Global Gasification Market Panel 2012 Gasification Technologies Conference

Transcription

1 ` Global Gasification Market Panel 2012 Gasification Technologies Conference DFG Remarks Monday, October 29, 2012 Introduction Table of Contents Global Economic Prospects Energy Demand Issues and Opportunities Good morning. In my few minutes I d like to make a few points about global economic prospects, energy demand and issues and possible opportunities. Term Global Economic Prospects Near Term Global Economic Prospects Economic activity has been growing more slowly or even declining in most major countries for most of the past year Europe, the United States and China will be preoccupied with difficult structural problems for the next few years A serious negative shock coming from any of these three would push the world back into recession If this should happen, governments have far fewer resources to counter a downturn Even if things turn out fairly well, trend growth will likely be lower than in recent decades until the emerging markets are able to make a greater contribution to final demand GTC Conference Panel PFC Energy Page 3 29/10/2012 Strategic Advisors in Global Energy Beijing Houston Kuala Lumpur Moscow Paris Singapore Washington

2 GTC Conference Page 2 First, on global economic prospects, as you all know global economic activity has been growing more slowly or even declining in most major countries for most of the past year. We could put up some numbers but you know picture. Second, as we see it, Europe, the United States and China will all be preoccupied with difficult structural problems for at least the next several years. Again the basics are familiar: the problems that have given rise to the fiscal cliff in the US; the problems that make it so difficult to hold the Euro area together and the problems that make it so difficult for China to make the transition from being overly dependent on net exports and investment to being more sustainably dependent on consumption. Again I could go on but just say that as long as these problems persist, these countries or regions are not going to be providing the economic leadership that most would say we clearly need. Third while my colleagues and I tend to think that the world will muddle through, a serious negative shock coming from any of these three would almost certainly push the world back into recession. Obviously this would be worrisome at any time but what makes it particularly worrisome now is that given the resources that were expended the last time around stimulus programs in this country and China, country level bailouts in Europe, most governments would have far fewer resources to counter a downturn now than we did last time around Fourth, even if things turn out fairly well, as they might, if we characterize muddling through as turning out fairly well, trend growth will likely be lower than in recent decades until the emerging markets are able to make a greater contribution to final demand. In other words these imbalances and other problems are not going to be resolved anytime soon and getting the process of getting them resolved is not going to be very good for economic growth or by extension for the growth in demand for energy.

3 GTC Conference Page 3 Energy Demand Energy Demand: Headwinds and Changing Fundamentals Assuming negative shocks can be avoided, global demand for energy will continue to edge up Growth in energy intensive activities, especially in emerging markets, will continue to temper the effects of slower growth in GDP and the effects of improving efficiency Viewed from a distance, energy fundamentals look fairly stable: Transportation and electricity in all end uses as key sectors Asia as the critical region Conventional coal, oil and gas as principal sources of supply Looked at more closely, there is a lot going on in these and other sectors, regions and sources GTC Conference Panel PFC Energy Page 4 29/10/2012 Turning to energy demand the key points are headwinds and changing fundamentals. As far as headwinds our thinking is that if negative economic shocks can be avoided, global demand for energy will continue to edge up. The reason is the judgment that the growth in energy intensive activities as development proceeds and incomes rise in especially in the emerging markets will continue to temper not offset but temper - the effects of slower growth in global GDP and the effects of continuing efforts to increase efficiency. In terms of fundamentals, viewed from a distance, energy fundamentals invariably look fairly stable : Transportation and electricity in all end-uses have long been the key sectors; Asia, the geographical center of growth; and conventional coal, oil and gas, the principal sources of supply. Important basics and not very exciting. But looked at more closely there is more than enough going on in these and other sectors, regions and sources to keep us all out of trouble.

4 GTC Conference Page 4 Issues and Possible Opportunities Some Issues and Possible Opportunities US Important shifts are underway, with many more coming, in power generation, petrochemicals and transport But views differ on timing and extent Europe Possible / probable phase out of nuclear in some countries Decades of talk regarding diversification of supplies The Middle East Continuing stealthy growth in domestic demand China Energy implications of economic restructuring, including efforts to stimulate domestic demand in interior provinces GTC Conference Panel PFC Energy Page 5 29/10/2012 Let me conclude by briefly mentioning some issues and possible opportunities. Full disclosure, these are some of the things that I find interesting and there are many, many more if we talk to my colleagues. In the US as everyone knows we have important shifts underway or coming in power generation, petrochemicals and transportation. My colleagues and I have written quite a bit on unconventionals and the ongoing and potential effects are clearly transformative. But as I get out and talk to people in utilities and elsewhere I find that views differ when it comes to major investments and these differences have to mean opportunities for alternatives such as gasification. Turning to Europe, the problems of the Eurozone get all the attention but what about the possible if not the probable phase out of nuclear in some countries or the decades of talk regarding the need for diversification of supplies that someone has to do something about sometime. (Again there have to be opportunities even if growth in total demand remains modest). Third, the Middle East, where the focus is generally exports and production but despite what too often happens, you really cannot ignore the continued growth in domestic

5 GTC Conference Page 5 demand and its implications for future availabilities especially for gas. And finally China where, again, not surprisingly most people focus on the implications of possible slower growth but almost no one seems to give thought to the possible positive implications of economic restructuring including efforts to stimulate demand in the interior provinces. That concludes my time and I look forward to the discussion that follows.