Canberra November 2016
The global energy context today Key points of orientation: Middle East share in global oil production in 2016 at highest level for 40 years Transformation in gas markets deepening with a 30% rise in LNG Additions of renewable capacity in the power sector higher in 2015 than coal, gas, oil and nuclear combined Energy sector in the spotlight as the Paris Agreement enters into force Billions remain without basic energy services There is no single story about the future of global energy; policies will determine where we go from here
Renewables Renewables Mtoe A new fuel in pole position Change in total primary energy demand 2 000 1990-2015 2015-2040 1 500 1 000 500 Nuclear Rest of world European Union Latin America India US Africa China Nuclear Coal Oil Gas Coal Oil Gas Lowcarbon Lowcarbon Low-carbon fuels & technologies, mostly renewables, supply nearly half of the increase in energy demand to 2040
TWh TWh Greater policy support boosts prospects for solar PV and wind Solar PV and wind generation, 2040 4 000 6 000 3 000 2 000 1 000 4 500 3 000 1 500 Additional in the 2 C scenario Increase in WEO-2016: Rest of world United States China WEO-2015 Solar PV Wind power Stronger policies on solar PV and wind help renewables make up 37% of electricity generation in 2040 in our main scenario & nearly 60% in the 2 C scenario
The next frontiers for renewables are heat and transport Renewable energy use by sector Mtoe 1 200 900 600 Additional to 2040 2015 300 Electricity Heat Transport Today renewables in electricity and heat use are nearly at par; by 2040, the largest untapped potential lies in heat and transport
mb/d A suite of tools to address energy security Net oil imports 20 United States European Union China India Net oil imports 15 10 5 Reduction in net oil imports due to: Switch to electric and natural gas vehicles Switch to renewables Efficiency improvements Increase in oil production 2014-2040 2014 2040 2014 2040 2014 2040 2014 2040 The energy transition provides instruments to address traditional energy security concerns, while shifting attention to electricity supply
Entering a period of greater oil market volatility Approvals of new conventional crude oil projects in 2015-2016 have fallen to the lowest level since the 1950s If approvals remain low in 2017, an unprecedented effort will be needed to avoid a supply-demand gap in a few years time US tight oil provides a potential lifeline, but cannot be relied upon to cover a major shortfall in the baseload of oil supply Without a pick-up in investment, or a rapid slowdown in demand growth, the stage is set for the next boom-and-bust cycle for oil
No peak yet in sight, but a slowdown in growth for oil demand Change in oil demand by sector, 2015-2040 mb/d 6 3 0-3 Power generation Buildings Passenger cars Maritime Freight Aviation Petrochemicals The global car fleet doubles, but efficiency gains, biofuels & electric cars reduce oil demand for passenger cars; growth elsewhere pushes total demand higher
A wave of LNG spurs a second natural gas revolution Share of LNG in global long-distance gas trade 2000 525 bcm 2014 685 bcm 2040 1 150 bcm Pipeline LNG 26% Pipeline LNG 42% Pipeline LNG 53% Contractual terms and pricing arrangements are all being tested as new LNG from Australia, the US & others collides into an already well-supplied market
Coal: a rock in a hard place Coal demand in key regions China United States India European Union 2014 Change 2014-2040: Decreasing demand Increasing demand Southeast Asia 500 1 000 1 500 2 000 2 500 3 000 Mtce The peak in Chinese demand is an inflexion point for coal; held back by concerns over air pollution & carbon emissions, global coal use is overtaken by gas in the 2030s
Still a long way from a pathway to energy sector decarbonisation Energy-sector CO 2 emissions Gt 40 30 20 10 Early peak in emissions Net-zero by the end of the century 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Current pledges fall short of limiting the temperature increase to below 2 C; raising ambition to 1.5 C is uncharted territory
Gt The Power Sector in the Frontline of Decarbonsiation: CO2 reductions in NPS and 450 By technology 38 New Policies Scenario 34 Efficiency 30 26 450 Scenario 22 18 2010 2020 2030 2040 Renewables Fuel switching Nuclear CCS Other By sector Power Industry Transport 2014 2040: 450 Scenario Additional in New Policies Scenario Buildings 5 10 15 Gt
Power Sector Emissions need to Fall. To levels seen in the 1970s. Global CO 2 emissions from fossil-fuel combustion in the power sector by scenario 20 Gt 16 12 Current Policies Scenario New Policies Scenario 8 4 450 Scenario 2000 2010 2020 2030 2040 The New Policies Scenario almost breaks the link between rising power demand and related CO 2 emissions, but the two are completely decoupled in a 450 Scenario
The Power Sector: Pivotal in the 450 Scenario The power sector is transformed and almost decarbonised by 2040 in the 450 Scenario 2014 23 800 TWh 2040 33 500 TWh Nuclear 11% Hydro 16% 18% 16% Wind Solar PV 8% 67% 3% Other renewables 11% 20% 2% 1% CCS Unabated fossil Fuels 9% 18%
Low Carbon Generation in a Decarbonising world Growth in generation to 2040 by low-carbon technology in the New Policies and 450 Scenarios Additional in 2040 Additional in 2040 Additional in 2040 2014 New Policies 450 Scenario Nuclear: 2014 New Policies 450 Scenario CCS: 2014 New Policies 450 Scenario Renewables: 4 000 8 000 12 000 16 000 TWh Wind and solar PV Other renewables Generation from renewables more than triples in a 450 Scenario, compared with today; nuclear and CCS also support decarbonisation
