The energy transition is no longer just a response to the climate crisis. It is reshaping global geopolitical balances, industrial competitiveness, and national security strategies.
The report on the geopolitics of the energy transition
The energy transition is not only a response to the climate crisis, it is one of the main factors redefining global geopolitical balances. As highlighted by the report Geopolitics, energy transition, and strategic choices on renewables, produced by LUISS CISS and Enel Foundation, the shift from fossil fuels to renewable sources directly affects national security, industrial competitiveness, and the distribution of power among states. This is why the geopolitics of the energy transition is increasingly intertwined with national security.
Energy, historically at the center of international relations, is changing its nature. Dependencies do not disappear, they evolve. If in the twentieth century control over oil and gas defined alliances and conflicts, today the real field of competition is represented by clean technologies, critical materials, industrial supply chains, and innovation capacity.
The energy transition therefore increasingly appears as a national security issue. The decentralization enabled by renewables reduces risks linked to centralized fossil fuel supplies, but introduces new vulnerabilities related to the availability of critical technologies and materials, as well as the cybersecurity of digitalized infrastructure. In this context, the ability to innovate by developing more advanced technologies and to manufacture devices at scale at sustainable costs is essential to maintaining economic competitiveness.
Geopolitics of the energy transition beyond the environmental dimension
The report highlights how energy policies result from three interconnected dimensions:
- a climate and ethical dimension, linked to emissions reduction and environmental sustainability;
- an economic dimension, connected to costs, benefits, and industrial competitiveness;
- a strategic and security dimension, which is becoming increasingly central to state decision-making.
It is precisely this last dimension that is gaining growing importance. The energy transition is now perceived as a key factor of strategic autonomy, capable of strengthening or weakening a country’s international position. In a context marked by wars, trade tensions, and technological rivalries, multilateral cooperation often gives way to competitive logic.
How power balances are changing
Renewable energy sources, unlike fossil fuels, can theoretically be exploited almost everywhere. However, their effective deployment depends on three critical factors:
- access to critical materials such as lithium, cobalt, and rare earths;
- technological and manufacturing capacity;
- availability of capital and advanced infrastructure.
China emerges as the dominant player. Beijing controls a very large share of the production and refining of critical materials and more than 70 percent of global manufacturing capacity for major clean technologies, including solar photovoltaics, batteries, electric vehicles, and electrolyzers. This industrial leadership allows China to occupy a central position in the new value chains of the energy transition. The risk for Europe and the United States is evident: replacing dependence on Russian gas with technological and industrial dependence on China.
How energy security is changing
The shift toward a renewable-based energy system also entails a profound transformation of the concept of energy security. The traditional model, based on large centralized infrastructure and continuous fuel flows, is giving way to a decentralized, digitalized, and interconnected system.
This transformation presents both advantages and critical issues:
- greater resilience thanks to distributed generation;
- lower vulnerability to physical supply disruptions;
- new exposure to cyber risks and smart grid security;
- a shift in investment from OPEX, fuels, to CAPEX, infrastructure and technologies.
Energy security no longer concerns only energy availability, but also the ability to manage complex systems, protect data and digital infrastructure, and control key technologies.
Critical materials and new geopolitical dependencies
Critical materials in the energy transition, lithium, cobalt, and rare earths, are essential for batteries, solar panels, wind turbines, and electric mobility. However, their extraction and processing are highly concentrated in a small number of countries, often characterized by political instability or controversial alliances.
Potential supply shocks affecting critical materials could slow the transition in the medium to long term, also having a significant impact on costs and industrial planning. For this reason, securing raw material supply has become a strategic priority for governments and companies.
Geopolitics of the energy transition and the strategies of major global players
The report highlights that technological capability is fundamental to exploiting resources and creating competitive products. This ability to develop and leverage new technologies depends on several factors:
- a balanced mix of basic and applied research;
- the existence of an innovation ecosystem capable of turning discoveries into inventions and then into industrial products;
- the presence of an effective industrial base;
- sufficient public and private investment.
All these factors require sustained and long-term effort, guided by a clear strategic vision, and tend to produce results only over time. Measuring a country’s technological level is complex because of the many variables involved, including strategic secrecy. China, for example, despite its manufacturing advantages, shows patent levels comparable to other industrial powers, while benefiting from rapidly growing investment in the energy transition. Western countries must therefore invest in research and collaborate in order to maintain their technological advantage.
Strategies of the four key global actors
China
China has made the energy transition a pillar of its industrial and geopolitical strategy. It dominates manufacturing supply chains, but this position also entails risks linked to potential trade retaliation and growing international distrust.
China holds global leadership in clean technologies. It produces 85 percent of global photovoltaic modules. In 2023, it invested $890 billion in clean energy, 40 percent more than the previous year. The country could reach its emissions peak very soon and then see them progressively decline. China also holds a crucial advantage both in the production of many critical materials and in their refining. This translates into technological advantages as well as cost containment.
China’s energy strategy has evolved from a focus on energy efficiency from 1981 to 2000, to energy security from 2001 to 2010. The current phase combines security and climate sustainability and has been defined as the “energy rice bowl.”
