Energy-Climate

In adapting to growing geopolitical competition over digital technology, the EU and the UK are striving for economic security and technological sovereignty. European policies focus on reducing critical over-dependencies on China. This de-risking is a necessary process of adaptation to the new geopolitical realities. 

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.

While solar photovoltaic (PV) installations are booming in Europe (and in other parts of the world), the local industry is closing down. Over the past two years, the European installed solar PV capacity has been multiplied by two. On the other hand, the remaining European manufacturers of solar PV panels are dying.

With the war in Ukraine, Germany’s “traffic light” coalition government has had to adapt its climate policy to the upheavals caused by this war, which has turned its economic, energy, and military model upside down. Against a backdrop of high energy costs and increasing calls for reshoring in Europe, German industry is looking at how to maintain its competitiveness while decarbonizing its industry.

Electric vehicles (EVs) are better for the climate – even in worst-case scenarios. Across its life cycle, a typical European electric car produces less greenhouse gas (GHG) and air pollutants or noise than its petrol or diesel equivalent. Emissions are usually higher in the production phase, but these are more than offset over time by lower emissions in the use phase. According to the European Environment Agency’s report on electric vehicles, life cycle GHG emissions of EVs are about 17-30% lower than those of petrol and diesel cars.

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.