Energy, Oil, Gas, Renewables, Susbsidies, Copenhagen, Cancun

1. World Energy Outlook 2010World Energy Outlook 2010
© OECD/IEA 2010
Presentation to the press
London, 9 November 2010

2. The context:The context: A time of unprecedentedA time of unprecedented
uncertaintyuncertainty
 The worst of the global economic crisis appears to be over –
but is the recovery sustainable?
 Oil demand & supply are becoming less sensitive to price –
what does this mean for future price movements?
 Natural gas markets are in the midst of a revolution
© OECD/IEA 2010
 Natural gas markets are in the midst of a revolution –
will it herald a golden era for gas?
 Copenhagen Accord & G-20 subsidy reforms are key advances –
but do they go far enough & will they be fully implemented?
 China & other emerging economies will shape the global energy
future – where will their policy decisions lead us?

3. International oil price assumptionsInternational oil price assumptions
80
100
120
140
arsperbarrel(2009)
Current Policies Scenario
New Policies Scenario
450 Scenario
© OECD/IEA 2010
The age of cheap oil is over, though policy action could bring lower international prices
than would otherwise be the case
0
20
40
60
1980 1990 2000 2010 2020 2030 2035
Dolla

4. Recent policy commitments,Recent policy commitments,
if implemented, would make a differenceif implemented, would make a difference
World primary energy demand by region in the New Policies Scenario
12 000
14 000
16 000
18 000
Mtoe
Rest of world
China
OECD
WEO-2009:
Reference Scenario
© OECD/IEA 2010
Global energy use grows by 36%, with non-OECD countries – led by China,
where demand surges by 75% – accounting for almost all of the increase
0
2 000
4 000
6 000
8 000
10 000
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Reference Scenario

5. Emerging economies dominateEmerging economies dominate
the growth in demand for all fuelsthe growth in demand for all fuels
Incremental primary energy demand in the New Policies Scenario, 2008-2035
Gas
Oil
Coal
OECD
China
Rest of world
© OECD/IEA 2010
Demand for all types of energy increases in non-OECD countries,
while demand for coal & oil declines in the OECD
- 600 - 300 0 300 600 900 1 200 1 500
Other renewables
Hydro
Nuclear
Mtoe

6. FossilFossil--fuel subsidies are distortingfuel subsidies are distorting
price signalsprice signals
Economic value of fossil-fuel consumption subsidies by country, 2009
30
40
50
60
70
Billiondollars
Electricity
(generated from
fossil fuels)
Gas
Oil
Coal
© OECD/IEA 2010
Fossil-fuel consumption subsidies amounted to $312 billion in 2009, down from
$558 billion in 2008, with the bulk of the fall due to lower international prices
Iran
SaudiArabia
Russia
India
China
Egypt
Venezuela
Indonesia
UAE
Uzbekistan
Iraq
Kuwait
Pakistan
Argentina
Ukraine
Algeria
Malaysia
Thailand
Bangladesh
Mexico
Turkmenistan
SouthAfrica
Qatar
Kazakhstan
Libya
0
10
20
30

7. Booming demand for mobility in theBooming demand for mobility in the
emerging economies drives up oil useemerging economies drives up oil use
1 000
1 200
1 400
1 600
Million
China
Other non-OECD
United States
Other OECD
Passenger vehicles in the New Policies Scenario
© OECD/IEA 2010
The global car fleet will continue to surge as more & more people in China & other
emerging economies buy a car, overshadowing modest growth in the OECD
0
200
400
600
800
1980 1990 2000 2008 2020 2035

8. Oil production becomes less crudeOil production becomes less crude
World oil production by type in the New Policies Scenario
60
80
100
mb/d
Crude oil - fields yet
to be developed or found
Unconventional oil
Natural gas liquids
© OECD/IEA 2010
Global oil production reaches 96 mb/d in 2035 on the back of rising output of
natural gas liquids & unconventional oil, as crude oil production plateaus
0
20
40
60
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
to be developed or found
Crude oil – currently
producing fields
Total crude oil

