Cost-effective technologies could raise the share of electricity in global energy consumption to around 33 per cent today, putting the world within reach of a 35 per cent electrification target by 2035, according to a new International Energy Agency (IEA) analysis.
The IEA’s Special Report on Electrification comes amid two ongoing energy supply shocks: disruptions to energy flows linked to the conflict in the Middle East and persistent concerns over energy affordability. The report says these pressures are prompting countries to look at electrification as a way to reduce dependence on imported fuels, strengthen energy security and lower exposure to fossil fuel price volatility.
Electricity is playing a growing role in modern economies, with global electricity demand rising faster than GDP and nearly twice as fast as overall energy demand in recent years. Electricity now powers activities generating nearly half the world’s GDP. One-fifth of the increase in manufacturing companies’ revenues since 2020 has come from electrification-related sectors, with around half of these revenues flowing to companies headquartered in Europe, Japan, Korea and North America, and most of the remainder to companies in China. High-value-added sectors such as digital and financial services, artificial intelligence and advanced manufacturing are also increasingly dependent on electricity.
Yet around 730 million people still lack access to electricity, limiting access to basic energy services and economic development. Per capita electricity consumption varies sharply, from about 200 kilowatt-hours (kWh) a year in sub-Saharan Africa to around 7,000 kWh in advanced economies and China.
The report notes that countries are increasingly turning to electrification to strengthen energy security, with 25 countries announcing new electrification-related policies since February 2026.
The report, which was developed at the request of Türkiye and Australia in their respective roles as President and President of Negotiations of the 31st Conference of the Parties to the United Nations Framework Convention on Climate Change (COP31), comes as the incoming COP31 Presidency of Türkiye has made electrification a central priority of its Global Climate Action Agenda, alongside targets on waste and resilient cities. The Presidency has set a goal of increasing the share of final energy demand met by electricity from just over 20 per cent today to 35 per cent by 2035. COP31 is scheduled to take place in Antalya from November 9-20.
Ali Murat Ersoy, Ambassador of the Republic of Turkey to India, at a Pre-COP dialogue on September 23 in New Delhi, said the Presidency was seeking to move the climate process from setting targets towards implementation. He said the COP31 Climate Action Agenda would include voluntary implementation benchmarks for 2035, including raising electricity’s share of global final energy demand to 35 per cent.
“These benchmarks are entirely voluntary and designed to respect national circumstances without imposing any obligations,” Ersoy said, adding that the Climate Implementation Bridge was intended to help developing countries overcome institutional barriers, strengthen project preparation and convert national climate goals into bankable and investable projects.
The IEA said the energy crisis resulting from the conflict in the Middle East could further accelerate electrification as countries seek to reduce exposure to disruptions in fossil fuel supplies.
Sales of electrification-related technologies have increased particularly in markets exposed to disruptions in energy shipments through the Strait of Hormuz, the report said. It added that the conflict in the Middle East could further boost electricity demand.
Philip Green, Australia’s High Commissioner to India, at the same dialogue, said disruptions around the Strait of Hormuz and Red Sea had increased concerns over energy security and encouraged countries to seek greater autonomy in the energy they consume. “It doesn't detract from the move to renewables. It doesn't detract from the move to electrification. It actually provides another justification to do the same thing very much,” Green added.
Electrification can reduce dependence on imported fuels by replacing direct fossil fuel use in transport, buildings and industry with electricity, particularly where electricity generation draws on domestic resources.
Electric cars, motorcycles, trucks and buses already avoid around 2.3 million barrels of oil demand per day globally, according to the report. This is more than the amount of oil that bypassed the Strait of Hormuz through the United Arab Emirates’ Habshan-Fujairah pipeline in summer 2026.
Under a scenario based on current policies, electric vehicles could avoid around 10 million barrels per day of oil demand by 2035. In the IEA’s High Electrification Scenario, avoided oil demand from electric vehicle adoption could reach 18 million barrels per day.
The report estimates that fuel importers could reduce their import bills by around a quarter by 2035 compared with 2025 under the High Electrification Scenario, equivalent to about $400 billion a year. At the higher energy prices prevailing in 2026, the savings would exceed $500 billion annually.
The transport sector has the largest potential for further electrification, supported by a roughly 90 per cent decline in lithium-ion battery prices since 2010.
Around half of oil-based road transport demand could be electrified competitively with technologies available today, the IEA said. If battery prices continue to decline, more than four-fifths could become cost-competitive.
Electric cars are already around three times more energy-efficient than internal combustion engine vehicles, making electrification a significant route to reducing oil consumption.
Electric vehicles are expected to account for around half of global car sales by 2035 under current policies, compared with about a quarter today.
The IEA estimates that around half of global space heating demand could be electrified cost-effectively. In industry, around 40 per cent of energy consumption in low- and medium-temperature applications can be electrified cost-effectively.
Near-term opportunities include textiles, food processing, pulp and paper and some chemical applications, where technologies such as heat pumps and electric boilers can replace fossil fuel-based heat.
The report also highlights opportunities in emerging markets and developing economies, where electrification can reduce exposure to fuel price fluctuations and supply disruptions. In South Asia and parts of Africa, agricultural electrification, including irrigation and cold-chain infrastructure, could have a significant impact on overall electrification rates.
India is also emerging as a focus of Australia’s practical clean-energy cooperation. Australian Climate Change and Energy Minister Chris Bowen, at the same pre-COP dialogue, said the India-Australia energy partnership was already delivering projects including an Australia-India Rooftop Solar Training Academy, which is expected to train 2,000 solar technicians in its first two years, creating opportunities for women and young people. He also said Australia was supporting technology commercialisation partnerships between Australian researchers and Indian manufacturers.
The share of electricity in global final energy consumption currently stands at about 23 per cent. Reaching 35 per cent by 2035 would require electricity demand to grow by around 1,400 terawatt-hours annually, almost twice the average annual increase over the past decade.
The IEA said grids will need to be expanded and modernised around 40 per cent faster through 2035 than over the previous decade under the High Electrification Scenario. Battery storage will also need to expand rapidly, with global battery storage capacity rising almost tenfold to around 2,900 gigawatts by 2035 on a net-zero pathway.
Bowen said electrification would require investment in grids and storage as well as supportive policy, and that Australia was working to make electrification and access to finance central to the consensus at COP31. The global goal of mobilising $100 billion a year in climate finance had been reached, and countries had now set a new goal of at least $300 billion a year by 2035, while emphasising the need for a practical, inclusive transition.
At the same time, the report warns that electrification creates new energy security risks, particularly because critical minerals and manufacturing capacity for batteries and other electric technologies are geographically concentrated.
Ersoy also linked the implementation challenge to climate finance, saying developing countries would need “predictable, timely, and accessible climate finance, technology transfer, and capacity building support” to translate national climate plans into action. He said adaptation and resilience also require sustained attention because of the gap between developing countries’ needs and available resources.
He added that Turkey supported the call at COP30 to at least triple adaptation finance by 2035 and saw this as an area of mutual interest with India.
The IEA said greater electrification could therefore strengthen energy security and reduce emissions, but would require investment in grids, generation, storage, supply chains, skills and consumer support to ensure that the transition is affordable and reliable.