November 20th, 2014 Asian Super Grid and RES Workshop at KPMG Former Executive Director, IEA Professor, GraSPP the University of Tokyo Global Associate for Energy Security and Sustainability of the IEEJ Nobuo TANAKA

Energy Security and Sustainability in N.E. Asia

Asian Growth & Shale Revolution

The engine of energy demand growth moves to Asia with resulting problems.

Primary energy demand, 2035 (Mtoe)

China is the main driver of increasing energy demand in the current decade, but India takes over in the 2020s as the principal source of growth

4%

65%

10%

8%

8% 5%

OECD

Non-OECD Asia

Middle East

Africa

Latin America

Eurasia

Share of global growth 2012-2035

480

Brazil 1 540

India

1 000 Southeast

Asia

4 060

China

1 030

Africa

2 240 United States 440

Japan

1 710

Europe 1 370

Eurasia

1 050 Middle East

WEO 2013

Shale Revolution and Geopolitics of Oil/Gas

exporters and importers

WEO2013

4

What has happened in the Shale revolution of the US: US aims to further reduce CO2 by 30% towards 2030 in the Power sector.

-15% -10% -5% 0% 5% 10% 15% 20% 25%

Renewables

Coal-fired power output

Coal demand

Gas-fired power output

Gas demand

CO2 emissions

Total primary energy demand

GDP (MER)

From 2006-2011, United States CO2 emissions went down by 7% due to coal-to-gas fuel switching, power generation efficiency gains & increased renewables output

WEO2012

Cop21 in paris : Optimism (US China deal) and Pessimism (2°C ?)

Final Draft (7 June 2013) Technical Summary IPCC WGI Fifth Assessment Report

Do Not Cite, Quote or Distribute TS-119 Total pages: 127

TFE.8, Figure 1: Global mean temperature increase since 1861–1880 as a function of cumulative total global CO2

emissions from various lines of evidence. (a) Decadal average results are shown over all CMIP5 EMIC and ESMs for

each RCP respectively, with coloured lines (multi-model average), decadal markers (dots) and with three decades

(2001–2010, 2041–2050 and 2091–2100) highlighted with a star, square and diamond, respectively. The historical time

period up to decade 2001–2010 is taken from the CMIP5 historical runs prolonged by RCP8.5 for 2005–2010 and is

indicated with a black thick line and black symbols. Coloured ranges illustrate the model spread (90% range) over all

CMIP5 ESMs and EMICs and do not represent a formal uncertainty assessment. Ranges are filled as long as data of all

models is available and until peak temperature. They are faded out for illustrative purposes afterward. CMIP5

simulations with 1% yr–1 CO2 increase only are illustrated by the dark grey area (range definition similar to RCPs

above) and the black thin line (multi-model average). The light grey cone represents this report’s assessment of the

transient climate response to emissions (TCRE) from CO2 only. Estimated cumulative historical CO2 emissions from

1850 to 2011 with associated uncertainties are illustrated by the grey bar at the bottom of panel a. (b) Comparison of

historical model results with observations. The magenta line and uncertainty ranges are based on observed emissions

from CDIAC extended by values of the Global Carbon project until 2010 and observed temperature estimates of

HadCRUT4. The uncertainties in the last decade of observations are based on the assessment in this report. The black

thick line is identical to the one in panel a. The thin green line with crosses is as the black line but for ESMs only. The

yellow-brown line and range show these ESM results until 2010, when corrected for HadCRUT4’s incomplete

geographical coverage over time. All values are given relative to the 1861–1880 base period. All time-series are derived

Carbon Budget

515Gt had been

emitted by 2011.

2C scenario needs

to stop at

790Gt.(66%).

790-515=275Gt

budget left.

Annual 2012

=9.7Gt

275/9.7=Only 28

years to go!

IPCC WGI Fifth Assessment Report

ETP 2014 Message Carbon Intensity of supply is stuck

The political will to make meaningful progress at a global scale has yet to be demonstrated

ETP2014

A transformation is needed…

..and we to have the tools to develop a strategy and be proactive.

