NewEnergyOutlook2025

April15,2025

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Executivesummary

Summaryfindings

Investorsandbusinessesnavigatingtheenergytransitionfacerisingcomplexityanduncertaintyagainstabackdropofelevatedpolicyriskandgeopoliticaltension.Yetkeycleanenergytechnologiescontinuetoenjoystrongfundamentals,withfavorableeconomicsandrisingtechnologymaturitydrivingadoptionindiversegeographiesacrosstheglobe.Atthesametime,acceleratedpowerdemandgrowthfromrisingadoptionofartificialintelligencepresentsbothachallengeandanopportunity.

ThisreportrepresentsBloombergNEF’slatestglobalenergytransitionoutlookto2050.Init,wepresentanew,updatedbase-casescenario,mappingouthowthetransitionmightprogressinaworldwhereinvestmentdecisionsaredrivenprimarilybytheneedtomeetrisingenergydemandwithacost-competitivemixoftechnologies–notbyclimateconcerns.Throughthis‘EconomicTransitionScenario’,weexplorehowfarandhowfastthelow-carbontransitioncanproceedbasedpurelyoncompetitiveeconomicsandexistingshort-termpolicysettings.InconjunctionwithourParis-alignedNetZeroScenario(publishedlastyear),wehopethatthisnewworkcansupportcompanies,financialinstitutionsandpolicyprofessionalsindevelopingresilientstrategiestoaddressenergysecurity,economicdevelopmentandclimatechangemitigation.

Understandingthisreport

Forthisyear’sNewEnergyOutlook,wehavefocusedoureffortsonupdatingthebase-caseEconomicTransitionScenario(ETS),incorporatingnewanalysisondata-centerpowerdemand,changedpolicyassumptionsinsomekeygeographies,andupdatedcostestimatesforbothcleanandfossilenergy.Mostpolicyandcostassumptionsdatefromlate2024.OurETSseesrobustadoptionofcleanpowerandelectrificationinroadtransportinthecomingdecades,growthinnaturalgasdemand,andlong-termdeclineincoalandoiluse.Theemissionstrajectoryisinlinewithglobalwarmingof2.6Cby2100,witha67%confidenceinterval.

OurNetZeroScenario(NZS)publishedin2024remainsvalid.Thetrajectoryrequiredfortheworldtoachievenetzeroby2050inlinewiththeParisAgreementhasnotchanged,thoughthereislesstimethanever.Wedonotre-displaythatworkinfullinthispublication,butwedomakeimportantcomparisonstoitthroughoutandre-publishthescenario’sfulldatasetinourNewEnergyOutlook2025:DataViewer

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).Emissionsinourbase-caseETSfall22%by2050(backto2005levels)–farlessthanthe100%reductionintheNZS.

Thisyear’sreportcontainsasubstantialchapterfocusingonthe10yearsto2035.Theseyearswillbemake-or-breakfromaclimateperspective,andtheyear2035specificallyforms

thefocusofthethirdroundofNationallyDeterminedContributions(NDCs)undertheParisAgreement,whichareduethisyearinadvanceofCOP30.

Growth,opportunityanddatacenters

IntheETS,demandforelectricpowerisup75%to2050aseconomicdevelopment,electricvehicles(EVs),coolingneedsanddata-centerdemandcombinetopushupelectricityuse.GrowingeconomiesinAsia,theMiddleEastandAfricaaccountforalargeportionoftheincrease,anditisherethatthegreatestopportunitiesforpowerinfrastructureinvestmentwilllie.Acrossthewiderenergyeconomy,demandfor‘usefulenergy’isup32%by2050aspopulationsgrowandeconomiesdevelop,butprimaryenergygrowsjust9%,asefficiencygainsfromelectrificationandrenewableslimitthegrowthofupstreamenergyproduction.

Incrementalelectricitydemandfromdatacentersrisesto1,200terawatt-hoursgloballyby2035,and3,700TWhby2050.Intotal,datacentersrepresent4.5%oftotalfinalpowerdemandin2035and8.7%in2050–lessthanthedemandfromEVs(11.2%in2050),butmorethanairconditioningandheat-pumpload(7.1%in2050).

