World Energy Outlook · US natural gas supply in the Reference Scenario Thanks mainly to shale gas, US gas output grows gradually through to 2030, outstripping demand & squeezing

© OECD/IEA - 2010

World Energy Outlook

Pawel OlejarnikEnergy Analyst

17 February 2010

© OECD/IEA - 2009

World primary energy demand by fuelWorld primary energy demand by fuelin the Reference Scenarioin the Reference Scenario

Global demand grows by 40% between 2007 and 2030, with coal use rising most in absolute terms

Mto

e

Other renewables

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

1980 1990 2000 2010 2020 2030

Biomass

Hydro

Nuclear

Gas

Oil

Coal

WEO-2008 total

© OECD/IEA - 2009

Change in primary energy demand by fuelChange in primary energy demand by fuelin the Reference Scenario, 2007in the Reference Scenario, 2007--20302030

The increase in China’s demand for energy – for coal in particular – dwarfs that of all other countries & regions

- 500 0 500 1 000 1 500 2 000

E. Europe/Eurasia

Africa

Latin America

OECD

Middle East

Other Asia

India

China

Mtoe

Coal

Oil

Gas

Nuclear

Hydro

Other

© OECD/IEA - 2009

World electricity generation by fuel World electricity generation by fuel in the Reference Scenarioin the Reference Scenario

Power generation based on all types of energy except oil is projected to grow, with the biggest increases in absolute terms coming from coal- and gas-fired capacity

0 4 000 8 000 12 000 16 000

Coal

Gas

Hydro

Nuclear

Other renewables

Biomass

Oil

TWh

2007

2015

2030

© OECD/IEA - 2009

Number of people without access to electricityNumber of people without access to electricityin the Reference Scenario (millions)in the Reference Scenario (millions)

$35 billion per year more investment than in the Reference Scenario would be needed to 2030 – equivalent to just 5% of global power-sector investment – to ensure universal access

World population withoutaccess to electricity

2008: 1.5 billion people2030: 1.3 billion people

© OECD/IEA - 2009

Oil productionOil productionin the Reference Scenarioin the Reference Scenario

Sustained investment is needed mainly to combat the decline in output at existing fields, which will drop by almost two-thirds by 2030

NGLs

Unconventional oil

Crude oil – fields yet to be developed

or found

Crude oil – currently producing fields

0

20

40

60

80

100

120

2000 2008 2030

mb

/d

© OECD/IEA - 2009

Impact of decline on world natural gas productionImpact of decline on world natural gas productionin the Reference Scenarioin the Reference Scenario

Additional capacity of around 2 700 bcm, or 4 times current Russian capacity, is needed by 2030 – half to offset decline at existing fields & half to meet the increase in demand

0

1

2

3

4

5

2007 2015 2020 2025 2030

tcm Fields yet to be developed or found

Currently producing fields

0%

20%

40%

60%

80%

100%

Share from fields not yet producing

(right axis)

© OECD/IEA - 2009

US natural gas supply US natural gas supply in the Reference Scenarioin the Reference Scenario

Thanks mainly to shale gas, US gas output grows gradually through to 2030,outstripping demand & squeezing imports

0

100

200

300

400

500

600

700

1990 1995 2000 2005 2008 2015 2020 2025 2030

bcm Net imports

Conventional

Unconventional

0%

10%

20%

30%

40%

50%

60%

70%

Share of unconventional

in total supply

© OECD/IEA - 2009

Natural gas transportation capacity Natural gas transportation capacity

A glut of gas is developing – reaching 200 bcm by 2015 – due to weaker than expected demand & plentiful US unconventional supply, with far-reaching implications for gas pricing

0

100

200

300

400

500

600

700

800

2007 2015

bcm Unutilised LNG liquefaction

& pipeline capacity

LNG trade

Pipeline trade

73%

% Capacity utilisation rate

88%

© OECD/IEA - 2009

Average annual expenditure on net imports Average annual expenditure on net imports of oil & gas in the Reference Scenarioof oil & gas in the Reference Scenario

The Reference Scenario implies persistently high spending on oil & gas imports, with China overtaking the United States by around 2025 to become the world's biggest spender

0

100

200

300

400

500

600

European

Union

United

States

China Japan India ASEAN

Billion d

ollars

(2008)

1971-2008

2008-2030

1%1%

1%

2%

3%

% Share of GDP

2%

2%

3%

3% 6%

3%

0.4%

© OECD/IEA - 2009

The policy mechanismsThe policy mechanismsin the 450 Scenarioin the 450 Scenario

A combination of policy mechanisms, which best reflects nations’ varied circumstances & negotiating positions

We differentiate on the basis of three country groupings> OECD+: OECD & other non-OECD EU countries

> Other Major Economies (OME): Brazil, China, Middle East, Russia & South Africa

> Other Countries (OC): all other countries, including India

A graduated approach> Up to 2020, only OECD+ have national emissions caps

> After 2020, Other Major Economies are also assumed to adopt emissions caps

> Through to 2030, Other Countries continue to focus on national measures

Emissions peaking by 2020 will require> A CO2 price of $50 per tonne for power generation & industry in OECD+

> Investment needs in non-OECD countries of $200 billion in 2020, supported by OECD+ through carbon markets & co-financing

© OECD/IEA - 2009

World primary energy demand by fuel World primary energy demand by fuel in the 450in the 450 Scenario Scenario

