© OECD/IEA 2011
World Energy Outlook 2011World Energy Outlook 2011
Dr. Fatih BirolDr. Fatih BirolIEA Chief EconomistIEA Chief Economist
Parliament House, CanberraParliament House, Canberra12 December 201112 December 2011
© OECD/IEA 2011
The context: fresh challenges The context: fresh challenges add to already worrying trendsadd 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
Emerging economies continue Emerging economies continue to drive global energy demandto drive global energy demand
Growth in primary energy demand
Global energy demand increases by one-third from 2010 to 2035, with China & India accounting for 50% of the growth
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
2010 2015 2020 2025 2030 2035
Mto
e
China
India
Other developing Asia
Russia
Middle East
Rest of world
OECD
© OECD/IEA 2011
Natural gas & renewables become Natural gas & renewables become increasingly importantincreasingly important
Renewables & natural gas collectively meet almost two-thirds of incremental energy demand in 2010-2035
Additional to 2035
2010
World primary energy demand
0
1 000
2 000
3 000
4 000
5 000
Oil Coal Gas Renewables Nuclear
Mto
e
© OECD/IEA 2011
Changing oil import needs are set toChanging oil import needs are set toshift concerns about oil securityshift concerns about oil security
Net imports of oil
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
0
2
4
6
8
10
12
14
China India EuropeanUnion
UnitedStates
Japan
mb/
d
2000
2010
2035
© OECD/IEA 2011
What impact would deferred What impact would deferred investment in MENA have on markets? investment in MENA have on markets?
MENA is set to supply the bulk of the growth in oil outputto 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 production 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
Golden prospects for natural gasGolden prospects for natural gas
Largest natural gas producers in 2035
Unconventional natural gas supplies 40% of the 1.7 tcm increase in global supply,but best practices are essential to successfully address environmental challenges
0 200 400 600 800 1 000
Norway
India
AustraliaAlgeria
CanadaQatar
Iran
ChinaUnited States
Russia
bcm
Conventional
Unconventional
© OECD/IEA 2011
Coal won the energy race in the Coal won the energy race in the first decade of the 21st centuryfirst decade of the 21st century
Growth in global energy demand, 2000 2010‑
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
Nuclear
0
200
400
600
800
1 000
1 200
1 400
1 600
Coal
Mto
e
Total non-coal
Natural gas
Oil
Renewables
© OECD/IEA 2011
Asia: the arena of future coal tradeAsia: the arena of future coal trade
International coal markets & prices become increasingly sensitive to developments in Asia; India surpasses China as the biggest coal importer soon after 2020
0
100
200
300
2009 2020 2035
Mtc
e
Japan
European Union
ChinaIndia400
Major coal net importers
2009 2020 2035
© OECD/IEA 2011
Australia’s energy resources underpin Australia’s energy resources underpin its economy & rising prosperity in Asia its economy & rising prosperity in Asia Australia will play a key role in meeting the rise in global energy demand
Consolidates position as world's largest exporter of hard coal
exports reach over 300 Mtce in 2020
more efficient power plants & CCS could bolster prospects even further
LNG exports expand to 85 bcm in 2020 and 115 bcm in 2035, more than a four-fold increase on today
LNG export capacity catches up with that of Qatar
Coal & natural gas export revenues exceed $2 trillion through to 2035
Key challenge is to reap the benefits of the resources boom while avoiding the potential pitfalls
© OECD/IEA 2011
Global second thoughts on nuclear Global second thoughts on nuclear would have far-reaching consequenceswould 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
The overall value of subsidiesThe overall value of subsidiesto renewables is set to riseto renewables is set to rise
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
Biofuels
Electricity
0
50
100
150
200
250
2007 2008 2009 2010 2015 2020 2025 2030 2035
Billi
on d
olla
rs (2
010)
© OECD/IEA 2011
Russia remains a cornerstone Russia remains a cornerstone of the global energy economyof the global energy economy
Russian revenue from fossil fuel exports
An increasing share of Russian exports go eastwards to Asia,providing Russia with diversity of markets and revenues
2010$255 billion
61%16%
21%
2035$420 billion
48%
EuropeanUnion
17%Other
20%China
15%
OtherEurope
EuropeanUnionOther
Europe
China 2%
Other
© OECD/IEA 2011
Energy is at the heart ofEnergy is at the heart ofthe climate challengethe climate challenge
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
EuropeanUnion
0
100
200
300
400
500
United States China India Japan
Gig
aton
nes
2010-2035
1900-2009
Cumulative energy-related CO2 emissions in selected regions
© OECD/IEA 2011
0
5
10
15
20
25
30
35
40
2010 2020 2025 2030 2035
Delay until 2017Delay until 2015
2015
Emissions from existinginfrastructure
The door to 2°C is closing,The door to 2°C is closing,but will we be “locked-in” ?but will we be “locked-in” ?
Without further action, by 2017 all CO2 emissions permitted in the 450 Scenariowill be “locked-in” by existing power plants, factories, buildings, etc
456°C trajectory
2°C trajectory
CO2 e
mis
sion
s (g
igat
onne
s)
© OECD/IEA 2011
If we don’t change direction soon, If we don’t change direction soon, we’ll end up where we’re headingwe’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 optionsare 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
Australia’s energy wealth is set to play a vital role, both domestically & internationally
Despite steps in the right direction, the door to 2°C is closing