IEA says global energy system faces its “broadest test in decades”

(MENAFN) The International Energy Agency (IEA) has warned that the global energy system faces unprecedented challenges, with risks spanning fuel markets, supply chains, and digital infrastructure, according to reports. In its World Energy Outlook 2025, the Paris-based agency describes the world entering an “Age of Electricity,” where power demand is rising faster than total energy use, reshaping economies and creating new vulnerabilities.

“The world has never faced energy security pressures across so many fronts at once, from oil and gas to grids, data, and minerals,” said IEA Executive Director Fatih Birol. He called on governments to demonstrate the same determination that led to the agency’s creation after the 1973 oil crisis. Electricity now makes up a fifth of all final energy use but powers more than 40% of global economic activity. Birol noted, “Last year, we said the world was moving into the Age of Electricity, and it’s clear today that it has already arrived.”

Advanced economies are now driving the surge in electricity use, with data centers and artificial intelligence emerging as major consumers. Global investment in digital infrastructure is projected to reach $580 billion in 2025, surpassing spending on oil supply. “Those who say ‘data is the new oil’ can now back it up with numbers,” Birol added.

The report identifies critical minerals as a growing point of vulnerability. One nation currently refines 19 of the 20 key energy-related minerals, controlling roughly 70% of global processing.

“These minerals are the foundation of batteries, wind turbines, solar panels, and AI hardware,” the IEA said, warning that over half face export restrictions. Birol compared their importance to that of oil in the 20th century, calling them “a matter of national resilience.”

The IEA projects that India and Southeast Asia will surpass China as the primary drivers of global energy demand over the next decade, with solar-rich regions fueling renewable adoption. Solar photovoltaic energy remains the fastest-growing source, while nuclear capacity is set to expand by at least one-third by 2035, aided by small modular reactors for energy-intensive industries like data centers.

Oil and gas markets are currently well-supplied, with prices expected to stay near $60–65 per barrel. A wave of liquefied natural gas projects is expected to boost capacity by 50% by 2030, but the agency cautioned that geopolitical risks could destabilize markets if ignored.

Despite record renewable growth, the IEA says the world remains off track for global climate and energy access targets. About 730 million people still lack electricity, and nearly 2 billion rely on unsafe cooking fuels. The agency calls for universal electricity access by 2035 and clean cooking solutions by 2040. Birol stressed, “The choices made this decade will shape energy security and climate stability for generations. The data show the path forward, but also the urgency to move.”

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