., Shen, L., Wei, Q., & Rosenthal, H. (2015). Drastic decline in spawning activity of chinese sturgeon acipenser sinensis gray 1835 in the remaining spawning ground of the yangtze river since the construction of hydrodams. Journal of Applied Ichthyology, 31(5), 839–842. Yao, Y., Xu, J.-H., & Sun, D.-Q. (2021). Untangling global levelised cost of electricity based on multifactor learning curve for renewable energy: Wind, solar, geothermal, hydropower and bioenergy. Journal of Cleaner Production, 285(nil), 124827. Yihdego, Y., Khalil, A., & Salem, H. S. (2017). Nile River’s basin dispute: Perspectives of the Grand Ethiopian Renaissance Dam (GERD). Global Journal of Human-Social Science, 17, 1–21. Yildiz, V., & Vrugt, J. A. (2019). A toolbox for the optimal design of run-of-river hydropower plants. Environmental Modelling & Software, 111(nil), 134–152. Yu, Y.-H. (2019). M3 wave system modeling: Cooperative research and development final report, CRADA Number CRD-17-697. Technical report, National Renewable Energy Laboratory (NREL). Yuce, M. I., & Muratoglu, A. (2015). Hydrokinetic energy conversion systems: A technology status review. Renewable and Sustainable Energy Reviews, 43(nil), 72–82. Zarfl, C., Berlekamp, J., He, F., Jähnig, S. C., Darwall, W., & Tockner, K. (2019). Future large hydropower dams impact global freshwater megafauna. Scientific Reports, 9(1), 18531. Zarrouk, S. J., & Moon, H. (2014). Efficiency of geothermal power plants: A worldwide review. Geothermics, 51, 142–153. Zhang, S., Pang, B., & Zhang, Z. (2015). Carbon footprint analysis of two different types of hydropower schemes: Comparing earth-rockfill dams and concrete gravity dams using hybrid life cycle assessment. Journal of Cleaner Production, 103, 854–862. Zhou, D., & Deng, Z. D. (2017). Ultra-low-head hydroelectric technology: A review. Renewable and Sustainable Energy Reviews, 78(nil), 23–30. Zhou, Y., Hejazi, M., Smith, S., Edmonds, J., Li, H., Clarke, L., Calvin, K., & Thomson, A. (2015). A Comprehensive view of global potential for hydro-generated electricity. Energy & Environmental Science, 8(9), 2622–2633.

18. The potential of biomass Joana Portugal-Pereira, Francielle Carvalho, Régis Rathmann, Alexandre Szklo, Pedro Rochedo, and Roberto Schaeffer

1. INTRODUCTION Traditional biomass sources have been a millenary driver for socioeconomic development. Around 2.6 billion people, particularly in the Global South, rely on solid fuels, such as firewood, agricultural residues, animal waste and charcoal for cooking and heating (WHO, 2021). As of today, the traditional use of biomass supplies 24.6 EJ of energy for cooking and heating, equivalent to a share of 5% of the world’s final energy consumption in 2019 (REN21, 2021). Nevertheless, traditional biomass is an unsustainable source of energy, as it brings adverse impacts to human health and increased pressure on natural resources (Mazzone et al., 2021; Portugal-Pereira et al., 2018). Modern biomass, on the other hand, has been fundamental to guarantee energy security and to diversify energy portfolios from fossil fuel dependency. Currently, modern biomass provides nearly 40 EJ of global primary demand, equivalent to 7% of the global needs for heating, 3% of transport energy, and 2% of total power supply (IRENA, 2021; REN21, 2021). As a versatile renewable energy source, modern biomass can be applied in all sectors, offering stable energy supply using the existing infrastructure and end-user equipment. In the context of climate mitigation, modern bioenergy-based technologies are receiving growing attention as a possible strategy for curbing greenhouse gas (GHG) emissions. Bioenergy-based technologies are renewable sources of energy and considered carbon neutral.1 Further, if bioenergy units are integrated with carbon capture and storage (BECCS) facilities, the life cycle carbon balance may be even negative, as the carbon dioxide (CO2) produced is not emitted into the atmosphere, but rather captured and permanently stored (Butnar et al., 2020; Fuss et al., 2014, 2018; Minx et al., 2018). For this reason, bioenergy capacity is expected to increase steadily to compensate emissions in the so-called hard-to-abate sectors (Rogelj et al., 2018). But this rapid and unprecedented large-scale growth of bioenergy raises questions about its sustainability. Critical voices alert that large-scale bioenergy-based technologies can cause adverse side effects with other sustainability dimensions and their efficacy depends on specific regional contexts (Calvin et al., 2021; Robledo-Abad et al., 2016). Within this context, this chapter aims to evaluate the role of bioenergy in stringent carbon scenarios, particularly drop-in fuels for aviation and shipping, and BECCS. Long-term mitigation scenarios will be reviewed highlighting the required expansion of installed capacity of bioenergy-based technologies. Further, adverse side effects of large-scale expansion of bioenergy will be evaluated, focusing on potential conflicts with land use, food security, and water availability. Following this introduction, Section 2 overviews the technological status of drop-in fuels production and BECCS deployment, followed by Section 3, which analyses their role in 334

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current net-zero emissions (NZE) scenarios. Building on this, Section 4 evaluates the potential trade-offs and limits of large-scale bioenergy strategies under stringent mitigation scenarios. Expected power shifts and related changes in geopolitical dynamics due to an energy transition based on modern bioenergy technologies are also discussed. Finally, Section 5 presents final remarks and possible ways forward to mild ground between bioenergy mitigation pledges and sustainable development goals.

2. TECHNOLOGY OVERVIEW 2.1 Drop-In Fuels for Aviation and Shipping Biomass-derived fuels can play an important role in decarbonising the aviation and shipping sectors. In particular, the development of “drop-in” fuels2 is crucial for international transportation in the mid-term, given the globalisation of demand, long lifespan of fleet, stricter conditions of use and safety standards of these fuels. Aviation fuels (jet fuels) are highly qualified liquid fuels with very strict specifications of carbon chains and physicochemical properties, while marine fuels (bunker fuels) must have high energy density, thermal and chemical stability and low cost to serve long-distance navigation, usually for the transport of low value-added goods. Therefore, jet fuels are “premium fuels” that generally compose the net cash margins of oil refineries, while bunkers are mainly produced by refinery residual streams. Biomass feedstocks can be categorised as sugar and starch crops, oil crops, lignocellulosic crops and algae biomass. Sugar and starches represent the widely cultivated crops in the world such as sugarcane, corn, wheat, among others. Oil crops are biomasses with high oil content in their seeds and fruits, such as soybeans, palm and rape. Lignocellulosic biomasses are complex long-chain molecules (cellulose, hemicellulose and lignin), such as wood, agricultural and forest residues and grasses. Algae represent biomass species that are grown in water such as microalgae, macroalgae (or seaweed) and cyanobacteria. Biomass constituents have a significant influence on the performance of biomass conversion. While carbohydrates and degradable hemicellulose are easily degraded through biochemical processes, more complex non-degradable lignin can only be recovered via thermochemical routes (Ibarra-Gonzalez & Rong, 2019). There are various challenges associated with biomass use for heat generation and the production of liquid and gaseous fuels. Firstly, for some crops, biomass production is seasonal, while the fuel demand is continuous. Secondly, the heterogeneous and complex nature of biomass requires an accurate measure of its properties to design the technology selection and operation. Finally, biomass has a relatively low energy density, which means that a greater amount of biomass is required to produce the same amount of energy as conventional fossil fuels, which is generally associated with high levelised cost of fuels (LCOF). Such features affect biomass supply chains and require characterisation, sometimes pre-treatment and storage steps (Bajpai, 2020; Irmak, 2019). Different technological pathways are capable of converting biomass into alternative fuels, depending on the type of biomass. In general, conversion routes can be divided into thermochemical and biochemical processes. Thermochemical pathways include mainly hydrotreatment, gasification followed by Fischer-Tropsch synthesis, pyrolysis and liquefaction,

