Amid escalating geopolitical tensions, the global energy landscape is undergoing a significant transformation, spurred by crises in regions like Greenland and Venezuela. This shift is compelling countries to reconsider their reliance on fossil fuels and pivot towards renewable energy sources, despite emerging rivalries over critical minerals essential for renewable technologies.
In a recent statement, U.S. President Donald Trump highlighted the strategic importance of Venezuela’s vast oil reserves, suggesting that the recent attack on the country was driven by desires to access these resources. While this could potentially delay the transition to renewables by increasing the availability of cheap fossil fuels, experts assert that significant investments and time are required to fully exploit Venezuelan oil, especially given the complexities of refining its heavy crude.
By the time these resources become readily accessible, the growing global instability and fragile supply chains are expected to reinforce the economic and security arguments for adopting renewable energy.
Mike Davis, CEO of Global Witness, remarked, “Trump’s attack on Venezuela reminds us that a world dependent on fossil fuels is one that’s riven with conflict, instability and human rights abuses. Switching to renewables is great for the climate but it is also a form of liberation, as it frees us all from dependence on dictators and warmongers.”
Even oil-rich Arab states are drawing similar conclusions. The Centre for Environment and Development for the Arab Region and Europe, based in Cairo, noted that the current political risks and supply chain disruptions might initially slow the shift to a low-carbon future. However, the situation in Venezuela may ultimately prompt Arab nations to intensify their commitment to renewable energy as oil prices decline.
The centre emphasized the importance of investing in renewables and energy efficiency as a means to counteract the risks of a resurgence in fossil fuel dominance and price volatility, thereby supporting long-term economic resilience.
Energy Transition Faces New Geopolitical Challenges
The shift to renewable energy is not without its challenges, particularly due to China’s stronghold over critical minerals like lithium, vital for renewable technologies. This dominance is a factor in the U.S.’s strategic interest in Greenland, a region rich in resources needed for energy transition and expanding defense and technology sectors.
Alex Dustan, a partner at Slaughter and May, noted that the narratives around energy transition have shifted from economic efficiency and decarbonization to national security concerns, leading to significant commercial consequences.
Despite Trump’s optimism about Venezuela’s oil potential, analysts are skeptical about the willingness of energy companies to invest in the country’s oil infrastructure, given the political instability and falling crude prices. Juan Pablo Martinez from the London School of Economic’s Centre for Economic Transition Expertise highlighted that the breakeven price for Venezuelan crude is approximately $60 per barrel, making it less competitive compared to other sources.
According to Martinez, “Even if Venezuelan crude became available in the market it’s quite likely that there would be losses in the long run if prices went down, particularly because crude oil is really abundant.” He added that renewable energy could remain competitively cheap in comparison.
ING bank analysts predict that oil prices, which saw an 18% decline last year due to oversupply, will continue to drop, further discouraging investments in Venezuelan oil fields.
China Leads the Way in Clean Energy Investment
In contrast, investment in clean technologies is on track to reach a record $2.2 trillion by 2025, driven by concerns over energy security, according to the International Energy Agency (IEA). This is double the investment anticipated for oil, natural gas, and coal.
The IEA reports that China’s share of global clean energy spending has increased from a quarter to nearly a third over the past decade, largely due to its investments in green technologies.
James Meadway, an economist, and host of the Macrodose podcast, commented, “China has sown up much of the electrification decarbonisation industry. This is bad from the point of view of Washington and US capital, and their version of how to respond to that is carve it out and concentrate on fossil fuel production.”
China’s dominance extends to the refining of strategic minerals, with an average market share of 70% for 19 out of 20 essential minerals, and 94% for rare-earth-containing magnets used in various technologies, as reported by the IEA.
A new paper by the Grantham Research Institute on Climate Change and the Environment highlights that the supply and demand dynamics of these minerals are crucial for the energy transition’s feasibility.
Greenland’s potential as a source of rare earth elements has garnered interest, although it lacks commercial production due to environmental regulations and challenging climate conditions. Martinez, a co-author of the paper, pointed out that even if extraction began in Greenland, much of the refining would still occur in China, limiting diversification of supply chains.
Hugh Miller, a consultant with CETEx, sees rising tensions between the U.S. and Europe over Greenland as having a more significant impact on the energy transition: “The indirect impact might be greater in terms of what it means for US-EU relations and cooperation on the energy transition,” he said.
According to Meadway, the U.S. aims to secure access to Greenland’s resources rather than full control, viewing it as a strategic move in a resource-constrained world. “What the US is doing is a form of bullying to get preferential terms in a world where there’s resource constraints and you can try and carve China out,” he said.
Trump-linked entities have secured deals with nations like Pakistan, Somalia, and Haiti, trading resources such as minerals for humanitarian or military aid, as reported by Global Witness.
However, China’s dominance in rare earths is rooted in long-term state investments that allow for sustained projects, unlike the West, which relies more on private capital. Clement Sefa-Nyarko from King’s College, London, noted that private capital is less likely to invest in such ventures without government support.
Focusing on Sustainable Mining and Mineral Stockpiling
Miller highlighted that many countries are now seeking to stockpile critical minerals, learning from the EU’s past reliance on Russian natural gas before the Ukraine conflict. Sefa-Nyarko emphasized the need for the West to view nations with critical minerals as valuable partners, addressing environmental, human rights, and governance issues.
He stated, “The west needs to think about all countries and communities that have any kind of critical mineral as partners of value, as collaborative partners who must also benefit. Sustainable mining and responsible sourcing must be treated as integral to supply chain security, not as peripheral technical issues.”
Although the shift to renewables increases dependence on China for minerals, Martinez argued that this reliance is less critical than current fossil fuel imports, especially if recycling technologies improve.
“If you had a supply shock with regards to critical minerals it would be a much slower transmission mechanism in terms of how that affects energy prices,” he said.
However, investing in renewables comes with its own risks. Dustan noted that the offshore wind sector is exploring cheaper turbine supply options due to rising costs, impacting bids in recent European wind energy project auctions.
He concluded, “Ultimately, the energy transition’s commercial opportunities remain substantial, but these are increasingly conditional on geopolitical resilience. The organizing principle can be simple: build for resilience so that when geopolitics intrudes, projects bend rather than break, capital remains deployed and stakeholder confidence endures.”
This page was last updated January 22, 2026
Original Story at greencentralbanking.com