At the offices of the Centre for Global Energy Studies (CGES) at 17 Knightsbridge, London, veteran Saudi oil minister, the late Sheikh Ahmed Zaki Yamani would look into his crystal ball and prophecise, “Oil will not end, oil era will come to an end.” That was prophetic, especially when uttered in an era when Peak Oil was the currency in circulation.

Decades later, my wonderful friend, Fatih Birol, the Executive Director of the Paris-based International Energy Agency (IEA), is speaking the same language: “We are entering the Age of Electricity.”

While unveiling the IEA’s keenly awaited World Energy Outlook (WEO) 2024, the IEA executive director added, “In energy history, we’ve seen the Age of Coal and the Age of Oil, and we’re now moving rapidly into the Age of Electricity.

Despite the oil producers’ negating the assertion, the IEA continues to maintain that due to the ongoing transition, global fossil fuel demand is set to peak by the end of the decade, meaning surplus oil and gas supplies could drive investment into green energy, and fossil fuel market prices could continue to feel the heat.

IEA’s World Energy Outlook maintains that global fossil fuel demand will peak by the end of the decade as the world moves towards green fuels

“In the second half of this decade, the prospect of more ample — or even surplus — supplies of oil and natural gas, depending on how geopolitical tensions evolve, would move us into a very different energy world,” Mr Birol said at the release of WEO last Wednesday, Oct 16.

Surplus fossil fuel supplies would likely lead to lower prices and could enable countries to dedicate more resources to clean energy, moving the world into an “age of electricity,” he added.

The transition is obvious. A record high level of clean energy came online globally last year, the IEA noted, including more than 560 gigawatts (GW) of renewable power capacity. Around $2 trillion is expected to be invested in clean energy in 2024, almost double the amount invested in fossil fuels, as costs for most clean technologies are resuming a downward trend after rising in the aftermath of the Covid-19 pandemic, WEO-2024 reported.

This will help renewable power generation capacity rise from 4,250 GW today to nearly 10,000 GW in 2030 in the current policy scenario, WEO-2024 added. This is indeed short of the target set at COP 28 — three times the current renewable output — but still more than enough, in the aggregate, to cover the growth in global electricity demand, and push coal-fired generation into decline.

Nuclear is one of seven clean energy technologies that are key to affordable and secure transitions, but overcoming barriers to deployment, including network infrastructure, should be a priority worldwide. As per the WEO-2024, the share of nuclear power is likely to remain close to 10 per cent under the three main long-term scenarios presented in the outlook.

Electricity use has grown at twice the pace of overall energy demand over the last decade, with two-thirds of the global increase in electricity demand over the last ten years coming from China, leading this ongoing transition. In the current policy scenario, the IEA says the country’s oil use for road transport is set to decline.

China accounted for 60pc of the new renewable capacity added worldwide in 2023 — and in six years, by 2030, China’s solar photovoltaic (PV) generation is on course to exceed the total electricity demand of the United States today, the WEO-2024 highlighted. To be fair, though, to a certain extent, this decline in Chinese fossil fuel consumption would be offset by a large increase in oil use as a petrochemical feedstock.

Electric vehicle sales in China are already expected to hit the 50pc mark this year. All this means that by 2050, EVs will displace some six million barrels per day of oil demand.

Yet, there are open questions about how quickly and efficiently new renewable capacity can be integrated into power systems and whether grid expansions and permitting times will keep pace with growth in electricity consumption. Policy uncertainty and a high cost of capital are holding back clean energy projects in many developing economies, including Pakistan.

Electricity demand growth is set to accelerate further in the years ahead and rise even more quickly in scenarios that meet national and global net zero goals, the WEO-2024 emphasised. The accelerated electricity demand growth is driven by light industrial consumption, electric mobility, cooling, data centres, and artificial intelligence.

Currently, 60 cents are spent on grids and storage for every dollar spent on renewable power. By the 2040s, this reaches parity in all scenarios. Many power systems are vulnerable to an increase in extreme weather events and cyberattacks, putting a premium on adequate investments in resilience and digital security.

Is Pakistan ready for this coming electricity revolution? We are far behind. We urgently need affordable electricity from all sources. Maybe it is time for us to take a helping hand from a trusted friend, China, in this sector, too, and prepare for the inevitable.

Published in Dawn, The Business and Finance Weekly, October 21th, 2024