The Global Energy Transition: Exploring the Uncertainty International Symposium, University of Tokyo, December 218 Paul Appleby BP Group Strategic Planning
How to handle the energy transition? Track the transition Explore the uncertainty scenarios Get on board: Advancing the energy transition Get into action do, learn, do
Tracking the transition
Primary energy fuel mix Consumption growth by fuel Shares of primary energy consumption Annual change, Mtoe 35 5% 3 25 2 15 1 5-5 Coal Nuclear Hydro Oil Renew. Gas 4% 3% 2% 1% Oil Coal Gas Hydro Nuclear Renew. -1 26-16 216 217 % 1965 1978 1991 24 217 Note: Oil includes biofuels BP Statistical Review of World Energy BP p.l.c. 218
Fuel shares in power generation Share 6% 5% Coal Non-fossil Oil & gas 4% 3% 2% 1% % 1997 1999 21 23 25 27 29 211 213 215 217 BP Statistical Review of World Energy BP p.l.c. 218
Exploring the uncertainty Scenarios are not about predicting the future, rather they are about perceiving futures in the present. The end result is not an accurate picture of tomorrow, but better decisions about the future. Peter Schwartz, The Art of the Long View
Alternative scenarios Primary energy consumption by fuel Carbon emissions Billion toe Billion tonnes CO2 2 24 4 35 15 Renewables 3 1 5 216 ET ICE ban Less RE gas push switch FT EFT Hydro Nuclear Coal Gas Oil 7 25 2 15 Evolving transition (ET) 1 Internal combustion engine ban (ICE ban) Less gas switching 5 Renewables push (RE push) Faster transition (FT) Even faster transition (EFT) 197 198 199 2 21 22 23 24 BP p.l.c. 218
Billion toe 2 Transport 15 1 Three windows on the energy transition Industry Non-combusted Buildings 2 15 1 Primary energy demand End-use sector Region Fuel Other Africa Other Asia India China OECD 2 15 1 Renewables Hydro Nuclear Coal Gas Oil 5 5 5 8 BP p.l.c. 218
Energy demand by sector Billion toe 2 Primary energy consumption by end use sector % per annum 5% Final energy consumption growth: non-combusted versus industry 15 Transport Industry Non-combusted Buildings 4% 3% Non-combusted Industry 1 2% 5 1% 197 198 199 2 21 22 23 24 % 197-198 198-199 199-2 2-21 21-22 22-23 23-24 9 BP p.l.c. 218
Energy demand in buildings Final energy consumption in buildings by fuel type Billion toe 3.5 3. 2.5 2. 1.5 1..5 Oil Gas Coal Electricity. 197 198 199 2 21 22 23 24 1 BP p.l.c. 218
Energy demand in buildings and transport sector Final energy consumption in buildings by fuel type Billion toe 3.5 3. 2.5 2. 1.5 1..5 Oil Gas Coal Electricity Billion toe 5 4 3 2 1 Contributions to transport energy consumption growth Income per head Population growth Efficiency gains. 197 198 199 2 21 22 23 24 216 24 11 BP p.l.c. 218
Billion toe 2 Transport 15 1 Three windows on the energy transition Industry Non-combusted Buildings 2 15 1 Primary energy demand End-use sector Region Fuel Other Africa Other Asia India China OECD 2 15 1 Renewables Hydro Nuclear Coal Gas Oil 5 5 5 12 BP p.l.c. 218
Regional energy demand Primary energy consumption by region Primary energy growth and regional contributions Billion toe 2 15 1 5 Other Africa Other Asia India China OECD % per annum 3.% 2.5% 2.% 1.5% 1.%.5%.% 197 198 199 2 21 22 23 24 -.5% 2-21 21-22 22-23 23-24 13 BP p.l.c. 218
Energy mix by region Billion toe 5 Primary energy demand by fuel and region Coal Oil Gas Nuclear Hydro Renewables 4 3 2 1 216 24 216 24 216 24 216 24 216 24 US EU China India Middle East 14 BP p.l.c. 218
Billion toe 2 Transport 15 1 Three windows on the energy transition Industry Non-combusted Buildings 2 15 1 Primary energy demand End-use sector Region Fuel Other Africa Other Asia India China OECD 2 15 1 Renewables Hydro Nuclear Coal Gas Oil 5 5 5 15 BP p.l.c. 218
Global energy by fuel Primary energy consumption by fuel Shares of primary energy Billion toe 2 15 1 Renewables Hydro Nuclear Coal Gas Oil 5% 4% 3% Oil Coal Hydro Gas Nuclear Renewables 2% 5 1% 197 198 199 2 21 22 23 24 % 197 198 199 2 21 22 23 24 16 BP p.l.c. 218
