Dec 6, 2021 - Energy & Environment

A fraught and rocky energy transition pathway

Illustration of puzzle pieces with different forms of fossil fuels.

Illustration: Rebecca Zisser/Axios

Two wide-angle new essays explore how the global movement away from fossil fuels could be wrenching and geopolitically messy.

Driving the news: Adam Tooze's piece in Foreign Policy covers a lot of ground. One key takeaway: He warns that it's not clear if the red-blue U.S. political and policy divide will ever be successfully bridged, despite clean energy's growth in conservative states, its growing economic importance and Wall Street's increasing buy-in.

  • "To imagine that economics leads to political de-escalation would be, to say the least, historically naive," the Columbia University historian writes.

Threat level: Tooze warns that one potential future is fossil fuel producing regions locked in a struggle with the left — one that leaves the U.S hobbled in the low-carbon economy and lacking a clear strategy.

  • "The possibility of a deepening sociopolitical divide around the climate issue and inconsistent and incoherent policy cannot be denied," Tooze writes.
  • "The most gothic visions see the United States plunged into something akin to a civil war between fossil fuels and anti-fossil fuel factions," he warns, adding that while this may be "fanciful," the U.S. record of navigating deep economic changes isn't great.

A separate piece in Foreign Affairs explores how the clean energy transition will "produce new forms of competition and confrontation long before a new, more copacetic geopolitics takes shape."

Some of the many takeaways:

  • Some petro-states "may enjoy feasts before they suffer famines," write Columbia's Jason Bordoff and Harvard's Meghan O'Sullivan, who both served in government before academia. "[D]ependence on the dominant suppliers of fossil fuels, such as Russia and Saudi Arabia, will most likely rise before it falls," they note.
  • Higher-cost oil producers will see a diminished market as demand falls. In addition, countries with more aggressive climate policies in Europe, as well as the U.S., may constrain their output.
  • Europe's dependence on Russian gas is set to increase, with Moscow gaining influence before it recedes. But as western consumers eventually curb fossil fuel use, "Russia will increasingly turn to the Chinese market to offload its supplies, fostering the geopolitical alignment of Moscow and Beijing."

But despite petro-states' persistent influence, the clean energy transition will also reorient geopolitical and economic influence (indeed they ultimately see Russia as among the likely losers).

  • One source of "dominance" will be control of supply chains for clean energy materials like cobalt, copper, lithium, nickel and rare earth minerals.
  • China is ready to flex its muscle here. They note its 2010 embargo of critical minerals to Japan amid tensions over the East China Sea "could be a sign of things to come."
  • One key stat: Critical minerals will represent half of all energy-related trade by 2050, up from 10% today.

The intrigue: This reorientation will also occur in less obvious ways. For instance, countries that help set equipment specs and norms of engagement on emerging fuels like hydrogen will benefit.

What's next: The piece offers ideas for cutting risks and smoothing the transition.

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