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GlobalEnergy&MaterialsPractice

Theenergytransition:Wherearewe,really?

Scalingupdeploymentofdecarbonizationtechnologiesiscrucialtoachievenetzero,butthereisarealitygap—thelackoffirmEUandUSprojectcommitmentscouldslowmomentum.

ThisarticleisacollaborativeeffortbyDiegoHernandezDiaz,HumayunTai,andThomasHundertmark,withMichielNivardandNicolaZanardi,representingviewsfromMcKinsey’sGlobalEnergy&MaterialsPractice.

©GettyImages

August2024

AlmostnineyearsafterthelandmarkParis

Agreementandnearlyhalfwaythroughwhat

hasbeencalleda“decisivedecade”forclimatechange,theworldstandsatacriticaljunctureintheirtransitionawayfromfossilfuels.

Translatingintoactiontheambitiousclimatetargetsthathavebeenputinplaceby

governmentsandcompaniesdependson

acceleratingthedeploymentandadoptionof

severalinterrelatedtechnologies.Theseinclude

renewableenergysources(RES),electrification

technologiessuchaselectricvehicles(EVs),and

heatpumps—aswellascomparativelylessmaturetechnologies,suchascarboncapture,utilization,andstorage(CCUS),greenandbluehydrogen,

andsustainablefuels.

Thesedecarbonizationtechnologies(alongsidemanyothers,suchasnuclear,long-termdurationenergystorage,batteryenergystoragesystems,

andenergyefficiencyinvestments)arethe

cornerstoneofeffortstoreducegreenhousegas(GHG)emissionsinallMcKinseyenergyscenarios.Theperioduntiltheendofthisdecadeisacriticalonetoputinplaceatrajectoryofaccelerated

adoptiontomeet2030and2050targetssetbycountriesandcompanies.

Whilesignificantprogresshasbeenmade

indevelopinganddeployingsomeofthese

technologies,notablysolarandwind,forwhich

installedcapacityhasrisensharplyoverthepast15years,asignificantgaphasemergedbetweentheactualresultsandtheexpectedones.The

at-scaledeploymentofallthesetechnologies

isstillnothappeningasfastasneededtoreach2030targets(seesidebar“Thetechnology

gap”).Moreover,thetechnologiesareatriskof

facingrawmaterialandlaborshortagesandlongpermittingprocedures.

Thetechnologygap

Thegapbetweenwhatisneededandwhathasbeenachievedinthedeploymentoflow-emissionstechnologyislarge—to

date,onlyabout10percentofthedeploymentoflow-emissionstechnologiesgloballyby2050requiredfornetzerohasbeenachieved,mostlyinlesschallengingusecases.Closingthegapwouldrequirebuildinganew,high-performingenergysystemtomatchorexceedthecurrentone,whichwouldentaildevelopinganddeployingnewlow-emissionstechnologies,along

withentirelynewsupplychainsandinfrastructuretosupportthem.

Giventhesizeandcomplexityoftoday’senergysystem,thisisnoeasytask.Thephysicalchallengesthatwouldneedtobeovercometosuccessfullytransformtheenergysystemaresignificantandwouldrequireconcertedactiontosolve.

McKinsey’srecentreport,“TheHardStuff:Navigatingthephysicalrealitiesoftheenergytransition,”identifies25physical

challengesacrosssevendomainsoftheenergysystemthatwouldneedtobeaddressedfortheenergytransitiontosucceed.¹

Addressingthesephysicalchallengeswouldinvolveimprovingtheperformanceoflow-emissionstechnologies,addressingtheinterdependenciesbetweenmultiplechallenges,andachievingmassivescale-ups,evenintechnologieswhereastrongtrackrecordhasnotyetbeenestablished.And,ofcourse,thisisonlyonesideoftheequation.Toovercomethesephysicalchallenges,significantfirminvestmentintolow-emissiontechnologiesneedstobeunlocked.