Diversified fuel mix Shares of primary energy 1% 8% 6% Oil Gas Coal Non-fossil 4% 2% % 19 192 194 196 198 2 22 24 17 BP p.l.c. 218
Billion toe 2 Transport 15 1 Three windows on the energy transition Industry Non-combusted Buildings 2 15 1 Primary energy demand End-use sector Region Fuel Other Africa Other Asia India China OECD 2 15 1 Renewables Hydro Nuclear Coal Gas Oil 5 5 5 18 BP p.l.c. 218
Five key questions Is the transition to a lower carbon energy system happening fast enough? What have we learnt about electric cars and the mobility revolution? When is global oil demand likely to stop growing? Just how fast will renewable energy grow? How resilient is the outlook for natural gas? 19 BP p.l.c. 218
Five key questions Is the transition to a lower carbon energy system happening fast enough? What have we learnt about electric cars and the mobility revolution? When is global oil demand likely to stop growing? Just how fast will renewable energy grow? How resilient is the outlook for natural gas? 2 BP p.l.c. 218
Carbon emissions continue to rise in the ET scenario Carbon emissions Carbon emissions in 24: EFT versus ET scenario Billion tonnes CO 2 4 Billion tonnes CO 2 4 Energy intensity Fuel switching 3 3 2 1 Evolving transition Faster transition 2 1 Power Other sectors CCUS Even faster transition 197 198 199 2 21 22 23 24 Evolving transition Even faster transition 21 BP p.l.c. 218
Impact of faster transition on global energy system Billion tonnes CO 2 in 24 Reductions in carbon emissions: EFT versus ET scenario 2 4 6 8 1 12 Billion toe 2 Primary energy consumption under different scenarios 24 Power CCUS Industry & Buildings 15 1 5 Renew. Hydro Nuclear Coal Gas Oil Transport 216 ET FT EFT 22 BP p.l.c. 218
Five key questions Is the transition to a lower carbon energy system happening fast enough? What have we learnt about electric cars and the mobility revolution? When is global oil demand likely to stop growing? Just how fast will renewable energy grow? How resilient is the outlook for natural gas? 23 BP p.l.c. 218
Penetration of electric cars in 24 BP p.l.c. 218
Penetration of electric cars in 24 Share of global car parc ~15% Share of Vkm ~3% BP p.l.c. 218
Electric cars, shared mobility and autonomy Trillion km Car kilometres by fuel type New mobility share of Vkm 4 Electricity 4% Private - autonomous 35 3 Gas Liquids 3% Shared - autonomous Shared - human driver 25 2 2% 15 1 1% 5 216 22 225 23 235 24 % 216 22 225 23 235 24 26 BP p.l.c. 218
Liquid fuel demand from passenger cars Mb/d 45 4 35 3 25 2 15 1 5 18.7 216 Growth in demand for travel Changes in liquids demand from cars: 216-24 2.5 22.6 18.2 Tightening in vehicle efficiency standards 2. Shared mobility EVs Switch to EVs Other gains in fuel efficiency 18.6 24 27 BP p.l.c. 218
Global ban on internal-combustion engine (ICE) cars Share Electric car sales as a share of total car sales Share Share of total passenger Vkm powered by electricity 1% 1% Evolving transition Evolving transition 8% ICE ban 8% ICE ban 6% 6% 4% 4% 2% 2% % 216 22 225 23 235 24 % 216 22 23 24 28 BP p.l.c. 218
Impact of ICE ban Mb/d 24 2 16 Passenger cars liquids demand Evolving transition ICE ban Carbon emissions from energy Billion tonnes CO 2 4 35 3 25 12 8 4 2 15 1 5 Evolving transition Even faster transition 216 Evolving transition ICE ban 216 24 199 2 21 22 23 24 29 BP p.l.c. 218
Impact of ICE ban Passenger cars liquids demand Carbon emissions from energy Mb/d Billion tonnes CO 2 24 2 16 Evolving transition ICE ban 4 35 3 25 12 8 4 2 15 1 5 Evolving transition ICE ban Even faster transition 216 Evolving transition ICE ban 216 24 199 2 21 22 23 24 3 BP p.l.c. 218
Five key questions Is the transition to a lower carbon energy system happening fast enough? What have we learnt about electric cars and the mobility revolution? When is global oil demand likely to stop growing? Just how fast will renewable energy grow? How resilient is the outlook for natural gas? 31 BP p.l.c. 218
