The Global Energy Transition: Exploring the …...2018/12/03  · The Global Energy Transition: Exploring the Uncertainty International Symposium, University of Tokyo, December 2018

The Global Energy Transition: Exploring the Uncertainty

International Symposium, University of Tokyo, December 2018

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

© BP p.l.c. 2018

BP Statistical Review of World Energy

0%

10%

20%

30%

40%

50%

1965 1978 1991 2004 2017

Oil

Coal

Gas

Hydro

Nuclear

Renew.

Annual change, Mtoe

Consumption growth by fuel Shares of primary energy consumption

-100

-50

0

50

100

150

200

250

300

350

2006-16 2016 2017

Coal

Nuclear

Hydro

Oil

Renew.

Gas

Primary energy fuel mix

Note: Oil includes biofuels

© BP p.l.c. 2018

BP Statistical Review of World Energy

0%

10%

20%

30%

40%

50%

60%

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Coal Non-fossil Oil & gas

Fuel shares in power generation

Share

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’

© BP p.l.c. 2018

0

5

10

15

20

2016 ET ICEban

Lessgas

switch

REpush

FT EFT

Renewables

Hydro

Nuclear

Coal

Gas

Oil

7

Primary energy consumption by fuel Carbon emissions

0

5

10

15

20

25

30

35

40

1970 1980 1990 2000 2010 2020 2030 2040

Evolving transition (ET)Internal combustion engine ban (ICE ban)Less gas switchingRenewables push (RE push)Faster transition (FT)Even faster transition (EFT)

2040

Alternative scenarios

Billion toe Billion tonnes CO2

© BP p.l.c. 2018

0

5

10

15

20 Other

Africa

Other Asia

India

China

OECD

8

0

5

10

15

20Renewables

Hydro

NuclearCoalGas

Oil

Billion toe

0

5

10

15

20Transport

Industry

Non-combusted

Buildings

Primary energy demand

End-use sector Region Fuel

Three windows on the energy transition

© BP p.l.c. 2018

Energy demand by sector

9

Primary energy consumption by end use sector

Final energy consumption growth: non-combusted versus industry

% per annum

0

5

10

15

20

1970 1980 1990 2000 2010 2020 2030 2040

TransportIndustryNon-combustedBuildings

0%

1%

2%

3%

4%

5%

1970-1980

1980-1990

1990-2000

2000-2010

2010-2020

2020-2030

2030-2040

Non-combusted

Industry

Billion toe

© BP p.l.c. 2018

Energy demand in buildings

10

Billion toe

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1970 1980 1990 2000 2010 2020 2030 2040

Oil

Gas

Coal

Electricity

Final energy consumption in buildings by fuel type

© BP p.l.c. 2018

Energy demand in buildings and transport sector

11

Billion toeBillion toe

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1970 1980 1990 2000 2010 2020 2030 2040

Oil

Gas

Coal

Electricity

0

1

2

3

4

5

2016 2040

Income per head

Efficiency gains

Population growth

Contributions to transport energy consumption growth

Final energy consumption in buildings by fuel type

© BP p.l.c. 2018

0

5

10

15

20 Other

Africa

Other Asia

India

China

OECD

12

0

5

10

15

20Renewables

Hydro

NuclearCoalGas

Oil

Billion toe

0

5

10

15

20Transport

Industry

Non-combusted

Buildings

Primary energy demand

End-use sector Region Fuel

Three windows on the energy transition

© BP p.l.c. 2018

Regional energy demand

13

Primary energy consumption by region Primary energy growth and regional contributions

