IEEJ：January 2019 © IEEJ2019

Tokyo, 11 January 2019
Tim Gould
Head of Division, World Energy Outlook
International Energy Agency© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

Today’s energy context
 Mixed signals about the pace & direction of change in global energy:
 Oil markets are entering a period of renewed uncertainty & volatility© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

A rollercoaster ride

Billion dollars (2017)

Net income from oil and gas in six selected producer economies
1 200
1 000
Net income:800

Natural gasOil600
400200
2010

2011

2012

2013

20142015

20162017

The fall in oil prices that started in 2014 brought into sharp relief
some risks associated with high dependence on hydrocarbon revenues© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

A rollercoaster ride

Billion dollars (2017)

Net income from oil and gas in six selected producer economies
1 200
1 000

Venezuela

800

Net income:Nigeria

United Arab600

NaturalEmiratesgas
Oil400

Saudi Arabia

Iraq

Russia

200
2010

2011

2012

2013

2014

2015

2016

2017

The fall in oil prices that started in 2014 brought into sharp relief
some risks associated with high dependence on hydrocarbon revenues© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

Today’s energy context
 Mixed signals about the pace & direction of change in global energy:
 Oil markets are entering a period of renewed uncertainty & volatility Natural gas is on the rise: China’s rapid demand growth is erasing talk of a ‘gas glut’ Solar PV has the momentum while other key technologies & efficiency policies need a push
 Our assessment points to energy-related CO2 emissions reaching a historic high in 2018
 For the first time, the global population without access to electricity fell below 1 billion

 Electricity is carrying great expectations, but questions remain over the extent of its

reach in meeting demand & how the power systems of the future will operate Policy makers need well-grounded insights about different possible futures & how

they come about. The WEO provides two key scenarios: New Policies Scenario© OECD/IEA 2018

 Sustainable Development Scenario

IEEJ：January 2019 © IEEJ2019

The new geography of energy
Energy demand2000
United States
European Union
ChinaAfricaIndia
Southeast Asia
Middle East
1 0002 000

3 000

4 000
Mtoe

In 2000, more than 40% of global demand was in Europe & North America and some
20% in developing economies in Asia. By
By 2040,2040, this
this situation
situation isis completely
completely reversed.
reversed.
© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

The new geography of energy
Energy demand
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
United States
China
European
United States
Union
China
European Union
China
AfricaIndia
AfricaIndia
Southeast
Middle Asia
East
Southeast
Middle Asia
East
1 000

2 000

3 000

4 000
Mtoe

In 2000, more than 40% of global demand was in Europe & North America and some
20% in developing economies in Asia. By
By 2040,
2040, this
this situation
situation isis completely
completely reversed.
reversed.
© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

The new geography of energy
Energy demand
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
United States
China
European
United States
Union
China
European Union
China
India
European Union
AfricaIndia
European UnionAfrica
India
Southeast
Middle Asia
East
Southeast
Middle Asia
East
1 000

2 000

3 000

4 000
Mtoe

In 2000, more than 40% of global demand was in Europe & North America and some
20% in developing economies in Asia. By
By 2040,2040, this
this situation
situation isis completely
completely reversed.
reversed.
© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

Fuelling the demand for energy
Change in global energy demand, 2017-2040
Mtoe 1 500
1 200

Renewables & nuclear

Coal

Other

Renewables

300

Oil

Nuclear

900
600

Gas

OtherPower
Industry

0Petrochemical

OtherCars

PowerCars-300-600

Advanced Developing
economies economies

Advanced Developing
economies economies

Advanced Developing
economies economies

Power

Advanced Developing
economies economies

The increase in demand would be twice as large without continued improvements
in energy efficiency, a powerful tool to address energy security & sustainability concerns© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

Improved efficiency is the key to the outlook for cars
Change in global oil demand for cars

Global car sales
100%mb/d 40

Implied increase due to:Fleet growth30

Reduced by:
Fuel efficiency20ElectricGas

80%

Fuel efficiency(litres/100km)

60%<4Natural gas
Biofuels

4-640%

6-8

Electricity

10>820%

2017

2040

2017

2040

Energy efficiency is the key mechanism that curbs oil consumption in cars.
By 2040 there are no cars sold that have an efficiency worse than 6.5 litres/100 km.
© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

Can US shale alone avoid a turbulent oil market?
Global oil outlook
mb/d 105

Demand100
95

Growth required from US shale

90
85
80

Growth from other sources(at current project approval rates)

7570

Currently producing fields

652010

2015

2020

2025

Oil demand looks robust in the near term; if approvals of new conventional projects
remain low, market stability would require continuous exceptional growth in US shale© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

China – the emerging giant of gas demand
Net gas imports in 2017

Shares in long-distancegas trade, 2017bcm 400
300200

Pipeline

100

LNG

0-100

EuropeanUnion

Japan& Korea

ChinaIndia

SoutheastAsia

Developing countries in Asia – led by China – dominate the rise in long-distance gas trade;more than 80% of the growth to 2040 comes in the form of LNG© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

