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OECD Workshop “Climate transition scenarios: integrating models into risk assessment under uncertainty and the cost of delayed action” (6 July 2022) - Session 1, Blandine Barreau, International Energy Agency (IEA)

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Overview- World Energy Outlook scenarios
OECD Workshop, 6 July 2022
Session 1: Transition scenarios: assumptions and model...

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IEA 2022. All rights reserved. Page 2
Scenario analysis in the World Energy Outlook
The World Energy Outlook (WEO) is one ...

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IEA 2022. All rights reserved. Page 3
Why do we produce scenarios?
• Energy and climate scenarios enable decision makers t...

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OECD Workshop “Climate transition scenarios: integrating models into risk assessment under uncertainty and the cost of delayed action” (6 July 2022) - Session 1, Blandine Barreau, International Energy Agency (IEA)

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Presentation from the OECD Workshop “Climate transition scenarios: integrating models into risk assessment under uncertainty and the cost of delayed action” (6 July 2022) - Session 1, Blandine Barreau, International Energy Agency (IEA)

Presentation from the OECD Workshop “Climate transition scenarios: integrating models into risk assessment under uncertainty and the cost of delayed action” (6 July 2022) - Session 1, Blandine Barreau, International Energy Agency (IEA)

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OECD Workshop “Climate transition scenarios: integrating models into risk assessment under uncertainty and the cost of delayed action” (6 July 2022) - Session 1, Blandine Barreau, International Energy Agency (IEA)

  1. 1. Overview- World Energy Outlook scenarios OECD Workshop, 6 July 2022 Session 1: Transition scenarios: assumptions and modelling under uncertainty, and financial risks associated with delayed political action Blandine BARREAU, IEA
  2. 2. IEA 2022. All rights reserved. Page 2 Scenario analysis in the World Energy Outlook The World Energy Outlook (WEO) is one of IEA’s flagship publications. It uses the latest available data to analyse comprehensively different plausible future energy pathways. 4 core scenarios APS Announced Policies Scenario What is the impact of announced policies? SDS Sustainable Development Scenario What is required for the energy sector to achieve sustainability goals? NZE Net Zero Emissions by 2050 Scenario What is required for the energy sector to reach net zero CO2 emissions by 2050? STEPS Stated Policies Scenario Where do existing policies take us?
  3. 3. IEA 2022. All rights reserved. Page 3 Why do we produce scenarios? • Energy and climate scenarios enable decision makers to consider multiple futures, the key drivers and implications Scenarios are used extensively by policy makers and an increasing number of companies Independent, transparent scenarios enable comparison & evaluation  Embed the achievement of climate and other environmental goals into policy and investment strategies Help undertake an audit of climate risks to existing business models Use scenarios as a tool to help integrate climate considerations into future business decisions
  4. 4. IEA 2022. All rights reserved. Page 4 What long-term scenarios can struggle to capture • Major technology breakthroughs and shifts: (In the past) Hydraulic fracturing; (In the future) Nuclear fusion?  Market volatility and disequilibria in energy markets Important for short-term dynamics but not modelled over long-term • Geopolitical events E.g. Instability in Middle East; breakdown in globalisation • Behavioural change E.g. Intergenerational changes; shift away from vehicle ownership- now better integrated! • Positive feedback mechanisms and spillovers • Extreme outcomes
  5. 5. IEA 2022. All rights reserved. Page 5 10 20 30 40 50 60 2000 2010 2020 2030 2040 2050 Gt CO2 The world is starting to bend the emissions curve New policies, technology cost reductions, and the pandemic have pulled the projected emissions curve down. But there is still a large gap between announced pledges and the net zero emissions scenario. Pre-Paris Baseline Stated Policies Announced Pledges Updated Announced Pledges Net Zero Emissions Global emissions
  6. 6. IEA 2022. All rights reserved. Page 6 Action to reduce emissions re-shapes global energy markets Full realisation of all announced pledges sees peak oil and natural gas demand occurring in the current decade, yet the NZE pathway requires increased ambition and results in a transformation of energy markets Oil demand (mb/d) 70 80 90 100 110 120 2010 2020 2030 STEPS APS NZE 2 500 3 000 3 500 4 000 4 500 5 000 2010 2020 2030 Natural gas demand (bcm) 1 000 2 000 3 000 4 000 5 000 6 000 2010 2020 2030 Coal demand (Mtce) 2 500 5 000 7 500 10 000 12 500 2010 2020 2030 Solar PV and wind generation (TWh)
  7. 7. IEA 2022. All rights reserved. Page 7 The Global Energy and Climate Model key characteristics 26 demand regions / 120 supply regions Time horizon to 2050, with annual and hourly data Complete update every year Energy flows Energy infrastructure CO2 emissions, water Investments, prices, bills GEC model Key outputs
  8. 8. IEA 2022. All rights reserved. Page 8 WEM model Transformation Coal upgrading Refinery Hydrogen production CTL/GTL/CTG Gas processing and distribution Electricity generation Heat production Bioenergy processing Final energy demand Coal Petroleum products Gases Electricity Heat Biofuels Solid biomass Other renewables The Global Energy and Climate Model structure Primary energy demand Coal Oil Natural gas Nuclear Hydro Bioenergy Solar PV Wind Other renewables Energy service demand Industrial processes, heating, steam Motor driven equipment People and goods mobility Space and water heating Cooking Cooling, refrigeration Appliances, lighting Final energy demand Industry Non- energy use Transport Residential Services Agriculture Historical data Resources Technologies Socioeconomic drivers Energy supply Coal Oil Natural gas Bioenergy Import Export Domestic production Trade matrices International prices End-user prices Energy flows Energy infrastructure CO2 emissions, water Investments, prices, bills Climate and energy policies Key inputs Key outputs
  9. 9. IEA 2022. All rights reserved. Page 9 Useful links • Main World Energy Outlook 2021 page with key findings • Possibility to download the whole book as pdf. • At the very bottom of the page, you’ll find as well additional material such as the launch presentation and the free dataset which contains some high level scenario results and our key assumptions (CO2 prices for selected regions, fossil fuel resources, GDP, population, technology costs…etc) • More details on the modelling underlying our projections is available here: https://www.iea.org/reports/world-energy-model, with notably the possibility to download the full model documentation and a more detailed dataset on power generation costs
  10. 10. IEA 2022. All rights reserved. Page 10 IEA 2020. All rights reserved.

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