Accelerating the Energy Transition 2025

Introduction Despite ambitious targets set by governments and companies globally, a comprehensive energy transition that enhances equity, security and sustainability still faces major challenges. In 2024, total energy investments surpassed $3 trillion for the first time, with $2 trillion directed towards clean technologies – renewables, electric vehicles (EVs), nuclear power, grids, storage, low-emission fuels and heat pumps.1 While these investments are expanding clean energy projects in many regions, progress remains uneven across economies and sectors. To build a future-ready energy system aligned with a 1.5°C pathway, annual investments must grow to over $5 trillion by 2030,2 creating a $3 trillion gap from today’s clean technology spending. Assuming a 10% weighted average cost of capital (WACC), approximately $300 billion in additional annual returns would be needed to attract this level of investment – equivalent to nearly three times the annual profit of some major corporations, or potentially $1 billion in additional annual profits across 300 medium to large-sized companies. This raises a key question: How can governments and businesses across diverse economies and sectors align their objectives and actions to accelerate the energy transition and unlock this value? The path forward is complex. The economic case for the energy transition is promising net societal benefits; however, the challenge lies in clearly articulating and translating these into compelling business cases that attract private investment. Businesses face significant hurdles in scaling-up clean energy and energy efficiency investments, including uncertainties around which technologies will prevail, how markets will develop, geopolitical and country risks, and the timing and sequencing of investments. These factors directly influence risk- adjusted returns, making it more difficult to build a compelling business case for investment.Governments often aim to maintain a level playing field, avoid picking technology “winners” and promote fair competition among energy sources. Meanwhile, businesses are hesitant to take investment risks without clearer signals about market viability and returns. This dynamic environment requires industries to continuously adapt their strategies in real-time, while governments, typically slower to adjust, may need to become more agile. Building momentum for the energy transition and unlocking necessary investments requires a strong alignment of the economic and business cases. Governments play a key role in setting clear policy direction, strengthening institutions, creating a conducive macro-economic environment and, in some cases, directly investing in energy systems. To build a future-ready and 1.5°C-aligned energy system, annual investments in clean tech must grow from $2 trillion today to over $5 trillion by 2030, demanding strong alignment of the economic and business cases. Significant acceleration of advanced energy solutions needed to hit net zero BOX 1 Achieving a net-zero emissions pathway by 2030 demands an extraordinary scale-up of advanced energy solutions. Carbon capture and storage (CCS) capacity must grow 20-fold, energy storage 35-fold, clean hydrogen production 70-fold and sustainable aviation fuel (SAF) 190-fold. Furthermore, mass deployment of new advanced modular nuclear reactors will be needed. The required growth and investment across these technologies presents an unprecedented challenge – and opportunity – for the global energy transition. Source: World Economic Forum. Up to 90% of the funding across energy demand, supply and finance sectors must come from international private capital in most countries. Accelerating the Energy Transition: Unpacking the Business and Economic Cases 3