There is a widely held belief that when countries have state ownership of natural resources, particularly oil and natural gas, they often experience the negative consequences associated with the “resource curse”. Some say that resource nationalism poses a significant obstacle to the transition to renewable energy across the world, particularly in countries where resource management is monopolized by the state in adjacent sectors. As it is important to promote renewable energy for a cleaner and more sustainable future, resource nationalism can therefore have both positive and negative impacts on the transition to renewables. Check out some insights below.<
DevelopmentAid: How can green-resource nationalism impact the transition to renewables?
“There are many concerns about the transition to renewables. One of them is the dependence of this process on a few leading countries that produce materials that are critical for the industry. The International Energy Agency analyzed where the extraction and processing of the necessary metals occurs. One name appeared almost everywhere – China. It is the largest producer of many critical minerals for the transition to renewables and nearly the monopolist of their processing. Another issue concerns specific minerals. Cobalt is primarily extracted in the Democratic Republic of Congo and often from artisanal mines with almost no regulations. Journalists have found children as young as four working in dangerous conditions for as little as 8 pennies a day. UNICEF has estimated that conditions such as this may affect about 40,000 children. The transition to cleaner energy is vulnerable to resource nationalism but is also mining intensive. To achieve net-zero emissions by 2050, the pivot toward curbing greenhouse gases will spur unprecedented demand. Moreover, renewable expansion may trigger political backlashes, and resource nationalist claims about abstained sovereignty may constitute considerable obstacles to renewable energy transitions. Alternative solutions (including a circular economy) for the transition to renewables are needed, and some innovations are already in the research and development stage.”
“The unequal geographic division of green natural resources over the planet seems to have today given the keys of humanity’s future to the hands of a few countries. According to a UK Government paper published recently, 70% or more of the planet’s green energy resources are concentrated in three countries in the world. Countries like the DR Congo and China alone hold respectively 70% and 60% of cobalt and RREs world reserves. According to the IMF, the present supply of graphite, copper, platinum, lithium and cobalt is expected to increase significantly from 300% to more than 450% from current levels to meet the expected demand towards the objectives of net zero by 2050. This unique position of very low competition may obviously make it more difficult for these states to resist the temptation to dictate prices or implement policies that might eventually circumvent the energy transition initiatives towards the horizon of this very near financial windfall. In these times of profound changes on the international stage, politically and socially, should this 4th industrial revolution and the new universal challenges also be seen as an opportunity for humanity to rethink its economic model?”
“In the situation where the state has the monopoly over fossil fuels, the state itself is the main impediment to the transition to green energy. While politicians often promote nationalistic sentiments to that end, the state embraces a more direct approach to limit the market for renewables via laws and regulations. This literally happens in an automatic fashion when established economic agents and dynamics prevent the transition without any additional measures or action. Therefore, it is rather difficult for companies to invest in renewables and acquire a meaningful market share in these “resource-cursed” states. On the other hand, states are not the only agents undermining the transition. It is naive to assume that multi-national oil companies would allow the transition to renewables for the sake of their revenues from fossil fuels without a fight. Hence, the very existence of such multi-national companies has a negative impact on the increase of renewables’ market share in the regions where they operate intensely. Nevertheless, all in all, this is a public policy decision through which states can mobilize economic agents to more environment-friendly energy production. This can be achieved via taxes, subsidies, or other kinds of positive or negative incentives. At the end of the day, multinational oil companies might also be on board with a view to ensure their own production sustainability which makes more economic sense for them to invest in renewables in the long run.”
“Green-resource nationalism has both positive and negative impacts on the transition to renewable energy. On the one hand, it promotes energy security by reducing the reliance on imported fossil fuels and stimulates domestic renewable energy production, leading to economic growth, job creation, and innovation. It also contributes to global climate change mitigation. On the other hand, green-resource nationalism can hinder international cooperation and impede the global diffusion of renewable technologies. Trade barriers and preferential treatment for domestic industries disrupt knowledge sharing and cost reductions. Moreover, it may result in resource inequality, favoring countries with abundant renewable resources and disadvantaging others. To navigate these challenges, striking a balance between domestic development and international cooperation is crucial. Collaboration, fair resource sharing, and open knowledge exchange are key to realizing a sustainable and equitable global energy future. Countries must prioritize energy security while actively promoting collective efforts to combat climate change.”
DevelopmentAid members are provided with exclusive access to a wide range of career development tools that are unmatched by any other sources. These tools encompass the largest job board specific to the development sector, individual consulting opportunities, comprehensive organization contact details, curated shortlists and award notices, project references, and various other resources. Become an Individual Professional Member here.