weo12

WORLDENERGY

OUTLOOK2012

WORLD ENERGY

OUTLOOK 2012

Please note that this PDF is subject to specific restrictions that limit its use and distribution. The terms and conditions are available online at http://www.iea.org/termsandconditionsuseandcopyright/

WORLDENERGY

OUTLOOK2012

Industry and government decision makers and others with a stake in the energy sector all need WEO-2012. It

presents authoritative projections of energy trends through to 2035 and insights into what they mean for energy security,

environmental sustainability and economic development.

Oil, coal, natural gas, renewables and nuclear power are all covered, together with an update on climate change issues.

Global energy demand, production, trade, investment and carbon-dioxide emissions are broken down by region or country, by fuel and by sector.

Special strategic analyses cover:

What unlocking the purely economic potential for energy efficiency could do, country-by-country and sector-by-sector, for energy markets, the economy and the environment.

The Iraqi energy sector, examining both its importance in satisfying the countrys own needs and its crucial role in meeting global oil and gas demand.

The water-energy nexus, as water resources become increasingly stressed and access more contentious.

Measures of progress towards providing universal access to modern energy services.

There are many uncertainties; but many decisions cannot wait. The insights of WEO-2012 are invaluable to those who

must shape our energy future.

WORLD ENERGY

OUTLOOK 2012

150 (61 2012 25 1P1) ISBN: 978-92-64-18084-0

WORLDENERGY

OUTLOOK2012

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INTERNATIONAL ENERGY AGENCY

The International Energy Agency (IEA), an autonomous agency, was established in November 1974. Its primary mandate was and is two-fold: to promote energy security amongst its member

countries through collective response to physical disruptions in oil supply, and provide authoritative research and analysis on ways to ensure reliable, affordable and clean energy for its 28 member countries and beyond. The IEA carries out a comprehensive programme of energy co-operation among its member countries, each of which is obliged to hold oil stocks equivalent to 90 days of its net imports. The Agencys aims include the following objectives:

n Secure member countries access to reliable and ample supplies of all forms of energy; in particular, through maintaining effective emergency response capabilities in case of oil supply disruptions.

n Promote sustainable energy policies that spur economic growth and environmental protection in a global context particularly in terms of reducing greenhouse-gas emissions that contribute to climate change.

n Improve transparency of international markets through collection and analysis of energy data.

n Support global collaboration on energy technology to secure future energy supplies and mitigate their environmental impact, including through improved energy

efficiency and development and deployment of low-carbon technologies.

n Find solutions to global energy challenges through engagement and dialogue with non-member countries, industry, international

organisations and other stakeholders.IEA member countries:

Australia Austria

Belgium Canada

Czech RepublicDenmark

FinlandFrance

GermanyGreece

HungaryIreland

ItalyJapan

Korea (Republic of)LuxembourgNetherlandsNew Zealand NorwayPolandPortugalSlovak RepublicSpainSwedenSwitzerlandTurkeyUnited Kingdom

United States

The European Commission also participates in

the work of the IEA.

OECD/IEA, 2012International Energy Agency

9 rue de la Fdration 75739 Paris Cedex 15, France

www.iea.org

Please note that this publication is subject to specific restrictions

that limit its use and distribution. The terms and conditions are available online at

http://www.iea.org/termsandconditionsuseandcopyright/

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Foreword 3

Foreword

In the Foreword to last years World Energy Outlook, I stressed the need for detailed, meticulous, objective and original analysis as a foundation for sound energy policy making. Important political decisions shaping the energy future have since been taken, in many cases drawing on the analysis in the World Energy Outlook. They include the specification, in many countries, of principles to guide the development of unconventional gas resources and new commitments, from all parts of society, to boost investment towards the goal of providing universal energy access.

Dr. Fatih Birol and his team in the Agencys Directorate of Global Energy Economics again present us this year with detailed information on what has happened across the energy sector and visions of where we are heading. They do so with the greatly valued participation of many experts from across the world, whose commitment and contribution I acknowledge and commend.

We have been privileged this year to work with representatives of the Iraqi government and other experts on Iraq to produce a special study of that countrys energy prospects. Many people do not realise that Iraq is, already, the third-largest oil exporter in the world. The future level of Iraqs oil (and natural gas) production will not only determine the countrys economic future but will also shape future world oil markets.

Efficiency in energy use is just as important to the future energy balance as unconstrained energy supply. Despite years of persistent pursuit, the potential of energy efficiency remains largely untapped. This year we demonstrate the full extent of that potential through an Efficient World Scenario, showing what can be achieved simply by adopting measures which fully justify themselves in economic terms. By 2035, we can save energy equivalent to 18% of global energy consumption in 2010. Global GDP would be 0.4% higher. The financial savings on reduced fuel consumption would be in excess of $17 trillion. We would have reduced oil consumption by nearly 13 mb/d. And we would have gained precious time in which to act decisively in pursuit of our global climate goal.

Water is needed for energy and energy is needed to produce and supply water. In an increasingly water-constrained world, we analyse this mutual dependence for the first time this year. We quantify energys call on global water supplies and set it in context. A volume of water which exceeds that carried annually by the Ganges River is needed by the energy sector each year.

Finally, one remarkable feature of the market, to which we draw attention this year, is an energy transformation in the United States. Due to a combination of new technology, free markets and policy action, the United States is well on the way to becoming self-sufficient in energy, in net terms. We show how this is coming about and discuss its far-reaching implications.

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4 World Energy Outlook 2012

I have only touched here on the scope of this WEO. All policy makers in energy and related fields will find here material to increase their knowledge and contribute to the quality of their decisions.

Maria van der Hoeven Executive Director

This publication has been produced under the authority of the Executive Director of the International Energy Agency. The views expressed do not necessarily reflect the views or policies of individual IEA member countries.

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Acknowledgements 5

Acknowledgements

This study was prepared by the Directorate of Global Energy Economics of the International Energy Agency in co-operation with other offices of the Agency. It was designed and directed by Fatih Birol, Chief Economist of the IEA. Laura Cozzi co-ordinated the analysis of energy efficiency, climate change and modelling; Tim Gould co-ordinated the analysis of oil, natural gas and Iraq; Amos Bromhead co-ordinated the subsidy analysis and contributed to the analysis of global trends; Marco Baroni co-ordinated the power and renewables analysis; Pawe Olejarnik contributed to the hydrocarbon-supply modelling and Iraq analysis; Dan Dorner co-ordinated the analysis of Iraq and energy access, Timur Gl co-ordinated the transport analysis and contributed to the energy efficiency analysis; Matthew Frank co-ordinated the energy-water analysis and contributed to the analysis of Iraq. Other colleagues in the Directorate of Global Energy Economics contributed to multiple aspects of the analysis and were instrumental in delivering the study: Sabah Al-Khshali (Iraq); Mustafa Al-Maliky (Iraq); Ali Al-Saffar (Iraq); Prasoon Agarwal (efficiency and buildings); Christian Besson (oil, natural gas and Iraq); Alessandro Blasi (energy-water and Iraq); Violet Shupei Chen (subsidies and energy-water); Ian Cronshaw (coal and natural gas); Dafydd Elis (power and Iraq); Capella Festa (oil, natural gas and Iraq); Fabian Ksicki (climate and efficiency); Shinichi Kihara (efficiency); Jonas Kraeusel (transport and subsidies); Jung Woo Lee (subsidies and efficiency); Breno Lyro (bioenergy and transport); Chiara Marricchi (power and renewables); Jules Schers (energy access); Timur Topalgoekceli (oil, natural gas and Iraq); Brent Wanner (power and renewables); David Wilkinson (power, efficiency and renewables); Peter Wood (oil, natural gas and Iraq); Akira Yanagisawa (efficiency, industry and Iraq); Sandra Mooney and Magdalena Sanocka provided essential support. More details about the team are at www.worldenergyoutlook.org/aboutweo/team.

Robert Priddle carried editorial responsibility.

The study benefited from input provided by numerous IEA experts. In particular, the Energy Efficiency and Environment Division, including Philippe Benoit, Robert Tromop, Lisa Ryan, Grayson Heffner, Sara Pasquier, Vida Rozite, Aurelien Saussay, Yamina Saheb and Nora Selmet, provided input to the efficiency analysis. Other IEA colleagues who also made significant contributions to different aspects of the report include Carlos Fernandez Alvarez, Manuel Baritaud, Paolo Frankl, Cristina Hood, Alexander Koerner, Christopher Segar, Cecilia Tam, Johannes Truby, Nathalie Trudeau, Laszlo Varro and Hirohisa Yamada. Experts from the OECD also contributed to the report, particularly Jean Chateau, Bertrand Magn, Rob Dellink and Marie-Christine Tremblay. Thanks also go to the IEAs Communication and Information Office for their help in producing the final report, to Bertrand Sadin and Anne Mayne for graphics and to Debra Justus for proofreading the text.

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The special focus on Iraq would not have been possible without the close co-operation received from the federal government of Iraq, the regional and provincial governments and officials across many government bodies in Iraq. We are particularly grateful to H.E. Dr. Hussain Al-Shahristani, Iraqs Deputy Prime Minister for Energy, for his strong support from the inception of this study through to its conclusion. H.E. Thamir Ghadhban, Chair of the Prime Ministers Advisory Commission in Iraq, provided indispensable input as keynote speaker and chair of our high-level workshop in Istanbul.

