Global energy chokepoints pose persistent risks to oil and LNG supply, with E3G warning import-dependent economies face long-term vulnerability.

Even in an era of apparent energy abundance, the global system that powers economies is built on a fragile foundation: a handful of narrow maritime routes that cannot be bypassed.

A new analysis by E3G warns that these global energy chokepoints—from the Strait of Hormuz to critical shipping corridors in Asia—are not occasional vulnerabilities but permanent features of the fossil fuel economy.

A system where disruption is inevitable

For decades, energy security has been framed as a question of supply: more oil, more gas, more infrastructure. But the report challenges that assumption, arguing that supply expansion does little to address the deeper structural risks embedded in global trade routes.

Introducing the findings, Richard Smith, a senior policy advisor at E3G, cautioned that recent tensions around key transit routes are not exceptional.

“What we’re seeing in Hormuz isn’t a freak, one-off event. It’s an inherent and unavoidable part of the global oil and gas system. Even though we were just in an era of low price and oversupply, globally integrated fossil fuel markets leave all oil and gas consumers bracing for an inflation shock. Renewables aren’t without risk – there are also solar panels stuck in Hormuz right now. But for every solar panel that makes it through, that’s secure energy every day for a generation. Renewables and energy efficiency are the only realistic way to escape this crisis loop.”

The implication is stark: even in well-supplied markets, the concentration of energy flows through a limited number of routes ensures that disruption remains a constant threat.

The rise of “paper chokepoints”

While physical blockages—conflict, piracy, or accidents—remain the most visible risks, the report highlights a quieter and increasingly influential set of constraints.

So-called “paper chokepoints” include shipping bottlenecks, insurance withdrawals, regulatory barriers and climate-related disruptions. None require a single tanker to be stopped outright, yet all can constrict supply and drive up prices.

Because oil and LNG markets are deeply interconnected, these disruptions cascade quickly across regions. A bottleneck in one location can trigger volatility far beyond it, intensifying competition for cargoes and amplifying price shocks.

This interconnectedness means that even countries not directly reliant on a specific chokepoint are still exposed to its consequences.

Asia’s vulnerability—and India’s economic exposure

The risks are most acute in Asia, which depends heavily on energy imports moving through a small number of strategic routes.

Madhura Joshi, programme lead for global clean power diplomacy at E3G, pointed to the region’s deep exposure to the Strait of Hormuz.

“Asia receives nearly 90% of the oil and LNG transiting the Strait of Hormuz, and the consequences of prolonged disruption will be felt unevenly across the region. For India, sustained high oil prices translate directly into widening current account deficits, currency pressure, and fiscal stress that could constrain both growth and public spending. Japan and South Korea, among the world’s most LNG-dependent economies, face acute supply vulnerability with limited ability to absorb prolonged market tightness.

“This crisis makes clear that energy security for these economies cannot rest on access to the same fragile chokepoints; accelerating electrification and domestic clean energy is the most durable path to genuine resilience.”

For India, where energy imports are tightly linked to inflation, fiscal balance and currency stability, the stakes are particularly high. Prolonged disruptions are not just supply issues—they are macroeconomic shocks.

Energy security—and the illusion of control

The report reframes energy security as a question not simply of access, but of control. Maria Pastukhova, programme lead for energy transition at E3G, emphasised that reliance on distant supply chains fundamentally limits national resilience.

“Energy systems are a backbone of national security, but for many importers, that backbone depends on infrastructure and routes far beyond their control. Reliance on distant supply chains and chokepoints means disruption risk is built in. Clean energy systems are not immune to shocks, but they shift more of the system under domestic control and reduce exposure to geopolitical and market volatility. That is the strategic energy security lesson from this crisis.”

In other words, the vulnerability lies not just in scarcity but in dependence—on infrastructure and geopolitics beyond national reach.

A pathway out of the chokepoint trap

The analysis outlines a five-track strategy to reduce exposure, combining short-term crisis management with long-term structural change.