¹Thehardstuff:Navigatingthephysicalrealitiesoftheenergytransition,McKinseyGlobalInstitute,August14,2024.

2Theenergytransition:Wherearewe,really?

Wehaveidentifiedthreemajorissuesthatthreatenthenecessarydeploymentofcapital:first,the

businesscase—thatis,theeconomicreturnsand

policypredictabilityfordevelopers—oftenremainsweak;second,manytechnologiesareincreasinglybutnotyetcost-competitiveforconsumers,giventhelackofat-scalemanufacturingcapacityor

learningratedrivenbydeployment;andthird,

severaltechnologieshavenotbeentestedatscaleandneedmultiyearproduct,project,andsupply

chaindevelopment,therebycreatinguncertainty

abouttheireffectivenessandefficiency.Ultimately,technology-focusedenablershavenotyet

managedtoaddressthechallengesposedby

macroeconomicshocks,geopolitics,andwhatittakestoenabletechecosystems.

FreshMcKinseyanalysisoftheenergytransitionlandscape,includingtheuptakeofkeyclimate

anddecarbonizationtechnologiesandinvestmentdecisionsthatfollowprojectannouncements(seesidebar“Ouranalysis”),suggeststhatcorporate,public,andprivateequityinvestorsarehesitatingaboutdeployingcapitalforthereasonsdescribedabove.Investedcapitalisbehindwhereitneeds

tobetoensuredeploymenttargetsaremet.As

itstands,asignificantproportionofannounced

projectshavenotyetreachedthefinalinvestmentdecision(FID)stageatwhichprojectsare

greenlit,meaningthatthereisacontinuingriskofcancellationorleakage.1Andprojectswithlongerleadtimes(suchasoffshorewind)arequickly

reachingthestageatwhichcapacitythathasreachedFIDwillonlycomeonlineafter2030.

Facingthishardtruth,innovationandpolicy

resetswillbeneededfortheincreasingnumberofcountryandcompanynet-zerocommitmentstobeachievedinpracticeandmoveprojectstoFIDandquicklybeyondtosubsequentdeployment.

Rigorous,fact-basedassessmentofreal-worldprogressiskeytoensuringthatmomentumis

maintained,andtheenergytransitioncontinues

atthenecessarypace.Inthisarticle—aprelude

toourGlobalEnergyPerspective2024—weseektoprovideadetailed,albeitpartial,assessment

ofwheretheexecutionofprojectsstandsfor

specificlow-emissionstechnologiesinEurope

andtheUnitedStates.Thegoalistoanswerthe

criticalquestion:wherearewe,really,intheenergytransition?

Whileconsiderableprogressintheenergy

transitionhasbeenmadeinmanycountries,thisarticlefocusessolelyonEuropeandtheUnitedStates,bothofwhichhavesetexplicit2030

targets.2Itshouldbenotedthatweareneithermodelingnorforecastingfutureoutcomes,but

ratherseekingtobringtolightthefactsasbestascanbedefinedtoassesshowbigthegapisand

whatneedstobedonetocloseit.

Commitmentsandenthusiasmareup

Recentyearshaveseenaflurryofnet-zero

commitmentsandever-growingenthusiasmforclimateactionfromallpartsofsociety.

Onthepolicyside,all195countriesthatsignedthehistoric2015ParisAgreementhaveputforward

so-calledNationallyDeterminedContributions

(NDCs)—climateactionplans—andmorethan70countriestodayhavenet-zerotargetsenshrinedinlaworoutlinedasagoalinpolicydocuments.3Morethan155countrieshavesignedtheGlobal

MethanePledgetoreducemethaneemissionsby30percentbelow2020levelsby2030.4

IndustrialpolicyinmanyOECDeconomiesisnowanchoringclimatetechnologiesasacorepillarandsubstantialpublicfundsarebeingearmarkedfor

theirdevelopment.InbothEuropeandtheUnitedStates,emergingindustrialpolicyhascenteredonbuildingupacompetitivecleantechvaluechain.

