Download 2018 Outlook Figures

2018 Outlook: Exploring Global Changes

The 2018 Food, Water, Energy and Climate Outlook continues a process, started in 2012 by the MIT Joint Program, of providing a periodic update on the direction the planet is heading in terms of economic growth and its implications for resource use and the environment. To obtain an integrated look at food, water, energy and climate, as well as the oceans, atmosphere and land that comprise the Earth system, we use the MIT Integrated Global System Modeling (IGSM) framework. Consisting primarily of the  Economic Projection and Policy Analysis (EPPA) model and the MIT Earth System Model (MESM), the IGSM is a linked set of computer models developed by the MIT Joint Program to analyze interactions among human and Earth systems. As in our last (2016) edition, this year’s Outlook reports on projected effects of population and economic growth, technology improvements, climate policy and other factors on energy and land use, emissions and climate, and water and agriculture. An important first step toward achieving stabilization of global average temperatures at reasonable cost is the Paris Agreement, in which nearly 200 countries committed to a wide range of initial climate actions aimed at achieving that goal. For this year’s Outlook, we have invited guest contributors to offer perspectives on progress to date, and challenges and opportunities in fulfilling Paris climate pledges in several regions and countries around the globe. Recognizing the inadequacy of the short-term commitments to keep global warming below the long-term targets of 2°C or even 1.5°C, we explore emissions pathways consistent with these goals.

About the 2018 Outlook

The 2018 Outlook reflects a complete reevaluation of the economic, energy, land and water projections presented in the previous 2016 and 2015 editions. This year’s report is based on a new version of our central economic model, the Economic Projection and Policy Analysis (EPPA) model, as well as revisions to the MIT Earth System Model (MESM). Updates and revisions reflect more recently available data. As with previous Outlooks, our intent is to represent as best we can existing energy and environmental policies and commitments, especially those under the Paris Agreement on climate change, assuming those commitments extend to the horizon of our modeling and reporting. Since there are multiple changes in our assessment and representation of: (1) Paris Agreement pledges; (2) projections of economic and population growth; (3) underlying demand for resource-intensive products such as food, along with agricultural commodities; (4) technology costs; and (5) Earth-system response to changing emissions; it would be inappropriate to compare this Outlook with a previous edition and attribute differences in results to just one of these changes. Ascribing differences would require separating one set of changes from the others, and holding all the other things unchanged—a task that we have not undertaken.

Key Findings

Energy and Land Use

Population and economic growth are projected to lead to continued increases in primary energy use, growth in the global vehicle stock, further electrification of the economy, and, with continued land productivity improvement, relatively modest changes in land use. While successful achievement of Paris Agreement pledges should begin a shift away from fossil fuels and temper potential rises in fossil fuel prices, it is likely to contribute to increasing global average electricity prices.

• We estimate that global primary energy use rises to about 730 exajoules (EJ) by 2050, up from about 550 EJ in 2015. The share of fossil energy (coal, oil, gas) drops from about 84% in 2015 to 78% by 2050. Primary energy use is projected to decline slightly to nearly flat in the Developed region, with the global increase coming from the Other G20 and Rest of the World regions, despite continued reductions in energy intensity in all regions.
• The Developed and Other G20 regions account for over 82% of global primary energy use in 2015. This drops gradually to 76% by 2050.
• The vehicle stock and fuel use in vehicles continue to increase in all regions through 2050, especially outside the Developed region despite our imposition of fuel economy standards in most regions as a likely measure countries will use to meet their Paris pledges. While private vehicle fuel use is a policy target in many countries, it generally accounts for less than 10% of primary energy use.
• Global electricity production rises substantially over the period 2015 to 2050, increasing by 62% compared with an increase in total primary energy production of 32%, indicating a continued trend of electrification of the economy. Renewables, natural gas, nuclear and bioenergy generation expand. Coal generation nearly disappears in the Developed region but remains about flat for the world as a whole, largely because of continued expansion of its use in China and India despite faster growth of other sources of generation in these countries.
• Compared with 2015, our projections show conversion of about 2.5% of natural forest area to crop and pasture land by 2050, with no further conversion through 2100. Slowing population growth, falling income elasticities of food demand, and continued yield improvements help to slow and halt conversion.
• We project about a 3% increase in cropland and an 8% increase in pasture between 2015 and 2050. Cropland then decreases through 2100, to about 2% less than in 2015. We also see a slight decline in pasture by 2100 compared with 2050, so that it is only 3% above the 2015 level.
• Despite an expansion of biomass energy of about 250% by 2050 (relative to 2015), land devoted to production of biomass for energy accounts for less than 1% of cropland that year.
• Global average fossil energy prices are projected to be nearly flat. Oil and gas prices rise by less than 10%, while coal prices fall by about 9%. Policies and measures that reduce demand for these fuels are partly responsible for these small price changes. Electricity prices rise gradually to about 31% above 2015 levels by 2050, in part because of polices used to meet Paris pledges but also because of gradual depreciation of older power plants that will be more expensive to replace.

