Title: Empower, Contend, Conjoin: Securing Our Tomorrow in 2025
Stepping into 2025, the global energy transition is gaining momentum, fueled by geopolitical shifts, the pursuit of energy security, and the pursuit of economic opportunities. Our stellar performance in 2024 saw a deceleration in emissions growth and a return of investment towards 'clean and green'. Four major trends are expected to shape the energy landscape in the coming year:
An Expanding Horizon for Clean Energy Investments
Clean energy investments have been outpacing fossil fuels for the past couple of years, and this momentum will continue in 2025. This stretches beyond wind and solar, encompassing other renewable sources such as hydro, energy storage, and even bio-energy. Tech giants are leading the charge, sparking renewed interest in nuclear, with announcements of old plant revivals and small modular reactor projects expected. In the transport sector, electric vehicle sales surged by over 20% in 2024, setting the stage for similar growth in 2025. Green Hydrogen is poised to enter a new phase as well, with an uptick in procurement tenders in Asia and early-stage projects breaking ground.
Persisting Fossil Fuel Investments market with Subsidy Opportunities
Global energy demand is increasing by about 3% annually, with electricity demand climbing even faster at a rate of 4%. Although extraordinary profits in the fossil fuel industry are fading, local incentives persist, driving new investments. The US and Norway are looking to exploit supply opportunities to satisfy Europe's LNG appetite as it reduces its reliance on Russian supplies, while China and India continue to rely on coal to meet their surging electricity needs. It's worth noting that RMI analysis reveals that gas with only 0.2% leakage can be more harmful to the environment than coal. Nevertheless, gas plants are unlikely to be phased out anytime soon, particularly in 2025. However, the economic slowdown and oversupply pressure on oil and gas prices present a unique opportunity to slash sizeable fossil fuel subsidies this year.
Competition to Capture the $2 Trillion Clean Energy Technologies and Materials Market
The clean energy technologies market, nearly as vast as the current crude oil market, according to the IEA, is a field ripe for competition. As traditional leaders like the US, China, and the EU widen their investment in advanced commodities, other countries such as India, Southeast Asia, and Brazil seek to establish themselves in the market. Countries like the UAE and Egypt are investing in electrolyzer manufacturing, while Indonesia, Mongolia, the Democratic Republic of Congo, and Chile are ramping up their rare earth mineral mining and processing initiatives. The intense competition in 2025 is expected to result in industrial policies, strategic partnerships, and significant corporate investments.
New Commitments and Testing our Global Resolve
With 94% of the global carbon budget already utilized, deep emissions cuts of 22 gigatonnes of CO2 equivalent are needed to stay within the remaining budget. The UAE, UK, and Brazil have already pledged reductions, setting a precedent. The US, despite its internal political uncertainty, has also committed to action. China, with its slowing economy, faces increasing pressure to update its Nationally Determined Contributions (NDC) plans. By the February 2025 deadline, more nations are expected to announce new commitments, with the Brazilian COP30 Presidency playing a pivotal role in driving ambition. Early announcements from developed countries towards fulfilling their $300 billion annual climate finance commitment will provide a boost to global efforts.
In conclusion, 2025 will be a defining year for our energy transition. With governments now in stable positions for at least three years, collective action and resilience in the face of geopolitical challenges have proven powerful. The US's withdrawal from influential climate agreements in the past did not halt progress, with states and other countries stepping up to fill the void. Therefore, in 2025, we can anticipate greater ambition and progress, building on the momentum that has been established.
Enrichment Data:1. S&P Global Commodity Insights predicts cleantech energy supply spending will reach $670 billion in 2025, surpassing upstream oil and gas investments for the first time.2. The Energy & Utilities sector is experiencing rapid change, with renewables poised for significant growth in 2025. Renewable energy investment is driven by increased demand, government support, and corporate commitments.3. Tech giants are partnering with companies like X-Energy to deploy nuclear power projects, addressing the increasing energy needs of data centers.4. AI is driving innovation within climate tech, optimizing renewable energy systems, enhancing energy storage technologies, and improving carbon capture methods.5. Low-carbon hydrogen is attracting investment, positioning 2025 as a promising year for the sector’s growth.
In alignment with the predicted surge in cleantech energy supply spending to $670 billion in 2025, sustaining this momentum is crucial for providing a viable alternative to fossil fuels. This shift towards sustainability extends beyond the renewable sectors, as tech giants collaborate with companies like X-Energy to deploy nuclear power projects, addressing the increasing energy needs of data centers.
As the Energy & Utilities sector undergoes rapid change, embracing sustainability becomes increasingly important. By 2025, renewable energy investments are expected to demonstrate significant growth, driven by increased demand, government support, and corporate commitments to a more environmentally-friendly future.
