This paper draws on my professional experience working on energy and climate issues in the Eastern Mediterranean, as well as many conversations with policymakers, technical experts, and civil society stakeholders from Athens to Beirut and from Istanbul to Cairo. The renewable energy revolution offers both cleaner power and a practical foundation for cooperation through shared infrastructure and capital flows. The region’s energy future is as much about finance, diplomacy, and institutional trust as it is about technology. My aim here is to explore how financial mechanisms can bridge historic divides and support a shared energy transition. My hope is that this paper contributes to reimagining the Eastern Mediterranean not as a collection of competing interests, but as an interconnected energy community bound by mutual prosperity and resilience.

• Introduction
• Rising tides: Meeting the Mediterranean’s surging energy needs
• From pledge to power: Speeding the region’s renewable revolution
• Beyond borders, beyond banks: Innovative financing for regional energy
• Shared foundations: Creating a regional energy community
• Shared horizon: Finance and diplomacy for a unified Eastern Mediterranean energy landscape

Introduction

The Eastern Mediterranean region stands at a critical juncture in its energy development. Positioned as a geopolitical crossroads with significant renewable energy resources and strategic importance, the region encompassing Greece, Cyprus, Turkey, Syria, Lebanon, Israel, Palestine, Jordan, and Egypt has the potential to become a leader in sustainable energy while strengthening regional cooperation and economic integration.

This study examines how the Eastern Mediterranean can secure a sustainable energy future through a two-pronged approach: strategically financing next-generation grid technologies that leapfrog legacy infrastructure challenges, while simultaneously developing integrated financing mechanisms that foster cross-border cooperation. This dual strategy aligns technological innovation with regional stability and market integration needs, creating a framework for sustainable development that transcends political boundaries.

The Eastern Mediterranean’s abundant renewable energy potential, particularly in solar and wind resources, presents a transformative opportunity. The region could generate approximately 144 percent of its projected 2050 electricity demand through renewable energy sources.¹ Yet despite this potential, significant challenges persist. Aging and fragmented grid infrastructure, geopolitical tensions, and uneven regulatory frameworks hinder energy integration.

Additionally, ongoing political conflicts, geopolitical tensions, and maritime boundary threats in the region complicate the development of cross-border infrastructure, while the region remains heavily dependent on fossil fuels at a time when global climate commitments push for rapid energy transition.²

Meeting these challenges requires more than traditional approaches. This paper argues that innovative financing mechanisms can serve dual purposes: funding advanced infrastructure development while simultaneously functioning as instruments of regional cooperation. By strategically structuring financial tools that encourage cross-border collaboration, the Eastern Mediterranean can transform its energy landscape while creating economic interdependencies that help overcome historical political tensions.

The analysis unfolds in four parts. First, it examines the regional context—focusing on power demand trends, the state of grid infrastructure, and the region’s renewable energy potential. Second, it analyzes how COP28 commitments (made at the 2023 climate conference) intensify the need for rapid renewable integration and technological leapfrogging. Third, it evaluates the financing mechanisms available to fund this transition, from multilateral development banks and green bonds to Islamic finance and bilateral investment. Finally, it explores how these financing tools can support frameworks for regional collaboration, including physical infrastructure development, regulatory harmonization, energy diplomacy, and governance structures.

Rising tides: Meeting the Mediterranean’s surging energy needs

The region’s energy landscape is characterized by growing demand, aging infrastructure, and untapped renewable potential against a backdrop of complex geopolitical relationships. These interrelated factors explain why the strategies of technological leapfrogging and regional integration are necessary for sustainable energy development in the Eastern Mediterranean.

Regional power demand trajectory

Electricity demand across the Eastern Mediterranean is expected to grow substantially in the coming decades. Turkey, a pivotal economy in the region, saw its electricity consumption reach 348 terawatt hours (TWh) in 2024, marking a 3.8-percent increase from the previous year.³ Projections indicate a rise to 380 TWh in 2025, 455 TWh by 2030, and 510 TWh by 2035.⁴

This growth trajectory is mirrored in Egypt, Syria, and Lebanon, driven by population growth, urbanization, and economic development. Meeting this demand sustainably requires a massive expansion of renewable energy capacity and modernized infrastructure to support it.

Recognizing the potential and cost competitiveness of renewable energy systems, countries in the region have established ambitious renewable energy targets. Turkey aims to double its electricity capacity by 2035, with renewable energy providing nearly 65 percent of power.⁵ Egypt has set a target of renewable energy providing 42 percent of its power by 2030 and 58 percent by 2040, while Greece plans to cover at least 60 percent of its power needs with green electricity by 2030.⁶

Untapped renewable potential

The Eastern Mediterranean possesses immense renewable energy potential that remains largely untapped, though Turkey and Greece have made progress in this area. The whole Mediterranean basin’s current renewable capacities stand at 90 gigawatts (GW) for solar photovoltaic and 82 GW for wind energy, with a potential exceeding 3 TW for the whole basin—a figure that underscores the opportunity for rapid expansion.⁷

The Eastern Mediterranean’s total renewable energy capacity in 2023 was around 90 GW, with research suggesting that the region could potentially generate 144 percent of its projected 2050 electricity demand through renewable energy sources.⁸ Egypt could produce 188 percent of its demand from solar and wind energy, with 76 GW of surplus electricity production. Syria could produce 592 percent of its total demand, while Turkey and Greece could produce 105 percent and 96 percent, respectively, of their 2050 demand.⁹

According to the author’s estimates, if the pipeline of solar, wind, and hydropower projects in Egypt is fully implemented—including projects that are announced, planned, or under construction—its renewables generation capacity would grow twelvefold, in line with those of other North African nations. If the pipeline of solar, wind, and hydropower projects in Greece is fully implemented, this would result in a sevenfold increase in renewable energy generation capacity.¹⁰ These estimates are not just an opportunity to enhance energy security and accelerate the energy transition. They are also an economic opportunity with the potential to create jobs, stimulate investment, and position the region as a global leader in the growing clean energy sector.

The rapidly growing power demands across the Eastern Mediterranean necessitate expanding renewable energy capacity while also fundamentally rethinking how electricity is transmitted and shared. Addressing this challenge requires examining the current state of interconnection infrastructure and identifying opportunities to transform the region’s fragmented grid systems into an integrated network.

The interconnection imperative

Cross-border transmission grid interconnections are of cornerstone importance in the development of power systems. Grids that depend on intermittent renewable energy sources, such as solar and wind, benefit greatly from interconnections for balancing the intermittent nature of renewable sources. Because different countries have varying electricity demands throughout the day, spare capacities and shortfalls can be balanced between different grids.

The Eastern Mediterranean’s grid infrastructure presents a fragmented landscape in which cross-border electricity trade is limited. Northern countries such as Greece benefit from advanced energy grids, while southern and eastern regions lag behind. Across the whole Mediterranean, northern-shore countries have sufficient, albeit underutilized, interconnections, while southern-shore countries lack interconnection infrastructure and synchronization. ​Additionally, there are few north-south interconnections, with only a link from Spain to Morocco and another from Turkey to Syria.​¹¹ This disparity creates both a challenge and an opportunity for leapfrogging conventional development paths.

Eastern Mediterranean countries continue to prioritize energy self-sufficiency through domestic power generation rather than regional power trading. With the exception of the Palestinian territories, which import nearly all (99.4 percent) of their electricity due to minimal local generation capacity, several countries maintain exceptionally low power import levels—around 1 percent of their total consumption—including Cyprus (0 percent), Lebanon (0.078 to 3.61 percent), Jordan (0.29 to 2 percent), and Egypt (0.29 to 0.41 percent). Similarly, with the exception of Greece and its integration into the European electricity market, power exports remain negligible throughout the region, with most countries exporting less than 1 percent of their generated electricity. This self-contained approach stems from incompatible technical systems among national grids that impede synchronous operation, difficulties in maintaining grid stability across borders, and persistent political tensions that discourage deeper energy integration.¹²

Some interconnections exist in the Eastern Mediterranean but are underutilized or nonoperational. Many of the interconnections are used purely on an emergency basis to cover unexpected or scheduled outages, or are not in operation at all. Key connections such as Turkey-Syria (400 kilovolts (kV)), Jordan-Syria (400 kV), and Lebanon-Syria (400 kV, 220 kV, and 66 kV) are currently inactive, largely due to regional conflicts and technical incompatibilities between national grids, including different frequencies and control systems.¹³

Yet some progress toward greater regional integration is under way. A “super grid” is slowly emerging across the Mediterranean. The Mediterranean Master Plan 2022 outlines several Eastern Mediterranean interconnectors including: the Great Sea Interconnector between Greece, Cyprus, and Israel (1000 MW); the EuroAfrica interconnector to link Cyprus and Egypt (1000 MW), the Green Energy Interconnector (GREGY)  between Greece and Egypt (3000 MW of primarily renewable power); and a number of capacity-expansion proposals such as the ones between Egypt and Jordan (1100 MW), Jordan and Syria (800 MW), Syria and Turkey (600 MW), and Jordan and the Palestinian territories (100 MW).¹⁴

These projects are designed to enhance electrical integration, facilitate renewable energy exchange, and improve security of supply. The Great Sea Interconnector, which is under construction, is expected to be operational by 2030 with a capacity of up to 2 GW, while the GREGY project is expected to be completed by 2031.¹⁵ These developments have been planned for more than a decade. An older proposal, the Mediterranean Electricity Ring, aimed to connect Mediterranean countries via a circle of interconnections to facilitate cross-border power exchange. In the Eastern Mediterranean, this included connecting Egypt, Jordan, Syria, Lebanon, Turkey, and Greece.¹⁶

However, significant challenges remain. Tensions caused by maritime disputes between regional countries such as Greece, Turkey, and Cyprus, the unresolved Cyprus question, and the protracted Israel-Palestinian conflict, all impede the development of cross-border infrastructure.¹⁷

In addition, the geopolitical diversity, uneven political stability, and limited political trust among Eastern Mediterranean countries dampen some national governments’ interest in exploring partial reliance on external electricity. Reasons cited often include the potential for electricity being used as a geopolitical lever, the risk of disruption caused by internal conflict, infrastructure failure, governance breakdown propagating across borders, and concerns about expanding cybersecurity vulnerabilities by exposing national grids to transboundary breaches.

Additionally, many countries maintain vertical monopolies in their electricity sectors—e.g., utilities such as Electricité du Liban (EDL) in Lebanon, Israel Electric Corporation (IEC) in Israel, and, to some extent, various companies in Jordan—which enable them to control generation, transmission, and distribution, thus limiting market competition and cross-border electricity flow.

Technical barriers are equally significant, as systems have evolved separately with different standards and technologies. Alternating-current (AC) interconnections require high degrees of technical compatibility and operational coordination, creating stability risks when disturbances in one location impact other areas of the network. These challenges are compounded by insufficient regulatory frameworks and governance structures needed to support cross-border trading.¹⁸

From pledge to power: Speeding the region’s renewable revolution

Developing renewable energy capacity and establishing physical interconnections form the backbone of regional energy integration, and these efforts need to rapidly scale up due to the urgency of the climate crisis. Global climate commitments and obligations provide a framework for measuring progress and highlight the gap between current trajectories and required outcomes.

Meeting COP28 targets

The commitment at COP28 to triple the world’s installed renewable energy generation capacity by 2030 provides a clear imperative for action in the Eastern Mediterranean. Nations collectively committed to this target as part of the global stocktake of the 2015 Paris Agreement.¹⁹ In addition, 130 nations—including Greece, Cyprus, and Turkey—also joined the Global Renewables and Energy Efficiency Pledge, a voluntary coalition committing to triple their renewable energy capacity and double the rate of energy-efficiency improvement.²⁰ In September 2024, nine northern Mediterranean countries (often known as the MED9) agreed to collaborate on making the region a renewable energy hub, aligning with this global target.²¹

A growing grassroots initiative known as TeraMed is seeking to mobilize Mediterranean countries to triple their renewable energy capacity and reach 1 terawatt in combined generation capacity.²²

As of 2023, Eastern Mediterranean countries had an installed renewable power capacity of 90 GW, accounting for 42 percent of their total electricity generation.²³ To meet the COP28 target, the region must reach 405 GW of capacity by 2030, requiring a steep annual growth of 45 GW. Unsurprisingly, the region is not on track. With the exceptions of Greece and Egypt, all Eastern Mediterranean countries must accelerate their efforts if they are to meet the threefold-increase target.²⁴

In my view, meeting these ambitious renewable targets requires more than simply adding generation capacity. The Eastern Mediterranean needs advanced infrastructure solutions that can both accommodate the tripling of renewable energy and overcome existing grid fragmentation. Smart grid technologies represent the critical connective tissue that will enable this rapid transition.

Smart grid innovation: The digital backbone of renewable integration

To effectively integrate the growing share of renewables and enhance grid stability, the Eastern Mediterranean must leapfrog conventional infrastructure by investing in smart grids. In addition to interconnections, smart grid technologies enable better management of intermittent renewable sources, improve reliability, and reduce losses. These technologies include battery storage, advanced metering infrastructure, dynamic line rating, and other network automation, data management, and analytics technologies for real-time monitoring and control.

Battery storage is particularly crucial for managing the intermittency of renewable energy sources, ensuring grid stability as the share of renewables increases. However, large-scale battery storage projects are still nascent in the Eastern Mediterranean—with the exception of Turkey, which set a target for battery energy storage capacity to reach 7.5 GW by 2035.²⁵

Flexibility mechanisms, including demand response and renewable hydrogen production, further enhance grid stability. Technologies such as electrolysis using solar and wind electricity for hydrogen production are gaining traction. Turkey has plans to develop 5 GW of electrolyzer capacity for green hydrogen production by 2035, and to expand capacity to a staggering 70 GW by 2053.²⁶ Similar applications are being explored in Egypt, which plans to become a transit route for renewable hydrogen.²⁷

Smart meters also help manage the grid better through demand-side management. In the Eastern Mediterranean, Greece is leading on smart meters. It plans to roll out 3.12 million units by 2026, funded by the European Investment Bank, to enhance energy efficiency and support demand response.²⁸

Deploying advanced grid technologies across borders also requires moving beyond identifying technical requirements to addressing the fundamental question of funding this transition. Additionally, this paper argues that the financing challenge is not merely about capital mobilization but also the creation of financial structures that simultaneously enable technological leapfrogging and regional cooperation.

Beyond borders, beyond banks: Innovative financing for regional energy

The transition from technical requirements to financial realities necessitates examining the substantial capital investments needed to realize the Eastern Mediterranean’s energy transformation. While technological solutions provide the roadmap, financing mechanisms will determine the pace and scale of implementation, particularly when the magnitude of required investment exceeds traditional national budgetary capacities.

Quantifying the investment challenge

The Eastern Mediterranean’s energy transition demands significant capital to expand limited renewable energy capacity, modernize aging grids, and develop cross-border interconnections.

Renewable energy projects typically cost around $1 million per megawatt of installed capacity. Their costs are already competitive, and they are the cheapest form of new generation capacity across the region. Moreover, those costs are expected to continue falling and renewables are expected to be the cheapest source of electricity in most countries—including for storage—by 2027.²⁹

However, given the sheer scale of buildup required to meet COP28 commitments, the enormity of the financing required cannot be overstated. If the region is to build 45 GW of renewable energy capacity this year, this would require approximately $45 billion just for generation capacity at current costs, excluding transmission and storage infrastructure.³⁰

Transmission infrastructure is another challenge, especially given how its cost is often borne by grid operators rather than by private developers. The Great Sea Interconnector, for example, is estimated to cost approximately €1.9 billion ($2.08 billion).³¹

By 2030, the region’s total investment needs for sustainable energy transition could well exceed $300 billion. The magnitude of investment required highlights why ordinary national financing approaches are insufficient for the Eastern Mediterranean’s energy transformation. Instead, the region needs to scale finance beyond national resources and to explore financing instruments that mobilize capital at scale and also create structures for regional cooperation, serving as both financial tools and diplomatic instruments in a region where political tensions have historically impeded collaboration.

Financing the energy transition

The Eastern Mediterranean’s sustainable energy future will require mobilizing diverse financing sources and mechanisms. A mix of public and private funding sources—ranging from multilateral lenders and climate funds to innovative partnerships and financial instruments—can bridge the investment gap and accelerate the energy transition.

In developing countries within the Eastern Mediterranean, this challenge is made more difficult by the higher cost of capital, as investors demand high-risk premiums due to country, currency, or sector uncertainty.

This section outlines key financing sources and provides case studies and examples of how each source is being applied (or could be applied) in the Eastern Mediterranean. Each financing mechanism not only brings capital but can also serve as a catalyst for regional cooperation and innovation in energy infrastructure.

1. Multilateral development banks

Multilateral development banks (MDBs) provide a foundational source of capital and risk mitigation for large-scale energy projects in the region. Institutions such as the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), the Asian Infrastructure Investment Bank (AIIB), and the World Bank offer concessional loans, grants, guarantees, and technical assistance to support renewable energy and grid modernization. For example, the EBRD has invested more than €3.8 billion in renewable energy across emerging markets, supporting 119 projects totaling more than 6 GW of capacity.

In the Eastern Mediterranean, MDB financing often underpins ambitious projects. For example, the EBRD and partners launched a $500-million framework that helped finance sixteen solar plants (750 MW) in Egypt, including in the Benban solar park.

Another notable initiative with a renewable energy component is the Southern and Eastern Mediterranean Sustainable Energy Financing Facility (SEMED SEFF), a joint program of the EBRD, EIB, Agence Française de Développement, and KfW, a German state-owned bank. With a €141.7-million budget, SEMED SEFF catalyzed investments in Jordan and Morocco to cut more than 150,000 tons of carbon dioxide annually and boost renewables (25 percent of its funds went to renewable energy projects).³²

MDBs not only supply affordable long-term loans; they also crowd in other investors. In Egypt’s Benban project, for instance, the EBRD, the International Finance Corporation (IFC), the AIIB, and the African Development Bank (AfDB) cofinanced solar plants alongside private developers, dramatically lowering financing costs and risk.³³ By leveraging MDBs’ preferred creditor status and technical expertise, such involvement signals to markets that projects are bankable.

By providing concessional finance, convening power, and technical and policy assistance, MDBs help Eastern Mediterranean countries undertake projects that might otherwise be too costly or complex, from large wind and solar farms to regional grid interconnectors. Their financing comes with due diligence and policy guidance, encouraging reforms (such as market liberalization or improved procurement frameworks) that improve the overall investment climate. Going forward, scaling up MDB capital—including through their climate-focused funds and guarantees—will be crucial to meet the region’s renewable investment needs at the pace demanded by global climate commitments.

2. Green finance and investment

Green finance refers to capital raised for climate-friendly and sustainable projects through instruments such as green bonds, green loans, and ESG (environmental, social, governance) investments. In the Eastern Mediterranean, green bonds specifically are emerging as an important tool to tap global capital markets for renewable energy and low-carbon infrastructure. The global green bond market has expanded rapidly to more than $2.5 trillion outstanding by 2024.³⁴

Eastern Mediterranean nations have started to issue their own green bonds to fund clean energy, often with strong investor demand. Egypt was an early mover, launching a $750-million sovereign green bond in September 2020.³⁵ Cyprus followed in 2022, issuing a €1-billion green bond. In 2023, Israel and Turkey debuted their first sovereign green bonds, raising $2 billion and $2.5 billion, respectively.³⁶ Greece signaled plans to issue a sovereign green bond as well. While a national issuance expected for 2024 remains pending, the Bank of Greece issued a €500-million green bond in 2020.³⁷

Other private institutions have also issued green bonds, including banks and other businesses such as renewable energy companies. Lebanon’s Fransabank SAL issued its first green bond in 2018, valued at $60 million, with support from the IFC and EBRD. The proceeds were directed to support sustainable finance initiatives. Jordan’s Kuwait Bank followed in 2023 and, in collaboration with the IFC, issued its first green bond, valued at $50 million. The funds were allocated to renewable energy, low-carbon transport, and sustainable water and wastewater projects. ​ Additionally, Arab Bank in Jordan issued a $250-million sustainable bond in October 2023 to support green and sustainable initiatives.³⁸

However, the market remains nascent and fragmented. Strengthening regulatory frameworks, standardizing green taxonomies, and building technical capacity among issuers and investors will be key to unlocking green capital at scale. For instance, Turkey developed its own sustainable finance framework in 2021, while IFC support enabled Egypt to develop green bond guidelines and the Amman Stock Exchange to produce sustainability reporting guidelines.³⁹ The European Union recently introduced the European Green Bond Standard, a voluntary framework to ensure transparency and combat greenwashing, which could serve as a model to harmonize practices in the region.⁴⁰

3. International climate finance

International climate finance refers to dedicated funds and initiatives aimed at supporting climate change mitigation and adaptation in developing countries. For Eastern Mediterranean nations (many of which are middle-income or emerging economies), these funds are an important supplement to domestic resources. Key global climate funds include the Green Climate Fund (GCF), Climate Investment Funds (CIF) such as the Clean Technology Fund, and the Global Environment Facility (GEF). Historically, the Middle East and North Africa (MENA) region has underutilized these funds: MENA has received only about 6.6 percent of cumulative financing from the major global climate funds through 2023.⁴¹

Eastern Mediterranean countries are now working to improve their access to these pools of finance by developing strong project proposals and institutional capacity. Egypt has been notably successful in tapping climate funds, securing about one-third of all GCF resources allocated to MENA as of 2023. About 85 percent of Egypt’s GCF funding has been in the form of loans. Jordan has also received international climate finance, accounting for roughly 10 percent of GCF funding in MENA (with around half in loans). Meanwhile, Turkey has benefited from World Bank funding via the Türkiye Green Fund (TGF), receiving a $155-million loan for the greening of firms through equity financing, while Lebanon has benefited from GEF grants, receiving about 8 percent of GEF’s MENA allocations.⁴² These funds often work by blending with multilateral bank financing or by de-risking projects to attract private investors (through instruments like guarantees and concessional tranches).

4. Islamic finance

Islamic finance is a growing source of funding for the energy transition and is particularly relevant in the Muslim-majority countries of the Eastern Mediterranean. Islamic finance follows sharia principles, such as prohibition of interest, and typically uses profit-sharing or asset-backed structures.⁴³ Green sukuk (sharia-compliant bonds earmarked for environmental projects) have emerged as a key instrument to raise capital for renewables while tapping into Islamic investor pools. The global sukuk market has seen strong growth and greening in recent years. The first half of 2024 set a record, with $9.9 billion in green and sustainability sukuk issuances, indicating accelerating interest.⁴⁴

While most green sukuk so far have originated in Southeast Asia and the Gulf, Eastern Mediterranean nations are starting to consider them.⁴⁵ Egypt, for example, has been considering sukuk as a financing tool. It passed a Sovereign Sukuk Law in 2021 and could issue green sukuk to fund projects under its renewable energy and sustainable transport plans.⁴⁶

Importantly, major finance institutions are steering toward climate action. In 2021, Emlak Katılım issued the first green sukuk in Turkey with a total value of 51.8 million Turkish lira.⁴⁷ The Islamic Development Bank (IsDB) has also issued sukuk to raise funds for green projects. For example, in 2024 it issued a $2-billion benchmark sukuk earmarked partly for green development programs.⁴⁸

Beyond sukuk, Islamic finance can support renewable energy through Islamic banks and funds investing in project equity or providing sharia-compliant loans (such as profit-sharing and loss-sharing musharakah (a joint-venture structure) or lease-based Ijarah financing). Islamic finance also opens opportunities for waqf (endowment funds) or zakat (charitable contributions) to be structured for community-level clean energy access or climate resilience projects, although such models are still in experimental stages.

5. Bilateral investment

Financing and development support from one country to another plays a pivotal role in the Eastern Mediterranean’s energy landscape. Bilateral investment often comes either directly from foreign governments (through aid, export credits, or state-owned banks) or via government-backed companies and sovereign wealth funds pursuing projects abroad. In the push for renewables, several powerful bilateral actors have emerged: notably the Gulf states (such as the United Arab Emirates (UAE) and Saudi Arabia) and China. They view renewable energy projects not only as commercial opportunities but also as avenues to strengthen strategic ties and influence in the region.

The UAE and Saudi Arabia have invested significantly in Egypt’s renewable energy projects, using investors such as ACWA Power, Masdar, and AMEA Power to fund new wind and solar capacity.⁴⁹ For example, Masdar has partnered with Egyptian firms to develop a gigantic 10-GW onshore wind farm, one of the world’s largest, which it announced on the sidelines of COP27.⁵⁰

China is increasingly becoming a major bilateral financier in Eastern Mediterranean energy. Chinese state-owned enterprises and funds have targeted renewable energy acquisitions and projects, especially in economies where financing gaps exist. In Egypt, Chinese banks and companies have supported the Benban solar complex; for example, the AIIB provided $210 million in debt financing for eleven solar plants (totaling 490 MW) in Benban’s second phase.⁵¹ Chinese firms have also supplied solar panels and construction for many Benban projects. China also has energy investments in Turkey, Lebanon, and Greece. China’s Silk Road Fund has acquired a 49-percent stake in ACWA Power’s renewable energy portfolio.⁵² These investment patterns are part of the increasing “greening” of China’s Belt and Road Initiative (BRI) and reflect China’s willingness to invest in lower-income Eastern Mediterranean nations, though these investments often serve dual purposes of commercial returns and strategic positioning.⁵³

The European Union (EU) and its member states also act bilaterally through programs like the EU-funded Neighbourhood Investment Platform, which gives grants to complement loans for energy projects in the Mediterranean neighborhood.⁵⁴ Europe often emphasizes grid interconnections and market integration (e.g., funding studies for a EuroAfrica interconnector between Egypt and Greece), Gulf countries favor high-profile generation projects, and China is active across the value chain from generation to transmission.

Bilateral investments bring substantial capital and can fast-track projects, but they also entail geopolitical balancing as recipient countries in the Eastern Mediterranean navigate offers from multiple suitors. When managed well, bilateral financing can complement multilateral efforts. It also can foster regional cooperation. For instance, the UAE not only invests in Arab neighbors but has discussed energy deals involving Israel (such as solar facilities in Jordan exporting power to Israel as part of a desalinated water and solar energy swap between Israel and Jordan).⁵⁵

6. Debt financing

Debt financing (i.e., borrowing funds to be repaid with interest) is one of the predominant ways to fund energy infrastructure, including renewable projects, worldwide. In the Eastern Mediterranean, debt financing takes multiple forms: loans from commercial banks or international institutions, bonds issued in capital markets, export credits or supplier credits for equipment, and concessional and blended debt.

Given that debt is cheaper than equity, developers typically seek debt to cover most of the project costs. For investors and lenders, renewable energy projects can be attractive debt opportunities because they generally generate steady cash flows once operational.

Finance for regional cooperation

A comprehensive financing strategy leveraging all of the above mechanisms is crucial for the Eastern Mediterranean to realize its energy transition ambitions. Multilateral and climate funds provide scale and patient capital, green and Islamic finance tap new investor pools, and bilateral investments bring in strategic funding.

Additionally, financing structures such as project finance, public-private partnerships, power purchase agreements, and blended finance can help reduce risk. Green investment banks can help mobilize funding for green projects, while innovative tools like fintech and results-based financing fill niche gaps.

In my view, the region’s success in meeting COP28 goals hinges less on the availability of technology and more on the ability to align financial incentives across borders.

By structuring these financing approaches with regional cooperation as their foundation, these instruments create shared financial interests across borders, incentivizing collaboration and helping overcome entrenched political obstacles. Financial mechanisms explicitly requiring cross-border participation serve as powerful diplomatic tools in addition to their capital mobilization function.

For instance, multilateral investment funds that mandate co-investment from multiple Eastern Mediterranean countries establish joint ownership stakes in critical infrastructure, creating a financial incentive to maintain peaceful relations. Similarly, blended finance structures offering preferential terms for projects with cross-border components make cooperation economically advantageous compared to purely national approaches. For example, a Mediterranean renewable energy fund requiring participation from Greece, Turkey, and Cyprus could provide a neutral financial platform in which shared economic benefits supersede maritime disputes.

The strategic design of these mechanisms must include governance frameworks that span national boundaries, with representation requirements ensuring all stakeholders have meaningful input in investment decisions. Interconnection-specific project bonds co-issued by multiple countries can create shared liability structures in which default risks are mutually borne, fostering accountability across traditional divides.

When properly implemented, these tools can transform abstract diplomatic goals into concrete economic incentives. Countries with historical tensions can begin to view their neighbors not as competitors but as essential partners in accessing capital markets and achieving energy security. Countries that once viewed energy resources as potential flashpoints for conflict can instead develop economic interdependencies that make continued cooperation the most rational choice.

Shared foundations: Creating a regional energy community

While innovative financing mechanisms provide the tools for transformation, their successful implementation depends on creating supportive physical, institutional, and diplomatic frameworks. The mobilization of capital through green bonds, MDB funding, climate finance, and other financial instruments discussed above is necessary but insufficient on its own to achieve regional energy integration.

Having participated in several regional energy dialogues, I have observed that trust between regulators remains limited. Finance can be the tool that enables cooperation in more sensitive policy areas. Yet it must be paired with robust infrastructure development, harmonized regulatory environments, diplomatic initiatives that overcome historical tensions, and coordinated governance structures that span national boundaries. The implementation of regional energy integration requires establishing concrete structures for collaboration that can transform the Eastern Mediterranean’s abundant renewable resources into a shared, resilient energy architecture that benefits all participating nations. These efforts must include

• physical infrastructure development and grid integration;
• interconnected energy markets and regulatory alignment on grid codes, tariff structures, and cross-border trading;
• regional cooperation and diplomatic engagement; and
• regional governance frameworks.

Scaling cross-border initiatives for a connected grid

Cross-border energy cooperation in the Eastern Mediterranean is advancing through several key initiatives aimed at integrating renewable energy sources and enhancing grid connectivity. There are nine interconnection projects and proposals at different stages of development across the region. If implemented fully, they can help create a more unified energy market capable of efficiently distributing energy across the Mediterranean while addressing the intermittency challenges of solar and wind.

The Great Sea Interconnection, set to link Cyprus, Greece, and Israel, is perhaps the region’s flagship project and will facilitate the trade of renewable electricity across borders. Similarly, Egypt and Greece are exploring the GREGY interconnection. Beyond the Eastern Mediterranean, Italy and Tunisia are advancing the ELMED interconnection between them, which is expected to be operational by 2027.⁵⁶ Technologies already exist to manage some of the perceived risks of interconnections. Using high-voltage direct current (HVDC) transmission lines offer greater controllability and can be isolated more easily than traditional AC interconnections. Interconnections can also be directed to non-critical loads or areas in order to reduce risk to cross-border disruptions, while robust cybersecurity standards and protocols can help protect critical infrastructure.

Harmonizing regulations for seamless market operation

Achieving a fully integrated energy market in the Eastern Mediterranean requires harmonized regulations to ensure fair access to grids, promote investment, and reduce the cost of risk capital. Countries involved in interconnection projects need to have the regulatory framework in place to allow for successful entry of foreign electricity into domestic electricity markets and successful export of their electricity to foreign markets. This is especially difficult for countries in which electricity utilities hold vertical monopolies in all sectors of the economy. Turkey, Cyprus, Greece, and Egypt have unbundled or are on the way to unbundling their electricity markets; meanwhile, Jordan, Lebanon, and, to a lesser extent, Israel have electricity utilities that hold vertical monopolies and are responsible for generating and supplying electricity to all sectors in the economy.⁵⁷

The EU’s internal energy market policies are a model for regulatory convergence, emphasizing transmission ownership unbundling between electricity generation or supply companies and transmutation ones, consumer rights, and the role of regulatory actors such as the Agency for the Cooperation of Energy Regulators (ACER).⁵⁸ The EU’s Electricity Directive 2019/944 mandates nondiscriminatory access to transmission and distribution systems, a principle that could be adapted for the Eastern Mediterranean to attract private investment.⁵⁹

However, this EU model cannot be fully replicated in the Eastern Mediterranean due to different system maturity levels. The Association of Mediterranean Energy Regulators (MEDREG), comprising twenty-seven energy regulators from twenty-two countries, recommends that regulatory frameworks must be tailored to specific subregional contexts, and that Eastern Mediterranean countries need to develop more regulatory solutions independent from those of the EU.⁶⁰

Progress in regulatory harmonization could also increase infrastructure investments significantly in the Eastern Mediterranean. However, this progress is slow due to the region’s diverse regulatory environments, with countries such as Syria, Lebanon, Turkey, and Egypt maintaining state-controlled energy sectors, while others like Greece and Cyprus align with EU directives to liberalize the energy market. Overcoming these disparities will require sustained dialogue, capacity building, and incentives for alignment.

Energy diplomacy: Transforming geopolitical challenges into opportunities

Geopolitical tensions are another major barrier to cooperation in the Eastern Mediterranean. Political and security dynamics significantly influence energy cooperation in the region. Long-standing disputes—such as those between Greece, Turkey, and Cyprus over maritime boundaries, the Syrian civil war, the unresolved Cyprus question, the recently intensified Israeli-Palestinian conflict, and the Israel-Lebanon conflict—have all historically hindered regional collaboration and the development of cross-border infrastructure, particularly affecting projects like the EastMed Gas Pipeline.⁶¹ Overcoming these challenges will require financial resources as well as diplomatic engagement and innovative governance structures.

However, the shift toward renewable energy and the EU’s focus on a green energy economy present new opportunities for cooperation. Initiatives such as the East Mediterranean Gas Forum (EMGF)—established in 2019 as a platform focused on natural gas development, it includes Egypt, Greece, Cyprus, Israel, Jordan, and the Palestinian territories, along with France and Italy—can be both reformed to become more inclusive of all Eastern Mediterranean counties and expanded beyond natural gas to include renewable energy, power infrastructure, and advancing electricity interconnection and trading.⁶² Some energy policy experts have advocated for renaming the EMGF as the East Mediterranean Energy Forum (EMEF) to reflect this broader mandate.⁶³ Such a forum should include a regulatory platform, in which each country is represented by its national regulatory authority or electricity governing body, to jointly promote greater harmonization of regional energy markets and legislation.

Energy cooperation is increasingly recognized as a tool for regional stability and economic integration. The development of renewable energy projects and interconnectors can create shared economic interests, reducing the potential for conflict.⁶⁴ This approach transforms energy from a source of competition to a platform for collaboration, potentially easing long-standing tensions through mutual economic benefits and shared climate goals.

An increased shift toward renewable energy sources not only ensures long-term sustainability and economic benefits for the region, but also has higher potential than gas diplomacy. Unlike natural gas and other tradable commodities, renewable energy systems are an undisputed resource. Additionally, collaboration on renewable energy projects through interconnections provides synergies between partnering countries due to the benefits they provide to both grids.

Shared horizon: Finance and diplomacy for a unified Eastern Mediterranean energy landscape

The Eastern Mediterranean stands at the cusp of a transformative energy transition in which innovative financing can simultaneously advance technological leapfrogging, economic development, and regional cooperation. By strategically structuring investment mechanisms that require collaboration, the region can convert financial transactions into diplomatic bridges.

Financial innovation offers three distinct diplomatic dividends beyond its direct economic benefits.

First, joint financing creates structured engagement opportunities that maintain dialogue even during political tensions. When countries coinvest in renewable infrastructure through mechanisms such as regional green bonds or mixed-ownership projects, they establish technical and financial communication channels that persist through diplomatic fluctuations. These ongoing interactions build relationships among technical experts and financial officials that can later facilitate broader cooperation.

Second, shared financial liabilities transform political calculus by creating mutual dependencies. When neighboring countries with historical tensions become co-guarantors of infrastructure loans or joint issuers of project bonds, they develop a tangible economic interest in maintaining stable relations. The economic costs of diplomatic ruptures become quantifiable and immediately visible to stakeholders on all sides.

Third, financial innovation creates positive-sum narratives in a region often characterized by zero-sum competition. By enabling countries to collectively tap into previously inaccessible capital pools—such as global ESG funds seeking large-scale sustainable investments—regional financial mechanisms demonstrate that cooperation delivers benefits unattainable through individual action.

If the Eastern Mediterranean realizes this vision of financially driven integration, it could emerge as a global model for how innovative capital structures can overcome entrenched geopolitical challenges. The region’s abundant renewable resources, which have the potential to generate more electricity than its projected future demand, provide the natural foundation, while innovative financing creates the institutional architecture for a sustainable energy future that transcends historical divisions and creates shared prosperity across borders.

The path forward requires financial creativity, diplomatic persistence, and technical expertise—but the potential rewards extend far beyond renewable kilowatts to include a fundamental reconfiguration of regional relationships built on shared economic interests rather than historical grievances.

The Atlantic Council would like to extend special thanks to Limak Holding for its valuable support for this report.

Karim Elgendy
Executive Director,
Carboun Institute;
Associate Fellow,
Chatham House

Karim Elgendy is an expert on energy transition and climate policy in the Middle East and North Africa. His research examines the intersection of climate diplomacy, energy geopolitics, and sustainable development across the region. Elgendy investigates how countries navigate energy transitions and climate change impacts within shifting geopolitical landscapes, and analyzes how regional and global power dynamics influence climate action and policy implementation. He possesses deep expertise in energy and climate policies across the Eastern Mediterranean and Gulf Cooperation Council states, with particular focus on renewable energy, climate resilience, and diplomacy.

Elgendy has authored numerous articles and policy publications in leading journals and platforms. He has presented at over one hundred public speaking engagements and has delivered guest lectures at several prestigious universities. His expert analysis is regularly featured in broadcast, print, and digital media outlets, and he has appeared in most mainstream media outlets.

The Atlantic Council in Turkey aims to promote and strengthen transatlantic engagement with the region by providing a high-level forum and pursuing programming to address the most important issues on energy, economics, security, and defense.

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As AI and data centers expand demand for power, natural gas and coal alone can’t meet future needs, while current solar and battery supply chains carry security risks. To resolve these challenges, the United States should expand domestic manufacturing of advanced energy technologies while maintaining natural gas—and, possibly, coal—production in the near term.

To win the AI race against the Chinese government, US energy policy must shift from a climate-first lens to one that prioritizes national security and securing a growing supply of power. To do so, Congress should pass the Future Usable Energy Legislation—Artificial Intelligence (FUEL-AI) Act, which would prioritize key national security interests such as providing power for key AI hubs like Northern Virginia’s Data Center Alley, streamlining permitting, modernizing transmission and the grid, supporting domestic energy manufacturing, and incentivizing energy efficiency technologies.

Energy and the race for AI supremacy

Whether the AI race is a sprint or a marathon, both paths demand massive amounts of new electricity. Though energy is a small share of AI costs, it’s a critical operational constraint: data centers can’t run without power.

While acknowledging profound uncertainties, top forecasts project data centers and AI-driven electricity demand could reach 4.6–9.1 percent of total US consumption by 2030, up from 4 percent today. If the sprint scenario holds, only fast-to-deploy sources like solar and batteries can keep pace with demand.

Even in the marathon scenario of broad AI adoption, the United States will likely need large amounts of new electricity—fast. Relying on natural gas and coal alone to power AI won’t work. Natural gas turbine production is constrained, and no major coal plant has opened since 2013. Supply chain constraints, profound grassroots opposition, and investor reluctance make new coal capacity unlikely.

Even though gas and coal will play a major role in powering US AI, a gas and coal-only strategy won’t succeed. In the worst-case scenario, insufficient electricity generation could create shortages and necessitate persistent brownouts that were last seen in the United States in the 1970s. Even if those dire conditions don’t materialize, however, higher domestic natural gas prices would reduce the competitiveness of US liquefied natural gas and pipeline gas exports. But the impact of a natural gas and coal-only approach would be felt most acutely by consumers, since residential electricity prices are already outpacing inflation. 

Rural Americans would be hit hardest by rising electricity costs and poor reliability. They spend 4.4 percent of household income on energy—versus 3.1 percent in metropolitan areas—and face more outages.

Fueling AI with a summer peaking resource

In both AI sprint and marathon scenarios, solar and battery storage are highly suitable for meeting rising demand due to their speed, low cost, scalability, and geographic flexibility.

Solar is highly capable for matching data centers’ peak summer demand, especially in warm-weather markets. In Northern Virginia, home to 13 percent of all reported data center operational capacity globally, regional solar generation typically peaks in the summer—matching peaks for both commercial data centers’ cooling needs and residential consumers’ electricity consumption.  

Solar’s flexibility makes it ideal for data center clusters, as it requires minimal infrastructure and no resupply. China appears to recognize solar power’s strategic value, concentrating rooftop solar in coastal provinces and deploying at least 3,000 megawatts of capacity at the dual-use Shigatse Peace Airport near the Indian border.

Strengthening solar cybersecurity

China’s dominance of solar supply chains poses security risks, especially given solar power’s importance for AI. Reports of Chinese-made inverters with unexplained communication equipment underline the dangers, as such devices could destabilize the grid—a risk the US Department of Energy has long flagged.

However, inverter threats are just one among many. The Chinese government and other adversaries already have broad ability to target US and partner infrastructure. Cybercriminals operating in Russia attacked Colonial Pipeline, while China has been linked to  Mumbai’s 2021 blackout, malware found in US power and water systems, a still-unexplained transformer interdiction in Houston, and crypto mines operating near US military sites. Indeed, Chinese firms are estimated to own one-third of US crypto mining infrastructure and supply the vast majority of its machinery. Furthermore, ERCOT, the operator for most of the Texas grid, warns these high-load operations can worsen grid events, turning low-voltage issues into frequency control problems.

China’s role in software and hardware supply chains poses sabotage risks. Just as Russia weaponized energy in Ukraine, Beijing could exploit electricity systems in a Taiwan conflict. The United States should assess the inverter threat by reviewing installed units, ramping up inspections of Chinese-connected devices, and conducting other risk mitigation and software hygiene measures.

Instead of fruitlessly seeking to eliminate vulnerabilities and establish perfect security across pipelines, crypto mines, and inverters, however, the United States must rely on deterrence, threatening proportionate responses if China conducts electricity sector sabotage.

Replace the Inflation Reduction Act with FUEL-AI

The AI race with China carries immense stakes and uncertainty. To compete, the United States will need vast new electricity generation—regardless of whether the race is a sprint or a marathon. This requires an all-of-the-above energy approach: natural gas, coal, and advanced technologies like solar, batteries, advanced nuclear, and wind.

