Global Energy Challenge

2. Total World Production and Consumption Oil and Natural Gas Production and Consumption Coal Production and Consumption Hydro and Nuclear Energy Consumption of the energy resources Global Current Energy Trends ENERGY CHALLENGE 2

3. Total World Production and Consumption ENERGY CHALLENGE 3 REGIONAL SHARE PRODUCTION Asia China Non OECD Europe and Eurasia Middle East OECD Total 13113 MTOE TOTAL FINAL CONSUMPTION OECD China Asia(Excluing China) Non-OECD Europe and Eurasia Africa Non-OECD Americas Middle East Bunkers TOTAL FINAL CONSUMPTION(FUEL) Oil Electricity Natural Gas Biofuels and Waste Caol/Peat Other TOTAL ENERGY PRODUCTION Biofuels and waste Hydro Nuclear Natural gas Oil Total 13113 MTOE

4. Oil Production and Consumption ENERGY CHALLENGE 4 13.10% 12.60% 9.30% 5.00% 4.50% 4.40% 3.90% 3.90% 3.70% 3.60% 36.00% 0.00% 10.00% 20.00% 30.00% 40.00% Saudi Arabia Russian Federation US China Iran Canada UAE Venezuela Kuwait Iraq Others CRUDE OIL PRODUCERSTotal 4142 Mt 353 247 122 121 11410893 89 82 79 574 NET EXPORTERS Saudi Arabia Russian Federation Iran Nigeria UAE Iraq Venezuela Kuwait Total 1982 Mt NET IMPORTERS USA China Japan India Korea Germany Italy France Total 2079 Mt

5. Natural Gas Production and Consumption ENERGY CHALLENGE 5 19.80% 19.10% 4.70% 4.60% 4.60% 3.30% 3.10% 2.80% 2.30% 2.20% 33.50% 0.00% 10.00% 20.00% 30.00% 40.00% USA Russian federation Qatar Iran Canada Norway China Saudi Arabia Netherlands Indonesia Others NATURAL GAS PRODUCERSTotal 3435 bcm Net exporters Russian Federation Qatar Norway Canada Algeria Turkemenistan Indonesia Netherlands Total 829 bcm Net importers Japan Germany Italy Korea Turkey USA France UK Total 827 bcm

6. Coal Production and Consumption ENERGY CHALLENGE 6 NET EXPORTERS USA Russian federation Qatar Iran Canada Norway China Saudi Arabia Total 1168 Mt NET IMPORTERS USA Russian federation Qatar Iran Canada Norway China Saudi Arabia Total 1188 Mt 45.30% 11.90% 7.60% 5.70% 5.40% 4.50% 3.30% 2.50% 1.80% 1.60% 10.40% 0.00% 20.00% 40.00% 60.00% China USA India Indonesia Australia Russian Federation South Africa Germany Poland Kazakhstan Others COAL PRODUCERS

7. Hydro and Nuclear Energy ENERGY CHALLENGE 7 NUCLEAR POWER PRODUCERS USA France Russian Federation Korea Germany Japan CanadaTotal 2584 TWh 79.40% 46.30% 29.80% 19.00% 18.90% 17.90% 14.70% 9.80% 1.80% 11.50% PERCENTAGE OF NUCLEAR IN TOTAL DOMESTIC ELECTRICITY GENERATION Hydro power producers China Brazil Canada US Russia Federation India Norway Total 3566 TWh 95.30% 80.60% 68.60% 59.00% 44.30% 15.90% 14.80% 12.40% 8.70% 7.90% 13.60% PERCENTAGE OF HYDRO IN TOTAL DOMESTIC ELECTRICITY GENERATION

