1IEEJ © 2018, All rights reserved

Ken Koyama, IEEJ, July 20th 20182

Global energy transition in the past
 19th century: Coal became dominant under Industrialization
 20th century: “the century of oil”

 Background factors: economic competitiveness, supply potential,
convenience, technology advancement, etc.

 1970s: Oil crisis and oil substitution policy Enhancement of energy security policy in OECD resulted in energy
diversification (away from oil)

 21st century: What’s next after “the century of oil”?
 Need to address environment and energy security problems
 Technology development/deployment in renewable, ZEV, etc.
 Possibility to develop new unconventional energy sources World energy future heavily depends on the above conditions/uncertainties

IEEJ © 2018, All rights reserved

Ken Koyama, IEEJ, July 20th 20183

Global energy demand trajectories by source（Oil is the largest source, its trajectory kinked in the 1970s）
5,000（石油換算100万トン）

Lehman Shock

Oil

4,500

Gas
Coal

4,000

NuclearRenewable

3,500

Impact of Oil Crisis

Hydro

3,000
2,500
2,000
1,500
1,000

IEEJ © 2018, All rights reserved

Source: Prepared by author based on BP Statistical Review of World Energy 2018

2017

2015

2013

2011

2009

2007

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

1973

1971

1969

1967

01965

500

Ken Koyama, IEEJ, July 20th 2018

<Advanced Technology Scenario>

4

Oil demand will not peak out in IEEJ's ATS
6

Coal

3

Coal

Renewables
Nuclear

OilGasNuclearRenewables

1
Gtoe

Genera- Generation
tion0

Gas

0

Generation

Oil-1

Transport

41-2(solid line: ATS, dotted line: reference)52❖ Effects by ATS in 2050
GenerationGtoe❖ Primary Energy

1990
2000
2010
2020
2030
2040
2050In ATS, coal starts to decline from now and is surpassed by renewable energy around 2040, due mainly to energy
efficiency and the elimination of emissions in the power supply/demand sectors. Despite large decline intransportation fuels, oil does not reach a peak. Fossil fuels share of the total in 2050 is reduced to 68%, from 79%
in the reference case. It is still a high level of dependence.
Source: “IEEJ Outlook 2018” (IEEJ, October 2017)IEEJ © 2018, All rights reserved<Reference>

Ken Koyama, IEEJ, July 20th 2018

5

Generation & Transport lead Demand Growth❖ Electricity❖ Oil fuels for vehicles

Electricity demand per capita

128.6

7.0

8

102.883.8
1.642.22

Growth in 2015-2050

4160.191280

Mb/d-24-4

0.32

0.70

0.15
0.0

Growth in 2015-2050-0.4

0-6-1.2

OECDOECD

Other
Non-OECD

Other Asia

ASEAN

India

China-8

Other
Non-OECD-100

Other Asia

-8-0.8-4

ASEAN

2

Three quarters of the growth until 2050 are for fuels for power generation and transportation. The economic
development and improvements in living standards of the relatively poor and populous areas - non-OECD Asia contribute to the global energy expansion.
Source: “IEEJ Outlook 2018” (IEEJ, October 2017)IEEJ © 2018, All rights reserved

0.8

unit/p

0.4

0.26
0.07

IndiaPWh

6Vehicle ownership per capita

20China

610MWh/p

<Peak Oil-Demand Analysis>

Ken Koyama, IEEJ, July 20th 2018

6Transport, especially cars drive oil demand⛽ Oil consumption [Reference Scenario]
114

120

⛽ Oil for Road [Reference Scenario]

122

40

105

Mb/d8090
47

76

30

NonOECD

2645
214060

Road48

Ot hert ransportNonenergy
use30

4020Mb/d100332018OECD

191510Ot hers02000

2015

2030

2040

2050

About 70% of the increases in oil consumption until
2050 is by transport and petrochemical feedstock. In
particular, road transport may decide where to go.

Source: “IEEJ Outlook 2018” (IEEJ, October 2017)IEEJ © 2018, All rights reserved

02000

2010

2020

2030

2040

2050

However, oil consumption by cars in OECD isdecreasing, and it will be less than non-OECD around2020. Non-OECD accounts for all future increases.

