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…
  • 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. 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 email: