Repeated energy shocks are pushing countries to diversify their energy systems, and energy security, not just climate goals, has become the primary driver of the transition.
Policy momentum is accelerating across Asia, with China, India, South Korea, Indonesia, and the Philippines all setting aggressive renewable capacity targets, positioning the region at the center of the buildout.
The shift is fueling demand for battery metals and rare earths, creating potential investment opportunities concentrated in emerging markets (EMs) such as Chile, Peru, and Indonesia.
The energy disruptions stemming from the recent Iran war and other geopolitical conflicts have reinforced the urgency of diversifying energy systems and accelerating the energy transition. In turn, we believe this is supporting demand for critical metals; strengthening the outlook for renewable energy deployment; and creating a growing set of investment opportunities in EMs, since many of these resources are concentrated there.
The Rationale
The world has experienced two major energy crises within just five years, both with significant consequences for government finances and household disposable income, and the fiscal burden of repeated energy shocks has become increasingly difficult to ignore. Many developing economies continue to grapple with high debt levels, while fiscal positions across much of the developed world have also deteriorated.
Fossil fuel subsidies are expected to shoot up vastly this year to $1.1 trillion, marking an increase of around $400 billion compared to last year.[1] The 2022 energy crisis was even more costly, as explicit fossil fuel subsidies were expected to reach $1.3 trillion, while implicit costs, including unpriced health and environmental costs, were more than $5 trillion.[2]
At the same time, the economics of clean energy continue to improve. The rapid decline in the cost of solar, wind, and battery technologies has made renewable energy increasingly competitive with conventional energy sources. Solar photovoltaic (PV) costs have fallen by 90% in the last decade, onshore wind by 70%, and batteries by more than 90%.[3]
With heightened volatility in oil and gas markets driven by geopolitical tensions and supply disruptions, we believe these trends have further strengthened the economic rationale for accelerating the deployment of renewable energy and reducing dependence on imported fuels. In 2025, renewables became the world's largest source of electricity generation, surpassing coal for the first time ever.[4]
But it’s not just costs and economics—while the motivation behind the energy transition was centered around climate ambition a few years ago, energy security is now the primary policy driver, as renewable energy eliminates the need for imported fuel once installed. In other words, solar, wind, and batteries do not have a constant dependency for fuel supply once in place, which, in turn, can help reduce dependency on other countries.
The Policy Response
We have seen a wave of policy responses aimed at accelerating renewable energy adoption, particularly across Europe and Asia, regions most exposed to geopolitical crisis.
China’s renewable energy goals have been impressive, targeting 3,500 gigawatts (GW) of renewable energy generation capacity and making up 50% of electricity and 25% of energy use by 2030.[5] In August 2026, the country set mandatory renewable consumption targets, which will require quarterly and annual monitoring.[6] This is a shifting focus from building new power generation to ensuring it gets consumed.
South Korea has committed to achieving 100 GW of renewable energy capacity by 2030.[7] This policy aims to triple the country's clean energy base to cover at least 20% of the national power generation by the end of the decade.[8]
Indonesia has accelerated a 100 GW solar target and has sped up geothermal power projects.[9]
India’s regulators have recently adopted competitive tariffs for large-scale renewable projects. India continues its push toward a national goal of 500 GW of non-fossil capacity by 2030, which would make up 50% of total electricity needs.[10] Lately, the country has pivoted into solar PV manufacturing and plans to expand its domestic manufacturing footprint to reduce reliance on Chinese imports.
The Philippines has accelerated rooftop solar applications as consumers were looking to protect themselves from high energy bills. The country aims for 35% renewable energy share in the power generation mix by 2030.[11]
India PV Manufacturing Capacity and Forecasts (in GW)
Sources: Care Edge Research and William Blair, as of August 2026. FY refers to fiscal year. Data after fiscal year 2027 is forecast.
Implications for EMs and Commodities
Following the Iran war and the accompanied energy supply shock, a temporary oil demand destruction is expected this year. The International Energy Agency and OPEC have both cut oil demand forecasts, driven by the price surge and tighter supply. While the outlook is less clear over the next few years, we believe that oversupply might resurface again in 2027 (due to supply surpassing demand), which could bring oil prices lower.
But as energy consumption is linked to global growth, we believe cheap renewable energy could unlock large gross domestic product (GDP) growth potential for many EMs. This higher GDP potential could translate to broader growth in consumption and commodity demand.
Furthermore, the biggest beneficiary in the commodities space may likely be metals, particularly battery metals and rare earths. Bloomberg expects battery metals demand to considerably grow in 2026, due, in part, to the rise in global passenger EV sales.[12]
Another large driver for this growth is battery energy storage systems (BESS), which go hand in hand with renewable energy installations, as they are used to stabilize the grid and address intermittency issues of energy generation from solar and wind.
Globally, BESS capacity is expected to expand rapidly, rising from around 250 GW in 2025[13] to more than 1,500 GW by 2030.[14] Led by China, EMs are driving much of this growth, with China accounting for approximately 60% of installations.[15] China already has the world's largest installed BESS base as well, exceeding 135 GW in 2025, and is projected to add between 64 GW and 85 GW of new energy storage capacity (primarily BESS) in 2026.[16]
In comparison, the European Union's installed capacity stood at around 40 GW in 2025[17] and is expected to reach near 180 GW by 2030,[18] while India is forecast to grow its BESS capacity to 47 GW by the end of the decade.[19]
BESS Capacity Additions (in GW)
Sources: International Energy Agency and William Blair, as of August 2026.
Meanwhile, lithium, copper, aluminum, and certain rare earths are benefiting the most from the energy transition theme.
Lithium has seen impressive demand growth—more than 20% in 2025 alone.[20] This continuous demand improvement, together with tighter supply in 2026, has lifted prices. BESS installations have also been a significant driver, making up around 20% of total lithium demand.[21] With Chile boasting the largest lithium mine in the world, and China, Zimbabwe, and Argentina being in the top 5 producing countries, EMs have been playing a key role in delivering clean, reliable, and low-cost energy.
For copper, thematic demand for electrification and data centers has kept prices high despite the weak cyclical outlook. Elevated copper prices have benefited many EM countries, especially Chile, the Democratic Republic of Congo, Peru, and Zambia. Copper prices are also providing support to the Chilean peso as the two share a long relationship.
Aluminum has also benefited from electrification and AI infrastructure demand, but the price response has been different, as aluminum supply is typically more elastic than copper if there is enough reliable and cost-competitive power available.
In addition, China is a key aluminum producer, making up around 60% of total global aluminum production.[22] India is also a large aluminum producer, but it’s not a very large exporter, as most supply is consumed domestically due to the country’s infrastructure boom.
Furthermore, certain rare-earth magnets have become key components of batteries, EVs, and more recently, AI and robotics, and the strong demand outlook supports prices. There’s a relatively large price bifurcation, however, in Chinese and offshore prices as China controls about 90% of rare-earth refining.
Other EMs have rushed to secure supply of these resources, with Brazil launching its critical mineral fund in 2026, and Argentina, Peru, Indonesia, and the Philippines participating in relevant bilateral frameworks with the United States.
Conclusion
The energy transition is no longer driven solely by climate objectives—it has increasingly become a response to energy security concerns, economic competitiveness, and the need for greater resilience in an uncertain geopolitical landscape. For EMs, we believe this shift presents a significant opportunity to position themselves at the center of the next phase of global growth.
Alexandra Symeonidi, CFA, is a senior corporate credit and sustainability analyst on William Blair’s emerging markets debt team.
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