Energy and Climate Outlook Dr. Fatih Birol Chief Economist International Energy Agency

The Reference Scenario: World Primary Energy Demand 18 000 Other renewables Nuclear 16 000 Biomass 14 000 Gas 12 000 10 000 Mtoe 8 000 Coal 6 000 4 000 Oil 2 000 1970 1980 1990 2000 2010 2020 2030 Global demand grows by more than half over the next quarter of a century, with coal use rising most in absolute terms

Reference Scenario: Increase in World Oil Supply, 2004-2030 25 20 Other 15 mb/d Iran 10 Iraq 5 S.Arabia OPEC conventional Non-conventional Non-OPEC conventional The share of OPEC in world oil supply increases sharply as conventional non-OPEC production peaks towards the middle of next decade

Proven Natural Gas Reserves Gas reserves are concentrated in FSU and MENA regions – Russia and Iran together account almost half of global gas reserves

Annual Increase in Coal Demand -100 100 200 300 400 500 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 China Rest of the world million tonnes Global coal demand in the recent years has grown much faster than previously – mainly driven by China

Reference Scenario: Increase in Power Sector CO2 Emissions by Fuel, 2005-2030 - 500 500 1 000 1 500 2 000 2 500 3 000 3 500 OECD Transition economies China India Rest of developing countries million tonnes Coal Oil Gas China and India account for almost 60% of the increase in power sector CO2 emissions to 2030

Reference Scenario: Energy-Related CO2 emissions by Region 15 Rest of non-OECD 12 2 China Rest of OECD 9 Gigatonnes of CO 6 United States 3 1990 2000 2010 2020 2030 China to overtake US as the world’s biggest emitter, though OECD countries bear a major responsibility as to cumulative carbon concentration

CO2 Emissions Growth 2004-2030 6 000 14 2004 2030 12 5 000 10 4 000 8 2004 2030 million tonnes 3 000 tonnes per capita 6 2 000 4 1 000 2004 2030 2 China India OECD Emissions growth in China is twice as large as in the OECD, but in 2030 per capita emissions will still be lower than current OECD ones

The Next Ten Years Will Determine Our Energy Future Investment over the next decade will lock in technology for up to 60 years China and India - growing at breakneck speed fueled by energy OECD power plants – significant portion reaching to retirement Security of supply is under threat because the balance of power is shifting Oil production in non-OPEC countries is set to peak, Gas production to peak in OECD

Alternative Policy Scenario

Alternative Policy Scenario The Alternative Policy Scenario: Key Policies for Global CO2 Reduction 42 Increased nuclear (10%) Increased renewables (12%) Power sector efficiency & fuel (13%) 38 Electricity end-use efficiency (29%) Reference Scenario Fossil-fuel end-use efficiency (36%) Gt of CO2 34 30 Alternative Policy Scenario 26 2004 2010 2015 2020 2025 2030 Improved end-use efficiency accounts for over two-thirds of avoided emissions in 2030 in the APS

The Alternative Policy Scenario : Key policies that Make a Global Difference Energy efficiency Power generation US Tighter CAFE standards Improved efficiency in residential & commercial sectors Increased use of renewables EU Increased vehicle fuel economy Improved efficiency in electricity use in the commercial sector Nuclear plant lifetime extensions China Improved efficiency in electricity use in industry Improved efficiency in electricity use in the residential sector Increased efficiency of coal-fired plants Increased reliance on nuclear A dozen policies in the US, EU & China account for around 40% of the global emissions reduction in 2030 in the Alternative Policy Scenario

Focus on European Union: Electricity Investment, 2005-2030 -500 -400 -300 -200 -100 100 200 300 billion dollars (2005) Additional demand-side investment Avoided supply-side investment Net change in electricity investment Investment needs are $139 billion lower over the projection period

Some concluding thoughts… The Reference Scenario projects a vulnerable, dirty and expensive global energy system Demand side efficiency – “ easier “ with large potential Large-hydro and nuclear - important parts of the solution Numbers speak for themselves : no sustainable/meaningful solution to climate change problem without having China and India on board Strong political will and urgent government action is needed to create clear incentives to change existing investment patterns