Chairman’s Message

<Main Points>

IEEJ’s Global Energy Outlook: forecast- based projection for global energy

Strong energy demand growth driven by India and ASEAN

India today resembles the development stage of China in 2000

Robust demand for natural gas expected globally

CO2 reduction by nearly 60% possible by 2050 with technology advancement

Massive construction of new coal fired plants in China/India

1.5℃ path very difficult but 2℃ path still possible with additional efforts

More emphasis on adaptation necessary to address overshoot

1. IEEJ’s Global Energy Outlook: forecast-based projection for global energy

IEEJ, the Institute of Energy Economics, Japan, the energy think tank that I chair, has issued its annual global energy outlook on October 17. IEEJ’s outlook is forecast-based, in contrast to backcast-based projections such as the IEA’s Net Zero Emission Scenario in its World Energy Outlook. IEEJ has been issuing its energy projections every year since 2006. It is one of the few long-term global energy projections issued publicly every year by an independent organization.
　IEEJ’s outlooks consist of two scenarios. The Reference Scenario (RS) is developed on the basis of the current trends of policies and technologies. The Advanced Technologies Scenario (ATS) is based on the assumptions that policies and technology advancement are pursued to their maximum extent of receptivity and application opportunities. The two scenarios are based ultimately on the expert judgments of IEEJ’s researchers. In other words, IEEJ’s outlooks present the most likely future, based on current trends and on ambitious policy/technology progress, respectively.

2. Strong energy demand growth is expected to be driven by India and ASEAN

The global primary energy demand is expected to grow steadily towards 2050 based on RS but can be contained with energy efficiency improvement in ATS. While substantial energy efficiency improvement can be expected in the advanced economies and in China, energy demand is expected to grow strongly in the emerging markets and developing economies (EMDE). In particular, very strong energy demand growth is expected in India and in ASEAN even assuming maximum energy efficiency improvement in ATS. The strong energy demand growth in India and in ASEAN will have major impacts on every aspect of the energy outlooks towards 2050.

3. India today resembles the development stage of China in 2000

China has realized a dramatic economic development since 2000, especially after joining the WTO. With its economic development and rising living standards, the energy demand of China has grown dramatically as well, impacting the whole global energy landscape.
　India, with its population surpassing that of China, is poised to repeat a similar dramatic development. In terms of development stage, India today looks similar to China in 2000. The number of residential air conditioners per 100 people in China in 2023 was 24, a major jump from the level of 3 in 2000. The figure for India in 2023 was 3, which is exactly the level of China in 2000. The number of automobiles per 100 people in China in 2023 was 21, another major jump from the level of 1 in 2000. The figure for India in 2023 was 4, which is roughly comparable to the level of China in 2000. As the living standard in India will certainly rise, substantial energy growth is quite certain.
　The big question is “will India’s energy demand growth be as large as China’s energy growth in the past quarter century?” The IEEJ outlook expects that per capita energy consumption in India in 2050 will be more than 40% smaller than the per capita energy consumption in China in 2023. The difference can be attributed to the much stronger manufacturing sector in China as well as the higher per capita GDP in China in 2023 compared to the expected level in India in 2050. The emergence of the climate change issue which was not a major factor during the earlier years of dramatic economic development in China, and the advancement of energy efficiency enhancing technologies in the past quarter century can also explain the differences.
　While the relatively modest energy growth expected in India in comparison to China may be somewhat reassuring, we cannot miss the point that the strong energy growth expected in India in the coming years should have major impacts on the global energy landscape. The same should be taken into account for the emerging economies of ASEAN. India and ASEAN will be the main driver of global energy demand towards 2050.

4. Robust demand for natural gas is expected globally

With the strong energy demand growth, especially in India and in ASEAN, the demand for natural gas is expected to grow steadily in RS. Even in ATS, the demand for natural gas is expected to remain robust. Such outlooks contrast clearly with the outlook for coal, which is expected to contract under both scenarios.
　The shift from coal to natural gas as a means to reduce CO2 emissions is a major factor behind this contrast. IEEJ believes that steady investment in natural gas is necessary to ensure stability of the demand and supply balance in the global natural gas market.

Primary Supply of Natural Gas(Global)

5. CO2 reduction by nearly 60% possible by 2050 with technology advancement

With the strong demand for energy, IEEJ expects that CO2 emissions will stay almost at the same level towards 2050 globally in RS. With technology and policy advancement, CO2 emissions can be reduced by nearly 60%. But 40% of the current level of CO2 emissions will remain in 2050. The remaining CO2 emissions will be concentrated in the EMDE and the non-power sectors. To achieve carbon neutrality globally, it is clear that the world will have to intensify its efforts in the EMDE and in the non-power sectors.

