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IEE
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2 Introduction
•IEEJ Outlook 2018
- Prospects & Challenges up to 2050 –
•Today’s Topic
The Role of Coal & LNG in Asia’s Future Energy Mix
: Defying the odds?
•Introduction of Panelists
2
October 2017
The Institute of Energy Economics, Japan
IEEJ
Outlook 2018– Prospects and challenges until 2050 –
Energy, Environment and Economy
Executive summary
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Asia/World Energy Outlook 2018 – Prospects and Challenges up to 2050–
October 2017
The Institute of Energy Economics, Japan
IEEJ
Outlook 2018– Prospects and challenges until 2050 –
Energy, Environment and Economy
Executive summary
Available soon on our website
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4 Overview of the current global energy market
4
・Although the trend of Asia as leading the global energy market remains unchanged, developments in the US and China, which accounts for 40% of the energy market, must be carefully monitored.
・World coal demand dropped for two years in a row (US and China largely) while oil and gas grew. China’s coal consumption declined for the third consecutive year (2016, BP).
・Discussions on Peak Oil (supply) of the 2000s are now changing to Peak Demand. Note the recent movements that aim to ban the sale of internal combustion engine vehicles.
・CO2 emissions dropped in 2015 but increased again in 2016. India and ASEAN showed big increases despite the declined observed in the US and China.
・Paris Agreement calls for “Long-term low greenhouse gas emission development strategies” by 2020. This Outlook expands its estimation period to 2050.
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5 Scenarios in this Outlook
5
#Reference Scenario Reflects past trends with current energy and environment policies. Does not reflect any aggressive policies for low-carbon measures.
#Advanced Technologies Scenario Assumes the introduction of powerful policies to enhance energy security and address climate change issues. It promotes utmost penetration of low-carbon technologies.
#Oil Demand Peak Case Assumes a more rapid introduction of electric drive vehicles than in the reference scenario, to analyze the possibilities of oil demand peak.
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6 Examples for Technology
6
*1 ZEV: battery electric vehicles, plug-in hybrid electric vehicles and fuel cell battery vehicles
*2 CCT: ultra super critical, advanced-USC and integrated coal gasification combined cycle
Reference Advanced
Technologies
Peak Oil
Demand
En
erg
y e
ffic
ien
cy
Vehicle technology (ZEV*1 sales share)
9% in 2030 20% in 2050
21%
43%
30%
100%
Coal-fired power
generation (CCT share in newly installed
capacity)
30% in 2030
90% in 2050
70%
100%
Sam
e a
s Refe
ren
ce
Carb
on
fr
ee
tech
no
log
y
Installed capacity
PV
Wind
Nuclear
(2015 to 2050)
0.2 to 1.5 TW
0.4 to 1.9 TW
0.4 to 0.6 TW
(2050)
2.5 TW
3.0 TW
1.0 TW
Thermal power generation with
CCS (Only countries and regions with CO2
storage potential excluding aquifers)
none Newly installed
after 2030
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Energy Outlook up to 2050
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0
50
100
150
200
250
1990 2000 2010 2020 2030 2040 2050
Y2015=100
-250 250 750
China
India
ASEAN
Other Asia
*MENA
**SS Africa
Latin America
Europe
Intl. bunkers
OECD
Non
-OEC
D
2015-2030
2030-2050
Mtoe
Energy market shifting to southern Asia
8
❖ Global Population, GDP and Energy ❖ Growth in Primary Energy
255
145
132
GDP
Energy
Population
<Reference>
* Middle East and North Africa, **Sub-Saharan Africa
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9 KAYA Identity
9
Emissions = Population X GDP X Energy X Emissions
capita GDP Energy
ZERO ZERO
SDG 32%
70%
GDP 155%
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21.2
32.9
44.1
0
10
20
30
40
50
1990 2010 2030 2050
GtCO2
13.6
19.8
0
5
10
15
20
2015 2050
Gtoe
-0.5 0.5 1.5 2.5
Coal
Oil
Natural Gas
Nuclear
Renewables Asia*
RoW**
Gtoe
High dependence on fossil fuels continues
10
❖ Growth in Primary Energy ❖ Energy-related CO2
<Reference>
❖ Energy Mix
* Non-OECD Asia, **Rest of the world
81%
79%
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19.8
17.2
0
5
10
15
20
25
1990 2000 2010 2020 2030 2040 2050
Reference
Advanced Technology
Gtoe
elec.
