Why Executives Expect the World to Achieve Net Zero by 2060 or Later?
According to a new report, customers' willingness to pay is a growing issue, as is the ability to generate adequate return on investment in energy transition-oriented projects.
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[Image source: Krishna Prasad/MITSMR Middle East]
Confidence in the world’s ability to achieve net zero by 2050 looks eroding as it becomes even more challenging to ensure adequate investment returns and progress diverges across a fragmenting world.
Bain & Company’s fourth annual Energy & Natural Resource Executive Survey shows an increasing percentage of industry executives expect the world to reach net zero by 2060 or later—with 62% sharing this sentiment in 2024 versus 54% in 2023.
However, executives in the Middle East (61%) feel more optimistic about the prospects of their transition-oriented growth, such as renewables, hydrogen, bio-based products, lithium, and other transition commodities that will contribute to their company’s valuation and profits by 2030.
Bain & Company surveyed over 600 industry executives across the globe to better understand industry leaders’ views on the energy transition, new technologies, and investment opportunities and where they see the most significant challenges for decarbonization.
“This year’s survey found that energy and natural resource companies have not dampened ambitions for their transition-oriented growth businesses. However, customers’ willingness to pay is a growing issue, as is the ability to generate adequate return on investment (ROI) in energy transition-oriented projects. As a result, companies are focusing on projects with a viable ROI path,” said Joe Scalise, head of Bain & Company’s Energy and Natural Resource practice based in San Francisco. “Clearly, the longer the executives are at the front lines of the energy transition, the more sober they are getting about the transition’s practical realities.”
Here are key themes to watch:
Fewer executives expect the world to achieve net-zero carbon emissions by 2050.
Despite energy and natural resource companies’ continued investments in decarbonization, about 62% of executives anticipate the world will reach net zero by 2060 or later, up from 54% in last year’s survey. This view is consistent across most regions and strongly held among oil and gas executives.
Most companies are maintaining or increasing investments in their transition-oriented growth businesses.
Executives in the Middle East (61%), Asia-Pacific (55%), and Latin America (51%) are feeling more optimistic about the prospects of their transition-oriented growth such as renewables, hydrogen, bio-based products, and lithium and other transition commodities that will contribute to their company’s valuation and profits by 2030. Hence, they are maintaining or increasing green investments. Only 4%, 12%, and 10% of executives from the three regions expressed less optimism, while the remainder showed no significant change.
The survey revealed a more balanced picture in Europe, where 30% of executives revealed more optimism vs. 27% who were less optimistic about their new energy growth business areas contributing to the bottom line.
In North America, 29% of executives were more positive compared to 17%, less positive on their transition-related growth areas.
Executives are more concerned than ever about generating acceptable returns to scale up their transition-related businesses.
Like last year, executives say the greatest obstacle to scaling up their transition-oriented businesses is finding enough customers willing to pay higher prices (or having equivalent policy support) to create sufficient return on investment. In fact, the share of executives identifying this as a significant roadblock jumped 14 percentage points from 2023 to 2024 to 70% of executives.
Bain has found that a 500-basis-point increase in the cost of capital can increase the total annual revenue required to finance a project by as much as 50%.
Artificial intelligence is increasingly seen as a difference-maker.
More executives (65% in 2024) believe AI (including GenAI) and digital technologies will significantly affect their businesses by 2030 compared to 56% last year.
The most promising AI applications include improving maintenance, production, and the supply chain, while emissions reduction is considered the least promising.
Most companies focus first on applications with a clearer, shorter path to a return on investment. Over time, Bain expects the industry to pursue more advanced and potentially higher-value use cases, such as increasingly automated design and engineering work.
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