Shielding Sri Lanka from the global energy war

Why do we find long queues at fuel stations, triggered by war thousands of miles away, despite government assurances that there was no need to panic? While it is easy to criticise panic-buyers, their sentiments reflect an undeniable reality – we are not an energy-secure nation. Any geopolitical turbulence, if severe enough, can shatter our ability to meet our own energy requirements. But how much thought have we as a country put into understanding our energy security? 

There has been a lot of commentary on the recent outbreak of war in West Asia. Some attribute it to Israeli pressure on Washington, some say it is because of Sunni Arab pressure to defang the Shia Persians, some point to Iran’s oil reserves as the reason, others call it a distraction from the Epstein files, currency speculators see it as a move to strengthen the dollar’s hegemony, while some still defend it as humanitarian intervention. Although any combination of these things could have triggered the latest outbreak, there is a much larger war at play here which most analysts miss. The all-encompassing Energy War that has been unfolding before our eyes since January 2025. 

Petro States  vs electro States

The most important geopolitical “world war” at the moment, albeit invisible, is the war for energy dominance. Namely, the new cold war between the USA and China over who becomes the world’s most critical supplier of energy. Much like the original cold war between American-style capitalism vs Soviet-style communism, this new cold war is between fossil fuels and renewables. Washington’s strategic umbrella covers many of the world’s largest oil and gas reserves, while China has become the undisputed leader in the overall renewable energy space.  

On President Trump’s first day in office, he declared a national energy emergency and signed executive orders to “unleash American energy dominance.” According to the U.S Department of Energy, crude oil production is now over 13 million barrels per day, with total oil and liquid fuels output reaching 24 million barrels per day — more than Russia and Saudi Arabia combined. Natural gas production has now jumped to 110 billion cubic feet per day, nearly matching Russia, Iran, and China put together. America is without a doubt the planet’s top “Petro-state”, and they are just getting started. 

China, by contrast, controls the refining and processing of 19 out of 20 strategic critical minerals without which the renewable industry cannot exist. For rare earth elements used in EV motors and wind turbines such as neodymium, praseodymium, dysprosium, terbium etc, China has both refining and manufacturing dominance. Even minerals like lithium, cobalt, nickel, and graphite, used widely in batteries, come under Beijing’s near-monopoly. This chokehold, built through decades of strategic planning, allows China to draw the landscape of renewable energy. Any global energy transition from fossil fuel energy to renewable energy, strengthens Beijing’s power exponentially. 

The geostrategic energy objectives of either side are simple. Like the capitalists and communists racing for influence worldwide to establish their strongholds, the fossil-fuel faction and the renewable energy faction are entrenched in a race to establish their territory. President Trump wants the world to use fossil fuels, which means more money for the American economy, while President Xi Jinping wants the world to electrify, enriching the Chinese economy.

The actions of both nations clearly reflect this. Through massive domestic scaling, subsidies, and overseas projects, Beijing exports solar panels, wind turbines, batteries, and electric vehicles all over the world today. China has also invested greatly in green technology for itself, in order to protect itself from potential pressure from the fossil-fuel side. It is often considered the world’s first “Electro-state”, investing over 600 billion dollars in renewable energy. The USA for its part, has aggressively marketed LNG to its European allies, replacing the Russian void after Western sanctions.  

It is in this context that any conflict involving the world’s powers must be understood. The recent operation in Venezuela was part of the new cold war, where securing Venezuela’s oil reserves under Washington’s strategic leadership (the power to decide whom this energy is sold to and in what currency) was the primary interest at stake. This is also central to Washington’s pressure on India and China to move away from Russian oil imports, as Moscow is in direct competition with the USA to supply the world with oil and gas. 

While many reasons contributed to the present conflict between Iran and the U.S-Israel-Arab alliance, it is difficult to ignore the energy component. If Iran’s oil reserves can be brought under the same strategic umbrella as the USA, Canada and the GCC, this would further empower the fossil-fuel faction. Unleashing Iran’s oil potential where all that oil could be sold in USD and only to whomever Washington dictates, would consolidate American interests in West Asia into something impregnable. 

An energy grid as a shield

What can we as Sri Lankans do about all this? Any conflict that spikes oil prices would be catastrophic, a global war over energy dominance even more so. As we just witnessed, the mere news of war sends people into a panic, which then triggers wider panic, black market hustlers jump in, social media rumors spread, and even law enforcement is called in to control the situation. All of this is because of an unfortunate but justifiable fear that we are not energy independent. 

Our only solution is to become part of a larger energy grid which can protect us not just from the global energy war, but from geopolitical shocks in general. This is a common international practice; Ireland is integrated with the UK grid, Demark into the Nordic grid, Nepal with the Indian grid, Latvia with Belarus, Portugal with the Iberian grid etc. 

For small countries, energy security is about resilience, not production. Limited land areas, small domestic markets, exposure to volatile import prices, and vulnerability to climate events can make national power systems very fragile. But belonging to a wider grid, whether through cross-border electricity interconnections, shared gas infrastructure, or coordinated renewable markets—provides stability and affordability that smaller systems cannot achieve.

Of course, all of this depends on our own strategic clarity. Whose energy grid should we belong to? Whom should we have a sustained, formalised energy partnership with? China? India? USA? China has a lot of cash to spare, so should we woo them with promises to electrify? India is investing heavily in both fossil fuels and renewable energy; so could they be a neutral option in the global war? Are we willing to compromise anything to become part of a larger energy grid? If not, are we doomed to long queues and fuel crises whenever a bomb goes off anywhere in the world? 

 There are obviously no easy answers, and any meaningful policy can only come out through political consensus. The fact that we need refuge in an energy grid in clear, but whose refuge we seek can only be decided through vigorous policy debates. Our energy woes are not just crises; they are catastrophes waiting to happen in a new era of global energy competition.  

A grid is a shield, and missiles are incoming. 

(The author is the Executive Director of the Centre for Law And Security Studies (CLASS), Sri Lanka’s premier geostrategic think-tank and consultancy. His analysis has been published by institutions like West Point, Yale, Johns Hopkins and Columbia University)