1. 2023 Energy
Transition Outlook
The energy challenge trinity:
Security, sovereignty, and sustainability
Part of Wood Mackenzie’s Energy Transition Service

2. 2
Industry Value
Chain Depth:
Assets,
Technologies,
and Costs
Integrated
Global
Perspectives
Investible
Market
Intelligence
Executive summary
Broad and deep – Forming an integrated view of various energy transition scenarios across each segment,
commodity, technology and market
Wood Mackenzie’s ETO – a strategic view of the energy transition
Regional Power
& Renewables
Markets
Oils & Refining
Global LNG
& Gas
Regional Gas
Markets
Bulks and Metals
Markets
Chemicals
Markets
Energy Transition Research (Global Energy and Emerging Technologies)
Includes our Energy Transition Outlook (ETO)
Wind Solar Grid Edge Energy
Storage
Electric &
Fuel cell
Vehicles
Hydrogen &
Ammonia
CCUS Oil &
Gas
Metals &
Mining
Chemicals

3. 3
Executive summary
…but many of the challenges remain the same
Since our last ETO the market context has changed
Energy security fears have increased
• COVID-19 and the war in Ukraine unsettled
general public more widely.
• Russia’s invasion of Ukraine reduced the
supply of energy and metals to the world,
amplifying the impact of underinvestment over
the last decade. It’s led to supply security fears
around the world, and higher prices fueling
inflation.
• Many countries are facing a multi-year period
of slow growth and weak investment. Energy
transition offers an opportunity to invest in new
technologies that boost local manufacturing
and create jobs.
• Investment is now accelerating across all
sectors.
• But low-carbon sectors such as renewables
are growing fastest.
Financial landscape is less favourable
• High interest rates, cost inflation globally and
supply chain issues are slowing pace of
change to below required levels.
• Renewable technologies are capital intensive.
Companies not keen to deploy more capital
into early stage projects that are risky and
don’t assure returns. High interest rates
changed the calculus and FID criteria.
• Easy locations for solar and wind have been
utilised. Next phase of growth requires
investment into grid infrastructure and
interconnections. These projects are
significantly more capex heavy and are sitting
unconnected at record levels.
• Historically, governments have invested in
infrastructure projects and energy transition is
likely to be no different.
• Partnership and cooperation will be key to
mitigate risks.
Not on track to hit emissions targets
• No major country is currently on track to meet
their 2030 emissions reduction goals.
• Urgently need to address obstacles including
permitting restrictions and constraints in the
electricity supply chain. Policy landscape is
shifting to direct incentives and targeted
support to accelerate the development of new
technologies.
• Governments can’t meet their 2030 emissions
targets but they don’t want to bin their Net Zero
Emissions goals yet because they have been
legislated and passed into law.
• CCUS offers significant opportunity. Once
operationalised and scaled this technology
makes up for ‘lost decades’ of no or limited
reductions in carbon emissions. This is
resulting in increased investment and
corporate activity in this sector.

4. 4
Executive summary
The energy transition is highly uncertain, our ETO models different pathways and outcomes
Wood Mackenzie’s 2023 Energy Transition Outlook
Net zero 2050
1.5 degree scenario
Country pledges
2 degree scenario
• Wood Mackenzie’s base case view
across all commodity and technology
business units – our central, most likely
outcome
• Our base case incorporates the
evolution of current policies and
technology advances
• Electricity share of final demand rises
from 20% to 22% by 2030
• Oil demand peaks at 108 mb/d in 2032
and falls to 92 mb/d in 2050.
• US$1.9 trillion annual average
investment required
• Our base case is broadly consistent with
a 2.5˚C global warming view by 2050
Base case
2.5 degree scenario
• Wood Mackenzie’s scenario on how
country pledges may be implemented in
the future. The 2˚C trajectory aligns with
the upper temp limit from the Paris
Agreement
• The rapid decarbonisation of power and
electrification across multiple sectors
drives emissions reduction in this scenario
• Electricity share of final demand rises to
30% by 2050
• Oil demand falls to 50 mb/d in 2050
• US$2.2 trillion annual average investment
required
• Developed countries reach net zero by
2050; global net zero by 2070
• Wood Mackenzie’s scenario on how a
1.5˚C world may play out over the next 30
years. Carbon emissions align with the
most ambitious goal of the 2015
Paris Agreement
• Immediate peak energy, low-carbon
hydrogen and carbon removal
technologies play a major role, while
consumer behaviour must change radically
• Electricity share of final demand rises to
50% in 2050
• Oil demand falls to 30 mb/d by 2050
• US$2.7 trillion annual average investment
required
• Global net zero emissions arrive by 2050

