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Geopolitics of Renewables

Geopolitics of Renewables

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The optimism around the “renewables-for-peace” narrative has diminished.

Geopolitical assertions about the power of the renewables to usher in greater co-operation among countries are being falsified by recent developments. If anything, renewables have been pivotal in sparking what many refer to as the US-China trade war while several new players emerging as competitors in the sector may well lead to increased trade tension.

The potential role of conventional energy resources in sparking conflicts among countries has been proven, historically, over time. However, when renewables came to the fore in the global energy space, it was argued that conventional geopolitics around conventional energy resources might die its natural death as the control of resources – the primary cause of conflicts – was virtually absent in renewables. It was also hoped that the countries’ common end goal of combating climate change could propel greater co-operation in increasing the share of renewables in their energy mix. Renewables were also the easy answer to questions posed by the dilemma between economic growth and environmental costs.

The growing geopolitics over renewables, as witnessed over the past few years, has, however, increasingly diminished the optimism around the “renewables-for-peace” narrative. The US-China trade dispute may have its roots in the growing trade deficit between the two countries, but solar industries have borne the brunt of the blame. China’s growing expertise in manufacturing inexpensive solar panels and related components has made the domestic manufacturers suffer in many countries. The solar energy sectors of the US and the European Union have been at the receiving end of its subsidisation policies. Upcoming markets such as India have also suffered as cheaper Chinese panels are being dumped in those countries, rendering domestic manufacturing capacity practically obsolete. China dominates renewable manufacturing as the country is home to a significant amount of rare earth metals – tellurium, dysprosium and neodymium – which are critical to solar panel and storage battery manufacturing. The geopolitics around these minerals has created more friction between solar manufacturing majors than co-operation, with the recent imposition of tariffs by the US on solar component imports being a case in point.

The World Trade Organization (WTO) has already been witness to not less than three major trade conflicts surrounding the renewable energy industry. The conflicts are not only limited to great powers but are also involving other countries that have gained some expertise in the sector and are seeking to compete with established players. The US locking in anti-dumping duties on biodiesel imports from Argentina and Indonesia is another case in point.

As more countries develop expertise in renewables, their trade protectionism will spark a second round of geopolitical competition in the energy sector. It could sound the death knell for renewables that are still at a very nascent stage, having managed to barely reach some degree of cost parity with conventional fuels. While the globalisation of renewables could provide a common, collaborative platform for successful transition to clean energy, the commercialisation of renewables is the potential oxymoron that threatens to kill the very industry it seeks to promote. It is important to note that organisations such as the WTO have been dealing with newer forms of technologies and related issues with the same old combination of rules and regulations. Also, unlike the conventional fuels that are largely not covered by the WTO, trade in renewables is dealt by it without any specific exceptions or limitations. While countries may be prompted to view renewables through the same geopolitical lens as conventional fuels, the absence of specific institutions overlooking the dynamics of the global renewable energy market may see the sun set early on renewables.

The writer is a PhD Researcher in International Politics at Jawaharlal Nehru University, Delhi

Source: businesstoday.in

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Anand Gupta Editor - EQ Int'l Media Network

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