© OECD/IEA 2011 World Energy Outlook 2011 Carnegie Endowment Washington DC, 28 November 2011.

© OECD/IEA 2011

World Energy Outlook 2011World Energy Outlook 2011

Carnegie EndowmentCarnegie EndowmentWashington DC, 28 November 2011Washington DC, 28 November 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 in the New Policies Scenario

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

Oil demand is driven higher Oil demand is driven higher by soaring car ownershipby soaring car ownership

Vehicles per 1000 people in selected markets

The passenger vehicle fleet doubles to 1.7 billion in 2035; most cars are sold outside the OECD by 2020, making non-OECD policies key to global oil demand

20102035

0

100

200

300

400

500

600

700

800

United States EuropeanUnion

China India Middle East

© OECD/IEA 2011

US oil imports declineUS oil imports decline

More stringent vehicle fuel efficiency standards and expanding domestic production from light tight oil cause US oil imports to fall to about 6 mb/d in 2035

US liquids supply

0

5

10

15

20

25

1990 2005 2010 2020 2035

mb/

d

Net oil imports

Biofuels

Natural gas liquids

Crude oil

© 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

EU oil imports overtake those of the US around 2015 and China becomes the world’s largest oil 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 output 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

Globally, second thoughts on nuclear Globally, 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

Power investment focuses on Power investment focuses on low-carbon technologieslow-carbon technologies

Share of new power generation and investment, 2011-2035

Renewables are often capital-intensive, representing 60% of investment for 30% of additional generation, but bring environmental benefits & have minimal fuel costs

0%

5%

10%

15%

20%

25%

30%

35%

40%

Coal Gas Nuclear Hydro Wind Solar PV

GenerationInvestment

© 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)

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Realising Russia’s potential for energy Realising Russia’s potential for energy savings would have a big impactsavings would have a big impact

Natural gas savings from raising efficiency (to comparable OECD levels)

Russia’s total energy savings potential is close to the primary energy used in a year by the UK; new efficiency policies bring results, but the savings potential remains large even in 2035

600 400 200 0 200 400 600

2008

2035

180 bcm

130 bcm

Domestic gas demand / potential savings

bcm

Net exports

© 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

Energy poverty is widespreadEnergy poverty is widespread

31

8

Latin America

Sub-Saharan Africa China

India

Rest of developing

Asia

289 379

585

1.3 billion people in the world live without electricity

Million people without electricity

© 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

US oil security improves, although world oil supply diversity is diminishing; new options are 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

The world needs Russian energy, while Russia needs to use less

Despite steps in the right direction, the door to 2°C is closing