Thanks to the “Go Green” theme of the 21st-century global economy, investors are now eager to spend trillions on energy transition, but at the same time, too much money is piling into mature projects, with high-risk innovations struggling to attract backing. Will there be enough money in the world to save the planet? It is an urgent question that has a complicated answer.

Big-picture forecasters identify the enormous amounts required to fund a more environmentally friendly future, as well as the equally intimidating gaps in obtaining them. According to European financier Allianz, to meet the globally agreed-upon 2030 emissions targets, investment in the energy transition must more than double to $4.05 trillion annually. In a 2023 report, the Boston Consulting Group (BCG), a United States-based firm, projects a net-zero “capital gap” of $18 trillion.

The situation looks even more dire for 2025. With his promise to “drill, baby, drill” for oil and gas, United States President Donald Trump has reclaimed the presidency and will eliminate the generous green subsidies that his predecessor, Joe Biden, had advanced through the Inflation Reduction Act (IRA). High energy costs and farmer protests are undermining support for Europe’s ambitious transition agenda, while Canada is about to repeal its historic carbon tax.

In financial markets, the cost of capital-intensive energy infrastructure is continuing to rise due to persistently high interest rates. A return to reliance on fossil fuels is being prompted by the AI-driven surge in data centre construction, which is driving up electricity demand estimates.

According to Richard de los Reyes, a portfolio manager at T. Rowe Price’s New Era Fund, one of these data centres can consume as much electricity as a small city. The need for natural gas to meet demand is increasingly recognised.

Mismatched realities

However, practitioners in the financial trenches who are raising capital and structuring deals have a very different perspective. They are concerned about pursuing too few green investments with too much capital.

According to Alex Leung, head of infrastructure research and strategy at UBS Asset Management, “I continue to firmly believe that the megatrends of decarbonisation and digitalisation will revolutionise our way of life. However, these sectors are becoming increasingly crowded. The world of renewable energy is becoming more and more fragmented from a financial standpoint. How can both be true? Capital is plentiful, but it is largely concentrated in a small number of established green technologies, while more creative or untested industries have difficulty obtaining funding.”

On the one hand, investors can support well-established, reasonably priced technologies with the realistic hope of a consistent, multi-decade payout. Since economies of scale and a boom in Chinese equipment have driven the costs of solar and onshore wind power below those of fossil fuels, they have entered this category. Then there are technologies like offshore wind that have high costs and unknown risks, or technologies like carbon capture or green hydrogen that show promise but have not yet turned a profit. For these projects to become commercially viable, they still need government assistance or wealthy corporate backers.

Antoine Saint Olive, global head of infrastructure and energy finance at Natixis Capital and Investment Banking in Paris, said, “Everyone wants to be part of the energy transition on paper. But when you have a real deal on your desk, in many cases, you are talking about new technologies.”

As investors lament over crowded trades, this mismatch, between a surplus of capital for proven projects and a shortage for riskier innovations, helps explain why trillions are still required. The most important agreements arguably lie in the intersection of established and emerging technologies: rapidly evolving solar and wind energy storage systems and the modifications to grids required to transmit them. Without improved customer delivery, renewable energy investments will eventually reach a ceiling, and in certain locations, they may have already.

According to Rebecca Fitz, a partner at BCG and a founding member of the company’s Centre for Energy Impact, current grids can generally handle renewable energy until it accounts for 15% of their input. She said that there is “a bottleneck in power market design” in some regions of Europe where the percentage is higher than 50%.

Stef Beusmans, an associate partner at Sustainable Capital Group in Amsterdam, said, “Moving green energy from where it’s best produced—Spain and Portugal for solar, the Netherlands for wind—to where it’s needed is particularly challenging due to Europe’s patchwork of national grids and regulators. Europe finds it more difficult to really accelerate the deployment of clean energy due to different national support schemes.”

Energy finance at a crossroads

The venerable, obscure world of infrastructure finance, which accounts for roughly 4% of global capital, faces both opportunities and challenges as a result of the energy transition’s immense scope and complexity, according to UBS. In this area, plain vanilla deals are uncommon. Infrastructure investors must structure transactions individually and frequently bear the risk over an extended period of time, but bond underwriters and traders have access to rating agencies and liquid markets to help them manage risk.

According to Leung, “It could take up to a year to structure and close a deal. After that, active management is necessary for many infrastructure assets. This goes beyond simply cutting a coupon.”

As per Marta Perez, who leads the Americas infrastructure debt team at Allianz Capital Partners, green investments present a more complex scenario. She clarifies that established project finance models, originally devised for predictable long-term assets like traditional fossil fuel power plants, must undergo transformation to cater to the variability and often decentralised attributes of renewable energy systems.

Climate activists prioritise a variety of issues, such as building insulation and tree planting. However, electricity is the main issue for investors. According to BCG, approximately 90% of the $18 trillion net-zero capital gap is attributable to electric vehicles and other “end uses” of electricity.

Allianz reports that in 2023, “electrified transport” and renewable energy production each accounted for over $600 billion in global spending. Batteries and other energy-related components ranked fourth at $135 billion, while power grid upgrades came in third at $310 billion.

These figures will only rise due to the haste to construct AI data centres, which are huge energy users. According to UBS, the United States will generate an astounding 20% more electricity per year between 2023 and 2026. Leung claims that because the AI craze will require more power from fossil fuels, it will be “slightly negative for decarbonisation in the short term.”

However, AI also draws the world’s renowned tech companies further into the energy transition. Amazon, Microsoft, Alphabet (the parent company of Google), and other hyperscalers that run data centres are still “among the most committed to net-zero,” according to Leung, despite recent conciliation with Trump. They might have to pay more for clean power.

The AI-driven power surge is increasing the role of regulated utilities, which can raise rates to cover their costs. For energy-transition investments, this might offer one of the safest financing options. But public opposition to higher taxes, particularly those aimed at financing Big Tech’s energy appetite, might prove to be a significant barrier.

