Renewables Hit $2.2 Trillion in Investment but Coal Still Generates 35% of Global Electricity

Renewables Hit $2.2 Trillion in Investment but Coal Still Generates 35% of Global Electricity The IEA projects renewables and nuclear will reach 50% of the power mix by decade-end, yet grid bottlenecks and AI demand growth complicate the pace of transition. Renewable energy investment is projected to reach $2.2 trillion this year, more than double the amount flowing into fossil fuels and accounting for over 40% of the $3.3 trillion estimated for the global energy sector, according to the IEA. Solar power continues to dominate new capacity additions. The money is flowing.⁵ But coal still generates approximately 35% of global electricity supply. Over 2,000 GW of coal capacity remains operational worldwide. Renewables are now cheaper than coal in most markets, yet the installed base persists because retirement timelines depend on policy and grid readiness, not just economics.² The IEA's Electricity 2026 report projects global power demand will grow by more than 3% per year on average through the rest of the decade. Coal's share of the generation mix will erode as nuclear, renewables, and natural gas gain ground. The share of renewables and nuclear is forecast to reach 50% by the end of this decade. Renewable output will grow by about 1,000 TWh annually through 2030, with solar PV alone accounting for over 600 TWh.¹ The world will not see a significant return to coal in 2026 despite the Iran war, analysts argue. The energy crisis has pushed some Asian economies temporarily toward coal-fired generation. But the structural economics favour renewables on a levelised cost basis, and the policy direction in most major economies is away from coal expansion.⁷ The end of oil has been predicted before. The Economist traced the history of peak oil forecasts and found that each time demand was written off, it returned. Oil consumption reached roughly 100 million barrels per day before the Hormuz crisis. The current demand destruction from elevated prices is real but may prove cyclical rather than structural if prices normalise.³ Grid bottlenecks are the binding constraint on the transition pace. Grids continued to lag behind new capacity additions in 2025, struggling to integrate new supply. Electricity demand is rising faster than ever, driven by data centres, EVs, and industrial electrification. The pace of change is not moot. It is real. But the infrastructure to deliver it is not keeping up.⁶ AI-fuelled data centre demand will set back the energy transition if grids cannot absorb the new load from clean sources, forcing reliance on gas and coal for dispatchable backup. The IEA projects AI and data centres will account for as much as 4% of global electricity use by 2030. That demand did not exist five years ago.⁵ China is the climate superpower that determines the global trajectory. The country burned 4.9 billion tonnes of coal last year. It also added more solar capacity than any other nation. Whether China's clean energy growth continues to outpace its coal consumption growth is the single most important variable for global emissions.⁴ What to watch is whether the IEA's 50% renewables-plus-nuclear target for 2030 tracks on schedule in the next annual update, and whether grid investment closes the gap with generation additions. If the grid bottleneck persists, the $2.2 trillion in renewable investment produces capacity that cannot fully dispatch, and coal remains the fallback for reliability.^1,6