1

Finalinvestmentdecision(FID)isthepointatwhichformalapprovalfromtheprojectdeveloperisgiventoproceed,markingthecommitmenttoallocatecapitalresourcestotheexecutionoftheproject.

2

Fortheanalysisinthisarticle,EuropereferstotheEuropeanUnionplusNorway,Switzerland,andtheUnitedKingdom.Theremaysomegapsinthedatabasedondataavailability.

3“NetZeroTracker,”accessedJune2024;“NationallydeterminedcontributionsundertheParisAgreement,synthesisreportbythe

secretariat,”UnitedNationsClimateChange,November14,2023;Netzerostocktake2023,ajointreportbyNewClimateInstitute,OxfordNetZero,EnergyandClimateIntelligenceUnit,andData-DrivenEnviroLab,June2023.

4“Globalmethanepledge,”ClimateandCleanAirCoalition,accessedJune2024.

3

Theenergytransition:Wherearewe,really?

InEurope,theEuropeanGreenDeal,introduced

in2019,aimstomaketheEuropeanUnion

climate-neutralby2050,withintermediateFitfor55targetstoreduceGHGsbyatleast55percentby2030comparedto1990levels.5IntheUnitedStates,theInflationReductionAct(IRA)of2022isthelargestclimateinvestmentinUShistory,

withtotalclimate-relatedspendingofalmost

$370billionovertenyears,withtheaimofcuttingemissionsby40percentby2030from2005

levels.6Inaddition,theInfrastructureInvestmentandJobsActhasallocatedbillionstoward

modernizingtheenergygrid,expandingEV

infrastructure,andenhancingenergyefficiencyacrosssectors.7

Togetherwithcontinuedcostimprovement,

includingthroughinnovation,theseandother

policyinitiativesareleadingtoprogress.Globally,between2010and2023,renewableenergy

installationcapacitygrewaround20percent

peryear,whiletheadoptionofEVssurged,withacompoundannualgrowthrateofaround80

percent(Exhibit1).8

5“Europeangreendeal,”CounciloftheEuropeanUnion,June17,2024.6

Buildingacleanenergyeconomy:AguidebooktotheInflationReductionAct’sinvestmentsincleanenergyandclimateaction,TheWhiteHouse,January2023.

Renewableenergyinstallationincludessolarphotovoltaic,solarthermal,onshorewind,andoffshorewind.

7“Aguidebooktothebipartisaninfrastructurelaw,”TheWhiteHouse,January2024.8

Ouranalysis

Toshedlightonthecurrentstatusoftheenergytransitionandprovidearigorous,fact-basedassessment,weconductedanextensiveanalysisinvolvingseveralsteps.

Scope:Weidentifiedthekeysingulartechnologiesthattogetheraccountforthebulkofdecarbonizationpotential(onshoreandoffshorewind,solarPV,cleanhydrogen,sustainablefuels,CCUS,electricvehicles,andheatpumps).Thismeansweexcluded

severalotherdecarbonizationtechnologies,includingenergystorageandbatteryenergystoragesystems(BESS)because

thesetechnologiesarealreadyinvastsupply,withveryhealthypipelines,andnumerousplayersnotonlyannouncingprojects

butcommittingtothem.Wealsoexcludedenergyefficiency,low-carbonthermalgeneration,andnuclearbecausetheseareveryfragmentedmarketswithlimitationsduetoregulation.

Datacollection:Wegatheredcomprehensivedatafromvarioussources,includingproprietaryandcommercialproject-trackingdatabases.Thisallowedustoobtainup-to-dateinformationonthestatusofnumerousprojectsacrossdifferentdecarbonizationtechnologies.

Policyandhistoricalcapacityreview:Wereviewedexistingpolicies,historicalcapacitydeployments,andgrowthtrendsto

understandthebroadercontextandthetrajectoryofdifferenttechnologies.Thishelpedusbenchmarkcurrentprogressagainsthistoricaldataandpolicytargets.