We are indebted to many Iraqi senior officials and experts for their time and assistance. Special thanks are due to the leadership and staff of the Ministry of Oil and, in particular, to Fayadh Hassan Neema, Director of the Technical Directorate at the Ministry of Oil, who was an invaluable interlocutor throughout, and to Falah Alamri, Director General of the State Oil Marketing Organization. H.E. Dr. Ashti Hawrami, Minister of Natural Resources in the Kurdistan Regional Government, provided valuable support and insights to the IEA team during their visit to Erbil. We greatly appreciated the welcome afforded the team in Basrah by Ahmed Al-Hassani, Deputy Governor of Basrah Governorate, and by the Provincial Council.

Ambassador Fareed Yasseen, Iraqs Ambassador to France, and his staff provided unstinting assistance to the completion of this study and the teams visits to Iraq, as did Dr. Usama Karim, Senior Advisor to Iraqs Deputy Prime Minister for Energy. Sincere thanks also to Tariq Shafiq, Managing Director of Petrolog and Associates and one of the founding fathers of Iraqs petroleum industry, for his expert counsel.

Maria Argiri, Janusz Cofala (International Institute for Applied System Analysis), Xiaoli Liu (Energy Research Institute), Michael McNeil (Lawrence Berkeley National Laboratory), Trevor Morgan (Menecon Consulting) and Paul Waide (Waide Strategic Efficiency) provided valuable input to the analysis.

The work could not have been achieved without the substantial support and co-operation provided by many government bodies, organisations and energy companies worldwide, notably: American Iron and Steel Institute; Department of Resources, Energy and Tourism, Australia; Booz & Company; Cement Sustainability Initiative of the World Business Council for Sustainable Development; Daimler; Ministry of Climate, Energy and Building, Denmark; Enel; Eni; Institute for Industrial Productivity; The Global Building Performance Network; Ministry of Foreign Affairs, Italy; Iron and Steel Federation, Japan; The Institute of Energy Economics, Japan; Ministry of Economy, Trade and Industry, Japan; Ministry of Energy, Mexico; Ministry of Economic Affairs, the Netherlands; Ministry of Foreign Affairs, Norway; Ministry of Petroleum and Energy, Norway; Norwegian Agency for Development Cooperation; Parsons Brinckerhoff; Peabody Energy; Petrobras; Ministry of Economy, Poland; Schlumberger; Schneider Electric; Shell; Siemens; Energy Market Authority, Singapore; Statoil; Toyota; Ministry of Energy and Natural Resources, Turkey; Department for International Development, United Kingdom; Foreign and Commonwealth Office, United Kingdom; Executive Office of the Secretary-General, United Nations; Department of Energy, United States; Department of State, United States; and Vattenfall.


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WorkshopsMany international experts participated in a number of workshops that were held to gather input to this study, resulting in valuable new insights, feedback and data:

Golden Rules for a Golden Age of Gas: Warsaw, 7 March 2012 Iraq Energy Outlook: Istanbul, 4 May 2012 Fuelling the Future with Energy Efficiency: Tokyo, 10 May 2012 Measuring Progress Towards Universal Energy Access: Paris, 25 May 2012

More information at www.worldenergyoutlook.org/aboutweo/workshops.

IEA Energy Business CouncilSpecial thanks go to the companies that participated in meetings of the IEA Energy Business Council (EBC) during 2012, which provided significant insights to this study. The EBC brings together many of the worlds largest companies in terms of energy exploration, production and use, ranging from commodities companies, automobile manufacturers, wind and solar producers and financial institutions. Further details may be found at www.iea.org/energybusinesscouncil.

Peer reviewersMany international experts provided input, commented on the underlying analytical work and reviewed early drafts of each chapter. Their comments and suggestions were of great value. They include:

Majeed A. Abdul-Hussain Parsons BrinckerhoffSaleh Abdurrahman National Energy Council of IndonesiaEmmanuel Ackom UNEP Ris CentreAli Aissaoui APICORPNatik Al-Bayati Prime Ministers Advisory Commission, IraqAbdulilah Al-Emir Deputy Prime Ministers Office, IraqJabbar Allibi Independent consultant Alicia Altagracia Aponte GE EnergyMarco Arcelli EnelSefa Sadk Aytekin Ministry of Energy and Natural Resources, TurkeyChristopher Baker Department of Climate Change and Energy Efficiency, AustraliaPeter Bach Danish Energy Agency, Ministry of Climate, Energy and

BuildingsAmit Bando International Partnership for Energy Efficiency CooperationPaul Baruya IEA Clean Coal CentreGeorg Buml Volkswagen Morgan Bazilian National Renewable Energy Laboratory (NREL)Carmen Becerril Acciona EnergiaLaurent Bellet EDFKamel Bennaceur SchlumbergerSomnath Bhattacharjee Institute for Industrial Productivity


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Alexey Biteryakov GazpromExportEdgar Blaustein EU Energy Initiative Partnership Dialogue Facility Maike Bggemann Shell Nils Borg European Council for an Energy-Efficient Economy Valentina Bosetti Fondazione Eni Enrico Mattei (FEEM)Jean-Paul Bouttes EDFAlbert Bressand Columbia School of International and Public Affairs,

United StatesAbeeku Brew-Hammond Energy Commission, GhanaNicholas Bridge British Ambassador to the OECDNigel Bruce World Health Organization, SwitzerlandPeter Brun Vestas Anne Brunila Fortum CorporationMick Buffier Xstrata Coal Stephan Buller SiemensRon Cameron OECD Nuclear Energy Agency Peter Candler Foreign and Commonwealth Office, United KingdomKevin Carey World BankGuy Caruso Center for Strategic and International Studies, United StatesRobert Cekuta Department of State, United StatesSharat Chand The Energy and Resources Institute, IndiaSurya Prakash Chandak United Nations Environment ProgrammeSuani Teixeira Coelho University of So Paulo, Brazil Heather Cooley Pacific Institute, United StatesAlan Copeland Bureau of Resource and Energy Economics, AustraliaJohn Corben SchlumbergerEduardo Luiz Correia PetrobrasJoppe Cramwinckel World Business Council for Sustainable Development,

Switzerland Jos Delbeke Directorate General Climate Action, European CommissionTim Depledge BPCarmine Difiglio Department of Energy, United StatesJens Drillisch KfW Development Bank Richard Duke Department of Energy, United StatesAdeline Duterque GDF SUEZJonathan Elkind Department of Energy, United StatesDavid Ensign Department of State, United StatesPeter Evans GE EnergyNikki Fisher Anglo American Thermal CoalPhilippe Fonta World Business Council for Sustainable Development,

SwitzerlandGabriele Franceschini Eni Peter Fraser Ontario Energy Board, CanadaAjay Gambhir Grantham Institute for Climate Change, United KingdomAmit Garg India Institute of Management, Ahmedabad


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Dario Garofalo EnelFrancesco Gattei EniArunabha Ghosh Council on Energy, Environment and Water, IndiaDolf Gielen International Renewable Energy Agency Adriano Gomes de Sousa Ministry of Mining and Energy, Brazil Rainer Grgen Federal Ministry of Economics and Technology, GermanyHugo Leonardo Gosmann Ministry of Mining and Energy, BrazilChristopher Guelff Foreign and Commonwealth Office, United KingdomCecilia Gunnarsson VolvoWenke Han Energy Research Institute, ChinaDavid Hawkins Natural Resource Defence Council, United StatesHamah-Ameen Hawramany Ministry of Electricity, Kurdistan Regional GovernmentJames Hewlett Department of Energy, United StatesNikolas Hill AEATakashi Hongo Mitsui Global Strategic Studies InstituteMichael Howard Ministry of Natural Resources, Kurdistan Regional GovernmentTom Howes European CommissionMarco Hls GIZ, GermanySteven Hunt Department for International Development, United KingdomRuba Husari Independent consultantJana Hybaskova Ambassador, European Union Delegation to IraqTaichi Ito Mitsubishi UFJ Lease and Finance Corporation, Co. Ltd.Akihiro Iwata New Energy Technology Development Organisation, JapanAnil Jain Planning Commission, Government of IndiaJames Jensen Jensen AssociatesJan-Hein Jesse Clingendael InstituteAhmed Mousa Jiyad Independent consultant Catrin Jung-Draschil VattenfallMarianne Kah ConocoPhillipsSami Kamel General ElectricI.A. Khan Planning Commission, Government of IndiaAli H. Khudhier South Gas Company, IraqDavid Knapp Energy Intelligence Kenji Kobayashi Japan Automobile Importers Association Hans Jrgen Koch Ministry of Climate, Energy and Buildings, DenmarkBeejaye Kokil African Development BankKeiichi Komai The Energy Conservation Center, JapanRad Kombargi Booz & CompanyMichihisa Kono Siemens Annemarije Kooijman-van Dijk

University of Twente, the Netherlands

Robert P. Kool Chair of IEA Demand-Side Management Programme Ken Koyama The Institute of Energy Economics, JapanRakesh Kumar PTC India


