© World Energy Council 2013 World Energy Scenarios Composing Energy Futures to 2050 Dan A. Rieser, Deputy Director, WEC London

© World Energy Council 2013 We live in a changing and challenging environment…

© World Energy Council China India Rest of the world Looking back: Global primary energy demand: Source: BP Statistical Review of World Energy June 2013 Nuclear 11% billion t coal equivalent 4,1 Billion t coal equivalent increase ─ 46 % of which are coal Billion: 10 9

© World Energy Council Looking forward: Primary energy demand by energy type 17,1 33,2 % Hydro Natural gas Coal Nuclear Oil Biomass/waste Other renewables 18,7 21,0 23,4 23,9 25,2 23,7 % 29,5 % 5,2 % 6,5 % 0,5 % 1,4 % 34,0 % 21,9 % 25,6 % 5,5 % 2,3 % 1,3 % 29,4 % 24,7 % 30,3 % 5,0 % 6,8 % 0,6 % 31,8 % 24,5 % 23,8 % 6,3 % 2,4 % 27,7 % 25,4 % 28,1 % 5,8 % 6,9 % 0,8 % 31,6 % 26,8 % 18,6 % 8,4 % 2,7 % 7,8 % 9,4 % 3,2 % 8,4 % 2,8 % 5,3 % 4,1 % BPExxon/MobilBPExxon/MobilBPExxon/Mobil billion t coal equivalent

© World Energy Council Scenarios: Primary energy supply by energy type 18,2 32,3% Nat. Gas Coal Nuclear Oil Renewables 21,5% 27,3% 5,7% 13,2% 33,6% 22,3% 28,2% 5,2% 10,7% WEC Sym- phony Shell Moun- tains Shell Oceans 29,9% 21,9% 27,3% 6,0% 14,9% 30,9% 21,6% 28,6% 6,0% 12,9% 27,9% 23,3% 25,5% 6,5% 16,8% 28,9% 22,3% 28,5% 6,8% 13,5% 28,4% 23,3% 26,8% 7,0% 14,5% 24,6% 26,6% 25,4% 4,2% 19,2% 20,3% 23,8% 15,2% 11,4% 29,3% 17,8% 26,4% 23,5% 10,2% 22,1% 22,6% 19,0% 22,4% 5,4% 30,6% 18,7 21,3 22,5 23,5 26,1 29,3 30,0 30,8 33,3 23,7 IEAEIA IEA NPS EIA Ref. IEA NPS EIA Ref. EIA Ref. WEC Jazz billion t coal equivalent

© World Energy Council Scenarios: Global electricity generation by fuel type 21,4 4,7% Natural gas Coal Nuclear Oil Renewables 22,2% 40,6% 12,9% 19,6% 20,2 4,4% 22,2% 39,9% 12,8% 20,7% 28,2 2,8% 21,6 % 38,6 % 12,2 % 24,8 % 26,6 3,0% 20,8% 38,1% 13,6% 24,5% 33,8 1,8% 22,8% 34,2% 12,2% 29,0% 33,0 2,1% 21,9% 37,4% 14,6% 24,0% 39,0 1,8% 24,0% 35,5% 14,1% 24,6% 53,6 25,0% 37,8% 6,1% 31,1% 47,9 19,9% 17,7% 14,5% 47,9% Note: IEA and WEC incl. own consumption; EIA excl. own consumption IEA NPS EIA Ref. IEA NPS EIA Ref. IEA NPS EIA Ref. EIA Ref. WEC Jazz WEC Symphony billion MWh

© World Energy Council 2013 Why are WEC scenarios unique? ► portray a range of conceivable outcomes and aid the understanding of how different factors can interact and shape the future. ► identify robust trends; ‘what-if’ assumptions about future. Scenarios are not forecast. ► inform debate regarding the future energy landscape; foundation for company investment decisions & government policies Plausible, pertinent, alternative stories of the future which: The uncertainty funnel: WEC Scenarios are explorative, rather than normative

© World Energy Council Scenario Building Process at the World Energy

© World Energy Council 2013 The scenarios are designed to help a range of stakeholders to address the “energy trilemma” – of achieving environmental sustainability, energy security and energy equity. WEC’s latest scenarios study: ► Comprises of two scenarios Stories quantified by Paul Scherrer Institute (project partner) based on a global and regional MARKAL GMM model

