IEA World Energy Outlook 2024

The IEA’s Executive Director, Fatih Birol, emphasised that the global energy system is undergoing a transformation comparable to the shift from coal to oil in the past, with electricity set to dominate the future landscape. He highlighted how this transition, driven largely by renewable-energy sources, is expected to see more than half of the world’s electricity coming from low-emission technologies before 2030. However, the report warns that progress remains uneven across regions, and calls for increased investment to make clean energy more accessible and resilient on a global scale.

In addition to electricity's central role, the World Energy Outlook 2024 addresses key geopolitical and economic pressures on energy security, especially in light of recent global conflicts. The IEA projects that by the end of the 2020s, demand for fossil fuels like oil, coal and natural gas will peak, while clean energy investments will reach unprecedented levels. This shift presents significant opportunities to mitigate climate change, though the report also highlights the substantial work that remains to reach international climate goals, such as limiting global warming to 1.5ºC.

What is the World Energy Outlook report? 

The World Energy Outlook (WEO) report is the flagship publication from the International Energy Agency (IEA), which is an intergovernmental organisation that provides policy recommendations, analysis and data on the global energy sector. The report is considered to be the most authoritative global source of energy analysis and projections, identifying the biggest trends in both energy demand and supply, and examining what these mean for energy security, emissions and economic development. The WEO 2024, as this latest edition published in October 2024 is known, examines not just how far the world has come on the journey toward a more sustainable global energy system, but also considers what more needs to be done if climate goals – such as limiting the warming of the planet to 1.5ºC – are to be achieved. 

The report also points to the major risks that are being caused by geopolitical tensions both in the case of energy security and when it comes to taking global action to reduce emissions of greenhouse gases. Projections from the IEA suggest that the world will enter a new energy market context in the coming years, characterised by an abundant supply of multiple fuels and technologies, including oil and liquefied natural gas.

The ‘Age of Electricity’

On the release of the report, Fatih Birol, the Executive Director of the International Energy Agency (IEA), heralded the arrival of the “Age of Electricity”, something that he said will “define the global energy system” from now on. “In energy history, we’ve witnessed the Age of Coal and the Age of Oil,” Birol said. “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.”

The report predicts that more than half of the world’s electricity will come from low-emission sources before the year 2030. But it warned that the deployment of clean energy is “far from uniform” on an international scale. What’s more, the report predicts that demand for fossil fuels such as oil, gas and coal will peak by the end of the 2020s, with clean energy “entering the energy system at an unprecedented rate”. A full 560 gigawatts (GW) of renewable energy capacity was added to the global system in 2023, the report finds, while around $2 trillion is due to be invested in clean energy in 2024, almost double what will be allocated to fossil fuels in the same period.

Rising demand for electricity and the persistence of coal 

The IEA says that by 2035 global electricity demand will be 6% higher than it was predicting as recently as last year, and expects the world to add the equivalent of Japan’s annual electricity requirements each year (909 terawatt hours). This demand is being driven by a variety of factors, such as the need for air conditioners in countries that are suffering ever-more-brutal heatwaves, like India, power-hungry data centres, new factories and also electric vehicles, the report states.

The growth in clean power generation has not, however, kept pace with this rising global demand for electricity. The IEA predicts this trend will continue, meaning that the use of coal to generate power will decrease more slowly than had been expected. In the United States, for example, some utility companies are extending the life of coal-fired power plants rather than sticking to plans to retire them. 

But the IEA also points to enough low-emissions power plants coming online by the end of the 2020s to meet that rise in demand. These plants, the Paris-based agency says, will be primarily wind, solar and nuclear. This increase in capacity could see the use of fossil fuels such as coal, oil and natural gas peak over the course of the current decade, and prevent the global emissions of greenhouse gases from increasing too drastically.  

