Net Zeroby 2050

A Roadmap for the
Global Energy
Sector

Net Zeroby 2050
A Roadmap for the
Global Energy Sector
Net Zero by 2050 Interactive
iea.li/nzeroadmap
Net Zero by 2050 Data
iea.li/nzedata

INTERNATIONAL ENERGYAGENCYThe IEA examines thefull spectrumof energy issues
including oil, gas andcoal supply anddemand, renewableenergy technologies,
electricity markets,energy efficiency,
access to energy,
demand side
management andmuch more. Throughits work, the IEA
advocates policies
that will enhance thereliability, affordability
and sustainability ofenergy in its
30 membercountries,
8 association
countries andbeyond.
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This publication and any
map included herein arewithout prejudice to thestatus of or sovereignty overany territory, to thedelimitation of international
frontiers and boundaries andto the name of any territory,
city or area.

Source: IEA. All rights
reserved.
International Energy Agency
Website: www.iea.org

Revised version,
October 2021 (4th revision)
Information noticefound at: www.iea.org/
corrections

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Foreword
We are approaching a decisive moment for international efforts to tackle the climate crisis –a great challenge of our times. The number of countries that have pledged to reach net‐zeroemissions by mid‐century or soon after continues to grow, but so do global greenhouse gas
emissions. This gap between rhetoric and action needs to close if we are to have a fighting
chance of reaching net zero by 2050 and limiting the rise in global temperatures to 1.5 °C.
Doing so requires nothing short of a total transformation of the energy systems that underpin
our economies. We are in a critical year at the start of a critical decade for these efforts. The
26th Conference of the Parties (COP26) of the United Nations Framework Convention on
Climate Change in November is the focal point for strengthening global ambitions and action
on climate by building on the foundations of the 2015 Paris Agreement. The International
Energy Agency (IEA) has been working hard to support the UK government’s COP26
Presidency to help make it the success the world needs. I was delighted to co‐host the IEA‐
COP26 Net Zero Summit with COP26 President Alok Sharma in March, where top energy andclimate leaders from more than 40 countries highlighted the global momentum behind clean
energy transitions.
The discussions at that event fed into this special report, notably through the Seven Key
Principles for Implementing Net Zero that the IEA presented at the Summit, which have beenbacked by 22 of our member governments to date. This report maps out how the global
energy sector can reach net zero by 2050. I believe the report – Net Zero by 2050: A roadmap
for the global energy system – is one of the most important and challenging undertakings in
the IEA’s history. The Roadmap is the culmination of the IEA’s pioneering work on energy
data modelling, combining for the first time the complex models of our two flagship series,
the World Energy Outlook and Energy Technology Perspectives. It will guide the IEA’s work
and will be an integral part of both those series going forward.
Despite the current gap between rhetoric and reality on emissions, our Roadmap shows that
there are still pathways to reach net zero by 2050. The one on which we focus is – in our
analysis – the most technically feasible, cost‐effective and socially acceptable. Even so, thatpathway remains narrow and extremely challenging, requiring all stakeholders –governments, businesses, investors and citizens – to take action this year and every year
after so that the goal does not slip out of reach.

Since the IEA’s founding in 1974, one of its core missions has been to promote secure andaffordable energy supplies to foster economic growth. This has remained a key concern of
our Roadmap, drawing on special analysis carried out with the International Monetary Fundand the International Institute for Applied Systems Analysis. It shows that the enormous
Foreword

3

IEA. All rights reserved.

This report sets out clear milestones – more than 400 in total, spanning all sectors andtechnologies – for what needs to happen, and when, to transform the global economy fromone dominated by fossil fuels into one powered predominantly by renewable energy likesolar and wind. Our pathway requires vast amounts of investment, innovation, skilful policy
design and implementation, technology deployment, infrastructure building, international
co‐operation and efforts across many other areas.

challenge of transforming our energy systems is also a huge opportunity for our economies,
with the potential to create millions of new jobs and boost economic growth.
Another guiding principle of the Roadmap is that clean energy transitions must be fair andinclusive, leaving nobody behind. We have to ensure that developing economies receive thefinancing and technological know‐how they need to continue building their energy systems
to meet the needs of their expanding populations and economies in a sustainable way. It isa moral imperative to bring electricity to the hundreds of millions of people who currently
are deprived of access to it, the majority in of them in Africa.
The transition to net zero is for and about people. It is paramount to remain aware that not
every worker in the fossil fuel industry can ease into a clean energy job, so governments
need to promote training and devote resources to facilitating new opportunities. Citizens
must be active participants in the entire process, making them feel part of the transition andnot simply subject to it. These themes are among those being explored by the Global
Commission on People‐Centred Clean Energy Transitions, which I convened at the start of2021 to examine how to enable citizens to benefit from the opportunities and navigate
the disruptions of the shift to a clean energy economy. Headed by Prime Minister
Mette Frederiksen of Denmark and composed of government leaders, ministers andprominent thinkers, the Global Commission will make public its key recommendations aheadof COP26 in November.
The pathway laid out in our Roadmap is global in scope, but each country will need to design
its own strategy, taking into account its specific circumstances. There is no one‐size‐fits‐all
approach to clean energy transitions. Plans need to reflect countries’ differing stages of
economic development: in our pathway, advanced economies reach net zero before
developing economies do. As the world’s leading energy authority, the IEA stands ready toprovide governments with support and advice as they design and implement their own
roadmaps, and to encourage the international co‐operation across sectors that is so essential
to reaching net zero by 2050.
This landmark report would not have been possible without the extraordinary dedication of
the IEA colleagues who have worked so tirelessly and rigorously on it. I would like to thankthe entire team under the outstanding leadership of my colleagues Laura Cozzi andTimur Gül.
The world has a huge challenge ahead of it to move net zero by 2050 from a narrowpossibility to a practical reality. Global carbon dioxide emissions are already rebounding
sharply as economies recover from last year’s pandemic‐induced shock. It is past time forgovernments to act, and act decisively to accelerate the clean energy transformation.
As this report shows, we at the IEA are fully committed to leading those efforts.
Dr Fatih Birol
Executive Director
International Energy Agency

4International Energy Agency | Special ReportAcknowledgements
This study, a cross‐agency effort, was prepared by the World Energy Outlook team and theEnergy Technology Perspectives team. The study was designed and directed by Laura Cozzi,
Chief Energy Modeller and Head of Division for Energy Demand Outlook, and Timur Gül,
Head of Division for Energy Technology Policy.
The lead authors and co‐ordinators were: Stéphanie Bouckaert, Araceli Fernandez Pales,
Christophe McGlade, Uwe Remme and Brent Wanner. Laszlo Varro, Chief Economist,
Davide D’Ambrosio and Thomas Spencer were also part of the core team.
The other main authors were: Thibaut Abergel (buildings), Yasmine Arsalane (economic
outlook, electricity), Praveen Bains (biofuels), Jose Miguel Bermudez Menendez (hydrogen),
Elizabeth Connelly (transport), Daniel Crow (behaviour), Amrita Dasgupta (innovation),
Chiara Delmastro (buildings), Timothy Goodson (buildings, bioenergy), Alexandre Gouy
(industry), Paul Hugues (industry), Lilly Lee (transport), Peter Levi (industry),
Hana Mandova (industry), Ariane Millot (buildings), Paweł Olejarnik (fossil fuel supply),
Leonardo Paoli (innovation, transport), Faidon Papadimoulis (data management),
Sebastian Papapanagiotou (electricity
networks), Francesco Pavan(hydrogen),
Apostolos Petropoulos (transport), Ryszard Pośpiech (data management), Leonie Staas(behaviour, industry), Jacopo Tattini (transport), Jacob Teter (transport), Gianluca Tonolo(energy access), Tiffany Vass (industry) and Daniel Wetzel (jobs).
Other contributors were: Lucila Arboleya Sarazola, Simon Bennett, Cyril Cassisa, Arthur
Contejean, Musa Erdogan, Enrique Gutierrez Tavarez, Taku Hasegawa, Shai Hassid, Zoe
Hungerford, Tae‐Yoon Kim, Vanessa Koh, Luca Lo Re, Christopher Lowans, Raimund
Malischek, Mariachiara Polisena and Per Anders Widell.
Caroline Abettan, Teresa Coon, Marina Dos Santos, Marie Fournier‐S’niehotta, Reka Koczka
and Diana Louis provided essential support.
Edmund Hosker carried editorial responsibility and Debra Justus was the copy‐editor.

Valuable comments and feedback were provided by other senior management andnumerous other colleagues within the International Energy Agency. In particular
Keisuke Sadamori, Mechthild Wörsdörfer, Amos Bromhead, Dan Dorner, Nick Johnstone,
Pascal Laffont, Toril Bosoni, Peter Fraser, Paolo Frankl, Tim Gould, Tom Howes,
Brian Motherway, Aad van Bohemen, César Alejandro Hernández, Samantha McCulloch,Sara Moarif,
Heymi Bahar,
Adam Baylin‐Stern,
Niels Berghout,Sara Budinis,
Jean‐Baptiste Dubreuil, Carlos Fernández Alvarez, Ilkka Hannula , Jeremy Moorhouse andStefan Lorenczik.
Acknowledgements

5

IEA. All rights reserved.

The International Monetary Fund (IMF), in particular Benjamin Hunt, Florence Jaumotte,
Jared Thomas Bebee and Susanna Mursula, partnered with the IEA to provide themacroeconomic analysis. The International Institute for Applied Systems Analysis (IIASA), in
particular Peter Rafaj, Gregor Kiesewetter, Wolfgang Schöpp, Chris Heyes, Zbigniew Klimont,
Pallav Purohit, Laura Warnecke, Binh Nguyen, Nicklas Forsell, Stefan Frank, Petr Havlik and
Mykola Gusti, partnered with the IEA to provide analysis and related indicators on air
pollution and greenhouse gas emissions from land use.

Valuable input to the analysis was provided by: Trevor Morgan (independent consultant) andDavid Wilkinson (independent consultant).
Thanks go to the IEA Communications and Digital Office (CDO), particularly to Jad Mouawad,
Head of CDO, and to Astrid Dumond, Jon Custer, Tanya Dyhin, Merve Erdil, Grace Gordon,
Christopher Gully, Jethro Mullen, Julie Puech, Rob Stone, Gregory Viscusi, Therese Walsh andWonjik Yang for their help in producing and promoting the report and website materials.
Finally, thanks to Ivo Letra of the IEA Information Systems Unit for his essential support in
the production process, and to the IEA’s Office of Legal Counsel, Office of Management andAdministration, and Energy Data Centre for the assistance each provided throughout the
preparation of this report.

Peer reviewers
Many senior government officials and international experts provided input and reviewed
preliminary drafts of the report. Their comments and suggestions were of great value. They
include:Aimee Aguilar Jaber
Keigo Akimoto
Doug Arent
Daniel Balog
Georg Bäuml
Harmeet Bawa
Pete Betts
Sama Bilbao y Leon
Diane Cameron
Rebecca Collyer
Russell Conklin
François Dassa
Jelte de JongCarl de Maré
Guillaume De Smedt
Agustin Delgado
Johanna Fiksdahl
Alan Finkel
Niklas Forsell
James Foster
Hiroyuki Fukui
Rosanna Fusco
Li Gao6

Organisation for Economic Co‐operation and Development (OECD)
Research Institute of Innovative Technology for the Earth, Japan
National Renewable Energy Laboratory (NREL), United States
Permanent Delegation of Hungary to the OECD
Volkswagen
Hitachi ABB Power Grids
Grantham Research Institute on Climate Change and theEnvironment, United Kingdom
World Nuclear Association
Nuclear Energy Agency
European Climate Foundation
US Department of Energy
EDF
Ministry of Economic Affairs and Climate Policy, The Netherlands
ArcelorMittal
Air Liquide
Iberdrola
Permanent Delegation of Norway to the OECD
Special Advisor to the Australian Government on Low Emissions
Technology
International Institute for Applied Systems Analysis (IIASA)UK Department for Business, Energy and Industrial Strategy
ToyotaEni
Ministry of Ecology and Environment of the People’s Republic of
China
International Energy Agency | Special ReportFrançois Gautier
Oliver Geden
Dolf Gielen
Francesca Gostinelli
Jae H. Jung
Michael HackethalPeter Wood
Selwin Hart
David Hawkings
Jacob Herbers
Takashi Hongo
Christina Hood
Michael Kelly
Sir David KingKen Koyama
Fabien Kreuzer
Joyce Lee
Chen Linhao
Todd Litman
Claude Lorea
Ritu Mathur
Vincent Minier
Steve Nadel
Stefan Nowak
Brian Ó Gallachóir
Henri Paillère
Yongduk Pak
Alessandra Pastorelli
Jonathan Pershing
Glen Peters
Stephanie Pfeifer
Cédric Philibert
Lynn Price
Andrew Purvis
Julia Reinaud
Yamina Saheb
Ignacio Santelices
Andreas Schäfer
Vivian Scott
Acknowledgements

Permanent Delegation of France to the OECD
German Institute for International and Security Affairs
International Renewable Energy Agency (IRENA)
Enel
Ministry of Foreign Affairs, Republic of Korea
Ministry for Economic Affairs and Industry, Germany
Shell
United Nations
Natural Resources Defense Council
US Department of Energy
Mitsui & Co. Global Strategic Studies Institute, Japan
Compass Climate, New ZealandWorld LPG Association
Cambridge University
The Institute of Energy Economics, Japan
DG Energy, European Commission
Global Wind Energy Council (GWEC)
Ministry of Science and Technology of the People’s Republic of
China
Victoria Transport Policy Institute, Canada
Global Cement and Concrete Association
The Energy and Resources Institute (TERI)
Schneider ElectricAmerican Council for an Energy‐Efficient Economy
Technology Collaboration Programme on Photovoltaic Power
Systems (PVPS TCP)
MaREI, SFI Research Centre for Energy, Climate and Marine,
University College Cork
International Atomic Energy Agency (IAEA)
Korea Energy Economics Institute (KEEI)
Permanent Delegation of Italy to the OECD
US State Department
Centre for International Climate and Environmental Research(CICERO)
Institutional Investors Group on Climate Change (IIGCC)
Independent consultant
Lawrence Berkeley National Laboratory, United States
World SteelBreakthrough Energy
OpenEXP
Sustainable Energy Agency, Chile
University College London
The University of Edinburgh
7

Simon Sharpe
Adnan Shihab Eldin
Toshiyuki Shirai
Adam Sieminski
Stephan Singer
Varun Sivaram
Jim Skea
Jeff Stehm
Jonathan Stern
Wim ThomasDavid Turk
Fritjof Unander
Rob van der Meer
Noé van Hulst
Tom van Ierland
David Victor
Amanda Wilson
Harald Winkler
Markus Wolf
Markus Wråke
William Zimmern

Cabinet Office, United Kingdom
Formerly Kuwait Foundation for the Advancement of Sciences
Ministry of Economy, Trade and Industry, JapanKAPSARC
Climate Action Network
US State Department
Imperial College London
Task Force on Climate‐Related Financial Disclosures
Oxford Institute for Energy Studies
Independent consultant
US Department of Energy
Research Council of Norway
The European Cement Association (CEMBUREAU)International Partnership for Hydrogen and Fuel Cells in the
EconomyDG for Climate Action, European Commission
University of California, San Diego
Natural Resources Canada
University of Cape Town
Electric Power Research Institute (EPRI), United States
Swedish Energy Research CentreBP

The individuals and organisations that contributed to this study are not responsible for any
opinions or judgments it contains. All errors and omissions are solely the responsibility of the
IEA.
This document and any map included herein are without prejudice to the status of orsovereignty over any territory, to the delimitation of international frontiers and boundaries
and to the name of any territory, city or area.
Comments and questions are welcome and should be addressed to:Laura Cozzi and Timur Gül
Directorate of Sustainability, Technology and Outlooks
International Energy Agency
9, rue de la Fédération
75739 Paris Cedex 15
FranceE‐mail: IEANZE2050@iea.org
Web: www.iea.org

8International Energy Agency | Special ReportTable of Contents
Foreword........................................................................................................................... 3
Acknowledgements ........................................................................................................... 5
Executive summary ......................................................................................................... 13
1

Announced net zero pledges and the energy sector

29

1.1 Introduction................................................................................................... 30
1.2 Emissions reduction targets and net zero pledges ........................................ 31
1.2.1 Nationally Determined Contributions ............................................... 31
1.2.2 Net‐zero emissions pledges ............................................................... 32
1.3 Outlook for emissions and energy in the STEPS ............................................ 36
1.3.1 CO2 emissions .................................................................................... 36
1.3.2 Total energy supply, total final consumption and electricity
generation ......................................................................................... 37
1.3.3 Emissions from existing assets .......................................................... 39
1.4 Announced Pledges Case............................................................................... 40
1.4.1 CO2 emissions .................................................................................... 41
1.4.2 Total energy supply ........................................................................... 43
1.4.3 Total final consumption ..................................................................... 44
1.4.4 Electricity generation ......................................................................... 45
2

A global pathway to net‐zero CO₂ emissions in 2050

47

2.1 Introduction................................................................................................... 48
2.2 Scenario design.............................................................................................. 48
2.2.1 Population and GDP........................................................................... 50
2.2.2 Energy and CO2 prices........................................................................ 51
2.3 CO2 emissions ................................................................................................ 53
2.4 Total energy supply and total final consumption .......................................... 56
2.4.1 Total energy supply ........................................................................... 56
2.4.2 Total final consumption ..................................................................... 60
2.5 Key pillars of decarbonisation ....................................................................... 64
2.5.1 Energy efficiency................................................................................ 65
2.5.3 Electrification ..................................................................................... 70

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IEA. All rights reserved.

2.5.2 Behavioural change ........................................................................... 67

2.5.4 Renewables ....................................................................................... 73
2.5.5 Hydrogen and hydrogen‐based fuels................................................. 75
2.5.6 Bioenergy ........................................................................................... 77
2.5.7 Carbon capture, utilisation and storage ............................................ 79
2.6 Investment .................................................................................................... 81
2.7 Key uncertainties ........................................................................................... 83
2.7.1 Behavioural change ........................................................................... 84
2.7.2 Bioenergy and land‐use change......................................................... 90
2.7.3 CCUS applied to emissions from fossil fuels ...................................... 94
3

Sectoral pathways to net‐zero emissions by 2050

99

3.1 Introduction................................................................................................. 100
3.2 Fossil fuel supply ......................................................................................... 100
3.2.1 Energy trends in the Net‐Zero Emissions Scenario .......................... 100
3.2.2 Investment in oil and gas ................................................................. 103
3.2.3 Emissions from fossil fuel production.............................................. 104
3.3 Low‐emissions fuel supply ........................................................................... 105
3.3.1 Energy trends in the Net‐Zero Emissions Scenario .......................... 105
3.3.2 Biofuels ............................................................................................ 106
3.3.3 Hydrogen and hydrogen‐based fuels............................................... 108
3.3.4 Key milestones and decision points................................................. 111
3.4 Electricity sector .......................................................................................... 113
3.4.1 Energy and emissions trends in the Net‐Zero Emissions Scenario .. 113
3.4.2 Key milestones and decision points................................................. 117
3.5 Industry ....................................................................................................... 121
3.5.1 Energy and emission trends in the Net‐Zero Emissions Scenario .... 121
3.5.2 Key milestones and decision points................................................. 129
3.6 Transport ..................................................................................................... 131
3.6.1 Energy and emission trends in the Net‐Zero Emissions Scenario .... 131
3.6.2 Key milestones and decision points................................................. 138
3.7 Buildings ...................................................................................................... 141
3.7.1 Energy and emission trends in the Net‐Zero Emissions Scenario .... 141
3.7.2 Key milestones and decision points................................................. 147

10International Energy Agency | Special Report4

Wider implications of achieving net‐zero emissions

151

4.1 Introduction................................................................................................. 152
4.2 Economy ...................................................................................................... 153
4.2.1 Investment and financing ................................................................ 153
4.2.2 Economic activity ............................................................................. 155
4.2.3 Employment .................................................................................... 157
4.3 Energy industry............................................................................................ 160
4.3.1 Oil and gas ....................................................................................... 160
4.3.2 Coal .................................................................................................. 162
4.3.3 Electricity ......................................................................................... 163
4.3.4 Energy‐consuming industries .......................................................... 165
4.4 Citizens ........................................................................................................ 167
4.4.1 Energy‐related Sustainable Development Goals ............................. 167
4.4.2 Affordability ..................................................................................... 170
4.4.3 Behavioural changes ........................................................................ 173
4.5 Governments ............................................................................................... 175
4.5.1 Energy security ................................................................................ 175
4.5.2 Infrastructure................................................................................... 180
4.5.3 Tax revenues from retail energy sales ............................................. 183
4.5.4 Innovation........................................................................................ 184
4.5.5 International co‐operation .............................................................. 187

Annexes

191

Annex A. Tables for scenario projections ....................................................................... 193
Annex B. Technology costs ............................................................................................ 201
Annex C. Definitions ...................................................................................................... 203

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Annex D. References ..................................................................................................... 217

Summary for policy makers
The energy sector is the source of around three‐quarters of greenhouse gas emissions
today and holds the key to averting the worst effects of climate change, perhaps thegreatest challenge humankind has faced. Reducing global carbon dioxide (CO2) emissions to
net zero by 2050 is consistent with efforts to limit the long‐term increase in average global
temperatures to 1.5 °C. This calls for nothing less than a complete transformation of how we
produce, transport and consume energy. The growing political consensus on reaching net
zero is cause for considerable optimism about the progress the world can make, but thechanges required to reach net‐zero emissions globally by 2050 are poorly understood. A hugeamount of work is needed to turn today’s impressive ambitions into reality, especially given
the range of different situations among countries and their differing capacities to make thenecessary changes. This special IEA report sets out a pathway for achieving this goal, resulting
in a clean and resilient energy system that would bring major benefits for human prosperity
and well‐being.

In this Summary for Policy Makers, we outline the essential conditions for the global energy
sector to reach net‐zero CO2 emissions by 2050. The pathway described in depth in thisreport achieves this objective with no offsets from outside the energy sector, and with low
reliance on negative emissions technologies. It is designed to maximise technical feasibility,
cost‐effectiveness and social acceptance while ensuring continued economic growth andsecure energy supplies. We highlight the priority actions that are needed today to ensure theopportunity of net zero by 2050 – narrow but still achievable – is not lost. The report provides
a global view, but countries do not start in the same place or finish at the same time:advanced economies have to reach net zero before emerging markets and developing
economies, and assist others in getting there. We also recognise that the route mapped out
here is a path, not necessarily the path, and so we examine some key uncertainties, notably
concerning the roles played by bioenergy, carbon capture and behavioural changes. Getting
to net zero will involve countless decisions by people across the world, but our primary aim
is to inform the decisions made by policy makers, who have the greatest scope to move theworld closer to its climate goals.

Summary for policy makers

13

IEA. All rights reserved.

The global pathway to net‐zero emissions by 2050 detailed in this report requires all
governments to significantly strengthen and then successfully implement their energy andclimate policies. Commitments made to date fall far short of what is required by thatpathway. The number of countries that have pledged to achieve net‐zero emissions hasgrown rapidly over the last year and now covers around 70% of global emissions of CO2. Thisis a huge step forward. However, most pledges are not yet underpinned by near‐term policies
and measures. Moreover, even if successfully fulfilled, the pledges to date would still leavearound 22 billion tonnes of CO2 emissions worldwide in 2050. The continuation of that trend
would be consistent with a temperature rise in 2100 of around 2.1 °C. Global emissions fellin 2020 because of the Covid‐19 crisis but are already rebounding strongly as economies
recover. Further delay in acting to reverse that trend will put net zero by 2050 out of reach.

Net zero by 2050 hinges on an unprecedented clean technology push to 2030
The path to net‐zero emissions is narrow: staying on it requires immediate and massive
deployment of all available clean and efficient energy technologies. In the net‐zeroemissions pathway presented in this report, the world economy in 2030 is some 40% larger
than today but uses 7% less energy. A major worldwide push to increase energy efficiency isan essential part of these efforts, resulting in the annual rate of energy intensity
improvements averaging 4% to 2030 – about three‐times the average rate achieved over thelast two decades. Emissions reductions from the energy sector are not limited to CO2: in ourpathway, methane emissions from fossil fuel supply fall by 75% over the next ten years as aresult of a global, concerted effort to deploy all available abatement measures andtechnologies.
Ever‐cheaper renewable energy technologies give electricity the edge in the race to zero.
Our pathway calls for scaling up solar and wind rapidly this decade, reaching annual additionsof 630 gigawatts (GW) of solar photovoltaics (PV) and 390 GW of wind by 2030, four‐times
the record levels set in 2020. For solar PV, this is equivalent to installing the world’s current
largest solar park roughly every day. Hydropower and nuclear, the two largest sources of
low‐carbon electricity today, provide an essential foundation for transitions. As theelectricity sector becomes cleaner, electrification emerges as a crucial economy‐wide tool
for reducing emissions. Electric vehicles (EVs) go from around 5% of global car sales to morethan 60% by 2030.

P R I O R I T Y

A C T I O N

Make the 2020s the decade of massive clean energy expansion
All the technologies needed to achieve the necessary deep cuts in global emissions by
2030 already exist, and the policies that can drive their deployment are already proven.
As the world continues to grapple with the impacts of the Covid‐19 pandemic, it isessential that the resulting wave of investment and spending to support economic
recovery is aligned with the net zero pathway. Policies should be strengthened to speed
the deployment of clean and efficient energy technologies. Mandates and standards arevital to drive consumer spending and industry investment into the most efficienttechnologies. Targets and competitive auctions can enable wind and solar to accelerate
the electricity sector transition. Fossil fuel subsidy phase‐outs, carbon pricing and othermarket reforms can ensure appropriate price signals. Policies should limit or provide
disincentives for the use of certain fuels and technologies, such as unabated coal‐fired
power stations, gas boilers and conventional internal combustion engine vehicles.
Governments must lead the planning and incentivising of the massive infrastructure
investment, including in smart transmission and distribution grids.

14

International Energy Agency | Special ReportKey clean technologies ramp up by 2030 in the net zero pathway
Capacity additions
(GW)
1 200

Electric car sales(millions)
5

60

1 000
800

Wind

50
x4

600

Energy intensity of GDP(MJ per USD ppp)
4% per
year

4

x 18
40

3

Solar PV

30

400
200
2020

2030

2

20

1

10
2020

2030

2020

2030

Note: MJ = megajoules; GDP = gross domestic product in purchasing power parity.

Net zero by 2050 requires huge leaps in clean energy innovation
Reaching net zero by 2050 requires further rapid deployment of available technologies aswell as widespread use of technologies that are not on the market yet. Major innovation
efforts must occur over this decade in order to bring these new technologies to market intime. Most of the global reductions in CO2 emissions through 2030 in our pathway come fromtechnologies readily available today. But in 2050, almost half the reductions come fromtechnologies that are currently at the demonstration or prototype phase. In heavy industry
and long‐distance transport, the share of emissions reductions from technologies that are
still under development today is even higher.

Summary for policy makers

15

IEA. All rights reserved.

The biggest innovation opportunities concern advanced batteries, hydrogen electrolysers,
and direct air capture and storage. Together, these three technology areas make vital
contributions the reductions in CO2 emissions between 2030 and 2050 in our pathway.
Innovation over the next ten years – not only through research and development (R&D) anddemonstration but also through deployment – needs to be accompanied by the large‐scaleconstruction of the infrastructure the technologies will need. This includes new pipelines totransport captured CO2 emissions and systems to move hydrogen around and between ports
and industrial zones.

P R I O R I T Y

A C T I O N

Prepare for the next phase of the transition by boosting innovation
Clean energy innovation must accelerate rapidly, with governments putting R&D,
demonstration and deployment at the core of energy and climate policy.
Government R&D spending needs to be increased and reprioritised. Critical areas such as
electrification, hydrogen, bioenergy and carbon capture, utilisation and storage (CCUS)
today receive only around one‐third of the level of public R&D funding of the moreestablished low‐carbon electricity generation and energy efficiency technologies.
Support is also needed to accelerate the roll‐out of demonstration projects, to leverage
private investment in R&D, and to boost overall deployment levels to help reduce costs.
Around USD 90 billion of public money needs to be mobilised globally as soon as possible
to complete a portfolio of demonstration projects before 2030. Currently, only roughly
USD 25 billion is budgeted for that period. Developing and deploying these technologies
would create major new industries, as well as commercial and employment
opportunities.
Annual CO2 emissions savings in the net zero pathway, relative to 2020

2030

2050

20%
Behaviour changes

16

40%

60%

Technologies in the market

80%

100%

Technologies under development

International Energy Agency | Special Report

The transition to net zero is for and about people
A transition of the scale and speed described by the net zero pathway cannot be achieved
without sustained support and participation from citizens. The changes will affect multiple
aspects of people’s lives – from transport, heating and cooking to urban planning and jobs.
We estimate that around 55% of the cumulative emissions reductions in the pathway arelinked to consumer choices such as purchasing an EV, retrofitting a house with energy‐
efficient technologies or installing a heat pump. Behavioural changes, particularly inadvanced economies – such as replacing car trips with walking, cycling or public transport,
or foregoing a long‐haul flight – also provide around 4% of the cumulative emissions
reductions.
Providing electricity to around 785 million people that have no access and clean cooking
solutions to 2.6 billion people that lack those options is an integral part of our pathway.
Emissions reductions have to go hand‐in‐hand with efforts to ensure energy access for all by
2030. This costs around USD 40 billion a year, equal to around 1% of average annual energy
sector investment, while also bringing major co‐benefits from reduced indoor air pollution.
Some of the changes brought by the clean energy transformation may be challenging to
implement, so decisions must be transparent, just and cost‐effective. Governments needto ensure that clean energy transitions are people‐centred and inclusive. Household energy
expenditure as a share of disposable income – including purchases of efficient appliancesand fuel bills – rises modestly in emerging market and developing economies in our net zero
pathway as more people gain access to energy and demand for modern energy services
increases rapidly. Ensuring the affordability of energy for households demands close
attention: policy tools that can direct support to the poorest include tax credits, loans andtargeted subsidies.

P R I O R I T Y

A C T I O N

Clean energy jobs will grow strongly but must be spread widely

The transition to net zero brings substantial new opportunities for employment, with
14 million jobs created by 2030 in our pathway thanks to new activities and investment
in clean energy. Spending on more efficient appliances, electric and fuel cell vehicles, andbuilding retrofits and energy‐efficient construction would require a further 16 million
workers. But these opportunities are often in different locations, skill sets and sectors
than the jobs that will be lost as fossil fuels decline. In our pathway, around 5 million jobs
are lost. Most of those jobs are located close to fossil fuel resources, and many are wellpaid, meaning structural changes can cause shocks for communities with impacts thatpersist over time. This requires careful policy attention to address the employment

Summary for policy makers

17

IEA. All rights reserved.

Energy transitions have to take account of the social and economic impacts on
individuals and communities, and treat people as active participants.

losses. It will be vital to minimise hardships associated with these disruptions, such as byretraining workers, locating new clean energy facilities in heavily affected areas wherever
possible, and providing regional aid.

Million jobs

Global employment in energy supply in the net zero pathway, 2019-2030
60

Bioenergy
Electricity
LossesCoal
Oil and gas

40
Growth

20

2019

2030

An energy sector dominated by renewables
In the net zero pathway, global energy demand in 2050 is around 8% smaller than today,
but it serves an economy more than twice as big and a population with 2 billion more
people. More efficient use of energy, resource efficiency and behavioural changes combine
to offset increases in demand for energy services as the world economy grows and access toenergy is extended to all.
Instead of fossil fuels, the energy sector is based largely on renewable energy. Two‐thirds
of total energy supply in 2050 is from wind, solar, bioenergy, geothermal and hydro energy.
Solar becomes the largest source, accounting for one‐fifth of energy supplies. Solar PV
capacity increases 20‐fold between now and 2050, and wind power 11‐fold.
Net zero means a huge decline in the use of fossil fuels. They fall from almost four‐fifths oftotal energy supply today to slightly over one‐fifth by 2050. Fossil fuels that remain in 2050
are used in goods where the carbon is embodied in the product such as plastics, in facilities
fitted with CCUS, and in sectors where low‐emissions technology options are scarce.
Electricity accounts for almost 50% of total energy consumption in 2050. It plays a key roleacross all sectors – from transport and buildings to industry – and is essential to produce low‐emissions fuels such as hydrogen. To achieve this, total electricity generation increases over
18

International Energy Agency | Special Reporttwo‐and‐a‐half‐times between today and 2050. At the same time, no additional new final
investment decisions should be taken for new unabated coal plants, the least efficient coalplants are phased out by 2030, and the remaining coal plants still in use by 2040 are
retrofitted. By 2050, almost 90% of electricity generation comes from renewable sources,
with wind and solar PV together accounting for nearly 70%. Most of the remainder comesfrom nuclear.
Emissions from industry, transport and buildings take longer to reduce. Cutting industry
emissions by 95% by 2050 involves major efforts to build new infrastructure. After rapid
innovation progress through R&D, demonstration and initial deployment between now and2030 to bring new clean technologies to market, the world then has to put them into action.
Every month from 2030 onwards, ten heavy industrial plants are equipped with CCUS, three
new hydrogen‐based industrial plants are built, and 2 GW of electrolyser capacity are added
at industrial sites. Policies that end sales of new internal combustion engine cars by 2035 andboost electrification underpin the massive reduction in transport emissions. In 2050, cars on
the road worldwide run on electricity or fuel cells. Low‐emissions fuels are essential whereenergy needs cannot easily or economically be met by electricity. For example, aviation relies
largely on biofuels and synthetic fuels, and ammonia is vital for shipping. In buildings, banson new fossil fuel boilers need to start being introduced globally in 2025, driving up sales ofelectric heat pumps. Most old buildings and all new ones comply with zero‐carbon‐readybuilding energy codes.1

P R I O R I T Y

A C T I O N

Set near-term milestones to get on track for long-term targets
Governments need to provide credible step‐by‐step plans to reach their net zero goals,
building confidence among investors, industry, citizens and other countries.

1
A zero‐carbon‐ready building is highly energy efficient and either uses renewable energy directly or uses anenergy supply that will be fully decarbonised by 2050, such as electricity or district heat.

Summary for policy makers

19

IEA. All rights reserved.

Governments must put in place long‐term policy frameworks to allow all branches ofgovernment and stakeholders to plan for change and facilitate an orderly transition.
Long‐term national low‐emissions strategies, called for by the Paris Agreement, can set
out a vision for national transitions, as this report has done on a global level. These long‐term objectives need to be linked to measurable short‐term targets and policies. Our
pathway details more than 400 sectoral and technology milestones to guide the global
journey to net zero by 2050.

Key milestones in the pathway to net zero2025
No new sales offossil fuel boilers
2021

2030
Universal energy accessNo new unabatedcoal plants approvedfor development

Gt CO₂

No new oil and gas
fields approved fordevelopment; no
new coal mines ormine extensions

60% of global car
sales are electric
Most new clean
technologies inheavy industry
demonstrated
at scale
1 020 GW annual solar
and wind additions
Phase‐out of
unabated coal inadvanced economies

40

2035

All new buildings are
zero‐carbon‐ready

Most appliances andcooling systems soldare best in class
50% of heavy trucksales are electric
No new ICE car sales
All industrial
electric motor sales
are best in classOverall net‐zeroemissions electricity
in advanced
economies

35

2040
50% of existingbuildings retrofitted
to zero‐carbon‐readylevels50% of fuels usedin aviation are
low‐emissions

2050
More than 85%
of buildings are
zero‐carbon‐readyAround 90% ofexisting capacity inheavy industries
reaches end ofinvestment cycle

More than 90% of
heavy industrial
production is
low‐emissions

Net‐zero emissions
electricity globally

30
Phase‐out of all
unabated coal and oil
power plants

25
20

Almost 70% ofelectricity generation
globally from solar PV
and wind2045

15

50% of heating demand
met by heat pumps

10
5
0
‐5
2020

2025

2030

2035

150 Mt low‐carbon hydrogen
850 GW electrolysers

2040

2045
435 Mt low‐carbon hydrogen
3 000 GW electrolysers

4 Gt CO2 captured

Buildings

20

Transport

Industry2050

7.6 Gt CO2 captured

Electricity and heat

Other

International Energy Agency | Special Report

There is no need for investment in new fossil fuel supply in our net zero
pathway
Beyond projects already committed as of 2021, there are no new oil and gas fields
approved for development in our pathway, and no new coal mines or mine extensions are
required. The unwavering policy focus on climate change in the net zero pathway results ina sharp decline in fossil fuel demand, meaning that the focus for oil and gas producers
switches entirely to output – and emissions reductions – from the operation of existing
assets. Unabated coal demand declines by 98% to just less than 1% of total energy
use in 2050. Gas demand declines by 55% to 1 750 billion cubic metres and oil declines by
75% to 24 million barrels per day (mb/d), from around 90 mb/d in 2020.
Clean electricity generation, network infrastructure and end‐use sectors are key areas forincreased investment. Enabling infrastructure and technologies are vital for transforming
the energy system. Annual investment in transmission and distribution grids expands from
USD 260 billion today to USD 820 billion in 2030. The number of public charging points for
EVs rises from around 1 million today to 40 million in 2030, requiring annual investment ofalmost USD 90 billion in 2030. Annual battery production for EVs leaps from 160 gigawatt‐
hours (GWh) today to 6 600 GWh in 2030 – the equivalent of adding almost 20 gigafactories2
each year for the next ten years. And the required roll‐out of hydrogen and CCUS after 2030
means laying the groundwork now: annual investment in CO2 pipelines and hydrogen‐enabling infrastructure increases from USD 1 billion today to around USD 40 billion in 2030.

P R I O R I T Y

A C T I O N

Drive a historic surge in clean energy investment
Policies need to be designed to send market signals that unlock new business models
and mobilise private spending, especially in emerging economies.

2

Battery gigafactory capacity assumption = 35 gigawatt‐hours per year.

Summary for policy makers

21

IEA. All rights reserved.

Accelerated delivery of international public finance will be critical to energy transitions,especially in developing economies, but ultimately the private sector will need to financemost of the extra investment required. Mobilising the capital for large‐scale
infrastructure calls for closer co‐operation between developers, investors, publicfinancial institutions and governments. Reducing risks for investors will be essential toensure successful and affordable clean energy transitions. Many emerging market anddeveloping economies, which rely mainly on public funding for new energy projects andindustrial facilities, will need to reform their policy and regulatory frameworks to attract
more private finance. International flows of long‐term capital to these economies will beneeded to support the development of both existing and emerging clean energy
technologies.

Trillion USD (2019)

Clean energy investment in the net zero pathway
5
End‐useEnergy infrastructure

4Electricity generation
Low‐emissions fuels

3

2

1

2016‐20

2030

2050

An unparalleled clean energy investment boom lifts global economic growth
Total annual energy investment surges to USD 5 trillion by 2030, adding an extra
0.4 percentage point a year to annual global GDP growth, based on our joint analysis with
the International Monetary Fund. This unparalleled increase – with investment in clean
energy and energy infrastructure more than tripling already by 2030 – brings significant
economic benefits as the world emerges from the Covid‐19 crisis. The jump in private andgovernment spending creates millions of jobs in clean energy, including energy efficiency, as
well as in the engineering, manufacturing and construction industries. All of this puts global
GDP 4% higher in 2030 than it would be based on current trends.
Governments have a key role in enabling investment‐led growth and ensuring that thebenefits are shared by all. There are large differences in macroeconomic impacts between
regions. But government investment and public policies are essential to attract large
amounts of private capital and to help offset the declines in fossil fuel income that many
countries will experience. The major innovation efforts needed to bring new clean energy
technologies to market could boost productivity and create entirely new industries,
providing opportunities to locate them in areas that see job losses in incumbent industries.
Improvements in air quality provide major health benefits, with 2 million fewer premature
deaths globally from air pollution in 2030 than today in our net zero pathway. Achieving
universal energy access by 2030 would provide a major boost to well‐being and productivity
in developing economies.

22

International Energy Agency | Special ReportNew energy security concerns emerge, and old ones remain
The contraction of oil and natural gas production will have far‐reaching implications for all
the countries and companies that produce these fuels. No new oil and natural gas fields areneeded in our pathway, and oil and natural gas supplies become increasingly concentrated
in a small number of low‐cost producers. For oil, the OPEC share of a much‐reduced global
oil supply increases from around 37% in recent years to 52% in 2050, a level higher than at
any point in the history of oil markets. Yet annual per capita income from oil and natural gas
in producer economies falls by about 75%, from USD 1 800 in recent years to USD 450 by the2030s, which could have knock‐on societal effects. Structural reforms and new sources ofrevenue are needed, even though these are unlikely to compensate fully for the drop in oil
and gas income. While traditional supply activities decline, the expertise of the oil and natural
gas industry fits well with technologies such as hydrogen, CCUS and offshore wind that areneeded to tackle emissions in sectors where reductions are likely to be most challenging.
The energy transition requires substantial quantities of critical minerals, and their supply
emerges as a significant growth area. The total market size of critical minerals like copper,
cobalt, manganese and various rare earth metals grows almost sevenfold between 2020 and
2030 in the net zero pathway. Revenues from those minerals are larger than revenues fromcoal well before 2030. This creates substantial new opportunities for mining companies. It
also creates new energy security concerns, including price volatility and additional costs fortransitions, if supply cannot keep up with burgeoning demand.
The rapid electrification of all sectors makes electricity even more central to energy
security around the world than it is today. Electricity system flexibility – needed to balancewind and solar with evolving demand patterns – quadruples by 2050 even as retirements offossil fuel capacity reduce conventional sources of flexibility. The transition calls for major
increases in all sources of flexibility: batteries, demand response and low‐carbon flexible
power plants, supported by smarter and more digital electricity networks. The resilience ofelectricity systems to cyberattacks and other emerging threats needs to be enhanced.

P R I O R I T Y

A C T I O N

Address emerging energy security risks now

The focus of energy security will evolve as reliance on renewable electricity grows andthe role of oil and gas diminishes. Potential vulnerabilities from the increasing
importance of electricity include the variability of supply and cybersecurity risks.
Governments need to create markets for investment in batteries, digital solutions andelectricity grids that reward flexibility and enable adequate and reliable supplies ofelectricity. The growing dependence on critical minerals required for key clean energy
technologies calls for new international mechanisms to ensure both the timely
Summary for policy makers

23

IEA. All rights reserved.

Ensuring uninterrupted and reliable supplies of energy and critical energy‐relatedcommodities at affordable prices will only rise in importance on the way to net zero.

availability of supplies and sustainable production. At the same time, traditional energy
security concerns will not disappear, as oil production will become more concentrated.
Global energy security indicators in the net zero pathway
Oil supply(mb/d)
100

Critical minerals demand(Mt)

Share of solar PV and windin electricity generation

50

100%

40

80%

60

30

60%

40

20

40%

10

20%

80

52%
OPEC share

34%
20

2020

2050

2020

2050

2020

2050

Note: mb/d = million barrels per day; Mt = million tonnes.

International co‐operation is pivotal for achieving net‐zero emissions by 2050
Making net‐zero emissions a reality hinges on a singular, unwavering focus from allgovernments – working together with one another, and with businesses, investors andcitizens. All stakeholders need to play their part. The wide‐ranging measures adopted bygovernments at all levels in the net zero pathway help to frame, influence and incentivise
the purchase by consumers and investment by businesses. This includes how energy
companies invest in new ways of producing and supplying energy services, how businesses
invest in equipment, and how consumers cool and heat their homes, power their devices andtravel.
Underpinning all these changes are policy decisions made by governments. Devising cost‐effective national and regional net zero roadmaps demands co‐operation among all parts ofgovernment that breaks down silos and integrates energy into every country’s policy making
on finance, labour, taxation, transport and industry. Energy or environment ministries alone
cannot carry out the policy actions needed to reach net zero by 2050.
Changes in energy consumption result in a significant decline in fossil fuel tax revenues. In
many countries today, taxes on diesel, gasoline and other fossil fuel consumption are an
important source of public revenues, providing as much as 10% in some cases. In the net zero
pathway, tax revenue from oil and gas retail sales falls by about 40% between 2020 and 2030.
Managing this decline will require long‐term fiscal planning and budget reforms.

24

International Energy Agency | Special Report

The net zero pathway relies on unprecedented international co‐operation among
governments, especially on innovation and investment. The IEA stands ready to support
governments in preparing national and regional net zero roadmaps, to provide guidance andassistance in implementing them, and to promote international co‐operation to accelerate
the energy transition worldwide.

P R I O R I T Y

A C T I O N

Take international co-operation to new heights
This is not simply a matter of all governments seeking to bring their national emissions
to net zero – it means tackling global challenges through co‐ordinated actions.
Governments must work together in an effective and mutually beneficial manner toimplement coherent measures that cross borders. This includes carefully managing
domestic job creation and local commercial advantages with the collective global needfor clean energy technology deployment. Accelerating innovation, developing
international standards and co‐ordinating to scale up clean technologies needs to bedone in a way that links national markets. Co‐operation must recognise differences in thestages of development of different countries and the varying situations of different partsof society. For many rich countries, achieving net‐zero emissions will be more difficultand costly without international co‐operation. For many developing countries, thepathway to net zero without international assistance is not clear. Technical and financial
support is needed to ensure deployment of key technologies and infrastructure. Without
greater international co‐operation, global CO2 emissions will not fall to net zero by 2050.

Gt CO2Global energy-related CO2 emissions in the net zero pathway and
Low International Co-operation Case
40

30

20
Low International Cooperation Case
10
NZE
2030

2050

2070

2090

Note: Gt = gigatonnes.

Summary for policy makers

25

IEA. All rights reserved.

2010

Net Zero Emissions by 2050 Interactive iea.li/nzeroadmap

2020

40 Mt CO2
capturedFrom 2021:
No new unabatedcoal plants approvedfor development

Fossil fuels account foralmost 80% of TES

33.9

Total CO2 emissions (Gt)

Industry
8.5Gt

Solar PV and windaccounts for almost
10% of total electricity
generation

Buildings
2.9Gt

Other
1.9Gt

Transport

Power

7.2Gt

13.5GtRetrofit rates below
1% globally

Unabated coal, natural gas
and oil account for over 60%
of total electricity generation

Universal
energy access
Most new clean
technologies in heavy
industry demonstrated
at scale

From 2021:
No new oil and gas
fields approved fordevelopment;
no new coal minesor mine extensions

5% of global car
sales are electric

All new buildings are
zero-carbon-ready

21.1

2030

Total CO2 emissions (Gt)

Industry
6.9Gt

Buildings
1.8Gt

60% of global car
sales are electric

Other
0.9Gt

1 020 GW annual
solar and windadditions

Power

5.8Gt

Transport

5.7Gt

150 Mt low-carbonhydrogen; 850 GW
electrolysers
Phase-out of unabated coalin advanced economies

2035

Virtually all heavy industry
capacity additions areinnovative low-emissions
routesAll industrial electricmotor sales are
best in class

12.8

Total CO2 emissions (Gt)Capacity fitted with
CCUS or co-firinghydrogen-based
fuels reaches 6% of
total generation

Industry
5.2Gt

Buildings
1.2Gt

Other
0.1Gt

Overall net-zero emissions
electricity in advanced
economies

4 Gt CO2 captured

Power

Most appliances andcooling systems soldare best in class

No new internal
combustion
engine car sales

Transport

4.1Gt

2.1Gt

50% of heavy trucksales are electricAround 90% ofexisting capacity inheavy industries reaches
end of investment cycle

6.3

Total CO2 emissions (Gt)

50% of existingbuildings retrofitted tozero-carbon-ready levels

2040

Net-zero emissions
electricity globally
Industry
3.5Gt

Buildings

50% of fuels usedin aviation are
low-emissions

0.7Gt

Phase-out of all
unabated coal andoil power plants

Power-0.1GtOther

Transport
2.7Gt-0.5GtElectrolyser capacity
reaches 2 400 GW

Oil demand is 50%
of 2020 level

More than 90% of heavy
industrial production
is low-emissions

0
33.9

Total CO2 emissions (Gt)
Total CO2 emissions (Gt)More than 85%
of buildings are
zero-carbon-readyIndustry
0.5Gt

Power

Buildings
0.1Gt-0.4GtTransport

0.7Gt

Other
-1Gt

Almost 70% ofelectricity generation
globally from solar PV
and wind520 Mtlow-carbonhydrogen7.6 Gt CO2 captured

IEA. All rights reserved.

2050

Renewables reachalmost 90% of total
electricity generation

Net Zero Emissions by 2050 Interactive iea.li/nzeroadmap

Chapter 1
Announced net zero pledges and the energy sector
S U M M A R Y
 There has been a rapid increase over the last year in the number of governments
pledging to reduce greenhouse gas emissions to net zero. Net zero pledges to datecover around 70% of global GDP and CO2 emissions. However, fewer than a quarterof announced net zero pledges are fixed in domestic legislation and few are yet
underpinned by specific measures or policies to deliver them in full and on time.

 The Stated Policies Scenario (STEPS) takes account only of specific policies that are inplace or have been announced by governments. Annual energy‐related and industrial
process CO2 emissions rise from 34 Gt in 2020 to 36 Gt in 2030 and remain aroundthis level until 2050. If emissions continue on this trajectory, with similar changes innon‐energy‐related GHG emissions, this would lead to a temperature rise of around
2.7 °C by 2100 (with a 50% probability). Renewables provide almost 55% of global
electricity generation in 2050 (up from 29% in 2020), but clean energy transitions lag
in other sectors. Global coal use falls by 15% between 2020 and 2050; oil use in 2050
is 15% higher than in 2020; and natural gas use is almost 50% higher.

 The Announced Pledges Case (APC) assumes that all announced national net zeropledges are achieved in full and on time, whether or not they are currently
underpinned by specific policies. Global energy‐related and industrial process CO2
emissions fall to 30 Gt in 2030 and 22 Gt in 2050. Extending this trajectory, withsimilar action on non‐energy‐related GHG emissions, would lead to a temperature risein 2100 of around 2.1 °C (with a 50% probability). Global electricity generation nearly
doubles to exceed 50 000 TWh in 2050. The share of renewables in electricity
generation rises to nearly 70% in 2050. Oil demand does not return to its 2019 peakand falls about 10% from 2020 to 80 mb/d in 2050. Coal use drops by 50% to
2 600 Mtce in 2050, while natural gas use expands by 10% to 4 350 bcm in 2025 andremains about that level to 2050.

 Efficiency, electrification and the replacement of coal by low‐emissions sources inelectricity generation play a central role in achieving net zero goals in the APC,
especially over the period to 2030. The relative contributions of nuclear, hydrogen,bioenergy and CCUS vary across countries, depending on their circumstances.

 The divergence in trends between the APC and the STEPS shows the difference that

Chapter 1 | Announced net zero pledges and the energy sector

29

IEA. All rights reserved.

current net zero pledges could make, while underlining at the same time the need for
concrete policies and short‐term plans that are consistent with long‐term net zeropledges. However, the APC also starkly highlights that existing net zero pledges, even
if delivered in full, fall well short of what is necessary to reach global net‐zeroemissions by 2050.

1.1

Introduction

November 2021 will see the most important UN Framework Convention on Climate Change(UNFCCC) Conference of the Parties (COP 26) since the Paris Agreement was signed in 2015.
As COP 26 approaches, an increasing number of countries have announced long‐term goals
to achieve net‐zero greenhouse gas (GHG) emissions over the coming decades. On
31 March 2021, the International Energy Agency (IEA) hosted a Net Zero Summit to takestock of the growing list of commitments from countries and companies to reach the goalsof the Paris Agreement, and to focus on the actions necessary to start turning those net zero
goals into reality.
Achieving those goals will be demanding. The Covid‐19 pandemic delivered a major shock to
the world economy, resulting in an unprecedented 5.8% decline in CO2 emissions in 2020.
However, our monthly data show that global energy‐related CO2 emissions started to climb
again in December 2020, and we estimate that they will rebound to around 33 gigatonnes ofcarbon dioxide (Gt CO2) in 2021, only 1.2% below the level in 2019 (IEA, 2021). Sustainableeconomic recovery packages offered a unique opportunity to make 2019 the definitive peakin global emissions, but the evidence so far points to a rebound in emissions in parallel withrenewed economic growth, at least in the near term (IEA, 2020a).
Recent IEA analyses examined the technologies and policies needed for countries andregions to achieve net‐zero emissions energy systems. The World Energy Outlook 2020
examined what would be needed over the period to 2030 to put the world on a path towards
net‐zero emissions by 2050 in the context of the pandemic‐related economic recovery(IEA, 2020b). The Faster Innovation Case in Energy Technology Perspectives 2020 exploredwhether net‐zero emissions could be achieved globally by 2050 through accelerated energy
technology development and deployment alone: it showed that, relative to baseline trends,
almost half of the emissions savings needed in 2050 to reach net‐zero emissions rely ontechnologies that are not yet commercially available (IEA, 2020c).
This special report, prepared at the request of the UK President of the COP 26, incorporates
the insights and lessons learned from both reports to create a comprehensive and detailed
pathway, or roadmap, to achieve net‐zero energy‐related and industrial process CO2
emissions globally by 2050. It assesses the costs of achieving this goal, the likely impacts on
employment and the economy, and the wider implications for the world. It also highlights
the key milestones for technologies, infrastructure, investment and policy that are neededalong the road to 2050.
This report is set out in four chapters:

Chapter 1 explores the outlook for global CO2 emissions and energy supply and use
based on existing policies and pledges. It sets out projections of global energy use andemissions based on the Stated Policies Scenario (STEPS), which includes only the firm
policies that are in place or have been announced by countries, including Nationally30

International Energy Agency | Special ReportDetermined Contributions. It also examines the Announced Pledges Case (APC), a
variant of the STEPS that assumes that all of the net zero targets announced by countries
around the world to date are met in full.
Chapter 2 presents the Net‐Zero Emissions by 2050 Scenario (NZE), which describes
how energy demand and the energy mix will need to evolve if the world is to achieve
net‐zero emissions by 2050. It also assesses the corresponding investment needs andexplores key uncertainties surrounding technology and consumer behaviour.

Chapter 3 examines the implications of the NZE for various sectors, covering fossil fuelsupply, the supply of low‐emissions fuels (such as hydrogen, ammonia, biofuels,
synthetic fuels and biomethane) and the electricity, transport, industry and buildings
sectors. It highlights the key changes required to achieve net‐zero emissions in the NZE
and the major milestones that are needed along the way.



Chapter 4 explores the implications of the NZE for the economy, the energy industry,citizens and governments.

1.2

Emissions reduction targets and net zero pledges

1.2.1

Nationally Determined Contributions

1

Under the Paris Agreement, Parties 1 are required to submit Nationally Determined
Contributions (NDCs) to the UNFCCC and to implement policies with the aim of achieving
their stated objectives. The process is dynamic; it requires Parties to update their NDCs every
five years in a progressive manner to reflect the highest possible ambition. The first round of
NDCs, submitted by 191 countries, covers more than 90% of global energy‐related andindustrial process CO2 emissions. 2 The first NDCs included some targets that wereunconditional and others that were conditional on international support for finance,technology and other means of implementation.
As of 23 April 2021, 80 countries have submitted new or updated NDCs to the UNFCCC,
covering just over 40% of global CO2 emissions (Figure 1.1). 3 Many of the updated NDCs
include more stringent targets than in the initial round of NDCs, or targets for a larger
number of sectors or for a broader coverage of GHGs. In addition, 27 countries and theEuropean Union have communicated long‐term low GHG emissions development strategies
to the UNFCCC, as requested by the Paris Agreement. Some of these strategies incorporatea net zero pledge.

1

2
Unless otherwise stated, CO2 emissions in this report refer to energy‐related and industrial process CO2
emissions.
3

Several countries have indicated that they intend to submit new or updated NDCs later in 2021 or in 2022.

Chapter 1 | Announced net zero pledges and the energy sector

31

IEA. All rights reserved.

Parties refers to the 197 members of the UNFCCC which includes all United Nations member states, United
Nations General Assembly Observer State of Palestine, UN non‐member states Niue and the Cook Islands andthe European Union.

