Forging the Electric Age

The twentieth-century global order was built on fossil fuels, with power concentrated among nations controlling oil supply and shipping routes—a system often framed as stability but rooted in inequality and coercion. That order is now fracturing as climate risk, capital markets, and geopolitical competition reshape the landscape. A petro-bloc of fossil fuel exporters is working to preserve its influence, while major powers like the US and China compete to dominate emerging industrial systems. Meanwhile, energy-importing nations remain trapped in costly and insecure dependencies like LNG, exposing them to volatile markets and geopolitical shocks. In this shifting context, electrification offers middle powers a pathway to break free from fossil reliance and help build a more resilient and distributed global order.

Industry Is the Hard Frontier

For transport, buildings, and the residential and commercial sectors, the argument about electrons versus molecules is settled. Electrons win. Electric motors convert 90–95% of energy to motion versus 25% for combustion engines. Heat pumps move 3–4 units of heat for every unit of electricity. Batteries have fallen 97% in cost since 1991. Solar has fallen 90% in fifteen years. In Australia, rooftop solar installs at (US)$0.55 per watt — the financed cost of that electricity is 2–3 US cents per kilowatt-hour. If free fusion energy magically appeared tomorrow, it could not deliver electricity to your house cheaper than rooftop solar already does in Australia. This is because the cost of the electricity network is the dominant cost of electricity – which is why rooftop solar behind the meter is always the first priority in making a lowest cost energy system. Rewiring Australia’s data shows the average household saves $4,000–5,000 per year by going all-electric. Rewiring Aotearoa calculated $11 billion per year in savings for New Zealand. These numbers were before the price shock of the latest stupid oil war which probably adds another $2000 per year in savings. The wins for residential and transport electrification stack up: cheaper energy, local jobs, better air quality, reduced inequality.

But industry is different. Making steel, aluminium, cement, and chemicals with clean electricity is not yet obviously cheaper than doing it with fossil fuels. Coal as a source of heat for industrial processes is under 0.5c/kWh equivalent. Natural gas if you are close to a pipeline is 1-2c/kWh. The blast furnace has had 150 years of optimisation. Electrochemical iron reduction is still a process in the lab. Industrial heat above 1,000°C is still mostly delivered by burning things. The molecules-to-electrons transition in heavy industry requires not just cheap electricity but new processes, new equipment, new supply chains, and patient capital willing to back first-of-a-kind plants and long and uncertain capital cycles.

The simple way I think about it is that success in any industrial vertical needs cheap electrons, a more efficient process and a reliable input supply chain – typically ores. As an example South Australian solar and wind with an electrochemical iron pathway looks like the viable pathway by which iron and steel will get cheaper while also decarbonizing. Iron pathways through LNG or hydrogen will almost certainly make steel more expensive. People don’t like commodities getting more expensive.

Steel and aluminium, while hard, look doable — the electrochemistry exists, the economics are closing, and first commercial plants are under construction. Cement is the really tough nut. About 60% of cement’s CO₂ comes from the chemical reaction itself (calcining limestone), not from the fuel burned to heat the kiln. You can’t fix that by switching to clean electricity alone. But there are promising angles. Some kilns already burn waste — tyres, municipal refuse, biomass — as fuel, which can be even cheaper than coal and diverts material from landfill. And a new line of research on industrial co-production (Finke, Wagner et al., 2025) argues that multi-product electrochemical pathways — making cement clinker alongside other valuable outputs — could achieve cost-neutral electrification once manufacturing scales. Single-product electrochemistry struggles to beat a coal kiln on cost; co-production changes the equation by spreading capital costs across multiple revenue streams.

The easy electrification — cars, homes, commercial buildings — is happening whether governments help or not, because the economics are compelling. America’s diabolical political and regulatory environment, combined with its cheap local gas, is why it is going much slower than places that don’t have their political processes corrupted by the oil and gas lobby. New Zealand, Vietnam, Pakistan – they are invested in moving away from fossil fuels because they aren’t producers. The hard decarbonisation is industrial electrification. This is where geopolitics, strategy, and deliberate coalition-building matter. It’s where the next world order will be forged.

Historically, steel production was located where metallurgical coal and good ores came together near ports. Places like Wollongong and Pittsburgh. Newcastle and the other Newcastle. Then Asia got into the game with cheap ore shipped from places like Western Australia and coal and LNG. The same is true of aluminium (very often near hydroelectricity), cement, and chemical production including petrochemicals. The new industry that makes things cheaper, and greener, will be where the material flows meet the cheap clean energy flows. Another underappreciated thing will be the advantage of new processes with low capital costs – if you can keep the capex low enough you will be able to operate the machinery when the wind blows and the sun shines, and throttle it down when it doesn’t. Given that the price of electricity is frequently negative in countries with high renewables penetration, figuring out how to maximise the portion of your production that you can do when energy is even better than free will return great dividends and is part of the toolbox for making new industrial processes cheaper than the old.

