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World Energy Outlook Dr. Fatih Birol
IEA Chief EconomistBrussels, 29 April 2014
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The world energy scene today
Some long-held tenets of the energy sector are being rewritten Countries are switching roles: importers are becoming exporters… … and exporters are among the major sources of growing demand New supply options reshape ideas about distribution of resources
But long-term solutions to global challenges remain scarce Renewed focus on energy efficiency, but CO2 emissions continue to rise
Fossil-fuel subsidies increased to $544 billion in 2012 1.3 billion people still lack electricity – in Africa and South Asia
Energy prices add to the pressure on policymakers Sustained period of high oil prices without parallel in market history Large, persistent regional price differences for gas & electricity
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Growth in US shale gas output since 2005 is equivalent to the total production of Qatar, Kuwait, UAE and Iraq combined; while shale oil output is equal to that of Iraq
Unconventional oil and gas has made a major contribution to global production
0
50
100
150
200
250
300
Gas
bcm
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Oil
mb/d
US shale gas and shale oil production increases: 2005-2014
while shale oil output is equal to that of Iraq
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Who has flooded the markets?
Incremental steam coal exports
The US accounted for only 7% of the increase in global steam coal exports since 2007
020406080
100120140160180200
2009 2010 2011 2012 2013
Mt Indonesia
United States
Australia
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The slowdown in Chinese demand caught the industry off-guard
Coal demand in China: real demand vs historical trend
China’s move away from coal will be a far greater determinant of the direction of the coal markets than the shale gas revolution in the US
3000
3200
3400
3600
3800
4000
4200
4400
2010 2011 2012 2013
Mt
Real consumption
Historical trend
Curbing in China ≈ 20 times US exports increase in 2012
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A mix that is slow to change
Growth in total primary energy demand
Today's share of fossil fuels in the global mix, at 82%, is the same as it was 25 years ago; the strong rise of renewables only reduces this to around 75% in 2035
500 1 000 1 500 2 000 2 500 3 000
Nuclear
Oil
Renewables
Coal
Gas
Mtoe
1987-2011
2011-2035
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US emissions on a downward trend
Energy-related CO2 emissions in the United States
CO2 emissions fell sharply since the shale gas revolution, but rebounded last year on the back of a partial gas-coal switch and increased industrial activity
4.0
4.5
5.0
5.5
6.0
6.5
1990 1995 2000 2007 2012 2013
Gt CO2
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Non-OECDOECD
Emissions off track in the run-up to the 2015 climate summit in France
Cumulative energy-related CO2 emissions
Non-OECD countries account for a rising share of emissions, although 2035 per capita levels are only half of OECD
200
400
600
800Gt
1900-1929
1930-1959
1960-1989
1990-2012
2013-2035
OECD
Non-OECD
Total emissions1900-2035
51%
49%
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3×
4×
5×
2003
Regional differences in natural gas prices narrow from today’s very high levels but remain large through to 2035; electricity price differentials also persistelectricity price differentials also persist
20132035
Reductionfrom 2013
Who has the energy to compete?
Ratio of industrial energy prices relative to the United States
United States
2×
Japan EuropeanUnion
China
ElectricityNatural gas
2003
Japan EuropeanUnion
China
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Energy-intensive industries need to count their costs
Share of energy in total production costs for selected industries
Energy-intensive sectors worldwide account for around one-fifth of industrial value added, one-quarter of industrial employment and 70% of industrial energy use.
10% 20% 30% 40% 50% 60% 70% 80% 90%
Glass
Pulp & paper
Iron & steel
Cement
Aluminium
Fertilisers
Petrochemicals
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An energy boost to the economy?
Share of global export market for energy-intensive goods
The US, together with key emerging economies, increases its export market share for energy-intensive goods, while the EU and Japan see a sharp decline
Today 36% 10% 7% 7% 3% 2%
European Union
United StatesChina IndiaMiddle East
Japan
-3%
-10%
+3%+2% +2%+1%
while the EU & Japan see a sharp decline
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LNG from the United States can alleviate strain on the gas markets, but is no silver bullet
Indicative economics of LNG export from the US Gulf Coast
New LNG supplies accelerate movement towards a more interconnected global market, but high costs of transport between regions mean no single global gas price
Average import price
Liquefaction, shipping& regasification
United States price3
6
9
12
15
18
To Asia
$/MBtu
3
6
9
12
To Europe
$/MBtu
but high costs of transport between regions mean no single global gas price
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A Third Way for Europe: balancing competitiveness & sustainability
The high cost of energy in Europe is a structural issue, not a one off
Europe’s share of the global export market for energy-intensive goodsis set to decline substantially by 2035, directly impacting 30 million jobs
Both competitiveness & sustainability are crucial issues for Europe, but it must not be seen as an “either-or” choice
improve energy efficiency
negotiate more competitive terms for natural gas imports
develop renewables, nuclear power & unconventional gas
complete the internal energy market
2014 a key year for Europe energy policy, it will shape its long-term prosperity & could provide powerful inspiration for others to follow