Canberra November 2016
© OECD/IEA 2016
© OECD/IEA 2016
The global energy context today


Key points of orientation:

Middle East share in global oil production in 2016 at highest level
for 40 years

Transformation in gas markets deepening with a 30% rise in LNG

Additions of renewable capacity in the power sector higher in 2015
than coal, gas, oil and nuclear combined

Energy sector in the spotlight as the Paris Agreement enters into force

Billions remain without basic energy services
There is no single story about the future of global energy; policies
will determine where we go from here
© OECD/IEA 2016
A new ‘fuel’ in pole position
Change in total primary energy demand
Mtoe
1990-2015
2015-2040
2 000
Rest of
world
Renewables
1 500
European
Union
Latin
America
India
1 000
Renewables
US
500
Africa
China
Nuclear
Nuclear
Coal
Oil
Gas
Lowcarbon
Coal
Oil
Gas
Lowcarbon
Low-carbon fuels & technologies, mostly renewables,
supply nearly half of the increase in energy demand to 2040
© OECD/IEA 2016
Greater policy support boosts
prospects for solar PV and wind
4 000
6 000
3 000
4 500
TWh
TWh
Solar PV and wind generation, 2040
Additional in the
2 °C scenario
Increase in WEO-2016:
2 000
3 000
Rest of world
United States
China
1 000
1 500
WEO-2015
Solar PV
Wind power
Stronger policies on solar PV and wind help renewables make up 37% of electricity
generation in 2040 in our main scenario – & nearly 60% in the 2 °C scenario
© OECD/IEA 2016
The next frontiers for renewables
are heat and transport
Renewable energy use by sector
Mtoe 1 200
900
Additional
to 2040
600
2015
300
Electricity
Heat
Transport
Today renewables in electricity and heat use are nearly at par;
by 2040, the largest untapped potential lies in heat and transport
© OECD/IEA 2016
A suite of tools to address energy security
mb/d
Net oil imports
20
United States
European Union
China
India
Net oil imports
15
Reduction in net oil imports
due to:
Switch to electric and
natural gas vehicles
10
Switch to renewables
Efficiency improvements
5
Increase in oil production
2014-2040
2014
2040
2014 2040
2014 2040
2014 2040
The energy transition provides instruments to address traditional energy
security concerns, while shifting attention to electricity supply
© OECD/IEA 2016
Entering a period of
greater oil market volatility

Approvals of new conventional crude oil projects in 2015-2016
have fallen to the lowest level since the 1950s

If approvals remain low in 2017, an unprecedented effort will be
needed to avoid a supply-demand gap in a few years’ time

US tight oil provides a potential lifeline, but cannot be relied
upon to cover a major shortfall in the ‘baseload’ of oil supply

Without a pick-up in investment, or a rapid slowdown in demand
growth, the stage is set for the next boom-and-bust cycle for oil
© OECD/IEA 2016
No peak yet in sight, but a
slowdown in growth for oil demand
Change in oil demand by sector, 2015-2040
mb/d 6
3
0
-3
Power
generation
Buildings
Passenger
cars
Maritime
Freight
Aviation Petrochemicals
The global car fleet doubles, but efficiency gains, biofuels & electric cars reduce oil
demand for passenger cars; growth elsewhere pushes total demand higher
© OECD/IEA 2016
A wave of LNG spurs
a second natural gas revolution
Share of LNG in global long-distance gas trade
2000
525 bcm
2014
685 bcm
LNG
26%
Pipeline
Pipeline
2040
1 150 bcm
LNG
42%
Pipeline
LNG
53%
Contractual terms and pricing arrangements are all being tested as new LNG from
Australia, the US & others collides into an already well-supplied market
© OECD/IEA 2016
Coal: a rock in a hard place
Coal demand in key regions
China
2014
United States
Change 2014-2040:
India
Decreasing demand
Increasing demand
European Union
Southeast Asia
500
1 000
1 500
2 000
2 500
3 000
Mtce
The peak in Chinese demand is an inflexion point for coal; held back by concerns over
air pollution & carbon emissions, global coal use is overtaken by gas in the 2030s
© OECD/IEA 2016
Still a long way from a pathway to
energy sector decarbonisation
Energy-sector CO2 emissions
Gt 40
30
20

