Electricity

IEA warns geopolitical tensions pose risk for energy security, urges faster clean energy transition

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October 18, 2024

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Published:

October 18, 2024

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Geopolitical tensions and fragmentation are creating major risks for energy security and climate action, exposing significant fragilities in today’s global energy system and highlighting the need for speeding up clean energy expansion, the International Energy Agency (IEA) said in its new annual report. Fossil fuel demand is expected to peak by the end of the decade, as the world is moving fast towards “the age of electricity”, the document adds.

The latest edition of the IEA’s World Energy Outlook (WEO) projects the world is set to enter a new energy market context in the coming years, marked by continued geopolitical hazards but also by a relatively abundant supply of multiple fuels and technologies.

Low-emissions sources are set to generate more than half of the world’s electricity before 2030, while demand for all three fossil fuels – coal, oil and gas – is still projected to peak by the end of the decade. Although clean energy is entering the energy system at an unprecedented rate, its deployment is far from even in terms of technologies and markets, the report notes.

Demand for coal, oil, and natural gas is still seen peaking by 2030

“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.

The projected excessive oil and liquefied natural gas (LNG) supply and manufacturing capacity for some clean energy technologies, notably solar and batteries, will likely bring down energy prices and provide room for stepping up investments in clean energy transitions and removing fossil fuel subsidies, according to him.

Birol: the world is moving into the age of electricity

In this context, the report points to the emergence of a new, more electrified energy system as global electricity demand soars. “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,” said Birol.

Javier Blas, Bloomberg’s energy and commodities columnist, highlighted that expected coal demand for the period 2020-2030 was revised higher as electricity demand is rising faster than renewables output. In a post on X, he noted that the projection for 2030, of 300 million tons of coal equivalent, is 6% higher than in WEO 2023.

Javier Blas: Electricity demand is rising faster than renewables output, pushing up demand for coal

Over the last decade, electricity consumption around the world has grown at twice the pace of overall energy demand, with two-thirds of the global increase in electricity demand coming from China, according to the IEA report. Today, China plays a major role in almost every energy trend – whether it’s investment, fossil fuel demand, electricity consumption, deployment of renewables, the market for EVs, or clean technology manufacturing, Birol noted.

China accounts for two-thirds of the global increase in electricity demand

For clean energy to continue growing at pace, much greater investment is necessary in new energy systems, especially in electricity grids and energy storage the report reads. It also warns that the world is still a long way from a trajectory aligned with its net zero goals despite growing momentum behind clean energy transitions.

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