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© OECD/IEA - 2008

The contextThe contextThe contextThe context

Soaring energy prices to mid-2008, followed by a collapse – what will it mean for demand?

How will the financial crisis & economic slowdown affect energy demand & investment?

Will economic worries divert attention from strategic energy-security & environmental challenges?

Are we setting ourselves up for a supply-crunch once the economy is back on its feet?

Will negotiators at COP-15 in Copenhagen in 2009 have the political support needed to succeed?

© OECD/IEA - 2008

0

2 000

4 000

6 000

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10 000

12 000

14 000

16 000

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1980 1990 2000 2010 2020 2030

Mto

e

Other renewables

Hydro

Nuclear

Biomass

Gas

Coal

Oil

World energy demand expands by 45% between now and 2030 – an average rate of increase of 1.6% per year – with coal accounting for more than a third of the overall rise

World primary energy demand in tWorld primary energy demand in the he Reference Scenario: this is unsustainable!Reference Scenario: this is unsustainable!World primary energy demand in tWorld primary energy demand in the he Reference Scenario: this is unsustainable!Reference Scenario: this is unsustainable!

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The continuing importance of coal in The continuing importance of coal in world primary energy demandworld primary energy demandThe continuing importance of coal in The continuing importance of coal in world primary energy demandworld primary energy demand

0%

20%

40%

60%

80%

100%

Non-OECD OECD

All other fuelsCoal

Shares of incremental energy demand Reference Scenario, 2006 - 2030Increase in primary demand, 2000 - 2007

Demand for coal has been growing faster than any other energy source & is projected to account for more than a third of incremental global energy demand to 2030

Mto

e

0

100

200

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400

500

600

700

800

900

1 000

Coal Oil Gas Renewables Nuclear

4.8%

1.6% 2.6%

2.2%

0.8%

% = average annual rate of growth

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Share of renewables in electricity Share of renewables in electricity generation in the Reference Scenario generation in the Reference Scenario Share of renewables in electricity Share of renewables in electricity generation in the Reference Scenario generation in the Reference Scenario

Soon after 2010, renewables become the world’s 2nd-largest source of electricity behind coal, thanks to government support, prospects for higher fossil-fuel prices

& declining investment costs

0% 5% 10% 15% 20% 25% 30% 35%

2030

2006

2030

2006

2030

2006

2030

2006

Rest

of t

heW

orld

Non

-EU

OEC

DEU

Wor

ldHydro

Other

© OECD/IEA - 2008

Change in oil demand by region Change in oil demand by region in the Reference Scenario, 2007-2030in the Reference Scenario, 2007-2030Change in oil demand by region Change in oil demand by region in the Reference Scenario, 2007-2030in the Reference Scenario, 2007-2030

-2 0 2 4 6 8 10

China

Middle East

India

Other Asia

Latin America

E. Europe/Eurasia

Africa

OECD North America

OECD Europe

OECD Pacific

mb/d

All of the growth in oil demand comes from non-OECD, with China contributing 43%, the Middle East & India each about 20% & other emerging Asian economies most of the rest

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Cumulative energy-supply investment Cumulative energy-supply investment

in the Reference Scenarioin the Reference Scenario, 2007-2030, 2007-2030

Cumulative energy-supply investment Cumulative energy-supply investment

in the Reference Scenarioin the Reference Scenario, 2007-2030, 2007-2030

Investment of $26 trillion, or over $1 trillion/year, is needed, but the credit squeeze could delay spending, potentially setting up a supply-crunch once the economy recovers

Power generation

50%

Transmission & distribution

50%Mining

91%

Shipping & ports

9%

Exploration and development

80%

Refining16%

Shipping4%

Exploration & development

61%LNG chain

8%

Transmission & distribution

31%

Power 52%

$13.6 trillion

Oil 24%

$6.3 trillion

Gas21%

$5.5 trillion

Coal 3%

$0.7 trillion

Biofuels <1%

$0.2 trillion

© OECD/IEA - 2008© OECD/IEA - 2008

© OECD/IEA - 2008

World oil production by OPEC/non-OPEC World oil production by OPEC/non-OPEC

in the Reference Scenarioin the Reference Scenario

World oil production by OPEC/non-OPEC World oil production by OPEC/non-OPEC

in the Reference Scenarioin the Reference Scenario

Production rises to 104 mb/d in 2030, with Middle East OPEC taking the lion’s share of oil market growth as conventional non-OPEC production declines

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2000 2007 2015 2030

OPEC - other

OPEC - Middle East

Non-OPEC - non-conventional

Non-OPEC -conventional

OPEC share

mb/

d

38%

40%

42%

44%

46%

48%

50%

52%

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1990 2000 2010 2020 2030

mb/

d

Natural gas liquids

Non-conventional oil

Crude oil - yet to be developed (inc. EOR) or found

Crude oil - currently producing fields

World oil production by source World oil production by source in the Reference Scenarioin the Reference ScenarioWorld oil production by source World oil production by source in the Reference Scenarioin the Reference Scenario

64 mb/d of gross capacity needs to be installed between 2007 & 2030 – six times the current capacity of Saudi Arabia – to meet demand growth & offset decline

