World Energy Outlook: Energy Challenges Ahead
World Energy Outlook: Energy Challenges Ahead Laura Cozzi International Energy Agency 2005 Annual Forum on Energy and Sustainability 6-8 November, Madrid INTERNATIONAL ENERGY AGENCY
Reference Scenario: The Challenges
INTERNATIONAL ENERGY AGENCY
World Primary Energy Demand 18 000 16 000 14 000 Oil
Mtoe
12 000 10 000
Gas
8 000 6 000
Coal
4 000 2 000
Other renewables
0 1970 1971
INTERNATIONAL ENERGY AGENCY
1980
1990
2000
2010
2020
Nuclear Hydro 2030
Oil, gas and coal together account for 83% of the growth in energy demand between now and 2030 in the Reference Scenario
Inter-Regional Trade in World FossilFuel Supply 6 000
Trade as % of world demand
5 000
Mtoe
4 000 3 000
63%
26%
15%
46% 14%
15%
2 000 1 000 0 2002
2030
2002
Oil Domestic consumption
INTERNATIONAL ENERGY AGENCY
2030
Gas
2002
2030
Coal Traded between regions
Energy trade between regions more than doubles by 2030, most of it still in the form of oil
Oil Flows & Major Chokepoints: The “Dire Straits”
INTERNATIONAL ENERGY AGENCY
The risk of an oil-supply disruption will grow as trade and flows through key maritime and pipeline chokepoints expand
World Energy-Related CO2 Emissions 20 000
Mt of CO2
16 000 12 000
8 000 4 000
0 1970 OECD
INTERNATIONAL ENERGY AGENCY
1980
1990
2000
Transition economies
2010
2020
2030
Developing countries
Global emissions grow 62% between now & 2030, with developing countries’ emissions overtaking OECD’s in the 2020s
Cumulative Energy Investment 2003-2030 OECD North America OECD Europe OECD Pacific Transition economies China Other Asia Middle East Africa Latin America 0
500
1 000
1 500
2 000
2 500
3 000
3 500
billion $ (2000)
Coal
INTERNATIONAL ENERGY AGENCY
Oil
Gas
Power sector absorbs 62% of global energy investment in the period 2003-2030
Alternative Policy Scenario
INTERNATIONAL ENERGY AGENCY
Electricity
World Alternative Policy Scenario z Strong endorsement of G8 meeting at Gleanegles z Current prices favor WAPS z Analyses impact of new environmental & energy-security policies worldwide
¾ OECD: Policies currently under consideration ¾ Non-OECD: Also includes more rapid declines in
energy intensity resulting from faster deployment of more-efficient technology
z Impact on fuel-mix, environment & cost z Oil, gas & electricity prices change INTERNATIONAL ENERGY AGENCY
World Primary Energy Demand in Reference & Alternative Scenarios 17 000 16 000
Reference Scenario
15 000 14 000 Mtoe
13 000 12 000
Alternative Scenario
11 000 10 000 0
≈
- 1 000 - 2 000 2000
2005 Coal
INTERNATIONAL ENERGY AGENCY
2010 Oil
2015 Gas
2020
Nuclear
2025
2030
Renewables
Coal demand falls most among fossil fuels, partially offset by more use of renewables
Average Vehicle Fuel Efficiency for New Light Duty Vehicles in Selected Regions, 2002
litres per 100 km
10
5
0 OECD North America
China
India
Japan
OECD Europe
The scope for improving vehicle efficiency is large in many regions – including OECD countries
INTERNATIONAL ENERGY AGENCY
Oil Demand for Transport in the Reference and Alternative Scenarios by Region 2 000 1 600
+44 %
M toe
1 200
+26 % +159 %
800
+127 %
400 0 OECD 2002
INTERNATIONAL ENERGY AGENCY
2030 Reference Scenario
non-OECD 2030 Alternative Scenario
Oil demand for transport is almost 10% lower in the WAPS compare to the RS in 2030
Reduction in Oil Demand in the Alternative vs. Reference Scenario, 2030 Power generation 8%
Other 4%
Residential and services 11%
Industry 13%
Transport 64%
Oil savings = 12.8 mb/d
INTERNATIONAL ENERGY AGENCY
Oil savings in 2030 would be equivalent to the combined current production of Saudi Arabia and UAE
Net Gas Imports in the Alternative and Reference Scenarios, 2030 600
bcm
400
200
0 OECD North America
Reference Scenario
OECD Europe
OECD Asia
Alternative Scenario
Net gas imports are lower in all major importing regions INTERNATIONAL ENERGY AGENCY
