London, 12 November 2012

1. World Energy Outlook 2012
Presentation to the press
London, 12 November 2012
© OECD/IEA 2012

2. The context
 Foundations of global energy system shifting
 Resurgence in oil & gas production in some countries
 Retreat from nuclear in some others
 Signs of increasing policy focus on energy efficiency
 All-time high oil prices acting as brake on global economy
 Divergence in natural gas prices affecting Europe (with prices
5-times US levels) and Asia (8-times)
 Symptoms of an unsustainable energy system persist
 Fossil fuel subsidies up almost 30% to $523 billion in 2011, led by MENA
 CO2 emissions at record high, while renewables industry under strain
 Despite new international efforts, 1.3 billion people still lack electricity
© OECD/IEA 2012

3. Emerging economies steer energy markets
Share of global energy demand
6 030 Mtoe 12 380 Mtoe 16 730 Mtoe
100% Rest of non-OECD
Non-OECD
Middle East
80%
India
China
60%
OECD
40%
20%
1975 2010 2035
Global energy demand rises by over one-third in the period to 2035,
underpinned by rising living standards in China, India & the Middle East
© OECD/IEA 2012

4. A United States oil & gas transformation
US oil and gas production
mboe/d 25
20
Unconventional gas
15
10 Conventional gas
Unconventional oil
5
Conventional oil
1980 1990 2000 2010 2020 2030 2035
The surge in unconventional oil & gas production has implications
well beyond the United States
© OECD/IEA 2012

5. Iraq oil poised for a major expansion
Iraq oil production Iraq oil exports
mb/d 9 North mb/d 9 Other
8 Centre 8 Asia
7 South 7
6 6
5 5
4 4
3 3
2 2
1 1
2012 2020 2035 2012 2020 2035
Iraq accounts for 45% of the growth in global production to 2035;
by the 2030s it becomes the second-largest global oil exporter, overtaking Russia
© OECD/IEA 2012

6. Middle East oil to Asia: a new silk road
Middle East oil export by destination
mb/d 7 2000
6 2011
2035
5
4
3
2
1
China India Japan & Korea Europe United States
By 2035, almost 90% of Middle Eastern oil exports go to Asia; North America’s
emergence as a net exporter accelerates the eastward shift in trade
© OECD/IEA 2012

7. Natural gas: towards a globalised market
Major global gas trade flows, 2010
2035
Rising supplies of unconventional gas & LNG help to diversify trade flows,
putting pressure on conventional gas suppliers & oil-linked pricing mechanisms
© OECD/IEA 2012

8. Different trends in oil & gas
import dependency
Net oil & gas import dependency in selected countries
Japan
Gas Imports 100%
2010
2035
80%
European Union
60%
40%
20% China
India
United States
0%
Gas Exports 20%
20% 40% 60% 80% 100%
Oil imports
While dependence on imported oil & gas rises in many countries,
the United States swims against the tide
© OECD/IEA 2012

9. A power shift to emerging economies
Change in power generation, 2010-2035
Coal Gas Nuclear Renewables
China
India
United States
European Union
Japan
-1 000 0 1 000 2 000 3 000 4 000 5 000 6 000
TWh TWh
The need for electricity in emerging economies drives a 70% increase in worldwide
demand, with renewables accounting for half of new global capacity
© OECD/IEA 2012

10. The multiple benefits of renewables
come at a cost
Global renewable energy subsidies
Billion $250
Biofuels:
$1 200 billion
$200 2011-2035
$150
Electricity:
$100 2012-2035
$2 600 billion
Existing capacity
$50
$960 billion
2011 2015 2020 2025 2030 2035
Renewable subsidies were $88 billion in 2011; over half the $4.8 trillion required to
2035 has been committed to existing projects or is needed to meet 2020 targets
© OECD/IEA 2012

11. Wide variations in the price of power
Average household electricity prices, 2035
cents/kWh 25
20
2011
15 OECD average
10 2011
Non-OECD
5 average
China United States European Union Japan
Electricity prices are set to increase with the highest prices persisting in the
European Union & Japan, well above those in China & the United States
© OECD/IEA 2012

12. Energy is becoming thirstier in the
face of growing water constraints
Global water use Water for energy
100% Biofuels
Fossil fuels
Other
80%
Nuclear
60%
40% Power
Coal
20%
Energy
2010 2010
The energy sector’s water needs are set to grow, making water an increasingly
important criterion for assessing the viability of energy projects
© OECD/IEA 2012

13. Energy efficiency: a huge opportunity
going unrealised
Energy efficiency potential used by sector in the New Policies Scenario
100% Unrealised energy
efficiency potential
80%
Realised energy
efficiency potential
60%
40%
20%
Industry Transport Power Buildings
generation
Two-thirds of the economic potential to improve energy efficiency
remains untapped in the period to 2035
© OECD/IEA 2012

14. The Efficient World Scenario:
a blueprint for an efficient world
Total primary energy demand
Mtoe 18 000
New Policies Reduction in 2035
17 000
Scenario Coal 1 350 Mtce
16 000 Oil 12.7 mb/d
Gas 680 bcm
15 000
Others 250 Mtoe
14 000 Efficient
World Scenario
13 000
12 000
2010 2015 2020 2025 2030 2035
Economically viable efficiency measures can halve energy demand growth to 2035;
oil demand savings equal the current production of Russia & Norway
© OECD/IEA 2012

15. Energy efficiency brings economic gains
Energy expenditure in 2035 compared with 2010
Trillion $1.5 New Policies the
Additional in
Scenario
New Policies
$1.2 Scenario
$0.9 Efficient World
Scenario
$0.6
$0.3
$0
-$0.3
China India European United Japan
Union States
In addition to cutting energy expenditures by an average of 20%, improved efficiency
brings wider economic gains, particularly for India, China, the United States & Europe
© OECD/IEA 2012

16. The Efficient World Scenario
delays carbon lock-in
2017
2022
Gt 35
30
2 °C trajectory
25
20 Lock-in of infrastructure
Room to manoeuvre
in New Policies Scenario
Efficient World Scenario
in 2017
2022
15
10
Lock-in of existing
5 infrastructure
2011 2015 2020 2025 2030 2035
Energy efficiency can delay “lock-in” of CO2 emissions permitted under a 2 °C
trajectory – which is set to happen in 2017 – until 2022, buying five extra years
© OECD/IEA 2012

17. Foundations of energy system shifting
 Policy makers face critical choices in reconciling energy,
environmental & economic objectives
 Changing outlook for energy production & use may redefine
global economic & geopolitical balances
 Iraq set to play a pivotal role in global oil markets
 As climate change slips off policy radar, the “lock-in” point
moves closer & the costs of inaction rise
 The gains promised by energy efficiency are within reach & are
essential to underpin a more secure & sustainable energy system
© OECD/IEA 2012