Energy

Rystad predicts energy sector volatility in 2025. (Image source: Adobe Stock)

The coming year looks set to bring more volatility, geopolitical tension and policy evolutions in terms of the energy scene, according to new research from Rystad Energy, which has highlighted significant trends that will shape the energy world in 2025

The US-China dynamic, ongoing conflicts in the Middle East and the war in Ukraine will take centre stage, while rising instability across the Global South, and the transformative impact of AI will also shape the global order. A global trade war sparked by US tariffs, and China economic slowdown are potential clouds on the horizon.

In terms of global upstream investments, Rystad forecasts a decline of 2% in 2025, with deepwater developments in Surname, Mexico and Turkiye and offshore shelf investments in Suriname Indonesia, Qatar and Russia offset by a decline in shale/tight oil investments. Despite Donald Trump’s “drill baby drill” rhetoric, US operators are less likely than ever to spend more on drilling in the face of an oversupplied market. A forecast growth in both OPEC+ and non-OPEC+ supply is set to put a downward pressure on oil prices.

“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,” said Aditya Saraswat, senior vice president, Upstream Research at Rystad.

Rystad also highlights ongoing supply chain issues, with geopolitical tensions and increased protectionism likely to impact the global supply chain supporting the energy transition. 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. Overall, increased divestments, mergers and acquisitions are likely across the energy supply chain.

Global power demand is entering a period of accelerated growth, fuelled by industrial decarbonisation efforts, the rise of EVs and the rapid expansion of data centres, with global electricity demand from data centres set to more than double by the end of the decade.

Low carbon energy markets are set to grow, boosted by climate plans emerging from the COP29 summit.

“However, However, 2025 could be another reality check for renewables and cleantech, with shifting policies favouring fossil fuels, green energy stocks under pressure, and uncertainty about funding and subsidies,” commented Artem Abramov, head of Clean Tech Research at Rystad Energy.

Nevertheless Solar PV is set to grow by around 600TWh in 2025, and the CCUS market is poised for rapid growth, thanks to policy support, despite infrastructure hurdles.

The hydrogen sector is however facing a reality check with challenges and cancellations on the cards.

“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,” said Minh Khoi Le, head of Hydrogen Research at Rystad.

“We’re moving from a time of energy scarcity to a time of energy abundance,” says Rystad Energy CEO and founder Jarand Rystad. “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 levelling off, as it is globally.

“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 centres – primarily fuelled 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 liquefied 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.”

Lithium-sulphur battery technology delivers higher performance at a lower cost compared to traditional lithium-ion batteries. (Image source: Adobe Stock)

Stellantis, a leading automaker that is seeking to provide clean, safe and affordable freedom of mobility, has signed a joint development agreement with Zeta Energy Corp, a company focused on developing rechargeable batteries that are lower cost and sustainably produced, to advance battery cell technology for electric vehicles

The two are seeking to develop lithium-sulphur EV batteries with gravimetric energy density while achieving volumetric energy density comparable to today’s lithium-ion technology. The ambition is to create a lighter battery pack with the same usable energy as contemporary lithium-ion batteries. This is expected to enable greater range, improved handling and enhanced performance as well as having the potential to improving fast-charging speeds by up to 50%. These benefits will make EV ownership more convenient for users as well as costing less than half the price per kWh of current lithium-ion batteries.

“We are very excited to be working with Stellantis on this project,” remarked Tom Pilette, CEO of Zeta Energy. “The combination of Zeta Energy’s lithium-sulphur battery technology with Stellantis’ unrivaled expertise in innovation, global manufacturing and distribution can dramatically improve the performance and cost profile of electric vehicles while increasing the supply chain resiliency for batteries and EVs.”

The collaboration includes both pre-production development and planning for future production. Upon completion of the project, the batteries are targeted to power Stellantis electric vehicles by 2030.

“Our collaboration with Zeta Energy is another step in helping advance our electrification strategy as we work to deliver clean, safe and affordable vehicles,” commented Ned Curic, Stellantis chief engineering and technology officer at Stellantis. “Groundbreaking battery technologies like lithium-sulphur can support Stellantis’ commitment to carbon neutrality by 2038 while ensuring our customers enjoy optimal range, performance and affordability.”

The project will support Aramco's emissions reduction objectives. (Image source: Adobe Stock)

Aramco is significantly advancing its net-zero ambitions with the signing of a shareholders’ agreement with Linde and SLB to progress the development of a Carbon Capture and Storage (CCS) hub at Jubail, set to become one of the largest globally

Under the terms of the shareholders’ agreement Aramco will take a 60% equity interest in the CCS hub, with Linde and SLB each owning a 20% stake.

