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What to expect from the new WEO-2021

The new World Energy Outlook (WEO) is coming on Wednesday 13 October, providing critical analysis and insights on trends in energy demand and supply, and what they mean for the climate, energy security and economic development. This year’s WEO-2021 is being released earlier than usual to help inform the debate at COP26 and beyond – and, for the first time, the analysis will be available for free to ensure it finds the widest possible audience. 

The report comes at a pivotal moment, not only during the run-up to COP but also when economic recovery from Covid-19 is contributing to a huge run-up in prices. The essence of this year’s WEO is a detailed stocktake of how far countries have come in their clean energy transitions, how far they still have to go to reach the goal of limiting temperature rises to 1.5 °C, and what actions governments and others can take to seize opportunities along the way.

At the same time, the WEO provides a clear-headed analysis on the vulnerabilities that could affect the reliability or affordability of energy, as well as the different starting points of countries around the world. Many developing economies are still in the midst of a profound public health crisis with Covid-19, progress towards universal energy access has stalled, and many governments face persistent challenges in mobilising investment in the energy infrastructure that is vital to support social and economic development.

As usual, the WEO analysis is based on scenarios. There is no single view about the future, but instead we detail three main storylines. One is normative, in that it designates a specific outcome and shows a pathway to reach it. Two scenarios are exploratory, in that they define a set of starting conditions and then see where they lead. 

The normative scenario is the Net Zero Emissions by 2050 scenario, introduced in May 2021 in the IEA’s landmark Net Zero by 2050 Roadmap. This scenario is integrated fully into WEO-2021, and is the benchmark for assessing global progress towards the 1.5°C target and other energy-related sustainable development goals.

The Announced Pledges Scenario is new to the WEO. It takes all of the latest climate commitments made by governments around the world, including their Nationally Determined Contributions as well as longer term net zero targets, and assumes they will be met in full and on time. This allows us to explore the extent of the world’s commitment to reduce emissions, and what this might mean for the energy sector if these pledges are met in full.

Number of countries with NDCs, long-term strategies and net zero pledges, and their shares of global CO2 emissions in 2020

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There is still a large gap between the cumulative pledges that have been announced by governments and what’s needed to achieve a 1.5°C stabilisation in global average temperatures. A large part of this year’s WEO analysis concerns this ‘ambition gap’ and what can be done to close it – especially the additional actions that are required over the decade to 2030.

Achieving all the announced pledges in full and on time cannot be taken for granted. The WEO also takes a more granular, sector-by-sector look at what has actually being done to reach these and other energy-related objectives. This is described in the Stated Policies Scenario, which brings the analysis back to the painstaking work of implementing policy goals, and the real-world challenges this can involve.

There are also references in the analysis to the Sustainable Development Scenario, a normative scenario which represents a gateway to the temperature outcomes targeted by the Paris Agreement. Full scenario projections for this scenario are available. The WEO-2021 does not, however, include a Current Policies Scenario.

As a “guidebook to COP,” this year’s WEO naturally includes a strong focus on energy-related climate actions as well as the huge market opportunities and job creation that clean energy transitions can bring. WEO-2021 also addresses hazards that policymakers will need to watch out for.

Our scenarios in this Outlook describe smooth, orderly processes of change. In practice, however, energy transitions could well be volatile and disjointed affairs, with an ever-present risk of mismatches between energy supply and demand, and new risks arising from transforming the electricity sector or from burgeoning demand for critical minerals.

With this in mind, there is a special chapter dedicated to the topic of energy security, considering a range of risks – old and new – and how they can be mitigated. The analysis also looks in detail at how transitions can be made fair and inclusive, putting people at the centre of the process – themes that are central to the work of the IEA’s Global Commission on People-Centred Clean Energy Transitions.

The modelling that goes into the WEO includes a wide representation of energy technologies and how their costs change over time, depending on technology learning rates and deployment. The new Outlook retains and builds on the new, hybrid modelling approach that was adopted to develop the Net Zero by 2050 Roadmap, combining the strengths of the World Energy Model that underpins the WEO and the model used for the Energy Technology Perspectives series. This allows us to explore in detail the diffusion of different clean energy technologies, a process that in the past has typically taken decades but which needs to rapidly quicken to reach climate goals.

The new analysis also contains more detailed representations of some key technologies, notably hydrogen, as well as greater granularity on the sources of finance for energy investments and regional variations in the cost of capital.

Number of countries that have adopted selected energy and non-energy technologies, 1910-2018

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Another novelty in this year’s WEO is to measure energy values in exajoules (EJ), whereas they were previously expressed in million tonnes of oil equivalent (Mtoe). One EJ is equivalent to 23.88 Mtoe, so dividing by 25 is a useful approximation.

Along with the whole WEO team, we look forward to sharing the key results of our analysis with you over the coming days and weeks. The launch will be live-streamed from IEA headquarters in Paris on Wednesday. We are also organising a series of “WEO Week” live-streamed events starting on 18 October. Each day that week we will be bringing in leading global commentators and experts to discuss different aspects of the new Outlook, and react to our findings. We hope that you can join us.