weo 2008 wec 19th march rome
DESCRIPTION
TRANSCRIPT
© OECD/IEA - 2009© OECD/IEA - 2009
© OECD/IEA - 2009
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
1980 1990 2000 2010 2020 2030
Mto
e
Other renewables
Hydro
Nuclear
Biomass
Gas
Coal
Oil
World energy demand expands by 45% between now and 2030 – an average rate of increase of 1.6% per year – with coal accounting for more than a third of the overall rise
World primary energy demand in tWorld primary energy demand in the he Reference Scenario: this is unsustainable!Reference Scenario: this is unsustainable!World primary energy demand in tWorld primary energy demand in the he Reference Scenario: this is unsustainable!Reference Scenario: this is unsustainable!
Office of the Chief Economi
st
© OECD/IEA - 2009
The continuing importance of coal in The continuing importance of coal in world primary energy demandworld primary energy demandThe continuing importance of coal in The continuing importance of coal in world primary energy demandworld primary energy demand
0%
20%
40%
60%
80%
100%
Non-OECD OECD
All other fuelsCoal
Shares of incremental energy demand Reference Scenario, 2008 - 2030Increase in primary demand, 2000 - 2007
Demand for coal has been growing faster than any other energy source & is projected to account for more than a third of incremental global energy demand to 2030
Mto
e
0
100
200
300
400
500
600
700
800
900
1 000
Coal Oil Gas Renewables Nuclear
4.8%
1.6% 2.6%
2.2%
0.8%
% = average annual rate of growth
Office of the Chief Economi
st
© OECD/IEA - 2009
Power-generation capacity under Power-generation capacity under construction worldwideconstruction worldwidePower-generation capacity under Power-generation capacity under construction worldwideconstruction worldwide
0
50
100
150
200
250
Coal Gas Oil Nuclear Hydro Wind Rest ofrenewables
GW Non-OECD
OECD
Total = 613 GW
Over 600 GW of power-generation capacity is currently under construction worldwide & is expected to be operational before 2015, 3/4 of this is outside the OECD
Office of the Chief Economi
st
© OECD/IEA - 2009© OECD/IEA - 2009
© OECD/IEA - 2009
Change in oil demand by region Change in oil demand by region in the Reference Scenario, 2008-2030in the Reference Scenario, 2008-2030Change in oil demand by region Change in oil demand by region in the Reference Scenario, 2008-2030in the Reference Scenario, 2008-2030
-2 0 2 4 6 8 10
China
Middle East
India
Other Asia
Latin America
E. Europe/Eurasia
Africa
OECD North America
OECD Europe
OECD Pacific
mb/d
All of the growth in oil demand comes from non-OECD, with China contributing 43%, the Middle East & India each about 20% & other emerging Asian economies most of the rest
Office of the Chief Economi
st
© OECD/IEA - 2009
0
20
40
60
80
100
120
1990 2000 2010 2020 2030
mb/
d
Natural gas liquidsNon-conventional oilCrude oil - yet to be Developed or foundCrude oil - currently producing fields
World oil production by source World oil production by source in the Reference Scenarioin the Reference ScenarioWorld oil production by source World oil production by source in the Reference Scenarioin the Reference Scenario
Even if oil demand was to remain flat to 2030, 45 mb/d of gross capacity – roughly four times the capacity of Saudi Arabia – would ne needed just to offset decline from existing fields.
45 mb/d
Office of the Chief Economi
st
© OECD/IEA - 2009
A sea change: world oil & gas production by A sea change: world oil & gas production by company type in the company type in the Reference ScenarioReference ScenarioA sea change: world oil & gas production by A sea change: world oil & gas production by company type in the company type in the Reference ScenarioReference Scenario
0
20
40
60
80
100
120
2007 2015 2030
mb/
d
0
750
1 500
2 250
3 000
3 750
4 500
2006 2015 2030
Bcm
NOCs Private companies
Oil Gas
Almost 80% of the projected increase in output of both oil & gas comes from national companies – on the assumption that investment is forthcoming
Office of the Chief Economi
st
© OECD/IEA - 2009
The 11 members of GECF account for 2/3 of global gas reserves,while just 2 of them – Russia & Iran – account for over 40% .