Emissions and Climate

It is widely recognized that the near-term Paris pledges are inadequate by themselves to stabilize climate. On the assumption that Paris pledges are met and retained in the post-2030 period with further emissions reduction efforts, future emissions growth will come from the Other G20 and developing countries, accelerating changes in global and regional temperatures, precipitation, sea-level rise and ocean acidification.

• Atmospheric concentrations of CO2 exceeded 405 ppm as of April 2018. That of all long-lived GHGs, in CO2-e, is now approaching 500 ppm.
• Annual emissions of the major greenhouse gases are projected to increase from 52 gigatons (Gt) CO2-e in 2015 to just under 69 Gt by 2100 under our representation of current NDC commitments, extended through the century. Annual emissions are fairly flat through 2030, and they gradually increase after that as regions of the world that have not adopted absolute emissions constraints see emissions increases. The relative importance of different gases and sources remains about the same as today.
• The projected median increase in global mean surface temperature by 2100, above the 1861-1880 mean value, is 3.0°C—the 10 and 90% confidence limits of the distribution are 2.6 and 3.5°C.
• Median values for continental (North America, Europe, Asia, Australia, Africa, South America) average temperature increases vary from slightly below to slightly above 4°C by 2100. These show more warming than the global average because warming is generally greater over land than over the ocean. The continental projections also reflect the general result that warming is greater at the poles than at the equator, so regions with greater land areas toward the poles warm more.
• Other important projected changes in the Earth system include: a median ocean pH drop to 7.85 from a preindustrial level of 8.14 in 1861, with a 10 and 90% confidence range of 7.83 and 7.88; a median global precipitation increase of 0.18 mm/day, with a 10 and 90% range of 0.15 and 0.22 mm/day, relative to the 1861-1880 mean value; and median sea-level rise of 0.23 m in 2100, with a 10 and 90% range of 0.18 and 0.28 m, relative to the 1861-1880 mean value. The sea-level rise estimates include only that due to thermal expansion. Sea-level rise will likely be somewhat greater due to contributions from melting glaciers and ice sheets, and the committed level of sea-level rise is much greater even if temperature is stabilized because of the slow uptake of heat by the ocean that will continue for centuries.

Water and Agriculture

Water and agriculture are key sectors that will be shaped not only by increasing demands from population and economic growth but also by the changing global environment. Climate change is likely to add to water stress and reduce agricultural productivity, but adaptation and agricultural development offer opportunities to overcome these challenges.

To develop our water projections for the period 2015-2050, we simulated water-stress measures developed for major river basins in the continental U.S. in a large ensemble to capture uncertainty in the Earth system.

• Results show a central tendency of increases in water stress by 2050 for much of the eastern half of the U.S. and the far west. The central tendency for the upper plains and lower western mountains shows a slight reduction in water stress.
• The full distribution of possible outcomes shows a marked asymmetry in the sign and corresponding strength of water-stress changes. For southern, southwest and western basins of the U.S., this asymmetry indicates a significant increase in water stress is more likely than a decrease.
• In northeastern basins no outcomes indicated a reduction in water stress. While this region currently experiences little water stress, and even with increases may not face the kind of severe water shortages typical of the southwest, it may need to prepare for unprecedented shortages.
• Our simulations include growth in demand for water from various water-using sectors, and so projected water stress can arise from growth in demand for water as well as reduced availability, or often a combination of these factors.
• MIT Joint Program Deputy Director C. Adam Schlosser offers a perspective on the looming water accessibility crisis the world will face with growing population and increasing water demands, calling on the need for risk assessment and response, while highlighting advances in modeling that can provide a more robust assessment of water risks.

