Energy Policy

International Energy Agency's Jones and Wrake present strategies for clean energy development

How can technology help limit global temperature rise and enhance energy security? During today's E&ETV coverage of a Center for Strategic and International Studies event, representatives from the International Energy Agency present IEA's Energy Technology Perspectives for 2012. Panelists include Ambassador Richard Jones, deputy executive director at the International Energy Agency; Markus Wrake, senior energy analyst and ETP project lead; and David Pumphrey, deputy director and senior fellow at the CSIS Energy and National Security Program.


David Pumphrey: And it's really an honor to have with us Ambassador Dick Jones, who is the deputy executive director at the IEA, as well as, let's see if I can get it pronounced right, Nicholas, Nicholas Wrake. Was I close?

Markus Wrake: Wrake.

David Pumphrey: Markus, Markus, I'm sorry. I can't read either. To present the latest Energy Technology Perspectives publication by the IEA. And this is one of three or four kind of really flagship publications that the IEA puts out.

Of course, they do short-term work with the monthly oil market reports, some midterm reports which we had the presentation of the natural gas and renewables midterm and, of course, the World Energy Outlook is one of the other flagship publications.

But the Energy Technology Perspectives takes a bit of a different look at the energy futures that we have and really takes a focus on the technology side and perhaps less on the market side to look and see what is really possible and what's feasible and what is the state of play.

It comes out every two years, correct? And so it's been our pleasure to have the last two presentations here. And so I'm looking forward to having a good presentation this morning.

We will be doing questions and answers at the end, so if you can write down your questions as we go through, we'll be able to take them then. So, Ambassador Jones, if you'd like to get started?

Richard Jones: The IEA is launching this report at a critical time for the world's energy system. Midway through 2012 the challenges are clear. Energy demand and prices have been rising. Energy-related carbon dioxide, CO2 emissions have hit record highs.

Energy security concerns are at the forefront of the world's political agenda. On all of these scores ETP 2012 contains both good news and bad news for governments, industry and citizens.

The bad news is that the world is failing to tap technology's potential to create a clean energy future. But the good news is that we can turn affordable clean energy from aspiration into reality if we but tap that potential.

ETP 2012 looks ahead all the way to 2050. It shows us three dramatically different futures. One which we call the 2DS or 2 degree scenario, where the rise in average global temperatures is held to 2 degree scenario. One where average temperatures rise by 4 degree centigrade.

And finally a potentially devastating scenario where they rise 6 degree centigrade. The first path offers us the prospect of attaining the international goal of mitigating climate change by limiting the long-term increase in the average temperatures worldwide to 2 degree centigrade from pre-industrial levels.

This is the pathway to sustainability. However, for us to have an 80 percent chance of reaching this target, energy-related CO2 emissions must be cut worldwide by more than half between 2009 and 2050.

This 2 degree EPT scenario also outlines the technologies, policies and financing required to reach this goal. It provides tools and roadmaps which can guide our national policies towards a more sustainable future.

And here I would like to stress that a sustainable future is not just about reducing carbon emissions. ETP 2012 shows us a more secure, affordable alternative to our current path, one where countries harvest more of their indigenous energy, enhancing their energy security and creating lasting fuel savings that outweigh the costs of transitioning to a new lower carbon energy system.

Indeed, the biggest challenge as we see it to achieving a low carbon energy future is not its absolute cost or its technological difficulty. Rather it is agreement on how to share uneven costs and benefits of adopting clean energy technology across generations and geographically among countries in an equitable manner.

To make a successful transition from today's rising CO2 emissions to a world where they are cut in half in less than 40 years, we need to take action urgently. Are we on the right track to make this transition? The simple answer is no.

Under current policies, rather than a failing energy use and carbon dioxide emissions, it would actually increase by a third by 2020 and almost double by 2050. So instead of being cut in half, we're on a track to double the emissions.

Progress in rolling out clean technologies has simply been too slow and too piecemeal. Investment in fossil fuel technologies continues to outpace investment in cleaner technologies. Too little is being spent on developing, demonstrating and deploying clean energy technologies.