© World Energy Council 2013 Two Scenarios stories, exploratory, different and equally probable rather than good and bad  Jazz: Trade based, consumer driven, focussed on access and affordability. achieving growth through low cost energy. Governments facilitate GHG actions.  Symphony: Government led, voter driven, focussed on environmental goals and energy security, national and regional measures to increase share of renewables in energy mix. Binding international agreement on GHG emissions WEC Scenarios Deriving the scenario stories 10

© World Energy Council JazzSymphony GDP growthHigher (3.54% pa CAGR, PPP)Lower (3.06% pa CAGR, PPP) PopulationLower (2050 = 8.7 billion)Higher (2050 = 9.3 billion) Efficiency/ IntensityIncreasing (-2.29% pa (primary, PPP)) Increasing more strongly (- 2.44% pa (primary, PPP)) CO 2 prices/climate policy Limited Prices (2050): USD/tCO 2 Stronger Prices (2050): USD/tCO 2 Resources Better access to unconventional resources More expensive unconventionals Technology support Limited; energy choice based on free markets support for nuclear, large hydro, CCS and renewables Technology innovation Further development of CCGT decentralized power (SPV) Focused R&D programs (esp. CC(U)S, solar PV) Instruments In the absence of international agreed commitments carbon market grows more slowly from bottom up based on regional, national and local initiatives. Carbon market is top down based on an international agreement, with commitments and allocations. Storyline and quantification assumptions

© World Energy Council Global primary energy supply by energy type 18,6 27 % Hydro Natural gas Coal Nuclear Oil Biomass/Waste Wind/Solar 32 % 12 % 21 % 5 % 2 % 1 % 25,3 27 % 30 % 8 % 26 % 5 % 2 % 30,0 25 % 11 % 27 % 4 % 2 % 6 % 21,5 20 % 29 % 10 % 26 % 8 % 3 % 4 % 23,7 15 % 20 % 16 % 24 % 11 % 4 % 10 % Source: World Energy Council, World Energy Scenarios – Composing energy futures to 2050, London, October 2013 Jazz SzenarioSymphony Szenario Billion t coal equivalent

© World Energy Council Global electricity generation by fuel type in TWh Hydro Natural gas Coal Nuclear Öl Biomass Geothermal Coal(w. CCS) Nat. gas (w. CCS) Biomass (w. CCS) Wind Solar PV Other Jazz SzenarioSymphony Szenario % 4% 16% 14% 5% 15% 3% Source: World Energy Council, World Energy Scenarios - Composing energy futures to 2050, London, October % 16% 8% 25% 1% 25% 15% 17% 2% 8% 6% 1% 36% 2% 24% 6% 1% 11% 3% 1% 8% 6% 2% 42% 28% 10% 13% 7% 40% 5% 22% 13% 16% 4%

© World Energy Council Role of renewables in electricity generation globally Source: World Energy Council, World Energy Scenarios - Composing energy futures to 2050, London, October 2013 TWh WEC Jazz Scenario

© World Energy Council Source: World Energy Council, World Energy Scenarios - Composing energy futures to 2050, London, October 2013 WEC Symphony Scenario TWh Role of renewables in electricity generation globally

© World Energy Council CO ₂ emissions by region JAZZ: Energy choice based on free markets limited regulations supporting low-carbon energy (but regional diversity) consequently: carbon pricing only after significant income growth SYMPHONY: Priority to environmental sustainability CO2 reduction obligations, carbon taxes, CC(U)S mandates, renewable energy subsidies consequently: global carbon price emerges 7% 32% 20% 21% 19% 28% 13% 15% 19% 27% 13% 16%

© World Energy Council The global economy will be challenged to meet the 450 ppm target without enormous economic costs Resulting CO ₂ emissions (black lines) (IPCC classifiction)

© World Energy Council Carbon Capture, Utilization and Storage JAZZ: Possibly ready at commercial scale 2035 CC(U)S not adopted initially due to high costs/low carbon price Commercial use in enhanced oil recovery Wider adoption post 2040 SYMPHONY: Entry of CC(U)S earlier due to govt. intervention; govt. promotion CC(U)S increasingly required on coal new build CC(U)S in enhanced oil recovery 21% 18% 23% 18% 16%

© World Energy Council 2013 WEC and IPCC in context ► Overall IPCC CO 2 budget: 1000 GtC (associated with a 2/3rds chance of keeping warming below 2 degrees) 531 GtC has already been used up by Gt remain. In addition, non-CO 2 forcings would reduce this to 270 GtC. ► Emissions from (40 years) – in the energy sector alone: Jazz approx. 440 GtC Symphony approx. 310 GtC ► Jazz is well above the budget by 2050, and will continue to overshoot for some time thereafter since it is very unlikely that emissions would fall from 44 Gt CO 2 in 2050 to zero soon after. ► Symphony would also just exceed the budget by 2050, and emissions would continue afterwards. If the declining output of emissions continues, this scenario may still be able to achieve 2 degrees, albeit not with the 2/3rds probability associated with the 1000 Gt budget.

