Europe: The Russian invasion of Ukraine in 2022 accelerated Europe’s transition away from Russian fossil fuels and toward renewable energy. By 2024, renewables accounted for 46.9% of EU electricity generation, up from 34% in 2019, while fossil fuels fell to a historic low of 29%. In 2025, this shift deepened: wind and solar power together surpassed fossil fuels for the first time in 14 of the 27 EU member states. For the first time, wind and solar together surpassed fossil fuels, generating 30% of EU electricity in the first half of 2024 compared to 27% of coal and gas. Wind power grew by nearly 10%, and solar by 20%, supported by favorable conditions and capacity additions. In 2025, solar power continued its rapid ascent, growing to 13.2% of EU generation, while wind provided 16.9%. Coal-fired electricity production fell to a new historic low of 257 TWh—just over a third of its 2015 level—with 19 member states registering coal shares below 5%. Hydropower also rebounded after years of drought, helping renewables exceed half of the EU’s power mix. Overall, renewables provided 47.7% of EU electricity in 2025, maintaining most of the previous year’s gains despite challenging weather conditions.

Fossil fuel generation dropped sharply, with coal output falling by 24% and gas by 14%, driving a 17% overall decline in fossil-based electricity. However, in 2025, gas generation increased by approximately 8% to cover shortfalls from lower wind and hydropower output, though coal continued its structural decline. This structural shift reduced EU power sector emissions to less than half their 2007 peak and cut reliance on imported gas, saving billions in energy costs. Electricity demand, which had slumped during the energy crisis, rebounded slightly by 0.7% in 2024 but remains below pre-crisis levels.

The European Green Deal continues to anchor this transition. It legally binds the EU to climate neutrality by 2050 and a 55% emissions reduction by 2030, supported by the European Climate Law. Financing comes from the NextGeneration EU Recovery Plan, REPowerEU, and the EU’s seven-year budget, with over €500 billion allocated for climate and energy projects. However, the European Commission estimates an annual investment need of €1.24 trillion—about 7.8% of EU GDP—to meet 2030 targets, leaving a significant funding gap. Legislative updates under the Green Deal include the Carbon Border Adjustment Mechanism (CBAM), an expanded Emissions Trading System, and the Net-Zero Industry Act, aimed at scaling clean tech manufacturing. In December 2025, the Commission adopted the RESourceEU Action Plan to accelerate critical raw materials supply, including a European Critical Raw Materials Centre set to begin operations in early 2026. Despite progress, watchdogs warn of delays and political pushback that could weaken climate ambition during the 2024–2029 term. The European Court of Auditors warned in early 2026 that EU action on critical raw materials "is not producing tangible results," noting that 10 of 26 high-risk materials are entirely imported and that new mining projects can take up to 20 years to become operational.

In Europe, rare earth imports have declined sharply in recent years. By 2024, EU imports fell nearly 30%, totaling just 12,900 tons. This contraction highlights the region’s heavy dependence on external suppliers, with almost half of its imports coming from China (46%), followed by Russia (28%) and Malaysia (20%). To address these vulnerabilities, the EU passed the Critical Raw Materials Act (CRMA) in 2022, aiming to strengthen supply chains. The CRMA has been reinforced by the 2025 RESourceEU plan, which aims to reduce strategic dependencies by up to 50% by 2029 and mobilise €3 billion over 12 months for alternative supply projects. However, analysts caution that rare earths remain a blind spot in Europe’s broader resource strategy. Despite these challenges, the EU rare earth metals market is forecast to grow modestly at a 1.6% compound annual growth rate (CAGR) through 2035. Still, Europe remains strategically exposed to "economic blackmail" due to China’s near-monopoly in refining and mining.

Asia: Energy demand in Southeast Asia is growing at one of the fastest rates globally, projected to rise 25% by 2035, driven by urbanization, industrialization, and population growth. Currently, fossil fuels dominate the region’s energy mix, accounting for around 80% of primary energy and 72% of power generation in 2024, with coal providing nearly half of electricity. In 2026, the US-Israeli war on Iran has caused a major supply shock, with LNG shipments through the Strait of Hormuz halted and Qatar suspending exports, sending Asian spot LNG prices to three-year highs. This has forced Asian utilities to boost coal-fired power generation to cut costs and safeguard energy security. South Asia is pivoting back to coal: Bangladesh is increasing coal generation and imports, Pakistan is prioritizing plants running on locally-mined coal, and India is maximizing domestic coal output. Despite net-zero pledges by eight ASEAN countries—Brunei, Malaysia, Singapore, and Vietnam by 2050; Indonesia by 2060; and Thailand by 2065—progress is slow. Coal remains entrenched, and LNG imports, seen as a cleaner alternative, face cost and supply challenges, especially after Europe’s surge in LNG demand following Russia’s invasion of Ukraine. The Middle East conflict has exacerbated these challenges, leading analysts at Wood Mackenzie to project that the conflict "will significantly reduce Asian LNG demand growth in 2026”.

