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© OECD/IEA 2017
A sustainable & secure transition to
a low carbon future
Dr. Fatih Birol
The Round Table for Studying Energy Situations, METI , Tokyo, 27 February 2018
IEA
Executive Director, International Energy Agency
© OECD/IEA 2017
Tipping the energy world off its axis
• Four large-scale upheavals in global energy :
- 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
• These changes brighten the prospects for affordable, sustainable energy &
require a reappraisal of approaches to energy security
• There are many possible pathways ahead & many potential pitfalls if
governments or industry misread the signs of change
© OECD/IEA 2017
India takes the lead, as China energy growth slows
India, China and other developing Asia will be critical in determining the future trajectory of global energy
demand & C02 emissions
Change in energy demand, 2016-40 (Mtoe)
India
1 005 420
Southeast
Asia
China
790
United States
-30
Japan
-50
Europe
-200
270
Central and
South America
485
Africa
135 Eurasia
480Middle
East
© OECD/IEA 2017
Government policy choices will shape the global energy mix
Even in a low-carbon energy future, there is still an important role for natural gas, oil and coal ;
Efficiency, renewables, nuclear and CCUS are critical for a sustainable energy path
Total primary energy demand in the world by fuel and scenario
5	000
10	000
15	000
20	000
2016 2040		
Central	Scenario
2040	
SDS
Mtoe
Renewables
Nuclear
Gas
Oil
Coal
Note:
SDS	- Sustainable	Development
Scenario
Fossil
fuels:
81%
Fossil
Fuels:
75%
Fossil
Fuels:
61%
© OECD/IEA 2017
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
TWh2016 Growth	to	2040
Sources of global
electricity demand growth
Industrial		
motors
Cooling
Large	
appliances
Connected	
&	small
appliances
Electric vehicles
Other
Japan
© OECD/IEA 2017
The cost of wind and solar PV have fallen sharply, with further reductions expected;
Cost-optimal integration requires interconnections, flexible generation, storage & demand response
Wind and solar PV average LCOEs and auction results by commissioning date
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
Onshore wind average auction
price
Solar PV average auction price
Offshore wind LCOE
Solar PV - utility scale LCOE
Onshore wind LCOE
© OECD/IEA 2017
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
Japan
© OECD/IEA 2017
The potential of clean energy technology remains under-utilised
Despite good progress in some areas, many technologies still need a strong push to achieve their full potential
and deliver a sustainable energy future
Energy	storage		
Solar	PV	and	onshore	wind		
Electric	vehicles	
●Not	on	track ●Accelerated	improvement	needed ●On	track
Building	energy	efficiency			
Transport	biofuels			
Carbon	capture	and	storage			
More	efficient	coal-fired	power			
Nuclear			
Transport	– Fuel	economy	of	light-duty	vehicles		
Lighting,	appliances	and	building	equipment		
Energy	efficiency	in	industry	
Hydrogen	and	Fuel	Cells
© OECD/IEA 2017
Japan’s Power Mix: Policy determines uptake of low-carbon sources
Decarbonisation of Japan’s power sector can be achieved through the uptake of variable renewables and the
restart of nuclear plants while ensuring their safety
Power generation mix in Japan by fuel and scenario
0%
20%
40%
60%
80%
100%
2016 Central	Scenario
2040
SDS
2040
Coal Gas Oil Nuclear Renewables
33%
40%
8%
2%
18%
22%
28%
1%
22%
27%
2%
9%
0%
32%
56%
© OECD/IEA 2017
Recommendations for Japan
• Enhance energy security and resilience by taking an “all fuel” and “all technology“
approach to energy policy
• Continue to adjust renewable support policies in line with falling costs & ensure
there is adequate system flexibility including interconnections
• Pursue all low carbon options, including efficiency, renewables, nuclear (with
maximum safety), to decrease emissions in a cost-optimal way
• Continue to be a leader in global energy technology R&D and innovation
• Take advantage of the opportunities that digitalization is creating in the energy
sector, while being mindful of the associated risks
• The IEA stands ready to support the clean and secure energy transition in providing
cutting-edge technical advice to governments
© OECD/IEA 2017
www.iea.org
IEA