In fact, the share of energy-related investment in public research, development and deployment, RD&D as we call it, has fallen by two thirds since the 1980s. Such failures to embrace the full potential of clean energy technology and improving energy efficiency are very alarming.

And yet there is still time, time to achieve a low-carbon energy system, one that is likely to enhance energy security, underpin stable economic growth and safeguard the environment. Decisive, efficient and effective policies can still unleash the full power of technology to create a sustainable future.

Now, as I mentioned before, progress in rolling out clean energy has been too slow and piecemeal. In ETP 2012 we divided technologies into three categories to assess their performance. Some were on track, some just required a bit more effort, but the majority were off track.

Several of the most mature renewable technologies, like hydropower, the use of biomass, onshore wind and solar PV, photovoltaic technology, are on track. Fuel economy, electric vehicles and industry are improving, but more effort is needed in those areas.

However, unfortunately, a number of vital technologies, cleaner coal, nuclear power, carbon capture and storage, efficient buildings and biofuels for transport are simply off track. Let's be clear, while ambitious, a clean energy transition is still possible. However, action in all sectors will be necessary to reach the 2 degree scenario targets.

Indeed, progress in renewable power technologies has been quite positive. Hydro, biomass, wind and solar PV are broadly on track to achieving the 2 degree scenario goals as I mentioned. In particular, wind has progressed impressively. In fact, with 27 percent growth rates it is now the most competitive of renewable energy technologies.

Solar PV has been growing even faster in recent years, but, of course, from a much smaller base. It's registered 42 percent average growth over the last decade. This growth has been driven by strong policy support in some countries and impressive cost reductions.

Some countries have seen a 75 percent decrease in the cost of solar PV in just the last three years and this is the installed cost, it's not just the cost of the modules. It's the cost of everything for installation. So it's a huge, huge step forward for that technology in a very short time.

Of course, maintaining such progress will not be easy. Enhanced research development and demonstration is still needed for refining new generation technologies that are not advancing quickly enough. Some of these include concentrated solar power or solar thermal. Offshore wind is another area.

More mature renewable energy technologies must also continue to deploy to new markets with high resource potential. But just to repeat this book's high note, on the whole, renewable sources, particularly renewable sources of electricity generation, particularly wind and solar PV, are progressing quite well.

Well, public RD&D hit a high in 2009, it's the little spike there towards the end of the right side, and this was a result of economic stimulus spending. You can see that it declined again in 2010 to just a little bit more than 2008 levels. Now, preliminary 2011 data suggests that spending may again be on the rise, which would be good news.

But if you look at that graph, overall, the energy sector only accounts for about 4 percent of total government R&D spending. And it was 11 percent back in 1980. This weak support for energy R&D represents a major challenge given the strategic importance of the sector.

Coupled with continued measures aimed at fostering early deployment to provide opportunities for technology and learning and cost reduction from, for example, economies of scale for more mature technologies, targeted RD&D efforts are crucial for bringing early-stage clean energy technologies to market.

How can we overcome the obstacles on the road towards a clean energy future? ETP 2012 makes several recommendations on ways to transform our energy system. One key conclusion is that a sustainable energy system must be a smarter, more unified and integrated energy system. Today's system is centralized and one directional.

For example, power comes from a power plant to the consumers. It goes in one direction. But tomorrow's system, however, will be decentralized and multidirectional. Complex and diverse individual technologies will need to work together rather than in isolation.

This means that policies should be designed to address the needs of the energy system as a whole, rather than individual technologies. In short, our success will hinge on adopting systems thinking, which is more efficient because it identifies synergies and opportunities for savings across sectors and applications.

It also focuses fossil fuel use on those applications with the greatest intensity of energy use and emphasizes the efficiency of the service provided, rather than just the amount of energy consumed. And here I just want to emphasize that when it comes to our energy mix, we believe there's plenty of space for fossil fuels in our future.

What we're advocating is a more balanced system that makes us less reliant on them, but not in any stretch of the imagination do we think they can be eliminated. Now, ETP 2012 shows how investing in a transition to a clean energy future can payoff in many ways.

There are three key recommendations for government policymakers from ETP 2012 which can help turn the dream of a cleaner energy future into reality. First, we need to ensure that energy costs reflect the true cost of energy. This means pricing carbon and abolishing fossil fuel subsidies.

