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Bridging the Gap Between Energy Producers and
ConsumersCarmen Difiglio, Ph.D.
U.S. Department of EnergyInternational Conference on Economics
Turkish Economic Association
September, 2006
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Outline of Talk Problems facing energy producers and consumers.
Oıl market factors/access to capital. CO2 emıssıon trends (ıntensıty). Role of advanced technologıes to reduce CO2 emıssıons.
Technology scenarios. IEA analysıs used to achıeve a world-wıde perspectıve.
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Problems Facing EnergyConsumers
Rising prices. Uncertain supplıes. Conflict between economic growth and environment.
Energy security. Role of government.
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Problems Facing EnergyProducers
Uncertainties:–Future markets.
–Environmental constraints.
–Government policies. Short-term vs. long-term planning horizon.
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World Primary Energy Demand(IEA WEO)
Fossil fuels account for almost 90% of the growth in energy demand between now and 2030
Oil
Natural gas
Coal
Nuclear power
Hydro power
Other renewables
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
1970 1980 1990 2000 2010 2020 2030
Mto
e
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
1970 1980 1990 2000 2010 2020 2030
Mto
e
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Increase in World Primary Energy Production by Region (IEA WEO)
Almost all the increase in production to 2030
occurs outside the OECD
3%12%
85%
0
1 000
2 000
3 000
4 000
5 000
6 000
1971-2002 2002-2030
Mto
e
OECD Transition economies Developing countries
31%
10%
59%
share of total increase (%)
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Access to OılAccess to Oıl Future oıl supplıes are ıncreasıngly not dıctated by market forces but by government polıcıes.
This partly reflects exercıse of monopoly power but also can reflect natıonal polıcıes that are not as self servıng.
Access of foreıgn capıtal can ımprove productıvıty, reduce waste and envıronmental damage assocıated wıth energy productıon.
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Access to Oil Reserves (IEA WEO)
National companies only (Saudi Arabia,
Kuwait, Mexico)35%
Limited access - National
companies 22%
Production sharing
12%
Concession21%
Iraq10%
1,032 billion barrels
Access to much of the world’s remaining oil reserves is restricted
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Undiscovered Oil & Gas Resources & Exploration Wells Drilled, 1995-2003 (IEA WEO)
27%
24%12%
9%
28%
Middle East Former Soviet Union North America
Africa, Latin America and Asia
Undiscovered Oil & Gas Resources
Europe
1.9 trillion boe
64%
7%
22%
5%2%
Number of New Wells Drilled in 1995-2003
24 500 fields
Discoveries have fallen in recent year, mainly because exploration has shifted to less prospective regions
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Environment Environment Pollution vs Climate-Changing Emissions
Reducing pollution (sulfur, NOx, VOCs, PM) has tangible benefits that are easily recognized. Local actors receive the benefits.
Reducing climate-changing emissions (CO2, methane, etc.) has less tangible benefits. Benefits accrue to non-actors in non-predictable ways.
While substantial progress has been made to produce and use energy without pollution, climate-changing emissions are much more difficult problem.
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Technology OpportunitiesTechnology Opportunitiesand Limitsand Limits
Clean energy technologies can provide more secure energy services but do not always represent a good business investment.
It is usually more profitable to produce energy than to save energy.
Without government support, there is little incentive for industry to commercialize uncompetitive technologies with the goal of making them competitive through technology learning.
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0
4 000
8 000
12 000
16 000
20 000
1970 1980 1990 2000 2010 2020 2030
Mt o
f CO
2
OECD Transition economies Developing countries
Global emissions grow 62% between 2002 & 2030, and developing countries’ emissions will overtake OECD’s in
the 2020s
World Energy-Related CO2 Emissions(IEA WEO)
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Growth in World Energy Demand and CO2 Emissions (IEA WEO)
Average carbon content of primary energy increases slightly through 2030 – in contrast to
past trends
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
1971-2002 2002-2030
aver
age
an
nual
gro
wth
rat
e
Primary energy demand CO2 Emissions
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IEA’sEnergy Technology Perspectives
2006 Publication of the International Energy Agency.
Provides status of energy technologies that can reduce provide energy service demand while reducing CO2 emissions.
Using the Energy Technology Perspectives model, provides scenarios of technology use through 2050.
Assumes upper limit of $25 USD/tonne CO2 (incremental cost to achieve emission reduction).
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Scenarios (IEA ETP) Baseline ACT Map = achieves expected success in all technology areas with government efforts and CO2 reduction incentives.
No CO2 capture and storage scenario. Low
–efficiency,–renewables, &–nuclear scenarios.
TECH = high success in all technology areas.
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Emission ReductionEmission Reductionby Technology Areaby Technology Area (IEA ETP)
Other renewables
Biomass
Fossil fuel generation efficiency
Nuclear
Coal to gas
Hydropower
CCSPower
generation
End-useefficiency
Biofuels in transport
CCS in fuel transformation
CCS in industry
Fuel mix in buildings and industry
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Emission Reduction among OECD, Emission Reduction among OECD, Transition and Developing CountriesTransition and Developing Countries (IEA (IEA ETP)
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Key FindingsKey FindingsEnergy Technology Perspectives
Most energy still comes from fossil fuels in 2050.
CO2 emissions can be returned towards today’s level by 2050.
Growth in oil and electricity demand can be halved.
Power generation can be substantially de-carbonised by 2050.
De-carbonising transport will take longer but must be achieved in the second half of the century.
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Policy MessagesPolicy MessagesEnergy Technology Perspectives
Improving end-use energy efficiency is top priority.
Well-focused R&D is essential. Tech R&D to deployment incentives are critical.
Stable policy environment needed that promotes low carbon technologies and also address non-economic barriers.
Collaboration among developed & less-developed countries is essential.