GLOBAL ENERGY CHALLENGES: COULD WE FACE THEM?

- Astana, 4-5 September 2008

Slav Slavov

Regional Manager for Europe & Central Asia

WEC founded in 1923

all energies and global

non governmental

long term reflection

short term action

Rome Congress 2007

Montreal Congress 2010

WHAT IS WEC?

• ACCESSIBILITY-the extent to which people have access to modern and affordable energy;

• AVAILABILITY-reliability+security of energy supply systems once access has been achieved;

ACCEPTABILITY- the environmental acceptance of energy production, transportation and use.

WEC GLOBAL GOALS ARE:AAA

• Up-Down stream dialogue & cross-border investments

• Diversification of supply sources and routes• Increase share of potential domestic

sources• Stocks management & global gas market• Enhancing energy efficiency

FULLY FULLY

BALANCED BALANCED

AND AND

MUTUALLY REINFORCEDMUTUALLY REINFORCED

TripleTriple challenge challenge

Sustainability

• Renewable energy• Energy efficiency• Nuclear option where chosen• Emissions trading

Competitiveness • Timely provided investments• Interconnections (Trans-regional net works)

• New technology & cost reductionClean coalCarbon sequestrationAlternative fuelsEnergy efficiencyNuclear

Security of supply

• Delivering sustainability to energy sector should be a priority objective. It is achievable but…challenges

are many, and they must be tackle now and

urgently if sustainability is to be achieved in this

century;

• And, it requires alternative policies.

WEC MESSAGE

Why current policies are limited?

• Ineffective and short-sighted;

• Confusing and unfocused;

• Inadequate to face the global scale of the issue;

• Lead to more energy import dependence.

What priorities of alternative policies should be?• to restrain emission growth in energy & transport & develop

carbon- free initiatives;

• to ensure security by increasing share of alternative sources

and encourage diversification of current energy mix;

• to support technology development & deployment;

• Energy is and will remain one of the major global concerns

• Estimated 2050 world population about 9 Billion;

• Electricity Consumption is foreseen to triple to some 45,000 TWh/a;

• How to reduce emissions without compromising economic development.

Or shift to low C economy?

Study Background - Population and Background - Population and Energy Consumption GrowthEnergy Consumption Growth

IEA Scenario of energy growth for a sustainable future

 

0

5

10

15

20

25

30

1990 2000 2010 2020 2030 2040 2050

Worl

d P

rim

ary

En

erg

yS

ou

rces

(Gto

e)

6

6,5

7

7,5

8

8,5

9

Wo

rld

Po

pu

latio

n (

Bill

ion

s)

Other Renewables

Biomass

Nuclear

Gas

Oil

Coal

Population

0

5

10

15

20

25

30

1990 2000 2010 2020 2030 2040 2050

Worl

d P

rim

ary

En

erg

yS

ou

rces

(Gto

e)

6

6,5

7

7,5

8

8,5

9

Wo

rld

Po

pu

latio

n (

Bill

ion

s)

Other Renewables

Biomass

Nuclear

Gas

Oil

Coal

Population

Source: IEA report “Energy to 2050 – Scenario for a Sustainable Future (2003)”

IncreasingDependency

To Low Carbon FutureTo Low Carbon Future

Which way to take???Which way to take???

The present global energy dynamics are unsustainable.

Source Figure: 1990-20030: IEA, World Energy Outlook 2006, p. 492, 493; 2050: IEA, Prospects for CO2 Capture and Storage, Paris 2004, p. 101, 109; source insert: 1990-2030: IEA, WEO 2006, p. 492, 512; 2050: WEC, Global Energy Perspectives to 2050 and Beyond, Report 1995, appendix C, scenario B: share developing countries in world primary energy supplies

World fossil fuel supplies

and energy-related CO2 emissionsbusiness-as-usual base line

7 914

192026

40

60

0

10

20

30

40

50

60

70

1990 2004 2030 2050

fossil fuels, btoe

CO2 emissions, Gt

CO2 emissionsfrom fossil fuel use = 60 % of all GHG

30 % 40 % 50 %: Dcs-overtake emissions from OECD; reaching 60-70% in 2050

Energy and Climate change challenge

• Electricity: 47%-largest ,but provides greatest reduction

leverage;

• Transport: 21%-Growing everywhere. Key challenge for

emissions reduction;

• Industry: 18%-Fast growth in developing countries; offset by

increasing efficiency everywhere;

• Buildings: 13%-Steady growth; wide variation in emissions

intensity.

