© OECD/IEA - 2006

INTERNATIONAL ENERGY AGENCY

World Energy World Energy Outlook 2006Outlook 2006

Scenarios for the World and the European Union

Presentation to European Wind Energy Conference

Milan, Italy, 7-10 May 2007

© OECD/IEA - 2006

World Primary Energy Demand

Global demand grows by more than half over the next quarter of a century, with coal use rising most in absolute terms

Oil

Coal

Gas

BiomassNuclear

Other renewables

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

1970 1980 1990 2000 2010 2020 2030

Mto

e

© OECD/IEA - 2006

Reference Scenario:

World Incremental Electricity Generation by Fuel

Most of the additional demand for electricity is expected to be met by coal, which remains the world’s largest source of

electricity to 2030

- 500

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

2004-2015 2015-2030

TWh

Oil Nuclear Other renewables Hydro Gas Coal

© OECD/IEA - 2006

Annual Increase in Coal Demand

Global coal demand in the recent years has grown much faster than previously – mainly driven by China

milli

on to

nnes

-100

0

100

200

300

400

500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

China Rest of the world

© OECD/IEA - 2006

Reference Scenario:

Incremental Coal-fired ElectricityGeneration by Region

7 785 TWh

Over three-quarters of the increase in coal-fired generation is in developing Asia, based on ample coal

reserves

High gas prices boost the role of coal in the OECD

55%

15%

7%

14%

6% 3%

ChinaIndiaRest of developing AsiaOECD North AmericaRest of OECDOther countries

© OECD/IEA - 2006

Reference Scenario:Energy-Related CO2 emissions by Region

China overtakes the US as the world’s biggest emitter before 2010, though its per capita emissions reach just 60% of those of

the OECD in 2030

0

3

6

9

12

15

1990 2000 2010 2020 2030

Gig

aton

nes

of C

O 2

United States

China

Rest of non-OECD

Rest of OECD

© OECD/IEA - 2006

Reference Scenario: Energy-Related CO2 Emissions by Fuel

Half of the projected increase in emissions come from new power stations, mainly using coal & mainly located in China &

India

Increase of 14.3 Gt (55%)

0

10

20

30

40

50

1990 2004 2010 2015 2030

billio

n to

nnes

Coal Oil Gas

© OECD/IEA - 2006

INTERNATIONAL ENERGY AGENCY

Alternative Policy Alternative Policy Scenario Scenario

© OECD/IEA - 2006

The Alternative Policy Scenario: Mapping a New Energy Future

The Alternative Policy Scenario analyses impact of government policies under consideration

1 400+ different policies worldwide analysed to Improve efficiency in energy production & use Increase reliance on non-fossil fuels Bolster output of oil & gas in net importing countries

By 2030 energy demand is reduced by 10% - equivalent China’s current consumption – and in 2015 savings are close to Japan’s consumption

By 2030, CO2 emissions are 6.3 Gt lower

© OECD/IEA - 2006

Improved end-use efficiency accounts for over two-thirds of avoided emissions in 2030 in the APS

Alternative Policy Scenario

Reference Scenario

Increased nuclear (10%)Increased renewables (12%)Power sector efficiency & fuel (13%) Electricity end-use efficiency (29%)

Fossil-fuel end-use efficiency (36%)

26

30

34

38

42

2004 2010 2015 2020 2025 2030

Gt o

f CO

2

The Alternative Policy Scenario: Key Policies for CO2 Reduction

© OECD/IEA - 2006

Alternative Policy Scenario:

Shares of non-Hydro Renewable Energy in Power Generation by Region

0% 5% 10% 15% 20% 25%

OECD Europe

Other developing Asia

OECD North America

World

Africa

OECD Pacific

Brazil

China

India

Transition economies

2030 2004

Most of the growth in non-hydro renewables use occurs in OECD Europe, where incentives are the strongest

© OECD/IEA - 2006

Renewed Interest in Hydropower?