BCG claims that North American utilities will supply the remaining 35% of the anticipated increases in power demand from natural gas and 60% from renewable sources.

Infrastructure experts believe that Trump is one threat that may be overrated. The length of energy investments— much longer than a single presidential term—makes changes in policy less significant. As per UBS research, Trump will also have difficulty dismantling or repealing the IRA.

Leung and his associates point out that about 70% of the US renewable projects currently in development are in “red” states that supported Trump. In the House of Representatives, 18 Republicans have already signed a letter opposing repeal, which is more than enough to make a difference in the closely divided chamber. It is difficult to determine the exact impact of this resistance, though, because Trump has been avoiding Congress on a regular basis.

Despite being politically conservative, Texas leads the United States in solar and wind energy. More than 70% of Americans nationwide favour increased use of solar and wind power, according to Pew Research.

In the worst-case scenario, according to UBS, Trump will make changes to the IRA rather than abolish it, enabling Republican-led states to finish short-term renewable projects while still giving the President a political win.

China dominates green investing

The largest economy in the world, the US, does not lead the way in green investment. According to CarbonCredits.com, China holds that distinction, investing $818 billion in clean energy in 2024, more than the US, European Union (EU), and the United Kingdom combined. In 2024, the People’s Republic saw a 45.2% increase in solar capacity.

China is also far ahead in its nuclear power plant programme, which may lead to a resurgence in the US, if not Europe. Although nuclear power has other known hazards, it does not emit carbon. Since China is primarily funding its renewable energy advancements domestically, private capital from around the world is looking elsewhere. Europe is still dedicated to a surge in renewable energy to partially replace Russian natural gas imports, which Russian President Vladimir Putin stopped due to sanctions pertaining to Ukraine.

According to the European Investment Bank (EIB), the EU is still investing ten times as much in renewable energy as it is in fossil fuels, despite also placing bets on more liquefied natural gas. To reach the 2030 carbon reduction targets, the bloc’s overall energy-transition investment is predicted to continue increasing, having increased by a third in 2023 to $360 billion.

Other countries are joining in as well. With plans to triple by 2030, India’s renewable capacity jumped to almost half of the US level last year. In India, six significant solar developers have “attracted investments from diverse sources, including foreign institutional investors from North America, Europe, and the Middle East,” according to S&P Global.

Nearly 85% of the record 10.9 GW of power capacity added by Brazil in 2024 came from renewable sources. With an investment of $8.4 billion promised, Saudi Arabia is backing the biggest and most ambitious green hydrogen project in the world, close to Neom, the Kingdom’s “city of the future,” according to Neom.

The objective is to use electric current generated from renewable sources to split water molecules into their hydrogen and oxygen components, then store the hydrogen for use as fuel. Following closely behind, the United Arab Emirates (UAE), Saudi Arabia’s neighbour, is using its plentiful sunshine to power massive renewable energy projects.

Green energy draws investors

Big-ticket investors worldwide remain driven by environmental, social, and governance (ESG) principles, as indicated by Saint Olive of Natixis. Banks still wish to “greenify their balance sheets,” even though they contribute at least as much to infrastructure as institutional investors. Banks outside of the United States do, at least.

Saint Olive noted that banks and sponsors around the world still have ESG ambitions, and the change of a single country’s president will not make them fall apart.

The EIB estimated that private equity investments in green energy would reach $26 billion globally, up from almost nothing before the COVID-19 pandemic. The amount at stake could be many times that amount, given the private equity model’s practice of leveraging up equity holdings.

According to Fitz of BCG, as solar energy gains popularity and Texas lawmakers push legislation that favours fossil fuels, private equity firms in the US are paying special attention to onshore wind generation.

She said, “Private equity is paying more for wind assets. Going forward, they see wind as an essential component of the energy picture.”

One of the biggest obstacles still facing the world is financing the energy transition. When the US Department of Transportation completed the interstate highway system in 1991, it cost $129 billion, making it one of the largest infrastructure projects of the 20th century. The capital requirements for green power in a single year are a tiny portion of that. Utilising tried-and-true technology, the US highway system was funded by the federal government.

Aside from China, governments face significant pressure to transfer as much of the financial burden as possible to the private sector, given the social responsibilities of the 21st century. Saint Olive emphasises that many estimates of the renewable energy transition underestimate the significant costs involved in mining the metals required for constructing batteries, electrical grids, and turbines.

He argues that mining is a “fully merchant business” reliant on fluctuating prices that hinder fixed, infrastructure-style returns, and that it faces no favourable treatment from regulators or the public. He claims that many banks have a negative view of the mining industry from an ESG standpoint. They prefer to let others pay for it.

Nevertheless, despite the White House’s rhetoric, the global energy transition is not only continuing but also accelerating. However, investors in infrastructure are also accustomed to creating custom solutions for a project’s evolving environment.

For construction in the United States, you might have bank loans before looking to the capital markets. European plants could rely on power purchase agreements that last for ten years. Very long-term financing, such as construction plus 25 years, is available in the Middle East.

“Whether the transition will occur quickly enough to prevent ecological disaster is more important than whether it will occur at all. If governments and engineers can work together to produce profitable investments, private finance appears ready to play a role. More capital will come in if projects are generating 20% returns. Although it’s not always discussed, economic viability plays a significant role in the equation,” Leung noted.

Green energy investment is growing, but money flows mostly to proven technologies. Riskier innovations still struggle for funding. If governments and investors collaborate wisely, the world can accelerate the energy transition while keeping projects profitable and sustainable.

The post Big money investors bet on renewables appeared first on International Finance.

Henry Ziemer, an associate fellow at the Centre for Strategic and International Studies (CSIS), says the region is rich in minerals, especially copper and lithium, whose demand is expected to soar, as well as more specialised minerals like nickel, rare-earth elements, and niobium, which are used in steel and aerospace manufacturing.