Figure 1.1 ⊳Number of countries with NDCs, long-term strategies and net

Number of countries

zero pledges, and their shares of 2020 global CO2 emissions
200

100%

150

75%

100

50%

50

25%

First
NDC

New or updated NZE pledges
NDC

Long‐term
strategy

NZE targets inlaw

Share of global 2020 CO₂ emissions (right axis)
IEA. All rights reserved.

Around 40% of countries that have ratified the Paris Agreement have updated their NDCs,
but net zero pledges cover around 70% of global CO2 emissions

1.2.2

Net‐zero emissions pledges

There has been a rapid increase in the number of governments making pledges to reduce
GHG emissions to net zero (Figure 1.2). In the Paris Agreement, countries agreed to “achievea balance between anthropogenic emissions by sources and removals by sinks of greenhousegases in the second‐half of the century”. The Intergovernmental Panel on Climate Change(IPCC) Special Report on Global Warming of 1.5 °C highlighted the importance of reachingnet‐zero CO2 emissions globally by mid‐century or sooner to avoid the worst impacts ofclimate change (IPCC, 2018).
Net‐zero emissions pledges have been announced by national governments, subnational
jurisdictions, coalitions 4 and a large number of corporate entities (see Spotlight). As of
23 April 2021, 44 countries and the European Union have pledged to meet a net‐zeroemissions target: in total they account for around 70% of global CO2 emissions and GDP(Figure 1.3). Of these, ten countries have made meeting their net zero target a legal
obligation, eight are proposing to make it a legal obligation, and the remainder have madetheir pledges in official policy documents.

4
Examples include: the UN‐led Climate Ambition Alliance in which signatories signal they are working towards
achieving net‐zero emissions by 2050; and the Carbon Neutrality Coalition launched at the UN Climate Summit
in 2017, in which signatories commit to develop long‐term low GHG emissions strategies in line with limiting
temperature rises to 1.5 °C.

32International Energy Agency | Special ReportFigure 1.2 ⊳Number of national net zero pledges and share of global CO2

50

100%

40

80%

30

60%

20

40%

10

20%

2015
In law

2016

2017

Proposed

2018

2019

1

Share of CO₂ emissions

Countries with pledges

emissions covered

2020

2021
Q1
Global CO₂ covered (right axis)

In policy documents

IEA. All rights reserved.

There has been a significant acceleration in net-zero emissions pledges
announced by governments, with an increasing number enshrined in law
Notes: In law = a net zero pledge has been approved by parliament and is legally binding. Proposed = a net
zero pledge has been proposed to parliament to be voted into law. In policy document = a net zero pledge has
been proposed but does not have legally binding status.

Figure 1.3 ⊳Coverage of announced national net zero pledges

Countries

Population

CO₂ emissions

GDP
20%
Advanced economies

40%

60%

Emerging market and developing economies

80%

100%
Not covered

IEA. All rights reserved.

pledges in law, or proposed legislation or in an official policy document
Note: GDP = gross domestic product at purchasing power parity.

Chapter 1 | Announced net zero pledges and the energy sector

33

IEA. All rights reserved.

Countries accounting for around 70% of global CO2 emissions and GDP have set net zeroIn contrast to some of the shorter term commitments contained within NDCs, few net zeropledges are supported by detailed policies and firm routes to implementation. Net‐zeroemissions pledges also vary considerably in their timescale and scope. Some key differences
include:

GHG coverage. Most pledges cover all GHG emissions, but some include exemptions or
different rules for certain types of emissions. For example, New Zealand’s net zeropledge covers all GHGs except biogenic methane, which has a separate reduction target.



Sectoral boundaries. Some pledges exclude emissions from specific sectors or activities.
For example, the Netherlands aims to achieve net‐zero GHG emissions only in its
electricity sector (as part of an overall aim to reduce total GHG emissions by 95%), andsome countries, including France, Portugal and Sweden, exclude international aviationand shipping.

Use of carbon dioxide removal (CDR). Pledges take varying approaches to account for
CDR within a country’s sovereign territory. CDR options include natural CO2 sinks, suchas forests and soils, as well as technological solutions, such as direct air capture or
bioenergy with carbon capture and storage. For example, Uruguay has stated thatnatural CO2 sinks will be used to help it reach net‐zero emissions, while Switzerland plans
to use CDR technologies to balance a part of its residual emissions in 2050.

Use of international mitigation transfers. Some pledges allow GHG mitigation that
occurs outside a country’s borders to be counted towards the net zero target, such as
through the transfer of carbon credits, while others do not. For example, Norway allows
the potential use of international transfers, while France explicitly rules them out. Somecountries, such as Sweden, allow such transfers but specify an upper limit to their use.



Timeframe. The majority of pledges, covering 35% of global CO2 emissions in 2020,
target net‐zero emissions by 2050, but Finland aims to reach that goal by 2035, Austria
and Iceland by 2040 and Sweden by 2045. Among others, the People’s Republic of China(hereafter China) and Ukraine have set a target date after 2050.

S P O T L I G H T
How are businesses responding to the needto reach net-zero emissions?
There has been a rapid rise in net‐zero emissions announcements from companies inrecent years: as of February 2021, around 110 companies that consume large amountsof energy directly or produce energy‐consuming goods have announced net‐zeroemissions goals or targets.
Around 60‐70% of global production of heating and cooling equipment, road vehicles,
electricity and cement is from companies that have announced net‐zero emissions
targets (Figure 1.4). Nearly 60% of gross revenue in the technology sector is also
generated by companies with net‐zero emission targets. In other sectors, net zero
34

International Energy Agency | Special Reportpledges cover 30‐40% of air and shipping operations, 15% of transport logistics and 10%of construction. All these shares are likely to keep growing as more companies makepledges.

1

Sectoral activity of large energy-related companies with

Figure 1.4 ⊳announced pledges to reach net-zero emissions by 2050
20%

40%

60%

80%

100%

Heating and cooling
CementRoad vehicles
Power
Technology
Steel
Passenger airlines
AircraftShipping operations
Oil and gas
Transport logistics
Construction
Scope 1+2+3

Partial value chain

Scope 1+2

No target
IEA. All rights reserved.

Some sectors are more advanced in terms of the extent
of net zero targets by companies active in the sector
Notes: Scope 1 = direct emissions from energy and other sources owned or controlled. Scope 2 = indirectemissions from the production of electricity and heat, and fuels purchased and used. Scope 3 = indirectemissions from sources not owned or directly controlled but related to their activities (such as employee
travel, extraction, transport and production of purchased materials and fuels, and end‐use of fuels,
products and services). Partial value chain includes Scope 1 and 2 emissions and Scope 3 emissions in
specific geographic locations or sections of a company’s value chain.
Source: IEA analysis based on company reports from the largest 10‐25 companies within each sector.

Around 40% of companies that have announced net zero pledges have yet to set out how
they aim to achieve them. For those with detailed plans, the main options include directemissions reductions, use of CO2 removal technologies, such as afforestation, bioenergy
Chapter 1 | Announced net zero pledges and the energy sector

35

IEA. All rights reserved.

Company pledges may not be readily comparable. Most companies account for emissions
and set net zero pledges based on the GHG Protocol (WRI, WBCSD, 2004), but thecoverage and timeframe of these pledges varies widely. Some cover only their own
emissions, for example by shifting to the use of zero‐emissions electricity in offices andproduction facilities, and by eliminating the use of oil in transport or industrial
operations, e.g. FedEx, ArcelorMittal and Maersk. Others also cover wider emissions fromcertain parts of their values chains, e.g. Renault in Europe, or all indirect emissions
related to their activities, e.g. Daikin, Toyota, Shell, Eni and Heidelberg. Around 60% of
pledges aim to achieve net‐zero emissions by 2050, but several companies have set an
earlier deadline of 2030 or 2040.

with carbon capture, utilisation and storage (CCUS), or direct air capture with CO2
storage, and purchasing emissions (credits generated through emissions reductions that
occur elsewhere). The use of offsets could be a cost‐effective mechanism to eliminate
emissions from parts of value chains where emissions reductions are most challenging,
provided that schemes to generate emissions credits result in permanent, additional andverified emissions reductions. However, there is likely to be a limited supply of emissions
credits consistent with net‐zero emissions globally and the use of such credits could
divert investment from options that enable direct emissions reductions.

1.3

Outlook for emissions and energy in the STEPSThe IEA Stated Policies Scenario (STEPS) illustrates the consequences of existing and statedpolicies for the energy sector. It draws on the latest information regarding national energy
and climate plans and the policies that underpin them. It takes account of all policies that arebacked by robust implementing legislation or regulatory measures, including the NDCs thatcountries have put forward under the Paris Agreement up to September 2020 and the energy
components of announced economic stimulus and recovery packages. So far, few net‐zeroemissions pledges have been backed up by detailed policies, implementation plans or interim
targets: most net zero pledges therefore are not included in the STEPS.

1.3.1

CO2 emissions

Global CO2 emissions in the STEPS bring about only a marginal overall improvement in recent
trends. Switching to renewables leads to an early peak in emissions in the electricity sector,
but reductions across all sectors fall far short of what is required for net‐zero emissions in
2050. Annual CO2 emissions rebound quickly from the dip caused by the Covid‐19 pandemic
in 2020: they increase from 34 Gt in 2020 to 36 Gt in 2030 and then remain around this level
until 2050 (Figure 1.5). If emissions trends were to continue along the same trajectory after
2050, and with commensurate changes in other sources of GHG emissions, the global
average surface temperature rise would be around 2.7 °C in 2100 (with a 50% probability).
There is strong divergence between the outlook for emissions in advanced economies on one
hand and the emerging market and developing economies on the other. In advanced
economies, despite a small rebound in the early 2020s, CO2 emissions decline by about athird between 2020 and 2050, thanks to the impact of policies and technological progress in
reducing energy demand and switching to cleaner fuels. In emerging market and developing
economies, energy demand continues to grow strongly because of increased population,brisk economic growth, urbanisation and the expansion of infrastructure: these effects
outweigh improvements in energy efficiency and the deployment of clean technologies,
causing CO2 emissions to grow by almost 20% by the mid‐2040s, before declining marginallyto 2050.

36

International Energy Agency | Special ReportFigure 1.5 ⊳Energy-related and industrial process CO2 emissions by region

Gt CO₂and sector in the STEPS

1SectorRegion40

OtherInternational bunkers

Buildings

30

Transport
Emerging market anddeveloping economies

20

Industry

10
Electricity

Advanced economies
2010

2030

2050 2010

2030

2050
IEA. All rights reserved.

Global CO2 emissions rebound quickly after 2020 and then plateau,with declines in advanced economies offset by increases elsewhere
Note: Other = agriculture and own use in the energy sector.

1.3.2

Total energy supply, total final consumption andelectricity generation

The projected trends in CO2 emissions in the STEPS result from changes in the amount ofenergy used and the mix of fuels and technologies. Total energy supply (TES)5 worldwide
rises by just over 30% between 2020 and 2050 in the STEPS (Figure 1.6). Without a projectedannual average reduction of 2.2% in energy intensity, i.e. energy use per unit of GDP, TES in
2050 would be around 85% higher. In advanced economies, energy use falls by around 5% to2050, despite a 75% increase in economic activity over the period. In emerging market anddeveloping economies, energy use increases by 50% to 2050, reflecting a tripling of economic
output between 2020 and 2050. Despite the increase in GDP and energy use in emerging
market and developing economies, 750 million people still have no access to electricity in
2050, more than 95% of them in sub‐Saharan Africa, and 1.5 billion people continue to relyon the traditional use of bioenergy for cooking.

5
Total primary energy supply (or total primary energy demand) has been renamed total energy supply inaccordance with the International Recommendations for Energy Statistics (IEA, 2020d).

Chapter 1 | Announced net zero pledges and the energy sector

37

IEA. All rights reserved.

The global fuel mix changes significantly between 2020 and 2050. Coal use, which peaked in2014, falls by around 15%. Having fallen sharply in 2020 due to the pandemic, oil demandrebounds quickly, returning to the 2019 level of 98 million barrels per day (mb/d) by 2023
and reaching a plateau of around 104 mb/d shortly after 2030. Natural gas demand increases
from 3 900 billion cubic metres (bcm) in 2020 to 4 600 bcm in 2030 and 5 700 bcm in 2050.
Nuclear energy grows by 15% between 2020 and 2030, mainly reflecting expansions in China.

Total energy supply and CO2 emissions intensity in the STEPS

200

60

150

gCO₂/MJ

EJ

Figure 1.6 ⊳

45

Oil
Coal

CO₂ intensity of TES(right axis)

100
Natural gas

30

Renewables

50

15

NuclearTraditional use of biomass

2000

2010

2020

2030

2040

2050
IEA. All rights reserved.

Coal use declines, oil plateaus and renewables and natural gas grow substantially to 2050
Note: EJ = exajoule; MJ = megajoule; TES = total energy supply.

Total final consumption increases in all sectors in the STEPS, led by electricity and natural gas(Figure 1.7). All the growth is in emerging market and developing economies. The biggest
change in energy use is in the electricity sector (Figure 1.8). Global electricity demand
increases by 80% between 2020 and 2050, around double the overall rate of growth in final
energy consumption. More than 85% of the growth in global electricity demand comes fromemerging market and developing economies. Coal continues to play an important role inelectricity generation in those economies to 2050, despite strong growth in renewables: inadvanced economies, the use of coal for electricity generation drops sharply.

EJ

Figure 1.7 ⊳250

Total final consumption by sector and fuel in the STEPS
Buildings

Industry

Transport

200
150
100
50
2010
Coal
Heat

2050 2010
Oil
Natural gas
Modern Bioenergy
Other renewables

2050
2050 2010
HydrogenElectricity
Traditional use of biomass
IEA. All rights reserved.

Final energy consumption grows on average by 1% per year between 2020 and 2050,
with electricity and natural gas meeting most of the increase

38

International Energy Agency | Special ReportFigure 1.8 ⊳Electricity generation by fuel and share of coal in the STEPS

Thousand TWh

Advanced economies

Emerging market and developing economies

30

60%

20

40%

10

20%

Coal

2010 2020 2030 2040
Oil
Natural gas

2050
Nuclear2010 2020
Renewables

1

2030 2040 2050
Share of coal (right axis)
IEA. All rights reserved.

Emerging market and developing economies drive most of the increase in global
electricity demand, met mainly by renewables and gas, though coal remains important

1.3.3

Emissions from existing assets

The energy sector contains a large number of long‐lived and capital‐intensive assets. Urban
infrastructure, pipelines, refineries, coal‐fired power plants, heavy industrial facilities,buildings and large hydro power plants can have technical and economic lifetimes of wellover 50 years. If today’s energy infrastructure was to be operated until the end of the typicallifetime in a manner similar to the past, we estimate that this would lead to cumulative
energy‐related and industrial process CO2 emissions between 2020 and 2050 of just under
650 Gt CO2. This is around 30% more than the remaining total CO2 budget consistent withlimiting global warming to 1.5 °C with a 50% probability (see Chapter 2).

There are some large regional differences in emissions levels from existing assets(Figure 1.9). Advanced economies tend to have much older capital stocks than emerging
market and developing economies, particularly in the electricity sector, and existing assets
will reach the end of their lifetimes earlier. For example, the average age of coal‐fired power
Chapter 1 | Announced net zero pledges and the energy sector

39

IEA. All rights reserved.

The electricity sector accounts for more than 50% of the total emissions that would comefrom existing assets; 40% of total emissions would come from coal‐fired power plants alone.
Industry is the next largest sector, with steel, cement, chemicals and other industry
accounting for around 30% total emissions from existing assets. The long lifetime of
production facilities in these sub‐sectors (typically 30‐40 years for a blast furnace or cementkiln) and the relatively young age of the global capital stock explain their large contribution.
Transport accounts for just over 10% of emissions from existing assets and the buildings
sector accounts for just under 5%. The lifetime of vehicles and equipment in the transportand buildings sectors is generally much shorter than is the case in electricity and industry –passenger cars, for example, are generally assumed to have a lifetime of around 17 years –but associated infrastructure networks such as roads, electricity networks and gas grids havevery long lifetimes.

plants in China is 13 years and 16 years in the rest of Asia, compared to around 35 years in
Europe and 40 years in the United States (IEA, 2020e).

Gt CO₂

Figure 1.9 ⊳Emissions from existing infrastructure by sector and region
Emerging market and developing economies

Advanced economies

25
20
15
10
5

2020

2030
Electricity

2040
Industry

2050

2020

Transport

2030

2040

Buildings

2050
Other

IEA. All rights reserved.

Emerging market and developing economies account for three-quartersof cumulative emissions from existing infrastructure through to 2050

1.4

Announced Pledges Case

The Announced Pledges Case (APC) assumes that all national net‐zero emissions pledges are
realised in full and on time. It therefore goes beyond the policy commitments incorporated
in the STEPS. The aim of the APC is to see how far full implementation of the national net‐
zero emissions pledges would take the world towards reaching net‐zero emissions, and to
examine the scale of the transformation of the energy sector that such a path would require.
The way these pledges are assumed to be implemented in the APC has important
implications for the energy system. A net zero pledge for all GHG emissions does notnecessarily mean that CO2 emissions from the energy sector need to reach net zero. For
example, a country’s net zero plans may envisage some remaining energy‐related emissions
are offset by the absorption of emissions from forestry or land use, or by negative emissions
arising from the use of bioenergy or direct capture of CO2 from the air (DAC) with CCUS.6 It
is not possible to know exactly how net zero pledges will be implemented, but the design of
the APC, particularly with respect to the details of the energy system pathway, has been
informed by the pathways that a number of national bodies have developed to support net
zero pledges (Box 1.1). Policies in countries that have not yet made a net zero pledge areassumed to be the same as in the STEPS. Non policy assumptions, including population andeconomic growth, are the same as in the STEPS.
6

For example, in recent economy‐wide net zero mitigation pathways for the European Union, around140‐210 million tonnes CO2 of emissions from the energy sector remain in 2050, which are offset by CDR frommanaged land‐use sinks, and bioenergy and DAC with CCUS (European Commission, 2018).

40

International Energy Agency | Special ReportBox 1.1 ⊳Consultations with national bodies on achieving national netzero emissions goals

1

To help inform its work on net zero pathways, the IEA engaged in extensive consultations
with experts in academia and national bodies that have developed pathways to support
net zero pledges made by governments. This includes groups that have developed net‐
zero emissions pathways for several countries including China, European Union, Japan,
United Kingdom and United States, as well as the IPCC. These pathways were not useddirectly as input for the APC, but the discussions informed our modelling of national
preferences and constraints within each jurisdiction and to benchmark the overall levelof energy‐related CO2 emissions reductions that are commensurate with economy‐wide
net zero goals.

1.4.1

CO2 emissions

In the APC, there is a small rebound in emissions to 2023, although this is much smaller than
the increase that immediately followed the financial crisis in 2008‐09. Emissions never reachthe previous peak of 36 Gt CO2. Global CO2 emissions fall around 10% to 30 Gt in 2030 andto 22 Gt in 2050. This is around 35% below the level in 2020 and 14 Gt CO2 lower than in the
STEPS (Figure 1.10). If emissions continue this trend after 2050, and with a similar level ofchanges in non‐energy‐related GHG emissions, the global average surface temperature risein 2100 would be around 2.1 °C (with a 50% probability).
Figure 1.10 ⊳ Global energy-related and industrial process CO2 emissions by

Gt CO₂

scenario and reductions by region, 2010-2050
40
STEPS
30
APC

20

10

2010

2020

United States

European Union

2030
Japan

2040
Korea

2050
China

Other

Achieving existing net zero pledges would reduce emissions globally to 22 Gt CO2 in 2050,
a major reduction compared with current policies but still far from net-zero emissions

Chapter 1 | Announced net zero pledges and the energy sector

41

IEA. All rights reserved.

IEA. All rights reserved.

The net zero pledges that have been made to date therefore make a major difference to thecurrent trajectory for CO2 emissions. Equally, however, existing net zero pledges fall wellshort of what is necessary to reach net‐zero emissions globally by 2050. This highlights theimportance of concrete policies and plans to deliver in full long‐term net zero pledges. It also
underlines the value of other countries making (and delivering on) net zero pledges: the morecountries that do so, and the more ambitious those pledges are, the more the gap will narrow
with what is needed to reach net‐zero emissions by 2050.
The largest drop in CO2 emissions is in the APC is in the electricity sector with global emissions
falling by nearly 60% between 2020 and 2050. This occurs despite a near‐doubling ofelectricity demand as energy end‐uses are increasingly electrified, notably in transport andbuildings (Figure 1.11). This compares with a fall in emissions of less than 15% in the STEPS.

Gt CO₂

Figure 1.11 ⊳ Global CO2 emissions by sector in the STEPS and APC
40

Other
Buildings
Transport
Industry
Electricity

30

20

10

2000 2010 2020

2030 2040 2050
STEPS

2030 2040 2050
APC
IEA. All rights reserved.

Announced net zero pledges would cut emissions in 2050 by 60%
in the electricity sector, 40% in buildings, 25% in industry and just over 10% in transport

The transport and industry sectors see a less marked fall in CO2 emissions to 2050 in the APC,
with increases in energy demand in regions without net zero pledges partially offsetting
emissions reduction efforts in other regions. Emissions from the buildings sector decline byaround 40% between 2020 and 2050, compared with around 5% in the STEPS: fossil fuel use
in buildings is mostly to provide heating, and countries that have made pledges account fora relatively high proportion of global heating demand.
Even in regions with net zero pledges, there are some residual emissions in 2050, mainly inindustry and transport. This reflects the scarcity of commercially available options toeliminate all emissions from heavy‐duty trucks, aviation, shipping and heavy industry.

42

International Energy Agency | Special Report1.4.2

Total energy supply

Global total energy supply increases by more than 15% between 2020 and 2050 in the APC,
compared with a third in the STEPS (Figure 1.12). Energy intensity falls on average by around
2.6% per year to 2050 compared with 2.2% in the STEPS. There is a substantial increase inenergy demand in emerging market and developing economies, where economic andpopulation growth is fastest and where there are fewer net zero pledges, which outweighs
the reductions in energy demand in the countries with net zero pledges.

1

EJ

Figure 1.12 ⊳ Total energy supply by source in STEPS and APC
800

Renewables
NuclearNatural gas
Oil
Coal

600

400

200

2000 2010 2020

2030 2040 2050
STEPS

2030 2040 2050
APC
IEA. All rights reserved.

Announced net zero pledges lift renewables in the APC from 12% of total energy supply
in 2020 to 35% in 2050, mainly at the expense of coal and oil

Global coal use falls significantly more rapidly in the APC than in the STEPS. It drops from
5 250 million tonnes of coal equivalent (Mtce) in 2020 to 4 000 Mtce in 2030 and 2 600 Mtce
in 2050 (compared with 4 300 Mtce in the STEPS in 2050). Most of this decline is due toreduced coal‐fired electricity generation in countries with net zero pledges as plants are
repurposed, retrofitted or retired. In advanced economies, unabated coal‐fired power plants
Chapter 1 | Announced net zero pledges and the energy sector

43

IEA. All rights reserved.

The global increase in energy supply in the APC is led by renewables, which increase theirshare in the energy mix from 12% in 2020 to 35% by 2050 (compared with 25% in 2050 in
the STEPS). Solar photovoltaics (PV) and wind in the electricity sector together contributeabout 50% of the growth in renewables supply, and bioenergy contributes around 30%.
Bioenergy use doubles in industry, triples in electricity generation and grows by a factor offour in transport: it plays an important role in reducing emissions from heat supply andremoving CO2 from the atmosphere when it is combined with CCUS. Nuclear maintains its
share of the energy mix, its output rising by a quarter to 2030 (compared with a 15% increasein the STEPS), driven by lifetime extensions at existing plants and new reactors in somecountries.

are generally phased out over the next 10‐15 years. China’s coal consumption for electricity
declines by 85% between 2020 and 2050 on its path towards carbon neutrality in 2060. These
declines more than offset continued growth for coal in countries without net zero pledges.
Globally, coal use in industry falls by 25% between 2020 and 2050, compared with a 5%
decline in the STEPS.
Oil demand recovers slightly in the early 2020s but never again reaches its historic peak in
2019. It declines to 90 mb/d in the early 2030s and to 80 mb/d in 2050, around 25 mb/dlower than in the STEPS, thanks to a strong push to electrify transport and shifts to biofuels
and hydrogen, especially in regions with pledges. Natural gas demand increases from about
3 900 bcm in 2020 to around 4 350 bcm in 2025, but is then broadly flat to 2050 (it continues
to grow to around 5 700 bcm in the STEPS).

1.4.3

Total final consumption

Global energy use continues to grow in all major end‐use sectors in the APC, albeit
substantially more slowly than in the STEPS (Figure 1.13). Total final consumption (TFC)
increases by around 20% in 2020‐50, compared with a 35% increase globally in the STEPS.
Measures to improve energy efficiency play a major role in the APC in reducing demand
growth in countries with net zero pledges. Without those efficiency gains, electricity demand
growth would make it much harder for renewables to displace fossil fuels in electricity
generation. The biggest reduction in energy demand relative to the STEPS is in transport,
thanks to an accelerated shift to electric vehicles (EVs), which are around three‐times asenergy efficient as conventional internal combustion engine vehicles.
Figure 1.13 ⊳ Total final consumption in the APC
Buildings

Transport

TFC shares

Oil

Natural gas

HydrogenRenewables

2050

2040

2030

Electricity

2020

Heat

2050

2040

2030

2020

Coal

2050

25%

2040

50

2030

50%

2020

100

2050

75%

2040

150

2030

100%

2020

EJ

Industry
200

Traditional useof biomass
IEA. All rights reserved.

Announced net zero pledges lead to a shift away from fossil fuels globally to electricity,
renewables and hydrogen. Electricity’s share rises from 20% to 30% in 2050

44

International Energy Agency | Special Report

The fuel mix in final energy use shifts substantially in the APC. By 2050, electricity is thelargest single fuel used in all sectors except transport, where oil remains dominant. The
persistence of oil in transport stems partly from the extent of its continued use in countries
without net zero pledges, and partly from the difficulty of electrifying substantial parts of thetransport sector, notably trucking and aviation. Electricity does make inroads into transport,
however, and rapid growth in the uptake of EVs puts oil use into decline after 2030, with EVs
accounting for around 35% of global passenger car sales by 2030 and nearly 50% in 2050 in
the APC (versus around 25% in the STEPS in 2050). Electrification in the buildings sector isalso much faster in the APC than in the STEPS.

1

The direct use of renewables expands in all end‐use sectors globally through to 2050. Modern
bioenergy accounts for the bulk of this growth, predominantly through the blending of
biomethane into natural gas networks and liquid biofuels in transport. This occurs mainly inregions with net zero pledges. Hydrogen and hydrogen‐based fuels play a larger role in the
APC than in the STEPS, reaching almost 15 exajoules (EJ) in 2050, though they still accountfor only 3% of total final consumption worldwide in 2050. Transport accounts for more than
two‐thirds of all hydrogen consumption in 2050. In parallel, on‐site hydrogen production in
the industry and refining sectors gradually shifts towards low‐carbon technologies.

1.4.4

Electricity generation

Global electricity generation nearly doubles during the next three decades in the APC, risingfrom about 26 800 terawatt‐hours (TWh) in 2020 to over 50 000 TWh in 2050, some
4 000 TWh higher than in the STEPS. Low‐emissions energy sources provide all the increase.
The share of renewables in electricity generation rises from 29% in 2020 to nearly 70% in
2050, compared with about 55% in the STEPS, as solar PV and wind race ahead of all othersources of generation (Figure 1.14). By 2050, solar PV and wind together account for almost
half of electricity supply. Hydropower also continues to expand, emerging as the third‐largest
energy source in the electricity mix by 2050. Nuclear power increases steadily too,
maintaining its global market share of about 10%, led by increases in China. Natural gas use
in electricity increases slightly to the mid‐2020s before starting to fall back, while coal’s shareof electricity generation falls from around 35% in 2020 to below 10% in 2050. At that point,
20% of the remaining coal‐fired output comes from plants equipped with CCUS.

Chapter 1 | Announced net zero pledges and the energy sector

45

IEA. All rights reserved.

Hydrogen and ammonia start to emerge as fuel inputs to electricity generation by around2030, used largely in combination with natural gas in gas turbines and with coal in coal‐fired
power plants. This extends the life of existing assets, contributes to electricity system
adequacy and reduces the overall costs of transforming the electricity sectors in many
countries. Total battery capacity also rises substantially, reaching 1 600 gigawatts (GW) in
2050, 70% more than in the STEPS.

Thousand TWh

Figure 1.14 ⊳ Global electricity generation by source in the APC
14

100%

12

Oil
Unabated natural gas
Unabated coal
Fossil fuels with CCUS
Hydrogen based
Nuclear
Other renewables
Hydropower
Wind
Solar PV

80%

10
60%

8
6

40%

4
20%

2
2010

2020

2030

2040

2050

2020 2030 2050
IEA. All rights reserved.

Renewables reach new heights in the APC, rising from just under 30% of electricity supply
in 2020 to nearly 70% in 2050, while coal-fired generation steadily declines
Note: Other renewables = geothermal, solar thermal and marine.

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International Energy Agency | Special ReportChapter 2
A global pathway to net-zero CO₂ emissions in 2050
S U M M A R Y
 The Net‐Zero Emissions by 2050 Scenario (NZE) shows what is needed for the global
energy sector to achieve net‐zero CO2 emissions by 2050. Alongside corresponding
reductions in GHG emissions from outside the energy sector, this is consistent withlimiting the global temperature rise to 1.5 °C without a temperature overshoot (witha 50% probability). Achieving this would require all governments to increase
ambitions from current Nationally Determined Contributions and net zero pledges.

 In the NZE, global energy‐related and industrial process CO2 emissions fall by nearly
40% between 2020 and 2030 and to net zero in 2050. Universal access to sustainableenergy is achieved by 2030. There is a 75% reduction in methane emissions from fossil
fuel use by 2030. These changes take place while the global economy more thandoubles through to 2050 and the global population increases by 2 billion.

 Total energy supply falls by 7% between 2020 and 2030 in the NZE and remains ataround this level to 2050. Solar PV and wind become the leading sources of electricity
globally before 2030 and together they provide nearly 70% of global generation in
2050. The traditional use of bioenergy is phased out by 2030.

 Coal demand declines by 90% to less than 600 Mtce in 2050, oil declines by 75% to
24 mb/d, and natural gas declines by 55% to 1 750 bcm. The fossil fuels that remain
in 2050 are used in the production of non‐energy goods where the carbon isembodied in the product (like plastics), in plants with carbon capture, utilisation andstorage (CCUS), and in sectors where low‐emissions technology options are scarce.

 Energy efficiency, wind and solar provide around half of emissions savings to 2030 in
the NZE. They continue to deliver emissions reductions beyond 2030, but the period
to 2050 sees increasing electrification, hydrogen use and CCUS deployment, for which
not all technologies are available on the market today, and these provide more thanhalf of emissions savings between 2030 and 2050. In 2050, there is 1.9 Gt of CO2
removal in the NZE and 520 million tonnes of low‐carbon hydrogen demand.
Behavioural changes by citizens and businesses avoid 1.7 Gt CO2 emissions in 2030,
curb energy demand growth, and facilitate clean energy transitions.

 Annual energy sector investment, which averaged USD 2.3 trillion globally in recent
years, jumps to USD 5 trillion by 2030 in the NZE. As a share of global GDP, averageannual energy investment to 2050 in the NZE is around 1% higher than in recent years.
and all technologies. But the path to 2050 has many uncertainties. If behaviouralchanges were to be more limited than envisaged in the NZE, or sustainable bioenergy
less available, then the energy transition would be more expensive. A failure todevelop CCUS for fossil fuels could delay or prevent the development of CCUS forprocess emissions from cement production and carbon removal technologies, making
it much harder to achieve net‐zero emissions by 2050.

Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

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IEA. All rights reserved.

 The NZE taps into all opportunities to decarbonise the energy sector, across all fuels2.1

Introduction

Achieving a global energy transition that is compatible with the world’s climate goals isunquestionably a formidable task. As highlighted in Chapter 1, current pledges bygovernments to reduce emissions to net zero collectively cover around 70% of today’s global
economic activity and global CO2 emissions. The Announced Pledges Case shows that, if all
those pledges were met in full, it would narrow the gap between where we are heading andwhere we need to be to achieve net‐zero emissions by 2050 worldwide. But it also showsthat the gap would remain large. Meeting all existing net zero pledges in full would still leave
22 gigatonnes (Gt) of energy‐related and industrial process CO2 emissions globally in 2050,
consistent with a temperature rise in 2100 of around 2.1 °C (with a 50% probability).
In this chapter, we examine the energy sector transformation which is embodied in our
Net‐Zero Emissions by 2050 Scenario. First, it provides an overview of the key assumptions
and market dynamics underlying the projections, including projected fossil fuel and CO2
prices. It discusses trends in global CO2 emissions, energy use and investment, including the
key roles played by efficiency measures, behavioural change, electrification, renewables,hydrogen and hydrogen‐based fuels, bioenergy, and carbon capture, utilisation and storage(CCUS). Further, it discusses some of the key uncertainties surrounding the global pathway
towards net‐zero emissions related to behavioural change, the availability of sustainablebioenergy, and the deployment of CCUS for fossil fuels. The transformation of specific energy
sectors is assessed and discussed in detail in Chapter 3.

2.2

Scenario design

The Net‐Zero Emissions by 2050 Scenario (NZE) is designed to show what is needed acrossthe main sectors by various actors, and by when, for the world to achieve net‐zero energy‐
related and industrial process CO2 emissions by 2050.1 It also aims to minimise methane
emissions from the energy sector. In recent years, the energy sector was responsible foraround three‐quarters of global greenhouse gas (GHG) emissions. Achieving net‐zero energy‐
related and industrial process CO2 emissions by 2050 in the NZE does not rely on action inareas other than the energy sector, but limiting climate change does require such action. We
therefore additionally examine the reductions in CO2 emissions from land use that would becommensurate with the transformation of the energy sector in the NZE, working in
co‐operation with the International Institute for Applied Systems Analysis (IIASA). In parallelwith action on reducing all other sources of GHG emissions, achieving net‐zero CO2 emissions
from the energy sector by 2050 is consistent with around a 50% chance of limiting the long‐term average global temperature rise to 1.5 °C without a temperature overshoot(IPCC, 2018).
1

Unless otherwise stated, carbon dioxide (CO2) emissions in this chapter refer to energy‐related and industrial
process CO2 emissions. Net‐zero CO2 emissions refers to zero CO2 emissions to the atmosphere, or with any
residual CO2 emissions offset by CO2 removal from direct air capture or bioenergy with carbon capture andstorage.

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International Energy Agency | Special Report

The NZE aims to ensure that energy‐related and industrial process CO2 emissions to 2030 are
in line with reductions in 1.5 °C scenarios with no or low or limited temperature overshootassessed in the IPCC in its Special Report on Global Warming of 1.5 °C.2 In addition, the NZE
incorporates concrete action on the energy‐related United Nations Sustainable Development
Goals related to achieving universal energy access by 2030 and delivering a major reduction
in air pollution. The projections in the NZE were generated by a hybrid model that combinescomponents of the IEA’s World Energy Model (WEM), which is used to produce theprojections in the annual World Energy Outlook, and the Energy Technology Perspectives(ETP) model.
Box 2.1 ⊳2International Energy Agency modelling approach for the NZE

A new, hybrid modelling approach was adopted to develop the NZE and combines therelative strengths of the WEM and the ETP model. The WEM is a large‐scale simulation
model designed to replicate how competitive energy markets function and to examine
the implications of policies on a detailed sector‐by‐sector and region‐by‐region basis. The
ETP model is a large‐scale partial‐optimisation model with detailed technology
descriptions of more than 800 individual technologies across the energy conversion,industry, transport and buildings sectors.
This is the first time this modelling approach has been implemented. The combination of
the two models allows for a unique set of insights on energy markets, investment,
technologies, and the level and detail of policies that would be needed to bring about theenergy sector transformation in the NZE.
Results from the WEM and ETP model have been coupled with the Greenhouse Gas ‐ Air
Pollution Interactions and Synergies (GAINS) model developed by IIASA(Amann et al., 2011). The GAINS model is used to evaluate air pollutant emissions andresultant health impacts linked to air pollution. For the first time, IEA model results havealso been coupled with the IIASA’s Global Biosphere Management Model (GLOBIOM) to
provide data on land use and net emissions impacts of bioenergy demand.
The impacts of changes in investment and spending on global GDP in the NZE have been
estimated by the International Monetary Fund (IMF) using the Global Integrated
Monetary and Fiscal (GIMF) model. GIMF is a multi‐country dynamic stochastic generalequilibrium model used by the IMF for policy and risk analysis (Laxton et al., 2010;
Anderson et al., 2013). It has been used to produce the IMF’s World Economic Outlook
scenario analyses since 2008.

2

The IPCC classifies scenarios as “no or limited temperature overshoot”, if temperatures exceed 1.5 °C by lessthan 0.1 °C but return to less than 1.5 °C in 2100, and as “higher overshoot”, if temperatures exceed 1.5 °C by
0.1‐0.4 °C but return to less than 1.5 °C in 2100.

Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

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There are many possible paths to achieve net‐zero CO2 emissions globally by 2050 and many
uncertainties that could affect any of them; the NZE is therefore a path, not the path to net‐
zero emissions. Much depends, for example, on the pace of innovation in new and emerging

technologies, the extent to which citizens are able or willing to change behaviour, theavailability 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 dictatedby 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 fueland electricity supplies at all times, minimising stranded assets where possible andaiming to avoid volatility in energy markets.

2.2.1

Population 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.
World population by region and global GDP in the NZE

10

500

8

400

6

300

4

200

2

100

2000

2010

2020

2030

2040

Rest of world
Eurasia
Middle East
North America
C & S America
Southeast Asia
EuropeAfricaIndia
China

Trillion USD (2019)

Billion people

Figure 2.1 ⊳Global GDP(right axis)

2050
IEA. All rights reserved.

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).

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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 isclose to the pre‐pandemic rate of around 3% per year on average, in line with assessmentsfrom 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
2050 it is more than twice as large.

2.2.2

2

Energy 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 explorationis required and no new oil and natural gas fields are required beyond those that have alreadybeen 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 meetdemand, 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 2.1 ⊳Fossil fuel prices in the NZEReal terms (USD 2019)

2010

2020

2030

2040

2050

IEA crude oil (USD/barrel)

91

37

35

28

24

United States

5.1

2.1

1.9

2.0

2.0

European Union

8.7

2.0

3.8

3.8

3.5

China

7.8

5.7

5.2

4.8

4.6

Japan

12.9

5.7

4.4

4.2

4.1

Natural gas (USD/MBtu)

Steam coal (USD/tonne)
United States

60

45

24

24

22

European Union

108

56

51

48

43

Japan

125

75

57

53

49

Coastal China

135

81

60

54

50

Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

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IEA. All rights reserved.

Notes: MBtu = million British thermal units. The IEA crude oil prices are a weighted average import price among
IEA member countries. Natural gas prices are weighted averages expressed on a gross calorific‐value basis. US
natural gas prices reflect the wholesale price prevailing on the domestic market. The European Union and
China gas prices reflect a balance of pipeline and liquefied natural gas (LNG) imports, while Japan gas prices
solely reflect LNG imports. LNG prices used are those at the customs border, prior to regasification. Steamcoal prices are weighted averages adjusted to 6 000 kilocalories per kilogramme. US steam coal prices reflectmine‐mouth price plus transport and handling cost. Coastal China steam coal price reflects a balance ofimports and domestic sales, while the European Union and Japanese steam coal prices are solely for imports.

In line with the principle of orderly transitions governing the NZE, the trajectory for oilmarkets and prices avoids excessive volatility. What happens depends to a large degree on
the strategies adopted by resource‐rich governments and their national oil companies. In the
NZE it is assumed that, despite having lower cost resources at their disposal, they restrict
investment in new fields. This limits the need for the shutting in and closure of higher costproduction. The market share of major resource‐rich countries nevertheless still rises in the
NZE due to the large size and slow decline rates of their existing fields.
Producer economies could pursue alternative approaches. Faced with rapidly falling oil andgas demand, they could, for example, opt to increase production so as to capture an evenlarger share of the market. In this event, the combination of falling demand and increased
availability of low cost oil would undoubtedly lead to even lower – and probably much morevolatile – prices. In practice, the options open to particular producer countries would dependon their resilience to lower oil prices and on the extent to which export markets havedeveloped for low‐emissions fuels that could be produced from their natural resources.
Anticipating and mitigating feedbacks from the supply side is a central element of the
discussion about orderly energy transitions. A drop in prices usually results in some reboundin demand, and policies and regulations would be essential to avoid this leading to any
increase in the unabated use of fossil fuels, which would undermine wider emissions
reduction efforts.
As the energy sector transforms, more fuels are traded globally, such as hydrogen‐based
fuels and biofuels. The prices of these commodities are assumed to be set by the marginal
cost of domestic production or imports within each region.
A broad range of energy policies and accompanying measures are introduced across all
regions to reduce emissions in the NZE. This includes: renewable fuel mandates; efficiency
standards; market reforms; research, development and deployment; and the elimination of
inefficient fossil fuel subsidies. Direct emissions reduction regulations are also needed insome cases. In the transport sector, for example, regulations are implemented to reduce
sales of internal combustion engine vehicles and increase the use of liquid biofuels andsynthetic fuels in aviation and shipping, as well as measures to ensure that low oil prices do
not lead to an increase in consumption.
CO2 prices are introduced across all regions in the NZE (Table 2.2). They are assumed to be
introduced in the immediate future across all advanced economies for the electricity
generation, industry and energy production sectors, and to rise on average to USD 130 per
tonne (tCO2) by 2030 and to USD 250/tCO2 by 2050. In a number of other major economies– including China, Brazil, Russia and South Africa – CO2 prices in these sectors are assumed
to rise to around USD 200/tCO2 in 2050. CO2 prices are introduced in all other emerging
market and developing economies, although it is assumed that they pursue more direct
policies to adapt and transform their energy systems and so the level of CO2 prices is lower
than elsewhere.

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International Energy Agency | Special ReportTable 2.2 ⊳ CO2 prices for electricity, industry and energy production in the NZE
USD (2019) per tonne of CO2

2025

2030

2040

2050

Advanced economies

75

130

205

250

Selected emerging market anddeveloping economies*

45

90

160

200

Other emerging market anddeveloping economies

3

15

35

55

2

* Includes China, Russia, Brazil and South Africa.

2.3

CO2 emissions

Global energy‐related and industrial process CO2 emissions in the NZE fall to around21 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 arearound 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.

40

Global net CO2 emissions in the NZE
CO₂ emissions

tCO₂ per capita

Gt CO₂

Figure 2.2 ⊳

30
20

12
9
6

10

3

0

0

‐10
2010

2020

2030

Advanced economies

2040

2050

Per capita CO₂ emissions

‐3
2010

2020

2030

2040

2050

Emerging market and developing economies
IEA. All rights reserved.

CO2 emissions fall to net zero in advanced economies around 2045 and globally by 2050.
Per capita emissions globally are similar by the early-2040s.

3
In the period to 2030, CO2 emissions in the NZE fall at a broadly similar rate to the P2 illustrative pathway in
the IPCC SR 1.5 (IPCC, 2018). The P2 scenario is described as “a scenario with … shifts towards sustainable andhealthy consumption patterns, low‐carbon technology innovation, and well‐managed land systems withlimited societal acceptability for BECCS [bioenergy with carbon capture and storage]”. After 2030, emissions
in the NZE fall at a much faster pace than in the P2 scenario, which has 5.6 Gt CO2 of residual energy sector
and industrial process CO2 emissions remaining in 2050.

Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

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IEA. All rights reserved.

Note: Includes CO2 emissions from international aviation and shipping.

Several emerging market and developing economies with a very large potential for producing
renewables‐based electricity and bioenergy are also a key source of carbon dioxide removal(CDR). This includes making use of renewable electricity sources to produce large quantitiesof biofuels with CCUS, some of which is exported, and to carry out direct air capture withcarbon capture and storage (DACCS).
Per capita CO2 emissions in advanced economies drop from around 8 tCO2 per person in 2020
to around 3.5 tCO2 in 2030, a level close to the average in emerging market and developing
economies in 2020. Per capita emissions also fall in emerging market and developing
economies, but from a much lower starting point. By the early 2040s, per capita emissions inboth regions are broadly similar at around 0.5 tCO2 per person.
Cumulative global energy‐related and industrial process CO2 emissions between 2020 and
2050 amount to just over 460 Gt in the NZE. Assuming parallel action to address CO2
emissions from agriculture, forestry and other land use (AFOLU) over the period to 2050
would result in around 40 Gt CO2 from AFOLU (see section 2.7.2). This means that total CO2
emissions from all sources – some 500 Gt CO2 – are in line with the CO2 budgets included in
the IPCC SR1.5, which indicated that the total CO2 budget from 2020 consistent with
providing a 50% chance of limiting warming to 1.5 °C is 500 Gt CO2 (IPCC, 2018).4 As well as
reducing CO2 emissions to net‐zero, the NZE seeks to reduce non‐CO2 emissions from theenergy sector. Methane emissions from fossil fuel production and use, for example, fall from
115 million tonnes (Mt) methane in 2020 (3.5 Gt CO2‐equivalent [CO2‐eq])5 to 30 Mt in 2030
and 10 Mt in 2050.
The fastest and largest reductions in global emissions in the NZE are initially seen in theelectricity sector (Figure 2.3). Electricity generation was the largest source of emissions in
2020, but emissions drop by nearly 60% in the period to 2030, mainly due to major reductions
from coal‐fired power plants, and the electricity sector becomes a small net negative sourceof emissions around 2040. Emissions from the buildings sector fall by 40% between 2020 and
2030 thanks to a shift away from the use of fossil fuel boilers, and retrofitting the existingbuilding stock to improve its energy performance. Emissions from industry and transport
both fall by around 20% over this period, and their pace of emissions reductions accelerates
during the 2030s as the roll‐out of low‐emissions fuels and other emissions reduction options
is scaled up. Nonetheless, there are a number of areas in transport and industry in which it
is difficult to eliminate emissions entirely – such as aviation and heavy industry – and both
sectors have a small level of residual emissions in 2050. These residual emissions are offset
with applications of BECCS and DACCS.

4This budget is based on Table 2.2 of the IPCC SR1.5 (IPCC, 2018). It assumes 0.53 °C additional warming fromthe 2006‐2015 period to give a remaining CO2 budget from 2018 of 580 Gt CO2. There were around 80 Gt CO2
emissions emitted from 2018 to 2020.
5

Non‐CO2 gases are converted to CO2‐equivalents based on the 100‐year global warming potentials reportedby the IPCC 5th Assessment Report (IPCC, 2014). One tonne of methane is equivalent to 30 tonnes of CO2.

54

International Energy Agency | Special ReportFigure 2.3 ⊳Global net-CO2 emissions by sector, and gross and

Gt CO₂

net CO2 emissions in the NZESector15

Gross and net CO₂ emissions
Electricity 40
Buildings
Transport 30
Industry
20
Other
Gross CO₂
emissions 10
BECCS and
0
DACCS

10
5
0
‐5
2010

2020

2030

2040

2050

Net CO₂emissions ‐10
2010

2

2020

2030

2040

2050

IEA. All rights reserved.

Emissions from electricity fall fastest, with declines in industry and transport acceleratingin the 2030s. Around 1.9 Gt CO2 are removed in 2050 via BECCS and DACCS.
Notes: Other = agriculture, fuel production, transformation and related process emissions, and direct air
capture. BECCS = bioenergy with carbon capture and storage; DACCS = direct air capture with carbon captureand storage. BECCS and DACCS includes CO2 emissions captured and permanently stored.

The NZE includes a systematic preference for all new assets and infrastructure to be assustainable and efficient as possible, and this accounts for 50% of total emissions reductionsin 2050. Tackling emissions from existing infrastructure accounts for another 35% of
reductions in 2050, while behavioural changes and avoided demand, including materials
efficiency6 gains and modal shifts in the transport sector, provide the remaining 15% ofemissions reductions (see section 2.5.2). A wide range of technologies and measures are
deployed in the NZE to reduce emissions from existing infrastructure such as power plants,
industrial facilities, buildings, networks, equipment and appliances. The NZE is designed tominimise stranded capital where possible, i.e. cases where the initial investment is notrecouped, but in many cases early retirements or lower utilisation lead to stranded value, i.e.
a reduction in revenue.

6
Materials efficiency includes strategies that reduce material demand, or shift to the use of lower emissions
materials or lower emissions production routes. Examples include lightweighting and recycling.

Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

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IEA. All rights reserved.

The rapid deployment of more energy‐efficient technologies, electrification of end‐uses andswift growth of renewables all play a central part in reducing emissions across all sectors in
the NZE (Figure 2.4). By 2050, nearly 90% of all electricity generation is from renewables, as
is around 25% of non‐electric energy use in industry and buildings. There is also a major rolefor emerging fuels and technologies, notably hydrogen and hydrogen‐based fuels, bioenergy
and CCUS, especially in sectors where emissions are often most challenging to reduce.

Gt CO2

Figure 2.4 ⊳Average annual CO2 reductions from 2020 in the NZE
Activity
Behaviour and avoided demand
Energy supply efficiency
Buildings efficiency
Industry efficiency
Transport efficiency
Electric vehicles
Other electrification
HydrogenWind and solar
Transport biofuels
Other renewables
Other power
CCUS industry
CCUS power and fuel supply

20

0

‐20

‐40

‐60

2021‐25 2026‐30 2031‐35 2036‐40 2041‐45 2046‐50

Net emissions reduction
IEA. All rights reserved.

Renewables and electrification make the largest contribution to emissions reductions, but awide 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.

2.4

Total energy supply and final energy consumption

2.4.1

Total 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 afall 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 througha 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.

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International Energy Agency | Special Report

2030 limits the available opportunities in later years. At the same time, increasing productionof 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 totalenergy 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 populationthat is nearly 3 billion people higher and a global economy that is over three‐times larger.

EJ

Figure 2.5 ⊳2Total energy supply in the NZE

600

Other
Other renewables
Wind
Solar
Hydro
Traditional use of biomass
Modern gaseous bioenergy
Modern liquid bioenergy
Modern solid bioenergy
NuclearNatural gas
Oil
Coal

500
400
300
200
100

2000

2010

2020

2030

2040

2050
IEA. All rights reserved.

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

There are large reductions in the use of fossil fuels in the NZE. As a share of total energy
supply, they fall from 80% in 2020 to just over 20% in 2050. However, their use does not fallto zero in 2050: significant amounts are still used in producing non‐energy goods, in plants
with CCUS, and in sectors where emissions are especially hard to abate such as heavy
industry and long‐distance transport. All remaining emissions in 2050 are offset by negativeemissions elsewhere (Box 2.2). Coal use falls from 5 250 million tonnes of coal equivalent(Mtce) in 2020 to 2 500 Mtce in 2030 and to less than 600 Mtce in 2050 – an average annual
decline of 7% each year from 2020 to 2050. Oil demand dropped below 90 million barrels
per day (mb/d) in 2020 and demand does not return to its 2019 peak: it falls to 72 mb/d in
2030 and 24 mb/d in 2050 – an annual average decline of more than 4% from 2020 to 2050.
Natural gas use dropped to 3 900 billion cubic metres (bcm) in 2020, but exceeds its previous
Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

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The energy mix in 2050 in the NZE is much more diverse than today. In 2020, oil provided
30% of total energy supply, while coal supplied 26% and natural gas 23%. In 2050, renewables
provide two‐thirds of energy use, split between bioenergy, wind, solar, hydroelectricity andgeothermal (Figure 2.6). There is also a large increase in energy supply from nuclear power,
which nearly doubles between 2020 and 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.
Figure 2.6 ⊳Total energy supply of unabated fossil fuels and low-emissions
energy sources in the NZE

EJ

Unabated fossil fuels

Low‐emissions

600

Other
renewables
Solar
Wind
Traditionaluse of biomass
Modernbioenergy
Hydro
NuclearNatural gas
Oil
Coal

500
400
300
200
100
2010 2020 2030 2040 2050

2010 2020 2030 2040 2050
IEA. All rights reserved.

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, eventhough 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 aremajor efforts to limit fossil fuel use in these applications in the NZE, for instanceglobal 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.



Use with CCUS. 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). Around925 bcm of natural gas is converted to hydrogen with CCUS. In addition, around
470 Mtce of coal and 225 bcm of natural gas are used with CCUS in the electricity
and industrial sectors, mainly to extend the operations of young facilities and reduce
stranded assets.

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International Energy Agency | Special Report

Use in sectors where technology options are scarce. The remaining 20% of fossil
fuel use in 2050 in the NZE is in sectors where the complete elimination of emissions
is particularly challenging. Mostly this is oil, as it continues to fuel aviation inparticular. A small amount of unabated coal and natural gas are used in industry andin the production of energy. The unabated use of fossil fuel results in around
1.7 Gt CO2 emissions in 2050, which are fully offset by BECCS and DACCS.

EJ

Figure 2.7 ⊳2Fossil fuel use and share by sector in 2050 in the NZE100% Coalwith CCUS
80%
without CCUS
Natural gas
60%with CCUS
without CCUS
40%
Oilwith CCUS
20%
without CCUS

50
40
30
20

Buildings

Transport

Power

Industry

EnergyproductionNon‐combustion

10

Share of sector
total (right axis)

IEA. All rights reserved.

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.

Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

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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 forthe traditional use of biomass in cooking: this is rapidly phased out in the NZE. Modern formsof 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 portionof 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.

Solid, liquid and gaseous fuels in the NZE

Figure 2.8 ⊳EJ

SolidsLiquids

Gases

200
150
100

Coal
Traditional biomass

Oil
Modern bioenergy

Natural gas
Hydrogen‐based

2050

2040

2030

2020

2010

2000

2050

2040

2030

2020

2010

2000

2050

2040

2030

2020

2010

2000

50

Hydrogen conversion
lossesIEA. All rights reserved.

Increases in low-emissions solids, liquids and gases from bioenergy, hydrogen andhydrogen-based fuels offset some of the declines in coal, oil and natural gas
Notes: Hydrogen conversion losses = consumption of natural gas when producing low‐carbon merchanthydrogen using steam methane reforming. Hydrogen‐based includes hydrogen, ammonia and synthetic fuels.

2.4.2

Total final consumption

Total final consumption worldwide rebounds marginally following its 5% drop in 2020, but it
never returns to 2019 levels in the NZE (435 EJ). It falls by just under 1% each year on average
between 2025 and 2050 to 340 EJ. Energy efficiency measures and electrification are the twomain contributing factors, with behavioural changes and materials efficiency also playing arole. Without these improvements, final energy consumption in 2050 would be around
640 EJ, around 90% higher than the level in the NZE. Final consumption of electricity
increases by 25% from 2020 to 2030, and by 2050 it is more than double the level in 2020.
The increase in electricity consumption from end‐uses sectors and from hydrogen productionmeans that overall annual electricity demand growth is equivalent to adding an electricity
market the size of India every year in the NZE. The share of electricity in global final energy
consumption jumps from 20% in 2020 to 26% in 2030 and to around 50% in 2050 (Figure 2.9).
The direct use of renewables in buildings and industry together with low‐emissions fuels suchas bioenergy and hydrogen‐based fuels provide a further 28% of final energy consumption
in 2050; fossil fuels comprise the remainder, most of which are used in non‐emitting
processes or in facilities equipped with CCUS.
In industry, most of the global emissions reductions in the NZE during the period to 2030 aredelivered through energy and materials efficiency improvements, electrification of heat, andfuel switching to solar thermal, geothermal and bioenergy. Thereafter, CCUS and hydrogenplay an increasingly important role in reducing CO2 emissions, especially in heavy industries
such as steel, cement and chemicals. Electricity consumption in industry more than doubles
between 2020 and 2050, providing 45% of total industrial energy needs in 2050 (Figure 2.10).
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International Energy Agency | Special Report

The demand for merchant hydrogen in industry increases from less than 1 Mt today toaround 40 Mt in 2050. A further 10% of industrial energy demand in 2050 is met by fossil
fuels used in plants equipped with CCUS.

