Each year the IEA publishes reports forecasting market trends and developments for the next five years concerning the primary energy sources for global markets: oil, coal, gas and renewables. In addition, a market report assesses energy efficiency. This year's series starts with Medium-Term Oil Market Report 2015, which Executive Director Maria van der Hoeven launched in London at Energy Intelligence's International Petroleum Week.
The medium-term reports aim to contribute to market transparency through a comprehensive analysis of the recent trends and future prospects in terms of global demand, supply, processing and trade for oil, coal and gas as well as analysing the current drivers and barriers influencing deployment of renewable energy worldwide. The series examines planned investment in new capacity and infrastructure, highlighting potential market pressures for the 2014-2019 period. Trends in price formation and inter-fuel substitution potential are also covered.
Although published at different times of the year, the medium-term reports are consistent in terms of broad economic, price and policy assumptions, providing an integrated view of energy development over the medium term.
In 2014, Medium-Term Gas Market Report and Medium-Term Oil Market Report were launched in June, and two months later saw the appearance of Medium-Term Renewable Energy Market Report, followed by the Energy Efficiency Market Report, and on 15 December, Medium-Term Coal Market Report. Medium-Term Oil Market Report 2014 is available for free download by clicking here.
The recent oil market sell‑off, brought on by deep imbalances after years of record-high prices, will likely prove a milestone in the history of oil. However prices eventually evolve, markets may never be the same. The 2015 edition of the Medium-Term Oil Market Report sizes up the magnitude of this transformation so far and sketches the oil landscape at the 2020 horizon.
It is not just oil price signals that have changed, but also the market’s responsiveness to them. On the supply side, this Report’s forecast reflects not just lower price assumptions, but also the high price-sensitivity of US light tight oil compared with conventional crude, as well as OPEC’s embrace of market forces in late 2014 in a bid for market share. On the demand front, it shows how the response to lower prices will differ in a low-growth, deflationary environment compared to a higher-growth one.
Not all factors can be easily predicted. Much hangs on the outcome of talks between Iran and the “P5+1”, on Islamist violence in oil-producing countries, and on future relations between Russia and the West. Such geopolitical risk factors are themselves a defining feature of the oil market for the medium term.
As in previous editions, this Report also offers key projections of global refining capacity, crude trade flows and product supply, this year with special focus on the impact of changing bunker fuel legislation.
Rarely has the oil market faced changes as sweeping as today. That makes the insights from the IEA Medium-Term Oil Market Report 2015 all the more timely and valuable.
The Medium-Term Gas Market Report provides a detailed analysis of demand, upstream investment and trade developments for the following five years that will shape the gas industry and the role of gas in the global energy system. The 2014 edition was launched on the 10 June, at the Conference of Montreal.
The Medium-Term Gas Market Report 2014 gives a detailed analysis of demand, supply and trade developments as well as infrastructure investments to meet the 2.2% annual growth in gas demand expected through 2019. It investigates the important changes that will transform the industry: rising regional disparities between gas-hungry regions such as China and the Middle East against weakening growth in the Former Soviet Union (FSU) and Europe; competition between FSU supplies and LNG from the United States and Australia, notably in Europe and Asia; the shift towards net imports in non-OECD Asia and Latin America; and uncertainty over whether Europe can ease its dependency on Russian gas. Besides enhanced coverage of gas in the power sector, this year’s report features special focuses on the potential of gas in maritime transport; the competition between oil and gas to meet fast-growing power consumption in the Middle East; the implications of Iran’s possible return to the international gas scene; and the interplay of natural gas liquids and natural gas in the United States.
Renewable power capacity expanded at its fastest pace to date in 2013. Renewable power generation continued to grow strongly, reaching almost 22% of the global mix, compared with 21% in 2012 and 18% in 2007. Globally, renewable electricity generation is now on par with that of natural gas, which remained relatively stable in 2013. Investment in new renewable power capacity topped USD 250 billion globally in 2013 and is likely to remain at high levels.
