New Energy Transition Outlook frames five divergent scenarios as geopolitical shock and energy independence reshape the global energy system

Key findings include:

• Energy security scenario (2.5°C) produces lower warming than both Growth First (3°C) and the Base Case (2.6°C), not through climate policy, but as a by-product of electrification driven by import reduction
• The scenarios present a cumulative investment opportunity of US$147 to US$189 trillion through to 2060 for energy and resources companies.
• Global liquids demand rises to a peak of approximately 109 mb/d in 2031 in the Base Case
• Solar, wind and battery capacity are set to surge 60% by 2030 and six times by 2060 in the Base Case
• Nuclear is experiencing a global revival, with the United States holding 53% of the unrisked advanced nuclear pipeline
• Global power demand is on track to double by 2060 in the Base Case

The global energy transition has reached a fork in the road, with nations increasingly choosing energy security and economic growth over climate goals. In a finding that challenges conventional assumptions about energy independence, Wood Mackenzie’s Energy Transition Outlook 2026-27 reveals that countries pursuing energy security above all else could produce lower warming outcomes than the central base case, not through climate policy, but as an inadvertent by-product of faster electrification driven by import reduction. Electricity is the most efficient way of meeting energy needs as it reduces conversion losses from fossil fuel combustion.

The report for the first time analyses five divergent pathways, introducing two new scenarios, Energy Security (2.5°C) and Growth First (3°C), as well as Country Pledges (2°C) and Net Zero 2050 (1.5°C), all modelled around the Base Case (2.6°C), Wood Mackenzie’s assessment of the most likely outcome for the energy world.

As geopolitical risk and economic self-interest have moved to the centre of energy decision-making, the inclusion of the two new scenarios better reflects the state of the market and the shift in the energy transition narrative, said Prakash Sharma, Vice President, Head of Scenarios and Technologies at Wood Mackenzie.

“The energy transition has arrived at a genuine crossroads,” said Sharma. “The world is no longer moving in one direction. Nations are making fundamentally different choices about how to power their economies, and those choices are producing outcomes that confound conventional wisdom.”

Sharma noted that countries cannot simultaneously minimise costs, maximise domestic manufacturing, eliminate supply-chain dependencies, accelerate decarbonisation and limit public spending, adding that this is a time for courage, and countries must accept trade-offs between competing objectives.

“One of our most striking findings this year is that a security-first energy strategy, pursued not out of climate intent but out of necessity, can deliver lower emissions than our central base case. The mechanism is electrification: countries reducing import dependence are building domestic nuclear, geothermal and renewables, and lower emissions would follow longer term.’’

Energy Security Scenario: The Electrification Dividend

The report’s Energy Security scenario models a world in which the 2026 Strait of Hormuz crisis, which halted 15% to 20% of global oil and LNG flows and pushed Brent crude above US$100 per barrel, becomes a structural turning point. Major economies accelerate their shift away from fossil fuel imports, deploying electrification, renewables and nuclear to reduce exposure to supply chain disruption and chokepoint risk. The result is a warming trajectory of 2.5°C by 2100, slightly under the 2.6°C Base Case.

Critically, this improvement does not come from heavy deployment of climate-labelled technologies. Hydrogen and carbon capture both remain lower than the base case in the Energy Security scenario as they are trade-exposed, capital-intensive, and difficult to scale without steady policy support.

“The lower emissions are a structural consequence of which technologies a security-first strategy rewards, not which ones it intends to deploy,” said Sharma. “Countries would be mindful though that energy security comes at a cost because the race for resilience replaces efficiency and globally optimised supply chains.”

By contrast, the Growth First scenario, in which countries prioritise economic expansion above all else to meet growing demand for electricity and artificial intelligence, produces warming above 3°C, as existing fossil fuel assets are extended, thermal plant retirements are delayed, and renewables fail to displace fossil fuels at scale.

Fossil Fuels: Shocked, Not Shaken

Despite the geopolitical shock of the Hormuz crisis, fossil fuel demand has proved resilient. Global liquids demand rises to a peak of approximately 109 mb/d in 2031 in Wood Mackenzie’s Base Case, staying within 5% of that peak until 2041. In the near term there is no substitute at scale, and price volatility is changing energy policies and investment decisions. Gas outlasts liquids in the Base Case, peaking in 2042, while coal, having peaked in 2024, slides gradually.

Where governments respond to the shock by cutting import dependence, as in the Energy Security scenario, demand diverges more sharply after 2030, falling 8 mb/d below the Base Case by 2040.

The Investment Opportunity

The transition presents a cumulative investment opportunity of US$147 to US$189 trillion to 2060, ranging from the Base Case to Net Zero, with electrification and grid infrastructure requiring roughly half of total capital deployed. Solar, wind and battery capacity are set to surge 60% by 2030 and six times by 2060 in the Base Case. Nuclear is experiencing a global revival, with the United States holding 53% of the unrisked advanced nuclear pipeline, which reached 85 GW in Q3 2026.

Global power demand is on track to double by 2060, driven by electrification, industrial growth, and rapidly expanding data centre capacity, which alone is set to double between 2026 and 2030.

The Climate Scenarios: A Receding Horizon

“The more climate-ambitious pathways, Country Pledges and Net Zero, remain analytically essential as benchmarks,” said Sharma. “But the gap between where the world is heading and where these scenarios require it to go has widened again this year. The policy ambition, capital mobilisation and international cooperation they demand are more difficult to achieve today than at any point in the last decade. The fork in the road is real, and right now, most nations are not intentionally taking the faster transition path, resetting priorities towards economic resilience and security. Yet some of these decisions may in fact play a beneficial role in decarbonisation strategies if policies of self-interest unlock or accelerate new technologies.”