INTERNATIONAL ENERGY AGENCY World Energy Outlook Key Challenges Ahead of us Energy Risk Europe 2006...

INTERNATIONAL ENERGY AGENCY

World Energy OutlookWorld Energy OutlookKey Challenges Ahead of usKey Challenges Ahead of us

Energy Risk Europe 2006Energy Risk Europe 2006 3 October 2006, London3 October 2006, London

International Energy AgencyInternational Energy Agency

© OECD/IEA (2006)

INTERNATIONALENERGY AGENCY

Challenge 1:Security of

Supply

© OECD/IEA (2006)


International Crude Oil Prices, WTI

Crude oil prices has risen since 2002, reaching new highs in 2004 and 2005 – the price of WTI hit $78 in August 2006

© OECD/IEA (2006)

0

10

20

30

40

50

60

70

80

90

1970 1975 1980 1985 1990 1995 2000 2005

do

llars

pe

r b

arre

l

Real $ (2005) Nominal

Average real price - 1980s Average real price - 2000-2005


Spare Refinery Capacity

Significant amount of investment is needed to reverse the downward trend in global oil refining spare capacity

© OECD/IEA (2006)

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

*

2006

*

(kb/d)

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

*

2006

*

(kb/d)


World Primary Oil Demand, 1971-2005

© OECD/IEA (2006)

The share of transport is increasing at the cost of all other sectors.

Total

Transport sector

Non-transport sectors

01970 1975 1980 1985 1990 1995 2000 2005

10

20

30

40

50

60

70

80

90

mb/

d


© OECD/IEA (2006)

OECD Oil Demand Growth by Sector, 1999-2005

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

PowerGeneration

Industry Transport

mb

/d

In the OECD, the transport sector accounted for almost all the oil demand growth


0 5000 10000 15000 20000 25000 30000 35000 40000

GDP per capita (dollars)

0

100

200

300

400

500

600

700

800

900

vehic

les

per

thousa

nd

people

Italy

UKJapan

USA

GermanyFranc

eCanada

IsraelKorea

Poland

Malaysia Mexic

oBrazil

Russia

ThailandIndonesi

a ChinaIndia

Vehicle Ownership, 2004

© OECD/IEA (2006)

The potential for increased vehicle ownership in emerging markets is enormous


New Car Registrations, 2004

© OECD/IEA (2006)

Non-OECD markets currently account for one-third of global new car sales – but the share is growing rapidly

0

5

10

15

20

OECD Europe OECD NorthAmerica

OECD Pacific non OECD

Car

sal

es (

mill

ion)

China

CIS

IndiaBrazil

0

5

10

15

20

OECD Europe OECD NorthAmerica

OECD Pacific non OECD

Car

sal

es (

mill

ion)

China

CIS

IndiaBrazil


Pump Price of Diesel in Developing

Asian Countries, February 2006

Indicative average delivered cost of imported diesel

*Nov. 2004 data for the Philippines

© OECD/IEA (2006)

Most developing Asian countries subsidise diesel, cushioning demand from rises in international prices

0 10 20 30 40 50 60 70 80

India

Thailand

Indonesia

China

Sri Lanka

Vietnam

Philippines*

Malaysia

Myanmar

US cents per litre


World Primary Energy Demand

Oil, gas and coal together account for 83% of the growth in energy demand between now and 2030 in the Reference Scenario

Coal

Oil

Gas

Other renewables Nuclear Hydro 0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

1980 1990 2000 2010 2020 2030

Mto

e

1971


Regional Shares in World Primary Energy Demand

Two-thirds of the increase in world demand between 2003 and 2030 comes from developing countries, especially in Asia

62%51%

42%

16%

10%

9%

22%39%

49%

0%

20%

40%

60%

80%

100%

1971 2003 2030

OECD Transition economies Developing countries


Incremental World Primary Oil Demand by Sector, 2005-2015

© OECD/IEA (2006)

Transport will account for the bulk of the increase in oil demand through 2015, making demand less sensitive to crude oil prices

