Managing Director, Head of Sustainable Investment Research & Analytics (SIRA) and Chief Investment Officer, BSI Intel
BlackRock
Managing Director, Head of Sustainable Investment Research & Analytics (SIRA) and Chief Investment Officer, BSI Intel
BlackRock
With over two decades at the intersection of finance, policy and sustainability, Chris brings a rare vantage point on how capital markets are responding to the energy transition — and where the biggest opportunities lie. We sought his take on three questions about the forces reshaping energy investment, the themes he's watching most closely, and what it all means for Asia-Pacific.
As a fiduciary to clients, BlackRock begins with client choice, focuses on delivering the best risk-adjusted returns within client mandates, and underpins its work in research, data and analytics. From our research, we see the energy transition as one of five mega forces rewiring markets and reshaping the global economy [1]. The story is far from linear, and its uneven progress across countries and sectors is creating a broad set of risks and opportunities for investors. This reflects a shift in the energy mix--generally toward lower-carbon sources of energy--alongside continued growth in global energy demand. This dynamic is shaped by rising energy and resource demand needed to power economic growth; technological innovation that increases efficiency and expands what is economically feasible; and the interaction of physical climate risks and damages, market forces, and policy—including energy security—shaping how companies, governments, investors, and consumers adapt and deploy new technologies across regions.
Against that backdrop, two drivers stand out today. First, geopolitical fragmentation has a global effect on markets, and that has brought energy security into the centre of the conversation. Current energy shock has reinforced the importance of energy security and availability, which has accelerated the shift toward domestic energy production or more resilient supply sources. Second, AI is adding a new layer of urgency by driving a sharp increase in electricity demand through data centres, digital infrastructure and the systems that support them [2]. Acting together, these drivers point to the need for energy pragmatism – where countries and companies balance the need to deliver reliable, secure, affordable and low-carbon energy.
Energy security concerns and soaring energy demands are driving the need for energy abundance – expanding supply reliably across oil and gas, renewables, storage, nuclear and grids to meet these demands and keep costs down for consumers. Countries are also ramping up renewables and storage as ‘energy security’ assets, alongside recycling and efficiency efforts. For example, some countries such as Japan are investing in electricity grids and reducing dependence on narrow sets of suppliers for liquefied natural gas, while others such as Germany are accelerating auctions for wind power projects. As for China, even as it scales up adoption of clean-energy technologies, it continues to expand coal capacity. This reflects a pragmatic energy transition pathway shaped by both industrial ambition and energy-security priorities [3].
The current Middle East conflict has renewed attention on energy security, resource nationalism and supply chain integrity; all of which are creating considerable tailwinds for domestically produced energy including country-specific mixes of coal, faster clean electrification, circular economy, and grid resilience. Relative to past energy crises, all the cost points are different this time. Many of these solutions have all declined further in cost and become even more competitive than they were in 2022, and hydrocarbon volatility improves the relative economics [4]. The Iran war therefore delivers three simultaneous tailwinds: it raises the cost of imported fossil fuels sharply and durably via risk premia; it raises the political urgency for domestic electrification beyond anything climate advocacy achieved; and it arrives at the precise moment clean energy and electrification have become structurally cost-competitive without subsidy in most markets.
AI power demand is tightening links across energy, technology, utilities and infrastructure, pushing up electricity use and the need for power capacity. Near term, while hyperscalers [5] aim for clean, firm (available 24/7), cheap and immediate supply, in our analysis, they cannot optimize for all four simultaneously. This in practice favours gas and existing coal or nuclear capacity, depending on the region’s current ready asset base. In the medium or long-term, with hyperscalers as some of the largest investors in clean energy to help power the rising fuel demand, the scale and durability of Artificial Intelligence/Data Centres (AIDC) demand can pull forward clean-firm technologies such as nuclear, geothermal, and long-duration energy storage.
In many ways, energy security and AI-driven demand are reinforcing each other. It is now clear that together, energy security and AI demand are accelerating the same needs and unlocking long-term thematic opportunities. It amplifies the pragmatic shift in the future of the energy transition – one that can deliver cleaner power, but also enough power, at the right price and with greater resilience.
