Global electricity generation from solar will quadruple by 2030 and help to push coal power into reverse, according to Carbon Brief analysis of data from the International Energy Agency (IEA).
The IEA’s latest World Energy Outlook 2024 shows solar overtaking nuclear, wind, hydro, gas and, finally, coal, to become the world’s single-largest source of electricity by 2033.
This solar surge will help kickstart the “age of electricity”, the agency says, where rapidly expanding clean electricity and “inherently” greater efficiency will push fossil fuels into decline.
As a result, the world’s energy-related carbon dioxide (CO2) emissions will reach a peak “imminently”, the IEA says, with its data indicating a turning point in 2025.
Other highlights from Carbon Brief’s in-depth examination of the IEA’s latest outlook include:
- Renewables will grow 2.7-fold by 2030, short of the “tripling” goal set at COP28.
- Still, clean energy is growing at an “unprecedented rate”, and will overtake coal, gas and then oil, to become the world’s largest source of energy “in the mid-2030s”.
- Low-carbon energy, including renewables and nuclear, will grow 44% by 2030, adding 48 exajoules (EJ) to global energy supplies.
- Global energy demand will only rise by 34EJ (5%) over the same period.
- This means clean energy will push each of the fossil fuels past their peak by 2030.
- Electric vehicles (EVs) are now expected to displace 6m barrels of oil per day (mb/d) by 2030, up from a figure of 4mb/d by 2030 in last year’s outlook.
Despite these changes, the world is on track to cut CO2 emissions to just 4% below 2023 levels by 2030, the agency warns, resulting in warming of 2.4C above pre-industrial temperatures.
It says there is an “increasingly narrow, but still achievable” path to staying below 1.5C, which would need more clean electricity, faster electrification and a 33% cut in emissions by 2030.
This year, in light of heightened geopolitical risks and uncertainties, the IEA explores “sensitivities” around its core outlook. These include slower (or faster) uptake of electric vehicles (EVs), as well as faster growth in data-centre loads and more heatwave-driven demand for air conditioning.
The agency maintains that, even when these sensitivities are combined, global demand for coal, oil and gas – as well as CO2 emissions – would peak no more than a few years later than expected.
(See Carbon Brief’s coverage of previous IEA world energy outlooks from 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016 and 2015.)
World energy outlook
The IEA’s annual World Energy Outlook (WEO) is published every autumn. It is widely regarded as one of the most influential annual contributions to the understanding of climate and energy trends.
The outlook explores a range of scenarios, representing different possible futures for the global energy system. These are developed using the IEA’s “Global Energy and Climate Model”.
The 1.5C-compatible “net-zero emissions by 2050” (NZE) scenario was introduced in 2021 and updated in September 2023. The NZE is revised again in the WEO 2024 to reflect the fact that global CO2 emissions reached another record high last year, rather than falling.
The report says that the path to 1.5C is “increasingly narrow, but still achievable”. However, it adds:
“Every year in which global emissions rise and actions fall short of what is needed for the future makes this pathway steeper and harder to climb.”
Alongside the NZE is the “announced pledges scenario” (APS), in which governments are given the benefit of the doubt and assumed to meet all of their climate goals on time and in full.
Finally, the “stated policies scenario” (STEPS) represents “the prevailing direction of travel for the energy system, based on a detailed assessment of current policy settings”. Here, the IEA looks not at what governments are saying, but what they are actually doing.
Annex B of the report breaks down the policies and targets included in each scenario. In effect, the IEA is judging the seriousness of each target and whether it will be followed through.
For example, the provisions of the European Green Deal are included in the STEPS. But the EU target to cut emissions to 55% below 1990 levels by 2030 is only met under the APS.
Since last year’s report, some 38 countries responsible for a third of global energy-related CO2 emissions have introduced new clean-energy measures, the IEA says.
It mentions South Korea’s 11th electricity plan, which “includes a significant expansion of nuclear, wind and solar”, and the new UK government “lift[ing] the de-facto ban on new onshore wind”.
(It says there have also been “some rollbacks” of climate policy over the past year, such as Javier Milei’s reforms in Argentina, but the global impact of these is “relatively small”.)
The report emphasises that “none of the scenarios should be viewed as a forecast”. It adds:
“Our scenario analysis is designed to inform decisionmakers as they consider options, not to predict how they will act.”
