In his first remarks as Canada’s Prime Minister, Mark Carney pledged to make the country a “…superpower in both conventional and clean energy.” But what does it really mean to be an “energy superpower”?
Let’s define it: an energy superpower is a country that wields influence over global energy markets through its substantial resources, production capabilities, infrastructure, trading capabilities, strategic policies and innovation capabilities. It can influence global prices, supply security and geopolitical alignments while maximizing the value of its domestic resources.
Energy hegemony matters because the world’s future economy demands vastly more energy. If all 8 billion people on Earth consumed as much energy per capita as the average North American, we would need five times today’s energy supply. That doesn’t even account for the impact of the artificial intelligence (AI) revolution.
In April, former Google CEO Eric Schmidt testified to the US Congress that energy demand from datacenters could triple by 2030, rising from 3% of demand now to 9%. By 2050, AI may account for more than half of total energy consumption in advanced economies. The rising global need for air conditioning amid record-breaking heat adds even more pressure, as does the mining of cryptocurrencies. If we supplied all that energy using fossil fuels, we would ensure that our climate crisis becomes a catastrophe.
Today’s energy superpowers are losing their grip. Saudi Arabia, Qatar and other Middle Eastern countries influence prices through OPEC and “swing” capacity, but they lack clear energy transition strategies. The same is true for the United States, which leads in oil and gas production but has bungled its position in clean energy thanks to political dysfunction. The recently signed “Big Beautiful Bill” ends various clean energy tax credits passed under President Biden, promising yet more uncertainty for energy innovators.
In addition, the US and Canada have driven up the supply of LNG, dreaming that it will replace coal, but that may never happen. Cheap solar and wind have pushed LNG demand and prices downward, causing many projects to be cancelled. The outlook for the next five years is simply not good for LNG, as analysts continue to warn. And then there is Russia, which is rapidly losing influence over European energy markets.
Meanwhile, China—with few fossil fuel resources—is emerging as the next dominant force in global energy, as I discussed in a previous post. Why? China controls critical minerals and their processing, dominates solar, wind, EVs and battery production, and is investing in advanced fission and fusion energy. As The New York Times put it, “There’s a race to power the future. China is pulling away.”
If China becomes an energy superpower, it probably will use that position as a geopolitical cudgel. But it is not too late for the West. What our business and political leaders lack is a focused plan and the will and tenacity to achieve it. China has a strategic vision, crisply defined in five-year plans. The West has, well, elaborate permitting processes defined in legalese. We spend time determining who can’t build what where, while China funds deliberate innovations and builds whatever, wherever it chooses.
The next battlegrounds for energy superpowers are small modular reactors (SMRs), geothermal and, most importantly, fusion energy. Often called the “holy grail” of clean energy, fusion promises reliable, abundant and safe baseload anywhere, anytime, with limited need for additional infrastructure. The country that cracks fusion first will almost certainly dominate global energy markets.
Becoming an energy superpower requires long-term commitment, and China is investing accordingly. If countries in the West are serious about competing, they will need four things:
- Visionary Energy Leaders. Energy executives must manage both energy supply and demand—which is easier said than done. That means rolling out cleaner versions of existing hydrocarbon sources (e.g., adding carbon capture to natural gas) while developing zero-carbon offerings for Big Tech’s AI datacenters. Energy leaders must meet soaring demand without overbuilding fossil fuel infrastructure doomed to become stranded assets. And they must complement this with solar, wind, batteries, trading capabilities and game-changing technologies like fusion. That diversity of sources will be key to pulling off a transition towards cleaner energy. All the while, energy leaders must maintain grid reliability while keeping consumer prices in check.
- Political Support to Use Natural Resources. Elected officials and regulators must greenlight efforts to roll out cleaner fossil fuels and to develop critical minerals, which will enable solar, wind, batteries, SMRs and fusion. Countries that leave their mineral wealth in the ground, buried by regulation and red tape, may forego the opportunity to become energy superpowers. The US, Canada and Australia, for example, have significant mineral wealth but struggle with this exact issue.
- Eagerness to Create New Markets. An emerging energy superpower can’t merely scale the status quo. It must create next-generation technologies and new markets for derivative energy products like desalination, hydrogen and sustainable aviation fuels. It must store and trade energy to maximize value. And it must attract energy-intensive industries—AI, chemicals, steel, cement, biomanufacturing and so forth—with industrial parks or clusters offering access to talent, energy, raw materials and transportation infrastructure.
- Startup Ecosystems That Attract Top Talent. The world’s top universities and startup hubs remain in the West, but China is catching up. For the first time in 2022, it surpassed the US in annual patent applications—a key indicator of innovation. What Western ecosystems lack is patient capital, a must-have for energy solutions. Western investors generally prefer to fund safe, low-capital ventures for quick returns. The Chinese government, meanwhile, funds technologies that are critical to its national strategy and is willing to suffer short-term losses for long-term gain. The West needs to create competitive ecosystems with stronger government support, complemented by investors willing to back bold energy ventures with patience and farsightedness. That is how Silicon Valley got started—and how it turned the US into a digital superpower. And that is how the next energy superpower will earn that title.
Let’s not forget that rising demand for energy is only part of this story. The growing frequency and cost of extreme floods, storms, wildfires and heatwaves, fueled by climate change, started this race to replace fossil fuels with cleaner and more scalable sources of energy.
This is, indeed, a race. The first countries to become clean energy superpowers will be able to attract valuable industries, create high-paying jobs and wield geopolitical power for decades. The question isn’t whether there will be a new energy superpower—it’s whether the West has the will to outcompete China and the guts to challenge shortsighted business leaders and politicians at home who are committed to a status quo that is economically and ecologically untenable.