The International Energy Agency’s World Energy Outlook (WEO) 2020 focuses on the next ten years, exploring different pathways out of the crisis caused by the COVID-19 pandemic.

Global energy demand is set to drop by 5% in 2020, energy-related CO2 emissions by 7%, and energy investment by 18%. WEO-2020 presents four possible pathways:

  • The Stated Policies Scenario (STEPS), in which COVID-19 is gradually brought under control in 2021 and the global economy returns to pre-crisis levels the same year. This scenario reflects current policy intentions and targets.
  • The Delayed Recovery Scenario (DRS), which is designed with the same policy assumptions as in the STEPS, but assumes a prolonged pandemic causing lasting damage to economic prospects. The global economy returns to its pre-crisis size in 2023 followed by a decade with the lowest rate of energy demand growth since the 1930s.
  • The Sustainable Development Scenario (SDS), in which a surge in clean energy policies and investment puts the energy system on track to achieve sustainable energy objectives in full. The assumptions on public health and the economy are the same as in the STEPS. Global emissions are on track for net zero by 2070.
  • The new Net Zero Emissions by 2050 case (NZE2050), which extends the SDS analysis. It includes the first detailed IEA modelling of what would be needed in the next ten years to put global CO2 emissions on track for net zero by 2050.

IEA says renewables “take starring roles in all our scenarios, with solar centre stage”. In STEPS, renewables meet 80% of global electricity demand growth over the next decade. Hydropower remains the largest renewable source, but solar is the main source of growth, followed by onshore and offshore wind.

“I see solar becoming the new king of the world’s electricity markets. Based on today’s policy settings, it is on track to set new records for deployment every year after 2022,” said IEA Executive Director Dr Fatih Birol. “If governments and investors step up their clean energy efforts in line with our Sustainable Development Scenario, the growth of both solar and wind would be even more spectacular.”

WEO-2020 shows that strong growth of renewables needs to be paired with robust investment in electricity grids, which would otherwise prove to be a weak link in the transformation of the power sector. Fossil fuels face varying challenges. Coal demand does not return to pre-crisis levels in STEPS, with its share in the 2040 energy mix falling below 20%, but demand for natural gas grows significantly, mainly in Asia. Oil remains vulnerable to the major economic uncertainties resulting from the pandemic.

Emissions set to bounce back, but more slowly than after the financial crisis

Global emissions are set to bounce back more slowly than after the financial crisis of 2008-2009, but the world is still a long way from a sustainable recovery. A step-change in clean energy investment offers a way to boost economic growth, create jobs and reduce emissions. The SDS shows how to put the world on track to achieving sustainable energy objectives in full. As well as rapid growth of solar, wind and energy efficiency technologies, the next 10 years would see a major scaling up of hydrogen and carbon capture, utilisation and storage, and new momentum behind nuclear power, IEA says.

“Despite a record drop in global emissions this year, the world is far from doing enough to put them into decisive decline,” said Dr Birol. “Only faster structural changes to the way we produce and consume energy can break the emissions trend for good.” This will require decisive government action. Despite major challenges, the vision of a net-zero emissions world is increasingly coming into focus. The SDS pathway relies on countries and companies hitting their announced net-zero emissions targets on time and in full, IEA stresses.

IEA says there is no single storyline about the future. “Prior to the crisis, energy demand was projected to grow by 12% between 2019 and 2030. Growth over this period is now 9% in the STEPS, and only 4% in the DRS. With demand in advanced economies on a declining trend, all of the increase comes from emerging market and developing economies, led by India.”

The IEA notes that the advance of renewable sources of generation, and of solar in particular, as well as the contribution of nuclear power, is much stronger in the SDS and NZE2050. “Emissions from the power sector drop by more than 40% by 2030 in the SDS, with annual additions of solar PV almost tripling from today’s levels. Electricity takes an ever-greater role in overall energy consumption, as rising output from renewables and nuclear power helps to bring down emissions from sectors – such as passenger transport – that are cost effective to electrify.”

Maintaining a strong pace of emissions reductions post-2030 requires a relentless focus on energy and material efficiency, electrification, and a strong role for low-carbon liquids and gases, IEA says. “In SDS, low-carbon hydrogen and carbon capture and storage scale up significantly, building on a decade of rapid innovation and deployment in the 2020s.

Achieving Net Zero needs "dramatic" action and significant role for nuclear

The vision of a net-zero emissions world is coming into focus, IEA notes, but adds that reaching net zero globally by 2050, as in the NZE2050, would demand a set of dramatic additional actions over the next ten years.

“Bringing about a 40% reduction in emissions by 2030 requires, for example, that low-emissions sources provide nearly 75% of global electricity generation in 2030 (up from less than 40% in 2019), and that more than 50% of passenger cars sold worldwide in 2030 are electric (from 2.5% in 2019).

Electrification, massive efficiency gains and behavioural changes all play roles, as does accelerated innovation across a wide range of technologies from hydrogen electrolysers to small modular nuclear reactors.” No part of the energy economy can lag behind, as it is unlikely that any other part would be able to move at an even faster rate to make up the difference.

In summary, it is clear from the IEA analysis that nuclear power has a significant role mainly in the SDS and NZE2050 scenarios. STEPS assumes an average of over $50bn is invested in nuclear power a year over the next decade to build new large-scale projects and to start deploying SMRs, only a modest increase on spending in the past decade. This also assumes an increase in new project starts in coming years.

Under SDS, however, nuclear power output could increase by 90% in emerging market and developing economies by 2030 if governments implement clean energy policies, with established nuclear energy programmes expanding in China, Russia, India and the Middle East in particular, WEO-2020 concludes. Under SDS, from 40GW to 140GW of new nuclear capacity could be added between 2019-30, mainly in China and Russia, which have proved that they can build reactors in five to seven years.