World Energy Outlook 29 Key results and messages of the 45 Scenario Marco Baroni Office of the Chief Economist International Energy Workshop Stockholm, 22 June 21
Mtoe World primary energy demand by fuel in the Reference Scenario 18 16 14 12 1 8 6 4 2 198 199 2 21 22 23 Other renewables Biomass Hydro Nuclear Gas Oil Coal WEO-28 total Global demand grows by 4% between 27 and 23, with coal use rising most in absolute terms
Change in primary energy demand in the Reference Scenario, 27-23 Coal Oil Gas Nuclear OECD Non-OECD Hydro Biomass Other renewables - 5 5 1 1 5 2 Mtoe Fossil fuels account for 77% of the increase in world primary energy demand in 27-23, with oil demand rising from 85 mb/d in 28 to 88 mb/d in 215 & 15 mb/d in 23
mb/d Oil production in the Reference Scenario 12 1 8 NGLs Unconventional oil Crude oil fields yet to be developed or found Crude oil currently producing fields 6 4 2 2 28 23 Sustained investment is needed mainly to combat the decline in output at existing fields, which will drop by almost two-thirds by 23
tcm Impact of decline on world natural gas production in the Reference Scenario 5 4 3 2 1% 8% 6% 4% Fields yet to be developed or found Currently producing fields Share from fields not yet producing (right axis) 1 2% 27 215 22 225 23 % Additional capacity of around 2 7 bcm, or 4 times current Russian capacity, is needed by 23 half to offset decline at existing fields & half to meet the increase in demand
Billion dollars (28) Average annual expenditure on net imports of oil & gas in the Reference Scenario 6 5 2% 1971-28 28-23 4 2% % Share of GDP 3 3% 2 1 1% 1% 1% 2% 3% 6% 3% 3%.4% European Union United States China Japan India ASEAN The Reference Scenario implies persistently high spending on oil & gas imports, with China overtaking the United States by around 225 to become the world's biggest spender
Iran Russia Saudi Arabia India China Egypt Venezuela Mexico Indonesia Argentina Iraq Uzbekistan UAE Pakistan Ukraine Malaysia Kuwait Algeria South Africa Thailand Chinese Taipei Turkmenistan Ecuador Bangladesh Libya Qatar Vietnam Nigeria Kazakhstan Azerbaijan Angola Colombia Sri Lanka Peru Brunei Korea Philippines Subsidy (billion US$) Subsidy as a percentage of GDP Fossil fuel subsidies by country and as a share of GDP, 28 12 5 1 15 2 25 3 35 coal 25% gas 9 oil % of GDP 2% 15% 6 1% 3 5% % Global subsidized consumption of fossil fuels amounted to around US$ 55 billion in 28. Of the countries surveyed this represents 2.1% of GDP (PPP) on average
Number of people without access to electricity in the Reference Scenario (millions) World population without access to electricity 28: 1.5 billion people 23: 1.3 billion people $35 billion per year more investment than in the Reference Scenario would be needed to 23 equivalent to just 5% of global power-sector investment to ensure universal access
The policy mechanisms in the 45 Scenario A combination of policy mechanisms, which best reflects nations varied circumstances & negotiating positions We differentiate on the basis of three country groupings > OECD+: OECD & other non-oecd EU countries > Other Major Economies (OME): Brazil, China, Middle East, Russia & South Africa > Other Countries (OC): all other countries, including India & ASEAN A graduated approach > Up to 22, only OECD+ have national emissions caps > After 22, Other Major Economies are also assumed to adopt emissions caps > Through to 23, Other Countries continue to focus on national measures Emissions peaking by 22 will require > A CO 2 price of $5 per tonne for power generation & industry in OECD+ > Investment needs in non-oecd countries of $2 billion in 22, supported by OECD+ through carbon markets & co-financing
Abatement by policy type in the 45 Scenario relative to the Reference Scenario, 22 45 Scenario Reference Scenario Domestic policies and measures Sectoral agreements OECD+ cap-and-trade for power and industry (including international credits) Emissions Abatement: OECD+ Other Major Economies Other Countries 3 31 32 33 34 35 Gt After realising the abatement potential of policies & measures and sectoral approaches, cap-and-trade in OECD+ yields a further 1.8 Gt
Gt World abatement of energy-related CO 2 emissions in the 45 Scenario 42 4 38 36 Reference Scenario OECD+ World abatement by technology 22 3.8 Gt 23 13.8 Gt 34 13.8 Gt Efficiency 65% 57% 32 3.8 Gt OME 3 28 OC 26 45 Scenario 27 21 215 22 225 23 Renewables & biofuels Nuclear CCS 19% 13% 3% 23% 1% 1% An additional $1.5 trillion of investment is needed in total in the 45 Scenario, with measures to boost energy efficiency accounting for most of the abatement through to 23