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while biochemical pathways include mainly fermentation, anaerobic digestion and enzymatic hydrolysis. Hydroprocessing is widely performed in oil refineries to remove oxygen and unwanted components such as nitrogen (N2) and sulphur. For some input streams, it can stabilise the molecules by saturating double bounds. The process involves the deoxygenation, decarboxylation, desulphurisation and denitrogenation of vegetable oils and fats through catalytic hydrogenation, producing liquid hydrocarbons with high paraffin content. Additional steps, known as hydroisomerisation and hydrocracking, may be required to produce biofuels that meet stringent specifications. Such processes aim to shorten and branch fuel molecules, ensuring they have acceptable cold flow properties and desired flash and freezing points (Carvalho et al., 2016, 2019). The hydroprocessing produces mainly biofuels similar to diesel and jet fuel, known as hydrotreated vegetable oils (HVO) and hydrotreated esters and fatty acids (HEFA), respectively. The process known as Fischer–Tropsch Biomass-to-Liquids (FT-BTL) is comprised of biomass gasification followed by FT synthesis. Lignocellulosic biomass is the most suitable feedstock for this process. The process begins with biomass gasification that is based mainly on its partial oxidation using a gasifier agent (such as steam, air or oxygen) to produce a synthesis gas (syngas) (Ail & Dasappa, 2016; Pan et al., 2017). Syngas is composed of molecular hydrogen (H2), N2 (if atmospheric air is the oxidising agent), carbon monoxide (CO) and CO2. It is also formed by smaller amounts of methane (CH4), water vapour (H2O) and traces of other gases. Different gasifiers can be used, and the choice depends on the plant scale and feedstock characteristics. Then, steps for syngas conditioning and acid gas removal are employed to remove impurities and sulphur gases, and to adjust the H2 and CO ratio (Tagomori et al., 2019). Next, syngas follows to the FT synthesis, which comprises a series of catalytic reactions that produce longer hydrocarbon chains. The wide range of hydrocarbons (C1 to C120) obtained consists mainly of linear paraffins, linear olefins and, occasionally, isomerised, cyclic and other olefins. Similar to petroleum refining, this process does not produce a single fuel, but a basket of heterogeneous products, so called FT-BTL fuels. Thus, to obtain finished products, downstream processes, such as hydrotreatment, are applied. The composition of FT-BTL products is essentially determined by the type of catalyst and reactor, by the operating conditions and by the downstream operations. Pyrolysis of biomass represents its thermal decomposition at high temperatures for a short period in the absence of oxygen or in the presence of an inert gas. Lignocellulosic biomass is the most suitable feedstock for this process and its characteristics directly influence the efficiency of the process and the equipment choice. The process produces pyrolysis oil (bio-oil), biochar and pyrolysis gas (formed by H2, CO, CH4, CO2, among others). Fast pyrolysis is the most used system to optimise pyrolysis oil production (Hsieh & Felby, 2017). The produced bio-oil is not suitable for the direct replacement of petroleum-based fuels since it is very susceptible to oxidation, is viscous, acidic, thermally unstable and has high oxygen content. Such characteristics compromise its storage and transport and can damage engines and fuel systems. Therefore, to be converted into advanced biofuels, bio-oils must undergo an upgrading step, that can be performed by three different processes: hydrotreatment, to deoxygenate (and decarboxylate) compounds; the use of zeolites to reduce the oxygen content and increase thermal stability and emulsification with diesel (Hsieh & Felby, 2017). Additionally, bio-oil can be co-processed with crude fossil-based oil in standard petroleum refineries to produce higher quality fuels (e.g., in deasphalting units). Finally, the bio-oil can be fed into gasifiers designed to deal with liquid feedstock. In this case, pyrolysis becomes a pre-treatment step of FT-BTL.

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Hydrothermal liquefaction is the thermochemical conversion of biomass into liquid fuels through its processing in a pressurised aqueous environment. In this process, water acts simultaneously as reagent and catalyst, allowing the process of wet biomass and its direct conversion, without needing energy-intensive pre-treatments and drying steps. The liquid hydrocarbons produced by hydrothermal liquefaction can be used directly as an alternative to petroleum or upgraded into products similar to oil derivatives. Given the severe conditions in which the process occurs, its application faces several challenges, such as risks of corrosion, unwanted precipitation of inorganic salts, formation of chars (solids) and coke, low energy and process conversion efficiency, need for intensive downstream processing to separate and stabilise products, high water demands and costs (Elliott et al., 2015; Tran, 2016). Fermentation is the biological conversion of biomass into biofuels, chemicals, materials and gases through microorganisms. It is an anaerobic process formed by chemical reactions in which yeasts or bacteria convert the sugars (glucose) extracted from biomass to alcohols and CO2. Sugar crops require less pre-treatment to extract glucose, while starch and lignocellulosic biomass need further processing to be converted into fermentable substrates. The technological process to convert the complex cellulose and hemicellulose structures into simple sugars is called enzymatic hydrolysis. The whole process to convert lignocellulosic feedstocks into alcohols can be basically divided into four stages: pre-treatment, hydrolysis (which can be acidic or enzymatic), fermentation and distillation. Also, more sophisticated technologies that involve the use of modified microorganisms, thermochemical processes and catalytic synthesis are under development to generate ethanol and methanol fuels (Albarelli et al., 2017; Farzad et al., 2017). Anaerobic digestion is a biological process in which acidogenic bacteria and methanogens break down organic wastes in the absence of oxygen into CO2, H2, ammonia (NH3) and organic acids and CH4, respectively. Firstly, complex chains of polymers are broken down into monomers through hydrolysis processes to be readily available to acidogenic bacteria. This is followed by acidogenic bacteria fermentation to generate NH3, CO, hydrogen sulphide (H2S) and other by-products that are then digested by acetogens to produce largely acetic acid, as well as CO2 and H2. Finally, these intermediate products are converted into CH4, CO and H2O by methanogens. Methanol can be produced from a thermochemical pathway via direct oxidation or liquid-phase oxidation of CH4 or converted through monohalogenated methanes. Advanced biochemical routes using methanothrophic bacteria are also being investigated as promising routes to generate methanol (Park & Lee, 2013; Sheets et al., 2016). Pure alcohols are not adequate for aviation and shipping given their low energy content and different chemical and physical properties compared to jet and bunker fuels. However, alcohols can be converted into hydrocarbons similar to petroleum distillates, suitable for these applications. The process is based on well-developed technologies currently applied in the petrochemical industry and is carried out in three steps: dehydration, oligomerisation and hydrogenation. The dehydration is a chemical process performed to remove oxygen from molecules in the form of water. The oligomerisation step combines the short-chain molecules to produce long-chain molecules, while the hydrotreating process breaks double bounds by the addition of H2. Then, a mixture of synthetic paraffinic hydrocarbons is produced and a final upgrading step allows the separation of products. Different levels of technology maturity have been reached from each biofuel production technology. The Technology Readiness Level (TRL) rank is a widely used system to measure technology development. The TRL scale goes from 1 to 9, where 1 is the lowest and 9 is the highest (Figure 18.1).

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Source:   Own elaboration.

Figure 18.1  Technology readiness level of bioenergy technologies to support decarbonisation 2.2 Bioenergy Integrated with Carbon Capture and Storage (BECCS) Carbon capture and storage in biomass processing plants, commonly referred as BECCS, is expected to play an important role in stringent carbon scenarios as it can offset “hard-toabate” sector emissions, such as shipping and aviation, and create negative emissions in the long term, which would be required in a 1.5ºC warming world (de Coninck et al., 2018; Fuss & Johnsson, 2021; Rogelj et al., 2018). BECCS comprises the capture and permanent storage of the CO2 produced during biomass conversion to energy. There is not a unique definition of BECCS since it can be applied to different biomass processing facilities with different levels of CO2 emissions (Koornneef et al., 2012). BECCS is applied in two principal bioenergy processes – combustion and conversion. The former represents the direct combustion of biomass to produce electricity or heat, while the latter involves the conversion of biomass through biochemical and thermochemical processes. Bioenergy power plants and ethanol fermentation are considered the main sources of biogenic carbon capture (Consoli, 2019). The CO2 capture aims to produce a concentrated stream of CO2 that is transported to a storage site. To this end, a nearly pure CO2 stream is needed. The CO2 capture in bioenergy power plants can be divided into three technological approaches: pre-combustion, post-combustion and oxy-combustion, while CO2 capture in ethanol fermentation is based on dehydration and there is also the possibility of using chemical looping for CO2 capture associated with biomass combustion in some cases (Neto et al.,