0

10

20

30

40

50

60

70

Transport Industry Residential PowerGeneration

Services Others

%


World Oil Production Shifts Away from OECD

Global oil production climbs from 82 mb/d in 2004 to 115 mb/d in 2030; OECD share falls from 25% to 12%

OECD

MENA

Other

NCO

41.2 mb/ d

50.5 mb/ d

13.5 mb/ d

30.9 mb/ d

29.0 mb/ d

20.2 mb/ d

2004 2030

2.2 mb/ d10.2 mb/ d

© OECD/IEA (2006)


World Proven Oil Reserves

MENA share of global oil reserves is much higher than its share of current production, suggesting strong potential for growth

Iraq9%

Iran10%

Non-MENA39%

Saudi Arabia20%

Other MENA14% Kuwait

8%

© OECD/IEA (2006)


MENA Net Oil Exports

MENA plays an increasingly important role in international trade, its net exports surging from 22 mb/d in 2004 to 39 mb/d

in 2030

mb/d


Net Oil Imports by OECD Regions

OECD Europe will rely more on MENA oil – imports from MENA reach

8.5 mb/d, or nearly two-thirds of total imports in 2030

OECD North America

OECD Europe OECD Pacific

0

3

6

9

12

15

18

2004 2030 2004 2030 2004 2030

mb/

d

MENA non MENA


Proven Natural Gas Reserves

Gas reserves, concentrated in the Middle East & the transition economies, are equal to 66 years of current

production © OECD/IEA (2006)


MENA Natural Gas Exports

MENA becomes the world’s leading gas exporter, with most of the increase in exports meeting surging European & US LNG

demand

Billion cubic metres

© OECD/IEA (2006)


Net Natural Gas Imports by OECD Regions

OECD Europe will see its net imports grow from 200 bcm in 2003 to

500 bcm in 2030, meeting 64% of the region’s total gas demand

0

100

200

300

400

500

600

OECD North America OECD Europe OECD Pacific

Mto

e

2003 2010 2030


EU Gas Supply Balance

Rising demand – mainly for power generation – and declining output will cause net imports to surge

0

200

400

600

800

1980 1990 2004 2010 2020 2030

bcm

Production Net imports

© OECD/IEA (2006)


© OECD/IEA (2006)

EU Power Generation Capacity Increases, 2004-2030

More thanhalfof the existingcapacitywillneedto bereplacedby 2030

0

200

400

600

800

1000

1200

2005 2010 2015 2020 2025 2030

GW

Existing New


Challenge 2:Carbon Dioxide Emissions

© OECD/IEA (2006)


World Energy-Related CO2 Emissions

Global emissions grow 50% between now and 2030, and developing countries’ emissions will overtake OECD’s in the

2020s

0

4 000

8 000

12 000

16 000

20 000

1970 1980 1990 2000 2010 2020 2030

Mt o

f CO

2

OECD Transition economies Developing countries

© OECD/IEA (2006)


CO2 Emissions Growth 2004-2030

OECD CO2 emissions growth are about three quarters of Chinese CO2 rise, but on a per capita basis, OECD emissions will be still

two times higher in 2030

0

1 000

2 000

3 000

4 000

China OECD

million

ton

nes

NorthAmerica

Pacific

Europe

0

3

6

9

12

15

ton

nes p

er c

ap

ita

2004

2030

2004

2030

© OECD/IEA (2006)


World Alternative

Policy Scenario

At the G8 Summit in July 2005, the IEA was called upon to “advise on alternative energy scenarios and strategies aimed at a clean, clever and competitive energy future”.