China – the emerging giant of gas demand
Net gas imports in 2040
2017

Shares in long-distancegas trade, 2040
2017

bcm 400
300
200

Pipeline

100

LNG

0-100

EuropeanUnion

Japan& Korea

China

India

Southeast
Asia

Developing countries in Asia – led by China – dominate the rise in long-distance gas trade;more than 80% of the growth to 2040 comes in the form of LNG© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

Our energy destiny rests with governmentsTotal investment in energy supply to 2040:$42.3 trillion

Market-driven
30%

2018-2040
42.3 trillion dollars
Government-driven
70%

More than 70% of the $2 trillion required each year in energy supply investment either
comes from state-directed entities or receives a full or partial revenue guarantee© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

Flexibility: the cornerstone of tomorrow’s power systems
Phases of integration with variable renewables share, 2017

Integration
phase

Targeted investment
in flexibility neededMobilise existing
power system flexibility

432European Union

Germany

United Kingdom

China

Japan United States

10%10%20%30%

40%50%60%

Wind and solar PV share of generation

Higher shares of variable renewables raise flexibility needs and call for reforms to deliver
investment in power plants, grids & energy storage, and unlock demand-side response© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

Flexibility: the cornerstone of tomorrow’s power systems
Phases of integration with variable renewables share, 2030
2017
Integration
phaseAll sources offlexibility needed

Targeted investment
in flexibility needed
Mobilise existingpower system flexibility

6Germany5United Kingdom

432China

European Union

United States
Japan

10%

10%

20%

30%

40%

50%

60%

Wind and solar PV share of generation

Higher shares of variable renewables raise flexibility needs and call for reforms to deliver
investment in power plants, grids & energy storage, and unlock demand-side response© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

Two directions for nuclear power
Growth markets

160

GW

GW

Without policy changes

Retirementsfrom 2017

120160

120

2017
2040
80

80Additions
to 2040402017

UnitedStates

EuropeanUnion

Japan40ChinaRussia

India

The contribution of nuclear power could decline substantially in leading markets,
while large growth is coming, as China takes first position within a decade© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

What if the future is electric?

45125

Energy-related CO2 emissions
(Gt)
40

40

100

32

Electricity demand(thousand TWh)Oil demand(mb/d)

Scenario:
3575

2430

50

16

25

25

820
2015 2020

2030

2040

2015 2020

2030

2040

2015 2020

New Policies
Future is Electric

2030

2040

Increased electrification leads to a peak in oil demand, avoids 2 million air pollutionrelated premature deaths, but does not necessarily lead to large CO2 emissions reductions© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

Can we unlock a different energy future?
Global energy-related CO2 emissions
New Policies Scenario

Gt 36
30
24
18

Sustainable Development
Scenario

Existing and under construction

power plants, factories, buildings etc.

1262017

2025

2030

2035

2040

Coal plants make up one-third of CO2 emissions today and half are less than 15 years old;policies are needed to support CCUS, efficient operations and technology innovation© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

Can we unlock a different energy future?
Global energy-related CO2 emissions
New Policies Scenario

Gt 36
30
2418

Sustainable Development
Scenario

Existing and under construction

power plants, factories, buildings etc.

126Coal-fired power plants
2017

2025

2030

2035

2040

Coal plants make up one-third of CO2 emissions today and half are less than 15 years old;policies are needed to support CCUS, efficient operations and technology innovation© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

Can we unlock a different energy future?
Global energy-related CO2 emissions
New Policies Scenario

Gt 36302418Sustainable Development
Scenario

Increased room
to manoeuvre

Existing and under construction

power plants, factories, buildings etc.

126
Coal-fired power plants
2017

2025

2030

2035

2040

Coal plants make up one-third of CO2 emissions today and half are less than 15 years old;policies are needed to support CCUS, efficient operations and technology innovation© OECD/IEA 2018

IEEJ：January 2019 © IEEJ2019

Is hydrogen heading back to the future?
Costs for hydrogen production in Australia and transportation to Japan in 2040
Production of high-carbon H2
Capital cost

SMR
LigniteOperating costs

Production of low-carbon H2
Carbon capture storage and utilisation

ElectrolyserFuel

SMR
Lignite

CO2 transport and storage

Off-grid

Electricity

Curtailed
Grid
Transport
Conversion

Ammonia

Shipping

Organic compound
LiquidDehydrogenation
1234567Dollars per kg H2 (2017)© OECD/IEA 2018

There are multiple options for the production, transportation andconsumption of zero-carbon hydrogen and hydrogen-based fuels

IEEJ：January 2019 © IEEJ2019

Conclusions
 The links between energy & geopolitics are strengthening & becoming morecomplex, a major factor in the outlook for energy security
 A mismatch between robust oil demand in the near term & a shortfall in newprojects risks a sharp tightening of oil markets in the 2020s
 The rapid growth of electricity brings huge opportunities; but market designs needto deliver both electricity and flexibility to keep the lights on
 There is no single solution to turn emissions around: renewables, efficiency & a hostof innovative technologies, including storage, CCUS & hydrogen, are all required The future pathway for energy is open: governments will determine where ourenergy destiny lies
© OECD/IEA 2018

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iea.org/weo
Contact :report@tky.ieej.or.jp© OECD/IEA 2018