energy supply/demand up to 2050 - siew 2021

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Energy supply/demand up to 2050

Yukari Niwa Yamashita

Institute of Energy Economics, Japan (IEEJ)

SIEW2019 Thinktank Round Table C

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Reference ScenarioAdvanced Technologies

Scenario

Reflects past trends with technology progress and current energy policies, without any aggressive policies for low-carbon measures.

Assumes introduction of powerful policies to address energy security and climate change issues with the utmost penetration of low-carbon technologies.

Social-economy structure

Stable growth led by developing economies despite slower population growth.Rapid diffusion of energy consuming appliances and vehicles due to higher income.

International energy price

Oil supply cost increases along with demand growth.Gas price convergences among Europe, N. America and Asia markets.Coal keeps unchanged with today’s level.

Slower price increase due to lower demand growth (coal price decreases).

[LNG in Asia] Higher/lower price cases

Energy policiesGradual reinforcement of low-carbon policies with past pace.

Further reinforcement of domestic policies along with international collaboration.

Energy technologiesImproving efficiency and declining cost of existing technology with past pace.

Further declining cost of existing and promising technology.

Basic scenarios in IEEJ Outlook

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Population

4

CAGR Composition

Assumptions

0.5%

0.6%

0.4%

1.2%

0.1%

0.01%

2.1%

0.8%

0.8%

0% 1% 2% 3%

North America

Latin America

Asia

Middle East

Advanced Europe

Oth. Europe/Eurasia

Africa

Oceania

World

Compound annual growth rate1980-2017

2017-2050

0.6 0.8

4.1

4.7

1.3

2.5 7.5

9.7

0

2

4

6

8

10

2017 2050

Billion

Oceania

Africa

Oth. Europe/Eurasia

Advanced Europe

Middle East

Asia

Latin America

North America

4 (not 3) billion more

needs energy access

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Real GDP

5

CAGR Composition

Assumptions

2.0%

2.8%

3.7%

2.6%

1.3%

2.4%

4.3%

2.0%

2.7%

0% 2% 4% 6%

North America

Latin America

Asia

Middle East

Advanced Europe

Oth. Europe/Eurasia

Africa

Oceania

World

Compound annual growth rate1980-2017

2017-2050

1937

25

81

21

32

80

191

0

50

100

150

200

2017 2050

$2017 trillion

Oceania

Africa

Oth. Europe/Eurasia

Advanced Europe

Middle East

Asia

Latin America

North America

Decoupling required

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Crude oil

International energy prices

Note: Historical prices are nominal. Assumed future prices as real in $2018.

CIF import prices for Japan

Natural gas

Coal

6

Reference

Advanced Technologies

:

:

Assumptions

0

50

100

150

1980 1990 2000 2010 2020 2030 2040 2050

$/bbl

0

5

10

15

20

1980 1990 2000 2010 2020 2030 2040 2050

$/MBtu Japan

Europe (UK)

United States

0

50

100

150

1980 1990 2000 2010 2020 2030 2040 2050

$/t

0

200

400

600

800

1,000

1980 1990 2000 2010 2020 2030 2040 2050

$/toe

Moderate

assumption

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Primary energy consumption

7

By region By energy source

Reference Scenario

0

5,000

10,000

15,000

20,000

1980 1990 2000 2017 2030 2040 2050

Mtoe

Intl. bunkers

Oceania

Africa

Oth. Europe/Eurasia

Advanced Europe

Middle East

Asia

Latin America

North America

7,203

8,766

10,025

13,972

16,564

17,98318,757

0

5,000

10,000

15,000

20,000

1980 1990 2000 2017 2030 2040 2050

Mtoe

Other renewables

Hydro

Nuclear

Natural gas

Oil

Coal

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0.5 0.8

Demand Supply

Latin America

0.0 0.2

Demand Supply

Oceania

0.1 0.4

Demand Supply

Other Europe/Eurasia

-0.3 -0.2

Demand Supply

Advanced Europe

0.5 1.0

Demand Supply

Middle East

0.7 0.7

Demand Supply

Africa

2.9

1.2

Demand Supply

Asia

-0.1 0.6

Demand Supply

North America

Unit: Gtoe

Growth in demand overwhelms supply in Asia

Over 60% of global demand growth comes from Asia. Meanwhile its energy supply cannot catch up,

resulting in dropping energy self sufficiency from 72% to 61%.

North America and the Middle East increase surplus export capacity and enlarge their presences as

energy suppliers.

8

❖ Change in energy supply / demand by region (2017-2050)

Reference Scenario

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88%56%

2018 2050

JPN, KOR,TWN*

69% 84%

2018 2050

ASEAN56% 62%

2018 2050

South Asia

36%51%

2018 2050

China

9% 5%

2018 2050

North America

27% 30%

2018 2050

World except ME

26% 15%

2018 2050

Advanced Europe

*Japan, Korea and Chinese Taipei

Only Asia pushes up dependence on ME

Developing Asia increases dependence on Middle East oil and mitigating risk of supply disruption

remains one of the priority issues.

