The Sun and the Winds: geopolitical change in the energy mix of the future

It is often said that one of the biggest hurdles to a swift global sustainability transition is money. Surely, it is. To avoid an increase in average temperatures above 2°C (vs pre-Industrial age), we will need to invest more than 3.5 trillion USD every year until 2035: from renewables to electrification, from new building materials to green logistics solutions.

Yet, we often neglect one equally crucial factor: geopolitics. In this article, I argue that as the world succeeds in taming climate change, the West seriously risks losing the global hegemonic economic and political position that it has maintained for almost 1,500 years. Money is the easy part.

The major factor in this change is energy, more precisely, the energy transition needed to keep atmospheric conditions deteriorating to the point of no return.

As dominant as coal has been during the first industrial revolution, the explosion of the private car industry at the turn of the twentieth century propelled the use of oil as a primary energy source. Together, petroleum and coal (and gas) — or fossil fuels — have dominated ever since. They account for 63.3% of total electricity production and 84.3% of general energy use.

Given its importance in the global economy, energy is a major factor in geopolitical balances. The US is a major oil producer and has organised its foreign policy — especially in the Middle East — to influence the global petroleum supply greatly. It is also the third-largest coal producer. This dominating position allowed the United States to maintain its economic and political global hegemony.

The only possible challenger, China, has a much weaker position in an energy market dominated by fossil sources. Yes, it is the world largest coal producer (almost five times the US’ output), but it has a much weaker oil balance: it imports almost 60% of its oil consumption vs 35% for the US. Moreover, through foreign policy links, the US controls better its energy balance than China. This gap is a formidable obstacle for China to challenge the US economic hegemony.

What will happen with the energy transition, then?

Our energy mix will need to change dramatically to keep temperatures from rising unsustainably. 70% of electricity will have to be produced from wind and solar sources by 2050. The share of fossil fuels will plunge from 63% to less than 2%. What are the geopolitical consequences of this momentous change?

A typical crystalline silicon (c-Si) PV panel — currently the dominant solar technology with over 95% of the global market — contains about 76% glass (panel surface), 10% polymer (encapsulant and back-sheet foil), 8% aluminium (frame), 5% silicon (solar cells), 1% copper (interconnectors), and less than 0.1% silver (contact lines) and other metals (e.g., tellurium, tin, and lead). Although crystalline silicon still provides the greatest number of systems, many believe that a new standard — thin-film copper-indium-gallium-selenium — is the future. It features flexible substrates and potentially lighter weight and lower cost-per-watt.

The major raw materials required to manufacture wind turbine components are bulk commodities: iron ore, copper, aluminium, limestone, and carbon. Wind turbines use steel for the towers, nacelle structural components, and the drivetrain, accounting for about 80% of the total weight. Some innovative turbine generator designs use direct-drive magnetics, containing the rare earth metals neodymium and dysprosium.

China is the largest exporter of six of the commodities listed above: dysprosium (98.7% of total global exports come from China), gallium (95%), neodymium (82%), indium (56.2%), tellurium (61.2%), and selenium (20.5%). The US only appears among the top-three producers of neodymium (3%).

In terms of finished products, the global photovoltaic export market is dominated by Asia (88%). China’s share is 47%, which means that almost half of globally installed solar systems are produced by a Chinese company. The European and North American market shares are 9% and 4%, respectively. China is also the largest global producer of wind turbines with more than 35% market share (US:15%).

As its control of fossil fuels has been a distinctive feature of the US’ hegemony, the energy transition would create a clear opportunity for China. Surely, the West can increase its market share in the wind and solar technologies and currently low recyclability rates for crucial metals can improve to lessen dependency from China. But the marginal progress that these moves would generate dwarfs the potential gain in political and economic dominance that the energy transition creates for China. Even more so that China will be allowed to phase out coal — the energy source it is the best endowed — more slowly than others.

I believe that the geopolitical consequences of the energy transition are contributing to poor political action on climate change. As it stands, the control over renewable energy sources is too penalising for the current hegemonic powers and too favourable for an increasingly assertive Middle Kingdom.



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Luca Silipo

Luca Silipo

I am an economist and author dedicated to finding applicable solutions to achieve social sustainability while preserving economic growth.