Scientific discoveries tend to cluster, arising roughly at the same time from teams or individuals working separately from each other. The phenomenon has a name— multiple discovery or simultaneous invention—and there are many examples: natural selection, calculus, the telephone. Contemporaneously, it’s been observed that more Nobel Prizes have been going to multiple persons—who, again, were working independently of each other.

Of course, the concept has great relevance to the progress of artificial intelligence. And especially to the understandable unease around AI, and even to call a stop to the development of AI. Unfortunately for those with that view, it’s simply not going to be possible to halt or even slow the forward march of this technology. Yes, an individual country or domain could undertake such action, but it would only serve to establish their isolation from the rest of the world. Indeed, in a very compelling example, historians have speculated that the Ming Dynasty successfully suppressed the growth of maritime technology and withdrew its society from engaging in any seafaring exploration. Effectively, this ceded all venturing to the rest of the world. So yes, you can stop progress for yourself, but that won’t stop others.

When we consider the intuitions of those who habitually want to halt technological progress, we can further speculate that some portion of society has probably always taken such a position: against seafaring, against railroads, against cars, against telephones, against stem-cell research… and now this same layer of society is back again in full swing, against AI.

A good proxy for these inclinations can currently be found in the anti-data center movement, which unfortunately is arising most strongly on the left side of the political spectrum. No surprise there. Led by plodding, linear, zero-sum thinkers like Bernie Sanders, groups that have successfully stopped transmission projects and even lots of wind and solar projects now look to do the same with data centers. Mr. Sanders—who apparently has never seen a complex-contingent system, and doesn’t care to know how they work—represents a puritanical New England tradition that is eager to jump into the fray and take the side of those who abhor building and construction and development of any kind. Sure, ratepayers are justifiably concerned about the impact of future electricity prices as power demand grows, but news flash: Global power-sector growth is already on a strong upward march, because energy transition itself makes that inevitable. If you are against data center growth because it will place upward pressure on grid demand, then you should also be against electric cars and buses and trucks, electric heating, and the entire effort to swing as many industrial processes as possible from the realm of fossil fuels over to the power sector.

Now, if the federal government were not currently in the hands of a kakistocracy, we would likely be engaging in constructive approaches to these challenges in everything from grid management and transmission access to AI safety policy more generally. We’d have professionals like Jigar Shah (former director of the DOE Loan Programs Office) back at the helm working on approaches that welcome the spectacular power sector-growth necessary for transition with a solution set that actually addresses those needs. Shah currently has a post up at LinkedIn, The Data Center Reckoning: Why Communities Are Saying No — And What Has to Change, that’s right on point.

In the current government, however, we have a far more serious and widespread case of derangement, where the impulses to control everything are fully authoritarian. This has given way to some of the most awful outcomes of all, in which natural gas turbine growth, to take just one example, is now flourishing “behind the meter,” thus adding further lock-in to what is already a very problematic path dependency forming on natural gas. Worse, the clowns and sociopaths sprinkled across this administration demonstrated in the Anthropic dustup last month that they would, in the face of what they perceived as intransigence on the part of the company, blacklist them—effectively imposing a corporate death penalty on the AI startup. And we actually witnessed “Department of War” officials going full-blast on social media, accusing the Anthropic CEO of being a liar.

Political reality suggests, however, that the real threat of AI—job losses, possibly on a large if not very large scale—is going to animate the AI discourse once those career-ending effects start to come into play. You may have noticed that Anthropic’s CEO, Dario Amodei frequently steps to the microphone these days to warn that AI could smash both existing white collar jobs and their future growth. While not everyone agrees, we already have signals from the market that the prospects for computer science majors—probably the hottest undergraduate major of the past decade or so—have suddenly turned downward.

In recent decades the U.S. has developed into a country with a special talent for stagnation, and an inability to solve problems or to get anything done. We can’t build high-speed rail, we’re way behind on EV adoption, we can’t repair or replace our tunnels and bridges, and we have infrastructure projects, especially in the power sector, that have been bottlenecked for years. Governance, meanwhile, has lapsed into such an inefficient state that the new mayor of New York is getting rave reviews for fixing a series of small things that have long since been resolved in the rest of the developed world.

As people age, they become more risk-averse and increasingly opposed to change of any kind. The U.S. currently has an aging population, with the replacement rate falling to very low levels through a combination of lower fertility rates and lower immigration. This is a recipe not for a correction in our ways but for a deepening of our current course, in which there’s strong bipartisan sentiment to build nothing, change nothing. A favorite example: the long-delayed L.A. bike path project which, according to reporting last year, should have been completed by now. Your faithful correspondent actually did some reporting on this effort seven years ago, in 2019, and it should be said that the portions of this project that have been completed are amazing. However, the hard part—connecting the southern portion to the northern portion near downtown—remains fully stuck in the mud. Notably, in an example of how America’s neglected problems can stack on top of one another, one of the concerns about the formation of the center-city portion of the bike path was that it would negatively impact the homeless population. But this was just one of myriad hurdles that transformed the project into what the linked SFGate article called a “bureaucratic hell.”

One public figure who’s currently sending the message that the task of the next administration cannot be restricted to “simply putting back things to the way they were” is Pete Buttigieg, currently on a speaking tour in states like Kansas and Oklahoma. While oratory and public persuasion are not the only deciding factors in making a presidential run, Mayor Pete has shown again and again that he can marshal words against our current Empire of B.S. with consistent success—and to the distress of his interlocutors!

More specifically, as the former DOT secretary, Buttigieg got a full dose of the regulatory miasma that has built up over a half century in this country, and described it this way: “We got so good at stopping all the bad things that we stopped all the good things from happening too.” Buttigieg hasn’t declared yet for 2028, but he seems to have a “theory of the case,” and so his decision to run seems inevitable.

Read more

Americans aren’t buying what President Trump is selling. In a televised speech to the nation last week, the president once again laid out a series of incoherent arguments in his ongoing attempt to explain the war. The attack on Iran, apparently, is simultaneously a war of choice and something that was necessary. The closing of the Strait of Hormuz, meanwhile, occupies not two but several conflicting framings: an action taken by Iran that has nothing to do with the war; a condition that will dissipate naturally all on its own; and a problem the rest of the world needs to solve, because the U.S. is on the verge of washing its hands of any responsibility for its future protection. The president followed up his speech several days later with a bizarre Truth Social post on Easter Sunday, in which he praised Allah, dropped an f-bomb, and threatened Iran with total annihilation if they do not open the Strait. Betting markets responded to the whiff of executive-branch desperation by pushing the Impeachment contract at Kalshi to new highs, raising the odds to nearly 26% that Trump is both impeached (in the House) and convicted (in the Senate). Just to add, that is functionally a parlay bet, relying on not one but two outcomes to pay out.

A practice most professional bullshitters generally respect when baffling audiences is the disciplined avoidance of any details. Here the president failed to adhere to that tactic when he asserted, several times and forcefully, that the passage of ships through the Gulf has no effect on the U.S. or its economy. His reason? We produce our own oil and don’t need any Gulf oil. Observers have often remarked that Donald Trump genuinely doesn’t understand how complex, contingent systems work—such as the global economy and all its interlocking parts—and here we have a tidy case study in the president’s deficiency.

But the president also committed a cardinal sin of politics: You cannot assert to the public specific claims that are easily falsifiable. Gasoline prices are available for all to see, and on a national average are back above $4.00 per gallon—last reached in 2022, at the outset of the Russia-Ukraine war. His assertion that the U.S. is insulated from the effects of high oil prices only has relevance to the country’s trade balance—not to the effect on American consumers. Unlike some other petrostates in history, the U.S. does not subsidize prices at the pump. We pay the global price. There is no local price. Clearly there’s a common intuition that big producer states of commodities confer cheap local prices to the domestic populace, but that’s possible only if you are not running a free market in those commodities at home. It’s easy to imagine someone making this same mistake, say, upon arriving in New Zealand assuming that, because that country is a huge exporter of dairy products, local milk will be cheap. Nope. The U.S. could double its production of oil and New Zealand could double its output of powdered milk and Americans and New Zealanders would still be paying the global price for oil and milk respectively.

Here, we can assert a maxim: There is no way to reduce the hit to consumption from a spike in oil prices by producing more oil. If that were true, the U.S. would be basking in cheap oil prices right now, having nearly tripled its output of petroleum (not just crude) since the low-output years, around 2005. On the contrary, the U.S. has done basically nothing to reduce its structural dependency on gasoline—though you could assert it’s a form of accomplishment to have held consumption steady as the population grew over the past two decades.

Read more

Forever is a long time. And yet the events now set in motion by the U.S. attack on Iran are likely to give way to a new energy security regime of very lengthy duration. While energy history is anchored by the great, singular transitions, it’s also the case that wars, embargoes, and shortages also play a reshaping role, cutting deep grooves in the psyches of nations and kicking off new policy regimes. In the aftermath of Russia’s attack on Ukraine, for example, the EU’s natural gas consumption stepped down about 20% from its 2021 highs; and that demand destruction has roughly been maintained as the EU has raced forward to adopt heat pumps and other gas-saving measures. Going back a bit further, the 2004—2008 global bull market in oil, which resolved into a fearsome spike, put a halt to decades-long OECD demand growth. And that growth never recovered (see chart below). Going even further back, oil enjoyed a dominant 50% share of all energy consumed in the world coming into the oil crises of the 1970s. Today? Oil has fallen to just a 33% share of total world energy consumption. Pain, as always, is a stern teacher.

When George H.W. Bush attacked Iraqi forces back in 1991, driving them out of Kuwait, he was criticized for not following up Desert Storm with a march on Baghdad. American hawks wanted Bush to “finish the job.” But Bush, among several considerations, understood that despite the serial tensions that defined the Middle East then (as now), a kind of equilibrium had long since formed around flows of oil from the Persian Gulf, and disturbing that equilibrium was far more likely to open up a box of furies, and other nasty surprises. Here we might recall the Odyssean dilemma, in which our hero has to navigate a strait and choose whether to sail closer to a six-headed monster, on one side of the passage, or a whirlpool on the other. Figuring the whirlpool was certain death, Odysseus sailed nearer to the monster, losing a few men in the process, but survived. March on Baghdad? No way, concluded Bush.

By attacking the country that owns the most beachfront real estate on the Strait of Hormuz, you might say that President Trump, by contrast, has sailed closer to the whirlpool. Everyone knows that Iran is a brutal theocracy and has been meddling and causing trouble since forever through its proxies around the region. Attacking Iran, however, with the intent to drive them into submission has pierced the stability of a system that is far larger than either the U.S. or Iran: the global economy, and its continued dependence on petroleum. Proper war planning for an attack on Iran ideally would have recognized that this larger system requires at least as much, if not more, attention and care than the direct attacks on the Iranian state.

What are some of the painful adjustments that therefore are likely to evolve as the risk premium around oil remains elevated for some time to come? Let’s go through some of the most obvious.

• In a repeat of 2022, global coal consumption is likely to soar. The pain point in 2022 was natural gas via the Russia-Ukraine war and Putin’s gas policies, but this time around it’s the reduction in Gulf LNG capacity that’s going to deliver a lot of pain to Asia. Global coal consumption reached a new all-time high in 2022—and then hit two more highs in 2023 and 2024—entirely undoing the moderate progress made in coal demand-reduction over the previous decade. A country like Japan, which has an enormous industrial base but must import energy to run it, is at great risk in this scenario. If Japan can’t get enough LNG, it will partly turn to coal, and you can apply that to other nations across Asia that manufacture but are dependent to some extent on imported energy. As someone quipped on the internet this week, maybe it’s time for Japan to do its part to clear the Strait of Hormuz:

• U.S. exports of both coal and natural gas in the form of LNG will quickly rise to meet current export capacity; and if demand for those two fuels doesn’t let up, the U.S. energy economy will start exploring ways to expand that capacity. We must also remember that the U.S. has been expanding exports of both these fuels steadily over the past decade. U.S. coal exports have risen over this time partly due to the reduction in domestic demand. LNG capacity has risen in part because North America has economically recoverable natural gas reserves that are nothing less than gargantuan. So export momentum is already in the mix. Finally, U.S. petroleum product exports (not crude oil) may be constrained from increasing much as the combination of lower lower global supply but also lower global demand makes may offset each other. However, there’s no question that prices for those products will rise.

• Leaving aside the associated snarling of global supply chains that may constrain all production of any kind, demand for renewables and planning for more renewables will soar, along with demand for battery energy storage systems (BESS). The Iran war is shaping up to become a second major blow in less than five years to fossil fuel dependency in the power sector. The world will become weary. The Asian countries, led by India, are the domains where we are likely to see enormous jumps in renewables growth. China already builds renewables at a frantic pace, so the rate of change possible in China is far less. India, meanwhile, has a lot of catching up to do, and this probably triggers that long-overdue need to build new solar capacity.

Let’s pause here to remember a golden rule on which you can rely: Fossil fuel price shocks are a wonderful gift to producers of those fuels in the short term but are terrible for those producers in the long term. ‘Twas always thus.

Read more

Crafting a working description of our current energy transition continues to be a challenge. We remain stuck in a version of the classic Dickens novel, A Tale of Two Cities, in which it’s seemingly the best of times for the continued buildout of wind, solar, and batteries while we are forced to endure the worst of times when it comes to emissions, which keep on growing. A recent editorial piece in the New York Times by David Wallace-Welles, Don’t Look Now, but the Green Transition Is Still Happening, illustrates the challenge perfectly. And the problems start right away, with the title, which depends greatly on how one defines transition.

