Downside of a Power Boom

Monday 17 February 2025

The most recent IEA electricity report confirms no progress will be made in the decarbonization of global power over the next three years as total global system growth is now running so hot it will consume 100% of renewables growth from 2024 through 2027. Cold Eye Earth has warned repeatedly that any sustained acceleration in total system growth would erect an even higher hurdle for decarbonization and the IEA’s Electricity 2025, released just last week, points exactly in that direction—increasing its own forecast substantially that global power grew 4.3% last year, and is set to grow by at least 4.0% each year through 2027. In such a scenario, the fossil fuel underlayer in global power will remain safe and intact, entirely undisturbed or reduced by fast growing renewables.

The forecast also strengthens further the case that energy transition is now lapsing into becoming an Additive, rather than a Transformative, process. In the Additive model, renewables wind up as just another new layer of energy sitting atop all the previous layers, without eating into them. Unfortunately, this is the historical pattern with previous energy transitions and to successfully fight the inexorable surrender to this history will require policies far more radical and aggressive. While Cold Eye Earth has been writing about this emerging problem for about two years now (Cold Eye Earth was renamed in late 2023 and reoriented from The Gregor Letter, precisely for this reason) you can read the fullest summary and expression of this idea in the free, open to the public Momentum Lost issue, published earlier this month.

Now, in previous discussions Cold Eye Earth has provided readers with extensive growth modeling of both renewables, and global power, through the end of this decade. These simple models have shown the historical growth rate of global power and renewables, while laying out a high case and a normal case for growth through the year 2030. What has been their conclusion? That global renewables retained the potential to cover most, if not all, of marginal growth through the end of this decade—as long as total system growth didn’t breakout to the upside. Needless to say, Electricity 2025 converts what had previously been the high case of 4.0% total demand growth into the base case—and that is going to prove extremely challenging for renewables to cover.

Using a steady 4.0% growth rate to the end of the decade, the above chart incorporates EI Statistical Review data through 2023, and applies a 4.0% growth rate to 2024 based on IEA estimates, to obtain the following result: renewables must grow by 8257 TWh (39379 - 31122 = 8257) from this year through 2030 just to keep up with total system growth.

Let’s make this plain: global power is on course to advance a whopping 26.5% in the six years from 2024 through 2030.

The implications are not hard to discern. While the IEA claims in their report that renewables (plus nuclear) will still be able to cover this newly accelerated rate of demand growth, they additionally rely on super volatile hydropower, quirky nuclear power, and worst of all, biomass, to pad their wind and solar growth. That’s a stretch, to say the least. To be honest, the IEA’s claim that “most of the growth will be covered by low carbon resources” sounds like a big scoop of hopium. Indeed, there are global indications that natural gas is ready for a big, new advance while coal still refuses to die.

Cold Eye Earth takes the view, therefore, that power sector emissions will not fall, will not stay flat, but will instead keep rising. Only wind and solar contain the growth visibility upon which a forecast can rely. Wind and solar growth has been amazing, and will continue to be amazing. But you cannot fool emissions data with biomass, and you cannot reliably forecast hydropower which in recent years has acted more like a climate-change barometer, careening between ever more extreme surpluses and drought. Nuclear, meanwhile, may indeed have entered a new era of interest, but the uncertainties over whether retired plants are in fact ever re-opened (the current excitement) makes forecasting shaky.

What’s particularly surprising is that the IEA’s electricity report is absolutely devastating to the project of decarbonization, but few in the climate community seem alarmed by it, so far. Cold Eye Earth offers the following reason why: the bulk of the discourse in climate journalism is completely offsides now, anchored to the trailing view that we will replace fossil fuels in power with renewables, when it’s now crystal clear we’re not on that course at all. This community seems content to keep making serially failed peak emissions forecasts, while tediously “counting renewables” —all of which looks more like a head-banging incantation, rather than analysis.

What are the realistic prospects that renewables can cover what the IEA is now calling a “new age of electricity and unprecedented power growth” through the end of this decade? We can come at this question a number of ways. First, there is the thematic approach which observes that coal hit another all time high last year, that natural gas in power is about to grow even more strongly in the US , and that global economic growth seems to be stirring anew.

Let’s leave the themes aside, for now, and concentrate on current renewable growth rates. Our hurdle is that from now through 2030 we need to come up with 8250 new TWh of generation to feed total demand, and we need all of those TWh to come from clean sources. We could try to model what hydro and nuclear will offer to the effort but as Cold Eye Earth has shown for years, it’s exceedingly difficult to project those two sources because of the volatility of hydro, and also because the global nuclear sector often sees new capacity neutralized by the retirement of old capacity, leading to a long flatline. Moreover, because wind and solar will provide the vast majority of clean energy growth, getting a handle on those two sources together will give us a very good idea of whether we can hit the mark: 8250 TWh of new, clean power globally.

