1. © OECD/IEA - 2009 The global energy outlook after the crisis Presentation to Delegation from the Federal tariff Service, Russian Federation Paris, 27 May 2010 Trevor Morgan Senior Economist International Energy Agency

2. © OECD/IEA - 2009 The context Signs of recovery from the worst economic slump since the 2 nd World War – but how fast? An oil price collapse & then a rebound – rising marginal costs point to higher prices in the longer term A slump in energy investment due to the financial & economic crisis – will it bounce back quickly enough to avert a supply squeeze later? The Copenhagen Accord – will it pave the way for a stronger deal to ensure that the 2  C goal is achieved?

3. © OECD/IEA - 2009 The global energy outlook is for more of the same – with current government policies Global demand grows by 40% between 2007 and 2030, with fossil fuels accounting for more than ¾ of the increase Mtoe Other renewables 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 198019902000201020202030 Biomass Hydro Nuclear Gas Oil Coal World primary energy demand by fuel in the Reference Scenario

4. © OECD/IEA - 2009 Emerging economies drive demand growth Non-OECD countries account for 93% of the increase in world primary energy demand & all of the growth in oil demand, which rises from 85 mb/d in 2008 to 105 mb/d in 2030 - 500 0 5001 0001 5002 000 Other renewables Biomass Hydro Nuclear Gas Oil Coal Mtoe OECD Non-OECD Change in primary energy demand by region in the Reference Scenario, 2007-2030

5. © OECD/IEA - 2009 Where would the oil come from? OPEC takes the lion’s share of the growth in oil supply as conventional non-OPEC production soon peaks, with unconventional oil also playing a growing role 0 20 40 60 80 100 120 2000200820152030 mb/d 0% 10% 20% 30% 40% 50% 60% Unconventional Other OPEC Middle East OPEC Non-OPEC OPEC market share (right axis) Oil production by source in the Reference Scenario

6. © OECD/IEA - 2009 Decline rates are of critical importance to future upstream oil investment needs On current policies, 63 mb/d of gross capacity would need to be installed between 2008 & 2030 – equal to 6 times the current capacity of Russia World oil production in the Reference scenario

7. © OECD/IEA - 2009 Worldwide upstream oil & gas investment is beginning to rebound Global upstream spending fell in 2009, for the first time in a decade, by over $90 billion in 2009, but is set to bounce back by around 10% in 2010 on current plans * Planned spending 0 100 200 300 400 500 20002001200220032004200520062007200820092010* Billion dollars 19% c.10%

8. © OECD/IEA - 2009 US shale gas is indeed a global gas game-changer Mainly as a result of shale gas production growth, US gas output grows gradually through to 2030, outstripping US demand & squeezing US net imports US natural gas supply in the Reference Scenario 0 100 200 300 400 500 600 700 199019952000200520082015202020252030 bcm Net imports Conventional Unconventional 0% 10% 20% 30% 40% 50% 60% 70% Share of unconventional in total supply

9. © OECD/IEA - 2009 Natural gas inter-regional transportation capacity A global glut of gas is building – approaching 200 bcm in the next few years – as a result of weaker than expected demand growth & a wave of new capacity additions 0 100 200 300 400 500 600 700 800 20072015 bcm Unutilised LNG liquefaction & pipeline capacity LNG trade Pipeline trade 73% % Capacity utilisation rate 88%

10. © OECD/IEA - 2009 Current policies fall far short of what is needed to achieve the Copenhagen objective CO 2 emissions fell by an estimated 3% in 2009 to under 28 Gt but are set to rebound to 40 Gt in 2030, putting us on course for an eventual rise in global temperature of around 6  C 0 5 10 15 20 25 30 35 40 45 198019902000201020202030 Gt International marine & aviation bunkers Non-OECD gas Non-OECD oil Non-OECD coal OECD gas OECD oil OECD coal Energy-related CO 2 emissions in the Reference Scenario

11. © OECD/IEA - 2009 Limiting temperature rise to 2 degrees requires big & quick emission reductions in all regions An additional $10.5 trillion of investment is needed in total in the 450 Scenario, with measures to boost energy efficiency accounting for most of the abatement through to 2030 26 28 30 32 34 36 38 40 42 200720102015202020252030 Gt 450 Scenario Reference Scenario OECD+ OME OC 3.8 Gt 13.8 Gt Abatement of world energy-related CO 2 emissions in the 450 Scenario CCS - 10% Nuclear - 10% Renewables & biofuels - 23% Efficiency - 57% World abatement by technology, 2030

12. © OECD/IEA - 2009 A rapid decarbonisation of the global fuel mix is required In the 450 Scenario, demand for fossil fuels peaks by 2020, with zero-carbon fuels making up a third of the world's primary sources of energy demand by 2030 0 2 000 4 000 6 000 8 000 10 000 12 000 19902000201020202030 Mtoe 0% 6% 12% 18% 24% 30% 36% Fossil fuels Zero-carbon fuels Share of zero- carbon fuels (right axis) World primary energy demand by fuel in the 450 Scenario

13. © OECD/IEA - 2009 Non-OPEC producers would bear the brunt of lower demand Curbing CO 2 emissions would improve energy security by cutting demand for oil, but even in the 450 Policy Scenario, OPEC production increases by 11 mb/d between now and 2030 TO BE UPDATED 36 mb/d 0 20 40 60 80 100 120 2008Reference Scenario 2030 450 Scenario 2030 mb/d Non-OPEC OPEC 11 mb/d 16 mb/d World oil production by scenario

14. © OECD/IEA - 2009 EU primary natural gas imports by scenario EU gas imports continue to grow in the 450 Scenario, but plateaus by around mid-2020s +65% (204 bcm) +37% (116 bcm) 0 100 200 300 400 500 600 20072015202020252030 Bcm Reference Scenario 450 Scenario

15. © OECD/IEA - 2009 Concluding remarks The financial crisis has halted the rise in global energy use, but its long-term upward path will resume soon on current policies Oil investment has fallen sharply, posing questions on medium term supply A sizable glut of natural gas is developing A 450 path requires massive investments, but would bring substantial benefits Natural gas can play a key role as a bridge to a cleaner energy future Copenhagen Accord a politically significant step towards a legally binding deal, but not sufficient to limit temperature rise to 2 °C

16. © OECD/IEA - 2009 WEO will be back in 2010… WEO will be back in 2010… A full update of energy projections through to 2035 In-depth analysis of headline issues > Climate policy > Fossil energy subsidies > Outlook for renewables > Unconventional oil > Energy poverty > Outlook for Caspian energy

17. © OECD/IEA - 2009 Thank you trevor.morgan@iea.org www.iea.org www.worldenergyoutlook.org