6 shifts reshaping global energy markets

The roadmap for the global energy transition is being redrawn as national strategies increasingly focus on security concerns and economic impacts alongside climate ambitions.

The Fostering Effective Energy Transition 2025 report from the World Economic Forum finds that against a backdrop of geopolitical and economic risks, a series of structural shifts is reshaping energy markets. For example, oil prices are fluctuating, driven by conflict in the Middle East, though supply remains unaffected. These shifts are influencing investment decisions and redefining the future roles of key energy sources.

Here’s how the report outlines these changes:

Liquified natural gas (LNG) – natural gas cooled to a liquid state to make it easier to store and transport – is often referred to as a “bridge fuel” for the energy transition. This is because it can provide stable power to grids to address the intermittency of renewables while producing fewer carbon emissions than coal and oil.

But with growing focus on meeting the security aspect of the energy triangle, LNG’s role in the global energy mix is being redefined. While detractors question if the world should move to another fossil fuel, another perspective is emerging: that LNG isn’t a bridge but a destination fuel.

Innovation in technologies such as carbon capture promises to drive down LNG emissions further. At the same time, amid rising geopolitical uncertainty, countries are looking to diversify their energy supply, resulting in strong policy support for LNG in many regions.

Demand for LNG surged in 2024 and 2025, International Energy Agency data shows, particularly in Asia and Europe, as countries looked for alternatives to pipeline gas from Russia. And while global supply growth slowed to 2% in 2024, new projects are set to drive a rebound to nearly 6% in 2025.

Nuclear power today produces just under 10% of global electricity supply. But with its potential to supply reliable baseload power, momentum is growing and small modular reactors (SMRs) are at the forefront of this shift.

SMRs have about a third of the generating capacity of traditional large-scale reactors – but they are safer, cost less, faster to build and more adaptable to different locations and energy needs. As with all nuclear plants, they don’t emit greenhouse gases. And, unlike conventional plants, they can be turned off and restarted.

This flexibility makes SMRs ideal for phasing out coal and can complement LNG in providing stable and dispatchable energy.

Global investment in nuclear power is rising, especially in China, whose capacity is set to surpass the US and Europe by 2030.

Along with electrification, behavioural change and digitalization, energy efficiency shapes global energy intensity – the amount of energy required to produce a unit of GDP. It is one of the most cost-effective levers to boost security, cut emissions and lower costs – sometimes referred to as the clean energy transition’s “first fuel”.

Research conducted by the Forum and PwC found that through energy efficiency, it is possible to cut global energy consumption by 31%, saving over $2 trillion in annual energy costs, without reducing economic output.

Smart grids, AI analytics, and demand response programs are already optimizing energy use. And behavioural incentives are driving more conscious consumption – supporting a more resilient, low-carbon system.

Energy storage is another essential aspect of grid stability and supply-demand balance as intermittent renewables continue to be integrated.

Global capacity is set to surpass 2 TWh by 2030, with annual installations increasing at an average rate of 21%. China is projected to lead with a 43% share, followed by the United States, at 14%, Europe and India.

Battery systems, hydrogen, and pumped storage hydropower are among the technologies driving flexibility in low-carbon energy systems.

Clean energy investments are outpacing fossil fuels, and in 2024 investment in the global energy transition grew 11% to a record $2.1 trillion. The power sector is leading the charge through the deployment of solar and wind power and smart grids.

As the effort to decarbonize expands to harder-to-abate sectors, technologies like carbon capture and storage are gaining momentum.

However, the success of clean technologies depends on strong supply chains and reliable access to critical resources – making supply chain resilience increasingly important.

Artificial intelligence (AI) is reshaping energy systems – while it offers substantial efficiency gains, its demand for power and resources is also set to increase.

The data centres behind generative AI tools could drive 10% of global power demand growth by 2030. At a global level, rising demand is driven by many factors including the use of air conditioning and consumption from industry. But many of the world’s 11,000 data centres are concentrated in hubs, and the effect on local electricity markets could be substantial.

AI’s growth is also affecting resources, with large and hyperscale data centres projected to account for almost 70% of the demand for copper in the building contained sector by 2030.

On the flipside, insights provided by AI technology promise to cut 5-10% of global greenhouse gas emissions by 2030. The challenge as AI advances will be to ensure these benefits outweigh its impact and that digitalization is a driver rather than a drag on the energy transition.

The energy landscape is becoming increasingly complex, local, and digital. Successfully navigating this transition, according to the Energy Transition Report, calls for integrated strategies that align energy policy, finance, and technology to accelerate the shift to a secure, low-carbon future.