IEEJ：December 2016 © IEEJ2016

Tokyo, 25 November 2016

© OECD/IEA 2016

© OECD/IEA 2016

IEEJ：December 2016 © IEEJ2016

The global energy context today
 Key points of orientation:
 Middle East share in global oil production in 2016 at highest levelfor 40 years
 Transformation in gas markets deepening with a 30% rise in LNG
 Additions of renewable capacity in the power sector higher in 2015

than coal, gas, oil and nuclear combined Energy sector in the spotlight as the Paris Agreement enters into force
 Billions remain without basic energy services

 There is no single story about the future of global energy; policies

will determine where we go from here© OECD/IEA 2016

IEEJ：December 2016 © IEEJ2016

A new ‘fuel’ in pole position
Change in total primary energy demand
Mtoe

1990-2015

2015-2040

2 000
Rest ofworld

Renewables

1 500

Japan
EuropeanUnion
Latin
America

India

1 000
Renewables

US500

AfricaChina

Nuclear

Nuclear

Coal

Oil

Gas

Lowcarbon

Coal

Oil

Gas

Lowcarbon

Low-carbon fuels & technologies, mostly renewables,
supply nearly half of the increase in energy demand to 2040
© OECD/IEA 2016

IEEJ：December 2016 © IEEJ2016

Greater policy support boosts
prospects for solar PV and wind

4 000

6 000

3 000

4 500

TWhTWhSolar PV and wind generation, 2040

Additional in the2 °C scenario
Increase in WEO-2016:

2 000

3 000

Rest of world
United States
China

1 000

1 500
WEO-2015

Solar PV

Wind power

Stronger policies on solar PV and wind help renewables make up 37% of electricity
generation in 2040 in our main scenario – & nearly 60% in the 2 °C scenario© OECD/IEA 2016

IEEJ：December 2016 © IEEJ2016

The next frontiers for renewables
are heat and transport
Renewable energy use by sector
Mtoe 1 200900

Additional
to 2040

600

2015
300

Electricity

HeatTransport

Today renewables in electricity and heat use are nearly at par;by 2040, the largest untapped potential lies in heat and transport© OECD/IEA 2016

IEEJ：December 2016 © IEEJ2016

A suite of tools to address energy security

mb/d

Net oil imports
20

United States

European Union

ChinaJapanNet oil imports

15

Reduction in net oil imports
due to:Switch to electric andnatural gas vehicles

10

Switch to renewables
Efficiency improvements

5

Increase in oil production
2014-204020142040

2014 2040

2014 2040

2014 2040

The energy transition provides instruments to address traditional energy
security concerns, while shifting attention to electricity supply© OECD/IEA 2016

IEEJ：December 2016 © IEEJ2016

Entering a period ofgreater oil market volatility
 Approvals of new conventional crude oil projects in 2015-2016

have fallen to the lowest level since the 1950s
 If approvals remains low in 2017, an unprecedented effort will beneeded to avoid a supply-demand gap in a few years’ time US tight oil provides a potential lifeline, but cannot be relied

upon to cover a major shortfall in the ‘baseload’ of oil supply Without a pick-up in investment, or a rapid slowdown in demand

growth, the stage is set for the next boom-and-bust cycle for oil© OECD/IEA 2016

IEEJ：December 2016 © IEEJ2016

No peak yet in sight, but aslowdown in growth for oil demand
Change in oil demand by sector, 2015-2040
mb/d 630-3
Power
generation

Buildings

Passenger
cars

Maritime

Freight

Aviation Petrochemicals

The global car fleet doubles, but efficiency gains, biofuels & electric cars reduce oil
demand for passenger cars; growth elsewhere pushes total demand higher© OECD/IEA 2016

IEEJ：December 2016 © IEEJ2016

A wave of LNG spurs
a second natural gas revolution
Share of LNG in global long-distance gas trade
2000
525 bcm

2014
685 bcm

LNG
26%

Pipeline
Pipeline

2040
1 150 bcm

LNG
42%

Pipeline

LNG
53%

Contractual terms and pricing arrangements are all being tested as new LNG from
Australia, the US & others collides into an already well-supplied market© OECD/IEA 2016

IEEJ：December 2016 © IEEJ2016

Coal: a rock in a hard place
Coal demand in key regions
China2014

United States

Change 2014-2040:
India

Decreasing demand
Increasing demand

European Union
Southeast Asia
Japan500

1 000

1 500

2 000

2 500

3 000
Mtce

The peak in Chinese demand is an inflexion point for coal; held back by concerns overair pollution & carbon emissions, global coal use is overtaken by gas in the 2030s© OECD/IEA 2016

IEEJ：December 2016 © IEEJ2016

Still a long way from a pathway toenergy sector decarbonisation
Energy-sector CO2 emissions
Gt 403020

Early peak in emissions

Net-zero by the end ofthe century

10

1990

2000

2010

2020

2030

2040

2050

2060

2070

2080

2090

2100

Current pledges fall short of limiting the temperature increase to below 2 °C;
raising ambition to 1.5 °C is uncharted territory© OECD/IEA 2016

IEEJ：December 2016 © IEEJ2016

Conclusions
 Energy security remains a major concern; potential vulnerabilities

are growing, so too is the range of tools available to address them
 New oil market dynamics & subdued upstream investment areushering in a period of greater market volatility
 A wave of LNG is the catalyst for a second natural gas revolution,with far-reaching implications for gas pricing & contracts
 The next chapter in the rise of renewables requires policies to pushtheir role in heat & transport & changes in power market design The Paris Agreement is a framework; its impact on energy depends

on how its goals are translated into real government policy actions© OECD/IEA 2016

IEEJ：December 2016 © IEEJ2016

www.worldenergyoutlook.org@IEA @IEABirol© OECD/IEA 2016

© OECD/IEA 2016

Contact :report@tky.ieej.or.jp