The United States should replace the Inflation Reduction Act with FUEL-AI, shifting focus from climate to national security. FUEL-AI would make it easier to build new energy infrastructure by streamlining permitting and modernizing transmission. Additionally, it would support domestic energy manufacturing for key national security technologies, such as transformers and advanced batteries; and prioritize power demand and supply measures at AI hubs like Northern Virginia’s Data Center Alley.

These reforms could attract bipartisan backing. Both parties oppose the Chinese government and support strategic technologies like nuclear power and transformers, while US advanced energy supply chains support hundreds of thousands of jobs and hundreds of billions of dollars in investment. Reorienting energy policy toward AI competitiveness can unite national security and economic priorities without abandoning the advanced energy technologies of the future.

Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center and Indo-Pacific Security Initiative, and editor of the independent China-Russia Report. This article reflects his own personal opinion.

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The post Replace the Inflation Reduction Act with FUEL-AI appeared first on Atlantic Council.

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Though a major and sustained trade spat between Beijing and Washington would undoubtedly inflict major damage on the global economy, it could also provide limited, discrete opportunities for other actors. For example, Brazil could increase exports of soybeans to the People’s Republic of China, while Taiwan and South Korea could find it economically useful and politically convenient to ramp up purchases of US soybeans. Meanwhile, the US battery-storage sector faces profound uncertainty due to the tariffs, but it could emerge stronger over the long term.

Imposing large tariffs on China carries undeniable risks—and any decoupling of the two massive economies will bring pain, especially in the short term. Yet the crisis also presents opportunities to draw the United States and its allies and partners closer on discrete issues, even as broader, US-driven uncertainty continues to persist.

US-China trade is unbalanced

The US-China trade war doesn’t come from nowhere. Due to China’s export promotion policies, including subsidies, and the United States’ low savings rate, the bilateral goods trade deficit has exploded in recent years, peaking at $418 billion in 2018.

In order to reduce the bilateral goods trade deficit, the United States has imposed several waves of tariffs on Chinese exports. In response, China has, among other measures, targeted specific goods, such as soybeans, which are a major import it receives from the United States. China is betting that targeting soybeans will be a pain point for the White House: US soybean farmers are an important political constituency, about half of all their production is shipped abroad every year, and China is the largest single purchaser.

At the same time, China cutting its soybean imports from the United States could also present opportunities for other buyers and markets. Brazil, already China’s largest source of soybeans, could expand its exports. On the other side, the European Union, South Korea, and Taiwan could make politically useful and showy purchases of US soybeans as a way of trying to earn favor with the White House before or during their own negotiations on trade or other issues. 

—Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center and Indo-Pacific Security Initiative; he also edits the independent China-Russia Report. This article reflects his own personal opinions.

Storage battery markets

Just as the US-China trade war could curtail or even halt soybean trade, the US battery complex could face severe disruptions if the United States and China continue down the road of decoupling. China is, by far, the largest exporter of batteries to the United States, accounting for over 70 percent of the United States’ lithium-ion battery energy storage system imports in 2024. These batteries, a single module of which can be as big as a truck, store electricity from the grid (often solar) and discharge power during peak demand periods. 

If 145 percent US tariffs on Chinese goods remain in place, Chinese-produced lithium-ion batteries may be priced out of the market, especially since South Korean-made batteries are highly competitive and face only a 10 percent tariff (as of April 10). Accordingly, US tariffs may see a reorientation of storage-battery supply chains, with fewer imports from China and more from treaty allies such as South Korea, Japan, and Canada. 

Without commenting on the other disruptions of the trade war, the reshoring and friendshoring of battery supply chains would hold significant national security benefits. Advanced batteries are strategically important: in addition to commercial uses, they hold military applications for drones, electronic warfare systems, and submarines.

But it won’t be easy to shift battery supply chains, at least not in the near term. US allies have limited spare capacity. The international battery workforce disproportionately consists of Chinese nationals. China controls critical parts of the supply chain, such as graphite. And new factories—built in the United States or in friendly countries—will take years to complete. Significantly, the United States has no domestic manufacturing capacity for lithium iron phosphate batteries, which are highly suitable for grid-scale storage. It will take time for supply chains to reorient themselves. 

If the United States and China move forward with hard decoupling, the US battery-storage sector will face immediate pain. At the same time, higher tariffs on Chinese-made batteries would incentivize greater manufacturing capacity in the United States and its allies and friends. In order to compete with China, the United States should pair any tariffs on China with investments in research, development, and manufacturing for batteries and other dual-use, militarily relevant energy technologies.

—Joseph Webster

The post Want to understand the US-China trade war? Start with soybeans and batteries. appeared first on Atlantic Council.

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To ensure US AI leadership, the United States must harness all forms of energy–while also promoting energy efficiency—allow a level playing field, and remove red tape constraining the buildout of critical enablers, especially transmission lines and grid enhancing technologies. A “some of the above” energy approach could force the United States to compromise on not only AI leadership, but also affordable electricity and other economic priorities.

The competition with China in artificial intelligence may be the defining national security challenge of our time. While AI’s exact electricity needs remain uncertain, substantial power infrastructure expansion and efficiency improvements are needed. By building new generation capacity, including advanced energy technologies, enhancing transmission, and optimizing power consumption, the United States can maintain its competitive edge in AI development. If the United States adopts a “some of the above” approach to energy, however, it will be waging the century’s most important technological fight with China with one hand tied behind its back.

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But while all countries should contribute to the global effort, they shouldn’t cut their emissions by the same proportions. Each country’s burden should be determined by their per capita emissions—not on rates of change in emissions. And the world’s poorest countries, including many in Africa, have not contributed anywhere near as much to climate change as industrialized nations.

Africa, specifically, is responsible for only 3.7 percent of carbon emissions from the burning of fossil fuels. Its per capita emissions are far lower than any other region. In addition, the African continent needs more plentiful and reliable energy supplies to fuel its development, both economic (as reliable energy supports manufacturing) and human (as energy allows children to do their homework in the evenings and medicines to be stored).

Meanwhile, industrialized countries are moving ahead with fossil fuel projects: The United States is looking to raise domestic oil production, while China has moved forward with building 94.5 gigawatts of new coal-fired power plants. In contrast, South Africa—which has the biggest installed generating capacity in Africa—has a total installed capacity of just 63.4 gigawatts. The International Energy Agency warned in 2021 that global climate goals may be missed if new fossil fuel projects proceed.

Before the international community asks African countries to leave undeveloped fossil fuel resources in the ground, it must make them an offer of clean energy financing—one substantial enough to fund Africa’s current and future appetite for electricity. Doing so would not only help reduce GHG emissions: It would also support Africa’s electrification and development goals.

A just energy transition

Slow progress on increasing electrification rates is already being made in Africa. Just over half of all Africans now have access to electricity at home for the first time, while twelve countries, including the Democratic Republic of Congo, Kenya, and Nigeria, published detailed plans in January 2025 to connect more people to their respective grids. Population growth is driving up demand, which will be further boosted by the uptake of technologies such as electric vehicles in the future.

Amid this growing access to and demand for energy, the international community must offer clean energy financing to African countries and companies to convince them to forego fossil fuel development. Offering this financing now, as energy infrastructure is being constructed from scratch, would allow Africa to build infrastructure and supply chains meant for clean energy, instead of building them up for fossil fuels and having to adapt them later—at greater financial cost. It would have the added benefit of promoting economic development and higher living standards in Africa, which would dampen security threats and ease long-term migration pressures.

Some argue that Africa, for the sake of its development, should be allowed time to use fossil fuels such as gas, which is seen by some as a bridging fuel and thus part of the climate solution. However, emissions from gas-fired plants are at least half as high as those from coal, making gas a driver of climate change.

Additionally, financing is already difficult for some fossil fuel projects. Landlocked Botswana, for example, has 212 billion tons of coal that is largely undeveloped because large-scale mining would require exports. Proposed coal railways from Botswana to ports in either Namibia or Mozambique have failed to secure funding because of reticence among banks and financial institutions about financing coal projects. At the same time, Botswana has a generating capacity of only 892 megawatts and relies on electricity imports. New coal plants would be an obvious option, but here too financing is challenging. Clean energy such as solar offers a more fundable option.

Some projects are managing to secure financing—but only just. For example, the five-billion-dollar East African Crude Oil Pipeline project that will funnel oil from Uganda to the Tanzanian port of Tanga has attracted a great deal of criticism from environmental organizations and the European Union among others, with some calling on banks to rescind their financing. This seems unlikely given that construction began in late 2024. However, Ugandan efforts to secure financing for an oil refinery have thus far failed, pushing the government and UAE partner Alpha MBM Investments to try to fund it themselves. The project will ultimately contribute to climate change, but Kampala argues it must focus on economic development.

Some efforts are being made to offer countries clean energy investment in return for a reduction in fossil fuel development. For example, a group of Western countries has set up Just Energy Transition Partnerships (JETPs) to mobilize public and private finance for low-carbon projects in return for commitments on renewables or energy sector emissions. However, progress has been far too slow, with just four JETPs signed since 2021. Those four include partnerships with Indonesia ($20 billion), Senegal ($2.6 billion), South Africa ($11.6 billion), and Vietnam ($15.5 billion). Funding on this scale should be agreed with every developing country. According to the International Energy Agency, Africa needs investment of $200 billion a year by 2030 to achieve universal access to electricity and meet climate change pledges.

Challenging but possible

Many will argue that putting together such huge funding packages is impossible at the current time because of profound global economic and political instability and high sovereign debt levels after the COVID-19 crisis. Yet governments found the money for mitigation measures during the pandemic. For example, the United States spent $4.6 trillion; the United Kingdom spent between $387 billion and $512 billion. The required finance can be made available in times of real crisis—and climate change is a monumental crisis.

The real stumbling block is political will. Gaining political support for funding on this scale would be difficult at any time, but an ongoing uptick in nationalism and protectionism makes it even more challenging. The United States and European powers would have to participate, and other countries should too, including China, Japan, South Korea, and the Gulf states. And when governments seem hesitant about participating—for example, the Trump administration currently views overseas aid in a dim light—actors in the private sector, from corporations to philanthropists, can help.

Whether this plan is implemented by beefing up the JETP program or via a new vehicle, apportioning the money will be difficult. Many African countries have little or no hydrocarbons or coal. Thus, a continent-wide approach may be needed to ensure that the financing makes the desired impact, both in terms of boosting clean energy access and reducing fossil fuel development. Such an approach can include an agreement, possibly made through the African Union, although this could agitate those countries actually giving up their fossil fuel resources.

In addition to financing, technical support and skills transfer would also be needed. North American and European grid operators and bureaucracies are still struggling to keep up with the pace of complicated permit and grid interconnection applications from renewable energy developers. Such bottlenecks can derail development, so African governments need technical support, while international solar, wind, and storage operators could help build up the operations and maintenance expertise needed to ensure assets remain operational.

Africa has vast clean energy potential—it is home to 60 percent of the world’s best solar resources. However, the continent hosts just 1 percent of global solar generating capacity, about the same amount as the not-particularly-sunny country of Belgium. If the international community truly wants African countries to turn away from fossil fuel development, it will need to give those countries the financing to harness that clean energy potential. The big question is whether the international community is really serious about it.

Neil Ford is a freelance consultant and journalist on African affairs and the global energy sector. He produces reports for a wide range of organizations and has a PhD in East African development.

The Africa Center works to promote dynamic geopolitical partnerships with African states and to redirect US and European policy priorities toward strengthening security and bolstering economic growth and prosperity on the continent.

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Nonetheless, grassroots momentum could accelerate decarbonization throughout the Mediterranean basin. Increased renewable energy cooperation across the Mediterranean would not only help mitigate climate change, but it would also promise new economic opportunities, improved energy security, and enhanced regional ties.

To achieve the ambitious global goal of tripling renewable capacity, the Mediterranean region must overcome several challenges, including geopolitical tension and limited finance. But the target is eminently within reach if countries implement their existing renewable energy plans and increase their ambition while embracing the benefits of cross-border collaboration.

Common targets, divergent trajectories

Over the past decade, the region has significantly expanded its renewable energy portfolio, particularly in the east. As of 2022, installed renewable power capacity in Mediterranean countries was estimated at nearly 300,000 megawatts (MW), representing 43 percent of total generation capacity.

According to Climate Analytics, in order to align with the 1.5 degrees Celsius target set in the Paris Agreement, global renewable capacity needs to grow to 11.5 terawatts (TW) by 2030, 3.4 times higher than 2022 levels. For the Mediterranean to play its part, it would need to bring its capacity above 1 TW, 3.6 times 2022 levels. This would require annual growth of 97 gigawatts (GW)—adding the total generation capacity of Spain every year until 2030.

These goals are within reach if countries implement their current plans—and then some. The existing pipeline of solar, wind, and hydropower projects in the region, would nearly triple generation capacity to 780,000 MW. But this only brings the region 73 percent of the way toward the 1 TW goal.

Within the region, plans and aspirations vary widely. Last year, most Mediterranean countries signed the Global Renewables and Energy Efficiency Pledge, which aims to triple renewable energy capacity globally by 2030. Under existing plans, Greece, Egypt, Libya, Tunisia, Algeria, and Morocco would exceed three times their current renewables capacity, while others—including big consumers like France, Italy, Turkey, and Israel—would fall short.

Seizing the economic opportunity

The renewable energy transition presents distinct economic opportunities for both the northern and southern shores of the Mediterranean, reflecting their unique geographical, economic, and industrial contexts.

Solar photovoltaics (PV) and wind power are becoming increasingly competitive with fossil fuels.  In Egypt for example, the cost of solar energy dropped to 2 cents per kilowatt hour, while wind power stands at 2.4 cents. Mediterranean countries can meet their domestic energy needs with clean, locally sourced energy, and potentially become net exporters using interconnectors such as the one between Tunisia and Italy. Investing in renewable projects creates real economic benefits—clean energy accounted for 10 percent of global economic growth in 2023. Scaling up renewable deployment has the potential to create 30 million new jobs globally by 2030, although 13 million jobs in fossil fuel-related industries could be lost.

The Mediterranean’s extensive coastlines offer significant potential for offshore wind development. This emerging sector could create thousands of jobs in manufacturing, installation, and maintenance, especially in the north. Northern Mediterranean countries can also invest in smart-grid technologies and energy management systems that would improve domestic energy efficiency and create exportable expertise for grid integration of renewables.

Additionally, the southern Mediterranean can capitalize on its high solar irradiance and vast deserts to develop large-scale solar and wind projects. Countries like Morocco, Egypt, and Algeria can serve domestic needs and potentially export clean energy to Europe through interconnectors, such as that connecting Morocco and Spain, and one being planned between Tunisia and Italy. Abundant solar and wind resources across North Africa are ideal for green hydrogen production, creating new export opportunities serving energy-hungry European markets.

Financing the energy transition

Countries across the Mediterranean can position themselves as green finance hubs, facilitating investments in renewable projects throughout the region rather than chase dwindling investments in fossil fuels. Countries with developed financial markets, like France and Italy in the north, can leverage their existing expertise and infrastructure to accelerate renewable energy deployment. In the south which has often struggled with attracting investments on favorable terms, emerging markets such as Egypt and Morocco can capitalize on their growing financial sectors and strategic positions to attract renewable energy investments.

Southern Mediterranean countries can use instruments like Sharia-aligned sukuk, also known as Islamic bonds, that emphasize environmental stewardship. The success of green sukuk issuances by entities like the Islamic Development Bank has already demonstrated the potential of this approach. Governments can also offer tax incentives and develop national sustainable finance strategies.

Despite not explicitly referring to the Mediterranean region, the EU’s Clean Industrial Deal could also provide some support and resources, particularly in financing through the Clean Trade and Investment Partnerships, and its plans to mobilize €100 billion for clean manufacturing, simplifying state aid for renewables, and addressing energy prices and financing.

Overcoming geopolitical faultlines

Ultimately, the region needs to come together to push toward a collective goal. But doing so requires overcoming complex geopolitical relationships, recent history shows that energy cooperation can persist even amid political tensions.

Despite the economic opportunities presented by renewable energy collaboration, the Mediterranean region faces significant geopolitical challenges. Historical tensions and ongoing disputes create a complex landscape for cooperation, including between Morocco and Algeria over Western Sahara, strained relations between Algeria and France rooted in colonial history, periodic tensions between Morocco and Spain over migration and border disputes, and between Turkey-Greece-Cyprus over territorial and maritime issues.

However, these challenges haven’t completely hindered collaboration. Algeria and Italy have maintained strong energy partnerships despite Libya’s instability. Similarly, Morocco and Spain have successfully operated the Morocco-Spain power interconnector since 1997, and have recently agreed to study collaboration on green hydrogen transport.

Tripling renewables is an unmatched opportunity

By embracing the goal of tripling renewable energy capacity by 2030, countries across the Mediterranean have the opportunity to unlock a host of economic benefits. Achieving this ambitious target will require concerted efforts and collaboration among all stakeholders. Governments must take the lead in creating enabling policy frameworks, investing in infrastructure, and fostering regional cooperation. The private sector must also step up to drive innovation, mobilize capital, and build robust supply chains.

The time to act is now, and the Mediterranean must embrace this transformative journey with a spirit of regional cooperation. By seizing the economic potential of renewable energy, the region can address the pressing challenges of energy and climate change while laying the foundation for a more sustainable and inclusive future.

Karim Elgendy is an Associate Fellow at Chatham House and at the Middle East Institute in Washington.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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EnergySource Mar 7, 2025

The US can reduce Russia’s nuclear energy—and geopolitical—influence

By Marina Lorenzini

As the Trump administration outlines its energy priorities, strengthening the US nuclear industry remains a point of bipartisan agreement. Revitalizing this sector will lead not only to domestic economic growth, but also a reduction in Russia’s dominance in global nuclear markets and its geopolitical leverage.

Energy & Environment Energy Markets & Governance

EnergySource Feb 27, 2025

Can the EU’s Clean Industrial Deal cut carbon and restore competitiveness? 

By Andrea Clabough, Andrei Covatariu, Elena Benaim, Carol Schaeffer

Atlantic Council experts share their analysis on the EU’s new industrial policy, its implications for European energy security, and how key partners may respond to the bloc’s evolving regulatory landscape.

Eastern Europe Energy & Environment

EnergySource Jan 15, 2025

Tripling global nuclear energy capacity is in reach—if the world seizes the moment

By Amy Drake

At COP28, nations and corporations committed to tripling global nuclear energy capacity by 2050, underscoring its essential role in achieving net-zero emissions. Looking ahead to COP30, global leaders must strengthen multilateral collaboration, engage the financial sector, and provide support for new partnerships with the nuclear industry to meet this goal.

Energy & Environment Nuclear Energy

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The post The Mediterranean must work collectively to harness the power of renewables appeared first on Atlantic Council.

Read the full report here.  

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On balancing competing pressures 

In recognition of the complexity of the energy system, rising energy demand, and that every energy source has tradeoffs, Rick Muncrief, who just retired as CEO of Devon Energy, sums up the realities facing the sector this way: “We cannot prioritize clean energy over reliability and affordability, we cannot pursue reliability and affordability at the expense of the environment, and we cannot develop energy policies and systems that do not account for geopolitical risks domestically and abroad.”  

These geopolitical risks feature strongly in our survey results, with respondents citing conflict in the Middle East and Russia’s unjust war in Ukraine as the biggest concerns. These risks raised the alarm over the use of energy for geopolitical leverage and renewed determination among US business leaders and policymakers to ramp up innovation and manufacturing domestically.   

What will be the biggest risk in energy geopolitics in the coming year?

On seeking common ground 

But amid this competitive spirit, policymakers know that they cannot secure their respective energy systems alone. Dan Jørgensen, European Commissioner of energy and housing, identifies key areas, including supply chains, cybersecurity, liquefied natural gas, and nuclear energy, where US-EU partnership is critical for both to achieve energy security, writing: “In the face of challenges to come, it will be essential to find and reinforce our common connections, wherever they exist.”   

On advancing the energy transition 

Energy leaders also make clear in our Agenda that the momentum of the energy transition has taken on a life of its own. Andrés Rebolledo Smitmans, executive secretary of the Latin America Energy Organization (OLADE), notes that in Latin America and the Caribbean “the share of renewable energy in electricity generation increased from 53 percent to 68 percent in the past ten years, while greenhouse gas emissions were reduced by 26 percent.” Ramping up progress will “require investments in unprecedented volumes of materials, which must flow and materialize in relatively short periods.” 

This unprecedented amount of investment is perhaps why, out of all sectors we surveyed, those who work in finance predict the longest runway for reaching net-zero emissions. 

Median year estimated for achieving net zero (by sector and region/country)

However, progress toward advanced nuclear energy and greater regional cooperation will continue to move the world toward both decarbonization and development. 

As Lassina Zerbo, chair of the Rwanda Atomic Energy Board, writes, “Nuclear energy—and in particular small modular and micro reactors (SMRs)—can revolutionize the African energy landscape and promote sustainable development.” In Southeast Asia, Kok Keong Puah, chief executive of Singapore’s Energy Market Authority, emphasizes that interconnections are key to regional decarbonization, but also that a “stable, prosperous, and decarbonized Southeast Asia will not only benefit the region but also strengthen global supply chains, promote economic growth, and contribute to climate stability.” 

And one of the most intriguing advancements to watch in 2025 will be the promise of generative AI, which could lead to a game-changing acceleration toward net-zero targets.   

While acknowledging that energy demand for AI is currently growing, Josh Parker, senior director of corporate sustainability at Nvidia, writes, “AI is also proving to be a powerful tool for finding ways to save energy and may very well become the best tool we have for advancing sustainability worldwide.”  

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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Landon Derentz

Senior Director

Global Energy Center

Energy & Environment Middle East

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Energy & Environment French

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Energy & Environment Energy Transitions

Global Energy Agenda Feb 20, 2025

Energy realities require pragmatic solutions

By Rick Muncrief

Meeting the world’s growing energy demand requires balancing reliability, affordability, and sustainability while addressing geopolitical and economic security. Pragmatic policies that expand energy access, invest in diverse energy sources, and build resilient infrastructure are needed for a more secure and prosperous future.

Americas Energy & Environment

Global Energy Agenda Feb 20, 2025

The small reactor revolution can transform African energy systems 

By Lassina Zerbo

Africa faces a dual challenge of ensuring reliable access to energy while contributing to global net-zero goals. Nuclear energy—and in particular small modular and micro reactors—can revolutionize the African energy landscape and promote sustainable development.

Africa Energy & Environment

Global Energy Agenda Feb 20, 2025

Busting the top myths about AI and energy efficiency 

By Josh Parker

The rapid growth in AI and data centers in recent years has fueled concern that these systems will push the world toward an energy crisis. Advancements in this sector, however, should put this concern to rest.

Energy & Environment Energy Transitions

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

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The post How shifting political leadership, war, and generative AI are shaping the energy outlook: Insights from the 2025 Global Energy Agenda appeared first on Atlantic Council.

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Arshad Mansoor is the president and CEO of the Electric Power Research Institute. This essay is part of the Global Energy Agenda.

In 2017, Google published a groundbreaking paper titled “Attention Is All You Need.”¹ It not only revolutionized the field of artificial intelligence but also triggered a boom in the construction of data centers worldwide. This surge in data-center demand has had profound implications for global power consumption, presenting both challenges and opportunities for the transformation of the energy sector. 

Data centers’ impact on power demand 

The proliferation of data centers has led to a substantial rise in global power demand. According to projections by the Oak Ridge National Laboratory, the electricity requirements for these facilities are expected to grow exponentially. This trend is particularly pronounced in the United States: The Electric Power Research Institute (EPRI) estimates that American data centers could consume up to 9 percent of electricity generation by 2030—more than double the estimated 4 percent they consume today.“²

In addition to data centers, other factors such as the onshoring of manufacturing and the electrification of industry are further driving up power consumption. This escalating demand poses a challenge for regions that are already struggling with electricity reliability, leading to delays in the retirement of coal-fired plants and the addition of new natural gas-fired generation to ensure stable supply. 

High-tech commitments to low-carbon energy 

Despite these challenges, the high-tech industry has been a staunch advocate for the clean energy transition. Companies like Google have set ambitious goals to achieve net-zero emissions by 2030. The increasing power demand from their data centers, however, threatens to derail these targets.  

Google’s 2018 paper on 24/7 carbon-free energy (CFE)³ highlighted the limitations of relying solely on renewable energy certificates and emphasized the need for true carbon neutrality, where consumption is matched with zero-carbon energy production on a 24/7 basis. 

The paper laid the foundation for the current push toward 24/7 CFE, which aims to ensure that data centers and other high-tech facilities are powered entirely by low-carbon energy around the clock. While achieving this goal presents significant challenges, it also offers an opportunity for the high-tech and power industries to collaborate and drive the energy transition forward. 

Navigating the path to net zero 

In the short term, the increased reliance on natural gas and the delayed retirement of coal plants may seem like a setback for the clean energy transition. However, these measures are necessary to maintain grid reliability as we work toward a more sustainable energy future. The real challenge lies in accelerating the deployment of emerging carbon-free technologies such as advanced nuclear reactors, carbon capture and storage (CCS), and long-duration energy storage (LDES). 

Public-private partnerships, such as technology deployment hubs, can play a crucial role in this effort. These hubs would facilitate the phased deployment of advanced energy technologies, with specific targets for LDES, small modular reactors, new large nuclear plants, and gas with CCS. By sharing the financial, regulatory, and licensing risks associated with these technologies, these collaborations can help bring them to market more quickly and at scale. 

Technology deployment hubs 

The concept of technology deployment hubs involves a series of phased deployments, each building on the lessons learned from previous projects. Experience suggests that it takes decades and at least ten full-scale deployments for new technologies to achieve cost reductions and supply chain efficiencies.  

Just as early tech company commitments to renewable energy helped drive rapid cost decreases and widespread deployment, similar commitments today can accelerate progress on the new and emerging technologies needed to meet growing electricity demand. By adopting this phased approach, we can ensure that each deployment maximizes cost efficiencies and technological refinements, ultimately accelerating the clean energy transition. 

Relighting the spark 

The collaboration between the high-tech and power industries is essential for achieving our long-term clean energy goals. By working together, these sectors can drive the development and deployment of advanced energy technologies, supported by regulatory and policy frameworks that enable innovation and investment. This partnership has the potential to create a second spark in the energy transition, similar to the one ignited by Google’s early investments in renewable energy. 

While the next few years may see a temporary increase in natural gas use and extended coal plant operations, these measures are necessary to ensure grid reliability during the transition. The ultimate goal is to achieve a net-zero economy. The high-tech industry’s commitment to 24/7 CFE, combined with the power sector’s expertise in energy generation and distribution, can help us reach this target more quickly. 

The path to net zero is fraught with challenges, but it also presents significant opportunities for innovation and collaboration. By seizing the opportunity to accelerate the low-carbon transition through emerging partnerships between high-tech and power companies, we can ensure a sustainable and reliable energy future. Let’s not be distracted by short-term detours; instead, let’s focus on the long-term goal of achieving a net-zero economy and work together to make it a reality. 

Ushering the auto industry into a new energy era

By Jim Farley

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By Volodymyr Kudrytskyi

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The US must assure its energy-secure future

By Meredith Berger

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By Daniel Yergin and Madeline Jowdy

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Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

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By Rick Muncrief

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By Arshad Mansoor

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Forging stronger transatlantic energy cooperation

By Dan Jørgensen

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Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

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Busting the top myths about AI and energy efficiency 

By Josh Parker

Read more

The small reactor revolution can transform African energy systems 

By Lassina Zerbo

Read more

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

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The post Tech and power sector partnerships can accelerate the energy transition appeared first on Atlantic Council.

Dan Jørgensen is the EU Commissioner for Energy and Housing. This essay is part of the Global Energy Agenda.

Looking from Europe to the United States, across the great span of the Atlantic Ocean, it is not always easy to find our common connections.

I discovered this first-hand when my academic pursuits brought me to Seattle. For instance, I realized early on that we certainly do not share the same definition of “football.” We also have different ideas on what constitutes a “large” portion size. A visit to a pastry shop shows that we even have different definitions of “Danish.”

But as I grew accustomed to life in the Emerald City, and, in particular, as I met neighbors and made friends, I came to recognize many of the same qualities that I admired among my own people: an appreciation for hard work, humility, and shared human values.

Many years later, as we begin the latest chapter in EU-US relations, some in Europe have looked across the Atlantic and speculated about potential differences and divisions. However, as I take on the role of European Commissioner for Energy and Housing, I see more ways in which our relationship is defined by our common interests.

First and foremost, we have a common interest in a stable, secure, and rules-based international order, in which freedoms are upheld and borders are respected. That is why we have committed our support and solidarity to the people of Ukraine. Since Russia began its illegal aggression, I have visited Ukraine twice. During these visits, I met people who have lost their families and their homes. I met people who have been living without basic necessities, such as electricity and heating. In fact, during the first two years of the war, Ukraine lost two-thirds of its overall electricity capacity due to brutal and relentless Russian attacks. The united support of the European Union and the United States, including through the Group of Seven Plus (G7+), offers Ukraine a crucial counterbalance to reinforce its energy security. Maintaining this cooperation in the coming years, to support the reconstruction and reform of Ukraine’s energy sector, will be equally essential.

Of course, in the context of geopolitical instability, we must also protect our own energy systems. Here, EU-US cooperation on cybersecurity will be important. Digitalization helps to make our energy systems more efficient, reliable, and sustainable. However, without proper precautions, it can also make our systems more vulnerable to malicious attacks, which are expanding in their reach and increasing in their frequency. We must tackle these threats together, for example, by maintaining our engagement via EU-US cyber dialogues and Group of Seven (G7) meetings on Cybersecurity for Digital Energy Infrastructure Systems.

Another priority shared across the Atlantic is to ensure strong and secure supplies of affordable energy. We want to bring down bills for our citizens and strengthen the competitiveness of our companies. In this regard, there are a number of areas where it is plainly in our common interest to cooperate. For example, liquefied natural gas (LNG) from the United States could continue to play a vital part in completing our REPowerEU objective to phase out Russian energy supplies to the EU.

A key aspect of this joint work will be to diversify our sources of energy. For instance, nuclear will continue to be an integrated part of our energy mix and an important part of the solution to decarbonize our energy systems. Continuing our long-standing cooperation with the United States in the nuclear sector is therefore a priority—in particular, to diversify nuclear fuel and fuel services, to spur investment in small modular reactors, and to foster EU-US leadership in advancing nuclear fusion.

Similarly, we must continue our cooperation in securing critical raw materials. EU-US collaboration enables us to source vital minerals for our energy systems, reduce vulnerabilities in our supply chains, and reward responsible economic actors by sharing the benefits of next-generation energy.

Taking a longer-term view of our energy security, the EU remains committed to pursuing sustainable energy and decarbonization. We do not pursue these objectives for ideological reasons, but for logical reasons. From a competitiveness point of view, the EU is a global leader in key clean tech segments such as wind and heat pumps. We are also leading on hydrogen—including electrolyzers. As a result of our work in these and other clean energy sectors, the share of renewables in our electricity mix increased from 36 percent in 2021 to 46 percent in 2024. As we continue our work to combine competitiveness, innovation, and decarbonization, this share will only increase, ensuring a strong, secure, and sustainable supply of affordable energy for our citizens.

The EU will never close its door on any international partner who is willing to share the path toward a global energy system that is fair, secure, and sustainable. We take this path not because it is easy, but because it is essential.

Similarly, in the face of challenges to come, it will be essential to find and reinforce our common connections, wherever they exist.

Ushering the auto industry into a new energy era

By Jim Farley

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Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

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The US must assure its energy-secure future

By Meredith Berger

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The importance of US LNG for economic growth and the global energy transition

By Daniel Yergin and Madeline Jowdy

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Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

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Energy realities require pragmatic solutions

By Rick Muncrief

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Tech and power sector partnerships can accelerate the energy transition

By Arshad Mansoor

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Forging stronger transatlantic energy cooperation

By Dan Jørgensen

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Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

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Busting the top myths about AI and energy efficiency 

By Josh Parker

Read more

The small reactor revolution can transform African energy systems 

By Lassina Zerbo

Read more

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

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The post EU-US energy cooperation: Forging stronger connections in times of division appeared first on Atlantic Council.

Andrés Rebolledo Smitmans is the executive secretary of OLADE. This essay is part of the Global Energy Agenda.

Latin America and the Caribbean constitute a green region. It is home to the planet’s most significant natural lung: the Amazon rainforest. In addition, it has an energy matrix with the highest levels of renewable energy participation at 33 percent compared to a global average of 14 percent. This fact allows us to state with pride, but aware of our responsibility, that we are the greenest region on the Earth.  

At the same time, this highly renewable resources region suffers more than any other from the growing and visible impacts of climate change. Events of unprecedented magnitude and frequency, such as extreme and prolonged droughts, coupled with unprecedented floods and hurricanes that most frequently affect Caribbean countries, are causing damage to infrastructure and families, and seriously jeopardizing the security of energy supply. The situation is reaching extreme levels in some countries, with cases of rationing impacting their economies and populations. 

We live in a region with a great wealth of natural resources, especially renewable resources, all of which are waiting for adequate exploitation. We have used only 30 percent of the water, 12 percent of the wind, and 1 percent of the solar radiation available. Our energy transition industry also has large reserves of critical minerals. In other words, the enormous availability of energy resources also promotes us as one of the world’s major producers and suppliers of low-emission hydrogen. 

The region shows substantial progress in its energy transition toward more decarbonized economies. According to the latest data published by the Latin American Energy Organization (OLADE) in the 2024 Energy Outlook for Latin America and the Caribbean, the share of renewable energy in electricity generation increased from 53 percent to 68 percent in the past ten years, while greenhouse gas emissions were reduced by 26 percent. In addition, 77 percent of the new electricity generation capacity incorporated last year was renewable. 

In the social aspect, 97.4 percent of electricity service coverage was achieved. However, 17 million people still lack access to electricity, 180 million live in poverty, and 77 million do not have access to clean cooking systems, which primarily affects women. These facts compel us to seek alternatives and encourage the region to work together in the search for more robust, flexible, and resilient energy systems that can benefit all. Based on the region’s energy wealth, it is essential to generate local value chains through the development of sources that create jobs and wealth. 

In this context, there are increasingly demanding and pressing challenges. The energy transition and the decarbonization of economies require investments in unprecedented volumes of materials, which must flow and materialize in relatively short periods. This endeavor requires consolidated institutional schemes, with policy and regulatory frameworks that spread the signals of stability and security sought by investors while maintaining the flexibility required by a changing technological environment. 

The lessons learned by countries that have already made progress in their energy transition processes also show that it is just as important to diversify energy production as it is to strengthen transmission and distribution. Also, this goal requires significant investments and favorable environments for their development.  

There are, jointly with opportunities, relevant economic and social challenges. We are responsible for focusing our efforts on making energy a transversal axis of development, contributing to closing the poverty gaps afflicting our region with better levels of access to energy, healthy cooking systems, and access to information and, in short, creating conditions of equity in the broadest sense of the concept. 

The energy setting experienced currently by the world and our region reaffirms the urgency and shared responsibility to act against climate change and its effects, as well as the need to increase and strengthen collective action. In this regard, the region needs to advance energy integration. Significant progress has been made in this area, but there is still a long way to go in consolidating a regional market. Collective action involves dialogue at the intersection of all public- and private-sector actors, academia, international organizations, multilateral banks, and civil society.  

Beyond expressions of goodwill, OLADE, an intergovernmental organization that brings together twenty-seven countries in Latin America and the Caribbean, has been working hard to create the right conditions to deepen and fast-track the energy transition processes in these regions.  

The OLADE Meeting of Ministers is the highest governance structure of our organization, which brings together the highest energy authorities of its member countries. At its recent meeting in Asunción, Paraguay, it adopted a series of resolutions that mark the path to be followed by the region. These decisions seek to improve energy efficiency in all member countries, eliminate the use of coal for electricity generation, and institute a Regional Energy Planning Council, which aims to further advance progress on our common energy and climate goals. 

Our main commitment is to integrate the region’s energy as an instrument that will allow us collectively to better face the impacts of the current environment, plan our future, and build, with the support of all, a better world for future generations. 

Ushering the auto industry into a new energy era

By Jim Farley

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Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

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The US must assure its energy-secure future

By Meredith Berger

Read more

The importance of US LNG for economic growth and the global energy transition

By Daniel Yergin and Madeline Jowdy

Read more

Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

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Energy realities require pragmatic solutions

By Rick Muncrief

Read more

Tech and power sector partnerships can accelerate the energy transition

By Arshad Mansoor

Read more

Forging stronger transatlantic energy cooperation

By Dan Jørgensen

Read more

Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

Read more

Busting the top myths about AI and energy efficiency 

By Josh Parker

Read more

The small reactor revolution can transform African energy systems 

By Lassina Zerbo

Read more

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

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The post Latin America and the Caribbean: Leading the green energy transition amid climate challenges appeared first on Atlantic Council.

The scale of political transformation that took place throughout the democratic world in 2024 will be evident when the Group of Seven (G7) convenes under new Canadian leadership later this year. Ultimately, elections last year led to a notable political shift to the right, laying the foundation for a new international energy and climate architecture. 

Global affairs are only part of the story, however. The release of generative artificial intelligence (AI) models like ChatGPT and OpenAI illustrate the emergence of novel challenges with global consequences on par with those stemming from foreign affairs. For a world still largely pursuing a net-zero future, its leaders must now also contend with yet another competitive race between the United States and China, this time for dominance over key aspects of the development, deployment, and governance of a technology central to global military and economic primacy. 

It’s with this backdrop that the Atlantic Council is pleased to present its fifth Global Energy Agenda. To illuminate this period of profound democratic transition, where the urgent need to secure reliable and sustainable energy systems remains a defining issue, this year’s publication shares the insights from leading industry, civil society, and government voices. As in prior years, this collection of essays is complemented by our in-depth analysis of the results of the Atlantic Council Global Energy Center’s annual global energy survey. 

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

Global Energy Agenda

Feb 20, 2025

Global Energy Agenda full survey results

In the fall of 2024, the Atlantic Council’s Global Energy Center surveyed global energy and climate experts to take the community’s pulse on the outlook for geopolitical energy risks, a global energy market in transition, and prospects for the net-zero imperative.

Africa Americas

Ushering the auto industry into a new energy era

By Jim Farley

Read more

Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

Read more

The US must assure its energy-secure future

By Meredith Berger

Read more

The importance of US LNG for economic growth and the global energy transition

By Daniel Yergin and Madeline Jowdy

Read more

Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

Read more

Energy realities require pragmatic solutions

By Rick Muncrief

Read more

Tech and power sector partnerships can accelerate the energy transition

By Arshad Mansoor

Read more

Forging stronger transatlantic energy cooperation

By Dan Jørgensen

Read more

Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

Read more

Busting the top myths about AI and energy efficiency 

By Josh Parker

Read more

The small reactor revolution can transform African energy systems 

By Lassina Zerbo

Read more

Public Event Thu, February 20, 2025 • 3:30 pm ET

Setting the Global Energy Agenda for 2025

The Global Energy Center hosts a discussion to launch this year’s edition of the Center’s annual flagship report, the Global Energy Agenda.

Climate Change & Climate Action Energy & Environment Energy Transitions Geopolitics & Energy Security

Global Energy Agenda

Nov 30, 2023

The 2024 Global Energy Agenda

By Landon Derentz, Christine Suh, Paul Kielstra (Editors)

The fourth edition of the Global Energy Agenda kicks off with a collection of essays by energy leaders that are rolling out during COP28. Rounding out the Agenda in early 2024, the Atlantic Council Global Energy Center will release the results of its annual survey of experts that takes the pulse on the geopolitical risks affecting energy markets, the future of fossil fuels, and the transition to clean energy.

Energy & Environment Geopolitics & Energy Security

Landon Derentz is senior director at the Atlantic Council Global Energy Center; Christine Suh is the managing editor for the Atlantic Council Global Energy Center; Paul Kielstra is a freelance editor, analyst, and writer based outside of London; and Bailee Mathews is a program assistant for the Atlantic Council Global Energy Center.

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Landon Derentz

Senior Director

Global Energy Center

Energy & Environment Middle East

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Christine Suh

Managing Editor, Global Energy Center

Global Energy Center

Energy & Environment French

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Bailee Mathews

Program Assistant

Global Energy Center

Energy & Environment Energy Transitions

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Global Energy Forum

The ninth Atlantic Council Global Energy Forum will be held June 17 and 18 in Washington, DC. Please check back regularly for updates on our programming.

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

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The post The 2025 Global Energy Agenda appeared first on Atlantic Council.

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Global Energy Agenda

Feb 20, 2025

The 2025 Global Energy Agenda

By Landon Derentz, Christine Suh, Paul Kielstra, Bailee Mathews (Editors)

The Atlantic Council is pleased to present its fifth Global Energy Agenda. As in prior years, this collection of essays is complemented by our in-depth analysis of the results of the Atlantic Council Global Energy Center’s annual global energy survey. 

Energy & Environment Geopolitics & Energy Security

The post Global Energy Agenda full survey results appeared first on Atlantic Council.

Jim Farley is the president and CEO of Ford Motor Company. This essay is part of the Global Energy Agenda.

Political and policy change are part of the American democratic experiment and integral to the business landscape. As the auto industry navigates its transformation, it’s important to keep the choices and needs of the customer front and center. Automakers must prioritize choice for our customers, listening to their preferences at every turn. That is our north star, and it is a valuable lesson for all of us in the automobile industry and for those who have a role in how we build our global energy future. We must put people first. 

It starts with listening to the people who use our products in a thousand ways, big and small, every day. Whether it’s dropping kids off at school or towing heavy equipment, a diverse vehicle lineup serves customers in unique ways. We want to give customers services and experiences they can’t live without. Automakers will continue to build iconic gas-powered vehicles that customers love. We’ll also innovate new forms of hybrid powertrains that fit the way that Americans work and play.  

And the industry will be making new electric cars, trucks, and vans with technological innovations to take the driving experience to new levels of performance. The next generation of electric vehicles will be even better and include features that customers haven’t yet imagined. 

It is imperative for the future of domestic manufacturing that the best electric cars in the world are made by American automakers. But domestic automakers face stiff international competition in this race. To win, our focus must be clear: The United States cannot cede energy, innovation, or manufacturing leadership to China, Europe, or other regions. If we want to maintain our competitive edge while securing our supply chains and shoring up our manufacturing capacity, we must invest in America’s auto industry. 

We can win this race because we have the road map. When it comes to history’s most pivotal achievements, Americans have led the way—from the moon landing to the microchip to artificial intelligence. US automaking history, like Ford’s, is entwined with America’s greatest moments of achievement: the moving assembly line, converting automobile factories to military factories in World War II, and retooling our operations to build lifesaving equipment during the COVID-19 pandemic. 

