Director for Science, Technology and Industry,
OECD

I use these slides to present my personal views which I prescribed in the campaign. This presentation is not necessarily reflecting the official views. Nobuo TANAKA
IEA ’ ’ s s

A Safety Net: Emergency Preparedness
Remains Crucial
60
48
36
24
2 Sep. 2005 decision, 2 mb/d
12
1.48 billion barrels of Public stocks
-
1 2
Theoretical decision, 4 mb/d
3 4 draw rate (mb/d)
5 6
IEA Public Stocks could replace an oil supply disruption of 2 mb/d for nearly 2 years

100%
80%
60%
22%
16%
39%
49%
10%
9%
40%
20%
62%
51%
42%
0%
OECD
1971 2003
Transition economies
2030
Developing countries
About 70% of the increase in energy demand will come from develo ping

18
15
12
9
6
3
80%
70%
60%
50%
40%
30%
20%
10%
0
1990
Production
2000
Demand
2010 2020 2030
Imports as a % of demand (right scale)
0%
China’s oil imports will soar from around 3 mbd today to almost 12 mbd in 2030

Expected Total Oil Net Imports (mb¥d)
40
35
30
25
20
15
2000 2005 2010 2015 2030
10
5
0
OECD India
+
China
Stocks: - China: 14 Mt for the first phase
India: 5 Mt for the first phase
(plan to triple such capacity at later phases)

Reference Scenario:
Increase in World Oil Supply, 2004 2030
25
20
Other
15
10
Iran
Iraq
5
S.Arabia
0
OPEC conventional Non-conventional Non-OPEC conventional
The share of OPEC in world oil supply increases sharply as conventional non-OPEC production peaks towards the middle of next decade

Exports through the “ Dire Straits ”
Much of the additional oil and LNG exports from the Middle East will be shipped through just three maritime routes

Reference Scenario:
World Primary Energy Demand
18 000
16 000
14 000
12 000
10 000
8 000
6 000
4 000
2 000
0
1970 1980 1990 2000 2010
Other renewables
Nuclear
Biomass
Gas
2020 2030
Coal
Oil
Global demand grows by more than half over the next quarter of a century, with coal use rising most in absolute terms

Reference Scenario:
World Inter-regional Natural Gas Trade
1 000
800
600
400
200
0
2000 2004 2010 2015
Pipelines LNG
2020 2030
Global gas trade expands by 1.5 times, with two-thirds of the increase coming from Russia, the Middle East & North Africa – mostly as LNG

Reference Scenario:
Increase in World Gas Supply,
2004 2030
1000
800
600
400
200
0
Middle East and North
Africa
Transition
Economies
Developing
Asia
Latin America OECD
The Middle East and North Africa account for the bulk of the growth in global gas production.

Russian Gas Supply Outlook
Bcm
900
800
700
600
Other Gazprom fields
New Fields to meet Gazprom Outlook
Zapolyarnoye
Plus
Exports to
Asia-Pacific
New
Fields to meet
Gazprom
Outlook
500
400
Urengoy
Gazprom
Outlook
300
200
Yamburg
100
Medvezhye
Non-Gazprom Production
(Independents and Central Asian Imports)
0
1990 1995 2000 2005 2010 2015 2020
An apparent growing gap in Russian gas supply underscores the need for investment in new production capacity, an improvement in efficiency and a reduction in flaring.

Reference Scenario:
Oil 21%
$20.2 trillion (in $2005)
Electricity
56%
$11.3 trillion
$4.3 trillion
Biofuels 1%
$3.9 trillion
$0
.6 t rill io n
Gas 19% Coal 3%
Investment needs exceed $20 trillion – $3 trillion more than previously projected, mainly because of higher unit costs

Global Upstream Oil & Gas Investment:
Impact of Cost Inflation
300
250
200
150
100
50
2000
Year 2000
2002
Nominal actual forecast
2004 2006 2008
Adjusted for cost inflation
2010
Annual upstream investment doubled to $225 billion between 2000 and
2005, but most of the increase was due to cost inflation

Growth kb/d mb/d
3.0
2.0
1.0
0.0
2006 2007 2008
Non-OPEC Growth (excl. Biofuels)
OPEC NGLs Growth
World Demand Growth
2009 2010
Biofuels Growth
OPEC Capacity Growth
2011
Based on current projects and plans, the level of spare production capacity should rise but the quality of this incremental crude will have important implications for the refining industry and product markets.
18

