Key Takeaways
The IEA has been forced by U.S. Energy Secretary Chris Wright to restore the agency’s original mission of providing accurate, reality-based data about the world’s energy picture. It has moved in that direction with its forecasts in the World Energy Outlook 2025, released during COP30.
The IEA has restored its Current Policies Scenario, last published in 2019, which does not assume that the objectives of the Paris Climate Agreement are met.
In the intervening years, the IEA published the Announced Pledges Scenario, which has resulted in unrealistic forecasts, one of which was to forecast peak oil demand before 2030.
In its Current Policies Scenario, IEA expects oil to reach 113 million barrels per day by 2050, more in alignment with other forecasters.
Both of IEA’s major scenarios overshoot the 1.5 °C target for temperature rise.
The International Energy Agency (IEA) released its World Energy Outlook (WEO) on November 12, in the middle of the COP 30 summit, and rather than focus on the “Announced Pledges Scenario (APS),” which assumed country commitments to the Paris Climate Agreement are met, it contains two main scenarios: the Current Policies Scenario (CPS) and the Stated Policies Scenario (STEPS). Neither of these scenarios assume that the objectives of the Paris Climate Agreement are met; that is, they do not assume that the world’s governments meet their stated goals to reach net zero carbon by 2050. The CPS was a regular feature of the IEA’s suite of scenarios until the 2020 WEO, when the IEA discontinued it in favor of the APS, which led to unrealistic projections.
It was U.S. Energy Secretary Chris Wright who ensured the IEA made the change. Wright threatened to suspend 18% of IEA funding, which is provided by the United States, unless the agency reformed its forecasting methods and returned to its original mission of providing fact-based analysis of the global energy situation. The IEA’s emphasis on the APS, for example, formed the basis of the agency’s projections of the world reaching peak oil demand before 2030, which other forecasters have shown is unrealistic. IEA was forced by events to increase oil demand estimates four times during 2024.
Investors and companies depend on base-case supply scenarios when making their financial decisions, and the CPS provides a much better baseline for that analysis. While the STEPS is more aspirational because it models government policy intentions based on an assessment of market, infrastructure, and financial constraints, those intentions can easily be retracted, as evidenced by climate policy rollbacks in New York and California.
The Forecasts: Demand
In the CPS, the world’s energy demand rises by 90 exajoules in 2035 — a 15% increase from today. In the STEPS, energy demand rises more slowly — by around 50 exajoules, or 8%. The variation in the scenarios reflects differences in the energy mix and in the technical efficiency of appliances and equipment. The growth is due to increased mobility, demand for heating, cooling, lighting, and other household and industrial uses, and artificial intelligence (AI) data centers. The report notes that global investment in data centers is expected to reach $580 billion in 2025, surpassing the $540 billion a year spent globally on oil supply.
According to the IEA, a new wave of emerging economies — led by India and Southeast Asia, and joined by nations in the Middle East, Africa, and Latin America — is increasingly shaping global energy markets. Together, these regions are beginning to take over the role once played by China, whose rapid expansion drove half of global oil and gas demand growth and 60% of electricity demand growth since 2010. The IEA cautions, however, that no country is matching China’s energy-intensive rise. Between 2000 and 2010, advanced economies accounted for half of global car fleet growth; in the following decade, China alone matched that. Looking ahead to 2035, half of all growth in the global car fleet is expected to come from emerging and developing economies outside China.
Oil
The IEA is no longer forecasting peak oil. The IEA said global oil and gas demand could grow until 2050, which departs from its previous expectations of a speedy transition to cleaner fuels. In fact, in the CPS, the IEA finds that oil demand could reach 113 million barrels per day by mid-century, up around 13% from 2024 consumption. It says that some 25 million barrels per day of new oil supply projects are needed by 2035 to keep markets in balance, and it forecasts rising oil prices to incentivize the additional upstream projects.
In the STEPS, which considers proposed but not necessarily adopted policies, oil demand peaks around 2030 at about 102 million barrels per day and then slowly declines as the share of electric vehicles (EVs) in new car sales rises above 50% by 2035. In the CPS, the share of EV sales plateaus after 2035 at around 40%. Petrochemical feedstocks, aviation, and trucks support the growth in oil demand to 113 million barrels per day in 2050.
