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Global energy markets: today & tomorrow

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Dr. Fatih Birol, the Executive Director of the International Energy Agency, gave a talk at Imperial College London on 20 March 2018 to discus how new technologies - including electrification & digitalisation – create opportunities, but also risks & uncertainty.

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Global energy markets: today & tomorrow

  1. 1. © OECD/IEA 2018 Global energy markets: today and tomorrow Dr. Fatih Birol Executive Director, International Energy Agency IEA Imperial College London, 20 March 2018
  2. 2. © OECD/IEA 2018 Tipping the energy world off its axis • Four large-scale upheavals in global energy are underway: - The United States is turning into the undisputed global leader for oil & gas - Solar PV is on track to be the cheapest source of new electricity in many countries - China’s new drive to “make the skies blue again” is recasting its role in energy - The future is electrifying, spurred by cooling, electric vehicles & digitalisation • There are many possible pathways ahead & many potential pitfalls if governments or industry misread the signs of change
  3. 3. © OECD/IEA 2018 Old ways of understanding the world of energy are losing value as countries change roles: the Middle East is fast becoming a major energy consumer & the United States a major exporter India takes the lead, as China energy growth slows Change in energy demand, 2016-40 (Mtoe) India 1 005 420 Southeast Asia China 790 United States -30 Japan -50 Europe -200 270Central and South America 485 Africa 135 Eurasia 480 Middle East
  4. 4. © OECD/IEA 2018 Booming non-OPEC supply growth reshapes world oil market… …more than covers demand growth for next three years. By 2023, non-OPEC supply grows by 5.2 mb/d, with US, Canada and Norway key sources of additional supplies Changes in global oil supply capacity, 2017-2023 -1.0 0.0 1.0 2.0 3.0 4.0 US Brazil Canada Iraq Iran Norway Colombia Indonesia China Mexico Angola Venezuela mb/d
  5. 5. © OECD/IEA 2018 China net crude oil imports double the US in 2023 0 2 4 6 8 10 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 mb/d US China India Indian imports, too, surpass the US in 2023 as shale growth reduces US import dependence Net crude oil imports
  6. 6. © OECD/IEA 2018 US becomes undisputed leader of oil & gas production The US is already switching to become a net exporter of gas and becomes a net exporter of oil in the 2020s, helped also by the demand-side impact of fuel efficiency and fuel switching 25 30 35 5 10 15 20 1980 1990 2000 2010 2020 2030 2040 mboe/d Shale oil Shale gas Other unconventionals Conventional oil & gas Oil and gas production in the United States
  7. 7. © OECD/IEA 2018 Strong outlook as LNG ushers in a new global gas order Growing gas import requirements in developing Asia, Japan and Korea are largely met by LNG, with exports from the US and Australia accelerating a shift to a flexible, liquid global market 706 bcm in 2016 Gas exportersGas importers 39% shipped by LNG 1 230 bcm in 2040 59% shipped by LNG Australia Russia & Caspian Middle East Other Africa US & Canada Australia Russia & Caspian Middle East Other AfricaUS & Canada Asia 37% Europe 52% Other Asia 60% Europe 35% Other
  8. 8. © OECD/IEA 2018 The cost of wind and solar PV have fallen sharply, with further reductions expected; cost-optimal integration requires interconnections, flexible generation, storage and demand response Wind and solar PV average costs Wind and solar PV costs being driven down by competition 0 50 100 150 200 250 300 350 2008 2010 2012 2014 2016 2018 2020 2022 USD 2016/MWh Offshore wind Solar PV Onshore wind
  9. 9. © OECD/IEA 2018 A new leader emerging on nuclear Without additional lifetime extensions, the largest nuclear fleets face significant declines, while China is soon set to overtake the United States as the global leader Nuclear power generation capacity 40 80 120 2010 2020 2030 2040 GW United States China France
  10. 10. © OECD/IEA 2018 The future is electrifying India adds the equivalent of today’s European Union to its electricity generation by 2040, while China adds the equivalent of today’s United States Electricity generation by selected region Middle East 2 000 4 000 6 000 8 000 10 000 Africa Southeast Asia European Union India United States China TWh 2016 Growth to 2040 Sources of global electricity demand growth Industrial motors Cooling Large appliances Connected & small appliances Electric vehicles Other Japan
  11. 11. © OECD/IEA 2018 Oil & gas dependent economies set to face structural challenges  The shale revolution is creating a near-term squeeze on market opportunities for some of the world’s main oil & gas exporters in the Middle East, Russia and beyond  Shale is also putting downward pressure on oil & gas prices, redoubling the impacts on hydrocarbon-dependent economies  Looking further ahead, the rise of advanced energy technologies is spurring uncertainty over future oil & gas demand trends  Unprecedented set of short- and long-term challenges facing some major resource-holders, posing questions about their economic sustainability  IEA to analyse the vulnerabilities, strategic responses and possible implications for energy security of today’s price and policy environment in major resource-holders
  12. 12. © OECD/IEA 2018 Progress in electricity access is seen in all world regions, but sub-Saharan Africa lags behind Million people 200 400 600 2000 2005 2010 2016 Many countries, led by India, are on track to achieving full electrification by 2030, but – despite recent progress – efforts in sub-Saharan Africa need to redouble Sub-Saharan Africa India Other Asia 2020 2025 2030 India Other Asia Sub-Saharan Africa Population without electricity access Million 200 400 600 2000 2005 2010 2016 Sub-Saharan Africa India Other Asia 2020 2025 2030
  13. 13. © OECD/IEA 2018 A new strategy for energy & sustainable development The Sustainable Development Scenario reduces CO2 emissions in line with the objectives of the Paris Agreement, while also tackling air pollution and achieving universal energy access Sustainable Development Scenario New Policies Scenario Sustainable Development Scenario Global CO2 emissions by scenario 10 20 30 40 2000 2010 2020 2030 2040Gt
  14. 14. © OECD/IEA 2018 Stronger policies for a more sustainable world Only 15% additional investment is required to 2040 to achieve the Sustainable Development Scenario, with two-thirds of energy supply investment going to electricity generation & networks The Sustainable Development Scenario in 2040 580bcm additional gas demand 2times more efficient than today 3250GW global solar PV capacity 875million electric vehicles
  15. 15. © OECD/IEA 2018 Conclusions  The oil & gas boom in the United States is shaking up the established order, with major implications for markets, trade flows, investment & energy security  The versatility of natural gas means that it is well placed to grow, but it cannot afford price spikes or uncertainty over methane leaks  China continues to shape global trends, but in new ways as its “energy revolution” drives cost reductions for a wide range of clean energy technologies  Our strategy for sustainable energy shows that concerted action to address climate change is fully compatible with global goals on universal access & air quality  Electrification & digitalisation creates new opportunities in the global energy system, but also risks, such as cybersecurity, that policy makers have to address
  16. 16. © OECD/IEA 2018 Modernising the IEA: three pillars  Making the IEA a truly global agency  Mexico became 30th member country in February 2018  Since 2015, Brazil, China, India, Indonesia, Morocco, Singapore and Thailand have all become Associate members  Extended IEA family now accounts for over 70% of the world’s total energy consumption, up from less than 40% two years ago  Strengthening and broadening the commitment to energy security  Enhancing the focus on energy efficiency and clean energy technologies
  17. 17. © OECD/IEA 2018 www.iea.org IEA
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Dr. Fatih Birol, the Executive Director of the International Energy Agency, gave a talk at Imperial College London on 20 March 2018 to discus how new technologies - including electrification & digitalisation – create opportunities, but also risks & uncertainty.

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