Electricity’s share of global energy consumption to grow; global oil consumption could start to decline before 2035

The International Energy Agency (IEA) released its latest World Energy Outlook this month. The report offers two main forecasting scenarios. The first, the Current Policies Scenario, is based on policies and regulations already in place. The second, the Stated Policies Scenario, includes measures pending official adoption and official commitments guiding the direction of travel. Global energy demand is expected to grow until 2035 at an average pace of 1.2 % a year under the Current Policies Scenario and by 0.7 % a year under the Stated Polices Scenario. Demand continues to rise through 2050 with the overwhelming share of growth coming from developing economies.

Global energy-related CO2 emissions are expected to rise from the current 38 gigatons (38 billion tons or 38 Gt) to 39 Gt in the early 2030s, and remain at that level at least until 2050 under the Current Policies Scenario. In the Stated Policy Scenario, emissions start to decline in the next few years, falling to the 2015 level (35 Gt) in 2035 and the 2005 level (below 30 Gt) by 2050. In any case, the world is on track to miss completely its goals of limiting annual anthropic carbon emissions to prevent global warming. The world is currently heading towards the average warming of the climate in the range of 2.5–3°C.

Demand for electricity will grow significantly faster that energy demand overall, reaching in both scenarios a level about 40 % higher than now in 2035. Electricity’s share of final demand is expected to increase from 21 % at present to about 25 % in 2035 and about 30 % in 2050. The IEA sees demand for renewable energy rising by 70–80 % from its current level by 2035. The share of renewable energy in global electricity production is expected to rise from 30 % at present to 50–55 % in 2035, depending on the scenario. The assumptions in the scenarios differ on e.g. rate of electrification of the car fleet (increase to 40 % of global car sales in 2035 under the Current Policies Scenario and over 50 % under the Stated Policies Scenario).

The IEA sees demand for oil rising from its current 100 million barrels per day (mb/d) to 105 mb/d in 2035 and 113 mb/d under the Current Policy Scenario. Under the Stated Policy Scenario, oil demand is expected to peak around 2030 and return to its current level around 2035. The modest decline in demand continues, falling to around 97 mb/d in 2050. Natural gas is expected to overtake coal as the second-most important fossil fuel, with global coal demand peaking in coming years. Coal demand is expected to be about 8 % less than at present in 2035 under the Current Policy Scenario, and a decline to 20 % below current levels under the Stated Policies Scenario.

China’s energy consumption is expected to peak over the next five years and plateau thereafter. China is already one of the most electrified countries in the world, and its development continues at a rapid pace. China’s oil consumption is expected to peak before 2030, and then fall to 15.8 mb/d in 2035 (Current Policy Scenario) or to 15.2 mb/d (Stated Policy Scenario) from the current level of 16.2 mb/d. Electricity production continues to become greener, and China’s demand for coal by 2035 is expected fall by 10 % (Current Policy Scenario) or by 20 % (Stated Policy Scenario) from the current level.

India accounts for the world’s largest increases in total energy consumption and demand for oil. Oil demand is expected to increase significantly from its current level (5.5 mb/d) to (7.5–8 mb/d) in 2035, with growth continuing until 2050. This is largely affected by the rapid increase in the national car fleet. Coal will remain the most significant source of energy in Indian electricity production, even if the share of solar and wind power rise from a current level of 11 % to nearly 40 % by 2035. India’s biggest challenge is building sufficient electricity transmission and storage capacity.

The United State today is the world’s largest consumer of oil, natural gas and nuclear energy. With respect to oil and natural gas, the US leading position lasts until 2035, but in terms of nuclear energy consumption China catches up and surpasses the US. With Trump’s second-term policy shifts, US energy demand is expected to return to growth. Natural gas remain the most important energy source until 2050, even if US demand for natural gas already peaks before 2035. Natural gas also remains the most important fuel source for electrical power generation. About a third of electricity production will come from renewable energy in 2035 (Current Policy Scenario), with bioenergy remaining the largest source of renewable energy. US oil demand is expected to rise in coming years and then level off over the longer term.

With electricity’s share of EU energy demand and electricity generation projected to rise substantially, demand for increased investment in transmission capacity should grow. The share of fossil fuels in electricity production is already less than 30 %, and less than the shares of solar and wind power combined. Renewable energy’s share of electricity production is expected to rise to over 70 % by 2035 (both scenarios). Electrification of the car fleet is expected to cause a gradual decline in oil demand (as much as 30 % from current levels by 2035 under the State Policies Scenario).

Change in final consumption of global energy by region under Current Policy Scenario and Stated Policy Scenario

Sources: IEA World Energy Outlook 2025 and BOFIT.