Redrawing the geopolitical map

For two centuries, the geographic concentration of oil, natural gas and coal reserves has helped configure the international geopolitical landscape. Coal and steam power drove the Industrial Revolution which, in turn, shaped geopolitics in the 19^th century. Since then, control over the production of and trade in oil has been a key feature of 20^th century power politics. A transition from fossil fuels to renewable energy could transform global power relations no less than the historical shifts from wood to coal and from coal to oil.

Repositioning of states

A state’s relative position in the international system is influenced by a range of attributes, including its GDP, population, land size, natural resources, geostrategic location, military resources, and ‘soft power’. Having control over and access to significant energy resources and markets is an important asset because it enables states to protect vital national interests at home, and leverage economic and political influence abroad. States without such assets, by comparison, have less leverage and are more vulnerable.

The rapid growth of renewable energy is therefore likely to alter the power and influence of some states and regions relative to others, and to redraw the geopolitical map in the 21^st century.

How different countries fare in the context of the energy transition depends in no small part on how exposed they are to changes in fossil fuel trade flows. Equally important is their position in the clean energy race, the commercial race to become a leader in renewable energy technology. Although the issue is highly complex, innovation will be a key determinant of the pace of change and its effect can be illustrated in Figure 4.

Figure 4. Impact of the energy transition on selected countries and groupings

• The Y-axis depicts the share of oil, gas, and coal imports in total primary energy consumption in 2017. It situates selected countries, as well as the European Union, in the energy economy of today, which is dominated by fossil fuels. The higher the share, the more dependent a country is on fossil fuel imports. Net fossil fuel exporting countries have negative shares.
• The X-axis shows the cumulative number of patents for renewable energy technologies that had been registered by the end of 2016. This indicator provides a way to assess the position of selected countries, and the European Union, in the clean energy race.

Countries and groupings in the upper right quadrant of Figure 4 stand to gain the most from the energy transition: they are highly dependent on imported fossil fuels but have positioned themselves at the forefront of the clean energy race.

Figure 4 gives rise to a number of observations.

• The United States is close to energy self-sufficiency, largely due to the shale revolution. It became a net exporter of natural gas in 2017 and is projected to become a net oil exporter early in the 2020s. The US is well positioned in the clean energy race: US companies hold strong positions in new technologies, including robotics, artificial intelligence, and electric vehicles.
• China will gain from the energy transformation in terms of energy security. It has a leading position in manufacturing, but also in innovation and deployment of renewable energy technologies. It is the biggest location for renewable energy investment, accounting for more than 45% of the global total in 2017.⁴³ Currently, it remains highly dependent on oil imports which have been growing steadily.
• Europe and Japan are major economies which are very dependent on fossil fuel imports. They also hold strong positions in renewable technologies. In Europe, Germany leads the way with almost 31,000 renewable energy patents. Germany’s domestic Energiewende, or ‘energy transition’, has made the country a frontrunner in renewable energy deployment.
• India has been among the fastest-growing economies in the world in the last few years, lifting millions out of poverty. It is projected to have the world’s largest population by 2024⁴⁴ and is poised to overtake China as the world’s largest energy growth market by the end of the 2020s.⁴⁵ India has set itself an ambitious target of 175 GW of renewables by 2022.⁴⁶ This represents a massive increase, considering that India’s total installed power generation capacity in October 2018 was only 346 GW.⁴⁷
• Russia, the world’s largest gas exporter and second largest oil exporter, may face challenges in adapting to a world increasingly powered by renewables. Russia’s economy is larger and more diversified than any of the Middle Eastern oil producers, but oil and gas rents are a vital component of the state budget, accounting for around 40% of fiscal revenues.⁴⁸ Even though Russia is stepping up renewable energy deployment and is investing in research and development, it still lags far behind China and the US in terms of patents for renewable energy technologies.

To assess the impact of the energy transition on different regions, Figure 5 shows each region’s net fossil fuel exports and imports as a share of GDP.

Figure 5. Regional impact of the energy transition

While the graph above masks differences within regional groupings, it has the advantage of uncovering major differences between regions and country groupings.