Our base projections for agricultural production and prices for the 2015-2050 period reflect the effects of the Paris Agreement on energy and land-use decisions we used in our projections of country NDCs but do not consider the impacts on the sector of the unabated climate change we simulate. Guest contributor Mark Rosegrant (IFPRI) offers thoughts on transformative developments in agriculture, and Angelo Gurgel (Universidade Federal de Viscosa, Brazil) provides some initial projections of how agricultural markets may be affected by climate, drawing on literature reviewed by the Intergovernmental Panel on Climate Change (IPCC).

• Our projections show that between 2015 and 2050 at the global level, the value of overall food production increases by about 130%, crop production increases by 75% and livestock production by 120%, incorporating recent econometric evidence on the relationship between population, income and food demand.
• While final demand for crops grows only about as fast as population growth, a projected shift to more meat consumption creates additional demand for crops for livestock feed.
• Food production grows faster than livestock and crop production because it includes value-added and other inputs used in producing food. A key expected transformation in agriculture is an increasing value-added component of food production as income rises, which Rosegrant identifies.
• Crop, livestock and forest-product prices rise at a moderate rate under an assumption of a 1% increase in land productivity in all land uses, less if the productivity growth assumption is 2% per year.
• Food prices from the food sector rise by less than 5% by 2050 relative to 2015, much less than the commodity prices because of the growing importance of the value-added component. Crop and livestock prices have a bigger direct impact in poorer countries where there is less food processing and more direct consumption from the crop and livestock sector.
• Simulating yield effects of climate change ranging from reductions of about 5 to 25% varying by crop, livestock type and region drawn from studies reviewed by the IPCC, Gurgel finds commodity price increases above baseline prices in 2050 without climate change of about 4 to 7% by 2050 for major crops, 25 to 30% for livestock and forestry products, and less than 5% for other crops and food. The differential regional changes in yields creates a comparative advantage for the Developed region, and a comparative disadvantage for the Rest of the World region, which includes many countries in the tropics where yields are expected to be more severely affected.

Meeting Short-Term Paris Commitments

Experts on policy developments in various parts of the world provide their perspectives on how well key countries and regions are progressing in fulfilling their Paris pledges. They report on some bright prospects, including expectations that China may exceed its commitments and that India is on a course to meet its goals. But they also observe a number of dark clouds, from U.S. climate policy developments to the increasing likelihood that financing to assist the least developed countries in sustainable development will not be forthcoming at the levels needed.

