Energy market participants are urgently seeking clarity amid uncertainty. The business of energy and environmental technology has always been challenging and disproportionately exposed to regulatory risk. Today, those risks are increasing rapidly – compounding market challenges. The situation is volatile and rife with potential to disrupt value chains, strand capital, freeze investment, and stifle growth.

Despite the turbulence of the moment, we continue to believe a bright future of economic growth paired with a vastly lighter environmental footprint is within reach. Let’s identify the firm ground that is sustaining momentum in the energy transition.

1. The Energy Transition Has Achieved a Modest but Durable Permanence

Significant players in nearly every sector made substantial investments in the energy transition – often overcoming both internal and external skepticism. While activists looked elsewhere, major fossil economy actors entered the field, with every intention of profiting and expanding their foothold.

2. Traditional Divisions Between “Clean” and “Status Quo” Are Blurring

Traditional industry players are increasingly aligned with innovators in defending energy transition investments. Once capital is committed, risk-mitigation measures become a shared priority, and industry incumbents and challengers alike now advocate for market predictability. This shift offers a stabilizing influence on policy.

3. Pragmatism Is Having a Moment

Governments and policymakers are acknowledging the limits of rigid, ideology-driven constraints on private-sector solutions. The push for more flexible, technology-neutral policy is gaining ground.

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Let’s unpack these points:

1. The Energy Transition Has Achieved a Durable Permanence

The transition is irreversible—though not immune to setbacks. Some realities:

• The market has cooled.
• Investment has slowed.
• But a return to old conditions? Not happening.

Corporations have poured more than $2 trillion into energy transition pathways.That money isn’t vanishing. Petroleum giants are piloting low-carbon products, agribusinesses are investing in biodiversity, and industries are experimenting with cost-effective fossil alternatives.

Predictably, massive government incentives sparked an investment surge, leading to both promising ventures and ill-conceived failures. As the hype recedes, we are left with a new equilibrium. Newton’s laws don’t govern markets, but the principle holds: investments in motion tend to stay in motion. Capital expects returns, careers hinge on project outcomes, and plenty of serious professionals have skin in the game.

This is no longer just a niche sector with obscure startups doing hard-to-explain things. The energy transition is mainstream – though perhaps not yet dominant (to borrow a phrase).

Recent global investments outpaced net-zero targets. Even at half the current rate, we remain on track for long-term decarbonization goals.

2. The Erosion of “Clean vs. Status Quo” Divides

Policy realignment is accelerating. Established industry groups across North America and Europe are joining the innovation sector in advocating for stable risk-mitigation policies.

Unified demands for predictability may reinforce key policies such as Canada’s Renewable Fuel Regulation, U.S. investment tax incentives, and sustainable aviation programs in the U.K. and E.U.

Governments have ample cause to pay attention. Shrinking dependence on Russian energy remains an urgent priority for the EU. Canada must find domestic markets for renewable energy exports potentially shut out of U.S. markets. In the U.S., both sides of the aisle recognize clean energy’s job-creation potential and prefer growth to retreat.

Challenges remain. Budgets everywhere are too tight to expand subsidies. Climate mandates will be contested over costs, and governments are suddenly more concerned with managing trade friction than with outbidding each other on industrial policy incentives. Surging uncertainty in global macroeconomic conditions will add headwinds.

Some decarbonization incentives will disappear. Some high-profile U.S. tax credits may be axed, though which ones—and when—remains uncertain. Canada’s new government has already modified its Carbon Tax. In Europe, the debate is now “guns versus butter” as pressing calls for rearmament could squeeze out support for energy transition incentives.

Still, a pulse of policy stability beats steadily, keeping many opportunities open.

3. Pragmatism Takes the Stage

This moment presents an opportunity for durable, measured progress.

For those focused on decarbonization, recent shifts may be less a setback and more a chance to craft pragmatic, durable policy approaches.

Consider:

• Germany, a vocal proponent of “green” hydrogen, has signed contracts for hydrogen produced from fossil methane with carbon capture.
• Imperial Oil’s new renewable diesel facility in Alberta is now dependent on Canada’s Clean Fuel Regulation as a domestic market driver.
• Renewable energy has grown well beyond predictions and is – in many circumstances – cheaper and faster to deploy than legacy energy systems to meet ever-growing demands.

Underpinning these gains, the limitations of “electrify everything” have become clearer to more people. Recognition that many hoped-for solutions may be out of reach (for now) creates space for discussion of more pragmatic near-term options for progress.

It’s not just markets; voters have sent calls for caution, too. Over the past year, voters in North America and Europe have shown dwindling enthusiasm for some climate initiatives. The political appetite for radical change appears more fragile than advocates realized. Technology-specific mandates that constrain rather than unleash competition are losing traction.

Looking Ahead to Q2

Despite the fearful headlines, we’re not returning to the energy markets of yesteryear. Those innovators, investors, and organizations that see this understand 2025 presents the chance to advance pragmatic, durable energy transition initiatives and projects.

Public officials and even some climate activists are recognizing the need to consolidate and build on early progress rather than tear it down.

We expect to look back on this year to see two clear outcomes:

• Many governments will recognize and offer the stable policy structures that industry requires to refine strategies, optimize capital investments, and boost profitability through lower-carbon innovations.
• Private sector energy transition projects based on compelling economics and sound technologies will strengthen their market positions, expand their footprint, and build the value chains necessary to expand commercial success.

The energy transition is here to stay.
The question now is how effectively we navigate its next phase.

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AJW Quarterly Series: Finding Calm in the Chaos

A quarterly review of global forces across the energy transition, seeking the signal amidst the noise.

AJW is wading into the conversation because we see the upside in discerning the difference between caution and fear. We make no claim to clairvoyance – merely some hard-won insights, drawn from setbacks as well as successes during decades of working with dedicated and resilient energy leaders. We aim to help those seeking resilience, not retreat.

To learn more about our work – and to gain an experienced partner tested in the crucible of energy transition turbulence – visit https://ajw-inc.com/.