The global energy landscape is experiencing a notable transformation, with nations increasingly emphasizing energy security alongside climate objectives. According to the International Energy Agency (IEA), global energy demand is projected to rise by 15% between 2023 and 2040, driven by economic growth and the need for diversified energy sources to mitigate geopolitical risks. In 2024, global energy demand increased by 2.2%, nearly double the average annual growth rate of 1.3% observed over the past decade. This growth was primarily driven by a 4.3% rise in electricity consumption, attributed to factors such as record-breaking temperatures, industrial electrification, and the expansion of data centers. These trends are reshaping energy markets, influencing investment strategies, and contributing to the acceleration of a more secure and resilient energy future. A recent report, The New Joule Order by Carlyle, examines how the focus on energy security is influencing global energy policies, a trend further supported by the IEA’s 2024 report on global energy demand growth.
Energy security has become a central concern for many nations, driving efforts to diversify energy sources in order to protect against geopolitical, macroeconomic, and financial risks. Historically, energy transitions driven by security concerns—such as those following the oil crises of 1973 and 1979—have progressed at a similar pace to the net-zero transition observed between 2010 and 2024. During the earlier period, the transition was approximately 0.3% per annum faster, indicating the effectiveness of security-driven energy strategies.
While renewable energy sources are gaining traction, fossil fuels continue to play a significant role in the global energy mix. The "Peak Oil Trade" concept signals a shift in how major consumers, particularly in East Asia, are reducing their reliance on imported fossil fuels. This includes increasing domestic energy production through nuclear and renewable sources to enhance energy security. The shift suggests a move from a globally traded fossil fuel market toward more localized energy models, with a growing emphasis on the "security premium" rather than the "green premium" on renewable energy.
Historically, investment decisions have been guided by metrics such as the 'levelized cost of energy' (LCOE), but this focus has sometimes led to underinvestment in critical energy sources, such as nuclear power, which remains essential for meeting increasing energy demand. Recent reports suggest that investment strategies should also account for consumption dynamics and 'return on equity' (ROE). To address challenges like system bottlenecks and grid congestion, a broader investment perspective is necessary—one that includes all critical energy sources.
Looking ahead, there is a noticeable gap between increasing energy demand and current investment levels in energy infrastructure. This presents significant opportunities for investors to focus on underfunded sectors, particularly those critical to ensuring a reliable and secure energy future.
The traditional model of global fossil fuel trade is evolving as countries ramp up domestic energy production and reduce their reliance on imported energy. In 2024, emerging and developing economies accounted for over 80% of the increase in global energy demand, signaling a broader trend toward localized energy solutions.
As investment strategies evolve, it is crucial to consider not only production costs but also energy consumption patterns and return on equity. Underinvestment in critical energy sources, such as nuclear power, could have significant implications for meeting future energy needs and supporting the transition to a more secure and resilient energy future.
The first 100 days of President Trump’s administration marked a pivotal shift in U.S. energy policy. During this period, the administration focused on increasing domestic energy production, particularly through fossil fuels, with the goal of achieving energy independence. This resulted in changes to the regulatory environment, particularly in areas related to fossil fuel production and energy infrastructure development.
The U.S. increased domestic energy production and reduced its reliance on foreign imports. The Trump administration’s approach influences the development of energy technologies aimed at enhancing energy security, such as advancements in energy storage, pipeline infrastructure, and nuclear energy. These changes continue to impact global energy markets and will likely influence future policy and investment decisions.
The focus on energy security has become a central theme in global energy policy. The policies implemented so far during the Trump administration, with an emphasis on domestic energy production and reducing dependence on foreign energy, sparked a global conversation about energy security. Countries have reassessed their energy strategies, balancing energy security with climate goals.
Despite the ongoing importance of fossil fuels, nuclear and renewable energy sources are expected to experience accelerated growth in the coming years. This shift presents ample investment opportunities, particularly in sectors poised for growth due to the increasing focus on energy security.
Several energy policy trends are driving this growth:
The policy-driven growth in both nuclear and renewable energy sectors offers significant investment opportunities for those committed to advancing global energy security. Advanced nuclear reactors, energy storage technologies, and renewable energy infrastructure are set to attract substantial capital over the next decade, positioning them as pivotal areas for long-term investment. As the world embraces a more diverse energy mix, the future of energy resilience will be shaped by strategic investments, groundbreaking policies, and technological innovation. By efficiently balancing energy security and economic growth, companies and individuals can better navigate the changing energy landscape and support a more secure, sustainable future.
Interested in reading the full reports?
Click here: The New Joule Order by Carlyle
Click here: Growth in Global Energy Demand by IEA
