Energy Transition Geopolitics

The energy transition does not eliminate geopolitical risk. It reroutes it from oil-producing states to mineral-processing states, and the new map is more concentrated, not less.

In the fossil fuel era, geopolitical power flows from hydrocarbon reserves (OPEC, Russia, US shale). In the clean energy era, power flows from critical mineral supply chains: lithium, cobalt, nickel, rare earths, and the processing capacity to refine them into battery-grade and magnet-grade materials. The critical difference: oil reserves are distributed across dozens of countries, while mineral processing is concentrated in China to a degree that OPEC never achieved with oil.

China refines roughly 60-70% of global lithium, 70-80% of cobalt, and 85-90% of rare earth elements. This is not a natural resource advantage (China mines only a fraction of these minerals). It is an industrial policy advantage built over 30 years of processing investment while other countries focused on extraction.

From OPEC to China. OPEC's share of world oil production peaked above 50% in 1973 and sits near a third today. China's share of rare earth processing exceeds 85%.

Is a clean energy system more or less geopolitically concentrated than the fossil fuel system it replaces?

More concentrated, at the processing stage. The extraction of lithium, cobalt, and nickel is spread across Australia, Chile, DRC, Indonesia, and others. But nearly all of it flows through Chinese processing before reaching battery manufacturers. A single country's dominance of processing creates a chokepoint that did not exist in the oil era.

The policy response (US Inflation Reduction Act domestic content requirements, EU Critical Raw Materials Act, allied "friendshoring") aims to diversify processing, but building alternative capacity takes a decade.

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