Why the Energy Transition Is Really an Infrastructure Race

May 29, 2026

The energy transition—defined as the global goal of reaching net-zero carbon emissions by 2050—has long been framed as a story of technological breakthroughs, from solar panels and wind turbines to the rise of electric vehicles.

That narrative obscures a difficult reality: More than $19 trillion has been invested in renewable energy over the past two decades, according to research from Clear Street, but wind and solar still account for only a relatively small share of total global energy capacity.

At the same time, energy systems are under growing strain as electricity demand continues to rise and supply chains face disruptions and geopolitical strife.

Amid these challenges, it’s becoming clear that the transition isn’t just about supplanting one energy source with another, but about rebuilding the entire global system that produces, moves and uses energy. This shift is already affecting how investors, policy makers and companies are planning the path forward.

The first centralized power grids date back to the late 19th century. These small, localized networks often used direct current systems. They later gave way to the larger, interconnected alternating-current networks still in place today.

Climate ambition meets reality

For the last decade, the energy transition has been understood as a gradual move away from fossil fuels, which continue to supply the majority of global energy, according to Bloomberg Intelligence. The data underscores how deeply embedded they remain in the global energy system, with most scenarios forecasting that fossil fuels will still account for more than half of total energy demand by 2040.

“Eight billion people in the world don’t survive without fossil fuels, and we foresee that being the case for a long time to come,” says Greg Payne, Senior Vice President of Mackenzie Investments’ Greenchip Team. “We’re trying to turn that around now, but it’s a slow boat to turn.”

However, renewable energy is introducing new complexities to the energy system.

Unlike fossil fuels, wind and solar generation is intermittent, requiring resilient systems to maintain reliability. Integrating these sources at scale has proven both more challenging and costly than expected.

“It’s very much not a simple narrative,” says Payne, who describes the transition as a balancing act between sustainability, affordability and energy security.

Energy security moves to the fore

Recent disruptions in global energy markets have shown how exposed many economies are to external supply shocks—especially those reliant on imported fuels or concentrated supply chains. As a result, energy security is emerging as a central consideration alongside decarbonization.

“We’ve entered a multipolar world,” says Benoit Gervais, Senior Vice President of Mackenzie Investments’ Resource Team, who notes that energy is shaped not only by cost, but also by trade relationships, domestic capacity and geopolitical alignments.

This is particularly evident in critical minerals, where supply chains are highly concentrated. Bloomberg Intelligence research notes that China retains a virtual monopoly over rare earth elements, controlling 70% of upstream mine production and 90% of downstream manufacturing.

Both Gervais and Payne point to China’s dominance across the energy value chain as a key vulnerability, and emphasize that the transition depends on the ability to secure reliable and diverse sources of energy, as well as the infrastructure to support it.

Rising demand constrained by limited capacity

At the same time, demand for energy is quickly accelerating globally. Electrification across sectors, combined with the rapid expansion of artificial intelligence and data centers, is driving a significant increase in power consumption.

But the infrastructure needed to support that demand is lagging. “There isn’t room for the grid to take it on,” Payne says.

Investment in grid networks is rising, but years of underinvestment and supply chain constraints continue to limit capacity. In many markets, delays to connect new power generation projects can last five or more years, while shortages of equipment such as transformers are further extending timelines. The pressure extends beyond networks to the materials that underpin electrification.

Copper, essential for transmission lines, power systems and digital infrastructure, is expected by many analysts to enter a structural supply deficit in the coming years as demand accelerates and new supply remains stilted.

More broadly, supply chains for critical minerals are highly concentrated, often with single countries dominating production or processing, creating vulnerabilities in a system that depends on steady and scalable inputs. These constraints contribute to the central challenge of the transition: the difficulty of scaling energy systems quickly enough to meet rising demand.

From ground to grid

What is emerging is an expanded view of the transition that extends beyond power generation. Payne describes it as a “ground to grid” challenge, encompassing everything from the extraction of raw materials to the infrastructure required to deliver electricity to end users.

Demand for materials such as copper and rare earth elements is increasing, driven by both electrification and the growth of digital infrastructure. Yet new supply is constrained by long permitting timelines, significant costs and the complexity of developing new projects.

Further along the value chain, processing and refining capacity remains concentrated and underdeveloped. Many mining and processing operations have historically generated low returns, limiting investment despite their growing strategic importance.

To achieve the goals of the energy transition, new infrastructure is required on a massive scale. Grids must be expanded and modernized, transmission networks extended and storage capacity added to manage variability in renewable generation.

Many of the key bottlenecks are institutional, Gervais says—permitting delays can stretch for years, and labor shortages are widespread—and infrastructure, from pipelines to transmission lines, has not kept pace.

“We’re getting into the era of the economy of doing,” Gervais says, referring to the physical build-out required to support the transition, which will require time and significant capital.

A shift in investment and a race to build

As we move into the “economy of doing,” investment opportunities are emerging across the broad energy ecosystem, including in grid infrastructure, industrial equipment and critical materials.

Governments are also playing a more active role in shaping markets, from supporting domestic supply chains to introducing policies aimed at securing access to key resources. The transition, in this context, is less a replacement of fossil fuels with renewables than an expansion of the overall energy system, incorporating multiple energy sources and investment across the value chain.

Increasingly, the progress of the energy transition is being determined by how quickly infrastructure can be built, from material processing facilities to renewable generation plants and the grids that connect them. The emphasis is shifting from the challenge of producing cleaner energy to developing the systems that can deliver it at scale efficiently.

Payne cautions that this reality stands in contrast to more optimistic narratives around abundance driven by digital technologies. “We see a world that’s the exact opposite,” he says, pointing to the growing constraints on energy, materials and infrastructure.

The pace at which these systems can be built will determine not only how quickly the transition unfolds, but how resilient and reliable it proves to be.