Petrostates, electrostates, and the energy transition

Is the global transition to low-carbon energy accelerating or slowing down? One answer is that it depends where you look. In the US, energy policy has shifted away from support for low-carbon technologies, but China is continuing with record installations of solar, wind, and batteries, and record sales of EVs. With AI emerging as the central arena for great power completion, which model will work best at providing the power the new technologies need?

The AI revolution will be the most transformative change in human history. That’s according to Gerard Reid, this week’s guest, a veteran energy commentator and co-founder of the advisory firm Alexa Capital. Gerard, who also co-hosts the podcast Redefining Energy, says he thinks AI will reinvent the world’s energy system. There is a widening gulf between ‘petrostates’ such as the US, which are rich in oil and gas and favor fossil fuels, and the ‘electrostates’, led by China, which is dominates global manufacturing for technologies such as solar panels, batteries and EVs.

Europe, which is relatively resource-poor, is following China’s path out of necessity, while India and others weigh up which model to adopt. Gerard, host Ed Crooks and regular guest Amy Myers-Jaffe debate the different approaches that different countries are taking to build secure energy systems that will be able to meet growing demand for electricity for AI. 

Electricity is now the ultimate security priority, demanding grid upgrades, new technologies to support resilience including vehicle-to-grid, and new strategic partnerships. Gerard argues that OPEC’s current strategy suggest it sees oil demand peaking soon. As the world adopts Chinese EVs and other low-cost, low-carbon technologies, some big questions are becoming increasingly urgent. Will the US continue to cling to fossil fuels? Will cheap solar upend electricity industries around the world? And above all, will the race for strategic and economic success be won by whichever country integrates AI, low-cost power, and resilient grids first?

Ed Crooks is Vice Chair for the Americas at Wood Mackenzie. Amy Myers-Jaffe is the Director of NYU’s Energy, Climate Justice and Sustainability Lab.

Let us know what you think. We’re on X, at @theenergygang and Bluesky, at ‪@theenergygang.bsky.social‬. Make sure you’re following the show so you don’t miss an episode – we’ll be back in two weeks, Tuesday morning at 7am eastern time.