Estimatesoffuturedemandfromdatacentersremainuncertainandsubjecttorevision,butitisclearthattheyrepresentasubstantialopportunityinthecomingdecade.Wefindthatanadditional362gigawattsofpowerplantcapacityarerequiredby2035tomeetdata-centerdemand.Renewables(47%)andstorage(9%)togethermakeupmorethanhalfoftheneededcapacity,buttheremainder(44%)isfossil-based.However,inpowergenerationterms,thebalanceisflipped.Inaggregate,64%ofincrementalgenerationtomeetdata-centerdemandcomesfromfossilfuels,and36%fromrenewables.

Thisfindingappearstorunatoddswithindustrywisdomtodaythatplacessolarandwindatthefrontofthequeuewhenconstructingnewpowercapacitytomeetdata-centerdemand,inpartduetoabacklogingasturbineavailability.Ourmodelingsupportsthestrongcaseforrenewablesandstoragebuildtopowerdatacentersbutalsohighlightsthepossibilitythataddeddata-centerdemandcouldhelpextendthelifeofexistingcoalandgasplants.Indeed,mostoftheincrementalcoalcapacityandone-thirdofthegascapacityassociatedwithdata-centerdemandisfromexistingplantsthatavoidordelayretirement.

StrongfundamentalsunderpingrowthinrenewablesandEVs

Renewablesandelectricvehiclesplayanever-expandingroleintheEconomicTransitionScenario,ascontinuingcostreductionsandmaturingtechnologiesdrivefasteradoptionacrossmultipleregions.Whiletherehavebeenheadwindsinrecentyears,namelyhigherinterestrates,volatilecostsandrisingtradebarriers,thesetechnologiescontinuetoenjoyadvantageousandimprovingeconomics,whichultimatelydrivetheiradoptiontounprecedentedlevels.

Renewablegenerationincreases84%inthefiveyearsto2030,andthendoublesagainto2050.Bymid-century,renewablesourcesserve67%oftheworld’s(much-expanded)appetiteforelectricpower,upfrom33%in2024.Theshareofcoal,gasandoilinthepowersystemdropsfrom58%in2024to25%in2050,yieldinga21%reductioninabsolutefossil-firedgenerationlevels.Betweennowand2035,6.9TWofsolarisconstructedglobally,alongside2.6TWofwind.

Powersystemflexibilityincreasesmarkedlytoensureoptimalgridoperationandsystemstability,complementingtheriseofvariablerenewables.Intheyear2050,morethan4,300TWhofdemand-sideflexibilityisenabledviasmartEVcharginganddemandresponseinthewidereconomy.Another6,100TWhofflexibilitycomesfromdispatchabletechnologies

NZS20

24

suchasbatteries,so-calledgaspeakersandpumpedhydro.Together,thesesourcesareequivalentto20%ofglobalelectricitydemandbymid-century.

Passengerelectricvehiclesalesrisefrom17.2millionin2024to42millionin2030,and80millionin2050.Bymid-century,abouttwo-thirdsofthe1.5billionpassengervehiclesontheroadareelectric,upfrom4%today.ThiselectrificationisoneofthemostimportantdriversofemissionsreductionsintheEconomicTransitionScenarioandhelpsdelivera40%reductioninoilconsumedinthetransportsectorby2050,orahalvingofdemandwhenconsideringroadtransportalone.

Oilandcoalfacedecline,thoughthespeedisuncertain

Overalloildemandpeaksin2032at104millionbarrelsperday,withroadfuelpeakingafewyearsearlier.Demandultimatelydropsto88millionbarrelsperdayby2050–asignificantdeclinefromtoday,butfarfromthedroprequiredtogetontrackfornetzero.Outsideofroadtransport,oilconsumptionremainsresilientintheEconomicTransitionScenario,withadoublingofdemandforaviationandstronggrowthinpetrochemicalsthrough2050.

