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Key themes of WEO 2021
  • In the run-up to a crucial COP26 meeting in Glasgow, this World Energy Outlook-2021 (WEO-2021) provides a detailed picture of how far countries have come in their clean energy transitions, and how far they still have to go. A new global energy economy is emerging, but will need to take shape much more quickly to avoid severe impacts from a changing climate.
  • An outlook based on today’s policy settings, the Stated Policies Scenario (STEPS), shows aggregate fossil fuel demand slowing to a plateau in the 2030s and then falling slightly by 2050, the first time this has been projected in this scenario. Almost all of the net growth in energy demand comes from low emissions sources. Nonetheless, the global average temperature rise in this scenario passes the 1.5 degrees Celsius (°C) mark around 2030 and would still be climbing as it reaches 2.6 °C in 2100.

Change in CO2 emissions by sector and scenario, 2020-2050

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  • Announced net zero pledges and enhanced Nationally Determined Contributions, if implemented in full as in the Announced Pledges Scenario (APS), start to bend the curve and bring the temperature rise in 2100 down to around 2.1 °C. In the APS, oil demand peaks soon after 2025, and a more rapid ramp up in low emissions sources brings emissions down to 21 gigatonnes (Gt) in 2050. However, a much greater global effort will be essential to reach the relative safety of the Net Zero Emissions by 2050 Scenario (NZE). Announced pledges close less than 20% of the emissions gap in 2030 between the STEPS and the NZE. 
  • Actions in four key areas over the next decade are essential to keep the door to a 1.5 °C stabilisation open: a massive push for clean electrification; a renewed focus on realising the full potential of energy efficiency; concerted efforts to prevent leaks from fossil fuel operations; and a boost to clean energy innovation.
  • Many emerging market and developing economies face a continued public health crisis from Covid-19, and the pandemic has set back efforts to improve access to electricity and clean cooking fuels. Funds for sustainable recovery are scarce and capital remains up to seven-times more expensive than in advanced economies, at a moment when their economies are entering what has historically been an energy- and emissions-intensive process of urban expansion and infrastructure development.
  • An international catalyst will be essential to accelerate clean energy deployment and to allow developing economies – where per capita emissions are often very low – to chart a new lower emissions path for development; as things stand, emissions from emerging market and developing economies (excluding China) increase more than 5 Gt to 2050 in the STEPS, with the largest growth from industry and transport.
  • Transitions are accompanied by marked shifts in energy sector employment, but clean energy jobs expand faster than other sectors fall. The downside risks for jobs are concentrated in the coal sector, where retirements of coal‐fired capacity approach 100 gigawatts (GW) per year over the coming decade in the NZE, almost double the figure in the Announced Pledges Scenario (APS). Phasing out coal requires an accelerated scale up of new low emissions generation and infrastructure, as well as a sustained commitment by governments and the international community to manage the impacts on communities, assets, land and the local environment.
  • Price volatility is an ever-present feature of commodity markets, but well-managed transitions offer ways to dampen the impacts on household energy bills. Compared with the situation in STEPS, the effect of a large price shock in 2030 in the NZE is reduced by efficiency gains and lower direct consumption of oil and gas.
  • Getting the world on track for net zero emissions by 2050 requires transition-related investment to accelerate from current levels to around USD 4 trillion annually by 2030, but only a minority of these investments immediately deliver zero emissions energy or energy services. Ensuring that other investments are financed, for example those that aid transitions in emissions-intensive sectors, is a key challenge for financiers, investors and policy makers.
  • If the world gets on track for net zero emissions by 2050, then the cumulative market opportunity for manufacturers of wind turbines, solar panels, lithium-ion batteries, electrolysers and fuel cells amounts to USD 27 trillion. These five elements alone in 2050 would be larger than today’s oil industry and its associated revenues.
Introduction

In a momentous period for the future of energy and emissions, this World Energy Outlook uses several long-term scenarios to illustrate the choices that face the world’s decision makers in the run-up to the crucial 26th Conference of the Parties (COP26) in November and beyond. A key variable in determining where the world goes from here is action taken by governments. They do not hold all the levers: individuals, communities, civil society, companies and investors can all make a major difference. But none have the same capacity as governments to shape the future of energy by setting the framework conditions that channel investment to energy projects, by supporting innovation, by giving clear signals about their long-term ambitions and by taking the necessary steps to realise them.

