Our energy supply is not just a matter of supply and demand; it is as much a tool in international relations, national politics and policymaking. And while the energy sources we will use in the future will be different from the ones we use today in 2030, that aspect may never change, says Raad Alkadiri.
It had faded into the background for a while, but in the past decade, it became clear again that geopolitical movements have had a huge impact on energy markets in 2030. We have seen some events, including the first major land war in Europe since 1945, that clearly exposed the fragility of globalization and at the same time put increasing pressure on it. In addition, the energy market crisis brought along unexpected other crises, such as sky-high fuel and energy prices, faltering supply chains, empty shelves in supermarkets and empty car showrooms.
Managing Director Energy, Climate & Resources, Eurasia Group
We collided, in short, with the limits of neoliberal thinking and this spurred regionalism. The world once again became a sea of competing islands, each evolving in different directions and a lot of them becoming more inward looking, the United States being a prime example. Some blocs also saw opportunities in this evolution. Many developing countries, which lacked the resources to purchase expensive energy, cautiously took China‘s, and to a lesser extent India’s, hand. It made the Chinese confident and assertive, especially in their own region. Europe is still the most coherent continent in this story, with local superpowers, although even here regional priorities are usually considered more important than a global world vision.
Because of the events I describe above, a sort of “energy poverty” developed in certain parts of the world that lasted through the first half of 2020. This also widened the gap between poor countries and the West even more. The high interest rates and the lack of cheap and rapidly available fuels caused a multi-speed energy transition (indeed, the fact that we also must fight climate change in the meantime made the whole situation even more pertinent and complicated). In Europe, for example, energy transition and energy security quickly became synonymous. Many countries in South America and Asia did not have this luxury for several more years.
Since about 2025-2026, we have seen developing countries slowly but surely catching up. Europe‘s large investments in renewable energy have brought prices down, and China has also made a clear commitment to curb its emissions. That has given the global market for renewable energy a growth boost.
The big loser in this story was natural gas. Its high cost meant that, at first, it priced itself out of the market. In the first part of the decade there was also so much focus on gas that we saw overinvestment, which, in turn, led to a surplus in production. After 2025, the reduced demand, the transition to green energy and alternatives to Russian supply meant that gas became much less competitive.
Hydrogen is increasingly casting itself as an alternative but has not yet been able to fully live up to that role. That will probably not be the case until 2040. Especially for green hydrogen, there are still many practical challenges and obstacles to overcome.
The big test
As I said, in Europe, energy transition and security are now synonymous. The EU has shown what is possible when political will, a great need for energy security, financial resources and public support all coincide. The continent managed to develop a coherent energy transition. The CBAM (Carbon Border Adjustment Mechanism), part of the Fit for 55-program, played an important role in this. It was also a lever to shape new energy and trade relationships.
That is not to say that this transition came about without a hitch. The winter of 2024-2025 was the big test. Ongoing tensions between Russia and Ukraine provided the basis for a common vision and public support. At the same time, there was a shift in financing, with private investment in energy claiming an increasing role and public investment declining in importance. Regulations were winding down, not so much around pricing, but mostly around operational licensing. Europe realized that energy security should not be hampered by red tape. The transition to green energy also set in motion great competition between different blocks for critical minerals and resources. This led to a period of “resource colonialism.” As we got better and better at recycling those resources, this movement diminished and faded out.
Of course, all government decisions also had some impact on how energy was invested in, although consumption patterns were still the big differentiator. The vast majority of investments went into renewable energy, with the role of gas increasingly reduced to no more than a marginal backup or a way to absorb peaks by the end of the decade. Investments in hydrogen were also gaining momentum, with industrial clusters in Belgium, the Netherlands and northern Germany, for example, acting as major levers. The effects of climate change – which have become increasingly apparent and hard-hitting in recent years – brought with it an enormous number of investments and a clear commitment to halting this phenomenon.
Regulations have been phased out, not so much around pricing, but around operational permits
About the interviewee
Raad Alkadiri has more than a quarter century of experience advising C-level managers and government leaders, especially concerning issues such as energy, climate and the economy. He joined Eurasia Group in 2021, having previously worked at Boston Consulting Group and IHS. Alkadiri studied International Relations at the Universities of Oxford and St. Andrews and holds a degree in Psychology.
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