IEEJ：February 2018 © IEEJ2018

The rapidly changing global energy
landscapeDr. Fatih Birol
Executive Director, International Energy Agency
IEEJ, Tokyo, 27 February 2018
IEA
© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018

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

IEEJ：February 2018 © IEEJ2018

India takes the lead, as China energy growth slows
Change in energy demand, 2016-40 (Mtoe)

135 Eurasia

Europe-200
United States-30Middle
East485

Central andSouth America270

Africa480India
1 005

China790

Japan-50420

SoutheastAsia

India, China and other developing Asia will be critical in determining the future trajectory of global
energy demand & C02 emissions© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018....A world in motion..as China moves global energy markets, again
Change in world energy demand by fuelCoal (Mtce)

Oil (mb/d)

Gas (bcm)

Low-carbon (Mtoe)

2 500

30

2 000

2 000

2 000

24

1 600

1 600

1 500

18

1 200

1 200

1 000

12800

800

500

6400

400

01990-2016 2016-40- 500
1990-2016 2016-40

1990-2016 2016-40

China1990-2016 2016-40

1990-2016 2016-40

Other countries

Low-carbon sources & natural gas meet 85% of the increase in global demand:
China’s switch to a new economic model & a cleaner energy mix drives global trends© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018

EVs are on the way, but oil demand still keeps risingElectric car fleet

Million cars

300

Change in global oil demand
16

Other countries
Japan

12United States
200

India

Petrochemicals

8European Union

Aviation and shipping

China4100mb/dTrucks
0-42016

2025

2040

Passenger cars
Other sectors
2016-2040

Electric cars are helping to transform energy use for passenger cars, slowing the pace of growth inglobal oil demand: however, trucks, aviation, shipping & petrochemicals keep oil on a rising trend© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018

US becomes undisputed leader of oil & gas production

Oil and gas production in the United States
mboe/d35

Shale oil

30

Shale gas
Other unconventionals

25
mboe/dConventional oil & gas

20
151051980

1990

2000

2010

2020

2030

2040

The US is already switching to become a net exporter of gas & becomes a net exporter of oilin the 2020s, helped also by the demand-side impact of fuel efficiency & fuel switching© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018

LNG ushers in a new global gas order
Gas importers
exporters
Globalgas trade
1 230 bcm in 2040

706 bcm in 2016

Europe35%
Europe52%
MiddleEast

US& Canada

Asia
60%

AfricaAsia
37%
Africa
59% shipped by LNG

Russia& CaspianUS &39%shipped by LNG
OtherAustralia Canada

Australia
OtherRussia& Caspian OtherMiddle
East

OtherGrowing gas import requirements in developing Asia, Japan and Korea are largely met by LNG,
with exports from the US accelerating a shift towards a more flexible, liquid global market© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018

The future is electrifying
Sources of global
electricity demand growth

Electricity generation by selected region
China
United States
India

Other

European Union
Electric vehicles

Southeast Asia

Industrial
motorsLargeappliances

Middle East

Connected& small
appliances

AfricaCoolingJapan
2 000
2016

4 000

Growth to 2040

6 000

8 000

10 000
TWhIndia adds the equivalent of today’s European Union to its electricity generation by 2040,
while China adds the equivalent of today’s United States© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018

Wind and solar PV costs being driven down by competition
Wind and solar PV average LCOEs and auction results by commissioning date
USD 2016/MWh
350
300

Onshore wind average auction
price

250

Solar PV average auction price

200

Offshore wind LCOE

150
Solar PV - utility scale LCOE

100
5002008

Onshore wind LCOE2010

20122014

20162018

20202022

The cost of wind and solar PV have fallen sharply, with further reductions expected;
Cost-optimal integration requires interconnections, flexible generation, storage & demand response© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018

A new leader emerging on nuclear

GW

Nuclear power generation capacity
China
120 United States
80

France40 Japan

2010

2020

2030

2040

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© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018

Japan’s Power Mix: Policy determines uptake of low-carbon sources
Power generation mix in Japan by fuel and scenario
100%
80%
60%

18%
8%

27%

2%

40%

1%

40%
20%

56%

22%

28%
32%
33%

22%

0%
Central Scenario
2040

2016
CoalGas

OilNuclear

0%
9%

2%

SDS
2040
Renewables

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© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018

A new strategy for energy & sustainable development

Gt

Global CO2 emissions by scenario

40

New Policies Scenario

30
SustainableDevelopment
Scenario

20
Sustainable Development Scenario
102000

2010

2020

2030

2040

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© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018

The potential of clean energy technology remains under-utilised

Solar PV and onshore wind
Energy storage
Electric vehicles
Nuclear
Transport – Fuel economy of light-duty vehicles
Energy efficiency in industry
Lighting, appliances and building equipment
Hydrogen and Fuel Cells
More efficient coal-fired power
Carbon capture and storage
Building energy efficiency
Transport biofuels●Not on track●Accelerated improvement needed●On track

Despite good progress in some areas, many technologies still need a strong push to achieve their fullpotential and deliver a sustainable energy future© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018

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• Concerted action is needed to address climate change, including deployment of all low
carbon options• Electrification & digitalisation are the future for many parts of the global energy system,
creating new opportunities but also risks that policy makers have to address© OECD/IEA 2017

IEEJ：February 2018 © IEEJ2018

www.iea.org
IEA

Contact :report@tky.ieej.or.jp© OECD/IEA 2017