Emergency measures—strategic reserves, diversified suppliers, infrastructure protection—can help absorb immediate shocks. But they do not eliminate the underlying risks.

Only structural shifts—reducing reliance on imported fossil fuels through electrification, efficiency, storage and domestic clean energy—offer durable resilience.

Unlike fossil fuel systems, where exposure to chokepoints is persistent, clean energy systems become more secure over time as domestic capacity expands.

A permanent feature of the fossil fuel era

The report’s conclusion is clear: chokepoint risk is not a temporary disruption but a defining characteristic of the global oil and gas system.

As long as energy flows depend on narrow, contested routes, the possibility of sudden shocks—economic, political or logistical—will remain ever-present.

For policymakers, the question is no longer whether disruptions will occur, but how quickly they can reduce their exposure to them.

And in that transition, the shift to clean energy is no longer just a climate imperative—it is a strategic one.

China’s $120 billion investment surge into critical minerals is not just about securing resources—it is about shaping the architecture of the global clean energy economy. As supply chains realign, the balance of industrial power is shifting in ways that could define the next century

The global energy transition is often framed as a technological race—who will build the best batteries, the most efficient solar panels, or the most advanced electric vehicles. But beneath this narrative lies a more fundamental contest: control over the raw materials that make these technologies possible.

Lithium, cobalt, nickel, rare earths—these are not just commodities. They are the building blocks of the new industrial economy.

Over the past few years, China has moved decisively to secure them.

A recent analysis by Climate Energy Finance (CEF) estimates that China has committed more than $120 billion in outbound investment into critical minerals and metals since 2023, spanning multiple continents and resource categories.

What this report documents is not merely investment flows, but the architecture of a new global green industrial order,” says Tim Buckley, report lead author and Director at CEF.

This is not a scattered set of deals. It is a coordinated strategy—one that is rapidly reshaping the global resource landscape.

Beyond Extraction: Building a System

Historically, global resource investment followed a familiar pattern: capital flowed from developed economies into resource-rich regions, extracting raw materials for export with limited local value creation.

China’s current approach marks a significant departure.

Instead of focusing solely on extraction, Chinese firms are increasingly investing in processing, infrastructure, and industrial ecosystems within host countries—building ports, railways, clean energy systems, and enabling manufacturing capacity.

As Associate Professor of the Australia–China Relations Institute at the University of Technology, Marina Yue Zhang notes, the strategy has moved “well beyond simple resource extraction towards a more integrated model linking resource acquisition with processing, infrastructure, manufacturing, and long-term industrial partnerships.”

The result is a vertically integrated system that connects resource acquisition, refining, and industrial production into a single coordinated framework.

China already dominates many parts of this chain—accounting for roughly 90% of global rare earth refining, over 70% of cobalt processing, and around 60% of lithium processing.

The Logic of Vertical Integration

At the heart of China’s strategy is a simple economic insight: control the entire value chain, and you control the market.

By investing simultaneously in mines, processing facilities, and downstream manufacturing, China reduces its dependence on external suppliers while increasing global reliance on its capabilities.

Buckley underscores the scale and intent of this approach: China has built “a vertically integrated green supply chain spanning every continent, combining state-directed capital with private enterprise execution at a speed and scale no competitor country comes close to matching.”

For competitors, replicating this model is not just a matter of capital—it requires alignment between policy, industry, and long-term planning.

A New Partnership Model in the Global South

One of the most significant shifts in China’s strategy is how it engages with resource-rich nations.

Earlier models of foreign investment were often criticised as extractive. Today, Chinese firms are increasingly offering in-country processing, infrastructure investment, skilled employment, and technology transfer in exchange for long-term resource access.

As CEF analyst Matt Pollard explains, these are “not just mining deals, but blueprints for green industrialisation,” offering pathways for emerging economies to build domestic industries.

For many countries in the Global South, this represents a significant opportunity—but also a strategic choice.

A Multipolar Shift

China’s resource strategy is unfolding in a rapidly changing geopolitical landscape.

As Western economies adopt more protectionist measures and retreat from multilateral engagement, China has expanded its global investment footprint—particularly across emerging markets.

