Key reasons to read this story
- Step inside the strange contradiction that has defined the energy transition in 2025
- Take a closer look at what 2025 has revealed about the limits of clean-energy optimism
- Follow the money, materials and politics that are shaping the next phase of the energy transition
- Understand why the most difficult aspect of decarbonization may have only just begun
If you look at the raw numbers of the energy transition in 2025, you can see a world that is sprinting toward the future. But if you look at the infrastructure and policies intended to bring that future, you will see a world that is stuck in traffic.
As the year comes to a close, the global energy system is defined by a sharp duality. On one hand, there has been a great acceleration in deployment and innovative technologies. Solar installations surged by 64% compared to 2024, electric vehicles are expected to account for a quarter of global car sales, and energy-storage capacity is expected to rise by 22.7%.
On the other hand, there is a massive gridlock with uneven transition, political reversals, and outdated infrastructure stalling progress. McKinsey Global Institute estimates that the transition is advancing at barely half the pace required for the Paris Agreement’s net-zero pathway.
Breakthroughs: solar, storage, and EVs push ahead
Renewables overtake coal
Renewable energy has surpassed coal in electricity generation for the first time. Both Ember and the International Energy Agency confirm that global wind and solar reached 5,072 TWh in the first half of 2025, surpassing coal’s 4,896 TWh. Renewables now supply 34.3% of global power, edging out coal at 33.1%.
Battery prices collapse
The long-standing critique that renewables fail when the sun sets is rapidly eroding. Global battery‑storage deployments are surging. BloombergNEF predicts 94 GW of new capacity in 2025. National Renewable Energy Laboratory forecasts that, under favorable circumstances, four‑hour lithium‑ion systems could cost as little as $110/kWh by 2050, making solar and wind energy backed by batteries a more stable, around‑the‑clock power source.
EVs reach the 25% threshold
Despite policy headwinds in the United States, electric vehicles have passed a significant milestone. The IEA’s Global EV Outlook 2025 confirms that EVs now account for 25% of all new global car sales, with total sales set to exceed 20 million units this year. In China, which dominates clean energy deployment across solar, batteries, and electric vehicles, the transition has really gained momentum, with more than half of new car sales now electric or hybrid.
Heavy industry begins to shift
One of the most carbon-intensive sectors has achieved a major breakthrough which was once considered unattainable. In Brevik, Norway, Heidelberg Materials inaugurated the world’s first industrial-scale cement plant with integrated carbon capture in mid‑2025. Known as Brevik CCS, the facility is designed to capture around 400,000 tonnes of CO₂ annually, roughly half of the plant’s emissions, and store it permanently under the North Sea.
Investment momentum holds
Clean energy investment is predicted to reach a record US$3.3 trillion in 2025. For every dollar invested in fossil fuels, two dollars now flow into clean energy technologies.
Drawbacks: when reality bites back
A transition this fast exposes structural weaknesses, and in 2025 these became impossible to ignore.
A connection crisis
The main obstacle is no longer cost but connection. The Lawrence Berkeley National Laboratory reports that nearly 2,300 GW of generation and storage capacity are stuck in interconnection queues in the US. Wait times have stretched from under two years in the early 2000s to over four years today. As delays mount, nearly 80% of the proposed projects are being withdrawn.
Profitability pressures mount
Several sectors have struggled to deliver the commercial returns needed to sustain momentum. Offshore wind was hit hardest with rising costs and aggressive bidding triggering the cancellation of projects in the United States and failed auctions in Europe. Oil majors, including BP and Shell, have scaled back multibillion-dollar renewable plans and redirected capital to fossil fuel operations.
Hydrogen’s reality check
The green hydrogen hype cycle has been realistically corrected. The IEA’s Global Hydrogen Review 2025 notes that while project announcements abound, final investment decisions remain scarce.
By 2030, only about 4 million tonnes per annum of low-emission hydrogen has been firmly committed, which is a fraction of what is needed to decarbonize heavy industry and shipping. Without substantial subsidies or carbon pricing, the economics remain uncompetitive.
The looming copper crunch
As lithium prices plunge due to oversupply, a more intractable crisis is emerging for copper. The IEA warns of a potential 30% supply shortfall by 2035. Copper is the nervous system of the transition and, with no easy substitute, its shortage threatens to throttle the manufacturing of everything from wind turbines to grid lines.
Policy reversals reshape momentum
2025 brought significant policy disruption, especially in the United States. The One Big Beautiful Bill Act accelerated the phase-out of key Inflation Reduction Act incentives, tightened foreign entity restrictions, boosted fossil fuel production, and effectively eliminated support for residential rooftop solar energy and EVs.
Geopolitical tensions have further increased costs. New US tariffs on Chinese clean energy technology are fracturing supply chains and slowing deployment across advanced economies.
Deepening global inequalities
The transition remains profoundly unequal. Over 80% of the growth in future energy demand originates in emerging economies, yet more than 90% of new clean energy investment since 2021 has flowed to advanced economies and China. The World Economic Forum estimates that this has created an annual investment gap of US$2.2 trillion in the developing world under net‑zero pathways, a gap that risks locking in inequality in the energy transition.
The AI wild card
AI-driven data centers have pushed global electricity demand sharply upwards. This surge, BNEF notes, is conflicting with grid realities, threatening reserve margins, and underscoring how fast demand is outpacing clean-energy deployment.
The state of the transition
The energy transition has reached its difficult adolescence. The easy wins of early adoption are over. What remains is the hard, expensive, and politically complex work of rebuilding the foundation of the global economy. The breakthroughs of 2025 prove the destination is viable but the evident gridlock proves the path is broken.
The year ahead will be defined by whether institutions can learn to build, connect, and finance at the pace technology and climate now demand.
