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PEDRO L. MARÍNPEDRO L. MARÍNRome, March 3, 2011Rome, March 3, 2011

1. International Energy Trends

2. Current Energy Challenges

Content

3. Opportunities

2

4. Collaboration between International Organizations and National Agencies

Over the last years the energy sector has suffered deep changes

Volatility and price growth

Emerging economies high growth rates Technological progress

Climate change

1. International energy trends

3

Oil price evolution 1994-2011

0,00

20,00

40,00

60,00

80,00

100,00

120,00

140,00

160,00

1/1/199

4

1/1/199

5

1/1/199

6

1/1/199

7

1/1/199

8

1/1/199

9

1/1/200

0

1/1/200

1

1/1/200

2

1/1/200

3

1/1/200

4

1/1/200

5

1/1/200

6

1/1/200

7

1/1/200

8

1/1/200

9

1/1/201

0

1/1/201

1

Source: Platt s

$/Bb

l

• Effects: reduction of energy dependency and search for alternative energy sources.

– Boost in demand.

– Supply rigidities (size of investments, geopolitical instability, geological difficulties).

– Speculative component in financial markets.

1. International energy trendsVolatility and price growth

4

• Volatility in the short term and price growth in the mid and long term due to:

• Large economic growth at the emerging countries. Last 20 years: OECD growth rate, 2.2%; emerging countries growth rate, 4.7%.

• In energy, this trend is even stronger:– In 1990, energy consumption in emerging countries was 26% of world consumption.

In 2009, 45%. – In 1995, consumption in USA was more than twice the consumption in China. Now

China is the main consumer worldwide. – Since 1995, 90% of world energy consumption corresponds to emerging economies.

• Effects: shift in trade flows, market adjustment rigidities, environmental impact.

Principales consumidores energéticos (top-10)

0 500 1.000 1.500 2.000

ItalyUK

FranceIndia

CanadaGermany

JapanRussiaChina

US

BrazilS.KoreaFrance

GermanyCanada

JapanIndia

RussiaChina

US

Consumo energía primaria (Mtoe)Fuente: SEE.

2009

1995

Participación en el incremento del consumo de energía primaria

48,7%

43,7%

11,1%

89,9%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

OECD

Emergentes

OECD

Emergentes

Fuente: SEE.

Período 1995-2009

Período 1965-1995

5

1. International energy trendsEmerging economies high growth rates

Top-10 energy consumers Primary energy consumption growth share

• Energy consumption is responsible for 65% of GHG emissions (75% in 1990). Accordingly it is key to achieve the stabilization scenarios included at the IPCC.

• Effects: investment in a cleaner energy model and gradual internalization of environmental impact.

• a6

1. International energy trendsClimate change

GHG emissions distribution among sectors

Source: STERN report 2006

Land use

Agriculture

Land use

Wastage

Electricity generation

Industry

Transport

Buildings

Other energy uses

• This has led to a technological revolution, providing incentives to invest in new and alternative technologies.

– LNG plants and CCGTs to generate electricity.

– Electrification process. Since1990, world electricity consumption has raised from 22% to 27% of final energy consumption. The EU 2050 Roadmap aims at reaching 60%, which is possible only with electrical vehicles.

– Development of renewable energies. 160 GW of wind power and 23 GW of solar in 2009. Large cost reduction: current prices were thought to be possible only in 2015.

– Reinforcement of energy saving and efficiency policies.

7

1. International energy trendsTechnological progress

1. International Energy Trends

2. Current Energy Challenges

Content

8

3. Opportunities

4. Collaboration between International Organizations and National Agencies

9

CompetitivenessEnergy is the main input for many industries, even more important than labour.

Environmental targetsKyoto Protocol agreement on the reduction of collective greenhouse gas emissions and further agreements on technology sharing reached at Cancun COP-16.

Security of supplyEnergy dependency is above 50% for most countries. This implies: continuous transfer of wealth to other economies, risk of supply shortages and imported volatility of domestic prices through international fuel prices and exchange rate volatility.

2. Current energy challenges

1. International Energy Trends

2. Current Energy Challenges

Content

10

3. Opportunities

4. Collaboration between International Organizations and National Agencies

11

3. Opportunities

Renewable energy:Wind Geothermal Solar Biomass Sea power

Infrastructures:Grids Interconnections

Storage

Smart grids

Saving and energy eff.:Lighting Production tech.

