Energy transition and resilience – one of the five mega forces that we track – is seeing energy systems reshaped by growing demand, tech change, physical climate risks and evolving policy priorities.
On this page you can learn more about our framework for tracking the transition and explore our recent research. Click the button below to read our latest report taking stock of developments over the last year.
The energy transition is set to spur a massive reallocation of capital as energy systems are rewired. We see the transition’s speed and shape driven by an interplay of policy, technology, and consumer and investor preferences.
The transition is unfolding at different speeds across countries and sectors, in our view. Election outcomes in recent years have triggered shifts in energy, industrial and trade policies, while heightened geopolitical risks are making energy security a greater priority. We are closely watching how those policies intersect with rapid technological change to alter the transition path and investment opportunities from here. The opportunity is not in broad energy but exposures to secure supply, infrastructure and power-system bottlenecks across public and private markets. We evolve our mega force to “energy transition and resilience” to reflect this.
We believe the is one of several mega forces driving a global economic transformation, reminiscent of past technological revolutions. The energy system sits at the cross currents of many of these mega forces – like the AI buildout and its big energy needs and geopolitical fragmentation that’s leading to strategic competition in the energy technology and critical commodities.
Our latest report looks at how this collision of mega forces is shaping the low-carbon transition and changing the investment landscape.
Illustration of how energy sits at the crosscurrents
For illustrative purposes only. Source: BlackRock Investment Institute, December 2024. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any funds, strategy or security in particular.
We have developed the BlackRock Investment Institute Transition Scenario (BIITS) to inform an assessment, on behalf of clients, of how the transition is most likely to play out based on what we know and expect today – and the potential portfolio impact. We aim to track its evolution over time, similar to how we plan to track other mega forces.
We expect tipping points when the relative costs of new technology fall below those of incumbent sources and when barriers to adoption are low. These tipping points arrive at different times across regions and sectors, resulting in an uneven and multispeed transition, in our view. See our original 2023 paper laying out our framework (for professional investors only).
Emerging markets are pivotal to the global transition to a low-carbon economy but face a shortfall in investment relative to developed economies. Reforms to plug that shortfall could present both opportunities and risks for investors, in our view. See our 2023 paper on financing the transition (for professional investors only).
We see opportunities as investors pay more attention to climate resilience as an investment theme. Climate resilience refers to the ability to prepare for, adapt to and withstand climate hazards and to rebuild better after climate-related damages. See our 2023 paper on the opportunities and risks in climate resilience.
We expect inflationary pressures in coming years as higher energy prices combine with increasing capital spending — though this effect may dissipate over time as clean technology costs decline.
We see the growth impact dominated by physical climate damages – and expect this to bolster climate resilience to those damages as a key investment theme. The impact on portfolios depends not only on the timing and size of these shifts but also when markets price them in.
We see opportunities across the energy system to get in front of shifts before markets. The BIITS offers investors a compass to help navigate the transition’s risks and opportunities. It’s our clients’ choice whether to use it in their investment processes. We recognize views on the transition differ.