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Ken Kuroda Mitsubishi CorporationTakayuki Kusajima Toyota Motor CorporationNicolas Lambert European CommissionJeff Larkin Parsons BrinckerhoffMassimo Lombardini European CommissionHirono Masazumi The Japan Gas AssociationSteve Lennon EskomEoin Lees The Regulatory Assistance ProjectWenge Liu China Coal Information Institute Joan MacNaughton Energy Institute, United KingdomClaude Mandil Former IEA Executive DirectorRitu Mathur The Energy and Resources Institute, IndiaKenichi Matsui The Institute of Energy Economics, JapanTakahiro Mazaki Mitsubishi CorporationSiddiq McDoom Natural Resources CanadaHamish McNinch Independent consultantPedro Antonio Merino RepsolLawrence Metzroth Arch CoalRyo Minami Ministry of Economy, Trade and Industry, JapanVincent Minier Schneider ElectricBogdan Mitna Daimler AGArne Mogren European Climate FoundationSalah Mohammed Rumaila Operating Organization, IraqKlaus Mohn StatoilSimone Mori EnelEd Morse CitigroupRichard Morse Stanford University, United StatesAsri Mousa Independent consultantOmar Moussa SchlumbergerSteve Nadel American Council for an Energy-Efficient EconomyYugo Nakamura Bloomberg New Energy FinanceNaokazu Nakano Sumitomo Metal IndustriesAnne Arquit Niederberger Policy SolutionsHans Nijkamp ShellShohei Nishimura Japan Oil, Gas and Metals National Corporation Petter Nore Norwegian Agency for Development Cooperation Patrick Nussbaumer United Nations Industrial Development OrganisationPer Magnus Nysveen Rystad EnergyUlrich Oberndorfer Federal Ministry of Economics and Technology, GermanyPatrick Oliva MichelinBram Otto ShellShonali Pachauri International Institute for Applied System Analysis, AustriaBinu Parthan Sustainable Energy AssociatesAndrew Pearce Parsons Brinckerhoff


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Volkmar Pflug SiemensFriedbert Pflger Kings College LondonChristian Pichat ArevaRoberto Pot EdisonVenkata Ramana Putti World BankWilliam Ramsay Former IEA Deputy Executive DirectorOliver Rapf Buildings Performance Institute EuropeBirgitta Resvik Fortum CorporationBrian Ricketts EuracoalMarc Ringel European CommissionNick Robins HSBC Hans-Holger Rogner International Atomic Energy Agency, AustriaPiet Ruijtenberg ParPetro Consulting Ralph Samuelson Asia Pacific Energy Research CentreGeorge Sarraf Booz & CompanyKoichi Sasaki The Institute of Energy Economics, JapanSteve Sawyer Global Wind Energy CouncilDeger Saygin Utrecht University, the NetherlandsStefan Scheuer Coalition for Energy SavingsHans-Wilhelm Schiffer RWEMartin Schpe Federal Ministry for the Environment, Nature Conservation and

Nuclear Safety, GermanyKristin Seyboth Intergovernmental Panel on Climate ChangeBaoguo Shan State Grid Energy Research Institute, ChinaP.R. Shukla Indian Institute of Management, AhmedabadRalph Sims Massey University, New Zealand Stephan Singer WWF InternationalKelly Smith Natural Resources CanadaChristopher Snary Department of Energy and Climate Change, United KingdomPil-Bae Song Asian Development BankLeena Srivastava The Energy and Resources Institute, IndiaSimon Stolp World BankMichael Stoppard IHS CERAGreg Stringham Canadian Association of Petroleum ProducersCartan Sumner Peabody EnergyRenata Nascimento Szczerbacki

Petrobras

Minoru Takada United NationsKazunori Takahashi Hitachi Ltd.Kuniharu Takemata Electric Power Development Co., Ltd. (J-POWER)Nobuo Tanaka Former IEA Executive DirectorJosue Tanaka European Bank for Reconstruction and DevelopmentChee Hong Tat Energy Market Authority, SingaporeTessa Terpstra Ministry of Foreign Affairs, the NetherlandsWim Thomas Shell


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Simon Trace Practical Action, United KingdomJames Turner Department of Energy and Climate Change, United KingdomJim Turner Department of State, United StatesOras Tynkkynen Member of Parliament, FinlandThamir Uqaili Independent consultantAad van Bohemen Ministry of Economic Affairs, the NetherlandsCoby van der Linde Clingendael Institute, the NetherlandsNoe van Hulst Energy Academy EuropeWim J. van Nes SNV Netherlands Development OrganisationKristi Varangu Natural Resources CanadaLivia Vasakova Directorate-General for Energy, European Commission Antonio Verde Ministry of Foreign Affairs, ItalyPierre Verlinden Trina SolarFrank Verrastro Center for Strategic and International Studies, United StatesLouise Vickery Department of Resources, Energy and Tourism, AustraliaDaniele Violetti United Nations Framework Convention on Climate ChangeFaisal Wadi South Oil Company, IraqHenry Wang Saudi Basic Industries Corporation, Saudi ArabiaPeter Wells Cardiff Business SchoolJacob Williams Peabody EnergyStephen Wilson Rio TintoSteven Winberg CONSOL EnergyPeter Wooders International Institute for Sustainable Development,

SwitzerlandXiaojie Xu Academy of Social Sciences, ChinaZhang Yuzhuo Shenhua GroupCraig Zamuda Department of Energy, United StatesAlex Zapantis Rio TintoKrzysztof mijewski Public Board for Development of Low-emission Economy,

Poland

The individuals and organisations that contributed to this study are not responsible for any opinions or judgements contained in this study. All errors and omissions are solely the responsibility of the IEA.


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Comments and questions are welcome and should be addressed to:

Dr. Fatih Birol Chief Economist Director, Directorate of Global Energy Economics International Energy Agency 9, rue de la Fdration 75739 Paris Cedex 15 France

Telephone: (33-1) 4057 6670 Email: [email protected]

More information about the World Energy Outlook is available at www.worldenergyoutlook.org.


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ANNEXES

TABLE

OF

CONTENTS

PART CIRAQENERGY OUTLOOK

PART AGLOBALENERGYTRENDS

PART DSPECIALTOPICS

PART BFOCUS ON ENERGYEFFICIENCY

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ANNEXES

IRAQ OIL AND GAS RESOURCES AND SUPPLY POTENTIAL 14

IMPLICATIONS OF IRAQS ENERGY DEVELOPMENT 16

IRAQ TODAY: ENERGY AND THE ECONOMY 13

IRAQ: FUELLING FUTURE RECONSTRUCTION AND GROWTH 15

UNLOCKING ENERGY EFFICIENCY AT THE SECTORAL LEVEL 11

PATHWAYS TO ENERGY EFFICIENCY 12

ENERGY EFFICIENCY: THE CURRENT STATE OF PLAY 9

A BLUEPRINT FOR AN ENERGY EFFICIENT WORLD 10

UNDERSTANDING THE SCENARIOS 1

ENERGY TRENDS TO 2035 2

OIL MARKET OUTLOOK 3

COAL MARKET OUTLOOK

RENEWABLE ENERGY OUTLOOK

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NATURAL GAS MARKET OUTLOOK 4

POWER SECTOR OUTLOOK 6

CLIMATE CHANGE MITIGATION AND THE 450 SCENARIO 8

WATER FOR ENERGY 17

MEASURING PROGRESS TOWARDS ENERGY FOR ALL 18


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ANNEXES

TABLE

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CONTENTS

PART CIRAQENERGY OUTLOOK

PART AGLOBALENERGYTRENDS

PART DSPECIALTOPICS

PART BFOCUS ON ENERGYEFFICIENCY


ANNEXES

IRAQ OIL AND GAS RESOURCES AND SUPPLY POTENTIAL 14

IMPLICATIONS OF IRAQS ENERGY DEVELOPMENT 16

IRAQ TODAY: ENERGY AND THE ECONOMY 13

IRAQ: FUELLING FUTURE RECONSTRUCTION AND GROWTH 15

UNLOCKING ENERGY EFFICIENCY AT THE SECTORAL LEVEL 11

PATHWAYS TO ENERGY EFFICIENCY 12

ENERGY EFFICIENCY: THE CURRENT STATE OF PLAY 9

A BLUEPRINT FOR AN ENERGY EFFICIENT WORLD 10

UNDERSTANDING THE SCENARIOS 1

ENERGY TRENDS TO 2035 2

OIL MARKET OUTLOOK 3

COAL MARKET OUTLOOK

RENEWABLE ENERGY OUTLOOK

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NATURAL GAS MARKET OUTLOOK 4

POWER SECTOR OUTLOOK 6

CLIMATE CHANGE MITIGATION AND THE 450 SCENARIO 8

WATER FOR ENERGY 17

MEASURING PROGRESS TOWARDS ENERGY FOR ALL 18


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Part A: GLOBAL ENERGY TRENDS 31

Understanding the scenarios 33Defining the scenarios 34Non-policy assumptions 36

Economic growth 36Population 39Energy prices 40CO2 prices 44Technology 46

Energy trends to 2035 49Global energy trends by scenario 50Energy trends in the New Policies Scenario 52

Primary energy demand 52Energy supply and trade 63Energy-related CO2 emissions 68Economic implications 69

US developments redefining the global energy map 74Diverging trends in import dependency 75The impact of unconventional gas 77The direction of oil trade and supply security 78

Oil market outlook 81Demand 82

Primary oil demand trends 82Regional trends 84Sectoral trends 87Special topic: heavy freight road transport 91