This is another moment of upheaval in our industry, and in the global economy as a whole. And if we are going to meet the demands of Americans and our future, we need to adopt the same kind of mindset that has always set our country apart. 

This is important because today, as we navigate winning the energy, technological, and manufacturing future, we have a burst of new innovations at our doorstep and increasingly intricate supply chains around the world. We face both uncertainty and great opportunity. 

We must build the necessary manufacturing plants and components—including the batteries and materials that will power our future—here on our shores. An America that controls its own supply chains, that invests in cutting-edge technology, and that brings innovation home is one that secures its future. Right now, Ford is doing that through industry-leading investments in multiple states, where we’re building vehicles Americans want today and making big bets on the high-tech vehicles of the future. 

We know that battery demand in the United States has grown and that China controls key sectors of our energy supply chain. It’s why US automakers have taken bold steps to scale our advanced battery manufacturing right here in America. Investments to onshore this battery technology are an essential part of improving affordability and availability of choice for Americans. It will take time and commitment to build up this capability in the United States, but the more we delay, the greater our reliance on foreign materials will be and the farther behind American auto companies will fall. If American companies don’t do this, those in other nations will. 

Onshoring our manufacturing also protects us from geopolitical conflicts, pain points, and uncertainty. Last year, we saw escalations of war and conflict around energy-producing countries. When we invest in American facilities, there is less risk to the American people. 

I am confident that we can step up to the task at hand. The US auto industry will be working with policymakers to prioritize American manufacturing and energy security. We’ll collaborate to ensure America sets the terms in the great energy race, so that our auto industry and manufacturing sector continue to lead the world. And we’ll make smarter decisions for our country if we keep the choices and needs of Americans front and center. 

The United States was built for moments like this, and we will continue to usher the auto industry into a new era by investing in our team, our customers, our country, and our future. 

Ushering the auto industry into a new energy era

By Jim Farley

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Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

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The US must assure its energy-secure future

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Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

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Energy realities require pragmatic solutions

By Rick Muncrief

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By Arshad Mansoor

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By Dan Jørgensen

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By Andrés Rebolledo Smitmans

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Busting the top myths about AI and energy efficiency 

By Josh Parker

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The small reactor revolution can transform African energy systems 

By Lassina Zerbo

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The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Ushering the US auto industry into a new energy era appeared first on Atlantic Council.

Volodymyr Kudrytskyi is the former CEO of Ukrenergo, Ukraine’s transmission system operator. This essay is part of the Global Energy Agenda.

A key energy security objective for Ukraine is to create stability for investors to finance the deployment of new, decentralized generation in the country. How to ensure that investments can hurdle over obstacles in a profoundly challenging environment is the crucial challenge that Ukraine must solve in 2025. 

The Ukrainian power system is in the midst of one of the greatest trials in human history. It has already survived thirty-one Russian onslaughts since February 2022. Of this unprecedented number, thirteen missile and drone attacks took place in 2024. According to officials, more than 2,000 missiles and countless drones have targeted Ukrainian power plants and high-voltage substations since the beginning of full-scale war.  

Russia’s strategic goal is clear: to devastate the Ukrainian power grid to benefit Russian troops on the battlefield. The tactics of this Russian energy terrorism are also obvious: to destroy the grid’s ability to deliver power to consumers and to remove balancing capacity from the system. While nuclear generation still covers most baseload consumption, Ukraine has already lost more than 10 gigawatts (GW) of balancing power plants—mostly thermal and hydropower—which play a crucial role in meeting peak demand. 

After the integration of Ukraine’s power system into the European continental grid in March 2022, the national grid operator, Ukrenergo, discovered how to defend and recover transmission capabilities of Ukraine’s high-voltage infrastructure. With the help of US and European Union (EU) financing, we built unique passive engineering protection for critical elements of the grid. Ukrenergo has accumulated one of the largest stocks of high-voltage equipment in the world. There are 1,500 trained and highly qualified specialists on Ukrenergo’s restoration teams, working 24/7 to keep the lights on for the Ukrainian people. Of course, without adequate air-defense systems, this will not suffice. The high-voltage grid remains a primary target for the adversary’s aerial attacks, but the Ukrainian transmission operator is gaining experience in quick recoveries after massive shelling and is strengthening its ability to balance the grid in wartime. 

As the grid becomes more resilient with time, the traditional electricity generation base is being deteriorated. Big power plants are also trying to restore capacity, but sometimes take on irreversible damage or require years to be brought back online. Therefore, the main strategic task for Ukraine to achieve in 2025 and beyond is to rebuild its balancing generation capacity to compensate for the power shortages caused by Russian missile attacks on thermal and hydropower plants.  

Building back better the Ukrainian way means rolling out hundreds of new generation facilities of up to 10 megawatts (MW) each, instead of dozens of larger plants that could be exhausted with Russia’s latest assault. At Ukrenergo, we determined that the Ukrainian power system will need 12 to 13 GW of new generation capacity in the next three to five years. This means adding more wind and solar plants, high-maneuverability gas peakers, biomass plants, and battery storage. Such technologies should be spread throughout the country to deprive Russia of the ability to knock out large amounts of power capacity with one strike.  

To roll out this decentralized generation, Ukraine would require around €10 billion in investments. Such a volume could be effectively deployed only by the private sector—the public sector doesn’t have the money, and it is impossible to decentralize generation in a centralized way. 

The interest of Ukrainian and foreign investors in reshaping the country’s energy system was demonstrated in August 2024, when Ukrenergo provided special auctions for the ancillary service market. In two auctions, we received nearly 1,000 bids from different businesses, which were ready to roll out nearly 1 GW of new generation to receive five-year-term offtake contracts with Ukrenergo for the provision of grid-balancing services.  

It was like a gunshot at the start of a big race. But to get across the finish line, these pioneers in deploying decentralized generation still face three key obstacles.  

1. Uncertainty in regulation and market debts  

The current price for electricity on the Ukrainian market determines the whole process. Price on the Ukrainian wholesale electricity market is measured by regulated price-caps. In the periods of highest demand, these price caps are not relevant to the prices on the EU market, which is regulated only by supply and demand without any political interference. This difference impacts trade between the EU and Ukraine, and investors’ ability to finance new generation capacity. So, investors need assurances that price depends on supply and demand, and not the wishes of politicians to manually control it through administrative measures like price caps.  

It is critical that Ukrainian regulators exercise fully independent judgement and decision-making. Wise decisions would include setting cost-reflective tariffs for natural monopolies (including Ukrenergo) and taking measures against customers who consume energy without paying for it. This would eliminate market debts, which currently do not allow businesses to achieve their full market potential and make returns on investment less certain. 

2. Access to finance 

The Ukrainian energy sector could be injected into the power system. However, access to financing remains one of the main problems for potential investors.  

A state program offers low interest rates for businesses willing to build new generation facilities, but a typical efficient energy project investment far exceeds the program cap, disqualifying many projects from accessing these loans. 

Moreover, Ukrainian businesses don’t have access to liquidity from international financial institutions and multinational banks, which require at least five-year offtake contracts and have extensive pledge requirements to secure credit lines.  

To roll out up to 13 GW of new generation in Ukraine, we must connect businesses and financial institutions so that they can cooperate effectively. Unused donor money could be leveraged to create financial instruments like insurance, guarantees, and extra collateral to make investments more attractive for banks. This would effectively multiply the generation capacity that every donated euro can pay for. 

3. Coordinating between communities and businesses 

Installing new generation facilities requires finding land and securing permits, both of which fall under the responsibility of local communities. These communities are interested in technologies that will benefit their local area, not the whole system. Better communication and cooperation are needed between the private businesses that are able and willing to roll out new generation and the local communities that need it.  

Unleash the private sector 

Rolling out decentralized balancing capacity along with renewables would not only make the Ukrainian power system resilient to Russian attacks, it would also enable Ukraine to virtually complete the clean transition of its power system, as the new electricity mix would be about 90 percent carbon free. Moreover, the new power system would be cheaper to run than the current one, because of the domination of nuclear and renewable generation with lower marginal cost than the Soviet-era coal-fired power plants.  

Ukraine has unique starting parameters to achieve this quickly: strong nuclear and hydropower, good solar and wind potential, and a sharp deficit of electricity, which supports high market prices and quick payback on energy projects. The main priority of Ukrainian energy strategy for the next five years should be to remove the stumbling blocks and let private initiative do the job—it always does. 

Ushering the auto industry into a new energy era

By Jim Farley

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Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

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The US must assure its energy-secure future

By Meredith Berger

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The importance of US LNG for economic growth and the global energy transition

By Daniel Yergin and Madeline Jowdy

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Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

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Energy realities require pragmatic solutions

By Rick Muncrief

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Tech and power sector partnerships can accelerate the energy transition

By Arshad Mansoor

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Forging stronger transatlantic energy cooperation

By Dan Jørgensen

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Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

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Busting the top myths about AI and energy efficiency 

By Josh Parker

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The small reactor revolution can transform African energy systems 

By Lassina Zerbo

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The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Ukraine can unleash energy investment even amid war appeared first on Atlantic Council.

Kok Keong Puah is the chief executive of Singapore’s Energy Market Authority. 

Southeast Asia’s energy transition stands at an inflection point. As the region’s energy demand accelerates—spurred by both rapid economic growth and a growing population—the stakes are higher than ever. The ASEAN Centre for Energy (ACE) estimates that Southeast Asia’s energy demand will more than double from 2022 levels by 2050. By that year, the International Energy Agency predicts that the region’s energy demand will surpass the European Union’s.  

This growth presents an enormous challenge: How can we ensure energy security, meet climate ambitions, and address the needs of a growing population at the same time? Yet there is a silver lining: Southeast Asia has the potential to lead the way in the global energy transition. 

ACE estimates suggest that renewable energy could meet more than two-thirds of the region’s energy needs by 2050. However, unlocking this potential is far from straightforward. Large upfront capital investments, profitability concerns, and a lack of adequate grid infrastructure all stand in the way.  

The solution? A more connected Southeast Asia.  

Regional interconnectivity is key to unlocking Southeast Asia’s decarbonized future. The ASEAN Power Grid (APG) vision aims to connect power grids, creating a borderless network throughout Southeast Asia that links regions rich in renewable energy to demand centers. A connected system would lay the foundation for a robust and integrated regional energy market. It would allow countries to diversify their energy sources and strengthen resilience by drawing upon mutual support from neighboring nations. 

Through the APG, countries could establish long-term power purchase agreements for renewable energy projects that improve project bankability and attract high-quality investments. For example, The Business Times in Singapore reported that planned electricity export projects from Indonesia to Singapore could bring as much as $20 billion in investments to Indonesia. The APG would also increase access to electricity in exporting countries as domestic grid infrastructure is strengthened to support cross-border trade. Domestic manufacturing and related economic activities would likely see an uptick as developers source parts and services locally.   

Southeast Asia is already taking strides toward realizing the APG vision. Pathfinding projects, such as the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project, have proven the feasibility of multilateral cross-border power trade among multiple Southeast Asian countries. Its success has paved the way for further initiatives such as the Brunei-Indonesia-Malaysia-Philippines Power Integration Project.  

These efforts are laying the groundwork for an interconnected regional grid. But significant investment and infrastructure development are still needed. 

Singapore is supporting projects from Australia, Cambodia, Indonesia, and Vietnam to provide a total of 7.35 gigawatts of low-carbon electricity imports to Singapore. Doing so has allowed us to kick-start discussions within the region on how we can collaborate to realize the APG vision.  

Collaboration beyond the Association of Southeast Asian Nations (ASEAN) is essential. No one country can realize the APG alone. ASEAN has collaborated with dialogue partners such as Australia, Japan, and the United States on renewable energy technologies and regional power integration. These partnerships not only bring financial support, but also a wealth of expertise to accelerate the sustainable energy transition.  

An example of such collaboration is the joint feasibility study between Singapore and the United States on regional energy connectivity. The first phase demonstrated the technical feasibility and socioeconomic benefits of regional connectivity, while the second phase will focus on studying the necessary legal and financial frameworks to support it.  

Southeast Asia’s renewable energy resources make the region an ideal testing ground for emerging low-carbon technologies. Hydrogen, geothermal energy, and carbon capture and storage (CCS) hold immense potential. Singapore, in collaboration with ExxonMobil and Shell through the S Hub consortium, is studying cross-border CCS projects to enhance the region’s climate resilience.  

The inaugural Singapore-US Forum, co-hosted with the US Department of Commerce at the 2024 Singapore International Energy Week (SIEW), brought together government and industry leaders to discuss strategies to accelerate the development of hydrogen in Asia. These partnerships are critical for driving innovation and ensuring that Southeast Asia remains at the forefront of the global energy transition. 

Similarly, organizations like the Atlantic Council play a key role in driving the region’s decarbonization by facilitating important discussions that shape energy transition narratives. As our strategic insights partner for SIEW, the Atlantic Council’s advocacy efforts on energy security have helped to build mindshare among participants on the benefits of regional interconnectivity, renewables, and low-carbon energy technologies.  

The energy transition in Southeast Asia has global implications. A stable, prosperous, and decarbonized Southeast Asia will not only benefit the region but also strengthen global supply chains, promote economic growth, and contribute to climate stability. Through our continued partnerships with the United States and other global partners, we will build a connected and sustainable world for all. 

Ushering the auto industry into a new energy era

By Jim Farley

Read more

Ukraine can unleash energy investment even amid war

By Volodymyr Kudrytskyi

Read more

The US must assure its energy-secure future

By Meredith Berger

Read more

The importance of US LNG for economic growth and the global energy transition

By Daniel Yergin and Madeline Jowdy

Read more

Southeast Asia aims for sustainability through connectivity

By Kok Keong Puah

Read more

Energy realities require pragmatic solutions

By Rick Muncrief

Read more

Tech and power sector partnerships can accelerate the energy transition

By Arshad Mansoor

Read more

Forging stronger transatlantic energy cooperation

By Dan Jørgensen

Read more

Latin America and the Caribbean are leading the green energy transition

By Andrés Rebolledo Smitmans

Read more

Busting the top myths about AI and energy efficiency 

By Josh Parker

Read more

The small reactor revolution can transform African energy systems 

By Lassina Zerbo

Read more

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Southeast Asia aims for sustainability through connectivity appeared first on Atlantic Council.

The potential for geothermal energy in particular to seize this opportunity has greatly improved due to advancements in geothermal systems. While conventional geothermal and hydrothermal systems have historically faced opposition for their limited geographical accessibility and high upfront costs, the emergence of enhanced systems has significantly augmented the viability of widescale geothermal deployment to support a cleaner, more affordable, and strategically advantageous energy sector. Enhanced geothermal systems (EGS) use directional drilling tools and technologies developed by the oil and gas industry as well as hydraulic fracturing to overcome geographic barriers and reduce costs. EGS thus unlocks the potential for widespread deployment across the United States, offering a cleaner, more affordable, and strategically advantageous energy solution. 

Public Event Thu, February 20, 2025 • 10:00 am ET

Geothermal: Unlocking America’s untapped energy potential

Governor Jared Polis of Colorado and a panel of experts discuss opportunities to advance US energy security and economic competitiveness through next-generation geothermal energy.

Energy & Environment United States and Canada

EGS offers a myriad of additional benefits, ranging from environmental sustainability to economic competitiveness. Not only does it provide emissions-free electricity generation, it also enhances energy security by offering a reliable 24/7 clean power alternative for emissions-heavy sectors. Coupled with reduced operational costs over time and increased scalability, this positions EGS as a key driver for US decarbonization efforts while maintaining productivity and global competitiveness.

Despite its promise, EGS faces obstacles in attracting investment and achieving widespread commercialization. Efforts to address these barriers must focus on streamlining permitting processes, mitigating upfront capital costs, and creating a conducive political and business environment. Government support through legislation and funding, coupled with industry-led initiatives such as joint ventures and community engagement, will be crucial in accelerating the adoption of EGS and unlocking its full potential in the United States’ energy landscape.

Staff

Chase Thalheimer

Assistant Director

Global Energy Center

Arabic Geopolitics & Energy Security

Staff

Reed Blakemore

Director, Research and Programs

Global Energy Center

Geopolitics & Energy Security Energy Transitions

New Atlanticist Aug 15, 2024

The IRA two years on: A signpost of the new economic policy consensus

By William Tobin

Signed in August 2022, the Inflation Reduction Act has prompted global competition among governments to make public investments in emerging industries and technologies.

Economy & Business International Markets

Report Mar 17, 2022

Unearthing potential: The value of geothermal energy to US decarbonization

By Zachary Strauss

Achieving US climate goals requires the development and widespread deployment of all available clean energy solutions. Geothermal energy, while currently only a marginal component of the US energy economy, can contribute significantly to the climate action effort.

Energy & Environment Energy Transitions

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

learn more

The post Unlocking America’s untapped energy potential through enhanced geothermal systems appeared first on Atlantic Council.

Consider the snow leopard. Panthera uncia sports some of the most effective camouflage in the animal kingdom, its white coat with gray and black spots blending in perfectly with the rocky, snowy Himalayan landscape it inhabits. It’s known as “the ghost of the mountains,” seeming to appear out of thin air on the rare occasions it is seen in the wild. 

There’s an equivalent phenomenon in global affairs: under-the-radar trends and events that elude even the most seasoned observer. When their effect on world affairs eventually becomes apparent, they may seem to have come out of nowhere. But these “snow leopards” were there all along. Trends slowly gathering momentum while the crisis du jour dominates headlines, technological developments whose real-world application is still theoretical, known but underrated risks—all of these phenomena have the power to reshape the future. Some already are. 

Any forecast of the future needs to account for these snow leopards. As we brought together experts across the Atlantic Council for our annual look into the future, our next-generation staff took on the challenge of spotting the hard to spot. They surveyed the world around them for overlooked risks, trawled scientific journals and the websites of obscure government departments, and came up with a list of potentially world-changing trends and developments. 

In the year to come and beyond, keep an eye on these six snow leopards. 

When you send a message on WhatsApp to a friend in Colombia or share a video call with family in India, the data—images, text, and video—gets broken down into packets and travels along undersea cables that connect continents in fractions of a second. Nearly 99 percent of international data passes through these cables, including terabytes of sensitive data sent by the US military to command posts overseas as well as an estimated ten trillion dollars transferred every day through the global financial system. In an increasingly interconnected world, nonstate actors pose a serious threat to this critical digital infrastructure, which often lies in shallow waters where it is vulnerable to everything from cyber threats to explosive devices to dragging anchors. 

It doesn’t take advanced equipment like submarines to damage these undersea cables. In 2013, for instance, Egyptian authorities arrested three divers who had used underwater explosives to slice through the South East Asia-Middle East-West Europe 4 internet cable, which runs for 12,500 miles and connects three continents. This incident came five years after a similar attack on the same cables and three years after terrorists in the Philippines successfully cut cable lines near the Filipino city of Cagayan de Oro. While the possible involvement of China and Russia in recent cord-cutting incidents has drawn international scrutiny, these prior incidents indicate that nonstate actors also perceive these cables as an opportune target.  

In late 2023, a Telegram channel affiliated with Yemen’s Houthi rebels threatened this vital underwater infrastructure by posting a map showing the subsea communications cables in the Mediterranean Sea, the Red Sea, the Arabian Sea, and the Persian Gulf. An ominous message accompanied the map: “There are maps of international cables connecting all regions of the world through the sea. It seems that Yemen is in a strategic location, as internet lines that connect entire continents—not only countries—pass near it.” Of note, the Houthis possess an arsenal of underwater mines, and Houthi militants have reportedly undergone combat diver training in the Red Sea.  

The Houthis’ bold assertion could inspire other nonstate actors to put undersea cables in their crosshairs, expanding the threat to this vital infrastructure beyond the region. The same day the Telegram post appeared, a Hezbollah-affiliated Telegram channel shared a similar message and questioned whether the Houthi statement was a “veiled message to the Western coalition.” 

Since these cables facilitate financial transactions and are the only hardware capable of accommodating the huge volumes of military sensor data that inform ongoing operations, terrorist groups may see them as high-value targets that can be attacked at a relatively low cost. Furthermore, non-state actors with growing cyber capabilities could exploit vulnerabilities in these networks, potentially disrupting services or stealing sensitive data. This confluence of high-tech and low-tech threats should sound alarms about the future security of global communication networks. 

Emily Milliken is an analyst focusing on Gulf security issues, and the associate director of media and communications for the N7 Initiative at the Atlantic Council’s Middle East Programs. 

In 2023, the United States produced more oil in a single year than any other country in history—largely due to fracking, which injects fluid under high pressure into rocks, cracking them open to access oil stored within them. The same technique can be used to draw cleaner sources of energy—such as the heat trapped in the earth’s crust—to the surface and send it out to homes across the United States. Geothermal energy harnesses that heat and constitutes a low-carbon energy source. With new technology on the horizon that could make it easier to utilize geothermal energy in more parts of the country, the United States is poised to unlock a major source of energy.  

Geothermal-power extraction is currently confined to traditional hydrothermal regions, mostly in the western continental United States plus Hawaii and Alaska. In these regions, conventional geothermal systems tap into the naturally occurring hot water or steam from the earth to drive turbines that generate electricity.  

Through enhanced geothermal systems (EGS), geothermal-energy production could be expanded far beyond traditional hydrothermal regions. According to the US Department of Energy, by replicating the physical dynamics present in these regions, EGS has the potential to power more than 65 million homes—a little under half of all American homes. EGS is similar to fracking in that it involves injecting fluid into the ground to create new fractures or reopen old ones, resulting in increased permeability. The hot fluid is then pumped to the surface, where it is used to generate electricity. This method works in areas where the ground is hot enough but there may not be enough naturally occurring fluid or permeability to make geothermal power viable without the addition of EGS. 

Currently, the United States has utilized less than 0.7 percent of its geothermal-electricity resources, with the remaining potential expected to become available via EGS. The Department of Energy has started to recognize the potential of EGS, funding projects in Nevada, California, and Utah. The department’s Enhanced Geothermal Shot initiative seeks to reduce the cost of EGS by 90 percent by 2035 to $45 per megawatt hour. It’s an ambitious goal, but one that, if successful, would dramatically increase access to this low- or no-carbon energy source across the United States.  

That could help address an urgent need. One analysis estimates that power demand in the United States will grow 4.7 percent over the next five years, outpacing the 0.5 percent growth in annual demand over the last decade. Though not a silver bullet, expanding access to geothermal power could help meet this demand in a clean, predictable, and relatively cheap way. 

Imran Bayoumi is an associate director at the Scowcroft Center for Strategy and Security.

Given the political and technical difficulties of getting countries to reduce the amount of greenhouse gases they pump into the air, the quest for technologies that can remove these gases has grown ever more important. One such technology, direct air capture (DAC), involves pulling carbon dioxide (CO2) out of the air and permanently storing it somewhere else, usually deep underground in rock formations. Because current methods of direct air capture are costly and energy-intensive, they have made only a marginal contribution to meeting global climate goals.  

Yet carbon capture might be poised for a transformation thanks to a yellow powder. DAC technologies are expensive to scale because they use substantial amounts of water and energy and are designed to capture concentrated sources of carbon such as the exhaust from a power plant. A new CO2-absorbing material called COF-999, created by a University of California at Berkeley-led team of scientists, could collect CO2 far more cheaply, using substantially less water and energy, than current DAC processes. Utilizing a covalent organic framework—involving the strongest chemical bonds in nature—the material promises to be dependable and sustainable. The powder is less likely to be damaged by humidity, reaches half its capacity in only eighteen minutes, is reusable (it can be used through one hundred cycles of the carbon-removal process, with minimal capacity loss), and might effectively pull CO2 out of the air around us, which has far lower concentrations of carbon than, for example, power-plant exhaust. 

Current carbon-capture technology, according to some estimates, could account for 14 percent of the global-emissions reductions needed to meet climate targets by 2050. The market is already expected to rapidly expand, with a projected compound annual growth rate of 6.2 percent over the next five years and estimated value of four trillion dollars by 2050. The invention of COF-999 could supercharge these numbers. It could be easily implemented in existing carbon-capture systems, or scientists could experiment with ways to take advantage of its ability to clean ambient air. “We took a powder of this material, put it in a tube, and we passed Berkeley air—just outdoor air—into the material to see how it would perform … It cleaned the air entirely of CO2,” said Omar Yaghi, a Berkeley chemistry professor who worked on the study. As atmospheric CO2 levels hit record highs, and extreme heat waves, wildfires, floods, and hurricanes increase in frequency, the yellow-powder breakthrough is one example of the creative science needed to counter inaction on rising global emissions.

Ginger Matchett is a program assistant with the GeoStrategy Initiative in the Atlantic Council’s Scowcroft Center for Strategy and Security. 

If you have fifteen million dollars to spare, an unused ancestral estate, or even a small plot of land in need of transformation, you too can get in on the hot new trend of rewilding—or the process of rebuilding natural ecosystems on landscapes disrupted by humans. The concept represents a fundamental shift in the way governments, ecologists, and ordinary people view conservation. It focuses on restoring to health native environments—including their balance of plants and animals—rather than on trying to protect scarce undisturbed areas such as wilderness (only 3 percent of the Earth’s land surface is ecologically intact). The idea first took off in North America and has spread like kudzu, including to the estates of the ultra-wealthy. Although rewilding remains a niche solution to various conservation problems, it may be on the verge of an explosion, with major consequences for the global climate. 

Some estimates already put the global total of land available for rewilding at a billion acres, which is roughly half the area of the Australian landmass—and even more is set to become available over the course of this century as a combination of factors reduce pressure for the intensive use of land. Some two-thirds of humanity is projected to live in cities by 2050, and the world’s total population (urban and rural) is expected to peak by the mid-2080s. At the same time, agricultural productivity is increasing, technology and innovation are decoupling food output from land input, and alternative proteins, which are far less land- and carbon-intensive than animal-based proteins, are becoming increasingly popular. 

A 2024 study found that a quarter of land in Europe is suitable for rewilding, with Scandinavian countries, Scotland, Ireland, Spain, and Portugal at the top of the list. A lot of land is viable for rewilding beyond Europe, too, including in Japan and North America. In the United States alone, around thirty million acres of cropland has been abandoned since the 1980s.  

Rewilding may help the environment by absorbing carbon and reversing biodiversity loss. Recent declines in biodiversity around the world, including a 73 percent decrease in wildlife populations over the last fifty years and one million species on the verge of extinction, are linked to accelerated climate change and the spread of infectious diseases. There could be economic benefits as well. Nature tourism is responsible for $600 billion in revenue globally and twenty-two million jobs; revitalized natural spaces and the reintroduction of large animals into them can help raise those numbers. Restoration and rewilding can also increase farming yields, the availability of water, and global fish populations, while also reducing the degradation of agricultural land. Mangroves, coastal wetlands, and coral reefs can lessen flood risk. Putting large herbivores back into their native areas can lower wildfire risk. 

Just as the potential benefits of rewilding are becoming clearer, so too are its possible costs. Some experts fear that rewilding efforts may, like some net-zero carbon pledges, allow governments and industry to sidestep decarbonization efforts in favor of carbon offsets, which are unregulated and can be reversed. The reintroduction of animals and plants, particularly large predators, can also induce a public backlash, which may harm rewilding and restoration. Restoration of ecosystems might increase the risks of tick- and other vector-borne diseases as well. As the world grows hotter, it could prove difficult to reintroduce some desired species. 

Nevertheless, if the land resources and financial incentives for ecological restoration combine with messaging and public sentiment in favor of individual and community action, rewilding may become a movement capable of restoring wide swathes of land to their original states. In so doing, it might open a new route to address the effects of a changing climate.

John Cookson is the editor of the Atlantic Council’s New Atlanticist.  

Sydney Sherry is an assistant director with the GeoStrategy Initiative in the Atlantic Council’s Scowcroft Center for Strategy and Security. 

In 2019, scientists Akira Yoshino, M. Stanley Whittingham, and John B. Goodenough won the Nobel Prize in chemistry for their development of the rechargeable, renewable lithium-ion battery. The committee commended the trio for having “laid the foundation of a wireless, fossil fuel-free society.” Since their debut in the 1990s, batteries have become ubiquitous in all kinds of electronics. But there’s something even better on the horizon, and not a moment too soon: quantum batteries. 

These novel batteries store energy by drawing on quantum mechanics (the study of physics on a microscopic scale) and particularly quantum chemistry, which is crucial to battery research and allows scientists to understand the chemical structure and reaction of atoms at significantly quicker speeds than current models. It’s a promising emerging technology to watch amid a broader exploration of alternative battery chemistries that could offer the energy density and stability to perform better than lithium-ion batteries for certain functions. 

One application is medical devices. About 26 percent of the US adult population has some type of disability that requires a medical device—such as cochlear implants or a pacemaker—and these devices rely on lithium-ion, lithium, or lithium-iodine batteries for energy. Supply of such batteries isn’t guaranteed; beginning in 2022, for instance, a lithium-ion battery shortage upended electric-vehicle and medical-device supply chains in the United States. These batteries also often require recharging or a replacement, which can necessitate additional surgeries if the medical device that uses them is implanted.

Since quantum batteries could have higher energy density, quantum devices could provide more efficient and long-lasting performance than lithium-based options, reducing the number of battery exchanges that put patients at risk. The energy stored in quantum batteries also could power medical facilities and electric vehicles, improving emergency services in vulnerable and remote areas—a crucial concern worldwide, as climate change brings stronger storms along with longer and more intense heat waves, which not only raise health risks but also strain power grids. During power outages, most hospitals today rely on fossil-fuel and battery-system generators, which often experience complications. In the future, quantum batteries could power these facilities instead. Additionally, since quantum batteries could accelerate charging times for electric vehicles from the current thirty minutes to seconds at high-speed stations (and from about ten hours to a few minutes at home), electrically powered ambulances and medical devices could be charged and ready to go in seconds—a unit of time that can make all the difference for first responders.  

Tatevik Khachatryan is an assistant director for events at the Atlantic Council.

Picture someone falling for an online hoax. If an elderly internet user came to mind, think again. A recent study from Cambridge University revealed that the generation that grew up with the internet—and that reported in the study spending the most time online—had a hard time telling real headlines from fake ones. 

Though they tend to be tech savvy and certainly are not the only generation vulnerable to inaccurate information, members of Generation Z (those born in the late 1990s and early 2000s) are more susceptible to mis- and disinformation than widely assumed. Often relying on social media as a primary news source, digital natives are vulnerable to manipulation. In the Cambridge study, as well as in research conducted by the Center for Countering Digital Hate, they demonstrated a propensity to believe in conspiracy theories. Gen Z might be conscious of the threat posed by biased feeds and manipulated media, but its members continue to scroll and share—and their amplification of mis- and disinformation will be a serious challenge in the future.

Social media is a central fact of life for the vast majority of Gen Zers in the developed world, and it has become an indispensable informational tool for those in developing countries as well. In 2024, a report surveying nearly 4,500 individuals across the United States, Canada, the United Kingdom, Ireland, and Australia found that 91 percent of Gen Z social media users are on Instagram and 86 percent are on TikTok. Gen Z is forming judgments based on the content appearing on their social media feeds—often curated by algorithms that privilege content with higher engagement levels regardless of whether it is true or false—and circulating it to their digital communities. Their decisions about who to follow on social media are not necessarily rooted in the authenticity or credibility of those figures. Instead their social media consumption is often parasocial: They tend to follow media streams and engage with the causes of individuals who they don’t know personally, be they influencers or politicians. 

A generation growing up with seemingly unlimited access to information and extensive knowledge about what digital technologies like algorithms do, but with limited ability to verify that information, represents a significant sociological change. As members of Gen Z proceed in their careers and assume more powerful positions, there is a real risk that they have been left ill-prepared to navigate the overwhelming scale of online information ecosystems. The mis- and disinformation surrounding global challenges ranging from war to migration to climate change may also make Gen Zers more mistrustful of both institutions and other individuals, rendering them less capable of addressing these challenges. Collaborative efforts between Gen Z and older generations—engaging private companies, governments, and individuals—are needed to manage a transformed information landscape and prevent subsequent generations from growing up in an era of misinformation or falling for online hoaxes. 

Ginger Matchett is a program assistant with the GeoStrategy Initiative in the Atlantic Council’s Scowcroft Center for Strategy and Security. 

Srujan Palkar is a Global India fellow and assistant director with the Scowcroft Middle East Security Initiative in the Atlantic Council’s Middle East Programs.

Global Foresight 2025

In this year’s Global Foresight edition, our experts share findings from our survey of global strategists on how human affairs could unfold over the next decade. Our team of next-generation scholars spot “snow leopards” that could have major unexpected impacts in 2025 and beyond. And our foresight practitioners imagine three different scenarios for the next decade.

Learn More Full Survey

Atlantic Council Strategy Paper Series Feb 12, 2025

Welcome to 2035: What the world could look like in ten years, according to more than 350 experts

In the fall of 2024 after the outcome of the US presidential election, the Atlantic Council’s Scowcroft Center for Strategy and Security surveyed the future, asking leading global strategists and foresight practitioners around the world to answer our most burning questions about the biggest drivers of change over the next ten years. Here are the full results.

Read More

Atlantic Council Strategy Paper Series Feb 12, 2025

Six ‘snow leopards’ to watch for in 2025

By Emily Milliken, Imran Bayoumi, Ginger Matchett, Srujan Palkar, Sydney Sherry

Atlantic Council foresight experts spot the underappreciated phenomena that could have outsized impact on the world, driving global change and shaping the future.

Civil Society Climate Change & Climate Action

Atlantic Council Strategy Paper Series Feb 12, 2025

Three worlds in 2035: Imagining scenarios for how the world could be transformed over the next decade

2024 was marked by increased climate shocks and collaboration of autocratic adversaries. What will the world look like in the next decade? The Atlantic Council’s top experts brought their globe-spanning expertise to the task of forecasting three different scenarios for the future.

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The post Six ‘snow leopards’ to watch for in 2025 appeared first on Atlantic Council.

• Executive summary
• Introduction
• A vital resource, a complicated history
• Country updates
• The future
• Opportunities and policy development
• Policy recommendations
• Conclusion
• About the authors

Executive summary

Water security is an urgent issue that demands immediate attention from Central Asian governments, businesses, civil society, and their international partners. Climate change, population growth, infrastructure problems, a lack of government foresight, and the unequal distribution of precious water resources between the upstream countries (Kyrgyzstan and Tajikistan) and the downstream nations (Kazakhstan, Turkmenistan, and Uzbekistan) have created a “perfect storm” of pressing water insecurity. The 2021 Central Asia drought, the loss of the Aral Sea, the evaporation of glaciers in the Tian Shan mountains, and the alarming shrinking of the Caspian Sea are reminders of how natural and man-made disasters have destructive consequences on Central Asia’s strained water resources.

This report addresses the status of water security across the five Central Asian countries, outlining recent developments, ongoing challenges, and opportunities for improvement. Geopolitically, interstate tensions and the role of international politics—e.g., influence from the West, Russia, and China and tensions with Afghanistan—all will continue to affect the region’s water security. This report will address international cooperation in projects for water sharing, including the current and future role of agencies like the International Fund for Saving the Aral Sea and partners like the United States Agency for International Development, the World Bank, and extraregional governments. The report concludes with a holistic set of policy recommendations to help improve water security in Central Asia.

Water security is a complex and challenging topic for the five Central Asian countries (C5), a region heavily dependent on shared water sources. Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan face increasing water-related challenges due to the unequal distribution of water resources across the region (upstream vs. downstream nations), interstate tensions, the legacy of Soviet-era water management systems, corruption and lack of good governance, and the effects of climate change. Despite efforts to modernize, countries still rely on outdated and insufficient water infrastructure that struggles to meet the demands of growing populations, as well as water-intensive industries like cotton.

Relevant recent developments in this region include the collapse of the Aral Sea, the declining water levels of the Caspian Sea, border conflicts over water access between Kyrgyzstan and Tajikistan, and the Taliban’s construction of a controversial canal in Afghanistan. Challenges also offer opportunities, including regional agreements on sharing and protecting bodies of water, applying new water-management technologies, and using newly arid lands for new projects.

This report analyzes the current state and future of water security across the five Central Asian states while also considering external players such as Afghanistan, China, and the Caspian littoral countries. The region’s division between water-rich upstream countries and water-scarce downstream states is a key focus of this report. A useful map published in a 2017 report by German think tank Adelphi demonstrates how large swathes of the downstream countries—Kazakhstan, Turkmenistan, and Uzbekistan—depend on water resources that flow from the mountainous regions of Kyrgyzstan and Tajikistan upstream. Water security impacts domestic politics, foreign policy, economic stability, infrastructure, and energy security. Thus, our recommendations address a wide range of cross-cutting issues, as a holistic view of water security is necessary to improve living conditions, the environment, economies, and industries while addressing regional geopolitical concerns.

A vital resource, a complicated history

There are several challenges to the health and integrity of Central Asia’s precious water resources, particularly the Amu Darya and Syr Darya rivers, the Aral Sea, Lake Balkhash, and the Caspian Sea. Challenges include climate change, pollution, and issues related to human development, like population growth, urbanization, industrialization, and the all-important agricultural industry, among other human activities. Glacial melt also threatens the Pamir and Tien Shan mountain ranges, located in the region’s two upstream countries, Kyrgyzstan and Tajikistan. Changes to the water flow will (literally) have a trickle-down effect that will affect the two countries and the downstream nations, namely Kazakhstan, Uzbekistan, and Turkmenistan. In other words, water security in Central Asia is heavily linked to transboundary water bodies.

But other challenges must be considered to understand the evolving situation across the region. They include irregular rainfall patterns, which lead to extended droughts in some areas while others suffer from unseasonable rainfalls causing floods; extreme weather patterns that affect both human life and the local environment; and the fragile state of water infrastructure due to neglect in the post-Soviet era.

Central Asia knows how catastrophic water disasters can be. Nearly all of the Aral Sea—90 percent of what had been the fourth-largest inland sea in the world—is simply gone due to poor water mismanagement. The problem commenced in the 1960s due to Soviet-era, large-scale irrigation projects, which included the diversion of the sea’s tributaries, the Amu Darya and Syr Darya, and benefited, for instance, Uzbekistan’s important cotton industry. The negative consequences include soil salinization, waterlogging, and a sea-level drop, resulting in new dry lands. The Aral Sea’s diminishment has prompted economic decline and job loss for noncotton industries, not to mention health challenges for regional populations and devastation of their way of life. Astana has attempted to protect what remains of the Kazakhstani side of the sea, which nowadays mostly resembles a group of interconnected and fragmented lakes rather than a unified body of water, by constructing the Kok-Aral Dam, for example. Unfortunately, the Uzbekistani government still prioritizes its cotton industry over the protection of Aral Sea, parts of which are likely lost forever.

In a similar vein, the Caspian Sea is becoming increasingly precarious. The sea’s northern coast, which borders Kazakhstan and Russia, is already becoming shallower. While desalination projects are a growing part of the problem, the limited amount of water reaching the sea is insufficient to keep it healthy. For instance, the Soviets constructed dams and reservoirs in the Volga River that inhibit water (and marine life) flows into the Caspian. These include Russia’s Cheboksary Dam and the Volga Hydroelectric Station. There will be severe repercussions akin to what the Aral Sea is experiencing if the Caspian’s water level is not safeguarded. Besides the obvious challenges to human life and the regional environment, trade and commerce also will be affected. Specifically, the maritime and transportation sector will be impacted by the Caspian’s disappearance. Bypassing Russian territory, the Trans-Caspian International Transport Route (TITR), commonly known as the Middle Corridor, is integral to the transport of commodities and goods from China and Central Asia to Europe: The Caspian Sea serves as a crucial component of the TITR, with tankers and cargo ships sailing from Baku and Aktau to Turkmenbashi and vice versa. Declining water levels would put heavier ships at risk of being trapped and unable to access ports—and undercut the usefulness of the TITR.

The complexity of water

The C5 states have common problems regarding water security. Obsolete water infrastructure is Central Asia’s greatest water challenge. Overall, their Soviet-era water infrastructure requires repairs, replacement, or full modernization. Unfortunately, the Central Asian governments have been slow to invest in this area. While managing the flow of water across regional rivers or addressing the effects of climate change are challenging long-term issues, improving water infrastructure can significantly protect scarce water flows in the region. Outdated water infrastructure can result in up to “40 percent of water losses during irrigation and up to 55 percent of losses when supplying drinking water.” In other words, improving the transit of water in Central Asia would buy time, allowing regional governments to address some of the more complex problems stemming from climate change and water-diversion projects.

The intersection between water security and energy production is complex, particularly regarding hydroelectric power. Kyrgyzstan and Tajikistan have extensive water resources that generate electricity through hydroelectric dams. However, this strategy creates tensions with downstream nations that depend on these rivers for agricultural irrigation and human consumption. Hydroelectric dams, like Tajikistan’s Rogun Dam, may become a source of conflict between upstream and downstream countries if relationships are not managed carefully. As climate change intensifies, the unpredictability of water flow can worsen interstate relations. Map I shows changes in river flows of major river systems in Central Asia.

The 2021 Central Asian drought highlighted the region’s vulnerability to water shortages. Kazakhstan, in particular, experienced serious agricultural losses, underscoring the risks of dependence on transboundary water sources. Kazakhstan’s Lake Balkhash, fed by the Ili River from China, presents another example of water insecurity. China’s upstream development projects threaten to reduce the water flow into Lake Balkhash, which could lead to a disaster on the Aral scale. Tensions exist between Uzbekistan and Kyrgyzstan over the Syr Darya, which originates in Kyrgyzstan and flows through Uzbekistan. Around 80 percent of Uzbekistan’s water originates from neighboring countries, leaving it vulnerable to upstream water-management decisions.

The political landscape in Central Asia complicates efforts to manage water resources. The region features a range of political systems, from strongly authoritarian Turkmenistan to the more open Kazakhstan. This contributes to differing levels of commitment to regional cooperation on water management. For example, Astana has identified water security as a problem. It promotes dialogue and proposes the creation of regional water mechanisms to address water-access issues, such as the International Fund for Saving the Aral Sea, which originated in the early 1990s. On the other hand, Ashgabat has a more limited engagement with the rest of the region and the wider world including on environmental issues. Similarly, during the rule of Islam Karimov, Uzbekistan was reluctant to engage with neighbors to discuss water cooperation. However, President Shavkat Mirziyoyev is willing to engage. Meanwhile, Bishkek and Dushanbe’s growing reliance on hydropower to address domestic energy crises will exacerbate water-security problems with their downstream neighbors. More open governments tend to be more willing to discuss sensitive issues, including shared water resources, and admit their shortcomings and erroneous policies.

