We are watching real time the equivalent of the decline of the Roman empire

This is an interview between energy finance analyst Tim Buckley and leading illuminem voice Praveen Gupta. It looks at the global fallout from the US war on Iran, from the spike in inflation across fossil-fuel-dependent Asia to the accelerating shift towards electrification, batteries and renewables as countries race to build energy security.

Tim Buckley founded Climate Energy Finance Australasia in 2022, having co-founded and worked with the global energy finance think-tank IEEFA over 2013–2021. For 17 years Tim was a Managing Director at Citigroup and Head of Australasian Equity Research. He has published over 100 reports on the global energy transition.

Tim has 35 years' financial markets experience, including providing public-interest financial analysis on the energy transition since 2013, studying China, India and Australia.

Praveen Gupta (PG): The top four Asian economies (China, Japan, India and South Korea) are the ones most dependent on the Hormuz supply chain. Why and how does the blockade effect spill over worldwide?

Tim Buckley (TB): I view Trump's motives as entirely self-serving, paying back his US fossil fuel funders by taking out a major region of competing fossil fuel supply, thereby pushing up the profits for the remaining players, of which the US is the number one fossil fuel producer in the world. Trump initially bragged that US fossil fuel firms would profit very nicely from his war on Iran, ignoring the massive cost to the average American from higher inflation and higher interest rates.

The US war against Iran has caused a spike in global inflation, and added cost pressures to the greater Asian region, given most countries here are very heavily dependent on imported fossil fuels. One strategic miscalculation by the US was to assume that China would be hit hard by higher imported fossil fuel costs, but of course China was exceptionally well prepared with huge oil stockpiles and having pursued electrification and decarbonisation as a national priority to improve energy independence.

"I expect one lasting outcome of the US war on Iran is that Greater Asia will pursue far faster electrification and decarbonisation investments to build energy security"

PG: Wind and solar have the lowest cost per kWh of any power generation method, the fastest response time, the shortest deployment time, zero pollution, complete recycling of components which can also be sourced domestically, and a fuel supply that will not run out. Are we at an inflection point?

TB: Yes, I expect one lasting outcome of the US war on Iran is that Greater Asia will pursue far faster electrification and decarbonisation investments to build energy security. This is going to be underpinned by the amazing technological improvements being seen, particularly in Chinese batteries, EVs and wind turbine scale. The ongoing deflation of cleantech, even as the technology capabilities are improving, will accelerate deployments.

I see batteries (BESS and behind the meter) as the largest disrupting factor in the global energy system in 2026. EV adoption is accelerating everywhere except in the US, and that builds energy independence from the Middle East, but it will also see vehicle-to-grid bidirectional charging technologies accelerate by the end of this decade, building grid resilience even as it allows even greater speed of integration of VRE into the electricity system. China is way ahead of the West, and with India's massive reliance on imported fossil fuels, and chronic air pollution, I see rapid uptake there continuing as well.

PG: I understand that the Science Based Targets initiative (SBTi) dropped proposed rules that would have made it harder for a data centre group, running mostly on fossil fuels, to claim its energy needs were entirely met by renewable power to hit its climate goals?

TB: The US undermining of global action on dealing with the climate crisis means previous Western-led efforts for global solutions are being undermined, no doubt. But that plays totally into the hands of the long-term, nearly inevitable move from a uni-polar world to a multi-polar world where there is more room for China and increasingly India to play a central role in a global re-write of the world's rules. While Trump remains, we are likely to see the development of regional and then inter-regional blocs of alignment on things like carbon pollution rules and carbon emissions pricing. My hope is the EU CBAM will serve as a model for a path to an Asian CBAM, but China will want to get its domestic settings totally in place first, and we are seeing that happen real time in 2026 with a 50% expansion of the China ETS into six key heavy industry sectors by the end of 2027.

PG: Why are voters in America increasingly turning against data centres in their backyards?

TB: Data centres are backed by massive pools of financial capital, and speed and scale of deployment is the current US land grab, and those developers don't care about the need for a social licence to operate, nor the cost of enabling services like electricity and water to get established. The result is double-digit annual rises in electricity prices as electricity demand rises faster than new supply. This is made even more pronounced given Trump has undermined investor confidence in new renewable energy infrastructure investments. The US is under-investing in low-cost renewable energy infrastructure in order to keep aligned with the White House, but this is clearly undermining US decarbonisation and causing rapid energy cost inflation.

