Energy transition

In the competitiveness and energy transition battles, the European Union (EU) must master a determinant factor: skills. 

President Trump’s positions and policies, combined with record coal consumption and booming global electricity demand, geo-economic confrontation, and widespread concerns about energy security, are changing the game when it comes to understanding realistic decarbonization trajectories. The war in Europe is intensifying competition between defense and transition budgets. This is also the case elsewhere in the world.

As Europe's main source of low-carbon electricity, nuclear power is a strategic asset for tackling climate and geopolitical challenges. 

With the demand for critical raw materials set to, at a minimum, double by 2030 in the context of the current energy transition policies, the concentration of critical raw materials (CRM) supplies and, even more, of refining capacities in a handful of countries has become one of the paramount issues in international, bilateral and national discussions. China’s dominant position and successive export controls on critical raw materials (lately, germanium, gallium, rare earths processing technology, graphite, antimony) point to a trend of weaponizing critical dependencies.

Indonesia is a country that is booming economically and demographically. This not only matters for regional, political, and energy security, but also increasingly, for the world’s energy transitions, due to Indonesia’s large metal reserves, as well as its equally important coal consumption in industry and for power generation.

Over the last 20 years, Indonesia’s economy has been characterized by very dynamic growth, massive increases in its electricity demand, and coal consumption and exports. Hence, its greenhouse gas (GHG) emissions are on a steady growth trajectory, although the country has committed to lowering them by 32% (unconditional) or 41% (conditional) by 2030.

With its Organization for Economic Cooperation and Development (OECD) membership application, occurring in the context of global energy transition requirements and geopolitical confrontations, Indonesia is today at a crossroads.

Transport, energy, water and telecommunications infrastructures are vital for economic development. These infrastructures are also fundamental for the achievement of the 2030 Sustainable Development Goals (SDGs), which have suffered a setback notably due to the Covid-19 pandemic, wars, and weak economic performance. Based on the Global Infrastructure Outlook, the world needs 97 trillion dollars ($) in infrastructure investments (energy, water, airports, ports, rail, road, and telecommunications) over 2016-2040, and based on the current investment trends ($79 trillion over the given period), the cumulative global infrastructure investment gap amounts to $18 trillion.

The deployment at scale of electric mobility in France and in Europe withholds significant industrial, societal, geopolitical, and financial challenges, against the backdrop of strategic dependencies along the value chain of the electric vehicle (EV).

In a previous note published in 2018, we noted that global coal demand had flattened. Several governments had announced coal phase-out plans, global coal power investment had contracted, and investment in greenfield coal mines was also at a standstill. The freezing of financial resources for coal projects might have indicated the beginning of a structural decline in coal demand and supply.