The document discusses scenarios presented in the World Energy Outlook publication. There are four core scenarios - Announced Policies, Sustainable Development, Net Zero Emissions by 2050, and Stated Policies - that model different pathways for energy based on policy assumptions. Scenarios are useful tools for policymakers and companies to consider different futures and implications. However, scenarios have limitations in capturing unexpected events like technology breakthroughs or geopolitical changes. The document also provides an overview of the Global Energy and Climate Model used to generate the scenarios, including its structure, inputs, and outputs.

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

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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?

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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

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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

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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

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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)

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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

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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

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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

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IEA 2020. All rights reserved.