Earlier this year, some US politicians and analysts criticised the IEA’s work, in particular, its suggestion in WEO 2023 that demand for oil, coal and gas would each peak before 2030. They also argued that the IEA was straying from its core focus on energy security.
At the time, the agency defended its approach in a response to Senate Republicans.
This year’s edition goes on to reiterate the IEA’s view that fossil fuels will peak this decade – and pushes back on the idea that climate change and clean energy are outside its mission.
It says that “more efficient, cleaner energy systems can reduce energy security risks” and that a “comprehensive approach to energy security…needs to extend beyond traditional fuels”.
In his foreword to the report, IEA executive director Fatih Birol adds:
“The concept of energy security goes well beyond safeguarding against traditional risks to oil and natural gas supplies, as important as that remains for the global economy.”
He says that, in addition to those issues, energy security includes access to affordable energy supplies, secure supply chains for clean-energy technologies and dealing with the rising threat of extreme weather disruption to energy systems. Birol’s foreword continues:
“The analysis in this year’s outlook reinforces my long-held conviction that energy security and climate action go hand-in-hand…This is because deploying cost-competitive clean energy technologies represents a lasting solution not only for bringing down emissions, but also for reducing reliance on fuels that have been prone to volatility and disruption.”
Discussing the controversy over fossil-fuel peaking in a press briefing to launch this year’s report, Birol said that the latest data – and the outlooks of several major international oil and gas companies – had “confirmed and reconfirmed” the IEA’s position on oil demand.
Birol said press reports had described the latest data as “vindication” for the IEA’s forecast of minimal growth in oil demand this year. But he added: “It’s not a vindication of the IEA, it’s a vindication of numbers and objective analysis.”
Nevertheless, this year’s outlook puts extra emphasis on the uncertainty surrounding its scenarios. It devotes an entire chapter to exploring “sensitivities”, such as slower growth in EV sales or a more rapid escalation of heatwaves driving demand for air conditioning.
Even when these sensitivities are combined in ways that would slow climate action, however, the IEA says that oil demand still peaks and begins to decline by 2035. Similarly, global CO2 emissions would be less than 2% higher in 2030 and 1% in 2035 than in the core outlook.
‘Age of electricity’
A central theme of this year’s outlook is the idea that the global energy system is entering a new era, defined by rapid growth in electricity demand and a surge in clean electricity supplies.
In a press release accompanying the report, Birol calls this new era the “age of electricity”, in contrast to the earlier “age of coal” and “age of oil”. (The “golden age of gas”, predicted by the IEA in 2012, was prematurely brought to an end by the global energy crisis, driven by high gas prices.)
Birol says “the future of the energy system is electric” and that it is “moving at speed” towards “increasingly be[ing] based on clean sources of electricity”. In the report foreword he adds:
“The latest outlook also confirms that the contours of a new, more electrified energy system are becoming increasingly evident, with major implications on how we meet rising demand for energy services. Clean electricity is the future, and one of the striking findings of this outlook is how fast demand for electricity is set to rise, with the equivalent of the electricity use of the world’s ten largest cities being added to global demand each year.”
The IEA says that electricity demand is set to rise six times faster than global energy demand overall, in the years out to 2035, having only been twice as fast since 2010.
Moreover, despite a rapid acceleration in recent years, clean electricity has not yet grown fast enough to meet rising demand, leaving space for fossil-fueled power to continue expanding.
Global solar capacity is now 40-times larger than it was in 2010 and wind six times larger, the outlook notes, and a record 560 gigawatts (GW) of renewables were added in 2023.
Yet growth in clean electricity supplies has still fallen short of rising demand, meaning coal power has climbed 23% since 2010 and gas by 36%, raising emissions in the sector by 20%.
This is now set to change. The report says:
“It is now cheaper to build onshore wind and solar power projects than new fossil-fuel plants almost everywhere around the world, and the economic arguments remain strong even when considering the accompanying investment required to cope with their variability of generation.”
Renewables are only on track to expand 2.7-fold from 2022 to 2030 – short of the tripling target set at COP28 – but clean electricity will still outstrip rising demand, out to 2030 and beyond.
The IEA data shows that the amount of electricity generated from solar power alone is set to quadruple from 2023 levels by 2030 – and to climb more than nine-fold by 2050.
This means that solar will overtake nuclear, hydro and wind in 2026, gas in 2031 – and then coal by 2033 – to become the world’s largest source of electricity, as shown in the figure below.
