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00:00I think, you know, sitting through all the sessions, a couple of terms I've heard recurring
00:04through all the discussions that we've heard so far. Supply chains, energy security. I think we
00:10can all agree that energy security and the global energy supply chains have really faced a period
00:16of profound disruptions. Rapid technological changes, heightened market volatility,
00:21shifting political priorities are all reshaping the energy landscape at every level. And these
00:27shifts are not only changing how energy will be produced, transported and consumed, but also how
00:33investors, governments and corporations are thinking about risk, resilience and opportunity in the
00:39global supply chain for energy. And we tracked the money and the investment that's going into the
00:47global clean energy supply chain. And in 2025, we've tracked that about 127 US billion dollars have gone
00:54into clean energy supply chain, which is up about 6% year on year. And this is no longer just
01:01a niche
01:01manufacturing story that we see playing out in China, but a wider capital allocation theme that's
01:07playing out across a broader set of geographies. Government wants control of technology, they want
01:13jobs, they want supply chain security. And the composition of the investments is also changing,
01:18which really gives us an insight into what is top of minds for the industry. And last year,
01:24about half of the investments went into battery manufacturing. What we see the investments
01:29that go into the production of battery metals, which is lithium, cobalt and nickel is also growing,
01:34but the share of solar have really fallen quite significantly from its peak in 2023.
01:40So governments and corporations are rethinking what energy security means and how do they define
01:46energy security? In the past, the question was pretty straightforward. Do we have enough access to coal,
01:52oil, and gas? And can we get them to go where we need to in time, affordably, reliably, and at
01:59scale?
01:59This is a question that's now increasingly difficult to answer and increasingly difficult to plan about.
02:05And the Straits of Hormuz really highlighted how exposed the global oil and gas supply chains are again.
02:11The destruction of the Straits of Hormuz took out about 20% of global liquefied natural gas supply
02:18and about 30% of global seaborn crude oil trade. And about 80 to 90% of those actually came,
02:25are destined for Asia, with China accounting for more than a third alone.
02:31And what started as an initial regional conflict quickly escalated into a global energy supply chain
02:39threat. In the wake of the Gulf conflict, which unfortunately is still playing out,
02:43fossil fuel prices really took to the sky, reaching about 1.4 to 1.6 times of prices that we
02:49saw
02:49in January of 2025. And this escalating Middle East conflict really highlights how continued fossil
02:57fuel dependence could pose a threat to global economy. And nowhere is that more evident than
03:03in emerging economies, such as here around the Asia Pacific, where higher prices means higher costs
03:10for power generation, industry, and transport. And energy security is no longer just about physical
03:16supply, because even when cargos do arrive, affordability becomes a very real concern.
03:22For governments, this could mean increased fiscal pressures. For corporations, this could mean
03:27pressure on margins and cost competitiveness. You know, many markets here, especially around
03:33in Southeast Asia, in China, in India, are still very heavily relying on coal. And this has prompted
03:40a discussion of, could we see a comeback of coal as part of the energy security question?
03:45And while coal could provide a buffer in the short term, for countries that are dependent on the input
03:51of coal as a fuel does not actually resolve the underlying energy security concerns.
03:57And this point was, again, recently underscored by discussions in Indonesia, where there were talks of
04:03potentially consolidating coal exports under a state-owned entity. And this adds another layer of
04:09uncertainty for coal buyers. Instead, what we think is that the conflict in the Middle East could actually
04:15accelerate the energy transition, because it reframes the energy transition from this country, from just a
04:22climate policy choice, to an energy security and affordability strategy.
04:29And this is also highlighted in our BNEF latest annual New Energy Outlook, which is our long-term
04:35modeling out to 2050 of how energy systems could evolve under two scenarios, a least cost scenario and a net
04:42zero scenario.
04:43And what it really shows is the faster that economies could reduce their dependency on fossil fuel
04:49imports, the stronger it could improve its energy resilience. And across most major markets, the
04:55transition to low-carbon technology actually sees their energy imports as a share of GDP decline.
05:03So if the old question was, how do we have enough access to fossil fuels and get them to where
05:08we need them to go?
05:08So what are clients increasingly asking? What's the industry increasingly asking?
05:14And people were increasingly asking, what's our exposure to supply chains and our exposure to geopolitical chocos?
05:21And so we took a look at how many times the terms reshoring, onshoring and franchoring were mentioned in Bloomberg
05:27News over the years.
05:29And we see that starting from 2022, the mentions of those terms have gradually increased, but really spiked into 2025.
05:37And then geopolitical headlines dominated the news cycle, and we saw quite a sharp dip.
05:44But what is clear is that supply chain strategies now a main part in the mainstream state of government corporate
05:51and government policy discussions.
05:55We also see this in the increased implementation of protectionist trade measures, such as trade tariffs on equipment or product
06:02that are imported,
06:03or other form of trade pressures, such as the European Union's carbon border adjustment mechanism.
