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Sustainability
Lack of trust drives the just-in-case energy era
Published September 29, 2026 in Sustainability • 6 min read • 
Audio available
Fatih Birol, Executive Director of the International Energy Agency, explains why long-term policy stability and infrastructure investments are essential for a secure, resilient power supply.
Rapid read:
- Total energy demand is growing along with almost every fuel: oil, gas, and, in some countries, coal – alongside a large surge in renewables.
- In an uncertain world, countries must do more to be prepared for the next crisis.
- My golden rule has always been diversification: never one fuel, never one route, never one country, never one technology.
The age of electricity
Two years ago, I said the world was entering the age of electricity, and the data since then have only strengthened the case. The story of energy is a story of change. The industrial revolution ran on coal. Oil grew in prominence after the Second World War, then natural gas.
However, what we are seeing now is different. Total energy demand is growing along with almost every fuel: oil, gas, and, in some countries, coal – alongside a large surge in renewables. But electricity demand is growing two and a half times faster than global energy consumption. That is set to be the defining energy fact of the decade.
Three drivers explain this. The first is Artificial Intelligence (AI), which is the most consequential technological innovation to date. There is a serious race between the United States, China, and Europe to lead it, and whoever wins will hold the upper hand in geopolitics and the global economy for decades. Data centers for AI need electricity to power them 24 hours a day, seven days a week.
The second is electric vehicles. Five years ago, 5% of all cars sold worldwide were electric. This year, the share is expected to be almost 30%, and they are not selling primarily for environmental reasons, but because they are more efficient and getting cheaper.
The third, which is the largest globally, is air conditioning. Today, around 90% of households in the US and Japan have it, but only 5% in Nigeria, 18% in Indonesia, and 20% in India. As temperatures and incomes rise, many households will buy air conditioners – some before a car.
If sectors like information technology move fast like bikes, energy moves more like a tanker: it can change its destination, but it needs time.
Meeting surging electricity demand securely, affordably, and sustainably is a global challenge. It’s compounded by the fact that energy is a vast system that tends to turn slowly. If sectors like information technology move fast like bikes, energy moves more like a tanker: it can change its destination, but it needs time.
Last year, 75% of all new power plants built generated electricity from renewable sources, with solar and wind leading. But still the system is so large that this surge only makes a small dent in the total energy mix. Anyone committing capital over 20 years has to keep both facts in mind: the system is set to remain fossil-fuel heavy even as renewables surge.
Fifteen years ago, when I talked about solar, it was seen as a romantic idea. Today, it is a business proposition, winning on cost and security, because countries can generate it at home – with no need for costly imports.
But deployment does not always align with the areas of greatest potential. While Africa has the world’s best solar resources, more than 600 million people across the continent still don’t have access to electricity. Shockingly, all of sub-Saharan Africa generates less solar power than Belgium.
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Two constraints: policy and grids
To meet the moment, we need proactive and stable policies that support the deployment of these technologies – and the enabling infrastructure around them.
Europe illustrates this fact clearly. Its competitiveness problem traces its roots back to three strategic mistakes. The first was over-reliance on a single fuel from one country: Russia. The second was its retreat from nuclear – about a third of Europe’s electricity came from nuclear in the 1990s, but the share today is declining toward 15%.
And the third was the manufacturing of key technologies like solar: Germany, Spain, and Italy subsidized that industry when it was expensive, then Europe dropped the ball. Today, 85% of the world’s solar panels are made in China.
Developing a technology is like running a marathon. Being ahead in the first 10 kilometers, as Europe was in solar, doesn’t win the race. What matters is who crosses the finish line after 42 kilometers. This sort of sustained endurance requires consistent policy over decades, which Europe did not have.
Then there is the physical constraint. Last year, Europe added a record volume of renewable capacity. Across the continent, solar installations onshore and offshore wind projects were built and ready but couldn’t connect because the grid was unable to accommodate them. For a continent that is spending roughly €300bn a year on imported fossil fuels, that is not a technical detail but a strategic vulnerability.
The energy system: room for improvement
The percentage of households that have air conditioning:
90% in the US and Japan.
20% in India.
18% in Indonesia.
5% in Nigeria.
600 million
The number of Africans who don’t have access to electricity, despite the continent having the world’s largest resources of solar power.
€300bn
The amount Europe spends annually on imported fossil fuels despite adding a record volume of renewable capacity last year. Onshore and offshore wind farms, along with solar installations, were built and ready but could not be connected to the grid.
Trust is the scarcest commodity in energy
My golden rule has always been diversification: never one fuel, never one route, never one country, never one technology. In other words, don’t put all your eggs in one basket.
Two shocks in five years should have made that view abundantly clear. Russia’s invasion of Ukraine in 2022 and its abuse of its position as Europe’s dominant gas supplier have pushed the European Union to seek to phase out Russian gas entirely. Then the Strait of Hormuz closed. Both events struck at trade relationships that were assumed to be stable because the economics were so strong. But they were not stable enough to withstand the geopolitical shocks that hit them.
So energy importers are shifting from a just-in-time system to a just-in-case system. Price is now weighed against predictability. A government choosing a partner for a power project may pay a premium to avoid a supplier that could one day use it as leverage. That means a more secure system is becoming a more expensive one, as the risk calculation has changed.
It was never logical that a $140tn global economy should hinge on a 50km waterway in a very difficult part of the world.
The current crisis makes the need for diversification clearer than ever. For years, I asked everyone applying for a job at the International Energy Agency the same question: what would you do if the Strait of Hormuz closed? It was a test of instinct, since we’re paid to see risk before it arrives. It was never logical that a $140tn global economy should hinge on a 50km waterway in a very difficult part of the world.
This year, the question stopped being hypothetical. Most likely, it will not be the last time the unexpected comes to pass – and in an uncertain world, countries must do more to be prepared for the next crisis.
This article draws on Fatih Birol’s conversation with David Bach on the IMD Leaders Unplugged podcast.Â
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