Security of Energy Supply in the European Union

Transcript Security of Energy Supply in the European Union

Security of Energy Supply in the European Union

William C. RAMSAY INTERNATIONAL ENERGY AGENCY

Castle Mĕlník, 31 May 2007 © OECD/IEA, 2007

The IEA: Who are Members?

Australia (1979) Belgium Canada Finland (1992) Greece (1977) Austria Czech Republic (2001) France (1992) Denmark Germany Hungary (1997) Ireland Korea (2002) Italy ( 1978) Luxembourg Norway participates in the Agency under a special Agreement Sweden Japan The Netherlands Portugal (1981) Switzerland New Zealand (1977) Spain Turkey (1981) United Kingdom United States

The Slovak Republic and Poland are candidate countries

IEA Shared Goals

1. Diversity, efficiency and flexibility in the energy sector 2. Prompt, flexible (and, when needed, collective) response to energy emergencies 3. Environmentally sustainable provision and use of energy 4. Development of more environmentally acceptable energy sources 5. Improved energy efficiency 6. Continued research, development and market deployment of new and improved energy technologies 7. Undistorted energy prices 8. Free and open trade and a secure framework for investment 9. Co-operation among all energy market participants

Public Oil Stocks Key to Preparedness

937

North America Europe

401

1,230

691

Public Industry Asia

396

Public Industry

428

Public Industry

Units: Million barrels Includes: crude, NGLs and feedstocks and finished products •

Total Stocks of 4.1 billion barrels =150 days of net imports

•

Public stocks only = 2 years of Iranian exports

•

No emergency system exists for natural gas

Hurricanes Katrina & Rita

140 120 100 2 September 2005 - IEA collective response to Hurricane Katrina 80 60 40 20 Jan 05

WTI Cush Platt's M1(Adj) Unleaded USG Pipeline Platt's No. 2 USG Pipeline Platt's

May 05 Sep 05 Jan 06 May 06

This is the core task of governments

Sep 06

World Energy Outlook 2006

Reference Scenario: World Primary Energy Demand

18 000 16 000 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 1970 1980 1990

Other renewables

2000 2010 2020 2030

Nuclear Biomass Gas Coal Oil

Global demand grows by more than half over the next quarter of a century, with coal use rising most in absolute terms

New Oil & Gas Upstream Investment by Source and Destination, 2006-2010 Total investment = $306 billion OPEC 7% Rest of world 13% Rest of world 59% OECD 19

OECD 80% OPEC 23% Source of investment by company base Distribution of investment

Oil and gas companies based on OECD countries continue to dominate global upstream investment, most of which will go to non-OECD

Changing Pattern of Energy Demand

100% 80% 22% 16% 39% 49% 60% 10% 9% 40% 62% 51% 42% 20% 0% OECD 1971 2003 Transition economies 2030 Developing countries

About 70% of the increase in energy demand will come from developing countries due to their more rapid economic and population growth

China Oil Outlook

18 15 12 9 6 3 0 1990

NDRC projection for 2010 in 11 th Five Year Plan = 7.7 mbd

Production 2000 Demand 80% 70% 60% 50% 40% 30% 20% 10% 2010 2020 2030 Imports as a % of demand (right scale) 0%

China’s oil imports will soar from around 3 mbd today to almost 12 mbd in 2030

World Primary Coal Demand

4000 3500 3000 2500 2000 1500 1000 500 actual

Reality?

Reference Scenario

5000

Alternative Policy Scenario

4000 3000 2000 1000 0 1970 1980 1990 2000 2010 2020 2030 0

High Oil & Gas prices have prompted a phenomenal coal response Without clean coal and other technologies this is not sustainable

EU CO2 Emissions in the “Business-as-usual” Scenario

5 000 4 000 3 000 2 000

1990 = 3 808 Mt

1 000 0 1970 1980 1990 Power generation 2000 2010 Transport 2020 2030 Other

Based on current trends, the EU’s emissions will be 6% and 10% above 1990 levels by 2015 and 2030 respectively

Improving European Energy Security Means…

•

More capacity

•

More efficiency

•

More diversity …in a truly integrated Internal Market

1) Investment

Required Energy Investment OECD Europe 2005-2030 $2.5 trillion (in $2005) $1.7 trillion Electricity 68% Oil 10% Biofuels 3% Gas 17% Coal 1%

In the Reference Scenario, European energy investment needs to 2030 exceed $2.5 trillion. Over two-third of this investment is needed in the electricity sector.

