The keynote address given by IEA Executive Director Dr. Fatih Birol the World Knowledge Forum in Seoul, 17 October 2017.

1. IEA
© OECD/IEA 2017
Global Energy Markets in Transition: Implications for
the economy, environment & geopolitics
Dr. Fatih Birol, Executive Director, International Energy Agency
World Knowledge Forum, 17 October 2017

2. © OECD/IEA 2017
The global energy context today
 Global energy markets are changing rapidly
 North America entering a new age of energy prosperity
 Asia is dominating global energy demand
 Solar at records highs, driven by policy support & cost reductions
 Electric car sales are growing exponentially
 Digitalization is having profound impacts on the energy sector
 Local air pollution is becoming a key driver of energy policy
 Energy and geopolitics are becoming increasingly interlinked

3. © OECD/IEA 2017
US shale oil production
US shale oil is shaking up global markets even at lower oil prices
US shale oil has surged in recent years on enormous cost savings & technological improvements;
The US is set to lead the growth in global oil supply over the next 5 years
1
2
3
4
5
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
mb/d

4. © OECD/IEA 2017
No peak yet in sight, but a slowdown in growth for oil demand
The global car fleet doubles, but efficiency gains, biofuels & electric cars reduce oil demand for passenger cars;
growth elsewhere pushes total demand higher
Change in oil demand by sector, 2015-2040
-3
0
3
6mb/d
Power
generation
Buildings Passenger
cars
Maritime Freight Aviation Petrochemicals

5. © OECD/IEA 2017
Natural Gas: The United States accounts for 40% of global production growth
Since 2009, US shale has added the equivalent of two Qatars to the global balance;
Middle East and China set to significantly expand production to 2022
Global natural gas production growth, 2016-22
- 40 0 40 80 120 160
Europe
Russia
Australia
China
Middle East
United States
bcm

6. © OECD/IEA 2017
Share of LNG in global gas trade
2015
695 bcm
2040
1 150 bcm
2000
525 bcm
LNG
53%
Pipeline
Pipeline
LNG
40%
Pipeline
LNG
26%
A 2nd natural gas revolution is changing the gas security equation
A wave of new LNG supply, led by Australia and the US will improve the ability of the system to
react to potential demand or supply shocks, but security of gas supply still a concern

7. © OECD/IEA 2017
Price discovery through competitive auctions effectively reduces costs along the entire value chain;
Auctions with long-term contracts will drive almost half of new capacity growth
Announced wind and solar PV average auction prices by commissioning date
Competition driving renewables costs down
0
20
40
60
80
100
120
140
160
180
2012 2013 2014 2015 2016 2017 2018 2019 2020
USD/MWh
Onshore wind
average auction
price
Solar PV average
auction price

8. © OECD/IEA 2017
Renewables closing the gap with coal
Renewable generation to expand by over a third with its share increasing from 24% in 2016 to 30% in
2022, rapidly closing the gap with coal
Electricity generation by fuel
0
2 000
4 000
6 000
8 000
10 000
12 000
2002 2006 2010 2014 2018 2022
Generation (TWh)
Coal
Natural gas
Nuclear
Renewables

9. © OECD/IEA 2017
Global energy-related CO2 emissions
5
10
15
20
25
30
35
1970 1975 1980 1985 1990 1995 2000 2005 2010 2014 2015 2016
Gt
IEA analysis shows that global CO2 emissions remained flat in 2016 for a
third consecutive year, even though the global economy grew
Global CO2 emissions flat for 3 years – an emerging trend?

10. © OECD/IEA 2017
28
30
32
34
36
2014 emissions GDP growth Renewables and fuel
mix
Energy intensity 2016 emissions
Emissions(BilliontonnesCO2e)
Energy efficiency is helping to keep emissions down
Emissions would have been 2 billion tonnes higher in 2016 if it had not been for energy efficiency
improvements and the move towards renewables and cleaner fuels
Factors influencing greenhouse gas emissions, 2014-16

11. © OECD/IEA 2017
Supply-side investment needs to be re-directed, not increased; demand-side
investment for energy efficiency, electrification & renewables needs to ramp
up significantly
Renewables and efficiency are key to global climate change mitigation
Gt
18
22
26
30
34
38
2010 2020 2030 2040
Central Scenario
Efficiency
Renewables
CCS
Nuclear
Fuel switching
Other
2 °C Scenario
Global CO2 emissions reductions in the Central & 2 °C Scenario by technology

12. © OECD/IEA 2017
The potential of clean energy technology remains under-utilised
Recent progress in some clean energy areas is promising, but many technologies still need a strong
push to achieve their full potential and deliver a sustainable energy future
Energy storage
Solar PV and onshore wind
Building construction
Nuclear
Transport – Fuel economy of light-duty vehicles
Lighting, appliances and building equipment
Electric vehicles
Energy-intensive industrial processes
Transport biofuels
Carbon capture and storage
More efficient coal-fired power
●Not on track ●Accelerated improvement needed ●On track

13. R&D funding on clean energy has remained steady at around $37 billion/year, leaving significant room
for growth
Global clean energy R&D funding needs a strong boost
Global R&D spending
on clean energy and electricity networks
Top 3 IT company R&D spenders
0
10
20
30
40
2012 2015
USD(2016)billion
Private Public
0
10
20
30
40
2012 2015
USD(2016)billion

14. © OECD/IEA 2017
Closing remarks
• While a continued focus on oil security is essential, a broader approach to energy
security is needed to reflect changing nature of natural gas & electricity markets
• New oil market dynamics & subdued upstream investment are ushering in a period of
greater market volatility
• A wave of LNG is the catalyst for a second natural gas revolution, with far-reaching
implications for gas pricing & contracts
• The next chapter in the rise of renewables requires more work on systems integration &
expanding their use beyond the power sector
• Limiting the global temperature rise to 2°C would require an energy transition of
exceptional scope, depth & speed, including stronger R&D efforts