The International Energy Agency’s (IEA) latest World Energy Outlook opens with a disclaimer: none of its scenarios are forecasts. Most readers skip past this caveat. They shouldn’t. The IEA isn’t being modest—it’s admitting something most energy executives and ministers would rather not hear. Nobody actually knows where the energy system is heading over the next decade, and betting your strategy on a single outcome is a mug’s game.
The agency’s Current Policies Scenario—assuming only laws already on the books—has oil demand hitting 113 million barrels a day by 2050. That’s 15 per cent higher than today. Electric cars stall everywhere except China and Europe. Carbon emissions nudge 40 gigatonnes annually, pushing temperatures up 2.9°C by century’s end. Meanwhile, the Stated Policies Scenario, which factors in announced policies not yet enacted, sees oil peaking around 2030 at 102 million barrels before sliding. Half of all new cars sold globally are electric by 2035, wiping out 10 million barrels of daily oil demand.
Both scenarios are plausible. Neither is a wish list. And the chasm between them could redraw geopolitical maps, gut corporate balance sheets, or vindicate national champions. Nevertheless, energy pundits still peddle a tidy narrative: renewables rise, fossils fall, electrification marches on. The IEA’s framework suggests this is nonsense.
Not probabilities, not predictions
The real question isn’t which scenario happens. It’s whether any of them do. The IEA explicitly warns that its framework captures “the wide spectrum of possible outcomes” implied by today’s markets and policies—not probabilities, not predictions. The future is fog, not a straight road. These scenarios veer wildly on fossil demand, renewable build-out, emissions, infrastructure spending. That divergence isn’t a modelling quirk. It’s reality.
What makes this year’s outlook particularly grim is how many things could go wrong at once. Fatih Birol, the IEA’s boss, noted there’s never been a moment “when energy security tensions have applied to so many fuels and technologies at once.”
Oil routes face geopolitical bottlenecks. Gas infrastructure can’t handle extreme weather. Renewables struggle to integrate with creaking grids. Power systems are buckling under cyber and physical attacks. Last year, energy infrastructure disruptions hit more than 200 million households worldwide. Power grid failures caused 85 per cent of them.
Past energy transitions unfolded slowly, within stable frameworks. Coal gave way to oil over decades. Oil shared space with gas gradually. Today’s shift tries to electrify transport, decarbonise heavy industry, and power data centres whilst trade wars simmer and weather patterns unravel. Texas in February 2021 showed what happens when systems built for yesterday’s climate meet today’s extremes: 4.5 million customers lost power, 240 people died, and the economic damage hit 130 billion US dollars. Seven in ten US transmission lines are over 25 years old, relics from a different climate era.
Awkward choices
Businesses face some awkward choices. Investment in data centres—580 billion US dollars this year—has overtaken global oil supply spending (540 billion US dollars). Yet data centres drive less than a tenth of electricity demand growth. The AI frenzy obscures the bigger story: electricity use is climbing four times faster than total energy consumption, pushed by electric cars in rich countries and air conditioners in poor ones. Firms betting everything on either fossil persistence or renewable dominance will probably regret it.
The smart thing to do will not be predicting which future arrives. It will be building strategies that work in several.
Take natural gas. In the Current Policies world, demand swells to 5,600 billion cubic metres by mid-century. In Stated Policies, it keeps rising into the 2030s—thanks largely to American and Qatari LNG flooding markets—then flattens. Gas is either a bridge fuel or a stranded asset, depending. Treating it as definitely one or the other is asking for trouble.
Governments aren’t doing much better. The IEA dropped its Announced Pledges Scenario this year because too few countries have updated their climate targets for 2031-35. No pledges, no scenario. This policy fog makes everything worse. Without clear signals, markets price in wider risks, pushing up capital costs across the board. The result? Paralysis dressed up as prudence. Ministers delay hard decisions, investors wait for clarity, and the energy system drifts between futures without committing to any.
Profit from delay
The scenarios also expose who actually profits from delay. In the Current Policies world, OPEC+ pumps 15 per cent more oil in 2050 than at any point in history. America remains the world’s biggest oil and gas producer through mid-century. Asian emerging markets hoover up fossil fuels even as Europe and Japan decarbonise. The transition doesn’t kill oil producers—it just reshuffles market share.
The real winners sit between old and new energy: equipment makers, infrastructure builders, engineering firms. They collect fees regardless of which path wins.
The IEA’s multi-scenario approach is itself an admission of defeat for deterministic modelling. The Current Policies Scenario vanished from the Outlook between 2020 and 2025, shelved during pandemic chaos. Its return signals that a conservative baseline matters again precisely because policy risk has exploded. The new ACCESS scenario—mapping universal electricity and clean cooking access—acknowledges 730 million people lack power and two billion cook with dung. Energy’s future isn’t just about carbon. It’s about who gets any energy at all.
Energy certainty is finished
For companies, scenario planning beats forecasting. Build supply chains that survive both rapid electrification and stubborn fossil demand. Hedge energy costs across wildly different price paths. Cultivate political ties that span pro-incumbent and pro-insurgent regulatory regimes. Winners will treat energy uncertainty as permanent, not temporary.
For governments, vagueness will mean failure. Every year without long-term clarity compounds investor hesitation, inflates transition costs, and narrows viable paths forward. The IEA’s scenarios aren’t a menu. They’re a warning. Left ungoverned, the energy system will lurch between extremes, torching capital on all sides.
Energy certainty, if it ever existed, is finished. Those still planning for one future—green or grey, electric or combustion—are building on sand. The survivors will be the ones who grasp that when the future diverges this sharply, flexibility is the only currency that holds value.
Photo: Dreamstime.
