The future of renewable energy could lie in offshore wind power and may soon become cheaper than natural gas in Europe.

The global transition to clean energy could be led by offshore wind power according to a new study by the International Energy Agency (IEA), which found that the power source is on track to become a $1 trillion industry by 2040 and could provide enough energy to support the entire world’s electricity demand.

The news comes after an earlier IEA report this week found that the booming solar energy industry is growing global supplies of renewable electricity faster than expected, with the agency predicting that capacity could expand by 50% in the next five years.

“In the past decade, two major areas of technological innovation have been game-changers in the energy system by substantially driving down costs: the shale revolution and the rise of solar PV,” Fatih Birol, the IEA’s executive director, said in a statement Friday. “And offshore wind has the potential to join their ranks in terms of steep cost reduction.”

“Offshore wind currently provides just 0.3% of global power generation, but its potential is vast,” Birol told the Guardian.

Birol said that he anticipates the average cost of offshore wind power to halve in the next two decades, driven by cheaper financing, technological improvements, and bigger turbines – some of which near the height of the Eiffel Tower. The report suggests that offshore wind power will be cheaper than natural gas in Europe in the near future.

The report emphasizes that supportive government policies will be needed for offshore wind power to reach its potential scale. The world’s current wind energy production is only about 20 gigawatts today, but will reach 130 gigawatts by 2040, and could reach 180 gigawatts with strong climate policies, the report predicts. China will be one of the top producers of the booming energy source.

“If the governments are serious about their climate policies and climate neutrality, they have to have dedicated policies in order to foster green technologies like offshore wind,” Birol told Al Jazeera. CNBC estimates the industry needs $840 billion over the next two decades to meet the report’s 2040 target of making a 15-fold increase in capacity.

The Guardian’s Jillian Ambrose notes that improving offshore wind power technology will not only directly provide clean energy, but it can also substitute fossil fuel use in hydrogen energy production.

“In the North Sea, energy companies are already planning to use the electricity generated by giant offshore windfarms to turn seawater into hydrogen on a floating “green hydrogen” project, backed by the UK government,” writes Ambrose. “The clean-burning gas could be pumped back to shore to heat millions of homes by the 2030s. The UK has committed to reaching net zero carbon emissions by 2050.”