#United States #Clean Energy #New York #Bain Company #net-zero emissions

Energy Executives Adjust Net-Zero Timelines Amid Cost Pressures

Amid a backdrop of record global investments in clean energy, executives overseeing the shift to a more sustainable energy sector are exhibiting less optimism regarding the timelines for achieving net-zero carbon emissions. According to the recently released 2025 Energy & Natural Resources Executive Survey by Bain & Company, a staggering 44% of energy and natural resources (ENR) leaders now project that the world will not hit net-zero emissions before 2070, a notable increase from just 31% in 2024. This suggests a growing skepticism among industry leaders about the pace of progress towards sustainability goals.

A Shift in Perspectives

The survey captures perspectives from over 700 executives spread across various sectors, including oil and gas, utilities, chemicals, and agribusiness. These insights reflect a palpable change in attitude toward net-zero aspirations. Significantly, only 32% of executives now expect net-zero to be achieved by 2050, a decrease from previous expectations where more than 40% were optimistic about reaching this milestone.

Executives from the oil and gas sectors foresee the peak of oil consumption around 2038. This forecast underlines the likelihood that traditional energy sources will continue to play a pivotal role in meeting global energy needs for an extended period. Joe Scalise, a partner and global head of Energy & Natural Resources at Bain, notes, "Our findings clarify that the energy transition is not just about decarbonization, but also about managing increasing energy needs. There's profound innovation underway, but executing amidst these dual challenges is essential."

Financial Barriers to Transition

While the enthusiasm for environmental, social, and corporate governance (ESG) investments remains high, a more pragmatic focus on returns on investment (ROI) is emerging among ENR executives. Financial constraints such as tightening budgets and soaring capital costs are prompting firms to reconsider their investment strategies. Notably, 76% of the executives report an increase in capital project costs over the past year, with significant portions facing extreme cost hikes exceeding 20%.

One of the most pressing hurdles highlighted by executives is the challenge of attracting customers willing to pay premium prices for transition-oriented products. Additionally, the lack of robust shareholder support and the uncertainties surrounding governmental policies and regulations are further complicating company transitions.

Embracing Technological Advances

Despite the grim outlook on net-zero timelines, there are pockets of optimism surrounding the potential of emerging technologies, particularly artificial intelligence (AI). A notable 72% of executives expressed confidence in the business cases for deploying advanced digital tools over the next five to ten years. In response to the changing technological landscape, many companies are actively planning improvements to their systems, specifically targeting ERP transformations—with over 60% expecting such initiatives within three years.

Grant Dougans, a Bain partner overseeing the Energy & Natural Resources practice, emphasizes that the modernization of ERP systems is increasingly viewed as a strategic necessity. This technological upgrade could enhance operational efficiencies through capabilities such as AI-driven demand forecasting.

Utilities on High Alert for AI Demands

As the energy consumption of data centers is projected to surge globally—potentially consuming over 2.6% of total energy by 2027—utilities must prepare for unprecedented demand. Most utility executives maintain a cautious optimism, suggesting they can balance this surge in demand only if all conditions are favorable.

The three main strategies identified by utilities to accommodate higher energy demands include expanding renewable energy sources, extending the life of existing assets, and investing in natural gas facilities. Notably, while nuclear power is regarded as a viable energy solution within North America, its adoption is viewed with skepticism in other regions.

Conclusion

As the energy industry navigates these complex challenges, the shift in timelines indicates a broader need for strategic innovation. Executives are learning to balance the urgent push for decarbonization with long-standing operational demands. This dual focus on innovation and sustainability will likely define the future trajectory of the energy sector in the years to come.