The global balance of power is shifting from the declining petrostate in the west to the rising electrostate in the east, as China dominates the energy transition while the US clings to fossil fuels. Donald Trump's policy of 'energy dominance' seeks to turn back the clock, using tariffs and military threats to open markets for his supporters in the fossil fuel industry. Meanwhile, Xi Jinping presides over a country that has invested more than any other in renewable energy, buffering its economy from gas price shocks and opening up export markets for solar panels, wind turbines, and electric vehicles.
History shows that when the dominant form of energy changes, there is often a shift in the global pecking order. We are now in the midst of such a transition as the epoch of petrol, predominantly produced in the US, Russia and Gulf states, gives way to an era of renewables, overwhelmingly manufactured in China. However, the outcome remains contested, and the process could be ugly. The new energy order is winning economically and technologically, but the old petro-interests still wield political, military and financial might.
Democracies across the planet are now threatened by what might be called fossil fuel fascism – an extremist political movement that breaks laws, spreads lies and threatens violence to maintain markets for oil, gas and coal that would otherwise be replaced by cheaper renewables. The war against Iran is driven by multiple factors, including its nuclear program and Trump's need for distraction, but the wider context is that the Earth is becoming more hostile for humanity, driving up tensions and redefining geopolitical realities.
In the short term, the biggest windfall from the Iran conflict has gone to the US petroleum industry, which was struggling with low prices earlier this year but now enjoys a revenue surge while rival suppliers in the Gulf are choked by threats in the Strait of Hormuz. Along with Russian and Saudi petro-companies, US energy suppliers look set to cash in for months, even as consumers pay more at the pumps. The war is also forcing countries to explore ways to increase energy independence, though this will initially involve increasing domestic oil production.
