Financing focus areas for the energy transition TABLE 17 Strategic benefits of the energy transition TABLE 18 Source: World Economic Forum.To accelerate progress, policy-makers and market actors must work in concert to de-risk investment, strengthen market signals and ensure that clean energy technologies can compete on a level playing field. A well-calibrated mix of policies, pricing mechanisms and private capital will be essential to shift from a transition fuelled by ambition to one driven by economic momentum. Only then can the full potential of energy systems be realized and scalable, secure and sustainable outcomes be delivered in a world of growing complexity.Energy transformation as an economic opportunity Unlocking the full potential of energy systems will require more than a navigation of policy and market friction – it will require a repositioning of the transformation itself as a strategic lever for economic growth. What has long been seen as a climate obligation must now be reframed as an engine of job creation, innovation and competitiveness. Governments, businesses and financial institutions need to recognize that decarbonization is not just an environmental necessity but a pathway to long- term economic competitiveness (Table 18).Focus area Old paradigm New paradigm Implications Policy signals and alignmentFragmented (voluntary) ambitions and weak delivery frameworks disconnected from market needsMarket-responsive policy design: aligning climate and other energy transition ambitions with investor needs and delivery constraintsMisalignment creating uncertainty and slowing deployment; adaptive (yet stable and market-informed) policy and accountability mechanisms growing increasingly essential Investment drivers and capital mobilizationMix of public, concessional and private capital, with reliance on subsidies in many early-stage or unproven technologiesMobilizing private capital through market signals and commercial viability: with public finance used strategically to de-risk and scale investment in harder markets or technologiesInvestment model increasingly shifting towards blended finance structures that emphasize co-investment, local market depth and scaled commercial deployment Financial conditions and expectationsFavourable interest rates117 and low-cost capital enabling impact- first investments with lower return thresholdsBankability-focused capital strategy: navigating higher interest rates118 and fiscal constraints in a competing environment by demonstrating stronger returns and financial resilienceReturn on investment (ROI)-focused investors and rising interest rates shifting focus to bankability; the need for clean energy to stand out against competing investment priorities, offer strong returns and manage risk in a tougher financial climate Benefit area Strategic value Job creation and economic growthThe transition can drive job creation across the energy value chain, from renewables and grid modernization to hydrogen and advanced energy storage. The IEA’s Net Zero Emissions by 2050 Scenario anticipates the creation of 14 million new clean energy jobs by 2030, and projects that an additional 16 million workers will transition to roles related to clean energy.119 Industrial competitivenessClean energy and energy efficiency can lower operational costs, enhance energy security and create new high-value industries, ensuring competitiveness in global markets. Resilient energy systemsSecure, affordable and sustainable energy is a foundation for economic stability, reducing exposure to fossil fuel volatility and geopolitical risks. Technology leadershipCountries that invest in energy innovation and infrastructure today will be well positioned to dominate the energy markets of tomorrow. Environmental co-benefitsEmissions reduction improves public health, lowers healthcare costs and increases workforce productivity – while building resilience against climate-related shocks.Source: World Economic Forum. Fostering Effective Energy Transition 2025 48