The International Energy Agency (IEA) says countries around the world are contending with pressing energy security threats and growing longer-term risks across an unprecedented range of fuels and technologies, thrusting energy into the heart of geopolitical tensions and elevating it as a core issue of economic and national security.
The IEA’s 519-page World Energy Outlook 2025 “underscores the need for governments to pursue greater diversification of supplies and increased cooperation with one another to help navigate the uncertainties and turbulence ahead”.
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The World Energy Outlook (WEO) highlights different opportunities and vulnerabilities, as well as commonalities, using three main scenarios, none of which are forecasts. Each maps out a distinct energy future, enabling analysis of the implications of different policy, investment and technology choices for energy security, affordability and emissions.
Two of the scenarios set starting conditions and then examine where they lead – the Current Policies Scenario (CPS) and the Stated Policies Scenario (STEPS). The third, Net Zero Emissions by 2050 (NZE), maps out a pathway to achieve specific energy and climate-related goals.
“When we look at the history of the energy world in recent decades, there is no other time when energy security tensions have applied to so many fuels and technologies at once – a situation that calls for the same spirit and focus that governments showed when they created the IEA after the 1973 oil shock,” said IEA executive director Fatih Birol. “With energy security front and centre for many governments, their responses need to consider the synergies and trade-offs that can arise with other policy goals – on affordability, access, competitiveness and climate change.”
He added: “Analysis in the World Energy Outlook has been highlighting for many years the growing role of electricity in economies around the world. Last year, we said the world was moving quickly into the Age of Electricity – and it is clear today that it has already arrived. In a break from the trend of the past decade, the increase in electricity consumption is no longer limited to emerging and developing economies. Breakneck demand growth from data centres and AI is helping drive up electricity use in advanced economies, too. Global investment in data centres is expected to reach $580bn in 2025. Those who say that ‘data is the new oil’ will note that this surpasses the $540bn being spent on global oil supply – a striking example of the changing nature of modern economies.”
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By GlobalDataIn two critical areas, the world is falling short on the goals it set for itself: universal energy access and climate change. WEO 2025 says that “in a volatile world, energy security takes centre stage”. Its key findings on security are:
- Pressing threats and longer-term hazards are elevating energy to a core issue of economic and national security. Energy is at the heart of today’s geopolitical tensions, with traditional risks to fuel supply now accompanied by restrictions affecting supplies of critical minerals.
- The electricity sector is also increasingly vulnerable to cyber, operational and weather-related hazards. Decisions taken by energy policymakers will be crucial to address these risks, but they do so against a complex backdrop.
- Geopolitical fragility coexists with subdued oil prices. Ongoing conflicts and instability sit alongside oil market balances showing a large surplus of supply over demand.
- Countries are prioritising energy security and affordability but are reaching for different levers to achieve them. Some, including many fuel-importing countries, lean towards renewables and efficiency as solutions. Others focus more on ensuring ample supplies of traditional fuels.
- There are fractures in the international system and uncertainties over the outlook for trade, but energy trade is more important than ever. Abundant supplies of oil, solar panels, batteries and, before long, liquefied natural gas create strong incentives for producers to seek out international markets.
- There is less momentum than before behind national and international efforts to reduce emissions, yet climate risks are rising. 2024 was the hottest year on record and the first in which global temperatures exceeded 1.5°C above preindustrial levels. At the same time, the world remains thirsty for energy.
- New technologies are entering the system at speed, and renewables set new records for deployment in 2024 for the 23rd consecutive year. Oil, natural gas and coal consumption, and nuclear output, all reached record highs as well, driven mainly by China, since 2019 demand for coal has grown 50% faster than the next fastest-growing fossil fuel, natural gas, a key reason why energy-related emissions have continued to grow.
WEO 2025 finds that serious threats are hanging over critical minerals supply chains. “Traditional hazards affecting the security of oil and gas supply are now accompanied by vulnerabilities in other areas, most visibly in critical minerals supply chains. These new dimensions to energy security… have been underscored by China’s new export controls on rare earth elements and battery components and technologies.”
