Key messages from the APEC Energy
Demand and Supply Outlook 8th Edition
IEEJ Webinar
27 October 2022
Dr. David Wogan, Assistant Vice President

Scenarios
Reference (REF)

Carbon Neutrality (CN)Definition

Recent trends and current policies.

Hypothetical decarbonisation
pathways for each APEC economy.

Purpose

Provides a baseline for comparison
with the Carbon Neutrality scenario.

Additional energy sectortransformations that support
decarbonisation objectives.

Key assumptions

Current polices and trends continue.

Increased levels of energy efficiency,
electrification, behavioral changes,
fuel switching, and CCS deployment.

Limitations

Assumes that recent trends,including relevant decarbonisation
measures continue.

Does not consider non-energy
impacts on CO2 or removal.

Note: does not represent APERC’s recommendation or advocacy for a pathway or set of policies.
The analysis was performed prior to March 2022 and does not include current disruptions to international energy
markets.

2Macroeconomic assumptions
Population in millions
3 100

GDP in billion 2018 USD PPP
160 000

 Projection

3 000
2 900

120 000

2 800

100 000

2 700

80 0002 600

60 0002 500

40 000

2 400

20 0002 3002000

2010

2020

 Projection

140 000

2030

2040

2050

02000

2010

2020

2030

2040

2050

• Macroeconomic trends are expected to drive energy demand through 2050
• Population is expected to peak in the 2030s• Economic activity (GDP) is expected to continue• Trends vary by APEC sub-region and economy
3

Energy demand decouples significantly from economic activity
Energy demand by fuel in REF (PJ)
300 000

Energy demand by fuel in CN (PJ)
300 000

 Projection

Others

250 000

Heat

200 000

Electricity
Hydrogen150 000

Biomass

100 000

Other renewables

50 000

Oil02000Gas
Coal
2010

2020

2030

2040

2050

 Projection

Others

250 000

Heat

200 000

Electricity
Hydrogen150 000

Biomass

100 000

Other renewables

50 000

Oil

02000

Gas
Coal
2010

2020

2030

2040

2050

• Energy efficiency gains and electrification lead to energy demand being almost one-quarter
lower by 2050 (CN vs REF).
• Substantial fossil fuels demand remains even in CN.
4Electricity demand is increasingly met with generation from wind andsolar…
Electricity generation in REF (TWh)Electricity generation in CN (TWh)30 00030 000 Projection

25 000

Imports
Other

20 000

SolarWind15 000Hydro

10 000

Nuclear

5 000

Gas02000

Oil
Coal
2010

2020

2030

2040

2050

Imports

 Projection

25 000

OtherSolar

20 000WindHydro

15 000

Nuclear

10 000Oil
Gas CCS

5 000
02000

Gas
2010

2020

2030

2040

2050

Coal CCS• Growth in electricity generation to meet increased buildings and transport demand.
• Natural gas substitution for coal continues and provides balancing and ancillary services to theelectric grid.
5Yet, fossil fuels remain a large share of APEC energy supply
Energy supply in REF (PJ)

Energy supply in CN (PJ)

450 000

450 000

 Projection400 000

Other fuels

350 000

Hydrogen

300 000

Electricity

250 000

Renewables

200 000

Nuclear

150 000

 Projection

400 000

Other fuels

350 000

Hydrogen

300 000

Electricity

250 000

Renewables

200 000

NuclearGas

150 000

100 000

Oil

100 000

Oil

50 000Coal

50 000

Coal0
2000

2010

2020

2030

2040

2050

02000

Gas

2010

2020

2030

2040

2050

• Natural gas supply increases in both scenarios as coal declines.
• Oil supply is level in REF and declines in CN as APEC and global oil use declines.

6Natural gas and oil import growth driven by China and southeast Asia
Net energy trade in REF (PJ)

Net energy trade in CN (PJ)

40 00040 00030 000HydrogenElectricity

20 000

Renewables

10 000Gas

30 000HydrogenElectricity

20 000

Renewables

10 000Gas

0Refined products

0

Refined products- 10 000

Crude oil & NGL- 10 000

Crude oil & NGL

Coal- 20 000- 30 000

Trade balance
2000

2010

2018

2020

2030

2040

2050

Coal

- 20 000- 30 000

Trade balance
2000

2010

2018

2020

2030

2040

2050

• USA, China, Russia, and Canada account for essentially all the production growth in REF.
• Natural gas production declines at a faster rate than consumption in the 2040s.
• Interfuel and regional competition are key factors.
7

CN delivers ambitious CO2 emissions reductions…
Energy-related CO2 emissions in REF (million tonnes)

Decrease between REF and CN (million tonnes)

25 00025 000 Projection

20 000Non-specified
Agriculture

15 000

Buildings
Transport

10 000Industry
Own use

5 000
0
2000

Power
2010

2020

2030

2040

2050

 Projection

Non-specified
Agriculture

20 000

Buildings
Transport

15 000Industry
Own use10 000Power
5 000
Reference02000

2010

2020

2030

2040

2050

Carbon Neutrality• APEC-wide CO2 emissions decline by 14% in REF and by 67% in CN.
• The power and transport sectors are the most influential in driving emissions lower in CN.

8…through energy and emissions intensity improvements
50 00045 000Population

Energy intensity

40 00035 00030 00025 000
20 000REF

GDP per capita
2018

Emissions intensity
CN

15 000
10 0002050

5 0000• The Kaya Identity splits CO2 emissions into macroeconomic and energy components.

• Lower energy intensity delivers approximately three-quarters of the emissions reductions in REF and CN.
• In CN, energy and emissions intensity reductions provide roughly equal incremental benefits.

9In CN, oil and gas security continues to be a concern
Net imports of crude oil and petroleum products in CN, 2000-2050 (PJ).

Net natural gas imports in CN, 2000-2050 (PJ).

60 00040 00050 00030 00040 000Oceania

30 000

Other Americas

20 000Southeast Asia

10 000

Northeast Asia
Russia0USA- 10 000

China- 20 000- 30 000

Oceania

20 000

2000

2010

2018

2020

2030

2040

2050

Other Americas
10 000Southeast Asia
Northeast Asia

0RussiaUSA- 10 000

China- 20 000- 30 000

20002010

2018

2020

2030

2040

2050

• Efforts to discourage oil and gas investment reduce supply elasticity and energy security.
• Those efforts can also lead to reduced production by entities with market power.
10

Electric grid reliability
Change in electricity generation by fuel and scenario, 2018-2050 (TWh)
8000
6000
4000
2000
0-2000
-4000
-6000
-8000

Reference
Coal total

Gas total

Oil

Carbon Neutrality
Wind

Solar

Otherrenewables• Increased reliance on wind and solar generation can reduce supply elasticity and necessitate higher reserve
margins.
• As currently being implemented, decarbonization appears to be reducing short-term supply elasticities andincreasing costs, thereby reducing energy security.
11Summary• Energy demand decouples from economic growth• Increased efficiency and electrification reduce demand• Wind and solar generation grow• Fossil fuels remain• Need both energy and emissions intensity reductions• Oil and gas security remains a concern in CN• Electric grid reliability is a challenge with increased wind and solar power generation

12

Thank you.
https://aperc.or.jp
david.wogan@aperc.or.jp