Share of Non-Hydro Renewables in Electricity Generation, 2030 OECD Europe OECD North America OECD Pacific East Asia Latin America China South Asia Middle East Africa Transition economies 0%
5%
10%
Reference Scenario
INTERNATIONAL ENERGY AGENCY
15%
20%
Alternative Scenario
25% RS
New policies would boost the share of non-hydro-renewables in all regions – most in the EU in absolute terms
OECD CO2 Emissions in the Reference and Alternative Scenarios 16 000
Mt of CO 2
15 000 14 000 13 000 12 000 11 000 1990
2000 Reference Scenario
INTERNATIONAL ENERGY AGENCY
2010
2020
2030
Alternative Scenario
OECD CO2 emissions peak around 2020 – 25% higher than in 1990
Contributory Factors in CO2 Reduction 2002-2030 100%
5%
10% 80%
4%
8%
21%
12%
17%
20%
15%
21% 60%
5%
7%
1%
7% 10%
40%
58% 20%
63%
67%
Transition economies
Developing countries
49%
0% World
OECD
End-use efficiency gains Fuel switching in end uses Increased nuclear in power generation Increased renewables in power generation Changes in the fossil-fuel mix in power generation
Improvements in end-use efficiency contribute for more than half of decrease in emissions, and renewables use for 20%
INTERNATIONAL ENERGY AGENCY
Difference in Electricity Investment in the Alternative vs. Reference Scenario 2003-2030 1 000
billion dollars (2000)
500
Efficiency measures
Avoided supply-side investment
Difference
0
- 500 -1 000
Additional demand-side investment
Generation, Transmission and Distribution
-1 500 -2 000
Additional investments on the demand side are more than offset by lower investment on the supply side INTERNATIONAL ENERGY AGENCY
Deferred Investment Scenario
INTERNATIONAL ENERGY AGENCY
World Proven Oil and Gas Reserves Oil Non-MENA 39% Saudi Arabia 20% Other MENA 14%
Natural gas Kuwait 8%
Iran 10%
Other MENA 8% UAE 3%
INTERNATIONAL ENERGY AGENCY
Non-MENA 55%
Iraq 9%
Saudi Arabia 4%
Qatar 14%
Iran 16%
MENA share of global oil and gas reserves is much higher than its share of current production, suggesting strong potential for growth
Deferred Investment Scenario z How would global energy markets evolve if investment MENA upstream oil industry grew slower than in the Reference Scenario? z Investment might be deferred because of ¾ Deliberate policy on the part of producers ¾ External financing constraints
z Investment is assumed to remain constant as share of GDP in each country z Results in a reduction of between 10% and 40% in oil investment vis-à-vis the RS z MENA oil production falls progressively versus the RS z Oil prices are driven higher, dragging up gas & coal prices z MENA gas production is also lower due to Lower associated oil/gas output INTERNATIONAL ENERGY AGENCY
Reduced global gas demand & call on MENA gas
Summary & Conclusions
INTERNATIONAL ENERGY AGENCY
Conclusions z If governments stick with current policies, global energy needs will be more than 50% higher in 2030 than today z Fossil fuels will continue to dominate the energy mix z Projected market trends raise serious concerns ¾ Increased vulnerability to supply disruptions ¾ Rising CO2 emissions ¾ Huge energy-investment needs
z More vigorous consuming-country policies could curb demand growth & reduce reliance on MENA oil and gas Far more radical policy action & technology breakthroughs
would be needed to reverse these trends
z Upstream MENA investment is a critical uncertainty Constraining the long-term expansion of productive capacity
will be in neither producers’ nor consumers’ interests INTERNATIONAL ENERGY AGENCY
World Energy Outlook 2005 z Answers the question: how much oil and gas will the Middle East and North Africa export through to 2030? z Focuses on Saudi Arabia, Iran, Iraq, Kuwait, the UAE, Qatar, Egypt, Libya and Algeria z Analyses three distinct scenarios: Reference, Deferred Investment and Alternative Policy z Draws implications for global energy markets, international oil and gas prices and energy security INTERNATIONAL ENERGY AGENCY