Early peak in emissions

Net-zero by the end of
the century
10
1990
2000
2010
2020
2030
2040
2050
2060
2070
2080
2090
2100
Current pledges fall short of limiting the temperature increase to below 2 °C;
raising ambition to 1.5 °C is uncharted territory
© OECD/IEA 2016
The Power Sector in the Frontline of
Decarbonsiation:
CO2 reductions in NPS and 450
Gt
•By technology
38
New Policies Scenario
34
Efficiency
30
Renewables
26
450 Scenario
Fuel switching
22
Nuclear
CCS
Other
18
2010
2020
2030
2040
•By sector
Power
2014
2040:
Industry
450 Scenario
Transport
Additional in New
Policies Scenario
Buildings
5
10
15
Gt
© OECD/IEA 2016
Power Sector Emissions need to Fall….
To levels seen in the 1970s ….
Global CO2 emissions from fossil-fuel combustion in the
power sector by scenario
Gt
20
Current Policies
Scenario
16
New Policies
Scenario
12
8
4
2000
450 Scenario
2010
2020
2030
2040
The New Policies Scenario almost breaks the link between rising power demand and
related CO2 emissions, but the two are completely decoupled in a 450 Scenario
© OECD/IEA 2016
The Power Sector:
Pivotal in the 450 Scenario

The power sector is transformed and almost decarbonised by
2040 in the 450 Scenario
2014
2040
23 800 TWh
33 500 TWh
Nuclear
11%
16%
18%
Hydro
Wind
16%
8%
Solar PV
67%
3%
Other renewables
20%
11%
1%
CCS
2%
9%
Unabated fossil
Fuels
© OECD/IEA 2016
18%
Low Carbon Generation in a
Decarbonising world
Growth in generation to 2040 by low-carbon technology
in the New Policies and 450 Scenarios
Renewables:
Additional
in 2040
Wind and
solar PV
Other
renewables
2014
New Policies
450 Scenario
Nuclear:
Additional
in 2040
2014
New Policies
450 Scenario
CCS:
Additional
in 2040
2014
New Policies
450 Scenario
4 000
8 000
12 000
16 000
TWh
Generation from renewables more than triples in a 450 Scenario,
compared with today; nuclear and CCS also support decarbonisation
© OECD/IEA 2016
Annual Capacity Additions of low
carbon power in the 450 Scenario
350
G
W 300
CCS
Nuclear
Other renewables
Hydro
Wind
Solar PV
250
200
150
100
50
2020
2025
2030
2035
2040
Annual capacity additions of low-carbon technologies
need to exceed 300 GW per year by the 2030s
© OECD/IEA 2016
Renewable Power Capacity is Growing
Quickly
Renewables-based power capacity additions set a new record in 2015
and exceeded those of all other fuels for the first time
GW

300
60%
Other
renewables
250
50%
Solar PV
200
40%
150
30%
Wind
Hydro
100
20%
50
1990
© OECD/IEA 2016
10%
1995
2000
2005
2010
2015
Fossil and
nuclear
Share of
renewables
(right axis)
Electricity demand slowdown
& renewable ramp-up

Renewables are leading the charge in the power sector,
meeting the lion’s share of slowing global power demand in
2014-2015
TWh
800
700
600
500
400
300
200
100
0
2011
Other renewables
© OECD/IEA 2016
2012
Solar PV
2013
Wind
2014
Hydropower
2015
Global demand increase
Total Power Sector Investment in NPS and
450 Scenarios

By the 2020s, the investment needs for the power sector in a 450
Scenario overtake those for fossil fuel supply
Power plants
Infrastructure
12
1.4
Trillion dollars (2015)
10
Other
0.9
Bioenergy
2.3
Hydro
2.5
Solar PV
8
0.5
0.6
6
1.7
4
0.0
1.8
3.9
2
0.9
2.7
1.2
Wind
CCS
1.4
2.1
2.4
,
NPS
Fossil fuels
© OECD/IEA 2016
450
NPS
Nuclear
450
NPS
450
Renewables
NPS
450
T&D
The Power Sector is the Key Deployment
Sector for Renewables
© OECD/IEA 2016
Conclusions

Energy security remains a major concern; potential vulnerabilities
are growing, so too is the range of tools available to address them

New oil market dynamics & subdued upstream investment are
ushering in a period of greater market volatility

A wave of LNG is the catalyst for a second natural gas revolution,
with far-reaching implications for gas pricing & contracts

The next chapter in the rise of renewables requires policies to push
their role in heat & transport & changes in power market design

