World Energy Outlook 2006

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Only those regions that have the potential to produce biofuels without subsidy are expected to export. Most exports will probably take the form of ethanol derived from sugar cane, because there will be less need to subsidise it, compared with biodiesel, and because countries that subsidise biodiesel are unlikely to permit producers to export that fuel. Brazil is expected to remain the largest ethanol exporter over the projection period. Some developing Asian and African countries have ethanol production costs close to those of Brazil and may emerge as significant exporters in the coming decades, depending on domestic requirements and trade policies. Malaysia, Indonesia and the Philippines could become exporters of biodiesel derived largely from palm oil. The European Union and the United States may become sizable net importers of biofuels, especially in the Alternative Policy Scenario, as demand outstrips domestic production. The way international trade in biofuels develops will depend on whether trade barriers are removed, on subsidy policies and on timely investment in production facilities. In the Reference Scenario, existing biofuels policies are assumed to remain in place. A growing number of governments are actively supporting the development of the biofuels sector in recognition of the environmental benefits and energy-security benefits from reduced oil imports and from more diverse sources of energy supply. Although national circumstances vary markedly, in every country that has managed to develop a sizeable biofuels industry, strong government support has been required to kick-start the industry and bridge the gap between the market value of the fuel and its production cost. Government support can take various forms, including direct financial assistance to biorefiners and retailers in the form of grants, tax credits or cheap loans, subsidies to farmers, tax exemptions for flex-fuel vehicles and tax exemptions or rebates for biofuels. A number of countries have also set targets for the percentage and quantity of biofuels to be used in pure form or blended with conventional fuels. In some countries, fuel retailers are obliged to market particular blends, such as E20 in Brazil. A 2% biodiesel blend, which is currently voluntary, will become mandatory in that country from 2008. Mandatory fuel-mix requirements for oil companies are applied in 11 countries. Table 14.3 summarises the main measures currently in place in selected countries. In the Alternative Policy Scenario, new policy measures to encourage the production and use of biofuels, which are now being considered by governments around the world, are taken into account (see Part B). These include larger subsidies to producers and consumers of biofuels and flex-fuel vehicles, more extensive vehicle-purchase mandates and increased spending on research and development. Trade barriers for agricultural products are also assumed to be reduced. Such barriers are restricting access in many industrialised countries to imported biofuels, which is holding back the growth of the industry in countries with the lowest production costs. Chapter 14 - The Outlook for Biofuels 397 14
Table 14.3: Summary of Current Government Support Measures for Biofuels in Selected Countries/Regions Country Official targets* Production incentives Consumption incentives Brazil 40% rise in production, 2005-2010 Tax incentives for oil-seed production Tax exemptions for vehicles able to use (ethanol) Loan assistance E blends, and flex-fuel vehicles Reduced levels of industrial tax Fuel tax advantage over petrol Price controls US 2.78% for 2006 (ethanol) Tax credits Vehicle tax credits and fuel tax Producer payments exemptions Grant and loan programmes Subsidies on flex-fuel vehicles Government fleet requirement Loan assistance Canada 3.5% by 2010 (ethanol) Some provinces exempt ethanol from Exemption from excise tax road tax (CA$ 0.085/litre) Sweden 3% in 2005 (biofuels, Tax incentives for new plants Exemption from fuel excise duty by energy content) Access to EU Common Agricultural Policy (CAP) provisions Capital grants France 5.75% in 2008; Tax credits on equipment using Capped fuel tax exemptions 7% in 2010; 10% in 2015 (biofuels) renewable energy Quotas Tax penalty on refiners not using biofuels Access to EU CAP provisions Capital grants 398 World Energy Outlook 2006 - FOCUS ON KEY TOPICS
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INTERNATIONAL ENERGY AGENCY The Int
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It is possible to go further and fa
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Riccardo Quercioli, Julia Reinaud,
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Alternative Policy Scenario Tera Al
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John Mitchell Chatham House, UK Hos
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© OECD/IEA, 2007
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T A B L E O F C O N T E N T S PART
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Foreword 3 Acknowledgements 5 List
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8 9 Supply 179 Inter-Regional Trade
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13 14 Prospects for Nuclear Power 3
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List of Figures Chapter 1. Key Assu
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6.9 Impact of Carbon Value on Gener
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9.13 Growth in Road and Aviation Oi
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13.3 Shares of Nuclear Power in Ele
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Chapter 2. Global Energy Trends 2.1
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11.4 Change in Primary Energy Deman
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Chapter 3. Oil Market Outlook 3.1 C
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World Energy Outlook Series World E
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half of the increase in global prim
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Will the investment come? Meeting t
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World primary energy demand in 2030
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above $4.70 per MBtu. Nuclear power
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Larger energy savings would require
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© OECD/IEA, 2007
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would be needed (over and above tho
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© OECD/IEA, 2007
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Government Policies and Measures As
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over the projection period, as it d
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for heating, and faster improvement
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Figure 1.2: Growth in Real GDP Per
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dollars per barrel Figure 1.3: Aver
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is assumed that available end-use t
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Demand Primary Energy Mix Global pr
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een revised down and that for coal
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Mtoe 10 000 8 000 6 000 4 000 2 000
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Figure 2.4: Fuel Shares in World Fi
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Table 2.2: Net Energy Imports by Ma
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capacity for oil, gas, coal and ele
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Exploration and development Explora
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China United States Middle East Ind
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illion tonnes 25 20 15 10 5 Figure
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© OECD/IEA, 2007
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Demand 1 Primary oil 2 demand is ex
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far the largest consumer. The econo
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new field wildcats, 1996-2005 log s
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Table 3.2: World Oil Supply (millio
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the Organization of the Petroleum E
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A lack of reliable information on p
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Table 3.3: Major New Oil-Sands Proj
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mb/d Figure 3.8: Non-Conventional O