06:09To be very clear, these are two very separate mechanisms.
06:12Trade tariffs are implemented to encourage domestic production and to level the playing field,
06:18while the EU's sebum mechanism seeks to address emissions and carbon leakage.
06:23But what this means is that it matters now where a product is produced.
06:28It matters how carbon intensive it is.
06:33Some countries are taking it a step further by limiting or restricting the use or import of equipment tied to
06:40the product's market of origin.
06:42Take the U.S., for example.
06:43For their Clean Energy Investment Tax Credit under the One Big Beautiful Bill Act,
06:48they are prohibiting the use of product or the proportion of cost tied to what they term as prohibited foreign
06:54entities.
06:56So for developers, this creates a much more complicated optimization problem,
07:02because your task is no longer just to procure the cheapest, most affordable, cost-competitive product.
07:09We now need to know where this product is made.
07:12Could it affect our chances of getting tax credits?
07:16Would the ownership structure of the factory that produced this create any risk for us in the future?
07:23And the restriction of Chinese products in some markets are already reshaping global trade for all
07:29by redirecting supply to emerging markets where demand for affordable clean technologies continue to rise.
07:36And we see that China's export for lithium-ion batteries, electric vehicles, solar and wind continues to boom across emerging
07:44markets
07:45as their exports to developed markets starts to shrink.
07:50At the same time, despite the surge in policy attention, we see that on-shoring efforts across markets such as
07:58the U.S., Australia and Europe have actually been slow to materialize.
08:04Projects have either faced cancellations or delays as they face cost and demand realities.
08:12And while localization can increase energy security, it can create jobs, it can create domestic manufacturing capabilities,
08:21there is a trade-off in that it can also raise near-term deployment costs.
08:27And we have two examples here.
08:28BNEF estimates that to produce a solar module in the U.S. and the EU remains quite substantially more expensive
08:36than producing one in China or Southeast Asia.
08:39And Italy actually provides another clear example.
08:42In their solar auction, the implementation of the European Union's Net Zero Industry Act,
08:48where they exclude projects that were using Chinese-made products that were made in mainland China or made by Chinese
08:55-owned firms,
08:57led to an average weighted bid price in that particular auction round that was 17% higher than a previous
09:04solar auction held within the same year,
09:06but without their restriction.
09:09And the trade-off becomes even more persistent due to this global overcapacity that we're seeing,
09:16be it battery cells across the entire solar value chain,
09:20current operational manufacturing capacity is more than sufficient to meet 2025 demand already.
09:29And what we see is that even though manufacturing capacities outside of China continues to grow,
09:35costs, supplier debt, skill continues to favor incumbent supply chains,
09:40and these are advantages that are very difficult and challenging to move.
09:43So China's dominance in the supply chain still remains,
09:47and that's a reality that will be difficult to change in the near term.
09:52And the last question that people are asking as well is,
09:56do we have access to the metals and critical minerals that we need to build the future energy systems?
10:03Under BNEF New Energy Outlook Long-Term Scenario Modeling,
10:07again, we see that there will be massive deployment of these transformative low-carbon technologies.
10:13The momentum for many of them are already well underway,
10:16and all of these would have impact on the demand for energy transition metals.
10:20Again, through our transition metals outlook, we take a look at the impact.
10:25And leveraging on our 2025 results,
10:28we see that the metals that are expected to grow most significantly
10:32are all closely linked to the transport sector.
10:34So demand for lithium, graphite, rare earth, manganese are all expected to triple by 2050
10:42because EVs need these for their batteries.
10:45They need the rare earths for the magnets.
10:48And again, if we look at the refined supply chain of these metals,
10:52we can see China's dominance clearly shows through.
10:55We tracked 11 energy transition metals,
10:58all of which are exposed to significant supply chain risk,
11:01which was defined as if the top producers controls more than 30% of global supply.
11:05And all but one of these refined supply is dominated by China.
11:10And of course, this has prompted a lot of response from governments all around the world.
11:14Governments are coming up with policies,
11:16with partnerships such as the U.S.-Australia Framework for Critical Minerals.
11:20Australia, Brazil, Canada, and Tunisia, South Africa together hold some of the highest concentration
11:26of these critical minerals.
11:27And these five markets have together provided about $45 billion of financial and fiscal incentives
11:32in order to spur additional supply chain to diversify reliance on China itself.
11:39So resource-reached nations are really now asking,
11:42what is their potential role in future global supply chains?
11:46Governments, corporations are faced with choices.
11:49Do they have to choose between, do they remain exporters of raw materials,
11:53or do they try to capture more value by processing and refining these materials locally before exporting them?
11:59But whatever it is, the question of risk, resilience, control,
12:04would be one that governments and corporations will need to balance forward.
12:07And so I'm really looking for the panel that follows to learn about how we can redesign ecosystems
12:12to be more resilient in the future.
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