Decoupling of global economic growth from emission growth continued in 2024: Report

Emerging and developing economies (EMDEs) accounted for over 80% of the growth in global energy demand, with China and India being major contributors as global energy-related carbon emissions rose 0.8% to a record-breaking 37.8 Gt in 2024 as energy demand surged 2.2%, according to report from Kotak Institutional Equities.

However, the silver lining was that the emission growth rate was lower than the global GDP growth rate of 3.2%, restoring the decades-long trend of the decoupling of emission growth from economic growth, which saw a deviation in 2021.

The rapid deployment of five key clean energy technologies—solar PV, wind power, nuclear power, electric cars and heat pumps—from 2019 to 2024 played a significant role in this decoupling. These technologies now prevent 2.6 Gt of emissions p.a. which is 7% of global energy-related Co2 emissions.

India witnessed record-breaking additions of 34 GW (based on IEA estimates) in solar PV and wind capacity in 2024. The country’s target of reaching 500 GW of renewable energy capacity by 2030 will require significant investments of US$175 bn. Further, an additional investment of $60 bn will be required for electricity transmission and distribution to accommodate incremental renewable energy capacity.

“This will lead to a huge opportunity for -- capital good companies engaged in EPC, design and O&M for renewable energy generation as well as transmission and distribution; and asset owners related to the renewable energy space,” noted the report.

Energy related emission was driven by higher electricity demand (4.3% YoY) to meet the rising cooling needs due to the higher temperatures, growing industrial consumption, electrification of transport and expansion of data centres.

“The global power generation mix is evolving toward renewables and nuclear energy, which contributed 40% of total power generation, with coal accounting for 35% of the total power generation in 2024,” it said.

Non-fossil fuel energy sources, mainly renewables and nuclear, recorded the highest growth at 5%, contributing nearly half of the total growth in global energy supply for the year, with renewables growing 6% and nuclear power generation 4%.