Good morning or good afternoon to you all, and thank you for joining our Investor Day. I'm Ladislas Pazkevic in charge of Investor Relations, and I'm here with Helik Kristofferson and Patrick Poullianne. As we have a lot of material to cover, this Investor Day is going to take place over 2 days, today and tomorrow, all virtual given the current sanitary context. Today will be dedicated to the macro and tomorrow to the strategy. Today, Helle will present the total energy outlook.
And after the presentation, Helle and Patrick will be here to take your questions. And I should stress that I wish you can focus your questions on these macro aspects. But before we start, I'd like to share a safety moment with you. As you know, at Total, safety is a core value and comes first. So we start our meetings of the day with a safety moment.
Thank you, Ladislas. Good afternoon, everyone. I hope that you're safe and sound and coping all right with the current COVID situation. Welcome to this presentation on Total's 2020 Energy Outlook. It's focused on energy demand and not on energy supply.
Some of you may remember that we shared our first energy outlook with you back in February 2019. A lot has happened since then. And the need to try and understand what's going on in our markets is more critical than ever, given the fundamental changes at work in our industry. So here we are. On the positive side, it's fair to say that the awareness that we need massive collective concerted efforts to fight climate change, that awareness is becoming more and more widespread.
The world needs a net zero ambition, as the chart says here, and the world needs to take action to deliver against that ambition. So that's for less carbon. On the other hand, economic growth and increasing populations aiming for better living standards imply a continued demand for more energy. In our scenarios today, we assume that worldwide GDP will grow at 3.3% per annum between now and 2,050, which is below the last 20 year trend. And we assume that world population will be close to 10,000,000,000 people 30 years from now.
So the challenge we're facing can be summarized as more energy and less carbon. And that's really a challenge for society as a whole, involving all the parties that are listed here on the chart, being its states, local regulators, cities, municipalities, investors, industry, consumers, technology researchers, of course, including you and I. The next chart is just a reminder of where the world carbon emissions come from. And it shows that 80% of CO2 emissions come from either energy supply or energy use. So the message is simple.
Dramatic action is needed on both fronts. To simplify, and that's what the chart shows, there are 5 key sectors to work on: power, heat and generation other energy production and transformation and when it comes to end user related emissions, industry, transport and buildings. What's new is that there is 1 continent that has taken a leadership role on sustainability and on carbon neutrality. That's Europe, of course. As Ursula van der Leyen put it, the European Green Deal is Europe's man on the moon.
It's bold. It's ambitious. It's game changing. It means achieving net 0 over the next 30 years. And by the way, you will hear more tomorrow on how we embed the Green Deal into our strategy.
So here are now the core assumptions behind the two scenarios that we are going to talk about today. Again, these scenarios are both addressing the need for more energy and less carbon. Demand increases by 0.6% per annum in one scenario and by 0.4% in the other scenario. The EU Green deal is embedded in both scenarios. And as we've done this, actually, we have added in as well the net zero roadmaps of the U.
K. And of Norway, meaning that when I talk about Europe today, I effectively include Norway and the U. K. Into the EU 27. The first scenario, momentum, is based on the national defined contributions of the Paris Agreement as they've been updated by countries in 2019.
It's in line with best industry practices around decarbonization, which means very aggressive deployments of proven technologies, electrical vehicles, solar and wind, biofuels and so on. So momentum goes beyond the business as usual scenario. Nevertheless, it fails to meet the well below 2 degree target globally. The second scenario that we've called rupture, Jada's is consistent with a 1.5, 1.7 degree target and therefore, is consistent with a trajectory leading to net 0. It's been built with a backcasting approach and essentially means that the whole world commits to goals and targets that will be like the European Green Deal.
Technological breakthroughs are a prerequisite. Together with the scaling up of new industries, such as hydrogen, synthetic fuels, carbon capture and so on. Here are now some more detailed assumptions behind our modeling. And we've contrasted those assumptions in 2,050 with where the world was in 2018. I'm not going to cover everything on the chart here.
But what you can see is that there are essentially 7 key drivers for decarbonization, 7 core themes that we're going to cover more in detail. And maybe I would just point out the last line on the chart here, which is energy efficiency accelerating. So we have modeled in momentum energy efficiency gains per annum around 2.6%. In rupture, the efficiency grows to 2.9% per annum. And that compares with historical data over the last 20 years of 1.6% energy efficiency gains per annum.
So it's aggressive. And finally, last chart of the introduction. Here is a recap of the outcomes of our models. So schemes that are underpinning both scenarios and that are therefore critical to keep in mind when we try and stay ahead of the long term trends in our markets. I will go through those 8 themes.
