As countries race to secure energy security, economic competitiveness and climate credibility, a clear divide has emerged between petro-states, whose economies remain anchored in fossil fuels, and electro-states, which are rapidly electrifying their energy systems using renewables.
As the world enters 2026, renewables are growing at record speed. But fossil fuels still dominate the global energy system, not only in electricity generation but also across transport, industry and heating.
Global renewable power capacity expanded by roughly 585 gigawatts, the largest annual increase recorded to date. According to the International Energy Association, renewables accounted for more than 92% of all new power capacity added worldwide last year, driven mainly by solar and wind.
Installed renewable capacity now exceeds 4 400 GW, according to international energy agencies, and investment continues to follow. Global spending on renewable energy reached an estimated $800-billion in 2024, far outpacing investment in new fossil-fuel power generation. This is driven mainly by the cost of wind and solar production decreasing sharply in the past two years.
Around nine out of ten new renewable projects commissioned last year produced electricity cheaper than the lowest-cost fossil-fuel alternatives. In many regions, new solar power is more than 40% cheaper than coal or gas, while onshore wind undercuts fossil fuels by even more.
Renewables now generate around one-third of the world’s electricity, up from less than 20% a decade ago. When nuclear energy is included, low-carbon sources provide more than 40% of global electricity for the first time in history. However, with all that being said, fossil fuels remain firmly in control of the global energy system.
Fossil fuels still supply nearly 60% of global electricity, with coal alone accounting for roughly a third of power generation. Natural gas remains a critical balancing fuel, especially in developed economies seeking grid stability amid rising renewable penetration. When transport fuels, industrial heat and manufacturing energy are included, fossil fuels still provide about 80% of the global energy supply.
This imbalance explains why fossil fuel production continues to rise even as renewable capacity surges. Electrification is advancing, but large parts of the global economy (steelmaking, shipping, aviation and heavy industry) remain structurally dependent on oil, gas and coal.
These tensions between petro and electro states were on full display at recent UN climate negotiations. Efforts to establish formal global roadmaps to phase out fossil fuels have gained broad support from climate-vulnerable nations (such as Italy and Colombia) and renewable-rich economies (such as Germany and China). Yet fossil fuel-producing blocs, such as the US, Canada and Australia, have resisted binding language, arguing that transition pathways must reflect national circumstances, development stages and energy access realities.
This diplomatic standoff is expected to intensify this year as countries debate how and whether fossil fuels should be explicitly integrated into future climate frameworks. The outcome will shape not only emissions trajectories, but also global capital flows.
Crucially, the data shows that the energy transition is not failing but uneven. Renewables are transforming electricity systems at record speed, but the broader energy system is moving slowly. Bridging this gap will require not just more renewable capacity but also accelerated electrification of transport and industry, expanded grids, and credible transition pathways for fossil-fuel-dependent regions.
