In March, BlackRock CEO Larry Fink, whose firm manages US$14 trillion, wrote to investors that the world is reorganising around self-reliance. Rebuilding the global economy will cost more than governments and banks can fund alone.

Fink has form. In 2020 he told CEOs that climate risk was investment risk. By 2023 he had dropped the ESG label after conservative blowback. Now he’s early again, urging investors to price in renationalisation and deglobalisation.

This is the second instalment of a three-part series, drawing on work with Christopher Flynn and Ilona Millar at Gilbert + Tobin, and discussions with Andrew Tiernan, who leads Hakluyt in Australia. Part One explained why the settings of the global economy are breaking.

Part Two: what it means

Two forces are deciding who sets the rules for business.

The first is geopolitical: the world is reorganising into blocs. For eighty years, American power kept the sea lanes open and commodities flowing at market prices to anyone who could pay. The world free-rode on that security guarantee, paid for by US taxpayers. Following Trump’s return, the bargain is over.

The second is domestic: the state wants to be a market maker. For decades, governments set the rules and left it to private enterprise. Now they buy equity stakes, set price floors, and subsidise industries they consider strategic. Take the Pentagon, whose purpose is to win wars: it now holds 15% of a rare-earths miner and helps set the price it pays.

Where it matters most – in energy, critical minerals, semiconductors, AI, and defence – price is no longer enough. A board buying from the cheapest supplier and trusting government to stay out has the wrong model of the world.

1. Energy security is national security

For half a century, rich countries stopped worrying about whether they could keep the lights on. The Iran war ended those salad days. Energy is once again a question of state, to be stockpiled, subsidised, and when necessary, fought for.

For Canberra, the numbers are ugly. Petrol stocks sit at 49 days, well below the 90-day international rule; Australia is the only member of the International Energy Agency that has never met the target, missing it every year since 2012. In May 2026 the Albanese government put A$10.7 billion into a fuel security and resilience package: politics and resilience first, prices and markets second.

What does this mean for decarbonisation, when governments are already using energy security to wave new gas exploration through?

2. Decarbonisation loses, then wins

The underlying rationale for energy policy has been to decarbonise because the world ought to. In 2026, energy is no longer a loose proxy for decarbonisation but a national-security and economic priority. Decarbonisation will accelerate as a result.

The cheap option and the secure option are now the same. Solar electricity has fallen from US$460 per megawatt-hour in 2010 to around $40 today. Battery costs are down roughly 90% in fifteen years. Renewables built at home cannot be embargoed at a strait. Governments will follow Jack Lang’s advice and back self-interest: the best horse in the race, and the only one trying.

The politics matter even more than the economics. As Jason Bordoff of Columbia University puts it: “When national security issues are at risk, that’s when policymakers really jump through hoops.”

Climate advocates have spent thirty years looking for a driver strong enough to shock governments into decarbonising at the speed the science requires. They have now found one. A clean energy build-out keeps the grid running in all geopolitical weather; saving the planet is incidental. Arguments built on morality lose the next decade. Those built on security and cost win it.

3. Clean energy is the new oil dependence

Decarbonisation is part of the energy security answer, not the whole of it. The transition relocates risk rather than removing it, and the new dependence is more concentrated than the old one.

China dominates clean-energy supply chains, holding 70–90% market share across solar panels, batteries, electric vehicles, and the refined minerals that feed them. It refines 19 of the 20 strategic minerals tracked by the IEA. It produces 94% of the world’s sintered permanent magnets, the components in wind turbines, electric vehicles, industrial motors, data centres, and missile guidance.

The exposure is structurally different from OPEC’s grip on oil, in ways that make it harder to manage. Oil must keep arriving, tanker by tanker. A solar panel, once installed, runs for 25 years with no further inputs. So Chinese leverage concentrates at the moment of construction, not across the life of the asset.

That changes when the risk lands on a balance sheet. Ford lost a week of Explorer production in May 2025 because of a shortage of rare-earth magnets after China introduced new export licensing rules. More than 200 gigawatts of European solar capacity now sit on Chinese inverters. The controls now reach beyond China’s borders: any product containing 0.1% Chinese rare-earth material requires a licence from Beijing, and applicants must submit product schematics. In effect, the West is handing over industrial designs to access the inputs to its own clean-energy build.

