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Energy Perspectives 2016Long-term macro and market outlookColumbia University, 16 November 2016Eirik Wærness, Senior vice president and Chief economist
Macro and market outlook to 2040 – www.statoil.com/energyperspectives
Energy Perspectives 2016
2
The triple energy challenge – a balancing act
Satisfying demand
Risk/reward
balanceSustainability
• Population growth
• GDP growth
• Increasing energy demand
• Fighting decline from existing fields
• Price uncertainty
• Cost challenges
• Risk elements
• Policy uncertainty
• Clean and affordable
energy for all
• Limiting greenhouse
gas emissions
• Policy gap between
targets and measures
3
Significant uncertainty and large changes
4
… this calls for using scenarios
Supply and demand factors (indexed 2002=100)
Source: The Economist Source: DOE, CEIC, IEA, IRENA
0
2000
4000
6000
8000
10000
12000
0
200
400
600
800
1000
1200
1400
1600
2000 2003 2006 2009 2012 2015
US shale oil prod.
Chinese int.tourists
New Chinese cars
Chinese airpassengers
Solar capacity(rhs)
Several futures are possible…Rivalry, Reform, Renewal* - but the world is twice as rich and more efficient
Energy intensityIndex, 1990=100
0
20
40
60
80
100
120
1990 2000 2010 2020 2030 2040
Reform Renewal Rivalry
World GDP and energy demandIndex, 1990=100
0
100
200
300
400
500
1990 2000 2010 2020 2030 2040
Reform Renewal Rivalry
Source: IEA (history), Statoil (projections) *Rivalry: Geopolitical uncertainty, regional conflicts; Reform: COP21 followed up and tightened; Renewal: Energy revolution delivering emissions consistent with 2°-C target
2013 Renewal
Reform
Rivalry
5
World GDP growth rates%
0
1
2
3
4
'90-'0'0-'10 '10-'20 '20-'30 '30-'40
Reform Renewal Rivalry
Source: BigThink, IEA, Statoil (projections)
A strong trend affecting economics and energy
6
All growth in energy demand in emerging economies, in particular in Asia
World energy demand per regionBn toe
0
4
8
12
16
20
Ref Ren Riv Ref Ren Riv
Rest of world India China
OECD Pacific OECD Europe OECD Americas
2020 20402013
The global population centre is in Asia
Each small square represents 1 million people
Speeding up the change in global energy mix
7
… with Renewal displaying a paradigm shift
0%
20%
40%
60%
80%
100%
197
3
198
3
199
3
200
3
201
3
204
0 R
efo
rm
204
0 R
en
ew
al
204
0 R
ivalr
y
New RES
Biofuelsand waste
Hydro
Nuclear
Gas
Oil
Solid fuels0
5
10
15
20
197
3
198
3
199
3
200
3
201
3
204
0 R
efo
rm
204
0 R
en
ew
al
204
0 R
ivalr
y
Historical
Bn toe
Source: IEA (history), Statoil (projections)
OECD Americas energy mix changes gradually
0%
20%
40%
60%
80%
100%
197
3
198
3
199
3
200
3
201
3
204
0 R
efo
rm
204
0 R
en
ew
al
204
0 R
ivalr
y
New RES
Biofuelsand waste
Hydro
Nuclear
Gas
Oil
Solid fuels
0
1
2
3
197
3
198
3
199
3
200
3
201
3
204
0 R
efo
rm
204
0 R
en
ew
al
204
0 R
ivalr
y
Bn toe
… but Renewal displays a paradigm shift
CO2 emissions determined by demand and mix
9
Source: IEA (history), Statoil (projections)
Climate policies: Driving Renewal, contributing to Reform
Reform
450Renewal
NPRivalry
0
10
20
30
40
Statoil IEA
20402013
World CO2 emissionsBillion tons
World CO2 emissionsBillion tons
0
10
20
30
40
Ref Ren Riv
Rest of world India China
OECD Pacific OECD Europe OECD Americas
20402013
Technology shift for light duty vehicles
10
Light Duty Vehicle fleet composition
Billions
Source: IEA (history), Statoil (projections)
Sales Light Duty Vehicles
Millions
… in all scenarios, and a revolution in Renewal
Fuel mix in Final Energy Demand for LDVs
%
0
20
40
60
80
100
Ref Ren Riv
Electricity Biomass Gas Oil
2013 2040
0
20
40
60
80
100
120
140
Ref Ren Riv
Th
ou
sa
nd
s
Other Plug-in hybrids
Electric vehicles Diesel
Gasoline
