“North America is at the forefront of a sweeping transformation in oil and gas production that will
affect all regions of the world, yet the potential also exists for a similarly transformative shift in
global energy efficiency,” said IEA Executive Director Maria van der Hoeven. “This year’s World
Energy Outlook shows that by 2035, we can achieve energy savings equivalent to nearly a fifth of
global demand in 2010. In other words, energy efficiency is just as important as unconstrained
energy supply, and increased action on efficiency can serve as a unifying energy policy that brings
multiple benefits.”

The WEO finds that the extraordinary growth in oil and natural gas output in the United States will
mean a sea-change in global energy flows. In the New Policies Scenario, the WEO’s central scenario,
the United States becomes a net exporter of natural gas by 2020 and is almost self-sufficient in
energy, in net terms, by 2035. North America emerges as a net oil exporter, accelerating the switch
in direction of international oil trade, with almost 90% of Middle Eastern oil exports being drawn to
Asia by 2035. Links between regional gas markets will strengthen as liquefied natural gas trade
becomes more flexible and contract terms evolve. While regional dynamics change, global energy
demand will push ever higher, growing by more than one-third to 2035. China, India and the Middle
East account for 60% of the growth; demand barely rises in the OECD, but there is a pronounced
shift towards gas and renewables.

Fossil fuels will remain dominant in the global energy mix, supported by subsidies that, in 2011,
jumped by almost 30% to $523 billion, due mainly to increases in the Middle East and North Africa.
Global oil demand grows by 7 mb/d to 2020 and exceeds 99 mb/d in 2035, by which time oil prices
reach $125/barrel in real terms (over $215/barrel in nominal terms). A surge in unconventional and
deepwater oil boosts non-OPEC supply over the current decade, but the world relies increasingly on
OPEC after 2020. Iraq accounts for 45% of the growth in global oil production to 2035 and becomes
the second-largest global oil exporter, overtaking Russia.

While the regional picture for natural gas varies, the global outlook over the coming decades looks
to be bright, as demand increases by 50% to 5 trillion cubic metres in 2035. Nearly half of the
increase in production to 2035 is from unconventional gas, with most of this coming from the United
States, Australia and China. Whether demand for coal carries on rising strongly or changes course
radically will depend on the strength of policy decisions around lower-emissions energy sources and changes in the price of coal relative to natural gas. In the New Policies Scenario, global coal demand
increases by 21% and is heavily focused in China and India.

Renewables become the world’s second-largest source of power generation by 2015 and close in on
coal as the primary source by 2035. However, this rapid increase hinges critically on continued
subsidies. In 2011, these subsidies (including for biofuels) amounted to $88 billion, but over the
period to 2035 need to amount to $4.8 trillion; over half of this has already been committed to
existing projects or is needed to meet 2020 targets. Ambitions for nuclear have been scaled back as
countries have reviewed policies following the accident at Fukushima Daiichi, but capacity is still
projected to rise, led by China, Korea, India and Russia.

Water is essential to the production of energy, and the energy sector already accounts for 15% of
the world’s total water use. Its needs are set to grow, making water an increasingly important
criterion for assessing the viability of energy projects. In some regions, water constraints are already
affecting the reliability of existing operations and they will introduce additional costs. Expanding
power generation and biofuels output underpin an 85% increase in the amount consumed (the
volume of water that is not returned to its source after use) through to 2035.

“Our analysis shows that in the absence of a concerted policy push, two-thirds of the economically
viable potential to improve energy efficiency will remain unrealised through to 2035. Action to
improve energy efficiency could delay the complete ‘lock-in’ of the allowable emissions of carbon
dioxide under a 2°C trajectory – which is currently set to happen in 2017 – until 2022, buying time to
secure a much-needed global climate agreement. It would also bring substantial energy security and
economic benefits, including cutting fuel bills by 20% on average,” said Fatih Birol, IEA Chief
Economist and the WEO’s lead author.

WEO-2012 presents the results of an Efficient World Scenario, which shows what energy efficiency
improvements can be achieved simply by adopting measures that are justified in economic terms.
Greater efforts on energy efficiency would cut the growth in global energy demand by half. Global oil
demand would peak before 2020 and be almost 13 mb/d lower by 2035, a reduction equal to the
current production of Russia and Norway combined. The accrued resources would facilitate a
gradual reorientation of the global economy, boosting cumulative economic output to 2035 by
$18 trillion, with the biggest gains in India, China, the United States and Europe.

http://www.worldenergyoutlook.org/media/weowebsite/2012/WEO2012Pressrelease.pdf

http://www.worldenergyoutlook.org/media/weowebsite/2012/factsheets.pdf