5. 5
Executive summary
The world needs to reach net zero before 2050 to meet the goals of the Paris Agreement
Global energy-related CO₂ emissions, billion tonnes (Bt)
The three ETO scenarios
(5)
-
5
10
15
20
25
30
35
40
2000 2010 2020 2030 2040 2050
Outlook Trajectory Policy Enablers
Base case Consistent with
2.5 degrees global
warming
Evolution of current
policies and aligns
with our commodity
outlooks released in
H1 2023
Steady advancement of
current and nascent
technologies
Country
pledges
Consistent with
below 2 degrees
warming (Global
net zero by 2060)
Aligned with net
zero pledges
announced in the
run up to COP28
Incorporates policy
response to the current
energy crisis, and
geopolitical challenges
facing global economy
Net zero 2050 Consistent with
1.5 degrees
warming (Global
net zero by 2050)
Aligned with most
ambitious goal of
Paris Agreement
Immediate peak
energy; rapid hydrogen
and carbon removal
deployment; consumer
shift
Base case Net zero 2050
Country pledges

6. 6
Achieved (self-declared)
Declaration / pledge
In law
In policy document
Proposed / in discussion
Executive summary
Countries meet their mid-century goals in our scenarios; only the EU27 and the UK come close to meeting the
2030 emissions reduction targets
Source: Wood Mackenzie, Net Zero Tracker
Status of net zero pledges by country
Net zero pledges now cover 88% of annual global emissions
Country
2030 target vs
baseline
Net Zero
year
Base case
(2030)
Pledges
scenario (2030)
Net zero
scenario (2030)
UK
68% decline vs
1990
2050 - 44% - 55% - 62%
EU-27
55% decline vs
1990
2050 - 40% - 50% - 53%
US
50-52% decline
vs 2005
2050 - 15% - 22% - 30%
Japan
46% decline vs
2013
2050 - 23% - 30% - 37%
South
Korea
40% decline vs
2017
2050 - 13% - 23% - 25%
China
Peak emissions
before 2030
2060 - 5% - 16% - 21%
India
45% drop in
intensity by 2030
2070 + 47% +32% + 6%
WoodMac 2030 emissions comparison is against announced country targets and baseline
years.
Announced pledges WoodMac ETO

7. 7
Executive summary
Emissions must fall rapidly across all sectors to meet the long-term climate targets
Global emissions remain far from a 1.5˚C pathway even if announced pledges are met
Key measures required to achieve climate pledges longer term:
• In our base case, emissions peak around 2027 and fall ~ 30% by
2050 from 2019 levels. Annual decline needs to be twice as fast in
the base case to limit the temperature increase to 1.5 ˚C warming.
• Expand global energy infrastructure across power transmission
and distribution, EV charging network, and delivery of emerging
technologies such as CCUS and low carbon hydrogen, and long
duration energy storage.
• Incentivise heavy industry to electrify processes and adopt Scope
1-3 emissions targets in hard to abate sub-sectors such as iron
and steel and cement production.
• COP28 needs to create a framework for investment into low
carbon infrastructure and energy supply in non-OECD markets
which are struggling to raise finance and are slow to transition.
Note: area in the positive axis show gross emissions and removals in the negative axis.
Global energy-related net emissions, billion tonnes CO2
-10
-
10
20
30
40
2000 2010 2020 2030 2040 2050
Coal Gas
Oil Industrial processes
CCUS Direct air capture
Nature-based solutions ETO net emissions
AET2 net emissions AET1.5 net emissions
Base case net emissions
Pledges scenario net emissions Net zero scenario net emissions

8. 8
0
100
200
300
400
500
600
700
2000 2010 2020 2030 2040 2050
Exajoule
(EJ)
Coal Gas
Oil Bio energy
Electricity Low-carbon hydrogen
Base Case Pledges scemario
Net zero scenario
Executive summary
Share of electricity and low-carbon hydrogen in TFC rises to 34% in the base case and 61% in our net zero
scenario by 2050
Total final consumption (TFC)
Global energy demand will continue to grow with rising incomes and population
Total primary energy demand (TPED)
• Electricity is more efficient to meet energy demand than fossil fuels due to
reduced losses.
• Although global GDP and population continue to grow, greater
electrification enables a reduction in energy consumption per unit of GDP
65%
9%
16%
10%
0
100
200
300
400
500
600
700
2000 2010 2020 2030 2040 2050
Exajoule
(EJ)
Coal Gas Oil
Bio energy Nuclear Hydro
Renewables Base case Pledges scenario
Net zero scenario
scenario

9. 9
Executive summary
Fossil fuels meet over half of total demand; their decline depends on the pace and scale of low-carbon supply
ETO total final consumption (TFC) by sector: base case and scenario comparison
Industry accounts for about 50% of final energy consumption
Chemicals Cement
Iron & Steel Other
75%
46% TFC by 2050
Energy intensive, fossil fuel dependent processes and
high cost of new technologies hinder transition.
Mitigation: efficiency, circular feedstock, CCUS
21% TFC by 2050
EVs reach 90% new car sales in developed markets
by 2050, heavy duty mobility remains oil dependent.
Long term focus: EV & FCEV infrastructure and support
for less developed markets
33% TFC by 2050
Strong regulatory support will drive consumer shifts to
heat pumps and other electric devices.
Critical enabler: grid infrastructure and deployment of
zero-carbon power.
61%
0
50
100
150
200
250
2023 2030 2040 2050 2023 2030 2040 2050 2023 2030 2040 2050
Industry Transport RCA
Exajoule
(EJ)
Coal Gas Oil Bio energy Electricity Low carbon hydrogen Base case Pledges scenario Net zero scenario

