Are Electrostates The Future In The 21st Century?
In September 2020, The Economist published an article comparing and contrasting the global energy strategies of the USA and China. It observed that the US was the world’s largest fossil fuel supplier, building on shale oil and coal seam gas, and China was the world’s largest fossil fuel consumer. Its consumption market is so large that it plans to set up a world consumer forum to rival OPEC.
The article does not focus on China’s fossil fuel consumption-the backbone of its rapid growth story over the last quarter of the previous century. Instead, it focuses on China’s new aggressive strategy in the electrification of its industries and relying on renewables to power its industries, including cement and steel production. The Economist has named China the world’s first electrostate. It illustrates how by 2050, China will lead the global electricity consumption, which will rise to 50% of global energy consumption. By investing in mines to extract minerals required for solar panels, batteries, and semi-conductors worldwide, China is way ahead of other nations in the race.
To quote the Economist, “ It is the strategy of using state power to drive electrification combined with reliance on manufacturing to enhance energy security, and with the added ingredient of “infrastructure diplomacy” based on international supply of renewables and electrification, that makes China an electrostate.” And China has made a seemingly wise choice in aspiring to become one. It has the most extensive domestic production of renewables globally at minimum cost, building a base for standardized, high-quality exports to the world. It also has the advantage of evolving and maneuvering based on its experience.
China is now a premier industrial power whose ambitions of growth and demands of consumption cannot just be met with fossil fuels alone. So, renewable energy sources and electrification provide a sweet alternative without any geopolitical or immediate physical constraints.
So what does it mean to other global powers in the Aisa-Pacific and beyond?
In the first meeting of the heads of states of the Quad alliance ( US, India, Australia, and Japan), it was made evident that global competition, cooperation, and geopolitics had shifted from oil wells and nuclear weapons. There was an extra emphasis given to cooperation on future technologies for an inclusive Asia-Pacific and minimizing the role of China in the supply chain.
With the Fourth Industrial Revolution in full swing and the conditions placed by the COVID-19 pandemic, AI, IoT, high-speed online communication, and the expansion of the digital economy have accelerated. It has prompted many liberal democracies to look for alternate sources for arranging necessary raw materials, like rare earth metals. The deadlines for net carbon neutrality by 2050 have led many countries to look for cleaner forms of energy and rapidly build infrastructures for its generation. The shift to an electro-economy is the road ahead.
Faster global transitions to renewable energy, the impending doom of climate change have prompted investors to invest in the electrification of the economy. Capital is being moved from fossil fuels to green energy sources in financial markets. Clean energy businesses gained an almost 150% increase in value in 2020. Tesla reached $380 billion in valuation. It was more than the following 10 automobile manufacturers combined and more than ExxonMobil, Shell, and BP combined- the fossil fuel powerhouses of the 20th century.
Countries are trading more in mineral-rich areas, to gain supremacy of the technologies of the future. A scramble has already begun among companies, governments, and alliances like the QUAD to gain absolute control of these resources. The latest political instability and civil war-like scenario in Afghanistan may be directly linked to big powers trying to get a piece of the muti-trillion dollar worth of rare earth resources in the country. On the other hand, the diversification of the UAE from oil production to investment in renewable energy, space technology, etc., is a clear sign of the downhill slide of fossil fuel-based economies and a rise of electro-economies.
And that is how states would look like in the 21st century!
