Energy, Power and the Return of Geopolitics

Let me start by saying that energy sits at the heart of the opportunities and challenges ahead, and I remain convinced that we are at the start of an energy revolution, one that offers enormous opportunity for all of us and for the planet. It will not be linear but it will be transformative. I’ll be writing more regularly this year because, more than ever, it feels important to put the changes unfolding around us into context. I’ll also continue the Redefining Energy podcast as we explore these shifts with some of the sharpest thinkers in the space. As always, thank you for reading and engaging and have a great 2026! And if I can be helpful in any way, please feel free to reach out at gerard@gerardreid.com with my various different business endeavours! Let’s dive in.

Energy has always been central to economic growth, political power, and military strength. Countries that have secured cheap and reliable energy supplies industrialise faster, project power further and sustained economic growth for longer. The great industrial revolutions that shaped the modern world, including the automobile revolution at the start of the twentieth century, were not just technological shifts but also energy revolutions. Each one was underpinned by access to a better energy source that was cheaper, more scalable and more flexible than what came before.

Fossil fuels, in particular, reshaped the global order. Coal, oil, and gas allowed energy to be stored, transported and used when needed. This made it possible to replace human and animal labour, particularly in agriculture, as well as mechanise production and transport, and do so at a huge scale. In the process, the balance of power between nations was fundamentally changed. The ability to secure supply, protect infrastructure and convert energy into industrial output and military capability proved decisive again and again throughout the twentieth century. Wars were rarely fought explicitly over fossil fuels but they were very often decided by them.

The strategic advantages of oil were clearly understood by Winston Churchill. As First Lord of the Admiralty, he pushed the Royal Navy to move from coal to oil, despite Britain having abundant coal and no domestic oil production. Oil powered ships accelerated faster, sailed further, required fewer crew, were easier to refuel at sea, created more space for armaments, and produced far less smoke, making them harder to detect. Churchill then took the next decisive step by securing supply, acquiring a majority stake in the Anglo Persian Oil Company, which later BP, and expanding its production and refining capacity. These decisions proved critical in the First World War, enabling a faster, more agile British fleet to control the waters of northern Europe.

Throughout the twentieth century, countries dependent on imported energy were exposed not only to price volatility but also to geopolitical pressure. Exporters could and did use energy as a strategic weapon. What was often missed, however, was that energy security was never just about access to resources but also about the systems built around them. Storage, shipping, grids, markets, payment systems, and capital flows all mattered. These institutions determined how effectively energy could be turned into economic and political power. That remains true today. Oil is still traded in dollars, through market structures that look remarkably similar to those of decades past.

We are now moving from a world shaped by molecules to one increasingly shaped by electrons. This shift is happening for four simple reasons: physics, economics, scalability, and digitalisation. From a physics perspective, electrons are far more efficient at delivering useful energy than burning molecules. Roughly two thirds of the energy in fossil fuels is lost as waste heat before it does anything useful. From an economic perspective, electricity is increasingly cheaper than combustion. With massive volumes of low cost solar and wind coming onto systems worldwide, electricity is becoming the lowest cost way to power everything from homes to cars to industry.

Scalability is the third driver. Electrification allows energy to be produced locally, using renewables or nuclear, deployed quickly, and expanded incrementally. A heat pump in a home, an electric motor in a factory, or a data centre powering AI can all be added without rebuilding the entire system. This enables countries to reduce fuel import dependence rapidly. Pakistan is a striking example. In just two years, it has gone from negligible solar generation to over a quarter of its electricity coming from solar. The result was five year lows in LNG imports in the first half of 2025 as gas fired generation was displaced.

The final driver is digitalisation. Digital economies run on electricity, not fossil fuels. Forty eight hours without electricity would shut down payments, communications, logistics, and the internet and moderen city living as we know it would grid to a halt. Electricity is also inherently digital. Energy and data move at near light speed and can be measured, shifted, stored, optimised, and coordinated in real time. Molecules cannot do this. Once these forces combine, electrification stops being a policy choice or a climate preference. It becomes the most efficient, flexible, and intelligent way to run a modern economy.

China is leading this shift and is on track to become the first true electrostate. While much of the West debated market design, subsidies, and targets, China built scale. It now dominates the manufacturing and value chains of key electrical technologies. It has deployed vast amounts of renewables and nuclear power and built the largest power grid in the world, equivalent in length to the grids of Europe, the United States, and India combined. In the last decade alone, it has installed nearly 1.3 million kilometres of new transmission cables, almost as much as the United States built in a century. The result is cheap and reliable electricity across the country, not by accident, but by deliberate system design. An additional benefit is reduced dependence on fossil fuel imports, long viewed by Chinese leadership as a major strategic vulnerability.

Electrification fundamentally changes the energy import equation. Domestic solar, wind, nuclear, grids, batteries and electric transport replace fuels that must be imported, insured, and defended with capital assets that sit inside national borders and produce energy every day. The result is a structural gain in resilience. At the same time, China’s leadership in electrification technologies gives it a powerful new set of geopolitical tools. By exporting solar panels, wind turbines, batteries, EVs and grid equipment to emerging markets, China helps other countries cut fossil fuel imports while gaining access to needed resources as well as embedding long term industrial, financial and technical relationships. Energy trade shifts from fuels bought on spot markets to capital equipment financed over decades, locking in standards, supply chains, and influence. This is not climate policy dressed up as strategy. It is long term geopolitics executed through energy.

Which brings us back to a familiar conclusion, in a very different context. Energy still underpins everything. It defines the limits of economic growth, the stability of political systems, and the balance of power between nations. What has changed is the nature of the system. We are moving away from a fuel based world that must be constantly replenished toward an electrical one built on infrastructure. In the twenty first century, geopolitical strength will belong not to those with the largest fossil fuel reserves, but to those with the best designed, most resilient, and lowest cost electrical systems.