The consultancy firm McKinsey & Company highlighted a challenge facing the energy transition back in August 2024. “Scaling up deployment of decarbonisation technologies is crucial to achieve net zero, but there is a reality gap—the lack of firm EU and US project commitments could slow momentum,” it said.
Almost a year later, this reality gap has grown. The global climate impact of continued fossil fuel use has become more obvious than ever, with around four in 10 glaciers worldwide now doomed to melt, according to research. Meanwhile, climate-related ocean acidification has passed a tipping point, scientists say.
But rather than step up efforts to combat the climate crisis, many administrations are lagging or even backtracking on decarbonisation commitments. Even apparently climate-friendly governments such as those of New Zealand and the UK are facing legal action over inadequate efforts to cut carbon emissions.
More damaging, of course, is the stance of some of the world’s largest polluters.
The US has rolled back a host of climate measures and introduced tariffs that are expected to slow the development of the energy generation industry, with Chris Seiple, vice chairman of Power and Renewables at Wood Mackenzie, saying: “We will definitely see impacts on power sector capital projects.”
Elsewhere, the world’s largest carbon emitter, China, has overtaken the European Union in terms of its contribution to global warming, while India and Russia’s emissions are continuing to soar. Last year marked a new high (or low, depending on your perspective) in terms of global greenhouse gas emissions.
Meanwhile, major carbon-emitting companies have continued to push forward with expansion plans, despite calls for an immediate halt to further fossil fuel projects. It is not all doom and gloom, however. Notwithstanding the setbacks, global clean energy investments are forecast to rise by 2% in 2025, to a record $3.3 trillion.
Can the worst impacts of global warming be avoided?
And although China remains far and away the world’s largest carbon polluter, its footprint fell slightly in 2024 even as energy demand rose—leading to hopes that emissions may have peaked. Even the US has seen some signs of climate optimism, with solar module manufacturing capacity continuing to grow despite market uncertainty.
The question is whether these advances will be enough to meet climate goals and avoid the worst impacts of global warming. At the current rate of progress, this seems unlikely.
“Without immediate and deep greenhouse gases emissions reductions across all sectors and regions, it will be impossible to keep warming below 1.5°C,” said the World Meteorological Organization’s State of the Global Climate 2024 report.
“It is therefore urgent to mitigate, or reduce, greenhouse gas emissions from fossil fuels wherever possible. Transitioning to renewable energy sources is a critically important part of reducing emissions.”
It is doubtful that this transition will be achieved if left to governments alone, with the World Meteorological Organization citing an Intergovernmental Panel on Climate Change analysis that shows nationally determined contributions towards decarbonisation will not be enough to avert a climate crisis.
However, there is still a chance that the transition to a low-carbon society could be driven by economics. While clean energy is frequently vilified for requiring subsidies, the reality is that in the G20 governments are spending three times more on fossil fuels than they are on renewables.
Yet despite this level of support for a mature industry, fossil fuel generation is increasingly being outcompeted by clean energy.
In Lazard’s 2024 levelised cost of energy (LCOE) analysis—one of the industry’s most respected benchmarks—the lowest-cost utility-scale solar and onshore wind emerged as significantly cheaper than combined-cycle gas generation, the most cost-effective source of fossil fuel-based electricity.
Onshore wind was even competitive with combined-cycle gas when tied to storage, levelling the playing field in terms of flexibility and dispatchability. Lowest-cost utility-scale solar plus storage was cheaper than coal and gas peaker plants, Lazard’s analysis showed.
Furthermore, “Certain renewable energy generation technologies have an LCOE that is competitive with the marginal cost of selected existing conventional generation technologies,” Lazard said.
And these are figures for the US. In many other parts of the world—particularly those with abundant solar and wind resources—the business case for new electricity generation is overwhelmingly in favour of clean energy.
Because of this, renewables met three quarters of electricity demand growth in 2024, according to the consultancy Ember, with solar alone addressing 40% of the increase. Rising low-cost, low-carbon electricity generation is driving profound shifts in other areas of the energy system.
In transport, for example, electrification is emerging as a major rival to the internal combustion engine (ICE). As far back as March 2023, research by the prestigious Fraunhofer Institute for Systems and Innovation (ISI) Research found “a clear, long-term cost advantage for electric vehicles over ICE cars.”
Even though electric cars have significantly higher purchase costs, “Medium-sized electric cars, for example, reach cost parity after three years,” said Fraunhofer ISI. “In the small car segment, it can take five to eight years for electric cars to reach the cost level of ICE cars.”
The energy transition could be driven by economics
Such economic arguments, along with the fact that EVs offer a cleaner, quieter drive than ICE vehicles, are leading to a boom in vehicle electrification in selected markets—including China, where up to half of all new cars sold are electric.
Industry, too, is increasingly relying on renewably produced electricity for its operations, with progress especially marked in the Nordics, Germany and China. Greater availability of cheap, clean renewable electricity is also beginning to drive a shift away from fossil fuels in areas such as space heating.
These moves are not yet happening as quickly or widely as they should to meet global climate targets, but their impact is undeniable. Before long, the improved efficiency of processes, companies and economies based on renewable electricity will begin to show up in global markets.
In developing the energy parks that support this trend, Pacific Green is aiming to remain at the forefront of the transition to a cleaner, more sustainable world. It is not an easy journey, but the rewards for those who stay the pace are clear.
Publish date: 12 July, 2025