Find topic

Can we en:form you? You can use our filter to find relevant topics. Alternatively our search function or the overview of articles can help you out.



Frequent requests

electrification emission trading energy storage energy transition innovation power stations RWE security of supply
Back to Overview
The future is electrifying
The IEA ‘World Energy Outlook’ has identified four global megatrends in the energy sector

India as the main driver of growth in global energy consumption, renewables conquer the world, the heyday of coal is past, and a surge in oil production in the USA: these are some of the main takeaways from the current ‘World Energy Outlook’ report published by the International Energy Agency.

At first glance, the findings presented by experts in the International Energy Agency’s (IEA) latest outlook are not really that surprising: global energy demand will continue to grow, rising by a hefty 30 per cent by 2040. To put this figure in perspective, that is an increase in current global consumption equivalent to adding another China AND another India.

Nevertheless, the main drivers of this trend are not the usual suspects from the People’s Republic. Instead, according to the forecasts by the IEA, which was founded in 1974 by several industrialised countries due to the oil crisis, almost 30 per cent of the increase in demand will stem from India, where energy consumption is rising twice as fast as in China.

China is a key determinant of momentum behind the low-carbon transition. IEA

Four megatrends identified

Four fundamental changes provide the backdrop to the ‘World Energy Outlook’: the rapidly increasing significance and declining cost of renewables, the mounting importance of electricity in the energy mix, China’s transformation into a service-oriented economy and clean energy producer, and the rise of the USA to become the world’s largest supplier of oil and gas. The Outlook, sometimes referred to as the “Bible of the energy industry”, investigates the individual and combined effects of these developments through to 2040. By then, the Earth is projected to have a population of more than nine billion people.

The additional energy that these people will use will mainly come from electricity, which will account for 40 per cent of the global increase in consumption. This is roughly equivalent to the amount that oil has covered in the last 25 years. Electric motors, networked IT devices, air conditioning – all of this runs on electricity. “By 2040, electricity demand for cooling in China will exceed Japan’s total demand for electricity today,” according to the IEA’s experts. Furthermore, the number of electricity consumers will increase by 45 million, due to expanding access to electricity – annually, of course. Some initial signs of this trend are already visible: in 2016, investment in the electricity sector was higher than in oil and gas, for the first time ever.

Worldwide renewables boom

Where will all of this electricity come from? The answer is simple: along with natural gas, it will mainly be generated from wind, solar and hydro. Forty per cent of the increase in primary energy consumption will be covered by renewables. One decisive factor is that solar power is developing into a cheap source of energy for many countries, enabling first-time access to energy for huge groups of people in regions in Southeast Asia and Africa. Electricity from wind, solar and hydro will gain ground: two thirds of total global investment in power generation facilities is concentrated in these three technologies, despite their declining costs. For example, the costs of photovoltaic systems have fallen by around 70 per cent since 2010.

The share of green power in total electricity generation at the target horizon is an almost unimaginable 40 per cent. Not just in Germany or Europe, but worldwide.

This explosive expansion of green energy, which has regularly been underestimated by the agency in the past, will also signal an end to the reign of King Coal. Since 2000, coal-based generation capacities have increased by almost 900 gigawatts (GW). But the IEA is certain that from now until 2040 “only” another 400 GW will be added. In a country like India, the share of coal in energy production will fall from the current level of three quarters to less than one half.

An energy revolution in China

China is one driver of this change, albeit not the most important one. “When China changes, everything changes”, states the subtitle of one of the report’s key chapters. The Chinese president has called for an “energy revolution” and “the fight against pollution”. Along with the transition to a more services-oriented economic model, the energy sector is moving in a new direction. A closer inspection reveals that energy consumption in China is no longer growing at an annual rate of 8 per cent as in the past, but at a rate of just 2 per cent. And even this figure will fall by half in the near future.

Right now, almost two thirds of China’s energy demand are covered by coal-fired power stations. In the years ahead, this share will not only shrink significantly, it will be surpassed by renewables. As the IEA emphasises: “China is a key determinant of momentum behind the low-carbon transition.”

A renaissance for oil in the USA

While green energy is the main driver of change in the People’s Republic, ‘black gold’ is expediting the changes in the energy sector in the USA. Production from shale oil alone will increase by 8 million barrels per day between 2010 and 2025. This represents the strongest increase in oil production ever registered by a single country in the history of the oil markets.

With regard to global oil supply, growth of output from the US will account for 80 per cent of the increase by 2025. Consumers can be thankful for this, as robust US production will keep oil prices under control. As a result, the current prices of USD 50 to 70 per barrel may remain in place through to 2040. Of course, this also means that the IEA expects that consumers around the world are not (yet) ready to give up oil. While consumption growth will weaken from 2025, demand will keep rising, just more slowly. And even more than 20 years down the road, most of the two billion passenger vehicles that are expected to be on the road by then will still be powered by petrol or diesel. An estimated 900 million vehicles will run on electricity.

The IEA experts don’t really have any good news with regard to the climate. By 2040, global energy-related CO2 emissions are projected to increase slightly. “This outcome is far from enough to avoid severe impacts of climate change,” according to the IEA. The only glimmer of hope: compared to the last report in 2016, emissions are forecast to be 600 tonnes lower than in the latest issue of the World Energy Outlook.

Photo credits: Dima Zel,

Ask the en:former…

…and put a question to the editorial staff!

via e-mail place feedback
Feedback form

    All fields marked with * are required.

    Ask the en:former…

    …and put a question to the editorial staff!

    via E-Mail Place Feedback


    Subscribe to our monthly newsletter and stay en:formed.

    sign in
    Rate now Already rated

    share article:
    More about Innovation Energy industry Energy transition