An energy reset is happening around the world

The global climate summit COP30 that took place in Brazil in November fell short of expectations. It is not that the world is not concerned about climate change or that energy transition is not progressing, but more the outcome of the emerging global energy reset.

The world is undergoing a shift from purely climate-focused policies to a more ‘pragmatic’ approach that prioritises reliable, affordable, and secure energy. It acknowledges continued dependence on fossil fuels while integrating renewables and nuclear power, recognising that energy access is crucial for development and stability, setting-up climate goals based on practical realities rather than extreme predictions. This is what has now become known as ‘Energy Pragmatism’.

This was clear from the updated ‘nationally determined contributions’ (NDCs) and adaptation plans to 2035, submitted by countries on the run-up to COP30. Based on these, the world remains on track for 2.3-2.5°C of warming by 2100.

For the first time there was an acknowledgement at COP30 that there is likely to be an ‘overshoot’ of the Paris Agreement 1.5°C goal set 10 years ago.

A substantial gap exists between pledges and reality, as countries strive to deliver affordable energy at home, to meet demand and avoid energy crises. Their primary concerns are reliable energy supply and low costs. They are no longer pursuing emissions reductions at any cost – if they actually ever did.

Honest debate

Writing in the Financial Times end October, Greek Prime Minister Kyriacos Mitsotakis hit the nail on the head when he said “EU’s Green Deal is at a crossroads. High energy prices leave little room to burden our economies with additional costs.” He added that EU’s energy transition must reinforce a broader strategic framework of where Europe wants to be in the world. “For too long we behaved as if the energy transition is a morality game.” In doing so, the system and its effects on the public and on Europe’s competitiveness have become politically untenable. “It is time to make our exit from this.”

Mitsotakis forcefully made the point that the green transition cannot be an end in itself. “For many years, Europe elevated decarbonisation above everything else. Other goals – employment, industrial production, strategic autonomy – lost when they went up against decarbonisation. We cannot afford to stay on this path.”

He argued that: “Decarbonisation is vital but it is not the only objective. If we must accept some emissions for a bit longer to save our industries or to maintain social cohesion, so be it. We must have these debates honestly. We cannot begin with climate neutrality and hope everything else falls into place.”

Europe appears to be heeding this advice. Following a watering down of its 2040 emission targets, and in response to a backlash against environmental regulation, it has started rolling back environment laws –including corporate sustainability laws – to boost competitiveness.

In 2025 the EU went from the Green Deal to realism. And it is not just in response to Trump. The rising costs of the green transition affected the European economy and forced EU’s leadership to reconcile its climate ambitions with prioritising the competitiveness of its industry.

In a recent interview RWE’s CEO, Markus Krebber, outlined a clear message: “The energy transition is necessary but expensive, it requires realism and long-term planning. And during that the industry must remain sustainable without threatening its competitiveness in the global market.” He said: “if we push too hard, people will vote for parties that none of us want – and then we won’t even achieve the targets.”

JPMorgan CEO Jamie Dimon says Europe has a ‘real problem’: “They’ve driven business out, they’ve driven investment out, they’ve driven innovation out.” He is proving to be right.

Realistic climate policies

The EU is not the only one scaling back its climate policies. A global energy reset is happening around the world. It is not a case of abandoning energy transition, but more a case of balancing it with harsh realities.

China is pursuing this balance, by following President Xi Jinping’s advice that it should “establish the new before destroying the old”. Despite developing low-carbon technology faster than anybody else, it is not abandoning fossil fuels. This policy was clearly articulated at COP30 by Liu Zhenmin, China’s climate envoy, who said: “Some nations propose roadmaps solely focused on ‘fossil-fuel phase out’ without concurrently considering renewable energy development. This approach is unfeasible and would severely undermine national energy security, economic growth and social stability.”

Even Canadian Prime Minister Mark Carney who 10 years ago, while governor of the Bank of England, popularised the phrase ‘stranded-assets’, this year fast-tracked approval of a new LNG export terminal, promising to “transform our country into an energy superpower”. He has also rolled back some of Canada’s climate policies and promoted new fossil fuel projects to boost investment.

What has been unfolding globally is not so much an ‘energy transition’ as an ‘energy-addition’.

Climate change will not go away and “decarbonising the economy makes good sense.” But climate policies must be realistic and resilient, enhancing energy security and affordability, leading to improvements in living standards, especially in the developing world.

Energy reset

While accelerating energy transition remains important, global energy demand is rising faster than renewable energy. In 2024 total energy grew by 11.9 Exajoules, while renewables grew by 2.8 Exajoules, and provided 5.5 per cent of the total. Most of the difference was provided by fossil fuels. In addition, total energy growth has been increasing year-on-year. It was 9.2 Exajoules in 2023 and 7.8 Exajoules in 2022, confirming that the world is in an ‘energy-addition’ mode. The gap between total energy and renewables growth has in fact been widening.

Often when people talk about energy, they actually mean electricity, where renewables are doing better. But energy transition involves total energy. Based on the above figures there is a long way to go before renewables growth can close the gap. And while that is happening, there is a need for an energy reset.

Michael Liebreich, senior contributor of BloombergNEF, put it quite succinctly: “The climate and clean energy community is facing a choice. It can remain reactive, doubling down on old narratives, pressing on with existing policies, preaching to the converted. Or it can undertake a pragmatic reset: Wind back historical over-reach, accept harsh realities, address legitimate concerns, refresh its offer and find new ways of communicating with a confused public.” And it should stop trying to make them feel guilty, using implausible scenarios to scare them. People resist paying high costs now for future benefits. Their economic priorities are short term.

What is happening now is a pragmatic reset of climate policies, climate targets and energy priorities. Energy transition has barely started. It will be a long process.