"The rise of carbon pricing in international trade will only make worse the declining profile of US exports over time"

PG: Why is the US feeling a pinch despite being a surplus producer and a global leader? Will fracking keep the US ahead of the pack despite the climate crisis?

TB: I think we are watching real time the equivalent of the decline of the Roman empire, with the breakdown of key public institutions and self-interest being the order of the day in the US. The rise of carbon pricing in international trade will only make worse the declining profile of US exports over time, and the US is leaving the field when it comes to developing the cleantech zero-emissions industries of the future. The US economy will survive, but Trump is playing entirely into the hands of China in terms of their lack of strategic thinking for long-term competitiveness.

PG: Do you see some vigour in the realignment of supply chains in the wake of Hormuz?

TB: Yes. I think this has entirely vindicated China's massive ongoing investment in OFDI globally, both in cleantech and upstream mining supply chains since the start of this decade. China now not only dominates battery and EV manufacturing globally, but also the upstream battery cathode and anode markets, and increasingly the critical minerals and strategic metal mining supply chains globally, so it is increasingly able to withstand and ignore the bleatings of the US White House.

CEF follows the money, and China is using geopolitics and OFDI in a strategic win-win manner in many countries globally that are increasingly unable to rely on the US to counterbalance China's internationalisation strategy. When China is offering to build industrial value-add precincts in return for access to other countries' mineral resources, this is reshaping global alliances permanently across Asia, the Middle East, Africa and South America. Even the EU has been subject to constant undermining by the US, such that if China continues to play the long game, I would not be surprised to see climate solutions become a key aspect of building stronger EU-China collaborations as the US stands idly by.

"China's relative standing is building. I expect to continue to see the Yuan rise as a functional currency in global trade"

PG: How critical is the Malacca Strait in the current state of geopolitics?

TB: It is geopolitically important, but China is winning the long game of geopolitics without resorting to force. Simply by letting the US undermine its own world standing, China's relative standing is building. I expect to continue to see the Yuan rise as a functional currency in global trade, particularly given China's growing global relevance and the increasing unreliability and unpredictability of the US as the global functional currency reserve.

PG: To what extent has the oil shortage spurred the use of coal worldwide?

TB: At the margin, coal has benefited from Trump's war against Iran. But as we have discussed, the long-term strategic imperative for most countries is to align with the climate science and their treaty obligations under the Paris Agreement. Besides, the simple economic reality is that wind and solar firmed by batteries, and transport and freight powered by EVs, is underpinned by economics as well as energy security. I don't see the Iran war as stimulating a long-term rebound in coal. Coal's global share of the energy mix peaked a decade ago at 42%, and is now down to around 30% globally in 2026. Coal's share will continue to be progressively diluted.

China continues to build new coal power plants, but every year the average coal plant utilisation has declined for a decade. Coal serves in China as a backup to their massive ongoing deployment of 300 GW per annum of renewable capacity, but this backup role is going to be rapidly undermined as BESS deployments continue to grow 30–40% annually, with China alone representing half the world's BESS deployments in 2025.

"If policy makers can be effective in resisting the AI vested interests… that will underpin a lot more electricity supply, driving electrification and decarbonisation in the process"

PG: Is the nuclear option ready to fulfil the AI industry's growing demand?

TB: No. Nuclear might see an uplift in investment in the US in support of AI, given government subsidies and their need for a massive lift in electricity supply even as they undermine wind deployments, but nuclear is simply too expensive, too slow, and faces too much difficulty securing a social licence to operate to see a global renaissance any time soon. Solar is cheap and plentiful each and every day for eight hours, and this guts the economic merit of nuclear plants that need to run 24/7 to justify their massive capital cost.

PG: "Energy for AI, and AI for energy: why the flywheel doesn't spin yet"?

TB: The massive investment in data centres to power AI can be marshalled to enable the investment in huge amounts of firmed renewable energy as an enabler. Capital is plentiful, and if policy makers can be effective in resisting the AI vested interests, they can ensure data centres sign long-term firmed renewable PPAs that will underpin a lot more electricity supply, driving electrification and decarbonisation in the process. That is the trend here in Australia, but vested interests will resist being made to bear costs they'd rather inflict on the public instead.

PG: Grateful for these insights into your crystal ball, Tim! You have always been well ahead of time.

This article is also published on The Diversity Blog. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy Thought Leaders, their opinions do not necessarily represent those of illuminem.

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