Our Net Zero Scenario, or NZS, charts an energy transition pathway consistent with the Paris Agreement goal of keeping global warming well below 2C and achieving net-zero emissions worldwide by 2050. Achieving this goal means transitioning every sector of the energy system – power, transport, industry and buildings – to fully carbon-free energy sources, alongside significant efficiency gains and a small amount of carbon removal for the hardest-to-abate emissions.
This year, we have conducted our NZS analysis with country-level granularity for nine countries, and regional granularity for other parts of the world, taking into account the physical characteristics of each territory, as well as their differing circumstances, advantages and resources. We have produced a single, unified NZS that is economics-led and solves for a mix of technology solutions, building on the three distinct technology paradigms presented in last year’s report. To achieve global net zero by 2050 is a goal of breathtaking ambition – we have designed our NZS to be plausible and achievable, avoiding drastic step-changes that would over-stretch the expansion capacity of supply chains and the speed at which assets can change over.
The final result of NZS is a pathway consistent with a 1.77C temperature rise by 2050 (with a 67% likelihood) with no overshoot or the need for net-negative emissions post-2050. This trajectory gives a 33% chance of staying within 1.5C, but a better than 67% chance of staying below 2C.
Getting to net zero by mid-century requires a complete phase-out of unabated fossil fuel use in the energy sector. In our Net Zero Scenario, oil, gas and coal consumption peak almost immediately, if they have not already.
Switching power generation from fossil fuels to clean sources is the single biggest contributor to global emissions reduction, accounting for half of all emissions abated over 2022-50. This includes displacing unabated fossil fuel with wind, solar, other renewables and nuclear. Electrification of transport and industrial processes, buildings and heat – using increasingly lower-carbon electricity – is the next biggest contributor, abating about a quarter of total emissions over the period.
Carbon capture and storage, or CCS, spurs decarbonization in industry, with some uptake in clean hydrogen and electricity production. CCS gains in importance from the early 2030s, as hard-to-abate sectors are being tackled and unabated fossil-fuel plants are retrofitted. CCS accounts for 11% of all emissions abated over the scenario period. The annual rate of emissions captured by CCS grows from very low levels today to 1.7 gigatons of CO2 in 2030, 4.9 gigatons in 2040 and 7.3 gigatons by 2050 – a volume comparable to the combined power sector emissions of China, the US and Europe in 2021. Carbon removals only account for 1% of emissions and are mainly needed to abate residual emissions from CCS applications.
The use of bioenergy outside the power sector also increases, with applications in buildings, industry and in producing sustainable aviation fuels for the transport sector.
Global hydrogen use jumps more than ficefold to 2050 under the NZS, growing from over 90 million tons today to 501m tons. Growth is driven by use in the energy industry (163m tons), where it helps decarbonize fuel refining, fuel extraction and equipment operation, and by applications in steel making (144m tons). In transport, some 88m tons of hydrogen is used either in its pure form, or as derivative fuels such as methanol or ammonia, to propel planes and vessels over medium to long distances. In power, consumption by combined-cycle- and peaker gas plants reaches 43m tons. Use is mostly confined to providing backup generation as burning hydrogen for bulk supply is uncompetitive against renewables and plants equipped with CCS in most regions. In buildings, consumption reaches 30m tons in 2050.
Today, most hydrogen production is so-called gray, produced from unabated fossil fuels. By 2050, low-carbon hydrogen produced with flexible grid-connected electrolyzers powered by renewables and nuclear power becomes the dominant pathway in the NZS. Hydrogen production becomes a significant factor in the overall power system. In total, nearly 21,000 terawatt-hours of electricity is used for hydrogen production in 2050 in the NZS – equivalent to three-quarters of the world’s total power demand today. Blue hydrogen from fossil fuels with CCS plays a small but important role.
In sum, our Net Zero Scenario implies an investment opportunity of $194 trillion between now and 2050. Annual investment rises from $5.5 trillion a year in the remainder of this decade to $7.4 trillion a year in the 2040s. These totals include investment in both fossil and clean energy supply projects, as well as clean demand-side areas such as electric vehicles and heat pumps. Electric vehicles alone draw 47% of all tracked investment to 2050 in the NZS. Low-carbon power is the next largest investment area, at $45.8 trillion, or about 24% of the total. The ratio of investment in clean-energy supply to fossil sources (so, excluding demand areas) must average 2.9 in this decade, and then rise to 4.9 in the 2030s and 9.7 in the 2040s. This means that, for every dollar invested in fossil-energy supplies between now and 2030, $2.9 should be invested in clean energy supplies, such as renewable energy, clean hydrogen and carbon capture, rising to nearly $10 after 2040. These ratios can provide a guide for financial institutions wishing to align their investing and lending activities to a net-zero trajectory.
Final energy use
The final energy use changes profoundly by 2050. Energy consumption in industry continues to rise through mid-century, but the energy mix changes significantly. Electricity increases from 20% in 2022 to 35% in 2050, while energy from coal and gas declines to 5% and 8% by 2050, respectively. Industry, too, is the sector where hydrogen makes the most inroads. Hydrogen comprises all of the new incremental demand beginning in the mid-2030s.
Transport energy demand changes markedly due to widespread electrification. As in the ETS, the move from combustion to electrification, and the decarbonization of electricity supply, drives massive new efficiencies through the system – but at an even higher rate in the NZS. The result is that by mid-century, oil consumption effectively vanishes while at the same time, total final energy consumption drops by 46%, almost half.
Final energy consumption in the buildings sector falls 8% in the Net Zero Scenario to 113 exajoules by mid-century, but building energy demand from buildings increases slightly beforehand, peaking at 127 exajoules in 2029. Electricity provides the largest share of final energy to the buildings sector, growing from 33% today to 38% by 2030, and then 65% in 2050. Bioenergy, which today is commonly used for cooking in developing economies, declines from 23% of final energy today, to 17% in 2050. Hydrogen captures 4% of final energy use in buildings, but district heating plays a bigger role, meeting 10% of demand.
The power grid emerges as a key enabler for our Net Zero Scenario, attracting $21 trillion in investment by 2050, or about 11% of the total. These investments fund a substantial expansion of the global electricity system to connect new supply points and serve growing demands, driven by electrification and the growth of renewables - as well as ensuring the safe, ongoing operations of the existing grid, through refurbishment and replacement of aging assets.
By 2050, in the NZS, the global transmission and distribution grids more than doubles in length. The total length of underground cables, submarine cables and HVDC lines are each more than double, underscoring the foundational role that power grids will play in the energy transition.
