27 ISSUES RELATED TO ENERGY CRISIS IN GEOPOLITICS – 2

Peerzada Raouf Ahmad

epgp books

     

 

 

 

    CONTENT: –

 

     –  UNDERSTANDING THE GEOPOLITICS OF RENEWABLE ENERGY

 

–  GEOPOLITICS OF MINERALS FOR RENEWABLE ENERGY

 

–   FUTURE IMPLICATIONS

 

 

LEARNING OUTCOME

 

. Appreciate the shift to renewable energy but to analyze the growing geopolitical disputes over the resources

. Explain the geopolitics of mineral in connection to the renewable energy resources

. Critically Analyse the commodification in most natural things

 

KEYWORDS

 

Gray literature, Sheikhs versus Shale standoff, Digital disruption.

 

 

1. UNDERSTANDING THE GEOPOLITICS OF RENEWABLE ENERGY

 

Geopolitics of renewable energy has received relatively little attention, especially when considering the far-reaching consequences of a global shift to renewable energy.

 

Oil and gas account for more than half of global energy consumption and captured close to 70 percent of total investment in energy supply from 2000-2015 (EIA n.d.). The world’s transportation systems—and therefore national economies—depend almost completely on supplies of oil. Yet geopolitics and the global energy economy are both changing. The traditional definition of geopolitics is the influence of geography upon the foreign relations of states. However, in recent years the role of nnon-state actors in iternational relations has both grown and become increasingly well recognized. Leaders and policymakers are more and more consumed by transnational threats, which pose challenges to multiple countries and cross borders; cyber and terrorism are two of the most prominent examples, alongside climate change. At the same time, many of the concerns of earlier decades have resurfaced in recent years, as challenges have mounted to the international order that has been predominant since the end of World War II. Great power conflict—while unimaginable only a few years ago—is now again in the realm of the possible. Meanwhile the costs of solar and wind power have dropped dramatically, helping renewable energy make significant inroads into the global energy mix. Sales of alternative fuel vehicles, while still small as a percentage of total vehicle sales, have climbed sharply, especially in China. Cross-border renewable energy trade has caused international tensions, including solar trade disputes between the European Union and China and between the United States and India. Investment in renewable energy is crossing international borders and in some cases, is overtaking fossil energy investments. Non-energy companies are investing in major renewable energy projects across the globe, such as Google’s investment in the Lake Turkana Wind Power Project in Kenya (Africa’s biggest wind farm and the largest single private investment in Kenya’s history when completed) (Guardian 2015). Distributed renewable energy is helping address energy poverty. In India, more than a million households are benefiting from solar energy, with over 10,000 remote villages securing basic electricity through distributed renewable power alone.

 

Nonetheless, the geopolitics of renewable energy has received relatively little study (https://www.academia.edu/15717140/Future_Petroleum_Geopolitics_Consequences_of_Clim ate_Policy_and_Unconventional_Oil_and_Gas n.d.). The literature review carried out for this report finds that the geopolitical consequences of a transition to renewable energy has received far less attention than the geopolitical consequences of, for instance, fracking. Most research on the geopolitics of renewable energy to date has been conducted by Dutch and German research institutions and largely consisted of gray literature (working papers, online reports, dissertations etc.

(http://energypolicy.columbia.edu/sites/default/files/energy/CGEPTheGeopoliticsOfRenewable s.pdf n.d.).

MAP-1(DISTRIBUTION OF RENEWABLE ENERGY)

 

a. The complicated geopolitics of renewable energy

 

Meeting the goals set at the 2015 climate conference in Paris calls for dramatic changes in the global energy mix. One-hundred and ninety-five countries agreed on the objective of limiting the global average surface temperature to “well below” 2°C above preindustrial levels.(UN 2015) To achieve this target, a shift to zero- and low-carbon energy-producing technologies will be required in the near future (http://www.ipcc.ch/pdf/assessment-report/ar5/syr/AR5_SYR_FINAL_SPM.pdf n.d.) with wide deployment of negative-carbon technologies – those that remove carbon dioxide from the atmosphere – in the second part of the century. The twentieth and twenty-first centuries were profoundly shaped by energy geopolitics, which can be defined as the way countries influence one another through energy supply and demand. There is a vast literature that shows how securing the energy supply, especially in the form of natural gas or oil, was and still is an important consideration in many political decisions. Both the high oil prices of the 1970s and today’s low oil prices can be attributed to geopolitical considerations. The latest price decline is driven by traditional producers trying to prevent losing market share to US producers who are using new technology to extract oil from shale formations, now known as the “sheikhs versus shale” standoff (http://www.economist.com/news/leaders/21635472-economics-oil-have-changed-some-businesses-will-go-bust-market-will-be n.d.).

