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Global energy transition has long adapted as a necessary shift to sustainability, but the economic and geopolitical challenges suggest that it may be time to rethink how we approach this transformation. While efforts to reduce carbon emissions remain priority, new concerns about affordability and energy safety are reshaping debate, raising questions about the feasibility of current strategies.
The challenge lies in balancing long -term goals of sustainability with short -term economic and political realities. The power system operates in long investment cycles, and passing away from fossil fuels requires significant infrastructure changes, capital investments and regulatory support. The moment of inheritance energy systems, built over the decades, cannot be returned overnight.
The reality of the transition of energy
The power transition had to be a history of innovation and declining costs. For years, the price of renewable energy was lowered, driven by economies of scale, technological advances and globalized supply chains. But now, while governments are pressured for constant and economic nationalism, a new reality is deciding – Clalanian Energy is getting more expensive.
Steven Knell, a professor in practice at the Center for Global Energy and Climate Policy at the University of London Soas, does not undermine the words when it comes to this growing dilemma. “If the power transition is made in the UK or done at the US, it requires twice longer and costs twice as much,” he explains. “And basically means that even from the most optimistic predictions, we do not fall on our climate goals.”
Over the past decade, China has emerged as the predominant force in solar, wind and battery production, controlling more than 75% of the global production capacity for key energy technologies. Prioritizing the extent and efficiency of cost, China made renewable affordable, accelerating global approval. Now, governments in the US and Europe are trying to recover the market share – but at a high price. “This energy transition,” Knell argues, “was always a cost of cost. And now we are making it more expensive than it should be.”
Increasing cost of energy transition
One of the most significant challenges to the transition of energy has been the instability of cost. While the initial narrative focused on declining renewable cost, the era after the Fandemia has seen significant inflation in technology and infrastructure costs. The pricing of essential ingredients such as solar panels and wind turbines has increased due to the limitations of the supply chain, increased costs of raw materials and increased competition for resources.
According to Knell, industry data showed an increase in photovoltaic solar costs (PVs) of nearly 25% from 2022 to 2023, challenging previous assumptions of transition affordability. While costs have fallen somewhat from the peak of the top of the supply chain, the price for selected goods and technologies remains relatively high.
Moreover, policy decisions have inadvertently promoted higher costs as the growing politicization of energy policy has led to an increase in economic nationalism. Protectionist measures in the United States and Europe, aimed at reducing the Chinese supply chains, have increased production costs, making the passage more expensive than it was originally predicted. This is a challenge that lies throughout the supply chain. Whereas the goal behind these policies-Security of the creation of jobs of jobs and energy security-is understandable, they can eventually slow down progress by limiting access to more cost effective technologies.
Governments across the globe are prioritizing local production and supply chains, often at the expense of cost efficiency and effectiveness. While these policies aim to strengthen national energy security, they also risk shredding the global market and preventing the establishment of critical renewable energy technologies.
Protectionism versus affordability: hidden trade
Such protectionist policies are increasing costs for consumers and slowing the transition. “US -made solar panels cost 40 to 50 percent more than those imported from China,” Knell points out. “Era’s turbines in Europe are already 20 to 30 percent more expensive. These price increases are being chained, which means that for everyday people, the transition is no longer affordable as it used to be. “
The irony is that many of the same governments that once defended low -cost renewal are now deliberately making them more expensive by limiting imports and subsidizing inefficient internal production. The result? Fewer projects, longer delays and higher prices – all at a time when energy costs are already a major economic concern.
“We are living through a moment of cost inflation,” Knell explains. “Everything is more expensive, and now policymakers are choosing to make the passage of energy even more expensive. The problem is, the more costly it becomes, the harder it becomes to sell to the voters.”
South Global pays the price
Beyond rich nations, protectionist energy policies have an even greater impact on developing markets, where affordability is the only most important factor in energy policy.
“The demand for faster growth energy is in the global south,” Knell points out. “These countries need low -cost renewable, and now, the cheapest way to get them is from China.
For decades, fossil fuels remained prevalent in developing countries because they were free and accessible. Renewed renovations only began to challenge them when costs fell dramatically. Now, after the passage of global supply chains, the fear is that the highest prices will slow down the adoption and prolong the fossil fuel addiction.
“People who make these policies assume that governments will continue to pay, companies will continue to invest,” Knell says. “But when the cost of the transition increases, the support begins to corrode. You start losing the audience.”
A loser bet on nationalism
The case of enhancing pure energy production is often adapted about energy security and job creation. But history suggests that governments often overestimate how quickly and effectively domestic industries can escalate.
“Look at the US solar industry,” Knell points out. “Despite billions in incentives, America -made panels still cannot compete with Chinese prices. In Europe, offshore wind projects are stuck because they are very expensive. Governments are trying to build a new overnight supply chain, but these things take years.”
At the same time, the demand for pure energy is only increasing. The world will need to double the production of electricity by 2050 to maintain the pace with electrification and decarbonization. Slow and more expensive internal production puts it at risk.
“This is not just a political problem – it’s an economical,” Knell warns. “If we continue to make the energy more expensive, people will start to push back. And when that happens, the whole transition slows down. “
What is the alternative?
Knell believes that a pragmatic approach to global supply chains is the only way to keep costs under control. Instead of full protectionism, he argues, policymakers should focus on diversifying suppliers rather than cutting China completely.
“The US and Europe do not need to do everything at home,” he says. “They simply have to make sure they do not rely on a single country. It means investing in production in places like India, Southeast Asia and Latin America. It has nothing to do with isolation – it has to do with balance.”
At the same time, it emphasizes the need for better market structures and infrastructure reform. “For now, we’ve got offshore wind farms in the UK that have not even been in the network,” Knell points out. “We are paying for no energy that is not being used. This is a market failure, and its arrangement would do more to reduce costs than hitting tariffs for Chinese batteries. “
After all, the choice is simple: a cost -effective energy transition, or politically run. “Energy transition is the only most important economic change of our lives,” Knell says. “We cannot allow it to make it more expensive than it should be.”
This is the economic reality of the green transition – and a warning to policymakers that bet on isolation to ensure their future of clean energy. The world needs a low -cost, high -speed transition, not an expensive, protectionist. Now the question is whether politics will allow the economy to do its job.