CoaldemanddropsrapidlyintheETS,ascost-competitiverenewablesandgasdisplaceitsuseinthepowersector.Betweentodayand2035,globalcoalconsumptiondrops25%.Intheimmediatefuture,weestimatethatcoaldemandmaydrop2%year-on-yearin2025,withmostofthereductiondrivenbyChina.Whilethisoutcomewillrestonnumerousfactorssuchasthecountry’seconomicgrowthandrenewablesproduction(includinghydro),itispossiblethatChina’scoal-basedemissionsmaynowbeindecline.

Forbothoilandcoal,along-termdeclineisexpectedinbothourETSandourNetZeroScenario.Investmentisthuslikelytofallinthesesectorswhetherpolicymakerspursueaneconomics-ledtransitionoraParis-alignedone,albeitatdifferenttimesandatdifferentspeeds.Thesamecannotbesaidforgas,whereourtwoscenarioshighlightstarklydivergentfutures.

Figure1:Fossil-fueldemandbysector,EconomicTransitionScenario

Coal

Oil

Gas

Megatonsofcoal

Millionbarrelsperday

Billioncubicmeters

Energyindustry

7,000

120

6,000

Power

Non-energyuse

6,000

100

5,000

Othersectors

Rail

5,000

4,000

3,000

2,000 2024

80

60

40

NZS

4,000

3,000 NZS

2024

2,000

AviationShippingRoadCommercialb.Residentialb.

Otherindustry

1,000

20 2024

1,000

Chemicals

Cement

0

0

0

Aluminum

2000 2025

2050

2000 2025

2050

2000 2025

2050

Steel

Source:BloombergNEF.Note:‘NZS2024’istheNetZeroScenariofromNEO2024.Megatonsaremetricandassumea6,000kcal/kilogramenergycontent.‘b.’referstobuildings.WehaverevisedupwardhistoricaloildemandinNEO2025comparedtoNEO2024scenarios,aswenowaccountmoreaccuratelyforoilusefornon-energypurposesoutsidethepetrochemicalindustry.

Growthingasdemandhighlightsdivergentfutures

GasplaysalargerroleinourEconomicTransitionScenariothisyear,thankstolowerlong-termfuel-priceexpectationsandhigherelectricitydemandfromdatacenters.Globalnaturalgasdemandincreases25%from2024to2050,reaching5,449billioncubicmeters.Muchofthisgrowthoccursafter2035,astheyearsupto2034arecharacterizedbyrenewablesdisplacingtheuseofgasinthepowersector.Butafter2035,power-sectorgasconsumptionkicksinagain,ledmainlybytheUS,wherefavorableeconomicssupportinvestmentingas-firedgeneration.Gasusealsocontinuestogrowinindustryandbuildingsglobally,wherecost-competitivelow-carbonsolutionsarelacking.

ThisoutlookcontrastssharplywithourNetZeroScenario,whichseesgasdemanddroppingsteeplyintheneartermandroughlyhalvingbymid-century.Therearethushighlydivergentfuturespossiblefornaturalgas,anditsroleintheenergytransitionwilllookverydifferentdependingonwhichkindoftransitiontrajectoryisatplayinagivenregion.

Limitedinroadsonhydrogen,carboncapture,andhard-to-abatesectors

Notallcleanenergytechnologiesarereadytostandontheirowntwofeet.UnlikerenewablesandEVs,hydrogen,carboncaptureandstorage,cleanfuelsandlow-carbonindustrialprocessesallstruggletomakeanimpactintheEconomicTransitionScenario,whichassumesthatpolicymakersoffernonewfinancialsupportforlow-carbontechnologies.

Intheaviationsector,thehighcostofsustainableaviationfuelslimitstheirroletojust6%offinalenergyuseby2035,and7%by2050.Fossilkerosenedemandjumps63%by2050tomeetrisingaviationdemand,withacommensurateriseinemissions.Shippingfaresbetter,withemissionsfallingnearly30%by2050,thankstoacombinationofoptimizedoperations,liquefiednaturalgas(LNG)uptake,andsomeprogressonmethanolandammonia.

