Featured in Nordsip: Five minutes to Midnight – and We Have not Even Started the Energy Transition

Have We Even Begun?

Global energy demand continues to increase, driven by rising living standards – a logical correlation. Yes, energy efficiency is improving. In wealthier economies, energy use per capita and per unit of GDP has been decreasing. That should be a reason for optimism: we can decouple prosperity from energy consumption. But here is the bad news: the vast majority of global energy demand is still met by carbon-based fuels. In other words, we have not even started the transition – yet.

Source: ASR Ltd, Energy Institute, Our World in Data

One helpful way to understand the mechanics of energy use and emissions is the Kaya Identity, which breaks down CO₂ emissions into four key factors: population, income per capita, energy intensity of income, and carbon intensity of energy. It is a simplified, yet powerful model, which explains the drivers behind the continued increase in global emissions as highlighted by this chart from Absolute Strategy Research.

Source: ASR Ltd, LSEG Datastream

Graphics courtesy of Absolute Strategy Research. Reproduced with permission. Originally published on 11 July 2025 in “Climate Macro Strategy – Energy Transition: Myths & Realities”

Read further here: Five minutes to Midnight – and We Have not Even Started the Energy Transition