An energy revolution is underway in this century, though most people have not noticed it
30 Jul 2025
I know progressives are supposed to be technophobes, but there is one technology we probably love more than anyone else (except the engineers who created it): renewable energy. It is nothing less than astonishing and unbelievable that we have achieved so much progress in so little time.
At the turn of the century, sun and wind in the form of solar panels and wind turbines were expensive, primitive, utterly inadequate solutions to power our machines at scale, which is why early climate activism focused a lot on minimizing consumption on the assumption we had no real alternative to burning fossil fuels, but maybe we could burn less. This era did all too well in convincing people that if we did what the climate needs of us, we would be entering an era of austerity and renunciation, and it helped power the fossil fuel industry’s weaponization of climate footprints to make people think personal virtue in whittling down our consumption was the key thing.
There’s nothing wrong with being modest in your consumption, but the key thing to saving the planet is whittling down the fossil fuel industry and use of fossil fuels to almost nothing by making the energy transition to renewables and an electrified world. And that’s a transformation that has to be collective and not just individual.
Other stuff is great – changing our diets, especially to reduce beef consumption and food waste, protecting natural systems that sequester carbon, better urban design and better public transit, getting rid of fast fashion, excessive use of plastic, and other wasteful climate-harming forms of consumption – all matter. But the majority of climate change comes from burning fossil fuels, and we know exactly how to transition away from that and the transition is underway – not nearly fast enough, not nearly supported enough by most governments around the world, actively undermined by the Trump administration and many fossil fuel corporations and states.
But still, it is underway. And, arguably, unstoppable. Because it’s just a better way to do everything. One thing that’s been striking in recent years, and maybe visible in recent years because there is now an alternative, is the admission that fossil fuel is a wasteful and poisonous way to produce energy. That’s the case whether it’s to move a vehicle or cook a dinner.
Oil, coal, and gas are distributed unevenly around the world and just moving the fuel to the sites where it will be used is hugely energy inefficient. About 40% of global shipping is just moving fossil fuel around, and more fuel is moved on trains and trucks. But also, fossil fuel is extracted, shipped, and refined for one purpose: to be burned, and in the future coming fast, burning is going to look like a primitive way to operate machines.
As the Rocky Mountain Institute explains it: “Today, most energy is wasted along the way. Out of the 606 EJ [exajoules] of primary energy that entered the global energy system in 2019, some 33% (196 EJ) was lost on the supply side due to energy production and transportation losses before it ever reached a consumer. Another 30% (183 EJ) was lost on the demand side turning final energy into useful energy. That means that of the 606 EJ we put into our energy system per annum, only 227 EJ ended up providing useful energy, like heating a home or moving a truck. That is only 37% efficient overall.” That’s the old system, and it’s dirty, toxic to human health and the environment – and our politics – as well as the main driver of climate chaos. And wasteful.
The new system, on the other hand, is far cleaner, and the fact that sun and wind are so widely available means that the corrosive politics of producer nations and their manipulations of dependent consumer nations could become a thing of the past. I know someone is about to pipe up with an objection about battery materials and there are two answers to that. One is that the race is on, with promising results, to produce batteries with more commonly available and widely distributed materials.
The other is that batteries are not like fossil fuel, which you incessantly burn up and have to replace; they are largely recyclable, and once the necessary material is gathered, it can be reused and extraction can wind down. But also the scale of materials needed for renewables is dwarfed by the materials to keep the fires burning in the fossil fuel economy (and the people who complain about extraction sometimes seem to forget about the monumental scale of fossil fuel extraction and all the forms of damage it generates, from Alberta to Nigeria to the Amazon).
And renewables are now adequate to meet almost all our needs, as experts like Australia’s Saul Griffiths and California’s Mark Z Jacobson have mapped out. Simply because it’s cheaper, better and ultimately more reliable, the transition is inevitable – but if we do it fast, we stabilize the climate and limit the destruction, and if we don’t, we don’t. Almost no one has summed up how huge the shifts are since the year 2000, but the Rocky Mountain Institute has done that for the last decade, during which, they tell us: “clean-tech costs have fallen by up to 80%, while investment is up nearly tenfold and solar generation has risen twelvefold. Electricity has become the largest source of useful energy, and the deep force of efficiency has reduced energy demand by a fifth.” Estimates for the future price of solar have almost always been overestimates; estimates for the implementation of solar have been underestimates.
Another hangover from early in the millennium is the idea that renewables are expensive. They were. They’re not anymore. There are costs involved in building new systems, of course, but solar power is now the cheapest way to produce electricity in most of the world, and there’s no sign that the plummet in costs is stopping. As Hannah Ritchie at Our World in Data said in 2021 of renewable energy: “In 2009, it was more than three times as expensive as coal. Now the script has flipped, and a new solar plant is almost three times cheaper than a new coal one. The price of electricity from solar declined by 89% between 2009 and 2019.”