Impact of Deferred Investment on Supply
(Versus a 22 mb/d rise in the Reference Scenario)
4
0
-4
-8
-12
2015 2030
OPEC Non-OPEC: conventional Non-OPEC: non-conventional
Deferred investment in OPEC countries lowers their market share and pushes up prices.
Higher prices stimulate higher investment in non-OPEC countries, driving up their conventional & non-conventional output
19

15
12
9
6
Rest of non-OECD
China
Rest of OECD
United States
India
3
0
1990
United States
2000
China India
2010 2020
Rest of non-OECD
2030
Rest of OECD
Developing countries account for over three-quarters of the increase in emissions to 2030 however their per-capita emissions still remain well below those of the OECD.

Annual Increase in Coal Demand
500
400
300
200
100
0
-100
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
China Rest of the world
Global coal demand in the recent years has grown much faster than previously – mainly driven by China

Reference Scenario:
Energy-Related CO
2
Emissions by Fuel
50
40
30
Increase of
14.3 Gt (55%)
20
10
0
1990
Coal
2004 2010
Oil
2015 2030
Gas
Half of the projected increase in emissions come from new power stations, mainly using coal & mainly located in China & India
23

3 500
3 000
2 500
2 000
1 500
1 000
500
0
- 500
OECD Transition economies
China India Rest of developing countries
Coal Oil Gas
China and India account for 58% of the increase in power sector CO2 emissions to 2030

• Analyses impact of government policies under consideration to enhance security & curb emissions
• Demonstrates that we can significantly reduce growth in energy demand & emissions and stimulate alternative energy production
‰ Oil demand is reduced by 13 mb/d in 2030 - equivalent to current output of Saudi Arabia & Iran
‰ Oil savings in 2015 savings reach 5 mb/d
‰ CO
2 emissions are 6.3 Gt (16%) lower in 2030 – equivalent to the current emissions of US and Canada
• Delaying action by 10 years would reduce the impact on emissions in 2030 by three-quarters

Alternative Policy Scenario:
36
34
32
5.2 mb/d
1.8 mb/d
30
28
26
2005 2010 2015
Reference Scenario
2020 2025
Alternative Policy Scenario
2030
In stark contrast with the Reference Scenario, OECD oil imports level off soon after 2015 & then begin to decline 27

Alternative Policy Scenario:
60
40
20
0
120
100
80
2005
Alternative Policy Scenario
OPEC share in APS (right axis)
50%
45%
40%
2015
35%
2030
Reduction compared with Reference Scenario
OPEC share in RS (right axis)
OPEC’s share of global oil production rises from 40% now to 43% in 2030 in the APS, compared with a jump to 49% in the RS 28

Alternative Policy Scenario:
800
600
400
- 90 bcm
200
- 46 bcm
- 33 bcm
0
United States European Union Japan
2004 Reference Scenario 2030 Alternative Policy Scenario 2030
Gas imports in the main consuming regions are significantly lower in the
APS compared with the RS

Alternative Policy Scenario:
2
42
38
Reference Scenario
Increased nuclear (10%)
Increased renewables (12%)
Power sector efficiency & fuel (13%)
Electricity end-use efficiency (29%)
Fossil-fuel end-use efficiency (36%)
34
30 Alternative Policy Scenario
26
2004 2010 2015 2020 2025 2030
Improved end-use efficiency accounts for over two-thirds of avoided emissions in 2030 in the APS

Mt CO
60 000
2
50 000
40 000
30 000
20 000
Emissions 2003 2050
+137%
ACT Scenarios 2050
+6%
+21%
+27%
-16%
Other
Buildings
Transport
Industry
Transformation
Power
Generation
10 000
0
2003 Baseline
2030
(WEO 2005)
Baseline
2050
Map No CCS Low
Efficiency
TECH Plus
2050
Technology holds the promise of returning soaring energy-related CO2 emissions to today’s levels by 2050

End-use efficiency
Power
Generation
Coal to gas
Nuclear
Fossil fuel generation efficiency
CCS
Hydropower
Biomass
Other renewables
Biofuels in transport
CCS in fuel
Fuel mix in buildings and industry transformation
CCS in industry
Improved end-use energy efficiency is the most important contributor to reduced emissions!