The International Energy Agency (IEA) predicts that over the next 15 years, the world’s demand for lithium will grow by a factor of 40, and by 2028, S&P Global Market Intelligence estimates that it could surpass current worldwide production output.

Additionally, according to the IEA, demand for copper would increase by 40% over the next five years, surpassing current production by 2030.

Demand for lithium is more susceptible to shifting market conditions in the green energy sector, especially if the Trump administration reduces carbon emission targets and withdraws the US from the Paris Agreement.

However, Ziemer contends that this is not the case for copper, which is “almost certain to remain high in demand as it will be critical for applications ranging from green energy and electric vehicles to the wiring needed to power AI data centres.”

According to IEA data, Latin America is home to seven of the top ten most productive copper mines in the world and has about 60% of the world’s lithium and 40% of its copper reserves. Furthermore, the region is home to the majority of the world’s top producers of the two metals, with Chile and Peru leading the list for copper and Bolivia, Argentina, and Chile leading the list for lithium.

Supply chain diversification

Diversifying mineral supply chains is becoming a major corporate and geopolitical concern as the United States and China compete more fiercely, especially in the technology sector, and as rising demand further strains global metal supplies.

According to United Nations data, over 40% of the world’s capacity for smelting and refining of copper, lithium, rare earths, and cobalt is in China.

The World Bank noted that China was responsible for a staggering 65% of Chile’s mineral exports in 2021, which amounted to almost 6% of Chile’s GDP in Latin America.

Melissa Sanderson, a board member of American Rare Earths, said, “China’s market dominance allows it to exert significant influence over global pricing, whether by increasing or restricting exports of key commodities or by implementing other restrictions on key materials.”

Canadian Prime Minister Justin Trudeau recently stated that the nation’s mineral and metal resources are a major factor in US President Donald Trump’s ambition to annex Canada. Given China’s dominance of vital minerals worldwide, he noted, “this is a strategic vulnerability for the US vis-a-vis China, as it is for much of the Western world.”

Trump vowed to further divorce from China’s midstream supply chain and announced a national energy emergency as one of his first actions as president in his second term. Beijing replied to his announcement of a 10% global levy on Chinese imports by, among other things, limiting the export of minerals that it utilises in its supply chain.

Companies are also being prompted to disengage from their existing mineral supply networks due to the growing threat of a trade war.

Tim Heneveld, country director for Pergolux in North America, said, “Trump’s early signals have supply chains on edge, especially in industries that rely on manufacturing and critical materials. Businesses are reconsidering their material sourcing practices; many are trying to find new suppliers or move their operations to areas with lower geopolitical risks.”

However, there will be a price to pay for creating more robust mineral supply chains, according to Laura Dow, Business Director at CPG Buying, a company that focuses on buying goods and materials from China.

“Businesses that put a strong emphasis on a supply chain that is balanced and future-proof will be the most successful in the long run. This dynamic has prompted the US and Canada to seek stronger partnerships in Latin America to diversify and secure their critical mineral supplies,” says Iggy Domagalski, CEO of Wajax, a Canadian distributor of industrial products and services.

Reaching maximum potential

Although some of the world’s largest reserves of rare-earth elements and essential minerals are found in Latin America, much of this remains unexplored. Additional expansion might be a crucial remedy for the world’s supply networks, which are becoming more stressed.

According to a study co-authored by Economist Impact and JP Morgan Private Bank, “The region, with a few exceptions, has not yet been able to realise its full potential in the value chains for critical minerals, and therefore in those for clean energy and digital components.”

“The environmental and physical costs of increasing mining are being borne by many communities. However, given competing local and global geopolitical objectives and growing environmental concerns, boosting the sector may prove to be a challenging task. Furthermore, local interest in creating sourcing networks is also constrained by a historical discrepancy between the region’s midstream output and raw material production,” CSIS’s Ziemer commented.

Isabel Al-Dhahir, senior analyst at GlobalData, parent company of Mining Technology, believes that China has become a major force in the midstream copper and lithium market in Latin America over the past 20 years, thriving in the void created by the governments of the region’s lack of investment.

She cautions that this reduces Latin America’s geopolitical clout and restricts the area to selling raw minerals to the Chinese and other international investors.

As per Economist Impact and JP Morgan Private Bank, this disparity is ascribed to “a multitude of factors, including an increasingly complex regulatory environment, lack of critical infrastructure, and low extraction and processing capacity, to name a few.”

“By 2030, global demand is expected to outpace production for key inputs like lithium and copper, making the opening of new mines an ongoing challenge. New projects must be developed as quickly as possible to avoid a global shortage of certain essential minerals, since it can take years or even decades from the time a mining claim is staked to the first output,” Ziemer noted.

Redressing past inequities

Due to these conflicts, the local populace mistrusts the industry’s efforts to promote regional growth, especially the opening of new mines, which is a crucial prerequisite for increasing output.

Ziemer said that “many communities in Latin America find themselves bearing the environmental and physical costs of increased mining, so the increase in demand (for critical minerals) has come with a price.”

Local governments have responded to this by increasing state support and forming more public-private partnerships, which have led to a diversification of supply chains for production and output.

The largest economy in the region, Brazil, which has the third-largest nickel and rare-earth element reserves in the world, has committed $815 million to supporting projects in the field “in the context of sustainable and technological development,” according to a statement made last month by Aloizio Mercadante, president of Brazil’s National Development Bank.

In an effort to further domesticate the midstream lithium industry, Chile’s government-run copper mining company, Codelco, and lithium manufacturer Sociedad Química y Minera de Chile signed a 35-year contract to jointly develop the vast lithium resources in the Salar de Atacama salt flat between 2025 and 2060.

To further diversify the country’s long-term sourcing away from China, the government of lithium-rich Argentina recently signed a cooperation agreement with the US.

These actions follow strong opposition to foreign mining ventures in countries such as Bolivia, Chile, and Panama, most notably leading to the recent closure of the Cobre Panamá mine amid environmental concerns and widespread public unrest.