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Investment Cumulative global invest
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amounts to around $260 billion. Inv
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Environmental policies and regulati
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growth marginally, pushing demand d
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© OECD/IEA, 2007
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Demand Primary gas consumption is p
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The long-term rate of increase in G
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cm Figure 4.3: Natural Gas Producti
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Table 4.2: Inter-Regional* Natural
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Box 4.1: LNG Set to Fill the Growin
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construction of upstream and downst
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investment is incremental and where
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Demand Global coal use is projected
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Figure 5.1: Share of Power Generati
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international demand. In contrast,
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Table 5.3: Hard Coal* Net Inter-Reg
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Consolidation of the mining industr
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� Exchange rates: A drop in the v
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Electricity Demand Outlook Global e
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TWh Figure 6.3: World Incremental E
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generating capacity from 364 GW in
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The share of non-hydro renewable so
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y insufficient LNG infrastructure.
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phase-out policies require 27 GW of
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illion dollars (2005) 5 000 4 000 3
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Increasing interconnection capacity
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(in year-2005 dollars). These refor
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Figure 6.17: Population without Ele
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© OECD/IEA, 2007
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© OECD/IEA, 2007
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� Policies encouraging more effic
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the additional policies and technol
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fossil-fuel and renewable energy so
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Table 7.1: Selected Policies Includ
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Energy Prices and Macroeconomic Ass
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lower cost than in the Reference Sc
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The reduction in the use of fossil
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global consumption of biomass is 58
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compared with 1.3% in the Reference
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production. For these reasons, we a
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mb/d Figure 7.7: Increase in Net Oi
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markets is significantly lower in t
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Production and Trade As in the Refe
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in the long run (in particular main
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Notwithstanding the rates of growth
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Figure 7.14: Global Savings in CO 2
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Investment in Energy-Supply Infrast
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Investment along the Electricity Ch
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Demand-Side Investment Additional d
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Figure 8.2: Demand-Side Investment
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Supply-Side Investment In the Alter
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Table 8.3: Cumulative Oil and Gas I
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and another to buy a car. But there
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Box 8.4: Energy Savings Programme i
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With the exception of China (where
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© OECD/IEA, 2007
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Power Generation Summary of Results
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Table 9.2 shows the changes in elec
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Nuclear power capacity rises to 519
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Biowaste Solar photovoltaic grammes
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The Alternative Policy Scenario ass
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As oil is the principal fuel in tra
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Fuel Economy Governments intervene
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The broad categories of policy ment
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millions 100 80 60 40 20 0 Figure 9
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period. The fleet grows most rapidl
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emissions alone (IPCC, 1999). Using
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greater use of biomass- and gas-fir
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energy-intensive processes in both
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more than 1 000 tce per tonne of st
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Almost all of the 21 Mtoe savings i
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which have much lower equipment own
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Policy Overview Policies taken into
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� Utility energy efficiency schem
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� Four-fifths of the energy and e
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Table 10.1: Most Effective Policies
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These examples reflect differences
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countries (for example in relation
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Gt of CO 2 Figure 10.2: Reduction i
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� Introduction of CO2 capture and
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Implications for Energy Security Th
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ole in power supply, if its costs c
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© OECD/IEA, 2007
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© OECD/IEA, 2007
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Introduction Since the first oil sh
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y about 60% of the increase in the
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second-largest consumer of gas - ga
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Figure 11.5: Change in Real Energy
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OECD, but remain large in some non-
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Figure 11.7: Economic Value of Ener
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Impact of Higher Energy Prices on D
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Figure 11.8: Increase in World Prim
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complicated by the role played by o
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crude oil price elasticity of fuel
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higher oil prices. Exceptional fact
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2004. It is projected to increase f
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to drive prices up. Demand appears
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on the results of our assessment of
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countries, a price increase directl
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toe per thousand dollars of GDP* 0.
