2026 outlook: how reliability and renewables can co-exist in the new energy map

The US seizes the Venezuelan President and says it plans to control the nation’s oil “indefinitely”. Anti-regime protests convulse Iran after fuel price rises, electricity and water shortages, and economic malaise. Russia bombards Ukrainian power plants and Kyiv strikes Russian oil refineries.

The memory of the extreme energy price spikes of 2022 and attendant inflation is still fresh and painful. AI seems like a critical, potentially world-changing technology, that could shape the mastery between nations – but how can its voracious energy needs be satisfied?

Quest for energy security

Meanwhile, 2026 is forecast to be one of the four hottest on record. The warming climate brings extreme weather, and threats to the livelihoods of hundreds of millions of people. Despite this danger, does the quest for energy security now override the need for net-zero?

The title of the responsible ministry in the UK makes the goal clear: the Department for Energy Security and Net-Zero. Of course, the aim is to achieve both. Reaching net-zero greenhouse gas emissions, where most of the economy is decarbonised, and any remaining release of carbon dioxide is balanced out by removing it from the atmosphere, is national policy in many countries, often with a target date of 2050 or earlier. But does this conflict with providing reliable and affordable energy for all?

The first answer is that this is a false dichotomy. Climate campaigners argue that net-zero will deliver not just less perilous climate change, but also lower bills, less price volatility, and greater energy security – by ending dependence on imports of oil and gas. This is a tempting position, avoiding hard trade-offs, and it has some merit.

Taking the wider view

A wider view is that there can be no energy security without climate security. Wild weather will hit offshore oil platforms and wind turbines, electricity cables and hydroelectric dams. Rising seas will flood petroleum refineries and nuclear power plants. Merciless heat waves will bring blackouts.

A world suffering climate catastrophe will be suspicious, unstable and violent. That will be bad for energy security, whether export of oil and gas, transit of electricity or hydrogen, or cross-border investments in renewable power.

But those who acknowledge the severity of the climate crisis still have genuine, well-founded concerns over the costs and risks of a very rapid shift to a low-carbon energy system.

Even a conceptually sound energy transition can be mismanaged. Ideology, political meddling and special interests, over-regulation, incumbent lobbying, NIMBY movements, and poor market design can produce expensive and unreliable energy systems. Renewable-dominated systems need to cope with lengthy periods of cloudy, dark, cold weather in northern Europe, or drought that dries up reservoirs in Brazil or India. A future low-carbon economy needs to propel long-distance planes and ships, smelt steel, calcine cement, cultivate crops.

Absolute net-zero is not necessary, not now – an energy system decarbonised, say, 95 percent, would meet most of our climate goals, while postponing the potentially politically painful and punitively costly last 5 percent.

Focus on affordability

There is also no energy security without affordability. If countries undermine their industrial competitiveness, as Europe has been widely blamed for, they will shed emissions, indeed, but they will also lose jobs and economic power to less scrupulous competitors. If excessively costly energy causes a political backlash that benefits far-right wing politicians, net-zero could be set back a decade or more.

A low-carbon economy avoids many of the security pitfalls of the legacy fossil-fuel based system. Oil and gas crises in 1973-4, 1978-80, 1990-91 and 2022 are branded into national consciousness, as times when distant political events in the Middle East or eastern Europe harmed consumers in the US, Western Europe, India and Japan.

The role of critical minerals

But it brings new forms of vulnerability. One is dependence on critical minerals, such as lithium, rare earths, copper and cobalt, whose mining and processing is dominated by China, Russia or potentially unstable nations.

That threat can be overstated. Starker is the overwhelming dominance of Beijing in the manufacture and export of solar and wind systems, batteries, hydrogen electrolysers and electric vehicles. It is not that the supply of energy would or could be cut off overnight – the sun will rise over Brussels and Washington.

But European and American sovereignty in energy technology, trade policy and regulation is already gravely threatened, if not already lost in many areas. Cutting off a continent and denying the reality of competitiveness of the new energy systems is not a strategy, but a denial of reality.

The risky prospect of electrifying everything

Advocates of “electrifying everything” with cheap renewables often praise trans-continental grids that would bring electrons from remote sites in the Sahara, interior Asia or Australia to users in Europe, India or south-east Asia. Attractive as the prospect is, such projects are far riskier than international transit of oil and gas, especially in a world of trade wars.

Ultimate energy security might seem to come from generating all a country’s energy within its national borders. The US shale boom has made it self-sufficient in oil and gas; Beijing’s build-out of renewable and nuclear power and electric vehicles, with domestic coal, might bring China close to self-sufficiency.

But North Korean-style autarky does not create prosperity or security. Large, powerful nations who feel themselves untethered from dependence on others are prone to launch risky geopolitical adventures. We are learning again in the 2020s some of the painful lessons of the 1930s. Global security – energy, economic and political – comes instead from mutual interdependence.

• ·         Robin M. Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis