Energy Transition Market Set to Reach $5.6 Trillion by 2031

2025-06-25 economy

Global, Tuesday, 24 June 2025.
Driven by rising energy demand and net-zero goals, the global energy transition market is expected to grow substantially despite technological and geopolitical challenges.

Driving Forces Behind the Energy Transition

The global energy transition market, valued at $2.3 trillion in 2021, is projected to grow at a compound annual growth rate (CAGR) of 9.3% to reach $5.6 trillion by 2031 [1]. This growth is fuelled by increasing global emphasis on reducing carbon emissions through government regulations aiming for net-zero emissions and technological advancements in renewable energy, energy storage, and grid systems [1]. An increasing investment in renewable energy, as evidenced by a 6.5% rise in global investments to $366 billion in 2021, further underscores this market’s momentum [1].

Regional Leaders in the Energy Transition

Asia-Pacific plays a significant role in the energy transition, leading with over 48.7% of the market share in terms of revenue in 2021 due to rapid industrialization, urbanization, and government support in countries like China and India [1]. Meanwhile, Latin America and the Caribbean (LAC) are also making strides with a projected 75% renewable energy share in their electricity mix by 2025, which is expected to grow beyond 80% by 2035 [6]. These regions indicate a strong investment in infrastructure and renewable resources, positioning them as critical players in the global transition to sustainable energy.

Opportunities and Challenges

The energy transition offers numerous opportunities, such as significant job creation and the potential for economic growth, particularly in emerging economies [1]. Despite these benefits, challenges persist, including high initial costs and outdated grid infrastructures [1], along with geopolitical concerns that can impact the market’s trajectory [2]. Navigating these challenges will be crucial for stakeholders aiming to capitalize on the transition’s potential, especially in markets like the LAC region, which are beginning to explore green hydrogen as a future energy source [6].

Looking Ahead

As the world intensifies its efforts to mitigate climate change, the global energy transition market is expected to continue its robust growth path. By 2031, the substantial projected market size of $5.6 trillion reflects not only the necessity but also the commercial viability of transitioning to sustainable energy [1]. To achieve these goals, ongoing innovation and investment in technological advancements are imperative. This era of transformation offers a pathway not only for economic resilience but also for addressing the urgent climate crisis through clean energy initiatives [1].

Sources

energy transition net-zero goals