The rapidly changing global energy landscapeeneken.ieej.or.jp/data/7794.pdfSolar PV is on track to...

© OECD/IEA 2017

The rapidly changing global energy landscape Dr. Fatih Birol

IEEJ, Tokyo, 27 February 2018

IEA

Executive Director, International Energy Agency

IEEJ：February 2018 © IEEJ2018

© OECD/IEA 2017

Tipping the energy world off its axis

• Four large-scale upheavals in global energy :

- The United States is turning into the undisputed global leader for oil & gas

- Solar PV is on track to be the cheapest source of new electricity in many countries

- China’s new drive to “make the skies blue again” is recasting its role in energy

- The future is electrifying, spurred by cooling, electric vehicles & digitalisation

• These changes brighten the prospects for affordable, sustainable energy &require a reappraisal of approaches to energy security

• There are many possible pathways ahead & many potential pitfalls ifgovernments or industry misread the signs of change


© OECD/IEA 2017

India takes the lead, as China energy growth slows

India, China and other developing Asia will be critical in determining the future trajectory of global energy demand & C02 emissions

Change in energy demand, 2016-40 (Mtoe)

India1 005 420

SoutheastAsia

China 790

United States-30

Japan-50

Europe-200

270Central and

South America

485

Africa

135 Eurasia

480MiddleEast


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Low-carbon sources & natural gas meet 85% of the increase in global demand:

.. .. A world in motion..as China moves global energy markets, again

Change in world energy demand by fuel

Coal (Mtce)

0

500

1 000

1 500

2 000

2 500

- 5001990-2016 2016-40

Oil (mb/d)

6

12

18

24

30

1990-2016 2016-40

Gas (bcm)

400

800

1 200

1 600

2 000

1990-2016 2016-40

Low-carbon (Mtoe)

400

800

1 200

1 600

2 000

1990-2016 2016-401990-2016 2016-40

Other countriesChina

China’s switch to a new economic model & a cleaner energy mix drives global trends


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EVs are on the way, but oil demand still keeps rising

Electric cars are helping to transform energy use for passenger cars,

Electric car fleet

100

200

300

2016 2025 2040

Mill

ion

cars Other countries

United States

India

European Union

China

Passenger carsOther sectors

Change in global oil demand

4

8

12

16

Petrochemicals

Aviation and shipping

Trucks

mb/

d

- 42016-2040

0

Japan

Electric cars are helping to transform energy use for passenger cars, slowing the pace of growth in global oil demand: however, trucks, aviation, shipping & petrochemicals keep oil on a rising trend


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US becomes undisputed leader of oil & gas production

The US is already switching to become a net exporter of gas & becomes a net exporter of oil in the 2020s, helped also by the demand-side impact of fuel efficiency & fuel switching

Oil and gas production in the United States

25

30

35

5

10

15

20

1980 1990 2000 2010 2020 2030 2040

mboe/d Shale oil

Shale gas

Other unconventionals

Conventional oil & gasmboe/d


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LNG ushers in a new global gas order

Growing gas import requirements in developing Asia, Japan and Korea are largely met by LNG, with exports from the US accelerating a shift towards a more flexible, liquid global market

Global gas trade

706 bcm in 2016

Global gas tradeGas exportersGas importers

39% shipped by LNG

1 230 bcm in 2040

59% shipped by LNG

AustraliaRussia& Caspian

MiddleEast

Other

Africa

US &Canada

AustraliaRussia& Caspian

MiddleEast Other

AfricaUS& Canada

Asia37%

Europe52%

Other

Asia60%

Europe35%

Other


© OECD/IEA 2017

The future is electrifying

India adds the equivalent of today’s European Union to its electricity generation by 2040, while China adds the equivalent of today’s United States

Electricity generation by selected region

Middle East

2 000 4 000 6 000 8 000 10 000

Africa

Southeast Asia

European Union

India

United States

China

TWh2016 Growth to 2040

Sources of global electricity demand growth

Industrial motors

Cooling

Large appliances

Connected & small

appliances

Electric vehicles

Other

Japan


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The cost of wind and solar PV have fallen sharply, with further reductions expected;Cost-optimal integration requires interconnections, flexible generation, storage & demand response

Wind and solar PV average LCOEs and auction results by commissioning date

Wind and solar PV costs being driven down by competition

0

50

100

150

200

250

300

350

2008 2010 2012 2014 2016 2018 2020 2022

USD 2016/MWh

Onshore wind average auctionprice

Solar PV average auction price

Offshore wind LCOE

Solar PV - utility scale LCOE

Onshore wind LCOE


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A new leader emerging on nuclear

Without additional lifetime extensions, the largest nuclear fleets face significant declines, while China is soon set to overtake the United States as the global leader

Nuclear power generation capacity

40

80

120

2010 2020 2030 2040

GW

United States

China

France

Japan


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Japan’s Power Mix: Policy determines uptake of low-carbon sources

Decarbonisation of Japan’s power sector can be achieved through the uptake of variable renewables and the restart of nuclear plants while ensuring their safety

Power generation mix in Japan by fuel and scenario

0%

20%

40%

60%

80%

100%

2016 Central Scenario2040

SDS2040

Coal Gas Oil Nuclear Renewables

33%

40%

8%2%

18%

22%

28%

1%

22%

27%

2%9%

0%

32%

56%


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A new strategy for energy & sustainable development

The Sustainable Development Scenario reduces CO2 emissions in line with the objectives of the Paris Agreement, while also tackling air pollution and achieving universal energy access

10

20

30

40

2000 2010 2020 2030 2040

Gt

New Policies Scenario

Sustainable Development Scenario

Global CO2 emissions by scenario

SustainableDevelopment

Scenario


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The potential of clean energy technology remains under-utilised

Despite good progress in some areas, many technologies still need a strong push to achieve their full potential and deliver a sustainable energy future

Energy storage Solar PV and onshore wind

Electric vehicles

●Not on track ●Accelerated improvement needed ●On track

Building energy efficiency Transport biofuels

Carbon capture and storage More efficient coal-fired power

Nuclear Transport – Fuel economy of light-duty vehicles

Lighting, appliances and building equipment Energy efficiency in industry

Hydrogen and Fuel Cells


© OECD/IEA 2017

Conclusions

• The oil & gas boom in the United States is shaking up the established order, with majorimplications for markets, trade flows, investment & energy security

• The versatility of natural gas means that it is well placed to grow, but it cannot affordprice spikes or uncertainty over methane leaks

• China continues to shape global trends, but in new ways as its “energy revolution”drives cost reductions for a wide range of clean energy technologies

• Concerted action is needed to address climate change, including deployment of all lowcarbon options

• Electrification & digitalisation are the future for many parts of the global energy system,creating new opportunities but also risks that policy makers have to address


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