Will the world reach its climate goals?

Atradius economists explore the risks facing fuel-importing economies and how they can protect themselves from disruptions to energy systems and geopolitical events such as the war in the Middle East.

Images of burning fuel depots in Iran, immobile tankers at anchor near the Strait of Hormuz and petrol prices rocketing at fuel pumps are now dominating rolling news feeds. A barrel of crude oil recently reached its highest price in four years. The current conflict in the Middle East is making energy security front page news.

However, as Atradius Chief Economist John Lorié and I explore in our latest Energy Outlook , the vulnerabilities that the war in the Middle East has exposed for fuel-importing countries is just part of a much bigger issue. As we state in our report’s title: Green now or grieve later.

How important are renewables for lowering fuel import bills?

Economies that depend on importing fossil fuels will inevitably feel the pinch when fuel prices rise. Countries that don’t have to import their fuel, perhaps because they generate their energy demands through renewables, will benefit from lower economic vulnerability.

More than 60 countries have net fuel import bills of at least 4% of GDP, making them financially vulnerable, particularly in this climate of spiking fuel costs. Nearly all are emerging economies, who are also often more vulnerable to climate change and can find it harder to secure affordable finance to invest in clean energy transition.

At its simplest, the message is, green is good. 

Of course, in reality the situation is much more complex. To build resilience in an environment of higher fuel prices, fuel importing economies will need a strategy that accelerates investment in domestic renewable energy and pushes electrification beyond the power sector. Economies that build greater energy efficiency in heavy transport, industry, heating and cooling will benefit from lowering their import fuel bills.

But this is harder to achieve for emerging and developing economies, where demand for fossil fuels appears to be growing, and availability of finance for clean energy transition is shrinking.

Will the world reach its climate goals?

The world is currently not on track to meet its climate goals. The goal of Net Zero Emissions now appears largely out of reach. The International Energy Agency’s fairly pessimistic Stated Policies Scenario (STEPS) is structurally higher this year than our outlook last year. Soberingly, the IEA’s even more pessimistic Current Policies Scenario has returned from being parked on a shelf, and is now pointing to a significant slowdown in the clean energy transition and rising demand for fossil fuels.

None of this is good for climate change, nor energy security.

2025 is one of the hottest years ever recorded and also reached record amounts of CO2 emissions. At the same time US policies have resulted in a reduction in planned domestic renewable energy capacity expansion. A surge in demand for datacentres, as well as growing demand for air conditioning in the Middle East and North Africa, has resulted in a rise in demand for electricity. Much of the growing demand is being met by the use of fossil fuels.

What does the latest Energy Outlook focus on?

Our latest Energy Outlook looks at the risks facing fuel-importing counties as the clean energy transition slows down. Using the IEA’s scenarios for input data, we model how changes in energy use and the energy mix contribute to structural improvements and deterioration in net fuel import intensity.

We conclude that a slowdown in the global energy transition and should serve as a wake-up call. This is especially true for fuel-importing emerging economies who are vulnerable to spikes in fuel prices, but also to the wider world including advanced economies who are seeing climate goals burn away in a cauldron of fiery geopolitical events and slow political progress.

Download our Energy Outlook: Green now or grieve later report