Guest column: Great Game 2.0 – the clean energy race

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The scramble by states to secure fossil fuels has been a dominant leitmotif of geopolitics over the past decade.

The resulting transformation of the old-energy chessboard has been extraordinary: today, nearly 90 per cent of fossil-fuel reserves are controlled by states, against a mere 15 per cent a quarter-century ago.

Observers have dubbed this competition among states as the New Great Game, harkening back to the competition between Britain and Russia in the 19th century for supremacy in central Asia.

Dominion over carbon stored below the earth is last century’s game. Fossil fuels still have the potential to transform states, but resource nationalism will be a thing of the past by 2050.

The new Great Game is fundamentally different: those who develop clean-energy technologies – from renewables such as wind and solar, carbon-scrubbed oil, natural gas and coal, as well as nuclear and efficiency systems – will be the winners; liberating energy from geography will be the real revolution.

Of course, there will be a transitional phase over the next few decades. During this time, resource-rich countries will try to extract value from their reserves. Semi-clean natural gas will take a privileged place during this period as a bridge to this new era.

Energy innovations often produce turning points in history, beginning, of course, with fire. Each time a new energy technology has emerged – be it steam, electricity, or oil – the balance of power among nations has shifted.

Clean energy and efficiency technologies, no doubt, will rearrange the chessboard again. Which countries will emerge as kings and queens and which as pawns is unclear.

But in the early stages of this clean-energy race, one thing is certain: the west is lagging. The US government is spending just $5bn annually on energy R&D; the American Energy Innovation Council estimates that it needs to spend $16bn just to remain competitive.

China, by contrast, is not only busy securing oil and gas fields around the world, it has seized pole position in the clean-energy race. It is the leading producer of wind turbines; it is making massive investments in its electricity grid and has stricter fuel-emission standards than the US.

China now has a more favourable and predictable market for private investments in clean energy technology than the US. China also knows where it wants to be on the energy spectrum: it is driving the resource race for fossil fuels, so that it can be secure during the transition to the new era. At the same time it has positioned itself as the dominant manufacturer of components for renewable energy technologies.

China is investing massively to achieve its goals – some $1,000bn over 10 years. And it is not alone. South Korea has committed to investing 2 per cent of GDP each year in clean energy – a total of $80bn over five years.

Not to be left behind are the oil-rich Gulf states which have proven to be surprisingly adept in the clean energy race. This race is locally embedded and globally connected.

The west’s failure to invest sufficiently in new energy technologies can be explained in part by the effects of the recession. But also holding it back is a nagging sense of disappointment in the promise of clean energy – and of politicians to create the conditions for its production.

After all, it was more than 30 years ago that President Carter donned his wool sweater and the US embarked on its first foray into renewables.

Now, however, we are at an inflection point. The confluence of concern over climate change, energy security, resource nationalism, and, above all, energy prices, has created ideal conditions for innovation.

Perhaps the most important new factor has been the empowerment of individuals: the consumption of energy has become a conscious act and an act of conscience.

This generational change is a function of heightened awareness of the impact of energy consumption on our wallets, on foreign policy, and on the environment.

It will only intensify in the coming years, as smart meters, the internet, and advanced software allow individuals to fine-tune their energy consumption even more effectively.

Just as individuals are beginning to think differently about energy, so must political leaders.

Energy is no longer just about oil and coal. It is a metaphor and vehicle for political and economic development. The mark of a successful modern government will be its ability to find a niche for its country in the clean-energy revolution.

With political and technological forces in alignment – from an awareness of the effects of resource nationalism, to a global sensitivity to climate change and energy security, to the empowerment of individuals worldwide as energy players – rapid progress can be made on all fronts.

The clean-energy movement is still in its infancy – CleanTech 1.0 – where the mobile phone industry was in 1983, when Motorola released its two-pound, $4,000 DynaTac 8000x; or where the computing world stood that same year, when Windows 1.0 was launched.

Wind, solar, biomass, hydrogen and other sources of power will see a fairly quick evolution along a technology continuum from 1.0 to 3.0, 5.0 and beyond.

Whichever nations harness this potential will win the Great Game 2.0.

Joseph A. Stanislaw is an Independent Senior Advisor to Deloitte. He is also the founder of the advisory firm The JAStanislaw Group

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