© OECD/IEA 2015
Canberra 20 November 2015
The start of a new energy era?
 2015 has seen lower prices for all fossil fuels
 Oil & gas could face second year of falling upstream investment in 2016
 Coal prices remain at rock-bottom as demand slows in China
 Signals turn green ahead of key Paris climate summit
 Pledges of 150+ countries account for 90% of energy-related emissions
 Renewables capacity additions at a record-high of 130 GW in 2014
 Fossil-fuel subsidy reform, led by India & Indonesia, reduces the global
subsidy bill below $500 billion in 2014
 Multiple signs of change, but are they moving the energy system
in the right direction?
© OECD/IEA 2015
Demand growth in Asia – the sequel
Change in energy demand in selected regions, 2014-2040
Mtoe 1 200
900
600
300
0
-300
European United
Union
States
Japan
Latin
Middle Southeast Africa
America
East
Asia
China
India
By 2040, India’s energy demand closes in on that of the United States,
even though demand per capita remains 40% below the world average
© OECD/IEA 2015
Policies spur innovation and tip the
balance towards low-carbon
Costs in 2040 for different energy sources/technologies, relative to 2014
60%
40%
20%
0%
-20%
-40%
-60%
Solar PV
Onshore
wind
Efficient
lighting
Efficient industrial
heat production
Upstream
oil and gas
Innovation reduces the costs of low-carbon technologies & energy efficiency,
but – for oil & gas – the gains are offset by the move to more complex fields
© OECD/IEA 2015
A new balancing item in the oil market?
Change in production (2015-2020) of US tight oil for a range of 2020 oil prices
mb/d
2
1
0
-1
-2
-3
-4
$40/bbl
$50/bbl
$60/bbl
$70/bbl
$80/bbl
$90/bbl
$100/bbl
Tight oil has created more short-term supply flexibility, but there is no guarantee
that the adjustment mechanism in oil markets will be smooth
© OECD/IEA 2015
If oil prices stay lower for much longer:
what would it take, what would it mean?
 Much more resilient non-OPEC supply & higher output from a stable
Middle East could hold the oil price close to $50/bbl until the 2020s
 Oil importers gain, each $1/bbl reduction is $15 billion off import bills;
major window of opportunity to press ahead with subsidy reform
 If lower prices persist for decades, reliance on Middle East oil gets back
to 1970s levels; risk of a sharp market rebound if investment falls short
 Lower prices could undercut essential policy support for the energy
transition: weaker incentives mean 15% of efficiency savings are lost
 Reduction in revenues to key producers & boost to global oil demand
growth make a prolonged period of lower prices progressively less likely
© OECD/IEA 2015
The big opportunities & uncertainties
for natural gas are in Asia
Natural gas demand and supply in developing Asia , 2040
2014 & 2040
bcm 1 500
1 200
Imports
900
Conventional
600
Unconventional
Additional
to 2040
2014
300
Demand
Production
Developing Asia accounts for almost half of the rise in global gas demand & 75% of
the increase in imports, but gas faces strong competition from renewables & coal
© OECD/IEA 2015
Global LNG Exports
bcm
LNG exports by region in the New Policies Scenario
600
60%
500
50%
400
40%
Rest of world
Southeast Asia
Russia
North America
Middle East
300
30%
Australia
Africa
200
20%
100
10%
2000
© OECD/IEA 2015
2013
2025
2040
LNG share of
inter-regional
trade (right axis)
Growth in US Shale Output
bcm
Shale gas production by play in the United States
500
Utica
400
Marcellus
300
Haynesville
200
Eagle Ford
Fayetteville
Barnet
100
Other
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
In 5 years, Marcellus grows to global stature
© OECD/IEA 2015
2015*
China Unconventional Gas Projections
bcm
Indicative range of unconventional gas production outcomes by type in China
400
Coal-to-gas
Tight gas
Coalbed methane
300
Shale gas
200
100
2013
Low
NPS
2025
High
Low
NPS
2040
High
A major source of uncertainty in regional, indeed global markets
© OECD/IEA 2015
A new chapter in China’s growth story
4 000
9
60
Renewables
GDP
Nuclear
3 000
6 000
2 000
3 000
1 000
Gas
40
Oil
Energy
demand
Energy
demand
GDP (trillion dollars, PPP)
Energy demand (Mtoe)
Total primary
Energy
energy
demand
demand
in China
& GDP in China
20
Coal
GDP
2000
2010
2020
2030
2040
Along with energy efficiency, structural shifts in China’s economy favouring
expansion of services, mean less energy is required to generate economic growth
© OECD/IEA 2015
India moving to the centre
of the world energy stage
Change in demand for selected fuels, 2014-2040
Coal
1 500
(Mtce)
Oil
24
Africa
1 000
500
Southeast
Asia
India
(mb/d)
Solar PV
1 500
Southeast Asia
16
Africa
1 000
Middle East
8
China
European
Union
0
United States
-500
-8
-1 000
-16
United
States
European
Union
Japan
Middle East
Africa
European Union
United States
500
India
0
