1) Global energy investment of $2.7 trillion per year is needed through 2040 to meet energy demand growth while transitioning to a lower-carbon future. Investment choices in the energy sector have long-term implications due to large infrastructure with long lifespans. 2) Oil markets are gradually returning to balance as low prices reduce non-OPEC supply, helping push the market towards balance. However, world upstream oil and gas investment continues to fall, raising concerns about reliance on the Middle East. 3) Achieving a 2-degree Celsius pathway will require massive additional investments in efficiency, renewables, nuclear, and other low-carbon technologies compared to current trends. G7 countries must take a

1. Energy Investment for Global Growth
Dr. Fatih Birol
Executive Director, International Energy Agency
G7 Energy Ministerial meeting 2016
Kitakyushu, Japan
1 - 2 May 2016

2. © IEA 2016
Global energy investment challenge
Cumulative investment in the energy sector to 2040
Energy investment of USD 2.7 trillion per year is needed to 2040; investment choices
have long-term implications as sector depends on large-scale, high-cost assets
Energy efficiency
Power
Oil
Gas
Coal
Biofuels
$60 trillion

3. © IEA 2016
Oil markets are gradually returning
to balance as low prices take their toll
In 2016 non-OPEC supply is set to drop by over 700 kb/d, the largest fall
since 1992, helping to push the oil market towards balance
-2
-1
0
1
2
3
2014 2015 2016 2017 2018 2019 2020 2021
mb/d
Demand Growth Supply Growth Stock change
Oil market balance

4. © IEA 2016
World upstream oil and gas investment
continues to fall
World upstream oil and gas investment continues to fall; raising the prospect
of increasing reliance on the Middle East in the future
0
100
200
300
400
500
600
700
800
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-23%
-19%
ISDbillions(nominal)

5. © IEA 2016
Cross border supply cut
Terrorist attack - sabotage
Natural disaster
Technical disruption
Tight market / shortages
Algeria
2013/2016
Egypt/Sinaï
2011-2015
Libya 2011-2013
Nigeria 2014-2016
Yemen
2012-2016
Argentinian -
Chile 2004
Russian-Ukrainian conflict
2006/2009/2014
India-Nepal
2015Katrina & Rita
2005 Japan 2011
Argentina
2004-2015
Polar Vortex
2014-2015
Mexico
2012-2014
Italy
2006/2012
Chile
2004-2007
Brazil
2014-2015
UK 2006/ 2010/2013
China
2009/2013/2015
Indonesia
2007
Canada 2014
India 2013
Pakistan
2011-
2015
Egypt
2014Venezuela
2010-2011 Barbados
2015
Trinidad &
Tobago
2010-2015
Unavailable LNG capacity has almost tripled over the past four years, highlighting
security & investment challenges in key producer countries
Lots of new LNG is coming online,
but safeguarding gas security is important
Angola 2014

6. © IEA 2016
Electricity security:
a multifaceted challenge
Electricity security is an emerging challenge with many dimensions; the IEA is
involved in all key aspects of this issue in collaboration with the G7 and partners
Capacity adequacy and system security
Security of fuel supply
Infrastructure resilience
Grid integration of variable renewables
Cybersecurity

7. © IEA 2016
2005 2014 2040
10%
20%
30%
40%
Action on energy efficiency
must begin to match its potential
Energy efficiency policies are being introduced in more countries and
sectors; they continue to slow demand growth, but more can be done
Share of energy consumption covered by mandatory efficiency regulations
Industry
Buildings
Transport
• Steam boilers
• Process heat
• Motors
• Heating / cooling
• Lighting / appliances
• Cars
• Trucks

8. © IEA 2016
A 2°C pathway requires more technological
innovation, investment & policy ambition
Massive additional investments in efficiency, renewables, nuclear power
and other low-carbon technologies are required to reach a 2°C pathway
16
20
24
28
32
36
40
2010 2015 2020 2025 2030 2035 2040
Gt
Trend post-COP21
2°C Scenario
17.9 Gt
Energy efficiency
Fuel & technology
switching in end-uses
Renewables
Nuclear
CCS
Other
CO2 emissions in a post-COP21 world

9. © IEA 2016
G7 countries must take a long-term view
on their energy systems
• Be wary of cuts in upstream oil and gas investment – they pose
threats to energy security and could lead to greater price volatility
• Gas can play a critical role in low-carbon transition; do not take gas
supply security for granted
• Make sure electricity systems are prepared for the future in terms
of policy, regulation and infrastructure
• Mandate and incentivise energy efficiency improvements in order
to harness its vast potential across all sectors of the economy
• Make all energy decisions within the context of climate change