Fossil fuel subsidies, which in 2011 were at least seven times higher than governmental support worldwide for renewables. This will help level the playing field for clean energy technology and improve the climate for market-driven investment in this area. And you can see here the first recommendation is to create an investment climate of confidence in clean energy.

Second, governments at all level should act to help unlock the incredible potential of energy efficiency by adopting our 25 energy efficiency recommendations, which were originally developed for the G8, but have been endorsed by IEA ministers and others around the world. And they cover seven different sectors.

And third, we must accelerate energy innovation by increasing public support for research, development and demonstration, RD&D, to encourage private sector investment and facilitate widespread commercial penetration of clean, modern technologies. So that's a brief overview from the top. And now I'll let Markus take over and give you the nitty-gritty details.

Markus Wrake: Thanks. Morning everybody, thanks for coming. I'm Markus, so I'll zoom in and drill down a little bit on the details of ETP. I am the project leader of ETP, so I've been spending the better part of the last year and a half on this project. So it's great to be out talking about the results, rather than about what we intend to do.

So, zooming in on the U.S., this graph here shows CO2 emissions dropping by about 75 percent in the U.S. between now and 2050. At the bottom line there, that's the 2 degree scenario. That's a pathway that we set out in our 2DS, and then the wedges between there showed contributions from different sectors in achieving that scenario compared to the 4 degree scenario.

And the really two sectors that stand out for the U.S., the first is power generation, that is the case in almost all countries I would argue. And the second is transport, which is a particularly large contribution in the United States. So I'm going to talk a little bit in particular about these two sectors.

And if we start by looking at the electricity sector, this here you see the global picture. So this is how we envision the mix of fuels changing from 2009 to 2050 at the global level. And as you see, we have -- first of all, we have a great increase in electricity demand. So almost a doubling of electricity demand globally.

And second, the share of low carbon technologies and in particular renewable technologies will be rising rapidly. So we're going to go from a situation today where about a fifth of the electricity is generated through renewable technologies to over half. So we have 57 percent renewable power generation in 2050 at the global level.

So this brings us back to the message we heard Ambassador Jones touch on before and the need to change the overall functionality of the system to accommodate all these new sources of power generation. I'll come back to that in a minute.

If we look at the U.S. situation a bit more closely, this is a slide that some of you might have seen a couple of weeks ago when our colleagues from the medium-term renewables team were here presenting our just launched medium-term report for renewables where we look five years into the future, rather than 40.

And what you see is here is the wind capacity growth in the U.S. from 1998 through today. And then the red bars show our projections. And really the takeaway here is the effect of policy. And I've added a couple of arrows here showing what happened in the past as production tax credit has expired in the U.S.

And if you look at what we have, what we project for 2012 in terms of installed capacity and then you look at next year, 2013, most of that crash is due to the expected expiration of the PTC, the production tax credits, at the end of this year.

So, this uncertainty in policies is not unique to the U.S. by any means, so we see this pattern in many countries. But it just underlines the importance of some kind of certainty and predictability, in particular as policy is designed for these new technologies.

In the U.S., of course, we have a lot of portfolio standards at the state level that will support some of the growth that we see beyond 2013. But still, at the federal level, we see great uncertainty. And natural gas is an interesting fuel from many respects. And here you see the projected growth that we have in the U.S. for coal and gas.

And it's certainly true that in the short term, or even the medium term, natural gas provides huge benefits, both from an economic standpoint and from an environmental one. When it displaces coal as it to a large extent is doing here in the United States, the emissions reductions are impressive. We have reductions of CO2, but, of course, also other pollutants like sulfur and mercury.

So, the benefits are real and obvious. However, if you look at the long term, natural gas, the role of natural gas will change. And I'll just show you one slide to show you what I mean. What you see here is the CO2 intensity in renewable -- or sorry, in power generation at the global level and at different regional levels.

So the line graph here shows how many grams of CO2 is emitted in the 2 degree scenario per every kilowatt hour of electricity between now and 2050. So actually you see we're going to go from a situation where we have about 500 grams of carbon for every kilowatt hour to way below 100 in 2050.

