Energy Market Review 2025
The energy sector is at a crossroads. Protecting and growing revenue have stepped up to challenge decarbonization goals as the immediate priority for the oil and gas sector. But how can energy companies strike the balance that will boost short-term financial growth, while positioning the business for longer-term sustainable success?
2025 is a big year for the energy transition and a key checkpoint for the natural resources industry to consider the next leg of the journey. 2025 marks the 10-year anniversary of the 2015 Paris Agreement where world leaders recognised the need to limit global warming to 1.5°C, the need for greenhouse gas emissions to peak before 2025 at the latest, and decline 43% by 2030.[1]
Investment in clean energy has accelerated since 2015.[2] The world now invests almost twice as much in clean energy as it does in fossil fuels. This is a huge achievement, and mature technologies are reaping the rewards. Yet current investment levels represent only 37% of the annual $5.6 trillion required from 2025 to 2030 to meet net-zero targets (Figure 1).[3]
While progress has been made, it hasn’t been made fast enough to hit targets aligned to the Paris Agreement. 2024 saw the global mean temperature exceed 1.5°C above pre-industrial levels for the first time.[4]
Against a backdrop of geopolitical uncertainty, cyber-threats, changing regulations, stakeholder scrutiny, macroeconomic volatility and other evolving challenges, energy companies face complex decisions about balancing revenue and investment now and into the future.
The clean energy transition will only succeed if investments generate the risk-adjusted returns that satisfy boards and investors.
Energy companies need to think ahead about their clean energy strategy, ensuring they have a strategic roadmap that covers near-and long-term priorities that consider future demand scenarios as electrification continues, competition intensifies and new business models emerge.
In our 2025 Global Clean Energy Survey, energy companies’ planned investments in technologies change over the immediate, 5-year and 10-year horizons (Figure 2):[5]
The impacts of the war in Ukraine continue to ripple throughout global supply chains, driving energy companies to focus on maintaining security of supply to keep the lights on – for the business itself and links across the entire supply chain. Meanwhile, political shifts in key regions such as the U.S. have changed the competitive landscape in oil and gas, creating opportunities to boost cashflow from fossil fuels in the short term and driving fossil fuels as a major priority in the immediate term.
While opportunities to invest in traditional fossil fuels operations are being revived, regulatory pressures to decarbonize operations remain and in response, carbon capture outstrips all other technologies to take pole position as an investment priority for the oil and gas sector over the next five years.
“This is surprising given that the technology has not yet been deployed on any large scale. However, the finding may reflect the prospect of tradeable carbon credits, certainty about the price for storing carbon, and the commercial opportunities for oil and gas producers from sequestering carbon in exhausted fields.” says Marie Reiter, Head of Global Broking Strategy, Natural Resources.
The outlook over the next ten years is more mixed. Geothermal emerges as a top priority for oil and gas companies in the next ten years (32%), while hydrogen follows as the second highest priority at 28% and battery energy storage solutions (BESS) at 27%. The difference between these figures is so fine, that any of the top technologies could take poll position. It all hangs on how the technologies develop, how they prove their return on investment (ROI), and how they align to longer-term business goals.
Regardless of where the project is and the technology in play, risk leaders are under the spotlight.
Actions risk leaders need to take to drive value in clean energy:
Contact our oil and gas and clean energy specialists to build a sustainable future for your business.
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