1. Energy Investment for Global Growth Dr. Fatih Birol Executive Director, International Energy Agency G7 Energy Ministerial meeting 2016 Kitakyushu, Japan 1 - 2 May 2016

2. © IEA 2016 Global energy investment challenge Cumulative investment in the energy sector to 2040 Energy investment of USD 2.7 trillion per year is needed to 2040; investment choices have long-term implications as sector depends on large-scale, high-cost assets Energy efficiency Power Oil Gas Coal Biofuels USD 60 trillion

3. © IEA 2016 Oil markets are gradually returning to balance as low prices take their toll In 2016 non-OPEC supply is set to drop by over 700 kb/d, the largest fall since 1992, helping to push the oil market towards balance Oil market balance

4. © IEA 2016 World upstream oil and gas investment continues to fall World upstream oil and gas investment continues to fall; raising the prospect of increasing reliance on the Middle East in the future 0 100 200 300 400 500 600 700 800 200520062007200820092010201120122013201420152016 - 23% -19% ISD billions (nominal)

5. © IEA 2016 Cross border supply cut Terrorist attack - sabotage Natural disaster Technical disruption Tight market / shortages Algeria 2013/2016 Egypt/Sinaï 2011-2015 Libya 2011-2013 Nigeria 2014-2016 Yemen 2012-2016 Argentinian - Chile 2004 Russian-Ukrainian conflict 2006/2009/2014 India-Nepal 2015 Katrina & Rita 2005 Japan 2011 Argentina 2004-2015 Polar Vortex 2014-2015 Mexico 2012-2014 Italy 2006/2012 Chile 2004-2007 Brazil 2014-2015 UK 2006/ 2010/2013 China 2009/2013/2015 Indonesia 2007 Canada 2014 India 2013 Pakistan 2011- 2015 Egypt 2014 Venezuela 2010-2011 Barbados 2015 Trinidad & Tobago 2010-2015 Unavailable LNG capacity has almost tripled over past four years, highlighting security & investment challenges in key producer countries Lots of new LNG is coming online, but safeguarding gas security is important Angola 2014

6. © IEA 2016 Electricity security: a multifaceted challenge Electricity security is an emerging challenge with many dimensions; the IEA is involved in all key aspects of this issue in collaboration with G7 and partners Capacity adequacy and system security Security of fuel supplyInfrastructure resilienceGrid integration of variable renewablesCybersecurity

7. © IEA 2016 200520142040 10% 20% 30% 40% Action on energy efficiency must begin to match its potential Energy efficiency policies are being introduced in more countries and sectors; they continue to slow demand growth, but more can be done Share of energy consumption covered by mandatory efficiency regulations Industry Buildings Transport Steam boilers Process heat Motors Heating / cooling Lighting / appliances Cars Trucks

8. © IEA 2016 A 2°C pathway requires more technological innovation, investment & policy ambition Massive additional investments in efficiency, renewables, nuclear power and other low-carbon technologies are required to reach a 2°C pathway 16 20 24 28 32 36 40 2010201520202025203020352040 Gt Trend post-COP21 2°C Scenario 17.9 Gt Energy efficiency Fuel & technology switching in end-uses Renewables Nuclear CCS Other CO 2 emissions in a post-COP21 world

9. © IEA 2016 G7 countries must take a long-term view on their energy systems Be wary of cuts in upstream oil and gas investment – they pose threats to energy security and could lead to greater price volatility Gas can play a critical role in low-carbon transition; do not take gas supply security for granted Make sure electricity systems are prepared for the future in terms of policy, regulation and infrastructure Mandate and incentivise energy efficiency improvements in order to harness its vast potential across all sectors of the economy Make all energy decisions within the context of climate change