 

Today, the balance of power in energy geopolitics is shifting away from the owners of fossil-fuel resources to countries that are developing low-carbon energy sources. Many believe that alternative technologies, like wind and solar electricity, will lower the geopolitical power of traditional energy producers because low-carbon alternatives will provide diversification and increased energy security, especially to those countries that are heavily dependent on fossil-fuel imports. That said, predicting the winners and losers is very difficult, because there are so many elements to consider. In the geopolitics of traditional energy, there are clear centers of power on both the supply side, where Saudi Arabia-led OPEC, Russia, and the United States dominate, and the demand side, where China, the European Union, and, again, the United States are the most important markets. The participants are familiar with the expected behavior of the major players. The geopolitics of renewable energy, on the other hand, is a much more complicated affair with numerous decentralized players. Moreover, instead of focusing on just two major resources, oil and natural gas, low-carbon energy geopolitics may depend on many additional factors, such as access to technology, power lines, rare earth materials, patents, storage, and dispatch (i.e. rules that prioritize use of different energy sources), not to mention unpredictable government policies. Despite this very complex road ahead, it is possible to take stock of the factors that will determine which nations gain and lose power as the world seeks to lower carbon dioxide emissions.

 

b.  Clean energy versus fossil fuels

 

Though the cost of producing some non-fossil-fuel energy has recently decreased, for it to achieve substantial market penetration still requires supportive government policies, among them are direct subsidies, carbon pricing, regulations requiring renewables use, and feed-in tariffs. Such climate-friendly policies reduce demand for fossil fuels and lower the prices that coal, oil, and gas producers are paid for their products. If fossil-fuel producers believe that such “tight” climate policies are a reality here to stay, and foresee that fossil-fuel resources may become a stranded asset, they may increase production today despite decreasing oil and gas prices. For fossil-fuel producers, it is better to profit on the resource while it is still valuable, even if they are not getting prices as high as they once were. If they increase production and lower prices to make these gains while they can, it would make development of wind and solar power more challenging, as these renewable technologies would find it even harder to compete. The stringency and timing of climate policy will affect the balance of geopolitical power between fossilfuel and non-fossil-fuel energy producers. As the Paris Agreement signatories showed, the world recognizes the dangers of climate change and a need for action. At the same time, it is clear that the pledges countries submitted under the Paris Agreement, which declare how much and by when they will cut emissions, are not sufficient for the stated goal of limiting the increase in temperature to below 2°C (MIT Joint Program 2015). Many pledges are contingent on financial support and technology transfers that may or may not materialize; therefore, it is not clear how large the differences might be between what countries pledged and what they actually do. In addition, the Paris Agreement relies on goodwill, and there are no penalties for noncompliance. Even if the agreement is fully implemented, the world energy system would still mostly rely on fossil fuels in 2030, the date for which most of the current targets are specified (MIT Joint Program 2015). As a result, neither fossil-fuel nor non-fossil-fuel energy producers have much certainty about the direction of future government policies, and whether they are likely to see penalties or support. Regardless of this uncertainty, major energy consumers like China, the European Union, and the United States are rapidly developing their non-fossil-fuel energy sources. For example, the United States increased the share of wind and solar from 0.5% of total power generation in 2005 to 5% in 2015. And by the end of 2015, China had become the country with the largest installed capacity for both wind power (145 GW) and solar power (45 GW). This trend will reduce the geopolitical power of traditional fossil-fuel suppliers, like the Middle East and Russia, and increase the technological advantage of major players in the renewable energy sector, like China, Germany, the United States, and Japan (Paltsev 2016).

 

There is a shifting trend in the future of geo-politics wherein the country with the largest deposit of renewable resources of energy would emerge as global power. Recently the world has experienced the crunch of large scale decline in energy supply through non-renewable means, this has distorted the global power equation and an increasing trend of shifting the power towards the country with renewable stock of energy has been observed. The emergence of developed economic power while simultaneously having higher HDI, in form of the Scandinavian countries.

