© OECD/IEA - 2007

INTERNATIONAL ENERGY AGENCY

Energy and Energy and Climate Climate

Outlook Outlook Dr. Fatih Birol

Chief EconomistInternational Energy Agency

© OECD/IEA - 2007

The Reference Scenario: World Primary Energy Demand

Global demand grows by more than half over the next quarter of a century, with coal use rising most in absolute terms

Oil

Coal

Gas

BiomassNuclear

Other renewables

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

1970 1980 1990 2000 2010 2020 2030

Mto

e

© OECD/IEA - 2007

Reference Scenario: Increase in World Oil Supply, 2004-2030

The share of OPEC in world oil supply increases sharply as conventional non-OPEC production peaks towards the middle of

next decade

S.Arabia

Iraq

Iran

Other

0

5

10

15

20

25

OPEC conventional Non-conventional Non-OPECconventional

mb/

d

© OECD/IEA - 2007

Proven Natural Gas Reserves

Gas reserves are concentrated in FSU and MENA regions – Russia and Iran together account almost half of global gas reserves

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Annual Increase in Coal Demand

Global coal demand in the recent years has grown much faster than previously – mainly driven by China

milli

on to

nnes

-100

0

100

200

300

400

500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

China Rest of the world

© OECD/IEA - 2007

Reference Scenario:

Increase in Power Sector CO2 Emissionsby Fuel, 2005-2030

China and India account for almost 60% of the increase in power sector CO2 emissions to 2030

- 500

0

500

1 000

1 500

2 000

2 500

3 000

3 500

OECD Transitioneconomies

China India Rest ofdevelopingcountries

milli

on to

nnes

Coal Oil Gas

© OECD/IEA - 2007

Reference Scenario:Energy-Related CO2 emissions by Region

China to overtake US as the world’s biggest emitter, though OECD countries bear a major responsibility as to cumulative carbon

concentration

0

3

6

9

12

15

1990 2000 2010 2020 2030

Gig

aton

nes

of C

O 2

United States

China

Rest of non-OECD

Rest of OECD

© OECD/IEA - 2007

CO2 Emissions Growth 2004-2030

2004

2030

2004

2030

2004

2030

0

1 000

2 000

3 000

4 000

5 000

6 000

China India OECD

mill

ion

ton

nes

0

2

4

6

8

10

12

14to

nn

es p

er ca

pita

Emissions growth in China is twice as large as in the OECD, but in 2030 per capita emissions will still be lower than current OECD

ones

© OECD/IEA - 2007

The Next Ten Years Will Determine Our Energy Future

Investment over the next decade will lock in technology for up to 60 years

China and India - growing at breakneck speed fueled by energy

OECD power plants – significant portion reaching to retirement

Security of supply is under threat because the balance of power is shifting

Oil production in non-OPEC countries is set to peak,

Gas production to peak in OECD

© OECD/IEA - 2007

INTERNATIONAL ENERGY AGENCY

Alternative Policy Alternative Policy Scenario Scenario

© OECD/IEA - 2007

Improved end-use efficiency accounts for over two-thirds of avoided emissions in 2030 in the APS

Alternative Policy Scenario

Reference Scenario

Increased nuclear (10%)Increased renewables (12%)Power sector efficiency & fuel (13%) Electricity end-use efficiency (29%)

Fossil-fuel end-use efficiency (36%)

26

30

34

38

42

2004 2010 2015 2020 2025 2030

Gt o

f CO

2

The Alternative Policy Scenario: Key Policies for Global CO2 Reduction

© OECD/IEA - 2007

The Alternative Policy Scenario : Key policies that Make a Global Difference

A dozen policies in the US, EU & China account for around 40% of the global emissions reduction in 2030 in the Alternative Policy

Scenario

Energy efficiency Power generation

US

Tighter CAFE standards Improved efficiency in residential & commercial sectors

Increased use of renewables

EU

Increased vehicle fuel economy Improved efficiency in electricity use in the commercial sector

Increased use of renewables Nuclear plant lifetime extensions

China

Improved efficiency in electricity use in industry Improved efficiency in electricity use in the residential sector

Increased efficiency of coal-fired plants Increased use of renewables Increased reliance on nuclear

© OECD/IEA - 2007

Focus on European Union: Electricity Investment, 2005-2030

Investment needs are $139 billion lower over the projection period

-500

-400

-300

-200

-100

0

100

200

300bi

llion

dol

lars

(200

5)

Additional demand-side investment Avoided supply-side investment Net change in electricity investment

© OECD/IEA - 2007

Reference Scenario

26

30

34

38

42

2004 2030

Gt o

f CO 2

Alternative Policy Scenario

Efficiency of electricity use CCS and efficiency in industry Biofuels and hybrids

Efficiency of power plants Nuclear power-plants Renewables-based generation

CCS in power generation 2015

Going Beyond the Alternative Policy Scenario: BAPS CO2 Emissions Savings

BA

PS additional reduction goal of 8 G

t of CO

2

© OECD/IEA - 2007

Some concluding thoughts…

The Reference Scenario projects a vulnerable, dirty and expensive global energy system

Demand side efficiency – “ easier “ with large potential

Large-hydro and nuclear - important parts of the solution

Numbers speak for themselves : no sustainable/meaningful solution to climate change problem without having China and India on board

Strong political will and urgent government action is needed to create clear incentives to change existing investment patterns