London, 14 November 2017

© OECD/IEA 2017
 Tipping the energy world off its axis

 Four large-scale upheavals in global energy set the scene for the new Outlook:
 The United States is turning into the undisputed global leader for oil & gas
 Solar PV is on track to be the cheapest source of new electricity in many countries
 China’s new drive to “make the skies blue again” is recasting its role in energy
 The future is electrifying, spurred by cooling, electric vehicles & digitalisation

 These changes brighten the prospects for affordable, sustainable energy &
require a reappraisal of approaches to energy security

 There are many possible pathways ahead & many potential pitfalls if
governments or industry misread the signs of change

© OECD/IEA 2017
 India takes the lead, as China energy growth slows

Change in energy demand, 2016-40 (Mtoe)

Europe 135 Eurasia

-200
United States Middle China Japan
-30 480 -50
East 790
Southeast
485 India Asia
420
Central and 270 Africa 1 005
South America

Old ways of understanding the world of energy are losing value as countries change roles:
the Middle East is fast becoming a major energy consumer & the United States a major exporter
© OECD/IEA 2017
 A world in motion..

Change in world energy demand by fuel

Coal (Mtce) Oil (mb/d) Gas (bcm) Low-carbon (Mtoe)

2 500 30 2 000 2 000

2 000 24 1 600 1 600

1 500 18 1 200 1 200

1 000 12 800 800

500 6 400 400

1990-2016 2016-40 1990-2016 2016-40 1990-2016 2016-40 1990-2016 2016-40

Low-carbon sources & natural gas meet 85% of the increase in global demand:

© OECD/IEA 2017
 .. as China moves global energy markets, again

Change in world energy demand by fuel

Coal (Mtce) Oil (mb/d) Gas (bcm) Low-carbon (Mtoe)

2 500 30 2 000 2 000

2 000 24 1 600 1 600

1 500 18 1 200 1 200

1 000 12 800 800

500 6 400 400

0
1990-2016 2016-40 1990-2016 2016-40 1990-2016 2016-40
- 500
1990-2016 2016-40 China Other countries

Low-carbon sources & natural gas meet 85% of the increase in global demand:
China’s switch to a new economic model & a cleaner energy mix drives global trends
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 Solar PV forges ahead in the global power mix

Global average annual net capacity additions by type

Coal
Gas
2010-2016
Nuclear
Renewables Solar PV Wind Other

Coal
Gas
2017-2040
Nuclear
Renewables Solar PV Wind Other
20 40 60 80 100 120 140 160 GW

China, India & the US lead the charge for solar PV, while Europe is a frontrunner for onshore &
offshore wind: rising shares of solar & wind require more flexibility to match power demand & supply
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 The future is electrifying

Electricity generation by selected region Sources of global

electricity demand growth

China
United States
India Other

European Union Industrial

motors
Electric vehicles
Southeast Asia
Large
Middle East appliances
Connected Cooling
Africa & small
appliances
2 000 4 000 6 000 8 000 10 000
TWh
2016 Growth to 2040

India adds the equivalent of today’s European Union to its electricity generation by 2040,
while China adds the equivalent of today’s United States
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 EVs are on the way, but oil demand still keeps rising
Electric car fleet Change in global oil demand

300 16
Million cars

Other countries
United States
12
India Petrochemicals
200
European Union 8
China Aviation and shipping
4
100 Trucks
0

mb/d
Passenger cars
Other sectors
-4
2016 2025 2040 2016-2040

Electric cars are helping to transform energy use for passenger cars, slowing the pace of growth in
global oil demand: however, trucks, aviation, shipping & petrochemicals keep oil on a rising trend
© OECD/IEA 2017
 US becomes undisputed leader of oil & gas production

Oil and gas production in the United States

mboe/d 35 Shale oil

30 Shale gas
Other unconventionals
25
Conventional oil & gas
20
15
10
5

1980 1990 2000 2010 2020 2030 2040

The US is already switching to become a net exporter of gas & becomes a net exporter of oil
in the 2020s, helped also by the demand-side impact of fuel efficiency & fuel switching
© OECD/IEA 2017
 LNG ushers in a new global gas order

Global gas trade

1 230 bcm in 2040

706 bcm in 2016

59% shipped by LNG

39% shipped by LNG

Asia’s growing gas import requirements are largely met by LNG,

with exports from the US accelerating a shift towards a more flexible, liquid global market
© OECD/IEA 2017
 LNG ushers in a new global gas order

Gas exporters
1 230 bcm in 2040

706 bcm in 2016

US Africa
& Canada

Middle
East Africa

Australia
Russia US & Russia Middle
& Caspian Australia Canada Other & Caspian East Other

Asia’s growing gas import requirements are largely met by LNG,

with exports from the US accelerating a shift towards a more flexible, liquid global market
© OECD/IEA 2017
 LNG ushers in a new global gas order

Global
Gas importers
exporters
gas trade
1 230 bcm in 2040

706 bcm in 2016

Europe
35% Asia
Europe 60%
52% Asia
37%

Other Other

Asia’s growing gas import requirements are largely met by LNG,

with exports from the US accelerating a shift towards a more flexible, liquid global market
© OECD/IEA 2017
 A new strategy for energy & sustainable development
Global CO2 emissions by scenario
40

Gt
New Policies Scenario

30

Sustainable
Development 20
Scenario Sustainable Development Scenario

10

2000 2010 2020 2030 2040

The Sustainable Development Scenario reduces CO2 emissions in line with the objectives of the
Paris Agreement, while also tackling air pollution and achieving universal energy access
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 Stronger policies for a more sustainable world
The Sustainable Development Scenario in 2040

875
million electric
2 times
more efficient
than today
vehicles

3 250
global solar PV capacity
GW 580 bcm
additional gas demand

Only 15% additional investment is required to 2040 to achieve the Sustainable Development Scenario,
with two-thirds of energy supply investment going to electricity generation & networks
© OECD/IEA 2017
 Conclusions

 The oil & gas boom in the United States is shaking up the established order, with major
implications for markets, trade flows, investment & energy security
 The versatility of natural gas means that it is well placed to grow, but it cannot afford
price spikes or uncertainty over methane leaks
 China continues to shape global trends, but in new ways as its “energy revolution”
drives cost reductions for a wide range of clean energy technologies
 Our strategy for sustainable energy shows that concerted action to address climate
change is fully compatible with global goals on universal access & air quality
 Electrification & digitalisation are the future for many parts of the global energy system,
creating new opportunities but also risks that policy makers have to address

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 iea.org/weo

© OECD/IEA 2017