Comparativeanalysis:Wecomparedstatedtargetswithexpectedcapacitydeployments,includingprojectstatusandhistoricalsaleslevelsforcustomeradoption-driventechnologies,suchasEVsandheatpumps.Thisenabledustoassessthealignment

betweenambitiousclimatetargetsandactualprogressontheground.

Gapassessment:Byexaminingtheprojectstatus,includingthosethathavereachedFIDstage,weassessedthegapbetween

targetvolumes,expectedvolumes(basedoncurrenttrends),andvolumesthathavealreadyreachedFID.Thisanalysishighlightedthediscrepanciesbetweenannouncedprojectsandthosethatarelikelytomaterialize.

4Theenergytransition:Wherearewe,really?

Exhibit1

Accelerateddeploymentofdecarbonizationtechnologieswillbeneededtomeettherisingnumberofnet-zerotargets.

Net-zerogoalsbycountrytargetyearandstatus,%ofGDP

Targetyear2030–402041–50After2050Notarget

1

59

32

8

TargetstatusInlawInpolicyPledged/proposedNotarget

33

51

7

8

>90%ofcountriesbyGDPhavenetzerocommitments—includingChinaandIndia

>10,000

companiesaremembersofthe“RacetoZero”campaign¹

Globalcleantechdeployment

Installedcapacityofwindandsolar,terawatts

SolarPV

Ofshorewind

Onshorewind

3

2

1

+20%peryear

0

2010201520202023

Electricvehiclepassengercarparc,²millionunits

BatteryelectricPlug-inhybrid60

50

40

+79%peryear

30

20

10

0

2010201520202023

Heatpumpsinstalledstock,millionunits

250

200

150

100

+6%peryear

50

0

2010201520202023

Note:Figuresmaynotsumto100%,becauseofrounding.

1RacetoZeroisaglobalcampaigntotakeimmediateactiontohalveglobalemissionsby2030.2Batteryelectricvehiclesandplug-inhybridvehicles.

Source:CarbonBrief;IEA;IRENA

McKinsey&Company

Theenergytransition:Wherearewe,really?5

Fromthecorporateside,66percentofFortune

500companieshavemadeclimatecommitments

(eithercarbonneutral,net-zero,orscience-based).9Overall,morethan5,000companiesgloballyhavejoinedtheScience-BasedTargetsInitiative(SBTi)—widelyconsideredthegoldstandardforvoluntary

climatetargets—andhavesetapprovedtargets

compatiblewitha1.5°pathway.10PubliccompaniesintheEuropeanUnionandtheUnitedStates

increasinglyreportontheirsustainabilityimpactaspartoftheirfinancialdisclosurerequirements.11

Suchdevelopmentsunderscoreabroadertrendtowardcleanerenergyandreducedcarbon

emissions,butarenowsetagainstanincreasinglycomplexanduncertainglobalenergyspace.

Energysecurity,affordability,reliability,and

industrialcompetitivenesscanbechallengingto

achievealongsidesustainability,andinvestmentishardertosecure.12

Thechallengeofmaintainingmomentum

Thequestionremainswhethertheworld’s

much-neededcommitmentscanbetranslatedtoaction.McKinsey’sanalysisoftargetsand

announcementshighlightsapotentialdisconnect

betweenclimateambitionsandwhatislikelytobeachievedinpractice—atleastatcurrentcourseandspeed.RegardingNDCs,forexample,theUnited

Nationsacknowledgesthat“qualityandambitionvary.”13WheretheSBTiisconcerned,manyof

thecompaniesthathavesigneduphavemade

commitmentsbuthavenotyetarticulatedaclearplantoachievethem.14

IntheUnitedStatesalone,morethan1,000greenorbluehydrogenprojectshavebeenannounced

since2015.However,fewerthan15percenthad

reachedFIDatthetimeofwriting,indicatingahighriskforprojectfall-through.15Thisdiscrepancy

betweenannouncedprojectsandprojectsrealized

followingFIDdoesnotonlyapplytohydrogen—itistrueacrossmostcriticalenergytransition

technologies(Exhibit2).

