World Energy Outlook 2012

1. World Energy Outlook 2012 Maria van der Hoeven Executive Director, IEA Warszawa, 14 December 2012

2. The context • Foundations of global energy system shifting • Resurgence in oil & gas production in some countries • Retreat from nuclear in some others • Signs of increasing policy focus on energy efficiency • All-time high oil prices acting as brake on global economy • Divergence in natural gas prices affecting Europe (with prices 5-times US levels) and Asia (8-times) • Symptoms of an unsustainable energy system persist • Fossil fuel subsidies up almost 30% to $523 billion in 2011, led by MENA • CO2 emissions at record high, while renewables industry under strain • Despite new international efforts, 1.3 billion people still lack electricity

3. Emerging economies steer energy markets Share of global energy demand 6 030 Mtoe 12 380 Mtoe 16 730 Mtoe 100% Non-OECD Rest of non-OECD Middle East 80% India China 60% OECD 40% 20% 1975 2010 2035 Global energy demand rises by over one-third in the period to 2035, underpinned by rising living standards in China, India & the Middle East

4. A US oil & gas transformation United States oil and gas production mboe/d 25 20 Unconventional gas 15 Conventional gas 10 Unconventional oil 5 Conventional oil 1980 1990 2000 2010 2020 2030 2035 The surge in unconventional oil & gas production has implications well beyond the United States

5. Iraq oil poised for a major expansion Iraq oil exports Iraq oil production 9 mb/d 9 mb/d Other North 8 Asia Centre 8 South 7 7 6 6 5 5 4 4 3 3 2 2 1 1 2012 2020 2035 2012 2020 2035 Iraq accounts for 45% of the growth in global production to 2035;by the 2030s it becomes the second-largest global oil exporter, overtaking Russia

6. Middle East oil to Asia: a new silk road Middle East oil export, by destination mb/d 7 2000 2011 6 2035 5 4 3 2 1 China India Korea & Japan Europe United States By 2035, almost 90% of Middle Eastern oil exports go to Asia; North America’s emergence as a net exporter accelerates the eastward shift in trade

7. Natural gas: towards a globalised market Major global gas trade flows, 2010 Major global gas trade flows, 2035 Rising supplies of unconventional gas & LNG help to diversify trade flows, putting pressure on conventional gas suppliers & oil-linked pricing mechanisms

8. Different trends in oil & gasimport dependency Net oil & gas import dependency in selected countries Korea & Japan Gas Imports 100% 2010 2035 80% European Union 60% 40% China 20% India United States 0% Gas Exports 20% 20% 40% 60% 80% 100% Oil imports While dependence on imported oil & gas rises in many countries, the United States swims against the tide

9. A power shift to emerging economies Change in power generation, 2010-2035 Coal Gas Nuclear Renewables China India European Union Russia Japan 2 000 3 000 4 000 5 000 6 000 -1 000 0 1 000 TWh TWh The need for electricity in emerging economies drives a 70% increase in worldwide demand, with renewables accounting for half of new global capacity

10. The multiple benefits of renewablescome at a cost Global renewable energy subsidies of $4.8 trillion, 2011-2035 Biofuels $1.2 trillion Committed to existing projects $1.0 trillion Required to meet targets2012-2020 $1.6 trillion Electricity $3.6 trillion Renewable subsidies were $88 billion in 2011; over half the subsidies required to 2035 has been committed to existing projects or is needed to meet 2020 targets

11. Wide variations in the price of power 2035 0 European Union China Russia United States Japan Average household electricity prices, 2035 cents/kWh 25 20 2011 OECD average 15 10 2011 Non-OECD average 5 Electricity prices are set to increase with the highest prices persisting in theEuropean Union & Japan, well above those in China, Russia & the United States

12. Energy efficiency: a huge opportunity going unrealised Energy efficiency potential used by sector in the New Policies Scenario 100% Unrealised energy efficiency potential 80% Realised energy efficiency potential 60% 40% 20% Industry Transport Power generation Buildings Two-thirds of the economic potential to improve energy efficiency remains untapped in the period to 2035

13. The Efficient World Scenario: a blueprint for an efficient world Total primary energy demand by scenario Mtoe 18 000 New PoliciesScenario 17 000 Coal 1350 Mtce Oil 12.7 mb/d 16 000 Gas 680 bcm 15 000 Others 250 Mtoe Efficient World Scenario 14 000 13 000 12 000 2010 2015 2020 2025 2030 2035 Economically viable efficiency measures can halve energy demand growth to 2035

14. The Efficient World Scenario delays carbon lock-in 2017 2022 35 Gt 30 Other 2 °C trajectory 25 Transport Lock-in of infrastructure in New Policies Scenario in 2017 Lock-in of infrastructurein Efficient World Scenario in 2022 20 Room to manoeuvre Industry 15 10 Lock-in of existing infrastructure 5 Power generation 2011 2015 2020 2025 2030 2035 Energy efficiency can delay “lock-in” of CO2 emissions permitted under a 2 °C trajectory – which is set to happen in 2017 – until 2022, buying five extra years

15. Foundations of energy system shifting: implications for Poland • With Poland’s robust economy & ageing energy infrastructure, government & industry face critical policy & investment choices • Energy efficiency as well as nuclear, renewables & natural gascan help Poland address both energy security & climate change • Unconventional natural gas resources in Poland, if cost-effective& developed in a sustainable manner, can have profound implications for the nation itself, as well as the EU as a whole • Poland’s energy sector should foster developments of crucial new energy technologies, including CCS, & remain responsive to the ever-changing global energy landscape