20402013
0
1
2
3
Ref Ren Riv
Other Plug-in hybrids
Electric vehicles Diesel
Gasoline
20402013
Technology changes in LDVs in OECD Americas
Light Duty Vehicle fleet composition
Millions
Source: IEA (history), Statoil (projections)
Sales Light Duty Vehicles
Millions
… and revolution in Renewal
Fuel mix in Final Energy Demand for LDVs
%
0
20
40
60
80
100
Ref Ren Riv
Electricity Biomass Gas Oil
2013 2040
0
5
10
15
20
Ref Ren Riv
Th
ou
sa
nd
s
Other Plug-in hybrids
Electric vehicles Diesel
Gasoline
20402013
0
50
100
150
200
250
300
350
Ref Ren Riv
Other Plug-in hybrids
Electric vehicles Diesel
Gasoline
20402013
Fuel mix change in electricity
12
Large investments in new renewables required, especially in Renewal
Solar and wind generation capacityGW
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Ref Ren Riv
Solar Wind
20402013
Electricity generation mix%
0
20
40
60
80
100
Ref Ren Riv
Geothermal Solar Wind
Biomass Hydro Nuclear
Gas Oil Coal
20402013
De-carbonization of power in OECD Americas…will require large investments in new renewables
Solar and wind generation capacityGW
0
400
800
1,200
1,600
2,000
Ref Ren Riv
Solar Wind
20402013
Electricity generation mix%
0
20
40
60
80
100
Ref Ren Riv
Geothermal Solar Wind
Biomass Hydro Nuclear
Gas Oil Coal
20402013
Other sectors are more challenging to change… and demand here will grow as the economy grows…
Fuel mix in Final Energy Demand for
Residential, Commercial & Industrial sectors Bn toe
Fuel mix in Final Energy Demand for Transport
excluding LDVsBn toe
0
0.5
1
1.5
2
2.5
Ref Ren Riv
Coal Oil Gas Biomass Electricity
2013 2040
0
2
4
6
8
10
12
Ref Ren Riv
Coal Oil Gas Biomass New RES Electricity Heat
2013 2040
Source: IEA (history), Statoil (projections)
14
Global oil and gas demand growth variesLarge variation across sectors – significant growth in non-energy demand
Source: IEA (history), Statoil (projections)
10.6
-14.0
23.8
-30
-20
-10
0
10
20
30
Reform Renewal Rivalry
OtherTransformation
Power & Heat
Non-Energy
Transport
OtherStationary
Residential
Industry
Change in oil demand 2013-2040Mbd
1,229
-9
1,166
-1,500
-1,000
-500
0
500
1,000
1,500
Reform Renewal Rivalry
Change in gas demand 2013-2040Bcm
North American oil demand will decrease…despite growth in non-energy demand
Source: IEA (history), Statoil (projections)
-4.2
-10.0
-0.2
-12
-9
-6
-3
0
3
6
Reform Renewal Rivalry
OtherTransformation
Power & Heat
Non-Energy
Transport
OtherStationary
Residential
Industry
Change in oil demand 2013-2040Mbd
255
-178
437
-1,200
-900
-600
-300
0
300
600
Reform Renewal Rivalry
Change in gas demand 2013-2040Bcm
Huge investments needed in oil, gas and renewable electricity
Source: Statoil
…to replace production and ensure sustainability
New oil production 2015-2040Mbd
New gas production 2015-2040Bcm
Incremental New RES production 2015-40Thousand TWh
0
50
100
150
2015 2040
Rivalry add-onReform add-onRenewal add-onPotential legacy productionMin legacy productionHistoryRenXXRefXXRivXX
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2015 2040
Reform add-on
Rivalry add-on
Renewal add-on
Potential legacy production
Min legacy production
History
RenXX
RefXX
RivXX
0
5
10
15
20
25
30
35
40
2015 2040
Hist
Renewal add-on
Reform add-on
Rivalry add-on
Legacy production
History
RenXX
RivXX
17
Source: Statoil, IEA (WEO 2015), EIA, BP, ExxonMobil
Wide span in forecasts
18
Oil demand
Million barrels per dayGas demand
Billion cubic meters
70
80
90
100
110
120
130
2015 2020 2025 2030 2035 2040
Reform Rivalry RenewalIEA NP IEA 450 EIABP XOM History
3000
3500
4000
4500
5000
5500
6000
2015 2020 2025 2030 2035 2040
Reform Rivalry RenewalIEA NP IEA 450 EIABP XOM History
Source: Statoil, IEA (WEO 2015), EIA, BP, ExxonMobil
19