© OECD/IEA 2014

Amos Bromhead Directorate of Global Energy Economics

International Energy Agency

APERC Annual Conference 20159 -10 June 2015

© OECD/IEA 2014

Outlook for energy demand to 2040

World total primary energy demand by scenario

The three scenarios presented demonstrate the impact of the policy choices made by governments: rates of growth in energy use & the types of fuels supplied are

markedly different

8 000

10 000

12 000

14 000

16 000

18 000

20 000

22 000

1990 2000 2010 2020 2030 2040

+1 746 Mtoe (+10%)Current Policies Scenario

New Policies Scenario

450 Scenario

-2 663 Mtoe (-15%)

Mtoe

© OECD/IEA 2014

Changing dynamics of global demand

Energy demand by region

As 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

2 000

4 000

6 000

8 000

10 000

1990 2000 2010 2020 2030 2040

Mtoe

OECD

Rest of world

China

China

Rest of world

OECD

© OECD/IEA 2014

A mix slowly moving towards low-carbon energy

Fuel shares in world primary energy demand

Declining shares of oil & coal in the mix bring the overall share of fossil fuels down to just under three-quarters by 2040, with gas on the way to becoming first fuel

29%

31%

21%

5%

14%

2012

Coal

Oil

GasNuclear

Renewables

13 361 Mtoe

24%

26%24%

7%

19%

204018 290 Mtoe

© OECD/IEA 2014

The changing geography of oil demand

Growth in world oil demand by region

The 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

90.1

103.9

OECD

-10.4

75

80

85

90

95

100

105

2013 2040

China

India

OtherAsia

Africa

5.8

5.5

2.3

2.4

MiddleEast

3.6

Othernon-OECD

Bunkers1.63.0m

b/d

2.3

© OECD/IEA 2014

India

World

Global coal demand leveling off

Global coal demand by key region

Global coal demand growth slows rapidly due to more stringent environmental policies, underlining the importance of high-efficiency plant & CCS to coal’s future

1 000

2 000

3 000

4 000

5 000

6 000

7 000

1980 1990 2000 2010 2020 2030 2040

Mtce

1987: European coal demand peak2005: US coal demand peak

Chinese coal demand plateau

India: 2nd largest coal consumer by 2020

Other

India

China

United StatesEurope

© OECD/IEA 2014

China and the Middle East: key sources of demand growth for natural gas

Natural gas demand by region

Gas demand growth in China & the Middle East alone, driven largely by the priority to diversify the fuel mix for power, is more than double the rise in total OECD gas use

200

400

600

800

1 000bcm Additionalto 20402012

UnitedStates

MiddleEast

China EuropeanUnion

Russia Africa IndiaLatin America

© OECD/IEA 2014

Renewables supply half of the growth in global power demand; wind & solar PV

Renewables-based power generation and subsidies

Renewables overtake coal to become the leading source of power

Generation

Subsidies

Hydropower

Wind and solar PV

(right axis)

wind & solar PV subsidies decline from 2030 as costs fall & recent higher-cost commitments expire

Generation

1 000

2 000

3 000

4 000

5 000

6 000

2013 2020 2040 2013 2030 2040

TWh

30

60

90

120

150

180

Billi

on d

olla

rs (2

013)210

2030 2020

7 000

© OECD/IEA 2014

The entire global CO2 budget to 2100 is used up by 2040 – Paris must send a strong signal that low-carbon investment needs to increase to four-times current levels

The entire global CO2 budget to 2100 is used up by 2040

The 2 °C goal – last chance in Paris?

World CO2 budget for 2 °C~2300 Gt

25%

50%

75%

100%

Share of budget used in Central Scenario

1900-2012

2012-2040

Average annual low-carbon investment, 2014-2040

Central Scenario

For 2 °C target

2013

CCSNuclearRenewablesEfficiency

0.5

1.0

1.5

2.0

Trill

ion

dolla

rs (2

013)

© OECD/IEA 2014

Navigating a stormy energy future

n Geopolitical & market uncertainties are set to propel energy security high up the global energy agenda

n Volatility in the Middle East raises short-term doubts on investment & spells trouble for future oil supply

n Without clear direction from Paris in 2015, the world is set for warming well beyond the 2 °C goal

n Far-sighted government policies are essential to steer the global energy system on to a safer course