Indeed,decarbonizationtechnologyprojectshavehistoricallyhadahighfall-throughrate,withonlyasmallpercentageofannouncedprojectsreachingFID,andanevensmallernumbersofprojects

actuallybeingrealized.Ouranalysisshowsthat

manyplannedprojectsforkeydecarbonization

technologiesintheEuropeanUnionandtheUnitedStatesarefallingshortofannouncedtargets,somesignificantlyso.

Theextentofthisshortfallvariesbytechnologyandregion—renewableenergygeneration

technologies,especiallysolar,aretheclosesttomeetingshort-termgoals,whileelectrificationtechnologieshaveseenperiodsofrapid

growthbutarenowlosingmomentum.Many

innovativetechnologiesthatcouldbecrucial

fordecarbonizing“hard-to-electrify”sectors

haveambitiousprojectpipelinesbutarenotyet

deployedatscale.Thesetechnologiesneedtobedeployedaselectrificationisonlyapartialanswer.

Here,welookattheprogressofeachofthesetechnologiesandwheretheyarefallingshortoftargets.

SolarPVandwind:Growthmaylosemomentum

IntheEuropeanUnionandtheUnitedStates,

renewableenergygenerationtechnologies,such

assolarPV,onshoreandoffshorewind,andbatteryenergystoragesystems(BESS),haveexperiencedrapiddevelopment,drivenbysupportivepolicies

andincreasingprivatesectorinvestment.

BESShasseensignificanttechnological

advancementoverthelastdecadeandhasscaledrapidlysince2015.IntheUnitedStates,legislation

9“Commitmentissues:MarkersofrealclimateactionintheFortuneGlobal500,”ClimateImpactPartners.10“Ambitiouscorporateclimateaction,”ScienceBasedTargetsInitiative,July2024.

11“Corporatesustainabilityreporting,”EuropeanCommission,2023.

12“Anaffordable,reliable,competitivepathtonetzero,”McKinsey,November30,2023.13“AllabouttheNDCs,”UnitedNationsClimateAction,accessedJuly2024.

14SBTImonitoringreport2023,ScienceBasedTargetsinitiative,July2023.15HydrogenInsightsProjectTracker,McKinsey.

6Theenergytransition:Wherearewe,really?

Exhibit2

Investmentannouncementshavebeensignificantbutmanyhavefailedtoreachfinalinvestmentdecision.

TechnologydeploymentpipelineinEU27+3¹andUSvstargets,²%oftarget,normalized

Operationalin2023FID/Expectedby2030³Announcedfor20302030Target⁴

100

Low-carbonpowergeneration

Cleancommoditiesproduction

End-usedecarbonization

AnnouncedprojectsforsolarPV meetandexceedtargetby3%

Announced

projectsfor

cleanH₂meetandexceed

targetby98%

Announced projectsfor CCUSmeet andexceedtargetby473%

75

50

25

0

Ofshore

Onshore

SolarPV

wind

wind

CleanH₂Sustainable

fuels

Electric

vehicles(EVs)

Heatpumps

CCUS⁵

2030205GW⁶695GW705GW

target⁴

15mtpa⁷

136mtpa

56

million

156million

75mtpa

Additions30GW165GW

needed

On

trajectory

11.8mtpa

136mtpa

On

trajectory

61

million

28mtpa

1EU27+Norway,Switzerland,andtheUnitedKingdom.2Technologydeploymentisameasurementtounderstandthegapbetweenactualvsneededdeployment.3Finalinvestmentdecision(FID)exceptforEVsandheatpumps(expectedsalesbasedonaveragesalesoverthelastfewyears).⁴Targetasdefinedfor2030forbothEU27+3andtheUS;forsolar,sustainablefuels,andheatpumps,notargetexists,andtheMcKinseySustainableTransformationscenariowasused.

⁵Carboncapture,utilization,andstorage.⁶Gigawatts.⁶Metrictonsperannum.