z Will be presented in Madrid on 15 December
Thank you! [email protected] www.worldenergyoutlook.org
INTERNATIONAL ENERGY AGENCY
Reference Scenario: The Challenges
INTERNATIONAL ENERGY AGENCY
World Primary Energy Demand 18 000 16 000 14 000 Oil
Mtoe
12 000 10 000
Gas
8 000 6 000
Coal
4 000 2 000
Other renewables
0 1970 1971
INTERNATIONAL ENERGY AGENCY
1980
1990
2000
2010
2020
Nuclear Hydro 2030
Oil, gas and coal together account for 83% of the growth in energy demand between now and 2030 in the Reference Scenario
Inter-Regional Trade in World FossilFuel Supply 6 000
Trade as % of world demand
5 000
Mtoe
4 000 3 000
63%
26%
15%
46% 14%
15%
2 000 1 000 0 2002
2030
2002
Oil Domestic consumption
INTERNATIONAL ENERGY AGENCY
2030
Gas
2002
2030
Coal Traded between regions
Energy trade between regions more than doubles by 2030, most of it still in the form of oil
Oil Flows & Major Chokepoints: The “Dire Straits”
INTERNATIONAL ENERGY AGENCY
The risk of an oil-supply disruption will grow as trade and flows through key maritime and pipeline chokepoints expand
World Energy-Related CO2 Emissions 20 000
Mt of CO2
16 000 12 000
8 000 4 000
0 1970 OECD
INTERNATIONAL ENERGY AGENCY
1980
1990
2000
Transition economies
2010
2020
2030
Developing countries
Global emissions grow 62% between now & 2030, with developing countries’ emissions overtaking OECD’s in the 2020s
Cumulative Energy Investment 2003-2030 OECD North America OECD Europe OECD Pacific Transition economies China Other Asia Middle East Africa Latin America 0
500
1 000
1 500
2 000
2 500
3 000
3 500
billion $ (2000)
Coal
INTERNATIONAL ENERGY AGENCY
Oil
Gas
Power sector absorbs 62% of global energy investment in the period 2003-2030
Alternative Policy Scenario
INTERNATIONAL ENERGY AGENCY
Electricity
World Alternative Policy Scenario z Strong endorsement of G8 meeting at Gleanegles z Current prices favor WAPS z Analyses impact of new environmental & energy-security policies worldwide
¾ OECD: Policies currently under consideration ¾ Non-OECD: Also includes more rapid declines in
energy intensity resulting from faster deployment of more-efficient technology
z Impact on fuel-mix, environment & cost z Oil, gas & electricity prices change INTERNATIONAL ENERGY AGENCY
World Primary Energy Demand in Reference & Alternative Scenarios 17 000 16 000
Reference Scenario
15 000 14 000 Mtoe
13 000 12 000
Alternative Scenario
11 000 10 000 0
≈
- 1 000 - 2 000 2000
2005 Coal
INTERNATIONAL ENERGY AGENCY
2010 Oil
2015 Gas
2020
Nuclear
2025
2030
Renewables
Coal demand falls most among fossil fuels, partially offset by more use of renewables
Average Vehicle Fuel Efficiency for New Light Duty Vehicles in Selected Regions, 2002
litres per 100 km
10
5
0 OECD North America
China
India
Japan
OECD Europe
The scope for improving vehicle efficiency is large in many regions – including OECD countries
INTERNATIONAL ENERGY AGENCY
Oil Demand for Transport in the Reference and Alternative Scenarios by Region 2 000 1 600
+44 %
M toe
1 200
+26 % +159 %
800
+127 %
400 0 OECD 2002
INTERNATIONAL ENERGY AGENCY
2030 Reference Scenario
non-OECD 2030 Alternative Scenario
Oil demand for transport is almost 10% lower in the WAPS compare to the RS in 2030
Reduction in Oil Demand in the Alternative vs. Reference Scenario, 2030 Power generation 8%
Other 4%
Residential and services 11%
Industry 13%
Transport 64%
Oil savings = 12.8 mb/d
INTERNATIONAL ENERGY AGENCY
Oil savings in 2030 would be equivalent to the combined current production of Saudi Arabia and UAE
Net Gas Imports in the Alternative and Reference Scenarios, 2030 600
bcm
400
200
0 OECD North America
Reference Scenario
OECD Europe
OECD Asia
Alternative Scenario
Net gas imports are lower in all major importing regions INTERNATIONAL ENERGY AGENCY
Share of Non-Hydro Renewables in Electricity Generation, 2030 OECD Europe OECD North America OECD Pacific East Asia Latin America China South Asia Middle East Africa Transition economies 0%
