Despite achievements in clean energy, such as record-breaking installed capacity from renewable sources, a significant increase in EV (electric vehicle) sales and the expansion of new energy storage technologies around the world, the journey to the energy transition is far from simple. This is the assessment of Albert Cheung, head of Global Transition Analysis at BNEF (BloombergNEF).
“Working in clean energy and climate is like living in a constant state of cognitive dissonance, caught between good news and bad news. The silver lining is that every year brings continued growth in the cleantech industries, record levels of investment and constant technological advancements,” he said.
“Yet despite years of continued rapid acceleration, it is never enough. Every winter, BNEF analysts spend weeks crunching numbers only to conclude that global investment in energy transition is well below the level needed to get on a path to net zero by mid-century,” Cheung said.
For this year, he listed a series of factors that could directly impact countries' path towards their net zero goals. Among the challenges he pointed out are the arrival of the Trump istration, which could change climate policies in the United States, and the slowdown in the growth of electric vehicle sales.
He also mentioned the difficulties in Europe's battery sector, limited progress on hydrogen and industrial decarbonisation, ongoing difficulties in the offshore wind sector and the COP29 financial deal that left many countries disappointed.
According to the expert, this feeling of discomfort brings five important lessons that society must absorb as it begins a new year of work on the energy transition.
1. The energy transition will not slow down
The clean energy transition continues apace, with 2024 set to see strong growth across a range of technologies. Solar PV installations grew 35%, energy storage in megawatt-hour rose 76% and electric vehicle sales increased 26% year-on-year, according to BNEF estimates.
“What about the Trump effect? Updated forecasts suggest that by 2030, electric vehicles will for one-third of new vehicle sales in the United States — nearly three times the current market share. While that’s below the 48% penetration expected under Biden-era regulations, it still represents significant growth,” the analyst emphasized.
In of clean energy, more than 900 GW of new solar, wind and storage projects are expected in the US by 2035 – in a scenario where investment and production tax credits are completely repealed.
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This is the hard part of the journey
In Albert Cheung’s view, the advancement of the energy transition now faces more complex barriers. In mature markets, early adopters of electric vehicles and residential solar PV systems have already captured the low-hanging fruit, driving down the upfront costs of these technologies.
“However, growth in sectors such as EVs and solar is starting to slow. In 2024, electric vehicle sales grew by 26%, a slower pace than the 60% and 34% recorded in 2022 and 2023, respectively. Similarly, growth in PV installations, which was 35% in 2024, is expected to fall to 11% in 2025, showing that many advanced markets are reaching high levels of penetration,” he reported.
Keeping pace will require overcoming bottlenecks, such as increasing flexibility in mature grids, developing emerging markets with weak regulations, and investing in charging and energy storage infrastructure.
Emerging markets such as India, Pakistan and Romania have been major drivers but need more robust regulatory arrangements for widespread adoption. “The future of transition will require new solutions to unlock these opportunities and pave the way for the next growth cycle,” he stressed.
3. Be careful not to misinterpret the data
According to BNEF’s head of global transition analysis, in a sector as complex as the energy transition, misinterpreting data can lead to distorted perceptions. In the case of electric vehicles, for example, slower growth in 2024 in the European Union was widely interpreted as a decline in consumer interest.
“However, the reality was more nuanced: a temporary increase in sales in the previous year due to the end of subsidies created an unfavorable comparison effect. Nevertheless, the EU car industry met its CO2 emissions targets, showing that the market is already operating at a pace sufficient to meet the regulations,” he said.
This temporary slowdown reflects a strategic alignment of automakers, who are likely to wait until 2025 to launch more competitive vehicles aligned with the new emissions targets.
“The lesson here is clear: the context behind the numbers is crucial to understanding market dynamics. Isolated data can give the impression of slowdowns or failures when, in fact, they are part of predicted cycles or strategies adjusted to the regulatory scenario,” explained the expert.
4. A successful and profitable transition
The energy transition depends on financial returns that attract investors and companies. According to Cheung, technologies such as clean hydrogen still face high costs, with average prices for green hydrogen being 35% higher than two years ago.
“This reinforces the need for long-term policies, such as subsidies and carbon pricing, to enable adoption in sectors such as fertilizers, steel and chemicals. Governments must create regulatory environments that allow for risk-adjusted returns, ensuring that clean energy investments remain attractive,” he stressed.
The offshore wind sector exemplifies the challenges of balancing costs and incentives. Competitive auctions in recent years have put pressure on manufacturers’ margins, resulting in cancelled projects and financial difficulties.
“Learning from these experiences is essential to structure policies that attract sustainable investments, offering stability to developers and viable financial returns. The success of the energy transition is directly linked to the ability to create a balance between competitiveness, incentives and economic viability,” added the executive.
5. Geoeconomic competition has become the biggest complicating factor
The global energy transition is increasingly marked by geoeconomic competition. Countries such as the US, India and EU are implementing policies to protect their local clean technology industries, such as batteries and solar s, while also facing challenges related to global oversupply, especially due to China’s production capacity.
“While these policies aim at economic and energy security, they often increase costs for the end and hinder the dissemination of global innovations,” he said.
To ensure a successful transition, policymakers need to balance protectionism with international collaboration. Strategic partnerships, such as t ventures and sharing of technical expertise, can help mitigate the impacts of restrictive policies while fostering a vibrant local industry.
“In addition, diversifying sources of clean technology and avoiding wholesale exclusions of foreign companies can reduce the costs of the transition and strengthen energy security worldwide. The future of the transition will depend on strategic and balanced policy decisions,” concluded Albert Cheung.
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