This Outlook takes into consideration the full diversity of country circumstances, resources, technologies and potential policy choices in its examination of the scenario projections. Countries are not starting this journey from the same place. Many developing economies, in particular, are facing a continued public health crisis and the impacts of the Covid-19 pandemic on their economies and energy sectors will be felt for years to come. By contrast, more rapid progress with mass vaccination campaigns leaves most advanced economies and the People’s Republic of China (hereafter China) with a clearer near-term pathway to recovery, though many uncertainties and risks remain.

The main scenarios in this Outlook are:

  • Net Zero Emissions by 2050 Scenario (NZE), which sets out a narrow but achievable pathway for the global energy sector to achieve net zero CO2 emissions by 2050.
  • Announced Pledges Scenario (APS), which assumes that all climate commitments made by governments around the world, including Nationally Determined Contributions (NDCs) and longer term net zero targets, will be met in full and on time.
  • Stated Policies Scenario (STEPS), which reflects current policy settings based on a sector-by-sector assessment of the specific policies that are in place, as well as those that have been announced by governments around the world.

There are also references to the Sustainable Development Scenario (SDS), which, like the NZE, achieves key energy-related United Nations Sustainable Development Goals related to universal energy access and major improvements in air quality, and reaches global net zero emissions by 2070 (with many countries and regions reaching net zero much earlier). The Announced Pledges and New Zero Emissions by 2050 scenarios are introduced for the first time this year. Updates have been incorporated into the STEPS and to the SDS since the WEO-2020. All the scenarios are described in detail in Chapter 2 - State of play.

This Overview chapter explores ten key themes covering the risks, trade-offs and benefits of different courses of action. The Outlook is based on rigorous modelling and analysis, reflecting the latest energy data, policy announcements, investment trends and technology developments, but it keeps in mind two core tenets: the crucial role of energy in human well-being and social and economic development; and the responsibility of the energy sector for nearly three-quarters of the emissions that are causing climate change. 


The Stated Policies Scenario (STEPS) is based on prevailing policy settings and so provides a useful barometer of the strength and impact of these policies over time. Compared with the WEO-2020, some of the largest changes in the STEPS in this Outlook are:

  • Total fossil fuel demand is higher in the near term than in the WEO-2020 STEPS. However, it is also markedly lower after 2030. For the first time, aggregate fossil fuel demand slows to a plateau in the 2030s and then falls slightly by 2050.
  • Natural gas demand is around 600 billion cubic metres (bcm) (or 10%) lower in 2050 than in the WEO-2020 STEPS, mainly reflecting lower projected consumption in the power and industry sectors in emerging market and developing economies in Asia.
  • Oil demand starts to decline in the 2030s for the first time in the STEPS as a result of more muted growth in petrochemicals and faster reductions elsewhere.
  • Coal use rebounds more rapidly in the near term and stays above last year’s projections until around 2030, but its subsequent decline is faster than projected in 2020 (and much faster than projected five years ago)
  • Total CO2 emissions are around 2 Gt lower in 2050 than in last year’s STEPS. Most of the difference is in the power sector, where emissions fall by more than 25% between 2020 and 2050 (compared with a decline of less than 10% in the WEO‑2020). Generation from solar photovoltaics (PV) and wind in 2050 is around 15% and 20% respectively higher in this Outlook.

Natural gas demand in the Stated Policies Scenario in the World Energy Outlooks 2021, 2020 and 2016

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Oil demand in the Stated Policies Scenario in the World Energy Outlooks 2021, 2020 and 2016

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Coal demand in the Stated Policies Scenario in the World Energy Outlooks 2021, 2020 and 2016

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