World Energy Outlook Pawel Olejarnik Energy Analyst 17 February 2010 © OECD/IEA - 2010

Mtoe

World primary energy demand by fuel in the Reference Scenario

18 000

Other renewables

16 000

Biomass

14 000

Hydro

12 000

Nuclear

10 000 8 000

Gas

6 000

Oil

4 000

Coal

2 000 0 1980

WEO-2008 total

1990

2000

2010

2020

2030

Global demand grows by 40% between 2007 and 2030, with coal use rising most in absolute terms © OECD/IEA - 2009

Change in primary energy demand by fuel in the Reference Scenario, 20072007-2030 Coal

China

Oil

India

Gas

Other Asia

Nuclear

Middle East

Hydro

OECD

Other

Latin America Africa E. Europe/Eurasia - 500

0

500

1 000

1 500

2 000 Mtoe

The increase in China’s demand for energy – for coal in particular – dwarfs that of all other countries & regions © OECD/IEA - 2009

World electricity generation by fuel in the Reference Scenario 2007

Oil

2015

Biomass

2030

Other renewables Nuclear Hydro Gas Coal 0

4 000

8 000

12 000

16 000 TWh

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 © OECD/IEA - 2009

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

World population without access to electricity 2008: 1.5 billion people 2030: 1.3 billion people $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 © OECD/IEA - 2009

mb/d

Oil production in the Reference Scenario 120

NGLs

Unconventional oil

100

Crude oil – fields yet to be developed or found Crude oil – currently producing fields

80

60 40 20

0 2000

2008

2030

Sustained investment is needed mainly to combat the decline in output at existing fields, which will drop by almost two-thirds by 2030 © OECD/IEA - 2009

tcm

Impact of decline on world natural gas production in the Reference Scenario

5

100%

4

80%

Currently producing fields

3

60%

Share from fields not yet producing (right axis)

2

40%

1

20%

0

0% 2007

2015

2020

2025

Fields yet to be developed or found

2030

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 © OECD/IEA - 2009

bcm

US natural gas supply in the Reference Scenario 700

70%

Net imports

600

60%

Conventional

500

50%

400

40%

300

30%

200

20%

100

10%

0

Unconventional Share of unconventional in total supply

0%

1990 1995 2000 2005 2008 2015 2020 2025 2030

Thanks mainly to shale gas, US gas output grows gradually through to 2030, outstripping demand & squeezing imports © OECD/IEA - 2009

bcm

Natural gas transportation capacity

800

73%

700 600 500

Unutilised LNG liquefaction & pipeline capacity LNG trade

88%

Pipeline trade

400

% Capacity utilisation rate

300

200 100 0 2007

2015

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 © OECD/IEA - 2009

Billion dollars (2008)

Average annual expenditure on net imports of oil & gas in the Reference Scenario 600

1971-2008 2%

500

2008-2030 % Share of GDP

2%

400

3%

300 200

1%

100

3%

1%

6% 3%

2% 1%

3%

0 European Union

United States

China

Japan

India

0.4%

ASEAN

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 © OECD/IEA - 2009

The policy mechanisms in 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

Mtoe

World primary energy demand by fuel in the 450 Scenario

4 500 4 000

36% 32%

3 500

28%

3 000

24%

2 500

20%

2 000

16%

1 500

12%

1 000

8%

500

4%

0 1990

Coal Oil Gas Nuclear Hydro Biomass Other renewables Share of zero-carbon fuels (right axis)

0% 2000

2010

2020

2030

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 © OECD/IEA - 2009

Trillion dollars (2008)

Cumulative OPEC oil export revenues by scenario

28 24 20 16 12 8 4 0 Reference Scenario

1985-2007

450 Scenario

2008-2030

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 © OECD/IEA - 2009

Gt

World abatement of energyenergy-related CO2 emissions in the 450 Scenario 42 Reference Scenario

40

World abatement by technology, 2030

38 OECD+ 36 34

13.8 Gt 3.8 Gt

32

OME Renewables & biofuels - 23%

30 OC

28

26 2007 2010

Efficiency - 57%

CCS - 10%

450 Scenario 2015

2020

2025

Nuclear - 10%

2030

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 © OECD/IEA - 2009

TWh

Incremental world electricity production in the Reference and 450 Scenarios, 20072007-2030 7 000

Reference Scenario

6 000

450 Scenario

5 000 4 000 3 000 2 000

1 000 0 -1 000 Coal

Gas

Oil

Nuclear Hydro Wind Biomass Solar Other renewables

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 © OECD/IEA - 2009

100%

250

80%

200

205 60%

150

40%

100

125 90

20% 0%

Grammes per kilometre

Share of sales

World passenger vehicle sales & average new vehicle CO2 intensity in the 450 Scenario

Electric vehicles Plug-in hybrids Hybrid vehicles ICE vehicles CO2 intensity of new vehicles (right axis)

50

0 2007

2020

2030

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 © OECD/IEA - 2009

1 200

Other Countries

1 000

Other Major Economies

800

OECD+

Financing in 2020

600

With OECD+ co-financing of 50% of non-OECD investment

400 200 0 2015

2020

2025

2030

$ billion (2008)

Billion dollars (2008)

Additional investment in the 450 Scenario relative to the Reference Scenario

400

300

Non-OECD Non-OECD

200 100 0

OECD+ OECD+

2020

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 © OECD/IEA - 2009

The 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

42 Reference Scenario

40

Gt

Gt

World abatement of energyenergy-related CO2 emissions in the 450 Scenario 35

Reference Scenario Current Pledges

33

38 31

36

450 Scenario

34

13.8 Gt

29

3.8 Gt

32

27 2007

2010

2015

2020

30 28

26 2007 2010

450 Scenario 2015

2020

2025

2030

Current pledges point direction but further efforts would be needed to reach the 450 Scenario © OECD/IEA - 2009

Conclusions  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 © OECD/IEA - 2009