The global energy system is in danger of falling short of the hopes and expectations placed upon it. Turmoil in parts of the Middle East has rarely been greater since the oil shocks in the 1970; conflict between Russia and Ukraine has reignited concerns about gas security; nuclear power, which for some countries plays a strategic role in energy security, faces an uncertain future; and electricity remains inaccessible to many people, including two out of every three people in sub-Saharan Africa. The point of departure for the climate negotiations, due to reach a climax in 2015, is not encouraging: a continued rise in global greenhouse-gas emissions and stifling air pollution in many of the world’s fast-growing cities. Advances in technology and efficiency give some reasons for optimism, but sustained political efforts will be essential to change energy trends for the better. The World Energy Outlook 2014, with projections and analysis extended to 2040 for the first time, provides insights that can help to ensure that the energy system is changed by design, rather than just by events.

1. © OECD/IEA 2014
OECD Parliamentary Days
25 February 2015

2. © OECD/IEA 2014
Changing dynamics of global demand
Energy demand by region
As China slows, then India, Southeast Asia, the Middle East and parts of Africa &
Latin America take over as the engines of global energy demand growth.
2 000
4 000
6 000
8 000
10 000
1990 2000 2010 2020 2030 2040
Mtoe
OECD
Rest of world
China
China
Rest of world
OECD

3. © OECD/IEA 2014
Rich in resources
In the last 5 years, almost 30% of global oil & discoveries were in sub-Saharan Africa;
Hydro
Wind
Oil
Oil
Oil
OilGas
Gas
Oil
Coal
Gas
Fossil fuels
Solar
the region has vast untapped renewables potential, notably hydropower & solar

4. © OECD/IEA 2014
Power sector investment, regional cooperation & improved management of
resources & revenues are three pillars of a brighter sub-Saharan energy future
Less than 50%
More than 50%
Share of population with
access to electricity:
Rich in resources, but poor in supply
2012 2020 2025 2030 2035 2040
200
400
600
800
Million
Population without electricity

5. © OECD/IEA 2014
2013 2020 2030 20402015
Instability in the Middle East
a major risk to oil markets
Oil production growth
The short-term picture of a well-supplied market should not obscure future risks as
demand rises to 104 mb/d & reliance grows on Iraq & the rest of the Middle East
+5
+10
+15
-5
2013 2020 2030 20402015
Net decline in output from other producers
Increase to 2040: 14 mb/d
mb/d
Increase to 2040:
14 mb/d
Middle East
Brazil
Canada
United States
& reliance grows on Iraq & the rest of the Middle East
in United States, Canada, Brazil & the Middle East

6. © OECD/IEA 2014
Looking ahead on the oil price
 Against a backdrop of weaker demand, buoyant supply in North
America has brought prices down – but can it keep them down?
 Lower prices are starting to curtail upstream spending plans, with
implications for future supply
 Over time, squeezed cash flow would constrain the capacity of
North America & Brazil to act as engines of global supply growth
 An oil price at current levels could provide some breathing space to
major oil importers, boosting demand & GDP
 The fall in export revenue a painful blow to some major OPEC
producers & Russia, affecting economy & geopolitics

7. © OECD/IEA 2014
The oil price is hitting 2015
upstream spending plans
Global upstream oil and gas investment
Announced spending cuts for 2015 are highest (at 20-40%) in North America & Brazil;
for US tight oil, a decision to stop drilling feeds through quickly into production levels
250
500
750
Billiondollars
2012 2013 2014 2015 (est.)
17%

8. © OECD/IEA 2014
Gas on the way to become first fuel,
with role of LNG on the rise
Main sources of regional LNG supply
Share of LNG rises in global gas trade, pushed by a near-tripling in liquefaction sites:
LNG brings more integrated & secure gas markets, but only limited relief on prices
Middle East
Australia
US & Canada
East Africa
Russia
North Africa
West Africa
Other
Middle East
Southeast Asia
West Africa
Australia
North Africa
Other
100
200
300
400
500
600bcm
2012 2040

9. © OECD/IEA 2014
Retirements add to the investment
challenge in the power sector
Power capacity by source, 2013-2040
Despite limited demand growth, OECD countries account for
one-third of capacity additions – to compensate for retirements & to decarbonise
2013
Retirements Additions
2040
2 000
4 000
6 000
8 000
10 000
12 000GW
Renewables
Nuclear
Oil
Gas
Coal

10. © OECD/IEA 2014
Nuclear capacity grows by 60%, but no
nuclear renaissance in sight
Net capacity change in key regions, 2013-2040
By 2040, an expanded nuclear fleet has saved almost 4 years of current CO2 emissions
& for some countries has improved energy security & balances of energy trade
-20 0 20 40 60 80 100 120 140
European Union
Japan
United States
Russia
India
China
GW

11. © OECD/IEA 2014
50
100
150
200
1990 2000 2010 2020 2030 2040
GW
2013
Nuclear power: public concerns
must be heard and addressed
Retirements of nuclear power capacity
1990-2040
Key public concerns include plant operation, decommissioning & waste management;
Spent nuclear fuel
European Union United States Japan Others
38% of today’s
capacity to retire
by 2040
1971-2012
350 thousand tonnes
1971-2040
705 thousand tonnes
1971-2040: 705 thousand tonnes
United States
European
Union
JapanChina
Canada
Russia Korea
India
Other
By 2040, almost 200 reactors are retired & the amount of spent fuel doubles& the amount of spent fuel doubles

12. © OECD/IEA 2014
The entire global CO2 budget to 2100 is used up by 2040 – Paris must send a strong
signal for increasing low-carbon investment four times beyond current levels
The 2 °C goal – last chance in Paris?
World CO2 budget for 2 °C
~2300 Gt
25%
50%
75%
100%
Share of budget used
in Central Scenario
1900-2012
2012-2040
Average annual low-carbon
investment, 2014-2040
Central
Scenario
For 2°C
target
2013
CCS
Nuclear
Renewables
Efficiency
The entire global CO2 budget to 2100 is used up by 2040
0.5
1.0
1.5
2.0
Trilliondollars(2013)

13. © OECD/IEA 2014
Navigating a stormy energy future
 Geopolitical & market uncertainties are set to propel energy
security high up the global energy agenda
 Volatility in the Middle East raises short-term doubts on
investment & spells trouble for future oil supply
 Nuclear power can play a role in energy security & carbon
abatement – but financing & public concerns are key issues
 Without clear direction from Paris in 2015, the world is set for
warming well beyond the 2 °C goal
 Far-sighted government policies are essential to steer the global
energy system on to a safer course

14. © OECD/IEA 2014
www.worldenergyoutlook.org
email: weo@iea.org