Global energy leaders divided on peak oil and transition strategy, says Bain & Company
Energy and natural resources companies are facing tough choices as they prioritize competitiveness and investment returns amidst geopolitical turmoil. Opinions are split on issues like peak oil and renewable energy, according to a report from Bain & Company that surveyed over 800 industry leaders.
The economic reality will continue to drive where capital flows in these industries, which for now appears to point to continued investment in fossil fuel technologies, with most executives believing global demand for oil will remain high for at least the next decade. Larger questions around the energy transition and the possibility of peak oil have taken a back seat, in some cases.
Despite that, the report notes that many companies are far from giving up on renewable energy. In fact, executive optimism has increased when it comes to investments in transitional materials, circular systems, and organic or regenerative agriculture, though they were far less optimistic about some other transition technologies like low-carbon hydrogen.
Among other categories, executives were most optimistic about AI and digital projects. This may highlight some degree of cognitive dissonance considering the finding that fewer than 20% of organizations are seeing results from scaling AI. Most of the notable ROI is from AI adoption in areas like operations and maintenance.
“While executives are prioritizing securing competitive advantage and access to affordable, reliable clean energy as well as reducing carbon emissions, there’s also a stronger consensus on global net-zero aspirations pushing out beyond 2070,” said Joe Scalise, global head of Energy & Natural Resources at Bain & Company.
“Increasingly, geopolitics and policy environment are impacting how leaders across the globe view transition-oriented investments differently. This reflects the complexity of the energy transition and the fact that the necessary policy support that many advocates hoped for hasn’t come to fruition.”
Peak oil and sustainability
Though most executives expect global oil demand to continue rising, expectations regarding when that demand will peak are split. Executives in the Middle East believe peak oil demand will be at some point between the earlier timelines of Europe and the much later expectations of North America.
Despite these differences, a stronger consensus is forming around net-zero emissions, with most respondents projecting the world will reach that goal in 2070 or later. That is why securing competitive advantage and access to affordable renewable energy sources ranks very high among global executives’ top priorities.
An emerging trend is companies that were already previously investing large amounts of capital in renewable energy have a more positive view of related core technologies in their markets. Meanwhile, those that were allocating less have been retreating. This could be a case of ‘sunk cost’, but is more likely related to underlying beliefs and principles.
For example, more than half of European companies surveyed invested significantly in areas related to the energy transition, compared to only a quarter of companies in North America. That reflects the general sentiments in the European Union versus the United States – sentiments that are influenced by prevailing trends in regulations, pressures from stakeholder, and other political and societal factors that play a role in how companies invest.
Shifting investment patterns and M&A
Ongoing policy volatility is impacting the attractiveness of different regions for companies looking to invest in transition-related areas. Although North America remains a favored destination, its perceived attractiveness among executives fell from 68% to 46% over the last year, not in small part due to the Trump administration’s radical policy shifts.
Many leaders now view their own home regions as the best bet for investment, likely part of an overall trend towards near-shoring. Three-quarters of those who find North America unattractive say that reducing policy uncertainty would be the most significant factor in their ability to scale up deployment in that market.
Executives are also bracing for significant changes to their business structures. Two-thirds of respondents expect an increase in portfolio restructuring, including divestments and consolidations, over the next two years.
This trend is driven by market volatility, rising costs, and heightened competition, including more mergers and acquisitions. In specific sectors such as chemicals, executives are particularly concerned with overcapacity and self-sufficiency in certain markets, which complicates long-term planning and asset management.
AI and infrastructure
While enthusiasm for AI is high across the industry, measurable financial results remain elusive. Around two-thirds of the companies surveyed are currently experimenting with AI or running pilots, though increasing value has been a struggle for more. Nearly half of the executives surveyed noted that the biggest barrier to success is a lack of clear links between AI outcomes and actual business value.
The surging power demand from AI and data centers is putting increased strain on utilities, especially in the U.S. where AI is truly booming. Utilities have had to take a hard look at how to accommodate this growing demand, including expanding energy storage and extending the life of existing assets. There has been some close cooperation between governments and tech companies aimed at solving this looming issue.
Overall, when it comes to devising a playbook for 2026, Bain & Company suggests prioritizing project execution, building realistic portfolios, understanding market policy, maintaining plan flexibility, and demanding value from AI.
“As energy executives translate today’s industry signals into action, the mandate for tried and true business discipline is as clear as it has ever been: Focus on investments grounded in the physics and economics, and bankable with clear line of sight to the explicit or implicit role of policy,” said Grant Dougans, partner in Bain & Company’s Energy & Natural Resources practice.
“Companies will need to carefully invest in areas where they are advantaged, including in AI; carve a portfolio where they can win, understand how governments think in priority markets and yet be flexible enough to withstand volatility.”
