Originally published on Linkedin.
In years of listening to an excess of podcasts (true crime or otherwise) I’ve learned that in the end, it’s almost always about money. And so too with the global transition to clean energy.
The incredibly low cost of renewables and zero emission vehicles is why the transition has sped up in the last few years. But it’s also why the backlash from the incumbent fossil fuel industries is so intense.
As my pal Tom Rivett-Carnac OBE said on his podcast after COP30 last year, “the politics will follow the economics”. And that’s why as we go into 2026, I’ve been thinking a lot about how the noise in the news might be political - the US dropping out of the UNFCCC, invasion of Venezuela, sabre-rattling in Greenland – but so much of the signal is economic.
In Bill McKibben's book, Here Comes the Sun, which I’ve been quoting endlessly at everyone I talk to (no apology, it’s brilliant), he advises: “The most basic strategy [for activists] is simply to get out of the way”, and that’s made me think that our key job right now is to follow those economic signals, and figure out what it means to push policies and regulations out of the way, with the intent that the politics follow.
Looking at the economics of the fossil fuel market, especially oil, prices remain weak despite geopolitical tension and pro-fossil fuel political support. You can say the words “drill baby drill” as often as you like, but price is largely driven by demand.
Global oil demand is 'sluggish', according to analysts, with 'slowing growth' in demand impacted by electric vehicle adoption and energy efficiency gains, especially in economies like China and Europe. It’s anecdotal of course, but one of my advocacy colleagues recently had a chat with a high-level rep of an oil giant. “We’ve lost the war”, the rep said, “and everyone in the sector knows it. The demand for oil going down will have an incredible impact on the sector.”
While gas is harder to call, nonethless for investors and policymakers this is a significant moment. Countries and companies still betting on oil and gas are increasingly exposed to financial risk and stranded asset scenarios.
Meanwhile, investment, technology adoption, and market dynamics for clean energy are aligning in ways that are starting to displace fossil fuel demand in real time.
Over 50% of all new vehicles sold in China last year were electric. In fact, China’s adoption of electric vehicles has displaced oil demand so much that domestic oil demand may peak next year, earlier than expected. The upfront cost of some electric vehicles in China is now lower than that of petrol and diesel cars, which enables a serious economic tipping point as consumers will shift to the cheaper option, regardless of its engine type. Electric car sales overtook petrol in the EU for first time in December, which could be an early warning for a similar fall in oil demand.
Global energy transition investment hit a record $2.3 trillion in 2025, up 8% from a year earlier, according to the latest Bloomberg NEF figures. Renewable energy secured $690 billion in new investments, led by solar. People talked a lot about the solar success story in Pakistan last year, and we’re seeing the trend elsewhere too, such as Vietnam and Ethiopia. Twenty African countries have set national records for solar panel imports and we’re seeing more countries “leapfrog” to clean energy, where developing economies skip new investment in fossil fuels and move directly to renewables. Even in the US, despite the Administration's efforts, solar met 61% of electricity demand growth in 2025.
Energy security is emerging as one of the strongest economic drivers of clean energy investment in 2026. Countries and companies are responding to real-world exposure to weather extremes, fossil fuel volatility, and financial risk.
Extreme weather is testing energy systems in real time. During last year’s European heatwave, daily power demand rose by up to 14%, while outages at thermal power plants pushed daily average electricity prices two-to-three-times higher. In the US, the major winter storm last week drove record power demand and is estimated to have caused up to $24 billion in economic losses.
By contrast, heatwaves in China last year saw electricity demand surge, but the country faced it easily - a result of its rapid investment in renewables and grid capacity. As Bloomberg put it, the world’s largest clean energy transition is already paying dividends when it comes to energy security. More extreme weather is coming this year: Australia has faced two record-breaking heatwaves in January, while floods continue to devastate parts of southern Africa. It is only February.
The financial system has started to signal that climate risk is exceeding what markets can absorb. Actuaries warned earlier this year that global warming is accelerating faster than predicted, meaning mainstream economic models are understating both the scale and proximity of climate risk.
Banks are already responding: companies exposed to flooding or high-carbon activity are paying higher borrowing costs, while insurers are withdrawing coverage or raising premiums. When insurance becomes unavailable or unaffordable, it is a clear market signal that risk has crossed a critical threshold.
