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 22 °C carbonbudget’ is being spent much too quickly the °C ‘carbon budget © 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 demand processed 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