Broadly, it requires an “all-of-the-above” investing approach. We favor an active, multi-asset approach given the colliding mega forces. Near-term, higher volatility and dispersion in stock returns favor active fundamental and systematic approaches, and precision indexing. Over longer horizons, we favor gradually building positions in themes such as electrification and critical minerals such as copper, nickel and aluminum, which are accessible across public and private markets.
In a more fragmented and supply-constrained world, investors need to focus on the core assets and technologies the system cannot function without. Investments in batteries, power electronics and electric motors or “electro tech” are particularly favourable as they form the core hardware layer of AI, energy, infrastructure and defence. We like solar, storage and grid tech because it’s in high demand and quick to build. We see energy infrastructure offering stable, inflation-linked cash flows. At the same time, this is bumping up against limited supplies of key materials such as copper – especially in fast-growing battery storage. We favor copper to tap into electrification build-out, even as its performance is subject to economic growth.
The opportunity set today is wider than many people assume. In public markets, companies involved in providing physical infrastructure and equipment supporting the AI buildout – such as semiconductors, power and data centre assets – stand to benefit, no matter the winners or losers. In private markets, there is a growing role for infrastructure equity, private credit and real assets tied to the energy system. BII analysis suggests that, once existing implicit exposure is accounted for, total infrastructure allocations in diversified portfolios could plausibly range from 10-19% depending on liquidity and risk tolerance — well above typical allocations today [6]. What is becoming clearer is that some of the most interesting transition opportunities are in the physical buildout of the system — grids, storage, power equipment and critical materials — going beyond listed equities. We’re selective in renewables, being mindful of higher interest rates and the challenges with relying on a concentrated pool of suppliers.
Next, as physical climate risks and extreme weather become more visible through real-world economic damage, resilience is emerging as a compelling investment theme. We see opportunities across public and private equity, infrastructure equity, and fixed incomes. Resilience provides a secular opportunity across a broad spectrum of sectors and subthemes, including resilient buildings, grid hardening, resilient agriculture, logistics and supply chains, water infrastructure, healthcare, and others. This is driving markets for climate resilient investment and in beneficiary companies providing resilient products and solutions.
Over the long term, both the magnitude of physical climate risk and the uncertainty around macroeconomic impacts are set to increase, as new risk channels—like heat-driven inflation and insurability challenges—continue to emerge and evolve. At the same time, colliding mega forces, policy change and technological innovation are making investment in the energy system, and in assets exposed to climate and natural capital risk, more complex. We view that as a constructive investment environment because increasing dispersion means increasing opportunities for alpha generation [7]. Capturing that potential requires an active approach — fundamentally and systematically through data and signals, and in indexing through precision exposures. For private markets, active due diligence and operational execution becomes critical, given the disproportionately large unlisted opportunity set in infrastructure and the ability to look through short-term turbulence.
3. How can APAC position itself to benefit from the opportunity set in energy transition?
APAC is well positioned to shape the next phase of the energy transition because it sits at the intersection of rising power demand, manufacturing capacity and capital needs. China is driving the next phase through its scale in clean-technology manufacturing even as it continues to invest across conventional energy supply. Other examples include Japan’s Green Transformation (GX) strategy and Singapore’s Financing Asia’s Transition Partnership (FAST-P) that are designed to accelerate Asia’s transition through public-private partnership and blended finance mechanisms. Yet, many projects with significant financing needs are often held back by higher costs of capital, policy uncertainty, currency and offtake risks. It is also perceived that these projects tend to be riskier and there is limited pipeline of investment-ready opportunities in the region. The biggest challenge then is not a lack of capital, but a mismatch between available capital and the risk-return profile of projects on the ground.
The starting point to benefit from the opportunity set in energy transition has to be policy enablement and fundamental derisking. That comes down to clearer policy frameworks, credible transition roadmaps, stronger project preparation, better data and disclosure, and, where appropriate, catalytic capital to unlock new markets and technologies. Capital will go where there is visibility of both risks and pathways to returns.
