ISES 2013 - Day 1 - Richard H. Jones (Deputy Executive Director, International Energy Agency) - Future Scenarios

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World Energy Outlook 2012 Ambassador Richard H. Jones

Deputy Executive Director

International Student Energy Summit

Trondheim, 13 June 2013

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The context

Foundations of global energy system shifting Resurgence in oil & gas production in some countries

Retreat from nuclear in some others

Signs of increasing policy focus on energy efficiency

All-time high oil prices acting as brake on global economy Divergence in natural gas prices affecting Europe (with prices

5-times US levels) and Asia (8-times)

Symptoms of an unsustainable energy system persist Fossil fuel subsidies up almost 30% to $523 billion in 2011, led by MENA

CO2 emissions at record high, while renewables industry under strain

Despite new international efforts, 1.3 billion people still lack electricity

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Emerging economies steer energy markets

Share of global energy demand

Global energy demand rises by over one-third in the period to 2035, underpinned by rising living standards in China, India & the Middle East

20%

40%

60%

80%

100%

1975 2010 2035

Middle East

India

China

OECD

Non-OECD Rest of non-OECD 6 030 Mtoe 12 380 Mtoe 16 730 Mtoe

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A United States oil & gas transformation

US oil and gas production

The surge in unconventional oil & gas production has implications well beyond the United States

Unconventional gas

Conventional gas

Unconventional oil

Conventional oil

mboe/d

5

10

15

20

25

1980 1990 2000 2010 2020 2030 2035

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Natural gas: towards a globalised market

Major global gas trade flows, 2010

Rising supplies of unconventional gas & LNG help to diversify trade flows, putting pressure on conventional gas suppliers & oil-linked pricing mechanisms

Major global gas trade flows, 2035

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Different trends in oil & gas import dependency

While dependence on imported oil & gas rises in many countries,

Net oil & gas import dependency in selected countries

0%

20%

40%

60%

80%

100%

20% 40% 60% 80% 100% Oil imports

Gas Imports

United States

China India

European Union

Japan

2010 2035

20% Gas Exports

the United States swims against the tide

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3 000 4 000 5 000 6 000 TWh

2 000

A power shift to emerging economies

The need for electricity in emerging economies drives a 70% increase in worldwide demand, with renewables accounting for half of new global capacity

Change in power generation, 2010-2035

-1 000 0 1 000

Japan

European Union

United States

China

TWh

Coal Gas Nuclear Renewables

India

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The multiple benefits of renewables come at a cost

Renewable subsidies were $88 billion in 2011; over half the $4.8 trillion required to 2035 has been committed to existing projects or is needed to meet 2020 targets

Global renewable energy subsidies

$50

$100

$150

$200

$250

2011 2015 2020 2025 2030 2035

Billion

2012-2035

$960 billion

$2 600 billion

$1 200 billion

Existing commitments

Electricity:

2011-2035 Biofuels:

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2010

Energy is becoming thirstier in the face of growing water constraints

The  energy  sector’s  water  needs  are  set  to  grow,  making  water  an  increasingly  important criterion for assessing the viability of energy projects

20%

40%

60%

80%

100%

2010

Coal

Nuclear

Other

Energy

Biofuels Fossil fuels

Power

Global water use Water for energy

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Energy efficiency: a huge opportunity going unrealised

20%

40%

60%

80%

100%

Industry Transport Power generation

Buildings

Unrealised energy efficiency potential

Realised energy efficiency potential

Two-thirds of the economic potential to improve energy efficiency remains untapped in the period to 2035

Energy efficiency potential used by sector in the New Policies Scenario

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The Efficient World Scenario: a blueprint for an efficient world

Economically viable efficiency measures can halve energy demand growth to 2035;

Total primary energy demand

12 000

13 000

14 000

15 000

16 000

17 000

18 000

2010 2015 2020 2025 2030 2035

Mtoe

New Policies Scenario

Efficient World Scenario

Reduction in 2035

Coal 1 350 Mtce

Oil 12.7 mb/d

Gas 680 bcm

Others 250 Mtoe

oil demand savings equal the current production of Russia & Norway

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Energy efficiency brings economic gains

In addition to cutting energy expenditures by an average of 20%, improved efficiency brings wider economic gains, particularly for India, China, the United States & Europe

Energy expenditure in 2035 compared with 2010

Trillion

Efficient World Scenario

New Policies Scenario Additional in the New Policies Scenario

-$0.3

$0

$0.3

$0.6

$0.9

$1.2

$1.5

China India European Union

United States

Japan

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Four measures to keep the 2 °C target alive

National efforts in this decade need to buy time for an international agreement, expected to come into force in 2020

Our 4-for-2 °C Scenario includes four measures: 1. Implement selected energy efficiency policies

2. Limit use of inefficient coal power plants

3. Reduce methane releases from upstream oil & gas

4. Partially remove fossil-fuel subsidies

The four measures meet key criteria: No  harm  to  countries’  economic  growth

Reliance only on existing technologies and proven policies

Significant national benefits other than climate change mitigation

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Key messages

Changing outlook for energy production & use, particularly in North America, may redefine global economic & geopolitical balances

Despite positive steps in some countries, global emissions keep rising, with little time left until the climate meeting in Paris 2015

Policy makers face critical choices in reconciling energy, environmental & economic objectives