• The Middle East and North Africa, together with Russia and other countries in the Commonwealth of Independent States (CIS),⁴⁹ are the regions most exposed to a reduction in fossil fuel revenues. On average, these regions have net fossil fuel exports of more than a quarter of their GDP. Declining export revenues will adversely affect their economic growth prospects and national budgets. To prevent economic disruption, they will need to adapt their economies and reduce their dependence on fossil fuels.
• The majority of countries in Sub-Saharan Africa (SSA) will benefit from reducing fossil fuel imports and generating renewable energy domestically, because this will boost job creation and economic growth. The exceptions to this are the two biggest oil producers in the region, Nigeria and Angola, which are at risk because they depend heavily on fossil fuel rents. Because of their size and large fossil fuel exports, they skew the data for SSA as a region. In the long-term, however, African countries have a unique opportunity to leapfrog the fossil fuel-centred development model despite recent discoveries of oil and gas.
• Small Island Developing States (SIDS) will benefit most of all if they adopt renewable energy sources rather than fossil fuels. The import of fossil fuels now amounts to 8% of their GDP. Many SIDS are also extremely vulnerable to the effects of climate change. SIDS possess ample renewable energy sources and renewable technologies can meet most of their domestic energy needs. The shift would cut import bills, promote sustainable development, and increase their resilience. International cooperation to support SIDS’ renewable energy ambitions is growing substantially, and 13 SIDS have established 60-100% renewable electricity targets.
• South Asia spends more than 3% of its GDP on imports of fossil fuels, and demand for fossil fuels is rising rapidly from a low base. These countries will benefit from the energy transformation primarily by reducing their fossil fuel import bills, which would otherwise grow dramatically and weigh on their economies.
• Europe, China and Japan are currently heavily reliant on fossil fuel imports but would increase their energy independence as renewable energy shares grow. Japan is the most dependent; its net fossil fuel imports amount to 5% of GDP.
• North America and Latin America are net neutral when combined. On a continental scale, in light of both their domestic resources and international trade in energy, their economies are largely energy independent.

The vulnerability of fossil fuel exporters

Countries that have historically enjoyed geopolitical influence because they supply fossil fuels are likely to see a decline in their global reach and influence unless they can reinvent their economy for a new energy era.

Many fossil fuel-rich countries are able to project considerable international power. They can employ their fossil fuel rents (the difference between cost of production and market price of fossil fuels) to finance socio-economic development and economic diversification, significantly strengthen their military capabilities, or invest in foreign assets such as US securities.

The energy transformation is expected to put pressure on fossil fuel prices and related rents.⁵⁰ If fossil fuel revenues decline, these countries will need to rethink their national priorities and strategies. Figure 6 lists countries that derive much of their GDP from fossil fuel rents.

Figure 6. Fossil fuel rents as a percentage of GDP (average 2007-16)

Figure 6 shows clearly that oil rents have generally been much larger than natural gas rents and coal rents. Among the countries whose fossil fuel rents amount to over 10% of GDP, natural gas rents are higher than oil rents in only three: Turkmenistan, Uzbekistan, and Trinidad and Tobago. In just one country, Mongolia, coal rents are the highest fraction. In all other countries, including large gas exporters such as Russia, oil rents dominate.

A decline in fossil fuel rents has the potential to profoundly destabilize countries that have not prepared their economies sufficiently for the consequences. The loss of oil rents in countries with weak governance could lead to fractures in society and political instability. The drop in oil price in the 1980s was one of the factors that contributed to the decline and eventual fall of the Soviet Union, which in turn led to the end of the Cold War, arguably the biggest geopolitical shift since the end of the Second World War.

Figure 7 shows fossil fuel exporters’ preparedness, based on exposure and resilience.⁵¹ Exposure captures the degree to which countries rely on rents from fossil fuels.⁵² Resilience measures income in relation to population in order to capture how robustly an economy can respond to the risks posed by the energy transition.⁵³

Figure 7. The relative preparedness of fossil fuel producing countries for the energy transition

Four groups of countries can be distinguished:

• Highly exposed, low resilience countries

  These countries are highly dependent on fossil fuel rents, which typically account for more than 20% of their GDP. They also lack resilience because their per capita GDP is low and they have limited financial buffers. The countries in this group include Libya, Angola, Republic of Congo, Timor-Leste, and South Sudan.

• Highly exposed, highly resilient countries

  These countries are highly dependent on fossil fuel rents but have sufficient income and capacity to be able to reinvent themselves and adapt to the energy transition. They include Gulf states, such as Saudi Arabia, Qatar, Kuwait, and the United Arab Emirates (UAE), and Brunei Darussalam.

