The new geopolitics of energy


The transition to a climate-neutral energy system in 2050, largely based on renewable energy sources, can be seen as a technological rupture vis à vis the still largely fossil fuel-based energy and economic system in place. It is a source of challenges and opportunities for economic actors, in the EU and globally.

Research and innovation will play a crucial role to accompany the transformation be it through individual technology development, or systemic innovation. The key to success in the long-term is to develop a wide portfolio of cost-effective and efficient carbon-free alternatives, in combination with solutions for an integrated energy system, built on digitalization and sector integration.

It will be essential to plan and operate such a system “as a whole,” across multiple energy carriers, infrastructures, and consumption sectors, by creating stronger links between them with the objective of delivering low-carbon, reliable, and resource- efficient energy services, at the least possible cost for society. The recently published EU strategies on Energy System Integration and on Hydrogen look into an efficient integration of decarbonized, mostly renewable, supply of electricity.

Oil and gas have played a key role in international geopolitics since 1912. The same year, Winston Churchill, First Lord of the Admiralty of the Royal Navy, decided to convert the fleet from coal to oil to keep pace with the faster German ships. He believed that the cruising speed of the new Queen Elizabeth frigates had to reach at least 25 knots to escape the enemy. A speed which would have been impossible to achieve with coal, which has a lower energy density. Furthermore, the logistics of coal made refueling at sea almost impossible. The conversion of the fleet made overseeing the complicated logistics chain of oil production, storage and distribution a national priority. In 1914 Churchill nationalized the Anglo-Iranian (ancestor of the current BP) guaranteeing the Royal Navy twenty years of supplies.

During the war Adolf Hitler did what he could to get his hands on Baku, Astrakhan and the oil reserves of the Caspian, advancing the Barbarossa operations and the battle of the Caucasus. In the summer of 1941, England and the Soviet Union invaded Iran, deposing the King of Persia, Reza Shah, accused of being close to Hitler.

Wars, colonialism, races to build regional and global spheres of influence have often had, as their ultimate goal, access to energy sources. The current “energy cold war” narrative sees the United States versus Russia and Iran and courting Saudi Arabia and other Persian Gulf states for energy interests. The recent increase in American domestic production due to the shale revolution has led to the United States’ energy independence and to a rapprochement between Saudis and Russians, historic producers who now find themselves dealing with a market flooded with shale oil and gas. In this regard, Russia has recently relaunched the idea of a “gas Opec” in order to adjust supply and balance the market.

Clean hydrogen (both green obtained from renewable sources through water electrolysis, and blue produced from methane with CO2 capture) is a solution that can combine the fight against climate change with regional cooperation and the lowering of geopolitical tensions. Thanks to hydrogen, energy produced from renewable sources in areas of the world endowed with much sun and wind but located far from the point of consumption can be developed and transported over long distances at a low cost. The IEA has calculated that it would be cheaper for Japan to import green hydrogen from the Australian desert or the Middle East than to produce it locally. Europe could import it from North Africa, Norway and Russia, the same trio that currently supplies it with fossil fuels. This could balance the gradual reduction of gas and oil imports and prevent possible tensions in producer countries.

The six countries of the Gulf Cooperation Council (Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates) have already launched some of the largest solar energy projects in the world, worth tens of gigawatts. When these initiatives will be combined with an equally ambitious hydrogen program, the Gulf countries will be able to maintain their energy leadership. The abundance of land for large photovoltaic systems, the strategic geographical position and the great industrial and intellectual skills from the oil and gas sector make this area a natural hydrogen hub. This could offset the reduction in revenues from gas and oil. It is estimated that if 20% of territory of the United Arab Emirates were used for solar plants for the production of green hydrogen for export, the same revenues currently guaranteed by gas and oil could be achieved.

The gradual shift to a hydrogen economy would also provide local oil and gas companies with new business opportunities, allowing them to enter into agreements and partnerships with clean energy companies, and retain, if not increase, current employment. The existing infrastructure represents a key factor in accelerating the development of hydrogen and offers a competitive advantage to countries that currently export oil and gas. Of course, a global hydrogen market can only be developed through international cooperation, involving both producer and consumer countries, as well as international organizations such as OPEC, IEA and IRENA. The next COP26 and the G20 meeting in 2021, of which Italy will be co-chair and chair respectively, could be a precious opportunity to establish international coalitions for the development of hydrogen.