% per annum

0

5

10

15

20

1970 1980 1990 2000 2010 2020 2030 2040

Other

Africa

Other Asia

India

China

OECD

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

2000-2010 2010-2020 2020-2030 2030-2040

Billion toe

© BP p.l.c. 2018

Energy mix by region

14

Primary energy demand by fuel and regionBillion toe

0

1

2

3

4

5

2016 2040 2016 2040 2016 2040 2016 2040 2016 2040

Coal Oil Gas Nuclear Hydro Renewables

India China Middle EastEUUS

© BP p.l.c. 2018

0

5

10

15

20 Other

Africa

Other Asia

India

China

OECD

15

0

5

10

15

20Renewables

Hydro

NuclearCoalGas

Oil

Billion toe

0

5

10

15

20Transport

Industry

Non-combusted

Buildings

Primary energy demand

End-use sector Region Fuel

Three windows on the energy transition

© BP p.l.c. 2018

Global energy by fuel

16

Shares of primary energy

0

5

10

15

20

1970 1980 1990 2000 2010 2020 2030 2040

Renewables

Hydro

Nuclear

Coal

Gas

Oil

0%

10%

20%

30%

40%

50%

1970 1980 1990 2000 2010 2020 2030 2040

Oil GasCoal NuclearHydro Renewables

Primary energy consumption by fuel

Billion toe

© BP p.l.c. 2018

Diversified fuel mix

17

Shares of primary energy

0%

20%

40%

60%

80%

100%

1900 1920 1940 1960 1980 2000 2020 2040

Oil

Gas

Coal

Non-fossil

© BP p.l.c. 2018

0

5

10

15

20 Other

Africa

Other Asia

India

China

OECD

18

0

5

10

15

20Renewables

Hydro

NuclearCoalGas

Oil

Billion toe

0

5

10

15

20Transport

Industry

Non-combusted

Buildings

Primary energy demand

End-use sector Region Fuel

Three windows on the energy transition

© BP p.l.c. 2018

Five key questions

19

• 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?

© BP p.l.c. 2018

Five key questions

20

• 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?

© BP p.l.c. 2018

Carbon emissions continue to rise in the ET scenario

21

Billion tonnes CO2

Carbon emissions

0

10

20

30

40

1970 1980 1990 2000 2010 2020 2030 2040

Evolving transition

Faster transition

Even faster transition

Billion tonnes CO2

0

10

20

30

40

Evolving

transitionEven faster transition

Othersectors

CCUS

Power

Fuel switching

Carbon emissions in 2040: EFT versus ET scenario

Energyintensity

© BP p.l.c. 201822

0 2 4 6 8 10 12

Transport

Industry &Buildings

CCUS

Power

Billion tonnes CO2 in 2040

Reductions in carbon emissions:EFT versus ET scenario

Impact of faster transition on global energy system

Billion toe

0

5

10

15

20

2016 ET FT EFT

Renew.

Hydro

Nuclear

Coal

Gas

Oil

2040

Primary energy consumption under different scenarios

© BP p.l.c. 2018

Five key questions

23

• 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?

© BP p.l.c. 2018

Penetration of electric cars in 2040

© BP p.l.c. 2018

Penetration of electric cars in 2040

Share of global car parc

~15%

Share of Vkm

~30%

© BP p.l.c. 2018

Electric cars, shared mobility and autonomy

26

0

5

10

15

20

25

30

35

40

2016 2020 2025 2030 2035 2040

Electricity

Gas

Liquids

Trillion km

Car kilometres by fuel type

0%

10%

20%

30%

40%

2016 2020 2025 2030 2035 2040

Private - autonomous

Shared - autonomous

Shared - human driver

New mobility share of Vkm

© BP p.l.c. 2018

Liquid fuel demand from passenger cars

27

18.7

22.6 18.2

2.5

2.0

18.6

0

5

10

15

20

25

30

35

40

45

2016 Growth indemand for travel

Tightening in vehicleefficiency standards

Shared mobilityEVs

2040

Switch to EVs

Other gains in fuel efficiency

Changes in liquids demand from cars: 2016-2040

Mb/d

© BP p.l.c. 2018

Global ban on internal-combustion engine (ICE) cars

28

0%

20%

40%

60%

80%

100%

2016 2020 2025 2030 2035 2040

Evolving transition

ICE ban

0%

20%

40%

60%

80%

100%

2016 2020 2030 2040

Evolving transition

ICE ban

Electric car sales as a share of total car sales

Share of total passenger Vkm powered by electricityShareShare

© BP p.l.c. 2018

Impact of ICE ban

29

Passenger cars liquids demand

0

4

8

12

16

20

24

2016 Evolving transition ICE ban

Evolving transition

ICE ban

Carbon emissions from energy

0

5

10

15

20

25

30

35

40

1990 2000 2010 2020 2030 2040

Evolving transition

Even faster transition

2016 2040

Billion tonnes CO2Mb/d

© BP p.l.c. 2018

Impact of ICE ban

30

Passenger cars liquids demand

0

4

8

12

16

20

24

2016 Evolving transition ICE ban

Evolving transition

ICE ban

Carbon emissions from energy

0

5

10

15

20

25

30

35

40

1990 2000 2010 2020 2030 2040

Evolving transitionICE banEven faster transition

2016 2040

Mb/d Billion tonnes CO2

© BP p.l.c. 2018

Five key questions

31

• 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?