elec.
elec.
other fuels
other fuels
other fuels
genera-tion loss
transmission
losses*
-0.8 -0.6 -0.4 -0.2 0.0
Industry
Transport
Building
PowerGeneration
Gtoe
Drawing another path – Advanced Technologies Scenario
11
❖ Global Primary Energy ❖ Reduction Effects by ATS in 2050
Up-to-date Technologies
Efficiency Improvement
Efficiency Improvement and Zero-emission Generation
* Including station service power
Cumulative Reduction 40Gt
<Advanced Technologies>
Efficiency Improvement
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0
10
20
30
40
50
Reference ATS
2015 2050
PWh
10%
28%47%
0
2
4
6
8
10
12
14
Reference ATS
2015 2050
VRE*
Other RE
Hydro
Nuclear
Gas
Oil
Coal
TW
Zero-emission Generation occupies two thirds
12
❖ Global Power Generation ❖ Global Power Capacity
* Variable Renewable Energy includes PV, CSP, wind and marine.
66% 62%
38%
34%
60%
6%
Non-fossil
Fossil with CCS
Fossil
34%
<Advanced Technologies>
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0
1
2
3
4
5
6
1990 2000 2010 2020 2030 2040 2050
Gtoe
Oil
Coal
Nuclear
Renewables
Gas
Genera-tion
Genera-tion
Genera-tion
Genera-tion
Trans-port
-2 -1 0 1
Coal
Oil
Gas
Nuclear
Renewables
Gtoe
Coal falls significantly and below renewables
13
❖ Primary Energy ❖ Effects by ATS in 2050
(solid line: ATS, dotted line: reference)
<Advanced Technologies>
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CO2
emissions peak in the middle of 2020s
❖ Energy-related CO2 Emissions ❖ Reductions by technology
……▲6.2Gt
………▲0.4Gt
…………▲2.2Gt
▲14.4Gt
……▲3.6Gt
…………▲0.5Gt
……………▲1.5Gt
<Advanced Technologies>
44
30
33
10
20
30
40
50
1990 2000 2010 2020 2030 2040 2050
GtCO2Energy Efficiency
Biofuels
Wind, Solar, etc.
Nuclear
Fuel Switching
CCS
Reference
ATS
Halve
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15
Peak Oil “Demand” Case
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16 Transportation, especially cars, drives oil demand
16
⛽ Oil consumption [Reference Scenario] ⛽ Oil for Road [Reference Scenario]
Others
Non-
energy
use
Other
transport30
40
45
47
Road
48
76
90
105
114122
0
20
40
60
80
100
120
2000 2015 2030 2040 2050
Mb
/d
21
19OECD
15
18
26Non-
OECD
33
0
10
20
30
40
2000 2010 2020 2030 2040 2050
Mb
/d
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17 The time for car electrification has come?
17
⛽ Selected recent movements by governments/assemblies and car makers A resolution to ban conventional car sales
in the European Union by 2030 was passed
by the Bundesrat of Germany (2016)
Germany
The ruling and opposition parties proposed
the abolition of conventional vehicles by
2025 (2016)
Norway
The Government announced that it would
ban conventional car sales by 2040 (2017)
France
The Government announced that it would
ban conventional car sales by 2040 (2017)
United Kingdom
Minister said that all new car sales after
2030 would be electric vehicles (2017)
India
Deputy Minister mentioned that the ban
on the sale of conventional vehicles was
under investigation (2017)
China
The target for FCV sales is more than
30,000/year in 2020 (2015). Reported of full-
scale entry into EVs in 2020 (2016)
Announced the strategy to increase EV share in
its total sales to 25% with more than 30
models of EVs by 2025 (2017)
Introducing 12 models of EVs by 2022. The
target of 30% of its total sales as EVs (2017)
The plan to prepare EVs at all line up by 2020
(2015)
Announced that eco-cars combined with EVs
and HEVs will be raised to 70% by 2025 (2017).
In 2030, two-thirds of automobile sales will be
electrified. EVs will be released in China in 2018
(2017).
