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Energy supply/demand up to 2050
Yukari Niwa Yamashita
Institute of Energy Economics, Japan (IEEJ)
SIEW2019 Thinktank Round Table C
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3
Reference ScenarioAdvanced Technologies
Scenario
Reflects past trends with technology progress and current energy policies, without any aggressive policies for low-carbon measures.
Assumes introduction of powerful policies to address energy security and climate change issues with the utmost penetration of low-carbon technologies.
Social-economy structure
Stable growth led by developing economies despite slower population growth.Rapid diffusion of energy consuming appliances and vehicles due to higher income.
International energy price
Oil supply cost increases along with demand growth.Gas price convergences among Europe, N. America and Asia markets.Coal keeps unchanged with today’s level.
Slower price increase due to lower demand growth (coal price decreases).
[LNG in Asia] Higher/lower price cases
Energy policiesGradual reinforcement of low-carbon policies with past pace.
Further reinforcement of domestic policies along with international collaboration.
Energy technologiesImproving efficiency and declining cost of existing technology with past pace.
Further declining cost of existing and promising technology.
Basic scenarios in IEEJ Outlook
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Population
4
CAGR Composition
Assumptions
0.5%
0.6%
0.4%
1.2%
0.1%
0.01%
2.1%
0.8%
0.8%
0% 1% 2% 3%
North America
Latin America
Asia
Middle East
Advanced Europe
Oth. Europe/Eurasia
Africa
Oceania
World
Compound annual growth rate1980-2017
2017-2050
0.6 0.8
4.1
4.7
1.3
2.5 7.5
9.7
0
2
4
6
8
10
2017 2050
Billion
Oceania
Africa
Oth. Europe/Eurasia
Advanced Europe
Middle East
Asia
Latin America
North America
4 (not 3) billion more
needs energy access
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Real GDP
5
CAGR Composition
Assumptions
2.0%
2.8%
3.7%
2.6%
1.3%
2.4%
4.3%
2.0%
2.7%
0% 2% 4% 6%
North America
Latin America
Asia
Middle East
Advanced Europe
Oth. Europe/Eurasia
Africa
Oceania
World
Compound annual growth rate1980-2017
2017-2050
1937
25
81
21
32
80
191
0
50
100
150
200
2017 2050
$2017 trillion
Oceania
Africa
Oth. Europe/Eurasia
Advanced Europe
Middle East
Asia
Latin America
North America
Decoupling required
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Crude oil
International energy prices
Note: Historical prices are nominal. Assumed future prices as real in $2018.
CIF import prices for Japan
Natural gas
Coal
6
Reference
Advanced Technologies
:
:
Assumptions
0
50
100
150
1980 1990 2000 2010 2020 2030 2040 2050
$/bbl
0
5
10
15
20
1980 1990 2000 2010 2020 2030 2040 2050
$/MBtu Japan
Europe (UK)
United States
0
50
100
150
1980 1990 2000 2010 2020 2030 2040 2050
$/t
0
200
400
600
800
1,000
1980 1990 2000 2010 2020 2030 2040 2050
$/toe
Moderate
assumption
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Primary energy consumption
7
By region By energy source
Reference Scenario
0
5,000
10,000
15,000
20,000
1980 1990 2000 2017 2030 2040 2050
Mtoe
Intl. bunkers
Oceania
Africa
Oth. Europe/Eurasia
Advanced Europe
Middle East
Asia
Latin America
North America
7,203
8,766
10,025
13,972
16,564
17,98318,757
0
5,000
10,000
15,000
20,000
1980 1990 2000 2017 2030 2040 2050
Mtoe
Other renewables
Hydro
Nuclear
Natural gas
Oil
Coal
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0.5 0.8
Demand Supply
Latin America
0.0 0.2
Demand Supply
Oceania
0.1 0.4
Demand Supply
Other Europe/Eurasia
-0.3 -0.2
Demand Supply
Advanced Europe
0.5 1.0
Demand Supply
Middle East
0.7 0.7
Demand Supply
Africa
2.9
1.2
Demand Supply
Asia
-0.1 0.6
Demand Supply
North America
Unit: Gtoe
Growth in demand overwhelms supply in Asia
Over 60% of global demand growth comes from Asia. Meanwhile its energy supply cannot catch up,
resulting in dropping energy self sufficiency from 72% to 61%.