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2021). Pre-combustion capture relates to the CO2 removal before combustion is completed. For example, in gasification systems, the biomass is fed into the reactor with steam and air (or oxygen) to produce the synthesis gas, composed mainly by CO and H2. The syngas flows to a shift reactor where additional H2 and CO2 are produced by the reaction of CO with steam. Then, the resulting mixture has a high concentration of H2 and CO2 (15–60% by volume) and the high pressures applied in this process favours the CO2 separation (Rubin et al., 2005). Post-combustion capture refers to CO2 capture after the combustion is complete. These systems separate CO2 from the exhaust gases produced in the primary fuel combustion with air. A liquid solvent is used to capture CO2 produced in low concentrations (3–15% by volume) from the flue gas stream that is mainly composed by N2 (Rubin et al., 2005). In oxy-combustion systems, nearly pure oxygen is used for the primary fuel combustion, producing a flue gas composed of water vapour and high concentrations of CO2 (greater than 80% by volume). Water vapour is removed by cooling and compressing the gas stream. This system requires the upstream separation of O2 from air and downstream treatment of the exhaust gas may be required to remove air pollutants and non-condensed gases. Alternatively, CO2 capture in ethanol production is simpler and considered a promising application for BECCS, given the high CO2 stream produced in fermentation. Consequently, only dehydration and compression steps are needed to capture the CO2, which significantly reduce costs (da Silva et al., 2018). Limited progress has been achieved towards BECCS implementation, whose technologies have not been prioritised (Fuss & Johnsson, 2021). Over the last decades, BECCS technologies have been demonstrated at scale, but are still at early adoption stages. This means that even though some applications have reached market, they need policy support to scale-up or that they are still being validated at demonstration and prototypes stages (IEA, 2020). Only five facilities are actively using BECCS technologies worldwide, together capturing around 1.5 Mt of CO2 per year. The major operating facility is located in Illinois and captures up to 1  Mt of CO2 yearly in a corn-based ethanol production facility. The remaining four plants are smaller-scale projects located in the United States and Canada that capture individually less than 600 kt CO2.yr-1 in ethanol production processes. Additionally, three ongoing projects are focusing on BECCS: the Mikawa Power Plant in Japan, the Drax Power Plant in the United Kingdom and the Norwegian Full-Chain CCS. The Mikawa project plans the retrofit of a coal-based power plant to operate entirely using biomass with a CO2 capture facility. The Drax plant is expected to operate commercial-scale capture by 2027 and the Norwegian plant intends to integrate BECCS into waste-to-energy and cement plants (Consoli, 2019; IEA, 2021a).

3. BIOENERGY IN STRINGENT CARBON SCENARIOS As a major source of clean energy, bioenergy is expected to play a pivotal role in stringent carbon scenarios aligned with the Paris Agreement temperature goals. Among different pathways compatible with global warming of 1.5ºC by the end of the century, compared to preindustrial levels, there is a mutual understanding of reducing GHG emissions by 40–60% in the next decade to reaching net zero CO2 emissions by mid-century and net negative emissions

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thereafter (Höhne et al., 2020; Rogelj et al., 2017; UNEP, 2021). This will be achieved by a rapid shift away from fossil fuels, increasing the share of renewable energies, improvements in energy efficiency and electrification of the transportation and industrial sectors. Among all scenarios reviewed in the assessment conducted by the IPCC Special Report on Global Warming of 1.5ºC (Rogelj et  al., 2018), all pathways depend to some extent on the use of biomass resources, which may lead to significant changes in land use dynamics, especially under overshooting scenario3 premises (Guivarch et al., 2022). Along the same lines, recent illustrative mitigation pathways announced by the IPCC WG III AR6 and the International Energy Agency (IEA) to achieve NZE targets by mid-century suggest high dependence on bioenergy, which could become the second largest primary energy source after solar by 2050 (IEA, 2021b; Riahi et al., 2022). While stringent carbon scenarios agree on the importance of bioenergy, there is a high uncertainty related to the technical levels of bioenergy resources production and innovation requirements for biomass conversion technologies. Past studies present a wide range of sustainable bioenergy availability, mainly dependent on the land availability and land productivity and other socioeconomic and institutional factors that may interact with food security priorities (Mbow et al., 2018). Overall bottom-up sectorial assessments consider that sustainable production could vary between 100 and 170 EJ (Calvin et al., 2021; Creutzig et al., 2015; Frank et  al., 2021; Wu et  al., 2019). Accordingly, top-down estimates based on Integrated Assessment Models (IAMs) scenarios indicate a bioenergy demand varying from 50 to 175 EJ yearly by the end of the century in well-below 2°C scenarios with a 1,000 Gt CO2 remaining carbon budget, which could represent between 25 and 50% of total power demand and up to 90% of liquid fuel share (Daioglou et al., 2020). According to the IEA (2021b), the use of bioenergy may rise by 3% yearly in stringent carbon scenarios, reaching over 100 EJ by 2050. There is a common understanding that bioenergy expansion has physical limits and biomass resources should not compete with other ecosystem services. Advanced bioenergy feedstocks, such as forestry, agricultural and agro-industrial residues and organic municipal waste, which do not require dedicated land are prioritised, or dedicated sugary or oily crops planted in degraded or marginal land, are the preferable sources of bioenergy supply. These feedstocks do not directly compete with food production nor constrain food affordability to the most vulnerable population. According to IEA (2021c), these feedstocks could account for as much as 25 EJ of bioenergy supply in 2050. Further, innovative practices of integrated forestry plantations and agricultural production via agroforestry systems could increase production of both food and bioenergy through sustainable intensification practices (Haughey et al., forthcoming). Overall, carbon-stringent scenarios assume that land area dedicated to bioenergy production increases up to 400 Mha considering sustainability constrains (IEA, 2021b; Smith et al., 2019). Of this, 70 Mha could be allocated in degraded land and 50 Mha in agroforestry systems. However, according to Bauer et al. (2020), land cover for energy crops could expand up to nearly 800 Mha if no sustainability parameters are accounted for. To ensure sustainable production of bioenergy and limited adverse side effects with other sustainable development goals, the certification of bioenergy products and strict control of land use and management practices are critical to avoid direct and indirect land use conflicts (see Section 4). In all illustrative mitigation pathways (IMPs) assessed in the IPCC WG III AR6 (Riahi et  al., 2022), the level of bioenergy varies depending on the speed and degree of ambition of decarbonisation. Pathways that assume a fast implementation of mitigation strategies based on a more efficient use of resources and low energy demand limit the use of bioenergy

The potential of biomass  341

technologies. On the other hand, under pathways that achieve 1.5°C (with a >50% probability) with a great deployment of CO2 removal technologies after a high temperature overshoot, bioenergy plays a particularly key role. In these cases, drop-in biofuels are easily blended with fossil kerosene and bunker fuels reaching a demand of almost 3 EJ yearly, which support decarbonisation of aircraft and ships (Figure 18.2). Further, BECCS facilities deliver nearly 120 EJ yearly with negative emissions able to compensate for the difficult-to-abate sectors. 3.1 Drop-In Liquid Biofuels in Aviation and Shipping Drop-in fuels are expected to expand significantly in the aviation and shipping sectors under stringent-carbon scenarios. In the next decade, 15% of fossil jet-A fuel may be supplied by biojets, whereas biobunker fuels may contribute to 10% of total bunker fuel consumption. By 2050, biojet and biobunker fuels increase their share in the global fuel market and are projected to supply 45% and 20% of total final energy consumption in aircraft and ships, respectively (IEA, 2021b). In the aviation sector, biokerosene fuels from the ATJ, HEFA and FT-BTL routes are the frontrunner drop-in fuels, rising to nearly 6.2 mboe.d−1. In the shipping sector, on the other hand, blends with drop-in fuels based on HVO and FT-BTL biobunkers seem to be promising routes (Müller-Casseres et al., 2021). Further, to ensure a negative emissions balance, the production of drop-in fuels may be integrated with CCS at a relatively competitive cost. Since this would involve the capture of relatively pure CO2 streams (e.g., in ethanol fermenters, bio‐FT reactors), the CO2 capture does not require complex pre-treatment and cleaning processes. The use of CCS in drop-in fuels could result in 0.6–0.8 Gt CO2 yearly by 2050.

Note:   * – based on the IPCC WG III AR6 Illustrative Mitigation Pathway LD (C1); ** – based on the IPCC WG III AR6 Illustrative Mitigation Pathway Neg (C2). Source:   Own elaboration based on (Byers et al., 2022).

Figure 18.2  Secondary energy of sustainable modern bioenergy-based technologies under stringent carbon pathways with no or limited overshooting and with overshooting by 2100: (a) bioelectricity and (b) drop-in fuels (EJ/yr)

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3.2 Bioenergy with Carbon Capture and Storage BECCS facilities contribute to a reduction in GHG emissions as they store permanently CO2 emissions resulting in a potentially negative emissions balance (Butnar et  al., 2020). By mid-century, up to 1–16 Gt of CO2 may be captured yearly in BECCS units, mainly in biofuels production and in the biopower sector. This could mean that 10–50% of total bioenergy units could be equipped with CCS facilities. The reliance on BECCS varies significantly across carbon stringent scenarios. In trajectories with limited temperature overshoot, BECCS deployment is projected by capture no more than 8 Gt of CO2 yearly by 2050, while trajectories with high overshoot depend on up to 16 Gt of CO2 captured to stabilise global warming at 1.5°C.