Source:EHPA;EIA;Eurostat;IEA;Rystad;Wind4C;McKinseyEnergySolutions;McKinseyHydrogenInsights

McKinsey&Company

hassupportedarobustpipelineandproject

conversion,especiallyinstateslikeCalifornia

andTexas.InEurope,weexpectthesolarPV

projectpipelinewillinturnattractBESSprojects,especiallyinplaceslikeGermanyandSpainwherecolocationisfavorable.Allinall,batteryproductioncapacityappearshealthy,leadingustobelieve

thereislessriskofasupplygap(andthereforewhyweexcludedBESSfromthisanalysis).

However,ouranalysisofoffshorewindandsolarPVshowsthatnotallrenewablepipelinesare

ontracktomeet2030targetsandshort-termdecelerationisthreateningtheexistingpipeline

Theenergytransition:Wherearewe,really?7

further(Exhibit3).Systembottlenecksneedtoberesolvedfastertoensuredeploymentscalesattherequiredrate.

SolarPV

SolarPVhasexperiencedsignificantgrowthinbothEuropeandtheUnitedStates,witharound

180gigawatts(GW)and120GWofsolarPVcapacityaddedsince2015,respectively.16

Despitethisgrowth,Europe’ssolarpipelineisnotontracktomeet2030capacitytargetsof600

GW:lessthan390GWofcapacityisplannedtobeonlinebyendofthedecade,leavinga

16“Renewablecapacitystatistics2023,”InternationalRenewableEnergyAgency,March2023.

Exhibit3

Cleangenerationpipelinesarelargelyfallingbelowtargets.

Installed

capacity,

gigawatts(GW)

OperationalAdditionsin2023¹FID²/CommittedAnnouncedfor2030³

With2023additions⁵

McKinsey’sSustainable

Transformation(ST)in2030⁶

2030Target

Likelyadditionsbasedonhistoricaltrend⁴

EU27+3⁷solarphotovoltaic

EU27+3⁷of-andonshorewind

USof-and

onshorewind

USsolar

photovoltaic

750

750

~100GWrequired

fromfurtherprojects

toreachtarget

~200GWrequired

fromfurtherprojects

toreachtarget

600

600

+100

+199

+228

450

450

~94GWrequired

fromfurtherprojects

toreachtarget

~61GWrequiredfrom

furtherprojectstoreach

+114

McKinsey’sST2030⁶

300

+61

300▲

+84

+94

150

150

+56

0

0

2023

2030

Atrisk

2023

2030

Atrisk

2023

2030

Ontrajectory

2023

2030

Atrisk

1OperationalGWcapacityaddedin2023.2Announcedprojectsthathavereachedthefinalinvestmentdecision.3Includesannouncedprojectsandprefinal

investmentdecision.4TrajectoryofcapacityifGWadditionaverageofpast3yearswouldbeaddedeveryyear.5Trajectoryofcapacityof3-yearaverageplustheadditionsfrom2023.6Continuedmomentumscenario.7EU27+Norway,Switzerland,andtheUnitedKingdom.

Source:Rystad;WindEurope

McKinsey&Company

8Theenergytransition:Wherearewe,really?

gapofapproximately200GW.Moreover,ofthe

approximate114GWofadditionalsolarcapacity

expectedtocomeonlineoverthenextfiveyears,lessthan20percenthasreachedFID.Acatch-

upisstillpossible:incontrasttowind,additional

solarcapacitycouldbedeliveredrapidly,within18months,andthepipelinebetweennowand2030couldincreaseandbecomefirmer.

IntheUnitedStates,accordingtoouranalysis,annualsolarPVcapacityadditionswillslow

downafter2028,atabout220GWofcapacity

(operationalandFID),becauseofalackoffirm

longer-termcommitments.Oftheannounced

capacitytocomeonlinebefore2030,around60

percentisstillpendingFID,puttingasignificant

proportionofplannedsolaratrisk.However,again,herewewouldacknowledgethatthenatureofsolarinstallationissuchthatthepipelinescouldindeed

materializeintime.

