Renewable Energy and International Regime Change

Renewable Energy and International Regime Change

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As emerging economies continue to grow, their energy needs are set to expand dramatically in the coming years. The International Energy Agency has even predicted that global need for energy will grow by 30 per cent over the next two and a half decades. The future of energy will without question be more dedicated to trying out alternative cleaner sources of energy. However, how far is that future going to be, has been subjected to much debate. Energy has been the basis of power politics in international relations. Securing energy for domestic purpose, fluctuation of energy prices in the international market, domestic economic policies relating to supply and demand of energy, geopolitical consideration relating to the availability of energy resources, have ever defined the global politics since the industrial revolution.


Energy politics today has come to be even more complex. It has contributed to regional and international conflicts. There are significant geopolitical considerations when it comes to energy security today. Access to energy is for sustaining rapid growth of developing economies like China and India, in order to employ the hundreds of millions keeping pace with the increasing populations. Failure to deliver on the hope of greater prosperity could unravel even authoritarian regimes. Two of the major global energy consumers, the United States and the European Union, have similar needs but different aims and ambitions on energy imports. The focus of the United States since its economy is overly dependent on oil has been securing Oil. It has thus traditionally paid consequent special attention to the Middle East. The EU, on the other hand is highly reliant on imported gas, which makes Russia an important supplier and an important factor in the EU’s energy policies. It has had contributed to raising tensions particularly between Germany and the central European states.

The limited capacity of oil producing states to expand short-term supply keeping in tandem with the rising demand for oil and gas imports have driven up prices, supplier wealth, and producer leverage, allowing producers such as Russia, Venezuela and Iran to play deciding roles in regional and international politics. Recent developments of the world like the above have reiterated the fact that ‘energy exploration and exploitation has been a story of permanent conflict including between consumers and producers: by the former to achieve favorable and (preferably unlimited) access to resources, and by the latter to control access to resources exclusively and completely’. The Russian-Ukrainian gas dispute can be subsequently viewed in the same light.


Lower oil prices, coupled with the current slowdown in global demand from at least the traditional demand centers like the Middle East in Europe and the United States, have shaken the economies and politics of producer states that have come to depend on large export revenues to maintain stability at home and support muscular foreign policies abroad. That can especially be felt even more in countries situated in the Arab world, which straddles between two continents and represent resource richness with respect to conventional sources of energy. Being resource-rich, the area was sizzling with economic growth and trade and investment in-and-out flows. With two-thirds of Arab countries producing oil, crude is undoubtedly the most important factor in the region’s economic development fueling economic growth and propelling social and political transformations in the Arab economies.


Also, Iran and Venezuela, which highly subsidize social programs and fuel at the expense of economic growth and diversification. International economic and political developments have contributed to massive price fluctuations of oil even when the underlying nature of the market remains unchanged. Political power has come to be coagulated in the hands of the energy exporters while the international importers have failed to arrive at a consensus on issues of great importance like whether to deploy peacekeeping forces to Darfur or not, or whether to impose sanctions on Iran keeping in tandem with its nuclear program or not, etc.


On the supply side, there is limited ability to expand production rapidly in the short term, and even long-term prospects are mixed. ‘In the past decade, Russia and Saudi Arabia have accounted for the largest increases in oil supply. Existing Russian fields are now producing at their peak, and Saudi Arabia has limited additional short-term capacity. Due to commercial disputes, local instability, or ideology, Russia, Venezuela, Iran, Nigeria, Mexico, and Iraq are not investing in new long-term production capacity’.


Given limited supply elasticity, political volatility gets magnified through fluctuating and unpredictable prices. Key sources of instability include conflict in the Middle East. There has been the risk of the Iraq war spilling into the Persian Gulf. This has also given risk over the possibility of U.S. and/or Israeli conflict with Iran over its nuclear program, etc. Political risk has been increased by the control of various choke points in transit routes like the Strait of Hormuz, the Strait of Malacca, Bab el-Mandeb, the narrow strait connecting the Red Sea and the Gulf of Aden. Oil transit, civilian nuclear energy use, and nuclear proliferation have been intertwined in a volatile mix of international energy security and conflict. There is also the difficulty of getting pirate attacks in these choke points which could have had disastrous impacts on energy prices.


