IEA© OECD/IEA 2018

Trends in Energy Scenario Development

Cecilia Tam, Senior Energy Analyst, International Energy Agency

APERC Annual Conference, Tokyo 30-31 May 2018

© IEA 2017

Context

Energy Efficiency: The world is generating more value than ever from its energy use, and there has been a noticeable acceleration in recent years

Renewables: Solar PV broke new records in 2016, led by China and is on track to be the cheapest source of new electricity in many countries

China: Drive to “make the skies blue again” is recasting its role in energy

United States: Is turning into the undisputed global leader in oil and gas

Electrification: The future is electrifying, spurred by cooling, electric vehicles & digitalisation

There are many possible pathways ahead & many potential pitfalls if governments or industry misread the signs of change

© IEA 2018

The world is generating more value from its energy use

This decade has seen intensity improvement rates at almost double the historic average, suggesting

that the world has entered a new era of faster intensity gains.

Changes in global energy intensity (energy per unit of GDP)

-3.0%

-2.0%

-1.0%

0.0%

1981-90 1991-2000 2001-10 2011 2012 2013 2014 2015 2016

Ann

ual c

hang

e in

ene

rgy

inte

nsity

Average annual change 1981-2010 Average annual change 2011-2016

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Renewables growth more and more dependent on wind and solar

Solar PV enters a new era, becoming the undisputed leader in renewable power capacity growth;

PV also accounts for 60% of the upside potential in the accelerated case

Renewable electricity capacity growth by technology

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0

200

400

600

800

1 000

1 200

1999-2004 2005-10 2011-16 2017-22

Capacity growth (GW)

Additional -accelerated case

Others

Hydropower

Solar PV

Wind

% from wind andsolar PV (right axis)

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A shift in the global centre of gravity for energy

Change in primary energy demand to 2040 (Mtoe)

Southeast Asia, India and China are the engine of future energy demand growth, together accounting for almost 60% of the global increase to 2040

Share of global growth 2016-2040

1 005India 420

SoutheastAsia

790ChinaUnited States

-30

Japan-50

Europe-280

320Latin America

485

Africa

135

Eurasia

485MiddleEast

11%

21%

26%

13%

13%

8%3% 5%

Southeast Asia

China

IndiaMiddle

East

Africa

Latin America

Eurasia Other

© OECD/IEA 2018

25

30

35

US becomes undisputed leader of oil & gas production

Oil and gas production in the United States

The US is already switching to become a net exporter of gas & becomes a net exporter of oil

in the 2020s, helped also by the demand-side impact of fuel efficiency & fuel switching

5

10

15

20

1980 1990 2000 2010 2020 2030 2040

mboe/d Shale oil

Shale gas

Other unconventionals

Conventional oil & gasmboe/d

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GW

Solar PV forges ahead in the global power mix

Global average annual net capacity additions by type

China, India & the US lead the charge for solar PV, while Europe is a frontrunner for onshore &

offshore wind: rising shares of solar & wind require more flexibility to match power demand & supply

Renewables

Nuclear

Gas

Coal

Renewables

Nuclear

Gas

Coal

20 40 60 80 100 120 140 160 GW

2010-2016

2017-2040

Solar PV Wind

Solar PV Wind Other

Other

20 40 60 80 100 120 GW

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Energy demand by fuel in selected end-use sectors in

China in the New Policies Scenario

300

600

900

1 200

1 500

2000 2016 2040 2000 2016 2040 2000 2016 2040

Biomass

Heat

Electricity

Gas

Oil

Coal

Industry Transport Buildings

Mto

eOtherrenewables

As China enters the next phase of development, the focus shifts from industry-led

towards services-led growth with a focus on energy efficiency and electricity use

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The future is electrifying

Electricity generation by selected region

China adds the equivalent of today’s United States to its electricity generation by 2040 and Southeast

Asia becomes the 5th largest electricity consumer

Middle East

2 000 4 000 6 000 8 000 10 000

Africa

Southeast Asia

European Union

India

United States

China

TWh2016 Growth to 2040

Sources of global

electricity demand growth

Industrial motors

Cooling

Large appliances

Connected & small

appliances

Electric vehicles

Other

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706 bcm in 2016

Global gas trade

Growing gas import requirements in developing Asia, Japan and Korea are largely met by LNG,

with exports from the US accelerating a shift towards a more flexible, liquid global market

LNG ushers in a new global gas order

Gas exportersGas importers

39% shipped by LNG

1 230 bcm in 2040

59% shipped by LNG

AustraliaRussia& Caspian

MiddleEast

Other

Africa

US &Canada

AustraliaRussia& Caspian

MiddleEast Other

AfricaUS& Canada

Asia37%

Europe52%

Other

Asia60%

Europe35%

Other

© OECD/IEA 2018

Conclusions

While energy efficiency has improved in recent years, 68% of

global energy use remains uncovered by mandatory policy and

low rate of policy implementation needs to accelerate.

Prospects for renewables driven by developments in solar PV

and wind requiring greater focus on systems integration

China continues to shape global trends, but in new ways as its

“energy revolution” drives cost reductions for a wide range of

clean energy technologies that can benefit APEC

Electrification & digitalisation are the future for many parts of

the global energy system, creating new opportunities

© OECD/IEA 2018

Suggestions for future APERC scenarios

Accelerated energy efficiency scenario assuming efficient

urban design and optimised heating and cooling networks

High electrification scenario to identify opportunities for

decarbonising end uses with low cost renewables and shifting

away from fossil fuels

Energy scenarios under a Sustainable Development Goal lens;

IEA’s Sustainable Development Scenario covers SDG 3 (Clean

Air), 7 (Access and Renewables) and 13 (Climate Change)

© OECD/IEA 2018

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