Is our current energy transition one in which old forms of fossil energy are being replaced by low carbon sources of energy? Not really. A more accurate description would be that energy transition has gone far enough to see low carbon energy dominate marginal demand growth—thus halting new growth of fossil energy—while leaving all the existing fossil energy demand, unfortunately, in place. The structure of Wallace-Wells’ essay is a familiar one, in which you kick off the argument with an extensive list of stellar low carbon achievements: This January, Norway sold only 7 vehicles with an internal combustion engine; Pakistan now sometimes produces more electricity from rooftop solar than from its main power grid; 90% of new U.S. power capacity is composed of wind and solar. And so on.

Regular readers of climate journalism will recognize this touting of achievements and the declarations are well deserved. Cold Eye Earth feels obligated to cite these wins also, and just recently took the view that global road fuel demand has almost certainly peaked, because EV adoption in China has finally reached critical mass, closing the door on global road fuel demand going much higher. So again, there is no shortage of good news items, but the bigger picture is not great. And presumably, no one reading this is confused about the fact that the bigger picture is the only one that matters. Thus, starting about half way through Wallace-Well’s essay, we get the other half of the story:

New power changes the existing system only on the margins, and the old system is pretty dirty. To this point, new green energy has mostly supplemented rather than displaced fossil fuels. Globally, emissions are still climbing, if slowly, and temperatures are not only rising but rising at an accelerating rate, raising the uncomfortable possibility that the world’s climate system may be more sensitive to emissions than almost anyone had bargained for.

So, in the title, we have the claim that the transition is still happening, but in the body we get the admission that low carbon energy has mostly supplemented, not replaced, fossil fuels. Doesn’t sound like an actual transition, does it? Effectively, the headline claim is undermined by the facts and you do have to wonder how long this storytelling architecture can sustain itself before reaching full burnout. At its worst, this format preys upon common human intuitions that if lots of good news is being generated that it invariably leads to a great outcome.

Wind and solar once again covered all the growth in U.S. power generation last year. But power sector emissions rose anyway. The culprit? A huge spike in coal-fired power generation. Here we have a truly unfortunate example of how renewables can meet all marginal demand growth, but a change in composition of fossil fuel utilization (coal took back some share from natural gas) allows emissions growth to find a way upward. Let’s take this counterpoint to energy transition in two parts.

First, the U.S. is a major world domain for wind, solar, and battery growth. Last year, wind and solar reached a nearly 19% share of total U.S. power generation. 2025 was also the sixth year in a row that wind and solar have basically covered all marginal growth in power sector demand growth. You can see that marginal coverage quite easily, just by glancing at the following chart:

This chart is a portrait of additionality, the much criticized term that makes the simple and direct observation (just as Wallace-Wells acknowledged) that energy transition so far is merely supplemental to the world of fossil fuels. Is it a victory to have at least halted the growth of fossil fuels—as demonstrated here, in the U.S. power sector? Indeed it is a victory. However, the reason why renewables are competitive for new build power and less so against incumbent power—both in the U.S. and around the world—is due to simple economics: renewables are cheap, but they are not dirt cheap. The former gets you wins in the marketplace for new capacity. But the latter doesn’t get you radical disruption to existing capacity.

Second, power sector emissions actually rose last year. Coal stormed back into the power sector, causing emissions to rise by 4.2%. There is no question that the transition from coal to a combination of natural gas and renewables has been successful at driving a huge volume of coal out of the system. But the U.S. like many other regions in the world still has extensive coal-fired capacity that can be brought on when needed.

When spare capacity in global oil producers either expands or sits at comforting levels, oil prices have a very difficult time sustaining high levels. This is the regime we’ve inhabited for the past few years in the aftermath of the 2022 Russian invasion of Ukraine, and the associated sanctions which greatly disrupted global oil and natural gas markets.

Read more

The U.S. Supreme Court struck down the Trump administration’s tariff scheme, holding that it was unconstitutional in a 6-3 decision. While there were differences of opinion within the majority about the relevance of the major questions doctrine, the message from justices Roberts, Barrett, Gorsuch, Kagan, Sotomayor, and Jackson was clear: Executive branch actions are reviewable by courts, and the president does not possess unlimited powers. The decision appears to have shattered Trump emotionally, and the president had what most observed as a temper tantrum before the TV cameras, even going so far as to accuse the justices of being under the influence of foreign interests.

Last November, Cold Eye Earth reported on the oral arguments presented to the court, and that’s when we all learned, based on two hours of questioning, that the plaintiffs could probably count on at least six justices to ultimately find against the administration as the three liberals on the court were likely to be joined by Gorsuch, Barrett, and Roberts who would ultimately write the opinion for the majority. The Cold Eye Earth summation at the time works well as a re-cap of the case, now decided:

When President Trump imposed across-the-board tariffs on the entire world this past April, he arrogated powers to himself and the executive branch that no president before him has attempted to claim. Justice Barrett pressed the solicitor general fairly hard on the fact that the powers enumerated in the IEEPA legislation not only do not include the word tariff, but “the actual verbs” cited in IEEPA—investigate, block, nullify, void, prevent, prohibit, regulate, direct, and compel—have not been used elsewhere by Congress as stand-ins or substitute concepts for tariffs. Chief Justice Roberts appeared quite resolute in his questioning, saying several times that tariffs are indeed taxes—a theme also sounded out by Justice Sotomayor. Gorsuch, meanwhile, appeared to be rather agitated by the top-down implications of the case, as he repeatedly laid out a scenario whereby either Congress and/or the Supreme Court hands too much power to the president. The country would discover over time, in his view, that such power, once granted can never be clawed back. By the time the plaintiff’s lawyer, Neal Katyal, rose to make their case, it was already clear the government was facing a steep climb: IEEPA does not grant tariff powers in the text, and even if it did, granting revenue-raising powers to the president is something Congress simply can’t be allowed to do.

The standout event of the majority’s opinion surely has to be the very lengthy, 46-page concurrence by Gorsuch, in which he takes to task three of his colleagues on the left and three more on the right. Each set of three, in his view, has long been playing hide-and-seek with the major questions doctrine, and he suggested pretty clearly that the three conservatives (Kavanaugh, Alito, and Thomas) were denying executive powers to Democratic presidents, and expanding them on behalf of Republican presidents while suggesting the three liberals (Kagan, Sotomayor, and Jackson) were doing the same in reverse, favoring power expansion to Democratic presidents and leaning against Republican presidents (as they did in this case). The man has a point! For Gorsuch, the major questions doctrine and the related non-delegation principle were central to this case. After chastising the conservatives who dissented from the 6-3 opinion for pretending these questions were not applicable, he then pointed to the liberals who had concluded that “the statutory language of IEEPA” was sufficient to deny the president its use as a global tariff vehicle. For Gorsuch, they too were avoiding the major questions doctrine.

Gorsuch’s view may very well have ramifications as Trump attempts to stitch his tariff regime back together using other legal facilities (supposedly) available to him. By foregrounding the robust theme that the executive must generally go through Congress to either enact or sustain tariff actions, he is transmitting to the federal judiciary (in part) a guiding principle they may use as future cases come before them.

Suggested Reading:

Quick Thoughts on the Tariff Decision and the President’s Angry Reaction, by Jack Goldsmith

A breakdown of the court’s tariff decision, by Adam Feldman

Supreme Court, on a 6-3 vote, blocks Trump’s IEEPA tariffs, by Chris Geidner

Unsurprisingly, the Trump team returned to the tariff well the very same day, announcing their backup plan to achieve tariff continuity. Let’s pause here and recall the old proverb “As a dog returns to its vomit, so a fool returns to his folly.” The court’s decision opened an escape hatch for Trump—whose public approval craters to new lows each week—to actually step down from this failed scheme. But, as the saying goes, you’ll never guess what happened next: Trump erected, again by executive fiat, a new slate of global tariffs at a 10% rate, then adjusted that rate upward to 15% in a subsequent social media post. If tariffs were alcohol, we might say the president’s on a bender.

Read more

Coal-fired power generation popped higher in the U.S. last year. Coal consumed to make electricity soared by a fairly distressing 13.8%. But the spike represents no change to the overall trend of long-term decline. Since 2010, coal’s misfortune—a decline of roughly 1,000 TWh—has been exploited by natural gas and combined wind and solar. If we use a baseline of roughly 4,000 TWh to represent total U.S. generation over that time, coal in power has been more than cut in half. The misfortune will continue.

Meanwhile, natural gas and combined wind and solar have each advanced by about 800 TWh since 2010, not only covering coal’s losses but advancing further to cover total demand, which finally budged from that 4,000 TWh level and has now grown to 4,500 TWh per year.

Because natural gas has lower emissions than coal, there’s a common perception that dumping one for the other is an unqualified win. But that’s not true. Natural gas still produces strong emissions, and natural gas can also hitch its wagon to path dependency, eventually curbing (some of) the expected growth from combined wind and solar. Cold Eye Earth offers the following delineation to untangle the confusion:

• Operationally, combined wind and solar benefit greatly from having enough natural gas on the grid to support their intermittency. The engineering now available to modern, highly-calibrated natural gas power capacity is so advanced that grids can titrate the amount of gas power on the grid from hour to hour—stepping aside when wind and solar are going strong, and stepping back in when they weaken. So far, therefore, this fine-tuned ramping capability has worked perfectly with the rise of wind and solar. Up to some level of penetration therefore, we must allow that this flexible natural capacity has been necessary to help wind and solar spread their wings.

• Alas, once you go beyond that point then new natural gas capacity simply becomes another emissions problem to be solved, neutralizing a great portion of the improvement renewables secured in lowering emissions. Sure, you want to love and celebrate an extra 800 TWh of combined wind and solar, but doing so in the face of a fresh 800 TWh from natural gas is troubling. And unfortunately, this is the path that the U.S. has now taken. And no, wind and solar will not displace young, newly built natural gas capacity.

Facts change over time, morphing into new facts. It’s likely that many still believe the U.S. has an intractable coal problem, when in fact we now have a new problem in natural gas. This is the old “fighting the last war” phenomenon. No, coal hasn’t been zeroed out yet (as it has in the United Kingdom, for example), but directionally we are headed to the same destination. The U.S. has more than enough natural gas capacity in power, and we should be fighting further growth now with the same intensity and planning that was brought to bear on coal starting 20 years ago.

Long-term U.S. tariffs on Chinese solar panels raised prices and triggered a decline in solar industry employment. Those are the findings of a new 2026 study, “Beyond tariffs: A better approach to green industrial policy,” which examined these effects from the starting point of 2012. Unsurprisingly, the study’s broadest conclusion, that “overall human welfare declined,” derives from the simple fact that human health improves when emissions decline and worsens when emissions either rise, or hang around, not falling fast enough.

What’s delicious here is that it’s a perfect demonstration of the insights offered by the British economist David Ricardo more than 200 years ago. Even today, many people have trouble understanding what Ricardo saw: we live in a dynamic economy, not a zero-sum, static one, and tariffs affect far more than just import prices as they eventually shrink overall flows in targeted sectors, reducing earnings, total market size, and purchasing power of workers and consumers.

This is why Cold Eye Earth devoted significant time to Ricardo last year, when Trump returned to office with his caveman economic views. Here we used the example of bike frames and bike components, and the recognition that Japan makes the best components at the most competitive cost, and the U.S. tends to have an edge when making bike frames:

Read more

Global power generation from wind and solar has reached a level that’s equal to total generation from all sources in the United States. And this is 2024 data — 2025 data will arrive in late spring—so global wind and solar have almost certainly risen above this level. Recorded at 4,623 TWh of generation in 2024, global wind and solar likely added another 800 TWh in 2025 and now roughly generate about 5,400 TWh annually. That is very strong growth.

Indeed, the growth of wind and solar globally has been so strong that they equalled the total generation from all sources in the EU as recently as 2021, right around the 2,900 TWh level. Only three years were required to grow global wind and solar generation another 1,700 TWh to the 2024 level of 4,623 TWh. While the effort to kick off actual declines in global generation from fossil fuels remains a difficult problem to solve, there is clearly no problem at all with either the rate or the volume of wind and solar growth globally.

The most important metric for power sector decarbonization is of course total global demand growth for power, and 2025 has turned out to be notably weaker than expected. When we measure how much of this new demand globally is matched by the growth of wind and solar generation, weaker growth in total demand naturally lowers the success threshold for wind and solar, in their ongoing effort to entirely kill the growth of fossil fuel generation. Most estimates of last year’s total demand growth from all sources point to a 3.3% annual increase—far below the 4.3% increase in 2024 and also below the IEA’s previous headline forecast for three straight years of 4.0% (or even higher) growth.

Setting aside the percentages for a moment, it’s not hard or complicated to understand the basic proposition here: If total wind and solar generation added a fresh 800 TWh, we need total global power demand growth to either match that volume or, better still, fall below it. Alas, even with last year’s slower growth in total demand, wind and solar once again did not (quite) cover that gain. This also means that unless hydropower or nuclear power came to the rescue last year (again, we are still working with estimates until official 2025 data is released), then global power sector emissions either increased or stayed flat.

So how has 2025 shaped up so far, as we put it all together? Wind and solar growth are a tad stronger, and total demand is a tad weaker, but combined wind and solar have once again missed out on covering all the growth. Based on current estimates, 2025 likely saw 1,031 TWh of total demand growth, against wind and solar’s 800 TWh. Furthermore, using an updated IEA estimate of 3.7% for 2026 total power demand growth, the projection suggests once again that wind and solar growth don’t quite make it across the line.

Cold Eye Earth would like to remind readers of two concepts that are truly helpful in understanding the interplay between the growth of clean generation, and legacy, incumbent generation:

1. A small thing growing fast is a powerful phenomenon that will shock you with its ability to overtake a large thing.

2. A large thing growing slowly can be devilishly hard to constrain, and will resist its overthrow durably for a long period of time.

We see the same phenomenon across a number of domains, including the intellectual realm, where new and popular ideas can grow and spread quickly, even as older, incumbent ideas that “should have died already!” press onward.

