For more than a century, global geopolitics has been shaped by the struggle to control oil. Wars, alliances, trade routes and strategic maritime chokepoints have all been influenced by the need to secure hydrocarbon resources.
As countries pursue net-zero emissions, many believe the shift to renewable energy will reduce the geopolitical tensions that have long been driven by dependence on fossil fuels.
The green transition also creates a paradox, as the conversion to renewable energy will reduce the world’s reliance on oil, but drastically increase the world’s reliance on a new set of strategic raw materials, including lithium, cobalt, nickel, graphite, and rare earth materials. The world is not moving away from resource politics, but rather moving into a different phase of resource politics.
The focus of international competition is shifting from oil-producing regions to countries with the capacity to mine, process and manufacture the critical materials needed for the clean energy transition.
From oil chokepoints to mineral value chains
Oil was the foundation of geopolitics in the 20th century. The various maritime choke points (e.g., the Strait of Hormuz, the Suez Canal, and the Strait of Malacca) had great significance in the world as it supplied fuel for the world economy and was the cornerstone of global energy security.
With the transition to a green economy, that equation has fundamentally changed. Electric vehicles, solar panels, wind turbines, semiconductors and advanced battery systems all depend on access to critical minerals such as lithium and cobalt. In this new energy landscape, geopolitical power is determined not merely by the possession of these minerals, but by the ability to control their processing, manufacturing and supply chains.
This distinction is very important. For example, Australia has large deposits of lithium, but most lithium is processed in China. Similarly, most of the world’s cobalt is also produced in the Democratic Republic of Congo, but the downstream value of the cobalt is controlled by foreign companies. This means that refining capacity and having the right industrial support system to produce the products is much more significant in a clean energy economy than the geological availability of the resource.
This was realised by the Chinese government years before any other country in the world, and rather than concentrating only on the production of renewable energy, they set up the complete industrial chain including mining, refining, production, and exports. China is now the leading in producing batteries and solar photovoltaic products and holds a large portion of the rarer materials being processed and refined. As a result of this situation, the clean energy value chains have become a tool for Chinese geopolitics, as exemplified by the recent Chinese restrictions on exports of gallium, germanium and rare-earth magnets, which have no substitutes in microchips or in military electronics.
The United States and the European Union have also implemented industrial policies of their own. The US Inflation Reduction Act is designed to assist in reducing dependence on the Chinese supply chain, while the EU’s Critical Raw Materials Act is intended to help diversify supply of mineral resources. The nature of the competition has now extended beyond climate change leadership.
At the same time, resource-based producer nations are beginning to change their expectations regarding how they will utilize raw materials for economic benefit. For example, Indonesia’s recent ban on shipping nickel ore is an attempt to move away from simply selling their raw resources to outside sources and to build their own processing/refining facilities and battery production plants. Thus, those nations which process will have greater long-term strategic positions than those that solely produce.
India’s challenge is industrial, not geological
Instead of producing a flashy report about the discovery of 5.9 million tonnes of lithium reserves at Reasi in India, they should focus on the real issue i.e inability to convert the geological resources into actual industrial capability. The countries that will determine the future of the green economy will not be the ones with the greatest quantities of ores and minerals but rather the countries that successfully establish refining and manufacturing facilities to process those resources.
Initiatives such as the National Critical Mineral Mission; KABIL-India; and the Production Link Incentive Program make positive declarations. But these alone will not determine India’s status in relation to the green economy. An integrated system of mining, refining, processing, recycling; conducting research and development; effective international supply chain policy will determine if India can be an active participant or simply a consumer in the global green economy.
At the same time, there is a need to recalibrate how India approaches its foreign policy. Many countries such as Australia, Argentina, Chile, Indonesia, and numerous African nations possess deposits of critical minerals. As a result, developing strategic relationships with these countries for the joint long term sustainable management of critical minerals will become as important as establishing long term energy relationships in the past with major petroleum producers; therefore, colocating these two important objectives will require implementation of similar coordination and cooperation processes for their benefit.
There is an increasing relationship between climate policies and national security. Just as the availability of oil has previously shaped economic competitiveness, energy, electricity storage, semiconductors, and access to critical materials will similarly shape it in the future.
The green transition does not mean that resource dependence on fossil fuels will be replaced by non-dependence on fossil fuels; instead, the green transition will fundamentally change how geopolitical competition occurs (e.g., there will be fewer disputes over oil deposits; however, there will be more competition over lithium, cobalt, rare earth metals and capabilities to refine and manufacture them).
The 20th century rewarded countries that controlled oil. Similarly, the 21st century is likely to benefit only those who control mineral processing, advanced manufacturing and clean-energy technologies. The new world economy will be decided not based on the countries with the best deposits of minerals, but by leveraging those minerals into industrial production capacity and geopolitical strength.
Janvi Singhi is a postgraduate student of Political Science and International Relations at Indira Gandhi National Open University, New Delhi. Views are personal.
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