The IEF published its annual Outlooks Comparison Report. The report noted the growing divergence in outlooks for all sources of energy. The divergence is largely driven by differing views of the speed and shape of the transition of the global energy system to net-zero carbon emissions. “This uncertainty gap erodes investor confidence, which in turn damages energy security and market stability,” said Joseph McMonigle, Secretary General of the IEF.

OPEC market share of total liquids supply rises from 34% in 2022 to 38-40% in 2045 in IEA STEPS and OPEC Reference Case. IEA STEPS and APS show OPEC market share of total liquids supply falling between 2022 and 2030 before rising between 2030 and 2045. OPEC Reference Case show OPEC member production rising by nearly 12 mb/d between 2022 and 2045. While OPEC does not provide country level forecasts for OPEC members, IEA does provide some data. IEA STEPS forecast for 2045 shows OPEC production at 4.3 mb/d higher than 2022 levels as increases from the Middle East more than offset declines in Africa. STEPS shows increased output from: Saudi Arabia (+1.8 mb/d); Iraq (+1.2 mb/d); Iran (+1.2 mb/d); and UAE (+1.1 mb/d).

IEA-IEF-OPEC trilateral program of work bolsters energy data transparency and market stability. IEA and OPEC energy outlooks shape consensus views and influence policy and investment decisions worldwide. Given their influence, it is vital to understand these outlooks and the assumptions underlying the various scenarios. This mission has only become more important considering the recent global pandemic, geopolitical upheaval, and progress toward energy transitions.  Energy outlooks highlight the need for a “multidimensional” approach to the energy transition along with increased intergovernment cooperation, investment, and technology innovation.

The report compares the short and long-term energy outlooks from IEA and OPEC and then examines a wider-range of scenarios published by leading industry and intergovernmental organizations. Similar to previous years, the divergences in energy forecasts are growing, underscoring the vast uncertainties relating to policy, technology, energy costs, and energy efficiency. 

The range between the high and low scenarios for 2050 total primary energy demand is more than eight percent greater than today’s global energy market. Similarly wide ranges are found in the long-term demand outlooks for oil, natural gas, coal, nuclear, and renewables. Different approaches to modeling and the complexity of energy systems help explain the large range in projections. Some models use backcasting and start from a desired end-goal, such as achieving net zero emissions by a specific date, and then model a path to reach specific targets. Other models take a bottom-up approach with different assumptions on whether and how policies will evolve, how geopolitics will impact energy security and resource availability, and how technology costs will develop. 

While there is significant uncertainty in the short-, medium-, and long-term, one thing is clear, there is no single, linear path for the energy transition. All energy sources and technologies will be needed to meet the world’s growing energy needs while reducing greenhouse gas emissions. Additionally, different countries will progress at different paces according to domestic circumstances, priorities, and financial and technological capabilities. 

Many of the scenarios examined show global population growing by more than 20 percent by 2050 and the global economy doubling compared to 2022. Unprecedented levels of investment and cooperation across governments and in the energy and technology sectors will be needed to achieve climate goals and ensure accessible and affordable energy for all.

The range of energy scenarios also underscores the importance for policymakers to provide clear, predictable, and achievable policies/regulations and highlights the challenges ahead for achieving a just and orderly transition. Aspirational energy outlook scenarios are essential for tracking global progress towards climate goals, but it is equally important to provide outlooks that reflect likely policy developments and consumer trends. Clear model assumption descriptions and an assessment on the probability of scenario outcomes based on recent trends could enhance the usefulness of outlooks for investors and policymakers.