“The incident further highlights that countries and their citizens are not willing to accept an unrestricted expansion of mining based solely on demand for critical minerals,” Ziemer warns.

Changing partnerships

The worldwide competition for vital minerals is a complicated geopolitical struggle in addition to an economic one. Latin America, which is caught in the crossfire of geopolitical interests, is significantly impacted by the fierce competition between the US and China.

China has long influenced global pricing and supply chains by using its hegemony in the smelting and refining of minerals. However, the United States and its allies are now looking for alternate sources of vital minerals due to recent trade conflicts and tariffs, including those imposed by the Trump administration. As a result, Latin America, with its vast reserves, has emerged as a crucial theatre in which these superpowers compete for influence.

Many Latin American countries are seeking to exert greater control over their mineral resources in response to growing external demand. Efforts such as negotiating more favourable trade agreements with major economies and forming regional alliances are gaining traction. In an era where political power and resource control are increasingly intertwined, these measures aim to safeguard national sovereignty while securing economic benefits.

ESG factors and investment risks

Environmental, social, and governance (ESG) factors are becoming important to investors as they assess possible projects. This change poses an opportunity for the mining industry in Latin America.

Global investors are closely monitoring mining companies, demanding responsibility, sustainability, and transparency in their operations. Mining-related social and environmental hazards, including ecological harm, community uprooting, and regulatory uncertainty, can have a big financial impact. Investors now prioritise businesses that integrate strong ESG processes and show a dedication to long-term sustainability above those that only focus on short-term profits.

For investors, the current geopolitical environment adds another level of risk. The stability of mineral markets can be impacted by trade disputes, shifting alliances, and erratic governmental changes. As a result, many investors are becoming wary about depending heavily on one area or provider.

Diversification is becoming a crucial tactic for reducing these risks, geographically and in terms of production methods. Businesses that make investments in diverse supply chains, local processing capacity, and environmental practices have a better chance of surviving future market turbulence.

We are at a turning point in the search for critical minerals. On one hand, the twin forces of digital transformation and the transition to green energy are expected to drive a global surge in demand for copper, lithium, and other key resources. On the other hand, the race to secure these materials has exposed long-standing challenges related to social inequality, environmental degradation, and geopolitical instability.

Development in Latin America must be sustainable and inclusive if the continent is to reach its full natural riches potential. This entails making certain that local communities gain from resource exploitation by investing in public services, creating jobs, and sharing revenue.

At the same time, businesses need to embrace more environmentally friendly technologies and follow global guidelines that safeguard human rights and the environment. Long-term success in the area can only be attained by finding a balance between social responsibility and economic progress.

Technological developments present encouraging answers to many of the problems the mining sector faces. Technology may significantly increase operating efficiency and sustainability, from more effective extraction methods to the incorporation of renewable energy and digital monitoring systems. Governments and corporations in Latin America must cooperate to fund R&D, creating an innovation ecosystem that can adjust to changing international norms.

Latin America now plays a crucial role on the world scene as a result of the ongoing US-China conflict. However, by creating its own value chains and regulatory frameworks, the region must also demonstrate its strategic autonomy.

The Latin American nations can reduce their dependence on any single foreign power by strengthening ties with both long-standing partners and emerging markets. Beyond enhancing national security, this balanced approach provides the flexibility needed to navigate an increasingly complex global landscape.

Final thoughts

Latin America’s mineral wealth is positioned to be a key factor in the world’s ongoing transition to a more technologically advanced and connected future. But wisely utilising this potential is the difficult part. The region can transform this new battlefield into a global paradigm for how natural resources can propel revolutionary economic and social advancement with careful policymaking, inclusive practices, and a dedication to sustainability.

The competition for essential minerals is more than just a matter of supply and demand in a world characterised by swift technological advancements and shifting geopolitical alliances. Environmental stewardship, cultural rights, and economic imperatives interact in a complicated way.

A microcosm of the greater global fight for sustainable development is Latin America’s quest to benefit from its mineral wealth while making sure that the expenses are fairly distributed.

A more resilient and responsible future may be modelled after the lessons learnt here, which include investing in cutting-edge technologies, rethinking conventional resource extraction strategies, and striking a balance between local and global demands.

The stakes have never been higher, yet the road ahead is certainly difficult. Latin America’s vital minerals will continue to be at the forefront of this revolutionary change as countries across the world rearrange their supply networks and reevaluate their strategic goals.

The region has a rare chance to change not just its own fate but also the direction of global manufacturing and technology, whether through increased community involvement, progressive regulatory changes, or the adoption of cutting-edge green technologies.

Acquiring raw resources is only one aspect of the conflict over Latin America’s vital minerals, while the other is the fair allocation of rewards and obligations. A balanced strategy that incorporates economic, social, and environmental factors is crucial as the globe moves toward smarter technologies and greener energy.

Only by doing this will Latin America be able to turn its abundant but frequently underutilised resources into a driving force for long-term development, guaranteeing that the promise of mineral wealth is fulfilled in ways that benefit local communities, protect the environment, and strengthen the region’s position in a world growing more multipolar.

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“In 2016, the issuance of the first SOCAR Bonds, worth USD 100 million, for domestic capital markets received orders amounting to USD 204 million, marking a significant turning point in the local capital markets,” SOCAR Capital told International Finance.

Although the securities market had long existed in Azerbaijan, it was after the second issuance of SOCAR Bonds that a real influx into the market was observed among the Eurasian country’s population.

In 2021, the second “SOCAR Bonds” issuance, valued at USD 100 million, received offers exceeding USD 380 million. Of the purchased bonds, 60% belonged to individuals. The high liquidity, ease of transactions, and timely interest payments according to the schedule generated significant interest among both individuals and legal entities. The price of the bonds has never fallen below their nominal value (USD 1,000).