North America and the Middle East increase surplus export capacity and enlarge their presences as
energy suppliers.
8
❖ Change in energy supply / demand by region (2017-2050)
Reference Scenario
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88%56%
2018 2050
JPN, KOR,TWN*
69% 84%
2018 2050
ASEAN56% 62%
2018 2050
South Asia
36%51%
2018 2050
China
9% 5%
2018 2050
North America
27% 30%
2018 2050
World except ME
26% 15%
2018 2050
Advanced Europe
*Japan, Korea and Chinese Taipei
Only Asia pushes up dependence on ME
Developing Asia increases dependence on Middle East oil and mitigating risk of supply disruption
remains one of the priority issues.
Meanwhile, North America and Advanced Europe reduce the dependence rapidly but would be affected
by higher oil price when emergency due to higher dependence at the global level.
9
❖ Share of Middle East oil in demand by region
Reference Scenario
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Coal
Oil
Natural gas
Nuclear
Renewables
0
2
4
6
1990 2010 2030 2050
Gtoe
-0.5 0.0 0.5 1.0 1.5 2.0
Nuclear
Coal
Renewables
Oil
Natural gas
Gtoe
Power
Transport
Others
Dependency to fossil fuels remains unchanged
Natural gas increases by 1.7 times especially in the power sector, becoming a second-position energy.
Coal peaks around 2040 and oil remains the most important energy.
Renewables grow rapidly but their share of primary demand mix increase only to 16% from 14%. Lessing dependency on fossil fuels
progresses slowly.
10
❖ Primary energy demand ❖ Change in energy demand
(2017-2050)
Reference Scenario
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Population, GDP, energy and CO2
11
Reference Scenario
Advanced Economies Emerging Market and Developing Economies
105
169
91 78
0
100
200
300
400
1980 1990 2000 2010 2020 2030 2040 2050
Y2017=100
Population
Real GDP
Primary energy consumption
CO2 emissions
134
356
159 148
0
100
200
300
400
1980 1990 2000 2010 2020 2030 2040 2050
Y2017=100
Population
Real GDP
Primary energy consumption
CO2 emissions
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Energy intensity improvement in industry sector
12
12%
28%
21%
18%
33%
22%
37%
30%27%
43%
0%
10%
20%
30%
40%
50%
Refe
rence
Advance
d
Tech
no
log
ies
Refe
rence
Advance
d
Tech
no
log
ies
Refe
rence
Advance
d
Tech
no
log
ies
Refe
rence
Advance
d
Tech
no
log
ies
Refe
rence
Advance
d
Tech
no
log
ies
Iron & steel Non-metallic
minerals
Chemical Paper & pulp Other industries
Improvement rate vs. 2017
Advanced Technologies Scenario
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0
20
40
60
80
100
120
140
160
180
200
2005 2010 2017
GW
Expanding installed capacity of VREs
Source: IEA
0
20
40
60
80
100
120
140
2005 2010 2017
GWSolar PV Wind
China
China
U.S.U.S.
GermanyGermany
Japan
Japan
India
FranceU.K.Spain
France
Italy
・ Recent trends exhibit rapid expansion of the power generating capacities of Variable Renewable Energies (VREs), such as solar and wind,
due to continuous cost declines and growing concerns over climate change issues.
・ VREs are expected to continue the rapid expansion in the long-term, although we should anticipate several challenges as stated below.