Electricity
Electricity demand grows much faster than overall energy use in all of IEA’s scenarios.
Renewable energy is expanding faster than any other major power source across all scenarios, driven largely by solar, according to the International Energy Agency. By 2035, the IEA projects that 80% of the world’s increase in energy consumption will come from regions with strong solar potential. The surge in solar power is being matched by growth in wind, hydropower, bioenergy, and geothermal energy, alongside gains in energy efficiency. China remains the largest renewables market, expected to account for 45% to 60% of global installations over the next decade and to retain its position as the world’s leading manufacturer of renewable technologies.
Nuclear power is poised for a global revival, with growth expected in both traditional large-scale reactors and newer designs such as small modular reactors, according to the IEA. After more than 20 years of stagnation outside China, global nuclear capacity is projected to rise by at least one-third by 2035. More than 40 countries have now incorporated nuclear energy into their national strategies and are moving forward with new projects. Alongside reactor restarts in Japan and the United States, more than 70 gigawatts of new capacity are currently under construction — one of the highest levels seen in three decades.
The IEA reports that global coal market trends are now largely shaped by a few major emerging and developing economies — most notably China, followed by India, Indonesia, and others in Southeast Asia. Roughly half of global coal demand comes from electricity generation in these countries. The future of coal, the IEA notes, will depend heavily on their electricity needs, the pace of renewable energy expansion, and whether natural gas can remain competitively priced. In its STEPS, the IEA projects that emerging and developing economies will add more than 600 gigawatts of renewable capacity annually through 2035.
Liquefied Natural Gas
New liquefied natural gas (LNG) projects surged in 2025, with about 300 billion cubic meters of new annual LNG export capacity expected to start operation by 2030 — a 50% increase. Around half the new capacity is being built in the United States, and an additional 20% in Qatar. In the CPS, the IEA expects the global LNG market to increase from around 560 billion cubic meters in 2024 to 880 billion cubic meters in 2035 and to 1,020 billion cubic meters by 2050, due to rising power sector demand driven by data center and AI growth. In the CPS, most of the new LNG is expected to go to China and Europe, which may mean that the European Union will have to scrap its methane emissions regulation if it wants to keep the lights on and have heat to warm its homes and businesses.
Carbon Dioxide Emissions
Global energy-related carbon dioxide emissions reached a record in 2024, and, in the CPS, they are expected to remain around that level, which IEA says points towards a temperature increase of almost 3 °C in 2100. In the STEPS, the temperature increase is 2.5 °C due to lower carbon dioxide emissions. These increases occur in the IEA forecasts despite the EU’s recent agreement for a 90% emission reduction target by 2040.
Critical Minerals
As we found in The Economic and Strategic Importance of Domestic Mineral Production and the IEA has now noted, Chinese dominance of the critical minerals supply chain creates “vulnerabilities.” In a press release, the IEA said, “A single country is the dominant refiner for 19 out of 20 energy-related strategic minerals, with an average market share of around 70%,” adding that “[g]eographic concentration in refining has increased for nearly all key energy minerals since 2020, and particularly for nickel and cobalt.” Minerals are needed for batteries, EVs, wind and solar farms, and parts of the electricity grid, as well as semiconductors, weapons systems, and many other industries. The IEA called for “stronger action by governments” to boost mineral supply, which President Trump has actively been pursuing in his trade deals.
Analysis
Fortunately for businesses and market analysts, the IEA has moved away from its previous focus on projecting the aspirations of net-zero-focused governments towards aligning with realistic projections of future demand. Clearly, demand for oil and natural gas is not slowing down anytime soon as developing countries lift themselves out of energy poverty and developed countries build their technology sectors. While reinstating the CPS is a positive step, the IEA must ensure that its scenarios and forecasts align with current reality for its projections to be considered a trusted source of energy information. Pursuing global energy abundance is the best path forward for improving human lives and meeting the challenges of extreme weather. As IER’s Robert L. Bradley Jr. wrote recently, “The path forward under any climate scenario is adaptation, where the best energies and societal wealth anticipate, ameliorate, and recover from weather extremes.”
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