“For more than eight years, SOCAR Bonds have maintained the status of the most traded corporate bonds on the Baku Stock Exchange. SOCAR Bonds are the first securities in Azerbaijan to be widely bought and sold by the public and have inspired other corporate companies to issue their securities. As a result, dozens of corporate bonds are currently circulating in the domestic capital markets. The primary goal of issuing SOCAR Bonds was to contribute to the development of domestic capital markets and offer an alternative investment tool for local investors,” SOCAR Capital continued.

On January 15, 2025, SOCAR Capital achieved another milestone by leading SOCAR’s “green” bonds worth USD 200 million for Azerbaijan’s domestic capital markets. The designation of these bonds as “green” is no coincidence, as the funds raised will be allocated to SOCAR Green’s projects and investments aimed at enhancing the country’s renewable energy potential.

As is known, for Azerbaijan, which hosted the prestigious “COP29” event under the United Nations Framework Convention on Climate Change, the development and promotion of green energy are of paramount importance.

Issued under the slogan “Green Income, Green Future,” SOCAR’s “green” bonds aim to provide reliable and stable income to Azerbaijani citizens while supporting the country’s progress in green energy.

Through this initiative, SOCAR intends to support and accelerate the development of environmentally friendly energy sources and SOCAR Capital occupies an important role in this mission.

In just eight years, the company has made innumerable contributions to Azerbaijan’s capital markets. Some of these include the development of the infrastructure of the local capital market, expansion of the investor base, increase in exchange trading volumes, greater financial literacy, and channelling idle funds into the economy.

SOCAR Capital is working to improve Azerbaijani companies’ access to financial markets while also enhancing activity in the corporate bond market. The firm is actively promoting the trading of “SOCAR Bonds” through a market maker and is establishing a call centre to promptly address investors’ inquiries.

As of January 2025, SOCAR Capital has gone ahead with the move of implementing the third mass placement via subscription. The company is also collecting subscription orders from investors through multiple investment companies, banks, and the “ASAN Service,” ensuring wide public access.

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As Türkiye’s largest integrated industrial group, SOCAR Türkiye has expanded its operations in sectors like petrochemicals, refining, natural gas, trade, transmission and distribution, while continuously increasing its production capacity with our value chain extending from the source to the end user.

One such success story has been SOCAR Energy Trade, which has become the largest private sector natural gas wholesale portfolio in Türkiye, while carrying out SOCAR Türkiye’s natural gas and electricity, trade and sales activities since 2009.

International Finance recently caught up with Fuad Ibrahimov, SOCAR Türkiye, Head of Gas Business Unit, who shared his views about SOCAR Energy Trade, its import and export operations, and much more.

Can you briefly tell us about the electricity and natural gas trade operations of SOCAR Energy Trade?

SOCAR Türkiye contributes to country’s supply security by supplying up to 1.7 billion cubic metres of gas annually under the memorandum of understanding signed by the Ministries of Energy of the Republic of Azerbaijan and the Republic of Turkiye.

Accordingly, at SOCAR Energy Trade, we are a key link in the supply chain of the entire group. We make sure the Azerbaijani gas is used in our own petrochemical and refinery facilities in Turkiye. However, what I consider a key factor in our winning this award is our business model which goes beyond merely meeting the gas and electricity needs of our group companies.

Today, we stand as one of the prominent private sector players in Turkiye in the wholesale markets for both electricity and gas. For years, we have been providing gas and electricity to the B2B customers in our portfolio.

Our end-user portfolio volume for electricity rose to 300 MW while the electricity sales and trading volume stood at 750 MW. In 2023, our total trading and sales volume for gas and electricity hit the 21-terawatt mark.

Can you provide information on SOCAR Energy Trade’s import and export operations?

SOCAR Türkiye actively employs import and export channels to maximise the benefits of group companies and create added value. In addition to long-term contracts, SOCAR Türkiye procures natural gas from Azerbaijan through spot imports. SOCAR Türkiye is the only private sector player bringing in gas to our country from an alternative source. Furthermore, we have engaged in cross-border electricity trade operations with Georgia, Bulgaria and Greece since 2023.

What are the future plans of SOCAR Energy Trade?

SETAS continues to act as a one-stop shop for the energy needs of its customers in Turkiye, offering a sustainable energy supply as well as its energy expertise to become their solution partner in energy. I believe our trade company won this award for its competence in providing its customers with a one-stop shop for energy. Our operations are not solely limited to gas and electricity supply. We act as a solution partner for all needs of our energy-related customers. We aim to update our solutions through continuous development in line with global energy trends.

In addition, at SOCAR Energy Trade, we focus on operations to enhance the value of not only the Turkish supply chain but also the global supply chain. We are planning new strategic steps to increase the added value of our integrated value chain in gas. With the addition of the electricity generation link to our gas value chain and the subsequent trade and cross-border activities, our value chain will be further enriched.

What are the action steps SOCAR Energy Trade takes in terms of sustainability and green energy?

We have renewable power purchase agreements (PPAs) in our own supply portfolio. Moreover, we support our customers in terms of sustainability. To reduce the carbon footprints of end users and make them carbon neutral, we have been selling renewably sourced and I-REC (International Renewable Energy Certificate) certified green energy since 2021. In 2023, SETAS procured green energy to 21% of its end-user portfolio. This year, we intend to ensure that green energy sales make up 25% of our third part portfolio as a minimum.

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However, in a clever response, Russia chose countries like China and India as its energy markets and diverted much of Europe’s supply to these two Asian powerhouses, resulting in an energy shortage for the continent.

Amid all these, Finland has grabbed the global attention, as clean electricity produced in this part of the world has become abundant in supply, apart from trading at a negative price tag.

Has Finland Finally Solved The Power Crisis?

While the rest of Europe is still struggling to cope with the ongoing energy crisis, the Nordic country’s spot energy prices dropped below zero, during May 2023.

While reacting to Finland’s average electricity price slipping into negative territory, Jukka Ruusunen, CEO of grid operator Fingrid, told YLE News, “The average price for the day is now slightly, but nevertheless, on the negative side. Yes, it is historic. Production is high, consumption is low and now we are in a situation where it is not easy to adjust production.”

