ieej © 2019, all rights reserved · 2019-07-05 · although share of fossil fuel in energy...

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IEEJ © 2019, All rights reserved

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Ken Koyama, IEEJ, June 25th, 2019

Volatile crude oil price Impacts of Unconventional Oil & Gas Development Impacts of US Shale Gas Revolution Impacts of US Energy Independence

Growing energy demand in Asia and its implication to global energy security Emerging concerns for energy supply constraints Geopolitical risks in the Middle East Lack of timely investment in resource development Importance of stability of energy transportation

Environmental challenges for sustainabilityClimate change and global environmental problemsLocal and regional environmental problems

Emerging global energy landscape

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0

1

2

3

4

5

6

1990 2000 2010 2020 2030 2040 2050

Gtoe

Oil

Coal

Nuclear

Renewables

Natural gas

Coal consumption will decrease remarkably (especially, for power generation). Oil consumption will decrease after peaking in 2030. Although share of fossil fuel in energy consumption will decrease from 81% to 69% in 2050 (to

79% in the Reference Scenario), high dependency on fossil fuel continues.

Coal declines while oil hits peak in 2030❖ Primary energy demand

(Solid lines: Advanced Technologies, dashed lines: Reference) It is assuming preparation and implementation of more ambitious strategies or programs for energy security, mitigation of climate change and so on.

❖ Comparison with the Reference

● Advanced Technologies Scenario

In the Advanced Technologies Scenario…

Gen.

Gen.

Gen.

Gen.

Trans.

-1.5 -1.0 -0.5 0.0 0.5

Coal

Oil

Natural gas

Nuclear

Renewables

Gtoe

Advanced Technologies Scenario

Gen.: Power generationTrans.: Transportation

Source: “IEEJ Outlook 2019” (IEEJ, October 2018)

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CO2 emissions peak in the middle of 2020s<Advanced Technologies Scenario>

❖ Energy-related CO2 Emissions ❖ Reductions by technology

……▲6.2Gt

………▲0.4Gt

…………▲2.2Gt

▲14.4Gt

……▲3.6Gt

…………▲0.5Gt……………▲1.5Gt

44

30

33

10

20

30

40

50

1990 2000 2010 2020 2030 2040 2050

GtCO2Energy Efficiency

Biofuels

Wind, Solar, etc.

Nuclear

Fuel Switching

CCS

Reference

ATS

Halve

Energy-related CO2 emissions in ATS decline after the 2020s but are still very far from reaching half of current levels by 2050. Efficiency is the most contributor for CO2 reductions from the reference. Two-thirds of the total reductions are electricity-related technologies, including non-fossil power, thermal power with CCS and energy efficiency in power supply/demand.

Source: IEEJ “IEEJ Outlook 2018” (Oct. 2017)

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-5

-4

-3

-2

-1

0

1

2

China India ASEAN

Chan

ge o

f inv

estm

ent/

impo

rt ( T

ril. $

201

0)

AdditionalinvestmentImportreduction(Quantity effect)

Importreduction(Price effect)

-2

0

2

4

6

8

10

MENA

Additionalinvestment

Importreduction(Quantity effect)

Exportreduction(Price effect)

In the Reference Scenario, $67 billion of investment is required for the energy supply facilities (1.5% against GDP).

In the Advanced Technologies Scenario, $8 billion of investment is additionally required. In Asia, additional investment can be covered by the savings through reduction of fuel imports. In the Middle East, decreases in revenues from oil and natural gas export will be much more than

decreases in the upstream investment.

Required investment for energy supply

❖ Required investment (2017-2050) ❖ Difference of benefits and costbetween two scenarios (2017-2050)

* “Electricity” includes the saving through electrification.

Net cost

Net benefits

* MENA: The Middle East and North Africa

67 65

1525

0

20

40

60

80

100

120

Reference AdvancedTechnologies

Accu

mul

ated

inve

stm

ent (

Tril.

