INTERNATIONAL ENERGY AGENCY

© OECD/IEA - 2009

Our Global Energy FutureOur Global Energy FutureLooking beyond the economic crisisLooking beyond the economic crisis

Ministry of EconomyMinistry of EconomyWarsawWarsaw

12 May 200912 May 2009

Mr. Nobuo TanakaMr. Nobuo TanakaExecutive DirectorExecutive Director

International Energy AgencyInternational Energy Agency

© OECD/IEA - 2009

Weakening economy drives oil demand revisions

Two year demand contraction in 08/09 first since early-1980s OECD hit hard, but clear signs that non-OECD is slowing now too Latest GDP estimates suggest -1.4% for 2009, with consensus of gradual

recovery in 2010 Prices bottoming-out in the face of OPEC supply cuts, and a degree of post-

G20 ‘bounce’

OMR 2009 Oil Demand & GDPForecast Evolution

83

84

85

86

87

88

89

Jul-0

8

Aug-08

Sep-0

8

Oct

-08

Nov-08

Dec-0

8

Jan-0

9

Feb-0

9

Mar

-09

Apr-09

mb/d

-2

-1

0

1

2

3

4

5

Y-o-Y%

World GDP Growth

Total Demand

Crude FuturesFront Month Close

303540455055606570

Nov 08 Dec 08 Jan 09 Feb 09Mar 09 Apr 09

$/bbl

NYMEX WTI ICE Brent

Source: Platts

IEA April 2008 Oil Market Report

© OECD/IEA - 2009

Evaluating oil supply-side impacts

3

Supply also affected, on weak demand, low prices, credit crunch & investment slippage 、

2009 forecast already down by 1.7 mb/d since July 2008, excluding 2008 baseline changes

Canada & Russia taking a hit in terms of investment & likely output

$50/bbl oil unlikely to see extensive shut-ins of current output per se

But impact of lower spend on new projects and prevailing decline rates at mature fields

-1.80

-1.60

-1.40

-1.20

-1.00

-0.80

-0.60

-0.40

-0.20

0.00

Change to 2009 supply forecast, net of 2008 baseline changes, mb/d

OPEC crude

OPEC gas liquids

Non-OPEC

© OECD/IEA - 2009

World Oil Production by Source IEA’s World Energy Outlook 2008

Business as Usual Scenario

Around 65 mb/d of gross capacity needs to be installed between 2007 & 2030 – six times the current capacity of Saudi Arabia – to meet demand growth and offset decline

20 mb/d

45 mb/d

IEA World Energy Outlook 2008

© OECD/IEA - 2009

Long-term oil-supply cost curveLong-term oil-supply cost curve(with $50 per tonne of CO(with $50 per tonne of CO22) )

A carbon price of $50 per tonne of CO2 would increase the cost of producing non-conventional oil the most – by as much as $30 per barrel – due to its higher energy intensity

© OECD/IEA - 2009

European Responses to January 2009 Gas Supply Disruption

Interconnector UK-BE reversed

BBL NL-UK reduced

Yamal increase

Blue Stream increase

Increase Germany -Croatia

Increasing Croatian production share off-take

Reverse flow Czech to Slovakia

Hungary increase to Serbia & Bosnia

Reverse flow from Greece to Bulgaria

Additional spot LNG to Greece & Turkey

7 Jan (immediate) 10 Jan. 16 Jan. 18 Jan.

Timeline of Actions

© OECD/IEA - 2009

Cumulative energy supply investment

in Business as Usual, 2007-2030

Investment of $26 trillion, or over $1 trillion/year, is needed, but the credit squeeze could delay spending, potentially setting up a supply-crunch once the economy recovers

Power generation

50%

Transmission & distribution

50%Mining

91%

Shipping & ports

9%

Exploration and development

80%

Refining16%

Shipping4%

Exploration & development

61%LNG chain

8%

Transmission & distribution

31%

Power 52%

$13.6 trillion

Oil 24%

$6.3 trillion

Gas21%

$5.5 trillion

Coal 3%

$0.7 trillion

Biofuels <1%

$0.2 trillion

© OECD/IEA - 2009

Energy-related CO2 emissions Business as Usual Scenario

97% of the projected increase in emissions between 2006 & 2030 comes from non-OECD countries – three-quarters from China, India & the Middle East alone

