Det Energipolitiske Udvalg 2006-07
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INTERNATIONAL ENERGY AGENCY
World Energy
Outlook 2006
Dr. Fatih Birol
Chief Economist
International Energy Agency
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The Reference Scenario:
World Primary Energy Demand
18 000
16 000
14 000
12 000
Mtoe
10 000
8 000
6 000
4 000
2 000
0
1970
Other renewables
Nuclear
Biomass
Gas
Coal
Oil
1980
1990
2000
2010
2020
2030
Global demand grows by more than half over the next quarter of a
century, with coal use rising most in absolute terms
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Reference Scenario:
Increase in World Oil Supply, 2004-2030
25
20
Other
mb/d
15
Iran
10
5
Iraq
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
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Reference Scenario:
World Inter-regional Natural Gas Trade
1 000
800
600
bcm
400
200
0
2000
2004
2010
Pipelines
2015
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
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Annual Increase in Coal Demand
500
400
million tonnes
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
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Reference Scenario:
Energy-Related CO
2
Emissions by Fuel
50
40
billion tonnes
30
20
10
0
1990
Coal
2004
2010
Oil
2015
2030
Gas
Increase of
14.3 Gt (55%)
Half of the projected increase in emissions comes from new power
stations, mainly using coal & mainly located in China & India
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Reference Scenario:
Energy-Related
CO
2
emissions by Region
15
12
Gigatonnes of CO
2
9
6
3
0
1990
Rest of non-OECD
China
Rest of OECD
United States
2000
2010
2020
2030
China overtakes the US as the world’s biggest emitter before 2010, though
its per capita emissions reach just 60% of those of the OECD in 2030
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Reference Scenario:
Cumulative Investment, 2005-2030
$20.2 trillion (in $2005)
Electricity
56%
$11.3 trillion
Oil 21%
$4.3 trillion
Biofuels 1%
$3.9 trillion
Gas 19%
Coal 3%
Investment needs exceed $20 trillion – $3 trillion more than previously
projected, mainly because of higher unit costs
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Global Upstream Oil & Gas Investment:
Impact of Cost Inflation
300
actual
index (year 2000 = 100)
250
200
150
100
Year 2000
forecast
50
2000
2002
Nominal
2004
2006
2008
2010
Adjusted for cost inflation
Annual upstream investment doubled to $225 billion between 2000 and
2005, but most of the increase was due to cost inflation
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Access to oil reserves
National companies
only
37%
Limited access -
national companies
dominant
13%
Production sharing
11%
Iraq
9%
Concession
30%
Total reserves = 1 290 billion barrels
Access to much of the world’s remaining oil reserves is restricted
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Energy Poverty: Annual Deaths from
Indoor Air Pollution
3
2.8
2
millions
1.6
1.2
1
1.3
0
Malaria
Smoke from
biomass
Tuberculosis
HIV/AIDS
Source: World Health Organization
The number of people using dirty traditional biomass for cooking is set to
grow from 2.5 billion now to 2.7 billion in 2030 absent new policies
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The Energy Future Absent New Policies
Security of oil supply is threatened
Oil production in non-OPEC countries is set to peak
Production will be increasingly concentrated in a small
number of countries
Gas security is also a growing concern
Europe’s production has already peaked - US to follow
Import dependence in both regions & other key regions
will grow absent new policies
Investment
over the next decade
will lock in
technology that will remain in use for up to 60 years
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INTERNATIONAL ENERGY AGENCY
Alternative Policy Scenario
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Alternative Policy Scenario:
Mapping a Better Energy Future
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
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Alternative Policy Scenario:
OECD Oil Imports
36
34
5.2 mb/d
mb/d
32
30
28
26
2005
1.8 mb/d
2010
2015
2020
2025
2030
Reference Scenario
Alternative Policy Scenario
In stark contrast with the Reference Scenario, OECD oil imports level off
soon after 2015 & then begin to decline
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The Alternative Policy Scenario:
Global Oil Supply
120
100
OPEC market share
80
mb/d
60
40
20
0
2005
Alternative Policy Scenario
OPEC share in APS (right axis)
2015
2030
Reduction compared with Reference Scenario
OPEC share in RS (right axis)
