KYLE HIEBERT: The green energy transition won’t be peaceful

Activists may lament how the mixed results of the recent COP27 climate summit dashed all remaining hope for holding global warming to 1.5°C above pre-industrial levels. However, more crucial for avoiding climate catastrophe is that the green energy transition is finally under way. Yet its acceleration will bring significant upheaval to markets and geopolitics, layering in new risks just as climate change intensifies.

In most of the world installing renewables has become cheaper than burning fossil fuels. Meanwhile electric vehicle production costs are on pace for parity with gas and diesel-powered vehicles by 2027, and multiple jurisdictions, including the EU, have decided to ban internal combustion vehicles by the mid-2030s.

Governments and private sector firms are also prioritising the energy security provided by renewables given the fallout from Russia’s invasion of Ukraine. The International Energy Agency expects that investment in green energy will surpass $1.4-trillion for 2022, accounting for three-quarters of growth in overall energy investment. More green power capacity is due to come online in the next five years than the previous two decades. The agency predicts that investment in renewables could reach $2-trillion a year by 2030.

These are encouraging signs. And yet fossil fuels will remain a pillar of the global energy mix for decades to come. As the number of producers dwindles, especially among rich democracies, whose citizens support aggressive climate action yet are voracious consumers of oil, large authoritarian state producers will gain new clout.

Evidence of this can be seen in the tepid Western price cap on seaborne Russian oil sales implemented on December 5. Set at $60 a barrel, the limit essentially equals the discounted cost Russian oil is already fetching on the open market. At its current level the new cap won’t truly inhibit the revenue stream underpinning the Kremlin’s war machine, as doing so would tempt Russia to restrict supply and trigger renewed global energy price chaos.

After US President Joe Biden failed in July to persuade Saudi Crown Prince Mohammad bin Salman to get Opec+ to suspend planned cuts to its production quota that took hold in early October, the US is also seeking a rapprochement with Venezuela. This despite a UN report in September alleging the regime of President Nicolás Maduro has committed crimes against humanity in its crushing of dissent. The Biden administration is now offering to rehabilitate Venezuela’s oil industry in exchange for humanitarian aid access and the promise of credible elections being held in 2024.

Elsewhere, China’s dominance of supply chains for rare earth mineral processing, solar panels and lithium-ion batteries could render it the world’s pre-eminent “electrostate”. China has long been seen wielding its foreign investment, state-owned enterprises and infrastructure projects to cultivate ties with nations across the Global South. Chinese expertise and production capacity for green technology will therefore bolster Beijing’s coffers while giving it another political lever to reshape the global order in favour of authoritarianism.

The gradual, yet significant shift away from fossil fuels will provoke political instability in smaller, less-competitive producers as well. This category includes many African petrostates, where a drop in government revenue will invite more intense fights over control of national income by political and military elites. Public subsidies for fuel and food staples may be abandoned, development initiatives could stall and deep inequities will go unaddressed — a combination that could end up stoking insurgencies. Autocrats will also have difficulty maintaining patronage networks, increasing the probability of future power grabs via military force.

With upwards of $173-trillion in green energy supply and infrastructure investment required to meet global climate targets, mineral-rich but institutionally weak nations will also face serious governance challenges amid the tension and possible violence that will come from the tidal wave of demand for their resources.

The eastern Democratic Republic of the Congo (DRC) provides the most extreme example of the dangers of this 21st century clean energy gold rush. For years the biodiverse region has been a chaotic battleground between government forces and the 120-plus different militant groups residing there. Criminal enterprises, corrupt local officials, erstwhile revolutionaries, ethnic militias and jihadist affiliates of the Islamic State are each vying for a greater share of a booming illicit trade in gold, diamonds and critical minerals used in high-end electronics, including green technology. The consequences for local populations have been devastating.

Burundi, Rwanda and Uganda have also been accused of profiting off the insecurity of their neighbour by offering weapons, money, training, intelligence and logistical support to rebel groups in the DRC in exchange for natural resources being smuggled across their borders and laundered into global supply chains.

Future hotspots may include the largely lawless Sahel with its enormous uranium deposits, now that there is renewed interest in carbon-free nuclear power. In Latin America, friction is already being felt between local communities and foreign companies in remote and ecologically fragile areas throughout the so-called lithium-triangle that spans the shared border region between Chile, Bolivia and Argentina.

Meanwhile the “just transition” promised to fossil fuel workers in the Global North has yet to materialise in even the most basic form. Should this trend continue, hyper-polarised electorates will become further divided by the economic inequities of decarbonisation that lie ahead. The outcome could be more volatile populist movements like the so-called “freedom convoy” of lorry drivers that occupied and paralysed the Canadian capital of Ottawa for weeks in early 2022, the farmer protests in the Netherlands in August, or even amateurish antigovernment insurrections like the January 6 2021 Capitol riots in the US.   

Stranded fossil fuel assets also present a major risk for investors. A recent study in the journal Nature showed that even with the relatively conservative climate policies announced to date, roughly $1-trillion in investment, mostly held by pension funds and financial markets in OECD countries, could become worthless.

At the same time, the green transition will be playing out amid the backdrop of worsening climate breakdown. More destructive storms, heatwaves, floods and droughts will render many areas around the world unfit for farming, tourism and commercial development. Without greater adaptation measures, joblessness will skyrocket. Unemployed and disillusioned youth unable to provide for themselves or their families through subsistence farming or finding opportunity in crumbling labour markets will become vulnerable to radicalisation and recruitment by malicious actors — be it rebel militias, ideologically motivated extremists or terror groups.

Outcomes of climate change such as increased water stress, mass internal displacement and greater food insecurity will also place far more pressure on state institutions, inviting heavy-handed responses from governments that cannot cope with a surge in civil unrest.

Ensuring the green transition delivers more equitable economic growth will be key to diffusing some of these tensions. This includes reorienting the mandates of multilateral institutions like the World Bank and IMF to enable developing countries that have historically contributed next to nothing to the climate crisis to efficiently harness their fossil fuel resources for poverty alleviation where renewable options are not yet feasible. Industrialised countries must also enact steeper emissions cuts in the short term, and invest heavily in research & development of new, better green energy technologies that can speed their adoption.

Governments in mineral-rich nations must also focus on enforcing policies and regulatory frameworks that ensure the benefits of resource extraction are reinvested in local communities, rather than simply spirited away to the benefit of foreign companies and shareholders.

The coming green transition may therefore not deliver the utopia many hope it will. But the absence of its rollout would be infinitely worse.

• Hiebert, formerly based in Cape Town and Johannesburg as deputy editor of Africa Conflict Monitor, is a researcher and analyst and contributing writer to the Centre for International Governance Innovation, based in Canada.