Top 5 Energy & Industrials Trends in 2025

As we approach 2025, the energy and industrial sectors stand at a crossroads of transformation and uncertainty. Shifting regulatory landscapes, advancements in technology, and geopolitical dynamics are shaping a complex environment where opportunities and challenges coexist. 

From the incoming U.S. administration’s expected impact on industrial growth to the future of the energy landscape, the upcoming year promises pivotal developments. Here, we delve into some key trends poised to define the energy and industrial space in 2025, offering insights from industry leaders and experts on the critical issues shaping the future.

DOGE: Accelerating Industrial Growth or Creating Regulatory Bottlenecks?

Experts have mixed opinions on the potential impacts of the Department of Government Efficiency (DOGE) on industrials. On the positive side, a former Chief Growth Officer at Jacobs Solutions hopes that DOGE recommendations will lead to faster permitting through the use of AI. He highlights that the assumption that every new infrastructure project is unique contributes to excessively long development timelines. 

However, a former deputy assistant secretary at the Department of Energy expressed concern that DOGE’s push to reduce government employees could delay nuclear approvals for data center projects. He points out that Project 2025 proposes cuts to the U.S. Nuclear Regulatory Commission (NRC) and worries that these reductions could cause approval processes to stall. This expert argues that NRC staff play a crucial role in helping firms navigate nuclear approvals, rather than hindering them.

Weathering the Tariff Storm

A director at Simon Property Group believes tariffs would hurt retail tenants, as during Trump’s last term, retailers faced margin compression due to tariff impacts.

The Head of Enterprise Technology Transformation at NextEra Energy argues that if tariffs target foreign components, the cost impact will be catastrophic for capital goods producers like GE and Siemens. However, if tariffs apply to finished goods, costs will rise, but it would not be as severe. 

The former Global Executive Director of Tendering at GE Vernova believes capital goods companies will pass the higher costs onto their corporate customers, as in some oligopolistic markets, where prices are set by competitors rather than market forces.

From a corporate perspective, a BofA economist suggests that Trump’s tariffs could result in margin compression for businesses, as many may struggle to effectively pass on the increased costs to consumers.

The Future of Energy: Navigating a Post-IRA Landscape

The Head of Enterprise Technology Transformation at NextEra Energy, believes that Inflation Reduction Act (IRA) modifications may unfold under three scenarios:

1. No Change: Since red states are the primary beneficiaries of the bill, the IRA remains unchanged. 
2. Modified IRA: Most likely. Subsidies for natural gas and LNG projects are increased, while those for wind and solar are reduced. This shift will make energy equipment markets resemble 2013, when natural gas was the most cost-effective fuel compared to coal, wind, and solar. 
3. Complete Repeal: Least likely scenario.

The expert predicts energy equipment decision-making will significantly slow down in the first half of 2025, as newly appointed government officials, unfamiliar with their roles, take time to understand their sectors, while industry leaders remain cautious, waiting for updated regulatory guidelines. Additionally, managers anticipating lower interest rates for their energy projects might postpone decisions. The former Chief Growth Officer at Jacobs Solutions thinks that scenario one or two is likely since the IRA’s drivers remain. 

Due to tight capacity availability in natural gas turbines from dominant players like GE and Siemens, the Head of Enterprise Technology Transformation at NextEra Energy, predicts that secondary players in this space with excess rust belt capacity, such as Caterpillar, Mitsubishi, Cummins, and Ansaldo, could benefit from increased orders. 

However, the former Global Executive Director of Tendering at GE Vernova, is less optimistic about Bloom Energy’s prospects despite its expertise in natural gas fuel cells. The expert thinks the fuel cells lack a useful business case, as they are less efficient than gas turbines and less green than wind and solar.  

He predicts that the onshore wind market does not require subsidies, as the technology is price competitive with fossil fuel.  Firms such as Siemens and GE have lengthy pipelines, so he does not anticipate a market slowdown.

A former Partner at Siemens Energy Ventures anticipates that many blue hydrogen and green hydrogen projects will not survive a modified IRA that eliminates hydrogen subsidies, as this technology is not cost competitive with fossil fuel. However, on a more positive note, this expert notes that ex-U.S. renewables demand will continue to grow, and the rest-of-world market is 10 times the size of the U.S. market. 

Energy: Fossil Fuel Strikes Back?

A Vice President of Sales at NOV predicts that oil prices will reach $80 in 2025, surpassing the consensus estimate of $70. This outlook is driven by potential additional restrictions on Iranian supply, a prolonged delay in the return of Russian oil to the market, and extended OPEC supply cuts. The expert predicts a decline in energy M&A activity, noting that most attractive targets have already been acquired.  

A Board Member at CITGO Petroleum thinks unprofitable renewable technology is at risk under an IRA repeal. Both experts predict that integrated oil majors will keep their focus on capital discipline despite a potentially more favorable fossil fuel regulatory environment. Capital discipline will remain because the U.S. has reached peak oil demand, with marginal growth in demand now coming from international markets. Both experts hold a pessimistic view on the prospects for sustainable airline fuel (SAF) and renewable diesel.

Airlines: Continued Evolution 

Airline experts predicted the following for 2025:   

1. Spirit Airlines will likely be acquired out of bankruptcy. Due to poor fixed cost absorption, it’s hard to shrink to profitability in the airline sector. Because profitability is achieved with scale, Spirit will likely need to merge with another airline to survive. A merger is also highly likely since several airlines are interested in acquiring Spirit’s aircraft and gaining access to its gates.  
2. Southwest Airlines is on a path to greater profitability. A former General Manager of Finance at Delta Air Lines thinks the firm’s creation of a premium cabin is capital-efficient and will pay dividends. The former Vice President of North American Airlines at Sabre Corporation feels Southwest will emerge stronger as it transitions from a low-cost carrier to a legacy airline. He notes that its presence on Google Flights indicates a shift in management’s approach toward operating more like a legacy airline.
3. Introduction of Basic Business Class: A former General Manager of Finance at Delta Air Lines believes a potential new trend could involve unbundling business class to cater to leisure customers. Itemized pricing for baggage check, lounge access, and business seat assignments could tap into leisure travelers’ desire for a more premium experience. The challenge will then be to prevent corporate buyers from acquiring these tickets.

What to Expect in The Year Ahead

With a new incoming U.S. administration and potential impacts from regulatory changes, the uncertainty surrounding the energy and industrial sectors in 2025 is high. We will be following as these key trends develop and using AlphaSense Expert Insights to stay on top of critical insights from industry leaders.