13
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Wind and solar PV power generation capacity
Wind Solar PV
14
515
1,131
1,8101,632
3,065
0
1,000
2,000
3,000
4,000
5,000
2017 2030 2050 2030 2050
Reference ATS
GWOceania
Africa
Oth. Europe/Eurasia
Advanced Europe
Middle East
Asia
Latin America
North America
386
1,070
2,954
1,476
4,434
0
1,000
2,000
3,000
4,000
5,000
2017 2030 2050 2030 2050
Reference ATS
GWOceania
Africa
Oth. Europe/Eurasia
Advanced Europe
Middle East
Asia
Latin America
North America
Advanced Technologies Scenario
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Power generation mix
Electricity generated Power generation capacity
15
25,606
34,412
45,363
33,552
42,127
0
10,000
20,000
30,000
40,000
50,000
60,000
2017 2030 2050 2030 2050
Reference ATS
TWh
Other renewables
Hydro
Nuclear
Natural gas with CCS
Natural gas
Oil
Coal with CCS
Coal
6,342
9,357
13,980
9,895
16,163
0
3,000
6,000
9,000
12,000
15,000
18,000
2017 2030 2050 2030 2050
Reference ATS
GW
Other renewables
Hydro
Nuclear
Natural gas with CCS
Natural gas
Oil
Coal with CCS
Coal
Advanced Technologies Scenario
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13%
10%7%
12%
19%17%
22%
6%16%
32%
590412
156
Reference ATS*
2017 2050
CO2 intensity
g/kWh
PV/Wind
Other RE
Nuclear
Fossil with CCS
Fossil w/o CCS PV Wind
0% 100% 200%
ASEAN
India
China
Japan
W.Europe
USA
peak demand
VRE capacity surpass peak demand
Zero-emission power generation (renewables, nuclear and fossil thermal with CCS) dominates 80% of
power generation mix in the Advanced Technologies Scenario.
Generation capacity of variable renewable energy (VRE), such as solar PV and wind, exceeds peak
electricity demand. Some regions need system stability measures, such as battery storage.
16
❖ Ratio of capacity to peak demand
(2050, Advanced Tech.)
❖ Power mix and CO2
intensity
●2017(PV+Wind)
*ATS: Advanced Technologies Scenario
Advanced Technologies Scenario
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Primary energy consumption
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By region By energy source
Advanced Technologies Scenario
Note: Solid lines stand for Advanced Technologies Scenario and
dotted lines stand for Reference Scenario.
8,766
16,564
18,757
13,972 15,624 15,915
0
5,000
10,000
15,000
20,000
1990 2000 2010 2020 2030 2040 2050
Mtoe
Advanced Economies
Emerging Market and Developing
Economies
0
2,000
4,000
6,000
1990 2000 2010 2020 2030 2040 2050
Mtoe
Coal
Oil
Natural gas
Nuclear
Hydro
Other renewables
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Unclear oil revenue for the Middle East
In the Advanced Technologies Scenario, demand growth of fossil fuels slows and prices are lower than in
the Reference Scenario.
Asia and Advanced Europe can reduce net import bills a lot. Meanwhile, oil and gas export revenues for
the Middle East could decrease by the equivalent to 13% of its GDP.
18
❖ Net energy exports / imports by region (2050)
[1%] [1%]
[2%] [1%] [1%] [0%] [6%] [13%]
5
4
3
2
1
0
1
2
3Asia
Advanced
Europe Oceania Africa
Latin
America
North
America
Oth. Europe
/Eurasia Middle East
Net Import
tril.$Net Export
Reference ATS*
[%: Net export-import difference vs. GDP]
*ATS: Advanced Technology Scenario
Advanced Technologies Scenario
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Energy-related CO2 emissions
19
By region By technology
20.3
37.6
40.9
32.7
32.8
25.3
0
15
30
45
1990 2000 2010 2020 2030 2040 2050
GtCO2
Efficiency
Biofuels
Wind, solar, etc.
