Trends and strategies in the 2019 edition of World Energy Outlook, the reference publication for anyone working with energy.
The World Energy Outlook (WEO) is published by the International Energy Agency (IEA). Now more than ever, decision makers in the energy field must examine the current situation carefully and make their decisions based on evidence, understanding of the implications of their choices. The World Energy Outlook does not give a forecast of what will happen in the future. Instead it lays out scenarios that explore and analyse different possible futures, the actions, or inactions, that lead to them and how the different parts of the system are interconnected.
World energy demand is still largely met by fossil sources (31% oil, 27% coal and 23% gas). Focussing on electricity generation, the main sources are: coal (38%), gas (23%) and hydroelectric (16%). Wind energy accounts for 5% and solar PV 2%. In this scenario, the following major uncertainties emerge: a substantially stable oil market despite geopolitical uncertainties, the need to reduce emissions despite the continually growing CO2 trend (reaching an all-time high in 2018), the need to provide universal energy access when today 850 million people are still living without electricity.
There are various paths that can be taken in the long term:
Energy security and emissions are still central defining the future energy path. In particular, on the energy security side, the US plays an increasingly important role in the global energy landscape (representing 85% of global oil growth and 30% of gas by 2030), resulting in a lower role of OPEC and Russia on world oil production (47% in 2030 vs 55% in the early 2000s). The Middle East remains the world main oil supplier (with the Strait of Hormuz still one of the main routes). Increasing power system flexibility becomes essential in keeping up with the growing need for electricity (in the STEPS scenario, solar PV becomes the main source of installed capacity in the world). On the energy efficiency side, continuous improvement is needed. In 2018, the world economy's energy intensity fell by only 1.2%, well below 3% per year required in the SDS.
On a geographical level, emerging economies will redefine energy flow trends, with China, remaining the leading energy consumer in all scenarios, while India is the region with the largest energy demand growth. In 2040, (in the STEPS scenario) 80% of international oil trade is destined to Asia, also due to the doubling of imports to India. However, in this area the battle remains between coal, natural gas and renewables to supply electricity and heat to emerging Asian economies. Energy demand is also growing in Africa as a result of rapid population growth, which by 2040 will exceed 2 billion (increasing by over 600 million in cities alone). There will be an opportunity to pursue low-carbon intensity development in Africa, through the leveraging of domestic energy resources including renewables, gas and energy efficiency. Thanks to recent discoveries, gas remains central to support the continent's industrial growth and offers a good source of flexibility for power.
To build a sustainable scenario, emissions trend must change and aim for NET ZERO EMISSIONS by 2070. A shared commitment is needed to reach this target.
There is no single source or solution, but all energy sectors must be involved to achieve the NET ZERO EMISSIONS target by 2070. Reducing the emissions gap to 2050 between the STEPS and SDS scenarios will be possible thanks to energy efficiency (37%), renewables (32%), CCUS (9%), fuel switching (8%), nuclear (3%) and other (12%). Emissions locked in the current energy system configuration must be considered in the transition process (coal-fired power plants are currently responsible for 30% of emissions and many of these plants are still quite young). In addition, gas networks can be a crucial tool for long-term flexibility thanks to products such as low-carbon hydrogen and biomethane. A grand coalition involving governments, investors, the private sector and anyone interested in climate change fight is highly desirable in reaching the goal of a sustainable scenario.
* Previously known as the NEW POLICIES SCENARIO (NPS)