Economic power affects every state and industry in defining manners. Economic power is the access to wealth, natural renewable resources, monopoly powers and/or superior technology. The current global initiative towards climate change threatens to cause a shift in economic powers and strengths, particularly concerning access to natural renewable resources and superior technology. The adaptation of green/renewable forms of energy is set to ripple an advantageous effect in the macroeconomic aspect.

Impact/ shift of energy economic strengths

The shift from fossil fuel and non-renewable sources of energy are the main contributors and some of the greatest causes of climate change. The global initiative aims to combat reliance on these sources and strives for a world that is not dependent on them. As an effect, it is predicted that the fuel industry will become obsolete in a few decades to come. This, however, is without the decline in energy demand. This opens a market for energy production from a renewable source. The predictions showcase that states and industries that will be able to act on a greener source of energy will in turn grow and cut down on the cost of oil and similarly sell the surplus production to other industries or states.

This, however, does not remain the greatest gain from the shift of energy resources.

Gap opened due to the economic shifts

The adaptation of these sources of energy will require a great amount of technology. This means there will be a greater demand to produce these technologies. This creates a market gap in several aspects. As of the current state of affairs, China stands as the leading producer of photovoltaic technology and windmill manufacturers, with Vietnam and Malaysia following closely. This positions the East with a significant advantage in future trajectories. However, China remains one of the largest energy consumers and will continue to rely on fuels for decades to come and will barely be able to export these technologies during the transition. The production of these technologies remains an under-tapped sector in the international market with demands about to skyrocket and minimal competition.

Due to the rush to hit decarbonization goals, the demand for renewable energy technologies continues to rise. The creation of these technologies also requires several raw materials and metals such as cobalt, copper, lithium, and nickel among others. These remain vital ingredients in Teslas (electric vehicles), turbines, solar panels, green power stations, and grids among others. The supply of these materials will allow the state or industry to profit greatly if capable of keeping up with the ever-growing demand.

Green energy will greatly change regional differences due to different weather conditions that affect the production of energy from renewable sources. Regions with combined types of natural resources to guarantee a continuous supply of renewable energy will experience a great demand to export energy as opposed to the regions that experience different seasons negating one source of energy production.

The surplus production of green energy will then invite energy-hungry industries, such as steelmaking or data storage among others to their shores.

Economic power struggle

Energy superpowers will do everything such as flog fossil fuels, dig out metals or turbocharge renewable energy. These are the states and organisations that will take over the future of green energy. The world is predicted to greatly use hydrocarbons as oil demand will continue to rise as the world moves to a greener source. China with a high energy demand will take time to adapt to the green demand and will continue to guzzle hydrocarbons as they continue to adapt. Petrostates will only hope to thrive by revamping oil refineries and pipelines (with resources such as wind and sun) to make hydrogen energy. Petrostates and organisations such as OPEC continue to discuss strategies to future-proof their economies, however, will eventually fail due to the rising decarbonization demand.

Macroeconomic effects

Renewable sources of energy are much cheaper than fuels and their use continues to grow. According to the International Energy Agency, “projections for electricity capacity in its three principal scenarios – the Stated Policies Scenario (SPS), Sustainable Development Scenario (SDS) and Net Zero Scenario – wind energy costs could fall by a further 17–29% by 2030 as compared with 2020, while solar costs could fall by another 40–60%.” This makes renewable energy the cheapest form of a sustainable source of energy in most regions of the world.

The declining costs of clean energy, its relative cost superiority to traditional counterparts, and reduced demand for fossil fuels should all converge to drive energy prices downwards. However, the fast transition to a greener source of energy may depress prices for both clean technologies and traditional energy while a slow transition may push energy prices up as fossil fuel supply is controlled before sufficient clean energy supplies come to full action.

Possible winners and losers

The opportunities for states and organizations to enter the industry, especially during this period of continuous change, can be a lucrative investment, especially if approached with care. The ongoing transformation predicts that the East will continue to be significant energy consumers and remain the top producers of renewable energy technologies. This will maintain them as an economic influencer, however, may not create much gain as renewable energy economic superpowers. Other states such as Chile and the US are key actors and potential powers because they continue to hold untapped metals and raw materials essential in green technologies. Africa has a tapestry of raw materials and continues to be a key producer of these materials for the benefit of technological advancements. The very rapid growth of the demand for these materials can greatly influence the power that Africa plays in the contribution to the climate change initiative. This may also promote Africa’s green initiative and promote the implementation of renewable energy technologies within the various states, putting Africa, with multiple sources of renewable energy, as a very powerful potential in the energy sector decades from now, based on the impact created today.

The private sector is a key actor as they may as well be shareholders or stakeholders in the green initiative by helping implement the use of green technology. The impact private sector actors may have can significantly influence the implementation of these initiatives and the adoption of technologies, free from the constant push and pull of political bureaucracy.