What are the current geopolitical issues and energy security advancements changing the tides in the coming year?
Energy security and its future are contingent upon the relationship between three factors — green transitions, geopolitics and energy.
Despite warfare and conflict, the world has uncovered new supplies of oil and liquefied natural gas. Reports suggest the demand for these fossil fuels — alongside coal — have yet to peak for the decade. An abundant amount of these fuels could help nations stabilize prices. While this extends the shelf life of fuels for public use, policymakers need it to allocate more time to pushing renewables instead of finding ways to use regulation to control volatile fossil fuel prices.
Just as solar panels and hydrogen electorlyzers are getting more powerful and competent, so too are power solutions and machinery for oil and gas drilling. There will be a need to supplement the end of fossil fuels with electrified offshore generators and simulation engines. They are vital for abiding by emissions expectations while increasing productivity to meet demand.
Artificial intelligence (AI) is one of the most interesting influences on the green transition. Tech companies around the world are investing in the technology, as it could lead the way for decarbonization through in-depth insights and suggestions for how to overcome energy concerns. Simultaneously, international competition and private interest could cloud judgments. The desire to have the best AI technology could capitalize energy assets in a harmful way, putting stress on existing systems and hindering environmental progress.
The green transition also strongly relies on nations sharing critical minerals among each other. Metals like copper, cobalt, lithium and nickel will be the most essential to create clean energy equipment, with use expected to have a 25% increase by 2050. However, most of these metals are extracted and processed by several key locations, including Indonesia, China, Australia and the Congo. These locations represent lynchpoints for many, preventing global energy goals from happening if nations have conflict with the world’s suppliers.
Geopolitical trends and events will impact green power expansion in the following ways:
National instability causes several issues throughout supply chains. Trade systems dismantle, components become scarce and products could be stuck in transit. Critical minerals that are essential for assembly become a hot commodity. If nations refuse to collaborate or global leaders create policies that punish international commerce, these supply chain issues could increase.
For example, many of the world’s solar technology and electric vehicle (EV) batteries are produced in China. Many countries struggle to acquire parts because of contentious trade agreements, higher costs or shipping delays. The situation is becoming more dire as a new ban threatens the industry. The ban halts the spread of EVs and storage systems because tariffs and other import costs make machinery harder to get.
Hackers are more frequently attacking critical infrastructure, including power systems. In 2023, there were around 13 attacks every second, indicating a 30% rise since 2022. These incidents can target everything from oil fields to smart grids.
As nations engage in cyber warfare, utilities and power supplies often have sensitive, valuable data to steal. Additionally, mass shutdowns of large-scale generators like wind farms will cause renewable energy’s reputation for dependability to falter.
These security risks are creating urgency to move away from centralized power systems. On a community level, residents are more encouraged to go off-grid. Pulling out of the main grid allows consumers to own their renewable power equipment and have agency over its exposure to potential cyberthreats.
Materials are in short supply, especially those essential to creating clean power equipment. Many nations are investing efforts into becoming green energy powerhouses and technological leaders. When compounded with geopolitics, such competitive goals may only slow down progress. A nation could restrict imports and raise prices to stay in the most favorable position.
This competition over the most advantageous spot can lead to a phenomenon called greenflation, which represents the increasing prices of the green transition despite historical reductions. Regulatory action should control price increases for the most prominent tech as countries continue to fight for market dominance.
Many of these dangers are inspiring households and organizations to become energy-independent. While cyberattacks are concerning, investors in renewable energy are also afraid of grid-scale power system failure because of natural disasters or economic unrest. If catastrophe strikes, households will still want to have electricity, heating and cooling, and businesses will need to keep operations alive.
The increased interest in decentralized renewable energy could motivate national efforts. Countries wanting domestic control over the grid would need to invest in options like wind, solar, hydropower, geothermal and energy storage. The promise of a diverse portfolio could convince properties to move back to the main grid, inspired by countries like Iceland which generates nearly 100% of power from renewables. Until then, the green transition will be motivated by the solution that provides the most energy security.
Geopolitical unrest and shifting political landscapes lead to confusion and delays in regulatory action. Combating ideals discourages people from committing to the renewable energy trend.
For example, if a political administration moves away from climate concerns, companies — even some in the clean power space — may soften how much they advertise their climate activism and products.
Companies do this because they fear losing subsidies or other funding. Energy projects could become less attractive as administrations influence where money goes. Investors may not want to put money into renewable energy if climate legislation is going to change spontaneously.
Humans must continue expanding renewable energy despite geopolitical tensions. These issues can distract from efforts to decarbonize the atmosphere and adopt electrification. Shifting focus toward peace-making efforts is the only way to encourage neighbors, corporations and governments to see how it will change the world for the better.
