A surprisingly relaxed year for global power growth made it easier for wind and solar in their ongoing effort to cover marginal demand in 2025. According to the IEA, in fact, combined generation from new wind and solar, along with the help from nuclear power growth, almost met total demand. Impressive! As energy transitionists understand, that is the holy-grail crossover point that, if breached—and then breached repeatedly—would inevitably trigger emissions declines in the global power sector. Alas, we are still not there.

According to the IEA, total global power demand rose by an unexpectedly weak 850 TWh in 2025. That represented just 3% growth during a period when the IEA had confidently forecasted steady, sequential 4% annual growth for last year, this year, and the next. In the chart below, you can see the year-over-year deceleration in total demand, and how combined wind and solar growth fared by comparison. While nuclear is not shown, according to the IEA, it alone advanced by 34 TWh. Ergo, when you add that to wind and solar’s 799 TWh of growth, the total nearly covers the entire 850 TWh.

Just to remind, Cold Eye Earth remains uncomfortable with the catch-all category known as “renewables,” which is a kind of jambalaya stew composed of everything from highly unstable hydropower to dreaded biofuels (ugh). This is not to say that emerging sources like geothermal, for example, aren’t both exciting and promising, but rather that sources like wind, solar, and nuclear are superior for tracking purposes, because they adhere to manufacturing and thus learning rate dynamics in addition to being either zero or near-zero carbon sources. Moreover, as Cold Eye Earth has pointed out for years, wind and solar are the clear leaders—by leaps and bounds—beyond all the other “renewable” sources. If you’re looking for the tip of the spear in how we’ll eventually decarbonize the power sector, look always to those two (with nuclear just behind) until some radical scientific and economic breakthrough occurs that can scale. Hint: If pressed to identify where that breakthrough may arrive among geothermal, hydropower, biofuels, wave (ocean) energy, hydrogen, and some as-yet-unnamed energy source, the current choice would have to be geothermal.

Of particular note in the IEA’s assessment of last year: The agency reported that the big swing downward in power demand was driven largely by a more relaxed year for cooling demand in India and Southeast Asia. This reminds us that climate change and climate volatility are increasingly competing as major factors in our more routine efforts to track trajectories from fossil fuels, wind and solar, and overall economic growth. Indeed, it sounds like the downshift in electricity growth was a major factor in bringing total global growth for all energy down to a slower pace in 2025:

All major energy fuels and technologies grew in 2025 – but at very different rates. Overall global energy demand growth slowed to 1.3%, just below the average for the previous decade. Slower economic growth and slower growth in energy-intensive industries in some regions, lower cooling demand, and faster efficiency improvements all contributed to slower demand growth.

To put some numbers on this thorny problem, it is estimated that global air-conditioning accounted for 7% of total power demand in 2022, or about 2,100 TWh out of 29,000 TWh total. That’s just about exactly half the power consumed in the U.S. that same year. At this scale, uncertainties over how much new demand will come from, say, data centers, start to fade rather quickly because we literally find ourselves in an era where volatility in cooling demand is so substantial that it alone can turn the knob on global power and our efforts to decarbonize it. Here we run into an old nemesis, a flaw in human thinking: We are not good at understanding scale. This flaw is how we get such axioms as “One death is a tragedy, but a million deaths is a statistic.” This bias leads us rather habitually to discount the system as it currently exists—colossal, profoundly embedded, hard to dislocate—while overfocusing on local disputes around a transmission wire, an offshore wind farm, or the location of a battery installation.

