Sovereign Energy Security Through an SDG Lens
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Article Type
Insights
Topic
Opinion
Published
August 12, 2026
Read time
6 mins
Authors
Irina Kurochkina, CFA
Ruari van Veen
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The conflict in the Middle East and resulting concerns over oil and gas supply chains have highlighted how dependent many economies remain on fossil fuels with significant implications for energy security, affordability and the broader global economy, underlining the importance of reducing reliance on imported fossil fuels. For sovereign investors, these developments reinforce an important lesson: energy policy is not only about environmental ambitions but, increasingly, a measure of economic resilience.

 

SDG 7 and sovereign resilience

The United Nations Sustainable Development Goal 7, Affordable and Clean Energy, seeks to ensure access to reliable, sustainable and modern energy for all. While often viewed through a climate lens, progress toward SDG 7 can also strengthen economic stability by reducing exposure to volatile fossil-fuel markets and improving long-term energy independence.

 

To monitor how counties are progressing on SDG 7, we use the score based on the following indicators1:

  • Population with access to electricity (%)
  • Population with access to clean fuels and technology for cooking (%)
  • CO2 emissions from fuel combustion per total electricity output (MtCO₂/TWh)
  • Renewable energy share in total final energy consumption (%)

 

Looking at overall global progress on SDG 7, there is a positive trend in broader access to clean fuels and an increasing share of renewable energy, accompanied by a gradual reduction in CO₂ emissions from fuel combustion. However, progress remains uneven across countries. For example, in high-income countries, the share of renewable energy in total energy consumption averages around 19%, while in low-income countries it remains below 12%. There are also substantial regional differences, with the Middle East and North Africa averaging just 2% of renewable energy share, compared with more than 29% in Western Europe.

 

Source: Aegon AM, SDG Transformation Center, 2025.  

 

In an environment of geopolitical shocks and volatility in fossil fuel prices, progress on this SDG can lead to a clear difference in a country’s performance. Countries heavily dependent on imported fossil fuels can face higher inflation, weaker trade balances, and increased fiscal pressure when energy prices rise. These developments can even ignite social unrest and institutional instability. By contrast, nations that have invested in domestic renewable energy production are poised to benefit from a more stable energy system and greater resilience to geopolitical shocks.


For investors applying a sustainable sovereign framework, this creates a meaningful connection between sustainability outcomes and sovereign fundamentals.

 

Learning from the leaders

Several countries demonstrate how policy commitment and strategic investment can transform an energy system over time. Some of the most well-known examples are countries like Denmark and Sweden. Denmark has been consistently building a leading position in the transition to cleaner energy. According to IEA, wind power, bioenergy and solar account for more than 80% of Denmark’s electricity mix, while coal has largely been phased out from district heating. Sweden also illustrates the importance of policy consistency. Strong carbon-pricing mechanisms, low-carbon electricity generation and continued investment in clean technologies have helped position Sweden among the world's leaders in decarbonisation.

 

It is important to note that renewable energy is something that any country should explore, no matter location or historical wealth. There are several leaders in emerging market countries that show how renewable energy can become embedded in sovereign policy.

 

Uruguay is one of the most compelling examples. Uruguay benefited from a strong domestic hydropower base, which provided an important starting point for expanding renewable capacity and reducing reliance on imported fossil fuelsThe country introduced a renewable energy promotion framework in 2010 that significantly increased renewable electricity generation and reduced dependence on imported fossil fuels. IEA data shows the reliance on imported fossil fuels has dropped significantly in this period.

 

Chile has also emerged as a global renewable-energy success story. Supported by abundant solar and wind resources, the country has attracted significant investment and established a clear pathway toward net-zero emissions, including an ambitious coal phase-out programme.

 

Source: Aegon Am, International Energy Agency. Time series of the % amount of renewable energy (nuclear, solar, wind, hydropower, biofuels and other renewables) as part of the total energy supply, which includes all energy produced or imported minus what is exported or stored. Data as of 07-2026.  

 

Looking beyond emissions

The transition away from fossil fuels is not solely about reducing greenhouse-gas emissions. It is increasingly about strengthening resilience in a world that is becoming more fragmented, polarized and unpredictable. Recent volatility in oil and gas markets demonstrates that fossil-fuel dependency represents both an environmental and economic risk. Countries that increase the share of domestic renewable energy production become less vulnerable to external shocks and volatility in energy prices.

 

For sovereign investors, monitoring progress on sustainable indicators like SDG 7 therefore provides insight not only into environmental performance, but also into a country's ability to navigate a changing global energy landscape. As the world moves toward 2030, sovereigns that successfully combine sustainability ambitions with greater energy security may be among the best positioned to deliver long-term economic resilience.


 

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Authors

Irina Kurochkina, CFA
Portfolio Manager
Irina Kurochkina, CFA, is a portfolio manager with a focus on sovereigns.
View profile
Ruari van Veen
Portfolio Manager
Ruari van Veen is a portfolio manager with a focus on rates markets, including money markets, sovereigns and LDI portfolios.
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