In the relentless pursuit of climate neutrality by 2050, Europe has laid out ambitious targets that hinge fundamentally on transforming its energy consumption patterns. However, a critical aspect of this transition—the pace at which individual companies shift from fossil fuels to low-carbon energy sources—has remained veiled in uncertainty. Bridging this knowledge gap, researchers at the Complexity Science Hub (CSH) have pioneered an innovative monitoring tool that quantifies the speed of energy transition at the firm level, offering unprecedented insight into the dynamics shaping Europe’s decarbonization journey.
The newly developed CSH Monitor harnesses comprehensive energy consumption data, illustrating not only the extent of low-carbon energy adoption but also the underlying heterogeneity across sectors and company sizes. Applying this methodology to Hungary as an illustration, the team analyzed the energy profiles of approximately 25,000 companies from 2020 to 2024. This dataset covers a staggering majority of the country’s industrial energy use—comprising 75% of gas, 70% of electricity, and 50% of oil consumption in the firm sector—enabling an exceptionally detailed landscape of energy consumption transitions to be mapped.
What emerges from this analysis is a sobering reality: despite the European Union’s ambitious climate objectives, the actual energy transition within the business sector is advancing at a sluggish, arguably insufficient pace. Roughly half of the firms have increased their share of low-carbon electricity, signifying nascent progress, yet the other half continue to deepen their reliance on fossil fuels. This bifurcation underscores a resistant undercurrent in many sectors, with some companies entrenched in traditional fossil fuel infrastructures while others pioneer cleaner energy use, revealing a spectrum of transition velocities rather than a uniform march towards sustainability.
Further dissecting the data, the study reveals an intriguing paradox in energy adoption behavior. Across virtually every industrial subsector examined, there coexist firms that have embraced predominantly low-carbon electricity and peers that scantily utilize such energy. This diversity within the same industrial categories implies that the barriers to transitioning are less about technological feasibility and more about economic, organizational, and strategic factors unique to each firm’s circumstances. The variation highlights that the energy transition is not merely a matter of technological availability but rather hinges on complex firm-level decisions and constraints.
Crucially, the research identifies economic dependencies as a formidable influence on a company’s likelihood to switch from fossil fuels to electricity. Firms that allocate a substantial fraction of their revenue to fossil fuel expenses exhibit significant inertia, being less inclined to adopt electrification strategies. Conversely, companies where electricity expenditures constitute a larger slice of revenue tend to be more proactive in shifting towards low-carbon electricity. This suggests a lock-in effect, where firms heavily invested in fossil fuel infrastructure face high transition costs and risks, dampening their agility in energy transformation.
The phenomenon of ‘lock-in’ underlines the importance of policy mechanisms that can alleviate initial switching costs and provide economic certainty. Without robust support systems and clear regulatory trajectories, companies vulnerable to transition risks may hesitate, hampering broader decarbonization goals. Therefore, targeted interventions such as financial incentives, investment subsidies, and regulatory frameworks are pivotal to enable firms to surmount these barriers and accelerate energy transition adoption confidently.
Size, a critical structural characteristic of companies, also dictates energy transition dynamics. Larger corporations with more substantial overall energy consumption demonstrate a marked proclivity towards increasing their share of electricity, likely driven by greater resource access, capacity for investment, and pressure from stakeholders. In contrast, smaller firms exhibit slower transition rates, possibly reflecting demographic, financial, and capability constraints that limit their ability to absorb and implement decarbonization measures swiftly.
Looking ahead, the researchers conducted a compelling thought experiment to explore potential future trajectories should transition behavior change fundamentally. If companies currently lagging in the adoption of low-carbon energy were to adopt strategies paralleling those frontrunners within their sectors, projections suggest that fossil fuel consumption could plummet to as low as 30-45% by 2050. Correspondingly, low-carbon energy sources could dominate up to 70% of total energy consumption in this optimistic scenario. Such a shift would markedly accelerate the fulfillment of Europe’s climate neutrality ambitions and avoid entrenched fossil dependencies.
Conversely, a continuation of present trends portends a reticent energy transition, with fossil fuels maintaining a dominant share—estimated around 80%—in firm energy usage even by mid-century. This stagnation forecasts severe challenges to meeting EU decarbonization targets and underscores the urgency of proactive policy and corporate action to alter the trajectory. Without decisive intervention, the inertia inherent in current business practices threatens to derail climate objectives fundamentally.
The implications of this research extend far beyond Hungary. While the CSH Monitor’s application was limited by data availability, the methodology offers a blueprint for broader deployment across Europe and beyond. Countries with comprehensive transaction-level Value Added Tax (VAT) data systems, such as Belgium, Spain, Portugal, and Ecuador, are primed for similar analyses. Expanding such monitoring infrastructures would not only illuminate firm-level energy transition progress but also enable policymakers to deploy targeted support, optimize resource allocation, and implement timely corrective measures.
A striking insight is offered by the cost implications of renewable versus fossil-based electricity. Given that renewable electricity is already cheaper in many markets today, the bottleneck is shifting from supply-side capacity to the demand side’s adaptability—how effectively and swiftly firms transition their processes to electrification. This delineates a critical frontier in the energy transition: facilitating beyond-grid decarbonization by fostering firm-level innovations and investments in electrification technologies, process redesign, and infrastructure upgrades.
Ultimately, this study emphasizes that the path to climate neutrality is neither linear nor uniform but complex and fraught with heterogeneity across firms and sectors. It highlights the importance of granular, firm-specific data in unraveling the intricacies of energy transitions and tailoring policies to diverse corporate realities. Without such nuanced understanding and responsive strategies, Europe risks leaving vast portions of its industrial economy behind in the fossil era, jeopardizing the collective climate vision.
The Complexity Science Hub’s efforts represent a pioneering stride in closing the information gap critical to managing the energy transition effectively. By enabling transparent, comparable, and high-resolution monitoring of firm behaviors, the CSH Monitor equips stakeholders—from policymakers to investors—with the vital intelligence to catalyze and sustain the urgent transformation required. As Europe charts the course towards 2050, such innovation in data-driven governance will be indispensable in turning climate pledges into tangible reality.
Subject of Research: People
Article Title: Using firm-level supply chain networks to measure the speed of the energy transition
News Publication Date: 9-Feb-2026
Web References: https://www.nature.com/articles/s41467-026-69358-4, https://csh.ac.at/news/can-europe-be-climate-neutral-by-2050-new-monitor-tracks-the-pace-of-the-energy-transition/
References: J. Stangl, A. Borsos, and S. Thurner, Nature Communications, DOI: 10.1038/s41467-026-69358-4
Image Credits: © Complexity Science Hub (CSH)
Keywords
Sustainability, Economics, Climate change, Energy resources, Solar fuels, Fossil fuels