Fuels and other

2010
2020
2030
2040
2050

Electricity use

Figure 2.9 ⊳

2010
2020
2030
2040
2050

Global total final consumption by fuel in the NZE

50

100

150

200

250

300

2

Fuels and other
Oil
Natural gas
Coal
Heat
Modern bioenergy
Traditional useof biomass
Hydrogen‐based
Other renewables
Electricity use
Fossil fuels unabatedFossil fuels with CCUS
Hydrogen‐based
Nuclear
Solar PV and wind
Hydro
350
EJ
Other renewables
IEA. All rights reserved.

The share of electricity in final energy use jumps from 20% in 2020 to 50% in 2050
Note: Hydrogen‐based includes hydrogen, ammonia and synthetic fuels.

In buildings, the electrification of end‐uses including heating leads to demand for electricity
increasing by around 35% between 2020 and 2050: it becomes the dominant fuel, reaching
16 000 terawatt‐hours (TWh) in 2050, and accounting for two‐thirds of total buildings sector
energy consumption. By 2050, two‐thirds of residential buildings in advanced economies andaround 40% of residential buildings in emerging market and developing economies are fittedwith a heat pump. Onsite renewables‐based energy systems such as solar water heaters andbiomass boilers provide a further quarter of final energy use in the buildings sector in 2050
(up from 6% in 2020). Low‐emissions district heating and hydrogen provide only 7% of energyuse, but play a significant role in some regions.
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In transport, there is a rapid transition away from oil worldwide, which provided more than
90% of fuel use in 2020. In road transport, electricity comes to dominate the sector, providing
more than 60% of energy use in 2050, while hydrogen and hydrogen‐based fuels play asmaller role, mainly in fuelling long‐haul heavy‐duty trucks. In shipping, energy efficiency
improvements significantly reduce energy needs (especially up to 2030), while advanced
biofuels and hydrogen‐based fuels, such as ammonia, increasingly displace oil. In aviation,
the use of synthetic liquids and advanced biofuels grows rapidly, and their share of totalenergy demand rises from almost zero today to almost 80% in 2050. Overall, electricity
becomes the dominant fuel in the transport sector globally by the early 2040s, and it
accounts for around 45% of energy consumption in the sector in 2050 (compared with 1.5%
in 2020). Hydrogen and hydrogen‐based fuels account for nearly 30% of consumption(almost zero in 2020) and bioenergy for a further 15% (around 4% in 2020).

EJ

Figure 2.10 ⊳ Global final energy consumption by sector and fuel in the NZEIndustry

200

Transport

Buildings
Other
Hydrogen‐based
Other renewables
Modern bioenergy
Traditional useof biomass
Electricity
Fossil fuels with CCUS
Unabated fossil fuels

160
120
80

2050

2040

2030

2020

2010

2050

2040

2030

2020

2010

2050

2040

2030

2020

2010

40

IEA. All rights reserved.

There is a wholesale shift away from unabated fossil fuel use to electricity, renewables,hydrogen and hydrogen-based fuels, modern bioenergy and CCUS in end-use sectors
Note: Hydrogen‐based includes hydrogen, ammonia and synthetic fuels.

Buildings energy consumption falls by 25% between 2020 and 2030, largely as a result of amajor push to improve efficiency and to phase out the traditional use of solid biomass forcooking: it is replaced by liquefied petroleum gas (LPG), biogas, electric cookers andimproved bioenergy stoves. Universal access to electricity is achieved by 2030, and this adds
less than 1% to global electricity demand in 2030. Energy consumption in the buildings sector
contracts by around 15% between 2030 and 2050 given continued efficiency improvements
and electrification. By 2050, energy use in buildings is 35% lower than in 2020. Energy
efficiency measures – including improving building envelopes and ensuring that all new
appliances brought to market are the most efficient models available – play a key role inlimiting the rise in electricity demand in the NZE. Without these measures, electricity
demand in buildings would be around 10 000 TWh higher in 2050, or around 70% higher thanthe level in the NZE.

S P O T L I G H T
How does the NZE compare with similar 1.5 °C scenarios
assessed by the IPCC?
The IPCC SR1.5 includes 90 individual scenarios that have at least a 50% chance of limiting
warming in 2100 to 1.5 °C (IPCC, 2018).9 Only 18 of these scenarios have net‐zero CO2energy sector and industrial process emissions in 2050. In other words, only one‐in‐fiveof the 1.5 °C scenarios assessed by the IPCC have the same level of emissions reduction
9
Includes 53 scenarios with no or limited temperature overshoot and 37 scenarios with a higher temperature
overshoot.

62International Energy Agency | Special Reportambition for the energy and industrial process sectors to 2050 as the NZE.10 Somecomparisons between these 18 scenarios and the NZE in 2050 (Figure 2.11):
Figure 2.11 ⊳ Comparison of selected indicators of the IPCC scenarios and

320

15

15

240

10

10

160

5

5

80

600

EJ

TFC
EJ

20

40

Hydrogen in TFC

Wind and solar share
100%

450

30

75%

300

20

50%

150

10

25%

Scenarios assessed by IPCC

2

Bioenergy TES
EJ

20

Energy‐related CDR

CCUS
Gt CO₂Gt CO2the NZE in 2050

NZE
IEA. All rights reserved.

The NZE has the lowest level of energy-related CDR and bioenergy of any scenario that
achieves net-zero energy sector and industrial process CO2 emissions in 2050

Use of CCUS. The scenarios assessed by the IPCC have a median of around 15 Gt CO2
captured using CCUS in 2050, more than double the level in the NZE.



Use of CDR. CO2 emissions captured and stored from BECCS and DACCS in the IPCC
scenarios range from 3.5‐16 Gt CO2 in 2050, compared with 1.9 Gt CO2 in the NZE.

10The low‐energy demand scenario has around 4.5 Gt CO2 energy sector and industrial process emissions in
2050 and is not included in this comparison.

Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

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Notes: CCUS = carbon capture, utilisation and storage; CDR = carbon direct removal; TES = total energy
supply; TFC = total final consumption. Energy‐related CDR includes CO2 captured through bioenergy with
CCUS and direct air capture with CCUS and put into permanent storage. Wind and solar share are given
as a percentage of total electricity generation. Only 17 of the 18 scenarios assessed by the IPCC reporthydrogen use in TFC.



Bioenergy. The IPCC scenarios use a median of 200 EJ of primary bioenergy in 2050
(compared with 63 EJ today) and a number use more than 300 EJ. The NZE uses
100 EJ of primary bioenergy in 2050.



Energy efficiency. Total final consumption in the IPCC scenarios range from300‐550 EJ in 2050 (compared with around 410 EJ in 2020). The NZE has final energy
consumption of 340 EJ in 2050.



Hydrogen. The IPCC scenarios have a median of 18 EJ hydrogen in total final
consumption in 2050, compared with 33 EJ in the NZE.11



Electricity generation. The shares of wind and solar in total electricity generation in
2050 in the IPCC scenarios range from around 15‐80% with a median value of 50%.
In the NZE, wind and solar provide 70% of total generation in 2050.

2.5

Key pillars of decarbonisation

Achieving the rapid reduction in CO2 emissions over the next 30 years in the NZE requires abroad range of policy approaches and technologies (Figure 2.12). The key pillars ofdecarbonisation of the global energy system are energy efficiency, behavioural changes,
electrification, renewables, hydrogen and hydrogen‐based fuels, bioenergy and CCUS.
Figure 2.12 ⊳ Emissions reductions by mitigation measure in the NZE, 2020-2050
45

Activity

Measures

Gt CO₂+24%+51%
Measures30

Mitigation measures
Behaviour andavoided demand
Energy efficiency
Hydrogen‐based
Electrification
BioenergyWind and solar
Other fuel shifts
CCUS

‐50%
15

‐100%
2020

2030

2050
IEA. All rights reserved.

Solar, wind and energy efficiency deliver around half of emissions reductions to 2030
in the NZE, while electrification, CCUS and hydrogen ramp up thereafter
Notes: Activity = energy service demand changes from economic and population growth. Behaviour = energy
service demand changes from user decisions, e.g. changing heating temperatures. Avoided demand = energy
service demand changes from technology developments, e.g. digitalisation. Other fuel shifts = switching fromcoal and oil to natural gas, nuclear, hydropower, geothermal, concentrating solar power or marine.
11
The NZE value for hydrogen includes the total energy content of hydrogen and hydrogen‐based fuelsconsumed in final energy consumption.

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International Energy Agency | Special Report2.5.1

Energy efficiency

Minimising energy demand growth through improvements in energy efficiency makes acritical contribution in the NZE. Many efficiency measures in industry, buildings, appliances
and transport can be put into effect and scaled up very quickly. As a result, energy efficiency
measures are front‐loaded in the NZE, and they play their largest role in curbing energy
demand and emissions in the period to 2030. Although energy efficiency improves further
after 2030, its contribution to overall emissions reductions falls as other mitigation measures
play an expanding role. Without the energy efficiency, behavioural changes andelectrification measures deployed in the NZE, final energy consumption would be around
300 EJ higher in 2050, almost 90% above the 2050 level in the NZE (Figure 2.13). Efficiency
improvements also help reduce the vulnerability of businesses and consumers to potential
disruptions to electricity supplies.

2

Figure 2.13 ⊳ Total final consumption and demand avoided by mitigation

EJ

measure in the NZE
300

Industry

Buildings

Transport

2020 2030 2050

2020 2030 2050

200

100

2020 2030 2050
NZE demand Avoided due to:Electricity

Other fuel switch

Efficiency

Behaviour

IEA. All rights reserved.

Energy efficiency plays a key role in reducing energy consumption across end-use sectors
Notes: Other fuel switch includes switching to hydrogen‐related fuels, bioenergy, solar thermal, geothermal,
or district heat.

In the buildings sector, many efficiency measures yield financial savings as well as reducing
energy use and emissions. In the NZE, there are immediate and rapid improvements inenergy efficiency in buildings, mainly from large‐scale retrofit programmes. Around 2.5% ofexisting residential buildings in advanced economies are retrofitted each year to 2050 in the
NZE to comply with zero‐carbon‐ready building standards12 (compared with a current retrofit
rate of less than 1%). In emerging market and developing economies, building replacement
A zero‐carbon‐ready building is highly energy efficient and uses either renewable energy directly or from anenergy supply that will be fully decarbonised by 2050 in the NZE (such as electricity or district heat). A zero‐carbon‐ready building will become a zero‐carbon building by 2050, without further changes to the building or
its equipment (see Chapter 3).

Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

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12

rates are higher and the annual rate of retrofits is around 2% through to 2050. By 2050, thevast majority of existing residential buildings are retrofitted to be zero‐carbon buildings.
Energy‐related building codes are introduced in all regions by 2030 to ensure that virtually
all new buildings constructed are zero‐carbon‐ready. Minimum energy performancestandards and replacement schemes for low‐efficiency appliances are introduced orstrengthened in the 2020s in all countries. By the mid‐2030s, nearly all household appliancessold worldwide are as efficient as the most efficient models available today.
In the transport sector, stringent fuel‐economy standards and ensuring no newpassenger cars running on internal combustion engines (ICEs) are sold globally from 2035
result in a rapid shift in vehicle sales toward much more efficient electric vehicles (EVs).13 The
impact on efficiency is seen in the 2030s, as the composition of the vehicle stock changes:
electric cars make up 20% of all cars on the road in 2030 and 60% in 2040 (compared with
1% today). Continuous improvements in the fuel economy of heavy road vehicles take placethrough to 2050 as they switch to electricity or fuel cells, while efficiency in shipping andaviation improves as more efficient planes and ships replace existing stock.
In the industry sector, most manufacturing stock is already quite efficient, but there are still
opportunities for energy efficiency improvements. Energy management systems,
best‐in‐class industrial equipment such as electric motors, variable speed drives, heaters andgrinders are installed, and process integration options such as waste heat recovery are
exploited to their maximum economic potentials in the period to 2030 in the NZE. After 2030,
the rate of efficiency improvement slows because many of the technologies needed toreduce emissions in industry in the NZE require more energy than their equivalent
conventional technologies. The use of CCUS, for example, increases energy consumption tooperate the capture equipment, and producing electrolytic hydrogen on‐site requires
additional energy than that needed for the main manufacturing process.
Table 2.3 ⊳Key global milestones for energy efficiency in the NZESectorTotal energy supply
Annual energy intensity improvement (MJ per USD GDP)
Industry
Energy intensity of direct reduced iron from natural gas (GJ per tonne)
Process energy intensity of primary chemicals (GJ per tonne)
Transport
Average fuel consumption of ICE heavy trucks fleet (index 2020=100)
Buildings
Share of zero‐carbon‐ready buildings in total stock
New buildings: heating & cooling energy consumption (index 2020=100)
Appliances: unit energy consumption (index 2020=100)

2020
2010‐20‐1.6%

2030
2020‐30‐4.2%

2050
2030‐50
‐2.7%

12
17

11
16

10
15

100

81

63

<1%
100
100

25%
50
75

>85%
20
60

Notes: ICE = internal combustion engine; zero‐carbon‐ready buildings = see description in section 3.7.

13
In 2020, the average battery electric car required around 30% of the energy of the average ICE car to provide
the same level of activity.

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International Energy Agency | Special Report2.5.2Behavioural change

The wholescale transformation of the energy sector demonstrated in the NZE cannot be
achieved without the active and willing participation of citizens. It is ultimately people whodrive demand for energy‐related goods and services, and societal norms and personal
choices will play a pivotal role in steering the energy system onto a sustainable path. Just
under 40% of emissions reductions in the NZE result from the adoption of low‐carbon
technologies that require massive policy support and investment but little direct
engagement from citizens or consumers, e.g. technologies in electricity generation or steel
production. A further 55% of emissions reductions require a mixture of the deployment of
low‐carbon technologies and the active involvement or engagement of citizens andconsumers, e.g. installing a solar water heater or buying an EV. A final 8% of emissions
reductions stem from behavioural changes and materials efficiency gains that reduce energy
demand, e.g. flying less for business purposes (Figure 2.14). Consumer attitudes can also
impact investment decisions by businesses concerned about public image.

2

In the NZE, behavioural change refers to changes in ongoing or repeated behaviour on thepart of consumers which impact energy service demand or the energy intensity of an energy‐
related activity.14 Reductions in energy service demand in the NZE also come from advancesin technology, but these are not counted as behavioural changes. For example, increased
digitalisation and a growing market share of smart appliances, such as smart thermostats orspace‐differentiated thermal controls reduce the necessity for people to play an active rolein energy saving in homes over time in the NZE.

Reducing excessive or wasteful energy use. This includes reducing energy use inbuildings and on roads, e.g. by reducing indoor temperature settings, adopting energy
saving practices in homes and limiting driving speeds on motorways to 100 kilometres
per hour.

Transport mode switching. This includes a shift to cycling, walking, ridesharing or taking
buses for trips in cities that would otherwise be made by car, as well as replacing
regional air travel by high‐speed rail in regions where this is feasible. Many of thesetypes of behavioural changes would represent a break in familiar or habitual ways of life
and as such would require a degree of public acceptance and even enthusiasm. Many
would also require new infrastructure, such as cycle lanes and high‐speed rail networks,
clear policy support and high quality urban planning.



Materials efficiency gains. This includes reduced demand for materials, e.g. higher rates
of recycling, and improved design and construction of buildings and vehicles. The scopefor gains to some extent reflects societal preferences. For instance, in some places there

14

This means, for example, that purchasing an electric heat pump instead of a gas boiler is not considered asa behavioural change, as it is both an infrequent event and does not necessarily impact energy service
demand.

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There are three main types of behavioural change included in the NZE. A wide range ofgovernment interventions could be used to motivate these changes (see section 2.7.1).

has been a shift away from the use of single‐use plastics in recent years, a trend that
accelerates in the NZE. Gains in materials efficiency depend on a mixture of technicalinnovation in manufacturing and buildings construction, standards and regulations to
support best‐practice and ensure universal adoption of these innovations, and increased
recycling in society at large.
Figure 2.14 ⊳ Role of technology and behavioural change in emissions
reductions in the NZE
2020
‐5
‐10
‐15
‐20

2030

2040

2050
Behavioural changes
and materials
Low‐carbon
technologies with theactive involvementof consumers

Gt CO2‐25‐30

Low‐carbon
technologies‐35
IEA. All rights reserved.

Around 8% of emissions reductions stem from behavioural changes and materials efficiency
Notes: Low‐carbon technologies include low‐carbon electricity generation, low‐carbon gases in end‐uses andbiofuels. Low‐carbon technologies with the active involvement of citizens includes fuel switching,electrification and efficiency gains in end‐uses. Behavioural changes and materials efficiency includes
transport mode switching, curbing excessive or wasteful energy use, and materials efficiency measures.

Three‐quarters of the emissions reductions from behavioural changes in the NZE are
achieved through targeted government policies supported by infrastructure development,
e.g. a shift to rail travel supported by high‐speed railways. The remainder come fromadopting voluntary changes in energy saving habits, mainly in homes. Even in this case, publicawareness campaigns can help shape day‐to‐day choices about how consumers use energy.
(Details of what governments can do to help bring about behavioural changes are discussed
in Chapter 4).
Behavioural changes reduce energy‐related activity by around 10‐15% on average over theperiod to 2050 in the NZE, reducing overall global energy demand by over 37 EJ in 2050
(Figure 2.15). In 2030, around 1.7 Gt CO2 emissions are avoided, 45% of which come fromtransport, notably through measures to phase out car use in cities and to improve fueleconomy. For example, reducing speed limits on motorways to 100 km/h reduces emissions
from road transport by 3% or 140 Mt CO2 in 2030. A shift away from single occupancy car use
towards ridesharing or cycling and walking in large cities saves a further 185 Mt CO2. Around
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International Energy Agency | Special Report

40% of emissions savings in 2030 occur in industry because of improvements in materials
efficiency and increased recycling, with the biggest impacts coming from reducing waste andimproving the design and construction of buildings. The remainder of emissions savings in
2030 are from behavioural changes in buildings, for example adjusting space heating andcooling temperatures.

2

Figure 2.15 ⊳ CO2 emissions and energy demand reductions frombehavioural changes and materials efficiency in the NZEEmissions
2040

Energy demand
2050

2030

‐0.6

‐8

‐1.2

‐16

‐1.8

‐24

‐2.4

‐32

‐3.0

EJ

Gt CO₂

2030

2040

2050
Transport
Buildings
Industry‐40
IEA. All rights reserved.

By 2030, behaviour changes and materials efficiency gains reduce emissions by
1.7 Gt CO2, and energy demand by 27 EJ; reductions increase further through to 2050

The scope, scale and speed of adoption of the behavioural changes in the NZE varies widely
between regions, depending on several factors including the ability of existing infrastructure
to support such changes and differences in geography, climate, urbanisation, social norms
and cultural values. For example, regions with high levels of private car use today see a more
gradual shift than others towards public transport, shared car use, walking and cycling; air
travel is assumed to switch to high‐speed rail on existing or potential routes only where trains
could offer a similar journey time; and the potential for moderating air conditioning inbuildings and vehicles takes into account seasonal effects and humidity. Wealthier regions
generally have higher levels of per capita energy‐related activity, and behavioural changes
play an especially important role in these regions in reducing excessive or wasteful energy
consumption.
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In 2050, the growing importance of low‐emissions electricity and fuels in transport andbuildings means that 90% of emissions reductions are in industry, predominantly in those
sectors where it is most challenging to tackle emissions directly. Material efficiency alone
reduces demand for cement and steel by 20%, saving around 1 700 Mt CO2. Of the emissions
reductions in transport in 2050, nearly 80% come from measures to reduce passenger
aviation demand, with the remainder from road transport.

Most of the behavioural changes in the NZE would have some effect on nearly everyone’s
daily life, but none represents a radical departure from energy‐reducing practices alreadyexperienced in many parts of the world today. For example, in Japan an awareness campaign
has successfully reduced cooling demand in line with the reductions assumed in many
regions in the NZE by 2040; legislation to limit urban car use has been introduced in manylarge cities; and speed limit reductions to around 100 km/h (the level adopted globally in the
NZE by 2030) have been tested in the United Kingdom and Spain to reduce air pollution andimprove safety.
Table 2.4 ⊳Key global milestones for behavioural change in the NZESectorYear

Milestone

Industry2020

 Global average plastics collection rate = 17%.

2030

 Global average plastics collection rate = 27%.
 Lightweighting reduces the weight of an average passenger car by 10%.

2050

 Global average plastics collection rate = 54%.
 Efficiency of fertiliser use improved by 10%.

Transport

2030

 Eco‐driving and motorway speed limits of 100 km/h introduced.
 Use of ICE cars phased out in large cities.

2050

 Regional flights are shifted to high‐speed rail where feasible.
 Business and long‐haul leisure air travel does not exceed 2019 levels.

Buildings

2030

 Space heating temperatures moderated to 19‐20 °C on average.
 Space cooling temperatures moderated to 24‐25°C on average.
 Excessive hot‐water temperatures reduced.

2050

 Use of energy‐intensive materials per unit of floor area decreases by 30%.
 Building lifetime extended by 20% on average.

Note: Eco‐driving involves pre‐emptive stopping and starting; ICE = internal combustion engine.

2.5.3

Electrification

The direct use of low‐emissions electricity in place of fossil fuels is one of the most importantdrivers of emissions reductions in the NZE, accounting for around 20% of the total reduction
achieved by 2050. Global electricity demand more than doubles between 2020 and 2050,
with the largest absolute rise in electricity use in end‐use sectors taking place in industry,
which registers an increase of more than 11 000 TWh between 2020 and 2050. Much of thisis due to the increasing use of electricity for low‐ and medium‐temperature heat and insecondary scrap‐based steel production (Figure 2.16).
In transport, the share of electricity increases from less than 2% in 2020 to around 45% in
2050 in the NZE. More than 60% of total passenger car sales globally are EVs by 2030
(compared with 5% of sales in 2020), and the car fleet is almost fully electrified worldwide
by 2050 (the remainder are hydrogen‐powered cars). The increase in electric passenger car
sales globally over the next ten years is over twenty‐times higher than the increase in ICE car
sales over the last decade. Electrification is slower for trucks because it depends on higher
70

International Energy Agency | Special Reportdensity batteries than those currently available on the market, especially for long‐haultrucking, and on new high‐power charging infrastructure: electric trucks neverthelessaccount for around 25% of total heavy truck sales globally by 2030 and around two‐thirds in
2050. The electrification of shipping and aviation is much more limited and only gets under
way after large improvements in battery energy density (see section 3.6) (Figure 2.17). In the
NZE, demand for batteries for transport reaches around 14 TWh in 2050, 90‐times more thanin 2020. Growth in battery demand translates into an increasing demand for critical minerals.
For example, demand for lithium for use in batteries grows 30‐fold to 2030 and is more than
100‐times higher in 2050 than in 2020 (IEA, 2021).

2

Figure 2.16 ⊳ Global electricity demand and share of electricity inenergy consumption in selected applications in the NZE
75%

8 000

50%

4 000

25%

TWh

12 000

Merchant Heavyhydrogen industry

Light
Heating in Cooking Light‐duty
industry buildings
vehiclesElectricity demand:
Electricity share in consumption (right axis):

2020
2020

Heavy‐
trucks

2030
2030

2050
2050

IEA. All rights reserved.

Global electricity demand more than doubles in the period to 2050,
with the largest rises to produce hydrogen and in industry
Notes: Merchant hydrogen = hydrogen produced by one company to sell to others. Light‐duty vehicles =passenger cars and vans. Heavy trucks = medium‐freight trucks and heavy‐freight trucks.

Alongside the growth in the direct use of electricity in end‐use sectors, there is also a hugeincrease in the use of electricity for hydrogen production. Merchant hydrogen produced
using electrolysis requires around 12 000 TWh in 2050 in the NZE, which is greater thancurrent total annual electricity demand of China and the United States combined.

Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

71

IEA. All rights reserved.

In buildings, electricity demand is moderated in the NZE by a huge push to improve theefficiency of appliances, cooling, lighting and building envelopes. But a large increase inactivity, along with the widespread electrification of heating through the use of heat pumps,
means that electricity demand in buildings still rises steadily over the period reaching 66% of
total energy consumption in buildings in 2050.

Figure 2.17 ⊳ Battery demand growth in transport and battery energy density

16

800

Li‐S (or other) (650 Wh per kg)
required for electric aircrafts

12

600

Wh per kg

TWh per year

in the NZE

Solid state (400 Wh per kg)
required for electric long‐haul trucks

8

400

4

200

2010

2020

Long‐haul trucks

2030
Cars, buses, delivery trucks

2040

2050

Battery cell density (right axis)
IEA. All rights reserved.

Nearly 20 battery giga-factories open every year to 2030 to satisfy battery demandfor electric cars in the NZE; higher density batteries are needed to electrify long-haul trucks
Notes: Li‐S = lithium‐sulphur battery; Wh per kg = Watt hours per kilogramme.

The acceleration of electricity demand growth from 2% per year over the past decade to 3%
per year through to 2050, together with a significantly increased share of variable renewableelectricity generation, means that annual electricity sector investment in the NZE is three‐times higher on average than in recent years. The rise in electricity demand also calls forextensive efforts to ensure the stability and flexibility of electricity supply throughdemand‐side management, the operation of flexible low‐emissions sources of generation
including hydropower and bioenergy, and battery storage.
Table 2.5 ⊳Key global milestones for electrification in the NZESectorShare of electricity in total final consumption
Industry
Share of steel production using electric arc furnace
Electricity share of light industry
Transport
Share of electric vehicles in stock: cars
two/three‐wheelersbus
vansheavy trucks
Annual battery demand for electric vehicles (TWh)
Buildings
Heat pumps installed (millions)Share of heat pumps in energy demand for heating
Million people without access to electricity

72

2020
20%

2030
26%

2050
49%

24%
43%

37%
53%

53%
76%

1%
26%
2%
0%
0%
0.16

20%
54%
23%
22%
8%
6.6

86%
100%
79%
84%
59%
14

180
7%
786

600
20%
0

1 800
55%
0

International Energy Agency | Special Report2.5.4

Renewables

At a global level, renewable energy technologies are the key to reducing emissions fromelectricity supply. Hydropower has been a leading low‐emission source for many decades,
but it is mainly the expansion of wind and solar that triples renewables generation by 2030
and increases it more than eightfold by 2050 in the NZE. The share of renewables in total
electricity generation globally increases from 29% in 2020 to over 60% in 2030 and to nearly
90% in 2050 (Figure 2.18). To achieve this, annual capacity additions of wind and solar
between 2020 and 2050 are five‐times higher than the average over the last three years.
Dispatchable renewables are critical to maintain electricity security, together with otherlow‐carbon generation, energy storage and robust electricity networks. In the NZE, the main
dispatchable renewables globally in 2050 are hydropower (12% of generation),bioenergy (5%), concentrating solar power (2%) and geothermal (1%).

2

Figure 2.18 ⊳ Fuel shares in total energy use in selected applications in the NZE

IEA. All rights reserved.

Renewables are central to emissions reductions in electricity, and they make major

Notes: Indirect renewables = use of electricity and district heat produced by renewables. Other low‐carbon= nuclear power, facilities equipped with CCUS, and low‐carbon hydrogen and hydrogen‐based fuels.

Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

73

IEA. All rights reserved.

contributions to cut emissions in buildings, industry and transport both directly and indirectlyRenewables also play an important role in reducing emissions in buildings, industry andtransport. Renewables can be used either indirectly, via the consumption of electricity or
district heating that was produced by renewables, or directly, mainly to produce heat.
In transport, renewables play an important indirect role in reducing emissions by generating
the electricity to power electric vehicles. They also contribute to direct emissions reductions
through the use of liquid biofuels and biomethane.
In buildings, renewable energy is mainly used for water and space heating. The direct use ofrenewable energy rises from about 10% of heating demand globally in 2020 to 40% in 2050,
about three‐quarters of the increase is in the form of solar thermal and geothermal. Deep
retrofits and energy‐related building codes are paired with renewables whenever possible:
almost all buildings with available roof space and sufficient solar insolation are equipped withsolar thermal water heaters by 2050, as they are more productive per square metre thansolar PV and as heat storage in water tanks is generally more cost‐effective than storage ofelectricity. Rooftop solar PV, which produces renewable electricity onsite, is currently
installed on around 25 million rooftops worldwide; the number increases to 100 million
rooftops by 2030 and 240 million by 2050. A further 15% of heating in buildings in 2030
comes indirectly from renewables in the form of electricity, and this rises to almost 40% in
2050.
In industry, bioenergy is the most important direct renewable energy source for low‐ andmedium‐temperature needs in the NZE. Solar thermal and geothermal also produce lowtemperature heat for use in non‐energy‐intensive industries and ancillary or downstream
processes in heavy industries. Bioenergy, solar thermal and geothermal together provide
about 15% of industry heat demand in 2030, roughly double their share in 2010, and thisincreases to 40% in 2050. The indirect use of renewable energy via electricity adds 15% to
the contribution that renewables make to total industry energy use in 2050.
Table 2.6 ⊳Key deployment milestones for renewables

Sector

2020

2030

2050

29%

61%

88%

134

630

630

114

390

350

– of which: Offshore wind

5

80

70

Dispatchable renewables

31

120

90

Renewable share in TFC

5%

12%

19%

Households with rooftop solar PV (million)

25

100

240

Share of solar thermal and geothermal in buildings

2%

5%

12%

Share of solar thermal and geothermal in industry final consumption

0%

1%

2%

Electricity sector
Renewables share in generation
Annual capacity additions (GW): Total solar PV
Total windEnd‐uses sectors

Note: TFC = total final consumption.

74

International Energy Agency | Special Report2.5.5

Hydrogen and hydrogen‐based fuels

The initial focus for hydrogen use in the NZE is the conversion of existing uses of fossil energy
to low‐carbon hydrogen in ways that do not immediately require new transmission anddistribution infrastructure. This includes hydrogen use in industry and in refineries and power
plants, and the blending of hydrogen into natural gas for distribution to end‐users.

2

Global hydrogen use expands from less than 90 Mt in 2020 to more than 200 Mt in 2030; theproportion of low‐carbon hydrogen rises from 10% in 2020 to 70% in 2030 (Figure 2.19).
Around half of low‐carbon hydrogen produced globally in 2030 comes from electrolysis andthe remainder from coal and natural gas with CCUS, although this ratio varies substantiallybetween regions. Hydrogen is also blended with natural gas in gas networks: the global
average blend in 2030 includes 15% of hydrogen in volumetric terms, reducing CO2 emissions
from gas consumption by around 6%.

Mt

Figure 2.19 ⊳ Global hydrogen and hydrogen-based fuel use in the NZE
500

100%

400

80%

300

60%

200

40%

100

20%

2020

2025

2030

2035

2040

2045

2050

OnsiteOther
Refineries
Iron and steel
Chemicals
Merchant
Other
Refineries
Industry
Shipping
AviationRoad
Buildings
Electricity generation
Blended in gas grid

Low‐carbon share
IEA. All rights reserved.

The initial focus for hydrogen is to convert existing uses to low-carbon hydrogen;hydrogen and hydrogen-based fuels then expand across all end-uses

These developments facilitate a rapid scaling up of electrolyser manufacturing capacity andthe parallel development of new hydrogen transport infrastructure. This leads to rapid cost
reductions for electrolysers and for hydrogen storage, notably in salt caverns. Storedhydrogen is used to help balance both seasonal fluctuations in electricity demand andimbalances that may arise between the demand for hydrogen and its supply by off‐grid
renewable systems. During the 2020s, there is also a large increase in the installation of
end‐use equipment for hydrogen, including more than 15 million hydrogen fuel cell vehicles
on the road by 2030.
Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

75

IEA. All rights reserved.

Note: Includes hydrogen and hydrogen contained in ammonia and synthetic fuels.

After 2030, low‐carbon hydrogen use expands rapidly in all sectors in the NZE. In theelectricity sector, hydrogen and hydrogen‐based fuels provide an important low‐carbon
source of electricity system flexibility, mainly through retrofitting existing gas‐fired capacity
to co‐fire with hydrogen, together with some retrofitting of coal‐fired power plants to co‐firewith ammonia. Although these fuels provide only around 2% of overall electricity generationin 2050, this translates into very large volumes of hydrogen and makes the electricity sector
an important driver of hydrogen demand. In transport, hydrogen provides around one‐thirdof fuel use in trucks in 2050 in the NZE: this is contingent on policy makers taking decisions
that enable the development of the necessary infrastructure by 2030. By 2050,
hydrogen‐based fuels also provide more than 60% of total fuel consumption in shipping.
Of the 530 Mt of hydrogen produced in 2050, around 25% is produced within industrial
facilities (including refineries), and the remainder is merchant hydrogen (hydrogen produced
by one company to sell to others). Almost 30% of the low‐carbon hydrogen used in 2050
takes the form of hydrogen‐based fuels, which include ammonia and synthetic liquids andgases. An increasing share of hydrogen production comes from electrolysers, which accountfor 60% of total production in 2050. Electrolysers are powered by grid electricity, dedicatedrenewables in regions with excellent renewable resources and other low‐carbon sources
such as nuclear power. Rolling out electrolysers at the pace required in the NZE is a key
challenge given the lack of manufacturing capacity today, as is ensuring the availability ofsufficient electricity generation capacity. Global trade in hydrogen develops over time in the
NZE, with large volumes exported from gas and renewables‐rich areas in the Middle East,
Central and South America and Australia to demand centres in Asia and Europe.
Table 2.7 ⊳ Key deployment milestones for hydrogen and hydrogen-based fuels
Sector

2020

2030

2050

Total production hydrogen‐based fuels (Mt)
Low‐carbon hydrogen production
share of fossil‐based with CCUS
share of electrolysis‐based
Merchant production
Onsite production

87
9
95%
5%
15
73

212
150
46%
54%
127
85

528
520
38%
62%
414
114

Total consumption hydrogen‐based fuels (Mt)
Electricityof which hydrogenof which ammonia
Refineries
Buildings and agriculture
Transportof which hydrogenof which ammoniaof which synthetic fuels
Industry

87
0
0
0
36
0
0
0
0
0
51

212
52
43
8
25
17
25
11
8
5
93

528
102
88
13
8
23
207
106
44
56
187

Note: Hydrogen‐based fuels are reported in million tonnes of hydrogen required to produce them.

76

International Energy Agency | Special Report2.5.6

Bioenergy

Global primary demand for bioenergy was almost 65 EJ in 2020, of which about 90% was
solid biomass. Some 40% of the solid biomass was used in traditional cooking methods whichis unsustainable, inefficient and polluting, and was linked to 2.5 million premature deaths in
2020. The use of solid biomass in this manner falls to zero by 2030 in the NZE, to achieve the
UN Sustainable Development Goal 7. Increases in all forms of modern bioenergy more thanoffset this, with production rising from less than 40 EJ in 2020 to around 100 EJ in 2050
(Figure 2.20).15 All bioenergy in 2050 comes from sustainable sources and the figures in the
NZE for total bioenergy use are well below estimates of global sustainable bioenergy
potential, thus avoiding the risk of negative impacts on biodiversity, fresh water systems, andfood prices and availability (see section 2.7.2).

2

EJ

Figure 2.20 ⊳ Total bioenergy supply in the NZE
100

25%

80

20%

60

15%

40

10%

20

5%

Traditional use of biomass
Conversion losses
BiogasesLiquid biofuels
Modern solid bioenergy
Buildings and agriculture
Industry
Electricity

2010

2020

2030

2040

2050

Modern bioenergy share
share in TES (right axis)
IEA. All rights reserved.

Modern bioenergy use rises to 100 EJ in 2050, meeting almost 20% of total energy needs.
Global demand in 2050 is well below the assessed sustainable potential
Notes: TES = Total energy supply. Conversion losses occur during the production of biofuels and biogases.

15

Modern bioenergy includes biogases, liquid biofuels and modern solid biomass harvested from sustainablesources. It excludes the traditional use of biomass.

Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

77

IEA. All rights reserved.

Modern solid bioenergy use rises by about 3% each year on average to 2050. In the electricity
sector, where demand reaches 35 EJ in 2050, solid bioenergy provides flexible low‐emissions
generation to complement generation from solar PV and wind, and it removes CO2 from theatmosphere when equipped with CCUS. In 2050, electricity generation using bioenergy fuelsreaches 3 300 TWh, or 5% of total generation. Bioenergy also provides around 50% of district
heat production. In industry, where demand reaches 20 EJ in 2050, solid bioenergy provides
high temperature heat and can be co‐fired with coal to reduce the emissions intensity ofexisting generation assets. Demand is highest for paper and cement production: in 2050,
bioenergy meets 60% of energy demand in the paper sector and 30% of energy demand for
cement production. Modern solid bioenergy demand in buildings increases to nearly 10 EJ in
2030, most of it for use in improved cookstoves as unsustainable traditional uses of biomass
disappear. Bioenergy is also increasingly used for space and water heating in advanced
economies.
Household and village biogas digesters in rural areas provide a source of renewable energy
and clean cooking for nearly 500 million households by 2030 in the NZE and total biogas use
rises to 5.5 EJ in 2050 (from under 2 EJ in 2020).16 Biomethane demand grows to 8.5 EJ,
thanks to blending mandates for gas networks, with average blending rates increasing toabove 80% in many regions by 2050. Half of total biomethane use is in the industry sector,
where biomethane replaces natural gas as a source of process heat. The buildings andtransport sectors each account for around a further 20% of biomethane consumption in
2050.
One of the key advantages of bioenergy is that it can use existing infrastructure. For example,
biomethane can use existing natural gas pipelines and end‐user equipment, while manydrop‐in liquid biofuels can use existing oil distribution networks and be used in vehicles with
only minor or limited alterations. BioLPG – LPG derived from renewable feedstocks – isidentical to conventional LPG and so can be blended and distributed in the same way.
Sustainable bioenergy also provides a valuable source of employment and income for ruralcommunities, reduces undue burdens on women often tasked with fuel collection, brings
health benefits from reduced air pollution and proper waste management, and reduces
methane emissions from inefficient combustion and the decomposition of waste.
Liquid biofuel consumption rises from 1.6 mboe/d in 2020 to 6 mboe/d in 2030 in the NZE,
mainly used in road transport. After 2030, liquid biofuels grow more slowly to around
7 mboe/d in 2050 and their use shifts to shipping and aviation as electricity increasingly
dominates road transport. Almost half of liquid biofuel use in 2050 is for aviation, where bio‐kerosene accounts for around 45% of total fuel use in aircraft.
Bioenergy with carbon capture and storage (BECCS) plays a critical role in the NZE in
offsetting emissions from sectors where the full elimination of emissions is very difficult toachieve. In 2050, around 10% of total bioenergy is used in facilities equipped with CCUS andaround 1.3 Gt CO2 is captured using BECCS. Around 45% of this CO2 is captured in biofuels
production, 40% in the electricity sector and the rest in heavy industry, notably cement
production.

16

Biogas is a mixture of methane, CO2 and small quantities of other gases produced by anaerobic digestion oforganic matter in an oxygen free environment. Biomethane is a near pure source of methane produced either
by removing CO2 and other contaminants from biogas or through the gasification of solid biomass (IEA, 2020b).

78

International Energy Agency | Special ReportTable 2.8 ⊳Key deployment milestones for bioenergy
2020

2030

63

72

102

Share of advanced biomass feedstock

27%

85%

97%

Modern gaseous bioenergy (EJ)

2.1

5.4

13.7

0.3

2.3

8.3

1.6

6.0

7.0

0.1

2.7

6.2

Modern solid bioenergy (EJ)

32

54

74

Traditional use of solid biomass (EJ)

25

0

0

2 340

0

0

Total energy supply (EJ)

Biomethane
Modern liquid bioenergy (mboe/d)Advanced biofuelsMillion people using traditional biomass for cooking

2050

2

Notes: mboe/d = million barrels of oil equivalent per day. Bioenergy from forest plantings is consideredadvanced when forests are sustainably managed (see section 2.7.2).

2.5.7

Carbon capture, utilisation and storage

CCUS can facilitate the transition to net‐zero CO2 emissions by: tackling emissions fromexisting assets; providing a way to address emissions from some of the most challenging
sectors; providing a cost‐effective pathway to scale up low‐carbon hydrogen production
rapidly; and allowing for CO2 removal from the atmosphere through BECCS and DACCS.

Energy‐related and process CO2 emissions in industry account for almost 40% of the CO2
captured in 2050 in the NZE. CCUS is particularly important for cement manufacturing.
Although efforts are pursued in the NZE to produce cement more efficiently, CCUS remains
central to efforts to limit the process emissions that occur during cement manufacturing. The
electricity sector accounts for almost 20% of the CO2 captured in 2050 (of which around 45%
is from coal‐fired plants, 40% from bioenergy plants and 15% from gas‐fired plants).
CCUS‐equipped power plants contribute just 3% of total electricity generation in 2050 but
the volumes of CO2 captured are comparatively large. In emerging market and developing
economies, where large numbers of coal power plants have been built relatively recently,
Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

79

IEA. All rights reserved.

In the NZE, policies support a range of measures to establish markets for CCUS investment
and to encourage use of shared CO2 transport and storage infrastructure by those involvedin the production of hydrogen and biofuels, the operation of industrial hubs, and retrofittingof existing coal‐fired power plants. Capture volumes in the NZE increase marginally over the
next five years from the current level of around 40 Mt CO2 per year, reflecting projects
currently under development, but there is a rapid expansion over the following 25 years aspolicy action bears fruit. By 2030, 1.6 Gt CO2 per year is captured globally, rising to 7.6 Gt CO2
in 2050 (Figure 2.21). Around 95% of total CO2 captured in 2050 is stored in permanentgeological storage and 5% is used to provide synthetic fuels. Estimates of global geologicalstorage capacity are considerably above what is necessary to store the cumulative CO2
captured and stored in the NZE. A total of 2.4 Gt CO2 is captured in 2050 from the atmospherethrough bioenergy with CO2 capture and direct air capture, of which 1.9 Gt CO2 ispermanently stored and 0.5 Gt CO2 is used to provide synthetic fuels in particular for aviation.

retrofits play an important role where there are storage opportunities. In advanced
economies, gas‐fired plants with CCUS play a bigger role, providing dispatchable electricity
at relatively low cost in regions with cheap natural gas and existing networks. In 2030, around
50 GW of coal‐fired power plants (4% of the total at that time) and 30 GW of natural gas
power plants (1% of the total) are equipped with CCUS, and this rises to 220 GW of coal(almost half of the total) and 170 GW of natural gas (7% of the total) capacity in 2050. A
further 30% of CO2 captured in 2050 comes from fuel transformation, including hydrogenand biofuels production as well as oil refining. The remaining 10% is from DAC, which is
rapidly scaled up from several of pilot projects today to 90 Mt CO2 per year in 2030 and justunder 1 Gt CO2 per year by 2050.

Gt CO₂

Figure 2.21 ⊳ Global CO2 capture by source in the NZE
8

Other
Direct air capture
Fuel supply
Hydrogen production
Biofuels production
Other
Industry
Industry combustion
Industry processes
Electricity sector
Bioenergy
Gas
Coal

6

4

2

2020

2025

2030

2035

2040

2045

2050
IEA. All rights reserved.

By 2050, 7.6 Gt of CO2 is captured per year from a diverse range of sources. A total of 2.4 Gt
CO2 is captured from bioenergy use and DAC, of which 1.9 Gt CO2 is permanently stored.

Table 2.9 ⊳Key global milestones for CCUS
2020

2030

2050

Total CO2 captured (Mt CO2)

40

1 670

7 600

CO2 captured from fossil fuels and processes

39

1 325

5 245

Power

3

340

860

Industry

3

360

2 620

Merchant hydrogen production

3

455

1 355

Non‐biofuels production

30

170

410

CO2 captured from bioenergy

1

255

1 380

Power

0

90

570

Industry

0

15

180

Biofuels production

1

150

625

0

90

985

0

70

630

Direct air capture
Removal80

International Energy Agency | Special Report2.6

Investment

The radical transformation of the global energy system required to achieve net‐zero CO2emissions in 2050 hinges on a big expansion in investment and a big shift in what capital isspent on. The NZE expands annual investment in energy from just over USD 2 trillion globallyon average over the last five years to almost USD 5 trillion by 2030 and to USD 4.5 trillion by
2050 (Figure 2.22).17 Total annual capital investment in energy in the NZE rises from around
2.5% of global GDP in recent years to about 4.5% in 2030 before falling back to 2.5% by 2050.

2

Figure 2.22 ⊳ Annual average capital investment in the NZE

Trillion USD (2019)

By sector

By technology area

5
4
3
2
1

2016‐20 2030

2040 2050

2016‐20 2030 2040

2050

Technology area
Other
Fossil fuels
CCUS
HydrogenElectricity system
Electrification
Efficiency
Other renewables
Bioenergy
SectorBuildings
Transport
Industry
Infrastructure
Electricity generation
Fuel production
IEA. All rights reserved.

Capital investment in energy rises from 2.5% of GDP in recent years to 4.5% by 2030; themajority is spent on electricity generation, networks and electric end-user equipment
Notes: Infrastructure includes electricity networks, public EV charging, CO2 pipelines and storage facilities,
direct air capture and storage facilities, hydrogen refuelling stations, and import and export terminals forhydrogen, fossil fuels pipelines and terminals. End‐use efficiency investments are the incremental cost of
improving the energy performance of equipment relative to a conventional design. Electricity systems include
electricity generation, storage and distribution, and public EV charging. Electrification investments include
spending in batteries for vehicles, heat pumps and industrial equipment for electricity‐based material
production routes.

The shift in what capital is spent on leads to annual investment in electricity generation risingfrom just over USD 500 billion over the last five years to more than USD 1 600 billion in 2030,
before falling back as the cost of renewable energy technologies continues to decline. Annual
nuclear investment rises too: it more than doubles by 2050 compared with current levels.
Annual investment in fuel supply however drops from about USD 575 billion on average over

Investment levels presented in this report include a broader accounting of efficiency improvements inbuildings than reported in the IEA World Energy Investment (IEA, 2020c) and so differ from the numberspresented there.

Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

81

IEA. All rights reserved.

17

the last half‐decade to USD 315 billion in 2030 and USD 110 billion in 2050. The share of fossil
fuel supply in total energy sector investment drops from its 25% level in recent years to just
7% by 2050: this is partly offset by the rise in spending on low‐emissions fuel supply, such ashydrogen, hydrogen‐based fuels and bioenergy. Annual investment in these fuels increases
to nearly USD 140 billion in 2050. Investment in transport increases significantly in the NZEfrom USD 150 per year in recent years to more than USD 1 100 billion in 2050: this stems
mainly from the upfront cost of electric cars compared with conventional vehicles despite
the decline in the cost of batteries.
By technology area, electrification is the dominant focus in the NZE. In addition to moreinvestment in electricity generation, there is a huge increase in investment in expansion andmodernisation of electricity networks. Annual investment rises from USD 260 billion on
average in recent years to around USD 800 billion in 2030 and remains about that level to2050. Such investment is needed to ensure electricity security in the face of rising electricity
demand and the proportion of variable generation in the power mix. There is also a large
increase in investment in the electrification of end‐use sectors, which includes spending on
EV batteries, heat pumps and electricity‐based industrial equipment. In addition toinvestment in electrification, there is a moderate increase in investment in hydrogen to 2030
as production facilities are scaled up, and larger increases after as hydrogen use in transport
expands: annual investment in hydrogen, including production facilities, refuelling stations
and end‐user equipment, reaches USD 165 billion in 2030 and over USD 470 billion in 2050.
There is also an increase in global investment in CCUS (annual investment exceeds
USD 160 billion by 2050 and in efficiency (around USD 640 billion annual investment by 2050,
mostly for deep building retrofits and efficient appliances in the industry and buildings
sectors).
Financing the investment needed in the NZE involves redirecting existing capital towards
clean energy technologies and substantially increasing the overall level of investment inenergy. Most of this increase in investment comes from private sources, mobilised by public
policies that create incentives, set appropriate regulatory frameworks and reform energy
taxes. However, direct government financing is also needed to boost the development of
new infrastructure projects and to accelerate innovation in technologies that are in thedemonstration or prototype phase today. Projects in many emerging market and developing
economies are often relatively reliant on public financing, and policies that ensure a
predictable flow of bankable projects have an important role in boosting private investmentin these economies, as does the scaling up of concessional debt financing and the use ofdevelopment finance. There are extensive cross‐country co‐operation efforts in the NZE tofacilitate the international flow of capital.
The large increase in capital investment in the NZE is partly compensated for by lower
operating expenditure. Operating costs account today for a large share of the total cost of
upstream fuel supply projects and fossil fuel generation projects: the clean technologies thatplay an increasing role in the NZE are characterised by much lower operating costs.

82

International Energy Agency | Special Report2.7

Key uncertainties

The road to net‐zero emissions is uncertain for many reasons: we cannot be sure how
underlying economic conditions will change, which policies will be most effective, howpeople and businesses will respond to market and policy signals, or how technologies andtheir costs will evolve from within or outside the energy sector. The NZE therefore is just one
possible pathway to achieve net‐zero emissions by 2050. Against this background, thissection looks at what the implications would be if the assumptions in the NZE turn out to be
off the mark with respect to behavioural change, bioenergy and CCUS for fossil fuels. These
three areas were selected because the assumptions made about them involve a high degreeof uncertainty and because of their critical contributions to achieve net‐zero emissions by
2050.

2

Figure 2.23 ⊳ Additional electricity demand in 2050 and additional investment
between 2021-2050 for selected areas of uncertainty
Investment

20%

10

16%

8

12%

5

8%

3

4%
No
Restricted Low fossil
behaviour bioenergy CCUS

Trillion USD (2019)

Thousand TWh

Electricity demand

13

16

20%
16%

12

12%
8
8%
4

4%
No
Restricted Low fossil
behaviour bioenergy CCUS

Increase from NZE (right axis)
IEA. All rights reserved.

The absence of behaviour change, restrictions on bioenergy use and failure to develop
fossil fuel CCUS would each raise investment to meet net-zero emissions by USD 4-15 trillion
Notes: No behaviour assumes none of the behavioural changes included in the NZE. Restricted bioenergy
assumes no increase in land use for bioenergy production. Low fossil CCUS assumes no increase in fossil fuel‐based CCUS apart from projects already approved or under construction.



Behavioural changes are important in reducing energy demand in transport, buildings
and industry. If the changes in behaviour assumed in the NZE were not attainable,
emissions would be around 2.6 Gt CO2 higher in 2050. Avoiding these emissions throughthe use of additional low‐carbon electricity and hydrogen would cost an additional
USD 4 trillion.

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Our analysis clearly highlights that more pessimistic assumptions would add considerably toboth the costs and difficulty of achieving net‐zero emissions by 2050 (Figure 2.23).



Bioenergy use grows by 60% between 2020 and 2050 in the NZE and land use for its
propagation increases by around 25%. Bioenergy use in 2050 in the NZE is well below
current best estimates of global sustainable bioenergy potential, but there is a highdegree of uncertainty concerning this level. If land use for bioenergy remains at today’slevel, bioenergy use in 2050 would be around 10% lower, and achieving net‐zeroemissions in 2050 would require USD 4.5 trillion extra investment.



A failure to develop CCUS for fossil fuels would substantially increase the risk of stranded
assets and would require around USD 15 trillion of additional investment in wind, solarand electrolyser capacity to achieve the same level of emissions reductions. It could also
critically delay progress on BECCS and DACCS: if these cannot be deployed at scale, thenachieving net‐zero emissions by 2050 would be very much harder.

2.7.1

Behavioural change

Impact of behavioural changes in selected sectors in the NZE
Changes in the behaviour of energy consumers play an important role in cutting CO2
emissions and energy demand growth in the NZE. Behavioural changes reduce global energy
demand by 37 EJ in 2050, a 10% reduction in energy demand at that time, and without them
cumulative emissions between 2021 and 2050 would be around 10% higher (Figure 2.24).
Behavioural change plays a particularly important role in the transport sector.
Figure 2.24 ⊳ Reduction in total final consumption due to behavioural changes
by fuel in the NZE

EJ

2020

2030

2040

2050

‐ 10

‐3%

‐ 20

‐6%

‐ 30

‐9%

‐ 40

‐12%
Oil

Natural gas
Electricity
Heat
Modern bioenergy
Change in final energy consumption (right axis)

Other

IEA. All rights reserved.

The impact of behaviour changes and materials efficiency on
final energy consumption increases over time
Note: Other includes coal, hydrogen, geothermal, solar thermal, synthetic oil and synthetic gas.

Passenger aviation. Demand would grow more than threefold globally between 2020 and
2050 in the absence of the assumed changes in behaviour in the NZE. About 60% of this84

International Energy Agency | Special Reportgrowth would occur in emerging market and developing economies. In the NZE, threechanges lead to a 50% reduction in emissions from aviation in 2050, while reducing thenumber of flights by only 12% (Figure 2.25).


Keeping air travel for business purposes at 2019 levels. Although business trips fell toalmost zero in 2020, they accounted for just over one‐quarter of air travel before thepandemic. This avoids around 110 Mt CO2 in 2050 in the NZE.



Keeping long‐haul flights (more than six hours) for leisure purposes at 2019 levels.
Emissions from an average long‐haul flight are 35‐times greater than from a regional
flight (less than one hour). This affects less than 2% of flights but avoids 70 Mt CO2 in
2050.



A shift to high‐speed rail. The opportunities for shifting regional flights to high‐speed rail
vary by region. Globally, we estimate that around 15% of regional flights in 2019 could
have been shifted given existing rail infrastructure; future high‐speed rail lines ensurethat by 2050 around 17% could be shifted (IEA, 2019).18 This would reduce emissions byaround 45 Mt CO2 in 2050 (high‐speed trains generate no emissions in 2050 in the NZE).

2

Figure 2.25 ⊳ Global CO2 emissions from aviation and impact of behavioural

Gt CO2changes in the NZE
1.0

100

0.8

80

0.6

Behaviour
reductions

0.4

60
40

‐50%
0.2

20

2019

2020

2050

EmissionsLong‐haul
Medium‐haulRegional#REF! reductions
Emissions
Cap long‐haul
leisure flights
Cap businessflights
Shift to high‐speed
rail
Million flights(right axis)
IEA. All rights reserved.

Demand for passenger aviation is set to grow significantly by 2050, but behaviouralchanges reduce emissions by 50% in 2050 despite reducing flights by only 12%

18This assumes that: new rail routes avoid water bodies and tunnelling through elevated terrain; travel times
are similar to aviation; and centres of demand are sufficiently large to ensure that high‐speed rail is
economically viable.

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Notes: Long‐haul = more than 6 hour flight; medium‐haul = 1‐6 hour flight; regional = less than 1 hour. Businessflights = trips for work purposes; leisure flights = trips for leisure purposes. Average speeds vary by flight
distance and range from 680‐750 km/h.

Car use. A variety of new measures that aim to reduce the use of cars in cities and overall car
ownership levels are assumed in the NZE. They lead to rapid growth in the rideshare market
in urban areas, as well as phasing out polluting cars in large cities and replacing them withcycling, walking and public transport. The timing of these changes in the NZE depends on
cities having the necessary infrastructure and public support to ensure a shift away fromprivate car use. Between 20‐50% of car trips are shifted to buses, depending on the city inquestion, with the remainder replaced by cycling, walking and public transport. Thesechanges reduce emissions from cars in cities by more than 320 Mt CO2 in total in themid‐2030s (Figure 2.26). Their impact on emissions fades over time as cars are increasingly
electrified, but they still have a significant impact on curbing energy use in 2050.
Figure 2.26 ⊳ Global CO2 emissions savings and car ownership per household

Mt CO2due to behavioural change in the NZE200

CO2 emissions savings

100%

150

80%

100

60%

50

40%

0

20%

‐50
2020
Ridesharing

2030

2040

Cycling and walking

2050
Buses

Cars per household in 2050

0 cars1 car
2 cars 3+ cars
Before behaviour change
After behaviour change
IEA. All rights reserved.

