Will Renewable Energy Transform Global Geopolitics?

Energy experts debate how renewable energy can dramatically impact a country’s independence from foreign influence, and shift the global balance of power.

Featured Experts from the Natixis Investment Managers Summit:

  • Arunabha Ghosh, Chief Executive Officer, Council on Energy, Environment and Water
  • Meghan O'Sullivan, Former US Deputy National Security Advisor; Professor, Harvard University Belfer Center
  • Jean-Pierre Sbraire, Deputy Chief Financial Officer, Total
  • Moderator: David Keohane, Financial Times Paris Correspondent on Finance, Energy and Industry
"Electricity is the energy of the 21st century," said Jean-Pierre Sbraire, Deputy Chief Financial Officer at Total. As renewable energy sources make increasing inroads into the global energy mix, the omnipresence of electricity is fueling geopolitical change. Generated by wind farms or solar panels and stored in next-generation batteries, tomorrow's clean energy offers a distributed model that challenges the role of nation states. At the same time, the raw materials required by these new technologies are triggering new competition for strategic resources. Yet amid these upheavals, it would be a mistake to neglect the traditional role the Middle East has played and recognize that it matters as much today as it ever did.

The geopolitics of electricity
Electricity's new dominance will transform the international landscape, with geopolitical implications that range from the cybersecurity of connected energy to the role of the state. Mini-grids may loosen the bonds between local regions and central governments, while super-grids could drive increased international cooperation. "The geography of politics changes with the massive electrification of energy use," explained Meghan O'Sullivan, a former US Deputy National Security Advisor.

Competition for resources
The clean energy race is also sparking fierce competition for resources. Current plans for electric vehicles call for 40,000 tons of lithium in India alone, while global production totaled just 32,000 tons in 2016.1 The result is what Arunabha Ghosh, Chief Executive Officer for the Council on Energy, Environment and Water, calls a "Wild West" for critical minerals. "Companies think they're safe by buying a mine in Chile or the Democratic Republic of Congo, but that didn't work out very well with oil wells," noted Ghosh. A new governance and security architecture for these minerals is required but has yet to be invented.

America's role on the global stage
Despite this shifting context, some things remain unchanged. O'Sullivan was keen to refute the idea that fracking and a reduced dependency on Saudi Arabian oil mean the United States no longer has to care about Middle Eastern stability. As long as the country is a big oil consumer tied to global markets, production shocks will continue to impact American motorists at the pump.

At the same time, China's dominant role in the renewable sector is supplying the US with soft power that challenges America's global influence. "China is positioning itself to reap the geopolitical and strategic benefits of this new technology in ways that the US hasn't fully anticipated," said O'Sullivan.

Traditional players, new strategies
So what does this brave new world mean for traditional industry players? Sbraire explained how Total has drawn three strategic conclusions. When it comes to oil, the group is reacting to flat demand by positioning itself on low break-even assets. Gas, where demand is increasing, is being developed. And electricity – whose share of the global energy mix Sbraire forecasts to rise from 45% to up to 75% – is being pursued via a dedicated low-carbon renewable strategy. When even the oil companies are getting into electricity, you know it's here to stay.

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1 "Report on Raw Materials for Battery Applications." European Commission Staff Working Document, November 22, 2018. Accessed January 4, 2019.

Fracking is a proven drilling technology used for extracting oil, natural gas, geothermal energy, or water from deep underground.

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The Natixis Investment Managers Summit was hosted by Natixis Investment Managers. Natixis Investment Managers includes all of the investment management and distribution entities affiliated with Natixis Distribution, L.P. and Natixis Investment Managers S.A.