© OECD/IEA - 2007

The New World Energy Orderand Implications for

Climate Change

Dr. Fatih BirolChief Economist

International Energy Agency

© OECD/IEA - 2007

Reference Scenario

© OECD/IEA - 2007

Reference Scenario:

World Primary Energy Demand

Global demand grows by more than half over the next quarter of acentury, with coal use rising most in absolute terms

02468

1012141618

1980 1990 2000 2010 2020 2030

billio

n ton

neso

f oil e

quiva

lent

02468

1012141618

1980 1990 2000 2010 2020 2030

billio

n ton

neso

f oil e

quiva

lent

Other renewablesBiomassHydroNuclearGasOilCoal

© OECD/IEA - 2007

The Emerging Giants of World Energy

China & India will contribute more than 40% of the increase in global energy demand to 2030 on current trends

0%

20%

40%

60%

80%

100%

Total energy

Coal Oil Nuclear Hydro Power sectorinvestments

Rest of the worldIndiaChina

Increase in Primary Energy Demand & Investment Between 2005 & 2030 as Share of World Total

© OECD/IEA - 2007

The Emerging Giants of World Energy

China & India will contribute more than 40% of the increase in global energy demand to 2030 on current trends

0%

20%

40%

60%

80%

100%

Total energy

Coal Oil Nuclear Hydro Power sectorinvestments

Rest of the worldIndiaChina

Increase in Primary Energy Demand & Investment Between 2005 & 2030 as Share of World Total

© OECD/IEA - 2007

Global Oil Supply Prospects to 2015

Oil supply/demand balance is set to remain tight

In total, 37.5 mb/d of gross capacity additions needed in 2006-2015

13.6 mb/d to meet demand & rest to replace decline in existing fields

OPEC & non-OPEC producers have announced plans to add 25 mb/d through to 2015

Thus, a further 12.5 mb/d of gross capacity would need to be added or demand growth curbed

Otherwise, a supply crunch cannot be ruled out

© OECD/IEA - 2007

Index of average of Top 5 IOCs’Reserves Replacement Ratio

The current reserve replacement ratio of top 5 IOCs has fallen, and its becoming more difficult to replace reserves

despite rising oil prices

2001 2002 2003 2004 2005 200620

25

30

35

40

45

50

55Top 5 IOCsBrent

dolla

rs pe

r bar

rel

0

50

100

150

200

250

300ind

ex* (

1992

=100

)

© OECD/IEA - 2007

Proven Natural Gas Reserves

Gas reserves are also concentrated – Russia and Iran together account for almost half of global gas reserves

World total: 183 tcm as of 1 January 2007Source: Cedigaz

8.0

7.0

5.8

14.5

57.9

73.913.6

2.7

© OECD/IEA - 2007

Energy-Related CO2 Emissions by Region, 1900-2005

Over the last century, China has contributed only 8% of global emissions & India 2%

0

2 000

4 000

6 000

8 000

10 000

1900 1915 1930 1945 1960 1975 1990 2005

millio

n ton

nes

Rest of the world33%

India2%

China8% Japan

4%

European Union23%

United States30%

Cumulative emissions

© OECD/IEA - 2007

China & India in Global CO2 Emissions

Around 60% of the global increase in emissions in 2005-2030 comes from China & India

Cumulative Energy-Related CO2 Emissions

0 100 200 300 400 500

United States

European Union

Japan

China

India

billion tonnes

1900-20052006-2030

© OECD/IEA - 2007

CO2 Emissions from Coal-Fired Power Stations built prior to 2015 in China & India

0

1 000

2 000

3 000

4 000

5 000

6 000

2006 2015 2030 2045 2060 2075

millio

n ton

neso

f CO 2

Existing power plants Power plants built in 2005-2015

Capacity additions in the next decade will lock-in technology & largely determine emissions through 2050 & beyond

