Navigating the escalating oil risks: Electrification as keystone to national sovereignty
In a world of mounting oil risks, those who board this electrification “train” will fast-track resilience; those who resist risk being left at the station, vulnerable to the next shock.
Editor's note: Warwick Powell is an Adjunct Professor at Queensland University of Technology. He’s also working at the intersection of China, digital technologies, supply chains, financial flows and global political economy & governance. The article reflects the author's opinions and not necessarily the views of China Up Close.
In the shadow of renewed conflict in Iran, the global energy landscape is fracturing under the weight of unprecedented risks. US-Israeli strikes have prompted Tehran to restrict navigation through the Strait of Hormuz, halting tanker traffic and disrupting up to 20 percent of the world’s seaborne oil trade. This is equivalent to 12 million barrels per day of crude oil. Prices have surged by 12 percent by morning trading on 2 March, embedding an $8 per barrel risk premium, while LNG shipments from Qatar face similar perils. Compounding this, Houthi re-activation in the Red Sea has forced rerouting around the Cape of Good Hope, adding weeks to voyages and billions in costs. These aren’t isolated incidents; they signal a new era of “oil risk” where geopolitical flashpoints can choke supply lines overnight, threatening economic stability for oil-dependent nations.
This volatility underscores a stark reality: Long-term electrification of transportation and industry isn’t just an environmental imperative; it’s a non-negotiable strategy for national sovereignty.
By shifting from imported fossil fuels to domestically generated electricity, countries can insulate themselves from maritime chokepoints and foreign supply disruptions. Even oil-rich Arab states have recognized this, pouring tens of billions into renewables despite their vast reserves. Saudi Arabia aims for 50 percent renewable energy by 2030, investing over $40 billion annually from its Public Investment Fund into solar, wind and hydrogen. The United Arab Emirates has exceeded 7.7 GW of installed renewable capacity, with projects set to reach 23 GW by 2031, backed by 190 billion AED in investments. These “electro-petrostates” are decarbonizing grids to free up oil for export, reducing domestic emissions while bolstering energy independence.
For nations without such reserves, the stakes are higher. Electrification enhances Energy Return on Energy Invested (EROEI) by leveraging efficient renewable sources, yielding more usable energy per input and fostering sustainable growth amid finite fossil resources.
China’s ascent in the electric vehicle (EV) sector exemplifies this foresight. Facing perennial threats to its oil lifelines - 80 percent of imports pass through the Strait of Malacca, a chokepoint historically vulnerable to US naval interdiction - China has invested strategically for decades to mitigate these risks. The result? A world-leading EV ecosystem born from anticipated energy insecurity, now delivering unparalleled scale and affordability. By addressing its own vulnerabilities, China has at the same time solved EROEI challenges for itself and for the globe: Cheaper batteries and efficient supply chains make electrification viable for emerging markets, enabling energy sovereignty where high-cost Western systems once priced them out.
This transition extends far beyond passenger cars. In 2025, China’s new energy heavy-duty truck sales exploded. Electric trucks now dominate over 20 percent of heavy-duty sales, displacing diesel and slashing emissions in logistics. Rail electrification is equally transformative. China’s high-speed network, already 70 percent electrified, integrates hydrogen fuel cells for long-haul efficiency, with prototypes like a 2,400-kW hydrogen train entering trials. Shipping follows suit, with electric and hydrogen vessels emerging; witness the methanol-fueled Guoneng Yangtze 01 in commercial operation and ammonia tugs completing bunkering tests. These advancements are shields against oil shocks, proven by China’s diesel demand peaking in 2024 amid electrification embedment.
Global conditions have never been more conducive to accelerated electrification. Electricity demand is forecasted to surge 3.6 percent annually through 2030, driven by EVs and industry, while renewables will meet 90 percent of the growth, surpassing coal by 2026. EVs are 3 to 4 times more efficient than internal combustion engines, converting 75 to 90 percent of energy to motion versus 20 to 30 percent. By 2050, road transport could slash energy use by 70 percent while supporting 70 percent more travel, with electrification driving most savings. Yet, this momentum hinges on leadership in supply chains and breakthroughs, areas where China reigns supreme. Dominating 70 percent of global clean tech manufacturing, including EVs, batteries and solar energy, China is leveraging economies of scale to halve battery costs and standardize innovations like LFP chemistry. Its “three verticals and three horizontals” roadmap integrates upstream mining to downstream infrastructure, fostering systemic synergies.
This dominance is evolving beyond exports into a profound globalization of production footprints, transforming electrification into a shared capacity-building endeavor. Chinese EV powerhouses like BYD, Geely and Chery are establishing factories worldwide, localizing assembly to bypass trade barriers, create jobs and transfer technology to host economies. BYD’s facilities in Thailand, Brazil, Uzbekistan, and a new plant in Hungary ramping up in 2026 exemplify this shift, enabling region-specific models while integrating local suppliers. Chery’s $800 million investment in Vietnam’s largest Southeast Asian factory, targeting 200,000 units annually by mid-2026, further illustrates how these ventures build resilient supply chains, from component sourcing to final assembly.
Battery giant CATL is extending this model upstream, with a $6 billion integrated hub in Indonesia spanning nickel mining to battery recycling, and plants in Spain and Hungary. Overall, Chinese OEMs’ overseas manufacturing capacity is set to nearly double to 4.3 million vehicles per year by 2026, concentrated in Europe and Southeast Asia. This localization not only mitigates “oil risk” for partner nations by embedding electrification capabilities but also boosts global EROEI through optimized, proximate supply networks, reducing logistical vulnerabilities and empowering emerging markets to leapfrog into sustainable mobility.
Some 15 years ago, a number of western commentators argued that China’s then commitments to developing EVs was a sign of wasted investment. The passage of time suggests that these pronouncements were premature and ill-judged. For nations pursuing energy sovereignty, engagement with Chinese capabilities is inevitable. Tariffs and barriers may slow imports, but they can’t erase the affordability and efficiency China offers. In a world of mounting oil risks, those who board this electrification “train” will fast-track resilience; those who resist risk being left at the station, vulnerable to the next shock. The path forward is clear: Electrify now, or pay later.
*The article was first published on CGTN
About the Author
Warwick Powell is an Adjunct Professor at Queensland University of Technology. He’s also working at the intersection of China, digital technologies, supply chains, financial flows and global political economy & governance.
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Great reporting!
Far from being a sucker to propaganda about the (real) climate crisis, allegedly used to suppress development in the global south, China's investment in solar power has provided her with valuable autonomy from the US and it's desire for monopoly.