Transcript London 12 November 2014

Dr. Fatih BIROL
IEA Chief Economist
Prague, 11 December 2014
© OECD/IEA 2014
Signs of stress in the global energy system
 Current calm in markets should not disguise difficult road ahead
 Turmoil in the Middle East raises doubts over future oil balance
 Resurgent debate over the security of gas supply to Europe
 Mixed signals in run-up to crucial climate summit in Paris in 2015
 Global CO2 emissions still rising, with most emitters on an upward path
 Increasing emphasis on energy efficiency starting to bring results
 Will change in global energy be led by policies, or driven by events?
© OECD/IEA 2014
Changing dynamics of global demand
Energy demand by region
Mtoe 10 000
Rest of world
8 000
6 000
OECD
OECD
China
4 000
Rest of world
2 000
China
1990
2000
2010
2020
2030
2040
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.
© OECD/IEA 2014
United States holds a strong position
on energy costs
Weighted average cost of energy paid by consumers
$/toe 2 000
1 500
2008
2013
1 000
2040
500
European
Union
Japan
United
States
China
India
Economies face higher costs, but the pace of change varies: China overtakes the US,
costs double in India & remain high in the European Union & Japan
© OECD/IEA 2014
Instability in the Middle East
a major risk to oil markets
Oil production growth
in United States, Canada, Brazil & the Middle East
mb/d +15
Increase to 2040: 14 mb/d
+10
Middle East
Increase to 2040:
14 mb/d
+5
Brazil
2013 2015
-5
2013 2015
2020
2030
2040 Canada
Net decline in output from other producers
2020
2030
United States
2040
The short-term picture of a well-supplied market should not obscure future risks as
demand rises to 104 mb/d & reliance grows on Iraq & the rest of the Middle East
© OECD/IEA 2014
Looking ahead on the oil price
 Against a backdrop of weaker demand, buoyant supply in North
America has brought prices down – but can it keep them down?
 Lower prices are starting to curtail upstream spending plans, with
implications for future supply
 Over time, squeezed cash flow would constrain the capacity of
North America & Brazil to act as engines of global supply growth
 Current oil price levels could provide some breathing space to
major oil importers, boosting demand & GDP
 It would also accelerate reliance on low-cost producers in the
Middle East, some of which face major investment challenges
© OECD/IEA 2014
Gas on the way to become first fuel,
with role of LNG on the rise
Main sources of regional LNG supply
bcm 600
Other
West Africa
500
North Africa
Russia
400
East Africa
300
200
Other
North Africa
Australia
West Africa
US & Canada
Australia
Southeast Asia
100
Middle East
Middle East
2012
2040
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
© OECD/IEA 2014
Global coal demand leveling off
Global coal demand by key region
Mtce 7 000
World
6 000
Other
5 000
India
4 000
Chinese coal demand plateau
3 000
China
2 000
1 000
1980
India: 2nd largest coal
2005:peak
US coal demand peak
1987: European coal demand
consumer by 2020
1990
2000
2010
2020
United States
Europe
2040
India
2030
Global coal demand growth slows rapidly due to more stringent environmental
policies, underlining the importance of high-efficiency plant & CCS to coal’s future
© OECD/IEA 2014
Retirements add to the investment
challenge in the power sector
Power capacity by source, 2013-2040
GW 12 000
10 000
Renewables
8 000
Nuclear
6 000
Oil
Gas
4 000
Retirements
Coal
Additions
2 000
2013
2040
Despite limited demand growth, OECD countries account for
one-third of capacity additions – to compensate for retirements & to decarbonise
© OECD/IEA 2014
Nuclear capacity grows by 60%, but no
nuclear renaissance in sight
Net capacity change in key regions, 2013-2040
China
India
Russia
United States
Japan
European Union
-20
0
20
40
60
80
100
120
140
GW
By 2040, an expanded nuclear fleet has saved almost 4 years of current CO2 emissions
& for some countries has improved energy security & balances of energy trade
© OECD/IEA 2014
Nuclear power: public concerns
must be heard and addressed
Retirements of nuclear power capacity
1990-2040
2000
2010 2013 2020
2030
2040
50
1971-2040
1971-2012
350
705 thousand tonnes
100
GW
150
200
European Union
European
Union
United States
Russia
38% of today’s
capacity to retire
by 2040
United States
Japan
China Japan
Canada
India
1990
Spent nuclear fuel
1971-2040: 705 thousand tonnes
Korea
Other
Others
Key public concerns include plant operation, decommissioning & waste management;
By 2040, almost 200 reactors are retired & the amount of spent fuel doubles
© OECD/IEA 2014
Nuclear power can play a role in
CO2 abatement & energy security
CO2 emissions avoided annually by nuclear power
1971-2040
Share of energy demand met by domestic sources
and nuclear power in 2040
Gt 2.5
100%
2.0
80%
1.5
60%
1.0
40%
0.5
20%
1971 1980
2000
2020
2040
China
United
States
European
Union
Japan
Nuclear
Indigenous&production
Indigenous production
nuclear
Korea
Net imports
By 2040, an expanded nuclear fleet has saved almost 4 years of current CO2 emissions
& for some countries has improved energy security & balances of energy trade
© OECD/IEA 2014
Navigating a stormy energy future
 Geopolitical & market uncertainties are set to propel energy
security high up the global energy agenda
 Volatility in the Middle East raises short-term doubts on
investment & spells trouble for future oil supply
 Nuclear power can play a role in energy security, carbon
abatement and economic goals
 Far-sighted government policies are essential to steer the global
energy system on to a safer course
 Reconciling competitiveness, the imperatives of energy security
and climate change will be critical for European policy-makers
in 2015
© OECD/IEA 2014
www.worldenergyoutlook.org
email: [email protected]
© OECD/IEA 2014