1. © OECD/IEA 2016 The global energy outlook and what it means for Portugal Dr. Fatih Birol Executive Director, International Energy Agency Portugal IDR launch Lisbon, 13 April 2016

2. © OECD/IEA 2016 The European context Downturn in prices for all fossil fuels  Oil & gas facing second year of falling upstream investment in 2016  Coal prices remain at rock bottom as demand slows in China An ongoing shift towards clean energy technologies is being driven by policy action & cost reductions  Renewables accounted for over 90% of new global electricity generation in 2015  Portugal is a leading performer in renewable electricity COP21 was an historic milestone that can stimulate energy sector innovation  Pledges of 180+ countries account for 95% of emissions  EU intends to reduce GHG emissions by at least 40% by 2030

3. © OECD/IEA 2016 Upstream oil and gas investment continues to fall Upstream oil and gas investment continues to fall, particularly in high-cost regions; this raises the prospect of increasing reliance on the Middle East in the future Upstream oil and gas investment -18% 0 100 200 300 400 500 600 700 800 900 200520062007200820092010201120122013201420152016 Billion USD (nominal) -24%

4. © OECD/IEA 2016 Global energy emissions – peaked? Global energy-related CO 2 emissions IEA analysis shows renewables, led by wind, and improvements in energy efficiency were key to keeping emissions flat for a second year in a row 5 10 15 20 25 30 35Gt 197519801990200020102015 Global economic downturn Dissolution of Soviet Union Second oil shock 198519952005

5. © OECD/IEA 2016 0% 20% 40% 60% 80% 100% 120% 20082009201020112012201320142015 Indexed cost (2008=100%) Onshore wind Solar PV - utility scale LEDs The cost of clean energy continues to fall The falling cost of clean energies opens new opportunities, but support mechanisms need to be reviewed as costs decline Indexed cost of onshore wind, utility scale PV and LED lighting

6. © OECD/IEA 2016 Greater efforts are still needed to reach a 2°C pathway Energy efficiency & renewables account for the bulk of the additional emission reductions required for a 2°C pathway, but all forms of clean energies are needed 16 20 24 28 32 36 40 2010201520202025203020352040 Gt Trend post-COP 21 2 °C Scenario 17.9 Gt Energy efficiency Fuel & technology switching in end-uses Renewables Nuclear CCS Other

7. © OECD/IEA 2016 How can Portugal contribute? Portugal has decoupled GHG emissions and energy demand from economic growth, although the recession played a part

8. © OECD/IEA 2016 Portugal is among the European leaders in renewables energy In addition to benefits, the growth in renewables raises challenges, which must be addressed if policy is to be sustainable over the long term

9. © OECD/IEA 2016 Portugal is among the European leaders in renewables energy In addition to benefits, the growth in renewables raises challenges, which must be addressed if policy is to be sustainable over the long term

10. © OECD/IEA 2016 Tackling the tariff deficit Portugal made some hard decisions to reduce the tariff deficit: policy makers must continue to provide transparency, predictability and certainty

11. © OECD/IEA 2016 Bridging an energy island: Iberian Peninsula must become closer to Europe Interconnection capacity between Iberia and rest of Europe is set to rise to 8 GW by 2020, short of EU 10% target, and too low to realise full benefits of internal market 20112020 Source: ENTSO

12. © OECD/IEA 2016 IEA recommendations: how can Portugal meet its challenges? Implement all measures to reduce the tariff deficit by 2020  Continue to tackle excessive rents in the energy sector  Focus on market reform: tariff structures, wholesale markets and MIBGAS Pursue the development of further energy interconnections with mainland Europe Maintain its commitment to renewables but shift focus to cost- efficient mechanisms to bring renewables closer to market Finally, with looming energy security & environmental challenges, international co-operation is more vital than ever