Read more

An emerging bright spot in our current energy transition is that global road fuel demand appears to be peaking. Here at Cold Eye Earth we maintain a healthy skepticism towards any claim of a peak in fossil fuel demand or emissions globally, and equally assert that these declarations can neither be reliably “called” in real time. Peak declarations have scurried about for nearly twenty years now, nearly all of them wrong. But at least in the past, the “peak game” in energy demand forecasting paid respect to a time-window, in a nod to uncertainty. Today’s peak callers rush to the stage after quarterly data to yell “peak” only to throw themselves against this wall repeatedly as the years pass by.

The prospect that global road fuel is currently in the midst of peaking is composed of a number of data points, but owes most of its viability to long-run trends that began a decade or more ago. Put another way, the very same trajectories that got people excited about a peak in oil demand were overly embraced when they first appeared. Those trends needed time—and lots of it— to broaden and deepen. Let’s take a look at them.

• The arrival of the first EVs, and the array of incentives to buy them, 2005-2015. We can think of this period as the early investment phase, the start of a long journey that would eventually curb sales of internal combustion engine (ICE) vehicles. Europe and the U.S. were the first participants in this stage which had no effect at all on oil demand but prepared the ground for an eventual shift. A great example of how this lengthy return on investment played out in a specific domain is California, which remains the leading edge market for EV sales in the U.S. The seeds were sown. And eventually, they bloomed.

• Disincentives to ICE vehicle ownership in the form of fees, higher petrol taxation; the rise of the walkable city and the flowering of emissions zoning and congestion pricing; and the exploding popularity of EVs, 2010-2020. Although adoption of EV in the U.S. during this period was sluggish, (and remains so) globally the car itself became an increasingly powerful symbol of the problem of climate change. Europe, for example, had long been a leader in ICE disincentives—mostly through stiff petrol taxes—but then cities from Paris to London to Barcelona began a second initiative to attack ICE vehicles through travel fees, and car zoning. Just as in California, those initiatives accumulated over time and then broke through.

• The juggernaut of China’s EV-forward transportation policy, and the peaking of global ICE vehicle sales, 2015-2025. In the year or two after 2018 we began to safely conclude that global ICE sales had peaked, as they were unlikely to turn around or recover again given global sales growth of EV, especially in China. What we did not know is how rapid and aggressive (see the chart below) the ensuing 5-7 years would become for EV sales in China, as they stormed both passenger and commercial markets. The best estimate for EV sales last year (based on 11 months of data) is that they got close to reaching 50% of China’s total market. This means it’s an easy layup to project that EVs will push past 50% of the market this year. Put another way, the ICE vehicle, in China at least, just became the rotary phone.

Read more

Despite a very encouraging 15-year decarbonization effort, the project of global energy transition continues to face stubborn hurdles. In order to judge the state of progress, it’s important to anchor oneself to a starting line, and Cold Eye Earth continues to prefer the year 2010 as the best overall reference point for our current transition. That’s the year that utility-scale wind and solar really started to land with some force, when EV adoption as a sustainable trend became visible, and when national policy strategies and corporate efforts started to emerge strongly. A different and perhaps even better argument is that 2010 was the year that previously noisy data that reflected the early, nascent stirrings of decarbonization kind of snapped to attention and began to press forward with clarity.

If we look back at that period, we’ll see that most experts were already anticipating that hard-to-abate sectors like steel, cement, air travel, and heat for both industrial and commercial/residential needs were not going to be dislocated easily. That is still the case. Fifteen years have gone by and, at best, we are still at the experimental, proof-of-concept stage in trying to dislodge coal in steelmaking, jet fuel in aviation, and heat in the built environment. These science experiments have been encouraging. Green steel is possible. Hydrogen fuel cells in trucking and even in aviation have potential. But nothing is scaling, and we know why: price. So in these areas, we continue to nibble around the edges of the problem in creative ways, but without any breakthroughs. One example: After all the hopes for hydrogen and its promise of versatility, the accelerated adoption of heat pumps has taken a far bigger stride (notably lowering natural gas consumption in Europe). And what’s poignant in that comparison is that heat pumps are established tech, while hydrogen applications remain largely on the drawing board. Solar panels, wind turbines, batteries, and EVs are in the same category—established, and no longer experimental.

The hurdle to global energy transition that was less anticipated was economic growth itself. A double-edged sword, modern growth provides the momentum and liquidity necessary to get new infrastructure built, while at the same time making the decarbonization hurdle rate far more challenging. Consequently, new energy sources have tried and so far struggled to cover marginal demand, while also displacing existing legacy sources. To be fair, this is not an easy mandate to fulfill. Indeed, we are still waiting for the moment when wind and solar will sustainably cover 100% of global power demand growth. (Reports indicate this may have happened in 2025. We await data confirmation, of course. But a stern lesson of energy history is to always be wary of extrapolating long-term trends from short-term data.)

All this said, we are obligated to regard the rise of wind and solar as one of the main, established supertrends that will—given enough time—eventually cause other sources of legacy power to enter long-term decline. Indeed, if we were not under time pressure to deliver reductions in global CO_2, we would see the current pace of energy transition in far more positive terms. The progression you see below is frankly quite impressive. Since 2010, the world has moved combined wind and solar from 1.76% to 17% of global power generation. That’s an enormous accomplishment in a short time span, and one that has obviously avoided a very large tranche of emissions growth. In the 2025 estimate, growth of power generation ex-wind and solar is held steady at roughly 26,630 TWh, based on projections by Ember. Whether the rather slow rate of total demand growth, estimated at just 2.7%, endures the finalization of this year’s statistics remains to be seen.

Cold Eye Earth has written extensively about the fleet turnover challenge in our efforts to transform global power. There is no natural law that prevents combined wind and solar from cutting into all legacy sources, forcing them into decline. That wind and solar have not been able to do so can be found in a much simpler, more conventional explanation: New wind and solar are cheap enough to compete for new generation and to dislodge old, very uneconomic generation. That’s the story, right there in the chart above. What wind and solar can’t do is dislodge economically viable generation. That this line of demarcation is not intellectually challenging to understand suggests that those who keep resisting it do so because they understandably don’t like the message.

But turn the orb slightly and the prismatic light that starts to shine through is still pretty positive: Legacy generation gets older every day. Rust, as they say, never sleeps. And despite the fact that economic growth makes this all the more challenging, let’s marvel at how adept wind and solar have been in pushing through these myriad challenges regardless. Economic growth is like the proverbial steamroller, in front of which one tries to pick up nickels and dimes before the barrel squashes all that lies before it. Wind and solar have neatly survived that experience for more than a decade, and they will indeed prevail. Eventually.

The other global supertrend with real promise is the adoption of EVs, though this trend might escape your notice if you live in the United States. (Sad face.) Global sales of internal combustion engine (ICE) vehicles peaked in 2017, but it’s only now that we are seeing its first effect: Global consumption of gasoline is starting to flatline. This is due to China’s almost singular effort to remove ICE vehicles from the market. The policy mandate has had a profound effect not just within China but now outside of China too. If you blinked, you may have missed that EVs are now nearly 50% of China’s vehicle market—passenger cars and commercial vehicles combined.

Why was China able to use EVs to drive out the incumbent technology, while global wind and solar have still not crossed that threshold in the global power domain? Multiple reasons. For many Chinese consumers, the EV was their first car. The country was only at the beginning of the S-curve of personal vehicle ownership when EV technology began to roll out. So, unlike mature vehicle markets in the OECD, there were far fewer vehicles on the road with residual utility value. Readers may recall the following example from the March 31, 2025, issue:

A family keeps a 2010 Toyota in the garage so their two college students can drive it when they are home for summer, working jobs. No one in the family loves the Toyota, and they are all math literate and understand that running costs for a new EV would be far lower. Ah, but the EV represents a new capital cost to the family, whereas the 2010 Toyota is already paid for. So the value proposition of the 2010 Toyota is poor if you were buying it today off a used car lot. But not if you already own it. The value proposition of keeping the Toyota, the value to be captured in its ongoing utility, therefore, is excellent.

The OECD has a far greater fleet turnover problem when it comes to EV adoption, not only because these regions began adopting cars widely more than 100 years ago, but because cars now last longer too, with lifespans lengthening notably in the past 20 years. The OECD was also early to electrification, so power plant penetration also began here over 100 years ago.

Unsurprisingly, road fuel demand is no longer growing (much) in China, and as a result, it’s no longer growing (much) worldwide. According to the IEA, for example, global gasoline usage barely grew in 2025, and it’s expected to not grow at all in 2026—even though total oil demand is forecasted to rise by 0.8%. The global oil market is on the verge therefore of losing road fuel as a pillar of growth.

Read more

To better manage the holiday period, Cold Eye Earth is shifting its publication schedule ahead by one week and will release its next issue on Monday, 29 December 2025. We wish everyone a warm and fulfilling holiday season. While you’re here, a preview of the next issue: EV sales are about to reach 50% share in China, the world’s top vehicle market. That’s a very big deal, with broad ramifications for emissions and the overall project of energy transition. See you soon.

—Gregor Macdonald

In the current energy transition, the most important metric to follow is how much of yearly global power demand growth can be covered by low-carbon resources. Cold Eye Earth, along with its preceding publications (gregor.us and terrajoule.us), has tracked this metric for over a decade, hoping that this threshold would soon be crossed. But with the exception of a couple of years when total wind and solar grew moderately toward that target, we have continued to wait patiently for a better outcome. (Total global power demand actually fell in the pandemic year, 2020, but the that year remains an unhelpful outlier in all datasets.)

Through the first three quarters of this year, however, reporting indicates that total global demand growth for power is coming in much lower than forecast, which considerably lowers the bar for combined wind and solar to meet all new demand. This is surprising. Not on the wind and solar side of growth, but rather that total growth, which is supposed to be running at 4.00% or so, is coming in lower, reportedly at just 2.7%. Given all the drama and excitement over accelerated AI-driven demand for power, one has to wonder why the high rate forecast, coming from the IEA, for example, is not coming true.

London-based think tank Ember, which tracks this progress, has just reported its latest year-to-date estimate:

In the first three quarters of 2025, solar generation rose by 498 TWh (+31%) and already surpassed the total solar output in all of 2024. Wind generation grew by 137 TWh (+7.6%). Together, they added 635 TWh, outpacing the rise in global electricity demand of 603 TWh (+2.7%).

As previously discussed in the November 10 issue, wind and solar generation growth this year continue to track with the simple (if not simplistic) growth model used by Cold Eye Earth, which projects the two technologies will advance by 775 total TWh this year. But if they have already grown by 635 TWh through Q3, then they may complete the year at a level higher than that projection, above 800 TWh. That’s great news for wind and solar, but also for the Cold Eye Earth model, which may have correctly estimated this year’s growth within 5%.

The big miss here, again, is total demand growth, which is also on pace to come in around 800 TWh—leaving a big gap against the ongoing IEA forecast. In the chart below, Cold Eye Earth previously modeled its usual year-to-year wind and solar growth forecast, and also a three-year run of total demand growth of 4.0% per year. (Note that there are small discrepancies in the comparison of 2024 to 2025’s total demand growth because 2024 was a leap year.)

If total global power demand comes in at just 64% of the forecast this year (800 TWh vs. 1250 TWh), not only will it be a nice illustration of how dominant this factor is to the direction of energy transition, but it will also suggest that much of the expectation of higher growth from AI-related workloads has not yet landed. Other factors that might explain the miss: lower global economic growth as a result of disruptive U.S. trade policies, and there may be weather-related effects too. As we know, extremely hot years can cause global air-conditioning to spike. And any easing of that demand, from an anomalous cool summer, would have the opposite effect. It’s also good to remember that real-time data collection has higher error-risk. After all, even data that’s gathered retrospectively often has to be revised also. (Agencies like the U.S. EIA revise data continually.) So, Ember’s estimate of total demand will likely be revised. But, by how much is uncertain. Finally, there is the forward march of energy efficiency, but that is a small and steady factor and certainly could not account for the huge difference between 2.7% and 4.0% growth of global power.

Progress in AI is pressing onward as a new round of models are released. Google’s Gemini 3 was let loose about three weeks ago and has wowed the tech community with its stellar capabilities. Claude Opus 4.5, from Anthropic, emerged a few days later. And rumor has it that OpenAI—which reportedly sounded the alarm over this mounting competition with a company-wide memo, calling a code red from Sam Altman—has decided to hurry up and release its latest version of ChatGPT this coming week.

Your faithful correspondent thought it might be useful, therefore, to report how these models actually perform on a real-world task. The usual province of Cold Eye Earth is to report, of course, on all the energy demands that might emerge from AI. But there has been so much public focus on that theme that it’s left a deficit of reporting on how AI might work for the average person. In this case, we’ll take a look at how these models handle taxes and financial planning.

Read more

In its latest World Energy Outlook the IEA reopened the door to continued growth of global oil demand. This is a change from their outlook of the past few years, to be sure, where they, like others, forecast little to no demand growth after 2025. In the opinion of Cold Eye Earth, however, we shouldn’t be too alarmed by the IEA’s shift in posture. After all, it’s just one of their scenarios (current policy scenario, or CPS), and in this latest CPS, oil demand continues rising—by an aggregate 13% in the 26 years from 2024 to 2050. Looked at more closely, that’s a scant 0.5% of growth per year until midcentury. And it’s probably not a coincidence that this tracks with the sub-1% growth that oil is experiencing lately.

Readers will recall it was British Petroleum that first made the big call on “scant to nil” post-2025 demand growth, way back in 2019. And since that time, a number of analysts have gathered around this year as a pivot point. Why is the IEA suddenly so alarmed? It’s not clear. But here is one possibility: The effort to stop oil demand growth requires intense effort, and in recent years China has led that effort valiantly, followed by a solid and ongoing effort in Europe. But North American EV adoption just isn’t that great, and the current administration is of course doing everything possible to return oil to a stronger position not just here in the U.S. but in this entire hemisphere . If we examine a related IEA chart, "Global new car sales by drivetrain,” one can see how although ICE vehicles globally peaked years ago, around 2017, the rate at which we stop buying ICE altogether and increase purchases of EV still matters.

