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Everything Energy is a podcast by the International Energy Agency (IEA). Through expert interviews, it delves into today’s biggest global energy topics – providing valuable insights on important trends based on the latest data and analysis.
Welcome to Everything Energy. I'm Dan Hewitt. This podcast has been on a bit of an extended break, but we're back, new and improved. And in this episode, we're focusing on the International Energy Agency's global energy review. Before I get started, I wanted to take a moment to talk a bit about the aim of this podcast.
There's a saying at the IEA that data always wins. And data is the IEA's bread and butter, whether it's energy supply, demand, prices, investments, or emissions for all fuels and technologies for all countries around the world. And that data allows the IEA to explain different trends, such as why nuclear energy is making a comeback, what's happening to global oil demand, and what the future energy mix might look like. Our goal here is to help you cut through the geopolitical uncertainty and the different narratives about energy to make sense of what's happening based on the data. And now on with today's episode and the global energy review.
It's a snapshot of the trends across the energy sector worldwide in 2024 based on some of that data we just mentioned like demand, supply, and emissions. Joining me is Laura Cozzi, the IEA's director of sustainability, technology, and outlooks who oversees the data collection, analysis, and production of the report.
Laura, welcome to the podcast. Now could you start by telling me a little more about the purpose of this report? Because this isn't about future trends or projections. It's about what's happening into the energy world right now. Is that right?
Yes. Absolutely. So what we have decided to do is to provide analysts and the world in general with the the latest picture that covers all fuels or technologies or regions on what happened to in the world of energy in 2024. So it really taps into, all the minds of data that we have at the IEA from oil to solar, from wind to nuclear, from coal to heat pumps. So really covering all, of energy and just providing a picture of what happened, in 2024.
So let's go into the top line of the report, and that is really that the amount of energy the world is using is increasing. So demand rose by 2.2%, and the average for the last decade was just 1.3%. So tell us about what's driving that increased need for energy.
So you got all the numbers right, which makes my life, easier, and maybe we can just, try to understand why, did we see last year such a big growth in in energy demand. So it's as you mentioned, it's very strong rebound compared to what happened over the past decade, and we try to understand why did that that happen. So when you look at GDP, the global economy, it did do a bit better than the past decade, but the economic activity per se does not explain all this big growth. So when we dig into the number, we actually understand that there is one big driver, which is a big, big increase in electricity demand. And all the fuels and technologies that we need to produce this electricity account for the vast majority of this growth, actually 70%.
So it's really an electricity story. What happened last year, electricity demand grew very, very strongly, and this brought up energy demand for all fuels and all technologies.
Well, you mentioned electricity there, so let's just dig into that a bit because electricity demand rose by 4.3%. So how significant is that figure? How how big a figure is that?
It's huge. It's very simple. But we need to imagine that, basically, the incremental electricity demand we added in 2024 is equal to the entire electricity demand of Japan. So it's a very, very big number, much bigger than what we have seen over the past several years. So I think it's important to understand why did we see this peak demand growth.
And I would say that there are three different trends. One, if you may all have seen, actually, that 2024 was a very particular year in terms of breaking records on temperature. Was the hottest year, on record in many regions of the world where it's already hot and people actually have air conditioners. So going through very hot summers, they switch to the air conditioners more, therefore, pulling up electricity demand. So the first big item was needing needs for cooling.
But it was not the only one. Last year, we saw very big increase in data centers in certain regions of the world, and this investment in data centers, though data centers are very electricity hungry, brought up electricity demand as well. So that's the second big item is the digitalization of our economies that is continuing at a faster pace. And the third is that you're selling more and more of electric electric consuming items, for example, electric vehicles. So really three big items that pushed up demand, cooling needs, digitalization, and the overall electrification of the economies.
So we can see where that demand has come from. So could you tell us a a bit more about which fuels and technologies have met that demand?
Yeah. So what's very interesting is actually we saw a growth of all the fuels and all the technologies. The largest portion of the additional demand was met by renewables, and we can come back to that in a in a second. The second largest part was actually natural gas, and then we've seen all the other fuels. So oil, coal, and nuclear.
So all of them actually contributed in different part, but the two largest one were really renewables and natural gas.
Just sticking with the theme of electricity there and power demand. Now does what we've seen with the growth of electricity, does that meet with the IEA's projections about the increased demand for electricity?
So, actually, last year, one of the big themes of the world energy outlook was that we are entering the age of of electricity. And the reasons that we had highlighted the using this this catchphrase, if you if you will, was really based on on recent data and emerging trends. And this data for twenty twenty four four really confirm that we are entering this age of electricity. So the share of electricity in final energy use is growing. And why is it growing?