Intheindustrialsector,low-carbontechnologiesandprocessesmakelittleimpactto2050.Energy-relatedemissionsfromindustryincreaseamodest6%globallyto2050,reachingalmost7GtCO2(or9.5GtCO2ifprocessemissionsareincluded).Demandforindustrialmaterialssuchassteel,aluminum,cementandpetrochemicalsincreasesataslowerratethanseeninthelasttwodecades,butthelackoftechnologytransitionmeansthatemissionscontinuetorisegradually.By2050,fossilfuelsprovide88%oftheenergyusedtoproducesteel–similartotoday’slevels.Unabatedfossilfuelsaccountformorethan96%ofglobalcementproductionbymid-century.Andpetrochemicalsdemandrises79%,withlittletoshowinthewayoflow-carbontransformation.

Residentialandcommercialbuildingsseea37%increaseinfinalenergyusethrough2050,thankstorisingpopulation,higherhouseholdincomesandincreasedbusinessactivity–includingdatacenters,whichareconsideredwithincommercialbuildings.Justunderhalfoftheincreaseoccursintheresidentialsector,withadoublinginair-conditioningdemandandgrowthinotherenergyusestoo.Coolingneedsanddatacentersdrivea68%increaseinelectricitydemandincommercialbuildings.Heatpumpsareacriticaltoolfordecarbonizingbuildingheat,buttheirhighupfrontcostrestrictstheirroletojustaquarterofprimaryheatingunitsincold-climatehouseholdsbymid-centuryintheEconomicTransitionScenario.Despitetheriseinenergydemand,acombinationofelectrification,cleanerpowerandenergyefficiencygainstogetherholdemissionsincreasesinthebuildingssectortojust4%by2050.

ThesefindingscontraststronglywithourNetZeroScenario,whichseesalargeroleforheatpumpsinbuildings,cleanfuelsforheavytransport,andhydrogen,carboncaptureandelectrificationinindustry.TheNZSmapsoutcredibledecarbonizationpathwaysforeachoftheseso-calledhard-to-abatesectors–butrobust,long-termpolicysupportwouldbeneededtoclosethegapbetweenthebasecaseinthisreport,andthedesirepathtonetzero.

TheUSenergytransitiondoesnotderail

BNEF’soutlookforenergytransitionintheUSwillevolveinthecomingmonthsasmorepolicyclarityemergesfromafluidandfast-movingpictureinWashingtontoday.TheupdatedUSbasecasepresentedinthisreportincorporatesaloweredEVforecastthatassumesweakerfuel-economystandardsandremovalofpurchasetaxcredits.Wealsofactorinlowernaturalgaspriceassumptions,updatedprojectpipelinesandcostestimatesforcleanenergytechnologies,andincreaseddata-centerdemand.Mostoftheseassumptionsweresettledattheendof2024butremainvalidasofApril2025.

Comparedwithour2024basecase,theUStransitionisslowedbutnotderailed.Importantly,emissionscontinuetofall,dropping16%by2035(ascomparedto24%inlastyear’sbasecase),and29%by2050(versus41%lastyear),asrenewablesandEVscontinuetorollout.Whencomparedtolastyear’soutlook,mostoftheincreaseinemissionsinthecomingdecadeisduetoroadtransportandfuelrefining,withsomeimpactfromincreasedgasburninthepowersector.

ForcleanpowertechnologiesintheUS,thefutureremainsbrightinthenexttenyears.TheETSseesinstalledwindcapacitydoubleby2035to321GW,andsolarmorethantriplesto692GW.Theinstalledbaseofbatterystoragerisesfrom29GWin2024to175GWby2035.

Comparedtolastyear’sEconomicTransitionScenario,ournewbasecasesees15%lesswindcapacityintheUSby2035,reflectingtheadministration’sactionsonpermittingandseabedleases,aswellaslowerassumedonshorewindcapacityfactorsinourmodeling.Incontrast,lowersolarandbatterycostshaveledtoincreaseddeploymentforthesetwotechnologies.Solarcapacityisup43GWor7%in2035comparedtoourpreviousETS,andbatterystorageisup11%or17GW.Policychanges–boththosethathavebeenenactedandthosethatarestilltocome–canandwillaffectthepaceofthetransitionintheUS,butcleanenergytechnologieswillcontinuetogaingroundbasedoneconomics.

