Resource Race and Green Transition: Three Unexpected Conclusions from Foresight Centre’s Research on Climate and Poverty

© iStock

Beneath the surface of green energy—which most people associate with solar panels, electric vehicles, and reduced CO2 emissions—lies a complex web of geopolitical interests, international inequality, and resource constraints. Researchers from the Laboratory for Science and Technology Studies (LST) at the HSE ISSEK Foresight Centre have published a series of articles in leading international journals on hidden and overt conflicts surrounding critically important metals and minerals, as well as related processes in the energy sector.

The global energy sector is undergoing a profound transformation, with innovation concentrated in some countries and resources in others. Any crisis in the relationships between them can create obstacles to the transition to clean energy sources. A team of scientists from HSE ISSEK conducted a large-scale empirical analysis covering African countries as well as the world’s major exporters and importers of rare earth metals (REMs), the key raw materials for green technologies. Using advanced econometric models (CS-ARDL, FMOLS, and MMQREG) and network analysis, the researchers identified patterns that often challenge conventional assumptions about the factors influencing the clean energy transition. The findings have been published in the peer-reviewed journals Resources Policy, Utilities Policy and Renewable Energy.

Africa's Green Statistics are Misleading

Many African countries formally rank among the world leaders in the share of renewable energy in their primary energy supply, in some cases meeting up to 100% of domestic demand. However, behind these figures, in the vast majority of cases, lies the use of traditional biomass fuels—firewood, charcoal, and agricultural waste—burned in primitive stoves for heating and cooking rather than in modern power plants. This practice does not solve environmental or climate problems; on the contrary, it worsens them. Indoor emissions cause severe health damage, especially to women and children, while uncontrolled deforestation leads to forest degradation and biodiversity loss.

Such 'clean' energy is, in fact, neither modern nor environmentally friendly. For biomass to become part of the green energy transition, countries need waste-processing plants, pellet production facilities, and modern electricity generation systems. All of this also requires affordable financing and well-developed infrastructure. However, as the study authors note, none of these conditions are likely to be met anytime soon. Public green energy statistics can therefore be misleading, while a genuine green transition depends not only on technology but also on long-term investment and effective governance.

For the least developed countries, the priority should be to reduce borrowing costs through international grants and subsidised loans, since the main obstacle to green projects in developing economies is the high cost of financing. Middle-income countries, meanwhile, need to stimulate private investment by providing risk insurance and simplifying regulations.

Resource Scarcity Does Not Drive Energy Transition

Most experts view the scarcity of domestic fossil fuel resources as the primary driver of the shift toward green technologies in the energy sector. In this framework, resource abundance would be expected to slow the development of clean technologies. However, an analysis of the 14 largest exporters and importers of rare earth metals (REMs) shows that neither resource scarcity nor resource abundance, on their own, are sufficient to drive the energy transition.

The key role is played by the quality of institutions and the level of financial development. Well-developed banking systems and transparent governance frameworks help channel capital into low-carbon projects. In countries with strong institutions (such as France, Germany, and Japan), this effect is particularly pronounced. The exceptions include China, Russia, and the Philippines, where institutional factors have not yet had a comparable impact. A possible explanation is the large share of heavy industry in these economies, combined with insufficient institutional policy effort to advance the climate agenda.

Figure 1. Institutional Quality Index

Source: The World Bank (2024). World Development Indicators

Increase in CO₂ Emissions Does Not Necessarily Indicate 'Dirtier' Energy

The relationship between greenhouse gas emissions and climate-friendly technologies in the energy sector is found to be nonlinear and time-dependent. In the short term, in countries such as Thailand, Vietnam, India, Japan, and Russia, rising CO₂ emissions may coincide with a decline in the carbon intensity of energy consumption. This effect is explained by the rapid overall growth of the economy and industrial output, which leads to higher absolute emissions: emissions per specific technological processes may decrease, even as total emissions continue to rise.

However, in the long run, high emissions often hinder the energy transition by reinforcing carbon dependence, where existing coal-fired power plants, well-established fossil fuel supply chains, and path-dependent industry development make it socially costly and structurally difficult to abandon 'dirty' energy sources.

As can be seen, low CO₂ emissions in the poorest countries are not always a sign of success. They often reflect limited industrial development and the use of traditional biomass for energy rather than modern, clean energy sources. This highlights that climate policy should consider not only absolute CO₂ levels but also the structure of the economy and its stage of industrial development.

Geopolitics of Rare Earth Metals

A separate strand of the research focuses on trade in rare earth metals (REMs). The analysis shows that China occupies a central position in the global logistics network for REM trade. Nearly 90% of rare earth compound exports to the United States and 47.6% of those to South Korea are routed through China. As a result, any disruption in Chinese logistics is immediately reflected in global supply chains. European countries such as Germany and the Netherlands primarily engage in intra-regional trade, with the notable exception of France, which is an active exporter to Japan.

According to the GREENQ index, Russia’s energy mix has one of the lowest carbon intensities in the sample, second only to France. This is largely due to the high share of hydropower, nuclear energy, and natural gas in electricity generation. At the same time, institutions have not yet become a driver of green growth, and continued economic expansion tends to translate into a proportional increase in both energy consumption and greenhouse gas emissions.

The study authors used the GREENQ index, an aggregated indicator proposed in 2023 by a group of researchers from China, India, and the United Kingdom. The index is calculated based on a country’s energy mix and reflects the amount of CO₂ emitted in generating one unit of electricity. A lower value indicates a cleaner and more sustainable energy system. France, Russia, and Germany rank among the leaders according to this indicator, while India, the Philippines, and Estonia have the lowest scores, reflecting a more carbon-intensive energy balance.

Figure 2. GREENQ index in selected countries, 2000-2021

Source: HSE ISSEK LST

From Raw Commodity Exports to Value-Added Products and Lower-Cost Financing

The findings support policy recommendations aimed at accelerating low-carbon development and expanding investment. Resource-rich developing countries face a strategic choice: to export raw commodities and generate budget revenues, or to mobilise financing for processing facilities and manufacturing, thereby creating jobs and fostering technologies. Empirical evidence suggests that the global trend is gradually shifting toward the latter option, with foreign investment increasingly directed toward the production of value-added products within the continent. To consolidate this shift, measures such as restrictions on the export of unprocessed raw materials, stronger regional coordination, and greater transparency in production are required.

The studies conducted by HSE ISSEK LST demonstrate that the energy transition is not solely about climate but also about macroeconomics, governance quality, and the geopolitics of supply chains. Africa has the potential to become a leader in green energy, while countries exporting rare earth metals (REMs) could emerge as drivers of new industrialisation. However, achieving this will require the global community to share technology, reduce the cost of capital, and develop more diversified and sustainable trade routes. As HSE University's findings indicate, the entire world could benefit from this transition—provided that renewable energy statistics do not obscure the absence of real structural change, and short-term gains do not come at the expense of long-term sustainability.

The studies were conducted with support from HSE University's Basic Research Programme.