Rystad Energy’s fifth edition of its flagship annual report, Global Energy Scenarios (GES) 2026, finds that global reliance on imported energy is projected to peak by 2034 as energy security concerns accelerate the shift towards electrification. Against the backdrop of two major energy crises in five years, the report highlights how a broader range of rapidly deployable technologies is helping the energy system withstand major disruptions to energy flows. It explores how energy import dependency could evolve under three possible future scenarios, each reflecting a different pace of change.
Russia’s war in Ukraine and the US-Israeli war with Iran, which has severely affected flows through the Strait of Hormuz, are among the most severe tests of the energy system since the oil crises of the 1970s. Both had long been considered major risks, but they played out differently than anticipated.
Governments protect consumers first, then turn to structural change
Since February 2026, nearly 100 countries have cut fuel taxes, paid subsidies or capped prices to shield consumers, 60 have introduced demand-reduction measures and 34 have pursued structural changes. Of those, 26 adopted electrification policies, 22 of them in Europe and Asia. Energy security is making electrification more politically durable, including in countries such as Italy and Japan that had placed relatively less emphasis on sustainability. Most countries are electrifying with domestic energy: renewables and nuclear where available, and coal where reserves exist. Little new coal capacity is being built, but plant life extensions, restarts and delayed phaseouts, including Italy to 2038 and Thailand’s Mae Moh, add years of emissions.
“The system has absorbed the current crisis remarkably well so far, much of it through capacity built after the previous shock. Decades of investment, innovation and diversification created this optionality and, with ample buffers at the onset of the crisis, this has bought the system valuable time. How much remains depends on how long the Strait of Hormuz stays constricted and how fast new options can materialize. The longer the conflict lasts, the harder it will affect interlinked systems like food, logistics and manufacturing, “said Jarand Rystad, founder and executive chairman of Rystad Energy.
Pragmatism: a new reference pathway to 2050
The report introduces Pragmatism as a new reference scenario to 2050. It assumes a gradual strengthening of current policies, with affordability, energy security and technology costs setting the pace. It reflects a shift away from a transition driven mainly by stringent climate policy toward one that balances reliable, affordable and clean energy. Climate first, which assumes rapid and coordinated global action, and Fossil first, which assumes weaker policy support and slower clean-technology progress, bracket the range.
Under Pragmatism, primary energy demand reaches 702 exajoules (EJ) by 2050, equivalent to adding another India to global energy demand in less than 25 years. Liquids demand declines about 2.2% per year to 102 million bpd in 2026, and gas demand about 0.9% per year to 4,150 billion cubic meters. Oil and gas trade grows into the mid-2030s and stays above today’s level until 2043. Middle East exports hold near current levels through 2050, and Europe and Asia still import around 76% and 49% of their gas, respectively. Import dependence among importing countries falls from around 40% today to 26% by 2050 in Pragmatism, compared with 33% in Fossil first and 14% in Climate first.
Each pathway involves trade-offs. Fossil first costs less upfront because it avoids the capital needed for electrification, while Climate first front-loads investment, at an average of $3.8 trillion per year from 2026 to 2050, compared with $2.9 trillion in Pragmatism and $2.3 trillion in Fossil first. For net importers, Climate first capex peaks at $3.1 trillion in 2037 and then falls to $1.1 trillion by 2050, below Fossil first. The cost gap narrows after 2040 as fuel bills fall and clean technologies scale.
Electricity moves to the center of the system
Electricity overtook oil in 2025 as the largest carrier of useful energy for direct fuel use, and its share is projected to rise from around 28% today to 41% by 2050 under Pragmatism. By midcentury, electricity supplies more useful energy than coal, oil and gas combined. Primary energy demand among importers peaks in 2038 at 421 EJ, yet the energy they put to work grows 22% through 2050 because electric end uses lose less energy than combustion. Electricity is now linked to about 47% of global gross domestic product (GDP), up from 38% in 2000, with China’s share up 28 percentage points to 48%.
Artificial intelligence adds a different kind of pressure. It is felt most in local power markets and grids, where data centers outbid existing customers, strain the supply of gas-fired generation equipment and fill order books for gas turbines and fuel cells. In the US, data centers lean largely on gas for the firm power they need first. Nuclear has returned to the agenda, with Asia moving fastest and data centers contracting it directly.
Whichever mix countries choose, the common denominator is electricity. Established technologies continue to get cheaper, while newer ones, from long-duration heat storage to new battery chemistries, approach commercialization.
China’s clean-technology exports grow as importers look beyond oil and gas
The Hormuz crisis is the first major energy shock with a real electric alternative, and Chinese manufacturers are supplying much of it. Chinese battery electric vehicle exports are on track to reach 12% of global car sales outside China in 2026. Between January and July, exports to Europe reached nearly 1 million vehicles, about double the level of the same period in 2025, while exports to South America rose to around half a million from approximately 170,000. Global EV sales reached 33% in the middle of the year as diesel prices hit records across Europe, South America and Southeast Asia. Battery storage is set to grow around 56% this year, ahead of solar at 18%, and electric trucks are on track to reach over 40% of heavy-truck sales in China, four years ahead of its 2030 target.
This also concentrates supply in a few places. China holds 96% of solar wafer capacity, 95% of cathode materials, 91% of rare earth refining, 88% of solar cells and 78% of battery cells, and its smallest share among the segments shown, wind nacelles, is about two-thirds. Importers in Europe and India are replacing oil and gas from the Persian Gulf with Chinese batteries, minerals and EVs, which deepens that dependence. The report notes that several emerging clean-technology supply chains are more concentrated than the current fossil energy system. It frames this as a shift in the nature of risk: energy security moves from a flow of fuels to a stock of assets, and an imported solar panel or battery can produce for decades, while an imported barrel of oil must be replaced tomorrow. How quickly the dependency eases depends on how fast other countries build their own manufacturing capacity, in the way Japanese automakers rose out of the 1970s efficiency drive.
Emissions plateau near 40 gigatonnes, with the pace of decline still open
Global fossil CO₂ emissions are plateauing at around 40 Gt. Under the Pragmatism scenario they fall to about 20 Gt by 2050. Cumulative emissions of 800 Gt from 2026 to 2050 correspond to around 0.35 degrees Celsius of additional warming, based on the IPCC estimate of about 0.1 degrees per 220 Gt of CO₂. That is above the goal of the Paris Agreement, which requires net zero emissions by 2050, but well below the trajectories once seen as business as usual. In the Climate first scenario, emissions fall to about 2 Gt by 2050 and add around 0.25 degrees. In Fossil first, emissions stay near today’s level for longer and add around 0.45 degrees.
Cleaner power has delivered most of the progress so far. Rystad Energy’s Decarbonization Index, which tracks the Three Tasks of the energy transition, rises from the low 20% range in the mid-2020s to above 60% by 2050 under Pragmatism. Clean power reaches about 85% and electrification about 50%. Policy targets are following the same order. The EU has set an indicative electrification target of 46% by 2040, and the COP31 presidency has proposed raising electricity’s share of global final energy demand to 35% by 2035, after COP28 focused on tripling renewable capacity.