Nevertheless, policy and market risks increasingly cloud the development picture, raising concerns over how fast renewables can scale up to meet long-term deployment objectives. Just when renewables are becoming a cost-competitive option in an increasing number of cases, policy uncertainty is rising in some key OECD markets. Renewables continue to spread in emerging markets, where fast-growing power demand and diversification needs provide strong deployment drivers. Still, barriers to development remain in a number of non-OECD areas, including China. As a result, despite strong anticipated generation growth, renewable power capacity additions and investment are expected to level off through 2020. Meanwhile, biofuels for transport and renewables for heat continue to grow, though at slower rates than renewable electricity and with persistent policy challenges.
The Medium-Term Renewable Energy Market Report 2014 assesses market trends for renewables in the electricity, transport and heat sectors, identifying drivers and challenges to deployment, and making projections through 2020. The report presents for the first time an investment outlook for renewable power capacity, in addition to projections for renewable electricity technologies, a global biofuels supply forecast and extended analysis of final energy use of renewables for heat.
Energy efficiency has been referred to as a “hidden fuel”, one that extends energy supplies, increases energy security, lowers carbon emissions and generally supports sustainable economic growth. Yet it is hiding in plain sight: the global energy efficiency market is worth at least USD 310 billion a year and growing, according toEnergy Efficiency Market Report 2014. The report also finds that energy efficiency finance is becoming an established market segment, with innovative new products and standards helping to overcome risks and bringing stability and confidence to the market.
The evidence is clear: energy efficiency has played, and continues to play, a large and valuable role in the sustainable development of the global economy. Energy Efficiency Market Report 2014 includes an in-depth look at energy efficiency developments in the transport sector and in finance. Huge new waves of demand for mobility are emerging in OECD non-members, bringing with them the challenges of pollution and congestion already faced in OECD members. Fuel-economy standards and other policies are expected to help shape the market for more energy-efficient vehicles in the years to come. In financial markets, energy efficiency is becoming an important segment in its own right, aided by a growing range of financial products. The report documents the growing scale and diversity of energy efficiency products and actors.
Finally, Energy Efficiency Market Report 2014 reviews national energy efficiency market developments in various jurisdictions around the world, including Canada, China, the EU, India and Italy. These case studies provide snapshots of specific energy efficiency sub-markets and insights into how these markets may evolve in the coming years.
This is the second annual energy efficiency report. The first Energy Efficiency Market Report provided a practical basis for understanding energy efficiency market activities, a review of the methodological and practical challenges associated with measuring the market and its components, and statistical analysis of energy efficiency and its impact on energy demand. It also highlighted a specific technology sector in which there is significant energy efficiency market activity, in this instance appliances and information and communication technologies (ICT). The report also presented a selection of country case studies that illustrate current energy efficiency markets in specific sectors, and how they may evolve in the medium term.
Global demand for coal over the next five years will continue marching higher, breaking the 9-billion-tonne level by 2019, according to Medium-Term Coal Market Report 2014. The report notes that despite China’s efforts to moderate its coal consumption, it will still account for three-fifths of demand growth during the outlook period. Moreover, China will be joined by India, ASEAN countries and other countries in Asia as the main engines of growth in coal consumption, offsetting declines in Europe and the United States.
Global coal demand growth has been slowing in recent years, and the report sees that trend continuing. Coal demand will grow at an average rate of 2.1% per year through 2019, the report said. This compares to the 2013 report’s forecast of 2.3% for the five years through 2018 and the actual growth rate of 3.3% per year between 2010 and 2013.
As has been the case for more than a decade, the fate of the global coal market will be determined by China. The world’s biggest coal user, producer and importer has embarked on a campaign to diversify its energy supply and reduce its energy intensity, and the resulting increase in gas, nuclear and renewables will be staggering. However, the IEA report shows that despite these efforts, and under normal macroeconomic circumstances, Chinese coal consumption will not peak during the five-year outlook period.
Medium-Term Coal Market Report 2014’s forecasts come with considerable uncertainties, especially regarding the prospect of new policies affecting coal. Authorities in China as well as in key markets like Indonesia, Korea, Germany and India, have announced policy changes that could sharply affect coal market fundamentals. The possibility of these policy changes becoming reality is compounding uncertainty resulting from the current economic climate.
Medium-Term Coal Market Report 2014 is available for sale at the IEA Bookshop.
“How to fix the 21st Century’s dirty engine of growth” – a Huffington Post commentary by IEA Executive Director Maria van der Hoeven