• Kenneth Kimmel (Union of Concerned Scientists) suggests that a combination of dark clouds, red flags, silver linings and Hail Mary passes cast great doubt over whether the U.S. will meet its Paris pledge to reduce greenhouse gas emissions by 26–28% below 2005 levels by 2025.
• Michael Mehling (MIT Center for Energy and Environmental Policy Research (CEEPR) and University of Strathclyde) notes that while Europe has successfully met earlier targets and styled itself as a climate leader, more recently, emissions have risen with growing energy demand and industrial output, jeopardizing achievement of the 2030 pledge and the long-term target of an 80–95% reduction by 2050 below 1990 levels.
• Valerie Karplus (MIT Sloan School of Management) finds several promising signs that China will fulfill and even exceed its Paris pledge for 2030, which includes: (1) to reach peak CO2 emissions, (2) to increase its non-fossil share of primary energy consumption to 20%, (3) to reduce CO2 intensity by 60–65% relative to 2005 levels, and (4) to increase its forest stock by 4.5 billion cubic meters compared to 2005.
• Karplus and Arun Singh (ETH Zurich) suggest that India’s CO2 emissions performance since 2015 indicates that the nation can meet and even beat its Paris ambitions. Progress over the next 15 years will hinge on the pace of energy-demand expansion, system-level challenges to integrating renewables, and the prominence of clean energy in the national development narrative.
• Niven Winchester (Motu Economic and Public Policy Research, and the MIT Joint Program) writes that the new South Korean president is considered a pragmatist, and his government is moving more aggressively on climate policy than the previous administration. Winchester cites a study estimating that a $90/ton emissions price would be needed for Korea to meet its 2030 Paris pledge, likely higher than in most other regions of the world, illustrating challenges of emissions reductions in middle-income countries with relatively rapid economic growth.
• Mustafa Babiker (Saudi Aramco, and the MIT Joint Program) points out that the Middle East/North Africa (MENA) region is particularly vulnerable to the physical effects of climate change and the socioeconomic impacts of climate mitigation efforts due to its deep economic dependency on hydrocarbon resources. NDCs for countries in the region are broadly framed in the context of sustainable development and climate adaptation goals, with some commitments contingent on international financial support. Emissions reductions efforts are focused on increased deployment of renewables with a variety of initiatives that would support that development, especially in some of the countries with more aggressive efforts.
• Achala Abeysinghe (International Institute for Environment and Development, and legal and strategic advisor to the Chair of the Least Developed Countries (LDCs) Group for the UNFCCC), writes that despite the unquestionable determination of the LDCs to develop sustainably, mitigate GHG emissions, adapt to climate change, and address loss and damage, they lack the resources and tools to effectively implement their NDCs. Global support has lagged far behind what is required, primarily due to a lack of climate finance. The adequacy, predictability and sustainability of global climate finance have become questionable.

Long-Term Climate Stabilization Goals

The Paris Agreement established more precise long-term temperature targets than previous climate pacts by specifying the need to keep “aggregate emissions pathways consistent with holding the increase in global average temperature well below 2°C above preindustrial levels” and further adding the goal of “pursuing efforts to limit the temperature increase to 1.5°C.” We find that those targets remain technically achievable, but in general require much deeper near-term reductions than those embodied in the NDCs agreed upon in Paris. Because the Earth-system response to increased greenhouse gases is uncertain, we compared emissions paths that stay below 2°C with a 50-50 (i.e. 50%) chance to those that had a 2-in-3 (i.e. 67%) chance of staying below that level, and interpreted the 1.5°C aspiration with a 50-50 chance, with or without a temporary overshoot of that target. For these long-term targets, we applied globally uniform carbon pricing that increased over time, starting in either 2020 or 2030 to determine whether a 10-year delay in going beyond Paris NDCs rendered the long-term goal unattainable.

• Making deeper cuts immediately (2020) rather than as a next step in the Paris process (waiting until 2030) would lower the carbon prices needed to achieve long-term goals, and reduce the need for unproven options to achieve zero or negative emissions after 2050. We estimate that achieving 2°C with a 50-50 chance would require an $85/ton carbon dioxide-equivalent (CO2-e) carbon price if started in 2020, or $122 if delayed until 2030 (in 2015 dollars). Achieving 2°C with a 2-in-3 chance would require carbon prices of $109 in 2020 or $139 if started in 2030.
• We estimate that achieving the 1.5°C aspiration with a 50-50 chance would require a carbon price of $130 in 2020. Allowing an overshoot would mean less drastic measures in the near term but would rely on negative emissions technology in the second half of the century.
• Given the representation of future technology in our model, we would deem the Paris pledges as inconsistent with even the 2°C with a 50-50 chance, because the carbon price path that balances short and long-term costs requires a very sharp drop in emissions, compared to the Paris goal, when put in place in 2030. It is hard to imagine a political process that would deliver this as a global policy, and if implemented, the sharp drop would leave stranded assets and likely cause other economic disruptions.
• If we can develop reasonable cost options to get to zero emissions after 2050 in sectors where we currently do not see easy solutions, extensively take advantage of carbon sequestration in forests and soils, or advance negative emissions technologies such as bioenergy with carbon capture and storage (CCS), then the Paris path to 2030 is less clearly inconsistent with the 2°C goal. This would allow for a smoother transition but put a heavy bet on these unproven options.