And then the gray bands here in the middle of the graph shows the performance of two common kinds of natural gas-fired power generation. Open cycle gas turbine, which is the top one, that's the most flexible. It's often used to balance a power system. And combined cycle gas turbine, which is the top performing in terms of CO2 and efficiency technology that we have on the market today.

And, as you see, somewhere around 2025 and 2030, on average, the CO2 intensity needs to be below what natural gas can provide, unless we deploy CCS. So, at some point, natural gas, at least from this perspective, will go from being part of the solution to being part of the problem. And, of course, this raises questions around how we invest in infrastructure for gas.

If we really want to move to a very low carbon system, which is the 2 degree scenario, we're going to have to find a way to accommodate for decreased use of natural gas. So the power plants will run for fewer hours and provide more peak power, rather than baseload and so forth. We're going to have to find ways of using some of the infrastructure for other fuels.

It could be biogas or hydrogen in the future, unless we want to face the silent cost in these infrastructure systems. So, I think this is an important message to carry with you as we look at the role of natural gas. It's a nice segue to carbon capture and storage. You know, of course, this picture that I just showed you before could change if we can afford and if the progress on CCS is more -- is quicker than we expect in our scenario.

So CCS could play a major role in accommodating more fossil fuels. However, and Ambassador Jones already mentioned this, is progress on CCS, as you probably know, is disappointing so far. We're not making the progress as we hoped only a few years ago. And we've indeed decreased the rate at which we deploy carbon capture and storage in our scenarios.

However, we at the IEA still believe that CCS has got a large role to play, a critical role to play. The potential is great. And I guess there are two main messages to take away from this picture. One is that we need to ramp up CCS rapidly. We need to step up in particularly government efforts to demonstrate CCS in power generation.

We have quite a few good demonstration plants in industry, but so far no large-scale demonstration in power generation. So that's the first one. Second, CCS is not only about power generation as many people believe. It's also about industry. In fact, in industry CCS provides one of the few technologies beyond any efficiency that could in a significant way reduce emissions.

So without CCS it becomes very difficult to get rid of the emissions in industry. In power it's slightly different. We can see other solutions than CCS, but certainly it would become more costly, would put more pressure on other resources like biomass and so forth without CCS. Turning to transport, again, starting with the global picture.

This is sales of cars, passenger light-duty vehicles at the global level between now and 2050, split by technology. So, as you see, we're going to move not surprisingly from a system which is largely based on fossil fuels and internal combustion engines to one that where almost all cars that are sold in 2050 have some kind of electric motor into it.

So we see room for different pathways in different countries. So not all countries will, of course, have all these technologies. It doesn't make sense to have infrastructure in place for all these powertrain technologies. But certainly there is room for different pathways at the global level. Looking at the policies and the targets for particular electric vehicles, that brings a few interesting observations to the forefront.

So what we see here are the government targets for electric vehicle sales between now and 2020 when we add them up. So we've gone through all the country policy and the announced targets that countries have made for electric vehicles and we've added them up. And this is actually quite encouraging.

If these targets are realized, we're going to have about 20 million vehicles on the road by 2020, about 7 million vehicles sold in 2020. That's almost spot on what we have in our 2 degree scenario. So if we realize this, we're at the volumes needed to create the cost reductions. We can support the infrastructure that we need in the longer term and so on and so forth.

However, when we talk to our industry partners, the car manufacturers that we work very closely with when we develop our modeling, the picture is slightly different. So this is what they planned to produce when we asked them. This is the planned install capacity to produce electric vehicles in the same time period.

So of course the discrepancy is quite striking. So industry is planning for about a fifth of the sales in 2020 as the governments are announcing targets for. Of course, industry is flexible. They could adjust. So maybe this slide is slightly pessimistic, overly so. But it's still true that it takes time for industry to build new factories. It takes time to get the consumer confidence in place.

So really this is a general message, not only for electric vehicles, it's really important that governments back up their targets with credible policies so that industry believes that it makes sense to invest in the production capacity and the consumers believe that it makes sense to choose an electric vehicle over a conventional one.