Supply 97Reserves and resources 97Production prospects 101Trade 119Investment in oil and gas 120

Natural gas market outlook 125Demand 126

Gas demand trends 126Regional trends 127Sectoral trends 132

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Foreword 3Acknowledgements 5Executive Summary 23

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Table of Contents 17

Production 133Reserves and resources 133Gas production prospects 136Focus on prospects for unconventional gas 141

Trade 146Inter-regional trade 146The pricing of internationally traded gas 150

Investment 154

Coal market outlook 155Demand 156

Overview of global demand trends 156Sectoral trends 159Regional trends 159

Supply 163Reserves and resources 163Overview of global supply trends 164Regional trends 166

Coal markets and industry trends 174Developments in international pricing 174Cost and investment developments 176

Power sector outlook 179Electricity demand 180Electricity supply 182

Capacity retirements and additions 183Fossil-fuelled generation 188Nuclear power 190Renewables 191Transmission and distribution 192Investment 193CO2 emissions 196

Regional trends 197Focus on electricity prices 202

Renewable energy outlook 211Recent developments 212Outlook for renewable energy by scenario 214Outlook by type in the New Policies Scenario 219

Focus on bioenergy 219Hydropower 225Wind power 226Solar photovoltaics 227Other renewables for electricity and heat 229

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Costs of renewables 230Investment 230Production costs 231Subsidies to renewables 233Integration of variable renewables into the electricity system 236

Benefits of renewables 238

Climate change mitigation and the 450 Scenario 241Introduction 242Recent developments 242The world of the 450 Scenario 245

Comparison to other scenarios 245Primary energy demand and electricity generation in the 450 Scenario 249Energy-related emissions and abatement 252Benefits of the 450 Scenario 257

Carbon in energy reserves and energy infrastructure 259Potential CO2 emissions in fossil-fuel reserves 259Emissions lock-in 261

Part B: FOCUS ON ENERGY EFFICIENCY 267

Energy efficiency: the current state of play 269Introduction 270The current status of energy efficiency 271

Existing policies 274Barriers to energy efficiency deployment 280

The outlook for energy efficiency 282Trends by region 284Trends by sector 287Role in reducing CO2 emissions 289Untapped economically viable potential in the New Policies Scenario 290

Investment in energy efficiency 292

A blueprint for an energy-efficient world 297The Efficient World Scenario 298

Introduction 298Methodology and assumptions 298

Energy markets in the Efficient World Scenario 302Trends by fuel 303Energy intensity 307

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Energy prices 307Energy trade 308Investment and fuel savings 312

Implications for the global economy 313Environmental implications 317

Energy-related CO2 emissions 317Local pollution 319

The role of energy efficiency in increasing energy access 321Building the Efficient World Scenario: a blueprint for savings 322

Unlocking energy efficiency at the sectoral level 327The balance of sectoral opportunities 328Buildings 330

Techno-economic potential and policy framework 330Outlook 331Trends by sub-sector 334

Industry 338Techno-economic potential and policy framework 338Outlook 340Trends by sub-sector 342

Transport 344Techno-economic potential and policy framework 344Outlook 346Trends by sub-sector 349

Power generation and electricity demand 351Techno-economic potential and policy framework 351Outlook 352

Pathways to energy efficiency 357What is included in the profiles? 357

How to read the profiles 357World 360United States 364European Union 368Japan 372China 376India 380

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Part C: IRAQ ENERGY OUTLOOK 385

Iraq today: energy and the economy 387Iraqs energy sector 388

Overview of energy supply 390Overview of energy demand 397

The context for Iraqs energy development 403The economy 403Legal and institutional framework 405Security 411Environment and water 412

Projecting future developments 413

Iraq oil and gas resources and supply potential 419Oil 420

Reserves and resources 420Production 425Crude oil conversion and bringing oil to market 433Water requirements 436

Natural gas 439Reserves and resources 439Production 440

Oil and gas investment 445

Iraq: fuelling future reconstruction and growth 449Overview of energy demand trends 450Outlook for the power sector in the Central Scenario 454

Electricity demand 454Electricity generation 456Transmission and distribution 462Investment in the power sector 463Measuring the value of changes in the power sector 464

Outlook for end-use sectors 466Transport 466Industry 468Buildings and other sectors 470

Environment 471Energy-related emissions 471Water use 472

High Case 473Delayed Case 474

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Implications of Iraqs energy development 477Energy in Iraqs economic and social development 478

The Central Scenario 478Economic development in the High and the Delayed Cases 484

Iraqs impact on international oil markets 485The Central Scenario 486Iraqs oil market impact in the High and Delayed Cases 489

Iraqs impact on international gas markets 492

Part D: SPECIAL TOPICS 499

Water for energy 501Introduction 502

Facing a more water-constrained future 502Water for energy linkages 505

Primary energy production 506Electricity generation 508The vulnerability of energy to water constraints 512

Outlook for water requirements for energy production 514Regional stress points 518

China 518India 521United States 523Canada 525

How serious is the water constraint? 527

Measuring progress towards energy for all 529Introduction 530Global status of modern energy access 532Outlook for energy access in the New Policies Scenario 535

Access to electricity 535Access to clean cooking facilities 537

Energy for All Case 538Energy Development Index 541

Energy development framework 541Results from the Energy Development Index 544

ANNExES 549Annex A. Tables for Scenario Projections 551Annex B. Policies and measures by scenario 629Annex C. Definitions 641Annex D. References 655

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List of figures

Part A: GLOBAL ENERGY TRENDS

Figures for Chapter 1: Understanding the scenarios 1.1 Average IEA crude oil price 421.2 Ratio of average natural gas and coal prices to crude oil prices in the

New Policies Scenario 43

Figures for Chapter 2: Energy trends to 2035 2.1 World primary energy demand by scenario 502.2 Global energy-related CO2 emissions by scenario 522.3 World primary energy demand by fuel in the New Policies Scenario 542.4 World primary energy demand per unit of GDP and per capita in the

New Policies Scenario in selected regions and countries 552.5 Non-OECD primary energy demand by region in the New Policies Scenario 562.6 Share of China and India in net increase in global primary energy demand

by fuel and CO2 emissions in the New Policies Scenario, 2010-2035 572.7 OECD primary energy demand by fuel in the New Policies Scenario 602.8 The global energy system, 2010 622.9 Fossil fuel production in selected regions in the New Policies Scenario,

2010 and 2035 652.10 Change in key WEO-2012 projections for 2035 compared with WEO-2011

in the New Policies Scenario 672.11 Energy-related CO2 emissions in selected countries and regions in the

New Policies Scenario, 2010 and 2035 692.12 Economic value of fossil-fuel consumption subsidies by fuel 702.13 Economic value of fossil-fuel consumption subsidies by fuel for top

25 countries, 2011 712.14 Spending on net imports of fossil fuels in the New Policies Scenario 732.15 Net energy self-sufficiency in selected countries and regions in the

New Policies Scenario 752.16 Net oil and gas import dependency in selected countries in the New

Policies Scenario 762.17 Reductions in net oil imports in the United States by source in the New

Policies Scenario 772.18 Share of inter-regional oil and gas trade through key choke points in the

New Policies Scenario 79

Figures for Chapter 3: Oil market outlook 3.1 World oil demand and oil price by scenario 823.2 Oil demand growth by region in the New Policies Scenario 853.3 World oil demand by sector in the New Policies Scenario 883.4 World transport oil demand by sub-sector in the New Policies Scenario 893.5 Cumulative oil savings from vehicle fuel-economy standards in selected

regions, 2010-2035 90

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3.6 PLDV fleet in selected regions in the New Policies Scenario 913.7 Incremental road freight growth by region since 2000 in the New Policies

Scenario 923.8 Freight truck sales and stock by region in the New Policies Scenario 933.9 World freight truck oil demand in the New Policies Scenario 943.10 Alternative fuel use by freight trucks in the New Policies Scenario 953.11 Average on-road fuel consumption of heavy freight trucks by region in the

New Policies Scenario 973.12 Proven oil reserves in the top 15 countries, end-2011 983.13 Ultimately technically recoverable resources and cumulative production

by region in the New Policies Scenario 993.14 Liquid fuels schematic 1003.15 World oil supply by type in the New Policies Scenario 1033.16 World oil production by type in the New Policies Scenario 1043.17 World oil production by quality in the New Policies Scenario 1043.18 United States oil production by type in the New Policies Scenario 1063.19 Change in oil production in selected countries in the New Policies Scenario,

2011-2035 1143.20 World offshore crude oil production by physiographical location

and region in the New Policies Scenario 1193.21 Net oil imports in selected countries and regions in the New Policies Scenario 1203.22 Worldwide upstream oil and gas investment and the IEA Upstream

Investment Cost Index 123

Figures for Chapter 4: Natural gas market outlook 4.1 World natural gas demand by scenario 1264.2 Natural gas demand in selected regions in the New Policies Scenario 1284.3 Indicative economics of LNG exports from the United States 1304.4 World natural gas demand by sector in the New Policies Scenario 1324.5 Unconventional gas production in leading countries in the New Policies

