WoodMac reports that the energy transition has slowed ten
years past the Paris Agreement, noting that no G7 country is on track to meet
its 2030 emissions reduction target. Right now, it appears that net zero 2050
is more of an aspiration than a likelihood. They note that announced goals for
2035 have been weak, rather than ratcheting up deployment and cost as the
original plans called for.
“It is increasingly acknowledged that the world will not
achieve net zero emissions by 2050. With COP30 about to begin, our seventh
annual Energy Transition Outlook (ETO) reveals the world is on a 2.6 °C
pathway, marginally above our base case prediction a year ago.”
I think we can improve that
and hit maybe a 2.2 °C trajectory, if the temperature rise rate is as predicted
by the models. While net zero 2050 is not officially dead yet, it seems that
1.5 °C is most certainly dead and 2.0 °C is the best we could hope for.
The barriers to progress
include economic and geopolitical challenges, including COVID, the effects of
wars in Ukraine and the Middle East, and things like tariffs.
“At the same time, rising population, economic growth
and societal aspirations, particularly in developing countries, are driving
energy demand ever higher and outpacing gradual improvements in energy
efficiency.”
Economic growth and societal
aspirations in developing countries should be celebrated rather than dissed as
these countries get better energy and electricity access and improve the
quality of life for their citizens.
They note that while
renewables’ share of global power supply went from 5% to 20% over the past
decade, it was still not enough to meet incremental growth in the power sector.
That means fossil fuels are still increasing on the global power grid as a
whole.
“Scaling up low-carbon supply faster than demand growth
and building a new, deeply decarbonised, resilient energy system is proving far
tougher than envisaged.”
Energy affordability is being
prioritized over energy sustainability in developed countries, as it probably
should, since it solves a more immediate problem. Another factor is the AI
race, which is already increasing energy demand. They note that the exit of the
US and some European banks from the Net Zero Banking Alliance is another
indicator of the backoff from deep decarbonization goals. They believe the
multiple-source global energy system will become more connected and more
complex. They also believe that capital allocation will need to be handled
carefully, with policies that offer support for effective capital allocation.
“Power’s share of energy consumption will increase from
one-fifth today to over one-third by 2060 in our base case, the largest share
and eclipsing oil. Low-carbon supply is racing to keep pace. Variable
renewables will surge from 20% of generation today to 60% by 2050, with solar
power alone doubling by 2030 and overtaking coal by 2034. Yet dispatchable
fossil fuels remain essential. Coal, in the main, is powering developing
economies, and gas turbines are providing critical backup where renewable infrastructure
struggles with massive new loads. The surge in power demand from the AI boom
will strain global power markets throughout the rest of this decade and perhaps
beyond.”
They also state that “critical
minerals are a geopolitical chokepoint,” with China controlling much of the
mining and processing, and other countries like the Democratic Republic of the
Congo controlling much of cobalt production and Indonesia controlling nickel
output.
They see oil demand peaking
in 2032, which seems reasonable to me. They see natural gas demand peaking
sometime in the 2040s. I think that depends on how well other low-carbon
technologies improve from solar to nuclear. Countries will continue to
prioritize energy affordability and energy security.
As detailed in the quote and
chart below, there will be a need for increased investment to achieve even the
lesser goal of 2° C and net zero by 2060.
“A 2 °C goal is plausible if net zero emissions are
achieved by around 2060. To scale up the full suite of low-carbon technologies,
from renewables to nuclear, hydrogen and carbon capture, annual investment from
public and private sources must increase by 30% from current levels to average
US$4.3 trillion between now and 2060. That translates to energy sector capex
rising from 2.4% of global GDP today to around 3.5% within the next decade, a
stretch for many economies.”
References:
Slipping
climate targets and the “energy addition.” Scaling low-carbon technologies adds
complexity to the energy system. Simon Flowers, Prakash Sharma, and Gavin
Thompson. Wood Mackenzie. November 6, 2025. Slipping
climate targets and the “energy addition” | Wood Mackenzie
Energy
transition outlook: 2025/26 update. Wood Mackenzie. Energy
transition outlook 2025-26 - Insights and Scenarios | Wood Mackenzie
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