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Oil in the global energy mix:Oil in the global energy mix:Climate policies can drive an early peak in oil demand Climate policies can drive an early peak in oil demand
Nobuo TanakaNobuo TanakaExecutive DirectorExecutive DirectorInternational Energy AgencyInternational Energy Agency
Bridge Forum Dialogue, LuxembourgBridge Forum Dialogue, Luxembourg13 April 2011 13 April 2011
Oil prices break out to the upside after over a Oil prices break out to the upside after over a year within a $65-$85/bbl rangeyear within a $65-$85/bbl range
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mb/dmb/dPrice Surge Kick-Started by Tighter
2H10 Fundamentals
Implied Stock Ch.&Misc to Bal (RHS)Oil DemandOil Supply
Annual expenditure on net imports of oilAnnual expenditure on net imports of oil
If oil prices average US$100 a barrel in 2011, spending on oil imports in many countries will reach or surpass the record levels of 2008* Projections made prior to events of 11 March
Overview of WEO-2010 scenariosOverview of WEO-2010 scenarios
New Policies Scenario is the central scenario in WEO-2010> assumes cautious implementation of recently announced commitments &
plans, even if yet to be formally adopted > provides benchmark to assess achievements & limitations of recent
developments in climate & energy policy
Current Policies Scenario takes into consideration only those policies that had been formally adopted by mid-2010> equivalent to the Reference Scenario of past Outlooks
The 450 Scenario sets out an energy pathway consistent with the goal of limiting increase in average temperature to 2OC
Primary energy demand by fuel in the New Primary energy demand by fuel in the New Policies ScenarioPolicies Scenario
Non-OECD energy demand increases by 64% in 2008-2035, compared with a rise of just 3% in the OECD. Demand for all types of energy increases in non-OECD countries, while demand for coal & oil
Fossil-fuel subsidies are distorting price Fossil-fuel subsidies are distorting price signals signals
Fossil-fuel consumption subsidies amounted to $312 billion in 2009, down from $558 billion in 2008, with the bulk of the fall due to lower international prices
Economic value of fossil-fuel consumption subsidies by country, 2009
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Electricity(generated from fossil fuels)GasOilCoal
Booming demand for mobility in the Booming demand for mobility in the emerging economies drives up oil use emerging economies drives up oil use
The global car fleet will continue to surge as more & more people in China & other emerging economies buy a car, overshadowing modest growth in the OECD
Oil production becomes less crudeOil production becomes less crude
Global oil production reaches 96 mb/d in 2035 on the back of rising output of natural gas liquids & unconventional oil, as crude oil production plateaus
World oil production by type in the New Policies Scenario
More oil from fewer producers More oil from fewer producers
Production rises most in Saudi Arabia & Iraq, helping to push OPEC’s market share from 41% today to 52% by 2035, a level last seen prior to the first oil shock of 1973-1974
Incremental oil production by key country in the New Policies Scenario, 2009-2035
Coal remains the backbone of global Coal remains the backbone of global electricity generationelectricity generation
A drop in coal-fired generation in the OECD is offset by big increases elsewhere, especially China, where 600 GW of new capacity exceeds the current coal-fired capacity of the US, EU & Japan
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India
Other non-OECD
OECD
Coal-fired electricity generation by region in the New Policies Scenario
Renewables enter the mainstream…. Renewables enter the mainstream….
The use of renewable energy triples between 2008 & 2035, driven by the power sector where their share in electricity supply rises from 19% in 2008 to 32% in 2035
Renewable primary energy demand in the New Policies Scenario
…….but only if there is enough government .but only if there is enough government supportsupport
Government support remains the key driver – rising from $57 billion in 2009 to $205 billion in 2035 – but higher fossil-fuel prices & declining investment costs also spur growth
Annual global support for renewables in the New Policies Scenario
In the 450 Scenario, compared with the Current Policies Scenario, China & the US account for 48% of the cumulative emission abatement that is needed in 2010-2035
World energy-related CO2 emission savings by country in the 450 Scenario
relative to the Current Policies Scenario
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2008 2015 2020 2025 2030 2035
Gt
China 33%
United States 15%
European Union 9%
India 8%
Middle East 5%
Russia 3%
Rest of world 24%
Share of cumulative abatement
between 2010-2035
Japan 3%
42.6 Gt
21.7 Gt
Current Policies Scenario
450 Scenario
20.9 Gt
The 450 Scenario: The 450 Scenario: Abatement by country Abatement by country
Fundamental change also in transport Fundamental change also in transport
Plug-in hybrids & electric vehicles reach 39% of light-duty vehicle sales by 2035, making a big contribution to CO2 abatement, thanks to a major decarbonisation of the power sector
Sales of plug-in hybrid and electric vehicles in the 450 Scenario
Will peak oil be a guest or the spectre at the Will peak oil be a guest or the spectre at the feast?feast?
Oil demand peaks at 88 mb/d before 2020 & falls to 81 mb/d in 2035, with a plunge in OECD demand more than offsetting continuing growth in non-OECD demand
Combating climate change will bring Combating climate change will bring economic benefits as well as costseconomic benefits as well as costs
In the 450 Scenario, annual spending on oil imports in 2035 by the five largest importers is around $560 billion, or one-third, lower than in the New Policies Scenario
Oil-import bills as share of GDP in selected countries
OPEC oil-export revenues set to rise OPEC oil-export revenues set to rise
In the 450 Scenario, OPEC’s cumulative oil revenues in 2010-2035 amount to $27 trillion, or more than a 3-fold increase compared with the last quarter century
The surge in oil prices poses a threat to the fragile economic recovery by impacting balance of payments, inflation & growth
If oil prices average $100 per barrel in 2011, OECD oil-import spending will amount to 2.3% of GDP
Emerging economies with high energy intensity and import dependency are most vulnerable
“Golden Age” of gas with supply abundance and high demand from China and post-Fukushima
Uncertain future Chinese policies will have huge impacts
Policies to respond to challenges posed by climate change & energy security by bringing the oil demand peak forward would have important repercussions on the oil market
With or without oil the age of cheap energy is over – but who will take the rent?
Oil in the global energy mix:Oil in the global energy mix:Climate policies can drive an early peak in oil demand Climate policies can drive an early peak in oil demand
Nobuo TanakaNobuo TanakaExecutive DirectorExecutive DirectorInternational Energy AgencyInternational Energy Agency
Bridge Forum Dialogue, LuxembourgBridge Forum Dialogue, Luxembourg13 April 2011 13 April 2011