The demand for Gas, on the other hand, has been increasing extraordinarily because natural gas is a comparatively clean source of energy, causing low greenhouse-gas emissions. However, gas infrastructure is very costly. With gas becoming a traded and widely available fuel, cross-border energy transport is becoming a major issue for consumer (and producer) security, as the Russian-Ukrainian gas dispute has revealed. Moreover, linking large reservoirs with markets has come up as a major challenge as well as it calls for major investments. Therefore, the international gas trade involves geopolitical and strategic approaches. The gas market to a large extent is structured regionally because gas either has to be transported through a pipeline infrastructure or transformed into liquefied natural gas which is cost-intensive and requires special infrastructure as well.


More recently, Changes to the earth’s climate, has contributed to the ongoing energy debate. Traditional geopolitical considerations have become even more complex with global climate change. The U.N. Intergovernmental Panel on Climate Change (IPCC) has declared that the use of fossil fuels is the primary cause of increase in greenhouse gases, which in turn are progressively increasing the temperature of the planet. A changing global climate is already resulting in significant loss of glaciers and shrinkage of polar icepacks. It will lead to severe flooding in some places and drought in others, which will have devastating effect on food security of many countries, spread diseases, and cause hundreds of thousands of deaths each year, particularly for those living in the developing world. According to climate scientists of the world, the concentration of carbon dioxide and other greenhouse gases in the atmosphere has reached 435 parts per million (ppm) of carbon dioxide equivalent. In most countries, it is predominantly fossil fuels that is gas, coal and oil that is used for transport, heat and power. In response to the threat of climate change, governments around the world are making commitments to reduce their reliance upon these sources of energy and to increase the use of low carbon energy sources, specifically nuclear and renewable energy. Also, there is the growing global concern regarding the depletion of non-renewable energy resources in the world. Thereby there is progressively the impetus to use ‘renewable energy’, an umbrella term describing a wide variety of energy sources that are non-depleting with use, including solar, wind, tidal, wave or bioenergy. There is no doubt that the demand for this form of energy is increasing, but how fast, can be subjected to inquiry.


The transition to low carbon energy systems has not proved straightforward. The growth in the use of renewable energy over the past 20 years has been extremely variable across different social, political and economic contexts. It has been as varied as rapid implementation in countries such as Germany and Denmark, to a more stagnant level of growth in the UK. Social movements have arisen to installation for harvesting renewable sources of energy. Proposals to develop increasing numbers of onshore wind farms in rural areas for example in the Country Guardian organization in the UK, have been challenged. There have been skeptical responses of local residents to proposals for renewable energy in their locality and concepts such as ‘NIMBYism’ (‘Not In My Back Yard’) have come up.


Developing countries like China, India and other are increasingly playing major roles in both the manufacture and installation of renewable energy. It has been viewed however, that switching to alternative fuels, requires long-term investments in technology and infrastructure. For example, in the United States, there was a temporary increase in demand for hybrid vehicles in the summer of 2008 which also run on renewable energy. However, this demand could not be sustained. The demand reduced to about 30 percent by January 2009. The auto industry, has found it harder for automakers to finance the transition of their fleets to renewable energy.


Sustaining investments which will reduce demands of conventional energy in order to expand renewable sources of energy will require consistent price signals to industry, investors, and consumers. When done well, there is no doubt increased public input into decision-making can improve both the quality and the legitimacy of such activities, increasing trust and understanding. ‘The use of analytic-deliberative methods of public engagement, including mechanisms such as citizens’ panels, at an early or ‘upstream’ stage of policy or technology development, can enable the integration of public values into policy formation and decision-making, leading to enhanced legitimacy and trust’. However, at the hindsight that will require national leaders to take actions that may have short-term financial and political costs.


The perceived value of renewable energy resources has gained widespread inclusion in policy and regulatory prescriptions in recent years. The shift of the world towards trying renewable sources of energy is inevitable. The question however remains if the introduction of renewable sources of energy shall terminate the importance of geopolitics in energy security, abolishing energy conflicts and usher in global peace regime.


