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Energy Technology Perspectives

Framework assumptions

Economic activity (Table A.1) and population (Table A.2) are the two fundamental drivers of demand for energy services in ETP scenarios. These are kept constant across all scenarios as a means of providing a starting point for the analysis, and facilitating the interpretation of the results. Under the ETP assumptions, global GDP will more than triple between 2021 and 2050; uncertainty around GDP growth across the scenarios is significant, however. The climate change rate in the 6DS, and even in the 4°C Scenario (4DS), is likely to have profound negative impacts on the potential for economic growth. These impacts are not captured by ETP analysis. Moreover, the structure of the economy is likely to have non-marginal differences across scenarios, suggesting that GDP growth is unlikely to be identical even without considering secondary climate impacts. The redistribution of financial, human and physical capital will affect the growth potential both globally and on a regional scale. Assumed GDP projections for ETP 2015 are unchanged to ETP 2014. An update of the GDP projections is planned for the ETP 2016 edition, taking into account also revised power purchasing parities data for 2011, released by the World Bank’s International Comparison Program in 2014.

Table A.1 Real GDP growth projections in ETP 2015  

CAAGR (%)  2012-2020 2020-2030  2030-2050   2012-2050
World  4.1 3.4 2.7 3.2
OECD  2.3 2.1 1.7 1.9
Non-OECD  6.0 4.5 3.2 4.2
ASEAN  5.4 4.2 3.5 4.1
Brazil   4.0 3.8 2.7 3.2
China 8.1 4.9 2.9 4.6
European Union   1.5 1.8 1.5 1.5
 India 6.7 6.5 5.1  5.7
 Mexico 3.3 3.1 2.3  2.8
 Russia 3.6 3.2 1.7  2.5
South Africa  3.1 2.6 2.2  2.5
United States 2.9 2.2 1.9  2.2

Notes: CAAGR = compounded average annual growth rate; ASEAN = Association of Southeast Asian Nations; growth rates based on GDP in 2012 USD using purchasing power parity terms.

Source: IMF, 2013; IEA analysis.

Table A.2 Population projections used in ETP 2015 

Country/Region 2012 2020 2030 2040 2050
World  7 068 7 701 8 406 9 016 9 524
OECD 1 262 1 317 1 366 1 407 1 430
Non-OECD 5 806 6 385 7 035 7 609 8 095
ASEAN 610 665 721 762 785
Brazil 199 211 223 229 231
China 1 384 1 440 1 461 1 444 1 393
European Union  509 516 518 517 512
India 1 237 1 353 1 476 1 566 1 620
Mexico  121 132 144 152 156
Russia 143 140 134 127 121
South Africa 52 55 58 61 63
United States 322 342 367 387 405

Note: numbers in millions.

Source: UNDESA, 2013.

Energy prices, including those of fossil fuels, are a central variable in the ETP analysis (Table A.3). The continuous increase in global energy demand is translated into higher prices of energy and fuels. Unless current demand trends are broken, rising prices are a likely consequence. However, the technologies and policies to reduce CO2 emissions in the ETP 2014 scenarios will have a considerable impact on energy demand, particularly for fossil fuels. Lower demand for oil in the 4DS and the 2DS means there is less need to produce oil from costly fields higher up the supply curve, particularly in non-members of the Organization of the Petroleum Exporting Countries (OPEC). As a result, oil prices in the 4DS and 2DS are lower than in the 6DS. In the 2DS, oil prices even fall after 2030. 

Prices for natural gas will also be affected, directly through downward pressure on demand, and indirectly through the link to oil prices that often exists in long-term gas supply contracts.1 Finally, coal prices are also substantially lower owing to the large shift away from coal in the 2DS.

Table A.3 Fossil fuel prices by scenario

    2012 2020 2025 2030 2035 2040 2045 2050
IEA crude oil import price (2013 USD/bbl)      
  2DS 106 105 104 102 101 100 99 98
  4DS 106 112 118 123 128 132 135 137
  6DS 106 116 128 139 147 155 161 167
OECD steam coal import price (2013 USD/t)   
  2DS 86 88 83 78 78 77 77 76
  4DS 86 101 105 108 110 112 114 116
  6DS 86 107 112 117 121 124 128 131
Gas (2013 USD/MBtu)    
US import price 2DS 3.7 5.1 5.5 5.9 6.0 6.1 6.0 6.0
  4DS 3.7 5.5 6.1 6.6 7.4 8.2 8.4 8.5
  6DS 3.7 5.5 6.2 6.8 7.7 8.5 8.9 9.1
Europe import price 2DS 10.6 10.5 10.3 10.0 9.6 9.2 9.1 9.0
  4DS 10.6 11.1 11.6 12.1 12.4 12.7 13.0 13.2
  6DS 10.6 11.5 12.4 13.2 13.6 14.0 14.6 15.0
Japan import price 2DS 16.2 13.6 13.1 12.6 12.3 12.0 11.9 11.8
  4DS 16.2 14.4 14.5 14.6 15.0 15.3 15.7 15.9
  6DS 16.2 15.0 15.7 16.3 16.9 17.5 18.2 18.8

Notes: bbl = barrel; t = tonne; MBtu = million British thermal units.

The global marginal abatement costs for CO2 to reach the reduction targets of the 4DS and 2DS are shown in Table A.4. These values represent the costs associated with the abatement measures to mitigate the last tonne of CO2 emissions to reach the annual emissions target in a specific year. The global marginal abatement costs can be regarded as a benchmark CO2 price allowing the comparison of the cost-effectiveness of mitigating options across technologies, sectors and regions. For the 2DS, with costs of up to USD 170 per tonne of CO2 (t/CO2) in 2050, it is more cost-effective to implement all mitigation measures up to that cost level rather than emitting the CO2. In the 4DS, the less ambitious CO2 reduction target results in significantly lower marginal abatement costs of up to USD 60/tCO2. The costs shown for the 6DS reflect only the carbon price in the EU Emissions Trading Scheme (ETS) for electricity generation, industry and international aviation, which has been assumed to be continued after 2020.

Table A.4 Global marginal abatement costs by scenario   

(USD/tCO2) 2020 2030 2040 2050
2DS 30-50 80-100 120-140 140-170
4DS 10-30 20-40 30-50 40-60
6DS 20 30 40 50
Note: 6DS only assumes carbon pricing in the EU for the sectors currently included in the ETS (electricity generation, industry and aviation). 


1 This link is assumed to become weaker over time in the ETP analysis, as the price indexation business model is gradually phased out in international markets.

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