CEEPR/EPRG/EDF European Energy Policy Conference. Dr Fatih Birol Executive Director, International Energy Agency Paris, 7 July 2016

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1 CEEPR/EPRG/EDF European Energy Policy Conference Dr Fatih Birol Executive Director, International Energy Agency Paris, 7 July 2016

2 Demand growth in Asia the sequel Change in energy demand in selected regions, Mtoe European Union United States Japan Latin America Middle East Southeast Asia Africa China India Energy use worldwide grows by one third to 2040, driven by Asia; EU energy demand declines by 15% over the period

3 Upstream oil and gas investment continues to fall Upstream oil and gas investment % - 22% Upstream oil and gas investment continues to fall, particularly in high-cost regions; this raises the prospect of price volatility & greater reliance on the Middle East in the future

4 The Middle East takes back centre stage Middle East oil production, mb/d % 33% Middle East share of Global oil supply (right axis) 25 30% % 10 24% 5 21% Reliance on Middle East oil is rising sharply, with big increases in supply in Saudi Arabia, Iraq & Iran Mar-16 Apr-16 May-16 18%

5 Greater competition is coming to the European gas market 12 US LNG is competitive in Europe USD/Mbtu European hub prices (TTF) Henry Hub indexed LNG delivered to Europe Oversupply in global LNG markets will intensify competition; flexible US LNG volumes are well-placed to compete in Europe Nb: Based on cash costs and on forward curves as of June 7 th 2016 IEA 2016

6 The cost of clean energy continues to fall Indexed cost of onshore wind, utility scale PV and LED lighting Indexed cost (2008=100%) 120% 100% 80% 60% 40% 20% 0% Onshore wind Solar PV - utility scale LEDs The falling cost of clean energies opens new opportunities and provides scope for support mechanisms to be reviewed

7 A 2 C pathway requires more technological innovation, investment & policy ambition 40 CO 2 emissions in a post COP 21 world Trend post-cop 21 Energy efficiency Renewables Gt Gt Fuel & technology switching in end-uses Nuclear C Scenario CCS Other Even greater efforts in efficiency, renewables, nuclear power and other low carbon technologies would be required to get close to a 1.5 C pathway IEA 2016

8 Costs continue to fall, but global progress in clean energy still needs to accelerate Technology Status today against 2DS targets Electric vehicles Solar PV and onshore wind Other renewable power Nuclear More efficient coal-fired power Carbon capture and storage Biofuels Transport Industry Buildings Appliances and lighting Energy storage Not on track Accelerated improvement needed On track Global clean energy deployment is still overall behind what is required to meet the 2 C goal, but recent progress on electric vehicles, solar PV and wind is promising IEA 2016

9 Priorities in moving to a sustainable energy future Be wary of cuts in upstream oil and gas investment - they pose threats to energy security and could lead to greater price volatility COP21 was historic and a catalyst for more innovation, research and investment in clean energy technologies 2015 saw progress in solar PV, wind and electric vehicles, but other areas such as CCS and biofuels are lagging behind International collaboration is crucial to respond to energy security & environmental challenges; IEA is pursuing modernization efforts: I. Opening its doors to the emerging economies II. Taking on a new role to safeguard natural gas security III. Becoming a global Clean Energy Hub

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