Policies discouraging car use in cities lead to rapid reductions in CO2 emissions and lower
car ownership levels, though the impact diminishes over time as cars are electrified

The gradual move away from cars in cities also has an impact on car ownership levels. Survey
data indicates that car‐share schemes and the provision of public transport reduces car
ownership by up to 35%, with the biggest changes taking place in multiple car households(Jochem et al., 2020; Martin, Shaheen and Lidiker, 2010). Without behavioural changes, 35%of households would have a car in 2050; with behavioural changes this share falls to around
20% in the NZE, and two‐car households fall from 13% of the total to less than 5%.
The changing patterns of mobility in cities in NZE have implications for materials demand.
Reduced car ownership leads to a small drop in steel demand in 2050, saving around40 Mt CO2 in steel production. Increased cycling would need to be supported by building an
estimated 80 000 km of new cycle lanes globally over the period to 2050, generating
increased demand for cement and bitumen. This effect is small, however: the extra emissions
associated with this would be less than 5% of the emissions avoided by lower car use.
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How to bring about the behavioural changes in NZERegulations and mandates could enable roughly 70% of the emissions saved by behaviouralchanges in the NZE. Examples include:

Upper speed limits, which are reduced over time in the NZE from their current levels to
100 km/h, cutting emissions from road vehicles by 3% in 2050.



Appliance standards, which maximise energy efficiency in the buildings sector.

Regulations covering heating temperatures in offices and default cooling temperatures
for air conditioning units, which reduce excessive thermal demand.



Changes initially tackled by market‐based mechanisms, e.g. swapping regional flights forhigh‐speed rail,19 which can be addressed by regulation over time to mirror changes inpublic sentiment and consumer norms.

2

Market‐based instruments use a mix of financial incentives and disincentives to influence
decision making. They could enable around two‐thirds of the emissions saved by behaviouralchanges in the NZE. Examples include:Congestion pricing and targeted interventions differentiated by vehicle type,20 such as
charges aimed at the most polluting vehicles, or preferential parking for clean cars.

Transport demand measures that reduce travel, such as fuel taxes and distance‐based
vehicle insurance and registration fees (Byars, Wei and Handy, 2017).

Information measures that help consumers to drive change, such as mandatory labellingof embodied or lifecycle emissions in manufacturing and a requirement for companies
to disclose their carbon emissions.

Information and awareness measures could enable around 30% of the emissions saved bybehavioural changes in the NZE. Examples include:Personalised and real‐time travel planning information, which facilitates a switch towalking, cycling and public transport.



Product labelling and public awareness campaigns in combination, which help makerecycling widespread and habitual.

Comparisons with consumption patterns of similar households, which can reduce
wasteful energy use by up to 20% (Aydin, Brounen and Kok, 2018).

Not all the behavioural changes in the NZE would be equally easy to achieve everywhere,
and policy interventions would need to draw on insights from behavioural science and take
into account existing behavioural norms and cultural preferences. Some behavioural changes
may be more socially acceptable than others. Citizen assemblies in the United Kingdom and19

20

Congestion charging is currently used in 11 major cities and has been shown to reduce traffic volumes by up
to 27%. Low‐emissions zones charge vehicles to enter urban zones based vehicle type and currently exist in
15 countries (TFL, 2021; Tools of Change, 2014; European Commission, 2021).

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A law banning domestic flights where a rail alternative of under two‐and‐a‐half hours exists has been
proposed in France (Assemblee Nationale, 2021).

France indicate a large level of support for taxes on frequent and long‐distance flyers and forbanning polluting vehicles from city centres; conversely, measures that limit car ownershipor reduce speed limits have gained less acceptance (Convention Citoyenne pour le Climat,
2021; Climate Assembly UK, 2020). Behavioural changes which reduce energy use in homes
may be particularly well supported: a recent survey showed 85% support for line‐drying
clothes and switching off appliances, and only 20% of people felt that reducing temperature
settings in homes was undesirable (Newgate Research and Cambridge Zero, 2021).

Low‐car cities
 Phase out ICE cars fromlarge cities.
 Rideshare all urban car trips.

Fuel‐efficient driving
 Reduce motorway speeds toless than 100 km/h.
 Eco‐driving.
 Raise air conditioning
temperature in cars by 3 °C.
Reduce regional flights
 Replace all flights <1h where
high‐speed rail is a feasible
alternative.
Reduce international flights
 Keep air travel for businesspurposes at 2019 levels.
 Keep long‐haul flights forleisure at 2019 levels.
Space heating Target average set‐pointtemperatures of 19‐20 °C.
Space cooling Target average set‐pointtemperatures of 24‐25 °C.

Related policy‐goals

 Low‐emissions zones.
 Access restrictions.
 Parking restrictions.
 Registration caps.
 Parking pricing.
 Congestion charges.
 Investment in cycling lanes
and public transportation.

 Air pollution
mitigation.
 Public health.
 Reduced congestion.
 Urban space.
 Beautification andliveability.

 Speed limits.
 Real‐time fuel efficiency
displays.
 Awareness campaigns.

 Road safety.
 Reduced noise
pollution.

Socialacceptability
CO2 emissions
impactPolicy options

Timeliness

Key behavioural changes in the NZE
Cost‐
effectiveness

Table 2.10 ⊳ High‐speed rail investment.  Lower air pollution.
 Subsidies for high‐speed rail  Lower noise pollution.
travel.
 Price premiums.
 Awareness campaigns.
 Price premiums.
 Corporate targets.
 Frequent‐flyer levies.

 Lower air pollution.
 Lower noise pollution.

 Awareness campaigns.
 Consumption feedback.
 Corporate targets.

 Public health.
 Energy affordability.

 Awareness campaigns.
 Consumption feedback.
 Corporate targets.

 Public health.
 Energy affordability.

= poor match= neutral match= good match

Notes: Large cities = cities over 1 million inhabitants. ICE = internal combustion engine. CO2 emissions impact= cumulative reductions 2020‐2050. Eco‐driving = early upshifting as well as avoiding sudden acceleration,
stops or idling. The number of jobs that can be done at home varies considerably by region, globally, anaverage of 20% of jobs can be done at home.

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International Energy Agency | Special Report

The behavioural changes in the NZE would bring wider benefits in terms of air pollution incities, road safety, noise pollution, congestion and health. Attitudes to policy interventions
can change quickly when co‐benefits become apparent. For example, support for congestion
charging in Stockholm jumped from less than 40% when the scheme was introduced toaround 70% three years later; a similar trend was seen in Singapore, London and other cities,
all of which experienced declines in air pollution after the introduction of charging (Tools of
Change, 2014; DEFRA, 2012).

2

Are net‐zero emissions by 2050 still possible without behavioural change?
If the behavioural changes described in the NZE were not to materialise, final energy use
would be 27 EJ and emissions 1.7 Gt CO2 higher in 2030, and they would be 37 EJ and
2.6 Gt CO2 higher in 2050. This would further increase the already unprecedented ramp‐up
needed in low‐carbon technologies. The share of EVs in the global car fleet would need toincrease from around 20% in 2030 to 45% to ensure the same level of emissions reductions(Figure 2.27). Achieving the same reduction in emissions in homes would require electricheat pumps sales to reach 680 million in 2030 (compared with 440 million in the NZE).
Without gains in materials efficiency, the share of low‐carbon primary steel production
would need to be more than twice as high in 2030 as in the NZE. In 2050, the use ofsustainable aviation fuels would also need to rise to 7 mboe/d (compared with 5 mboe/d in
the NZE). Emissions from cement and steel production would be 1.7 Gt CO2 higher in 2050
than in the NZE, and so require increased deployment of CCUS in industry, deployment ofelectric arc furnaces and more use of low‐carbon hydrogen.
Figure 2.27 ⊳ Share of low-carbon technologies and fuels with and without
behavioural change in 2030 in the NZE
50%
40%
30%
20%
10%

Electric cars
NZE

Heat pumps inresidential buildings

Low‐carbon steel

Additional without behaviour changes

Sustainable aviation
fuels
2020
IEA. All rights reserved.

In the absence of behavioural changes, the share of low-emissions technologies in end-

Notes: Electric cars = share of electric cars on the road globally. Sustainable aviation fuels = biojet kerosene
and synthetic jet kerosene. Low‐carbon steel refers to primary steel production.

Chapter 2 | A global pathway to net-zero CO₂ emissions in 2050

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uses in 2030 would need to be much larger to achieve the same emissions as in the NZE

2.7.2

Bioenergy and land‐use change

Modern forms of bioenergy play a key role in achieving net‐zero emissions in the NZE.
Bioenergy is a versatile renewable energy source that can be used in all sectors, and it canoften make use of existing transmission and distribution infrastructure and end‐user
equipment. But there are constraints on expanding the supply of bioenergy: with finite
potential for bioenergy production from waste streams, there are possible trade‐offs
between expanding bioenergy production, achieving sustainable development goals andavoiding conflicts with other land uses, notably food production.
The level of bioenergy use in the NZE takes account of these constraints: bioenergy demandin 2050 is around 100 EJ. The global sustainable bioenergy potential in 2050 has beenassessed to be at least 100 EJ (Creutzig, 2015) and recent assessments estimate a potential
between 150‐170 EJ when integrating relevant UN Sustainable Development Goals(Frank, 2021; IPCC, 2019; IPCC, 2014; Wu, 2019). However, there is a high degree of
uncertainty over the precise levels of this potential. Using modelling developed inco‐operation with IIASA, here we examine the implications for achieving net‐zero CO2emissions by 2050 if the available levels of sustainable bioenergy were to be lower. We also
examine what would need to be done to achieve large reductions in emissions fromagriculture, forestry and other land use (AFOLU).

Ensuring a sustainable supply of bioenergy
Most liquid biofuels produced today come from dedicated bioenergy crops such as
sugarcane, corn or oil crops, often known as conventional biofuels. The expanded use of
feedstocks and arable land to produce these biofuels can conflict with food production. In
the NZE, there is a shift towards the use of sustainable, certified agricultural products andwood. Biofuel production processes in the NZE use advanced conversion technologies
coupled with CCUS where possible (see section 3.3.2). The emphasis is also on advanced
bioenergy feedstocks, including waste streams from other processes, short‐rotation woody
crops and feedstocks that do not require the use of arable land. Advanced bioenergy
accounts for the vast majority of bioenergy supply in the NZE by 2050. The use of
conventional energy crops for biofuel production grows from around 9 EJ in 2020 to around
11 EJ in 2030, but then falls by 70% to 3 EJ in 2050 (including feedstocks consumed in the
biofuel production processes).
Advanced bioenergy feedstocks that do not require land include organic waste streams fromagriculture and industry, and woody residues from forest harvesting and wood processing.
Investment in comprehensive waste collection and sorting in the NZE unlocks around 45 EJ
of bioenergy supply from various organic waste streams which is primarily used to produce
biogases and advanced biofuels (Figure 2.28). Woody residues from wood processing andforest harvesting provide a further 20 EJ of bioenergy in 2050 in the NZE – less than half ofcurrent best estimates of the total sustainable potential. Bioenergy can also be produced

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International Energy Agency | Special Reportfrom dedicated short‐rotation woody crops (25 EJ of bioenergy supply in 2050).21 Sustainably
managed forestry fuelwood or plantations22 and tree plantings integrated with agricultural
production via agroforestry systems that do not conflict with food production or biodiversity
provide just over 10 EJ of bioenergy in 2050.

EJ

Figure 2.28 ⊳ Global bioenergy supply by source in the NZE100

2Forestry plantings
Short‐rotation woody crops

80

Forest and wood residues
Organic waste streams

60

Traditional use of biomass
Conventional bioenergy crops

40
20

2010

2020

2030

2040

2050
IEA. All rights reserved.

Bioenergy use increases by around 60% between 2020 and 2050,
while shifting away from conventional feedstocks and the traditional use of biomass
Note: Organic waste streams include agricultural residues, food processing, industrial and municipal organic
waste streams; they do not require land area.
Source: IEA analysis based on IIASA data.

The total land area dedicated to bioenergy production in the NZE increases from 330 million
hectares (Mha) in 2020 to 410 Mha in 2050. In 2050, around 270 Mha is forest, representing
around one‐quarter of the total area of global managed forests, and around 5% of total forest
area. There is 130 Mha of land used for short‐rotation advanced bioenergy crops in 2050 and
10 Mha for conventional bioenergy crops. There is no overall increase in cropland use forbioenergy production in the NZE from today’s level and no bioenergy crops are developedon forested land in the NZE.23 As well as allowing a much greater level of bioenergy crop
production on marginal lands, woody energy crops can produce twice as much bioenergy perhectare as conventional bioenergy crops.

21

Woody short‐rotation coppice crops grown on crop land, pasture land or marginal lands not suited to foodcrops.

23

Of the 140 Mha land used for bioenergy crops in 2050, 70 Mha are marginal lands or land currently used forlivestock grazing and 70 Mha are cropland. There is a 60 Mha increase in cropland use for woody crops to 2050
in the NZE but this is offset by a reduction in cropland use for producing conventional biofuel feedstocks.

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22
Sustainable forestry management ensures that the carbon stock and carbon absorption capability of theforest is expanded or remains unchanged.

Total land use for bioenergy in the NZE is well below estimated ranges of potential landavailability that take full account of sustainability constraints, including the need to protect
biodiversity hotspots and to meet the UN Sustainable Development Goal 15 on biodiversity
and land use. The certification of bioenergy products and strict control of what land can beconverted to expand forestry plantations and woody energy crops nevertheless is critical to
avoid land‐use conflict issues. Certification is also critical to ensure the integrity of CO2 offsets(see Chapter 1), the use of which should be carefully managed and restricted to sectors thatlack alternative mitigation options. A related land‐use issue is how to tackle emissions thatarise from outside the energy sector (Box 2.3).
Box 2.3 ⊳Balancing emissions from land use, agriculture and forestry

To limit the global temperature rise, all sources of GHG emissions need to decline to close
to zero or to be offset with CDR. The energy sector accounted for around three quartersof total GHG emissions in recent years. The largest source of GHG emissions other thanthe energy sector is agriculture, forestry and other land use (AFOLU), which produced
between 10‐12 Gt CO2‐eq net GHG emissions in recent years.24 CO2 emissions from
AFOLU were around 5‐6 Gt CO2, and nitrous oxide and methane emissions were around
5‐6 Gt CO2‐eq (IPCC, 2019).
Options to reduce emissions from AFOLU and enhance removals include: halting
deforestation; improving forest management practices; instituting farming practices that
increase soil carbon levels; and afforestation. A number of companies have recently
expressed interest in these sorts of nature‐based solutions to offset emissions from theiroperations (see Chapter 1). For afforestation, converting around 170 Mha (roughly half
the size of India) to forests would sequester around 1 Gt CO2 annually by 2050.
Achieving net‐zero energy‐related and industrial process CO2 emissions by 2050 in the
NZE does not rely on any offsets from outside the energy sector. But commensurate
action on AFOLU would help limit climate change. The energy‐sector transformation in
the NZE would reduce CO2 emissions from AFLOU in 2050 by around 150 Mt CO2 given
the switch away from conventional crops and the increase in short rotation advanced‐
bioenergy crop production on marginal lands and pasture land. To reduce emissions from
AFOLU further would require reducing deforestation by two‐thirds by 2050, instituting
improved forest management practices and planting around 250 Mha of new forests. The
combined impact of these changes would reduce CO2 emissions from AFOLU to zero by2040 and absorb 1.3 Gt CO2 annually by 2050. In this case, cumulative AFOLU CO2emissions between 2020 and 2050 would be around 40 Gt CO2.
Non‐CO2 emissions from livestock, as well as other agricultural emissions, may be moredifficult to mitigate given the link between livestock production and nitrous oxide andmethane emissions. Changes to farming practices and technology improvements,

24
AFOLU emissions are emissions from anthropogenic activities and do not include CO2 emissions removalfrom the atmosphere by natural land sinks.

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International Energy Agency | Special Reportincluding changes to animal feed, could help to reduce these emissions, but it may benecessary to use afforestation to offset these emissions entirely. An alternative could beto reduce these emissions by reducing the demand for livestock products. For example,
we estimate that reducing meat consumption in households with the highest levels of
per capita consumption today to the global average level would reduce GHG emissions
by more than 1 Gt CO2‐eq in 2050. Lower demand for livestock products would reduce
the pasture needed globally for livestock by close to 200 Mha and the cropland that isused to grow feed for livestock by a further 80 Mha.

2

Are net‐zero emissions by 2050 possible without expanding land use for bioenergy?
Estimates of the global sustainable bioenergy potential are subject to a high degree of
uncertainty, in particular over the extent to which new land area could sustainably beconverted to bioenergy production. As a result, the NZE takes a cautious approach tobioenergy use, with consumption in 2050 (100 EJ) well below the latest estimates that
integrate relevant SDGs, which suggest a potential between 150‐170 EJ. But it is possible thatthe land available to provide sustainable bioenergy is even more limited. Here we explore
the implications for emissions of restricting land use for dedicated bioenergy crops andforestry plantations to around 330 Mha, which is what is used today.
Figure 2.29 ⊳ Impact on electricity demand and ability to achieve net-zeroemissions by 2050 without expanded bioenergy land use

90
60
30

NZE

80
60

Solar PV and windThousand GW

120

Electricity demand
Thousand TWh

EJ

Bioenergy use

32
24

40

16

20

8

Without expanding bioenergy land use
IEA. All rights reserved.

Achieving net-zero emissions without expanding bioenergy land use would require a

Limiting land use to 330 Mha would reduce available bioenergy supply in 2050 by more than
10 EJ. This would mostly take the form of a reduction in the availability of short‐rotation
woody energy crops, which are mainly used in the NZE in place of fossil fuels to provide hightemperature heat for industrial processes and for electricity generation. Without bioenergy,
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further 3 200 TWh from solar PV and wind, increasing capacity in the NZE by nearly 10%

it is likely that hydrogen and synthetic methane would be used instead, and their production
would require around 70 Mt of hydrogen in 2050 (15% more than in the NZE). If this were to
be produced through the use of electrolysis it would require around 750 GW of electrolyser
capacity and increase electricity demand in 2050 by around 3 200 TWh (Figure 2.29).
The additional electricity that would be needed could be produced using renewables, which
would require an additional 1 700 GW of wind and solar PV capacity and almost 350 GW ofadditional battery capacity in 2050. Annual capacity additions during the 2030s would need
to be 160 GW higher than in the NZE. The additional wind, solar, battery and electrolyser
capacity, together with the electricity networks and storage needed to support this higher
level of deployment would cost more than USD 5 trillion by 2050. This is USD 4.5 trillion morethan would be needed if the use of bioenergy were to be expanded as envisaged in the NZE,
and would increase the total investment needed in the NZE by 3%. While it might therefore
be possible still to achieve net‐zero emissions in 2050 without expanding land use forbioenergy, this would make the energy transition significantly more expensive.

2.7.3

CCUS applied to emissions from fossil fuels

A total of 7.6 Gt CO2 is captured in 2050 in the NZE, almost 50% of which is from fossil fuelcombustion, 20% is from industrial processes, and around 30% is from bioenergy use with
CO2 capture and DAC (Figure 2.30). The use of CCUS with fossil fuels provides almost 70% of
the total growth in CCUS to 2030 in the NZE. Yet the prospects for the rapid scaling up of
CCUS are very uncertain for economic, political and technical reasons. Here we look at the
implications for reaching net‐zero emissions in 2050 if fossil fuel CCUS does not expand
beyond existing and planned projects.

Gt CO2

Figure 2.30 ⊳ CCUS by sector and emissions source in the NZEElectricity

3

Industry

Fuel supply

DAC
CO2 source
AtmosphereIndustrial
processes
Bioenergy
Fossil fuels

2

2050

2040

2030

2020

2050

2040

2030

2020

2050

2040

2030

2020

2050

2040

2030

2020

1

IEA. All rights reserved.

Fossil fuel emissions account for almost 70% of total CO2 capture in 2030
and almost 50% in 2050
Note: DAC = direct air capture.

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International Energy Agency | Special ReportAre net‐zero emissions by 2050 possible without fossil fuel‐based CCUS?
Fossil fuel‐based CCUS applications comprise most of the CCUS projects added to 2030 in the
NZE. These projects help to reduce risks for other non‐fossil fuel CCUS applications that are
essential to reach net zero. In view of the challenges that fossil fuel‐based CCUS projects face,
we have constructed a Low CCUS Case (LCC) in which no new fossil fuel CCUS projects aredeveloped beyond those already under construction or approved for development. In the
LCC, CO2 emissions captured from fossil fuels are only around 150 Mt in 2050, compared with
3 600 Mt in 2050 in the NZE.

2

In industry, the lack of new fossil fuel CCUS projects leads in the LCC to 1.2 Gt of additional
CO2 emissions compared with the NZE in 2050. It would be necessary to use alternativetechnologies to eliminate these emissions in order to achieve net zero by 2050. A number oftechnologies that are at the prototype stage of development would be needed, such as
electric cement kilns or electric steam crackers for high‐value chemicals production (seeBox 2.4). Assuming that these technologies could be demonstrated and deployed at scale,this would increase electricity demand by around 2 400 TWh and hydrogen demand inindustry by around 45 Mt in 2050. It would also be necessary to replace the 145 Mt ofhydrogen that is produced in the NZE from fossil fuels equipped with CCUS. Provision of this
190 Mt of hydrogen through electrolysis would require an additional 2 000 GW capacity ofelectrolysers in 2050 (almost 60% more than in the NZE) and an additional 9 000 TWh ofelectricity (Figure 2.31).
Figure 2.31 ⊳ Impacts of achieving net-zero emissions by 2050 without
expanded fossil fuel-based CCUS
Electricity demand

Capacity

30
Thousand GW

Thousand TWh

60

40

20

10

20

NZE LCC
2030

NZE LCC
2050

Electricity for:
Hydrogen Industry

Other

NZE LCC NZE LCC
2030
2050
Capacity:
Solar PVWind

NZE LCC NZE LCC
2030
2050
Electrolysers

Batteries

IEA. All rights reserved.

Failure to deploy fossil fuel-based CCUS would significantly increase electricity demand

Note: LCC = Low CCUS Case where CCUS applied to fossil fuels is restricted to projects under construction orapproved for development today.

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and require much more solar, wind and electrolyser capacity

Box 2.4 ⊳Technology innovation in the NZE

Innovation is key to developing new clean energy technologies and advancing existing
ones. The importance of innovation increases as we get closer to 2050 because existing
technologies will not be able to get us all the way along the path to net‐zero emissions.
Almost 50% of the emissions reductions needed in 2050 in the NZE depend on
technologies that are at the prototype or demonstration stage, i.e. are not yet available
on the market (see Chapter 4).
After a new idea makes its way from the drawing board to the laboratory and out into
the world, there are four key stages in the clean energy innovation pipeline (IEA, 2020d).
But the pathway to maturity can be long and success is not guaranteed.
Prototype. A concept is developed into a design and then into a prototype for a new
device, e.g. a furnace that produces steel with pure hydrogen instead of coal.



Demonstration. The first examples of a new technology are introduced at the sizeof a full‐scale commercial unit, e.g. a system that captures CO2 emissions from
cement plants.

Market uptake. The technology is being deployed in a number of markets. However,it either has a cost and performance gap with established technologies (e.g.
electrolysers for hydrogen production) or it is competitive but there are still barriers,
such as integration with existing infrastructure or consumer preferences, to reachingits full market potential (e.g. heat pumps). Policy attention is needed in both cases
to stimulate wider diffusion to reduce costs and to overcome existing barriers, withmore of the costs and risks being borne gradually by the private sector.

Maturity. The technology has reached market stability, and new purchases or
installations are constant or even declining in some environments as newer
technologies start to compete with the stock of existing assets, e.g. hydropower
turbines.

Innovation is critical in the NZE to bring new technologies to market and to improve
emerging technologies, including for electrification, CCUS, hydrogen and sustainablebioenergy. The degree of reliance on innovation in the NZE varies across sectors andalong the various steps of the value chains involved (Figure 2.32).
Electrification. Almost 30% of the 170 Gt CO2 cumulative emissions reductions fromthe use of low‐emissions electricity in the NZE comes from technologies that are
currently at prototype or demonstration stage, such as electricity‐based primary
steel production or electric trucks.



Hydrogen. Not all steps of the low‐carbon hydrogen value chain are available on themarket today. The majority of demand technologies, such as hydrogen‐based steel
production, are only at the demonstration or prototype stage. These deliver morethan 75% of the cumulative emissions reductions in the NZE related to hydrogen.

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International Energy Agency | Special Report

CCUS. Around 55% of the cumulative emissions reductions that come from CCUS in
the NZE are from technologies that are at the demonstration or prototype stage
today. While CO2 capture has been in use for decades in certain industrial and fueltransformation processes, such as ammonia production and natural gas processing,it is still being demonstrated at a large scale in many of the other possible
applications.

2

Bioenergy. Around 45% of the cumulative emissions reductions in the NZE related
to sustainable bioenergy come from technologies that are at the demonstration or
prototype stage today, mainly for the production of biofuels.

Figure 2.32 ⊳ Cumulative CO2 emissions reductions for selected
technologies by maturity category in the NZEElectricity
Solar PVWindElectric cars
Electric trucks
Heat pumps
Electrified primary steel
CCUS
CementFossil CCUS power
Steel
DACS
Hydrogen‐based fuels
TrucksShipping
Cars
Steel
Bioenergy
Biomass CCUS power
Bio‐FT with CCUS
Bio‐FT
20
Market uptake

40

60
Demonstration

80

100

120
Gt CO₂

Prototype
IEA. All rights reserved.

CCUS, hydrogen and bioenergy technologies are less mature than electrification.
Most technologies for heavy industry and trucks are at early stages of development.

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Notes: Bio‐FT = Biomass gasification with Fischer‐Tropsch synthesis. Maturity levels are the technology
design at the most advanced stage.

In the electricity sector, it would be necessary to produce an additional 11 300 TWh ofelectricity for industry and fuel transformation and to replace virtually all of the electricity
generated from fossil fuel powered plants equipped with CCUS in 2050 in the NZE. Using
renewables, this would require an additional 7 000 GW of wind and solar PV capacity in 2050.
This is around 30% more than in the NZE, and would mean that annual capacity additions ofsolar PV and wind during the 2030s would need to reach 1 300 GW (300 GW more than in
the NZE). To accommodate this additional level of variable renewables and to provide theflexibility that is available from fossil fuel CCUS equipped plants in the NZE, around 660 GW
more battery capacity would be needed in 2050 (20% more than in the NZE in in 2050),
together with additional 110 GW of other dispatchable capacity.
Reducing the rate of adding CCUS at existing coal‐ and gas‐fired generation plants in the LCC
would also raise the risk of stranded assets. We estimate that up to USD 90 billion of existingcoal‐ and gas‐fired capacity could be stranded in 2030 and up to USD 400 billion by 2050.
Investment in fossil fuel‐based CCUS in the NZE to 2050 is around USD 650 billion, which
would be avoided in the LCC. But additional investment is required in the LCC for extra wind,solar and electrolyser capacity, for electricity‐based routes in heavy industry, and for
expanded electricity networks and storage to support this higher level of deployment. As aresult, the additional cumulative investment to reach net‐zero emissions in 2050 in the LCC
is USD 15 trillion higher than in the NZE.
Failure to develop CCUS for fossil fuels would also be likely to delay or prevent thedevelopment of other CCUS applications. Without fossil fuel‐based CCUS, the number ofusers and the volumes of the CO2 transport and storage infrastructure deployed aroundindustrial clusters would be reduced. Fewer actors and more limited pools of capital would
be available to incur the high upfront costs of infrastructure, as well as other risks associatedwith the initial roll‐out of CCUS infrastructure clusters. In addition, there would be fewer
spill‐over learning and cost‐reduction benefits from developing fossil fuel‐based CCUS,
making the successful demonstration and scale up of more nascent CCUS technologies muchless likely. A delay in the development of other CCUS technologies would have a major impact
on the prospect of getting to net‐zero emissions in 2050. For example, CCUS is the only
scalable low‐emissions option to remove CO2 from the atmosphere and to almost eliminate
emissions from cement production. If progress in these technologies were delayed and could
not be deployed at scale, then achieving net‐zero emissions by 2050 would be vastly moredifficult.

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Sectoral pathways to net-zero emissions by 2050\

S U M M A R Y

 Fossil fuel use falls drastically in the Net‐Zero Emissions Scenario (NZE) by 2050, andno 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. Low‐
emissions fuels – biogases, hydrogen and hydrogen‐based fuels – see rapid growth.
They account for almost 20% of global final energy in 2050, compared with 1% in
2020. More than 500 Mt of low‐carbon hydrogen is produced in 2050, of which about
60% is produced using electrolysis that accounts for 20% of global electricity
generation in 2050. Liquid biofuels provide 45% of global aviation fuel in 2050.

 Electricity demand grows rapidly in the NZE, rising 40% from today to 2030 and morethan two‐and‐a‐half‐times to 2050, while emissions from generation fall to net‐zeroin aggregate in advanced economies by 2035 and globally by 2040. Renewables drive
the transformation, up from 29% of generation in 2020 to 60% in 2030 and nearly 90%
in 2050. From 2030 to 2050, 600 GW of solar PV and 340 GW of wind are added eachyear. The least‐efficient coal plants are phased out by 2030 and all unabated coal by
2040. Investment in electricity grids triples to 2030 and remains elevated to 2050.

 In industry, emissions drop by 20% to 2030 and 90% to 2050. Around 60% of heavy
industry emissions reductions in 2050 in the NZE come from technologies that are notready for market today: many of these use hydrogen or CCUS. From 2030, all new
industry capacity additions are near‐zero emissions. Each month from 2030, the world
equips 10 new and existing heavy industry plants with CCUS, adds 3 new hydrogen‐based industrial plants and adds 2 GW of electrolyser capacity at industrial sites.

 In transport, emissions drop by 20% to 2030 and 90% to 2050. The initial focus is on
increasing the operational and technical efficiency of transport systems, modal shifts,
and the electrification of road transport. By 2030, electric cars account for over 60%
of car sales (4.6% in 2020) and fuel cell or electric vehicles are 30% of heavy truck sales(less than 0.1% in 2020). By 2035, nearly all cars sold globally are electric, and by 2050
nearly all heavy trucks sold are fuel cell or electric. Low‐emissions fuels andbehavioural changes help to reduce emissions in long‐distance transport, but aviationand shipping remain challenging and account for 330 Mt CO2 emissions in 2050.
around 20% of the existing building stock worldwide is retrofitted and all newbuildings comply with zero‐carbon‐ready building standards. Over 80% of theappliances sold are the most efficient models available by 2025 in advanced
economies and by the mid‐2030s worldwide. There are no new fossil fuel boilers soldfrom 2025, except where they are compatible with hydrogen, and sales of heat pumps
soar. By 2050, electricity provides 66% of energy use in buildings (33% in 2020).
Natural gas use for heating drops by 98% in the period to 2050.

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 In buildings, emissions drop by 40% to 2030 and more than 95% to 2050. By 2030,

3.1

Introduction

The Net‐Zero Emissions by 2050 Scenario (NZE) involves a global energy systemtransformation that is unparalleled in its speed and scope. This chapter looks at how themain sectors are transformed, as well as the specific challenges and opportunities thisinvolves (Figure 3.1). It covers the supply of fossil and low‐emissions fuels, electricity
generation and the three main end‐use sectors – industry, transport and buildings. For eachsector, we set out some key technology and infrastructure milestones on which the NZE
depends for its successful delivery. Further we discuss what key policy decisions are needed,and by when, to achieve these milestones. Recognising that there is no single pathway toachieve net‐zero emissions by 2050 and that there are many uncertainties related to clean
energy transitions, in this chapter we also explore the implications of choosing not to rely on
certain fuels, technologies or emissions reduction options across the transformation andend‐use sectors.
Figure 3.1 ⊳CO2 emissions by sector in the NZE

Gt CO₂

15

10

5

0

‐5
2010

2020
Power

2030
Buildings

Transport

2040
Industry

2050
Other
IEA. All rights reserved.

Emissions fall fastest in the power sector, with transport, buildings and industry seeing steadydeclines to 2050. Reductions are aided by the increased availability of low-emissions fuelsNote: Other = agriculture, fuel production, transformation and related process emissions, and direct air
capture.

3.2

Fossil fuel supply

3.2.1

Energy trends in the Net‐Zero Emissions Scenario

Coal use declines from 5 250 million tonnes of coal equivalent (Mtce) in 2020 to 2 500 Mtce
in 2030 and to less than 600 Mtce in 2050. Even with increasing deployment of carbon
capture, utilisation and storage (CCUS), coal use in 2050 is 90% lower than in 2020
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International Energy Agency | Special Report(Figure 3.2). Oil demand never returns to its 2019 peak and it declines from 88 million barrels
per day (mb/d) in 2020 to 72 mb/d in 2030 and to 24 mb/d in 2050, a fall of almost 75%
between 2020 and 2050. Natural gas quickly rebounds from the dip in demand in 2020 andrises through to the mid‐2020s, reaching a peak of around 4 300 billion cubic metres (bcm),
before dropping to 3 700 bcm in 2030 and to 1 750 bcm in 2050. By 2050, natural gas use is
55% lower than in 2020.

EJ

Figure 3.2 ⊳Coal, oil and natural gas production in the NZE

200

3Projected

Historical

150

100
Natural gas

50

Oil
Coal

1990

2000

2010

2020

2030

2040

2050
IEA. All rights reserved.

Between 2020 and 2050, demand for coal falls by 90%, oil by 75%, and natural gas by 55%

Oil
The trajectory of oil demand in the NZE means that no exploration for new resources isrequired and, other than fields already approved for development, no new oil fields arenecessary. However, continued investment in existing sources of oil production are needed.
On average oil demand in the NZE falls by more than 4% per year between 2020 and 2050. If
all capital investment in producing oil fields were to cease immediately, this would lead to aloss of over 8% of supply each year. If investment were to continue in producing fields but
no new fields were developed, then the average annual loss of supply would be around 4.5%
(Figure 3.3). The difference is made up by fields that are already approved for development.
These dynamics are reflected in the oil price in the NZE, which drops to around USD 35/barrel
in 2030 and USD 25/barrel in 2050. This price trajectory is largely determined by theoperating costs for fields currently in operation, and only a very small volume of existingproduction would need to be shut in. However, income from oil production in all countries
is much lower in the NZE than in recent years,1 and the NZE projects significant stranded

Governments may also reduce or eliminate upstream taxes to ensure that production costs are below the oil
price to maintain domestic production.

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1

capital and stranded value.2 The oil price in the NZE would be sufficient in principle to cover
the cost of developing new fields for the lowest cost producers, including those in the Middle
East, but it is assumed that major resource holders do not proceed with investment in new
fields because doing so would create significant additional downward pressure on prices.
The refining sector also faces major challenges in the NZE. Refinery throughput drops
considerably and there are significant changes in product demand. With rapid electrificationof the vehicle fleet, there is a major drop in demand for traditional refined products such as
gasoline and diesel, while demand for non‐combusted products such as petrochemicals
increases. In recent years, around 55% of oil demand was for gasoline and diesel, but thisdrops to less than 15% in 2050, while the share of ethane, naphtha and liquefied petroleumgas (LPG) rises from 20% in recent years to almost 60% in 2050. This shift accentuates thedrop in oil demand for refiners, and refinery runs fall by 85% between 2020 and 2050.
Refiners are used to coping with changing demand patterns, but the scale of the changes in
the NZE would inevitably lead to refinery closures, especially for refineries not able toconcentrate primarily on petrochemical operations or the production of biofuels.
Oil and natural gas production in the NZE
Oil

125

Thousand bcm

mb/dFigure 3.3 ⊳

100
75

4
3

50

2

25

1

2010
Middle East

2020

2030

2040

North America

Eurasia2050
AfricaNatural gas

5

2010
Asia Pacific

2020

2030

2040

2050

Central and South America

EuropeIEA. All rights reserved.

No new oil and natural gas fields are required beyond those already approved fordevelopment. Supply is increasingly concentrated in a few major producing countries

Natural gas
No new natural gas fields are needed in the NZE beyond those already under development.
Also not needed are many of the liquefied natural gas (LNG) liquefaction facilities currently
under construction or at the planning stage. Between 2020 and 2050, natural gas traded as

2Stranded capital is capital investment in fossil fuel infrastructure that is not recovered over the operating
lifetime of the asset because of reduced demand or reduced prices resulting from climate policies. Stranded
value is a reduction in the future revenue generated by an asset or asset owner assessed at a given point intime because of reduced demand or reduced prices resulting from climate policies (IEA, 2020a).

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International Energy Agency | Special ReportLNG falls by 60% and trade by pipeline falls by 65%. During the 2030s, global natural gas
demand declines by more than 5% per year on average, meaning that some fields may beclosed prematurely or shut in temporarily. Declines in natural gas demand slow after 2040,
and more than half of natural gas use globally in 2050 is to produce hydrogen in facilities
with CCUS. The large level of hydrogen, also produced using electrolysis, and biomethane in
the NZE, means that the decline in total gaseous fuels is more muted than the decline innatural gas. This has important implications for the future of the gas industry (see Chapter 4).

3

Coal
No new coal mines or extensions of existing ones are needed in the NZE as coal demand
declines precipitously. Demand for coking coal falls at a slightly slower rate than for steamcoal, but existing sources of production are sufficient to cover demand through to 2050. Sucha decline in coal demand would have major consequences for employment in coal mining
regions (see Chapter 4). There is a slowdown in the rate of decline in the 2040s as coalproduction facilities are increasingly equipped with CCUS: in the NZE, around 80% of coalproduced in 2050 applies CCUS.

3.2.2

Investment in oil and gas

Upstream oil and gas investment averages about USD 350 billion each year from 2021 to2030 in the NZE (Figure 3.4). This is similar to the level in 2020, but around 30% lower than
average levels during the previous five years. Once fields under development start
production, all of the upstream investment in the NZE is to support operations in existing
fields; after 2030, total annual upstream investment is around USD 170 billion each year.
Figure 3.4 ⊳Investment in oil and natural gas supply in the NZEOilNatural gas

Billion USD (2019)

600

Refining
Transport
FieldsExisting
New

400

200

1991‐ 2001‐ 2011‐ 2021‐ 2031‐ 2041‐
2000 2010 2020 2030 2040 2050

1991‐ 2001‐ 2011‐ 2021‐ 2031‐ 2041‐
2000 2010 2020 2030 2040 2050
IEA. All rights reserved.

Once fields under development start production, all upstream oil and gas

Note: Investment in new fields in the 2021‐2030 period is for projects that are already under construction or
have been approved.

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investment is spent on maintaining production at existing fields

3.2.3Emissions from fossil fuel production

Emissions from the supply chains of coal, oil and natural gas fall dramatically in the NZE. The
global average greenhouse gas (GHG) emissions intensity of oil production today is just under
100 kilogrammes of carbon‐dioxide equivalent (kg CO2‐eq) per barrel. Without changes, alarge proportion of global production would become uneconomic, as CO2 prices are applied
to the full value chains of fossil fuels. For example, by 2030 the CO2 price in advanced
economies in the NZE is USD 100 per tonne of CO2 (tCO2), which would add USD 10 to thecost of producing each barrel at today’s average level of emissions intensity.
Methane constitutes about 60% of emissions from the coal and natural gas supply chains andabout 35% of emissions from the oil supply chain. In the NZE, total methane emissions fromfossil fuels fall by around 75% between 2020 and 2030, equivalent to a 2.5 gigatonne ofcarbon‐dioxide equivalent (Gt CO2‐eq) reduction in GHG emissions (Figure 3.5). Around one‐
third of this decline is a result of an overall reduction in fossil fuel consumption, but the larger
share comes from a huge increase in the deployment of emissions reduction measures andtechnologies, which leads to the elimination of all technically avoidable methane emissions
by 2030 (IEA, 2020a).
Methane emissions from coal, oil and natural gas in the NZE

120

3 600

80

2 400

40

1 200

2000

2005

2010
Natural gas

2015

2020
Oil

2025

Mt CO₂‐eq

Mt methane

Figure 3.5 ⊳

2030

Coal
IEA. All rights reserved.

Methane emissions from fossil fuels fall by 75% between 2020 and 2030 as result of aconcerted global effort to deploy all available reduction measures and technologies
Note: Mt = million tonnes.

Actions to reduce the emissions intensity of existing oil and gas operations in the NZE leads
to: the end of all flaring; the use of CCUS with centralised sources of emissions (including tocapture natural sources of CO2 that are often extracted with natural gas); and significant
electrification of upstream operations (often making use of off‐grid renewable energy
sources).

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The NZE inevitably brings significant challenges for fossil fuel industries and those who workin them, but it also brings opportunities. Coal mining declines dramatically in the NZE, but
the mining of minerals needed for clean energy transitions increases very rapidly, and mining
expertise is likely to be highly valued in this context. The oil and gas industry could play a keyrole in helping to develop at scale a number of clean energy technologies such as CCUS, low‐
carbon hydrogen, biofuels and offshore wind. Scaling up these technologies and bringing
down their costs will rely on large‐scale engineering and project management capabilities,
qualities that are a good match to those of large oil and gas companies. These issues,
including the question of how to help those affected by the major changes implied by the
NZE, are discussed in more detail in Chapter 4.

3.3

Low‐emissions fuel supply

3.3.1

Energy trends in the Net‐Zero Emissions Scenario

3

Reaching net‐zero emissions will require low‐emissions fuels3 where energy needs cannot
easily or economically be met by electricity (Figure 3.6). This is likely to be the case for somemodes of long‐distance transport (trucks, aviation and shipping) and of heat and feedstock
supply in heavy industry. Some low‐emissions fuels are effectively drop‐in, i.e. they arecompatible with the existing fossil fuel distribution infrastructure and end‐use technologies,
and require few if any modifications to equipment or vehicles.

3
Low‐emissions fuels refer to liquid biofuels, biogas and biomethane, and hydrogen‐based fuels (hydrogen,ammonia and synthetic hydrocarbon fuels) that do not emit CO2 from fossil fuels directly when used and also
emit very little when being produced. For example, hydrogen produced from natural gas with CCUS and highcapture rates (90% or higher) is considered a low‐emissions fuel, but not if produced without CCUS.

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Low‐emissions fuels today account for just 1% of global final energy demand, a share that
increases to 20% in 2050 in the NZE. Liquid biofuels meet 14% of global transport energy
demand in 2050, up from 4% in 2020; hydrogen‐based fuels meet a further 28% of transportenergy needs by 2050. Low‐carbon gases (biomethane, synthetic methane and hydrogen)meet 35% of global demand for gas supplied through networks in 2050, up from almost zero
today. The combined share of low‐carbon hydrogen and hydrogen‐based fuels in total final
energy use worldwide reaches 13% in 2050. Hydrogen and ammonia also provide important
low‐emissions sources of power system flexibility and contribute 2% of overall electricity
generation in 2050, which is enough to make the electricity sector an important driver ofhydrogen demand.

Figure 3.6 ⊳Global supply of low-emissions fuels by sector in the NZE

Liquid biofuels in transport
2020

Shipping
Aviation
Road transport

2030
2050
Low‐carbon gases in gas grid
2020

BiomethaneHydrogen
Synthetic methane

2030
2050
Hydrogen‐based fuels in TFC

Buildings
Industry
Transport ‐ hydrogen
Transport ‐ ammonia
Transport ‐ synfuels

2020
2030
2050
10%

20%

30%

40%
IEA. All rights reserved.

Low-emissions fuels in the form of liquid biofuels, biomethane, hydrogen-based fuels
help to decarbonise sectors where direct electrification is challenging
Notes: TFC = total final consumption. Low‐carbon gases in the gas grid refers to the blending of biomethane,hydrogen and synthetic methane with natural gas in a gas network for use in buildings, industry, transport andelectricity generation. Synfuels refer to synthetic hydrocarbon fuels produced from hydrogen and CO2. Finalenergy consumption of hydrogen includes, in addition to the final energy consumption of hydrogen, ammonia
and synthetic hydrocarbon fuels, the on‐site hydrogen production in the industry sector.

3.3.2

Biofuels4

Around 10% of the global primary supply of modern bioenergy (biomass excluding traditional
uses for cooking) was consumed as liquid biofuels for road transport and 6% was consumed
as biogases (biogas and biomethane) to provide power and heat in 2020, with the rest
directly used for electricity generation and heating in the residential sector. Supply
accelerates sharply in the NZE with liquid biofuels expanding by a factor of almost four andbiogases increasing by a factor of six by 2050.
All but about 7% of liquid biofuels for transport are currently produced from conventional
crops such as sugarcane, corn and soybeans. Such crops directly compete with arable landthat can be used for food production, which limits the scope for expanding output. So mostof the growth in biofuels in the NZE comes from advanced feedstocks such as wastes andresidues and woody energy crops grown on marginal lands and cropland not suitable for food4

Liquids and gases produced from bioenergy.

106International Energy Agency | Special Reportproduction (see section 2.7.2). Advanced liquid biofuel production technology using woody
feedstock expands rapidly over the next decade in the NZE, and its contribution to liquidbiofuels jumps from less than 1% in 2020 to almost 45% in 2030 and 90% in 2050 (Figure 3.7).
By 2030, production reaches 2.7 million barrels of oil equivalent per day (mboe/d) by 2030,
underpinned by biomass gasification using the Fischer‐Tropsch process (bio‐FT) and cellulosic
ethanol, mostly to produce drop‐in substitutes for diesel and jet kerosene. Advanced liquidbiofuel production increases by an additional 130% to more than 6 mboe/d in 2050, the bulkof which is biokerosene.

Liquid biofuels

Gaseous biofuels

Figure 3.7 ⊳3Global biofuels production by type and technology in the NZE
BiogasBiomethane
Conventional ethanol
Advanced ethanol
Conventional biodiesel
Advanced biodiesel and biokerosene
with CCUS

2020
2030
2040
2050
2020
2030
2040
2050
5

10

EJ 15
IEA. All rights reserved.

Liquid biofuel production quadruples while that of biogases expands sixfold between 2020
and 2050, underpinned by the development of sustainable biomass supply chains
Notes: EJ = exajoules; CCUS = carbon capture, utilisation and storage. Conventional ethanol refers to
production using food energy crops. Advanced ethanol refers to production using wastes and residues andnon‐food energy crops grown on marginal and non‐arable land. Conventional biodiesel includes fatty acid andmethyl esters (FAME) route using food energy crops. Advanced biodiesel includes biomass‐based Fischer‐Tropsch and HEFA routes using wastes, residues and non‐food energy crops grown on marginal and non‐arable
land. Biomethane includes biogas upgrading and biomass gasification‐based routes.

The supply of these biofuels after 2030 shifts rapidly in the NZE from passenger vehicles andlight trucks, where electrification is increasingly the order of the day, to heavy road freight,
shipping and aviation. Ammonia makes inroads into shipping. Advanced liquid biofuels
increase their share of the global aviation fuel market from 15% in 2030 to 45% in 2050.
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Production using these feedstocks is mostly under development today. Current output
capacity, principally cellulosic ethanol, is about 2.5 thousand barrels of oil equivalent per day(kboe/d). The NZE assumes that projects currently in the pipeline in Japan, the United
Kingdom and the United States will bring these technologies to the market within the next
few years. The scale up required for all advanced liquid biofuels (including from waste oils)
over the next decade is equivalent to building one 55 kboe/d biorefinery every ten weeks(the world’s largest biorefinery has capacity of 28 kboe/d).

Advanced biofuels such as hydrogenated esters and fatty acids (HEFA) and bio‐FT are able toadjust their product slates (up to a point) from renewable diesel to biokerosene, and existing
ethanol plants, especially those that can be retrofitted with CCUS or integrated withcellulosic feedstock, also make a contribution.
The supply of biogases increases even more than liquid biofuels. Injection into gas networks
expands from under 1% of total gas volume in 2020 to almost 20% in 2050, reducing theemissions intensity of the network‐based gas. Biomethane is mostly produced by upgrading
biogas produced from anaerobic digestion of feedstocks such as agricultural residues likemanure and biogenic municipal solid waste, thereby avoiding methane emissions that would
otherwise be released. Due to the dispersed nature of these feedstocks, this assumes theconstruction of thousands of injection sites and associated distribution lines every year.
Biogas and biomethane are also used as clean cooking fuels and in electricity generation in
the NZE.
The production of biofuels can be combined with CCUS at a relatively low cost in some biofuel
production routes (ethanol, bio‐FT, biogas upgrading) because the processes involved
release very pure streams of CO2. In the NZE, the use of biofuels with CCUS results in annual
carbon dioxide removal (CDR) of 0.6 Gt CO2 in 2050, which offset residual emissions intransport and industry.

3.3.3

Hydrogen and hydrogen‐based fuels

Hydrogen use in the energy sector today is largely confined to oil refining and the productionof ammonia and methanol in the chemicals industry. Global hydrogen demand was around
90 million tonnes (Mt) in 2020, mainly produced from fossil fuels (mostly natural gas) andemitting close to 900 Mt CO2. Both the amount needed and the production route ofhydrogen change radically in the NZE. Demand increases almost sixfold to 530 Mt in 2050, of
which half is used in heavy industry (mainly steel and chemicals production) and in thetransport sector; 30% is converted into other hydrogen‐based fuels, mainly ammonia forshipping and electricity generation, synthetic kerosene for aviation and synthetic methane
blended into gas networks; and 17% is used in gas‐fired power plants to balance increasing
electricity generation from solar PV and wind and to provide seasonal storage. Overall,hydrogen‐based fuels5 account for 13% of global final energy demand in 2050 (Figure 3.8).
Ammonia is used today as feedstock in the chemical industry, but in the NZE it is also used
as fuel in various energy applications, benefitting from its lower transport cost and higher
energy density than hydrogen. Ammonia accounts for around 45% of global energy demand
for shipping in 2050 in the NZE. Co‐firing with ammonia is also a potential early option to
reduce CO2 emissions in existing coal‐fired power plants. The toxicity of ammonia means thatits handling is likely to be limited to professionally trained operators, which could restrict its
potential.

5
Hydrogen‐based fuels are defined as hydrogen, ammonia as well as synthetic hydrocarbon fuels produced
from hydrogen and CO2.

108International Energy Agency | Special ReportFigure 3.8 ⊳Global production of hydrogen by fuel and hydrogen demandby sector in the NZE
Share of hydrogen fuels by sector in 2050

Mt

Hydrogen production
600

75%

400

50%

200

25%

3

2020

2030

FossilRefining CNR

2040

2050

with CCUS
Electricity

Shipping

Road
Aviation Chemicals Iron andtransport
steel

Synthetic fuels

Ammonia

Hydrogen

IEA. All rights reserved.

Hydrogen production jumps sixfold by 2050, driven by water electrolysis and natural gas
with CCUS, to meet rising demand in shipping, road transport and heavy industry
Note: Refining CNR = hydrogen by‐product from catalytic naphtha reforming at refineries.

Synthetic kerosene meets around one‐third of global aviation fuel demand in 2050 in the
NZE. Its manufacture at bioenergy‐fired power or biofuel production plants requires CO2
captured from the atmosphere. CO2 from these sources can be considered carbon neutral,as it results in no net emissions when the fuel is used. There is scope for the co‐productionof advanced liquid biofuels and synthetic liquid fuels from hydrogen and CO2, with the
integration of the two processes reducing the overall liquid fuel production costs. Alongside
synthetic liquid fuels, enough synthetic methane is produced from hydrogen and CO2 in 2050
to meet 10% of demand for network supplied gas in the buildings, industry and transport
sectors.

Scaling up deployment of technologies and related manufacturing capacity will be critical toreducing costs. Water electrolysers are available on the market today and hydrogenproduction from natural gas with CCUS has been demonstrated at a commercial scale (there
are seven plants in operation around the world). The choice between the two depends on
Chapter 3 | Sectoral pathways to net-zero emissions by 2050

109

IEA. All rights reserved.

By 2050, hydrogen production in the NZE is almost entirely based on low‐carbon
technologies: water electrolysis accounts for more than 60% of global production, andnatural gas in combination with CCUS for almost 40%. Global electrolyser capacity reaches
850 gigawatts (GW) by 2030 and 3 600 GW by 2050, up from around 0.3 GW today.
Electrolysis absorbs close to 15 000 terawatt‐hours (TWh), or 20% of global electricity supply
in 2050, largely from renewable resources (95%), but also from nuclear power (3%) and fossil
fuels with CCUS (2%). Natural gas use for hydrogen production with CCUS is 925 bcm in 2050,
or around 50% of global natural gas demand, with 1.8 Gt CO2 being captured.

economic factors, mainly the cost of natural gas and electricity, and on whether CO2 storageis available. For natural gas with CCUS, production costs in the NZE are around USD 1‐2 per
kilogramme (kg) of hydrogen in 2050, with gas costs typically accounting for 15‐55% of total
production costs. For water electrolysis, learning effects and economies of scale result in
CAPEX cost reductions of 60% in the NZE by 2030 compared to 2020. Production cost
reductions hinge on lowering the cost of low‐carbon electricity, as electricity accounts for
50‐85% of total production costs, depending on the electricity source and region. The
average cost of producing hydrogen from renewables drops in the NZE from USD 3.5‐7.5/kg
today to around USD 1.5‐3.5/kg in 2030 and USD 1‐2.5/kg in 2050 – essentially about thesame as the cost of producing with natural gas with CCUS.
Converting hydrogen into other energy carriers, such as ammonia or synthetic hydrocarbon
fuels, involves even higher costs. But it results in fuels that can be more easily transported
and stored, and which are also often compatible with existing infrastructure or end‐use
technologies (as in the case of ammonia for shipping or synthetic kerosene for aviation). For
ammonia, the additional synthesis step increases the production costs by around 15%
compared with hydrogen (mainly due to additional conversion losses and equipment costs).
The relatively high cost of synthetic hydrocarbon fuels explains why their use is largely
restricted to aviation in the NZE, where alternative low‐carbon options are limited. Synthetic
kerosene costs were USD 300‐700/barrel in 2020: although these costs fall to
USD 130‐300/barrel by 2050 in the NZE as the costs of electricity from renewables and CO2
feedstocks decline, the cost of synthetic kerosene remains far higher than the projected
USD 25/barrel cost of conventional kerosene in 2050 in the NZE. The supply of CO2, captured
from bioenergy equipped with CCUS or direct air capture (DAC), needed to make these fuels
is a relevant cost factor, accounting for USD 15‐70/barrel of the cost of synthetichydrocarbon fuels in 2050. Closing these cost gaps implies penalties for fossil kerosene or
support measures for synthetic kerosene corresponding to a CO2 price of
USD 250‐400/tonne.
Increasing global demand for low‐carbon hydrogen in the NZE provides a means for countries
to export renewable electricity resources that could not otherwise be exploited. For
example, Chile and Australia announced ambitions to become major exporters in theirnational hydrogen strategies. With declining demand for natural gas in the NZE, gas‐
producing countries could join this market by exporting hydrogen produced from natural gas
with CCUS. Long‐distance transport of hydrogen, however, is difficult and costly because of
its low energy density, and can add around USD 1‐3/kg of hydrogen to its price. This means
that, depending on each country’s own circumstances, producing hydrogen domesticallymay be cheaper than importing it, even if domestic production costs from low‐carbon
electricity or natural gas with CCUS are relatively high. International trade neverthelessbecomes increasingly important in the NZE: around half of global ammonia and a third ofsynthetic liquid fuels are traded in 2050.

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International Energy Agency | Special Report3.3.4

Key milestones and decision points

Table 3.1 ⊳Key milestones in transforming low-emissions fuels

Sector

2020

2030

2050

20%

45%

48%

Advanced liquid biofuels (mboe/d)

0.1

2.7

6.2

Share of biomethane in total gas networks

<1%

2%

20%

1

150

625

87

212

528

9

150

520

Electrolyser capacity (GW)

<1

850

3 585

Electricity demand for hydrogen‐related production (TWh)

1

3 850

14 500

135

680

1 800

0

60

150

Bioenergy
Share of modern biofuels in modern bioenergy(excluding conversion losses)

CO2 captured and stored from biofuels production (Mt CO2)

3

Hydrogen
Production (Mt H2)of which: low‐carbon (Mt H2)

CO2 captured from hydrogen production (Mt CO2)
Number of export terminals at ports for hydrogen and ammonia trade

Note: mboe/d = million barrels of oil equivalent per day; Mt = million tonnes; H2 = hydrogen.

