Global energy sector transitions will have an impact on geopolitics

Major energy trends indicate that a rapid energy transition may shift geopolitical balance until 2040

Energy has always been an essential part of geopolitics. Transitions in energy markets and new technologies can have a significant impact on the geopolitical balance and national security by affecting countries’ energy trade, economy and security of supply. For example, combatting global climate change has already had and will continue to have an impact on the demand for hydrocarbons. Decreasing demand can put financial pressure on countries with economies dependent on export of hydrocarbons (coal, oil and gas), and this may create political instabilities. Simultaneously, political decisions to financially support energy production from renewable sources, mainly wind, have reduced countries’ dependency on fossil fuel imports and paved the way for a wave of on countries’ own competitive renewable energy sources.

This policy brief is based on the first phase of a three-phase study on changing geopolitics of energy. The focus areas are the following:

• First phase of the study focuses on developing global energy scenarios up to 2040 and analyzing the impact of market changes (demand and supply) in energy sector on global geopolitics.
• Second phase will focus on the impact of these scenarios on Russian economy, energy and security policy. It concentrates especially on the hydrocarbon supply and demand in Russia, and their possible effects on Finland.
• Third phase will focus on Finland and analyze how Finnish energy security will develop and how Finland should prepare for the possible changes in Russia’s energy trade.