World Energy Outlook 2011

Presentation to the press London, 9 November 2011

OECD/IEA 2011

The context: fresh challenges add to already worrying trends

Economic concerns have diverted attention from energy policy

and limited the means of intervention

Post-Fukushima, nuclear is facing uncertainty MENA turmoil raised questions about regions investment plans Some key trends are pointing in worrying directions:
CO2 emissions rebounded to a record high energy efficiency of global economy worsened for 2nd straight year spending on oil imports is near record highs

OECD/IEA 2011

Emerging economies continue to drive global energy demand

Growth in primary energy demand in the New Policies Scenario
Mtoe 4 500 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 2010 2015 2020 2025 2030 2035 China India Other developing Asia Russia Middle East Rest of world OECD

Global energy demand increases by one-third from 2010 to 2035, with China & India accounting for 50% of the growth
OECD/IEA 2011

Natural gas & renewables become increasingly important

World primary energy demand
Mtoe 5 000 4 000 3 000 2 000 1 000 0 Oil Coal Gas Renewables Nuclear Additional to 2035 2010

Renewables & natural gas collectively meet almost two-thirds of incremental energy demand in 2010-2035
OECD/IEA 2011

Oil demand is driven higher by soaring car ownership

Vehicles per 1000 people in selected markets
800 700 600 500 400 300 200 100 0 United States European Union China India Middle East 2010 2035

The passenger vehicle fleet doubles to 1.7 billion in 2035; most cars are sold outside the OECD by 2020, making non-OECD policies key to global oil demand
OECD/IEA 2011

Changing oil import needs are set to shift concerns about oil security
Net imports of oil
mb/d 14 12 10 8 6 4 2 0 China India European Union United States Japan 2010 2035 2000

US oil imports drop due to rising domestic output & improved transport efficiency: EU imports overtake those of the US around 2015; China becomes the largest importer around 2020
OECD/IEA 2011

What impact would deferred investment in MENA have on markets?

MENA is set to supply the bulk of the growth in oil output

to 2035, requiring investment of over $100 billion/annum

Deferred Investment Case looks at near-term investment

falling short by one-third

possible drivers include new spending priorities, higher perceived risks, etc

MENA output falls 3.4 mb/d by 2015 and 6.2 mb/d by 2020 Consumers face a near-term rise in oil prices to $150/barrel MENA earns more initially, but then less as market share is lost

OECD/IEA 2011

Golden prospects for natural gas

Largest natural gas producers in 2035
Russia United States China Iran Qatar Canada Algeria Australia India Norway 0 200 400 600 800 1 000 bcm Conventional Unconventional

Unconventional natural gas supplies 40% of the 1.7 tcm increase in global supply, but best practices are essential to successfully address environmental challenges
OECD/IEA 2011

Coal won the energy race in the first decade of the 21st century
Growth in global energy demand, 2000-2010
Mtoe 1 600 1 400 1 200 1 000 800 600 400 200 0 Total non-coal Coal Natural gas Oil Nuclear Renewables

Coal accounted for nearly half of the increase in global energy use over the past decade, with the bulk of the growth coming from the power sector in emerging economies
OECD/IEA 2011

Asia: the arena of future coal trade

Share of global hard coal trade
70% 60% 50% 40% 30% 20% 10% 0% 2009 2020 2035 India China Japan European Union

International coal markets & prices become increasingly sensitive to developments in Asia; India surpasses China as the biggest coal importer soon after 2020
OECD/IEA 2011

Second thoughts on nuclear would have far-reaching consequences

Low Nuclear Case examines impact of nuclear component

of future energy supply being cut in half

Gives a boost to renewables, but increases import bills,

reduces diversity & makes it harder to combat climate change

By 2035, compared with the New Policies Scenario:
coal demand increases by twice Australias steam coal exports natural gas demand increases by two-thirds Russias natural gas net exports power- sector CO2 emissions increase by 6.2%

Biggest implications are for countries with limited energy

resources that planned to rely on nuclear power

OECD/IEA 2011

Power investment focuses on low-carbon technologies

Share of new power generation and investment, 2011-2035
40% 35% 30% 25% 20% 15% 10% 5% 0% Coal Gas Nuclear Hydro Wind Solar PV Generation Investment

Renewables are often capital-intensive, representing 60% of investment for 30% of additional generation, but bring environmental benefits & have minimal fuel costs
OECD/IEA 2011

The overall value of subsidies to renewables is set to rise

250 200 150 100 50 0 2007 2008 2009 2010 2015 2020 2025 2030 2035

Billion dollars (2010)

Biofuels Electricity

Renewable subsidies of $66 billion in 2010 (compared with $409 billion for fossil fuels), need to climb to $250 billion in 2035 as rising deployment outweighs improved competitiveness
OECD/IEA 2011

Realising Russias potential for energy savings would have a big impact
Natural gas savings from raising efficiency (to comparable OECD levels)

2008 Domestic gas demand 2035

180 bcm Net exports / potential savings 130 bcm bcm

600

400

200

200

400

600

Russias total energy savings potential is close to the primary energy used in a year by the UK; new efficiency policies bring results, but the savings potential remains large even in 2035
OECD/IEA 2011

Russia remains a cornerstone of the global energy economy

Russian revenue from fossil fuel exports
2010 $255 billion 2035 $420 billion

China 2%

Other 21% Other Europe 16%

Other 17% European Union 61% China 20% Other Europe 15% European Union 48%

An increasing share of Russian exports go eastwards to Asia, providing Russia with diversity of markets and revenues
OECD/IEA 2011

Energy is at the heart of the climate challenge

Cumulative energy-related CO2 emissions in selected regions
Gigatonnes 500 400 300 200 100 0 United States China European Union India Japan 2010-2035 1900-2009

By 2035, cumulative CO2 emissions from today exceed three-quarters of the total since 1900, and Chinas per-capita emissions match the OECD average
OECD/IEA 2011

The door to 2C is closing, but will we be locked-in ?

CO2 emissions (gigatonnes) 45 40 35 30 25 20 15 10 5 0 2010 2015 2020 2025 2030 2035 Delay until 2017 Delay until 2015 Emissions from existing infrastructure 2C trajectory 6C trajectory

Without further action, by 2017 all CO2 emissions permitted in the 450 Scenario will be locked-in by existing power plants, factories, buildings, etc
OECD/IEA 2011

If we dont change direction soon, well end up where were heading

In a world full of uncertainty, one thing is sure:

rising incomes & population will push energy needs higher

Oil supply diversity is diminishing, while new options

are opening up for natural gas

Coal the forgotten fuel has underpinned growth, but its

future will be shaped by uptake of efficient power plants & CCS

Power sector investment will become increasingly

capital intensive with the rising share of renewables

The world needs Russian energy, while Russia needs to use less Despite steps in the right direction, the door to 2C is closing

OECD/IEA 2011