World Energy Outlook 2025 Tackles Energy Demands and Fixes

A report from the International Energy Agency (IEA), released early December, shows that future electricity demand is set to surge well beyond previous expectations. How the world meets this growing demand will have profound implications for energy security, affordability, and climate change.

The IEA’s flagship World Energy Outlook (WEO) is widely regarded as the most authoritative source of global energy analysis and projections. Updated annually to reflect the latest energy data, technology and market trends, and government policies, it explores a range of possible energy futures and their implications for energy security, access, and emissions.

The World Energy Outlook 2025 (WEO-2025) is published against a backdrop of significant shifts in global energy policies, volatile markets, and heightened geopolitical tensions. Governments are reaching increasingly divergent conclusions about how best to address energy security, affordability, and sustainability. A central theme of this year’s report is the growing importance of critical minerals and the need to protect their supply.

Scenarios, not forecasts

The World Energy Outlook 2025 sets out scenarios rather than predictions or forecasts. All scenarios begin with the same assessment of today’s energy landscape—characterised by rapidly rising demand and geopolitical uncertainty—but diverge based on different assumptions about policy ambition and technological progress.

The report models three main scenarios:

• Current Policies Scenario (CPS):
  This scenario reflects only policies and regulations that are already in force. It assumes a cautious pace of clean energy deployment and integration, resulting in global warming of around 2.9°C by 2100. Under this pathway, oil and natural gas demand continue to grow until 2050, while coal demand begins to decline before 2030. Energy-related emissions remain close to today’s levels.
  
• Stated Policies Scenario (STEPS):
  STEPS includes a broader range of policies that governments have announced or proposed but not yet fully implemented. While barriers to new technologies are lower than in the CPS, aspirational targets are not assumed to be met. Under this scenario, global temperatures rise to around 2.5°C by 2100.
  
• Net Zero Emissions by 2050 Scenario (NZE):
  This scenario charts a pathway consistent with limiting warming to 1.5°C, requiring rapid deployment of clean energy and deep emissions reductions. Global emissions reach net zero by 2050, with a short-term temperature overshoot above 1.5°C before falling back to below 1.5°C by 2100, assuming large-scale carbon dioxide removal. Fossil fuel demand falls sharply, leaving many existing or planned projects unused.
  

Key findings and emerging risks

The report finds that momentum behind national and international efforts to reduce emissions has weakened, even as climate risks intensify. In 2024, global temperatures exceeded 1.5°C above pre-industrial levels for the first time, making it the hottest year on record. At the same time, global energy demand continues to grow rapidly as new technologies enter the market.

Renewables set new deployment records in 2024 for the 23rd consecutive year, yet fossil fuels have not declined at the pace required. Oil, natural gas, coal consumption, and nuclear output all reached record highs. Coal demand—mainly driven by China—has grown 50% faster than natural gas demand, contributing to rising energy-related emissions.

China also dominates the manufacturing of solar panels and batteries, with high production volumes keeping prices low but raising concerns about market concentration. Chinese firms are increasingly investing in clean energy manufacturing overseas, including in Indonesia, Morocco, Hungary, and Brazil.

After years of stagnation, nuclear power is experiencing a resurgence. New investments are being made worldwide, including in conventional reactors and small modular reactors (SMRs). By 2035, global nuclear capacity is expected to increase by at least one-third in several scenarios.

Electricity, critical minerals, and infrastructure resilience

Energy security is no longer defined solely by oil and gas. The report highlights the growing strategic importance of critical minerals, which are essential for power grids, batteries, electric vehicles, and emerging technologies such as artificial intelligence, as well as defence and aviation industries.

China currently refines 19 out of 20 energy-related strategic minerals, holding an average market share of around 70%. As of November 2025, more than half of these minerals are subject to export controls.

The IEA also warns of rising risks to energy infrastructure from extreme weather, cyberattacks, and other forms of disruption. In 2024 alone, outages and attacks affecting critical energy systems disrupted electricity supplies for more than 200 million households worldwide.

As electricity demand accelerates, investment in grids, storage, and system flexibility must increase much faster. Electricity currently accounts for just 21% of global final energy consumption, yet it powers sectors responsible for over 40% of the worldwide economy and remains the primary energy source for most households. This underscores the economic and social costs of insecure and unreliable electricity supplies.