Understanding GEC Model scenarios – Global Energy and Climate Model – Analysis - IEA

Overview

The IEA medium to long-term outlooks – the World Energy Outlook (WEO) and the Energy Technology Perspective (ETP) - use a scenario approach to examine future energy trends relying on the Global Energy and Climate (GEC) Model. The GEC Model is used to explore various scenarios, each of which is built on a different set of underlying assumptions about how the energy system might respond to the current global energy crisis and evolve thereafter. By comparing them, the reader is able to assess what drives the various outcomes, and the opportunities and pitfalls that lie along the way. These scenarios are not predictions – GEC Model scenarios do not contain a single view about what the long-term future might hold. Instead, what the scenarios seek to do is to enable readers to compare different possible versions of the future and the levers and actions that produce them, with the aim of stimulating insights about the future of global energy.

The WEO-2022 and ETP-2023 – based on the integrated GEC modelling cycle – explore three scenarios, all of which are fully updated to include the latest energy market and cost data. The Net Zero Emissions by 2050 Scenario (NZE) is normative, in that it is designed to achieve specific outcomes – an emissions trajectory consistent with keeping the temperature rise in 2100 below 1.5 °C (with a 50% probability), universal access to modern energy services and major improvements in air quality – and shows a pathway to reach it. The Announced Pledges Scenario (APS), and the Stated Policies Scenario (STEPS) are exploratory, in that they define a set of starting conditions, such as policies and targets, and then see where they lead based on model representations of energy systems, including market dynamics and technological progress.

The 2022 GEC modelling cycle does not include the Sustainable Development Scenario (SDS), which is another normative scenario used in previous editions to model a “well below 2° C” pathway as well as the achievement of other sustainable development goals. The APS outcomes are close, in some respects, to those in the SDS, in particular in terms of the temperature outcome. But they are the product of a different modelling approach and so as long as policy ambition does not fully capture all SDS outcomes, the APS falls short of achieving those.

Definitions and objectives of the GEC Model 2022 scenarios

The scenarios highlight the importance of government policies in determining the future of the global energy system: decisions made by governments are the main differentiating factor explaining the variations in outcomes across our scenarios. However, we also take into account other elements and influences, notably the economic and demographic context, technology costs and learning, energy prices and affordability, corporate sustainability commitments, and social and behavioural factors. However, while the evolving costs of known technologies are modelled in detail, we do not try and anticipate technology breakthroughs (e.g. nuclear fusion).

An inventory of the key policy assumptions available along with all the underlying data on population, economic growth, resources, technology costs and fossil fuel prices are available in the Macro Drivers and Techno-economic inputs pages.

For the first time, the projections were generated by a unified model that integrates the strengths the previous World Energy Model (WEM) and the Energy Technology Perspectives (ETP) model. Combining the detailed features of the two previous models allows us to prepare a unique set of insights on energy markets, investment, technologies and the policies that would be needed for the clean energy transition.

In the NZE Scenario; there is no trade-off between achieving climate objectives and delivering on energy access and air pollution goals. Good policy design can exploit synergies between the three parallel objectives of the NZE Scenario. Achieving universal access to modern energy only leads to a small increase in CO2 emissions (0.2%), the climate effect of which is more than offset by lower methane emissions due to a reduction in use of traditional biomass cookstoves. Incorporating additional elements of the sustainable development agenda, such as energy and water, or energy and gender, highlight further synergies. Moreover, the scenario is designed such that advanced economies move to achieve net zero emissions at a faster pace and thus earlier than in other scenarios and earlier than emerging market and developing economies, thus leaving more room in the earlier years for the latter to expand energy access.

The transition to a low-carbon economy leads to a more efficient energy system that relies less on fuel combustion; this plays a major role in improving air quality, reducing both outdoor and household air pollution. In countries where reducing health impacts of air pollution is an urgent issue, low-carbon measures that reduce the overall quantity of fossil fuels being used – including energy efficiency measures on the demand side, and a shift to renewables on the supply side – are an important part of an action plan to tackle those health-related impacts.

Despite the fundamental changes across all sectors the NZE Scenario still ensures an orderly transition. This includes ensuring the security of fuel and electricity supplies at all times, minimising stranded assets where possible and aiming to avoid volatility in energy markets.

How do the scenarios relate to the pursuit of a 1.5°C outcome?