It will also mean a lot less shipping. 50% of the world’s shipping is moving fossil fuels. If you shipped iron instead of iron ore and the fossil fuels to make it, you would cut the tonnage by 2/3 or more. Shipping is 2% of global energy and more of emissions, so this is a good thing.

Trade in Embodied Clean Energy

Here’s the conceptual shift that matters: you can’t really export electricity. It’s hard to ship. Wires aren’t (yet) crossing oceans. The oft touted alternative – hydrogen is a poor way to ship energy — the round-trip efficiency of electrolysis, compression, transport, and reconversion is so poor that you lose 60–70% of the energy – even worse than LNG. It’s thermodynamic madness, and I’ve been saying this for years while the hydrogen lobby (which basically is the oil and gas lobby) extract billions in government subsidies for what amounts to fossil fuel industry life support.

But you can export materials that have clean energy embodied in them. About 1/4-1/2 of the cost of steel is energy. Around 30% of aluminium is energy. Cheap electricity will enable green iron, green aluminium, refined lithium, and battery-grade materials at globally competitive prices, with near-zero emissions.

This is already happening. The Australian government’s Green Iron Investment Fund has put $1 billion into decarbonising steel. CSIRO’s Green Metals Innovation Network launched in 2025. Fortescue is building a commercial green iron plant at Christmas Creek. A green steel recycling mill in Collie, Western Australia will produce 450,000 tonnes of rebar annually from 2026. Australia’s iron ore exports were worth $116 billion in 2025–26, and projections suggest green iron could grow that to $386 billion by 2060.

The trade of the future isn’t tankers of LNG. It’s shiploads of green iron and aluminium and lithium (and ammonia and copper and …) — molecules that carry clean electrons inside them. The new industrial machine doesn’t ship fuel. It ships the things that fuel used to build.

Pax Electricana

I call this alternative strategy Pax Electricana: stability underwritten not by oil chokepoints and carrier groups, but through electrification, decentralised industrial alliances, and shared resilience — a framework that hedges against a fossil-fuel bloc and the fragmentation of global trade. Is it inevitable ? If we are ever to address climate change it is.

The sun shines everywhere. The wind blows in every ocean. Lithium, copper, nickel, cobalt, silicon — the minerals of the electric stack — exist on every continent, in dozens of countries. The electric world is inherently distributed. No single country controls the sun.

If the petro-bloc alignment persists, electrification becomes not merely a climate or economic policy choice but a strategic hedge against a fossil-aligned geopolitical order. Pax Electricana builds that hedge by creating alternative industrial supply chains anchored in clean electrification and diversified partnerships among middle powers.

The Middle Power Coalition

So who builds this thing? Not China alone, and not America alone. The superpowers are both too conflicted. China dominates manufacturing of the electric stack but is a geopolitical risk for anyone building a supply chain that depends on a single source. The US has extraordinary innovation but governance so politically volatile that climate policy reverses every four years — the IRA giveth, the Big Beautiful Bill taketh away.

The answer is the middle powers. Individually constrained, collectively formidable. Australia, Canada, Japan, South Korea, Taiwan, the European Union, Chile, Mexico, and eventually many more. Countries that are either major mineral holders, major manufacturers, major renewable energy suppliers, major technology developers, or major energy importers looking for a way out. Often several of these at once. And whether the big powers end up in a G1, G2, or G3 configuration, the middle powers need a strategy that doesn’t depend on how that race shakes out.

Australia is a great example – it has the minerals, the solar resource, and the land — and the uncomfortable truth that it currently earns its living as a petrostate. That’s not a contradiction. It’s a motivation. Canada under Mark Carney has signalled a clean-energy industrial strategy — transition bonds, carbon contracts for difference, a sustainable investment taxonomy — though Carney himself is torn, as any leader of a major oil and gas exporter must be. Japan and Korea have the manufacturing sophistication and the most urgent motivation to escape LNG dependency. Europe has the market size, the regulatory infrastructure, and — crucially — the Carbon Border Adjustment Mechanism (CBAM), which creates demand pull-through for low-embodied carbon materials from trusted partners. Europe provides not just demand but regulatory consistency and financial market depth — a glue that binds industrial partners across regions. Chile has lithium and copper. Taiwan has semiconductor fabrication. Latin America broadly offers extraordinary solar and wind potential alongside growing domestic markets.