8. Consumption of the energy resources ENERGY CHALLENGE 8 Production of biofuels and waste is high Other energy sources are being used extensively for electricity generation Efficiency of the other energy sources is low Coal and natural gas major chunk is being used for industrial use Transport also uses a major chunk of the energy Other includes geothermal, solar, wind, electricity and heat, etc. 80.7% 4.3% 0.4% 14.6% COAL Industry Non-Energy use Transport Other 62%17% 9%12% OIL Transport Non-energy use Industry Other 37% 12%7% 44% NATURAL GAS Industry Non-energy use Transport Other 43% 1% 56% ELECTRICITY Industry Transport Other Supply and Consumption Coal/peat Oil products Natural Gas Nuclear Hydro Biofuels and Waste Other Production 3850.54- 2805.35 674.01 300.17 1310.64 128.08 Imports 696.75 1077.39 865.3 - - 13.89 55.78 Exports -726.24 -1164.02 -861.72 - - -11.64 -55.82 Stock changes -44.99 3.05 -21.98 - - -0.74 - TPES 3776.06 -83.58 2786.95 674.01 300.17 1312.15 128.04 Transfers -0.34 195.38 - - - 0.02 - Statistical diff. -143.75 3.52 10.31 - - -0.08 -1.74 Electricity plants -2075.41 -203.82 -711.28 -670.42 -300.17 -81.07 1624.79 CHP plants -180.77 -25.55 -313.98 -3.57 - -42.75 329.47 Heat plants -109.45 -11.71 -92.93 -0.02 - -10.82 189.23 Blast furnaces -190.85 -0.61 -0.08 - - -0.06- Gas works -6.32 -3.82 3.18 - - -0.03 - Coke ovens(b) -59.09 -2.61- - - -0.02 - Oil refineries - 3989.31 -0.85 - - - - Petchem. plants - -31.81 - - - - - Liquefaction plants -17.55 - -10.74 - - - - Other transf. -0.06 -2.79 -3.59 - - -54.63 -0.35 Energy ind. own use -85.43 -206.71 -267.51 - - -10.77 -207.25 Losses -3.42 -0.69 -18.97 - - -0.19 -173.79 TFC 903.62 3614.51 1380.51 0 0 1111.75 1888.4 Industry 728.93 312.48 506.38 - - 198.15 800.14 Transport(c) 3.41 2265.21 92.52 - - 58.61 25.16 Other 132.05 435.55 610.23 - - 854.99 1063.11 Non-energy use 39.22 601.27 171.36 - - - -

9. Current Energy Trends ENERGY CHALLENGE 9 Hydraulic fracturing and other unconventional technologies has led to to oil and gas boom Unconventional sources are poised to be risky as requires continuous investment in drilling new wells Demand to actually decrease due to improved energy efficiency Massive deep-water oil resources unearthed by new seismic technologies making sixth largest producer by 2035 Government drive to promote sugar ethanol making it least carbon intensive World’s only source of low cost oil, to remain unchallenged by 2020 Will account for 10 percent of growth in energy demand through 2035 Two-thirds of world energy demand growth will come from Asia China will remain Asia's biggest market, but the volumetric growth in Indian demand is larger than that of China Hope to replicate US success but legal environment and oil service industry capacity The burden of costly fossil fuel imports will fall heavily on the European Union in the years ahead The price of natural gas in the EU is now triple the price in the United States; Japan is paying nearly five times as much Due to highly subsidised fossil fuels the energy mix to remain same Trucks, not cars, are behind the growing consumption of oil, so diesel demand to grow three times faster than demand for gasoline

10. Population Living standards / per capita consumption Industrial changes - coming up , growth Price changes ENERGY CHALLENGE 10

