IEA’s 2024 World Energy Outlook warns of geopolitical risks and urgent need for clean energy investments

Regional conflicts and geopolitical tensions are exposing significant vulnerabilities in today’s global energy system, emphasising the urgent need for stronger policies and increased investment to accelerate the transition to cleaner and more secure technologies, according to the IEA’s World Energy Outlook 2024.

The latest edition of the World Energy Outlook (WEO), the most authoritative global source of energy analysis and projections, examines how evolving market trends, geopolitical uncertainties, emerging technologies, and advancing clean energy transitions are reshaping energy security. The report highlights how today’s geopolitical tensions are creating major risks for both energy security and global efforts to reduce greenhouse gas emissions.

Projections based on current policy settings indicate that the world is entering a new energy context, marked by persistent geopolitical hazards but also an abundance of various fuels and technologies. This includes a surplus of oil and liquefied natural gas (LNG) expected in the second half of the 2020s, alongside a significant increase in manufacturing capacity for key clean energy technologies, particularly solar PV and batteries.

“In the second half of this decade, the potential for ample or even surplus supplies of oil and natural gas, depending on geopolitical developments, could place us in a very different energy world from the recent global energy crisis,” said IEA Executive Director Fatih Birol. “This suggests downward pressure on prices, offering relief to consumers affected by recent price spikes. The easing of fuel price pressures could give policymakers the opportunity to focus on ramping up investments in clean energy transitions and eliminating inefficient fossil fuel subsidies. Government policies and consumer choices will have profound implications for the future of the energy sector and efforts to tackle climate change.”

The report finds that low-emissions energy sources are set to generate more than half of the world’s electricity by 2030. Meanwhile, demand for coal, oil, and gas is expected to peak by the end of this decade. Clean energy is entering the global energy system at an unprecedented pace, though the transition is uneven across different technologies and regions.

The WEO-2024 also reveals that a new, more electrified energy system is taking shape as global electricity demand rises sharply. Over the past decade, electricity use has grown at twice the pace of overall energy demand, with China accounting for two-thirds of the global increase in electricity demand during that period.

“In previous editions of the World Energy Outlook, the IEA made clear that the future of the global energy system is electric – and now that reality is becoming visible to everyone,” said Dr Birol. “In energy history, we’ve seen the Age of Coal and the Age of Oil, and we’re now moving rapidly into the Age of Electricity, which will define the future of the energy system and increasingly be powered by clean electricity sources.”

“China plays a major role in many of today’s global energy trends,” Dr Birol continued. “Whether it’s investment, fossil fuel demand, electricity consumption, renewable energy deployment, the EV market, or clean technology manufacturing, almost every energy development today is a China story. For example, China’s rapid solar expansion could see its solar power generation surpass the total electricity demand of the United States by the early 2030s.”

Global electricity demand growth is projected to accelerate further, adding the equivalent of Japan’s annual electricity consumption to global use each year, based on current policy settings. Demand could rise even faster under scenarios aligned with national and global net zero targets.

To sustain clean energy growth, much larger investments in new energy systems, particularly in electricity grids and energy storage, are essential. Currently, for every dollar spent on renewable power, 60 cents are invested in grids and storage, underscoring the need for greater investment in supporting infrastructure. Secure decarbonisation of the electricity sector will require an even faster increase in grid and storage investments than in clean energy generation. The investment ratio must shift to 1:1 to maintain balance. Many power systems are also vulnerable to extreme weather events, making resilience and digital security a priority.

Despite the growing momentum for clean energy transitions, the world remains far from achieving its net zero goals. Decisions by governments, investors, and consumers often reinforce the current energy system’s flaws rather than driving a shift towards a cleaner, more secure future, according to the report. Reflecting the uncertainties of today’s energy landscape, the WEO-2024 includes analyses of how the speed of renewable energy adoption, electric mobility, LNG demand, heatwaves, efficiency policies, and the rise of artificial intelligence (AI) could impact electricity demand in the coming years.

Based on current policy settings, global carbon dioxide emissions are expected to peak imminently. However, without a sharp decline afterward, the world is on track for a 2.4°C increase in average global temperatures by the end of the century – far exceeding the Paris Agreement target of limiting global warming to 1.5°C. The report underscores the inextricable link between energy security risks and climate change. In many regions, extreme weather events, intensified by decades of high emissions, are already posing significant challenges to the secure operation of energy systems, with more severe heatwaves, droughts, floods, and storms.

The WEO-2024 stresses the need for a resilient and flexible new energy system built to last. Such a system should prioritise security and ensure the benefits of the energy transition are shared inclusively. In some parts of the world, high financing costs and project risks are slowing the spread of affordable clean energy technologies, especially in developing economies, where these technologies could deliver the greatest benefits for sustainable development and emissions reductions. Lack of access to energy remains the most pressing inequity in today’s global energy system, with 750 million people – mainly in sub-Saharan Africa – still lacking access to electricity, and over 2 billion without clean cooking fuels.