Stated Policies Scenario (STEPS)
The report outlines four different scenarios for possible energy futures including the Stated Policies Scenario (STEPS). STEPS uses energy policies that have already been announced by governments around the world to project energy demand, and also looks at how government targets for reducing greenhouse gas (GHG) emissions could affect energy production and use.
According to the STEPS projections in WEO 2021, the world’s total natural gas and oil demand will be higher over the next few years than was projected in WEO 2020. Demand is then projected to level off in the 2030s and fall slightly by 2050. Under the STEPS projection global demand for natural gas and oil could reach a record level.
“The new IEA’s World Energy Outlook 2021 shows the world will need natural gas and oil for decades to come,” comments Tim McMillan, president and CEO, Canadian Association of Petroleum Producers. “Canada should pursue an energy evolution that will attract investment to develop our resources and help meet growing global demand.”
Highlights from WEO 2021
Main points from the STEPS projection in WEO 2021 include:
- World oil demand grows by 17 per cent from 2020 to 2050. Global oil demand is set to average 100 million barrels per day (MMb/d) before 2030 and increase to 104 MMb/d in the mid-2030s, the fall back to about 100 MMb/d until 2050.
- Natural gas is expected to be one of the fastest-growing sources of energy in the world, with demand growing to around 4,500 billion cubic metres (bcm) in 2030 (15 per cent higher than in 2020) and to 5,100 bcm in 2050.
Read more: Study projects growing global demand for LNG
The report recognizes that world is not investing enough to meet its future energy needs, which means worldwide production might not keep pace with demand. Combined with uncertainties over government policies, this decrease in energy development could result in an unstable and unpredictable period ahead for energy, including possible energy shortfalls and higher prices for energy consumers.
McMillan notes energy transition policies put in place are contributing to an energy crisis that is seeing investment diverted from responsible natural gas and oil producing nations to regions that are not as committed to lowering their emissions compared to Canada. According to the IEA report, Russia and OPEC are poised to become the most powerful energy providers in the world. Their market share is expected to reach more than 50 per cent of oil production with 40 per cent of natural gas expected to come from Russia and the Middle East by 2050.
The current energy crisis in Europe with record high prices, should be a warning of the possible consequences of poor energy and climate policies. Canada’s natural gas and oil industry presents a big economic opportunity including employment and support for Canada’s post-pandemic economic recovery, plus sustainable production and clean-tech innovation to reach Canada’s climate goals.
What does this mean for Canada?
Canada’s natural gas and oil industry is the country’s leading investor in emissions reduction and clean-technology. Investment in Canada’s natural gas and oil industry will support hundreds of thousands of jobs for Canadians and provide the foundation for our economic recovery while generating billions in government revenues to help fund emissions-reducing technologies for use in other industries and around the world.
Specifically for Canada, WEO 2021 projects strong growth for Canadian energy, with oil production increasing to 5.7 MMb/d in 2040 – an eight per cent increase from 2020 – and natural gas production growing to 7 billion cubic feet (bcf) per day in 2040, also an increase of eight per cent from 2020.
McMillan says, “As nations around the world today struggle with an energy crisis and failing to provide responsible energy to their citizens, Canada must step up and offer a safe haven for natural gas and oil investment, so our trading partners do not have to rely on others who are not as committed to lowering their emissions compared to Canada for their energy needs.”