The Different Potential Energy Scenarios of the Next Decade

Aaron Foyer
The Different Potential Energy Scenarios of the Next Decade

The IEA, founded in 1974, has adapted its mandate (initially focused on fossil fuels) and its World Energy Model (WEM) scenarios to reflect changes in requirements for global energy and the impact on climate change. 

World Energy Model Overview

Though well regarded, criticisms have arisen around the WEM scenarios and how they have changed over time, particularly with regards to the ongoing demand for fossil fuels and nuclear energy generation and the level of renewable energy penetration.

In 2007, the IEA began examining a pathway that would lead to energy-related CO2 emissions being reduced to 23 Gt by 2030.  The two climate policies initially examined were the 450 Policy Scenario, which leads to stabilization of greenhouse gases at 450 parts per million CO2 equivalent (ppm CO2-eq) and the 550 Policy Scenario aimed at stabilization at 550 ppm.

The 450 Scenario is the transitional scenario that has maintained ongoing focus with projections towards the threshold for preventing dangerous anthropogenic impacts on climate change.

In the WEO 2007 analysis, the 450 Scenario, when compared to the Reference Case (renamed Current Policies Scenario, 2010), has demand for coal declining to half as much in 2030, nuclear demand doubling and demand for renewables increasing substantially.

World CO2 Emissions from Fossil Fuels by Scenario

CO2 emissions in 2030 under the Reference Case are 41.9 Gt versus 23 Gt in 2030 in the 450 Scenario.  This corresponds with the much lower coal demand in the 450 Scenario, 2,559 Mtoe versus 4,994 Mtoe in the Reference Case, and the higher nuclear demand, 1,709 Mtoe versus 854 Mtoe.

From 2010 to 2016, the 450 Scenario was compared to the New Policies Scenario and the Current Policies Scenario. In 2017, the IEA WEO introduced the Sustainable Development Scenario (SDS) which was in essence the 450 Scenario with the inclusion of the UN sustainable development goals.

World Energy Demand Scenario Comparison, 2010 – 2019 (2030)

The WEO results indicate that the current and planned strategies by global policy leaders are not aligned with meeting the goals of UN SDG.

Over the decade (2010 – 2019), the total energy demand in 2030 for the New Policy Scenario has demand decreasing by 649 Mtoe over the Current Policy Scenario.  Coal, oil and gas demand is lower in the NP than the CP by 789 Mtoe and renewables demand increases by 148 Mtoe. This suggests that recently announced policy changes result in lower demand for energy than the currently implemented policies.

Conparing the difference between the 450 Scenario in 2010 to the Sustainable Development Scenario in 2019, shows total energy demand declining by 834 Mtoe.  Coal demand decreases by 284 Mtoe, oil increases slightly (20 Mtoe) and gas experiences a substantial demand growth (407 Mtoe).  Both nuclear (-600 Mtoe) and biomass (-703 Mtoe) show substantial declines in demand.

The 2019 SDS indicates that the NP Scenario needs coal, oil and gas demand to decline a further 2671 Mtoe to meet UN SDG goals. 

Over a decade out from when the IEA developed the 450 Scenario, the change in energy demand required between 2019 and 2030 from each of the WEM energy scenarios differs dramatically. 

Change in Energy Demand by Scenario, 2019, 2030

In the WEO 2020, the Net Zero Emissions by 2050 Scenario indicates primary energy demand falling by 17% between 2019 and 2030 to a level similar to that back in 2006, even though the global economy has doubled.

The global energy sector and industrial processes related CO2 emissions fall from 35.8 Gt in 2019 to less than 10 Gt by 2050 and are on track to net zero emissions by 2070. 

However, as noted by the IEA, to eliminate the remaining 10 Gt in 2050 will require more than the changes noted in the SDS, including challenging technological changes, overcoming infrastructure constraints, social acceptance of stringent policies, behavioral changes, and capital stock replacement.

So why the dramatic changes in WEO scenarios and output?   

Though both energy scenarios – the Sustainable Development Scenario and the original 450 Scenario are the IEA transition scenarios to meet climate change objectives, the output from these scenarios is very different because, as pointed out by the IEA, the ‘global goalposts’ have changed.

Energy and Industrial Process CO2 Emissions and Reduction Levers

These changes have significantly impacted energy demand and related CO2 emissions in industry sectors like power generation.  The terawatt-hours of electricity generated by the SDS scenario for 2030 is 3,970 Twh more than suggested in the 450 Scenario, resulting in CO2 emissions increasing by 9,923 Mt.

Three major reasons why these two scenarios are different according to the IEA are:

First, energy –related CO2 emissions reached 33 Gt in 2018, 2.5 Gt higher than the level set out for that year in the 450 Scenario.  This means the SDS starting point is higher and the emissions trajectory must fall to a greater extent.  Further, the carbon-intensive capital stock is larger.

Emissions Trajectories for Total CO2 Emissions in the Sustainable Development Scenario

Secondly, the 450 Scenario was designed with the intention of reaching a net-zero CO2 emissions by 2100, whereas, the SDS aims to achieve this goal by 2070.  Combined with the higher emissions trajectory starting point, this resulted in the need for an average annual emissions decline of 730 Mt versus the 400 Mt decline in the 450 Scenario.

Third, the SDS relies on much more solar and wind use in the power sector and less on nuclear and the impact of carbon capture, utilization and storage (CCUS) than in the 450 Scenario.

To understand the IEA WEO scenarios and their annual outputs, one must understand the assumptions underlying each scenario (fuel prices, policies, technologies and socioeconomic drivers) and how and why the assumptions have changed over time.