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Globally, most energy still comes from climate-damaging fossil fuels such as oil, gas and coal. At the same time, the share of renewable energy is growing, especially in the electricity sector. The EU and China are leading this expansion. Economist Nikolaus Kowall explains how far the energy transition has actually progressed and where it is gaining momentum.
Looking at the world’s energy supply, we are still firmly in the fossil-fuel era. In 2023, more than 80 per cent of global energy consumption came from fossil fuels. Only 14 per cent came from renewable sources, while the small remainder came from nuclear power.
This is particularly evident in China, where the share of fossil fuels is even higher. A similar picture can be seen in the United States. But even in the EU, fossil fuels still account for around two-thirds of total energy consumption. This is not just about electricity: oil and gas heating systems, transport and coal use in industry also play a major role.
Germany is above the EU average, while Austria is below it, mainly due to hydropower. Wood heating also plays a role there, and the country has phased out coal-fired electricity generation. Nevertheless, 62 per cent of Austria’s energy still comes from fossil fuels.
So far, so bad. But the situation is far less hopeless than many believe.
The transition is already visible in electricity
Globally, around one third of electricity already comes from renewable sources. In China, the figure is slightly higher. In the EU, nearly half of all electricity is generated from renewables, compared with almost 60 per cent in Germany and as much as 87 per cent in Austria.
However, electricity currently accounts for only around 20 per cent of total energy use. This raises an obvious question: what is the benefit of clean electricity if transport, heating and industry still rely on fossil fuels?
Electricity is the key to the energy transition
This is exactly where the energy transition comes in. The role of electricity can hardly be overstated. At its core, the transition means electrifying overall energy consumption. Cars are meant to run on electricity instead of oil. Heating systems should use electricity instead of gas. Industrial processes, too, are expected to replace fossil fuels with electricity or green hydrogen, which itself is produced using renewable electricity.
Electricity is therefore the central pillar of the energy transition. That is why expanding clean power generation is so important, and this is precisely where rapid progress is being made. A global energy revolution is underway, even if it is advancing at different speeds depending on the region.
Since 2010, wind energy has become more than 50 per cent cheaper, while solar power costs have fallen by 85 per cent. At the same time, global wind and solar power generation has doubled within five years.
Fossil fuels, by contrast, are barely growing anymore. In 2024, oil’s share of global energy consumption fell below 30 per cent for the first time.
China is driving the energy transition
China is often criticised because of its continued construction of coal-fired power plants, and rightly so. But the numbers also tell another story: in 2024, nuclear power accounted for less than one per cent of newly installed electricity capacity in China, while fossil fuels made up only around 12 per cent. More than 80 per cent of new capacity came from renewable energy sources.
Since 2022, renewables have been expanding particularly rapidly in China. No other country is driving the global energy transition to the same extent. China continues to build fossil-fuel capacity mainly as a safeguard for energy security. Globally, two thirds of all new renewable energy capacity is being built in China.
More than 90 per cent of new power plants are renewable
When new power plants are built worldwide, how many run on renewable energy?
- 2022: 80 per cent
- 2023: 86 per cent
- 2024: 92.5 per cent
This is more than a trend. It is the beginning of an energy revolution.
Fossil electricity generation is falling sharply in the EU
The shift is particularly visible in the European Union. Coal and gas have been losing importance in the electricity mix for years. Since 2019, electricity generation from gas has fallen by a quarter, while coal generation has dropped by 40 per cent. At the same time, the share of wind and solar power has risen from 17 to 29 per cent.
Emissions are also declining. The carbon intensity of electricity generation in the EU is now only half the global average. Overall emissions have been cut in half since 2007.
The EU as a global leader in the energy transition
Political developments also reveal major differences. In the United States, the energy transition gained momentum under Joe Biden, but progress has slowed again under President Donald Trump. China’s transformation is highly dynamic, though its current energy system remains heavily fossil-based. The European Union, meanwhile, is clearly the global frontrunner in the energy transition.
This is not only good news for the climate but also for Europe’s economic independence. At a time when global trade is becoming less reliable and geopolitical conflicts dominate world affairs, autonomy is increasingly valuable. Countries that rely less on imported energy are also more politically independent. Much remains to be done, but the EU is taking major steps towards greater self-sufficiency.
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