World Energy Outlook 2013 Timur Gül Directorate of Global Energy Economics, IEA Geneva, 21 November

The world energy scene today Some long-held tenets of the energy sector are being rewritten Countries are switching roles: importers are becoming exporters… … and exporters are among the major sources of growing demand New supply options reshape ideas about distribution of resources But long-term solutions to global challenges remain scarce Renewed focus on energy efficiency, but CO2 emissions continue to rise Fossil-fuel subsidies increased to $544 billion in 2012 1.3 billion people lack electricity, 2.6 billion lack clean cooking facilities Energy prices add to the pressure on policymakers Sustained period of high oil prices without parallel in market history Large, persistent regional price differences for gas & electricity

The engine of energy demand growth moves to South Asia Primary energy demand, 2035 (Mtoe) Share of global growth 2012-2035 Eurasia OECD 1 370 Eurasia Latin America 1 710 Europe 65% 8% 5% 4% 4 060 China 8% 2 240 United States Africa 440 Japan 1 050 Middle East 10% Middle East 1 540 India 1 000 Southeast Asia 480 Brazil 1 030 Africa Non-OECD Asia China is the main driver of increasing energy demand in the current decade, but India takes over in the 2020s as the principal source of growth

A mix that is slow to change Growth in total primary energy demand 1987-2011 Gas 2011-2035 Coal Renewables Oil Nuclear 500 1 000 1 500 2 000 2 500 3 000 Mtoe Today's share of fossil fuels in the global mix, at 82%, is the same as it was 25 years ago; the strong rise of renewables only reduces this to around 75% in 2035 the strong rise of renewables only reduces this to around 75% in 2035

Emissions off track in the run-up to the 2015 climate summit in France Cumulative energy-related CO2 emissions OECD Non-OECD Total emissions 1900-2035 51% 49% Gt 800 600 Non-OECD OECD 400 200 1900 1930 1960 1990 2013 -2035 -1929 -1959 -1989 -2012 Non-OECD countries account for a rising share of emissions, although 2035 per capita levels are only half of OECD

Two chapters to the oil production story Contributions to global oil production growth Conventional: 2013-2025 Middle East 2025-2035 Brazil Rest of the world Unconventional: 2013-2025 Light tight oil Oil sands, extra-heavy oil, coal/gas-to-liquids, & other -8 -6 -4 -2 2 4 6 8 mb/d but the Middle East is critical to the longer-term oil outlook The United States (light tight oil) & Brazil (deepwater) step up until the mid-2020s,

A reorientation of Eurasian energy trade Fossil fuel net import demand (Mtoe) Asia 1000 1250 1500 Europe Asia 750 750 500 500 250 250 2011 2035 Oil Gas Coal Oil Gas Coal Demand is pulling Eurasia’s energy exports eastwards, but major investments in the upstream and in infrastructure are required to break into expanding Asian markets

LNG from the United States can shake up gas markets Indicative economics of LNG export from the US Gulf Coast (at current prices) $/MBtu 18 15 $/MBtu 12 12 Average import price 9 9 Liquefaction, shipping & regasification 6 6 United States price 3 3 To Asia To Europe New LNG supplies accelerate movement towards a more interconnected global market, but high costs of transport between regions mean no single global gas price but high costs of transport between regions mean no single global gas price

Who has the energy to compete? Ratio of industrial energy prices relative to the United States Natural gas Electricity 3× 4× 5× Reduction from 2013 2003 2035 2013 2003 2× United States Japan European Union China Japan European Union China Regional differences in natural gas prices narrow from today’s very high levels but remain large through to 2035; electricity price differentials also persist electricity price differentials also persist

Energy-intensive industries need to count their costs Share of energy in total production costs for selected industries 10% 20% 30% 40% 50% 60% 70% 80% 90% Petrochemicals Fertilisers Aluminium Cement Iron & steel Pulp & paper Glass Energy-intensive sectors worldwide account for around one-fifth of industrial value added, one-quarter of industrial employment and 70% of industrial energy use.

An energy boost to the economy? Share of global export market for energy-intensive goods European Union +3% +1% +2% +2% Japan Today 36% 10% 7% 7% 3% 2% China Middle East India United States -10% -3% The US, together with key emerging economies, increases its export market share for energy-intensive goods, while the EU and Japan see a sharp decline while the EU and Japan see a sharp decline

Orientation for a fast-changing energy world China, then India, drive the growing dominance of Asia in global energy demand & trade, with implications for Eurasian exports Technology is opening up new oil resources, but the Middle East remains central to the longer-term outlook Regional price gaps & concerns over competitiveness are here to stay, but there are ways to react – with efficiency first in line The transition to a more efficient, low-carbon energy sector is more difficult in tough economic times, but no less urgent