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Review of the panel discussion held by IE Energy Club and IE International Relations Club at IE

Business School, Madrid on February 7, 2017

Written by Manuel Weissenegger, Master in International Relations Candidate

As geopolitical dynamics unravel, the interrelated questions of clean energy and climate change face significant challenges. On February 7, 2017, we had the opportunity to hear the insights of Gonzalo Escribano, PhD and Lara Lázaro Touza, PhD from the Elcano Royal Institute. First and foremost, I cannot stress enough the fascinating intertwining of politics and economics that the world of energy faces. Decisions made in Washington or Brussels can ripple throughout the globe and have reverberating effects from Riyadh to Algiers. Such decisions can clearly also have dramatic effects on both clean energy and climate change. However, there are two important messages I could catch from this interesting discussion. First, there is hope out there. Second, while the news coming from Washington are certainly important, the US is not the only player in the field. In general, I was convinced that while clean energy and climate change do indeed face critical challenges, media coverage of negative events is exaggerated. Instead, we should not prematurely give up the hopes that a cleaner and more sustainable world is possible.

But what exactly did we learn? On the future of clean energy, Gonzalo Escribano pointed out what follows. First, in current geopolitical debates, energy independence is a key word. However, we should be warned. The notion of full-fledged energy independence is not only far from viable, but even undesirable. As he puts it, “it’s not bad to import renewables”, as long as the import-scheme is sufficiently diversified. A second insight focusing on the domestic level is associated with the power transfer related to renewables. Since clean energy (in most cases) needs a grid, there is a transfer of power from the owner of the source of power to the owner of the grid. This creates a “grid community”. Third, the geopolitics of energy are clearly marked by the recent OPEC deal to curb production. The members (and allies) of the cartel appear to follow through with their pledges. However, this will largely depend on how the Trump administration implements the Iran-nuclear deal. Iran would break the OPEC agreement should it face economic sanction limiting its global positioning in the oil market. This is where the fascinating dynamics of geopolitics become evident. Finally, an understated source of hope comes from the EU’s winter package presented on November 30, 2016 and entitled “Clean Energy For All Europeans”. This package could provide an effective way of diversifying European energy supply from gas to a combination of gas and renewables.

As for climate change, the situation does appear more dire. Again, the gears of geopolitics are crucial. With the US attempting to withdraw from the hallmark Paris Accord there is a lot of uncertainty. This uncertainty is not overcome by the unexpected pledge made by Xi Jinping to be a leader in the fight against climate change. Rather, this pledge appears hopeful but questionable. For Lara Lázaro the paradox in this situation is that “this time it is the markets that might safe us”. With ever-lower prices for clean energy, there are signs of hope that emissions might drop.

In conclusion, the geopolitics of clean energy and climate change should make as wary about the chance of achieving the goals set in Paris. However, we ought not give up our ambitions of making this world a cleaner and more sustainable place.

February 11, 2017

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