The Paris Agreement is a framework; its impact on energy depends
on how its goals are translated into real government policy actions
© OECD/IEA 2016
www.worldenergyoutlook.org
© OECD/IEA 2016
© OECD/IEA 2016
Global Power Sector Emissions by
Scenario and Fuel
In the 450 Scenario, power sector CO2 emissions are cut by 80% by 2040,
with renewables accounting for nearly 60% of global electricity supply
Gt CO2

15
New Policies Scenario
450 Scenario
Oil
Gas
12
Coal
9
6
3
2010
© OECD/IEA 2016
2020
2030
2040 2010
2020
2030
2040
Electricity Demand and Generation
in the US in NPS
Electricity demand
5
Thousand TWh
4
3
2
1
2005 2014 2020 2030 2040
Power services*
End-use demand:
Other final uses
Transport
Services
Residential
Industry
Generation:
Other renewables
Solar
Wind
Hydro
Nuclear
Oil
Gas
Coal
Electricity generation
5
Thousand TW
4
3
2
1
2005 2014 2020 2030 2040
The US Clean Power Plan provides a major boost to renewables-based generation,
while efficiency measures restrain demand growth
© OECD/IEA 2016
Electricity Demand and Generation
in the EU in NPS
Electricity demand and generation in the European Union
in the New Policies Scenario
Electricity demand
3.5
Thousand TWh
3.0
2.5
2.0
1.5
1.0
0.5
2005 2014 2020 2030 2040
Power services*
End-use demand:
Other final uses
Transport
Services
Residential
Industry
Generation:
Other renewables
Solar
Wind
Hydro
Nuclear
Oil
Gas
Coal
Electricity generation
3.5
3.0
2.5
2.0
1.5
1.0
0.5
2005 2014 2020 2030 2040
Wind becomes the largest single source of generation
in the European Union soon after 2030
© OECD/IEA 2016
Thousand TW
Electricity Demand and Generation
in Japan in NPS
Electricity demand and generation in Japan in the
New Policies Scenario
Electricity demand
1.2
Thousand TWh
1.0
0.8
0.6
0.4
0.2
2005 2014 2020 2030 2040
Power services*
End-use demand:
Other final uses
Transport
Services
Residential
Industry
Generation:
Other renewables
Solar
Wind
Hydro
Nuclear
Oil
Gas
Coal
Electricity generation
1.2
Thousand TWh
1.0
0.8
0.6
0.4
0.2
2005 2014 2020 2030 2040
While demand barely grows, the return of nuclear and the expansion of renewables
allow for rapid growth in low-carbon power
© OECD/IEA 2016
Electricity Demand and Generation
in China in NPS
Electricity demand and generation in China in the
New Policies Scenario
Electricity demand
12
Thousand TWh
10
8
6
4
2
2005 2014 2020 2030 2040
Power services*
End-use demand:
Other final uses
Transport
Services
Residential
Industry
Generation:
Other renewables
Solar
Wind
Hydro
Nuclear
Oil
Gas
Coal
Electricity generation
12
Thousand TW
10
8
6
4
2
2005 2014 2020 2030 2040
Coal stands still while renewables, nuclear and gas meet China’s rising power needs
© OECD/IEA 2016
Global Electrcity Demand by
Region and Scenario
Latin America
Africa*
Middle East
E. Europe/Eurasia
OECD Asia Oceania
Other Asia
India
OECD Europe
OECD Americas
China
2014
Additional in 2040 in
New Policies Scenario
End-point of range:
450 Scenario
Current Policies
Scenario
2
4
6
8
10
12
Thousand TWh
Countries outside the OECD account for more than 80% of
power demand growth to 2040 in all scenarios
© OECD/IEA 2016
Electrcity Demand in 2040
NPS and 450 Scenarios
36
Thousand TWh
32
Industry
Other
Residential
Services
28
24
New Policies
Scenario
Transport
450 Scenario
Transport is the only sector that sees higher global power demand
in the 450 Scenario relative to the New Policies Scenario
© OECD/IEA 2016
Global Electricity Generation
by Fuel and Scenario
Global electricity generation by fuel and scenario
Coal
2014
Additional in 2040 in
New Policies Scenario
Gas and oil
Nuclear
End-point of range:
450 Scenario
Current Policies
Scenario
Hydro
Other renewables
2
4
6
8
10
12
14
16
Thousand TWh
Coal-fired generation sees the greatest variation across scenarios
© OECD/IEA 2016