William Rawlings
Introduction to Energy Politics
The next 15 years are crucial for global energy transitions and climate objectives, with over $12 trillion available to expand clean power. The emerging electric world order offers strategic advantages: reduced pipeline dependence, decentralised assets, rapid deployment, declining costs, and significant synergy with technological advancements, including data centers and demand response mechanisms like Virtual Power Plants. A paradigm shift within the global energy market is hastening the multipolarisation of the world order. China’s ascent as a rival energy leader is accelerating the decline of a U.S.-backed global oil regime, allowing countries to maximise strategic autonomy at the expense of American global influence.
Renewable energy is reshaping geopolitics as fossil-fuel-dependent nations, led by the U.S. and the Organization of the Petroleum Exporting Countries (OPEC), resist an increasingly renewable-dominated world spearheaded by China. This shift in energy alliances could remake wider geopolitical dynamics. To be sure, emerging energy alignments are complex and intertwined with existing economic and security partnerships, defying clear-cut alliances. This is evident in China’s mediation of Iran and Saudi Arabia’s diplomatic negotiations, its defense cooperation with the UAE, and its leadership in BRICS. The United States is also at odds with Iran’s nuclear ambitions and has imposed punitive measures on other petrostates, notably Venezuela and its fossil fuel exports. However, a realignment in energy may serve as an important vector in a broader reconfiguration of global politics, reshaping existing partnerships.
Energy Architectures
China and the United States’ energy policies have diverged over the past two decades. The United States has become entrenched in shale oil, while China has leveraged advanced manufacturing to electrify its economy. Although this dichotomy is not always clear, as illustrated by the Inflation Reduction Act (IRA) in the U.S. and China’s enduring coal industry, a trend towards electrostate and petrostate tendencies is defining energy relations for each country. The divergence of energy systems underpins the global realignment and intensifies the rivalry between China and the United States.
China has established itself as a premier electrostate by investing heavily in electrification and dominating clean energy supply chains—from raw materials to mass-produced solar panels and battery systems. Currently, China produces over one-third of global electricity and installed more wind and solar capacity in 2023 than the rest of the world combined. Despite high coal usage, its share in China’s energy mix is declining as renewables integrate into the grid. China targets over 3,200 GW of renewable capacity by 2030, alongside a planned $72 billion grid infrastructure investment in 2024. Amid recent deflation and an imploding real estate market, China’s economic growth has been supported by smart electrification, distributed energy, and grid infrastructure investment. These investments also serve China’s dual-action climate goals: peaking carbon emissions by 2030 and achieving net zero by 2060.
China has prioritised the clean energy transition since the late 2000s. In recent decades, China’s rapid, coal-powered industrialization has led to extreme air and water pollution, sparking domestic criticism and outrage. This environmental degradation was highly publicised in the run-up to the 2008 Olympics, forcing Xi Jinping to acknowledge climate concerns in his early Five-Year Plan. At the same time, rising labor costs strained China’s manufacturing-led growth model, prompting a pivot toward higher-value industries. In response, policymakers in the Politburo Standing Committee promoted clean technology manufacturing to boost national image, enter foreign markets, strengthen domestic industry, and address environmental concerns. Since 2012, every subsequent Five-Year Plan has included an energy strategy and prioritised investments in nuclear power, energy storage, renewables, and electric vehicles. To be sure, China, the world’s largest coal importer, producer, and consumer, continues to rely heavily on coal, though likely as a temporary bridge resource until renewables can support its surging electricity demand.
These policy initiatives have promoted China’s clean energy leadership. Over 80% of global solar panel manufacturing occurs in China. The country’s economies of scale significantly reduce photovoltaic costs, accelerating worldwide deployment. China’s abundant rare earth mineral reserves, including lithium and cobalt, support domestic manufacturing and enhance geopolitical leverage in international trade, mirroring the geopolitical weight oil once held. The government has published high-level strategies to coordinate national efforts in strengthening the clean tech sector, highlighted by the nationalisation and consolidation of China’s mines into the China Rare Earth Group and the Made in China 2025 Plan. This export dominance is strengthening Xi Jinping’s soft power and gradually positioning China as a technological hegemon with growing influence over both European nations and emerging economies in Latin America and Africa.
The United States remains entrenched as a leading petrostate, prioritising fossil fuel production to sustain geopolitical leverage even as it invests in climate policies like the IRA. The traditional petrostate relies on hydrocarbons for a significant portion of government revenues. While the United States’ diversified economy reduces its overall dependence on oil revenues, regional disparities persist, with some states—like West Texas—relying on fossil fuels for more than 10% of state and local revenue to sustain economically struggling areas.
Electoral pressures further impede the transition away from fossil fuels. Under the electoral college scheme, national political candidates must cater to regional demands to win competitive swing states. Democratic candidates championing climate goals routinely compromise on energy, highlighted by Kamala Harris’ support for fracking in an ill-fated attempt to sway Pennsylvania voters. Even elected presidents like Joe Biden hiked natural gas production to record levels while Barack Obama oversaw the largest expansion of oil production during any presidency in U.S. history. Although outright government support waxes and wanes with the dominant political party, domestic production has underpinned the U.S. since Rockefeller and Standard Oil. Shale output is projected at 14 million barrels per day (bpd) through 2030 while LNG exports are expected to double by 2027, highlighting America’s commitment to fuel extraction. Shale oil has turned a $400 billion annual oil deficit into a $45 billion surplus over the past two decades, and this institutional inertia means electrification now threatens to strand over $4 trillion in infrastructure.