4. LOOK FORWARD INTO THE FUTURE Bioenergy production presents a significant mitigation potential but has direct implications on other sustainable dimensions. The magnitude of co-benefits and adverse side effects depends on a variety of factors, including the feedstock, management regime, climatic region, other demands for land and scale of deployment (Calvin et al., 2021). In terms of land carbon balance, perennial grasses and woody crops have higher biomass carbon stocks than annual crops and enhance soil carbon sequestration when planted on land previously cultivated with annual crops. Intensive forest management and the expansion of forest areas stimulated by bioenergy demand can increase forest carbon stock (Favero et al., 2020). Importantly, management practices to increase soil carbon need to be continuously applied in order to contribute to an improved GHG budget as soil carbon sequestration is a reversible process (Andren & Katterer, 2001). Planting biomass feedstocks on degraded land reduces or reverses land degradation by improving soil fertility, increasing soil organic carbon and removing contaminants such as heavy metals. However, the specific effects depend on initial land conditions, feedstock type and management practice (Calvin et  al., 2021). Integration of woody crops and perennial grasses with conventional annual crops can help enhance soil carbon sequestration, reduce soil erosion and mitigate dryland salinity (Landis et al., 2018). The effect of bioenergy production on food security depends predominantly on the scale/ rate of deployment (Calvin et al., 2021). In local contexts, industrial crops grown for bioenergy in low-income countries may reduce poverty and improve food security through stable income and capacity development (Jarzebski et  al., 2020). The use of residues from agriculture or forestry generates additional income and minimises competition for land, limiting the effects on food security (Smith et al., 2019). The use of food crops for bioenergy, or cultivation of energy crops on high-quality arable land, can displace food production, leading to increased food prices and land use changes to meet demand for displaced food crops (Rathmann et al., 2012; Smith et al., 2019). In addition, the expansion of bioenergy production raises concerns about the pressure on deforestation. Ferrante and Fearnside (2020), Gao (2011) and Rochedo et al. (2018) suggest that promoting a very rapid large-scale expansion of biofuels will likely induce further direct and indirect deforestation, depending on the used feedstock.

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Moreover, the production of bioenergy may have negative impacts on water resources. The reporting of water impacts on ecosystems caused by the implementation of modern bioenergy systems is both variable and incomplete (Neary, 2018). While some assessments include only active human uses such as irrigation and water used in biofuels conversion processes, others include hydrologic processes such as evapotranspiration, infiltration, runoff and baseflows, which are natural ecosystem processes influenced by human activity (Neary, 2013). Water limitations may reduce the opportunities to use bioenergy in some ecosystems. However, there are many situations where bioenergy may advance both socioeconomic and sustainable landscape objectives (Berndes, 2002). Finally, bioenergy production can affect wild and agricultural biodiversity in some positive ways, such as through the restoration of degraded lands, but many of its impacts will be negative, for example when natural landscapes are converted into energy crop plantations or peat lands are drained (IPBES, 2019). In general, wild biodiversity is threatened by loss of habitat when the area under crop production is expanded, whereas agricultural biodiversity is vulnerable in the case of large-scale monocropping and limited genetic variety. The first pathway for biodiversity is habitat loss following land conversion for crop production. The second major pathway is loss of agrobiodiversity, induced by intensification on croplands, in the form of crop genetic uniformity. Table 18.1 synthesises major co-benefits and adverse side effects of bioenergy expansion. The aforementioned adverse side effects related to bioenergy expansion may be minimised with the implementation of sustainable certification schemes. Certification schemes have become important tools to address concerns and safeguard the sustainability of bioenergy along its entire supply chain, mainly stimulated as a result of verification requirements to mandatory sustainability criteria (Ebadian et al., 2020). For instance, in 2016, the European Commission (EC) announced that by 2030 renewable energy consumption would rise to 32% and 14% of road and rail transport fuels (EC, 2021). To ensure that renewable energy, and in particular bioenergy, would by supplied from sustainable sources, the EC defined a series of GHG emission criteria that solid biomass and liquid biofuels must comply with, which include direct and indirect land use changes. Demonstration of compliance to four criteria is required in order to count towards the RED II: i) minimum GHG saving requirements, ii) conservation of carbon stocks and peatland, iii) conservation of biodiversity and iv) exemption for wastes and residues (EC, 2021). Similarly, in the United States, the Renewable Fuel Standard (RFS) programme was created under the Energy Policy Act of 2005 (EPAct) to unsure that renewable fuel life cycles reduce GHG emissions when compared to the equivalent substituted fossil fuel. Four renewable fuel categories under the RFS were defined: i) biomass-based diesel, ii) cellulosic biofuel, iii) advanced biofuel and iv) total renewable fuel (EPA, n.d.). For a fuel to qualify as a renewable fuel under the RFS program, the US Environmental Protection Agency (EPA) must determine that the fuel qualifies under the statute and regulations. Among other requirements, biomass-based fuels must achieve a reduction in GHG emissions as compared to a 2005 petroleum baseline. The International Civil Aviation Organization (ICAO) under its Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) scheme also defines sustainable criteria to ensure that drop-in aviation fuel supply chain achieve certain levels of GHG emission

344

+ −

+

+

+

+/−

−

+/−

+

−

+

−

+

−

+

+

−

−

+/−

−

+/−

+

+

+/−

+

+

+

+/−

+

+

+/−

+/−

+

+

+/−

+

+/−

+/−

+/−

+

+/−

+/−

+

+

+/−

+

+

−

+/−

−

−

+/−

−

+

−

+/-

−-

−

−

+

+

+/−

+/−

+/−

−

−

−

+

−

−

+

−

+/−

+

Food Job and Water Biodiversity security incomes availability

Note:   +/− indicates benefits or adverse impacts, which vary according to region and cultivation practice applied. Source:   Elaborated from Calvin et al. (2021); Rathmann et al. (2012); Favero et al. (2020); Berndes et al. (2015); Neary (2013; 2018); Gao (2011), Ferrante & Fearnside (2020), and Rochedo et al. (2018).

Burning of residues

Agricultural residue

+

Sugarcane

Modest removal used for feed

Sugarcane

Forest

Degraded pastureland

Soybean or canola

Sugarcane

Agricultural residue

+

Cropland with continuous corn −

− +

Short rotation wood crops Primary forest

Soybean or canola

+

Corn with conventional tillage

Forest

Corn

Corn

+/−

−

−

+

GHG Land mitigation degradation

Short rotation wood crops Cropland or degraded land

Primary forest or/on peatland

Degraded land on mineral soils

Palm oil

Palm oil

Cropland or degraded land

Primary forest

Perennial grasses

Perennial grasses

Prior land use and/or management practice

Feedstock

Table 18.1  Co-benefits (+) and adverse effects (−) of bioenergy feedstocks as influenced by prior land use and by management regime

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reductions and do not put pressure on land use (ICAO, 2021). Several feedstock types have the potential to produce a CORSIA eligible fuel (CEF), including agricultural residues, municipal solid waste, used cooking oil, tallow, corn, soybean, rapeseed and palm oil, sugarcane, sugar beet, corn grain, poplar, miscanthus, switchgrass and palm fatty acid distillate (ICAO, 2021). Fuels are only eligible in the CORSIA programme if three criteria are met: (i) fuels must achieve net life cycle GHG emissions reduction of at least 10% compared to the baseline jet fuel life cycle, i.e., GHG footprint must be below 80.92gCO2e/MJ; (ii) feedstock cannot result in land use change of native ecosystem land after January 1, 2008 and (iii) in case of land use conversion after January 1, 2008, induced land use change must be limited to a defined threshold (ICAO, 2021). While these examples point to the pressure of bioenergy on land use and its ecosystem services and are fundamental to guarantee its sustainability, current certification schemes are not strict enough to ensure a full sustainability compliance. The definition of a broad set of sustainability criteria, encompassing not only indirect land-use change (iLUC) but also biomass cascading, social and economic aspects, should favour advanced biofuels, with a view to providing high GHG emission savings with a low risk of causing iLUC and are less likely to compete directly for agricultural land used for food and feed production. A transition from fossil fuels to modern bioenergy technologies will transform global power relations, shaking the current geopolitical order and creating new alliances, rivalries and potential new hierarchies of winners and losers (IRENA, 2019). The fundamental shifts to the leadership in the bioenergy “race” are shaped by five major drivers: (i) potential of biomass feedstock supply and land availability, (ii) development of bioenergy innovative technologies, (iii) capacity of bioenergy supply, (iv) policies to promote bioenergy and (v) investments in bioenergy technologies. In this sense, the Latin American and Southeast Asian regions and the United States present a potentially competitive advantage compared to other regions, given their large-scale feedstock resources, high bioenergy supply potential and advanced know-how on bioenergy technologies. Currently, these regions are both large suppliers and consumers of biofuels and top investors in bioenergy technologies. Driven by government policy and low costs, these regions could reinforce their role as major exporters of drop-in fuels and central markets for BECCS facilities. Furthermore, other regional poles, such as West African countries, may emerge if enabling policies and financial flows are created to support modern bioenergy technologies. Currently, West African countries are largely dependent on unsustainable traditional biomass for cooking and heating. However, this trend could be reverted into advanced bio-based technologies if national policies and international cooperation strategies favoured investments in technology and infrastructure to support biomass supply chains. On the other hand, the Middle East and North Africa (MENA) and Russia are more vulnerable to a shift towards bioenergy and face challenges in adapting to a world increasingly powered by modern biomass technologies. Both MENA and Russian economies are highly exposed to fossil fuel revenues and have limited investments in bio-based technologies. Although Russia has high bioenergy resources and its economy is more diversified than MENA oil producers, oil and gas rents contribute significantly to Russia’s GDP and innovation in bioenergy is incipient. To prevent an economic upheaval, these economies will need to adapt and reduce their dependence on fossil fuels, while promoting public policies and investments on bioenergy and other low carbon technologies.