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A sea change: world oil & gas production by A sea change: world oil & gas production by company type in the company type in the Reference ScenarioReference ScenarioA sea change: world oil & gas production by A sea change: world oil & gas production by company type in the company type in the Reference ScenarioReference Scenario

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2007 2015 2030

mb/

d

0

750

1 500

2 250

3 000

3 750

4 500

2006 2015 2030

Bcm

NOCs Private companies

Oil Gas

Almost 80% of the projected increase in output of both oil & gas comes from national companies – on the assumption that investment is forthcoming

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EU natural gas market outlookEU natural gas market outlookEU natural gas market outlookEU natural gas market outlook

EU import dependency rises from 58% today to 86% in 2030 as a result of declining domestic production and increasing demand

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100

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2007 2030

Bcm Imports - other countries

Imports - Middle East

Imports - Africa

Imports - Russia andother TE

Domestic production

© OECD/IEA - 2008

The 14 members of GECF account for three quarters of global gas reserves, while just 2 of them – Russia & Iran – account for over 40% .

World natural gas reserves and Gas Exporting World natural gas reserves and Gas Exporting Countries Forum (GECF) Countries Forum (GECF) World natural gas reserves and Gas Exporting World natural gas reserves and Gas Exporting Countries Forum (GECF) Countries Forum (GECF)

World total: 179 Tcm (2008)

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Post-2012 climate-policy

scenarios

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Energy-related COEnergy-related CO22 emissions emissions in the Reference Scenarioin the Reference ScenarioEnergy-related COEnergy-related CO22 emissions emissions in the Reference Scenarioin the Reference Scenario

97% of the projected increase in emissions between now & 2030 comes from non-OECD countries – three-quarters from China, India & the Middle East alone

0

5

10

15

20

25

30

35

40

45

1980 1990 2000 2010 2020 2030

Gig

aton

nes

Internationalmarine bunkersand aviation

Non-OECD - gas

Non-OECD - oil

Non-OECD - coal

OECD - gas

OECD - oil

OECD - coal

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Reductions in energy-related COReductions in energy-related CO22 emissions in the climate-policy scenariosemissions in the climate-policy scenariosReductions in energy-related COReductions in energy-related CO22 emissions in the climate-policy scenariosemissions in the climate-policy scenarios

While technological progress is needed to achieve some emissions reductions, efficiency gains and deployment of existing low-carbon energy account for most of the savings

20

25

30

35

40

45

2005 2010 2015 2020 2025 2030

Gig

aton

nes

Reference Scenario 550 Policy Scenario 450 Policy Scenario

CCS Renewables & biofuels

Nuclear

Energy efficiency

550 Policy

Scenario

450 Policy

Scenario

54%

23%

14% 9%

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World energy-related COWorld energy-related CO22 emissions emissionsin 2030 by scenarioin 2030 by scenarioWorld energy-related COWorld energy-related CO22 emissions emissionsin 2030 by scenarioin 2030 by scenario

OECD countries alone cannot put the world onto a 450-ppm trajectory, even if they were to reduce their emissions to zero

World

World

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Reference Scenario 550 Policy Scenario 450 Policy Scenario

Gig

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nes

© OECD/IEA - 2008

Key results of the post-2012 Key results of the post-2012 climate-policy analysisclimate-policy analysisKey results of the post-2012 Key results of the post-2012 climate-policy analysisclimate-policy analysis

550 Policy Scenario Corresponds to a c.3C global

temperature rise Energy demand continues to

expand, but fuel mix is markedly different

CO2 price in OECD countries reaches $90/tonne in 2030

Additional investment equal to 0.25% of GDP

450 Policy Scenario Corresponds to a c.2C global

temperature rise Energy demand grows, but half as

fast as in Reference Scenario Rapid deployment of low-carbon

technologies and a big fall in non-OECD emissions

CO2 price in 2030 reaches $180/tonne

OPEC production still 12mb/d higher in 2030 than today

Additional investment equal to 0.6% of GDP

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Cumulative European Union COCumulative European Union CO22 savings savings with 20% reduction target in 2020with 20% reduction target in 2020Cumulative European Union COCumulative European Union CO22 savings savings with 20% reduction target in 2020with 20% reduction target in 2020

EU cumulative savings over 2008-2020 would represent only 40% of China’s annual CO2 emissions in 2020

0

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12

China

ANNUAL 2020 CO2 emissions

Gig

aton

nes

EU-27

CUMULATIVE savingswith 20% CO2 emissions reduction target

(2008 - 2020)

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Summary & conclusionsSummary & conclusionsSummary & conclusionsSummary & conclusions

Current energy trends are patently unsustainable — socially, environmentally, economically

Oil will remain the leading energy source but...> The era of cheap oil is over, although price volatility will remain

> The oil market is undergoing major and lasting structural change, with national companies in the ascendancy

Energy and geopolitics will be increasingly interconnected

We need a major decarbonisation of the world’s energy system -- Copenhagen is crucial

Addressing environmental issues will substantially improve energy security

Financial crisis can plant the seeds for an “energy investment crisis”