There’s little more perplexing than trying to assess exactly where the world is going with energy transition, so much so that sometimes it feels as though we have set sail on a journey in which even the destination is unclear.
There’s little more perplexing than trying to assess exactly where the world is going with energy transition, so much so that sometimes it feels as though we have set sail on a journey in which even the destination is unclear. Best we can do is judge which way the wind is blowing.
This may not be a conclusion that delegates to our flagship Global Energy Transition (GET 2025) next month in Rotterdam will want to contemplate. Nor, one suspects, will this community of geoscientists dedicated to energy transition and the ultimate goal of a decarbonised world be entirely happy with the progress of needed technology subject to a world buffeted by political and economic crosswinds.
Undeniably there has been a shift in the conversation post-Covid and the advent of two wars. In summary, energy security, industrial/commmercial considerations, near stalemate of COP-type meetings, and a rising tide of populist/anti-regulation movements in many countries have all taken a toll on the priority being accorded to climate change (even in a summer of raging fires around the world).
It is becoming the orthodoxy to talk about energy addition rather than energy transition, which is indeed the theme of EAGE’s Annual Conference & Exhibition next year in Aberdeen. It was also a feature of future energy scenarios offered by Dr Scott Tinker in his Opening Session presentation at this year’s meeting in Toulouse.
The mindset now is that energy addition is about meeting the unavoidable growth in demand factoring in rapid industrialisation and population increases in the developing world. Substantial oil and gas production for the foreseeable future is going to be needed, while at the same time we somehow do not lose sight of climate change mitigation/decarbonisation in whatever form that might take, e.g. building renewable capacity, cleaner energy production, carbon capture and storage, etc.
For some naysayers, even this strategy is too great a concession to the energy transition. From day one in office the Trump Administration proclaimed its hostility, notably withdrawing the US from the 2015 Paris Climate Agreement, rolling back clean energy provisions in the Biden Inflation Reduction Act, and waging war on wind power whilst enacting measures to boost US domestic oil and gas production. It remains to be seen exactly how much impact these policies have, given the US is second only to China in its energy transition investments (World Econmic Forum). Whether the US can afford to overlook some green energy sources may be an issue. For example, the Energy Information Administration (IEA) forecasts US electricity sales to the commercial sector to rise by 3% in 2025 and 4.5% in 2026, driven largely by demand from data centres, while electricity sales to industrial consumers are expected to rise by 2% in 2025 and 3.5% in 2026.
We may wonder whether following the energy addition credo is putting off some hard choices on cooling the planet. We can all agree that the whole process was never likely to be a straightforward switch and is going to be much slower than optimists anticipated. In a recent Foreign Affairs essay on ‘The troubled energy transition’, Daniel Yergin reminded readers of the historical precedents from the moment in January 1709 that Abraham Darby, a village foundryman and ironmaster in England, hastened the transition from wood to coal and helped to initiate the subsequent Industrial Revolution by pioneering the use of coke as the fuel to smelt iron (instead of charcoal). Astonishingly it was not until the beginning of the 20th century that coal overtook wood as the world’s number one energy source. Similarly oil discovered in the mid-19th century did not overtake coal as the world’s number one energy source until the 1960s, and even today the world is using three times as much coal as it did in the 1960s.
Yergin makes the point on energy addition: ‘In 2024, the world used more wind and solar energy than ever before. But it also used more oil and coal than ever before’. He also cautions on the sheer scale of the decarbonising project in a $115 trillion-plus world economy that continues to grow making 2050 Net Zero increasingly unrealistic. He cites the Energy Institute’s Statistical Review of World Energy finding that between 2022 and 2023 the world’s dependence on conventional energy – oil, natural gas and coal – declined by less than 0.5% from 81.9% to 81.5%.
Yet, for all the negativity, the commitment to energy transition worldwide is gigantic and obviously unstoppable, as the numbers show. One headline figure from the International Energy Agency’s 2025 annual World Energy Investment report suggests that global energy investment is set to increase this year to a record $3.3 trillion of which the share of clean technologies – renewables, nuclear, grids, storage, low-emissions fuels, efficiency and electrification – is on course to hit a record $2.2 trillion with oil, natural gas and coal reaching $1.1 trillion.