Meanwhile, North America and Advanced Europe reduce the dependence rapidly but would be affected

by higher oil price when emergency due to higher dependence at the global level.

9

❖ Share of Middle East oil in demand by region

Reference Scenario

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Coal

Oil

Natural gas

Nuclear

Renewables

0

2

4

6

1990 2010 2030 2050

Gtoe

-0.5 0.0 0.5 1.0 1.5 2.0

Nuclear

Coal

Renewables

Oil

Natural gas

Gtoe

Power

Transport

Others

Dependency to fossil fuels remains unchanged

Natural gas increases by 1.7 times especially in the power sector, becoming a second-position energy.

Coal peaks around 2040 and oil remains the most important energy.

Renewables grow rapidly but their share of primary demand mix increase only to 16% from 14%. Lessing dependency on fossil fuels

progresses slowly.

10

❖ Primary energy demand ❖ Change in energy demand

(2017-2050)

Reference Scenario

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Population, GDP, energy and CO2

11

Reference Scenario

Advanced Economies Emerging Market and Developing Economies

105

169

91 78

0

100

200

300

400

1980 1990 2000 2010 2020 2030 2040 2050

Y2017=100

Population

Real GDP


CO2 emissions

134

356

159 148

0

100

200

300

400

1980 1990 2000 2010 2020 2030 2040 2050

Y2017=100

Population

Real GDP


CO2 emissions

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Energy intensity improvement in industry sector

12

12%

28%

21%

18%

33%

22%

37%

30%27%

43%

0%

10%

20%

30%

40%

50%

Refe

rence

Advance

d

Tech

no

log

ies

Refe

rence

Advance

d

Tech

no

log

ies

Refe

rence

Advance

d

Tech

no

log

ies

Refe

rence

Advance

d

Tech

no

log

ies

Refe

rence

Advance

d

Tech

no

log

ies

Iron & steel Non-metallic

minerals

Chemical Paper & pulp Other industries

Improvement rate vs. 2017

Advanced Technologies Scenario

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0

20

40

60

80

100

120

140

160

180

200

2005 2010 2017

GW

Expanding installed capacity of VREs

Source: IEA

0

20

40

60

80

100

120

140

2005 2010 2017

GWSolar PV Wind

China

China

U.S.U.S.

GermanyGermany

Japan

Japan

India

FranceU.K.Spain

France

Italy

・ Recent trends exhibit rapid expansion of the power generating capacities of Variable Renewable Energies (VREs), such as solar and wind,

due to continuous cost declines and growing concerns over climate change issues.

・ VREs are expected to continue the rapid expansion in the long-term, although we should anticipate several challenges as stated below.

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Wind and solar PV power generation capacity

Wind Solar PV

14

515

1,131

1,8101,632

3,065

0

1,000

2,000

3,000

4,000

5,000

2017 2030 2050 2030 2050

Reference ATS

GWOceania

Africa

Oth. Europe/Eurasia

Advanced Europe

Middle East

Asia

Latin America

North America

386

1,070

2,954

1,476

4,434

0

1,000

2,000

3,000

4,000

5,000

2017 2030 2050 2030 2050

Reference ATS

GWOceania

Africa

Oth. Europe/Eurasia

Advanced Europe

Middle East

Asia

Latin America

North America


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Power generation mix

Electricity generated Power generation capacity

15

25,606

34,412

45,363

33,552

42,127

0

10,000

20,000

30,000

40,000

50,000

60,000

2017 2030 2050 2030 2050

Reference ATS

TWh

Other renewables

Hydro

Nuclear

Natural gas with CCS

Natural gas

Oil

Coal with CCS

Coal

6,342

9,357

13,980

9,895

16,163

0

3,000

6,000

9,000

12,000

15,000

18,000

2017 2030 2050 2030 2050

Reference ATS

GW

Other renewables

Hydro

Nuclear

Natural gas with CCS

Natural gas

Oil

Coal with CCS

Coal


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13%

10%7%

12%

19%17%

22%

6%16%

32%

590412

156

Reference ATS*

2017 2050

CO2 intensity

ｇ/kWh

PV/Wind

Other RE

Nuclear

Fossil with CCS

Fossil w/o CCS PV Wind

0% 100% 200%

ASEAN

India

China

Japan

W.Europe

USA

peak demand

VRE capacity surpass peak demand

Zero-emission power generation (renewables, nuclear and fossil thermal with CCS) dominates 80% of

power generation mix in the Advanced Technologies Scenario.

Generation capacity of variable renewable energy (VRE), such as solar PV and wind, exceeds peak

electricity demand. Some regions need system stability measures, such as battery storage.