Scenario, 2035 1424.6 Active drilling rigs in the United States, 2002-2012 1434.7 Relationship between break-even price (gas price needed to recover well

costs) and the liquid content of the gas produced 1444.8 World unconventional gas production by type and scenario/case 1454.9 Percentage change in selected economic and energy indicators

in the United States, 2006-2011 1464.10 Net inter-regional natural gas trade flows between major regions in

the New Policies Scenario 1494.11 World short-term LNG trade, 2000-2011 153

Figures for Chapter 5: Coal market outlook 5.1 Share of coal in world primary energy demand by scenario 1565.2 Incremental world primary energy demand by fuel, 2001-2011 158

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5.3 Incremental coal demand in China and the rest of the world by major sector in the New Policies Scenario 161

5.4 Share of key regions in global coal demand in the New Policies Scenario 1625.5 Share of coal and natural gas in US electricity generation in the New Policies

Scenario 1635.6 World hard coal reserves by country, end-2010 1645.7 Change in world coal production by type and scenario, 2010-2035 1655.8 Share of major hard coal importers in global inter-regional trade in the

New Policies Scenario 1705.9 Chinas hard coal net trade in the New Policies Scenario 1715.10 United States hard coal net trade in the New Policies Scenario 1725.11 Australian hard coal exports by type in the New Policies Scenario 1745.12 Average fortnightly steam coal prices in selected ports 1755.13 Average FOB supply cash costs and prices for internationally traded steam

coal, 2011 177

Figures for Chapter 6: Power sector outlook 6.1 World electricity supply and demand by sector in the New Policies Scenario 1816.2 Share of electricity generation by source and region in the New Policies

Scenario 1836.3 Power generation gross capacity additions and retirements in the New Policies

Scenario, 2012-2035 1846.4 World net incremental generation and capacity by type in the New Policies

Scenario, 2010-2035 1856.5 Coal-fired power generation by selected region in the New Policies Scenario 1886.6 Gas-fired electricity generation by region in the New Policies Scenario 1896.7 Nuclear power capacity by region in the New Policies Scenario 1916.8 Share of renewables in electricity generation by region in the New Policies

Scenario 1926.9 Power sector cumulative investment by type in the New Policies Scenario,

2012-2035 1956.10 Annual average investment in T&D infrastructure in the New Policies Scenario 1956.11 CO2 emissions from fossil-fuel combustion in the power sector and emission

intensity per unit of electricity generation by selected region in the New Policies Scenario 196

6.12 United States electricity generation by source in the New Policies Scenario 1976.13 Japan electricity generation by source in the New Policies Scenario 1996.14 Renewables-based electricity generation by source and share of total

generation in the European Union in the New Policies Scenario 2006.15 Power generating capacity additions by source in China and share of global

additions in New Policies Scenario, 2012-2035 2016.16 Share of oil and gas electricity generation in selected regions in the New

Policies Scenario 2026.17 Components of the end-user price of electricity 203

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6.18 Average electricity price to households in selected European countries by cost component, excluding taxes, 2011 203

6.19 Change in end-user prices by type of consumer and selected region in the New Policies Scenario, 2011-2035 204

6.20 Wholesale electricity prices by region and cost component in the New Policies Scenario 207

6.21 Average household electricity prices by region and cost component in the New Policies Scenario 208

6.22 Total cost per capita of residential sector electricity in selected countries, and share of household income spent on electricity 209

Figures for Chapter 7: Renewable energy outlook 7.1 Share of renewables by category and scenario 2177.2 World average annual renewables-based capacity additions by type

in the New Policies Scenario 2177.3 World bioenergy use by sector and use of traditional biomass in the

New Policies Scenario, 2010 and 2035 2197.4 Share of solid biomass supply for biofuels and power generation by feedstock

in the New Policies Scenario 2247.5 Share of bioenergy demand for biofuels and power generation from domestic

production and imports, 2010 and 2035 2257.6 Installed hydropower capacity in selected regions in the New Policies Scenario 2267.7 Solar PV gross capacity additions, average unit cost, and resulting investment

requirements in the New Policies Scenario 2287.8 Cumulative investment in renewables-based electricity generation by region

and type in the New Policies Scenario, 2012-2035 2317.9 Indicative biofuels production costs and spot oil prices 2327.10 Global renewable energy subsidies by source in the New Policies Scenario 2347.11 Subsidised and unsubsidised renewables-based electricity generation

by type in the New Policies Scenario 2357.12 Global subsidies to renewables-based electricity generation and biofuels

by region in the New Policies Scenario 2357.13 Subsidy lock-in of renewables-based electricity generation in the New

Policies Scenario 2367.14 Installed wind and solar PV capacity and their contribution to system

adequacy in the New Policies Scenario 2387.15 CO2 emissions savings from greater use of renewables, relative to 2010

fuel mix in the New Policies Scenario 239

Figures for Chapter 8: Climate change mitigation and the 450 Scenario 8.1 Annual change in global energy-related CO2 emissions by fuel and global

GDP growth 2438.2 Energy-related CO2 emissions per capita by region, 2011 2448.3 Global energy-related CO2 emissions by scenario 246

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8.4 Greenhouse-gas concentration pathways and probability distribution of equilibrium temperature increase above pre-industrial levels 247

8.5 Primary energy demand in the 450 Scenario by fuel 2498.6 Electricity generation from low-carbon technologies and share by scenario,

2010 and 2035 2508.7 Global energy-related CO2 emissions abatement in the 450 Scenario relative

to the New Policies Scenario 2538.8 Global CO2 emissions reduction in the 450 Scenario relative to the

New Policies Scenario in global road transport 2548.9 Per-capita emissions and total emissions by region 2558.10 Fossil fuel-import bills in selected regions by scenario 2588.11 Potential CO2 emissions from proven fossil-fuel reserves at the end of 2011

by region 2608.12 Potential CO2 emissions from remaining fossil-fuel reserves by fuel type 2618.13 Energy-related CO2 emissions from locked-in infrastructure in 2011

and in the 450 Scenario in OECD countries 2628.14 Energy-related CO2 emissions from locked-in infrastructure in 2011

and in the 450 Scenario in non-OECD countries 2638.15 Global energy-related CO2 emissions in the 450 Scenario and from locked-in

infrastructure 265

Part B: FOCUS ON ENERGY EFFICIENCY

Figures for Chapter 9: Energy efficiency: the current state of play 9.1 Global energy intensity average annual growth rates, 1971-2010 2729.2 Energy intensities by regions, 1980 and 2010 2739.3 Energy intensity trends by region, 1980-2010 2749.4 Change in global primary energy demand by measure and by scenario 2829.5 Savings in primary energy due to energy efficiency in the New Policies

Scenario compared with the Current Policies Scenario by region, 2035 2869.6 Decomposition of the change in final energy consumption in the New Policies

Scenario compared with the Current Policies Scenario by sector in 2035 2899.7 Contribution of change in CO2 emissions by policies in the New Policies

Scenario compared with the Current Policies Scenario 2899.8 Trends in energy and CO2 intensity by scenario, 2010-2035 2909.9 Utilised long-term energy efficiency economic potential in the New Policies

Scenario, 2011-2035 2919.10 Average annual increase in energy efficiency investment in the New Policies

Scenario compared with the Current Policies Scenario 2939.11 Average payback periods for energy efficiency measures in the New Policies

Scenario by sector including and excluding transaction costs 2959.12 Investment in energy efficiency by country and region, 2011 296

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Figures for Chapter 10: A blueprint for an energy-efficient world 10.1 Representation of energy efficiency by end-use sector in the World

Energy Model as considered in the Efficient World Scenario 29910.2 Efficient World Scenario methodology 30110.3 World primary energy demand in the Efficient World Scenario by fuel 30310.4 Reduction in global oil demand in the Efficient World Scenario compared

with the New Policies Scenario 30410.5 Reduction in electricity demand by region in the Efficient World Scenario

compared with the New Policies Scenario 30510.6 Reduction in global coal demand in the Efficient World Scenario compared

with the New Policies Scenario 30610.7 Reduction in global natural gas demand in the Efficient World Scenario

compared with the New Policies Scenario 30610.8 Average annual change in global energy intensity in the Efficient World

Scenario 30710.9 Fuel import bills in selected countries by fuel and scenario 31010.10 Change in investment across the electricity value chain in the Efficient World

Scenario, compared with the New Policies Scenario, 2012-2035 31310.11 Change in real GDP in the Efficient World Scenario compared with the

New Policies Scenario 31410.12 Changes in value-added by sector and region in the Efficient World Scenario

compared with the New Policies Scenario in 2035 31510.13 Change in global trade flows for selected sectors in the Efficient World

Scenario compared with the New Policies Scenario in 2035 31710.14 Energy-related CO2 emissions by scenario and abatement measures 31810.15 Cumulative efficiency-related CO2 emissions savings in the Efficient

World Scenario relative to New Policies Scenario by sector and region 31810.16 Additional electricity needed to achieve energy for all in India compared

with savings in the Efficient World Scenario, 2011-2030 321

Figures for Chapter 11: Unlocking energy efficiency at the sectoral level 11.1 Energy savings in 2035 by fuel and sector in the Efficient World Scenario

compared to the New Policies Scenario 32811.2 Savings in residential energy demand in the Efficient World Scenario

relative to the New Policies Scenario by contributing factor 33411.3 Change in energy demand in the residential sector in the Efficient

