Chapter 4 Natural gas
Are we entering a Golden Age of Gas? Natural gas can enhance security of supply: global resources exceed 25 years of current producaon; while in each region, resources exceed 75 years of current consumpaon
Natural gas use will grow regardless of the policy landscape World primary natural gas demand by scenario bcm 5 5 5 4 5 4 3 5 3 2 5 2 1 5 1 198 199 2 21 22 23 235 Current Policies Scenario New Policies Scenario 45 Scenario In the New Policies Scenario, demand grows from 3.1 tcm in 29 to 4.8 tcm in 235 an increase of 55% or 1.7% per year
UnconvenAonal gas takes a growing share Largest natural gas producers in 235 Russia United States China Iran Qatar Canada Algeria Australia India Norway ConvenLonal UnconvenLonal 2 4 6 8 1 bcm UnconvenAonal natural gas supplies 4% of the 1.7 tcm increase in global supply, but best pracaces are essenaal to successfully address environmental challenges
Gas demand growth comes from China, Middle East, India Natural gas demand by selected region in the New Policies Scenario, 29 and 235 bcm 1 8 6 AddiLonal to 235 29 4 2 North America European Union Middle East Russia China India Japan Gas demand grows fastest in the non- OECD regions, led by China, which accounts for more than a quarter of the worldwide increase in demand between 29 & 235
Power will be the main driver of demand in most regions Incremental primary natural gas demand by region and sector in the New Policies Scenario, 29-235 China Middle East E. Europe/Eurasia Other Asia OECD Americas OECD Europe India LaLn America Africa OECD Asia Oceania Power generalon Other energy sector Industry Buildings Other 5 1 15 2 25 3 35 4 45 bcm Power generaaon accounts for over 41% of the increase in global gas demand between 29 & 235, as gas is increasingly favoured over coal &, in some cases, nuclear
Inter- regional gas trade booms Net gas trade by major region in the New Policies Scenario E.Europe/Eurasia Africa Middle East OECD Oceania LaLn America OECD Americas India OECD Asia China OECD Europe Importers Exporters 235 29-5 - 4-3 - 2-1 1 2 3 4 bcm Gas trade between WEO regions doubles from 59 bcm in 29 to almost 1 2 bcm in 235, with China s imports increasing the most
Gas resources are plenaful Recoverable gas resources and produceon by region and type, end- 21 OECD Europe LaLn America Africa Asia Pacific OECD Americas Middle East E. Europe/Eurasia Years 15 3 45 6 75-5 5 1 15 2 25 tcm CumulaLve produclon Proven reserves Other convenlonal recoverable resources PotenLal unconvenlonal recoverable resources Regional resource to consumplon ralo (top axis) ConvenAonal resources of over 4 tcm are equal to 12 years of current output & adding similar amounts of recently found unconvenaonal gas boosts this figure to almost 25 years
Are we entering a golden age of gas? Comparison of average annual natural gas demand growth between the New Policies Scenario and the GAS Scenario, 29-235 Total gas demand Power generalon Industry Golden Age of Gas Scenario New Policies Scenario Buildings Transport Total OECD Total non- OECD China % 1% 2% 3% 4% 5% 6% 7% 8% Faster gas growth could come from more aggressive policies to support gas use, lower supply costs, more use as a transport fuel & slower growth in nuclear power
Chapter 5 Power outlook
ElectrificaAon has much further to go TWh 4 35 3 25 2 15 1 5 World electricity supply and demand by sector in the New Policies Scenario Own Use Transmission & distribulon losses Demand: Other Transport Services ResidenLal Industry 2 25 21 215 22 225 23 235 All sectors see higher demand for electricity, with non- OECD countries accounang for more than 8% of the increase between 29 & 235
Moving towards a more diversified fuel mix in power generaaon Share of world electricity generaeon by fuel in the New Policies Scenario 29 2 43 TWh 22 27 881 TWh 235 36 25 TWh % 2% 4% 6% 8% 1% Coal Gas Oil Nuclear Biomass Hydro Wind Other Coal remains the largest source of electricity generaaon globally to 235, growing by 45%, but its share of total generaaon drops from 41% to 33% in favour of gas & renewables
