© OECD/IEA 2015 Addressing global energy and climate change challenges Dr. Fatih BIROL IEA Executive Director The University of Tokyo 16 September 2015
© OECD/IEA 2015
Addressing global energy and climate change challenges
Dr. Fatih BIROL IEA Executive Director
The University of Tokyo16 September 2015
© OECD/IEA 2015
Signs of stress in the energy system
Today’s market conditions a welcome boost to consumers, but
should not disguise difficult road ahead
Cutbacks & cost-efficiency the new watchwords for the upstream
Turmoil in the Middle East raises doubts over future oil balance
Mixed signals in run-up to crucial climate summit in Paris in 2015
Flattening in global CO2 emissions a turning point, or a pause?
Increased emphasis on energy efficiency starting to bring results
Will change in global energy be led by policies, or driven by events?
© OECD/IEA 2015
Changing dynamics of global demand
Energy demand by region
As China slows, then India, Southeast Asia, the Middle East and parts of Africa & Latin America take over as the engines of global energy demand growth.
2 000
4 000
6 000
8 000
10 000
1990 2000 2010 2020 2030 2040
Mtoe
OECD
Rest of world
China
China
Rest of world
OECD
© OECD/IEA 2015
Who is driving change in oil markets?
Oil consumption
-3
-2
-1
0
1
2
3
4
mb
/d
IEA
OPEC
Oil production
Net oil production and consumption changes, 2008-2014
OPEC remains central to the global oil outlook, but over the past 6 years it is the IEA that has freed up more than 6 mb/d to fuel rising consumption in other markets
5
© OECD/IEA 2015
The price is hitting upstream spending
Global upstream oil and gas investment
Announced capex cuts for 2015 are highest (at up to 40%) in North America & Brazil; for tight oil, a decision to stop drilling feeds through more quickly to production levels
250
500
750
Bill
ion
do
llars
2012 2013 2014 2015 (est.)
20%
© OECD/IEA 2015
Gas on the way to become first fuel,with role of LNG on the rise
Main sources of regional LNG supply
Share of LNG rises in global gas trade, pushed by a near-tripling in liquefaction sites: LNG brings more integrated & secure gas markets, but only limited relief on prices
Middle East
Australia
US & Canada
East Africa
Russia
North AfricaWest Africa
Other
Middle East
Southeast Asia
West AfricaAustralia
North AfricaOther
100
200
300
400
500
600bcm
2012 2040
© OECD/IEA 2015
Energy & climate change today
A major milestone in efforts to combat climate change is fast approaching – COP21 in Paris in December 2015
Momentum is building:
Historic US-China joint announcement; EU 2030 targets agreed
Developed & developing countries are putting forward new pledges
Many energy companies & investors are starting to engage
Energy production & use accounts for two-thirds of global greenhouse-gas emissions
Energy sector must cut emissions, while powering economic growth, boosting energy security & increasing energy access
© OECD/IEA 2015
National pledges build towards a global agreement
Submitted INDCs cover 70% of energy-related GHG emissions, with implications for future energy & emissions trends
Submitted INDCs
© OECD/IEA 2015
Conclusions
Geopolitical & market uncertainties are set to propel energy security high up the global energy agenda
The rise in LNG – notably from the US – is set to have a positive impact on international gas market efficiency & security
For COP21, the IEA proposes four key energy sector outcomes:
1. Target a near-term peak in emissions
2. Five-year revision, to test the scope for raising ambition
3. Lock in the vision by setting a long-term emissions goal
4. Track the transition in the energy sector
Key priority as the new IEA Executive Director is to modernise the Agency