IEA 2025: THE AGE OF ELECTRICITY IN THE PARADOX OF 2.7 BILLION PEOPLE WITHOUT ENERGY

On Wednesday, the International Energy Agency (IEA) presented its annual report, World Energy Outlook 2025, confirming that we are officially in a new “Era of Electricity”. The report presents encouraging data on the growth of renewables, but also warns that there are still too many social, economic and climate contradictions to overcome.

Despite the pressure that the White House has tried to exert on the Agency, the picture that emerges from the report is clear: renewables are set to grow faster than any other energy source in every possible scenario, even if climate action were to come to a complete halt.

The analysis was presented on the third day of COP30, and the hope is that it will help push delegations towards more ambitious decisions and texts regarding the phase-out of fossil fuels, reopening the door to the phase-out, or at least the transitioning away that emerged two years ago at the close of COP28 in Dubai and was then shelved in 2024.

These are the key points of the IEA report:

• the Age of Electricity has arrived: demand for electricity is growing much faster than overall energy use.
• failed climate and universal energy access targets: the world will exceed 1.5°C of warming in any scenario, but by reaching net zero emissions by mid-century, we could still bring the increase below 1.5°C in the long term. Meanwhile, around 730 million people still live without electricity and nearly 2 billion rely on cooking methods that are harmful to their health.
• renewable energy: growing faster than any other major energy source in all scenarios.
• concentration of critical minerals: a single country – China – dominates the refining of 19 out of 20 strategic energy-related minerals, with an average market share of 70%;
• liquefied natural gas boom: around 300 billion cubic metres of new annual LNG export capacity will come online by 2030.
• nuclear revival: after more than two decades of stagnation, global nuclear capacity is set to increase by at least a third by 2035.

The IEA 2025 report, the world’s most authoritative source of energy analysis and projections, warns that governments will need to make key choices and compromises, seize opportunities, diversify supplies and cooperate to overcome uncertainties and turbulence.

The 2025 edition of the World Energy Outlook covers a wide range of trajectories, highlighting different opportunities and vulnerabilities, but also common elements. Through three main scenarios (CPS: Current Policies, STEPS: Stated Policies, NZE: Net Zero Emissions by 2050) – none of which, the Agency clarifies, is a prediction – the report outlines a distinct energy future, allowing for an analysis of the implications of different policy, investment and technology choices for energy security, affordability and emissions reduction.

Energy demand continues to grow

Among the many trends common to all Outlook 2025 scenarios is the growing global need for energy services in the coming decades, with increasing demand for mobility, heating, cooling, lighting and other domestic and industrial uses, as well as, increasingly, for data and artificial intelligence services.

For the Agency, emerging economies, led by India and South-East Asia and flanked by countries in the Middle East, Africa and Latin America, will shape the dynamics of the energy market in the years to come.  These countries will take over from China (which since 2010 has accounted for 50% of global demand growth for oil and gas and 60% for electricity), but no single country or group will come close.

Total energy demand, electricity demand and renewable energy in electricity generation by scenario (2015-2035 period).

Climate and energy access goals

According to the World Energy Outlook’s long-term analysis, there are two critical areas where the world is lagging behind its goals: universal energy access and climate change. Around 730 million people still live without electricity and nearly 2 billion rely on cooking methods that are harmful to human health. A new scenario in the 2025 report outlines a path, country by country, to achieve universal access to electricity by 2035 and clean cooking by 2040.

The Age of Electricity is already here

“Last year, we said that the world was moving rapidly towards the Age of Electricity, and today it is clear that it has already arrived,” said Fatih Birol, Executive Director of the IEA. “The rise in electricity consumption is no longer limited to emerging and developing economies. The rapid growth in demand from data centres and AI is helping to increase electricity use in advanced economies as well. Global investment in data centres is expected to reach $580 billion by 2025. Those who say data is the new oil will note that this exceeds the $540 billion spent on global oil supplies: a striking example of the changing nature of modern economies.“

A crucial issue for energy security in the Age of Electricity is the speed with which new grids, storage systems and other sources of electricity system flexibility are being deployed. At present, some of these elements are lagging behind. Investment in electricity generation has increased by almost 70% since 2015, but annual spending on grids has grown at less than half that rate.

Electricity is at the heart of modern economies, and demand is growing much faster than overall energy use in all scenarios in the Report. Investors are responding to this trend: spending on electricity supply and end-use electrification already accounts for half of global energy investment today. At present, electricity accounts for only about 20% of global final energy consumption, but it is the key energy source for sectors representing over 40% of the global economy and the main source of energy for most households.

With climate risks on the rise, the report shows that the world will exceed the 1.5°C warming threshold in any scenario, including those with very rapid emissions reductions, and the energy sector will need to prepare for the security risks brought by higher temperatures, but there is still scope to avoid the worst climate outcomes. The updated scenario in which the world achieves net-zero emissions by mid-century brings temperatures below 1.5°C in the long term.

Increase in global average temperature and reductions in annual emissions from peak to 2035 in the NZE scenario of previous editions.

Renewables grow more than any other source, in all scenarios

Although the pace varies across the different scenarios in the report, renewable energy grows faster than any other major energy source in all scenarios, led by solar photovoltaics. In particular, a new analysis shows that by 2035, 80% of global energy consumption growth will occur in regions with high-quality solar irradiation. 

Total energy demand by source and region in the CPS scenario for 2050

Concentration of critical minerals

Energy risks also affect supply chains for critical minerals due to high levels of market concentration. A single country, China, is the dominant refiner of 19 out of 20 strategic energy-related minerals, with an average market share of around 70%. These minerals are vital for power grids, batteries and electric vehicles, but also play a crucial role in AI chips, jet engines, defence systems and other strategic industries. Geographical concentration in refining has increased for almost all key energy minerals since 2020, particularly for nickel and cobalt.

Share of major refiners of energy-related strategic minerals by region.

Liquefied natural gas (LNG) boom

In the Outlook 2025, all scenarios point to ample global supplies of oil and gas in the short term. A loosening of the market balance for natural gas appears imminent, with the launch of new liquefied natural gas (LNG) export projects. Final investment decisions for new LNG projects have skyrocketed in 2025, adding to the expected surge in natural gas supply in the coming years. Approximately 300 billion cubic metres of new annual LNG export capacity is expected to come online by 2030, leading to a 50% increase in global LNG supply. About half of the new capacity is under construction in the United States and a further 20% in Qatar. Natural gas demand has been revised upwards in the 2025 edition, but doubts remain about where all the new LNG will go.

Another common element across the scenarios is the resurgence of nuclear energy, with investments increasing in both traditional large-scale plants and new projects, including small modular reactors. After more than two decades of stagnation, global nuclear capacity is set to increase by at least a third by 2035.

Article by Paolo Della Ventura, Climate and Advocacy Section coordinator at Italian Climate Network

Charts: World Energy Outlook 2025, IEA

Download the full report here.