By Rystad Energy –
- The global energy landscape in 2025 will be shaped by geopolitical tensions, economic instability, and the increasing demand for electricity from AI and EVs.
- The US will play a key role in global energy markets, with Trump’s policies impacting domestic and international energy priorities.
- While the push for decarbonization continues, challenges such as oversupply, infrastructure constraints, and policy shifts will impact the growth of renewables and cleantech.
As the new year approaches and the book on an eventful year in the energy world closes, 2025 looks set to bring more volatility, geopolitical tension and policy evolutions. Elections in almost all major global economies in 2024 have set the stage for a shifting policy landscape next year, most notably in the US, as President-elect Donald Trump outlines his priorities and plans for the incoming administration.
The push for decarbonization continues, but numerous challenges persist, including economic instability, evolving energy demands and infrastructure constraints. As industries adapt to a changing landscape, several trends are emerging that will shape the sector’s trajectory. From shifts in the geopolitical balance to breakthroughs in low-carbon technologies and the increasing influence of artificial intelligence (AI), 2025 presents critical opportunities and risks for stakeholders across the energy value chain.
Drawing on Rystad Energy’s depth of expertise, we are looking into our crystal ball and exploring 12 significant trends that will shape the energy world in the coming year. Each trend offers a roadmap for understanding the forces that will influence global energy strategies in 2025.
We’re moving from a time of energy scarcity to a time of energy abundance. Capacity additions in both fossil fuels and renewables will outpace increases in demand next year. Similarly, in the face of an oversupplied oil market, OPEC+ may need to extend its production cuts far into 2025 to protect oil prices. The era of China driving oil consumption growth is over, with the country’s peak diesel in the rearview mirror, gasoline demand plateauing and coal consumption leveling off, as it is globally.
OPEC+ May Be Facing Long-Term Production Cuts
This is echoed in the electricity market, with 90% of the power consumption growth in 2025 coming from renewables, while nuclear and gas share the remaining 10%. The intermittency of renewable power capacity has triggered record periods of negative prices, intensifying the need for reliable energy storage. As such, 2025 could be a breakout year for energy storage systems. Of the expected 1,350 terawatt hours (TWh) of growth in global power demand, consumption by data centers – primarily fueled by AI – is likely to grow by 13% in 2025. This equals about 3% of total electricity consumption growth, similar to the growth from the 20 million new electric vehicles (EVs) expected.
The new Trump administration will impact domestic and global energy priorities, including pulling any levers available to increase domestic crude production, even though the industry is unlikely to respond to this stimulus. However, President Trump might have more success in accelerating liquified natural gas (LNG) infrastructure investments, the results of which will not be felt for several years. These dynamics underscore the importance of careful navigation as the sector balances short-term challenges with long-term opportunities.
Jarand Rystad, CEO and founder, Rystad Energy
For more on our 2025 projections, watch our special year-end edition of Rystad Talks Energy on-demand here.”
1. Geopolitical uncertainty will persist in 2025
Shaped by both economic challenges and geopolitical turbulence, 2025 is set to be a year of heightened uncertainty. The US-China dynamic, under a new US administration, will take the spotlight. At the same time, ongoing conflicts in the Middle East and the war in Ukraine will command attention on the global stage. Rising instability across the Global South, the continued fracturing of international alliances and the transformative impact of AI will further redefine the global order.
Economically, the threat of a global trade war sparked by US tariffs looms large, potentially stalling growth and fueling protectionist policies. A key question is how quickly advanced nations can rein in inflation, especially as trade barriers complicate the efforts of central banks. Meanwhile, governments are expected to pivot toward addressing mounting deficits. Adding to these challenges, China’s economic slowdown – driven by a struggling real estate sector and subdued consumer confidence – risks creating significant ripple effects worldwide.
Jorge Leon, Head of Geopolitical Analysis
2. Upstream sector poised for a quieter year
Global upstream investments are projected to decline by 2% next year, signaling a plateau after the robust growth seen earlier this decade. Deepwater investments are expected to increase by 3%, driven by developments in Suriname, Mexico and Türkiye. Offshore shelf investments are predicted to grow by 2%, fueled by activity in Indonesia, Qatar, and Russia. Rystad Energy forecasts a decline of around 8% in shale/tight oil investments in 2025 due to a combination of lower activity and reduced unit prices. Global liquids demand is estimated to grow by about 1 million bpd, and the faster pace of non-OPEC+ supply growth is leading to an oversupplied market, putting downward pressure on oil prices. Non-OPEC+ oil supply is expected to increase by approximately 1.4 million bpd, with both tight oil and deepwater contributing to this growth. NGL and other liquids are also projected to grow next year, adding more than 300,000 bpd. Leading into 2025, the OPEC+ balancing act will make or break oil prices, seeking to manage its market share expectations alongside non-OPEC+ growth and slowing demand.
