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.
© 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.
© 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.
© 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.
© 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.
© 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.
© 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.
© 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.
© 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.
© 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.
© 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.
© 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.
© 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.
© 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.
© 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.
© 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.
© OECD/IEA 2018
www.iea.org
IEA