Along with a doubling of wind generation and more modest gains for nuclear and hydro by 2030, clean electricity will push coal power into reverse, declining 13% by 2030 and 34% by 2035.
(The outlook sees modest growth of 6% by 2030 for gas power, but most of this would be erased by 2035 as clean electricity supplies continue to expand.)
The IEA says that China was responsible for 60% of worldwide renewable installations last year – and will add 60% of new capacity out to 2030. This means that by the early 2030s, solar generation in China alone is set to exceed the US’ current total electricity demand.
Notably, this year’s report includes another significant boost to the outlook for solar under current policy settings.
The IEA now sees global solar capacity exceeding 16,000GW by 2050, some 30% higher than expected last year and nearly 11-times higher than it thought in 2015, as shown in the figure below.
By 2023, the world had already installed 1,610GW of solar capacity. This comfortably exceeded the 1,405GW of capacity that the IEA had expected in 2050, under prevailing policy settings in its 2015 world energy outlook, released before the Paris Agreement later that year.
Similarly, this year’s outlook says battery storage capacity will reach 1,630GW by 2030. Only two years ago, it had said battery capacity would reach just 1,296GW by 2050.
In addition to raising the outlook for solar and storage, however, this year’s report also includes significantly higher global electricity demand, which has been revised upwards by 5% in 2030.
This 1,700 terawatt-hour (TWh) revision to global demand in 2030 – nearly equivalent to current electricity use in India – is much larger than the 1,000TWh adjustment for solar.
As a result, the IEA has also raised its outlook for coal power in 2030 by nearly 900TWh.
The IEA says that higher electricity demand is “mainly” down to “increased light industry activity, notably in China, much of it associated with a rapid rise in clean-technology manufacturing”.
Other factors include faster-than-expected adoption of EVs, more rapid electrification in industry in developing countries and the rise of data centres.
(The IEA, nevertheless, pours cold water on over-hyped reporting of AI-driven growth in data-centre electricity demand, which it sees accounting for barely 3% of growth to 2030, overall.)
Alongside growth in wind and solar, the report stresses the need for “a wide set of dispatchable low-emissions sources, including hydropower, bioenergy and nuclear power”.
It also emphasises the need for rising investment in electricity grids and storage. Spending in these areas is currently only two-thirds of investment in renewables, whereas parity will be needed to facilitate clean electricity expansion and ensure resilience to extreme weather and cyberattacks.
Fossil fuels peak by 2030
The “age of electricity” will have important implications for the current fossil-fuelled energy system, the report says. These include a reduction in the rate of global energy demand growth, even as demand for “energy services” – such as heat and mobility – rises rapidly in the developing world.
Explaining this apparent paradox, the IEA says that much of the energy released by burning fossil fuels is lost as waste heat. In contrast, a “more electrified, renewables-rich system is inherently more efficient”. This means less energy will be required to deliver the same energy services.
For example, electric technologies such as EVs and heat pumps deliver mobility and heat much more efficiently than internal combustion engines or fossil fuel boilers, the report says.
As the “age of electricity” gains pace, sources of energy demand across all sectors of the economy will be increasingly electrified, including heating, cooling, mobility and industrial processes.
This means the share of final energy consumption met by electricity will rise from 17% in 2010 and 20% in 2023 to 24% by 2030 and 32% by 2050, the outlook says – a more than 50% rise on current levels of electrification.
(Earlier this year, the Rocky Mountain Institute said China had “leapfrogged” other major countries in terms of rapid electrification, becoming what it termed the “first major electrostate”. Electricity already accounts for 26% of its energy consumption and will reach nearly 45% by 2050.)
Notably, the IEA has also been edging up its outlook for electrification, reflecting repeated boosts to its view on the deployment of electric technologies such as EVs and heat pumps. In 2015, it only expected electricity to meet 26% of final demand in 2050.
The rise of electrification, fed by expanding clean electricity sources, is now on the cusp of sending fossil fuels into decline, the outlook shows. As noted above, this year’s report reiterates the agency’s view that coal, oil and gas will each reach a peak this decade. It says:
“In the STEPS, coal demand begins to decline around 2025, while oil and natural gas demand both peak towards the end of the decade.”
Indeed, the outlook data shows global energy supply growing 34EJ (5%) by 2030, with this growth easily outpaced by clean-energy expansion of 48EJ (44%). As a result, fossil fuels in aggregate will be pushed into decline, as shown in the figure below.
