01 POWER ISLAND / 02 H2+NH3 / IEA 2022 NetZeroby2050-ARoadmapfortheGlobalEnergySector

technologies, the extent to which citizens are able or willing to change behaviour, the availability of sustainable bioenergy and the extent and effectiveness of international collaboration. We investigate some of the key alternatives and uncertainties here and in Chapter 3. The Net Zero Emissions by 2050 Scenario is built on the following principles.

The uptake of all the available technologies and emissions reduction options is dictated by costs, technology maturity, policy preferences, and market and country conditions.

All countries co operate towards achieving net zero emissions worldwide. This involves all countries participating in efforts to meet the net zero goal, working together in an effective and mutually beneficial way, and recognising the different stages of economic development of countries and regions, and the importance of ensuring a just transition.

An orderly transition across the energy sector. This includes ensuring the security of fuel and electricity supplies at all times, minimising stranded assets where possible and aiming to avoid volatility in energy markets.

2.2.1Population and GDP

The energy sector transformation in the NZE occurs against the backdrop of large increases in the world’s population and economy (Figure 2.1). In 2020, there were around 7.8 billion people in the world; this is projected to increase by around 750 million by 2030 and by nearly 2 billion people by 2050 in line with the median variant of the United Nations projections (UNDESA, 2019). Nearly all of the population increase is in emerging market and developing economies: the population of Africa alone increases by more than 1.1 billion between 2020 and 2050.

Figure 2.1 World population by region and global GDP in the NZE

By 2050, the world’s population expands to 9.7 billion people and the global economy is more than twice as large as in 2020

Notes: GDP = gross domestic product in purchasing power parity; C & S America = Central and South America. Sources: IEA analysis based on UNDESA (2019); Oxford Economics (2020); IMF (2020a, 2020b).

The world’s economy is assumed to recover rapidly from the impact of the Covid 19 pandemic. Its size returns to pre crisis levels in 2021. From 2022, the GDP growth trend is close to the pre pandemic rate of around 3% per year on average, in line with assessments from the IMF. The response to the pandemic leads to a large increase in government debt, but resumed growth, along with low interest rates in many countries, make this manageable

in the long term. By 2030, the world’s economy is around 45% larger than in 2020, and by 2 2050 it is more than twice as large.

2.2.2Energy and CO2 prices

Projections of future energy prices are inevitably subject to a high degree of uncertainty. In IEA scenarios, they are designed to maintain an equilibrium between supply and demand. The rapid drop in oil and natural gas demand in the NZE means that no fossil fuel exploration is required and no new oil and natural gas fields are required beyond those that have already been approved for development. No new coal mines or mine extensions are required either. Prices are increasingly set by the operating costs of the marginal project required to meet demand, and this results in significantly lower fossil fuel prices than in recent years. The oil price drops to around USD 35/barrel by 2030 and then drifts down slowly towards USD 25/barrel in 2050.

Table 2.2 CO2 prices for electricity, industry and energy production in the NZE

* Includes China, Russia, Brazil and South Africa.

2.3CO2 emissions

Global energy related and industrial process CO2 emissions in the NZE fall to around 21 Gt CO2 in 2030 and to net zero in 2050 (Figure 2.2).3 CO2 emissions in advanced economies as a whole fall to net zero by around 2045 and these countries collectively remove around 0.2 Gt CO2 from the atmosphere in 2050. Emissions in several individual emerging market and developing economies also fall to net zero well before 2050, but in aggregate there are around 0.2 Gt CO2 of remaining emissions in this group of countries in 2050. These are offset by CO2 removal in advanced economies to provide net zero CO2 emissions at the global level.

Figure 2.4 Average annual CO2 reductions from 2020 in the NZE

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Renewables and electrification make the largest contribution to emissions reductions, but a wide range of measures and technologies are needed to achieve net-zero emissions

Notes: Activity = changes in energy service demand from economic and population growth. Behaviour = change in energy service demand from user decisions, e.g. changing heating temperatures. Avoided demand = change in energy service demand from technology developments, e.g. digitalisation.

2.4Total energy supply and final energy consumption

2.4.1Total energy supply7

Total energy supply falls to 550 exajoules (EJ) in 2030, 7% lower than in 2020 (Figure 2.5). This occurs despite significant increases in the global population and economy because of a fall in energy intensity (the amount of energy used to generate a unit of GDP). Energy intensity falls by 4% on average each year between 2020 and 2030. This is achieved through a combination of electrification, a push to pursue all energy and materials efficiency opportunities, behavioural changes that reduce demand for energy services, and a major shift away from the traditional use of bioenergy.8 This level of improvement in energy intensity is much greater than has been achieved in recent years: between 2010 and 2020, average annual energy intensity fell by less then 2% each year.

