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• Caio César Cristófalo

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World Energy Outlook 2013 London, 12 November

© OECD/IEA 2013

The world energy scene today  Some long-held tenets of the energy sector are being rewritten

 Countries are switching roles: importers are becoming exporters…  … and exporters are among the major sources of growing demand  New supply options reshape ideas about distribution of resources  But long-term solutions to global challenges remain scarce

 Renewed focus on energy efficiency, but CO2 emissions continue to rise  Fossil-fuel subsidies increased to $544 billion in 2012  1.3 billion people lack electricity, 2.6 billion lack clean cooking facilities  Energy prices add to the pressure on policymakers

 Sustained period of high oil prices without parallel in market history  Large, persistent regional price differences for gas & electricity © OECD/IEA 2013

The engine of energy demand growth moves to South Asia Primary energy demand, 2035 (Mtoe)

Share of global growth 2012-2035

Eurasia

Latin America

Europe 1 370 United States

8%

China

1 710

4 060

2 240

Middle 1 050 East Brazil 480

1 030 Africa

1 540

Eurasia OECD

1 000

Africa 440

Japan

Southeast Asia

5% 4%

8%

Middle 10% East

65%

India Non-OECD Asia

China is the main driver of increasing energy demand in the current decade, but India takes over in the 2020s as the principal source of growth © OECD/IEA 2013

A mix that is slow to change Growth in total primary energy demand 1987-2011 Gas

2011-2035

Coal Renewables Oil Nuclear 500

1 000

1 500

2 000

2 500

3 000 Mtoe

Today's share of fossil fuels in the global mix, at 82%, is the same as it was 25 years ago; the strong rise of renewables only reduces this to around 75% in 2035 © OECD/IEA 2013

Emissions off track in the run-up to the 2015 climate summit in France ‘Carbon budget’ for 2 °C

Cumulative energy-related CO2 emissions Total emissions 1900-2035

Gt 800

Remaining budget

600 Non-OECD Non-OECD 49% OECD

400

1750-2011 ‘Carbon budget’ for 2 °C 2012-2035

200 OECD 51% 1900 -1929

1930 -1959

1960 -1989

1990 -2012

2013 -2035

Non-OECD countries account for a rising share of emissions, although 2035 per capita levels are only half of OECD; the the22°C°C‘carbon carbonbudget’ budget is being spent much too quickly © OECD/IEA 2013

Oil use grows, but in a narrowing set of markets Oil demand by sector region mb/d 105 100

Other Gasoline

95

Diesel

90

Other

Middle East India

85

OECD

China

80

75 2012

Transport

Petrochemicals

Other sectors

2035

China becomes the largest consumer of oil by 2030, as OECD oil use drops; demand is concentrated in transport, where diesel use surges by 5.5 mb/d,, & petrochemicals © OECD/IEA 2013

Turbulent times for the refining sector Refinery capacity and operation mb/d 105

Other Middle East India New refinery capacity China

100 95 90

Existing spare & excess capacity

85 80

Oil bypassing refineries

Spare & excess capacity with 10 mb/d at risk of closure by 2035

Oil processed demand by refineries

75 70 65 2012

2035

More oil bypassing the refining system and new capacity in growing non-OECD markets piles pressure on existing refiners, especially in Europe © OECD/IEA 2013

Two chapters to the oil production story Contributions to global oil production growth Conventional: 2013-2025

Middle East

2025-2035

Brazil Rest of the world Unconventional: 2013-2025

Light tight oil Oil sands, extra-heavy oil, coal/gas-to-liquids, & other -8

-6

-4

-2

0

2

4

6

8 mb/d

The United States (light tight oil) & Brazil (deepwater) step up until the mid-2020s, but the Middle East is critical to the longer-term oil outlook © OECD/IEA 2013

Brazil cuts a distinctive profile Brazil oil production mb/d 6

Electricity mix by fuel, 2035 100%

Oil production:

Other

5

80%

Deepwater

4 60%

Electricity generation:

3

Other renewables 40%

Bioenergy

2

Hydropower 20%

Nuclear

1

Fossil fuels 2012

2025

2035

Brazil

World

Complex deepwater projects see Brazil joining the top ranks of global oil producers, while the domestic power mix remains one of the least carbon-intensive in the world © OECD/IEA 2013

Capacity to change? Power generation capacity additions and retirements, 2013-2035 United States Net additions Additions

European Union

Retirements Japan China

India Middle East 200

400

600

800

1 000

1 200

1 400

1 600 GW

China & India together build almost 40% of the world’s new capacity; 60% of capacity additions in the OECD replace retired plants © OECD/IEA 2013

Renewables power up around the world Growth in electricity generation from renewable sources, 2011-2035 TWh 2 100

Other renewables

Other ASEAN renewables

Other United renewables States

Solar PV

Solar PV Africa

Solar PV Japan

Wind China

1 800 1 500 1 200 900 600 300

Wind European Union Hydro Europe, Japan and United States

Wind Latin America Hydro Hydro

India

China

India, Latin America, ASEAN and Africa

The expansion of non-hydro renewables depends on subsidies that more than double to 2035; additions of wind & solar have implications for power market design & costs © OECD/IEA 2013

Who has the energy to compete? Ratio of industrial energy prices relative to the United States Natural gas

Electricity

5× Reduction from 2013

4×

2035 2013 2003

3×

2003 2× United States

Japan

European Union

China

Japan

European Union

China

Regional differences in natural gas prices narrow from today’s very high levels but remain large through to 2035; electricity price differentials also persist © OECD/IEA 2013

An energy boost to the economy? Share of global export market for energy-intensive goods +3%

European Union +1%

Today

36%

10%

+2%

+2%

7%

3%

2%

China

Middle East

India

Japan 7%

United States -3% -10%

The US, together with key emerging economies, increases its export market share for energy-intensive goods, while the EU and Japan see a sharp decline © OECD/IEA 2013

LNG from the United States can shake up gas markets Indicative economics of LNG export from the US Gulf Coast (at current prices) $/MBtu 18 15 12

$/MBtu 12

9

9

6

6

3

3 To Asia

Average import price Liquefaction, shipping & regasification United States price

To Europe

New LNG supplies accelerate movement towards a more interconnected global market, but high costs of transport between regions mean no single global gas price © OECD/IEA 2013

Orientation for a fast-changing energy world  China, then India, drive the growing dominance of Asia in global

energy demand & trade  Technology is opening up new oil resources, but the Middle East

remains central to the longer-term outlook  Regional price gaps & concerns over competitiveness are here

to stay, but there are ways to react – with efficiency first in line  The transition to a more efficient, low-carbon energy sector

is more difficult in tough economic times, but no less urgent

© OECD/IEA 2013