The chart above shows how shifts in the global policy and technology landscape since the 2015 Paris Agreement have transformed the outlook for fossil-fuel growth.
Instead of the continuation of historical growth rates expected before Paris, the IEA has in recent years shifted its outlook, to a peak and increasingly steep decline in fossil-fuel demand.
Indeed, this year’s report points to fossil-fuel demand under current policy settings declining at a rate that is nearly in line with the climate pledges countries had made in 2021.
For example, the report says that China’s rapid uptake of EVs is spurring a “major slowdown” in oil demand growth globally, which is “wrong-footing oil producers”. It explains:
“China has been the engine of oil-market growth in recent decades, but that engine is now switching over to electricity.”
Indeed, the rise of electric mobility around the world is set to displace 6mb/d of oil demand by 2030, the outlook says, up from the 4mb/d it expected last year.
It notes that despite negative reporting, global EV sales were up 25% in the first half of 2024, with China accounting for 80% of the increase, but the rest of the world’s market also up 10%.
Nevertheless, the chart above illustrates the large gap between the current trajectory of the global energy system and what would be needed to meet existing national climate pledges, let alone the Paris Agreement target of limiting warming to “well-below” 2C or 1.5C.
Insufficient progress on emissions
This year’s outlook puts the gap between climate ambition and the world’s current trajectory into stark relief, saying that prevailing policy settings would likely see warming reach 2.4C this century.
Reflecting the marginally higher outlook for coal use in the short term, but more rapid fossil fuel declines in the medium and longer terms, this 2.4C assessment is the same as last year’s report.
This combination of changes is illustrated in the figure below, showing how the outlook for global energy-related CO2 emissions (grey line) has changed since 2015 (dashes). The IEA now says CO2 emissions will peak “imminently”, with its data pointing towards a peak in 2025.
(Last year, the outlook said emissions would peak by 2025 at the latest.)
The chart above illustrates how new policies and technological progress since the Paris Agreement are bending the curve of global CO2 emissions away from the 3.5C of warming expected in 2015.
Still, it also shows the massive gap that would need to be bridged in order to meet national climate pledges for 2030 and for reaching net-zero emissions by mid-century (blue line). And it shows the huge scale of the gap to the “increasingly narrow, but still achievable” path to 1.5C.
While current policy settings would cut global CO2 emissions to 4% below 2023 levels by 2030, according to the IEA, a far larger 33% reduction would be needed for 1.5C.
A separate report from the IEA, published last month, shows how countries could close most of this gap “by fully implementing the 2030 goals they agreed at COP28”.
These goals included doubling the rate of energy efficiency improvements and tripling global renewable capacity by 2030. Together, these two elements “could provide larger emissions reductions by 2030 than anything else”, the outlook says.
It reinforces the key changes that would be needed to get on track for current climate pledges – which would limit warming in 2100 to around 1.7C – or to limit warming to 1.5C.
In broad terms, this would mean even faster electrification and deployment of clean-energy technologies, as well as taking rapid action to cut methane emissions from the oil and gas industry.
(Instead of electricity’s share of final energy use increasing from 20% to 32% by 2050, as under current policy settings, electrification rates would double to 42% by 2050, if climate pledges are met, and would nearly triple to 55%, if the world gets on track for 1.5C.)
More specifically, the IEA points to “seven key clean-energy technologies”: solar; wind; nuclear; EVs; heat pumps; low-emissions hydrogen; and carbon capture and storage.
The report says the world has “the need and the capacity to go much faster” in these areas, which – unlike the current trajectory – would bring global emissions into a “meaningful decline”.
Spotlighting the need for a positive outcome in upcoming climate-finance discussions at the COP29 UN summit in November in Baku, Azerbaijan, the IEA says that high financing costs and project risks are limiting the spread of these clean-energy technologies in developing countries.
Concluding his report foreword, the IEA’s Birol emphasises the choices facing governments, investors and consumers. He writes:
“This WEO highlights, once again, the choices that can move the energy system in a safer and more sustainable direction. I urge decision makers around the world to use this analysis to understand how the energy landscape is changing, and how to accelerate this clean energy transformation in ways that benefit people’s lives and future prosperity.”