“Now there is enough electricity, and it is almost emission-free,” Ruusunen told YLE, adding that Finns could “feel good about using electricity.”

The Nordic country had to undergo energy poverty in 2022 and its citizens were asked to watch their electricity consumption, after the nation banned energy imports from Russia. The country is now facing an oversupply of electricity.

In December 2022, Finland got its first floating liquefied natural gas terminal at the southern port of Inkoo. The terminal will supply gas to the Nordic country and help the latter to move away from the Russian energy supply.

The massive 291-meter-long and 43-meter-wide offshore support vessel Exemplar has a capacity of 68,000 tons of LNG and is scheduled to be operational in 2023.

The vessel will first reconvert the LNG to gas, following which the product will be fed into the Finnish network for distribution. The arrival of the Exemplar will also enable gas deliveries to the Baltic states — Estonia, Latvia, and Lithuania— and possibly also to Poland through the undersea pipeline between Finland and Estonia that runs near Inkoo.

Russian energy giant Gazprom halted gas exports to neighbouring Finland in May 2022, citing Helsinki’s refusal to pay in rubles. This move resulted in the end of Finland’s nearly 50 years of importing energy from Russia.

While natural gas accounts for just some 5% of total energy consumption in Finland, until May 2022, nearly all of that gas used to come from the Kremlin, and was mainly used by Finnish industrial and other companies with only an estimated 4,000 households relying on gas heating. Post-Ukraine war, this energy tie with Russia has met with a silent death.

The Country Has Gone Nuclear Now

In 2023, Finland launched its nuclear power plant, Olkiluoto 3, which has been dubbed Western Europe’s first new reactor in over 15 years. The launch happened immediately after Germany shut down its last three plants.

The reactor, which has a 1,600-megawatt capacity, was connected to the Finnish national power grid in March 2022. The mechanism started functioning regularly on April 16, 2023.

Olkiluoto 3 is presently producing around 14% of Finland’s electricity, and is expected to remain operational for “at least the next 60 years” according to the plant operator Teollisuuden Voima (TVO).

Finland as of now has five nuclear reactors in two power plants located on the shores of the Baltic Sea. Combined, they cover over 40% of the nation’s electricity demand.

The Nordic country has also recently signed a Memorandum of Understanding (MoU) with the United States, on nuclear energy and nuclear waste management.

The move has helped Finland to bring down electricity prices by over 75% in the Nordic country. Average spot electricity prices in the country fell to €60.55 per megawatt hour in April 2023 from €245.98 per megawatt hour in December 2022, a decrease of 75.38%, according to Nord Pool, a physical electricity exchange.

Wind To Power Finland’s Renewable Energy Drive

Finland’s wind power capacity has increased by 75% in 2022, according to the Finnish Wind Energy Association (FWPA).

Finland has ambitious climate goals of achieving net zero by 2035, well ahead of the European Union’s 2050 goal.

In 2022, the Nordic nation put 427 new wind turbines into operation, adding 2,430 megawatts of capacity. One megawatt could power an estimated 1,000 homes, meaning the new turbines could service over 2.4 million households.

The country now has a total of 1,393 wind turbines producing a combined power of 5,677 MW, potentially enough to power an estimated 5.5 million homes in the country.

Wind power capacity is expected to increase by around 1,000 MW annually over the next few years. By 2025, wind is expected to cover at least 28% of Finland’s electricity consumption, up from almost 10% in 2021.

Finland Story Catching World’s Imagination

“Finland has set one of the most ambitious climate targets in the world, a legal obligation to reach carbon neutrality by 2035. It has made notable progress towards this target, deploying the first new nuclear reactor in Europe in over 15 years and achieving strong growth in wind generation. Thanks to the country’s efforts to advance its energy transition, Finland has the second lowest share of fossil fuels in the energy supply among IEA member countries. Finland has also succeeded in rapidly ending nearly all energy imports from Russia while ensuring secure access to energy by increasing imports from other countries, expanding domestic renewable energy production and improving energy efficiency,” commented the International Energy Association in its May 2023 report.

India, the world’s fifth-largest economy, is seeking a partnership with the Nordic country, on the commercial use of hydrogen clusters, in order to generate clean and sustainable energy.

In May 2023, Finnish wave energy technology developer, AW-Energy, signed a memorandum of understanding (MoU) with Namibian energy generation company, Kaoko Green Energy Solutions, to produce green hydrogen from renewable energy sources including wave energy.

Conclusion

While the Ukraine war and the resultant energy crisis have slowed down Europe’s economy in general, for Finland, it has been a different story altogether.

From opening Western Europe’s first nuclear reactor in over 15 years to heavily investing in renewable sources like wind and hydrogen, the Nordic country is showing the way to the world, in terms of having an indigenous power generation ecosystem run by green energy.

The post IF Insights: Finland takes the ‘Green’ route to become self-sufficient in energy front appeared first on International Finance.

Europe is now trying to wean itself off Russian energy. To handle the resulting scarcity, it has approached OPEC and non-OPEC allies, who have promised to hike production to 432,000 barrels per day in June. The increased output will be enough to meet the EU’s short-term energy demands.

Europe was committed to meeting its climate control targets in the pre-war era. However, many question the continent’s commitment since the European Commission proposed a plan to consider some gas and nuclear energy as “green.” Climate change activists have staunchly opposed this move. This proposal could be law by 2023 if most member states back it. The proposed bill aims to commission 30 gas projects in the EU.

Critics dubbed this move “greenwashing” and warned that the bloc’s bid to become climate-neutral by 2050 is in danger.

The Russian invasion was a catalyst for this sudden shift, which environmental groups might contest legally.

Context
Europe has been taking the moral high ground for the last two decades. European governments are among the first in the world to take proactive steps against climate change. Despite their best efforts, their economy remained dependent on cheap Russian fossil fuel imports. Vladimir Putin used this energy dependency as an economic and political weapon in times of crisis.

