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Informist, Wednesday, Nov. 12, 2025

 

MUMBAI – Energy has been at the heart of current geopolitical tensions with many countries contending with pressing energy security threats across an unprecedented range of fuels and technologies, the World Energy Outlook 2025, released Wednesday by the International Energy Agency, said.

 

India, along with other countries in Southeast Asia, and joined by countries in the Middle East, Africa and Latin America will increasingly shape energy market dynamics in the years ahead. "Collectively, they take up the baton from China, which accounted for half of global oil and gas demand growth and 60% of electricity demand growth since 2010, although no country or group of countries comes close to replicating China's energy-intensive rise," the report said.

 

Demand for energy has been rising for mobility - for heating, cooling, lighting and other household and industrial uses - and increasingly for data and AI-related services, the Paris-based intergovernmental autonomous organisation focusing on energy security and policy advice, said in the report.

 

Amid these shifts, traditional energy risks affecting the security of oil and gas supply are now accompanied by vulnerabilities in other areas, it said and pointed out that the most visible among them is the supply chain for critical minerals due to high levels of market concentration.

 

"A single country is the dominant refiner for 19 out of 20 energy-related strategic minerals, with an average market share of around 70%. The minerals in question are vital for power grids, batteries and EVs, but they also play a crucial role in AI chips, jet engines, defence systems and other strategic industries," it observed.  

 

Geographic concentration in refining has increased for nearly all key energy minerals since 2020, and particularly for nickel and cobalt.

 

However, an analysis of the pipeline of announced projects suggests that reversing this process is set to be slow, calling for stronger action by governments, EIA said in the report.

 

Electricity is at the heart of modern economies and electricity demand grows much faster than overall energy use in all scenarios in WEO-2025. Investors are reacting to this trend, with spending on electricity supply and end-use electrification already accounting for half of today's global energy investment.

 

"For the moment, electricity accounts for only about 20% of final energy consumption globally, but it is the key source of energy for sectors accounting for over 40% of the global economy and the main source of energy for most households."

 

Electricity consumption is rising not just in emerging and developing economies, the report said, pointing out that "breakneck demand growth from data centres and AI is helping drive up electricity use in advanced economies, too. Global investment in data centres is expected to reach $580 billion in 2025. Those who say that 'data is the new oil' will note that this surpasses the $540 billion being spent on global oil supply – a striking example of the changing nature of modern economies."

 

The report further said that a pivotal issue for energy security in the Age of Electricity is the speed at which new grids, storage and other sources of power system flexibility are put in place. For the moment, some of these elements are lagging. Investments in electricity generation have charged ahead by almost 70% since 2015, but annual grid spending has risen at less than half that pace.

 

The report also found that renewables are growing faster than any other major energy source in all the scenarios, led by solar PV. By 2035, 80% of global energy consumption growth is likely to occur in regions with high-quality solar irradiance. "Another common element across scenarios is the revival of fortunes for nuclear energy, with investment rising in both traditional large-scale plants and new designs, including small modular reactors. After more than two decades of stagnation, global nuclear power capacity is set to increase by at least a third by 2035."

 

All the scenarios analysed in the report indicate ample global supplies of oil and gas in the near term. Oil markets already reflect this, with today's geopolitical fragility coexisting with oil prices in the $60-$65 per barrel range. A similar easing of market balances for natural gas appears imminent, as new projects for liquefied natural gas exports come online.

 

However, easing near-term market balances for oil and gas are no cause for complacency, the report said. Both markets remain exposed to geopolitical risks, and faster demand growth – in response to weaker energy transition policies or lower prices – could quickly erode what buffers they have, it said.  End

 

US$1 = INR 88.61

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Abhijit Doshi

Edited by Deepshikha Bhardwaj

 

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