Scaling the Industrial Transition 2025

2025 in review – what has changed? TABLE 1 Note: Arrow indicates the overall trend in momentum since 2024. Source: World Economic Forum.Topic 2024 snapshot 2025 update Strategic relevance Net zero Strong policy momentum and expanding corporate net-zero pledges; some efficiency and emissions improvements, though progress remains insufficientProgress is uneven; corporate ambition continues to rise, yet regional policy momentum is diverging (EU, Middle East, India positive; US rollback); companies shifting towards commercially driven decarbonization strategies Economic/capital High interest rates made capital availability a binding constraintRates eased slightly, but bottlenecks shifted to project economics/bankability with exchange- rate volatility raising costs in emerging markets Tariffs and trade policy Limited policy attention; marginal to analyseNow central, with new tariffs and policy uncertainty affecting supply chains, raising costs and refocusing on self-reliance Green technology Strong policy support for emerging solutions such as hydrogen, biofuels and CCUS; early pilots showing promiseDeployment remains uneven: mature technologies (renewables, electrification and storage) are scaling rapidly, while hydrogen progress remains subdued amid cost pressures and demand uncertainty AI–energy nexus Nascent technology with speculative benefitsNow fully operational, driving a surge in electricity demand and a race for green electrons and grid access, while also opening new opportunities to optimise energy assets and systems Together, these shifts mark 2025 as a year of transition under tension. The foundations for reducing emissions in heavy industry exist, but are increasingly shaped by regional asymmetry and technological disruption. New growth engines are reshaping energy demand. The surge of electrification (+4.3% in 2024),2 automation and artificial intelligence (AI) has created new industrial loads and altered the geography of energy use. In 2024, global energy demand rose 2.2%, well above the decade’s average, with AI and data centres alone projected to drive nearly 10% of global power demand growth by 2030.3 These concentrated and inflexible loads are redefining how grids are planned, financed and operated – testing resilience, reliability and cost efficiency in real time. Industry alone accounted for nearly 40% of global electricity demand growth in 2024. Industrial electricity use rose nearly 4% – a marked acceleration from 2023, driven by expansion in electro-intensive manufacturing and broader industrial recovery.4 This surge in industrial electrification signals progress but also intensifies pressure on grids, supply chains and power costs. Meanwhile, carbon dioxide (CO2) emissions rose 0.9% to 38.2 gigatonnes (Gt) of CO2 in 2024 – a record high (Figure 1). Emissions trends vary sharply by sector, with recent declines in cement and steel, while aviation, aluminium and primary chemicals show notable increases. Under current policies, emissions are projected to remain near 38 Gt through 2035, showing no sustained decline. Stated policy pledges could modestly cut emissions– about 1% per year to 2050 – but only the Net Zero by 2050 Scenario, as outlined by the International Energy Agency (IEA), delivers a structural transformation, requiring a nearly 7% annual drop in global emissions this decade (Figure 2).5 This divergence underscores that reducing emissions in hard-to-abate sectors remains the defining challenge of the decade. Heavy industries, such as steel, cement, aluminium, oil and gas, and trucking, remain central to industrial value chains and account for a dominant share of global emissions (nearly 40%), exposing the delicate balance between energy security, affordability, and climate ambition.In a world of rising demand, shifting trade patterns and digital and technological disruption, the central question is how industry can remain competitive while accelerating the energy transition. Can industrial systems sustain growth and efficiency while cutting emissions, adapting to new energy dynamics, and maintaining security and cohesion in an increasingly fragmented global landscape? Table 1 summarizes how key dynamics have evolved since 2024 – highlighting where progress has stalled, momentum has shifted and new constraints have emerged.1.1 The year in review Scaling the Industrial Transition: Hard-to-Abate Sectors and Net-Zero Progress in 2025 6