Biofuels

Another early priority is for governments to assess national sustainable biomass feedstockpotential as soon as possible to establish the quantities and types of wastes, residues andmarginal lands suitable for energy crops. Assessments should provide the basis for national
roadmaps for all liquid and gaseous biofuels, and strategies for low‐emissions fuels. Early
decisions will be needed in this context about how to support the sustainable collection ofwastes and residues from the forestry, agriculture, animal and food industries and fromadvanced municipal solid waste sorting systems: in the NZE, support measures are in placeby 2025. Measures might usefully include low‐emissions fuels standards that incentivise theuse of biofuels as feedstock. International knowledge‐sharing would help with the design ofsuch measures and assist efficient dissemination of best practices from regions with existingcollection systems, e.g. for forestry residues in Nordic countries and used cooking oilcollection in Europe, China and Southeast Asia countries.
Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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IEA. All rights reserved.

Several sustainability frameworks considering net lifecycle GHG emissions and othersustainability indicators exist in different regions, e.g. the Renewable Energy Directive II in
the European Union, RenovaBio in Brazil and the Low‐C Fuel Standards in California.
However, the scope, methodology and sustainability metrics of these frameworks differ.
Global consensus on a sustainability framework and indicators within the next few years
would help stimulate investment; this should be a priority. Such a framework should cover
all forms of bioenergy (liquid, gaseous and solid) and other low‐emissions fuels, and should
strive for continuous environmental performance improvement. Certification schemes
ideally should be developed in parallel.

Governments will also need to decide how best to support biogas installations anddistribution in order to move away from traditional uses of biomass for cooking and heatingby 2030. Such practices remain widespread in some developing countries. They are best
tackled as part of broader programmes to promote clean cooking alongside improving accessto electricity and LPG.
Decisions will be needed by 2025 on how best to create markets for sustainable biofuels andclose the cost gap between biofuels and fossil fuels. Measures will need to incentivise therapid development and deployment of advanced liquid biofuel technologies in end‐use
sectors (particularly heavy‐duty trucking, shipping and aviation), using mechanisms such as
low‐carbon fuel standards, biofuel mandates and CO2 removal credits. Measures that could
boost the scaling up of advanced biofuels production in the next four years include:
incentives for co‐processing bio‐oil in existing oil refineries or fully converting oil refineries
to biorefineries; retrofitting ethanol plants with CCUS; and integrating cellulosic ethanol
production with existing ethanol plants.
New infrastructure will be needed to provide for the injection of more biomethane into gas
networks and to transport and store the CO2 captured from ethanol and bio‐FT biofuel plants.
Governments should prioritise the co‐development of biogas upgrading facilities andbiomethane injection sites by 2030, ensuring that particular attention is paid to minimising
fugitive biomethane emissions from the supply chain. Where biomass availability allows,
governments may see value in encouraging the deployment of biofuel plants with CCUS near
existing industrial hubs where integrated CCUS projects are planned, such as the Humber
region in the United Kingdom.

Hydrogen‐based fuels
An immediate priority should be for governments to assess the opportunities and challengesof developing a low‐carbon hydrogen industry as part of national hydrogen strategies orroadmaps. Decisions will be needed on whether to produce hydrogen domestically from low‐
carbon electricity via water electrolysis or from gas with CCUS or a combination of both, orwhether to rely on imported hydrogen‐based fuels. Building technology leadership along thehydrogen supply chain could help create jobs and stimulate economic growth.
Decisions will be needed during the next decade on how best to bring down the costs of low‐
carbon hydrogen production. Switching existing hydrogen production in industry and oil
refining from unabated fossil fuels to low‐carbon hydrogen is one possible way to ramp up
low‐carbon hydrogen production in applications that have large demand already available.
Financial support instruments, such as contracts for differences, could help to reduce thecurrent cost gap of low‐carbon hydrogen production compared to existing unabatedproduction from fossil fuels.
Decisions will also be needed on how best to scale up hydrogen. Industrial ports could be agood starting point, since they may provide access to low‐carbon hydrogen supply in theform of offshore wind or CO2 storage. They also offer scope to promote new port‐related
112International Energy Agency | Special Reportuses for hydrogen, e.g. shipping and delivery trucks, and they could become the first nodesof an international hydrogen trade network. The establishment of hydrogen trade will
require the development of methodologies to determine the carbon footprint of thedifferent hydrogen production routes and the adoption of guarantees of origin andcertification schemes for low‐carbon hydrogen (and hydrogen‐based fuels).
Blending hydrogen into existing gas networks offers another early avenue to scale up low‐
carbon hydrogen production and trigger cost reductions. International harmonisation ofsafety standards and national regulations on allowed concentrations of hydrogen in gas grids
would help with this, as would the adoption of blending quotas or low‐emissions fuelstandards.

3

Repurposing existing gas pipelines, where technically feasible, with declining natural gas
demand and connecting large hydrogen demand hubs to transport hydrogen could result in
low cost and low regret opportunities to kick‐start the development of new hydrogen
infrastructure. Developing the infrastructure for hydrogen at the pace required in the NZE
would involve considerable investment risks along the value chain of production, transportand demand ranging from hydrogen production technologies through to low‐emissions
electricity generation and CO2 transport and storage. Governments and local authorities
could play an important role by co‐ordinating the planning processes among the various
stakeholders; direct public investment or public‐private partnerships could help to develop
necessary shared infrastructure for hydrogen; and international co‐operation and cross‐border initiatives could help to share investment burdens and risks and so facilitate large‐
scale deployments, as in the EU Important Projects of Common European Interest.

3.4

Electricity sector

3.4.1

Energy and emissions trends in the Net‐Zero Emissions Scenario

The NZE involves both a significant increase in electricity needs – the result of an increase ineconomic activity, rapid electrification of end‐uses and expansion of hydrogen production byelectrolysis – and a radical transformation in the way electricity is generated. Global
electricity demand was 23 230 TWh in 2020 with an average growth rate of 2.3% per year
over the previous decade. It climbs to 60 000 TWh in 2050 in the NZE, an average increase of
3.2% per year.

Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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Emerging market and developing economies account for 75% of the projected global
increase in electricity demand to 2050 (Figure 3.9). Their demand increases by half by 2030
and triples by 2050, driven by expanding population and rising incomes and living standards,
as well new sources of demand linked to decarbonisation. In advanced economies, electricity
demand returns to growth after a decade‐long lull, nearly doubling between 2020 and 2050,
driven mostly by end‐use electrification and hydrogen production.

Figure 3.9 ⊳Electricity demand by sector and regional grouping in the NZE

Thousand TWh

Advanced economies

Emerging market and developing economies

40
30
20
10

2010
Industry

2020

2030

Transport

2040
Buildings

2050

2010

2020

Hydrogen supply

2030

2040

District heating

2050
Other

IEA. All rights reserved.

Electrification of end-uses and hydrogen production raise electricity demand worldwide,with a further boost to expand services in emerging market and developing economies

The transformation of the electricity sector is central to achieving net‐zero emissions in 2050.
Electricity generation is the single largest source of energy‐related CO2 emissions today,
accounting for 36% of total energy‐related emissions. CO2 emissions from electricity
generation worldwide totalled 12.3 Gt in 2020, of which 9.1 Gt was from coal‐fired
generation, 2.7 Gt from gas‐fired plants and 0.6 Gt from oil‐fired plants. In the NZE, CO2
emissions from electricity generation fall to zero in aggregate in advanced economies in the2030s. They fall to zero in emerging market and developing economies around 2040.
Renewables contribute most to decarbonising electricity in the NZE: global generation fromrenewables nearly triples by 2030 and grows eightfold by 2050 (Figure 3.10). This raises theshare of renewables in total output from 29% in 2020 to over 60% in 2030 and nearly 90% in
2050. Solar PV and wind race ahead, becoming the leading sources of electricity globally
before 2030: each generates over 23 000 TWh by 2050, equivalent to about 90% of allelectricity produced in the world in 2020. Pairing battery storage systems with solar PV andwind to improve power system flexibility and maintain electricity security becomes
commonplace in the late 2020s, complemented by demand response for short duration
flexibility and hydropower or hydrogen for flexibility across days or even seasons.
Hydropower is the largest low‐carbon source of electricity today and steadily grows in the
NZE, doubling by 2050. Generation using bioenergy – in dedicated plants and as biomethane
delivered through gas networks – doubles to 2030 and increases nearly fivefold by 2050.

114

International Energy Agency | Special ReportThousand TWh

Figure 3.10 ⊳ Global electricity generation by source in the NZE
25

100%

20

80%

15

60%

10

40%

5

20%

2010

2020

2030

2040

2050

Oil
Unabated natural gas
Unabated coal
Fossil fuels with CCUS
Hydrogen based
Nuclear
Other renewables
Hydropower
Wind
Solar PV

32020 2030 2050
IEA. All rights reserved.

Solar and wind power race ahead, raising the share of renewables in total generationfrom 29% in 2020 to nearly 90% in 2050, complemented by nuclear, hydrogen and CCUS

Nuclear power also makes a significant contribution in the NZE, its output rising steadily by
40% to 2030 and doubling by 2050, though its overall share of generation is below 10% in
2050. At its peak in the early 2030s, global nuclear capacity additions reach 30 GW per year,
five‐times the rate of the past decade. In advanced economies, lifetime extensions forexisting reactors are pursued in many countries as they are one of the most cost‐effective
sources of low‐carbon electricity (IEA, 2019), while new construction expands to about
4.5 GW per year on average from 2021 to 2035, with an increasing emphasis on small
modular reactors. Despite these efforts, the nuclear share of total generation in advanced
economies falls from 18% in 2020 to 10% in 2050. Two‐thirds of new nuclear power capacity
in the NZE is built in emerging market and developing economies mainly in the form of large‐
scale reactors, where the fleet of reactors quadruples to 2050. This raises the share of
nuclear in electricity generation in those countries from 5% in 2020 to 7% in 2050 (as well as
nuclear meeting 4% of commercial heat demand in 2050).

Retrofitting coal‐ and gas‐fired capacity with CCUS or co‐firing with hydrogen‐based fuels
enables existing assets to contribute to the transition while cutting emissions and supporting
electricity security. The best opportunities for CCUS are at large, young facilities with
Chapter 3 | Sectoral pathways to net-zero emissions by 2050

115

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Nuclear power technologies have advanced in recent years, with several first‐of‐a‐kind large‐
scale reactors completed that include enhanced safety features. While projects have been
completed on schedule in China, Russia and the United Arab Emirates, there have been
substantial delays and cost overruns in Europe and the United States. Small modular reactors
and other advanced reactor designs are moving towards full‐scale demonstration, withscalable designs, lower upfront costs and the potential to improve the flexibility of nuclear
power in terms of both operations and outputs, e.g. electricity, heat or hydrogen.

available space to add capture equipment and in locations with CO2 storage options or
demand for use. Opportunities are concentrated in China for coal‐fired power plants and theUnited States for gas‐fired capacity. While they provide just 2% of total generation from 2030
to 2050 in the NZE, retrofitted plants capture a total of 15 Gt CO2 emissions over the period.
Carbon capture technologies remain at an early stage of commercialisation. Two commercial
power plants have been equipped with CCUS over the past five years, and there are currently
18 CCUS power projects in development worldwide. Completing these projects in a timely
manner and driving down costs through learning‐by‐doing will be critical to further
expansion. An alternative would be to retrofit existing coal‐ and gas‐fired power plants toco‐fire high shares of hydrogen‐based fuels. In the NZE, hydrogen‐based fuels generate
900 TWh of electricity in 2030 and 1 700 TWh in 2050 in this way (about 2.5% of global
generation in both years). A large‐scale (1 GW) demonstration project to co‐fire with 20%
ammonia is underway in 2021, with aims to move towards ammonia‐only combustion.
Manufacturers have signalled that future gas turbine designs will be capable of co‐firing highshares of hydrogen. While the investment needed to co‐fire hydrogen‐based fuels looks to
be modest, relatively high fuel costs point to targeted applications to support power systemstability and flexibility rather than bulk power.
The global use of unabated fossil fuels in electricity generation is sharply reduced in the NZE.
Unabated coal‐fired generation is cut by 70% by 2030, including the phase‐out of unabatedcoal in advanced economies, and phased out in all other regions by 2040. Large‐scale oil‐fired
generation is phased out in the 2030s. Generation using natural gas without carbon capturerises in the near term, replacing coal, but starts falling by 2030 and is 90% lower by 2040
compared with 2020.
The electricity sector is the first to achieve net‐zero emissions mainly because of the low
costs, widespread policy support and maturity of an array of renewable energy technologies.
Solar PV is first among them: it is the cheapest new source of electricity in most markets andhas policy support in more than 130 countries. Onshore wind is also a market‐ready low cost
technology that is widely supported and can be scaled up quickly, rivalling the low costs ofsolar PV where conditions are good, though it faces public opposition and extensive
permitting and licensing processes in several markets. Offshore wind technology has beenmaturing rapidly in recent years; its deployment is poised to accelerate in the near term. The
current focus is on fixed‐bottom installations, but floating offshore wind starts to make amajor contribution from around 2030 in the NZE, helping to unlock the enormous potentialthat exists around the world. Hydropower, bioenergy and geothermal technologies are wellestablished, mature and flexible renewable energy sources. As dispatchable generating
options, they will be critical to electricity security, complemented by batteries, which haveseen sharp cost reductions, have proven their ability to provide high‐value grid services andcan be built in a matter of months in most locations. Concentrating solar and marine power
are less mature technologies, but innovation could see them make important contributionsin the long term.

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International Energy Agency | Special Report3.4.2

Key milestones and decision points

Table 3.2 ⊳Key milestones in transforming global electricity generation

Category
Decarbonisation of  Advanced economies in aggregate: 2035.
electricity sector
 Emerging market and developing economies: 2040.
Hydrogen‐basedfuels Start retrofitting coal‐fired power plants to co‐fire with ammonia and gas turbines
to co‐fire with hydrogen by 2025.

Unabatedfossil fuel

 Phase out all subcritical coal‐fired power plants by 2030 (870 GW existing plants
and 14 GW under construction).

3

 Phase out all unabated coal‐fired plants by 2040.
 Phase out large oil‐fired power plants in the 2030s.
 Unabated natural gas‐fired generation peaks by 2030 and is 90% lower by 2040.
Category

2020

2030

2050

Total electricity generation (TWh)

26 80037 30071 200Installed capacity (GW)

2 990

10 30026 600Share in total generation

29%

61%

88%

Share of solar PV and wind in total generation

9%

40%

68%

Coal and gas plants equipped with CCUS

4

460

1 330

Bioenergy plants with CCUS

0

130

840

Average blending in global coal‐fired generation (without CCUS)

0%

3%

100%

Average blending in global gas‐fired generation (without CCUS)

0%

9%

85%
0.0%

Renewables

Carbon capture, utilisation and storage (CCUS) generation (TWh)Hydrogen and ammonia

Unabated fossil fuels
Share of unabated coal in total electricity generation

35%

8%

Share of unabated natural gas in total electricity generation

23%

17%

0.4%

2016‐202021‐302031‐507

17

24

Nuclear power
Average annual capacity additions (GW)
Infrastructure
Electricity networks investment in USD billion (2019)
Substations capacity (GVA)

260

820

800

55 900113 000

290 400

Battery storage (GW)

18

590

3 100

Public EV charging (GW)

46

1 780

12 400Transforming the electricity sector in the way envisioned in the NZE involves large capacity
additions for all low‐emissions fuels and technologies. Global renewables capacity more thantriples to 2030 and increases ninefold to 2050. From 2030 to 2050, this means adding morethan 600 GW of solar PV capacity per year on average and 340 GW of wind capacity per year
including replacements (Figure 3.11), while offshore wind becomes increasingly important
Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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IEA. All rights reserved.

Note: GW = gigawatts; GVA = gigavolt amperes.

over time (over 20% of total wind additions from 2021 to 2050, compared with 7% in 2020).
The annual deployment of battery capacity in the electricity sector needs to scale up inparallel, from 3 GW in 2019 to 120 GW in 2030 and over 240 GW in 2040. Retrofitting existingcoal‐ and gas‐fired power plants also needs to get underway.
Figure 3.11 ⊳ Solar PV and wind installed capacity in the NZEWind

Solar PVGW

16 000

12 000

8 000

4 000

2010

2020

2030

2040

2050

2010

Emerging market and developing economies

2020

2030

2040

2050

Advanced economies
IEA. All rights reserved.

Solar PV and wind need to scale up rapidly to decarbonise electricity,with total solar PV capacity growing 20-fold and wind 11-fold by 2050

Figure 3.12 ⊳ Global investment in electricity networks in the NZE

Billion USD (2019)

Grid investment

Driver for grid investment

1 200

100%

900

75%

600

50%

300

25%

2020

2030

2040

2050

Replacement
Renewables
Increased
demand2021‐302031‐402041‐50
IEA. All rights reserved.

Electricity network investment triples to 2030 and remains elevated to 2050,
meeting new demand, replacing ageing infrastructure and integrating more renewables

118

International Energy Agency | Special ReportInvestment in electricity networks will be crucial to achieving this transformation. Global
electricity networks that took over 130 years to build need to more than double in total
length by 2040 and increase by another 25% by 2050. Total grid investment needs to rise to
USD 820 billion by 2030, and USD 1 trillion in 2040, before falling back after electricity is fully
decarbonised and the growth of renewables slows to match demand growth (Figure 3.12).
Replacing ageing infrastructure is an important part of network investment through to 2050
in the NZE.

3

Governments face several key decisions in the electricity sector if they are to follow thepathway to net‐zero emissions by 2050 envisioned in the NZE particularly about how to bestuse existing power plants. For retrofits of coal‐ or gas‐fired capacity, either with carbon
capture or co‐firing with hydrogen‐based fuels (or full conversion), decisions are needed tosupport first‐of‐a‐kind projects before 2030 before widespread retirement of unabatedplants becomes necessary. For other fossil fuel power stations, decisions about phase outs
are needed. Coal‐fired power plants should be phased out completely by 2040 unlessretrofitted, starting with the least‐efficient designs by 2030 (Figure 3.13). This would require
shutting 870 GW of existing subcritical coal capacity globally (11% of all power capacity) andinternational collaboration to facilitate substitutes. By 2040, all large‐scale oil‐fired power
plants should be phased out. Natural gas‐fired generation remains an important part ofelectricity supply through to 2050, but strong government support will be needed to ensurethat CCUS is deployed soon and on a large scale.

Thousand TWh

Figure 3.13 ⊳ Coal-fired electricity generation by technology in the NZE
10Equipped with CCUS
Ammonia

8

Generation from coal‐fired
plants in the APC

6

Combined heat and power
Ultra‐supercritical and IGCC
Supercritical
Subcritical

4
2

2010

2020

2030

2040

2050
IEA. All rights reserved.

Coal-fired power accounted for 27% of global energy CO2 emissions in 2020, and in theNotes: APC = Announced Pledges Case; IGCC = integrated gasification combined‐cycle. Ammonia includes
co‐firing and full conversion of coal plants.

Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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NZE, all subcritical plants are phased out by 2030 and all plants without CCUS by 2040

The path to net‐zero emissions could be facilitated by early government action to help moveseveral technologies that provide power system flexibility through the demonstration phases
and bring them to market. Expanding the set of energy storage technologies to complement
batteries and addressing emerging needs for longer duration seasonal storage would be ofparticular value. Technical solutions to support the stability of power grids with high sharesof solar and wind would also benefit from research and development (R&D) support.
There are three important sets of decisions to be made concerning nuclear power: lifetime
extensions; pace of new construction; and advances in nuclear power technology. In
advanced economies, decisions need to be made about new construction and the large
number of nuclear power plants that may be retired over the next decade absent action toextend their lifetimes and make the required investment. Without further lifetime
extensions and new projects beyond those already under construction, nuclear power
output in advanced economies will decline by two‐thirds over the next two decades(IEA, 2019). In emerging market and developing economies, there are decisions to be madeabout the pace of new nuclear power construction. From 2011 to 2020, an average of 6 GWof new nuclear capacity came online each year. By 2030, the rate of new construction
increases to 24 GW per year in the NZE. The third set of decisions concerns the extent ofgovernment support for advanced nuclear technologies, particularly those related to small
modular reactors and high‐temperature gas reactors, both of which can expand markets fornuclear power beyond electricity.
Figure 3.14 ⊳ Additional global alternative capacity needed in a Low Nuclear

GW

and CCUS Case
3 000

Other dispatchable
Batteries
Solar PV
Wind
CCUS
Nuclear

2 000
1 000
0
‐1 000

2025

2030

2035

2040

2045

2050
IEA. All rights reserved.

Sharply reducing the roles of nuclear power and carbon capture would require even faster
growth in solar PV and wind, making achieving the net zero goal more costly and less likely
Note: The Low Nuclear and CCUS Case assumes that global nuclear power output is about 60% lower in 2050
than in the NZE due to no additional lifetime extensions or new nuclear projects in advanced economies andno expansion of the current pace of construction in emerging market and developing economies, and that theamount of coal‐ and gas‐fired capacity equipped with CCUS is 99% lower than in the NZE.

120International Energy Agency | Special ReportFailing to take timely decisions on nuclear power and CCUS would raise the costs of a net‐
zero emissions pathway and add to the risk of not meeting the goal by placing an additionalburden on wind and solar to scale up even more quickly than in the NZE (Figure 3.14). In a
Low Nuclear and CCUS Case, we assume that global nuclear power output is 60% lower in
2050 than in the NZE as a result of no additional nuclear lifetime extensions or new projects
in advanced economies and no expansion of the current pace of construction in emerging
market and developing economies, and that only the announced CCUS projects arecompleted (representing 1% of the CCUS capacity added in the NZE).

3

Our analysis indicates that the burden of replacing those sources of low‐carbon generation
would fall mainly on solar PV and wind power, calling for 2 400 GW more capacity than in
the NZE – an amount far exceeding their combined global capacity in operation in 2020
(Figure 3.14). There would also be a need for about 480 GW of battery capacity above andbeyond the 3 100 GW deployed in the NZE, plus more than 300 GW of other dispatchable
capacity to meet demand in all seasons and ensure system adequacy. This would call for an
additional USD 2 trillion investment in power plants and related grid assets (net of lower
investment in nuclear and CCUS). Taking account of avoided fuel costs, the estimated total
additional cost of electricity to consumers between 2021 and 2050 is USD 260 billion.

3.5

Industry

3.5.1

Energy and emission trends in the Net‐Zero Emissions Scenario

As the second‐largest global source of energy sector CO2 emissions, industry has a vital
contribution to make in achieving the net zero goal. Industrial CO2 emissions6 (including fromenergy use and production processes) totalled about 8.4 Gt in 2020. Advanced economies
accounted for around 20% and emerging market and developing economies for around 80%,
although complex global supply chains for the production of materials and manufacturing
mean that advanced economies generally consume far more finished goods than they
produce.
Three heavy industries – chemicals, steel and cement – account for nearly 60% of allindustrial energy consumption and around 70% of CO2 emissions from the industry sector.
Production is highly concentrated in emerging market and developing economies, which
account for 70‐90% of the combined output of these commodities (Figure 3.15). China alone
was responsible for almost 60% of both steel and cement production in 2020. These bulk
materials are essential inputs to our modern way of life, with few cost‐competitive
substitutes; the challenge is to carry on producing these materials without emitting CO2.

6All CO2 emissions in this section refer to direct CO2 emissions from the industry sector unless otherwise
specified.

Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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The outlook for global materials demand in the NZE is one of plateaus and small increases.
This is in stark contrast with the growth seen during the last two decades when global steel

demand rose by 2.1‐times, cement by 2.4‐times and plastics (a key group of material outputs
from the chemical sector) by 1.9‐times in response to global economic and population
expansion. When economies are developing, per capita material demand tends to rise
rapidly to build up stocks of goods and infrastructure. As economies mature, future demandstems primarily from the need to refurbish and replace these stocks, the levels of which tend
to saturate. In the NZE, flattening or even declining demand in many countries around theworld leads to slower global demand growth. Some countries such as India see higher growthin steel and cement production, while production in China declines considerably following its
industrial boom period after the turn of the millennium.
Figure 3.15 ⊳ Global CO2 emissions from industry by sub-sector in the NZE

Gt CO2

200

6

150

4

100

2

50

2020
Chemicals

2030
Steel

2040

2050
Cement

2020
Other

2030

2040

Index (2020 = 100)

Emerging market and developing economies

Advanced economies
82050

Material production (right axis)
IEA. All rights reserved.

The majority of residual emissions in industry in 2050 comefrom heavy industries in emerging market and developing economies
Note: Other includes the production of aluminium, paper, other non‐metallic minerals and other non‐ferrous
metals, and a series of light industries.

Certain segments of material demand increase rapidly to support the required expansion ofenergy‐related infrastructure in the NZE, notably renewable electricity generation andtransport infrastructure. The additional infrastructure required for these two segments by
2050 relative to today alone contributes roughly 10% of steel demand in 2050. But co‐ordinated cross‐sectoral strategies, including modal shifts in transport and building
renovation, as well as other changes in design, manufacturing methods, construction
practices and consumer behaviour, more than offset this increase. Overall, global demand
for steel in 2050 is 12% higher than today, primary chemicals is 30% higher and cement
demand is broadly flat.
CO2 emissions from heavy industry decline by 20% by 2030 and 93% by 2050 in the NZE.
Optimising the operational efficiency of equipment, adopting the best available technologies
for new capacity additions and measures to improve material efficiency play an important
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International Energy Agency | Special Reportpart in this. However, there are limits to how much emissions can be reduced by thesemeasures. Almost 60% of emissions reductions in 2050 in the NZE are achieved using
technologies that are under development today (large prototype or demonstration scale)(Figure 3.16).
Figure 3.16 ⊳ Global CO2 emissions in heavy industry and reductions by
mitigation measure and technology maturity category in the NZE

Gt CO2

Mitigation measures

Maturity of measures

3

Activity

8

Measure+39%

CCUS
Energy efficiency
Other fuel shifts
Electrification
Other renewables
Bioenergy
HydrogenMaterial efficiency

6

‐95%

4

2

Maturity

2020

2050

2020

Prototype
Demonstration
Market uptake
Mature2050

IEA. All rights reserved.

An array of measures reduces emissions in heavy industry,
with innovative technologies like CCUS and hydrogen playing a critical role

Aside from the need for high‐temperature heat and process emissions, two factors explain
the slower pace of emissions reductions in heavy industries relative to other areas of theenergy system. First, the ease with which many industrial materials and products can be
traded globally means that markets are competitive and margins are low. This leaves little
room to absorb additional costs stemming from the adoption of more expensive production
pathways. It will take time to develop robust global co‐operation and technology transfer
frameworks or domestic solutions to enable a level playing field for these technologies.
Second, heavy industries use capital‐intensive and long‐lived equipment, which slows the
deployment of innovative low‐emission technologies. Capacity additions in the period to2030 – before a large‐scale roll‐out of innovative processes can take place – largely explain
the persistence of industrial emissions in 2050, more than 80% of which are in emerging
market and developing economies. Strategically timed investment in low‐carbon
technologies could help minimise early retirements (Box 3.1).
Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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Hydrogen and CCUS technologies together contribute around 50% of the emissions
reductions in heavy industry in 2050 in the NZE. These technologies enable the provision oflarge amounts of high‐temperature heat, which in many cases cannot be easily provided byelectricity with current technologies, and help to reduce process emissions from the chemical
reactions inherent in some industrial production. Bioenergy also makes a contribution in awide array of industrial applications.

Box 3.1 ⊳Investment cycles in heavy industry

For heavy industry, the year 2050 is just one investment cycle away. Average lifetimes ofemissions‐intensive assets such as blast furnaces and cement kilns are around 40 years.
After about 25 years of operation, however, plants often undergo a major refurbishment
to extend their lifetimes.
The challenge is to ensure that innovative near‐zero emissions industrial technologies
that are at large prototype and demonstration stage today reach markets within the next
decade, when around 30% of existing assets will have reached 25 years of age and thus
face an investment decision. If these innovative technologies are not ready, or not usedeven if ready, this would have a major negative impact on the pace of emissions
reductions or risk an increase in stranded assets (Figure 3.17). Conversely, if they are
ready, and if existing plants are retrofit or replaced with them at the 25‐year investment
decision point, this could reduce projected cumulative emissions to 2050 from existing
heavy industry assets by around 40%. The critical window of opportunity from now to2030 should not be missed.

Gt CO2

Figure 3.17 ⊳ CO2 emissions from existing heavy industrial assets in the NZE
6NZE (heavy industry)

4

2

2020

Existing
infrastructure:
Typical lifetime

Existing infrastructure: 25‐year
investment cycle

2030

2040

2050
IEA. All rights reserved.

Intervening at the end of the next 25-year investment cycle could help unlock
60 Gt CO2, around 40% of projected emissions from existing heavy industry assets

The energy mix in industry changes radically in the NZE. The share of fossil fuels in totalenergy use declines from around 70% today to 30% in 2050. The vast majority of fossil fuels
still being used then are in heavy industries, mainly as chemical feedstock (50%) or in plants
equipped with CCUS (around 30%). Electricity is the dominant fuel in industrial energy
demand growth, with its share of total industrial energy consumption rising from 20% in 2020
to 45% in 2050. Some 15% of this electricity is used to produce hydrogen. Bioenergy plays animportant role, contributing 15% of total energy use in 2050, but sustainable supplies are
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International Energy Agency | Special Reportlimited, and it is also in high demand in the power and transport sectors. Renewable solar
and geothermal technologies to provide heat make a small but fast growing contribution(Figure 3.18).
Figure 3.18 ⊳ Global final industrial energy demand by fuel in the NZEHeavy industry

Total industry

100%

3

80%
60%
40%
20%
2020

2030

Coal
Natural gas with CCUS
Bioenergy and waste

2040
Coal with CCUS
Electricity
Other renewables

2050 2020

2030

Oil
Electricity for hydrogen
Hydrogen (imported)

2040

2050

Natural gas
Heat (imported)
IEA. All rights reserved.

Fossil fuel use in industry is halved by 2050, replaced primarily by electricity and bioenergy
Notes: Industrial energy consumption includes chemical feedstock and energy consumed in blast furnaces andcoke ovens. Hydrogen refers to imported hydrogen and excludes captive hydrogen generation. Electricity forhydrogen refers to electricity used in the production of captive hydrogen via electrolysis.

Chemicals production

Technologies that are currently available on the market account for almost 80% of theemissions savings achieved globally in the chemical industry by 2030 in the NZE relative totoday. They include recycling and re‐use of plastics and more efficient use of nitrogen
fertilisers, which reduce the demand for primary chemicals, and measures to increase energy
efficiency. Beyond 2030, the bulk of emissions reductions result from the use of technologies
whose integration in chemical processes is under development today, including certain CCUS
applications and electrolytic hydrogen generated directly from variable renewable electricity(Figure 3.19). CCUS‐equipped conventional routes and pyrolysis technologies are mostcompetitive in regions with access to low cost natural gas, while electrolysis is the favoured
option in regions where the deployment of CCUS is impeded by a lack of infrastructure or
public acceptance.

Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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In the NZE, emissions from the chemicals sub‐sector fall from 1.3 Gt in 2020 to 1.2 Gt in 2030
and around 65 Mt in 2050. The share of fossil fuels in total energy use falls from 83% in 2020
(mostly oil and natural gas), to 76% in 2030 and 61% in 2050. Oil remains the largest fuelused in primary chemicals production by 2050 in the NZE, along with smaller quantities ofgas and coal.

Figure 3.19 ⊳ Global industrial production of bulk materials by production
route in the NZE
Chemicals

Steel

Cement100%

Conventional routes
Innovative routes
Other
Hydrogen‐based
CCUS‐equipped

75%

50%

25%

2020 2030 2050

2020 2030 2050

2020 2030 2050
IEA. All rights reserved.

Near-zero emissions routes dominate cement, primary steel and chemicals
production by 2050, with key roles for CCUS and hydrogen-based technologies
Notes: CCUS = carbon capture, utilisation and storage. Chemicals refers to the production of primary chemicals(ethylene, propylene, benzene, toluene, mixed xylenes, ammonia and methanol). Steel refers to primary steel
production. Other includes innovative processes that utilise bioenergy and directly electrify production.
Hydrogen‐based refers to electrolytic hydrogen. Fossil fuel‐based hydrogen with CCUS is included in the CCUS‐
equipped category.

Iron and steel production
In the NZE, global CO2 emissions from the iron and steel sub‐sector fall from 2.4 Gt in 2020
to 1.8 Gt in 2030 and 0.2 Gt in 2050, as the unabated use of fossil fuels falls sharply. Theirshare of the overall fuel mix drops from 85% today to just over 30% in 2050. The steel
industry remains one of the last sectors using significant amounts of coal in 2050, primarily
due to its importance as a chemical reduction agent, albeit mostly in conjunction with CCUS.
The NZE sees a radical technological transformation of the iron and steel sub‐sector basedlargely on a major shift from coal to electricity. By 2050, electricity and other non‐fossil fuelsaccount for nearly 70% of final energy demand in the sector, up from just 15% in 2020. This
shift is driven by technologies such as scrap‐based electric arc furnaces (EAF), hydrogen‐based direct reduced iron (DRI) facilities, iron ore electrolysis and the electrification ofancillary equipment. The share of coal in total energy use drops from 75% in 2020 to 22% by
2050 in the NZE, of which 90% is used in conjunction with CCUS.
Technologies that are currently on the market deliver around 85% of emissions savings insteel production to 2030. They include material and energy efficiency measures and a major
increase in scrap‐based production – which requires only around one‐tenth of the energy ofprimary steel production – driven primarily by increased scrap availability as more products
reach their end‐of‐life. Partial hydrogen injection into commercial blast furnaces and DRI
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International Energy Agency | Special Reportfurnaces gain pace in the mid‐2020s, building on pilot projects testing the practice today.
After 2030, the bulk of emission reductions come from the use of technologies that are underdevelopment, including hydrogen‐based DRI and iron ore electrolysis. Several
CCUS‐equipped process technologies are deployed in parallel, including innovative smelting
reduction, natural gas‐based DRI production (particularly in regions with low natural gas
prices) and innovative blast furnace retrofit arrangements in regions with relatively youngplants.

3

Cement production
Producing a tonne of cement today generates around 0.6 tonnes CO2 on average, two‐thirdsof which are process emissions generated from carbon released from the raw materials used.
Fossil fuels – mostly coal plus some petroleum coke – account for 90% of thermal energy
needs.
Increased blending of alternative materials into cement to replace a portion of clinker (theactive and most emissions‐intensive ingredient), lower demand for cement and energy
efficiency measures deliver around 40% of the emissions savings in 2030 compared with
2020. Through use of blended cements, the global clinker‐to‐cement ratio declines from 0.71
in 2020 to 0.65 in 2030. The ratio continues to decline after 2030, but more slowly, reaching
0.57 in 2050 (blended cements could reach a clinker‐to‐cement ratio as low as 0.5, butmarket application potential depends on regional contexts). Limestone and calcined clay are
the main alternative materials used in blended cements by 2050. Since 0.5 is the lowest
technically achievable clinker‐to‐cement ratio, other measures are needed to achieve deeper
emission reductions.

Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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After 2030 in the NZE, the bulk of emissions reductions come from the use of technologies
that are under development today. CCUS is the most important, accounting for 55% of
reductions in 2050 relative to today. In many cases, it is more cost‐effective in the NZE toapply CCUS to fossil fuel combustion emissions than to switch to zero‐emissions energy
sources. Coal use is eliminated from cement production by 2050, when natural gas accounts
for about 40% of thermal energy (up from 15% today), biomass and renewable waste for afurther 35% (up from less than 5% today), hydrogen and direct electrification for just about
15%, and oil products and non‐renewable waste for the remainder. Constraints on theavailability of sustainable biomass supplies prevent it from claiming a higher share. Directelectrification of cement kilns is at the small prototype stage today, and so only starts to be
deployed after 2040 on a small scale. From the 2040s, hydrogen provides around 10% of
thermal energy needs in cement kilns, although blending of small amounts begins earlier.
Innovative types of cement based on alternative binding materials that limit or avoid thegeneration of process emissions, and even enable CO2 capture during the curing process, areeither still at much earlier stages of development relative to other options like CCUS, or have
limited applicability.

Box 3.2 ⊳What about other industry sub-sectors?

Steel, cement and chemicals are not the only outputs from the industry sector. It also
includes other energy‐intensive sub‐sectors such as aluminium, paper, other non‐metallic minerals and non‐ferrous metals, as well as light industries that produce
vehicles, machinery, food, timber, textiles and other consumer goods, together with theenergy consumed in construction and mining operations.
Emissions from the light industries decline by around 30% by 2030 and around 95% by
2050 in the NZE. In contrast to the heavy industries, most of the technologies requiredfor deep emission reductions in these sub‐sectors are available on the market and readyto deploy. This is in part because more than 90% of total heat demand is low/medium‐
temperature, which can be more readily and efficiently electrified.
Figure 3.20 ⊳ Share of heating technology by temperature level in lightindustries in the NZE
Low/medium‐temperature heat demand by technology

Technology
Fossil fuel heater
Biomass heater
Electric heater
Hydrogen heater
Heat pump
Other heat sources

2020
2030
2050
High‐temperature heat demand by technology
2020
2030
2050

Sub‐sectors
Mining and construction
Food and tobacco
Machinery
Textile and leather
Transport equipment
Wood and wood products

Heat demand by sub‐sector
2020
2030
2050
25%

50%

75%

100%
IEA. All rights reserved.

The share of electricty in satisfying heat demand for light industries rises
from less than 20% today to around 40% in 2030 and about 65% in 2050
Notes: Light industries excludes non‐specified industrial energy consumption. Low/medium‐temperature
heat corresponds to 0‐400 °C and high‐temperature heat to >400 °C. Other heat sources includes solar
thermal and geothermal heaters, as well as imported heat from the power and fuel transformation sector.

Electricity accounts for around 40% of heat demand by 2030 and about 65% by 2050. For
low‐ (<100 °C) and some medium‐ (100‐400 °C) temperature heat, electrification includes
an important role for heat pumps (accounting for about 30% of total heat demand in2050). In the NZE, around 500 MW of heat pumps need to be installed every month overthe next 30 years. Along with electrification, there are smaller roles for hydrogen andbioenergy for high‐temperature heat (>400 °C), accounting for around 20% and around
15% respectively of total energy demand in 2050 (Figure 3.20). The rate of electrolyser
capacity deployment is much lower than heavy industries, but the unit sizes will also be
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International Energy Agency | Special Reportmuch smaller. About 5% of heat demand is satisfied by direct use of renewables,
including solar thermal and geothermal heating technologies.
Energy efficiency also plays a critical role in these manufacturing industries, notably
through increased efficiency in electric motors (conveyers, pumps and other driven
systems). By 2030, 90% of the motor sales in other industries are Class 3 or above.

3.5.2

3

Key milestones and decision points

Table 3.3 ⊳Key milestones in transforming global heavy industry sub-sectors

Category
Heavy industry

 2035: virtually, all capacity additions are innovative low‐emissions routes.

Industrial motors

 2035: all electric motors sales are best in class.

Category

2020

2030

2050

21%

28%

46%

Total industry
Share of electricity in total final consumption
Hydrogen demand (Mt H2)

51

93

187

CO2 captured (Mt CO2)

3

375

2 800

17%

27%

54%

8%

14%

35%

46

63

83

0

38

210

1%

13%

93%

2

70

540

32%

38%

46%

5

19

54

0

36

295

Share of primary steel production: hydrogen‐based DRI‐EAF

0%

2%

29%

iron ore electrolysis‐EAF

0%

0%

13%

CCUS‐equipped processes

0%

6%

53%

1

70

670

Clinker to cement ratio

0.71

0.65

0.57

Hydrogen demand (Mt H2)

0

2

12

0%

9%

93%

0

215

1 355

Chemicals
Share of recycling: reuse in plastics collection
reuse in secondary production
Hydrogen demand (Mt H2)with on‐site electrolyser capacity (GW)
Share of production via innovative routes
CO2 captured (Mt CO2)
Steel
Recycling, re‐use: scrap as share of input
Hydrogen demand (Mt H2)with on‐site electrolyser capacity (GW)

CO2 captured
CementShare of production via innovative routes
CO2 captured (Mt CO2)

From 2030 onwards, all new capacity additions in industry in the NZE feature near‐zeroemissions technologies. Much of the heavy industry capacity that will be added and replaced
Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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Note: DRI = direct reduced iron; EAF = electric arc furnace.

in the coming years is in emerging market and developing economies; they may expect
financial support from advanced economies. Each month from 2030 to 2050, the NZE implies
an additional 10 industrial plants equipped with CCUS, three additional fully hydrogen‐basedindustrial plants and 2 GW of extra electrolyser capacity at industrial sites. While challenging,
this is achievable. For comparison, about 12 heavy industrial facilities were built from scratch
on average per month in China alone from 2000 to 2015. By 2050, nearly all production inheavy industry is with near‐zero emissions technologies.
Decisive action from governments is imperative to achieve clean energy transitions in heavy
industry at the scale and pace envisioned in the NZE. Within the next two years, governments
in advanced economies will need to take decisions about funding for R&D for critical near‐zero emissions industrial technologies and for mitigating the investment risks associated withdemonstrating them at scale. This should lead to at least two or three commercial
demonstration projects for each technology in different regions, and to market deployment
by the mid‐2020s. International co‐ordination and co‐operation would facilitate better useof resources and help prevent gaps in funding.
Governments also need to take early decisions on large‐scale deployment of near‐zeroemissions technologies. By 2024 in advanced economies and 2026 in emerging market anddeveloping economies, governments should have in place a strategy for incorporating near‐zero emissions technologies into the next series of capacity additions and replacements forsteel and chemical plants, which should include decisions about whether to pursue CCUS,
hydrogen or a combination of both. If they are to succeed, those strategies need to include
concrete plans for developing and financing the necessary infrastructure for CCUS and/orhydrogen, together with clean electricity generation for hydrogen production. The
construction of the required infrastructure should begin as soon as possible given the longlead‐times involved.
Within a similar timeframe, governments of countries that produce cement should decide
how to develop the necessary CCUS infrastructure for that sub‐sector, including thenecessary legal and regulatory frameworks. Importing countries should make plans to moveprogressively to exclusive use of low‐emissions cement, which may involve the need tosupport the development of CCUS‐equipped facilities elsewhere in order to ensure supplies
and to avoid a disproportionate burden being placed on other countries.
Strategies must be underpinned by specific policies. By 2025, all countries should have a long‐term CO2 emissions reduction policy framework in place to provide certainty that the next
wave of investment in capacity additions will feature near‐zero emissions technologies.
Successful strategies are likely to require initial measures such as carbon contracts fordifference, public procurement and incentives to encourage private sector procurement. As
new technologies are deployed and costs decline, there is likely to be a strong case by about
2030 for replacing these initial measures with others such as CO2 taxes, emissions trading
systems and emissions performance standards. Financing support for near‐zero emissions
capacity additions may also have an important role to play through measures such as low
interest and concessional loans and blended finance, as well as through contributions by
130International Energy Agency | Special Reportadvanced economies to funds that support projects in emerging market and developing
economies. Strategies should also include measures to reduce industrial emissions throughmaterial efficiency, for example by revising design regulations, adopting incentives topromote longer product and building lifetimes, and improving systems for collecting andsorting materials for recycling.
There is a strong case for an international agreement on the transition to near‐zero emissions
for globally traded products by the mid‐2020s so as to establish a level playing field.
Alternatively, countries may need to resort to measures to shield domestic near‐zeroemissions production from competition from products that create emissions. Any such policy
would need to be designed to respect the regulatory frameworks governing international
trade, such as those of the World Trade Organization.

3

Even with accelerated innovation timelines and strong policies in place, some high‐emitting
capacity additions will be needed to meet demand in the next decade before near‐zeroemissions technologies are available. It would make sense for governments to require any
new capacity to incorporate retrofit‐ready designs so that unabated capacity added in thenext few years has the technical capacity and space requirement to integrate near‐zeroemissions technologies in coming years. Beyond 2030, investment in the NZE is confined toinnovative near‐zero emissions process routes.
Governments should not overlook the need for measures to spur deployment of alreadyavailable near‐zero emissions technologies in light manufacturing industries. Adopting acarbon price and then sufficiently increasing the price over time – through carbon taxes or
emissions trading systems for larger manufacturers – may be the simplest way to achievethat objective. Other regulatory measures such as tradeable low‐carbon fuel and emissions
standards could yield the same outcome, but may involve greater administrative complexity.
Technology mandates are likely to be needed to achieve the energy efficiency savings in the
NZE, such as minimum energy performance standards for new motors and boilers. Tailored
programmes and incentives for small and medium enterprises could also play a helpful role.

3.6

Transport

3.6.1

Energy and emission trends in the Net‐Zero Emissions Scenario

7

Unless otherwise noted, CO2 emissions reported here are direct emissions from fossil fuel combusted during
the operation of vehicles.

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The global transport sector emitted over 7 Gt CO2 in 2020, and nearly 8.5 Gt in 2019 before
the Covid‐19 pandemic.7 In the NZE, transport sector CO2 emissions are slightly over 5.5 Gt
in 2030. By 2050 they are around 0.7 Gt – a 90% drop relative to 2020 levels. CO2 emissions
decline even with rapidly rising passenger travel, which nearly doubles by 2050, and rising
freight activity, which increases by two‐and‐a‐half‐times from current levels, and an increasein the global passenger car fleet from 1.2 billion vehicles in 2020 to close to 2 billion in 2050.

The transport modes do not decarbonise at the same rate because technology maturity
varies markedly between them (Figure 3.21). CO2 emissions from two/three‐wheelers almost
cease by 2040, followed by cars, vans and rail in the late 2040s. Emissions from heavy trucks,
shipping and aviation fall by an annual average of 6% between 2020 and 2050, but stillcollectively amount to more than 0.5 Gt CO2 in 2050. This reflects projected activity growth
and that many of the technologies needed to reduce CO2 emissions in long distance transport
are currently under development and do not start to make substantial inroads into themarket in the coming decade.
Figure 3.21 ⊳ Global CO2 transport emissions by mode and share of emissions
reductions to 2050 by technology maturity in the NZE

Gt CO2CO₂ emissions by mode

Technology maturity by mode

4

100%

3

75%

2

50%

1

25%

2010

2020

2030

Light‐duty vehicles
Other road
Aviation

2040

2050

Heavy trucks
Shipping
Rail

Heavy
trucksShipping

Aviation

MatureMarket uptake

Demonstration

Prototype
IEA. All rights reserved.

Passenger cars can make use of low-emissions technologies on the market, but majoradvances are needed for heavy trucks, shipping and aviation to reduce their emissions
Notes: Other road = two/three wheelers and buses. Shipping and aviation include both domestic andinternational operations. See Box 2.4 for details on the maturity categories.

Decarbonisation of the transport sector in the NZE relies on policies to promote modal shifts
and more efficient operations across passenger transport modes (see sections
2.5.7 and 4.4.3),8 as well as improvements in energy efficiency. It also depends on two major
technology transitions: shifts towards electric mobility (electric vehicles [EVs] and fuel cellelectric vehicles [FCEVs])9 and shifts towards higher fuel blending ratios and direct use of

8
Examples of efficient operations include: seamless integration of various modes (inter‐modality) and“Mobility as a Service” in passenger transport; logistics measures in road freight, e.g. backhauling, night‐timedeliveries, real‐time routing; slow steaming in shipping; and air traffic management, e.g. landing and take‐offscheduling in aviation.
9
EVs include battery electric vehicles, plug‐in hybrid electric‐gasoline vehicles and plug‐in hybrid electric‐diesel
vehicles. FCEVs contain a battery and electric motor and are capable of operating without tailpipe emissions.

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International Energy Agency | Special Reportlow‐carbon fuels (biofuels and hydrogen‐based fuels). These shifts are likely to requireinterventions to stimulate investment in supply infrastructure and to incentivise consumer
uptake.
Transport has traditionally been heavily reliant on oil products, which accounted for morethan 90% of transport sector energy needs in 2020 despite inroads from biofuels andelectricity (Figure 3.22). In the NZE, the share of oil drops to less than 75% in 2030 and slightly
over 10% by 2050. By the early 2040s, electricity becomes the dominant fuel in the transport
sector worldwide in the NZE: it accounts for nearly 45% of total final consumption in 2050,
followed by hydrogen‐based fuels (28%) and bioenergy (16%). Biofuels almost reach a 15%
blending share in oil products by 2030 in road transport, which reduces oil needs by around
4.5 million barrels of oil equivalent per day (mboe/d). Beyond 2030, biofuels are increasingly
used for aviation and shipping, where the scope for using electricity and hydrogen is more
limited. Hydrogen carriers (such as ammonia) and low‐emissions synthetic fuels also supply
increasing shares of energy demand in these modes.

3

Figure 3.22 ⊳ Global transport final consumption by fuel type and modein the NZEConsumption by mode

Consumption by fuel

Modes
Other
Aviation
Shipping
Rail
Heavy trucks
LDVs
Other road

EJ

120

90

60

Fuels
Hydrogen‐based fuels
Bioenergy
Electricity
Fossil fuels

30

2020

2030

2040

2050

2020

2030

2050
IEA. All rights reserved.

Electricity and hydrogen-based fuels account for more than
70% of transport energy demand by 2050
Note: LDVs = Light‐duty vehicles; Other road = two/three wheelers and buses.

Electrification plays a central role in decarbonising road vehicles in the NZE. Battery costdeclines of almost 90% in a decade have boosted sales of electric passenger cars by 40% on
average over the past five years. Battery technology is already relatively commerciallycompetitive. FCEVs start to make inroads in the 2020s in the NZE. The electrification of heavy
trucks moves more slowly due to the weight of the batteries, high energy and power
Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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Road vehicles

requirements required for charging, and limits on driving ranges. But fuel cell heavy trucks
make significant progress, mainly after 2030 (Figure 3.23). The number of battery electric,plug‐in hybrid and fuel cell electric light‐duty vehicles (cars and vans) on the world’s roads
reaches 350 million in 2030 and almost 2 billion in 2050, up from 11 million in 2020. The
number of electric two/three‐wheelers also rises rapidly, from just under 300 million today
to 600 million in 2030 and 1.2 billion in 2050. The electric bus fleet expands from 0.5 million
in 2020 to 8 million in 2030 and 50 million in 2050.
Figure 3.23 ⊳ Global share of battery electric, plug-in hybrid and fuel cellelectric vehicles in total sales by vehicle type in the NZELight‐duty vehicles

Heavy trucks

Two/three‐wheelers

2020 2030 2050

2020 2030 2050

Plug‐in hybrid electric

Fuel cell electric

100%
80%
60%
40%
20%

2020 2030 2050
Battery electric

IEA. All rights reserved.

Sales of battery electric, plug-in hybrid and fuel cell electric vehicles soar globally
Note: Light‐duty vehicles = passenger cars and vans; Heavy trucks = medium‐ and heavy‐freight trucks.

Light‐duty vehicles are electrified faster in advanced economies over the medium term andaccount for around 75% of sales by 2030. In emerging and developing economies, theyaccount for about 50% of sales. Almost all light‐duty vehicle sales in advanced economies arebattery electric, plug‐in hybrid or fuel cell electric by the early 2030s and in emerging anddeveloping economies by the mid‐2030s.
For heavy trucks that operate over long distances, currently biofuels are the main viable
commercial alternative to diesel, and they play an important role in lowering emissions fromheavy‐duty trucks over the 2020s. Beyond 2030, the number of electric and hydrogen‐powered heavy trucks increases in the NZE as supporting infrastructure is built and as costs
decline (lower battery costs, energy density improvements and lower costs to produce anddeliver hydrogen) (IEA, 2020b). This coincides with a reduction in the availability ofsustainable bioenergy, as limited supplies increasingly go to hard‐to‐abate segments such asaviation and shipping, though biofuels still meet about 10% of fuel needs for heavy‐duty
trucks in 2050 (see Chapter 2). Advanced economies have a higher market share of battery
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International Energy Agency | Special Reportelectric and fuel cell electric heavy‐duty trucks sales in 2030, more than twice the level inemerging market and developing economies, although this gap closes towards 2050.

Probability density

Figure 3.24 ⊳ Heavy trucks distribution by daily driving distance, 2050
0.25%
0.20%
Fuel cellelectric

0.15%

3

0.10%
Batteryelectric

0.05%

0

200

400

600

800
1 000
Daily driving distance (km)
IEA. All rights reserved.

Driving distance is the key factor affecting powertrain choice for trucks

Realising the objectives of the NZE depends on rapid scaling up of battery manufacturing(current announced production capacity for 2030 would cover only 50% of required demandin that year), and on the rapid introduction on the market of next generation battery
technology (solid state batteries) between 2025 and 2030. Electrified road systems using
conductive or inductive power transfer to provide electricity to trucks offer an alternative forbattery electric and fuel cell electric trucks on long‐distance operations, but these systems
too would need rapid development and deployment.

Aviation10
The NZE assumes that air travel, measured in revenue‐passenger kilometres, increases by
only around 3% per year to 2050 relative to 2020. This compares with about around 6% overthe 2010‐19 period. The NZE assumes that aviation growth is constrained by comprehensive
government policies that promote a shift towards high‐speed rail and rein in expansion oflong‐haul business travel, e.g. through taxes on commercial passenger flights (seesection 2.5.2).
Global CO2 emissions from aviation rise in the NZE from about 640 Mt in 2020 (down fromaround 1 Gt in 2019) to a peak of 950 Mt by around 2025. Emissions then fall to 210 Mt in
2050 as the use of low‐emissions fuels grows. Emissions are hard to abate because aviation
Aviation considered here includes both domestic and international flights. While the focus here is oncommercial passenger aviation, dedicated freight and general (military and private) aviation, whichcollectively account for more than 10% of fuel use and emissions, are also included in the energy and emissions
accounting.

Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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10requires fuel with a high energy density. Emissions in aviation comprise just over 10% of
unabated CO2 emissions from fossil fuels and industrial processes in 2050.
In the NZE, the global use of jet kerosene declines to about 3 EJ in 2050 from 9 EJ in 2020
(and around 14.5 EJ in 2019 before the Covid‐19 crisis), and its share of total energy use falls
from almost 100% to just over 20%. The use of sustainable aviation fuel (SAF) starts toincrease significantly in the late‐2020s. In 2030, around 15% of total fuel consumption inaviation is SAF, most of which is biojet kerosene (a type of liquid biofuel). This is estimatedto increase the ticket price for a mid‐haul flight (1 200 km) by about USD 3 per passenger. By
2050, biojet kerosene meets 45% of total fuel consumption in aviation and synthetichydrogen‐based fuels meet about 30%. This is estimated to increase the ticket price for a
mid‐haul flight in 2050 by about USD 10 per passenger. The NZE also sees the adoption ofcommercial battery electric and hydrogen aircraft from 2035, but they account for less than
2% of fuel consumption in 2050.
Operational improvements, together with fuel efficiency technologies for airframes andengines, also help to reduce CO2 emissions by curbing the pace of fuel demand growth in the
NZE. These improvements are incremental, but revolutionary technologies such as open
rotors, blended wing‐body airframes and hybridisation could bring further gains and enable
the industry to meet the International CiviI Aviation Organization’s (ICAO) ambitious 2050
efficiency targets (IEA, 2020b).

Maritime shipping11
Maritime shipping was responsible for around 830 Mt CO2 emissions worldwide in 2020
(880 Mt CO2 in 2019), which is around 2.5% of total energy sector emissions. Due to a lack ofavailable low‐carbon options on the market and the long lifetime of vessels (typically
25‐35 years), shipping is one of the few transport modes that does not achieve zero
emissions by 2050 in the NZE. Nevertheless, emissions from shipping decline by 6% annually
to 120 Mt CO2 in 2050.
In the short term, there is considerable potential for curbing fuel consumption in shipping
through measures to optimise operational efficiency and improve energy efficiency. Suchapproaches include slow steaming and the use of wind‐assistance technologies (IEA, 2020b).
In the medium to long term, significant emissions reductions are achieved in the NZE byswitching to low‐carbon fuels such as biofuels, hydrogen and ammonia. Ammonia looks likely
to be a particularly good candidate for scaling up, and a critical fuel for long‐range
transoceanic journeys that need fuel with high energy density.
Ammonia and hydrogen are the main low‐carbon fuels for shipping adopted over the next
three decades in the NZE, their combined share of total energy consumption in shipping
reaching around 60% in 2050. The 20 largest ports in the world account for more than halfof global cargo (UNCTAD, 2018); they could become industrial hubs to produce hydrogen and

11

Maritime shipping here includes both domestic and international operations.

