IEA© OECD/IEA 2017

GLOBAL ENERGY INVESTMENTS:

WHAT’S NEXT?Dr. Fatih Birol, Executive Director, International Energy Agency

IICEC 8th International Energy and Climate Forum, 13 October 2017

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The global energy context today

Global energy markets are changing rapidly

North America entering a new age of energy prosperity

Solar at records highs, driven by policy support & cost reductions

Electric car sales are growing exponentially

Digitalization is having profound impacts on the energy sector

Local air pollution is becoming a key driver of energy policy

There is no single story about the future of global energy;

policies will determine where we go from here

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0

250

500

750

1 000

USD

(2016)

billio

n

Global energy investment fell 12% in 2016, a second consecutive year of decline

Total energy investment was $1.7 trillion in 2016;Electricity sector investment overtook oil and gas for the first time, while energy efficiency saw the biggest growth

Global energy investment 2016

-25%-1%

+9%

Networks

Renewable

Thermal

Oil & gas

Coal

Electricity Oil, gas & coal Energy efficiency

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China remains the first destination of energy investment in 2016

China represented 21% of global energy investment (supported by renewables, electricity networks and

energy efficiency), followed by the US and Europe

Energy investment in selected markets, 2016

0 50 100 150 200 250 300 350 400

Southeast Asia

Russia

India

Europe

United States

China

USD (2016) billion

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US shale oil production

US shale oil is shaking up global markets even at lower oil prices

US shale oil has surged in recent years on enormous cost savings & technological improvements;

The US is set to lead the growth in global oil supply over the next 5 years

1

2

3

4

5

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

mb/d

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Natural Gas: The United States accounts for 40% of global production growth

Since 2009, US shale has added the equivalent of two Qatars to the global balance;

Middle East and China set to significantly expand production to 2022

Global natural gas production growth, 2016-22

- 40 0 40 80 120 160

Europe

Russia

Australia

China

Middle East

United States

bcm

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Renewables closing the gap with coal

Renewable generation to expand by over a third with its share increasing from 24% in 2016 to 30% in

2022, rapidly closing the gap with coal

Electricity generation by fuel

0

2 000

4 000

6 000

8 000

10 000

12 000

2002 2006 2010 2014 2018 2022

Generation (TWh)

Coal

Natural gas

Nuclear

Renewables

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Price discovery through competitive auctions effectively reduces costs along the entire value chain;

Auctions with long-term contracts will drive almost half of new capacity growth

Announced wind and solar PV average auction prices by commissioning date

Competition driving renewables costs down

0

20

40

60

80

100

120

140

160

180

2012 2013 2014 2015 2016 2017 2018 2019 2020

USD/MWh

Onshore windaverage auctionprice

Solar PV averageauction price

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A large share of energy use is still not subject to efficiency standards

The amount of global energy use covered by mandatory efficiency policies grew in 2016, but 68% of

energy use remains uncovered. We owe the efficiency gains of today to the policies of the past.

Share of global energy use covered by mandatory efficiency policies, 2016

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

WORLD TOTAL

Trucks

Appliances

Space heating

Electric motors

Cars

Lighting

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PetrochemicalOther

Transport

70

75

80

85

90

95

Oil

dem

and

(m

b/d

)Trucks drive global oil demand

Trucks were responsible for nearly 40% of the growth in global oil demand since 2000; they are the

fastest growing source of oil demand, in particular for diesel.

2000 2015Increase by sector

Trucks

Cars

Other transport

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CO2 emissions growth in the Reference Scenario, 2015-2050

A modern truck sector is still a long haul away

Nearly 40 countries have fuel efficiency standards for cars.

Only Canada, China, Japan and the United States have standards for trucks.

Power sector Industry sector

100 200 300 400 500 600 700 800 900

Trucks

Coal use

Mt

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The potential of clean energy technology remains under-utilised

Recent progress in some clean energy areas is promising, but many technologies still need a strong

push to achieve their full potential and deliver a sustainable energy future

Energy storage Solar PV and onshore wind

Building construction

Nuclear Transport – Fuel economy of light-duty vehicles

Lighting, appliances and building equipment

Electric vehicles

Energy-intensive industrial processes

Transport biofuels

Carbon capture and storage More efficient coal-fired power

●Not on track ●Accelerated improvement needed ●On track

R&D funding on clean energy has remained steady at around $37 billion/year, leaving significant room

for growth

Global clean energy R&D funding needs a strong boost

Global R&D spendingon clean energy and electricity networks

Top 3 IT company R&D spenders

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10

20

30

40

2012 2015

USD

(20

16)

bill

ion

Private Public

0

10

20

30

40

2012 2015

USD

(20

16)

bill

ion

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Closing remarks

• While a continued focus on oil security is essential, a broader approach to energy

security is needed to reflect changing nature of natural gas & electricity markets

• New oil market dynamics & subdued upstream investment are ushering in a period of

greater market volatility

• A wave of LNG is the catalyst for a second natural gas revolution, with far-reaching

implications for gas pricing & contracts

• The next chapter in the rise of renewables requires more work on systems integration &

expanding their use beyond the power sector

• Addressing environmental challenges will require an energy transition of exceptional

scope, depth & speed, including stronger R&D efforts