346  Handbook on the geopolitics of the energy transition

The economies of the European Union, United Kingdom, Japan and South Korea are very dependent on fossil fuel imports and present limited biomass resources. However, these countries hold a strong position in bioenergy and have been investing significantly in drop-in fuel technologies and carbon capture and storage innovations. These four countries present a high share of low carbon bio-based patented innovations that are key to continuously reduce costs and increase the competitiveness of modern bioenergy technologies. Finally, China is currently promoting policies to diversify its energy supply matrix and to ensure an energy supply, which includes investments in modern bioenergy technologies. The country is presently reliant on imported fossil fuels, but it is simultaneously a major biofuel producer and consumer, which may be fostered by bioenergy innovation policies and investments.

5. FINAL REMARKS Biomass has been a key driver in energy transitions and development. In the context of low carbon energy transitions and climate mitigation, modern bioenergy-based technologies in the form of drop-in biofuels or BECCS are particularly relevant as one of the possible strategies for curbing GHG emissions and ensuring security of the energy supply. In this chapter, we presented an overview of upfront bioenergy-based technologies and evaluated the role of bioenergy in stringent carbon scenarios, particularly drop-in fuels for aviation and shipping and BECCS. We looked at the expected expansion of modern bioenergybased technologies in global IAM trajectories compatible with Paris Agreement temperature goals. While large scale expansion of modern bioenergy-based technologies may contribute to the decarbonisation of aviation and shipping and even provide negative emissions through BECCS facilities to compensate global emissions of “hard-to-abate” sectors, it comes at a cost. Upscaling bioenergy-based technologies – to levels above 100 EJ​.​yr−1 – may compete for biomass and land, increasing pressure on ecosystem services and other sustainable development dimensions beyond climate mitigation. The magnitude of adverse side effects and risks are local and context specific, but tend to be severe to food security, land tenure, water resources, soil quality and biodiversity, if institutions and weak governance fail in protecting natural ecosystem services and the most vulnerable people dependent on land-based activities. Sustainable certification schemes may promote more sustainable bioenergy applications, but carbon-centric metrics may not necessarily protect ecosystem service provision from other impact categories. Further assessments are needed to investigate the complex dynamics of incorporating bioenergy-based technologies into the portfolio of mitigation strategies and their interactions with land systems and other sustainable development goals.

NOTES 1. Carbon dioxide released during its combustion is considered equivalent to that absorbed during biomass growth through photosynthesis processes, therefore the net carbon dioxide balance is considered neutral. 2. Drop in biomass derived-fuels are fuels produced from biomass sources through a variety of biological, thermal and chemical processes that present similar chemical and physical properties and meet the same ASTM fuel quality standard of replaced fossil fuels, which means, they use the existing infrastructure and require almost no adaptations in the current fleet and prime movers.

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3. Overshoot pathways temporarily exceed the carbon budget to stabilise the global warming level below 1.5°C before the end of century, followed by a steadily decline of emissions through removal of carbon dioxide (Rogelj 2018).

REFERENCES Ail, S. S., & Dasappa, S. (2016). Biomass to liquid transportation fuel via Fischer Tropsch synthesis – Technology review and current scenario. Renewable and Sustainable Energy Reviews, 58, 267–286. https://doi​.org​/10​.1016​/j​.rser​.2015​.12​.143 Albarelli, J. Q., Onorati, S., Caliandro, P., Peduzzi, E., Meireles, M. A. A., Marechal, F., & Ensinas, A. V. (2017). Multi-objective optimization of a sugarcane biorefinery for integrated ethanol and methanol production. Energy, 138, 1281–1290. https://doi​.org​/10​.1016​/j​.energy​.2015​.06​.104 Andren, O., & Katterer, T. (2001). Basic Principles for Soil Carbon Sequestration and Calculating Dynamic Country-Level Balances Including Future Scenarios (J. Kimble, R. Follett, & B. Stewart (eds.)). Lewis Publishers. Bajpai, P. (2020). Biomass properties and characterization. In Biomass to Energy Conversion Technologies (pp. 21–29). Elsevier. https://doi​.org​/10​.1016​/ B978​- 0​-12​-818400​- 4​.00003-7 Bauer, N., Rose, S. K., Fujimori, S., van Vuuren, D. P., Weyant, J., Wise, M., Cui, Y., Daioglou, V., Gidden, M. J., Kato, E., Kitous, A., Leblanc, F., Sands, R., Sano, F., Strefler, J., Tsutsui, J., Bibas, R., Fricko, O., Hasegawa, T., … Muratori, M. (2020). Global energy sector emission reductions and bioenergy use: Overview of the bioenergy demand phase of the EMF-33 model comparison. Climatic Change, 163(3), 1553–1568. https://doi​.org​/10​.1007​/s10584​- 018​-2226-y Berndes, G. (2002). Bioenergy and water—the implications of large-scale bioenergy production for water use and supply. Global Environmental Change, 12(4), 253–271. https://doi​.org​/10​.1016​/S0959​ -3780(02)00040-7 Berndes, G., Youngs, H., Ballester, M. V. R., Cantarella, H., Cowie, A., Jewitte, G., Martinelli, L., & Near, D. G. (2015). Chapter 11: Soils and water. In Bioenergy & Sustainability: Bridging the Gaps (pp. 794). New York, NY: United Nations Environment Program. Butnar, I., Li, P.-H., Strachan, N., Portugal Pereira, J., Gambhir, A., & Smith, P. (2020). A deep dive into the modelling assumptions for biomass with carbon capture and storage (BECCS): a transparency exercise. Environmental Research Letters, 15(8), 084008. https://doi​.org​/10​.1088​/1748​-9326​/ab5c3e Byers, E., Krey, V., Kriegler, E., Riahi, K., Schaeffer, R., Kikstra, J., Lamboll, R., Nicholls, Z., Sanstad, M., Smith, C., Wijst, K.-I. van der, Lecocq, F., Portugal-Pereira, J., Saheb, Y., Strømann, A., Winkler, H., Auer, C., Brutschin, E., Lepault, C., … Al Khourdajie, A. (2022). AR6 Scenarios Database Hosted by IIASA (V1.0). IPCC. https://doi​.org​/10​.5281​/zenodo​.5886912 Calvin, K., Cowie, A., Berndes, G., Arneth, A., Cherubini, F., Portugal‐Pereira, J., Grassi, G., House, J., Johnson, F. X., Popp, A., Rounsevell, M., Slade, R., & Smith, P. (2021). Bioenergy for climate change mitigation: Scale and sustainability. GCB Bioenergy, 13(9), gcbb.12863. https://doi​.org​/10​.1111​/gcbb​.12863 Carvalho, F., Portugal-Pereira, J., Koberle, A., & Szklo, A. (2016). Biojet fuel in Brazil: Technological routes and feedstock availability. European Biomass Conference and Exhibition Proceedings, 2016(24thEUBCE). Carvalho, Francielle, Silva, F. T. F., Szklo, A., & Portugal‐Pereira, J. (2019). Potential for biojet production from different biomass feedstocks and consolidated technological routes: A georeferencing and spatial analysis in Brazil. Biofuels, Bioproducts and Biorefining, 13(6), 1454–1475. https://doi​.org​ /10​.1002​/ bbb​.2041 Consoli, C. (2019). Bioenergy and Carbon Capture and Storage - 2019 Perspective. https://www​ .globalccsinstitute​.com​/wp​-content​/uploads​/2019​/03​/ BECCS​-Perspective​_ FINAL​_ PDF​.pdf Creutzig, F., Ravindranath, N. H., Berndes, G., Bolwig, S., Bright, R., Cherubini, F., Chum, H., Corbera, E., Delucchi, M., Faaij, A., Fargione, J., Haberl, H., Heath, G., Lucon, O., Plevin, R., Popp, A., RobledoAbad, C., Rose, S., Smith, P., … Masera, O. (2015). Bioenergy and climate change mitigation: An assessment. Global Change Biology Bioenergy, 7(5), 916–944. https://doi​.org​/10​.1111​/gcbb​.12205 da Silva, F. T. F., Carvalho, F. M., Corrêa, J. L. G., Merschmann, P. R. de C., Tagomori, I. S., Szklo, A., & Schaeffer, R. (2018). CO2 capture in ethanol distilleries in Brazil: Designing the optimum carbon transportation network by integrating hubs, pipelines and trucks. International Journal of Greenhouse Gas Control, 71, 168–183. https://doi​.org​/10​.1016​/j​.ijggc​.2018​.02​.018

