In its latest Energy Technology Perspectives 2014 (ETP 2014) the International Energy Agency (IEA) looked at the energy sector over the next 40 years. ETP 2014 analyses three possible energy futures to 2050:
- 6°C Scenario (6DS) - where the IEA projects the world is now heading based on existing policies
- 4°C Scenario (4DS) - this scenario reflects the stated intentions by countries to cut emissions and boost energy efficiency
- 2°C Scenario (2DS) - this scenario is based on technological change tht results in a sustainable energy system with reduced greenhouse gas emissions.
In the 6°C scenario global energy demand is projected to grow by 70% over 2011 levels. Concomitantly emissions are projected to grow by more than 60% over 2011 levels.
Under the same projections for population and gross domestic product, the introduction of new technology and radical policy action in the 2°C scenario dramatically improves energy efficiency to limit increases in demand by 25% while emissions are cut by more than 50%. The major sources of reduced energy demand and reduced carbon are (% of cumulative emissions reductions)
- End-use fuel and electricity efficiency 38%
- Renewables 30%
- CCS 14%
- End-use fuel switching 9%
- Power generation efficiency and fuel switching 2%
A major difference between the 2°C and 6°C scenarios is that in the 6°C scenario oil remains the most important primary energy source with demand increasing by 45%. In contrast in the 2°C scenario new policies and technologies reduce oil demand by 30%.
In the ETP 2014 the IEA makes the case that there is a significant financial benefit in addition to environmental and social benefits from decarbonizing the energy system. The IEA estimates that US$ 44 trillion in additional investment in energy infrastructure is required to decarbonize the energy system inline with the 2°C scenario by 2050. But the IEA forcasts that this expenditure is more than offset by over US$ 115 trillion in fuel savings. The result is a net savings of US$ 71 trillion (assuming no discount). With a 10% discount rate, the net savings are still more than US$ 5 trillion.