Why don’t wind and solar simply race ahead and quickly bury continued growth from fossil fuels in the global power sector? Why don’t they put this contest to bed already? Why does the volume of new generation each year from wind and solar pretty reliably come up to the line of marginal growth, and then halt? Why don’t wind and solar simply overrun the system, in a spectacular viral distribution? The reason is that wind and solar, while cheap, are not nearly as cheap when compared to other historical technologies that quickly overwhelmed their markets. Essentially, wind and solar are cheap enough to be the obvious choice for replacing retiring power generation, but not so cheap as to economically destroy existing generation. Just a few examples from the past:

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Financial crises tend to burn themselves into the psyche of nations. The South Sea Bubble, Tulip mania, the Crash of 1929, the German hyperinflation of 1930’s, and the Asian Financial Crisis of 1997 are just few examples of market dramas that inevitably shaped future monetary policies, market structures and each nation’s perception of risk. The traumas need not be restricted to markets. China’s multiple, historical famines—in addition to the 20th century Great Chinese Famine—have created, according to some scholars, a kind of hard, red line around food security. A study at Berkeley in fact showed that the last famine continues to have negative impacts on people’s health. The first job of any Chinese government, it’s been said, is to entirely foreclose upon the risk of starvation.

The ghost of a past trauma that clearly animates current thinking around the AI investment boom is of course the Dot Com bubble—an exuberant, deflationary growth event that caused the U.S. to understandably conclude it was ground-zero for tech futurism, and that this cornucopia of progress would press onward, well, “forever?” While a tremendous volume of crucial internet infrastructure was indeed deployed through that mania—foundational to today’s far more advanced capabilities—the bubble was ultimately humiliating, and wound up wrecking the careers of many people who both successfully, and then unsuccessfully, rode that wave. On a more humorous note, “Dot Com” finally replaced the 1929 crash as the go-to model for traders seeking a template to guide them through a historic market meltdown.

Which brings us to today: there is currently a feverish model-making community attempting to build a road-map for how and when the current tech-driven bull market will end—as they all must end—in tears. If you haven’t been following along, the AI bull market has, so far, deputized a number of sectors already from semiconductors to electrical utility and power, and more recently to optics and computer memory makers. Unsurprisingly, the various Magnificent Seven names have participated in their various ways, from the concentrated bet expressed through Nvidia, to the AI focused Google, and to other hyperscalers trying to find their footing like Microsoft to Meta, and Amazon. For the modelers of the coming bust, the imminent initial public offerings of SpaceX, Anthropic, and Open AI are classic over-the-bow warning shots that we are entering the final stages of the current AI bull run, or at least, “we are much closer to the end, than the beginning.”

Mostly though, the roadmap currently in favor among the bubble watchers overlays two time series: The number of days (or weeks, or months) which passed from the introduction of the Netscape browser in 1994/1995 to the top of the market in 1999/2000 vs. the number of days which have passed since Open AI introduced ChatGPT in 2022, through today. Some use the Nasdaq 100, or the Nasdaq composite, or even the SP500 as their market measure. In the version below, which comes from Fidelity, the chartmaker is using the Inter@ctive Week Internet Index, and finds that were the current market to match Dot Com, the bull run would top out later this year.

But here is another variation, this time from Bespoke, that anchors Netscape to late 1994 and uses the much broader Nasdaq composite index. Following this particular historical roadmap suggests the current AI driven bull market has almost another two years to run.

Wise investors will generally take note of these models, and then proceed to not rely on them. In other words, these charts function best as starting points for your own thinking, your own analyses and your risk management. Here, we must pay some due to Nassim Taleb, who insightfully pointed out that humans are so desperate for maps to guide them that they will happily take the wrong map and use it anyway, if it makes them feel better. While we know that all bubbles end in a bust, it’s not clear that the Dot Com era is the best fit for the current one. Cold Eye Earth has a slightly different map, therefore. After all, the goal of this game is to not get fooled again, right? Read on.

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Cold Eye Earth is going to have to roll forward its publication schedule by a week.

Sorry about that. We’ve had a few technical issues to deal with of late (a nasty round of factory resets and clean installs on the Mac collection) and in addition your editor has a historical sleep-problem that’s usually contained to manageable levels but has flared up recently to a feverish pitch. For readers who are familiar with that particular issue, your bookshelf is no doubt already filled up with books like these.