Here, meanwhile, is the fossil fuel chart from the IEA, “Oil and gas demand do not peak,”revealing their shift in the CPS.

You will also note that the IEA sees no peak for natural gas, either. That particular aspect of their forecast looks more solid. Gas has two things going for it. (1) As a partner to variable renewable sources, gas greatly helps the balancing-needs of global power grids—and that will be true even as battery energy storage systems (BESS) continue to grow. (2) In its competitor role, gas has sustained a strong, ongoing capability against coal, and much of the global natural gas fleet is young.

Indeed, the favorable growth prospects for natural gas offer additional help in understanding why growth prospects for oil are so poor: In global transportation, there remains oil dependency but not oil growth. And outside of transportation, whether it be chemicals or an array of industrial applications, there’s simply not enough organic growth to offset oil’s poor prospects.

While we want to be cautious about using the signal from oil prices to strengthen the argument against (much, if any) oil growth in the future, it has become difficult to ignore that the global oil complex has been building inventories, growing spare capacity, and suffering the low prices that inevitably follow those emerging conditions. For at least a year or two now, it’s also been possible to declare that oil prices, on an inflation-adjusted, basis are dirt cheap. Oil was at one time considered an inflation hedge, and for short periods oil may still retain some dwindling qualities under those circumstances. But it’s pretty shocking to see oil at $60 a barrel in the year 2025. That’s after 20% aggregate inflation since 2019-2020 or so, and doesn’t even include the inflation from the previous 20 years. Oil prices first reached $60 a barrel in 2005!—which shocked people and rightly so. But $60 oil in 2025 is little more than a pale, thin shadow of those go-go years.

To be blunt: Today’s oil prices do in fact indicate that demand absolutely sucks, and the futures market (which is not infallible) doesn’t see that changing. It’s also fair to say that the IEA often makes new shifts and declarations right around the time the trends they are seeing reach their apex. To be sure, the Crazy Ivan move in the U.S. toward fossil fuels has been jarring, and the importance of the U.S. in these equations no doubt adds to the overall dark vibes about energy transition in general.

Presently, according to the IEA, global oil demand is on course to advance 0.7% in 2025 and by a similar percentage next year. But overall, oil demand has grown only 3.2% in the aggregate in the five-year period from 2019 through 2024. From a climate perspective, the central problem that oil presents, therefore, is not that it’s going to keep advancing, but rather that it’s just not on course to decline.

The IEA has of course updated their other main scenario, the Stated Policies Scenario, or STEPS, and that has led them to muse and speculate over various peaks. Cold Eye Earth likes this scenario much better, and overall it seems more in tune with current trends. (Indeed, the CPS increasingly looks like a rearguard move by the IEA that gives them credibility in case “all this energy transition stuff” doesn’t work out very well.) For example, in the STEPS, oil demand stops growing around 2030; natural gas reaches its maximum level ten years from now, around 2035; nuclear generation finally grows again on a sustainable basis; and coal keeps going for a while but really starts to fall off hard by 2030. You can see all those projections in the chart below, also from the IEA’s 2025 Outlook.

It’s no surprise that nuclear fares so well in the STEPS. Nuclear is the perfect example of a technology that truly lives and dies on the back of policy changes. And yes, that remains true even if you posit that the new wave of SMRs comes to fruition. Everyone is aware that many countries around the world are coalescing to promote a nuclear revival, but to achieve the IEA outcome shown here will require countries to actually follow through on their plans.

Coal, meanwhile, and the decline the IEA forecasts, is therefore the shadow of these nuclear plans. The titanic ascent of wind, solar, and storage—along with natural gas—has certainly helped to blunt coal growth. But to trigger actual declines in coal will require all the current effort plus something extra—like nuclear—to force coal consumption to a final tipping point.

A final thought: Cold Eye Earth remains allergic to the common assumption that peaks convert quickly to declines. They don’t. However, we should keep an open mind for the possibility that some fossil fuels, like coal, could actually not just decline but fall off a cliff as the encirclement of gas, renewables, and nuclear reaches critical mass.

Wealth and income inequality are back on the front page as public figures race to converge on the issue of affordability. The tip of the spear in current discourse appears to be centering around the election of Zohran Mamdani for New York City mayor after he ran a campaign absolutely laser-focused on affordability, while at the same time President Trump has run into deep trouble in voter popularity as the public has decided his administration not only messed up but is now gaslighting everyone about its record on inflation. A fresh CBS poll released on November 23 showed that the public has now essentially transferred its ire—once trained on Biden and the last administration—to Trump. And so Trump is now the punching bag for the fact that prices are either still going up or are already unaffordable.

Cold Eye Earth, however, likes to check in with the top-down view, and that means taking a look at the latest Gini coefficient reading for the U.S. Is the U.S. more unequal than most of its OECD counterparts? Indeed it is. But this comes as no surprise. The U.S. has only partly been running a political economy that adheres to the “free-market welfare state” that’s more common in Europe. Yes, the U.S. has had a safety net since FDR established Social Security. But the U.S. diverges in two important ways from the OECD: Income tax burdens on higher-income earners are much lower in the U.S., and even now in the 21st century the U.S. still doesn’t offer universal healthcare. Those two factors alone—if you run them long enough—could deepen wealth and income inequality. Whereas the U.S. has a Gini coefficient of 59 (the higher the number, the worse inequality), the E.U. comes in at 48. The full data page, with the interactive version of the chart below, can be found at Our World in Data.

The outlook for the U.S. is not particularly bright, however. While the American public doesn’t like inequality much and is increasingly bitter about affordability, when given the opportunity to gravitate toward the EU model, most U.S. voters decline to vote for such changes. Meanwhile, in the background of such ongoing policy preferences, the U.S. and the rest of the OECD continues to roll through a series of technological changes that for decades have increasingly replaced workers with automation. If you believe that AI poses the risk that this automation goes into hyperdrive, then the outlook for inequality is due to worsen rapidly.

Using AI has likely become routine for most people, and this fact seems underappreciated. This “light AI” which comes in the form of advanced search, queries about daily life from finances to taxes to home repair (no doubt already helping personal productivity), is surely playing a role in the quickly rising demand that makes purveyors of AI services so excited. Cold Eye Earth uses AI semi-regularly to analyze datasets, for example. Each model has its own strengths.

Here’s a fun one: my recent travels I was gifted this nice chunk of rock with a couple of fossils, and so I took the photo above, and asked Google’s Gemini to make its estimates. Here is what Gemini returned:

That is a beautiful piece! Based on the appearance, preservation, and the rock matrix, these fossils are almost certainly fish from the Green River Formation in Wyoming, USA.

This geologic formation is famous worldwide for producing incredibly detailed, Eocene-age (about 50 million years old) fish fossils like the ones you have.

🐟 Likely Identification

The two most common genera of fish found in this formation, and the ones that match the general body shapes in your image, are:

1. Lower Fish: This appears to be a good example of Knightia eocaena.

   • Features: It has a smaller, more streamlined, herring-like body, which are the most abundant fossils found in the formation. They rarely grow over 10 inches, and this one looks to be in that typical size range.

2. Upper Fish: This one might be another Knightia, or possibly a juvenile Diplomystus dentatus.

   • Features of Diplomystus: Diplomystus is the second most common fish and is known for having a deeper, “hatchet-shaped” body and an upturned snout (though the snout isn’t perfectly clear in the photo). They were predators that often fed on the smaller Knightia.

• News briefs • Concentration risk is growing elsewhere too, and not just in measures of inequality. Investors are quite aware that nearly all the performance in the U.S. stock market increasingly comes from a handful of mega-cap corporations, leaving small companies to tread water. • Mike Green of Simplify Asset Management thinks that the way the U.S. measures poverty has a deep flaw, and as a result we are likely undercounting poverty and underestimating the actual household income needed to support a family, in the year 2025. • New England, which has been reluctant to build gas pipelines, transmission pipelines, or enough renewables, has increasingly found itself struggling with very high winter energy prices. Now comes a plan that takes a page out of the EU’s response to the Russian gas crunch: build heat pumps, and lots of them. • Amazon will work with Energy Northwest and X-energy to build an SMR in eastern Washington, on the old Hanford site, home of the existing Columbia Generating Station. • Synchronous condensors, a technology originally developed nearly a century ago, are expanding quickly again as they solve stability challenges on grids that are increasingly composed of variable renewable energy (VRE). •

—Gregor Macdonald

The tariff case currently before the Supreme Court of the United States is quite significant, as its resolution will go a long way in determining the extent of presidential power. The conservative movement in the U.S. has largely tended toward executive power expansion in recent decades, and were the case decided in favor of the president, it would inarguably mean a true step change had occurred not just in the growth of executive branch power, but in the separation and balance of powers that defines the relationships between the legislative, executive, and judicial branches.

When initial oral arguments were made this week in Learning Resources v. Trump, we learned fairly quickly that the current justices of the Supreme Court—and especially the conservative judges—were simply not willing to go that far. Chief Justice Roberts and associate justices Barrett and Gorsuch were notably skeptical if not slightly alarmed by the arguments being made by the government’s lawyer, John Sauer, the current solicitor general. The core issue at hand: If, in a 1977 piece of legislation called the International Emergency Economic Powers Act, Congress gave the president the right to erect an across-the-board tariff scheme with the rest of the world, then why doesn’t that legislation refer anywhere to the right to establish tariffs specifically? This matters quite a lot, because tariffs actually raise revenue, and that is always and everywhere the purview of the legislative branch. And perhaps just as important: If Congress did grant such broad rights, would that not awaken the major questions doctrine? This legal principle holds that Congress cannot transfer policy-making to the executive branch in matters that greatly affect the political and economic realm.

Subscribe now

When President Trump imposed across-the-board tariffs on the entire world this past April, he arrogated powers to himself and the executive branch that no president before him has attempted to claim. Justice Barrett pressed the solicitor general fairly hard on the fact that the powers enumerated in the IEEPA legislation not only do not include the word tariff, but “the actual verbs” cited in IEEPA—investigate, block, nullify, void, prevent, prohibit, regulate, direct, and compel—have not been used elsewhere by Congress as stand-ins or substitute concepts for tariffs. Chief Justice Roberts appeared quite resolute in his questioning, saying several times that tariffs are indeed taxes—a theme also sounded out by Justice Sotomayor. Gorsuch, meanwhile, appeared to be rather agitated by the top-down implications of the case, as he repeatedly laid out a scenario whereby either Congress and/or the Supreme Court hands too much power to the president. The country would discover over time, in his view, that such power, once granted can never be clawed back. By the time the plaintiff’s lawyer, Neal Katyal, rose to make their case, it was already clear the government was facing a steep climb: IEEPA does not grant tariff powers in the text, and even if it did, granting revenue-raising powers to the president is something Congress simply can’t be allowed to do. Indeed, it was Justice Thomas who asked the first question of the day to the U.S. solicitor general: “Could you spend a few minutes explaining why the major questions doctrine is not applicable here?”

Prediction markets also lurched hard on the outcome. Kalshi published a dedicated story on the days proceedings: Trump tariff odds collapse during Supreme Court showdown. Many, of course, want to know when the case will be decided, and also whether Trump can rebuild his tariff scheme should the court strike it down. Well, the court has until June of 2026 to decide, but experts note that they took this case on an expedited basis, and justices actually acknowledged this fact during oral arguments, indicating that they understand both the scope and the urgency to make a decision. A decision could come sooner. As for Trump’s recourse, there are reasons the administration didn’t go with plan B in the first place: because trying to rebuild the current scheme will be much harder if they have to go back and rely on other tariff provisions—which are narrower in scope, and some of which are already in place, on countries like China.

Further reading:

Ricardo in Reverse, April 14, 2025 from Cold Eye Earth.

In tariff cases, verbs rather than major pronouncements about presidential power give the court the off-ramp it’s looking for, November 7, from Scotus Blog.

While hard to quantify, a reversal of the current tariff scheme would be enormously beneficial to myriad small businesses that rely on imports, and more broadly to the manufacturing and housing sectors. The main plaintiff in the tariff case is a classic example: a children’s educational toy company that pairs instructional approaches with simple items imported from abroad. Not only would U.S. businesses receive refunds, but the air would finally clear on the trade outlook. Of particular concern to readers of Cold Eye Earth, of course, is the entire power sector—a capital-intensive industry that produces cutting-edge energy technology, and which relies on raw material imports. As most current reporting shows, it’s not the cost of power but rather all the associated infrastructure that’s driving inflation in electricity prices. A graph from the linked New York Times article:

Cold Eye Earth remains quite resolute in the top-down, macro view that if you want to tackle climate change, then it is axiomatic that you must be supportive of free trade. Tariffs are bad; they raise the cost of mitigation unnecessarily, and they slow the speed of transition. If climate change is an existential threat, with the potential to radically shift societal cost levels higher and higher (uninsurable homes are merely one example), then how can one possibly care if China is making all the heat pumps, solar panels, and transmission wires?

Share

The Economist is reporting that China now makes more money selling energy technology to the rest of the world than the U.S. makes selling oil, petroleum products and LNG through its energy exports channel. This claim is a bit sloppy, because there’s a big difference between gross revenues and profits, and here one has to conclude The Economist is talking about revenues when it writes:

China is now making more money from exporting green technology than America makes from exporting fossil fuels. This trend will continue simply because renewables are cheap; if you doubt the appeal, count the solar panels on Pakistani roofs. The work China does on cutting emissions at home—ever cheaper renewables, more abundant storage which makes those renewables more useful, better electricity markets, long transmission lines and all sorts of associated expertise—will thus be increasingly relevant, and sellable, beyond its borders.