Fossil fuel volatility is compounding these risks. Ahead of recent winter storms, US gas prices soared by 75% in just three days, with knock-on effects felt in European and UK markets. These shocks move quickly with the globalised nature of fossil fuel markets, raising costs for households and businesses far from the source of disruption. Oil prices were volatile just days ago amid the renewed risk of conflict that could disrupt crude exports out of Iran and cause ripple effects across global markets if the Strait of Hormuz, the world’s most critical oil chokepoint, is blocked.
Energy security is high up on government agendas, and the greater the volatility that comes with fossil fuels, the greater the push to generate alternative, more secure power sources. Look at Europe and the UK’s recent pact that secured 100GW of joint offshore wind projects: a clear move to strengthen energy sovereignty in the region.
And of course, there’s the looming power crunch from data centre demand for AI. By 2030, AI alone may account for over 20% of total electricity demand growth, says the World Economic Forum. PJM Interconnection, the US’s largest regional grid operator, reported that the Storm Fern’s record power demand last week in the US was partly due to data centre electricity needs, pushing grids to their limit and risking power availability to those needing to heat their homes in -20C temperatures.
Data centres are power hungry, and these companies need access to electricity, fast. The tech sector will secure whatever energy is available to meet explosive demand, including some who are using behind-the-meter fossil fuel generation.
If we don’t scale renewables fast enough, that demand will be met increasingly by fossil fuels, locking in higher costs and emissions for years to come.
I have faith in the idea that the politics will follow the economics. But even with the economic case increasingly obvious, we still need to keep pushing.
The fossil fuel industry, and governments, are still making billions from fossil fuels in 2026, and they’ll keep doing so for as long as they can. Lobbying is alive and well, including at COPs, to preserve the power dynamic of these systems for years to come.
See the chatter around Carbon Measures, the latest ‘distract and delay’ tactic from Big Oil: right as the world is wrapping up years of consultation to improve the Greenhouse Gas Protocol, Exxon and some of the biggest emitters have decided that now’s the perfect time to push for a new emissions accounting system, that will take years to implement. It’ll likely and conveniently push all carbon-blame onto end users and free the oil industry from any responsibility. Never forget that BP invented the ‘carbon footprint’. But the biggest bonus: diffusion, confusion and delay for a few more years.
To maintain progress, in 2026 we must focus on implementation: addressing the barriers to the clean energy transition. We have most, if not all the technology we need. The major blockers now are removing outdated rules, accelerating permitting, and modernising grid regulation. Grid investment is still failing to keep pace with spending on generation and electrification and is being held back by lengthy permitting processes and tight supply chains.
More broadly, stable policy frameworks are needed to provide investment certainty and unlock long-term capital.
We’re already seeing implementation in 2026, with mechanisms such as the EU’s Carbon Border Adjustment Mechanism coming into force. How this plays out politically, and how it influences domestic carbon pricing systems such as China’s emissions trading system, will be a key signal of which governments are aligning infrastructure, markets, and policy with the pace of the transition.
There’s a lot happening this year that fills me with energy. Yes, there’s a lot of political support for fossil fuels in headlines right now, but do not ignore the obvious momentum driving the international clean energy transition. China called for other countries to double down on the clean energy transition at Davos last month, and the world’s first fossil fuel phase out conference is due in Colombia in April. There is a widening division of those pursuing petrostate versus electrostate futures. While some countries are still debating which path they want to take, the economic risks are only compounding.
There are so many business and government leaders that want to push on with this transition in the name of our - and their own - future economic and energy security. Throughout this year we’ll bring them together to drive the conversations that’ll unlock the next stages of this transition. Look out for our US Leaders’ Forum in April, Asia Action Summit in May, our summit during London Climate Action Week in June, and of course Climate Week NYC in September.
Because in 2026 one thing is clear: it’s the economics that are pushing the clean energy transition ahead. Renewables are cheaper. Electric vehicles are hitting major tipping points that are subverting oil demand. Climate risk is hitting balance sheets right now.
Vested interests will push back and politics may lag, but in the end the money always talks. We’re using our activism to get out of the way.
Helen Clarkson, CEO