The global energy outlook to 2025 and the

megatrends impacting energy markets beyond that Sydney, 16 September 2015

Keisuke Sadamori

Director

© OECD/IEA - 2013

Slide 2

Demand/Supply Balance until 4Q16*

Source: OMR September 2015

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

84

86

88

90

92

94

96

98

1Q09 3Q10 1Q12 3Q13 1Q15 3Q16

mb/dmb/d

Impl. stock ch.&misc (RHS) Demand Supply*

*OPEC production assumed at 31.7mb/d (most recent 3 month average) through forecast period

© OECD/IEA - 2013

Slide 3

Total Non-OPEC Supply, y-o-y Change

Source: OMR September 2015

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1Q12 1Q13 1Q14 1Q15 1Q16

mb/d

Other North America Total

© OECD/IEA 2014

2013 2020 2030 2040 2015

Instability in the Middle East a major risk to oil markets

Oil production growth

The short-term picture of a well-supplied market should not obscure future risks as demand rises to 104 mb/d & reliance grows on Iraq & the rest of the Middle East

+5

+10

+15

-5 2013 2020 2030 2040 2015

Net decline in output from other producers

Increase to 2040: 14 mb/d

mb/d

Increase to 2040: 14 mb/d

Middle East

Brazil

Canada United States

in United States, Canada, Brazil & the Middle East

© OECD/IEA 2015

Climate pledges shift the energy sector One-quarter of the world’s energy supply is low carbon in 2030; energy

intensity improves three-times faster than the last decade

Renewables reach nearly 60% of new capacity additions in the power sector; two-thirds of additions are in China, EU, US & India

Natural gas is the only fossil-fuel that increases its share of the global energy mix

Total coal demand in the US, Europe & Japan contracts by 45%, while the growth in India’s coal use slows by one-quarter

Climate pledges for COP21 are the right first step towards meeting the climate goal

© OECD/IEA 2015

Peak in emissions: IEA strategy to raise climate ambition

Global energy-related GHG emissions

Five measures – shown in a “Bridge Scenario” – achieve a peak in emissions around 2020, using only proven technologies & without harming economic growth

20

25

30

35

40

2000 2014 2020 2025 2030

Gt

CO

2-e

q

Bridge Scenario

INDC Scenario Energy

efficiency

49%

Reducing inefficient coal

Renewables investment

Upstream methane reductions

Fossil-fuel subsidy reform

17%

15%

10%

Savings by measure, 2030

9%

© OECD/IEA 2015

Total

50

100

150

200

2015 2020 2025 2030 2035 2040

Mill

ion

Vehicle sales

Lock in the vision: What more does it take for 2 °C?

Cost reductions & deployment of electric vehicles

An emissions goal would give greater clarity & certainty to the energy sector, strengthening the case for RD&D investment & technology transfer

100

200

300

400

Do

llars

per

kW

h

Electric

Battery costs Electric vehicles (right axis)

Solar PV additions

Capacity Capital costs Solar PV (right axis)

Cost reductions & deployment of all solar PV

25

50

75

100

2015 2020 2025 2030 2035 2040

GW

1 400

2 100

2 800

Do

llars

per

kW

700

Internal combustion

© OECD/IEA 2015

• Combination of technology cost reduction, better resources, appropriate regulatory framework attracting financing • Long-term PPAs and price competition effective drivers for reducing costs

India 88 $/MWh

Chile 87 $/MWh

USA 75 $/MWh

Utility PV

South Africa 65 $/MWh

Brazil 81 $/MWh

Onshore wind

South Africa 51 $/MWh

USA 48 $/MWh China

80 - 100 $/MWh

Brazil 54 $/MWh

Turkey 73 $/MWh

Germany 67-100 $/MWh

Ireland 69

$/MWh

Australia 65 $/MWh

Dubai 60 $/MWh

UK >120

$/MWh

UK 122

$/MWh

Recent long-term remuneration contract prices (e.g. auctions and FITs)

STE

Morocco 160 $/MWh

South Africa Base 124 $/MWh Peak 335 $/MWh

Egypt 41 $/MWh

Slide 8

Recent progress in RE generation costs

Source: IEA analysis as of July 2015

© OECD/IEA 2015

Overview of results – solar PV and wind

Slide 9

Source: Projected Costs of Generating Electricity 2015

© OECD/IEA 2015

Higher

uncertainty

Larger and more

pronounced

changes

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

1 8 15 22 29 36 43 50 57 64 71 78 85 92 99 106

113

120

127

134

141

148

Load

leve

l [MW

]

Hours

20% 10% 5% 2.50% 0%

Largerrampsat high shares

More frequent up and down at high

shares

Smoothing effect at low shares

Note: Load data and wind data from Germany 10 to 16 November 2010, wind generation scaled, actual share 7.3%. Scaling may overestimate the impact of variability; combined effect of wind and solar may be lower, illustration only.

Net-load at different annual VRE shares

Energy security risks of renewables

Slide 10

Source: The Power of Transformation 2014

© OECD/IEA 2015

Gas struggles to compete against coal and renewables

Incremental generation growth , 2014 – 20

0

200

400

600

800

1 000

1 200

1 400

Gas Coal Wind+Solar

TW

h Sol

arWindCoal

© OECD/IEA 2015

Second wave of additional LNG supply is coming soon

Additional LNG export capacity by year, 2005 -20

0

10

20

30

40

50

60

70

2005 2007 2009 2011 2013 2015 2017 2019

Bcm

United States

Russia

Southeast Asia

Qatar

Other MiddleEast

© OECD/IEA 2015

This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of

international frontiers and boundaries and to the name of any territory, city or area.

Global LNG trade flows will shift

Change in LNG net trade: 2014-20 (bcm)

© OECD/IEA 2014

Conclusions

Slide 14

• Companies that do not anticipate stronger energy & climate policies risk

being at a competitive disadvantage.

• Policies and market designs must adapt to deeper de-carbonization.

• Well functioning market and diversity will continue to be the core of

energy security.

• RD&D effort for cleaner energy in all fuel sources and improving

efficiency is the key