© OECD/IEA 2018

Global energy: today and tomorrow

Dr. Fatih BirolExecutive Director, International Energy Agency

IEA

The Hague, 26 March 2018

© OECD/IEA 2018

Tipping the energy world off its axis

• Four large-scale upheavals in global energy are underway:

- 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

• There are many possible pathways ahead & many potential pitfallsif governments or industry misread the signs of change

© OECD/IEA 2018

United States becomes undisputed leader of oil & gas production

The United States is already switching to become a net exporter of gas & becomes a net exporterof oil in the 2020s, helped also by the demand-side impact of fuel efficiency & fuel switching

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30

35

5

10

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20

1980 1990 2000 2010 2020 2030 2040

mboe/d Shale oilShale gasOther unconventionalsConventional oil & gas

Oil & gas production in the United States

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Strong outlook as LNG ushers in a new global gas order

Growing gas import requirements in developing Asia, Japan & Korea are largely met by LNG,with exports from the United States & Australia accelerating a shift to a flexible, liquid global market

706 bcm in 2016

Gas exportersGas importers

39% shipped by LNG

1 230 bcm in 2040

59% shipped by LNG

AustraliaRussia& Caspian

MiddleEast

Other

Africa

US &Canada

AustraliaRussia& Caspian

MiddleEast Other

AfricaUnited States& Canada

Asia37%

Europe52%

Other

Asia60%

Europe35%

Other

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The cost of wind & solar PV have fallen sharply, with further reductions expected;cost-optimal integration requires interconnections, flexible generation, storage & demand response

Wind & solar PV average costs

Wind & solar costs being driven down by competition

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2008 2010 2012 2014 2016 2018 2020 2022

USD 2016/MWh

Offshore windSolar PVOnshore wind

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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

160

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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

Japan

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IEA estimates show that global energy-related CO2 emissions reached a historic high in 2017, telling us that current efforts to combat climate change are far from sufficient

CO2 energy-related emissions

After three years of plateau, global emissions increase again

CO2 emissionsIncrease 2016-17

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35

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

20162017

Gt CO2

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Emissions increased in most major economies, But the United States, United Kingdom, Mexico and Japan were notable exceptions

Change in energy-related CO2 emissions by region, 2016-2017

Emissions growth was not universal

Mt CO2

Change in CO2emissions

- 50

0

50

100

150

200

China Other Developing Asia

European Union

United States

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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

• Action to address climate change can be fully fully compatible with global goals on universal access & air quality

• 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 2018

Modernising the IEA: three pillars

• Making the IEA a truly global agency

- Mexico became 30th member country in February 2018

- Since 2015, Brazil, China, India, Indonesia, Morocco, Singapore & Thailand

have all become Associate members

- Extended IEA family now accounts for over 70% of the world’s total energy consumption, up from

less than 40% two years ago

• Strengthening & broadening the commitment to energy security

• Enhancing the focus on energy efficiency & clean energy technologies

© OECD/IEA 2018

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