World Scenario and the New Policies Scenario from 2010 to 2035 by end-use 33511.4 Cumulative new industry capacity as a share of currently installed global

capacity in the Efficient World Scenario 33811.5 Average annual change in industrial activity, efficiency and energy demand by

industrial sub-sector and scenario, 2010-2035 34111.6 Fuel savings in the transport sector in the Efficient World Scenario 34711.7 Energy savings in the transport sector by region in the Efficient World Scenario

relative to the New Policies Scenario 349

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11.8 Energy savings in the transport sector in the Efficient World Scenario relative to the New Policies Scenario by sub-sector 349

11.9 Energy savings in road transport in the Efficient World Scenario relative to the New Policies Scenario 350

11.10 Power generation energy savings by measure in the Efficient World Scenario 35311.11 Coal-fired capacity by technology in the Efficient World Scenario 356

Figures for Chapter 12: Pathways to energy efficiency 12.1a Global primary energy demand by scenario 36012.1b Changes in global real GDP and value-added by sector in the Efficient World

Scenario relative to the New Policies Scenario 36112.1c Global additional investment by end-use sector in the Efficient World Scenario

relative to the New Policies Scenario 36112.1d Global change in energy consumption in energy-intensive industries in the

Efficient World Scenario, 2010-2035 36212.1e Global oil demand savings in the transport sector in the Efficient World

Scenario relative to the New Policies Scenario 36212.1f Global energy demand and savings in the residential sector in the Efficient

World Scenario relative to the New Policies Scenario 36212.2a United States primary energy demand by scenario 36412.2b United States fossil fuel net trade (current) and import bills in the Efficient

World Scenario and the New Policies Scenario 36512.2c United States additional investment by end-use sector in the Efficient World

Scenario relative to the New Policies Scenario 36512.2d United States change in energy consumption in energy-intensive industries

in the Efficient World Scenario, 2010-2035 36612.2e United States oil demand savings in the transport sector in the Efficient World

Scenario relative to the New Policies Scenario 36612.2f United States energy demand and savings in the residential sector in the

Efficient World Scenario relative to the New Policies Scenario 36612.3a European Union primary energy demand by scenario 36812.3b European Union fossil fuel net trade (current) and import bills in the Efficient

World Scenario and the New Policies Scenario 36912.3c European Union additional investment by end-use sector in the Efficient World

Scenario relative to the New Policies Scenario 36912.3d European Union change in energy consumption in energy-intensive

industries in the Efficient World Scenario, 2010-2035 37012.3e European Union oil demand savings in the transport sector in the Efficient

World Scenario relative to the New Policies Scenario 37012.3f European Union energy demand and savings in the residential sector in the

Efficient World Scenario relative to the New Policies Scenario 37012.4a Japans primary energy demand by scenario 37212.4b Japans fossil fuel net trade (current) and import bills in the Efficient World

Scenario and the New Policies Scenario 373

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12.4c Japans additional investment by end-use sector in the Efficient World Scenario relative to the New Policies Scenario 373

12.4d Japans change in energy consumption in energy-intensive industries in the Efficient World Scenario, 2010-2035 374

12.4e Japans oil demand savings in the transport sector in the Efficient World Scenario relative to the New Policies Scenario 374

12.4f Japans energy demand and savings in the residential sector in the Efficient World Scenario relative to the New Policies Scenario 374

12.5a Chinas primary energy demand by scenario 37612.5b Chinas fossil fuel net trade (current) and import bills in the Efficient

World Scenario and the New Policies Scenario 37712.5c Chinas additional investment by end-use sector in the Efficient World Scenario

relative to the New Policies Scenario 37712.5d Chinas change in energy consumption in energy-intensive industries

in the Efficient World Scenario, 2010-2035 37812.5e Chinas oil demand savings in the transport sector in the Efficient World

Scenario relative to the New Policies Scenario 37812.5f Chinas energy demand and savings in the residential sector in the Efficient

World Scenario relative to the New Policies Scenario 37812.6a Indias primary energy demand by scenario 38012.6b Indias fossil fuel net trade (current) and import bills in the Efficient World

Scenario and the New Policies Scenario 38112.6c Indias additional investment by end-use sector in the Efficient World Scenario

relative to the New Policies Scenario 38112.6d Indias change in energy consumption in energy-intensive industries in

the Efficient World Scenario, 2010-2035 38212.6e Indias oil demand savings in the transport sector in the Efficient World

Scenario relative to the New Policies Scenario 38212.6f Indias energy demand and savings in the residential sector in the Efficient

World Scenario relative to the New Policies Scenario 382

Part C: IRAQ ENERGY OUTLOOK

Figures for Chapter 13: Iraq today: energy and the economy 13.1 Iraq hydrocarbon resources and infrastructure 38813.2 GDP per capita for selected countries, 2011 38913.3 Hydrocarbon revenue relative to GDP in selected countries, 2011 39013.4 Iraq oil production 39113.5 Iraq average daily oil production and transportation, June 2012 39213.6 Average refinery product slate in Iraq compared to the United States, 2011 39413.7 Iraq monthly gas production and transportation, June 2012 39513.8 Iraq crude oil exports by destination market 39713.9 Primary energy demand per capita in Iraq and the Middle East 39713.10 Evolution of the energy mix in Iraq and the Middle East 398

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13.11 Iraq domestic energy balance, 2010 39913.12 Iraq difference between gross installed generation capacity and available

peak capacity, 2011 40013.13 Iraq source and reliability of electricity supply by governorate, 2011 40213.14 Electricity losses by type in selected countries, 2010 40313.15 Iraq monthly oil export revenues by route 40413.16 Number of years cover for oil revenues from financial reserves in selected

countries, 2011 40513.17 Iraq main government institutions related to the energy sector 41013.18 Total number of attacks in Iraq (weekly) 41213.19 Variations in Iraqs GDP growth by scenario 415

Figures for Chapter 14: Iraq oil and gas resources and supply potential 14.1 Iraq main hydrocarbon basins and fields 42114.2 Iraq oil reserves by field, end-2011 42314.3 Iraq production outlook to 2020 in context 42714.4 Northern Iraq oil and gas fields and infrastructure 43114.5 Wells by type and rig count required in the Central Scenario 43214.6 Iraq refinery capacity in the Central Scenario 43314.7 Southern Iraq oil and gas fields and infrastructure 43514.8 Reservoir pressure and recovery factors prior to and after the start of water

injection at the Rumaila and Kirkuk fields 43714.9 Net water requirement in southern Iraq oil fields by source in the Central

Scenario 43814.10 Iraq gas production in the Central Scenario 44214.11 Iraq associated gas processing capacity additions and flaring reduction in the

Central Scenario 44214.12 Iraq non-associated gas production by region in the Central Scenario

and High Case 44414.13 Iraq oil and gas investment in the Central Scenario 44614.14 Average oil and gas project preparation and completion times

in the Middle East 447

Figures for Chapter 15: Iraq: fuelling future reconstruction and growth 15.1 Iraq total primary energy demand by scenario 45015.2 Iraq total primary energy demand by fuel in the Central Scenario 45215.3 Total primary energy demand per capita in selected countries in the Central

Scenario 45315.4 Energy intensity in selected countries in the Central Scenario 45315.5 Iraq total final electricity consumption by sector and estimated

unmet electricity demand in the Central Scenario 45415.6 Iraq net generation capacity available at peak and capacity required to meet

peak demand in the Central Scenario 45515.7 Iraq grid-connected gross generation capacity in the Central Scenario 45615.8 Expected completion time of selected power plants in Iraq 457

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15.9 Iraq electricity generation by fuel and overall efficiency of power generation in the Central Scenario 459

15.10 Levelised cost of base-load plants with international fuel prices in 2020 (Central Scenario) and current domestic fuel prices in Iraq 461

15.11 Iraq annual average investment in power generation capacity and electricity networks in the Central Scenario 463

15.12 Export value of fuel saved in the power sector as a result of changes from 2015 46515.13 Iraq fossil-fuel consumption subsidies in the Central Scenario 46615.14 Iraq PLDV ownership and oil demand in transport in the Central Scenario 46715.15 PLDV ownership and stocks in selected countries in the Central Scenario 46815.16 Iraq domestic energy balance in the Central Scenario, 2035 46915.17 Iraq energy-related CO2 emissions by fuel and its share of Middle East

emissions in the Central Scenario 47115.18 Carbon intensity in selected countries in the Central Scenario 47215.19 Iraq water requirements, 2015 473

Figures for Chapter 16: Implications of Iraqs energy development 16.1 Iraq oil and gas export revenues in the Central Scenario 47816.2 Oil production and export revenue as a share of GDP in selected countries

in the Central Scenario, 2011 and 2035 47916.3 Iraq annual average investment in energy supply infrastructure in the Central

Scenario 48016.4 Iraq labour force and estimated direct oil sector employment in the Central

Scenario 48116.5 Growth in OPEC and non-OPEC supply in the Central Scenario 48616.6 Major contributors to global oil supply growth to 2035 in the Central Scenario 48716.7 Iraq oil balance in the Central Scenario 48716.8 Iraq oil balance in the High Case 49016.9 Key oil market indicators in 2035 in the Delayed Case, relative to the Central

Scenario 49216.10 Growth in natural gas production in selected countries in the Central Scenario 49316.11 Iraq gas balance in the Central Scenario 49416.12 Indicative delivered supply costs and prices for Iraq gas export, 2020 49716.13 Natural gas production and export in the High Case and the Delayed Case 498

