Scaling the Energy Transition

The path to a low-carbon, energy-efficient world is far from straight. As the 2025 Statistical Review of World Energy reveals, global energy demand continues to rise, along with emissions. And the accelerating growth in renewables and electrification is in tandem with increases in oil, gas and coal demand to meet the needs of an energy hungry globe.

We’re also witnessing a multi-speed energy transition, reflecting varying regional priorities and circumstances. Take renewables, where momentum in Europe has stalled somewhat, with growth of just 7 percent in 2024, due to high financing costs, supply chain bottlenecks and permitting obstacles. In contrast, China is soaring ahead, in the past year adding double the amount of renewable energy of the US, Europe, and India combined.

By starting from a lower base, emerging nations have the opportunity to build a renewable energy infrastructure in parallel with their economic development. Non-OECD (Organisation for Economic Co-operation and Development) countries have increased their renewables deployment at twice the rate of OECD nations over the past decade.

For the first time in several years, nuclear power rose as a proportion of total global energy generation, to 5 percent, mainly due to increased output in France and Japan. The growing interest in small modular reactors (SMRs), along with larger projects such as Sizewell C in the UK, have played a part in this growth.

Simon Virley

Vice Chair and Head of Energy and Natural Resources

KPMG in the UK

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Fossil fuels remain a central part of the energy mix

Coal, gas and oil production reached record levels in 2024, reflecting a growing demand for energy. Gas is on a significant upward curve, supplying one-quarter of the world’s energy – more than all renewable sources together. Indeed, when you exclude China, gas grew faster than renewables in the past year. China, which has become the world’s fourth-largest gas producer, is now able to meet 56 percent of its domestic gas demand from home-based production.

Globally, liquid natural gas (LNG) has proven to be a flexible option, with sellers able to divert cargoes swiftly and easily, and the US stepping up to become the world’s largest LNG exporter, filling in the gap left by Russia.

Production of coal also hit a record high over the past twelve months, with Asia Pacific accounting for 83 percent of global demand – two-thirds of which was attributable to China. Despite China’s huge investment in renewables, coal is still responsible for 58 percent of the nation’s electricity generation. India’s economic growth is also heavily reliant on coal, with demand for this fuel rising 4 percent in 2024. In Europe, on the other hand, coal consumption fell 7 percent and for the first time is now below nuclear.

The big oil story is the ascent of the US, which is now the largest producer globally, accounting for a fifth of global production in 2024–equivalent to the output from Russia and Saudi Arabia combined. Although oil remains the world’s biggest energy source (supplying one-third of global demand), it may be close to its peak, with all regions either slowing down or plateauing demand in the last year.

Satisfying surging electrification demand – while improving energy-efficiency

As the world’s energy systems electrify at pace, countries and large corporates are in a race to satisfy this rising demand. Globally, electricity production was up by 4 percent in 2024, with China’s grid capacity on a particularly steep upward curve, having added the equivalent of the entire US grid in the past decade.

The growth in electric vehicles (EVs) and data centers are contributing to the thirst for electricity, but the real, big driver is cooling, which is responsible for around 60 percent of incremental electricity.

Although coal saw the biggest increase in electricity generation and is still the largest single source, renewables now meet 32 percent of global electricity supply. Also on the rise is battery electricity storage capacity, which more than doubled over the past year, with China well ahead of any other nation, hosting 60 percent of total installed capacity; the US is in second place at 20 percent.

There has been significant progress in energy efficiency, thanks to innovations like EVs, heat pumps, LED lighting and smart grids. However, much of these benefits have been cancelled out by the ‘Jevons paradox’, where increased efficiency leads to greater overall consumption, leaving overall energy use per capita broadly flat globally.

What lies over the peak?

With energy demand and emissions continuing to rise, the world is currently not on track to achieve the emissions reduction targets agreed at Paris a decade ago.

Nevertheless, there are encouraging trends. Wind and solar are the two fastest growing energy technologies, while electrification is increasing twice as fast as overall energy demand, which will improve the overall efficiency of the energy system.

But we have also seen record amounts of coal, oil and gas to meet the needs of a world that retains a voracious appetite for energy.

The findings from this year’s Statistical Review of World Energy suggest that the ‘disorderly energy transition’ is set to persist. Businesses need to learn to cope with these increasingly divergent trends, take advantage of new opportunities, but also manage associated risks effectively.