But even cheap is a misnomer: wind and sun are free and inexhaustible; you just need devices to collect the energy and transform it into electricity (and transmission lines to distribute it). Free energy! We need to get people to recognize that is what’s on offer, along with energy independence – the real version, whereby if we do it right, we could build cooperatives, local (and hyperlocal or just autonomous individual) energy systems, thereby undermining predatory for-profit utilities companies as well as the fossil fuel industry. Renewable energy could be energy justice and energy democracy, as well as clean energy.
An energy revolution is underway in this century, though it’s unfolded in ways slow enough and technical enough for most people not to notice (and I assume it’s nowhere near finished). It is astonishing – a powerful solution to the climate crisis and the depredations of the fossil fuel industry and for-profit utilities. Making it more visible would make more people more enthused about it as a solution, a promise, a possibility we can, should, must pursue swiftly and wholeheartedly.
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Rebecca Solnit is a Guardian US columnist. She is the author of No Straight Road Takes You There and Orwell’s Roses.
The International Energy Agency (IEA) expects global oil demand to start a slow decline over the next decade, driven by rising renewable energy use and the electrification of transportation and heating.
This article explores how declining oil demand may affect political stability in oil-rich Middle East and North Africa (MENA) countries. While many of them remain among the world’s lowest-cost producers, falling prices could strain their public finances. If oil revenues decline structurally, some regimes may struggle to fund public services and maintain legitimacy.
Governments face a choice: delay socioeconomic reforms to avoid short-term unrest – risking long-term vulnerabilities – or pursue disruptive changes to build long-term resilience. Striking a balance will be a major challenge for oil-rich MENA countries in the coming decade.
In its recently published report Oil 2025, the International Energy Agency (IEA) announced that it expected global oil demand to peak by 2029. Alongside the electrification of transportation and heating, a key driver of this trend is the growing share of renewable energy in global power generation. This forecast is in line with similar reports, such as the 2024 BP Energy Outlook, which takes a longer-term view to 2050. Rystad Energy projects that oil demand will peak sometime between 2025 and 2037, depending on the pace of the energy transition. However, there are also other voices: OPEC1 Secretary General Haitham Al Ghais declared recently that “there is no peak in oil demand on the horizon”.
For many oil-rich countries, the precise date of “peak oil demand” is less important than the widening gap between supply and demand, which may exert long-term downward pressure on oil prices. On the one hand, new suppliers such as Argentina, Brazil or Guyana are adding to global supply; on the other, demand is widely expected to decline from a certain point on. This shift towards a buyers’ market – where oil-rich countries must compete for export opportunities – risks structurally lowering prices and eroding the economic rents on which these states have long depended.
A number of academic texts have shown a connection between oil prices and political stability. Some studies have established a link between decreasing oil prices and protests, coups d’état or conflict escalation. Other studies have argued that countries become more democratic when they have passed their oil peak. In many oil-rich countries around the world (e.g., Kazakhstan, Saudi Arabia or Venezuela), often defined as rentier states, the degree of political stability relies significantly on revenues generated from hydrocarbons. These revenues are used in various ways: to fund repressive state apparatuses, to maintain clientelist networks, or to provide economic benefits to citizens in order to secure public support for the political status quo. In general, declining oil prices are associated with rising political instability, as they weaken the state’s capacity to govern effectively and undermine regime legitimacy. However, it is important to recognise that factors such as existing political stability, institutional quality and the economic profile significantly moderate this relationship.
Bringing these two dynamics together, this issue of Notes Internacionals examines the extent to which the global renewable energy transition may impact the political stability of oil-rich countries in the Middle East and North Africa (MENA).
The renewable energy transition is defined here as “a pathway toward transformation of the global energy sector from fossil-based to zero-carbon by the second half of this century”2. For the purposes of this paper, “oil-rich countries” refers to those in the MENA region where oil rents account for more than 10% of GDP (according to the World Bank). This group includes the seven Arab countries of the Arabian/Persian Gulf (“the Gulf”), that is, Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, as well as Algeria, Iran and Libya. Political stability, meanwhile, is understood as “the health of authority, resilience, legitimacy, and replacement in a political object”, that is, a regime is considered stable if it can enforce its rule, adapt to change, maintain perceived legitimacy and provide for the peaceful and orderly replacement of leadership.
