Third IEA IEF OPEC Symposium on Gas and Coal Market Outlooks. Tim Gould, IEA

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1 Third IEA IEF OPEC Symposium on Gas and Coal Market Outlooks Tim Gould, IEA

2 A new fuel in pole position Change in global primary energy demand Mtoe Rest of world Renewables SE Asia European Union Latin America India 500 Renewables US Africa China Nuclear Nuclear Coal Oil Gas Lowcarbon Coal Oil Gas Lowcarbon Low-carbon fuels & technologies, mostly renewables, supply nearly half of the increase in energy demand to 2040

3 China s transition has a major impact on global trends Change in total final energy consumption in China Mtoe Energy-intensive industry Light industry Services Residential Transport Other China s energy-intensive industries are no longer the spur for future growth; the resulting fall in coal demand makes way for a strong rise in electricity & gas use

4 Gas is well placed in the US power sector Levelised cost of electricity generation for existing and new coal and gas plant in the United States, Dollars per MWh (2015) New coal plant New gas plant Existing gas plant Existing coal plant 15% 25% 35% 45% 55% 65% 75% 85% Plant utilisation New CCGTs beat new coal plants on a commercial basis in the United States even in baseload generation

5 .. but the picture changes in markets where gas is imported Levelised cost of electricity generation for existing and new coal and gas plant in the European Union, 2025 Dollars per MWh (2015) 250 New coal plant New gas plant Existing gas plant Existing coal plant 15% 25% 35% 45% 55% 65% 75% 85% Plant utilisation The commercial case for coal-to-gas switching in power generation is not self-evident in the European Union

6 .. and coal is a very tough competitor across much of Asia Levelised cost of electricity generation for existing and new coal and gas plant in Asia, Dollars per MWh (2015) New coal plant New gas plant Existing gas plant Existing coal plant 15% 25% 35% 45% 55% 65% 75% 85% Plant utilisation In most Asian gas-importing countries, the economic case for gas-for-power is limited to a role in meeting peaks in demand

7 Air pollution is an energy problem, & an opportunity for natural gas Pollutant emissions, 2015 Nitrogen oxides (NO X ) Sulfur dioxide (SO 2 ) Fine particulate matter (PM 2.5 ) 108 Mt 81 Mt 41 Mt Coal 43% >99% Oil >99% 85% Biomass 61% 43% Coal Oil Energy-related Gas Non-energy Bioenergy Other Source: WEO Special Report: Energy and Air Pollution Energy is the single most important cause of emissions of all the main pollutants, boosting the case for gas in Asia s fast-growing urban & industrial centres

8 But tackling methane emissions is vital to underpin the sustainable case for gas Global oil & gas sector methane emissions and gas production Methane is a potent greenhouse gas; taking action to reduce these emissions is a major opportunity to tackle near-term warming alongside long-term reductions in CO 2

9 Renewables are increasingly competitive in all markets Levelised cost of electricity by selected technologies, Dollars per MWh (2015) CO 2 cost Coal Gas Solar PV Wind United States European Union China India Falling costs and rising electricity prices lead more renewables to be competitive; by 2040, nearly half of wind and solar PV do not require any subsidies

10 Still a long way from a pathway to energy sector decarbonisation Energy-sector CO 2 emissions Gt Early peak in emissions Net-zero by the end of the century Current pledges fall short of limiting the temperature increase to below 2 C; raising ambition to 1.5 C is uncharted territory

11 Fossil fuels in a decarbonising system Energy demand by fuel & scenario Mtoe Oil Coal Gas Main Scenario 2 C Scenario Coal is hit hardest in a 2 degree scenario & oil demand peaks before 2020: only consumption of natural gas ends up higher than today

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