Part D: SPECIAL TOPICS

Figures for Chapter 17: Water for energy 17.1 World water resources and human freshwater use 50217.2 Renewable water resources per capita in 2010 50417.3 Water use for primary energy production 50717.4 Water use for electricity generation by cooling technology 51017.5 Share of power generation capacity with freshwater once-through cooling

and hydro in selected countries, 2010 513

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17.6 Global water use for energy production by scenario 51417.7 Global water use for energy production in the New Policies Scenario

by fuel and power generation type 51617.8 Water intensity of energy production for selected regions in the New Policies

Scenario 51717.9 Renewable water resources per capita and distribution of water-intensive

energy production by type in China 51817.10 Water use for energy production in China in the New Policies Scenario 51917.11 Renewable water resources per capita and distribution of water-intensive

energy production by type in India 52217.12 Water use for energy production in India in the New Policies Scenario 52317.13 Water use for energy production in the United States in the New Policies

Scenario 52417.14 Canadian oil sands production and estimated water withdrawal by type

in the New Policies Scenario 527

Figures for Chapter 18: Measuring progress towards energy for all 18.1 Countries with the largest population without access to electricity, 2010 53318.2 Countries with the largest population relying on traditional use of biomass

for cooking, 2010 53418.3 Electricity consumption per capita in selected regions in the New Policies

Scenario 53718.4 Number of people without clean cooking facilities by region in the New Policies

Scenario 53818.5 Average annual investment in modern energy access in selected regions,

2011-2030 53918.6 Additional impact of the Energy for All Case compared with the New Policies

Scenario 54018.7 Energy development framework 54218.8 Composition of the new Energy Development Index 54318.9 Energy Development Index country results, 2010 (and 2002) 54518.10 Comparison between the new Energy Development Index and the Human

Development Index in 2010 547

List of tables


Tables for Chapter 1: Understanding the scenarios 1.1 Definitions and objectives of the WEO-2012 scenarios 351.2 Real GDP growth assumptions by region 371.3 Population assumptions by region 391.4 Fossil-fuel import price assumptions by scenario 411.5 CO2 price assumptions in selected regions and countries by scenario 46

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Tables for Chapter 2: Energy trends to 2035 2.1 World primary energy demand and energy-related CO2 emissions by scenario 512.2 World primary energy demand by fuel in the New Policies Scenario 532.3 World primary energy demand by region in the New Policies Scenario 582.4 Fossil-fuel reserves and resources by region and type, end-2011 642.5 Cumulative investment in energy-supply infrastructure in the New Policies

Scenario, 2012-2035 74

Tables for Chapter 3: Oil market outlook 3.1 Oil and total liquids demand by scenario 833.2 Oil demand by region in the New Policies Scenario 853.3 Remaining technically recoverable oil resources by type and region, end-2011 1013.4 Oil production and oil and liquids supply by type and scenario 1023.5 Non-OPEC oil production in the New Policies Scenario 1073.6 OPEC oil production in the New Policies Scenario 1153.7 Oil and gas industry investment by company 1213.8 Cumulative investment in oil and gas supply infrastructure by region

in the New Policies Scenario, 2012-2035 124

Tables for Chapter 4: Natural gas market outlook 4.1 Natural gas demand by region and scenario 1274.2 Natural gas demand by region in the New Policies Scenario 1284.3 Remaining technically recoverable natural gas resources by type and region,

end-2011 1344.4 Natural gas production by major region and scenario 1364.5 Natural gas production by region in the New Policies Scenario 1384.6 Inter-regional natural gas net trade in the New Policies Scenario 1474.7 LNG export projects under construction worldwide 150

Tables for Chapter 5: Coal market outlook 5.1 Coal demand by region and scenario 1575.2 World coal demand by sector in the New Policies Scenario 1595.3 Coal demand by region in the New Policies Scenario 1605.4 Coal production by type and scenario 1655.5 World inter-regional hard coal trade by type and scenario 1665.6 Coal production by region in the New Policies Scenario 1685.7 Inter-regional hard coal trade in the New Policies Scenario 1695.8 Selected Indian foreign direct investment in coal supply projects 173

Tables for Chapter 6: Power sector outlook 6.1 Electricity demand by region and scenario 1806.2 Electricity generation by source and scenario 1826.3 Cumulative capacity retirements by region and source in the New

Policies Scenario, 2012-2035 1866.4 Cumulative gross capacity additions by region and source in the New

Policies Scenario, 2012-2035 187

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6.5 Investment in electricity-supply infrastructure by region and source in the New Policies Scenario, 2012-2035 194

Tables for Chapter 7: Renewable energy outlook 7.1 Total primary demand for renewable energy by region and scenario 2157.2 World renewable energy use by type and scenario 2167.3 Renewables-based electricity generation by region in the New Policies

Scenario 2187.4 Ethanol and biodiesel consumption by region in the New Policies Scenario 2217.5 Installed onshore and offshore wind power capacity by region in the New

Policies Scenario 227

Tables for Chapter 8: Climate change mitigation and the 450 Scenario 8.1 World anthropogenic greenhouse-gas emissions by scenario 2468.2 Probability of staying below a specified temperature threshold by scenario 2478.3 Global air pollution by scenario 258


Tables for Chapter 9: Energy efficiency: the current state of play 9.1 Overview of key energy efficiency policies that are currently in place

by country/region and sector 2769.2 Key barriers and remedial policy tools 2809.3 Key energy efficiency assumptions in major countries/regions in the

New Policies and 450 Scenarios 2859.4 Energy demand and savings due to efficiency measures in the New Policies

Scenario compared with the Current Policies Scenario by end-use sector 288

Tables for Chapter 10: A blueprint for an energy-efficient world 10.1 World primary energy demand in the Efficient World Scenario by fuel 30210.2 Fossil-fuel import prices in the Efficient World Scenario 30810.3 Investment in energy efficiency, energy savings and fuel cost savings

by end-use sector in the Efficient World Scenario compared with the New Policies Scenario, 2012-2035 312

10.4 Air pollution by region and sector 320

Tables for Chapter 11: Unlocking energy efficiency at the sectoral level 11.1 Summary of key policies by sector in the Efficient World Scenario 32911.2 Global buildings energy demand by fuel and energy-related CO2 emissions

in the Efficient World Scenario 33111.3 Global industry energy demand by fuel and energy-related CO2 emissions

in the Efficient World Scenario 34111.4 Global transport energy demand by fuel and energy-related CO2 emissions

in the Efficient World Scenario 34611.5 Installed capacity, fuel consumption and electricity generation in the

Efficient World Scenario 355

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Tables for Chapter 12: Pathways to energy efficiency 12.1a World key indicators 36012.1b Global economic and environmental benefits 36112.1c World final energy consumption 36312.2a United States key indicators 36412.2b United States economic and environmental benefits 36512.2c United States final energy consumption 36712.3a European Union key indicators 36812.3b European Union economic and environmental benefits 36912.3c European Union final energy consumption 37112.4a Japans key indicators 37212.4b Japans economic and environmental benefits 37312.4c Japans final energy consumption 37512.5a Chinas key indicators 37612.5b Chinas economic and environmental benefits 37712.5c Chinas final energy consumption 37912.6a Indias key indicators 38012.6b Indias economic and environmental benefits 38112.6c Indias final energy consumption 383


Tables for Chapter 13: Iraq today: energy and the economy 13.1 Contracts awarded by federal authorities for hydrocarbon exploration and

development 40713.2 Growth rates for Iraqi oil output and GDP by scenario 41413.3 Main assumptions for Iraq in the Central Scenario 417

Tables for Chapter 14: Iraq oil and gas resources and supply potential 14.1 Iraq oil resources by region and super-giant field 42214.2 Indicative oil development and production costs in selected countries 42414.3 Iraq oil production by region in the Central Scenario and the High Case 42914.4 Iraq gas resources by region and super-giant field 44014.5 Iraq gas production by region in the Central Scenario and the High Case 441

Tables for Chapter 15: Iraq: fuelling future reconstruction and growth 15.1 Iraq primary energy demand by fuel and scenario 45115.2 Capital costs, efficiency, and construction times for the main types

of new generation technologies in Iraq 45815.3 Iraq key domestic energy indicators by scenario 473

Tables for Chapter 16: Implications of Iraqs energy development 16.1 Key energy export, revenue and investment indicators from the projections

for Iraq 484

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Tables for Chapter 17: Water for energy 17.1 Key uses of water for energy and potential water quality impacts 50517.2 Power plant cooling system trade-offs 50917.3 Examples of water impacts on energy production 51317.4 Global water use for energy production in the New Policies Scenario

by region 515

Tables for Chapter 18: Measuring progress towards energy for all 18.1 People without access to modern energy services by region, 2010 53218.2 Number of people without access to electricity by region in the New Policies

Scenario 53518.3 Number of people without clean cooking facilities by region in the New

Policies Scenario 538

List of boxes


Boxes for Chapter 2: Energy trends to 2035 2.1 How have the New Policies Scenario projections changed since WEO-2011? 67

Boxes for Chapter 3: Oil market outlook 3.1 The economic implications of runaway oil-demand growth in Saudi Arabia 863.2 Cars everywhere, but where will they go? 903.3 The rise and rise of light tight oil 1083.4 Arctic waters: the final frontier? 1103.5 Brazils oil boom gathers pace 1123.6 Global oil refining faces a major shake-out 122

