World Economic Forum: global energy transition fracturing as geopolitical risks mount
Progress on the global energy transition has lost momentum and the transition readiness of countries has fallen for the first time in a decade due to geopolitical tensions, supply disruptions and an increasing focus on energy security at a time when global energy demand continues to rise rapidly, according to the World Economic Forum.
The assesment comes as a part of the forum's Energy Transition Index 2026, which measures how well national energy systems function in three key areas: security, sustainability, and equity. It also assesses how prepared governments are to facilitate the shift towards clean energy. The report, published in collaboration with Accenture, found that momentum across regions slowed due to disruption in the Strait of Hormuz, even though global investments in clean energy crossed $2.3 trillion last year.
“Despite growing headwinds, 60% of countries improved their overall scores, although balanced progress is becoming more concentrated, with only one in four countries improving across all three dimensions,” the report said.
A 'fracturing' of the energy transition
The report added that the Hormuz interruption has exacerbated the issues already plaguing energy systems, showing that they are still vulnerable to geopolitical shocks, with import-dependent emerging economies being most impacted.
Countries are under rising and uneven strain due to supply risks and structural limitations, which has consequences for long-term sustainability, affordability, and resilience.
“The energy transition is not reversing, but it is fracturing,” said Roberto Bocca, Head of the Centre for Energy and Materials, World Economic Forum. “In a more volatile geoeconomic environment, security, affordability, and resilience are central to sustaining progress. Closing the gap between ambition and delivery will require stronger foundations, including more diversified and resilient energy systems, faster infrastructure build-out, and capital that can reach markets where it is needed most.”
Nordic countries take the lead
According to the ETI, Sweden took the top spot, followed by Finland, Denmark, Estonia, and Norway, respectively.
Other advanced economies like Singapore also performed well, moving up ten spots on better policy signals, while the US saw a little decline despite stronger performance in security. Germany maintained its position with consistent gains, while Japan saw a slight improvement.
The Middle East, North Africa, and Pakistan region saw a decline of 0.9% overall, indicating weakening performance and readiness. Despite this, Saudi Arabia improved its ranking through investments in large-scale battery storage, rapid deployment of renewable energy sources, and increased financial support.
Published ahead of the Annual Meeting of the New Champions in Dalian, China, the ETI report also highlights China’s fast deployment of clean energy systems. With $627 billion invested in clean energy in 2025 and ongoing large-scale renewable capacity expansion, China continues to be Asia's top performer.
This remained the case even though the difficult regulatory and investment climate somewhat offset improvements in infrastructure, energy intensity, and affordability.
Although ranked 70th on the ETI, India achieved one of the biggest increases in readiness, which was fuelled by advancements in human capital and infrastructure, making it a crucial participant in the upcoming stage of the transition.
AI and the growing electricity demand
Electrification, cooling, digital infrastructure, and AI all contributed to a 3% increase in the world's electricity demand, which is becoming a key barrier to the transition. Although they contribute over 80% of demand growth, emerging nations still have infrastructure deficiencies and greater financing costs.
In the meantime, clean-energy funding is still quite concentrated, with around 75% going to a small number of economies, despite record overall investment. This widens the gap between where capital is deployed and where demand is growing.
However, to navigate this challenge, AI may come to the rescue.
“The energy transition is entering a more disruptive and challenging phase, making enterprise resilience an increasingly important priority for business leaders,” said Muqsit Ashraf, Global Lead for Industry and Enterprise at Accenture. “Organisations that use technology and AI to improve adaptability, strengthen decision-making, and respond more effectively to change will be better positioned to navigate uncertainty and sustain long-term growth.”
Tackling geopolitical uncertainties
While the Energy Transition Index (ETI) 2026 shows improvements in energy system performance, it appears increasingly challenging to sustain progress.
Energy systems must now balance decarbonisation, security, and affordability in an increasingly uncertain environment. According to the World Economic Forum, three key measures must be taken for this to happen:
- Governments should “Diversify across fuels, import partners, supply chains, and critical minerals” to reduce vulnerabilities. Energy systems should be stress-tested against multiple disruptions, including supply shocks and extreme weather events. Investments in grid modernisation and storage can strengthen resilience, while portfolios combining renewables will help maintain reliability.
- Greater emphasis must be placed on grids, flexibility, and delivery capability. “Digitise application processes, coordinate environmental review, and pre-designate infrastructure corridors to compress timelines,” the report added.
- The most important yet challenging aspect for governments will be growing investments and policy stability. Accordingly, they must establish predictable regulatory frameworks, long-term procurement schedules, and transparent market rules.
In a press statement, the forum said that tackling these measures will help in “restoring investability through stable policy frameworks and targeted capital flows, particularly toward the emerging economies that will drive the majority of future demand growth.”