All this said, a couple of two-parters are in the works: one on current markets, and an overdue deep dive into AI that incorporates all that’s happened anew in the past few months. The two-part series on markets will begin a week from today, May 25, 2026.

—Gregor Macdonald

Senate candidate James Talarico of Texas has voiced full support for the oil and gas industry, in a reminder that Democrats will have to broaden the tent if they want to expand their numbers in the Senate and the House. Talarico can be thought of as a kind of experiment: After numerous near misses, what combination of positions would actually give a Democratic candidate a chance to win a Senate seat in Texas? So far, Talarico seems to have hit upon the optimal mix. His background is rooted in a distinctly more progressive version of Christianity, and this particular signal—a friendly embrace of the oil and gas industry—is clearly designed to loosen calcified distinctions in the Lone Star State. The strategy appears to be working. Recent polling and prediction markets show that regardless of whether Cornyn or Paxton is the nominee on the Republican side, Talarico has converted the race into a tossup.

Talarico made his comments on the Ranch Hall podcast earlier this year, declaring that the oil and gas industry is critical to the Texas economy and to working families. He also embraced the growth of wind and solar power and correctly pointed out that Texas was a 20th-century giant in energy, and that renewables point to the state’s continued dominance in the 21st. What’s intriguing to ponder here is that Talarico will surely be criticized within the Democratic party for making such accommodating remarks, but the irony is that voicing support for the existing oil and gas industry is almost entirely without any ramification, and in the end is mostly costless. As a presidential candidate, Barack Obama took the exact same position. Talarico repeated Obama’s phrase too, an embrace of an “all of the above strategy.” And what did Obama do, practically, while in office? Instead of either promoting or interfering with the U.S. oil and gas industry, his administration got busy, creating the conditions to help wind and solar reach a takeoff point. What’s not to like?

Cold Eye Earth has laid out previously the observation that the “words” uttered by politicians, more often than not, have little to no bearing on the fortunes of the U.S. oil and gas industry. The March 6, 2023, issue, Energy and the Presidents, showed that oil production declined quite seriously under the presidency of Bush (an oilman from Texas); soared under Obama, who presided over the biggest surge in “all of the above energy” in half a century; that coal continued to crash under Trump (I) despite his promises; and that Biden oversaw new all-time highs in LNG exports and U.S. petroleum production. But at least 90% of Americans don’t know anything at all about these facts. In the suburbs of Columbus, Ohio, no one is digging through PDFs and Excel files from the EIA. From that 2023 issue of Cold Eye Earth:

Americans mistakenly believe political rhetoric governs energy policy, but the fact remains that the United States runs a free market energy system. And in a free market system, price and technology are in control. Correlations between the political perceptions of various Presidential administrations and actual, realized energy outcomes remain exceedingly low, and in many cases negative. Yes, the EPA (created by Richard Nixon!) has churned out regulations for a half-century and American presidents can certainly bend both the discourse, and the regulatory state, in their preferred direction. But it’s truly remarkable to consider how the last four Presidents, in this century, oversaw energy outcomes that blatantly defied commonplace public perceptions. And these were not marginal outcomes, but central, large scale outcomes.

There’s additional confusion because many people who do take an interest in energy are not just over-persuaded by words, or symbolic actions, but do not see or understand scale. They think that when Biden cancelled the KXL pipeline that it was a momentous event. Indeed, both the political right and the left had reactions to the announcement totally out of scale or proportion to the policy. Same too with the Biden administration’s approval of the Willow project in Alaska. These actions were almost entirely symbolic, and barely show up on a map of the U.S. energy system. The U.S. energy complex is a vast, sprawling juggernaut of enormous production, consumption, and exports. And this is what Talarico more cleverly, more astutely understands. Should he win that Texas senate seat, he will have virtually no impact on the future of U.S. energy which will roll onward, like a big wheel.

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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.

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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.

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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.

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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.

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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.

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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:

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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.

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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.

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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.

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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.

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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.

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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?

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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.

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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