Global Energy Risks Demand Urgent Diversification and Cooperation

In an evolving global landscape, energy security risks are escalating, necessitating prompt diversification and international cooperation. The 2025 edition of the World Energy Outlook (WEO) from the International Energy Agency (IEA) highlights the imperative for governments worldwide to address these mounting challenges. This comprehensive report outlines crucial choices and opportunities that nations must consider to ensure energy security amid unprecedented geopolitical tensions.

Energy Security and Growing Risks

Countries are grappling with serious energy security threats across a diverse array of fuels and technologies. With energy increasingly becoming a central issue of economic and national security, the WEO emphasizes the need for enhanced cooperation among nations to mitigate uncertainties in the energy sector.

Key Scenarios in WEO 2025

The WEO presents three main scenarios that map distinct energy futures. These scenarios are not forecasts; instead, they allow for the analysis of various policy, investment, and technology choices impacting energy security, affordability, and emissions.

• Rising Global Energy Demand: The growing need for energy services, including mobility and heating, is a trend across all scenarios.
• Emerging Economies’ Influence: Countries like India and those in Southeast Asia, the Middle East, Africa, and Latin America are reshaping energy market dynamics.
• Critical Minerals Market: Supply chains for essential minerals are now a focal point due to significant market concentration.

Electricity’s Central Role

Electricity demand is projected to grow significantly faster than overall energy use. As electricity accounts for only about 20% of global final energy consumption, it serves as the core energy source for many sectors, including households and industries.

• Global investment in data centers is anticipated to hit $580 billion by 2025, surpassing the $540 billion earmarked for oil supply.
• Renewable energy sources, especially solar power, are expected to expand rapidly.

Investment and Infrastructure Challenges

While investments in electricity generation have surged almost 70% since 2015, annual spending on grid infrastructure has lagged behind. This discrepancy poses a challenge for energy security, especially as new energy technologies emerge.

Natural Gas Market Dynamics

The oil and gas sectors are currently experiencing geopolitical fragility, with oil prices fluctuating between $60 and $65 per barrel. However, natural gas markets are expected to stabilize due to new liquefied natural gas (LNG) projects, with around 300 billion cubic meters of new LNG export capacity projected to commence by 2030.

Universal Energy Access and Climate Goals

Despite advancements, significant gaps remain in achieving universal energy access and combating climate change. Approximately 730 million individuals lack electricity, while nearly 2 billion rely on unhealthy cooking methods.

Pathways to Universal Access

The WEO outlines strategies for each country to meet electricity access targets by 2035 and clean cooking goals by 2040, emphasizing the role of liquefied petroleum gas (LPG).

With climate change presenting ominous risks, WEO-2025 illustrates that the world could exceed a 1.5°C increase in warming under various scenarios. However, pathways to achieve net-zero emissions by mid-century could help lower temperatures in the long run.

Building Resilience

As energy systems continue to be impacted by climate change, there is an urgent need to enhance resilience against rising weather-related risks. Notably, disruptions to critical energy infrastructure in 2023 affected over 200 million households globally, with power lines being particularly susceptible to damage.

In conclusion, the findings of the WEO emphasize the urgent need for governments to prioritize diversification and cooperation within the energy sector to navigate the complexities of modern energy security.