Global FID Outlook 2026: What Will Actually Reach Sanction (and Why)

Global FID Outlook 2026: What Will Actually Reach Sanction (and Why)

Energy & infrastructure projects across LNG, power, grid, refining, petrochemicals, hydrogen and CCUS.

 

Executive Summary

2026 is not expected to be the mega-FID year that consensus forecasts predicted. While record-breaking Final Investment Decision announcements suggested transformational capital deployment, our project-level analysis reveals a structural misalignment between what was announced and what is likely to reach financial close over the next eleven months.

Based on Q4 2025 pipeline assessment and early January 2026 deal flow, we identify five critical insights that explain why FID conversion rates are tracking 30-40% below market expectations - and where capital is likely to deploy this year.

The core finding: Execution readiness, not financing availability, determines which projects convert. The gap between announced pipelines and executable deals is wider than most participants anticipated entering this year.

 

Finding 1: The Executable Market Is a Fraction of the Announced Pipeline

The Perception vs Reality Gap: Why 2026 Isn’t the "Mega-FID" Year Predicted

Entering 2026, industry consensus anticipated a landmark year for infrastructure FID. LNG capacity announcements exceeded 200 MTPA globally. Renewable energy projects totaling over 400 GW claimed "2026 FID-ready" status. CCUS facilities representing 150+ MTPA of capture capacity were declared in active development.

When we apply project-level scoring across commercial readiness, offtake certainty, permitting status, EPC clarity, and financing conditionality, our revised executable FID forecast for 2026 has contracted to roughly 30-40% of announced capacity across most sectors - and early-year deal flow validates this compression.

Sector	Conversion Rate
LNG	35%
Offshore Wind	30%
CCUS	30%
Green Hydrogen	22%

 

Analyzing the 30-40% Conversion Rate in LNG, Wind, and CCUS

This divergence stems from three structural forces:

Announcement inflation. Project sponsors faced pressure to maintain market relevance through 2024-2025. Announcing a "2026 FID target" signaled momentum to stakeholders -  even when internal timelines showed 2027-2028 as more realistic. The cost of announcing was zero; the cost of missing FID is reputational damage that is now arriving.

Optionality preservation. Many announced projects were placeholders designed to secure permits, grid connections, or land rights while awaiting market clarity. They are real projects - but contingent on conditions (carbon prices, offtake contracts, technology costs) that have not materialized as assumed.

Deferred execution risk. A significant portion of the pipeline sits in our "Upside" category - projects that could still reach FID in 2026 if multiple variables align favorably (policy clarity, EPC pricing stabilization, sponsor risk appetite). But as we move through Q1, the probability window is narrowing.

Implications for Market Participants

For investors, this means the "wall of FIDs" is not arriving as a synchronized wave. Capital deployment will be lumpier and more selective than aggregate announcements suggested at year-end 2025.

For suppliers and contractors, the addressable market is smaller but more concentrated—winning a share of executable deals matters more than tracking the entire announced universe.

For policymakers, the gap highlights that announcement velocity ≠ delivery velocity. Achieving climate or energy security targets requires not just project initiation, but systematic removal of execution bottlenecks that are now clearly visible in Q1 slippage patterns.

 

B) Regional Power Shifts: The Middle East Outpaces Europe in Execution

Finding 2: Europe Leads in Pipeline, Lags in Conversion

The Pre-FID vs. FID Distinction

Europe positioned itself through 2024-2025 as the global leader in energy transition—and by certain metrics, it is. The region accounts for approximately 40% of global announced offshore wind capacity, 35% of green hydrogen projects, and over half of industrial CCUS initiatives targeting hard-to-abate sectors.

Yet as 2026 unfolds, European FID conversion rates are lagging peer regions by 15-25 percentage points.

