The transition from fossil fuels to renewable energy has reduced geopolitical risks, as renewable resources are more widely available across the world, leading to localised generation and reduction in energy imports. However, this has not completely mitigated geopolitical risks. There are several risks that continue to exist and revolve primarily around trade protectionism, threats to power infrastructure, digital and cybersecurity threats to power projects and the power grid, the race among countries to secure the supply of critical minerals needed for the energy transition, and differing political ideologies across countries that hinder progress in energy transition.
Despite the far-reaching consequences of deviating from the global energy transition, these wide-ranging geopolitical threats have received relatively less attention. These threats have the potential to slow down the uptake of renewable energy and thus warrant a detailed discussion, which this article attempts.
Trade protectionism policies
India has resorted to protectionism policies by placing tariff and non-tariff barriers to promote domestic manufacturing. Tariff barriers have transitioned from safeguard duties to basic customs duties (BCD). In Union Budget 2024-25, the BCD exemption for catalysts and resin for the manufacture of cast components for wind-operated electricity generators has been removed. In addition, due to sufficient domestic manufacturing capacity for solar glass and tinned copper interconnect, the customs duties exemption previously provided to these items has not been extended.
Meanwhile, minerals such as antimony, beryllium, bismuth, cobalt, copper, gallium, germanium, hafnium, indium, lithium, molybdenum, niobium, nickel, potash, rare earth elements, rhenium, strontium, tantalum, tellurium, tin, tungsten, vanadium, zirconium, selenium, cadmium and silicon (excluding quartz and silicon dioxide) have been fully exempted from BCD. Additionally, BCD has been reduced to 2.5 per cent for graphite, silicon quartz and silicon dioxide. To support the energy transition, the list of exempted capital goods for use in the manufacture of solar cells and panels in the country has been expanded and is valid till March 31, 2026. A similar extension has been granted to forged steel rings for the manufacture of special bearings used in wind-operated electricity generators.
Similarly, in other countries like the US, trade protectionism policies in the renewable energy sector have focused on safeguarding domestic renewable industries from international competition. These measures include tariff and import restrictions on solar panels and wind turbine components. For instance, in 2018, the US imposed tariff restrictions on imported solar cells and modules to shield domestic manufacturers from low-cost imports. Similarly, anti-dumping and countervailing duties were placed on the import of wind turbine components to counteract the unfair subsidies and pricing practices of foreign producers. While these policies aim to boost domestic production and secure energy independence, they have also given rise to concerns about increased costs for renewable energy projects and potential delays in the transition to clean energy.
Threats to physical energy infrastructure
There is a growing connection between energy security and geopolitical conflicts related to physical infrastructure. Recent events such as the Nord Stream pipeline attacks in the Baltic Sea, as well as disruptions in the supply of oil and liquefied natural gas through the Red Sea, highlight this trend.
China’s Belt and Road Initiative (BRI) also illustrates the link between the infrastructure sector and geopolitical threats. The risk of “debt-trap diplomacy”, where economically weaker countries are unable to repay loans looms large. For instance, a key component of the BRI is the China-Pakistan Economic Corridor (CPEC), through which China has been funding and developing various infrastructure projects, including those in the energy sector. The World Bank’s International Debt Report 2023 states that Pakistan’s external bilateral debt to China is over 72 per cent. Pakistan’s financial distress raises significant concerns about its ability to repay these loans going forward. The CPEC, in fact, faces another serious geopolitical threat. There have been instances of armed attacks on Pakistan’s Gwadar port in Balochistan (constructed with Chinese help) and other strategic assets in the region. The energy sector is vulnerable, with attackers in the past targeting a Chinese-funded hydropower project in northern Pakistan which killed Chinese engineers as well.
India faces direct geopolitical threats in the renewable energy sector in the South Asian region. For instance, China is setting up a significant number of hydro projects on the Yarlung Tsangpo (Brahmaputra) river near the Arunachal Pradesh border. The concern is that China may divert the river water, which could lead to artificial floods in India. At the fourth Global RE-Invest 2024, Ninong Ering, MLA and adviser to the minister (hydropower development), Arunachal Pradesh government, pointed out that a significant quantity of electricity (particularly from hydro projects) is evacuated from the “chicken neck” (a small piece of land that connects northeast India to the rest of the country). Any disruption in this area could block the link between the two regions, impacting power supply. To this end, cross-border trading and access to electricity from neighbouring countries such as Bangladesh, Nepal and Bhutan are key – and proactive work is already underway in this area.
