International Resource Politics 101: Political Implications of Renewable Energies

Foreword

International Resource Politics is characterized by three terms: International Relations, Geopolitics, and Resources. It explains the influence of natural resources, particularly energy, on state behavior and international politics. Resources have a tremendous impact on the world stage as resource-rich states have power over obtaining, securing, and limiting access to their energy assets, hence shaping interstate relations. Taking into account the three terms formerly mentioned, this series of articles explains the geopolitical advantages and disadvantages provided, namely, by energy while focusing on the development of resources as economic engines and their role in various political events that occurred in the late 19th century up to present times.

The International Resource Politics 101 series is divided into six chapters:

1. International Resource Politics 101: Foundations of Resource Politics

2. International Resource Politics 101: Oil’s Emergence and Historical Implications

3. International Resource Politics 101: Economic Illnesses

4. International Resource Politics 101: Political Implications of Renewable Energies

5. International Resource Politics 101: Terrorism and Geopolitics

6. International Resource Politics 101: Blessing Or Curse?

International Resource Politics 101: Political Implications of Renewable Energies

In 2022, the National Oceanic and Atmospheric Administration announced that 2021 was the world’s sixth-hottest year on record. However, the global energy crisis, especially, in European Union (EU) amidst the war in Ukraine seems to be even hotter. The conflict between Ukraine and Russia escalated energy insecurity, raising petroleum prices to unheard-of rates in the EU (Jayanti, 2022). Before the war, the majority of European nations could usually rely on a consistent supply of Russian gas, which accounted for 40% of the EU's total imports in 2021. However, many EU members are now scurrying to find other petroleum supplies (Pandey, 2022) as the European Commission put on an obligation for states to fill their gas storage by at least 80% before the upcoming winter, and then to 90% for the years after (EC, 2022).

To address the impact of the abovementioned conflict, in May 2022, the European Commission (EC) adopted a REPowerEU plan to wean Europe off Russian fossil fuels long before 2030. The REPowerEU plan outlines the EU’s path to independence from Russian fossil fuels by 2027, comprising 40% of natural gas, 27% of oil, and 46% of coal. The strategy focuses on four key areas: investment and reform, energy supplier diversification, renewable energy transition acceleration, and energy efficiency and savings (Tagliapietra, 2022). Crucially, the long-term component of this strategy calls for bringing a large portion of energy production within the EU from renewable sources, with the newly adopted plan that interlinks energy security and global energy transition. From solar photovoltaic to wind, heat pumps to green hydrogen, REPowerEU emphasizes the acceleration of green technology and suggests raising the EU's overall 2030 target for renewables from 40% to 45% (Tagliapietra, 2022). Denmark and Norway have already planned for wind energy to supply electricity to themselves and the rest of Europe in response to the war in Ukraine (EcoPolitic, 2022).

Figure 1: €323 billion can be saved by doubling renewables by 2030 in the EU

The REPowerEU is not the first plan of the EU to prioritize the essential role of clean energy. The rolled-out European Green Deal (EGD) in 2019 targeted lofty goals pushing the EU to become a net-zero emitter of greenhouse gases by 2050 moving its economy toward a sustainable economic model (EC, 2019). It has been highlighted in the REPowerEU as a reference to provide alternatives to transform the energy system as the EU's commitment to climate action. However, the greater penetration of green energy sources into the economy goes beyond the climate context leading to geopolitical repercussions, some of which are likely to be detrimental to its fossil fuel exporter partners (Leonard, et al., 2021). It is especially pertinent to the relationship between the EU and Russia, where trading fossil fuels has long been a significant economic and strategic factor (Siddi, 2021). Hence, this article will explain how the EU’s shift towards renewable energy would have affected its relationship, particularly with Russia in the pre-war context concerning its fossil fuels, and what the possible risks associated with the green energy transition are.

