Study reveals decline in fossil gas generation in global power mix

Global fossil gas generation declines for fifth consecutive year

Fossil gas generation has fallen for the fifth year running in the global power mix. According to the latest electricity review from climate think tank Ember, wind and solar capacity grew fast enough to meet nearly all demand growth in 2025. The trend marks a structural shift in the power sector. For the first time, clean electricity is displacing fossil generation in absolute terms rather than simply growing faster in percentage terms.

Ember’s data shows fossil fuel generation fell by 0.2 percent in 2025. Meanwhile, wind and solar met 99 percent of global electricity demand growth last year. Solar output rose 30 percent year on year, covering 75 percent of global electricity demand growth on its own. Coal generation declined and fell below one third of global electricity generation for the first time. Gas generation increased slightly by 36 terawatt hours, or 0.5 percent, to 6,919 terawatt hours in 2025. However, its share of the global mix continued to decline because total clean generation grew faster.

These figures carry weight for UK businesses tracking energy markets and supply chain risks. The share of wind and solar in the global electricity mix has climbed from 23 percent to 33.8 percent over the past decade. During the same period, coal’s share fell from 38.7 percent to 33.0 percent. Gas occupies a middle position, still generating significant volumes but losing ground to renewables in relative terms.

Structural energy transition displaces fossil fuels in absolute terms

Ember describes 2025 as the first year fossil generation has fallen because of a structural clean energy shift. Previous declines occurred during economic crises or other temporary events. This time, the reduction reflects sustained growth in renewable capacity rather than reduced electricity demand. The distinction matters because it suggests the trend may continue rather than reverse when economic conditions change.

China and India play central roles in this transition. Together, the two countries accounted for 42 percent of global fossil fuel generation in 2025. Both also recorded year on year fossil generation declines, according to Ember’s analysis. China’s renewable capacity additions have accelerated significantly in recent years. India continues to expand solar installations while coal generation growth has slowed. The combined effect of policy support and falling renewable costs has shifted investment patterns in both economies.

For businesses operating in UK manufacturing, construction, or energy intensive sectors, these global trends influence domestic energy costs and policy direction. UK electricity prices remain linked to international gas markets. As a result, changes in global gas demand affect price volatility and long term contract structures. Furthermore, the UK’s net zero commitments align with the global shift toward renewable electricity, creating both compliance requirements and commercial opportunities.

Gas generation is not disappearing from the global mix. However, the data suggests its role is evolving. Even when gas output rises slightly in absolute terms, it can lose market share if renewables expand faster. This pattern emerged clearly in 2025. Gas generation increased marginally, yet its share of total generation continued to fall. The implication is that gas increasingly functions as a balancing fuel rather than a primary growth source in electricity systems.

Wind and solar absorb nearly all new electricity demand

Wind and solar capacity absorbed 99 percent of global electricity demand growth in 2025. This concentration of new supply represents a significant acceleration compared to earlier years. Solar alone covered 75 percent of demand growth, reflecting continued cost reductions and deployment speed. Wind contributed the remainder, with both onshore and offshore installations expanding across multiple regions.

The speed of solar deployment stands out in the data. A 30 percent year on year increase in output demonstrates the technology’s scalability. Manufacturing capacity for solar panels has expanded rapidly, particularly in Asia. Consequently, equipment costs have fallen and installation timelines have shortened. These factors enable faster project delivery compared to conventional power stations.

For UK businesses, the global solar surge has several implications. First, equipment prices in domestic markets benefit from global manufacturing scale. Second, grid connection queues increasingly contain renewable projects rather than gas plants, affecting long term energy infrastructure planning. Third, corporate power purchase agreements now favor solar and wind projects because of predictable costs and shorter development periods.

Coal’s decline below one third of global generation marks a symbolic threshold. The fuel dominated electricity systems for decades. Its reduced share reflects both policy interventions and economic pressure from cheaper alternatives. In many markets, existing coal plants struggle to compete with new renewable capacity on cost alone. Retirements are accelerating in developed economies, though some emerging markets still rely heavily on coal for baseload generation.