• Moderately exposed, moderately resilient countries

  These countries are quite exposed, but their economies are moderately resilient. As a result, they should be able to manage the transition, provided they implement effective policies to diversify their economies. This group includes Russia, Iran, Algeria and Azerbaijan.

• Relatively low exposure countries

  Fossil fuel rents in these countries are less than 10% of GDP so they should be less vulnerable to the energy transition. This group includes Malaysia, Bahrain, Colombia and Norway.

In many oil producing countries, there is an implicit social contract in which the authority of the state stems from providing generous subsidized services. If their oil income falls for a long period, these governments will struggle to provide the socio-economic programmes that citizens have come to expect. Austerity can potentially fracture the state’s legitimacy, possibly leading to social unrest, political infighting and even violence. In such cases, domestic political turmoil could spill across national borders with consequences for neighbouring states. Indeed, the emergence of a power vacuum in petrostates is potentially the biggest geopolitical risk of the energy transition.⁵⁴

Vulnerability is probably greatest in countries where the dependence on oil rents is highest and where there are high levels of youth unemployment. Recent upheavals in the Middle East indicate the formidable nature of the governance challenges in these states, which will become even more difficult to resolve as oil revenues decline. Nigeria is vulnerable in this regard as well. It has long struggled with poor governance and poverty, and now faces a youth bulge: the average age of the population is 18 years and the country is expected to overtake the United States to become the third-most populous country in the world by 2050.⁵⁵

The loss of oil rents may cause painful adjustments in the short term. In the long run, however, fossil fuel-driven economies have the opportunity to reduce the risks posed by oil dependence, and create a more stable, equitable and productive economic future for their peoples. Studies show that large oil rents can undermine growth, distort the economy, capture democratic institutions, stimulate corruption, impede the development of domestic industry, and aggravate conflict.⁵⁶ While most of these adverse effects can be avoided through good governance, the rule of law and sound policies,⁵⁷ they nevertheless remain a significant risk for many oil-rich states.

Economic diversification to reduce dependence on oil rents has been a long-standing policy goal of many oil-exporting countries. The economic diversification and decarbonization strategy of the UAE, for example, shows how enlightened decision-making can reduce risks. The energy policy of the UAE foresees a 44% share of clean energy and 70% decarbonization of the economy by 2050. However, few countries have successfully invested their resource windfalls and constructed a strong and diversified economy. With the exception of Malaysia and the UAE, few oil exporters have followed Hartwick’s rule which states that, to preserve long-term per capita consumption, subsoil assets (such as oil, gas and coal) should be transformed into reproducible surface assets (such as human or physical capital).⁵⁸

In recent years, in recognition of the new reality, several oil exporting countries have developed plans to diversify their economies and increase their resilience (see Table 1).

Table 1. Diversification plans of the Gulf Cooperation Council (GCC) countries

Oil- and gas-rich states will derive many benefits from diversifying their economies. They will strengthen their long-term growth prospects and shield their economies from the vagaries of international commodity prices, a key source of macroeconomic volatility.⁵⁹ An open economy and competitive private sector will generate more sustainable growth. They will also create more productive jobs, an important priority in countries where large numbers of young people are unemployed. Finally, diversification will help to prepare these countries for the looming peak in oil demand.

A tailored strategy is needed to create a secure path to economic transformation and diversification, particularly as each country has unique characteristics and faces particular challenges which require specific solutions to resolve them. Policy interventions that encourage diversification include fiscal and monetary discipline, investment in human capital and infrastructure, and support for the private sector.⁶⁰

Energy security for fossil fuel importers

On the eve of World War I, Winston Churchill made a daring choice: he converted the fuel used by the British fleet from domestic coal to imported oil. Ever since, energy security—the uninterrupted supply of energy at affordable prices—has been a critical strategic issue for all energy-importing states. No less than 80% of the world’s people live in countries that are net importers of fossil fuels.⁶¹

Concerns over energy security have marked the conduct of international relations, the formation of alliances, the protection of national interests, and defence planning. Oil interests have shaped the relations between the
United States and the Middle East for decades.⁶² Similarly, China’s need to secure oil supplies and other natural resources to sustain its growth has led it to foster new and deeper ties with countries in Asia, Africa and Latin America, as well as diversify its domestic energy supply with renewables.

In a renewable energy economy, most countries will be able to achieve energy independence: they will have greater energy security and more freedom to take the energy decisions that suit them. Since some form of economically viable renewable energy potential is available in most places, countries that currently depend heavily on fossil fuel imports will be able to use renewables to reap strategic and economic benefits.

