At a time when geopolitical uncertainty and economic fragility dominate headlines, in certain quarters, energy transition is being talked about as an expensive luxury.
UBS argues in a new research note that the case for transitioning away from fossil fuels is stronger than ever, calling it “a structural imperative” rather than a discretionary pursuit.
In a sprawling deep dive, the bank’s global sustainability team sets out why recent global shocks, from supply chain disruptions to political flip-flopping on climate policy, have failed to dent the fundamental case for the shift to cleaner, more secure energy systems.
Electrification remains central
While some investors are asking whether the energy transition is “over,” UBS insists that energy security, soaring electricity demand from technologies such as artificial intelligence, and infrastructure resilience all point in the opposite direction.
This is not just a climate story. The transition is increasingly about economics and national security. The marginal cost of renewable power, once the capital investment is made, is close to zero, and many governments are looking to reduce reliance on imported fossil fuels.
Replacing those fuels with domestic solar, wind and electrified transport is becoming a matter of strategic self-interest.
Weaning off fossil fuels
According to research cited by UBS, replacing imported oil, gas and coal with electric vehicles, heat pumps and renewables could slash global fossil fuel imports by 70%, saving about $1.3 trillion a year.
Despite macroeconomic noise, electricity demand is climbing. UBS notes global power use rose 4% in 2024, the third-largest annual jump on record.
Interestingly, this growth appears to be decoupling from economic output, with advanced economies seeing electricity use driven more by electrification trends (think data centres, electric vehicles and heat pumps) than by GDP alone.
Europe remains a key focus. Energy prices are still two to four times higher than those in the US and remain volatile due to a mix of regulatory constraints, patchy infrastructure and market design issues.
Grid flexibility
Constraint costs (where parts of the grid can’t move energy to where it's needed - now cost UK consumers £1 billion a year in curtailed wind output alone.
UBS suggests that grid investment and flexibility measures like storage and demand-response systems are now unavoidable if the transition is to stay on track.
The message is clear: investors may squabble over timelines or technology winners, but the direction of travel is not in doubt. The transition is happening - because it has to.