Demand for oil and other liquid fuels Mb/d Liquids demand Mb/d, average annual growth Liquids demand growth 14 12 1 Cars Non-road Industry Power Trucks Non-combusted Buildings 2.5 2. 1.5 Power Industry Transport Buildings Non-combusted Total 8 6 1. 4.5 2. 2 21 22 23 24 -.5 25-21 21-215 215-22 22-225 225-23 23-235 235-24 32 BP p.l.c. 218
Demand for liquid fuels by scenario Liquids demand Mb/d 12 1 8 6 4 2 Evolving transition ICE ban Faster transition Even faster transition 197 198 199 2 21 22 23 24 33 BP p.l.c. 218
Demand for liquid fuels by scenario Liquids demand Mb/d 12 1 8 6 Evolving transition 4 ICE ban Faster transition 2 Even faster transition Supply with no investment (3% decline rate) 197 198 199 2 21 22 23 24 34 BP p.l.c. 218
Five key questions Is the transition to a lower carbon energy system happening fast enough? What have we learnt about electric cars and the mobility revolution? When is global oil demand likely to stop growing? Just how fast will renewable energy grow? How resilient is the outlook for natural gas? 35 BP p.l.c. 218
Rapid growth in renewable energy TWh, average annual growth Growth of renewable power Pace of power market penetration Largest gains in market share over 25 years, %pts 16 14 12 1 OECD China Other 2% 15% 8 6 1% Nuclear (1966-1991) Renewables (215-24) 4 5% Gas (1985-21) 2 2-216 216-23 23-24 % 36 BP p.l.c. 218
Renewables push scenario 1% Renewables share of power growth 216-24 8% 6% 4% 2% % Evolving transition Renewables push 37 BP p.l.c. 218
Renewables push scenario Renewables share of power growth 216-24 Change in carbon intensity of power 216-24 1% % 8% -2% 6% -4% 4% -6% 2% -8% % Evolving transition Renewables push -1% Evolving transition Renewables push Even faster transition 38 BP p.l.c. 218
Five key questions Is the transition to a lower carbon energy system happening fast enough? What have we learnt about electric cars and the mobility revolution? When is global oil demand likely to stop growing? Just how fast will renewable energy grow? How resilient is the outlook for natural gas? 39 BP p.l.c. 218
Growth in natural gas demand Gas consumption by region Gas consumption by sector Bcf/d Bcf/d 7 6 5 N America China Middle East Africa Europe India & Other Asia CIS Other 7 6 5 Transport Power Industry Buildings Non-combusted 4 4 3 3 2 2 1 1 216 24 216 24 4 BP p.l.c. 218
Possible risks to the outlook for natural gas Billion toe 2. 1.5 Gas demand increase 216-24 Industry Transport Power Buildings Non-combusted 1. Switching.5 Other effects. Evolving transition Less gas switch 41 BP p.l.c. 218
Possible risks to the outlook for natural gas Billion toe 2. 1.5 1. Gas demand increase 216-24 Industry Transport Power Buildings Non-combusted Switching % per annum -1% % 1% 1% 2% 2% Evolving transition Less gas switch Renewables push Gas demand growth 216-24.5. Evolving transition Less gas switch Other effects 42 Faster transition Even faster transition BP p.l.c. 218
The energy transition: mapping the uncertainty Some aspects of energy transition seem relatively likely: global energy demand continues to grow driven by increasing prosperity slower growth as we learn to do more with less increasing abundance and diversification of energy supplies renewable energy growing in importance oil and gas continue to play a central role in the global energy system Other aspects remain far more uncertain: impact of EVs and autonomy in reshaping transport sector role of natural gas and renewables in lower carbon transition how will we achieve a more decisive break from past to achieve sharp fall in carbon emissions? 43 BP p.l.c. 218
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The Global Energy Transition: Exploring the Uncertainty International Symposium, University of Tokyo, December 218 Paul Appleby BP Group Strategic Planning