Transition Monitor
Monday 29 December 2025
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 CO2, 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.
The profound effect that the Chinese EV initiative is having on transportation fuel demand is now spreading outward, reaching markets across the non-OECD where legacy automakers like Ford and Volkswagen are now seeing much stiffer competition for sales. Here’s a representative data point that underscores the tectonic shift underway: Through the first 10 months of this year, China’s exports of EVs rose 90% compared to 2024, reaching more than 2 million units sold. How dominant has China become in world car markets? Well, Chinese EVs now have a whopping 75% share of EV sales in emerging markets (non-OECD nations). Ponder that data point for a moment. In a global vehicle market that runs at around 85 million units per year, 20 million of those units are now EVs. And China is providing 10% of that market now just through exports!
This quiet war on oil that China kicked off last decade is entirely rational. Leadership correctly judged that were a nation of 1.4 billion people to fully adopt ICE vehicles, the air pollution alone would have become politically unmanageable. Last decade, the populace indicated to leadership that coal-driven air pollution was becoming a crisis, and leadership listened. Already the world’s largest importer of oil, the prospect of an emerging ICE fleet in non stop expansion would have only added another fearsome layer to the country’s carbon output from not just coal, but industrial uses of oil.
There’s a familiar lesson in all this to Western nations, who habitually want to avoid any policy-pain when it comes to cars, car ownership, and voters—who invariably are also car owners. If you want to transform large systems rapidly, you will need to employ both the carrot, and the stick.
There’s also a surprise. In most forecasting over the past decade analysts have generally regarded oil as a far more challenging fuel to overthrow than, say, coal. But it’s coal instead that has shown nine-lives-capability—faking us out with a ghostly peak in 2014 before going on to reach new, successive all-time highs—while it’s oil that looks like its losing its grip on one growth driver after another.
Tipping points are achievable when scalable technologies are given enough time to gain momentum, triggering network effects as they distribute their magic. We are now in a position to categorize the scalable solutions that are already in place, or have potential to start scaling soon.
• Technologies that have proven their ability to scale, and which are already heavy movers in their respective sectors: wind and solar in global power, and electric vehicles in global transport.
• Technologies that have proven their ability to scale, but which are not yet heavy movers in their respective sectors: nuclear in global power; heat pumps in buildings; grid-scale batteries; high-voltage direct current (HVDC) technology in power transmission.
• Technologies that have not yet proven their ability to scale, but which have the potential to become heavy movers in their respective sectors: geothermal in global power, and robotics in global manufacturing, transport, mining, transportation (autonomous), and agriculture.
• Technologies that either remain on the drawing board or have working prototypes whose future ability to contribute meaningfully to energy transition is uncertain: the entire promise of hydrogen, from heat generation in industrial settings to battery cells in air and ground transportation; materials recycling in everything from batteries to spent nuclear fuel; myriad conservation and efficiency efforts, from building materials to networked electrical flows; and carbon capture technologies.
The last two categories receive considerable attention in the press, because humans are wired to care alot about breakthroughs. But for our purposes, we should concentrate on the second category first, while keeping an open mind to all the rest. It’s that second category of nuclear, heat pumps, grid-scale batteries and better transmission technology that’s in a position right now to join wind, solar, and EV as new forces for energy transition.
While it’s true that global emissions are likely to hit a new all time high in 2025, at least the estimated 1.1% increase is within the normal range for annual additions. As readers know, Cold Eye Earth has been critical (and correct) of nearly all peak emissions analysis up to this point in time. And yet, now that we have arrived at mid-decade, the next five years look brighter. Wind and solar will likely do a “pretty good job” of suppressing emissions growth in global power. Even more enticing is the prospect that global EV adoption has already reached the suppression point for road fuel. It’s not impossible to imagine, for the first time, that oil consumption will no longer add to annual emissions increases. That’s encouraging.
If you are feeling slightly more optimistic about the next five years, you need to see the following if you want to retain such optimism: wind and solar and EVs press onward in their disruption of their respective sectors, and then nuclear, heat pumps, and grid-scale batteries will need to demonstrate they are not just ready to join the fight, but are ready to move aggressively enough to change the nature of the fight itself.
—Gregor Macdonald