Energy demand overview

Lower emissions in Below 2° are driven by faster decarbonization in emerging economies, and in the power and industrial sectors

Comparing the scenarios by geography

Viewed through a geographical lens, the faster decarbonization in Below 2° is driven overwhelmingly by more rapid emission reductions in emerging economies. By 2050, these countries account for around 80% of the difference in emissions between Current Trajectory and Below 2°.

Lower emissions in China make the largest single contribution to the gap between the two scenarios, accounting for around 30% of the difference in 2035, and 20% in 2050. Over the second half of the outlook, the contribution from other emerging Asian economies grows in importance, such that overall, emerging Asian countries (including China) account for almost half of the difference in emissions between the scenarios in both 2035 and 2050. In large part that reflects the rapid growth in energy needs of these countries: emerging Asian economies account for around three-quarters of global growth in primary energy in Current Trajectory between 2023 and 2050.

Comparing the scenarios by sector

An alternative way to compare the two scenarios is to look at differences in emissions from the main sectors in which energy is used: buildings, industry, power and transport. Viewed through this lens, by far the biggest contributions to faster decarbonization in Below 2° come from the world’s power and industrial sectors.

The global power sector accounts for around 40% of the difference in emissions between the two scenarios in both 2035 and 2050. That is largely due to slower decarbonization of electricity generation in emerging economies in Current Trajectory. The faster power sector decarbonization in emerging economies in Below 2° is largely due to more rapid adoption of wind and solar power: wind and solar account for around three-quarters of generation in emerging economies by 2050 in Below 2°, compared with around a half in Current Trajectory. The sustainability benefits of greater electrification depend on the extent to which the carbon intensity of that electricity is reduced.

The industrial sector is the other main sector contributing to the difference in emissions between the two scenarios, accounting for around 35% of the gap between them. That reflects a range of factors including faster progress on improving industrial energy efficiency, greater levels of electrification, increased adoption of low carbon hydrogen and CCUS in harder-to-abate industries, as well as wider-economy measures that reduce the demand for manufactured goods and materials.

Growth in primary energy is driven by emerging economies, with its scale dependent on the path of energy efficiency

Global economic growth

Global GDP growth averages 2.5% per year over the outlook in the two scenarios, weaker than average global growth of 3.4% over the past 25 years. Slower GDP growth is mostly due to lower global population growth, although growth in GDP per capita is also a little weaker than in the past few decades.

The world economy nonetheless roughly doubles in size between 2023 and 2050. Global growth is heavily skewed towards emerging economies, which together account for 80% of the increase in world GDP over the outlook. As in recent Energy Outlooks, the assumed trajectory for global GDP includes an estimate of the impact of climate change on growth. This impact includes the effects of both rising temperatures on economic activity and the upfront costs associated with mitigation and adaptation. Details of the approach and its limitations can be found in Economic impact of climate change in the Annex.

The impact of energy efficiency

The extent to which the doubling in global GDP by 2050 leads to increases in primary energy depends on the extent to which energy efficiency improves after a period of slower-than-usual gains over the past five years (see Weak energy efficiency for an exploration of the implications of different paths for energy efficiency). In Current Trajectory, energy efficiency improves by around 2% per year on average, whereas it rises by around 3.3% per year in Below 2°. The faster efficiency gains in Below 2° reflect more rapid displacement of thermal generation by renewables (reducing the energy losses associated with the conversion of thermal energy into electricity), together with greater efforts to improve system-wide energy efficiency to help accelerate decarbonization.

These faster gains in energy efficiency, together with somewhat slower GDP growth, mean that global primary energy grows more slowly than the average annual growth rate of 1.7% seen over the past 20 years. In Current Trajectory, total primary energy grows by 0.3% per year on average over the outlook, whereas it falls by around 1% per year on average in Below 2°.

Growth in primary energy by region

In both scenarios, emerging economies (excluding China) are the main sources of increasing energy demand. Primary energy in those economies grows throughout the outlook in Current Trajectory, rising by almost a half by 2050. Within that, primary energy grows by around 70% in non-China Asian emerging economies, by 60% in Africa, and by around 30% in South America. In contrast, in Below 2° demand in emerging countries falls gradually over the second half of the outlook. But even in that scenario, their share of total global energy rises to 50% by 2050 from around 40% in 2023.

Energy demand growth in developed economies and in China is much weaker. Primary energy in developed economies continues the declines of the past two decades, falling by 15% in Current Trajectory and 40% in Below 2°. China’s use of primary energy falls by more than 10% by 2050 in Current Trajectory, and by more than a third in Below 2°.

