Navigating the Emerging Energy Transition

Transcription

1 Navigating the Emerging Energy Transition Dr. Fatih Birol Executive Director International Energy Agency Singapore International Energy Week 26 October 2015

2 An energy system in transition The fall in energy prices has been a welcome boost to consumers, but should not disguise difficult road ahead Cutbacks & cost-efficiency the new watchwords for the upstream Turmoil in the Middle East raises doubts over future oil balance Momentum is building in run up to COP-21 climate summit in Paris Flattening in global CO 2 emissions a turning point, or a pause? Ongoing reforms to fossil fuel subsidies, but at $500 billion they remain over four-times those to renewables Renewables growing strongly & increased emphasis on energy efficiency Will change in global energy be led by policies, or driven by events?

3 Dollars per per MBtu barrel The great plunge in energy prices Oil and natural gas prices, Oil price: January 2014 Latest Gas prices: January 2014 Latest 0 Oil price Henry Hub Gas (US) Title Transfer Facility (TTF) Gas (Europe) Japan LNG import China LNG import Amid signs of over-supply for both fuels, oil & gas prices have tumbled since 2014 & the divergence between different regional gas prices has narrowed sharply

4 Lower revenues are hitting upstream oil & gas investment Billion dollars World upstream oil and gas capital investment % Capex cuts are highest in North America, but pressure is widely felt and compensated only in part by cost reductions for services & supplies; more cuts expected in 2016 if low prices persist

5 Sharp decline looms for Light Tight Oil mb/d US Light Tight Oil Production Forecast 0.0 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Following remarkable growth over recent years, the fall in oil prices is expected to see US Light Tight Oil output decline by 400 kb/d in 2016

6 LNG trade keeps on expanding supported by increasing demand across the globe LNG is basically the only option to deliver gas from continent to continent

7 $ per MWh But coal will not disappear quickly Power generation cost of existing plants in Asia Gas plant Coal plant 0 Only very competitively priced LNG has a chance to beat coal in Asia

8 Renewables to lead world power market growth to 2020 Shares of net additional renewable capacity, India 9% Brazil 5% Rest non - OECD 13% EU 13% USA 9% Japan 5% Rest OECD 8% China 38% Renewable electricity additions to 2020 will top 700 GW or almost two-thirds of net additions; Emerging economies make up two-thirds of the expansion

9 The coverage of climate change pledges is impressive North Americas 6.1 Gt Submitted INDCs Not yet submitted INDCs South America 1.2 Gt Europe 3.8 Gt Africa 1.1 Gt Russia and Caspian 2.0 Gt Middle East 2.0 Gt India 1.9 Gt China 8.6 Gt Other Asia 1.7 Gt Oceania 2.2 Gt This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries, and to the name of any territory, city or area. More than 150 countries submitted climate pledges; together these countries account for 90% of global GDP and almost 90% of emissions

10 Index (1990 = 100) Demand and emissions growth decouple in the power sector Growth in world electricity demand and related CO 2 emissions 300 Historical Projected Electricity demand Power sector 200 CO 2 emissions If all INDCs are implemented, power sector emissions stay broadly flat to 2030, despite electricity demand rising by more than 40%

11 Concluding remarks Oil at current prices is a powerful driver to rebalance markets, but the big question is just when will equilibrium be restored Attention paid to energy security appears indexed to oil prices Pressure on natural gas prices is amplified by new supplies, but only very competitively priced LNG has chance to beat coal in Asia Investment in renewables remains strong as costs continue to fall, but government support is still crucial Climate pledges are an excellent basis from which to build ambition, but not yet enough to achieve our climate goal As new IEA Executive Director, IEA modernisation is my priority