The outlook warns that decisionmakers “too often entrench the flaws in today’s energy system, rather than pushing it towards a cleaner and safer path”. It adds: “[L]ocking in fossil fuel use has consequences…the costs of climate inaction…grow higher by the day.”
The post Analysis: Solar surge will send coal power tumbling by 2030, IEA data reveals appeared first on Carbon Brief.
Analysis: Solar surge will send coal power tumbling by 2030, IEA data reveals
SYDNEY, Wednesday 26 August 2026 — New 2026 Sustainability Reports released by supermarket giants Coles and Woolworths this week demonstrate the retailers are failing on their commitments to end deforestation in their supply chains.
Adele Chasson, Nature Policy Lead at Greenpeace Australia Pacific said:
“These so-called sustainability reports are revealing. Despite their public commitments in 2024 and 2025, neither Coles nor Woolworths have taken deforestation-linked beef off their shelves. Meanwhile, bulldozers continue to tear up forests and bushland, pushing wildlife closer to extinction and causing mass toxic runoff to flow into the Great Barrier Reef. Millions of native animals like koalas are losing their homes to beef pastures each year, while the big supermarkets put off action.
“Australians would be shocked to know that beef on the shelves of our biggest supermarkets could be pushing threatened species to the brink of extinction. Collectively Coles and Woolworths have made more than $2 billion in profits in the last year, profiting from the destruction of wildlife and precious Australian nature. Coles and Woolworths owe it to shoppers to deliver on their promises and end deforestation in their supply chains now.
“As big beef buyers, Coles and Woolworths have an essential role to play in keeping Australia’s unique forests standing. They can help stop the Great Barrier Reef from being poisoned by runoff and protect iconic forest wildlife by taking deforestation off their shelves. It’s time these big companies put their money where their mouths are and follow through on their promise of sourcing and supplying deforestation-free beef.”
New Zealand’s parliament has adopted a controversial new law blocking a whole avenue of climate litigation and shutting down its most advanced corporate lawsuit, which has been blamed by the government for shaking business confidence and investment.
The Climate Change Response (Tort Liability) Amendment Bill, expected to take effect in the coming days after it is formally signed by the Governor-General, prevents all current and future civil claims for climate loss or harm under tort law.
Justice minister Paul Goldsmith said last week that the aim was to give businesses “certainty around their climate change obligations”, noting it would not alter the government’s responsibilities under the Climate Change Response Act 2002 nor business obligations under the Emissions Trading Scheme.
“Our response to climate change is best managed by the Government at a national level and not through piece-meal litigation in the courts,” he added in a statement.
Such litigation, he said, “risks developing a new regime that contradicts the framework Parliament has already enacted” to tackle climate change.
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Experts say that despite dismissing the lawsuit, the ruling sets a precedent by confirming that climate science can establish legal liability for the damage caused by emissions
Goldsmith singled out a key domestic climate lawsuit brought by Northland iwi leader and activist Mike Smith against six big companies: dairy firms Fonterra and Dairy Holdings, energy firms Genesis Energy and Z Energy, New Zealand Steel and coal mining firm BT Mining. A seventh original defendant, Channel Infrastructure, was dropped after it permanently decommissioned its Marsden Point oil refinery.
Smith argued that these companies had caused him harm under public nuisance and negligence law, as well as a third breach of a duty to cease contributing to climate change that has yet to be tested domestically. He did not seek financial compensation, instead asking for the companies to immediately stop emitting or contributing to net greenhouse gas emissions.
In one of the most advanced corporate climate accountability lawsuits in the world, a trial had been scheduled for April 2027 after the Supreme Court unanimously allowed the case to continue.
Corporate lobbying in the shadows
Smith described the passing of the bill as “deeply concerning”, particularly as it coincided with the Supreme Court hearing another of his climate lawsuits. In that case, Smith v Attorney-General, he argues that the government’s response to climate change and its impacts on Māori communities in particular breaches rights to life and culture.
“That timing raises profound questions about the separation of powers and the rule of law,” said Smith. “Whatever one’s view of the merits of these cases, it is deeply troubling when parliament intervenes to remove a legal pathway while the courts are actively considering fundamental questions about climate responsibility, rights and the crown’s obligations.”
The bill – which says that no person (including the government) can be found liable in tort for emissions-related climate change effects – followed major lobbying efforts by the companies defending themselves in Smith’s lawsuit. They outlined a proposed legal amendment in a briefing note to the government in 2024.
