The first international conference on just energy transition is due to take place later this month in Santa Marta, Colombia, on the future of electricity generated from new and renewable energy sources.
It will address the means of financing the transition and technological developments that reduce the costs of production and distribution of renewable electricity or “green power”.
The two organising countries – the Netherlands and Colombia – aim to rally a group of countries seeking to diversify their energy sources, as well as experts and representatives of civil society. The British economist Michael Jacobs, writing in the UK magazine the New Statesman, notes that the conference will launch a group of “electro-states” that will shift towards reliance on renewable and nuclear energy in transportation, heating, and cooling.
The transition, taking place gradually at first and then more rapidly, will occur in accordance with an agreed-upon action plan with shared standards, incentives, and monitoring systems.
While research and development and new production technologies have achieved significant reductions in the cost of electricity generated from solar and wind energy over recent years, major challenges remain.
This applies in particular to the development of electricity grids capable of handling these energy sources. The cost of storing electricity generated from renewable energy when sunlight is limited or wind is low continues to hamper expansion. However, recent developments offer hope of quick breakthroughs in this area.
China has already made notable advances in electricity storage, surpassing Japan and the United States in battery technology. During my recent visits to China, I visited exhibitions organised in tandem with conferences on Asian cooperation and economic development held in Beijing, Tianjin, and Hainan and saw for myself the progress made by Chinese research centres, universities, and manufacturing in the production of durable, fast-charging batteries with wide-ranging applications in transport, machinery, household appliances, mobile phones, and drones.
These are also only some examples of China’s progress in green technologies, for which demand is steadily increasing both to keep pace with development and to mitigate risks of over-reliance on one source. China’s 15th Five-Year Plan (2026-2030), adopted in March, aims to meet domestic demand both in consumption and production as well as external demand through exports, by promoting green development activities, the advancement of technological industries, and the upgrading of research and development systems and AI applications.
China is a major supplier of these products, and the growing demand for them has stimulated demand for financing the green energy transition in “electric-states”. China’s national currency is linked to this trend. The “electro-renminbi”, or more simply, the “electro-Yuan” is playing a role akin to that played by the dollar in energy markets reliant on oil, or the “petrodollar”.
In 1971, then US president Nixon announced that the dollar would no longer be convertible into gold, causing global confusion known as the “Nixon shock”, as it brought a sudden end to the Bretton Woods system. This system, in effect since 1944, had established the dollar as a reserve currency, with other countries’ currencies pegged to it at fixed exchange rates, under a commitment to convert gold at $35 per ounce.
The collapse of the Bretton Woods gave rise to an ongoing debate over the nature, fairness, and efficacy of exchange-rate systems. It also triggered the search for an alternative to the dollar as the dominant international reserve currency – one which enabled the US to borrow from abroad and repay its debts with money printed domestically at low cost to the US but high cost to others.
This “exorbitant privilege” of the dollar, in the words of former French president Valéry Giscard d’Estaing when he was French finance minister in the 1960s, drew increasing doubts and criticism.
Not long after the Nixon shock, another shock occurred due to the adjustment of oil prices following the outbreak of the 1973 October War, the oil export embargo, and the first major energy crisis of the 20th century. This was followed by the agreement in 1974 to price oil exports in dollars and invest the resulting surpluses in global markets and US bonds.
As a result, demand for oil automatically meant demand for the dollar as the currency for settling payments. This system remains in effect today, with around 80 per cent of international oil market transactions conducted in dollars.
In an article I published in this newspaper last June, I mentioned the remark by John Connally, US treasury secretary during the Nixon era, in response to complaints about the impact of unilateral US dollar policies on their economies.
“It’s our dollar, but your problem,” he said. This quote – and the attitude behind it – is the title of a recent book by American economist Kenneth Rogoff. The US’ fiscal unilateralism has continued in substance since the 1970s, even if its methods of imposition have varied from subtle to blunt across different administrations.
However, international currencies are not immortal. A sign of this can be seen in the decline in the dollar’s dominance as a reserve currency from 71 per cent of total global reserves in 2000 to about 59 per cent in 2025. The dollar’s value, stability, and resilience are under constant scrutiny as the US contends with the pressures of inflation, mounting debt, and the need to meet its obligations while maintaining sufficient liquidity to remain a safe haven.
Amid rising US debt and increasing borrowing costs in the US, constraints on the Federal Reserve and threats to its independence in combating inflation, and mounting geopolitical tensions and trade wars, the primary threat to the dollar’s dominance, credibility, and status as a safe haven stems from within. This point is underscored by the US economic historian Barry Eichengreen in his recent book Money Across Borders.
However, the transition from one international currency to another is not straightforward. It would be wrong to assume that electricity can do for the yuan what oil did for the dollar. We must therefore keep a close watch on China’s approach to internationalising its currency, its willingness to bear the associated burdens, and the effects of this on its balance of payments.
We should also consider what roles gold, the euro, and other international currencies might play as rivals to the dollar. And what impact will financial technology have on all this? These are questions that will be explored in a forthcoming article.
This article also appears in Arabic in Wednesday’s edition of Asharq Al-Awsat.
* A version of this article appears in print in the 9 April, 2026 edition of Al-Ahram Weekly
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