Faster electrification of the global economy could strengthen energy security, improve competitiveness and reduce emissions, with cost-effective technologies potentially bringing a proposed global target of 35 per cent electrification within reach by 2035, according to a new International Energy Agency (IEA) report.

The analysis, requested by Türkiye and Australia to inform COP31 discussions, examines opportunities to accelerate electricity use across sectors and regions, as well as the implications for energy security, emissions and economic development.

It will support discussions at the latest IEA COP31 High-Level Energy Transition Dialogue in New York, as countries consider adopting the 35 per cent global electrification target.

The report finds that, based on technologies available today and energy prices at levels seen before the current supply shock, electricity could cost-effectively account for 33 per cent of global final energy consumption by 2035, compared with 23 per cent today.

The IEA said this would put the proposed 35 per cent target within “striking distance”.

At current energy prices amid the Strait of Hormuz crisis, even more energy consumption could become cost-effective to electrify.

Electricity demand is already expanding rapidly, with global electricity use growing faster than economic output and nearly twice as fast as overall energy demand in recent years.

Growth has been driven by increased air conditioning, data centres, advanced manufacturing and electric vehicles.

The IEA said greater electrification could also significantly reduce dependence on imported fuels.

In a scenario where fuel-importing countries substantially accelerate electrification, global energy import bills could fall by more than $400 billion by 2035 compared with 2025 levels.

By the same year, faster electrification could reduce global oil consumption by 18 million barrels per day compared with a scenario without the accelerated shift.

The report attributes much of the reduction to the rapid adoption of electric vehicles.

Electrification could also contribute significantly to emissions reductions in transport, buildings and industry, which together account for more than half of energy-related carbon dioxide emissions.

Under the faster electrification scenario, CO2 emissions from these three sectors could decline by 40 per cent by 2035, a rate the IEA said is aligned with international climate goals.

The report said this reduction could put total energy-related CO2 emissions on a downward trajectory regardless of the electricity generation mix.

However, expanding domestic low-emissions electricity generation would provide additional energy security and emissions benefits.

The analysis also identifies opportunities across regions to increase electrification cost-effectively, although priorities differ between countries.

In emerging and developing economies, potential measures include electrifying agricultural water pumps, expanding electric two- and three-wheelers in densely populated cities and increasing electricity use among small businesses, including those in food and textile industries.

The IEA cautioned that unlocking this potential will require increased investment in electricity generation and grids, as well as smarter and more flexible power systems.

Countries will also need to address emerging electricity security risks, including concentrated supply chains for key technologies and critical minerals, cybersecurity threats, natural disasters and climate-related hazards.

Ensuring the benefits of electrification are widely distributed will also require policies to help households and businesses manage upfront costs associated with adopting electric technologies.

The report comes amid heightened attention to energy security following the Strait of Hormuz crisis, described by the IEA as the second major energy shock in five years.

It concludes that accelerating electrification could provide countries with an opportunity to reduce fuel-import dependence while supporting energy security, efficiency improvements, renewable energy expansion and climate objectives. -OGN/TradeArabia News Service