The first phase of the hub, due for completion by late 2027, will have the capacity to capture nine million metric tons of CO2 from three Aramco gas plants and other industrial sources, with the potential for expansion in later phases. The captured CO2 will be transported through a pipeline network and stored below ground in a saline aquifer sink, leveraging the Kingdom’s geological potential for CO2 storage.

Net-zero ambitions

The project will support Aramco’s ambition to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions across its wholly-owned operated assets by 2050. It also complements the company’s blue hydrogen and ammonia initiatives.

Ashraf Al Ghazzawi, Aramco EVP of Strategy & Corporate Development, said, “CCS plays a critical role in furthering our sustainability ambitions and our new energies business. This announcement represents a step forward in delivering on our strategy to contribute to global carbon management solutions and achieve our emission mitigation goals. Aramco’s collaboration with SLB and Linde demonstrates the importance of global partnerships in driving technological innovation, reducing emissions from conventional energy sources and enabling new, lower-carbon energy solutions. This CCS hub is among several programmes that will enable us to meet rising demand for affordable, reliable, and more sustainable energy.”

Oliver Pfann, Linde EVP EMEA, added, “Carbon capture and sequestration is essential for achieving the Kingdom’s emission reduction targets. Linde is proud to collaborate with Aramco and SLB, contributing Linde’s innovative technology and experience in delivering world-scale decarbonization projects.”

Gavin Rennick, SLB president, New Energy, said, “Leveraging our proven portfolio of CCS technologies and extensive experience in complex CCS projects around the world, we are confident that SLB will play a critical role in advancing this important initiative. This project aligns perfectly with our commitment to industrial decarbonisation, and we look forward to collaborating closely with Aramco and Linde to make it a success.”

SAF production is expected to climb to 2.7 billion litres in 2025. (Image source: Canva)

The International Air Transport Association (IATA) has announced updated projections for Sustainable Aviation Fuel (SAF) production, reflecting progress in the aviation sector's shift towards greener alternatives while acknowledging challenges in scaling output.

In 2024, SAF production is expected to double to 1 million tonnes, or 1.3 billion litres, compared to 2023 levels. Despite this growth, SAF will account for just 0.3% of global jet fuel production and 11% of global renewable fuel capacity. These figures fall short of earlier forecasts that had anticipated SAF production reaching 1.5 million tonnes (1.9 billion litres) in 2024. The lower-than-expected output is attributed to delays in ramping up key SAF facilities in the United States, which have now postponed their timelines to the first half of 2025.

Looking ahead, SAF production is expected to climb to 2.1 million tonnes (2.7 billion litres) in 2025, representing 0.7% of jet fuel production and 13% of global renewable fuel capacity. The adjusted projections underline the pressing need for greater investment and policy support to accelerate SAF adoption, a critical component in the aviation industry's efforts to achieve carbon neutrality.

Achieving net-zero CO2 emissions by 2050 will require a monumental shift in renewable fuel production infrastructure, according to IATA’s analysis. To meet this goal, the industry will need to establish between 3,000 and 6,500 new renewable fuel plants, which will also cater to sectors beyond aviation by producing renewable diesel and other fuels.

The investment required to construct these facilities averages approximately US$128bn annually over the next 30 years. While substantial, this figure is notably lower than the US$280bn invested annually in solar and wind energy markets from 2004 to 2022, highlighting the comparative feasibility of scaling renewable fuel production to support aviation’s decarbonisation efforts.

“SAF volumes are increasing, but disappointingly slowly. Governments are sending mixed signals to oil companies which continue to receive subsidies for their exploration and production of fossil oil and gas. And investors in new generation fuel producers seem to be waiting for guarantees of easy money before going full throttle. With airlines, the core of the value chain, earning just a 3.6% net margin, profitability expectations for SAF investors need to be slow and steady, not fast and furious. But make no mistake that airlines are eager to buy SAF and there is money to be made by investors and companies who see the long-term future of decarbonisation. Governments can accelerate progress by winding down fossil fuel production subsidies and replacing them with strategic production incentives and clear policies supporting a future built on renewable energies, including SAF,” said Willie Walsh, IATA’s director general.

“Governments must quickly deliver concrete policy incentives to rapidly accelerate renewable energy production. There is already a model to follow with the transition to wind and solar power. The good news is that the energy transition, which includes SAF, will need less than half the annual investments that realising wind and solar production at scale required. And a good portion of the needed funding could be realised by redirecting a portion of the retrograde subsidies that governments give to the fossil fuel industry,” said Walsh.