Buckley argues that this divergence is accelerating China’s momentum: its trajectory is “one of adaptation and acceleration, not retreat,” even amid rising geopolitical tensions.

The result is a shift toward a more multipolar global economy, where influence is distributed across multiple centres rather than concentrated in traditional Western powers.

Supply Chain Risks and Strategic Vulnerabilities

China’s growing dominance also raises concerns.

The concentration of extraction and processing capacity creates risks for global supply chains, energy security, and industrial competitiveness.

Countries dependent on these supply chains face potential vulnerabilities—from geopolitical disruptions to market imbalances.

Efforts to diversify supply are emerging, including strategic collaborations such as Japan’s partnership with Australia’s Lynas Rare Earths to secure long-term supply.

But scaling such alternatives remains a complex and time-intensive challenge.

The Limits of Protectionism

In response to China’s rise, some governments have turned to tariffs, trade barriers, and restrictive policies.

While these measures may offer short-term protection, they do little to address the underlying structural gap.

The challenge is not simply one of market access—it is one of capability.

Without investment in processing, infrastructure, and industrial capacity, alternative supply chains remain incomplete. Protectionism, in this context, risks isolating economies rather than strengthening them.

More effective responses are likely to involve strategic partnerships and targeted investments, similar to emerging collaborations in rare earth supply chains.

Implications for India and Emerging Economies

For countries like India, the evolving resource landscape presents both opportunity and urgency.

India has ambitions to become a major player in clean energy manufacturing and supply chain diversification. It has a large domestic market, growing industrial capacity, and a strong talent base.

But it faces significant gaps.

Processing capabilities remain limited. Access to critical minerals is constrained. And integration across the value chain is still developing.

To compete effectively, India will need to move beyond isolated initiatives and adopt a more coordinated approach—linking resource access, industrial policy, and global partnerships.

More broadly, resource-rich nations face a strategic choice. They can remain suppliers of raw materials, or they can leverage current demand to build domestic industries and capture greater value.

China’s model offers one pathway. Whether others can develop alternatives will shape the future of the global economy.

The New Resource Order

The transition to a low-carbon economy is not just an environmental imperative—it is an industrial transformation.

At its core lies a simple reality: technologies may evolve, but they are built on physical resources. Control those resources, and you shape the trajectory of the transition.

China’s $120 billion investment surge is a reflection of this understanding. It is not merely securing supply—it is constructing a system.

The implications are profound.

As the world moves toward net zero, the question is no longer just who will innovate, but who will control the inputs that make innovation possible.

In that contest, the contours of a new resource order are already emerging—and China is at its centre.

India’s non-fossil power capacity is set to reach 70% by 2035-36, driven by rapid solar expansion, but grid constraints, storage gaps and utilisation challenges could shape the energy transition.

India is preparing for one of the most dramatic transformations in its energy sector, with the Central Electricity Authority outlining a future where clean energy dominates installed capacity but fossil fuels continue to underpin supply reliability.

The National Generation Adequacy Plan (2026-27 to 2035-36) presents the most detailed roadmap yet of how India’s electricity system will evolve over the next decade. It projects that India’s installed power capacity will reach 1,121 GW by 2035-36, with 70% (786 GW) coming from non-fossil sources, signalling a structural shift in the country’s energy mix.

At the same time, the report highlights a more complex reality: capacity expansion alone will not define the transition—utilisation, storage, and grid readiness will.

India Power Capacity 2035-36 to Cross 1,100 GW

India’s electricity system is expected to nearly double in scale over the next decade.

According to the report, net electricity generation is projected to rise from around 1,725 billion units today to 3,450 billion units by 2035-36, reflecting the country’s rapid economic growth and electrification push.

Solar energy is set to emerge as the dominant force in India’s power mix. Installed solar capacity alone is expected to exceed 500 GW, accounting for nearly 45% of total capacity, making it the single largest contributor to India’s energy basket.