Why Europe’s Pipeline is Stalling

The issue is not ambition or capital availability. European pension funds, infrastructure investors, and development banks are actively seeking transition assets. Instead, three execution constraints are binding:

Bankability instrument complexity. Europe has innovated extensively on de-risking mechanisms - Contracts for Difference (CfDs), carbon contracts, green premium auctions. But these instruments often require multi-year negotiation, credit enhancement structuring, and regulatory approval cycles that delay FID even after project selection. A CfD award does not equal an executable contract.

Permitting duration uncertainty. While some member states have streamlined processes (Denmark, Netherlands for offshore wind), others face 3-5 year permitting timelines with material appeal risk. This creates execution asymmetry within the region - leaders pull ahead, laggards stall.

Merchant exposure on critical variables. Many European projects retain merchant exposure to power prices, hydrogen offtake, or CO₂ transport/storage availability. Until these revenue streams achieve contractual certainty or regulatory floors, lenders remain cautious—extending due diligence and tightening terms.

The Bifurcation Pattern

Not all European developers face these challenges equally. Integrated utilities with balance sheet capacity (Ørsted, Equinor, Iberdrola) can absorb merchant risk and move faster. Pure-play developers relying on project finance face longer cycles.

The result: Europe will deliver significant FID volume in 2026 -but underperformance relative to pipeline size is now evident in Q1 deal flow, particularly in hydrogen and CCUS where anticipated closings are slipping into Q2-Q3 or deferring entirely.

 

Finding 3: MENA’s "Stealth" Leadership in CCUS and Energy Transition

Reframing the Regional Narrative

Market commentary has tended to position the Middle East as a hydrocarbon incumbent managing gradual transition. This undersells what is actually happening in 2026.

On execution speed and FID conversion, MENA is outperforming every other region - including on technologies assumed to be Western-led.

Through 2024-2025, the Middle East consistently delivered faster FID cycles across:

• LNG expansions (Qatar North Field, UAE Ruwais)
• Petrochemicals and refining (Saudi Aramco downstream integration)
• CCUS (ADNOC's Al Reyadah expansion, Saudi Aramco Jubail)

As we move through Q1 2026, MENA-based projects represent ~25% of our high-confidence CCUS FID forecast for the year - despite being underweighted in global CCUS narrative attention.

Why MENA Converts Faster

Four structural factors create execution velocity:

Integrated risk absorption. National oil companies and sovereign-backed utilities can internalize risks (CO₂ supply, reservoir performance, off-taker credit) that would require complex third-party contracting elsewhere. This collapses decision timelines.

EPC market depth and relationship continuity. Decades of mega-project execution have created deep contractor relationships and established pain/gain sharing norms. EPC pricing and risk allocation - often the most contentious FID negotiations - resolve faster.

Subsurface data advantage. For CCUS specifically, MENA operators have 50+ years of reservoir characterization, enhanced oil recovery experience, and injection infrastructure. Geological risk, a major lender concern in frontier CCUS basins, is largely quantified.

Streamlined decision governance. While this varies by entity, many MENA projects benefit from shorter approval chains and less exposure to public markets scrutiny or activist opposition that can delay Western projects.

The Market Blind Spot

CCUS has been framed as a North American story (driven by 45Q tax credits) and a European story (driven by ETS pricing and Net Zero Industrial Plans). But when measuring FID probability rather than announced ambition, MENA is converting more consistently in early 2026.

This matters for suppliers, technology providers, and investors: the bankable market for CCUS services this year is more Middle East-weighted than business development strategies calibrated at year-end 2025 assumed.

 

Finding 4: The Safe Haven: Why Regulated Transmission is Winning the Investment Race

The Anti-Hype Investment Case

While market attention gravitates toward transformational mega-projects—offshore wind farms, hydrogen hubs, floating LNG terminals - a quieter category is delivering more consistent FID conversion: regulated transmission and grid infrastructure.

Across our FID pipeline scoring, transmission projects show:

• 2/3^rd conversion probability (vs. 25-35% for merchant renewables)
• Faster permitting cycles (18-30 months vs. 36-60 months)
• Lower financing costs (120-150 bps spreads vs. 250-400 bps)

Why Transmission Outperforms on Bankability

The sector benefits from structural advantages that de-risk FID:

Revenue certainty through regulation. Most transmission projects operate under Regulated Asset Base (RAB) or Rate of Return frameworks, where allowed returns are set by independent regulators. This eliminates merchant exposure—the primary source of FID delay in generation and industrial projects.

