The Rise of Electrostates Could Redraw the Global Economy

Countries that build economies around electricity - “electrostates” - may gain economic and strategic influence as factories, jobs, and technology supply chains shift toward places with affordable power and reliable grids. An analysis of 16 countries finds that enabling policies are generally further ahead than real-world deployment: median scores are 67% for supportive conditions and 45% for market uptake. China leads deployment, with widespread electric-vehicle use, electrification across buildings and industry, and more than 80% of global battery-cell manufacturing. Its electricity still relies heavily on coal, but its industrial dominance means other countries must decide which technologies to produce themselves and which to import.

The transition could reduce exposure to volatile fossil-fuel markets, but countries face distinct obstacles. Europe has ambitious targets yet struggles with high electricity costs, grid bottlenecks, and weak commercial incentives; the U.S. has substantial clean-energy projects awaiting grid connections while policy favors fossil-fuel production. Developing economies could leapfrog fossil infrastructure, though limited finance and grid investment impede progress. Electrification also improves energy efficiency, reducing the amount of energy needed for the same work, and could sharply lower fossil-fuel bills. But dependence may shift toward batteries, minerals, and electrical equipment concentrated in a few countries. The authors argue that climate policy and industrial strategy are now inseparable: governments must build resilient power systems and manufacturing capabilities, not merely replace fossil fuels.