State of the transition: tariffs, shortages, data centers, and Europe vs China

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May 2, 2025

Michael Cembalest, Chairman of Market and Investment Strategy for J.P. Morgan Asset & Wealth Management, brings his sharp insights on the energy transition. He discusses the staggering $2 trillion investment in clean energy and the gap between deployment and real impact. Key issues like rising costs, equipment shortages, and the challenges faced by Europe and China in their energy policies are explored. Cembalest also highlights areas of progress and potential solutions for the future, making for a compelling discussion on navigating the complex landscape of energy transformation.

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ANECDOTE

Toilet Hoarding Panic Example

Stephen Lacey panicked and bought multiple toilets and大量 toilet paper rolls after tariffs were announced.
This illustrates supply chain concerns affecting everyday consumer behavior during trade uncertainties.

INSIGHT

Scorpion Bowl Chart Insights

The "Scorpion Bowl chart" measures renewable share in final energy consumption, mixing various energy types.
It reveals a slow transition pace despite the surge in renewable electricity capacity additions globally.

INSIGHT

Current Investment Signals Transition

Investment decisions today, like not building new gas turbine plants, signal a long-term energy transition reality.
The transition takes time, but strategic investments are already shaping future energy infrastructure.

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This week, we’re asking the central question of the energy transition: How fast are we going?

Clean energy is bringing in $2 trillion of investment annually. Wind and solar now account for the vast majority of new electricity capacity globally. And we may already be at “peak trade” of fossil fuels.

And yet, when we look at the share of renewables in final energy consumption, they’re increasing only incrementally around the world. At the current linear pace, meaningful decarbonization may take decades longer than needed.

This week, we’re joined by one of the most prolific and respected market analysts for a 360-degree view of how the transition is playing out.

In this episode, Michael Cembalest, chairman of market and investment strategy for J.P. Morgan Asset & Wealth Management and author of the influential "Eye on the Market" newsletter, walks us through his annual energy analysis – a comprehensive assessment that covers dozens of economic and financial trends in energy.

This conversation has a little bit of everything. Cembalest walks us through his "scorpion bowl chart" that shows the gap between clean energy deployment and impact. We also dig into the transmission crisis, rising costs, equipment delays, and tariffs. And we cover the data center challenge, Europe’s economic challenges, and China’s rise.

But it’s not all gloomy. Cembalest also identifies where real progress is happening, and what a realistic path forward might look like.

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Credits: Co-hosted by Stephen Lacey, Jigar Shah, and Katherine Hamilton. Produced and edited by Stephen Lacey. Original music and engineering by Sean Marquand.