While we don’t possess the tools to gauge profit, we can at least take a peek at the U.S. data. Just to say, the U.S. actively exports energy-related products like wind and gas turbines, power equipment, and other electrical equipment and components—but of course its sales of oil, coal, nat gas in LNG form, and petroleum products lead the category. According to the U.S. International Trade Commission, energy and energy-related product exports totaled $331.8 billion in 2024, and that gross figure is probably the best “comp” to the export category The Economist invokes for China. Here is the table from the ITC, and note the spike that occurred in 2022, which is not hard to understand: That was the year of the Russian invasion of Ukraine, which lifted the prices of all energy from coal to LNG to petroleum products.

Midyear reporting indicates that the global power sector is doing a good job covering marginal growth with wind and solar. That is excellent news, though it’s also the expectation. The mantra here at Cold Eye Earth remains that wind and solar will, bit by bit, domain by domain, cover marginal growth of power and then eventually will cover—consistently, and not occasionally—marginal growth in power at the global level. According to Ember, that’s exactly how the first half of 2025 unfolded.

The important detail, however, can be found in the figure that matters most: total global power demand growth, which according to Ember grew only 2.6%. Readers will recall that we are supposedly in the middle of a three-year run of above-trend power demand growth, which the IEA sees running hot at around 4.0% per year through next year and into 2027. If the data estimates are correct, 2.6% as applied to the global level of power demand is quite meaningfully below that forecast, and thus makes the wind and solar capability achievable. At 4.0% growth, well, not so much. What’s really helpful here is that it drives home the fact that renewables growth is subordinate in importance to total power system growth. You have to care about both figures, you have to track both, and always remember to highlight them both, as a pair.

Here is Ember’s graph, showing that total power demand grew by 369 TWh, and how that demand growth was nicely covered by the growth of wind (97 TWh) and solar (306 TWh), which totaled 403 TWh.

How does the first-half (1H) performance of wind and solar generation growth compare with the forecasts? Readers will recall that Cold Eye Earth uses a very simple trailing five-year growth average rate to make single-year outlooks. No complex modeling, no tweaks or adjustments, no inputs from news or experts. The method is indeed almost moronically simple, and yet it has been working extremely well!

The most recent update to this forecasting method occurred earlier this summer when the full-year 2024 data was released in the EI Statistical Review. The Cold Eye Earth projection indicated that combined generation from wind and solar would advance by 775 TWh in 2025, moving from 4,623 total TWh in 2024 to 5,398 TWh.

Now let’s return to the Ember estimate of wind and solar generation growth for just the first half of 2025: 403 TWh. What is half the Cold Eye Earth projection? That would be 387.5 TWh. That’s within 4% of the current estimate. Magic!

To take some credit, the choice of the five-year trailing rate has some thought behind it. The five-year period appears to strike the right balance between a ten-year rate, which is probably stale, and a shorter one- to three year rate, which might be unduly influenced by an outlier year. For those who want to do this at home, the DIY method is simple.

1. Determine the trailing five-year compound annual growth rate of combined wind and solar generation, using the EI Statistical Review data-set.

2. Apply that rate to the following year, and no further, for a one-year forecast.

•  •  •

Speaking of DIY, your faithful correspondent has, over the years, custom fit winter fenders to a number of bikes. Bike riders will appreciate the tangled web of frustration involved, which eventually resolves into a pair of fenders that look good, and don’t rub. Years later, having proven these capabilities, it was a pleasure this year to not just buy some new fenders, but to let the bike boys at the local shop undertake the task. :-)

The newsletter has a number of cyclists among the readership, and while you may have seen the Breadwinner B-Road before, there are new components to mention. Mainly, it’s an all new 2025 Shimano 105 mechanical groupset which works beautifully, and has better gearing for hill climbing. Not that it’s a goal, but a good portion of the bike is made in the U.S. The frame (Breadwinner) and fenders (Portland Design Works) are made right here in Portland, and the hubs are White Industries, from California. A note on the Shimano 105 groupset: it’s now the only mechanical set they make, as all the others have gone fully electronic (and there’s a 105 electronic too). Finally, look at the coverage offered by those low hanging flaps on the fenders! Let the winter cycling season begin.

• • •

• News briefs • Abigail Spanberger won the Virginia governor’s race in a landslide, bringing sweeping change also to the state’s House of Delegates. That portends good things for the state’s clean energy efforts. • EV sales reached 22% of passenger car sales globally last year, which is spurring the growth of charging stations worldwide. • The redistricting wars could net an extra 7 GOP seats in the House of Representatives, which is why the success of Gavin Newsom’s counter-effort this past week is a big deal. • Copper demand is expected to rise nearly 25% by the year 2035, according to Wood Mackenzie. • Simon Moores of Benchmark Mineral Intelligence says that battery energy storage systems (BESS) are increasing market share and have been growing so strongly that they now compose 20% of the global market. • An event in China which showcased a new humanoid robot whose walking motion was so smooth, the presenters had to cut it open to prove to the audience a real person was not hiding inside. •

—Gregor Macdonald

Cold Eye Earth is currently on the road, visiting Ann Arbor, Michigan; Troy, New York; Brooklyn, NY; and Washington, D.C. Accordingly, there will be no regular issue this week, and we will return on 10 November, 2025. If you’re interested, here is a sample of what we’re reading during this holiday:

1. Artificial Intelligence and Economic Growth, Aghion, Jones, and Jones, 2017.

2. Geothermal Energy is a Climate Moonshot Beneath Our Feet, New Yorker, 2025.

3. How Long Will it Take to Build a Nuclear Power ‘Renaissance’ in the U.S.?, New York Times, 2025.

—Gregor Macdonald

The Trump administration continues to find clever ways to cancel wind and solar projects. Their most recent success is exceptionally destructive, as they’ve found a way to scuttle the gargantuan Nevada-based solar project Esmeralda 7, which was slated to top out at a head-spinning 6.2GW of capacity, spread across nearly 200 square miles of land. A quick review of the global solar table shows that Esmeralda would not just have been the largest solar array in the United States, but would have landed immediately in the top ten solar plants in the world. There is only one word to describe this administration’s efforts: madness.

The most recent cancellation comes at a time when everyone from utility and power professionals to energy sector generalists agree that growing imbalances between U.S. electricity supply and demand are on a collision course. Actually, it’s worse than that. Supply and demand imbalances were already in the queue prior to 2025, when U.S. power demand finally jumped out of its long-stagnant range as electrification itself started to take hold, and the construction boom of AI data centers began in earnest. John Arnold, former natural gas trader and now philanthropist and policy advocate, had this to say upon learning of the Esmeralda cancellation:

While it goes without saying, the Trump administration is so broadly incompetent that it appears not to have occurred to them that “the electric bill” is a reality that permeates American society, not unlike the grocery bill and prices at the pump. Indeed, it is almost surely the case that the administration believes it can marshal all the power the U.S. grid needs from coal and natural gas new build—entirely forgetting that those construction projects take time, often much time, to complete. Now add to this heap of trouble the fact that cooling days are on the rise in much of the U.S., placing further upward pressure on the grid to serve demand. It’s a very ugly picture.

At what point do Republicans in a state like Nevada (and others) realize that “the electric bill” is likely to be a major talking point in next year’s midterm elections? Perhaps more quickly than you expect: the Republican governor of Nevada is not happy about the cancellation.

Wind and solar have made a critically important contribution to the U.S. power grid by being the go-to, quickly deployable solution to U.S. electricity demand growth. For the past five years—and so far in 2025 as well—combined wind and solar have pretty much covered all the growth in U.S. electricity. That’s a big deal, especially given that U.S. power demand is on course this year to be up a cumulative 9.0% since 2021. Cold Eye Earth takes the view that if the Trump administration doesn’t reverse course on its attempt to suppress wind and solar growth, the portion of marginal growth that would have otherwise come from wind and solar will not be adequately covered by coal and/or natural gas. Demand is moving too swiftly to the upside. Only wind and solar can move that fast. (Note on active charts: the chart below is active and can be toggled to show totals for each category: ex-wind+solar; and wind+solar. But the active chart is only responsive only at the Cold Eye Earth website, not in this email.)

The IEA has slightly downgraded its renewables growth forecast for the U.S. this year. No surprise. But the agency maintains that solar is storming the planet and is on course to provide 80% of total global renewables growth from now to the end of the decade. Particularly encouraging is the IEA’s assessment that India is now ready to take its place behind China as the world’s second-largest market for renewables. Well, let’s hope that’s the case, because India, on a population-adjusted basis, is far, far behind other large regions when we use the solar-per-capita measure.

Worse, India’s solar growth rates continue to be weak. Last year, total solar generation grew just 17% there, while U.S. solar generation grew 26% and China’s grew 43%. This gap is even more stark when you consider that it’s far harder for China to grow solar 43% in a year because it has been manically growing solar for years. India’s solar, coming up from a low base, shouldn’t be growing 17% per annum but more like 50%.

Cold Eye Earth also finds itself looking askance at the IEA’s practice of loading up the renewables category with every imaginable energy source that’s not fossil fuels. This practice is also happening elsewhere in the energy think-tank world, in what appears to be a transparently comical effort to achieve “number go up!” While it’s true that our categories need some revision, we really need to stop including biofuels in the category—nuclear too. One of the deeper ironies here is that most renewables advocates agree that biofuels are ridiculous—a thin, low-energy content solution that barely offers a net energy gain (if at all) after you expend the energy required to process them. Worse, most biofuels are combusted! Perhaps we should have combustibles and non-combustibles as categories.

One emerging source of renewable energy that’s truly exciting is geothermal. Indeed, like solar and wind, geothermal is an energy-collection technology. We could say that energy-collection technologies have an intrinsic elegance, a basic simplicity, that’s dependable and sustainable. Yes, geothermal requires some excavation and no doubt some ongoing energy inputs. But tapping into existing earthly heat sources and channeling them to produce power is rich with possibility.

Bloomberg reports that markets are indicating their enthusiasm for geothermal as lease prices soar for prospective geothermal areas of land. From the article Companies Are Paying Record Sums to Develop Geothermal Energy:

Average prices for public land leases for geothermal energy development soared by 282% this year to $127 per acre, driven by growing energy demand from data centers and President Donald Trump’s administration embracing the energy source. The record prices are a major step up from $33 per-acre average last year, according to data from the US Bureau of Land Management, the agency that conducts the auctions.

Further reading:

Newsom signs 1 bill to speed geothermal approvals, vetoes another.

One of the World’s Largest Geothermal Networks Is Buried Beneath a Corporate Campus in Rural Wisconsin.

The Future of Geothermal Energy.

Oil prices fell back below $60 a barrel last week, as an already weak futures market succumbed to yet another emotional eruption from the U.S. president. Friday’s punishing liquidation, which hit crypto markets the hardest, and technology equities quite badly, and left broad indexes like the S&P 500 down 2.7%, also pulled down oil—enough so to trade with “a five handle” on crude. (That’s trader talk for: NYMEX crude fell into the 50s.).

But of course, oil has been sustainably weak for some time now. Worldwide electrification is pressing onward. China has literally transformed its vehicle fleet in just one decade. And it’s no longer clear that oil has any notable demand driver that could firm up the market. It’s less the case that oil is in trouble, and really more the case that nothing is coming to rescue oil from its fate: a long, stagnant period of no growth.

You know what? We should all congratulate the research team at British Petroleum, which in 2019 forecast that by the year 2025 oil demand growth would be scant to non-existent. Well done, BP!

We must always remind ourselves that energy transition discourse invariably winds up concentrating on electricity. And electricity accounts for only 20% of total global energy consumption. Global transportation, meanwhile, accounts for about 30% of total global energy consumption. Accordingly, we can say with some justification that the world is currently making moderate progress in decarbonizing the two sectors most easily suited to the process: power, through renewables, and transportation, through the electric drivetrain. So at least we are making progress on half of the problem. But it’s still too early to conclude that this has sustainably slowed down the growth rate of total fossil fuel consumption. Indeed, after the disruption of the global pandemic in 2020-2021, the world got right back on track in 2022-2024 by growing fossil fuel demand by the usual 1.2% - 1.5% rate. In 2024, growth was at the top of that range, in fact. Finally, not to name names, but it’s frustrating and rather sad to think of all the energy analysts who declared that fossil fuel consumption peaked with the pandemic.

—Gregor Macdonald

Nuclear power equities have been on a strong market run recently as they anticipate future growth, but does this mean the typically long nuclear development timelines have been shortened? One of the easier calls to make, coming into the new administration, was that the nuclear industry would enjoy a lot of policy support. Support alone can be life-changing for companies in this industry, as they are capital-intensive (to say the least), and they must survive long enough to achieve distant outcomes that sometimes turn out well, but mostly do not. You can think of nuclear startups as very costly, long-running science experiments as they pursue “advanced” solutions. (Entities building older designs can also face myriad, seemingly endless challenges.) Overall, the industry has been known for its failures, dependency on state support, and cost overruns that go exponential, often leading to bankruptcy—or (you guessed it) to more state support. And so it goes.

Part of what’s going on here is that markets have been pivoting all year to chase any company that might become a beneficiary of state largesse, so a number of utility names that already have working nuclear in their portfolios—Vistra Corp. and Centrus Energy, for example—have soared, along with a number of hot startups like Oklo and NuScale Power. More broadly, traditional nuclear designs are being deployed globally, in China especially, but advanced designs, or SMRs (small modular reactors), are also catching on across Asia. And now, in North America, we see early signs of progress in SMR deployment too. Ontario Power Generation (OPG) is constructing a new SMR in Darlington, outside Toronto—the first of its kind in North America. Oklo is also building an SMR, its first, on the site of the Idaho National Laboratory near Idaho Falls. In both cases, you can pretty much guess what the general plan is: build one, see if it works well, then make plans to build more.