Finally, water quality tends to receive insufficient attention. Pollution from agriculture, industry, and aging infrastructure impacts water supplies, meaning that even when water reaches a household, drinking it may not be safe.

Country updates

Each C5 country grapples with unique issues driven by geography, infrastructure, and governance affecting water. There are efforts to address these challenges, with projects ranging from cross-border cooperation to investment in new infrastructure and international partnerships. However, political instability, lack of transparency, and outdated technologies impede progress.

Joint coordination is critical to addressing transboundary water issues. Kazakhstan’s President Kassym-Jomart Tokayev will be the president of the International Fund for Saving the Aral Sea (IFAS) from 2024 to 2026. Astana aims to implement development and scientific programs to “[reduce] the negative impact [of the Aral Sea catastrophe] on the entire region and ensure stability and sustainable development of Central Asia.” Similarly, in 2018, the five Caspian states signed a convention in Aktau, Kazakhstan, to end a long-standing border dispute over the sea. Moreover, the five states signed the Tehran Convention in 2003, a much-needed environmental legal framework to protect the sea. While the territorial dispute was resolved, interstate cooperation to protect the Caspian remains limited and challenges continue.

Kazakhstan

Kazakhstan faces significant water challenges due to its dependence on transboundary water resources: The Aral Sea, Lake Balkhash, the Ural River, and the Caspian Sea are all shared with neighboring countries and fed by rivers originating outside of their boundaries, leading to complex management issues. The Ili River, which feeds Lake Balkhash, originates in China’s Xinjiang region, where ongoing development projects and increased agriculture strain water flows to China’s Central Asian neighbor. The Ural River, shared with Russia, suffers from pollution and declining water levels due to industrial activities including oil refining and chemical production. High zinc concentrations in the Ural make the water unsuitable for consumption once it reaches Kazakhstan.

Kazakhstan is closely monitoring the health of Lake Balkhash. However, long-term solutions depend on cooperation with Beijing, which sees the Ili’s waters as a domestic issue despite the river’s flow into Kazakhstan. Astana is engaging Beijing and Moscow to address transboundary water issues. There is reason to be cautiously optimistic, as a Kazakh-Russian commission has been established to protect the Ural River. At the same time, Beijing and Astana are drafting an agreement to address river waters.

Water challenges in Kazakhstan take various shapes. The country already suffers from droughts, which are exacerbated by climate change. Moreover, shared water bodies mean Astana must engage in multivector diplomacy with neighboring countries to manage domestic water problems. For Kazakhstan, water security involves more than human consumption and agriculture: Trade is a component, as the country relies on the health of the Caspian Sea to transport goods and commodities, such as oil, from Aktau port to Baku.

The government of Kazakhstan has been straightforward about the need to address water challenges. In his September 1, 2023, address to the nation, President Tokayev was blunt about worst-case scenarios and the need to restructure water management. “The issue of water availability and quality remains critical. Given the population growth and the economy by 2040, the water deficit in Kazakhstan may reach 12-15 billion cubic meters,” he explained. The government soon after created the Ministry of Water Resources and Irrigation to improve water management and usage in Kazakhstan. This ministry announced rules for regulating water relations between regions in December 2023, which came into force on August 31, 2024. In mid-2024, the ministry reestablished the National Hydrogeological Service to develop a state policy in underground water management, exploration, and state monitoring. Without a doubt, Astana recognizes water security as a clear and present danger, while agreements with neighboring states and more water-related projects need to occur faster to avoid a catastrophe.

Uzbekistan

Uzbekistan faces severe water shortages. Approximately 80 percent of its water resources originate from neighboring countries. Major rivers like the Syr Darya and Amu Darya, crucial for Uzbekistan’s agriculture and population, have reportedly lost 20 percent of their volume over the past five decades. Uzbekistan’s reliance on Soviet-era water infrastructure further compounds the problem, leading to inadequate water access in rural areas, where villagers often drink from irrigation ditches or travel to other settlements to collect water.

Tashkent’s Aral Sea strategy differs from Kazakhstan’s. Rather than replenishing the sea’s waters, Tashkent aims to improve newly dry territories. For example, the country is planting trees and shrubs along the Akkum ridge and Muynak district to combat wind erosion and stabilize sand dunes. These projects aim to prevent salt and dust from spreading to other regions, improving environmental conditions.

Uzbekistan also is introducing new technologies to address water security. According to Tashkent, around 1.26 million hectares, or 30 percent of irrigated areas, are now utilizing water-saving technologies, including sprinklers and drip irrigation, though up-front and maintenance costs are high. Tashkent is also analyzing several options to improve water management, according to the Uzbek media, including “transferring 50 percent of internal irrigation networks to closed irrigation systems,” increasing the annual capacity of local water-saving technology enterprises, reducing water salinity, and fortifying canals with concrete. Reforestation and environmental projects also can alleviate the environmental damage caused by the Aral Sea’s desiccation.

However, Uzbekistan’s economy depends heavily on the cotton industry, which requires large quantities of water. In 2012, the amount of water consumed to grow Uzbekistan’s cotton was estimated at sixteen billion cubic meters annually. Moreover, 90 percent of water consumed by Uzbek cotton originates upstream, and over 85 percent of arable land is further reliant on upstream-sourced water irrigation. With roughly 25 percent of the country’s GDP dependent on cotton, Uzbekistan is in no hurry to divest itself of its water-hungry cash crop. Attempts to convince Uzbek farmers to switch to fast-ripening, water-efficient, and climate-resilient cotton varieties have made limited impacts.

Uzbekistan is also exploring hydropower to address its growing electricity consumption. Tashkent aims to build a cascade hydroelectric power station along the Naryn River in the Namangan region, a project expected to cost around US$434 million. It remains to be seen how this hydropower plant will affect water flows for human consumption and other projects.

Reliant on water sourced from neighboring countries like Kyrgyzstan and Tajikistan, Uzbekistan is highly vulnerable to regional water policies and usage. Any upstream activities, such as dam construction or increased agricultural water use, directly impact Uzbekistan’s water availability. Moreover, Uzbekistan’s water infrastructure largely dates to the Soviet era. Some rural communities lack functional water pipelines or access to reservoirs. Modern upgrades are either incomplete or malfunctioning. In the village of Armandasht, new pipelines are failing to supply water two years after installation, leaving residents to rely on unsafe alternatives like irrigation ditches and wells. This disparity in water availability contributes to economic and health issues, particularly for impoverished communities.

Despite progress on the Kazakhstani side of the Aral Sea, areas on the Uzbek side are considered irreparably lost. The sea’s continued desiccation results in severe environmental consequences, including salt and dust storms that negatively affect agriculture and human health.

At a 2023 IFAS meeting, President Mirziyoyev said, “The problem of water shortage in Central Asia has become acute and irreversible and will only worsen further.” If the situation in Uzbekistan does not improve, authorities expect the national water shortage to reach 15 percent to 25 percent by 2050, with a desert area expanding to 123 million square meters. Ultimately, Tashkent must make difficult choices regarding its vital but water-intensive cotton industry. Diversifying toward nuts, fruits, and vegetables is advisable, though that would undoubtedly send shockwaves throughout the country’s economy and social order because it would require a major and expensive retraining and readjustment of farming techniques, equipment, and lifestyle, not to mention the search for customers for noncotton goods. For Uzbekistan, water and economic security are inextricably linked.

Kyrgyzstan

Kyrgyzstan has ample water resources but lacks proper infrastructure and effective water-management policies. Despite its rivers, streams, and vast glaciers, the country faces significant challenges in delivering clean water to its population, especially in rural areas. In 2017, UNICEF identified Kyrgyzstan as one of Central Asia’s most vulnerable countries to climate change, which is expected to disproportionately affect the country’s poorest communities. Children will be particularly affected by the deteriorating situation, according to the UN agency.

Rapid population growth, particularly in urban areas like Bishkek, has outpaced the capacity of the water infrastructure, leading to frequent shortages. The city’s population numbers about 1.15 million, but the underlying and largely Soviet-era infrastructure was designed for around 650,000 people. In 2023, Bishkek experienced severe water shortages, first affecting the southern areas and later spreading to other parts of the city. Authorities cited insufficient glacier thaw as one cause, but rapid urbanization and poor urban planning also play a significant role. Bishkek has announced plans to provide a centralized drinking water system for 95 percent of the urban population and two million rural citizens by 2026. The project and promises are not new; a similar program, called Taza Suu, was launched in the early 2000s with financial support from the Asian Development Bank and the World Bank. It resulted in new pipelines and service for many villages, but the project was plagued by “corruption schemes . . . and construction issues, and the equipment supplied failed to meet the requirements.”

Even when water arrives at a residence, it may not be safe for human consumption. “About 33 percent of piped water services throughout the country do not meet sanitary standards,” said Kyrgyzstan’s Department of Disease Prevention and State Sanitary and Epidemiological Surveillance in 2017. Yet conditions may be improving. In 2022, a World Bank delegation visiting Kyrgyzstan noted that access to and the quality of water supply and sanitation services across Kyrgyz rural communities were improving. The World Bank is currently funding a Sustainable Rural Water Supply and Sanitation Development Project, which costs around US$28 million.

In 2023, the European Bank for Reconstruction and Development (EBRD) announced loans to Kyrgyzstan to renovate its water-supply networks, procure operational and maintenance equipment, and introduce household metering in Aidarken, Kadamzhai, Kok-Jangak, and Tash-Komur in the Batken and Jalal-Abad oblasts. Nevertheless, much of the infrastructure dates to the Soviet era, with little modernization having been done. The government is attempting to address this by expanding and upgrading water pipelines and storage reservoirs. However, the country needs short- and long-term projects, financial assistance, and technical expertise to overhaul its water infrastructure, and a recent World Bank report indicates that one-third of the rural population does not have access to clean drinking water.

Kyrgyzstan’s high vulnerability to climate change exacerbates its water challenges. The country relies on glacial melt for water, but inconsistent thawing patterns (due to climate shifts) cause seasonal water shortages. Additionally, more frequent, severe droughts will disproportionately affect lower-income communities.

Tajikistan

Despite being the most water-rich country in Central Asia, Tajikistan’s water future looks grim. The country’s Department of Water and Energy Policy predicts a drastic reduction in water consumption, from 2,520 cubic meters per person per year to just 1,167 cubic meters by the decade’s end. This projected drop is not just a symptom of poor rainfall or climate change (although these are significant factors), but also due to poor policy, outdated and inadequate infrastructure, lack of investment in water supply, and competing interests among different industries, the national government, and the country’s neighbors.

Tajikistan relies heavily on hydropower, which produces around 95 percent of its electricity. The country’s future crown jewel is the Rogun Hydroelectric Dam. The construction project began in 2016 and the dam, once operational, is intended to help Tajikistan become energy independent—though when exactly that will occur is debatable. According to a 2019 projection, the six planned energy generating turbines would be operational by 2026; now, though, the hope is that the third unit will come online sometime in 2025. The project comes with a hefty price tag, estimated at roughly US$6 billion. Once completed, it is expected to become one of the largest hydropower plants in the region, generating 3.6 gigawatts to power the aluminum industry, help meet domestic energy demand, and potentially export electricity to neighboring countries.

Efforts are underway to modernize critical water infrastructure. Tajikistan is working with international partners to address issues related to water quality, groundwater management, and the overall efficiency of water use across different sectors of the economy. The country also struggles with water distribution, quality, and efficiency. Increasing demand from growing urban populations and industrial sectors compounds the challenge. As competition for water resources between economic sectors intensifies, there is growing concern over the impact on groundwater quality. Tajikistan’s water systems are already under strain, and without significant improvements, water contamination could pose severe health and environmental risks shortly.

Tajikistan also faces increasing pressure from neighboring countries over shared water resources. For example, Kyrgyzstan and Uzbekistan share the Syr Darya River with Tajikistan. Moreover, while hydropower provides the lion’s share of the country’s electricity, the sector is vulnerable to water-level fluctuations caused by climate change. More than twenty billion cubic meters of glacial ice, or about 2.5 percent, melted during the last century. A further temperature increase will accelerate glacial melting. The reliance on hydropower could become a double-edged sword if water resources continue declining, affecting energy security and water availability.

Turkmenistan

In stark contrast to realities observed on the ground, Turkmenistan’s government claims the country does not face significant water challenges. The Voluntary National Review of Turkmenistan in 2023 presents an optimistic view of the nation’s water security, boasting that “95 percent of the population has access to clean water” and “99.9 percent uses water services organized in compliance with safety requirements.” However, residents outside of the capital, Ashgabat, disagree. A resident from Turkmenbashi highlighted the neglect of rural areas, noting that the authorities “don’t see anything except the city of Arkadag [Ashgabat],” and described persistent water and heating shortages during the winter of 2023-24. The country’s failure to invest in modernizing infrastructure and its dependence on water-intensive industries like cotton agriculture exacerbate the challenges. Turkmenistan’s rigid authoritarian government limits civil discourse on environmental concerns, slowing progress toward meaningful solutions.

Turkmenistan’s water supply primarily comes from irrigation canals and dated Soviet-era infrastructure. While the central government has focused on providing water to the capital and vital economic hubs while neglecting rural and peripheral regions, water rationing is common, especially during the summer, when residents may only have access to water for a limited time each day.

The United Nations Environment Program (UNEP) is working with Turkmenistan to address its water challenges. In August 2024, Turkmen Foreign Affairs Minister Raşit Meredow held virtual discussions with UNEP’s executive director, Inger Andersen, about establishing a regional center for technologies related to climate change in Ashgabat. This initiative aims to improve water management and mitigate the effects of climate change, including rising temperatures and arid conditions in Turkmenistan. Supported by USAID, Turkmen officials installed water metering systems along the Karakum Canal, which should improve water efficiency in the agricultural sector, which consumes a sizable portion of Turkmenistan’s water resources. (Water meters help farmers measure the amount of water delivered to different crops, maximizing the productivity of said crops, while reducing energy costs and water waste).

The future

The region’s long-term stability hinges on collaborative water management, transparency, and sustainable development initiatives. Without concerted and cooperative action, Central Asia risks further exacerbating interstate tensions, environmental degradation, social inequalities, and economic disruptions caused by water shortages.

The possibility of conflict

Water conflicts are already on Central Asia’s horizon. Between 2021 and 2022, there were violent clashes between Kyrgyzstan and Tajikistan over unmarked borders and land claims. While water was not the direct cause for many of these skirmishes, access to water—an issue for local communities—has intensified militarist political impulses and sharpened local suffering during the conflict. While Bishkek and Dushanbe appear to have resolved tensions for the time being, there is always the possibility of fighting over water to erupt again if conditions do not improve or continue to deteriorate—and dispute-resolution mechanisms are not in place.

Map III (below) shows the relative uses of irrigation in Central Asia, with the density of irrigated land in the Fergana Valley naturally visible. A significant number of farmers have abandoned their crops to focus on keeping fruit trees alive. If another severe drought occurs, protests and violence over water among border communities could escalate into low-intensity conflict. Lack of water could lead to widespread protests at the local level, resulting in government crackdowns.

Additionally, there is concern about the Taliban’s resurgence in Afghanistan. With the exception of Tajikistan, the other four Central Asian governments are engaging the Taliban to secure economic and trade agreements and peace along the borders, potentially leading to the establishment of a North-South corridor via Afghanistan to Pakistan and India. However, the possibility for conflict is still present: In early 2022, Turkmen border guards and Taliban fighters engaged in border clashes.

The controversial 285 kilometer Qosh Tepa canal in northern Afghanistan could foment conflict. The Central Asian states—except Tajikistan—took a “business as usual” approach when the Taliban took control of Afghanistan. However, the significant percentage of water that Qosh Tepa will divert from the Amu-Darya River upstream in Afghanistan will impact tens of thousands of people downstream in Uzbek and Turkmen communities, disrupting their agricultural capabilities and potentially forcing the resettlement of at least a portion of those affected. It will also interfere with Kazakhstan’s attempts to ameliorate the drying of the Aral Sea. While the project is proceeding, the Taliban is engaged in discussions with neighboring Uzbekistan “to address matters related to the construction of the Qosh Tepa Canal.” Meanwhile, even having agreements in place is no guarantee of quiet—Iran and Afghanistan have had a water treaty in place since 1973 concerning water in the Helmand River, yet tensions over inadequate supply resulted in a cross-border clash in May 2023.

The Taliban government has no partner for the large-scale canal project and is proceeding with construction on its own. In November 2023, satellite imagery showed water escaping from what was supposed to be a completed portion of the canal, sparking fears that either miscalculation of the pressure of flowing water had caused a breach or the project had been sabotaged, sending water into the surrounding dry land to be absorbed by the sand for over a month. Kabul claimed that the outflow had been set up deliberately to manage the groundwater level in the area, yet there are ongoing serious concerns that the open-topped canal risks doing more harm and wasting more water in a region where poorly designed and outdated water transport systems are already responsible for the loss of a large proportion of this vital resource.

Climate change

Central Asia is no stranger to natural disasters, but climate change will exacerbate them. The region suffered a massive heatwave and drought during the summer of 2021, significantly damaging farms and animal husbandry. Mudslides also can result from intense rains or heat waves that melt glaciers. Melting means more water flowing downstream, leading to floods and, eventually, the disappearance of the glaciers themselves. Flooding can also endanger the populations living downhill and may spur migration, furthering societal pressure in the region.

The governments and nongovernmental organizations in the region, as well as international climate and water organizations and experts, recently participated in a series of discussions on climate change. For example, in May 2024, the Central Asian Climate Change Conference (CACC-2024) occurred in Almaty, Kazakhstan. A month later, Astana, the Kazakh capital, hosted the Sub-Regional Workshop on Integrated Planning for Climate and Air, organized by the UNEP-convened Climate and Clean Air Coalition (CCAC) and the UN Economic Commission for Europe (UNECE) secretariat. Similarly, the Dushanbe Water Process takes place in the Tajik capital, organized by the United Nations Development Programme (UNDP), in cooperation with the EU and Tajikistan’s Ministry of Energy and Water Resources.

Central Asia is rapidly warming. A study published in Geophysical Research Letters found that “over the past 35 years, temperatures have increased across Central Asia [while] mountain regions have become hotter and wetter—which might have accelerated the retreat of some major glaciers.” The ADB presents similar troubling data: The decrease in glacier surface area in Central Asia over the past fifty to sixty years—due to changing climate conditions—has reached 30 percent. If the situation is not addressed, climate change will have several destructive effects. Economic damage from droughts and floods in Central Asia could reach “1.3 percent of GDP annually, while crop yields are expected to decrease by 30 percent by 2050,” leading to around 5.1 million internal climate migrants by that time.

Salt flats, new dry lands, and energy infrastructure

A challenge for the C5 is what to do with vast territories affected by climate change and other environmental issues. Not only has the Aral Sea dried up but parts of the landscape are contaminated and toxic due to Soviet testing of biological weapons on Vozrozhdeniyia Island, which used to be in the middle of the Aral Sea. Now that the sea has dried up, it is larger and no longer an island. A lack of reporting on the pathogens there means the nature of the danger is unclear.

However, there are possible uses for this land. The dried-up portions of the Aral and Caspian seas and glacier/snow-free territories could be used for agricultural projects, planting trees and greenery, or installing green energy infrastructure. For example, Uzbekistan is planting trees and shrubs along more than eight thousand hectares of the Akkum ridge, Muynak district, and by the Sudachye system of lakes. Creating a forest in the area will reduce wind erosion, consolidate moving dunes, and prevent salt and dust from moving to other regions and populated areas. The new dry lands could be utilized for green energy projects like solar and wind farms. Kazakhstan already operates the large Burnoye solar plants, while Uzbekistan has the Zarafshan wind farm and is constructing the Bash wind farm.

The region’s salt flats, like the Asht Salt Flat, or Asht Namak, in the Fergana Valley (on Tajik territory but close to the border with Uzbekistan), and Shalkarteniz and Sor Tuzbair in Kazakhstan, must also be protected. Protecting Central Asia’s environment from climate change while capitalizing on areas like the new dry lands is a complex, long-term, and expensive task. Regional authorities have highlighted the need to protect their nations’ environments.

During his speech at the UN Climate Change Conference in Dubai at COP28, Kazakhstan’s President Tokayev explained that a new environmental code will facilitate the implementation of green technology, and “there is extraordinary potential for wind and solar power in my country and for green hydrogen.” The objective of the code is to introduce and support the best available techniques (BAT) and regulate activities that have or may have a negative impact on the environment. Since its introduction, government announcements and media reports suggest that Astana is increasingly interested in green technology to address internal energy demand. In early 2024, The Astana Times announced a green hydrogen production project in Mangystau Region.

Opportunities and policy development

Central Asian countries are aware of the water crisis and the need to develop policies and technologies to ameliorate the situation. International partners are engaged in cooperative efforts in hydrogeology, infrastructure buildup, utilities maintenance, and agricultural/irrigation modernization. EU countries, which have an elevated level of development in water management and environmental protection and prioritize climate-related policies, are particularly fit for this role as they seek new areas for engagement and partnerships in the region. Similarly, USAID is the primary US governmental agency engaging Central Asia on environmental issues. There also is an opportunity for greater diversification and participation on the part of other US federal agencies.

Extraregional partners

French entities are engaging with Central Asian nations. In 2023, the French Geological Survey (Bureau de Recherches Géologiques et Minières, or BRGM) signed an agreement on water management with Kazakhstan’s Geology Committee of the Ministry of Industry and Infrastructure Development. In Uzbekistan, the Suez Group of France signed a seven-year contract with the water company Uzsuvtaminot, the Municipality of Tashkent, and the Ministry of Investment and Foreign Trade to expand and improve drinking water access in Tashkent.

Moreover, France partnered with Kazakhstan, Saudi Arabia, and the World Bank in organizing the One Water Summit, held in Riyadh on December 3, 2024. The event was announced by President Emmanuel Macron and Kazakh President Tokayev at the seventy-ninth session of the UN General Assembly in New York (on September 25), and the summit was held on the margins of the sixteenth session of the Conference of the Parties to the UN Convention to Combat Desertification (UNCCD COP16). These meetings serve as an important links between Central Asia and actors with capital and expertise on water management.

As for other European countries, in August 2024, a Kazakhstani delegation traveled to Germany for working meetings that resulted in four agreements on agriculture and water management. The Netherlands is engaging Astana to share knowledge on good practices. And at a 2023 conference in Astana, Slovak water companies presented research results and proposals to address water-related problems, particularly in Kazakhstan, including resource management and safety of water structures.

The EBRD has provided a sovereign loan of US$8.93 million and another US$8.93 million in investment grants to improve the Kyrgyz Republic’s water supply. The Central Asia Water & Energy Program (CAWEP) aims to expand and improve access to drinking water among the C5 nations and Afghanistan. According to the annual 2022-2023 CAWEP report, current projects include improving water resources and environmental conditions along the Aral Sea and adjacent basin areas of Kazakhstan.

USAID is active in Central Asia. In April 2024, USAID launched a new water supply system in Tajikistan’s Rokhati village, Rudaki District, to provide drinking water to more than 3,000 people. Over the period of October 2020 to September 2025, USAID is investing US$21.5 million to strengthen regional capacity to manage shared water resources and mitigate environmental risks in the Syr Darya and Amu Darya river basins. These initiatives include organizing online lectures, sponsoring academic training, establishing national intersectoral committees and a regional coordination committee, and organizing a study tour of the Syr Darya River basin for water specialists and journalists to raise awareness.

Turkmenistan may turn to Israel for assistance: During an April 2023 visit by Foreign Minister Eli Cohen to open the Israeli embassy in Ashgabat, he met with President Serdar Berdymukhamedov to share experiences in agriculture and water-saving techniques. Meanwhile, Korea Water Resources Corp. (K-Water), a state-run water management agency, has signed agreements with Kyrgyzstan to foster cooperation in the water sector and climate crisis. Finally, Azerbaijan (which borders the Caspian and Baku) could engage Central Asia via international organizations like the Organization of Turkic States to develop water projects to protect the Caspian Sea and capitalize on its close relationship with Kazakhstan.

Working together

For years, Central Asia has been moving toward greater regional integration for economic, cultural, and geopolitical reasons. Geopolitically, regional integration enables interstate cooperation in the face of the ever-present influence of neighboring actors like Russia and China. Initiatives to mitigate water insecurity provide an opportunity to strengthen regional cohesion in a concrete sphere of shared interest. Working together to address common water-related challenges can serve as a confidence-building mechanism to deepen C5 integration.

When the C5 presidents met in Astana in early August 2024 to discuss water issues, President Tokayev emphasized that it is “necessary to develop a new consolidated water policy, based on equal and fair use of water and strict fulfillment of obligations.” Kazakhstan, known for supporting regional cooperation and integration via its multivector foreign policy, is engaging partners. In 2023, Astana and Bishkek approved the Strategic Action Program for the Chu and Talas river basins to protect the combined three million residents of the area. The 2022–2030 program, drafted by UNDP and UNECE, addresses water quality, volumes, and ecosystem conservation.

The third International Conference on the Decade of Action, “Water for Sustainable Development, 2018–2028,” took place in June 2024 in Dushanbe, part of the Dushanbe Water Process. Tatyana Bokova, head of Tajikistan’s Revenue Administration Department, said: “Over decades of cooperation with neighboring countries, various mechanisms for the integrated management of shared waters have been introduced. Our oldest intergovernmental agreement turns sixty this year, and it, like others, continues to meet modern needs.” Similarly, the fourth meeting of the Joint Uzbek-Turkmen Intergovernmental Commission on Water Management met in Turkmenabat on April 30, 2024. The parties agreed to expedite the registration of Uzbek water-management facilities in Turkmenistan and to implement a project to build an antifiltration wall at the Sultan Sanjar dam of the Tuyamuyun hydroelectric complex. The C5 governments are discussing outstanding water-related issues; however, the combined effects of climate change, population growth, water scarcity, and environmental degradation are becoming more pressing. A broad array of effective actions is urgently needed.

Policy recommendations

The C5 forum has sought to increase regional cooperation and connectivity. Initiatives like the Middle Corridor and regional blocs promote cooperation and dialogue, but the C5 does not act as a unified bloc. Kazakhstan relies on its multivector foreign policy, and Uzbekistan is opening to the world. Meanwhile, Kyrgyzstan and Tajikistan have deteriorating relations with the West; Bishkek tends to cooperate more closely with Russia and China. Meanwhile, Turkmenistan maintains a relatively isolationist foreign policy. In other words, the C5 governments have different foreign policies, objectives, and partners.

The C5 format to engage the rest of the world has brought mixed results, though summits with the United States, Europe, and the Gulf states have resulted in positive announcements, investment, and trade projects. Yet Central Asia must increase intraregional connectivity and confidence-building mechanisms to deepen C5 integration to address regional problems in a holistic and unified manner. Challenges like water security do not recognize borders, and no single government can successfully address them without working together with neighbors. As this report has noted, distrust and border incidents, including over access to water, continue to prevent a more cohesive regional bloc from engaging the broader world. A joint, high-level C5 water policy body could improve water management, prepare legislation and regulation, and identify and work with investment partners both in the international assistance space and the private sector. Now that the United States and Central Asia have held a presidential-level C5+1 (regional diplomatic platform) in 2023 and a B5+1 in 2024, a blue C5+1 focused on water issues could prove very fruitful.

Regional cooperation

• Strengthen the Central Asian water agencies. Regional agencies exist, tasked with managing water bodies, namely IFAS and the Interstate Commission for Water Coordination (ICWC). Regional bodies also have subagencies devoted to environmental affairs. For example, the Economic Cooperation Organization (ECO) has a Directorate for Energy, Minerals, and Environment, while one of the objectives of the Organization of Turkic States (OTS) is cooperation among the ministers of environment and ecology. There also are regular high-level conferences focused on water, such as the Dushanbe Water Process. Moreover, there is a legal environmental framework: the Tehran Convention, which entered into force in 2006, tasked with environmental protection of the Caspian Sea. However, ongoing water challenges, including the troubling Caspian situation, demonstrate that the existing environmental agencies and legal frameworks must be revised.
  • Restructure the ICWC (established in 1992) or create a new Central Asia Water Council/Secretariat. A challenge: deciding how much power a restructured ICWC or new agency would have in executing its mandate without raising concerns about national sovereignty. Water is a critical resource that demands greater cooperation and integration. A state-of-the-science entity exclusively focused on this resource is clearly needed but would require buy-in from all parties in the region to be effective.
  • Address the deteriorating Soviet-era water transport network throughout the region as a starting point, with progress in this critical area providing confidence-building and establishing credibility (as noted earlier in this report), so that more sensitive issues can begin to be discussed and acted upon. An ICWC with a broader mandate (and resources) or a new Central Asian water agency could then help regional governments search for joint solutions to sensitive regional topics. Because stopping hydropower projects in Tajikistan would protect Kazakhstani and Uzbekistani agricultural industries but prolong Tajikistan’s energy woes, for example, it would be important to identify and apply mutually agreed upon and accepted measures.
• Heighten the prominence of Tajikistan’s Dushanbe Water Process. Organized by a Central Asian state, this forum specifically focuses on water issues. The conference’s name and international recognition could grow if linked to preparations and negotiations for future One Water Summits, for example.

International engagement and partnerships

International activities in Central Asian water management, infrastructure development, and investment are important sources of funding and expertise; proper coordination can avoid or limit wasteful redundancies. Therefore, a strengthened regional agency, as suggested above, is crucial. Specifically, the Central Asian countries should pursue the following formats:

• Green 5+1: To build on the US-C5 presidential-level meeting and platforms, a ministerial environmental summit between Central Asian and US environmental officials should occur. This summit could have the additional positive outcome of keeping the New York Declaration alive (signed during the historical presidential 5+1 summit in 2023 between Biden and the Central Asian leaders). A Green 5+1 could occur, for example, at the 2025 Astana International Forum: Proper preparation would be needed, and the aim could be announcing specific initiatives with earmarked funding, which would put its earlier publicized general good intentions into action.
• Hold a green EU + Central Asia head-of-state summit: Europe engages with Central Asia on both country-to-country and bloc-to-region levels: EU-Central Asia summits, EU-Central Asia ministerial meetings, high-level political and security dialogues, and other high-level meetings. In September 2023, there was a C5+Germany summit in Berlin between the C5 presidents and the German chancellor. These meetings often address water. At the 2023 EU-Central Asia Ministerial Meeting in Luxembourg, participants highlighted the need to address the nexus of water and climate change “in a strong and holistic manner.” In June 2024, Dushanbe hosted the High-level Central Asian Forum on “Water and Climate Change” organized by UNDP, with support from Brussels. The next step should be a high-level summit, ideally at the presidential/head of state level, between the EU and Central Asia on environmental challenges, especially water. The EU is interested in expanding cooperation with the region beyond the usual topics of energy, transportation, and civil society—and water is a perfect subject matter. Paris, The Hague, and Astana could spearhead this initiative in collaboration with the UN.
• Hold Green East Asia (i.e., Japan, South Korea) + Central Asia summits: The first C5+Japan meeting at the presidential/prime minister level occurred in August 2024. Meanwhile, South Korea’s then-President Yoon Suk Yeol toured Kazakhstan, Turkmenistan, and Uzbekistan in June 2024, with the first presidential summit scheduled for 2025. To increase engagement, a Green C5 + East Asia summit at the ministerial level could occur, leading to a presidential C5-East Asia Green summit.
• Further engage the international donor community: Engaging with the international donor community, like the World Bank and EBRD, is nothing new for Central Asian governments looking to attract investment and aid agreements. While Kazakhstan and Uzbekistan are quite active, the situation is more challenging for the three other countries that are less open to deeper relations with the West. Nevertheless, more donor coordination and participation are advisable to develop regional water conservation, efficient use strategies, and country-specific projects—and to avoid redundancies, incorporate lessons learned, and move away from revisiting project ideas that have not worked before. A donor coordination policy conference focusing on water and climate policy, conducted in the region, and leading to the establishment of a proposed coordinating authority, could go a long way to improve water-management and climate-response strategies.

Confidence building

It is vital that the Central Asian states engage both within the region and with upstream and Caspian littoral countries in high-level international discussions of water issues, raising the profile of the region and communicating the critical nature of the problem. Two conferences provide an opportunity for Central Asia and its neighbors to act.

• COP29: Azerbaijan hosted the 2024 United Nations Climate Change Conference in November. Azerbaijan had openly stated its hopes that COP29 would avoid some of the criticism of previous COPs by acting as an accelerator for smaller regional initiatives and creating workable frameworks for developing countries to act pragmatically on environmental issues. These foci perfectly complement Central Asian challenges. Central Asian calculations should carefully incorporate the COP29 outlook, especially given the importance of Azerbaijan’s cooperation on many issues.
• Regional climate summit: Kazakhstan will host a Central Asian environment summit in 2026. Water security in Central Asia must be a critical item on the agenda. Astana should rally support for effective initiatives and solutions. Summit workshops can identify high-priority projects for cooperative execution. COP29 provides a basis for this action. It is highly desirable that the suggested Central Asia Water Council or agency be established either prior to or at this event.

Technology, accountability and jobs

• Do what works: In recent years, national and regional governments and utilities around the world have implemented technologies like water-measuring systems, drip irrigation, recycling of gray water, and pump stations. Each of these technologies should be field tested in the region and utilized where appropriate.
• Encourage and incorporate new technologies: Water-saving technologies are being developed in several countries including Japan. Agencies like the Astana International Financial Centre (which has a Green Finance Center), USAID, the Asian Development Bank (ADB), or EBRD can create special funds for innovative water projects and provide grants to scientists (mainly from the C5) who are developing new technologies to address water security.
• Upgrade regional water infrastructure such as canals. To eliminate seepage, Soviet-era canal bottoms must be paved and insulated until they are watertight. Moreover, the tops of the canals could be covered with solar panels, which would provide energy to pump and measuring stations along the canal while reducing evaporation. Kazakhstan’s lengthy Irtysh–Karaganda Canal, the Arys-Turkistan Canal, and/or the Kyzylkum Canal could be testing grounds for solar panels. These initiatives are especially promising since they have already attracted the interest of private investors.
• Ensure transparency and accountability: As more money pours into water infrastructure, there is the increasing likelihood of misappropriation, theft, and corrupt practices. Regional governments must consider hiring international accountability agencies that can audit projects to ensure funds are appropriately spent. The citizenry’s trust in their leaders will grow if authorities take concrete steps toward transparency and efficient spending; and the confidence of international donors and partners would be strengthened, which is key to paving the way for continued future cooperation.
• Create jobs and prioritize training: New projects should contribute to job creation in countries with high unemployment. Prioritizing job training in the water sector will require collaboration between the water and professional education authorities. In this context, it is worth noting the opening of the Kazakh University of Water Management and Land Reclamation in September 2024. Water-related projects will create jobs, as occurred through Uzbekistan’s South Karakalpakstan Water Resources Management Improvement Project.
• Involve foreign donors and obtain end-user feedback: Government officials must engage with the general population to discuss water security and what citizens need. Kazakhstan’s “Listening State” initiative, for example, could have a specific water component. Other governments can follow Astana’s models and have town halls and meetings between community leaders and senior policymakers about what water-related challenges they face and what the residents of affected communities propose. Ideas should not only come from international agencies or a country’s senior leadership; local populations can also provide valid and helpful recommendations regarding how to manage water challenges. Engaging in listening initiatives will have the added benefit of fostering stakeholder buy-in.

Conclusion

Water shortage is a limiting factor for Central Asia’s regional development. To improve the current situation, the five countries of the region need to accelerate the renovation and upgrading of the regional water infrastructure, field test and incorporate new water-saving technologies, and attract international partners and foreign investment in area water infrastructure at a significantly higher rate. Coordination of these activities on the regional level is paramount.

A previous version of this report misstated the year Kazakhstan will host a Central Asian environment summit. It will be in 2026.

Ariel Cohen, LLB, PhD, is an internationally renowned expert on energy policy, Russia/Eurasia, Eastern and Central Europe, and the Middle East. He is a recognized authority on political and security risk man-agement; economic development and investment policy; the rule of law; crime and corruption; market-entry strategies; and other aspects of state/business relations.

Cohen is a senior fellow at the International Tax and Investment Center, a nonprofit research and edu-cation organization in Washington, and director of its Energy, Growth and Security Program. He also serves as a nonresident senior fellow at the Atlantic Council.

He has authored six books and monographs, has been involved in journalism since 1981, and has pub-lished over 900 articles in professional and popular media. A columnist for Forbes, he regularly appears on CNN, NBC, CBS, FOX, C-SPAN, BBC-TV, Al Jazeera, and all Russian and Ukrainian national TV networks.

He also writes for Newsweek, The National Interest, Huffington Post, the Atlantic Council’s New Atlanticist blog, and UPI, and has written numerous guest columns for The New York Times, Christian Science Moni-tor, The Washington Post, The Wall Street Journal, The Washington Times, and National Review Online. He is widely published in Europe and the Middle East.

Until July 2014, Cohen was a senior research fellow at the Heritage Foundation in Washington. Dr. Cohen conducts White House briefings and regularly lectures at the request of US government institutions including the US Department of State, the Joint Chiefs of Staff, the Training and Doctrine and Special Forces Commands of the US Armed Forces, the Central Intelligence Agency, and the Defense Intelligence Agency. He frequently testifies before committees of the US Congress—including the Senate and House Foreign Relations Committees, the House Armed Services Committee, and the House Judiciary Commit-tee—and the Helsinki Commission. He also directs high-level conferences on a wide array of topics.

Cohen is a member of the Council on Foreign Relations, the American Bar Association, and the Amer-ican Council on Germany.

Wesley Alexander Hill is the assistant director and lead analyst for the Energy, Growth, and Security Program at the International Tax and Investment Center. The program focuses on critical natural resources, energy transformations, infrastructure, and geopolitics in Eurasia while exploring opportunities for investment and policymaking.

Hill is an accomplished foreign policy professional with expertise in energy policy, security studies, grand strategy, Chinese politics, Sino-American relations, Sino-African relations, and Sino-Eurasian relations. Hill has been featured in Al Jazeera, The Hill, Newsweek, Voice of America, The National Interest, and many other outlets. Hill is also a contributor to Forbes.

Earlier in his career, Hill was a political science lecturer and researcher at Tulane University. Hill is a fellow of the National Bureau of Asian Research, having conducted research at Beijing’s Tsinghua University and Taipei’s National Normal University. Hill began his career conducting foreign policy research and analysis in the constituent services office of Congresswoman Dina Titus.

Hill graduated from Tulane University.

Wilder Alejandro Sánchez is an analyst who focuses on geopolitical, trade, and defense and security issues across the Western Hemisphere, Eastern Europe, and Central Asia. He is president of Second Floor Strategies, a consulting firm based in Washington, DC.

His analyses have appeared in numerous refereed journals, including the SAIS Review of International Affairs, Small Wars and Insurgencies, Defence Studies, Polar Journal, the Journal of Slavic Military Studies, European Security, Studies in Conflict and Terrorism, and Perspectivas. He has published book chapters on Bolivia’s foreign policy, separatism in Moldova, and economic diversification in Kazakhstan. His essays and commentaries appear in The Diplomat, NE Global, Geopolitical Monitor, World Politics Review, e-International Relations, among others, and have been published by the Center for International Maritime Security.

Sánchez holds a master’s degree in international peace and conflict resolution from American University’s School of International Service. He has attended the Institute of World Politics, Johns Hopkins University’s School of Advanced International Studies, and studied in Austria, Belgium, and France. He also studied at the National Defense University’s William J. Perry Center (formerly the Center for Hemispheric Defense Studies) in Washington.

The Eurasia Center’s mission is to promote policies that strengthen stability, democratic values, and prosperity in Eurasia, from Eastern Europe in the West to the Caucasus, Russia, and Central Asia in the East.

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Historically, Egypt’s exports have been dominated by petroleum products, cotton, textiles, and chemicals. However, as the global energy landscape evolves, Egypt stands on the brink of transformation. The country is on the cusp of harnessing its renewable energy potential to meet domestic demand, reduce its reliance on fossil fuels, and emerge as a leader in clean energy exports.

For Egypt to achieve this, however, it must first address critical internal challenges, such as its dependence on natural gas for electricity generation and its underdeveloped renewable energy infrastructure. Achieving energy self-sufficiency is a necessary precursor to realizing the country’s green energy export ambitions.

Tapping into endless sunshine

Egypt is endowed with abundant sunshine. It boasts some of the highest solar irradiance levels in the world, ranging from 2,000 to 3,200 kilowatt hours (kWh) per square meter annually. With more than 3,500 hours of sunshine per year and ample open space, regions such as the Western Desert and Upper Egypt hold vast, untapped potential for solar energy development.

Several projects already in the works highlight this potential. The Benban Solar Park, one of the world’s largest solar installations, currently has a capacity of 1.8 gigawatts (GW), with plans for significant expansion. Upcoming developments include AMEA Power’s additional 2 GW project with 900 megawatt hours (mWh) of battery storage, and the Masdar/Hassan Allam Utilities/Infinity consortium’s planned 300 MW expansion at Benban alongside a 900 MW project at Dakhla Oasis (1.2 GW in total). Elsewhere, Abydos Kom Ombo Solar PV Park will host a 500 MW facility, and the Masdar consortium signed another significant deal with over 6 GW of new solar capacity, 4 GW of new solar manufacturing capacity, and 2 GW of new battery manufacturing capacity.

Harnessing wind power in the Gulf of Suez

Wind energy is another cornerstone of Egypt’s renewable energy strategy. The Gulf of Suez and the Nile Valley offer high wind speeds, averaging 8–10 meters per second. Vision 2030, a strategy launched by the Egyptian government nine years ago, targets 14 GW of wind capacity by the close of this decade, with several large-scale projects already underway.

Notable developments include AMEA’s 5 GW wind farm in the Gulf of Suez, expected to be operational by early 2026, Hassan Allam/ACWA Power’s 1.1 GW wind farm, and Orascom Construction Consortium’s 650 MW project at Ras Ghareb. Additionally, the Masdar consortium, in partnership with Infinity Power and Hassan Allam Utilities, is developing a 10 GW onshore wind farm, which will rank among the largest globally. The project is projected to reduce carbon emissions by 23.8 million tons annually, accounting for approximately 9 percent of Egypt’s total current emissions. Other smaller but significant initiatives include Alcazar’s 2 GW wind farm and Taqa Arabia/Voltalia’s combined wind and solar facilities (1 GW and 2.1 GW, respectively).

