As the world works to curb climate change and reduce emissions, a new challenge is emerging: global electricity demand is rising faster than anticipated. According to the latest World Energy Outlook report by the International Energy Agency (IEA), the world is set to add electricity demand equivalent to Japan’s annual consumption every year for the next decade. This rising demand is driven by factors like the increased use of electric vehicles (EVs), air conditioners, and data centres, which make it harder for countries to reduce their carbon emissions and slow global warming.
A Rapid Rise in Electricity Demand
In its latest report, the IEA projects that global electricity demand in 2035 will be 6% higher than forecasted last year. This growing demand is being fueled by a number of factors:
- Electric vehicles (EVs): As more people switch to electric cars, especially in countries like China, electricity demand continues to rise. In China alone, EV sales are projected to account for half of all new car sales by the end of 2023.
- Air conditioning: With rising global temperatures due to climate change, more people are purchasing air conditioners, particularly in hotter regions like India. Sales of air conditioners in India doubled this year after a series of intense heat waves.
- Data centres: Tech companies are building more data centres to support services like cloud computing and artificial intelligence. While data centres only account for 1% of global electricity demand, they are often concentrated in specific areas, putting significant pressure on local power grids.
These trends mean that while societies become more electrified, the pressure on electricity systems is increasing faster than expected, making it tougher to cut emissions quickly enough to meet global climate targets.
A Silver Lining: Growth in Renewable Energy
While global electricity demand is rising faster than expected poses a challenge, there is some positive news. The IEA report highlights that countries are expected to build enough low-emission power plants—such as solar, wind, and nuclear facilities—by the end of the decade to match the growing demand. This expansion in renewable energy is crucial to preventing further increases in emissions from electricity generation.
In fact, renewable energy sources are expected to grow rapidly. For example, China accounted for 60% of the global growth in solar and wind power in 2022. If these trends continue, it could help ensure that coal, oil, and natural gas use peaks this decade, which would be a critical step in limiting global warming.
However, even with this growth, the challenge remains immense. To truly meet the climate targets set by international agreements like the Paris Agreement, countries would need to build low-carbon electricity sources twice as fast as they are currently doing by 2035.
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Challenges to Reducing Emissions
While renewables are growing, the rapid increase in electricity demand means that global emissions are not falling as quickly as they should. The IEA estimates that under current policies, global carbon dioxide (CO2) emissions from electricity generation will fall just 3% by 2030. To stay on track with climate goals, emissions need to drop by 33% over the same period. This stark contrast highlights the gap between current progress and what is needed to address climate change.
One reason for this gap is the continued reliance on coal in countries like China and India. Coal is one of the most polluting energy sources, and while renewable energy is expanding, electricity demand is growing so quickly that coal usage is only declining slowly. In the United States, some coal-fired power plants that were slated for retirement have had their lifespans extended due to rising electricity needs.
Additionally, many countries face logistical challenges in expanding renewable energy:
- China needs to upgrade its electric grids to handle the fluctuating output from wind and solar power.
- Europe saw a slowdown in electric heat pump sales this year, partly due to the easing of gas prices.
- In the United States, a lack of transmission lines is delaying the construction of new wind farms.
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Fossil Fuels and Uncertainty in the Future
The IEA report also points out that the future of fossil fuel markets is uncertain. Growing sales of electric vehicles are expected to cause global oil demand to plateau by the end of this decade. At the same time, new infrastructure being built to export liquefied natural gas (LNG)—particularly in the United States and Qatar—could lead to an oversupply of natural gas later in the decade, potentially lowering energy prices.
Despite these trends, fossil fuel producers, especially in the oil and gas industries, remain sceptical of the IEA’s prediction that oil and gas demand will peak by 2030. The report also highlights that 2024 could be a pivotal year for global energy policies. Many countries, including the United States, are holding elections, and the outcome could significantly influence energy policies.
For example, if Donald J. Trump were to return to office, he has promised to repeal federal policies that support renewable energy and electric vehicles, which could slow progress toward cleaner energy in the U.S.
Also Read: Renewable Energy Estimates 30% Of Global Electricity Supply In 2023
A Complex Energy Future
The IEA’s report highlights that global electricity demand is rising and offers a mixed outlook for the future of global energy. On the one hand, the rise in electricity demand presents a significant challenge to reducing emissions quickly enough to prevent the worst effects of climate change. On the other hand, rapid growth in renewable energy offers hope that global emissions may not rise as sharply as they could.
However, the world still faces a long and difficult road ahead. The IEA’s findings make it clear that while progress is being made, it is not enough to keep global warming in check. More needs to be done to accelerate the transition to clean energy, upgrade electricity grids, and expand renewable power sources worldwide.
With the world’s energy needs growing, it’s clear that the “age of electricity,” as IEA executive director Fatih Birol describes it, will define the future of global energy systems. The question is whether that future will be powered by fossil fuels or renewable energy—and whether the world can act quickly enough to secure a cleaner, more sustainable energy future.
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