world energy outlook 2020 · 2020. 12. 7. · arsalane yasmine, iea/sto/edo created date:...

IEA 2020. All rights reserved.

World Energy Outlook 2020Tim Gould, Head of Division, IEA

IOGCC Annual Conference, Monday 9 November


Covid-19 and the energy outlook

• In an extraordinary year, 2 key questions:- How might the pandemic (and its aftermath) reshape the energy sector?- Does this disruption help, or hinder, the prospects for rapid clean energy transitions?

• Focus on pathways out of today’s crisis over the next 10 years, amid 2 key uncertainties- Duration and severity of the pandemic and its economic impacts- Response from energy policy makers and the sustainability of the recovery

• Scenario-based approach more important than ever, to examine:- The direction we are heading, depending on the outlook for public health & the economy- What would be required to reach net-zero emissions


A shock to the energy system

Bringing the pandemic under control in 2021 would allow energy demand to return to pre-crisis levels by early 2023.

1%

2%

3%

4%

Average annual GDP growth(2019-30)

Energy demand

90

100

110

120

WEO-2019Stated PoliciesScenario

2019 2025 2030

Delayed RecoveryScenario

2023WEO-2019Stated Policies ScenarioDelayed Recovery Scenario

Inde

x (2

019=

100)

A longer pandemic would usher in the slowest decade of energy demand growth for a century


Impacts vary widely by fuel & technology

renewables lead the rebound while coal never gets back to pre-crisis levels;

Change in primary energy demand, 2019-20202021202220232024202520262027202820292030

-600

-300

0

300

600

900

Oil Coal Gas Nuclear Modern renewables

Mtoe

After a 5% drop in energy demand in 2020, a delayed recovery puts energy into slow motion, prolonging today’s overhang of supply

-600

-300

0

300

600

900

Oil Coal Gas Nuclear Modern renewables

Stated Policies Scenario (STEPS)Delayed Recovery Scenario (DRS)


Solar PV is now the cheapest source of electricity in most countries in part due to low cost financing and is set to triple before 2030 under current and proposed policies, with the potential to grow much faster

0

4 000

8 000

TWh

Solar PV is now the cheapest source of electricity in most countries in part due to low cost financing and is set to triple before 2030 under current and proposed policies

Solar PV is becoming the ‘new king’ of electricityChange in global electricity generation

-8 000

-4 000

Coal Gas Other lowcarbon

Wind Solar PV

2000-2019

SDSSTEPS

2019-2040


Wind Solar PV

-8 000

-4 000

0

4 000

8 000


Wind Solar PV

TWh

2000-2019

STEPSSDS

2019-2040


Without a larger shift in policies, no rapid decline in oil

Global oil demand by scenario

In the STEPS & the DRS, oil demand reaches a plateau in the 2030s as transport fuels are no longer a reliable engine for growth; a stronger push for efficiency, electrification and recycling will be needed for oil use to fall

2015 2020 2025 203080

90

100

110mb/d

Reaching 2019 levels

WEO-2019STEPS

DRS

Sustainable DevelopmentScenario


Diversification: the critical watchword for oil and gas producers

A lower price and demand outlook, due in the near term to Covid-19, adds to the strains on countries that rely on oil & gas revenues.

Today’s value of oil and gas production to 2040

Oil

Gas

Oil

Gas

Oil

Gas

0

5

10

15

20

25

WEO-2019 Stated PoliciesScenario

Sustainable DevelopmentScenario

Trillion dollars -24%

-34%

The pressure for changes in strategies & business models is even stronger in the SDS


Production declines are the key determinant of investment needs

Continued upstream investment is needed in all scenarios to offset declines from existing oil fields, but rapid transitions imply very different strategies and risks for the industry

Global oil demand by scenario and declines in supply from 2019

20

40

60

80

100

120

2010 2015 2020 2025 2030 2035 2040

mb/d

Additional new fields in the STEPS

Supply with no new investment

New fields in the SDS

Supply withinvestment in existing fields


The push in developing economies for industrial growth & improved air quality create openings for natural gas in the STEPS

-2 000 -1 500 -1 000- 500 0 500 1 000 1 500 2 000bcm

Net change

Switching fromnatural gas

Switching tonatural gas

with CCUSMarket growthEfficiency

Increased pressure on natural gas

, but prospects in the SDS are diminished by faster efficiency gains & switching to renewables

Changes in natural gas demand by key driver, 2019-2040

STEPS

SDS


Electricity cannot be the only vector for an energy transformation

The 20% share of electricity in global final energy consumption is set to rise, but low-carbon sources of electricity cannot carry energy transitions on their own

Final energy consumption by carrier in 2019 and 2040 in the Sustainable Development Scenario

1 000

2 000

3 000

4 000

5 000

Liquids Gases Electricity

2019

High carbon Low carbon

Liquids Gases Electricity

2040Mtoe


10

20

30

40

2010 2020 2030 2040 2050 2060 2070

Gt CO2

The world is still far from putting emissions into decisive decline

Global emissions are set to bounce back more slowly than after the financial crisis of 2008-2009, but the world is still a long way from a sustainable recovery

China 2060 net-zero statement

Net-zero in 2050

STEPSFull implementation of 2050 net-zero pledges (e.g. EU, UK, New Zealand and others)

SDS


Walk or cycle short tripsInstall batteries and solar at home

Turn down air conditioningUpgrade home heating to heat pumps

Retrofit homes

Buy energy efficient appliances

Drive more slowlyIncrease recycling

Work from home Fly less often

Expand nuclear power & develop SMRs

Equip with CCUS Deploy solarBuild wind onshore and offshore

Extend and digitalise gridsLow-emissions shipping Innovation Fuel-cell trucks

batteries & electrolysers

Widespread digitalisation

Eliminate flaring Improve product efficiency

Advanced biofuel production

Low-carbon gases

Modernise hydropower

Improve bankability of efficiency investmentsManage risks for new technologies

Invest in innovation

Investment guidelinesIncrease investment in renewables

Develop new financial tools to unlock private capitalAlign portfolios with low-emissions activities

Net-zero by 2050 demands unprecedented efforts over the next decade

Net zero energy emissions in 2050 would require a set of dramatic additional actions over the next 10 years.Energy companies, citizens and investors all need to be on board – with unprecedented contributions to make

3801.6380 billion $ billion $trillion $20302020Clean electricity investment

2.5502.5 million million cars sold20302020Electric cars

0.45400.45 Mt Mt 20302020Hydrogen

Finance

Government policies


Conclusions

• The pandemic will leave lasting scars, but it is still open whether it represents a setback for a more secure and sustainable energy system, or a catalyst that accelerates the pace of change

• Renewables have taken off, with solar leading the way. But a slowdown in improving access to electricity and a risk of under-investment in grids are warning signs for the future

• The crisis has squeezed oil and gas revenues and investment, forcing producers to reassess their strategies to align with technology and policy shifts

• Getting to net zero means ramping up clean technology deployment while continuing to reduce costs, especially through innovation for hydrogen and other low-carbon fuels, battery storage & CCUS

• There are no short cuts; only profound changes, guided by good policies, can deliver a better energy future. This is a choice – for citizens, investors, companies, but most of all for governments

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world energy outlook 2020 · 2020. 12. 7. · arsalane yasmine, iea/sto/edo created date:...

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