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International Energy Agency | Special Reportammonia for use in both chemical and refining industries, as well as for refuelling ships.
Internal combustion engines for ammonia‐fuelled vessels are currently being developed by
two of the largest manufacturers of maritime engines and are expected to become available
on the market by 2024. Sustainable biofuels provide almost 20% of total shipping energy
needs in 2050. Electricity plays a very minor role, as the relatively low energy density ofbatteries compared with liquid fuels makes it suitable only for shipping routes of up to
200 km. Even with an 85% increase in battery energy density in the NZE as solid statebatteries come to market, only short‐distance shipping routes can be electrified.

3

Rail
Rail transport is the most energy‐efficient and least carbon‐intensive way to move people
and second only to shipping for carrying goods. Passenger rail almost doubles its share of
total transport activity to 20% by 2050 in the NZE, with particularly rapid growth in urban
and high‐speed rail (HSR), the latter of which contributes to curbing growth in air travel.
Global CO2 emissions from the rail sector fall from 95 Mt CO2 in 2020 (100 Mt CO2 in 2019)
to almost zero by 2050 in the NZE, driven primarily by rapid electrification.
Figure 3.25 ⊳ Global energy consumption by fuel and CO2 intensity in
non-road sectors in the NZE
Maritime shipping

Aviation
50

80%

40

60%

30

40%

20

20%

10

2020 2030 2040 2050
Oil

Gas

Bioenergy

Hydrogen2020 2030 2040 2050
Ammonia

Electricity

gCO₂/MJ

Rail
100%

2020 2030 2040 2050

Synthetic fuelCO₂ intensity (right axis)
IEA. All rights reserved.

Railways rely heavily on electricity to decarbonise, while shipping and aviation
curb emissions mainly by switching to low-emissions fuels

In the NZE, all new tracks on high‐throughput corridors are electrified from now on, whilehydrogen and battery electric trains, which have recently been demonstrated in Europe, areadopted on rail lines where throughput is too low to make electrification economically viable.
Oil use, which accounted for 55% of total energy consumption in the rail sector in 2020, falls
to almost zero in 2050: it is replaced by electricity, which provides over 90% of rail energy
needs and by hydrogen which provides another 5%.
Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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Note: Synthetic fuel = low‐emissions synthetic hydrogen‐based fuels.

3.6.2

Key milestones and decision points

Table 3.4 ⊳Key milestones in transforming the global transport sector

Category
Road transport

 2035: no new passenger internal combustion engine car sales globally

Aviation andshipping

 Implementation of strict carbon emissions intensity reduction targets as soon as
possible.

Category

2020

2030

2050

Road transport
Share of PHEV, BEV and FCEV in sales: cars

5%

64%

100%

two/three‐wheelers

40%

85%

100%

bus

3%

60%

100%

vans

0%

72%

100%

heavy trucks

0%

30%

99%

5%

13%

41%

Share of electricity and hydrogen in total energy consumption

43%

65%

96%

Activity increase due to modal shift (index 2020=100)

100

100

130

Synthetic hydrogen‐based fuels share in total aviation energy consumption

0%

2%

33%

Biofuels share in total aviation energy consumption

0%

16%

45%

0

20

38

Share in total shipping energy consumption: Ammonia

0%

8%

46%

Hydrogen

0%

2%

17%

Bioenergy

0%

7%

21%

Biofuel blending in oil products
Rail

Aviation

Avoided demand from behaviour measures (index 2020=100)
Shipping

Infrastructure
EV public charging (million units)

1.3

40

200

Hydrogen refuelling units

540

18 00090 000Share of electrified rail lines

34%

47%

65%

Note: PHEV = plug‐in hybrid electric vehicles; BEV = battery electric vehicles; FCEV = fuel cell electric vehicles.

Electrification is the main option to reduce CO2 emissions from road and rail modes, thetechnologies are already on the market and should be accelerated immediately, together
with the roll‐out of recharging infrastructure for EVs. Deep emission reductions in the hard‐to‐abate sectors (heavy trucks, shipping and aviation) require a massive scale up of therequired technologies over the next decade, which today are largely at the prototype anddemonstration stages, together with plans for the development of associated infrastructure,including hydrogen refuelling stations.

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International Energy Agency | Special Report

The transformation of transport required to be on track to reduce emissions in line with the
NZE calls for a range of government decisions over the next decade. In the next few years,
all governments need to eliminate fossil fuel subsidies and encourage switching to low‐
carbon technologies and fuels across the entire transport sector. Before 2025, governments
need to define clear R&D priorities for all the technologies that can contribute to decarbonisetransport in line with their strategic priorities and needs. Ideally this would be informed byinternational dialogue and collaboration. R&D is critical in particular for battery technology,
which should be an immediate priority.

3

To achieve the emissions reductions required by the NZE, governments also need to movequickly to signal the end of sales of new internal combustion engine cars. Early commitments
would help the private sector to make the necessary investment in new powertrains, relative
supply chains and refuelling infrastructure (see section 4.3.4). This is particularly important
for the supply of battery metals, which require long‐term planning (IEA, 2021a).
By 2025, the large‐scale deployment of EV public charging infrastructure in urban areas
needs to be sufficiently advanced to allow households without access to private chargers to
opt for EVs. Governments should ensure sustainable business models for companies
installing chargers, remove barriers to planning and construction, and put in place regulatory,
fiscal and technological measures to enable and encourage smart charging, and to ensurethat EVs support electricity grid stability and stimulate the adoption of variable renewables(IEA, 2021b).
For heavy trucks, battery electric trucks are just beginning to become available on themarket, and fuel cell electric technologies are expected to come to market in the next few
years. Working in collaboration with truck manufacturers, governments should take steps in
the near term to prioritise the rapid commercial adoption of battery electric and fuel cellelectric trucks. By 2030, they should take stock of the competitive prospects for thesetechnologies, so as to focus R&D on the most important challenges and allow adequate time
for strategic infrastructure deployment, thus paving the way for large‐scale adoption during
the 2030s.

Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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Governments need to define their strategies for low‐carbon fuels in shipping and aviation by2025 at the latest, given the slow turnover rate of the fleets, after which they should rapidly
implement them. International co‐operation and collaboration will be crucial to success.
Priority action should target the most heavily used ports and airports so as to maximise theimpact of initial investment. Harbours near industrial areas are ideally placed to become low‐
carbon fuel hubs.

Box 3.3 ⊳What would be the implications of an all-electric approach toemissions reductions in the road transport sector?

The use of a variety of fuels in road transport is a core component of the NZE. However,
governments might want to consider an all‐electric route to eliminate CO2 emissions fromtransport, especially if other technologies such as FCEVs and advanced biofuels fail todevelop as projected. We have therefore developed an All‐Electric Case which looks at
the implications of electrifying all road vehicle modes. In the NZE, decarbonisation of roadtransport occurs primarily via the adoption of plug‐in hybrid electric vehicles (PHEVs),
battery electric vehicles (BEVs), fuel cell electric vehicles (FCEVs) and advanced biofuels.
The All‐Electric Case assumes the same rate of road transport decarbonisation as the NZE,
but achieved via battery electric vehicles alone.
The All‐Electric Case depends on even further advances in battery technologies than the
NZE that lead to energy densities of at least 400 Watt hours per kilogramme (Wh/kg) by
the 2030s at costs that would make BEV trucks preferable to FCEV trucks in long‐haul
operations. This would mean 30% more BEVs (an additional 350 million) on the road in
2030 than in the NZE. Over sixty five million public chargers would be needed to support
the vehicles, requiring a cumulative investment of around USD 300 billion, 35% higher
than the NZE. This would require faster expansion of battery manufacturing. The annual
global battery capacity additions for BEVs in 2030 would be almost 9 TWh, requiring
80 giga‐factories (assuming 35 GWh per year output) more than in the NZE, or an averageof over two per month from now to 2030.
The increased use of electricity for road transport would also create additional challenges
for the electricity sector. The total electricity demand for road transport (11 000 TWh or
15% of total electricity consumption in 2050), would be roughly the same in both cases,
when account is taken of demand for electrolytic hydrogen. However, the electrolytichydrogen in the NZE can be produced flexibly, in regions and at times with surplus
renewables‐based capacity and from dedicated (off‐grid) renewable power. Peak power
demand in the All‐Electric Case, taking into consideration the flexibility that enables
smart charging of cars, is about one‐third (2 000 GW) higher than in the NZE, mainly due
to the additional evening/overnight charging of buses and trucks. If not coupled withenergy storage devices, ultra‐fast chargers for heavy‐duty vehicles could cause additional
spikes in demand, putting even more strain on electricity grids.
While full electrification of road transport is possible, it could involve additional
challenges and undesirable side effects. For example, it could increase pressure onelectricity grids, requiring significant additional investment, and increasing thevulnerability of the transport system to power disruptions. Fuel diversification could
bring benefits in terms of resilience and energy security.

140

International Energy Agency | Special ReportFigure 3.26 ⊳ Global electricity demand and battery capacity for roadtransport in the NZE and the All-Electric Case
On‐road battery capacity
TWh

TWh

Electricity demand
12 000

8 000

300

200

3
4 000

100

2020 2030 2050 2030 2050
NZE
Two/three‐wheelers

2020 2030 2050 2030 2050

AEC
Buses

NZE
Cars and vans

Heavy trucks

AEC
Electrolytic H₂
IEA. All rights reserved.

Both direct electricity consumption and vehicle battery capacity in 2050
increase by about a quarter in the All-Electric Case relative to the NZE
Note: AEC = All‐Electric Case.

3.7

Buildings

3.7.1

Energy and emission trends in the Net‐Zero Emissions Scenario

Floor area in the buildings sector worldwide is expected to increase 75% between 2020 and
2050, of which 80% is in emerging market and developing economies. Globally, floor area
equivalent to the surface of the city of Paris is added every week through to 2050. Moreover,buildings in many advanced economies have long lifetimes and around half of the existingbuildings stock will still be standing in 2050. Demand for appliances and cooling equipment
continues to grow, especially in emerging market and developing economies where
650 million air conditioners are added by 2030 and another 2 billion by 2050 in the NZE.
Despite this demand growth, total CO2 emissions from the buildings sector decline by morethan 95% from almost 3 Gt in 2020 to around 120 Mt in 2050 in the NZE.12
Energy efficiency and electrification are the two main drivers of decarbonisation of thebuildings sector in the NZE (Figure 3.27). That transformation relies primarily on technologies

All CO2 emissions in this section refer to direct CO2 emissions unless otherwise specified. The NZE also
pursues reductions in emissions linked to construction materials used in buildings. These embodied emissions
are cut by 40% per square metre of new floor area by 2030, with material efficiency strategies cutting cement
and steel use by 50% by 2050 relative to today through measures at the design, construction, use and end‐of‐life phases.

Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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12already available on the market, including improved envelopes for new and existingbuildings, heat pumps, energy‐efficient appliances, and bioclimatic and material‐efficientbuilding design. Digitalisation and smart controls enable efficiency gains that reduce
emissions from the buildings sector by 350 Mt CO2 by 2050. Behaviour changes are also
important in the NZE, with a reduction of almost 250 Mt CO2 in 2030 reflecting changes intemperature settings for space heating or reducing excessive hot water temperatures.
Additional behaviour changes such as greater use of cold temperature clothes washing andline drying, facilitate the decarbonisation of electricity supply. There is scope for these
reductions to be achieved rapidly and at no cost.
Figure 3.27 ⊳ Global direct CO2 emissions reductions by mitigation measure in

Gt CO2

buildings in the NZE
4+29%

Activity+96%

Mitigation measures
Behaviour andavoided demand
Energy efficiency
Electrification
Hydrogen‐based
Bioenergy
Other renewables
Other fuel shifts

3
Activity
2‐51%
Measures
1
‐97%
2020

2030

2050
IEA. All rights reserved.

Electrification and energy efficiency account for nearly 70% of buildings-related emissions
reductions through to 2050, followed by solar thermal, bioenergy and behaviour
Notes: Activity = change in energy service demand related to rising population, increased floor area andincome per capita. 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.

Rapid shifts to zero‐carbon‐ready technologies see the share of fossil fuels in energy demandin the buildings sector drop to 30% by 2030, and to 2% by 2050 in the NZE. The share ofelectricity in the energy mix reaches almost 50% by 2030 and 66% by 2050, up from 33% in2020 (Figure 3.28). All end‐uses today dominated by fossil fuels are increasingly electrified in
the NZE, with the share of electricity in space heating, water heating and cooking increasingfrom less than 20% today to more than 40% in 2050. District energy networks and low‐carbon
gases, including hydrogen‐based fuels, remain significant in 2050 in regions with high heatingneeds, dense urban populations and existing gas or district heat networks. Bioenergy meetsnearly one‐quarter of overall heat demand in the NZE by 2050, over 50% of bioenergy use isfor cooking, nearly all in emerging market and developing economies, where 2.7 billion
142

International Energy Agency | Special Reportpeople gain access to clean cooking by 2030 in the NZE. Space heating demand drops by two‐
thirds between 2020 and 2050, driven by improvement in energy efficiency and behaviouralchanges such as the adjustment of temperature set points.
Figure 3.28 ⊳ Global final energy consumption by fuel and end-use

By end‐use

application in buildings in the NZE

2020
2030
2050

By fuel

2020
2030
2050
25

50

75

100

125
EJ

End‐uses
Space heating
Water heating
Space coolingLighting
Cooking
Appliances
Other
Fuels
Coal
Oil
Natural gas
HydrogenElectricity
District energy
Renewables
Traditional use of
biomass

3

IEA. All rights reserved.

Fossil fuel use in the buildings sector declines by 96% and space heating energy needsby two-thirds to 2050, thanks mainly to energy efficiency gains
Note: Other includes desalination and traditional use of solid biomass which is not allocated to a specificend‐use.

Zero‐carbon‐ready buildings

Retrofit rates increase from less than 1% per year today to about 2.5% per year by 2030 inadvanced economies: this means that around 10 million dwellings are retrofitted every year.
In emerging market and developing economies, building lifetimes are typically lower than inadvanced economies, meaning that retrofit rates by 2030 in the NZE are lower, at around 2%
per year. This requires the retrofitting of 20 million dwellings per year on average to 2030.
To achieve savings at the lowest cost and to minimise disruption, retrofits need to becomprehensive and one‐off.

Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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The NZE pathway for the buildings sector requires a step change improvement in the energy
efficiency and flexibility of the stock and a complete shift away from fossil fuels. To achievethis, more than 85% of buildings need to comply with zero‐carbon‐ready building energy
codes by 2050 (Box 3.4). This means that mandatory zero‐carbon‐ready building energy
codes for all new buildings need to be introduced in all regions by 2030, and that retrofits
need to be carried out in most existing buildings by 2050 to enable them to meet zero‐carbon‐ready building energy codes.

Box 3.4 ⊳Towards zero-carbon-ready buildings

Achieving decarbonisation of energy use in the sector requires almost all existingbuildings to undergo a single in‐depth retrofit by 2050, and new construction to meetstringent efficiency standards. Building energy codes covering new and existing buildings
are the fundamental policy instrument to drive such changes. Building energy codes
currently exist or are under development in only 75 countries, and codes in around 40 ofthese countries are mandatory for both the residential and services sub‐sectors. In the
NZE, comprehensive zero‐carbon‐ready building codes are implemented in all countries
by 2030 at the latest.

What is a zero‐carbon‐ready building?
A zero‐carbon‐ready building is highly energy efficient and either uses renewable energy
directly, or uses an energy supply that will be fully decarbonised by 2050, such as
electricity or district heat. This means that a zero‐carbon‐ready building will become azero‐carbon building by 2050, without any further changes to the building or its
equipment.
Zero‐carbon‐ready buildings should adjust to user needs and maximise the efficient andsmart use of energy, materials and space to facilitate the decarbonisation of othersectors. Key considerations include:

Scope. Zero‐carbon‐ready building energy codes should cover building operations(scope 1 and 2) as well as emissions from the manufacturing of building construction
materials and components (scope 3 or embodied carbon emissions).

Energy use. Zero‐carbon‐ready energy codes should recognise the important partthat passive design features, building envelope improvements and high energy
performance equipment play in lowering energy demand, reducing both theoperating cost of buildings and the costs of decarbonising the energy supply.

Energy supply. Whenever possible, new and existing zero‐carbon‐ready buildings
should integrate locally available renewable resources, e.g. solar thermal, solar PV,
PV thermal and geothermal, to reduce the need for utility‐scale energy supply.
Thermal or battery energy storage may be needed to support local energy
generation.

Integration with power systems. Zero‐carbon‐ready building energy codes needbuildings to become a flexible resource for the energy system, using connectivity
and automation to manage building electricity demand and the operation of energy
storage devices, including EVs.



Buildings and construction value chain. Zero‐carbon‐ready building energy codesshould also target net‐zero emissions from material use in buildings. Material
efficiency strategies can cut cement and steel demand in the buildings sector bymore than a third relative to baseline trends, and embodied emissions can be further
reduced by more robust uptake of bio‐sourced and innovative construction
materials.

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International Energy Agency | Special ReportHeating and cooling
Building envelope improvements in zero‐carbon‐ready retrofit and new buildings account forthe majority of heating and cooling energy intensity reductions in the NZE, but heating andcooling technology also makes a significant contribution. Space heating is transformed in the
NZE, with homes heated by natural gas falling from nearly 30% of the total today to less than
0.5% in 2050, while homes using electricity for heating rise from nearly 20% of the total today
to 35% in 2030 and about 55% in 2050 (Figure 3.29). High efficiency electric heat pumps
become the primary technology choice for space heating in the NZE, with worldwide heatpump installations per month rising from 1.5 million today to around 5 million by 2030
and 10 million by 2050. Hybrid heat pumps are also used in some of the coldest climates, butmeet no more than 5% of heating demand in 2050.

3

Figure 3.29 ⊳ Global building and heating equipment stock by type and usefulspace heating and cooling demand intensity changes in the NZE

300

75

200

50

100

25

2020

2030

Retrofit ZCRBNew ZCRB
Intensity (right axis): Heating

2050
Other
Cooling

4

2020
Coal and oil
Biomass
Heat pumps

3

Billion units

Heating equipment stock100

Index (2020 = 100)

Billion m²

Building envelope
400

2
1

2030
2050
Gas
District heat
Solar thermal
Hydrogen
Other
IEA. All rights reserved.

By 2050, over 85% of buildings are zero-carbon-ready, reducing average useful heating
intensity by 75%, with heat pumps meeting over half of heating needs

Not all buildings are best decarbonised with heat pumps, however, and bioenergy boilers,
solar thermal, district heat, low‐carbon gases in gas networks and hydrogen fuel cells all playa role in making the global building stock zero‐carbon‐ready by 2050. Bioenergy meets 10%of space heating needs by 2030 and more than 20% by 2050. Solar thermal is the preferredrenewable technology for water heating, especially where heat demand is low; in the NZE it
meets 35% of demand by 2050, up from 7% today. District heat networks remain an
attractive option for many compact urban centres where heat pump installation is
impractical, in the NZE they provide more than 20% of final energy demand for space heatingin 2050, up from a little over 10% today.
Chapter 3 | Sectoral pathways to net-zero emissions by 2050

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IEA. All rights reserved.

Notes: ZCRB refers to buildings meeting zero‐carbon‐ready building energy codes. Other for building envelope
refers to envelopes that do not meet zero‐carbon‐ready building energy codes. Other for heating equipment
stock includes resistive heaters, and hybrid and gas heat pumps.

There are no new coal and oil boilers sold globally from 2025 in the NZE. Sales of gas boilers
fall by more than 40% from current levels by 2030 and by 90% by 2050. By 2025 in the NZE,
any gas boilers that are sold are capable of burning 100% hydrogen and therefore are zero‐carbon‐ready. The share of low‐carbon gases (hydrogen, biomethane, synthetic methane) ingas distributed to buildings rises from almost zero to 10% by 2030 to above 75% by 2050.
Buildings that meet the standards of zero‐carbon‐ready building energy codes drive down
the need not only for space heating but also for space cooling – the fastest growing end‐use
in buildings since 2000. Space cooling represented only 5% of total buildings energy
consumption worldwide in 2020, but demand for cooling is likely to grow strongly in the
coming decades with rising incomes and a hotter climate. In the NZE, 60% of households
have an air conditioner in 2050, up from 35% in 2020. High‐performance building envelopes,
including bioclimatic designs and insulation, can reduce the demand for space cooling by
30‐50%, while providing greater resilience during extreme heat events. In the NZE, electricity
demand for space cooling grows annually by 1% to reach 2 500 TWh in 2050. Without
2 000 TWh of savings from residential building envelope improvements and higher efficiency
equipment, space cooling demand would be almost twice as high.

Appliances and lighting
Electric appliances and lighting become much more efficient over the next three decades in
the NZE thanks to policy measures and technical advances. By 2025 in the NZE, over 80% of
all appliances and air conditioners sold in advanced economies are the best available
technologies today in these markets, and this share increases to 100% by the mid‐2030s. In
emerging market and developing economies, which account for over half of appliances andair conditioners by 2050, the NZE assumes a wave of policy action over the next decade whichleads to 80% of equipment sold in these markets in 2030 being as efficient as the best
available technologies in advanced economies today, increasing to close to 100% by 2050
(Figure 3.30). The share of light‐emitting diode (LED) lamps in total lightbulb sales reaches
100% by 2025 in all regions. Minimum energy performance standards are complemented byrequirements for smart control of appliances to facilitate demand‐side response in all
regions.
Energy use in buildings will be increasingly focused on electric, electronic and connected
equipment and appliances. The share of electricity in energy consumption in buildings rises
from 33% in 2020 to around two‐thirds in 2050 in the NZE, with many buildings incorporating
decentralised electricity generation using local solar PV panels, battery storage and EV
chargers. The number of residential buildings with solar PV panels increases from 25 million
to 240 million over the same period. In the NZE, smart control systems shift flexible uses ofelectricity in time to correspond with generation from local renewables, or to provide
flexibility services to the power system, while optimised home battery and EV charging allow
households to interact with the grid. These developments help improve electricity supply
security and lower the cost of the energy transition by making it easier and cheaper tointegrate renewables into the system.
146

International Energy Agency | Special ReportFigure 3.30 ⊳ Global change in electricity demand by end-use in the buildings

Thousand TWh

sector
30

+37%
+101%

20

‐93%

‐9%

Efficiency

Behaviour

3

10

2020

Activity

Heat needs

Electrification
AppliancesSpace cooling

2050
Lighting

IEA. All rights reserved.

Energy efficiency is critical to mitigate electricity demand growth for appliances and air
conditioning, with savings more than offsetting the impact of electrifying heat

3.7.2

Key milestones and decision points

Table 3.5 ⊳Key milestones in transforming global buildings sector

Category
New buildings

 From 2030: all new buildings are zero‐carbon‐ready.

Existing buildings

 From 2030: 2.5% of buildings are retrofitted to be zero‐carbon‐ready each year.

Category

2020

2030

2050

Buildings
Share of existing buildings retrofitted to the zero‐carbon‐ready level

<1%

20%

>85%

Share of zero‐carbon‐ready new buildings construction

5%

100%

100%

Stock of heat pumps (million units)

180

600

1 800

Million dwellings using solar thermal

250

400

1 200

Avoided residential energy demand from behaviour

n.a.

12%

14%

Heating and cooling

Appliances and lighting
Appliances: unit energy consumption (index 2020=100)

100

75

60

Lighting: share of LED in sales

50%

100%

100%

Population with access to electricity (billion people)

7.0

8.5

9.7

Population with access to clean cooking (billion people)

5.1

8.5

9.7

Distributed solar PV generation (TWh)

320

2 200

7 500

EV private chargers (million units)

270

1 400

3 500

Energy access

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Energy infrastructure in buildings

Near‐term government decisions are required for energy codes and standards for buildings,
fossil fuel phase out, use of low‐carbon gases, acceleration of retrofits and financial
incentives to encourage investment in building sector energy transitions. Decisions will bemost effective if they focus on decarbonising the entire value chain, taking into account not
only buildings but also the energy and infrastructure networks that supply them, as well as
wider considerations including the role of the construction sector and urban planning. Suchdecisions are likely to bring wider benefits, notably in reducing fuel poverty.
Near‐term government action is needed to ensure that zero‐carbon‐ready buildings become
the new norm across the world before 2030 for both new construction and retrofits. Thisrequires governments to act before 2025 to ensure that zero‐carbon‐ready compliant
building energy codes are implemented by 2030 at the latest. While this goal applies to all
regions, ways to achieve zero‐carbon‐ready buildings vary significantly across regions andclimate zones, and the same is true for heating and cooling technology strategies.
Governments should consider paving the way by making public buildings zero‐carbon‐readyin the coming decade.
Governments will need to find ways to make new zero‐carbon‐ready buildings and retrofits
affordable and attractive to owners and occupants by overcoming financial barriers,
addressing split incentive barriers and minimising disruption to building use. Building energy
performance certificates, green lease agreements, green bond financing and pay‐as‐you savemodels could all play a part.
Making zero‐carbon‐ready building retrofits a central pillar of economic recovery strategies
in the early 2020s is a no‐regrets action to jumpstart progress towards a zero‐emissions
building sector. Foregoing the opportunity to make energy use in buildings more efficient
would drive up electricity demand linked to electrification of energy use in the buildings
sector and make decarbonising the energy system significantly more difficult and more costly(Box 3.5).
Box 3.5 ⊳What would be the impact of global retrofit rates not rising to 2.5%?

Decarbonising heating in existing buildings in the NZE rests upon a deep retrofit of the
majority of the existing building stock. Having almost all buildings meetzero‐carbon‐ready building energy codes by 2050 would require retrofit rates of 2.5%
each year by 2030, up from less than 1% today. Retrofits can be disruptive for occupants,
require high upfront investment and may face permitting difficulties. These issues makeachieving the required pace and depth of retrofits in the coming years the biggest
challenge facing the buildings sector.
Any delay in reaching 2.5% of annual retrofits by 2030 would require such a steep
subsequent ramp up as to make retrofitting the vast majority of buildings by 2050
virtually impossible. Modelling indicates that a delay of ten years in the acceleration ofretrofitting, would increase residential space heating energy demand by 25% and space

148

International Energy Agency | Special Reportcooling demand by more than 20%, translating to a 20% increase in electricity demand in
2050 relative to the NZE (Figure 3.31). This would put more strain on the power sector,
which would need to install more low‐carbon generation capacity. Policies and fuelswitching would still drive down fossil fuel demand in the Delayed Retrofit Case, but anadditional 15 EJ of fossil fuels would be burned by 2050, emitting 1 Gt of CO2.
Figure 3.31 ⊳ Global residential space heating and cooling energy

EJ

demand in the NZE and Delayed Retrofit Case

3

18
15
12
Electricity and district heat
9
6
3
Fossil fuels
2020

2025

2030
NZE

2035
2040
Delayed Retrofit Case

2045

2050

IEA. All rights reserved.

Delays in the ramp up of retrofit rates and depth would be almost impossible to catchup, placing further strain on the power sector and pushing up fossil fuel demand

Governments also face decisions on minimum energy performance standards (MEPS). The
NZE sees all countries introduce MEPS for all main appliance categories set at the moststringent levels prevailing in advanced economies by 2025 at the latest. Among others, thiswould mean ending the sale of incandescent, halogen and compact fluorescent lamps by that
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Governments need to establish policies for coal and oil boilers and furnaces for space andwater heating, which in the NZE are no longer available for sale from 2025. They also needto take action to ensure that new gas boilers are able to operate with low‐carbon gases(hydrogen ready) in decarbonised gas networks. This puts a premium on the availability ofcompelling alternatives to the types of boilers being phased out, including the use of heatpumps, efficient wood stoves (using sustainable supplies of wood), district energy, solar PV,
solar thermal and other renewable energy technologies. Which alternatives are best will
depend to some extent on local conditions, but electrification will be the most energy‐
efficient and cost‐effective low‐carbon option in most cases, and decarbonising andexpanding district energy networks is likely to make sense where densities allow. The use ofbiomethane or hydrogen in existing or upgraded gas networks may be the best option inareas where more efficient alternatives are not possible.

time. Setting MEPS at the right level will require careful planning; international collaboration
to align standards and objectives could play a helpful role in keeping costs down.
The systemic nature of the NZE means that strategies and policies for buildings will work best
if they are aligned with those being adopted for power systems, urban planning and mobility.
This would help to ensure the successful scaling up of building‐integrated PV technologies,
battery storage and smart controls to make buildings active service providers to grids. It
would also help to foster the deployment of smart EV charging infrastructure. Policies
incentivising dense and mixed‐use urban planning coupled with easy access to local services
and public transport could reduce reliance on personal vehicles (see Chapter 2). There arealso links between buildings strategies and measures to reduce the embodied carbon
emissions of new construction, which falls by 95% by 2050 in the NZE.

150International Energy Agency | Special ReportChapter 4
Wider implications of achieving net-zero emissions
S U M M A R Y
 Economy: In our Net‐Zero Emissions by 2050 Scenario (NZE), global CO2 emissions
reach net zero by 2050 and investment rises across electricity, low‐emissions fuels,
infrastructure and end‐use sectors. Clean energy employment increases by 14 million
to 2030, but employment in oil, gas and coal declines by around 5 million. There are
varying results for different regions, with job gains not always occurring in the sameplace, or matching the same skill set, as job losses. The increase in jobs and investment
stimulates economic output, resulting in a net increase in global GDP to 2030. But oil
and gas revenues in producer economies are 80% lower in 2050 than in recent years
and tax revenues from retail oil and gas sales in importing countries are 90% lower.

 Energy industry: There is a major contraction in fossil fuel production, but companies
that produce these fuels have skills and resources that could play a key role indeveloping new low‐emissions fuels and technologies. The electricity industry scales
up to meet demand rising over two‐and‐a‐half‐fold to 2050 and becomes more capitalintensive, focusing on renewables, sources of flexibility and grids. Large energy‐
consuming companies, vehicle manufacturers and their suppliers adjust designs andretool factories while improving efficiency and switching to alternative fuel supplies.

 For citizens who lack access to electricity and clean cooking, the NZE delivers universal
access by 2030. This costs around USD 40 billion a year over the next decade and adds
less than 0.2% to CO2 emissions. For citizens the world over, the NZE brings profoundchanges, and their active support is essential if it is to succeed. Around three‐quartersof behavioural changes in the NZE can be directly influenced or mandated bygovernment policies. The cost of energy is also an important issue for citizens, and the
proportion of disposable household income spent on energy over the period to 2050
remains stable in emerging market and developing economies, despite a large
increase in demand for modern energy services.
underpins the decisions made by all other actors. Four particular points are worth
stressing. First, the NZE depends on actions that go far beyond the remit of energy
ministers, and requires a co‐ordinated cross‐government approach. Second, the fallin oil and gas demand in the NZE may reduce some traditional energy security risks,
but they do not disappear, while potential new vulnerabilities emerge from increasing
reliance on electricity systems and critical minerals. Third, accelerated innovation isneeded. The emissions cuts to 2030 in the NZE can be mostly achieved withtechnologies on the market today, but almost half of the reductions in 2050 dependon technologies that are currently under development. Fourth, an unprecedented
level of international co‐operation is needed. This helps to accelerate innovation,
develop international standards and facilitate new infrastructure to link national
markets. Without the co‐operation assumed in the NZE, the transition to net‐zeroemissions would be delayed by decades.
Chapter 4 | Wider implications of achieving net-zero emissions

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 Government action is central to achieve net‐zero emissions globally by 2050; it4.1

Introduction

Achieving net‐zero emissions by 2050 is a monumental task, especially against a backdrop ofincreasing economic and population growth. It calls for an unwavering focus from allgovernments, working together with industries and citizens, to ensure that the transition to
global net‐zero emissions proceeds in a co‐ordinated way without delay. In this chapter, we
look at what the changes that deliver net‐zero emissions globally by 2050 in the NZE would
mean for the economy, the energy industry, citizens and governments.
Figure 4.1 ⊳Selected global milestones for policies, infrastructure andtechnology deployment in the NZE

2025
No new sales offossil fuel boilers
2021
No new unabatedcoal plants approvedfor development

Gt CO₂

No new oil and gas
fields approved fordevelopment; no
new coal mines ormine extensions

40

2030
Universal energy access
All new buildings are
zero‐carbon‐ready
60% of global car
sales are electric
Most new clean
technologies in heavy
industry demonstrated
at scale
1 020 GW annual solar
and wind additions
Phase‐out of
unabated coal inadvanced economies

35

2035
Most appliances andcooling systems soldare best in class
50% of heavy trucksales are electric
No new ICE car sales
All industrial
electric motor sales
are best in classOverall net‐zeroemissions electricity inadvanced economies

30

2040
50% of existingbuildings retrofitted
to zero‐carbon‐readylevels50% of fuels usedin aviation are
low‐emissions

2050

Around 90% of existing
capacity in heavy
industries reaches endof investment cycle
Net‐zero emissions
electricity globally

25

Phase‐out of all
unabated coal and oil
power plants

20
15

More than 85%
of buildings are
zero‐carbon‐readyMore than 90% of
heavy industrial
production is
low‐emissions
Almost 70% ofelectricity generation
globally from solar PV
and wind2045
50% of heating demand
met by heat pumps

10
5
0
‐5
2020

2025

2030

2035

150 Mt low‐carbon hydrogen
850 GW electrolysers

2040

2045
435 Mt low‐carbon hydrogen
3 000 GW electrolysers

4 Gt CO2 captured

Buildings

Transport

Industry2050

7.6 Gt CO2 captured

Electricity and heat

Other
IEA. All rights reserved.

There are multiple milestones on the way to global net-zero emissions by 2050.
If any sector lags, it may prove impossible to make up the difference elsewhere.

152

International Energy Agency | Special ReportWide‐ranging measures and regulations in the NZE help to influence or change the purchasesthat individuals make, the way they heat and cool their homes, and their means of transport.
Many industries, especially those that are currently involved in the production of energy or
are large‐scale users of energy, also face change. Some of the shifts for individuals andindustries may be unpopular, underscoring the fact that it is essential to ensure that theenergy transition is transparent, just and cost‐effective, and to persuade citizens of the needfor reform. These changes deliver significant benefits. There are around 790 million people
who do not have access to electricity today and 2.6 billion people who do not have access toclean cooking options. The NZE shows how emissions reductions can go hand‐in‐hand withefforts to provide universal access to electricity and clean cooking, and to improve air quality.
It provides significant opportunities too, with clean energy technologies providing many new
business opportunities and jobs, and with innovations that stimulate new industrial
capacities.

4

4.2

Economy4.2.1

Investment and financing

The transition to net‐zero emissions by 2050 requires a substantial ramp up in the investmentof electricity, infrastructure and the end‐use sectors. The largest increase over the next
decade is in electricity generation: annual investment increases from about USD 0.5 trillion
over the past five years to USD 1.6 trillion in 2030 (Figure 4.2). By 2030, annual investment
in renewables in the electricity sector is around USD 1.3 trillion, slightly more than thehighest level ever spent on fossil fuel supply (USD 1.2 trillion in 2014). Annual investment inclean energy infrastructure increases from around USD 290 billion over the past five years toabout USD 880 billion in 2030. This is for electricity networks, public electric vehicle (EV)charging stations, hydrogen refuelling stations and import and export terminals, direct air
capture and CO2 pipelines and storage facilities. Annual investment in low‐carbon
technologies in end‐use sectors rises from USD 530 billion in recent years to USD 1.7 trillion
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Underpinning all of these changes are decisions taken by governments. This will require
wholehearted buy‐in from all levels of government and from all countries. The magnitude of
the changes required to reach global net‐zero emissions by 2050 are not within the power ofgovernment energy or environment departments alone to deliver, nor within the power ofindividual countries. It will involve an unprecedented level of global collaboration, withrecognition of and sensitivity to differences in the stages of development of individual
countries, and an appreciation of the difficulties faced by particular communities andmembers of society, especially those who may be negatively affected by the transition tonet‐zero emissions. In the NZE, governments start by setting unequivocal long‐term targets,ensuring that these are fully supported from the outset by explicit, near‐term targets andpolicy measures that clearly set out the pathway, and that recognise each country’s uniquestarting conditions, to support the deployment of new infrastructure and technologies(Figure 4.1).

in 2030.1 This includes spending on deep retrofitting of buildings, transformation of industrial
processes, and the purchase of new low‐emissions vehicles and more efficient appliances.
After 2030, annual electricity generation investment falls by one‐third to 2050. A lot of
infrastructure for a low‐emissions electricity sector is established within the first decade of
the NZE, and the cost of renewables continues to decline after 2030. In end‐use sectors, there
are continued increases in investment in EVs, carbon capture, utilisation and storage (CCUS)
and hydrogen use in industry and transport, and more efficient buildings and appliances.
Global investment in fossil fuel supply falls steadily from about USD 575 billion on averageover the past five years to USD 110 billion in 2050 in the NZE, with upstream fossil fuelinvestment restricted to maintaining production at existing oil and natural gas fields. This
investment reflects the fact that fossil fuels are still used in 2050 in the NZE in processes
where they are paired with CCUS, in non‐emitting processes (such as petrochemical
manufacturing), and in sectors where emissions reductions are most challenging (withemissions offset by carbon dioxide removal). Investment in low‐emissions fuels increases
more than thirty‐fold between 2020 and 2050, reaching about USD 135 billion in 2050. Thisis split roughly equally between the production of hydrogen and hydrogen‐based fuels, andthe production of biofuels.
Over the 2021‐50 period in the NZE, annual average total energy sector investment as a shareof gross domestic product (GDP) is around 1% higher than over the past five years. The
private sector is central to finance higher investment needs. It requires enhanced
collaboration between developers, investors, public financial institutions and governments.
Collaboration will be especially important over the next five to ten years for the developmentof large infrastructure projects and for technologies in the demonstration or prototype phase
today such as some hydrogen and CCUS applications. Companies and investors have declaredstrong interest to invest in clean energy technologies, but turning interest into actual
investment at the levels required in the NZE also depends on public policies.
Some obstacles to investment need to be tackled. Many emerging market and developing
economies are reliant on public sources to finance energy projects and new industrial
facilities. In some cases, improvements in regulatory and policy frameworks would facilitate
the international flow of long‐term capital to support the development of both new andexisting clean energy technologies. The rapid growth in investment in transport and buildingsin the NZE presents a different kind of challenge for policy makers. In many cases, an increasein capital spending for an efficient appliance or low‐emissions vehicle would be more thanoffset by lower expenditure on fuels and electricity over the product lifetime, but some
low‐income households and small and medium enterprises may not be able to afford the
upfront capital required.

1
Investment levels presented in this report include a broader accounting of efficiency improvements inbuildings and differ from that reported in the IEA World Energy Investment report (IEA, 2020a). End‐use
efficiency investments are the incremental cost of improving the energy performance of equipment relative
to a conventional design.

154

International Energy Agency | Special ReportFigure 4.2 ⊳Global average annual energy investment needs by sector andtechnology in the NZE

Fuels
2016‐20

Oil
Natural gas
Coal
Low‐emissions fuels

2021‐302031‐402041‐50
Electricity

Fossil fuels without CCUS
Fossil fuels with CCUS
NuclearRenewables
Battery storage

2016‐202021‐302031‐402041‐50
Infrastructure

Electricity grids
EV chargers
Hydrogen infrastructure
Fossil fuels
Direct air capture
CO₂ transport and storage#REF!
Renewables
Hydrogen
Efficiency
Electrification
Fossil fuels and others
CCUS

2016‐202021‐302031‐402041‐50
End‐use2016‐202021‐302031‐402041‐50
0.5

4

1.0

1.5

2.0
2.5
Trillion USD (2019)
IEA. All rights reserved.

Investment increases rapidly in electricity generation, infrastructure and end-use sectors.
Fossil fuel investment drops sharply, partly offset by a rise in low-emissions fuels.
Notes: CCUS = carbon capture, utilisation and storage; EV = electric vehicle. Infrastructure includes electricity
networks, public EV charging, CO2 pipelines and storage facilities, direct air capture and storage facilities,hydrogen refuelling stations, and import and export terminals for hydrogen and fossil fuels pipelines andterminals. End‐use efficiency investments are the incremental cost of improving the energy performance ofequipment relative to a conventional design.

Economic activity

The energy transition required for net‐zero emissions by 2050 will affect all economic
activities directly or indirectly. In co‐ordination with the International Monetary Fund, we
have modelled the medium‐term global macroeconomic impact of the changes in the energy
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4.2.2

sector that occur in the NZE. This analysis shows that the surge in private and government
spending on clean energy technologies in the NZE creates a large number of jobs andstimulates economic output in the engineering, manufacturing and construction industries.
This results in annual GDP growth that is nearly 0.5% higher than the levels in the Stated
Policies Scenario (STEPS)2 during latter half of the 2020s (Figure 4.3).3
Figure 4.3 ⊳Change in annual growth rate of global GDP in the NZE relative
to the STEPS

0.5%

Private investment
Government investment
Reduction in rent
Net change

0.4%
0.3%
0.2%
0.1%
0.0%
‐0.1%

2021‐252026‐30
IEA. All rights reserved.

The surge in government and private investment in the NZE has a positive impact
on global GDP, but there are large differences between regions
Notes: GDP = gross domestic product. Reduction in rents stem mainly from lower fossil fuel income.
Source: IEA analysis based on IMF.

There are large differences in macroeconomic impacts between regions. The decline in fossil
fuel use and prices results in a fall in GDP in the producer economies,4 where revenues fromoil and gas sales often cover a large share of public spending on education, health care andother public services. The drop in oil and gas demand, and the consequent fall in international
prices for oil and gas, cause net income in producer economies to drop to historic lows
(Figure 4.4). Some countries with the lowest cost oil resources (including members of the2
The IEA Stated Policies Scenario is the projection for the global energy system based on the policies andmeasures that governments around the world have already put in place and on announced policies as
expressed in official targets and plans, such as Nationally Determined Contributions put forward under theParis Agreement (see Chapter 1).
3
The estimated general equilibrium macroeconomic impact of the increase in public and private investment
and the reduction in oil‐related revenue contained in the NZE has been provided by the International
Monetary Fund using its Global Integrated Monetary and Fiscal Model (GIMF).
4
Producer economies are large oil and gas exporters that rely on hydrocarbon revenues to finance a significant
proportion of their national budgets, including countries in the Middle East, Russia and the Caspian region.

156

International Energy Agency | Special ReportOrganization of the Petroleum Exporting Countries [OPEC]) gain market share in thesecircumstances, but even they would see large falls in revenues. Structural reforms would beneeded to address the societal challenges, including those to accelerate the process ofreforming inefficient fossil fuel subsidies and to speed up moves to use hydrocarbon
resources to produce low‐emissions fuels, e.g. hydrogen and hydrogen‐based fuels (seesection 4.3.1).
Income from oil and gas sales in producer economies in the NZE

1 000

2.0

800

1.6

600

1.2

400

0.8

200

0.4

1971‐
80

1981‐
90
Oil

1991‐
00

2001‐
10

Natural gas

2011‐
20

2021‐
30

2031‐
40

Thousand USD per capita

Billion USD (2019)

Figure 4.4 ⊳

4

2041‐
50

Per capita income (right axis)
IEA. All rights reserved.

Structural reforms and new sources of revenue are needed in producer economies,
but these are unlikely to compensate fully for a large drop in oil and gas income

The macroeconomic effects of the NZE are very uncertain. They depend on a host of factors
including: how government expenditure is financed; benefits from improvements to health;changes in consumer bills; broad impact of changes in consumer behaviour; and potential
for productivity spill‐overs from accelerated energy innovation. Nonetheless, impacts arelikely to be lower than assessments of the cost of climate change damages (OECD, 2015). It
is also likely that a co‐ordinated, orderly transition can be executed without major global
systemic financial impacts, but this will require close attention from governments, financial
regulators and the corporate sector.

Employment

Employment in the energy sector shifts markedly in the NZE in response to changes ininvestment and spending on energy. We estimate that today roughly 40 million people
around the world work directly in the oil, gas, coal, renewables, bioenergy and energy
network industries (IEA, 2020b). In the NZE, clean energy employment increases by 14 million
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4.2.3

to 2030, while employment in oil, gas and coal fuel supply and power plants declines byaround 5 million, leading to a net increase of nearly 9 million jobs (Figure 4.5).

Million jobs

Figure 4.5 ⊳Global energy sector employment in the NZE, 2019-2030

60

Bioenergy
Electricity

50

Coal

Losses40

Oil and gas

Growth

30
20
10

2019

2030
IEA. All rights reserved.

Overall employment in the energy sector increases by almost 9 million to 2030
as jobs created in clean energy sectors outpace losses in fossil fuels

Jobs created would not necessarily be in the same area where jobs are lost, plus the skill setsrequired for the clean energy jobs may not be directly transferable. Job losses would be mostpronounced in communities that are heavily dependent on fossil energy production ortransformation activities. Even where the number of direct energy jobs lost is small, theimpact on the local economy may be significant. Government support would almost certainly
be needed to manage these transitions in a just, people‐centred way. In preparation, a better
understanding of current energy industry employment is needed. A useful action would be
for governments to adopt more detailed surveying approaches for energy industry
employment, such as those used in the US Energy & Employment Report (NASEO and Energy
Futures Initiative, 2021).
In addition to the 14 million new clean energy jobs created in the NZE, other new jobs are
created by changes in spending on more efficient appliances, electric and fuel cell vehicles,
and building retrofits and energy‐efficient construction. These changes would require afurther 16 million workers, meaning that there would be 30 million more people working inclean energy, efficiency and low‐emissions technologies by 2030 in the NZE (Figure 4.6).5
Investment in electricity generation, electricity networks, EV manufacturing and energy
efficiency are among the areas that will open up new employment opportunities. For
example, jobs in solar and wind more than quadruple in the NZE over current levels. Nearly
two‐thirds of workers in these sectors by 2030 in the NZE would be highly skilled and the5This includes new jobs and jobs filled by moving current employment from one type of production to another.

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International Energy Agency | Special Reportmajority require substantial training. In addition, with the more than doubling of total energy
investment, new employment opportunities will arise in associated areas such as wholesale
trading, financial and legal services.
In many cases it may be possible to shift workers to new product lines within the same
company, for example in vehicle manufacturing as production reconfigures to EVs. However,there would be larger risks for specialised supply chain companies that provide products andservices, e.g. internal combustion engines that are replaced by new components such asbatteries.
Figure 4.6 ⊳New workers in clean energy and related sectors and shares by

4skill level and occupation in the NZE and the STEPS in 2030
Additional workers in clean energy and related sectors (millions)
Grids
Power generation
EVs
Bioenergy production
Efficiency
End‐use renewables
Innovative technologies

NZE

STEPS
10

20

30

Positions by occupation and skill level in the NZE
Occupation

Construction
23%

Professional
38%

Skill level

High 65%
20%

40%

Manufacturing
28%

Other
12%

Medium 27%

Low 8%

60%

80%

100%

IEA. All rights reserved.

About 30 million new workers are needed by 2030 to meet increased demand for clean
energy, efficiency, and low-emissions technologies; over half are highly skilled positions

The new jobs created in the NZE tend to have more geographic flexibility and a wider
distribution than is the case today. Around 40% are jobs located close to where the work is
being done, e.g. building efficiency improvements or wind turbine installation, and theremaining are jobs tied to manufacturing sites. Today the manufacturing capacity for anumber of clean energy technologies, such as batteries and solar photovoltaic panels, isconcentrated in particular areas, notably China. The rapid increase in demand for clean
energy technologies in the NZE requires new production capacity to come online that could
be located in any region. Those countries and companies that move first may enjoy strategic
advantages in capturing burgeoning demand.

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Note: EVs = electric vehicles.

4.3

Energy industry

4.3.1

Oil and gas

The energy transition envisioned in the NZE involves a major contraction of oil and gas
production with far‐reaching implications for all the companies that produce these fuels. Oil
demand falls from around 90 million barrels per day (mb/d) in 2020 to 24 mb/d in 2050, while
natural gas demand falls from 3 900 billion cubic metres (bcm) to around 1 700 bcm. No fossil
fuel exploration is required in the NZE as no new oil and natural gas fields are required
beyond those that have already been approved for development. This represents a clear
threat to company earnings, but there are also opportunities. The resources and skills of theoil and gas industry are a good match with some of the new technologies needed to tackle
emissions in sectors where reductions are likely to be most challenging, and to produce someof the low‐emissions liquids and gases for which there is a rapid increase in demand in the
NZE (see Chapter 2). By partnering with governments and other stakeholders, the oil and gas
industry could play a leading role in developing these fuels and technologies at scale, and inestablishing new business models.
The oil and gas industry is highly diverse, and various companies could pursue very different
strategies in the transition to net‐zero emissions. Minimising emissions from core oil and gas
operations however should be a first‐order priority for all oil and gas companies. This
includes tackling methane emissions that occur during operations (they fall by 75% between
2020 and 2030 in the NZE) and eliminating flaring. Companies should also electrify operations
using renewable electricity wherever possible, either by purchasing electricity from the gridor by integrating off‐grid renewable energy sources into upstream facilities or transport
infrastructure. Producers that can demonstrate strong and effective action to reduce
emissions can credibly argue that their oil and gas resources should be preferred over higher
emissions options.
Some oil and gas companies may choose to become “energy companies” focused on low‐emissions technologies and fuels, including renewable electricity, electricity distribution, EV
charging and batteries. Several technologies that are critical to the achievement of net‐zeroemissions, such as CCUS, hydrogen, bioenergy and offshore wind, look especially well‐suited
to some of the existing skills, competencies and resources of oil and gas companies.
160

Carbon capture, utilisation and storage. The oil and gas industry is already the global
leader in developing and deploying CCUS. Of the 40 million tonnes (Mt) of CO2 captured
today at large‐scale facilities, around three‐quarters is captured from oil and gas
operations, which often produce concentrated streams of CO2 that are relatively easy
and cost effective to capture (IEA, 2020c). The oil and gas industry also has the large‐
scale engineering, pipeline, sub‐surface and project management skills and capabilities
to handle large volumes of CO2 and to help scale up the deployment of CCUS.

International Energy Agency | Special Report

Low‐emissions hydrogen and hydrogen‐based fuels. Oil and gas companies could
contribute to developing and deploying low‐emissions hydrogen in several ways
(IEA, 2019a). Nearly 40% of hydrogen production in 2050 in the NZE is from natural gas
in facilities equipped with CCUS, providing an important opportunity for companies andcountries to utilise their natural gas resources in a way that is consistent with net‐zeroemissions. Of the total output of 530 Mt of hydrogen in 2050, about 30% is processed
into ammonia and synthetic fuels (equivalent to around 7.5 mboe/d). The
transformation processes involved have many potential synergies with the skills andequipment used in oil and gas processing and refining. Oil and gas companies also havelong experience of transporting liquids and gases by pipeline and ships.

Advanced biofuels and biomethane. The production of advanced biofuels grows
substantially in the NZE, but this depends critically on continued technologicalinnovation. Many oil and gas companies have active R&D programmes in these areasand could become leading producers. Biomethane – a low‐emissions alternative tonatural gas – can be produced in large centralised facilities, which could be a good fit
with the knowledge and technical expertise of existing gas producers (IEA, 2020d).

Offshore wind. About 40% of the lifetime costs of a standard offshore wind project
involve significant synergies with the offshore oil and gas sector (IEA, 2019b). The oil andgas industry has considerable experience of working in offshore locations, which could
be of value in the construction of foundations and subsea structures for offshore windfarms, especially when using vessels during installation and operation. The experienceof maintaining safety standards in oil and gas companies could also be helpful during
maintenance and inspection of offshore wind farms once they are in operation.

4

Oil and gas companies are well‐placed to accelerate the pace of development anddeployment of these technologies, and to gain a commercial edge over other companies. In
the NZE, investment in low‐emissions technologies suited to the skills and expertise of oil
and gas companies exceeds that in traditional oil and gas operations by 2030. Total capitalspending on these technologies and on traditional oil and gas operations averages
USD 650 billion per year over 2021‐50, just less than annual investment in oil and gas projects
between 2016 and 2020 (Figure 4.7).

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Not all oil and gas companies will choose to follow a strategy of diversifying into other typesof energy. For example, it is far from certain that national oil companies will be charged bytheir state owners to diversify and develop low‐emissions energy sources outside their corearea of activity; other companies may decide simply to concentrate on supplying oil andnatural gas as cleanly and efficiently as possible, and to return income to shareholders. Whatis clear, however, is that no oil and gas company would be unaffected by the NZE and thatall parts of the industry need to decide how to respond (IEA, 2020e).

Annual average investment in oil and gas and low-emissions

Figure 4.7 ⊳technologies with synergies for the oil and gas industry in the NZE

Billion USD (2019)

Oil and natural gas

Low‐emissions technologies

800
600
400
200

2016‐
20
Oil

2021‐
30

2031‐
40

Natural gas

2041‐
50
CCUS

2016‐
20
Hydrogen

2021‐
30

2031‐
40

Bioenergy

2041‐
50
Offshore wind

IEA. All rights reserved.

Investment in low-emissions technologies suited to the skills and expertise ofoil and gas companies exceeds investment in traditional operations by 2030
Note: CCUS = carbon capture, utilisation and storage.

4.3.2

Coal

The precipitous decline in coal use projected in the NZE would have major implications forthe future of mining companies and countries with large existing production capacities.
Around 470 million tonnes of coal equivalent (Mtce) of coal used in the NZE in 2050 is in
facilities equipped with CCUS (80% of global coal demand in 2050), which prevents an evensharper decline in demand. But no new coal mines or mine extensions are needed in the NZE.
Retraining and regional revitalisation programmes would be essential to reduce the social
impact of job losses at the local level and to enable workers and communities to findalternative livelihoods. There could also be opportunities to locate new clean energy
facilities, including the new processing facilities that are needed for critical minerals, in theareas most affected by mine closures.
For mining companies, however, the contraction in coal demand in the NZE could be offset
by the need to increase mining of other raw minerals, including those vital to many clean
energy technologies, such as copper, lithium and nickel (IEA, 2021a). Global demand forthese critical minerals rises rapidly in the NZE (Figure 4.8). For example, demand for lithiumfor use in batteries expands by a factor of 30 by 2030, while demand for rare earths, primarily
used for making EV motors and wind turbines, increases by a factor of ten by 2030. Criticalmineral resources are not always located in the same locations or countries as existing coalmines, but the skills and experience of mining companies will be essential to ensure that the
supply of these minerals is able to match demand at reasonable prices. By the 2040s, the sizeof the global market for these minerals approaches that for coal today.
162

International Energy Agency | Special ReportBillion USD (2019)

Figure 4.8 ⊳Global value of coal and selected critical minerals in the NZE

500

Coal
Critical minerals
Rare earth
SiliconManganese
CobaltGraphite
NickelLithium
Copper

400
300
200
100

2020

2030

2040

4

2050
IEA. All rights reserved.

The market for critical minerals approaches that of coal today in the 2040s
Notes: Includes total revenue for coal and for selected critical minerals used in clean energy technologies. The
prices of critical minerals are based on conservative assumptions about cost increases (around a 10%‐20%
increase from current levels to 2050).

4.3.3

Electricity

Getting to net‐zero emissions calls for a massive expansion of the electricity sector to power
the needs of a growing global economy, the electrification of end‐uses that previously usedfossil fuels, and the production of hydrogen from electrolysis. While electricity demand
increases more than two‐and‐a‐half times, the rapid transformation of the industry meansthat total electricity supply costs triple from 2020 to 2050 in the NZE, raising average costs
per unit of electricity generation modestly (Figure 4.9).

6
They typically need replacing after 25‐30 years of operation, whereas many conventional hydropower,
nuclear and coal plants operate far longer albeit with periodic additional investment.