© BP p.l.c. 2018

Demand for oil and other liquid fuels

32

0

20

40

60

80

100

120

140

2000 2010 2020 2030 2040

Cars TrucksNon-road Non-combustedIndustry BuildingsPower

Liquids demand

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

2005- 2010

2010-2015

2015-2020

2020-2025

2025-2030

2030-2035

2035-2040

Power Buildings

Industry Non-combusted

Transport Total

Mb/d, average annual growthMb/d

Liquids demand growth

© BP p.l.c. 2018

Demand for liquid fuels by scenario

33

0

20

40

60

80

100

120

1970 1980 1990 2000 2010 2020 2030 2040

Evolving transition

ICE ban

Faster transition

Even faster transition

Liquids demand

Mb/d

© BP p.l.c. 2018

Demand for liquid fuels by scenario

34

0

20

40

60

80

100

120

1970 1980 1990 2000 2010 2020 2030 2040

Evolving transition

ICE ban

Faster transition

Even faster transition

Supply with no investment

Liquids demand

(3% decline rate)

Mb/d

© BP p.l.c. 2018

Five key questions

35

• 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?

© BP p.l.c. 2018

Rapid growth in renewable energy

36

0

20

40

60

80

100

120

140

160

2000-2016 2016-2030 2030-2040

OECD

China

Other

0%

5%

10%

15%

20%

TWh, average annual growth Largest gains in market share over 25 years, %pts

Growth of renewable power Pace of power market penetration

Nuclear

(1966-1991)

Gas

(1985-2010)

Renewables

(2015-2040)

© BP p.l.c. 2018

‘Renewables push’ scenario

37

0%

20%

40%

60%

80%

100%

Evolvingtransition

Renewables push

Renewables share of power growth 2016-2040

© BP p.l.c. 2018

‘Renewables push’ scenario

38

0%

20%

40%

60%

80%

100%

Evolvingtransition

Renewables push

-100%

-80%

-60%

-40%

-20%

0%

Evolvingtransition

Renewables push

Evenfaster

transition

Change in carbon intensity of power2016-2040

Renewables share of power growth 2016-2040

© BP p.l.c. 2018

Five key questions

39

• 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?

© BP p.l.c. 2018

Growth in natural gas demand

40

0

100

200

300

400

500

600

700

2016 2040

Transport Buildings

Power Non-combusted

Industry

Gas consumption by sector

0

100

200

300

400

500

600

700

2016 2040

N America EuropeChina India & Other AsiaMiddle East CISAfrica Other

Gas consumption by region

Bcf/dBcf/d

© BP p.l.c. 2018

Possible risks to the outlook for natural gasGas demand increase

2016-2040

41

Billion toe

0.0

0.5

1.0

1.5

2.0

Evolvingtransition

Less gasswitch

Industry Buildings

Transport Non-combusted

Power

Switching

Other effects

© BP p.l.c. 2018

Possible risks to the outlook for natural gas

0.0

0.5

1.0

1.5

2.0

Evolvingtransition

Less gasswitch

Industry Buildings

Transport Non-combusted

Power

Gas demand increase2016-2040

42

-1% 0% 1% 1% 2% 2%

Evolvingtransition

Less gas switch

Renewables push

Faster transition

Even fastertransition

Gas demand growth2016-2040

Billion toe % per annum

Switching

Other effects

© BP p.l.c. 2018

The energy transition: mapping the uncertainty

43

• 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?

Advancing theenergy transition

www.bp.com/energytransition

Our strategy for the energy transition

45

Growinggas and

advantagedoil in the Upstream

Market ledgrowth in theDownstream

Venturing and low carbon across

multiple fronts

Modernisingthe whole

Group

Our commitment to advance a low carbon future

46

Creating and building low carbon businesses

Getting into action – Lightsource BP

Getting into action – Fulcrum Bioenergy

Getting into action – Chargemaster

Acquisition of the UK’s biggest electric vehicle charging network

The Global Energy Transition: Exploring the Uncertainty

International Symposium, University of Tokyo, December 2018

Paul Appleby– BP Group Strategic Planning