The renewable energy transition in the MENA region
When discussing the renewable energy transition, it is important to recognise that this process is not driven solely by environmental concerns, but also increasingly by geopolitical and economic considerations. Expanding domestic energy production through sources such as solar and wind allows countries – particularly those with limited fossil fuel reserves – to reduce their dependence on external energy suppliers. At the same time, renewable energy has become increasingly cost-competitive, usually offering lower generation costs compared to fossil fuel-based energy. These two parallel drivers – energy security and lower generation costs – ensure that renewables can even be politically attractive when climate change is not a top priority for political leadership. As a result, most leading energy models project continued rapid growth in renewable energy generation across the world (2024 BP Energy Outlook, IEA World Energy Outlook 2024).
However, further expansion of renewable energy generation does not automatically imply a decrease in fossil fuel demand. In fact, we are still in a phase of “energy addition” rather than “energy substitution”: the share of renewables is growing rapidly, but not fast enough to keep up with the growth in total global energy demand. A common expectation is that the substitution phase will begin in the 2030s. Yet this will not be an abrupt change, and the decline in oil demand is expected to be very gradual with phases of volatility. Historically speaking, energy transitions are very slow processes, and, as the influential energy analyst Daniel Yergin argues, this one will probably “not proceed as many expect or in a linear way: it will be multidimensional, proceeding at different rates with a different mix of technologies and different priorities in different regions”. The BP Energy Outlook 2024, for example, projects that oil demand will plateau between 2025 and 2030, yet still forecasts that, under the current trajectory, global demand in 2050 will be roughly at the level it was in 2000. The persistence of existing fossil fuel infrastructure, continuous demand growth in many parts of the world, technological limitations of renewables (e.g. reduced dispatchability) and ongoing oil dependency in sectors such as petrochemicals, aviation, shipping and heavy industries all contribute to a substantial demand for oil in the foreseeable future (see also IEA World Energy Outlook 2024).
For these reasons, most oil-producing countries in the Gulf region are not particularly concerned that they will run out of markets for their resources anytime soon. Furthermore, their production costs are among the lowest in the world, and many still possess abundant reserves. As a result, they are often expected to be the “last men standing” even in a future where oil prices fall below the commercial breakeven point for higher-cost producers. In such a scenario, extraction methods that are more expensive – such as deep-sea drilling, fracking or operations in remote, harsh environments – will be the first to cease production due to economic viability. According to Rystad, the lowest average breakeven price for new oil production is found in onshore operations in the Middle East, at just $27 per barrel. This is followed by offshore shelf production at $37 per barrel, deepwater offshore at $43, and North American shale at $45. In contrast, oil sands have significantly higher breakeven prices, averaging around $57 per barrel, with some projects reaching up to $75. Most MENA producers argue that their competitive advantage will shield them from the effects of global demand decline and that their market share will even increase.
However, broader market dynamics could still pose significant challenges. As global demand declines and oversupply becomes more likely, high-cost producers may face strong incentives to maximise output in the short term – a pattern often described as a “feast before the famine.” In such a situation, low-cost producers could decide to constrain their output to stabilise the price. A potential risk of this strategy is, however, that the higher the oil price, the greater the economic incentive for public and private actors to seek cheaper alternatives. Investments in renewables often rise when oil prices are high and decrease when prices fall again.
Furthermore, in a market with shrinking demand, this strategy will be difficult to sustain, as individual high-cost producers face strong incentives to break ranks and monetise their reserves quickly, fearing they may soon become stranded and lose economic value. This behaviour, akin to a resource-based prisoner’s dilemma, would lead to a breakdown of coordination, intensified competition, overproduction and a downward spiral in prices. In 1986, a similar dynamic played out when Saudi Arabia – after years of unilaterally cutting output to support global oil prices – abandoned its role as swing producer in response to other OPEC members exceeding their quotas. This shift led to a sharp increase in global supply and a subsequent price collapse. It took more than 15 years for oil prices to return structurally to pre-crash levels. This recovery was driven primarily by surging demand from a rapidly growing Chinese economy, which is a scenario that is unlikely to be repeated. Due to these dynamics, Rystad Energy expects that oil prices in the future will be structurally lower than the $80 per barrel OPEC is aiming for.
While countries in the Gulf have some of the lowest oil production costs in the world , they often require high oil prices to balance their national budgets. Due to high levels of public spending – on subsidies, public sector wages and large-scale development projects – most of them have high fiscal breakeven oil prices (see Figure 1). According to the International Monetary Fund (IMF), nearly all MENA countries require oil prices significantly above the current level (around $65 per barrel as of July 2025) to balance their budgets. If for a limited period the global oil price falls under this threshold, most oil-rich countries can fill the gap with financial reserves or low-interest debt. But if it stays structurally low for a long period, they will need to cut public spending or disincentivise imports: a prospect that most governments like to avoid. In the 1980s, for example, Saudi Arabia weathered the storm by reducing capital spending, freezing infrastructure projects and delaying payments to suppliers in order to avoid cuts to the public sector. Such strategies, however, only work for a limited period of time and are no structural solution to less revenues.