China and India drive fossil generation changes

China and India together accounted for 42 percent of global fossil fuel generation in 2025. Their combined energy policies therefore shape global emissions trajectories and fuel demand patterns. Both countries recorded year on year declines in fossil generation, according to Ember’s data. This development surprised some analysts who expected continued fossil growth in emerging economies.

China’s renewable capacity additions reached record levels in 2024 and 2025. The country installed more solar capacity in these two years than the rest of the world combined in the previous decade. Wind capacity also expanded significantly, particularly offshore installations. At the same time, coal generation growth slowed and began declining in absolute terms. Economic factors, including domestic coal prices and air quality concerns, supported this transition alongside climate policy.

India’s energy transition follows a different path but produces similar outcomes. Solar installations have accelerated under auction programs that drive down contract prices. Rooftop solar adoption is increasing in commercial and industrial sectors. Meanwhile, coal generation growth has slowed considerably. New coal plant approvals have declined, and some planned projects face delays or cancellations. Gas generation remains limited because of high import costs and infrastructure constraints.

These developments matter for UK supply chains and international operations. Many UK businesses source components or materials from China and India. Energy costs in those markets affect manufacturing competitiveness and pricing. Moreover, multinational corporations face increasing pressure to address Scope 3 emissions from suppliers. As Chinese and Indian manufacturers shift toward cleaner electricity, embedded carbon in imported goods should decline. This trend supports UK carbon reporting compliance and supply chain decarbonization efforts.

The policy environments in both countries continue to evolve. China’s dual carbon goals target carbon peaking before 2030 and carbon neutrality before 2060. India has committed to 500 gigawatts of non fossil electricity capacity by 2030. These targets drive investment decisions and infrastructure planning. UK businesses with operations or suppliers in these markets should monitor policy implementation and regional energy price trends.

Gas generation’s evolving role in electricity systems

Gas generation increased slightly by 36 terawatt hours in 2025, yet its share of the global electricity mix fell. This apparent contradiction reflects the mathematics of energy transitions. Total electricity demand grew, and renewables absorbed nearly all that growth. Consequently, gas output could rise in absolute terms while shrinking in relative importance. The pattern suggests gas is transitioning from a growth fuel to a balancing fuel in many electricity systems.

Balancing fuel means gas plants increasingly operate during periods when renewable output cannot meet demand. This includes evening peaks when solar generation drops, or low wind periods when output from wind farms declines. Gas turbines can start quickly and adjust output to match fluctuations in supply and demand. However, this operational profile differs from baseload generation, where plants run continuously at high capacity factors. Lower utilization affects the economics of gas infrastructure and investment decisions.

For UK businesses, this shift has several implications. First, electricity prices may show greater volatility as the grid relies more on weather dependent renewables and flexible gas plants. Second, businesses with flexible demand can benefit from time of use tariffs that reflect these price patterns. Third, on site generation and battery storage become more attractive as ways to manage exposure to grid price volatility.

The UK’s own electricity mix is following similar patterns to the global trend. Gas generation has declined from its peak in the mid 2000s. Wind and solar capacity has expanded significantly, particularly offshore wind. Coal generation has almost entirely disappeared from the grid. As a result, gas plants now provide backup and balancing services rather than continuous baseload generation. This transition affects power purchase agreements, capacity market participation, and grid connection terms.

Long term, the data suggests gas infrastructure faces questions about utilization and stranded asset risk. If renewables continue to meet most demand growth, gas plants may run fewer hours per year. Consequently, their capacity factors will decline and revenue per unit of installed capacity will fall. Some markets are exploring hydrogen blending or conversion to reduce emissions from existing gas infrastructure. Others are accelerating gas plant retirements and replacing capacity with battery storage and demand flexibility.