Power investment focuses on low- carbon technologies Share of new power generaeon and investment in the New Policies Scenario, 211-235 4% 35% GeneraLon Investment 3% 25% 2% 15% 1% 5% % Coal Gas Nuclear Hydro Wind Solar PV Renewables are o^en capital- intensive, represenang 6% of investment for 3% of addiaonal generaaon, but bring environmental benefits & have minimal fuel costs
New policies help tame the rampant growth in power sector emissions Global CO 2 emission savings in power generaeon relaeve to the 29 fuel mix in the New Policies Scenario Gt 24 22 2 18 16 14 12 More efficient plants Nuclear Hydro Biomass Wind Other renewables CCS 29 fuel mix New Policies Scenario 1 21 215 22 225 23 235 CO 2 emissions reducaons arise mainly from the shi^ away from coal- & oil- fired generaaon towards lower- carbon nuclear and renewables- based technologies
Low- carbon power technologies come of age GW 1 8 6 Global installed power generaeon capacity in the New Policies Scenario Fossil- fuel addilons Nuclear addilons Renewable addilons ExisLng 21 capacity 4 2 21 215 22 225 23 235 Renewables and nuclear power account for more than half of all the new capacity added worldwide through to 235
EU moving towards cleaner forms of electricity generaaon Electricity generaeon from low- carbon sources in the European Union in the New Policies Scenario TWh 1 2 1 8 6 4 2 Nuclear Hydro Wind Biomass Solar PV Other CCS Low carbon 1% 8% 6% 4% 2% % Share of electricity generalon AddiLonal to 235 29 Wind spearheads the low- carbon contribuaon to the EU electricity sector: the share of generaaon from low- carbon technologies rises to two- thirds in 235
Fukushima has raised quesaons about the future role of nuclear power AddiEons and reerements of nuclear power capacity by region in the New Policies Scenario GW 7 6 5 4 3 2 1-1 - 2-3 211-215 216-22 221-225 226-23 231-235 OECD: addilons OECD: relrements Other non- OECD: addilons China: addilons Non- OECD: relrements Net capacity change Most of the net increase in nuclear power capacity comes from non- OECD countries, while almost 6% of capacity addiaons in the OECD replace ageing nuclear plants
Power is geang greener Incremental global renewables- based electricity generaeon relaeve to 29 by technology in the New Policies Scenario TWh 8 7 6 5 4 3 2 1 46% Other renewables 44% 42% 4% 38% 36% 34% 32% Solar PV Biomass Hydro Wind Share of renewables in total increase in generalon (right axis) 215 22 225 23 235 3% Renewables- based generaaon almost triples between 29 & 235, contribuang nearly 45% of the growth in total generaaon worldwide
Solar PV and wind conanue to shine Solar PV and wind power capacity by region in the New Policies Scenario Solar PV Wind Other OECD Japan United States China India Other non- OECD European Union Japan Other OECD India Other non- OECD United States European Union China 2 4 6 8 1 12 14 GW 5 1 15 2 25 3 35 GW Over three- quarters of the growth in installed wind capacity and 7% of the growth in solar PV capacity occurs in the United States, European Union, China and India 21 Capacity increase 211-22 Capacity increase 221-235
Low- carbon power technologies come of age GW 1 8 6 4 Global installed power generaeon capacity in the New Policies Scenario Oil addilons Gas addilons Coal addilons Nuclear addilons Renewables addilons ExisLng 21 capacity 2 21 215 22 225 23 235 Renewables and nuclear power account for more than half of all the new capacity added worldwide through to 235
The variability of renewables raises overall capacity needs Capacity of wind and solar PV and their system effects for the United States and OECD Europe, 235 GW 5 4 3 2 5 4 3 2 GW Installed capacity Average ullisalon of installed capacity Capacity credit 1 United States Other flexible capacity required for system adequacy OECD Europe 1 Capacity credit of wind and solar PV ranges from 4-9%, so addiaonal capacity is needed for system adequacy such as storage technologies, greater interconnecaon, or more flexible plant
Going green comes at a price Investment in new power plants and infrastructure in the New Policies Scenario 211-235: $16.9 trillion Renewables make up 6% of investment in new power plants, led by wind, solar PV & hydro, even though they represent only half of the capacity addiaons
