IEA says electrification is an energy-security option after the Hormuz shock

The International Energy Agency said in a 22 September special report that electrification had moved higher on energy-security agendas after the Strait of Hormuz supply shock. Requested by Türkiye and Australia, the analysis examines the potential to accelerate electrification globally, how opportunities vary by sector and region, and the effects on energy security and climate goals. It was prepared to inform international discussions about a proposed target for electricity to supply 35 percent of final energy consumption by 2035.

Using technologies available today and energy prices from before the supply shock, the IEA finds that electricity could cost-effectively meet 33 percent of global final energy consumption by 2035. The current share is 23 percent. The agency says prices during the crisis could make even more uses economical to electrify. These shares depend on modelling assumptions about technology and costs; they are not a definitive 2035 forecast or an adopted target for every country.

In one IEA scenario, fuel-importing countries accelerate electrification substantially. Their energy import bills could then fall by more than US$400 billion by 2035 compared with 2025, while global oil use could be 18 million barrels per day lower than in the scenario without that acceleration. Those are modelled results conditional on the scenario being carried out across countries. The savings for any individual economy would depend on its generation mix, infrastructure, technology adoption and energy prices.

The report also examines the potential to reduce energy-related carbon dioxide emissions from transport, buildings and industry. In the faster-electrification scenario, emissions in those three sectors fall by 40 percent by 2035. The IEA says that pace could align with international climate goals. The outcome nevertheless depends on how electricity is generated and how quickly the power system becomes cleaner; the report does not say that every additional unit of electricity demand is automatically low-emissions.

Global electricity use has grown faster than economic output and nearly twice as fast as overall energy demand in recent years, according to the IEA. It links the increase to air conditioning, data centres, advanced manufacturing and electric cars. As electricity takes a larger role in economies, keeping supply secure and affordable becomes more important. Electrification is therefore not only a choice of vehicle or appliance; it requires investment in generation, transmission and distribution, flexibility and system operation.

For emerging and developing economies, the report identifies potential in electric agricultural water pumps, two- and three-wheelers in densely populated cities, and small businesses in sectors such as food and textiles. Priorities will differ by country. Pump electrification depends on local power supply and water management; uptake by small businesses depends on connections and equipment costs. The IEA also says some households and businesses may need help managing the upfront cost of switching technologies.

The report lists risks that come with greater electrification. Delayed investment in generation and grids can create bottlenecks. Concentrated supply chains for key technologies can raise security concerns, while cyberattacks and climate-related disasters threaten system continuity. More flexible grids, storage and a diverse power supply can help manage these challenges. The announcement does not quantify a single global price tag for the investment each country would require.

The IEA’s US$400 billion import-bill reduction and 18-million-barrel daily oil difference are conditional scenario results, not savings or commitments already achieved. Its central message is that electrification can reduce dependence on imported fuels in suitable sectors, provided countries have reliable and affordable electricity and invest in grids. Country-level plans and implementation data will show how far the global scenario can be applied to regional economies.