World Energy Outlook 2013 by Dr Fatih Birol, IEA Chief Economist

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As delivered at the 5th Annual Atlantic Council Energy & Economic Summit

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World Energy Outlook 2013 by Dr Fatih Birol, IEA Chief Economist

  1. 1. World Energy Outlook 2013 Dr Fatih Birol IEA Chief Economist Atlantic Council Energy &Economic Summit Istanbul, 22 November © OECD/IEA 2013
  2. 2. The world energy scene today  Some long-held tenets of the energy sector are being rewritten  Countries are switching roles: importers are becoming exporters…  … and exporters are among the major sources of growing demand  New supply options reshape patterns of trade  But long-term solutions to global challenges remain scarce  Renewed focus on energy efficiency, but CO2 emissions continue to rise  Fossil-fuel subsidies increased to $544 billion in 2012  1.3 billion people lack electricity, 2.6 billion lack clean cooking facilities  Energy prices add to the pressure on policymakers  Sustained period of high oil prices without parallel in market history  Large, persistent regional price differences for gas & electricity © OECD/IEA 2013
  3. 3. The engine of energy demand growth moves to South Asia Primary energy demand, 2035 (Mtoe) Share of global growth 2012-2035 Eurasia Latin America Europe 1 370 United States 4 060 2 240 Middle 1 050 East Brazil 480 1 030 Africa 1 540 5% 4% 8% China 1 710 Eurasia OECD 1 000 Africa 440 Japan Southeast Asia 8% Middle 10% East 65% India Non-OECD Asia China is the main driver of increasing energy demand in the current decade, but India takes over in the 2020s as the principal source of growth © OECD/IEA 2013
  4. 4. A mix that is slow to change Growth in total primary energy demand 1987-2011 Gas 2011-2035 Coal Renewables Oil Nuclear 500 1 000 1 500 2 000 2 500 3 000 Mtoe Today's share of fossil fuels in the global mix, at 82%, is the same as it was 25 years ago; the strong rise of renewables only reduces this to around 75% in 2035 © OECD/IEA 2013
  5. 5. Two chapters to the oil production story Contributions to global oil production growth Middle East 2013-2025 2025-2035 Brazil United States Rest of the world -2 0 2 4 6 8 mb/d The United States (light tight oil) & Brazil (deepwater) step up until the mid-2020s, but the Middle East is critical to the longer-term oil outlook © OECD/IEA 2013
  6. 6. Renewables power up around the world Growth in electricity generation from renewable sources, 2011-2035 TWh 2 100 Other renewables 1 800 1 500 1 200 900 600 300 Other United renewables States Solar PV Japan Wind European Union Hydro Europe, Japan and United States Other ASEAN renewables Solar PV Solar PV Africa Wind Wind China Latin America Hydro Hydro India China India, Latin America, ASEAN and Africa The expansion of non-hydro renewables depends on subsidies that more than double to 2035; additions of wind & solar have implications for power market design & costs © OECD/IEA 2013
  7. 7. Who has the energy to compete? Ratio of industrial energy prices relative to the United States Natural gas Electricity 5× Reduction from 2013 4× 2035 2013 2003 3× 2003 2× United States Japan European Union China Japan European Union China Regional differences in natural gas prices narrow from today’s very high levels but remain large through to 2035; electricity price differentials also persist © OECD/IEA 2013
  8. 8. Energy-intensive industries need to count their costs Share of energy in total production costs for selected industries 10% 20% 30% 40% 50% 60% 70% 80% 90% Petrochemicals Fertilisers Aluminium Cement Iron & steel Pulp & paper Glass Energy-intensive sectors worldwide account for around one-fifth of industrial value added, one-quarter of industrial employment and 70% of industrial energy use. © OECD/IEA 2013
  9. 9. An energy boost to the economy? Share of global export market for energy-intensive goods +3% European Union +1% Today 36% 10% +2% +2% 7% 3% 2% China Middle East India Japan 7% United States -3% -10% The US, together with key emerging economies, increases its export market share for energy-intensive goods, while the EU and Japan see a sharp decline © OECD/IEA 2013
  10. 10. LNG from the United States can shake up gas markets Indicative economics of LNG export from the US Gulf Coast (at current prices) $/MBtu 18 15 12 $/MBtu 12 9 9 6 6 3 3 To Asia Average import price Liquefaction, shipping & regasification United States price To Europe New LNG supplies accelerate movement towards a more interconnected global market, but high costs of transport between regions mean no single global gas price © OECD/IEA 2013
  11. 11. Orientation for a fast-changing energy world  China, then India, drive the growing dominance of Asia in global energy demand & trade  Technology is opening up new oil resources, but the Middle East remains central to the longer-term outlook  Regional price gaps & concerns over competitiveness are here to stay, but there are ways to react – with efficiency first in line  The transition to a more efficient, low-carbon energy sector is more difficult in tough economic times, but no less urgent © OECD/IEA 2013

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