11. Population 7.1 Billion (in 2012) 8.3 Billion (in 2030) 1.2 Billion new energy users India takes over China to be the most populous country, after 2025 India’s population exceeds 1.5 Billion in 2035 Africa sees the fastest rate of growth Russia is the only major non OECD country that sees a decline in its population Population growth and income growth directly impacts energy use by effecting size and composition of energy demand and indirectly impacts it through its effect on economic growth Demand for energy will increase by approx.50% due to increase in the global population and the consumption patterns of an expanding middle class Share of the world’s population increases from 82% in 2010 to 85% in 2030 (in the developing countries) People in Urban areas use more energy GROWING WORLD POPULATION INCREASING URBANISATION 60 % of the world’s population will live in cities AGING SOCIETIES The median age will increase to 34 years INCOME GROWTH The world income is expected to double the 2011 levels in real terms Energy consumption increases by 1.6% p.a. adding 36% increase to global consumption by 2030 ENERGY CHALLENGE 11

12. Living standards / per capita consumption Per capita energy demand would be much higher in developed countries as per the projections Average per-capita energy demand in the OECD countries drops by 7% between 2010 and 2035, while it increases by 25% in the rest of the world INDIA Fastest increase occurs reaching 1.0 toe per person in 2035, still less than one- quarter of the current OECD average USA 7.0 toe per person in 2010 to 5.8 toe per person in 2035 CHINA Sees a large increase, rising to 2.8 toe per person in 2035. Its demand rises by 60% between 2010 and 2035 *OECD – Organisation for Economic Co=operation and Development *toe – tonne of oil equivalent – unit representing energy generated by burning tonne of oil equivalent World primary energy demand per unit of GDP and per capita in the New Policies Scenario in major countries *Source : World Energy Outlook 2012 – International Energy Agency ENERGY CHALLENGE 12 CONSUMPTION NON OECD Low and medium income economies – 90% of population growth Due to rapid industrialisation and urbanisation Contribute to 70% of global GDP growth and over 90% 0f global energy Demand OECD Shrinking Middle Class – Emergence of winner-takes-it-all economies Per capita income rises in lower-income countries than the high- income countries see only a marginal growth NON OECD Accounts to almost 93% of the energy consumption growth In 2030 energy consumption is 61% above the 2011 level Growth averages to 1.5% p.a. per capita which accounts for 65% of world consumption over 53% in 2011 OECD In 2030 energy consumption will be just 6% higher than in 2011 It will decline in per capita terms (-0.2% p.a. 2011-30).

13. Industrial changes - coming up , growth 0.00% 0.50% 1.00% 1.50% BulkChemical Industry Energy intensive Industry Non-Energy intensive Industry Non- Manufacturin gIndustry Industry Wise energy consumption ENERGY CHALLENGE 13 Energy consumption grows by 1.2% a year in Non-manufacturing industries like agriculture, construction, and mining The energy intensity decreases in agriculture and construction industries The intensity increases in the mining industry due to its shift towards energy intensive resources Energy consumption in Non-energy intensive industries: Grows by 1.11% a year in the period 2012 to 2040 The growth is more rapid in the period 2012 to 2025 (1.3% per year) than in the period 2025 to 2040 (0.8% per year) Energy consumption in Energy-intensive industries: Grows by 0.7% a year in the period 2012 to 2040 with most of the growth occurring in the period 2012 to 2025 Industry types - Refining, food, paper, bulk chemicals, glass, cement and lime, iron and steel, and aluminum industries Energy consumption grows by 0.87% a year in Bulk chemical industries which use liquid feedstock as energy HGL feedstock consumption grows by 0.73% Petroleum feedstock consumption grows by 2.51% a year from 2012 to 2040

14. Price changes ENERGY CHALLENGE 14 Oil Prices •After the financial crises of 2008, a general upward trend has been seen •As existing fields are depleted, the cost will rise to satiate the demand Steam Coal Prices •Domestic prices depend on indigenous production costs •Coal prices fall sharply in the energy efficient scenario because of policy actions to reduce CO2 emissions Natural Gas Prices •Hub based pricing in some countries •Oil price indexation remains a predominant method in many countries •In some areas like the Middle East and Russia, it is subsidised •Depends on competition with coal in power sector CO2 prices •Through Cap Trade Programs or Carbon Taxing •EU Emissions Trading System is currently the largest •New Zealand, Australia and California also have such programs •Korea plans to start it by 2015 and China included these plans in its 12th five year plan

