World Energy Outlook 2025: Diversification and cooperation crucial amid growing energy risks

By Romel S. Gurky

As global energy security faces escalating risks and complexities, the latest World Energy Outlook (WEO) 2025 from the International Energy Agency (IEA) highlights the critical need for diversification of energy supplies and stronger international cooperation to navigate the uncertainties ahead.

The report, which offers an in-depth analysis of various energy futures across three key scenarios, underscores the growing geopolitical tensions surrounding energy, especially as energy security concerns now extend across a wider range of fuels and technologies. These challenges have brought energy to the forefront of national security, economic policy, and climate considerations.

A notable trend in the WEO-2025 is the rapid increase in global energy demand, driven not only by mobility, heating, and industrial use, but also by the explosive growth of data and AI services. Emerging economies, led by India and Southeast Asia, are becoming increasingly influential in shaping global energy dynamics. These regions are expected to drive a significant portion of the world’s energy demand growth, building on the previous contributions from China, though none are expected to replicate China's energy-intensive growth model.

The report also highlights vulnerabilities in the supply of critical minerals, crucial for powering renewable technologies, electric vehicles, and AI chips. The refining of key minerals like nickel and cobalt is highly concentrated in one or two countries, with market shares averaging 70%, raising concerns about supply chain disruptions and strategic resource security.

Read also: IEA sees weak oil demand growth through 2026 as supply surge builds surplus

In a stark reminder of the fragility of energy infrastructure, the WEO-2025 reveals that 2023 saw disruptions to critical energy systems affecting over 200 million households, with power lines particularly vulnerable. The growing risk of climate-related disasters, coupled with cyber threats, calls for enhanced resilience in energy systems globally.

Electricity, which is at the core of modern economies, is expected to grow much faster than overall energy consumption, with electricity demand driven by both emerging economies and advanced countries, particularly due to data centers and AI. This shift has already resulted in global investments of $580 billion in data centers for 2025, surpassing investments in oil supply.

Renewable energy sources, particularly solar power, are projected to grow faster than any other major energy source in all scenarios, with the WEO-2025 highlighting regions with high-quality solar irradiance as key drivers of future energy consumption. The resurgence of nuclear energy, with new investments in both large-scale plants and small modular reactors, is also a significant feature of the report.

While global oil and gas markets show sufficient supply in the near term, geopolitical instability continues to pose risks. The WEO-2025 also notes a surge in final investment decisions for new LNG projects, with a 50% increase in global LNG supply expected by 2030. However, the report warns that the ease in near-term market balances should not lead to complacency, as energy markets remain vulnerable to political and economic shifts.

In addressing long-standing energy goals, the WEO-2025 highlights setbacks in achieving universal energy access and climate change targets. Over 730 million people still live without electricity, and nearly 2 billion rely on harmful cooking methods. However, new pathways to achieving universal access to electricity by 2035 and clean cooking by 2040 are outlined in the report.

The WEO-2025 makes it clear that while the world is on track to surpass 1.5°C of warming under current trends, there remains a window to mitigate the worst climate impacts. Reaching net zero emissions by mid-century offers a path to bringing temperatures back below 1.5°C in the long term.

With energy security now encompassing a broad array of concerns from energy supply to infrastructure resilience, the WEO-2025 reinforces the need for governments to collaborate and make strategic decisions that balance energy security, climate goals, and economic development.  

Editing by Alexander Ginting