The Energy World Will Never Be the Same As Before the Iran War, Says Fatih Birol

A key theme in Antalya—and on Birol’s mind—is electrification. Right now less than a quarter of final energy consumption comes from electricity. The rest comes primarily from fuel consumption, think of petrol in vehicles, heating oil in homes, or gas in stoves. Relying on electricity, which tends to be produced relatively close to where it’s used, addresses energy security concerns. That’s even more the case when electricity is produced using renewables rather than imported fossil fuels. 

The COP31 presidency is pushing countries to pledge to rely on electricity for 35% of their final energy consumption by 2035. The world’s electricity grid still relies on fossil fuels to some degree—more or less so depending on the area—but today it’s typically cleaner than most fossil fuels. It will be even cleaner as renewable deployment continues. 

Electrification also represents a structural shift. It promises to reshape trade relationships as countries need to either build clean technology supply chains or identify friendly partners to build relevant trade relationships. It will spur investment in the power sector, advancing both big electric infrastructure projects and creating new companies that build innovative electricity technologies. In the IEA’s special report on electrification released in September, the agency says that annual global investment in electricity generation, battery storage, and grids could total $2.5 trillion by 2035 in a scenario where electrification really takes off. That’s a $1 trillion increase from last year. And electrification promises to unlock—or at least lessen—the stranglehold that oil and gas has on geopolitics while elevating the importance of another set of resources, including critical minerals.