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A sustainable & secure transition to a low carbon future

  • 1. © OECD/IEA 2017 A sustainable & secure transition to a low carbon future Dr. Fatih Birol The Round Table for Studying Energy Situations, METI , Tokyo, 27 February 2018 IEA Executive Director, International Energy Agency
  • 2. © OECD/IEA 2017 Tipping the energy world off its axis • Four large-scale upheavals in global energy : - 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 • These changes brighten the prospects for affordable, sustainable energy & require a reappraisal of approaches to energy security • There are many possible pathways ahead & many potential pitfalls if governments or industry misread the signs of change
  • 3. © OECD/IEA 2017 India takes the lead, as China energy growth slows India, China and other developing Asia will be critical in determining the future trajectory of global energy demand & C02 emissions Change in energy demand, 2016-40 (Mtoe) India 1 005 420 Southeast Asia China 790 United States -30 Japan -50 Europe -200 270 Central and South America 485 Africa 135 Eurasia 480Middle East
  • 4. © OECD/IEA 2017 Government policy choices will shape the global energy mix Even in a low-carbon energy future, there is still an important role for natural gas, oil and coal ; Efficiency, renewables, nuclear and CCUS are critical for a sustainable energy path Total primary energy demand in the world by fuel and scenario 5 000 10 000 15 000 20 000 2016 2040 Central Scenario 2040 SDS Mtoe Renewables Nuclear Gas Oil Coal Note: SDS - Sustainable Development Scenario Fossil fuels: 81% Fossil Fuels: 75% Fossil Fuels: 61%
  • 5. © OECD/IEA 2017 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 TWh2016 Growth to 2040 Sources of global electricity demand growth Industrial motors Cooling Large appliances Connected & small appliances Electric vehicles Other Japan
  • 6. © OECD/IEA 2017 The cost of wind and solar PV have fallen sharply, with further reductions expected; Cost-optimal integration requires interconnections, flexible generation, storage & demand response Wind and solar PV average LCOEs and auction results by commissioning date 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 Onshore wind average auction price Solar PV average auction price Offshore wind LCOE Solar PV - utility scale LCOE Onshore wind LCOE
  • 7. © OECD/IEA 2017 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 Japan
  • 8. © OECD/IEA 2017 The potential of clean energy technology remains under-utilised Despite good progress in some areas, many technologies still need a strong push to achieve their full potential and deliver a sustainable energy future Energy storage Solar PV and onshore wind Electric vehicles ●Not on track ●Accelerated improvement needed ●On track Building energy efficiency Transport biofuels Carbon capture and storage More efficient coal-fired power Nuclear Transport – Fuel economy of light-duty vehicles Lighting, appliances and building equipment Energy efficiency in industry Hydrogen and Fuel Cells
  • 9. © OECD/IEA 2017 Japan’s Power Mix: Policy determines uptake of low-carbon sources Decarbonisation of Japan’s power sector can be achieved through the uptake of variable renewables and the restart of nuclear plants while ensuring their safety Power generation mix in Japan by fuel and scenario 0% 20% 40% 60% 80% 100% 2016 Central Scenario 2040 SDS 2040 Coal Gas Oil Nuclear Renewables 33% 40% 8% 2% 18% 22% 28% 1% 22% 27% 2% 9% 0% 32% 56%
  • 10. © OECD/IEA 2017 Recommendations for Japan • Enhance energy security and resilience by taking an “all fuel” and “all technology“ approach to energy policy • Continue to adjust renewable support policies in line with falling costs & ensure there is adequate system flexibility including interconnections • Pursue all low carbon options, including efficiency, renewables, nuclear (with maximum safety), to decrease emissions in a cost-optimal way • Continue to be a leader in global energy technology R&D and innovation • Take advantage of the opportunities that digitalization is creating in the energy sector, while being mindful of the associated risks • The IEA stands ready to support the clean and secure energy transition in providing cutting-edge technical advice to governments