The World Energy Outlook 2024, published by the International Energy Agency (IEA), provides a comprehensive analysis of the evolving global energy system. Against the backdrop of escalating geopolitical tensions, accelerating clean energy transitions, and persistent challenges in energy access, the report examines the current state and future trends of energy demand, security, and sustainability. This article will summarise the key findings of the report, focusing on energy security, the role of clean energy, the future of fossil fuels, electricity demand, investment needs in emerging economies, and the implications of supply chain vulnerabilities.
The World Energy Outlook 2024 comes at a time of heightened geopolitical uncertainty, with ongoing conflict in Ukraine and rising tensions in the Middle East threatening global energy security. The report underscores how vulnerable energy systems remain to geopolitical shocks, highlighting that around 20% of the world’s oil and liquefied natural gas (LNG) supplies flow through the Strait of Hormuz, a vital chokepoint in the Middle East. Disruptions in these regions have the potential to cause severe supply shortages and price volatility.
Despite these risks, the report suggests that underlying market balances are easing, with new oil and LNG supply capacity set to come online in the coming years. By 2030, spare crude oil production capacity is projected to rise to 8 million barrels per day, while global LNG export capacity is expected to increase by nearly 50%. These developments could provide some buffer against price shocks but do not eliminate the risks entirely. The report emphasises the importance of diversifying energy sources and building more resilient supply chains, especially for critical minerals required for clean energy technologies.
One of the central themes of the World Energy Outlook 2024 is the accelerating pace of clean energy transitions, driven by government policies, technological advancements, and industrial strategies. The report highlights that more than 560 gigawatts (GW) of new renewable energy capacity, primarily from solar and wind, were added globally in 2023, with clean energy technologies continuing to grow rapidly.
However, the report stresses that while the momentum behind clean energy is strong, it is not yet sufficient to meet global climate goals. Under the Stated Policies Scenario (STEPS), which reflects the current policy trajectory, clean energy is projected to cover nearly all the growth in global energy demand between 2023 and 2035. Yet, to achieve the necessary reductions in carbon emissions and keep global temperature increases below 1.5°C, as outlined in the Net Zero Emissions by 2050 Scenario (NZE), much faster deployment of clean energy technologies will be required.
The report also notes that clean energy transitions are not happening uniformly across regions. While China accounted for 60% of the global renewable energy capacity added in 2023, other regions, particularly in emerging markets and developing economies, are lagging due to policy uncertainty, high financing costs, and weak infrastructure. The uneven distribution of clean energy progress raises concerns about whether global climate and energy goals can be achieved in time.
For the first time, the World Energy Outlook 2024 projects a peak in global demand for all three major fossil fuels—coal, oil, and natural gas—by 2030. This represents a significant turning point in the energy transition, driven by improvements in energy efficiency, the growing electrification of end-use sectors, and the rapid expansion of renewable energy.
However, the report warns that the global energy system is still heavily reliant on fossil fuels, particularly in emerging and developing economies. In the Stated Policies Scenario (STEPS), fossil fuels are projected to account for 58% of total energy demand by 2050, down from 80% today. This is far short of the reductions needed to meet net zero emissions goals, as outlined in the Announced Pledges Scenario (APS) and the Net Zero Emissions by 2050 Scenario (NZE), where fossil fuel use declines much more rapidly.
A key challenge identified in the report is the need for sustained investment in clean energy to displace fossil fuels in hard-to-abate sectors such as heavy industry, aviation, and shipping. Without further policy interventions and technological breakthroughs, fossil fuels will continue to play a significant role in the global energy mix, making it harder to achieve climate targets.
The report highlights the rapidly increasing demand for electricity, driven by the electrification of key sectors such as transportation, industry, and buildings. Global electricity demand is projected to rise much faster than overall energy demand, with clean energy sources such as solar, wind, and nuclear expected to meet the majority of this growth.
Electric vehicles (EVs) are a major driver of this trend, with EV sales accounting for around 20% of new car sales worldwide in 2023. In the Stated Policies Scenario, EVs are projected to account for nearly 50% of new car sales by 2030, displacing around 6 million barrels per day of oil demand. However, the report notes that delays in the roll-out of charging infrastructure and policy implementation could slow the growth of electric mobility, leading to higher oil demand in the short term.
In addition to electric mobility, other factors such as data centres and the rise of artificial intelligence (AI) are contributing to the surge in electricity demand. The report estimates that by 2035, global electricity demand will be 6% higher than previous projections, driven by these new uses. This raises important questions about how quickly clean power generation can scale to meet rising demand and whether grid infrastructure will keep pace.
Despite the rapid growth of clean energy technologies, the report highlights a significant gap in investment between advanced economies and emerging markets. While emerging and developing economies account for two-thirds of the global population and one-third of global GDP, they receive only 15% of total global clean energy investment. This disparity is a major obstacle to achieving global energy and climate goals, as these regions represent the largest sources of future energy demand growth.
The report calls for a concerted effort to increase clean energy investment in emerging economies, particularly in Africa, Southeast Asia, and Latin America. It emphasises the need for new financing models, stronger policy frameworks, and international cooperation to address the risks that are driving up the cost of capital in these regions. Without significant increases in clean energy investment, many countries will struggle to meet their energy access and climate commitments.
As the world moves towards a more electrified and renewable energy system, the supply chains for clean energy technologies are becoming increasingly important. The report highlights the vulnerabilities in these supply chains, particularly the concentration of critical minerals such as lithium, cobalt, and nickel in a few countries, most notably China. This concentration poses risks to the security of clean energy supply chains, especially as demand for these minerals is set to soar in the coming decades.
The report calls for a diversification of supply chains for critical minerals and increased investment in recycling and alternative materials to reduce reliance on a few key suppliers. Ensuring the resilience of these supply chains is crucial to maintaining the pace of clean energy transitions and avoiding disruptions that could slow progress towards global climate goals.
The World Energy Outlook 2024 paints a complex and multifaceted picture of the global energy landscape. While there is clear momentum behind clean energy transitions, significant challenges remain in achieving the speed and scale necessary to meet global climate and energy goals. The report highlights the critical role of government policies, international cooperation, and investment in shaping the future energy system.
As the world faces growing geopolitical risks and the accelerating impacts of climate change, the choices made by governments, businesses, and consumers in the coming years will have profound consequences for energy security, economic prosperity, and environmental sustainability. The report offers a clear message: the world can achieve a cleaner, more secure energy future, but only if action is taken now to accelerate the transition and address the challenges that lie ahead.