9. More oil from fewer producersMore oil from fewer producers
Incremental oil production by key country in the New Policies Scenario, 2009-2035
Venezuela
Canada
Kazakhstan
Brazil
Iraq
Saudi Arabia OPEC
Non-OPEC
© OECD/IEA 2010
Production rises most in Saudi Arabia & Iraq, helping to push OPEC’s market share from
41% today to 52% by 2035, a level last seen prior to the first oil shock of 1973-1974
0 1 2 3 4 5 6
Algeria
Libya
Nigeria
Qatar
Iran
Kuwait
UAE
Venezuela
mb/d

10. A golden age for gas?A golden age for gas?
 Gas is set to play a key role in meeting the world’s energy needs
> demand rises by 44%, led by China & Middle East
 Unconventional gas accounts for 35% of the increase in global
supply to 2035, with new non-US producers emerging
© OECD/IEA 2010
 Gas glut will peak soon, but may dissipate only very slowly
 The glut will keep pressure on gas exporters to move away from
oil-price indexation, notably in Europe
 Lower prices could lead to stronger demand for gas, backing out
renewables & coal in power generation

11. Coal remains the backbone of globalCoal remains the backbone of global
electricity generationelectricity generation
8 000
10 000
12 000
TWh
China
India
Other non-OECD
OECD
Coal-fired electricity generation by region in the New Policies Scenario
© OECD/IEA 2010
A drop in coal-fired generation in the OECD is offset by big increases elsewhere, especially
China, where 600 GW of new capacity exceeds the current capacity of the US, EU & Japan
0
2 000
4 000
6 000
1990 2000 2010 2020 2030 2035
OECD

12. Renewables enter the mainstream….Renewables enter the mainstream….
Renewable primary energy demand in the New Policies Scenario
India
Africa
OECD Pacific 2008
2035
© OECD/IEA 2010
The use of renewable energy triples between 2008 & 2035, driven by the power sector
where their share in electricity supply rises from 19% in 2008 to 32% in 2035
0 100 200 300 400 500
European Union
United States
China
Brazil
Mtoe

13. ….but only if there is enough….but only if there is enough
government supportgovernment support
Annual global support for renewables in the New Policies Scenariondollars(2009)
Biofuels
Renewables-based electricity
120
150
180
210
© OECD/IEA 2010
Government support remains the key driver – rising from $57 billion in 2009 to $205 billion
in 2035 – but higher fossil-fuel prices & declining investment costs also spur growth
Billion
0
30
60
90
120
2007 2008 2009 2015 2020 2025 2030 2035

14. China becomes the market leaderChina becomes the market leader
in lowin low--carbon technologiescarbon technologies
Passenger car sales
Capacity additions
China’s share of cumulative global additions to 2035 for selected technologies
85 GW
335 GW
105 GW
20%
30%
8.5 million
h l
© OECD/IEA 2010
Given the sheer scale of China’s market, its push to expand the role of low-carbon energy
technologies is poised to play a key role in driving down costs, to the benefit of all countries
85 GW
0%
10%
Solar PV Wind Nuclear Electric &
plug-in hybrids
vehicles

15. Caspian energy riches could enhanceCaspian energy riches could enhance
global energy securityglobal energy security
Caspian oil & gas outlook in the New Policies Scenario
3
4
5
6
mb/d
200
250
300
350
bcm
© OECD/IEA 2010
Kazakhstan drives an increase in Caspian oil production to 5.2 mb/d by 2035,
whileTurkmenistan & Azerbaijan push up gas production to over 310 bcm
0
1
2
3
2000 2009 2020 2035
Oil net exports Inland oil consumption
0
50
100
150
2000 2009 2020 2035
Gas net exports Inland gas consumption

16. The 450 Scenario:The 450 Scenario:
AA roadmap from 3.5roadmap from 3.5°°C to 2C to 2°°CC
 The 450 Scenario sets out an energy pathway consistent with
limiting the increase in temperature to 2°C
 Assumes vigorous implementation of Copenhagen Accord
pledges to 2020 & much stronger action thereafter
 The failure of the Copenhagen Accord pledges
© OECD/IEA 2010
 The failure of the Copenhagen Accord pledges:
> As many lack transparency, there is 3.9 Gt of uncertainty over the
level of abatement pledged to 2020
> As many lack ambition, the cost of achieving the 2° C goal has
increased by $1 trillion in 2010-2030 compared with WEO-2009