Offshoreandonshorewind

Inwind,powerprojectionsvarysignificantlyby

geographyandtechnology.Windprojectstypicallyhavelongerleadtimes,too,whichcanmakeprojectpipelineslesssecure.InEurope,thewindenergy

pipelineisbroadlyontracktomeet2030targets,whileintheUnitedStates,thepipelineappearstobelesssecure.

Europecurrentlyhasapproximately240GW

ofonshorewindcapacityinoperation,withan

additional106GWinthepipeline.Iffullyrealized,

thiswouldexceedthetargetof314GWofonshorewindcapacity.However,thispipelineisnotyet

committed,withonly17GW(16percent)ofplannedcapacityhavingreachedFID.TheUnitedStates

facesamorechallengingsituation,withonly39GWofonshorewindcapacityexpectedtocomeonlineafter2025,andjust16GW(41percentofthetotal

pipeline)havingsecuredFID.

OffshorewinddevelopmentinEuropehasagapofonly18GWremainingtomeetitsoverall2030

targetof176GW.But,again,oftheannounced

124GWofoffshorewindcapacityintheEuropeanpipeline,approximately65percentisstillpendingFID.

TheUnitedStatescurrentlyhasabout1GWof

installedoffshorewindcapacity—faroffitsnationaltargets,whichaimfor30GWby2030.The17GW

ofoffshorewindcapacitythathasbeenannouncedtocomeonlineby2030stillonlyrepresents60

percentofthisgoal—ofwhich,90percentarestillinthepre-FIDphase.

Electricvehiclesandheatpumps:

Momentumhasslowedwhenitmostneedstopickup

Ofcourse,RESandBESSdonotaloneholdtheanswertotheenergytransition.Decarbonizationalsoinvolvesreplacingfossilfuel-powered

processeswithelectricalternativesinareassuchastransportationandresidentialandcommercialheating.17

Historically,EVsandheatpumpshaveseenstronggrowth.SincetheParisAgreement,theadoptionofEVsandheatpumpshassurgedinboththe

EuropeanUnionandUnitedStates;however,

particularlyforEVs,thismomentumhasslowed

preciselyatthetimewhenaccelerationisneeded,requiringactiontoputEVsbackontracktomeettargets(Exhibit4).

Electricvehicles

FortheEuropeanUniontomeetitstargetof30

millionEVsby2030,itwouldneedtoaddalmost

twiceasmanyEVsasitcurrentlyhasontheroad

(around11million)overthenextfiveyears.18Asimilarscale-uprateisrequiredintheUnitedStates,whichistargeting26millionEVsby2030,buthasonly5millionEVsontheroadtoday.Evenwiththegroundstilltobemadeup,basedonFIDcommitments,the

17

Toachievetruezero-carbonstatus,theseelectricalternativesmustbepoweredbygreenelectricity—puttingevenmorepressureontheEuropeanUnionandUnitedStatestomeettheirtargets.

18

IEAGlobalEVDataExplorer.

Theenergytransition:Wherearewe,really?9

Exhibit4

Growthinelectricvehiclesandheatpumpsisslowingafterseveralyearsofrapiddevelopment.

Electricvehicle(EV)parcandinstalled

heatpumps,million

USEVpassengercars

100

50

~21million

additionalEVs

requiredto

reachtarget

+21

0

20232030

Atrisk

OperationalAdditionsin2023¹FID²/CommittedAnnouncedfor2030³

McKinsey’sSustainableTransformation(ST)in2030⁴2030Target

USheatpumps

~26million

additionalheatpumps

requiredtoreach

McKinsey’sST2030⁴

+26

+10

20232030

Ontrajectory

100

50

0

EU27+3⁵EV

passengercars

~19million

additionalEVs

requiredto

reachtarget

+19

20232030

Ontrajectory

+14

EU27+3⁵heat

pumps

~47mill