Setting Expectations Amid a Bumpy Energy Transition
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The global energy transition is progressing unevenly across sectors and regions, shaped by differences in technology readiness, financial capacity and policy strength. Using the MSCI Energy Transition Framework, this paper examines how these factors may influence corporate decarbonization over the next five to seven years.
Key findings:
- Technology readiness varies. Utilities, steel and transport have more viable decarbonization options than chemicals or oil and gas, where solutions remain costly or limited.
- Financial strength matters. Firms with stronger balance sheets are better positioned to invest in the transition, widening gaps within industries.
- Policy and institutions drive outcomes. Stronger policies and governance quality are linked to better emissions performance, particularly in developed EMEA markets, unlike Asia-Pacific where corporate targets play a larger role.
For investors, understanding how technology, finance and policy interact can help identify where transition risks are most material — and where low-carbon opportunities are emerging.
Data as of Aug. 6, 2025. The bars represent the range of decarbonization potential across technologies within each sector or industry. Longer bars indicate that multiple technologies are available, each with different potential. Shorter bars reflect fewer technology options and narrower potential. For sectors with only one applicable technology (e.g., motorcycles), a buffer is included for visibility. The color gradient highlights potential, shifting from red (lower potential) to green (higher potential). Source: MSCI Sustainability & Climate Research Services
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