Cybersecurity challenges
Cyberthreats to energy infrastructure have the potential to amplify the impact of physical attacks or cause significant disruptions on their own. A recent report by the International Renewable Energy Agency, titled “Geopolitics of the Energy Transition Energy Security”, highlights that these attacks may involve malware, hacking, phishing campaigns, denial of service or the remote deployment of electromagnetic pulse weapons to interfere with electricity flow. It adds that a 2023 analysis of cyberattacks in North America revealed that energy companies are targeted in 20 per cent of such incidents, making this sector the most vulnerable. In 2021, hackers shut down North America’s key Colonial Pipeline and demanded a ransom. Utilities also face serious ransomware attacks. A massive cyberattack on Ukraine’s power grid in 2015 reportedly left more than 200,000 consumers without power for up to six hours in some areas. Moreover, cyber malware may have played a role in the massive 2003 blackout that affected 50 million people in the US and Canada.
In 2022, cyberattacks disabled wind farm operations in Europe, reflecting a broader trend of increasing cyberattacks on power grids. Going forward, the possibility of jamming and spoofing of global navigation satellite systems could severely disrupt renewable energy generation.
India too has witnessed these threats in its power sector. In July 2021, four of India’s five regional load despatch centres experienced cyberattacks. These centres are essential to the country’s grid operations, managing electricity load distribution. Similar attacks have targeted NTPC Limited’s Kudgi Super Thermal Power Station and Telangana’s state transco. Another notable event occurred on October 12, 2020, when a power grid failure in Mumbai and nearby areas led to a citywide shutdown for several hours. The involvement of hackers in this incident remains debated, with some attributing it to a cyberattack by foreign entities. However, the then union power minister, Raj Kumar Singh, had, in a written reply to the Rajya Sabha (dated July 20, 2021), said, “No conclusive evidence was observed to attribute the Mumbai Grid incident of October 12, 2020 to a cyberattack.” Earlier, in 2019, Nuclear Power Corporation of India Limited reported a cyberattack on the Kudankulam Nuclear Power Plant in Tamil Nadu, which was confirmed by the Indian Computer Emergency Response Team (CERT-In). CERTs (dedicated sectoral teams) were established by the Ministry of Power to identify cyber vulnerabilities across different sectors of the power ecosystem. In addition, power utilities have been directed to join the Cyber Swachhta Kendra and implement the Cyber Crisis Management Plan. In October 2021, the Central Electricity Authority issued the first-ever cybersecurity guidelines for the power sector. These guidelines require all power utilities to follow a cyber assurance framework, which includes implementing early warning systems, managing vulnerability, securing remote operations, and either procuring information and communications technology equipment from trusted sources or testing them for malware.
Control over critical mineral supply
Renewable energy, storage and electrolyser technologies require critical minerals. A key reason for competition among countries regarding critical minerals is the gap between the high anticipated demand for such minerals and the limited supply, which is controlled by a few countries. The International Energy Agency predicts that demand for critical materials will more than triple by 2030. Without stronger measures to improve material efficiency, recycling and mining, there could be major shortages of six key energy transition materials – cobalt, copper, graphite, lithium, neodymium and nickel. The Energy Transitions Commission highlights the supply-demand gap for these minerals. Overall, a 20 per cent supply shortage is anticipated for these minerals by 2030, except for nickel, which may meet demand owing to expanded mining in Indonesia.
Meanwhile, on the supply side, the World Economic Forum highlights that the top three producers of six key minerals (rare earths, graphite, lithium, cobalt, nickel and copper) control 50-90 per cent of global mining and processing operations, raising concerns about their influence on raw material supplies and prices. China leads in securing critical mineral supplies through strong geopolitical strategies, including significant financing and a focus on processing operations. These policies ensure stable supplies for Chinese industries but have also fuelled geopolitical tensions.
