We would not be exaggerating if we said that 2025 will be a year of destiny for world energy security. The main reason for this is that the uncertainties experienced in the sector will impose critical decisions this year.
It would be useful to
take a rough look at the world energy outlook. According to the Energy
Institute data, when the fuel types are examined in the primary energy
consumption, which was 620 exajoules in total in 2023, it is seen that
hydrocarbons (gas, coal, oil) still constitute more than 80% of the total
consumption. The share of sustainable renewable resources, although it has been
talked about a lot in recent years, is still at the level of 8%. The rest is
made up of hydro and nuclear energy. However, a fundamental trend stands out in
the world energy sector: The new era, expressed as the energy transition with
green energy development, seems to have accelerated after the Covid-19 pandemic
and reached an irreversible point. Indeed, according to the calculations of the
International Energy Agency, the fact that the total investment in clean energy
within the investments of 3 trillion dollars in the energy sector is two times
bigger than the investment in fossil fuels gives a clue about the future.
Electricity consumption
is increasing much faster than the demand for energy worldwide. In other words,
the ‘electrification of energy’ is now an undeniable phenomenon. While
renewable sources, whose production costs have decreased significantly, are
rapidly increasing their share in power generation, it is expected that the
total renewable energy will overthrow coal as the leader in this field after
2025. On the other hand, the main factor that makes the issue more striking
than the competition between fuel types is the industrial and technological
dimension of the issue. A new energy economy is being formed with solar panels,
wind turbines, batteries, electric vehicles. In relation to this, innovations
in electricity storage and rare elements are also completing the supply chain.
Most importantly, investments in clean energy are generally becoming an
important component of economic growth. For countries that have a claim in the
economy, acquiring clean energy technologies is a must. Countries and companies
are increasingly entering into fierce competition in the production of clean
energy vehicles and the price volatility in the sub-energy markets are
alarming.
Uncertainty is
increasing at this point. The clean energy transition in the world will not be
completed immediately when the above-mentioned picture is taken into
consideration. The world is doomed to fossil fuels for a certain period of
time. This period varies according to the geography. Different interest groups
have different goals in this regard. In the USA, which is the leader in world
oil and gas production, the Trump administration, unlike the Democrats, may
wink at the hydrocarbon industry rather than green energy. While the
international system is witnessing competition between the USA and CHINA in
every field, it is natural for the USA to advance in its own field of
superiority, not on the playing field of its main rival, which is the clear
leader in green energy. Oil is sensitive for the USA in terms of demand
management as well as producers. The US aircraft industry, which is dominant in
the aviation sector where oil still seems unrivaled, is an example of this.
However, this is a short-term situation. In the long term, high tariffs against
China seem inevitable in order to produce clean energy equipment with local
means and to make this competitive. Catching the electrification trend through
small-module nuclear reactors is another option. The EU is also having
difficulties, especially with regard to electric vehicles, and is being dragged
towards a decision between the US and China, countries with which it has a
large trade volume.
The clean energy
economy rising with technological innovations will also bring geopolitical
consequences. While world energy security is now being built on these new
realities, the power struggle will gradually shift from oil and gas to other
areas. As clean energy, driven by the slogan of reducing carbon emissions,
becomes widespread, existing energy commodities will take their place in
international trade with lower volumes. China is the leader in machinery and
equipment production in clean energy branches such as solar and wind. The
interesting part is that the green energy revolution that started 25 years ago
under the leadership of the EU has gradually passed into China's hands. This is
complemented by the fact that the electric vehicle revolution that spread in
Europe 10 years ago also eventually passed into China's leadership.
On the other hand, the
situation is not homogeneous in terms of fossil fuels. Coal will not have good
days due to environmental pollution; oil will also face additional demand
problems due to China, which now turns to green energy but has been the leader
in demand until now and is not growing as much as before. While it is being
debated whether the demand for oil has reached its peak level worldwide,
another possibility is that the shock in financial markets expected in 2025
will also challenge the world economy and particularly affect the demand for
oil. Being a transition fuel with a significant share in power generation and
being a relatively clean hydrocarbon opens up space for natural gas. Moreover,
the new wave of liquefied natural gas (LNG) supply that will start this year
and continue until 2030 will make gas prices competitive. The preference of LNG
as a fuel type in newly ordered ships is another factor in favor of gas.
However, it should be remembered that the fate of hydrocarbons will not be
independent of the general energy policy preference.
All these factors
increase the uncertainty in energy markets, especially prices, as we enter the
new year. The critical decision moment in every field in the energy sector is
approaching. These decisions will differ by companies, countries and even regions.
However, regardless of which direction they are, it is understood that the
decisions to be made this year will shape the world energy agenda for at least
10 years.