1. 1 Energy Security Global Issues Seminar Series November 8 th 2006

2. 2 Energy Security is…? –For rich countries…maintaining life styles, and continued growth –For poor countries…growth and development –For the poorest.. access to wood, electricity,… –For producers…market access

3. 3 Most simply… Reliable energy supply at reasonable cost and acceptable environmental impacts…. … that will allow the world to grow in a sustainable and equitable way

4. 4 Why concerns about energy security now? 1. High oil prices & processing constraints 2. Perception that future oil supply may be insufficient: –High and growing concentration in the Middle East OPEC countries –Strong growth from a booming China –Emerging India –Robust demand from the industrialized countries with easy substitution away from oil over 3. No easy successor to oil waiting in the wings

5. 5 High Oil Prices (again)

6. 6 Its more than Oil

7. 7 Concentration of oil production

8. 8 Concentration of future oil production

9. 9 Potential for future demand growth (Source IEA) Developing Country Population: 6.4 billion Developed Country Population: 1.0 billion

10. 10 Non-OECD demand grows three times faster than OECD demand IEA Global Demand by Region Business-as-usual scenario

11. 11 What are the alternatives  Heavy oil/tar sands: potential but climate change impacts  Coal: super competitive (fastest growth in 2005) but climate change and local pollution  Gas: prices linked to oil and concentrated  Efficiency: lots of potential in developed countries but how to make it happen  Renewables: becoming more competitive but costs and other constraints (e.g. bio fuels, dams, wind) (e.g. bio fuels, dams, wind)

12. 12 IEA Global Demand by Fuel Business-as-usual scenario In Reference Case, global energy demand will rise by 52% by 2030 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 1970198019902000201020202030 Mtoe Oil Natural gas Coal Nuclear power Other renewables Hydro power

13. 13 IEA Increases in Energy Demand 2003 - 2030 Absolute Increase (Mtoe) % Increase Coal1,14244% Oil1,76147% Gas1,69876% Nuclear8012% Hydro14162% Biomass51045% Other RE 218404% Total5,55052% 83% of additional demand to be met from fossil fuels

14. 14 How important for WBG’s developing countries?  Short Term –Short term macro adjustment by oil consumers –“Windfalls” management by producers  Long term –Higher costs, if not avoided, are a significant “tax” on oil using poor countries –Volatility – impact on growth? –Implications for changing fuel cost competitiveness (& climate concerns) on:  Energy strategies and long term energy Investment choices  Other aspects of development

15. 15 What Can be done to secure energy supplies  Everything is important – no silver bullet  Greater efficiency, conservation and renewable energy  Fossil fuels with environmental mitigation  Energy independence is a mirage  Interdependence is the only way –Open trade and investment –Cooperation  Use of markets and private sector to greatest extent

16. 16 Final Question? A new era in terms of the world’s use of resources Versus: Market forces and ingenuity will sort it out