New Powers

• Author: Jeffrey Ball

Last year, a minister from the Organization of the Petroleum Exporting Countries (OPEC) called surging U.S. oil production a “grave concern” to the cartel. This spring, Barclays downgraded the debt of the U.S. electricity sector, warning that the increasing popularity of rooftop solar panels “is likely to disrupt the status quo.” Meanwhile, coal producers in the West are swimming in inventory, facing flat demand at home, and forced to look far afield, to Asia, for markets.

An energy revolution is rocking the world: one triggered by an explosion of new energy technologies and supplies. It’s a stark contrast to the energy shifts of the past half century, which were sparked by acute supply shocks. New resource riches are popping up spottily across the globe, and they are beginning to have profound and messy geopolitical and environmental repercussions. So far, their most striking effect is economic: today’s new energy supplies are threatening powerful players at least as much as yesterday’s energy crunches did. From a boom in fossil-fuel production to a flowering of renewable energy to the rollout of an array of contraptions and business models to cut energy waste, the new energy riches of the 21st century are doing what new riches typically do—destabilizing the old economic order.

To be sure, even as these new energy supplies emerge, the world faces fundamental energy challenges. Energy demand is rising in the developing world, particularly in China. That’s squeezing global output and keeping oil prices stubbornly high—pressure that could intensify as global economic activity picks up. And global greenhouse-gas emissions continue to increase, in large part because the world fuels itself mostly from coal and other fossil fuels and is likely to do so for many years to come.

Yet, in certain places, the new resource riches are starting to remake the energy landscape. They’re shifting the center of gravity of global oil production westward, to North America from the Middle East. They’re reorienting the adolescent renewable-energy industry eastward, to China from the United States and Europe. They’re curbing carbon emissions in some cases and exacerbating them in others, which means that their effect on today’s signal environmental concern—climate change—will remain unpredictable for years to come. All the while, the proliferation of new resource riches is jeopardizing the bottom lines of long-dominant energy powers, including OPEC, leading electricity producers, and multinational manufacturers. All of them are scrambling to adapt rather than get crushed.

Pushing ahead

Energy shifts historically have happened for two reasons. Sometimes there has been a push: a prevailing energy source has run out. Sometimes there has been a pull: a better energy source has come along. In the 1700s and 1800s, industrializing societies were both pushed and pulled to coal from wood. They were depleting their forests, and they found that coal, a more energy-rich fuel, was more...