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transcript
RNC2050RNC2050
Evento temático do RNC2050
19 junho, 2018
Teatro Thalia, Lisboa
“A TRANSIÇÃO ENERGÉTICA
EM PORTUGAL E A
CONTRIBUIÇÃO PARA A
NEUTRALIDADE CARBÓNICA”
29/06/20181
RNC2050RNC205029/06/20182
PREVENÇÃO DE STRANDED ASSETS
Nicolette Bartlett, Carbon Disclosure Project
Evento temático do RNC2050
A TRANSIÇÃO ENERGÉTICA EM
PORTUGAL E A CONTRIBUIÇÃO
PARA A NEUTRALIDADE CARBÓNICA
www.cdp.net | @CDP Page 3
Portugal’s Energy Transition and
Stranded Assets
19 June 2018
Nicolette Bartlett
www.cdp.net | @CDP
CDP: Only Global Environmental Disclosure System
5,500Companies in more
than 80 countries
reporting – over half the
world’s market cap
308Cities sharing best practices – 440
million people, 61 leading megacities
66Global corporate supply
chains – US$1.15 trillion in
annual procurement
822Institutional investors requesting
information – a third of the
world’s investable capital
www.cdp.net | @CDP
Portugal’s energy transition
The future will not look like the past
There is only one direction of travel, it is a matter of speed
The risks and opportunities are increasing and are unpredictable
The bet you take now as an investor and as a government sets the
country up for failure or success (or something in between).
Stranded assets mean failure as your citizens will pay the price.
Page 5
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www.cdp.net | @CDP
Stranded Assets
‘Stranded assets’ are assets that have suffered from
unanticipated or premature write-downs, devaluations or
conversion to liabilities. They can be caused by a range of
environment-related risks and these risks are poorly
understood and regularly mispriced……..’
Smith School of Enterprise and the Environment, University of Oxford
Page 7
www.cdp.net | @CDP
Stranded Assets
Some of these risk factors include:
Environmental challenges (e.g. climate change, water constraints)
Changing resource landscapes (e.g. shale gas, phosphate)
New government regulations (e.g. carbon pricing, air pollution
regulation)
Falling clean technology costs (e.g. solar PV, onshore wind)
Evolving social norms (e.g. fossil fuel divestment campaign) and
consumer behaviour (e.g. certification schemes)
Litigation and changing statutory interpretations
Page 8
www.cdp.net | @CDP
Environmental challenges / physical risk
Water security.
Energy, Food and Materials – depend on a stable supply of good
quality fresh water.
On average - takes 32 megalitres to run a medium sized gold
mining operation for a day; 1,364 megalitres to run a 500 MW power
plant for a day; and 15,145 litres to produce 1 kilogram of beef.
Page 9
www.cdp.net | @CDP
Water stress
22% of the world’s 500 largest companies (Global 500)
reporting to investors that worsening water security will
constrain corporate growth within the next three years.
35% “exposure to water-related risk that could generate a
substantive change in their business, operations or
revenue.” CDP 2015
Page 10
www.cdp.net | @CDP
Water stress for the electric power sector in 2016 and 2030
Page 11
www.cdp.net | @CDP
Water resilience summary
Page 12
Metrics:
Thermal asset water stress exposure
Hydro asset water stress exposure
Water risk management
CompanyWater resilience
rankWater resilience grade
Verbund 1 A
SSE 2 B
Fortum 3 B
EnBW 4 C
RWE 5 C
EDF 6 C
ENGIE 7 C
Centrica (i) 8 C
E.ON 9 C
CEZ 10 D
EDP 11 D
Endesa 12 D
Iberdrola 13 E
Enel 14 E
(i) Centrica’s rankings are weighted differently as it has no hydro assets.
www.cdp.net | @CDP
Thermal asset water stress exposure
2016
2% of thermal generation
capacity situated in high
or extremely high water
stress areas.
2030
51% of assets expected to
remain online to be in high
or extremely high water
stress regions.
Page 13
www.cdp.net | @CDP
Transition risk
New government regulations
Falling clean technology costs
Evolving social norms
Litigation
Page 14
www.cdp.net | @CDP
Consistently getting it wrong
Transition risk and the The dangers of
modelling the future
using the assumptions
of the past.
Page 15
www.cdp.net | @CDP Page 16
www.cdp.net | @CDP Page 17
www.cdp.net | @CDP
What about the private sector?
www.cdp.net | @CDP
www.cdp.net | @CDP
www.cdp.net | @CDP Page 21
Updating model assumptions is critical
…..demonstrates the importance of using
latest available data and market trends in
energy modelling.
Applying up-to-date solar PV and EV
cost projections, along with climate
policy effort in line with the Nationally
Determined Contributions (NDCs),
should now be the starting point for any
scenario analysis.
This is not a radical disruptive scenario in
terms of its inputs, but a reflection of the
current state of play..
www.cdp.net | @CDP
Market dynamics could cause dramatic change
Page 22
Solar PV (with associated energy storage costs included) could supply 23% of
global power generation in 2040 and 29% by 2050, entirely phasing out coal
and leaving natural gas with just a 1% market share. ExxonMobil sees all
renewables supplying just 11% of global power generation by 2040.
