Cite report
IEA (2023), World Energy Outlook 2023, IEA, Paris https://www.iea.org/reports/world-energy-outlook-2023, Licence: CC BY 4.0 (report); CC BY NC SA 4.0 (Annex A)
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Context and scenario design
Setting the scene
- There is a new context for this World Energy Outlook. A more complex and fragmented geopolitical landscape has energy as one of its dividing lines. Partly as a result, new energy and industrial policy settings are emerging as countries compete for footholds in the new clean energy economy, amid concerns about energy security and resilience. Greenhouse gas emissions remain at record levels and the accumulation of emissions is heightening physical climate risks. And this is all taking place in a difficult macroeconomic context, with the recent crisis pushing up the cost of living and ending a period of low interest rates.
- Some of the tensions in energy markets have receded in 2023 after a period of extended and extreme turbulence since 2020. However, numerous risks remain and the current relative calm may not last. Continued fighting in Ukraine, more than a year after Russia’s invasion, is now accompanied by the risk of protracted conflict in the Middle East. Periods of extreme weather are becoming a major hazard for energy security.
- Despite headwinds, there are strong signs of an acceleration in clean energy transitions. The deployment trends for solar PV, electric vehicles, batteries and heat pumps are encouraging and the overall balance of investment is shifting towards clean energy. For every USD 1 spent on fossil fuels, USD 1.8 is now spent on a range of clean energy technologies and related infrastructure: five years ago this ratio was 1:1. The increase in spending is concentrated in advanced economies and China. A much broader flow of clean energy projects – based on stronger national policies and international financial support – is essential to meet the Sustainable Development Goals, including energy access, and global climate and energy security objectives.
Investment flows
The pattern of investments in recent years has started to shift the world towards a more electrified, renewables-rich energy system
- This Outlook explores three scenarios – fully updated – that provide a framework for exploring the implications of various policy choices, investment and technology trends. The Stated Policies Scenario is based on current policy settings and also considers the implications of industrial policies that support clean energy supply chains as well as measures related to energy and climate. The Announced Pledges Scenario gives governments the benefit of the doubt and explores what the full and timely implementation of national energy and climate goals, including net zero emissions targets, would mean for the energy sector. The Net Zero Emissions by 2050 Scenario maps out a transition pathway that would limit global warming to 1.5 °C.
- The global economy is assumed to increase at an average of 2.6% per year to 2050 in the three scenarios, while the global population expands from 8 billion today to 9.7 billion in 2050. Energy, carbon and mineral prices find different equilibrium levels across the scenarios, but the potential for volatility remains high.
Economic and population drivers
Economic and population growth are two key underlying forces for the outlook: the global economy is assumed to increase at an average of 2.6% per year to 2050, while the global population expands from 8 billion today to 9.7 billion in 2050.
