Energy industry megatrends: navigating the next decade

January 2026  |  MARKET PULSE | SECTOR ANALYSIS

Financier Worldwide Magazine

January 2026 Issue

The energy industry is experiencing a period of steady change, influenced by a combination of global trends including rising demand, environmental concerns and advances in technology. While the pace and direction of this transformation vary across regions and sectors, several long-term developments are shaping how energy is generated, distributed and consumed. These evolving dynamics are also affecting policy decisions, investment priorities and the broader role of energy in economic and geopolitical contexts.

Electrification and surging global demand

Global energy demand continues to rise, driven by economic growth in emerging markets and the electrification of transport, industry and buildings. According to McKinsey’s Global Energy Perspective 2025, electricity demand is expected to grow significantly, with data centres and AI infrastructure emerging as major contributors. The International Energy Agency (IEA) reports that electricity demand grew by 4.3 percent in 2024 – outpacing both GDP and overall energy demand.

This surge is particularly pronounced in regions such as the US, India, ASEAN and Africa, where access to energy is expanding rapidly. However, the pace of improvement in energy efficiency remains suboptimal. BP’s Energy Outlook 2025 notes that energy efficiency gains have slowed to just 1.5 percent annually between 2019 and 2024, compared to nearly 2 percent in the previous decade.

Decarbonisation and the energy transition

The transition to low-carbon energy systems is accelerating in certain regions, but remains uneven. McKinsey’s scenarios suggest that fossil fuels will retain a significant share of the energy mix beyond 2050, particularly in the “slow evolution” and “continued momentum” pathways. Natural gas is projected to grow as a transitional fuel, while coal use may persist in heavy industry across Asia.

Renewables, however, are expanding rapidly. The IEA’s Renewables 2025 report forecasts that global renewable capacity additions between 2025 and 2030 will total 4600GW – double the deployment of the previous five years. Solar photovoltaic leads the charge, with China accounting for over half of the growth in wind and solar generation since 2019.

Despite this momentum, deployment is constrained by supply chain bottlenecks, permitting delays and rising equipment costs. Offshore wind, for example, faces project cancellations and undersubscribed auctions in Europe and Japan due to inflation and regulatory uncertainty.

According to Clint Vince, a partner at Dentons, the US is navigating a sea change in energy and environmental policy, shifting away from decarbonisation and climate priorities toward an ‘energy dominance’ policy doctrine. “The administration is emphasising maximum domestic production, expansion of drilling, reduced regulation and elimination of subsidies for renewable energy sources, all with the stated aim of reducing domestic consumer prices while boosting global influence,” he says. “This has been positive for hydrocarbons and nuclear, but difficult for proponents of wind, solar, hydrogen and energy efficiency.

“The overwhelming challenge for energy companies, regulators, policymakers and consumers is the massive increase in energy demand driven primarily by data centres and electrification,” he continues. “Policymakers are balancing the urgent need for grid infrastructure modernisation and regulatory reform with concerns about reliability, affordability, resource adequacy and resilience, complicated by sharply differing policies among states. Businesses now must be agile not only in navigating differing policies across international jurisdictions, but also increasingly from one US state to another.”

Technology and innovation: the digital energy frontier

Technological innovation is reshaping the energy sector. Artificial intelligence (AI), internet of things and cloud computing are being deployed to optimise grid operations, forecast demand and enhance customer experience. According to the World Economic Forum, big tech’s rising energy demand is driving a spike in long-term renewable power purchase agreements, particularly in the US.

Digitalisation is also improving operational efficiency. Oil majors are using AI-driven reservoir modelling and precision imaging to reduce exploration costs and reallocate capital toward more agile assets. Electric pumps in hydraulic fracturing are boosting productivity, while modified gas turbines are delivering nearly 20 percent output gains.

Battery storage is another critical enabler. The US alone added 18.2GW of battery capacity in 2024, helping to stabilise intermittent renewables and support grid resilience. However, the race is on to develop alternatives to lithium-ion technology, which faces limitations in long-duration applications and supply chain risks.

