Dr. Fatih Birol Executive Director, International Energy Agency Statoil Autumn Conference Oslo, 28 November 2017

 Four large-scale upheavals in global energy set the scene for the new Outlook:

➢ The United States is turning into the undisputed global leader for oil & gas

➢ Solar PV is on track to be the cheapest source of new electricity in many countries

➢ China’s new drive to “make the skies blue again” is recasting its role in energy

➢ The future is electrifying, spurred by cooling, electric vehicles & digitalisation

 These changes brighten the prospects for affordable, sustainable energy & require a reappraisal of approaches to energy security

 There are many possible pathways ahead & many potential pitfalls if governments or industry misread the signs of change

Change in energy demand, 2016-40 (Mtoe)

Europe 135 Eurasia -200 United States Middle China Japan 480 -30 East 790 -50 Southeast 485 India Asia 420 Central and 270 Africa 1 005 South America

Old ways of understanding the world of energy are losing value as countries change roles: the Middle East is fast becoming a major energy consumer & the United States a major exporter

Change in world energy demand by fuel

Coal (Mtce) Oil (mb/d) Gas (bcm) Low-carbon (Mtoe) 2 500 30 2 000 2 000

2 000 24 1 600 1 600

1 500 18 1 200 1 200

1 000 12 800 800

500 6 400 400

0 1990-2016 2016-40 1990-2016 2016-40 1990-2016 2016-40 1990-2016 2016-40 - 500 1990-2016 2016-40 China Other countries

Low-carbon sources & natural gas meet 85% of the increase in global demand: China’s switch to a new economic model & a cleaner energy mix drives global trends

Global average annual net capacity additions by type

Coal Gas 2010-2016 Nuclear Renewables Solar PV Wind Other

20 40 60 80 100 120 GW Coal Gas 2017-2040 Nuclear Renewables Solar PV Wind Other 20 40 60 80 100 120 GW 140 160 GW

China, India & the US lead the charge for solar PV, while Europe is a frontrunner for onshore & offshore wind: rising shares of solar & wind require more flexibility to match power demand & supply

Electricity generation by selected region Sources of global electricity demand growth

China United States

India Other European Union Industrial motors Electric vehicles Southeast Asia Large Middle East appliances Connected Cooling Africa & small 2 000 4 000 6 000 8 000 10 000 appliances TWh 2016 Growth to 2040 India adds the equivalent of today’s European Union to its electricity generation by 2040, while China adds the equivalent of today’s United States

Electric car fleet Change in global oil demand

300 16 Other countries United States 12 India Petrochemicals

Millioncars 200 European Union 8 China Aviation and shipping 4 100 Trucks 0 /d Passenger cars

mb Other sectors - 4 2016 2025 2040 2016-2040 Electric cars are helping to transform energy use for passenger cars, slowing the pace of growth in global oil demand: however, trucks, aviation, shipping & petrochemicals keep oil on a rising trend

Oil and gas production in the United States

mboe/d 35 Shale oil 30 Shale gas Other unconventionals 25 Conventional oil & gas 20 15 10 5

1980 1990 2000 2010 2020 2030 2040

The US is already switching to become a net exporter of gas & becomes a net exporter of oil in the 2020s, helped also by the demand-side impact of fuel efficiency & fuel switching

GlobalGGaass importersexporters gas trade 1 230 bcm in 2040

706 bcm in 2016

Europe US Africa 35% Asia & Canada Europe 60% 52% Asia Middle 37% East Africa 59% shipped by LNG Australia Russia US & Russia Middle Other39% shipped by LNG Other & Caspian Australia Canada Other & Caspian East Other

Growing gas import requirements in developing Asia, Japan and Korea are largely met by LNG, with exports from the US accelerating a shift towards a more flexible, liquid global market

Offshore oil and gas production Offshore electricity generation

/d 60 700 600 TWh

mboe 50 500 40 400 30 300 20 200 10 100

2016 2040 2016 2040

Oil Gas Offshore wind Marine

Major recent offshore discoveries boost the outlook for global offshore gas production, while Europe powers the growth in offshore wind

Population without electricity access

Sub-Saharan Million 600 Sub-Saharan Africa people Africa

400

India 200 Other Asia

Other Asia India 2000 2005 2010 2016 2020 2025 2030

Many countries, led by India, are on track to achieving full electrification by 2030, but – despite recent progress – efforts in sub-Saharan Africa need to redouble

Global CO2 emissions by scenario 40 Gt New Policies Scenario

Sustainable Development 20 Scenario Sustainable Development Scenario

2000 2010 2020 2030 2040

The Sustainable Development Scenario reduces CO2 emissions in line with the objectives of the Paris Agreement, while also tackling air pollution and achieving universal energy access

The Sustainable Development Scenario in 2040

875 2times million electric more efficient vehicles than today

3250GW 580bcm global solar PV capacity additional gas demand

Only 15% additional investment is required to 2040 to achieve the Sustainable Development Scenario, with two-thirds of energy supply investment going to electricity generation & networks

 The oil & gas boom in the United States is shaking up the established order, with major implications for markets, trade flows, investment & energy security

 The versatility of natural gas means that it is well placed to grow, but it cannot afford price spikes or uncertainty over methane leaks

 China continues to shape global trends, but in new ways as its “energy revolution” drives cost reductions for a wide range of clean energy technologies

 Our strategy for sustainable energy shows that concerted action to address climate change is fully compatible with global goals on universal access & air quality

 Electrification & digitalisation are the future for many parts of the global energy system, creating new opportunities but also risks that policy makers have to address