ALPS Symposium
6 March 2023, Tokyo

Energy security in clean energy transitions:Insights from the World Energy Outlook 2022
Yasmine Arsalane, International Energy Agency

Russia’s invasion of Ukraine has sparked a global energy crisis•

Russia’s invasion of Ukraine has plunged the energy sector into full-blown turmoil,
cutting supplies from the world’s largest fossil fuel exporter•

Oil & gas markets are facing major uncertainties amid today’s geopolitical upheaval•

High energy prices have stoked inflation and created a looming risk of global recession
Is today’s energy security crisis a lasting setback for energy transitions, or a catalyst
for accelerated action?

•The new Outlook considers multiple scenarios:•Stated Policies (STEPS) reflects today’s policy settings•Announced Pledges (APS) if country net zero and other pledges are met in full•

Net Zero Emissions by 2050 (NZE) – an updated roadmap to limit warming to 1.5°C

IEA 2022. All rights reserved.

Page 2An energy shock of unprecedented breadth and complexity
Percentage of countries with annual inflation greater than 6%
1973oil crisis

1979oil crisis2022
energy crisis

100%
80%
60%
40%
20%

1970

1975

1980

1985

1990

Advanced economies

1995

2000

2005

2010

2015

2020

Emerging and developing economies

Exacerbating already tight energy markets, the Russian invasion of Ukraine has tipped the world into a global energy
crisis of unprecedented breadth and complexity, affecting all countries and the vulnerable in particular
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Page 3Government responses are fast-tracking the clean energy economy
Clean energy investment in the Stated Policies Scenario

2Trillion
USD(2021)

1

2015

2016

2017

2018

2019

2020

20212030

The US Inflation Reduction Act, the EU’s Fit for 55 package, Japan’s GX, China’s new clean energy targets and India’ssolar revolution propel clean energy investment to new highs, but $4 trillion is needed by 2030 to be on track for 1.5 °C
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Page 4

Electricity is turning the corner
Change in generation, 2021-2030

Power sector CO2 emissions

4 000

16TWh

Announced pledges

3 000

Stated policies

2 000

Gt

121 000
8Emerging market anddeveloping economies

0-1 000

4Advanced economies-2 000
Solar PVWindNuclearNaturalgas

Coal

1990

2020

2050

AsAs markets
marketsrebalance,rebalance,thethe upside
upside forfor coal
coal isis temporary
temporaryas
as renewable
renewablegeneration
generationrises
risesbyby 90%
90%toto 2030
030 ; the peak in
power sector emissions needs to be followed by a much steeper decline to be consistent with global climate goals
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Page 5

New challenges emerge to maintain electricity security
Flexibility supply

Index (2021 = 1)

Flexibility needs
100%

6Demand responseAPSBatteries

80%

Other low emissions

4

Other renewables

60%

STEPS

Hydro

2Nuclear

40%

Unabated fossil fuels

UnitedStates

EuropeanUnion

China

2050

2030

2050

2030

2050

2030

2050

2030

20%

India

2021 STEPS APS
2050

Flexibility needs rise in all scenarios and vary substantially by country;
a broad range of technologies and approaches is required to ensure electricity security
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Page 6

The era of natural gas demand growth is coming to an end
Change in global gas trade,2021-2030

Global natural gas demand in the Stated Policies Scenario
6 000200bcmbcm

4 500

toAsia100
Other

Advanced economies
Are we entering a
Golden Age of Gas? (2011)

3 000Russia to China

0Russia toEuropean
Union

Emerging market anddeveloping economies

1 500toEuropean
Union
Other-100-200
2010

2020

2030

2040

2050

Pipeline

LNG

Strengthened policies, high near-term prices & energy security concerns bring the “Golden Age of Gas” to a close
but LNG remains crucial amid lower pipeline flows to Europe & robust import demand in Asia
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Page 7

Peak fossil fuel demand is coming this decade
Fossil fuel demand in the Stated Policies Scenario, 1900-2050
600

EJ

Historical

Projected

450

Oil

Oil

300

Coal

Coal150Natural gas
1900

1950

Natural gas

2000

2050

Today’s policy settings are now sufficiently strong that they produce a distinct peak in fossil fuel use before 2030
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Page 8

Keeping the door to 1.5 °C open
Global energy related CO2 emissions
50

Pre-Parisbaseline

Gt CO240

StatedPolicies
Scenario

30

20

Announced
Pledges
Scenario

10Net Zero
Emissions by2050 Scenario
1990

2000

2010

2021

2030

2050

Policy and technology progress since 2015 has shaved 1 °C off projected warming, a step in the right direction;
but much more needs to be done in order to avoid severe climate disruptions
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Page 9

A new energy security paradigm is needed for secure transitions
Scale up clean energy
to scale back fossil fuels

Lift emerging economies into thenew energy economy

Investment
Energy investment,
in NZE Scenario,
2021
2030
9x

Cost of capital for solar PV, 2021

Manage new vulnerabilities

Share of top 3 countries in mineralproduction

Trillion 4USD
(2021) 3

16%
12%

75%

28%50%

4%

25%

2-3x

100%

1.5x
1Fossilfuels

Cleanenergy

Advanced
economies

Emerging &developing
economies

Lithium Cobalt Nickel

Rareearths

For the duration of energy transitions, the clean energy and fossil fuel systems are both required to deliver
energy services; assessing & managing the evolving co-existence of both systems is crucial
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Page 10Clean energy manufacturers prepare the ground for faster transitions
Announced manufacturing capacity pipeline compared with NZE Scenario deployment in 2030

100%

NZE deployment in 203075%

50%

25%

Solar PV

Batteries

Electrolysers

2021

Announced pipeline to 2030

Lithium

Announced plans to scale up clean energy manufacturing capacity help to accelerate cost reductions and would,
in some cases, approach the levels needed to put the world on track with a 1.5 °C pathway
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Page 11

Avoiding growth in energy demand is critical to net-zero transitions
CO2 emissions reductions due to behaviouralchanges, 2030

Total final consumption
and demand avoided by measure
Industry

Transport

STEPS

200Buildings

Avoided demand
Fuel switching

STEPS2021

2050
2021

2021

2050

2050 - STEPSSTEPSNZE NZE

NZE

STEPS

50STEPS

100

2021

2050

2050 - NZE

Buildings: 390 Mt CO2
Space heating
Space cooling
Eco-household

BehaviourNZE NZE

NZE

150Energy efficiency

STEPS

EJ

1 152 Mt CO2

Transport: 760 Mt CO2
Fuel efficient driving
Low car cities
Cleaner cars
Work from home
Reduced flying

Energy efficiency and other mitigation measures cut total final demand by 40% compared to the STEPS in 2050.
Behavioural changes can tackle emissions from the existing assets without the need to wait for stock turnover
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Page 12

The IEA’s NZE in 2050 compared with IPCC net-zero scenarios
Hydrogen-based fuel final demand
40Wind and solar share
100%

45075%

30300

50%

20150

25%

10EJ

EJ

Total final consumption

600

Scenarios
assessedby IPCC

20

10Bioenergy supply
EJ

Energy-related CO2 removal
15Gt CO₂Gt CO2

CO2 capture
30300

10200

5100

IEA NZEscenario

The IEA NZE uses more energy efficiency, renewables, and hydrogen than IPCC scenarios of a comparable ambition;and relies less on CO2 capture, negative emissions and bioenergy
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Page 13

IEA 2023. All rights reserved.

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