Renewables account for a growing share of primary energy

Primary energy pathways in the two scenarios

The fastest growing source of primary energy in both scenarios is renewable energy, which includes wind and solar power, bioenergy and geothermal. The combined supply of energy from these sources rises more than two and a half-fold by 2050 in Current Trajectory, and three and a half-fold in Below 2°.

The counterpart to the increasing share of renewables in global energy is a decline in the shares of fossil fuels.

The biggest falls occur in the use of coal as its role in power generation declines (see electricity demand).

Oil demand is broadly flat over the first half of the outlook in Current Trajectory but declines further out in both scenarios, driven primarily by lower use in road transport (see Oil): oil demand ends the outlook around 15% lower than in 2023 in Current Trajectory, and 70% lower in Below 2°.

In contrast to the declines in oil and coal use, whether natural gas rises or falls over the outlook depends on the pace of decarbonization (see Natural gas). In Current Trajectory, gas use increases through much of the outlook and by 2050 is around 20% above its 2023 level, whereas, in Below 2°, it is 55% lower driven by a faster shift towards electrification and increased use of renewables.

Primary energy shares in Current Trajectory

Despite the rapid growth in renewable energy, oil remains the single largest source of primary energy supply over most of the outlook in Current Trajectory. Oil provides 30% of global energy inputs in 2035, down only slightly from its current share. For the first time, the share of energy from natural gas surpasses that of coal around the end of the 2020s.

The share of renewables rises from around one-tenth of primary energy in 2023 to over 15% in 2035, supported by the growing electrification of the energy system and the increasing penetration of wind and solar power (see Power sector). The share of renewables in primary energy surpasses that of coal in the early 2040s, and of oil towards the end of that decade. By 2050, renewables and natural gas each provide around a quarter of the world’s primary energy. The combined share of nuclear and hydropower is broadly flat at around 5% of primary energy.

Primary energy provides a measure of energy inputs – the raw energy sources fuelling the world. But the shares of fossil fuels in primary energy overstate their importance in terms of energy outputs – or useful energy. That reflects the energy losses involved in combusting fossil fuels, either when being used as a direct energy source or when being converted to an energy vector such as electricity or hydrogen.

A better – but still imperfect – measure of energy outputs is provided by so-called ‘total final consumption’ of energy (see Energy demand overview).

Total final consumption of energy peaks over the outlook as energy efficiency accelerates

Consumption of energy by region

TFC of energy rises by around 15% in the first half of the outlook in Current Trajectory, plateauing around that level thereafter. In contrast, in Below 2°, TFC starts to fall by the turn of this decade and by 2050 is more than 15% below its 2023 level.

In Current Trajectory, energy consumption growth over the first half of the outlook is entirely accounted for by higher demand in emerging economies, driven by rising prosperity and growing populations.

Energy consumption in emerging economies continues to rise over the second half of the outlook, particularly in India and other emerging Asian countries. But that growth is offset by declining energy consumption in developed economies and in China.

Falling Chinese energy consumption over the later part of the outlook period is a marked contrast to the pattern of recent decades: Chinese energy consumption has tripled since 2000, accounting for half of the total increase in global energy demand over that period.

In Below 2°, emerging economy energy consumption rises over the first half of the Outlook, albeit by less than in Current Trajectory. But accelerating gains in energy efficiency means final energy consumption in developed economies falls by around 10% by 2035. By 2050, energy demand in developed markets has fallen by more than a third from current levels, with Chinese energy consumption down by a quarter.

Energy consumption by energy vector

A key factor driving the acceleration in the efficiency of final energy use – and therefore in the slowing in the growth of TFC – is the increasing share of final energy uses which are electrified, as the efficiency of electric-based technologies such as electric motors and heat pumps are substantially higher than their fossil fuel-based equivalents. The share of electricity in final energy use increases from a little over 20% in 2023 to over a third by 2050 in Current Trajectory, and more than 50% in Below 2°.

Global electricity consumption rises by around 40% by 2035 in both scenarios, and by 85%-100% by 2050. The increase in consumption of electricity in Below 2° is only a little stronger than in Current Trajectory because more rapid electrification of the energy system is offset by faster progress of economy-wide energy efficiency measures.

The direct consumption of fossil fuels as a share of TFC declines from around two-thirds in 2023 to below 60% by 2035 in both scenarios. In Current Trajectory that share falls to around half of total energy use by 2050. Fossil fuel consumption declines much more rapidly in Below 2°, to only a quarter of final energy consumption by 2050.