After 2030, continuing electrification of end use sectors helps to reduce energy intensity further, but the emphasis on maximising energy efficiency improvements in the years up to

7 The terms total primary energy supply (TPES) or total primary energy demand (TPED) have been renamed as total energy supply (TES) in accordance with the International Recommendations for Energy Statistics (IEA, 2020a).

8 Modern forms of cooking require much less energy than the traditional use of biomass in inefficient stoves. For example, cooking with a liquefied petroleum gas stove uses around five times less energy than the traditional use of biomass.

2030 limits the available opportunities in later years. At the same time, increasing production of new fuels, such as advanced biofuels, hydrogen and synthetic fuels, tends to push up energy use. As a result, the rate of decline in energy intensity between 2030 and 2050 slows to 2.7% per year. With continued economic and population growth, this means that total energy supply falls slightly between 2030 and 2040 but then remains broadly flat to 2050.

Total energy supply in 2050 in the NZE is close to the level in 2010, despite a global population 2 that is nearly 3 billion people higher and a global economy that is over three times larger.

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Renewables and nuclear power displace most fossil fuel use in the NZE, and the share of fossil fuels falls from 80% in 2020 to just over 20% in 2050

2019 peak in the mid 2020s before starting to decline as it is phased out in the electricity sector. Natural gas use declines to 3 700 bcm in 2030 and 1 750 bcm in 2050 – an annual average decline of just under 3% from 2020 to 2050.

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Some fossil fuels are still used in 2050 in the production of non-energy goods, in plants equipped with CCUS, and in sectors where emissions are hard to abate

Note: Low emissions includes the use of fossil fuels with CCUS and in non energy uses.

Box 2.2 Why does fossil fuel use not fall to zero in 2050 in the NZE?

In total, around 120 EJ of fossil fuels is consumed in 2050 in the NZE relative to 460 EJ in 2020. Three main reasons underlie why fossil fuel use does not fall to zero in 2050, even though the energy sector emits no CO2 on a net basis:

Use for non energy purposes. More than 30% of total fossil fuel use in 2050 in the NZE – including 70% of oil use – is in applications where the fuels are not combusted and so do not result in any direct CO2 emissions (Figure 2.7). Examples include use as chemical feedstocks and in lubricants, paraffin waxes and asphalt. There are major efforts to limit fossil fuel use in these applications in the NZE, for instance global plastic collection rates for recycling rising from 15% in 2020 to 55% in 2050, but fossil fuel use in non energy applications still rises slightly to 2050.

UsewithCCUS.Around half of fossil fuel use in 2050 is in plants equipped with CCUS

(around 3.5 Gt CO2 emissions are captured from fossil fuels in 2050). Around 925 bcm of natural gas is converted to hydrogen with CCUS. In addition, around

Use in sectors where technology options are scarce. The remaining 20% of fossil

Figure 2.7 Fossil fuel use and share by sector in 2050 in the NZE

More than 30% of fossil fuel use in 2050 is not combusted and so does not result in direct CO2 emissions, around 50% is paired with CCUS

Notes: Non combustion includes use for non emitting, non energy purposes such as petrochemical feedstocks, lubricants and asphalt. Energy production includes fuel use for direct air capture.

Solid, liquid and gaseous fuels continue to play an important role in the NZE, which sees large increases in bioenergy and hydrogen (Figure 2.8). Around 40% of bioenergy used today is for the traditional use of biomass in cooking: this is rapidly phased out in the NZE. Modern forms of solid biomass, which can be used to reduce emissions in both the electricity and industry sectors, rise from 32 EJ in 2020 to 55 EJ in 2030 and 75 EJ in 2050, offsetting a large portion of a drop in coal demand. The use of low emissions liquid fuels, such as ammonia, synthetic fuels and liquid biofuels, increases from 3.5 EJ (1.6 million barrels of oil equivalent per day [mboe/d]) in 2020 to just above 25 EJ (12.5 mboe/d) in 2050. The supply of low emissions gases, such as hydrogen, synthetic methane, biogas and biomethane rises from 2 EJ in 2020 to 17 EJ in 2030 and 50 EJ in 2050. The increase in gaseous hydrogen production between 2020 and 2030 in the NZE is twice as fast as the fastest ten year increase in shale gas production in the United States.