REPORT: ENERGY INDUSTRY NO LONGER SEES NET-ZERO ACHIEVABLE BY 2050

A recent survey by Bain & Company reveals that despite record investments in clean energy, energy and natural resources executives are growing less confident about achieving net-zero carbon emissions in the near future. Financial constraints, shareholder reluctance, and policy uncertainties were identified as major barriers to progress.

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Net-Zero Timeline Pushed Further

Bain’s 2025 Energy & Natural Resources Executive Survey found that nearly half (44%) of industry executives now believe global net-zero emissions won’t be reached until 2070 or later, a sharp rise from 31% in 2024. Conversely, only 32% expect net-zero by 2050, a decline from previous surveys where 40–50% had anticipated that timeline.

Oil and gas executives, on average, predict peak oil demand around 2038, indicating that fossil fuels will remain critical in meeting energy needs for years to come.

The Challenge of Balancing Investment and Decarbonization

Bain’s survey, which gathered insights from over 700 executives across oil and gas, utilities, chemicals, mining, and agribusiness, highlights the complexity of the energy transition. Joe Scalise, Bain’s global head of Energy & Natural Resources, describes it as a “dual challenge” of increasing energy supply while simultaneously pushing for decarbonization.

While executives remain optimistic about meaningful emission reductions, they acknowledge that progress may be slower than initially expected due to economic and logistical hurdles.

Financial Pressures and ROI Concerns

The initial enthusiasm for ESG-driven investments is giving way to a stronger focus on return on investment (ROI). Rising capital costs and tighter budgets are forcing companies to make tough decisions on where to allocate resources.

Executives cite the biggest obstacle to scaling up clean energy businesses as the lack of customers willing to pay higher prices to ensure profitability. Increasingly, a lack of shareholder support is also seen as a significant challenge, alongside regulatory uncertainty and limited access to capital.

Rising Capital Project Costs

Over 75% of executives reported increased capital project costs in the past year, with 10% experiencing extreme cost hikes of over 20%. To manage this, companies plan to optimize capital allocation, streamline project scopes, and leverage AI-driven project management tools. Nearly half of respondents intend to integrate AI to enhance project execution and efficiency.

Growing Optimism About AI and Emerging Technologies

Despite waning confidence in the net-zero timeline, executives are increasingly optimistic about the role of AI and digital tools in improving business operations. About 72% believe AI will offer strong business value within the next 5–10 years.

Many companies are prioritizing digital transformation, with over 60% planning an enterprise resource planning (ERP) system overhaul in the next three years. Bain partner Grant Dougans notes that ERP modernization is now seen as a strategic necessity rather than just an IT upgrade, as it enables AI-driven forecasting and operational efficiencies.

Executives are also increasingly positive about the business cases for energy storage (47%), renewables (45%), circularity (39%), and carbon capture, utilization, and storage (43%).

AI-Driven Energy Demand and Power Infrastructure Challenges

The rise of AI and data centers is expected to place enormous strain on global energy infrastructure. Bain estimates that data centers could more than double their global energy consumption by 2027, consuming 2.6% of total electricity and requiring over $2 trillion in new energy investments.

Utilities executives acknowledge the challenge, with 43% saying they can handle the demand spike—but only if everything goes smoothly. Their primary strategies include increasing renewable energy investments, extending the life of existing assets, and adding natural gas capacity.

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Source: jpt.spe.org