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The electricity supply industry also becomes much more capital intensive, accelerating a
recent trend. The share of capital in total costs rises from less than 60% in 2020 (already ten
percentage points higher than in 2010) to about 80% in 2050. This is largely due to a massive
increase in renewable energy and the corresponding need for more network capacity andsources of flexibility, including battery storage. In the late 2020s and 2030s, the upgrading
and replacement of existing solar and wind capacity as they come to the end of theiroperating lives also boosts capital needs.6 New nuclear power capacity additions add further
capital spending in the NZE. The rising capital intensity of the electricity industry increases
the importance of limiting risk for new investment and ensuring sufficient revenues in all
years for grid operators to fund rising investment needs – a point underlined by the financial
difficulties experienced by some network companies in 2020 due to depressed electricity
demand resulting from the Covid‐19 crisis (IEA, 2020f).

Global electricity supply costs by component in the NZE

6

120

5

100

4

80

3

60

2

40

1

20
2010 2020 2030 2040 2050

Grids
Power plant operations and maintenanceCO₂ price100%

USD per MWh (2019)

Trillion USD (2019)

Figure 4.9 ⊳

80%
60%
40%
20%

2010 2020 2030 2040 2050
Power plant capital recovery
Fuel
Average cost (right axis)
IEA. All rights reserved.

Electricity system costs triple to 2050, raising average supply costs modestly;
the massive growth of renewables makes the industry more capital intensive
Notes: Electricity supply costs include all the direct costs to produce and transmit electricity to consumers.
Battery storage systems are included in power plant capital recovery.

The rising share of renewables in the electricity generation mix has important implications
for the design of electricity markets. When the shares of solar, wind, other variable
renewables and nuclear power reach high levels, available electricity supply at no marginal
cost is often above electricity demand, resulting in a wholesale price of electricity that is zeroor even negative. By 2050, without changes in electricity market design, about 7% of windand solar output in the NZE would be above and beyond what can be integrated (and socurtailed), and the share of zero‐price hours in the year would increase to around 30% in
major markets from close to zero today, despite the active use of demand response. If theshare of renewables in the electricity generation mix is to rise as envisioned in the NZE, itwould therefore be highly desirable to effect significant changes in the design of electricity
markets so as to provide signals for investment, including investment in sources of flexibility
such as battery storage and dispatchable power plants.
The increase in electricity use inevitably raises associated costs. Operating and maintaining
power plants worldwide costs close to USD 1 trillion in 2050 in the NZE, two‐and‐a‐half times
the level in 2020. In 2020, upkeep at fossil fuel power plants accounted for USD 150 billion,
and renewables required nearly as much, mostly for hydropower. By 2050, the cost ofoperating and maintaining renewables reaches USD 780 billion, most it needed for wind andsolar photovoltaics (PV) as a result of their massive scaling up: offshore wind alone accounts
for USD 90 billion.

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The sharp reduction of fossil fuel use in the electricity industry and lower fuel prices meanthat costs related to fuel and CO2 prices are significantly reduced. This continues a recent
trend driven by near record‐low natural gas prices in many markets. Even with rising CO2
prices over time, the rapid decarbonisation of electricity means that fuel and CO2 make up a
declining share of total costs, falling from about one‐quarter in 2020 to 5% in 2050. Thebalance of fuel costs shifts towards low‐emissions sources, mainly nuclear power andbioenergy (including with CCUS), though some still remains related to natural gas and coalused in power plants equipped with CCUS.
One challenge in this context is what to do about the coal‐fired power plants in operation. In
2020, over 2 100 gigawatts (GW) of power plants worldwide used coal to produce electricity
and heat, and they emitted nearly 30% of all energy‐related CO2 emissions. Options include
retrofitting coal‐fired power plants with CCUS technologies, co‐firing with biomass orammonia; repurposing coal plants to focus on providing flexibility; and, where feasible,
phasing them out. In the NZE, all unabated coal‐fired power plants are phased out inadvanced economies by 2030 and in emerging market and developing economies by 2040.
As a result, emissions from coal‐fired power plants fall from 9.8 gigatonnes (Gt) in 2020 to
3.0 Gt in 2030 and to just 0.1 Gt by 2040 (residual emissions from coal with CCUS plants).74

Another challenge is related to the scale of capacity retirements envisaged and associatedsite rehabilitation, starting with coal. The pace of retirement of coal‐fired power plants over2020‐50 is nearly triple that of the past decade. Decommissioning at each site can often lasta decade and entail significant cost, and may involve closing a mine as well. In some cases, it
may be financially attractive to build a renewable energy project on the same site, taking
advantage of the grid connection and limiting the cost of rehabilitation. Thousands of naturalgas‐fired and oil‐fired power plants are also retired by 2050, though these sites are often
strategically located on the grid and many are likely to be replaced directly with battery
storage systems.
The large fleet of ageing nuclear reactors in advanced economies means theirdecommissioning increases, despite many reactor lifetime extensions. In the NZE, annual
average nuclear retirements globally are 60% higher over the next 30 years than in the last
decade. Each nuclear decommissioning project can span decades, with costs ranging fromseveral hundred million dollars to well over USD 1 billion for large reactors (NEA, 2016).

4.3.4

Energy‐consuming industries

7

A CO2 capture rate of 90% is assumed, though higher rates are technically possible with reduced efficiencies
and additional costs (IEA, 2020g).

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The changes in the NZE would have an enormous impact on industries that manufacture
vehicles and their material and component suppliers. Around 95% of all the cars and nearly
all of the trucks sold worldwide in 2020 were conventional vehicles with an internal
combustion engine. In the NZE, about 60% of global car sales in 2030 are EVs, and 85% ofheavy‐duty trucks sold in 2040 are EVs or fuel cell vehicles. In the NZE, vehicle component
suppliers and vehicle manufacturers alike retool factories, change designs to incorporate
batteries and fuel cells, and adjust supply chains to minimise the lifecycle emissions
intensities of vehicles. This provides opportunities to redesign existing parts andmanufacturing processes to improve efficiency and lower costs.
The rapid increase in EV sales in the NZE requires an immediate scale up of new supply chainsfor batteries as well as recharging and low‐emissions refuelling infrastructure. In the NZE,
battery production capacity increases to more than 6.5 terawatt‐hours (TWh) by 2030,
compared with less than 0.2 TWh in 2020. Any delay in expanding battery manufacturing
capacity would have a detrimental impact on the roll‐out of EVs and slow cost reductions forother clean energy technologies that benefit in the NZE from having similar manufacturing
processes and know‐how (such as fuel cell vehicles and electrolysers).
In aviation and shipping, liquid low‐emissions fuels are central to cut emissions. Switching tosome of these would have little impact on vessel design: the use of hydrogen‐based fuels or
biofuels in shipping would only require changes to the motor and fuel system, and bio‐kerosene or synthetic kerosene can operate with existing aircraft. New bunkering andrefuelling infrastructure are needed in the NZE, however, and the use of these low‐emissions
fuels also requires new safety and standardisation standards, protocols for permitting,construction and design, as well as international regulation, monitoring, reporting andverification of their production and use.
In heavy industrial sectors – steel, cement and chemicals – most deep emissions reduction
technologies are not available on the market today. In the NZE, material producers soon
demonstrate near‐zero emission processes, aided by government risk‐sharing mechanisms,
and start to adapt their existing production assets. For multinational companies, this includes
developing technology transfer strategies to roll‐out processes across plants. International
co‐operation would help to ensure a level playing field for all. Within countries, efforts focus
on industrial hubs in order to accelerate emissions reductions across multiple industrial
sectors by promoting economies of scale for new infrastructure (such as CO2 transport andstorage) and supplies of low‐emissions energy.
Materials producers work with governments in the NZE to create an international
certification system for near‐zero emission materials to differentiate them fromconventional ones. This would enable buyers of materials such as vehicle manufacturers andconstruction companies to enter into commercial agreements to purchase near‐zeroemissions materials at a price premium. In most cases, the premium would result in only amodest impact on the final price of the product price given that materials generally accountfor a small portion of manufacturing costs (Material Economics, 2019).

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Citizens

4.4.1

Energy‐related Sustainable Development Goals

An inclusive and people‐centred transition is key to the world moving rapidly, collectively
and consistently toward net‐zero emissions by mid‐century. The NZE achieves the United
Nations energy‐related Sustainable Development Goals (SDGs) of universal access to clean
modern energy by 2030 (SDG 7.1) and reducing premature deaths caused by air pollution(SDG 3.9). The technologies, options and measures used to achieve full access to low‐emissions electricity and clean cooking solutions by 2030 in the NZE also help to reducegreenhouse gas (GHG) emissions from household energy use.

4

Energy access
About 790 million people worldwide did not have access to electricity in 2020, most of themliving in sub‐Saharan Africa and developing Asia. Around 2.6 billion people did not haveaccess to clean cooking options: 35% of them were in sub‐Saharan Africa, 25% in India and
15% in China. A lack of access to energy not only impedes economic development, but also
causes serious harm to health and is a barrier to progress on gender equality and education.8
Figure 4.10 ⊳ People gaining access to electricity by type of connection in

Million people

emerging market and developing economies in the NZE
1 000
Stand‐alone renewables
Stand‐alone
Mini‐grids renewables
Mini‐grids
Grid renewables
Grid
Without access

800
600
400
200

2020

2025

2030
IEA. All rights reserved.

More than 80% of people gaining access to electricity by 2030 are supplied

8

Households relying on the traditional use of biomass for cooking dedicate around 1.4 hours each daycollecting firewood and several hours cooking with inefficient stoves, a burden largely borne by women (IEA,
2017).

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renewable power and just over half via off-grid systems

Around 45% of those who lack access to electricity by 2030 gain it via a connection to a main
grid, while the rest are served by mini‐grids (30%) and stand‐alone solutions (25%)(Figure 4.10). Almost all off‐grid or mini‐grid solutions are 100% renewable. Decentralised
systems that rely on diesel generators, which are also deployed in some grid‐connected
systems to compensate for low reliability, are phased out later and replaced with solar
storage systems. Achieving full access does not lead to a significant increase in global
emissions: in 2030 it adds less than 0.2% to CO2 emissions. Achieving full access to electricity
also brings efficiency gains and accelerates the electrification of appliances, which become
critical to emissions reductions in buildings after 2030 in emerging market and developing
economies.
For clean cooking, 55% of those gaining access by 2030 in the NZE do so through improved
biomass cookstoves (ICS) fuelled by modern biomass, biogas or ethanol, 25% through theuse of liquefied petroleum gas (LPG) and 20% via electric cooking solutions (Figure 4.11). LPG
is the main fuel adopted in urban areas and ICS is the main option in rural areas. The use of
LPG results in a slight increase in CO2 emissions in 2030 but a net reduction in overall GHG
emissions due to reduced methane, nitrous oxides and black carbon emissions from thetraditional use of biomass. In addition, LPG is increasingly decarbonised after 2030 using bio‐
sourced butane and propane (bioLPG) produced sustainably from municipal solid waste(MSW) and other renewable feedstocks. The technical potential of bioLPG production from
MSW in 2050 in Africa could be enough to satisfy the cooking needs of more than 750 million
people (GLPGP, 2020; Liquid Gas Europe, 2021).
Figure 4.11 ⊳ Primary cooking fuel by share of population in emerging market
and developing economies in the NZE100%

Without Access
Other polluting

80%

Traditional biomass

60%

With AccessModern bioenergy
Natural gas

40%

LPG
Electricity

20%

2020

2025

2030

2035

2040

2050
IEA. All rights reserved.

Traditional biomass is entirely replaced with modern energy by 2030, mainly in the form of
bioenergy and LPG; by 2050, electricity, bioenergy and bioLPG meet most cooking needs
Notes: Modern bioenergy includes improved cook stoves, biogas and ethanol. Liquefied petroleum gas (LPG)
includes fossil and renewable fuel.

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The achievement of universal access to clean energy by 2030 requires governments anddonors to put expanding access at the heart of recovery plans and programmes. There would
be multiple benefits: investing heavily in energy access would provide an immediate
economic boost, create local jobs and bring durable improvements to social well‐being bymodernising health services and food chains. In the NZE, around USD 35 billion is spent eachyear improving access to electricity and almost USD 7 billion each year on clean cooking
solutions for people in low‐income countries from now to 2030.

Air pollution and healthMore than 90% of people around the world are exposed to polluted air today. Such pollution
led to around 5.4 million premature deaths in 2020, undermining economic productivity andplacing extra stress on healthcare systems. Most of these deaths were in emerging market
and developing economies. Just over half were caused by exposure to outdoor air pollution;
the remainder resulted from breathing polluted air indoors, caused mainly by the traditionaluse of biomass for cooking and heating.

4

Energy‐related emissions of the three major air pollutants – sulphur dioxide (SO2), nitrogenoxides (NOX) and fine particulate matter (PM2.5) – fall rapidly in the NZE. SO2 emissions fall by
85% between 2020 and 2050, mainly as a result of the large‐scale phase‐out of coal‐fired
power plants and industrial facilities. NOX emissions also drop by around 85% as a result of
the increased use of electricity, hydrogen and ammonia in the transport sector. The
increased uptake of clean cooking fuels in developing countries, together with air pollution
control measures in industry and transport, results in a 90% drop in PM2.5 emissions(Figure 4.12). The reduction in air pollution in the NZE leads to roughly a halving in premature
deaths in 2050 compared with 2020, saving the lives of about 2 million people per year,
around 85% of them in emerging market and developing economies.
Figure 4.12 ⊳ Global premature deaths and air pollutant emissions in the NZE

5Change in air pollutant emissions
Index (2020 = 100)Million people

Premature deaths

4
3
2
1

100
80
60
40
20

2020
2050
Advanced economies
Emerging market and developing economies

2020

2030

2040

NOx
SO2
PM2.5
2050

Reductions in major air pollutants mean 2 million fewer premature deaths per year
Sources: IEA analysis based on IIASA.

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4.4.2

Affordability

Total spending on energy
Energy affordability is a key concern for governments, businesses and households. Global
direct spending on energy, i.e. the total fuel bills paid by all end users, which totalled
USD 6.3 trillion in 2020, increases by 45% to 2030 and 75% to 2050, in large part reflecting
population and GDP growth over this period. As a share of global GDP, the figures look rather
different: total direct spending on energy holds steady at around 8% out to 2030 (similar to
the average over the last five years), but then declines to 6% in 2050. This decline offsets asignificant share of the higher cost of buying new, more efficient energy‐consuming
equipment.
A portion of the increase in energy spending in the NZE is related to rising CO2 prices and theremoval of consumption subsidies for fossil fuels and electricity. CO2 pricing (taxes andtrading schemes) paid by end users at its peak generates global revenues in the NZE of close
to USD 700 billion each year between 2030 and 2035, before declining steadily due todeclining overall emissions: these revenues could be recycled into economies or otherwise
used to improve consumer welfare, particularly for low‐income households. The NZE alsosees the progressive removal of consumption subsidies for fossil fuels, many of whichdisproportionally benefit wealthier segments of the population that use more of thesubsidised fuel. Phasing out the subsidies would provide more efficient price signals for
consumers, and spur more energy conservation and measures to improve energy efficiency.
The impact of phasing out subsidies on lower income households could be offset throughdirect payment schemes or other means at lower overall costs to the economy.

Trillion USD (2019)

Figure 4.13 ⊳ Global energy spending by fuel in the NZE
10

100%

8

80%

6

60%

4

40%

2

20%

2010
2020
Oil products

2030
Natural gas

2040
Coal

2050
Electricity

2010 2020 2030 2040 2050
Bioenergy
Other
IEA. All rights reserved.

Total energy spending increases by 75% to 2050, mainly on electricity
Note: Other = hydrogen‐based and synthetic fuels, and district heating.

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The transformation of the global energy system in the NZE drives a major shift in thecomposition of energy spending. Spending on electricity at USD 2.7 trillion in 2020 (45% of
total energy spending) exceeded spending on oil products for the first time and it rises toover USD 8.5 trillion in 2050 (80% of total energy spending) (Figure 4.13). Retail electricity
prices increase by 50% on average, contributing to the total increase. Spending on oil, which
has dominated overall energy spending for decades, goes into long‐term decline in the
2020s, its share of spending falling from 40% in 2020 to just 5% in 2050. Spending on natural
gas and coal also declines in the long term, offset by higher spending on low‐emissions fuels.
Spending on bioenergy reaches about USD 900 billion per year by 2040, while other low‐emissions fuels, including hydrogen‐based products, gain a foothold and establish a market
worth of around USD 600 billion per year by 2050.

4Household spending on energy
Direct spending by households on energy, including for heating, cooling, electricity and fuelfor passenger cars, falls as a share of disposable income in the NZE, though there are large
differences between countries (Figure 4.14).
Figure 4.14 ⊳ Average annual household energy bill in the NZE

USD (2019)

Advanced economies

Emerging market anddeveloping economies

3 000

6%

2 500

5%

2 000

4%

1 500

3%

1 000

2%

500

1%
2020

2030 2050

2020

2030

Hydrogen‐based
District heating
Bioenergy
Electricity
Coal
Natural gas
Oil products
Share of income(right axis)

2050
IEA. All rights reserved.

The proportion of disposable household income spent on energy is stable in emerging
market and developing economies, and drops substantially in advanced economies

In advanced economies, the average annual bill declines from about USD 2 800 in 2020 to
USD 2 300 in 2030, thanks to a strong push on energy efficiency and cost‐effective
electrification. Oil products make up close to half of household energy bills in 2020, but thisfalls to 30% in 2030 and almost zero in 2050, due to a rapid shift to EVs and to downward
pressure on oil prices. Natural gas bills, which make up almost 10% of the total today, also
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Note: Hydrogen‐based includes hydrogen, ammonia and synthetic fuels.

fall to almost zero in 2050 with the electrification of heating and cooking. Electricity rises
from about 35% of household fuel bills in 2020 to 90% in 2050, increasing the sensitivity ofhouseholds to electricity prices and consumption. Increasing incomes mean that householdspending on energy as a share of disposable income drops from 4% in 2020 to 2% in 2050.
In emerging market and developing economies, there is a huge increase in demand formodern energy services linked to expanding populations, economic growth, rising incomes
and universal access to electricity and clean cooking options. As in advanced economies,electricity accounts for the vast majority of energy bills in 2050. The use of more efficient
appliances and equipment curbs some of the increase in demand, but household bills still
increase in the NZE by over 60% to 2030 and more than double by 2050. As a percentage ofdisposable income, however, bills in emerging market and developing economies remainaround 4%, and there are large social and economic benefits from increased energy use.
Figure 4.15 ⊳ Change in household spending on energy plus energy-related
investment in the NZE relative to 2020

USD (2019)

Advanced
economies

Emerging market anddeveloping economies

1 000

2% Investment recovery
Other
Renewables
1%
Energy efficiency
Electrification

500

0

‐ 500

‐1 000

Variable costs
Energy bill perhouseholdNetchange‐1%
Net change share of
disposable income‐2% (right axis)
0%

2030

2050

2030

2050

IEA. All rights reserved.

Total household spending on energy increases modestly in emerging market anddeveloping economies, leaving over 90% of additional income available for other uses

Taking into account additional investment in electricity‐consuming equipment such as
efficient appliances and electric vehicles, spending on energy plus related investment is
USD 1.30 higher per day per household globally in 2050 than in 2020 in the NZE. This modest
increase means that expenditure on energy makes up a smaller share of disposable income
in 2050 than it does today, though the impacts vary by country. In advanced economies,
additional investment in electrification, energy efficiency and renewable energy costs about
USD 750 per household by 2030 and USD 720 in 2050, which is fully offset by reductions in
the level of energy bills (Figure 4.15). In emerging market and developing economies, a172International Energy Agency | Special Reportgrowing basket of energy services means increased use of energy, and total energy‐relatedhousehold spending increases. Additional investment moderates the change in energy bills,
with the result that total energy‐related spending takes 2 percentage points more ofhousehold disposable income in 2030 and 1 percentage point more in 2050 than today.

4.4.3

Behavioural changes

Behavioural changes play an important part in reducing energy demand and emissions in the
NZE, especially in sectors where technical options for cutting emissions are limited in 2050.
While it is citizens and companies that modify their behaviour, the changes are mostly
enabled by the policies and investments made by governments, and in some instances, they
are required by laws or regulations. The Covid‐19 pandemic has increased general awarenessof the potential effectiveness of behavioural changes, such as mask‐wearing, and working
and schooling at home. The crisis demonstrated that people can make behavioural changes
at significant speed and scale if they understand the changes to be justified, and that it isnecessary for governments to explain convincingly and to provide clear guidance about whatchanges are needed and why they are needed.

4

Figure 4.16 ⊳ Emissions reductions from policy-driven and discretionary
behavioural changes by citizens and companies in the NZE
2030

Citizens
2040

2050

2030

Companies
2040
2050

‐ 500

Mt CO₂‐1 000‐1 500Influenced or mandated by policies

Discretionary behavioural changes
IEA. All rights reserved.

Three-quarters of the emissions saved by behavioural changes could be

Around three‐quarters of the emissions saved by behavioural changes between 2020 and
2050 in the NZE could be directly influenced or mandated by government policy(Figure 4.16). They include mitigation measures such as phasing out polluting cars from large
cities and reducing speed limits on motorways. The other one‐quarter involves more
discretionary behavioural changes, such as reducing wasteful energy use in homes andChapter 4 | Wider implications of achieving net-zero emissions

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directly influenced or mandated by government policies

offices, though even these types of changes could be promoted through awarenesscampaigns and other means. Around 10% of emissions savings directly influenced or
mandated by government policy would require new or redirected investment ininfrastructure. For example, the shift in the NZE from regional flights to high‐speed rail would
necessitate building around 170 000 kilometres of new track globally by 2050 (a tripling of2020 levels).
Behavioural changes made by citizens and companies play a roughly equal role in reducing
emissions in the NZE. Most changes in road transport and energy‐saving in homes would
depend on individuals, whereas the private sector has the primary role in reducing energy
demand in commercial buildings and pursuing materials efficiency in manufacturing.
Companies can also influence behavioural changes indirectly, for example, by promoting theuse of public transport by employees that commute or encouraging working from home.
However, a simple distinction between the role for individuals and companies masks acomplex underlying dynamic: it is ultimately citizens as consumers of energy‐related goods
and services who shape corporate strategies, but at the same time companies do much toinfluence and generate consumer demand through marketing and advertising. In the NZE,
consumers and companies move together in adopting behavioural changes, withgovernments setting the direction of those changes and facilitating them via effective andsustained policy support.
The behavioural changes in the NZE happen to different extents in different regions, andreflect a range of geographical and infrastructure constraints, as well as existing behaviouralnorms and cultural preferences. In countries with low rates of car ownership or energy
service demand in buildings, many of the behavioural changes in advanced economies in NZE
would not be relevant or appropriate. As a result, around half of the emissions savings frombehavioural changes are in emerging market and developing economies, despite around 95%
of activity growth in buildings and road transport between 2020 and 2050 occurring there.
Nevertheless, there are significant opportunities in emerging market and developing
economies for materials efficiency and urban design to decouple growth in economic
prosperity and energy services from increases in emissions. For example, around 85% of CO2
emissions reductions from cement and steel making in 2050 are due to gains in materials
efficiency in emerging market and developing economies.
Cities are important to the behavioural changes in the NZE. Urban design can reduce theaverage city dweller’s carbon footprint by up to 60% by shaping lifestyle choices andinfluencing day‐to‐day behaviour. For example, compact cities with clustered amenities canshorten average trip lengths; digitalisation can help shared private mobility to become thede facto option to accommodate much of the growth in service demand; and urban green
infrastructure can reduce cooling demand (Feyisa, Dons & Meilby, 2014).

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4.5

Governments

4.5.1

Energy security

Energy security is an important consideration for governments and those they serve, and thepathway to net‐zero emissions must take account of it. Concerns about energy security havetraditionally been associated with oil and natural gas supplies. The drop in oil and gas
demand and the increased diversity of the energy sources used in the NZE may reduce somerisks, but they do not disappear. There are also new potential vulnerabilities associated with
the need to maintain reliable, flexible and secure electricity systems, and with the increasein demand for raw minerals for clean energy technologies. Improving energy efficiency
remains the central measure for increasing energy security – even with rapid growth in low‐emissions electricity generation, the safest energy supplies are those that are not needed.

4

Oil and gas security
No new oil and natural gas fields are required in the NZE beyond those already approved fordevelopment, and supplies become increasingly concentrated in a small number of low‐cost
producers. For oil, OPEC’s share of global oil supply grows from around 37% in recent years
to 52% in 2050, a level higher than at any point in the history of oil markets (Figure 4.17). For
natural gas, inter‐regional liquefied natural gas (LNG) trade increases from 420 bcm in 2020
over the next five years but it then falls to around 160 bcm in 2050. Nearly all exports in 2050
come from the lowest cost and lowest emissions producers. This means that the importanceof ensuring adequate supplies of oil and natural gas to the smooth functioning of the global
energy system would be quantitatively lower in 2050 than today, but it does not suggest thatthe risk of a shortfall in supply or sudden price rise is necessarily going to diminish, and ashortfall or sudden price rise would still have large repercussions for a number of sectors.
Figure 4.17 ⊳ Global oil supply and LNG exports by region in the NZEOil (mb/d)

LNG exports (bcm)

100

50%

500

80

40%

400

60

30%

300

20%

200

10%

100

Non‐OPEC

40
20

OPEC
1971

2010
Share of OPEC (right axis)

2050

1971
1990
2010
North America
RussiaSoutheast Asia
Middle East
Other

2030
2050
Australia
AfricaIncreased reliance on OPEC and other producer economies suffering from falling
oil and gas revenues could pose a risk to supply security in consuming countries

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IEA. All rights reserved.

Even if the timing and ambition of emission reduction policies are clear, the changes in the
NZE clearly have implications for producers and consumers alike. Many producer economies
would see oil and gas revenues drop to some of the lowest ever levels (see section 4.2.2).
Even if these producers increase their market share, and diversify their economies andsources of tax revenue, they are likely to struggle to finance essential spending at current
levels. This could have knock‐on effects for social stability, and that in turn could potentiallythreaten the smooth delivery of oil and gas to consuming countries. Moves on the part ofproducer economies to gain market share or a failure to maintain upstream operations while
managing the extreme strains that would be placed on their fiscal balances could lead toturbulent and volatile markets, greatly complicating the task facing policy makers.

Electricity security
The rapid electrification of all sectors in the NZE, and the associated increase in electricity’s
share of total final consumption from 20% in 2020 to nearly 50% in 2050, puts electricity
even more at the heart of energy security across the world than it already is (IEA, 2020h).
Greater reliance on electricity has both positive and negative implications for overall energy
security. One advantage for energy‐importing countries is that they become more
self‐sufficient, since a much higher share of electricity supply is based on domestic sourcesin the NZE than is the case for other fuels. However the increased importance of electricity
means that any electricity system disruption would have larger impacts. Electricity
infrastructure is often more vulnerable to physical shocks such as extreme weather events
than pipelines and underground storage facilities, and climate change is likely to put
increasing pressure on electricity systems, for example through more frequent droughts thatmight decrease the availability of water for hydropower and for cooling at thermal power
plants. The resilience of electricity systems needs to be enhanced to mitigate these risks andmaintain electricity security, including through more robust contingency planning, withsolutions based on digital technologies and physical system hardening (IEA, 2021b).
Cybersecurity could pose an even greater risk to electricity security as systems incorporate
more digitalised monitoring and controls in a growing number of power plants, electricity
network assets and storage facilities. Policy makers have a central part to play in ensuringthat the cyber resilience of electricity is enhanced, and there are a number of ways in which
they can pursue this (IEA, 2021c).
Maintaining electricity security also requires a range of measures to ensure flexibility,
adequacy and reliability at all times. Enhanced electricity system flexibility is of particularimportance as the share of variable renewables in the generation mix rises. As aconsequence, electricity system flexibility quadruples globally in the NZE in parallel with amore than two‐and‐a half‐fold increase in electricity supply.9 A portfolio of flexibility sources– including power plants, energy storage and demand response supported by electricity
9Electricity system flexibility is quantified here based on hour‐to‐hour ramping needs, which is only one aspectof flexibility that also includes actions on much shorter time scales to maintain frequency and other ancillary
services.

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International Energy Agency | Special Reportnetworks – is used to match supply and demand at all times of the year, under varying
weather conditions and levels of demand. There is a significant shift in the NZE from using
coal‐ and gas‐fired power plants for the provision of flexibility to the use of renewables,hydrogen, battery storage, and demand‐side response (Figure 4.18).

Emerging market anddeveloping economies

Advanced
economies

Figure 4.18 ⊳ Electricity system flexibility by source in the NZE
Coal
Natural gas
Oil
Hydrogen‐based
Nuclear
Hydro
Other renewables
Batteries
Demand response

2020
2050

2020

4

2050

20%

40%

60%

80%

100%
IEA. All rights reserved.

To meet four-times the amount of hour-to-hour flexibility needs,
batteries and demand response step up to become the primary sources of flexibility

Electricity demand also becomes much more flexible as a result of the use of demand
response measures, e.g. to shift consumption to times when renewable energy is plentiful.
Conventional sources of demand response such as moderating industry activities remain
important, but new areas of demand response such as smart charging of EVs unlock valuable
new ways of supplementing them.10 As the EV fleet expands in the NZE, EVs provide asignificant portion of total electricity system flexibility. Although the technology alreadyexists, the roll‐out of smart charging has been slow to date due to institutional and regulatory
barriers; these hurdles are overcome in the NZE. Measures are also implemented to ensurethat the digitalisation of charging and other sources of flexibility does not compromise
cybersecurity, and that potential social acceptance issues are addressed.

10

Smart chargers share real‐time data with a centralised platform to allow system operators to optimise
charging profiles based on how much energy the vehicle needs over a specified span of time, how much isavailable, the price of wholesale electricity, grid congestion and other parameters.

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Energy storage also plays an important role in the provision of flexibility in the NZE. The
deployment of battery storage systems is already starting to accelerate and to contribute to
the management of short‐duration flexibility needs, but the massive scale up to 3 100 GW ofstorage in 2050 (with four hour duration on average) envisaged in the NZE hinges on
overcoming current regulatory and market design barriers. Pumped hydropower offers an
attractive means of providing flexibility over a matter of hours and days, while hydrogen has

the potential to play an important part in longer term seasonal storage since it can be stored
in converted gas storage facilities that have several orders of magnitude more capacity thanbattery storage projects.
Dispatchable power is essential to the secure transition of electricity systems, and in the NZE
this comes increasingly from low‐emissions sources. Hydropower provides a significant partof flexibility in many electricity systems today, and this continues in the future, withparticular emphasis on expanding pumped hydro facilities. Nuclear power and geothermal
plants, though designed for baseload generation, also provide a degree of flexibility in the
NZE, but there are constraints on how much these sources can be expanded. This leaves animportant role for thermal power plants that are equipped with carbon capture or use low‐emissions fuels. For example, the use of sustainable biomass or low‐emissions ammonia inexisting coal plants offers a way of allowing these facilities to continue to contribute toflexibility and capacity adequacy, while at the same time reducing CO2 emissions. Additional
measures will also be necessary to maintain power system stability (Box 4.1).
Box 4.1 ⊳Power system stability with high shares of variable renewables

Stability is a key feature of electricity security, allowing systems to remain in balance andwithstand disturbances such as sudden generator or grid outages. Historically,
conventional generators such as nuclear, hydro and fossil fuels have been central toelectricity system stability, providing inertia with rotating machines that allow stored
kinetic energy to be instantly converted into power in case of a system disturbance, andgenerating a voltage signal that helps all generators remain synchronous.
In contrast, newer technologies such as solar PV, wind and batteries are connected to thesystem through converters. They generally do not contribute to system inertia and are
configured as “grid‐following” units, synchronising to conventional generators.
Maintaining system stability will call for new approaches as the share of converter based
resources, and in particular variable renewables, rises much higher in electricity systems.
There is a growing body of knowledge and studies on stability in systems with high sharesof variable renewables. For example, a recent joint study by the IEA and RTE, thetransmission system operator in France, analyses the conditions under which it would betechnically feasible to integrate high shares of variable renewables in France (IEA, 2021d).
Based on the findings of this study:One option to ensure stability for a net zero power system is to maintain a minimum
amount of conventional generation from low‐carbon technologies during hours ofhigh shares VRE output. This approach to maintain stability comes at the cost of solar
and wind curtailment at high shares.



Updated grid codes can be used to call for variable renewables and batteries toprovide fast frequency response services, which can help reduce the amount of
conventional generation needed for stability.

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International Energy Agency | Special ReportSynchronous condensers are able to provide inertia without generating electricity.
The technology is already proven at GW‐scale in Denmark and also in South
Australia, but experience needs to be expanded at larger scale.



Grid‐forming converters can allow variable renewables and batteries to generate avoltage signal, though experience with this approach needs to move beyond micro‐
grids and small islands to large interconnected systems.

Demonstration projects, stakeholder consultations and international collaboration willbe critical to fully understand the merits of each of these four approaches and the scopefor a portfolio of options that would most cost‐effectively achieve net zero emissions
while maintaining electricity security.

4

Electricity networks support and enable the use of all sources of flexibility, balancing demandand supply over large areas. Timely investment in grids to minimise congestion and expand
the size of the areas where supply and demand are balanced will be critical to making thebest use of solar PV and wind projects, and ensuring affordable and reliable supplies ofelectricity. Expanding long‐distance transmission also makes a key contribution in the NZE,
since a lack of available land near demand centres and other factors mean new sources ofgeneration are often located in remote areas. It is important that new transmission systems
are built with variable, bidirectional operation in mind in order to maximise the use ofavailable flexibility sources, and that regulatory and market arrangements support flexible
connections between systems. The key value of interconnections comes fromcomplementary electricity demand and wind patterns: solar PV output is more highly
correlated than wind over large areas.

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The NZE sees a major increase in demand for critical minerals such as copper, lithium, nickel,
cobalt and rare earth elements that are essential for many clean energy technologies. There
are several potential vulnerabilities that could hinder the adequate supply of these minerals
and lead to price volatility (IEA, 2021a). Today’s production and processing operations formany minerals are highly concentrated in a small number of countries, making supplies
vulnerable to political instability, geopolitical risks and possible export restrictions. In manycases, there are also concerns about land‐use changes, competition for scarce water
resources, corruption and misuse of government resources, fatalities and injuries to workers,
and human rights abuses, including the use of child labour. New critical mineral projects canhave long lead times, so the rapid increase in demand in the NZE could lead to a mismatchin timing between supply and demand. The international trade and investment regime is key
to maintaining reliable mineral supplies, but policy support and international co‐ordination
will be needed to ensure the application of rigorous environmental and social regulations.

4.5.2

Infrastructure

Getting to net‐zero emissions will require huge amounts of new infrastructure and lots ofmodifications to existing assets. Energy infrastructure is transformed in the NZE as all
countries and regions move from systems supporting the use of fossil fuels and the
distribution of conventionally generated electricity to systems based largely on renewableelectricity and low‐emissions fuels. In many emerging market and developing economies, theprovision of large amounts of infrastructure would be necessary in the coming decades inany case, creating a window of opportunity to support the transition to a net‐zero emissions
economy. In all countries, governments will play a central role in planning, financing andregulating the development of infrastructure. Some of the main infrastructure components– electricity networks and EV charging, pipelines systems for low‐emissions fuels and CO2,
and transport infrastructure – are discussed below.
The rapid increase in electricity demand in the NZE and the transition to renewable energy
call for an expansion and modernisation of electricity networks (Figure 4.19). This would
require a sharp reversal in the recent trend of declining investment: failure to achieve thiswould almost certainly make the energy transition for net‐zero emissions impossible. Tariff
design and permitting procedures also need to be revised to reflect fundamental changes in
the provision and uses of electricity. Some of the main considerations include:Long‐distance transmission. Most of the growth in renewables in the NZE comes from
centralised sources. Yet the best solar and wind resources are often in remote regions,requiring new transmission connections. Ultra high‐voltage direct current systems arelikely to play an important role in supporting transmission over long distances.



Local distribution. Energy efficiency gains in households and wider use of rooftop solar
PV mean surplus electricity will be available more often, while electric heat pumps andresidential EV charging points will require electricity to be more widely available.
Together these developments point to the need for substantial increases in distribution
network capacity.



Grid substations. The massive expansion of solar PV and wind requires new grid
substations: their capacity expands by more than 57 000 GW in the NZE by 2030,
doubling current capacity globally.



EV charging. Major new public charging networks are built in the NZE, including in work
places, highway service stations and residential complexes, to support EV expansion andlong‐distance driving on highways.



Digitalisation of networks. With a large increase in the use of connected devices, thedigitalisation of grid assets supports more flexible grid operations, better managementof variable renewables and more efficient demand response.

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International Energy Agency | Special ReportFigure 4.19 ⊳ Annual average electricity grid expansion, replacement andsubstation capacity growth in the NZEMillion km

6

60%

12

4

40%

8

2

20%

4

Thousand GW

Grid substation capacity growth

Grid expansion and replacements

4
2016‐
20

2021‐
30

Refurbishments

2031‐
40

2041‐
50

Renewables and demand increase

2016‐
20

2021‐
30

2031‐
40

2041‐
50

Share of digitalisation (right axis)
IEA. All rights reserved.

Grid and substation expansion is driven largely by the massive deployment of renewables
and electrification of end-uses, with a rising digital share of infrastructure
Note: Substation capacity here assumes active electricity is equal to apparent electricity.

Given the rapid decline of fossil fuels, significant investment in new oil and gas pipelines
are not needed in the NZE. However investment is needed to link the production of low‐emissions liquids and gases with consumption centres, and to convert existing pipelines
and associated distribution infrastructure for the use of these low‐emissions fuels. Some
low‐emissions fuels, such as biomethane and synthetic hydrogen‐based fuels, can makeuse of existing infrastructure without any modifications, but pure hydrogen requires a
retrofit of existing pipelines. New dedicated hydrogen infrastructure is also needed in
the NZE, for example to move hydrogen produced in remote areas with excellent
renewable resources to demand centres.

The expansion of CCUS in the NZE requires investment in CO2 transport and storage
capacity. By 2050, 7.6 Gt of CO2 is captured worldwide, requiring a large amount ofpipeline and shipping infrastructure linking the facilities where CO2 is captured withstorage sites. Industrial clusters, including ports, may offer the best near‐term
opportunities to build CO2 pipeline and hydrogen infrastructure, as the various
industries in those clusters using the new infrastructure would be able to share theupfront investment needs (Figure 4.20).

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Pipelines continue to play a key role in the transmission and distribution of energy in the
NZE:Figure 4.20 ⊳ Illustrative example of a shared CO2 pipeline in anindustrial cluster

IEA. All rights reserved.

Deployment of technologies like CCUS and hydrogen and their enabling infrastructure
would benefit strongly from a cross-sectoral approach in industrial clusters

Transforming transport infrastructure represents both a challenge and an opportunity. The
challenge arises from the potential increase in the energy and carbon intensity of economic
growth during the infrastructure development phase.11 Steel and cement are the two main
components of virtually all infrastructure projects, but they are also among the mostchallenging sectors to decarbonise. The opportunity comes from the scope that exists insome countries to develop infrastructure from scratch in a way that is compatible with the
net zero goal. Countries undergoing rapid urbanisation today can design and steer new
infrastructure development towards higher urban density and high‐capacity mass transit intandem with EV charging and low‐emissions fuelling systems.
Rail has an important part to play as transport infrastructure is developed. The NZE sees
large‐scale investment in all regions in high‐speed trains to replace both long‐distance car
driving and short‐haul aviation. It also sees large‐scale investment in all regions in track,
control systems, rolling stock modernisation and combined freight facilities to improve speed
and flexibility for just‐in‐time logistical operations and thus support a shift of freight fromroad to rail, especially for container traffic.

11

The modelling for the NZE incorporates the increase in steel and cement that is required to build additionaltransport infrastructure (roads, cars and trucks) and energy infrastructure, e.g. power plants and windturbines.

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International Energy Agency | Special Report4.5.3

Tax revenues from retail energy sales

The slump in the consumption of fossil fuels required to get to net‐zero emissions would
result in the loss of a large amount of tax revenue in many countries, given that fuels such as
oil‐based transport fuels and natural gas are often subject to high excise or other special
taxes. In recent years, energy‐related taxes accounted for around 4% of total government
tax revenues in advanced economies on average and 3.5% in emerging market anddeveloping economies, but they provided as much as 10% in some countries (OECD, 2020).
Figure 4.21 ⊳ Global revenues from taxes on retail sales of oil and gas in the
NZE

4Billion USD (2019)

1 000
800
Natural gas excise tax
600
Oil excise tax

400
200

2010

2020

2030

2040

2050
IEA. All rights reserved.

Tax revenues slump from retail sales of oil and gas



CO2 prices. These are introduced in all regions in the NZE, albeit at different levels forcountries and sectors, which provide additional revenue streams. The reduction in oil
and natural gas excise taxes is more than compensated over the next 15 years by higher
revenues from CO2 prices related to these fuels paid by end users and other sectors, butthese too fall as the global energy system moves towards net‐zero emissions.

Road fees and congestion charges. These would have the added benefit of discouraging
driving and encouraging switching to other less carbon‐intensive modes of transport.

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Tax revenue from oil and natural gas retail sales falls by close to 90% between 2020 and 2050
in the NZE (Figure 4.21). Governments are likely to need to rely on some combination ofother tax revenues and public spending reforms to compensate. Some taxation measures
focused on the energy sector could be useful. However, any such taxes would need to becarefully designed to minimise their impact on low‐income households, as poorer
households spend a higher percentage of their disposable income on electricity and heating.
Options for energy‐related taxes include:

Increasing taxation on electricity. Higher taxes on all electricity sales could generate
substantial revenues, especially since large increases in price often have little effect on
consumption. This might be counterproductive, however, as it would reduce the cost‐effectiveness of both EVs and heat pumps, which could slow their adoption, although
this risk could be mitigated by the introduction of CO2 prices.

Natural gas is currently less taxed than transport fuels in most countries. Introducing andraising CO2 prices for natural gas used in buildings, mostly for heating, would accelerateenergy efficiency improvements and boost government revenues, although care would beneeded to avoid disproportionately impacting low‐income households. Taxing natural gas
used in industry would improve the competitiveness of less carbon‐intensive fuels andtechnologies such as hydrogen, but would run the risk of undermining the international
competitiveness of energy‐intensive sectors and carbon leakage in the absence of
co‐ordinated global action or border carbon‐tax adjustments.

4.5.4

Innovation

Without a major acceleration in clean energy innovation, reaching net‐zero emissions by
2050 will not be achievable. Technologies that are available on the market today provide
nearly all of the emissions reductions required to 2030 in the NZE to put the world on track
for net‐zero emissions by 2050. However, reaching net‐zero emissions will require thewidespread use after 2030 of technologies that are still under development today. In 2050,
almost 50% of CO2 emissions reductions in the NZE come from technologies currently atdemonstration or prototype stage (Figure 4.22). This share is even higher in sectors such as
heavy industry and long‐distance transport. Major innovation efforts are vital in this decadeso that the technologies necessary for net‐zero emissions reach markets as soon as possible.
Figure 4.22 ⊳ Global CO2 emissions changes by technology maturity category
in the NZE
Gt CO₂30

Activity
Behaviour

15

On the market
MatureMarket uptake
Under development
Demonstration
Large prototype
Small prototype/lab

0
‐15
‐30
‐45
‐60

Net reductions
2030

2050
IEA. All rights reserved.

While the emissions reductions in 2030 mostly rely on technologies on the market, thoseunder development today account for almost half of the emissions reductions in 2050

184

International Energy Agency | Special ReportInnovation cycles for early stage clean energy technologies are much more rapid in the NZEthan what has typically been achieved historically, and most clean energy technologies thathave not been demonstrated at scale today reach markets by 2030 at the latest. This means
the time from first prototype to market introduction is on average 20% faster than the fastest
energy technology developments in the past, and around 40% faster than was the case forsolar PV (Figure 4.23). Technologies at the demonstration stage, such as CCUS in cement
production or low‐emissions ammonia‐fuelled ships, are brought into the market in the next
three to four years. Hydrogen‐based steel production, direct air capture (DAC) and othertechnologies at the large prototype stage reach the market in about six years, while mosttechnologies at small prototype stage – such as solid state refrigerant‐free cooling or solidstate batteries – do so within the coming nine years.

4

Figure 4.23 ⊳ Time from first prototype to market introduction for selected

H₂ ship
CCUS in cement production
H₂ direct reduced iron
Direct air capture
Solid‐state battery
Solid‐state cooling

13
16
30
10
16
20

Fast historical examples
LEDs
Wind power
Solar PV
Li‐ion battery

10
20
30
30

1950
Up to 2020:

1960

1970

Small protoype

1980

1990

2000

2010

2020

Years from prototype to market

technologies in the NZE and historical examples

2030

Large prototype
Demonstration
Remaining time to market ‐ NZE
IEA. All rights reserved.

Technology development cycles are cut by around 20%
from the fastest developments seen in the past
Note: H2 = hydrogen; CCUS = carbon capture, utilisation and storage; LED = light‐emitting diode; Li‐ion =lithium‐ion.
Sources: IEA analysis based on Carbon Engineering, 2021; Greco, 2019; Tenova, 2018; Gross, 2018; European
Cement Research Academy, 2012; Kamaya, 2011; Zemships, 2008.

The acceleration that is needed also requires a large increase in investment in demonstration
projects. In the NZE, USD 90 billion is mobilised as soon as possible to complete a portfolio
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An acceleration of this magnitude is clearly ambitious. It requires technologies that are not
yet available on the market to be demonstrated very quickly at scale in multiple
configurations and in various regional contexts. In most cases, these demonstrations are run
in parallel in the NZE. This is in stark contrast with typical practice in technology
development: learning is usually transferred across consecutive demonstration projects indifferent contexts to build confidence before widespread deployment commences.

of demonstration projects before 2030: this is much more than the roughly USD 25 billion
budgeted by governments to 2030. Most of these projects are concerned with theelectrification of end‐uses, CCUS, hydrogen and sustainable bioenergy, mainly for long‐
distance transport and heavy industrial applications.
Increased public funding helps to manage the risks of such first‐of‐a‐kind projects and toleverage private investment in research and development (R&D) in the NZE. This represents
a reversal of recent trends: government spending on energy R&D worldwide, including
demonstration projects, has fallen as a share of GDP from a peak of almost 0.1% in 1980 tojust 0.03% in 2019. Public funding also becomes better aligned with the innovations needed
to reach net‐zero emissions. In the NZE, electrification, CCUS, hydrogen and sustainablebioenergy account for nearly half of the cumulative emissions reductions to 2050. Just threetechnologies are critical in enabling around 15% of the cumulative emissions reductions in
the NZE between 2030 and 2050: advanced high‐energy density batteries, hydrogenelectrolysers and DAC.

Governments drive innovation in the NZEBringing new energy technologies to market can often take several decades, but theimperative of reaching net‐zero emissions globally by 2050 means that progress has to bemuch faster. Experience has shown that the role of government is crucial in shortening thetime needed to bring new technology to market and to diffuse it widely (IEA, 2020i). The
government role includes educating people, funding R&D, providing networks for knowledge
exchange, protecting intellectual property, using public procurement to boost deployment,
helping companies innovate, investing in enabling infrastructure and setting regulatory
frameworks for markets and finance.
Knowledge transfer from first‐mover countries can also help in the acceleration needed, andis particularly important in the early phases of adoption when new technologies are typicallynot competitive with incumbent technologies. For example, in the case of solar PV, national
laboratories played a key role in the early development phase in the United States, projects
supported directly by government in Japan created market niches for initial deployment andgovernment procurement and incentive policies in Germany, Italy, Spain, United States,
China, Australia and India fostered a global market. Lithium‐ion (Li‐ion) batteries were
initially developed through public and private research that took place mostly in Japan, theirfirst energy‐related commercial operation was made possible in the United States, and mass
manufacturing today is primarily in China.
Many of the biggest clean energy technology challenges could benefit from a more targeted
approach to speed up progress (Diaz Anadon, 2012; Mazzucato, 2018). In the NZE, concerted
government action leverages private sector investment and leads to advances in clean
energy technologies that are currently at different stages of development.
186

To 2030, the focus of government action is on bringing new zero‐ or low‐emissions
technologies to market. For example, in the NZE, steel starts to be produced using low‐emissions hydrogen at the scale of a conventional steel plant, large ships start to be
International Energy Agency | Special Reportfuelled by low‐emissions ammonia and electric trucks begin operating on solid statebatteries. In parallel, there is rapid acceleration in the deployment of low‐emissions
technologies that are already available on the market but that have not yet reachedmass market scale, bringing down the costs of manufacturing, construction andoperating such technologies due to learning‐by‐doing and economies of scale.
From 2030 to 2040, technology advances are consolidated to scale up nascent low‐emissions technologies and expand clean energy infrastructure. Clean energy
technologies that are in the laboratory or at small prototype stage today becomecommercial. For example, fuels are replaced by electricity in cement kilns and steam
crackers for high value chemicals production.



From 2040 to 2050, technologies at a very early stage of development today are adopted
in promising niche markets. By 2050, clean energy technologies that are atdemonstration or large prototype stage today become mainstream for purchases andnew installations, and they compete with present conventional technologies in all
regions. For example, ultra high‐energy density batteries are used in aircraft for shortflights.

4.5.5

4International co‐operation

The pathway to net‐zero emissions by 2050 will require an unprecedented level ofinternational co‐operation between governments. This is not only a matter of all countries
participating in efforts to meet the net zero goal, but also of all countries working together
in an effective and mutually beneficial manner. Achieving net‐zero emissions will be
extremely challenging for all countries, but the challenges are toughest and the solutions
least easy to deliver in lower income countries, and technical and financial support will beessential to ensure the early stage deployment of key mitigation technologies andinfrastructure in many of these countries. Without international co‐operation, emissions will
not fall to net zero by 2050.

International demand signals and economies of scale. International co‐operation has
been critical to the cost reductions seen in the past for many key energy technologies.
It can accelerate knowledge transfer and promote economies of scale. It can also helpalign the creation of new demand for clean energy technologies and fuels in one region
with the development of supply in other regions. These benefits need to be weighedagainst the importance of creating domestic jobs and industrial capacities, and of
ensuring supply chain resilience.

Managing trade and competitiveness. Industries that operate in a number of countries
need standardisation to ensure inter‐operability. Progress on innovation and clean
energy technology deployment in sectors such as heavy industry has been inhibited in
the past by uncoordinated national policies and a lack of internationally agreed

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There are four aspects of international co‐operation that are particularly important (Victor,
Geels and Sharpe, 2019).

standards. The development of such standards could accelerate energy technology
development and deployment.
Innovation, demonstration and diffusion. Clean energy R&D and patenting is currently
concentrated in a handful of places: United States, Europe, Japan, Korea and China
accounted for more than 90% of clean energy patents in 2014‐18. Progress towards
net‐zero emissions would be increased by moving swiftly to extend experience andknowledge of clean energy technologies in countries that are not involved in their initialdevelopment, and by funding first‐of‐a‐kind demonstration projects in emerging market
and developing economies. International programmes to fund demonstration projects,
especially in sectors where technologies are large and complex, would accelerate theinnovation process (IEA, 2020i).



Carbon dioxide removal (CDR) programmes. CDR technologies such as bioenergy and
DAC equipped with CCUS are essential to provide emissions reductions at a global level.
International co‐operation is needed to fund and certify these programmes, so as tomake the most of suitable land, renewable energy potential and storage resources,
wherever they may be. International emissions trading mechanisms could play a role inoffsetting emissions in some sectors or areas with negative emissions, though any suchmechanisms would require a high degree of co‐ordination to ensure market functioning
and integrity.

The NZE assumes that international co‐operation policies, measures and efforts are
introduced to overcome these hurdles. To explore the potential implications of a failure to
do so, we have devised a Low International Co‐operation Case (Box 4.2). This examines what
would happen if national efforts to mitigate climate change ramp up in line with the level ofeffort in the NZE but co‐operation frameworks are not developed at the same speed. It showsthat the lack of international co‐operation has a major impact on innovation, technology
demonstration, market co‐ordination and ultimately on the emissions pathway.
Box 4.2 ⊳Framing the Low International Co-operation CaseTo develop the Low International Co‐operation Case, technologies and mitigation options
were assessed and grouped based on their current degree of maturity and theimportance of international co‐operation to their deployment. Mature technologies inmarkets that are firmly established and that have a low exposure to international co‐
operation are assumed to have the same deployment pathways as in the NZE.
Technologies and mitigation options where co‐operation is needed to achieve scale andavoid duplication, that have a large exposure to international trade and competitiveness,that depend on large and very capital‐intensive demonstration programmes, or that
require support to create market pull and standardisation to ensure inter‐operability, areassumed to be deployed more slowly (Malhotra and Schmidt, 2020). Compared with the
NZE, these technologies are delayed by 5‐10 years in their initial deployment in advanced
economies and by 10‐15 years in emerging market and developing economies.

188

International Energy Agency | Special ReportFigure 4.24 ⊳ CO2 emissions in the Low International Co-operation Case

Gt CO₂and the NZE
40

30

NZE

20

Low International Co‐operation Case

4

10

2010

2030

2050

2070

2090
IEA. All rights reserved.

Without international co-operation, the transition to net zero would be delayed by decades

These results highlight the importance for governments of strengthening international
co‐operation. A strong push is needed to accelerate innovation and the demonstration of
key technologies, especially for complex technologies in emerging market and developing
economies where costs for first‐of‐a‐kind projects are generally higher, and to addressconcerns about international trade and competitiveness so as to ensure a just transition forall.

Chapter 4 | Wider implications of achieving net-zero emissions

189

IEA. All rights reserved.

Weak international co‐operation slows the deployment of mitigation options that are
currently in the demonstration phase (Figure 4.24). This includes emissions reductions inheavy industry, trucks, aviation, shipping and CDR. The energy transition proceeds unevenly
as a result. Over the next 20 years in the Low International Co‐operation Case, emissions
decline at a rapid but still slower pace than in the NZE in electricity generation, cars, lightindustry and buildings. However, emissions reductions are much slower in other areas. Afterthe mid‐2030s, the pace of emissions reductions worldwide slows markedly relative to the
NZE, and the transition to net zero is delayed by decades. Just over 40% of the 15 Gt CO2 ofemissions remaining in 2050 are in heavy industry, where the slower pace of demonstrationand diffusion of mitigation technologies is particularly significant (Figure 4.25). A further
one‐third of the residual emissions in 2050 are from aviation, shipping and trucks. Here theslower scale up and diffusion of advanced biofuels, hydrogen‐based fuels and high‐energy
density batteries hinders progress. The absence of co‐operation to support the deploymentof new projects in emerging market and developing economies means that emissions
reductions there are much slower than in the NZE.

Figure 4.25 ⊳ CO2 emissions in the Low International Co-operation Case and

Gt CO₂the NZE in selected sectors in 2050
8
6
4
2
0
‐2

Heavy
industry

Aviation andshipping

TrucksElectricity Other energy
generation
sectorLow International Co‐operation Case

Cars

Light
industry

NZE
IEA. All rights reserved.

CO2 emissions in 2050 in the Low International Co-operation Caseare concentrated in the industry and transport sectors
Note: Other energy sector = fuel production and direct air capture.

190

International Energy Agency | Special Report

IEA. All rights reserved.

ANNEXESAnnex A
Tables for scenario projections
General note to the tables
This annex includes global historical and projected data for the Net‐Zero Emissions by 2050
scenario for the following data sets: energy supply, energy demand, gross electricity
generation and electrical capacity, carbon dioxide (CO2) emissions from fossil fuelcombustion and industrial processes, and selected economic and activity indicators.
The definitions for fuels and sectors are in Annex C. Common abbreviations used in the tables
include: EJ = exajoules; CAAGR = compound average annual growth rate; CCUS = carbon
capture, utilisation and storage. Consumption of fossil fuels in facilities without CCUS areclassified as “unabated”.
Both in the text of this report and in the tables, rounding may lead to minor differences
between totals and the sum of their individual components. Growth rates are calculated on
a compound average annual basis and are marked “n.a.” when the base year is zero or thevalue exceeds 200%. Nil values are marked “‐”.
To download the tables in Excel format go to: iea.li/nzedata.

