Regional conflicts and geopolitical strains are highlighting significant fragilities in today’s global energy system, making clear the need for stronger policies and greater investments to accelerate and expand the transition to cleaner and more secure technologies, according to the International Energy Agency’s (IEA) new World Energy Outlook (WEO) 2024.
The report’s projections based on today’s policy settings indicate that the world is set to enter a new energy market context in the coming years, marked by continued geopolitical hazards but also by relatively abundant supply of multiple fuels and technologies. This includes an overhang of oil and liquefied natural gas (LNG) supply coming into view during the second half of the 2020s, alongside a large surfeit of manufacturing capacity for some key clean energy technologies, notably solar PV and batteries.
“In the second half of this decade, the prospect of more ample – or even surplus – supplies of oil and natural gas, depending on how geopolitical tensions evolve, would move us into a very different energy world from the one we have experienced in recent years during the global energy crisis,” said IEA Executive Director Fatih Birol. “It implies downward pressure on prices, providing some relief for consumers that have been hit hard by price spikes. The breathing space from fuel price pressures can provide policymakers with room to focus on stepping up investments in clean energy transitions and removing inefficient fossil fuel subsidies. This means government policies and consumer choices will have huge consequences for the future of the energy sector and for tackling climate change.”
Based on today’s policy settings, the report finds that low-emissions sources are set to generate more than half of the world’s electricity before 2030 – and demand for all three fossil fuels – coal, oil and gas – is still projected to peak by the end of the decade. Clean energy is entering the energy system at an unprecedented rate, but deployment is far from uniform across technologies and markets.
In this context, the WEO-2024 also shows that the contours of a new, more electrified energy system are coming into focus as global electricity demand soars. Electricity use has grown at twice the pace of overall energy demand over the last decade, with two-thirds of the global increase in electricity demand over the last ten years coming from China.
“In previous World Energy Outlooks, the IEA made it clear that the future of the global energy system is electric – and now it is visible to everyone,” said Dr Birol. “In energy history, we’ve witnessed the Age of Coal and the Age of Oil – and we’re now moving at speed into the Age of Electricity, which will define the global energy system going forward and increasingly be based on clean sources of electricity.”
“As with many other global energy trends today, China is a major part of what is happening,” Dr Birol added. “Whether it’s investment, fossil fuel demand, electricity consumption, deployment of renewables, the market for EVs, or clean technology manufacturing, we are now in a world where almost every energy story is essentially a China story.”
Global electricity demand growth is set to accelerate further in the years ahead, adding the equivalent of Japanese demand to global electricity use each year in a scenario based on today’s policy settings – and rising even more quickly in scenarios that meet national and global goals for achieving net zero emissions.
For clean energy to continue growing at pace, much greater investment in new energy systems, especially in electricity grids and energy storage, are necessary. Today, for every dollar spent on renewable power, 60 cents are spent on grids and storage, highlighting how essential supporting infrastructure is not keeping pace with clean energy transitions. Secure decarbonisation of the electricity sector requires investment in grids and storage to increase even more quickly than clean generation, and the investment ratio to rebalance to 1:1. Many power systems are currently vulnerable to an increase in extreme weather events, putting a premium on efforts to bolster their resilience and digital security.
Despite growing momentum behind clean energy transitions, the world is still a long way from a trajectory aligned with its net zero goals. Decisions by governments, investors and consumers too often entrench the flaws in today’s energy system, rather than pushing it towards a cleaner and safer path, the report finds. Reflecting the uncertainties in the current energy world, the WEO-2024 includes sensitivity analysis for the speed at which renewables and electric mobility might grow, how fast demand for LNG might rise, and how heatwaves, efficiency policies and the rise of artificial intelligence (AI) might affect electricity demand going forward.
Based on today’s policy settings, global carbon dioxide emissions are set to peak imminently, but the absence of a sharp decline after that means the world is on course for a rise of 2.4 °C in global average temperatures by the end of the century, well above the Paris Agreement goal of limiting global warming to 1.5 °C. The report underlines the inextricable links between risks of energy security and climate change. In many areas of the world, extreme weather events, intensified by decades of high emissions, are already posing profound challenges for the secure and reliable operation of energy systems, including increasingly severe heatwaves, droughts, floods and storms.
A new energy system needs to be built to last, the WEO-2024 emphasises, one that prioritises security, resilience and flexibility and ensures that benefits of the new energy economy are shared and inclusive.
To address the evolving energy challenges faced by countries around the world, the IEA is convening an International Summit on the Future of Energy Security in the second quarter of 2025. Hosted by the UK government in London, the Summit will assess the existing and emerging risks facing the global energy system, focusing on solutions and opportunities.