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World Energy Outlook 2008 Dr. Fatih Birol Chief Economist
International Energy Agency 1
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The context Soaring energy prices to mid-2008, followed by a collapse – what will it mean for demand? How will the financial crisis & economic slowdown affect energy demand & investment? Will economic worries divert attention from strategic energy-security & environmental challenges? Are we setting ourselves up for a supply-crunch once the economy is back on its feet? Will negotiators at COP-15 in Copenhagen in 2009 have the political support needed to succeed?
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World primary energy demand in the Reference Scenario: this is unsustainable!
18 000 Mtoe Other renewables 16 000 Hydro 14 000 Nuclear 12 000 Biomass 10 000 8 000 Gas 6 000 Coal 4 000 Oil 2 000 1980 1990 2000 2010 2020 2030 World energy demand expands by 45% between now and 2030 – an average rate of increase of 1.6% per year – with coal accounting for more than a third of the overall rise
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The continuing importance of coal in world primary energy demand
0% 20% 40% 60% 80% 100% Non-OECD OECD All other fuels Coal Shares of incremental energy demand Reference Scenario, Increase in primary demand, 100 200 300 400 500 600 700 800 900 1 000 Coal Oil Gas Renewables Nuclear 4.8% 1.6% 2.6% 2.2% 0.8% % = average annual rate of growth Mtoe Demand for coal has been growing faster than any other energy source & is projected to account for more than a third of incremental global energy demand to 2030
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Share of renewables in electricity generation in the Reference Scenario
0% 5% 10% 15% 20% 25% 30% 35% 2030 2006 Rest of the World Non-EU OECD EU Hydro Other Most of the increase in the use of renewable energy sources is for generating electricity. The share of renewables in total electricity generation worldwide rises from 18% in 2006 to almost 23% in 2030 in the RS, with renewables overtaking gas to become the second-largest source of power generation Hydropower remains the biggest source of renewables-based power, though it share falls slightly, while the contribution of other types of renwables – essentially wind and solar power – increases substantially (from 2% in 2006 to 9% in 2030). [other renewables such as tidal and wave remain very small]. Most of the increase in renewables-based power generation occurs in OECD countries, where non-hydro renewables output grows strongly (from 3% to 14%). In total, in the OECD, the increase in renewables-based power generation exceeds that in fossil-based and nuclear power generation combined. EU27: in 2030, wind energy (both onshore and offshore) represents more than 40% of renewable power supply. More than 40% together with bioenergy. Soon after 2010, renewables become the world’s 2nd-largest source of electricity behind coal, thanks to government support, prospects for higher fossil-fuel prices & declining investment costs
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Change in oil demand by region in the Reference Scenario, 2007-2030
OECD Pacific OECD Europe OECD North America Africa E. Europe/Eurasia Latin America Other Asia India Middle East China -2 2 4 6 8 10 mb/d All of the growth in oil demand comes from non-OECD, with China contributing 43%, the Middle East & India each about 20% & other emerging Asian economies most of the rest
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Cumulative energy-supply investment in the Reference Scenario, 2007-2030
Coal 3% Biofuels <1% $0.7 trillion $0.2 trillion Power 52% Oil 24% Gas 21% $13.6 trillion $6.3 trillion $5.5 trillion Shipping 4% Shipping & Refining ports 16% Transmission 9% Transmission Power & distribution Exploration & & distribution generation 31% development 50% 50% Exploration and 61% development LNG chain Mining 80% 8% 91% Investment of $26 trillion, or over $1 trillion/year, is needed, but the credit squeeze could delay spending, potentially setting up a supply-crunch once the economy recovers
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Oil and Gas supply prospects
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World oil production by OPEC/non-OPEC in the Reference Scenario
120 38% 40% 42% 44% 46% 48% 50% 52% OPEC - other mb/d 100 OPEC - Middle East 80 Non-OPEC - non- conventional 60 Non-OPEC - conventional 40 OPEC share 20 . 2000 2007 2015 2030 Production rises to 104 mb/d in 2030, with Middle East OPEC taking the lion’s share of oil market growth as conventional non-OPEC production declines
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World oil production by source in the Reference Scenario
