IEA World Energy Outlook: The World on Course for 2.4 Degrees - and at a Crossroads

The latest edition of the World Energy Outlook (WEO) by the International Energy Agency (IEA) has made it clear that today's geopolitical tensions and fragmentation pose significant risks to both energy security and global efforts to reduce greenhouse gas emissions. The report's projections, based on today's policy frameworks, indicate that the world will enter a new energy market environment in the coming years, characterized by ongoing geopolitical threats, but also by a relatively abundant supply of various fuels and technologies. This includes an oversupply of oil and liquefied natural gas (LNG), which is anticipated in the second half of the 2020s, as well as a large surplus of production capacities for some key clean energy technologies, especially photovoltaics and batteries. "In the second half of this decade, the prospect of a more abundant or even excessive supply of oil and gas - depending on how geopolitical tensions develop - would place us in a very different energy world than the one we experienced in recent years during the global energy crisis," said IEA Executive Director Fatih Birol.

"It means downward pressure on prices, which could somewhat relieve consumers who were hit hard by price spikes. The respite from fuel price pressure can give policymakers room to focus on increased investments in the transition to clean energy and the elimination of inefficient fossil fuel subsidies. This means that government policies and consumer choices will have a significant impact on the future of the energy sector and the fight against climate change," Birol continued.

Based on today's policy frameworks, the report states that by 2030 more than half of the world's electricity will be generated from low-emission sources - and that demand for all three fossil fuels - coal, oil, and gas - will peak by the end of the decade. Clean energies are penetrating the energy system at an unprecedented pace, but the deployment is by no means evenly distributed across all technologies and markets. In this context, WEO-2024 also shows that the contours of a new, more electrified energy system are emerging, as global electricity demand surges. Electricity consumption has grown twice as fast as overall energy demand over the past decade, with two-thirds of the worldwide increase in electricity demand in the last ten years coming from China.

"In previous World Energy Outlooks, the IEA has made it clear that the future of the global energy system is electric - and now it is visible to everyone. In energy history, we have seen the age of coal and the age of oil - and now we are rapidly moving into the age of electricity, which will determine the global energy system in the future and increasingly rely on clean electricity sources." "As with many other global energy trends, China is also a key factor here," Birol continued.

Whether it is about investments, demand for fossil fuels, electricity consumption, the use of renewable energies, the electric vehicle market, or the production of clean technologies, today we live in a world where almost every energy narrative is essentially a China narrative. Just one example: the expansion of solar energy in China is advancing so rapidly that by the early 2030s - in less than ten years - Chinese solar power generation alone could surpass the entire electricity demand of the United States, outlines Birol.

Growth in Electricity Demand Accelerates

The growth of global electricity demand will continue to accelerate in the coming years and, in a scenario based on today's policy frameworks, will add the equivalent of Japan's demand to global electricity consumption every year - and in scenarios that meet national and global targets for achieving net zero emissions, it will rise even faster. For clean energy to continue to grow so rapidly, significantly higher investments in new energy systems, particularly in power grids and energy storage, are required. Today, for every dollar invested in renewable energies, 60 cents are spent on grids and storage, highlighting that important infrastructure is not keeping pace with the transition to clean energy. A secure decarbonization of the electricity sector requires that investments in grids and storage increase even faster than in clean generation, and that the investment ratio is brought back to 1:1. Many electricity supply systems are currently vulnerable to the increase in extreme weather events, making efforts to strengthen their resilience and digital security even more important.

Net Zero Target is Still Far Away

Despite the increasing momentum in the transition to clean energy, the world is still far from a path aligned with net-zero targets. Decisions by governments, investors, and consumers too often reinforce the shortcomings of today's energy system instead of steering it onto a cleaner and more secure path, according to the report. To reflect the uncertainties in the current energy world, the WEO-2024 includes sensitivity analyses for the speed at which renewable energies and electromobility could grow, how quickly the demand for LNG could rise, and how heatwaves, efficiency measures, and the rise of artificial intelligence (AI) could affect future electricity demand. Based on today's policy frameworks, global carbon dioxide emissions will soon reach their peak.