Data sources
The formal base year for the scenario projections is 2019, as this is the last year for which acomplete picture of energy demand and production is available. However, we have used
more recent data when available, and we include our 2020 estimates for energy production
and demand in this annex. Estimates for the year 2020 are based on updates of the IEA’s
Global Energy Review reports which are derived from a number of sources, including thelatest monthly data submissions to the IEA’s Energy Data Centre, other statistical releases
from national administrations, and recent market data from the IEA Market Report Series
that cover coal, oil, natural gas, renewables and power.
Historical data for gross electrical capacity are drawn from the S&P Global Market
Intelligence World Electric Power Plants Database (March 2020 version) and theInternational Atomic Energy Agency PRIS database.

Total energy supply (TES) is equivalent to electricity and heat generation plus “other energy
sector” excluding electricity and heat, plus total final consumption (TFC) excluding electricity
and heat. TES does not include ambient heat from heat pumps or electricity trade. Solar in
TES includes solar PV generation, concentrating solar power and final consumption of solar
thermal. Other renewables in TES include geothermal, and marine (tide and wave) energy
for electricity and heat generation. Hydrogen production and biofuels production in theother energy sector account for the energy input required to produce merchant hydrogen(mainly natural gas and electricity) and for the conversion losses to produce biofuels (mainly
primary solid biomass) used in the energy sector. While not itemised separately, non‐renewable waste and other sources are included in TES.
Annex A | Tables for scenario projections

193

IEA. All rights reserved.

Definitional note: A.1. Energy supply and transformation tableDefinitional note: A.2. Energy demand table
Sectors comprising total final consumption (TFC) include industry (energy use and feedstock),transport, buildings (residential, services and non‐specified other) and other (agriculture andother non‐energy use). Energy demand from international marine and aviation bunkers areincluded in transport totals.

Definitional note: A.3. Electricity tables
Electricity generation expressed in terawatt‐hours (TWh) and installed electrical capacity
data expressed in gigawatts (GW) are both provided on a gross basis (i.e. includes own use
by the generator). Projected gross electrical capacity is the sum of existing capacity andadditions, less retirements. While not itemised separately, other sources are included in total
electricity generation.

Definitional note: A.4. CO2 emissions table
Total CO2 includes carbon dioxide emissions from the combustion of fossil fuels andnon‐renewable wastes, from industrial and fuel transformation processes (process
emissions) as well as CO2 removals. Three types of CO2 removals are presented:


Captured and stored emissions from the combustion of bioenergy and renewablewastes (typically electricity generation).



Captured and stored process emissions from biofuels production.

Captured and stored carbon dioxide from the atmosphere, which is reported as direct
air carbon capture and storage (DACCS).

The first two entries are often reported as bioenergy with carbon capture and storage(BECCS). Note that some of the CO2 captured from biofuels production and direct air capture
is used to produce synthetic fuels, which is not included as CO2 removal.
Total CO2 captured includes the carbon dioxide captured from CCUS facilities (such as
electricity generation or industry) and atmospheric CO2 captured through direct air capture
but excludes that captured and used for urea production.

Definitional note: A.5. Economic and activity indicators
The emission intensity expressed in kilogrammes of carbon dioxide per kilowatt‐hour(kg CO2/kWh) is calculated based on electricity‐only plants and the electricity component of
combined heat and power (CHP) plants. 1
Other abbreviations used include: PPP = purchasing power parity; GJ = gigajoules;
Mt = million tonnes; pkm = passenger‐kilometres; tkm = tonnes‐kilometres; m2 = square
metres.

1
To derive the associated electricity‐only emissions from CHP plants, we assume that the heat production of
a CHP plant is 90% efficient and the remainder of the fuel input is allocated to electricity generation.

194

International Energy Agency | Special ReportTable A.1: Energy supply and transformation

2019

2020

Total energy supply

612

587

547

Renewables

67

69

167

Solar

4

5

32

Wind

5

6

Hydro

15

Modern solid bioenergy

31

Modern liquid bioenergy
Modern gaseous bioenergy
Other renewables
Traditional use of biomass

2030

Shares (%)

2040

CAAGR (%)
2020‐
2020‐
2030
2050
‐0.7
‐0.3

2050

2020 2030 2050

535

543

100

100

295

362

12

30

67

9.3

78

109

1

6

20

21

11

29

67

89

1

5

16

17

9.6

16

21

27

30

3

4

6

2.9

2.2

32

54

73

73

5

10

14

5.3

2.8

4

3

12

14

15

1

2

3

14

4.9

2

2

5

10

14

0

1

3

10

6.4

4

5

13

24

32

1

2

6

11

6.7

25

25

‐

‐

‐

4

‐

‐

n.a.

n.a.

100

5.7

Nuclear

30

29

41

54

61

5

8

11

3.5

2.4

Unabated natural gas

139

136

116

44

17

23

21

3

‐1.6

‐6.6

Natural gas with CCUS
Oilof which non‐energy use
Unabated coal
Coal with CCUS

0

1

13

31

43

0

2

8

37

16

190

173

137

79

42

29

25

8

‐2.3

‐4.6

28

27

32

31

29

5

6

5

1.4

0.2

160

154

68

16

3

26

12

1

‐7.9

‐12

0

0

4

16

14

0

1

3

60

22

Electricity and heat sectors

233

230

240

308

371

100

100

100

0.4

1.6

Renewables

36

38

107

220

284

17

44

77

11

6.9

Solar PV

2

3

25

61

84

1

10

23

24

12

Wind

5

6

29

67

89

2

12

24

17

9.6

Hydro

15

16

21

27

30

7

9

8

2.9

2.2

Bioenergy

9

10

18

35

39

4

8

10

6.3

4.6

Other renewables

4

4

14

30

42

2

6

11

14

8.5

‐

‐

5

11

11

‐

2

3

n.a.

n.a.
n.a.

HydrogenAmmonia

‐

‐

1

2

2

‐

0

0

n.a.

Nuclear

30

29

41

54

61

13

17

16

3.5

2.4

Unabated natural gas

56

55

49

4

2

24

21

0

‐1.1

‐11

Natural gas with CCUS

‐

‐

1

5

5

‐

1

1

n.a.

n.a.

Oil

9

8

2

0

0

4

1

0

‐12

‐14

Unabated coal

102

100

30

0

0

43

12

0

‐11

‐34

Coal with CCUS

0

0

3

10

7

0

1

2

55

19

Other energy sector

57

57

61

76

91

100

100

100

0.7

1.5

Hydrogen production

‐

0

21

49

70

0

35

77

66

23

Biofuels production

5

6

12

15

12

10

20

13

8

2.7

Annex A | Tables for scenario projections

195

IEA. All rights reserved.

Energy supply (EJ)A

Table A.2: Energy demand
Energy demand (EJ)

Shares (%)

CAAGR (%)
2020‐
2020‐
2030
2050
‐0.4
‐0.6

2019

2020

2030

2040

2050

2020 2030 2050

Total final consumption

435

412

394

363

344

100

100

Electricity

82

81

103

140

169

20

26

49

2.4

2.5

Liquid fuels

175

158

143

96

66

38

36

19

‐1.0

‐2.9

Biofuels

4

3

12

14

15

1

3

4

14

4.9

Ammonia

‐

‐

1

3

5

‐

0

1

n.a.

n.a.

Synthetic oil

100

‐

‐

0

2

5

‐

0

1

n.a.

n.a.

171

154

129

77

42

37

33

12

‐1.8

‐4.2

Gaseous fuels

70

68

68

60

53

16

17

15

0.1

‐0.8

Biomethane

0

0

2

5

8

0

1

2

25

13

Hydrogen

0

0

6

12

20

0

2

6

54

20

Oil

Synthetic methane
Natural gas
Solid fuels
Biomass

‐

‐

0

1

4

‐

0

1

n.a.

n.a.

70
92
39

67
89
39

58
61
24

40
46
25

20
35
25

16
22
9

15
16
6

6
10
7

‐1.4
‐3.6
‐4.8

‐4.0
‐3.0
‐1.4

53

50

38

21

10

12

10

3

‐2.8

‐5.3

Heat

13

13

12

9

6

3

3

2

‐1.2

‐2.7

Other

3

3

7

11

15

1

2

4

8.2

5.2

Industry

162

157

170

169

160

100

100

100

0.8

0.1

Coal

Electricity

35

35

47

62

74

22

28

46

3.0

2.5

Liquid fuels

31

31

31

27

23

20

18

15

‐0.2

‐0.9

31

31

31

27

23

20

18

15

‐0.2

‐0.9

Gaseous fuels

Oil

32

32

35

34

28

20

21

18

1.0

‐0.4

Biomethane

0

0

1

2

4

0

0

3

22

15

Hydrogen

‐

0

3

4

5

0

2

3

44

15

Unabated natural gas

32

32

30

22

9

20

18

6

‐0.5

‐4.0

Natural gas with CCUS
Solid fuels
Biomass

0
58
10

0
52
9

1
51
15

5
40
19

7
30
20

0
34
6

1
30
9

4
18
13

38
‐0.3
5.2

18
‐1.9
2.8

Unabated coal

48

44

35

15

3

28

20

2

‐2.3

‐9.0

Coal with CCUS

0

0

1

5

7

0

1

4

91

31

6

6

6

3

2

4

3

1

‐1.2

‐4.5

Heat
Other

0

0

1

3

4

0

1

2

33

14

Iron and steel

36

33

37

36

32

21

22

20

1.1

‐0.2

Chemicals

22

20

26

26

25

13

15

15

2.7

0.7

Cement

12

16

11

11

10

10

7

7

‐3.3

‐1.3

196

International Energy Agency | Special ReportTable A.2: Energy demand
Shares (%)

2019

2020

2030

Transport

122

105

102

85

80

100

100

100

Electricity

1

1

7

22

35

1

7

44

17

11

Liquid fuels

115

99

89

53

30

94

87

38

‐1.0

‐3.9

Biofuels
Oil

2040

2050

2020 2030 2050

CAAGR (%)
2020‐
2020‐
2030
2050
‐0.3
‐0.9

4

3

11

12

11

3

11

14

14

4.3

111

96

76

35

9

91

74

12

‐2.2

‐7.4
3.7

Gaseous fuels

5

5

6

10

15

5

6

18

2.1

Biomethane

0

0

1

1

2

0

0

2

23

11

Hydrogen

0

0

1

6

13

0

1

16

92

34

Natural gas
Road

5

5

4

2

0

5

4

0

‐1.5

‐11

90

81

73

57

50

77

72

63

‐0.9

‐1.6

Passenger cars

47

41

30

19

17

39

29

21

‐3.1

‐2.9

Trucks

27

25

28

24

22

24

27

28

1.1

‐0.4

Aviation

14

8

13

13

14

8

13

18

4.6

1.7

Shipping

12

11

11

10

10

10

11

12

0.4

‐0.3

Buildings

129

127

99

89

86

100

100

100

‐2.4

‐1.3

Electricity

43

42

45

51

57

33

46

66

0.7

1.0

Liquid fuels

13

13

9

4

2

10

10

2

‐3.2

‐6.0

Biofuels

0

0

0

1

1

0

0

1

26

12

Oil

13

13

9

4

1

10

9

1

‐3.4

‐7.7

Gaseous fuels

30

28

23

13

6

22

23

7

‐2.1

‐4.9

Biomethane

0

0

1

2

2

0

1

2

29

11

Hydrogen

‐

0

2

2

2

0

2

2

103

27

30
34
5

28
34
5

19
10
9

7
7
7

1
6
6

22
27
4

20
10
9

1
7
7

‐3.8
‐11
6.9

‐12
‐5.5
0.9

Traditional use of biomass

25

25

‐

‐

‐

20

‐

‐

n.a.

n.a.

Coal

4

4

1

0

0

3

1

0

‐12

‐21
‐1.6

Natural gas
Solid fuels
Modern biomass

Heat

7

7

6

5

4

5

6

5

‐1.2

Other

2

3

5

8

11

2

5

12

7.1

4.8

Residential

91

90

67

59

58

71

67

67

‐3.0

‐1.5

Services

38

36

32

30

28

29

33

33

‐1.2

‐0.9

Other

22

23

22

20

18

100

100

100

‐0.5

‐0.9

Annex A | Tables for scenario projections

197

IEA. All rights reserved.

Energy demand (EJ)A

Table A.3: Electricity
Electricity Generation (TWh)Shares (%)

CAAGR (%)
2020‐
2020‐
2030
2050
3.4
3.3

2019

2020

2030

2040

2050

2020 2030 2050

Total generation

26 92226 77837 31656 55371 164

100

100

100

Renewables

7 153

7 660

22 81747 52162 333

29

61

88

12

Solar PV

665

821

6 970

17 031

23 469

3

19

33

24

12

Wind

1 423

1 592

8 008

18 78724 785

6

21

35

18

9.6

Hydro

4 294

4 418

5 870

7 445

8 461

17

16

12

2.9

2.2

665

718

1 407

2 676

3 279

3

4

5

7.0

5.2

of which BECCS

‐

‐

129

673

842

‐

0

1

n.a.

n.a.

CSP

14

14

204

880

1 386

0

1

2

31

17

Geothermal

92

94

330

625

821

0

1

1

13

7.5

Bioenergy

MarineNuclear

7.2

1

2

27

77

132

0

0

0

28

14

2 792

2 698

3 777

4 855

5 497

10

10

8

3.4

2.4
n.a.

Hydrogen‐based

‐

‐

875

1 857

1 713

‐

2

2

n.a.

Fossil fuels with CCUS

1

4

459

1 659

1 332

0

1

2

61

21

Coal with CCUS

1

4

289

966

663

0

1

1

54

19

Natural gas with CCUS

‐

‐

170

694

669

‐

0

1

n.a.

n.a.

16 941

16 382

9 358

632

259

61

25

0

‐5.4

‐13

Coal

9 832

9 426

2 947

0

0

35

8

0

‐11

‐40

Natural gas

6 314

6 200

6 222

626

253

23

17

0

0.0

‐10

795

756

189

6

6

3

1

0

‐13

‐15

Unabated fossil fuels

OilElectrical Capacity (GW)
2019

2020

2030

2040

Shares (%)
2050

2020 2030 2050

CAAGR (%)
2020‐
2020‐
2030
2050
6.7
5.0

Total capacity

7 484

7 795

14 93326 38433 415

100

100

100

Renewables

2 707

2 994

10 29320 73226 568

38

69

80

13

Solar PV

603

737

4 956

10 98014 458

9

33

43

21

10

Wind

623

737

3 101

6 525

8 265

9

21

25

15

8.4

Hydro

1 306

1 327

1 804

2 282

2 599

17

12

8

3.1

2.3

153

171

297

534

640

2

2

2

5.7

4.5

‐

‐

28

125

152

‐

0

0

n.a.

n.a.

Bioenergyof which BECCS

7.5

CSP

6

6

73

281

426

0

0

1

28

15

Geothermal

15

15

52

98

126

0

0

0

13

7.4

MarineNuclear

1

1

11

32

55

0

0

0

34

16

415

415

515

730

812

5

3

2

2.2

2.3
n.a.

Hydrogen‐based

‐

‐

139

1 455

1 867

‐

1

6

n.a.

Fossil fuels with CCUS

0

1

81

312

394

0

1

1

66

25

Coal with CCUS

0

1

53

182

222

0

0

1

59

22

Natural gas with CCUS

‐

‐

28

130

171

‐

0

1

n.a.

n.a.

4 351

4 368

3 320

1 151

677

56

22

2

‐2.7

‐6.0

Coal

2 124

2 117

1 192

432

158

27

8

0

‐5.6

‐8.3

Natural gas

1 788

1 829

1 950

679

495

23

13

1

0.6

‐4.3

440

422

178

39

25

5

1

0

‐8.3

‐9.0

11

18

585

2 005

3 097

0

4

9

42

19

Unabated fossil fuels

Oil
Battery storage

198

International Energy Agency | Special ReportTable A.4: CO2 emissions
CO2 emissions (Mt CO2)
2019

2020

2030

2040

Total CO2*

35 92633 90321 147

6 316

0Combustion activities (+)

33 49931 58219 254

6 030

940

‐4.8

Coal

14 66014 110

5 915

1 299

195

‐8.3

‐13

Oil

11 505

10 264

7 426

3 329

928

‐3.2

‐7.7

Natural gas

7 259
75

7 138
71

5 960
‐ 48

1 929
‐ 528

566
‐ 748

‐1.8
n.a.

‐8.1
n.a.

Bioenergy and waste

2050

CAAGR (%)
2020‐
2020‐
2030
2050
‐4.6
n.a.
‐11

Industry removals (‐)

1

1

214

914

1 186

75

28

Biofuels production

1

1

142

385

553

68

24

Direct air capture

‐

‐

71

528

633

n.a.

n.a.

Electricity and heat sectors

13 82113 504

5 816

‐ 81

‐ 369

‐8.1

n.a.

Coal

10 035

9 786

2 950

102

69

‐11

‐15

Oil

655

628

173

6

6

‐12

‐14
‐10

Natural gas

3 131

3 089

2 781

268

128

‐1.0

Bioenergy and waste

‐

‐

‐ 87

‐ 457

‐ 572

n.a.

n.a.

Other energy sector*

1 457

1 472

679

‐ 85

‐ 368

‐7.4

n.a.
‐8.4

Final consumption*

20 64718 92814 723

7 011

1 370

‐2.5

Coal

4 486

4 171

2 935

1 186

117

‐3.5

‐11

Oil

10 272

9 077

6 973

3 242

880

‐2.6

‐7.5

Natural gas
Bioenergy and waste
Industry*

3 451
75
8 903

3 332
71
8 478

2 668
40
6 892

1 453
‐ 70
3 485

303
‐ 176
519

‐2.2
‐5.6
‐2.0

‐7.7
n.a.
‐8.9

Iron and steel

2 507

2 349

1 778

859

220

‐2.7

‐7.6

Chemicals

1 344

1 296

1 199

654

66

‐0.8

‐9.5

Cement

2 461

2 334

1 899

906

133

‐2.0

‐9.1

Transport

8 290

7 153

5 719

2 686

689

‐2.2

‐7.5

Road

‐8.9

6 116

5 483

4 077

1 793

340

‐2.9

Passenger cars

3 121

2 746

1 626

547

85

‐5.1

‐11

Trucks

1 835

1 721

1 614

890

198

‐0.6

‐6.9

Aviation

1 019

621

783

469

210

2.4

‐3.5

Shipping

883

800

705

348

122

‐1.3

‐6.1

Buildings

3 007

2 860

1 809

685

122

‐4.5

‐10

Residential

2 030

1 968

1 377

541

108

‐3.5

‐9.2

Services

977

892

432

144

14

‐7.0

‐13

Total CO2 removals

1

1

317

1 457

1 936

79

29

Total CO2 captured

40

40

1 665

5 619

7 602

45

19

Annex A | Tables for scenario projections

199

IEA. All rights reserved.

*Includes industrial process emissions.

A

Table A.5: Economic and Activity Indicators
Indicator

Population (million)

2019

2020

2030

2040

2050

7 672

7 753

8 505

9 155

9 692

CAAGR (%)
2020‐
2020‐
2030
2050
0.9
0.7

GDP (USD 2019 billion, PPP)134 710128 276

184 037

246 960

316 4113.7

3.1

GDP per capita (USD 2019, PPP)

17 55816 545

21 63826 97532 6482.7

2.3

TES/GDP (GJ per USD 1 000, PPP)

4.543

4.578

2.973

2.164

1.716

‐4.2

‐3.2

TFC/GDP (GJ per USD 1 000, PPP)

3.231

3.208

2.139

1.468

1.086

‐4.0

‐3.5

TES per capita (GJ)
CO2 intensity of electricity generation(kg CO2 per kWh)

79.77
0.468

75.74
0.438

64.33
0.138

58.38
‐0.00156.03‐0.005

‐1.6
‐11

‐1.0
n.a.

2019

2020

2040

2050

Activity
2030

CAAGR (%)
2020‐
2020‐
2030
2050

Industrial production
Primary chemicals (Mt)

538

529

641

686

688

1.9

0.9

Steel (Mt)

1 869

1 781

1 937

1 958

1 987

0.8

0.4

Cement (Mt)

4 215

4 054

4 258

4 129

4 032

0.5

‐0.0
1.8

Transport
Passenger cars (billion vkm)

15 30014 26115 77519 15924 517

1.0

Trucks (billion tkm)

26 64625 76138 07249 75659 990

4.0

2.9

Aviation (billion pkm)

8 506

5 474

10 271

11 57314 566

6.5

3.3

Shipping (billion tkm)

107 225

109 153

155 621

209 905

291 032

3.6

3.3
1.5

Buildings
Services floor area (million m2)

49 67049 82558 86768 57678 157

1.7

Residential floor area (million m2)

190 062

192 558

235 745

290 696

345 183

2.0

2.0

2 095

2 116

2 435

2 765

3 051

1.4

1.2

Million households

200

International Energy Agency | Special ReportAnnex B
Technology costs
Electricity generation
Electricity generation technology costs by selected region

Table B.1 ⊳in the NZEFinancingrate(%)

Capital costs($/kW)

Capacity factor(%)

Fuel, CO2
and O&M($/MWh)LCOE($/MWh)

All

2020

2030

2050

2020 2030 2050 2020 2030 2050 2020 2030 2050

8.0
8.0
8.0
3.7
3.7
4.5

5 000
2 100
1 000
1 140
1 540
4 040

4 800
2 100
1 000
620
1 420
2 080

4 500
2 100
1 000
420
1 320
1 480

90
20
55
21
42
42

80
n.a.
25
22
43
46

75
n.a.
n.a.
23
44
48

30
90
50
10
10
35

30
30
170 235
80 105
10
10
10
10
20
15

105
220
70
50
35
115

110
n.a.
125
30
35
60

110
n.a.
n.a.
20
30
40

8.0
8.0
8.0
3.2
3.2
4.0

6 600
2 000
1 000
790
1 540
3 600

5 100
2 000
1 000
460
1 420
2 020

4 500
2 000
1 000
340
1 300
1 420

75
20
40
13
29
51

75
n.a.
20
14
30
56

70
n.a.
n.a.
14
31
59

35
120
65
10
15
15

35
35
205 275
95 120
10
10
15
15
10
5

150
250
100
55
55
75

120
n.a.
150
35
45
40

115
n.a.
n.a.
25
40
25

7.0
7.0
7.0
3.5
3.5
4.3

2 800
800
560
750
1 220
2 840

2 800
800
560
400
1 120
1 560

2 500
800
560
280
1 040
1 000

80
60
45
17
26
34

80
n.a.
35
18
27
41

80
n.a.
n.a.
19
27
43

25
75
75
10
15
25

25
135
100
5
10
15

25
195
120
5
10
10

65
90
90
40
45
95

65
n.a.
115
25
40
45

60
n.a.
n.a.
15
40
30

7.0
7.0
7.0
5.8
5.8
6.6

2 800
1 200
700
580
1 040
2 980

2 800
1 200
700
310
980
1 680

2 800
1 200
700
220
940
1 180

70
50
55
20
26
32

70
n.a.
50
21
28
37

70
n.a.
n.a.
21
29
38

30
35
45
5
10
25

30
50
45
5
10
15

30
75
50
5
10
10

75
65
55
35
50
130

75
n.a.
60
20
45
70

75
n.a.
n.a.
15
40
45

United States
NuclearCoal
Gas CCGT
Solar PV
Wind onshore
Wind offshore
European Union
NuclearCoal
Gas CCGT
Solar PV
Wind onshore
Wind offshore
China
NuclearCoal
Gas CCGT
Solar PV
Wind onshore
Wind offshore
India
NuclearCoal
Gas CCGT
Solar PV
Wind onshore
Wind offshore

Notes: O&M = operation and maintenance; LCOE = levelised cost of electricity; kW = kilowatt; MWh =megawatt‐hour; CCGT = combined‐cycle gas turbine; n.a. = not applicable. Cost components and LCOE figures
are rounded.

Annex B | Technology costs

201

IEA. All rights reserved.

Sources: IEA analysis; IRENA Renewable Costing Alliance; IRENA (2020).



Major contributors to the LCOE include: overnight capital costs; capacity factor that
describes the average output over the year relative to the maximum rated capacity(typical values provided); the cost of fuel inputs; plus operation and maintenance.
Economic lifetime assumptions are 25 years for solar PV, onshore and offshore wind.

Weighted average costs of capital (WACC) reflect analysis for utility‐scale solar PV in theWorld Energy Outlook 2020 (IEA, 2020) and for offshore wind from the Offshore Wind
Outlook 2019 (IEA, 2019). Onshore wind was assumed to have the same WACC as utility‐
scale solar PV. A standard WACC was assumed for nuclear power, coal‐ and gas‐fired
power plants (7‐8% based on the stage of economic development).

Fuel, CO2 and O&M costs reflect the average over the ten years following the indicateddate in the projections.



The capital costs for nuclear power represent the “nth‐of‐a‐kind” costs for new reactor
designs, with substantial cost reductions from the first‐of‐a‐kind projects.

Batteries and hydrogen
Table B.2 ⊳Capital costs for batteries and hydrogen production
technologies in the NZE
2020

2030

2050

Battery packs for transport applications (USD/kWh)

130 ‐ 15575 ‐ 90

55 ‐ 80

Low‐temperature electrolysers (USD/kWe)835 ‐ 1 300

255 ‐ 515

200 ‐ 390Natural gas with CCUS (USD/kW H2)

1 155 ‐ 2 010

990 ‐ 1 725

935 ‐ 1 625

Notes: kWh = kilowatt‐hour; kWe = kilowatt electric; CCUS = carbon capture, utilisation and storage; H2 =hydrogen. Capital costs for electrolysers and hydrogen production from natural gas with CCUS are overnight
costs.
Source: IEA analysis.

202

International Energy Agency | Special ReportAnnex C
Definitions
This annex provides general information on terminology used throughout this report
including: units and general conversion factors; definitions of fuels, processes and sectors;
regional and country groupings; and abbreviations and acronyms.

Area

km2
Mha

square kilometre
million hectares

Batteries

Wh/kg

Watt hours per kilogramme

Coal

Mtce

million tonnes of coal equivalent (equals 0.7 Mtoe)

Distancekm

kilometre

Emissions

ppm
tCO2
Gt CO2‐eq
kg CO2‐eq
g CO2/km
kg CO2/kWhparts per million (by volume)
tonnes of carbon dioxide
gigatonnes of carbon‐dioxide equivalent (using 100‐year global
warming potentials for different greenhouse gases)
kilogrammes of carbon‐dioxide equivalent
grammes of carbon dioxide per kilometre
kilogrammes of carbon dioxide per kilowatt‐hour

Energy

EJ
PJ
TJ
GJ
MJ
boe
toe
ktoe
Mtoe
MBtu
kWh
MWh
GWh
TWh

exajoule
petajouleterajoulegigajoulemegajoulebarrel of oil equivalent
tonne of oil equivalent
thousand tonnes of oil equivalentmillion tonnes of oil equivalentmillion British thermal units
kilowatt‐hour
megawatt‐hour
gigawatt‐hour
terawatt‐hour

Gas

bcm
tcm

billion cubic metres
trillion cubic metres

Mass

kg
kt
Mt
Gt

kilogramme (1 000 kg = 1 tonne)
kilotonnes (1 tonne x 103)
million tonnes (1 tonne x 106)
gigatonnes (1 tonne x 109)

Annex C | Definitions

203

IEA. All rights reserved.

Units

Monetary

USD million
USD billion
USD trillion
USD/tCO2

1 US dollar x 106
1 US dollar x 109
1 US dollar x 1012
US dollars per tonne of carbon dioxide

Oil

kb/d
mb/d
mboe/dthousand barrels per day
million barrels per day
million barrels of oil equivalent per day

Power

W
kW
MW
GW
TW

watt (1 joule per second)kilowatt (1 watt x 103)
megawatt (1 watt x 106)
gigawatt (1 watt x 109)
terawatt (1 watt x 1012)

General conversion factors for energy

Convert from:

Multiplier to convert to:
EJ

Gcal

Mtoe

MBtu

GWh

EJ

1

238.8 x 106

23.88

9.47.8 x 103

2.778 x 105

Gcal

4.1868 x 10‐9

1

10‐7

3.968

1.163 x 10‐3

Mtoe

4.1868 x 10‐2107

13.968 x 107

11 630MBtu

1.0551 x 10‐90.252

2.52 x 10‐812.931 x 10‐4GWh

3.6 x 10‐6860

8.6 x 10‐5

3 412

1

Note: There is no generally accepted definition of boe; typically the conversion factors used vary from 7.15 to
7.40 boe per toe.

Currency conversions
Exchange rates(2019 annual average)

1 US dollar (USD)
equals:British Pound

0.78

Chinese Yuan Renminbi

6.91

Euro

0.89

Indian Rupee

70.42

Indonesian Rupiah

14 147.67

Japanese Yen

109.01

Russian Ruble

64.74

South African Rand

14.45

Source: OECD National Accounts Statistics: purchasing power parities and exchange rates dataset, July 2020.

204

International Energy Agency | Special ReportDefinitions
Advanced bioenergy: Sustainable fuels produced from non‐food crop feedstocks, which arecapable of delivering significant lifecycle greenhouse gas emissions savings compared withfossil fuel alternatives, and which do not directly compete with food and feed crops for
agricultural land or cause adverse sustainability impacts. This definition differs from the oneused for “advanced biofuels” in US legislation, which is based on a minimum 50% lifecycle
greenhouse gas reduction and which, therefore, includes sugar cane ethanol.
Agriculture: Includes all energy used on farms, in forestry and for fishing.
Agriculture, forestry and other land use (AFOLU) emissions: Includes greenhouse gas
emissions from agriculture, forestry and other land use.
Ammonia (NH3): Is a compound of nitrogen and hydrogen. It can be used directly as a fuel indirect combustion process, and in fuel cells or as a hydrogen carrier. To be a low‐carbon fuel,ammonia must be produced from low‐carbon hydrogen, the nitrogen separated via theHaber process, and electricity needs are met by low‐carbon electricity.
Aviation: This transport mode includes both domestic and international flights and their useof aviation fuels. Domestic aviation covers flights that depart and land in the same country;
flights for military purposes are also included. International aviation includes flights that land
in a country other than the departure location.
Back‐up generation capacity: Households and businesses connected to a main power grid
may also have back‐up electricity generation capacity that, in the event of disruption, canprovide electricity. Back‐up generators are typically fuelled with diesel or gasoline andcapacity can be as little as a few kilowatts. Such capacity is distinct from mini‐grid and off‐
grid systems that are not connected to a main power grid.
Biodiesel: Diesel‐equivalent, processed fuel made from the transesterification (a chemical
process that converts triglycerides in oils) of vegetable oils and animal fats.
Bioenergy: Energy content in solid, liquid and gaseous products derived from biomass
feedstocks and biogas. It includes solid biomass, liquid biofuels and biogases.
Biogas: A mixture of methane, carbon dioxide and small quantities of other gases produced
by anaerobic digestion of organic matter in an oxygen‐free environment.
Biogases: Include biogas and biomethane.

Buildings: The buildings sector includes energy used in residential, commercial andinstitutional buildings and non‐specified other. Building energy use includes space heating
and cooling, water heating, lighting, appliances and cooking equipment.
Annex C | Definitions

205

IEA. All rights reserved.

Biomethane: Biomethane is a near‐pure source of methane produced either by upgrading
biogas (a process that removes any CO2 and other contaminants present in the biogas) or
through the gasification of solid biomass followed by methanation. It is also known as
renewable natural gas.

C

Bunkers: Includes both international marine bunkers and international aviation bunkers.
Capacity credit: Proportion of the capacity that can be reliably expected to generate
electricity during times of peak demand in the grid to which it is connected.
Carbon capture, utilisation and storage (CCUS): The process of capturing CO2 emissions fromfuel combustion, industrial processes or directly from the atmosphere. Captured CO2
emissions can be stored in underground geological formations, onshore or offshore or used
as an input or feedstock to create products.
Clean energy: Includes renewables, energy efficiency, low‐carbon fuels, nuclear power,
battery storage and carbon capture, utilisation and storage.
Clean cooking facilities: Cooking facilities that are considered safer, more efficient and moreenvironmentally sustainable than the traditional facilities that make use of solid biomass(such as a three‐stone fire). This refers primarily to improved solid biomass cookstoves,biogas systems, liquefied petroleum gas stoves, ethanol and solar stoves.
Coal: Includes both primary coal (including lignite, coking and steam coal) and derived fuels(including patent fuel, brown‐coal briquettes, coke‐oven coke, gas coke, gas‐works gas, coke‐oven gas, blast furnace gas and oxygen steel furnace gas). Peat is also included.
Concentrating solar power (CSP): Solar thermal power/electric generation systems thatcollect and concentrate sunlight to produce high temperature heat to generate electricity.
Conventional liquid biofuels: Fuels produced from food crop feedstocks. These liquidbiofuels are commonly referred to as first generation and include sugar cane ethanol, starch‐based ethanol, fatty acid methyl esther (FAME) and straight vegetable oil (SVO).
Decomposition analysis: Statistical approach that decomposes an aggregate indicator toquantify the relative contribution of a set of pre‐defined factors leading to a change in theaggregate indicator. This report uses an additive index decomposition of the type
Logarithmic Mean Divisia Index (LMDI).
Demand‐side integration (DSI): Consists of two types of measures: actions that influenceload shape such as energy efficiency and electrification; and actions that manage load suchas demand‐side response.
Demand‐side response (DSR): Describes actions which can influence the load profile such as
shifting the load curve in time without affecting the total electricity demand, or load
shedding such as interrupting demand for short duration or adjusting the intensity ofdemand for a certain amount of time.
Dispatchable generation: Refers to technologies whose power output can be readily
controlled ‐ increased to maximum rated capacity or decreased to zero ‐ in order to match
supply with demand.
Electricity demand: Defined as total gross electricity generation less own use generation,plus net trade (imports less exports), less transmissions and distribution losses.
206

International Energy Agency | Special ReportElectricity generation: Defined as the total amount of electricity generated by power only or
combined heat and power plants including generation required for own use. This is also
referred to as gross generation.
Energy sector CO2 emissions: Carbon dioxide emissions from fuel combustion (excluding
non‐renewable waste). Note that this does not include fugitive emissions from fuels, CO2from transport, storage emissions or industrial process emissions.
Energy sector GHG emissions: CO2 emissions from fuel combustion plus fugitive and vented
methane, and nitrous oxide (N2O) emissions from the energy and industry sectors.
Energy services: See useful energy.
Ethanol: Refers to bio‐ethanol only. Ethanol is produced from fermenting any biomass highin carbohydrates. Today, ethanol is made from starches and sugars, but second‐generation
technologies will allow it to be made from cellulose and hemicellulose, the fibrous material
that makes up the bulk of most plant matter.
Fischer‐Tropsch synthesis: Catalytic production process for the production of synthetic fuels.
Natural gas, coal and biomass feedstocks can be used.
Gases: Includes natural gas, biogases, synthetic methane and hydrogen.
Geothermal: Geothermal energy is heat derived from the sub‐surface of the earth. Water
and/or steam carry the geothermal energy to the surface. Depending on its characteristics,
geothermal energy can be used for heating and cooling purposes or be harnessed togenerate clean electricity if the temperature is adequate.
Heat (end‐use): Can be obtained from the combustion of fossil or renewable fuels, direct
geothermal or solar heat systems, exothermic chemical processes and electricity (throughresistance heating or heat pumps which can extract it from ambient air and liquids). This
category refers to the wide range of end‐uses, including space and water heating, andcooking in buildings, desalination and process applications in industry. It does not include
cooling applications.

Hydrogen: Hydrogen is used in the energy system to refine hydrocarbon fuels and as anenergy carrier in its own right. It is also produced from other energy products for use inchemicals production. As an energy carrier it can be produced from hydrocarbon fuels orfrom the electrolysis of water with electricity, and can be burned or used in fuel cells forelectricity and heat in a wide variety of applications. To be low‐carbon hydrogen, either theemissions associated with fossil‐based hydrogen production must be prevented (for example
by carbon capture, utilisation and storage) or the electricity input to hydrogen produced
from water must be low‐carbon electricity. In this report, final consumption of hydrogen
Annex C | Definitions

207

IEA. All rights reserved.

Heat (supply): Obtained from the combustion of fuels, nuclear reactors, geothermal
resources and the capture of sunlight. It may be used for heating or cooling, or converted
into mechanical energy for transport or electricity generation. Commercial heat sold isreported under total final consumption with the fuel inputs allocated under electricity andheat sectors.

Cincludes demand for pure hydrogen and excludes hydrogen produced and consumed onsite
by the same entity. Demand for hydrogen‐based fuels such as ammonia or synthetichydrocarbons are considered separately.
Hydrogen‐based fuels: Include ammonia and synthetic hydrocarbons (gases and liquids).
Hydrogen‐based is used in figures to refer to hydrogen and hydrogen‐based fuels.
Hydropower: The energy content of the electricity produced in hydropower plants, assuming
100% efficiency. It excludes output from pumped storage and marine (tide and wave) plants.
Industry: The sector includes fuel used within the manufacturing and construction industries.
Key industry branches include iron and steel, chemicals and petrochemicals, cement, andpulp and paper. Consumption of fuels for the transport of goods is reported as part of thetransport sector, while consumption by off‐road vehicles is reported under industry.
International aviation bunkers: Includes the deliveries of aviation fuels to aircraft forinternational aviation. Fuels used by airlines for their road vehicles are excluded. The
domestic/international split is determined on the basis of departure and landing locations
and not by the nationality of the airline. For many countries this incorrectly excludes fuels
used by domestically owned carriers for their international departures.
International marine bunkers: Covers fuels delivered to ships of all flags that are engaged ininternational navigation. The international navigation may take place at sea, on inland lakes
and waterways, and in coastal waters. Consumption by ships engaged in domestic navigation
is excluded. The domestic/international split is determined on the basis of port of departureand port of arrival, and not by the flag or nationality of the ship. Consumption by fishingvessels and by military forces is excluded and included in residential, services and agriculture.
Investment: All investment data and projections reflect spending across the lifecycle of a
project, i.e. the capital spent is assigned to the year when it is incurred. Investments for oil,gas and coal include production, transformation and transportation; those for the power
sector include refurbishments, uprates, new builds and replacements for all fuels andtechnologies for on‐grid, mini‐grid and off‐grid generation, as well as investment intransmission and distribution, and battery storage. Investment data are presented in realterms in year‐2019 US dollars unless otherwise stated.
Light‐duty vehicles (LDV): include passenger cars and light commercial vehicles (gross vehicle
weight <3.5 tonnes).
Liquid biofuels: Liquid fuels derived from biomass or waste feedstocks and include ethanoland biodiesel. They can be classified as conventional and advanced liquid biofuels according
to the bioenergy feedstocks and technologies used to produce them and their respective
maturity. Unless otherwise stated, liquid biofuels are expressed in energy‐equivalent
volumes of gasoline and diesel.

208

International Energy Agency | Special ReportLiquids: Includes oil, liquid biofuels (expressed in energy‐equivalent volumes of gasoline anddiesel), synthetic oil and ammonia.
Low‐carbon electricity: Includes renewable energy technologies, hydrogen‐based
generation, nuclear power and fossil fuel power plants equipped with carbon capture,utilisation and storage.
Low‐emissions fuels: Include liquid biofuels, biogas and biomethane, hydrogen, andhydrogen‐based fuels that do not emit any CO2 from fossil fuels directly when used and also
emit very little when being produced.
Marine: Represents the mechanical energy derived from tidal movement, wave motion or
ocean current and exploited for electricity generation.
Merchant hydrogen: Hydrogen produced by one company to sell to others; equivalent tohydrogen reported in total final consumption.
Mini‐grids: Small grid systems linking a number of households or other consumers.
Modern bioenergy: Includes modern solid biomass, liquid biofuels and biogases harvested
from sustainable sources. It excludes the traditional use of biomass.
Modern energy access: Includes household access to a minimum level of electricity;
household access to safer and more sustainable cooking and heating fuels, and stoves; accessthat enables productive economic activity; and access for public services.
Modern renewables: Includes all uses of renewable energy with the exception of traditionaluse of solid biomass.
Modern solid biomass: Refers to the use of solid biomass in improved cookstoves andmodern technologies using processed biomass such as pellets.

Natural gas liquids (NGLs): Liquid or liquefied hydrocarbons produced in the manufacture,
purification and stabilisation of natural gas. These are those portions of natural gas which
are recovered as liquids in separators, field facilities or gas processing plants. NGLs include
but are not limited to ethane (when it is removed from the natural gas stream), propane,butane, pentane, natural gasoline and condensates.
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Natural gas: Comprises gases occurring in deposits, whether liquefied or gaseous, consisting
mainly of methane. It includes both “non‐associated” gas originating from fields producing
hydrocarbons only in gaseous form, and “associated” gas produced in association with crude
oil as well as methane recovered from coal mines (colliery gas). Natural gas liquids (NGLs),
manufactured gas (produced from municipal or industrial waste, or sewage) and quantities
vented or flared are not included. Gas data in cubic metres are expressed on a gross calorificvalue basis and are measured at 15 °C and at 760 mm Hg (“Standard Conditions”). Gas data
expressed in tonnes of oil equivalent, mainly for comparison reasons with other fuels, are on
a net calorific basis. The difference between the net and the gross calorific value is the latent
heat of vaporisation of the water vapour produced during combustion of the fuel (for gas thenet calorific value is 10% lower than the gross calorific value).

CNetwork gases: Includes natural gas, biomethane, synthetic methane and hydrogen blended
in a gas network.
Non‐energy use: Fuels used for chemical feedstocks and non‐energy products. Examples ofnon‐energy products include lubricants, paraffin waxes, asphalt, bitumen, coal tars and oils
as timber preservatives.
Nuclear: Refers to the primary energy equivalent of the electricity produced by a nuclear
plant, assuming an average conversion efficiency of 33%.
Off‐grid systems: Stand‐alone systems for individual households or groups of consumers.
Offshore wind: Refers to electricity produced by wind turbines that are installed in open
water, usually in the ocean.
Oil: Oil production includes both conventional and unconventional oil. Petroleum products
include refinery gas, ethane, liquid petroleum gas, aviation gasoline, motor gasoline, jet
fuels, kerosene, gas/diesel oil, heavy fuel oil, naphtha, white spirit, lubricants, bitumen,paraffin, waxes and petroleum coke.
Other energy sector: Covers the use of energy by transformation industries and the energy
losses in converting primary energy into a form that can be used in the final consuming
sectors. It includes losses by gas works, petroleum refineries, coal and gas transformationand liquefaction, biofuels production and the production of hydrogen and hydrogen‐based
fuels. It also includes energy own use in coal mines, in oil and gas extraction, in direct air
capture, in biofuels production and in electricity and heat production. Transfers andstatistical differences are also included in this category.
Power generation: Refers to fuel use in electricity plants, heat plants and combined heat andpower (CHP) plants. Both main activity producer plants and small plants that produce fuelfor their own use (auto‐producers) are included.
Productive uses: Energy used towards an economic purpose: agriculture, industry, services
and non‐energy use. Some energy demand from the transport sector, e.g. freight, could also
be considered as productive, but is treated separately.
Renewables: Includes bioenergy, geothermal, hydropower, solar photovoltaics (PV),concentrating solar power (CSP), wind and marine (tide and wave) energy for electricity andheat generation.
Residential: Energy used by households including space heating and cooling, water heating,lighting, appliances, electronic devices and cooking equipment.
Services: Energy used in commercial facilities, e.g. hotels, offices, catering, shops, andinstitutional buildings, e.g. schools, hospitals, offices. Energy use in services includes spaceheating and cooling, water heating, lighting, equipment, appliances and cooking equipment.
Shale gas: Natural gas contained within a commonly occurring rock classified as shale. Shaleformations are characterised by low permeability, with more limited ability of gas to flow
through the rock than is the case with a conventional reservoir. Shale gas is generally
produced using hydraulic fracturing.
210

International Energy Agency | Special ReportShipping/navigation: This transport sub‐sector includes both domestic and internationalnavigation and their use of marine fuels. Domestic navigation covers the transport of goods
or persons on inland waterways and for national sea voyages (starts and ends in the same
country without any intermediate foreign port). International navigation includes quantities
of fuels delivered to merchant ships (including passenger ships) of any nationality for
consumption during international voyages transporting goods or passengers.
Solar photovoltaic (PV): Electricity produced from solar photovoltaic cells.
Solid biomass: Includes charcoal, fuelwood, dung, agricultural residues, wood waste andother solid wastes.
Steam coal: Type of coal that is mainly used for heat production or steam‐raising in power
plants and, to a lesser extent, in industry. Typically, steam coal is not of sufficient quality forsteel making. Coal of this quality is also commonly known as thermal coal.
Synthetic methane: Low‐carbon synthetic methane is produced through the methanation of
low‐carbon hydrogen and carbon dioxide from a biogenic or atmospheric source.
Synthetic oil: Low‐carbon synthetic oil produced through Fischer Tropsch conversion or
methanol synthesis from syngas, a mixture of hydrogen (H2) and carbon monoxide (CO).
Total energy supply (TES): Represents domestic demand only and is broken down into
electricity and heat generation, other energy sector and total final consumption.
Total final consumption (TFC): Is the sum of consumption by the various end‐use sectors.
TFC is broken down into energy demand in the following sectors: industry (including
manufacturing and mining), transport, buildings (including residential and services) andother (including agriculture and non‐energy use). It excludes international marine andaviation bunkers, except at world level where it is included in the transport sector.
Total final energy consumption (TFEC): Is a variable defined primarily for tracking progress
towards target 7.2 of the UN Sustainable Development Goals. It incorporates total final
consumption (TFC) by end‐use sectors but excludes non‐energy use. It excludes international
marine and aviation bunkers, except at world level. Typically this is used in the context ofcalculating the renewable energy share in total final energy consumption (Indicator 7.2.1 of
the Sustainable Development Goals), where TFEC is the denominator.
Total primary energy demand (TPED): See total energy supply

Transport: Fuels and electricity used in the transport of goods or people within the national
territory irrespective of the economic sector within which the activity occurs. This includes
fuel and electricity delivered to vehicles using public roads or for use in rail vehicles; fueldelivered to vessels for domestic navigation; fuel delivered to aircraft for domestic aviation;and energy consumed in the delivery of fuels through pipelines. Fuel delivered tointernational marine and aviation bunkers is presented only at the world level and is
excluded from the transport sector at a domestic level.
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Traditional use of solid biomass: Refers to the use of solid biomass with basic technologies,
such as a three‐stone fire, often with no or poorly operating chimneys.

CTrucks: Includes medium trucks (gross vehicle weight 3.5‐15 tonnes) and heavy trucks(>15 tonnes).
Useful energy: Refers to the energy that is available to end‐users to satisfy their needs. Thisis also referred to as energy services demand. As result of transformation losses at the pointof use, the amount of useful energy is lower than the corresponding final energy demand formost technologies. Equipment using electricity often has higher conversion efficiency thanequipment using other fuels, meaning that for a unit of energy consumed electricity canprovide more energy services.
Wind: electricity produced by wind turbines from the kinetic energy of wind.
Woody energy crops: Short‐rotation plantings of woody biomass for bioenergy production,such as coppiced willow and miscanthus.
Variable renewable energy (VRE): Refers to technologies whose maximum output at any
time depends on the availability of fluctuating renewable energy resources. VRE includes abroad array of technologies such as wind power, solar PV, run‐of‐river hydro, concentrating
solar power (where no thermal storage is included) and marine (tidal and wave).
Zero‐carbon‐ready buildings: A zero‐carbon‐ready building is highly energy efficient andeither uses renewable energy directly, or an energy supply that can be fully decarbonised,such as electricity or district heat.
Zero‐emissions vehicles (ZEVs): Vehicles which are capable of operating without tailpipe CO2
emissions (battery electric vehicles and fuel cell vehicles).

Regional and country groupings
Advanced economies: OECD regional grouping and Bulgaria, Croatia, Cyprus1,2, Malta andRomania.
Africa: North Africa and sub‐Saharan Africa regional groupings.
Asia Pacific: Southeast Asia regional grouping and Australia, Bangladesh, China, India, Japan,
Korea, Democratic People’s Republic of Korea, Mongolia, Nepal, New Zealand, Pakistan,
Sri Lanka, Chinese Taipei, and other Asia Pacific countries and territories.3
Caspian: Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan andUzbekistan.
Central and South America: Argentina, Plurinational State of Bolivia (Bolivia), Brazil, Chile,
Colombia, Costa Rica, Cuba, Curaçao, Dominican Republic, Ecuador, El Salvador, Guatemala,Haiti, Honduras, Jamaica, Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad andTobago, Uruguay, Bolivarian Republic of Venezuela (Venezuela), and other Central and SouthAmerican countries and territories.4
China: Includes the (People's Republic of) China and Hong Kong, China.

212

International Energy Agency | Special ReportFigure C.1 ⊳Main country groupings

Note: This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries
and to the name of any territory, city or area.

Developing Asia: Asia Pacific regional grouping excluding Australia, Japan, Korea and
New Zealand.
Emerging market and developing economies: All other countries not included in theadvanced economies regional grouping.
Eurasia: Caspian regional grouping and the Russian Federation (Russia).
Europe: European Union regional grouping and Albania, Belarus, Bosnia and Herzegovina,
North Macedonia, Gibraltar, Iceland, Israel5, Kosovo, Montenegro, Norway, Serbia,
Switzerland, Republic of Moldova, Turkey, Ukraine and United Kingdom.
European Union: Austria, Belgium, Bulgaria, Croatia, Cyprus1,2, Czech Republic, Denmark,Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia,
Spain and Sweden.
IEA (International Energy Agency): OECD regional grouping excluding Chile, Colombia,
Iceland, Israel, Latvia, Lithuania and Slovenia.
Latin America: Central and South America regional grouping and Mexico.

Non‐OECD: All other countries not included in the OECD regional grouping.
Non‐OPEC: All other countries not included in the OPEC regional grouping.
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IEA. All rights reserved.

Middle East: Bahrain, Islamic Republic of Iran (Iran), Iraq, Jordan, Kuwait, Lebanon, Oman,
Qatar, Saudi Arabia, Syrian Arab Republic (Syria), United Arab Emirates and Yemen.

CNorth Africa: Algeria, Egypt, Libya, Morocco and Tunisia.
North America: Canada, Mexico and United States.
OECD (Organisation for Economic Co‐operation and Development): Australia, Austria,
Belgium, Canada, Chile, Colombia, Czech Republic, Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania,
Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic,
Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States.
OPEC (Organisation of the Petroleum Exporting Countries): Algeria, Angola, Republic of theCongo (Congo), Equatorial Guinea, Gabon, the Islamic Republic of Iran (Iran), Iraq, Kuwait,
Libya, Nigeria, Saudi Arabia, United Arab Emirates and Bolivarian Republic of Venezuela(Venezuela).
Southeast Asia: Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic(Lao PDR), Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam. These
countries are all members of the Association of Southeast Asian Nations (ASEAN).
Sub‐Saharan Africa: Angola, Benin, Botswana, Cameroon, Republic of the Congo (Congo),
Côte d’Ivoire, Democratic Republic of the Congo, Eritrea, Ethiopia, Gabon, Ghana, Kenya,
Mauritius, Mozambique, Namibia, Niger, Nigeria, Senegal, South Africa, South Sudan, Sudan,
United Republic of Tanzania (Tanzania), Togo, Zambia, Zimbabwe and other African countries
and territories.6

Country notes
1

Note by Turkey: The information in this document with reference to “Cyprus” relates to the southern part ofthe island. There is no single authority representing both Turkish and Greek Cypriot people on the island.
Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution isfound within the context of the United Nations, Turkey shall preserve its position concerning the “Cyprus
issue”.
2
Note by all the European Union Member States of the OECD and the European Union: The Republic of Cyprus
is recognised by all members of the United Nations with the exception of Turkey. The information in thisdocument relates to the area under the effective control of the Government of the Republic of Cyprus.
3
Individual data are not available and are estimated in aggregate for: Afghanistan, Bhutan, Cook Islands, Fiji,
French Polynesia, Kiribati, Macau (China), Maldives, New Caledonia, Palau, Papua New Guinea, Samoa,
Solomon Islands, Timor‐Leste and Tonga and Vanuatu.
4
Individual data are not available and are estimated in aggregate for: Anguilla, Antigua and Barbuda, Aruba,
Bahamas, Barbados, Belize, Bermuda, Bonaire, British Virgin Islands, Cayman Islands, Dominica, Falkland
Islands (Malvinas), French Guiana, Grenada, Guadeloupe, Guyana, Martinique, Montserrat, Saba, Saint
Eustatius, Saint Kitts and Nevis, Saint Lucia, Saint Pierre and Miquelon, Saint Vincent and Grenadines, Saint
Maarten, Turks and Caicos Islands.
5

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities.
The use of such data by the OECD and/or the IEA is without prejudice to the status of the Golan Heights, East
Jerusalem and Israeli settlements in the West Bank under the terms of international law.
6

Individual data are not available and are estimated in aggregate for: Burkina Faso, Burundi, Cabo Verde,Central African Republic, Chad, Comoros, Djibouti, Kingdom of Eswatini, Gambia, Guinea, Guinea‐Bissau,
Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Réunion, Rwanda, Sao Tome and Principe, Seychelles,
Sierra Leone, Somalia and Uganda.

214

International Energy Agency | Special ReportAFOLU
APC
ASEAN
BECCS
BEV
CCUS
CDR
CFL
CH4
CHP
CNG
CO
CO2
CO2‐eq
COP
CSP
DAC
DACCS
DER
DSI
DSO
DSR
EAF
EHOB
ETP
EU
EV
FCEV
GDP
GHG
GTL
HEFA
ICE
IEA
IIASA
IMF
IOC
IPCC
LCC
LDVs
LCV
LED

agriculture forestry and other land use
Announced Pledges Case
Association of Southeast Asian Nations
bioenergy equipped with CCUS
battery electric vehicles
carbon capture, utilisation and storage
carbon dioxide removal
compact fluorescent lamp
methanecombined heat and power; the term co‐generation is sometimes usedcompressed natural gas
carbon monoxidecarbon dioxidecarbon‐dioxide equivalent
Conference of Parties (UNFCCC)
concentrating solar power
direct air capture
direct air capture with carbon capture and storage
distributed energy resourcesdemand‐side integration
distribution system operator
demand‐side responseelectric arc furnaces
extra‐heavy oil and bitumen
Energy Technology Perspectives
European Union
electric vehicle
fuel cell electric vehicle
gross domestic productgreenhouse gases
gas‐to‐liquidshydrogenated esters and fatty acids
internal combustion engine
International Energy Agency
International Institute for Applied Systems Analysis
International Monetary Fundinternational oil company
Intergovernmental Panel on Climate Change
Low CCUS Caselight‐duty vehicles
light‐commercial vehicle
light‐emitting diodeAnnex C | Definitions

215

IEA. All rights reserved.

Abbreviations and Acronyms

C

LNG
LPG
MEPS
NDCs
NEA
NGLs
NGV
NOC
NOX
N2O
NZE
OECD
OPEC
PHEV
PLDV
PM
PM2.5
PPP
PV
R&D
RD&D
SAF
SDG
SO2
SR1.5
STEPS
T&D
TES
TFC
TFEC
TPED
UEC
UN
UNDP
UNEP
UNFCCC
UK
US
VRE
WEO
WHO
ZEV

216

liquefied natural gas
liquefied petroleum gas
minimum energy performance standards
Nationally Determined Contributions
Nuclear Energy Agency (an agency within the OECD)natural gas liquids
natural gas vehicle
national oil company
nitrogen oxides
nitrous oxide
Net‐Zero Emissions Scenario
Organisation for Economic Co‐operation and Development
Organization of the Petroleum Exporting Countries
plug‐in hybrid electric vehicles
passenger light‐duty vehicle
particulate matterfine particulate matter
purchasing power parity
photovoltaics
research and development
research, development and demonstration
sustainable aviation fuelSustainable Development Goals (United Nations)sulphur dioxide
IPCC Special Report on the impacts of global warming of 1.5°C
above pre‐industrial levels
Stated Policies Scenariotransmission and distribution
total energy supply
total final consumption
total final energy consumption
total primary energy demand
unit energy consumption
United Nations
United Nations Development Programme
United Nations Environment Programme
United Nations Framework Convention on Climate Change
United Kingdom
United States
variable renewable energy
World Energy Outlook
World Health Organization
Zero‐emissions vehicle

International Energy Agency | Special ReportAnnex D
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