Technology progress is real, but scaling remains constrained by system readiness. Energy sources are diversifying, but investment and policy clarity continue to lag. Renewables and nuclear are competing to anchor supply for both industrial and digital demand, yet cost structures, permitting timelines and infrastructure bottlenecks remain constraints. Sustainable aviation fuel (SAF) is advancing from pilots to early scale: global output is expected to roughly double to about 2 million tonnes (MT) in 2025 (approximately 0.7% of jet fuel)6 – a step up that is still far short of needs. Asia is adding capacity faster than local demand, likely exporting surplus and easing prices at the margin. The EU’s ReFuelEU mandates (2% SAF in 2025, ramping steeply thereafter to 70% by 2050)7 are set to strengthen demand signals and accelerate uptake. Yet the transition is advancing under financial and structural strain. Energy prices have eased from their crisis peaks, but volatility persists, eroding competitiveness for energy-intensive users such as chemicals, aluminium and digital infrastructure, and exposing how fragile industrial competitiveness remains in competitive cost environment. Investment patterns are shifting too: clean energy investment remains resilient, expected to reach $2.2 trillion in 2025, roughly twice the capital directed to fossil fuels.8 Yet annual growth has slowed to 11% in 2024, down from the 24–29% expansion of previous years.9 Volatile interest rates, fiscal tightening and risk aversion – particularly in emerging economies – have made clean capital more expensive, with exchange-rate volatility further raising financing costs and deterring foreign investment. Overlaying all of this is a new geography of energy and trade. Tariffs, regional carbon prices and export controls are redrawing trade and technology routes, reshaping cost structures and supply chains, and creating a more regionalized energy landscape. Demand for key minerals surged in 2024 – lithium up nearly 30%, nickel, cobalt, graphite and rare earths rising 6–8% year-on-year (YoY),10 and battery demand up 25%, driven by electrification.11 Yet supply remains highly concentrated: China controls around 70% of global earth production and processes almost 90% of the world’s rare earth elements,12 intensifying competition for access and creating pressure on other regions to secure alternative suppliers and diversify sourcing. As global supply chains reorganize around resilience rather than efficiency, affordability and security are increasingly seen as prerequisites for sustainability, not trade-offs. The transition will advance only as fast as access to these essential materials allow, because critical minerals underpin many low-carbon technologies. Scaling the Industrial Transition: Hard-to-Abate Sectors and Net-Zero Progress in 2025 BOX 1 Scaling the Industrial Transition: Hard-to-Abate Sectors and Net-Zero Progress in 2025 marks a new phase in the evolution of the Net- Zero Industry Tracker (NZIT) focusing on a qualitative assessment of progress, readiness and system alignment across the world’s most emission-intensive sectors. It focuses on two core questions: 1 How fast are sectors progressing today? 2 What conditions must be strengthened to accelerate their transformation? This year’s edition takes a different form. Rather than serving as a data tracker, which will be made available online, the 2025 white paper synthesizes the main system-level barriers and enablers shaping industrial transition. It builds on the NZIT’s analytical framework but focuses on interpretation, readiness and scaling dynamics. The quantitative dashboards and sector data will be released separately, providing data-driven snapshots and indicators that complement this narrative assessment. Launched by the World Economic Forum in 2022, the NZIT provides a fact-based framework to assess the decarbonization progress of hard-to-abate industries against net-zero targets for 2030 and 2050. Covering eight emission-intensive sectors – aviation, shipping, trucking, steel, cement, aluminium, primary chemicals, and oil and gas – the NZIT benchmarks actual system performance and readiness to transform. System performance is assessed through indicators such as industry output, operational process intensity, energy mix, and value chain emissions and offsets, providing a clear view of actual sectoral progress. Readiness is assessed across five enablers: technology, demand, policy, infrastructure and capital. These dimensions highlight where structural conditions are in place – and where gaps remain – to accelerate industrial transformation. Each edition alternates between a comprehensive quantitative assessment (2024 edition) and a focused update (this edition), ensuring continuity of insights while balancing depth with efficiency. The NZIT integrates global net-zero pathways from key international and sectoral bodies and industry roadmaps, comparing business-as-usual trajectories with net-zero-aligned pathways to reveal the scale of action required. By combining annual pulse checks with periodic deep dives, the NZIT helps decision- makers prioritize interventions, track sectoral progress, and accelerate the transition of the hard-to-abate sectors. In 2024, global CO2 emissions rose 0.9% to about 38 Gt – the highest on record – as energy demand climbed roughly 2%, including a 4% increase in electricity use. Scaling the Industrial Transition: Hard-to-Abate Sectors and Net-Zero Progress in 2025 8

Scaling the Industrial Transition 2025