No country can do this alone. But together they constitute a supply chain for the entire electric stack — from mine to module to motor to manufactured machine — that doesn’t depend on a single superpower. This trade architecture is the core of Pax Electricana — reciprocal partnerships where everyone can move up the food chain. Australia shipping green iron and aluminium and refined lithium moves up from mining through to value added processing. Japan and Korea – geographically constrained in terms of renewables – get to spend a higher portion of their economy making the ships and cars that are higher value exports. Taiwan gets to dedicate more of its energy economy to ships, and less on the basic inputs like iron enabling it to decarbonise and increase its export values. Canada can supply critical minerals and maybe even cheaper aluminium given its hydro capacity. Chile can contribute lithium and copper. A Pacific and Atlantic lattice of production nodes that enhances resilience and reduces reliance on any single geopolitical corridor. Not a military alliance. A manufacturing alliance. Just as the Marshall Plan rebuilt Europe through industrial investment, not charity, Pax Electricana can do the same for the clean economy.

And here’s the part people miss when they think only about hardware: talent and knowledge sharing for rapid deployment of electrotech. The middle powers collectively have an extraordinary depth of engineering talent, trade skills, and institutional knowledge. Coordinating that — shared demonstration facilities for green steel and long-duration storage, aligned standards for low-carbon materials, reciprocal capital programmes, integrated workforce training — is what turns a loose coalition into an industrial mesh. Not a bloc defined by exclusion. A network creating redundancy, reducing exposure to single-point supply chain failures, and actively reducing the leverage of the petro-bloc.

The Three Billion

There’s one more piece of this coalition that most Western analysts completely miss, and it might be the most important. South and Southeast Asia — Indonesia, Vietnam, the Philippines, Thailand, Bangladesh, Pakistan — along with large parts of Africa, represent nearly three billion people who are right now going from hundreds of kilowatt-hours per person per year to thousands. That’s the trajectory every developing economy follows, and it is the single largest source of demand for the electro-stack on Earth.

These countries don’t want to repeat the fossil dependency trap. They can’t afford LNG at Asian spot prices. They have abundant solar resources. What they need is affordable electric technology — heat pumps, EVs, solar panels, batteries — manufactured at scale and financed at reasonable rates. A middle power coalition that can supply that stack has enormous leverage and enormous goodwill. There is power in a union with them on this. Africa too. The countries building the clean industrial supply chain won’t just be trading with each other — they’ll be equipping the fastest-growing energy markets in the world.

Working With China

Lets be clear about China – it dominates manufacturing of solar panels, batteries, and EVs, and just about everything else. You can’t build the electric stack at global scale without Chinese manufacturing, at least not yet.

But we shouldn’t build a system that requires China. The lesson of Europe’s dependency on Russian gas applies here too. Supply chain concentration is a systemic risk, regardless of which country sits at the centre.

The middle power strategy is about building redundancy. Multiple sources for critical minerals. Multiple manufacturing bases for batteries and power electronics. Not decoupling, but de-risking. The goal is a system resilient enough that no single country’s political decisions can switch off your energy transition.

The American Waiting Room

And America? Its innovation engine remains extraordinary, though Elon Musk’s chainsaw might have killed Vannevar Bush’s inspired post war innovation infrastructure – the universities and national labs. The fundamental science behind the electric stack — lithium-ion chemistry, power semiconductors, advanced magnetics — came overwhelmingly from US-funded research, often by immigrant scientists at publicly-funded universities. That brain trust still exists, even as the political superstructure lurches between climate action and climate denial every electoral cycle. Right now it might be a matter of saving the American brains that aren’t distracted by AI, and giving them a useful place to deploy this technology while this administration is hostile.

The middle powers can serve as a continuity mechanism. When US policy is hostile, the people and the IP and the companies don’t disappear — they need somewhere to go. Australia, Canada, Europe, and Japan can host demonstration projects, scale-up factories, and policy testbeds for technologies that the US invented but can’t currently deploy at home. Think of it as a waiting room for American clean tech, keeping the lights on until the politics change again.

This is what Carney’s Canada is positioning for. It’s what Australia’s “Future Made in Australia” industrial policy is about. It’s what the EU’s Green Deal Industrial Plan aspires to be. Individually, these are national programs. Collectively, they are the scaffolding of Pax Electricana. They do need more coordination.

Industrial Clusters: Demonstration Over Theory

The way this gets built is not with white papers. It’s with industrial clusters — specific places where cheap electricity, mineral supply, port access, and skilled labour converge. There are only so many places in the world where it makes sense to make iron, and fewer that are in close proximity to cheap renewables. If nuclear could produce electricity at 2-3c/kWh it would be in the running, but thats not a reality today and no serious nuclear companies are forecasting getting there soon. So the likeliest scenarios is that the first places to build these facilities are the places that are first to have cheap renewables close to the right geological deposits.