Energy Related CO2 Emissions (Global)



Energy Related CO2 Emissions(Sectoral)

6. Massive construction of new coal fired plants in China & India

One of the causes of the lingering CO2 emissions in the power sector in the EMDE is the coal-fired power plants. In contrast with the strong persuasion by the advanced economies to retire coal-fired power plants in the EMDE, the reality may be shocking to many in the advanced economies.
　New coal-fired power plants are being constructed at a historically high level in China and in India. While China leads the world in the deployment of renewable energies, China also leads the world by far in the construction of new coal-fired power plants at the same time. According to the IEA, the FID for coal-fired power plants in China in 2024 reached 100GW, the highest level since 2015. India is following China with the FID of 15 GW in 2024, the highest in the past 10 years. These numbers are for just one year, which should be beyond imagination for many outside these two countries.
　The reasons for such massive construction are their necessity to meet the growing power demand, the importance of ensuring affordability of power, and their desire to enhance energy security. They may argue that the operation of their coal-fired power plants is not for the base load but to accommodate the intermittency of renewable energies. While these arguments may have some merit, the reality that these new coal-fired power plants will continue to emit CO2 for decades to come cannot be denied.


Source: IEA, World Energy Investment 2025

7. 1.5℃ path very difficult but 2℃ path still possible with additional efforts

The remaining carbon budget for the 1.5℃ path is shrinking rapidly. Based on the latest assessment provided by the Indicators of Global Climate Change (IGCC) 2024, the remaining carbon budget from 2025 onward for the 1.5℃ path with 50% probability is just 130 GtCO2, down from 500 GtCO2 from 2020 onward estimated in the IPCC AR6. The remaining carbon budget is less than 4 years if the world continues its current emission of about 40 GtCO2 per annum. Assuming a linear CO2 emission reduction, carbon neutrality must be achieved by 2032. These numbers demonstrate the inconvenient reality that the 1.5℃ path is almost impossible to achieve.

CO2 emission pathway consistent with the 1.5℃ target


Note: Historical data are obtained from the Global Carbon Budget 2024, including emissions from cement production processes, flaring, and the land-use, land-use change, and forestry (LULUCF) sector. ‘IPCC AR6, C1’ refers to the 97 scenarios that limit warming to 1.5℃ (>50%) with no or limited overshoot, while ‘IPCC AR6, C2’ refers to the 131 scenarios that return warming to 1.5℃ (>50%) after a high overshoot.”

　If we turn to the 2℃ paths, the remaining carbon budget with 50% probability is 1050 GtCO2 and the remaining carbon budget with 67% probability is 870 GtCO2 from 2025 onward based on IGCC 2024. The estimated CO2 path based on the IEEJ outlook in ATS will result in the accumulated emissions of 906 GtCO2 until the realization of carbon neutral in the 2070’s including non-energy sector emissions. Based on this analysis, with IEEJ’s ATS scenario, 2℃ path with 50% probability is possible. The 2℃ path with 67% probability requires additional efforts to reduce CO2 emissions but appears still possible.
　I believe that it is time to focus on achieving the 2℃ path which was part of the original goals of the Paris Agreement. In any area, goals should be set ambitiously but at achievable levels to marshal resources and efforts at maximum level possible.

Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change;

Source: Paris Agreement, Article 2, 1. (a)

8. More emphasis on adaptation necessary to address overshoot

Setting the goal for the 2℃ path requires addressing the increased damages caused by temperature rise above 1.5℃. While mitigation remains essential, the importance of adaptation should be enhanced. According to the UNEP (United Nations Environment Programme), the actual flow of public funds for adaptation remains at $28 billion in 2022, while the necessary annual cost for adaptation calculated by UNEP for the 2020’s reaches $215 billion, 7 times larger than the actual amount. The need for adaptation funds based on NDC/NAP (National Adaptation Plan) is even larger, reaching $387 billion annually toward 2030, 14 times larger than the actual amount.
　Article 9 of the Paris Agreement calls for the balance between mitigation and adaptation in providing funds. However, the balance of funds in 2022 is 60% for mitigation and 28% for adaptation.
　As the goal should be set at achieving the 2℃ path reflecting the reality, much more emphasis should be placed on adaptation. As we become more realistic about the goal to achieve, we must face the reality of the need for adaptation.

The topics introduced in this message will be explained in detail in the webinar below. Please feel free to click the hyperlink below to register. For those who miss it, a video recording will be available afterwards.

The 19th IEEJ Webinar for the World
Date/Time: 7PM ET /on Monday, November 10,2025
　　　　　1AM CET/ 3AM AST/ 8AM SGT/ 9AM JST on Tuesday , November 11, 2025
2. Webinar App.：Zoom
3. Agenda：①IEEJ Outlook 2026:Global Energy Outlook for 2050
　　　　　②Realistic Climate Targets and the Importance of Adaptation:-Advanced Technologies Scenario as Milestones Toward Achieving the 2°C Target
4.Registration: https://us02web.zoom.us/webinar/register/WN_AWkLOrPGROGuCTss0ZI9DQ 5.Video
You can watch the video here (it will be uploaded shortly after the webinar). https://eneken.ieej.or.jp/en/seminar/other/ieej_seminar.html