Energy Transition: How Fast? Philippe Roos AOGC 2019 | 25 June 2019 - PowerPoint PPT Presentation

Energy Transition: How Fast? Philippe Roos AOGC 2019 | 25 June 2019

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The Energy Transition • Fact 0: Climate change is real and manmade • Fact 1: The energy transition is happening • Fact 2: It is only starting • Prediction: 100% renewable energy by 2100 (mostly solar) • Question: How do we get there? 3

Oil Demand Scenarios 140 (mb/d) 120 ▪ Oil companies (and 100 the IEA) don't expect 80 oil demand to peak 60 IEA BAU Equinor Rivalry anytime soon 40 Exxon Base Shell Oceans IEA Base Equinor Reform 20 BP ET 0 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 4

Incremental Oil Demand ▪ Oil companies (and the IEA) might be wrong (mb/d 2015-40, IEA, base case) 5

More Oil Demand Scenarios 140 140 Shell Sky BP RT Exxon 2°C (mb/d) Equinor Renewal IEA 2°C IPCC 1.5°C 120 120 DNV GL IEA <2°C Irena Greenpeace LUT 100 100 80 80 60 60 40 40 20 20 0 0 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 6

Renewable Parity Timeline 140 ($/MWh) 120 ▪ Oil companies call gas 100 a "bridge" or 80 60 "destination" fuel 40 ▪ Does gas really have CCGT Offshore Wind 20 Onshore Wind a future? Solar PV 0 2015 2020 2025 2030 2035 2040 2045 2050 Timeline for wind/PV to displace CCGT. European gas prices, no CO2 pricing. Source: Energy Intelligence 7

The Financial Transition ▪ Financial markets start to reprice assets when the peak happens ▪ Examples: European utilities post 2008, US coal post 2012 ▪ The shift in investors' perception can occur before the actual transition does ▪ Is it happening to the oil industry? Is current negative investor sentiment secular rather than cyclical? 8

Message 1: Physical Transitions Can Be Fast NYC, Fifth Av., 1900: one car NYC, Fifth Av., 1913: all cars 9

Message 2: Financial Transitions Can Be Faster 160 140 120 100 80 60 40 S&P 500 20 GE 0 (share price/index value, 100 = June 2014) 10

The Americas Europe Middle East & Asia-Pacific Contact Details 7 Down Street, 3 rd Floor 270 Madison Avenue, Suite 302 15A Temple Street, #02-01 Philippe Roos (Strasbourg) New York, NY 10016 London W1J 7AJ, UK Singapore 058562 T: +33 (0)6 22 86 37 76 Tel: +1 212 532 1112 T: +44 (0)20 7518 2200 T: +65 6538 0363 E: proos@energyintel.com 1401 K Street, NW, Suite 1000 Daev pereulok 20, Office 509 Aurora Tower, 1907 Washington, D.C. 20005 107045 Moscow, Russia Dubai Media City T: +1 202 662 0700 T: +7 495 604 8279/78/77 P.O. Box 502803 Dubai, UAE 808 Travis Street, Suite 1014 T: +971 4 364 2607/2608 Houston, TX 77002 T: +1 713 222 9700 1st Floor, Freij Bldg, Sodeco President Elias Sarkis Street Beirut, Lebanon T: +961 1 614282 & 3 energyintel.com