In the 450 Scenario, demand for fossil fuels peaks by 2020, and by 2030 zero-carbon fuels make up a third of the world's primary sources of energy demand

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

1990 2000 2010 2020 2030

Mto

e

0%

4%

8%

12%

16%

20%

24%

28%

32%

36% Coal

Oil

Gas

Nuclear

Hydro

Biomass

Other renewables

Share of zero-carbon fuels

(right axis)

© OECD/IEA - 2009

Cumulative OPEC oil export revenuesCumulative OPEC oil export revenuesby scenarioby scenario

Though slightly lower than in the Reference Scenario, OPEC revenues in the 450 Scenario are over four times as high as in the last 20 years

0

4

8

12

16

20

24

28

1985-2007

Reference Scenario 450 Scenario

2008-2030

Trillion

dolla

rs (2

00

8)

© OECD/IEA - 2009

World abatement of energyWorld abatement of energy--related COrelated CO22 emissionsemissionsin the 450 Scenarioin the 450 Scenario

An additional $10.5 trillion of investment is needed in total in the 450 Scenario, with measures to boost energy efficiency accounting for most of the abatement through to 2030

26

28

30

32

34

36

38

40

42

2007 2010 2015 2020 2025 2030

Gt

450 Scenario

Reference Scenario

OECD+

OME

OC

CCS - 10%

Nuclear - 10%

Renewables & biofuels - 23%

Efficiency - 57%

World abatement by technology, 2030

3.8 Gt

13.8 Gt

© OECD/IEA - 2009

Incremental world electricity productionIncremental world electricity productionin the Reference and 450 Scenarios, 2007in the Reference and 450 Scenarios, 2007--20302030

Renewables, nuclear and plants fitted with CCS account for around 60% of electricity generation globally in 2030 in the 450 Scenario, up from less than one-third today

-1 000

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

Coal Gas Oil Nuclear Hydro Wind Biomass Solar Other

renewables

TWh

Reference Scenario

450 Scenario

© OECD/IEA - 2009

World passenger vehicle sales & average new vehicle World passenger vehicle sales & average new vehicle COCO22 intensity in the 450intensity in the 450 ScenarioScenario

Improvements to the internal combustion engine & the uptake of next-generation vehicles & biofuels lead to a 56% reduction in new-car emission intensity by 2030

0%

20%

40%

60%

80%

100%

2007 2020 2030

Electric vehicles

Plug-in hybrids

Hybrid vehicles

ICE vehicles

Sha

re o

f sa

les

205

125

90

0

50

100

150

200

250

Gra

mm

es

per

kilo

metr

e

CO2 intensity

of new vehicles

(right axis)

© OECD/IEA - 2009

OECD+

Non-OECD

20200

200

300

400

100

Financing in 2020

With OECD+ co-financing of

of non-OECD investment

OECD+

Non-OECD

5

Additional investment in the 450Additional investment in the 450 ScenarioScenariorelative to the Reference Scenariorelative to the Reference Scenario

The 450 Scenario sees $10.5 trillion of additional investment to the Reference Scenario, costing 0.5% of GDP in 2020 and 1.1% of GDP in 2030

0

200

400

600

800

1 000

1 200

2015 2020 2025 2030

Billion d

ollars

(2008)

Other Countries

Other Major Economies

OECD+

0%

$ b

illion (

2008)

© OECD/IEA - 2009

The benefits of the 450 ScenarioThe benefits of the 450 Scenario

Avoiding the worst impacts of climate change

Lower energy bills for consumers: in industry, transport & buildings fuel costs are reduced by a total of $8.6 trillion between 2010 and 2030, compared to additional investment of $8.3 trillion> Savings in transport alone account for $6.2 trillion

Energy-security benefits and reduced oil & gas imports > For OECD countries, oil imports are 6 mb/d lower in 2030 than in 2008

> In China & India, oil imports are around 10% and 15% lower, respectively, by 2030 than in the Reference Scenario; China's gas imports are 23% lower by 2030

Sharp reduction in air pollution relative to the Reference Scenario> In 2030, SO2 emissions are 29% lower than in the Reference Scenario;

NOx emissions are 19% lower & emissions of particulate matter 9% lower

© OECD/IEA - 2009

World abatement of energyWorld abatement of energy--related COrelated CO22 emissionsemissionsin the 450 Scenarioin the 450 Scenario

Current pledges point direction but further efforts would be neededto reach the 450 Scenario

26

28

30

32

34

36

38

40

42

2007 2010 2015 2020 2025 2030

Gt

450 Scenario

Reference Scenario

3.8 Gt

13.8 Gt

27

29

31

33

35

2007 2010 2015 2020

Gt

Reference Scenario

450 Scenario

Current

Pledges

© OECD/IEA - 2009

ConclusionsConclusions

Meeting a 450 Scenario is achievable but requires a wholesale transformation of the way we produce & use energy

The investment needs are substantial, but there would be major benefits through fuel savings, enhanced energy security & reduced pollution – as well as reduced climate change

Financial support holds the key, as many of the abatement options are in non-OECD countries

Natural gas can play a key role as a bridge to a cleaner energy future

The challenge is enormous – but it can and must be met

> Improved energy efficiency & technology deployment are critical

> Each year of delay adds $500 billion to mitigation costs