Boxes for Chapter 4: Natural gas market outlook 4.1 Gas pricing reform in China 1314.2 USGS conventional oil and gas resource assessment updated 1354.3 New finds boost hopes for gas production in East Africa 1404.4 The economics of producing shale gas at $2/MBtu 143

Boxes for Chapter 5: Coal market outlook 5.1 Boom in global coal use continues apace 1585.2 South Africa or southern Africa? 167

Boxes for Chapter 6: Power sector outlook 6.1 Electric vehicles and smart grids 1936.2 Implications of growing renewables shares for power market design 205

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Boxes for Chapter 7: Renewable energy outlook 7.1 Improvements to the World Energy Model: the bioenergy supply and trade

module 2237.2 Hydropower prospects in Africa 2267.3 Indirect land-use change and the European Unions biofuels policy 240

Boxes for Chapter 8: Climate change mitigation and the 450 Scenario 8.1 Extreme weather events and the energy sector 2488.2 The relationship between the 450 and Efficient World Scenarios 264


Boxes for Chapter 9: Energy efficiency: the current state of play 9.1 What are we including when measuring energy efficiency? 2709.2 Lessons from Japans energy-saving Setsuden campaign 2789.3 The importance of effective implementation 2799.4 Decomposing the role of energy efficiency in curbing energy demand 2839.5 How much money is currently flowing into energy efficiency? 295

Boxes for Chapter 10: A blueprint for an energy-efficient world 10.1 Assessing the impact of the Efficient World Scenario on global economic

growth 31410.2 How large is the rebound effect? 316

Boxes for Chapter 11: Unlocking energy efficiency at the sectoral level 11.1 Determining the cost-effective efficiency potential of appliances

in the Efficient World Scenario 33711.2 Types of energy efficiency improvements in industry 33911.3 Modal shift and behavioural change in transport energy efficiency 34811.4 The value of smart grids 35311.5 The potential of combined heat and power 354


Boxes for Chapter 13: Iraq today: energy and the economy 13.1 Breaking through the historical ceiling on Iraqs oil supply 39113.2 Technical service contracts and production-sharing contracts 40613.3 Iraq energy data 41113.4 Overview of the Iraq Central Scenario and cases 41413.5 Strategic thinking for Iraqs energy sector 416

Boxes for Chapter 14: Iraq oil and gas resources and supply potential 14.1 Outlook for oil production in the KRG area 43014.2 The Strategic Pipeline 43614.3 Basrah Gas Company 443

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Boxes for Chapter 15: Iraq: fuelling future reconstruction and growth 15.1 Iraq near-term surge in power provision 45715.2 The role of renewables in Iraq 46015.3 Reforming the power sector 464

Boxes for Chapter 16: Implications of Iraqs energy development 16.1 Gaining local benefits from Iraqs energy investment boom 48316.2 Crude quality and marketing options 488


Boxes for Chapter 17: Water for energy 17.1 Energy for water 50417.2 Water requirements for concentrating solar power 511

Boxes for Chapter 18: Measuring progress towards energy for all 18.1 Brazils Luz Para Todos (Light for All) programme 53618.2 Areas for potential further development of the EDI 54318.3 Africa: resource rich but modern energy poor 546

List of spotlights

Part A: GLOBAL ENERGY TRENDS What is the biggest source of uncertainty for energy prospects? 38Are we on track to achieve the targets in the UN Sustainable Energy for All initiative? 59Are we finding enough crude oil to sustain production? 105Where will cheap American gas end up? 129Beyond the solar PV bubble 229What is the role of rare earths in climate change mitigation? 251

Part B: FOCUS ON ENERGY EFFICIENCY Do energy efficiency measures undermine carbon markets? 292Will improved energy efficiency be good for the oil-exporting countries? 311

Part C: IRAQ ENERGY OUTLOOK What is the potential cost of maintaining fossil-fuel subsidies in Iraq? 465Why invest in spare oil production capacity? 491

Part D: SPECIAL TOPICS What is the potential impact of new energy access commitments? 531

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Executive Summary 23

Executive Summary

A new global energy landscape is emerging

The global energy map is changing, with potentially far-reaching consequences for energy markets and trade. It is being redrawn by the resurgence in oil and gas production in the United States and could be further reshaped by a retreat from nuclear power in some countries, continued rapid growth in the use of wind and solar technologies and by the global spread of unconventional gas production. Perspectives for international oil markets hinge on Iraqs success in revitalising its oil sector. If new policy initiatives are broadened and implemented in a concerted effort to improve global energy efficiency, this could likewise be a game-changer. On the basis of global scenarios and multiple case studies, this World Energy Outlook assesses how these new developments might affect global energy and climate trends over the coming decades. It examines their impact on the critical challenges facing the energy system: to meet the worlds ever-growing energy needs, led by rising incomes and populations in emerging economies; to provide energy access to the worlds poorest; and to bring the world towards meeting its climate change objectives.

Taking all new developments and policies into account, the world is still failing to put the global energy system onto a more sustainable path. Global energy demand grows by more than one-third over the period to 2035 in the New Policies Scenario (our central scenario), with China, India and the Middle East accounting for 60% of the increase. Energy demand barely rises in OECD countries, although there is a pronounced shift away from oil and coal (and, in some countries, nuclear) towards natural gas and renewables. Despite the growth in low-carbon sources of energy, fossil fuels remain dominant in the global energy mix, supported by subsidies that amounted to $523 billion in 2011, up almost 30% on 2010 and six times more than subsidies to renewables. The cost of fossil-fuel subsidies has been driven up by higher oil prices; they remain most prevalent in the Middle East and North Africa, where momentum towards their reform appears to have been lost. Emissions in the New Policies Scenario correspond to a long-term average global temperature increase of 3.6 C.

The tide turns for US energy flows

Energy developments in the United States are profound and their effect will be felt well beyond North America and the energy sector. The recent rebound in US oil and gas production, driven by upstream technologies that are unlocking light tight oil and shale gas resources, is spurring economic activity with less expensive gas and electricity prices giving industry a competitive edge and steadily changing the role of North America in global energy trade. By around 2020, the United States is projected to become the largest global oil producer (overtaking Saudi Arabia until the mid-2020s) and starts to see the impact of new fuel-efficiency measures in transport. The result is a continued fall in US oil imports, to the extent that North America becomes a net oil exporter around 2030. This accelerates the switch in direction of international oil trade towards Asia, putting a focus on the security of the strategic routes that bring Middle East oil to Asian markets. The

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United States, which currently imports around 20% of its total energy needs, becomes all but self-sufficient in net terms a dramatic reversal of the trend seen in most other energy-importing countries.

But there is no immunity from global markets

No country is an energy island and the interactions between different fuels, markets and prices are intensifying. Most oil consumers are used to the effects of worldwide fluctuations in price (reducing its oil imports will not insulate the United States from developments in international markets), but consumers can expect to see growing linkages in other areas. A current example is how low-priced natural gas is reducing coal use in the United States, freeing up coal for export to Europe (where, in turn, it has displaced higher-priced gas). At its lowest level in 2012, natural gas in the United States traded at around one-fifth of import prices in Europe and one-eighth of those in Japan. Going forward, price relationships between regional gas markets are set to strengthen as liquefied natural gas trade becomes more flexible and contract terms evolve, meaning that changes in one part of the world are more quickly felt elsewhere. Within individual countries and regions, competitive power markets are creating stronger links between gas and coal markets, while these markets also need to adapt to the increasing role of renewables and, in some cases, to the reduced role of nuclear power. Policy makers looking for simultaneous progress towards energy security, economic and environmental objectives are facing increasingly complex and sometimes contradictory choices.

A blueprint for an energy-efficient world

Energy efficiency is widely recognised as a key option in the hands of policy makers but current efforts fall well short of tapping its full economic potential. In the last year, major energy-consuming countries have announced new measures: China is targeting a 16% reduction in energy intensity by 2015; the United States has adopted new fuel-economy standards; the European Union has committed to a cut of 20% in its 2020 energy demand; and Japan aims to cut 10% from electricity consumption by 2030. In the New Policies Scenario, these help to speed up the disappointingly slow progress in global energy efficiency seen over the last decade. But even with these and other new policies in place, a significant share of the potential to improve energy efficiency four-fifths of the potential in the buildings sector and more than half in industry still remains untapped.

Our Efficient World Scenario shows how tackling the barriers to energy efficiency investment can unleash this potential and realise huge gains for energy security, economic growth and the environment. These gains are not based on achieving any major or unexpected technological breakthroughs, but just on taking actions to remove the barriers obstructing the implementation of energy efficiency measures that are economically viable. Successful action to this effect would have a major impact on global energy and climate trends, compared with the New Policies Scenario. The growth in global primary energy demand to 2035 would be halved. Oil demand would peak just before 2020 and would be almost 13 mb/d lower by 2035, a reduction equal to the current production of Russia and

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Executive Summary 25

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Norway combined, easing the pressure for new discoveries and development. Additional investment of $11.8 trillion (in year-2011 dollars) in more energy-efficient technologies would be more than offset by reduced fuel expenditures. The accrued resources would facilitate a gradual reorientation of the global economy, boosting cum

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