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
Latin America China 4 060 Middle 1 050 East Brazil 480 1 030 Africa 1 540 1 000 440 Japan Africa
8%

Eurasia Europe 1 370

Eurasia OECD
8% 5% 4%

1 710
United States 2 240

Southeast Asia

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
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A mix that is slow to change
Growth in total primary energy demand
1987-2011 Gas Coal Renewables Oil Nuclear 500 1 000 1 500 2 000 2 500 3 000 Mtoe 2011-2035

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
Cumulative energy-related CO2 emissions
Gt 800 Total emissions 1900-2035

‘Carbon budget’ for 2 °C
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 22 °C ‘carbon levels are only half of OECD; the the °C 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 95 90 85 80

Other Gasoline Diesel

Other

Middle East
India

OECD

China

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
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Turbulent times for the refining sector
Refinery capacity and operation
mb/d 105 100 95 90 85 80 75 70 65 2012 2035 Other Middle East India New refinery capacity China Existing spare & excess capacity

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

Oil bypassing refineries

Oil processed demand by refineries

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:
Middle East Brazil Rest of the world Unconventional: Light tight oil Oil sands, extra-heavy oil, coal/gas-to-liquids, & other -8 -6 -4 -2 0 2 4 6 8 mb/d 2013-2025 2013-2025 2025-2035

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 5 4 Electricity generation: 60% 40% 20% Oil production:

Electricity mix by fuel, 2035
100%
80%

Other
Deepwater

3
2 1

Other renewables Bioenergy Hydropower Nuclear 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 European Union Japan China Net additions Additions Retirements

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 1 800 1 500 1 200 900 600 300 Other United renewables States Solar PV Japan

Other renewables Solar PV

Other ASEAN renewables

Solar PV Africa
Wind

Wind China

Latin America Hydro

Wind European Union Hydro Europe, Japan and United States

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 5× 4× 3× Reduction from 2013 2035 2013 2003 Electricity

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
European Union +1% Japan 7% 7% +3% +2% +2%

Today

36%

10%

3%

2% India

United States -3% -10%

China

Middle East

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 9 6 3 To Asia

$/MBtu 12
9 6

Average import price Liquefaction, shipping & regasification United States price

3
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

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