Powerful nations have since the last century used oil as a potent instrument of foreign policy, given its wide application in the modern economy. From generating electricity, fuelling automobiles, aircraft and ships to petrochemical products like plastics, oil fingerprints can practically be found all over the global economy. Petroleum has invariably fuelled the modern-day global economy and lifestyles since last century.
Control over the oil flow, therefore, naturally became a tool to advance foreign policy and national interests among top producing countries and those with capital and military might. This practice, known as energy statecraft, has endured for generations, but the wheels could slowly be coming off.
The strong emergence of green energy alternatives, including solar-charged electric vehicles and renewable fuels will definitely weaken the role of oil in international politics in the foreseeable future.
While the surge in wind, solar and other renewables has taken place mostly in the electricity sector, new technologies are enabling this transformation in other sectors too. Electric vehicles and heat pumps are, for instance, extending the deployment of renewables in transport, industry and buildings.
For starters, this green energy transition is seen to have the potential to level the ground between traditional energy exporters and importers. For long, the uneven geographic concentration of fossil fuels has favoured only a few countries with reserves through exports.
But with renewables, countries with no fossil fuel reserves could still meet their domestic energy needs through free sunlight and wind, backed up by storage batteries, alongside hydropower and geothermal.
Besides providing energy independence and energy security, renewables will go a long way in helping nations save on hard currency reserves which could have otherwise been used to import fossil fuels. This will help cushion the economies from global fuel price volatility as well as from imported inflation.
Free from the stranglehold of oil suppliers, the newfound energy independence among importing countries would enable them to pursue their strategic and foreign policy goals more independently.
On the other hand, the expected future loss of revenues from oil rents among oil producing economies should trigger them to initiate diversification strategies early enough. And those that are in early stages of developing their oilfields and coalfields, including Kenya, are advised not to put oversized expectations on their newfound mineral wealth in light of the global shift to green energy.
Achieving electricity supply that is 100 percent renewable is technically feasible for world economies. Brazil, Costa Rica, New Zealand and Kenya are examples of countries that are generating more than 80 percent of their electricity from renewables.
Now, the impact of the green energy shift is expected to go beyond producing and importing countries. Global alliances formed on the basis of oil are set to be shaken too.
If global demand for fossil fuels declines due to uptake of renewables, alliances built on fossil fuels are likely to weaken. Alliances may be maintained for various other reasons, but the energy pillar will become relatively less important.
For instance, the Organisation of the Petroleum Exporting Countries (Opec) is an example of a fossil fuel-based grouping. But in a world with a growing range of energy alternatives, the Opec enclave is likely to decline in importance. Instead, new alliances grounded on renewables are emerging, effectively reshaping future geopolitical relations.
They include the Global Geothermal Alliance, along with IRENA, a network of 160 countries headquartered in the United Arab Emirates (UAE) and spearheaded by Germany. Aside from hosting IRENA, the UAE, a major oil-exporting country, has also taken the lead in renewable energy by funding green energy projects in developing countries through the Abu Dhabi Fund for Development.
Equally, the Paris 2015 climate conference gave birth to the International Solar Alliance (ISA), which is billed to play an equivalent role of Opec in future.
Aside from alliances, bilateral relations between influential countries will also undergo changes as a result of the green energy transition.
Besides countries, the corporate scene and multilateral development lenders are also titling towards renewables, with dozens of companies making commitments to source and consume only green energy.
The Norwegian sovereign wealth fund, for instance, is taking steps to divest from coal, as are some private banks, including HSBC. Several multilateral development banks, including the World Bank and French Development Agency (AFD), have pulled the plug on coal investment financing. Global insurance companies such as Allianz and AXA have equally announced that they will phase out insurance coverage for particular coal projects.
Most recently, American giants Apple and Microsoft announced that their facilities are completely powered by renewable energy.
Major companies, including fossil fuel companies, now recognise the carbon risk to their operations. The energy transformation will ultimately move the world in the right direction by addressing climate change, combating pollution, and promoting prosperity and sustainable development.
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