In strategic terms, fossil fuel importing countries are vulnerable to risks of supply disruption and price volatility caused by political instability, terrorist attacks, or armed conflicts that may occur in oil- and gas-exporting nations. Smaller energy-importing countries may also be subject to pressure or coercion with regard to their energy supply and therefore have less freedom to determine their own strategic priorities and goals.

By contrast, countries that are able to develop their own renewable sources of energy are better placed to achieve energy security. An example is the Brazilian ethanol programme which was put in place after the oil shock of 1973 to reduce the country’s oil imports and shield the economy from volatile prices and supply disruptions. This programme has played a vital role in Brazil’s efforts to achieve energy self-sufficiency and has helped transform it into the world’s second largest producer and largest exporter of ethanol.

In economic terms, a high degree of import dependence also generates costs and risks. Countries that import most of their energy are exposed to currency fluctuations and volatile fuel prices that can result in balance-of-payment problems. The oil price shocks in the 1970s, for example, squeezed many industrial economies and sowed the seeds of a debt crisis that many developing countries suffered in the decade that followed, with serious social and economic consequences. Increasing the share of renewables in the energy mix can mitigate such risks and provide new pulses of economic growth.

Iceland is a good example of the benefits that can accrue from an economic transformation based on renewables. During the 20^th century, it evolved from being one of Europe’s poorest countries, highly dependent on imported coal and oil, to a country with a high standard of living, which derives 100% of its electricity from hydro and geothermal energy.⁶³ The effective development of its renewables has enabled Iceland to bolster its energy security, widen its economic base, and attract new industries to the country, including aluminium smelting, data storage and greenhouse agriculture.⁶⁴

Fossil fuel imports can also impose a huge burden on the trade balance of some importing countries. Data from the World Trade Organization (WTO) indicate that in 2015, despite a significant drop in oil prices, the global cost of gross fossil fuel imports was 1.9 trillion US dollars.⁶⁵ Figure 8 shows that Bahrain, India, Belarus, Jamaica, Tanzania, Pakistan, and South Korea were among the countries most dependent on fossil fuel imports.

Figure 8. Share of fossil fuel imports in all merchandise imports (average 2007-16)

Countries that switch from imported fossil fuels to domestically generated renewable energy will significantly improve their trade balance. India, for instance, is expected to overtake China as the largest growth market for energy in the 2020s. Its fossil fuel import bill (calculated as a proportion of total export earnings) grew from 35% in 2000-01 to 60% in 2012-13. Fossil fuel imports contributed to a trade deficit of 190 billion US dollars over the same period.⁶⁶

From the perspective of consumers, high energy import bills transfer large amounts of wealth abroad.⁶⁷ Energy importers are vulnerable to price swings, often as a result of remote geopolitical events. High oil prices can also stifle economic growth by importing inflation, curbing consumer spending, and raising the cost of doing business. Lower oil prices, conversely, can help to stimulate an importer’s economy.⁶⁸

Developing countries that lack domestic fuel reserves stand to benefit the most from exploiting their renewable energy resources. Small island developing states (SIDS), for example, rely heavily on imported fuels for their electricity needs.⁶⁹ SIDS also sit on the frontline of climate change despite having done the least to cause it. To increase their resilience in the face of extreme weather events, as well as bolster their energy security and reduce prohibitive import bills, 13 SIDS including Cabo Verde, the Cook Islands, Fiji, Saint Vincent and the Grenadines, Samoa, and Vanuatu, have announced plans to increase the contribution of renewable energy to between 60% and 100% of the power they consume.⁷⁰

Achieving an electricity supply that is 100% renewable is technically feasible in places where diverse sources of renewables are available, and the variability of renewable electricity generation can be managed on the grid. Some countries, such as Albania, Ethiopia, Lesotho, Norway, Paraguay and Tajikistan, already obtain all or almost all of their electricity from hydropower, which is an established technology that provides stability in the transmission system. Others have achieved similar results using a mix of renewables. Brazil, Costa Rica, New Zealand and Kenya, for example, generate more than 80% of their electricity from a combination of hydro, geothermal, wind, biomass and solar power.⁷¹

Countries such as Chile, Jordan and Morocco are also reducing their dependence on energy from abroad, in order to enhance their energy security and correct the structural trade imbalances that energy imports exacerbate. Morocco currently imports over 90% of the energy it consumes.⁷² It plans, however, to exploit its consistent sun and strong winds to reduce these imports and eventually become a net exporter of electricity to European and African markets. It has set a target of 52% renewables in its electricity mix by 2030.

