© OECD/IEA 2016 © OECD/IEA 2016

Key Trends and Future Potential in Energy Sector Mitigation

Climate Change Expert Group (CCXG)

Global Forum on the Environment and Climate Change 14-15 March 2017

Dave Turk Head of Energy and Environment Division

International Energy Agency

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Economic growth and energy emissions are decoupling

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Power Generation

23% Biofuels and Solar

Heat 1%

Renewables 17%

USD 1.8 trillion

Investment flows signal a reorientation of the global energy system

An 8% reduction in 2015 global energy investment results from a $200 billion decline in fossil fuels, while the share of renewables, networks and efficiency expands

Oil & Gas 46%

Coal 4%

Electricity Networks

14%

Energy Efficiency

12%

Global Energy Investment, 2015

Thermal Power

7%

Source: IEA World Energy Investment 2016

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Understanding the ambition

2000 – 2015 –

2,7 ºC –

2 ºC –

1.5 ºC –

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Clean energy deployment is still overall behind what is required, but recent progress on electric vehicles, solar PV and wind is promising

Tracking Clean Energy Progress

Other renewable power

Buildings

Nuclear

Transport

Appliances and lighting Energy storage

Industry

Biofuels Carbon capture and storage

More efficient coal-fired power

Electric vehicles Solar PV and onshore wind

Technology Status today against 2DS targets

●Not on track ●Accelerated improvement needed ●On track

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Carbon intensity of new power capacity down 27% since 2005

Source: IEA World Energy Investment 2016

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Pre-2020 challenge: Peak in emissions IEA strategy to raise climate ambition

Global energy-related GHG emissions

Five measures – shown in a “Bridge Scenario” – achieve a peak in emissions around 2020, using only proven technologies & without harming economic growth

20

25

30

35

40

2000 2014 2020 2025 2030

Gt C

O2-

eq

Bridge Scenario

INDC Scenario Energy

efficiency

49%

Reducing inefficient coal

Renewables investment

Upstream methane reductions

Fossil-fuel subsidy reform

17%

15%

10%

Savings by measure, 2030

9%

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Peaking emissions around 2020: Bridging strategy varies across regions

The measures in the Bridge Scenario apply flexibly across regions, with energy efficiency & renewables as key measures worldwide

United States

European Union

China

India

Middle East

Latin America Africa

Southeast Asia

Russia

Fossil-fuel subsidies

Efficiency

Renewables Inefficient coal plants

Methane reductions

GHG emissions reduction by measure in the Bridge Scenario, relative to the INDC Scenario, 2030

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The carbon intensity of the global economy can be cut by two-thirds through a diversified energy technology mix

Contribution of technology area to global cumulative CO2 reductions

Long-term challenge: Large scale systems transformation and decarbonisation

0

5

10

15

20

25

30

35

40

45

2013 2020 2030 2040 2050

GtCO

2

Renewables 32%

Energy efficiency 32%

Fuel switching 10%

Nuclear 11%

CCS 15%2DS

4DS

Source: IEA, Energy Technology Perspectives 2016

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From 2 degrees to “well below” 2 degrees

Industry and transport account for 45% of direct CO2 emissions in 2013, but they are responsible for 75% of the remaining emissions in the 2DS in 2050.

Energy- and process-related CO2 emissions by sector in the 2DS

0

5

10

15

20

25

30

35

40

45

2013 2020 2030 2040 2050

GtCO

2

Agriculture 2%

Buildings 8%

Industry 33%

Transport 24%

Other transformation 4%

Power 29%

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How to motivate GHG reductions ?

Energy Sector Actions GHG targets

Are critical for achieving

Are not the only (or primary) driver of

Other reasons: e.g., saving money,

air quality, road congestion, energy security

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Thank you

Dave Turk Head of Energy and Environment Division david.turk@iea.org

© OECD/IEA 2016

Indicators to track energy sector transformation: Broader perspective

Broader indicators are needed to understand energy sector evolution and to formulate sound policy.

Coverage of a potential set of indicators • Energy supply and demand • The overall state of the energy system (outcome

metrics) • Underlying drivers of change (driver metrics)

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Aggregate perspective: How are we doing in reducing the carbon intensity of our energy system?

0

20

40

60

80

100

120

1970 1980 1990 2000 2010 2020 2030 2040 2050

Carb

on in

tens

ity (1

990

= 10

0)

Historical 2DS

-2.0%

-1.0%

0.0%

1.0%

2.0%

% c

hang

e

Annual % change in the ESCII, 2010-14

As of 2014, the world’s energy supply was 1.2% more carbon intensive than it was in 1990

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Post Paris energy sector metrics: Beyond GHG levels