Established technology and modular execution. High-voltage transmission, substations, and interconnectors use proven technology with predictable cost curves. Modular rollout (vs. single-point mega-construction) reduces completion risk.

Cross-party political support. Unlike generation projects that can become politicized (onshore wind opposition, nuclear debates), transmission is broadly recognized as enabling infrastructure. This reduces permitting friction and appeals risk.

Availability of patient capital. Pension funds, insurance companies, and infrastructure funds view regulated utilities as core holdings. Capital supply is deep, and cost of capital is structurally lower than for merchant or contracted generation.

The Strategic Implication

For investors seeking deployment certainty rather than transformational upside, transmission offers a superior risk-return profile in 2026—and early-year deal flow confirms this pattern. The sector will not generate headlines—but it will generate contracted cash flows.

For policymakers, transmission buildout is the critical path for renewable integration. Every GW of offshore wind or solar requires ~0.3-0.5 GW of incremental transmission capacity. FID conversion in generation this year is partially a function of transmission execution—not just generation project readiness.

 

Finding 5: Solving the "FID Killer": EPC Risk vs. Capital Availability

The Misdiagnosed Bottleneck

Market commentary on FID challenges tends to focus on:

• Financing availability ("Are banks still lending?")
• Policy uncertainty ("Will subsidies be extended?")
• Offtake risk ("Can we secure long-term contracts?")

These are real issues - but they are not the primary constraint in early 2026.

Our analysis of deferred or canceled FIDs over 2024-2025 shows that >60% cited EPC contracting failure as the proximate cause. Projects had financing lined up, permits in hand, and off-takers identified - but could not finalize EPC terms that satisfied sponsor and lender risk tolerance. This pattern is continuing into Q1 2026.

Why EPC Has Become the Binding Constraint

Post-pandemic shifts have made EPC the critical path, and these constraints remain binding as we move through 2026:

Contractor risk appetite has collapsed. After high-profile cost overruns on mega-projects (LNG Canada, Hinkley Point C, multiple offshore wind farms), major EPCs remain unwilling to take lump-sum turnkey risk on complex projects. They continue demanding reimbursable structures, pain/gain sharing, or scope guarantees that shift risk back to sponsors—terms that many project finance lenders will not accept.

Supply chain volatility has made fixed pricing unviable. Steel, electrical equipment, specialized vessels, and skilled labor costs experienced 30-60% swings over 2023-2025. EPCs cannot credibly lock pricing for 4-6 year construction programs without enormous contingency buffers—which sponsors view as uncompetitive. This dynamic persists into 2026.

Scope instability is endemic in first-of-kind projects. Green hydrogen, CCUS, and offshore wind-to-hydrogen projects often reach EPC tendering with incomplete engineering. When scope changes during construction, attribution of cost overruns becomes contentious - and this anticipated conflict is preventing deal closure in multiple Q1 2026 negotiations.

The Execution Divide

This dynamic creates a clear winner/loser pattern:

Winners: Projects with integrated execution models

• NOCs doing in-house EPC (ADNOC, Saudi Aramco, QatarEnergy)
• Utilities with long-term EPC partnerships (Equinor/Aker, Ørsted/strategic contractors)
• Sponsors willing to self-perform or take construction risk onto balance sheet

Losers: Merchant developers relying on revised EPC risk

• Independent power producers without balance sheet depth
• Hydrogen developers seeking full non-recourse project finance
• CCUS projects requiring third-party EPC competitive bidding

The Capital Abundance Paradox

Ironically, capital has never been more available for infrastructure. Global dry powder in infrastructure funds exceeded $500 billion entering 2026. Pension funds remain underweight real assets. Development finance institutions are expanding climate mandates.