Gt Abatement in the 45 Scenario by key emitters, 22 1.4 1.2 1..8.6.4.2 International carbon markets Cap & trade in power & industry sectors Internation sectoral standards in transport & industry National policies China United States European Union India Russia Japan China, the United States, the European Union, India, Russia & Japan account for almost three-quarters of the 3.8 Gt reduction in the 45 Scenario
Gt Gt World abatement of energy-related CO 2 emissions in the 45 Scenario 42 4 Reference Scenario 35 Reference Scenario 38 33 Current Pledges 36 34 13.8 Gt 31 29 45 Scenario 32 3 3.8 Gt 27 27 21 215 22 28 26 45 Scenario 27 21 215 22 225 23 Current pledges point direction but further efforts would be needed to reach the 45 Scenario
Mtoe World primary energy demand by fuel in the 45 Scenario 12 1 8 6 4 2 36% Fossil fuels 3% 24% 18% 12% 6% Zero-carbon fuels Share of zero- carbon fuels (right axis) % 199 2 21 22 23 In the 45 Scenario, demand for fossil fuels peaks by 22, and by 23 zero-carbon fuels make up a third of the world's primary sources of energy demand
mb/d World oil production by scenario 12 1 8 16 mb/d Non-OPEC OPEC 6 4 11 mb/d 2 36 mb/d 28 Reference Scenario 23 45 Scenario 23 Curbing CO 2 emissions would also improve energy security by cutting oil demand, but even in the 45 Scenario, OPEC production increases by 11 mb/d between now and 23
Trillion dollars (28) Cumulative OPEC oil export revenues by scenario 28 24 2 16 12 8 4 Reference Scenario 45 Scenario 1985-27 28-23 Though slightly lower than in the Reference Scenario, OPEC revenues in the 45 Scenario are over four times as high as in the last 2 years
bcm World primary natural gas demand by scenario 4 5 3 75 +41% (1 264 bcm) Reference Scenario 45 Scenario 3 +17% (511 bcm) 2 25 1 5 75 27 215 22 225 23 Gas demand continues to grow in both scenarios, peaking by around 225 in the 45 Scenario & highlighting the potential role of gas as a transition fuel to a clean energy future
TWh Incremental world electricity production in the Reference and 45 Scenarios, 27-23 7 6 5 4 3 2 1-1 -2-3 Coal Gas Oil CCS Nuclear Hydro Wind Biomass Solar Other renewables Reference Scenario 45 Scenario Renewables, nuclear and plants fitted with CCS account for around 6% of electricity generation globally in 23 in the 45 Scenario, up from less than one-third today
GW World installed coal capacity and retirements/mothballing in the 45 Scenario 3 5 3 2 5 2 1 5 1 5 Total retirements/ mothballing lower needs Total installed capacity in 45 28 215 22 225 23 Plants built before 2 New coal additions without CCS Plants built after 2 New coal additions with CCS Under construction Additional coal capacity needs in RS Additional retirements/mothballing Retirements in Reference Scenario Coal capacity in RS By 23, coal-fired capacity in the 45 Scenario is about half than in the Reference Scenario, as the majority of coal plants built before 2 becomes uneconomical
Share of sales Grammes per kilometre World passenger vehicle sales & average new vehicle CO 2 intensity in the 45 Scenario 1% 8% 6% 4% 25 125 25 2 15 1 Electric vehicles Plug-in hybrids Hybrid vehicles ICE vehicles CO 2 intensity of new vehicles (right axis) 2% 9 5 % 27 22 23 Improvements to the internal combustion engine & the uptake of next-generation vehicles & biofuels lead to a 56% reduction in new-car emission intensity by 23
Billion dollars (28) World additional investment in the 45 Scenario relative to the Reference Scenario 1 2 1 8 6 4 2 Industry Power plants Buildings Biofuels Transport 215 22 225 23 $1.5 trillion of additional investment is needed in the 45 Scenario in the period 21-23 compared with the Reference Scenario, costing.5% of GDP in 22 & 1.1% of GDP in 23
Summary & conclusions The financial crisis has halted the rise in global fossil-energy use, but its long-term upward path will resume soon on current policies Tackling climate change & enhancing energy security require a massive decarbonisation of the energy system > We are now on course for a 6 C temperature rise & rising energy costs > Limiting temperature rise to 2 C will require big emission reductions in all regions A 45 path towards Green Growth would bring substantial benefits > Avoiding the worst effects & costs of climate change > Energy-security benefits, lower oil & gas imports & reduced energy bills > Much less air pollution & huge health benefits Natural gas can play a key role as a bridge to a cleaner energy future The challenge is enormous but it can and must be met > Improved energy efficiency & technology deployment are critical > Each year of delay adds $5 bn to mitigation costs between today & 23