Geopolitical tensions risk disrupting energy transition momentum: WEF

The energy transition is showing its fastest progress since before the Covid-10 pandemic, but rising geopolitical tensions, as well as investment and deployment gap, are jeopardising this momentum.

The World Economic Forum (WEF) ‘Fostering Effective Energy Transition 2025’ report shows that 65% of countries have made progress towards secure, equitable and sustainable energy this year – including 28% that advanced across all assessed aspects of the energy transition (political commitment, finance and investment, innovation, infrastructure, and education and human capital).

“Energy systems are evolving at varying speeds,” said Roberto Bocca, Head of the Centre for Energy and Materials, World Economic Forum. “We are seeing more holistic approaches and visible progress. It is encouraging that 28% of countries, including major energy consumers and producers like Brazil, China, the US and Nigeria, have advanced across multiple dimensions. Staying on track demands urgent investment in fast-growing emerging economies.”

Sustainability improvements and disruption risks

Globally, the world made a 1.1% energy transition gain in 2024 – the fastest since before the Covid-19 pandemic. Equity and sustainability saw the largest improvements, supported by stable energy prices and subsidy cuts, as well as increased renewable energy adoption and greater energy efficiency.

However, geopolitical risks – including state-based conflicts and trade wars – risk disrupting this hard-earned momentum. “Rising tariffs, volatile capital markets and mounting fiscal pressures are already delaying infrastructure investment and increasing the cost of long-term financing. Public funds may be redirected to near-term economic stabilisation, defence or social priorities – potentially crowding out investment in clean energy, innovation and grid resilience. These shifts risk widening transition gaps and weakening the durability of current gains,” warns WEF.

Record emissions and temperatures

2024 was the hottest year on record and saw energy-related emissions hit a record 37.8 billion tonnes, reminding us of the enormous work still ahead.

The report notes that energy security stagnated due to “inflexible power systems, import reliance and limited diversification”, and that energy demand rose by 2.2%, largely due to increasing AI-related data centre power consumption, as well as cooling needs and electrification.

“AI is the most transformative technology of our lifetimes and the single greatest lever of a more intelligent, adaptive and resilient energy future,” said Muqsit Ashraf, Group Chief Executive for Accenture Strategy. “Leading companies are harnessing technology, data and AI to accelerate their reinvention and placing people at the core of that change – ultimately becoming more resilient and delivering long-term profitable growth.”

Geographic disparities

European countries make up the entire top 10 in this year’s Energy Transition Index, led by Sweden, Finland and Denmark, followed by Norway and Switzerland in the top five, then Austria, Latvia, the Netherlands, Germany and Portugal.

But while advanced economies are having to deal with grid congestion, high prices and delivering bottlenecks, others are making fast gains thanks to policy reforms, improved infrastructure and growing investment.

China reached a record 12th place while Brazil ranked 15th thanks to greater energy diversification, lower prices and rising clean energy use. 

India made progress around energy efficiency and investment capacity, while the United Arab Emirates recorded the strongest year-on-year gain in a decade, driven by rapid infrastructure upgrades, targeted subsidy reforms, rising clean energy use and lower energy intensity.

Still, the pace of the transition remains widely imbalanced: since 2021, over 80% of energy demand growth has come from emerging and developing economies, but more than 90% of clean energy investment has been seen in advanced economies and China.

In the report, WEF calls for adaptive policies to attract long-term capital and foster cooperation, the modernisation of grid infrastructure, investment in workforce skills and innovation, scaling the deployment of clean tech in hard-to-abate sectors and enhancing capital investment in developing economies.