3 key insights into the Green Economy: Leading industries, energy insecurity and electricity demand

Every year we outline the size of the green economy.

Measuring the green economy is becoming increasingly important. Given its size, broad industry exposure and rapidly evolving nature, it’s gaining prominence as governments, businesses and investors respond to environmental challenges. However, the market can be volatile.

The FTSE Environmental Opportunities All Share (EOAS) Index has seen significant volatility since the beginning of 2025, particularly during the Q1 2025 tariff shock and the initial market response to the Iran war in March 2026. [note1] The index, which tracks companies generating more than 20% of their revenues from green products and services, provides a useful benchmark for the performance of the green economy.

Understanding its dynamics and characteristics is essential for investors and companies seeking to navigate opportunities in the green economy. 

Drawing on our latest research, here are three key findings from across our analysis:

1. Energy shock: Is insecurity driving the energy transition?

The global green transition is entering a more complex phase, with regions pursuing different pathways shaped not only by decarbonisation goals but also by energy security and industrial competitiveness.

Despite market volatility and energy security concerns, global green growth has reaccelerated. Heightened energy demand has supported positive performance for sustainable investment indices, particularly the FTSE EOAS Index. By the end of June 2026, the index had outperformed the FTSE Global All Cap Index by 10.8% over 12 months, a level exceeded only during 2020-21. [note2]

While the direction of travel remains towards a lower-carbon economy, regional responses to energy security challenges continue to diverge:

• Asia: Energy security remains a key consideration, reflecting the region's reliance on imported fossil fuels, particularly from the Middle East. Asia is still the largest source of coal investment and demand. Following recent oil price spikes, countries including Thailand, the Philippines, India and Bangladesh have increased coal-fired power generation.
• Europe: An accelerated transition to renewables continues to broaden Europe’s energy sources. Since Russia’s full-scale invasion of Ukraine in 2022 and the subsequent energy market disruption, Europe has accelerated efforts to diversify its energy mix and expand renewable energy capacity. The EU has set a target for renewables to account for 42.5% of energy consumption by 2030. [note3]

2. Accelerating electrification and AI-driven demand

Green revenues have expanded across 75% of the 133 green segments we track, driven by accelerating electrification, rising AI-related electricity demand, increasing energy efficiency pressures and clean transport growth. [note4]

Electrification continues to reshape energy markets. In 2025, renewables accounted for all growth in global electricity generation, while electric vehicles (EVs) reduced oil demand by 1.7 million barrels per day. Falling costs, particularly for solar, alongside energy security considerations, are often making clean energy solutions among the most cost-effective sources of energy.  [note5]

Demand is also being fuelled by the rapid expansion of AI infrastructure and data centres. The US has become the largest market for corporate clean power purchase agreements (PPAs), with Meta, Amazon, Google and Microsoft accounting for almost half (49%) of all clean power PPA deals in 2025.  [note6]

3. The global green economy spans almost all industries

If considered a standalone industry, the green economy would now rank as the world’s third largest. While market capitalisation is concentrated in Technology, Industrial Goods and Services, Automobiles and Parts, and Utilities at 73%, it spans nearly every sector of the economy.  [note7]

Energy Management and Efficiency, which includes green buildings, efficient information technologies and power storage, remains the largest green sector, representing 44% of the green economy by market capitalisation (US$4.7 trillion). 

Transport Equipment follows at 19% (US$2.0 trillion), led by EVs and batteries. 

These sectors dominate in scale, reflecting their central role in energy efficiency improvement and electrification.

This trend extends beyond AI and data centres. Transport, industrial processes, and the heating and cooling of buildings are also driving power demand, reigniting electricity growth for utilities in developed markets and playing to the strengths of renewables, particularly solar, in both cost competitiveness and deployment speed.

The prominence of Energy Management and Efficiency is reflected in debt markets as well as equities. By use of proceeds, the sector accounted for 34% of total green bond issuance outstanding as of Q1 2026, consistent with its position as the largest segment of the listed green economy. 

Energy Generation and Energy Equipment together represented the second-largest category at 16%.

A similar pattern is evident in London-listed companies. Industrials account for 26% of Green Economy Mark holders, [note8] while Utilities companies holding the Green Economy Mark represent 29% of all Utilities listed on the London Stock Exchange. 

This demonstrates the importance of these sectors in the UK's green economy landscape.

Ultimately, the green economy is increasingly being shaped by economics as much as environmental considerations, driven by electrification and rising electricity demand across AI infrastructure, data centres, transport and industry.