In sum, most oil-rich countries in the MENA region, in the short to medium term at least, are not overly concerned about losing markets for their products. What poses a greater concern is the scenario in which oil supply outpaces demand, leading to price volatility and structurally lower prices that could result in chronic underfinancing of government budgets.
Possible policy reactions by oil-rich countries
The risks associated with declining oil demand are not new. Ahmed Zaki Yamani, long-time Saudi oil minister from 1962 to 1986 and a key figure in the formation of OPEC, famously remarked that “the Stone Age came to an end not for a lack of stones, and the Oil Age will end, but not for a lack of oil”. In other words, technological innovations can make a resource less important for markets.
Policy responses to this challenge have been around for many decades, focusing on economic diversification, fiscal reform and a reassessment of public spending. In the context of the renewable energy transition, these strategies remain the default approach for oil-dependent economies seeking to adapt to a changing global energy landscape.
“Kicking the can down the road”: short-term stability – long-term vulnerability
Despite widespread recognition of the long-term risks associated with fossil fuel dependence, many oil-rich countries remain reluctant to pursue meaningful economic diversification or structural reform in the short term. This hesitation is rooted in a combination of political, economic and institutional factors that make inaction appealing from the perspective of ruling elites.
For many, there seems to be no immediate time pressure. Global oil demand continues to rise and is not expected to decline significantly in the near future. Moreover, there is often widespread scepticism among policymakers about the speed and scale of the global energy transition, which further weakens the perceived urgency for reform. In Kuwait, for example, until recently, diversification efforts have only been pursued halfheartedly as many policymakers and the population saw no urgency for structural changes at the moment. Furthermore, political gridlock made it difficult to strike a grand bargain over the country’s future. As long as oil revenues continue to finance public spending, or gaps in the budget can be filled with financial reserves or low-interest debt, there is little incentive for governments to take politically unpopular steps. In other cases, such as Algeria, Iraq or Iran, the domestic political context is already highly volatile – marked by relatively recent public protests – so governments must tread carefully when implementing major reforms.
Introducing structural reforms can threaten the delicate social contract that underpins many rentier states. These reforms often involve difficult trade-offs, such as reducing subsidies, introducing taxes or restructuring bloated public sectors. In political systems where citizens expect generous state benefits, low taxation and secure public employment in exchange for political compliance, tampering with these expectations can provoke public discontent and elite resistance. From this perspective, reform poses greater short-term political risk than maintaining the status quo.
Furthermore, reform can undermine the power and patronage networks of incumbent elites. Rather than risk disruption to their authority, many rulers prefer to “muddle through”, using oil revenues for short-term appeasement measures such as cash transfers, salary increases or new subsidies (see, for example, the response of most oil-rich countries in the region to the Arab Spring). This strategy allows them to postpone difficult decisions while safeguarding their hold on power. Inviting foreign investors, privatising state-owned companies and implementing similar policies can undermine state sovereignty and weaken the exclusive control of incumbent elites over state resources.
Overall, governments in oil-rich countries have several incentives to adopt a wait-and-see approach. Even when aware of the long-term necessity of reform, they may prefer to observe how other comparable states implement change – learning from their successes and failures – before embarking on potentially disruptive transitions themselves. From their perspective, premature reform could ultimately do more harm than good. Moreover, when decision-makers are already of an advanced age they may prioritise short-term stability over long-term planning. Yet this approach comes with considerable risks for the resilience of these countries in the long run.
One big unknown is the pace of the energy transition. While the aforementioned models may be relatively accurate for the near term, their predictive power decreases the further one looks in the future: technological innovations may overcome some of the current limitations of renewable energy, unexpected events may shake up the global economy or governments may push more ambitious objectives than now. In fact, if the world really did go for a “net-zero” strategy, global demand in 2050 would only be one-third of today’s demand, compared to 80% on the current trajectory.
Without reform, oil-dependent economies risk stagnation and falling behind as the global economy shifts toward green technologies, digitalisation and new industrial models. In a non-diversified economy, declining oil revenues – whether due to price drops or reduced demand – will increasingly strain state budgets. In many rentier states, where oil income dominates public finances, this may lead to deficits, mounting debt or the slow depletion of sovereign wealth funds. As fiscal space tightens, governments may need to resort to austerity measures, which can provoke public backlash, especially in societies where state benefits are expected and private sector opportunities are scarce. Rising youth unemployment and inequality can heighten tensions, fuelling protests, political mobilisation or even violent unrest.