Now, whether the share prices in the nuclear sector have gone too far, or not far enough, is not within the purview of Cold Eye Earth. But it does seem that a great deal of the future has been brought into the present through rapid share price gains. And the rate of these gains does seem to be ignoring the usual execution risk, as well as construction timelines that have long held the sector back from enjoying any growth.

Overall, everyone who roots for the continued deployment of wind, solar, and batteries should also be rooting for nuclear. As Cold Eye Earth has often explained, wind and solar and batteries have won the cost and speed race against nuclear, and that case is closed. They are cheap, effective, and reliable at generating a return on investment—qualities which have long since eluded the nuclear sector. And yet, with state support, grids that add nuclear at the margin find that emissions reductions are easier to achieve when nuclear, with its ultra-high capacity factor, comes online.

Wind and solar have trounced nuclear in the market for new generation—and again, this is final, this will never change; the race was over long ago.

The good news here is that we no longer have to waste time with a useless either/or argument over WSS (wind, solar, storage) vs. nuclear. Rather, we can proceed directly to a far more productive framing: given that WSS will forever lead the market for new generation from clean sources, what role can nuclear play in this equation? Answer: when we add nuclear capacity to an overall clean generation portfolio, it further suppresses either the growth of natural gas generation or our lingering dependency on coal-fired generation. It’s just that simple. Let’s stop making this issue so complicated.

Subscribe now

As a reminder that the coal factor is still very real, and will not be dislodged by WSS alone, the chart below is a companion to the measure of wind and solar vs. nuclear and demonstrates that both nuclear and coal generation are heading in the wrong direction. In the fight against coal, why would you not call upon nuclear to pull up the rear, even as WSS governs and dominates at the tip of the spear?

A strongly held thesis here at Cold Eye Earth is that wind, solar, and storage will eventually come to dominate 100% (or nearly 100%) of all marginal growth in global power. Over the past five years, this domination has landed in the U.S. power system, and it’s also been the case for a longer period of time in the E.U. This inevitably leads to the question: what about in China? And here we have good news directionally, but we still have some ways to go. This chart, from the good folks at Canary Media, is a really nice depiction of the progress being made.

A couple of observations: the 2011 - 2020 period can be regarded as the breakthrough decade in which 39% of marginal growth was covered by renewables—an enormous leap forward from the previous decade. The single 2024 performance is revealing in its own right, in two ways: on one hand, reaching 83% coverage of marginal growth is spectacular. On the other hand, it’s just one year, and the remaining tail of growth not covered by renewables is your hint to how difficult transition can be, and we know why: overall economic growth governs total system outcomes more than the growth of renewables.

According to Goldman Sachs research, global solar generation has grown faster than any technology in the history of electricity, easily beating the adoption of gas and coal, and even nuclear and wind power. Makes sense, does it not? Solar panels are manufactured and therefore enjoy the phenomenon whereby costs fall as output rises. Unlike mined, drilled, and excavated fossil fuels, solar has high capex and ultra-low opex. Once erected, a solar plant simply runs. That’s the difference between combustion, which never sleeps, and solar—which is an energy collection device. From the Goldman Sachs solar report:

When we witness the speed and now the breadth of solar’s global growth, we understandably are confronted with a now familiar paradox: how can solar be growing so fast, while energy transition itself appears to be going much more slowly? For the answer, look again to the two main culprits: path dependency of economically viable incumbent generation, and the relentless forward march of population and economic growth.

The current portrait of U.S. power generation is a tale of two cities. Unfortunately, the good news is merely good. And the bad news is actually pretty bad. Let’s start there. Coal in U.S. power generation is surging this year, up a hefty 15%. Readers do not need to be reminded that U.S. coal in power generation has been in a super-decline for 15 years but seems to have found a bottom in the past two years, and is now actually rising. Also not great: although the U.S. added to its nuclear capacity (Vogtle) we’re only seeing the faintest uptick in nuclear generation, which has remained stuck in the 775-to-790-TWh range for years.

Now to the moderately good news. For the first time in years, natural gas in U.S. power generation is dipping. This would be especially encouraging if coal was falling too, because then we could venture a thesis about the next chapter of transition in the American grid. Sigh. Despite the additional good news that wind and solar generation continues to grow, the soaring demand for coal-powered generation makes it a certainty that power sector emissions will rise this year. (confirmed: data shows power sector emissions are up +5.64% through the first half of 2025).

The sour turn of events in the U.S. powergrid this year (and likely in the years to come during the Trump administration) will have a negative effect on all forecasts for emissions trajectories in global power. Moreover, the AI data center buildout is so robust and so accelerated now, that it would not be surprising to see the IEA lift its growth forecasts for global power from already elevated levels.

In the department of good news, we’re getting a strong signal that a second-life battery market is developing as old electric vehicles finally retire. While the emergence of this market has been slow, it now seems to be taking off as the EV lifespan cycle starts to turn over, and everyone from consumers to businesses have new ways to utilize repurposed EV batteries. The Guardian covered the action just this weekend from the Australian vantage point, but it’s clear this is now unfolding everywhere:

Written-off vehicles typically earn little attention, with the main buyers usually being auto wreckers seeking parts or car enthusiasts hunting for restoration projects.

But at salvage auctions across Australia, a new type of buyer is emerging, and they are interested in one thing: the high-powered batteries inside electric vehicles.

The demand for secondhand EV batteries is surging, with buyers repurposing them for everything from solar storage units to off-grid energy systems that can replace diesel generators.

Brendon Green, the general manager of automotive solutions at Pickles, says the auction house is selling about 100 salvaged EVs every month, and interest is surging.

“It’s only very early days, but they are certainly in strong demand,” says Green.

“We’ve got this new element of second-life battery startups. That industry really didn’t exist 18 months ago.”

What’s particularly encouraging here is that it suggests energy transition will increasingly unlock symbiotic relationships, as the network effect kicks in from so many participants who own some piece, or have some stake, in clean energy. Fingers crossed.

—Gregor Macdonald

Adoption of natural gas as a way to lower carbon emissions is a far more problematic strategy than acknowledged, and is leading the world to a very suboptimal outcome. Over the past decade, global growth of natural gas demand has plowed along at an average rate of 2% per annum—more than enough to create a vast, new path dependency on this fossil fuel. Advocates are correct when they assert that much of this adoption is replacing coal. They are even more correct when they claim a portion of this new build actually serves to boost adoption of wind and solar, given that natural gas power generation nicely dovetails with variable renewables, allowing them to achieve higher levels of penetration. So what could possibly go wrong with the strong adoption of natural gas?

The problem is path dependency and how, as we’ve learned over time, the incumbent energy base has far more control over the pace of energy transition than the adoption of renewables. Every coal plant replaced by a new natural gas plant represents a terminal, one-time emissions gain that can’t be repeated. Afterwards, however, this new natural gas capacity then converts to the same long-term obstruction represented by the previous coal plant—suppressing the potential growth of wind, solar, and storage. Why? Because, as many still don’t fully understand, wind and solar and batteries compete strongly for new generation, but cannot overtake fossil fuel generation unless the capacity is old, and already near retirement. Finally, it needs to be highlighted that the world is not getting its coal problem under control at all. Total coal use originally peaked in 2014, flattened for six or seven years, and is now once again making new all-time highs.

Here is another chart that nicely shows the distribution of natural gas growth globally, demonstrating how very broad-based the adoption cycle has been over the past 10 to 20 years. (Clicking on the chart leads to a larger version). The only region not currently engaged in natural gas growth is the EU. But China, Asia, the “rest of the world,” and of course the U.S. are together driving the relentless growth.

Unsurprisingly, a number of observers have attempted for years to make “the big call” that natural gas growth would soon erode, but the exact opposite has happened. Even the IEA once saw a relaxation of demand on the horizon, but now they have this to say in their Natural Gas Report 2025:

Following the supply shock of 2022 and 2023, natural gas markets moved towards a gradual rebalancing and returned to structural growth in 2024. Global gas demand reached a new all-time high, with over three-quarters of growth coming from emerging market and developing economies.

Fertility rates continue to fall around the world, and that’s really not a bad thing. Just to be clear, Cold Eye Earth takes demographics seriously (as one should) but rejects all alarmist views about population bombs! and other such Malthusian thinking (as one should). Besides, we’ve been getting indications that net population growth would eventually start falling, and we have indeed been in that phase since roughly 2010, with population still growing, of course, but with each year’s addition generally smaller than the last. From 1980 through 2010, the world added between 80 and 90 million people (net) each year, but now we are tracking closer to 70 million annual net additions. Aging populations + falling fertility rates = a declining net addition each year. And according to a new UN report, The Real Fertility Crisis, fertility rates continue to fall.

Understanding the drivers of falling fertility rates can be tricky. For example, with the exception of the U.S., mostly what you see in the chart above are the effects of economic development. When high-fertility-rate countries begin to sustainably upgrade their infrastructure, health systems, and economies, fertility rates fall, because adults have the confidence they can carry children to adulthood—thus they start to have fewer children, into which they make a greater investment.

But there’s another kind of driver of falling fertility rates, and that occurs in already developed countries as the constraints of high-cost lifestyles begin to bear down on the decision-making around the prospects of parenthood. Indeed, financial limitations are an increasing cause of lower rates, from Europe to the U.S. to developed Asia, according to the UN report.

The bottom line is that fertility rates are on course to continue their decline. The chart here uses estimates for 2024 and 2025 from the UN Population Division Bureau, but the just-released report shows these rates ticking lower. India for example, moving from 2.05 to 1.90, and the U.S., going from 1.62 to 1.60. The U.S., by the way, demonstrates all the hurdles that make it increasingly hard to have children: it’s everything from an exceedingly expensive health care system to high housing costs. And the latter plagues OECD countries that, in contrast to the U.S., do enjoy public health systems. So, in the UK, in Europe, and in Australasia, the health care costs of having a child are much lower, but the cost of housing is just as if not even more prohibitive.

Forecasts for a peak in China’s emissions need to contend with a number of trends, not least of which is the continuing advance of its per capita energy consumption. There’s an understandable hope that China is building so much clean energy capacity that both industrial emissions and consumer-driven emissions will peak soon, and then fall. The missing link in this model is the prospect that China’s population—historically tied to productive output—will see domestic consumption grow steadily as is typical of economies after they build up wealth and mature.

In the chart below, we take a look at per capita energy consumption using a new metric offered by the EI Statistical Review: TES, or Total Energy Supply. This metric attempts to count not the raw energy inputs to consumption, but rather the output of energy that’s actually used. The metric supposedly puts renewables and fossil fuels on a more equal footing, reflecting better the contribution of the former.

After WWII, the US began its own journey from manufacturer to consumer society. It seems unlikely that China will shed its industrial base, even slowly, over the next few decades but more important is that its domestic energy consumption per capita carries the risk—not the certainty, albeit—that it will simply keep pressing higher.

China’s EV sales are on pace to reach a full 50% of market share in 2025. We’ve known for some time that ICE sales peaked in 2017, so the future of ICE in China was set in stone some time ago. At current levels of penetration you may now assign the weak growth in China’s road fuel consumption to the EV explosion and congratulations are warranted. As a major importer of crude oil, China has significantly de-risked its oil exposure. Big picture: the lack of support for further oil demand growth in China is the key factor in oil’s dim outlook globally. In the chart below, data through July of 2025 has been annualized.

U.S. emissions remain on pace to rise this year, the first rise in two years, possibly by as much as 3.0% to 4.0%. Through the first five months of the year, emissions are up 3.6% compared to the same period last year. For the U.S., the emissions picture almost certainly worsens from here until a recession or a new administration with new policies.

Growth of battery energy storage systems (BESS) is exploding higher. Estimates indicate the sector is up at least 50% through the first half of 2025, and that follows a nearly 100% advance last year of grid-scale BESS capacity. The most promising feature of BESS is that it adds value to every grid and every power source—with the exception, perhaps, of nuclear power which typically runs continuously about 95% of all the hours in a year.

Sometime this year or next, U.S. consumption of natural gas will overtake oil in energy terms. That will mark an historical pivot, as it was probably as far back as the late 19th century when American gas use eclipsed oil (we don’t have the data on that question, unfortunately). This harkens back to the “electrostate” discussion in the previous issue, and whether China is a true electrostate, or could the U.S. itself hope to fulfill that moniker. A likely outcome: China lapses into a similar long-term plateau of oil consumption that’s been witnessed in the U.S. the past twenty years, with occasional declines and recoveries as time goes by.

In the chart, U.S. natural gas use is now converging with oil at the 35 quadrillion BTU level. This confirms that even in the U.S., historically known for its mighty oil dependency, growth of the powergrid is how we tend to grow the economy now.

—Gregor Macdonald

China’s industrial revolution has largely been defined by the relentless growth of its electricity generation over the past three decades, as the nation transformed itself into the world’s workshop. The recent tendency to declare that China is now becoming an electrostate is a bit odd in this context, because the term is either too slippery to have reliable meaning, or succumbs to newcomer bias: when was China ever not an electrostate? Unlike the U.S., China did not grow its economy on the back of oil. Indeed, it wasn’t until this century that Chinese incomes were large enough and growing sufficiently to start adding domestic consumer demand for petroleum. China had to go through a build up of its cities first, as poor workers poured in from the countryside to take part in the manufacturing boom (Lewis turning point). The U.S. by contrast entered the era of consumer consumption much earlier, immediately after WW II, kicking off the long ascent of its lifestyle and consumer driven demand for gasoline.

In my 2018 series Oil Fall, my chapter on China addressed the divergence between the two countries:

It’s also important to understand that China is a nation that runs primarily on electricity. China is not an oil nation. It’s a power nation, a testament to its strong manufacturing identity. In 2017, China consumed 3132 Mtoe of energy from all sources, but only 608 Mtoe of that total was provided by oil. Oil provides just under 20% of China’s total energy demand. Compare this to the United States, whose total consumption of energy from all sources in 2017 was 2235 Mtoe, of which oil provided 913 Mtoe. The United States, by contrast, is still very much an oil nation, where oil provides nearly 41% of its energy.

