NEWS

Towards 2040 the world will need a lot of renewable energy. Considerable investments in new production of oil and gas are also necessary to replace falling production from existing fields.

This is outlined in Statoil’s Energy Perspectives report that was presented today.

“In order to achieve the objectives of the Paris climate agreement we need fast changes in the electricity sector and in private car transport, in addition to a strong energy efficiency improvement in all sectors,” says Statoil’s Chief economist Eirik Wærness.

“Even with a rapid increase in new renewable energy the oil and gas demand will only be slightly lower than today’s level in 2040. To compensate for falling global production from existing fields, considerable investments in new oil and gas production volumes will be needed, which in combination will correspond to 15-30 times the current total output on the Norwegian continental shelf,” says Wærness.

Statoil’s annual Energy Perspectives report describes how the world economy, international energy markets and energy-related greenhouse gas emissions develop, based on three different scenarios: Reform, Renewal and Rivalry.

The report has been prepared by a team of Statoil analysts in the fields of macroeconomics, energy markets, climate policies and geopolitics. It is based on models and frameworks that the company uses in connection with long-term analyses of the energy markets.

Three scenarios

“The future is uncertain, and consequently we have, just like last year, prepared three different scenarios for the development towards 2040,” says Wærness.

The Reform scenario in this year’s report is based on the national climate targets of the Paris agreement (COP21), with further restrictive measures in the energy and climate policies over time. The 2-degree target will not be reached in this scenario.

The scenario outlining the most ambitious energy and climate goals is Renewal, which assumes that nine out of 10 new private cars sold in 2040 will be hybrids or electric cars. It also assumes a transformation in the electricity sector, where sun and wind will account for around 40% of the global electricity generation in 2040, compared to the current 5%. In this scenario the oil and gas demand will be somewhat lower than the current level.

“This will require a radical and coordinated effort and transformation of the transport and electricity sector, driven by efficiency efforts, technology development, markets, consumer behaviour and not least politics. There may be cause for questioning whether the investments in oil, gas and renewable energy in the time ahead will be sufficient to meet the demand,” says Wærness.

The Intergovernmental Panel on Climate Change is currently evaluating implications from the commitment in the Paris Agreement to pursue efforts to limit the temperature increase to 1.5℃. Their report is expected in 2018, and based on this further implications also for the energy sector can be analysed further.

“The drastic changes in the energy system we are envisaging, will be introduced gradually – but this must be done much faster than we have seen before,” he says.

The third scenario, Rivalry, is more impacted by geopolitical conflict and larger differences in the regional development, both with regard to economic development and transformation of the energy systems.
Irrespective of the scenario the analysis reveals a need for major investments within the whole energy sector – both in oil, gas, renewables, energy infrastructure and energy storage towards 2040.

Major changes in energy supply and consumption

Statoil has published its Energy Perspectives report every year since 2011. It is one of several important analyses forming the basis for the company’s strategic and commercial assessments.

“The Paris climate agreement is an important starting point for necessary changes, but they are not sufficient, according to the 2016 Energy Perspectives report. Statoil will be a driving force for introducing stronger measures and faster change, which are vital for us to be able to produce the energy that the world needs in a sustainable manner.

Emissions must be reduced, while at the same time energy must be provided to a growing population, where a rising number of people are finding their way out of poverty,” says president and CEO Eldar Sætre.

“Statoil is well positioned for being an important energy provider also in a low-carbon society. Our oil and gas production has the lowest emission level in the world, and we are raising our ambitions to maintain our leading position. We are also gradually developing a profitable business in renewable energy and other low-carbon solutions,” says Sætre.