© OECD/IEA 2018

The Global Energy Outlook and the

Increasing Role of India

Dr. Fatih Birol

Executive Director, International Energy Agency

IEA

Darbari Seth Memorial Lecture, 29 August 2018

© OECD/IEA 2018

A fast-changing energy landscape

Four large-scale upheavals in global energy set the scene:

India moves to centre stage and China’s new drive to “make the skies blue again” is

recasting its role in energy

The United States is turning into the undisputed global leader for oil & gas

Solar PV is on track to be the cheapest source of new electricity in many countries

The future is electrifying, spurred by cooling, electric vehicles & digitalisation

These changes brighten the prospects for affordable, sustainable energy &

require a reappraisal of approaches to energy security

© OECD/IEA 2018

India takes the lead as China’s energy growth slows

Old ways of understanding the world of energy are losing value as countries change roles.

420

Southeast Asia

China 790

United States -30

Japan -50

Europe -200

270 Central and South America

485

Africa

135 Eurasia

480 Middle

East

India 1 005

Change in energy demand, 2016-40 (Mtoe)

© OECD/IEA 2018

Global oil demand remains robust

Global oil demand is set to rise by 1.4 mb/d in 2019, with China and India accounting for almost half of the increase;

Petrochemicals are becoming increasingly important drivers of oil demand

0

0.4

0.8

1.2

1.6

2

2005-2014

mb

/d

2016 2017 2018 2019 2015

© OECD/IEA 2018

Electric cars are helping to transform energy use for passenger cars, slowing the pace of growth in

global oil demand: however, trucks, aviation, shipping & petrochemicals keep oil on a rising trend

Electric car fleet

EVs are in the fast lane, but oil demand still keeps rising

100

200

300

2016 2025 2040

Mill

ion

car

s

Other countries

United States

India

European Union

China

Passenger cars Other sectors

4

8

12

16

Petrochemicals

Aviation and shipping

Trucks

mb

/d

- 4 2016-2040

0

Change in global oil demand

© OECD/IEA 2018

The future is electrifying

India adds the equivalent of today’s European Union to its electricity generation by 2040.

Electricity generation by selected region

Middle East

2 000 4 000 6 000 8 000 10 000

Africa

Southeast Asia

European Union

India

United States

China

TWh 2016 Growth to 2040

© OECD/IEA 2018

India is now one of the top destinations for energy investment, but more is needed

Energy investment in India amounted to over $80 billion in 2017, driven by renewables and electricity grids. With 18% of the global population, but less than 5% of total investment, the region urgently needs to increase spending.

Energy investment in selected markets, 2017

USD 2017 billion

0 100 200 300 400

Southeast Asia

India

Russia

Europe

United States

China

© OECD/IEA 2018

After remaining flat for 3 years, global CO2 emissions rose again in 2017, to an all-time high

Global energy-related CO2 emissions

After plateauing for 3 years, global emissions are on the rise again

CO2 emissions

Increase in 2017

5

10

15

20

25

30

35 Gt CO2

© OECD/IEA 2018

India’s per capita emissions remain well below the world average.

India emissions continue to grow, but per capita emissions remain among the lowest in the world.

CO2 emissions per capita

0

2

4

6

8

10

12

14

16

United States

Japan Middle East

China European Union

World average

Southeast Asia

India Africa

t C

O2 p

er c

apit

a 2016 2040

© OECD/IEA 2018

Energy is the leading source of all major air pollutants; Premature deaths due to outdoor air pollution

currently stand at around 3 million per year

Pollutant emissions, 2015

Air pollution is an energy problem

81 Mt 108 Mt 41 Mt

Fine particulate matter (PM2.5) Sulfur dioxide (SO2) Nitrogen oxides (NOX)

>99% >99% >99% >99% 85%

Coal 42%

Oil 62%

Biomass 39%

Non-energy Energy-related Coal Oil Gas Bioenergy Other

© OECD/IEA 2018

Led by India, many countries are on track to achieve full electrification by 2030, but – despite recent

progress – efforts in sub-Saharan Africa need to redouble

Population without electricity access

Electrification success in India, but work to do in sub-Saharan Africa

500

1 000

1 500

2 000

2 500

1985 2000 2017 2030

mill

ion

Rest of World

Sub - Saharan Africa

India

China

© OECD/IEA 2018

Air conditioning is driving electricity demand higher

Air conditioners could represent 35% of the growth in India’s electricity demand to 2050;

Currently 5% of households in India have air conditioners compared to over 90% in Japan and the US

Share of final electricity demand growth to 2050 in India

Cooling 35%

Lighting and appliances 23%

Other buildings 7%

Industry 24%

Other 11%

© OECD/IEA 2018

Technology progress and competition have driven down prices to record-low levels in several countries,

but best-practice policies addressing system integration are critically important for future deployment

Announced wind and solar PV average auction prices by commissioning date

Wind and solar PV transforming the power sector

0

20

40

60

80

100

120

140

160

180

2012 2013 2014 2015 2016 2017 2018 2019 2020

USD/MWh

Onshore windaverage auctionprice

Solar PV averageauction price

© OECD/IEA 2018

LED lighting is on track, thanks to government policy & innovation

LEDs are on track to dominate residential lighting by around 2020;

3.3 billion LEDs were installed in 2017, underpinned by falling costs & government policy

Global residential lighting sales by type

0%

20%

40%

60%

80%

100%

2010 2011 2012 2013 2014 2015 2016 2017

LEDs Fluorescents Incandescents & other

© OECD/IEA 2018

Global energy – Implications for India

• Higher oil prices are hurting consumers & putting pressure on governments to

reintroduce subsidies; crucial that any subsidies are carefully targeted

• Energy investment is a critical issue for India – particularly in the power sector to

respond to rapid demand growth & sustainability challenges

• Renewables & energy efficiency can cost effectively tackle air pollution and fossil fuel

imports, but need best-practice policy to lock-in investment

• The IEA stands ready to support India navigate its energy transition, with data,

analysis, an “all fuels and technologies “ approach & real-world solutions