15. Geopolitical Scenario Incentives given by Governments ENERGY CHALLENGE 15

16. Geopolitical Scenario ENERGY CHALLENGE 16 Increase in oil & natural gas production in US Attractive location for major Oil companies Major supplier of energy to Europe Shifting its focus to East Asia Supplies to Japan & china Decline in Exports to US Increasing capacity outside borders Rift between OPEC nations Focus on Indo-pacific region Large dependence on middle east Efforts to develop unconventional source of energy to meet future uncertainty Future ties with Russia India has a major reliance on Middle east for supply of crude Need to develop internal resources to meet rising demand By 2030, India will have the greatest demand for energy surpassing China

17. Incentives given by Governments Tax Incentives Rebates Early Retirement Programs Indirect Subsidies Subsidized Loans Property Accessed Clean Energy (PACE) financing On-Bill Financing Incentives given by governments across the globe to promote Clean and Efficient Energy Usage

18. Research and New Technologies Challenges ENERGY CHALLENGE 18

19. Researches and New Technologies Oil & Gas ENERGY CHALLENGE 19 OIL FROM BITUMINOUS SANDS SHALE GAS Key success Factors Improved Drilling Techniques No of patents doubled from 2005-2010 On going research on biofuels from algae Innovation in safety in deep sea drilling Natural Gas storage for vehicular consumption Minimizing the consequences of pipeline failures Investments • More than $1600 billion in 2013 • $130 million to improve efficiency • Investment in renewable sources of energy increased from $60 billion in 2000 to $250 billion in 2013 • By 2035 • Investment required to meet world’s energy: $2000 billion • Investment to improve efficiency: $550 billion 2X time 2000Indian Scenario Doubling the gas price Deregulation of petroleum Short-term measures Reserve to Production ratio: 20 years Gas reserves hit by fall in production at KG-D6 basin Only 22% of basinal area is well explored Expecting a boost in oil reserves with the implementation of OLAP

20. Challenges

21. Centralized utility grid includes large scale power generation, its transmission and distribution Proposed Model: Distributed generation focusses on generating power near to the point of consumption ENERGY CHALLENGE 21

22. Centralized utility grid includes large scale power generation, its transmission and distribution ENERGY CHALLENGE 22 Source:http://www.roymech.co.uk/Related/Electrics/Electrical_transmission.html CURRENT CENTRALIZED UTILITY GRID Large scale power generation plants set up near the source of energy resources Requires high investment but provides advantage of economies of scale Non renewable resources are still major sources of electricity production ISSUES WITH CENTRALIZED UTILITY GRID Transmission and distribution losses are very high Limited presence and costly extension of grid has resulted in 22% of world population with no electricity Load shedding and breakdown in grids result in power outages which cause economic losses Depletion of non renewable energy resources is a growing concern

23. Proposed Model: Distributed generation focusses on generating power near to the point of consumption ENERGY CHALLENGE 23 DEFINING DISTRIBUTED GENERATION Source: http://en.wikipedia.org/wiki/Distributed_generation, http://www.bain.com/publications/articles/distributed-energy-disrupting-the-utility-business- model.aspx, http://fresh-energy.org/2011/10/energy-101-what-in-the-world-is-distributed-generation/ Distributed generation is also called on-site generation, dispersed generation, embedded generation or decentralized generation Power generation is done near or at the site of consumption Distributed power systems may be off-grid or connected to the grid Both renewable and non renewable sources of energy can be used for power generation The scale can vary from being a micro grid to supply power to a medium sized society or a stand alone system for a single residence Can be used to provide continuous, intermittent, peak or even back-up power The size of a DG system typically ranges from less than a kilowatt to a few megawatts # Combined Heat and Power #

24. ENERGY CHALLENGE 24

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