0

5

10

15

20

25

30

35

40

45

1980 1990 2000 2010 2020 2030

Gig

aton

nes

Internationalmarine bunkersand aviationOECD - gasOECD - oilOECD - coalNon-OECD - gasNon-OECD - oilNon-OECD - coal

© OECD/IEA - 2009

Energy-related CO2 emissions 450 Policy Scenario

In the 450 Policy Scenario emissions peak around 2020,and then decline by more than 1/3 to reach 26 Gt in 2030

Internationalmarine bunkersand aviationOECD - gasOECD - oilOECD - coalNon-OECD - gasNon-OECD - oilNon-OECD - coal

0

5

10

15

20

25

30

35

40

45

1980 1990 2000 2010 2020 2030

Gig

aton

nes

© OECD/IEA - 2009

Reductions in energy-related CO2 emissions in the 450 Policy Scenario

20

25

30

35

40

45

2005 2010 2015 2020 2025 2030

Gig

aton

nes

OECD+

Non-OECD

Reference Scenario

450 Policy Scenario

CCS - 21%

Renewables & biofuels - 18%Nuclear - 14%

Energy efficiency - 47%

CCS - 10%

Renewables & biofuels - 25%Nuclear - 6%

Energy efficiency - 59%

35% (5.2 Gt reduction)

65% (9.5 Gt reduction)

Energy Efficiency 54%

CCS 14% Nuclear 9% Renewables & biofuels 23%

World total

•OECD and non-OECD countries must both work towards reducing CO2 emissions•Energy efficiency plays a key role for both OECD and non-OECD countries•To inform the international climate negotiations, the IEA will release an early excerpt of the WEO 2009 climate change analysis, to coincide with post-Kyoto negotiations this September

© OECD/IEA - 2009

Total power generation capacity today and in 2030 by scenario

In the 450 Policy Scenario, the power sector undergoes a dramatic change – with CCS, renewables and nuclear each playing a crucial role

0 1 000 2 000 3 000

Other renewables

Wind

Hydro

Nuclear

Coal and gas with CCS

Gas

Coal

GW

1.2 x today

1.5 x today

13.5 x today

2.1 x today

1.8 x today

12.5 x today

15% of today’s coal & gas capacity

Today Reference Scenario 2030 450 Policy Scenario 2030

© OECD/IEA - 2009

Roadmaps can accelerate deployment of key clean energy technologies

Supply side CCS power generation Coal – IGCC Coal – USCSC Nuclear III + IV Solar – PV Solar – CSP Wind Biomass – IGCC & co-

combustion Electricity networks 2nd generation

biofuels

Demand side Energy efficiency in

buildings Energy efficient motor

systems Efficient ICEs Heat pumps Plug-ins and electric vehicles Fuel cell vehicles Industrial CCS Solar heating Efficient industry processes

(starting with Cement)

Work has already begun on technologies shown in green, and these roadmaps will be launched later in 2009.

© OECD/IEA - 2009

Global electricity generation(450 ppm Scenario)

Renewables and nuclear power will increase

0%

25%

50%

75%

100%

2006 2030

Wind

Hydrogen

Other Renewables

Biomass & Waste

Hydro

Nuclear

Gas

Oil

Coal

41%

18%

2%

6%

22%

20%

5%

9%

(1%)

21%

16%

1%1%

4%18%

40%15%

18%

© OECD/IEA - 2009

Nuclear power needs to play a larger role in 2050

Energy Technology Perspectives (ETP) 2008 shows that significant increase of nuclear generation in both OECD countries and non-OECD countries is essential to

halve the current level of energy related CO2 emission by 2050.

© OECD/IEA - 2009

IEA 25 energy efficiency policy recommendations across 7 priority

areas1. Across sectors1.1 Measures for increasing investment in energy

efficiency;1.2 National energy efficiency strategies and goals;1.3 Compliance, monitoring, enforcement and

evaluation of energy efficiency measures;1.4 Energy efficiency indicators;1.5 Monitoring and reporting progress with the IEA

energy efficiency recommendations themselves. 2. Buildings2.1 Building codes for new buildings;2.2 Passive Energy Houses and Zero Energy

Buildings;2.3 Policy packages to promote energy efficiency in

existing buildings;2.4 Building certification schemes;2.5 Energy efficiency improvements in glazed areas. 3. Appliances3.1 Mandatory energy performance requirements or

labels;3.2 Low-power modes, including standby power, for

electronic and networked equipment;3.3 Televisions and “set-top” boxes; 3.4 Energy performance test standards and

measurement protocols.

