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Trading short-term gain for long-term pain: Why energy companies need to think ahead about clean energy

Energy Market Review 2025

By Alan McShane , Lucy Stanbrough , Marie Reiter and Steven Munday ACII | May 28, 2025

In this 2025 Energy Market Review article, we discuss how energy companies are balancing shorter-term financial growth with longer-term clean energy commitments to build a sustainable business.
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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?

Investment is on the rise, but there’s a steep hill to climb

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.

Technology tipping points: Where and when energy companies are placing their bets

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]

Immediate-term priorities

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.

Investments over the next five years

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.

Plans for the next 10 years

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.

Striking the balance on clean energy risk for today and tomorrow

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:

  • Identify your risks and opportunities, making use of industry specialization. As the dividing lines between business models blur, risk leaders should take advantage of deep subject matter specialism and on-the-pulse insights on insurance market trends that brokers combine to help you make informed decisions.
  • Build a forward-looking strategy, backed by data. Utilize data analytics and risk engineering models to evaluate the potential impact of different technology pathways and potential loss scenarios on your financial performance. Implement a robust scenario planning exercise to assess the resilience of your strategy under various market conditions.
  • Optimize your insurance spend to deploy capital strategically. Analytics point to areas to retain risk that’s costly in the market, or how best to spend on premium across all risks and set your limits at the most efficient level, in line with your organization’s risk tolerance. Any savings made on premium spend can then be deployed strategically in ways that best support the organization’s future growth objectives.

Contact our oil and gas and clean energy specialists to build a sustainable future for your business.

Footnotes

  1. The Paris Agreement Return to article
  2. Analysis: Clean energy contributed a record 10% of China’s GDP in 2024 Return to article
  3. Global Investment in the Energy Transition Exceeded $2 Trillion for the First Time in 2024, According to BloombergNEF Report Return to article
  4. Press Release | WMO confirms 2024 as warmest year on record at about 1.55°C above pre-industrial level Return to article
  5. Global Clean Energy Survey 2025 Report Return to article

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Authors


Global Head of Risk Engineering, Natural Resources

Head of Emerging Risks Research, WTW Research Network
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Head of Global Broking Strategy, Natural Resources
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Global Renewable Energy Leader, Natural Resources

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Global Head of Natural Resources
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Magnus Andrén
Head of Risk and Broking, Sweden

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