Energy security risks are opening up a new global divide between the north and south, according to new research from Verisk Maplecroft, with Europe looking to speed up the transition to alternative energies in response to the global energy crisis, while Asia has doubled down on coal to secure its energy supplies.\r\n\r\n\u201cBoth Asian and European economies are exposed to high and extreme risks to their energy security, [but] they have distinct environmental regulatory frameworks for their energy transition,\u201d says the Green Energy Dilemma Stirs Geopolitical Hornet\u2019s Nest report. It says Asia is likely to rely on fossil fuels for the next decade.\r\n\r\nVerisk Maplecroft warns that new geopolitical rifts are starting to form. \u201cAsia has become the fulcrum of a global tussle centred on the energy transition,\u201d the report explains. \u201cThe implications of these trends are far-reaching for companies and investors,\u201d and has afforded some breathing space to the traditional oil and gas sector, it adds.\r\n\r\n\u201cGlobal division on climate action has also become a silver lining for major oil and gas producers,\u201d Verisk Maplecroft says, with fossil fuel supply chains likely to redirect to Asia.\r\n\r\nChina has become a dominant player in the development of green energy markets, Verisk Maplecroft says.\r\n\r\n\u201cIn the global competition for dominance of the green tech space, China has already secured significant control over the global supply chain of materials that are indispensable inputs for clean energy development,\u201d says the report. China\u2019s solar manufacturing drives 70% of the world\u2019s capacity. The country is also rapidly building capacity for electric-vehicle battery components.\r\n\r\nThe report warns of potential vulnerabilities in the global supply chain for green energy, given the impact of geopolitical risks. The report notes US President Joe Biden\u2019s ban on Chinese solar modules that impacted the supply chain for the US solar industry, while China has made protective moves for its supply chain of strategic commodities and materials.\r\n\r\n\u201cIt is not immediately clear if these supply chain disruptions will affect the pace of the global energy transition but we expect them to increase the compliance and due diligence cost of international companies sourcing from China,\u201d says Kaho Yu, head of energy markets at Verisk Maplecroft.\r\n\r\n\u201cThe fractious geopolitics of green energy is not set to ease any time soon amid a widening global division on energy transition and supply insecurity driven by the Ukraine crisis,\u201d adds Yu. \u201cIt will remain a key obstacle to greater climate policy ambition, especially in developing markets.\u201d\r\n\r\nThe report\u2019s analysis reveals a strong correlation between a country\u2019s wealth and its commitment to the green transition. \u201cLower-income countries, those with weaker scores on Verisk Maplecroft\u2019s Poverty Index, are less likely to adopt a stringent carbon policy,\u201d it says.\r\n\r\n\u201cThese countries have prioritised domestic development agendas\u2026 their economies are more sensitive to the social impact of a robust carbon policy, such as unemployment caused by less investment in fossil fuels. Therefore, developing countries, especially China and India, will likely take a much slower transition path than developed countries, such as the US and EU,\u201d it warns.\r\n\r\nWhile creating a new divide with western countries, developing countries have united in strengthening their stance on climate action. \u201cThe global division on emissions has brought many developing countries together in terms of their climate politics,\u201d says Yu. China and India jointly led a last-minute intervention to weaken the language on fossil fuels in the Glasgow Climate Pact at COP26.\r\n\r\n\u201cWe expect these developing countries to stand together as a bloc negotiator and press rich countries for more support in climate finance, mitigation and adaptation,\u201d adds Yu.\r\n\r\nAt the same time, Verisk Maplecroft predicts closer political and strategic ties between China and Russia in their dual support for gas production and usage.\r\n\r\n\u201cThe collective effort of Asian countries in climate negotiations, the eastward shift of gas producers and China\u2019s dominance of the clean energy supply chain will combine to have significant impacts on the trade in global commodities and the geopolitical landscape,\u201d the report concludes.