The detailed breakdown of projected capacity includes:

• 315 GW coal
• 509 GW solar
• 155 GW wind
• 78 GW large hydro
• 20 GW gas
• 22 GW nuclear

These figures underline a system where renewables dominate capacity, but conventional sources remain critical to stability.

India Power Capacity 2035-36 vs Actual Generation Gap

One of the most important insights from the report is the divergence between installed capacity and actual electricity generation.

Despite renewables making up 70% of capacity, coal is expected to remain the backbone of electricity supply. The report projects coal will still account for 51% of total electricity generation (1,819 BU), while solar will contribute around 27% (984 BU).

This gap reflects the intermittent nature of renewable energy and the continued need for firm, dispatchable power.

As the report notes, “the source of firm power at present is predominantly coal-based generation.”

This highlights a key transition challenge: while India can rapidly build renewable capacity, replacing coal’s role in ensuring round-the-clock supply will require deeper systemic changes.

India Power Capacity 2035-36 Faces Grid Bottlenecks

While India’s renewable expansion has been rapid, the system’s ability to absorb this capacity remains constrained.

A major concern flagged in the analysis is the issue of stranded renewable capacity—power that is generated but cannot be transmitted due to grid limitations.

Vibhuti Garg, Director South Asia at the Institute for Energy Economics and Financial Analysis, said: “It is encouraging to see the national generation adequacy plan taking shape. India has made remarkable progress in expanding renewable energy capacity, with clean sources now accounting for more than 50% of installed capacity.

However, the real test lies not in capacity addition, but in how effectively this generation is utilised. Currently, over 37 GW of renewable energy capacity remains stranded—highlighting gaps in planning, integration, and grid readiness.

This underscores the urgent need to shift focus from merely adding capacity to ensuring efficient evacuation and utilisation. Strengthening transmission infrastructure and aligning it with demand centres is critical. As supply and demand increasingly diverge geographically, coordinated planning becomes essential.”

The report also notes that renewable energy generation is becoming more geographically dispersed, increasing the need for robust transmission networks to connect generation hubs with consumption centres.

India Power Capacity 2035-36 Needs Massive Storage Push

Energy storage emerges as the single most critical enabler of India’s clean energy transition.

The plan estimates that India will require 174 GW / 888 GWh of energy storage capacity by 2035-36, including battery storage and pumped hydro.

However, the current pipeline is far from sufficient:

• Only 10.6 GW of battery storage is under construction
• Additional capacity remains in tendering or early planning stages

This gap between projected need and current deployment highlights a major financing and policy challenge.

The report also emphasises that solar-plus-storage systems are emerging as an alternative, particularly for meeting peak demand during non-solar hours, but are yet to fully replace coal-based baseload generation.

India Power Capacity 2035-36 and Energy Security

The timing of the plan is significant, coming amid global energy market disruptions and geopolitical tensions.

Vibhuti Garg noted:“At a time when India remains exposed to global fuel supply disruptions due to geopolitical tensions, accelerating renewable energy integration is not just a climate imperative—it is an economic and energy security necessity.”

The report positions renewable energy not just as a climate solution, but as a strategic tool for reducing dependence on imported fuels.

EVs and Data Centres as New Demand Drivers

The plan also identifies electric vehicles and data centres as emerging sources of electricity demand.

These loads are expected to be geographically concentrated, requiring careful coordination between energy supply and demand planning.

Vibhuti Garg added: “This challenge will intensify with the rise of new demand drivers such as electric vehicles and data centres. These loads are often geographically concentrated, making it even more important to strategically plan clean energy supply in tandem with demand clusters.”

India’s power sector is entering a defining decade.

The National Generation Adequacy Plan makes it clear that the country is on track to build one of the world’s largest clean energy systems. But it also underscores that capacity alone is not enough.

The real transition will depend on:

• Grid infrastructure
• Energy storage deployment
• Demand-side planning
• Policy alignment with emerging technologies

As the report emphasises, the goal is not just to expand capacity, but to ensure a reliable, resilient, and cost-effective power system capable of meeting India’s rapidly growing electricity demand.