Nuclear
Fuel switching
CCS
Reference
Advanced Technologies
20.3
37.6
40.9
32.7
32.8
25.3
0
15
30
45
1990 2000 2010 2020 2030 2040 2050
GtCO2
North America
Latin America
Asia
Middle East
Advanced Europe
Oth. Europe/Eurasia
Africa
Oceania
Intl. bunkers
Reference
Advanced Technologies
Advanced Technologies Scenario
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Reference 41
Advanced Tech. 25
Halving emission by 2050*2
33
2℃ Minimising Cost*1
0
5
10
15
20
25
30
35
40
45
1990 2010 2030 2050
GtCO2
14
19
16
0
5
10
15
20
REF* ATS*
2017 2050
Gtoe
Renewables
Nuclear
Natural gas
Oil
Coal
Even after large reduction, 2°C goal still far
In the Advanced Technologies Scenario, dependence on fossil fuels drops to 70%, still high level.
Energy-related CO2
emissions peak at the middle of 2020s and decrease by 23% vs. 2017 in 2050.
To keep temperature rise to below 2 degrees Celsius, additional programs and innovative technologies are required.
20
❖ Primary energy demand ❖ Energy-related CO2
emissions
*1: Refer to “IEEJ Outlook 2018”
*2: Emissions path reflected “RCP 2.6” in the 5th Assessment Report
(AR5) by the Intergovernmental Panel on Climate Change (IPCC).
*REF: Reference Scenario, ATS: Advanced Technologies Scenario
Advanced Technologies Scenario
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Comparison with IEEJ Outlook 2019
21
❖ Reference Scenario ❖ Advanced Technologies Scenario
* Primary energy demand
Solid lines: IEEJ Outlook 2020
Dotted lines: IEEJ Outlook 2019
Coal
Oil
Natural gas
Nuclear
Renewables
0
2
4
6
1990 2010 2030 2050
Gtoe
Coal
Nuclear
Renewables
Oil
Natural gas
0
2
4
6
1990 2010 2030 2050
Gtoe
Reference material
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0
20
40
60
80
100
120
140
2000 2010 2020 2030 2040 2050
Mb/dIEEJ REF
IEEJ ATS
IEA CPS
IEA NPS
IEA SDS
BP ET
BP RT
BP ME
DNV Base
EIA REF
OPEC REF
Shell SKY
Exxon0
2
4
6
8
2000 2010 2020 2030 2040 2050
Tcm IEEJ REF
IEEJ ATS
IEEJ LNP
IEEJ HNP
IEA CPS
IEA NPS
IEA SDS
BP ET
DNV Base
EIA REF
OPEC REF
Shell SKY
Exxon
0
2
4
6
8
2000 2010 2020 2030 2040 2050
GtceIEEJ REF
IEEJ ATS
IEA CPS
IEA NPS
IEA SDS
BP ET
DNV Base
EIA REF
OPEC REF
Shell SKY
Exxon
0
2
4
6
8
2000 2010 2020 2030 2040 2050
千
PWh IEEJ REF
IEEJ ATS
IEA CPS
IEA NPS
IEA SDS
BP ET
DNV Base
EIA REF
OPEC REF
Shell SKY
Exxon
22
❖ Oil
Comparison with other institutes (1)
❖ Natural gas
❖ Coal ❖ Nuclear
* EIA shows ”Liquid” including
biofuels, etc.
Reference material
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Summary
23
✓ Only emerging and developing economies increase energy demand.
✓ In Asia, demand growth overwhelms supply growth and it increases energy imports. Dependence on ME oil increases
✓ The Middle East urgently needs of shifting away from an economy that depends on oil export revenues.
✓ In the Advanced Technologies Scenario, generation capacity of VRE exceeds peak demand.
✓ Dependence on fossil fuels is still high, resulting in falling short of the 2°C goal. R&D for innovative technologies is required.
