© OECD/IEA 2012

World Energy Outlook 2012World Energy Outlook 2012Maria van der Hoeven

Executive Director, IEA Warszawa, 14 December 2012

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The contextThe context

Foundations of global energy system shifting Resurgence in oil & gas production in some countries Retreat from nuclear in some others Signs of increasing policy focus on energy efficiency

All-time high oil prices acting as brake on global economy Divergence in natural gas prices affecting Europe (with prices 5-times US

levels) and Asia (8-times)

Symptoms of an unsustainable energy system persist Fossil fuel subsidies up almost 30% to $523 billion in 2011, led by MENA CO2 emissions at record high, while renewables industry under strain Despite new international efforts, 1.3 billion people still lack electricity

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Emerging economies steer energy markets Emerging economies steer energy markets

Share of global energy demand

Global energy demand rises by over one-third in the period to 2035, underpinned by rising living standards in China, India & the Middle East

20%

40%

60%

80%

100%

1975 2010 2035

Middle East

India

China

OECD

Non-OECDRest of non-OECD6 030 Mtoe 12 380 Mtoe 16 730 Mtoe

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A US oil & gas transformation A US oil & gas transformation

United States oil and gas production

The surge in unconventional oil & gas production has implications well beyond the United States

Unconventional gas

Conventional gas

Unconventional oil

Conventional oil

mboe/d

5

10

15

20

25

1980 1990 2000 2010 2020 2030 2035

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Iraq oil poised for a major expansionIraq oil poised for a major expansion

Iraq oil production

Iraq accounts for 45% of the growth in global production to 2035;by the 2030s it becomes the second-largest global oil exporter, overtaking Russia

1

2

3

4

5

6

7

8

9

2012 2020 2035

mb/d NorthCentreSouth

Iraq oil exports

1

2

3

4

5

6

7

8

9

2012 2020 2035

mb/d OtherAsia

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Middle East oil to Asia: a new silk road Middle East oil to Asia: a new silk road

Middle East oil export, by destination

By 2035, almost 90% of Middle Eastern oil exports go to Asia; North America’s emergence as a net exporter accelerates the eastward shift in trade

7

United StatesKorea & Japan EuropeChina India

mb/d 2000

2011

2035

1

2

3

4

5

6

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Natural gas: towards a globalised marketNatural gas: towards a globalised market

Major global gas trade flows, 2010

Rising supplies of unconventional gas & LNG help to diversify trade flows, putting pressure on conventional gas suppliers & oil-linked pricing mechanisms

Major global gas trade flows, 2035

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Different trends in oil & gasDifferent trends in oil & gasimport dependencyimport dependency

While dependence on imported oil & gas rises in many countries,

Net oil & gas import dependency in selected countries

0%

20%

40%

60%

80%

100%

20% 40% 60% 80% 100%Oil imports

Gas Imports

United States

ChinaIndia

European Union

Korea & Japan20102035

20%Gas Exports

the United States swims against the tide

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3 000 4 000 5 000 6 000TWh

2 000

A power shift to emerging economiesA power shift to emerging economies

The need for electricity in emerging economies drives a 70% increase in worldwide demand, with renewables accounting for half of new global capacity

Change in power generation, 2010-2035

-1 000 0 1 000

Japan

European Union

India

China

TWh

Coal Gas Nuclear Renewables

Russia

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The multiple benefits of renewablesThe multiple benefits of renewablescome at a cost come at a cost

Renewable subsidies were $88 billion in 2011; over half the subsidies required to2035 has been committed to existing projects or is needed to meet 2020 targets

Global renewable energy subsidies of $4.8 trillion, 2011-2035

Electricity$3.6 trillion

Biofuels$1.2 trillion

Committed to existing projects

$1.0 trillion

Required to meet targets

2012-2020$1.6 trillion

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Wide variations in the price of powerWide variations in the price of power

Electricity prices are set to increase with the highest prices persisting in theEuropean Union & Japan, well above those in China, Russia & the United States

Average household electricity prices, 2035

5

10

15

20

25cents/kWh

2011 Non-OECD average

2011 OECDaverage

0China Russia United States European

UnionJapan

2035

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Energy efficiency: a huge opportunity going Energy efficiency: a huge opportunity going unrealised unrealised

20%

40%

60%

80%

100%

Industry Transport Powergeneration

Buildings

Unrealised energyefficiency potential

Realised energyefficiency potential

Two-thirds of the economic potential to improve energy efficiency remains untapped in the period to 2035

Energy efficiency potential used by sector in the New Policies Scenario

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The Efficient World Scenario: The Efficient World Scenario: aa blueprint for an efficient world blueprint for an efficient world

Economically viable efficiency measures can halve energy demand growth to 2035

Total primary energy demand by scenario

12 000

13 000

14 000

15 000

16 000

17 000

18 000

2010 2015 2020 2025 2030 2035

Mtoe

New PoliciesScenario

Efficient World Scenario

Reduction in 2035

Coal 1350 Mtce

Oil 12.7 mb/d

Gas 680 bcm

Others 250 Mtoe

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Power generation

Industry

Transport

Other

Room to manoeuvre

The Efficient World Scenario The Efficient World Scenario delays carbon lock-indelays carbon lock-in

Energy efficiency can delay “lock-in” of CO2 emissions permitted under a 2 °C trajectory – which is set to happen in 2017 – until 2022, buying five extra years

5

10

15

20

25

30

2011 2015 2020 2025 2030 2035

Gt

2 °C trajectory

Lock-in of existinginfrastructure

2017

Lock-in of infrastructure in New Policies Scenario in 2017

202235

Lock-in of infrastructurein Efficient World Scenario in 2022

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Foundations of energy system shifting: Foundations of energy system shifting: implications for Polandimplications for Poland

With Poland’s robust economy & ageing energy infrastructure, government & industry face critical policy & investment choices

Energy efficiency as well as nuclear, renewables & natural gascan help Poland address both energy security & climate change

Unconventional natural gas resources in Poland, if cost-effective& developed in a sustainable manner, can have profound implications for the nation itself, as well as the EU as a whole

Poland’s energy sector should foster developments of crucial new energy technologies, including CCS, & remain responsive to the ever-changing global energy landscape