the future of global energy markets: implications for ... · the future of global energy markets:...
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IEA 2019. All rights reserved.
The Future of Global Energy Markets: Implications
for Security, Sustainability and Economic Growth
Dr. Fatih Birol, Executive Director, International Energy Agency
Delft University of Technology, 20 March 2019
• 31 January 2019
2IEA 2019. All rights reserved.
Today’s energy context
Mixed signals about the pace & direction of change in global energy:
• North America has entered a new age of oil & gas wealth
• Natural gas is on the rise: China’s rapid demand growth is erasing talk of a ‘gas glut’
• Solar PV has the momentum while other key technologies & efficiency policies need a push
For the first time, global population without access to electricity fell below 1 billion
Electricity is carrying great expectations, but questions remain over the extent of itsreach in meeting demand & how the power systems of the future will operate
Policy makers need well-grounded insights about different possible futures & howthey come about.
3IEA 2019. All rights reserved.
CO2 emissions rose for a second year in a row, after remaining flat for the three
previous years
Global emissions increased in 2018 – again
Global energy-related CO2 emissions
CO2 emissions
Increase in 2017
5
10
15
20
25
30
35Gt CO2
4IEA 2019. All rights reserved.
2000
1 000 2 000 3 000 4 000
United States
European Union
China
Africa
India
Southeast Asia
Middle East
Mtoe
2001
1 000 2 000 3 000 4 000
United States
European Union
China
Africa
India
Southeast Asia
Middle East
Mtoe
2002
1 000 2 000 3 000 4 000
United States
European Union
China
Africa
India
Southeast Asia
Middle East
Mtoe
2003
1 000 2 000 3 000 4 000
United States
European Union
China
Africa
India
Southeast Asia
Middle East
Mtoe
2004
1 000 2 000 3 000 4 000
United States
European Union
China
Africa
India
Southeast Asia
Middle East
Mtoe
2005
1 000 2 000 3 000 4 000
United States
European Union
China
Africa
India
Middle East
Southeast Asia
Mtoe
2006
1 000 2 000 3 000 4 000
United States
China
European Union
Africa
India
Middle East
Southeast Asia
Mtoe
2007
1 000 2 000 3 000 4 000
United States
China
European Union
Africa
India
Middle East
Southeast Asia
Mtoe
2008
1 000 2 000 3 000 4 000
United States
China
European Union
Africa
India
Middle East
Southeast Asia
Mtoe
2009
1 000 2 000 3 000 4 000
China
United States
European Union
Africa
India
Middle East
Southeast Asia
Mtoe
2010
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2011
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2012
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2013
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2014
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2015
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2016
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2017
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2018
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2019
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2020
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
The new geography of energy
Energy demand
In 2000, more than 40% of global demand was in Europe & North America and some
20% in developing economies in Asia. By 2040, this situation is completely reversed.
2021
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2022
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2023
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2024
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2025
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2026
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2027
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2028
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2029
1 000 2 000 3 000 4 000
China
United States
European Union
India
Africa
Middle East
Southeast Asia
Mtoe
2030
1 000 2 000 3 000 4 000
China
United States
India
European Union
Africa
Middle East
Southeast Asia
Mtoe
2031
1 000 2 000 3 000 4 000
China
United States
India
European Union
Africa
Middle East
Southeast Asia
Mtoe
2032
1 000 2 000 3 000 4 000
China
United States
India
European Union
Africa
Middle East
Southeast Asia
Mtoe
2033
1 000 2 000 3 000 4 000
China
United States
India
European Union
Africa
Middle East
Southeast Asia
Mtoe
2034
1 000 2 000 3 000 4 000
China
United States
India
European Union
Africa
Middle East
Southeast Asia
Mtoe
2035
1 000 2 000 3 000 4 000
China
United States
India
European Union
Africa
Middle East
Southeast Asia
Mtoe
2036
1 000 2 000 3 000 4 000
China
United States
India
European Union
Africa
Middle East
Southeast Asia
Mtoe
2037
1 000 2 000 3 000 4 000
China
United States
India
European Union
Africa
Middle East
Southeast Asia
Mtoe
2038
1 000 2 000 3 000 4 000
China
United States
India
European Union
Africa
Middle East
Southeast Asia
Mtoe
2039
1 000 2 000 3 000 4 000
China
United States
India
European Union
Africa
Middle East
Southeast Asia
Mtoe
2040
1 000 2 000 3 000 4 000
China
United States
India
Africa
European Union
Middle East
Southeast Asia
Mtoe
2040
1 000 2 000 3 000 4 000
China
United States
India
Africa
European Union
Middle East
Southeast Asia
Mtoe
By 2040, this situation is completely reversed.
5IEA 2019. All rights reserved.
Fuelling the demand for energy
The increase in demand would be twice as large without continued improvements
in energy efficiency, a powerful tool to address energy security & sustainability concerns
Oil
Advancedeconomies
Developingeconomies
Gas
Advancedeconomies
Developingeconomies
Coal
Advancedeconomies
Developingeconomies
-600
-300
0
300
600
900
1 200
1 500Renewables & nuclear
Mtoe
Advancedeconomies
Developingeconomies
Ren
ewab
les
Nuclear
Industry
Other
Power
Cars
Other
Petro-chemical
Cars
Power
Other
Power
6IEA 2019. All rights reserved.
