New energy-exporting nations will emerge and countries clinging on to fossil fuels risk political instability. As the Munich Security Conference discusses shifts in the geopolitical balance, it is clear that decisive and sustainable climate action is vital.
By Johannes von Karczewski, Heba Abd El-Hamid and Uwe Schuetz
Climate change is a fact. And the energy transition is an absolute necessity if we want to keep our planet habitable for future generations. Currently, however, Earth’s atmosphere is warming faster than ever before, fueled by ever-increasing amounts of carbon dioxide and other greenhouse gas emissions. After a temporary decline at the beginning of the 2020s due to the COVID-19 pandemic, global emissions are once again on the rise.
This is partly owing to our dependence on fossil fuels for power generation, mobility, and industry. While renewable energies will play an increasingly important role in the coming years, fossil fuels today still account for about 80 percent of global energy and about two-thirds of global electricity generation.
“Despite challenges, energy security will ultimately move the world in the right direction. It will make most countries energy independent. It will provide emerging markets with the resources they need to develop their economies.”Christian Bruch, President and CEO, Siemens Energy
“Our world is in danger. Traditional certainties are crumbling, threats and vulnerabilities are multiplying, and the rules-based order is increasingly under attack. The need for dialogue has never been greater.”Wolfgang Ischinger, Chairman, Munich Security Conference
Fossil fuels hot spots are in at-risk regions
However, as the share of renewable energies continues to grow, the importance of coal, gas and oil on the world market will decline – with a powerful impact on the world’s largest oil- and gas-producing countries and regions.
The 2021 Political Risk Outlook cautioned that countries that fail to diversify their economies away from fossil fuel exports will face a “slow-motion wave of political instability”. For this reason, the Middle East with Kuwait and Saudi Arabia, Africa with Libya and Algeria, and former Soviet Union countries, such as Russia and Kazakhstan, are crucial for global security.
These countries could potentially see themselves as “losers” in the energy transition as new geopolitical opportunities open up: In sunny or windy areas, developing and developed countries can become exporters of clean hydrogen or e-fuels, significantly improving their global position.
Shift in geopolitical balance
“Fundamental changes are taking place in the global energy system that will have significant geopolitical implications,” says Christian Bruch, President and CEO of Siemens Energy. “These changes will affect almost all countries and will have wide-ranging consequences on economies and society. The geopolitical balance will shift and the dynamics of relationships between countries will also be transformed.”
Europe, as a strong energy importer, will be even more dependent on affordable energy. The “winners” of the change could be found among the regions and countries that already have the lowest electricity costs for renewable energies such as onshore wind power, including Africa, China, or the United States and Latin America.
Ambassador Wolfgang Ischinger, Chairman of the Munich Security Conference, issues a stark warning. “Our world is in danger,” he says. “Traditional certainties are crumbling, threats and vulnerabilities are multiplying, and the rules-based order is increasingly under attack. The need for dialogue has never been greater.”
Fostering social acceptance for energy transitions worldwide
Dialogue between nations is crucial – as is a robust social acceptance of the measures needed to keep the global temperature rise below 2 degrees Celsius. To achieve this, we need to create a global environment open to technology and innovation. This will require us to do five things at once:
- Think climate policy globally: Climate change is a global problem. Temperatures will not stop rising in Berlin or Paris if emissions do not fall in New Delhi. That’s why governments around the globe need to develop shared goals, share knowledge and ensure that innovative technologies developed in one country are quickly transferred to others. The aim must be to avoid geopolitical distortions. We need an internationally coordinated climate policy that combines energy and security. The U.N. climate summit in Glasgow was an important milestone in this regard, even though it resulted in several compromises that hardly went beyond steps already taken. But they can and must now be followed up in concrete terms.
- Drive innovations forward sustainably: Part of global emissions can be reduced by existing technologies. However, disruptive technologies are also needed to achieve the net-zero targets. These include solutions for energy efficiency, hydrogen-based fuels, carbon capture, and storage. These technologies must be brought up to a commercial scale so that they can be deployed quickly. Here, the public sector has a big role to play by leveraging its procurement power to drive demand. Governments can build the infrastructure and level the playing field to make innovative technologies more competitive.
- Unleash financial power: Around €50 trillion will be needed by 2050 to shift the global economy to net-zero emissions. Seventy percent of the additional spending required will be needed in developing countries. We need to find creative ways to finance climate technologies and projects. We need continued funding for bridging solutions, such as the highly efficient (and hydrogen-ready) gas-fired power plants. We also need innovative structures for risk and capital allocation to support new technologies and business models.
- Assume corporate responsibility: Companies will need to declare climate neutrality as a fundamental principle of their actions. Whether the energy transition succeeds depends on the efforts of the business community. Government-set climate targets can be achieved if companies shrink their own carbon footprint and include their supply chains in the process.
- Forging alliances: Cooperation is the key to a successful energy transition. To gain momentum, politics, business, and society must work together to find solutions.
“Despite challenges, energy security will ultimately move the world in the right direction,” says Christian Bruch. “It will make most countries energy independent. It will provide emerging markets with the resources they need to develop their economies – all while keeping global temperatures from rising more than 2 degrees.”
An annual conference on international security policy that has been held in Munich, Germany, since 1963, it is the world’s largest gathering of its kind.
Over the past four decades the Munich Security Conference has become the most important independent forum for the exchange of views by international security policy decision-makers. Each year it brings together about 350 senior figures from more than 70 countries around the world to engage in an intensive debate on current and future security challenges.
Johannes von Karczewski heads Strategic Messaging at Siemens Energy. He is convinced that only those who know (their own) history can shape the future.
Heba Abd El-Hamid is a former business journalist and now works for Siemens Energy where she contributes to developing corporate narrative.
Uwe Schuetz has worked as a communications expert for Siemens Energy for many years and previously was active as a public relations consultant for technology companies.
Combined picture and video credits: Siemens Energy, MSC, Getty images