IRENA: Energy transition will see geopolitical “winners and losers”

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At the start of its ninth annual general assembly in Abu Dhabi today, the International Renewable Energy Agency (IRENA) released a report on the geopolitical impacts of the global expansion of renewable energy. As a result of the declining importance of coal, oil and gas, IRENA has forecast major shifts in geopolitical power structures – the precise nature of which remains largely unknown.

Outgoing IRENA director-general Adnan Z Amin spelt out the danger to the international community if the transition is not well managed, and what is at stake for nations and industries that fail to adapt.

“Unless you have a response strategy to the changes you see around you, you are going to be in trouble,” said Amin, describing the shift as representing a major disruption to international economic and political structures. “Those countries that will be unable to do this, those industries that are not able to respond to the disruption we see coming, will end up with major problems.”

The report, A New World: The Geopolitics of the Energy Transformation, was compiled by an international panel of energy industry figures from governments, international organisations and industry. Contributions were made by a 12-person panel of commissioners, led by former Iceland president Olafur Ragnar Grimsson.

China will offer global leadership

Energy giants including Statnett, Engie, Enel and Total contributed, along with standards and research institutes DNV GL and the Rocky Mountain Institute. The work was funded by the governments of Norway, Germany and the United Arab Emirates.

Lead commissioner Grimsson described the project as a first of its kind, noting that in its early stages he was struck by the lack of work in the field that had been conducted by academia and industry. “This is the first report ever presented about the new geopolitical map that is emerging fast all around the world,” said Grimsson. “It has to become a guideline … and a tool.”

The former head of state set out four key findings of the report: that high penetration of renewables will result in a new geopolitical map, marking a departure from a century dominated by fossil fuels; that the new order will feature “enhanced leadership” from China; that it will offer many nations increased energy independence; and that a democratization of energy supply is under way.

“When put together, a fascinating new geopolitical reality … is emerging in front of us,” said Grimsson.

An emerging paradox

While the report finds overall positive effects from the new geopolitical reality, there is a dark side to the changes, and an emerging paradox relating to the strategic minerals required for battery storage.

Report commissioner Carlos Lopes, from the University of Cape Town, noted that while the transition will result in increased energy independence in some parts of the world, the high concentration of minerals such as cobalt in a small number of African countries will result in them becoming “of great geostrategic importance”.

“It is not just about producing energy, but what you do with it,” said Lopes. “We will still have dependence on certain minerals that will be highly concentrated.” The result: “An opportunity for Africa to increase its assertiveness, provided the right governance is in place.”

Power-to-gas was singled out as a technology that will play a role in the new energy geopolitics, according to Andris Piebalgs from the Florence School of Regulation – a former EU commissioner for energy and for development. He described the importance of renewable energy exports, whether through international interconnection or green hydrogen or synthetic natural gas exports.

“There are completely different physics … electricity has different quality,” said Piebalgs. “So, we need to think from a different perspective. Grids will become, by far, more important. I personally very much believe in power-to-gas as easily scalable.”

Change is under way

Although there was disagreement between the report’s authors over the pace at which the transition will take place and the impacts it will have, there was unanimous recognition change is under way, and that there is a greater need for increased dialogue about its impacts.

“The report will convince all of you the emergence of this new world… that is a new reality and occurring faster than any of us could have predicted five or ten years ago,” said IRENA’s Amin. “We believe that this discussion is going to change fundamentally, and energy [will evolve] dramatically towards energy being driven by technology, and not by resources.”

The first day of the IRENA assembly ended with Amin praised for his eight years at the helm of the international renewables body. Delegates from host emirate Abu Dhabi, where IRENA has its headquarters, proposed making Amin emeritus director-general of the organization. Amin was the first permanent DG of IRENA and has not indicated the nature of his next appointment.