Dawn of the Electric World Order | The Polycrisis

Search for:

Menu

The Polycrisis

May 8, 2026

Analysis

Dawn of the Electric World Order

Global shockwaves from the war on Iran are accelerating the energy transition

Kate Mackenzie

, Tim Sahay

Programming Note: Kate and Tim are out with a brand new Polycrisis podcast that maps out how the transition to clean energy is upending the world order. Season one and a bonus season on shockwaves from the Iran war are available wherever you get your podcasts.

Oil and gas—the foundation of global systems of energy and production—are no longer reliably available where and when they are needed at bearable prices. Two wars in four years have triggered a permanent risk regime shift. No matter how uneven and uncertain the immediate reaction from markets and governments, the lesson of the present energy shock is unavoidable: the geopolitical conditions that once stabilized the carbon-based logistics of the modern world can no longer be guaranteed, and electrification offers a structural exit from instability.

After two months of war and supply chain disruption, the situation is becoming desperate in much of Asia and Africa, and roiling across Europe and the Americas. Many oil and gas importing countries are now being forced to triage: how much LNG goes to power generation versus fertilizer plants? Bidding wars will leave those without deep pockets paying in increased hunger, lost wages, and shrinking economies. It’s not just oil being affected by the war. From cooking gas to fertilizers to sulphur to helium, the war has yet again exposed the material underpinnings of the global economy and its web of interdependence.

Crises of this breadth and magnitude transform societies, firms, and governments. Societies boil under the strain of shortages, rationing, and hunger; economic distress cascades and political orders melt. After 2022’s inflationary shock, dozens of governments fell in a wave of anti-incumbency at the ballot box. Underlining the scale of the 2026 energy shock, IEA head Faith Birol said “More oil has been lost… than during the twin shocks of the 1970s that triggered recessions and fuel rationing around the world.” What will this crisis bring?

"A superior alternative"

What makes this shock different from the 1970s and 2022? As analysts at Ember put it: “this is the first energy shock with a superior alternative.”

In the more benign pre-shock landscape, mass electrification, solar and wind energy generation, and battery storage were already becoming competitive with fossil fuels. Electric vehicles accounted for about a quarter of all new car sales. Heat pumps and induction cooktops were growing in popularity. This combination of clean energy, storage, and electrification allow for countries to cut their dependence on a constant flow of imported fuels.

Solar is the cheapest source of electricity in history and has soared by a record 30% in 2025. Electric vehicles and hybrids are outselling combustion cars in many countries. (Ember)

Even in 2022, when the Russian invasion of Ukraine put pressure on global oil and gas markets, electric vehicles and solar panels were less cheap than they are today. The rate of EV sales tripled between 2022 and 2025 and in the same period grid-scale storage grew almost tenfold to 270GW. Spain, Australia, and the UK have recently begun to see the peak prices of grid electricity subdued even in periods of huge demand surge, because renewable power and batteries are increasingly substituting for expensive gas-powered peaker plants. For any buyer not blocked by trade wars, renewable energy and storage technologies are mature, cheap, and accessible.

Once a climate project, electrification is now a geopolitical insurance policy. Seventy-five percent of the world’s population lives in net fossil fuel importing countries and collectively spends $1.7 trillion a year importing fuels. Many of those governments facing a loss of confidence in global oil and gas markets are expanding clean energy and electrification projects. In April, France announced $10 billion in subsidies for EVs and heat pumps. The month prior, Spain introduced measures to further speed up electrification, renewable generation, and storage. Vietnam is about to ban petrol motorbikes in downtown Hanoi and Ho Chi Minh City; the country’s giant conglomerate Vin is abandoning a planned LNG terminal in favor of a renewable project. Nigeria’s solar imports from China in March were more than five times the level of a year earlier. The list is endless.

Resilience and capacity

The new option of a “superior alternative” in energy security exists largely due to China, whose industrial policy and manufacturing prowess have made electrification cheaper, better, and more abundant. China’s factories today supply most of the solar panels sold around the world, most of the battery cells, and almost three-quarters of EVs.

China’s electrification drive was never primarily a...