the global energy and the road to paris
TRANSCRIPT
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The global energy transition and the
road to Paris
Dr Jeremy Leggett
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Dramatic changes are beginning to sweep global energy markets
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Insurgencycost down
Incumbencycost up
Three emerging megatrends are particularly important
Carbon action
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0%
25%
50%
75%
100%
1850 1870 1890 1910 1930 1950 1970 1990 2010Percen
tage of U
.S. E
nergy Co
nsum
ption
50 years
Wood Coal
Hydro
Oil
Natural Gas
Renewables
75%
50 years
1920
75%
2020
Nuclear
50 years
X%?
Source: S Dolezalek
System change in energy is nothing new
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……much like the smell of cigarettes in restaurants”
Richard Branson
“I hope 10 years from now thesmell of exhaust from cars
will be a thing of the past….
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19131900
Spot the car Spot the horse
….and disruption can indeed happen very fast
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….not to mention up to 70% cuts by 2050, 35 years from now
White House June 2015
The industrialised nations have declared the endgame on
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Insurgencycost down
Incumbencycost up
Three emerging megatrends
Carbon action
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Source: Alliance Bernstein, April 2014
Solar PV averagein 2006
Fossil fuel versus solar: price
35 years
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The “Terrordome”
Alliance Bernstein, 14 April 2014
2006
Fossil fuel versus solar: price
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Apple global ad campaignApril 2014
Big players are smelling the coffee
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Why would Apple want “every company to copy” boring and design‐lite solar farms?
Apple Wants to Start Producing Cars as Soon as 2020 18 Feb 2015
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Slough, UKUBS Urges Investors to Join Solar RevolutionGuardian, 27 August 2014
The power of solar and storage
SSE project with Solarcentury rooftiles2010
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Source:ce:
The power of solar and storage€ kWh
EU EV sales
EU fleet
Lithium battery costs
Solar PV roof + battery + EV price
Payback, yearsROI
ROI27 August 2014
“This will change the face of energy markets”
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9 April 2014
Unlikely players
are paying very closeattention
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20 August 2014….er, run that past me again?
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The first U‐turn has happened in the utility sector. How long before the first oil & gas company?
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Source: Bloomberg NEF
The rise and rise of renewablesGW per yearelectricitygeneration additions
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May 1 2015Launch of Tesla Energy
Week 1: $800 million of indicative orders
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And as for energy efficiency….
The best way to shrink the mountain of transition….
….and the best way to create energy jobs
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Insurgencycost down
Incumbencycost up
Three emerging megatrends
Carbon action
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Source: Douglas Westwood, from Bloomberg
Selected listed international oil companies’ upstream capex and crude‐oil production
BG, BP, COP, CVX, ENI, OXY, PBR, RDS, STO, TOT, XOM
Capex versus oil production
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Capex trials & tribulations
Kashagan$50 bn & counting Shell in the Arctic:
$5 bn & floundering
Petrobras & the sub‐salt:$221 bn over 5 years pleeeeease
Canada & the tar sands:50 year financing? Really?
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Break‐even oil price: assessing danger of stranding
May 2014
$1.1 trillion capex at risk by 2025 >$95
2 degree budget
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“A trillion dollars of zombie investments” in planned future oil projects above $70
December 2014
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“The Shale Industry Could Be Swallowed By Its Own Debt”Jun 17 2015
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1 mile
© Hughes GSR Inc, 2014 (data from Drillinginfo, February, 2014)
Shale Drillers Feast on Junk Debt to Stay on TreadmillApr 30 2014
Is the U.S. Shale Boom Going Bust?Apr 22 2014
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The Weald, UK: fracking welcome?
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Balcombe, August 2014
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1 December 2014
It gets worse….
…..an enquiry now being emulated by the G‐20, as of April 2015
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US drill rig count
Thou
sand
barrels pe
r day
US shale oil
Conventional crude oil
Tar sands
Global crude production 2005 – 2014 and US rig count
What happens
next?
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Insurgencycost down
Incumbencycost up
Three emerging megatrends
Carbon action
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Copenhagen, Dec 2009
Our leaders may have failed in 2009, but…..
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c. 100 nations for zero net carbon by 2050
66% of emissions are down to 90 companies
US & China envoys work together at the Lima climate summit, December 2014
…..circumstances are different now
And:
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Coal is entering structural decline
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“It is our marching orders for advocacy. It really brings about a new urgency for us.”
Joseph Kurtz, president US Conference of Catholic Bishops
The ethical case has a new champion
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Saudi Arabia is focussing on oil consumption as well as production
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ConsumptionExports
Saudi crude and NGL production
2025
2030
….and the proposed solution?
Saudi Arabia: not a drop to export by before 2030 on current trends
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t h e e n e r g y o f n a t i o n sRISK BLINDNESS AND THE ROAD TO RENAISSANCE
J E R E M Y L E G G E T T
t h e e n e r g y o f n a t i o n sRISK BLINDNESS AND THE ROAD TO RENAISSANCE
J E R E M Y L E G G E T T
Jan 2004 – May 2013 May 2013 – Dec 2015
….all the dramas are in my front‐line eyewitness chronicles
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Conclusions: Paris and transition
• We are heading for the right signal to be sent from the Paris climate summit
• For the incumbency, problems will grow& opportunities will diminish
• For the insurgency, opportunities will grow & problems will diminish