Geopolitics, AI and clean power are reshaping strategy

In his excellent London Review of Books Autumn lecture, “Electrostates, Petrostates and the New Cold War,” Adam Tooze argues that we are entering a structurally different phase of global competition. The 20th century’s energy geopolitics centered on extraction and control of resources like oil fields, gas pipelines and uranium. Today’s competition is about who can build and scale electrified infrastructure, secure critical minerals and manufacture advanced components to power digital economies. The unit of power has shifted from the barrel to systems integration and networks.

The unknown quantity in this new era is China. It has been accelerating electrification and embedding solar, wind and battery manufacturing into their industrial strategy for decades. The United States, by contrast, flush from fracking, has signalled a renewed confidence in fossil fuels even as it competes fiercely in advanced technologies. Two models are emerging: one centred on electrification and manufacturing scale; the other blending hydrocarbons, financial depth and technological dominance.

Headlines around Trump, culture wars, and climate backlash obscure the deeper transformation already underway. The energy transition is not a future aspiration; it is happening in real time. The question is whether we are attentive enough to see it and the data supports this point. According to Ember, In 2025, solar and wind generated roughly 30% of European electricity, overtaking fossil fuels for the first time. China’s 15th Five-Year Plan anticipates that wind and solar will exceed half of installed power capacity. In the UK renewables already generate more than half of the UK’s electricity (approximately 54% in 2024) with wind alone contributing close to 30% of total output. 

But there is another force reshaping the landscape: artificial intelligence. This year alone, major AI companies are projected to invest an extraordinary US$650 billion in capital expenditure -  one of the largest coordinated private investment waves in modern industrial history. Data centres, advanced chips, cloud infrastructure and compute capacity are becoming the steel mills and railways of the 21st century.

Because AI is not just software, requiring infrastructure (land, cooling, grid stability) and gobbling up vast quantities of electricity, this AI build-out ties digital power directly to energy systems. The companies leading the AI race are now the largest corporate purchasers of renewable power on the planet.

In turn, this makes control over AI infrastructure into a geopolitical battleground. Semiconductor supply chains, rare earth access, advanced manufacturing capacity and energy security now shape military, financial and economic advantage. In this context, environmental aspect of electrification and clean power is suborned to their status as “strategic assets”.

Perception versus reality

This has led to the emergence of a strange convergence that Tooze describes: even in hydrocarbon-rich regions such as the Gulf, abundant solar potential and sovereign capital are combining to build large-scale clean energy and digital infrastructure hubs. We face a situation in which US companies are using Chinese parts to build data centres in petro-states.

In the United States, political backlash against ESG and climate policy suggests retreat. Yet AI hyperscalers are locking in long-term renewable contracts at unprecedented scale. In Europe, political anxiety about energy security coexists with record renewable generation. In the UK, public discourse may oscillate, but the grid mix continues to shift structurally towards renewables.

This divergence between narrative and material change is dangerous for decision-makers. Strategy must not be built on headlines but on capital flows, infrastructure build-out and long-term competitive positioning. As geopolitics comes to the fore, this risk shapes supply chains, financing conditions, energy pricing and regulatory expectations. Strategy must account for competing industrial blocs, not assume seamless global integration.

A second takeaway is that clean energy is not a peripheral sustainability issue and is foundational to digital infrastructure, AI deployment and industrial capacity. Access to stable, affordable and clean power will continue to influence competitiveness at corporate level just as much as access to energy has always done.

Capital is being allocated at historic scale. When US$650 billion flows into AI infrastructure in a single year it absorbs capital, talent and investor attention. Data centres, chips and hyperscale infrastructure become the dominant narrative of innovation, and other sectors must compete harder for funding and visibility. Leadership teams therefore need to ask difficult but necessary questions: where does our growth story sit in relation to the AI build-out? How exposed are we to shifts in capital allocation? Are we positioned within the electrification and infrastructure narrative or outside it?

As with most paradigm shifts, the energy transition is not linear, continuing to unfold unevenly across jurisdictions, influenced by political cycles and national priorities. But the direction of travel toward electrification, digitalisation and infrastructure intensity is, in our opinion,  unmistakable. The challenge for leadership teams is not to predict every headline. It is to situate their strategy within these longer-term forces.