World Energy Outlook Dr Fatih Birol Chief Economist, IEA Istanbul, 20 December

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1 World Energy Outlook 2013 Dr Fatih Birol Chief Economist, IEA Istanbul, 20 December

2 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 CO 2 emissions continue to rise Fossil-fuel subsidies increased to $544 billion in 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

The engine of energy demand growth moves to South Asia Primary energy demand, 2035 (Mtoe) Share of global growth 2012-2035 United States 2 240 480 Brazil Europe Africa 1 710 Middle East 1 030 Eurasia

3 The engine of energy demand growth moves to South Asia Primary energy demand, 2035 (Mtoe) Share of global growth United States Brazil Europe Africa Middle East Eurasia India China Japan Southeast Asia Africa Middle East Latin America 8% 10% Eurasia 8% 5% OECD 4% 65% Non-OECD Asia China is the main driver of increasing energy demand in the current decade, but India takes over in the 2020s as the principal source of growth

4 A mix that is slow to change Growth in total primary energy demand Gas Coal Renewables Oil Nuclear Mtoe 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

Emissions off track in the run-up to the 2015 climate summit in Paris Cumulative energy-related CO 2 emissions Gt 800 Total emissions 1900-2035 600 400 Non-OECD Non-OECD 49%

5 Emissions off track in the run-up to the 2015 climate summit in Paris Cumulative energy-related CO 2 emissions Gt 800 Total emissions Non-OECD Non-OECD 49% OECD 200 OECD 51% Non-OECD countries account for a rising share of emissions, although 2035 per capita levels are only half of OECD

6 Oil use grows, but in a narrowing set of markets Oil demand by sector region mb/d Other Gasoline Diesel OECD Other Middle East India China Transport Petrochemicals Other 2035 sectors China becomes the largest consumer of oil by 2030, as OECD oil use drops; demand is concentrated in transport, where diesel use surges by 5.5 mb/d,, & petrochemicals

7 Turbulent times for the refining sector Refinery capacity and operation mb/d Other Middle East India New refinery capacity China Existing spare & excess capacity Spare & excess capacity with 10 mb/d at risk of closure by 2035 Oil bypassing refineries Oil demand processed by refineries More oil bypassing the refining system and new capacity in growing non-oecd markets piles pressure on existing refiners, especially in Europe

8 Two chapters to the oil production story Contributions to global oil production growth Middle East Brazil United States Rest of the world mb/d The United States (light tight oil) & Brazil (deepwater) step up until the mid-2020s, but the Middle East is critical to the longer-term oil outlook

9 Renewables power up around the world Growth in electricity generation from renewable sources, TWh Other renewables United States Solar PV Japan Other renewables Solar PV Wind China ASEAN Other renewables Solar Africa PV Wind Latin America European Wind Union Hydro Hydro India Hydro Europe, Japan & United States China India, Latin America, ASEAN & Africa The expansion of non-hydro renewables depends on subsidies that more than double to 2035; additions of wind & solar have implications for power market design & costs

10 Who has the energy to compete? Ratio of industrial energy prices relative to the United States 5 Natural gas Electricity 4 3 Reduction from United States Japan European Union China Japan European Union China Regional differences in natural gas prices narrow from today s very high levels but remain large through to 2035; electricity price differentials also persist

11 Energy-intensive industries need to count their costs Share of energy in total production costs for selected industries 10% 20% 30% 40% 50% 60% 70% 80% 90% Petrochemicals Fertilisers Aluminium Cement Iron & steel Pulp & paper Glass Energy-intensive sectors worldwide account for around one-fifth of industrial value added, one-quarter of industrial employment and 70% of industrial energy use.

12 An energy boost to the economy? Share of global export market for energy-intensive goods European Union +1% Japan +3% +2% +2% Today 36% 10% 7% 7% 3% 2% United States China Middle East India -3% -10% 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

LNG from the United States can shake up gas markets Indicative economics of LNG export from the US Gulf Coast (at current prices) $/MBtu 18 15 12 9 6 3 $/MBtu 12 9 6 3 Average import price

13 LNG from the United States can shake up gas markets Indicative economics of LNG export from the US Gulf Coast (at current prices) $/MBtu $/MBtu Average import price Liquefaction, shipping & regasification United States price To Asia To Europe New LNG supplies accelerate movement towards a more interconnected global market, but high costs of transport between regions mean no single global gas price

14 Orientation for a fast-changing energy world China, then India, drive the growing dominance of Asia in global energy demand & trade Technology is opening up new oil resources, but the Middle East remains central to the longer-term outlook Regional price gaps & concerns over competitiveness are here to stay, but there are ways to react with efficiency first in line The transition to a more efficient, low-carbon energy sector is more difficult in tough economic times, but no less urgent

World Energy Outlook 2013

World Energy Outlook 2013 Paweł Olejarnik IEA Energy Analyst Warszawa, 15 Listopada 2013 The world energy scene today Some long-held tenets of the energy sector are being rewritten Countries are switching