A Multi-Polar World at Risk

Contributed by Robert Lyman © 2024. Robert Lyman’s bio can be read here.

Executive Summary 

In the 1970s and 1980s, energy security meant assuring a stable supply of affordable oil and reduced vulnerability to the threat of embargos and price manipulations by exporters. Many of the measures introduced were aimed at reducing oil imports and exports, diversifying the sources of energy (and specifically oil) supply, increasing energy efficiency, establishing strategic oil reserves and imposing controls on the price of oil.

For most of the post-2000 period, the governments of the world have abandoned their energy security concerns as they shifted focus towards attaining the goals of climate policy. Most OECD governments are now voluntarily committed to work towards the so-called “net-zero” emissions goal by 2050.

A new set of security concerns is arising as a result. One of the central features of global efforts to reduce GHG emissions is their reliance on accelerating the production and deployment of five critical technologies: solar photovoltaic (PV) electricity, industrial wind turbines, batteries to store electricity in bulk, electrolysers for the production of hydrogen, and heat pumps. The International Energy Agency now reports frequently on the trends with respect to these technologies and advocates for policies that will increase their production and use. In 2023, the IEA published an Energy Technology Perspectives (ETP) Special Briefing intended to provide policy makers with “strategic insights” in this area.

Manufacturing operations are highly geographically concentrated: currently, four countries and the European Union account for 80-90% of global manufacturing capacity for the five clean technologies examined in this briefing. China alone accounts for 40-80% across these technologies. If all announced projects were to be realized, these shares would shift to 70-95% and 30-80% respectively.

China also has a major role in the production of some critical minerals that are used in the renewable energy sector and in batteries. It is the dominant player in global mineral processing, and its upstream control over raw commodities is also increasing. It refines 68% of the world’s nickel, 40% of the copper, 59% of lithium, and 73% of cobalt. As for minerals, it produces over 60% of the world’s vanadium and graphite, and 40% of the world’s molybdenum, aluminum, and lead. Rare earth elements over which China has a substantial hold over mining activity include 17 metallic elements, four of which – neodymium, dysprosium, praseodymium, and terbium -are of particular importance to “clean” energy technologies.

This is not an accident. China has achieved this manufacturing and market dominance as a result of clear and sustained policy signals and deployment targets in its Five-Year-Plans.

China’s state-owned and controlled companies are directed by the government (i.e. the Chinese Communist Party) to operate in ways differently than the privately-owned and operated firms in most OECD countries. China engages in trade that is based not solely or even principally on markets but on government protection and mercantilism. Mercantilism is a nationalist economic policy that is designed to maximize the exports and minimize the imports for an economy. In other words, it seeks to maximize the accumulation of resources within the country and use those resources for one-sided trade. Their objective in trade is often to drive their higher cost competitors out of business, gain a near monopoly on supply, and then raise prices. They also can serve the broader strategic interests of the Chinese state.

Due to their climate policies, OECD countries are increasing their dependence on a single country for their future energy supplies. The concentration of supply capabilities in one country far exceeds what OPEC had in 1973. The fact that China is continually challenging western countries for geopolitical supremacy adds to the risks that it might use its domination of supply capability in future to unilaterally determine the supply and price conditions. In effect, OECD countries are endangering their own people. They are making China great again.

1 Comment

  1. Michael Singleton

    The Chinese are applying the Opium trade principles

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