But capital without executable EPC is sterile. Lenders will not close until they see a bankable construction contract. And bankable contracts are proving increasingly difficult to negotiate in complex, first-of-kind asset classes—a pattern that is defining Q1 2026 deal flow.

 

Strategic Takeaways for Investors, Developers, and Policymakers

For Investors and Lenders

Thesis: Selectivity will dominate over deployment velocity.

The compression of executable pipeline means competition for high-quality deals is intensifying through Q1. Winning allocations will require:

• Earlier engagement (pre-FID risk capital, development partnerships)
• Sector specialization (building proprietary views on EPC, offtake, technology risk)
• Flexibility on structure (willingness to take construction exposure, accept novel revenue mechanisms)

Passive strategies - waiting for sponsor-marketed "FID-ready" deals - are facing adverse selection as the best opportunities are being pre-placed in Q1.

For Developers and Sponsors

Thesis: Execution capability is the new competitive moat.

In a capital-abundant environment, access to financing is not a differentiator. What separates successful sponsors from stalled pipelines is:

• EPC relationship quality (can you get contractors to commit?)
• Permitting navigation (can you deliver approvals on schedule?)
• Offtake structuring (can you create bankable revenue despite merchant exposure?)

The sponsors that convert FID consistently through 2026 will be those that have internalized execution functions - not outsourced them to competitive markets.

For Suppliers and Contractors

Thesis: The addressable market is smaller but more concentrated—and this is now clear in Q1 activity levels.

Rather than tracking 200 MTPA of announced LNG or 90 GW of announced offshore wind, suppliers should focus on the 30-40% executable segment. This requires:

• Deeper customer intimacy (understanding sponsor balance sheets, risk tolerance, FID timelines)
• Selective bidding (avoiding doomed competitions for projects with poor FID probability)
• Risk-sharing innovation (developing pain/gain models that unlock stalled negotiations)

The winners will be those who help sponsors cross the EPC risk threshold—not those with the lowest day-one bid price.

For Policymakers

Thesis: Announcements ≠ delivery. Policy must target execution, not initiation—and Q1 slippage patterns make this urgency clear.

If governments want announced pipelines to convert into operating assets through 2026 and beyond, interventions must focus on:

• Permitting cycle compression (target 12-18 months for standardized projects)
• Offtake aggregation (public procurement of hydrogen, CCUS, offshore wind to create bankable revenue)
• EPC risk mitigation (consider government-backed completion guarantees for strategic projects)

Subsidy depth matters less than execution friction removal. A 30% subsidy with 5-year permitting delivers less than a 15% subsidy with 18-month permitting.

 

Conclusion: The 2026 Reality Check

The global infrastructure market is not short on ambition, capital, or announced projects. What it lacks - as Q1 2026 is demonstrating - is systematic execution readiness.

2026 will not be the "mega-FID year" that year-end 2025 consensus forecasts suggested. It will be a year of selective conversion, where well-structured projects in execution-friendly environments (MENA, regulated transmission, integrated sponsors) move forward - while the bulk of the announced pipeline defers into 2027-2028 or cancels entirely. This pattern is already visible in early-year deal flow.

For market participants, this creates both risk and opportunity as we move through the year:

• Risk: Over-resourcing for a wave of FIDs that is not materializing
• Opportunity: Gaining share in the executable segment by solving for the binding constraint—which is not capital, but execution credibility

The projects that will reach FID through 2026 share common characteristics: contracted offtake or regulated revenue, locked EPC terms with credible counterparties, permits in hand, and sponsors with balance sheet capacity to absorb residual risk.

Everything else remains pipeline.

 

About This Analysis

This analysis is based on project-level scoring of major announced FID candidates across LNG, power generation, CCUS, hydrogen, petrochemicals, and infrastructure, with scoring updated through Dec 2025/Jan 2026. Executable forecasts reflect >60% probability of FID in 2026; Upside cases reflect 30-60% probability.

Published January 2026. For inquiries on methodology, regional deep-dives, or sector-specific FID forecasts, please contact our research team.