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Daioglou, V., Rose, S. K., Bauer, N., Kitous, A., Muratori, M., Sano, F., Fujimori, S., Gidden, M. J., Kato, E., Keramidas, K., Klein, D., Leblanc, F., Tsutsui, J., Wise, M., & van Vuuren, D. P. (2020). Bioenergy technologies in long-run climate change mitigation: Results from the EMF-33 study. Climatic Change, 163(3), 1603–1620. https://doi​.org​/10​.1007​/s10584​- 020​- 02799-y de Coninck, H., Revi, A., & et  al. (2018). Strengthening and implementing the global response. In Global Warming of 1.5C: An IPCC Special Report on the Impacts of Global Warming of 1.5C Above Pre-industrial Levels and Related Global Greenhouse Gas Emission Pathways, in the Context of Strengthening the Global Response to the Threat of Climate Change. den Elzen, M., Portugal-Pereira, J., & Rogelj, J. (2021). The emissions gap. In United Nations Environment Programme (2021), Emissions Gap Report 2021: The Heat Is On – A World of Climate Promises Not Yet Delivered. ISBN: 978-92-807-3890-2. Ebadian, M., van Dyk, S., McMillan, J. D., & Saddler, J. (2020). Biofuels policies that have encouraged their production and use: An international perspective. Energy Policy, 147, 111906. https://doi​.org​/10​ .1016​/j​.enpol​.2020​.111906 EC. (2021). Renewable Energy – Recast to 2030 (RED II). https://ec​.europa​.eu​/jrc​/en​/jec​/renewable​ -energy​-recast​-2030​-red​-ii Elliott, D. C., Biller, P., Ross, A. B., Schmidt, A. J., & Jones, S. B. (2015). Hydrothermal liquefaction of biomass: Developments from batch to continuous process. Bioresource Technology, 178, 147–156. https://doi​.org​/10​.1016​/j​.biortech​.2014​.09​.132 EPA. (n.d.). Overview for Renewable Fuel Standard. 2021. Retrieved October 18, 2021, from www​.epa​ .gov​/renewable​-fuel​-standard​-program​/overview​-renewable​-fuel​-standard Farzad, S., Mandegari, M. A., Guo, M., Haigh, K. F., Shah, N., & Görgens, J. F. (2017). Multi-product biorefineries from lignocelluloses: A pathway to revitalisation of the sugar industry? Biotechnology for Biofuels, 10(1), 87. https://doi​.org​/10​.1186​/s13068​- 017​- 0761-9 Favero, A., Daigneault, A., & Sohngen, B. (2020). Forests: Carbon sequestration, biomass energy, or both? Science Advances, 6(13). https://doi​.org​/10​.1126​/sciadv​.aay6792 Ferrante, L., & Fearnside, P. M. (2020). The Amazon: biofuels plan will drive deforestation. Nature, 577(7789), 170–170. https://doi​.org​/10​.1038​/d41586​- 020​- 00005-8 Frank, S., Gusti, M., Havlík, P., Lauri, P., DiFulvio, F., Forsell, N., Hasegawa, T., Krisztin, T., Palazzo, A., & Valin, H. (2021). Land-based climate change mitigation potentials within the agenda for sustainable development. Environmental Research Letters, 16(2), 024006. https://doi​.org​/10​.1088​ /1748​-9326​/abc58a Fuss, S., Canadell, J. G., Peters, G. P., Tavoni, M., Andrew, R. M., Ciais, P., Jackson, R. B., Jones, C. D., Kraxner, F., Nakicenovic, N., Le Quéré, C., Raupach, M. R., Sharifi, A., Smith, P., & Yamagata, Y. (2014). Betting on negative emissions. Nature Climate Change. https://doi​.org​/10​.1038​/nclimate2392 Fuss, S., & Johnsson, F. (2021). The BECCS implementation gap–A Swedish case study. Frontiers in Energy Research, 8. https://doi​.org​/10​.3389​/fenrg​.2020​.553400 Fuss, S., Lamb, W. F., Callaghan, M. W., Hilaire, J., Creutzig, F., Amann, T., Beringer, T., De Oliveira Garcia, W., Hartmann, J., Khanna, T., Luderer, G., Nemet, G. F., Rogelj, J., Smith, P., Vicente, J. V., Wilcox, J., Del Mar Zamora Dominguez, M., & Minx, J. C. (2018). Negative emissions - Part 2: Costs, potentials and side effects. Environmental Research Letters, 13(6). https://doi​.org​/10​.1088​/1748​-9326​/aabf9f Gao, Y. (2011). A Global Analysis of Deforestation Due to Biofuel Development (No. 68). Guivarch, C., Kriegler, E., Portugal-Pereira, J., Bosetti, V., Edmonds, J., Fischedick, M., Havlik, P., Jaramillo, P., Krey, V., Lecocq, F., Lucena, A., Meinshausen, M., Mirasgedis, S., O’Neill, B., Peters, G., Rogelj, J., Rose, S., Saheb, Y., Strbac, G., … Zhou, N. (2022). Annex III: Scenarios and Modelling Methods. In IPCC Working Group III Contribution to the Sixth Assessment Report. Intergovernmental Panel on Climate Change (IPCC). Haughey, E., Neogi, S., Portugal-Pereira, J., van Diemen, R., & Slade, R. B. (2023). Sustainable intensification and carbon sequestration research in agricultural systems: A systematic review. Environmental Science & Policy, 143, 14–23. https://doi.org/10.1016/j.envsci.2023.02.018 Höhne, N., den Elzen, M., Rogelj, J., Metz, B., Fransen, T., Kuramochi, T., Olhoff, A., Alcamo, J., Winkler, H., Fu, S., Schaeffer, M., Schaeffer, R., Peters, G. P., Maxwell, S., & Dubash, N. K. (2020). Emissions: World has four times the work or one-third of the time. Nature, 579(7797), 25–28. https:// doi.org/10.1038/d41586-020-00571-x. PMID: 32132686. Hsieh, C. C., & Felby, C. (2017). Biofuels for the Marine Shipping Sector. http://task39​.sites​.olt​.ubc​.ca​/ files​/2013​/05​/ Marine​-biofuel​-report​-final​-Oct​-2017​.pdf