NotethattheUSscenariopresentedinthisreportdoesnotaccountforthenew‘reciprocal’tariffsannouncedonApril2.Thesetariffs,ifimplementedinfull,arelikelytoraisethecostsofkeycleantechnologiesintheUS–see‘Reciprocal’TariffsSpellChaosforCleanEnergyMarkets

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).BNEFhaspreviouslyrunascenarioinwhichtheUSpursuesfullonshoringofbatterycellsandsolarpolysilicon-to-modulesandfoundthattheresultinghighercostsledto27%lessstationarystoragebuildto2050,and7%lesssolarPV.SeeOnshoringRaisesCosts,ConstrainsCleanEnergyDeployment

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Globalemissionssettobegintheirlongdescent

Energy-relatedCO2emissionshaverisengloballyinmostyearssincethe1950s,butcleanenergyadditionsappearfinallytohavecaughtupwithenergy-demandgrowth.Ourmodelingindicatesthat2024mayhavebeenthepeakyearforemissions,meaningthat2025couldbethefirstyearofstructuralemissionsdecline(exceptingunusualyearssuchas2020or2009).Whilemanyindividualadvancedeconomieshavealreadyseenstructuralemissionsdeclinesinducedbythegrowthofcleanenergy,thiswouldbethefirsttimesuchamomenthasbeenobservedatthegloballevel.

Onlytimewilltellif2024wastrulythepeakbutinanycase,BNEF’sEconomicTransitionScenarioputsemissionsonadecliningtrajectoryinthecomingyears.By2030,wefindemissionshavefallen9%,andby2035thedropis13%.Bymid-century,globalenergy-relatedemissionsaredown22%,withthree-fourthsoftheemissionsavoidancecomingfromdeploymentofcleanpowertechnologies.Afurther15%ofabatementcomesfromelectrificationofendusesincludingtransport,and7%fromimprovingenergyefficiencyinbuildingsandindustryandenergysavingselsewhere.

Figure2:CO2emissionsreductionsfromfuelcombustionbymeasuresadopted,EconomicTransitionScenarioversus‘no-transition’scenarioandNetZeroScenario

BilliontonsofCO260

50

40

30

20

10

0

2000 2010 2020 2030 2040 2050

CarbonremovalsEnergyefficiencyFuelswitchingCleanpowerElectrificationHeat

BioenergyHydrogenCCS

2024

Notransition

Oil

ETS

Gas

NZS2024

Coal

Source:BloombergNEF.Note:The‘notransition’scenarioisahypotheticalcounterfactualthatmodelsnofurtherimprovementindecarbonizationandenergyefficiency.Inpowerandtransport,itassumesthatthefuturefuelmixdoesnotevolvefrom2023(2027inshipping).‘Cleanpower’includesrenewablesandnuclear,andexcludescarboncaptureandstorage(CCS),hydrogenandbioenergy,whichareallocatedtotheirrespectivecategories.‘Energyefficiency’includes

demand-sideefficiencygains.‘NZS2024’istheNetZeroScenariofromNEO2024.

Countriesfacedifferenttrajectories,andneedtomaketheirNDCscount

Whileweareatornearpeakglobalemissionsintheenergysector,thesameisnottrueforeverycountry.OuranalysisindicatesthatimportanteconomieslikeIndia,VietnamandIndonesiaaresettocontinueincreasingtheirgreenhousegasemissions,whilealargegroupofothermarkets,includingtheMiddleEastandAfrica,LatinAmericaandotherpartsofAsia,couldseealongplateauinemissions.TheglobaldeclineinemissionsislargelydrivenbyreductionsinleadingeconomiesincludingChina,theUSandEurope.

