Our Global Energy Future Looking beyond the economic crisis

1. Mr. Nobuo Tanaka ExecutiveDirectorInternational EnergyAgency Our Global Energy FutureLookingbeyond the economiccrisis Ministry of Economy Warsaw 12 May 2009

2. Weakening economy drives oil demand revisions IEA April 2008 OilMarket Report • Two year demand contraction in 08/09 first since early-1980s • OECD hit hard, but clear signs that non-OECD is slowing now too • Latest GDP estimates suggest -1.4% for 2009, with consensus of gradual recovery in 2010 • Prices bottoming-out in the face of OPEC supply cuts, and a degree of post-G20 ‘bounce’

3. Evaluating oil supply-side impacts • Supply also affected, on weak demand, low prices, credit crunch & investment slippage、 • 2009 forecast already down by 1.7 mb/d since July 2008, excluding 2008 baseline changes • Canada & Russia taking a hit in terms of investment & likely output • $50/bbl oil unlikely to see extensive shut-ins of current output per se • But impact of lower spend on new projects and prevailing decline rates at mature fields 3

4. World Oil Production by Source IEA’s World Energy Outlook 2008 Business as Usual Scenario 20 mb/d 45 mb/d IEA World Energy Outlook 2008 Around 65 mb/d of gross capacity needs to be installed between 2007 & 2030 – six times the current capacity of Saudi Arabia – to meet demand growth and offset decline

5. Long-term oil-supply cost curve(with $50 per tonne of CO2) A carbon price of $50 per tonne of CO2 would increase the cost of producing non-conventional oil the most – by as much as $30 per barrel – due to its higher energy intensity

6. European Responses to January 2009 Gas Supply Disruption 7 Jan (immediate) 10 Jan. 16 Jan. 18 Jan. Timeline of Actions Yamal increase BBL NL-UK reduced Reverse flow Czech to Slovakia Interconnector UK-BE reversed Blue Stream increase Hungary increase to Serbia & Bosnia Increase Germany -Croatia Increasing Croatian production share off-take Reverse flow from Greece to Bulgaria Additional spot LNG to Greece & Turkey

7. Cumulative energy supply investment in Business as Usual, 2007-2030 Coal 3% Biofuels <1% $0.7 trillion $0.2 trillion Gas 21% Oil 24% Power 52% $13.6 trillion $5.5 trillion $6.3 trillion Shipping Shipping & 4% Refining ports Transmission 16% 9% Transmission & distribution Power Exploration & 31% & distribution generation development 50% 50% Exploration and 61% Mining LNG chain development 91% 8% 80% Investment of $26 trillion, or over $1 trillion/year, is needed, but the credit squeeze could delay spending, potentially setting up a supply-crunch once the economy recovers

8. Energy-related CO2 emissions Business as Usual Scenario 45 International marine bunkers Gigatonnes and aviation 40 OECD - gas OECD - oil 35 OECD - coal Non-OECD - gas 30 Non-OECD - oil Non-OECD - coal 25 20 15 10 5 0 1980 1990 2000 2010 2020 2030 97% of the projected increase in emissions between 2006 & 2030 comes from non-OECD countries – three-quarters from China, India & the Middle East alone

9. Energy-related CO2 emissions 450 Policy Scenario 45 International marine bunkers and aviation Gigatonnes 40 OECD - gas OECD - oil 35 OECD - coal Non-OECD - gas 30 Non-OECD - oil Non-OECD - coal 25 20 15 10 5 0 1980 1990 2000 2010 2020 2030 In the 450 Policy Scenario emissions peak around 2020,and then decline by more than 1/3 to reach 26 Gt in 2030

10. Reductions in energy-related CO2 emissions in the 450 Policy Scenario 45 World total Gigatonnes Reference Scenario CCS - 21% 40 CCS 14% Nuclear - 14% 35% (5.2 Gt reduction) Renewables & biofuels - 18% Nuclear 9% OECD+ Renewables & biofuels 23% Energy efficiency - 47% 35 CCS - 10% Nuclear - 6% Energy Efficiency 54% Renewables & biofuels - 25% Non-OECD 30 65% (9.5 Gt reduction) Energy efficiency - 59% 450 Policy Scenario 25 20 2005 2010 2015 2020 2025 2030 • OECD and non-OECD countries must both work towards reducing CO2 emissions • Energy efficiency plays a key role for both OECD and non-OECD countries • To inform the international climate negotiations, the IEA will release an early excerpt of the WEO 2009 climate change analysis, to coincide with post-Kyoto negotiations this September

11. Total power generation capacity today and in 2030 by scenario Coal 1.2 x today Gas 1.5 x today 1.8 x today Nuclear Hydro 2.1 x today Wind 13.5 x today Other renewables 12.5 x today Coal and gas with CCS 15% of today’s coal & gas capacity 0 1 000 2 000 3 000 GW Today 450 Policy Scenario 2030 Reference Scenario 2030 In the 450 Policy Scenario, the power sector undergoes a dramatic change – with CCS, renewables and nuclear each playing a crucial role

12. Roadmaps can accelerate deployment of key clean energy technologies • Supply side • CCS power generation • Coal – IGCC • Coal – USCSC • Nuclear III + IV • Solar – PV • Solar – CSP • Wind • Biomass – IGCC & co-combustion • Electricity networks • 2nd generation biofuels • Demand side • Energy efficiency in buildings • Energy efficient motor systems • Efficient ICEs • Heat pumps • Plug-ins and electric vehicles • Fuel cell vehicles • Industrial CCS • Solar heating • Efficient industry processes (starting with Cement) Work has already begun on technologies shown in green, and these roadmaps will be launched later in 2009.