Other than the already known and more popular solar and wind harnessing technologies, Engineered Geothermal Systems (EGS), which are processes that artificially engineer deep geothermal resources, are areas which are rapidly growing in creating electricity through alternative mechanisms. Geothermal power is relatively environmentally friendly, widely distributed and available, and once installed can provide economic support for developed as well as developing nations. EGS technology relies on well-established drilling and extraction techniquespioneered by the oil and gas industry.


Geothermal power has the capacity to replace less desirable thermal generation such as coal or nuclear power. ‘In addition, this power resource can be adapted easily to remote or distributed generation opportunities where extension of transmission facilities is either impractical because of terrain, or because the market cannot support the debt on capital facilities’ (Refer Source). Again however, EGS is not a proven technology. The value of geothermal steam is again insufficient to allow its transport to even a few kilometers. The developers in this case thus have no other choice but to locate the power plants near the extraction well. Whether that is always viable, is another question that one must ask.


Among the obstacles to renewable sources of energy are lack of access to the electric grid at reasonable prices. High initial cost needs to be incurred in comparison to conventional energy sources for renewable. There is widespread lack of awareness about the scale of resources available, the pace of development of renewable technologies, or the potential economic advantages of renewable energy. It must be noted that as the renewable energy production has increased, so has the reporting of conflicts over placement and organization of wind, solar, biomass, hydro, and other facilities increased over the years. Standard geographical concepts such as place, landscape, space, distance, and territory are fundamental elements of public and scholarly discussions of social acceptance of renewable energy.


Renewable energy resources are by definition based on indigenous and often dispersed geographic or temporal characteristics. Solar and wind power plants may help reduce global warming not producing massive amounts of carbon dioxide that conventional fuels emit. However, their electricity yields are highly variable. The Sun’s intensity and the wind’s speed, change with the weather. For example, Germany’s wind energy producing turbines could power 10 cities the size of Berlin with power, if the wind was blowing constantly. Wind blows intermittently, solar resources are not available at night, and there are ebbs and flows of water in streams and rivers. As the proportion of wind and solar power in the energy mix rises, the difficulties of balancing power in the grid with demand has also grown. Reliable weather prediction is slated to play a greater role in this regard then. Europe’s largest solar thermal power plant is situated in South East Spain. Unlike facilities that use photovoltaic cells, this power plants convert direct sunlight to heat and then to electricity. That means, anything that darkens the light has a significant effect on the plant’s output. Further, aerosol particles in the air can reduce the amount of sunlight. Thus, in order to harness the sun’s energy there is the need for technology and equipment that can get as much solar power as possible at a given time and there is also the need to find ways of storing that energy so that it can be used without any interruptions. The process of making solar panels as well as the technology for storing that harnessed power remains to be quite expensive. Technology itself is the primary reason why solar power has not caught on even today to other sources of energy production.


‘Renewable energy resources are often discounted in value, citing intermittency, high cost per unit of output, reliability and remote geographic location (or if not remote, then not in proximity to existing transmission and substation facilities)’ (Source). These unequal tax burdens and existing subsidies create market distortions failing to internalize all costs and benefits of energy production and use. There is also ‘the lack of access to affordable credit, and the costs of connecting with the grid and transmission charges, which often penalize intermittent energy sources. Import duties on renewable technologies and components also act to make renewable energy more costly’.


While in many countries, renewable energy has to compete with financial and regulatory systems that have evolved to promote the development and use of fossil fuels and nuclear power, in other countries again, electric utilities maintain monopoly rights to produce, transmit and distribute electricity. This not only often discriminates against the use of renewable technologies but also discourage renewable energy projects .


Further, there is the problem of solar, wind, and biomass resources being not only dispersed widely but also unlike fossil and nuclear sources, these cannot be stored. This implies fundamental changes in the geography of energy production and distribution, roles for “the public” and in connections between places and regions. While there have been high public supports for green energy as measured by opinion polls but low success rates for planning applications (e.g., wind farms are proposed but canceled because of local protests) . In addition, there is lack of information to the global community as well the local public about available renewable energy resources and about the current state of renewable energy technologies, or misperceptions. This is coupled with the lack of experience or training, or negative past experiences with old technologies, and a lack of understanding about the benefits associated with renewable energy. All of these act as barriers to the use of the renewables . Further, raw materials used to produce renewable energy are also heavily concentrated. For instance, metals like yttrium and lanthanum are heavily concentrated in China which currently produces 95 percent of the world’s supply and holds 60 percent of global reserves.

