• While the Stated Policies Scenario (STEPS) provides the direction of travel for the energy system based on today’s policy settings, a wide range of factors influence the energy sector and there are many uncertainties. In this chapter we explore the possible impact of several uncertainties on the outlook in the STEPS.
• We do this by analysing the issues and building sensitivity cases around some of the most important and topical uncertainties affecting the energy sector. This includes how variations in the pace of growth of electric vehicles (EVs) and in the use of plug-in hybrids might impact energy demand. We also consider variations in the assumed pace of renewables deployment and assess potential responses to liquefied natural gas oversupply. And we consider uncertainties about how the development of data centres and artificial intelligence, the pace of appliance efficiency improvements, and more frequent and intense heat waves might affect electricity demand.
• Oil demand could be 2-3% higher or lower in 2035 than in the STEPS in the sensitivity cases. EV sales were the largest uncertainty analysed: a slower uptake of EVs could raise oil demand by 1.2 million barrels per day (mb/d) in 2030, mainly in the United States and Europe, and by more than 2 mb/d by 2035. By contrast, enhanced utilisation of EV manufacturing capacity could lead to more EVs being sold in emerging market and developing economies outside China, reducing oil demand by 1.8 mb/d in 2035.
• Natural gas demand could be affected by a liquefied natural gas surplus of around 130 billion cubic metres (bcm) in 2030 in the STEPS. Fully absorbed, this would lift global gas demand by up to 3% in 2035. The gas could help accelerate coal-to-gas switching in industry, but it could also delay the deployment of wind power and heat pumps. Conversely, natural gas demand could be 4% lower in 2035 from slower electricity demand growth and faster solar PV uptake.
• Electricity demand could move up or down in our sensitivity cases by up to 1 700 TWh to 2035, or about 5%. In the high case, natural gas- and coal-fired power would adjust up or down as needed in the near term, while renewables would play a bigger role after 2030. In the low case, electricity demand would still rise rapidly.
• Our analysis indicates that, even combining all the high cases, global peaks for oil, natural gas and coal demand would still occur within a few years of those for STEPS, albeit at higher absolute levels: up 1.7 mb/d for oil, 140 bcm for natural gas, and 37 million tonnes of coal equivalent for coal. Taking all the uncertainties together, CO₂ emissions could be up to 1.0% higher than in the STEPS in 2035, or as much as 3.6% lower, and in all cases would peak within a few years of the STEPS.
  

Sensitivity cases explore how much divergence there could be from the STEPS trajectory for some of the most important and topical uncertainties affecting the energy sector.