Besides economic and social risks, continued inaction threatens political legitimacy. Many oil-rich regimes rely not on democratic institutions but on wealth distribution to maintain authority. When that capacity weakens, so does the credibility of the ruling elite. In authoritarian or semi-authoritarian systems, the lack of political outlets can turn economic discontent into broader regime challenges.
In short, while inaction may reduce short-term political risk, it increases long-term vulnerability. Oil-rich countries that fail to diversify and reform now may face not only economic decline but also social turmoil, political instability and strategic marginalisation in a world where oil is becoming less valuable.
“No pain, no gain”: short-term disruption, long-term stability
While the risks of inaction are real and growing, meaningful reform is also not without costs, particularly in the short term. Structural transformation in oil-rich economies often requires painful adjustments that can provoke resistance and unsettle the political status quo. Efforts to diversify the economy, reduce public spending or introduce new taxes directly challenge the expectations of citizens and elites who have long benefited from the rentier model. These reforms may lead to social unrest, internal power struggles or temporary economic dislocation, particularly in countries where state-led redistribution has long served as a substitute for political participation. Ultimately, changing the socioeconomic status quo implies a renegotiation of the social contract in these countries.
Nonetheless, several governments in the MENA region have begun to acknowledge that the current model is unsustainable in the long run. The United Arab Emirates is the pioneer and has already set out big steps towards a more diversified economy, while Saudi Arabia has also launched an ambitious vision for economic diversification, investment in non-oil sectors and the expansion of domestic renewable energy. These strategies by oil-rich countries are not just economically motivated but reflect a recognition that continued dependence on oil leaves them vulnerable to external shocks and global market shifts. In essence, they have acknowledged the inherent risk of building political stability on an unstable commodity. Matthew Gray has characterised this system as “late-rentierism” in the Gulf: countries seek to move away from their reliance on oil exports and embrace economic liberalisation, new technologies and some social changes, while preserving the political status quo. Yet it is important to keep in mind that these policies do not imply a move away from fossil fuels: most oil-producers in the MENA region are even doubling down on oil exports. Some of them are promoting renewable energy themselves, but this energy is mainly used for domestic consumption to free up more hydrocarbons for exports. To quote Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman: “We are still going to be the last man standing, and every molecule of hydrocarbon will come out”. While these reform efforts have faced implementation challenges and critiques of top-down control, they signal an important shift in mindset: that long-term stability may only be achievable through short-term disruption.
Indeed, countries that embrace reform early may be better positioned to manage the energy transition on their own terms. Investing in education, building competitive industries, modernising state institutions and fostering private sector growth are not achieved overnight and often long processes. If successful, these measures can enhance state resilience, expand the social contract beyond rent distribution and create new sources of legitimacy rooted in performance, opportunity and innovation. Although more politically risky in the short run, such reforms offer a pathway towards greater long-term stability. In other words, the time to fix the roof is when the sun is shining
Conclusion
In the end, the impact of the renewable energy transition on the political stability of oil-rich countries in the MENA region depends a great deal on the individual characteristics of each country. The stability of most of the Gulf countries with state-of-the art oil production technology, well-functioning institutions and political constancy does not seem to be at much peril in the short and medium term. In fact, thanks to their low production costs, their market share is likely to increase. While this gives these countries more time to make a smooth transition to a more diversified economy, it also creates stronger incentives for inertia.
On the other hand, countries with higher fiscal breakeven prices and a history of political instability – such as Algeria, Iraq or Iran – are more vulnerable to declining oil prices. Their economies are more sensitive to revenue shocks, which can, in turn, translate into political volatility.
Political leaders of oil-rich MENA countries now face a strategic crossroads: they can either double down on the existing rentier model, relying on sovereign wealth funds and low-cost production to weather short-term shocks for the moment, or pursue structural reforms to build more resilient and diversified economies.
The former path may provide short-term stability but carries substantial long-term risk, particularly if global demand erodes more rapidly than anticipated. The latter route – while politically and socially riskier in the short run – offers a more sustainable future if implemented thoughtfully. Such action demands political foresight to implement potentially unpopular reforms proactively, prioritising long-term stability over short-term convenience. A successful transition requires more than just new infrastructure; it demands long-term investment in education, the economy and a gradual cultural shift that redefines the social contract beyond rent distribution. The optimal approach lies in a reform process that moves decisively in the right direction yet carefully avoids triggering major political or social upheaval. Finding this balance will be a major challenge for oil-rich countries in the MENA region in the next decade.
