A recalibration of the energy transition, not a U-turn

The global energy landscape is undergoing a shift, but not the kind of reversal that some commentators have described. Rather than abandoning the transition to cleaner energy, governments and companies are recalibrating it, adjusting pace, priorities, and investment flows in response to economic pressures, geopolitical realities, and the stubborn rise in global energy demand.

A central theme shaping this recalibration is the recognition that demand for reliable and affordable energy, particularly in fast-growing emerging economies, continues to exceed what renewable energy systems can currently provide on a global scale. Despite the rapid expansion of solar, wind, and other low-carbon sources, fossil fuels remain embedded in the world’s economies.

As a result, many companies that had previously announced aggressive strategies to pivot toward renewables are tempering their ambitions, prioritising financial discipline and shareholder returns. This adjustment does not signal the death of the transition; rather, it acknowledges that replacing an energy system built over more than a century cannot happen at the speed once envisioned.

Policy uncertainty

Policy uncertainty has exacerbated this trend. While the past decade saw a surge in climate pledges and green-technology enthusiasm, shifting political winds in major economies have created a more cautious environment. This pendulum swing is evident in the outcomes of recent climate conferences. At COP28 in Dubai, governments endorsed language “transitioning away from fossil fuels,” a landmark moment widely celebrated as signalling a decisive global shift. Yet COP30, held two years later, demonstrated a cooling of that momentum. The final text avoided commitments to transitioning away from fossil fuels altogether, reflecting resistance from resource-dependent economies and a broader realisation that ambitious pledges struggle when energy security concerns dominate.

This moderation is further underscored by developments at the International Energy Agency. The IEA has reinstated its Current Policies Scenario (CPS), a baseline illustrating how energy demand evolves under policies already in force. In this scenario, oil and gas demand continues to rise toward mid-century, highlighting the distance between today’s policy environment and stated long-term climate objectives. While the CPS is only one scenario among several, its reappearance is a reminder that the global policy landscape remains far from aligned with net-zero pathways.

Incremental path ahead

None of these developments amount to a reversal of the energy transition. Renewables remain the fastest-growing part of the global energy mix, investment continues to flow into low-carbon technologies, and long-term net-zero goals still frame national strategies. But the path ahead will be more incremental, less linear, and more dependent on balancing climate goals with economic and security considerations.

The world is not reversing course; it is navigating a more measured, realistic trajectory. The energy transition is alive but recalibrated.