Geopolitical volatility, AI-driven demand, and the race for energy sovereignty are accelerating the global shift away from fossil fuels.
The global energy transition is no longer driven solely by climate policy. In a multipolar world where nations prioritize protectionism and decentralization of critical infrastructure, energy resilience has become a strategic imperative, even a matter of “national security” if you will. The chokepoint risk of key passageways like the Strait of Hormuz, through which roughly a fifth of the world's oil supply passes and has since sent prices to over $100 a barrel, only further mobilizes the transition incentive.
Yet the shift to clean energy is not recent but part of a larger ongoing rotation. Of all new power capacity added globally in 2024, over 90% came from renewable sources. In fact, over the past decade, global energy transition investment has surged, reaching a record $2.3 trillion in 2025 (BloombergNEF annual Energy Transition Investment Trends) and $2.9 trillion expected annually in the next five years.
In 2025, energy transition investment even outpaced fossil fuel supply spending, as upstream oil and gas and fossil power generation both declined.
As a productive asset, clean energy offers durable advantages. Once the infrastructure is built, prices are stable and insulated against commodity supply shocks. And unlike oil, which is geographically constrained, solar, wind, and batteries can be manufactured anywhere (we’ll get to the caveat). It's cheaper, better for the environment, and a meaningful hedge against geopolitical risk. So, the global push for alternative sources of energy and investment into building out those supply chains, storage capacities, and distribution networks should not come as a surprise.
Any energy discussion would not be complete without mentioning AI data centres and their massive power demand fueling the transition. In the AI race, tech companies need diversified energy generation, resilient infrastructure, and secure access to commodities, metals and minerals (the caveat). Google's recently announced clean energy partnership to power its Minnesota data centre is one of many such deals reshaping grid economics.
China currently leads across every sector and supply chain in the green energy expansion, including rare earth extraction and processing, while clean energy accounted for over a third of their GDP growth in 2025. It is a poll position that has been buoyed by strong industrial policy in response to U.S. tariffs.
“This past year [2025], China stood up to the U.S. and, in doing so, transformed from a confrontational relationship to a competitive relationship.
After several years of tariffs, threats, and export controls, Beijing restricted exports of seven heavy rare earth minerals on April 4, 2025, requiring special licenses for shipments to the U.S. defense and high-tech sectors. This bold display of economic leverage marked a tipping point, compelling the U.S. to recognize China as a global power.”
~ Extract taken from our OUTLOOK 2026 booklet
This concentration gives Beijing meaningful leverage over every nation's ability to electrify its economy. Whether the West chooses to respond with more tariffs (confrontation) or treat China as a competitor by striking a trade deal and building out domestic productivity remains to be seen.
Greater energy demand from AI and electrification, combined with grid expansion and storage-heavy architectures, will require sustained capital across renewables, nuclear, battery storage, and transmission infrastructure. Access to critical minerals and metals will become an increasingly strategic variable. And while fossil fuels won’t disappear completely, their role may be displaced and gradually shift to a less dominant source as clean alternatives scale and cost curves fall. For investors, the "picks and shovels" enabling this transition are where the most compelling opportunities lie.
For more insights watch or read our latest market commentaries Disruption, Dividends, and Durable Income and Discipline During Times of Disruption.
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