World natural gas reserves and Gas Exporting World natural gas reserves and Gas Exporting Countries Forum (GECF) Countries Forum (GECF) World natural gas reserves and Gas Exporting World natural gas reserves and Gas Exporting Countries Forum (GECF) Countries Forum (GECF)
World total: 179 Tcm (2008)
Office of the Chief Economi
st
© OECD/IEA - 2009© OECD/IEA - 2009
© OECD/IEA - 2009
World’s top five energy-related COWorld’s top five energy-related CO22 emitters emitters in the Reference Scenarioin the Reference ScenarioWorld’s top five energy-related COWorld’s top five energy-related CO22 emitters emitters in the Reference Scenarioin the Reference Scenario
2007 2020
Gt rank Gt rank
China 6.1 1 10.0 1
USA 5.8 2 5.8 2
EU27 4.0 3 3.9 3
Russia 1.6 4 1.9 5
India 1.3 5 2.2 4
The top 5 emitters account for 70% of world emissions; China overtook the USA as the largest emitter in 2007, while India becomes the fourth largest before 2020
Office of the Chief Economi
st
© OECD/IEA - 2009
Energy-related COEnergy-related CO22 emissions from existing & emissions from existing & future power plants in the Reference Scenariofuture power plants in the Reference ScenarioEnergy-related COEnergy-related CO22 emissions from existing & emissions from existing & future power plants in the Reference Scenariofuture power plants in the Reference Scenario
Although 75% of power sector CO2 emissions in 2020 are already “locked-in”, investments in the next decade will be critical to a low-carbon future in the longer term
0
2
4
6
8
10
12
14
16
18
2005 2010 2015 2020 2025 2030
Gig
aton
nes
Future plants in OECD
Future plants in non-OECD
Existing plants in non-OECD
Existing plants in OECD“Window for action”
Office of the Chief Economi
st
© OECD/IEA - 2008
Reductions in energy-related COReductions in energy-related CO22 emissions in the climate-policy scenariosemissions in the climate-policy scenariosReductions in energy-related COReductions in energy-related CO22 emissions in the climate-policy scenariosemissions in the climate-policy scenarios
While technological progress is needed to achieve some emissions reductions, efficiency gains and deployment of existing low-carbon energy account for most of the savings
20
25
30
35
40
45
2005 2010 2015 2020 2025 2030
Gig
aton
nes
Reference Scenario 550 Policy Scenario 450 Policy Scenario
CCS Renewables & biofuels
Nuclear
Energy efficiency
550 Policy
Scenario
450 Policy
Scenario
54%
23%
14% 9%
Office of the Chief Economi
st
© OECD/IEA - 2009
World energy-related COWorld energy-related CO22 emissions emissionsin 2030 by scenarioin 2030 by scenarioWorld energy-related COWorld energy-related CO22 emissions emissionsin 2030 by scenarioin 2030 by scenario
OECD countries alone cannot put the world onto a 450-ppm trajectory, even if they were to reduce their emissions to zero
World
0
5
10
15
20
25
30
35
40
Reference Scenario 450 Policy Scenario
Gig
aton
nes
Office of the Chief Economi
st
© OECD/IEA - 2009
Key results of the post-2012 Key results of the post-2012 climate-policy analysisclimate-policy analysisKey results of the post-2012 Key results of the post-2012 climate-policy analysisclimate-policy analysis
550 Policy Scenario Corresponds to a c.3C global
temperature rise Energy demand continues to
expand, but fuel mix is markedly different
CO2 price in OECD countries reaches $90/tonne in 2030
Additional investment equal to 0.25% of GDP
450 Policy Scenario Corresponds to a c.2C global
temperature rise Energy demand grows, but half as
fast as in Reference Scenario Rapid deployment of low-carbon
technologies Big fall in non-OECD emissions CO2 price in 2030 reaches
$180/tonne OPEC production almost 13mb/d
higher in 2030 than today Additional investment equal to 0.6%
of GDP
Office of the Chief Economi
st
© OECD/IEA - 2009
Cumulative European Union COCumulative European Union CO22 savings savings with 20% reduction target in 2020with 20% reduction target in 2020Cumulative European Union COCumulative European Union CO22 savings savings with 20% reduction target in 2020with 20% reduction target in 2020
EU cumulative savings over 2008-2020 would represent only 40% of China’s annual CO2 emissions in 2020
0
2
4
6
8
10
12
China
ANNUAL 2020 CO2 emissions
Gig
aton
nes
EU-27
CUMULATIVE savingswith 20% CO2 emissions reduction target
(2008 - 2020)
Office of the Chief Economi
st
© OECD/IEA - 2009© OECD/IEA - 2009
© OECD/IEA - 2009
How is the financial & economic crisisHow is the financial & economic crisisaffecting energy investment?affecting energy investment?
How is the financial & economic crisisHow is the financial & economic crisisaffecting energy investment?affecting energy investment?
