Energy Outlook 2025: Growth amid challenges

Fossil Fuels: Despite the ongoing energy transition, fossil fuels remain dominant. The oil market appears stable, with prices expected to edge lower. However, geopolitical tensions and sanctions pose risks to this outlook. We expect weakness in European gas despite the stoppage of Russian pipeline flows through Ukraine. Meanwhile, the European carbon market is set for moderate gains.

Renewables: The renewable energy sector continues its upward trajectory in 2025. To support this growth, enhancements in transmission capacity, grid flexibility, and streamlined permitting processes are crucial. However, trade-protection measures may cause supply chain disruptions and necessitate the re-routing of critical parts, thereby increasing costs for developers in the US and Europe.

Carbon Capture and Storage (CCS): We anticipate solid progress in CCS infrastructure and growing demand. However, most capacity additions will occur post-2025, as CCS development is a long-term endeavour.

Hydrogen: The hydrogen hype of 2024 has given way to a more realistic outlook for 2025. The focus is shifting from ambitious project announcements to tangible execution and progress. Despite this, our forecasts still fall short of policy goals.

European Utilities: Leading the energy transition, European utilities are set to invest approximately €160 billion to shift electricity generation from fossil fuels to renewables. This transformation requires modernising and expanding the grid. While the sector’s cash flow remains robust, significant bond issuance will be necessary to finance these investments.