The Global Energy Transition Rolls On—Even As The U.S. Hits Reverse

Since the Trump administration has come into power its energy and climate policies have included withdrawing from the Paris Agreement, dismantling federal climate regulations for vehicles and power plants, and scaling back tax credits and funding for clean energy and hydrogen. As a result of the policy reversals the energy transition has slowed – but not stalled – in the U.S., with emission reductions delayed by about five years compared to what we at DNV forecast a year ago.

The policy reversals in the U.S. have created a barrage of headlines which might create the impression that the global energy transition is reversing – this is certainly not the case. DNV’s Energy Transition Outlook demonstrates that, despite policy turbulence in the U.S., the global shift toward renewable energy remains resilient.

The reason the global transition is robust lies across the Pacific and China’s relentless buildout and export of its renewable capacity. In 2025 alone, China is expected to install 390 GW of solar PV—56% of new global capacity—and 86 GW of wind, accounting for 60% of new installations worldwide. Chinese clean technology exports are propelling the transition in other regions, making solar panels, wind turbines, batteries, and electric vehicles more affordable and accessible than ever before.

The surprising benefits of energy security

Energy security has become a central driver of the global energy policy, with governments worldwide recalibrating their strategies to build resilience and reduce reliance on imports to shield their economies from geopolitical shocks.

It may seem counterintuitive, but our forecast shows that the implementation of energy security measures is a net benefit to decarbonization, even if only by a small margin. This is because all countries are doubling down on energy resources they can control themselves. For example, we now see more nuclear in the energy mix as governments perceive it as a secure energy source. In Europe, emissions will be significantly lower as it promotes renewables and scales down import of fossil fuels.

Unstoppable Economics of Clean Energy

Despite policy headwinds in the US, the economics of clean energy are now decisive. Solar and onshore wind are the cheapest sources of new power in most regions. By 2030, solar and onshore wind will supply 32% of global electricity, and by 2040, variable renewables will provide more than half of all electricity worldwide. The share of fossil-fired generation in electricity supply is set to fall from 59% today to just 4% by 2060.

The overarching trend that links solar, wind and EVs is electrification, which is growing and greening. Global electricity generation is projected to increase by 120% from now until 2060, doubling from a 21% share of total energy demand today to 43% in 2060. During 2025 we have passed the milestone of 50 million electric vehicles and in five years this number will be 200 million.

Bottlenecks in the energy transition

It would be misleading to suggest the entire energy transition is moving as quickly as solar and EVs, which can be regarded as the low hanging fruits.

In many locations it is no longer the cost or availability of renewables that is the biggest challenge, but the capacity of electricity grids to integrate and deliver them. In Europe, for example, grid constraints mean that solar capacity could be 16% higher and wind capacity 8% higher by 2035 if not for current “gridlocks.” North America faces similar challenges, with soaring demand from AI data centers and electric vehicles placing additional strain on already congested grids.

Hydrogen, which is vital to decarbonizing sectors which are difficult to electrify such as high heat industry, aviation and maritime, is growing very slowly. The hype around hydrogen has so far failed to materialize into significant production and for the third year in a row we have revised down our hydrogen forecast. It now seems the Trump administration also have hydrogen in its cross hairs.

No Net Zero by 2050—But Every Tenth of a Degree Counts

Perhaps the most sobering conclusion of the 2025 ETO is that the world will not achieve net-zero emissions by 2050. The carbon budget for 1.5°C of warming will be exhausted by 2029, and the 2°C budget by 2052. On the current trajectory, net-zero CO₂ is reached only after 2090, with global warming stabilizing around 2.2°C by 2100.

The global increase in emissions as a result of the US policy reversal is not particularly significant, although it is a move in the wrong direction when considered in the perspective of the Paris climate goals. The energy transition has not been derailed, but there is no denying that the absence of the US on the global stage makes much needed progress more difficult.