While the IRA codifies the U.S. commitment to renewable energy, its future remains uncertain amid a political climate where Republicans are pushing to revive fossil fuels. The hallmark American climate legislation of the 21st century, the Inflation Reduction Act provides tax credits and subsidies for clean energy with additional incentives to replace jobs in coal communities. Undoubtedly, the IRA has led to a boom in renewable energy, particularly solar, with over 49 billion USD invested in its first two years. Additional credits for domestically manufactured modules were the driving force for onshored manufacturing. Expansion plans increase domestic production from virtually nothing to 144 GW of module manufacturing, 71 GW of cell manufacturing, and 61 GW of wafer production by 2027.
Despite its well-documented success, the IRA is deeply politicised and controversial, especially in historically Republican districts reliant on coal and oil production. Entrenched fossil fuel actors, including $153 million spent in 2024 on oil and gas lobbying, are pushing back to protect their investments and guide the U.S. back to its fossil fuel roots. Their efforts have been reaping fruit as House Republicans unveiled a plan to repeal the Clean Energy Investment and Production Tax Credits, Electric Vehicle Credits, Advanced Manufacturing Credits, and Home Energy Efficiency and Electrification Credits. Under Donald Trump, the IRA may have reached an unnatural end as the U.S. turns away from an “all of the above” approach and returns to the open arms of a fossil fuel economy.
With federal funding freezes and an aging power grid, the U.S. faces growing disadvantages in the global energy transition. Strategic petroleum agreements with 31 nations signal an ongoing commitment to fossil-based energy security, yet these assets face mounting risks, as much of the Permian basin oil is uneconomical below $55 per barrel. Meanwhile, China’s renewable exports are meeting rising demand in Europe and Asia, crowding out U.S. influence. Consequently, the U.S. has deepened ties with nontraditional allies like Saudi Arabia, aligning more closely with petrostate governance models at odds with an electrified global future.
Reliance & Retaliations
China's cheap, abundant electrification exports now provide a viable energy alternative for countries currently reliant on the United States, Russia, and OPEC for imported fossil fuels. This circumvention of traditional energy reduces the United States’ trading power and economic might, providing the opportunity for global realignment. Multipolarisation may arise as countries choose between fossil fuels and renewables to satisfy their future energy demand.
A key consideration is avoiding excessive dependencies. Dependence on foreign fossil fuels compromises economic freedom and national security, positioning domestic energy production as a priority for strategic autonomy—regardless of climate concerns. Domestic energy assets, both fossil fuel and renewables, now carry a “security premium” amid escalating geopolitical tensions, exemplified by Europe’s recent energy crisis following Russia’s invasion of Ukraine. Europe’s reliance on 62% imported energy—primarily gas—has exposed it to price shocks and supply disruptions, allowing oil-producing nations to exert political influence through energy leverage. These price wars are increasingly unsustainable in an electrified global economy. Saudi Arabia and its partners plan to use reserves and debt issuance to survive low-price cycles until high-cost producers are eliminated. However, the long-term outlook suggests that fossil economies will lose their privileged geopolitical position as electrification erodes traditional energy leverage.
Rising U.S.-China trade tensions further reflect the anxieties of petroleum-dependent states amid the broader energy transition. U.S. tariffs of 104% on Chinese EVs and solar panels prompted retaliatory Chinese tariffs of up to 84%, alongside rare earth export restrictions. As renewables are on track to generate 40% of global electricity by 2028 and EVs are driving new car sales over the next decade, these disputes represent more than protectionism. A deeper rivalry is emerging: China is becoming increasingly self-reliant, while the U.S. and its allies grows more dependent on imported critical minerals. As foreign policy reorients around supply chain security, the U.S. has intensified efforts to secure overseas mineral rights—particularly in the Congo and Ukraine—using military and diplomatic means. This marks a broader shift where energy tech, not just fossil fuel access, becomes a core objective of national interest.
Geopolitical Realignemnt & Future
While the U.S.-China energy rivalry may define the near term, the global energy transition will likely exacerbate multipolarity. Europe and the Gulf States are positioning themselves as independent energy powers. Saudi Arabia, for example, plans 54 GW of renewables by 2032, even as it manipulates oil markets to maintain fiscal stability.
Africa, with its rapidly expanding population and underdeveloped energy systems, is becoming a key battleground for influence. Whether the continent adopts fossil-based or renewable infrastructure will shape global power alignments. Emerging mechanisms like Kenya’s €60 million geothermal debt-for-climate swap reflect the growing role of energy diplomacy in development financing.
Legacy institutions like the International Monetary Fund (IMF) and World Trade Organization (WTO) face growing challenges in adapting to this transition. The IMF continues to support fossil fuel-linked debt repayment structures, endorsing extraction for loan servicing. The WTO imposes stricter rules on renewable subsidies than fossil fuel ones, inhibiting the deployment of clean energy. These institutions, born of an oil-dominated world, now risk institutional irrelevance unless reformed to support a decarbonized global economy.
Ultimately, managing the energy realignment requires new global governance tools and alliances. The strategic emphasis is no longer on controlling fossil reserves but on governing electricity systems, data networks, and mineral flows. Without a decisive policy shift toward clean energy, the U.S. risks falling behind not just economically, but geopolitically, in an emerging electrostate-led order.
William Rawlings is a Master’s student at the University of Oxford, studying Energy Systems. He has dual degrees in Mechanical Engineering and Climate Science from Duke University and previously worked for PearlX Infrastructure, a Virtual Power Plant start-up in California.