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Ibarra-Gonzalez, P., & Rong, B.-G. (2019). A review of the current state of biofuels production from lignocellulosic biomass using thermochemical conversion routes. Chinese Journal of Chemical Engineering, 27(7), 1523–1535. https://doi​.org​/10​.1016​/j​.cjche​.2018​.09​.018 ICAO. (2021). CORSIA Supporting Document to Eligible Fuels - Life Cycle Assessment Methodology - v3. IEA. (2020). Energy Technology Perspectives. https://www​.iea​.org​/topics​/energy​-technology​-perspectives IEA. (2021a). CCUS Around the World Featured Pilot, Demonstration, and Early Stage Projects. https://www​.iea​.org​/reports​/ccus​-around​-the​-world IEA. (2021b). Net Zero by 2050 A Roadmap for the Global Energy Sector. IEA. (2021c). Bioenergy annual report 2021. IEA bioenergy. International Energy Agency. Paris. https://www.ieabioenergy.com/wp-content/uploads/2022/04/IEA-Bioenergy-Annual-Report-2021. pdf (accessed 3 July 2023) IPBES. (2019). Global Assessment Report on Biodiversity and Ecosystem Services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (E. Brondizio, J. Settele, S. Díaz, & H. Ngo (eds.)). IPBES Secretariat. https://doi​.org​/ https:/​/doi​.org​/10​.5281​/zenodo​.3831673 IRENA. (2019). A new World: The geopolitics of the energy transformation. IRENA. IRENA. (2021). Renewable Capacity Statistics 2021. https://www​.irena​.org​/publications​/2021​/ March​/ Renewable​-Capacity​-Statistics​-2021 Irmak, S. (2019). Challenges of biomass utilization for biofuels. In Biomass for Bioenergy - Recent Trends and Future Challenges. IntechOpen. https://doi​.org​/10​.5772​/intechopen​.83752 Jarzebski, M. P., Ahmed, A., Boafo, Y. A., Balde, B. S., Chinangwa, L., Saito, O., von Maltitz, G., & Gasparatos, A. (2020). Food security impacts of industrial crop production in sub-Saharan Africa: A systematic review of the impact mechanisms. Food Security, 12(1), 105–135. https://doi​.org​/10​.1007​ /s12571​- 019​- 00988-x Koornneef, J., van Breevoort, P., Hamelinck, C., Hendriks, C., Hoogwijk, M., Koop, K., Koper, M., Dixon, T., & Camps, A. (2012). Global potential for biomass and carbon dioxide capture, transport and storage up to 2050. International Journal of Greenhouse Gas Control, 11, 117–132. https://doi​ .org​/10​.1016​/j​.ijggc​.2012​.07​.027 Landis, D. A., Gratton, C., Jackson, R. D., Gross, K. L., Duncan, D. S., Liang, C., Meehan, T. D., Robertson, B. A., Schmidt, T. M., Stahlheber, K. A., Tiedje, J. M., & Werling, B. P. (2018). Biomass and biofuel crop effects on biodiversity and ecosystem services in the North Central US. Biomass and Bioenergy, 114, 18–29. https://doi​.org​/10​.1016​/j​.biombioe​.2017​.02​.003 Mazzone, A., Cruz, T., & Bezerra, P. (2021). Firewood in the forest: Social practices, culture, and energy transitions in a remote village of the Brazilian Amazon. Energy Research & Social Science, 74, 101980. https://doi​.org​/10​.1016​/j​.erss​.2021​.101980 Mbow, C., Rosenzweig, C., & et al. (2018). Chapter 5: Food security. In IPCC Special Report on Climate Change, Desertification, Land Degradation, Sustainable Land Management, Food Security, and Greenhouse Gas Fluxes in Terrestrial Ecosystems (Unpublished). Minx, J. C., Lamb, W. F., Callaghan, M. W., Fuss, S., Hilaire, J., Creutzig, F., Amann, T., Beringer, T., de Oliveira Garcia, W., Hartmann, J., Khanna, T., Lenzi, D., Luderer, G., Nemet, G. F., Rogelj, J., Smith, P., Vicente Vicente, J. L., Wilcox, J., & del Mar Zamora Dominguez, M. (2018). Negative emissions—Part 1: Research landscape and synthesis. Environmental Research Letters, 13(6), 063001. https://doi​.org​/10​.1088​/1748​-9326​/aabf9b Müller-Casseres, E., Carvalho, F., Nogueira, T., Fonte, C., Império, M., Poggio, M., Wei, H. K., Portugal-Pereira, J., Rochedo, P. R. R., Szklo, A., & Schaeffer, R. (2021). Production of alternative marine fuels in Brazil: An integrated assessment perspective. Energy, 219, 119444. https://doi​.org​/10​ .1016​/j​.energy​.2020​.119444 Neary, D. G. (2013). Best management practices for forest bioenergy programs. WIREs Energy and Environment, 2(6), 614–632. https://doi​.org​/10​.1002​/wene​.77 Neary, D. G. (2018). Impacts of Bio-Based Energy Generation Fuels on Water and Soil Resources. In Energy Systems and Environment. InTech. https://doi​.org​/10​.5772​/intechopen​.74343 Neto, S., Szklo, A., & Rochedo, P. R. R. (2021). Calcium looping post-combustion CO2 capture in sugarcane bagasse fuelled power plants. International Journal of Greenhouse Gas Control, 110, 103401. https://doi​.org​/10​.1016​/j​.ijggc​.2021​.103401 Pan, X., Elzen, M. den, Höhne, N., Teng, F., & Wang, L. (2017). Exploring fair and ambitious mitigation contributions under the Paris Agreement goals (D2597, Trans.). Environmental Science and Policy, 74, 49–56. https://doi​.org​/10​.1016​/j​.envsci​.2017​.04​.020

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Park, D., & Lee, J. (2013). Biological conversion of methane to methanol. Korean Journal of Chemical Engineering, 30(5), 977–987. https://doi​.org​/10​.1007​/s11814​- 013​- 0060-5 Portugal-Pereira, J., Koberle, A., Lucena, A. F. P., Rochedo, P. R. R., Império, M., Carsalade, A. M., Schaeffer, R., & Rafaj, P. (2018). Interactions between global climate change strategies and local air pollution: Lessons learnt from the expansion of the power sector in Brazil. Climatic Change, 148(1–2), 293–309. https://doi​.org​/10​.1007​/s10584​- 018​-2193-3 Rathmann, R., Szklo, A., & Schaeffer, R. (2012). Targets and results of the Brazilian Biodiesel Incentive Program – Has it reached the Promised Land? Applied Energy, 97, 91–100. https://doi​.org​/10​.1016​/j​ .apenergy​.2011​.11​.021 REN21. (2021). Renewables 2021 Global Status Report. Riahi, K., Schaeffer, R., Arango, J., Calvin, K., Guivarch, C., Hasegawa, T., Jiang, K., Kriegler, E., Matthews, R., Peters, G., Rao, A., Robertson, S., Sebbit, A. M., Steinberger, J., Tavoni, M., & Vuuren, D. van. (2022). Chapter 3: Mitigation Pathways Compatible with Long-Term Goals. In IPCC Working Group III Contribution to the Sixth Assessment Report. IPCC. Robledo-Abad, C., Althaus, H. J., Berndes, G., Bolwig, S., Corbera, E., Creutzig, F., Garcia-Ulloa, J., Geddes, A., Gregg, J. S., Haberl, H., Hanger, S., Harper, R. J., Hunsberger, C., Larsen, R. K., Lauk, C., Leitner, S., Lilliestam, J., Lotze-Campen, H., Muys, B., … Smith, P. (2016). Bioenergy production and sustainable development: Science base for policymaking remains limited. GCB Bioenergy, 1–16. https://doi​.org​/10​.1111​/gcbb​.12338 Rochedo, P. R. R., Soares-Filho, B., Schaeffer, R., Viola, E., Szklo, A., Lucena, A. F. P., Koberle, A., Davis, J. L., Rajão, R., & Rathmann, R. (2018). The threat of political bargaining to climate mitigation in Brazil. Nature Climate Change, 8(8), 695–698. https://doi​.org​/10​.1038​/s41558​- 018​- 0213-y Rogelj, J., Shindell, D., Jiang, K., & et  al. (2018). Chpater 2: Mitigation pathways compatible with 1.5°C in the context of sustainable development. In Global Warming of 1.5°C. An IPCC Special Report on the Impacts of Global Warming of 1.5°C Above Pre-Industrial Levels and Related Global Greenhouse Gas Emission Pathways, in the Context of Strengthening the Global Response to the Threat of Climate Change. https://www​.ipcc​.ch ​/sr15​/chapter​/2​- 0/ Rogelj, Joeri, Fricko, O., Meinshausen, M., Krey, V., Zilliacus, J. J. J., & Riahi, K. (2017). Understanding the origin of Paris Agreement emission uncertainties. Nature Communications, 8, 15748. https://doi​ .org​/10​.1038​/ncomms15748 Rubin, E., Meyer, L., & Coninck, H. de. (2005). IPCC Special Report on Carbon Dioxide Capture and Storage Technical Summary (B. Metz, O. Davidson, H. de Coninck, M. Loos, & L. Meyer (eds.)). Cambridge: Cambridge University Press. Sheets, J. P., Ge, X., Li, Y.-F., Yu, Z., & Li, Y. (2016). Biological conversion of biogas to methanol using methanotrophs isolated from solid-state anaerobic digestate. Bioresource Technology, 201, 50–57. https://doi​.org​/10​.1016​/j​.biortech​.2015​.11​.035 Smith, P., Calvin, K., Campbell, D., Cherubini, F., Grassi, G., Korotkov, V., Hoang, A., Lwasa, S., McElwee, P., Nkonya, E., Saigusa, N., Soussana, J., & Taboada, M. (2019). Interlinkages between Desertification, Land Degradation, Food Security and GHG fluxes: synergies, trade-offs and Integrated Response Options. In Climate Change and Land: An IPCC Special Report on Climate Change, Desertification, Land Degradation, Sustainable Land Management, Food Security, and Greenhouse Gas Fluxes in Terrestrial Ecosystems. Cambridge: Cambridge University Press. Tagomori, I. S., Rochedo, P. R. R., & Szklo, A. (2019). Techno-economic and georeferenced analysis of forestry residues-based Fischer-Tropsch diesel with carbon capture in Brazil. Biomass and Bioenergy, 123, 134–148. https://doi​.org​/10​.1016​/j​.biombioe​.2019​.02​.018 Tran, K.-Q. (2016). Fast hydrothermal liquefaction for production of chemicals and biofuels from wet biomass – The need to develop a plug-flow reactor. Bioresource Technology, 213, 327–332. https://doi​ .org​/10​.1016​/j​.biortech​.2016​.04​.002 den Elzen M., Portugal-Pereira J., J. Rogelj. 2021. The emissions gap. In United Nations Environment Programme (2021). Emissions Gap Report 2021: The Heat Is On – A World of Climate Promises Not Yet Delivered. ISBN: 978-92-807-3890-2. Nairobi WHO. (2021). Household Energy Database. https://www​.who​.int​/data​/gho​/data​/themes​/air​-pollution​/ who​-household​-energy​-db Wu, W., Hasegawa, T., Ohashi, H., Hanasaki, N., Liu, J., Matsui, T., Fujimori, S., Masui, T., & Takahashi, K. (2019). Global advanced bioenergy potential under environmental protection policies and societal transformation measures. GCB Bioenergy, gcbb.12614. https://doi​.org​/10​.1111​/gcbb​.12614