The key risk for critical minerals is high levels of market concentration. A single country [China] is the dominant refiner for 19 out of 20 energy-related strategic minerals, with an average market share of around 70%. “The minerals in question are vital for power grids, batteries and electric vehicles (EVs), but they also play a crucial role in AI chips, jet engines, defence systems and other strategic industries. As of November 2025, more than half of these strategic minerals are subject to some form of export controls.”
The report says electricity is at the heart of modern economies and electricity demand grows much faster than overall energy use in all scenarios. “It rises by around 40% to 2035 in both the CPS and the STEPS, and by more than 50% in the NZE Scenario.” Demand growth comes in varying proportions from appliances and air conditioners, advanced manufacturing and other light industries, electric mobility, data centres and electrified heating. Investors are reacting to this trend: spending on electricity supply and end-use electrification already accounts for half of today’s global energy investment.
Rising electricity use means that electricity prices are becoming a key reference point for consumers and policy makers. For the moment, electricity accounts for only 21% of total final consumption globally, but it is the key source of energy for sectors accounting for more than 40% of the global economy and the main source of energy for most households. “This underscores the importance of secure and affordable electricity supply.”
WEO 2025 notes that nuclear power is making a comeback. “Another common element across scenarios is the revival of fortunes for nuclear energy, with investment rising in both traditional large-scale plants and new designs, including small modular reactors (SMRs). More than 40 countries now include nuclear energy in their strategies and are taking steps to develop new projects.”
In addition to reactors that are restarting operation, notably in Japan, there is more than 70GW of new capacity under construction, one of the highest levels in 30 years. “Innovation, cost control and greater visibility on future cash flows is essential to diversify a sector that has been characterised by high market concentration, including for construction, uranium production and enrichment services.”
Technology companies are supporting the emergence of new business models, with agreements and expressions of interest for 30GW-electrical of SMRs, mainly to power data centres. “With these developments, after more than two decades of stagnation, global nuclear power capacity is set to increase by at least one-third to 2035.”
In summary, the STEPS and CPS scenarios present two views on how the energy system may evolve, building on different assumptions regarding today’s policies and technologies. Both scenarios see continued increases in energy demand to 2050, albeit at different speeds, with emerging market and developing economies driving the increase, led by India and South East Asia.
The emissions trajectory in the CPS is consistent with warming of almost 3°C by 2100, whereas lower levels of emissions in the STEPS keep this to around 2.5°C. In the NZE scenario, warming peaks around 2050 at about 1.65°C and declines slowly after that, largely due to active measures to remove CO₂ from the atmosphere. The resilience of energy infrastructure in the face of extreme weather and other hazards is becoming more critical.
Electricity plays a growing role in meeting energy service demand in all scenarios, supplied with rising shares of generation from renewables. Peak electricity demand rises by around 40% by 2035 in STEPS, with similar trends in the other scenarios, largely due to increased demand for cooling. Data centres and AI account for less than 10% of global growth in electricity demand, but this is a larger factor in the US, where a large share of new data centres are located.
The nature of energy security is changing; traditional risks have not gone away but electricity and critical mineral security are rising as key priorities. As to electricity security, the NZE scenario implies sharper challenges for electricity security. As electricity comes to provide more than half of the energy consumed around the world by 2050, the economic consequences of potential disruptions increase. The electricity sector becomes more complex, with growing supply from variable sources of generation and increasing consumption from a wide range of end-uses such as EVs and heat pumps, thus: “Maintaining electricity security will require a diverse portfolio of measures.”
Implications for the next ten years suggest that, by 2035, the NZE scenario sees global energy-related emissions fall by around 50% from 2024 levels, and electricity use rise to account for one-third of total final consumption. The installed capacity of renewables reaches around 19.6TW, increasing fourfold from 2024. Other low-emissions sources such as nuclear also see rapid growth, enabling deep cuts to be made in electricity sector emissions.