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to examine the issue, reflecting th
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Table 11.5: IMF Analysis of the Mac
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actually did since 2002. 17 The ave
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0.9 percentage points higher in 200
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Most OECD countries have experience
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developing countries has risen by 4
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$0.2 trillion (see Chapter 8). The
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� The five years to 2010 will see
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spending of the 40 companies, accor
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downstream activities, including GT
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illion dollars Figure 12.4: Investm
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Table 12.2: Sanctioned and Planned
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While most upstream investment cont
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increasing by as much as 100% for a
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Figure 12.11: Availability of Petro
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and Africa account for 70% of total
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mb/d Figure 12.14: Cumulative Addit
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Figure 12.15: World Oil Refinery In
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Table 12.3: Natural Gas Liquefactio
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approved by the US Maritime Adminis
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The prospects for investment and pr
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Current Status of Nuclear Power Ren
Page 347 and 348: Nuclear Power Today Nuclear power p
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Page 387 and 388: Current Status of Biofuels Producti
Page 389 and 390: Czech Republic Ethanol Figure 14.1:
Page 391 and 392: Mtoe 20 16 12 8 4 0 } 95% growth 20
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Page 395 and 396: Prospects for Biofuels Production a
Page 397: 32% 28% 24% 20% 16% 12% 8% 4% 0% Fi
Page 401 and 402: Regional Trends Brazil Biofuels con
Page 403 and 404: Table 14.4: US Biofuels Production
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Page 424 and 425: Figure 15.1: Share of Traditional B
Page 426 and 427: 1.3 million people) are due to biom
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Page 430 and 431: Figure 15.5: Woodfuel Supply and De
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Page 434 and 435: Improving the Way Biomass is Used F
Page 436 and 437: In view of their ability to reduce
Page 438 and 439: Implications for Oil Demand LPG is
Page 440 and 441: 50% target 2015-2030 100% provision
Page 442 and 443: The trend worldwide is towards remo
Page 444 and 445: Box 15.3: The Role of Microfinance
Page 446: The benefit/cost ratio of governmen
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$46 billion in the power sector, bu
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Administration has increased public
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Brazil’s rate of population growt
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Outlook for Energy Demand Brazil’
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domestic oil production and increas
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Industrial energy demand grows by 1
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Table 16.5: Main Policies and Progr
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southeast regions of Brazil, which
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into the Reference Scenario. End-us
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Figure 16.8: Oil and Gas Fields and
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Table 16.8: Brazil’s Oil Producti
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Figure 16.10: Brazil’s Crude Oil
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Production and Imports Gas producti
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unit would be located off the coast
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This trend is bolstered by strong g
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Figure 16.13: Planned Infrastructur
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The construction of very large hydr
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Box 16.5: Prospects for Renewable E
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stronger policies to connect bagass
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Investment The cumulative amount of
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ANNEXES © OECD/IEA, 2007
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ANNEX A TABLES FOR REFERENCE AND AL
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Reference Scenario: World Electrici
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Reference Scenario: OECD Electricit
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Reference Scenario: OECD North Amer
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Reference Scenario: United States E
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Reference Scenario: OECD Pacific El
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Reference Scenario: Japan Electrici
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Reference Scenario: OECD Europe Ele
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Reference Scenario: European Union
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Reference Scenario: Transition Econ
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Reference Scenario: Russia Electric
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Reference Scenario: Developing Coun
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Reference Scenario: Developing Asia
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Reference Scenario: China Electrici
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Reference Scenario: India Electrici
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Reference Scenario: Latin America E
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Reference Scenario: Brazil Electric
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Reference Scenario: Middle East Ele
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Reference Scenario: Africa Electric
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Alternative Policy Scenario: World
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Alternative Policy Scenario: OECD E
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Alternative Policy Scenario: OECD N
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Alternative Policy Scenario: United
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Alternative Policy Scenario: OECD P
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Alternative Policy Scenario: Japan
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Alternative Policy Scenario: OECD E
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Alternative Policy Scenario: Europe
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Alternative Policy Scenario: Transi
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Alternative Policy Scenario: Russia
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Alternative Policy Scenario: Develo
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Alternative Policy Scenario: Develo
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Alternative Policy Scenario: China
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Alternative Policy Scenario: India
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Alternative Policy Scenario: Latin
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Alternative Policy Scenario: Brazil
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Alternative Policy Scenario: Middle
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Alternative Policy Scenario: Africa
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ANNEX B ELECTRICITY ACCESS In a con
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Table B1: Electricity Access in 200
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Annex C - Abbreviations and Definit
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Dimethyl Ether (DME) Clear, odourle
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Ligno-Cellulosic Technology Process
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China China refers to the People’
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APS Alternative Policy Scenario BAP
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RS Reference Scenario TFC total fin
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Annex E - References ANNEX E REFERE
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CHAPTER 7: Mapping a New Energy Fut
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Gielen, D. (2006), Energy Efficienc
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International Energy Agency (IEA)/U
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CHAPTER 14: The Outlook for Biofuel
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REN21 Renewable Energy Policy Netwo
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The Online Bookshop International E
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IEA PUBLICATIONS, 9, rue de la Féd
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