Key findings presented from the World Energy Outlook 2011

1. World Energy Outlook 2011
Presentation to the press
London, 9 November 2011
© OECD/IEA 2011

2. 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 region’s 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

3. Emerging economies continue
to drive global energy demand
Growth in primary energy demand in the New Policies Scenario
4 500
Mtoe
4 000 China
3 500 India
3 000 Other developing Asia
2 500 Russia
Middle East
2 000
Rest of world
1 500
OECD
1 000
500
0
2010 2015 2020 2025 2030 2035
Global energy demand increases by one‐third from 2010 to 2035,
with China & India accounting for 50% of the growth
© OECD/IEA 2011

4. Natural gas & renewables become
increasingly important
World primary energy demand
5 000
Mtoe
Additional
to 2035
4 000
2010
3 000
2 000
1 000
0
Oil Coal Gas Renewables Nuclear
Renewables & natural gas collectively meet almost two‐thirds
of incremental energy demand in 2010‐2035
© OECD/IEA 2011

5. Oil demand is driven higher
by soaring car ownership
Vehicles per 1000 people in selected markets
800
2010
700 2035
600
500
400
300
200
100
0
United States European China India Middle East
Union
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

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

7. 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

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

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

10. Asia: the arena of future coal trade
Share of global hard coal trade
70% India
60% China
50% Japan
40% European Union
30%
20%
10%
0%
2009 2020 2035
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

11. 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 Australia’s steam coal exports
" natural gas demand increases by two‐thirds Russia’s 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

12. Power investment focuses on
low‐carbon technologies
Share of new power generation and investment, 2011‐2035
40%
Generation
35% Investment
30%
25%
20%
15%
10%
5%
0%
Coal Gas Nuclear Hydro Wind Solar PV
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

13. The overall value of subsidies
to renewables is set to rise
250
Billion dollars (2010)
Biofuels
200 Electricity
150
100
50
0
2007 2008 2009 2010 2015 2020 2025 2030 2035
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

14. Realising Russia’s potential for energy
savings would have a big impact
Natural gas savings from raising efficiency (to comparable OECD levels)
2008 180 bcm
Domestic gas demand Net exports / potential savings
2035 130 bcm
bcm
600 400 200 0 200 400 600
Russia’s 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

15. Russia remains a cornerstone
of the global energy economy
Russian revenue from fossil fuel exports
2010 2035
$255 billion $420 billion
Other
Other 17%
China 21% European
European
2% China Union
Other Union
Europe 61% 20% 48%
16%
Other
Europe
15%
An increasing share of Russian exports go eastwards to Asia,
providing Russia with diversity of markets and revenues
© OECD/IEA 2011

16. Energy is at the heart of
the climate challenge
Cumulative energy‐related CO2 emissions in selected regions
500
Gigatonnes
2010‐2035
1900‐2009
400
300
200
100
0
United States China European India Japan
Union
By 2035, cumulative CO2 emissions from today exceed three‐quarters of the total since 1900,
and China’s per‐capita emissions match the OECD average
© OECD/IEA 2011

17. The door to 2°C is closing,
but will we be “locked‐in” ?
45
CO2 emissions (gigatonnes)
6°C trajectory
40
35
30
2°C trajectory
25
20 Delay until 2017
Delay until 2015
15
10 Emissions from
existing
5 infrastructure
0
2010 2015 2020 2025 2030 2035
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

18. If we don’t change direction soon,
we’ll end up where we’re 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 2°C is closing
© OECD/IEA 2011