ETP2014

Three issues to achieve 450ppm: no.1 How to use more Renewables

2DS of ETP 2014: Optimistic or Pessimistic? It needs changing places of Fossil and Renewables

• Generation today:

– Fossil fuels: 68%

– Renewables: 20%

Generation 2DS 2050:

Renewables: 65%

Fossil fuels: 20%

ETP2014

Still on track in Renewables…

Emerging economies step up clean energy ambition, but momentum stalls in OECD countries

Total renewable power generation

ETP2014

Increasing subsidies for increasing renewables

Global renewable energy subsidies by source

50

100

150

200

250

2008 2010 2012 2015 2020 2025 2030 2035

Billion dollars (2012)

Biofuels

Other

Concentrating solar power

Wind offshore

Wind onshore

Bioenergy

Solar PV

Electricity:

Almost half of the global electricity demand growth is met by renewables, pushed by growing subsidies that reach $223 billion in 2035 from $101 billion in 2012

WEO2013

Power Sector needs Investment in additional flexibility

Grid infrastructure

Dispatchable generation Storage

Demand side integration

Four sources of flexibility …

© OECD/IEA 2014 14 The Power of Transformation, 2014 by IEA

Systems thinking and integration

Today’s energy system paradigm is based on a unidirectional energy delivery philosophy

A sustainable electricity system is a smarter, multidirectional and integrated energy system that requires long-term

planning for services delivery

ETP2014

IEA WEO2014

A decline in nuclear is compensated by a 3-fold increase in electricity from renewables, a continued high reliance on LNG imports & improvements in efficiency

Japan’s Power Mix: Serious problem with nuclear shutdown

16

© OECD/IEA 2014

Japan’s  power  system:  moving  to  a  more  diverse & sustainable mix

0.2

0.4

0.6

0.8

1.0

1.2

1990 2000 2010 2020 2030 2040

Tho

usa

nd

TW

h

Renewables

Nuclear

Oil

Gas

Coal

historical projected

100

200

300

400

500

600

CO2 electricity emissions intensity (right axis)

gCO

2/k

Wh

Japan electricity generation by source and CO2 intensity

With nuclear plants expected to restart & increased use of renewables, Japan’s  electricity  mix  be c omes  much  more  diversified  by  2040

Shinzo Abe has the best chance in decades of changing Japan for the

better. He seems poised to take it ( June 28th 2014 )

Snapshot of present penetration potentials

Not only Feed-in-tariffs but Grid integration !

“Harnessing Variable Renewables” by IEA

18

Power grid in Japan

Source: Agency for Natural Resources and Energy, The Federation of Electric Power Companies of Japan, Electric Power System Council of Japan, The International Energy Agency

Tokyo

Hokkaido

Tohoku

Hokuriku Kansai Chugoku

Kyushu 29GW

Shikoku 12GW

Chubu 40GW

Okinawa 2GW

Hydro Oil

Gas

Nuclear

Coal

Other

Power utility company

Generating company

In-house generation

--- 50 hz

60 hz <-------

19

0

20

40

60

80

100

120

140

Legacy

low grid costs

Legacy

high grid costs

Transformed generation and

8% DSI, low grid costs

0% VRE 45% VRE penetration

Tota

l sys

tem c

ost

(USD

/MW

h)

Grid cost

DSI

Fixed VRE

Emissions

Fuel

Startup

Fixed

non–VRE

• Large shares of VRE can be integrated cost-effectively

• But adding VRE rapidly without adapting the system is bound to increase costs

Japan’s Case Study: Cost-effective integration means transformation of power system

© OECD/IEA 2014 20

+40%

+10-15%

Test System / IMRES Model

The Power of Transformation, 2014 by IEA

To

tal S

yste

m C

ost ( U

SD

MW

h)

India

World

Issue No.2: Coal use will continue. Global coal demand levels off but needs CCS

Global coal demand by key region

Global coal demand growth slows rapidly due to more stringent environmental policies, underlining the importance of high-efficiency plant & CCS to coal’s future

1 000

2 000

3 000

4 000

5 000

6 000

7 000

1980 1990 2000 2010 2020 2030 2040

Mtce

1987: European coal demand peak 2005: US coal demand peak

Chinese coal demand plateau

India: 2nd largest coal consumer by 2020

Other

India

China

United States Europe

WEO2014

“Pandora’s Promise”,

a movie directed by

Robert Stone, is a

documentary of some

environmentalists

who changed their

views about Nuclear

Power.

