Discussing the importance of integrated global markets, Jason Bordoff, Founder and Director of the Center on Global Energy Policy at Columbia University, and an Expert on Global Energy Policy and Decarbonization, emphasizes that the energy transition will not take place without integrated global markets and comparative advantages. It is fundamental that we understand that energy market integration is key to promoting a more efficient adoption of clean energy, avoiding any form of protectionism that could slow down this progress.
«Because you can’t have a clean energy transition at the scale and speed we need without integrated global markets, without comparative advantage. There are parts of the world that are going to be better at making some things than others. And it is probably correct to maybe not think about China quite the same way we did 30 years ago in the formation of the WTO, but it is also the case that you can’t have every country try to make the clean energy transition happen within its own borders. And what we’re actually seeing today are countries that can’t compete with a trillion dollars in subsidies, that are worried they’ll lose investment, and they’re putting up roadblocks.»
On the role of geopolitical tension in the market integration process – given the competition between major powers like the United States, Europe, and China for the energy transition – Bordoff underlines the importance of balancing national interests with the need for global interconnections. While the transition towards a decarbonized energy system will take several decades (and will be a difficult and complex process), on the other, Bordoff imagines a future in which a more electrified world will enjoy the benefits of energy security, and the reduction of geopolitical conflict related to the energy trade.
«That’s about the multi-decade process of transition. Like, getting from here to there is going to be difficult and complicated. We often think about the end state: what does net zero look like? Hopefully, we get close to that or all the way there. And when we get there, I think it is a world, as I said earlier, that is more energy-secure. A lot of energy security risks today come from global trade. A decarbonized world, we know, will be one that is much more electrified. Electricity tends to be produced and consumed more locally. According to the International Energy Agency, global energy-related trade is around 40% of what it is today in a world that gets to net zero. So that has energy security benefits, that can reduce the potential for geopolitical conflict.»
Last, but not least, Bordoff addresses the International Energy Agency forecast that US$1.5-2 trillion a year will be needed by 2030 to support the energy transition in emerging and developing economies. And this issue is related to the idea of interconnection as a tool to promote the development of new energy infrastructure and a greater integration of markets amongst developed and emerging economies to ensure that resources are used in the most efficient and sustainable manner.
«We’re going to need somewhere between, according to the International Energy Agency, $1.5 to $2 trillion by 2030 into the clean energy transition and emerging and developing economies, compared to $250 billion this year. I mean, just several-fold more in parts of the world where there are a lot of challenges to putting capital to work. We need to overcome those in ways that benefit those local economies […]
[…] So, what if countries that are wealthier and have historically contributed the bulk of the emissions thought about where to deploy some of these technologies globally that improved cooperation between rich and poor countries, created economic opportunities in parts of the world that historically have been targets of investment for extraction? We can think about being targets of investment for clean energy solutions.»
Source:
Geopolitics and the Energy Transition, Jason Bordoff in conversation with Greg Gershuny The Aspen Institute (22 marzo 2024). https://www.youtube.com/watch?v=B-nQLWCRBiQ
