Filenews 24 December 2024 - by Ariel Cohen
In the run-up to the inauguration of U.S. President-elect Donald Trump on January 20, 2025, energy markets have begun to adjust to the new administration's economic policies.
The next administration will provide support to the oil, gas and nuclear industries, reassessing its renewable energy policy mainly due to the shift towards global energy security and reliability to offset the effects of a U.S.-China trade war. This comes at a time when both companies and governments are seeking to secure more and cheaper energy than ever before, in anticipation of a significant increase in consumption for AI projects and other economic activities.
The share of renewables in the global energy mix was projected to increase to 50% by 2030. However, the Trump administration's energy policies may change that goal. Trump's campaign statements have already affected the US. The appointment of Chris Wright as energy minister clearly shows the new government's intention to maximise oil industry output. Trump's team has said it will lift Biden's blockade on liquefied natural gas export licenses and speed up the permitting process for drilling on federal land.
These moves look set to weigh heavily on the solar industry. Not only will the sector not enjoy the support provided by the outgoing Biden administration, but it will also depend on imports from Asian states that are in Trump's crosshairs – most notably China. Trump's tariffs are expected to hit companies that use solar and wind power while leaving plenty of room for the nuclear industry to grow.
The global nuclear renaissance
European states have been hit by sanctions imposed on cheap Russian gas and are reviewing nuclear power as a solution. Hungary, a member of NATO and the European Union, adds two Russian-made VVER nuclear reactors to power generation. Romania, Slovakia, Poland, Finland and other countries are also turning their attention to nuclear energy. Outside Europe, Indonesia is in talks with both Russia and the United States on a nuclear deal to leave coal behind.
Smaller states are now interested in Small Modular Reactors (SMRs). A treaty that opens a new avenue for economic diplomacy and exchange of views between emerging countries and states with more advanced nuclear know-how.
India, one of the world's most populous countries, has announced plans to triple its own nuclear power generation by 2030. The US may seize the opportunity to gain a share in the Indian energy market by investing in and supporting nuclear infrastructure. In India, the Atomic Energy Act 1962 prohibits the operation of non-government nuclear power plants. However, pressure to increase electricity production forced the Indian government earlier in 2024 to put public-private partnerships on the table.
China also sees nuclear power as a push forward after disappointing gains from the renewable energy market, added to declining exports of solar panels and electric vehicles. By 2030, China is set to produce more nuclear power than the two current leading powers—France and the United States—combined. It will do so by challenging Russia's dominance of civilian nuclear supply chains and strengthening its political ties with uranium-producing states such as Kazakhstan, Namibia and Australia. By April 2024, 23 nuclear power plants were under construction in China. By contrast, the US has built just one new nuclear power plant in 30 years.
These trends follow a general decline in "loyalty" in the solar industry, which is mostly due to energy supply crises caused by the Russian invasion of Ukraine and the US-China "trade war". Before war-related economic sanctions and states' dependence on Russian energy, many European countries, such as Germany, depended on Russian hydrocarbons and viewed trade with Moscow as a means of integrating Russia into the European community – an expansion of "Ostpolitik" since the Cold War. Despite the inability of solar and wind power to offset, Germany pursued the Energiewende, the transition to renewable energy. It stepped up its effort to "turn off" its nuclear reactors, only to end up burning coal (with high emissions) as a key source of energy following Russia's invasion of Ukraine. This development may not have provoked strong reactions within Germany, but other states viewed it with great concern.
Germany's continued reliance on wind power as opposed to natural gas and nuclear power has recently pushed other European markets into an upward price spiral, prompting demands to split German markets into price bands and continue EU investment in nuclear power. Norway is now attempting to cut its energy connection to mainland Europe. The Czech parliament is now cutting significant funds channelled to the solar industry in favour of more reliable and efficient alternatives.
The future: Prioritising gas and nuclear energy for energy security
The general trend for 2025 is that many states are witnessing the persistent inefficiency of renewables and their inability to meet rapidly growing needs for more electricity. Globally, high energy prices and disconnection from Russian supplies are exacerbating these problems.
Until battery storage technology becomes cheap enough and can be developed alongside renewables, solar and wind power won't be able to meet the high energy demand when the sun isn't shining and the wind isn't blowing, except perhaps in certain locations where weather conditions are almost constant. In the United States, the Trump administration is trying to address this problem with a massive increase in oil and gas production, while around the world nations are looking for ways to meet their energy needs with nuclear reactors.
As demand for electricity increases across sectors and renewables fail to provide the baseload, a shift towards energy security is the logical answer, as more and more electricity is needed to maintain national security, cutting-edge research, and economic growth.
Performance – editing: Michalis Papantonopoulos
