JUNE 2026
The recent Middle East unrest has exposed the fragility of global fossil fuel supply chains.
Meaning the energy transition is increasingly being driven by geopolitics, not just climate change targets.
Historically, the primary justification for renewables was decarbonisation.
But Governments across the world are becoming more focused on energy independence and strategic resilience.
Which helps to explain why, surprisingly, the “clean energy” names (red line) have outperformed the oil stocks (blue line) since the war began in late February, despite a near-doubling of Brent crude prices.
Electrification continues to gather pace across transport, industry and residential demand with adoption rates trending structurally higher.
This is particularly true in China, as this chart illustrates.
It shows China’s electricity production since 2000.
A logarithmic scale (where the y-axis reflects percentage increases rather than simple absolute changes) has been used because the change has been so vast.
Growth in electricity production has slowed a little in recent years, reflecting the pandemic and the general maturing of China’s economy.
But the positive long-term trend is unlikely to change, given the rising energy demand from a large and still-growing economy.
A key driver of the green energy transition has been the steady decline in the cost of renewables and the supporting infrastructure.
Battery prices are a case in point.
Batteries are not a source of energy themselves, but they do influence energy storage costs.
The chart below shows how the price of battery grade lithium fell sharply between 2023 and 2025, sparking a surge in electric vehicle adoption, especially in China.
However, supply constraints have seen battery prices rebound modestly this year.
Alternative energy costs are likely to continue heading lower long-term, but recent developments highlight how fragile global commodity markets can create temporary disruptions to this trend.
Whilst the direction of travel appears clearly in favour of renewables, fossil fuels are not disappearing anytime soon.
Global electricity demand continues to rise sharply, driven by the AI boom, surging electric vehicle use and a strategic imperative for most Governments to become less reliant on volatile oil-producing regions.
But the energy transition away from oil and gas is unlikely to be linear, if for no other reason than green energy is currently unable to satisfy demand.
This is shown clearly in the chart below.
Whilst wind, solar and nuclear now feature as sources of China’s electricity production, the vast majority remains driven by fossil fuels.
Coal alone represents over 50% of the total share.
Meaning legacy energy markets are likely to remain a key source of volatility for the global economy, and financial markets more generally, for some time to come.
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