35%
40%
45%
50%
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
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The Alternative Policy Scenario:
Gas Imports, 2004-2030
800
- 90 bcm
600
bcm
400
200
- 46 bcm
- 33 bcm
0
United States
2004
European Union
Reference Scenario 2030
Japan
Alternative Policy Scenario 2030
Gas imports in the main consuming regions are significantly lower in
the APS compared with the RS
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The Alternative Policy Scenario:
Key Policies for CO
2
Reduction
42
Increased nuclear (10%)
Increased renewables (12%)
Power sector efficiency & fuel (13%)
Electricity end-use efficiency (29%)
Fossil-fuel end-use efficiency (36%)
38
Reference Scenario
Gt of CO
2
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
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Alternative Policy Scenario:
Change in Energy-Related CO
2
emissions, 2004-2030
United States
European Union
Japan
Russia
China
India
Rest of World
-1
0
1
2
3
4
5
6
Emissions in 2030 are below
current levels
Gt
Alternative Policy Scenario
Reference Scenario
Emissions in OECD countries peak by 2015 and then decline – to below
current levels by 2030 in the EU & Japan
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The Alternative Policy Scenario :
Key policies that Make a Global Difference
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
coal-fired plants
Increased use of
renewables
Increased reliance on
nuclear
US
EU
China
A dozen policies in the US, EU & China account for around 40% of the
global emissions reduction in 2030 in the Alternative Policy Scenario
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The Alternative Policy Scenario:
Cost Effectiveness of Policies
Total energy investment – from production to
consumption – are lower than in the RS
Consumers spend $2.4 trillion
more
in 2005-2030
in more efficient cars, refrigerators etc
..but producers need to spend almost $3 trillion
less
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
equipments (mainly cars) saves $2.4 in oil imports
The higher initial investments by consumers are
more than outweighed by fuel-cost savings
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The Alternative Policy Scenario:
Investment Payback Periods
9
8
7
6
years
5
4
3
2
1
0
2005-2015
2016-2030
2005-2015
2016-2030
Cars
Electrical equipment (refrigerators, washing machines, lighting, air conditioning)
Motors in industy
OECD
Non-OECD
The payback periods of new policies are very short, especially in
non-OECD countries for policies introduced before 2015
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Going Beyond the Alternative Policy Scenario:
BAPS CO
2
Emissions Savings
8
7
6
1 Gt
2 Gt
CCS in power generation
Renewables-based generation
Nuclear power-plants
Efficiency of power plants
Biofuels and hybrids
Efficiency and CCS in industry
Efficiency of electricity use
BAPS additional reduction goal of 8
Gt of CO
2
Gt of CO
2
5
1 Gt
4
1 Gt
3
2
1
0
1 Gt
1 Gt
1 Gt
The scale and the speed of the necessary technological change
represent a new order of challenge
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Renewed Interest in Nuclear Power
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
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Impact of a 50% Increase in Fuel Price
on Generating Costs
40%
increase in generating cost
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
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Outlook for Biofuels
Interest in biofuels is soaring
Biofuels can help address twin threats of growing
energy insecurity & climate change through
Increased diversity of geographic & fuel sources
Lower 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 in the medium term
Long-term prospects hinge on new technology
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Share of Biofuels in Road-Transport
Fuel Consumption
32%
28%
24%
20%
16%
12%
8%
4%
0%
World
2004
United States European Union
Brazil
2030 Reference Scenario
2030 Alternative Policy Scenario
Biofuels are set to play a much larger role in meeting world road-
transport fuel demand
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Summing Up
The Reference Scenario projects a vulnerable, dirty
and expensive global energy system
The WEO maps out a cleaner, cleverer and more
competitive energy future based on alternative
policies
Economic cost of these policies would be more
than outweighed by the economic benefits
Strong political will and urgent government action
is needed to create clear incentives to change
existing investment patterns
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