• 1. © OECD/IEA 2014London 12 November 2014
  • 2. © OECD/IEA 2014Signs of stress in the global energy systemCurrent calm in markets should not disguise difficult road aheadTurmoil in the Middle East raises doubts over future oil balanceResurgent debate over the security of gas supply to EuropeMixed signals in run-up to crucial climate summit in Paris in 2015Global CO2 emissions still rising, with most emitters on an upward pathAt $550 billion, fossil fuel subsidies over four-times those to renewablesIncreasing emphasis on energy efficiency starting to bring resultsWill change in global energy be led by policies, or driven by events?
  • 3. © OECD/IEA 2014Changing dynamics of global demandEnergy demand by regionAs China slows, then India, Southeast Asia, the Middle East and parts of Africa & Latin America take over as the engines of global energy demand growth.2 0004 0006 0008 00010 000199020002010202020302040MtoeOECDRest of worldChinaChinaRest of worldOECD
  • 4. © OECD/IEA 2014United States holds a strong position on energy costsWeighted average cost of energy paid by consumersEconomies face higher costs, but the pace of change varies: China overtakes the US, costs double in India & remain high in the European Union & JapanUnitedStates5001 0001 5002 000EuropeanUnionJapanChinaIndia$/toe200820132040
  • 5. © OECD/IEA 201420132020203020402015Instability in the Middle East a major risk to oil marketsOil production growthThe short-term picture of a well-supplied market should not obscure future risks as demand rises to 104 mb/d & reliance grows on Iraq & the rest of the Middle East+5+10+15-520132020203020402015Net decline in output from other producersIncrease to 2040: 14 mb/dmb/dIncrease to 2040: 14 mb/dMiddle EastBrazilCanadaUnited Statesin United States, Canada, Brazil & the Middle East
  • 6. © OECD/IEA 2014Looking ahead on the oil priceAgainst a backdrop of weaker demand, buoyant supply in North America has brought prices down – but can it keep them down?Lower prices are starting to curtail upstream spending plans, with implications for future supplyOver time, squeezed cash flow would constrain the capacity of North America & Brazil to act as engines of global supply growthSustained $80/barrel oil could provide some breathing space to major oil importers, boosting demand & GDPIt would also accelerate reliance on low-cost producers in the Middle East, some of which face major investment challenges
  • 7. © OECD/IEA 2014Gas on the way to become first fuel, with role of LNG on the riseMain sources of regional LNG supplyShare of LNG rises in global gas trade, pushed by a near-tripling in liquefaction sites: LNG brings more integrated & secure gas markets, but only limited relief on pricesMiddle EastAustraliaUS & CanadaEast AfricaRussiaNorth AfricaWest AfricaOtherMiddle EastSoutheast AsiaWest AfricaAustraliaNorth AfricaOther100200300400500600bcm20122040
  • 8. © OECD/IEA 2014IndiaWorldGlobal coal demand leveling offGlobal coal demand by key regionGlobal coal demand growth slows rapidly due to more stringent environmental policies, underlining the importance of high-efficiency plant & CCS to coal’s future1 0002 0003 0004 0005 0006 0007 0001980199020002010202020302040Mtce1987: European coal demand peak2005: US coal demand peakChinese coal demand plateauIndia: 2nd largest coal consumer by 2020OtherIndiaChinaUnited StatesEurope
  • 9. © OECD/IEA 2014Retirements add to the investment challenge in the power sectorPower capacity by source, 2013-2040Despite limited demand growth, OECD countries account for one-third of capacity additions – to compensate for retirements & to decarbonise2013RetirementsAdditions20402 0004 0006 0008 00010 00012 000GWRenewablesNuclearOilGasCoal
