World Energy Outlook 2012

Presentation to the press London, 12 November 2012

OECD/IEA 2012

The context
Foundations of global energy system shifting
Resurgence in oil & gas production in some countries Retreat from nuclear in some others Signs of increasing policy focus on energy efficiency

All-time high oil prices acting as brake on global economy

Divergence in natural gas prices affecting Europe (with prices

5-times US levels) and Asia (8-times)

Symptoms of an unsustainable energy system persist
Fossil fuel subsidies up almost 30% to $523 billion in 2011, led by MENA
CO2 emissions at record high, while renewables industry under strain Despite new international efforts, 1.3 billion people still lack electricity
OECD/IEA 2012

Emerging economies steer energy markets

Share of global energy demand
6 030 Mtoe 100% 12 380 Mtoe 16 730 Mtoe Rest of non-OECD Non-OECD Middle East India China

80%
60% 40% 20%

OECD

1975

2010

2035

Global energy demand rises by over one-third in the period to 2035, underpinned by rising living standards in China, India & the Middle East
OECD/IEA 2012

A United States oil & gas transformation

US oil and gas production
mboe/d 25 20 Unconventional gas 15 10 5

Conventional gas
Unconventional oil Conventional oil

1980

1990

2000

2010

2020

2030 2035

The surge in unconventional oil & gas production has implications well beyond the United States
OECD/IEA 2012

Iraq oil poised for a major expansion

Iraq oil production
mb/d 9 8 7 6 5 North Centre South mb/d 9 8 7 6 5 4 3

Iraq oil exports

Other Asia

4
3 2 1 2012 2020 2035

2
1 2012 2020 2035

Iraq accounts for 45% of the growth in global production to 2035; by the 2030s it becomes the second-largest global oil exporter, overtaking Russia
OECD/IEA 2012

Middle East oil to Asia: a new silk road

Middle East oil export by destination
mb/d 7 6 2000 2011 2035

5
4 3 2 1

China

India

Japan & Korea

Europe

United States

By 2035, almost 90% of Middle Eastern oil exports go to Asia; North Americas emergence as a net exporter accelerates the eastward shift in trade
OECD/IEA 2012

Natural gas: towards a globalised market

Major global gas trade flows, 2010 2035

Rising supplies of unconventional gas & LNG help to diversify trade flows, putting pressure on conventional gas suppliers & oil-linked pricing mechanisms
OECD/IEA 2012

Different trends in oil & gas import dependency

Net oil & gas import dependency in selected countries
Gas Imports 100% Japan 2010 2035 European Union 60% 40% 20% 0% China United States India

80%

Gas Exports 20% 20%

40%

60%

80%

100% Oil imports

While dependence on imported oil & gas rises in many countries, the United States swims against the tide
OECD/IEA 2012

A power shift to emerging economies

Change in power generation, 2010-2035
Coal China India Gas Nuclear Renewables

United States
European Union Japan -1 000 0 TWh 1 000 2 000 3 000 4 000 5 000 6 000 TWh

The need for electricity in emerging economies drives a 70% increase in worldwide demand, with renewables accounting for half of new global capacity
OECD/IEA 2012

The multiple benefits of renewables come at a cost

Global renewable energy subsidies
Billion $250
$200 $150 $100 $50 $960 billion 2011 2015 2020 2025 2030 2035 $2 600 billion Electricity: 2012-2035 Existing capacity

$1 200 billion

Biofuels: 2011-2035

Renewable subsidies were $88 billion in 2011; over half the $4.8 trillion required to 2035 has been committed to existing projects or is needed to meet 2020 targets
OECD/IEA 2012

Wide variations in the price of power

Average household electricity prices, 2035
cents/kWh 25 20 15 2011 OECD average 2011 Non-OECD average

10
5

China

United States

European Union

Japan

Electricity prices are set to increase with the highest prices persisting in the European Union & Japan, well above those in China & the United States
OECD/IEA 2012

Energy is becoming thirstier in the face of growing water constraints

Global water use
100%
Other

Water for energy

Biofuels Fossil fuels

80%
Nuclear

60% 40% 20%

Energy Power Coal

2010

2010

The energy sectors water needs are set to grow, making water an increasingly important criterion for assessing the viability of energy projects
OECD/IEA 2012

Energy efficiency: a huge opportunity going unrealised

Energy efficiency potential used by sector in the New Policies Scenario
100% 80% 60% 40% 20% Industry Transport Power generation Buildings Unrealised energy efficiency potential Realised energy efficiency potential

Two-thirds of the economic potential to improve energy efficiency remains untapped in the period to 2035
OECD/IEA 2012

The Efficient World Scenario: a blueprint for an efficient world

Total primary energy demand
Mtoe 18 000 Reduction in 2035 Coal Oil 1 350 Mtce 12.7 mb/d

17 000
16 000 15 000 14 000 13 000 12 000 2010

New Policies Scenario

Gas
Others Efficient World Scenario

680 bcm
250 Mtoe

2015

2020

2025

2030

2035

Economically viable efficiency measures can halve energy demand growth to 2035; oil demand savings equal the current production of Russia & Norway
OECD/IEA 2012

Energy efficiency brings economic gains

Energy expenditure in 2035 compared with 2010
Trillion $1.5
$1.2 $0.9 $0.6 $0.3

New Policies the Additional in Scenario New Policies Scenario

Efficient World Scenario

$0
-$0.3 China India European Union United States Japan

In addition to cutting energy expenditures by an average of 20%, improved efficiency brings wider economic gains, particularly for India, China, the United States & Europe
OECD/IEA 2012

The Efficient World Scenario delays carbon lock-in

2017
Gt 35 30 2022

25
20 15 10 5

2 C trajectory

Lock-in of infrastructure Room to manoeuvre in New Policies Scenario Efficient World Scenario in 2017 2022

Lock-in of existing infrastructure

2011

2015

2020

2025

2030

2035

Energy efficiency can delay lock-in of CO2 emissions permitted under a 2 C trajectory which is set to happen in 2017 until 2022, buying five extra years
OECD/IEA 2012

Foundations of energy system shifting

Policy makers face critical choices in reconciling energy,

environmental & economic objectives

Changing outlook for energy production & use may redefine

global economic & geopolitical balances

Iraq set to play a pivotal role in global oil markets As climate change slips off policy radar, the lock-in point

moves closer & the costs of inaction rise

The gains promised by energy efficiency are within reach & are

essential to underpin a more secure & sustainable energy system

OECD/IEA 2012