Nothing can stop us now…except geopolitics done badly

Shine on!

Nothing can stop us now…except geopolitics done badly

Share on

We’re winning on the energy transition. Now we need smart leaders to navigate around potential conflict and the bad habits of the past.

After an initial boost, fossil fuels have flatlined despite the Russian conflict. Although there are some stubborn dependencies, all evidence suggests coal, oil and gas will continue to decline. Renewable electricity and electric mobility are ascendant in their markets. The model we’ve been chasing as a global community — a technology disruption — suggests that the better, faster to install and cheaper service will displace the older, dumber, more expensive one. Think cell phones over landlines.

I have written elsewhere about how economics and ethics, markets and movements are backing this to happen. The sooner the better due to the ticking global climate change clock. At the end of last year I had the feeling we had turned a corner in this pursuit, and that we are heading into the homestretch… That point in the marathon where the runners head into the stadium for a final sprint around the stands. Renewables are racing to get to the finish line — 100% for the 100% — before 2050. Ideally by 2030. Most likely in between. It’s likely tol follow a curve something like this from our friends at the Rocky Mountain Institute (RMI): 


But, serious hurdles are cropping up on the track. The most obvious are coming from warmongers. Putin has started an energy war. And while it was mostly about using fossil fuels as a weapon over Europe, Ukraine’s lithium reserves cannot be taken out of the picture. This war has backfired by actually accelerating the move off fossil fuels. And it has also exposed the pretense of free markets in energy, thus leading to an orgy of subsidies to fossil fuels (mostly perverse, but not all). This has been feeding the profiteering of companies involved. It will likely have all sorts of unintended consequences that are adverse to climate justice. For example, Putin recently announced a free gasification program for all households in Russia, to make up for lost markets elsewhere. This is anti-electrification! Even more worrying for the smooth progress of global solutions — wind, solar and batteries — is the escalating trade war between China and many other countries. 

I fear that a “Hunger Games” mentality is creeping into our global climate and energy agenda — whereas we had been at the Olympic Games building on peace between nations.”

Take the little-covered question of export controls by China on photovoltaic wafer technology. In retaliation to the announced U.S. ban on certain semiconductor tech to China, Beijing said it would ban wafers and wafering machines to certain U.S. parties. The policy is still unclear but it should send a shiver down the spine of all of us rooting for solar to be a winner in the energy race. What happens if major U.S. end-users cannot access PV with wafers made in China? That would be 90% of it! As the U.S. attempts to restart domestic manufacturing, what if it cannot use the machines that make wafers that are made in China? That’s  99% of them! We’re already missing targets for solar installation in the U.S. And while the we can probably make these products one day, just as China can make microchips that the U.S. is trying to deny them, the bigger problem is what these hurdles do to the race itself.

Imagine that the U.S. is able to become a major silicon PV producer again — with the help of the Inflation Reduction Act (IRA). It cannot do it before 2025 and with trade barriers like these from the Chinese it will be even slower than it would be otherwise. That delays deployment of our best known answer to the need for clean electricity. It will make PV expensive if it is available at all in years to come. It also creates room for excuses and doubts about making the transition. I fear that a “Hunger Games” mentality is creeping into our global climate and energy agenda — whereas we had been at the Olympic Games building on peace between nations. Collaboration is key to solving the climate crisis as quickly as possible. 

Critical minerals in your rattle? 

Instead of the spirit of “survival of the friendliest” we’re hearing ugly language around key energy transition topics. It sounds like generals reciting the ways to win last century’s battles. Domination of value chains is a popular theme. And it’s not just for economic gain. More “strategic” reasons are being mooted in halls of power from the Indo Pacific to the trans-Atlantic states — aka how to get and keep power over “the other.” I’m also hearing saber-rattling around controls of supply lines to ensure said dominance growing.

Take the metals needed for the energy transition such as lithium. It has become openly discussed that nations will start hoarding the  metal because there is projected to be a supply shortage. In some ways a reservation policy makes sense, as with strategic reserves of grain or medicines. But how would pulling up the drawbridge and closing doors to some — but maybe not others — taint the design of future solutions? We are just at the beginning of the race for better batteries and contesting them now bodes badly for our potential to cooperate and get things moving. As Australia’s think-tank, the Lowy Institute, put it: lithium shouldn’t be the center of a competition between the great tech powers but, rather, a key component in the collective battle against climate change.

