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 2017 and 2060; uncertainty around GDP growth across the scenarios is significant, however. The climate change rate in the Reference Technology Scenario (RTS) is likely to have profound and unpredictable 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.

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 for 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 2017 scenarios will have a considerable impact on energy demand, particularly for fossil fuels. Declining demand for oil in the 2DS and the B2DS reduces the 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 2DS and B2DS are lower than in the RTS. In the 2DS and B2DS, oil prices even decline. 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.6 Finally, coal prices are also substantially lower owing to the large shift away from coal in the 2DS and B2DS.
 

Table A.1 Real GDP growth projections in ETP 2017 (assumed identical across scenarios)  

CAAGR (%)  2014-20 2020-30  2030-40 2040-60   2014-60
World  4.2 4.2 3.5 2.2 2.9
OECD  2.4 2.1 1.9 1.6 1.8
Non-OECD  5.5 5.5 4.2 2.4 3.5
ASEAN  5.8 5.1 3.9  2.4 3.4
Brazil   -0.6 3.3 3.5  2.0 2.1
China 7.5 5.7 3.5  1.6 3.3
European Union   2.3 1.8 1.6  1.4 1.5
India 9.1 7.8 6.0  3.0  5.0
Mexico 3.3 3.9 3.2  1.9  2.6
Russia 0.0 2.9 2.8  1.7  1.9
South Africa  2.0 3.1 3.3  2.2  2.4
United States 2.8 2.2 2.2  1.9  2.0

Notes: CAAGR = compound average annual growth rate; Growth rates based on GDP in United States dollars (USD) in purchasing power parity (PPP) constant 2015 terms.

Sources: IEA (2016d), World Energy Outlook; IMF (2016), World Economic Outlook Database, www.imf.org/external/pubs/ft/weo/2016/01/weodata/index.aspx

Table A.2 Population projections used in ETP 2017 (millions) 

Country/Region 2014 2020 2030 2040 2050 2060
World  7 255 7 747 8 490 9 146 9 714 10 173
OECD 1 258 1 297 1 348 1 381 1 400 1 407
Non-OECD 5 997 6 450 7 143 7 765 8 314  8 766
ASEAN 623 664 721 763 788  799
Brazil 206 216 229 236 238 236
China 1 372 1 405 1 418 1 398 1 351  1 280
European Union  510 513 514 511 505 495
India 1 295 1 389 1 528 1 634 1 705  1 745
Mexico  120 129 142 151 156  159
Russia 144 143 139 133 129  125
South Africa 54 57 60 63 66  67
United States 319 333 355 373 388 403

Source: UNDESA (2015), World Population Prospects: The 2015 Revision, https://esa.un.org/unpd/wpp/


Table A.3 Fossil fuel prices by scenario

   Scenario 2015 2020 2030 2040 2050 2060
Oil (2015 USD/bbl)
IEA crude oil import price (2015 USD/bbl)
  RTS 51 79 111 124 137 148
  2DS 51 73 85 78 72 67
  B2DS 51 73 66 64 62 60
Coal (2015 USD/t)
OECD steam coal import price
  RTS 64 72 83 87 90 92
  2DS 64 66 64 57 55 53
  B2DS 64 66 63 54 52 51
Gas (2015 USD/MBtu)
United States price RTS 2.6 4.1 5.4 6.9 8.9

10.7

2DS 2.6 3.9 4.8 5.4 5.9 6.3
B2DS 2.6 3.8 4.2 4.1 4.0 3.8
Europe import price   RTS 7.0 7.1 10.3 11.5 12.2 12.6
2DS 7.0 6.9 9.4 9.9 10.2 10.5
B2DS 7.0 6.7 8.2 7.7 7.2 6.9
Japan import price   RTS 9.7 9.6 11.9 12.4 12.8 13.2
2DS 9.7 9.0 10.8 10.9 11.0 11.1
B2DS 9.7 8.9 9.9 9.2 8.6 8.2

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

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6. 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.