Alternative Policy Scenario :
Key policies that Make a Global Difference
US
EU
China
Energy efficiency
• Tighter CAFE standards
• Improved efficiency in residential & commercial sectors
• Increased vehicle fuel economy
• Improved efficiency in electricity use in the commercial sector
• Improved efficiency in electricity use in industry
• Improved efficiency in electricity use in the residential sector
Power generation
• Increased use of renewables
• Increased use of renewables
• Nuclear plant lifetime extensions
• Increased efficiency of coalfired plants
• Increased use of renewables
• Increased reliance on nuclear
A dozen policies in the US, EU & China account for around 40% of the global emissions reduction in 2030 in the Alternative Policy Scenario

Alternative Policy Scenario:
• Total energy investment – from production to consumption – is lower than in the RS
• Consumers spend $2.4 trillion more in 2005-2030 in more efficient cars, refrigerators etc
• ..but $3 trillion less investment is required on the supply side
– Each $1 invested in more efficient electrical appliances saves $2.2 in investment in power plants & networks
– Each $1 invested in more efficient oil-consuming equipment (mainly cars) saves $2.4 in oil imports to 2030
• The higher initial investment by consumers is more than offset by fuel-cost savings / THIS IS THE DEMAND-SIDE
APPROACH for ENERGY POLICY.

Energy Efficiency Has A Key Role To Play
And Is Available In The Short Term
Energy efficiency offers
• • substantial energy and greenhouse
High performance buildings
• • energy security and reliability benefits
• • enhanced business competitiveness
Compact Fluorescent
Lamps
LED traffic lights
Least life-cycle cost appliances
Labelling and certification
A
B
C
D
E
F
G
Efficient information and communication technologies
Reducing standby power consumption
Super windows & daylighting

• Growing concerns over energy security, surging fossil-fuel prices & rising carbon emissions
• Positive aspects of nuclear power
‰ proven technology for large-scale baseload electricity generation
‰ reduce dependence on imported gas
‰ no emissions of greenhouse gases or local pollutants
‰ produces electricity at competitive & stable cost
‰ uranium resources abundant & widespread
•
But governments need to play a stronger role in facilitating investment where nuclear is accepted

Impact of a 50% Increase in Fuel Price on
Generating Costs
40%
30%
20%
10%
0%
Wind Nuclear IGCC Coal steam CCGT
Nuclear generating costs are far less sensitive to fuel price increases than gas or coal plants 37

• Interest in biofuels is soaring
• Biofuels can help address growing energy security & climate change threats by:
‰ Increasing diversity of geographic & fuel sources
‰ Lowering greenhouse-gas emissions - depending on how they are produced
• Higher oil prices have made biofuels more competitive, but further cost reductions are needed
• Availability of arable land will constrain biofuels potential medium term
• Long-term prospects hinge on new technology

Share of Biofuels in Road-Transport Fuel
Consumption
32%
28%
24%
20%
16%
12%
8%
4%
0%
World United States European Union Brazil
2004 2030 Reference Scenario 2030 Alternative Policy Scenario
Biofuels are set to play a much larger role in meeting world roadtransport fuel demand

• On current trends, we are on course for an unstable, dirty
& expensive energy future
• In response, urgent government policy action is required in two key areas:
– Promoting energy investment / Comprehensive energy security
– Promoting energy efficiency / Demand-side approach
• In addition to improving energy security and the environment, these policies also make economic sense
( Addressing three E’s all together )
• The WEO sets out the essential first steps on a path towards a clean, clever and competitive energy future
• For a truly sustainable energy system, technological breakthroughs will also be needed
• Need for Enhanced International / Cross Disciplinary
Cooperation

• In July 2005, the G8 invited the IEA to attend its
Summit in Gleneagles. The Gleneagles Plan of
Action mandated the IEA to identify pathways for G8 policy makers to realise a “clean, clever and competitive energy future.”
• At St. Petersburg G8 Summit 2006, the IEA recommended four points;
– Stanby power use in appliances and equipment,
– Program for tyres,
– Television set top boxes
– and Energy efficient lighting.