WORLD ENERGY INVESTMENT OUTLOOK Global Strategic Energy Challenges Dr. Fatih Birol Chief Economist Head, Economic Analysis Division International Energy Agency INTERNATIONAL ENERGY AGENCY US DOE US DOE Special Award Special Award for Analytical for Analytical Excellence Excellence ABN AMRO ABN AMRO Award of Award of Excellence Excellence World Coal World Coal Institute Institute Special Award Special Award
World Primary Energy Demand 6,000 5,000 Oil 4,000 Natural gas Mtoe 3,000 Coal 2,000 1,000 Nuclear power Hydro power Non-hydro renewables 0 1970 1980 1990 2000 2010 2020 2030 Gas grows fastest in absolute terms & non-hydro renewables fastest in % terms, but oil remains the dominant fuel in 2030
Global Strategic Challenges Security of energy supplies Threat of environmental damage caused by energy use Uneven access of the world s population to modern energy Investment in energy-supply infrastructure
Developing Asia Oil and Gas Imports Oil Net Imports 2002 2030 Oil Net Imports Gas Net Imports: 45% Imports Imports: 72% Gas Net Imports Gas Production Oil Production Gas Production Oil Production Developing Asia will become more dependent on oil & gas imports, from fewer countries mainly Middle East and Russia.
Global Strategic Challenges Security of energy supplies Threat of environmental damage caused by energy use Uneven access of the world s population to modern energy Investment in energy-supply infrastructure
Energy-Related CO 2 Emissions 40,000 35,000 million tonnes of CO2 30,000 25,000 20,000 15,000 10,000 5,000 0 1970 1980 1990 2000 2010 2020 2030 World OECD Transition economies Developing countries World emissions increase by 1.8 % per year to 38 billion tonnes in 2030 70% above 2000 levels
World Primary Energy Demand and CO 2 Emissions Average annual per cent growth rate 2.5 2.0 1.5 1.0 0.5 0.0 1971-2001 2002-2030 Energy demand CO2 emissions Emissions increase faster than demand over the next 30 years, because the share of fossil fuels in the energy mix grows
Global Strategic Challenges Security of energy supplies Threat of environmental damage caused by energy use Uneven access of the world s population to modern energy Investment in energy-supply infrastructure
Map of Global Energy Poverty 18 570 28 20 801 815 221 332 509 530 56 96 Millions of People Without Electricity Millions of People Relying on Biomass 1.6 billion people have no access to electricity, 80% of them in South Asia and sub-saharan Africa
Global Strategic Challenges Security of energy supplies Threat of environmental damage caused by energy use Uneven access of the world s population to modern energy Investment in energy-supply infrastructure
World Energy Investment 2001-2030 Total investment: 16 trillion dollars E&D 72% 46% Power generation Refining Other 13% 15% Oil 19% Electricity 60% 54% T&D E&D LNG Chain T&D and Storage 55% 8% 37% Gas 19% Coal 2% 88% Mining 12% Production accounts for the majority of investment in the supply chain except for electricity Shipping and ports
World Transportation Oil Demand 36 33 2001 30 mb/d 27 24 21 18 1971 15 17000 22000 27000 32000 37000 42000 47000 GDP (billion 2000 US$ using PPPs) Oil demand for transport increases very closely in line with GDP in all regions
World Oil Production 120 100 80 mb/d 60 40 20 0 1980 1990 2000 2010 2020 2030 OPEC - Middle East Non-OPEC OPEC - Other Non-conventional oil OPEC countries mainly in Middle East will account for bulk of the increase in world oil production to 2030
250 Oil Production and Capacity Additions 200 150 mb/d 100 50 0 2000 2030 2001-2030 Production Expansion to meet demand growth Replacement to maintain capacity The bulk of additions to crude oil production capacity will be needed simply to maintain capacity
Access to Oil Reserves Concession 21% Iraq 10% National companies only (Saudi Arabia, Kuwait, Mexico) 35% Production sharing 12% Limited access - National companies 22% 1,032 billion barrels Access to much of the world s remaining oil reserves is restricted
Oil and Gas Reserves Proven reserves are sufficient to meet demand for next three decades But considerable uncertainty over remaining probable and possible reserves Uncertainty is especially great in key producing countries Need for more transparent, consistent and comprehensive data is obvious
Restricted Middle East Oil Investment Scenario OPEC Middle East Share in Global Oil Supply 50 40 per cent 30 20 10 0 1970 1980 1990 2000 2010 2020 2030 Restricted Investment Scenario Reference Scenario OPEC Middle East s share of global oil production is assumed to remain flat at under 30% in Restricted Investment Scenario
Age of Installed Capacity in EU-15 140 120 100 GW 80 60 40 Oil Gas Coal Uranium 20 0 < 10 years 10-20 years 20-30 years > 30 years Europe's power plants are ageing: half current capacity - mostly coal-fired - could be retired before 2030
Electricity Revenue and Return on Capital of Indian SEBs 100 80 60 40 20 0-20 -40-60 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Return on capital Revenue as % of cost The desperate financial straits of Indian state electricity boards underlines the urgent need for pricing reform
Power Sector Private Investment in Developing Countries billion dollars 50 45 40 35 30 25 20 15 10 5 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Developing countries will need to reverse the slump in private capital flows if projected investment is to be forthcoming
Some concluding remarks Governments: less direct intervention as lender or owner facilitator role Policymakers need to ensure basic principles of good governance are applied and respected Fiscal and regulatory incentives for developing advanced technologies could speed their deployment and dramatically alter energy patterns Need for concerted international efforts