Electricity will become an increasingly important energy source over the next ten years, according to the International Energy Agency. The agency expects electricity demand to grow by at least 40 percent between now and 2035. We will use more and more electricity for air conditioning, industry, electric mobility, data centers, and electric heating.
The switch to electricity is already in full swing, and renewable energy is fueling growth — especially solar energy, which has become increasingly cheaper in recent years. Other renewables are growing very fast as well: wind, hydropower, bioenergy, and others are all expanding strongly.
But even though solar and wind are scaling fast, some sectors are harder to decarbonize: aviation, shipping, long-haul trucking, petrochemicals, specific industrial heat uses, etc. Also, even if renewables are cheap and getting cheaper, switching the entire system (transport, industry) takes time.
Oil demand
At the same time, the IEA’s latest annual ‘World Energy Outlook’ report states that there’s a real chance oil demand is projected to peak around 2030 and then gradually decline. Previous reports indicated that oil demand would plateau or even decrease this decade.
Much of the oil is not just for electricity but for transport (road vehicles, aviation), plastics/petrochemicals, heating in some cases, etc. WEO 2025 highlights that while renewables dominate electricity-generation growth, that alone doesn’t eliminate demand for oil in other uses.
Good news
The report emphasises that even though renewables are growing faster than any primary energy source, this doesn’t automatically mean fossil fuels will vanish. Many structural factors mean oil and gas remain significant under many policy paths.
In the fight against climate change, the success of electricity is good news because it emits fewer greenhouse gases than fossil fuels when used, even if that electricity is generated from, for example, gas. But this report also notes that the 1.5-degree warming threshold — the lower limit of the Paris Climate Agreement — has now disappeared from view.
Tense times
According to the IEA, growing uncertainties about the “political, economic, and energy context” are driving new scenarios — other IEA scenarios stick to a peak in oil demand around 2030. Much will depend on the electrification of the transport sector.
The fact is that we live in tense times, and the energy supply is suffering as a result. Rare minerals, which are needed for batteries and electric cars, are being used as a weapon in the global trade war, and our dependence on China in the energy transition poses a risk.
Moreover, electricity supply is vulnerable to new forms of warfare, such as cyberattacks, as well as to climate disasters, including storms and floods. This makes electricity a matter of economic and national security, the IEA warns.
Finally, the agency is still concerned about the burning of firewood. As many as 2 billion people worldwide still cook primarily on wood fires, “with serious implications for health and the environment,” according to Fatih Birol. This number must be drastically reduced over the next fifteen years, the agency concludes.