(TWh)
India
China
0
Japan
New infrastructure, an expanding middle class & 600 million new electricity
consumers mean a large rise in the energy required to fuel India’s development
© OECD/IEA 2015
Indian Renewable Power Growth
GW
Renewable sources of power generation capacity in India
in the New Policies Scenario
500
50%
Bioenergy
Wind
400
40%
CSP
Solar PV
30%
300
Hydro
Share of renewable
in total (right axis)
200
20%
100
10%
2014
2020
2025
2030
2035
2040
Astonishing Growth, but Coal still major Power Source
© OECD/IEA 2015
Indian Coal Imports
Mtce
Coal imports by origin in India in the New Policies Scenario
500
50%
South Africa
Australia
400
40%
Indonesia
Other
300
30%
200
20%
100
10%
2000
© OECD/IEA 2015
2005
2013
2020
2030
2040
Import share
(right axis)
Major Coal Exporters
Mtce
Major net exporters of coal by type in the New Policies Scenario
500
33%
400
300
Coking
Steam
% Share of
global trade
30%
33%
29%
200
11%
10%
100
2013 2040
Australia
2013 2040
Indonesia
2013 2040
Russia
7%
8%
2013 2040
Colombia
6%
7%
11%
5%
2013 2040 2013 2040
South United States
Africa
& Canada
Coal trade growth slows from massive rises in last decade, meets about one fifth of
global coal demand
© OECD/IEA 2015
Power is leading the transformation
of the energy system
Global electricity generation by source
3 000
Renewables
Coal
6 000
9 000
12 000
TWh
15 000
2014
Change
to 2040
Of which:
Gas
Hydro
Wind
Nuclear
Solar
Other
renewables
Oil
Driven by continued policy support, renewables account for half of additional global
generation, overtaking coal around 2030 to become the largest power source
© OECD/IEA 2015
Renewables Dominate Power Growth
Thousand TWh
Electricity generation by source in the New Policies Scenario
16
OECD
China
Rest of world
14
12
10
8
6
4
2
1990
2010
Coal
2030
1990
Gas and oil
2010
Nuclear
2030
Hydro
But coal still important
© OECD/IEA 2015
1990
2010
2030
Other renewables
Efficiency measures on the rise,
but significant potential still exists
Share of global mandatory efficiency regulation of final energy consumption
40%
Industry
 Steam boilers
 Process heat
 Motors
30%
Buildings
 Heating/Cooling
 Lighting/Appliances
20%
Transport
10%
 Cars
 Trucks
 Ships
2005
2014
2040
Energy efficiency policies are introduced in more countries and sectors;
they continue to slow demand growth but more can be done
© OECD/IEA 2015
The coverage of climate pledges
is impressive
Pledges submitted
Yet to submit pledges
Climate pledges for COP21 are consistent with a temperature rise of 2.7 °C, with
investment needs of $13.5 trillion in low-carbon technologies & efficiency to 2030
© OECD/IEA 2015
Climate pledges decouple power sector
emissions from electricity demand
40
20
Electricity
generation
30
15
Electricity
generation
20
10
10
1990
Emissions (Gt)
Generation (thousand TWh)
World electricity generation and related CO2 emissions
CO2 emissions
2000
2010
CO2 emissions
2020
5
2030
The share of low-carbon power generation grows to almost 45% in 2030 so that
power emissions remain flat, while electricity demand grows by more than 40%
© OECD/IEA 2015
Coal Demand Dependent on Climate
Action
9 000
Current Policies
Scenario (CPS)
8 000
75%
7 000
6 000
New Policies
Scenario (NPS)
5 000
4 000
© OECD/IEA 2015
50%
1990
2000
2010
2020
2030
2040
2013
16%
25%
450 Scenario (450)
29%
25%
3 000
2 000
1980
100%
29%
Mtce
World coal demand and share of coal in world primary energy demand by scenario
CPS NPS 450
2040
Conclusions
 Low prices bring gains to consumers, but can also sow the seeds
of future risks to energy security: no room for complacency
 India’s energy needs are huge: there is a strong shared interest
to support India’s push for clean & efficient technologies
 China’s transition to a more diversified & much less energy-
intensive model for growth re-shapes energy markets
 The energy transition is underway, but needs a strong signal from
Paris: governments must ring-fence policies against market swings
 With looming energy security & environmental challenges,
international cooperation on energy has never been more vital
© OECD/IEA 2015
© OECD/IEA 2015
www.worldenergyoutlook.org
Indian Power Sector Outlook
TWh
Power generation by source in India in the New Policies Scenario
5 000
Other renewables
historical
projected
Biomass
4 000
Wind
Solar PV
3 000
Hydro
Nuclear
2 000
Gas
Oil
1 000
Coal
2000
2010
2020
2030
2040
India Diversifies Fast, but Coal still the Major Power Source
© OECD/IEA 2015
Coal-Fired Plant efficiency Improves
GW
Coal-fired power plant capacity by technology and average
efficiency in India in the New Policies Scenario
500
39%
400
36%
Ultra-supercritical
and IGCC
Supercritical
Subcritical
300
33%
200
30%
100
27%
2010
© OECD/IEA 2015
2015
2020
2025
2030
2035
2040
Average
efficiency
of coal fleet
(right axis)