In parallel, energy trade is undergoing a fundamental transition – shifting from fossil fuels to technology. As solar panels, batteries and critical components replace oil and gas tankers, new trade routes and geopolitical dynamics are taking shape. This shift reduces short-term supply risks but increases strategic dependencies on concentrated clean technology supply chains (especially in minerals and manufacturing). The transformation from “tankers to container ships” is radically altering the state of global energy interdependence. These developments mark a clear shift away from one-size-fits-all solutions towards a more strategic and diversified energy mix – balancing dispatchable power (LNG, nuclear, storage), decentralized systems and digital innovation while improving energy security, equity and sustainability. They also signal a departure from a purely globalized energy model – one that’s heavily reliant on cross-border trade for traditional energy resources, centralized infrastructure and concentrated supply chains – towards more localized, resilient and self-sufficient energy systems. Yet, cooperation across borders and sectors remain vital to effective delivery. A broadening narrative As energy systems evolve, the narrative is progressing from idealism to pragmatism: Security, economic drivers and resilience are now as influential as sustainability in shaping decisions, as energy systems are now expected to deliver not just clean power, but also reliability, affordability and strategic value. Governments and businesses are now focusing on: –Securing energy supply chains: Governments are moving to reduce or diversify import dependencies, boost domestic production and tighten control over critical materials like lithium, cobalt and rare earths (e.g. China controls 70% of global rare earth extraction and 90% of processing).85 –Delivering economic value: Energy projects are now judged on industrial impact, job creation and competitiveness, as well as on emissions impact – e.g. US’s IRA spurred more than $200 billion in clean energy manufacturing,86 and the EU’s Clean Industrial Deal was presented as a strategy for EU competitiveness and decarbonization. –Digitalizing for decentralization: AI, smart grids and blockchain are facilitating more localized and efficient power systems, especially in emerging markets. Global investment in digital grid technologies alone reached $81 billion in 2024,87 highlighting the rising importance of digital and cyber resilience. As global trade dynamics change, energy systems are moving away from heavily globalized supply chains towards more localized and decentralized models. The WTO forecasts that world merchandise trade will contract by 0.2% in 2025 – a three percentage point reversal from earlier expectations – due to rising tariffs and trade uncertainty.88 This trend reflects the broader “peak trade” phenomenon, where protectionist policies and national resilience strategies are replacing hyper-globalization. Energy supply chains are increasingly viewed through a national security lens, prompting countries to tighten control from extraction to manufacturing and reduce reliance on single markets. Policies such as the US’s IRA, the EU’s Critical Raw Materials Act and China’s dominance in battery and solar supply chains underscore the geopolitical dimensions of energy security. Countries are securing access to critical minerals like lithium and cobalt, while producers increasingly pursue local beneficiation to capture more value. At the same time, digitalization is transforming energy markets. AI, blockchain and smart grids are enabling more localized and efficient energy distribution, reducing reliance on centralized power structures. Off-grid solar systems and microgrids expanded access for more than 560 million people worldwide in 2023,89 especially in emerging markets, further strengthening decentralized energy resilience. As this narrative broadens, national energy strategies are diverging. Countries are adapting based on their geopolitical positions, economic realities, resource endowments and technological strengths. Some prioritize energy security and selective decarbonization, while others push aggressively towards renewables and full electrification (Box 9). As chapters 2 and 3 have illustrated, this divergence has created a fragmented global energy landscape. The transformation of energy systems is no longer linear or uniform, but deeply contextual – reinforcing the need for a differentiated, tailored approach to energy transition. In this context, managing a multi-speed, multidimensional energy transition becomes essential to ensuring no region is left behind. Energy systems are moving away from heavily globalized supply chains towards more localized and decentralized models. Fostering Effective Energy Transition 2025 42