20 40 60 80 100 120 1990 2000 2010 2020 2030 mb/d Natural gas liquids Non-conventional oil Crude oil - yet to be developed (inc. EOR) or found Crude oil - currently producing fields 64 mb/d of gross capacity needs to be installed between 2007 & 2030 – six times the current capacity of Saudi Arabia – to meet demand growth & offset decline
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national companies – on the assumption that investment is forthcoming
A sea change: world oil & gas production by company type in the Reference Scenario 20 40 60 80 100 120 2007 2015 2030 mb/d 750 1 500 2 250 3 000 3 750 4 500 2006 Bcm NOCs Private companies Oil Gas Almost 80% of the projected increase in output of both oil & gas comes from national companies – on the assumption that investment is forthcoming
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EU natural gas market outlook
Bcm 800 Imports - other countries 700 Imports - Middle East 600 Imports - Africa Imports - Russia and 500 other TE Domestic production 400 300 200 100 2007 2030 EU import dependency rises from 58% today to 86% in 2030 as a result of declining domestic production and increasing demand
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World natural gas reserves and Gas Exporting Countries Forum (GECF)
World total: 179 Tcm (2008) The 14 members of GECF account for three quarters of global gas reserves, while just 2 of them – Russia & Iran – account for over 40% .
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Post-2012 climate-policy scenarios
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Energy-related CO2 emissions in the Reference Scenario
45 International marine bunkers and aviation Non-OECD - gas Non-OECD - oil Non-OECD - coal Gigatonnes 40 35 30 OECD - gas OECD - oil OECD - coal 25 20 15 10 5 1980 1990 2000 2010 2020 2030 97% of the projected increase in emissions between now & 2030 comes from non-OECD countries – three-quarters from China, India & the Middle East alone
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Reductions in energy-related CO2 emissions in the climate-policy scenarios
45 550 Policy Scenario 450 Policy Scenario 54% 23% 14% 9% Gigatonnes 40 CCS Renewables & biofuels Nuclear Energy efficiency 35 30 25 20 2005 2010 2015 2020 2025 2030 Reference Scenario 550 Policy Scenario 450 Policy Scenario While technological progress is needed to achieve some emissions reductions, efficiency gains and deployment of existing low-carbon energy account for most of the savings
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World energy-related CO2 emissions in 2030 by scenario
40 OECD Gigatonnes 35 World 30 25 Non-OECD World 20 15 10 5 Reference Scenario 550 Policy Scenario 450 Policy Scenario OECD countries alone cannot put the world onto a 450-ppm trajectory, even if they were to reduce their emissions to zero
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Key results of the post-2012 climate-policy analysis
550 Policy Scenario 450 Policy Scenario Corresponds to a c.3C global temperature rise Energy demand continues to expand, but fuel mix is markedly different CO2 price in OECD countries reaches $90/tonne in 2030 Additional investment equal to 0.25% of GDP Corresponds to a c.2C global temperature rise Energy demand grows, but half as fast as in Reference Scenario Rapid deployment of low-carbon technologies and a big fall in non-OECD emissions CO2 price in 2030 reaches $180/tonne OPEC production still 12mb/d higher in 2030 than today Additional investment equal to 0.6% of GDP
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Cumulative European Union CO2 savings with 20% reduction target in 2020
12 Gigatonnes China 10 8 6 EU-27 4 2 CUMULATIVE savings with 20% CO2 emissions reduction target ( ) ANNUAL 2020 CO2 emissions EU cumulative savings over would represent only 40% of China’s annual CO2 emissions in 2020
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Summary & conclusions
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Summary & conclusions Current energy trends are patently unsustainable — socially, environmentally, economically Oil will remain the leading energy source but... The era of cheap oil is over, although price volatility will remain The oil market is undergoing major and lasting structural change, with national companies in the ascendancy Energy and geopolitics will be increasingly interconnected We need a major decarbonisation of the world’s energy system -- Copenhagen is crucial Addressing environmental issues will substantially improve energy security Financial crisis can plant the seeds for an “energy investment crisis”
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