Investment challenge in Power Generation: Ageing plants and increasing demand Total capacity 2 397 GW More than 30 years old 638 GW (27%) Coal 323 GW Oil 130 GW Gas 140 GW Nuclear 46 GW

•

New investment corresponding to at least 25% of existing capacity needed by 2015

Power Demand Growth to 2015: Gas-fired generation dominates 300 GW 250 200 150 100 50 0 -50 Changes in installed capacity in OECD 1980-1989 Coal Oil 1990-1999 Gas Nuclear 2000-2004 Hydro Construction 2005-2010 Wind Planned 2005-2015 Other Renewables

Gas: Risk of Global Under-Investment to 2015

700 600 500 400 300 200 100 0 Exploration and Development Transmission and storage planned+proposed under construction Required investment according to IEA WEO 06 LNG © OECD/IEA, 2007

Russian Gas Supply Outlook…

800 700 600 500

Other Gazprom Fields Being Developed Medvezhe

400 300

Urengoy Zapolyarnoye

200

Yam burg

100 Independents 0 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 20 10 20 12 20 14 20 16 20 18 20 20

Gap between WEO and Russian Outlook New Independent New Gazprom Region (Yamal) Existing Gazprom Region (NPT) Gazprom Production Outlook

2) Efficiency

More Technology: Scenarios for CO2 Emissions 6 Gt reduction of CO 2 in 2030 32 Gt reduction of CO 2 in 2050 22 % 20 % 34 % 78% 46 % Cleaner energy mix Efficiency improvements CCS

Improved efficiency and a diverse portfolio of new energy technologies could substantially reduce the growth in CO 2 emissions

Energy Efficiency Has A Key Role To Play And Is Available In The Short Term • Energy efficiency offers

substantial energy and greenhouse gas savings at low or negative cost

High performance buildings • •

energy security and reliability benefits enhanced business competitiveness and social welfare

Compact Fluorescent Lamps LED traffic lights Least life-cycle cost appliances Labelling and certification

A B C D E F G

Efficient information and communication technologies Reducing standby power consumption Super windows & daylighting © OECD/IEA, 2007

Energy Efficiency Indicators: We must - and we can - do better!

1% Rate of Energy Efficiency Improvements Rate of Energy Efficiency Improvements 0% 1973 - 1990 1990 - 2004

Since 1990, the rate of energy efficiency improvement in IEA countries has been less than 1% p.a. - much lower than in previous decades

3) Diversity

Diversity of the Energy Mix

(EU 25 Primary Energy Supply in 2004)

15% 1% 4% 0.7% 18% 24% 37% Coal Oil Gas Nuclear Hydro Biomass and Waste Other Renew ables

1 756 Mtoe

Diversifying the fuel mix and the sources of supply are key steps in improving energy security.

European Gas Supplies

LNG Terminals from 100 Bcm/y in 2007 to > 200 Bcm/y in 2010

Regional outlook – Central Asia

Can the Internal Energy Market deliver?

For timely investment we need:

•

Open, transparent, fully functioning markets, This means:

Non-discriminatory third-party access to grids

Unbundling of transmission from generation and supply

Strong cross border transmission links A European regulator to set clear rules and make timely decisions for cross-border energy investment and trade

•

Policy and regulatory certainty:

Policy uncertainty (eg. over climate change) can jeopardize clever investment – that is the right amount, at the right time, in the right location, and using the right technology

It must be easier and faster to get permission to build new infrastructure

For improved energy efficiency we need:

Cost reflective pricing so that consumers can respond appropriately to price signals

The use of strict norms and standards in cases where cost effective energy efficient choices are ignored

For improved energy diversity we need to:

Improve the cost-competitiveness of renewables and biofuels

Develop a legal and regulatory framework that can attract private investment in LNG terminals and nuclear in those countries where it is accepted

Accelerate the development of large-scale CCS projects

Fully implement the internal market as diversity must be achieved at the European level

Security of Energy Supply in the European Union

Transcript Security of Energy Supply in the European Union

Security of Energy Supply in the European Union

The IEA: Who are Members?

IEA Shared Goals

Public Oil Stocks Key to Preparedness

Hurricanes Katrina & Rita

World Energy Outlook 2006

Reference Scenario: World Primary Energy Demand

1) Investment

Russian Gas Supply Outlook…

2) Efficiency

3) Diversity

Diversity of the Energy Mix

Regional outlook – Central Asia

Can the Internal Energy Market deliver?

For timely investment we need:

For improved energy efficiency we need:

For improved energy diversity we need to:

Directory