Our energy destiny rests with governments
Total investment in energy supply to 2040:
$42.3 trillion
More than 70% of the $2 trillion required each year in energy supply investment either comes from
state-directed entities or receives a full or partial revenue guarantee
2018-2040 42.3 trillion dollars
Government-driven70%
Market-driven30%
7IEA 2019. All rights reserved.
US expansion is 70% of global growth. Gains in Brazil, Iraq, Norway, the UAE and Guyana.
Main declines in Iran and Venezuela.
US leads the way in global oil supply growth
Change in total oil supply 2018-24
US
Brazil
Iraq
Norway
UAE
Guyana
Iran
Venezuela
-2
-1
0
1
2
3
4
5
mb
/d
8IEA 2019. All rights reserved.
The United States accounts for a third of growth in global natural gas production to 2025
Natural gas production growth for selected countries and regions, 2018-2025
US takes the lion’s share of the growth in global gas supply
& two-thirds of anticipated growth in LNG exports
-50
0
50
100
150
200
US Russia Middle East China Australia East Africa Europe
bcm
Domestic market Export market
9IEA 2019. All rights reserved.
The European Union needs to find imports to cover one-third of its demand by 2025, due to sharp
declines in the EU’s own production & the expiry of nearly 100 bcm of long-term gas import contracts
Produced / contracted gas & additional import requirements in the EU, 2018-2025
Europe will need to seek new gas imports
500
bcm
100
200
300
400
2018 2019 2020 2021 2022 2023 2024 2025
Additional supplyneeded
LNGCaspianNorth Africa pipe
Russia pipe
Norway pipe
EU-28 production
10IEA 2019. All rights reserved.
Technology progress and competition have driven down prices to record-low levels in countries with
good renewable resources, transparent policies and well-designed auction schemes
Announced wind and solar PV average auction prices by commissioning date
Wind and solar PV costs falling rapidly
0
20
40
60
80
100
120
140
160
180
2012 2013 2014 2015 2016 2017 2018 2019 2020
USD/MWh
Onshore windaverage auctionprice
Solar PV averageauction price
11IEA 2019. All rights reserved.
Phases of integration with variable renewables share, 2017
Higher shares of variable renewables raise flexibility needs and call for reforms to deliver investment in
power plants, grids & energy storage, and unlock demand-side response
Flexibility: the cornerstone of tomorrow’s power systems
All sources of
flexibility
needed
6
5
2
1
Mobilise existing power system flexibility
4
3
Targeted
investment in
flexibility needed
Integration
phase
Wind and solar PV share of generation
0% 10% 20% 30% 40% 50% 60%
India
China
United States
India
China
United States
European UnionEuropean Union
Germany
Germany
United Kingdom
United Kingdom
Phases of integration with variable renewables share, 2030
12IEA 2019. All rights reserved.
40
80
120
160
China Russia India
GW
2017
Two directions for nuclear power
Without policy changes
The contribution of nuclear power could decline substantially in leading markets,
while large growth is coming, as China takes first position within a decade
40
80
120
160
UnitedStates
EuropeanUnion
Japan
Retirements from 2017
2040
GW
Growth markets
Additionsto 2040
2017
13IEA 2019. All rights reserved.
Coal plants make up one-third of CO2 emissions today and half are less than 15 years old; policies are
needed to support CCUS, efficient operations and technology innovation
Can we unlock a different energy future?
12
18
24
30
2017 2025 2030 2035 2040
Gt CO236
Sustainable Development Scenario (Paris)
Coal-fired power plants
Increased roomto manoeuvre
6
New Policies Scenario
Existing and under constructionpower plants, factories, buildings etc.
14IEA 2019. All rights reserved.
How is clean energy technology progressing globally ?
Solar PV Lighting EVs Data centres& networks
Onshore wind
Hydropower Offshore wind
Nuclear power
Natural gas-fired power
GeothermalCCS in power
Coal-fired power
CSPOcean
Buildings codes
Heating
Cooling Appliances & equipment
Fuel economy of LDVs
Trucks/HDVs-fuel economy
International shipping
Transport biofuels
Energy storage
Chemicals Steel Aluminium Pulp & paper
Rail
Renewableheat
Renewable Power
Cement
Aviation CCS in Industry
Smart grids Hydrogen fuel cells
Out of the 38 technologies included in Tracking Clean Energy Progress (TCEP) 2018, only 4 are on track,
23 need improvement and 11 are off track
Bioenergy
Digitalisation Demand response
15IEA 2019. All rights reserved.
China was a remarkable success story for electrification, bringing access to hundreds of millions in record time; India achieved electricity access for all its villages in 2018; Today the challenge is concentrated in sub-Saharan Africa
Population without electricity access
Electrification success elsewhere, but sub-Saharan Africa still remains in the dark
500
1 000
1 500
2 000
2 500
1985 2000 2017 2030
mill
ion
Rest of World
Sub-Saharan Africa
India
China
16IEA 2019. All rights reserved.
Conclusions
• The links between energy & geopolitics are strengthening & becoming more complex, a
major factor in the outlook for energy security
• US emerges as the n.1 source of oil and gas growth in the next five years. Despite rapid
deployment of electric vehicles, global oil demand shows no sign of peaking
• Electrification & digitalisation is creating new opportunities in the global energy system, but
market designs need to deliver both electricity and flexibility to keep the lights on
• There is no single solution to our energy and climate challenges: renewables, efficiency & a
host of innovative technologies, including storage, CCUS & hydrogen, are all required
• The future pathway for energy is open: governments will determine where our energy
destiny lies