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Energy Transition Will Upend Geopolitics

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The rapid adoption of renewable energy will “redraw the geopolitical map of the 21st century,” according to a new report that surveys the geopolitical implications of the clean energy transition.

The rise of renewable energy can dramatically enhance the degree of energy independence, according to the Global Commission on the Geopolitics of Energy Transformation, which authored a report at the request of the International Renewable Energy Agency (IRENA).

Because energy can be generated by technologies, using the sun and wind, rather than concentrated natural resources in the form of oil and gas, which is not ubiquitous in geographic terms, many countries will be able to reduce their vulnerabilities to price spikes and outright supply disruptions by pivoting to renewable energy.  Moreover, the strategic importance of chokepoints – the Straits of Hormuz, or the Straits of Malacca for instance – will diminish as fossil fuels lose their grip on the global energy system.

Another important point is that renewable energy can be scaled up to almost any degree, and installations can also be decentralized.  The IRENA report argues that the decentralized nature of renewable energy will be a force for democratization.  “Renewables will also be a powerful vehicle of democratization because they make it possible to decentralize the energy supply, empowering citizens, local communities, and cities,” the IRENA report said.

A key difference between renewable energy and fossil fuels is one of cost.  As a technology, rather than a finite natural resource, costs decline the more clean technologies are manufacture and deployed.  “Renewable energy sources have nearly zero marginal costs, and some of them, like solar and wind, enjoy cost reductions of nearly 20% for every doubling of capacity,” the IRENA report argues.  That is radically different from natural resources, where higher demand drives up prices due to scarcity.

So, there is a lot to like about the coming energy transition.  Fewer chokepoints, less price volatility, reduced power concentrated in a relatively few places.

Read more at Energy Transition Will Upend Geopolitics