New York 25 November 2014
Signs of stress in the global energy system n Current calm in markets should not disguise difficult road ahead Ø Turmoil in the Middle East raises doubts over future oil balance Ø Resurgent debate over the security of gas supply to Europe n Mixed signals in run- up to crucial climate summit in Paris in 2015 Ø Global CO 2 emissions s>ll rising, with most emiaers on an upward path Ø At $550 billion, fossil fuel subsidies over four- >mes those to renewables Ø Increasing emphasis on energy efficiency star>ng to bring results n Will change in global energy be led by policies, or driven by events?
Changing dynamics of global demand Energy demand by region Mtoe 10 000 8 000 Rest of world 6 000 4 000 2 000 OECD Rest of world China OECD China 1990 2000 2010 2020 2030 2040 As China slows, then India, Southeast Asia, the Middle East and parts of Africa & La;n America take over as the engines of global energy demand growth.
United States holds a strong posinon on energy costs $/toe 2 000 Weighted average cost of energy paid by consumers 1 500 1 000 2008 2013 2040 500 European Union Japan United China India States Economies face higher costs, but the pace of change varies: China overtakes the US, costs double in India & remain high in the European Union & Japan
Instability in the Middle East a major risk to oil markets mb/d +15 Oil producnon growth in United States, Canada, Brazil & the Middle East Increase to 2040: 14 mb/d +10 +5 Middle East Increase to 2040: 14 mb/d Brazil 2013 2015 2020 2030 2040 Canada United States Net decline in output from other producers - 5 2013 2015 2020 2030 2040 The short- term picture of a well- supplied market should not obscure future risks as demand rises to & 104 reliance mb/d & grows reliance on Iraq grows & the on Iraq rest & of the rest Middle of the East Middle East
Looking ahead on the oil price n Against a backdrop of weaker demand, buoyant supply in North America has brought prices down but can it keep them down? n Lower prices are starnng to curtail upstream spending plans, with implicanons for future supply n Over Nme, squeezed cash flow would constrain the capacity of North America & Brazil to act as engines of global supply growth n Sustained $80/barrel oil could provide some breathing space to major oil importers, boosnng demand & GDP n It would also accelerate reliance on low- cost producers in the Middle East, some of which face major investment challenges
Gas on the way to become first fuel, with role of LNG on the rise Main sources of regional LNG supply bcm 600 500 400 300 200 100 Other North Africa Australia West Africa Southeast Asia Middle East Other West Africa North Africa Russia East Africa US & Canada Australia Middle East 2012 2040 Share of LNG rises in global gas trade, pushed by a near- tripling in liquefac;on sites: LNG brings more integrated & secure gas markets, but only limited relief on prices
Global coal demand leveling off Global coal demand by key region Mtce 7 000 6 000 World Other 5 000 4 000 India Chinese coal demand plateau 3 000 China 2 000 India: 2 1 000 1987: European coal demand 2005: peak US largest coal coal demand peak consumer by 2020 India United States Europe 1980 1990 2000 2010 2020 2030 2040 Global coal demand growth slows rapidly due to more stringent environmental policies, underlining the importance of high- efficiency plant & CCS to coal s future
ReNrements add to the investment challenge in the power sector Power capacity by source, 2013-2040 GW 12 000 10 000 8 000 6 000 Renewables Nuclear Oil 4 000 2 000 ReKrements AddiKons Gas Coal 2013 2040 Despite limited demand growth, OECD countries account for one- third of capacity addi;ons to compensate for re;rements & to decarbonise
Nuclear capacity grows by 60%, but no nuclear renaissance in sight Net capacity change in key regions, 2013-2040 China India Russia United States Japan European Union - 20 0 20 40 60 80 100 120 140 GW By 2040, an expanded nuclear fleet has saved almost 4 years of current CO 2 emissions & for some countries has improved energy security & balances of energy trade
Nuclear power: public concerns must be heard and addressed ReNrements of nuclear power capacity 1990-2040 1990 2000 2010 2013 2020 2030 2040 Spent nuclear fuel 1971-2040: 705 thousand tonnes 50 United States European Union GW 100 150 200 38% of today s capacity to renre by 2040 European Union United States Japan Others China 1971-2012 1971-2040 350 705 thousand tonnes Japan Canada India Russia Other Korea Key public concerns include plant opera;on, decommissioning & waste management; By 2040, almost 200 reactors are & re;red the amount & the of amount spent fuel of spent doubles fuel doubles
The 2 C goal last chance in Paris? World CO 2 budget for 2 C ~2300 Gt Average annual low- carbon investment, 2014-2040 100% 75% 50% 25% 2012-2040 1900-2012 Trillion dollars (2013) 2.0 1.5 1.0 0.5 CCS Nuclear Renewables Efficiency Share of budget used in Central Scenario 2013 Central Scenario For 2 C target The en;re global CO 2 budget to 2100 is used up by 2040 Paris must send a strong signal for increasing low- carbon investment four ;mes beyond current levels
NavigaNng a stormy energy future n GeopoliNcal & market uncertainnes are set to propel energy security high up the global energy agenda n VolaNlity in the Middle East raises short- term doubts on investment & spells trouble for future oil supply n Nuclear power can play a role in energy security & carbon abatement but financing & public concerns are key issues n Without clear direcnon from Paris in 2015, the world is set for warming well beyond the 2 C goal n Far- sighted government policies are essennal to steer the global energy system on to a safer course
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