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World economic growth will drive future demands for energy. The International Monetary Fund’s World Economic Outlook (April 2020) predicts that emerging and developing economies will account for the majority of global economic growth through the 2020s, with China and India leading the way. In general, as human and industrial activity expands, the concomitant growth in energy consumption introduces a complex paradigm. Achieving the dual goals of economic and environmental sustainability will be among the world's most pressing challenges, and the burden will not be evenly distributed. By 2050, it is expected that:
- The world’s population will increase by more than 2 billion people, with the increase primarily occurring in less developed regions.
- Global gross domestic product (GDP) will double in tandem with the rise in population, with developing economies taking a larger share of global economic activity.
- Global population and economic growth will drive energy consumption to new heights through 2050, albeit at a slower rate of growth.
We are already seeing this play out in the world’s energy system (see Figure 1). Energy demand in the world’s wealthiest, most developed nations—those that are a part of the Organization of Economic Cooperation and Development (OECD)—was surpassed by energy demand from emerging and developing nations (non-OECD countries) in 2006. This will not reverse.
The scale of the energy system is, in a word, massive. Moreover, much of the infrastructure that is in place has been developed with a focus on the world’s advanced economies, so it was designed to serve only a fraction of the global population. While existing energy value chains are flexible and can shift to meet changing market conditions, they are insufficient to deal with the energy requirements of the future, both in scale and scope. Significant new investment in infrastructure will be needed in developing, non-OECD countries, while existing infrastructure must be maintained, upgraded and/or replaced in both OECD and non-OECD nations.
The scale of the global energy challenge will most effectively be tackled through a portfolio approach, which includes new energy sources, renewable energy technologies, energy efficiency, and existing energy sources. As much the case now as throughout the history of civilization, investments must leverage regional comparative advantages to maximize economic progress (see Appendix A1 for a brief discussion of the principle of comparative advantage). In regional economies with significant economic interest in fossil fuels and fossil fuel-using industries, one approach in the portfolio of options available to address CO2 emissions is the umbrella of technologies collectively referred to as carbon capture, utilization and storage (CCUS). CCUS involves capturing CO2 where it is produced and then compressing and transporting it to a location where it can either be converted into a useable product, utilized in enhanced hydrocarbon recovery, or permanently sequestered (see Appendix A2 for a brief discussion of CCUS).
Several efforts have highlighted the important role of CCUS in broad global assessments of CO2 emission reductions pathways. The International Energy Agency (IEA), in its Clean Technologies Scenario, showed CCUS technologies contribute to 13% of global cumulative CO2 emissions reductions through 2060, making CCUS the third-largest contributor to global decarbonization efforts after energy efficiency (39%) and renewables (36%). In the Sustainable Development Scenarios, also developed by the IEA, CCUS was found to reduce global CO2 emissions by 9% cumulatively through 2050. The Intergovernmental Panel on Climate Change concluded in its Fifth Assessment Report that the costs of achieving a global temperature increase of no more than 2°C would more than double without CCUS.