Aditya Saraswat, Senior Vice President, Upstream Research
3. Refinery margins to remain squeezed by seasonal demand dips
Thin refinery margins are likely to persist, particularly during the seasonal demand lull in the first quarter. Margins in Asia may find some support later in the second quarter as refinery maintenance takes hold. However, the outlook for demand growth – especially in China – remains subdued, driven by the rising share of EVs and gains in fuel efficiency.
This prolonged weak-margin environment has already contributed to refinery attritions in China, the US and Europe – a trend that is expected to continue through the new year. Delays in commissioning additional capacity are also increasingly likely. These factors could result in product tightness in the second half of 2025, potentially driving a degree of recovery on margins.
Valerie Panopio, Senior Analyst, Commodity Markets – Oil
4. US shale oil producers won’t be moved by “Drill, baby, drill”
Donald Trump has come out unambiguously in favor of encouraging more oil and gas production in the US. While executives may be encouraged by the supportive rhetoric, they are less likely than ever to boost budgets towards more drilling, especially as a potential oversupply of oil looms over the market and well productivity stagnates. Third-quarter 2024 reports, released around the election, show that management teams remain focused on shareholder returns and acquisition-driven inorganic growth rather than expanding through drilling activity. For now, ‘Shale 4.0’ investor priorities are expected to outweigh ‘Trump 2.0’ policy considerations in US producer boardrooms. Looking ahead, investors are unlikely to accept reduced near-term returns alongside declining capital efficiency, which a shift back to a high-production growth model would entail.
Matthew Bernstein, Senior Analyst, Shale Research
5. US LNG exports could become a key bargaining chip in global trade
Trump’s push for deregulation and energy dominance could accelerate US LNG exports by fast-tracking permitting and infrastructure expansions, reinforcing US oil and gas production as well as LNG export growth. The domestic and global LNG market is already feeling the effects of the Biden administration’s moratorium on new non-FTA LNG approvals, which has helped tighten global balances in the medium term. Trump has vowed to reverse the pause when he takes office, which would benefit developers with pending projects. However, accelerating these projects could worsen the global LNG supply glut in the medium term if markets face a ‘too much, too soon’ situation.
The potential for oversupply in global markets could destabilize prices, especially if trade tensions with China reignite, which would have negative consequences for US producers and LNG developers. US LNG projects rely on securing consistent demand from China. Additionally, Trump faces a delicate balance between boosting US LNG exports to Europe and managing his stance on Russia. With Europe’s growing LNG demand, Trump sees an opportunity to reduce Russian influence, but swiftly ending the Ukraine war, as he has repeatedly claimed, may require easing sanctions. Regardless, Trump’s energy agenda in 2025 is likely to reshape US and global energy markets, but careful balancing of market fundamentals and geopolitics will be crucial.
Emily McClain, Vice President, North America Gas & LNG Market Research
6. Supply chain challenges still impacting global energy markets
High investment levels in oil and gas and new energies add another complication to an already beleaguered supply chain in 2025. Geopolitical tensions and increased protectionism will result in large changes in the global supply chains supporting energy transition with equipment and services. Within offshore oil and gas, bottlenecks around floating production, storage and offloading vessels (FPSOs), subsea kits, drilling rigs, and other vessels will continue to inflate and delay capital projects. In North America, increased capital optimization and efficiency are fueling further overcapacity and putting pressure on earnings for oilfield service companies.
In new energies, overcapacity in the manufacturing sector for batteries and solar PV will continue to build and fundamentally drive prices down. However, protectionism and tariffs will lead to rising costs for importers and force more home-shoring and offshoring of manufacturers. Overall, increased divestments, mergers and acquisitions will be the result across the energy supply chain, as suppliers position themselves for the new world order.
Audun Martinsen, Head of Supply Chain Research
7. Much more electricity will be needed to keep pace with AI and EV boom
Global power demand is entering a period of accelerated growth, fueled by industrial decarbonization efforts, the rise of EVs and the rapid expansion of data centers. Rystad Energy forecasts that global electricity demand from data centers will more than double by the end of the decade, reaching 860 terawatt-hours (TWh). Consequently, tech companies have emerged as some of the largest offtakers in the power purchase agreement (PPA) market, as they scramble to secure enough carbon-free power.
To meet round-the-clock power needs, some technology players have also been turning to additional baseload sources, including signed agreements to purchase power from conventional nuclear power plants. Interest is also being shown in new small modular reactor (SMR) technologies, despite higher development costs and a lingering need to prove technical feasibility. It is, therefore, evident that sourcing as much electricity as possible from renewable energy sources should be prioritized. Growth in solar and wind capacity is expected to reach a new record in 2025, adding close to 1,000 TWh of electricity that will cater to some of the increasing demand.
