The Paris Agreement: guidance on future policies

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Intended Nationally Determined Contributions (INDCs) and the Paris Agreement provide guidance for future energy policies

The Paris Agreement calls for the stabilization of the rise in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to enhance the temperature target further to 1.5°C. The Agreement also draws a powerful context within which its objectives should be pursued, namely, achieving sustainable development and eradicating poverty. Within these contexts, the Agreement considers the differences among the countries and calls on the Parties to reflect on 'equity' and the 'principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances', when they take actions.

INDC submissions to the United Nations Framework Convention on Climate Change (UNFCCC) cover nearly all Parties and provide important guidance on how future energy policies might evolve. At the same time, the broad-based nature of INDCs introduces uncertainties in terms of how their aggregate effect might contribute to the objectives of the Convention and the Paris Agreement. However, such broad-based contributions also provide an extensive opportunity for the Parties to cooperate by better matching the needs of developing countries with the means of implementation to be provided under the Paris Agreement.

The implementation of INDCs will likely lead to reduced energy demand and a further shift in the energy mix towards renewable energy

Modelling results demonstrate a progressive decline in total energy demand when moving towards more carbon-restricted scenarios. This is on the basis that measures targeting improved energy efficiency, as well as changes in consumer behaviour, will increasingly be adopted across countries, though the rate of implementation of such measures will differ among countries.

In respect to major energy sources, the achievement of INDC targets will have significant effects on the future energy mix. Broadly, demand for all fossil fuels at the global level in alternative scenarios is projected to decline relative to the Reference Case. In addition to the demand decline for fossil fuels, the share of renewable energy sources, as well as nuclear energy, will increase, thereby partially compensating/substituting for the energy demand loss from fossil fuels. The nature of these fuel substitutions is a key factor in shaping the energy mix. As most of the substituting fuels generate electricity, they tend to substitute coal and gas in electricity generation. This means that in the alternative scenarios there is more demand reduction in coal and gas compared to oil.

Policies geared to accelerate fuel efficiency improvements and a faster penetration of alternative fuel vehicles have the potential to significantly reduce oil demand

In Scenario A, oil demand in 2040 will reach 106.9 mb/d, which is 2.5 mb/d less than in the Reference Case. Furthermore, between 2030 and 2040, demand growth decelerates significantly so that demand actually plateaus at the end of the forecast period. In Scenario B, oil demand peaks in 2029 at 100.9 mb/d and then declines to 98.3 by 2040. This is 11.1 mb/d lower than in the Reference Case.In Scenario A, the oil demand reduction compared to the Reference Case is mainly a result of efficiency improvements in all sectors of consumption. In Scenario B, the introduction of policies that support achieving the INDC targets is combined with the assumption of an accelerated technology development and its transfer across countries. Similar to Scenario A, this would have implications for oil demand in each sector of consumption with the road transportation in the frontline. In this sector, demand is expected to drop by 6.2 mb/d by 2040 as a result of the higher fuel efficiency improvements and a much faster penetration of alternative fuel vehicles than assumed in both the Reference Case and Scenario A.

Compared to the Reference Case, the reduction in total energy-related CO2 emissions in Scenario B could reach the level of about 14% by 2040

In the Reference Case, annual energy-related CO2 emissions are likely to reach the level of almost 40 Gigatonnes (Gt) CO2 in 2030 and surpass 42 Gt CO2 in 2040. Considering the contributions included in the INDCs, as broadly measured by Scenario B, total energy-related CO2 emissions are projected to increase until at least 2030. By then, the current commitments by the Parties are expected to lead to CO2 emission reductions from energy use, compared to the Reference Case. The reduction could reach the level of about 14% by 2040.

Figure 8.8 - Percentage change in total CO2 emissions compared to the Reference Case

In addition, it should be noted that while per capita emissions in Annex I Parties reduce gradually over the period 2015–2040, even by 2040, under Scenario B, per capita emissions from Annex I Parties are projected to be still about one-and-a-half times that of Non-Annex I Parties.

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