ICT – Demand management

Materials Capital equipment

Interconnections facilitate competition among different markets

3. OpportunitiesInfrastructures

12

Electricity interconnections facilitate the management of renewable energy in the system, enhancing their deployment

Smart grids will facilitate a more efficient management of demand and supply, the development of electric mobility and a larger integration of renewable energies

Source: BP statistical review of world energy (June 2010)

Regasification plants, storage capacity and gas interconnections

provide a greater supply flexibility

13

3. OpportunitiesSaving and energy efficiency: competitivity

Energy intensity by geographical regions

Source: U.S. Energy Administration

0,00

0,10

0,20

0,30

0,40

0,50

0,60

0,70

0,80

0,90

1,00

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

tep/1

.000 U

.S $

North America Central & South America Europe Middle East Africa Asia & Oceania World

North America

Central and South America

Europe

Middle East

Africa

Asia & Oceania

World

Since the eighties, energy intensity has fallen by a 20% in the World. In Europe, where prices are higher due to strong energy dependency and fiscal policies, it has

fallen by almost a 50% in the same period.

Investment in energy efficiency produces benefits since the beginning.

14

3. OpportunitiesSaving and energy efficiency: competitivity

Source Perspectives on energy technologies 2008. IEA.

Costes de abatimiento por sectoresEmissions abatement costs by sector

Electricity sector

Energy efficiency

Fuel switching and CCS

Alternative transport fuels

Reduction of CO2 emissions in 2050 (Gt CO2/year)

Mar

gina

l cos

t (U

SD

/tC

O2)

15

From geographically From geographically concentrated production and concentrated production and

global trade flows to…global trade flows to…

… … local production and local production and regional interconexions. regional interconexions.

3. OpportunitiesRenewable energies: security of supply

16

Renewable energy sources are emissions-free.Renewable energy sources are emissions-free.

Carbon content96

73

51

00

1020

3040506070

8090

100

Coal Oil Natural Gas Renewable Energy

kg C

O2

per

TJ

Source: BP Statistical Review of World Energy

3. OpportunitiesRenewable energies: environment

17

0

5

10

15

20

25

30

35

2010 2015 2020 2025 2030

Coste de generación eléctrica (c€2010 / kWh)

Año de puesta en marchaFV Tejado

FV Suelo

Eólica offshore

Eólica onshore (rango de vientos bajo, medio e intenso)

Solar termoeléctrica

Cost evolution (c€2010/KWh)

Strong cost Strong cost reductions have been reductions have been seen recently and are seen recently and are expected for the next expected for the next

years…years…

CSPFV roof

Offshore wind

Onshore wind

FV ground

Year starting operationsSource: BCG

… … and, even now, and, even now, renewable energies are renewable energies are competitive in isolated competitive in isolated

systemssystems

3. OpportunitiesRenewable energies: competitiveness

3. OpportunitiesCommon features

18

Large up-front investments

Knowledge intensive

Continuous technological

change0

5

10

15

20

25

30

35

2010 2015 2020 2025 2030

Coste de generación eléctrica (c€2010 / kWh)

Año de puesta en marchaFV Tejado

FV Suelo

Eólica offshore

Eólica onshore (rango de vientos bajo, medio e intenso)

Solar termoeléctrica

Cost evolution (c€2010/KWh)

CSPFV roof

Offshore wind

Onshore wind

FV ground

Year starting operations

Source: BCG

Cost structure of electricity generation units

70%

30%

15%

85%

0%10%20%30%40%50%60%70%80%90%

100%

Operation and Maintenance Exp. Capital Expenditure

% o

ver t

otal

cos

ts

Fossil fuel technologiesRenewable energies*

Source: SEE, Ministry of Industry, Tourism and Trade* Except for biomass power plants

1. International Energy Trends

2. Current Energy Challenges

Content

19

3. Opportunities

4. Collaboration between International Organizations and National Agencies

4. Collaboration between International Organizations and National Agencies

20

Technology transfer

Share and improve information about current situation and prospective analyses

Capacity building on regulatory design, technical skills and economic viability

Financial schemes

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PEDRO L. MARÍNPEDRO L. MARÍNRome, March 3, 2011Rome, March 3, 2011