Ken Koyama, IEEJ, July 20th 2018

<Peak Oil-Demand Analysis>

7

The time for car electrification has come?
Germany

A resolution to ban conventional carsales in the European Union by 2030
was passed by the Bundesrat ofGermany (2016)
The ruling and opposition parties
proposed the abolition of
conventional vehicles by 2025 (2016)

NorwayThe Government announced that it
would ban conventional car sales by2040 (2017)
FranceThe Government announced that it
would ban conventional car sales by
2040 (2017)
United Kingdom

India

China

Minister said that all new car sales
after 2030 would be electric vehicles(2017)
But re-examined later
Deputy Minister mentioned that theban on the sale of conventional
vehicles was under investigation(2017)IEEJ © 2018, All rights reserved

Source: “IEEJ Outlook 2018” (IEEJ, October 2017)

The target for FCV sales is more than
30,000/year in 2020 (2015). Reported offull-scale entry into EVs in 2020 (2016)
ToyotaAnnounced the strategy to increase EV
share in its total sales to 25% with morethan 30 models of EVs by 2025 (2017)
Volkswagen

Introducing 12 models of EVs by 2022.
The target of 30% of its total sales as EVs(2017)
Renault-Nissan

The plan to prepare EVs at all line up by
2020 (2015)
HyundaiAnnounced that eco-cars combined with
EVs and HEVs will be raised to 70% by2025 (2017).
FordHonda

In 2030, two-thirds of automobile sales
will be electrified. EVs will be released inChina in 2018 (2017).

<Peak Oil Demand Case>

Ken Koyama, IEEJ, July 20th 2018

8ZEVs 100% share in new car sales in 2050
❖ Assumption of new car sales❖ Car ownership

Expectation on penetration speed of ZEVs varies a lot. In the Peak Oil Demand Case, 30% and 100% ofglobal new car (passenger and freight) sales are assumed to be ZEVs in 2030 and in 2050, respectively.
Sensitivity analysis of energy supply and demand was conducted assuming that the electricity demand
increased by the ZEVs will be met by thermal power generation.
100%

100%

80%

80%

60%

60%

Convent ional

ZEV
100%

40%

Convent ional
ZEV
74%

40%

66%
20%

20%

0%

9%

14%

20%

30%

0%
2015 2030 2040 2050 2030 2040 2050
Ref erence

Peak Oil Demand

Note: ZEV consists of plug-in hybrid vehicles, electric vehicles and fuel cell vehicles

Source: “IEEJ Outlook 2018” (IEEJ, October 2017)IEEJ © 2018, All rights reserved

40%0%5%

10% 15% 14%0%
2015 2030 2040 2050 2030 2040 2050
Ref erence

Peak Oil Demand

<Peak Oil Demand Case>

Ken Koyama, IEEJ, July 20th 20189

Oil demand peaks by rapid penetration of ZEVs
⛽ Oil consumption⛽ Oil for Road [Peak Oil Demand Case]40

Ref erence

33

122

120

30
AdvancedTechnologies
97

98

100
90
86

89
Peak OilDemand8060
2010

2020

2030

2040

2050

In the Peak Oil Demand Case, oil consumption hits apeak of 98 Mb/d around 2030 then declines. Thereduction from the Reference Scenario is 7 Mb/d and33 Mb/d in 2030 and in 2050, respectively.
Source: “IEEJ Outlook 2018” (IEEJ, October 2017)IEEJ © 2018, All rights reserved

21Mb/dMb/d105

2220
15
18
NonOECD
1116
100
2000

2010

2020

2030

2040

OECD52050

Note: Dotted lines are the Reference Scenario

Oil consumption by cars in Non-OECD, which
continues to increase rapidly in the Reference
Scenario, also declines from around 2030. It is as
much as one third of the Reference Scenario in 2050.

<Peak Oil Demand Case>

Ken Koyama, IEEJ, July 20th 201810

Peak oil demand may result in lower oil price❖ Assumption of real crude oil prices
140125115

120
95$2016/bbl

1007080

Ref erence60527065

Peak Oil Demand
60

40

50

44
200
2010

2020

2030

2040

2050

Assuming that the supply and demand relaxation will result in a decline in international oil prices.
In the Peak Oil Demand Case, the prices begin to decline after the 2020s and fall to $50/bbl in 2050.
Source: “IEEJ Outlook 2018” (IEEJ, October 2017)IEEJ © 2018, All rights reserved