 

 

FIGURE-1 (EEA 2005)

 

2. GEOPOLITICS OF MINERALS FOR RENEWABLE ENERGY

 

Motivated by concerns about climate change, depletion of fossil fuel reserves, economic competitiveness and innovation, governments around the world have set ambitious targets for renewable energy. Renewable energy technologies, such as solar panels, wind turbines, and batteries of electric cars, are highly dependent on a number of minerals. One of the critical materials for renewable energy technologies are rare earth elements – a group of 17 minerals – have received a lot of attention in the media over the past years. Achieving renewable energy targets will be very difficult if not impossible without access to these elements. There are several challenges to mineral supply security. Minerals are increasingly scarce due to growing demand and limited supply. Trends as population growth, economic growth, and changing consumption patterns are putting tremendous pressure on the demand for energy and mineral resources. Supply by contrast grows much slower due to a complex mix of factors. The imbalance between demand and supply has resulted in high prices and countries have to compete with each other over access to limited resources. These developments are a major concern for countries that rely on imports, as they are most vulnerable to supply disruptions. Supply disruption risks are high because the production of minerals is concentrated in a limited number of countries. China, for example, produces 97% of rare earth elements and is also a major producer of other minerals. This monopoly gives the country political leverage over other states. Import dependent states have formulated policy responses aimed at securing a stable and affordable supply of minerals. Producing countries have also become more active in formulating mineral policy, as they want to benefit from high prices. This has resulted in a trend towards more government interference, mercantilism and protectionism. The increased role of governments and state-owned enterprises is also related to the rise of state capitalism. Trends in mineral policy have both positive and negative implications for the balance of conflict and cooperation in international relations. The risk of international tension, however, is increased by the transition to a multipolar world, in which countries are focusing more on their national interests and international relations are becoming more uncertain and instable.

 

a. Key Minerals

 

One way to produce energy from solar rays is to use thin-films of photovoltaic cells. To create these thin films, a range of minerals are used, including tellurium, tin, indium, hafnium, gallium. Other minerals used for solar technology are silver, cadmium and selenium (Jaakko Kooroshy 2010). The permanent magnets for the electric generators found in wind turbines require the rare earth elements dysprosium and neodymium. Nickel and molybdenum are also used for wind power technology. In the rechargeable batteries of electric vehicles, one can find lithium and tungsten. Platinum is used in antipollution devices and vehicles. Cobalt and magnesium are used for bio-energy technology. The implementation of these technologies at a large scale, however, is problematic as many of these materials are relatively scarce.

 

b. Mineral scarcity

 

The public debate on mineral scarcity has been similar to the debate on peak oil. The underlying assumption is that mineral reserves are finite. The intuitive conclusion from this so called ‘static paradigm’ is that the speed of extraction and consumption will determine the rate of depletion. Due to growing demand production will start struggling as soon as existing deposits have been exhausted and new ones become more difficult to find. However, minerals are not scarce because there are not enough minerals to be found in the Earth’s crust. In fact, rare earth deposits can be found in many places, such as China, the US, Canada, India, Vietnam, Kazakhstan and Sweden. The total availability of minerals in the earth’s crust in itself is irrelevant for the geopolitics of minerals for renewable energy. Mineral supply depends on whether known mineral deposits are profitable for extraction with current or future technology and under current or future market conditions.

 

The supply of minerals is limited because under current market conditions only a small number of countries can mine minerals profitably. China is the largest producer of rare earth elements, accounting for up to 97% of global production. This kind of concentration of mineral production is the result of recent history. China has systematically built up a monopoly on rare earth elements during the past decades. There used to be rare earth production capacity in other countries but due to lower wages and less stringent environmental and health legislation in the Chinese mining sector, purchasing rare earth elements from China on the market became cheaper than maintaining domestic mining capacity. As a consequence, many countries, including the US, closed their domestic production of rare earth elements. Besides rare earths, China is also the biggest or among the biggest producers of, tungsten, magnesium, molybdenum, vanadium, gallium, silver, tin, cadmium and indium.

 

FIGURE-2 (https://www.google.co.in/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&ved=0ahUKEwj7l MXdq73VAhXLqI8KHU84ASsQjxwIAw&url=https%3A%2F%2Fwww.slideshare.net%2FViralNetw ork%2Ftnrree&psig=AFQjCNF2gJHIzTlRC-5KgqG2mde18eOLwg&ust=1501927935245182 n.d.)

