Energy executives push back net-zero expectations amid rising challenges
Despite record-breaking global investments in clean energy last year, leaders in the energy sector have become less optimistic about when the world will achieve net-zero carbon emissions. This is according to a new report by Bain & Company.
The 2025 edition of Bain & Company’s Energy & Natural Resources report has found that nearly half (44%) of energy and natural resources executives now expect the world to reach net-zero emissions by 2070 or later, a steep jump from the 31% that felt this way in 2024. Similarly, only 32% expect it by 2050 – a reversal from previous surveys, when around 40% to 50% foresaw net zero by 2050.
On average, oil and gas executives anticipate peak oil around 2038, a clear signal that sector leaders expect legacy assets to play a crucial role in meeting energy demand for the foreseeable future.
The survey of the global strategy consulting firm canvassed the views of more than 700 executives across oil and gas, utilities, chemicals, mining, and agribusiness on energy transition challenges and opportunities, providing perspective on how they’re balancing those investments with other business priorities.
Financial viability a major obstacle
The era of enthusiasm for environmental, social, and corporate governance – driven investment is giving way to a harder-nosed focus on ROI. Tighter budgets, constrained balance sheets, and rapidly rising capital costs are forcing companies to make tough calls about where to place their bets.
Executives continue to say their top roadblock to scaling up their transition-oriented growth energy business is finding enough customers willing to pay higher prices to create sufficient ROI, with a greater portion pointing to a lack of shareholder support as a major issue this year. Other top obstacles include government policy and regulation as well as a lack of cash or capital.
Meanwhile, more than three-quarters of executives told Bain & Company that their capital project costs rose at least somewhat over the past 12 months, and one in 10 executives experienced extreme cost increases surpassing 20%. To deliver projects more effectively, executives intend to improve capital allocation across their portfolios, more tightly scope projects, and do a better job of engineering project value and designing project concepts
“Energy leaders are facing a stark reality: the transition to net zero is proving more financially and operationally complex than many anticipated. Rising capital costs, policy uncertainty, and shareholder hesitancy are forcing executives to make difficult trade-offs,” noted Eric Beranger-Fenouillet, Head of the Energy, Natural Resources and Sustainability & Responsibility practices at Bain & Company in the Middle East.
AI to the rescue?
Amid the downturn in net zero sentiment, there is growing optimism among executives that AI and emerging technologies can play a crucial role in overcoming many challenges. Enthusiasm for AI and digital tools is surging, with 72% of executives saying they feel positively about the 5-to-10-year business case for these technologies.
“Emerging technologies like AI and energy storage are offering a bright spot amid the challenges. While we may have to adjust our timelines for net-zero, the continued development and adoption of transformative technologies could be the key to overcoming the financial and regulatory obstacles hindering the energy transition,” said Raja Atoui, partner at Bain & Company in the Middle East.
While companies may have been able to put off major technology investments without significant consequences in recent years, executives are starting to recognize that those days are over. Most say they are planning technology-enabled improvements across multiple key functions, and one of the first items on the agenda is overhauling their ERP systems – more than 60% anticipate their next ERP transformation will take place within the next three years.