Global CO2 Emission Scenarios

60

50

40

30

20

10

0

Emissions GtCO2/yr

2000 2010 2020 2030 2040 2050

EmissionsStabilization

Low CarbonEconomy

A

B

A – Business as usual; B – Roadmap to low carbon future

What WEC is suggesting?

• need to create a global carbon market with a fixed

global carbon value;

• need to set up global regulations for this market as

as well for emission trading;

• Common WEC-WTO efforts on energy +emission trading

rules beyond 2012.

Technology Map for the SET-Plan

• increasing role of RES in energy mix; (20% in Europe by 2020 ?)-very ambitious;

• further energy efficiency improvements;

• nuclear renaissance? A burning issue but attractive solution again climate change;

• Oil from non-traditional resources (oil sands…) (Canada forecasts some 3 Mb/d)

Other alternatives lead to improve energy mix and reduce

dependency

Question : would EI continue to fall down?

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

1973

The world energy intensitywas constant (set to 1,0)before the first oil shock

and declines after

WEC Study on Efficiency:Higher GDP for less energy

+0.2 %

- 0.9 %

- 0.5 %

- 1.7 %

- 6.2 %

- 1.1 %

- 1.4 %

- 0.4 %

+1.3 %

- 2.1 % +0.5 %

0.0 %

+0.2 %

- 0.9 %

- 0.5 %

- 1.7 %

- 6.2 %

- 1.1 %

- 1.4 %

- 0.4 %

+1.3 %

- 2.1 % +0.5 %

0.0 %

+0.2 %

- 0.9 %

- 0.5 %

- 1.7 %

- 6.2 %

- 1.1 %

- 1.4 %

- 0.4 %

+1.3 %

- 2.1 % +0.5 %

0.0 %

Since 1990, EI is declining by 1.5% /y. China accounts for 1/4 of the reduction in the world energy intensity.

Primary energy intensity, in toe/$95ppp

< 0.2

17

Large disparities by region in the energy intensities: a factor 3 between CIS,

2.5 for Middle East and Europe; OECD Asia, India and Latin America (close to Europe); North America, Other Asia and world average: about 30% above

Europe; China 40% above

0

1

2

3

CIS

Mid

dle

-East

Afr

ica

Ch

ina

No

rth

Am

eri

ca

Oth

er

Asia

Lati

n A

meri

ca

Ind

ia

OE

CD

Asia

Eu

rop

e

WO

RL

D

Eu

rop

e =

1

Primary energy intensities by world region (at purchasing power parities) (2006)

More than 50% of investment needs to 2030 of $22 trillion are in developing countries, 17% in China & another 6% in India alone

Cumulative Investment in Energy Supply Infrastructure, 2006-2030

Source: IEA World Energy Outlook 2007 “Reference Scenario”

Gas19%

Coal3%

Electricity53%Oil

24%

Biofuels1%

Power generation

51%

49%

OtherRefining

73%

22%5%

Exploration and development

LNG chainTransmission and

distribution

55%

37%

8%

Mining

Shipping and ports10%

90%

$5.4 trillion $11.6 trillion

$4.2 trillion$0.6 trillion

Exploration and development

Transmission and distribution

Total investment = $21.9 trillion (in $2006)

What WEC is suggesting here?

• more pragmatism in policy implementation:e.g.

• to provide more transparent, predictable and

stable reg.frame (new coal thermal projects);

• to open cross-border investments and cooperation

between energy suppliers & consumers;

• to harmonise cross-border el. tariffs and develop

methods for defining a common price formation

(in case of deregulated regional markets)

How easy to do business in Central Asia• Starting business (number of days):

KZ-21; UZ-13; KG-21; TJ-21; Korea-17;

• Starting business (number of procedures):

KZ- 8; UZ- 7; KG- 8; TJ- 13; Korea- 10;

• Investor Protection Index (0-lowest; 10-highest):

KZ-5,7; UZ-4,3; KG-6,0; TJ-1,7; Korea-5,3;

• Enforcing contract (number of days)

KZ-230; UZ-195; KG-177; TJ-295; Korea-230; AFG-1642;

• Closing business (recovery rate, cents on $1):

KZ-23,4; UZ-18,7; KG-15,6; TJ-23,6; Korea-82; finally

• How easy to do business/2007 Report (among178 countries)

KZ-71; UZ-145; KG-88; TJ-153; Korea-30; Russia:106;

1. WEC-FT Conference on

Investing in Clean Energy Business

- London,16&17 September -

2. WEC High-Level Dialogue between

Caspian Suppliers & European Consumers including the Role of Transit Corridor Countries

- Istanbul, 17 October -

Two important WEC-events in

September and October

THANK YOU

WWW.WORLDENERGY.ORG