World Energy Outlook 2010: Global Commodities Forum

Global Commodities Forum
31 January - 1 February 2011
World Energy Outlook 2010
By
Mr. David Fyfe, Head, Oil Industry & Markets Division, International Energy Agency
"The views expressed are those of the author and do not necessarily reflect the views of UNCTAD"
World Energy Outlook 2010

David Fyfe Head of Oil Industry & Markets Division, IEA
presented to UNCTAD Global Commodities Forum 31 January 2011
OECD/IEA 2010
The context: a time of unprecedented uncertainty

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 will it herald a golden age for gas? Copenhagen/Cancun & 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?
OECD/IEA 2010
Emerging economies dominate the growth in demand for all fuels

Incremental primary energy demand in the New Policies Scenario, 2008-2035
Coal Oil Gas Nuclear Hydro Other renewables - 600 - 300 0 300 600 900 1 200 1 500 Mtoe OECD China Rest of world
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
OECD/IEA 2010
Fossil-fuel subsidies are distorting price signals

Economic value of fossil-fuel consumption subsidies by country, 2009
Billion dollars 70 60 50 40 30 20 10 Iran Saudi Arabia Russia India China Egypt Venezuela Indonesia UAE Uzbekistan Iraq Kuwait Pakistan Argentina Ukraine Algeria Malaysia Thailand Bangladesh Mexico Turkmenistan South Africa Qatar Kazakhstan Libya 0 Electricity
(generated from fossil fuels)
Gas Oil Coal
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
OECD/IEA 2010
Booming demand for mobility in the emerging economies drives up oil use
Passenger vehicles in the New Policies Scenario
Million 1 600 1 400 1 200 1 000 800 600 400 200 0 1980 1990 2000 2008 2020 2035 China Other non-OECD United States Other OECD
The global car fleet will continue to surge as more & more people in China & other emerging economies realise their mobility goals, overshadowing modest OECD growth
OECD/IEA 2010
Oil production less reliant on crude

World oil production by type in the New Policies Scenario
100 Unconventional oil 80 60 40 20 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Natural gas liquids Crude oil - fields yet to be developed or found Crude oil currently producing fields Total crude oil
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
OECD/IEA 2010
mb/d
More oil from fewer producers

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

Annual expenditure on net imports of oil
Billion dollars (2009) 500 2.8% 400 300 200 1.4% 100 0 United States European Union Japan 3.1% 1.8% 2.6% 2.2% 2.2% 1971-2008 average 2008 2011 (assuming $100 avg. oil price) % Share of GDP MER 1.0% 2.7%
High oil prices are a key risk to derail the fragile economic recovery among developed nations both consumers and producers suffer under such a scenario But an oil burden reaching 5% globally will also hit developing country importers hard
OECD/IEA 2010
A golden age for gas?

Gas is set to play a key role in meeting the worlds energy needs
> demand rises by 44% to 2035, led by China & Middle East
Unconventional gas accounts for 35% of the increase in global supply to 2035, with new non-US producers emerging 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
OECD/IEA 2010
Coal remains the backbone of global electricity generation

Coal-fired electricity generation by region in the New Policies Scenario
TWh 12 000 10 000 8 000 6 000 4 000 2 000 0 1990 2000 2010 2020 2030 2035 China India Other non-OECD OECD
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
OECD/IEA 2010
Renewables enter the mainstream.

Renewable primary energy demand in the New Policies Scenario
OECD Pacific Africa India Brazil China United States European Union 0 100 200 300 400 Mtoe
2008 2035
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
OECD/IEA 2010
.but only if there is enough government support

Annual global support for renewables in the New Policies Scenario
Billion dollars (2009) 210 180 150 120 90 60 30 0 2007 2008 2009 2015 2020 2025 2030 2035
Biofuels Renewables-based electricity
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
OECD/IEA 2010
China becomes the market leader in low-carbon technologies

Chinas share of cumulative global additions to 2035 for selected technologies
30% 105 GW 335 GW 20% 85 GW 10% 8.5 million vehicles
Capacity additions Passenger car sales
0% Solar PV Wind Nuclear Electric & plug-in hybrids
Given the sheer scale of Chinas 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
OECD/IEA 2010
Caspian energy riches could enhance global energy security

Caspian oil & gas outlook in the New Policies Scenario
mb/d bcm 2000 2009 2020 2035 6 5 4 3 2 1 0 Oil net exports Inland oil consumption 350 300 250 200 150 100 50 0 2000 2009 2020 2035 Gas net exports Inland gas consumption
Kazakhstan drives an increase in Caspian oil production to 5.2 mb/d by 2035, while Turkmenistan & Azerbaijan push up gas production to over 310 bcm
OECD/IEA 2010
The 450 Scenario: a roadmap from 3.5C to 2C

The 450 Scenario assumes vigorous implementation of Copenhagen Accord/ Cancun Agreement pledges to 2020 & much stronger action thereafter Cancun Agreement commits countries to reducing emissions a step forward from Copenhagen but much deeper cuts are needed in 2020 to meet goal of 2C increase Countries emission reductions pledges result in an uncertainty of 3.9 Gt over the level of abatement pledged to 2020 In the 450 Scenario energy-related CO2 emissions peak before 2020
OECD/IEA 2010
Achieving the 2C goal would require rapid decarbonisation of global energy

Average annual change in CO2 intensity in the 450 scenario
1990-2008 0% -1% -2% -3% -4% -5% -6% A four-fold increase needed 2008-2020 2020-2035
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
OECD/IEA 2010
Climate policies could dramatically improve oil security

World oil demand by scenario
mb/d 100 96 92 88 84 80 2009 2015 2020 2025 2030 2035 New Policies Scenario 450 Scenario
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
OECD/IEA 2010
Concluding remarks
Recently announced policies can make a difference, but fall well short of what is needed for a genuinely secure & sustainable energy future The age of cheap oil is over, though policy action could bring lower international prices than would otherwise be the case Stronger penetration of natural gas can have profound implications for energy markets and environment Renewables are entering the mainstream, but long-term support is needed to boost their competitiveness Lack of ambition in Copenhagen/Cancun has increased the cost of achieving the 2C goal & made it less likely to happen
OECD/IEA 2010

World Energy Outlook 2010: Global Commodities Forum

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Global Commodities Forum

31 January - 1 February 2011

World Energy Outlook 2010

World Energy Outlook 2010

The context: a time of unprecedented uncertainty

Emerging economies dominate the growth in demand for all fuels

Fossil-fuel subsidies are distorting price signals

Gas Oil Coal

Oil production less reliant on crude

More oil from fewer producers

The implications of rising oil prices on the economy

A golden age for gas?

Coal remains the backbone of global electricity generation

Renewables enter the mainstream.

.but only if there is enough government support

Biofuels Renewables-based electricity

China becomes the market leader in low-carbon technologies

Capacity additions Passenger car sales

0% Solar PV Wind Nuclear Electric & plug-in hybrids

Caspian energy riches could enhance global energy security

The 450 Scenario: a roadmap from 3.5C to 2C

Achieving the 2C goal would require rapid decarbonisation of global energy

Climate policies could dramatically improve oil security

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