Power technology lock- in varies markedly across regions Share of transmission & distribueon infrastructure in place in 29 reaching 4 years of age World Russia India United States LaLn America China Middle East OECD Europe OECD Asia Oceania Africa 215 225 235 % 1% 2% 3% 4% 5% 6% 7% Half of the grid infrastructure in place globally in 29 will have reached 4 years of age by 235
Chapter 6 Climate change
The 45 Scenario illustrates what the 2⁰C goal will require World energy- related CO 2 emissions by scenario Gt 45 4 OECD Non- OECD Current Policies Scenario 28% 71% 7 Gt 35 3 New Policies Scenario 33% 15 Gt 25 45 Scenario 65% Holding greenhouse- gas concentraaon to 45 ppm would limit temperature increase to 2⁰C, compared with 3.5⁰C in the New Policies Scenario & 6⁰C in the Current Policies Scenario 2 199 2 21 22 23 235
MeeAng the 2⁰C goal requires a rapid shi^ away from fossil fuels World primary energy demand by fuel & scenario Mtoe 5 4 3 29 235: New Policies Scenario 235: 45 Scenario 2 1 Coal Oil Gas Nuclear Hydro Biomass & waste Other renewables ConsumpAon of coal unsurprisingly falls most in favour of more nuclear & renewables, but the scope of cuang oil use is limited by a lack of commercially viable subsatute fuels
Efficiency gains can contribute most to emissions reducaons World energy- related CO 2 emissions abatement in the 45 Scenario relaeve to the New Policies Scenario Gt 38 36 New Policies Scenario 34 32 3 28 26 24 22 45 Scenario 2 21 215 22 225 23 235 Abatement 22 235 Efficiency 72% 44% Renewables 17% 21% Biofuels 2% 4% Nuclear 5% 9% CCS 3% 22% Total (Gt CO 2 ) 2.5 14.8 Energy efficiency measures driven by strong policy acaon across all sectors account for 5% of the cumulaave CO 2 abatement over the Outlook period
All countries need to contribute to emissions reducaons Energy- related CO 2 emissions in the 45 Scenario and abatement relaeve to the New Policies Scenario by region, 29 and 235 Gt 12 1 8 6 4 CO 2 abatement relalve to New Policies Scenario, 235 CO 2 emissions, 235 CO 2 emissions, 29 2 Around three- quarters of the global abatement of CO 2 emissions in the 45 Scenario relaave to the New Policies Scenario occurs in 5 countries and in the European Union China United States India European Union Russia Japan Other OECD Other non- OECD
The power sector holds the key to geang emissions down World energy- related CO 2 abatement by sector in the 45 Scenario compared with the New Policies Scenario - 3-6 - 9-12 215 22 225 23 235 Power generalon Reduced electricity demand Transport Industry Buildings Other sectors Gt - 15 The power sector accounts for 2/3 of cumulaave emissions abatement to 235, through switching to less carbon- intensive generaaon, more efficient plant & lower electricity demand
Climate policy acaon would cut local & regional polluaon Emissions of major air pollutants by region in the 45 Scenario Mt 1 8 OECD Non- OECD 6 4 2 29 22 23 235 29 22 23 235 29 22 23 235 Sulphur dioxide Nitrogen oxides ParLculate mafer Policies to cut CO 2 emissions also have the effect of reducing substanaally emissions of other air pollutants that have a negaave impact on human health & the environment
...and cut the cost of imported oil Oil- import bills in selected regions by scenario Billion dollars (21) 6 5 4 3 2 1 21 235: New Policies Scenario 235: 45 Scenario Japan United States India European Union China Lower oil- import requirements & internaaonal oil prices slash the oil- import bills of imporang countries as a group by $8.4 trillion over 21-235
The door to 2 C is closing, but will we be locked- in? World energy- related CO 2 emissions in the Current Policies and 45 Scenarios and from locked- in infrastructure in 21 and with delay Gt 5 45 4 35 3 25 2 15 1 5 6 C trajectory 2 C trajectory 21 215 22 225 23 235 Delay unel 217 Delay unel 215 Emissions from exiseng infrastructure Without further acaon, by 217 all CO 2 emissions permiled in the 45 Scenario will be locked- in by exisang power plants, factories, buildings, etc.