Fulfilling the G8 Mandate

© OECD/IEA (2006)


World Alternative Policy Scenario (WAPS)

Mandate by G-8 leaders and proposal to IEA Ministers

Analyses impact of new environmental & energy-security policies worldwide OECD: Policies currently under consideration Non-OECD: Also includes more rapid declines in

energy intensity resulting from faster deployment of more-efficient technology

Impact on fuel mix, CO2 emissions & investment

needs

© OECD/IEA (2006)


Key Policies in Alternative Scenario for EU

More than 100 policies at EU level and 300 at country level Power Generation

Renewable energy directive CHP directive ETS

Transport sector Prolongation of the ACEA voluntary agreement Biofuels target

Residential and commercial sectors Eco-design Energy performance in buildings directive

© OECD/IEA (2006)


Oil/Gas Demand in the Reference and Alternative Policy Scenarios

Oil & gas demand in the Alternative Scenario are both 10% lower in 2030 due to significant energy savings and a shift in

the energy mix

2004 2030 Reference Scenario 2030 Alternative Scenario

0

20

40

60

80

100

120

140

Oil Gas

mb/

d

0

1000

2000

3000

4000

5000

6000

bcm

12.1 mb/d500 bcm

© OECD/IEA (2006)


EU CO2 Emissions in the Reference & Alternative Scenarios

With new policies, EU CO2 emissions stabilise by 2010 and fall after 2020

Reference Scenario Alternative Scenario

2 000

2 500

3 000

3 500

4 000

4 500

5 000

1990 2000 2010 2020 2030

Mt

of

CO

2

2 000

2 500

3 000

3 500

4 000

4 500

5 000

1990 2000 2010 2020 2030

Mt

of

CO

2

Kyoto Target

© OECD/IEA (2006)


Contributory Factors in CO2 Reduction 2003-2030

Improvements in end-use efficiency contribute for more than half of decrease in emissions, and renewables use

for 20%

0%

20%

40%

60%

80%

100%

49%

10%

21%

12%

8%

OECD

63%

1%

21%

15%

Transition economies

67%

7%

17%

5%4%

Developing countries

58%

World

End-use efficiency gains

7%

Fuel switching in end uses

20%

Increased renewables in power generation

10%

Increased nuclear in power generation

5%

Changes in the fossil-fuel mix in power generation

© OECD/IEA (2006)


Share of Non-Hydro Renewables in Electricity Generation, 2030

New policies would boost the share of non-hydro-renewables in all regions – most in the EU in absolute

terms© OECD/IEA (2006)

0% 5% 10% 15% 20% 25%

Transition economies

Africa

Middle East

South Asia

China

Latin America

East Asia

OECD Pacific

OECD North America

OECD Europe

Alternative Scenario Reference Scenario


Difference in European Electricity Investment in the Alternative vs. Reference

Scenario 2003-2030

Additional investments on the demand side more than offset by lower investment on the supply side

- 200

- 150

- 100

- 50

0

50

100

150

Additional demand-sideinvestment

bill

ion

do

llars

Avoided supply-side investment Difference

Generation,Transmission

&Distribution

Efficiency measures

© OECD/IEA (2006)


Summary & Conclusions

Projected market trends raise serious concerns Increased risk for energy security Rising environmental concerns

More vigorous policies would curb rate of increase in energy demand and emission significantly

But a truly sustainable energy system will call for faster technology development & deployment

Urgent and decisive government action needed


WEO 2006 – Alternative Scenario

World Alternative Policy Scenario a “tool for change” Deepening and broadening the analysis

New analysis in World Alternative Policy Scenario Database with more than a thousand policies and measures Economic comparison (capital cost and fuel expenditure) Co-operation with World Bank, UNEP, EU, centers of

excellence in key developing countries (China, India, Brazil)

Beyond Alternative Policy Scenario What options to stabilise CO2 emissions by 2030 and limit

oil demand growth What implications for beyond 2030

© OECD/IEA (2006)


WEO 2006 – Special chapters

Impact of Higher Energy Prices Energy Price Trends and Relationships (oil, gas , coal and

electricity) Impact on energy demand and macroeconomy Energy Policy Implications

Role for Nuclear Availability of uranium and costs Economics of new reactors Nuclear investments in competitive markets

Prospects for Biofuels Realistic outlook of how far they can take us Economics of biofuels production/consumption Reference, Alternative Scenario and Beyond

© OECD/IEA (2006)

INTERNATIONAL ENERGY AGENCY World Energy Outlook Key Challenges Ahead of us Energy Risk Europe 2006...

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