How Tectonic Shifts in Global Energy Are Affecting Global Governance

Abstract

The global energy landscape is undergoing tectonic shifts. Growth in energy demand and the revolution in unconventional oil and gas supply are restructuring world energy flows and geopolitics. At the same time, climate policies push for a decarbonised global energy mix. The resulting decentralisation of energy production and consumption is aided further by the digitalisation of energy systems. Other technological innovations are also driving the process and causing significant changes in, for instance, renewable energy and low-carbon vehicles—but also in oil and gas production.

All these shifts in global energy have fundamental implications for not only energy economics but also energy geopolitics and related global governance issues. Hafner and Wochner take a scenario approach to model the strategies of major geopolitical blocs in the age of climate change: humanity might achieve a coordinated global effort for climate change, take only weak action on the climate or simply muddle its way through in dealing with the central threat of this century. In each of those scenarios, the major geopolitical blocs hold differing strategic positions, with the outcomes benefiting some more than others.

The energy governance landscape is now highly fragmented, and this chapter analyses which mechanisms will help govern the coming transition.