$ 2

010)

Others

Electricity

Transmission

Zero-emissionpower sourcesThermalswithout CCSFuel supply

Investment forenergy efficiency

Investment forenergy supply facilities


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0

2

4

6

8

10

12

14

16

0 20 40 60 80 100

Prim

ary

ener

gy d

eman

d (G

toe)

Real GDP ($2010 trillion)

-0.5 0.0 0.5 1.0 1.5

India

China

ASEAN

MENA

Sub-Sahara

OECD

Gtoe

The global primary energy demand will increase by 1.4 times in 2050. The net increase in energy demand can be entirely attributable to non-OECD. In OECD, decoupling between growth of the GDP and energy consumption proceeds. 63% of the increment come from China, India and the ASEAN countries. Share of Asia in the global primary energy demand will increase from 41% to 48%.

Dramatic growth of energy demand in Asia❖ Primary energy demand vs. real GDP ❖ Change in energy demand (2016-2050)

63%

Reference Scenario

1990-2016 2050

OECD

2050

2040

2030

1990-2016

Non-OECD

* MENA: The Middle East and North Africa


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The time for car electrification has come?A resolution to ban conventional car sales in the European Union by 2030 was passed by the Bundesrat of Germany (2016)Germany

The ruling and opposition parties proposed the abolition of conventional vehicles by 2025 (2016)Norway

The Government announced that it would ban conventional car sales by 2040 (2017)

France

The Government announced that it would ban conventional car sales by 2040 (2017)

United Kingdom

Minister said that all new car sales after 2030 would be electric vehicles (2017)

India

Deputy Minister mentioned that the ban on the sale of conventional vehicles was under investigation (2017)China

The target for EV/FCV sales is more than 1 million and total electrified vehicles sales at 5.5 million in 2030 (2017).

Announced the strategy to increase EV share in its total sales to 25% with more than 80 models of ZEVs by 2025 (2017)

Introducing 12 models of EVs by 2022. The target of 30% of its total sales as EVs (2017)

The plan to prepare EVs at all line up by 2020 (2015).Introducing 14 EV models by 2025 (2017).

Introducing 13 new models of EVs by 2022 with new investment of 11 billion USD (2017).

In 2030, two-thirds of automobile sales will be electrified. EVs will be released in China in 2018 (2017).

Toyota

Volkswagen

Renault-Nissan

Hyundai

Ford

Honda

<Peak Oil-Demand Analysis>


→ Canceled later

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*EIA projection includes bio fuels and GTL. DNV projection excludes NGLs

Source: Prepared by Shigeru Suehiro, IEEJ (October 2018)

Difference in Oil Demand Projections

0

20

40

60

80

100

120

140

2000 2010 2020 2030 2040 2050

IEEJ REF

IEEJ ATS

IEEJ POD

IEA CPS

IEA NPS

IEA SDS

BP ET

BP FT

BP EFT

BP ICE ban

DNV Base

EIA REF

OPEC REF

Mb/d

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•Economic growth

•Need to protect environment

•Lower price

•Competition against coal

•Future of nuclear power

•Competition against renewable energy

•Competition with LPG

•Impact of power/gas market reform

•Pipeline vs. LNG

Factors to affect Gas/LNG Demand in Asia

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0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2000 2010 2020 2030 2040 2050

IEEJ REF

IEEJ ATS

IEA CPS

IEA NPS

IEA SDS

BP ET

DNV Base

EIA REF

bcm

Difference in Natural Gas Demand Projections

Source: Prepared by Shigeru Suehiro, IEEJ (October 2018)

*DNV projection includes NGLs

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Companies’ Response to Decarbonization

Focus on natural gas/LNG business as a cleaner fuel

Actions to embark on RE business

Eyes on innovative technologies such as hydrogen

Eyes on CO2 response/utilization technologies such as CCS/carbon recycle

Actions on ESG investment and CSR/Reputation conscious strategy

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Global energy challenges Emerging risks/threats to energy security and sustainability

Global energy transition and its implication Uncertainty over oil and gas demand But oil and gas will continue to play an important role in energy mix

Rising Asia’ importance in world energy market Increasing presence with rising demand and imports

Need to response to decarbonization Importance of cleaner energy and innovative technology

Summary and Conclusion

ieej © 2019, all rights reserved · 2019-07-05 · although share of fossil fuel in energy...

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