Annual Capacity Additions of low carbon power in the 450 Scenario G W 350 300 250 200 150 CCS Nuclear Other renewables Hydro Wind Solar PV 100 50 2020 2025 2030 2035 2040 Annual capacity additions of low-carbon technologies need to exceed 300 GW per year by the 2030s
Renewable Power Capacity is Growing Quickly GW Renewables-based power capacity additions set a new record in 2015 and exceeded those of all other fuels for the first time 300 60% Other renewables 250 200 150 100 50 50% 40% 30% 20% 10% Solar PV Wind Hydro Fossil and nuclear 1990 1995 2000 2005 2010 2015 Share of renewables (right axis)
Electricity demand slowdown & renewable ramp-up Renewables are leading the charge in the power sector, meeting the lion s share of slowing global power demand in 2014-2015 TWh 800 700 600 500 400 300 200 100 0 2011 2012 2013 2014 2015 Other renewables Solar PV Wind Hydropower Global demand increase
Total Power Sector Investment in NPS and 450 Scenarios Trillion dollars (2015) By the 2020s, the investment needs for the power sector in a 450 Scenario overtake those for fossil fuel supply 12 Power plants Infrastructure 10 1.4 Other 0.9 Bioenergy 8 6 0.5 0.6 2.3 Hydro 1.7 2.5 Solar PV 4 2 0.0 2.7 0.9 1.2 CCS 1.4 1.8 2.1 2.4 3.9 Wind, NPS 450 NPS 450 NPS 450 NPS 450 Fossil fuels Nuclear Renewables T&D
The Power Sector is the Key Deployment Sector for Renewables
Conclusions Energy security remains a major concern; potential vulnerabilities are growing, so too is the range of tools available to address them New oil market dynamics & subdued upstream investment are ushering in a period of greater market volatility A wave of LNG is the catalyst for a second natural gas revolution, with far-reaching implications for gas pricing & contracts The next chapter in the rise of renewables requires policies to push their role in heat & transport & changes in power market design The Paris Agreement is a framework; its impact on energy depends on how its goals are translated into real government policy actions
www.worldenergyoutlook.org
Global Power Sector Emissions by Scenario and Fuel In the 450 Scenario, power sector CO 2 emissions are cut by 80% by 2040, with renewables accounting for nearly 60% of global electricity supply Gt CO 2 15 12 New Policies Scenario 450 Scenario Oil Gas 9 Coal 6 3 2010 2020 2030 2040 2010 2020 2030 2040
Electricity Demand and Generation in the US in NPS Electricity demand 5 Thousand TWh 4 3 2 1 2005 2014 2020 2030 2040 Power services* End-use demand: Other final uses Transport Services Residential Industry Generation: Other renewables Solar Wind Hydro Nuclear Oil Gas Coal Electricity generation 2005 2014 2020 2030 2040 The US Clean Power Plan provides a major boost to renewables-based generation, while efficiency measures restrain demand growth 5 4 3 2 1 Thousand TW
Electricity Demand and Generation in the EU in NPS Electricity demand and generation in the European Union in the New Policies Scenario Electricity demand 3.5 Thousand TWh 3.0 2.5 2.0 1.5 1.0 0.5 2005 2014 2020 2030 2040 Power services* End-use demand: Other final uses Transport Services Residential Industry Generation: Other renewables Solar Wind Hydro Nuclear Oil Gas Coal Electricity generation 2005 2014 2020 2030 2040 Wind becomes the largest single source of generation in the European Union soon after 2030 3.5 Thousand TW 3.0 2.5 2.0 1.5 1.0 0.5
Electricity Demand and Generation in Japan in NPS Electricity demand and generation in Japan in the New Policies Scenario Electricity demand 1.2 Thousand TWh 1.0 0.8 0.6 0.4 0.2 2005 2014 2020 2030 2040 Power services* End-use demand: Other final uses Transport Services Residential Industry Generation: Other renewables Solar Wind Hydro Nuclear Oil Gas Coal Electricity generation 2005 2014 2020 2030 2040 1.2 Thousand TWh 1.0 0.8 0.6 0.4 0.2 While demand barely grows, the return of nuclear and the expansion of renewables allow for rapid growth in low-carbon power
Electricity Demand and Generation in China in NPS Electricity demand and generation in China in the New Policies Scenario Electricity demand 12 Thousand TWh 10 8 6 4 2 2005 2014 2020 2030 2040 Power services* End-use demand: Other final uses Transport Services Residential Industry Generation: Other renewables Solar Wind Hydro Nuclear Oil Gas Coal Electricity generation 2005 2014 2020 2030 2040 12 10 8 6 4 2 Thousand TW Coal stands still while renewables, nuclear and gas meet China s rising power needs
Global Electrcity Demand by Region and Scenario Latin America Africa* Middle East E. Europe/Eurasia OECD Asia Oceania Other Asia India OECD Europe OECD Americas China 2 4 6 8 10 12 Thousand TWh 2014 Additional in 2040 in New Policies Scenario End-point of range: 450 Scenario Current Policies Scenario Countries outside the OECD account for more than 80% of power demand growth to 2040 in all scenarios
Electrcity Demand in 2040 NPS and 450 Scenarios 36 Thousand TWh 32 Industry 28 Residential Services Transport Other 24 New Policies Scenario 450 Scenario Transport is the only sector that sees higher global power demand in the 450 Scenario relative to the New Policies Scenario
Global Electricity Generation by Fuel and Scenario Global electricity generation by fuel and scenario Coal Gas and oil Nuclear Hydro Other renewables 2014 Additional in 2040 in New Policies Scenario End-point of range: 450 Scenario Current Policies Scenario 2 4 6 8 10 12 14 16 Thousand TWh Coal-fired generation sees the greatest variation across scenarios