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Energy Perspectives 2019 Long-Term Macro and Market Outlook Energy Perspectives 2019 Long-term macro and market outlook Energy Perspectives 2019 WWelcomeelcome toto EEquinor’squinor’s EEnergynergy PPerspectiveserspectives 22019019 I am frequently asked about my view on how the global energy system will develop, and even more frequently about where I think oil, gas, electricity and CO2 prices will move over the short and long term. In Equinor we try to base our views on as many sources of information as possible, focusing on the potential effects of changes in market fundamentals and developments in technology, policy, resource availability and consumer behaviour. The future of energy is uncertain. And the question of how to respond does not have one single answer. Uncertainties call for the use of scenarios, describing how policy, technology and market conditions can move developments in very different directions, both desired and undesired. That is what Equinor’s Energy Perspectives 2019 aims to describe. It seems certain that demand for goods, services and activities that require energy in their production or consumption will continue to increase, driven by population growth and improved living standards. The challenge energy companies and the global society is faced with through the Paris Agreement (article 4.1) is formidable and unparalleled in human history: To sufficiently rapidly transform the global energy system “on the basis of equity, and in the context of sustainable development and efforts to eradicate poverty.” Equinor’s vision is to shape the future of energy. We are developing toward a broad energy company, producing oil and gas with lower emissions while building a strong position within new energy solutions. Our strategy is: Always safe, High value and Low carbon. To succeed, we must have a robust approach to the opportunities and challenges that come our way. The analysis in this report is important input to our strategic priorities, but does not reflect our views and strategy. We want the global energy mix to transform in a sustainable direction, and we want to take part in the shaping of such a future. With this 9th edition of Energy Perspectives our analysts again provide important insight. The only certainty is the uncertainty of the future, and we do not claim to hold the truth. We welcome engagement and debate. I hope the report will be as useful to your work as it is to mine. Eldar Sætre President and CEO 3 Executive summary In what direction will global energy markets develop global political cooperation, and fast technology change, towards 2050? This is a crucially important question, not delivering a path that keeps global energy-related only for energy companies. The answer to this question carbon emissions consistent with the well below 2° target will give profound signals on the chances of securing established in the Paris Agreement. a sustainable development, as defined e.g. by the 17 What is new in Energy Perspectives 2019? In addition to Sustainable Development Goals. Recent signals show what follows from updated historical figures and revised that possible combinations of important drivers such assumptions on key input parameters such as economic as economic and demand growth, energy efficiency, growth and energy intensity, the description of Renewal climate policy cooperation, technology development and is enriched with two sensitivities. The first one is centred geopolitics could result in very different development paths around the direction in IPCC’s 1.5° report, while the second for global energy markets over the next decades. This 9th one illustrates the effects of delaying policy action on edition of Energy Perspectives aims to provide the reader climate to 2025. It is also illustrated how Renewal depends with a helicopter perspective on possible macroeconomic on a crucial combination of simultaneous changes in and global energy market developments towards 2050, energy intensity, fuel mix and carbon capture, utilisation analysing relevant trends, energy sources, sectors and and storage (CCUS) developments. The potential regions across three very different scenarios, called impacts of hydrogen are quantified and visualised in an Reform, Renewal and Rivalry. illustrative pathway to the Renewal framework. Finally, new The scenarios are stories of the future that illustrate the perspectives are put forward for crude oil qualities, driven very large future outcome space for energy markets. Two by different levels of oil demand and different supply mix in of the scenarios, Reform and Rivalry, illustrate where the the three scenarios. world may move if current energy market, macroeconomic The challenges of satisfying global energy demand in a and geopolitical developments are not significantly sustainable manner are vast and multifaceted. Leaders changed. Reform represents a future driven by technology of nations, businesses and civil society are trying to make development and benign market forces, supported by choices today, facing unknown futures. Doing so requires gradually tightened energy and climate policies. Rivalry an informed debate and dialogue across many scenarios. describes a future where the energy transition is slowed by I hope that Energy Perspectives 2019 will contribute to lack of trust, significant geopolitical volatility and ineffective these discussions of possible energy futures. solutions to common challenges, like today. Renewal, on the other hand, shows where the energy markets need to go Eirik Wærness to contribute to a sustainable future. Renewal is driven by rapid and significant energy and climate policy tightening, Senior vice president and Chief economist 4 The energy world in 2050 2.0-2.2 x 29-49% Size of the global economy, Share of solar and wind in global electricity compared to 2018 generation, up from 7% in 2018 3,200-4,800 Bcm 10-36 Gt Global gas demand, compared to Global energy-related CO2 emissions, 3,900 bcm in 2018 compared to 33.1 Gt in 2018 0.6-1.3 Billion 52-118 mbd Electric vehicles on the road, equivalent to Global oil demand, compared to 99 mbd in 2018 30% - 90% of the total LDV fleet 5 Energy Perspectives 2019 TableTable ofof contentscontents Table of contents Welcome to Equinor’s Energy Perspectives 2019 .............................................................................................................................. 3 WelcomeExecutive toSu Emmaryquinor’s .................................................................................................................................................................................. Energy Perspectives 2019 4 Executive Summary Context and uncertainties ...................................................................................................................................................................... 7 ContextThe three and scenarios uncertainties ................................................................... ................................................................................................................ 9 The threeRe scenariosform: driven by market and technology ........................................................................................................................... 9 RenewalReform: :driven well below by market 2°.............................. and technology............................................................................................................................... 10 RenewalRivalry: pace: well of below change 2° slows down .................................................................................................................................... 12 Rivalry:Benchmarking pace of ....................................... change slows down .................................................................................................................................... 13 The globalBenchmarking economy ........................................ ........................................................................................................................................ 15 The globalCurrent economy situation ..................................................................................................................................................................... 15 CurrentOutlook situationto 2025 ............................................. .......................................................................................................................... 16 Outlook tobeyond 2025 2025 .............................................................................................................................................................. 17 The globalOutlook energy beyond market 2025 ..................................................................................................................................................................... 19 The globalCurrent energy situation market ..................................................................................................................................................................... 19 CurrentOutlook situationto 2025 ........................................... ............................................................................................................................ 19 Outlook tobeyond 2025 2025 ............................................................................................................................................................. 20 The globalOutlook oil market beyond ........................ 2025 ....................................................................................................................................................
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