Energy independence does not imply complete self-sufficiency or autarchy.⁷³ Even if a country is able to generate renewable energy, it will not necessarily choose to do so because it will focus on its comparative advantages. Even when a country’s energy needs are supplied entirely from home-grown sources, it will still benefit from international value chains and trade in technologies, goods and services.

Increasing energy security through renewable energy deployment may change the dynamics between energy exporters and importers. It will also diminish the role of oil and gas in international politics. Ensuring the security of energy supply becomes more a matter of domestic governance, rather than an international security priority. Countries that achieve energy independence will also be less vulnerable or beholden to their suppliers and will therefore be able to pursue their strategic and foreign policy goals more independently.

The rise of renewable energy leaders

Countries that are able to take advantage of new renewable energy technologies can expect to enhance their global influence and reach. Three types of countries have the potential to emerge as new renewable energy leaders.

First, countries with high technical potential for renewable energy generation stand to gain if they are able to become significant exporters of renewable electricity or fuels. Australia’s economically demonstrated solar and wind energy resources are estimated to be 75% greater than its combined coal, gas, oil and uranium resources.⁷⁴ In the Atacama Desert, Chile has among the world’s best solar resources, as well as high potential for wind, hydropower, geothermal and ocean energy. In both cases, however, the remoteness of these locations will probably constrain electricity exports.

Some countries are already net exporters of electricity generated by renewables. Brazil is already a major exporter of renewable electricity from hydro. Norway exports electricity to its neighbours and the Netherlands, and is building new transmission cables to Germany and the United Kingdom. Laos and Bhutan also export electricity generated from hydropower to neighbouring countries. Bhutan’s power exports to India raised more than 27% of government revenue and 14% of Bhutan’s GDP.⁷⁵

Second, mineral-rich countries such as Bolivia, Mongolia, and the Democratic Republic of Congo (DRC) have an opportunity to become part of the global production and value chains necessary for renewable technologies. Doing so will boost their economic development, provided they put the right policies and governance frameworks in place.

Third, leaders in technological innovation are positioned to gain the most from the global energy transformation. No country has put itself in a better position to become the world’s renewable energy superpower than China. In aggregate, it is now the world’s largest producer, exporter and installer of solar panels, wind turbines, batteries and electric vehicles, placing it at the forefront of the global energy transition.

Figure 9 shows the total clean energy manufacturing value added by four technologies: wind turbine components, crystalline silicon PV modules, LED packages, and lithium-ion battery cells. It confirms that China is by far the largest global manufacturer of these clean energy technologies. In addition, it leads the world in renewable energy patents (see Figure 10).

China’s concerted efforts to research, develop and invest in renewable energy and clean transport offer its industry the opportunity to overtake US and European companies, which have been dominant in sectors such as cars and energy machinery. This will give China a comparative advantage in trade and lend impetus to the country’s economic growth.

Figure 9. Clean energy manufacturing value added (2014, US$ billion)

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Figure 10. Cumulative share of renewable energy patents end 2016

By taking the lead on renewables, China has improved its geopolitical standing in several respects. By producing more of its own energy, China is reducing its reliance on fuel imports and the risks of energy disruption which could put a brake on its economic ambitions. Its technological expertise in renewables has established it as a leading exporter of clean energy technology, creating a balance of trade advantage.

The clean energy technology race could result in a situation of technology dominance. In some respects, that outcome can already be seen in mobile technology where a few companies (Huawei, Samsung, Apple) compete for global leadership. If a small number of players were to dominate clean energy technology in a similar way, it would raise concerns that concentration could stifle competition, suppress innovation, and distort markets. Countries that do not control key energy technologies may become heavily dependent on the few countries and companies that do. In this context, industrial policy becomes increasingly important; countries will need to create a competitive manufacturing value chain around certain technologies within a fair and rules-based trading system.

Apart from the risk of technology dominance in specific areas, renewable energy leaders are unlikely to gain the degree of market dominance that fossil fuel leaders have enjoyed, due to the ubiquitous nature of renewable energy sources.