16

❖ Ratio of capacity to peak demand

(2050, Advanced Tech.)

❖ Power mix and CO2

intensity

●2017(PV+Wind)

*ATS: Advanced Technologies Scenario


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By region By energy source


Note: Solid lines stand for Advanced Technologies Scenario and

dotted lines stand for Reference Scenario.

8,766

16,564

18,757

13,972 15,624 15,915

0

5,000

10,000

15,000

20,000

1990 2000 2010 2020 2030 2040 2050

Mtoe

Advanced Economies

Emerging Market and Developing

Economies

0

2,000

4,000

6,000

1990 2000 2010 2020 2030 2040 2050

Mtoe

Coal

Oil

Natural gas

Nuclear

Hydro

Other renewables

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Unclear oil revenue for the Middle East

In the Advanced Technologies Scenario, demand growth of fossil fuels slows and prices are lower than in

the Reference Scenario.

Asia and Advanced Europe can reduce net import bills a lot. Meanwhile, oil and gas export revenues for

the Middle East could decrease by the equivalent to 13% of its GDP.

18

❖ Net energy exports / imports by region (2050)

[1%] [1%]

[2%] [1%] [1%] [0%] [6%] [13%]

5

4

3

2

1

0

1

2

3Asia

Advanced

Europe Oceania Africa

Latin

America

North

America

Oth. Europe

/Eurasia Middle East

Net Import

tril.$Net Export

Reference ATS*

[%: Net export-import difference vs. GDP]

*ATS: Advanced Technology Scenario


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Energy-related CO2 emissions

19

By region By technology

20.3

37.6

40.9

32.7

32.8

25.3

0

15

30

45

1990 2000 2010 2020 2030 2040 2050

GtCO2

Efficiency

Biofuels

Wind, solar, etc.

Nuclear

Fuel switching

CCS

Reference


20.3

37.6

40.9

32.7

32.8

25.3

0

15

30

45

1990 2000 2010 2020 2030 2040 2050

GtCO2

North America

Latin America

Asia

Middle East

Advanced Europe

Oth. Europe/Eurasia

Africa

Oceania

Intl. bunkers

Reference



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Reference 41

Advanced Tech. 25

Halving emission by 2050*2

33

2℃ Minimising Cost*1

0

5

10

15

20

25

30

35

40

45

1990 2010 2030 2050

GtCO2

14

19

16

0

5

10

15

20

REF* ATS*

2017 2050

Gtoe

Renewables

Nuclear

Natural gas

Oil

Coal

Even after large reduction, 2°C goal still far

In the Advanced Technologies Scenario, dependence on fossil fuels drops to 70%, still high level.

Energy-related CO2

emissions peak at the middle of 2020s and decrease by 23% vs. 2017 in 2050.

To keep temperature rise to below 2 degrees Celsius, additional programs and innovative technologies are required.

20

❖ Primary energy demand ❖ Energy-related CO2

emissions

*1: Refer to “IEEJ Outlook 2018”

*2: Emissions path reflected “RCP 2.6” in the 5th Assessment Report

(AR5) by the Intergovernmental Panel on Climate Change (IPCC).

*REF: Reference Scenario, ATS: Advanced Technologies Scenario


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Comparison with IEEJ Outlook 2019

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❖ Reference Scenario ❖ Advanced Technologies Scenario

* Primary energy demand

Solid lines: IEEJ Outlook 2020

Dotted lines: IEEJ Outlook 2019

Coal

Oil

Natural gas

Nuclear

Renewables

0

2

4

6

1990 2010 2030 2050

Gtoe

Coal

Nuclear

Renewables

Oil

Natural gas

0

2

4

6

1990 2010 2030 2050

Gtoe

Reference material

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0

20

40

60

80

100

120

140

2000 2010 2020 2030 2040 2050

Mb/dIEEJ REF

IEEJ ATS

IEA CPS

IEA NPS

IEA SDS

BP ET

BP RT

BP ME

DNV Base

EIA REF

OPEC REF

Shell SKY

Exxon0

2

4

6

8

2000 2010 2020 2030 2040 2050

Tcm IEEJ REF

IEEJ ATS

IEEJ LNP

IEEJ HNP

IEA CPS

IEA NPS

IEA SDS

BP ET

DNV Base

EIA REF

OPEC REF

Shell SKY

Exxon

0

2

4

6

8

2000 2010 2020 2030 2040 2050

GtceIEEJ REF

IEEJ ATS

IEA CPS

IEA NPS

IEA SDS

BP ET

DNV Base

EIA REF

OPEC REF

Shell SKY

Exxon

0

2

4

6

8

2000 2010 2020 2030 2040 2050

千

PWh IEEJ REF

IEEJ ATS

IEA CPS

IEA NPS

IEA SDS

BP ET

DNV Base

EIA REF

OPEC REF

Shell SKY

Exxon

22

❖ Oil

Comparison with other institutes (1)

❖ Natural gas

❖ Coal ❖ Nuclear

* EIA shows ”Liquid” including

biofuels, etc.