So I think this is a very important message to our policymakers. In the short term, although electric vehicles is maybe more interesting from an academic standpoint and sort of more spectacular, in the short term in particular, fuel efficiency can play huge role.

And what you see in the left panel are the improvements of average fuel efficiency at the global level. The bottom, the blue line shows where we need to go in the 2 degree scenario. And the green line there shows what you can achieve just by better fuel economy. So that includes better fuel economy in conventional gasoline and diesel vehicles and hybrid vehicles.

So it doesn't include electric vehicles, no plug-in hybrids, no hydrogen, no fuel cells. So, as you see, we come a long way just with fuel efficiency. And to the right you see those fuel efficiency improvements translated into fuel savings. So of course, you know, you could have a lot of arguments on how you do this calculation.

But just to give you an order of magnitude, every day this would save about 11 million barrels of oil globally every day, just by fuel economy. However, this is not enough. As you see, we need to go further down than we have just by better fuel economy. And the answer to that is modal shift.

So looking at the U.S. picture here, we just saw the global picture, here's the U.S. And you see to the left the situation passenger mode share, so split by air, rail, buses and cars, in 2010 in the U.S. And as you see, it's mainly cars and airplanes. In the 4DS that picture is largely unchanged. We have an increased demand for travel in general.

We have an increased demand for air travel in particular. Through a bit of fuel economy we could achieve what I just showed you before. But if we're going to go all the way to the 2DS, we need to shift some of the travel in particular from cars to rail and buses. So that's the last remaining wedge there. That's all over and above of course what we can achieve with electric vehicles and hydrogen for example.

Turning to the building sector. It's certainly true that in almost all OSC countries the building sector contains huge potential for energy efficiency. The challenges in the OSC in particular is that a lot of the buildings are already built, so it's all about refurbishments. And here you see, just to illiterate that fact, you see the growth in households projected between now and 2050.

And, as you see, that's almost flat and that's a pretty good proxy for how many buildings we need to build. So, you know, a large portion of the buildings are already there, which has implications for what kind of policies would be effective to bring about, for example, improved efficiency buildings. If we look at the non-OSC world, the opposite is true.

So here you see the number of households and the growth of number of households in non-OSC countries. So, of course, here the challenges are completely different in some respects. It's about creating building codes for new buildings.

It's about incentivizing system integration so that the people that inhabit these buildings have a way of being efficient that's currently not possible for us in the OSC world. So, this is interesting when you look at what kind of policies could work in different contexts. Heating and cooling is a special feature of this year's edition of ETP.

We certainly believe that heating and cooling has not received the attention it should get, especially compared to electricity. Not many people, or not enough people I should say at least, realize that almost half of total demand for energy in the world is heating. So almost half of the energy we use is used for heating. Cooling is a smaller part.

But what's interesting is that the latent demand for cooling, we believe, is huge. When you're looking at the megatrends in the world right now, one is that most of the income growth and the population growth is going to happen in sunny and hot countries. And secondly, most of that growth is going to be in urban environments.

And one of the first things that people tend to buy as they grow richer, particularly if they're living in a city, is an air-conditioning unit. And if we continue to use the kind of air conditioning that we have here in this country and certainly most of the OSC, which is basically a fridge, that's going to create a huge increase in demand for energy just for cooling.

So we need to change the way that we cool our buildings. You know, it could be everything from better architecture as a passive cooling system, solar thermal cooling, district cooling networks and so forth. And certainly that's an area where we believe that we should keep a particular eye on what's happening in the cooling sector. Same is true for heating.

You know, we have a lot of inefficient heating in industry. There's a huge waste of heat. Power generation is probably the most obvious one, although we tend to forget about it. You know, more than half of the energy that we put into power generation is just wasted as heat. So we discard it into the atmosphere or cool it off in other ways.

But also in industry we could use some of the heat that goes out from one industry could be picked up by another, what's called cascading heat use, which could create quite large savings in the level of -- if we manage to integrate the system, that requires better coordination at the policy level and better planning among industry, which is a very steep challenge, that's got to be said.