Indeed, one of the reasons China has had such an easy time integrating fast growing wind and solar power—without the bottlenecks that appear in other domains—is that unlike the U.S. it has been working on expansion of its powergrid for many decades, primarily led by coal. If we use the starting point of 1990, which most researchers identify as the start of its modern industrial revolution, the data shows that China’s growth of electricity generation grew an astounding 1500%, from 621 TWh in 1990 to 10087 TWh last year. For context, China started 1990 generating less power than Japan (882 TWh) and wound up over 30 years later generating 10X the power of Japan (1016 TWh). This is not the record of a nation just now emerging as an electrostate.

Here is a nice graphic through 2023, showing the composition of China’s total energy use. While there’s certainly alot of metallurgical coal used in China for steelmaking, you can pretty much read the coal category in the chart below from the IEA as a decent proxy for electricity.

Clearly one of the intents behind this new-ish jargon is to paint a contrast between China, which has developed on the back of coal, and the U.S., which not only remains far more car-dependent, but has become a giant of oil production and petroleum refining, or, as they say, a petrostate. As long as we avoid the error of thinking the divergence between the two countries is recent, that’s fair. But even here, there are recent trends that bear watching.

• What do we say about the fact that U.S. oil consumption peaked twenty years ago? And relatedly, that U.S. electricity generation has broken out of a two decade flatline around 4000 TWh and is heading towards 4500 TWh, rapidly. What bars the U.S. from becoming, eventually, an electrostate?

• Although China’s oil demand grew by far less over the past three decades, a 600% increase, its oil demand growth in the last decade has picked up the pace. To be sure, this growth is now running into a wall formed by the titanic adoption of EV cars, buses, and trucks in China: oil growth will eventually be halted. That said, China’s oil demand now sits barely 10% below U.S. levels. So, electrostate is a rather grandiose term for the second largest oil consumer in the world.

Cold Eye Earth has an allergy to geo-political concepts. Terms like petrostate inevitably function as a kind of Christmas tree that can be decorated with every unfalsifiable concept imaginable, and these themes inevitably spill into other suspicions around the dollar, the petrodollar, spheres of influence and so forth. To be honest, events and developments in recent world history seem more often to be breaking out of long-held patterns, than adhering to them. In such a world, the value of labels can crumble quickly.

Since 2005 when OECD demand peaked the oil industry has had to entirely rely on the Non-OECD for growth, which of course is mostly driven by China. So we’ve all been quite aware during this time that once China’s oil demand peaks, global oil demand will peak. Based on recent trends, and especially China’s historic growth of electrified transport, we are closer than ever before to a peak—but with a couple of cautionary notes.

First, we must remember that peak does not equal decline. That’s a common intuition, but it just isn’t true. U.S. oil consumption has been on a plateau for twenty years, for example. Second, we must remember there’s a bolus of hard-to-abate industrial processes, mostly having to do with creating heat, that the world has barely begun to decarbonize. In addition to China adopting electricity as its major growth platform, the country has also taken charge of alot of that exact industrial production that relies on oil, natural gas, and coal for which there’s still no clean energy remedy (certainly none that are ready scale, that’s for sure.) This lump of unabated fossil fuel demand is going to press onward, and if China doesn’t perform that work, some other country will.

All this said, China has decidedly avoided the most severe storyline that usually accompanies oil dependence, by veering away from a future dominated entirely by petrol-based transport. Instead, it will be the ongoing industrial demand for oil that is likely to make the country’s overall oil demand resistant to any outright decline, at least for a while. The EI Statistical Review shows that China’s oil demand actually fell last year by 1.7%. You would be wise to read that not as the start of decline, but perhaps a more extended period where China’s oil demand growth levels off, rising and falling by smaller amounts from year to year.

We shouldn’t be overly surprised that global oil demand growth may finally be ready to flatten out. British Petroleum first raised the year 2025 as a likely peak year back in 2019, saying in effect that only a trace amount of growth could be expected after this year. In my Oil Fall series, published serially between 2018 and 2020, I originally tipped the 2020-2022 period as the window in which electrified transport would finally start to bear down on oil demand growth, opening the path to a peak. As always, global oil demand declines are still off the table. Oil in particular is likely to adhere to the additive model of energy transition, in which demand is transformed into a long-standing contest of minor skirmishes with supply. And just to remind, energy transition itself is exceedingly reliant on all the hard-to-abate industrial sectors that produce the infrastructure needed to create and deploy renewable technology.

What is indeed surprising is that oil now has a better near term prospect for conversion to a demand plateau than coal. Because global electricity demand continues to grow far, far, faster than global oil demand, coal has increasingly become the back-up fuel that countries call upon during severe weather (heat and cold) and which serves also a back-up to growth. Here we must remember that China’s coal overcapacity works two ways: yes, it’s confirmation that coal growth in China is slowing, and that part of this slowing is caused by the rise of renewables. However, the surprising spikes we’ve seen in global coal usage the past few years flow directly from this vast inventory of spare capacity which can be cranked up easily, and at any time.

We’re not seeing this dynamic however in oil. While global demand is still growing, it’s been awfully slow in recent years and is expected to advance by only a half a percent this year, 2025. Another factor is that the call on oil is nothing like the call on coal. Whereas nations in a pinch dig into spare capacity in coal-fired power generation (not just China, it has happened here in the U.S. and Europe too) such a mechanism doesn’t really exist with oil. And of course outside of industrial applications, oil is mostly a consumer product in transportation and air travel humming to the beat of the global economy, and consumers now have a number of ways globally to reduce their oil footprint.

Two helpful reminders in the matter of oil and peak consumption.

1. We will never be sure of peak until well after the fact. Years will need to pass.

2. Entirely separate in your mind the phenomenon of declines, from peak. Treat peak as its own event, one that marks the end of growth only, and nothing more.

The additive model of energy transition suggests that a peak in global emissions remains far away. Here, it’s helpful to imagine the earth as a slowly expanding balloon that adds just a touch of new energy demand each year, even as fossil fuel demand growth flattens or declines, in some countries. The mixture of factors which keep this slow but steady expansion in play are economic growth, population growth, the bolus of hard-to-abate industrial demand, and the presence of energy sources that are so cheap they actually wind up fostering further economic growth. Right now, for example, natural gas remains dirt cheap and its never a mystery as to how civilization will exploit cheap energy. Indeed, natural gas consumption globally continues to rip higher, growing 2.5% last year, and a steady 2.0% per year for the past decade.

As usual, the climate community continues to overfocus on renewables, asking or depending on them to do it all: covering all marginal growth, disrupting legacy energy pathways, and forcing emissions into decline. Renewables can help with all those goals, but they cannot as yet bear the entirety of those burdens. Cold Eye Earth remains astonished that academics are willing to commit in print to the claim that we will largely be in an all renewable world by mid-century, as Eric Beinhocker and J. Doyne Farmer claimed in their March 2025 Wall Street Journal op-ed:

Still, based on historical growth and its likely S-curve pattern, we can predict that renewables, along with pre-existing hydropower and nuclear power, will largely displace fossil fuels by about 2050.

As anyone who recalls the past 25 years understands, the road from falling costs and tech breakthroughs to disruptive outcomes is a lengthy one in the physical world. This is not software. Cheap wind and solar and their transmission lines and their batteries cannot be distributed overnight to a billion users. While the prospect for getting global emissions into decline after year 2030 looks plausible in power generation, that leaves broad swaths of the global economy still reliant on fossil fuels—and that’s even if you imagine a largely electrified fleet of global vehicles.

In the children’s book Mike Mulligan and His Steam Shovel, a very tidy story of energy transition is told through the retirement of a beloved and personified steamshovel that runs on coal, as the oil-based construction machines arrive and replace all the coal-burning diggers. Mike’s coal based steam shovel winds up as the heating boiler in the basement of a new town hall, and voila—the oil age has begun!

The additive model of energy transition avoids the common zeal however for revolutionary transformation, and takes time to consider all that unfolds at a slower pace, along the way. We will have our renewables revolution in powergrids but the balloon of global energy use will continue to expand until we come up with new tactics.

—Gregor Macdonald

The forward progress of emissions reductions made by the US in recent years is coming to a close. Natural gas and especially coal consumption have surged higher this year and that’s well before new policies, hostile to renewables and friendly to fossil fuels, have come to full realization. Through the first four months of 2025, emissions from US coal have risen by 19%, and natural gas emissions have risen by 3.4%. Petroleum emissions are firm, up 1.65%. Total U.S. emissions are up 4.6% as a result. While there’s plenty of time left in the year to see these growth indicators retreat some, we must remember that the relaxation of emissions rules across the U.S. economy has not yet fully rolled out, and the major curbs on renewable deployment are still to come.

Because economic growth is more controlling of emissions trajectories than the deployment of renewables, the most effective challenge to the new array of fossil-fuel-friendly policies in the U.S. would be a recession. You only need glance at the previous chart to see these effects: most recently in 2020, but also in 2009. A recession in the U.S. this year would absolutely change the current path of emissions. A bad recession that pressed onward into next year would likely see 2026 emissions returning to last year’s levels, if not lower. Given the current set of economic and trade policies—upward pressure on prices of goods and services, and downward pressure on employment due to slower economic growth and trade—we may indeed get a recession before the current presidential term is over.

Recent economic data from the U.S. has been poor, reflecting renewed weakness in the labor market, and more recently, indications of rising inflation. The month of August began with a disruptive jobs report that showed fairly massive downward revisions to previous data, and thus raised the alarm bells about recession. Interestingly, the FOMC met only two days prior to the job news, and Fed Chair Powell in his press conference remarks remained focused on inflation.

But it wasn’t long before Wall Street learned that Powell’s focus was justified. The Producer Price Index (PPI) was pretty ugly, and converted quickly to a strong retort of the emerging view that the tariffs were not inflationary. Barron’s, the stalwart publication of the financial sector, did not mince words: Tariffs Are Starting to Cause Inflation. Just Look at This Week’s Data.

Unfortunately, there is no landscape the stock market hates more than the pairing of slow growth and rising prices. While modern economies are greatly insulated from stagflation due to technology, free trade, and demographics, if the U.S. lapses into such conditions for a while they must be regarded as entirely man-made—an own goal driven by a zany, economically illiterate White House. Worse, two-hundred years of progress in economic theory and practice already foretold such an outcome. From the April issue of Cold Eye Earth, Ricardo in Reverse:

The collective actions of the administration—from the Council of Economic Advisors to the President, from the Republican Congress to the comically inept figures of Lutnick, Navarro, and Greer—reveals they have no understanding of the well established dynamics of trade that were advanced by the British economist David Ricardo, over 200 years ago. The President’s obsession in particular not just with tariffs, but with eliminating trade deficits, poignantly also recalls the mercantilist era, dominant when Ricardo first launched his ideas. Thus, after having lived in Ricardo’s world for a couple of centuries, the crackpots and ideologues of Team Trump have attempted to put Ricardo in reverse. But it cannot work, will not work. Markets, historians, economists, trade experts, corporations, and other countries all have the same answer to this doomed attempt to flout the laws of trade: two thumbs down.

Now that the stagflationary data is starting to flow through, it’s possible the White House panics and reverses course. But they would have to act soon. While the U.S. midterm elections take place in November of next year, the campaigns for those elections will begin this Autumn. That timeframe is very tight to undo policy, and shift the narrative back in their favor. And just to say: that the administration is playing games with the inflation data, or the jobs data, is your confirmation the White House now fears and understands that things are not going their way.

• Further reading: Donald Trump’s awful trade policy will outlast him. He thinks America is winning. It is not.

Share

U.S. electricity demand is growing strongly this year, indicating 3.6% growth in the first five months of 2025. The context is that global electricity demand is growing at above trend rates right now, and will continue to do so through the end of the decade, according to forecasts from the IEA. Quite obviously, for that growth to come true, the U.S. must be growing strongly too along with China, Europe, and the rest of the non-OECD. According to the IEA, we’re in the middle of an intense growth phase, in which global power will grow at 3.50% or above last year, this year, and in 2026.

Here in the U.S. let’s use the usual chart that does double-duty: indicating power system growth overall, and the contribution from wind and solar. As you toggle over the interactive elements, notice that U.S. wind and solar are still not quite covering all marginal growth, as all sources ex wind+solar (gray bars) are either holding steady or growing a little. Culprits? Natural gas, and so far this year, coal.

Do you see how sources ex wind+solar were not just countered, but actually forced into decline from 2010 through 2019? And then do you notice how these sources were pressed downward towards 3500 TWh coming into the 2020-2025 period, but were pushed no further? And do you see how they are slightly growing again? That’s a perfect portrait of the additive model of energy transition. When the overall system is growing slowly (or not at all), and when there’s a wave of power plant retirements (as there were in the U.S. in the 2010-2020 period—mostly coal), then new and fast growing wind and solar can not only cover all marginal growth, but can actually start to eat into the fossil fuel base. The most powerful factor in this “eating into” process being the lack of total system demand growth.

But then consider what happens when demand growth really gets going again. Despite the clearly increasing volume of new wind+solar generation coming onto the grid, it’s still not enough to fully suppress the growth of other sources in power.

Here is a test of your intuitions: if the system share of generation from combined wind and solar positively advances from 17% to 19% in a single year, would it still be possible for sources ex wind+solar to grow, in that same year? How you will answer this question depends on whether you work alot with data series like this, and in particular, if you study the growth of large systems. Cold Eye Earth observes that many people mistakenly believe they have a solid handle on energy transition and its contours.

