Geoeconomics of the transition to net-zero energy and industrial systems: A framework for analysis

Abstract

The unfolding transition to net-zero energy and industrial systems has a major impact on global value chains, the geoeconomic strategies of key players, and rules of engagement in the global economy. This research develops a novel conceptual framework for analyzing the geoeconomics of energy and industrial transformation, while delimiting it from geopolitics. The framework has three basic dimensions: a) resources, technology, and data; b) markets and networks; and c) rules of international economic interaction, which are negotiated by powerful players in the world economy. The discussion emphasizes the dual nature of the geoeconomics of energy and industrial transformation as a balancing act between securing autonomy and projecting geoeconomic influence. This sets it apart and makes it incompatible with more overt forms of geopolitical confrontation as witnessed between NATO countries and Russia. A transition to net-zero energy and industrial systems, the analysis concludes, hinges on the cooperation among countries and economic blocs. Managing this dilemma – competing to build an advantageous geoeconomic position while cooperating to ensure the broad participation of actors around the world – lies at the center of the geoeconomics of the transition to net-zero and is indispensable for advancing the United Nations’ Sustainable Development Goal 7 (affordable and clean energy) and Sustainable Development Goal 13 (climate action) in ways that benefit a wider range of countries and not merely the most industrialized nations.