The IPCC Sixth Assessment Report on Mitigation of Climate Change, released in April 2022, assessed a large number of scenarios that led to at least a 50% chance of limiting the temperature rise to 1.5 °C in 2100. As the figure makes clear, the NZE Scenario trajectory is well within the envelope of these scenarios.

To achieve the temperature goal, the Paris Agreement calls for emissions to peak as soon as possible and reduce rapidly thereafter, leading to a balance between anthropogenic emissions by sources and removals by sinks (i.e. net zero emissions) in by the year 2050. These conditions are all met in the NZE Scenario.

Universal access to modern energy is achieved by 2030 in the NZE Scenario and all national access targets are achieved in the APS

The Paris Agreement is also clear that climate change mitigation objectives should be fulfilled in the context of sustainable development and efforts to eradicate poverty. The NZE Scenario explicitly supports these broader development efforts (in contrast to most other decarbonisation scenarios), in particular through its energy access and cleaner air dimensions. In the NZE Scenario, strong policy support and international co-operation are an integral part of national and international recovery plans, and this enables a ramping up of progress on expanding access programmes to achieve universal access to electricity and clean cooking by 2030.

In the APS, all access to electricity and clean cooking country targets (see table below) are achieved in time and in full leading, by 2030, to a 60% and 68% reduction of the population without access to electricity and clean cooking respectively but still leaving 290 million without access to electricity and 780 million without access to clean cooking.

Progress is urgently needed as for the first time in decades, the number of people around the world without access to electricity is set to rise in 2022. It looks likely to reach 774 million, which would mean an increase of 20 million people from 2021, and coming after the pandemic-related slowdown in both 2020 and 2021 would take the number of those without access to electricity to levels last seen in 2019.

Countries with targets for access to electricity and clean cooking

Notes: DRC = Democratic Republic of the Congo. Universal access by 2030 includes countries that have targets to reach 100% access rates by 2030 or before. Other targets include countries with other less ambitious targets. Includes only targets for countries with access rates lower than 95%. Source: IEA analysis based on official country and third-party publications.

Investment needed to achieve universal access to electricity and clean cooking in the NZE Scenario amounts to around USD 36 billion per year, equivalent to 10% of what is spent in a year by the upstream oil and gas sector. Achieving universal access will transform the lives of hundreds of millions, and reduce the severe health impacts of indoor air pollution, overwhelmingly caused by smoke from cooking.

Health impacts due to energy-related air pollution can be reduced dramatically

Polluted air has caused at least 19 000 excess deaths per day in recent years. In 2021, indoor air pollution caused around 3.6 million premature deaths, while outdoor air pollution was responsible for a further 4.3 million. Air pollution also comes with significant economic costs. Some are direct costs, such as those due to the provision of healthcare, and some are indirect, such as those incurred as a result of labour productivity losses or crop damage. It is estimated that the global health cost of mortality and morbidity caused by exposure to fine particulate matter air pollution alone is equivalent to around 6% of global GDP and to more than 10% in certain countries, most notably India and China (World Bank, 2022).

While the STEPS and APS see rising numbers of premature deaths during the next decade, the NZE Scenario leads to dramatic reductions. By 2050 around 2 billion fewer people breathe heavily polluted air. This results in around 1.3 million fewer premature deaths from ambient air pollution in 2050 compared to 2021, some 3.5 million fewer than in the APS Scenario in that year. Universal access to clean cooking solutions cuts exposure to dirty household air, resulting in around 2.3 million fewer premature deaths from household air pollution in 2050 than today, an improvement of almost one million compared to the APS Scenario.

Over a decade of energy transition scenarios

The IEA began exploring scenarios to limit CO2 emissions already in 2006, with the ETP ACT Scenarios that sought to curb emissions growth by bringing emissions back down to 2005 levels by 2050. This analysis continued to evolve with the WEO 450 ppm case in 2007, the ETP BLUE Map Scenario in 2008 that later evolved into the 2DS Scenario, and the WEO 450 Scenario in 2009, all of which aimed to limit CO2 concentration in the atmosphere to 450 parts per million (ppm). At the time, 450 ppm was seen to be consistent with a 50% likelihood of keeping average global temperature rise below 2 °C.

Since then, the global goalposts have shifted, technological progress has been uneven, and emissions have continued to grow.