© OECD/IEA 2012

World Energy Outlook 2012: short, medium and longer term insights

Brisbane

April 2013

Ian Cronshaw

© 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

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Growth in Global Energy Demand 2000-10

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Japan: Coping Post Fukushima LNG Imports

5,149

6,149

7,149

8,149

9,149

10,149

11,149

12,149

Millio

n C

ub

ic M

ete

rs

2006 - 2011 Range 2010 2011 2012

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Emerging economies steer energy markets

Share of global energy demand

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

20%

40%

60%

80%

100%

1975 2010 2035

Middle East

India

China

OECD

Non-OECD Rest of non-OECD 6 030 Mtoe 12 380 Mtoe 16 730 Mtoe

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China—Driving Diversification

• 2011 4700 Twh, with 2015 6300 Twh

• New Five Year Plan sets ambitious goals for non coal energy

• Continues current 20% per annum growth in gas to 250 bcm by 2015, at least a third imported

• But slowdown in coal growth to only 2-4% per year looks less credible.

• It is now clear that China is exerting a major influence on global traded coal prices, and that influence will soon extend to gas

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Incremental coal demand in China & the rest of the world by major sector in the New Policies Scenario

-200

0

200

400

600

800

1 000

1 200 Industry*

Power generation

China Rest of world

1990-2000 2000-2010 2010-2020 2020-2035

Mtc

e

China Rest of world

China Rest of world

China Rest of world

* Includes blast furnace, coke oven transformation, and own use.

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Share of major hard coal importers in global inter-regional trade in the New Policies Scenario

0%

5%

10%

15%

20%

25%

30%

35%

40%

1990 2000 2010 2020 2030 2035

India

Japan European Union

China Korea

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A United States oil & gas transformation

US oil and gas production

The surge in unconventional oil & gas production has implications well beyond the United States

Unconventional gas

Conventional gas

Unconventional oil

Conventional oil

mboe/d

5

10

15

20

25

1980 1990 2000 2010 2020 2030 2035

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Reductions in net oil imports in the United States in the New Policies Scenario, by source

0

1

2

3

4

5

6

7

8

9

10

mb

/d

2011 2015 2020 2025 2030 2035

Demand-side efficiency

Biofuels use in transport

Natural gas use in transport

Increased oil supply

Reductions due to:

2011 net oil import level

Projected net imports

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Middle East oil to Asia: a new silk road

Middle East oil export by destination

By 2035, almost 90% of Middle Eastern oil exports go to Asia; North America’s emergence as a net exporter accelerates the eastward shift in trade

7

United States Japan & Korea Europe China India

mb/d 2000

2011

2035

1

2

3

4

5

6

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Different trends in oil & gas import dependency

While dependence on imported oil & gas rises in many countries,

Net oil & gas import dependency in selected countries

0%

20%

40%

60%

80%

100%

20% 40% 60% 80% 100% Oil imports

Gas Imports

United States

China India

European Union

Japan

2010

2035

20% Gas Exports

the United States swims against the tide

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Growing LNG enhances supply security & market flexibility

Projected LNG liquefaction capacity by country

Trade in natural gas between major regions doubles to over 1 tcm by 2035, with Australia becoming a leading LNG supplier

0

100

200

300

400

500

600

2008 2009 2010 2011 2012 2013 2014 2015 2020

Europe

Other Africa

Other Middle East

Russia

Americas

Algeria

Indonesia

Nigeria

Other Asia

Qatar

Australia

bcm

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Natural gas: towards a globalised market

Major global gas trade flows, 2010

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

Major global gas trade flows, 2035

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Energy efficiency: a huge opportunity going unrealised

20%

40%

60%

80%

100%

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

Energy efficiency potential used by sector in the New Policies Scenario

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The Efficient World Scenario: a blueprint for an efficient world

Economically viable efficiency measures can halve energy demand growth to 2035;

Total primary energy demand

12 000

13 000

14 000

15 000

16 000

17 000

18 000

2010 2015 2020 2025 2030 2035

Mtoe

New Policies Scenario

Efficient World Scenario

Reduction in 2035

Coal 1 350 Mtce

Oil 12.7 mb/d

Gas 680 bcm

Others 250 Mtoe

oil demand savings equal the current production of Russia & Norway

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Energy efficiency brings economic gains

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

Energy expenditure in 2035 compared with 2010

Trillion

Efficient World Scenario

New Policies Scenario Additional in the New Policies Scenario

-$0.3

$0

$0.3

$0.6

$0.9

$1.2

$1.5

China India European Union

United States

Japan

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Power generation

Industry

Transport

Other

Room to manoeuvre

The Efficient World Scenario delays carbon lock-in

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

5

10

15

20

25

30

2011 2015 2020 2025 2030 2035

Gt

2 °C trajectory

Lock-in of existing infrastructure

2017

Lock-in of infrastructure in New Policies Scenario in 2017

2022 35

Lock-in of infrastructure in Efficient World Scenario in 2022

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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

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