Toyota
Volkswagen
Renault-Nissan
Hyundai
Ford
Honda
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18 Oil peaks around 2030 by rapid penetration of ZEVs
18
⛽ Oil for Road [Peak Oil Demand Case]
Note: Dotted lines are the Reference Scenario
15
33
21
16
OECD
5
18
22
Non-
OECD
11
0
10
20
30
40
2000 2010 2020 2030 2040 2050
Mb
/d
⛽ Total Oil Consumption
8690
105
122
Advanced
Technologies
97
98
Peak Oil
Demand
89
60
80
100
120
2010 2020 2030 2040 2050
Mb
/d
Reference
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19 ⛽ While oil decreases, natural gas and coal increase
19 Note: Excluding own use
-1,846
-1,596
432
572
-1,567
-83
409
-2,000 -1,000 0
(Mt)
Oil
Coal
Natural gas
Oil
Biomass
Electricity
CO
2
Prim
ary
co
nsu
mp
tio
nRo
ad
Mtoe
2030
2050409
1004
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20 Crude oil production shifts to low-cost regions...
20
⛽ Crude oil production [Peak Oil Demand Case]
28.8
9.9
17.1
13.8
7.2 8.4
33.7
10.7
18.4
13.8
6.9 6.9
37.3
9.2
13.011.5
6.2 5.3
32.4
42.0
11.313.6
21.6 21.9
14.5 15.0
8.8
12.4
7.4 7.2
0
10
20
30
40
Middle East Others North America Former Soviet
Union
Latin America Asia
OPEC Non-OPEC
Mb
/d
2015 2030 2050 Reference
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21 ⛽ Due to lower prices, Middle East will suffer
the largest economic downturn
21
The ratio of net oil exports/imports to nominal GDP [2050]
Note: Europe excludes the former Soviet Union
ASEAN
India
Other
Asia
Japan
Europe
China
Oceania
United
States
Africa
Latin
America
Former
USSR
Canada
Middle
East
-15%
-10%
-5%
0%
5%
0 50 100 150
Ch
an
ges in
net o
il exp
ort r
atio
to
no
min
al G
DPG
DP
Real GDP ($2010 trillion)
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22 Less pollution but less revenues from excise taxes
22
⛽ Excise taxes on gasoline and diesel oil for automobiles in OECD
370
313
238
270
79
0
100
200
300
400
2030 2050 2030 2050
2015 Reference Peak Oil
Demand
$ b
illio
n
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23 What are the implications of declining oil use?
• Under certain circumstances, oil consumption can turn into a decline in
the not too distant future.
• The extreme assumption on the penetration of ZEVs is challenging.
Oil consumption may not easily peak out.
Oil is required even at the same scale of today in 2050 .
• The lack of supply investment because of pessimism could threaten
energy security and that would further decrease oil demand. The rising
dependence on the Middle East will increase geopolitical risk.
• Collaboration between consuming and producing countries will
become even more important. Supporting efforts such as Saudi Arabia’s
“Vision 2030“ is essential.
23
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24
Today’s Topic
Role of Coal & LNG in Asia’s Future Energy Mix
: Defying the odds?
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25
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1980 1990 2000 2010 2020 2030 2040 2050
Mtoe
化石燃料
85%→82%(レファレンス )
71%(技術進展)
石油
石炭
天然ガス
他再生可能
原子力
水力
Primary Energy Demand Reference Scenario ・・・Advanced Tech Scenario
World Asia
25
0
1,000
2,000
3,000
4,000
5,000
6,000
1980 1990 2000 2010 2020 2030 2040 2050
Mtoe
石油
石炭
天然ガス
他再生可能
原子力
水力
化石燃料
81%→79%(レファレンス )
68%(技術進展)
Coal
Oil
Gas
Coal
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26 Power generation mix
26
Reference Scenario
Advanced Technologies Scenario
Asia World
0
5,000
10,000
15,000
20,000
25,000
2015 2050 2030 2050
Ref Adv. Tech
Renewables
Hydro
Nuclear
Oil
Gas
Coal
TWh
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2015 2050 2030 2050
Ref Adv. Tech
GW
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2015 2050 2030 2050
Ref Adv. Tech
Renewables
Hydro
Nuclear
Oil
Gas
Coal
TWh
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2015 2050 2030 2050
Ref Adv.Tech
GW
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27 Power Generation Mix (Asia) Reference Scenario
Power Generation Share
27
0
5,000
10,000
15,000
20,000
25,000
1980 1990 2000 2015 2030 2040 2050
Other Renewable
Hydro
Nuclear
Natural Gas
Oil
Coal
TWh
0%
20%
40%
60%
80%
100%
1980 1990 2000 2015 2030 2040 2050
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28 ASEAN Will Become Net Importer of Gas and Coal Reference scenario
