World Energy and Environmental Outlook to 2030 Dr. Fatih Birol Chief Economist Head, Economic Analysis Division

Global Energy and Environmental Trends - Reference Scenario -

World Primary Energy Demand 1 000 2 000 3 000 4 000 5 000 6 000 7 000 1970 1980 1990 2000 2010 2020 2030 Mtoe Oil Natural gas Coal Other renewables World primary energy demand projected in RS to expand by almost 60% from 2002 to 2030, average annual increase of 1.7% per year. Projected rate of growth is, nevertheless, slower than over the past three decades, when demand grew by 2% per year. Demand reaches 16.5 billion toe in 2030 up from 10.3 btoe in 2002. Oil will remain single largest fuel in the global primary energy mix, though its share will fall marginally. Demand for gas grows at 2.3% per year in 2002-2030 – fastest rate of any fossil fuel. By 2030, gas use will be 90% higher than now, and gas will have overtaken coal as world’s 2nd-largest energy source. Nuclear power Hydro power Fossil fuels account for almost 90% of the growth in energy demand between now and 2030

Increase in World Primary Energy Production by Region 1 000 2 000 3 000 4 000 5 000 6 000 1971-2002 2002-2030 Mtoe OECD Transition economies Developing countries 31% 10% 59% share of total increase (%) 85% 12% Proven reserves of gas and coal far exceed cumulative amounts of both fuels that will be consumed over 2002-2030. And more reserves will certainly be added. Proven conventional oil reserves today are sufficient to cover all the oil that will be needed until 2030. But reserves additions (from new discoveries and from “proving up” probable and possible reserves) will be needed if production is not to peak before then. Key factor is cost. Non-conventional crude oil reserves are, in any case, very large and will replace any shortfall in conventional supplies as prices rise. Also considerable potential for expanding oil production from gas-to-liquids plants Sources of incremental energy supplies will shift markedly over the projection period, mainly in response to cost factors and the location of resources: Over 95% of increase in production will occur in non-OECD regions (up from less than 70% in 1971-2002). Most low-cost fossil-fuel resources located in non-OECD countries. 3% Almost all the increase in production to 2030 occurs outside the OECD

Per Capita Primary Energy Use, 2030 Despite relatively strong growth in energy use in developing regions, per capita consumption remains much lower than in the rest of the world. By 2030, per capita primary energy consumption averages a mere 1.2 toe in developing regions, compared with 5.4 toe in the OECD and 4.7 toe in the transition economies. With some exceptions, energy use remains concentrated in the northern hemisphere Per capita energy use remains much lower in developing countries

Electricity Deprivation In 2030, if no major new policies are implemented, there will still be 1.4 billion people without electricity.

World Energy-Related CO2 Emissions Global emissions grow 62% between 2002 & 2030, and developing countries’ emissions will overtake OECD’s in the 2020s

CO2 Emissions by Sector, 1990-2030 CO2 emissions in power generation and transport are expected to increase the most

Growth in World Energy Demand and CO2 Emissions 2.5% 2.0% Primary energy demand 1.5% average annual growth rate 1.0% 0.5% Global energy-related emissions grow marginally faster than primary energy demand over the projection period. As result, average carbon content increase slightly. Over past three decades, emissions grew less rapidly than demand. 0.0% 1971-2002 2002-2030 CO2 Emissions Average carbon content of primary energy increases slightly through 2030 – in contrast to past trends

World Alternative Policy Scenario

World Alternative Policy Scenario Analyses impact of new environmental & energy-security policies worldwide OECD: Policies currently under consideration Non-OECD: Also includes more rapid declines in energy intensity resulting from faster deployment of more-efficient technology Impact on energy, CO2 emissions & investment needs Basic macroeconomic & population assumptions as for Reference Scenario, but energy prices change WAPS assesses how global energy markets could evolve were countries around the world to adopt a set of new policies and measures to address environmental and energy-security concerns: OECD countries: policies considered include those currently under consideration or discussion. Non-OECD countries: Same policies also considered. But policy discussions less advanced than in OECD. Therefore, also assumed that energy efficiency and intensity improve more rapidly than in the RS as a result both of future policies and of faster transfer of technology from OECD countries. Basic assumptions on macroeconomic conditions and population are same as in RS. But energy prices assumed to change in response to new energy supply-demand balance. Purpose of this scenario is to provide insights into how effective policies might be in addressing environmental and energy-security concerns.

Net Natural Gas Imports, 2030 Global demand for natural gas in 2030 is 500 bcm or over 10% lower than in the RS. Lower demand, together with lower oil prices, would result in markedly lower gas prices – especially in North America. Imports are reduced significantly: - By 2030, gas imports in N. America are 80 bcm lower – equivalent to the output of 8 large LNG regas terminals. - Gas savings in OECD Europe amount to 70 bcm in 2030, also greatly reducing need to build LNG terminals (imports of Russian gas are not much affected). China, by contrast, sees a large increase in gas consumption and imports – the result of a switch from coal to gas in power generation & end-use sectors (to cut pollution). China’s gas-import dependence is more than twice as high as in the RS. Net gas imports are lower in all major importing regions, except China

OECD CO2 Emissions in the Reference and Alternative Scenarios 11 000 12 000 13 000 14 000 15 000 16 000 1990 2000 2010 2020 2030 Mt of CO 2 Reference Scenario Alternative Scenario OECD CO2 emissions peak around 2020 – 25% higher than in 1990

Contributory Factors in CO2 Reduction 2002-2030 0% 20% 40% 60% 80% 100% 5% Changes in the fossil-fuel mix in power generation 49% 10% 21% 12% 8% OECD 63% 1% 21% 15% Transition economies 67% 7% 17% 5% 4% Developing countries 10% Increased nuclear in power generation 20% Increased renewables in power generation 7% Fuel switching in end uses 58% World End-use efficiency gains Improvements in end-use efficiency contribute for more than half of decrease in emissions, and renewables use for 20%

Difference in Electricity Investment in the Alternative vs Difference in Electricity Investment in the Alternative vs. Reference Scenario 2003-2030 1 000 Additional demand-side investment Efficiency measures 500 Avoided supply-side investment Generation Transmission Distribution Difference billion dollars (2000) - 500 -1 000 -1 500 -2 000 Additional investments on the demand side are more than offset by lower investment on the supply side

Summary & Conclusions On current policies, world energy needs – and CO2 emissions – will be 60% higher in 2030 than now Policies under consideration & faster deployment of technology could substantially save energy and reduce emissions Larger capital needs on the demand side would be entirely offset by lower investment needs on the supply side Truly sustainable energy system will call for faster technology development & deployment Urgent & decisive government action is needed