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Challenges for the power sector
under high penetration of variable
renewable energies
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Distributed VRE resources
Europe ASEAN
Europe ASEAN
Solar
Wind
・ VRE resources differ significantly across regions. While wind power resources are abundant in Europe, ASEAN countries see relatively
scarce resources except for those in specific areas in Vietnam and the Philippines.25
※1: Obtained from the “Global Solar Atlas 2.0”, a free, web-based application is developed and operated by the company Solargis s.r.o. on behalf of the World
Bank Group, utilizing Solargis data, with funding provided by the Energy Sector Management Assistance Program (ESMAP). For additional information:
https://globalsolaratlas.info
※2: Obtained from the “Global Wind Atlas 2.0”, a free, web-based application developed, owned and operated by the Technical University of Denmark (DTU) in
partnership with the World Bank Group, utilizing data provided by Vortex, with funding provided by the Energy Sector Management Assistance Program
(ESMAP). For additional information: https://globalwindatlas.info
Source:
Global Solar Atlas※1
Source:
Global Wind Atlas※2
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0
5
10
15
20
25
30
Ru
ssia
Au
stra
lia
Can
ada
Ch
ina
U.S
.
Ind
ia
Ge
rman
y
Fran
ce
Ind
on
esia
Mal
aysi
a
Thai
land
Japa
n
TW
0
5
10
15
20
25
30
Ru
ssia
Au
stra
lia
Can
ada
Ch
ina
U.S
.
Ind
ia
Ge
rman
y
Fran
ce
Ind
on
esia
Mal
aysi
a
Thai
land
Japa
n
TW
Estimated VRE resources for selected countries
Onshore wind Solar PV
Source: Estimated by IEEJ using GIS data
・ Huge VRE resources exist in the countries with large geographic areas, such as Russia, Australia, China, and U.S. Total wind and solar
resources can cover all the global energy demand.
26
・ Solar resources are relatively scarce in high-latitude countries, whereas most Asian countries are not endowed with large wind resources.
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2015 2030 2045
Solar (Large scale) Onshore wind
Coal Natural gas
Nuclear
2017 U.S. cent/kWh
0
5
10
2015 2030 2045
0
5
10
2015 2030 2045
0
5
10
2015 2030 2045
Levelized cost of electricity generation (LCOE)
Europe United States
China ASEAN
・ Levelized Cost of Electricity (LCOE) is a metric that has long been used for assessing the specific cost of power generating facilities.
・ The LCOE of VREs has been declining rapidly over decades. By 2050, the LCOE of solar PV is expected to become lower than that of
conventional technologies, in many region across the world.
Source: Estimated by IEEJ
27
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System integration cost: A conceptual illustration
- If the LCOE of VRE is smaller than that of conventional power sources, the “traditional” power generation cost, which represents the costs
proportional to the LCOEs, shown as Cconv+CVRE in the above figure, declines with increasing share of VRE.
28
0% 100%
Vertical: Total system cost
Integration cost
(CINT)
LCOE:VRE
(CVRE)
VRE shar in power generation mix
LCOE:Conventional
(Cconv)
Case with
a positive carbon price
Optimal
- However, high penetration of VRE requires additional cost related to the necessity of power storage, VRE output curtailment, and grid
extension, etc., known as system integration costs, indicated by CINT as illustrated above.
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Summary: Good News and Not So Good News for VRE
29
✓ The generating cost of wind and solar PV has been declining rapidly. ➢ By 2050, solar PV is expected to become cheaper than conventional.
✓ Renewable energy is not evenly distributed in the world.➢ Solar resources are relatively scarce in high-latitude countries,
whereas most Asian countries are not endowed with large wind resources
✓ At high VRE penetration rates , system integration costs rapidly increase.➢ System integration costs are related to
✓power storage, ✓output curtailment, ✓grid extension, etc.
✓ In conclusion, for a successful bulk introduction of VRE, “an enabler” is still required.
Perhaps digitalisation?
Thank you very much for your attention!