IEA© OECD/IEA 2017

Global Energy Markets in Transition: Implications for

the economy, environment & geopolitics

Dr. Fatih Birol, Executive Director, International Energy Agency

15th IAEE European Conference 2017 Vienna, 4 September 2017

© OECD/IEA 2017

The global energy context today

• Global energy markets are changing rapidly

Renewables supplied half of global electricity demand growth in 2016

Global energy intensity fell by 2.1% in 2016

Electric car sales were up 40% in 2016, a new record year

• Universal access to modern energy remains a distant goal

1.2B people lack access to electricity; 2.7B people lack access to clean cooking

• Energy & geopolitics remain intrinsically linked, but the changing

energy landscape is altering the nature of this relationship

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A rapidly shifting energy landscape

Since 2010, efficiency measures have slowed down growth in global energy consumption;

Renewables and natural gas account for almost two-thirds of the growth.

Shares in growth in world energy demand

Coal

47%

Oil

16%

Gas

23%

Nuclear

2%

Renewables

12%

Coal

10%

Oil

27%

Gas

31%

Nuclear

0%

Renewables

32%

2000-2010 2010-2016

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US shale oil is shaking up global markets even at lower oil prices

US shale oil production

US shale oil has surged in recent years on enormous cost savings & technological improvements;

The US is set to lead the growth in global oil supply over the next 5 years

1

2

3

4

5

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

mb/d

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Share of LNG in global gas trade

2015695 bcm

20401 150 bcm

2000525 bcm

LNG53%

PipelinePipeline

LNG40%

Pipeline

LNG26%

A 2nd natural gas revolution is changing the gas security equation

A wave of new LNG supply, led by Australia and the US will improve the ability of the system to

react to potential demand or supply shocks, but security of gas supply cannot be taken for

granted

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Wind & solar transforming the power sector: system integration is key

Better grids, more flexible power plants and storage & demand side response will be needed to

integrate larger shares of wind & solar in a secure and cost-effective way

0% 10% 20% 30% 40% 50% 60%

India

Chile

China

Canada

Japan

United States

Australia

United Kingdom

Italy

Germany

Spain

Denmark

% of wind and solar

in 2010

% of wind and solar

in 2016

Share of wind and solar in total electricity generation in selected countries

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Global energy-related CO2 emissions

5

10

15

20

25

30

35

1970 1975 1980 1985 1990 1995 2000 2005 2010 2014 2015 2016

Gt

Global CO2 emissions flat for 3 years – an emerging trend?

IEA analysis shows that global CO2 emissions remained flat in 2016 for the third year in a row, even

though the global economy grew, led by emission declines in the US & China

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The potential of clean energy technology remains under-utilised

Recent progress in some clean energy areas is promising, but many technologies still need a strong

push to achieve their full potential and deliver a sustainable energy future

Energy storage Solar PV and onshore wind

Building construction

Nuclear Transport – Fuel economy of light-duty vehicles

Lighting, appliances and building equipment

Electric vehicles

Energy-intensive industrial processes

Transport biofuels

Carbon capture and storage More efficient coal-fired power

●Not on track ●Accelerated improvement needed ●On track

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PetrochemicalOther

Transport

70

75

80

85

90

95

Oil

dem

and

(m

b/d

)Trucks drive global oil demand

Trucks were responsible for nearly 40% of the growth in global oil demand since 2000; they are the

fastest growing source of oil demand, in particular for diesel.

2000 2015Increase by sector

Trucks

Cars

Other transport

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CO2 emissions growth in the Reference Scenario, 2015-2050

A modern truck sector is still a long haul away

Without further policy efforts, trucks will account for 40% of the oil demand growth to 2050

and 15% of the increase in global CO2 emissions

Power sector Industry sector

100 200 300 400 500 600 700 800 900

Trucks

Coal use

Mt

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We've tracked a steady $37 billion/year of clean energy and electricity networks R&D spending, with

room for growth from the private sector. As a share of GDP, China now spends most on energy R&D

Global clean energy R&D funding needs a strong boost

Global R&D spendingon clean energy and electricity networks

Top 3 IT company R&D spenders

0

10

20

30

40

2012 2015

USD

(2016)

billio

n

Private Public

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Closing remarks

• While a continued focus on oil security is essential, a broader approach to energy

security is needed to reflect changing nature of natural gas & electricity markets

• US shale oil triggers a deep transformation of oil industry dynamics

• A wave of LNG is the catalyst for a second natural gas revolution, with far-reaching

implications for gas pricing & contracts

• The next chapter in the rise of renewables requires more work on systems integration &

expanding their use beyond the power sector

• Limiting the global temperature rise to 2°C would require an energy transition of

exceptional scope, depth & speed, including stronger R&D efforts