Don’t Be Fooled – The Energy Transition is Not in Reverse
by Bob Shively, Enerdynamics President and Lead Facilitator
Listening to the news in the U.S., one might conclude that the growth of renewables, electric vehicles (EVs), and other aspects of an energy transition are rapidly slowing and that our existing fossil fuel-driven energy economy will last deep into the lifetimes of today’s adults. But not according to the recent Energy Transition Outlook 2025 prepared by independent assurance and risk management provider DNV. To quote from the forward in their Executive Summary:
The energy transition is rolling on. DNV’s annual Energy Transition Outlook has, consistently, forecast a shift from today’s 80/20 fossil/non-fossil primary energy mix to a 50/50 mix by 2050. That is still our prediction this year, although some aspects of the transition are supercharged and progressing rapidly, while other aspects of the transition have hit turbulence and are delayed.
DNV notes that cheap renewable electricity stored by ever-cheaper batteries is “already an unstoppable force.” They expect that variable renewable energy will provide 50% of all electricity by 2040, even though electricity use will have grown by 55% from today’s levels. And interestingly, although DNV believes electric demand will grow due to AI, such growth will be outpaced by growth in EV charging. To help you consider whether today’s headlines may be leading to false conclusions, consider the key highlights from the DNV study.
Key highlights
- U.S. policy renewables will have limited global impact
While policy shifts in the United States will delay that nation's emission reductions by approximately five years, the global transition continues largely unaffected. China's massive renewable buildout and technology exports are proving more influential than any single nation's policy reversals, with Chinese installations representing over half of new global solar capacity.
- Global energy security concerns will result in lower emissions
The heightened focus on energy security worldwide is producing net emission reductions. Energy-importing regions are accelerating their shift to domestic renewables, outweighing increased emissions from imported fossil fuels. Europe exemplifies this trend, with energy security measures projected to reduce emissions by nine percent in 2050 compared to scenarios focused solely on affordability.
- Electric vehicles and solar energy have reached key inflection points
The world has crossed fifty million EVs on the road, with projections showing EVs capturing half of global passenger vehicle sales by 2032. Solar capacity will exceed 3,000 gigawatts by year-end 2025. Behind-the-meter solar installations will represent thirty percent of all solar generation by 2060, fundamentally changing utility business models and grid management requirements. The current political trend away from EVs in the U.S. is being offset by rapid growth of EVs in China, Northern Europe, and several emerging economies in Asia and Latin America.
- AI's energy demand growth is manageable
Despite concerns about AI's power consumption, data centers supporting AI will account for only three percent of global electricity by 2040. While significant regionally—reaching sixteen percent in North America—AI demand growth will follow a more linear trajectory than initial exponential projections suggested, due to efficiency improvements across hardware, software, and operational practices.
- Greenhouse gas emissions won't halve by 2050
Perhaps most critically, global emissions will decline only by 43 percent by 2050, with net-zero not achieved until after 2090. This trajectory places warming at 2.2°C by 2100, exceeding Paris Agreement targets and creating substantial climate risks.
Investment implications
Energy expenditure patterns are fundamentally shifting. While global energy spending has grown by 50 percent since 2010, this growth is plateauing. Average annual expenditures around 2050 will remain near current levels despite GDP nearly doubling due to the low operational costs of renewable technologies.
Investment priorities are diverging sharply. Solar investments are projected to reach $900 billion annually by 2044, with wind tripling to similar levels. Battery storage investments will grow sevenfold to $50 billion yearly, then reach $300 billion in the 2050s. Meanwhile, fossil fuel investments face structural decline as demand peaks before 2030.
Grid infrastructure represents a critical bottleneck and opportunity. DNV estimates that, absent current grid constraints, European solar capacity could be 16% higher by 2035. Grid investments must double by mid-century to accommodate renewable integration, creating substantial opportunities in transmission, distribution, and smart grid technologies.
Supply and demand factors
Supply-side transformation accelerates through 2040, when variable renewables will provide over fifty percent of electricity—up from current single-digit percentages. Nuclear capacity will grow 150 percent by 2060, driven partly by energy security concerns and direct involvement of technology companies securing data center power.
Demand patterns reveal electrification's efficiency dividend. Despite electricity accounting for 43% of final energy demand by 2060, total energy consumption plateaus due to electrification's superior efficiency. This dynamic particularly affects transport, where EV adoption causes energy demand to decline from the mid-2030s despite growing mobility needs.
What this means for energy professionals
For energy professionals, DNV's outlook underscores the necessity of avoiding the temptation to allow current headlines to sway your thinking about the future. Yes, here in the U.S., the transition away from fossil fuels is slowing, but it is dangerous not to see the long-term trends or ignore the speed of transition elsewhere in the world.
Read More on Energy Currents
