Any assessment of the outlook for global energy and emissions has to assign a central place to emerging market and developing economies. There are billions of people on the planet who do not yet have the housing stock and appliances that are taken for granted across most advanced economies, and hundreds of millions of people who lack even the most basic access to modern energy. Emerging market and developing economies excluding China1 account for two-thirds of the global population today, and they will be home to the vast majority of the two billion people that look set to be added to the world’s population by 2050. The population of sub-Saharan Africa is projected to grow especially fast, and is on course to double by 2050.

As China has amply demonstrated over the last two decades, and many advanced economies before it, the process of constructing the infrastructure needed in a modern and rapidly developing economy up till now has been very energy- and emissions-intensive. With many emerging market and developing countries now considering how best to meet their future energy and development needs, the falling costs of key clean energy technologies offer a major opportunity to chart a new, lower emissions path to growth that is centred on clean electrification and efficiency (see section "Keeping the door to 1.5 °C open"). However, no country has yet shown a cost-effective way to leapfrog to low-carbon technologies in all areas of energy use, such as steel, cement and freight that are instrumental to the construction and operation of modern economies.

The starting point for this journey is not a propitious one. Most emerging market and developing economies face an ongoing public health crisis with the Covid-19 pandemic, without the means or the opportunity to start mass vaccination campaigns in earnest. The pandemic has been a setback for efforts to improve access to modern energy and has further strained the finances of the utilities that are key investors in grids and off-takers for renewable projects. Increased borrowing to cope with the effects of the pandemic has left little room for many governments to kick-start investment in sustainable recoveries; the annual boost to clean energy coming from public recovery spending amounts to less than USD 10 billion by 2023. Overall, if China is excluded, emerging market and developing economies account for one-fifth of the amounts being invested worldwide on clean energy.

Across all fuels and technologies, emerging market and developing economies are instrumental in shaping global trends in the coming decades. In the STEPS, oil demand in these economies is 12 million barrels per day (mb/d) higher in 2030 than in 2020 (an increase of nearly 30%), gas demand by 520 bcm (a near-25% increase), and coal demand by 160 million tonnes of coal equivalent (Mtce) (a 4% rise). Demand for fossil fuels in advanced economies falls in the APS, but announced pledges do not bend projected demand trends across much of the developing world.

Nevertheless, there are some indications of structural change. The energy intensity of GDP improves by 2.8% annually in the STEPS in this decade; it is accompanied by a similarly positive outlook for carbon intensity. Progress with energy efficiency and clean electrification helps to underpin these trends. More stringent energy performance standards for air conditioners in India are a case in point, helping to improve the efficient use of energy in a fast-growing segment that could otherwise push up peak demand and exacerbate strains on the power sector.

China is currently a global leader in renewable energy installations, and this continues in our scenarios, but an increasing number of emerging market and developing economies are following suit. The pace of capacity additions picks up in many countries in the STEPS: these include well-established markets like India and Brazil, where transport biofuels also flourish, as well as more recent ones in the Middle East and Africa. Renewables account for almost two-thirds of all new power capacity additions in emerging market and developing economies (excluding China) in the STEPS by 2030, up from about half today. Increased investment in robust grids and other sources of flexibility is vital to the reliable operation of solar PV and wind-rich systems; it is particularly important in India as it closes in on its target to increase renewable capacity to 450 GW by 2030, from around 150 GW today. 

Electricity demand grows rapidly in emerging market and developing economies in the STEPS. This reflects increased uptake of industrial electric motors and rising levels of appliance ownership rather than large-scale electrification of new end-uses such as transport. While electric two/three-wheelers gain ground quickly in many countries, passenger EVs face a number of non-economic barriers that are not completely overcome in the STEPS (or in the APS). These include insufficient recharging infrastructure, weak or unreliable grids, and reliance in some countries, especially in Africa, on the second-hand vehicle market where EVs will only become available with a time lag. Despite these barriers, there are some economies within this grouping (for example Singapore and Costa Rica) that already have phase-out policies in place for different categories of conventional vehicles.

Clean electrification cannot answer all the needs of economies undergoing rapid urbanisation and industrialisation. Transitions in fuels and energy-intensive sectors such as construction materials, chemicals and long-distance transport are particularly important. Here the signals in the STEPS are less encouraging, despite continued improvements in efficiency and fuel switching from more polluting fuels to electricity and natural gas. Some new projects are developed for low-carbon liquids and gases, notably for hydrogen in countries either with a large renewable energy resource base or with large natural gas resources (the Middle East is well placed on both counts), but in the STEPS they do not reach the scale that would make hydrogen a mainstream element of industrial strategies and operations. 

Taken together, this means that emerging market and developing economies are set to account for the bulk of CO₂ emissions growth in the coming decades unless much stronger action is taken to transform their energy systems. Emissions from emerging market and developing economies (excluding China) are projected to rise by 5.5 Gt to 2050 in the STEPS, with the largest increase from industry and transport (rather than power). In contrast, emissions are projected to decline by 3.7 Gt in advanced economies and by 3 Gt in China. The divergence in trends is even more significant in the APS.

Only a fraction of emissions from emerging market and developing economies are covered by net zero pledges. Greater ambition is warranted and necessary. However, while tackling climate change is a common cause, responsibilities and capabilities for climate action differ.2 An international catalyst is essential in the form of stronger financial support, recognising that the average cost of emissions reductions in these economies is much lower than in advanced economies. Moreover, despite limited country-wide emissions reduction pledges, per capita CO₂ emissions in emerging market and developing economies (excluding China) are less than half of the advanced economy average in 2030 in the APS. Producer economies across the Middle East and Eurasia are the exception: they are among the highest emitting regions on a per capita basis.