South Asia faces similar hurdles. Coal still supplies about 60% of power generation and plans to shift to LNG were disrupted by soaring prices and competition with Europe during the energy crisis. In 2026, with LNG prices doubled and supply constrained by geopolitical conflict, South Asian nations have accelerated their return to coal. The region needs $367 billion in investment to stay on track for its 2050 decarbonization goals, but pandemic-related fiscal constraints and rising energy costs have slowed progress. While renewable energy capacity is expanding—solar and wind installations grew 30% between 2020 and 2024, clean energy investment remains far below required levels. ASEAN received only 2% of global clean energy investment in 2023, despite accounting for 9% of the global population. Southeast Asian power demand continues to grow at an estimated 6% annually, with projected electricity needs reaching 1,523 TWh in 2026.

Asia is investing in advanced technologies to accelerate its transition. Japan’s New Energy and Industrial Technology Development Organization (NEDO) and IHI Corp are leading projects under the Green Innovation Fund, including the development of ammonia-powered gas turbines and hydrogen infrastructure to support carbon-neutral aviation and power generation. Malaysia, through partnerships with IHI and Gentari, is building a green ammonia value chain aligned with its National Energy Transition Roadmap, aiming for large-scale hydrogen adoption by 2030.

Across Asia, China continues to dominate the rare earth sector. According to the USGS, global rare earth mine production reached an estimated 390,000 tonnes of rare earth oxide (REO) equivalent in 2025, with China accounting for approximately 270,000 tonnes (around 69% of the total) while the US, Australia, and Myanmar accounted for most of the remainder. The Bayan Obo mine in Inner Mongolia remains the world's largest rare earth production site. China also produces around 90% of the world's refined rare earth supply and hosts the largest capacity for separation and purification, making its dominance extend well beyond the mining stage; for heavier rare earths such as dysprosium and terbium, China's share of refined supply rises to between 98 and 99%. China further tightened its grip in 2025: in April and October 2025, it implemented two rounds of export restrictions on rare earth elements including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, citing national security concerns in response to US tariff increases, causing exporters to halt shipments almost overnight as they awaited licence approvals. These restrictions have had a direct effect on prices: neodymium rose approximately 136% year-to-date by mid-2026, from around $53/kg in January to $124.87/kg, driven by sustained magnet demand and tightening Chinese supply policy.

Global demand for rare earths is rising, driven primarily by clean energy technologies. The rare earth elements market is projected to grow from approximately 197,000 tonnes in 2025 to 208,000 tonnes in 2026, reaching 273,000 tonnes by 2031 at a CAGR of 5.61%, with Asia-Pacific accounting for 86% of global volume in 2025. Magnets — the key input for EV motors and wind turbines — represent the largest application at nearly 49% of demand and are growing faster than the overall market. Around 36% of magnet demand is currently linked to e-mobility, and that share is projected to rise above 50% over the next decade. Europe is expected to expand more slowly, relying on recycling, secondary supply, and policy frameworks rather than new large-scale mining projects, though the April 2026 partnership between the US Department of Defense and Lynas to begin heavy rare earth processing in Malaysia — the first time in three decades that heavy rare earths have been separated outside China — signals that Western diversification efforts are beginning to move from planning to production. Rare earths are increasingly central to geopolitical competition, as nations race to secure supply chains for military and clean technology applications.

Despite these opportunities, significant risks remain. Europe is vulnerable to supply shocks due to its limited domestic mining and refining capacity, a vulnerability confirmed by the European Court of Auditors' 2026 report, which found recycling rates for 7 of 26 critical materials at just 1–5%, with 10 materials not recycled at all. Asia faces geopolitical risks stemming from its over-reliance on China, which could destabilize regional supply chains. The 2026 LNG supply shock from the Middle East conflict has demonstrated how quickly energy security can unravel, forcing a temporary but significant backslide into coal. Globally, environmental concerns and slow permitting processes threaten to hinder the development of new projects. These challenges underscore the delicate balance between growing demand, strategic competition, and the need for sustainable resource management.