Reference material

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Summary

23

✓ Only emerging and developing economies increase energy demand.

✓ In Asia, demand growth overwhelms supply growth and it increases energy imports. Dependence on ME oil increases

✓ The Middle East urgently needs of shifting away from an economy that depends on oil export revenues.

✓ In the Advanced Technologies Scenario, generation capacity of VRE exceeds peak demand.

✓ Dependence on fossil fuels is still high, resulting in falling short of the 2°C goal. R&D for innovative technologies is required.

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Challenges for the power sector

under high penetration of variable

renewable energies

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Distributed VRE resources

Europe ASEAN

Europe ASEAN

Solar

Wind

・ VRE resources differ significantly across regions. While wind power resources are abundant in Europe, ASEAN countries see relatively

scarce resources except for those in specific areas in Vietnam and the Philippines.25

※1: Obtained from the “Global Solar Atlas 2.0”, a free, web-based application is developed and operated by the company Solargis s.r.o. on behalf of the World

Bank Group, utilizing Solargis data, with funding provided by the Energy Sector Management Assistance Program (ESMAP). For additional information:

https://globalsolaratlas.info

※2: Obtained from the “Global Wind Atlas 2.0”, a free, web-based application developed, owned and operated by the Technical University of Denmark (DTU) in

partnership with the World Bank Group, utilizing data provided by Vortex, with funding provided by the Energy Sector Management Assistance Program

(ESMAP). For additional information: https://globalwindatlas.info

Source:

Global Solar Atlas※1

Source:

Global Wind Atlas※2

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0

5

10

15

20

25

30

Ru

ssia

Au

stra

lia

Can

ada

Ch

ina

U.S

.

Ind

ia

Ge

rman

y

Fran

ce

Ind

on

esia

Mal

aysi

a

Thai

land

Japa

n

TW

0

5

10

15

20

25

30

Ru

ssia

Au

stra

lia

Can

ada

Ch

ina

U.S

.

Ind

ia

Ge

rman

y

Fran

ce

Ind

on

esia

Mal

aysi

a

Thai

land

Japa

n

TW

Estimated VRE resources for selected countries

Onshore wind Solar PV

Source: Estimated by IEEJ using GIS data

・ Huge VRE resources exist in the countries with large geographic areas, such as Russia, Australia, China, and U.S. Total wind and solar

resources can cover all the global energy demand.

26

・ Solar resources are relatively scarce in high-latitude countries, whereas most Asian countries are not endowed with large wind resources.

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5

10

2015 2030 2045

Solar (Large scale) Onshore wind

Coal Natural gas

Nuclear

2017 U.S. cent/kWh

0

5

10

2015 2030 2045

0

5

10

2015 2030 2045

0

5

10

2015 2030 2045

Levelized cost of electricity generation (LCOE）

Europe United States

China ASEAN

・ Levelized Cost of Electricity (LCOE) is a metric that has long been used for assessing the specific cost of power generating facilities.

・ The LCOE of VREs has been declining rapidly over decades. By 2050, the LCOE of solar PV is expected to become lower than that of

conventional technologies, in many region across the world.

Source: Estimated by IEEJ

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System integration cost: A conceptual illustration

- If the LCOE of VRE is smaller than that of conventional power sources, the “traditional” power generation cost, which represents the costs

proportional to the LCOEs, shown as Cconv+CVRE in the above figure, declines with increasing share of VRE.

28

0% 100%

Vertical: Total system cost

Integration cost

（CINT）

LCOE：VRE

（CVRE)

VRE shar in power generation mix

LCOE：Conventional

（Cconv)

Case with

a positive carbon price

Optimal

- However, high penetration of VRE requires additional cost related to the necessity of power storage, VRE output curtailment, and grid

extension, etc., known as system integration costs, indicated by CINT as illustrated above.

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Summary: Good News and Not So Good News for VRE

29

✓ The generating cost of wind and solar PV has been declining rapidly. ➢ By 2050, solar PV is expected to become cheaper than conventional.

✓ Renewable energy is not evenly distributed in the world.➢ Solar resources are relatively scarce in high-latitude countries,

whereas most Asian countries are not endowed with large wind resources

✓ At high VRE penetration rates , system integration costs rapidly increase.➢ System integration costs are related to

✓power storage, ✓output curtailment, ✓grid extension, etc.

✓ In conclusion, for a successful bulk introduction of VRE, “an enabler” is still required.

Perhaps digitalisation？

Thank you very much for your attention!

energy supply/demand up to 2050 - siew 2021

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