Electricity is becoming ever more central to modern economies and daily life. It powers everything from air conditioning and advanced manufacturing to digital communications and artificial intelligence. The world is moving into the Age of Electricity: global demand for electricity has grown faster than global GDP and nearly twice as fast as overall energy demand. And electricity is already the main energy source for activities generating nearly half of global GDP.
Momentum is ramping up significantly. Amid the second major energy supply shock this decade, many countries are targeting action on electrification to reduce exposure to imported fuels. Over twenty-five countries have announced new electrification-related policies since March 2026. The latest data suggests that the rollout of electric cars, heat pumps, batteries and solar panels – already gathering pace in recent years – has been further boosted, particularly in markets exposed to disruptions in oil and gas imports. Meanwhile, demand from data centres and air conditioners continues to rise.
Even so, as the new Special Report on Electrification from the IEA explains, the potential is much larger. Electricity currently accounts for 23% of global final energy consumption. New sector-by-sector analysis shows that, using technologies available today and based on 2025 costs, prices and financing conditions, it would be cost-effective to raise this share to around 33% – and further technology cost reductions would expand this opportunity. Tapping this potential would place the world within striking distance of the goal, currently under international discussion, of reaching 35% by 2035.
The scale of the opportunity differs across sectors. Transport offers the greatest potential, supported by a 90% decline in lithium-ion battery prices since 2010. Around half of oil-based road transport demand could be electrified competitively today, including with electric motorcycles and buses. Buildings also offer substantial scope: half of global space-heating demand could be electrified competitively, while reversible heat pumps can meet both heating and cooling needs. In industry there are near-term opportunities in textiles, food processing, pulp and paper, and some chemicals production. Around 40% of energy use in low- and medium-temperature industrial applications can be electrified cost-effectively.
All regions around the world have potential to increase electrification rate, but this potential varies widely, reflecting factors from local energy costs and taxes to financing conditions and industrial strategies. In many emerging and developing economies, Dense cities, air pollution and reliance on imported fuels can strengthen the case for electric mobility. At the same time, around 730 million people still lack access to electricity. Expanding access to electricity must therefore remain a top priority, alongside support for growth of productive uses in agriculture and manufacturing.
Electrification can bring major reductions in oil and gas import bills. Electric cars, motorcycles, trucks and buses already avoid around 2.3 million barrels of oil demand each day. Under today’s policy settings, electric vehicles avoid about 10 million barrels per day by 2035, equivalent to the total oil production of Russia. In a High Electrification Scenario, in which the global electrification rate reaches 35% by 2035, around 18 million barrels per day of oil demand is avoided, with four-fifths of the reduction occurring in fuel-importing regions. In this scenario, the faster electrification of end-uses alone allows importers to reduce their import bills in 2035 by around one-quarter compared with 2025, equal to USD 400 billion annually, or more than USD 500 billion when assessed against 2026 energy prices.
Electrification can also make a major contribution to reducing emissions. End-use sectors are responsible for over half of energy-related carbon dioxide each year. In the High Electrification Scenario, these emissions fall by 40%. Electrification cuts overall emissions even if the power sector develops in line with current policies, but cleaner electricity multiplies the effect. And faster action on electrification also complements the goals of tripling renewable capacity and doubling the rate of energy efficiency improvement, because electric technologies generally waste less energy than their conventional equivalents.
Seizing this opportunity requires electricity systems to develop in a co-ordinated way. In the High Electrification Scenario, electricity demand growth rises to 1 400 terawatt-hours per year through 2035, almost twice the pace of the past decade. Grids need to be modernised and expanded 40% faster than they were over that period. Delays would increase connection queues, congestion, curtailment and reliability risks. Low-emissions generation, digital capabilities, storage and demand response must advance together. Integrated planning, suitable incentives, smart-grid capabilities and robust cybersecurity safeguards will therefore be essential.
New risks must also be managed. Supply chains for critical minerals and some technologies, including batteries, are highly geographically concentrated, making diversification and international cooperation high priorities. Digitally connected technologies can create cybersecurity risks, requiring robust safeguards. Strengthening innovation and manufacturing capacity can support both energy security and broader economic resilience.
Affordability and distributional impacts require equal attention. Electric vehicles are around three times more efficient than internal combustion engine vehicles, while heat pumps can offer larger gains over conventional boilers. Average household energy bills in the High Electrification Scenario fall by around 15% by 2035 compared with today. Yet substantial upfront costs and limited access to finance can create barriers. Targeted support may be needed, especially for lower-income households. Investment in skills is also important as demand grows for electricians, engineers and grid workers.
Electrification represents both a growing trend and a major opportunity. However, achieving high shares of electrification will not be automatic. It will depend on coherent national strategies, investment in electricity systems, secure supply chains, support for consumers, expanded access and international co-operation. As the world accelerates into the Age of Electricity, concerted action can ensure that its benefits are widely shared.
