Electricity sector emissions forecast to rise in 2026
27 July 2026
Global electricity demand is expected to grow faster in 2026 than it did last year, with carbon dioxide emissions from power generation forecast to rise by around 1%.
That’s according to the International Energy Agency’s latest Electricity Mid-Year Update, which forecasts global demand will rise by 3.6% this year and 3.8% in 2027 – up from 3% growth in 2025.
The IEA says industrial activity, electric vehicles and data centres are keeping demand on a firm upward path, even as the war in the Middle East disrupts LNG flows through the Strait of Hormuz. That disruption has driven gas prices in Asia and Europe to their highest levels since the 2022-23 energy crisis, triggering emergency measures to curb energy use in some countries.
Extra LNG supplies, particularly from North America, have helped ease the tightness in markets. Even so, gas price spikes have prompted fuel switching from gas to coal in several Asian and European countries.
Renewables are on track to overtake coal as the world’s biggest source of electricity generation this year, after nearly reaching parity with it in 2025. Their share of global generation is forecast to climb from 33% in 2025 to 37% by 2027, with output growing by more than 8% in 2026.
Solar is set to overtake wind this year to become the second-largest source of renewable generation after hydropower, with output expected to grow by around 600TWh in 2026, matching last year’s record.
Wholesale electricity prices jumped by more than 30% year-on-year in the EU and Japan during the second quarter, while US prices stayed broadly stable.
The IEA warns that a stronger-than-expected El Niño could raise cooling demand while reducing hydropower and wind generation in some regions. It expects emissions to flatten out in 2027 as renewables and nuclear power offset the rise in coal-fired generation.