Very simply, electricity is growing at twice the rate as energy demand. So while all other fuels are still important, the importance of electricity in our economies is growing vis a vis the other. So that's why we're saying we are entering the age of electricity, and the data for 2024 completely confirm that trend.
You mentioned renewables there. They have met a large percentage of that increase in demand. So maybe you could put that into context. How big a moment is this for the renewable sector?
I will give a number, and then I'll try to put it in context. So when we look in particular at solar and wind, it was the twenty second year in a row that the capacity additions broke records. And sometimes when you give capacity numbers and you're talking about 700 gigawatts, we say, it's huge. But we all know that solar wind cannot produce electricity all the time. So sometimes we think, okay.
The capacity number per se doesn't give us a good indication of how much energy did they really produce. And I personally found really outstanding the number in terms of actual electricity produced, not the capacity installed. So when we look at the electricity they produced, they basically met by themselves over 70% of the additional electricity demand. And when we look at other sources to compare, we need to go back ten years for the addition of coal to match what renewables, so I mean, in particular, did in one year. If we compare with natural gas, we need to go back eight years to actually have the same increment.
So it is it is really, really major.
I wanna move on to nuclear energy because in 2024, the world added a third more nuclear power capacity compared to the year before, and nuclear power generation reached a new all time high. So can we say that nuclear energy is making a comeback?
Yeah. No. Absolutely. So I think we this is another another of the topics that we have actually highlighted at the beginning of the year with the with another with another report where we very clearly said that we are ushering a new a new era for for nuclear. So the installation that went up by 33% is one indicator that shows that the expectation that in 2025, we will have the largest ever electricity production by nuclear from all power plants in the world.
Renewed interest in extending lifetime of existing reactors is another indication that this nuclear is becoming more and more important. And let's not forget new nuclear technologies, in particular, small modular reactors that are becoming more and more popular, including by the fact that they are of big interest interest by the tech companies that are interested in having clean and reliable electricity. So when you put all of these factors together, together with the fact that energy security has really become once again front and center in policymakers' mind, we absolutely do see a big, big interest, renewed interest in many countries around the world, even more than we had just a couple of years ago.
I wanna ask you a bit about where this increase in energy demand is happening. So tell us what we learned about the way that advanced and emerging economies are using energy.
Yeah. So I think this is a really important really important point. And I think a theme that we are consistently seeing over the past several years is most of the additional demand is coming from emerging markets and developing economy. And this is the case also for 2024 where we are seeing that 80% of the growth was actually coming from those countries. But let's try to delve a bit deeper into that.
What we are seeing is the following. Especially Asian countries like India and Southeast Asia are really growing very, very fast. So we are seeing growth rates of above 4%. So the fastest growing are really located in in Emerging Asia. Now the largest growth is still happening in one country, and this is China, but we need to understand and put China in the world context in terms of energy.
China is consuming 26% of global energy use. But China is really changing. So if we think back at the beginning of the year February, energy demand in China was growing at over 8% a year. Then we started at the beginning of the February, and it was for 4.5% a year. And this year, it grew for the first time less than 3%.
So why is this happening? This is happening because the economy in China is slowing down, but it's also transforming into lighter industries and meeting this incremental demand in a much, much cleaner way. So while China remains the largest growth, it's really slowing and is transforming the way energy the the global energy landscape is is is shaping. Third very important point, coming out of several years where we had seen either stable or in some cases contracting energy use in advanced economies. When 2024 breaks that trend in a very significant way way, we see The United States being the third largest growth in terms of energy demand just after China and India, where we see Europe coming back to growth.
Last time we saw growth was in 2017. So we need to ask ourselves why is this happening? And I think the very important point is once again a big uptick in electricity use that is bringing up demand in advanced economies, and therefore, all sources needed to produce electricity are going up again.
So you mentioned growth. There's big growth coming in emerging emerging economies, and then slightly smaller growth in advanced economies, but that has been slow for years. So which is more significant? Is it the the uptick in advanced economies, or is it the huge growth we're seeing in emerging economies?
I think they're both significant in different ways. So in terms of volumes, it's very, important to understand what's happening in China, in India, in Southeast Asia. Because in global commodity markets, volumes is what actually then makes a change in prices and the supply demand balance overall. So we absolutely need to understand what's happening in terms of the volumes there to understand and anticipate what can happen to to global markets. But the fact that advanced economies are seeing an uptick after years where we had to be seeing sluggish demand is very, very significant.
