By Alexa St. John
Electricity demand will rise much faster than overall energy growth in the coming decades, underscoring the need for diverse energy sources, according to an analysis released Wednesday.
The IEA report said that renewable energy, led by solar energy, will grow faster than any other major source in the coming years, and demand for coal and oil is likely to reach its peak globally by the end of this decade. The report indicated that many natural gas projects were approved in 2025 due to changes in American policy, indicating that global supply will increase despite outstanding questions about how it will be used. Meanwhile, global nuclear power capacity is set to increase by at least a third by 2035 after remaining stagnant for years.
The release of the annual World Energy Outlook coincided with UN climate negotiations in Brazil this week, where world leaders are calling for ways to limit global warming.
Regional dynamics
The IEA says building greater resilience into energy systems is particularly important because data centers, heating and cooling, electricity and other factors drive energy demand. Investment in data centers is expected to reach $580 billion this year, exceeding investment in oil supplies, according to the report.
The IEA said that developing economies, including India, countries in Southeast Asia, the Middle East, Africa and Latin America, “will increasingly shape the dynamics of the energy market in the coming years,” pointing to their potential in solar energy.
For its part, China has accounted for half of the global growth in demand for oil and gas, and more than half in demand for electricity, since 2010.
“In a change from the trend of the past decade, the increase in electricity consumption is no longer limited to emerging and developing economies,” IEA Executive Director Fatih Birol said in a statement. Birol said electricity use is also increasing in advanced economies.
Countries are struggling to meet demand as they brace for risks posed by a warming planet. The International Energy Agency says the world is failing to achieve universal energy access and climate change goals. About 730 million people still live without electricity, according to the International Energy Agency, and despite progress, nearly a quarter of the world’s population still relies on inefficient cooking methods that harm their health or the environment. 2024 was also the hottest year on record.
The IEA said countries should diversify their energy sources and cooperate to expand supply chains for vital minerals. This also includes rapid improvements to the grid, energy storage and wider infrastructure.
“When we look at the history of the energy world in recent decades, there is no other time when energy security tensions have affected so many fuels and technologies simultaneously,” Birol said. “As energy security is the focus of many governments, their responses must take into account synergies and trade-offs that may arise with other policy objectives: in relation to affordability, access, competitiveness and climate change.”
Global reaction
Wednesday’s edition of the annual report is the first published since the beginning of President Donald Trump’s second term. The Trump administration has opted for a second time to exit the Paris Agreement, eliminating dozens of climate regulations, cutting federal support for renewable energy such as wind and solar, and rolling back the “risk designation” that is the core of US climate policy.
Instead, Trump pledged to support the fossil fuel industry, invest in coal and ease restrictions on pollution.
But energy analysts said the shift toward clean energy is happening regardless of climate policy around the world.
“The evidence on the ground is overwhelming,” said Dave Jones, senior analyst at global energy think tank Ember. “Electric vehicle sales are taking off in many emerging countries, and solar energy is even penetrating the Middle East.” “The future will be dominated by renewable energy and electricity.”
Maria Pastukhova, head of the energy transition program at climate change think tank E3G, said the report makes “unambiguous the options available to the global energy system and global economy.”
“If countries want to grow their economies and protect their citizens from volatile energy prices, they must focus relentlessly on energy efficiency and decarbonizing energy demand,” Pastukhova said.
But others criticized it. Ben Bakewell, executive director of the World Wind Energy Council, said the forecasts do not fully reflect the momentum in renewables, and it should have been emphasized that the renewable energy trajectory is accelerating, driven by falling cost technologies, strong political support and the move towards electrification.
“We are accelerating,” he added. “You can see it all over the world and we can see it in our numbers from last year, but also in our numbers for the first half of this year. It looks very exciting, both for wind and solar, actually, and next year, even more so.”
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Associated Press reporters Jennifer McDermott in Providence, Rhode Island, and Sibi Arasu in New Delhi contributed to this report.
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Alexa St. John is a climate reporter for The Associated Press. You can follow her on X: @alexa_stjohn. Contact her at ast.john@ap.org.
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AP’s climate and environment coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with charities, list of funders and funded coverage areas on AP.org.
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This story was translated from English by an AP editor with the help of a generative AI tool.