Friday, April 16, 2021
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Energy: driving politics and economy in the past and in the future

Geopolitics has always been intertwined with energy. Pulitzer Prize-winning author Daniel Yergin explained it clearly in his latest book The New Map: Energy, Climate and the Clash of Nations.

As a Brookings Institution study put it, “in the modern era there is no other commodity that played such a vital role in driving political and economic turmoil and there is every reason to expect this to continue.”

I always loved maps. They reflect the importance each country gives to what surrounds it, whether is politics, economy or historical background. Some maps are easier to read than others. Mr Yergin defines this new map as not simple to follow for its dynamics are constantly changing.

Countries like the United States, China, Russia and Saudi Arabia are all essential players of this game.

The New Map is a story of pioneers: stubborn people that wanted to get something done and didn’t stop until they saw the results, no matter how much time was needed. The book tells the story of a Great America at the time when the shale oil and gas revolution took place. It also raises questions about the future of this energy giant. President-elect Joe Biden has shown support for climate initiatives and promised to rejoin the Paris Agreement during his first days of office. However, only if he will secure support both in the House and the Senate, he will be able to keep its promises and commit hundreds of billions of dollars for the energy transition. If Republicans will keep the majority within the Senate, the new President will need to find other tools.

Cover: The New Map.

And in a way or another, the US had and are influencing the rest of the world as well, including Central and Eastern Europe. The US Secretary of State Mike Pompeo recently visited different countries in the region, underlining how important it is to decrease the energy dependence and both the political and economic influence from Russia and China.

As Mr Yergin recalls in his book, the rise of shale has been one the keys to diversifying the European gas market and enhancing energy security. However, a sign of recognition also goes to Europe itself and in particular to the CEE region that over the past decades was able to diversify its energy sources, with new suppliers and new routes appearing on the European map.

Regarding Russia and China, we are used to thinking about them as superpowers. Indeed, Mr Yergin points out that in China there is the majority of lithium batteries supply of the world. However, the geopolitics of these countries is a little bit more complicated showing that they are quite dependent on each other. As Mr Yergin wrote: “Russia has returned to the Middle East and is pivoting to the east, to China. China needs energy and Russia needs the market.”

Finally, also climate change will play a big role. If we think about how long it took to develop the solar panels we use today, some might be sceptical towards a fast energy transition and the coronavirus pandemic underlined that. Therefore the solution is one and only: global economies need to diversify. As oil and gas changed the world’s geopolitical dynamics in the past, so will the energy transition and a new map awaits us.

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