New actors: citizens, cities and corporations

The shift to renewable energy may reshuffle political and economic power, because renewables tend to decentralize and democratize energy systems. Due to the falling cost of solar PV and wind power, as well as smart distribution systems, almost anyone with a rooftop or some land can produce electricity, either for self-consumption or for the grid. These developments will generate a more diverse energy ecosystem. The role of the centralized state in the energy system may change, while many new actors and new business models are likely to emerge and flourish. Local and distributed forms of energy generation give households and communities more autonomy than centralized grid systems.

As more people install solar panels, batteries and smart software, formerly passive consumers of electricity may become consumers and producers of electricity in an interconnected grid. Innovation in market design and smart grid technologies, including storage, permit stable management of variable renewable electricity on the grid. Advances in communication technology may lead to the emergence of an ‘energy internet’, allowing hundreds of millions of people to produce electricity in their homes, offices and factories and share it peer-to-peer.⁷⁷ The number of grid-connected smart devices is projected to rise from 26 billion in 2017 to over 75 billion by 2025, enabling intelligent demand side management.⁷⁸ In this new world of ‘prosumers’, energy assets will no longer be owned exclusively by centralized utilities or the state.

In a centralized energy system, the financial benefits of energy also tend to be centralized and concentrated in the hands of corporations and governments. A decentralized, renewable electricity system, by contrast, gives consumers a true choice of energy sources and a share in its economic benefits, while enhancing social acceptance of renewables investments. Germany provides a case in point. In 2016 private citizens owned 31.5% of installed renewable power capacity, making them the largest ‘bloc’ of investors in the sector.⁷⁹

Decentralized renewables can also help to increase the resilience of local communities against environmental disasters. Higashi-Matsushima, a Japanese city affected by the earthquake and tsunami in 2011, chose to rebuild its energy infrastructure around microgrids and decentralized renewable energy. In the United States, microgrids became popular after Hurricane Sandy knocked out power for 8.5 million people in 21 states.⁸⁰

Cities occupy a central role in the energy transformation. By the middle of this century, 70% of the world’s population is expected to live in cities.⁸¹ Cities consume around two-thirds of generated energy and produce 70% of the world’s carbon emissions. They are also especially vulnerable to the effects of climate change, including coastal flooding and urban heat island effects.⁸² At the same time, they have the means to shape the new energy landscape. By 2030, the fifty largest cities will have a bigger economic footprint than many small- and medium-income countries, making them major economic and political players on the international stage in their own right.

Cities are already taking decisive action. In 2017, more than one hundred towns and cities were sourcing up to 70% of their electricity from renewables, compared to 42 in 2015.⁸³ Several capital cities are among them, including Oslo (Norway), Dar es Salaam (Tanzania), Quito (Ecuador) and Wellington (New Zealand). Yokohama, Japan’s second largest city, is deploying a smart city project that has led to a roll out of smart grids, solar PV panels and electric vehicles.⁸⁴ New megacities are being announced and built to run entirely on renewable electricity, such as Neom, which will be constructed near the Red Sea and Aqaba Gulf.⁸⁵

Cities and local municipalities are also forming global alliances and networks, including C40, ICLEI and the global covenant of mayors.⁸⁶ Together with the actions of other non-state actors, such as California’s Global Climate Action Summit of September 2018, they are adding a new layer of global governance that is driving action to achieve decarbonization, sustainability, and greater resilience through renewables.

There is ample evidence that private corporations are responding to the realities of the energy transformation by restructuring and adjusting, and increasing renewables generation. Following dramatic declines in market capitalization, Germany’s largest utility companies, RWE and E.ON, both split their businesses into two parts, one focused on renewables and the other on thermal generation. Danish Oil and Natural Gas (DONG) changed its name to Ørsted after selling off its oil and gas business. Total is diversifying into solar and battery technology. Shell is growing its natural gas portfolio relative to oil. BP and other oil companies are buying into electric vehicle charging infrastructure. In 2017, barely seven years after its initial public offering, Tesla became the most valuable US car maker, overtaking General Motors, a company over one hundred years old. Some global technology companies already source 100% of their electricity from renewable energy.⁸⁷ These trends indicate that global technology companies are becoming important players in the new energy landscape.

In short, the renewable energy transformation goes hand in hand with a dispersion of power. The modern nation state and the fossil fuel economy have evolved alongside one another. The decline of the fossil fuel era and the advent of decentralized power generation in an increasingly electrified world may have profound implications for the role of the nation state.