World Energy Outlook 2012 Presentation
to the press London, 12 November 2012 © OECD/IEA 2012

The context  Foundations of
global energy system shifting  Resurgence in oil & gas production in some countries  Retreat from nuclear in some others  Signs of increasing policy focus on energy efficiency  All-time high oil prices acting as brake on global economy  Divergence in natural gas prices affecting Europe (with prices 5-times US levels) and Asia (8-times)  Symptoms of an unsustainable energy system persist  Fossil fuel subsidies up almost 30% to $523 billion in 2011, led by MENA  CO2 emissions at record high, while renewables industry under strain  Despite new international efforts, 1.3 billion people still lack electricity © OECD/IEA 2012

Emerging economies steer energy markets
Share of global energy demand 6 030 Mtoe 12 380 Mtoe 16 730 Mtoe 100% Rest of non-OECD Non-OECD Middle East 80% India China 60% OECD 40% 20% 1975 2010 2035 Global energy demand rises by over one-third in the period to 2035, underpinned by rising living standards in China, India & the Middle East © OECD/IEA 2012

A United States oil &
gas transformation US oil and gas production mboe/d 25 20 Unconventional gas 15 10 Conventional gas Unconventional oil 5 Conventional oil 1980 1990 2000 2010 2020 2030 2035 The surge in unconventional oil & gas production has implications well beyond the United States © OECD/IEA 2012

Iraq oil poised for a
major expansion Iraq oil production Iraq oil exports mb/d 9 North mb/d 9 Other 8 Centre 8 Asia 7 South 7 6 6 5 5 4 4 3 3 2 2 1 1 2012 2020 2035 2012 2020 2035 Iraq accounts for 45% of the growth in global production to 2035; by the 2030s it becomes the second-largest global oil exporter, overtaking Russia © OECD/IEA 2012

Middle East oil to Asia:
a new silk road Middle East oil export by destination mb/d 7 2000 6 2011 2035 5 4 3 2 1 China India Japan & Korea Europe United States By 2035, almost 90% of Middle Eastern oil exports go to Asia; North America’s emergence as a net exporter accelerates the eastward shift in trade © OECD/IEA 2012

Natural gas: towards a globalised
market Major global gas trade flows, 2010 2035 Rising supplies of unconventional gas & LNG help to diversify trade flows, putting pressure on conventional gas suppliers & oil-linked pricing mechanisms © OECD/IEA 2012

Different trends in oil &
gas import dependency Net oil & gas import dependency in selected countries Japan Gas Imports 100% 2010 2035 80% European Union 60% 40% 20% China India United States 0% Gas Exports 20% 20% 40% 60% 80% 100% Oil imports While dependence on imported oil & gas rises in many countries, the United States swims against the tide © OECD/IEA 2012

A power shift to emerging
economies Change in power generation, 2010-2035 Coal Gas Nuclear Renewables China India United States European Union Japan -1 000 0 1 000 2 000 3 000 4 000 5 000 6 000 TWh TWh The need for electricity in emerging economies drives a 70% increase in worldwide demand, with renewables accounting for half of new global capacity © OECD/IEA 2012

The multiple benefits of renewables
come at a cost Global renewable energy subsidies Billion $250 Biofuels: $1 200 billion $200 2011-2035 $150 Electricity: $100 2012-2035 $2 600 billion Existing capacity $50 $960 billion 2011 2015 2020 2025 2030 2035 Renewable subsidies were $88 billion in 2011; over half the $4.8 trillion required to 2035 has been committed to existing projects or is needed to meet 2020 targets © OECD/IEA 2012

Wide variations in the price
of power Average household electricity prices, 2035 cents/kWh 25 20 2011 15 OECD average 10 2011 Non-OECD 5 average China United States European Union Japan Electricity prices are set to increase with the highest prices persisting in the European Union & Japan, well above those in China & the United States © OECD/IEA 2012

Energy is becoming thirstier in
the face of growing water constraints Global water use Water for energy 100% Biofuels Fossil fuels Other 80% Nuclear 60% 40% Power Coal 20% Energy 2010 2010 The energy sector’s water needs are set to grow, making water an increasingly important criterion for assessing the viability of energy projects © OECD/IEA 2012

Energy efficiency: a huge opportunity
going unrealised Energy efficiency potential used by sector in the New Policies Scenario 100% Unrealised energy efficiency potential 80% Realised energy efficiency potential 60% 40% 20% Industry Transport Power Buildings generation Two-thirds of the economic potential to improve energy efficiency remains untapped in the period to 2035 © OECD/IEA 2012

The Efficient World Scenario: a
blueprint for an efficient world Total primary energy demand Mtoe 18 000 New Policies Reduction in 2035 17 000 Scenario Coal 1 350 Mtce 16 000 Oil 12.7 mb/d Gas 680 bcm 15 000 Others 250 Mtoe 14 000 Efficient World Scenario 13 000 12 000 2010 2015 2020 2025 2030 2035 Economically viable efficiency measures can halve energy demand growth to 2035; oil demand savings equal the current production of Russia & Norway © OECD/IEA 2012

Energy efficiency brings economic gains
Energy expenditure in 2035 compared with 2010 Trillion $1.5 New Policies the Additional in Scenario New Policies $1.2 Scenario $0.9 Efficient World Scenario $0.6 $0.3 $0 -$0.3 China India European United Japan Union States In addition to cutting energy expenditures by an average of 20%, improved efficiency brings wider economic gains, particularly for India, China, the United States & Europe © OECD/IEA 2012

The Efficient World Scenario delays
carbon lock-in 2017 2022 Gt 35 30 2 °C trajectory 25 20 Lock-in of infrastructure Room to manoeuvre in New Policies Scenario Efficient World Scenario in 2017 2022 15 10 Lock-in of existing 5 infrastructure 2011 2015 2020 2025 2030 2035 Energy efficiency can delay “lock-in” of CO2 emissions permitted under a 2 °C trajectory – which is set to happen in 2017 – until 2022, buying five extra years © OECD/IEA 2012

Foundations of energy system shifting
 Policy makers face critical choices in reconciling energy, environmental & economic objectives  Changing outlook for energy production & use may redefine global economic & geopolitical balances  Iraq set to play a pivotal role in global oil markets  As climate change slips off policy radar, the “lock-in” point moves closer & the costs of inaction rise  The gains promised by energy efficiency are within reach & are essential to underpin a more secure & sustainable energy system © OECD/IEA 2012