Fractured Energy Transition: Who Moves First, Who Pays More, and Who Gets Left Behind?

The global energy transition is no longer constrained by a lack of technology or ambition. Its defining challenge is coordination across borders, markets, and institutions that were never designed to move at the same speed. As policies diverge and capital concentrates, the risk is not that decarbonization slows everywhere, but that it accelerates unevenly.

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In 2025, the global energy transition looked increasingly fractured.

In Brussels, a German steel producer filed its first Carbon Border Adjustment Mechanism (CBAM) report. In Houston, a refinery manager checked updated  Inland Revenue Service (IRS) rules to confirm if a key hydrogen tax credit still applied. Meanwhile, in Lagos, an engineer evaluated a solar microgrid, its success hinging less on technology than on securing a distant multilateral guarantee. These moments highlight a shift from a unified push to net zero to a fragmented race shaped by borders, capital, and inequality.

As 2026 begins, divergence increasingly defines the path to carbon neutrality. Two 2025 reports by the World Economic Forum do more than confirm this divergence. They map it.

Policy Fault Lines: Winners and Laggards

Europe: Enforcement with intent

The European Union is no longer nudging industry toward decarbonization. It is enforcing it. Its Carbon Border Adjustment Mechanism (CBAM), once an academic concept, is now operational. Imports of steel, cement, aluminum, fertilizers, and electricity are being priced according to their embedded emissions.

This is often described as punishment. In practice, the policy is more complex. Revenues are being channelled into the EU’s Just Transition mechanisms, with particular focus on retention and industrial reinvention in Eastern Europe’s coal-dependent regions. The challenge, however, lies beyond Europe’s borders, where compliance capacity is uneven, and administrative barriers can be as decisive as carbon itself.

China: Building at scale

While Western economies debate alignment, China continues to build.

In the first half of 2025 alone, it added 290 GW of solar and wind capacity roughly the size of Germany’s entire power base, demonstrating scaled deployment amid Western policy debates. It currently has more than half of the world’s nuclear reactors under construction  and last year accounted for over half of global electric vehicle sales.

China’s climate strategy is not framed as environmental idealism. It is industrial policy, executed at scale. Through the Belt and Road Initiative, this model is now being exported via solar parks, grid infrastructure, and green hydrogen corridors from Central Asia to North Africa. The approach is pragmatic, centralized, and unapologetically strategic.

United States: The rollercoaster republic

The US remains the energy transition’s most productive contradiction. In 2025, implementation of the Inflation Reduction Act slowed under the new Trump administration. Clean hydrogen tax credits became entangled in evolving IRS interpretations. Several Department of Energy loan guarantees for industrial decarbonization were delayed, not due to technical shortcomings but institutional caution. Yet private capital continued to flow.

Despite shifting federal policy signals, US corporations contracted at least 20.4 GW of wind and solar power through Power Purchase Agreements (PPAs) in 2025, keeping the market on pace for a record-setting year.

The US energy transition is becoming less a function of coordinated public policy and more the product of private, deal-led momentum agile in execution, yet vulnerable to political shifts.

Beyond the Big Players

Across Africa, the clean energy transition is less about climate symbolism and more about sovereignty, reliability, and system resilience. In Kenya, drought-resistant, price-stable geothermal now supplies 38% of electricity, insulating the grid from fossil volatility. And in Nigeria’s villages, solar microgrids buzz to life, powering clinics through blackouts and shielding factories from fuel price spikes leapfrogging crumbling grids for resilience that’s as much about survival as it is about sustainability.

In parts of the Nordic region, district heating systems now run on excess heat from data centers, while carbon-neutral cement is transported by electric ferries. These are no longer pilot projects but standard practice. Having largely moved past debates over basic trade-offs, Nordic countries dominate the top ranks of the 2025 Energy Transition Index.

In the Middle East, the United Arab Emirates’ Masdar targets green ammonia exports to Rotterdam but grapples with cost overruns and certification delays, while Saudi NEOM’s AI microgrids battle sandstorm degradation and grid bottlenecks highlighting execution risks in Gulf clean energy ambitions

Hidden Costs

Divergence can look like momentum until its consequences surface.

Carbon leakage and administrative barriers

CBAM is effective in principle. In practice, it risks excluding producers who are low-carbon but under-resourced.

Consider a Kenyan steel recycler exporting scrap-based steel with emissions roughly half the global average. Without certified methodologies or accredited auditors often costing tens of thousands of euros, their product faces the same carbon treatment as coal-based production elsewhere. This raises an uncomfortable question: when does climate policy become an administrative barrier rather than an environmental one?

The capital divide

The energy transition is financed, not merely engineered. This disparity is often attributed to “risk.” But risk is not neutral, but rather shaped by currency exposure, policy credibility, and institutional design. Clean energy thrives in credit-strong zones, stalling elsewhere and entrenching inequality.

Stitching the Map Back Together

A fragmented transition does not have to remain fragmented, but reintegration will not happen by accident.

Effective climate finance reduces structural barriers instead of transferring risk downstream.

Zambia’s solar scaling program, launched with World Bank and International Finance Corporation support, pioneered a “one-stop-shop” approach: standardized contracts, pre-approved sites, and co-invested guarantees that attracted global developers and delivered some of sub-Saharan Africa’s lowest solar tariffs. Similarly, India’s Green Term-Ahead Market has improved grid flexibility by allowing renewable power to be traded in short intervals, increasing price transparency and investor confidence.

These approaches share a common principle: de-risk the system, not just the project. When finance adapts to local realities, capital flows become stabilizing rather than extractive.

Demand as the New Coordinating Force

Voluntary pledges are necessary but insufficient. The real leverage lies in converting demand-side ambition into enforceable contractual terms.

The African Union’s 2025 African Green Minerals Strategy exemplifies this shift. It links access to critical minerals such as cobalt, manganese, and graphite to domestic processing and value addition. Rather than imposing blanket export bans, the strategy outlines national beneficiation pathways.

These measures do not isolate markets, they restructure terms of entry.

Building With Imperfect Tools

The global energy transition is no longer constrained by a lack of technology or ambition. Its defining challenge is coordination across borders, markets, and institutions that were never designed to move at the same speed.

As policies diverge and capital concentrates, the risk is not that decarbonization slows everywhere, but that it accelerates unevenly. In such a world, clean energy becomes cheaper and more secure in some regions, while remaining scarce and expensive in others, locking in new forms of inequality under the banner of climate action.

The outcome will be shaped less by summit declarations than by decisions embedded in contracts, financing structures, and technical standards. These choices, often invisible and rarely debated, determine who can participate in the transition and on what terms.

Whether the energy transition ultimately narrows global divides or deepens them will depend on how deliberately these systems are aligned. That question is already being answered, quietly and incrementally, in boardrooms, ministries, and project sites around the world.

Featured image: Joan Sullivan / Climate Visuals Countdown.