World Energy Outlook Bo Diczfalusy, Näringsdepartementet

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1 World Energy Outlook 2013 Bo Diczfalusy, Näringsdepartementet

2 Energy demand & GDP Trillion dollars (2012) Mtoe GDP: OECD Non-OECD TPED (right axis): OECD Non-OECD Despite the partial decoupling of energy demand & economic growth, which has been particularly evident in the OECD, the two still remain closely tied

3 World energy demand & related CO 2 emissions by scenario Mtoe Gt 60 Primary energy demand: Current Policies Scenario New Policies Scenario 450 Scenario CO 2 emissions (right axis): Current Policies Scenario New Policies Scenario 450 Scenario In the New Policies Scenario, global primary energy demand between 2011 & 2035 increases by one-third & CO 2 emissions by one-fifth

4 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

5 Emissions off track in the run-up to the 2015 climate summit in France 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 Fossil energy resources by type years Total remaining recoverable resources Proven reserves Cumulative production to date 142 years 233 years 178 years 61 years 54 years Coal Natural gas Oil The world's remaining energy resources will not constrain the projected energy demand growth to 2035 & beyond, but large-scale of investment is required

7 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

8 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

9 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

10 Coal use grows further albeit at a slower pace than in the past Incremental world coal demand, historical & by scenario New Policies Scenario Current Policies Scenario 450 Scenario Mtce Differing stringency of climate action shapes the outlook for coal demand in the three scenarios


12 Unconventionals account for half of gas output growth Growth in unconventional gas production by type Shale gas United States China Canada Argentina India European Union Algeria Mexico Indonesia Coalbed methane Australia China India Canada United States bcm Unconventional gas development spreads well beyond North America, notably after 2020, with China & Australia major contributors to production growth

13 Natural gas: towards a globalised market Major global gas trade flows, Rising supplies of unconventional gas & LNG help to diversify trade flows, putting pressure on conventional gas suppliers & oil-linked pricing mechanisms

14 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

15 Renewables continue to gain share Renewable energy share in total primary energy demand by category & region 50% 40% 30% Additional market share in % 10% World US EU China World US EU China World US EU China Electricity generation Heat production Road transport Renewables grow strongly in all sectors and regions, with the strongest growth coming from the power sector

16 Capacity to change? Power generation capacity additions and retirements, United States European Union Additions Net additions Retirements Japan China India Middle East GW China & India together build almost 40% of the world s new capacity; 60% of capacity additions in the OECD replace retired plants

17 A new era in power capacity Installed capacity by source GW Historical Projections Other renewables Wind Hydro Nuclear Oil Gas Coal Despite additions of coal- & gas-fired power plants, more than half of new capacity is renewables-based, reaching 40% of global installed capacity in 2035

18 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

19 Energy efficiency involves all sectors of the economy Primary energy savings from energy efficiency by fuel & sector in the New Policies Scenario relative to the Current Policies Scenario in 2035 Power Industry Buildings Electricity & heat Gas Coal Oil Bioenergy Other renewables Transport Mtoe Energy savings are dominated by efficient motors in industry, efficient appliances & lighting in buildings & fuel-efficient road vehicles in transport

20 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.

21 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

22 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

23 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 lack electricity, 2.6 billion lack clean cooking facilities 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