Last month, BP faced investors at a capital markets day, responding to pressure from activist fund Elliott over concerns that it has drifted too far from its oil and gas roots in pursuit of green energy projects. Meanwhile, US giants like ExxonMobil have doubled down on fossil fuels and enjoy a significant valuation premium as a result.

This tension reflects a deeper uncertainty in global markets. The renewable energy revolution that once excited investors is under threat, particularly in the public markets.

While Donald Trump’s return to the White House has added fresh volatility, the retreat predates him. The S&P Global Clean Energy Index has fallen by 65% since Biden’s inauguration. Investors are questioning whether the transition can deliver profits as well as progress.

Yet this is no retreat from green investment itself. Instead, private capital has taken the lead where public markets have faltered.

In the UK, private equity and venture capital investments in renewables hit a five-year high in 2024, and forecasts suggest this growth will continue. A crucial driver of this momentum is the ability of private capital to take a longer-term perspective, avoiding the short-term pressures of public markets. These investors are not just funding projects but actively shaping them, working closely with industry experts to optimise operations, drive efficiencies, and accelerate deployment at scale.

Private equity, often not viewed as patient capital, is demonstrating both financial discipline and patience. While listed firms suffer the turbulence of shifting investor sentiment, PE funds are taking a longer-term approach, launching multi-fund strategies to hold assets for longer, convinced of the undeniable opportunity in decarbonisation.

The agility of private capital means that projects can be delivered faster, unencumbered by the slow-moving regulatory and reporting obligations of public markets. This dynamic is proving especially critical in funding emerging clean technologies that require sustained investment overextended periods before yielding returns.

At D2Zero, we see this first-hand. Backed by SCF Partners, a private equity firm with deep roots in energy, we have brought together six companies with expertise spanning oil and gas, hydrogen, and power efficiency. Their combined knowledge, developed over decades, is now focused on accelerating the energy transition. This collaborative model, leveraging both experience and innovation, is the blueprint for how the UK can capitalise on its existing strengths while pivoting towards the future.

This is the crucial point: for all the talk of a green industrial revolution, we have been too quick to divide the world into ‘heroes’ and ‘villains.’ The UK’s clean energy ambition has been undermined by its failure to fully embrace the North Sea’s existing expertise.

The idea that the oil and gas industry must be rapidly dismantled is short-sighted. Some 90% of the current workforce has skills transferable to offshore wind, CCUS, and geothermal. The same industry that has delivered complex energy projects for decades is best placed to build the clean infrastructure of the future. But an overzealous transition risks creating a cliff-edge for these skills, ultimately jeopardising the UK’s energy security.

The wider context is critical. London’s reputation as a world-leading financial centre was built, in part, on its status as the market of choice for listed energy businesses. If we get this right, a thriving clean energy industry, driven by private capital but supported by smart policy, could fuel a new wave of IPOs, revitalising the London market just as it faces existential questions about its global relevance.

To make this a reality, the government and financial sector must work together to create a stable regulatory environment that incentivises long-term investment. Mixed policy signals and excessive volatility deter investors, leading to a cycle of uncertainty that slows progress. We need targeted incentives for clean energy technologies and a pragmatic approach that recognises the transitional role of oil and gas rather than treating it as an adversary. A just transition must be both economically viable and strategically sound.

Moreover, the UK must take steps to ensure that our energy transition is an opportunity for domestic businesses rather than an outsourcing exercise. Too often, we have seen contracts for major renewables projects awarded to overseas firms while British supply chains struggle to compete.

Strengthening domestic manufacturing capacity and fostering homegrown expertise will be crucial in maintaining long-term energy security and economic prosperity. The UK has a wealth of engineering talent, but it requires clear policy direction and investment to compete on a global stage. Creating favourable conditions for domestic firms to scale will ensure that the economic benefits of the transition remain within our borders.

The UK has every reason to be excited about its energy transition. But we must recognise that the North Sea is an asset, not an obstacle. If we embrace this window of opportunity, balancing pragmatism with ambition, we can secure both our energy future and London’s place at the heart of global finance. The time for bold, informed action is now.

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This article originally appeared in The Herald.