  • 10. © OECD/IEA 2014Renewables supply half of the growth in global power demand; wind & solar PVRenewables-based power generationand subsidiesRenewables overtake coal to become the leading source of powerGenerationSubsidiesHydropowerWind and solar PV(right axis)subsidies decline from 2030 as costs fall & recent higher-cost commitments expireGeneration1 0002 0003 0004 0005 0006 000201320202040201320302040TWh306090120150180Billion dollars (2013)210203020207 000
  • 11. © OECD/IEA 2014Nuclear capacity grows by 60%, but no nuclear renaissance in sightNet capacity change in key regions, 2013-2040By 2040, an expanded nuclear fleet has saved almost 4 years of current CO2 emissions& for some countries has improved energy security & balances of energy trade-20020406080100120140European UnionJapanUnited StatesRussiaIndiaChinaGW
  • 12. © OECD/IEA 201450100150200199020002010202020302040GW2013Nuclear power: public concerns must be heard and addressedRetirements of nuclear power capacity1990-2040Key public concerns include plant operation, decommissioning & waste management;Spent nuclear fuelEuropean UnionUnited StatesJapanOthers38% of today’scapacity to retire by 20401971-2012350 thousand tonnes2040705 1971-2040: 705 thousand tonnesUnited StatesEuropeanUnionJapanChinaCanadaRussiaKoreaIndiaOtherBy 2040, almost 200 reactors are retired & the amount of spent fuel doubles
  • 13. © OECD/IEA 2014The entire global budget to 2100 is used up by 2040 – Paris must send a strong signal for increasing low-carbon investment four times beyond current levelsThe 2 °C goal – last chance in Paris?World CO2 budget for 2 °C~2300 Gt25%50%75%100%Share of budget usedin Central Scenario1900-20122012-2040Average annual low-carbon investment, 2014-2040CentralScenarioFor 2°Ctarget2013CCSNuclearRenewablesEfficiencyThe entire global CO2 budget to 2100 is used up by 20400.51.01.52.0Trillion dollars (2013)
  • 14. © OECD/IEA 2014Navigating a stormy energy futureGeopolitical & market uncertainties are set to propel energy security high up the global energy agendaVolatility in the Middle East raises short-term doubts on investment & spells trouble for future oil supplyNuclear power can play a role in energy security & carbon abatement – but financing & public concerns are key issuesWithout clear direction from Paris in 2015, the world is set for warming well beyond the 2 °C goalFar-sighted government policies are essential to steer the global energy system on to a safer course
  • 15. © OECD/IEA 2014www.worldenergyoutlook.org email: [email protected]
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    World Energy Outlook 2014 by Dr. Fatih Birol, Chief Economist of the the International Energy Agency (IEA)

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    Does growth in North American oil supply herald a new era of abundance - or does turmoil in parts of the Middle East cloud the horizon? How much can energy efficiency close the competitiveness gap caused by differences in regional energy prices? What considerations should shape decision-making in countries using, pursuing or phasing out nuclear power? How close is the world to using up the available carbon budget, which cannot be exceeded if global warming is to be contained? How can sub-Saharan Africa's energy sector help to unlock a better life for its citizens?
    Download World Energy Outlook 2014 by Dr. Fatih Birol, Chief Economist of the the International Energy Agency (IEA)

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    • 1. © OECD/IEA 2014London 12 November 2014
  • 2. © OECD/IEA 2014Signs of stress in the global energy systemCurrent calm in markets should not disguise difficult road aheadTurmoil in the Middle East raises doubts over future oil balanceResurgent debate over the security of gas supply to EuropeMixed signals in run-up to crucial climate summit in Paris in 2015Global CO2 emissions still rising, with most emitters on an upward pathAt $550 billion, fossil fuel subsidies over four-times those to renewablesIncreasing emphasis on energy efficiency starting to bring resultsWill change in global energy be led by policies, or driven by events?
