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The Winners and Losers of Energy Transition - The Green Line

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There is no greater challenge when it comes to climate change than that of the energy transition. For some countries, it will mean investing billions into the modernisation of their power grids, and for other countries, it will mean abandoning the source of revenue responsible for around 80 per cent of their national GDP.


The prominent question in front of these countries now though is will these countries begin preparing for the transition now, or will they be blindsided when the market does it for them?


This is Part Five of our special five-part series focusing on The Geopolitics of Climate Change.

 

Episode Overview:


Part 1: Cascading Chaos (5:30)

  • Lou Munden identifies the bifurcation coming between low cost, low emission and high cost, high emission producers of oil as the global demand begins to wane. The flow on effects on these states and their regions will have significant security effects, as soon as this decade.

  • These spill-over effects will be exacerbated by the collapse of the oil industry's effect on economies, including the significant amount of cash that flows from corruption in the oil industry.

  • Despite the potential devastation to their economy, Munden points out that it will be almost impossible for any country to avoid using the cheapest form of electricity available, including renewables.

Part 2: Develop or Demise (18:11)

  • Theresa Sabonis-Helf introduces us the problem about small-scale electricity distribution grids and the need to redevelop away from traditional large scale, long range electricity distribution.

  • We discuss the priority to supply places across the globe without stable electricity currently to develop sustainable, renewable powered electricity infrastructure.

  • We discuss the impact on energy transition of long term supply contracts with gas-producing nations such as Qatar or Russia, as seen in Europe.

  • Sabonis-Helf discusses why she labels the Ukraine-Russian conflict as the "first war of energy transition". At the end of conversation, she predicts where future energy transition conflicts may erupt from.

  • We unpack what peak demand for oil means for oil producing countries and what causes that shift, noting that oil remains the most important source of world energy but LNG is rapidly approaching the top of the pyramid.

Part 3: Endgame Economics (44:24)

  • Colby Connelly states that the world will still be using oil in 2030, with the biggest use in transport, logistics, and heavy industries, but the real question is how much, and how quickly will demand be falling?

  • We discuss the prospect of 'Plan B' for oil producing nations such as Saudi Arabia or Kuwait when demand drops and how COVID was an example of how quickly falling demand created painful economic and political conditions.

  • We debunk the idea that a like-for-like swap from oil to LNG is a feasible solution for the world, with the significant infrastructure and lead time to establish LNG production and the long-term supply deals that typically accompany those productions.

  • We conclude with a conversation about how oil-producing nations will approach transitioning from complete dependency on this industry

Part 4: The Peril for Petrostates (1:06:42)

  • John Calabrese tries to capture the multitude of factors affecting the decision to embrace energy transitions, including the complex impact of geopolitics and sudden shock events such as the COVID-19 pandemic on these nations.

  • We discuss the Saudi Arabian transition plan, including their ambition to raise foreign direct investment to 10 per cent by 2030 and their failure to make significant progress towards that goal. If Saudi Arabia's well funded strategy is failing to make inroads, what does that mean for less wealthy oil-dependant nations.

  • We discuss the difficulties of an easy-exit from Gulf oil, noting that Asian nations are now highly dependant on this oil in the face of a deteriorating US-China relationship.

  • On the other hand, the political unpalatability of raising taxes and deteriorating the social bargain between Gulf petrostates and their populaces, which were build on a foundation of oil dollars, creates a perilous choice for those states.

Part 5: A Terminal Twilight (1:22:22)

  • Henry Sanderson posits the winners of the energy transition will be nations in the battery supply chain, including China, DRC, and Chile.

  • At the same time, Sanderson notes that many of the countries in the supply chain are caught between the geopolitical power struggle between the US and China. We discuss the potential for embracing battery technology on a global scale and the threat of this conflict to derail the energy transition process.

  • Sanderson discusses what needs to happen to move towards electric vehicles, including charging stations and increasing capacity in suburban electricity grids.

 

Episode Guests:


Lou Munden

  • Co-founder of the Mission Climate Project

  • He is a sustainable development expert, and the inventor of TMP Climate’s data systems

  • He also hosts the ‘I’m Not a Scientist’ podcast

Theresa Sabonis-Helf

  • Inaugural Chair of the Science, Technology and International Affairs concentration in the Master’s Degree program at Georgetown University’s School of Foreign Service

  • Previously she served as Professor of National Security Strategy at the National War College in Washington DC

  • She publishes and lectures extensively on energy security, climate change policies, post-Soviet energy and environmental issues, regional water politics, regional trade and transit, and the politics of electricity

Colby Connelly

  • Energy Intelligence Research Analyst at Energy Intelligence.

  • His key focus areas include the energy transition, corporate strategy and competitor intelligence, oil and gas/LNG markets, and aboveground risk.

  • He previously worked as a Research Associate at the Arab Gulf States Institute in Washington, where he focused on the economies of the Gulf Cooperation Council region, with special attention to national oil companies and domestic energy markets

John Calabrese

  • Director, Middle East-Asia Project (MAP) at Middle East Institute

  • Teaches US foreign policy at American University in Washington DC

  • Book Review Editor of The Middle East Journal and previously served as General Series Editor of MEI Viewpoints

Henry Sanderson

  • Executive Editor for Benchmark Mineral Intelligence, a leading provider of data and analysis for the lithium ion battery supply chain.

  • Formerly he covered commodities and mining for the Financial Times in London

  • Author of Volt Rush and China's Super Bank

 

The Red Line's DRC and Cobalt Reading List:

We’ve compiled a list of further reading to better understand the geopolitics of DRC and essential minerals like cobalt.

Books:

Volt Rush

Harry Sanderson


Energy Transitions: Global and National Perspectives

Vaclav Smil

The Squeeze: Oil, Money and Greed in the Twenty First Centry

Tom Bower

 

For episode transcripts, monthly geopolitics Q&A’s, member-only videos and to support the show, check out our Patreon here: https://www.patreon.com/theredlinepodcast


This production was brought to you by The Red Line and Mission Climate Project.

 

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