10. 10
0
10
20
30
40
50
60
70
80
2015 Industry Transport RCA 2023 Industry Transport RCA Renewables-
based
hydrogen
CCUS and
DAC
2050
PWh
Base case Pledges scenario Net zero scenario
Executive summary
Electrolysis-based hydrogen contributes to nearly half of the demand growth in the scenario
Power demand by sector
Power demand doubles in the base case by 2050 and trebles in our net zero scenario
• Global GDP doubles to US$169 trillion by 2050. Economic growth drives industrial
output while policies to reduce emissions spur electrification
• Buildings and industry drive power demand in the base case. Hydrogen production
contributes to 50% of total power demand growth in the net zero scenario
• Improvement in electrolyser efficiency reduces power requirement by about 1,000
TWh in 2050 in the net zero scenario compared to the base case
Electrolysis-
based
hydrogen

11. 11
Executive summary
Flexible assets such as gas plants, batteries and hydrogen will be key for grid stability and decarbonisation
Note: * Solar, wind, and energy storage capacities are 10x the values indicated on the chart
Renewables account for 70% to 90% of supply to offset the decline in thermal power
across scenarios
0
1,000
2,000
3,000
2020
2030
2040
2050
2020
2030
2040
2050
2020
2030
2040
2050
2020
2030
2040
2050
2020
2030
2040
2050
Coal unabated Gas unabated Solar* Wind* Other renewables
Capacity
GW
0
500
1,000
1,500
2020
2030
2040
2050
2020
2030
2040
2050
2020
2030
2040
2050
2020
2030
2040
2050
2020
2030
2040
2050
Coal CCUS Gas CCUS Energy storage* Low-carbon hydrogen
and ammonia
Nuclear
Capacity
GW
Base case Pledges scenario Net zero scenario
Despite contributing to power
demand growth, hydrogen
electrolysers allow for more
integration of solar and wind
Small modular reactors can
be effective in land-
constrained markets difficult
to scale solar and wind

12. 12
0
2
4
6
8
2020
2030
2040
2050
2020
2030
2040
2050
2020
2030
2040
2050
CCUS Nature-based solutions Direct air capture
Bt
CO
2
Executive summary
Funding and policy support are increasing for low-carbon hydrogen and CCUS adoption
Low-carbon hydrogen production
Net zero requires 515 Mt Hydrogen and 12.7 Bt CO2 capture and removals by 2050
Carbon capture and removals
In our base case, CCUS and direct air capture
reach 2 billion tonnes and nature-based
solutions reach 1 billion tonnes by 2050
0
100
200
300
400
2020
2030
2040
2050
2020
2030
2040
2050
Green hydrogen Blue hydrogen
Mtpa
Capacity growth of more
than 5 Mt a year electrolytic
hydrogen is expected
This needs to accelerate to
more than 13 Mt additional
capacity a year to meet net zero
Note: CCUS includes BECCS. Nature-based solutions forecast in the
graphic is additional to existing LULUCF sink capacity.
Base case Net zero scenario
Pledges scenario

13. 13
Executive summary
Urgency of investment undermined by 7- to 10-year build time for new mines
Base metals, Mt
Base metals and battery raw materials supply will be crucial to support electrification
Battery raw materials, Mt
0
20
40
60
80
100
2020 2030 2050 2020 2030 2050 2020 2030 2050
Aluminium Copper Manganese
Base case Net zero scenario
0
2
4
6
8
10
2020 2030 2050 2020 2030 2050 2020 2030 2050
Lithium Nickel Cobalt
Base case Net zero scenario

14. 14
Executive summary
About 75% of total capital is needed in power and infrastructure sectors; clear policies can unlock the finance
Actual capex (2010-2022)
Annual global spend needs to increase by about 150% to achieve net zero
Pledges capex (2023-50)
Base case capex (2023-50) Net zero capex (2023-50)
US$26
trillion
US$52
trillion
US$60
trillion
US$75
trillion
• Average annual capex
US$2 trillion
• Upstream 57%
• Power and renewables 35%
• Average annual capex
US$1.9 trillion
• Upstream 27%
• Power and renewables 63%
• Average annual capex
US$2.2 trillion
• Upstream 14%
• Power and renewables 73%
• Average annual capex
US$2.7 trillion
• Upstream 7%
• Power and renewables 79%
Upstream oil and gas Power and renewables Power grid and EV infrastructure M&M Hydrogen and CCUS

15. How Wood Mackenzie
can help
To find out more about the data and insights included in
this executive summary please email
contactus@woodmac.com

16. 16
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17. 17
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18. 18
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19. 19
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