1.
World Energy Outlook
Dr. Fatih Birol
IEA Chief Economist
OECD Parliamentary Days
Paris, 5 February 2014
© OECD/IEA 2014

2.
The world energy scene today
 Some long-held tenets of the energy sector are being rewritten
 Countries are switching roles: importers are becoming exporters…
 … and exporters are among the major sources of growing demand
 New supply options reshape ideas about distribution of resources
 But long-term solutions to global challenges remain scarce
 Renewed focus on energy efficiency, but CO2 emissions continue to rise
 Fossil-fuel subsidies increased to $544 billion in 2012
 1.3 billion people still lack electricity – in Africa and South Asia
 Energy prices add to the pressure on policymakers
 Sustained period of high oil prices without parallel in market history
 Large, persistent regional price differences for gas & electricity
© OECD/IEA 2014

3.
The engine of energy demand growth
moves to South Asia
Primary energy demand, 2035 (Mtoe)
Share of global growth
2012-2035
Eurasia
Latin
America
Europe
1 370
United
States
8%
China
1 710
4 060
2 240
Middle 1 050
East
Brazil
480
1 030
Africa
1 540
Eurasia OECD
1 000
Africa
440
Japan
Southeast
Asia
5% 4%
8%
Middle 10%
East
65%
India
Non-OECD
Asia
China is the main driver of increasing energy demand in the current decade,
but India takes over in the 2020s as the principal source of growth
© OECD/IEA 2014

4.
A mix that is slow to change
Growth in total primary energy demand
1987-2011
Gas
2011-2035
Coal
Renewables
Oil
Nuclear
500
1 000
1 500
2 000
2 500
3 000
Mtoe
25 years ago the share of fossil fuels in the global mix was 82%; it is the same today
& the strong rise of renewables in the future only reduces this to around 75% in 2035
© OECD/IEA 2014

5.
Emissions off track in the run-up
to the 2015 climate summit in France
Cumulative energy-related CO2 emissions
Total emissions
1900-2035
Gt 800
600
Non-OECD
Non-OECD
49%
OECD
400
200
OECD
51%
1900
-1929
1930
-1959
1960
-1989
1990
-2012
2013
-2035
Non-OECD countries account for a rising share of emissions,
although 2035 per capita levels are only half of OECD
© OECD/IEA 2014

6.
Renewables power up around the world
Growth in electricity generation from renewable sources, 2011-2035
TWh 2 100
Other
renewables
1 800
1 500
1 200
900
600
300
Other
United
renewables
States
Solar PV
Japan
Wind
European
Union
Hydro
Europe, Japan
& United States
Other
ASEAN
renewables
Solar PV
Solar PV
Africa
Wind
Wind
China
Latin
America
Hydro
Hydro
India
China
India, Latin America,
ASEAN & Africa
The expansion of non-hydro renewables depends on subsidies that more than double
to 2035; additions of wind & solar have implications for power market design & costs
© OECD/IEA 2014

7.
Increasing subsidies for increasing
renewables
Renewable-energy subsidies by region in 2012
Rest of the
world
13%
India
2%
China
7%
$101 billion 57%
European
Union
21%
United States
Renewables subsidies increased to $101 billion in 2012, more than half of which are
Renewables subsidies increased to $101 billion in 2012,
in the European Union; renewables subsidies are set to more than double by 2035.
renewables subsidies are set to more than double by 2035
© OECD/IEA 2014

8.
Who has the energy to compete?
Ratio of industrial energy prices relative to the United States
Natural gas
Electricity
5
Reduction
from 2013
4
2035
2013
2003
3
2003
2
United States
Japan
European
Union
China
Japan
European
Union
China
Regional differences in natural gas prices narrow from today’s very high levels
but remain large through to 2035; electricity price differentials also persist
© OECD/IEA 2014

9.
Energy-intensive industries
need to count their costs
Share of energy in total production costs for selected industries
10%
20%
30%
40%
50%
60%
70%
80%
90%
Petrochemicals
Fertilisers
Aluminium
Cement
Iron & steel
Pulp & paper
Glass
Energy-intensive sectors worldwide account for around one-fifth of industrial value
added, one-quarter of industrial employment and 70% of industrial energy use.
© OECD/IEA 2014

10.
An energy boost to the economy?
Share of global export market for energy-intensive goods
+3%
European Union
+1%
Today
36%
10%
+2%
+2%
7%
3%
2%
China
Middle East
India
Japan
7%
United States
-3%
-10%
The US, together with key emerging economies, increases its export market share
for energy-intensive goods, while the EU & Japan see a sharp decline
and Japan see a sharp decline
© OECD/IEA 2014

11.
LNG from the United States
can shake up gas markets
Indicative economics of LNG export from the US Gulf Coast (at current prices)
$/MBtu
18
15
12
$/MBtu
12
9
9
6
6
3
3
To Asia
Average import price
Liquefaction, shipping
& regasification
United States price
To Europe
New LNG supplies accelerate movement towards a more interconnected global
market, but high costs of transport between regions mean no single global gas price
© OECD/IEA 2014

12.
Orientation for a fast-changing energy world
 China, then India, drive the growing dominance of Asia
in global energy demand
 Technology is opening up new oil resources, but the Middle East
remains central to the longer-term outlook
 Regional price gaps & concerns over competitiveness are here
to stay, but there are ways to react – with efficiency first in line
 The shift in the balance of global energy trade towards Asia
will have profound implications for energy security cooperation
© OECD/IEA 2014