Key Takeaways from the IEA’s World Energy Outlook Report
Geopolitical uncertainty, energy security, and the clean energy transition: these three topics were ever present throughout the International Energy Agency’s (IEA) World Energy Outlook for the world’s energy supply. The over 300-page report provides analysis and insights into the current state of the world’s energy, and where it could be in future policy scenarios and market trends. Here are some of our key takeaways.
Uncertainty Clouds the Future of Energy Security
Uncertainty casts a dark cloud over the report, reflecting mounting concerns over diverse aspects – from an unpredictable geopolitical landscape to an increasing risk of cyber-attacks on power systems.The report also highlighted climate change as a threat to energy infrastructure, increasing the likelihood and unpredictability of extreme weather events. As the report concludes: “Energy security and climate action are inextricably linked.”
“These threats and uncertainties underline how it is more critical than ever to accelerate the clean energy transition to ensure energy security worldwide. Climate change is here, and we need to act quickly to mitigate and adapt to it,” says renewables expert Anton Schön, Team Lead at First Climate.
Trends in the Clean Energy Transition
The IEA expects global energy demand to continue to decline due to new efficiency technologies such as cooling and the increased electrification. Electricity demand, on the other hand, is likely to increase due to increased use of electric vehicles, and artificial intelligence.
What will meet this growing electricity demand? In 2023, fossil fuels still dominated the global electricity supply at 60%—their lowest share in 50 years. Meanwhile, renewables have surged, surpassing 30% of global electricity generation for the first time in 2024. This momentum is expected to continue, with solar and wind projected to provide over 40% of electricity generation by 2035. Solar energy, in particular, has the potential to triple its gigawatt capacity from 2023 by 2030.
When it comes to financing the transition to clean energy, corporations have already started to take a leading role—their investments in renewable energy projects provide around half of energy financing today.
“To me, this finding demonstrates that the private sector’s voluntary action is essential to making the transition to clean energy happen,” says Anton Schön, “Companies have, and will continue to, step up to the challenge. And with tools like I-RECs, GoOs, or PPAs, First Climate is prepared to support companies to make the transition to renewable energy. ”
Companies will continue to step up to the challenge.
However, while renewable energy capacity is rapidly growing, the supporting infrastructure, such as grids, battery structure, and cybersecurity is lagging behind. For every $1 spent on renewable energy, only $0.60 is invested towards the infrastructure to support it, preventing this clean energy from being fully utilized.
The report also found that the clean energy transition has an equity problem: There is a large population globally that lacks access to basic energy needs. The report found that 750 million people don’t have electricity and 2 billion people still do not have access to clean cooking methods. The IEA report makes it clear that there’s still a long way to go in achieving the Global Sustainable Development Goals' aim of providing everyone with access to affordable, reliable, sustainable, and modern energy by 2030.
A Silver Lining on the Horizon?
Despite the uncertainties, energy supply across all sources is set to eventually increase in the future. If the opportunity is recognized correctly, this buyer’s market could provide some room for maneuverability, easing demand pressure and costs while creating more opportunities for increased investment in clean energy.
“We need to continue accelerating the transition now. The climate can’t wait anymore, and emissions need to be cut,” says Anton Schön.
You can find the entire IEA report here:
IEA (2024), World Energy Outlook 2024, IEA, Paris https://www.iea.org/reports/world-energy-outlook-2024, Licence: CC BY 4.0 (report); CC BY NC SA 4.0 (Annex A)