Global lithium reserves. Source: International Institute for Sustainable Development

We need a plan to develop these supply chains with the global good in mind. It is possible to determine a finite amount of metal required to service the whole energy transition to renewable electricity with energy storage. We have a knowable amount of lithium, manganese, cobalt, lead and nickel as well as other metals. These are all recyclable and with innovation in designing for circularity we could ensure that they can be utilized repeatedly. This is in stark contrast to the infinite foolishness of fossil fuels that set us rapaciously ranging from one reserve to the next, never to be satiated while we heat up the planet. With some thought and creativity we have the possibility of providing for all the needs of the human population with a fixed footprint! Whether it’s 50 metal mines or 100 (and it is probably not more) we can manage the use of these metals to be best practice in terms of extraction and community benefit. Instead, we’re falling into a land grab mentality in a poor replay of the old energy paradigm.

With some thought and creativity we have the possibility of providing for all the needs of the human population with a fixed footprint.

We need global cooperation, not chest-beating

One thing that  gets lost in this kind of bluster is the growing energy demand in non-OECD countries. Recent analysis by the UN’s renewables agency, IRENA, shows that the flow of capital to renewable financing in Africa is declining. This despite that continent being where the burgeoning world population is, with enormous need for energy services, especially for the 700 million souls yet to even get electricity. In fact, 70% of the world’s current population, in Asia and Africa mostly, only received 15% of funds so far this decade. Forget about “Sustainable Development Goal 7” or energy access for all when the big boys with their toys are distracted and trying to get power-over, rather than power-with, one another.

Via: Exponential View

If we don’t finance non-OECD energy demand to go clean, we can kiss our global climate targets goodbye. Future emissions aren’t projected to grow from the OECD — indeed they’ve been declining mostly. We need to pay attention to global cooperation, not chest-beating. This decade was already one for hyper-uncertainty due to COVID, an almost-coup in the U.S. and then yet-another war in Europe. It’s time for our diplomats, execs and politicians to start beating a different drum. If not, the great trade war of 2023 will fast become a new cold war and risk becoming a hot war. The 2020s was always going to be a decade of consequences. Now it’s time for real leadership to respond to our times.

New energy in our diplomacy

That said, trade policy and diplomacy is tricky stuff. China does have too much dominance for a healthy functioning market in PV, wind, EVs, batteries and other elements needed for the transition. So the rest of the world probably does need to build up some of these capacities and shorten supply lines for resiliency. The re-globalization of the 21st century is likely to swing away from the laissez-faire madness of the late 20th century. And I am all for some forms of protectionism — especially of human rights, local livelihoods and the environment. But rewriting the rules cannot become a license for “us versus them” if we are to fulfill the potential of the energy transition. 

 The competition for fossil fuels was by definition a zero-sum game, whereas in a world of renewables we can solve the puzzle together. Fighting over fossil fuels set our diplomats and leaders into a threat state, with stress hormones coursing through their veins, but we can live and act differently in a new energy future. Seeking common solutions, like where to source the limited supply of lithium we will need and how to distribute it fairly, can allow our dopamine to run instead. That’s the state of mind towards which we should be racing. Shine on!

Startup of the month 

Renewable Metals is a team in Western Australia participating in the Supercharge Australia Innovation Challenge (full disclosure: this is a program New Energy Nexus is running in partnership with EnergyLab Australia). Not to pre-empt the Challenge but this is the sort of company we should think about vis-a-vis the questions above. A team of metallurgists with know-how from the nickel smelting industry are applying some of their expertise to how to recycle scrapped lithium batteries. They have reduced the cost and toxicity of the process in their lab and are looking to scale to pilot production now. In the U.S., a battery recycling business that has re-cast itself as a battery materials company because that’s what they handle, cradle to cradle, has announced a $10 billion plant showing the size of this potential market. Renewable Metals are one to watch. Here’s what some cobalt coming out of shredded Bolt batteries in what they call a “liquor” looks like.

Written by

Danny Kennedy

Danny Kennedy is the CEO of New Energy Nexus, a clean energy startup incubator with chapters in the U.S., China, Southeast Asia, India and Uganda. He is also Managing Director of the California Clean Energy Fund overseeing the $25m for early-stage innovation companies and the $12m CalTestBed initiative. Kennedy co-founded Sungevity in 2007, the company that created remote solar design, and incubator fund Powerhouse in Oakland, CA. He is the author of Rooftop Revolution: How Solar Power Can Save Our Economy – and Our Planet – from Dirty Energy in 2012. Prior to being an entrepreneur and investor, he worked at Greenpeace on climate & energy.