United States
With the Inflation Reduction Act, the United States launched a broad industrial policy aimed at reshoring clean technology manufacturing. However, domestic political developments and the re-election of Donald Trump could slow Washington’s commitment to renewables in favor of fossil fuels.
European Union
The European Union is ambitious on climate targets but vulnerable from an industrial perspective. Initiatives such as the Net Zero Industry Act aim to reduce dependence on China and strengthen European strategic autonomy.
The EU has accelerated the energy transition, especially following Russia’s invasion of Ukraine. The main obstacle lies in divergent national interests among Member States, driven by differences in energy mixes, demand structures, and import dependence. European dependence on Russian gas has been drastically reduced, from 40–45 percent to around 15 percent. The goal is to eliminate it entirely by 2027. The EU is pushing renewables to reach 42.5 percent of energy consumption by 2030.
Europe’s transition to renewables also brings new challenges. The main one is the need to decouple supply chains from excessive dependencies and ensure long-term industrial competitiveness. This is why the EU has launched the Net Zero Industry Act. In addition, the profound transformation of the energy system will require the digitalization of the power sector and the protection of infrastructure from cyberattacks and other risks.
Europe has a strong dependence on China for the supply of critical raw materials. Countries such as France, Germany, and Italy have responded with similar but uncoordinated national strategies, creating dedicated investment funds of €2 billion, €1 billion, and €1 billion respectively to develop domestic supply chains.
Russia
Russia remains heavily dependent on fossil fuel exports and is seeking alternatives in nuclear energy and critical minerals, but is constrained by sanctions and structural technological delays. Oil and gas account for 30–50 percent of federal budget revenues and nearly 20 percent of GDP. Oil exports, representing 9 percent of global trade, are essential to sustaining the war effort in Ukraine.
Russia also dominates the enriched uranium market with 38 percent of global supply. In 2023, it generated more than $2.7 billion in exports. It controls 40 percent of global uranium conversion capacity and 46 percent of enrichment capacity. Despite holding significant reserves of critical minerals for green technologies, including 9 percent of rare earths and 8 percent of molybdenum, Russia has limited extraction and refining capacity and produces only 0.7 percent of global rare earths.
As a result, the global energy transition could have a significant negative impact on the Russian economy. The report forecasts a 16 percent reduction in fuel exports and an 8 percent decline in primary energy production over the next twenty years.
Global geopolitics of the energy transition risks and opportunities
The risks of the energy transition stem from the shift from a centralized system, where fossil resources are concentrated in the hands of a few and large-scale plants dominate, to a decentralized system in which energy production becomes distributed, small-scale, and autonomous. This transition requires new infrastructure such as smart grids and energy storage systems.
Vulnerabilities shift from control over fossil resources to dominance over key technologies and manufacturing capabilities, generating new interdependencies. A system based on distributed renewables is by definition more resilient than a centralized one, although it requires more complex and technologically advanced infrastructure. States must therefore rethink energy strategies in light of these new interdependencies and the need to control key technologies.
Possible international order scenarios and their impact on renewables
The scenario identified in the report as the “European dream” represents the most favorable condition for operators and for the energy transition process, especially in the European context. In this case, the availability of low-cost Chinese technology would combine with Western willingness to close the gap through investment in research and development. The system could stabilize around free-market dynamics, where access to resources is not distorted by geopolitical competition. However, this scenario appears difficult to achieve.
The report emphasizes that the most likely scenarios are also the most negative for the sector. In the “American dream” scenario, strong investments are expected to reduce the competitive gap with China, alongside growing protectionism in the US energy sector and continued investment in research, development, and manufacturing of transition technologies. The transition process would slow only in the short term and then accelerate once the gap is closed.
In the “Chinese dream” scenario, the report envisages intermittency in value chains, but not a halt to the transition. In this case, China’s significant advantage would not be matched by a strong US response. This scenario could represent a crystallization of the current situation, characterized by global value chains periodically affected by tariffs. It implies a stabilization of relations between West and the Rest, or G7 versus BRICS, or North versus Global South. This scenario suggests a gradual European slide toward long-term structural dependence on China, carrying a high strategic cost for the EU.
In the “Climate Nightmare” scenario, the US would shift decisively toward energy nationalism aimed at countering China’s competitive advantages, deemed too costly to close. This scenario is particularly adverse for the sector because blocking Chinese technology would not be matched by alternative investment in the energy transition. In extreme cases, a renewed dominance of fossil fuels could emerge, along with strong US pressure on European partners to abandon sourcing from China. Unfortunately, with Trump in the White House, this scenario currently appears the most likely.
The energy transition as a strategic choice
The LUISS–Enel Foundation report shows that the energy transition is now a strategic choice in international policy, not merely an environmental necessity. Its success will depend on countries’ ability to integrate sustainability, security, and economic competitiveness by investing in innovation, diversifying supply chains, and strengthening international cooperation.
In an increasingly unstable world, energy is once again a tool of power. Unlike in the past, however, it can also become a lever to build a more sustainable, resilient, and secure global system, provided the new geopolitical dynamics it generates are effectively governed.
Go to the report “Geopolitics, energy transition, and strategic choices on renewables” produced by LUISS CISS and Enel Foundation.
