IEEJ: January 2011

Special Bulletin
November 18, 2010
A Japanese Perspective on the International Energy Landscape (19)After IEA “WEO 2010” Symposium in Tokyo
Ken Koyama, PhD
Director
Strategy and Industry Research Unit
Institute of Energy Economics, JapanOn November 9, the International Energy Agency released its latest energy projection,“World Energy Outlook (WEO) 2010,” in London. Subsequently, our IEEJ and the IEA cosponsoredan international symposium, including a keynote address by IEA Executive Director Nobuo Tanaka,
in Tokyo on November 15. Nearly 350 people participated in the symposium.
The WEO is the IEA’s most important analysis positioned as its flagship product. It is also
the world’s most representative and famous long-term energy outlook. The WEO 2010 features acomprehensive, detailed analysis on future energy conditions throughout the entire world, projects
energy supply and demand and carbon dioxide emissions through 2035, and suggests policy
proposals based on the projections. The latest WEO also features a deep analysis on six important
topics – climate change, renewable energy, energy subsidies, unconventional oil, the Caspian energy
problem and the energy poverty issue. It then gives three future scenarios as explained below.
What are the key points of the WEO 2010? I would like to focus on the following points,
based on the massive report consisting of more than 700 pages, discussions at the Tokyo symposium
and my personal views:
The first important point of the WEO 2010 may be found in the development of scenarios.
Until last year, the WEO had named a future case of the world with “business as usual” trends andpolicies as the “Reference Scenario” and based a long-term outlook and analysis on the scenario as areference. But the latest WEO no longer uses the words “Reference Scenario.” Instead, the “CurrentPolicies Scenario” is given for a case of the world with policies adopted as of mid-2010, which isconceptually close to the past “Reference Scenario.” The key point is that the latest WEO focuses its
analysis on a new-concept scenario, called the “New Policies Scenario,” for a case where recently
published energy and environmental policies, promises and plans would be implemented, thoughcautiously. The WEO 2010 positions the “New Policies Scenario” at the center of its analysis andtreats it as a benchmark for looking at other scenarios, indicating that the “New Policies Scenario”
design and preconditions, and quantitative analysis results based on them are of great importance.

1

IEEJ: January 2011

As the third scenario, the WEO 2010 gives the “450 Scenario” indicating a pathway tolimiting global temperature rise to not more than 2 degrees Celsius, or GHG concentrations in theatmosphere to 450 ppm, as the previous WEO did. As indicated by this explanation, the “450Scenario” indicates a model case where measures will be taken to achieve the stated target, taking a“backcasting” approach. It is interestingly separated from the “New Policies Scenario” that is aforecast based on a bottom-up approach. My personal impression is that the world may actually
settle somewhere between the two different scenarios including the “New Policies Scenario” that has
more plausible implications at present, although the WEO 2010 and discussions at the Tokyo
symposium do not necessarily indicate such impression.
Another key point of the WEO 2010 may be that the latest outlook, though building on thedetailed, huge quantitative and model analyses, apparently gives greater priority to policy proposals
than the past ones. This point is indicated by the executive summary of the WEO 2010. I feel that thelatest WEO gives weight to policy implications and proposals based on basic quantitative analyses,
rather than to the explanation of such analyses.
These policy implications range wide. But I personally compile these implications into thefollowing six points: (1) the world energy market is faced with the most serious uncertainties inhistory, (2) the stability of fossil fuels and their markets will be of great importance under any
scenario, (3) energy security and global warming measures will grow more important in theuncertain future, (4) while the third point is a global issue, mainly emerging countries (including
China) will grow more important for energy security and global warming measures, (5) these policy
problems are huge challenges that the international community will face in the future, and (6) as theachievement of these challenges including the realization of the “450 Scenario” is not necessarily
impossible, the world will be required to make strong, full-fledged, proactive and serious efforts toachieve the challenges. I refrain here from describing the six points based on numerical data. As amatter of course, however, they are amplified in the WEO 2010.
In summary, the WEO 2010 takes advantage of new future scenarios to emphasize that theworld is required to implement strong and proactive energy and environmental policy efforts. Given
the WEO’s high attractiveness and importance, its policy messages may have great significance.
While the world and each country will seriously discuss policy responses to energy andenvironmental problems, the WEO 2010 may play a role in giving significant advice for policy
discussions and intellectual arguments.
Contact: report@tky.ieej.or.jp

2