As war in the Middle East rattles global energy markets, it is again highlighting the fragility of the world’s fossil-fuel system. Disruptions to shipping through the Strait of Hormuz – one of the most critical arteries of global oil and gas trade – have sent prices swinging and forced major importers to adapt. India, for example, has begun turning back toward Russian crude as shipments through the region grow more uncertain.

Such disruptions often accelerate deeper structural changes already underway. Around the world, governments are increasingly viewing the transition to cleaner and more domestically anchored energy systems not only as a climate imperative, but also as a matter of economic resilience and strategic competitiveness. In parts of Asia, that shift is already moving from debate to deployment.

I’ve recently returned from trips to Hong Kong and Mumbai, where I spent time meeting with policymakers, investors and industrial leaders. What stood out most to me was how different the mood is when you're on the ground where things are actually being built.

The conversation is not about the robustness of the science, the rationale for a transition to clean energy, or whether it is even possible. It is about grid connections, permitting queues, workforce pipelines and financing structures, the ordinary work of building a system that is already underway.

In Europe and the United States, sustainability is still too often framed as a cost to be managed. Across much of Asia, it is seized as a generational opportunity and pursued as industrial strategy.

That divergence is not rhetorical, and it is not ideological. It shows up in hard numbers: trillions of dollars of capital deployed, factories built, grids expanded, and supply chains secured.

The decisive competitive advantage

China’s pace illustrates the scale of the shift. In 2024 it added roughly one gigawatt of clean power every day, the equivalent of building a large power station every twenty-four hours. By May 2025 it became the first country to surpass one terawatt of installed solar capacity, a level the entire world reached only three years earlier. In a single year, China installed more solar than the United States has built in total.  

Cheap, abundant renewable electricity is quickly becoming the decisive competitive advantage of the next industrial era, much as cheap oil shaped the last. In China, industrial power prices are among the lowest available to major manufacturing economies, particularly in renewable-rich provinces where electricity can be produced at very low cost. Across much of Europe, industrial power remains significantly more expensive. Energy price gaps of this scale ripple through entire economies. Steel, chemicals, manufacturing, and artificial intelligence all depend on vast amounts of electricity. When power is significantly cheaper in one part of the world than another, industries tend to cluster there, reshaping supply chains, investment flows, and ultimately the balance of economic power.

That macroeconomic impact is already visible. Clean energy sectors contributed roughly $2.1 trillion to China’s GDP in 2025, around 11 percent of the economy. Without that contribution, China would likely have missed its headline growth target. Chinese data centres now pay far less for electricity than many of their American counterparts, a widening “electron gap” that analysts warn could shape the global balance of AI development.

Redesigning architecture

India’s trajectory adds another dimension. Rather than retrofitting legacy systems, it is building industrial ecosystems around renewables from the ground up. Through January of the current financial year three quarters of the country’s new power capacity came from renewable sources.

And this pattern extends beyond those two economies. Across much of Asia, governments are pairing large-scale renewable deployment with new manufacturing clusters, data infrastructure, and industrial policy designed to capture the economic value of the transition.

The West, by contrast, is hesitating. In the United States, 51 large clean-energy projects were cancelled or scaled back in 2025, wiping out $28.8 billion in planned investment and an estimated 30,000 projected jobs. Europe’s largest battery champion, Northvolt, declared bankruptcy. Industrial electricity costs remain roughly double those seen in China.

None of this is tidy. China’s solar curtailment, the share of solar power the grid cannot absorb, nearly doubled in the first half of 2025 as deployment outpaced transmission capacity. The country commissioned 78 gigawatts of new coal power last year, the highest annual total in a decade. Solar manufacturers lost an estimated $60 billion in 2024 as overcapacity crushed margins. Industrial revolutions rarely unfold cleanly.

But renewable deployment tells only part of the story. Look beyond those numbers and you see something deeper is happening: the architecture of governance, finance, and industry is being redesigned around the transition itself.

Shifting capital markets

In India, regulators and stock exchanges are hardwiring climate disclosure and sustainability-linked incentives into core corporate reporting through the Business Responsibility and Sustainability Reporting framework. ESG data is no longer a glossy appendix for investors; it is becoming a factor in credit risk, enterprise valuation, and capital allocation.

Capital markets are shifting as well. China’s outstanding green loans now exceed $6 trillion, representing more than 16 percent of all bank lending. Energy transition investment reached $818 billion in 2024, more than the United States, the European Union, and the United Kingdom combined.

Building the future

Talent is following capital. Engineering curricula across China and India increasingly integrate renewable development, grid management, battery chemistry, hydrogen systems and climate analytics. These students will graduate ready to build the infrastructure of the next decade.

The transition is no longer primarily about emissions reductions. It is about who will build the operating system of the next industrial revolution: electricity systems, energy storage, critical minerals, advanced manufacturing and digital infrastructure.

That is why the countries moving fastest are not treating the transition as environmental policy. They are pursuing it out of economic self-interest. Investment at this scale is not driven by altruism.

In a world repeatedly reminded of its vulnerability to energy shocks, from supply disruptions to geopolitical conflicts, the appeal of abundant domestic electricity is becoming difficult for even the most stubborn governments to ignore.

A strategic choice

Western leaders now face a strategic choice. They can continue to frame sustainability as a regulatory burden and a fiscal trade-off. Or they can recognise it as the foundation of economic growth and industrial renewal.

History will not pause while that debate plays out. Capital is already flowing. Supply chains are already consolidating. Talent is already in training.

The question is no longer whether the transition will happen. It is whether you help shape the new industrial system, or inherit one designed for you.

Paul Polman is an investor, philanthropist, former CEO of Unilever and a B Team Leader. Learn more about Paul.

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