© World Energy Council Scenario study regions

© World Energy Council Primary energy supply by region in Billion t coal equivalent 18,6 6 % North America South & Cental Asia Europe East Asia Latin America MENA 8 % 21 % 5 % Source: World Energy Council, World Energy Scenarios – Composing energy futures to 2050, London, October 2013 Sub-Saharan Africa 27 % 22 % 7 % 4 % 8 % 9 % 18 % 29 % 18 % 25,3 7 % 4 % 8 % 15 % 24 % 15 % 30,0 8 % 9 % 6 % 7 % 9 % 18 % 28 % 19 % 21,5 7 % 8 % 4 % 8 % 14 % 15 % 24 % 16 % 23,7 7 % 10 % 6 % Southeast Asia & Pacific Jazz SzenarioSymphony Szenario

© World Energy Council Renewable electricity generation by region in TWh 4,3 Source: World Energy Council, World Energy Scenarios – Composing energy futures to 2050, London, October ,1 16,7 10,7 23,0 North America South & Cental Asia Europe East Asia Latin America MENA Sub-Saharan Africa Southeast Asia & Pacific Jazz SzenarioSymphony Szenario 0,2 0,9 0,2 1,2 0,9 0,8 0,1

© World Energy Council Renewable electricity generation share by region in % 2010 Jazz Scenario 2050 Symphony Scenario

© World Energy Council CO 2 emissions by region in billion t 30,5 North America South & Cental Asia Europe East Asia Latin America MENA Source: World Energy Council, World Energy Scenarios – Composing energy futures to 2050, London, October 2013 Sub-Saharan Africa 41,8 44,0 30,4 19,1 Southeast Asia & Pacific Jazz SzenarioSymphony Szenario

© World Energy Council Carbon price (USD2010/tCO 2 ) Jazz Sub-Saharan Africa Middle East & North Africa Latin America & the Caribbean North America Europe South & Central Asia East Asia Southeast Asia & Pacific Symphony Sub-Saharan Africa Middle East & North Africa Latin America & the Caribbean North America Europe South & Central Asia East Asia Southeast Asia & Pacific Quantification assumption: CO 2 prices up to 2050

© World Energy Council Population without access to energy in 2050 in millionen Source: World Energy Council, World Energy Scenarios – Composing energy futures to 2050, London, October Jazz 2050 Symphony

© World Energy Council 2013 Summary Key Findings

© World Energy Council 2013 ► Coal remains a dominant fuel (especially in China and India), some potential for coal to liquids (CTL), increasing challenges around CCS ► Natural gas will gain more importance in the energy share ► Oil will continue to be the dominant fuel in transport ► Nuclear is not a game changer ► Hydro: great economic potential of hydro electricity generation especially in SSA and LAC ► Share of renewables (RES-E) could be increased ► Energy efficiency and energy conservation are absolutely crucial in dealing with demand outstripping supply Energy mix in 2050

© World Energy Council 2013 ► A reduction of greenhouse gas emissions is possible in the second half of the scenario period ► Carbon Capture and Storage (CCS) is a suitable technology (in addition to renewable electricity generation) to reduce CO 2 emissions ► The key uncertainties are CCS technology, solar energy and energy storage ► Energy policy should ensure that energy and carbon markets deliver investments, promote regional integration and hence provide benefits to consumers Carbon, uncertainties and policies Creating a sustainable energy mix remains the major challenge for the 21st century

© World Energy Council 2013 We are in a challenging place Demand is not evening out Universal electricity access is far from becoming a reality The contribution of energy efficiency is not up to expectations Current institutions cannot solve the issues It is not easy to get funding 1. Much of the solution will come from more management in the demand while leaving the market play its role within robust and predictable frameworks. 2. National policy frameworks have to be balanced in order to attract investment 3. International governance in specific areas (eg. trade rules) needs strengthening 4. Focussed RDD efforts (especially in storage and CCUS) are needed What is the way forward?

© World Energy Council 2013 Dan A. Rieser Thank you Any questions?