Australian lithium, Canadian nickel, and African cobalt all flow through Chinese refineries before reaching a (mostly Chinese) manufacturer’s battery line. China controls about 90% of global rare-earth processing and more than 99% for three of the heat-resistant magnet inputs. Processing, not geology, is the chokepoint.

ESG frameworks routinely warn that fossil-fuel assets will be stranded by transition. But clean-energy assets can also be stranded by supply chain disruption. The transition that was supposed to insulate the developed world from OPEC’s oil coercion has built a new dependence in its place. It is more concentrated than the old one, and Beijing has already begun to weaponise it.

4. The state is a market maker again

Faced with voters angry at the cost of the transition and of life in general, the state has stopped refereeing markets and started playing in them. Interventionism re-emerged when governments bailed out the banks in 2008, became reflex when they underwrote whole economies through COVID, and is now entrenched.It takes two forms. The first is industrial: equity stakes, price floors and reindustrialisation schemes such as Future Made in Australia. The second is defensive: capped power bills, fuel-excise relief, and ministers bludgeoning supermarkets over grocery prices. The tools differ, but the instinct is the same: to shield voters from foreign competition, economic insecurity, and a gnawing sense of national decline.The turn is all the more striking given ageing populations and stretched public finances. Governments have less fiscal room yet are expected to protect citizens’ economic interests more directly than at any time since the 1970s. Left- and right-wing prescriptions may differ, but the same populist impulse animates Mamdani in New York, the AfD in Germany, Reform in Britain, and One Nation here.If the state is here to stay, what matters is how well it intervenes. The record is not encouraging. In Australia, the National Disability Insurance Scheme and Snowy 2.0 have blown tens of billions beyond forecast, even as the fiscal space for ambitious nation building shrinks. Something must give, through higher taxes, more debt, or more promises quietly broken. For a board, that means dealing with a government that is shareholder, customer, and regulator at once, subsidising your sector with one hand while taxing, capping, or rewriting its rules with the other. Sovereign risk has come home.

5. Australia is an energy superpower on two legs

There is a way through, and it starts with energy. Energy is the price beneath every other cost: manufacturing, food, transport, even the data centres straining the grid. Cheap, secure power lifts productivity, the one way to fund an ageing society without higher taxes or service cuts.

This is a case for an energy superpower on two legs. The first leg is domestic: solar and wind at home, firmed by hydro, big batteries, and gas, because power built here cannot be blockaded at a foreign strait. The second is geopolitical: uranium, metallurgical coal, LNG, and critical minerals, sold to Japanese, Korean, and European buyers already paying a premium for supply they can trust. These exports should fund the grid that will one day replace them.

In The Great Decoupling, I described the contradiction at the centre of Australian prosperity: 81 per cent of its exports go east while security stays west. On two legs it becomes a coherent position.

Neither leg is clean of China. The renewables leg leans on its panels and batteries; the export leg ships ore that Chinese refineries process before it re-enters allied supply chains. The same chokepoint, met twice, from opposite directions. The US-Australia critical-minerals framework of October 2025 is the start of an answer.

None of this is automatic. It depends on clear policy settings, global supply chains staying open, and electorates tolerating the costs of transition. What boards can control is how they respond: treating energy access and geopolitical exposure as core strategic variables, not background ESG issues; positioning for the upside if the two-leg strategy succeeds, and staying resilient if it does not. This is what ESG now means in practice: energy, security, and geopolitics baked into core strategy, not appended as incidental disclosure.

In sum

Part One showed that the global economy’s settings have broken. Part Two has shown what that does to a business: energy is a question of state again, the transition trades one dependence for another, and fiscally stretched governments have become shareholders, customers and regulators all at once. The board’s task is to see this era for what it is and build strategy around it, not wait for the old one to return.

Every board now has to ask three questions. What do we own? What do we depend on? Who can take it from us? Most can answer the first from their balance sheet. Very few have done the thinking on the other two. Part Three is where we start to answer them.

About the Author

Luke Heilbuth is CEO of BWD Strategic, and a former Australian diplomat. BWD builds resilience strategy and board training for directors whose risk registers no longer match the world.

On Substack, Luke writes about the systems we’re breaking and the blindness that lets us — from climate and geopolitics to AI and the future of work. Read & Subscribe on Substack here.