Energy's interconnected future demands integrated intelligence
Nov 13, 2025
The global energy system has reached a critical inflection point. Wood Mackenzie's seventh annual Energy Transition Outlook, analysing 35 commodities across energy and natural resources sectors, reveals the world now confronts an energy landscape of unprecedented complexity. Emissions trajectories continue to deteriorate, climate targets drift further from reach, and market volatility has reached extraordinary levels. In this complex, more interconnected energy system, we argue business as usual is over in the book Connected and that traditional siloed approaches to analysis and decision-making have become dangerously obsolete.
The energy complexity challenge intensifies
Energy demand maintains its relentless upward trajectory, propelled by expanding populations, robust economic growth, and rising aspirations across developing nations. This growth outpaces gradual improvements in energy efficiency, creating fundamental challenges for global energy systems. Wood Mackenzie analysis reveals the world remains on a 2.6°C pathway, deterioration from our base case prediction a year ago and still far from the Paris Agreement's goals of limiting warming to 1.5°C or even 2°C.
Why so little progress? The war in Ukraine disrupted commodity markets and threatened energy security. Tensions in the Middle East have added to energy security fears. The global economy still runs on fossil fuels, with oil, gas and coal meeting 80% of energy needs today.
The numbers reveal stark realities. No major G7 nation remains on track to meet 2030 emissions goals. Peak emissions are now projected for 2028, with the subsequent decline rate slowing to 2% annually. Variable renewables will surge from 20% of generation today to 60% by 2050, with solar power alone doubling by 2030 and overtaking coal in 2034.
This transformation unfolds amid extraordinary complexity. The artificial intelligence boom strains global power markets, with data centres set to consume 700 TWh in 2025, exceeding electric vehicle demand. By 2050, data centres could consume 3,500 TWh, equivalent to current demand in India and the Middle East combined.
Fossil fuels face a gradual decline
Despite the transition momentum, fossil fuels remain the bedrock of supply for decades to come. While renewables' share of global power supply increased from 5% to 20% over the past decade, it barely met incremental demand growth. Natural gas maintains its position as a bridge fuel, especially where coal must be displaced or where renewables integration and storage remain limited.
This persistence reflects structural inertia beyond energy demand. Legacy assets in oil, gas and coal remain expensive to retire early, while many firms and governments view them as essential to energy security and affordability. In emerging markets, financing constraints make building renewables and grid infrastructure challenging, leaving fossil fuels to fill gaps.
Yet the catalysts for accelerated change strengthen annually. Clean energy deployment continues to surge: 750 GW of solar, wind, and batteries are on track to be rolled out in 2025, compared to fossil fuels at just 80 GW. China's accelerating decarbonisation stands out amid headwinds in other developed economies.
Artificial Intelligence accelerates disruption
The AI boom strains global power markets like never before. Nearly 250 GW of data centre project announcements—more than triple last year's levels - threaten electricity crises, higher tariffs, and derailed emissions targets as companies delay 2030 clean power commitments. Geopolitical stakes rise as countries race to build data centre hubs locally for digital security.
China absorbs demand within its rapidly expanding grid and aggressive renewable deployment, while US and European utilities scramble as power-hungry facilities overwhelm already strained interconnection queues. The mismatch between regional preparedness is stark. Some markets may adapt quickly while others might face potential grid constraints, delaying the start of data centre projects.
Nuclear power's 24/7 zero-carbon output gains favour, backed by expanded policy support for both new projects and uranium supply. Despite the enormous potential of capacity projected to grow from 400 GW today to between 800 GW and 1,600 GW by 2060, the industry must overcome chronic cost overruns and delays to remain competitive.
The interconnection imperative emerges
This evolving landscape demands fundamental shifts in industry approaches to analysis and decision-making. Traditional sector-specific expertise operating in isolation has proved insufficient. Oil, gas, coal, and power can no longer operate in silos: electric vehicle adoption shifts electricity demand, gas shortages ripple into power and heating, and investment in shared infrastructure affects multiple sectors simultaneously.
Geopolitical shocks or resource constraints in one fuel cascade across others, while technologies such as hydrogen, carbon capture utilisation and storage, and biofuels rely on cheap renewables and common infrastructure. Critical minerals have become strategic battlegrounds, with supply chains highly concentrated and creating asymmetric dependencies that shape technology costs and geopolitical power balances.
The challenge extends beyond technical complexity to capital allocation. Annual average investment is projected to increase by 30% from current levels to US$4.3 trillion if warming is to be be limited to 2°C. The bottleneck is not technology but capital formation, requiring sophisticated understanding of interconnected risks and opportunities across entire energy ecosystems.
Energy Connects includes information by a variety of sources, such as contributing experts, external journalists and comments from attendees of our events, which may contain personal opinion of others. All opinions expressed are solely the views of the author(s) and do not necessarily reflect the opinions of Energy Connects, dmg events, its parent company DMGT or any affiliates of the same.
