A New World The Geopolitics of the Energy TransationThe contents of this publication are the sole responsibility of the Global Commission on the Geopolitics of Energy Transation and do not necessarily represent the views of IRENA or its Members. www.geopoliticsofrenewables.org This Report may be freely reproduced, in whole or in part, provided the original source is acknowledged. With the support of IRENA 2019 ISBN 978-92-9260-097-6Contents The Commission .2 Foreword by Adnan Z. Amin, Director-General of IRENA .6 Foreword by lafur Ragnar Grimsson, Chair of the Commission 8 Introduction 12 The global energy transation .14 Energy transation 15 The forces of change 18 Why renewables will trans geopolitics . 23 Redrawing the geopolitical map .26 Power shifts 26 New relations between states . 45 Energy and conflict 55 Addressing root causes of geopolitical instability .62 Economic and social tensions . 63 Climate, water and food security 65 A new development path . 67 Conclusion .72 Endnotes . 76 Abbreviations 84 Acknowledgements 86 Photographic credits . 88A New World 2 The Commission Aware that the growing deployment of renewables has set in motion a global energy transation with significant implications for geopolitics, Adnan Z. Amin, the Director-General of the International Renewable Energy Agency IRENA, with the support of the Governments of Germany, Norway and the United Arab Emirates, convened the Global Commission in January 2018. Chaired by er President lafur Ragnar Grmsson of Iceland, the Commission comprises a diverse group of distinguished leaders from the worlds of politics, energy, economics, trade, environment and development. The Commission is an independent body with members serving in their individual capacity. This Report analyzes the geopolitical implications of the global energy transation driven by renewables. It is the culmination of ten months’ deliberations by the Commission, involving four meetings held in Berlin, Oslo, Reykjavik and Abu Dhabi respectively, as well as consultations with business leaders, academics and policy thinkers. It is ined by a number of background papers drafted by experts in the fields of energy, security and geopolitics. The Commission takes full and independent responsibility for this Report, which reflects the consensus of its members.3 A New World Members of the Commission Fu Chengyu Chair of United Nations Global Compact Network China; er Chairman for China Petroleum er Director-General of the World Trade Organization France Joschka Fischer er Minister of Foreign Affairs of Germany Mari Pangestu er Minister of Trade; er Minister of Tourism and Creative Economy Indonesia Murray McCully er Minister of Foreign Affairs of New Zealand Lapo Pistelli cutive Vice President, International Affairs of ENI; er Vice Minister of Foreign Affairs of Italy Andris Piebalgs Senior Fellow of the Florence School of Regulation; er EU Commissioner for Energy and for Development Latvia lafur Ragnar Grmsson Chair, er President of Iceland Anatoly Chubais Chairman of the cutive Board of RUSNANO Russia Adnan Z. Amin Director-General of IRENA Kenya Carlos Lopes Professor at the Graduate School of Development Policy and Practice, University of Cape Town; er cutive Secretary of the UN Economic Commission of Africa Guinea-BissauA New World 4 Representatives of supporting countries Maria Van Der Hoeven er cutive Director of the International Energy Agency The Netherlands Eirik Waerness Senior Vice President and Chief Economist, Equinor Norway Hans Olav Ibrekk Representative of the Government of Norway Peter Fischer Representative of the Government of Germany Fatima AlFoora AlShamsi Representative of the Government of the United Arab Emirates Masakazu T oyoda Chairman and CEO at the Institute of Energy Economics Japan Bill Richardson President of the Richardson Center for Global Engagement; er US Secretary of Energy and er Governor of New Mexico United States Izabella T eixeira er Minister of Environment of Brazil Khalid Bin Mohammad Al-Sulaiman er Vice President for Renewable Energy, King Abdullah City for Nuclear and Renewable Energy Saudi ArabiaA New World 6 Foreword by Adnan Z. Amin, Director-General of IRENA Energy is fundamental to our civilization and to the prosperity of nations. Its production, distribution and utilization are deeply embedded in the fabric of our economies and central to the relations between states. The energy sources powering our societies have been undergoing a period of rapid change. Renewables have emerged as a technologically feasible, economically attractive and sustainable choice that increasingly can meet the energy needs of many countries, corporations and citizens. As tackling climate change becomes more and more critical and renewables steadily increase their capacity to meet our energy needs, the global transition to sustainable sources of energy will continue to accelerate. Renewables enable countries to strengthen their energy security and achieve greater energy independence by harnessing the vast indigenous renewable energy sources that can be found across the planet. The rapid development of renewable technologies and their widespread deployment is certain to have significant long-term effects on geopolitical dynamics. While the estab- lishment of the International Renewable Energy Agency IRENA has created a central plat for international cooperation on renewables, to date no systematic efforts have been made to examine their geopolitical implications comprehensively. I therefore took the initiative to convene a Global Commission to address the geopolitics of energy transation. Composed of prominent leaders from different geographical and professional backgrounds in the fields of energy and international affairs, the Commission was launched at IRENA’s annual Assembly in January 2018 and deliberated over one year, drawing on the views of a broad range of public and private stakeholders and academics. I wish to express my heartfelt appreciation to all who contributed to this process. Germany, Norway and the United Arab Emirates provided generous support that made the work of the Commission possible. President Grimsson, as Chair, ably guided the Commission’s deliberations. 7 A New World Commission members made time to actively participate in the Commission’s discussions and provide compelling perspectives from their various areas of expertise. Last, but not least, the small but highly competent Secretariat facilitated, supported and synthesized the Commission’s reflections and research. The Report that has resulted is a vital first foray in this area that deepens our understanding of the wider geopolitical implications of the energy transfor- mation. It invites us to rethink energy statecraft as we have known it. It maps trends in the energy sector, and considers their possible impacts on power relations, trade, the root causes of geopolitical instability, and conflict. The report also acknowledges that, given the complex and dynamic nature of the transition, it is difficult to predict precisely how events will unfold. The Report highlights the vital need to prepare proactively for the new energy age and its geopolitical consequences. It also shows the crucial need to encourage innovation, align socio-economic structures and investment with the energy transition, strengthen international