The promise—and dilemma—of green hydrogen 

Egypt is positioning itself as a leader in green hydrogen production, which is based on renewable resources including solar and wind. According to the International Energy Agency, Egypt could produce green hydrogen for under two dollars per kilogram by 2030. The Suez Canal Economic Zone has been identified as a hub for green hydrogen development, with Siemens and Scatec working on a facility capable of producing one million tons annually by 2035.

However, green hydrogen presents a dilemma. Diverting renewable energy to hydrogen production reduces the energy available for the domestic grid, where natural gas remains dominant. To make green hydrogen a viable export commodity, Egypt must first stabilize its domestic energy supply and reduce its reliance on fossil fuels for electricity generation.

The potential roadblocks ahead

Egypt has significant renewable energy potential, but its true impact lies in effective implementation. The country’s ability to harness this potential will be key to achieving its sustainability goals and driving long-term energy transformation. Currently, Egypt’s energy ambitions face a range of structural and economic challenges that hinder its progress toward becoming a clean energy leader.

One major obstacle lies in the country’s electrical grid, which is currently incapable of integrating large-scale renewable energy projects. Despite ongoing investments, present renewable capacity has stagnated at under 12 percent of Egypt’s total 60 GW capacity, emphasizing the urgent need for grid upgrades and energy storage systems to support future expansion.

Additionally, regulatory barriers continue to stifle progress. The fragmented oversight of the energy sector, coupled with protracted permitting processes and systemic inefficiencies, discourages investments and delays project timelines. 

Financial constraints further compound these issues. With high public debt and limited fiscal space, funding renewable energy projects is difficult. While frameworks established in 2017 by the Green Climate Fund and the European Bank for Reconstruction and Development aim to attract private capital, financial roadblocks persist.

Most pressing, however, is that Egypt’s energy mix is still overwhelmingly dependent on fossil fuels, with approximately 80 percent of electricity generated from natural gas and oil. This reliance exposes the country to the risks of price volatility and supply disruptions, and it also undermines efforts to transition toward sustainable energy. Furthermore, dependence on gas for the domestic grid undermines Egypt’s ability to maximize liquefied natural gas (LNG) export earnings while tackling domestic challenges, such as summer blackouts and increasing gas imports due to declining production at the offshore Zohr field.  

Finally, fuel subsidies from the Egyptian government—estimated at seven billion dollars annually—distort energy markets and make renewables less competitive compared to fossil fuels.

Addressing these interconnected challenges is critical for Egypt to unlock its significant renewable energy potential and solidify its position as a global clean energy leader.

A balanced path to global leadership

Egypt stands on the verge of a renewable energy revolution, uniquely positioned to lead in clean energy generation and, eventually, exports. Its abundant solar irradiance, strong wind corridors, and significant potential for cost-effective green hydrogen production give the country a competitive edge in the global renewable energy landscape.

This potential is reflected in Egypt’s Vision 2030, which targets 42 percent of electricity generation from renewables by 2030. The Egyptian government has said that it wants renewable energy to account for 60 percent of the energy mix, including 40 billion dollars’ worth of green hydrogen investments. Through its Nexus of Water, Food, and Energy program, the government also aims to add 10 GW of renewable capacity by the end of this year with an investment of ten billion dollars.

These goals are ambitious, to say the least. To achieve its aims, Egypt must first secure energy self-sufficiency via rapid growth in renewable energy generation. Directing most or all renewable production to the domestic grid to replace natural gas gradually is an important first step. Maximizing LNG exports while transitioning renewables into the energy mix could generate the foreign exchange earnings needed to fund infrastructure development for renewables and other projects.

With smart, forward-looking policies and strategic investments from the Egyptian government, combined with robust international partnerships, Egypt can become a global clean energy hub. By harnessing its vast renewable resources, it can not only light up its own future but also contribute to powering the world—both literally and figuratively.

Jonathan Cohen is the former US ambassador to Egypt and the United Nations.

Racha Helwa is the director of the empowerME Initiative at the Atlantic Council’s Rafik Hariri Center for the Middle East.

The post The green gold rush: Why renewable energy is Egypt’s next big opportunity appeared first on Atlantic Council.

While trade barriers will likely restrain BYD’s access to the US market—at least in the short term—the company’s presence in Mexico isn’t about the United States. It reflects a broader ambition to use EVs to embed the company within Mexico’s critical infrastructure.

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Without a sure export market in the United States, BYD’s ambitions in Mexico could challenge the country’s underdeveloped EV infrastructure. BYD plans to expand auto sales sixfold in the country—but with fewer than 3,000 public charging stations, Mexico needs to invest $1.73 billion annually in its charging infrastructure over the next six years to keep up with demand.

Chinese firms, with their experience building renewable energy infrastructure, are filling this gap—and exploiting an opportunity to expand into Mexico’s critical infrastructure. BYD and partner companies are quickly deploying chargers to support Chinese EV ownership in Mexico. Vemo, a Mexican cleantech company, is actively working with the company to double the number of BYD-compatible chargers in Mexico to 1000 in 2025.

Moreover, Mexico’s grid already faces an energy deficit and will struggle to keep up with rising power demand from EVs. In November 2020, China’s State Power Investment Corporation (SPIC) acquired Mexican renewable energy company, Zuma Energia—now the second-largest private renewable energy producer in Mexico—which is involved in fast-charging facilities, storage, and solar panels. As of September 2024, SPIC reported investments of more than $1 billion in Mexico and expressed its intention to continue expansion in the country. 

An opportunity for Mexico

Mexico has much to gain from securing a piece of the EV market. New manufacturing facilities could create high-paying jobs, expand one of Mexico’s main export industries, and attract new investments. Jorge Vallejo, BYD’s general director in Mexico, stated that the new EV plant will create around 10,000 new jobs in Mexico.

Currently, EVs remain out of reach for many consumers. In Mexico, the cheapest Tesla model costs a prohibitive $40,000. However, localizing production could lower prices by reducing transport costs and bypassing tariffs.

Other automakers in Mexico are already struggling to compete with BYD. The Song model, BYD’s $30,000 plug-in sport utility vehicle, is edging out rivals. A local factory threatens to slash prices even lower.

EVs are just the first step

BYD is a risky business partner because of its ability to rapidly integrate itself within a country’s energy system, quickly replacing competitors in not only the EV market, but the larger cleantech industry.

BYD’s goal in Mexico is not just to sell electric vehicles. Similar to how the company has operated in Brazil, first come the EVs—then, BYD provides the manufacturing logistic software, charging systems, storage, and generation needed for the EV ecosystem to operate.

BYD is not just an auto company, it’s a software company, with its own chip-making subsidiary and artificial intelligence (AI) program. The company produces batteries, trucks, skyrails, energy storage systems, digital logistic management software, communication equipment, and 5G and AI technology. BYD uses this expertise to vertically integrate itself into a country’s energy system, allowing it to dominate large parts of the green economy.

In Brazil, where Chinese brands have a 9 percent share of new car sales, BYD builds electric buses, operates solar farms, supplies trains, partners with lithium miners, and manufactures consumer EVs. For BYD, EV production is a beachhead for gaining access to broader energy infrastructure, creating dependency on Chinese technology and investment to support the very industries Chinese companies help establish.

In Mexico, China’s footprint in the energy system is growing. In 2023 alone, Chinese companies announced over $12.6 billion in infrastructure projects in Mexico, focusing on EVs, mining, transit, container ports, and telecommunications. China-based miner Ganfeng has also been involved in a years-long dispute with Mexico over the rights to mine lithium in the Sonora desert.

The party’s favors

BYD’s rise in Mexico comes at a time when Chinese companies are under scrutiny for unfair trade practices, supply chain meddling, and security concerns, which have prompted several Mexican states to dial back tax and resource incentives for BYD.

But this means little for a company that is essentially at the service of the Chinese Communist Party (CCP). Since the late 1980s, China’s Go Out policy has encouraged investment abroad to obtain domestically scarce strategic resources. By acting as a key player in the CCP’s economic efforts, BYD gains unfair advantages in an increasingly competitive global automobile market. High subsidies, strong domestic policy support, and access to military intelligence that could guide transnational business decisions give BYD the competitive edge needed to make it one of the top-selling automakers in the world.

BYD’s ties to the CCP run deep: it has supported China’s military-civil fusion strategy, integrating defense and civilian research to bolster national objectives. In 2019, the company received a prestigious state award for contributions to military technology and has developed at least three military-civil fusion enterprise zones focused on research and development in the defense industry, as directed by the military.

BYD’s leadership maintains an extensive interpersonal network—and even a revolving door—with CCP leadership. BYD founder Wang Chuanfu has held a number of CCP posts, including as a delegate to the People’s Congress of Shenzhen from 2000–2010.

Perhaps uncoincidentally, BYD is also one of China’s most heavily subsidized companies. In 2022, BYD received $2.1 billion in direct subsidies from the Chinese government, significantly higher than other domestic manufacturers. These subsidies help BYD’s expansion efforts, especially as countries concerned with Chinese influence impose tariffs on Chinese EVs.

BYD did not become the world’s largest EV manufacturer by mistake. The CCP has called on BYD to “go out” and conquer foreign markets, and it has supported the company’s efforts through military collaboration, funding, and heavy subsidies. This intense collaboration has made it difficult to differentiate BYD’s corporate strategies from government orders.

A larger prize at stake

Through its vertically integrated approach—from electric vehicles to renewable energy infrastructure—BYD not only captures market share, but also secures lasting influence over the systems driving Mexico’s clean energy transition—to the geostrategic benefit of Beijing.

China’s expansion into Mexico’s EV market, led by BYD, is more than just a response to rising local demand for affordable electric vehicles. It is part of a wider strategy to embed Chinese influence in Mexico’s broader energy and infrastructure systems—and signals a much deeper geopolitical play.

Mexico’s demand for EVs is quickly growing—and BYD’s potential to dominate the market is undeniable. The rapid vertical integration of Chinese firms into sectors needed to support EV adoption can leave Mexico increasingly dependent on China for critical energy and industrial systems.

As Mexico looks to capitalize on the EV boom, policymakers must weigh the long-term trade-offs of Chinese partnerships. While BYD promises immediate economic benefits, the country risks ceding control over strategic assets and becoming overly reliant on Chinese technology and investment.

For Mexico to achieve sustainable, independent growth in cleantech, it must balance foreign collaboration with efforts to strengthen its own domestic capacity and regulatory oversight.

Haley Nelson is assistant director at the Atlantic Council Global Energy Center.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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Haley Nelson

Assistant Director, European Energy Security

Global Energy Center

Central Europe Energy & Environment

EnergySource Jan 22, 2025

China’s lithium-ion battery exports: Why are US prices so low?

By Joseph Webster

Export prices for Chinese batteries entering the US are lower than for any other market, suggesting that China may be engaging in anti-competitive behavior. As batteries grow in importance for commercial and military applications, the US should increase tariffs on Chinese battery imports to bolster US and allied manufacturing capabilities.

China Energy & Environment

EnergySource Jun 18, 2024

US-Mexico energy cooperation is vital to enable nearshoring

By William Tobin

As the United States seeks to nearshore supply chains, Mexico’s energy sector presents a valuable opportunity for collaboration. By easing regulations on the private sector, Mexico can facilitate US energy investment without impeding its own vision for growth.

Energy & Environment Energy Markets & Governance

EnergySource Jun 4, 2024

Brazil is buying lots of Chinese EVs. Will that continue?

By William Tobin

Brazilian imports of Chinese battery electric vehicles (BEVs) surged in 2023 as Chinese automakers sought—and continue to seek— global markets for their BEV surpluses. However, increasing protectionism in Brazil may force China to find new welcoming markets in other Latin American and Asian countries.

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The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

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The post What China’s BYD really wants from EV investments in Mexico appeared first on Atlantic Council.

But the two countries still seem trapped in regional and bilateral geopolitical dilemmas, some of which have little resonance today. The typology of disputes in the region is rich: from ethnonationalist, entrenched ones (such as the Cyprus problem, the Arab-Israeli conflict, and indeed Greek-Turkish issues), to asymmetrical ones (e.g. migration and terrorism), to potential ones (for instance energy-related), to human-security ones (such as water shortages, wildfires, rule-of-law shortcomings, and gender challenges). Every day that passes with problems unsolved adds new layers to existing idisputes, making the mix exceedingly difficult to tackle.

Turkey and Greece’s default mode until today has been one of postponement, waiting for a comprehensive solution of bilateral disputes in the hope that after such a solution, all other matters of disagreement would somehow be settled. If Turkey and Greece stick to this mode, that may never happen, and opportunities will continue to be missed—and calamities will remain difficult to avoid. Some skeptics argue that it may be impossible to solve the bilateral disputes as they have become near existential, going beyond national interest and involving the fundamental notions of justice, national pride, and identity.

Turkey and Greece should realize that many of their problems lie in the past, but any solutions lie in the future and in their synergies. Instead of resorting to inaction in the hopes of some future conflict resolution, they should actively seize opportunities and deal immediately with problems that, while the subject of disagreement, are not such long-standing disputes. Doing so would create a much-needed cooperation culture, and Turkey and Greece would solve these matters irrespective of whether a comprehensive solution for long-standing disputes is reached. This requires vision, pragmatism, and political resolve.

It is doable and it has been tried before. The two counties have initiated several connectivity mechanisms. They were even able to establish an effective rapprochement between 1999 and 2010. That period was characterized by flourishing bilateral trade and great progress on less political matters. Greece and Turkey also have a tradition of offering mutual assistance in natural disasters, such as wildfires and earthquakes. At the same time, various mechanisms for cooperation and crisis management also exist. They include the High-Level Cooperation Council, a permanent Confidence Building Measures Council, an exploratory talks committee, and a business council. Additionally, the countries have established electrical interconnectivity and have now even reached a point of modest electricity trading between them. Furthermore, the two countries have recently supported each other regarding their memberships in or leadership positions at international organizations including the UN Security Council, Organization for Security and Co-operation in Europe (OSCE), and International Maritime Organization. Finally, there is an ongoing “positive agenda” initiative, headed by the two deputy foreign ministers, pursuing initiatives of common interest and rapprochement.   

All these show that, notwithstanding rooted issues, there is a way forward for cooperation. Turkey and Greece can set up effective parallel efforts if they embrace realism, exercise political courage, and acknowledge the urgency of tackling current or foreseen challenges.

The two countries are united by the challenges they face regarding broader problems and by mutual advantages they share with respect to working together on the opportunities available to them. The way forward, therefore, lies in cooperation.

The field of energy, and in particular renewable energy, offers Turkey and Greece an area of cooperation that can unlock important gains for both, pave the way to cooperation in other fields, and promote even broader regional cooperation and stability. In the energy sector, Turkey and Greece can set up platforms for cooperation that lead to interconnectivity and through it to interdependence, eventually to normalcy, and ultimately peace. Such cooperation could revolve around large-scale infrastructure projects to improve access to the EU energy market, natural gas distribution, energy efficiency and conservation projects, and much more. If Turkey and Greece committed to burden sharing or gathering together their competencies, they could explore or exploit resources that can only—or at least optimally—be developed through collaboration. This is particularly true of renewable energy, such as wind power. Indeed, one of the merits of some renewable energy sources is that, unlike the underground resources that become fossil fuels, states largely do not quarrel over the rights to such commodities (e.g. wind and sunlight). It is a major value add that these renewable energy sources can be used in a collaborative fashion if, when, and for as long as the states involved wish to do so. This is particularly useful in the case of states experiencing animosity in their bilateral relations.

Such cooperation would have several advantages for both countries, their populations, and the broader region. Cooperation on energy specifically would provide the immediately concerned communities, such as the coastal and insular ones, with much-needed energy relief and security, especially when demand is high, such as during the peak tourist season in the summer. Regional energy prospects, as well as international relations, would also greatly benefit. Energy cooperation between littoral states, such as Greece and Turkey, would lead to greater energy security, improved interconnectivity, reduced geopolitical and security risk (driving down costs for energy and investment projects), and the opening of additional common funding opportunities, such as European Union (EU) support. This energy cooperation could form part of a useful and much-needed broader discussion on climate convergences, EU-Turkey relations as connected economies, and more; after all, energy is a matter of not only economics but also hard security, human security, human rights, and democracy.

Eastern Mediterranean energy may not be competitive internationally or in a position to meaningfully contribute to wider European energy security, but it is and is likely to remain important for the region. Thus, a “region for the region” approach might be the most pragmatic one for Greece and Turkey. They can help craft a sustainable vision for a broader energy mix at a regional scale built on synergies and not exclusions. Energy can be a catalyst for cooperation—and hence for well-being, peace, and prosperity, paving the way towards cooperation in more fields, between more countries.

That is certainly the case for Turkey and Greece. For their bilateral relationship, cooperation more broadly would create additional linkages between Turkey and Greece, connecting communities and creating markets. That has been shown by Greece’s new visa facilitation scheme for Turkish citizens seeking to visit some of the Aegean islands, increasing the number of visitors to those islands by dozens of thousands, boosting local economies, and contributing to social ties, reconciliation, and more peaceful relations. This also supports the legitimacy of any rapprochement and efforts to improve domestic sentiments about the “other” among the public. It also facilitates political leaders’ initiatives.  

Successful partnerships in areas such as energy could challenge rooted zero-sum mentalities of enmity and suspicion and allow for understandings and partnerships in more contentious fields, like security. Ultimately, these could lead to heightened trust and the reduction of skepticism, potentially culminating in solutions for even the longest-standing bilateral disputes.

Harry Tzimitras is a nonresident senior fellow at the Atlantic Council Turkey Programs and the director of the Peace Research Institute Oslo’s PRIO Cyprus Centre.

The post There’s a path forward for Turkey-Greece cooperation—but it requires a dose of realism appeared first on Atlantic Council.

The post Shaffer in Real Clear Energy: “The Hidden Renewable Energy in Central Asia” appeared first on Atlantic Council.

Strikingly, the per-kilogram prices of Chinese lithium-ion batteries exported to the United States are lower than the same product sold to any other market. The low per-kilogram prices may stem from China’s export of heavier BESS batteries to the United States—or anti-competitive tactics meant to oust US, Korean, and Japanese manufacturers in a militarily relevant technology. Given batteries’ dual-use potential and domestic production prospects, the United States should raise tariffs on Chinese imports and boost funding for domestic and allied supply chains.

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Chinese leaders recognize the commercial and military potential of next-generation batteries. Beijing has directed top firms to collaborate on solid-state battery development and banned Chinese companies from supplying batteries to Skydio, the largest US drone maker. Earlier this month, the US Department of Defense (DOD) designated China’s largest battery maker, CATL, as a military company.

The DOD may have made the designation due to CATL’s potential collaboration with the Chinese navy on lithium-ion battery-powered submarines. Currently, only Japan operates such submarines, although South Korea is building three of them. The DOD’s move may indicate that China is also using advanced batteries to enhance its submarine force.

Despite batteries’ dual-use applications, Chinese companies are global players. Chinese export destinations for lithium-ion (Li-ion) batteries are highly diversified, as the chart below shows.

Significantly, Chinese Li-ion battery exports to the United States have risen sharply in recent months, reaching an all-time high of $1.9 billion in December 2024. Chinese exporters may have been expediting shipments to avoid potential tariffs before President Donald Trump’s inauguration. But also, Chinese manufacturers often accelerate shipments in December to meet year-end targets and account for the production slowdown during Lunar New Year celebrations.

While Chinese battery global export earnings have declined from recent highs, focusing on dollar amounts doesn’t tell the whole story. As measured in weight, Chinese Li-ion battery exports are rising.

Chinese trade data shows that battery exports by weight have increased year-over-year, while their export value has declined. In 2024, the United States imported 923,000 tons, slightly less than the EU’s 938,000 tons. However, comparing volumes has limitations since batteries vary widely in function and are not interchangeable commodities.

Even as the quantity exported rises, battery prices on a per-kilogram measure have dropped. Indeed, the average global per-kilogram export price of China’s lithium-ion batteries fell from $32.9 in 2020 to $20.1 in 2024.  

Remarkably, Chinese per-kilogram battery export prices to the United States are the lowest in the world—only continental Latin America even comes close.

Tariffs don’t seem to be playing a major role. Chinese exporters of lithium-ion EV batteries to the United States now face a 25 percent tariff after President Joe Biden raised rates in a May executive order, up from 7 percent. But storage batteries—which are China’s primary Li-ion shipment to the United States—are not subject to the higher rate until 2026; they currently face an effective tariff rate of only 10.9 percent.

Importantly, China’s per-kilogram battery export prices vary depending on the type of batteries supplied to different markets. Stationary battery storage systems, typically weighing over 1,500 kilograms, contrast with EV batteries, which generally weigh between 326 and 544 kilograms. However, Chinese trade data, reported at the 8-digit Harmonized Tariff System (HTS)-level for external audiences, does not differentiate between lithium-ion batteries for energy storage or EVs.

In contrast, the United States’ more transparent data on Li-ion battery imports does distinguish between these categories, with most imports consisting of heavier battery energy storage systems. Significantly, per-kilogram battery costs are lower for battery energy storage systems than batteries for EVs. US BESS per-kilogram costs averaged $19.7 through the first eleven months of the year, while batteries for EVs averaged $28.8, according to US trade data. Chinese trade data also show that the EU imports more Li-ion battery units than the United States, suggesting Europe’s imports are more focused on EV batteries. This aligns with Europe’s higher EV penetration rate, which explains China’s relatively lower Li-ion battery export prices to the United States.

Indeed, US deployments of Li-ion storage projects are another factor driving its per-kilogram Li-ion battery import costs lower. Battery storage deployments have surged from 3.4 gigawatts (GW) in 2021 to nearly 8.3 GW in the first eleven months of 2024—a period that correlates with the decline in Chinese per-kilogram export prices.

Chinese battery exporters may indirectly benefit from the US solar deployment boom, despite limited eligibility for tax credits. About 53 percent of US solar projects—and 98 percent under the California Independent System Operator (CAISO), the United States’ most advanced solar market—include paired battery storage in order to reduce curtailment. While US data on its domestic Li-ion BESS production is lacking, market actors suggest China supplies most BESS batteries; conversely, EV batteries are primarily made in the United States. Without policy shifts, such as greater tariffs on Chinese products or more incentives for domestic manufacturing, Chinese suppliers are likely to dominate the growing BESS market.

Finally—and while difficult to prove definitively—Chinese battery exporters may be lowering per-kilogram prices to undercut US and allied manufacturers. US battery investment has surged, rising from under $4 billion in 2021 to over $33.8 billion by late 2024, potentially triggering worries in Beijing that the United States could eventually surpass China in this dual-use technology. Meanwhile, Chinese and South Korean exporters—the top two suppliers to the United States—appear locked in a price war, although Chinese shipments of storage batteries far outweigh South Korea’s, totaling 678,000 tons versus 58,000 tons through November 2024.  

It is preferable for the United States that South Korea—a US treaty ally and vital defense industrial base partner, including in semiconductors and shipbuilding—can compete with China in batteries. Indeed, the United States and its allies must win the battery race with China, especially given the technology’s military applications. Accordingly, increasing and accelerating tariffs on Chinese-made lithium-ion storage batteries would bolster US and allied manufacturers at the expense of Chinese competitors. Worryingly, existing planned tariffs will not close the cost gap between US-made and Chinese-made batteries, according to an analysis by Rahul Verma of Fractal Energy Storage. Additional tariffs on Chinese imports—and incentives for US manufacturers—may be necessary to close the cost gap.

To be sure, additional tariffs on Chinese-made lithium-ion storage batteries will impose short-term costs and slow domestic deployment of clean technologies, especially solar energy. Still, US long-term strategic interests—which include reducing emissions as rapidly as possible—are best served by constraining China’s dual-use technological capabilities and industrial capacity in batteries while advancing related US and allied competencies.

Given the need to jumpstart US and allied battery technological and manufacturing capabilities, additional, accelerated tariffs on Chinese-made Li-ion batteries for both EVs and BESS are appropriate. Additionally, policymakers should collect better data on Li-ion domestic production and make that information public. When placing tariffs on Chinese-made Li-ion batteries, however, policymakers should ensure that the United States, working closely with allies and partners, develop a US battery complex. Outcompeting China in batteries, a vital military and energy technology, is critical for US and allied security.

Joseph Webster is a senior fellow at the Atlantic Council’s Global Energy Center and its Indo-Pacific Security Initiative. He is also editor of the independent China-Russia Report. This analysis reflects his own personal opinion.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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Staff

Joseph Webster

Senior Fellow, Global Energy Center

Global Energy Center Indo-Pacific Security Initiative

Central Asia China

EnergySource Nov 18, 2024

Batteries are charging California’s solar revolution

By Joseph Webster and Natalia Storz

California is setting records in solar electricity generation and increasingly pairing solar projects with battery storage. This promising trend is not only greening the Golden State’s grid but also benefiting the broader region by reducing the need for electricity imports.

Energy & Environment Renewables & Advanced Energy

EnergySource May 13, 2024

What US tariffs on Chinese batteries mean for decarbonization—and Taiwan

By Joseph Webster

In response to Beijing’s attempts to cement its dominant position across the “new three” technologies of solar photovoltaics (PVs), electric vehicles (EVs), and batteries, the Biden administration is poised to issue tariffs on key Chinese products. A look at China’s battery exports, and its associated battery complex, reveals both opportunities and risks for US and allied […]

China Energy Transitions

EnergySource May 9, 2024

China builds more utility-scale solar as competition with coal ramps up

By Joseph Webster

China’s transition to more utility-scale solar installations furthers its decarbonization efforts. However, regional resource limitations, limited interprovincial electricity transfers, and cheap coal present structural and economic headwinds.

China Energy Transitions

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

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The post China’s lithium-ion battery exports: Why are US prices so low? appeared first on Atlantic Council.

The post Clabough in Real Clear Energy: “Don’t Turn Back: The Great Debate on Energy Subsidies” appeared first on Atlantic Council.

In the first global stocktake of progress towards the 2015 Paris Agreement, the 198 signatory countries called for accelerating deployment of low-emission technologies—including nuclear energy—to meet climate goals. The stocktake marked the first formal recognition of nuclear energy as a solution to reduce emissions in a COP agreement, reflecting a recent paradigm shift in how nuclear power is viewed among climate negotiators.

Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.

Acknowledging the emissions-reducing role of nuclear energy enables government and private sector leaders to leverage it as a decarbonization tool; it also helps unlock investment for countries embarking on nuclear energy projects.

During New York Climate Week in September 2024, fourteen global banks and financial institutions pledged to support the COP28 goal of tripling nuclear energy capacity. This public backing from the financial sector was the first of its kind and is a critical step in driving investor confidence in this revitalized market.

The pledge marks a timely shift in attitudes toward financing nuclear energy projects. The average annual global investment in nuclear power in the 2010s was just $30 billion. From 2017-23, this rose to $50 billion. Tripling nuclear energy capacity would require upwards of $150 billion in annual global investment by 2050.

Private investment—in addition to government-backed initiatives—is critical to accelerate nuclear energy deployment at scale. Leaders in the nuclear energy industry must continue to engage with banks and financial institutions to mobilize capital to support anticipated levels of growth.  

Customers ready to purchase nuclear electricity are required for new projects to be bankable. As the only zero-emission baseload power source with the potential to be scalable in many regions, nuclear energy is an attractive option for industries which require reliable, 24/7 power—like data centers.

Global power demand from data centers is expected to grow 160 percent by 2030, with US demand rising from 25 gigawatts (GW) in 2024 to more than 80 GW by 2030 to accommodate increased computing capacities. Customers are already experiencing higher electric bills as a result of data centers’ sudden and unprecedented strain on the grid.

Driven by their extraordinary demand for reliable power, US tech companies comprise some of the earliest end-users driving the large-scale deployment of commercial nuclear energy. Last year, some of the world’s largest tech firms announced big commitments to invest in nuclear energy projects, including agreements between Google and Kairos Power, Amazon and X-energy, and Microsoft and Constellation Energy.

Partnerships between Big Tech and reactor companies marked some of the most promising developments towards establishing demand at scale, or an “orderbook,” for the US industry last year. The partnerships illustrate the potential for financial mechanisms, such as power purchase agreements, to de-risk investments in novel projects. Using these developments as a blueprint, nuclear energy providers should work closely with other energy-intensive sectors, such as heavy manufacturing, as demand for clean electricity surges worldwide.

In November, COP29 in Azerbaijan delivered additional support for the industry. The Biden administration set a first-of-its-kind target to deploy 200 GW of new nuclear by 2050, which would more than triple current US capacity. The United States launched three project partnerships with Ukraine under the Foundational Infrastructure for the Responsible Use of Small Modular Reactor Technology (FIRST) program to dedicate $30 million to explore the potential of nuclear energy to help the country meet its energy security goals. The United States also signed a civil nuclear collaboration agreement with the United Kingdom to pool research and development funding and exclude Russia from future collaborations.

With Brazil holding the COP30 presidency, the country’s nuclear power ambitions may help to secure nuclear energy’s place at the center of the COP agenda. Latin America’s leader in installed nuclear capacity and home to the world’s eighth-largest uranium reserves, Brazil has expressed intentions to add 10 GW over the next thirty years and revive domestic uranium production.

Deploying new nuclear energy projects at scale will require global leaders to translate pledges into action. Multilateral engagement, backing from the financial sector, and buy-in from new customers could deliver major wins for nuclear energy. The industry must now mobilize around these converging trends to secure a robust nuclear energy ecosystem for the decades ahead.

Amy Drake is an assistant director at the Nuclear Energy Policy Initiative with the Atlantic Council Global Energy Center.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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Staff

Amy Drake

Assistant Director

Global Energy Center Nuclear Energy Policy Initiative

Energy & Environment Energy Transitions

New Atlanticist Oct 29, 2024

Tech companies are showing a new, strong interest in nuclear power. Here’s why.

By Jennifer T. Gordon, Lauren Hughes

Recent announcements by Google and Amazon demonstrate a willingness to finance the development and deployment of advanced reactors for their own energy requirements.

Energy & Environment Nuclear Energy

EnergySource Aug 11, 2024

Japan’s economic revitalization requires nuclear energy

By Lauren Hughes, Maia Sparkman

Japan’s economy is recovering, with government efforts to boost population growth and expand energy-intensive industries like AI and semiconductors. However, current energy policies may not meet rising demand. Restarting nuclear reactors under enhanced safety measures is key to Japan’s energy security and climate goals. To sustain growth, Japan must continue restarting its nuclear fleet and invest in next-generation reactors, addressing workforce and supply chain challenges.

Japan Nuclear Energy

EnergySource Dec 15, 2023

COP28’s legacy will be measured by emissions reduction, not ‘historic’ text

By Landon Derentz

The COP28 final declaration is transformational in its reflections on fossil energy’s role in climate change. The conference’s real legacy, however, will be the efforts undertaken to foster the inclusive platform necessary to promote private and public actions and reduce global emissions.

Climate Change & Climate Action Energy & Environment

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

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The post Tripling global nuclear energy capacity is in reach—if the world seizes the moment appeared first on Atlantic Council.

The post Shaffer in NewsMaxWorld: Science Belongs at Universities, National Laboratories – Not the UN appeared first on Atlantic Council.

Online Event Fri, December 6, 2024 • 12:00 pm ET

Chevron CEO Mike Wirth on the future of energy policy

AN #ACFRONTPAGE EVENT—Mike Wirth, chairman and chief executive officer of Chevron, discusses his vision for policies that address both energy security and environmental protection in an increasingly complex global landscape.

Economy & Business Energy & Environment Energy Transitions Geopolitics & Energy Security

According to Chevron* Chief Executive Officer Mike Wirth, there’s a rising “recognition” that the energy transition is “going to take longer than people would have hoped a few years ago.”

At a December 6 Atlantic Council Front Page event, Wirth argued that building what is essentially “a separate energy system”—a zero-carbon energy system—“in parallel” is going to require new infrastructure and new investments. “That’s going to take time,” he said.

Wirth explained that while finding solutions for climate change is at the forefront of policy discussions in Europe and the United States, developing countries are more focused on solutions that enable energy access and affordability. But, Wirth said, there are no “one-size-fits-all solutions.”

“The reality is some of these solutions work better in some places than they do in others, and none of them serve all the different needs of a diverse economy,” Wirth said. He added that he thus appreciates the flexibility of the Paris Agreement, in allowing countries to make their own nationally determined contributions based on their own contexts.

With President-elect Donald Trump soon to reenter the White House, Wirth said that he expects to see continued growth in conventional energy and also in “new technologies that address future market demands.”

“The US is an energy superpower. We have a strong diverse energy economy, and it is fundamental to our economic competitiveness,” he said. “We need all of these solutions” to satisfy future demand for energy.

Below are more highlights from the conversation, moderated by Atlantic Council President and CEO Frederick Kempe, in which the Chevron head discussed the future of the energy system under a new US administration and the impacts of geopolitics on energy.

The four-year outlook

• Wirth said the next US administration needs to craft policies that “balance” between three “tradeoffs”: Mitigating environmental impact, ensuring access to affordable energy, and maintaining national security.
• Wirth said that he believes Trump understands “the importance of a strong energy economy for a strong US economy.” He added that he expects the Trump administration to “reduce the regulatory burden” that the energy industry faces, and that there will be continued growth and advancement in both renewables and conventional energy.
• The next administration may want to take a look at the United States’ sanctions on oil-producing countries Iran, Russia, and Venezuela, Wirth noted. “Enforcement of those sanctions has been designed to allow those barrels to continue to come into the market” in part to avoid spiking oil prices, he said.
• “They haven’t really crimped supply, they’ve just redirected supply,” he argued. And that, he added, has created “certain risks” as the countries that have been subject to sanctions have looked into other, more dangerous ways to sell and ship their energy. For example, Wirth explained, Russia has resorted to using a shadow fleet, which poses risks for other ships and the environment. “That’ll be another issue that the administration will grapple with,” Wirth said.
• Chevron is the only US oil company allowed to operate in Venezuela. Wirth said that while the company has not yet discussed this with the incoming Trump administration, Chevron wants to maintain its presence there. “Other companies have left Venezuela. They’ve been replaced by and large with companies from two countries: Russia and China,” Wirth said. “If we were to leave,” he added, there is “no doubt” Chevron’s operations would meet the same fate.

Energy and geopolitics: “Fundamentally intertwined” 

• Wirth said that energy and geopolitics—including the conflicts unfolding around the world—are “fundamentally intertwined.”
• Considering Europe’s scramble to decrease its dependence on Russian gas following Russia’s 2022 invasion of Ukraine, Wirth argued that “Europe is going to have to reassess its overall approach to energy supply.”
• The United States, Wirth said, can be “an important source of supply to our allies” in Europe and beyond. “We’ll need to be in that future to avoid creating the same kind of single-point dependence that has existed.”
• On the conflict in the Middle East, Wirth said that Chevron has shut down natural gas platforms in the eastern Mediterranean. “These facilities have been targeted by rockets and missiles from Hezbollah,” he said. But, he added, “the naval version of the Iron Dome has proven to be effective in interdicting,” Wirth said.
• In discussing the technologies supporting the energy transition, Wirth warned that China has a “very strong hold” on the supply chains for materials—including rare earths and critical minerals—that make up technologies such as solar panels and electric vehicles.
• “You see a lot of the mining activity going on in Africa . . . and a lot of the processing goes on in China, which gives China a lot of influence over supply pricing,” he said. “We haven’t diversified the supply chains for some of these inputs to new energies nearly enough.”

Katherine Walla is the associate director of editorial at the Atlantic Council. 

Note: Chevron is a donor to the Atlantic Council. 

Watch the full event

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Underwhelming COP29

Participants at COP29 managed to reach an agreement on international carbon market standards, a key step to establishing such a market under the United Nations (UN), as envisioned in Article 6.4 of the 2015 Paris Agreement. However, COP29 became stuck on the key objective of the meeting: producing a new collective quantified goal (NCQG) as a new climate finance target for the next ten to fifteen years. This is meant to replace the current $100 billion annual figure—a pledge of financial aid to developing countries made by developed countries in 2009, but viewed as totally inadequate.

The most important issue to be settled is the quantum of the NCQG. Participating countries have disparate expectations, which are unlikely to be bridged. Developing countries have coalesced around the target of $1.3 trillion a year of international climate finance aid, based on a report by the High Level Expert Group on Climate Finance. Developed countries spearheaded by the European Union (EU) have reportedly toyed with a range of $200-300 billion, but are reportedly leaning toward $200 billion and a 2035 deadline.

The issue of the contributor base has also been important. Developing countries want to stick to the Paris Agreement, which calls for developed countries to provide climate finance to developing countries. Developed countries want to widen the contributor base to include rapidly growing emerging market countries. These countries, such as China and the Gulf countries, are able to contribute and should do so because of their high levels of emissions. Many developing countries, in particular China, have strongly objected to these demands. As part of the debate, China announced that it has voluntarily provided 177 billion yuan ($24 billion) in project financing to help other developing countries deal with climate change since 2016. This statement highlights China’s preferences for a bilateral approach. China is using climate finance as a tool to further its geopolitical agenda, instead of contributing funds to multilateral efforts. If other countries decide to follow a similar bilateral approach, they could strike another blow against the unraveling multilateral world order.

A day after the COP29 officially ended, an agreement on NCQG was reached, calling for developed countries to provide $300 billion a year by 2035 to help developing countries in their climate efforts. No one is happy with the agreement. Developing countries have criticized it as  too little. Developed countries have tried to lower expectations about official aid, emphasizing that the funding would have to come from a wide variety of sources, including the private sector. In any event, the agreements concluded at the COP29 will be overshadowed by the fact that Trump would most likely pull the United States out of the 2015 Paris Agreement for a second time—and could even withdraw from the 1992 UN Treaty that provides the framework for the COP process. This time around, Argentina could follow suit and quit the Paris Agreement. President Milei already recalled his negotiators midway through the COP29 meetings. Without the US and possibly Argentina, the rest of the world would have to struggle to come up with meaningful nationally determined commitments to achieve net zero emissions and to mobilize climate finance to help developing countries. This outlook does not augur well for the COP30 to be hosted by Brazil in 2025.

A divided G20 Summit

The G20 Summit in Rio de Janeiro has been described by media reports as chaotic and divided. Nevertheless, it managed to produce a Leaders’ Declaration, even though the debate about wording was cut short by Brazil’s President Lula—leaving a bitter taste among Western leaders. The Declaration contains watered-down language on practically all agenda items. A major result is the Global Alliance Against Hunger and Poverty, Lula’s signature project, which gathered support and was launched.

However, the facade of cooperation has been rocked by Argentina’s statement that while Milei did not want to prevent other leaders from signing the declaration, he strongly criticized key elements of the agenda. His targets included anything to do with the UN 2030 Sustainable Development Goals and strengthening the role of governments in fighting global hunger (which according to Milei should be promoted by removing the involvement of governments). At the same time, Milei stressed that he would prioritize economic development over environmental protection, having dissolved Argentina’s Environment Ministry after taking office. These arguments are in line with Trump’s views. They will likely be advanced more forcefully in future G20 meetings, undermining the chance of agreements for joint actions and weakening the G20 itself.

Prospects for international cooperation: more turbulence

President Trump will likely reverse or ignore many of Biden’s environmental and climate change initiatives. However, as several red states have seen job creation thanks to IRA programs, he may continue some programs on a case-by-case basis. Overall, Trump’s approach would weaken environmental protection home and disengage from international climate efforts.

In the vacuum created by the United States and Argentina, China has already stepped in to champion international climate efforts under the Paris Agreement and open trade, as Xi Jinping claimed in his speech at the Rio G20 Summit. China has appealed to the EU to “collaborate effectively on the COP29 agenda…(to) establish a strong foundation for re-aligning their broad green and economic initiatives and improve their bilateral relationship.” China’s approach may appeal to the EU when it’s confronted with Trump’s denial of climate change and his protectionist unilateralism. However, if the EU were to cooperate with China on climate and trade issues, it would find itself at greater odds with a Trump administration already unhappy with the EU for free riding the US security umbrella while posting a trade surplus with the United States. The EU would be in a very difficult position, as it still very much depends on Washington for security, especially against a revanchist Russia emboldened by its successes in Ukraine.

The rest of the world can find ways to deal with climate change without the US federal government, as it did during Trump’s first presidential term—including working with US states and cities still keen to promote a green agenda. But the whole exercise would be inefficient and more difficult, especially when mobilizing climate finance.

As summarized by Bloomberg, the Rio G20 Summit has shown “how quickly the guardrails are coming off the international rule-based order…(as) the looming return of Trump hung over the proceedings like the proverbial sword of Damocles.” Expect more of the same, at future summits—starting with the 2025 G20 under the presidency of South Africa.

Hung Tran is a nonresident senior fellow at the Atlantic Council’s GeoEconomics Center, a former executive managing director at the Institute of International Finance and a former deputy director at the International Monetary Fund.

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

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The post Divided COP29 and G20 Summits: A taste of things to come appeared first on Atlantic Council.

Speaking at an Atlantic Council Global Energy Center’s event on November 13 on the sidelines of COP29 in Baku, Azerbaijan, Neto and Landon Derentz, senior director and Morningstar Chair for Energy Security of the Global Energy Center, noted that Brazil and the United States are natural partners for strengthening cooperation given both countries’ historic leadership in innovation and research and development. Brazil’s robust biofuels sector and mature wind turbine manufacturing capacities demonstrate the country’s ability to drive energy sector transformation while meeting energy security needs.

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Both Brazil and the United States also understand that innovation is a key aspect of energy security. Looking ahead, both countries are well positioned to partner on enduring issues such as securing the supply chains central to energy security needs and energy transition efforts.

Following Neto and Derentz’s conversation, Cassia Carvalho, the executive director of the Brazil-US Business Council, moderated a panel with Allyson Book, the chief sustainability officer of Baker Hughes, Leonardo Botelho, the head of international and investor relations at the Brazilian Development Bank (BNDES), Jake Oster, the director of sustainability policy at Amazon Web Services, Owen Herrnstadt, a member of the board of directors at the Export-Import Bank of the United States (EXIM), and Anna Shpitsberg, the chief climate officer at the US Development Finance Corporation (DFC).

Unlocking climate and energy finance

Hernstadt of EXIM and BNDES’ Botelho emphasized that their institutions and DFC will continue to play critical roles in de-risking projects and promoting competitive markets. 

In Brazil specifically, where DFC just opened its first Latin America office this past March, Shpitsberg was optimistic about the level of opportunity she sees in the country. In October, DFC signed a cooperation framework arrangement with BNDES to enhance co-investment opportunities in a number of energy and climate sectors such as innovation, infrastructure, mining, biofuels, decarbonization, and green hydrogen. 

