In a recent report, Wood Mackenzie stated that the global goal of achieving net-zero emissions by 2050 is now “impossible,” projecting a temperature rise of 2.6°C. The Paris Agreement’s target of limiting warming to below 2°C is also highly unlikely to be met, primarily because G7 members are all set to miss their 2030 emission reduction targets.
According to the report, limiting warming to 2°C would require annual global investments of $4.3 trillion between 2025 and 2060. Additionally, the energy sector’s share of global GDP would need to increase from 2.5% to 3.25% over the next decade. Even if these conditions are met, the net-zero target would be delayed until 2060—a decade later than the critical deadline for mitigating severe climate impacts.
Despite rapid growth in renewable energy, which has increased its share of global electricity supply from 5% to 20% over the past decade, the transition faces multiple headwinds. Prakash Sharma, Vice President of Scenarios and Technologies at Wood Mackenzie, noted that surging electricity demand driven by AI and electrification, alongside challenges in scaling, system integration, capital allocation, and geopolitics, is hampering decarbonization efforts.
The report emphasized that the U.S., China, and Europe are pivotal to the global energy and climate trajectory, yet their performances vary significantly. Sharma pointed out that the U.S. saw climate policy setbacks during the Trump administration, while China leads in low-carbon development through its dominance in EVs, solar, and renewable deployment—though it remains a major fossil fuel emitter. Europe maintains the strongest net-zero ambition, yet rising military spending could divert funds from climate initiatives. These findings align with an October warning from DNV that global conflicts and macroeconomic challenges are diverting resources from climate action.
Investment gaps remain a critical barrier. The report indicates that the U.S. must increase annual investments from $388 billion to $682 billion (a 76% rise), Europe from $455 billion to $619 billion (a 36% increase), and China from $913 billion to $1.177 trillion (a 29% jump). Many regions even need to “more than double their transition spending.” Sharma warned that delaying the transition will raise long-term climate adaptation costs, underscoring that the next decade is crucial for determining the success of decarbonization.
Rising demand for critical minerals and AI introduces additional challenges. China dominates the refining of lithium and rare earths, while soaring needs for nickel, cobalt, and copper are intensifying geopolitical competition. AI data centers are expected to consume 700 TWh of electricity in 2025—surpassing EV usage—and may double by 2030, potentially exacerbating power crises. Nevertheless, the report also highlighted that integrating AI into energy systems could, in the long run, enhance efficiency and reduce emissions.
