“Updated Group strategy for growth, considering rapid changes in the environment”
The energy transition is changing the global energy sector at an accelerating pace with the following main characteristics:
- While demand for fossil fuels is expected to drop significantly in the next decades, fossil fuels will continue to play an important role in the global energy mix.
- Renewable energy sources are expected to significantly increase participation in global demand growth for primary energy by 2035 and to double their share by 2050, becoming the dominant contributor to the energy mix.
- Continued increase in demand for natural gas and its participation in the global energy mix at least until 2035, mainly due to transport and industry.
- Oil maintains its important role long term, as the second source of primary energy until 2050, immediately after renewable energy sources. Oil demand is expected to peak towards 2030, with petrochemicals being the fastest growing segment until 2050.
- Electricity will play an increasingly important role in the coming decades, with RES being the main driver of generation capacity growth, expected to account for 50% of total power production by 2035.
- New energy sources are emerging, e.g., hydrogen, synfuels, pyrolysis of plastics, hydrogenation of plant waste, battery storage and cheaper vehicle electrification.
The energy transition is also being supported by the social, political and regulatory trends seeking to address climate change in the European Union, as manifested in the recently announced Green Deal (e.g., tighter regulatory requirements for decarbonization) and globally, as manifested by the return of the US to the Paris agreement and China’s adoption of new climate goals. Similarly, in capital markets, ESG focus is becoming an imperative for investors, with global ESG assets on track to exceed $53tn by 2025, over 1/3 of total assets under management.