The Energy Transition’s Next Chapter: Clean Power Gains, Fossil Fuels Fade, and AI Joins the Grid
Overview
BloombergNEF’s New Energy Outlook 2025 reveals an energy landscape shaped by economic competitiveness, data center growth, and maturing clean technologies. While global emissions may have peaked in 2024, the path to net zero demands faster action and broader policy support.
Photo by BloombergNEF
Clean Technology Surges Ahead
Renewable energy is booming. Solar and wind capacity will more than double by 2050, powering 67% of global electricity, up from 33% in 2024. Lower costs will drive widespread adoption.
In the next 5 years we will see an 84% jump in renewable generation. By 2050, solar and wind will account for 9.5 terawatts of added capacity globally.
Electric vehicles (EVs) are accelerating fast. Sales rise from 17.2 million in 2024 to 80 million in 2050. By then, EVs will make up two-thirds of all passenger vehicles.
Flexibility becomes essential. Smart EV charging, batteries, and demand response systems are projected to provide the grid with 20% of total electricity demand in flexibility by 2050.
Photo by BloombergNEF
AI and Data Centers Reshape Energy Demand
Electricity use grows 75% by 2050, fueled by the rapid increased need for cooling and other data center energy needs.
By 2050, data centers will consume 3,700TWh annually, which is nearly 9% of total power demand. This would constitute more total energy use than air conditioning and heating combined.
Powering this demand means 362GW of new capacity by 2035, half of which will come from renewables and storage. Yet, 64% of the generation needed will continue to come from fossil fuels.
Fossil Fuels Decline, But Not Evenly
Coal and oil are on the way down, with varied paces. Coal demand is expected to fall 25% by 2035, while oil peaks in 2032 before declining 15% by 2050.
Road fuel demand drops, but aviation and petrochemicals still drive oil use higher in other sectors.
Natural gas has a more uncertain future. In BloombergNEF’s Economic Transition Scenario, gas demand grows 25% by 2050, but the Net Zero Scenario sees it halving. Regional policy choices will determine which path is taken.
Photo by BloombergNEF
Hard-to-Abate Sectors Still Lagging
Carbon capture, and low-carbon industrial technologies remain underdeveloped due to a lack of policy support.
In 2050, fossil fuels still provide 88% of energy for steel production and 96% for cement production.
Sustainable aviation fuels cover just 7% of aviation energy by 2050. Fossil kerosene use rises 63%.
The US: Progress Amid Policy Shifts
Emissions fall 29% by 2050, even with weaker fuel economy standards and shifting tax incentives.
Wind growth slows due to permitting issues, but solar and battery storage rise faster thanks to lower costs.
The outlook excludes new tariffs announced in April 2025, which could raise clean technology costs and impact deployment.
Global Emissions May Have Peaked
2024 might mark the peak year for global CO₂ emissions.
By 2030, emissions drop 9%; by 2050, a 22% drop, mostly due to clean power and electrification.
Investment and Policy Gaps Remain
$76 trillion is needed for energy investments through 2035 under the current trajectory. Achieving net zero by 2050 would cost just 19% more (90 trillion).
Barriers like fossil fuel subsidies, slow permitting, and grid constraints still limit renewable deployment.
Clean energy needs more than market forces; it needs decisive, long-term policy support to thrive and reach net zero.
The shift to clean energy is gaining serious momentum, with renewables set to dominate the power mix by mid-century. But without stronger policy action, especially in hard-to-decarbonize sectors, the world risks missing its climate goals. The next chapter of the energy transition must focus on unlocking the full potential of clean technologies and closing the gap to net zero.