This year’s update to RFF’s Global Energy Outlook adds benchmark scenarios from reports by the Intergovernmental Panel on Climate Change (IPCC), which will help contextualize global energy estimates, compare energy projections with decarbonization goals, and inform climate policy.
The year 2020 was unprecedented for the global energy system. COVID-19 reshaped the global economy, fundamentally changing the way we work, play, and interact with the world. As we look ahead to a post-COVID world, how will the global energy system respond? Later this spring, we will address this question with our annual Global Energy Outlook, which compares—on an “apples-to-apples” basis—energy projections from leading governmental, intergovernmental, scientific, and private organizations. To anticipate the release, we have updated the Global Energy Outlook data tool with a suite of new outlooks from the International Energy Agency (IEA), BP, the International Renewable Energy Agency (IRENA), the Organization of the Petroleum Exporting Countries (OPEC), and other major sources. In addition, this year’s Global Energy Outlook update adds benchmark scenarios from reports by the Intergovernmental Panel on Climate Change (IPCC) published in 2016 (the Shared Socioeconomic Pathways, or SSPs) and 2018 (the Special Report on Global Warming of 1.5°C). Let’s IPCC the Projections
The new IPCC scenarios provide us with refined lenses through which we can examine the extraordinarily wide range of possible energy futures. Each new IPCC scenario reflects a different set of social, economic, and policy assumptions that illustrate how climate action—or inaction—may affect the global energy system and future warming. Some scenarios, including the four “illustrative pathways” (IPs) published in 2018, limit warming to 1.5°C above pre-industrial levels. Others, such as the five SSPs, illustrate a broader range of potential futures: some (such as SSP1) assume a global push for sustainability, while others (such as SSP5) paint a picture of a future in which fossil fuels use surges. The IPs, labeled IP1 to IP4, reflect different assumptions about social, economic, and technological change through the end of the century, along with the subsequent impacts of those changes on a decarbonization strategy. IP1 represents low energy demand, IP2 reflects a focus on sustainability, IP3 is a scenario of societal and technological evolution that extrapolates from historical trends, and IP4 assumes broad fossil fuel use and energy-intensive economic growth. The five SSPs build upon the Representative Concentration Pathways (RCPs) from the IPCC Fifth Assessment Report. Like the IPs, the SSPs outline different socioeconomic development scenarios through the year 2100. Unlike the IPs, the baseline SSPs forecast energy developments in the absence of climate policy to address climate change. Each pathway represents varying challenges posed by mitigation and adaptation efforts throughout the century. In addition to the baseline SSP1–SSP5 pathways, we have included SSP1-2.6 and SSP2-2.6 scenarios, which incorporate one of the RCPs (indicated by 2.6) and the added goal of limiting warming to 2°C above pre-industrial levels. Regardless of the scenario, the road to decarbonization leads to major changes in our energy system. Some ambitious climate scenarios such as IP1, IP2, and SSP1-2.6 reach their goals through dramatic improvements in energy efficiency; in those scenarios, global energy demand is projected to grow little through 2100, while non-hydro renewables grow at unprecedented levels. These pathways include little to no deployment of carbon capture and storage (CCS), which plays a large role in other scenarios. Other scenarios, such as IP3 and IP4, include energy demand growth along the lines of historic trends while reducing emissions to net zero by mid-century. In these scenarios, oil and natural gas consumption remain relatively high over the next several decades (whereas coal declines rapidly in all IP scenarios), but emissions are offset by large-scale carbon removal, primarily through the use of biomass energy with CCS.
Regardless of the scenario, the road to decarbonization leads to major changes in our energy system.
Importantly, the term “large scale” cannot adequately convey the growth of certain technologies. Take CCS as an example: In recent years, this technology has captured about 40 million metric tons of carbon dioxide (CO₂) per year globally. By 2040, the IP3 and IP4 scenarios estimate annual removal of roughly 6–7 billion metric tons of CO₂ respectively. By 2060, IP3 estimates climb to 9 billion metric tons, while IP4 estimates grow to an astonishing 20 billion metric tons per year—equivalent to about 60 percent of the world’s CO₂ emissions in 2019. Ambitious climate scenarios from European oil majors BP and Equinor see a role for CCS, but at more modest scales. By 2040, BP’s “Net Zero” scenario—which is consistent with a 1.5°C pathway—estimates CCS deployment at about 4 billion metric tons of CO₂ by 2040. Equinor’s “Rebalance” scenario—which is more in line with a 2°C pathway—estimates a little more than 1 billion metric tons of CO₂ captured by CCS per year by 2040. Paired with CCS, biomass can offer further possibilities for carbon removal, if forests are properly managed and monitored. In 2019, biomass provided about 50 quadrillion British thermal units (QBtu) of carbon sequestration globally. Under most scenarios, biomass grows modestly over the coming decades; but under 1.5°C pathways IP3 and IP4, biomass grows dramatically, scaling up to provide more than 200 QBtu of CO₂ removal by 2100 under IP3 and an eye-popping 400 QBtu under IP4. Considering COVID
The impact of the COVID-19 pandemic on energy outlooks has largely resulted in lower estimates of primary energy demand, both immediately and in the long run. In light of these impacts, the IPCC pathways can help us gauge projections under the current, planned, and most ambitious climate policies. The 2020 “evolving policy” scenarios of the Global Energy Outlook, which assume that future climate policy develops at a similar rate as observed in recent trends, generally see gradual energy demand growth through at least 2040—similar to the progression of the SSP1, SSP2-2.6, and IP3 scenarios, which reflect middle-of-the-road and sustainable pathways. But, unlike the IPCC pathways, the new evolving policy scenarios depict a slow decline of fossil fuel use and growth in natural gas alongside renewables. These forces, coupled with the slow deployment of CCS, lead CO₂ emissions to flatten and result in global temperature rise of more than 1.5°C or 2°C.
The IPCC pathways can help us gauge projections under the current, planned, and most ambitious climate policies.
“Reference” scenarios from 2020, which have been added to the Global Energy Outlook and assume no new climate policies, show continued growth in energy demand that most closely matches the energy demand predicted by the SSP1 and IP2 pathways. Because they continue to rely on a fossil-heavy energy mix, most 2020 reference scenarios show a continued increase in emissions through 2040. (BP’s business-as-usual scenario is the exception.) Projections in the reference scenarios for energy demand and CO₂ emissions fall far below those of SSP2, SSP3, and SSP5 pathways—which suggests that today’s global energy pathway is on a more sustainable trajectory than envisioned in 2016, when these benchmark scenarios were published. Unsurprisingly, the “ambitious climate” scenarios from 2020, added now to the Global Energy Outlook, most closely align with the IPCC pathways toward 1.5°C and 2°C climate goals. These new projections indicate an immediate plateau in energy demand, a rapid transition from fossil fuels to renewable energy sources, and significant use of CCS (although as noted above, IPCC Scenarios IP3 and IP4 are most bullish on CCS). Every one of the ambitious climate scenarios includes a sharp decrease in CO₂ emissions by 2050, with emissions falling by at least 65 percent relative to 2018 levels. No matter the level of policy ambition, the inclusion of IPCC SSPs and the four IPs offers helpful context for 2020’s global energy estimates. In our forthcoming Global Energy Outlook, we’ll dive more deeply into each of these issues, highlighting the wide range in potential energy futures, and assessing their policy implications.
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