The potential for decarbonizing APEC’s energy system

Despite the progress toward the two shared energy goals, decarbonizing the APEC region requires more ambitious policies, technology deployment, investment, and emissions sinks. Research by the Asia Pacific Energy Research Centre (APERC), the energy think tank for APEC, explores a hypothetical pathway toward decarbonizing the energy system by 2050 for each of the members. In the Carbon Neutrality Scenario (CN), the need for additional efforts beyond existing policies and trends demonstrates for APEC decision-makers the magnitude of change required to realize the energy transition. CN is just one example of a pathway that can achieve carbon neutrality by 2050.

CN projections show CO2 emissions dropping by two-thirds through 2050. Based on APERC’s modeling, key enablers driving the energy transition are increased levels of energy efficiency, fuel switching, and rapid adoption of technologies like carbon capture and storage (CCS) and hydrogen. Emissions reductions are accomplished in two key segments of the energy system: end-use demand sectors and electricity generation.

In this scenario, energy demand decouples from economic growth representing an increase in access to energy services with lower energy and carbon footprints. Fuel substitution away from coal, oil products, and natural gas to electricity plays a foundational role in the transition. Electrifying transportation is a key driver. Additional actions such as phasing out natural gas for heating and cooking in buildings further increase electrification. In the transportation sector alone, around 18 million barrels of oil equivalent per day are displaced by electricity as electric vehicle (EV) sales swell. As an added benefit, electricity is utilized more efficiently than fossil fuels, delivering an additional boost to energy intensity.

Another feature of this scenario is that renewable electricity increases by an impressive 80% relative to current trends, ensuring that electrification of demand sectors is not merely shuffling CO2 emissions to the power sector. Moreover, the latest data shows that deployment of renewable energy capacity in parts of the APEC region, mainly in China, is already outpacing these projections. Renewable electricity is also delivering energy security benefits, allowing APEC members to avoid fossil energy imports and provide more predictable prices for investors and consumers.