Subscribe now

Expecting China’s emissions to peak anytime soon might be analogous to expecting U.S. emissions to have peaked in the early 1980s. This is roughly the era when the U.S. started shedding industrial capacity more quickly, but then leaned so much harder into becoming a consumer-based economy that its emissions kept rising, mostly on the back of oil consumption. U.S emissions finally peaked much later, not until this century, during the 2005-2007 period. The lesson: an industrial base will undoubtedly add to the stock of your emissions, and shrinking that base will drive them down. But higher levels of wealth can drive domestic consumption so high that your CO2 output makes up for the erosion in your industrial base.

Between the lines, you can discern that some observers, hellbent on calling peak emissions, are partially using this model to anticipate what comes next in China. But, somehow in their telling, China’s industrial base relaxes; the Chinese consumer doesn’t press onward to higher levels of demand; and growth of clean energy takes care of the rest. If this is your model, it’s not going to work out anytime soon.

A series of very helpful historical charts appeared this week in a longform story on China’s economy from the Australian Broadcasting Corporation (ABC) despite the article itself, which is naively credulous in its conclusions. Let’s grab the most important chart, and make some very simple, uncomplicated points:

• When did emissions in the U.S. and the EU start to fall? Roughly, when China’s share of global manufacturing began its most recent, meteoric ascent—in the 1990s. Yes, there have been gains in efficiency, and not every unit of lost manufacturing activity in the OECD showed up in China. But the basic equation is solid: emissions followed the migration of industrial production to China.

• How do we know that there’s ample room for China’s population to become super consumers, even if the growth of their industrial base relaxes? Because emissions per capita have only just passed the EU, and would still have a long way to go to reach U.S. levels. The per capita figures also wipe away any confusion about the nature of China’s emissions output: it’s directly the result of taking global manufacturing share.

A number of good things will still happen here, despite the rather foreboding prospect of future Chinese consumption. First, China will eventually halt all marginal growth in fossil fuels in its power system. In the additive model of energy transition, technologies like wind and solar are indeed fated to cover all the growth in a sector like electricity. But also according to the additive model, it could take a very long time before fossil fuels actually retreat in power. There is also no question that China’s industrial base, its built environment, and its transportation systems will become more efficient. So there are harder-to-account-for energy savings that will unfurl as the years pass by. In other words, it will take less energy in the future to run the same economy as China runs today. All good things, to be sure. But certainly not a recipe at all for peak emissions from China.

Prediction: China peak emissions callers will eventually throw in the towel.

Further reading: In sudden shift, American emissions rise as China’s falls.

U.S. total consumption of fossil fuels is no longer falling. Importantly, it should be clarified this pattern was already emerging before Trump took office. Another reminder: Trump has only been in office for 8 months. So, the vast majority of changes to fossil fuel use and decarbonization are yet to come. In the chart below, which runs through the end of calendar year 2024, you can see that the trend of lower fossil fuel consumption came to an end around 2018-2019, and has since started to flatten out. There are myriad cross-currents, explanations, policies that can be considered here, but the simplest one is best: apart from the deployment of wind and solar in electricity, the U.S. never had nor does it have any notable plan to reduce emissions outside of the power sector. Cold Eye Earth warned about this approach multiple times, explaining in particular that should something go wrong with power sector decarbonization, the country would have no other plan to reduce emissions except long-term, aspirational plans that wouldn’t land until well into next decade. And thus, here we are.

—Gregor Macdonald

Share

Decarbonization of global power faces a robust headwall of incumbent generation capacity that’s fated to erode, but only at an exceedingly slow rate. What to do? The standoff between this formidable headwall and wind, solar, and batteries is not challenging to explain using the intrinsic qualities unique to both categories. Wind, solar, and batteries are still too costly in nominal terms to wreck the economics of the incumbent fleet, while that same fleet, by contrast, enjoys path dependency and the ability to deliver the marginal unit of power at competitive cost. Let’s review our current location:

I

• Even in nominal terms—even without the consideration of externalities like air pollution and climate change—wind, solar, and batteries reign supreme now in the market for new generation. Unless you are going to introduce Soviet-style policies that protect coal and natural gas, every region of the world is now tipping toward wind and solar in the new build of power. There are some lagging effects here, of course, and parts of the world continue to add new natural gas capacity to replace some of the old, but the rate of these additions has slowed greatly. The free market has spoken here, and there is no turning back.

• Wind, solar, and batteries are also successfully agitating the incumbent fleet at the margin, where the economics of incumbent capacity are still favorable, but barely so, already weakened to a point of vulnerability. You can see this in myriad examples of old, weakly viable coal and natural gas as the onset of renewables starts to depress wholesale power prices—and as a result their economics, already close to the tipping point, succumb to reality. Just to note: this has been observed in old nuclear and old hydropower too. Wind, solar, and batteries absolutely disrupt powergrid pricing in their own favor.

• The difference between a new technology being cheap and cheaper than, however is non-trivial. And here we get to a rather persistent blind spot that plagues the climate community, one that at this point can only be regarded as outright denial. Wind, solar, and batteries are cheap. They are the fastest and most cost effective way to bring on new power generation. However they are not cheaper than the great mass of incumbent capacity. If they were, they would revolutionize the landscape at a much faster pace. Wind, solar, and batteries are unlike many technologically advanced consumer goods that have rolled out over the past century, for example, that have offered so much value, at such competitive prices, that they allow consumers to simply throw away their incumbent products.

II

The political economies of the West are therefore uniquely disadvantaged in the effort to attack this headwall of incumbent generation because of the privilege these societies grant to private property. Within Western economies, however, Europe has admirably made inroads on this issue as it has been moderately successful in (1) bringing the cost of fossil fuel externalities into the policy mix, which of course reveals the truth that fossil fuel generation has a cost to society that far exceeds its nominal costs to operate. And now there are indications Europe may also be (2) starting to overbuild wind and solar (not an easy thing to do, or sustain, in a world of private property, shareholders, and credit markets). Overbuilding would indeed be a clever and rather delightful way of bullying fossil fuel power capacity into fuller submission—if you can actually pull it off.

For the West, therefore, Europe is once again demonstrating that social democracy is probably the optimal political economy, and the Union has applied these same principles and strategies to healthcare, public transit, and the wider array of social services. Another term that describes this approach is the “free market welfare state.” While the U.S. also has a version of this political economy, it shares with the British Commonwealth countries (UK, Canada, Australia, New Zealand) just enough unease with the “social” component of this system that we don’t quite get the full or stable continental version in the English-speaking world. The Commonwealth countries, to be fair, are of course more advanced in this regard than the U.S.

Did Europe overbuild wind and solar capacity, as recently as last year? The data indicates this may be the case, at least directionally. According to the 2025 release of the EI Statistical Review (the benchmark provider of global energy data, along with the IEA), the EU grew wind and solar generation by 60.5 TWh as net demand growth from all sources came in at just 53.1 TWh. How intriguing! Let’s look at the composition of that annual change.

If you sum each of the totals in the chart, the product will be 53.1 TWh. That’s the net advance of generation from all sources. And yet, that total is lower than the annual increase in wind and solar alone, of 60.5 TWh. While it’s too early to say whether the EU can repeat such a performance in the years ahead, it’s worth considering a small signal is starting to flash here that even when the EU power system is gaining hydro and nuclear output—and losing coal, natural gas, and geothermal/biomass output—it has roared ahead regardless with enough wind and solar to overwhelm the system with bountiful, new clean energy.

III

Unfortunately, there is an underlying trend starting to form in Europe’s economy that deflates, or at least colors, the hope for a new era of decarbonization—and that is the rather pronounced and sustained decline in the EU’s manufacturing output. Here we run into an old and familiar problem: deindustrialization on an incremental basis in the West has largely wound up as increased industrial activity in Asia. We want to be careful here with the word deindustrialization, because it implies a gargantuan trend that’s the result of failed policies. Here it’s more of a steady erosion of the EU’s industrial output that’s playing out, and it would be unwise to forecast whether it continues. Needless to say, two of the most important variables that come into play when gauging decarbonization are the overall economic growth rate and the composition of the economy itself, whether it leans toward services and consumption or industrial output and manufacturing. When we look at the latest data on EU output, it’s effortless to imagine how this trend is making decarbonization a whole lot easier. From the July 2025 Eurostat release:

…The EU’s production of manufactured goods decreased by -2.0% in 2024 compared with 2023 and in the previous year, it decreased by -1.4% compared with 2022.

The recent decrease was recorded in 15 industrial activities with the biggest decrease in the manufacturing of motor vehicles, trailers and semi-trailers, followed by manufacturing of machinery and equipment n.e.c, the manufacturing of electrical equipment and the manufacturing of fabricated metal products, except machinery and equipment.

Just to remind, while China has secured its position as a global leader in the output of solar panels, heat pumps, electrolyzers, and wind blades, it is Europe that largely supplies the highly engineered electrical components and equipment that anchors powergrids globally, and China did indeed uptake a ton of that cutting-edge technology by purchasing it outright from the U.S., and especially Europe, over the past 20 years. So it’s a concern for the EU economy, unfortunately, to see that sector highlighted as one of the main decliners. Again we face the interplay between economic growth and decarbonization, and how economies place extreme pressure on the decarb effort during strong growth, while alternately offering great relief when they contract.

To conclude, Western economies are built on legal foundations that make revolutionary change hard to realize, in contrast to command economies like China, which are almost totally unconstrained in forcing investment losses onto certain sectors. China is clearly overbuilding wind and solar, just as they originally overbuilt coal-fired power capacity, and such overbuilding comes at a cost to the state and no doubt results in at least a partial loss of wealth among owners of legacy generation. The West has to be more patient and delicate to achieve such outcomes, and we do this through tax incentives, pollution pricing, and regulatory changes. Each of these is designed to gingerly tread the fine line between private ownership of assets and the state’s ability to conduct takings. Here’s an example of that borderline: in most municipalities in the U.S., if the town or city wants to build sidewalks, they likely already have the power and the right to take about five feet off your front lawn, without any compensation to you at all. If, however, the state needs to bulldoze 10 houses in your neighborhood to build an extension of local commuter rail, well, yes, you will be compensated. Welcome to the West, where it is harder to get things done quickly in the physical world because democracy and private property generate lengthy, deliberative processes.

Global fossil fuel consumption increased by 1.3% last year, a reminder that the additive model of energy transition is mainly a result of economic growth itself, and less so the energy sources involved. From a climate perspective, we are one world, everywhere, and at all times. If industrial production is rising in China, that’s the world’s industrial production rising. If wind and solar deployment is going gangbusters in Europe, that too is not a regional phenomenon but a global one. China maintains a massive industrial base to serve the world. California does not maintain a massive industrial base, is a service and knowledge economy, and is decarbonizing nicely because it’s transformed itself into a lovely 21st century-island that generates industrial production too—just not within its borders. There is no escape from this single-world reality.

Just to make this plain: if your country is not going to produce cement and steel, then some other country will wind up doing so. Same with oil, copper, cars, ships, and lumber. The 1.3% growth in aggregate fossil fuel consumption last year is exactly the kind of growth rate that, despite even the most heroic buildout of renewables, is enough to keep oil, coal, and natural gas viable and forecloses on the prospects of actual consumption declines. That’s how the additive model of transition is formed, and why it has accurately described all previous energy transitions.

The century-long experience of gasoline consumption in California is potentially a useful model for how, after great effort, we can halt the growth of at least one category of fossil fuels: petroleum in transportation. Higher gasoline taxes, the buildout of public transit, strict fuel efficiency rules, incentives for EV adoption, disincentives for ICE vehicle ownership—these are the tools by which California finally got petrol consumption under control. The prize? Five straight years of gasoline consumption decline, and a peak of consumption that is now 20 years in the rearview mirror.

Why is this potentially a useful model? Let’s consider the reasons:

• California was the epicenter of postwar suburban growth, and automobile ownership was the price of admission to this system. Indeed, it’s still the case that the five counties of Southern California house a seriously large chunk of the total U.S. vehicle fleet. It would be hard to find a domain with richer, longer-lasting car penetration.

• No consideration of offshoring or industrial production moving to Asia interferes with this particular example. Indeed, personal vehicle ownership was and remains a very domain specific condition of the U.S. and the Golden State in particular.

• Getting gasoline consumption to decline wasn’t easy, and took a long time, even with the array of policies that began to appear after 2005 (the peak). This demonstrates that, contra human intuitions, declines after peak do not show up quickly, but take a long time to appear.

• You have to be far more cautious in calling peak in any data series. Peak emissions, peak coal, peak road fuel—all of these tantalizing prospects have reeled in unsuspecting analysts over the years, only to spit them back out. Here at Cold Eye Earth, we followed this data series for 20 years, watched and waited to see how the policies would stack up, before finally, in 2022, declaring that the moment had finally arrived.

Where might be the best area to try and apply this model? Global road fuel consumption seems like a good place to start. California and Europe have of course been joined now by China in EV adoption. Unsurprisingly, when China joined in they went big as always, quickly establishing leadership and blowing our minds with the rate at which they have taken up EVs. The result is that they are starting to get road fuel growth under control. And if China is getting petrol consumption growth under control, that definitely steers the world in the same direction.

Early indications are that global emissions will grow by about 0.8% this year. The quick assessment comes from Glen Peters at Oslo-based CICERO after his review of mid-year IEA reports on coal, natural gas, and oil. Here is Peters on BlueSky:

Readers should also be aware that the IEA just released its other, main mid-year report on Electricity. According to the IEA, overall demand growth for power will ease this year and next, compared to last year’s heady 4.4% growth, by stepping down to 3.3% in 2025 and 3.7% in 2026. Let’s recall the Cold Eye Earth guidance that when it comes to forecasting and analyzing decarbonization progress in power, the total growth rate is far more important that the growth of wind and solar. So, a less elevated growth path this year and next will prepare the ground for wind and solar to make very strong contributions. Because they covered 50% of total 2024 growth, they should be expected to do at least that well this year, if not better.

—Gregor Macdonald