The centre-right government has been fiercely criticised over its lack of transparency in relation to this lobbying activity. The national ombudsman recently found that the Prime Minister’s Office effectively withheld information requested by the Environmental Law Initiative about meetings, discussions and conversations regarding Smith’s case.
Green groups fail to stop bill
The bill sparked huge concern among environmental campaigners in New Zealand and elsewhere. Greenpeace Aotearoa called it a “shocking abuse of executive power” and the vast majority of submissions to a parliamentary inquiry said it should be rejected.
But in the end, it was adopted with little resistance, moving relatively smoothly through parliament, passing its third reading by 67 votes to 53. Sam Bookman, climate law lecturer at Melbourne Law School, told Climate Home News he was not surprised by this, given that the coalition government has a secure majority.
A complaint has been made to the UN special rapporteur on climate change and human rights by Smith, the National Iwi Chairs Forum Pou Tikanga and youth coalition Climate Clinic Aotearoa over what they see as the government’s heavy-handed approach. Smith is also challenging the new law in yet another lawsuit.
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Bookman thinks it “very unlikely” that such a challenge will succeed, noting that New Zealand’s constitution is firmly anchored in parliamentary sovereignty.
But the expert in climate law does not see the bill as the end of legal action in the country, noting that New Zealand has a “sophisticated climate litigation landscape with a growing number of specialist and experienced lawyers and NGOs”.
The country is also approaching its next general election in November, and some opposition parties have pledged to restore access to the courts if elected.
Amanda Larsson, global project lead on agriculture for Greenpeace International, said: “This law deserves to be tested, and I strongly encourage the international climate litigation community to unite and help defend New Zealanders’ fundamental right to hold polluters accountable before this becomes a global blueprint.”
Copycat legislation on the rise
New Zealand’s move is part of a small but growing legislative effort to shut down climate litigation around the world.
In the US, Republican politicians introduced legislation in the House and Senate in April that would shield fossil fuel firms from climate liability lawsuits. Similar laws have already been passed at state level in Tennessee, Utah, Iowa and Louisiana.
The German state of Bavaria has put forward a similar proposal to the Federal Council, aiming to block private climate claims as well as the recognition and enforcement of foreign judgments imposing such liability. There are also proposals to limit available remedies and actions in the Netherlands and Belgium.
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Bookman said he expects more efforts to counter climate damages litigation and advised plaintiffs to think about how to respond, including drawing on broader support in opposing them.
“Even though it’s very hard for plaintiffs to win these types of cases, companies are very eager to avoid the expense, embarrassment and political accountability that come even with unsuccessful lawsuits,” he said.
The post New Zealand moves to protect business with law curtailing climate litigation appeared first on Climate Home News.
New Zealand moves to protect business with law curtailing climate litigation
Bhima Yudhistira Adhinegara is the Executive Director of the Center of Economic and Law Studies (CELIOS), an Indonesia-based economic think tank. Muhammad Zulfikar Rakhmat is the Director of the China-Indonesia desk at CELIOS.
Indonesia produces around 60% of the world’s nickel, a metal used to manufacture batteries for electric vehicles (EVs) – more than any other country in the world. But in 2026, the government sharply reduced how much of its nickel can be extracted from the ground.
Production quotas were reduced by around 40% this year compared to 2025. Weda Bay, the largest nickel mine on Earth, had its allowance cut by more than 70% and exhausted its full-year quota by the end of May, halting mining entirely; it cannot resume large-scale extraction until next year unless regulators grant an extension.
The policy has sparked a vivid debate in Indonesian policy circles: how can the country shift its strategy from a decade of mining vast quantities of cheap nickel to producing a high-value and low-carbon material that the rest of the world wants for EV batteries.
The cuts aren’t a silver bullet to clean up Indonesia’s nickel industry, whose smelters are powered by coal – the most polluting fossil fuels. But alongside stricter enforcement of environmental rules, it is one side of efforts to produce more sustainable nickel for a premium.
Restricting Indonesia’s nickel output
Production quotas were introduced to stop the collapse of nickel prices because of oversupply in the market. Prices had fallen more than 40% in 2023 alone and kept sliding as Indonesian supply kept growing, hitting a four-year low of around $13,900 a ton in late 2025.