Much of the existing infrastructure for energy transport is already transnational by nature and therefore encourages cooperation, as the experience of importing natural gas from Russia and North Africa has shown. This system could even push the most reluctant countries to join the global effort against climate change.

And today we are granted a historic opportunity. The recent agreement, unthinkable until a few months ago, between Israel, the United Arab Emirates and Bahrain offers us the possibility of extending this international cooperation to countries that until now did not even recognize each other diplomatically.

Estimates show that just over 1% of the Sahara could meet all of the world’s energy needs without emitting CO2. Of course, this is only a theoretical suggestion, because it would still be impractical to cover such a large area with solar panels, but it helps to give a sense of the potential that North Africa holds for the development of new renewables.

Indeed, one of the crucial issues in addressing climate change is reconciling the pro-environment fight with economic growth. The solution we will adopt must not only solve climate change but must also take into account another global challenge: that against inequality. As the European Commission and many countries (starting with Germany) now clearly state, a new partnership between Europe and Africa based on hydrogen is not only feasible but also desirable. It would become a “win-win” alliance, that could make the transition to zero CO2 less burdensome whilst ensuring social and economic development in both continents. In this context, Italy has significant advantages: it already acts as an infrastructural bridge between Europe and Africa, both with the gas pipelines arriving from Algeria (through Tunisia) and Libya and with the routes that can export hydrogen to Northern Europe, and it possess infrastructure and an energy supply chain (with small and large companies that are leaders in their sector) that are unique in Europe.

The import of green hydrogen would allow the European Union to get closer to achieving its targets for reducing emissions. As a recent analysis by Hydrogen Europe confirms, North Africa, and in particular the Maghreb area, offer an immense potential for this import. Solar energy resources are abundant in the region and the Sahara Desert has a vast generation capacity, from both solar and wind power. But what matters most is that we are already connected: the Maghreb exports natural gas from Algeria and Libya, with numerous pipeline connections to Spain and Italy. In addition, there are two electricity transport cables, each with a capacity of 0.7 gigawatts, between Morocco and Spain.

It would therefore be very interesting for Africa and Europe to unlock the export potential of renewable energy in North Africa if the Maghreb countries converted this electricity into hydrogen and transported the energy through the existing grid. As we have already highlighted, a part of the latter currently carrying natural gas could be converted to accommodate hydrogen, and it would be a cheaper option than building electric cables to transport renewable energy to Europe.

It’s not all. On the one hand, hydrogen can be the path that many of the countries that produce hydrocarbons can and must take to balance the decrease in the use of fossil fuels; on the other hand, several African countries that never benefited from the presence of oil deposits could begin to be part of the energy game. Let’s think of Eritrea, Ethiopia and Mali for example. And speaking of Mali, starting a production of this type could undoubtedly help the country to emerge from the spiral of violence and instability, which is not just a domestic problem but a concern for the entire international community. Not only in terms of security, but also and above all, as the flows of recent years have dramatically demonstrated, in terms of irregular immigration to the Old Continent.

Another example is that of the Congo, where according to recent reports, Germany would like to support a plan to build the largest dam in the world (twice the size of China’s Three Gorges) to produce and export large quantities of green hydrogen to Europe.

These considerations can help spark closer partnerships between Europeans and their African neighbors, a development that could foster the inclusion of an “African dimension” into the European Green New Deal. This would free the bottlenecks that have already established themselves in the electricity grid in Europe, and which risk hampering the ability to deliver more renewable energy into the system.

The executive vice president of the European Commission, Frans Timmermans, has already declared his dream of seeing Europe and Africa united in an energy collaboration to develop the enormous potential of renewables. Hydrogen is a fundamental tool to make it happen. In this geopolitics of hydrogen, Italy will also be able to play a leading role thanks to its geographical position, its entrepreneurial skills and the sensitivity of its institutions to the issue of climate change.

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