Private sector investment in the energy transition

Industry has a key role in developing and deploying the technology necessary for accelerating the energy transition. One area of opportunity in particular is in methane abatement. Baker Hughes’ Book said that not enough is being done to address this potent greenhouse gas, but this creates an opportunity. Investors must look closely at the tools necessary to tackle methane emissions in Brazil and elsewhere in the coming year. 

Amazon’s Oster noted that technology companies are also in a position to lead on investments in renewable energy and sustainable practices.

Looking ahead: strengthening collaboration

On public investments, Brazil and the US are both looking to strengthen partnerships. Shpitsberg and Botelho both expressed optimism for future collaboration between their organizations, noting that the opportunity to drive investments in Brazil is still large. Working together will be crucial to ensuring that future investments lead to energy sector innovation efficiently and effectively. 

Similarly, Book and Oster said the private sector will also focus on building partnerships across industry to advance energy and climate goals. This means using a range of finance instruments and expanding cooperation on clean energy technologies, including geothermal, hydrogen, and carbon capture, utilization, and storage.

The discussion in Baku signals that industry, finance, and government are continuing to push forward investments in clean energy and build coalitions in the year ahead with an eye toward COP30 in Brazil. 

Bailee Mathews is a program assistant with the Atlantic Council Global Energy Center.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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Bailee Mathews

Program Assistant

Global Energy Center

Energy & Environment Energy Transitions

EnergySource Nov 6, 2024

Tackling the energy-water challenge at COP29

By Robert F. Ichord, Jr.

Energy and water have a complex and inextricable relationship, especially as growing populations, expanding cities, and the changing climate strain resources around the globe. Leaders at COP29 must come together in Baku to promote policies, strategies, and investments to meet the water and energy challenge.

Climate Change & Climate Action Energy & Environment

EnergySource Oct 15, 2024

Attention to market realities are key to a successful COP29

By Robert Cekuta

Increasing funds for addressing climate and energy needs in developing countries is a COP29 priority. But it is important to remember that market conditions in recipient countries are critical in determining the success of such efforts.

Energy & Environment Energy Markets & Governance

EnergySource Jun 4, 2024

Brazil is buying lots of Chinese EVs. Will that continue?

By William Tobin

Brazilian imports of Chinese battery electric vehicles (BEVs) surged in 2023 as Chinese automakers sought—and continue to seek— global markets for their BEV surpluses. However, increasing protectionism in Brazil may force China to find new welcoming markets in other Latin American and Asian countries.

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California’s solar generation is rising sharply

Solar and batteries go together like peas and carrots. CAISO’s solar generation continues to grow as a share of its total in-state load, with the trailing 12-month share rising from 13.8 percent in January 2021 to 22 percent in August 2024. California overlaps almost entirely with, but is distinct from, CAISO, which serves 80 percent of the state plus a small portion of Nevada.

Solar’s growing share of California’s in-state electricity consumption is greening the grid. Coal electricity generation declined from 303 gigawatt hours (GWh) in 2021 to 257 GWh in 2023, while natural gas generation fell from 97,431 GWh to 94,192 GWh over the same period.

Additionally, CAISO imports significant volumes of electricity from neighboring states, some of which is generated by natural gas or coal. In 2023, only 64 percent of California’s electricity imports were from zero-emission sources, with many of these imports received via the Pacific DC Intertie high-voltage direct current (HVDC) transmission line used to ship electrons over long-distances. Consequently, as CAISO’s electricity imports fall due to local solar generation, the demand for carbon-emitting generation sources in neighboring states decreases. Importantly, it also frees up clean electrons—such as from Washington state’s hydropower—to serve other use cases, like data centers or green hydrogen. The rise of Golden State solar is not only reducing emissions and pollution in California; it also benefits the wider region.

Batteries are enabling incremental solar growth

Solar production has increased along with battery deployments. From January 2021 to August 2024, CAISO deployed 9.5 gigawatts (GW) of batteries. As batteries became relatively more significant on CAISO’s grid, cumulative installed battery capacity reached almost 50 percent of total installed solar capacity in August 2024. Without substantial battery deployment, solar curtailment likely would have exploded.

This trend of pairing solar with batteries is set to continue. Indeed, within CAISO, 98 percent of prospective solar projects include battery storage.

To meet ambitious climate targets while maintaining grid resiliency, CAISO will need more solar, more storage—and more transmission. A follow-on article will examine how CAISO’s transmission expansion is unlocking solar generation.  

Joseph Webster is a senior fellow at the Atlantic Council Global Energy Center.

Natalia Storz is a young global professional at the Atlantic Council Global Energy Center.

This article represents their own personal opinion.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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Joseph Webster

Senior Fellow, Global Energy Center

Global Energy Center Indo-Pacific Security Initiative

Central Asia China

EnergySource May 13, 2024

What US tariffs on Chinese batteries mean for decarbonization—and Taiwan

By Joseph Webster

In response to Beijing’s attempts to cement its dominant position across the “new three” technologies of solar photovoltaics (PVs), electric vehicles (EVs), and batteries, the Biden administration is poised to issue tariffs on key Chinese products. A look at China’s battery exports, and its associated battery complex, reveals both opportunities and risks for US and allied […]

China Energy Transitions

New Atlanticist May 13, 2024

California’s battery boom is a case study for the energy transition

By Joseph Webster

The state’s large-scale deployment of lithium-ion storage batteries is leading to lower solar “curtailment,” or when electricity generation is suppressed due to price signals or physical oversupply.

Energy & Environment Energy Transitions

EnergySource May 9, 2024

China builds more utility-scale solar as competition with coal ramps up

By Joseph Webster

China’s transition to more utility-scale solar installations furthers its decarbonization efforts. However, regional resource limitations, limited interprovincial electricity transfers, and cheap coal present structural and economic headwinds.

China Energy Transitions

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The post Batteries are charging California’s solar revolution appeared first on Atlantic Council.

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On the campaign trail, Trump made his climate plans clear—and they are not currently aligned with global goals and targets. Instead, he has stated that he will again withdraw from the Paris Agreement and end many of the climate policies launched during the Biden administration. 

His “America first” approach doesn’t align with the scientific reality of climate change. While Trump has signaled that his administration will put boundaries on its international commitments, the consequences of climate change do not recognize national boundaries.

With the looming threat of reduced climate commitments from the world’s largest economy (in terms of nominal gross domestic product), the negotiations at COP29 will take on a new significance. In 2016, when Trump was last elected, US negotiators were unable to make strong commitments at COP22 in Marrakesh. While they participated in these negotiations, they were encouraged to avoid any legally binding commitments until the next administration came into office. As the United States begins another transition from one administration to another, the same expectations could be placed on US negotiators this year.

Notably, the outcomes on the New Collective Quantified Goal (NCQG) on Climate Finance will bear the consequences of those expectations. The goal was mandated under the Paris Agreement and officially set at COP15, where developed countries agreed to mobilize $100 billion annually to enable climate action in developing countries. Now, the world is revisiting that $100 billion benchmark since the scope of the climate crisis has dramatically increased since 2009. 

With a noncommittal United States, there are two likely scenarios. The first scenario is that the decision on the NCQG is deferred to next year’s COP in Brazil. The second scenario is a new, nonbinding goal that is less ambitious and that will lack a mechanism to enforce it.

In short, the wording will matter. Instead of words like “commit,” the second scenario could result in a new finance goal with more ambiguous language. Nevertheless, it would serve as an important political signal. It could be a reference point that emphasizes the value of the process and the need to accelerate climate finance. It would keep the pressure on governments, ensuring that they recognize their responsibility to mobilize financial resources toward reducing emissions and protecting people from the impacts of climate change. In its ability to set a precedent, the agreement itself can inspire action not only in the public sector but also the private sector. COP negotiators should therefore seek to make the wording that sets this financing goal as strong as possible.

In recent years, the rising costs of global warming have become increasingly and painfully clear. It is in every country’s interest—including the United States’—to increase international financial commitments. After all, every one dollar invested in prevention saves sixteen dollars in disaster response.

As COP29 begins and the world looks ahead to COP30 where substantial commitments are expected, the value of US leadership cannot be overstated. This is not just a moral responsibility, but a survival mechanism. Climate change is a global issue. If the United States refuses to cut emissions further and ends the policies and investments launched under the Biden administration, the Trump administration would put even more Americans’ health, finances, and safety at risk as they face the rapidly intensifying consequences of climate inaction.

Jorge Gastelumendi is the senior director of the Atlantic Council’s Climate Resilience Center.

The post What Trump’s return as president means for COP29 appeared first on Atlantic Council.

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On November 7th, 2024, Global China Hub nonresident senior fellow Michael Schuman spoke to Politico’s E&E News about how how the second Trump administration may approach trade with China, and how this could impact American clean energy manufacturers.

The post Global China Hub Nonresident Senior Fellow Michael Schuman in Politico appeared first on Atlantic Council.

At this month’s COP29 in Baku, greater attention must be given to the complex relationship between energy and water. The meeting should promote long-term policies, strategies, and investments to meet this challenge.

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Hydropower’s role in the global energy system

Hydropower is the world’s single-largest source of renewable power. But most clean energy development analyses, including the 2024 World Energy Outlook by the International Energy Agency (IEA), emphasize the role of solar and wind in the energy transition. Their growth over the past decade has indeed been unprecedented; the IEA forecasts that global hydropower generation will be overtaken by solar photovoltaics in 2029 and by wind in 2030. Nevertheless, hydropower still contributes 14 percent of global power generation and 35 percent of the world’s non-fossil electricity. Hydropower is widespread in all regions, with 89 countries boasting installed capacity over 1,000 megawatts. Nine countries across four continents depend on hydropower for over 75 percent of their electricity generation, while another fourteen rely on it for more than half.

But drought and flood conditions have left this important power source vulnerable—after remaining constant for over a decade, hydropower output fell in 2021 and 2023 despite new capacity additions and improvements to older units.

New stresses, new demands

Climate change has exacerbated water stress. The World Resources Institute finds that a quarter of the world’s population lives in countries facing extreme drought conditions, notably in the Middle East, North Africa, and South Asia. Many other nations experience high water stress for at least one month a year.

This has a serious impact on power production. Droughts reduced hydropower generation by 8 percent in India during the first half of 2024. Droughts not only require increased thermal power use; they also reduce the availability of water for cooling thermal plants. In 2020, about 22 percent of global energy-related water use was for cooling thermal plants, drawn largely from freshwater sources. These volumes are projected to increase to at least 35 percent of world water use by 2050.

The agricultural sector is being profoundly affected by increased drought and record high temperatures. Irrigation systems, especially the expansive diesel and electric groundwater tubewell systems of South Asia, require increased energy supplies. A 2024 study suggests that future irrigation system expansion could increase energy consumption in irrigation worldwide by 28 percent.

Demand for desalination has risen about 7 percent per year in order to meet growing freshwater needs and groundwater depletion. Desalination plants are energy intensive, with total plant electricity consumption ranging from 1.3 kilowatt-hour (kWh) per cubic meter of water in new plants to as much as 3 kWh in older ones. This energy load and associated costs may strain electricity and water systems, as well as increase emissions if powered by fossil fuels. Desalination is expanding in a number of regions, notably in the Middle East and North Africa, which has the largest regional desalination capacity. Since 2022, the Algerian Energy Company has begun building five new desalination plants to augment the nineteen currently in operation. To reduce dependence on natural gas, the government is looking to use renewable energy to power these units.

Climate-induced severe weather comes at high cost

The severity of storms and floods have intensified in recent years, inflicting damage on energy and water infrastructure. Communities are being left devastated by severe weather events, such as the back-to-back hurricanes Helene and Milton in the United States.

The destruction of watersheds, including by wildfires that have reduced their ability to retain water, has resulted in mudslides and polluted lakes, rivers, and reservoirs with debris. Dams are critical to controlling water flows, but large floods put them under stress, with older facilities particularly impacted. In the United States alone, it is estimated that rehabilitating approximately 15,200 high-hazard dams will cost $24 billion.

The time for action is now

The energy-water nexus is creating new uncertainties for energy and climate planning, requiring a more integrated analytical framework for decisions on strategic investment. COP29 should support the development of improved data and monitoring of key energy-water indicators—such as reservoir and river flow levels, energy use and efficiency in water utilities, water prices, and infrastructure investment—that can be incorporated into national climate and energy plans.

Although it would be wise for hydro-dependent countries to diversify their clean generation, there still exists significant potential for new hydropower capacity, even though the IEA sees only marginal future growth contributing to emissions reduction. The International Hydropower Association estimates global hydropower potential stands at 1,782 gigawatts (GW), even larger than total installed capacity in 2023 of 1,416 GW, which includes pumped storage. Africa has the largest regional potential at 487 GW, but the lowest installed capacity of only 42 GW.

The International Renewable Energy Agency estimates that to meet net-zero emission goals, hydropower needs to double by 2050, requiring a much higher level of investment than the current $50-60 billion annually. Although China has been the largest international financier of hydropower projects, multilateral financial institutions have increased their funding over the past decade. The African Development Bank’s $1 billion program to upgrade twelve hydropower plants in Africa is an example of such funding.

Private sector participation is also critical to achieving net-zero goals through hydropower. Promising areas for private investment include pumped storage projects that can contribute to grid stability and store water, as well as desalination plants, which require large amounts of clean energy.

As COP29 pursues its mission to enhance ambition and enable climate action, clearer and stronger commitments—such as those that emerged on methane from public and private actors at COP28—are needed to meet the energy and water challenge. Addressing this critical issue is central to enabling emissions reduction and adaptation, and remedying loss and damage.

Robert F. Ichord, Jr. is a nonresident senior fellow at the Atlantic Council Global Energy Center.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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Robert F. Ichord, Jr.

Nonresident Senior Fellow

Global Energy Center

Nuclear Energy Energy Transitions

EnergySource Oct 15, 2024

Attention to market realities are key to a successful COP29

By Robert Cekuta

Increasing funds for addressing climate and energy needs in developing countries is a COP29 priority. But it is important to remember that market conditions in recipient countries are critical in determining the success of such efforts.

Energy & Environment Energy Markets & Governance

New Atlanticist May 14, 2024

Brazil’s tragic floods should put climate adaptation at the top of the G20 and COP agendas

By Valentina Sader

The ongoing flooding in Rio Grande do Sul is an example of the urgent need for countries to focus on adapting to climate change.

Brazil Climate Change & Climate Action

EnergySource Jun 2, 2023

Central Asia’s clean energy opportunity: Hydropower

By Maxwell Zandi

Central Asia has failed to harness its full hydropower capacity. But greater investments into the region can help unlock much of Central Asia’s potential.

Central Asia Energy & Environment

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The post Tackling the energy-water challenge at COP29 appeared first on Atlantic Council.

Southeast Asia is undergoing a profound transformation in its energy landscape, driven by rapid economic growth, urbanization, and a pressing need to reduce carbon emissions. Regional energy demand is expected to surge by two-thirds by 2040. Ensuring reliable and affordable supply for rapidly expanding populations requires an accelerated deployment of cleaner, more sustainable energy sources.

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From highly industrialized nations like Singapore to developing economies like Vietnam, each country faces distinct energy security and sustainability concerns. But across the region, there is a common need for an integrated transition strategy that supports economic growth, enhances energy security, and aligns with global climate objectives. Central to achieving this transition is the adoption of innovative clean technologies.

Technologies like carbon capture, utilization, and storage (CCUS), battery storage, enhanced geothermal systems, and small modular reactors (SMRs) are essential to ensure a reliable, resilient, and clean energy supply. With strategic investments and robust policy support, these technologies are poised to play a pivotal role in Southeast Asia’s energy future as the region faces rising demand and climate risks.

Diversifying the energy mix for resilience

By diversifying their energy sources with emerging technologies, Southeast Asian countries can enhance energy security while progressively reducing emissions. Finding the right balance between conventional and clean energy while leveraging innovative technologies is critical for maintaining resilience during the transition.

Natural gas is seen as a “transition fuel” for many Southeast Asian nations. While still a fossil fuel, natural gas produces nearly half the carbon dioxide emissions of coal and can be integrated with renewable sources of power generation. Investments in liquefied natural gas (LNG) infrastructure are increasing across the region. Singapore is positioning itself as a major LNG trading hub in Asia. Pavilion Energy and Sembcorp Industries have already made significant investments in LNG bunkering services, providing cleaner fuel options for shipping and ensuring Singapore’s energy security.

As countries rely on natural gas for immediate energy needs, emerging clean technologies are providing a pathway for achieving the deeper decarbonization needed for long-term sustainability. Clean energy technologies can diversify the energy mix, reduce emissions, and ensure resilience as Southeast Asia transitions to a more sustainable energy future.

Innovations supporting the region’s transition

Battery storage systems are critical for stabilizing power grids as intermittent renewables like solar and wind come online. The Asian Development Bank recently proposed a $30 million, 50-megawatt battery energy storage system project in northern Vietnam. The proposal is designed to reliably integrate solar energy into the grid. Vietnam added a massive 16.5 gigawatts (GW) of solar capacity in 2020. The project could provide a model for other Southeast Asian countries facing similar challenges with renewable integration.

CCUS is being deployed to mitigate emissions from the region’s fossil fuel use while maintaining energy security. Indonesia’s CCUS and enhanced gas recovery (EGR) project on the Gundih field in Central Java, led by Pertamina in partnership with Japan’s Ministry of Economy, Trade and Industry, is projected to capture and store 300,000 tons of carbon per year. Malaysia’s Kasawari project, spearheaded by Petronas, is expected to become one of the world’s largest offshore carbon capture projects, aiming to capture up to 3.3 million tons of carbon per year. Kasawari illustrates the potential for large-scale CCUS to decarbonize Southeast Asia’s natural gas industry.

Enhanced Geothermal Systems (EGS) represent a largely untapped opportunity for Southeast Asia which could expand geothermal energy in areas where other domestic energy resources are otherwise limited. Indonesia, with some of the highest geothermal potential globally, could meet its ambitious goal of increasing capacity to 9.3 GW by 2035 through EGS. However, scaling up this technology will require significant investments. The right policy frameworks are needed to de-risk projects and attract private sector involvement. Despite these hurdles, EGS could provide stable, baseload power—both at utility scale and to meet demand for energy-intensive facilities such as data centers and artificial intelligence hubs—complementing renewables and reducing reliance on coal.

Finally, advanced nuclear reactors, including SMRs, can produce carbon-free baseload energy while being more scalable and more efficient than traditional nuclear power plants. SMRs are gaining particular attention due to their smaller size, flexibility, and ability to integrate with renewables. For instance, in mid-2024, Singapore signed a civil nuclear cooperation agreement with the United States. Known as a “123 Agreement,” this provides access to US nuclear technology—including SMRs—as part of Singapore’s long-term decarbonization strategy. Indonesia is developing its own SMR technology through the PeLUIt-40 project, a domestically designed reactor aimed at helping the country achieve net-zero emissions by 2060. These initiatives highlight the growing interest in SMRs as a reliable and sustainable solution for Southeast Asia’s diverse energy needs.

Powering sustainable growth

Southeast Asia’s energy transition is a driver of economic growth and development. Clean energy technologies are creating new industries, attracting foreign investment, and creating jobs across the region. Countries that position themselves as leaders in cleantech innovation can unlock industrial expansion and international collaboration. And as Southeast Asia embraces sustainable energy, it will be better equipped to compete in the global economy. Reducing reliance on fossil fuels will not only help meet the region’s climate commitments, it will also protect Southeast Asia from the volatility of global energy markets. As clean energy infrastructure grows, regional energy cooperation—such as cross-border energy grids and trade in renewable energy—could further boost economic stability and integration.

Ultimately, by committing to a clean energy future, Southeast Asia can not only protect the climate, but also build a resilient, competitive economy that thrives in a rapidly changing global landscape.

Reed Blakemore is the director of research and programs at the Atlantic Council Global Energy Center.

Chase Thalheimer is an assistant director at the Atlantic Council Global Energy Center.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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Reed Blakemore

Director, Research and Programs

Global Energy Center

Geopolitics & Energy Security Energy Transitions

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Chase Thalheimer

Assistant Director

Global Energy Center

Arabic Geopolitics & Energy Security

EnergySource Jun 25, 2024

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The post Innovation can accelerate Southeast Asia’s energy transition  appeared first on Atlantic Council.

Public Event

Atlantic Council Regional Conference on Clean and Secure Energy

The regional conference on clean and secure energy gathers top government, business, and thought leaders to discuss the next steps in the clean energy transition.

Central Asia Climate Change & Climate Action Energy & Environment Energy Markets & Governance

Speaker

H.E. Alparslan Bayraktar
Minister of Energy and Natural Resources of the Republic of Türkiye

Event transcript

Uncorrected transcript, translated from Turkish

ALPARSLAN BAYRAKTAR: Distinguished guests, distinguished representatives of the Atlantic Council, distinguished participants, ladies and gentlemen. I would like to start by expressing my pleasure to be here with you all at the Regional Conference on Clean and Secure Energy organized by the Atlantic Council.

Distinguished guests: climate change, the pandemic, supply chain disruptions, high energy and commodity prices, rising capital costs and high inflation that is felt on a global scale, geopolitical risks and vulnerabilities, especially in our region, and regional conflicts are just a few of the current risks we face. Moreover, as we face all these challenges, there is also the task ahead of us: for the world economy to return to a carbon-neutral state by 2050. Therefore, we obviously face a very challenging energy transformation process.

For a successful energy transformation, and for us to be successful in this process, we need to develop more rational policies, implement these policies with determination, maximize our cooperation in line with the purpose of this gathering, and realize the necessary investments. However, in this aforementioned multi-risk environment, policy inconsistencies, uncertainties, and stop-starts all frankly have an extremely negative impact on the investment climate.

Considering this environment, what are we doing as Türkiye? What are our challenges, our priorities, our energy policies, and our energy transformation roadmap? One of them is addressing the increase in our energy demand. Türkiye is a country whose energy demand increases every year. When we look at energy demand over the last two decades, our demand for electricity and natural gas has tripled. We anticipate that this will continue to increase for the coming period. Our electricity demand forecast for 2035 is 510 terawatt-hours, but I believe this will be easily exceeded. Artificial intelligence, the additional energy requirements by big data, the transformation of transportation especially within the context of energy transformation, and electric vehicles will take this demand much higher. In addition, we need to meet these increasing needs to match our growing population, growing economy, urbanization, and regional developments. Of course, we need to meet this increasing demand with more affordable costs—costs that our consumers and citizens can afford.

Although there has been a significant decline in recent years, the second issue for the Turkish energy market is our dependence on foreign energy imports—our dependence on imported energy resources. Unfortunately, this is ongoing.

Consequently, as Türkiye, we are trying to implement a multidimensional, multilayered and unique energy strategy. We believe that in order to successfully achieve our decarbonization targets, our policies and regulatory framework must be more adaptive, more comprehensive, more flexible, more rational, and in line with new digital technologies. As Türkiye, we are focusing on five main areas in our long-term energy planning to achieve this decarbonization goal. These are, of course, renewable energy, which is one of the main topics of this conference; energy efficiency; nuclear energy; the role of natural gas as a transition fuel; and mining for the energy transformation.

Distinguished guests, today in Türkiye, renewable energy resources constitute more than half of our installed capacity. In this sense, Türkiye ranks fifth in Europe and eleventh in the world in renewable energy. We have identified renewable energy as the area of development and the area with the highest potential for our country until 2053, the date we set our net-zero emission target. For this reason, we will continue to support renewable energy projects in many different ways and methods, from small rooftop systems to large-scale projects. We have a very ambitious renewable energy program that will cover the next twelve years, that is, until 2035. In renewable installed capacity, we want to add five thousand megawatts of solar and wind capacity to our existing installed capacity every year. In other words, over the next twelve years, or by 2035, we want to increase our installed solar and wind capacity, which is currently thirty thousand megawatts, to ninety thousand megawatts.

In the next few days, we aim to share with you, our public, Türkiye’s Renewable Energy Strategy for 2035. We will likely publish it on the twenty-first of this month for the Turkish public and the international community.

While we continue to mobilize of all our potential in the field of renewable energy, we are of course aware of the fact that, unfortunately, renewable energy sources are also intermittent energy sources. Consequently, we consider the sources that will provide us with a reliable base load to be extremely important. In this sense, renewable energy is definitely one of the important areas that Türkiye should include in its energy mix and energy portfolio. And as you all know, we are currently building our first nuclear reactors. Four nuclear reactors are being built at the same time in Mersin Akkuyu. Because four reactors are being built simultaneously, the nuclear construction site in Mersin Akkuyu is the largest nuclear power plant construction site in the world. The progress of the first reactor here is over 90 percent complete, and hopefully by 2025 we will produce the first carbon-free electricity from this plant. By 2028 we will have commissioned the remaining three reactors. Through this, we will be able to meet 10 percent of Türkiye’s electricity needs from this plant and save Türkiye thirty-five million tons of carbon emissions per year. Of course, Akkuyu is not the only project we are targeting—we are also aiming to reach a total energy capacity of twenty thousand megawatts, which Türkiye has set as a target in its long-term energy plan for 2050. Of course, we want to achieve this not only with conventional, large-scale power plants, like the power plants we are considering in Sinop and Thrace, but also with small modular reactors that will enable us to reach a power capacity of at least five thousand megawatts.

Distinguished guests, with the First National Energy Efficiency Action Plan that we put into practice in 2017, we have reduced our energy consumption in primary energy by approximately 14 percent between 2017 and 2023. In this sense, energy efficiency is an area with great potential. During the implementation period of this action plan, both the public and private sectors have invested around $8.5 billion in Türkiye, allowing a reduction of seventy million tons of carbon emissions. This has also opened the door to forty-five thousand new green jobs. In January this year, I announced Türkiye’s Second National Energy Efficiency Action Plan for 2024-2030. In the coming period, we aim to make investments of approximately twenty billion dollars, together with the public private sector. Along with these investments, we will also reduce our energy intensity. Our energy consumption will be 16 percent lower than the base scenario, and we will reduce carbon emissions by one hundred million tons per month. Overall our target is that by 2040, Türkiye will save $46 billion through increased energy efficiency.

Dear guests, while integrating more renewable and intermittent resources into our system, we should not ignore natural gas. Natural gas also plays an important role in integrating more renewables. Natural gas is also important for our cities to have better quality air. As Türkiye, we are the fourth largest natural gas market in Europe, with our consumption exceeding fifty billion cubic meters. In order to establish a secure supply of natural gas and ensure diversification, we have increased the capacity of our gasification terminals. We have increased our gasification capacity five times in the last eight years. Beyond capacity increases to FSRUs and other facilities, we have increased our underground storage capacities, and we have made very important investments in natural gas infrastructure in many areas, including international pipeline projects. Thanks to this, Türkiye has gained the capability to purchase at least half of the natural gas it consumes annually as LNG.

Additionally, we continue to focus on all areas of the value chain in natural gas. We are implementing important programs, especially on the upstream side: on natural gas exploration and production. Consequently, in 2020, we made the largest natural gas discovery in the history of the Republic of Türkiye in the Black Sea. 2020 was the year of the pandemic, and it was the largest discovery in the seas in the world. After just a short period of time, we are now already producing natural gas for 2.6 million households. Of course, we aim to increase our production in the Black Sea fields and Sakarya gas field. In the first quarter of next year, we will reach a daily production of ten million cubic meters, and with the floating production platform that we recently brought to our country, we will reach a production of twenty million cubic meters in 2026. Soon, Türkiye will realize an annual production of 7.5 billion cubic meters, but our targets in the Sakarya gas field are much beyond this, what I have shared with you are the targets for the next two years.

While we carry out all these works, including infrastructure investments and upstream investments for energy security, we also make important contributions to the supply security of our region, especially Southeastern Europe. As of today, Türkiye has natural gas export agreements with Bulgaria, Romania, and Serbia. Because Türkiye has the infrastructure to supply more than the fifty billion cubic meters of gas that I mentioned earlier, and because it has the infrastructure to buy more gas, it has the capacity to transfer excess gas that it does not need to European markets and countries that are in serious need of gas. In 2024, we have also started to more intensively realize long-term LNG agreements, especially in our supply portfolio, where our supply portfolio predominantly includes piped gas. For natural gas, the United States has become Türkiye’s most important LNG supplier. The share of American LNG in the Turkish market has increased considerably, especially over the last five or six years, thanks to our infrastructure investments, and the fact that American LNG is highly competitive. In order to supply more natural gas, especially to Southeastern European countries, we need to increase our interconnection capacity with Bulgaria and Greece. I would like to express that we, as Türkiye, are and will be present in the investments to be made in this regard. I believe that it will make a significant contribution to both the supply security of this region and the diversification of gas.

Dear friends, today the mining sector has become critical to the production of clean energy technologies such as electric vehicles, wind turbines, batteries, and solar panels. In this sense, rare earth elements or critical minerals deserve special attention for their important role in electrical and electronic components and industrial processes. In Eskisehir, in the middle of Anatolia, we have discovered the world’s second-largest single field-reserve of rare earth elements, and in cooperation with our national mining company Eti Maden, we aim to develop this field with a value-added, high-standard mining approach. We believe that critical raw materials should not be a source of conflict, but a tool for regional and global cooperation. This is why Türkiye recently joined the Mineral Security Partnership Forum, which aims to enhance international cooperation. We held our first meeting in the United States a few days ago.

Distinguished guests, without transmission—without a strong transmission infrastructure, it is not possible to talk about a successful energy transition. For this reason, we need to strengthen our infrastructure, especially considering the sixty thousand megawatts of solar and wind, and of course offshore wind and geothermal resources that we will add to our installed capacity over the next twelve years. We need to increase our existing electricity grid in conjunction with our neighbors such as Georgia, Azerbaijan, Bulgaria, Greece. Similarly, in natural gas, and we need to strengthen our interconnection capacities. Therefore, one of the issues that we will focus on in the coming period, and where we will have many areas of cooperation, is transmission infrastructure and the investments required. We will share more details publicly in Türkiye’s Renewable Energy Development Strategy Program, which we will release in the coming days. In addition to this, we aim to expand the scope of EPIAS, our energy exchange, to new areas, including emission trading. This is important for Türkiye to become a carbon pricing country in 2026, especially as Türkiye enters the European Union market, which is our largest export market. We aim to realize this by establishing a carbon market within EPIAS. Likewise, we also aim for EPIAS, which is relocating to the Istanbul Finance Center, to become a commodity exchange.

Distinguished guests, it is important that our energy transition and energy security efforts are carried out in cooperation and together. This is necessary for us to achieve success. As you know, issues such as energy planning, capacity building, uninterrupted supply of energy, modernization of grid infrastructure, development of global storage capacity, and the importance of diversified and sustainable supply chains are of great importance. These issues were greatly emphasized at the G20 meetings held in Brazil last week, as well as at the G20 energy ministers meetings. We can successfully achieve the critical process of the energy transformation through deepening cooperation in this field.

As Türkiye, we are determined to have a better, cleaner, and more sustainable energy future for everyone, and our determination and will are very strong in this regard. With these feelings and thoughts, I hope that this conference will be successful, and I greet you all with respect and love.

Watch the speech in Turkish

The post Turkish Energy Minister Alparslan Bayraktar offers an ‘energy transformation roadmap’ appeared first on Atlantic Council.

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Public Event

Atlantic Council Regional Conference on Clean and Secure Energy

The regional conference on clean and secure energy gathers top government, business, and thought leaders to discuss the next steps in the clean energy transition.

Central Asia Climate Change & Climate Action Energy & Environment Energy Markets & Governance

Speaker

Reta Jo Lewis
President and Chair of the Board of Directors, Export-Import Bank of the United States

Moderator

Frederick Kempe
President and CEO, Atlantic Council

Event transcript

Uncorrected transcript: Check against delivery

FREDERICK KEMPE: Thank you, everyone, for joining this special discussion with the president and chair of the board of directors of the Export-Import Bank of the United States, the Honorable Reta Jo Lewis.

So Chair Lewis and I have known each other for some time. I just always enjoy conversations with her.

I’m going to open with some questions. We’ve got a tight half-hour. And then I’m going to turn to all of you, so already start thinking about what you’d like to ask Chair Lewis.

So the honor is always to host you. You’ve been serving as president and chair of EXIM since 2022, and a senior executive with twenty-five years—more than twenty-five years of leadership experience in international affairs, legal, public policy, business and regulatory affairs, and subnational diplomacy, including as special representative for global intergovernmental affairs under Secretary Hillary Clinton and vice president and counselor to the president at the US Chamber of Commerce.

So some people in this room have worked with EXIM Bank. Some people really don’t know what it does at all. And I just wondered if you could start by giving us a little bit of feeling on how you pursue your mission and how you see your place in the financial ecosystem, and particularly at this challenging but very promising time for the energy sector.

RETA JO LEWIS: No, absolutely, Fred. Thank you so much for giving us a few minutes to be here today with the EXIM team and also with our ambassador’s team. Our chargé has a great group of commercial officers that we work with here on the ground.

Just a little bit about EXIM Bank. It’s actually good to be in a room where people do understand about EXIMs or about export credit agencies. EXIM Bank, an organization founded back in 1934 by Franklin Delano Roosevelt, I think continues to live up to the mission that the president announced ninety years ago, and that is for us to be an agency that facilitates exports and supports US jobs. And I always like to say when you’re talking about jobs in these transactions, you can’t just be talking about jobs in the US; you got to be talking about jobs in the host countries and the home countries of which you’re also doing business in.

But you know, I think where we see our place in this ecosystem when we’re talking about clean and secure energy, as a significant player but as only one part of the puzzle. We are an institution that is chartered by the United States Congress, and we have been an agency that when we were reauthorized in 2019 Congress asked us to take on four additional mandates.

One, to make more financing available in small business.

Make more financing available in the transformational export areas. Everything—and there were ten export—transformational exports that were named, everything from semiconductors, AI, quantum computing, biotech, biomedical, and then you put in there renewables, wastewater treatment, and the like.

You also—Congress asked us to make more financing available in sub-Saharan Africa.

And also to make more financing available in the renewable energy, energy efficiency, energy storage space.

And so the debt finances of the US government and also as a jobs agency, we see our prime goal as to help US exporters to not only compete, but also to win global sales; but also working with our foreign buyers who also want to purchase goods and services, as long as they’re exported back to the—to the US That is our central mission. That is our central place in this ecosystem.

And also, knowing full well that we are an agency that does not work alone. We work with our other government partners in what President Biden and Vice President Harris likes to say is our whole-of-government effort, because what one government agency can do versus what another one can do is oftentimes different, but if all of us are working together—everything from our Cabinet agencies to agencies like EXIM Bank, DFC, MCC, and others—we each have a role to play in this—in this ecosystem.

FREDERICK KEMPE: Thank you so much, Chair Lewis.

We were together in January in Davos at the World Economic Forum and you talked about EXIM Bank’s commitment to nuclear and renewable energy projects. The people in this audience, many of them are in this business. Some of them are getting into the business of small modular reactors. They’re in the business of various different kinds of renewables. How are you looking at that at EXIM Bank? Is this a growing area? Is this—and where are you putting your priorities?

RETA JO LEWIS: It’s definitely a priority, and I’ll tell you why. One of the things that is so important about the nuclear space—and it’s really good to be here at a conference that is focused regionally, because in this region alone EXIM Bank has been very, very active. But in the field of nuclear, we also have a thirty-plus-year history of being—of authorizing transactions in this space, everything from working with [small modular reactors (SMRs)] to large nuclear reactors. And now, as we work with the nuclear councils, we’re even, with our US partners, talking about the microreactors.

EXIM Bank has a history of analyzing these transactions, everything from whether it’s from a legal or financial, environmental perspective, and just looking at the different packages that are coming before us. Our pipeline is strong.

I think it has gotten even stronger when last year, when we went—when we all went to COP, no one knew that it was going to turn out to be the nuclear COP. And I think it really has propelled global leadership of understanding the fact that nuclear has a definite place in the solutions that is going to have to happen in the clean and secure energy space.

Ever since I believe Secretary Kerry, when he was the special envoy, went to Romania to the Three Seas Conference—and that’s where we were at—and he talked about the fact of his evolution of knowing that nuclear was going to have a place and a space in the transition for—to a greener economy, and we at the time—the year before—had just awarded to the president and the Ministry of Energy in Romania a letter of interest about the work that we wanted to do with them around SMRs. Also, it’s good to be able to circle back and come full circle that in the discussions that we have had with Romania just in the last several weeks we have awarded—not only have we done those letters of interest, but we have been working very closely with the Romanian leadership as well as with the Energy Department and all of those companies that are going to be doing business there in the—in the nuclear space. And we just awarded a—I think it was, like, $99 million for an engineering multiplier program direct loan to support them in all of the pre-design work that they have to do in—on their nuclear reactor project.

The thing also that has been very critical is that I’m actually coming from London, whereby we were there just a few short days ago meeting with the new government and also the newly sworn-in parliament members who were the chairman of the Nuclear Committee and seven to—I think it was about six of his other parliamentarians. And we were really there in support of the American companies and any company, as I said, who’s exporting US goods and services; three of the American companies who had been successful in the negotiation of the awards of the finalists. And so everyone from the GE, Hitachi, Holtec, Westinghouse are some of the finalists—along with Rolls Royce are some of the finalists in that award, and what we wanted to as EXIM is not only to continue to talk with the American companies there, but also to talk to those who are going to be in their supply chain. That award, from what we are understanding, is going to be down to two. But these are such big and complicated projects that there is probably room for a whole host of people who are going to be in support of what’s going to be taking place in England in the coming months and years.

But we were there to send a signal—continue to send a signal to the market of how we want to use the products and tools that we have, everything from whether it’s direct loans or working capital guarantees or export credit insurance products, to show them that we are in support of any US company that is going to be working in or who will be successful in that market.

FREDERICK KEMPE: Thank you for that. And that is a pretty exciting announcement that just came out regarding Romania, and I think we even have some people in the audience that are involved in that—in that project.

So we are here talking about the region, but we are in Turkey. And I wonder if you could talk about Turkey and the most promising sectors for EXIM Bank here. It was—it was really interesting to me listening to the energy minister yesterday. Many of you in the audience may have known this, but know that well more than 50 percent of the power is coming from renewables—I mean, we aren’t there yet in the United States—which is pretty impressive, and also his quite ambitious plans for nuclear, and also the critical minerals group that has been put together. So there was a lot going on there. Where do you think you could work most effectively on energy transition issues in Turkey?

RETA JO LEWIS: Well, first of all, we have such a strong relationship in terms of US-Turkey. We were really glad to also be a part of that conversation, Assistant Secretary Pyatt and myself meeting with the minister right after his speech where he also talked about the renewable fund that he announced.

We’re really excited about the work that EXIM Bank has done here in Turkey. We have a strong relationship with US—with the EXIM’s—Turk Exim, just as we have a strong working relationship with other EXIMs around the world, and definitely around the region. In the last several years, we’ve probably signed over twenty memorandums of understanding and co-financing agreements, which allows us to lay out pillars that we want to prioritize, and we want to focus on. And, of course, the space of renewables has always been one about energy, and efficiency, and storage.

Our exposure here in Turkey is about two billion dollars, which we believe is still not nearly enough for the size of an economy that it is. But we’ve had a history of working very successfully in Turkey. We’ve had a long history of working here in the aircraft industry. And, as we said to the minister yesterday, being on the ground and being here, but also working in concert with our consulate and our embassy, is where we can be able to meet the individual executives, and leaders, and players, not just in Turkey but also in the region, to seek out those bankable projects, to hear from individuals early about the types of projects that they’re going to be doing in this entire clean energy ecosystem, and to let them know how EXIM is willing to be a strong collaborator and partner in the financing of these types of projects.

You know, for Turkey, you know, one of the things I know that, as such a strong regional leader, this commercial relationship that US and Turkey have is growing. And we see it, as we said to the minister yesterday, we think that it’s going to grow bilaterally, and it’s also going to grow, we believe, in a third-party cooperation way as well.

FREDERICK KEMPE: So I do want to get to people in the audience. So let me ask one question right now, although I have a long list I’d like to ask. But let me ask one more question on my part, then I’m going to look for hands here. And I think we have someone with a—or we have microphones in front of you. We’ll figure that out. But it always interests me when there’s someone in your kind of position, you’ve been in a lot of different interesting jobs, what either about this job gets you excited right now, or what specific project’s success stone, milestones have really got you excited in the recent past?

RETA JO LEWIS: You know, I would say, Fred, this has been a great opportunity that I have, serving in the Biden-Harris administration for President Biden as the head of EXIM. We are really seeing such a renewed focus on the work that we do as an export credit agency, and the impact that we can have with the financing that we can provide for American companies who are out there competing. Because part of our work is also about leveling the playing field. If we can use any tools that we have to help an American company or foreign buyer, as I said who’s exporting goods and services, secure a winning a bid, we want to be right there on the front lines with them.

But I think when I can—I always say things are—you got to also look at the numbers. When we first came in, two-plus years ago, on the—specifically in the renewable space, because we have that mandate. We had only done about eleven million dollars. The next year we did 175 million dollars. And the third year we did over 900 million dollars. That requires a significant amount of focus.

FREDERICK KEMPE: So from eleven million to 900 million dollars?

RETA JO LEWIS: Eleven million dollars. Now, granted, it was some very large deals that we did. But also, we have to look at the mandate that Congress has asked us. We have to look at the mandate coming from the initiatives that are coming out of the Biden-Harris administration, when the president worked with his G7 colleagues to talk about Partnership for Global Infrastructure and Investment Initiative. And so that 900 million dollars—that increase in terms of how we did that, and then even this year with the numbers still not totally in we’re over about a billion six dollars—

FREDERICK KEMPE: On renewables?

RETA JO LEWIS: On renewables, in the renewable—everything from solar, to mini-grids, to rural electrification. Now, that large deals—and some of those deals definitely have been in Angola. And I think it’s very, you know, perfect for an audience like this, because as we have met with so many people in the business community who are—who have done a lot of work here in Turkey, in Africa. And so for them to understand, for any of you to understand our commitment in sub-Saharan Africa, and throughout Africa. Bar none, I think those numbers tell the story. So when you see and meet with President Lourenço, and his Cabinet, and his business community, and his other leaders in Angola, and understand that you can have that level of direct impact on a community and what’s to come.

