The world is not on track to deliver on the most ambitious goal of the Paris Agreement and limit global warming to 1.5˚C.
Course correction won’t be easy. Fossil fuels are widely available, cost-competitive and deeply embedded in the energy system. Electricity’s share of final energy demand has stagnated at around 20% for the past five years, despite policy support for renewables. And energy demand has surged, driven by population growth, the rise of AI and data centres and transport electrification.
With a string of shocks to global markets threatening to further derail progress – such as the ongoing Russia-Ukraine conflict and heightening Middle East tensions – 2030 emissions reductions goals are slipping out of reach.
But there is still time for the world to navigate a path to a sustainable future, if decisive action is taken.
Viewing the energy system and its evolution as interconnected is more critical than ever. Electrification, flexibility and decarbonisation link markets that once stood apart. Our Energy Transition Outlook draws on Lens Energy Transition Scenarios to present integrated analysis across 35 commodities in the energy and natural resources sectors.
In one scenario, our base case, we analyse how energy markets could evolve if the current pace of policy and technology adoption continues.
In our country pledges scenario, we assess a more optimistic future for the energy transition, where countries achieve their existing emissions reduction pledges.
In our net zero scenario, we model an increasingly narrow pathway from the challenging options available to achieve the agreements set out at COP21 in 2015. It’s now widely acknowledged that a 1.5˚C scenario is out of reach.
Finally, in our delayed transition scenario we set out a five-year delay to global decarbonisation efforts due to current geopolitical barriers getting firmer, and reduced policy support to new technologies.
We’ve mapped out four distinct energy transition paths based on cross-sector, multi-commodity modelling
Our assessment of the most likely outcome, corresponding to 2.6˚C warming, under evolution of current policy and technology trends.
Our view of how countries’ existing long term emissions targets are achieved, roughly in line with a 2˚C warming trajectory.
A 1.5 °C by 2100 pathway, dependent on extraordinary levels of policy ambition, capital mobilisation and technological deployment.
A five-year delay in decarbonisation efforts due to geopolitical volatility and policy direction, with to a 3.1 °C pathway.
Our energy transition outlook consists of four different scenarios, built bottom-up from proprietary data sets on asset-level costs and integrated demand models. We model global energy supply and demand until 2060 and gather data from across energy and materials supply chains, including base metals and battery raw materials, critical minerals and emerging technologies such as hydrogen, CCUS, long-duration energy storage, next-generation nuclear and geothermal.
Reaching deeper and wider than equivalent modelling, Wood Mackenzie’s energy transition scenarios are the most comprehensive and integrated analysis available.
Providing bespoke, independent advice that helps our clients navigate critical challenges to make and execute energy and natural resources investment decisions with confidence.
