BCG: The Policy and Politics of the Energy Transition

At least 64 countries held elections in 2024 which could have big policy consequences for the energy transition.

Boston Consulting Group (BCG) has examined shifts in politics and energy in countries including India, Indonesia, Mexico, South Africa, the UK, the US and the EU.

“The consequences for the energy transition of recent elections are still playing out but there has been a clear shift in emphasis,” says Edmond Rhys Jones, Partner & Associate Director at BCG and co-author of BCG’s Blueprint for the Energy Transition. 

The report says that security, affordability and economic growth are as central to government agendas as the climate goals themselves.

“The 2024 elections have redrawn the global energy map,” explains Aparna Bharadwaj, Global Leader, Global Advantage practice at BCG and co-author of the report. 

Starting the energy transition

“We have the tools to get to net zero, but we do not have the policies, proven business cases, and capabilities in place everywhere to massively accelerate the pace of action,” BCG’s Blueprint for the Energy Transition says.

“The net zero path is no longer linear,” Aparna says. 

“Every country is making trade-offs to balance sustainability with economic and political realities. 

“The challenge ahead? Keeping momentum while navigating an increasingly fragmented landscape.” 

Concerns about supply disruptions, heightened by ongoing conflicts in Ukraine and the Middle East, are causing unease among voters and leaders—especially in regions like the EU, the UK, India and South Africa, which depend heavily on imported energy.

Adjustments in demand and the limitations of many energy infrastructures are prompting politicians to openly link energy policy with macroeconomic concerns and national security, ensuring energy remains accessible and economical.

BCG anticipates that governments with climate goals will place more emphasis on the role of low-carbon energy sources, while managing the risks involved in transitioning.

Ultimately, funding for the transition will have to come from one or both of two sources: taxpayers and consumers.

Funds from taxpayers mean substantial public investment in long-lasting infrastructure that can foster long-term growth.

Funding from taxpayers means making large public investments in infrastructure that typically lasts for decades and can create long-term growth. 

Taxpayer funding is essentially a progressive tax – higher earners will pay a larger share because of their higher marginal tax rates. 

However, taxpayers resist approving higher taxes and most governments are financially constrained from relying on public debt to defer the bill.

On the other hand, shifting the costs to energy users will translate into higher energy bills, disproportionally impacting low-income families and energy-intensive industries – who often pay the same as higher earners. 

As people seek economic growth and employment, governments are likely to prioritise investment in technologies and industries, driving economic competitiveness. 

Opportunities for green energy

The shift towards green energy opens doors for renewable energy providers who offer competitive low-carbon solutions and for fossil fuel producers keen to remain pertinent through this transition.

Government recognition that green technology will emerge as a trillion-dollar industry in the 2030s is becoming more widespread.

At the same time, government leaders need to address public concerns over industries and workers whose futures are at risk from the energy transition.

The report says it is likely that the path towards a unified global energy policy will become more segmented, with each nation prioritizing its dominant industry players.

Investors might zero in on a narrower array of technologies driven by national priorities, while governments may loosen regulations aimed at fast-tracking the shift to low-carbon energy.

Alternative energy forms like biofuels and hydrogen are expected to see slower growth than investments in nuclear and other renewable energies.

According to BCG, countries such as the UK are moving towards the political left which may see a push in low-carbon energy deployment.

“Between £700bn–£900bn (US$906bn-US$1.165tn) could be invested in capital projects in the UK over the next five years – a 2.1x-2.7x increase on the previous five-year period.” explains Raoul Ruparel, Director of BCG’s Centre for Growth.

“The push for growth, preparation for the energy transition and historic underinvestment all contribute to this increase in investment that has not been seen in the UK for 75 years.”

Energy transitions around the world

The EU has maintained its climate commitments despite gains by far-right parties.

Following the 2019 Green Deal, the EU is set to introduce a European Clean Industrial Deal, aiming to reconcile sustainability with economic growth.

Geopolitical tensions, including the ongoing Middle East conflicts and the Russia-Ukraine war, have led to a partial pivot in energy strategies.

Germany, for instance, has seen an increase in coal usage, and there continues to be a dependency on liquified natural gas, delaying the region's goal of achieving carbon neutrality by 2050.

In the UK, Labour’s landslide victory in July 2024 set the stage for its plan to make the UK a “clean energy superpower". 

However, Prime Minister Keir Starmer must navigate economic constraints, political opposition and regulatory hurdles to deliver on these promises.

In October 2024, Claudia Sheinbaum made history as Mexico’s first female president, securing a Morena supermajority. 

She aims to boost renewables to 45% of the energy mix by 2030 but faces infrastructure challenges and a struggling Pemex.

“We need to be more environmentally aware, which means not thinking about ourselves so much,” President Sheinbaum explains.

“Consumerism cannot be a central part of our lives anymore. We need to think of the collective.”

US President Donald Trump has moved quickly to implement an “energy dominance” agenda. 

His administration prioritises fossil fuel and critical mineral production, fast-tracks infrastructure permits and has issued executive orders rolling back climate policies – including withdrawing from the Paris Agreement.

The White House aims to restrict US$369bn in clean energy funding from the Inflation Reduction Act and Infrastructure Investment Jobs Act while revising regulations on vehicle emissions, environmental reviews and power generation.

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