Overline: Commentary

Headline: The Pitfalls of Shifting to Low Carbon Technologies

The energy transition could become an opportunity or a geopolitical threat for a country. But what factors does the outcome depend on? This issue has recently been studied by several research teams. Prof. Andreas Goldthau reviews these efforts in the article “The Tricky Geoeconomics of Going Low Carbon”. He argues that structural factors and market power will decide which countries end up winners and which losers in decarbonising their economies.

Globaler Süden Solarpanele — The energy transition can be an opportunity or a risk for a country. Shutterstock/ photolike

16.12.2021

According to Goldthau’s analysis, whether the Global South catches up on decarbonisation depends on each country’s specific domestic political economy. This will determine whether developing nations have access to clean technologies or not. Tech transfers typically come with Foreign Direct Investment (FDI). Short of sufficient clean energy FDI, the world may be heading towards an ‘uneven’ low carbon transition, in which late decarbonisers find themselves in a vicious feedback loop of persistently high emissions and decreasing economic competitiveness. This problem may get even worse if William Norhau’s exclusive climate clubs emerge, Goldthau says.

Countries with triple-A ratings – primarily those in the Global North – can use public spending for ‘greening’ their economies as part of fiscal stimulus packages. This happened during the Covid-19 crises, while poor nations struggled to keep their economies afloat. Moreover, large markets like the EU’s could be leveraged for advancing green industrial policy at home, which to trading partners may simply amount to ‘green protectionism’.

Goldthau concludes that, in the end, political will may not be the problem, nor lacking economic incentives or even adverse investment environments. Instead, it will likely be structural factors and the market power of established economic blocs that determine the geo-economic effect of decarbonisation.

Publication:

Andreas Goldthau: The tricky geoeconomics of going low carbon, Joule Volume 5, Issue 12. https://doi.org/10.1016/j.joule.2021.11.012

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