Geopolitics and the Energy Transition
International relations during the shift to a net-zero economy
On January 25, Kirkpatrick professor of the practice of international affairs Meghan O’Sullivan, director of the Kennedy School’s Belfer Center for Science and International Affairs since last summer, spoke about the impact of the energy transition on geopolitics. The transition to carbon-free energy sources and a world economy powered by electricity is “the challenge of our time,” O’Sullivan began.
Given a long history of “entanglement” between energy and international affairs—past U.S. foreign policy has certainly been shaped in part by a desire to secure stable sources of fossil fuels—it should not be surprising, she said, that geopolitics will play a role in the global push to secure the natural resources required to rebuild energy systems in a manner that is carbon-free. “There’s also a flip side to this,” she added: because “there are many different pathways to net zero,” the path that is chosen will, in turn, affect geopolitics. “We’re talking about changing how we generate, store, transport, and use energy, remaking the backbone of the global energy system, which is the backbone of the global economy. How this is done is going to have a huge impact on global affairs.”
O’Sullivan began writing about this broad subject in Foreign Affairs in 2021 in an article co-authored with Jason Bordoff of Columbia University. Both have experience with these issues: Bordoff served as special assistant to the President in the Obama administration; O’Sullivan served as special assistant to the President and deputy national security adviser for Iraq and Afghanistan in the George W. Bush administration. Her remarks were part of a series, Harvard Speaks on Climate Change, featuring Harvard faculty members working on different dimensions of the climate challenge.
At the moment, O’Sullivan continued, “our pursuit of net zero is reinforcing some of the pernicious trends in our geopolitical landscape.” But she is hopeful that “if we think a little bit differently about the energy transition, we might have the opportunity to reverse this feedback loop. And to think about the pursuit of net zero, not just as an end”—“to get to a globally sustainable economy”—“but also as a means for addressing some of the most deleterious geopolitical trends of our time.”
These negative trends include:
- The return of great power rivalry, in which energy is being used as a weapon in foreign policy, the prime example being the war on Ukraine.
- The competitive relationship between the U.S. and China, which dominates clean energy supply chains and control of critical minerals, including those, for instance, used in producing batteries for electric cars. If that dominance is exploited, it could slow the energy transition, or make it more expensive.
- The rise of so-called “middle powers” including the OPEC countries, which have already had an impact on climate talks. These countries, pursuing independent foreign policies, could use arguments about equity of economic impact to slow the energy transition.
- A “growing rift” between the developed and developing world fed by anger over issues such as distribution of COVID vaccines, the impact of pandemic-induced world inflation on food price and availability, and “perceptions of hypocrisy that are rampant around the war in Ukraine, and now the war in Gaza.”
Furthermore, O’Sullivan added, developing countries have little responsibility for past emissions, but “88 percent of future emissions will come from outside the United States. If the billions of people in the developing world perceive the energy transition as a Western agenda, this could slow the energy transition.”
The “deteriorating global landscape” that O’Sullivan outlined “is frustrating our ability to make an energy transition as quickly and as cheaply as we would like,” she argued. “And the pursuit of the energy transition… is reinforcing some of those negative geopolitical trends.”
But she expressed the hope that it is possible to use the pursuit of net-zero energy systems to improve the geopolitical landscape. One example she provided is “the diminishing integration of the global economy.” Globalization has historically been “an important vehicle for poverty alleviation and growth around the world.” She asked, Could the energy transition be used to combat a global trend toward protectionism and advance an open trade agenda?
O’Sullivan pointed to “friend-shoring,” the practice of offshoring supply chains in friendly countries with shared values, as one positive way of encouraging investment in mining, production, and processing of minerals that will be necessary to bring about the energy transition. Another would be reducing tariffs for environmental good or “clean energy inputs.” And a third would be a spurring of development in the Global South: the “use of clean energy finance to help countries actually build new platforms, new areas of manufacturing so that they can become important nodes in the overall clean energy system, rather than just purchasers of technologies that are manufactured and developed elsewhere.”
O’Sullivan was less sanguine about the possibility that the energy transition will diminish great power rivalry, particularly between the U.S. and Russia. But common interests in combating climate change, she said, will “become important for the peaceful navigation of this relationship” between the U.S. and China.
During the question and answer period that followed her presentation, Burbank professor of political economy James Stock, vice provost for climate and sustainability and director of the Salata Institute for Climate and Sustainability, asked about the rumors that the Biden administration might pause the construction of new liquefied natural gas (LNG) export terminals, which have been an important backstop for Europe’s energy supply during the war in Ukraine. O’Sullivan admitted that she was initially surprised to hear about this proposal because of the “central role that American natural gas has played in the energy security”—and therefore the general security—of Europe during the last couple of years. Her “political estimation” is that the pause is highly likely to happen because of domestic political considerations: specifically, President Biden “wanting to ensure that some of his more progressive supporters are comfortable with his energy policies, and particularly after some earlier decisions”—which expanded U.S. capacity for extracting and exporting fossil fuels in the context of constrained global supply following Russia’s invasion of Ukraine.
But O’Sullivan questioned whether the pause would have a major impact on global LNG markets, because so many new projects are already in the pipeline and will be coming online in the next few years. Of greater import, she said, is whether the U.S. Congress will act on a “$61–billion request to provide military and economic support for Ukraine.” Putting the proposed LNG pause in that context, she said, the move is likely to be perceived as a threat to European economic security and send an “overall really negative message in an election year about American support for the war in Ukraine.”