Delayed CCS or second thoughts on nuclear make 2 C even harder CumulaEve share of abatement relaeve to the New Policies Scenario in the 45 Scenario, Delayed CCS 45 Case and Low Nuclear 45 Case Share of abatement 1% 8% 6% 4% 2% 17. 16.5 16. 15.5 15. Trillion dollars (21) Efficiency Renewables Biofuels Nuclear CCS AddiLonal investment (right axis) % 45 Scenario Delayed CCS 45 Case Low Nuclear 45 Case 14.5 If CCS deployment was delayed or nuclear not deployed as expected in 45, miagaaon costs would rise and put unprecedented pressure on other technologies
Coal has to bear the brunt of emissions reducaons World energy- related CO 2 emissions by fossil fuel in the 45 Scenario Gt 15 12 Coal Oil Gas 9 6 3 21 215 22 225 23 235 Gas overtakes coal by 235 as the 2 nd - largest source of emissions, with coal- based emissions peaking early in the projecaon period & falling rapidly therea^er
The cheapest kwh of electricity is that which is not consumed Change in world energy- related CO 2 emissions from the power generaeon sector in the 45 Scenario compared with the New Policies Scenario 21 215 22 225 23 235-2 - 4-6 Reduced demand Renewables Nuclear CCS More efficient use of fossil- fuel plants - 8 Gt - 1 Widespread emissions trading, enabling policies for low- emissions technologies, stronger support to renewables & energy- efficiency measures drive power- sector emissions savings
A big shi^ in investment is required CumulaEve energy sector investment by scenario, 211-235 Trillion dollars (21) Total supply side investment 4 3 2 1 New Policies Scenario 45 Scenario Industry Buildings Transport Biofuels Power plants Power T&D Oil Gas Coal Change in investment rela>ve to New Policies Scenario 18 15 12 9 6 3-3 - 6 45 Scenario Trillion dollars (21) Investments need to be shi^ed away from fossil fuels towards low carbon technologies, and improved energy efficiency across all sectors
Delaying acaon is a false economy Change in investment in power generaeon in the Delayed 45 Case, relaeve to the 45 Scenario Billion dollars (21) 8 6 4 2-2 -4 211-22 221-235 Renewables Nuclear Gas and coal plants retrofitted with CCS Efficient coal plants and coal plants fitted with CCS Gas plants including plants fitted with CCS Inefficient coal Net change in investment Delaying acaon unal 215 reduces investment costs in the period unal 22, but for every $1 saved, an addiaonal $4.3 must be spent in 221-35 to compensate
Efficiency gains can contribute most to emissions reducaons European Union energy- related CO 2 emissions abatement in the 45 Scenario relaeve to the New Policies Scenario Gt 4. 3.5 3. 2.5 2. New Policies Scenario 45 Scenario 1.5 21 215 22 225 23 235 Abatement 22 235 Efficiency 68% 48% Renewables 25% 21% Biofuels 2% 6% Nuclear 1% 11% CCS 3% 14% Total (Mt CO 2 ) 269 132 Energy efficiency measures driven by strong policy acaon across all sectors account for 5% of the cumulaave CO 2 abatement over the Outlook period
Coal is now at a crossroads World primary coal demand by region and scenario Mtce 8 7 6 5 4 3 Rest of world India China Current Policies Scenario New Policies Scenario 45 Scenario 14% 47% 14% 5% 1 883 Mtce 2 55 Mtce 2 198 199 2 21 22 23 235 Coal demand is set to slow just how much depends criacally on government energy & environmental policies, especially in China