Thisyear,partiestotheParisAgreementareduetopresenttheirthirdsetofNationallyDeterminedContributions(NDCs)–emissionspledgesto2035.Manyhaveyettodoso,andouranalysisprovidesanindicationoftheemissionsreductionsthatwouldbeneededforthemtogetontrackfor‘wellbelowtwodegrees’.Forexample,ourNZSindicatesthattheEU,AustraliaandSouthKoreawouldeachneedtotargetroughlya70%reductioninemissionsby2035(fromdifferentbaseyears;seetable).Indiacouldcommittoa27%riseinemissionsfroma2005baseandremainontrackforBNEF’sNetZeroScenario.

ForthefewcountriesthathavealreadysubmittedathirdNDC,ourscenariosallowustoassesstheirlevelofambition.BothBrazilandtheUKhaveset2035targetsthatoutperformourNetZeroScenarioonemissionsreductions,whileJapan’scommitmentismoreambitiousthantheETSbasecasebutfallsshortoftheNZS.TheUShassubmitteda2035NDCthatfallsinlinewithourNZSbutisconsidereddefunctgiventhechangeofgovernment.

Table1:Tier1countryandEU-27NationallyDeterminedContributions2030and2035emissionstargetsandambitionlevelscomparedtoBNEF’sNetZeroScenariotrajectory

2030impliedemissionschange

2035impliedemissionschange

Market Targettype Baseyear NDC NZS NDC NZS

Brazil

Absoluteemissionsreduction

2005

-53%

8%

-59%to67%

-20%

UK

Absoluteemissionsreduction

1990

-68%

-58%

-81%

-73%

France

Absoluteemissionsreduction

1990

-51%

-45%

Pendingsubmission

-65%

Germany

Absoluteemissionsreduction

1990

-66%

-64%

Pendingsubmission

-78%

EU-27*

Absoluteemissionsreduction

1990

-55%

-54%

Pendingsubmission

-70%

US

Absoluteemissionsreduction

2005

-50%to-52%

-54%

-61%to-66%

-74%

Australia

Absoluteemissionsreduction

2005

-43%

-48%

Pendingsubmission

-71%

Japan

Absoluteemissionsreduction

2013

-46%

-55%

-60%

-73%

SouthKorea

Absoluteemissionsreduction

2018

-40%

-50%

Pendingsubmission

-71%

India

Emissionsintensity

2005

+153%

+103%

Pendingsubmission

+27%

Indonesia

Baselinescenario

2020

+74%

+3%

Pendingsubmission

-35%

Vietnam

Baselinescenario

2020

+81%

+1%

Pendingsubmission

-20%

China

Emissionsintensity

2005

+179%

+5%

Pendingsubmission

-43%

MoreambitiousthanNZS

InlinewithNZS

MoreambitiousthanETS

LessambitiousthanETS

Source:BloombergNEF,ClimateWatch,NationallyDeterminedContributionsfromtheUNFrameworkConventiononClimateChange.Note:NZSisNetZeroScenario.Appliesparties'economy-wide,unconditional,greenhousegasreductiontargetsfor2030,apartfromChina,whichonlyhasaCO2-relatedtarget.Wherethetargetisarange,themostambitiousfigureisusedintherating.NDCambitionassessmentsconsidertheabsolutedifferenceinemissions,crossoverpointsandoveralltrajectory.*IncludesEU-27forreference,with‘EuropeexUK’asaproxyfortheNZStrajectory.EuropeexUKincludesNorwayandSwitzerland.FranceandGermany’stargetsarebasedonaweightedaveragecontributiontothesectorscoveredbytheEUEmissionsTradingSystemandtheirnational-leveleffort-sharingtargets.Forcountrieswithemissionsintensityorbaselinescenariotarget,weestimatedtheir2030absoluteemissionstargets.Marketsarelistedinorderof2030targetsmosttoleastinlinewiththeNZS.

TheEconomicTransitionScenariowon’tmaterializebyitself

AlthoughwedescribetheETSasour‘basecase’,thelevelsofsolar,windandstoragedeploymentseeninthescenarioarenotthesameasthe2035forecastspresentedinoursectoralMarketOutlooks.TheETSmodelingattheheartofthisreportassumesthatpolicymakersputinplacetheconditionsforcost-optimallevelsofcleanenergydeployment,whereasoursectoralforecastsmustaccountforreal-worldpolicy,regulatoryandpracticalchallenges,whilefactoringinsomeprobabilitythatthesebarriersareliftedinfutureyears.

