As COP30 kicks off in Belém, an inevitable question is where does the energy transition stand?
TL;DR
- Energy transition progress exceeds expectations but is insufficient for Paris Agreement goals.
- Low-emission technology deployment is uneven, with rapid progress in power and mobility, but not in buildings or industry.
- China leads in expansions, while India surpasses the US in solar and wind energy additions.
- Significant challenges remain in decarbonizing heavy industry and utilizing hydrogen effectively.
New McKinsey Global Institute research offers an answer, by examining the physical transformation at the heart of the transition.
Our current position is best described as a “tale of many transitions”. Consequently, leaders require a thorough and intricate grasp to chart a course ahead, particularly as innovation, geopolitical developments, policy changes, and the energy needs of data expansion transform the energy sector.
Looking at the big picture, progress has exceeded many expectations, yet it remains insufficient to achieve the Paris Agreement's objectives. By the close of 2024, approximately 13.5 percent of the low-emission technologies essential for 2050 had been implemented on average. This represents a slight increase from two years prior, but it's still about half the deployment rate necessary to limit global warming to “well below” 2°C.
The devil is in the details. Huge unevenness of three sorts is at play here—the many transitions.
Currently, certain segments of the energy infrastructure have advanced rapidly in their rollout, while others remain stagnant. Significant strides have been made in three out of seven energy system areas, frequently where objectives for emission reduction, cost-effectiveness, and energy security aligned.
For example, annual additions of low-emissions power capacity doubled between 2022 and 2024 to around 600 gigawatts. Momentum further strengthened in early 2025. At this pace, the world could plausibly reach a “cruising speed” of roughly 1,000 gigawatts per year before 2030. This would be well in line with what is needed to meet Paris-aligned goals. In the mobility domain, by mid-2025 about one in four new passenger cars sold globally was electric. And the supply of critical minerals has grown quickly. But in four other domains, namely buildings, carbon capture, hydrogen, and industry, the story is far less encouraging. There has, at least to date, been limited success in accelerating deployment, and the latter three have barely budged.
Furthermore, regional progress isn't uniform. While China stands as the planet's top emitter, it's also been responsible for roughly two-thirds of recent expansions in solar, wind power, and electric vehicles. The contribution of other developing nations is also on the rise. During the initial half of 2025, India incorporated 22 gigawatts of solar and wind energy, surpassing the United States. This has provided a fresh impetus for deployment, occurring when both the U.S. And the EU have experienced a slowdown in certain sectors.
Third, future outlooks are also inconsistent. In 2024, we documented 25 physical hurdles concerning the development and implementation of low-emission technologies. This year, we observe an increasing gap between challenges previously deemed simple and those that are more complex.
While simpler tasks like enhancing passenger car range and electrifying heat in cold climates are being tackled, many of the most difficult challenges, essential for reducing energy system emissions by roughly half, remain unaddressed. These include making heavy industry processes carbon-free and effectively utilizing hydrogen. For instance, in 2024, only approximately 10 percent of the declared hydrogen pipeline projects secured final investment approval. Furthermore, between 2024 and mid-2025, over 50 hydrogen initiatives were scrapped, encompassing those linked to sectors like manufacturing and fuels. Consequently, a significant disparity exists between stated intentions and actual implementation.
While certain avenues appear to remain closed, others are opening up, often without warning. Progress in electrification technologies, particularly battery compositions and high-temperature applications, has expanded what's achievable, enabling their use in areas like long-haul freight and the decarbonization of cement production. Concurrently, dependable clean energy sources like nuclear, geothermal, and natural gas with carbon capture are benefiting from supportive policies and increasing demand from data centers.
What should leaders do when faced with this tale of many transitions?
Opportunities are evident in segments of the energy system experiencing genuine momentum. However, achieving further progress necessitates disciplined execution to sustain and, where required, boost the current pace. Business leaders who foresee upcoming limitations and proactively position themselves to address them secure a competitive edge.
In challenging sectors facing stalled advancement, persistent innovation is crucial. This involves not only developing individual low-emission technologies but also optimizing their integration and structuring markets to facilitate their widespread adoption. Simultaneously, companies must remain adaptable. The landscape is constantly shifting, necessitating the potential abandonment of established beliefs and methods in favor of novel strategies.
To chart a cost-effective, dependable, and competitive route for emission reduction, leaders must acknowledge that this shift is intricate and ever-changing. Developing the capacity to confront the complexities they encounter will enhance their effectiveness.
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