APPROACHES FOR USING SCENARIOS IN STRATEGIC DECISION- MAKING

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1 APPROACHES FOR USING SCENARIOS IN STRATEGIC DECISION- MAKING TCFD U.S. Scenario Analysis Conference Nathaniel Bullard May 1, 218

2 Analysis to help you understand the future of energy Clean Energy Advanced Transport Solar Wind Decentralized Energy Impact Storage Frontier on Power Power & Utilities Electrified Transport Impact on Transport Impact on oil demand Autonomous Driving Shared Mobility Commodities Emerging Technologies Carbon EU Power, US Power LNG &. Gas Oil & Products Internet of Things Machine Learning & Analytics Advanced Materials Impact on Industrials and Energy 1 May 1, 218

3 New Energy Outlook 2 May 1, 218

4 Principles for using climate scenarios Use a range of scenarios from multiple sources Ask what do I need to believe? for this to come true Be sceptical of futures that look just like the past Get the most up to date data and review often Identify climate risk primarily at a country level 3 May 1, 218

5 Principles for using climate scenarios Use a range of scenarios from multiple sources Ask what do I need to believe? for this to come true Be sceptical of futures that look just like the past Get the most up to date data and review often Identify climate risk primarily at a country level 4 May 1, 218

6 Many routes to meet two degree carbon budget Carbon emissions (MtCO2) 14, 12, 1, 8, 6, 4, 2, Source: Bloomberg New Energy Finance Note: data is for power sector only. 5 May 1, 218

7 and many tech pathways Installed capacity by technology, 24 Change in gas demand, % 1% 9% 8% 7% 6% Other Other renewables Solar Wind % 16% 14% 12% 1% 5% 4% 3% 2% 1% % NEO 217 IEA Current Policies IEA New Policies IEA 45 EIA Reference Hydro Nuclear Oil Gas Coal 8% 6% 4% 2% % NEO 217 IEA Current Policies IEA New Policies IEA Source: Bloomberg New Energy Finance, IEA, EIA; Note: solar includes PV & solar thermal; wind includes onshore and offshore wind. 6 May 1, 218

8 Principles for using climate scenarios Use a range of scenarios from multiple sources Ask what do I need to believe? for this to come true Be sceptical of futures that look just like the past Get the most up to date data and review often Identify climate risk primarily at a country level 7 May 1, 218

9 Key points Use a range of scenarios from multiple sources Ask what do I need to believe? for this to come true Be sceptical of futures that look just like the past Get the most up to date data and review often Identify climate risk primarily at a country level 8 May 1, 218

10 CCS is still found everywhere Company Role of CCS in forecast Bloomberg New Energy Finance IEA BP ExxonMobil Shell Statoil CCS not part of analysis 45 scenario: ( ) Carbon capture and storage (CCS) picking up in the 23s ( ); 7% of coal plants equipped with CCS New Policies scenario: <1, Mtce of coal demand for CCS/IGCC Base case: not clear Even Faster transition: more than a third of the carbon emissions from the remaining coal and gas power generation are capture and stored [Technological] Advances will promote ( ) emerging opportunities for technologies like carbon capture and storage (CCS). Mountains scenario: ( ) success of carbon capture and storage technologies. Oceans scenario: ( ) carbon capture and storage is delayed Reform scenario: Many successful [CCS] projects ( ) Renewal scenario: Significant growth [of CCS] ( ) 9 May 1, 218

11 Key points Use a range of scenarios from multiple sources Ask what do I need to believe? for this to come true Be sceptical of futures that look just like the past Get the most up to date data and review often Identify climate risk primarily at a country level 1 May 1, 218

12 Solar PV got cheap, and it will get cheaper Crystalline silicon solar PV experience curve $1/W 1976 $94.4/Watt 1985 $1/W $1/W 215 $ e $/W , 1, 1, 1,, Source: Bloomberg New Energy Finance Cumulative capacity (MW) $7.6 $5. $1.8 $ May 1, 218

13 Offshore wind turbine capacity by commissioning date Turbine capacity (MW) All projects Forecast 223, 1.9MW 222, 9.9MW 221, 9.MW 4 2 Annual average Source: Bloomberg New Energy Finance 12 May 1, 218 Note: X-axis denotes commissioning date. A project-weighted average was used for projects with multiple turbine models.

