energy cozzi(iea) ccxg gf sep2014
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IEA World energy investment outlook special report, june 2014TRANSCRIPT
© OECD/IEA 2014
Laura Cozzi Directorate of Global Energy Economics
CCXG, Paris, 17 June 2014
© OECD/IEA 2014
The context
Today’s investments lock in patterns of consumption, fuel use & emissions for long into the future
Capital costs to produce energy have doubled since 2000
Investment surge to meet rising Asian demand, but shale in US & renewables in Europe also show dynamic growth…
…that are attracting new type of investors
Growing public pressure on energy & environmental issues
© OECD/IEA 2014
Renewables come of age, but fossil fuel investment still dominant
Annual energy supply investment
Investment in renewables rose from $60 billion in 2000 to a high point approaching $300 billion in 2011, before falling back since
500
1 000
1 500
Billi
on d
olla
rs (2
012)
2000 2005 2010 2011 2012 2013
Renewables
Power transmission & distribution
Fossil fuels
Nuclear
© OECD/IEA 2014
10 20 30 40 50 60 Trillion dollars (2012)
A new investment landscape for a 2 °C world
Investment in the New Policies and 450 Scenarios, 2014-2035
Efficiency spending is $6 trillion higher & the composition of supply investment changes: CCS is widely deployed, $300 billion of fossil fuel investment is left stranded
450 Scenario
New Policies Scenario
Fossil fuels Power T&D Low-carbon Energy Efficiency
© OECD/IEA 2014
2
4
6
8
10
12
1990 2010 2030
Thos
uand
TW
h
Fossil-fuel plants fitted with CCS Fossil-fuel plants without CCS
OECD
1990 2010 2030
Other non-OECD
1990 2010 2030 Renewables Nuclear
China
The power sector is central to a low-carbon world
Electricity generation by technology and CO2 intensity in the 450 Scenario
Investment in low-carbon power technologies needs to triple from around $250 billion today to $730 billion in 2035, three-quarters for renewables
0.2
0.4
0.6
0.8
1.0
1.2
gCO
2/kW
h
CO2 electricity emission intensity (right axis)
© OECD/IEA 2014
30
60
90
120
150
180
210
2008 2013 2020 2025 2030 2035
Billi
on d
olla
rs (2
012)
$1 425 billion
$565 billion
$1 990 billion
Attracting financing in the 450 Scenario
Subsidies to renewables in the 450 Scenario
New financing vehicles could help lower the cost of capital – a reduction of three pct points would make renewables more competitive, reducing subsidies by 40%
Additional payment without WACC reduction
Up to 2035
Up to 2015
$1 540 billion
with reduced WACC
$800 billion
$1 190 billion
© OECD/IEA 2014
Committing capital in a fast-changing energy world
The role of governments in energy markets is on the rise, while private investors are wary of political and regulatory risks
Energy investments are moving to areas with high up-front costs, complicating the task of securing finance
The overall investment need in the energy sector is not much larger in a scenario compatible with a 2 °C target, but low-carbon have to significantly scale up
Credible policy & pricing signals, plus new financing vehicles, are essential to re-direct capital flows towards a 2 °C target
Report and data are free for download at: www.worldenergyoutlook.org