Release of IEA World Energy Outlook 2021

Solutions to reach Net Zero Emissions are available, cost-effective, and offer shelter for fossil fuel price shocks – heat pumps are one of the highlighted examples

This year’s edition of the World Energy Outlook (WEO), released on October 13, has been designed, exceptionally, as a guidebook to COP26. It spells out clearly what is at stake – what the pledges to reduce emissions made by governments so far mean for the energy sector and the climate. And it makes clear what more needs to be done to move beyond these announced pledges towards a pathway that would have a good chance of limiting global warming to 1.5 °C and avoiding the worst effects of climate change.

The report tells that a new global energy economy is emerging. During 2020, despite the pandemic, renewable sources of energy such as wind and solar PV continued to grow rapidly, and electric vehicles set new sales records. The new energy economy will be more electrified, efficient, interconnected, and clean. However, the transformation still has a long way to go. At the moment, every data point showing the speed of change in energy can be countered by another showing the stubbornness of the status quo. The direction of travel is a long way from alignment with the IEA’s landmark Net Zero Emissions by 2050 Scenario (NZE), published in May 2021, which charts a narrow but achievable roadmap to a 1.5 °C stabilization in rising global temperatures and the achievement of other energy-related sustainable development goals. At a pivotal moment for energy and climate, the WEO-2021 provides an essential guidebook for COP26 and beyond.

Different scenarios are compared in the report. In the run-up to COP26, many countries have put new commitments on the table, detailing their contributions to the global effort to reach climate goals; more than 50 countries, as well as the entire European Union, have pledged to meet net-zero emissions targets. If these are implemented in time and in full, as modeled in detail in IEA’s new Announced Pledges Scenario (APS), they start to bend the global emissions curve down.

However, a lot more needs to be done by governments to fully deliver on their announced pledges. Looking sector-by-sector at what measures governments have actually put in place, as well as specific policy initiatives that are under development, reveals a different picture, according to the report, which is depicted in IEA’s Stated Policies Scenario (STEPS).

Today’s pledges (APS) cover less than 20% of the gap in emissions reductions that need to be closed by 2030 to keep a 1.5 °C path within reach, according to the analysis. In the APS a doubling of clean energy investment and financing over the next decade, but this acceleration is not sufficient. Over the crucial period to 2030, the actions in this scenario fall well short of the emissions reductions that would be required to keep the door open to a Net Zero Emissions by 2050 (NZE) trajectory.

Solutions to close the gap with a 1.5 °C path are available – and many are highly cost-effective

The WEO-2021 highlights four key measures that can help to close the gap between today’s pledges (APS) and a 1.5 °C trajectory (NZE) over the next ten years – and to underpin further emissions reductions post-2030. According to the report, more than 40% of the actions required are cost-effective, meaning that they result in overall cost savings to consumers compared with the pathway in the APS.

Source: IEA. International Energy Agency Website:


The four measures are:

  • A massive additional push for clean electrification that requires a doubling of solar PV and wind deployment relative to the APS; a major expansion of other low-emissions generation, including the use of nuclear power where acceptable; a huge build-out of electricity infrastructure and all forms of system flexibility, including from hydropower; a rapid phase-out of coal; and a drive to expand electricity use for transport and heating (i.e. heat pumps).
  • A relentless focus on energy efficiency, together with measures to temper energy service demand through materials efficiency and behavioral change.
  • A broad drive to cut methane emissions from fossil fuel operations.
  • A big boost to clean energy innovation.

IEA states that there is a looming risk of more turbulence ahead for energy markets, but transitions can offer some shelter for consumers against oil and gas price shocks if consumers can get help to manage the upfront costs of change. In a transforming energy system such as the NZE, households are less reliant on oil and gas to meet their energy needs, thanks to efficiency improvements, a switch to electricity for mobility, and a move away from fossil fuel-fired boilers for heating. This will require policies that assist households with the additional upfront costs of efficiency improvements and low emissions equipment such as electric vehicles and heat pumps. As electricity takes up a progressively larger share of household energy bills, governments have to ensure that electricity markets are resilient by incentivizing investments in flexibility, efficiency, and demand-side response.

IEA concludes in the report that the costs of inaction on climate are immense, and the energy sector is at risk. The potential prize is huge for those who make the leap to the new energy economy. Making the 2020s the decade of massive clean energy deployment will require an unambiguous direction from COP26.

Read the Executive summary and the full report here.