So going deeper in understanding why it's that's happening is gonna be extremely important to anticipate the changes in in future years. So I go back to something. You mentioned at the beginning that you're entering the era of electricity, and I think, really, in advanced economies, this is a very important driver of this change that we have experienced over the past year.
So let's turn to fossil fuels. Yes. Now there's a different story for oil and natural gas. So why is the demand for natural gas growing so much faster than oil? So what has happened to let's go back a
couple of years actually to understand this because natural gas markets have gone through a very big turmoil. In 2022 with Russia's Invasion Of Ukraine, We had prices going off the roof and a big consequence, not only on supply, but also on the on demand that contracted. So we had gas demand not going up, but going down in in 2022. And it took time for markets to rebalance. So we went through a year 2023 where we started seeing rebalancing, and 2024 is really the year where we are seeing not only very robust growth.
We are seeing growth everywhere. Europe has mildly returned to growth. The US has seen a very significant growth. China has continued to see robust growth, and we have really seen a booming demand in other emerging countries and developing economies, well above the average of the past the past decade. If you look at the drivers there, I think it's important to underline the both industrial needs, so we're using natural gas to produce stuff, but also natural gas needs to produce electricity.
Going back to the cooling needs we mentioned at the beginning was also a very, very important driver.
So focusing on on oil again. So oil demand grew slowly at naught point 8%, and that meant oil share of total energy demand fell below 30% for the first time. So does that fit in with what the IEA has been saying in its forecast about the way that the world is going to be using oil?
Yeah. Absolutely. So our oil market team at the beginning of last year, as they do every year, they produce forecast for the year ahead, and they had rightly anticipated that the oil demand was actually slowing. So they had anticipated that the oil demand would grow below 1,000,000 barrels a day, which is exactly in line with the with the type of growth rate that that we are actually seeing in terms of data confirming what they had said at the beginning of the year. Now let's go back one minute understanding why is this change happening, this slowdown happening, very much linked to the fact that China economy is slowing down, but also by the fact that the Chinese economy is selling an incredible amount of electric vehicles that has brought up overall electric vehicle sales.
Again, this is something that we had anticipated at at the beginning of of last year. One in five cars sold globally in 2024 were electric. If you go back just a few years ago, 02/2019, that one in five was only 3%. So it's a huge, huge change. The sales of electric vehicles going very strongly.
And what that does that mean? If we look at sectors that were contributing to growth in oil demand, road was a very, very important driver. And suddenly, in 2024, if we look at the growth in road oil consumption, it was basically stable. There has been no growth. So one on one hand, China slowing down, and these big changes in the road transport sector explain this very slow growth for oil.
And you mentioned this below 30%, and maybe let's explain what that is. So when DIA was founded fifty years ago, oil was basically incredibly important in our energy metrics. So we were using oil, and oil in the global energy metrics was 46%. Nearly half of all energy use was oil. It has been very high for for very long, started decreasing following the oil crisis in the seventies.
And then we went into a long period where the share of oil was very stable at around 35, 30 six percent. And then few years ago, it started going down, and it's actually the first time that in our data records, we see oil going below 30%, which is quite a significant a significant change.
Just a bit more on electric cars. So how much of that reduction in oil is due to electric cars?
It's significant. It's not the only component, but we need to put again things in contest contest. Road is today even the largest part of, oil use, and for many years, it's been the engine of, oil, use growth. And now that's changed. So road oil has really slowed down.
Last year, we said it's it's been stalling, but there are other areas that are growing. Aviation is one of the areas that is growing quite strongly. Oil to produce petrochemicals. So at the end of the day, all the plastics around around us is also growing very, very fast. So we are really witnessing a change.
Electric vehicles are a big portion of that. It's not the only. Efficiency of new cars is also a reason for that. In some cases, like what's happening in China, there is a push for alternative vehicles, for example, fueled by natural gas. So this very big shift of the road transport sector is producing a shift in where demand, sectors are coming from.
So away from road towards aviation and petrochemicals.
And just the last word on on coal. So coal use went up 1%. Was that increase surprising, and which which countries drove that demand?
So the demand was very much localized in Asia. So we mentioned earlier China, but also India and Southeast Asia. These regions of the world are still very reliant on coal to produce electricity, and our assessment is as follows. Basically, the increase in needs for cooling that we had from 2023 to 2024 explains all the increase in coal use in these regions because we needed to produce more electricity and therefore burned more coal to produce these electricity needs for cooling.
Let's turn to emissions because this report also talks about carbon dioxide emissions. So demand for all fossil fuels hit new highs in 2024, and carbon dioxide emissions went up again. So what does this mean for the energy transition, and and is the energy transition happening?
