M iddle Eastern Supply and Sustainability Challenges Insights from the World Energy Outlook 2005

1. La journée du cinquantenaire du Génie Atomique Centre CEA de Saclay, le 2 décembre 2005 Middle Eastern Supply and Sustainability ChallengesInsights from the World Energy Outlook 2005 Claude Mandil Directeur Exécutif Agence Internationale de l’Energie

2. 18 000 16 000 14 000 Oil 12 000 10 000 Mtoe 8 000 Gas 6 000 Coal 4 000 2 000 Other renewables Nuclear Hydro 0 1970 1980 1990 2000 2010 2020 2030 1971 World Primary Energy Demand World Energy Demand rises by 52 % between now and 2030 in the Reference Scenario

3. This is Not Sustainable!

4. Other 16% Other India India 11% MENA 6% 4% MENA 6% 8% China 16% China 19% Transition economies 11% OECD Transition 52% OECD economies 42% 9% Global Energy-Related CO2 Emissions 2003 2030 37 Gt 24 Gt Emissions grow by just over half between now and 2030, with the bulk of the increase coming from developing countries

5. MENA Net Oil Exports MENA plays an increasingly important role in international trade, its net exports surging from 22 mb/d in 2004 to 39 mb/d in 2030

6. MENA Natural Gas Exports Billion cubic metres MENA becomes the world’s leading gas exporter, with most of the increase in exports meeting surging European & US LNG demand

7. Exports through the “Dire Straits” Much of the additional oil and LNG exports from MENA in the future will be shipped through just three maritime routes

8. OECD North America OECD Europe OECD Pacific Transition economies China Other Asia Latin America North Africa Other Africa Middle East 0 1 000 2 000 3 000 4 000 billion dollars (2004) Oil Gas Electricity Coal Global Energy Investment 2004-2030 Energy sector investment of $17 trillion will be needed through to 2030

9. 60 50 40 mb/d 30 20 10 0 1970 1980 1990 2000 2010 2020 2030 Reference Scenario Deferred Investment Scenario Difference MENA Crude Oil Production in the Deferred Investment Scenario In the Deferred Investment Scenario, MENA’s share of global oil production falls from 35% in 2004 to 33% in 2030

10. Electricity Deprivation In 2030, if no new policies are implemented, there will still be 1.4 billion people without electricity

11. But the future is not predetermined…

12. The World Alternative Policy Scenario • Analyses impact of new environmental & energy-security policies worldwide • OECD: Policies currently under consideration • Non-OECD: Also includes more rapid declines in energy intensity resulting from faster deployment of more-efficient technology • Impact on fuel mix, CO2 emissions & investment needs • Basic macroeconomic & population assumptions as for Reference Scenario, but energy prices change

13. 140 6000 120 5000 100 4000 80 bcm 3000 mb/d 60 2000 40 1000 20 0 0 Oil Gas Oil/Gas Demand in the Reference and Alternative Policy Scenarios 2004 2030 Reference Scenario 2030 Alternative Scenario Oil & gas demand in the Alternative Scenario are 10% lower in 2030 due to significant energy savings and a shift in the energy mix

14. 40 000 35 000 2 30 000 million tonnes of CO 25 000 20 000 1990 2000 2010 2020 2030 Coal Oil Gas Alternative Policy Scenario Reference Scenario CO2 Emissions in the Reference and Alternative Policy Scenarios CO2 emissions are 16% lower than in the Reference Scenario by 2030, but are still more than 50% higher than 1990

15. A B C D E F G Energy Efficiency Has A Key Role To Play And Is Available In The Short Term Energy efficiency offers: • substantial energy and greenhouse gas savings at low or negative cost • 470 Mt/y CO2 in IEA region by 2020 in appliances alone • At negative cost: -€169/t CO2 (IEA) • energy security and reliability benefits • Up to 1.5 Gt/y C by 2010; 2.7 Gt/y by 2020 • Half of this at negative cost (IPCC) • enhanced business competitiveness and social welfare Compact Fluorescent Lamps High performance buildings LED traffic lights Least life-cycle cost appliances Efficient information and communication technologies Reducing standby power consumption Super windows & daylighting Labelling and certification

16. But this is still not enough… • To achieve a truly sustainable energy system new technologies will be needed for which demonstration and R&D efforts must be scaled up • But changes in energy infrastructure take time, thus action is urgent AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY

17. The Technology ChallengeStabilising Greenhouse Gas Concentrations in the Atmosphere No single technology or policy can do it all Different - regions - resources - markets - preferences - scale-up - technology requirements timing - infrastructures Renewable Energy Technologies Vehicles: Efficiency, Bio- fuels, Hydrogen Fuel Cells Bio-Fuels and Power Zero Net Emission Bldgs., Industrial Efficiency, CHP Carbon (CO2) Sequestration Advanced Power Grids Nuclear Power Generation IV 17

18. Coal Replace 300 conventional, 500-MW coal power plants with “zero-emission” power plants, which means….. CO2 Sequestration Install 1000 Sleipner CO2 sequestration plants Wind Install 200 x current US wind generation in lieu of unsequestered coal Solar PV Install 1300 x current US solar generation in lieu of unsequestered coal Nuclear Build 140 1-GW power plants in lieu of unsequestered coal plants Avoiding 1 Billion Tons of CO2 per Year To meet the energy demand & stabilize CO2 concentrations unprecedented technology changes must occur in this century [Adapted from Pacala & Socolow, Science 2004]

19. Technology Opportunities • No one solution, but some features are clear: • Accelerating energy efficiency improvements can make a difference in the short and long term • CCS is crucial in the medium and long term but needs full scale demonstration • Renewables are key for the long-term sustainability but must be cost-effective • Nuclear can contribute more but must improve technology and waste handling • Need to pursue a “portfolio” policy approach for technology deployment and R&D AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY

20. The G8 Initiative • The G8 Plan of Action: • Energy Efficiency • Clean Fossil Fuel • Renewables • Technology Collaboration • Focuses on areas that can make the most difference • Relevant to all consuming nations • Dialogue leading to urgent action

21. The Role of the IEA • The Means • A major international programme of analysis, workshops, sharing knowledge and experience • Partnership with the Wold Bank and IFIs • The End • Energy scenarios and strategies for a clean energy future • Best practice for policy and regulation

22. Key Messages • Based on current policies, global energy needs in 2030 will be more than 50% higher than today • THIS IS NOT SUSTAINABLE ! • Rising CO2 emissions • Increased vulnerability to supply disruptions • Huge energy-investment needs • Persistent energy poverty • More vigorous policies would curb rate of increase in energy demand and emission significantly • But a truly sustainable energy system will call for faster technology development & deployment and institutional change • Urgent and decisive government action needed