One particular interesting development in the heating sector, and especially for buildings, is heat pumps, so electrifying heat. If we use heat pumps which is basically a fridge running in reverse where you pull heat from the ground or from the air, you add a little bit of electricity and you save about three quarters of the energy compared if you burn natural gas or something else to provide direct heating.

So that's a very efficient technology if used correctly. So we certainly have a large increase in the number of heat pumps used for heating in the residential sector. The flipside of that though is that it will create additional pressure, especially on peak demand for electricity.

So if everybody wakes up in the morning and turns on their heat pump, peak demand in the morning is going to go through the roof. And here I try to show that, you know, the dark green graph there shows what would happen in a stylized system if people just run their heat pump as they needed basically.

So you see sort of from midnight to the left, I've divided the day into four time slices. You see how this shoots up when people wake up in the morning and then again as they get home at night. Now, if you instead have some kind of fairly simple control system that evens out that demand, so we run the heat pumps a bit smarter, we might not wait until we wake up.

We could have something automatic that turns it on just before we wake up. You can have a little bit of storage. You could have control of your appliances, then you could shave about 30 percent off that peak demand. Which, at the individual level, might not mean so much, but at the system level that's hugely important.

It saves lots of money in terms of upstream capacity that otherwise would have to be built to supply that peak that you see there to the left there. So, I think we make a strong case in ETP that it's possible, from a technology standpoint, to realize the 2 degree scenario.

The obvious question of course that we always get is how much is this going to cost? Is it feasible from an economic standpoint? And what we try to do in order to at least provide half an answer to that question is we add up all the investments needed in the 2 degree scenario, in addition to what's needed in a scenario where climate policy and energy efficiency is not a priority, so in the 6 degree scenario.

And what we end up with are these quite staggering numbers. So we would need about US$36 trillion in addition invested in the energy system in the 2 degree scenario. That's a lot of money. But the good news is that if we add up the fuel savings that these investments would generate the numbers are even greater.

So, the top bar here shows the additional investments needed. The middle green/blue bar there shows the fuel savings that these investments could generate. Now, as you see on the net we have about a US$60 trillion saving. And even if you discount that at 10 percent, which is a fairly high discount rate from a social planner's perspective at least, we still end up with a US$5 trillion saving.

So when we do this over time we see that around 2025 or at least by 2030 the fuel savings have offset the additional upfront investment cost. So rather than focusing on the actual sort of specialized numbers here, I think the takeaway here is it's very difficult I would argue to make the case that it's impossible to realize the 2 degree scenario from an absolute cost perspective.

That is a very difficult argument to make. It's very difficult to say that it's impossible from a technology standpoint. However, the main barrier or at least one of the huge barriers is the fact that these costs or benefits are very unevenly distributed.

So they're unevenly distributed over time, so it's not obviously the case that the people that need to put up the money up front will see the benefits. It's not necessarily the case that the countries that need to put in the investments will see the benefits. So these uneven distributions of these costs and benefits are, I think, the key to unlock.

And that's why the role of governments and international collaboration is so important to realize this scenario. I'd like to close just by a little demo of a new feature of ETP. One of the first things that I did when I joined the IEA and took over this project was we did a survey with our stakeholders and asked them what would be the most important value added for this project for you?

And by far the most common answer was, well, the IEA, I'm sure you do great analysis. But it's very difficult to understand what you do. So the transparency issue is a big one. And secondly, could it be possible to make the data available so we could use it and play with it ourselves? That would also be a great benefit.

So, what we've done now is try to address at least some of that concern and I'll show you just one component of that which is our new website. So there's two components to this. One is a data visualization tool, so this is all available. You can just go to the IEA website and click your way to ETP.

This is an effort from us to try and make the data more understandable for our users. So what you see here is a slightly messier picture, I'll try to make it less messy in a minute, is the flow of energy at the global level. And to the left you have the input, the supply of fuels. You have coal, natural gas, biomass and so forth.

You have the transformation of those fuels in the middle and then you have the end-use sectors to the right, so where those fuels go. So what you can do here is you can zoom in, for example on the power and heat sector. So here you see the flows of energy that goes into power and heat and then where that energy goes.

