Changing the Paradigm of Energy Geopolitics

Foreword

Thijs Van de Graaf

We live in times of profound change and uncertainty. A combination of technological, political, and economic shifts is reshaping the international order. New digital technologies are upending our personal lives as much as they are transforming the world economy. The rapidly warming climate is dangerously approaching irreversible tipping points. Shifts in the global balance of power are coinciding with increased geopolitical competition. Even a global systemic shock like the pandemic, which shut down much of the world, has not canceled or reversed these megatrends. On the contrary, in many ways, it even catalyzed or accelerated them.

As the post-Covid world slowly shifts into a “new normal,” energy continues to make international headlines. Just as the UN climate conference kicked off in Glasgow in October 2021, an energy crisis took hold of global energy markets. Soaring gas prices in Europe coincided with lower-than-usual gas deliveries from Russia, which amassed troops along the borders of Ukraine. Coal shortages contributed to blackouts in China and reportedly led government officials to instruct state-owned energy companies to secure energy supplies at any cost. Rising oil prices prompted a release of strategic oil reserves from the United States in coordination with other major economies. These events are a stark reminder of the persistent centrality of fossil fuels to the geopolitics of energy.

Yet, in the background, the tectonic plates of our energy system are profoundly changing. Renewable energy such as wind and solar 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.¹ 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.”²

Renewables now form the leading edge of a global energy transformation. The growth of renewables is dominated by wind and solar power, aided by at least three major forces: falling costs of production, policies to combat climate change and air pollution, and rising social and investor pressure for change. Renewables are growing fastest in the power sector, but they are increasingly also finding their way to other end-use sectors such as transport, buildings and industry thanks to cost reductions in technologies such as batteries, heat pumps and electrolyzers (to produce hydrogen).

The world has transitioned to new energy sources before, from wood to coal and from coal to oil. Each shift has brought changes to the geopolitical map of the world. Coal and steam power, for example, were essential pillars of the British Empire in the nineteenth century whereas control over oil production and trade formed the bedrock of American power in the twentieth century. In a similar vein, the from fossil fuels to renewables will create effects that reverberate well beyond the energy sector, and shape the outlook of the twenty-first century world order.

There are at least four reasons to believe that a renewable-powered world will be very different from the fossil fuel powered world as we have known it for the past 150 years. First, fossil fuels are concentrated in specific geographic locations, while renewables are much more dispersed. In fact, renewables (wind, solar, biomass, geothermal, hydro, ocean energy) are available in one form or another in most countries. Second, renewables take the form of infinite flows (of wind, water, sun, and warmth from the Earth’s crust) rather than finite stocks of energy, which means they cannot be exhausted and are harder to disrupt. Third, while fossil fuels give way to centralized systems of energy production, renewables can be deployed at almost any scale and lend themselves better to decentralized forms of energy production and consumption. Fourth, the operating costs for fossil fuels are sensitive to underlying changes in fuel prices, which tend to be cyclical. Modern renewables, by contrast, have nearly zero marginal costs, and some of them, like solar and wind, are on technological learning curves (i.e., they enjoy cost reductions of nearly 20 % for every doubling of capacity).

The 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 past 5 years, renewables at a compound annual rate of more than 12.5 % while gas increased at a rate of 2.9 %, both much faster than total energy consumption growth of 1.6 %. By contrast, oil consumption grew more slowly than consumption as a whole (+1.4 %) and coal consumption fell (-0.5 %).

The geopolitical effects of the energy transition will be felt early on. Consider the massive impact coal had on the nineteenth-century world order, and you will be surprised to learn that coal only surpassed wood as the world’s primary energy source by around 1900. Similarly, it was not until the 1950s until oil overtook coal as the world’s primary energy source. By that time, of course, the two devastating World Wars had underscored the critical importance of petroleum for the security and wealth of nations.

All of this implies that we do not have to wait until the point where renewables overtake fossil fuels in the world’s energy mix to see the contours of this new energy order. In fact, many countries are already recalibrating their foreign and strategic policies to the clean energy transition—whether it is the oil kingdoms of the Persian Gulf planning for life beyond oil (e.g., Saudi Arabia’s Vision 2030), India’s leadership in setting up the International Solar Alliance, China’s bid for technology leadership in electric mobility, Japan’s search for new energy trading partners to import hydrogen, or the critical materials strategies that all major nations have developed.

The present volume is a particularly welcome exploration of the shifting geopolitics of energy at this time of profound change.

Thijs Van de Graaf

Ghent, Belgium, February 2022

Acknowledgments

An edited volume is far more than just a product of its editors’ imagination. It is a culmination of every contributor’s generosity and expertise. We therefore, first and foremost, offer our deepest appreciation to all the authors for not only penning every page that helps this book project to materialize, but more importantly for enlightening and stimulating us intellectually. Indeed, we have all benefitted tremendously through this project.