13. Global electricity generation(450 ppm Scenario) 1% 9% 1% (1%) 18% 16% 4% 5% 40% 15% 22% 20% 18% 6% 18% 2% 41% 21% Renewables and nuclear power will increase

14. Nuclear power needs to play a larger role in 2050 Energy Technology Perspectives (ETP) 2008 shows that significant increase of nuclear generation in both OECD countries and non-OECD countries is essential to halve the current level of energy related CO2 emission by 2050.

15. IEA 25 energy efficiency policy recommendations across 7 priority areas 4. Lighting 4.1 Best practice lighting and the phase-out of incandescent bulbs; 4.2 Ensuring least-cost lighting in non-residential buildings and the phase-out of inefficient fuel-based lighting. 5. Transport 5.1 Fuel-efficient tyres; 5.2 Mandatory fuel efficiency standards for light-duty vehicles; 5.3 Fuel economy of heavy-duty vehicles; 5.4 Eco-driving. 6. Industry 6.1 Collection of high quality energy efficiency data for industry; 6.2 Energy performance of electric motors; 6.3 Assistance in developing energy management capability; 6.4 Policy packages to promote energy efficiency in small and medium-sized enterprises. 7. Utilities 7.1 Utility end-use energy efficiency schemes 1. Across sectors 1.1 Measures for increasing investment in energy efficiency; 1.2 National energy efficiency strategies and goals; 1.3 Compliance, monitoring, enforcement and evaluation of energy efficiency measures; 1.4 Energy efficiency indicators; 1.5 Monitoring and reporting progress with the IEA energy efficiency recommendations themselves. 2. Buildings 2.1 Building codes for new buildings; 2.2 Passive Energy Houses and Zero Energy Buildings; 2.3 Policy packages to promote energy efficiency in existing buildings; 2.4 Building certification schemes; 2.5 Energy efficiency improvements in glazed areas. 3. Appliances 3.1 Mandatory energy performance requirements or labels; 3.2 Low-power modes, including standby power, for electronic and networked equipment; 3.3 Televisions and “set-top” boxes; 3.4 Energy performance test standards and measurement protocols. USD 128 Billion in energyefficiency stimulus from IEA Countries

16. Impact of financial crisis on global investment in renewable energy 90 Geothermal 80 Marine & small-hydro Billion dollars Biomass 70 -38% Solar 60 Wind 50 40 30 20 10 0 2004 2005 2006 2007 2008 2009 Renewable energy investment has collapsed due to the financial crisis – which has dried up sources of project finance – and lower fossil-fuel prices …. … IEA G-8 paper estimates spending in 2009 will drop by 38% relative to 2008 Source: NEF, IEA analysis

17. EU average Average worldwide ~28.4% ~36% ~42% ~48% ~665 gCO2/kWh ~880 gCO2/kWh ~740 gCO2/kWh ~1110 gCO2/kWh State-of-the art PC/IGCC Advanced R&D CCS <2020 Carbon Capture and Storage – energy efficiency alone is not enough gCO2/kWh but deep cuts only by adapted from VGB 2007; efficiency – HHV,net

18. Carbon Capture and Storage - only 4 full-scale projects exist today G8 goal: 20 full-scale demonstrations announced by 2010

19. CO2 Storage Prospectivity Source: Bradshaw, J. and Dance, T. (2004): “Mapping geological storage prospectivity of CO2 for the world’s sedimentary basins and regional source to sink matching,” in (E.S. Rubin, D.W. Keith and C.F. Gilboy eds.), GHGT-7, Proc. Seventh International Conference on Greenhouse Gas Control Technologies, Vancouver, B.C., Canada, September 5-9, 2004.

20. Shifting to the 450 ppm scenario requires significant investment 5 000 450 Policy Scenario (additional to 550) 4 000 550 Policy Scenario 3 000 Billion dollars (2007) 2 000 1 000 0 2010-2020 2021-2030 2010-2020 2021-2030 Power plants Energy efficiency Huge investment in power plants and energy efficiency is required to shift the world onto a 450 ppm trajectory

21. Total oil production in 2030 by scenario 120 Non-OPEC mb/d OPEC 100 9 mb/d 16 mb/d 80 60 12 mb/d 40 20 0 2007 Reference Scenario 550 Policy Scenario 450 Policy Scenario 2030 2030 2030 Curbing CO2 emissions would improve energy security by cutting demand for fossil fuels, but even in the 450 Policy Scenario, OPEC production increases by 12 mb/d from now to 2030

22. Summary • For energy security • need to diversify oil and gas sources • must ensure continued supply-side investment to meet oil demand and address production decline in mature fields and investment throughout the gas supply chain • For energy security and climate change mitigation • must invest in low carbon technologies: CCS, renewables, nuclear and energy efficiency must all be embraced • Economic crisis is an opportunity to place a Clean Energy New Dealat the heart of economic stimulus packages everywhere.