Following the invasion of Ukraine, EU leaders decided to phase out Russian energy imports by the end of 2022. The commission said it wanted to REPower the EU by quickening the pace towards clean energy systems. They hoped to increase the utility of hydrogen and biomethane through imports or domestic production. Irrespective of the advertised clean energy movements, renewable energy will only make up 45% of total energy consumption by 2030. Fossil fuel and nuclear energy will still be the primary driver of European nations.

The European Commission’s chief Ursula Von Der Leyen is outspoken about the importance of climate action. Her climate-neutral rhetoric is glorious as she called the European Green Deal “Europe’s man on the moon moment.” She claimed that being the first continent with net-zero emissions is “our European destiny.”

Despite the flamboyant language, the big question is how the EU intends to achieve these goals.

The European Commission has a green investment rulebook to save the planet by 2050- a taxonomy or “a classification system, establishing a list of environmentally sustainable economic activities.”

However, are taxonomical changes sufficient to make gases and nuclear energy green?

Insight
In June, The EU’s executive arm, the European Commission, gave natural gas and nuclear energy the green label. Though they said that some strings remain attached. For example, nuclear power plants could only be classified as green if they manage to dispose of radioactive wastes safely. It is important to note that there isn’t a single permanent disposal site anywhere in the world thus far.

As per the commission, gas plants will be classified as green if they switch to low-carbon or renewable gases like hydrogen or biomass created with renewable energy by 2035.

Mairead McGuiness, the EU commissioner of financial services, denied the allegations claiming there was no “greenwashing” as the institution labeled nuclear and gas as “transitional” energy sources under the proposed plan. She iterated that the European Commission’s credibility is still strong.

Environmental groups are having none of it. They see this as a jeopardy to the EU’s climate neutrality goals. The Climate Action Network Europe said that the European Commission is sacrificing the scientific integrity of the taxonomy for gas and nuclear lobbies. According to environmentalists, the EU plans to redirect finances that would have funded climate-positive investments.

Apart from activists, experts advising the EU have also raised concerns about the environmental impact of these projects.

The nuclear plant initiative is a debated issue in the European parliament with many supporters and dissenters. Some prefer gas to atomic energy.

Germany versus France
The two great leaders of Europe, Germany & France, are at loggerheads on what should be considered “green.”

The French camp heads the pro-nuclear faction because nuclear power plants generate 70% of the electricity in France. The French have the support of Poland, Hungary, the Czech Republic, Bulgaria, Slovakia, and Finland.

France wants to invest in new nuclear plants with small modular reactors. Expert at the Foundation of Strategic Research Think Tank in Paris, Nicola Mazzucchi, supports the French government’s initiatives. He said that automated factories could produce quality reactors cheaply at an industrial level.

Germany has pledged to shut down all plants by 2023. They have been slowly phasing out nuclear energy following the Fukushima disaster in 2011. Denmark, Austria, and Luxembourg are in the German camp, asking where the opposing faction intends to store or dispose of highly radioactive nuclear waste.

In a letter to the European Commission, Germany’s ruling coalition remarked that gas is an interim energy source till renewables and green tech are available. However, German chancellor Olaf Scholz said the taxonomical debate was completely overrated in an EU meeting last year to avoid conflict with France.

A senior fellow at Brussels-based Bruegel Think Tank, Georg Zachmann, who follows the EU’s climate and energy policy, said that the union would not take any steps to prevent France from building new atomic plants.

Zachmann says that the new taxonomy would be the gold standard in the fight against climate change. But he added that no investor would be interested in gas or nuclear plants when the union has so much political capital invested in pushing its member states towards renewable energy.

He also pointed out that onshore wind and solar energy alternatives aren’t very costly in many member states.

The 30 proposed gas projects in the EU will ensure Europe’s economic independence from Russia. For example, the EastMed pipeline project will require billions of euros to build a 1900 km pipeline connecting offshore gas fields to Greece and Italy. The proposed plan contradicts the Paris agreement in 2015, where world leaders pledged to curb global temperature rise to less than two degrees. The ideal temperature rise agreed upon was below 1.5 degrees above pre-industrial temperature by the end of the century.

Methane is 85 times more harmful to the atmosphere than carbon dioxide. The Baltic Pipe project is a pipeline that could conduct Norwegian gas to Poland and develop the Cyprus gas infrastructure. Under the proposed plans, this program could spend 13 billion euros to boost transport, digital infrastructure, and energy. However, climate change activists believe this move will trap the EU in fossil fuel dependency for decades and goes against the principles it has been preaching to the world.

The union cannot build new gas projects under the current system. The EU Commission is acting slyly and exploiting a loophole in EU regulations. Bi-annually a compilation of beneficial energy infrastructure projects is presented to all members. Though EU members cannot build new gas infrastructure, the dossier may contain projects that ensure continuous energy supply and are vital to the continent.

Europe is now flouting the guidelines set by the International Energy Agency and the Intergovernmental Panel on Climate Change which bans the installation of new oil and gas extraction projects to keep global warming below 1.5 degrees above pre-industrial levels.

Conclusion
The European parliament and the 27 EU member states will review the commission’s proposal soon.

The European Commission has opted for a delegated act, a fast-track legislative procedure. A majority in the EU parliament of 20 member states must vote against it to scrap the bill from becoming law.

While the taxonomy is unlikely to be rejected by the EU states (there are substantial economic benefits from fossil fuels during a global financial crisis), many parliamentarians from different political camps are enraged over the proposal to greenwash gas and nuclear energy.

The Greens in the European parliament will fight this bill and try to gather a majority against it. Rasmus Andersen, a Green lawmaker, said the new proposal disappointed him greatly. Joachim Schuster of the German Social Democrats thought the EU parliament would vote to scrap the bill.

Austria and Luxembourg have threatened to sue the European Commission over the altered taxonomy even if the parliament passes the bill.

Meanwhile, the OPEC countries will increasingly cut production shortly. It is a move likely to create an unexpected supply deficit in the coming months. Though this might lead to a bull market for oil traders, it does not bode well for energy importers like India, China, Japan, and the EU.

