XLVII Meeting of OLADE Ministers Buenos Aires, 6 December Paul Simons, IEA Deputy Executive Director

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1 XLVII Meeting of OLADE Ministers Buenos Aires, 6 December 2017 Paul Simons, IEA Deputy Executive Director

2 Tipping the energy world off its axis Four large-scale upheavals in global energy set the scene for the new Outlook: The United States is turning into the undisputed global leader for oil & gas Solar PV is on track to be the cheapest source of new electricity in many countries China s new drive to make the skies blue again is recasting its role in energy The future is electrifying, spurred by cooling, electric vehicles & digitalisation These changes brighten the prospects for affordable, sustainable energy & require a reappraisal of approaches to energy security There are many possible pathways ahead & many potential pitfalls if governments or industry misread the signs of change

3 India takes the lead, as China energy growth slows Change in energy demand, (Mtoe) Europe Eurasia United States -30 Middle East 480 China 790 Japan -50 Latin America 320 Africa 485 India Southeast Asia Old ways of understanding the world of energy are losing value as countries change roles: the Middle East is fast becoming a major energy consumer & the United States a major exporter

4 .. A as world China motion.. moves global energy markets, again Change in world energy demand by fuel Coal (Mtce) Oil (mb/d) Gas (bcm) Low-carbon (Mtoe) China Other countries Low-carbon sources & natural gas meet 85% of the increase in global demand: China s switch to a new economic model & a cleaner energy mix drives global trends

5 Latin America maintains its lead on renewables Share of renewables in final consumption World Latin America (ex Brazil) Brazil 50% 50% 50% 40% 40% 40% 30% 30% 30% 20% 20% 20% 10% 10% 10% Despite a boom in deepwater oil, in Brazil hydropower and biofuels continue to ensure that renewables account for a globally leading share of consumption

6 Solar PV forges ahead in the global power mix Global average annual net capacity additions by type Coal Gas Nuclear Renewables Solar PV Wind Other Coal GW Gas Nuclear Renewables Solar PV Wind Other GW GW China, India & the US lead the charge for solar PV, while Europe is a frontrunner for onshore & offshore wind. Results of recent auctions in Latin America a cause for optimism

7 Auctions drive prices down Recent announced long-term contract prices for new renewable power to be commissioned over Source: IEA (2017), Renewables Analysis and Forecasts to 2022, Paris.

8 The future is electrifying Electricity generation by selected region Sources of global electricity demand growth China United States India European Union Latin America Southeast Asia Middle East Large appliances Other Electric vehicles Connected & small appliances Industrial motors Cooling TWh 2016 Growth to 2040 India adds the equivalent of today s European Union to its electricity generation by 2040, while China adds the equivalent of today s United States

9 mb/d Million cars EVs are on the way, but oil demand still keeps rising Electric car fleet Change in global oil demand 300 Other countries United States India European Union China 12 8 Petrochemicals Aviation and shipping Trucks Passenger cars Other sectors Electric cars are helping to transform energy use for passenger cars, slowing the pace of growth in global oil demand: however, trucks, aviation, shipping & petrochemicals keep oil on a rising trend

10 Latin America remains a crucial producer of oil Oil production increase to 2040 mb/d Africa Mexico Canada United States Brazil Middle East Latin America accounts for one-third of the net increase in global oil supply to 2040

11 Billion dollars, 2016 Dollars per barrel, 2016 Estimated value of global fossil-fuel consumption subsidies Electricity Coal Gas Oil IEA average crude oil import price (right axis) Lower prices and bolder policies mean that the value of global fossil-fuel consumption subsidies declined again in 2016, to $260 billion

12 bcm Unconventional gas development takes off Natural gas production by country and gas type in Latin America in the New Policies Scenario 300 Conventional Unconventional Other 250 Trinidad & Tobago Argentina 200 Brazil Mexico 150 Venezuela Deepwater in Brazil and Mexico as well as shale gas in Argentina provide a major boost to Latin America s oil & gas production

13 LNG ushers in a new global gas order Global Gas importers exporters gas trade bcm in bcm in 2016 Europe 52% Middle East Africa Asia 37% Europe 35% US & Canada 59% shipped by LNG Asia 60% Africa Russia & Caspian 39% shipped by US LNG & Other Australia Canada Other Russia & Caspian Other Middle East Australia Other Growing gas import requirements in developing Asia, Japan and Korea are largely met by LNG, with exports from the US accelerating a shift towards a more flexible, liquid global market

14 Gt A new strategy for energy & sustainable development Global CO 2 emissions by scenario 40 New Policies Scenario 30 Sustainable Development Scenario 20 Sustainable Development Scenario The Sustainable Development Scenario reduces CO 2 emissions in line with the objectives of the Paris Agreement, while also tackling air pollution and achieving universal energy access

15 Stronger policies for a more sustainable world 875 million electric vehicles The Sustainable Development Scenario in times more efficient than today 3250GW global solar PV capacity 580bcm additional gas demand Only 15% additional investment is required to 2040 to achieve the Sustainable Development Scenario, with two-thirds of energy supply investment going to electricity generation & networks

16 Conclusions The oil & gas boom in the United States is shaking up the established order, with major implications for markets, trade flows, investment & energy security The versatility of natural gas means that it is well placed to grow, but it cannot afford price spikes or uncertainty over methane leaks Latin America is set to be a hotspot for deepwater and unconventional oil and gas production The region is playing a seminal role in driving global cost declines for renewables China continues to shape global trends, but in new ways as its energy revolution drives cost reductions for a wide range of clean energy technologies Our strategy for sustainable energy shows that concerted action to address climate change is fully compatible with global goals on universal access & air quality Electrification & digitalisation are the future for many parts of the global energy system, creating new opportunities but also risks that policy makers have to address

17 iea.org/weo