 

1. Obstacles to supply security

 

Access to these minerals is key to achieve renewable energy targets. However, several factors are undermining the supply security of minerals. Many countries are highly dependent on mineral imports. The degree of reliance depends on what services and products countries produce and on their economies’ position along the supply chain. Countries that produce renewable energy technologies sit closer to the refining stage in the supply chain than other countries. Japan, for example, is an important manufacturer of advanced electronics and is the world’s largest consumer of rare earths for which it is almost fully reliant on China. The EU also has only very limited mining capacity. There is a domestic mining capacity for some metals in Austria (tungsten), Finland, Greece (bauxite, nickel), Ireland (zinc, lead), Norway (titanium), Poland (copper, silver, lead), Portugal (tungsten), Spain (gold), and Sweden (gold, lead, iron ore). For other metals, such as rare earths and platina group metals, it relies almost entirely on imports. Figure-3 shows the import dependency of the EU for several minerals. As a consequence, the EU has classified several raw materials as critical. In the report, Critical Raw Materials for the EU (2010) by the Ad-hoc Working Group on Defining Critical Raw Materials and European Commission the following minerals are identified as critical at the EU level: antimony, indium, beryllium, magnesium, cobalt, niobium, fluorspar, platinum group metals, gallium, rare earths, germanium, tantalum, graphite and tungsten. The criticality of these material was based on the economic importance of the material, its supply risk, the risk that environmental measures may restrain access to deposits or supply, and the potential for substitution.

 

FIGURE-3 (https://www.zerowasteeurope.eu/category/waste/weee/ n.d.)

 

3. FUTURE IMPLICATIONS

 

The geopolitical world is experiencing the emerging three trends in the energy sector which are

 

i. The transition towards more renewable energy and diversified supplies is creating opportunities and challenges for the security of the global energy infrastructure. As renewables are now part of the energy portfolio and are rapidly gaining market share, they bring along benefits such as energy mix diversification, with distributed generation growing at a fast pace worldwide and its installed capacity expected to more than double in the next decade.

 

ii. Digital disruption is creating new opportunities – but also threats. Technology creates grids but also invites cyberattack. The increasing interconnectivity and proximity of energy systems means that conflicts can have ripple effects on energy markets and prices. Global ineffective measures to handle cyber-crimes have resulted in an expectation of cyber war.

 

iii. The rebalancing of energy supply and demand is leading to a new global energy security order. Recent drops in oil prices have led to a significant shift in wealth from net oil exporters to oil importers. At the same time, the development of unconventional sources of oil and gas, as well as the recent economic slowdown in emerging markets such as China and India, have contributed to price readjustments against the backdrop of a general shift in energy supply patterns.

 

The future of renewable energy source will be more centric to the trend in global capitalism. The world will soon witness the change in use value of air, water & soil into exchange value, and still further into a power value. The shifting to this energy form with the same old means of production might turn the world into a desert unfit for human civilization. This might be a last mode of production ever known to human beings.

 

 

SUMMARY

  • – Geopolitics and the global energy economy are both changing. The traditional definition of geopolitics is the influence of geography upon the foreign relations of states.
  • – There is a shifting trend in the future of geo-politics wherein the country with the largest deposit of renewable resources of energy would emerge as global power.
  • – The shifting to this energy form with the same old means of production might turn the world into a desert unfit for human civilization.

 

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References

  • EEA. 2005. https://www.eea.europa.eu/data-and-maps/figures/renewable-energy-production-by-country-2005.
  • EIA. n.d. US EIA, International Energy Outlook 2016 — http://www.eia.gov/outlooks/ieo/exec_summ.
  • Guardian, The. 2015. ” “Africa’s largest windfarm set to connect remote Kenya to the grid”,.”
  • http://energypolicy.columbia.edu/sites/default/files/energy/CGEPTheGeopoliticsOfRenewabl es.pdf.
  • http://www.economist.com/news/leaders/21635472-economics-oil-have-changed-some-businesses-will-go-bust-market-will-be.
  • http://www.ipcc.ch/pdf/assessment-report/ar5/syr/AR5_SYR_FINAL_SPM.pdf.
  • https://www.academia.edu/15717140/Future_Petroleum_Geopolitics_Consequences_of_Cli mate_Policy_and_Unconventional_Oil_and_Gas.
  • https://www.google.co.in/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&ved=0ahUKEwj7 lMXdq73VAhXLqI8KHU84ASsQjxwIAw&url=https%3A%2F%2Fwww.slideshare.net%2FViralNe twork%2Ftnrree&psig=AFQjCNF2gJHIzTlRC-5KgqG2mde18eOLwg&ust=1501927935245182.
  • https://www.zerowasteeurope.eu/category/waste/weee/.
  • Jaakko Kooroshy, Rem Korteweg & Marjolein de Ridder. 2010. RARE EARTH ELEMENTS AND STRATEGIC MINERAL POLICY. THE HAGUE.
  • Paltsev, Sergey. 2016. “The complicated geopolitics of renewable energy.” Bulletin of the Atomic Scientists.
  • UN 2015. “United Nations. 2015. “Adoption of the Paris Agreement.”.”