The United Kingdom has reached crunch time on climate commitments, with nearly all 2030 energy transition targets now out of reach despite cutting emissions in half since 1990, according to Wood Mackenzie's 'United Kingdom Energy Transition Outlook 2025'.
The analysis shows the UK must close a 12-percentage-point gap by 2030, requiring an additional £75 billion in accelerated investment this decade, while cumulative low-carbon spending needs will reach £1.5 - 2.1 trillion through 2060. A ban on North Sea exploration has locked in structural dependence on oil and gas imports, even as offshore wind deployment lags 20% behind government targets.
Shifting priorities threaten climate momentum
The UK slashed energy-related CO2 emissions from approximately 600 million tonnes per year in 1990 to 294 million tpa in 2025, a 51% reduction over 35 years. The government followed this success with an ambitious 2035 Nationally Determined Contribution target. However, Wood Mackenzie's base case projects only a 56% reduction by 2030 against the NDC target of 68%.
Amidst what the analysis describes as a "new world order," national security priorities and economic pressures now compete with climate policy for government attention and budget allocation. Defence spending and cost-of-living concerns are pulling resources away from climate initiatives, and the climate-motivated energy transition is losing urgency. Yet domestic low-carbon energy has become central to UK autonomy and global influence, creating a strategic imperative that extends beyond emissions targets.
Offshore wind stumbles on commercial reality
The power sector tells the story of rapid progress now hitting hard constraints. Renewables supplied over 50% of generated power in 2025, with wind and solar generation more than doubling from 2015 to 2025 as coal was completely phased out. But offshore wind project delays and cancellations throughout 2025 have created at least a 20% shortfall against 2030 capacity targets.
Contract for Difference reforms are showing early promise. Allocation Round 7 awarded a record 8.4 GW in 2025, and the UK signed an Investment Pact with eight North Sea neighbours committing to 15 GW annually from 2031 to 2040. The pact aims to mobilize £850 billion (€1 trillion) in capital. Still, grid connection queues and commercial constraints remain formidable barriers to faster deployment.
"The UK faces a critical paradox," said Lindsey Entwistle, Principal Research Analyst at Wood Mackenzie.
"The country successfully halved emissions since 1990, but the next phase demands simultaneous acceleration of renewable deployment and management of prolonged fossil fuel dependence. Contract for Difference reforms prove that targeted policy intervention can restart stalled offshore wind deployment. Yet the 20% shortfall against 2030 targets exposes the scale of execution risk. What worked in the last decade won't be enough for the next."
North Sea policy trades domestic production for import dependence
Oil demand falls 24% and gas demand declines 18% by 2035 in Wood Mackenzie's base case, yet fossil fuels remain critical. Transport accounts for 72% of oil demand, while residential, commercial and agriculture sectors represent 54% of gas demand. Gas still generates 22% of power in 2030 and 10% in 2035 despite clean power targets.
The North Sea Future Plan bans new exploration while the Energy Profits Levy extends until 2030. Domestic oil production falls to 79% of 2025 levels by 2035, with gas production dropping to 40%. By 2035, domestic production meets just 47% of oil demand and 21% of gas demand. Net imports reach 0.6 million barrels per day of oil and 39 billion m3 of gas, with growing dependence on US supplies following the Russian LNG ban.
The exploration ban addresses climate objectives but creates structural reliance on imports, introducing supply chain vulnerabilities and reducing UK influence over regional energy security. The government now faces the challenge of empowering new sectors to create skilled jobs in affected areas, ensuring continued public support for what policymakers call a "just transition."
Investment requirements span power, grid, and emerging technologies
Wood Mackenzie projects cumulative low-carbon energy capital expenditure of £1.5 - 2.1 trillion (US$1.86 - 2.63 trillion) between 2025 and 2060, depending on policy ambition. The range reflects four scenario pathways from Delayed Transition (3.1°C, £1.5 trillion) to Net Zero (1.5°C, £2.1 trillion). Power generation and grid infrastructure absorb over 60% of total investment across all scenarios.
An additional £75 billion (US$89 billion) between 2026 and 2030 would close the gap from base case to country pledges scenario. Offshore wind and low-carbon power need 60% of this incremental investment, with sustainable fuels and carbon capture requiring 13%, and grid and charging infrastructure demanding 10%.
Technology priorities are evolving. The government selected Rolls-Royce for a small modular reactor pilot project, with Wood Mackenzie expecting first grid-connected SMR generation in the early 2040s. An AI Growth Zone will collocate data centres with SMRs, though data centres reach less than 2% of total power demand by 2030 in the base case. Nuclear capacity hits 10.5 GW by 2050 in the base case, well short of the 24 GW government target.
Point-source carbon capture reaches 6 Mtpa by 2030 and 37 Mtpa by 2050, with power generation and blue hydrogen accounting for 64% of capture demand. The Carbon Border Adjustment Mechanism launches in 2027, potentially accelerating carbon capture adoption and addressing competitiveness gaps with imports.
Low-carbon hydrogen faces persistent commercial headwinds. High-profile project cancellations hit both electrolytic and blue hydrogen in 2024-2025 as energy companies pivoted back toward fossil fuel production.
Deployment is now refocusing toward hard-to-abate industry and power generation, where alternatives remain limited.