The other thing is, is that when you do financing to that magnitude, it sends a very powerful signal to the market that EXIM sees that market, they see the country of Angola as a stable, secure market for us to be in business with. I think it also sends the signal that others, and we’re beginning to see that, are actually also going into—going into that market. So the proof is going to continue to be in the pudding. We can’t wait as that project—as those projects begin to take shape and come off the ground.

FREDERICK KEMPE: Well, obviously part of what you’re doing is promoting US exports. Is there room for non-US companies in your African –

RETA JO LEWIS: Absolutely. Absolutely.

FREDERICK KEMPE: So if—you know how active Turkish companies are in Africa.

RETA JO LEWIS: Yes.

FREDERICK KEMPE: How does that work?

RETA JO LEWIS: Well, that’s why I was saying also, we’re—Turkish companies who—and the relationship that we have, from a US perspective, with Turkey, and the relationship that Turkey might have with—you know, from a third-party cooperation. EXIM Bank is about funding of goods and services to be exported. So any foreign buyer who is purchasing goods and services in the United States from any company, if they’re being exported abroad we can finance that. So that applies to anybody in this room, if they’re in the export game.

Also, we have introduced some new tools, one in particularly, because it goes straight to the reshoring work that the administration has been doing in our supply chain. We have a new product called Make More in America, and the Make More in America initiative is the first time that EXIM Bank, on domestic soil, on US soil, can support domestic manufacturers as long as—one of the key areas, of course, is—you’ve got to be exporting over the life of the whatever product that we would be awarding in an authorization. Those domestic manufacturers who are trying to either grow or expand in the US and want to look for financing, EXIM for the first time has the ability to do that.

And so with such a strong trading relationship between our two countries, with such a strong relationship of Turkish businesses who are trying to invest in the United States, it’s also another tool they too can use to gain support from US EXIM as long as—we would like to say direct loans—do direct loans and over the life of that project is when the exporting has to come. And then of course you have to have a jobs component.

FREDERICK KEMPE: Yes, really helpful. Questions—looking to the audience. Do I see anyone? Because I don’t, I’m going to—oh, I think I see one here—I see two here, so we’ll go here in the front and the toward the back—the distinguished Ariel Cohen.

Q: Ariel Cohen, the Atlantic Council. Thank you for your two excellent interventions last night and today.

So just to clarify, in terms of natural gas projects, do you have availability of finance for natural gas projects, or is this against policy?

RETA JO LEWIS: One of the good things about EXIM Bank is that, as a federal agency, we only have one prohibition that we do not finance anything in the military space, anything lethal. There is only one exception to military use, and that is dual use. And so I always like to describe that as police, fire, and border protection. We can fund those types of projects.

The thing about us is that EXIM Bank, we take all of our statutes, and laws, and rules that Congress puts before us, and we have a prohibition against discriminating against any company, any size, any sector.

Q: And just the—

FREDERICK KEMPE: So the answer and—

Q: The answer is yes.

FREDERICK KEMPE: The answer is yes, you can.

Q: That’s good to know.

FREDERICK KEMPE: Yes.

Q: And the second is what is the default rate historically on your financing?

RETA JO LEWIS: We are really—EXIM Bank, unlike others, you know, there is a 2 percent default rate that we have. We are very happy that, in this administration, as we go in for reauthorization on our budget, we have been approved in our discussions with the US Congress for our default rate to be increased from 2 to 4 percent.

For those who do not know, you know, if we go over that 2 percent rate, we would be what they call pencils down. We are very fortunate right now that it is at about—less than 1 percent, so we are doing—we are doing pretty well because of a lot of the work that’s been going on by some great staff at EXIM.

But we are also—been working with Congress—and when I testified most recently about asking Congress for an exemption from the default rate of our transformational export program, which is our China transformational export program, as well as an exemption from—on critical minerals. And I mean—not critical—on nuclear and—as you know, those are some very large projects, they’re very complicated, and those are some very large and sometimes nascent technologies in that transformational export area. And so we’ve been very active in our discussions with the US Congress to see what’s going to happen for us as we go in for our budget review for next year.

FREDERICK KEMPE: Thank you. And I think I saw a question in the back, please. If you could identify yourself in the question, please.

Q: Yes, it’s Eldar from Nobel Energy Azerbaijan.

I want to ask the question, from your bank environment in general, it was not easy to attract the financing to do renewables. In general, it would be more driven by the government standing behind, and initiatives, and everything. And we had some moments of big, giant oil companies or energy companies who are basically in the front line of the transition to renewables because they are driving this energy economy, taking the targets to renewables.

But after some shocking element of not the same generating value from the renewables, some oil giant companies start leaning back towards the traditional energy game. So if we believe the Reuters dated 7th October, BP announced that they are abandon a target to cut oil and gas out by 2030, which means significant change in strategy. So they don’t—they really abandon this target to reduce oil and gas, and they go back in the tradition energy sources.

Having that trends in big, giant oil companies shifting—not shifting, but maybe still stopping, like, into renewables, do you think this jeopardize the financing in general to those renewables projects because there are more attraction to the oil and gas and tradition energy again? Thank you.

FREDERICK KEMPE: I think you’re talking—I think the question was really the difficulty of financing renewables versus nonrenewable energy sources. Is that right? It was a little bit hard to pick some of it up.

RETA JO LEWIS: So I—if I understand him a little bit, it is about the fact that, for us as an agency, we are demanding of an agency. Whoever walks in the door, we’re going to be looking at those projects. And we’re going to—and we do a very rigorous amount of due diligence work on each and every project that we do. EXIM is very fortunate that we have a lending cap of about 135 billion dollars, and—we were talking about this last night—about 35 billion dollars has already been deployed, and we have about $100 billion left.

But, you know, if you do a lot of these—some of these new technologies, you do a lot of these—if you can do nuclear projects, this can eat into that very well. And that’s why co-financing with other [export credit agencies] is very important.

For us at EXIM, being a demand-driven agency, we have to look at everything. We have to look at everything that walks in the door. But that doesn’t mean that we stop there. We are out aggressively in organizations, meetings, and conferences like this, trying to talk about EXIM, talking about what products and services we have, but more importantly, we want to let you also know about the flexibilities that we might also have in our financing that will hopefully make us a lot more competitive, whether it’s competitive more around the offerings that we can offer you around exposure fees, around tenors, and around terms.

Now we also have some additional flexibilities that gives us an ability to do longer-term loans. But the other thing that we also want folks in this audience to know is that, I mean, we are open in all sectors. We are open in all sectors. We do not have a country cap. We do not have an industry or business cap. We are doing everything from $250 worth of export credit insurance, to hundreds of millions, to billions of dollars. And we’re looking at all sectors; everything—especially here in Turkey, we’re looking at the telecom sector. We’re looking at health care, we’re looking at everything in the digital space, data centers, and the like. And so we’re open for business, and we want to be in partnership with the US and Turkey, to continue that strong commercial relationship, but we want to be in partnership with all of you, especially in the region because this is such—all of you, as our—in the working relationship, this is an area—especially for this conference—that is only growing, and is going to be expanding, and we really are seeking opportunities to work with you. And we really appreciate being able to be here to do that.

FREDERICK KEMPE: I think that’s a—I think that’s a great place to close. For you in the audience, $100 billion left in the lending cap, no country cap, no business cap. We’re going to look at things that come in. So I think that’s a pretty exciting—it’s a pretty exciting message, and also the news of what you are doing in renewables, the news of what you are doing in nuclear, we see the trajectory in that direction.

So Chair Lewis, thank you so much for being with us from Washington, and thank you so much for giving us a really great view of how we could get all of the people in this audience to do more business with you.

RETA JO LEWIS: Absolutely, and we’ve got the EXIM team and the embassy team here to meet with all of you. Thank you very much.

FREDERICK KEMPE: Thank you.

Watch the full event

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Public Event

Atlantic Council Regional Conference on Clean and Secure Energy

The regional conference on clean and secure energy gathers top government, business, and thought leaders to discuss the next steps in the clean energy transition.

Central Asia Climate Change & Climate Action Energy & Environment Energy Markets & Governance

Speakers

Matthew Baldwin
Deputy Director-General, Directorate General for Energy, European Commission

Sanja Bozinovska
Minister of Energy, Mining and Mineral Resources, North Macedonia

Ahmet Berat Çonkar
Deputy Minister of Energy and Natural Resources, Republic of Türkiye

George-Sergiu Niculescu
President, Romanian Energy Regulatory Authority

Moderator

Matthew Bryza
Managing Director, Straife; Former US Ambassador to Azerbaijan

Event transcript

Uncorrected transcript: Check against delivery

MATTHEW BRYZA: Thanks. Thanks so much. Thanks so much to you, Fred, to Defne, to Grady, to Alp, to Zeynep for this really amazing conference that has been rich with fresh ideas and really a new tone on energy security and clean energy.

It’s an honor to be up on the stage right after Assistant Secretary Pyatt and after Deputy Minister Ekinci. I want to—we’ll call up our panel right now, but just congratulate you, Berris, on your appointment as deputy minister. We’re going into our third decade of collaborating together to try to develop the type of infrastructure we’re going to talk about now, and especially natural gas as a transition fuel. Congratulations.

So, please, may our panel join me up here? We have together with us Matthew Baldwin, who’s deputy director-general of the Directorate General for Energy of the European Commission. Matthew, thank you. We have—we have the Honorable Sanja Bozinovska, who is minister of energy of North Macedonia; Deputy Minister of Energy for Turkey Ahmet Berat Çonkar; and George-Sergiu Niculescu, who’s president of the Romanian Energy Regulatory Authority. Thank you.

According to the European Council, the share of Russia’s pipeline gas in the—in the EU, as Assistant Secretary Pyatt was talking about, dropped from around 45 percent in 2021 to about maybe 8 percent in 2023. And for pipeline gas and LNG combined, Russia accounted for less than 15 percent of total EU imports. This drop was possible largely thanks to a sharp increase in LNG imports, especially from the United States, which were enabled by investments in regasification terminals especially in Germany, which I think surprised everybody by how quickly it was able to pivot and deploy commercially viable projects that were supported, of course, by the government and by the European Commission.

Also, we saw a reduction in natural gas consumption in the EU by, I guess, around 15 percent, with a target to continue reducing that consumption by another 15 percent this year. And before that—in the decades before, I think it’s fair to argue the European Union worked very hard, especially the Commission, to stimulate investment in pipeline interconnections that also Assistant Secretary Pyatt discussed, which allow natural gas molecules to reach the buyers, the consumers, according to market mechanisms—supply and demand—rather than monopolistic power. So these are really impressive achievements that a lot of people in this room have worked together on for decades.

However, Southeast Europe is now flooded by Russian natural gas. It’s coming in via the TurkSteam pipeline, via the Russia-Ukraine pipelines. And in recent weeks, in my own experience, natural gas traders and investors in regasification terminals, especially in Greece, have told me that the LNG import terminal at Revithoussa is operating at only 20 percent capacity. And as I mentioned yesterday, I’m on the board of advisors of the largest natural gas distribution company in Bulgaria, which has booked five slots, doesn’t know how we’re going to use them. And at this point, it’s very difficult to reach a commercially viable contract right now for LNG that can outcompete the pipeline gas.

So looking ahead also, the European Commission and Azerbaijan have agreed in their Strategic Energy Partnership of July 2022 to double by 2027 imports of natural gas into the EU via the Southern Corridor. However, as we discussed yesterday, that goal conflicts with the EU’s objective of phasing out all natural gas usage by 2035, so in eleven years.

So I’d like to turn to Deputy Director-General Baldwin first and maybe focus on that last issue. How can we reconcile the need for longer-term natural gas sales and purchase agreements to allow this expanded infrastructure for natural gas to be financed with the ambition to phase our natural gas within eleven years?

MATTHEW BALDWIN: Well, thank you, Matt. And let me join the raucous applause to the Atlantic Council for putting on such another great event. And indeed, as Ambassador Pyatt said, it’s wonderful it’s in Istanbul—I mean, a pivotal city for the region in all of the things we’re talking about.

Thanks for the question. A bit of context, of course, to remind us how we got here. We are committed to be the first climate-neutral continent by 2050. We’ve done a lot of the heavy lifting in terms of developing what we call the European Green Deal, commitments to reduce our greenhouse gas emissions by 55 percent by 2030. We’re also looking at additional work to focus on 2040, which I think is meaningful in terms of generating necessary investments, focusing on a reduction around 90 percent by 2040.

And let’s also remind ourselves it’s not just the plucky European Union. We’ve heard from deputy foreign minister that Turkey itself is driving strongly in this direction. And the last COP took a really quite momentous decision to phase out fossil fuels with, yes, some important guardrail language, but that’s the direction of travel.

And of course, that’s the context in which we’ve had to manage the crisis in the last couple of years. And it has been—it’s been severe and it’s been difficult. I’m sure we’ll come back onto the specific aspects in the region.

But to try to answer your question, we’ve never pretended even before the crisis, when we needed gas in the worst way in the shortest possible timeframe, we never said that gas is not a transition fuel. We’re going to need gas in our pipes all the way through 2049. When countries are getting out of coal and into gas power generation, that’s a plus.

MATTHEW BRYZA: Yes.

MATTHEW BALDWIN: We know we’re going to need that. And if we can deliver on the burgeoning CCUS framework, I think that also provides a perfectly plausible outlet for companies to be buying gas now with a view to use it even beyond 2050. And by the way, there will be a number of countries that aren’t meeting that timescale, and therefore, you know, to be—to be ruthless about it, these companies will still have a market for their gas.

We are sometimes asked, therefore, you know, against the twenty-five-year or whatever planning profile that FIDs need for triggering LNG projects in the—in the US, how does that all fit? And I think if you—if you look in that framework that we’re going to need a continued supply of gas, we are not, I would stress, in the Commission, in the long-term contract business. I don’t have terminals in my office. I’m not calling gas traders in the middle of the night. But we’re totally fine with our gas purchasing companies making such arrangements to provide those commitments. We on the record are saying that. And I think if you look at the trends in terms of long-term contracting—and you probably follow this as closely as I do—it’s the portfolio players who have actually taken up the biggest slack. And if you think of the logic in that with the turmoil in the European gas markets and elsewhere, it’s about acquiring these long-term contracts which I think have done—have been effective in triggering FID, and then parceling out smaller contracts often for gas purchasing companies.

But I really want to stress, if European gas purchasing companies want to do those long-term contracts, and if they think that contributes to the security of supply, that’s absolutely great. Not a magic solution. These are also indexed. A lot of people said, looking at our gas price spikes in 2022, oh, if only—if only we had long-term contracts and we weren’t just on the spot market—which we weren’t, by the way—then everything would be fine. But that’s not the case. And a lot of those contracts, of course, are indexed to the—to the TTF.

If I may just make one last point on this issue, because I think it’s relevant in terms of our move towards climate neutrality, and that’s methane. And you know, it’s probably overtalked about now, but the great coming LNG glut in the second half of this decade—we know it’s coming from the US and from Qatar—as that market starts to loosen, big gas-consuming places like the EU and like Japan and Southeast Asia increasingly will be able to choose a bit between. And I think we need to use the current work that’s going on, the work we’re doing with Brad Crabtree and the MMRV Group to find a really global way of homing in on measuring and monitoring of emissions; and the work to reduce methane-reduction pathways, which we’ll be announcing in the COP, to enable that sort of choice as to where we’re getting the gas in the future. And I think that’s a big new trend.

Last point—of course, and I’m sure we’ll come back to it—in all of this, the regional collaboration that Ambassador Pyatt mentioned that we were doing in Greece, and as we—and I’d like to come back to the Russian gas question in a moment—you know, it is going to be so pivotal in all of this work.

So thank you. Sorry to be a bit long.

MATTHEW BRYZA: No, thanks, Matthew. Beautifully comprehensive and thoughtful. Really important clarification about the Commission’s view on longer-term natural gas sales.

MATTHEW BALDWIN: Hopefully wasn’t new, but, yeah.

MATTHEW BRYZA: It just—it doesn’t—there’s a lot of static in the system and that message doesn’t always come through, especially in places like Baku, where they really are worried about not being able to fund their upstream investment, which we’ll come to.

But one of your underlying points, of course, is natural gas, as Deputy Minister Ekinci was saying, as a transition fuel. So I’d like to turn, then, to Minister Bozinovska about North Macedonia’s plans. I mean, my understanding is North Macedonia is still dependent on about—on lignite for about 55 percent of its primary energy, so to generate electricity. So what’s the status of your gas interconnection planning with Greece and with Bulgaria? And also, what are your plans to develop a domestic natural gas distribution network, if any? Thank you.

SANJA BOZINOVSKA: First of all, thank you for the invitation.

As you said North Macedonia is mostly dependent on coal. We are working on a program. We just submitted our growth plans to the European Union, so we are waiting for an answer in the next—in the following months. The estimation is it will cost around three billion, which for our country is a significant amount of money.

We also established a just transition. And it’s led—I’m in the steering committee together with the Ministry of Environment. And we are discussing with EBRD, with EIB, and with the World Bank regarding the financing.

Regarding the gas in North Macedonia, there is only at the moment one connection; it’s from Bulgaria. And we had one tender with Greece; unfortunately, it was—there were objections from the European Investment Bank, and now we are doing our best to re-tender. We have secured all the finance. It’s around 86 million. And EBRD clearly state it’s the last financing that they have, so it will be their last financing into gas connector. We hope in the next two weeks that we will have the tender ongoing, and by the end of the year or January this work should start.

We heard that Alexandroupoli started from the 1st of October. Some projection about the work is around two years, but we hope that it can be finished a year and a half so it will be another diversification of the gas so it can come from Greece to North Macedonia. On Monday, we signed with Serbia the memo of understanding for also the gas connection, because from North Macedonia it’s only twenty-five kilometers that needs to be built. So in the near future, we plan to have Greece, North Macedonia, Serbia, and then it can go to Southeast Europe since this is also an important region to be valued. So this is the exact situation.

And regarding the 55 percent, we are doing a new energy law and we plan also to have more renewables. We have around in the last three years built seven hundred megawatts of solar and we need financing regarding the green infrastructure. And we also plan to include battery storage, which is a hot topic now in this region. We plan to have also construct for differences in order to, let’s say, have more renewables. So we are working on this. We are a new ministry, just three months established. But I hope by end of the year we will have more things in the law.

And we are working also with the energy community in Vienna and, yeah, in Brussels. I’m going in December, so we will discuss which issues are still a challenge and what needs to be done.

MATTHEW BRYZA: Wow, quite impressive vision, and not just vision but implementation. It sounds like you’re doing specific, concrete investment planning; I mean, I know you are. And this is a really important strategic issue, as well, going back to the Vertical Corridor that Assistant Secretary Pyatt talked about. And I want to come back to that issue in the next round, if that’s OK. But you’re not just talking about, as my old boss President Bush would say, strategery—you’re talking about the practicality of how to make the investments work.

So then I’d like to move to Deputy Minister Çonkar on this issue of making practical investments work. And Turkey has been a driving force of the diversification of sources of natural gas supply into the EU thanks to the Southern Corridor, but thanks to the investments that, again, many of us all worked together on to make possible in the upstream in Azerbaijan decades ago. And I mentioned in my opening remarks the ambition to double the flow of natural gas from—well, through the Southern Corridor into the EU.

So, from your perspective and Turkey’s perspective, where are those supplies of gas going to come from? Azerbaijan, as I’ll talk about in the next round, is not getting enough upstream investment to have those molecules coming out of the ground in time, but there’s a possibility of swaps from Turkmenistan which would have to go across Iran. Or is it cross-Caspian infrastructure, maybe, that we’re looking at? What could be the sources of supply?

AHMET BERAT ÇONKAR: Thank you very much, Matthew. First of all, thank you very much for this opportunity.

First of all, I would like to give some information about our gas infrastructure. As mentioned, Türkiye is the fourth-largest gas market in Europe, with an annual consumption of approximately fifty billion cubic meters of natural gas. For many years, Türkiye was importing almost all of this gas, total number was imported. After the discovery of natural gas in the Black Sea in August 2020, we started production only in three years’ time. Within three years’ time, we were able to start production. As of today, we are producing 6.2 million cubic meters of natural gas from our Black Sea fields, and we have additional one million from other fields. So Türkiye right now produces about 7.5 million cubic meters of natural gas from its own sources.

This means that we are able to meet about 2.6 million households’ needs from our own resources, so this is an important development for us. We are hoping to increase this production to ten million cubic meters in the first quarter of 2025.

MATTHEW BRYZA: Sorry, ten billion—ten billion per year?

AHMET BERAT ÇONKAR: Ten million per day.

MATTHEW BRYZA: Oh, ten million per day.

AHMET BERAT ÇONKAR: Per day. And as Minister Bayraktar mentioned, our aim is to double this to twenty million per day, which comes to almost 7.5 billion cubic meters per year, by the end of 2026 with our new floating production unit that will be operational at the end of 2026.

So, also we have made infrastructure investments to receive gas both through pipelines and LNG. Beyond that, we have made a lot of storage investments as well. So, you know, one of these storage facilities is Silivri natural gas storage project, which is the first natural gas storage of Türkiye. And it has critical importance in the energy supply security of our country. And as a result of the capacity increase were carried out in this facility, a storage capacity of 4.6 billion cubic meters has already been reached in Silivri. With this capacity, Silivri natural gas storage facility is the largest marine storage facility in Europe and is of critical importance for providing uninterrupted energy to our country.

Also, another project I want to mention in this area is the Salt Lake natural gas storage project. By the end of 2021 the first phase of this project was completed, and expansion works are continuing here as well. As of now, 1.2 billion cubic meters operating gas capacity and forty million cubic meters daily back production capacity has been reached in this pursuit as well. Also, we have increased our regasification capacity by almost fivefold. So our whole supply portfolio is changing and transforming in gas. With these infrastructure investments, we offer more competitive solutions for the markets.

Türkiye plays a pivotal role in realizing the goal of Southern Gas Corridor. As you mentioned, it’s a very important project. However, alongside the opportunities that this presents for Türkiye and the wider region, there are significant challenges that must be overcome to ensure that the expansion of this corridor is successful, timely, and sustainable. Türkiye’s role in the Southern Gas Corridor strengthens its position as a regional energy hub, and enhances its leverage in diplomatic and trade negotiations with both supply and consumer countries. I think it’s very important for this conjuncture.

Expanding the capacity of the Southern Gas Corridor offers us substantial economic benefits. Increased natural gas flows will likely lead to additional transit revenues for us and bolstering our economy. Moreover, the project could drive foreign investment into our energy infrastructure and related industries, creating jobs and stimulating economic growth.

Despite these opportunities, there are several key challenges in this area, as I mentioned. One of the most imminent challenges is the infrastructure investment required to expand the capacity of the Southern Gas Corridor. Türkiye’s strategy focuses on maintaining a diverse supply base here, ensuring a balanced energy market that is both flexible and secure.

Additionally, we continue to support international cooperation in expanding our resource base. We have signed long-term LNG supply agreements with major global companies, as mentioned in the morning. We also want to increase our cooperation with the countries in the region on a win-win basis and add resources in this region to the system. Türkiye continues to serve as a key facilitator for the energy projects in our Caspian region, Central Asia, and the Middle Eastern region with its unique location. As you also mentioned, Turkmenistan’s gas and the Caspian resources, there are a lot of untapped potential in these areas, so we need to work hard in integrating this to the system. As mentioned, collaboration and cooperation are the unique tools we can use to strengthen our energy supply security.

Finally, the successful expansion of this Southern Gas Corridor will require close regulatory and political coordination among multiple countries and stakeholders. So we need a very, very close and coordinated work in order to achieve this objective.

MATTHEW BRYZA: Excellent. Thank you, Deputy Minister Çonkar.

Deputy Minister, that was an absolutely comprehensive vision you’ve outlined that is taking the idea that was for years rhetoric and turning into reality that Turkey is a natural gas hub. It already is, and it will be for trading soon. Eventually, there will be a Turkish benchmark, I guess, for trading. We’ll get back into the mix of molecules in a second, but it’s a remarkable set of achievements that—not only are they enhancing Turkey’s strategic importance and helping the EU diversify its sources of supply, but I think of the air in Ankara, how—when I first visited there in 1998 how dirty it was and brown from all the coal, the lignite being burned. And now it’s so clean because of this transition to natural gas as a primary fuel for power generation.

But you also mentioned at the—at the end the importance of cooperation and regulatory cooperation. So let’s hear from a regulator. I’d like to turn now to Mr. George-Sergiu Niculescu, who’s the president of the Romanian Energy Regulatory Authority.

Romania sits at a geoeconomic/geostrategic confluence of the European Union on the one hand, and Moldova and Ukraine on the other hand. But in addition to that place on the map, you also have interconnectivity on electricity into the EU, which is an important market incentive for investments in a range of power generation and transmission projects. And also, it is stimulus for investment in natural gas transit as well. So, from your regulatory perspective, how are you working to attract those investments, and how’s it going?

GEORGE-SERGIU NICULESCU: Thank you very much for the question. Good morning, everyone.

Romania is deploying a lot of efforts in order to boost investments in the energy sector, both in generating new capacities, transport, and distribution as well, because it is very important that these two goes head to head. We cannot have investments only in producing electricity; we also need to enforce and enhance the grids in order to take in this new energy and deliver it to the consumers.

As Assistant Secretary Pyatt said, a common letter from Romania, Bulgaria, and Greece have been submitted to the European Commission regarding the need of investments in more interconnecting the grids. We saw that we have a gap between this part of Europe’s markets regarding the price of electricity and the western countries, because not all the countries have made investments in interconnectors. So the energy should flow freely from where it’s produced to where it’s consumed without any bottlenecks, without any borders.

Let me tell you that Romania has a total interconnecting capacity of 3.3 gigawatts, and this is for a consumption of around eight gigawatts, so more than 30 percent we have interconnecting capacities. I believe that Romania did this job, investing in interconnected. We are interconnected with every neighboring countries, and still we are looking to develop this.

We stimulate investments in the grids by throwing in support schemes. Ministry of Energy has called for projects for 1.3 billion euro dedicated only to distribution companies that want to invest in enforcing the grid. So the money’s on the table; they just need to deploy projects and sign the contracts and cash in the money, and then develop the projects.

For our TSO, also the Ministry of Energy has a dedicated call for projects for half-a-billion euro. This is on top of the reinvestments programs, yes, so more or less two billion euros for grid enforcements. And our authority, ANRE, has in the middle of this summer proved the new methodology for the next five years, which means that the revenues are regulated by us, and we have signed the methodology that stimulates investments. We have a methodology that generated good work, in our opinion, a return which—average cost for investment, which is around 7 percent. And on top of that, we have placed some KPIs in order for them to be able to provide better service for the consumers. I’m talking about the distributors, the companies that distribute the electricity. So this—if they reach out to these targets, they can go around 8 percent, 8.5 percent per year… This is a generous way to stimulate them to throw in huge volumes of money in order to enforce the grids, because the transition already started in Romania. It is no turning back from these targets that we imposed. And the transition needs better grids.

On top of that, we are not overlooking our natural gas resources. Because you talked about natural gas, the Black Sea offers us a lot of potentials.

On top of hydrocarbons, natural gas, also a good wind opportunity. Romania is the first country in the Black Sea region that has developed an offshore wind law, so we are pioneers in this regard with the help of the Department of State and the Department of Interior in the US government. We have from June this year a law that regulates all the aspects regarding the offshore wind.

Natural gas, coming back, I believe—I strongly believe that in the first part of 2027 we will see the first molecules of natural gas extracted from the Neptun Deep that will go into our transport system. Transgaz, our TSO, is making huge investments in order to overtake this new volumes of natural gas, and we have plans to use the natural gas in Romania by increasing our gas-fired turbines instead of coal-fired turbines, replacing them. And one example is the 1.7 gigawatts installed capacity in Mintia that will generate electricity. So using the gas in Romania, mostly, and of course acting as a—as an exporter, original exporter, for additional volumes for Republic of Moldova, as well as Hungary and other countries.

So ambitious projects, keeping on our targets and ambitions regarding the transition, of course having in mind the resources that Black Sea and our country has in terms of natural gas. So it’s, as I like to say, a tailor-made solution for the Romanian energy system.

MATTHEW BRYZA: Yeah, wow, tailor made and really comprehensive in terms of you’ve got the entire value chain that you’re focusing on, not just generation. And we’ll come back to generation and SMRs, by the way, in the next round. But from generation to the grid, I think very often people overlook the critical need for investments in upgrading the grid and don’t include that in the levelized cost of energy, so sometimes you get a distorted vision that—one that I was talking about yesterday, how much more cost-effective onshore wind can be, but you have to take into account those grid investments. And you are, and you’ve got the investment incentives.

Yeah, Matthew?

MATTHEW BALDWIN: Just to throw in a figure, our estimation of the grid infrastructure investment needs in the coming period is something of the order of magnitude—I think it’s 580 billion euros is the figure we’re looking at.

MATTHEW BRYZA: Wow. Wow.

MATTHEW BALDWIN: And of course—

SANJA BOZINOVSKA: But for where? Which countries?

MATTHEW BALDWIN: Sorry?

SANJA BOZINOVSKA: Which region?

MATTHEW BRYZA: For the EU.

MATTHEW BALDWIN: For Europe as a whole.

SANJA BOZINOVSKA: Europe whole.

MATTHEW BALDWIN: For Europe as a whole. I mean, and that’s because of grid, grid integration. I mean, that’s the biggest thing. There’s almost more renewables than the grid can currently handle, and so this is—this is a huge challenge.

Broader investment in infrastructure and energy needs more than 600 billion a year for the coming period.

MATTHEW BRYZA: A year? Wow.

MATTHEW BALDWIN: So checkbooks out, please, ladies and gentlemen.

MATTHEW BRYZA: Wow. Well, let’s stick with you for a second, Matthew, if we may.

MATTHEW BALDWIN: Sorry, yeah. Mmm hmm.

MATTHEW BRYZA: Yeah. And go back just for a moment to natural gas, and the fact that I mentioned before that right now—right now—Southeast Europe is awash, if that’s not a mixed metaphor, with Russian molecules. 2027 is the ambition for the EU to cut out, as you were saying, all fossil fuels from Russia. And what’s happening, I think, often now is that Russian LNG is being landed in other parts of the region, in Europe, and being rebranded as Belgian or Spanish or whatever it is. How do you get at that problem? And will tackling that, the—sort of the identity of molecules, be part of this phasing out of Russian natural gas in 2027, or does it even matter? Does everything kind of work out in the end through some sort of financial transaction?

MATTHEW BALDWIN: Well, we think it matters. I mean, just—it was good of Ambassador Pyatt to be so strong in support of what we’re trying to achieve. It’s worth—I looked up the language the other day we used in the Versailles Declaration in the immediate aftermath of the war. It was very unequivocal. This is twenty-seven heads of state and government, calmly they’re saying the mess that was launched by the invasion—saying we must phase out our dependency on oil, and gas, and coal, as soon as possible. And it’s interesting to look back on what we’ve achieved because—I’ll come to gas in a moment—on coal, it’s over.

MATTHEW BRYZA: Yeah, Russian, specifically.

MATTHEW BALDWIN: Russian coal is over. And coal, by the way, on its way to being over. Oil is down to 3 percent European-wide. That’s concentrated heavily in three member states: Hungary, Slovakia, Czechia. And they are, you know, on the process of coming out. But the sanctions, again, have been—have been effective.

Gas, I think we’ve given the numbers—45 percent down to 15 percent, 8 percent pipeline—but going up again. There’s some particularly local reasons as to why that is. US production dropped off a little bit. There was the outage in Freeport. We saw higher spot market prices in Asia, which drove up demand. But we’re not hiding from the fact that this is stubborn and difficult.

Throw into the mix that we have the transit contract across Ukraine which comes to an end at the end of 2024. We’ve been working intensively with our member states and our partners in European Community countries as well to model the impact of this, and the good news is we think it’s manageable. We don’t see any reason for this to have security of supply or, indeed, price impacts. There’s a global situation, 550 billion cubic meters of LNG, not all necessarily to the region. But given this and our estimations for the forthcoming LNG supply in 2025 to 2028, we think it’s going to be OK.

So what—how do we manage this situation in the future? LNG imports are part of that increase. Year on year, we think it’ll be an additional 2 bcm of Russian LNG coming into the system. And you know, you talk about it being rebranded, but it’s Russian LNG and I don’t think anyone’s pretending otherwise. It’s coming into countries in Northern Europe. It’s coming into countries in Southern Europe. And I don’t know, I have no insight into Gazprom or Kremlin pricing strategies, but it does seem that things are being priced to disrupt investment in things like—to disrupt projects like the Vertical Corridor. It would seem to be the case.

And I—you know, we—encouraging for me as a bureaucrat who’s very committed to this area is what President von der Leyen said in July. You know, she’s had five years or three years battering away on this issue, and she has tied her colors to the mast once again for the next commission, and I quote: “We will ensure that the era of dependency on Russian fossil fuel imports is over once and for all.”

MATTHEW BRYZA: Wow.

MATTHEW BALDWIN: To tumultuous applause in the European Parliament. There’s no backing off of this target.

MATTHEW BRYZA: Yeah, no equivocation. Yeah.

MATTHEW BALDWIN: So we’ve done, if you like, the—some of the easy bits. The last mile will be difficult. We’ve been asked to look at options. Our new incoming commissioner, who’s going to go through his hearings next week, he’s also been charged with this in his so-called mission letter. So watch this space is my—is my cheeky conclusion.

It is very difficult. A molecule is a molecule, as implied in your question. But I’m not convinced, personally, that the traceability issues are going to be so serious. There seems to be less evidence of LNG being transferred in tankers. It’s a technically more complex business than we’ve seen on the oil side. So we are on this issue and we very much need to address it—and we need to address it, again, in partnership and cooperation with other countries in the region. A lot of the gas is coming in—and no blame attached—through Turkey, and we’re looking forward to considering that and discussing it.

MATTHEW BRYZA: Thank you very much. That’s unequivocal. And, yeah, we should in no way underestimate the dramatic progress the European Union has made in these—in these short few tragic years of Russia’s war on Ukraine.

And so, in that mood of geostategy, then, I’d like to turn again to Minister Bozinovska and ask how—now that the name issue is, thank goodness, finally resolved, the name of North Macedonia and that dispute with Greece that lingered way too long is gone—the Vertical Corridor provides a way to—to really to bind North Macedonia and Greece together. You talked about the interconnection that made a little bit of a blip in terms of the European Investment Bank. But from a—from a more geostrategic perspective, how are you envisioning that sort of cooperation with Greece and beyond in terms of the Vertical Corridor that Ambassador Pyatt talked about?

SANJA BOZINOVSKA: So regarding politics is one thing, and then the stability—

MATTHEW BRYZA: Exactly.

SANJA BOZINOVSKA:—and benefits of the citizens, it’s another thing. So we have excellent communication with the Greeks. I just was in—before going to Washington I was in Greece, and we had also very successful meetings with the Greek regulator. And we are also working on market coupling with Greece.

MATTHEW BRYZA: Oh, nice.

SANJA BOZINOVSKA: Yes.

So, regarding the electricity, one, since we are—we want to be in EU, we want—we need to be coupled with one EU member, so we chose Greece. So with energy, we are perfect neighbors, so we are working on the market coupling.

And regarding the infrastructure, it’s very important we are aware and we are—regarding electricity, we are not connected, unfortunately, with all the neighbors. We are missing Albania. So we want to be connected east-west. We have the Bulgaria and North Macedonia. And when we build the transmission line, it will be North Macedonia, Albania, Montenegro, and then there is the underwater cable with Italy. So we also want to be connected both northwest and—north-south, and east-west. So we are planning on this regarding the connectivity.

And regarding the vertical, yes, we are planning, as I said, also to continue with talks with Serbia. And we need just to work on the financing here, since this is just now—we just started. They have—I think they have other sources, but we need to work on the sources, because now gas is not anymore the perfect green solution. However, we need just to secure finance. It’s not a big deal. It’s only twenty-five kilometers. I think we will be successful. So the vertical integration, I think it’s good. And we have support from EU and also from the United States.

MATTHEW BRYZA: Thank you. It’s so refreshing to go from a geopolitical theoretical question right back to the practical, in how do you get it done? And in our time working together with Turkey and Georgia and Azerbaijan, way back when two and a half decades ago, to start talking about what became the southern corridor Baku-Tbilisi-Ceyhan oil pipeline, we always had it in our minds that nothing was going to happen if the projects weren’t commercially—not only commercially viable, but attractive, with the competitive pull on capital, right, for other investments. And that’s what you’re describing, so—

SANJA BOZINOVSKA: And, just not to forget, regarding the cooperation, in June there was one blackout. And it was Montenegro, Croatia, Bosnia, and Albania. So four countries were a couple of hours without electricity. And it is very important to cooperate also on a regional level. And the question is now in ENTSO, in Brussels. And they’re still investigating. It was in June. They said by December they will have the outcome. And we had once also a couple of years ago, and it was in Greece couple of hours. So we just need to be more connected, and we need to communicate more as countries on a regional level, so we prevent this from happening.

MATTHEW BRYZA: Yeah, imagine—

MATTHEW BALDWIN: Just briefly to come in, it’s amazing to hear a minister—we really pay tribute to all the great things you’re doing. But it’s part of a process that we took a decision to start on ages ago, called the enlargement of the European Union, and delighted that North Macedonia is one of the enlargement candidates. And we have a process through what’s called the Energy Community.

It sounds like a commonplace thing, but it’s actually a fairly amazing organization because it’s been working with member states—excuse me—states like soon-to-be member states, like North Macedonia, to go through the painful business of the necessary reforms to meet the acquis, but most importantly to develop this regional cooperation, which you described, which is absolutely central to how the energy single market works. And, for example, why we have an incredibly efficient electricity single market. But it is, as you say, so nice to move from the theory, you know, North Macedonia becoming part of the European Union, to the practical benefits it delivers on the ground. It’s fantastic.

SANJA BOZINOVSKA: There are political issues in this also.

MATTHEW BALDWIN: Oh, no kidding. Yeah.

SANJA BOZINOVSKA: But we try to do the energy—

MATTHEW BALDWIN: If it was easy, we would have already done it, right?

SANJA BOZINOVSKA: Yeah.

MATTHEW BRYZA: That’s right. Exactly. Well, sticking with that theme then, of practicality of investments to power, no pun intended, the energy transition, Deputy Minister Çonkar, as Minister Bayraktar told us yesterday, Turkey now ranks fifth in Europe in installed renewable generation capacity, eleventh in the world as well. Which is amazing, how quickly that’s happened. And these investments are accelerating, and in pursuit of net zero target at the six hundredth anniversary, I guess, of Mehmed Fatih in 2053. So can you—can you describe for us some of the frameworks for stimulating investment in this sector?

AHMET BERAT ÇONKAR: Yeah. As you mentioned, Türkiye ranks fifth in Europe and eleventh globally in terms of installed capacity in renewable energy. The achievement reflects a firm commitment to a cleaner and more sustainable energy future by Türkiye. But it also highlights the scale of the challenges we must overcome to reach net zero emissions. The deployment of renewable energy is one of the key areas of our long-term energy strategy. We have set ambitious targets to increase the share of clean energy in the national energy mix, while reducing the carbon emissions in Türkiye. Renewable energy accounts more than 56 percent of our total installed capacity as of today, and it’s increasing day by day with new renewable energy investments.

As Mr. Bayraktar mentioned yesterday, we aim to add an additional sixty gigawatts of solar and wind capacity within ten years’ time. So it’s a quite challenging objective. And also, we would like to do this in both smaller distributed gigawatt-scale projects. So this is also another challenge for us. For this purpose, we need to commission 3.5 gigawatts solar and 1.5 gigawatts of wind power each and every year. In addition, we aim to reach five gigawatts of offshore wind installed capacity in the coming period. In order to achieve this right now, we are working on some legislation to speed up the investment processes. And it will be soon in the parliament. We are working on it closely right now.

Of course, the transition will not be easy, as it will affect many sectors and will bring many challenges to all. Electricity is a very sensitive issue for all countries. And people are directly affected by the prices, as we think about the inflationary environment also. This is also another aspect. So since transition costs will be reflected in the pricing, all governments will be affected by this issue. So we need to do very good planning in this area. While changing the energy generation portfolio, we also need to change the transmission system. When we reach the maximum renewable capacity, the traditional transmission systems need to change as well.

Since renewable resources can be intermittent, renewable energy, capacity needs to be managed very diligently. There are additional needs, such as a smart grid, digitalization, better management of the demand, and also the storage capacity. Our transmission systems needs to be increased for renewable energy, as I mentioned. We are right now also continuing our discussions on the Mega Grid Project, so that we can increase the transmission capacity with neighboring countries. Another pillar of the electricity sector in terms of renewable energy transformation is the nuclear energy, as mentioned earlier. Türkiye has different nuclear energy projects right now. The first one is under construction in Akkuyu, and the other two are in the negotiation phase with different countries.

We need to add nuclear to energy—our energy mix to reduce the carbon emissions. Akkuyu Nuclear Power Plant will be commissioned next year. It will start commercial production and reach a total capacity of almost five gigawatts within three years’ time, when the four reactors start producing electricity. And afterwards, we would like to quickly start the other two nuclear projects, one in Sinop, one in Tekirdağ. We plan to reach nuclear energy capacity of about twenty gigawatts by the year 2053. We are also following closely SMRs, the small modular reactors, as baseload energy. We plan to add about five gigawatts of capacity, nuclear capacity, in this area to our energy portfolio as well. And also until 2035, we are also planning to invest in hydrogen storage, as I mentioned earlier. And also our Minister Bayraktar, mentioned the importance of the energy efficiency. So we have also a very ambitious plan to develop the energy efficiency in Türkiye.

MATTHEW BRYZA: Thank you. Just to put those numbers in perspective for a second, I mean, so to get up to twenty gigawatts of nuclear power generation, I mean, that’s a huge achievement, right? That’s gigantic. But renewables—I mean, wind and solar—as you said, you’re already at thirty gigawatts. And you’re going to increase by 200 percent before the end of the decade.

AHMET BERAT ÇONKAR: Yes. Sixty gigawatts is in our plans. And this year we are even exceeding this goal.

MATTHEW BRYZA: Wow.

AHMET BERAT ÇONKAR: It’s going to be over five gigawatts this year.

MATTHEW BRYZA: Amazing.

AHMET BERAT ÇONKAR: So hopefully it continues that way.

MATTHEW BRYZA: Really amazing stuff.

AHMET BERAT ÇONKAR: With the new legislation and with the acceleration of the investments, I think we can achieve this.