Let’s first begin by celebrating the massive growth last year in combined wind and solar! Last year, according to various sources including the IEA, combined wind and solar grew by a positively heroic 754 TWh. This “big year” in global wind and solar was enough to push the trailing, five-year CAGR of wind and solar from just above 16% to 17%. Thus, we can apply that new number too, in our analysis, and project 17% growth from now through 2030. Result? Wind and solar come close, but now fall short of providing the additional 8250 TWh we need, during the period.

How close did they get? Well, when we subtract last year’s total generation of 4721 TWh from the projected 2030 level of 12092 TWh, we get the following: 7371 TWh of new wind and solar generation. That’s less than 1000 TWh away from the target, and if you are an optimist, you might decide to assume that growth in hydro, nuclear and biomass (ugh, sorry) will fill out the gap.

The one conclusion you should probably avoid, however, is thinking that fossil fuel generation will fall, and as a result, that global power sector emissions will fall. While we can’t be certain about the future, we can deal in probabilities. Here is the hard truth: despite absolutely spectacular renewables growth to come, it’s still not going to be enough to eat into the fossil fuel underlayer, and trigger a declining trend in global emissions from the power sector. Indeed, the goalposts are moving and we are now forced back into a position where we hope that renewables can merely cover the newly stepped up pace of global power growth. That’s the change in posture which is now unfolding in global energy transition.

Over the years there’s been alot of misunderstanding around coal capacity growth in China. But when coal capacity construction surges to the highest level in almost a decade, it’s time to pay attention. Just to review: naysayers towards China’s titanic renewables growth have tended to highlight the country’s coal growth, while ignoring that some healthy portion of this growth has merely added to overcapacity. However, one of the ways that global coal consumption was able to reach new all time highs again starting this decade was through the activating of this spare capacity. It is extremely worrisome therefore that China’s coal capacity is expanding again, because even if this is “spare” in the short term, it can always come back to bite us in the future. Lesson learned.

From the linked article in the FT, this quote was particularly on point:

“Instead of replacing coal, clean energy is being layered on top of an entrenched reliance on fossil fuels,” said the report, which was lead authored by Qi Qin, China analyst at Helsinki-based Crea, and Christine Shearer of California-based GEM. “The parallel expansion of coal and renewables risks undermining China’s clean energy transition.”

Global coal, according to the IEA, rose another 1.00% last year to yet another new all time high. While the IEA expects coal consumption to flatten, it does not expect it to fall. The chart below applies this 2024 estimate to the previously recorded data through 2023, from the EI Statistical Review. Nota bene: the histogram for 2014, showing consumption at 161.62 exajoules—as you recall, that was regarded by consensus to have been the final peak of global coal consumption.

• News Briefs • The new administration and the DOGE team, led by Elon Musk, have unleashed chaos across the federal workforce, while also bringing alot of spending to an abrupt halt. One of the administration’s main targets of course is clean energy, but as we know, Republican controlled states were the top beneficiary of those programs. So, it should not be a surprise that interruptions to the money-spigot would land hard in those regions. • As Cold Eye Earth observed several years ago, the Tesla Cybertruck was most likely to wind up as a product mistake, as it failed to address the real need in the market for electric mini-SUVs. Sales of the Cybertruck have been terrible, plagued by cancellations and little consumer interest. Last week, Tesla announced fresh $6000 discounts to the model as inventory starts to pile up. • In a related story, the Tesla brand itself has come under pressure globally, with protests breaking out at Tesla stores, and celebrities hitting Instagram to declare they’ve sold their Tesla vehicles. Canada has even threatened to slap targeted 100% duties on Tesla’s should the administration’s All-Canada tariffs actually land next month. WIRED magazine has the round-up. • The predicted insurance crisis has now landed fully in California in the wake of the Los Angeles fires. State Farm just applied for an emergency rate hike that would affect homeowners, but the state regulator shot down that proposal. What everyone needs to understand, however, is that rate hikes were repeatedly rejected in recent years as climate risk grew. This intervention, no doubt well intended, caused a shrinkage in the California insurance market, which forced many homeowners to call upon a state-run insurance option that was “more affordable.” Welp. That fund must now apply over $1 billion in new charges, because otherwise it would run out of money. •

—Gregor Macdonald