14 Lithium-ion battery prices, historical and forecast $/kwh 1, Source: Bloomberg New Energy Finance EVO 217; Note: Prices are an average of BEV and PHEV batteries and include both cell and pack costs. Cell costs alone will be lower. Historical prices are nominal, future ones are in real 216 U.S. dollars. 13 May 1, 218 BNEF observed values: annual lithium-ion battery price index average lithium-ion battery price: $19/kWh 23 average lithiumion battery price: $73/kWh BNEF observed values 19% learning rate

15 IEA solar capacity forecast evolution 1, 1,2 1,4 1, Global cumulative solar installations 1,6 1,4 1,2 1, Historical Note: Reference, New Policies Scenario 14 May 1, 218 Annual solar additions GW per year Source: IEA World Energy Outlook

16 IEA solar capacity forecast evolution 1, 1,2 1,4 1, Global cumulative solar installations 1,6 1,4 1,2 1, Historical Note: Reference, New Policies Scenario 15 May 1, 218 Annual solar additions GW per year Source: IEA World Energy Outlook

17 IEA solar capacity forecast evolution 1, 1,2 1,4 1, Global cumulative solar installations 1,6 1,4 1,2 1, Historical Note: Reference, New Policies Scenario 16 May 1, 218 Annual solar additions GW per year Source: IEA World Energy Outlook

18 IEA solar capacity forecast evolution 1, 1,2 1,4 1, Global cumulative solar installations 1,6 1,4 1,2 1, Historical Note: Reference, New Policies Scenario 17 May 1, 218 Annual solar additions GW per year Source: IEA World Energy Outlook

19 IEA solar capacity forecast evolution 1, 1,2 1,4 1, Global cumulative solar installations 1,6 1,4 1,2 1, Historical Note: Reference, New Policies Scenario 18 May 1, 218 Annual solar additions GW per year Source: IEA World Energy Outlook

20 IEA solar capacity forecast evolution 1, 1,2 1,4 1, Global cumulative solar installations 1,6 1,4 1,2 1, Historical Note: Reference, New Policies Scenario 19 May 1, 218 Annual solar additions GW per year Source: IEA World Energy Outlook

21 IEA solar capacity forecast evolution 1, 1,2 1,4 1, Global cumulative solar installations 1,6 1,4 1,2 1, Historical Note: Reference, New Policies Scenario 2 May 1, 218 Annual solar additions GW per year Source: IEA World Energy Outlook

22 IEA solar capacity forecast evolution 1, 1,2 1,4 1, Global cumulative solar installations 1,6 1,4 1,2 1, Note: Reference, New Policies Scenario 21 May 1, 218 Annual solar additions GW per year Historical Source: IEA World Energy Outlook

23 IEA solar capacity forecast evolution 1, 1,2 1,4 1, Global cumulative solar installations 1,6 1,4 1,2 1, Historical Note: Reference, New Policies Scenario 22 May 1, 218 Annual solar additions GW per year Source: IEA World Energy Outlook

24 IEA solar capacity forecast evolution 1, 1,2 1,4 1, Global cumulative solar installations 1,6 1,4 1,2 1, Historical Note: Reference, New Policies Scenario 23 May 1, 218 Annual solar additions GW per year Source: IEA World Energy Outlook

25 IEA solar capacity forecast evolution 1, 1,2 1,4 1, Global cumulative solar installations 1,6 1,4 1,2 1, Historical Note: Reference, New Policies Scenario 24 May 1, 218 Annual solar additions GW per year Source: IEA World Energy Outlook