17. 30
32
34
36
38
Gt
New Policies Scenario
35.4 Gt
The 450 Scenario:The 450 Scenario:
How do we get there now?How do we get there now?
World energy-related CO2 emission savings by country in the 450 Scenario
China 32%
United States 18%
Share of cumulative abatement
between 2010-2035
© OECD/IEA 2010
20
22
24
26
28
30
2008 2015 2020 2025 2030 2035
In the 450 Scenario, China & the US together account for 50% of the cumulative emission
abatement that is needed in 2010-2035
450 Scenario
21.7 Gt
European Union 8%
India 7%
Middle East 4%
Russia 4%
Rest of world 27%
13.7 Gt

18. Achieving the 2Achieving the 2°°C goal will require rapidC goal will require rapid
decarbonisation of global energydecarbonisation of global energy
Average annual change in CO2 intensity in the 450 scenario
3%
4%
5%
6%
A four-fold
increase needed
© OECD/IEA 2010
Carbon intensity would have to fall at twice the rate of 1990-2008 in the period 2008-2020
& almost four times faster in 2020-2035
0%
1%
2%
3%
1990-2008 2008-2020 2020-2035

19. A fundamental change is neededA fundamental change is needed
in power generationin power generation
Share of world electricity generation by type and scenario
Additional low-carbon generation
in the 450 Scenario
Low-carbon generation in the NPS
Fossil-fuel fired generation60%
80%
100%
© OECD/IEA 2010
Low-carbon technologies account for over three-quarters of global power generation by 2035
in the 450 Scenario, a four-fold increase on today
g
0%
20%
40%
2010 2015 2020 2025 2030 2035
in the 450 Scenario

20. … and also in transport… and also in transport
Sales of plug-in hybrid and electric vehicles in the 450 Scenario
CO2 intensity in
power generation
Electric vehicles
Plug-in hybrids
& CO2 intensity of the power sector
500
600
700
mesperkWh
50
60
70
Million
© OECD/IEA 2010
Plug-in hybrids & electric vehicles reach 39% of new sales by 2035, making a big contribution
to emissions abatement, thanks to a major decarbonisation of the power sector
power generation
(right axis)
0
100
200
300
400
Gramm
0
10
20
30
40
2010 2015 2020 2025 2030 2035

21. Will peak oil be a guest or theWill peak oil be a guest or the spectrespectre
at the feast?at the feast?
Oil demand in the 450 Scenario
World demand in
450 Scenario
Inter regional
Right axis:
mb/d
88
92
96
100
mb/d
4
8
12
16
© OECD/IEA 2010
Oil demand peaks at 88 mb/d before 2020 & falls to 81 mb/d in 2035, with a plunge
in OECD demand more than offsetting continuing growth in non-OECD demand
Inter-regional
(bunkers)
Other non-OECD
India
China
OECD
2009 2015 2020 2025 2030 2035
68
72
76
80
84
-16
-12
-8
-4
0

22. Combating climate change will bringCombating climate change will bring
economic benefits as well as costseconomic benefits as well as costs
Oil-import bills as share of GDP in selected countries
3%
4%
5% 2009
2035: New Policies Scenario
2035: 450 Scenario
© OECD/IEA 2010
In the 450 Scenario, annual spending on oil imports in 2035 by the five largest importers
is around $560 billion, or one-third, lower than in the New Policies Scenario
0%
1%
2%
Japan IndiaUnited
States
European
Union
China

23. Summary & conclusionsSummary & conclusions
 Recently announced policies can make a difference, but fall well
short of what is needed for a secure & sustainable energy future
 Lack of ambition in Copenhagen has increased the cost of
achieving the 2°C goal & made it less likely to happen
> Unless commitments are fully implemented by 2020, it will be all
but impossible to achieve the goal
© OECD/IEA 2010
but impossible to achieve the goal
 The age of cheap oil is over, though policy action could bring
lower international prices than would otherwise be the case
 Renewables are entering the mainstream, but long-term
support is needed to boost their competitiveness
 Getting the prices right, by phasing-out fossil-fuel subsidies,
is the single most effective measure to cut energy demand