© OECD/IEA 2015

Paris agreement: Implications for the global and EU energy sector

Marco BaroniTallinn, 12 January 2016

© OECD/IEA 2015

The start of a new energy era?

Energy sector turns green?

Paris agreement: pledges of 180+ countries account for over 90% of energy-related emissions

Energy accounts for at least 2/3 of greenhouse gas emissions

Renewables capacity additions at a record-high of 130 GW in 2014

Fossil-fuel subsidy reform, led by India & Indonesia, reduces the global subsidy bill below $500 billion in 2014

Carbon pricing covers 13% of global emissions, but China intention of trading system in 2017 will triple this share

Multiple signs of change, but are they moving the energy system in the right direction?

© OECD/IEA 2015

Energy emissions stall but economic engine keeps running

Global energy-related CO2 emissions

For the first time, energy-related CO2 emissions stalleddespite the global economy expanding by 3%

5

10

15

20

25

30

35Gt

1985 1990 1995 2000 2005 2010

Dissolution ofSoviet Union

Global economic downturn

2014

© OECD/IEA 2015 The boundaries and names shown and the designations used on maps included in this publication do not imply official endorsement or acceptance by the IEA.

Pledges submitted

…the global coverage of climate pledges is impressive

Pledges from countries that account for 95% of global energy-related GHG emissions; their full implementation would be consistent with a temperature rise of 2.7 °C

OECD AsiaOceania

2.2 Gt

Russia and Caspian

2.0 Gt

Europe

3.8 Gt

North America

6.1 Gt

South America

1.2 Gt

Africa

1.1 Gt

Middle East

2.0 Gt

1.7 Gt

Other AsiaIndia

1.9 Gt

China

8.6 Gt

© OECD/IEA 2015

Mtoe

-300

0

300

600

900

1 200

Demand growth in Asia – the sequel

By 2040, India’s energy demand closes in on that of the United States, even though demand per capita remains 40% below the world average

EuropeanUnion

UnitedStates

Japan LatinAmerica

MiddleEast

SoutheastAsia

Africa China India

Change in energy demand in selected regions, 2014-2040

© OECD/IEA 2015

Emissions burden moves over time

Cumulative energy-related CO2 emissions by region

Past emissions are important, although the source of emissions shifts with changes in the global economy

2015-2040

1890-2014

100

200

300

400

500

United

States

European China

Union

Russia Japan India Africa

Gt

© OECD/IEA 2015

Energydemand

GDP

A new chapter in China’s growth story

Along with energy efficiency, structural shifts in China’s economy favouringexpansion of services, mean less energy is required to generate economic growth

3 000

6 000

9 000

2000 2010 2020 2030 2040

Ener

gy d

eman

d (

Mto

e)

20

40

60

GD

P (

trill

ion

do

llars

,PP

P)

Energydemand

GDP

Total primary energy demand & GDP in ChinaEnergy demand in China

1 000

2 000

3 000

4 000

Coal

Oil

Gas

Nuclear

Renewables

Energydemand

GDP

3 000

6 000

9 000

2000 2010 2020 2030 2040

Ener

gy d

eman

d (

Mto

e)

20

40

60

GD

P (

trill

ion

do

llars

,PP

P)

© OECD/IEA 2015

India moving to the centreof the world energy stage

Change in demand for selected fuels, 2014-2040

New infrastructure, an expanding middle class & 600 million new electricity consumers mean a large rise in the energy required to fuel India’s development

Solar PV

0

500

1 000

1 500(TWh)

Oil

-16

-8

0

8

16

24(mb/d)

Coal

-1 000

-500

0

500

1 000

1 500(Mtce)

China

India

United States

European UnionAfrica

Middle EastJapan

India

China

Africa

Middle East

Southeast Asia

UnitedStates

Japan

European Union

India

SoutheastAsia

Africa

European Union

United States

© OECD/IEA 2015

Efficiency measures on the rise, but significant potential still exists

Share of global mandatory efficiency regulation of final energy consumption

Energy efficiency policies are introduced in more countries and sectors;they continue to slow demand growth but more can be done

10%

20%

30%

40%

2005 2014 2040

Industry Steam boilers

Process heat

Motors

Buildings Heating/Cooling

Lighting/Appliances

Transport Cars

Trucks

Ships

© OECD/IEA 2015

Power is leading the transformationof the energy system

Global electricity generation by source

Driven by continued policy support, renewables account for half of additional global generation, overtaking coal around 2030 to become the largest power source

3 000 12 000 15 000

TWh

Changeto 2040

2014Renewables

Coal

Gas

Nuclear

Oil

Hydro

Wind

Solar

Otherrenewables

Of which:

6 000 9 000

© OECD/IEA 2015

Climate pledges decouple power sector emissions from electricity demand

World electricity generation

The share of low-carbon power generation grows to almost 45% in 2030 so that power emissions remain flat, while electricity demand grows by more than 40%

10

20

30

40

Gen

erat

ion

(th

ou

san

d T

Wh

)

and related CO2 emissions

1990 2000 2010 2020 2030

Emis

sio

ns

(Gt)

5

10

15

20

CO2 emissions

Electricity generation

Electricity generation

CO2 emissions

© OECD/IEA 2015

Conclusions

Low prices bring gains to consumers, but can also sow the seeds of future risks to energy security: no room for complacency

India’s energy needs are huge: there is a strong shared interest to support India’s push for clean & efficient technologies

China’s transition to a more diversified & much less energy-intensive model for growth re-shapes energy markets

The energy transition is underway, but needs continued strong signal from governments to attract necessary investment

With looming energy security & environmental challenges, international cooperation on energy has never been more vital

© O

ECD

/IEA

201

5

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