There are some concerning portents. Earlier this year Energy Transition Investment Trends 2025 compiled by research provider Bloomberg New Energy Finance found low-carbon energy transition worldwide grew 11% to hit a record $2.1 trillion in 2024 (close to the IEA figures). Growth was driven by electrified transport, renewable energy, and power grids, which all reached new highs last year, along with energy storage investment. However, the pace of growth was slower than the previous three years, when investment jumped by 24-29% annually.
Electrified transport remained the largest investment driver, reaching $757 billion in 2024, according to BNEF when spending on passenger EVs, electric two- and three-wheelers, commercial electric vehicles, public charging infrastructure and fuel cell vehicles is taken into account. Renewable energy hit $728 billion, including on and offshore wind, solar, biofuels, biomass and waste, marine, geothermal and small hydro. Investment in power grids totalled $390 billion, which includes investment in transmission and distribution lines, substation equipment, and the digitalization of the grid. Not specifically mentioned is IEA modelling that projects data centres will use 945 terawatt-hours (TWh) in 2030, roughly equivalent to the current annual electricity consumption of Japan. By comparison, data centres consumed 415 TWh in 2024, roughly 1.5% of the world’s total electricity consumption.
BNEF’s report also reveals a marked difference between investment in mature and emerging sectors of the clean energy economy. Technologies that are proven, commercially scalable and have established business models, like renewables, energy storage, electric vehicles, and power grids, accounted for the vast majority of investment in 2024. These sectors drew $1.93 trillion, growing 14.7%, despite perceived hindrance from policy decisions, higher interest rates and expected slower consumer purchasing.
In contrast, investment in emerging technologies, like electrified heat, hydrogen, carbon capture and storage (CCS), nuclear, clean industry and clean shipping, reached only $155 billion, for an overall drop of 23% year-on-year. Factors that discourage investment in these sectors include affordability, technology maturity, and commercial scalability. ‘In order to scale these industries, the public and private sectors need to do more to de-risk these technologies, otherwise, they are not likely to have any meaningful impact on emissions by the end of the decade’, BNEF concludes.
Regionally the largest market for investment was China, which alone accounted for $818 billion of investment, up 20% from 2023. China’s investment growth was equivalent to two-thirds of the total global increase in the year.
The EU, US, and UK, which drove growth in 2023, saw different results in 2024. Investment was stagnant in the US, reaching $338 billion, and down in both the EU and UK, hitting $375 billion and $65.3 billion, respectively. This made China’s total investment last year greater than the combined investment of the US, EU and UK.
A similar story is told by analyst company Bridgewater Associates in its March publication. Is the green energy transition dead? The short answer is no, it is not. However there are caveats. ‘To compete on costs and economics … companies can no longer rely on a “policy backstop” to make overambitious investments’. The company has previously estimated that about 40-50% of global emissions reductions required to achieve net-zero goals can come from scaling technologies that are already mature but the technology is not yet there to address the remaining 50-60% of emissions. The rollback of subsidies and other policy supports is likely to make the path more challenging. Already more than 90% of climate investment flows go to mature technologies, which are cost-competitive with fossil fuel-based options and thus likely to continue growing. The remaining 5-10% goes toward emerging or immature technologies that are unlikely to be profitable in the absence of subsidies and whose share has already been shrinking.
None of these observations should come as a surprise to those intending to attend GET 2025. The geoscience and engineering community is focused on technology solutions, many of which are extraordinary. But, technology advance is constrained by the investment imperatives of the market economy, political will and community acceptance.
Carbon capture and storage (CCS), due to garner a lot of attention at GET, illustrates the point. The trajectory of CCS deployment remains a long way off where it must be to deliver net zero by 2050, according to DNV’s Pathway to Net Zero study published in June. CCS will progress, growing from 41 MtCO2/yr captured and stored today to an estimated 1,300 MtCO2/yr in 2050, 6% of global emissions, but six times less that what is said to be. ‘Economic headwinds have put pressure on this capital-intensive technology and corrective action will need to be taken by government and industry if we are to close the gap between ambition and reality’, DNV warns.
This is just one of many mammoth challenges ahead. The ever quotable Albert Einstein once noted: ‘A ship is always safe at shore but that is not what it’s built for’. At least the energy transiton ship has set sail.
