Financing Energy Security for Long Term Resilience

Shargiil Bashir, EVP and Group Chief Sustainability Officer, First Abu Dhabi Bank (FAB)

. Energy security has become a clear indicator of economic strength, with financial factors playing a decisive role in how energy systems handle disruptions. As global volatility intensifies, energy security is no longer solely about molecules and megawatts; it is about how capital is allocated, risks are priced, and investment decisions enable systems to absorb shocks and continue functioning under sustained uncertainty.

. Europe’s recent experience underscores this reality. Prior to the Russia–Ukraine conflict, more than 40 percent of the European Union’s gas supply came from Russia, leaving energy markets highly exposed to geopolitical disruption. When the conflict escalated in early 2022, Russian pipeline gas exports to Europe collapsed from roughly 150 billion cubic meters to about 25 billion within two years. The impact rippled quickly across energy prices, corporate balance sheets, inflation, and fiscal budgets, illustrating how concentrated supply risks translate rapidly into financial instability.

. Geopolitical developments, particularly those affecting major global energy corridors, highlight the systemic nature of energy risk. The ongoing regional conflict in the Middle East illustrates the strategic importance of transit points such as the Strait of Hormuz, where approximately 25% of traded oil and 20% of liquefied natural gas are transported. What this and other chokepoints such as the Bab el-Mandeb Strait in the Red Sea reveal is not only physical fragility, but financial exposure to concentrated geopolitical risk, underscoring the need for diversified routes, adaptable energy systems, and resilient investment frameworks.

. At the same time, energy demand itself is becoming more complex. While global energy use is rising, electricity consumption is growing even faster. In 2024, overall energy demand increased by around 2%, but electricity use rose by more than 4%, driven by electrification, digital technologies, and greater cooling needs, according to the International Energy Agency (IEA). Data centers are a significant factor, currently using about 415 terawatt-hours, or 1.5% of global electricity, with forecasts suggesting this could surpass 900 terawatt-hours by decade’s end, largely driven by artificial intelligence and accelerated computing workloads. Such growth requires long-term power agreements, grid upgrades, and robust financial structures to manage demand fluctuations.

. Financial decisions therefore shape the resilience of energy systems. Capital allocation determines whether rising demand deepens exposure to fuel price swings or accelerates the shift toward cleaner, more stable energy sources. IEA’s data shows that global energy investment now exceeds 3 trillion dollars annually, with nearly 2 trillion directed to clean technologies such as renewables, grids, storage, efficiency, and low-emission fuels, almost double the investment in fossil fuels. This reflects not only climate objectives, but also the growing recognition that clean energy enhances long term stability.

. Yet even this record level of spending still falls short of what is needed to align with global net zero pathways and build resilience at scale, particularly in emerging markets where capital remains scarce, and where higher financing costs, currency risk, and policy uncertainty delay investment at scale. Large global banks are beginning to demonstrate what scaled capital deployment can achieve in practice. Since 2022, FAB has allocated AED 53.2 billion to renewable energy, enabling over 12.1 million MWh of generation across its portfolio. Innovative instruments are also illustrating how structured finance can support system stability while advancing decarbonization. The world’s first low-carbon energy bond, issued by FAB in September 2025, raised $750 million to support annual production of 2 GWh of low-carbon energy such as nuclear.

. The stakes are especially high in hard to abate sectors such as heavy industry, aviation, and shipping, which account for an estimated 30—40 percent of global emissions and remain highly exposed to energy price volatility. Transitioning these sectors will require trillions of dollars of investment this decade in electrification, low carbon fuels, hydrogen, and carbon management. Without financial mechanisms that absorb early stage technology, demand, and offtake risks, these sectors risk becoming less competitive and more exposed as energy systems evolve.

. Emerging energy segments can broaden markets, but financial challenges remain. Options like low-emissions hydrogen, long-duration storage, and digital power systems are recognized as strategic, yet their rollout is slower than ambitions. Finance can drive progress by blending public and private funds, managing risk, and structuring longer-term projects to boost system resilience.

. Artificial intelligence is intensifying the issue. As data center electricity usage more than doubles, the way this expansion is financed will decide whether it pressures or strengthens energy systems. Linking data centers to renewables, securing long-term clean power contracts, and investing in efficiency and advanced cooling can limit exposure to price volatility and grid congestion. Making digital infrastructure greener is a strategic imperative for energy security in a tech-driven world.

. Energy security today is a material financial risk with direct implications for long term economic stability. Financial institutions therefore have a central role in building resilience, by allocating capital toward diversified energy supply chains, modernized grids, clean power, and low carbon fuels, while embedding geopolitical exposure and energy price volatility into risk assessment and investment decisions. Expanding long term financing, deploying blended finance in higher risk markets, supporting hard to abate sectors through risk sharing structures, and financing energy efficient digital infrastructure will be essential.

. In an era defined by volatility rather than stability, aligning capital allocation with resilience objectives will determine which economies and energy systems remain competitive, secure, and adaptable in the decades ahead.