Asaresult,oursectoralMarketOutlooksforecastmuchlesswindandstoragedeploymentby2030,andslightlylesssolar,thanmodeledintheETS.Thisisbecausetherearestillsubstantialbarrierstocleanenergydeploymentinanumberofmarketsaroundtheworld,whichmaypreventwind,solarandstoragefromreachingthe‘economicallyoptimal’levelsdescribedintheETS.Thesecanincludemarketaccessandmarketdesign,fossilfuelsubsidies,permitting/planningchallenges,gridinfrastructurelimitationsandlackofexperience.Somemarketshavelong-termcontractsforfossilgenerationthatprotecttheseplantsfrombeingdisplacedbycheapercleanenergy.Allthesechallengesneedtobe

addressedifcleanpoweristoreachitseconomicpotential.Policymakersmusttakeresponsibilityforcreatingtheconditionsforcleanpowertoflourish.

Inaddition,marketswithhourlywholesaletradingcouldseepowerpriceerosionthatharmtheeconomicsofrenewables,andultimatelystorage(evenifpricearbitragebecomeseconomicforstorageinsomemarketsatcertaintimes).Thiscannibalizationeffectisstrongestforsolarbutholdstrueforallzero-marginal-costtechnologies.WholesalepowerpriceswillnotbesufficienttodriveinvestmentlevelsconsistentwithourETS,andsoothermarketmechanismswillcontinuetobeneeded.

WhiletheETSseesmoresolarthanoursectorforecastto2030,itactuallydropsbelowtheforecastthereafter.By2035,solarhasrisento23.5%ofpowergenerationglobally–enoughtotriggerthecannibalizationeffectdescribedaboveinmanymarkets.Afterthispoint,furthergrowthinsolardeploymentsdependsondemandgrowthandhigherlevelsofstorageandflexibilityonthegrid.

Decisiveactionisneededtogetontrackfornetzero

OurbasecasescenariofallsshortoftheParisAgreementgoals,withemissionsfallingonly22%by2050–afarcryfromnetzero–consistentwith2.6Cofglobalwarmingby2100.Thisshowsthatdeployingonlyeconomicallycompetitiveclimatesolutionswillnotbeenoughtoavertclimatedisaster.Policymakersmustnotonlygrasptheeasiestopportunities–renewables,storageandEVs–butalsotacklehardersolutionssuchaslow-carbonheat,industrialdecarbonization,carboncapture,hydrogenandcleantransportfuels.Onlywiththiswiderrangeofsolutionscanthephysicalimpactsandeconomicdamagewroughtbyclimatechangebebroughtundercontrol.

InourNetZeroScenario,allofthesecleantechnologysectorsgrowfasterthanintheETS.By2035,thereare16TWofwindandsolarinstalledglobally,versus12.6TWintheETS.ThepassengerEVfleetistwiceaslargeby2035,at952millionvehiclesontheroad.Nuclearpowercapacityrisesabove750GW,hydrogento159millionmetrictons,andSAFdemandtonearly40billiongallons,asmultiplesectorsracetodecarbonizefaster.

Aligningtonetzerowouldrequiremoreinvestment,butthedifferenceissmallerthanonemightexpect.IntheEconomicTransitionScenariobasecase,globalinvestmentandspendingonenergytechnologiesandinfrastructuretotals$76trillionintheyearsto2035,includingbothfossilandcleanenergyspending,whiletheNetZeroScenariorequiresonly19%moreinvestment(atotalof$90trillion)overthesameperiod.

Whenconsideringthefullhorizonfrom2025to2050,cumulativeinvestmentintheEconomicTransitionScenariorisesto$184trillion,whiletheNetZeroScenarioonlyrequires16%morefundingat$213trillion.Thedifferenceliesinwheretheinvestmentgoes,withcleantechnologiessu