The time is ticking for Europe. Russia is gearing up for strategic reductions of gas supplies to Europe to increase their leverage in the winter. The pipeline Nord Stream 1 is already running at 40% capacity, with Russia citing technical issues. Many experts are skeptical about these claims.

There are shortfalls in gas supply across Europe, with Italian energy firm Eni stating it has only received half of the anticipated Russian gas supply. Austria and Slovakia have the same complaints. France has not received gas since 15 June, and Denmark, Finland, Netherlands, Bulgaria, and Poland have their supply cut off after these countries refused to buy gas in roubles.

Europe has committed to reaching maximum capacity or at least 80% of gas stocks before November. There is data hinting that it might have reached 55% already.

Before the invasion, Europe bought 40% of its gas from Russia. Now, that share has dropped to 20%. The continent also imports 45% of its coal imports from Russia.

Russia will tactically starve the continent of gas, and Europe might struggle to heat its homes this coming winter. Gas prices are likely to go up, and the EU cannot overlook the possibility of energy rationing.

The European Commission’s Energy Prices Toolbox has been assisting citizens and businesses for a while now. About 25 member states have adopted suggestions from the toolbox, and it is helping 70 million households struggling with the soaring gas prices.

EU is in a tricky spot. It wants to maintain its image as a leader in the fight against climate change while ensuring it does not slip into an energy crisis. The OPEC alliance is temporary and might help out in the short term. But in the long run, Europe must transition from a consumer to a gas producer while accelerating the adoption of renewable energy.

The post Is the EU risking its climate goals to defeat Russia? appeared first on International Finance.

The UAE is also speculated to play an important role while powering economic growth in the UAE over the next 50 years, said Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and Managing Director and Group CEO of ADNOC.

While addressing the Gastech 2021, he said, “Already at ADNOC, we produce about 300,000 tons of hydrogen a year. By leveraging our existing gas infrastructure and commercial-scale CCUS capabilities, the UAE can and will become a major player in the emerging blue hydrogen market.”

“Today, gas provides almost one-quarter of the world’s energy supply and will continue to play a critical role in the global energy system. No other fuel source can reliably supply the baseload power to heat and cool homes, drive heavy industry and expand economies, all while keeping emissions at a minimum.”

Currently, the UAE is on track to achieve self-sufficiency in natural gas with the help of ADNOC, which is a part of the integrated gas strategy launched in 2018.

The primary goal is to expand the production assets like Shah along with developing new ones like Umm Shaif gas cap and the Hail, Ghasha and Dalma project. The construction of artificial islands is also happening and the UAE is using their experience in world-class developments to ensure costs are minimised and commercial benefits maximised for all the partners.

The post UAE emerging as one of the biggest players in the global blue hydrogen market appeared first on International Finance.

The power minister also pointed out that a 7,000 sq. km area has been allocated to power the renewable energy projects in Egypt. It aims to produce electricity of 90,000 megawatts (MW). Keeping in tune with the goal set by MERE to produce 42 percent energy for the country from renewable sources by 2035, the project is expected to raise the total to 20 percent, which is a year ahead of its schedule.

Additionally, Egypt also hosts the Benban solar plant, which is regarded as the largest solar plant in the world that has a capacity of 1,465 MW. Mohamed Shaker added that since the beginning of the reform, the amount of investment in the electricity sector is estimated at $32 million. Additionally, he also estimated that the total investment in the development of electrical distribution companies is around EGP36 billion and the Decent Life initiative is set to provide funds between EGP60 and EGP70 billion.

The post Egypt to invest $4 bn to fuel its green hydrogen project: Govt appeared first on International Finance.

Daniel Howlett, HSBC’s regional head of Commercial Banking for the Middle East, North Africa and Turkey (MENAT) told the media, “This transaction demonstrates the commercial viability of green finance in the Middle East for issuers beyond sovereigns, financial institutions and the largest multinational corporations. Sustainable growth is more important than ever before for businesses that want to build back better from the Covid-19 pandemic and HSBC is proud to be leading the development of the green finance market in the Middle East.”

Last year, it was reported that HSBC Singapore was planning to drive bespoke green financing with a new green loan for small and medium-sized businesses in the city-state. The bank’s green loan is in line with internationally recognised green standards — and will accept applications based on industry certifications.

HSBC has supported sustainable finance through various bond launches in Hong Kong, Ireland and Mexico. In June 2018, the bank on its part decided to ease the transition to a low-carbon economy.

It was reported that HSBC  accepted the green loan applications from businesses holding Singapore Green Labelling Scheme (SGLS) and eco-certification schemes, Green & Gracious Award and Green Mark Scheme, product and services certification schemes and Renewable Energy Certification.

The post HSBC issues green finance facility for UAE-based Lamprell appeared first on International Finance.

The acquisition is expected to be completed this year. The deal is subject to regulatory approval, media reports said. The company will acquire Solarcentury’s six gigawatt project pipeline in Europe and South America.

Statkraft is Europe’s largest generator of renewable energy. Solarcentury said that it has developed 1.2 GWp of project capacity in seven countries over the last seven years. Christian Rynning-Tonnesen, chief executive officer of Statkraft, told the media, “This acquisition is in line with our strategy to ramp up as a wind and solar developer and become one of the leading renewable energy companies globally.”

The London-based company said that it would acquire it’s rivals shares from Scottish Equity Partners, Zouk Capital; Vantagepoint Capital and Grupo Ecos. In addition, Statkraft has signed a power purchase agreement with BayWa r.e. in Spain for the Tordesillas solar farm, media reports said. The signed power purchase agreement will come into effect next year, enhancing its position as a leading supplier in renewable energy. 

The project which is located in central Spain is a 41.7MW solar facility commissioned in the first half of next year. The facility is expected to generate 74GWh of solar energy, which in turn will save 19 tonnes of carbon emissions.

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