New gas and oil has prevented CO2 global emissions from peaking

Last year our analysis found that, if the deployment of renewables continued to accelerate along historical trends, there was a 70% chance that emissions could fall in 2024, meaning that we could have peaked greenhouse gas emissions in 2023.

Today the Global Carbon Budget has released the first estimate for CO2 emissions in 2024. While those numbers are still preliminary and include a range that could result in a reduction, it looks like emissions still rose in 2024 by 0.8%. This is smaller than in 2023, but nevertheless, it’s clear that the rapid emissions reductions that the science is calling for have not yet arrived.

So why haven’t we peaked? Below we get into the findings and highlight some key factors that are in a tug of war over the short-term direction of travel. But it’s clear from the data that the biggest driver of the increase is emissions from oil and gas. These fuels drove 90% of the increase in fossil CO2 emissions.

This increase is incredibly problematic, especially as gas is still being touted as a ‘transition fuel’. This is pure fabrication – gas is the main driver of emissions growth in 2024.

The good news on renewables

Our peaking predictions last year largely depended on two assumptions: continued explosive growth in renewables (wind and solar in particular) and modest progress in non-CO2 emissions cuts. On renewables, it looks like we were right.

In our analysis last year we said that renewables could be on track to reach 4.5 TW by the end of 2024. Under the IEA’s latest projections, renewables will smash this level, reaching 4.9 TW, with a record 700 GW installed this year, twice the amount installed just two years ago. The era of renewables is well and truly here.

Demand is growing faster than predicted

As can happen with projections, unforeseen events this year that we didn’t account for seem to have set back peaking.

In the electricity sector, we took IEA estimates for demand growth in 2023, with roughly +900 TWh per year estimated until 2030. However, in 2024 global electricity demand growth has been more like +1200 TWh. That’s another 300 TWh of electricity demand, with much of this coming in India and China. A significant fraction of this is due to cooling demand in response to extreme heat in these countries. This demand growth is significant in terms of CO2 emissions – without this, global coal demand might have dropped in 2024.

Increased electricity demand is being driven by different factors. Climate change-fuelled extreme heat is driving energy use as people are forced to use more air conditioning – which is incredibly energy intensive. In 2023, around 800 TWh of electricity was used for cooling during extreme heat events, up from less than 300 TWh in the 1990s. There has also been growth due to increased demand for electricity from manufacturing, as well as the emerging signal of demand growth from data centres. This additional demand has meant that the emissions from the power sector, rather than peaking and falling as many expected, seems likely to plateau in 2024.

Because of these factors, the record renewables deployment was not sufficient to get us to peak CO2 emissions. Renewables need to consistently exceed demand growth to replace fossil fuels, not just grow alongside them.

Gas and oil are delaying much needed emissions reductions

Oil and gas are at the heart of emissions growth in 2024, responsible for 90% of the growth in fossil CO2 emissions. Gas is set to surge by 2.4% in 2024, growing across the world and across sectors – and there are a huge number of new gas developments underway across the world.

This comes after two years of largely flat gas demand due to sky high prices. As the world begins to emerge from the energy crisis triggered by Russia’s illegal invasion of Ukraine, a glut of gas supply appears to be developing which will lower gas prices and could drive demand growth.

This situation, combined with the promotion of gas by countries such as Japan, Australia and South Korea, appears to be shifting much-needed resources away from renewable development in favour of gas, including LNG import terminals and new gas facilities. There is a risk of serious lock-in of high carbon infrastructure.

But renewables and storage are now cheaper in many places than even existing gas infrastructure. And governments must reckon with the inevitability that in a global market, the next price crisis is never far away. By reducing gas demand and switching to renewables, governments can shore up their energy security, and better manage energy price volatility.

The Global Carbon Budget also estimates that oil will have grown around 1% in 2024. Almost two-thirds of this is due to international aviation and shipping, where emissions are set to grow almost 8% in 2024. At this rate, aviation and shipping will burn through a huge chunk of the remaining carbon budget if they continue to grow.

