Energy transition will continue despite fragmented global priorities
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The global energy transition will continue to advance through the second half of this decade, even as major economies pursue different priorities and face shifting political winds, according to a new analysis from BloombergNEF.
The emergence of a low carbon global economy in 2025 was marked by both progress and fragmentation. Economic competition, strategic shifts and changing policy landscapes have made it clear that countries are no longer running the same race toward net zero emissions. Nonetheless, clean energy deployment and related technologies are on track to expand through 2030, driven by strong economics and rising demand for electricity.
The differing priorities of the world’s largest economies highlight how the energy transition landscape has changed. In the US, the pursuit of artificial intelligence dominance has overtaken climate mitigation as a strategic focus. That shift has driven increased demand for both clean and fossil fuel energy to power data centers and other digital infrastructure, and it has altered the country’s international posture on energy decarbonization.
Across the Pacific in China, energy security and clean energy leadership continue to align as strategic and economic goals. China’s success in electric vehicles has helped it curb oil imports, and its renewable energy sector suggests that coal demand may soon peak. Chinese clean tech companies are also expanding their presence overseas, despite challenges such as tariff barriers and project delays.
Europe remains a leader in climate policy, though it faces internal debates over sustainability disclosures and vehicle emissions standards. Clean energy and electrification are seen as pathways to reduce dependence on oil and gas imports, strengthen energy security and increase competitiveness in a global market dominated by information technology and low cost manufacturing.
The fractured approach to climate commitments was evident in the mixed set of Nationally Determined Contributions submitted ahead of COP30. The UK and the European Union set new emissions goals aligned with the Paris Agreement, which will require significant effort to achieve. China’s updated target marked the first time it called for emissions to decline, even though its goals lack quantitative ambition. In contrast, the US no longer has an active NDC after exiting the Paris Agreement and India has yet to submit one.
These divergent strategies reflect how climate mitigation has lost ground as a central policy priority for some nations. That said, the clean energy transition has momentum that is unlikely to be reversed even in a more fragmented global context.
Renewables and storage growth will continue
Renewable energy is expected to keep making progress for the remainder of this decade. BloombergNEF estimates that global solar and wind installations exceeded 800 gigawatts in 2025, setting a new annual record and tripling deployment levels since 2021. Although installation growth is expected to flatten in 2026 and expand more modestly through 2030, deployment will continue as the economics of renewable power remain compelling.
Globally, analysts expect 4.5 terawatts of new wind and solar capacity between 2026 and 2030. This represents a 67 percent increase compared with the previous five year period. Even in the US, where policy momentum has slowed, projections still anticipate 336 gigawatts of new wind, solar and energy storage between 2026 and 2030. While that forecast is lower than earlier expectations, it still represents a 24 percent increase over the preceding five years.
Energy storage is also poised for rapid growth. Annual global installations are expected to exceed 100 gigawatts in 2026 for the first time, and rise past 200 gigawatts within the decade. BloombergNEF’s Energy Storage System Cost Survey found that equipment prices are now about $117 per kilowatt hour, less than a third of what they were three years ago. These lower costs will support broader deployment of renewables in markets where daytime solar generation has depressed power prices.
Falling battery costs and better electric vehicles are also driving transport electrification. Electric vehicles now account for more than a quarter of global new car sales, a milestone that would have seemed improbable just a few years ago. BloombergNEF forecasts that EV share will rise to 40 percent of global sales by 2030. China currently leads with EVs making up more than half of new vehicle sales, and Europe’s EV share stands at more than 25 percent. Emerging markets in Southeast Asia, Latin America and other regions are also seeing rapid growth.
China’s dominance in EV sales and manufacturing has disrupted the global automotive market. Foreign automakers’ share of EV sales in China has fallen from two thirds in 2020 to below 40 percent today, while Chinese automakers now hold a growing share of EV sales outside their home market. Western and Japanese carmakers are increasingly partnering with Chinese firms to accelerate battery and EV technology development.
Even though the European Commission recently eased some vehicle emissions policies, analysts still expect battery electric vehicles to comprise more than 80 percent of new car sales in the EU by 2035. That forecast sends a clear signal to manufacturers and investors about future demand.
Hard to decarbonize sectors make slower progress
Not all parts of the energy transition are moving at the same pace. Hard to abate sectors such as heavy industry, building heat, shipping and aviation continue to rely on technologies that are still scaling up. Solutions such as hydrogen, carbon capture, electrification and renewable fuels require robust carbon pricing, subsidies or incentives, and mechanisms to stimulate demand. Effective trade protections may also be needed to prevent carbon leakage.
The European Union’s carbon border adjustment mechanism, paired with a decarbonization bank and tightened carbon market rules, aims to spur net zero aligned industrial production. The success of these tools will be watched closely as markets adapt to evolving policy frameworks.
China is expanding its carbon market and introducing emissions caps, while Japan’s GX‑ETS carbon market is set to launch in 2026. Despite slower policy changes in the US, the country is still expected to host the most carbon capture projects through the end of the decade.
Emerging clean technologies are also making incremental progress. Global carbon capture capacity is projected to increase more than fourfold by 2030 to more than 200 million metric tons per year. Clean hydrogen production is forecast to reach five million tons per annum by 2030, a sixfold increase from 2024. Sustainable aviation fuel is expected to grow tenfold, reaching almost four percent of jet fuel demand by the end of the decade.
These figures remain modest compared with overall energy demand, but they signal continued advancement even in sectors that face steep economic and technological hurdles.
Despite competing priorities, the transition to a lower carbon economy persists. BloombergNEF’s analysis suggests that peak global oil demand may occur as early as 2032 as electric vehicles displace internal combustion engines. Although this projection has shifted over time, the trend points to disruption in traditional energy markets.
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