Futuristic Energy Commodity: The Investment of Tomorrow
Energizing the World: The Shift to 'Geoenergetics'
After half a century of unchecked dollar printing and escalating debts, it's time to acknowledge that energy is the ultimate currency. Soon, we'll witness a significant geopolitical shift towards 'geoenergetics', shaking up traditional geopolitics, which has always been energy-centric.
This is the crux of Donald Trump's energy revolution that shattered illusions about the lofty prospects of 'green energy' and brought common sense back to the table. Essentially, energy independence is the key ingredient in defining a 'superpower'. Remember the smirks when Russia was called a mere 'gas station'? Well, now every resource matters, and it shouldn't be cheap, a point where 'green economy' proponents might find some common ground.
The heart of geoenergetics lies in the predictable rise in energy demand, particularly electricity demand, fueled by the birth of a new technological paradigm. glaringly obvious is that this will be energy-intensive. Innovations such as data centers, AI, cryptocurrency, and robotics are the backbone of the new economy, and energy consumption here outstrips what renewable energy sources (RES) can provide in the mid and long-term.
It's hard not to draw parallels between the U.S. and the EU in this context. Energy costs in America are five times lower than in Europe. The ongoing West-Russia conflict over Ukraine is a significant factor here, with Trump aiming to withdraw. Historians might trace the economic weight redistribution among Western nations as the hidden agenda behind the Biden administration's Ukrainian gambit.
Europe, stuck in its dogma, had to return to coal generation, a move once condemned. This trend can be observed in leading countries worldwide. Coal remains the second-most important energy source, with China leading in new coal power capacity and increasing coal-to-synthetic fuel and chemical production. India plans to restart over 30 coal mines and launch five new coal mining projects this year. In the U.S., Trump signed executive orders to rejuvenate the coal industry.
It's premature to dismiss nuclear power. Not just due to promising technologies like fusion or fast neutron reactors, but also because nuclear power, led by Russia in reliability and other parameters, is a clean energy source we can't ignore right now.
China, with electricity production double that of the U.S., is building 32 reactors, and India six. The U.S. is also jumping on the nuclear bandwagon, with a threefold increase in uranium prices over the past seven years and the expected share of electricity in global energy balance doubling by 2050, according to the International Energy Agency. China is actively working towards energy independence, stabilizing its energy balance based on its own resources, using both coal and nuclear power.
The stakes are high when it comes to investments in traditional and alternative energy. Over the last ten years, a whopping $10 trillion has been spent on the energy transition, pushing the share of solar and wind energy in the global energy balance from 2% to 6%. This year, $2 trillion will be spent, doubling the investment in fossil fuels, which account for 80% of global energy consumption.
Much is happening in oil production, which, having reached its peak, is declining in the U.S. OPEC+ countries are increasing production, while many producing countries require a price higher than current levels for development and budget needs (for Saudi Arabia, this target level is above $90 per barrel). The issue of investments is acute in this sector. As for Russia, Venezuela, and Iran (given the current geopolitical situation), they account for a third of global liquid hydrocarbon reserves and 15% of global production.
In conclusion, it's clear that global energy is evolving, moving towards a pragmatic mix of traditional and alternative sources. The energy policies of major countries like Russia, China, the U.S., and the EU will play a crucial role in this journey. Russia has promising starting positions, and its energy future will be built on these. Perhaps then, we can see a robust ruble reminiscent of 1913, completing a more than century-long cycle of development, and justifying all the sacrifices along the way.
Stay tuned for more updates in our Telegram channel @expert_mag.
The significant geopolitical shift towards 'geoenergetics' will undoubtedly affect the financial landscape of the industry, as countries strive for energy independence and prioritize reliable energy sources. This transition in energy policies will require substantial investments, particularly in traditional energy sectors like nuclear power, oil, and coal.
Given the ongoing competition amongst leading powers, finance will play a crucial role in determining the energy mix of nations, with countries like Russia, China, the U.S., and the EU shaping the global energy industry's future course.