Low Cost of Capital is the Whole Ballgame

Cheap electricity is the decisive advantage. Pipeline gas in the US costs under 1 cent per kilowatt-hour of heat. By the time you build a power plant and burn it, electricity generation costs 3–5 cents before transmission and distribution. LNG landed in Asia costs 4–9 cents per kilowatt-hour — just for the fuel, before conversion losses. Australian solar or Canadaian hydroelectricity can deliver at 2 cents (US units here). Below 4 cents, the economics of green industrial production flip. Australia is already there. Parts of Chile are there with solar and wind. The Middle East is there with solar (ironic, given they’re sitting on the oil). Whoever can credibly offer sub-4-cent clean electricity to industrial users at scale with colocated inputs will attract the capital.

And this is where Mark Carney’s insight becomes the whole ballgame. Carney — now Prime Minister of Canada, previously the guy who ran both the Bank of England and the Bank of Canada — has been saying for years that climate risk is financial risk, and that credibility lowers the cost of capital. He’s right, and it matters more than most people realise. A green iron project financed at 4% has a completely different economics than one financed at 8%. The difference between those numbers isn’t engineering — it’s trust. Stable governance, transparent legal systems, long-term policy commitment — these are the things that make institutional capital flow. Canada’s new transition bonds, Australia’s Future Made in Australia plan, the EU taxonomy — these aren’t just climate policy. They’re financial infrastructure. They’re the reason middle powers can offer something the petro-bloc fundamentally cannot: a credible long-term bet on the clean economy – but they will need to make that commitment together as producers and offtakers.

This matters existentially for the pension funds, sovereign wealth funds, and insurance pools of middle power countries — institutions holding vast capital that needs steady, secure returns through the coming decades. Coordinated electrification and supply-chain diversification lowers systemic risk and the cost of capital. Countries that internalise this reduce risk and attract long-term investment. Countries that don’t will find their capital fleeing to those that did. Capital follows credibility.

And the Other Important Thing is Low Cost Capex

Solar and wind are intermittent, everyone who wants to criticise the energy transition mentions that, but if you can design new manufacturing processes that are low in capex and can then be run intermittently, it increases the portion of time you can run on the cheapest electrons – the noon-time ones in a solar rich country. Ideally, now you think of how to design plant equipment that doesn’t need to run 24/7, but runs 18 hours a day and runs most intensively around noon when the sun is strongest. Colocation of solar and wind so the blend has a capacity factor of 70% paired with low CAPEX plant that can run at 70% is the secret.

Two World Orders

So here we are. Two competing visions of how the world organises itself around energy.

The Petro-Bloc offers fossil fuels, concentrated power, price volatility, geological luck, and periodic and expensive disruptions. It is extractive, inherently scarce, and controlled by a small number of actors – increasingly bad. Its golden age is behind it.

Pax Electricana offers electrification, distributed power, resilience, and engineering. It is manufactured, inherently abundant, and open to any country willing to invest. Its golden age is just beginning.

The middle powers didn’t ask for this role. They’d probably prefer that the superpowers got their act together. But waiting for Washington to lead is insane, and although Beijing is leading, we need diversity and a hedge. The technology is nearly ready. The supply chains are buildable. What’s needed is the political imagination to see that a coalition of middle powers — messy, multilateral, imperfect — is the entity best positioned to build a clean industrial order that works for everyone. And America won’t operate cohesively, so we should not write off that California and Washington State might be in the Pax with their wealth and talent.

What’s Hard About Pax Electricana

These are tremendously difficult political things to do. Local politics are driven by jobs. No one wants to see their steel mill shut down or smelter go away as entire geographic economies rely on them. Yet Pax Electricana acknowledges that there will be a new geography of different economic winners. This is the tension within Nation States. Politically important cities and regions will look to the state to prop-up existing industries rather than build a-new or elsewhere. It might be a better idea for Taiwan to ditch iron making in Taiwan for both cost and climate reasons, but the people of Taichung and the owners of those steel plants will fracture the politics. This might be Japan’s pathway to decarbonisation with a thriving industrial sector, but it runs counter to the fact that Japan is the LNG hub to the world today. A new kind of diplomacy will be required to pull together these projects that require local buy-in, international capital, and multi-country participation in the products.

The old world was forged in carbon. The new one will be forged in silicon, lithium, copper, green iron and aluminium — refined with clean electrons and traded between nations that chose to build rather than extract.

There is something deeper here, something that goes beyond economics and strategy. The fossil era was defined by power over — over colonies, over shipping lanes, over populations held hostage to commodity prices they couldn’t control. Electrification enables power within. Within countries, within communities, within households. A rooftop solar panel is a tiny act of sovereignty. A green steel mill is a big one. When countries can generate their own energy and manufacture their own industrial materials, they exercise power with their partners rather than having power exercised over them. That shift — from extraction to generation, from dependence to interdependence — is what makes Pax Electricana not just a strategy for prosperity, but a fundamentally different kind of world order.

The middle powers now have a choice. Forge a resilient, electrified industrial order — or be forged by the rival blocs shaping the new century and in some cases trying to force fossil on us forever.