Hydrogen and low-carbon fuels: scaling the future

Hydrogen is gaining traction as a clean energy carrier, particularly in hard-to-abate sectors such as steel, aviation and shipping. The IEA reports that global hydrogen demand reached 97 million tonnes in 2023, but low-emissions hydrogen still accounts for less than 1 percent of supply.

Projects such as Sweden’s Liquid Wind e-methanol plant and US hydrogen hubs are pioneering scalable models, though cost and infrastructure barriers remain. According to McKinsey, clean hydrogen could contribute more than 20 percent of annual global emissions reductions by 2050.

The US Department of Energy’s (DOE’s) Hydrogen Strategy outlines plans to accelerate research and deployment, with a focus on electrolysis, carbon capture and biomass gasification. However, significant investment and policy support are needed to make hydrogen cost-competitive at scale. At the moment, investment in hydrogen in the US is stalled as the second Trump administration refocuses on more traditional energy sources. 

“In addition to emphasising hydrocarbon production, the current administration is focused on enabling infrastructure for electricity and AI deployment by pursuing regulatory reform across all fuel sources,” suggests Jennifer Morrissey, counsel at Dentons. “This includes improving permitting and siting processes for transmission projects, accelerating interconnection timelines for gas and electricity initiatives, and streamlining litigation and regulatory approval procedures. These efforts should be positive for companies – however, this is occurring across a backdrop of uncertain tariffs, including on critical minerals needed to advance projects supported by these reforms, and supply chain issues.

“Energy federalism and comity among the states has been disrupted,” she continues. “The judiciary is assuming decision making that previously was in the province of administrative agencies, with outcomes less predictable as longstanding legal paradigms are challenged. Businesses must employ creative new strategies to address risk in a climate where regulators and customers simultaneously applaud and fear innovation and worry about its related costs. Meanwhile, companies are also impacted by globalisation that has evolved into more balkanised, geopolitical and regional settings, with new blocs forming and old alliances shifting.”

Geopolitical realignment and energy security

Geopolitical tensions are reshaping energy strategies. Conflicts in Ukraine and the Middle East, trade sanctions and resource nationalism are disrupting supply chains and investment flows. BP notes that countries are increasingly prioritising energy sovereignty and domestic production.

Europe’s retreat from Russian pipeline gas has accelerated liquefied natural gas (LNG) demand, while Asia is ramping up coal use amid economic adjustments. The US and Middle East are expanding LNG export infrastructure, with long-term contracts serving geopolitical as well as commercial ends.

OPEC+ remains a major force, but its influence is constrained by internal divisions and rising competition from non-OPEC producers. Production targets are being used to signal control rather than flood markets, with idle reserves providing strategic flexibility.

ESG integration and climate risk

Environmental, social and governance (ESG) factors remain relevant in energy investment, but the landscape is increasingly fragmented and politicised. In the US, the second Trump administration has rolled back climate disclosure rules, exited the Paris Agreement and cut funding for clean energy. The Securities and Exchange Commission (SEC) has stopped defending its climate disclosure rule, leaving it in legal uncertainty.

As a result, many firms have recalibrated their ESG strategies. A Conference Board report found that 80 percent of large US and multinational companies adjusted their approaches in 2025 – often rebranding sustainability, increasing legal oversight and focusing on business value over public commitments. Only 8 percent intensified ESG efforts.

Investor expectations persist, with institutional investors still demanding transparency on climate risk and governance. However, new SEC rules have weakened shareholder influence over ESG-related proposals.

In contrast, ESG regulation continues to evolve in Europe and parts of Asia. The European Commission (EC) has delayed and narrowed Corporate Sustainability Reporting Directive (CSRD) requirements for non-EU firms, while California advances state-level climate disclosure laws affecting thousands of energy companies.

Social equity remains part of ESG, though politicised. US federal diversity, equity and inclusion (DEI) programmes have been dismantled, yet global forums still frame energy access as a human right. In response, energy firms are shifting to targeted, data-driven sustainability strategies focused on measurable outcomes and risk management.

Investment trends and policy volatility

Investment in clean energy is surging, but remains uneven. The IEA estimates that global clean energy investment will reach $2.2 trillion in 2025, up 70 percent since 2000. However, financing costs remain a barrier in emerging economies.