India is affected by these developments, as its climate goals and energy security depend on access to these critical minerals. A few countries dominate global lithium cell manufacturing capacity, effectively controlling the market for lithium-ion (Li-ion) batteries. Graphite is another essential mineral for the manufacture of Li-ion batteries, with its production limited to a few regions around the world. Apart from batteries, China has a monopolistic position in the solar energy space as well, having a significant supply control on solar components.
To ensure domestic supply and manufacture of components using critical minerals, the Indian government has resorted to tariff barriers, which were updated during the Union Budget 2024-25 announcement; non-tariff barriers in the form of the Approved List of Models and Manufacturers (whose scope has now been extended to include solar cells); and subsidies in the form of production-linked incentives.
Apart from these initiatives, in the budget, the government proposed establishing a Critical Mineral Mission aimed at boosting domestic production, recycling critical minerals and acquiring critical mineral assets overseas. Its mandate will include technology development, skilling of workforce, extended producer responsibility framework and a suitable financing mechanism. With a focus on the offshore mining of minerals, the finance minister also proposed launching the auction of the first tranche of offshore blocks for mining, building on the exploration that has already been carried out. Overall, these developments indicate the growing seriousness of the government with regard to increasing the mining of critical minerals in India, securing overseas supplies and ensuring a stable supply chain, thereby minimising geopolitical risks in this space.
Impact of political ideologies on energy transition
Political ideologies can influence the level of commitment to decarbonisation efforts. For instance, some factions in the European Union (EU) parliament view the green energy transition as an overreaching ambition that raises the cost of living and ultimately contributes to inflationary pressures. Despite failing to achieve a majority in the recent elections, their opinion has resonated with the public. Hence, it is within reason to anticipate that while this may not impact overall energy targets, it can decelerate the implementation of strategic policies such as the European Green Deal.
Similarly, Germany’s Alternative für Deutschland (AfD) party doubts the findings on climate change, deeming the climate protection measures to be unnecessary. On the other side of the spectrum, the country has another political party, called the Greens, which emphasises climate change mitigation. Such political perspectives can and have easily influenced public discourse, leading to polarisation in the region.
Meanwhile, the 10H rule in Bavaria, which stipulates that the minimum distance between a turbine and the nearest settlement must be ten times the height of the turbine, has had a detrimental impact on wind turbine installation.
There is growing scepticism regarding wind energy in France, where the opposition Rassemblement National party has opined that the country should stop the construction of new wind turbines and instead dismantle them. In fact, even France’s draft “energy sovereignty” bill has notably omitted quantifiable renewable energy targets, while also removing the existing objectives set in line with the EU’s Renewable Energy Directive. Even though these targets have not been fully ruled out, they have been postponed. With this, the bill’s purpose is questionable, aimed only at regulating the sale price of nuclear electricity to consumers.
The differences in political ideologies on climate change mitigation are perhaps most pronounced in the US. The policy changes made in the US have a significant impact on global decarbonisation efforts. For instance, former US president Donald Trump withdrew from the Paris Agreement during his term in office, a move that was criticised by climate enthusiasts. President Joe Biden rejoined the Paris Agreement during his ongoing term. Moreover, the Biden administration introduced the Inflation Reduction Act of 2022 with significant investments and incentives for climate and energy projects. The outcome of upcoming elections could determine the country’s future stance on climate action.
Overall, political narratives influence citizens across the world. Therefore, it is crucial to develop a more nuanced understanding of the interplay between political ideologies, public opinion and environmental policy implementation.
Conclusion
The geopolitical risks discussed in the article underscore the complex interplay between energy security, national interests and global climate goals. Going forward, policymakers should recognise that a successful energy transition will not only hinge on renewable capacity additions but also on the country’s strategic foresight in tackling these geopolitical threats. While these risks may have increased with globalisation, solutions to many of these problems will come from greater international collaboration, especially for cross-border trade of electricity, diversification of trading partners beyond a select few, sharing of advanced technologies that help secure the grid and related projects.
By Sarthak Takyar
