When geopolitics accelerates green energy

Geopolitical crises and demand linked to AI reinforce the urgency of the energy transition.

 

The conflict in the Middle East has profoundly transformed the debate on the energy transition. Long considered a project relating to climate policy, it is now increasingly perceived as a question of national and economic security. The emergency has thus moved from a long-term structural issue to an immediate priority for States and businesses alike.

Historically, two conditions are necessary for the energy transition: falling costs and increasing the sense of urgency. These two elements are united today. On the one hand, the costs of renewable energy have fallen sharply in recent years, and on the other hand, geopolitical pressure in favor of diversifying energy sources has increased considerably.

From the climate debate to a question of national security

This development occurred in a context marked by several successive supply shocks in the energy sector over the last six years. The Russian invasion of Ukraine in 2022 showed how vulnerable Europe’s energy supply was: overnight, around 15% of gas supplies disappeared, leading to a significant acceleration of global investment in clean energy, which thus passed from approximately 1.3 trillion US dollars in 2019 to 2 trillion in 2024¹.

The conflict in the Middle East has further reinforced this dynamic. The blockage of the Strait of Hormuz has disrupted nearly a fifth of global seaborne oil trade, as well as a further 20% of liquefied natural gas (LNG) supplies. In this context, energy security and the energy transition are increasingly considered as part of a single agenda.

This development is also reflected in the financial markets: for example, ETFs dedicated to clean energy have already attracted 1.9 billion US dollars in the first months of 2026, significantly exceeding the total net flows of the year previous, which amounted to 1.2 billion1. The rise in prices further stimulated investor interest and attracted new capital.

The energy appetite of AI as an additional driver

The insatiable demand for electricity from the technology sector constitutes another structural driver of the energy transition. Data centers and artificial intelligence-related infrastructure require significant amounts of energy, the demand for which is increasing faster than available supply capacities. According to estimates from the International Energy Agency (IEA), the energy demand of data centers is expected to more than double over the next five years.

For large digital players (hyperscalers), access to sufficient computing capacity has long constituted a strategic bottleneck. A stable energy supply is therefore an important element in any further growth. Investments in clean energy are no longer just a commitment to climate goals, but also an investment in the security of energy supply, structurally supported by politics, economics and capital flows.

 

¹ Invesco ETF Snapshot May