<Peak Oil-Demand Analysis>

Ken Koyama, IEEJ, July 20th 201811

Economic impacts of peak oil demand

Middle East
Former USSR

Quant it y ef f ect
Price ef f ect

Lat in America

Net import sIndia
China
OECD EuropeJapan
Unit ed St at es

India
Japan5%Ref erence

Peak Oil Demand

Changes in net oil export rat io t onominal GDPGDPNet export s⛽ Changes in net oil exports/imports and ratios to nominal GDP [2050]
Af rica
Oceania
China

Canada0%
ASEAN

Unit ed
St at es

EuropeLat inAmerica

Ot herAsia-5%

FormerUSSR-10%-15%
0.0 0.5 1.0 1.5 2.0 2.5$ t rillion

050100150

Real GDP ($2010 t rillion)

MiddleEastNote: Europe excludes the former Soviet Union

Although the Middle East obtains the relative gain, its net oil export decreases of $1.6 trillion or 13% of nominal GDP is significant.
On the other hand, the most benefiting country from net oil import decreases is India, the second largest oil consumer, followed byChina, which has more car fleet than in any other countries. The United States has little impact despite of its consumption scale
since it is almost oil self-sufficient.

Source: “IEEJ Outlook 2018” (IEEJ, October 2017)IEEJ © 2018, All rights reserved

<Peak Oil-Demand Analysis>

Ken Koyama, IEEJ, July 20th 201812

Impacts of oil demand peak on primary energy, etc.
⛽ Changes in consumption(from the Reference Scenario)

Road

409

2050
Biomass-83

Gasoline
10%
25% 23% 23%
80% 27%LPG
Napht haOil

CO2100%2030

Elect ricit yPrimaryconsumpt ion⛽ Composition of petroleum products
consumption-1,56760%

Nat ural gas

572

Coal432

Oil(Mt )-1,596-1,846

Jet f uelDiesel
27%
40%
oil 34% 33% 34%
35%
20%

Heavy
f uel oil0%
2015 2030 2050 2030 2050-2,000-1,000

Ot hers

0Mt oeWhilst oil consumption declines, electricity demand by ZEVs
increases fuel consumption for power generation. Both natural
gas and coal exceed oil in the late 2030s. Since then, natural
gas is the largest energy source.

Source: “IEEJ Outlook 2018” (IEEJ, October 2017)IEEJ © 2018, All rights reserved

Kerosene

Note: Excluding own useRef erence

Peak OilDemandGasoline reduces its share to 10% in 2050. Share of diesel oil isnot smaller than gasoline because diesel oil has other uses, but
it is 8 points lower than today.

Ken Koyama, IEEJ, July 20th 2018

13Oil demand projections differ greatly
140
Mb/d1201008060402002000

2010

2020

2030

2040

2050

*EIA figures include bio fuels, GTL, etc. DNV figures exclude NGLs.
IEEJ © 2018, All rights reserved

Source: Prepared by Shigeru Suehiro, IEEJ (May 2018)

IEEJ REFIEEJ ATSIEEJ PODIEA CPSIEA NPSIEA SDSBP ET
BP FT
BP EFTBP ICE ban
DNV Base
EIA REFOPEC REFEXXON REF
Shell Sky
Shell Mountains
Shell Oceans

Ken Koyama, IEEJ, July 20th 201814

Implication of Peak Oil Demand The Peak Oil Demand Case shows that oil consumption can turn into a decline in the not too
distant future in some circumstances.
 However, the feasibility of this Case can be said to be extremely challenging because thepenetration of ZEVs is far greater than that in the “Advanced Technologies Scenario,” in which abottom-up approach to the maximum implementation of advanced technologies is adopted. Rather,it can be interpreted that oil consumption may not be easily reduced.
 The rising dependence on the Middle East crude oilwill increase geopolitical risk for stable supply.
 It should not be overlooked that oil isrequired even in 2050 in the Peak Oil  Although it is reasonable the Governments in theDemand Case on a scale that does
Middle East cut public investment and subsidies to
not differ from today.
reduce the budget deficit coping with low oil price, it
is difficult to deny the possibility of increasing social
 If the supply investment becomesanxiety and worsening situation in the region.
insufficient due to excessive...and thenpessimism in the future, it can trigger  The role of consuming countries continues to be
the switching from oil to otherimportant as well as producing countries’ own efforts.
energy threatening energy security.
Support the efforts represented by Saudi Arabia “Saudi
Vision 2030“ is needed.

Source: “IEEJ Outlook 2018” (IEEJ, October 2017)IEEJ © 2018, All rights reserved