The remaining hydropower potential is still large in developing countries

World Hydropower Potential

© OECD/IEA - 2006

Private Investment in Power Infrastructure in Developing Countries, 1990-2004

0

10 000

20 000

30 000

40 000

50 000

60 000

1990 1992 1994 1996 1998 2000 2002 2004

milli

on d

olla

rs (2

005)

Private investment in electricity in developing countries is still a fraction of the 1997 peak…

© OECD/IEA - 2006

World Outlook for Power Generation Renewables (GW installed)

0

100

200

300

400

500

2004 2030 APS

GW

Wind Onshore Wind Offshore Bioenergy Solar PVSolar Thermal Tide/Wave Geothermal

The installed capacity of non hydro renewables increases, helping to curb emissions growth

© OECD/IEA - 2006

Alternative Policy Scenario:

Capital Costs of Renewables-BasedTechnologies

The capital costs of renewables fall over time, with wind power the most competitive for new plant

0 1 000 2 000 3 000 4 000 5 000 6 000

Co-firing

Wind onshore

Wind offshore

Geothermal

Solar thermal

Medium-scale CHP plant

Tide and wave

Solar photovoltaic

Biowaste

dollars (2005) per kW

2030 2004

© OECD/IEA - 2006

Alternative Policy Scenario:

CO2 Emissions per kWh of Electricity Generated

Emissions per unit of electricity fall faster than ever in APS

400

450

500

550

600

650

700

750

1970 1980 1990 2000 2010 2020 2030

gram

mes

of C

O 2 p

er k

Wh

Reference Scenario Alternative Policy Scenario

© OECD/IEA - 2006

INTERNATIONAL ENERGY AGENCY

Focus on the European Focus on the European Union Union

© OECD/IEA - 2006

Focus on European Union: Primary Fuel Mix

Renewable energy and nuclear power are much higher in the APS

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2004 Reference Scenarioin 2030

APS in 2030

Coal Oil Gas Nuclear Renewables

© OECD/IEA - 2006

Focus on European Union : Power Generation Capacity Increases

Capacity additions until 2030 are larger than current installed capacity. By 2015 more than a quarter of today’s coal fired

plants will be retired.

0

200

400

600

800

1 000

1 200

1 400

2005 2010 2015 2020 2025 2030

MW

Existing Additions

© OECD/IEA - 2006

New Generation Capacity in the European Union

CCGTs still dominate investors’ plans in Europe

Under construction = 40 GW

17%1%

58%

10%

5%9%

Coal Oil Gas Nuclear Hydro Other Renewables

21%

1%

50%

2%

5%

21%

Planned = 169 GW

© OECD/IEA - 2006

Focus on European Union: Share of Nuclear & Renewables

2004 2015 2030

The share of carbon free power generation will increase from 46% today to 58% in APS in 2030, while it declines to 41% in the

Reference Scenario

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2004

Nuclear in Reference Scenario Renewables in Reference ScenarioAdditional Share of Nuclear in APS Additional Share of Renewables in APS

© OECD/IEA - 2006

EU25 Outlook for Power Generation – non hydro Renewables (GW installed)

Wind power installed capacity increases sixfold between 2004 and 2030

0

50

100

150

200

2004 2030 APS

GW

Wind Onshore Wind Offshore Bioenergy Solar PVSolar Thermal Tide/Wave Geothermal

© OECD/IEA - 2006

Focus on European Union : Energy-Related CO2 emissions

% of Reference Scenario

4% 18%

CO2 emissions are much lower in the Alternative Policy Scenario

3 000

3 200

3 400

3 600

3 800

4 000

4 200

4 400

4 600

1990 1995 2000 2005 2010 2015 2020 2025 2030

Mt o

f CO 2

Reference Scenario Alternative Policy Scenario

© OECD/IEA - 2006

Focus on European Union: CO2 Emissions Reduction, 2030

Efficiency improvements account for most of the emissions reduction in APS

750 Mt of CO2End-use fuel-

efficiency measures , 31%

End-use electricity-efficiency

measures, 25%

Fuel switching and improved

efficiency on the supply side, 12%

Renewables and biofuels, 12%

Nuclear, 20%

© OECD/IEA - 2006

Focus on European Union: Electricity Investment, 2005-2030

Investment needs are $139 billion lower over the projection period

-500

-400

-300

-200

-100

0

100

200

300bi

llion

dol

lars

(200

5)

Additional demand-side investment Avoided supply-side investment Net change in electricity investment

© OECD/IEA - 2006

Some concluding thoughts…

On current trends, the global energy system will remain vulnerable, dirty & expensive

Numbers speak for themselves : no sustainable/meaningful solution without having China and India on board

Policies to promote energy efficiency, renewables & nuclear can make a significant difference

Economic cost of these policies would be more than outweighed by the economic benefits

Urgent government action is needed to incentivise investment in cleaner & more secure energy

The next ten years will lock in technology for up to 60 years China and India - growing at breakneck speed fueled by

energy OECD power plants – significant portion reaching to retirement