5%
10%
Reference Scenario
INTERNATIONAL ENERGY AGENCY
15%
20%
Alternative Scenario
25% RS
New policies would boost the share of non-hydro-renewables in all regions – most in the EU in absolute terms
OECD CO2 Emissions in the Reference and Alternative Scenarios 16 000
Mt of CO 2
15 000 14 000 13 000 12 000 11 000 1990
2000 Reference Scenario
INTERNATIONAL ENERGY AGENCY
2010
2020
2030
Alternative Scenario
OECD CO2 emissions peak around 2020 – 25% higher than in 1990
Contributory Factors in CO2 Reduction 2002-2030 100%
5%
10% 80%
4%
8%
21%
12%
17%
20%
15%
21% 60%
5%
7%
1%
7% 10%
40%
58% 20%
63%
67%
Transition economies
Developing countries
49%
0% World
OECD
End-use efficiency gains Fuel switching in end uses Increased nuclear in power generation Increased renewables in power generation Changes in the fossil-fuel mix in power generation
Improvements in end-use efficiency contribute for more than half of decrease in emissions, and renewables use for 20%
INTERNATIONAL ENERGY AGENCY
Difference in Electricity Investment in the Alternative vs. Reference Scenario 2003-2030 1 000
billion dollars (2000)
500
Efficiency measures
Avoided supply-side investment
Difference
0
- 500 -1 000
Additional demand-side investment
Generation, Transmission and Distribution
-1 500 -2 000
Additional investments on the demand side are more than offset by lower investment on the supply side INTERNATIONAL ENERGY AGENCY
Deferred Investment Scenario
INTERNATIONAL ENERGY AGENCY
World Proven Oil and Gas Reserves Oil Non-MENA 39% Saudi Arabia 20% Other MENA 14%
Natural gas Kuwait 8%
Iran 10%
Other MENA 8% UAE 3%
INTERNATIONAL ENERGY AGENCY
Non-MENA 55%
Iraq 9%
Saudi Arabia 4%
Qatar 14%
Iran 16%
MENA share of global oil and gas reserves is much higher than its share of current production, suggesting strong potential for growth
Deferred Investment Scenario z How would global energy markets evolve if investment MENA upstream oil industry grew slower than in the Reference Scenario? z Investment might be deferred because of ¾ Deliberate policy on the part of producers ¾ External financing constraints
z Investment is assumed to remain constant as share of GDP in each country z Results in a reduction of between 10% and 40% in oil investment vis-à-vis the RS z MENA oil production falls progressively versus the RS z Oil prices are driven higher, dragging up gas & coal prices z MENA gas production is also lower due to Lower associated oil/gas output INTERNATIONAL ENERGY AGENCY
Reduced global gas demand & call on MENA gas
Summary & Conclusions
INTERNATIONAL ENERGY AGENCY
Conclusions z If governments stick with current policies, global energy needs will be more than 50% higher in 2030 than today z Fossil fuels will continue to dominate the energy mix z Projected market trends raise serious concerns ¾ Increased vulnerability to supply disruptions ¾ Rising CO2 emissions ¾ Huge energy-investment needs
z More vigorous consuming-country policies could curb demand growth & reduce reliance on MENA oil and gas Far more radical policy action & technology breakthroughs
would be needed to reverse these trends
z Upstream MENA investment is a critical uncertainty Constraining the long-term expansion of productive capacity
will be in neither producers’ nor consumers’ interests INTERNATIONAL ENERGY AGENCY
World Energy Outlook 2005 z Answers the question: how much oil and gas will the Middle East and North Africa export through to 2030? z Focuses on Saudi Arabia, Iran, Iraq, Kuwait, the UAE, Qatar, Egypt, Libya and Algeria z Analyses three distinct scenarios: Reference, Deferred Investment and Alternative Policy z Draws implications for global energy markets, international oil and gas prices and energy security INTERNATIONAL ENERGY AGENCY
z Will be presented in Madrid on 15 December
Thank you! [email protected] www.worldenergyoutlook.org
INTERNATIONAL ENERGY AGENCY