Oil Gas Coal
28
91
201
395
-500
-400
-300
-200
-100
0
100
200
300
400
500
2015 2030 2050
生産
需要
純輸入
Mtoe
-46
10
72
-500
-400
-300
-200
-100
0
100
200
300
400
500
2015 2030 2050
生産
需要
純輸入
Mtoe
-163-128
50
-500
-400
-300
-200
-100
0
100
200
300
400
500
2015 2030 2050
生産
需要
純輸入
MtoeProduction
Demand
Net Import
Production
Demand
Net Import
Production
Demand
Net Import
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0
1,000
2,000
3,000
4,000
5,000
1980 1990 2000 2015 2030 2040 2050
Oceania
Africa
Non-OECD Europe, Central
AsiaOECD Europe
Middle East
Asia
L.America
N.America
Mtoe
0
1,000
2,000
3,000
4,000
5,000
1980 1990 2000 2015 2030 2040 2050
Transfer
Non-energy
Other
Transport
Industry
Mtoe
Coal Consumption
World
Reference Scenario
29
Asia
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1980 1990 2000 2015 2030 2040 2050
Others
Korea
Japan
ASEAN
India
China
Mtoe
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1980 1990 2000 2015 2030 2040 2050
Transfer
Non-energy
Other
Transport
Industry
Mtoe
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30 Coal Questions
• Led by Europe, China and the US, global demand for coal has been declining in
recent years. Should we anticipate that the rest of Asia will soon follow a
similar trend and further decline the demand for coal? Will it be in response
to economic or environmental (local / global) concerns?
• For the fast growing countries/economies, their industrial use of coal (coking
and steam coal) , such as for steel and cement, are expected to increase. How
do you envision their transition?
• Will coal remain the cheapest energy option despite the promising or
anticipated cost decline of renewable and LNG?
• Should importing high quality coal make sense for those countries endowed
only with low calorie domestic coals? Is the timing correct for those countries
to start investing and introducing CCT such as super-critical or ultra-super
critical?
30
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31 LT LNG Supply-Demand Outlook for Asia Supply potentials can continue to exceed demand up to around 2020
0
100
200
300
400
500
600
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Divertable supplies from Atlantic
New projects under plannning
New projects with SPA/HOA signed
Existing projects
High demand
Low demand
Million Tonnes
Source: IEEJ
LNG will be oversupplied at least till 2020.
Timely upstream investment is required for the balance beyond 2030
High
Low
Demand
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32 LNG Questions
• Despite an increasing demand for LNG, it seems that abundant future supplies
from new projects are putting downward pressures on prices. Because of this
competitive situation, do you foresee the LNG market to eventually face a
supply shortage accompanied with price increases?
• Many refer to Natural gas and LNG as playing a major role as a “bridging fuel”;
if so, how long can it last?
• How will LNG (Natural gas) compete with the other components of the energy
mix?
32
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33 How it was and how it will look
33
Energy Transition
COAL
Biomass
Oil Gas
Wave & Wind
Other
Renewables
Source: Energy Matters website
Data from Vaclav Smil and BP as compiled by Rembrandt
Koppelaar.
Source: Staudt, Larry, “Assisting the World's Transition to
a Sustainable Energy Future
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34 Coal & LNG Questions
• Do you foresee Asia as pursuing and achieving zero-emissions?
What will be the position of coal and LNG in a de-carbonized society?
• Given the current (and anticipated) environmental policies,
is it an appropriate time to invest in either coal or LNG industry?
• If we pursue zero-emission, how big of a role can CCS play?
For example, given that one ton of coal emits more than 3 tons of CO2, is CCS
at $50 to 100 per ton CO2 still an option?
At which CCS costs will the industry remain competitive?
34
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35 We are Still in “Transition”
35
1900 1950 2000 2050 2100
Economy Energy Security Environment
Affordable Reliable Clean
Wood/Coal/Oil/Hydro/Nuclear/Gas Wind/Solar
Realistic technologies Ideal technologies