The new geography of energy capital

The energy sector is undergoing a profound transformation that is reshaping not just technologies and markets, but the geography of investment itself. While the international economy remained resilient in 2025, with global growth holding at around 3.3% in the face of trade tensions, geopolitical uncertainty and shifting policy environments, there is more than meets the eye beneath this apparent stability.

Clean energy investment has now surpassed US$2 trillion globally, exceeding upstream oil and gas spending. Yet to align with a 1.5°C pathway, annual investment must more than double to roughly US$4.5 trillion by 2030. The critical question is not only whether that capital will materialise, but where.

The energy transition is no longer unfolding in a globally synchronised pathway. Instead, it is fragmenting into a series of regional trajectories created by different economic realities, policy frameworks and geopolitical considerations.

A transition moving at different speeds

In the US, policy volatility is reshaping investor decision making. The Trump administration has redirected federal energy policy towards domestic oil, gas, coal, and nuclear production over emissions reduction, driven as much by executive orders as by legislation like the “One Big Beautiful Bill Act”. Offshore wind has been a casualty of this capital allocation with stop-work orders hit near-complete projects such as the Revolution Wind and Coastal Virginia Offshore Wind, costing developers millions before courts intervened.

The country’s position as a leading oil exporter has been reinforced by geopolitical disruption in Iran, and Republican preference for fossil fuels over renewables has doubled to 71% in six years.¹ Some global developers took the opportunity to change direction. For example, TotalEnergies reached a deal to relinquish its East Coast wind leases to the US government for US$1 billion in reimbursements, redirecting that capital into its US oil and natural gas infrastructure.

Amidst oil and gas resurgence, renewables investment remains mixed. Solar continues to attract capital due to cost competitiveness, but offshore wind has faced delays and policy headwinds. Even amid federal headwinds, the underlying economics of renewables continue to strengthen, suggesting the sector's growth is delayed rather than derailed.

Europe presents a different picture. While it may remain a global leader in climate ambition, such leadership comes with growing challenges around competitiveness. High energy costs are placing pressure on industrial sectors and supply chains, particularly in renewables manufacturing. DNV's Energy Transition Outlook notes industrial gas and electricity prices in Europe remain two to four times higher than in key trading partners, a gap that continues to weigh on the region's manufacturing base.

The UK sits squarely within this tension. The UK pioneered offshore wind and holds strong decarbonisation targets but also faces the same structural pressures as its continental neighbours, including the curtailment of generation at certain times, supply chain constraints, concerns over cyber risks, and increasing scrutiny over the affordability of the transition. Recent uncertainty around project timelines has also highlighted the importance of policy consistency in maintaining investor confidence. Political uncertainty compounds this, with Keir Starmer's resignation and an incoming leader whose energy policy sits alongside the wider question of where the government's growth and net-zero agenda will sit.

China offers a sharper contrast on this last point. Free from the electoral cycles reshaping policy in the US and Europe, it has pursued a consistent, state-directed strategy combining rapid renewable deployment with dominance across clean technology manufacturing. Coal remains part of the mix, but the pace of renewable expansion far outstrips other markets. Since the Hormuz crisis, it is also reshaping its oil and gas demand to further drive energy security.

New investment frontiers

As mature markets navigate policy and cost pressures, capital is increasingly looking beyond traditional hubs. India is emerging as a major growth market, driven by rising electricity demand and ambitious decarbonisation targets. The country achieved a total non-fossil fuel capacity addition of 55.3 GW during FY 2025 - 26 and now ranks as the world's third-largest renewable energy market and is on course to add almost 300 GW more renewable capacity between 2026 and 2030.² Across Asia-Pacific, countries such as Vietnam, Indonesia and Malaysia are also building substantial clean energy pipelines, even as their energy security pictures remain complex. Malaysia, for instance, is a net oil exporter, yet its light, low-sulfur crude commands a premium that makes it more valuable to sell abroad than refine at home, so the country exports its premium crude while importing cheaper, heavier grades better suited to its refineries - a reminder that energy self-sufficiency and energy security don't always mean the same thing.

Closer to home, North Africa is gaining attention as a future supplier of green energy and hydrogen to Europe and the UK, given its strong solar and wind resources. Egypt offers an early proof point with a 100 MW green hydrogen facility in the Suez Canal Economic Zone which began exporting to European and US markets in early 2026, backed by €124.3 million in EU funding. For the UK, this underlines the questions around energy security, import dependence and the role of international partnerships in meeting net zero goals.

The technologies attracting capital

Not all technologies are attracting the same level of investor confidence. Solar and battery storage remain the most bankable clean energy investment globally, benefiting from cost maturity and predictable returns. In contrast, hydrogen has lost some momentum due to high production costs and challenges around infrastructure and long-term offtake agreements.

Carbon capture and storage (CCS) is gaining traction, particularly in hard-to-abate sectors such as cement, steel and chemicals. This is an area where the UK has a potential competitive advantage, given its North Sea infrastructure and industrial clusters, but delivery timelines and funding clarity will be critical.

Demand-side challenges The transition is not only about supply, it also depends on how energy is used. Transport, buildings and industry account for the majority of energy demand, yet progress remains uneven. Electric vehicle adoption is accelerating in some markets, but varies widely depending on infrastructure and incentives.

In the UK, building efficiency represents one of the most immediate opportunities for emissions reduction, yet investment in retrofitting continues to lag. Industrial decarbonisation presents an even greater challenge, particularly for sectors reliant on high-temperature processes where alternatives to natural gas remain limited.

Navigating a fragmented future

The defining feature of the next phase of the energy transition is fragmentation. Rather than a single global pathway, we are seeing a patchwork of regional strategies shaped by local priorities and constraints.

For investors, this changes the equation. The energy transition is no longer a uniform global opportunity, but a portfolio of regional markets, each with its own risk profile.

For the UK, the implication is clear. Maintaining a competitive position will depend not only on ambition, but on execution: delivering policy stability, managing costs and leveraging existing strengths in areas such as offshore wind and CCS.

Capital will continue to flow into clean energy, but selectively. Understanding how and where the map is being redrawn will be critical to capturing the opportunities ahead.

References

_{1. Americans' Shifting Views on Energy Sources, Policy in 2026 | Pew Research Center.}

^{2. Press Release Page | Press Information Bureau.}

About the author

Al-Karim is the Global Head of Public Affairs for DNV Energy. He develops DNV’s relationships with national and regional governments, as well as with global sector associations and customers in the energy value chain. Leveraging DNV’s annual Energy Transition Outlook and other analyses, he supports policymakers on identifying how best to facilitate the energy transition through the optimal adoption of energy resources, including wind, solar, hydrogen, CCUS, oil and gas, energy efficiency, and battery storage. Prior to this, Al-Karim led DNV’s decarbonisation and demand side management business across Northern Europe, the Middle East & Africa, supporting industrial, commercial, and utility customers.

Previously, Al-Karim worked for the Carbon Trust on innovation policy in areas such as industrial energy efficiency, offshore wind and sustainable aviation biofuels. He ran the then Department for Business, Energy and Industrial Strategy’s (BEIS) Industrial Energy Efficiency Accelerator Programme. He also oversaw a programme for the UN’s Sustainable Energy for All (SEforALL) on industrial energy efficiency in emerging markets. Al-Karim has a B.Eng. Chemical Engineering from the University of Birmingham and an MBA from the University of Oxford.

Read the article online at: https://www.oilfieldtechnology.com/special-reports/14072026/the-new-geography-of-energy-capital/