International Energy Agency warns of new risks in ‘age of electricity’

ISTANBUL

The International Energy Agency (IEA) has warned that the global energy system faces its “broadest test in decades,” as overlapping risks stretch from fuel markets to supply chains and digital infrastructure.

In its World Energy Outlook 2025, released Tuesday, the Paris-based agency said the world has entered what it calls the “Age of Electricity” -- a period when power demand is rising faster than total energy use, reshaping economies and exposing new vulnerabilities.

“The world has never faced energy security pressures across so many fronts at once, from oil and gas to grids, data, and minerals,” IEA Executive Director Fatih Birol said. He urged governments to show the same determination that led to the agency’s creation after the 1973 oil crisis.

Electricity now accounts for one-fifth of all final energy use but powers more than 40% of global economic activity, according to the report.

Birol said the transformation is accelerating faster than expected: “Last year, we said the world was moving into the Age of Electricity, and it’s clear today that it has already arrived.”

Unlike previous decades, the surge in power use is now driven by advanced economies rather than emerging ones. Data centres and artificial intelligence have become major energy consumers, with global investment in digital infrastructure forecast to hit $580 billion in 2025 -- surpassing spending on oil supply. “Those who say ‘data is the new oil’ can now back it up with numbers,” Birol added.

Minerals emerge as new fault line

The report highlights critical minerals as the next major chokepoint in energy security. One country currently refines 19 of the 20 key energy-related minerals, controlling roughly 70% of global processing -- a concentration the IEA warns could expose economies to disruption or coercion.

“These minerals are the foundation of batteries, wind turbines, solar panels, and AI hardware,” the agency said, noting that over half now face export restrictions. “Diversifying and securing these supply chains will require stronger policy coordination, not just market forces.”

Birol said minerals have become “what oil was in the 20th century -- a matter of national resilience.”

Emerging economies drive new growth

The IEA projects that India and Southeast Asia will overtake China as the main engines of global energy demand in the next decade. By 2035, around 80% of consumption growth is expected to come from regions rich in solar potential, accelerating adoption of renewable technologies.

Solar photovoltaic energy remains the fastest-growing power source, while nuclear energy is poised for a revival. Global nuclear capacity is forecast to expand by at least one-third by 2035, driven by new small modular reactors designed to supply energy-intensive data centers.

Oil and gas markets, the agency said, are currently well-supplied, with prices expected to remain around $60–65 per barrel. A new wave of liquefied natural gas (LNG) projects is set to boost capacity by 50% by 2030, though the IEA warned that “geopolitical risks remain acute” and complacency could destabilize markets.

Climate goals off track

Despite record growth in renewables, the world remains off course to meet global climate and energy access targets, the report said. About 730 million people still live without electricity, and nearly 2 billion rely on unsafe cooking fuels.

The IEA’s updated roadmap calls for full electricity access by 2035 and universal clean cooking by 2040, largely through liquefied petroleum gas (LPG) and decentralized power systems.

Yet even with accelerated efforts, global temperatures are projected to rise beyond 1.5C, marking what Birol described as a “critical decade” for governments to act.

“The choices made this decade will shape energy security and climate stability for generations,” he said. “The data show the path forward, but also the urgency to move.”