The future will be electrified, or at least it could be one-third electrified in the next decade.
If global economies made a more concerted effort to benefit from the efficiencies of electric energy, it would be possible to provide 33% of the world’s final energy consumption through electricity by 2035, a big boost from today’s level of 23% according to a Sept. 22 report from the International Energy Agency (IEA).
Such an accelerated transition to electrification would mean fuel-importing countries around the world could reduce their energy import bills more than $400 billion by 2035 compared with 2025 levels, the report says. This would involve a reduction of 18 million barrels of oil per day as compared to the status quo—mainly due to a rapid uptake of electric vehicles.
“Amid this year’s Strait of Hormuz crisis, the second major energy shock in the past five years, momentum behind key electric technologies is growing,” says an IEA announcement of the report. “Many countries are considering how they can further leverage electrification to reduce their dependence on imported fuels while lowering emissions.”
Of course there are challenges, including a serious lack of necessary infrastructure according to one researcher, who urges we slow the pace of electrification until we can meet greater demand.
But if rapid electrification can be achieved, it not only would save costs, it would benefit the climate as well.
Final consumption matters more
The final source of power is more important than where that power came from, the report explains—both in terms of cost and the environment. Although fossil fuel production of electricity is more wasteful than renewables, final consumption via electricity is still more efficient than final energy consumption via fossil fuels, even if the electricity is generated from a fossil-fuel-powered plant.
According to the report, faster electrification of final use in three key sectors, transport, buildings, and industry, could cut carbon dioxide emissions 40% by 2035.
“This decline would be sufficient to put total energy-related CO2 emissions on a downward trajectory, regardless of the electricity generation mix,” IEA says.
The transition in buildings, transport and industry
The report breaks down the possibilities for improvement in three main sectors: industry, which accounts for nearly 40% of energy demand, and buildings and transportation, which account for around 30% each of energy demand.
The rate of electrification in buildings has risen rapidly, from around 25% in 2000 to nearly 40% by 2025, due to rapid growth in the number of appliances and air conditioners, powered almost exclusively by electricity.
Industry has also electrified rapidly, starting in 2010, with greater electrification of non-energy-intensive sectors, and faster growth of already electrified sectors, such as advanced manufacturing, the IEA report says. The electrification industry itself provides opportunities, with revenues from companies working in electrification accounting for one-fifth of the growth in global industrial revenues since 2020, per the report.
Electricity has historically had a limited role in transport, where trains have been the leaders in electricity use. The difficulty of transitioning ships and airliners to electric power means that electrifying the majority of the transport sector will be difficult.
“However, the fast-growing adoption of electric road vehicles has led to the share of electricity in transport energy consumption rising from 1% in 2015 to nearly 2% in 2025, and its share of useful energy services rising to 4%, reflecting its efficiency benefits,” the report says.
An argument for slower electrification
Increasing electrification faces many challenges, perhaps the greatest being limits on the infrastructure needed to produce sufficient electricity.
The soaring demand for the data centers that enable AI means that data centers were consuming 4.4% of U.S. electricity in 2023, and could be consuming more than 12% of the total by 2028, according to research from the Penn State Institute of Energy and the Environment.
Meeting this demand, as well as demands in increasing electrification in other industrial uses, and the transport and buildings sectors, requires huge investments in electrical grids worldwide.
And yet, according to research by Johathon Lesser from the National Center for Energy Analytics, utilities are focused on short-term management rather than long-term infrastructure development.
“Instead of investing in the power lines, substations, and backup systems needed for a reliable grid, many utilities are focused on managing demand. This often means higher prices and restricted access to electricity for customers,” Lesser writes.
The solution is a short-term slowing of electrification efforts and a greater focus on building the capacity to enable electrification, he says.
If it is possible to achieve electrification and appropriate parallel development of infrastructure, the world stands to benefit from a more electrified future.