China is on the verge of peaking – but this is not enough to move the global needle

China has been a major driver of emissions growth over the last decade, and so many – including us – assumed that China’s trajectory would dictate the world’s. However, this could be about to be challenged, with the data suggesting that China’s emissions might decline this year, but not take the world with it.

China’s property market has been cooling, and with it, cement and steel demand, which is then curbing China’s demand for coal.

A rapidly expanding EV market is also eating into oil demand, which is set to peak in China. And finally, there is a huge surge in renewables, where China is leading the world. Wind and solar are growing so fast that China has achieved its 2030 goal of 1200 GW of solar and wind capacity six years ahead of schedule.

In our report at the end of last year, we assumed that wind and solar growth would outstrip electricity demand growth and push China’s emissions into decline. While electricity demand in China has grown faster than we (or others) expected, so have renewables, with a bumper 350 GW installed in 2023, and over 400 GW expected in 2024. While the Global Carbon Budget estimates a small growth in China’s emission of 0.2%, other forecasts suggest that China is on track to see emissions fall in 2024.

New sources of emissions growth are emerging

India saw an unprecedented upswing in fossil fuel generation, particularly coal. Its rapidly growing energy demand is a product of its growing GDP, as well as increased demand from cooling. While there has been a steady expansion of renewables, which is now the cheapest form of electricity generation, India is still expanding coal and increasing its use of gas.

Other developing countries are also seeing a large growth in emissions, particularly from gas. Breaking this growing addiction to gas around the world will be critical for the climate fight.

Fossil gas interests are doing well at pushing gas reliance around the world, dressing it up as a transition fuel, locking in new investments in LNG supply and more. While renewables are cheaper than gas almost everywhere, markets are not allowing renewables to compete on a level playing field, with fossil fuel subsidies and high capital costs masking their true cost-effectiveness.

The result?

Clean energy investment is lagging behind in much of the developing world, with only 15% of the investment going to emerging and development markets outside of China. Climate finance has a key role to play in leveraging that investment and COP29 needs to deliver on this.

Advanced economies need to do more to drive global emissions reductions

Another reason that fossil CO2 emissions are continuing their decades-long climb is that emissions cuts in the US, EU and Australia slowed down in 2024.

Emissions in the US fell 3.3% in 2023, but the latest forecasts for the US have them essentially flatlining from 2023 to 2025. And in the EU, after cutting emissions 8.4% in 2023, emissions are only set to fall 3.8% this year. In Australia fossil fuel emissions appear to have flatlined. The exact reasons for these slow downs needs further analysis, but make it harder for the world as a whole to peak emissions.

Peaking is only the start of the journey

Peaking global emissions is our first milestone in our efforts to keep 1.5°C within reach. It is a signal to the world that climate action is working, and that we have the ability to make a difference in the face of an existential crisis.

2024 isn’t over yet, but it seems pretty unlikely now that we will see enough of a downturn now that we can say we peaked in 2023. However, we are slowly inching towards a reduction.

It’s still possible that we can get into the red next year, making 2024 the year of peak emissions, and meeting the milestone identified by the Intergovernmental Panel on Climate Change to peak emissions before 2025.

But ultimately peaking is only the start of the journey. Once we have peaked, we will need to reduce faster than ever to keep 1.5°C in reach. In our 2023 peaking scenario, global emissions only fall 10% by 2030 relative to 2019 levels – less than a quarter of the way towards the 43% cuts the IPCC says is needed to keep the Paris Agreement goal within reach.

This is all on the road to reach net zero CO2 emissions, because it is only when we reach net zero emissions that warming will stop. But cutting our global emissions also means that we will cut the rate in which the world warms on the way, buying time for crucial adaptation efforts as we race towards net zero.

The world is on the precipice of making a change for the better. But we cannot be complacent. Without vision and delivery from governments around the world, emissions will continue to march upwards. We are in a race against time. Winning slowly is the same as losing. This analysis tells us above all else, that we have much more to do.