Electricity demand is set to rise faster than overall energy growth in the coming decades, and countries will need to seek diversified energy sources to contend with energy security threats.
According to the World Energy Outlook report by the International Energy Agency, there will be a growing need for energy services around the world over the coming decades, with demand rising for mobility, industrial uses and increasingly for data and AI-related services.
The IEA warned there are now additional vulnerabilities in other areas , particularly in supply chains for critical minerals, due to high levels of market concentration.
The IEA pointed out that one country is the dominant refiner for 19 out of 20 energy-related strategic minerals. Geographic concentration for refining has also increased for nearly all key energy minerals since 2020.
IEA Executive Director Fatih Birol said: “When we look at the history of the energy world in recent decades, there is no other time when energy security tensions have applied to so many fuels and technologies at once – a situation that calls for the same spirit and focus that governments showed when they created the IEA after the 1973 oil shock.
“With energy security front and centre for many governments, their responses need to consider the synergies and trade-offs that can arise with other policy goals – on affordability, access, competitiveness and climate change.”
As countries grapple with meeting energy demand, new sources of sustainable energy are also growing. Renewables are growing faster than any other major energy source, according to the IEA’s analysis.
Liquefied natural gas is also set to meet demand as new LNG projects have surged in 2025. Around 300 billion cubic metres of new annual LNG export capacity is set to start operations by 2030, leading to a 50 per cent increase in available global LNG supply.
Josh Runciman, lead gas analyst for The Institute for Energy Economics and Financial Analysis (IEEFA) noted that LNG markets can avoid a prolonged supply glut if there is a sustained LNG demand growth in emerging markets, but this growth remains uncertain.
“It will require lower prices, which will impact on margins for some LNG exporters, Runciman said.
“The IEA assumes, in its central scenario, a long-term LNG price of US$7.50/MMBtu.
“This will shrink margins and likely make it difficult for some new LNG developments to proceed. The IEA’s analysis confirms that LNG remains too expensive to materially displace coal in Asia’s electricity mix, noting that prices would generally need to be below US$5/MMBtu, too low for many LNG exporters to remain viable.”