WORLD ENERGY MODEL DOCUMENTATION 2020 VERSION Last updated: May 7, 2021 2 Contents 1 Background ................................................................................................................................................ 5 1.1 WEO scenarios ................................................................................................................................ 6 1.2 New features in the World Energy Outlook 2020 .......................................................................... 8 1.3 World Energy Model structure ..................................................................................................... 10 2 Technical aspects and key assumptions .................................................................................................. 11 2.1 Population assumptions ............................................................................................................... 12 2.2 Macroeconomic assumptions ....................................................................................................... 13 2.3 Prices ............................................................................................................................................ 13 3 Energy demand ........................................................................................................................................ 18 3.1 Industry sector .............................................................................................................................. 19 3.2 Transport sector ........................................................................................................................... 25 3.3 Buildings sectors ........................................................................................................................... 31 3.4 Demand-side response ................................................................................................................. 34 4 Power generation and heat plants .......................................................................................................... 36 4.1 Electricity generation .................................................................................................................... 36 4.2 Value-adjusted Levelized Cost of Electricity ................................................................................. 40 4.3 Electricity transmission and distribution networks ...................................................................... 44 4.4 Hourly model ................................................................................................................................ 45 4.5 Mini- and off-grid power systems ................................................................................................ 46 4.6 Renewables, combined heat and power and distributed generation modules ........................... 47 5 Other energy transformation .................................................................................................................. 50 5.1 Oil refining and trade .................................................................................................................... 50 5.2 Coal-to-liquids, Gas-to-liquids, Coal-to-gas .................................................................................. 51 5.3 Hydrogen transformation ............................................................................................................. 52 6 Energy supply ........................................................................................................................................... 52 6.1 Oil ................................................................................................................................................. 52 6.2 Natural gas .................................................................................................................................... 57 6.3 Coal ............................................................................................................................................... 57 6.4 Bioenergy ...................................................................................................................................... 59 7 Emissions ................................................................................................................................................. 62 7.1 CO2 emissions ............................................................................................................................... 62 7.2 Non-CO2 greenhouse gases and CO2 process emissions .............................................................. 62 7.3 Air pollution .................................................................................................................................. 63 7.4 Oil and gas methane emissions model ......................................................................................... 63 8 Investment ............................................................................................................................................... 69 8.1 Investment in the energy supply chain......................................................................................... 69 8.2 Demand-side investments ............................................................................................................ 70 3 8.3 Financing for investments ............................................................................................................ 71 9 Energy access ........................................................................................................................................... 72 9.1 Defining modern energy access.................................................................................................... 72 9.2 Outlook for modern energy access .............................................................................................. 73 9.3 Affordability of basic electricity services ...................................................................................... 73 Annex 1: WEM terminology ................................................................................................................................ 74 A1.1 Definitions .................................................................................................................................... 74 A1.2 Regional and country groupings ................................................................................................... 79 A1.3 Acronyms ...................................................................................................................................... 81 A1.4 Oil and natural gas supply modules .............................................................................................. 83 A1.5 Coal supply module ..................................................................................................................... 84 Annex 2: References ........................................................................................................................................... 85 4 1 Background Since 1993, the International Energy Agency (IEA) has provided medium- to long-term energy projections using the World Energy Model (WEM). The model is a large-scale simulation model designed to replicate how energy markets function and is the principal tool used to generate detailed sector-by-sector and region-by-region projections for the World Energy Outlook (WEO) scenarios. Updated every year and developed over many years, the model consists of three main modules: final energy consumption (covering residential, services, agriculture, industry, transport and non-energy use); energy transformation including power generation and heat, refinery and other transformation – such as Coal to Liquids or hydrogen production; and energy supply. Outputs from the model include energy flows by fuel, investment needs and costs, CO2 emissions and end-user prices. The WEM is a very data-intensive model covering the whole global energy system. Much of the data on energy supply, transformation and demand, as well as energy prices is obtained from the IEA’s own databases of energy and economic statistics (http://www.iea.org/statistics). Additional data from a wide range of external sources is also used. These sources are indicated in the relevant sections of this document. The WEM is constantly reviewed and updated to ensure its completeness and relevancy. The development of the WEM benefits from expert review within the IEA and beyond and the IEA works closely with colleagues in the modelling community, for example, by participating in the annual International Energy Workshop (http://internationalenergyworkshop.org) and hosting the 2019 edition. The current version of WEM covers energy developments up to 2050 in 26 regions. Depending on the specific module of the WEM, individual countries are also modelled: 12 in demand; 101 in oil and gas supply; and 19 in coal supply (see Annex 1). The WEM is designed to analyse: Global and regional energy prospects: These include trends in demand, supply availability and constraints, international trade and energy balances by sector and by fuel in the projection horizon. Environmental impact of energy use: CO2 emissions from fuel combustion are derived from the projections of energy consumption. CO2 process emissions have been estimated based on the production of industrial materials while non-CO2 emissions originating from non-energy sectors