Notes:
1-Organization of the Petroleum Exporting Countries (OPEC).
This paper is part of the project “OILDOWN: The Implications of Decreasing Fossil Fuel Demand for Political Stability in the Middle East and North Africa”. OILDOWN is funded by the Spanish Ministry of Science and Innovation programme “Strategic Projects on the Ecological Transition and Digital Transition” (Grant number: TED2021-132846A-I00). The author would like to thank Eckart Woertz for his valuable feedback on an earlier draft of this paper.
In all Emerging economies, a climate crossroads between clean energy achievement represents a dramatic transformation for the world’s largest emerging economies, with the Middle East as a beacon of sustainable development . . .
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Clean energy vs fossil fuels: Emerging economies at a climate crossroads
Above image: BRICS nations have installed over 890 gigawatts of renewable capacity since 2020, with China alone adding 300 GW of solar and wind power, altering the global energy landscape.
BRICS economic bloc comprises Brazil, Russia, India, China, South Africa, Saudi Arabia, Egypt, United Arab Emirates, Ethiopia and Iran.
Five new members have since been added to the alliance.
An alliance of major emerging economies — BRICS — has reached a pivotal moment: fossil fuels now account for less than 50 per cent of its total power capacity, a first in the group’s 15-year history. The BRICS economic bloc comprises Brazil, Russia, India, China, South Africa, Saudi Arabia, Egypt, United Arab Emirates, Ethiopia and Iran. Five new members have since been added to the alliance.
The clean energy achievement represents a dramatic transformation for the world’s largest emerging economies. According to the 2025 Global Energy Monitor report, the original BRICS nations have installed over 890 gigawatts of renewable capacity since 2020, with China alone adding 300 GW of solar and wind power, altering the global energy landscape.
According to the report, Chinese manufacturers now produce 85 per cent of global solar panels and 70 per cent of wind turbines, driving costs down by 65 per cent since 2020. India has matched this momentum by adding 73 GW of renewable capacity over the past two years, exceeding its Paris Agreement commitments ahead of schedule. Brazil has leveraged its vast hydroelectric resources while expanding into bioenergy, achieving 87 per cent renewable electricity generation by late 2024.
Despite ongoing challenges with state utility Eskom, South Africa’s energy transformation has been equally remarkable, adding more renewable capacity than coal for the second consecutive year. The country’s Renewable Energy Independent Power Producer Procurement Programme has attracted $14 billion in private investment since 2022. However, this progress faces a critical test with BRICS expansion. The five new members, Indonesia, Nigeria, Kazakhstan, Malaysia, and Uzbekistan, bring energy portfolios that are overwhelmingly fossil-fuel dependent, with coal, oil, and gas comprising 78 per cent of their combined power capacity. These nations are developing 25 GW of new fossil fuel plants while advancing only 2.3 GW of wind and utility-scale solar projects, a ratio that threatens to reverse the entire bloc’s climate trajectory.
Indonesia, the world’s largest coal exporter, has 13.5 GW of coal plants under construction despite announcing a 2060 net-zero target. Kazakhstan is developing 4.2 GW of coal capacity while possessing some of the world’s best wind and solar resources. Nigeria, Africa’s largest economy, is prioritising $28 billion in oil and gas infrastructure over renewable alternatives that could provide more reliable and affordable electricity access.
This contradiction becomes more troubling in economics. The International Renewable Energy Agency reports that 86 per cent of renewable capacity added globally in 2024 generated electricity at costs below fossil fuel alternatives. In Southeast Asia, new solar projects now deliver power at $0.048 per kilowatt-hour compared to $0.073 for coal plants.
Chinese state-owned enterprises are paradoxical in this dynamic, simultaneously driving both trends. While China leads global renewable deployment domestically, Chinese companies finance 62 per cent of power capacity under construction in new BRICS countries, including 88 per cent of coal projects and 93 per cent of hydropower developments. This $47 billion investment pipeline reflects China’s Belt and Road Initiative strategy but creates tension with Beijing’s domestic climate commitments and international leadership aspirations.
The financing reveals deeper geopolitical dynamics shaping global energy transitions. Western development banks have largely withdrawn from fossil fuel projects, creating space for Chinese institutions to fill the gap. The Asian Infrastructure Investment Bank and China Development Bank have provided $23 billion for energy projects in new BRICS countries since 2022, with 68 per cent supporting fossil fuel development. This funding pattern suggests that BRICS expansion represents energy cooperation. Kenya’s experience, while outside BRICS, illuminates broader Africa’s energy dilemmas. The country generates over 85 per cent of electricity from renewables, primarily geothermal and hydro. Yet the country continues approving fossil fuel projects, including controversial gas-fired plants and the long-stalled Lamu coal project, highlighting how even renewable energy champions struggle to abandon fossil fuel options entirely.