Keeping all the above in mind, it is imperative that even when the use of renewable energies is increasing all around the world, it has yet not caught up to the global demand of oil and gas. It will still take a while to achieve the same. The global fixation with non-renewable sources of energy has come to be replaced by the use of nuclear power progressively. There are other modes of energy production like the shale gas revolution, which are doing the rounds of sustainable energy debates. The shale gas revolution for example is going to usher in shift in roles of international players. As we already know, that shale gas has contributed to a recent energy boom in the international energy markets. Coupled with that, countries like United States, which have been a major consumer till now of energy, and have been heavily dependent on energy imports are to be transformed to energy excess, energy exporting countries. This is probably going to create a different international equation altogether. These alternative sources of energy have thus for the time being reduced the global panic with respect to the concern over depletion of conventional energy resources, even though the production of Shale gas probably have its own production constrains especially in terms of drilling rigs and transport.


Further, offshore oil and gas industries have been heavily coming up. They have contributed to the global fall of price of oil. Places in Africa like Angola, Congo and Ghana are set to play greater roles in oil production with the development of this technology. Thus, the researchers point out that the oil alternatives of the Middle East have arrived, and they are not the renewables. This however does not guarantee that the future tendencies of having energy clashes are immediately to reduce. However, the focus of these conflicts might shift regions. Renewable electricity, as argued earlier, has several inherent problems, and it is expected that the natural gas market will erode the competitiveness of renewable energy.


These alternative models, including the rise of consideration for renewable resources, take use of conventional sources of oil and gas. For example, the quest to access a deeper and hotter resource for geothermal power has been tied closely to technology advances in the oil and gas industry. These processes are to definitively slow down the process of the arbitrary extraction of oil and gas, nonetheless themselves being dependent on conventional and traditional sources of energy. Climate concerns can also be mitigated for the time being by the raised use of these alternative techniques of energy extraction. Thus, major energy debates are still circling around the availability of oil, and gas, since dependence on them cannot be altogether done away with. Yet hydrocarbons make up the majority of our energy mix.


Renewable energy thus for that matter shall not herald any regime change in international politics as of yet, since, it shall not for years to come do away with the dependence of global economy on oil and gas. The scarcity of hydrocarbons calls for a new and concentrated push to ensure safe energy, to increase its efficient use, and to raise the share of renewables in the energy mix worldwide. The level of technology needed to imply absolute dependence on renewable energy, so as to be domestically reliant, it yet to be achieved by nations. It will take years to achieve the same. Till then, reliance on oil and gas is here to stay. What is clear, however, is that widespread use of this type of energy production could provide affordable substitutions for environmentally-costly fossil fuel generation, for agricultural or wildlife preservation and make the transition from a coal, nuclear more predictable and sustainable. For that purpose, at the global level, a cooperative multilateral approach that defines energy security as a goal that can only be achieved in encompassing state cooperation is essential.


‘For renewable energy to make a significant contribution to economic development, job creation, reduced oil dependence, and lower greenhouse gas emissions, it will be essential to improve the efficiency of technologies, reduce their costs, and develop mature, self-sustaining industries to manufacture, install and maintain renewable energy systems. The goal must not be simply to install capacity, but to provide the conditions for creation of a sustained and profitable industry, which, in turn, will result in increased renewable energy capacity and generation, and will drive down costs. To achieve this end, a viable, clear and long-term government commitment is critical. Also essential are policies that create markets, and ensure a fair rate of return for investors’ (Refer Source).


At the domestic level again, price-based incentives that guarantee producers a high price for electricity produced are more likely to facilitate involvement of large numbers of smaller investors for renewables. This again would take years to achieve. Solar technology, for example, is not the youthful industry it says it is and that technology has already had time to advance and drop in price, but it hasn’t. Renewable energies thus need to be coagulated with the present energy mix which includes oil, gas and nuclear technology. Though desirable, complete and absolute reliance on renewable energy will take years for the world. Till that time, the present geopolitics of energy supply and demand is here to stay. The world is, for the time being not going to be dominated by a single fuel, or single energy technology.

The author is a PhD Scholar at the Energy Studies Programme, School of International Studies, Jawaharlal Nehru University, New Delhi.