So first of all, yes, the bad news is that emission went up once again, so we hit once again another record here in terms of emission in the atmosphere. I think we need to go a bit deeper, though, to understand that the big change is happening, and we are really witnessing, in the data as well. So if we, look at the relationship between economic growth and c o two emissions, if we go back a bit in time, last century, it was very much an iron link between GDP growth and emission growth. What does it mean? For every percentage point of growth in GDP, you would actually see exactly the same percentage growth in emissions.
When we turn in this in this century, we actually start seeing this this link weakening. And over the past decade, this link has weakened even further. So last year, we have seen GDP growing 3.2% and emission growing 0.8%. Now half of that growth, let's keep in mind, was entirely due to the fact that it was a very hot year. So we are seeing a decoupling.
And if you allow me, I would like to go a bit deeper in this decoupling because for some regions in the world, this decoupling is an absolute decoupling. What does it mean? The economy is growing and emissions are declining. So this is the case for advanced economies. So if you take the advanced economies, The United States, Europe, put them all together, we have in 2024 an economy that is three times larger than in 1973, and the emissions are actually at the same level than in 1973.
So emission grew until middle of last decade, and since then, they're declining, declining, declining. So there is an absolute decoupling. In other parts of the world is a relative decoupling, so we're seeing the economy growing and emissions growing slower. You asked me another question, which I think deserves probably a separate answer, which is, is the transition happening? So I come back to answer this specific question.
The transition is happening. Maybe the cleanest indicate indicator is the following. With all the renewables, electric vehicles, nuclear, heat pumps that we mentioned earlier, those are avoiding and have avoided actually in twenty twenty four two point six gigatons of emissions. So let's put this 600,002,000 tons and compare it with the actual growth in emission that was 300,000,000 tons. So if we did not have all these technologies deployed at the amount that you're seeing, emissions would grow much, much faster.
Let's just dig down a little bit more into those figures because people will still want to know if carbon emissions are being reduced fast enough for the world to reach its climate targets. So for example, limiting global warming warming to 1.5 degrees. So what would you say to people who are asking the question, is that rate coming down fast enough?
So the fast enough is not yet. Because in all the scenarios that reach 1.5, net zero by 2050, you actually need to see emissions not only slowing, but peaking and declining very fast. And that's clearly we haven't seen it in the data yet. However, we have at COP twenty eight agreed globally couple of targets that are important to keep in mind, and those are the tripling of renewable capacity and doubling of energy efficiency. And we have a bit of mixed news here.
If you look at the tripling of renewable capacity, we're really not far away because our latest data show that we'll be on track for an increase of 2.7 vis a vis three. So very, very close. Where we are far is actually the doubling of energy efficiency because instead of doubling, actually, last year, have seen a halving. So there are different parts of the energy sector that are moving at different speeds, some going quite almost at the rate that we will need, and others really lagging behind.
Tell me a bit more about energy efficiency. So where were we hoping those levels would be, and what did we see last year? Was there disappointing news there?
Broadly speaking, the energy intensity of the economy, which is this indicator we use to measure, energy efficiency, was growing at around, 2% a year. And when the targets for 2030 were set to be aligned with the 1.5 degree scenario, we said it should be doubling that, which means we were at 2%. We would like to go towards 4% by 2030 to be in line with our current that kind of targets. So looking at the data for 2024, unfortunately, instead of growing to 2.3, two point four, two point five, we actually went down to 1%. So it's actually slowing instead of accelerating.
So right at the beginning, you you mentioned the impact of rising temperatures and the amount of power we need for cooling, does that raise a question about how much power we will we will need to supply in future years if there is continual heating? Presumably, those challenges are going to grow more and more if the world keeps heating up.
Absolutely. I think this is actually a very, very important point. Another that we actually raised a few years ago in a report, what was called the future of cooling. But what we are seeing in data certainly not only for 2024, but 2023 was similarly going in in the direction of increasing demand for cooling. What we're seeing is that the vast majority of the population actually lives in area where the cooling needs are very high.
And this is the areas of the world where more of the population growth is set to be. And these are the areas of the world where we are seeing the impacts of extreme temperatures being the most relevant. So if you want, the population map with the heating map are very, very, very much corresponding. So what we are seeing in in the data once again is the following. The people become wealthier.
It's very good news. The buyer conditioners, so they switch it on, and they need more electricity. So this is the circle that we are actually seeing and and witnessing.
Laura Cozzi, thanks very much for joining us.
Thank you so much. Thank you.