© BP p.l.c. 2018
Spencer DaleGroup chief economist
BP Energy Outlook2018 edition
© BP p.l.c. 2018
0
5
10
15
20
2016 ET ICEban
Lessgas
switch
REpush
FT EFT
Renewables
Hydro
Nuclear
Coal
Gas
Oil
2
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
2016 ET ICEban
Lessgas
switch
REpush
FT EFT
Renewables
Hydro
Nuclear
Coal
Gas
Oil
3
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
4
0
5
10
15
20RenewablesHydroNuclear
Coal
GasOil
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
Conventional
LNG
Russian pipeline
5
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
World China India Africa OECD Other
Productivity
Population
1990-2016
2016-2040
Economic backdrop
GDP growth by region and factor
% per annum
© BP p.l.c. 2018
0
5
10
15
20 Other
Africa
Other Asia
India
China
OECD
6
0
5
10
15
20RenewablesHydroNuclear
Coal
GasOil
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
7
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
8
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
9
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
Regional energy demand
10
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
Differences in the fuel mix across regions
11
Billion toe
0
1
2
3
4
5
201
6
204
0
201
6
204
0
201
6
204
0
201
6
204
0
201
6
204
0
Coal Oil Gas Hydro Nuclear Renewables
US EU China India Middle East
Primary energy demand by fuel and region
© BP p.l.c. 2018
0
5
10
15
20 Other
Africa
Other Asia
India
China
OECD
12
0
5
10
15
20RenewablesHydroNuclear
Coal
GasOil
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
13
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
14
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
15
0
5
10
15
20RenewablesHydroNuclear
Coal
GasOil
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
16
• 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?
• Is the transition to a lower carbon energy system happening fast enough?
© BP p.l.c. 2018
Five key questions
17
• 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?
• Is the transition to a lower carbon energy system happening fast enough?
© 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
20
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
21
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
22
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 Vkmpowered by electricityShareShare
© BP p.l.c. 2018
Impact of ICE ban
23
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
24
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
25
• 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?
• Is the transition to a lower carbon energy system happening fast enough?
© BP p.l.c. 2018
Demand for oil and other liquid fuels
26
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 oil and other liquid fuels
27
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 oil and other liquid fuels
28
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
US tight oil: alternative scenarios
29
0
2
4
6
8
10
12
14
16
18
2010 2015 2020 2025 2030 2035 2040
0
200
400
600
800
1000
1200
2010 2015 2020 2025 2030 2035 2040
US tight oil production Number of US oil rigs (in the four main producing regions*)
Evolving transition Evolving
transition
Mb/d
*Permian, Eagle Ford, Bakken and Niobrara
© BP p.l.c. 201830
0
2
4
6
8
10
12
14
16
18
2010 2015 2020 2025 2030 2035 2040
0
200
400
600
800
1000
1200
2010 2015 2020 2025 2030 2035 2040
US tight oil: alternative scenarios
Early peak
Early peak
US tight oil production
Evolving transition Evolving
transition
Mb/d
Number of US oil rigs (in the four main producing regions*)
*Permian, Eagle Ford, Bakken and Niobrara
© BP p.l.c. 201831
0
2
4
6
8
10
12
14
16
18
2010 2015 2020 2025 2030 2035 2040
0
200
400
600
800
1000
1200
2010 2015 2020 2025 2030 2035 2040
Early peak
Early peak
Greater resource Greater resource
Evolving transition Evolving
transition
US tight oil: alternative scenarios
US tight oil production
Mb/d
Number of US oil rigs (in the four main producing regions*)
*Permian, Eagle Ford, Bakken and Niobrara
© BP p.l.c. 2018
Five key questions
32
• 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?
• Is the transition to a lower carbon energy system happening fast enough?
© BP p.l.c. 2018
Rapid growth in renewable energy
33
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
34
0%
20%
40%
60%
80%
100%
Evolvingtransition
Renewables push
Renewables share of power growth2016-2040
© BP p.l.c. 2018
‘Renewables push’ scenario
35
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 growth2016-2040
© BP p.l.c. 2018
Five key questions
36
• 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?
• Is the transition to a lower carbon energy system happening fast enough?
© BP p.l.c. 2018
Growth in natural gas demand
37
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
38
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
39
-1% 0% 1% 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
Five key questions
40
• 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?
• Is the transition to a lower carbon energy system happening fast enough?
© BP p.l.c. 2018
Carbon emissions continue to rise in the ET scenario
41
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
Fuelswitching
Carbon emissions in 2040: EFT versus ET scenario
Energyintensity
© BP p.l.c. 201842
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
Conclusion
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?
© BP p.l.c. 2018
BP Energy Outlook2018 edition