The choice of metrics used to track and drive energy sector transformation matters a great deal • Specific energy goals can capture the multiple

benefits of low-carbon solutions • Energy sector metrics can link directly to policy

outcomes • Can highlight short-term actions needed for longer-

term low-carbon energy system transformation

Start with Energy Supply and Energy Demand

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Power Generation

23%

Global fleet average and new-build plants emissions intensity of power generation in IEA

scenarios

Oil & Gas 46%

Coal 4%

Electricity Networks

14%

Energy Efficiency

12%

Thermal Power

7%

0

100

200

300

400

500

600

1990 2000 2010 2020 2030 2040 2050

gCO 2

/kWh

Historic2DS average2DS new build

Source: IEA, Energy, Environment and Climate Change: 2016 Insights

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Enhancing UNFCCC processes

The UNFCCC process provides a strong foundation for metrics and data collection

Further actions that could be taken through the UNFCCC process include: • Establishing energy NDCs tracking procedures • Encouraging capacity building to collect detailed

sectoral and demand-side energy data • Highlighting the status of energy system

transformation in the five-yearly UNFCCC stocktaking

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…the global coverage of climate pledges is impressive

Pledges cover around 95% of global energy-related GHG emissions; their full implementation would be consistent with a temperature rise of 2.7 °C

Submitted INDCs Not submitted INDCs

OECD Asia Oceania

2.2 Gt

Russia and Caspian

2.0 Gt

Europe

3.8 Gt

North Americas

6.1 Gt

South America

1.2 Gt

Africa

1.1 Gt

Middle East

2.0 Gt

1.7 Gt

Other Asia

India

1.9 Gt

China

8.6 Gt

© OECD/IEA 2016

© OECD/IEA 2016

Aggregate perspective: How are we doing in reducing the carbon intensity of our energy system?

0

20

40

60

80

100

120

1970 1980 1990 2000 2010 2020 2030 2040 2050

Carb

on in

tens

ity (1

990

= 10

0)

Historical 2DS

-2.0%

-1.0%

0.0%

1.0%

2.0%

% c

hang

e

Annual % change in the ESCII, 2010-14

As of 2014, the world’s energy supply was 1.2% more carbon intensive than it was in 1990

© OECD/IEA 2016

Power Generation

23%

Global fleet average and new-build plants emissions intensity of power generation in IEA

scenarios

Oil & Gas 46%

Coal 4%

Electricity Networks

14%

Energy Efficiency

12%

Thermal Power

7%

0

100

200

300

400

500

600

1990 2000 2010 2020 2030 2040 2050

gCO 2

/kWh

Historic2DS average2DS new build

Source: IEA, Energy, Environment and Climate Change: 2016 Insights

© OECD/IEA 2016

Clean energy deployment is still overall behind what is required, but recent progress on electric vehicles, solar PV and wind is promising

Broader perspective summary: Progress in clean energy needs to accelerate

Technology Status today against 2DS targets Status

●Accelerated improvement needed ●On track ●Not on track

Institutionalisation Intensity Multilateralism PPP

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The carbon intensity of the global economy can be cut by two-thirds through a diversified energy technology mix

Contribution of technology area to global cumulative CO2 reductions

Long term challenge: Large scale systems transformation and decarbonisation

0

5

10

15

20

25

30

35

40

45

2013 2020 2030 2040 2050

GtCO

2

Renewables 32%

Energy efficiency 32%

Fuel switching 10%

Nuclear 11%

CCS 15%2DS

4DS

Source: IEA, Energy Technology Perspectives 2016

© OECD/IEA 2016

The carbon intensity of the global economy can be cut by two-thirds through a diversified energy technology mix

Contribution of technology area to global cumulative CO2 reductions

Long term challenge: Large scale systems transformation and decarbonisation

0

5

10

15

20

25

30

35

40

45

2013 2020 2030 2040 2050

GtCO

2

Buildings 10%

Industry 24%

Transport 18%

Other transformation 7%

Power 41%

4DS

2DS

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From 2 degrees to “well below” 2 degrees

Industry and transport account for 45% of direct CO2 emissions in 2013, but they are responsible for 75% of the remaining emissions in the 2DS in 2050.

Energy- and process-related CO2 emissions by sector in the 2DS

0

5

10

15

20

25

30

35

40

45

2013 2020 2030 2040 2050

GtCO

2

Agriculture 2%

Buildings 8%

Industry 33%

Transport 24%

Other transformation 4%

Power 29%

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Industry, Power and Transport will be the greatest emitters in the 2DS

Cumulative energy- and process-related CO2 emissions by sector in the 2DS, 2013-2050

Industry, power, and transport account for 85% of cumulative direct CO2 emissions between 2013 and 2050 in the 2DS

0% 5% 10% 15% 20% 25% 30% 35%

Agriculture

Other transformation

Buildings

Transport

Power

Industry 329 Gt

299 Gt

224 Gt

80 Gt

45 Gt

18 Gt

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The transition requires an exceptional effort

Meeting the 2DS requires significant changes in energy intensity and in the fuel mix over the next three decades

Global primary energy use by fuel, 2013-2050

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Benefits from saving electricity

Electricity savings in the end-use sectors not only reduce electricity bills for consumers, but also provide investment savings in the

power sector.