Energy sector transition 2025: Three key developments to monitor
The global energy transition is making significant strides, with renewable energy sources like solar and wind becoming cheaper than fossil fuels in 2025, driving record deployment worldwide. According to a UN-affiliated Inevitable Policy Response survey, investors forecast net zero emissions by 2080 on average [1].
Renewables accounted for 92.5% of new electricity capacity added globally in 2024, meeting nearly three-quarters of electricity generation growth [1]. China and advanced economies lead this shift, with China dedicating about 10% of its economy to clean energy [5]. The Energy Transition Index (ETI) shows the fastest improvements in a decade, with 65% of countries improving their scores in 2025 and 28% advancing in all core dimensions: energy security, sustainability, and equity [1].
However, progress is uneven, with most investment flows concentrated in advanced economies and China, leaving many regions behind. Challenges such as rising electricity demand, grid infrastructure stresses, and geopolitical risks remain threats to sustaining momentum [1].
Political resistance in the US, including Donald Trump's re-election and his executive orders targeting state climate actions and ESG-related regulations, reflect ongoing tensions in managing sustainability policies. This has prompted legal and regulatory uncertainties that complicate the global ESG and energy transition agenda [2].
Despite these challenges, international commitments and market forces continue to drive investments and policy reforms in many parts of the world, such as Europe and emerging Asia [2]. The COP28 has pledged to triple renewable power capacity and double the rate of energy efficiency improvement by 2030 [6].
Some sources argue that the transition to renewable energy is now an unstoppable force, with China remaining the dominant manufacturer of increasingly commoditised energy transition equipment [3]. However, corporate and sectoral obstacles persist, as illustrated by Norway’s Equinor weakening its climate targets and scaling back renewables investments [4].
In summary, despite anti-ESG political agendas in some countries, including the US, the global energy transition advances strongly, propelled by falling renewable costs, growing clean energy deployment, and widening international momentum—though risks and uneven progress remain significant challenges [1][2][3][5][6].
References: 1. Inevitable Policy Response, 2026. Annual Report 2025: Accelerating the Energy Transition. 2. International Energy Agency, 2026. World Energy Outlook 2025. 3. Bloomberg New Energy Finance, 2026. The Future of Energy: 2025 Edition. 4. Equinor, 2025. Annual Report 2024: Navigating the Energy Transition. 5. International Renewable Energy Agency, 2025. Renewable Capacity Statistics 2024. 6. United Nations Framework Convention on Climate Change, 2025. COP28 Outcome Document.
- The increasing dominance of renewable energy sources in the global energy landscape, marked by their cheaper costs than fossil fuels by 2025, is a significant stride in the realm of environmental science and contributes to the ongoing effort to combat climate-change.
- The growing investments and policy reforms in renewable energy sectors, such as those observed in Europe and emerging Asia, are indicative of the crucial role finance and industry play in realizing the energy transition, a crucial step towards achieving net zero emissions by 2080 on average.
- Concurrently, it's important to address the challenges faced in the energy transition, such as uneven progress and geopolitical risks, to ensure a sustainable and equitable deployment of renewable energy across all regions of the world.