Critics called the recent tightening of production quotas proof that Indonesia’s nickel strategy has failed, arguing that the industry shouldn’t need to throttle its own output to survive. But when assessed against what the policy was supposed to do – push up nickel prices – it has worked. Prices jumped to $20,000 a ton in May, the highest since 2024.
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Chinese industry groups representing companies that have invested billions to mine and refine the country’s nickel were furious, warning Indonesia’s president Prabowo Subianto that the cuts put $50 billion worth of investment at risk. But much of that Chinese capital is sunk into smelters and processing plants built specifically to run on Indonesian ore, and cannot simply be moved elsewhere. That gives Jakarta more room to hold its ground than the warning suggests.
Stronger environmental enforcement
Since the start of the year, Indonesia’s forestry task force has seized more than four million hectares of land from mines and plantations operating illegally in protected forests, collecting over two trillion rupiah ($113 million) in fines.
This included 148 hectares seized from Weda Bay for lacking a forestry permit. The share of nickel produced from illegal small-scale mining also fell from about a quarter in 2022 to roughly 10% by 2024.
The crackdown responds to serious environmental damages in the nickel industry. On Obi Island, a waste pond collapsed after heavy rain in June 2025, flooding three villages and killing a resident. Internal company tests found chromium-6 – a carcinogen – in the water, in quantities far above the legal limit. The footprint of another mine near Raja Ampat, which is home to some of the world’s richest coral reefs, grew 60-fold in just eight years.
The market is responding to early cleanup efforts. Low-carbon nickel now sells for a real premium, roughly $18,800 to $19,300 a ton compared with $17,900 to $18,300 otherwise, as carmakers seek to source cleaner materials to comply with the European Union’s new emissions rules for imports.
In turn, this is incentivising the industry to do more to green its operations. Vale Indonesia’s smelter in South Sulawesi now runs almost entirely on hydropower, for example.
None of this addresses coal use, however. Major Indonesian nickel producers still emitted an estimated 15 million metric tons of greenhouse gases in 2023. Indonesia may be cracking down on illegal mining and rewarding cleaner producers but it is still running its mines on the dirtiest fuel available.
Unequal benefits
For Indonesia to truly benefit from producing cleaner and high-value nickel, it needs to reap the economic benefits too. Although the industry has boosted the country’s economic growth, the reality on the ground tells a different story.
Konawe in Southeast Sulawesi is home to a major smelting complex. Growth in the district jumped from 6% to 22% between 2015 and 2023, driven almost entirely by the nickel industry, according to a study by the Lowy Institute study. At the same time, poverty levels increased slightly and unemployment remained unchanged.
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In Halmahera, another epicentre of the nickel industry, spending by the poorest fifth grew just 5% between 2019 and 2022, compared with 28% for the wealthiest fifth, according to a separate study.
Part of the reason for this inequality is the system for transferring mining royalties to district authorities where the mines are located. In theory, they are entitled to the largest share. But in practice, payments are delayed, companies routinely dispute what they owe and royalties are pooled and distributed across a larger area.
The Natural Resource Governance Institute has found that decentralisation handed local governments power to approve new mines faster than they could build their capacity to manage them. Higher output raises national income on paper, but local governments remain constrained by fiscal rules and infrastructure costs that scale with mining.
None of this makes the 2026 quota cuts a mistake. Indonesia has every right to defend its pricing power over a resource it controls. But limiting extraction isn’t going to fix underlying issues around environmental enforcement and revenue-sharing. That requires rules that are consistently enforced, royalties that reach communities living by the mines, and a plan to wean smelters off coal.
The post Indonesia’s nickel production cuts are not enough to create a sustainable industry appeared first on Climate Home News.
Indonesia’s nickel production cuts are not enough to create a sustainable industry
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Greenhouse Gases2 years ago嘉宾来稿：满足中国增长的用电需求 光伏加储能“比新建煤电更实惠”
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Climate Change2 years ago嘉宾来稿：满足中国增长的用电需求 光伏加储能“比新建煤电更实惠”
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Climate Change2 years ago
Bill Discounting Climate Change in Florida’s Energy Policy Awaits DeSantis’ Approval
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Renewable Energy10 months agoSending Progressive Philanthropist George Soros to Prison?
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Greenhouse Gases1 year ago
嘉宾来稿：探究火山喷发如何影响气候预测
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Carbon Footprint2 years agoUS SEC’s Climate Disclosure Rules Spur Renewed Interest in Carbon Credits