The transition to a lower-carbon global economy has faced numerous challenges, particularly in the past year, as the onset of 2026 approaches. Despite these obstacles, the momentum for energy transition continues, driven by changing regional priorities and technological advancements.
Over the past year, the narrative surrounding low-carbon transition has shifted from one of opportunity to one of fierce competition among major economies. Different nations have adopted divergent priorities, leading to a fragmented approach to the global energy transition. In the United States, the push for clean energy has been overshadowed by the race for AI supremacy, prompting increased energy demand to support data centers. Meanwhile, U.S. diplomats are actively promoting the country’s status as the largest oil and gas producer, seeking new markets for liquified natural gas (LNG) and disrupting shipping decarbonization efforts. Notably, recent actions regarding Venezuela highlight significant shifts in U.S. energy priorities.
In contrast, China continues to pursue both energy security and clean energy leadership, positioning these goals as key drivers of economic growth. The country has experienced a peak in domestic oil demand due to advancements in electric vehicles (EVs), pointing towards a potential decline in coal emissions thanks to the strength of its renewable energy sector. Chinese clean-tech companies are also expanding their operations internationally, despite facing various challenges such as tariff barriers and project delays. Europe maintains its leadership role in climate initiatives, although it now grapples with the need to enhance its economic competitiveness amidst a landscape dominated by Chinese manufacturing and American technology.
This mixed international backdrop is reflected in the Nationally Determined Contributions (NDCs) submitted ahead of COP30. The UK and EU have proposed ambitious emissions targets for 2035, while China’s recent goal also marks a notable advance, despite lacking specific quantitative benchmarks. Conversely, the U.S. NDC is rendered essentially irrelevant following the country’s exit from the Paris Agreement. India remains absent from this international emissions discourse, demonstrating the varying degrees of commitment among key players.
Amidst these tensions, the renewable energy sector continues to thrive, with global solar and wind installations reaching a record of over 800 gigawatts last year. Although growth in installations may slow in 2026, the long-term outlook remains positive with expectations of significant additional installations through 2030. The economic advantages of renewable energy are increasingly evident, insulating the sector from geopolitical instabilities. Factors including heightened demand for power from AI and EVs are expected to bolster renewable energy deployment.
The electric vehicle market demonstrates significant transformation, with EVs now comprising over 25% of global car sales—a figure projected to increase to 40% by 2030. China leads the way, achieving over 50% EV sales, while Europe follows with a share above 25%. As battery costs continue to fall, the competitiveness of EVs is likely to improve across more markets, fostering growth even in regions that have lagged behind.
Challenges remain in decarbonizing harder-to-abate sectors such as heavy industry and aviation. Innovative technologies, effective carbon pricing, and incentive mechanisms will be crucial in overcoming these hurdles. The European Union’s introduction of the carbon border adjustment mechanism signals an important move towards bolstering net-zero aligned production, while China’s expanding carbon market and Japan’s imminent carbon trading system illustrate the global push towards emissions reduction.
While climate change poses grave risks—as evidenced by the estimated $1.4 trillion in climate damages in 2024—the pathway forward through clean energy solutions suggests hope. Accelerating the deployment of these technologies could align global emissions with cost-effective trajectories, proving that a transition towards a sustainable future is not only necessary but achievable. The urgency to embrace clean energy reflects the potential to enhance human wellbeing while mitigating the impacts of climate change.