Energy at a crossroads: how the world can transition without losing stability
The energy world is facing a reality check. Ambitious climate targets meet stubborn geopolitical risks, rising costs, and uneven progress across regions. According to Dr. Fatih Birol, the next phase of the global energy transition will demand flexibility, pragmatism, and a clear-eyed approach to balancing short-term pressures with long-term goals.
Dr. Birol focused on the energy sector's future, emphasising the uncertainty due to the poly crisis and the growing demand for electricity. “Natural gas is expected to play a significant role, with new LNG supplies expected to alleviate pressure”.
How the energy sector navigates this balance will shape a resilient, low-carbon future - one that adapts to global complexities without losing sight of the end goal,” he said.
A complex phase of the energy transition
Dr. Birol first focused in looking at the energy triangle in the context of pragmatism progress and the path forward.
“Uncertainty has never been so high in the energy business. It reduces the appetite of investors in some areas. But there two major certainties. Number one, we are seeing an unprecedented growth of electricity consumption. We have never seen this before: in addition to the usual drivers, electricity demand growth, we have three very important drivers: AI, air conditions and electric cars. This means there is a growing role for natural gas, again, so demand side is very clear. Second: flexibility,” he explained.
Long-term climate goals now need to be weighed against immediate pressures, as energy systems face strains from geopolitical volatility, rising costs, and uneven progress across regions.
“Uncertainty has never been so high in the energy business. But there are two major certainties. Number one, we are seeing an unprecedented growth of electricity consumption. Second: flexibility”.
Dr. Fatih Birol, Executive Director of the International Energy Agency
Embracing a pragmatic recalibration
In response to these challenges, a pragmatic recalibration is taking shape. Policymakers and industry leaders are prioritising flexibility, ensuring that energy strategies can adapt to shifting economic and geopolitical conditions without compromising long-term objectives.
Dr. Birol highlighted the growth of renewables: “When you look at the numbers, this is undeniable. In 2024, more than 80% of new power generation worldwide came from renewable sources - making them the main driver of change in the energy sector. Some countries have shifted their positions, such as the United States, where renewables still face significant challenges, while in Europe universities and institutions are strongly supporting the transition. But the biggest challenge for renewables goes beyond policies. The key issue is the availability of grid.”
Achieving ambitious yet practical goals
The energy sector must chart a course that is both ambitious and achievable. By grounding policies in inclusivity, regional realities, and economic resilience, the next phase of the transition can be navigated successfully, balancing adaptability with long-term low-carbon objectives.
Africa's energy needs were highlighted, noting the potential for gas in industrialisation and the minimal impact on global emissions if developed. “Africa needs a lot of gas for industrialisation, for destination of water and others. Now, in terms of exporting the new projects for export from Africa may have difficulties in terms of competing, but for domestic purposes, I see there's a lot of potential,” he explained.
Diversification as a golden rule
Dr. Birol also highlighted the risk of concentration in refining. “I think the biggest risks lie in maintenance and in critical business areas. First of all, it is important to make clear that critical business is not necessarily about what we consume directly. Crude oil by itself cannot be used for much; it must be refined into petrol, diesel, LPG, jet fuel, and so on. Today, around 70% of the refining capacity for critical minerals is concentrated in a single country. In my view, this is extremely risky. For me, the number one golden rule of energy security is diversification — but instead, we are moving towards concentration, with a dangerous overreliance on critical refiners,” he concluded.