Also indispensable to an academic project of this nature is the peer review process, and we would therefore like to express particular gratitude to all the reviewers for offering time and expertise to meticulously review every chapter. Without them, this book would not be what it is:

• Anton Tugushev, City University of Hong Kong, Hong Kong
• Flavius Caba-Maria, Middle East Political and Economic Institute, Romania
• Jamie P. Halsall, University of Huddersfield, UK
• Jason Lee Carter, City University of Macau, Macau
• Paulo Duarte, University of Minho, Portugal
• Pedro Steenhagen, Getulio Vargas Foundation, Brazil
• Priscilla Roberts, City University of Macau, Macau
• Richard Ghiasy, The Hague Centre for Strategic Studies, the Netherlands
• Susann Handke, Independent Scholar, the Netherlands
• Tom Baxter, China Dialogue, United Kingdom.

To City University of Macau, we are grateful for their institutional support, and for providing an encouraging and nurturing environment that allows new ideas and new projects to flourish. In particular, we would like to express our gratitude to the University’s project officer, Ms. Yong Qi, for her professionalism, dedication, and unwavering support. She has been instrumental in managing and coordinating between the numerous individuals and organizations involved in the project.

We also wish to express our recognition for the work done by the English proofreader and copy-editor, Professor Gershom Tse. We thank him for his exceptional qualities which have greatly improved the final work, and for always being there for us.

Last but not least, we would like to thank Peter Lang our publisher for supporting and giving impetus to this editorial project from the very first day, and for cheering us on every step of the way. We are also deeply grateful for their contractual flexibility, without which we could not have been able to complete all necessary revisions as a result of the war in Ukraine.

As we acknowledge these friends and colleagues with great pleasure and fondness, we also recognize that a mere page or two of gratitude will not suffice to thank everyone who deserves to be thanked. Nevertheless, for every bit of support and encouragement we have received throughout this project, we offer our heartfelt appreciation and gratitude.

Introduction: Muse of Fire—Energy, Geopolitics, and Decarbonization

It is the purpose and wish of this manuscript that the collection of research contained among its pages not only shares but also inspires discussions toward intellectual advancement. At the same time, and perhaps more importantly, the authors of this collection have stayed mindful of the possibilities that their depictions and analyses might deviate from reality—this latter point has been particularly pertinent, as during the 20 or so months that this manuscript was being prepared, the world also experienced the outbreak and eventual escalation to global pandemic of COVID-19, in addition to a change in U.S. administration, Brexit and its aftermath, the 2021 United Nations Climate Change Conference (COP26), the energy crisis of late 2021, and the appalling invasion of Ukraine that Russia launched on February 24, 2022. These happenings have all had significant impact on every one of us, especially in terms of energy security, global energy markets, and the global transitions toward greener, more sustainable energy sources. As the aforementioned turmoils continue to unfold, some of the authors have made revisions accordingly, and we have all been reminded of the ever-evolving and ever-dynamic nature of the world that we inhabit. We therefore cannot afford to be complacent about conclusions drawn in the past. This is especially true during uncertain times.

By a similar token, geopolitics no longer has a singular classical view, one that used to stem from an intertwined vision shared by imperial powers, where sovereign states were the only entities of reference. This view, though outdated, retains certain relevance, as it has indeed influenced and steered international relations toward a space-power paradigm where states are perceived as living spaces, and the international order is only expressible in terms of states (Lebensraum). The view did however evolve: during Cold War and post–Cold War geopolitics, even though states continued to be the key subject, other aspects such as bipolarism began to be introduced.

Contemporary geopolitical debates are, on the other hand, driven by critical geopolitics (i.e., spaces of political actions) and further broadened by hybrid or meta-geopolitics. Critical geopolitics encompasses not only uni-, bi-, and multi-polarism, but also a global order comprising multiple actors, as well as the spatial constructions of national identity and political spaces. The visions of critical geopolitics are multidimensional, intertwined, and competitive: geoeconomics,¹ transnationalism,² globalism³ and digitalization (Geopolitics 2.0), geopolitics of feminism and gender, as well as energy and sustainability. Hybrid (or meta-) geopolitics, on the other hand, combines traditional views with new multidimensional geopolitical views on space-power relationships, and empires, states, regional realms, cities, outer space, and the cyberspace are all regarded as determinants of state power.

The world today is undergoing varying degrees and scales of transformations on multiple, inter-related, and intertwined fronts: digitalization, social transformations, energy transitions, and climate change as well as the countering responses, etc. Such transformations in turn induce new scientific, technological, and industrial capabilities, heavily influencing the models through which societies are organized and ways that states in the international system will interact with each other. Geopolitics seeks to understand and explain all such development, variables and parameters, conditions, power dynamics, and scenarios by tracking and analyzing them in the context of the international system.