Policy volatility is creating uncertainty. In the US, recent executive orders have rolled back federal climate initiatives, suspended offshore wind leasing and redirected resources toward fossil fuel infrastructure. Meanwhile, the EU is extending its gas storage regulation and launching the Clean Industrial Deal to accelerate decarbonisation.

COP30, which took place in the Amazon in November 2025, is expected to increase pressure on energy companies to announce ambitious sustainability pledges. Brazil’s dual role as a major oil producer and climate leader highlights the tensions between national interests and global commitments.

In the US, Biden-era legislation and policies have been rolled back and replaced by the current administration’s One Big Beautiful Bill Act, notes Dena Sholk, a law clerk at Dentons. “The Act terminates most renewable tax credits within a year and cancels certain funding for hydrogen projects and other clean technologies, and renews focus on oil and gas and other hydrocarbons,” she says. “Environmental regulations are also facing aggressive reform. The US has withdrawn from the Paris Accord and the Environmental Protection Agency is considering a major revision to, or reversal of, the endangerment finding, which would invariably upend numerous environmental regulations and lead to significant litigation over agency rulemaking.

“Meanwhile, DOE has directed an initiative to accelerate the permitting and interconnection of new, large-load facilities, including data centres and industrial operations, to speed deployment of AI technologies. States are taking a more proactive approach toward regulating the energy value chain, resulting in new opportunities and challenges for companies as they invest and grow in a patchwork system.”

Emerging themes: circularity, AI and resilience

A growing area of focus is the intersection between energy and AI. As AI models become more complex and energy-intensive, the sector is under pressure to deliver low-carbon electricity at scale. Data centres alone are projected to consume up to 8 percent of global electricity by 2030, according to a recent analysis by the World Bank. This has prompted a surge in interest in co-locating AI infrastructure with renewable energy sources, particularly in regions with abundant solar or hydroelectric capacity.

In parallel, the circular economy is gaining traction in energy planning. Companies are exploring ways to repurpose retired wind turbine blades, recycle solar panels and recover critical minerals from used batteries. The EC’s Circular Economy Action Plan has catalysed investment in clean tech recycling hubs, with pilot projects underway in Germany, Finland and the Netherlands. These efforts aim to reduce resource dependency and improve the lifecycle sustainability of energy technologies.

Another emerging trend is the rise of energy communities and prosumer models. Enabled by digital platforms and smart metering, households and small businesses are increasingly generating, storing and trading electricity locally. In the UK, Ofgem’s sandbox initiatives have supported trials of peer-to-peer energy trading, while similar schemes in Australia and Japan are demonstrating the viability of decentralised energy markets. These models not only enhance grid resilience but also empower consumers to participate directly in the energy transition.

Finally, climate adaptation is becoming a strategic priority for energy infrastructure. Extreme weather events – from wildfires to floods – are placing unprecedented stress on grids, pipelines and generation assets. Utilities are investing in climate-resilient design, including elevated substations, underground cabling and predictive maintenance systems. A recent report by Wood Mackenzie warns that without proactive adaptation, climate-related disruptions could cost the global energy sector over £300bn annually by 2035.

A decade of complexity and opportunity

The energy industry is entering a decade of complexity, marked by competing priorities – affordability, reliability and sustainability. While the transition to low-carbon systems is underway, it is shaped by regional disparities, technological hurdles and policy fragmentation.

Success will depend on the ability of stakeholders to navigate this dynamic landscape with agility, innovation and strategic foresight. There is no silver bullet for decarbonisation, but there is still considerable opportunity to act now and accelerate progress.

CONTRIBUTORS:

Clint Vince is a partner at Dentons. He can be contacted on +1 (202) 408 8004 or by email: clinton.vince@dentons.com.

Jennifer Morrissey is counsel at Dentons. She can be contacted on +1 (202) 408 9112 or by email: jennifer.morrissey@dentons.com.

Dena Sholk is a law clerk at Dentons. She can be contacted on +1 (202) 496 7657 or by email: dena.sholk@dentons.com.

© Financier Worldwide

WITH

Clint Vince, Jennifer Morrissey and Dena Sholk

Dentons