I guess the striking here is all the losses that I talked about before, how a large part of the energy that's actually just lost and wasted. You could zoom in on one particular sector, so choosing for example industry here. You can see where energy is getting its energy from. You can do this for different years. So here I actually show the 2050 situation, but you could do this for our different time periods so you can see how things change.

You can zoom, zoom in, you know, you can take one sector. So looking here at transport. In 2009 you see here where, for example, passenger travel gets its energy from. It's all oil, not surprisingly. And then you can see how this changes. So just playing this little movie here you can see how the share of oil that goes into transport gradually decreases out to 2050.

And all of this is an attempt from us to make it more easy to understand what's behind this. And all the data behind this is downloadable, so you can just click here and get the data behind it. Another way of showing what we're trying to do in our scenario is to zoom in on the actual emissions scenarios and what the contribution of different technologies could be to realize these.

So here we're looking at the world. At the top here you'll see emissions trajectory in the 6 degree scenario. So at the Y axis you have gigatons emissions of CO2. And then you have -- you can choose different technology. Here I've chosen carbon capture and storage and renewable energy. If I add end-use energy efficiency, you see how the emissions drop.

You can do this by sector, so if you click at the world and you choose United States instead, you see here the same picture, but for the United States. So you can choose here, well, I don't believe in CCS. I'll take that out and you see how the emissions rise. So all of this, we hope that this will form a better understanding and in the end, of course, better informed policymaking.

We have a special feature on transport also. I won't show that now, but where you can just -- you can look at the development of stocks of different vehicles and fuel efficiency and so forth between now and 2050. And for those of you who are lucky enough to have the book, you also have a little password there that you can go in into another area of the website.

You can download all the figures and all the data behind the graphs in the publication and play around with it yourself. So that's an effort to increase the transparency. So I hope that gives you an idea of what we're trying to do and with that, I hand over to David again. Thanks.

David Pumphrey: Thank you, Markus. That's a great presentation and I think that tools you were showing at the end are really an important benefit from this work, because it does help to visualize and to actually begin to work with it for people who really want to understand more deeply.

And I think it's a great way to add access to the IEA and for the IEA to be making it available to the world. So, Ambassador Jones, that's great. So, we have a few ground rules which most of you know I'm sure in terms of our question-and-answer sessions, is that we like you to identify yourself when you stand up and, if possible, if you can end up with a question.

And the way you ask it, it's always helpful if you have a statement to make you might end just with an inflection at the end to say am I right or not?

I was going to start though with a question, because I think one of the most -- given the debate that's been going on here about whether or not we can afford to make the transformation, and that's really been dominating the debate, I think your numbers at the end on the investments versus fuel savings, as well as discount rates, are very striking.

And I was just wondering if you would elaborate a little bit more on sort of how those fuel savings -- that aspect of it is derived. Is it through the efficiency side or is it through different price trajectories that result from the transformation?

Markus Wrake: They come from both I should say. You know, the fuel savings, the end-use efficiency is hugely important. You know, I showed the case of transport, but the same is true in industry and power generation where the end-use efficiency improvements in the building sector creates large savings in the upstream part of it.

So, a large chunk of those savings are just through energy efficiency. What I didn't talk about were the price assumptions behind that and that's obviously very important. So we, in fact in that slide I showed, we assume the same price levels in both scenarios.

So we have the oil price going in the 6 degree scenario from today's levels up to about $150 a barrel. We assume the same price development in the numbers that I showed you before. So we would pay the same money for oil in the 2 degree scenario, which obviously is not very realistic.

As we raise demand we're likely to see a reduced price level of oil as well, and also other fuels. And, in fact, if you add -- you know, we've done projections, what would happen to those prices as demand falls. And if you add that in, the fuel savings actually jump another 50 percent, because not only do we buy less fossil fuels or other fuels, we also pay less for the fuel that we actually buy.

Of course, this is driven by policy to a large extent. You know the cost reductions that we're seeing in technologies are driven by policy, but also there needs to be a price, and particularly on carbon, that safeguards against some of the rebound effects that we will otherwise have.

But to put it very simply, we're going to pay more for our own technology development than some -- you know, there could also be some more to our governments, rather than shipping money to the oil and gas exporting countries overseas. So that's a large change in these scenarios.

[End of Audio]



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