Commercial implications for UK businesses operating in energy intensive sectors

• Global fossil fuel generation fell 0.2 percent in 2025, while wind and solar met 99 percent of electricity demand growth, marking the first structural decline in fossil generation rather than a crisis driven reduction.
• Gas generation increased marginally by 36 terawatt hours to 6,919 terawatt hours, but its share of the global electricity mix continued declining as renewable capacity grew faster than total demand.
• China and India accounted for 42 percent of global fossil fuel generation in 2025 and both recorded year on year declines, indicating that emerging economies are shifting away from fossil generation growth.
• Solar output rose 30 percent year on year and covered 75 percent of global electricity demand growth on its own, demonstrating the technology’s scalability and falling costs.
• Coal generation fell below one third of global electricity generation for the first time, while the combined share of wind and solar climbed from 23 percent to 33.8 percent over the past decade.
• Gas is evolving from a primary growth fuel to a balancing fuel in many electricity systems, with implications for long term infrastructure investment, capacity factors, and utilization rates.

What UK businesses should consider as global electricity shifts toward renewables

The global shift toward renewable electricity affects UK businesses in several ways. Energy procurement strategies need to account for changing price structures and market dynamics. Long term power purchase agreements increasingly favor renewable projects because of predictable costs and shorter delivery timelines. Businesses with high electricity consumption should review contract structures and consider whether direct renewable procurement makes commercial sense.

Supply chain emissions are becoming more visible and material to business operations. As Chinese and Indian manufacturers shift toward cleaner electricity, embedded carbon in imported goods should decline. This trend supports UK carbon reporting requirements and helps businesses meet Scope 3 emissions targets. However, verification remains challenging. Businesses may need to engage suppliers directly to understand their energy sources and track progress over time.

Grid connection and on site generation decisions should factor in the changing electricity mix. As renewable penetration increases, grid prices will show greater volatility linked to weather patterns. Businesses with flexible operations can benefit from time of use tariffs and demand response programs. Those with less flexibility may find battery storage or on site generation help manage exposure to price volatility. The economics of these options are improving as equipment costs fall and grid services markets develop.

Public sector suppliers face additional considerations. Procurement Policy Note 06/21 requires bidders to publish carbon reduction plans and demonstrate progress toward net zero. As electricity grids decarbonize globally, reported emissions from UK operations and international supply chains should decline. This creates opportunities for businesses to demonstrate progress without major operational changes. However, it also raises the bar for what constitutes meaningful emissions reductions in competitive tenders. Understanding carbon reporting requirements and how grid decarbonization affects your figures is increasingly important for tender competitiveness.

Investment decisions with long time horizons need to consider energy transition risks. Assets that depend on stable fossil fuel prices or availability may face stranded asset risk as renewable capacity expands. Conversely, investments that benefit from renewable growth, such as electric vehicle charging infrastructure or heat pumps, may become more attractive. The speed of the global transition suggests these considerations are moving from long term strategic planning into medium term business planning cycles.

Regulatory trends in the UK align with the global shift toward renewable electricity. The government’s commitment to a decarbonized power sector by 2035 creates both compliance requirements and market opportunities. Businesses that anticipate these changes can position themselves advantageously. Those that delay may face higher transition costs and competitive disadvantages in markets where low carbon credentials matter for customer or investor decisions.

Where to find additional analysis and official data

Ember publishes detailed electricity data and analysis through its global electricity review, which provides country level breakdowns, historical trends, and methodology documentation. The organization’s data covers over 200 countries and territories, with monthly updates for major economies. This resource helps businesses track electricity mix changes in markets where they operate or source materials.

The UK government’s Department for Energy Security and Net Zero publishes regular statistics on domestic electricity generation, capacity, and prices. These publications include breakdowns by fuel type, regional variations, and forward projections. Businesses can use this data to understand UK specific trends and how they relate to global patterns.

The International Energy Agency provides comprehensive energy data and analysis covering electricity markets, renewable deployment, and emissions trends. Its World Energy Outlook and Electricity Market Report offer detailed projections and policy analysis relevant to long term planning. These resources help businesses understand how global energy transitions may affect fuel prices, technology costs, and regulatory developments.

For businesses seeking guidance on carbon reporting and emissions reduction, the UK’s Procurement Policy Note 06/21 sets out requirements for suppliers bidding on central government contracts above £5 million per year. Understanding these requirements helps businesses prepare compliant submissions and identify where emissions reductions deliver competitive advantages in public sector tenders.