World Energy Outlook 2025 Warns Of Rising Global Energy Risks And Urges Diversification And Cooperation –  IEA

The International Energy Agency (IEA) has released its latest World Energy Outlook 2025, offering an in-depth assessment of global energy trends, risks, and opportunities at a time when the world faces growing challenges in energy security, diversification, and sustainability. As nations grapple with multiple energy-related threats across fuels and technologies, the report emphasizes that cooperation and diversification of supply sources are now more critical than ever to ensure global energy stability.

The 2025 edition of the World Energy Outlook, regarded as the most authoritative global study on energy projections, explores three distinct scenarios that illustrate possible energy futures. These scenarios are not forecasts but frameworks designed to help policymakers understand the implications of their choices on energy affordability, security, and emissions. Common across all scenarios is the world’s rising need for energy services driven by increasing demand for mobility, industrial use, household comfort, and especially digital infrastructure such as data centres and artificial intelligence (AI) systems.

Emerging economies, including India and Southeast Asian nations, are projected to play a central role in shaping future energy demand. These regions, along with the Middle East, Africa, and Latin America, will collectively drive energy market growth, taking over from China, which has dominated global oil, gas, and electricity demand since 2010. However, no single country or group of nations is expected to replicate China’s rapid, energy-intensive industrial growth.

The report notes that traditional energy security risks related to oil and gas are now being compounded by vulnerabilities in the supply chains of critical minerals essential for clean energy technologies. A single country currently dominates the refining of 19 out of 20 key energy-related strategic minerals, holding an average market share of nearly 70%. These minerals are vital for renewable power systems, electric vehicle batteries, and digital technologies such as AI chips and defence equipment. Since 2020, the geographic concentration of refining has deepened, especially for nickel and cobalt. The IEA warns that diversifying these supply chains will take time and requires decisive government action.

IEA Executive Director Fatih Birol highlighted the unprecedented nature of the current energy security landscape, noting that tensions now span nearly all fuels and technologies. He urged governments to demonstrate the same commitment and cooperation that led to the founding of the IEA after the 1973 oil crisis. According to him, today’s policies must balance energy security with affordability, access, competitiveness, and climate goals.

Electricity continues to be at the centre of modern economies. The report finds that electricity demand is increasing faster than overall energy consumption in every scenario. Global investment in electricity generation and end-use electrification now accounts for half of all energy investments worldwide. Electricity makes up around 20% of total final energy consumption but powers over 40% of the global economy and serves as the primary energy source for most households. Dr. Birol noted that the world has firmly entered the “Age of Electricity,” driven by surging demand from data centres and AI. Investment in data centres is projected to reach $580 billion in 2025, surpassing the $540 billion spent on global oil supply—a powerful symbol of how the global economy is evolving.

Despite rapid progress in generation, the report warns that grid expansion and energy storage are lagging. While investments in electricity generation have grown nearly 70% since 2015, grid investments have increased at less than half that pace. Strengthening electricity grids and enhancing system flexibility through storage and other technologies are identified as critical priorities for maintaining reliable power systems.

Renewables continue to expand faster than any other energy source, led by solar PV. By 2035, around 80% of global energy consumption growth is expected to occur in regions with strong solar potential. Nuclear power is also witnessing renewed investment, with global capacity projected to rise by at least one-third by 2035, thanks to new large-scale projects and small modular reactor designs.

In the near term, global oil and gas supplies remain adequate, with oil prices expected to stay around $60 to $65 per barrel. Liquefied Natural Gas (LNG) capacity is expanding rapidly, with 300 billion cubic metres of new export capacity scheduled by 2030—half of it from the United States and 20% from Qatar. However, the IEA cautions that these market balances could quickly erode due to geopolitical tensions or shifts in demand.

The report also underscores ongoing shortfalls in achieving global climate and energy access goals. Nearly 730 million people still lack electricity, and around 2 billion rely on unsafe cooking methods. The WEO-2025 includes a pathway to achieve universal electricity access by 2035 and clean cooking access by 2040, largely through the use of LPG.

While climate risks continue to mount, the IEA warns that global temperatures are set to surpass the 1.5°C threshold in all projected scenarios, even those with rapid emissions reductions. However, it notes that achieving net-zero emissions by mid-century could still bring long-term temperatures back below 1.5°C.

The report concludes that the world’s energy systems must urgently adapt to rising risks—from extreme weather events and cyberattacks to resource shortages. In 2023 alone, disruptions to critical energy infrastructure affected more than 200 million households, with power grid failures accounting for 85% of incidents. The World Energy Outlook 2025 calls for faster investment, stronger policy cooperation, and greater resilience to ensure that the global energy transition remains secure, equitable, and sustainable.