Issue No.3 :

Nuclear power

after the

Fukushima

Eu model as Collective Energy security and sustainability

Energy self-sufficiency* by fuel in 2011

Source: Energy Data Center, IEA.

* Self-sufficiency = domestic production / total primary energy supply

Note: Does not include fuels not in the fossil fuels, renewables and nuclear categories.

11%

14%

15%

21%

6%

46%

12%

23%

28%

16%

9%

17%

32%

17%

10%

1%

10%

1%

1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

IEA

European Union

Korea

Luxembourg

Belgium

Japan

France

Spain

Slovak Republic

Ireland

Switzerland

Italy

Portugal

Hungary

Turkey

Germany

Finland

Austria

Sweden

Greece

Czech Republic

United Kingdom

Poland

India

United States

Netherlands

China

New Zealand Fossil fuels

Renewables

Nuclear

24%

52%

96%

10%

8%

26%

14%

11%

0% 20% 40% 60% 80% 100% 120% 140%

EU28

IEA28

ASEANFossil fuelsRenewablesNuclear

Collective Energy Security and Sustainability by Diversity, Connectivity and

Nuclear: European Model can be applied to Asia?

WEO 2013 basis

Power Grid Connection in Europe Physical energy flows between European countries, 2008 (GWh)

Source: ENTSO-E

25

Connecting MENA and Europe: " Desertec" as visionary “Energy for Peace"

Source: DESRETEC Foundation 26

ASEAN power grid connection

27

Presentation by Mr. Masayoshi SON 28

“Energy for Peace in Asia” New Vision?

Development of Natural Gas Pipelines in Europe *Europe has begun upgrading its natural gas transmission pipeline in the wake of domestic gas fields development between 1940 and 1960. *Cross border gas pipelines have been built along with gas imports from Russia. *In order to promote the security by diversification of supply sources, on the occasion of the supply dispute between Russia and Ukraine in 2006 was arose, gas import pipelines which won’t depend on Russian Supply has begun building new international pipeline systems.

Source : OG・May 25, 2009 29

30

Natural Gas Import Infrastructure in Europe

IEA Medium Term Oil and Gas Markets 2010

Mid-Term Oil & Gas Market 2010, IEA

Russian Gas Pipelines Will Extend to the East: Recent China Deal

USDOD China Report 2014 32

Figure 2: China’s Import Transit Routes.

China’s Oil and Gas Import Transit Routes

ASEAN is working on Gas Pipeline System.

Chap

ter 15 - O

verview o

f energ

y trends in

South

east Asia

57

5

15

Figure 15.16 The Trans-ASEAN Gas Pipeline (TAGP)

0 500

Km

Bontang

Tangguh

West Java

LumutLubuan

Bintulu MLNG

Arun

East JavaMasela

Jurong Isl.

Mariveles

LNG(Baatan)

EAST TIMOR

Kalimantan Senipah

Surabaya

Plaju

Sungiasalak

Dumai

Medan

Krabi

Khanom

Pasuruan

Natuna

Palawan

Ho Chi Minh

Mindanao

Luzon

Dili

Sumatra

Java

BaliLombok

Sumbawa Flores

Sulawesi Seram

Papua

Map Ta Phut

M A L A Y S I A

SINGAPORE

CAMBODIA

LAOS

MYANMAR

Phnom Penh

Vientiane

Yangon

Bandar SeriBegawan

Manila

Kuala Lumpur

I N D O N E S I A

Jakarta

Hanoi

CHINAINDIA

BangkokVIETNAM

PHILIPPINES

T H A I L A N D

BRUNEI

Existing gas pipeline

Planned LNG regasification terminal

Planned LNG liquifaction plant

Planned or under construction gas pipeline

Gas production area

LNG liquifaction plant

The boundaries and names shown and the designations used on maps included in this publication do not imply official endorsement or acceptance by the IEA.

Source: ASCOPE Secretariat

© OECD/IEA, 2009

33

34

Blue Print for North East Asia Gas & Pipeline Infrastructure

THE ENERGY CHARTER TREATY

A READER’S GUIDE

Energy Charter Secretariat

Role of the Energy Charter Treaty:

Ukraine Gas Disruption could have been avoided.