Energy security and geopolitical strains

The IEA report points to the effect that conflicts such as the one that broke out in the Middle East in 2023 have on the flow of oil, with a major potential for disruption. Some 20% of global oil and liquified natural gas (LNG) supplies, for example, flow through the Strait of Hormuz, which is a “maritime chokepoint” in the region. The solution, the agency suggests, is to accelerate the translation to “clean and more secure technologies” in order to move away from dependence on fossil fuels. What’s more, the IEA also pointed to the ongoing efforts by the United States and Qatar to build terminals for the export of liquified natural gas (LNG). This could lead to an “oversupply” of LNG in the 2020s, something that could push down global energy prices and avoid the kinds of price spikes suffered by some countries after Russia invaded Ukraine back in 2022. 

“In the second half of this decade [the 2020s], 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,” IEA Executive Director Fatih Birol said. “It implies downward pressure on prices, providing some relief for consumers that have been hit hard by price spikes. The breathing space from fuel price pressures can provide policymakers with room to focus on stepping up investments in clean energy transitions and removing inefficient fossil fuel subsidies. This means government policies and consumer choices will have huge consequences for the future of the energy sector and for tackling climate change.”

Growing sales of electric vehicles, for example, could see the global demand for oil plateau as the current decade progresses, while the IEA also expects a “large surfeit” of manufacturing capacity for some of the key clean energy technologies, such as solar PV and batteries.

The world is a ‘long way’ from its climate goals 

The demand for oil and gas is expected to peak before the end of the 2020s, according to the IEA’s analysis, but the world is still on pace to reach 2.4ºC of global warming by the end of the century. This is well above the Paris Agreement objective of limiting the temperature increase to 1.5ºC, and will entail “ever more severe risks from a changing climate”, according to the WEO 2024 report. The IEA states that decisions taken by governments, investors and consumers too often entrench the current flaws in the energy system, rather than pushing it towards a clean and safer path. The report points to the costs of climate inaction, which will increase day by day as emissions accumulate in the Earth’s atmosphere and the resultant extreme weather wreaks havoc. Clean-energy technologies, meanwhile, will remain cost-effective, according to the report, enjoying a low exposure to the commodity markets and providing “lasting benefits for people and the planet”. 

More investment needed in new energy systems

Despite the clear progress in the transition to clean energies that the WEO 2024 report points to, it concludes that greater investment is still needed for new systems, in particular when it comes to electricity grids and energy storage. For every dollar that is spent on renewable power, the IEA states, 60 cents are spent on grids and storage, which highlights how the essential supporting infrastructure is not managing to keep pace with the transition to clean energy. “Secure decarbonisation of the electricity sector requires investment in grids and storage to increase even more quickly than clean generation, and the investment ratio to rebalance to 1:1,” says the IEA. “Many power systems are currently vulnerable to an increase in extreme weather events, putting a premium on efforts to bolster their resilience and digital security.”

What’s more, the IEA has found that clean-energy projects are being held back in many developing economies, due to uncertainties over policy and the high cost of capital. In advanced economies, the picture is mixed, with “accelerations in some areas accompanied by slowdowns in others”, including a fall in the sales of heat pumps in Europe in the first half of 2024. The report also highlights the lagging process on headline commitments from the COP28 United Nations Climate Change Conference, held in 2023, with the goal of doubling the global rate of energy-efficiency improvements looking far out of reach under current policies.

China as a model for renewable energy

China merits special attention in the World Energy Outlook 2024. Electricity use has grown at twice the pace of overall energy demand over the last decade, with two-thirds of the global increase in electricity demand over the last 10 years coming from China, the IEA reports. The superpower is currently the world’s biggest emitter of greenhouse gas emissions, but it is also the principal manufacturer of solar panels and batteries for energy storage. Electric vehicles account for 40% of new car sales in the country (and 20% of sales globally), while solar-power generation from China alone could exceed the total demand for electricity in the United States by the early 2030s.
 

“As with many other global energy trends today, China is a major part of what is happening,” Dr Birol added. “Whether it’s investment, fossil fuel demand, electricity consumption, deployment of renewables, the market for EVs, or clean technology manufacturing, we are now in a world where almost every energy story is essentially a China story. Just one example: China’s solar expansion is now proceeding at such a rate that, by the early 2030s – less than 10 years from now – China’s solar power generation alone could exceed the total electricity demand of the United States today.”