Ed. note: The following guest essay is by Kevin P. Kane, you can find more of his work on his blog Energy Fanatic.

Many private investors and financial institutions are betting on who will win the green race, but contrary to how our national leaders and media outlets make things appear, they are not wagering on countries: not the U.S., not Germany, not China, and not South Korea. Even though there is a nationalistic slant to the way we frame green energy as a race between nations, it’s all a fictional bubble that no country can win.

To understand why this is true, we must exit a dream similar to how Neo in the movie, “The Matrix,” chose the famous red pill; after ingestion, he escaped the machine-created fantasy and experienced reality for the first time. Like Neo, let us escape the media and nation-created fantasy and experience the reality of green energy and globalization. Follow me, swallow the red pill, and escape through the sequence of logic outlined in these four steps:

1. Recognize that companies win in the market place, not nations or their people
2. Accept that despite a local company’s best efforts to develop its own technology, it must integrate core technology and components into its final product from diverse foreign partners due to the cutting-edge complexity of green energy
3. See that this systems integration-requirement spawns transnational partnerships and joint-ventures (JV), which reduces national borders and accelerates global financial and production-network integration
4. Awaken to a reality where global economic connectedness binds economies into one unit, thus creating a single common energy security fate for every country regardless of their national energy mix: making self-reliance impossible without returning to the stone age

Escaping “The Matrix”

In 2009, Pew Research published a report titled “Who’s Winning the Clean Energy Race,” ranking green energy investment by country among G20 members. Forward thinking opinion-leaders like Thomas Friedman continue to warn Americans how China is taking the lead in green energy. Oil industry pioneers like T. Boone Pickens argue that green energy and natural gas will facilitate national energy self-reliance by eliminating oil imports. All of these arguments frame the issue of energy through the lens of the nation: creating an imaginary world in our minds, not the real one around us.

Starting with step 1 of the red pill as your roadmap to escape “The Matrix,” we must recognize that only companies participate in the free market space: certainly not countries. Consider that Samsung, Siemens, ExxonMobil, LG Chemical, General Electric, BP, RWE, and Tesla Motors, belong to stockholders. Their market place victories do not belong to the nation or the welfare of its people, even where their headquarters office presides. Even nationally owned companies like Sinopec and Korea National Oil Corporation aim to behave exactly like their privately owned competitors by maximizing returns, doing their best to escape the distortionary influence of government, and expanding into new markets. Thus, the private sector shapes the global landscape of green energy, not the nation.

Transitioning Power from the Nation to the Free Market

All companies, whether large or small, aim to advance personal and investor-stockholder—not government or national—income and power. They are loyal to only themselves. So why do we talk of a green energy race between nations if companies are the real actors? Perhaps this is because we design everything in our minds around the nation coupled with the words of our national leaders, and so we struggle to hold on to something that does not match with reality: a world increasingly and irreversibly led by free individual actors and private companies indifferent to borders, from venture capitalists, environmental activists, investment banks, small and medium enterprises, to multinational corporations. The world is merging into one economic unit, and green energy accelerates this process: does not reverse it.

Successful Green Companies are Globalized Systems Integrators

New renewable energy and cleantech relies on technology under-development, not yet economical, not yet at grid parity, or still in conceptual phase: including smart grid, long-range electric vehicle sedans, energy storage systems, solar and wind power, et al. This brings us to step 2 of the red pill; deploying highly-sophisticated forms of green technology requires the world’s best concepts, engineers, components, and raw materials that can never exist in any single country. This suggests that the development of new renewable power and cleantech results in an unintentional process we can label, a “Global Manhattan Project.” Such a project is defined by an innate process reflecting the need for transnational partners—not by any individual design. This process evolves out of a cooperative pursuit to develop green products composed of a hodgepodge mix—systems integration—of diverse core components, labor, innovative ideas, and financing from many countries across many continents. New renewable energy and cleantech such as cost-effective high performance buildings, wind and solar power, energy storage, and smart grid, all require cross-cultural and cross-border corporate partnerships since no single country possess the skill, materials, or market structure to supply every component to any given green energy final product.

JVs and Partnerships Emerge

The nature of this “Global Manhattan Project” brings us to step 3 of the red pill: the type of business model that will thrive in such a globalized product development network: the JV.

These winning JVs will not focus on developing every part of the final product’s core technology, but instead on understanding how to create value added by integrated multiple core technologies into one final product, such as a smart grid or electric vehicle. This reality portends that smart companies will prioritize sales over corporate culture or control, and thus partner with firms from other countries, perhaps in the form of a JV model similar to the one between Tesla Motors and Toyota: a small innovative firm complementing a large producing one.

Renewable Power and Cleantech Accelerates Globalization, Thus Reducing Energy Independence

As international production networks, investment, and financing accelerates with new renewable energy and cleantech projects, the world will further integrate, break down borders, and shift economic power away from governments to the unforgiving free market place. This brings us to the final step to escape “The Matrix”: point 4 of the red pill.

Green energy accelerates trade and cross-border financing, which in turn increases economic integration: further merging the world into one single free market space. The 2008 Financial Crisis delivered us one key lesson: one nation’s economic error tears down perfectly healthy nations on the other side of the world. The same will be proven true with energy. The 2008 Financial Crisis coupled with the globalizing nature of green energy portends a future where an energy shock in one country will shatter the economy of a supply-energy independent economy on the other side of the world.

In Reality at Last

As you exit “The Matrix,” you should now see the world through the lens of the free market, and not the nation. You should also see that new renewable energy and cleantech further seals the world’s shared economic and energy security fate into one unit, thereby rendering individual energy self-reliance and supply security initiatives misguided and financially wasteful.

Global Solutions to One-World Market Problems

With the first step of recognizing reality in the past, we may now discuss positive-sum methods to sustain global economic growth, employment, and energy supply for every country.

First, we must decouple the relationship between nation and industry, and instead embrace the global market place with international JVs and profit sharing across borders; this will accelerate consumer welfare, increase employment, and galvanize economic output. Remember that companies in markets create economic growth, not governments.

Second, we must promote global free trade and prepare our populations for a reality they cannot escape: globalization results in the evolution of one single market accelerated by green energy.

Third and last, we can embrace globalization, look at the bright side of change, and identify how to profit and increase human welfare from it through global free trade, or we lie to ourselves and imagine there is something that can escape us from global mutual insecurity, whether it’s green energy or some other fantasy.

Prepared or unprepared, with or without renewable power and cleantech, the world will converge, and there will be winners and losers in the emergence of green energy. Losers will hold onto the nation as a frame of reference. Winners will embrace green energy as a means to advance freedom and liberalization in the market place.

Kevin P. Kane is an Oil & Gas analyst and cleantech business consultant. He lives in South Korea