  • 3. © OECD/IEA 2014Changing dynamics of global demandEnergy demand by regionAs China slows, then India, Southeast Asia, the Middle East and parts of Africa & Latin America take over as the engines of global energy demand growth.2 0004 0006 0008 00010 000199020002010202020302040MtoeOECDRest of worldChinaChinaRest of worldOECD
  • 4. © OECD/IEA 2014United States holds a strong position on energy costsWeighted average cost of energy paid by consumersEconomies face higher costs, but the pace of change varies: China overtakes the US, costs double in India & remain high in the European Union & JapanUnitedStates5001 0001 5002 000EuropeanUnionJapanChinaIndia$/toe200820132040
  • 5. © OECD/IEA 201420132020203020402015Instability in the Middle East a major risk to oil marketsOil production growthThe short-term picture of a well-supplied market should not obscure future risks as demand rises to 104 mb/d & reliance grows on Iraq & the rest of the Middle East+5+10+15-520132020203020402015Net decline in output from other producersIncrease to 2040: 14 mb/dmb/dIncrease to 2040: 14 mb/dMiddle EastBrazilCanadaUnited Statesin United States, Canada, Brazil & the Middle East
  • 6. © OECD/IEA 2014Looking ahead on the oil priceAgainst a backdrop of weaker demand, buoyant supply in North America has brought prices down – but can it keep them down?Lower prices are starting to curtail upstream spending plans, with implications for future supplyOver time, squeezed cash flow would constrain the capacity of North America & Brazil to act as engines of global supply growthSustained $80/barrel oil could provide some breathing space to major oil importers, boosting demand & GDPIt would also accelerate reliance on low-cost producers in the Middle East, some of which face major investment challenges
  • 7. © OECD/IEA 2014Gas on the way to become first fuel, with role of LNG on the riseMain sources of regional LNG supplyShare of LNG rises in global gas trade, pushed by a near-tripling in liquefaction sites: LNG brings more integrated & secure gas markets, but only limited relief on pricesMiddle EastAustraliaUS & CanadaEast AfricaRussiaNorth AfricaWest AfricaOtherMiddle EastSoutheast AsiaWest AfricaAustraliaNorth AfricaOther100200300400500600bcm20122040
  • 8. © OECD/IEA 2014IndiaWorldGlobal coal demand leveling offGlobal coal demand by key regionGlobal coal demand growth slows rapidly due to more stringent environmental policies, underlining the importance of high-efficiency plant & CCS to coal’s future1 0002 0003 0004 0005 0006 0007 0001980199020002010202020302040Mtce1987: European coal demand peak2005: US coal demand peakChinese coal demand plateauIndia: 2nd largest coal consumer by 2020OtherIndiaChinaUnited StatesEurope
  • 9. © OECD/IEA 2014Retirements add to the investment challenge in the power sectorPower capacity by source, 2013-2040Despite limited demand growth, OECD countries account for one-third of capacity additions – to compensate for retirements & to decarbonise2013RetirementsAdditions20402 0004 0006 0008 00010 00012 000GWRenewablesNuclearOilGasCoal
  • 10. © OECD/IEA 2014Renewables supply half of the growth in global power demand; wind & solar PVRenewables-based power generationand subsidiesRenewables overtake coal to become the leading source of powerGenerationSubsidiesHydropowerWind and solar PV(right axis)subsidies decline from 2030 as costs fall & recent higher-cost commitments expireGeneration1 0002 0003 0004 0005 0006 000201320202040201320302040TWh306090120150180Billion dollars (2013)210203020207 000
  • 11. © OECD/IEA 2014Nuclear capacity grows by 60%, but no nuclear renaissance in sightNet capacity change in key regions, 2013-2040By 2040, an expanded nuclear fleet has saved almost 4 years of current CO2 emissions& for some countries has improved energy security & balances of energy trade-20020406080100120140European UnionJapanUnited StatesRussiaIndiaChinaGW
  • 12. © OECD/IEA 201450100150200199020002010202020302040GW2013Nuclear power: public concerns must be heard and addressedRetirements of nuclear power capacity1990-2040Key public concerns include plant operation, decommissioning & waste management;Spent nuclear fuelEuropean UnionUnited StatesJapanOthers38% of today’scapacity to retire by 20401971-2012350 thousand tonnes2040705 1971-2040: 705 thousand tonnesUnited StatesEuropeanUnionJapanChinaCanadaRussiaKoreaIndiaOtherBy 2040, almost 200 reactors are retired & the amount of spent fuel doubles
  • 13. © OECD/IEA 2014The entire global budget to 2100 is used up by 2040 – Paris must send a strong signal for increasing low-carbon investment four times beyond current levelsThe 2 °C goal – last chance in Paris?World CO2 budget for 2 °C~2300 Gt25%50%75%100%Share of budget usedin Central Scenario1900-20122012-2040Average annual low-carbon investment, 2014-2040CentralScenarioFor 2°Ctarget2013CCSNuclearRenewablesEfficiencyThe entire global CO2 budget to 2100 is used up by 20400.51.01.52.0Trillion dollars (2013)
  • 14. © OECD/IEA 2014Navigating a stormy energy futureGeopolitical & market uncertainties are set to propel energy security high up the global energy agendaVolatility in the Middle East raises short-term doubts on investment & spells trouble for future oil supplyNuclear power can play a role in energy security & carbon abatement – but financing & public concerns are key issuesWithout clear direction from Paris in 2015, the world is set for warming well beyond the 2 °C goalFar-sighted government policies are essential to steer the global energy system on to a safer course
  • 15. © OECD/IEA 2014www.worldenergyoutlook.org email: [email protected]
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