APAC is set to benefit if it can strengthen existing supply chains to be able to cope with the flow of critical minerals, power and financing. This means thinking in terms of regional ecosystems rather than stand-alone national strategies. This could mean collaboration on standards, financing models, cross-border infrastructure and technology transfer.
We’ve seen how emerging markets can accelerate, or even leapfrog developed markets, in clean-tech adoption. Take China’s solar sector as an example. With solar PV costs having fallen by more than 80% over the past decade, China alone has seen record solar additions of nearly 370GW in 2025, accounting for over 60% of global solar capacity additions [8] [9]. As the single largest contributor to global energy supply growth, solar allows for incremental power demand to be met by clean generation instead of new fossil capacity. India’s rapid adoption of electric two- and three-wheelers is another example. Two- and three-wheelers dominate everyday mobility in India [10] and electric three wheelers are about 70% cheaper to own compared to their internal combustion alternative [11]. This is also reflected in the 21% and 57% increase in sales of electric two- and three-wheelers in 2025 compared to previous years [12]. The rapid electrification of two- and three-wheelers, coupled with the larger role that it plays against passenger cars, indicates that the country’s transition towards green mobility may not follow the traditional car-centric pathway seen in many other advanced economies [13].
Regional cooperation can unlock capital flows toward transformative technologies, driving real-economy progress and sustained economic growth. For example, the Asia Zero Emission Community (AZEC), a platform for cooperation across 11 partner countries in the Asia region towards carbon neutrality, is driving tangible collaborations across technology, finance, and capacity building. Under AZEC, a series of Vietnam-Japan cooperative energy projects amounting to US$20 billion for carbon-neutral industrial parks have been launched [14]. Another example is the ASEAN Power Grid, a regional initiative to deepen cross-border power trade and grid connectivity, which can strengthen energy security, improve system flexibility, and support higher renewable penetration across member states. A project of this scale, if implemented according to plan, could set the stage for further regional initiatives, and signal a paradigm shift in the APAC energy transition story.
In summary, the energy transition is being shaped by energy security priorities and surging power demand, creating a widening opportunity set across infrastructure, electrification, as well as adaptation and resilience. The pace of energy transition varies by region, and for APAC, progress hinges on policy clarity, project de-risking and regional collaboration that can better match capital with investable pathways. For investors, the message is clear —staying selective, data-led and active will be essential to capturing long-term alpha in a rapidly evolving energy system.
Footnotes:
[1] Source: BlackRock Investment Institute, Mega forces: An Investment opportunity, July 2025.
[2] Source: BlackRock Investment Institute, Global Weekly Commentary – Mideast shock fuels investing themes, March 30, 2026.
[3] These examples are illustrative and not exhaustive.
[4] Source: BloombergNEF, Levelized Cost of Electricity 2026 report, February 2026.
[5] Hyperscalers refer to the largest cloud and internet providers that operate massive global data center networks to provide computing capacity at scale.
[6] Source: BlackRock Investment Institute, Global Weekly Commentary – Tapping infrastructure’s potential, February 2026.
[7] Source: BlackRock Investment Institute, 2026 Global Outlook: Pushing limits, December 2025.
[8] Source: International Energy Agency, Solar PV Global Supply Chains – Executive Summary, August 2022.
[9] Source: International Energy Agency, Global Energy Review 2026, April 2026.
[10] IEA source states that there are 157 two-/three-wheelers per 1,000 people as compared to 35 passenger cars per 1,000 people. Source: International Energy Agency, Global EV Outlook 2024 - Trends in other light-duty electric vehicles, April 2024.
[11] Source: International Energy Agency, Transitioning India’s Road Transport Sector, July 2023.
[12] Source: Indian Ministry of Heavy Industries, The Ministry of Heavy Industries (MHI) has successfully achieved sales of more than one million of EVs in this Financial Year 2024-25, 1 April 2025.
[13] This report asserts that in advanced economies, passenger cars dominate road transport demand, accounting for around 65% of the transport energy use. Source: International Energy Agency, Energy Efficiency 2025 – Transport, November 2025.
[14] Source: Japan Bank for International Cooperation, Decarbonization Waves from Asia to the World, 7 July 2025.