According to the U.S Energy Information Agency, since 2020, Russia has been reducing its natural gas pipeline supplies to the EU and the UK, initially as a result of decreased demand in Europe due to responses to the COVID-19 pandemic, while in 2021, it still remained the largest natural gas exporter in Europe (Sönnichsen, 2022). Concerning the European Council on Foreign Relations (ECFR) (2021), changes to the European energy market and the European approach to energy security will mostly affect neighboring nations like Russia and Algeria, as the EU will substantially reduce its oil and gas imports after 2030 by EGD, even earlier in 2027 by the REPowerEU plan. According to the estimates of Makarov, Chen, and Paltsev (2020) in the study supported by the MIT Joint Program on the Science and Policy of Global Change, by 2030 Russian coal shipments to Europe will decline by 55% and Russian gas exports to Europe will decrease by 6% if the EU meets its nationally determined contribution. Correspondingly to EGD´s long-term 2050 strategy of becoming a net-zero emitter of greenhouse gases, the Russian exports of fossil fuels to the EU should be close to zero by 2050 (Makarov et al, 2020). While it implies the EU´s independence from Russian fossil fuel exports, for Russia, it means searching for new partners. Since the oil and gas profits have become a major source of income for Russia accounting for 45% of the federal budget in 2021, the EU´s EGD plan will definitely negatively affect Russia´s economic growth (Tabuchi, 2022).

Figure 2: Russia shut off the natural gas supplies to the EU on the 31st of October spurring the energy crisis

Roman Vakulchuk, Indra Overland, and Daniel Scholten (2020, p.5) systemically identified Russia as the most exposed to the EU energy transition, indicating that it could be challenging for Russia to find itself in an advantaged position. Along with the findings, they presented several risks associated with the greater use of renewables on a geopolitical scale for the EU. First, the pursuit of eradicating fossil-fuel reliance can result in the new rare earth materials dependence required for renewable energy technologies, causing another energy insecurity. The import of minerals and metals is required for the production of solar cells, wind turbines, lithium-ion batteries, fuel cells, and electric vehicles, and there are very few alternatives to substitute these minerals and metals (ECFR, 2021). According to O’Sullivan, Overland, and Sandalow (2017, p.11), 57% of the global reserves of rare earth elements are concentrated in China and Russia. The company registered on the Canadian Stock Exchange, Neo Performance Materials operates the Silmet rare earth separation facility near the seaside town of Sillmäe in Estonia (Hui, 2022); it derives its 70% of rare earth feedstock supplies from Russia. Along with it, the EU imports magnesium, borate, and niobium; 93% comes from China, 98% from Turkey, and 85% comes from Brazil (European Parliamentary Research Service (EPRS), 2022). For the EU, this could mean another over-reliance on the product imports that are economically vital to develop clean energy targets.

Second, renewable energy systems are widely cited as being challenged by the rising risk of cyber-attacks (Vakulchuk et al., 2020). According to the data released by Check Point (2022), the utility industry saw a 32 percent year-on-year increase in cyber-attacks in 2022, with an average of 1,103 attacks weekly. Since the start of the war in Ukraine, European wind-energy companies have sparked concern that hackers are attempting to wreak havoc in a sector that will profit from measures to reduce dependency on Russian oil and gas. They delivered that remote-control systems for about 2,000 wind turbines in Germany were down for a day after the attack amidst the war (Stupp, 2022). As the EU is trying to shift away from Russian fossil fuels to renewable energy sources, such hacking-related risks might have occurred due to political reasons.

Figure 3: In April, a cyberattack on Deutsche Windtechnik, a German wind energy business, forced it to temporarily disable the remote controls for nearly 2,000 wind turbines.

The European energy transition will have significant geopolitical effects, some of which are likely to be damaging to the partners of the European Union, in this case, Russia. The gradual shift away from Russian carbon commodities may create a decline in Russia´s economic growth and possibly other spillover effects. In the EU-Russia relationship pre-war context, it would mean a decrease in trade partnership. However, ECFR delivers that there is a great deal of room for cooperation between Europe and Russia in the areas of expanding the use of renewable energy sources, decreasing methane leakage, and improving energy efficiency. Although, amidst the war in Ukraine, the future relationship between these two regions is anyone's guess.

Crucially, the greater usage of renewable energy sources leads to other risks in the geopolitical landscape. As it has been mentioned earlier, dependence on the imports of rare earth materials from China and Russia which are crucial in proliferating the technologies needed for the development of renewable energy. Consequently, it brings up the next issue of cyberattacks on those green energy technologies. Definitely, the topic of energy seems to be the hottest discussion throughout Europe.

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