Soaring electricity demand is placing significant pressure on energy systems, and despite the rapid buildout of renewable and alternative energy sources, fossil fuels are expected to remain a dominant part of the energy mix through midcentury, according to the latest World Energy Outlook report from the International Energy Agency (IEA).
Even though the use of coal, oil, and gas peaks before 2030 under this scenario, fossil fuels are still projected to make up 58 percent of the energy mix in 2050. While that’s a reduction from 80 percent in 2023, it falls significantly short of the more ambitious goals set out in alternative climate-focused scenarios.
“Although the STEPS sees a threefold increase in renewables that brings fossil fuel use down from 80 [percent] of total energy demand in 2023 to 58 [percent] in 2050, this falls far short of the step change that occurs in the Announced Pledges Scenario (APS) and the Net Zero Emissions by 2050 (NZE) Scenario, especially the latter,” states the report by the IEA, a Paris-based transnational agency that advocates for a faster green-energy transition.
In the APS, which takes into account countries’ formal climate pledges and net-zero commitments, fossil fuels are phased out more rapidly, with clean energy meeting 40 percent of global energy demand by 2035 and nearly 75 percent by 2050. The NZE scenario, the most ambitious pathway, envisions clean energy meeting 90 percent of energy demand by midcentury, with most remaining fossil fuel use abated or offset by technologies such as carbon capture.
The IEA report also projects that oil and liquefied natural gas (LNG) supplies could experience a surplus in the second half of the 2020s, keeping prices low and potentially slowing the green transition.
While this could provide relief to consumers hit by energy price spikes, Birol noted that it could also reduce the urgency to invest in alternative energy solutions.
Further, the IEA report highlights the rapid growth in global electricity demand, driven by the electrification of transportation, increased energy consumption from data centers, and rising cooling needs. The world is expected to add the equivalent of Japan’s electricity consumption to the global total each year, with China leading much of this surge. Despite this, investments in clean energy infrastructure are not keeping pace.
“Today, for every dollar spent on renewable power, 60 cents are spent on grids and storage, highlighting how essential supporting infrastructure is not keeping pace with clean energy transitions,” the IEA stated.
The report further emphasizes that grid expansions and permitting processes in many regions, including advanced economies, are struggling to accommodate the rapid growth in green energy. In developing countries, high capital costs and policy uncertainties continue to hinder clean energy infrastructure projects. This infrastructure gap is a major factor slowing the pace of the green transition, leading to continued reliance on fossil fuels.
“Despite growing momentum behind clean energy transitions, the world is still a long way from a trajectory aligned with its net zero goals,” stated the IEA.