Carlos Torres Diaz, Head of Power Markets Research
8. Low carbon energy markets poised to flourish
Numerous ambitious climate plans have emerged from the COP29 summit, including net-zero and coal phase-out commitments from Indonesia, Mexico and the EU, backed by 25 countries. This keeps exponential growth scenarios for low-carbon energy very much on the agenda. However, 2025 could be another reality check for renewables and cleantech, with shifting policies favoring fossil fuels, green energy stocks under pressure, and uncertainty about funding and subsidies.
Battery and solar PV markets are likely to remain oversupplied, while regional biofuel markets show recovery potential as blending obligations take effect. The EU’s carbon market will take some big steps toward maturation with accelerated free allowance phaseouts and implementation of the Carbon Border Adjustment Mechanism (CBAM). This paves the way for final investment decisions on projects involving low-carbon hydrogen and carbon capture, utilization and storage (CCUS).
Despite headwinds, solar PV is set to grow by about 600 TWh in 2025, matching oil’s annual primary energy growth for the first time. Given solar’s superior efficiency over crude oil, this represents two-to-three times more useful energy than oil. Falling capture prices remain a challenge, but record-low battery storage costs offer timely solutions.
Artem Abramov, Head of Clean Tech Research
9. A defining year for the global climate conversation
By February, countries must submit their “nationally determined contributions” (NDCs), outlining climate actions through 2035 aimed at limiting global warming. COP30, to be held in Belém, Brazil next November, will test whether these plans translate into measurable progress, especially amid challenges like political shifts, inflation and competing priorities.
While $300 billion annually in climate finance by 2035 was pledged at COP29, this tally falls far short of the $1.3 trillion needed. Finalizing rules for carbon trading under Article 6 will be key to boosting credibility and unlocking new markets. Tools like Amazon Bonds and embedding climate goals into economic planning will also be in focus. Set in the Amazon, COP30 will serve as both a progress report and a chance to align ambition with action, driving the energy transition, mobilizing capital and the path to a sustainable future.
Lars Nitter Havro, Head of Energy Macro Research
10. CCUS policy support boosts growth despite infrastructure hurdles
The CCUS market is poised for rapid growth in 2025, with a wave of final investment decision (FID) approvals expected to meet project timelines. This momentum stems from supportive policies and funding in Europe, increasing carbon dioxide removal (CDR) credit activity, and post-US election market clarity. Key challenges remain, including a gap between CO? capture demand and infrastructure readiness, which could delay projects. To address this, we anticipate progress in CO? storage regulations, particularly in the Asia-Pacific region, and faster permit approvals in North America and Europe.
The successful implementation of the Northern Lights project in Norway has highlighted the potential of cross-border CCUS initiatives, paving the way for enhanced international collaboration and bilateral agreements. We also expect a strengthening of public-private partnerships, especially in building the infrastructure needed to transport CO?.
Yvonne Lam, Head of CCUS Research
11. Hydrogen sector faces a reality check in 2025, with cancellations rising
Heading into the new year, the hydrogen sector is bracing for a downturn. While some key FIDs were made in 2024, project cancellations have also been on the rise. Key auctions in Europe and Japan will support the progress of selected projects in 2025, but others will continue to face challenges and cancellations. This year will provide more clarity on political support and commitment to hydrogen, especially with Trump returning to the White House in the US and with elections looming in Germany – two major markets for clean hydrogen. We expect a more pragmatic approach in the clean hydrogen sector, as the cost premium for renewable hydrogen and derivatives remains largely unchanged. Additionally, 2025 will see continued progress from China and India as they advance their clean hydrogen and derivatives agendas.
Minh Khoi Le, Head of Hydrogen Research
12. Shipping sector pushes for change; greener solutions gain focus
Decarbonizing the shipping industry remains a major challenge due to its heavy dependence on fossil fuels and the complexity of introducing effective regulations at a global level. Transitioning to low-carbon alternatives such as green methanol or clean ammonia is vital but requires significant investment in new technologies and infrastructure. In the short-to-medium term, there is growing interest in moving forward with LNG and biofuels, as these are cheaper and already available.
A global carbon tax could accelerate this transition, but its success hinges on consistent adoption and enforcement across nations. Key measures include fostering international cooperation through organizations like the International Maritime Organization (IMO) to establish uniform tax rates and regulations. Revenue from these taxes should be reinvested in developing green technologies, upgrading infrastructure, and providing subsidies for early adopters. Support for developing nations, including financial aid and technical assistance, is essential. Transparency and robust data-sharing mechanisms are crucial for ensuring progress and accountability in this global effort.
Oddmund Fore, Head of Shipping & Offshore Markets