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GECO 2022

Global Energy and Climate Outlook 2022: Energy trade in a low carbon world

Global energy mix and international energy trade

In a scenario that limits global warming to 1.5C at the end of the century, global emissions decrease rapidly over the coming decades, leading to an 80% emission reduction in 2050 compared to today. This is achieved primarily by reductions in fossil energy use – the share of fossil fuels in global energy supply decreases to 17% in 2050 in the 1.5C scenario and renewables take an increasing share –, reaching 77% in 2050.

Reduced fossil fuel trade and increased self-sufficiency

As global demand for fossil fuel declines, so does international trade in fossil fuels. When the world moves along a pathway that reaches the Paris climate targets, energy self-sufficiency increases, as renewables are traded less than fossil energy. The increase in trade of modern biomass is not able to offset the decline in fossil fuels.

More hydrogen and synthetic fuels

In GECO 2022, we also investigate the role of hydrogen and synthetic fuels. The use of hydrogen increases over time as hydrogen production becomes more competitive and will be used in applications where fossil energy is without alternative today (e.g. steel production, long distance transport). With rising demand, international trade in hydrogen is also expected to increase, but this will not compensate for the decline in fossil energy trade. Most of international trade in hydrogen will be mainly over shorter distances.

Hydrogen can also be processed into synthetic fuels, which are easier to ship than hydrogen. A large share of these synthetic fuels is expected to be produced in regions abundant in cheap renewable energy to be traded internationally. Due to their high cost, synthetic fuels will be mainly used in specific applications, such as aviation.

Energy embodied in trade of goods

Currently, a sizeable share of energy is also embodied in trade of goods. GECO 2022 tracks the use of energy to produce goods that are then traded internationally, showing how this changes in the future.