26 IEA solar capacity forecast evolution 1, 1,2 1,4 1, Global cumulative solar installations 5, 4, 3, 2, 1, BNEF NEO Annual solar additions GW per year BNEF NEO Historical Note: Reference, New Policies Scenario Source: IEA World Energy Outlook 25 May 1, 218

27 Electric vehicle projections EV fleet size - millions OPEC Source: Bloomberg New Energy Finance, BP, OPEC, Exxon, IEA May 1, 218

28 Electric vehicle projections EV fleet size - millions BNEF OPEC Source: Bloomberg New Energy Finance, BP, OPEC, Exxon, IEA May 1, 218

29 Electric vehicle projections EV fleet size - millions 6 5 BNEF OPEC OPEC Source: Bloomberg New Energy Finance, BP, OPEC, Exxon, IEA May 1, 218

30 Electric vehicle projections EV fleet size - millions 6 5 BNEF BNEF OPEC OPEC Source: Bloomberg New Energy Finance, BP, OPEC, Exxon, IEA May 1, 218

31 Electric vehicle projections EV fleet size - millions Source: Bloomberg New Energy Finance, BP, OPEC, Exxon, IEA 35 4 BNEF 216 BNEF 217 BP 216 BP 217 Exxon 216 Exxon 217 OPEC 215 OPEC 216 IEA 216 IEA May 1, 218

32 Key points Use a range of scenarios from multiple sources Ask what do I need to believe? for this to come true Be sceptical of futures that look just like the past Get the most up to date data and review often Identify climate risk primarily at a country level 31 May 1, 218

33 Which Paris targets pose the greatest risk for business? Source: Bloomberg New Energy Finance Note:*energy -related emissions only. U.S. 23 target is extrapolated based on target trend to May 1, 218

34 Key points Use a range of scenarios from multiple sources Ask what do I need to believe? for this to come true Be sceptical of futures that look just like the past Get the most up to date data and review often Identify climate risk primarily at a country level 33 May 1, 218

35 Copyright and disclaimer This publication is the copyright of Bloomberg New Energy Finance. No portion of this document may be photocopied, reproduced, scanned into an electronic system or transmitted, forwarded or distributed in any way without prior consent of Bloomberg New Energy Finance. The information contained in this publication is derived from carefully selected sources we believe are reasonable. We do not guarantee its accuracy or completeness and nothing in this document shall be construed to be a representation of such a guarantee. Any opinions expressed reflect the current judgment of the author of the relevant article or features, and does not necessarily reflect the opinion of Bloomberg New Energy Finance, Bloomberg Finance L.P., Bloomberg L.P. or any of their affiliates ("Bloomberg"). The opinions presented are subject to change without notice. Bloomberg accepts no responsibility for any liability arising from use of this document or its contents. Nothing herein shall constitute or be construed as an offering of financial instruments, or as investment advice or recommendations by Bloomberg of an investment strategy or whether or not to "buy," "sell" or "hold" an investment. 34 May 1, 218

36 Coverage. Renewable Energy Power & Utilities Gas Carbon Markets & Climate Negotiations Energy Smart Technologies Storage Electric Vehicles Mobility and Autonomous Driving Frontier Power Emerging Technologies Nat Bullard Bloomberg New Energy Finance is a research firm that helps energy professionals generate opportunities. With a team of experts spread across six continents, BNEF provides independent analysis and insight, enabling decision-makers to navigate change in an evolving energy economy. BNEF research and analysis is accessible via web and mobile platforms, as well as on the Bloomberg Terminal.

APPROACHES FOR USING SCENARIOS IN STRATEGIC DECISION MAKING

APPROACHES FOR USING SCENARIOS IN STRATEGIC DECISION MAKING TCFD Seb Henbest @SebHenbest November 1, 2017 Analysis to help you understand the future of energy Solar Wind Power and Utilities Gas Carbon