4. Lighting4.1 Best practice lighting and the

phase-out of incandescent bulbs;

4.2 Ensuring least-cost lighting in non-residential buildings and the phase-out of inefficient fuel-based lighting.

5. Transport5.1 Fuel-efficient tyres;5.2 Mandatory fuel efficiency

standards for light-duty vehicles;

5.3 Fuel economy of heavy-duty vehicles;

5.4 Eco-driving.

6. Industry6.1 Collection of high quality

energy efficiency data for industry;

6.2 Energy performance of electric motors;

6.3 Assistance in developing energy management capability;

6.4 Policy packages to promote energy efficiency in small and medium-sized enterprises.

7. Utilities7.1 Utility end-use energy efficiency

schemes

USD 128 Billion in energy efficiency

USD 128 Billion in energy efficiency

stimulus from IEA Countries

stimulus from IEA Countries

© OECD/IEA - 2009

Impact of financial crisis on global investment Impact of financial crisis on global investment in renewable energyin renewable energy

Renewable energy investment has collapsed due to the financial crisis – which has dried up sources of project finance – and lower fossil-fuel prices ….

Source: NEF, IEA analysis

0

10

20

30

40

50

60

70

80

90

2004 2005 2006 2007 2008 2009

Geothermal

Marine & small-hydro

Biomass

Solar

Wind

Billi

on d

olla

rs

-38%

… IEA G-8 paper estimates spending in 2009 will drop by 38% relative to 2008

© OECD/IEA - 2009

adapted from VGB 2007; efficiency – HHV,net

Average worldwide

~28.4%

~1110 gCO2/kWh

~36%

~880 gCO2/kWh

EU average

~42%

~740 gCO2/kWh

State-of-the artPC/IGCC

CCS

<2020

~48%

~665 gCO2/kWh

Advanced R&D

but deep cuts only by

Carbon Capture and Storage – energy efficiency alone is not enough

gCO

2/kW

h

© OECD/IEA - 2009

Carbon Capture and Storage - only 4 full-scale projects exist today

G8 goal: 20 full-scale demonstrations announced by 2010

© OECD/IEA - 2009

CO2 Storage Prospectivity

Source: Bradshaw, J. and Dance, T. (2004): “Mapping geological storage prospectivity of CO2 for the world’s sedimentary basins and regional source to sink matching,” in (E.S. Rubin, D.W. Keith and C.F. Gilboy eds.), GHGT-7, Proc. Seventh International Conference on Greenhouse Gas Control Technologies, Vancouver, B.C., Canada, September 5-9, 2004.

© OECD/IEA - 2009

Shifting to the 450 ppm scenario requires significant investment

Huge investment in power plants and energy efficiency is required to shift the world onto a 450 ppm trajectory

0

1 000

2 000

3 000

4 000

5 000

2010-2020 2021-2030 2010-2020 2021-2030

Power plants Energy efficiency

Billi

on d

olla

rs (2

007)

450 Policy Scenario(additional to 550)

550 Policy Scenario

© OECD/IEA - 2009

Total oil production in 2030 by scenario

Curbing CO2 emissions would improve energy security by cutting demand for fossil fuels, but even in the 450 Policy Scenario, OPEC production increases by 12 mb/d from now to 2030

0

20

40

60

80

100

120

2007 Reference Scenario2030

550 Policy Scenario2030

450 Policy Scenario2030

Non-OPECOPECm

b/d

12 mb/d

9 mb/d16 mb/d

© OECD/IEA - 2009

Summary For energy security

need to diversify oil and gas sourcesmust ensure continued supply-side investment to

meet oil demand and address production decline in mature fields and investment throughout the gas supply chain

For energy security and climate change mitigationmust invest in low carbon technologies: CCS,

renewables, nuclear and energy efficiency must all be embraced

Economic crisis is an opportunity to place a Clean Energy New Deal at the heart of economic stimulus packages everywhere.