19. Hydrogen as carbon-free energy carrier and commodity Ad van Wijk

1. INTRODUCTION The role of hydrogen in realizing fully renewable energy systems, is recognized all around the world. Until the first half of 2021, over 30 countries had implemented hydrogen strategies. The vast majority of these hydrogen strategies were implemented in 2020. Among others, by Japan, South Korea, Australia, Chile, Morocco, China, Russia, Saudi Arabia, Austria, France, Germany, the Netherlands, Norway, Portugal and Spain. In Europe, on 8 July 2020, the European Commission released its ‘Hydrogen strategy for a climate-neutral Europe’ as part of their European Green Deal. The strategy defines a target of 6 GW electrolyzer capacity by 2024, growing to at least 40 GW electrolyzer capacity by 2030. It also recognizes the importance of hydrogen imports from neighbouring regions, especially North Africa (European Commission, ‘A hydrogen strategy for a climate-neutral Europe’, 2020). This target represents about 5.6  Mt green hydrogen production in 2030. However, to become less dependent on Russian gas, the European Commission has launched the REPowerEU programme and increased their hydrogen target for 2030 to 20 Mt, 10 Mt produced in the EU and 10 Mt imported (European Commission, 2022) The main goals of current hydrogen strategies are: reduction of greenhouse gas emissions, diversification of energy supply, integration of renewables, fostering of economic growth, support national technology developments, security of supply, strategic reserves and last but not least developing hydrogen for export and import (LudwigBölkowSystemtechnik, 2020). But why is there so much interest in hydrogen by governments and companies? How can hydrogen be produced, transported, stored? Where will hydrogen be used? What technology, economic and system developments are the drivers for hydrogen as an energy carrier and commodity? And what will be the role and characteristics of hydrogen in a future renewable energy system? These issues are analyzed and discussed in this paper.

2. HYDROGEN TECHNOLOGIES AND SYSTEM 2.1 Hydrogen Production Technologies Hydrogen, like electricity, is a carbon-free energy carrier, which means that no carbon dioxide (CO2) emissions are released to the atmosphere when hydrogen is burned or converted. The only ‘waste’ product is pure water. However, just like electricity, it does not mean that the production of hydrogen is without (life cycle) CO2 emissions. Hydrogen needs to be produced from a molecule that contains hydrogen with a conversion technology that requires energy input. 351

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Hydrogen can be produced from fossil fuels (hydrogen-carbon molecules), from biomass resources (hydrogen-oxygen-carbon molecules) or from water (hydrogen-oxygen molecule). When fossil fuels or biomass are the source of hydrogen, the input energy comes from fossil fuels or biomass. However, when water is used as the source of hydrogen, the input energy could come from electricity (electrolysis process), heat (thermolysis process) or solar lightphotons (photolysis process). In the end, the energy source together with the conversion process, input energy and flue gas treatment processes determine whether or not direct or indirect CO2 emissions to the air will take place. An overview of the most relevant hydrogen production technologies with their present maturity level, main output products and the related CO2 emission to the air, expressed in a ‘colour’ are summarized in Table 19.1 (van Wijk, 2021). A common opinion is that renewable or green hydrogen, without CO2 emissions to the air can only be produced by water electrolysis using renewable electricity, whereby renewable electricity is most often seen as only solar and wind electricity, although hydropower and geothermal electricity will play a role in certain areas too. From this table it is obvious that by using biogenic waste renewable or green hydrogen can also be produced. When the CO2 from these processes is captured and used or stored, hydrogen from biogenic waste could even have negative CO2 emissions to the air. And even hydrogen production from fossil fuels could have zero CO2 emissions to the air. Present hydrogen production from natural gas is with steam methane reforming (SMR) plants. In future auto thermal reforming (ATR) plants will also be installed, whereby up to 100% of the CO2 can be captured and stored. With methane pyrolysis, methane (CH4) is split into hydrogen (H2) and solid carbon (C). This process does not produce CO2 at all. It will depend from the input energy to heat this process whether or not indirect CO2 emissions take place. If part of the produced hydrogen and/or electricity from renewable or nuclear resources is used, the production of hydrogen is without any CO2 emissions. 2.2 Present Hydrogen Use Hydrogen is mainly produced from natural gas and coal and today is primarily used as a feedstock to produce chemical products, ammonia (the main component of fertilizers) and methanol. Hydrogen is also used in refineries to desulphurize oil and in the production of kerosine, gasoline and diesel. The primary energy input by gas and coal for hydrogen production is about 3,200 TWh, representing roughly 2% of world-wide primary energy consumption (IEA, 2019). Almost all of the hydrogen today is produced and used at or nearby chemical and petrochemical sites. Natural gas is transported by pipeline and coal by ship, rail or truck to the location of the refinery, fertilizer plant or methanol plant where gas or coal is converted into hydrogen. The hydrogen is therefore produced and used at the same location which is called captive hydrogen production and use. There is a limited, privately owned hydrogen pipeline infrastructure at chemical sites, especially to secure reliable baseload supply. There is no public infrastructure, no public market and no market regulation for hydrogen. At present, hydrogen is not used as an energy carrier. And hydrogen as such is not used in the public domain for heating buildings and only to a very limited extent for transport. Hydrogen is absent or only beginning to be considered as an energy carrier within energy law and energy regulations.

353

Steam methane reforming (SMR) Auto-thermal reforming (ATR) Methane pyrolysis

Partial Oxidation/gasification Underground coal gasification

Gasification Plasma gasification

Super critical water gasification Microbial Electrolysis Cell

Electrolysis Alkaline PEM SOEC

Photoelectrochemical

Natural gas

Coal

Solid biomass Biogenic waste

Wet biomass Biogenic waste

Electricity + water

Sunlight + water

Source:   Adopted and modified from van Wijk, 2021.

Process/Technology

Source

Laboratory

Mature Near Maturity Pilot Plants

First Plant 2023 Laboratory

Near Maturity First Plant 2023

Mature Projects exist

Mature Mature First plant 2021

Maturity

H 2 + O2

H 2 + O2 H 2 + O2 H 2 + O2

H2 + CH4 + CO2 H2 + CH4

H2 + CO2 + C H2 + CO2

H2 + CO2 + C H2 + CO2

H2 + CO2 H2 + CO2 H2 + C

Main output

Green

All shades of grey to green and pink depending on the source for electricity production. With electricity from renewable resources, green H2 and from nuclear, pink H2 is produced, both with zero CO2 emissions

Green Negative CO2 emissions possible

Green Negative CO2 emissions possible

Brown or blue, depending on the CCS technology 50–90% of CO2 can be captured and stored

Grey or blue, depending on the capture technology and the process input energy 50–100% of CO2 can be captured and stored. With ATR using part of the produced H2 as energy for process heat, 100% CO2 emission capture and storage is possible Turquoise, indirect CO2 emissions are zero if green electricity or part of the produced hydrogen is used as process energy

Colour of hydrogen

Table 19.1  Hydrogen production processes, their maturity status, main output molecules and their ‘colour’

354  Handbook on the geopolitics of the energy transition

2.3 Hydrogen Application Technologies In a transitional period, hydrogen can be used by combustion in a boiler, furnace, engine or turbine, to produce heat, electricity or mechanical power. However, in future, electrochemical conversion via fuel cells will become more important. The fuel cell reaction is the reverse of the electrolyzer reaction. Fuel cell systems have been developed over recent years, especially by car manufactures for drive trains in all kinds of mobility. Fuel cells have a similar technology structure as electrolyzers, batteries or solar PV, it is cells stacked together, whereby stacks are built together with other equipment to make a fuel cell system. Research and development is of course important to bring down cost, increase efficiencies, reduce degeneration and bring down the amount of materials, especially platinum. But fuel cell and stack mass production will especially drive down costs drastically. Mass production of cells and stacks (plants that produce 500,000 fuel cell systems per year) will bring down fuel cell system capex cost for cars to US$30–40/kW (Thompson et al., 2018). Fuel cell capex cost will be lower and conversion efficiencies are higher than for present day combustion technologies, such as engines or turbines. Therefore, in future, fuel cell technology will be at least cost competitive, but in most cases cheaper then present day combustion technology. 2.4 Fuel Cell Systems Will Be Applied in All Sectors Fuel cell systems are developed by car manufacturers as drive trains in fuel cell electric vehicles. However, these fuel cell systems can be applied in other transport such as ships, trains, drones and planes. But besides these applications in mobility, fuel cell systems will play a crucial role in other applications too. Fuel cells that produce electricity and heat will be used in houses and buildings. The volume and temperature level of the heat can be brought to the desired level by using heat pumps. Next to producing heat, the electricity produced from the fuel cells supplements the electricity from solar panels on the roof. Panasonic in Japan has introduced a small scale (