XLVII Meeting of OLADE Ministers Buenos Aires, 6 December 2017 Paul Simons, IEA Deputy Executive Director
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
India takes the lead, as China energy growth slows Change in energy demand, 2016-40 (Mtoe) Europe -200 135 Eurasia United States -30 Middle East 480 China 790 Japan -50 Latin America 320 Africa 485 India 1 005 420 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
.. 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) 2 500 30 2 000 2 000 2 000 24 1 600 1 600 1 500 18 1 200 1 200 1 000 12 800 800 500 6 400 400 0 1990-2016 2016-40 1990-2016 2016-40 1990-2016 2016-40 1990-2016 2016-40 - 500 1990-2016 2016-40 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
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% 0 2016 2040 2016 2040 2016 2040 Despite a boom in deepwater oil, in Brazil hydropower and biofuels continue to ensure that renewables account for a globally leading share of consumption
Solar PV forges ahead in the global power mix Global average annual net capacity additions by type Coal 2010-2016 Gas Nuclear Renewables Solar PV Wind Other Coal 20 40 60 80 100 120 GW 2017-2040 Gas Nuclear Renewables Solar PV Wind Other 20 40 60 80 100 120 GW 140 160 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
Auctions drive prices down Recent announced long-term contract prices for new renewable power to be commissioned over 2016-20 Source: IEA (2017), Renewables 2017. Analysis and Forecasts to 2022, Paris.
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 2 000 4 000 6 000 8 000 10 000 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
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 16 200 United States India European Union China 12 8 Petrochemicals Aviation and shipping 100 4 Trucks 2016 2025 2040 0 Passenger cars Other sectors - 4 2016-2040 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
Latin America remains a crucial producer of oil Oil production increase to 2040 mb/d 6 4 2 0 Africa Mexico Canada United States Brazil Middle East Latin America accounts for one-third of the net increase in global oil supply to 2040
Billion dollars, 2016 Dollars per barrel, 2016 Estimated value of global fossil-fuel consumption subsidies 700 120 Electricity 600 500 400 300 200 100 80 60 40 Coal Gas Oil IEA average crude oil import price (right axis) 100 20 2009 2010 2011 2012 2013 2014 2015 2016 Lower prices and bolder policies mean that the value of global fossil-fuel consumption subsidies declined again in 2016, to $260 billion
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 100 50 2016 2030 2040 2016 2030 2040 Deepwater in Brazil and Mexico as well as shale gas in Argentina provide a major boost to Latin America s oil & gas production
LNG ushers in a new global gas order Global Gas importers exporters gas trade 1 230 bcm in 2040 706 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
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 10 2000 2010 2020 2030 2040 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
Stronger policies for a more sustainable world 875 million electric vehicles The Sustainable Development Scenario in 2040 2times 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
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
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