Framed within contemporary geopolitical debates is the geopolitics of energy. Energy, as a fundamental part of the gamut of human experiences, has direct impact on the dynamics, development, and lives in human societies. It is a resource that forms the axes along which economies evolve. In fact, it is “a contributing factor to economic growth,” and “has traditionally been a source of international rivalry and conflict” (Mirtchev, 2021, p. 190). Energy therefore plays a deciding role in dictating the power relations among public and private actors across the world and is especially relevant to both sovereign states and actors in the international system. For those sovereign states, energy security is a crucial matter of national concern.

It is up to every state to defend its own national interests. In terms of ensuring energy security, a sovereign state must deploy a combination of energy (re)sources, production, and capabilities, as well as broader regional energy strategies, within the economic and political arenas that it is in and/or has integrated into. Energy security is highly dependent on regional planning, as well as infrastructural, spatial, and network arrangements, as energy production and trade are not only a protracted multi-partner enterprise but also an intertwined spatial cooperation between cities, regions, states, and sovereign neighbors. Regional cross-border cooperations may prove especially important and beneficial for long-term sustainability and productivity.

Energy security is nevertheless more than just a political narrative; it is a multidimensional concept whose meaning has in fact expanded over time. Traditional definitions of energy security used to focus on the stability of energy flows from source to consumer and the dynamics of the energy markets. Contemporarily, on the other hand, energy security can also refer to environmental and other social concerns such as energy poverty. Energy security therefore needs synergetic inter-sectorial visions, ranging from capital flows, flows of ideas and people, to education, technologies, taxation, and international cooperation. It also depends on such human social capital as social skills, technical know-how, innovative abilities, and constructivist education on global governance.

A significant part of contemporary energy security concerns environmental impacts and the sustainability of economic development. The term “sustainable development” was defined in 1987 in a World Commission on Environment and Development report entitled “Our Common Future” (also known as the Brundtland Report) as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” The concept therefore reconciles economic development with social and environmental balance, and part of sustainable development requires that human societies transition away from their current dependence on fossil fuel energy sources, toward greener, renewable energy sources.

The world’s current energy mix sits on two unbalanced trios: The first trio comprises conventional fossil fuels—coal, oil, and natural gas—which together accounts for around 80 % of global energy consumptions; the second trio involves low-carbon energy sources—hydropower, nuclear, and various renewable sources. To rectify the imbalance between the two, we must expand the low-carbon trio and shrink the conventional trio—this is and will be at the core of current and future energy policies and strategies.

For example, hybridizing renewable technologies and resources (e.g., solar and wind power) may be a cost-effective strategy. Not only has solar and wind power’s individual reliability increased over time, but hybridizing them can also pave the way for further devising integrated schemes of renewable energy sources. In addition, smart energy management is now at the forefront of technology and can be expected to redefine the energy markets—the coming decades will likely witness the development of smart homes, communities, workplaces, industries, cities, even countries. However, such environmental concerns, sustainability considerations, and innovations as well as related-issues including the transfer and protection of intellectual properties, all add layers of complexity to not only energy geopolitics but geopolitical analysis in general. This is not least because energy transitions require more than mere technological innovations; they do not just span decades, but they are complex processes that need to grapple with issues arising from the increasing decentralization of energy production, the emergence of new energy (re)sources and their management, as well as volatility of the energy markets and any necessary adjustments in response. Further adding to the complexity is that, because societies’ departure from fossil fuels will not happen overnight but rather entails a gradual, transitional process, during the interim en route to carbon neutrality, we must not neglect the fact that conventional fossil fuels will still play an important role of protecting the energy markets and consumers from turmoil and major disruptions to energy supply.

Ultimately, to achieve true net-zero carbon, sustainability and environmental concerns need to not only be incorporated into development plans but be given precedence of consideration. Energy transitions will also have a higher chance of success if more urgency can be induced among the next generations. Nonetheless, despite all the obstacles facing energy geopolitics, our collective efforts toward building a carbon-neutral future must not be fazed, as the alternative is not an option: If we fail to act on reducing, and eventually eliminating our dependence on fossil fuels, humankind will face dire consequences.

Energy and geopolitics—the backbone of this volume—will each be difficult to untether from the other. Geopolitics of energy might have traditionally focused on energy security, risks, and underlying threats, as well as issues relating to state sovereignty and inherent strategies. Current energy geopolitics, however, has expanded and now also revolves around energy resources and their utilization on both the local and global levels, as well as any latent complexity in the energy- induced power relations between states, international organizations, NGOs, large multinational companies, and even non-state actors, directly linking not only the general interests of individual states but also the relations, balance, domination, subjection, and cooperation between them. What energy geopolitics attempts to do, essentially, is to resolve energy-related disputes and restore geostrategic balances among actors on the international stage, through analyzing issues relating to energy production, supply, transmission, trade, as well as energy security, dependence, risks, threats, capacities, and impact on the environment.