EVs account for approximately 35% of the road transport market by 2035 –
BP put this figure at just 6% in its 2017 energy outlook. By 2050, EVs account
for over two-thirds of the road transport market. This growth trajectory sees
EVs displace approximately two million barrels of oil per day (mbd) in
2025 and 25mbd in 2050. To put these figures in context, the recent 2014-15
oil price collapse was the result of a two mbd (2%) shift in the supply-demand
balance.
www.cdp.net | @CDP
Fossil fuel demand
Page 23
Although this study focuses on the decarbonisation of the
global power and road transport sectors, which today
account for only 51% of global CO2emissions and fossil fuel
demand approximately, this scenario sees:
• Coal demand peaking in 2020;
• Oil demand peaking in 2020; and
• Gas demand growth curtailed.
www.cdp.net | @CDP
CDP Investor Research
Charged or static
Which European electric utilities are
prepared for a low carbon transition?
www.cdp.net | @CDP
League Table summary
Page 25
2017 League
Table rank
2015 League
Table rankCompany League Table score
Managing transition
risks
Managing physical
risks
Transition
opportunities
Climate governance
& strategy
1 3 Verbund 3.78 A A A B
2 1 Iberdrola 5.35 B E A A
3 7 Fortum 6.45 B B B D
4 4 Enel (i) 6.48 C E A B
5 11 SSE 6.51 C B C C
6 2 Centrica 6.65 B C D C
7 6 EDF 6.68 B C E B
8 5 EDP 6.72 D D A B
9 9 E.ON (i) 7.13 C C B C
10 8 ENGIE 7.98 C C D C
11 12 EnBW 8.22 E C C C
12 10 Endesa 8.66 D D C D
13 - CEZ 9.44 D D D E
14 13 RWE (i) 10.89 E C E E
Weighting: 35% 10% 30% 25%
(i) E.ON analysis includes 46.65% share of Uniper, RWE analysis includes 76.8% share of Innogy, Enel analysis includes 70.14% share of Endesa
www.cdp.net | @CDP
Estimated locked-in emissions relative to 2°C carbon budget (%)
Only three companies are likely
to remain within implied carbon
budgets by 2050.
The 14 companies are set to
exceed cumulative carbon
budgets by 14%, equating to 1.3
billion tonnes CO2e by 2050.
Early closure of fossil fuel plants
likely needed to achieve 2°C,
very limited scope for any new
fossil fuel assets without
significant coal closure or CCS.
Page 26
www.cdp.net | @CDP
Climate governance & strategy summary
Page 27
Metrics:
Emissions reduction targets
Board climate responsibility
Climate-related remuneration
Low carbon strategy
Use of an internal carbon price
CDP score
Carbon regulation supportiveness
CompanyClimate governance &
strategy rankClimate governance &
strategy grade
Iberdrola 1 A
EDP 2 B
Verbund 3 B
EDF 4 B
Enel 5 B
Centrica 6 C
SSE 7 C
ENGIE 8 C
EnBW 9 C
E.ON 10 C
Fortum 11 D
Endesa 12 D
RWE 13 E
CEZ 14 E
www.cdp.net | @CDP Page 28
Targets approved by the Science Based Targets Initiative
Source: Science Based Targets Initiative
CompanyHas an approved
science based target?Approved science based target details
EDP
Approved science based targetEDP commits to reduce scope 1 and 2 emissions from electricity production 55% per TWh by 2030, from 2015 levels. The company also commits to reduce absolute scope 3 emissions 25% over the same time period.
Enel Approved science based targetEnel commits to reduce CO2 emissions 25% per kWh by 2020, from a 2007 base-year. The target includes the decommissioning of 13 GW of fossil power plants in Italy, and is a milestone in the long term goal to operate in carbon neutrality by 2050.
Verbund Approved science based targetVerbund commits to reduce GHG emissions 90% by 2021 from a 2011 base-year (Scope 1, Scope 2, and scope 3 emissions from fuel-and-energy related activities and business air travel). This is a milestone in the long term goal to achieve carbon neutrality by 2050.
Iberdrola Committed companies
SSE Committed companies
www.cdp.net | @CDP
Gas being stranded?
Page 29
The Economics of Clean Energy Portfolios: How Renewable and Distributed Energy Resources Are Outcompeting and Can Strand Investment in Natural Gas-Fired Generation. Rocky Mountain Institute, 2018.
www.cdp.net | @CDP Page 30
www.cdp.net | @CDP Page 31
www.cdp.net | @CDP
What about fossil fuel
exploration and expansion for
global markets?
Page 32
www.cdp.net | @CDP
Mind the gap: the $1.6 trillion energy transition risk
Page 33
www.cdp.net | @CDP
Mind the Gap
Meeting demand in any of the three
scenarios will still require very
significant investment. Capital
expenditure on existing and new projects
in the period 2018-2025 amounts to
$3.3tr in the B2DS, $4.0tr in the SDS and
$4.8tr in the NPS.
Page 34
www.cdp.net | @CDP
Mind the Gap
Coal carries disproportionate
danger to the climate, but absolute
capex dollars are low compared to
oil and gas. Oil and gas account for
over 90% of total investment under
each scenario, and of the intervals
between each scenario.
New oil and gas projects are needed, but not
all of them. Material investment in new oil & gas
projects is required even in low demand
scenarios - $1.6tr in the B2DS and $2.1tr in the
SDS (2018-2025). However, given the
multitude of project options available, they
also carry the greatest risk. Nearly a quarter of
investment dollars in new projects that go ahead
in the NPS don’t fit in the SDS, and over 40% of
potential capex is surplus to requirements in the
B2DS.
Page 35
www.cdp.net | @CDP
Investor behaviour
Page 36
www.cdp.net | @CDP
Climate liability?
www.cdp.net | @CDP
What does all this mean?
The future will not look like the past
There is only one direction of travel, it is a matter of speed
The risks and opportunities are increasing and are unpredictable
The bet you take now as an investor and as a government sets the
country up for failure or success (or something in between).
Stranded assets mean failure as your citizens will pay the price.
Page 38
www.cdp.net | @CDP Page 39
Thank you
Nicolette.bartlett@cdp.net
RNC2050www.descarbonizar2050.pt