By Verangika Upananda
The World Economic Forum’s Energy Transition Index 2026 (ETI) was published a few weeks ago. ETI is a benchmark that measures how well countries are progressing toward a more secure, sustainable, affordable, and reliable energy system, while also assessing whether the conditions are in place for future progress. In simple terms, it looks at two things: how a country’s energy system is performing now, and how ready it is to improve further. That is why it is useful for comparing countries and identifying where policy, investment, or regulation needs strengthening. It finds that global transition progress has stalled. Sri Lanka appears as the top performer in South Asia, ranking 68th out of 120 countries, which suggests it is ahead of its regional peers (Sri Lanka is ahead of India, Pakistan, Nepal, and Bangladesh) but still far from the global leaders in transition readiness and system performance. For Sri Lanka, the finding is important because it confirms that progress is real but fragile. The country still needs stronger grid integration, clearer policy signals, and more resilient financing if it wants to move from moderate performance to a more secure and investable energy transition.
One of the most important shifts in energy policy today is that clean energy is no longer advancing only because governments support it. It is advancing because economics and energy security increasingly require it. The real problem is not energy prices in isolation but dependence on imported fossil fuels, which leaves countries exposed to supply shocks, geopolitical tension, and volatility in global markets. That is why the energy transition is now being driven less by climate politics alone and more by the need for resilience, competitiveness, and long-term security. Across the world, energy security has become inseparable from geopolitics. War-driven price spikes, shipping disruptions, and volatile fossil-fuel markets have shown that countries dependent on imported fossil fuels are exposed to higher costs and strategic uncertainty. For Sri Lanka, this is not a distant global trend. It is a direct warning about the risks of building long-term energy security on imported fuels. Sri Lanka is vulnerable because its energy system relies heavily on imported fossil fuels. That means the country has little insulation from external shocks in global oil and gas markets. When international prices rise or supply routes become uncertain, the effects are quickly transmitted to public finances, household costs, and industrial competitiveness. In that context, energy transition should be understood not just as a climate objective, but as a strategy for reducing exposure to imported coal and oil risk.
The domestic energy production in Sri Lanka is still dominated by biomass and agricultural waste, while fossil fuels continue to dominate the primary supply mix and transport remains heavily petroleum dependent. In other words, Sri Lanka’s energy vulnerability is structural, not temporary. This is why the transition must be understood as a security strategy as much as a climate one. The energy future of Sri Lanka has central bottlenecks that are technological, institutional, and financial: the grid has lagged behind renewable deployment, and high debt and currency risk make transition projects harder to finance. These weaknesses matter because they determine whether the country can convert renewable ambition into a stable energy system. The ETI reinforces that point by showing that future progress depends on the policy, financial, and infrastructure conditions that sustain deployment, not just on deployment itself.
For Sri Lanka, the policy implication is straightforward. Reducing exposure to imported fossil fuels should be treated as a national resilience priority. That means planning for a gradual fossil fuel phase-out, making storage part of the core system architecture, and using a least-system-cost approach that accounts for fuel import risk, grid stability, and long-term security. It also means strengthening policy certainty so that investors can trust the transition pathway. The ETI’s warning is clear: countries that do not close the gap between ambition and readiness will struggle to convert energy goals into durable outcomes. Sri Lanka is ahead regionally, but its next stage will depend on whether it can turn that relative position into lasting resilience. Further, the Southeast Asia Energy Outlook 2026 shows that current climate pledges in the region, including the new NDCs, are still not moving quickly enough to align energy systems with a secure low-carbon pathway. While the report makes clear that stronger implementation could sharply reduce fossil-fuel import costs and improve energy security, it also implies that today’s commitments alone are insufficient without faster policy action and deeper investment in clean energy infrastructure
Sri Lanka’s emerging green hydrogen policy should be seen in that same strategic frame. Green hydrogen points to a broader energy future that goes beyond solar and wind alone, especially because it can serve as a form of long-duration storage and support the decarbonization of harder-to-electrify sectors. It is also relevant to industrial and export-oriented value chains such as green ammonia, which could give Sri Lanka a new role in regional clean-energy markets. But hydrogen should be treated as a complementary pathway, not a substitute for grid reform, storage deployment, or fossil-fuel phase-out planning.
What links these policies together is the idea of resilience. Sri Lanka does not need to wait for the next global energy shock to discover the cost of dependence. The current international environment has already made the case: imported fossil fuels create strategic exposure, and that exposure weakens both macroeconomic stability and national energy security. A transition built on fossil-fuel reduction, system-wide cost planning, and energy storage would give the country a better chance of absorbing future shocks without passing them directly onto consumers and the budget.
Sri Lanka’s energy strategy should therefore be framed less as a narrow generation debate and more as a response to a changing global security environment. The real question is not whether renewable energy matters, but whether the country is prepared to use it to reduce vulnerability in a world where fossil-fuel imports are becoming more unstable and more expensive. That is why the combination of a fossil fuel phase-out framework, a least-system-cost approach, and a national storage roadmap offers such a strong policy foundation.
Verangika Upananda is a researcher with dual Master’s degrees in Development Studies from the University of Colombo, Sri Lanka, and the University of Bayreuth, Germany. Her work focuses on resource politics, gender, and sustainable energy transitions, with field experience in the Democratic Republic of Congo, India, and Sri Lanka. She has also worked in development consultantcy and Visiting Lecturer in Economics at the Open University of Sri Lanka.
Factum is an Asia-Pacific-focused think tank on International Relations, Tech Cooperation, and Strategic Communications accessible via www.factum.lk
The views expressed here are the author’s own and do not necessarily reflect the organization’s.