co-operation, and plan energy systems that are just and inclusive. Forward-looking choices that leaders in government and industry make today will create a more prosperous future that globally can promote sustainable economic growth, improve livelihoods, and foster social cohesion and stability. It is my hope that this Report will help decision makers in countries to anticipate and navigate the rapidly changing global energy landscape and manage the new geopolitical environment it will create. In doing so, this Report can enable them to mitigate the potential risks and benefit from the many opportunities that transation offers. A New World 8 Foreword by lafur Ragnar Grimsson, Chair of the Commission In recent years we have witnessed a transation of the global energy system that has helped to configure the geopolitical map of the world which has prevailed for decades. The shift from fossil fuels to renewables is driven by new technologies and falling costs, increasingly making renewables as competitive as conventional sources of energy. The energy transation is also driven by the policies and actions of governments, businesses, cities and civil society, as well as the world-wide movement to combat climate change and dangerous air pollution. This global energy transation is already becoming a major geopolitical force changing the power structures of regions and states, bringing the promise of energy independence to nations and communities, enhancing energy security and democratic empowerment. It was to understand and analyze this new, emerging geopolitical reality that the visionary Director-General of IRENA, Adnan Z. Amin, proposed to the Assembly of more than 150 Member States, the creation of an independent Global Commission to deliver a Report on the geopolitical consequences of the global energy transation. It has been an honour and a privilege to serve as the Chair of the Commission and to conduct the ined dialogue of a group of distinguished and expe- rienced individuals who brought a wealth of insights and knowledge to our collective enterprise. This Report is the first attempt to describe the new geopolitical world that is emerging from the renewables revolution. It is therefore both historic and worthy of further debate and analysis.9 A New World It is our hope that the Report will help people in government and business, universities, think tanks, civil society organizations and the media, as well as citizens across the world, to understand better and adjust to the geopolitical changes now gathering pace. I wish to thank the Members of the Commission for their dedication and co-operation and the capable Secretariat, supported by IRENA, for its excellent work. We also benefited from various contributions by business leaders and experts who addressed the Commission. The support provided by the Governments of Germany, Norway and the United Arab Emirates was also critical to the success of our work. In this endeavour, I have been guided by the experience of my own country which, during my lifetime, has moved from primary dependence on fossil fuels to become one of the most successful renewable energy countries in the world - bringing prosperity to the people and serving as a foundation for constructive political relationships with countries in Asia, Africa, Europe and the Americas. Through my service as President of Iceland, I was able to witness first hand how success in renewables can lead to new and dynamic partnerships between countries, thereby creating lasting alliances and fresh opportunities between nations that were once far apart. My responsibility as the Chair of the Global Commission thus allowed me to see in the history of my own country a prelude to a New World. Introduction Fundamental changes are taking place in the global energy system which will affect almost all countries and will have wide-ranging geopolitical conse- quences. Renewables have moved to the centre of the global energy landscape. T echnological advances and falling costs have made renewables grow faster than any other energy source. Many renewable technologies are now cost- competitive with fossil fuels in the power sector, even before taking into account their contributions to the battles against air pollution and climate change. These trends are creating an irreversible momentum for a global energy transation. While the surge in wind, solar and other renewables has taken place mostly in the electricity sector, new technologies are enabling this transation in other sectors. Electric vehicles and heat pumps are extending the deployment of renewables in transport, industry and buildings. Innovations in digitalization and energy storage are expanding the potential for renewables to flourish in ways that were unimaginable just a decade ago. The accelerating deployment of renewables has set in motion a global energy transation that will have profound geopolitical consequences. Just as fossil fuels have shaped the geopolitical map over the last two centuries, the energy transation will alter the global distribution of power, relations between states, the risk of conflict, and the social, economic and environmental drivers of geopolitical instability. These far-reaching effects have not previously been considered in a compre- hensive manner in any international forum or setting. T o raise awareness and deepen understanding of them, IRENA established the Global Commission on the Geopolitics of the Energy Transation, with the support of the Governments of Germany, Norway and the United Arab Emirates.PART 1. The global energy transation Renewable sources of energyparticularly wind and solarhave grown at an unprecedented rate in the last decade and have consistently surpassed expectations. The growth of their deployment in the power sector has already outpaced that of any other energy source, including fossil fuels, which include oil, coal and natural gas. Renewables, in combination with energy efficiency, now the leading edge of a far-reaching global energy transition. 1 This ongoing transition to renewables is not just a shift from one set of fuels to another. It involves a much deeper transation of the world’s energy systems that will have major social, economic and political implications which go well beyond the energy sector. The term ‘energy transation’ captures these broader implications. 2 The global energy transation will have a particularly pronounced impact on geopolitics. It is one of the undercurrents of change that will help to redraw the geopolitical map of the 21 stcentury. The new geopolitical reality that is taking shape will be fundamentally different from the conventional map of energy geopolitics that has been dominant for more than one hundred years. Fossil fuels have been the foundation of the global energy system, economic growth and modern lifestyles. The exploitation of fossil fuels lifted global energy use fifty-fold in the last two centuries, shaping the geopolitical envi- ronment of the modern world. The geographic concentration of fossil fuels 15 A New World has had a significant impact on the wealth and security of nations. An energy transation driven by renewables could bring changes just as radical in their scope and impact. The majority of countries can hope to increase their energy independence significantly, and fewer economies will be at r