© OECD/IEA - 2007

World’s Top Five CO2 Emitters

2005 2015 2030

Gt rank Gt rank Gt rank

US 5.8 1 6.4 2 6.9 2

China 5.1 2 8.6 1 11.4 1

Russia 1.5 3 1.8 4 2.0 4

Japan 1.2 4 1.3 5 1.2 5

India 1.1 5 1.8 3 3.3 3

China becomes the largest emitter in 2007 & India the 3rd largest by 2015

© OECD/IEA - 2007

Global CO2 Emissions and Climate Change

Global CO2 emissions rise to 42 gigatonnes in 2030, 57% above current levels and double the 1990 level

10

15

20

25

30

35

40

45

50

1980 1990 2000 2010 2020 2030

billio

n ton

nes

42 Gt

27 Gt+57%

© OECD/IEA - 2007

Population without electricity, 2006

In 2030, if no major new policies are implemented, there will still be 1.4 billion people without electricity.

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Alternative Policy Scenario

© OECD/IEA - 2007

Increase in Net Oil Imports, 2006-2030

New policies reduce global oil demand by 14 mb/d by 2030, cutting sharply the need for imports

-2

0

2

4

6

8

10

OECDNorth America

OECDEurope

OECDPacific

China India Other Asia

mb/d

Reference ScenarioAlternative Policy Scenario

© OECD/IEA - 2007

Global Energy-Related CO2 Emissions

Global emissions will increase by 57% in the Reference Scenario,but they level off in the Alternative Policy Scenario

10

15

20

25

30

35

40

45

50

1980 1990 2000 2010 2020 2030

billio

n ton

nes (

Gt) Reference Scenario 42 Gt

Alternative Policy Scenario

34 Gt

19%

27 Gt

© OECD/IEA - 2007

India’s Local Pollution

New policies reduce substantially emissions of SO2 and NOx– largely from coal-fired power plants, cars & trucks

Alternative Policy Scenario

0

3

6

9

12

15

18

1990 1995 2000 2005 2010 2015 2020 2025 2030

millio

n ton

nes

Reference Scenario

SO2

NOx

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How to go beyond?

© OECD/IEA - 2007

CO2 Emissions - 450 Stabilisation Case

In line with G-8 appeal in Heiligendamm, by 2030 emissions are reduced to some 23 Gt

10

15

20

25

30

35

40

45

2005 2010 2015 2020 2025 2030

Gt of

CO 2

CCS in industryCCS in power generationNuclearRenewablesSwitching from coal to gasEnd Use electricity efficiency

End Use fuel efficiency

Reference Scenario

450 Stabilisation Case27 Gt

42 Gt

23 Gt

Energy-Related CO2 Emissions

© OECD/IEA - 2007

Average Annual Power Generation Capacity Additions in the 450 Stabilisation Case, 2013-2030

So what would the ‘450ppm Stabilisation Case’ mean in practice?

22 CCS coal-fired plants (800 MW)

20 CCS gas-fired plants (500 MW)

30 nuclear reactors (1000 MW)

2 Three Gorges Dams

400 CHP plants (40 MW)

17 000 turbines (3 MW)

0 10 20 30 40 50 60

Other Renewables

Wind

Biomass and waste

Hydropower

Nuclear

Gas CCS

Coal CCS

GW

© OECD/IEA - 2007

Public Energy Research and Development Funding in IEA Countries

0

2

4

6

8

10

12

14

1986 1991 1996 2001 2006

billio

n doll

ars (

2006

)

0%

2%

4%

6%

8%

10%

12%

EfficiencyFossil fuels CCSRenewablesNuclear HydrogenStorage technologiesOther

Share of energy R&Din total R&D (right axis)

Share of public budgets for energy R&D in total R&Dfell over 50% in the last two decades

© OECD/IEA - 2007

Conclusions

Global energy system is on an increasinglyunsustainable path

China and India are engines of global energy demand -- countries putting economic development as top priority

Next 10 years are critical

Road to Copenhagen – a way out ?