Faces opposition
The Lamu coal project, has delayed since 2015. Initially justified as essential for energy security, the 981-megawatt plant now faces opposition from environmental groups, local communities, and economic analysts; who argue that falling renewable costs have made coal uncompetitive. The project’s $2 billion cost could instead finance 3,500 MW of solar capacity, providing more electricity at a lower cost while avoiding 8.8 million tonnes of annual carbon emissions.
African energy dynamics mirror broader developing world challenges. The African Development Bank reports that while the continent added 4.5 GW of renewable capacity in 2024, fossil fuel investments totalled $67 billion compared to $24 billion for clean energy. Nigeria alone approved $15 billion in oil and gas projects while allocating just $2.8 billion for renewable development despite having 200 million people lacking reliable electricity access who could benefit from distributed solar systems than fossil fuel plants.
Energy security concerns drive many decisions, particularly for countries heavily dependent on energy imports. Other considerations also matter as fossil fuel industries employ millions and provide significant government revenues. In Kazakhstan, oil and gas generate 35 per cent of government income, making rapid transition politically challenging despite abundant renewable resources.
However, emerging trends suggest potential pathways toward acceleration. Chinese renewable technology costs continue falling, with solar panel prices dropping 25 per cent in 2024 alone. Battery storage costs have declined by 89 per cent since 2019, addressing intermittency concerns that previously favoured fossil fuel baseload power. These technological advances make renewable energy increasingly attractive even in countries with strong fossil fuel traditions.
International pressure is also intensifying. The COP28 commitment to triple renewable capacity by 2030 requires unprecedented deployment rates, with developing countries needing to install 11,000 GW of clean energy this decade.
Climate risks are becoming impossible to ignore. New BRICS members face severe climate vulnerabilities, with Indonesia experiencing accelerating sea-level rise, Kazakhstan confronting desertification, and Nigeria dealing with extreme weather that damaged $3.2 billion of infrastructure in 2024. These climate impacts increasingly outweigh the short-term economic benefits of fossil fuel development.
Financial markets are also shifting. Major international investors are divesting from fossil fuel projects, with $40 trillion in assets under management now subject to net-zero commitments.
Although it is well known nowadays that a Solar O&M outfit ‘boosts’ output, Renewable Energy Magazine informs about a Gcube Extreme weather now a global threat to insurability and bankability of renewables finds Gcube Insurance report elaborating on the details.
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The image above is for illustration – credit to WindPowerMonthly
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Extreme weather now a global threat to insurability and bankability of renewables finds Gcube Insurance report
Unmodelled extreme weather risks are emerging as a defining challenge for renewable energy markets worldwide, raising concerns about the long-term bankability and viability of clean energy projects as the industry expands, finds a new report, Known Unknowns: The growing threat of Nat Cat and extreme weather to global renewables, from Gcube Insurance.
Courtesy of GCube.
The new market insights report from GCube Insurance, draws on its global claims database. Key findings from the report include:
US: Hail and wildfire losses are rising, with some natural catastrophe events exceeding $300 million in insured damages. The tightening of coverage limits, and rising deductibles is adding further pressure on project owners and financiers.
Europe: This region can no longer be considered a lower-risk renewables market. In 2024, Europe faced unprecedented renewables asset losses from natural catastrophes and extreme weather, alongside its second-costliest year for flood damages – leading to a rise in the frequency and severity of claims across the continent.
Middle East: Previously considered a ‘benign’ market for extreme weather, MENA renewables now face growing climate risks. As these risks escalate, insurers must rethink exposure, and the renewables industry must move beyond short-term fixes and begin to address the underlying vulnerabilities of its projects.
Australia: Losses to renewables from extreme weather fortunately remain low, but the current rapid expansion into new regions increases exposure to bushfires, cyclones, and hailstorms.
“For years, the US has been at the frontline of the renewable energy market’s battle with Nat Cat [natural catastrophe] and extreme weather risk” said Fraser McLachlan, CEO of GCube Insurance. “But while North America has long been the focal point of these challenges, it is now evident that this has become a global issue. Across Europe, the Middle East, and Australia, the renewables sector recognises the increasing climate-driven risks, but, due to modelling and data shortfalls, the full scale and complexity of those risks remain unclear.”
The report also highlights that natural catastrophe and extreme weather risks are increasingly impacting project bankability, particularly in the US, where some developments are struggling to secure financing due to coverage gaps and rising costs.
