© OECD/IEA 2015

Laura Cozzi EDF, Paris, 28 January 2016

© OECD/IEA 2015

The start of a new energy era?

Energy sector turns green?

Paris agreement: pledges of 180+ countries account for over 90% of energy-related emissions

Energy accounts for at least 2/3 of greenhouse gas emissions

Renewables capacity additions at a record-high of 130 GW in 2014

Fossil-fuel subsidy reform, led by India & Indonesia, reduces the global subsidy bill below $500 billion in 2014

Carbon pricing covers 13% of global emissions, but China intention of trading system in 2017 will triple this share

Multiple signs of change, but are they moving the energy system in the right direction?

© OECD/IEA 2015 The boundaries and names shown and the designations used on maps included in this publication do not imply official endorsement or acceptance by the IEA.

Pledges submitted

…the global coverage of climate pledges is impressive

Pledges from countries that account for 95% of global energy-related GHG emissions; their full implementation would be consistent with a temperature rise of 2.7 °C

OECD Asia Oceania

2.2 Gt

Russia and Caspian

2.0 Gt Europe

3.8 Gt

North America

6.1 Gt

South America

1.2 Gt

Africa

1.1 Gt

Middle East

2.0 Gt

1.7 Gt

Other Asia India

1.9 Gt

China

8.6 Gt

© OECD/IEA 2015

Growth in energy demand and emissions has tracked economic growth closely

but decouples over time, with emissions growth slowing to a crawl by 2030

Energy sector starts to go its own way

Growth in the global economy, primary energy demand and related CO2 emissions

75

100

125

150

175

200

1995 2000 2005 2010 2020 2025 2030

Inde

x (1

995

= 10

0)

2014

GDP Primary energy demand Energy-related CO2 emissions

GDP

Primary energy demand

Energy-related CO2 emissions

75

100

125

150

175

200

1995 2000 2005 2010 2020 2025 2030

Inde

x (1

995

= 10

0)

2014

GDP

Primary energy demand

Energy-related CO2 emissions

© OECD/IEA 2015

but – for oil & gas – the gains are offset by the move to more complex fields

Policies spur innovation and tip the balance towards low-carbon

Costs in 2040 for different energy sources/technologies, relative to 2014

-60%

-40%

-20%

0%

20%

40%

60%

Solar PV Onshore wind

Efficient industrial heat production

Efficient lighting

Upstream oil and gas

Innovation reduces the costs of low-carbon technologies & energy efficiency,

© OECD/IEA 2015

Mtoe

-300

0

300

600

900

1 200

Demand growth in Asia – the sequel

By 2040, India’s energy demand closes in on that of the United States, even though demand per capita remains 40% below the world average

European Union

United States

Japan Latin America

Middle East

Southeast Asia

Africa China India

Change in energy demand in selected regions, 2014-2040

© OECD/IEA 2015

Energy demand

GDP

A new chapter in China’s growth story

Along with energy efficiency, structural shifts in China’s economy favouring expansion of services, mean less energy is required to generate economic growth

3 000

6 000

9 000

2000 2010 2020 2030 2040

Ener

gy d

eman

d (M

toe)

20

40

60

GDP

(tril

lion

dolla

rs, P

PP)

Energy demand

GDP

Total primary energy demand & GDP in China Energy demand in China

1 000

2 000

3 000

4 000

Coal

Oil

Gas

Nuclear Renewables

Energy demand

GDP

3 000

6 000

9 000

2000 2010 2020 2030 2040

Ener

gy d

eman

d (M

toe)

20

40

60

GDP

(tril

lion

dolla

rs, P

PP)

© OECD/IEA 2015

India moving to the centre of the world energy stage

Change in demand for selected fuels, 2014-2040

New infrastructure, an expanding middle class & 600 million new electricity consumers mean a large rise in the energy required to fuel India’s development

Solar PV

0

500

1 000

1 500 (TWh)

Oil

-16

-8

0

8

16

24 (mb/d)

Coal

-1 000

-500

0

500

1 000

1 500 (Mtce)

China

India United States European Union

Africa Middle East

Japan

India

China

Africa

Middle East

Southeast Asia

United States

Japan

European Union

India

Southeast Asia

Africa

European Union

United States

© OECD/IEA 2015

Power is leading the transformation of the energy system

Global electricity generation by source

Driven by continued policy support, renewables account for half of additional global generation, overtaking coal around 2030 to become the largest power source

3 000 12 000 15 000 TWh

Change to 2040

2014 Renewables

Coal

Gas

Nuclear

Oil

Hydro

Wind

Solar

Other renewables

Of which:

6 000 9 000

© OECD/IEA 2015

Efficiency measures on the rise, but significant potential still exists

Share of global mandatory efficiency regulation of final energy consumption

Energy efficiency policies are introduced in more countries and sectors; they continue to slow demand growth but more can be done

10%

20%

30%

40%

2005 2014 2040

Industry Steam boilers Process heat Motors

Buildings Heating/Cooling Lighting/Appliances

Transport Cars Trucks Ships

© OECD/IEA 2015

A new balancing item in the oil market?

Change in production (2015-2020) of US tight oil for a range of 2020 oil prices

Tight oil has created more short-term supply flexibility, but there is no guarantee that the adjustment mechanism in oil markets will be smooth

-4

-3

-2

-1

0

1

2

$40/bbl $50/bbl $60/bbl $70/bbl $80/bbl $90/bbl $100/bbl

mb/d

© OECD/IEA 2015

A 2 °C pathway is still some further efforts away

16

20

24

28

32

36

40

2010 2015 2020 2025 2030 2035 2040

Gt

Baseline

450 Scenario

17.9 Gt

A peak in emissions by around 2020 is possible using existing policies & technologies; technology innovation and RD&D will be key to achieving the longer-term goal.

Energy efficiency

Fuel & technology switching in end-uses

Renewables

Nuclear

CCS

Other

© OECD/IEA 2015

Conclusions

The energy transition is underway, but needs continued strong signal from governments to attract necessary investment

Existing technologies are enough to enable a peak in energy-related emissions, but innovation is needed for scenarios compatible with 2 C

Models give essential insights on key technologies needed for the transition, and costs associated with the lack of one of them

Models also help understanding the speed of transition linked to infrastructures and economic development

With looming energy security and environmental challenges, international cooperation on energy has never been more vital

© O

ECD/

IEA

2015

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