IEEJ OUTLOOK 2022

IEEJ Outlook 2022

IEEJ © 2021

Energy Supply and Demand Outlookby 2050

REFATSCCEIEEJ Outlook 2022

What is IEEJ Outlook?

- Study to quantify the future global energy supply and demand situation until 2050.
- Outlook with forecast-approach, using econometric models etc.
- Scenario analysis on progress and trends in technologies and policies.
[Reference Scenario (REF)]
A scenario in which trends and changes continue while reflecting current energy andenvironmental policies.

IEEJ Outlook 2022

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[Advanced Technologies Scenario (ATS)]A scenario in which energy and environmental technologies are introduced to themaximum extent in order to secure a stable energy supply and strengthen climatechange countermeasures.
[Circular Carbon Economy/4R Scenario (CCE)]
A scenario based on the concept of a circular carbon economy with the "4Rs”(Reduce, Reuse, Recycle, Remove). The scenario reflects not only the AdvancedTechnologies Scenario assumptions, but also examines the maximum introduction of
decarbonization technology using fossil fuels.

2REF

ATSEmitters of two-thirds of the emissions declare CN, but...

IEEJ Outlook 2022

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❖ Energy-related CO2 emissions (global) ❖ Breakdown of CO2 Emissions (2019)* United States, Brazil, South Korea, Poland, China and Climate Ambitions Alliance (121 countries). ** When the CN-stated countries achieve zeroemissions in 2050 based on the emissions in the Reference / Advanced Technologies scenarios (For China, that announced 2060 CN, the emissions as of2050 by linear interpolation between today and 2060). *** Average paths referred to the IPCC "Global Warming of 1.5°C".

There is a worldwide movement to pursue carbon neutral (CN).
Currently, countries and regions emitting about two-thirds of the world's CO2
emissions have announced CN. Even if those countries succeed, global emissions in
2050 will be only half of current levels.

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REF

ATS

Power demand is certain to grow
❖ Final Energy Consumption

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(Advanced Economies)❖Final Energy Consumption(Emerging and Developing Economies)* Industry includes agriculture, forestry and fisheries and non-energy sector.

Energy demand in both developed and developing countries will be electrified more. Although
the electrification of heat demand in the industrial sector is limited, the electricity ratio will risefurther in the ATS.
Electricity demand is not much different between both scenarios. The stability, reliability andsecurity of electricity supply are issues that must be addressed.

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REF

ATS

Decarbonization of the power sector is progressing❖ Power Generation Mix

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(advanced economies)❖ Power Generation Mix(Emerging and Developing Economies)* VRE (Variable Renewable Energy): photovoltaic power, wind power, etc.

In the REF, more than half of the increase in electricity demand is supplied by VRE. However, inemerging and developing economies, thermal power generation remains necessary to meet astrong electricity demand.
In the ATS, the decarbonization of the power generation sector will be greatly advanced by alarge introduction of VRE and thermal power with CCS.

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REF

ATSDecarbonization of non-power generation sector is difficult

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❖ Primary energy demand❖ Energy-related CO2 emissions

The primary energy demand in the ATS in 2050 is almost the same as today. Demand for fossil
fuels declines, but still accounts for 60% of the total.
On the other hand, CO2 emissions are two-thirds of current levels. The emissions reduction fromthe power generation sector is significant, however, the reductions in the non-power generation
sector are not progressing much.

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Circular Carbon Economy/4R Scenario❖ Assumptions in CCE (in addition to the ATS)
4R

ReduceReuse

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RecycleRemoveTechnology

Assumptions

Hydrogen for powergeneration

Adopt hydrogen/ammonia power generation for 50-75% of coal- and gas-fired power
plants without CCS facility as of 2050.

Hydrogen fortransportation

Replace 10-15% of liquid fuels demand in the road sector in advanced economies and20-30% in the international bunkers with hydrogen as of 2050.

Hydrogen in industry
sectorReplace 10-30% of natural gas demand in the industry sector with hydrogen as of2050 in advanced economies with abundant hydrogen supply.

Direct reduction in steel
making by hydrogen

Adopt direct reduction technology utilizing blue hydrogen to 25% of crude steel
production in advanced economies, China, India and Brazil as of 2050.

Hydrogen in building
sectorReplace 10% of natural gas demand in the building sector with hydrogen as of 2050
in advanced economies.

Reduction of cement
production

Reduction of cement production by 25% utilizing coal ash and limestone and calcined
clay as of 2050

Algae synthesis to
produce biofuel

Increase algae-based bio-diesel by 50% from ATS as o 2050.

Concrete curing
capturing CO2

Adopt concrete curing capturing CO2 technology to 25-50% of the world concrete
production as of 2050.

Synthetic methane

Replace 20-40% of natural gas demand in the industry and building sectors withsynthetic methane as of 2050.

Synthetic fuels

Replace 10-20% of liquid fuels demand in the transport sectors with synthetic fuels asof 2050.

Carbon capture andstorage

Adopt CCS for blue hydrogen production.

From the perspective of decarbonizing fossil fuel utilization, this scenario considers themaximum introduction of 4R (Reduce, Reuse, Recycle, Remove) technologies in addition to theATS assumptions.

7CCE

Utilize clean hydrogen/ammonia

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❖ Supply and demand ofhydrogen/ammonia❖ Supply and demand ofsynthetic methane/fuelHydrogen/ammonia, not emit CO2 during combustion, are utilized in the industry sector and forpower generation. Hydrogen production could be blue, using fossil fuels and CCS, or green,using renewable energy.
Synthetic methane and fuels produced from clean hydrogen can be used in sectors whereelectrification is difficult, by utilizing existing infrastructure in the non-power generation sector.

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Reduce CO2 emissions without reducing fossil fuels

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❖ Primary energy demand❖ Energy-related CO2 emissions

Fossil fuel consumption in the CCE scenario is almost the same as that in the ATS.
Demand for natural gas for hydrogen production will increase slightly.
On the other hand, the CO2 emissions decline significantly. The center of gravity foremission reductions is shifting to the non-power generation sector.

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IEEJ Outlook 2022

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Asia-Middle East relations remain unchanged

In the CCE, there is a shift from fossil fuel trade to hydrogen/ammonia trade.
In the Middle East, hydrogen exports compensate for the decline in oil and gas exports. On theother hand, imports of hydrogen will increase significantly in Asia. Even in a world aiming fordecarbonization, the importance of trade relations between Asia and the Middle East remains
unchanged.

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REFATS

CCE

Summary【 Reference and Advanced Technologies Scenarios】- CO2 emissions are expected to grow in countries that have not expressedcarbon neutrality (CN), such as India, ASEAN, the Middle East, Africa, andothers.
- CO2 reduction in the power generation sector is likely to proceed, butemission reductions in the non-power generation sectors will not progress
much. Decarbonization in the non-power generation sector is key toachieve CN.

IEEJ Outlook 2022

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【Circular Carbon Economy Scenario】- In order to decarbonize the non-power generation sector, cleanhydrogen/ammonia and synthetic methane/fuels using these materials will
be required.
- There is a shift from fossil fuel trade to hydrogen/ammonia trade, but theimportance of trade relations between Asia and the Middle East remains
unchanged.
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