Cécile Luciano, Director of Structured Finance Energy Origination at NORD/LB, who contributed to the report, added that the changes have not yet made projects ‘unbankable’ but real challenges have been encountered.
““For example, I’ve seen a project in a flood-prone area where the insurance policy excluded flooding entirely. That’s not something we can accept, forcing developers to find coverage elsewhere, often in a different market. We are seeing more engagement between lenders, insurance advisors, brokers, and developers to ensure that policies are bankable from the start. This needs to happen early in the process, ideally before construction insurance is finalised.”
The report calls for action from insurers, developers, and financiers to close the global renewables risk management gap. This will involve enhancing data accuracy through updated natural catastrophe modelling, optimising asset design to withstand emerging weather threats, and strengthening resilience strategies through closer collaboration between insurers and financiers to maintain long-term insurability and effective risk-sharing.
With renewables markets worldwide experiencing unprecedented expansion, Known Unknowns serves as a timely warning that unchecked exposure to natural catastrophes and extreme weather could derail the energy transition. Adapting to these risks is no longer optional – it is essential for the sector’s future security.
The world surges past 40% clean power in a record renewables boom. New renewables and nuclear energy provided 40.9% of the world’s power generation in 2024, passing the 40% mark for the first time since the 1940s, according to a new global energy think tank report.
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The above image is for illustration – credit EMBER
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World surges past 40% clean power in record renewables boom
Renewables and nuclear provided 40.9% of the world’s power generation in 2024, passing the 40% mark for the first time since the 1940s, according to a new global energy think tank Ember report.
Renewables added a record 858 TWh in 2024, 49% more than the previous high in 2022. Solar was the largest contributor for the third year running, adding 474 TWh to reach a share of 6.9%. Solar was the fastest-growing power source (+29%) for the 20th year in a row.
Solar has doubled in just three years, providing more than 2,000 TWh of electricity in 2024. Wind generation also grew to 8.1% of global electricity, while hydro – the single largest renewable source – remained steady at 14% of global electricity.
“Solar power has become the engine of the global energy transition,” said Phil MacDonald, Ember’s managing director. “Paired with battery storage, solar is set to be an unstoppable force. As the fastest-growing and largest source of new electricity, it is critical in meeting the world’s ever-increasing demand for electricity.”
Ember’s sixth annual Global Electricity Review, published today, provides the first comprehensive overview of the global power system in 2024 based on country-level data. It’s published alongside the world’s first open dataset on electricity generation in 2024, covering 88 countries that account for 93% of global electricity demand, as well as historical data for 215 countries.
What drove the rising power demand
The analysis finds that fossil fuels also saw a small 1.4% increase in 2024 due to surging electricity demand, pushing global power sector emissions up 1.6% to an all-time high.
Heatwaves were the main driver of the rise in fossil generation, accounting for almost a fifth (+0.7%) of the increase in global electricity demand in 2024 (+4.0%), mainly through additional use of cooling. Without these temperature effects, fossil fuel generation would have risen by only 0.2%, as clean electricity generation met 96% of the demand growth not caused by hotter temperatures.
“Amid the noise, it’s essential to focus on the real signal,” continued MacDonald. “Hotter weather drove the fossil generation increase in 2024, but we’re very unlikely to see a similar jump in 2025.”
Aside from weather effects, the increasing use of electricity for AI, data centers, EVs, and heat pumps is already contributing to global demand growth. Combined, the growing use of these technologies accounted for a 0.7% increase in global electricity demand in 2024, double what they contributed five years ago.
Clean power will grow faster than demand
Ember’s report shows that clean generation growth is set to outpace faster-rising demand in the coming years, marking the start of a permanent decline in fossil fuel generation. The current expected growth in clean generation would be sufficient to meet a demand increase of 4.1% per year to 2030, which is above expectations for demand growth.
“The world is watching how technologies like AI and EVs will drive electricity demand,” said MacDonald. “It’s clear that booming solar and wind are comfortably set to deliver, and those expecting fossil fuel generation to keep rising will be disappointed.”
Beyond emerging technologies, the growth trajectories of the world’s largest emerging economies will play a crucial role in defining the global outlook. More than half of the increase in solar generation in 2024 was in China, with its clean generation growth meeting 1% of its demand increase in 2024. India’s solar capacity additions in 2024 doubled compared to 2023. These two countries are at the forefront of the drive to clean power and will help tip the balance toward a decline in fossil generation at a global level.
Professor Xunpeng Shi, president of the International Society for Energy Transition Studies (ISETS), said: “The future of the global power system is being shaped in Asia, with China and India at the heart of the energy transition. Their increasing reliance on renewables to power demand growth marks a shift that will redefine the global power sector and accelerate the decline of fossil fuels.”
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