Global energy markets outlook versus post-paris Agreement Impact on South East Europe Sylvia Elisabeth Beyer International Energy Agency Thessaloniki, 29 June 2016
A 2 C pathway requires more technological innovation, investment & policy ambition 40 CO 2 emissions in a post-cop 21 world 36 Trend post-cop 21 Energy efficiency 32 Renewables Gt 28 17.9 Gt Fuel & technology switching in end-uses Nuclear 24 20 2 C Scenario CCS Other 16 2010 2015 2020 2025 2030 2035 2040 Massive additional investments in efficiency, renewables, nuclear power and other low carbon technologies are required to reach a 2 C pathway
The share of gas in the global demand will increase in relation to other Scenarios fossil fuels 2030 2013 (13 579 Mtoe) Global gas share remains important 2030 (16 349 Mtoe) 2030 (14 673 Mtoe) New Policy Scenario 450 Scenario Source: WEO 2015 Despite gas share in the primary energy (23%) is the same in NPS and 450ppm, in 450ppm gas is increasingly used to balance renewable in the power system, which leads to a more rigid demand.
Power is leading the transformation Global electricity generation by source TWh 3 000 6 000 9 000 12 000 15 000 Renewables Coal Gas Nuclear Oil 2014 Change to 2040 Of which: Hydro Wind Solar Other renewables Driven by continued policy support, renewables account for half of additional global generation, overtaking coal around 2030 to become the largest power source
Policies spur innovation to low-carbon Costs in 2040 for different energy sources/technologies, relative to 2014 60% 40% 20% 0% -20% -40% -60% Solar PV Onshore wind Efficient lighting Efficient industrial heat production Upstream oil and gas Innovation reduces the costs of low-carbon technologies & energy efficiency, but for oil & gas the gains are offset by the move to more complex fields
Acceleration of clean energy progress Technology Status today against 2DS targets Electric vehicles Solar PV and onshore wind Other renewable power Nuclear More efficient coal-fired power Carbon capture and storage Biofuels Transport Industry Buildings Appliances and lighting Energy storage Not on track Accelerated improvement needed On track Global clean energy deployment is still overall behind what is required to meet the 2 C goal, but recent progress on electric vehicles, solar PV and wind is promising
Global demand growth moves to Asia Change in energy demand in selected regions, 2014-2040 Mtoe 1 200 900 600 300 0-300 European Union United States Japan Latin America Middle East Southeast Asia Africa China India By 2040, India s energy demand closes in on that of the United States, even though demand per capita remains 40% below the world average
A new chapter in China s growth story Total primary energy demand & GDP in China Energy demand (Mtoe) Energy demand (Mtoe) 94 000 9 000 3 000 6 000 6 000 2 000 3 000 3 000 1 000 Energy demand GDP Renewables GDP Nuclear GDP Gas Energy Oil Energy demand demand Coal 60 60 40 40 20 20 GDP (trillion dollars, PPP) GDP (trillion dollars, PPP) 2000 2010 2020 2030 2040 2000 2010 2020 2030 2040 Along with energy efficiency, structural shifts in China s economy favouring expansion of services, mean less energy is required to generate economic growth
Developing Asia Natural gas demand and supply in developing Asia, 2014 vs 2040 bcm 1 500 1 200 900 600 300 Imports Conventional Unconventional Additional to 2040 2014 Demand Production Developing Asia accounts for almost half of the rise in global gas demand & 75% of the increase in imports, but gas faces strong competition from renewables & coal
Oil rallies to 2016 high above $51/bbl $/bbl 120 110 100 90 80 70 60 50 40 30 20 Source: ICE, NYMEX Crude Futures Front Month Close May 14 Nov 14 May 15 Nov 15 May 16 NYMEX WTI ICE Brent
Upstream oil & gas investment falling Upstream oil and gas investment 800 700 600 500-23% - 22% 400 300 200 100 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Upstream oil and gas investment continues to fall, particularly in high-cost regions; this raises the prospect of price volatility in the future
kb/d US still the world s growth engine Selected sources of non-opec supply change 2015-21 1 400 1 200 1 000 800 600 400 200 0-200 - 400 In 2015-21, oil supply growth slows to 4.1 mb/d vs 11 mb/d in 2009-15; US, Iran, Brazil & Canada see the biggest increases, drop in Russia and China
Growth in global gas demand slows 600 500 Change in world natural gas demand 2.5 % 1.5 % 400 bcm 300 200 100 0 2009-15 2015-21 Change in total gas demand Change in per cent Growth in gas demand slows as it faces greater competition in the power sector; yet it is the only fossil fuel that does not suffer a decline in its share of the energy mix
Growth in gas supply led by US and Australia 200 Change in natural gas production by region (bcm) 150 100 bcm 50 0-50 -100 United States Australia Qatar China Russia ASEAN EU 2009-15 2015-21 The United States & Australia rather than the more established exporters Russia, Qatar & ASEAN are the main source of production growth
Greater competition in EU gas market 12 US LNG is competitive in Europe USD/Mbtu 10 8 6 4 2 0 2013 2015 2017 European hub prices (TTF) Henry Hub indexed LNG delivered to Europe Oversupply in global LNG markets will intensify competition; flexible US LNG volumes are well-placed to compete in Europe Nb: Based on cash costs and on forward curves as of June 7 th 2016
Algerian gas exports to OECD Europe 60 bcm 50 40 30 20 10 0 2010 2011 2012 2013 2014 Pipeline LNG
Global LNG export capacity increases 200 Liquefaction capacity additions 160 bcm 120 80 40 0 2009-15 2015-21 Australia Qatar U.S. Others LNG capacity additions will be led by the US & Australia over the next five years; projects in Canada & East Africa could also move ahead if demand & prices recover
Impact on South East Europe Developing Asia changes global demand: China s transition to a more diversified & much less energyintensive model for growth re-shapes energy markets Natural gas landscape is changing: Ample low cost LNG supplies available for SEE markets opportunity for competition and diversification Low oil prices bring gains to consumers, but can also sow the seeds of future risks to energy security and energy transition Paris Agreement: the energy transition is underway, but not on track and governments need to ring-fence policies against market swings