MATTHEW BRYZA: Yeah, similar, like Minister Bozinovska’s vision too, you’ve got everything, the entire value chain, all taken into account. In a way, I have to say that—having lived here for a while and worked on Turkish energy for, I don’t know, twenty-five years, I’ve never heard until around now such a comprehensive picture.

MATTHEW BALDWIN: It’s very, very impressive, really.

MATTHEW BRYZA: And with SMRs, part of it, let’s ask Mr. Niculescu then about the SMR project in Romania. We heard a bit about it yesterday. It’s such an innovative approach. You’re taking a moribund coal-fired plant, right, a brownfield project, and turning it into an SMR. So, to generate clean electricity. And also I know, because it’s, you know, NuScale you’re working with, an American company, the US Department of Energy is strongly supportive and looking at forming—or, we’ve already formed a strategic partnership between Romania and the US on energy with this NuScale SMR kind of as a centerpiece. So could you let us know the status of that project? And how significant is the SMR project in the overall mix of all those things you’re trying to make happen in Romania’s energy sector?

GEORGE-SERGIU NICULESCU: It’s not an easy job at all. It’s very provocative. It’s very complex. Because we assume the role of being, again, pioneers in this sector. First country in the—in Europe to deploy this type of technology.

MATTHEW BRYZA: And really, the first project in the world, really.

GEORGE-SERGIU NICULESCU: Yes, yes, yes, commercial project, yes. We strongly believe in this project. And I should give you a little bit of context. Romania has huge experience in operating nuclear power plants. We have two reactors in Cernavodă. Both have 1,400 megawatt installed power capacity. And we are planning to double up the size in Cernavodă by adding two more units. You should know the fact that Romania is the single country in the region that is not relying on a Russian, Soviet technology.

We have built these two reactors with Western technology CANDU from Canada. And we are following this tradition in looking into Western technology when deploying also small modular reactors. This is why NuScale was selected. So we have cut off any links with Soviet Union and Russia long time ago. I like to say that nowadays we have saw a divorce between Russian gas and EU economies. We started this nondomestic divorce with resources from Russia a long time ago. In natural gas we produce 85 percent of our needs, so just only 10-15 percent importing.

Coming back to small modular reactors, yes, we are deploying this technology on the land where it used to be a coal-fired power plant. So this is also one step ahead of the transition. The project is doing well. The company—the Romanian company involved in this project told me that engineers are on the site. We heard the extraordinary news from US Ex-Im Bank that they are—they approved finance of around $100 million, again for this project. Very optimistic about reaching the timeline and keeping the project into the timeline that was proposed. From a governmental point of view, huge political backup for this—for this project, in terms of regulator authority, of course, sustaining this project with all that it needs. Also, not only this project, but the full nuclear program that Romania has.

MATTHEW BRYZA: You know, impressive. You really are the pioneers globally on this project. Cosmin Ghita is an old friend of mine. I’ve been following this year, after year, after year. And you’re there. You’re on the edge of actually getting the investment. And just one more point to highlight that you made is how important it is to have the personnel who know how to operate nuclear generation, right?

GEORGE-SERGIU NICULESCU: Of course. Of course.

MATTHEW BRYZA: There’s not many countries that can do that. And those sorts of experts are in really short supply, so.

GEORGE-SERGIU NICULESCU: Yeah, well, we have good universities. We have people that were trained with skills. Of course, the workforce is essential in all the energy sector. And we are making a lot of efforts to stimulate students to follow up these career programs. Cosmin has a lot of programs in which he’s gathering students and guiding them towards this career. And he’s doing a good job.

MATTHEW BRYZA: Yeah. Great to hear. Great to hear. You mentioned timeline. We’re right on time. We have time for some questions, if there are some in the audience, and then there’ll be a coffee break for fifteen minutes, plus whatever time is left over from the questions. So I can’t see so well. Is any—oh, there’s one. Yeah. Is that John?

Q: It is indeed.

MATTHEW BRYZA: Hey, John. Good morning.

Q: Yeah, I know this problem. John Roberts, with the Atlantic Council and with the Institute of Energy in South-East Europe.

Question for Matthew Baldwin. I’ve just been in Azerbaijan several times researching a paper on Azerbaijan’s energy transition. And there’s one clear point that comes through from everybody, from the president down the ministry of energy, both foreign and domestic energy producing companies. Which is, they need investment to develop the gas required to meet the MOU of July 2022 for doubling Azerbaijani exports to the European Union. And, of course, to pay for the expansion of the Southern Gas Corridor that that entails.

And they say that needs long-term agreements which, in effect, means long-term contracts. But that all they get, as one corporate source put it, from the European Union was offers of three to five years, which is not enough to secure the kind of investment they need for the billions of dollars required for production and transportation expansion. Can you tell us what is the EU’s attitude to what is necessary to secure that kind of investment, and therefore the kind of imports that you would be looking to receive from Azerbaijan over the next three to five years?

MATTHEW BALDWIN: Well, again, you’re talking, John, I think about, here, what they’re hearing from companies in terms of commitments to contracts, right? Yeah. I mean, again, it’s one of the most jealously guarded commercial things. Companies do their contracts. I’m not party to them. Member states, governments, are not party to those contracts. So I can’t speak to that.

I would actually refer to the remarks of the Turkish deputy minister, that we need to work closely together, all partners, to secure this very important doubling of the expansion of the SGC. And I would just—you know, Matt, you felt I was making news, which slightly worries me. I don’t think I am making news. The European Union is not a barrier to companies taking longer-term contractual arrangements. Again, and I would observe that it is often the portfolio players, sometimes the big midstream companies, for a reason. They’re absorbing the big commercial risk in taking on—and this applies every bit as much to the Southern Gas Corridor as it is to US LNG projects and elsewhere.

It’s a difficult project. I think everyone’s always acknowledged that. We are working very hard with our partners in Azerbaijan. I know that the companies are working extremely hard too. And I’m encouraged here today to hear the strong commitments from the Turkish side, which it’s a no brainer, but I’m very glad that you’re also working hard on it. So I’m sorry that’s kind of a non-answer, John, to a good question. But that’s all I got.

MATTHEW BRYZA: No, it’s not a non-answer, actually. It’s a good answer, because you make the point that the big portfolio buyers of natural gas are able to balance out their portfolios, yeah. And my point was not that there’s any discouragement by the European institutions of LNG investment or natural gas investment, but it’s just that there’s a political fear that there would some change.

MATTHEW BALDWIN: There will be less gas over time, but there will still be considerable volumes under the—under all of our modeling. And someone was talking what’s the difference in a scenario, and a forecast, and a target? I’m not getting into that. But in all our scenario modeling, you know, there’s a lot of gas to be contracted and used in the European Union through 2049.

MATTHEW BRYZA: Great. Former Minister Palacio. And I think this will probably be the last question, because we’re just—

Q: I have two questions, one for the European Commission and one for the Romanian regulator. For the European commissioner, it’s a follow-up, in fact, to this question. We have had two great reports, one by former Prime Minister Letta, and one by former Prime Minister Draghi—the two Italians. There are other countries—

MATTHEW BALDWIN: They have a monopoly on reports, yeah.

Q: Yeah, on the report. Both of them highlight the need for the European Union to have the energy union. We have been—you have been speaking about just an electricity internal market. We are not there, and frankly we are far.

My question to the European Commission, the origin of that is not other that the treaty keeps the energy mix to each member state does with the energy mix whatever the member state wants. But on terms of environment, climate, this is the—this is—the European Commission decides. How are you going to overcome, convince? What are you going to do to have the member states coming together to have an energy mix? Because you speak about in the European Union gas. I mean, the European Union, gas, each one does whatever each member state wants, for the moment.

My question to you is linked to that. You have highlighted that you have looked successfully for some financing from the Export-Import Bank for your nuclear projects. Have you found any financing from the European Union Next Generation, from the European Investment Bank, or other European sources? And if not, tell us what was your—I mean, I’m giving the answer. Excuse me.

MATTHEW BRYZA: Thanks. We got a minute for each of you. Yeah, please.

MATTHEW BALDWIN: Oh, no question from Ana can we answered in a minute, but I’ll do my best. There’s a tendency now in Brussels, for every sentence to begin: As Mario Draghi says, comma. But he’s put his finger on a true point, as you’ve identified, which is the price of energy is elemental to the competitors of the European Union. It’s elemental in the short term, and, of course, it’s elemental in the long term, which is really one of the key things behind the famous energy trilemma.

We have—the incoming Commission has pledged itself to go further with the energy union—a true energy union is the phrase that’s been used. And part of that is about the governance. And this, I think, gets to your point. There’s going to be no competence grab, as we call it, in the European Union, where we say, right, member states, we will decide on your energy mix. That’s absolutely going to remain for them. But where this meets is in a bureaucratic thing called national energy and climate plans—I think North Macedonia, you’re doing this now—where you identify, each member state, how you’re going to meet the energy needs from energy security perspective and, of course, the mix that’s required to deliver on the ambitious decarbonization targets.

So, I mean, that’s not going to change. We have to work to deliver on this much more closely with every member state. These NECPs, as we call them, have to become investment plans. Back to my point, about the—yes, I’m sorry. But we also have to work with all levels of society—with regions, with cities—to deliver on this. Thank you. Sorry for eating up so much time.

MATTHEW BRYZA: Thank you. Perfect time. Mr. Niculescu—

GEORGE-SERGIU NICULESCU: Regarding financing the SMRs and the Doiceşti project, I’m well aware that—you know by now that this is a pioneer project. It needs a lot of backup, political, governmental backup. And I’m sure that after the project gets mature, a lot of financial institution, banks, international banks, will jump into this project and deliver finance. Until now, it is good that we have Ex-Im Bank on board with this project.

MATTHEW BRYZA: Great. Thank you. Thank you for your succinct, clear, and informative reply. So that’s the end of our panel. We now have a fifteen-minute coffee break before the next session, which is Disruption of Energy Security in Uncertain Times, moderated by our dear friend Mehmet Oğutçu. But before you go, I really want to thank these brilliant, strategic, clear, candid, and practical colleagues here on the panel for a discussion that, I think, enlightened everybody. Thank you very, very much.

Watch the full event

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Public Event

Atlantic Council Regional Conference on Clean and Secure Energy

The regional conference on clean and secure energy gathers top government, business, and thought leaders to discuss the next steps in the clean energy transition.

Central Asia Climate Change & Climate Action Energy & Environment Energy Markets & Governance

Speakers

Defne Arslan
Senior Director, Turkey Programs, Atlantic Council

Geoffrey R. Pyatt
Assistant Secretary of State for Energy Resources, US Department of State

Berris Ekinci
Deputy Minister of Foreign Affairs, Republic of Türkiye

Event transcript

Uncorrected transcript: Check against delivery

DEFNE ARSLAN: Good morning, dear guests. Thank you for joining us on our second day of the Atlantic Council’s Regional Conference on Clean and Secure Energy.

So I am looking forward to a full day of stimulating discussions and insights, and I really would like to thank you all for the excellent questions and conversations we all had yesterday. Yesterday, we indeed discussed many important issues ranging from regional renewable cooperation to the implications of the upcoming US elections. We heard important keynote remarks including His Excellency the Minister of Energy of Türkiye Mr. Alparslan Bayraktar and—along with many other distinguished speakers. Today we will explore, among other things, the rapidly changing geopolitics of the region, the current state of infrastructure, financing the green transition.

I do want to take a moment of—to reflect on this—on the concept of regional cooperation again, which brings us all together here and this is the essence of our conference yesterday and also today. I do think that we did monumental progress already, globally what we have already achieved, but still more to be done regarding the cooperation, especially so many things going on in the region—geopolitic threats, challenges that we are having, and what’s happening in Ukraine and also in Gaza and in Middle East, in the region. So still a lot to discuss. And how this will—these things will affect our cooperation in the region, especially energy cooperation, and how we can use energy cooperation to leverage these relationships and leverage the conflicts.

Of course, few people understand these things—but I need to say that few people understand these as well as Ambassador Geoffrey Pyatt, US assistant secretary of state for energy resources. A key member of the Foreign Service, Ambassador Pyatt has decades of experience in this region, including as former ambassador to Ukraine and Greece.

It is also my pleasure, after Ambassador Pyatt’s remarks, to introduce Ambassador Berris Ekinci, who will also deliver her remarks today, deputy minister of foreign affairs of Republic of Türkiye. Ambassador Ekinci has also had a very distinguished career in Ministry of Foreign Affairs of Türkiye, having previously served as director general for energy and environment, ambassador to Cuba, and in the Turkish Mission to the United Nations, London, Baku, and more.

And thank you, Assistant Secretary Pyatt, Deputy Minister Ekinci, for joining us this morning to deliver your remarks. Without further ado, I will pass the floor to Ambassador Pyatt for his keynote remarks, followed by Ambassador Ekinci’s keynote remarks. So, Assistant Secretary, please, floor is yours.

GEOFFREY R. PYATT: Good morning. Well, it’s great to be back here in Istanbul and a real honor to share the stage this morning with my friend Deputy Minister Ekinci.

I want to start, of course, by congratulating Fred, Defne, her whole team at the Atlantic Council for another wonderfully timed event. When Defne mentioned the plan to hold this conference again in Istanbul, I jumped at the opportunity knowing that it would be a really unique occasion full of insights and discussion among some of the region’s top energy policymakers and experts.

I also want to recognize all of the ministers who are here today or have been here to participate, including Minister Bayraktar, Minister Balluku, and Minister Bozinovska. And I’m also thrilled to point out that a large number of these ministers are women—progress that we should not take for granted, especially in the energy sector.

The same event here in Istanbul in 2022 was part of my first trip abroad as assistant secretary of state for energy resources, and today provides a really good opportunity to take stock of our work since then to promote regional energy security and energy transition. We’ve accomplished a great deal together over the past two years, including bringing energy policy to the forefront of foreign policy conversations and public consciousness. The energy transition today is accelerating, and each country is taking its own path, something that I look forward to discussing with many of you at greater depth next month at COP29 in Baku.

Since 2022, Europe has diversified its energy supply much faster than anyone would have predicted at the time. Russian gas has gone from 45 percent of EU supply in 2021 to just 15 percent last year, with a reaffirmed commitment to Europe’s target of full decoupling from Russian energy by 2027.

Turkey’s LNG import and regasification capacity has played an absolutely critical role in this unprecedented decoupling and will continue to do so as additional capacity comes online here in the country. Recent deals such as Turkey’s recent long-term contracts with Total and Shell, much of which will be composed by American-origin LNG, along with Venture Global’s capacity contract at the Alexandroupolis FSRU, are confirmation of how global energy companies are looking more and more at this part of Southeast Europe as a critical energy hub. Minister Bayraktar made clear when we were together last month in Houston that Turkey’s energy mix and sources of supply are changing permanently, which is a good thing for Turkey but also for the wider region.

Meanwhile, exciting new projects like the Vertical Corridor are set to build upon these trends. Using existing infrastructure in a cost-efficient manner, the Vertical Corridor will allow LNG imported from the Eastern Mediterranean to fill vast storage tanks as far north as Ukraine, providing a new source of gas for Central Europe and the Western Balkans and helping to reduce price volatility along the way. The Vertical Corridor will also be crucial in supporting the EU’s goals for energy decoupling by 2027, something I know is at the top of the agenda for the next European Commission. Indeed, Deputy Director-General Baldwin, who you’ll hear from later this morning, and I were together earlier this week at an event in Athens focused on exactly this topic.

Turkey’s role as a transit country for Caspian gas from Azerbaijan, and we hope in the near future Turkmenistan as well, will remain vital as gas serves an important medium-term role in route to a net-zero future. The Caspian region, of course, is an area of increased US government outreach as well, as evidenced by President Biden last year hosting the Central Asian leaders for a C5+1 summit meeting in New York. Both Turkey and the United States share the goal of helping the Central Asian region reach its full potential across the board, including on critical minerals development—which, as Minister Bayraktar pointed out yesterday, underpins our global clean energy ambitions. Turkey and the United States also share a strong desire to see oil flow again from Iraq through the Iraq-Turkey pipeline, a message that the United States has repeated at the highest levels with our friends in Baghdad and will continue to do so.

This region’s energy significance is not limited to fossil fuels. Indeed, Southeast Europe plays a key role in our collective clean energy future. As Minister Bayraktar described so compellingly in his remarks yesterday, Turkey has emerged as a leader in renewable energy, demonstrating that clean energy and secure energy can do hand in hand.

Equally important to the growth of renewable deployment is the work being done to develop and expand electricity interconnections among the countries of the region. These interconnectors are what moves clean electrons that are powering the energy transition. Expanded electricity transmission offers the prospect for more flexibility, more capacity for clean energy coming onto the grid, and more reliable and affordable energy for consumers. Turkey’s new electricity interconnector with Iraq, which I was delighted to discuss with KAR Group’s CEO in Erbil a few months ago, is a great example of how Turkey’s leadership can help the wider region to make progress on energy self-sufficiency and affordability. Similarly, Romania’s electricity interconnectors with both Moldova and Ukraine have been an essential support—source of needed supply and resilience, as George Niculescu and I were able to discuss last night.

Interconnectors also allow countries with comparative advantages in wind, solar, and other clean energy technologies to export electricity in times of high production and to import electricity when needed. Recent energy price spikes in Southeast Europe are a reminder that the energy transition will require more cooperation across and among energy markets like the ENTSO-E network. Romania, Bulgaria, and Greece’s initiative to work together to combat these high electricity prices during peak times is exactly the kind of coordination that’s needed to further integrate and efficiently allocate the region’s supply and demand, and interconnectors are the foundation to that cooperation. Expanded transmission can also allow for greater renewable energy deployment, which cannot always be built close to markets that they serve due to the large footprints unlike baseload coal, gas, and nuclear supplies.

As we work together on the energy transition, it’s important that we don’t replace an era of dependence on Russian fossil fuels for an era of dependence on Chinese clean technology inputs. Clean energy supply chains provide another area for regional cooperation. This includes both securing and diversifying critical mineral supply chains in a responsible manner. Turkey’s new membership in the Minerals Security Partnership Forum is a great example of how our two countries are working together on this critical issue.

We also need to develop and leverage the region’s clean energy manufacturing base. Turkey’s world-leading industrial groups are particularly well-positioned to help us deepen our supply chains for wind and solar technologies, helping to provide alternative sources for clean energy inputs that we need to drive the energy transition.

I have great confidence that if we work together towards greater regional energy collaboration while concurrently rejecting any further ties with an unreliable Russian Federation, the region’s energy abundance will help to foster a secure, affordable, and sustainable energy system for the whole region and beyond. In this regard, as Minister Bayraktar and Secretary of Energy Granholm reaffirmed with their recent establishment of the US-Turkey Energy and Climate Dialogue, the Biden administration is strongly committed to our partnership with Ankara on all of these issues.

In that regard, I’m looking forward to listening now to Deputy Minister Ekinci. And let me thank you again for the wonderfully warm welcome back here to Istanbul. I wish you a very successful conference and look forward to the discussions to come. Thank you very much.

BERRIS EKINCI: Ministers, ladies and gentlemen, distinguished guests, at the outset I would like to thank Atlantic Council, and namely the president and CEO Fred Kempe and the senior director of Turkey Program Defne Arslan, for gathering us for this very timely Regional Conference on Clean and Secure Energy, as we are only a month away from COP29 to be held in Baku, Azerbaijan. And always it’s a great pleasure to have the opportunity to meet with Ambassador Pyatt and discuss issues of common interest with the US.

Energy, once simply viewed from the perspective of supply and demand, has now evolved into a much more complex and challenging topic. Today, the focus has shifted towards the role of energy in view of rising security challenges and climate concerns. Our common objective is to meet energy security concerns, support efforts to curb climate change, while at the same time maintain uninterrupted access to energy at affordable prices.

Energy security has not only become inseparable from the wide discussion on energy transition, but it has also become one of the primary elements of geopolitics and international security debate. The realities of climate change, along with rising tensions in the region, demand us to act promptly and effectively. Accordingly, international and regional cooperation has become imperative in order to combat rising challenges concerning access to energy and clean energy technologies.

Over the past few decades, taking into account its deep dependency on oil and gas imports, Türkiye invested heavily into diversifying its energy infrastructure while also increasing the adoption of renewable energies, recognizing the importance not just for its climate goals but for its long-term energy security as well. This policy has assisted the energy security of regional countries at a very critical time during the last couple of years. Today, more than 58 percent of Türkiye’s installed energy capacity comes from renewable resources, including hydro, wind, and solar energy.

Despite our achievements, we also recognize that we cannot face the rising challenges in this field all alone. Cooperation on a global and regional level is necessary if we want to decarbonize our economies while maintaining access to reliable and secure sources. The journey towards a fully clean energy system is evidently not going to be easy. Determination and willingness is not enough. Critical raw materials and rare earth elements need to meet the ever-increasing demand for clean energy technologies. As it stands, the current supply levels will be significantly outpaced by the growing demand for clean energy projects.

Recognizing the need for a global dialogue that address these issues, Türkiye has joined the Minerals Security Partnership Forum. We are ready to work with our partners under the MSP, as well as other actors, to secure these resources in the most efficient way and to the benefit of all.

During this transition phase, we must also balance the interest of a carbon-free economy with the interest of an economy that has an increasing demand for access to affordable energy resources. In other words, we will have to be realistic. This is where nuclear energy and natural gas will play a crucial role.

We have reached a point where it is now widely accepted that it will not be possible to meet net-zero goals without nuclear power. Total nuclear energy power, which has been at a plateau level since the late 1980s, is now seeing a global call to triple its power by 2050. The Nuclear Energy Summit held in Brussels last March has highlighted the fact that the international community now sees nuclear power as a vital transition fuel.

Türkiye’s progress in building its first nuclear power plant in Akkuyu shows our resolve to diversify our energy mix. This project will be followed by a second and third. We are currently in talks with interested parties for their realization. Türkiye is also planning to more than triple the use of nuclear energy capacity by 2050.

Alongside the well-established use of conventional reactors, [small modular reactors (SMRs)] will also provide an exciting opportunity for the future. The flexibility and cost savings offered by SMRs make them all the more attractive. They will be pivotal for many countries wanting to add or increase the share of nuclear power into their energy mix. In this respect, Türkiye is actively seeking to work with partner countries and companies to be able to benefit from this new, innovative technology.

Finally, natural gas will remain a vital part of the energy security equation. The importance of natural gas has been underscored by recent global events, the war in Ukraine giving us all a critical wakeup call. Türkiye—located at the crossroads of Europe, Asia, and the Middle East—is uniquely positioned to support the energy security of its region. As clearly underlined by our flagship projects such as TANAP, our strategic location as a potential hub for natural gas offers many opportunities that could further strengthen the regional energy security. There are, for instance, many untapped resources in Turkmenistan and Azerbaijan which may be directed to Türkiye and other European markets.

We need to seize this very crucial window of opportunity, a window which may not be open for very long. However, without designing a common regional vision and strategy, giving coordinated and coherent messages with long-term perspectives, we will not be able to convince the energy companies to take investment decisions and the financial institutions to get onboard for the financing of such projects. We need more than words and political statements. Thus, the future of energy security lies within international cooperation and a strong commitment to innovation for a cleaner future.

Türkiye is determined to working with all parties in Europe and beyond for a secure and clean energy future. Together, we can rise to the challenges of climate change and energy security, ensuring a stable and prosperous world for generations to come. Thank you.

Watch the full event

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This political jockeying has important consequences for two interdependent portfolios in particular, whose prominence has grown dramatically since the last election cycle in 2019: energy and climate. Europe has gotten through the worst of the energy crisis following Russia’s full-scale invasion of Ukraine. But now the energy transition faces growing political headwinds, evidenced by a backlash to green policies expressed in recent European, national, and subnational elections.

To answer these challenges, Mario Draghi, former prime minister of Italy and former president of the European Central Bank, has written a report postulating that the Clean Industrial Deal should be adopted by the new European Commission within the first one hundred days. As the energy focus shifts from “clean” to “green”—suggesting more emphasis on industry and competitiveness as compared with environment and climate—it remains to be seen what this evolution means in practice. It needs to be viewed in the light of increased geopolitical tensions and rising concerns over European energy security.

Europe stands at a critical juncture in its mission to meet energy demand and fuel economic growth in a changed world. It’s a tall order. To do this requires the new Commission to overcome three key obstacles: lack of funding, import reliance, and declining economic competitiveness.

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Out of the energy crisis comes a climate opportunity

Europe’s energy crisis created tension between energy security and its climate ambitions, which lie at the heart of its global diplomacy. As Russia turned up the dials on its energy war against Europe, the continent rapidly embraced liquefied natural gas (LNG). Some countries—notably Germany—even restarted previously closed coal plants.

This kept the lights on but damaged Europe’s green credibility. As the crisis becomes less acute, Europe has the space to prove to the world that it is possible to build a secure, competitive, and resilient energy system—but to accomplish that task, it must first address three major obstacles.

1. Without adequate funding, Europe’s climate agenda is toothless

The problem is that Europe’s current climate toolbox is not up to this task. The European Union finally put adequate resources behind its Green Deal by using money left over from the Recovery and Resilience Facility (RRF), a pandemic-era policy innovation that utilized collective borrowing for the first—and so far, only—time.

Brussels mandated that at least 37 percent of member states’ shares of the €750 billion program go toward climate-related projects, and then repurposed €300 billion of the facility’s scantly used funds for the May 2022 REPowerEU plan, which aims to wean the bloc off Russian energy in part through decarbonization.

But that money has been spent. The EU reports that nearly all of REPowerEU’s funds have been mobilized, in addition to €275 billion of the RRF toward emissions-reducing projects. The EU’s climate account has run dry, but not its legislative ambitions—final approval was given to a new Net Zero Industry Act last May, and a Critical Raw Materials Act (CRMA) in March. Now, Commission President Ursula von der Leyen intends to introduce a Clean Industrial Deal within the first one hundred days of the new mandate.

But without new money to back up these initiatives, Europe’s climate plans have no teeth. Over the next decade, the US government could invest $569 billion under the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act, alongside a well-capitalized and risk-tolerant US financial sector. And China invested a staggering $890 billion in low-carbon sectors in 2023 alone, with little indication it will soon pull back.

Europe faces an internal battle to match such funding. Former Italian prime minister Mario Draghi’s long-awaited report calls for new common borrowing to reinvigorate European industry. But the Commission’s previous proposal for a European Sovereignty Fund faced widespread opposition among northern member states, who oppose further collective borrowing. If such opposition continues, clean industry may well seek greener pastures elsewhere.

2. Europe’s reliance on foreign energy, materials, and finance creates economic risks

Europe is dependent on energy imports. The reality that 45 percent of EU gas consumption came from a hostile power was made clear in February 2022. While Europe survived a dire end to its reliance on Russian fossil fuels, it now depends on imported LNG for 37 percent of its gas.

Likewise, Europe’s clean industry relies on Chinese finance and products. Last year, Europe imported a staggering $57 billion-worth of China’s marquis clean energy products: solar photovoltaics, lithium-ion batteries, and electric vehicles.

Where Europe tries to substitute those imports with domestic products, Chinese money and technologies are critical for backing such ventures. Chinese investments in the EU electric vehicle supply chain reached €4.7 billion in 2023. Chinese firms are in various stages of development for battery, auto, and material plants in Germany, France, Sweden, Finland, the United Kingdom, Spain, and Hungary.

These external dependencies leave Europe vulnerable to market instability and geopolitical pressure. The effects are already being felt.

Exposure to a more liquid and globalized market for energy has inflicted massive volatility on European gas prices, which were nine times higher than US prices in August 2022 before leveling off to a modest five-fold spread by May 2024. Partly as a result, Europe’s electricity prices are also two-to-three times higher than in the United States, with profound implications for Europe’s manufacturing competitiveness and investors’ willingness to plow more money into European industry.

The development of clean industries still leaves Europe beholden to external actors, where it depends mostly on imports for key cleantech raw materials like lithium, cobalt, rare earth elements, magnesium, and graphite.

3. Energy dependence and industrial policy imbalances are harming Europe’s competitiveness

European industry is still reeling from elevated fuel prices. Germany’s manufacturing sector—which in 2018 accounted for two-thirds of the EU-28’s trade surplus—has been hit by higher fuel prices, which Markus Krebber, the chief executive officer of Germany’s largest utility, warned may never fully recover. The automotive industry, the crown jewel of German manufacturing, responsible for one-sixth of German exports, is no longer performing—exports in 2023 were down 11 percent from 2019 levels.

Attempts to use industrial subsidies to stem Europe’s competitive decline are not only insufficient to keep pace with China and the United States—they also exacerbate intra-European disparities. Lacking consensus to establish common funding mechanisms at the EU level, the Commission in March 2022 relaxed state aid rules that normally prevent member states from subsidizing domestic industry. Perhaps unsurprisingly, Germany, France, and Italy accounted for 85 percent of industrial support under the crisis framework, undermining European solidarity and widening the competitive gap between the bloc’s three largest economies and the other twenty-four member states.

This every-country-for-itself subsidy strategy risks centralizing clean industry around Europe’s big three economies, given the prevailing economics of localization when dealing with ultra-heavy machinery like batteries and wind turbines. While Poland and Hungary currently account for most EU battery manufacturing capacity, Warsaw and Budapest can’t compete with aid packages from Berlin, Paris, and Rome.

Europe’s path forward requires cooperation—and competition

The European Union began as a peace project but now must reconcile itself to a world that it is more dangerous, more competitive, and more uncertain. Europe cannot resign itself to be a peripheral player in an era centered on US-China strategic competition. The continent needs to be clearer on its role within the international system and its geopolitical stance toward Washington and Beijing. And it must remember that Europe’s core strength has always been its ability to forge unity out of diversity, whether internally or with external partners.

On funding, Europe needs to work collectively

Collective European action is required to build competitive clean industries at home. The Draghi report calls for an EU-funded Marshall Plan for European industry, which low-carbon sectors would naturally be at the heart of. A common EU funding mechanism would also help to crowd in private sector investment, much like the IRA does in the United States. Further common borrowing is needed to make that a reality.

Fully leveraging private European capital also means providing clear and simple rules to the private investors. That requires a technologically neutral approach to moving towards net zero, much as the United States has done with its landmark climate laws.

The EU green taxonomy should include nuclear fusion and fission, geothermal, and other low-emission technologies that advance energy security and emissions-reductions in tandem. Europe cannot achieve its moonshot mission of climate neutrality by 2050 with one hand behind its back. No solutions can be taken off the table—the United States and China certainly are not doing so.

Europe needs trusted partnerships to de-risk external dependencies  

Collective European efforts must go beyond funding. Reducing external dependencies does not only mean replacing foreign energy imports with domestically produced clean energy. It also requires acting in concert to secure greater bargaining power, as well as diversifying sources of imports and pivoting towards trustworthy suppliers.

Europe must enhance its demand aggregation measures under the EU Energy Platform to achieve greater security and affordability in energy sources where it will always be a net-importer, such as LNG and hydrogen. It must also consider such measures for critical raw materials.

While the CRMA is justified in its objectives of locating more extraction and processing within Europe, there are limits to that approach. Europe’s raw materials cannot only be Made in Europe—they must also be Made with Europe, alongside a complex array of trade partnerships with nations in Africa, Latin America, and—of course—the United States and Canada. 

Indeed, Europe must also deepen its collaboration in energy and climate among external partners who share its vision of an open, free, and climate-secure world. This means intensifying transatlantic cooperation on innovating and deploying technologies like batteries, electric vehicles, and nuclear energy.

A competitiveness agenda means re-tooling the EU for an era of great power competition

Achieving Europe’s energy security and climate goals requires a radical approach that gives the European Union the tools to meet the challenge of a more competitive world. This means transforming the European Union so that it can survive in an era defined by hot war, industrial policy, and strategic economic competition. Europe must adapt, or as Draghi says in his new report, succumb to a “slow agony.” The new Commission has not a second to lose.

Michał Kurtyka is a distinguished fellow with the Atlantic Council Global Energy Center and the former Polish minister of climate and environment.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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The post A new European Commission faces three key issues at the heart of the clean energy transition appeared first on Atlantic Council.

The bottom line

The urgency of the green transition is not going away, and it is a question of security as much as it is a question of health, trade, economic, and environmental stability. Climate change is driving a security crisis in the Arctic as melting ice caps open new warship routes and shift geopolitical dynamics; it is fueling economic instability as resources become scarce and weather patterns disrupt industries; and it is intensifying border pressures as displaced populations seek refuge from climate disasters. The Biden administration and the European Commission made commendable progress on some climate targets and with spending programs to reach them. But more will be needed. Policymakers should adopt a NATO-style approach to long-term decarbonization and work to boost the green economies of the United States and the European Union (EU) together, not separately. 

State of play

The blessing of addressing climate change is the simplicity of the goal: reduce carbon emissions. The complexity lies in doing so in a way that is coordinated, fair, mutually beneficial, and, above all, maximally implemented to get as close to carbon neutral as possible. Fears concerning energy reliability, stunted economic growth, and global competitiveness are commonly cited barriers to achieving this goal. But the beauty of international cooperation is that it lightens each of those potential burdens. The problem, therefore, is also the solution.

Both the United States and the EU have put forward significant financial plans to invest in green technology and create avenues for the green transition of key industries. The US Inflation Reduction Act (IRA) was created to stimulate the US energy transition with an explicit focus on green businesses, and the EU’s European Green Deal was created as a counterpoint to boost European competitiveness in green markets. While the IRA focuses on subsidies as incentives for companies to pursue green transitions, and the European Green Deal focuses on regulations rather than incentives, each plan is by design insular. The IRA, for example, unleashed $369 billion in climate spending over the next ten years, encompassing primarily three categories of subsidies dedicated to electric vehicle (EV) purchases, clean-tech investments, and carbon-neutral electricity production. Certain green tech sectors, such as hydrogen energy or battery production, could be transatlantic and cooperative to create synergy and lower costs. Furthermore, refocusing on European and US investments to build mutual supply chains for electric vehicles or integrated power grids would allow for easier sharing of renewable energy.

At the supranational level, the EU has also made significant gains in setting climate targets. With programs like NextGenerationEU, the Fit for 55 package, and the REPowerEU Plan, which each set ambitious decarbonization goals, the outgoing European Commission showed clear political will to prioritize a green agenda.

The strategic imperative

In the wake of the energy crisis sparked by Russia’s full-scale invasion of Ukraine in 2022, making European economies energy self-reliant has become crucially intertwined with overall long-term geopolitical security. This is applicable to not only mitigating catastrophic climate events but also to reducing dependency on strategic adversaries. More than four decades ago, US President Ronald Reagan foresaw the strategic weaponization of Europe’s, particularly Germany’s, reliance on Russian natural gas and its potential implications for the national security of NATO allies. A climate coalition could begin with the longstanding defense allies established by NATO and then could hopefully expand to include other nations from Latin America, Africa, and Asia. Such a movement would also put positive pressure on countries that have expressed reservations about supranational decarbonization goals, namely reaching net-zero emissions in order to evade global climate catastrophe.

Looking ahead

More work has to be done on both sides of the Atlantic. While a milestone in US climate policy, the IRA alone will not meet climate targets. Early estimates indicate the United States needs to spend $10 trillion by 2032 in order to get on track to reach net-zero emissions by 2050.

Similarly, research by the Institut Rousseau suggests that the EU will need to spend €1.5 trillion per year to meet its 2050 zero emissions target. Total EU gross domestic product (GDP) in 2023 was roughly €17 trillion, which would make this annual commitment figure as much as 8 percent of total GDP. Consequently, funding remains a consistent deficit in reaching decarbonization goals.

Beyond the EU level, most EU members do not invest enough in low-carbon energy systems. For example, the EU’s Climate Action Progress Report 2023 states: “Progress by Member States towards the EU 2050 collective climate neutrality objective still appears insufficient. For some Member States, progress in recent years is not consistent with the effort required in the coming decades to meet the long-term climate targets,” failing to meet the supranational objectives laid out by the aforementioned plans. In Germany, although greenhouse gas emissions fell by 10 percent in 2023, experts still report that the country will not meet its 2030 goal of reducing its emissions by 65 percent by 2030. As a result, most EU members are not on track to meet their carbon emission targets. Drawing on a shared spending strategy enforced by a mutually accountable coalition structure could help pressure individual members to meet larger shared goals.

Allocating more resources toward meeting these obligations may prove more difficult with the shifting political winds across the continent. Far-right political parties made significant gains in European Parliament elections this year, and far- and hard-right parties have grown domestically within several key EU nations, such as the Netherlands, France, and Germany. Many of these parties have spent recent years incorporating climate policy criticism into their campaigns. Germany’s far-right Alternative for Deutschland, for example, has called for Germany’s complete withdrawal from all climate agreements, reinforcing its long-standing climate denialism. The rise of the National Rally in France ahead of the July snap elections highlighted concerns over the party’s anti-environment agenda. While there are many divisions among the far right at the EU level, far-right parties may easily unite against green initiatives and block key spending. And far-right parties are not the only ones to highlight skepticism toward the possibility of a climate-spending baseline.

In addressing the urgent need for a cohesive and international response to climate change, it is imperative to foster investment strategies that prioritize collaboration with nations demonstrating a commitment to cooperative engagement. A case in point is Hungary’s ambitious initiative to position itself as Europe’s leading producer of EV batteries. While this endeavor holds potential for significant economic growth, it raises critical concerns regarding the alignment of Hungary’s political stance with the broader goals of climate cooperation.

Hungary’s inclination to cultivate favorable relations with Russia, coupled with a recurrent disregard for democratic principles and a tendency toward isolationism, as well as China’s sizable investment in Hungary’s EV market, poses risks to the integrity of global efforts to confront climate change. Budapest’s nationalist approach and its reluctance to uphold cooperative relationships within the EU—and beyond—underscore the danger of consolidating control over essential resources, such as EV battery production, in the hands of an increasingly unilateralist government.

To safeguard the efficacy of climate change policies, it is essential to ensure that investment frameworks are designed to engage with countries that demonstrate a steadfast commitment to collaboration and shared democratic values. By prioritizing partnerships with nations that embrace a cooperative mindset, policymakers can cultivate a more resilient and unified approach to addressing the global climate crisis.

Policy recommendations

An Atlantic Council policy memo last year outlined a proposal for a NATO-style approach to targeting long-term decarbonization. This could still be the strongest proposal for a transatlantic partnership dedicated to the shared goal of combating climate change. If climate change can be understood as a global security threat—a threat to economies, infrastructure, future growth, and a world free of conflict over resources—then the best way to tackle it is a NATO-style approach to climate change budgeting. If shared defense spending can be pooled with a target of 2 percent of GDP from member nations, why can’t the same model be applied to climate change?

EU member states and the United States should set national-level spending targets based on annual GDP to fairly contribute to achieving decarbonization goals established by the Paris Agreement. This coalition-style approach would ensure mutual accountability and create a forum for high-level negotiation to produce predictable funding for decarbonization-related policy in the ongoing effort to fight climate change.

A transatlantic cooperative shared-spending target based on GDP would create a fair mutual incentive that allows each country to contribute according to its economic ability, rather than distribute the responsibility piecemeal according to the domestic agendas of each member state. This is intended as a strengthened version of Nationally Determined Contributions (NDC) as outlined by the Paris Agreement, which in its current form creates a dispersed and volatile approach vulnerable to short-term political changes when the solution must be sustained, reliable, and predictable. NDCs would of course continue to exist, but an alliance structure would strengthen those contributions, and that 2 percent of GDP spending would be combined and redistributed as needed based on climate goal needs.

The EU’s neighboring countries, who are currently not included in the EU’s broader initiatives, would be able to join this spending coalition and could use their participation to accelerate EU membership. Turkey and Ukraine, for example, could demonstrate their commitment to EU plans and values and further their accession processes by contributing to this partnership.

Remember the mutual benefit of a GDP-based funding system.

Using NATO as a model, it is important to remember that the Alliance is a contract of mutual security. The benefit that NATO members gain from participation is the promise of mutual aid. Therefore, a decarbonization-focused spending target must also promise common funds to aid in a series of climate-related crises. Member participation would guarantee that part of the spending would be allocated not only to future-proofing infrastructure and green technology but would also be able to be directed toward alleviating the costs imposed by climate-related crises.

This would provide an obvious benefit for countries such as the Netherlands, which faces immediate threats from coastal flooding and storms. But what about nations that have expressed reservations about climate change policies as an expensive and unnecessary burden?

Take Poland, for example. What benefit would Poland gain from this partnership? It faces little of the immediate climate risks that a country like the Netherlands might face when it comes to rising sea levels, and it is traditionally heavily reliant on coal for its economy and to keep the lights on, with coal yielding 63.7 percent of Poland’s energy generation mix in 2023.

Yet climate change is already impacting Poland. Changing weather patterns increase the risk of wildfires, crop failures, and water pollution. In just one example, the Oder River, which marks Germany’s eastern border and Poland’s west, has experienced several massive fish kills in the past two years, which experts have attributed to algae blooms caused by high levels of salinity and other pollutants from coal-powered industrial runoff and extended hot weather. A mutual spending target would allocate resources to alleviate these and other environmental catastrophes as well as to invest in solutions that protect against such disasters in the future. Climate policy spending could also be used to offset secondary climate-related expenses, such as air pollution, which leads to millions being spent on treating lung-related health concerns.

Countries applying for aid from this coalition to address damages from climate change may also need to commit to invest some of the aid in green industrial alternatives and other agendas to reach broader decarbonization goals. This reinforces the coalition’s mission to prevent future climate disasters by addressing the root cause—carbon emissions—through proactive investment.

Rather than focusing on initiatives to bolster US or EU industry separately, refocus initiatives to lower costs through cooperation.

The IRA and the European Green Deal both create joint investment in green technologies. Both approaches use subsidies to boost progress in green tech and entice investment, presumably each at the other’s expense. But the IRA and the European Green Deal are not mutually exclusive. Rather, they are complementary.

The United States and the EU could set a number of standards and regulations for private businesses that operate on both sides of the Atlantic, such as requirements for businesses to disclose greenhouse gas emissions, and standards for businesses to adapt to more energy efficiency rather than offsetting carbon emissions. According to a report from the Center for Active Stewardship, companies representing 71 percent of the S&P 500 by market capitalization and 87 percent of the index’s direct emissions have set voluntary net-zero goals. By requiring emissions disclosure and setting energy efficiency requirements, US-EU cooperation could standardize emissions and avoid creating a competition imbalance.

Carol Schaeffer is a nonresident senior fellow with the Atlantic Council’s Europe Center, host of the Transform Europe Debrief series, and a reporting and journalism fellow with the Jain Family Institute, focusing on decarbonization, the energy transition, and European policy.

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