World Energy Outlook 2025: Diversification and Cooperation Crucial as Global Energy Risks Multiply – Indian PSU
The International Energy Agency (IEA) has warned that countries worldwide are facing unprecedented energy security challenges spanning oil, gas, electricity, and critical minerals. The agency’s World Energy Outlook 2025 (WEO-2025) underscores the need for diversification of supplies and stronger international cooperation to ensure stability amid intensifying geopolitical and technological disruptions.
The annual report, widely regarded as the world’s most authoritative source on global energy trends, presents three scenarios that explore alternative pathways for the future of energy — none of which are forecasts, but rather analytical tools to help governments weigh policy choices, investments, and technology strategies.
According to the IEA, the world’s appetite for energy services is expanding rapidly, driven by rising demand for mobility, heating, cooling, industrial applications, and data services. Emerging economies — particularly India, Southeast Asia, and nations in the Middle East, Africa, and Latin America — are increasingly shaping global energy market dynamics, taking over the growth momentum from China.
“There has never been a time when energy security tensions affected so many fuels and technologies at once,” said Dr. Fatih Birol, Executive Director of the IEA. “Governments must balance energy security with affordability, competitiveness, and climate goals through data-driven, cooperative strategies.”
Age of Electricity Arrives
The report highlights that electricity now lies at the core of modern economies. Global investment in electricity supply and end-use electrification already accounts for half of total energy investments, reflecting the world’s rapid shift toward what the IEA calls the “Age of Electricity.”
Electricity consumption, driven by expanding data centres and AI infrastructure, is rising sharply not only in developing countries but also in advanced economies. The IEA projects that global investment in data centres will reach USD 580 billion in 2025 — surpassing the USD 540 billion projected for oil supply investment.
Despite robust progress in renewable generation — especially solar PV — the report warns that grid expansion and energy storage investments are lagging, threatening the reliability of future power systems. Nuclear energy is also experiencing a revival, with global capacity expected to rise by one-third by 2035, driven by both large-scale projects and emerging small modular reactor (SMR) designs.
Oil, Gas, and Critical Minerals
The IEA notes that near-term oil and gas supplies remain sufficient, with prices stabilising around USD 60–65 per barrel and new LNG capacity set to boost supply by 50% by 2030. However, heavy market concentration in the refining of critical minerals poses a growing risk to energy security — with a single country dominating the refining of 19 of the 20 key energy-related strategic minerals.
Climate and Energy Access Goals Lagging
Despite technological advances, the report warns that the world remains off-track in achieving its twin goals of universal energy access and climate stabilization. About 730 million people still lack electricity, and nearly two billion depend on unsafe cooking methods.
Even in accelerated transition scenarios, global warming is expected to surpass 1.5°C before stabilizing later in the century — underscoring the need for rapid emissions cuts and resilient infrastructure to withstand extreme weather and cyber risks.
The World Energy Outlook 2025 thus calls for a renewed spirit of global cooperation, echoing the unity that led to the creation of the IEA after the 1973 oil crisis. As Dr. Birol emphasized, ensuring secure, affordable, and sustainable energy in a fragmented world will require “the same focus and determination that shaped the modern energy order half a century ago.”
The writer of this article is Dr. Seema Javed, an environmentalist & a communications professional in the field of climate and energy
