The changing political economy of the global energy transition: new challenges on the road to climate neutrality

Since the signing of the Paris agreement in 2015, the international political economy of climate and energy has seen a marked shift. Following frontrunners Sweden and the UK, over 130 countries have announced climate-neutrality targets. While these targets cannot replace tangible action to reduce CO2 emissions, they have significantly expanded the scope of debates on the transition to a climate-friendly energy system, both among practitioners and scholars. Previously, debates centered on the power sector, focused primarily on the development and diffusion of renewables and the difficult policy and politics of an emerging system transformation in that sector (Aklin & Urpelainen, 2018). To meet carbon-neutrality targets, these power sector developments will have to increase in terms of speed, scale and geographic scope. In particular, this implies a renewed importance of the Global South as an emerging arena of energy transition politics (Goldthau et al., 2020). Furthermore, it requires rapid progress in the decarbonization of end-use sectors, including transport, heat and industry, via electrification and other forms of sector integration. This entails both the transformation of established industrial sectors, such as automotive, steel and chemicals, and the development of new value chains and related infrastructure to enable these transformations (Habert et al., 2020). Notably, this includes the scale-up of battery technologies as well the development and deployment of climate-friendly hydrogen technologies as well as markets and infrastructures for trade in this energy carrier (Griffiths et al., 2021). Finally, the decarbonization of transport sectors and accelerated deployment of renewables in the power sector will ultimately have to be combined with the phase-out, not only of coal- but also of oil and gas – the two primary world power sources. Recent analysis argues that 65% of oil and gas reserves will have to remain in the ground (Welsby et al 2021), whilst the production gap report argues that governments’ planned fossil fuel production remains dangerously out of sync with Paris Agreement limits (SEI et al 2021). These developments come with daunting new socio-economic and political challenges. At the international level, they are redrawing the geopolitics of energy, giving rise to new arenas of contestation and reshaping existing ones (Overland 2019). The phase-out of fossil-fuels in particular implies important structural changes in affected regions as well as political struggles between the winners and losers of this process. As investments in new fossil-fuel infrastructure are losing their attraction relative to clean energy, related markets are becoming more volatile, foreshadowing the destabilization of relations in the fossil fuel sector. Simultaneously, political struggles are emerging around the speed of transformation and chosen technological pathways with climate and energy-related standards and regulations emerging as new arenas of political contestation. Similarly, trade policy and other spheres of economic statecraft are being deployed as tools to defend industrial leadership and geoeconomic influence in the context of industrial decarbonization efforts (Bordoff & O’Sullivan, 2022). Moreover, this new phase in the global transformation towards a climate-neutral economy is taking place against the background of growing geo-economic rivalry. China and the US have engaged in increasingly hostile trade-related disputes, and multilateral fora for engagement are under strain. More generally, the rise of Chinese state-centered capitalism and its growing influence around the world has raised concern among OECD countries of asymmetric dependencies and waning industrial competitiveness (Gertz & Evers, 2020). These concerns have been further heightened by supply chain disruptions triggered by the Covid-19 crisis as well as extreme weather events (Kuzemko et al. 2020). The destabilization of relations at the international level is mirrored at the national and local levels. As frontrunners accelerate their decarbonization efforts, laggards are spending increasing political resources to slow-down progress, leading to heightened political tensions (Quitzow et al. 2021). Nowhere has this become more visible than in the US, where radically different energy visions are evolving side-by-side, mirroring broader political divisions. On the one side stands a Green New Deal, with its promises of profound, socially just change, and, on the other, visions that retain the investments, jobs and identities of a fossil-based industrial legacy. At the local level, this plays out in hotly contested processes of structural change and struggles over community-level practices and decentralized renewable energy (Brisbois 2019). Finally, these developments are raising more fundamental questions, provoking a return of the discussion on the role of the State, not only in the energy sector but in the economy as a whole (Borrás & Edler, 2020; Prontera & Quitzow, 2021). This section explores the dynamics of politics and policies in the context of this emerging transition to climate-neutrality. It welcomes contributions that address new and evolving political challenges and how these are manifested at different levels of governance. We seek a variety of theoretical and methodological approaches that shed light on differing dimensions of changing energy transition dynamics.