IEA Outlook 2025: The World’s Energy Future

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The Dawn of the "Age of Electricity"

Electricity is rapidly becoming the central pillar of the modern energy system. Its demand is set to grow much faster than overall energy use, driven by the electrification of transport and heating, alongside a massive surge in demand from data centers powering Artificial Intelligence (AI). The report notes that investment in data centers in 2025 is expected to surpass spending on global oil supply, signaling a profound shift in energy consumption patterns.

Critical Minerals: The New Geopolitical Fault Line

Energy security is no longer just about oil and gas. The report highlights the acute vulnerability of supply chains for critical minerals like lithium, cobalt, and rare earth elements, which are essential for batteries, electric vehicles (EVs), and wind turbines. A single country dominates the refining of 19 out of 20 strategic energy-related minerals, creating a significant risk of supply disruptions and economic coercion.

The Surprising Comeback of Nuclear Power

After decades of stagnation, nuclear power is experiencing a revival. More than 40 countries are now including nuclear energy in their strategies to enhance energy security and meet climate goals. With over 70 GW of new capacity under construction, global nuclear power capacity is projected to increase by at least one-third by 2035, supported by investment in both large-scale plants and new small modular reactors (SMRs).

AI's Dual Role: Energy Consumer and Efficiency Driver

Artificial Intelligence is a major new driver of electricity demand due to the explosive growth of data centers. However, the report also points out AI's potential to significantly boost energy efficiency. Widespread adoption of AI-driven optimization across transport and industry could unlock substantial energy savings and emissions reductions, making it a crucial tool for the energy transition.

Fossil Fuels on Divergent Paths

The outlook for fossil fuels varies significantly across the report's scenarios. While coal demand is projected to peak before 2030 in all cases, the futures of oil and natural gas are less certain. In some scenarios, their demand continues to grow, while in others, the rapid uptake of EVs and renewables leads to a plateau or decline. A massive new wave of Liquefied Natural Gas (LNG) supply is set to come online by 2030, raising questions about where this additional gas will be consumed.