Difficulties in obtaining credit & higher cost of capital> Increased aversion to risk> Paralysed credit markets> Plunging share values have increased debt-equity ratios
Lower prices & cash flows have made new investments less attractive
Falling demand caused by economic recession has reduced urgency & appetite for suppliers to invest
Office of the Chief Economi
st
© OECD/IEA - 2009
The crisis is driving down demand & prices for now, but impact on demand, investment, imports & emissions in the medium to long term may be negative
Impact on energy security Impact on energy security & climate change& climate change
Impact on energy security Impact on energy security & climate change& climate change
Office of the Chief Economi
st
© OECD/IEA - 2009
Demand-side investmentDemand-side investmentDemand-side investmentDemand-side investment
Financing problems & lower energy prices are discouraging investment in replacing energy-consuming capital stock
Will also delay the development & commercialisation of more energy-efficient demand-side technologies> Car manufacturers are particularly badly placed to invest because of
a slump in car sales & severe financial problemsStronger government policies to support energy efficiency could
redress the balance
Office of the Chief Economi
st
© OECD/IEA - 2009
Implications of oil/gas upstream Implications of oil/gas upstream investment cutbacksinvestment cutbacks
Implications of oil/gas upstream Implications of oil/gas upstream investment cutbacksinvestment cutbacks
Upstream oil projects involving 2 mb/d of peak capacity delayed so far, more to follow?
OPEC has announced delays at 35 projects, though no detailsCutbacks in spending on producing assets will push up decline ratesDemand in near term may fall more than the loss of capacity……but if demand rebounds quickly with economic recovery, spare capacity may
be squeezed in medium term given investment lead times & financing problems LNG liquefaction capacity is set to rise in near term, but no new investment
decisions are due to be taken in 2009
Office of the Chief Economi
st
© OECD/IEA - 2009
Impact of the crisis on power-sector Impact of the crisis on power-sector investmentinvestment
Impact of the crisis on power-sector Impact of the crisis on power-sector investmentinvestment
Falling demand & financing problems are driving investment cutbacks (little hard data to hand as yet)> Equipment suppliers (turbines etc) report a drop in orders of up to a third
Uncertainty about future electricity demand is a key risk factor influencing power-company investment decisions
Impact varies depending on the region and on the regulatory regime (much bigger in deregulated markets)
Cost of capital has risen sharply due to higher perceived riskCapital-intensive renewables & nuclear especially vulnerable to
financing difficulties & lower fossil-fuel prices > Renewable projects protected by guaranteed feed-in tariffs in some cases> But many wind developers are small (BBB-type rated) & are struggling to
raise finance
Office of the Chief Economi
st
© OECD/IEA - 2009
Impact of financial crisis on global investment Impact of financial crisis on global investment in renewable energyin renewable energy
Impact of financial crisis on global investment Impact of financial crisis on global investment in renewable energyin renewable energy
Q4
0
5
10
15
20
25
30
Billi
on U
S $
04-
Q1
04-
Q2
04-
Q3
04-
Q4
05-
Q1
05-
Q2
05-
Q3
05-
Q4
06-
Q1
06-
Q2
06-
Q3
06-
Q4
07-
Q1
07-
Q2
07-
Q3
07-
Q4
08-
Q1
08-
Q2
08-
Q3
08-
Office of the Chief Economi
st
Investment in renewables has been hit by the rising cost of credit and the fall in oil & gas prices which has reduced the economic incentive for “clean”
energy.
Source: NEF
Investment in Q4 2008 was 24% lower than 2007 and 20% lower than Q3
© OECD/IEA - 2009
Implications for energy industry Implications for energy industry structure & ownershipstructure & ownership
Implications for energy industry Implications for energy industry structure & ownershipstructure & ownership
Office of the Chief Economi
st
All energy sectors likely to see consolidation as large firms with robust balance sheets take over or buy assets from smaller firms
New wave of oil & gas deals in offing?> Majors, strongest independents & some national companies well
placed to acquire assets from distressed operators> Chinese national oil companies remain active in investing abroad,
including recent deals in Venezuela, Brazil, Iran & Africa Dominance of traditional power companies, with stable grid
businesses, could rise as independents struggle to secure financeSome coal companies struggling with heavy debt
> China’s Chinalco to take 18% stake in Rio Tinto Group in return for $19.5 billion cash injection
© OECD/IEA - 2009
Summary & conclusionsSummary & conclusionsSummary & conclusionsSummary & conclusions
Energy and geopolitics will be increasingly interconnected
We need a major decarbonisation of the world’s energy system – Copenhagen is crucial
Addressing environmental issues will substantially improve energy security
The financial crisis is undermining investment in low carbon energy –
there is an urgent need for governments to respond decisively
The Italian G8 Presidency can provide a bridge between the G20 and Copenhagen by calling for the financial crisis to be addressed in “tandem” with climate change