So first, energy demand is increasing in our 2 scenarios. Again, I think it's fair when we talk about net 0 to keep that as a backdrop, the need for more energy. Electrification of end users is massive and gaining pace. And therefore, of course, the power sector must decarbonize. Oil demand will reach a plateau around 2,030 and then decline slowly thereafter due to transport and CATChem accelerated transformation.
Gas will continue to play a key role for decades. It has a key role to play in power systems, in heat and in transport. Liquids and gases, on the other hand, will become greener. So there will be an increased penetration of what we call renewable fuels. And that includes synthetic fuels, hydrogen based fuels, biofuels, biogas and so on.
There is a promising potential for hydrogen to decarbonize industry, heavy duty transport and gases. There will be a much stronger role and need for electricity storage as end user demand electrifies and that storage could come, for instance, through batteries or through hydrogen. And then lastly, carbon sinks are absolutely a necessity to reach net 0. So now, I will move to the scenarios. As I do this, I will first cover momentum.
And then I will show you how rupture changes the picture, meaning that each time I go through rupture, it's a way to show what needs to be done to be on a net zero trajectory. And then at the very end of my presentation, I will show you how we've tried to account for the green deal in Europe. So first, here is the evolution of the total primary energy demand in the world between 20.182050 and its momentum. Demand is up by 25%, entirely driven by non OECD countries, where GDP is expanding and where growing populations are lifted out of poverty with better living standards. The scenario assumes high energy efficiency gains worldwide, as I said earlier.
And that results in an overall demand, which is held back and only grows by 0.6% per annum, which is less than 1 third of the growth rate in demand of the last 20 years. That was 2%. In terms of primary energy demand, renewables and natural gas play key play a key role. And actually, they're both complementing each other and competing with each other. Coal is phased out in the EU, thanks to the European Green Deal, but not on a worldwide scale.
And as I said, oil declines very slowly over the period. Moving on to rupture primary energy demand. The message is in the title. Net 0 requires a radical transformation of our energy consumption. Rock Air allows for a 10% increase in energy demand over the next 30 years and nevertheless produces an outcome, which is shown to the right here, which is that worldwide CO2 emissions are divided by 4.
And that means that they are falling from 33 gigatons to 8 gigatons after having accounted for 7.5 gigatons of carbon capture and storage. So the residual emissions in this scenario will have to be addressed through other technologies such as nature based solutions or future technologies like direct air capture or newer technologies still to be invented. In this scenario, oil peaks again around 2,030 and coal almost disappear on a worldwide scale. Gas retains a role, especially in power generation, but also in other sectors. Looking at the same picture, but now from an end user demand perspective And back to momentum.
I will continue switching back and forth. In terms of final energy consumption, the most striking feature of this chart is probably that electricity takes over from oil as a number one end user source of energy in 2015. This is due to the very strong assumption on electrification of end user demand, and that's what you can see to the right. Electrification of end user demand rose from 20% to around 30%. And keep in mind, by the way, that electrification is the cornerstone of most national decarbonization strategies, assuming then, of course, that power also decarbonizes.
As a result of this assumption on electrification, 75% of the growth in energy demand is covered by electricity. And then again, of course, it means that power will have to go green, and we'll come back to that in just a while. The electrification of end user demand is even more massive in rupture. It reaches 40%. You can see that on the chart.
For this to happen, we really need to act starting today because what happens over the next decade is very important for the world to be on the rupture trajectory of the chart and not staying on momentum. The left side of the chart shows something that may be obvious, but also worth underlining. As the global energy system decarbonizes, it also becomes much, much more diversified. And you can see that in the bar chart, which says 2,050 rupture. You can see all the colors, which are effectively all the end user energies that are available in 2,050.
It means more option to all of us as end users, and it means introduction of new energy carriers, especially secondary energy carriers. Power, hydrogen, biogas and biofuels account for more than 50% of end user demand in 2,050 in this scenario. That's, of course, a sea change versus today. So the world will need more power, meaning that power demand will increase rapidly. In momentum here, the growth of power demand is 2.1% for random net of energy efficiency, 2.1%.
That's 3.5 times more than the growth rate of primary energy demand. All end user sectors will electrify, and they will electrify more. In developed economies, that will be essentially through fuel switching, especially in the residential and commercial area and in the industry. In developing countries, access to energy is assumed to be dominated by access to power. The world transport sector will also electrify and will represent around 12% of power demand in 2,050, up from around 2% in 2018.
We'll come back to the power sector a little
later.
In rupture, growth in power demand is even faster. It's 2.9% per annum. You've heard Suttell say this before. Electricity is the energy of the 21st century. Well, that's even more true in a low carbon world.
You'll notice to the left that electricity also becomes widely used to produce hydrogen. It says so. The number 2 label on the bar chart, if you start from the beginning, on the Rapture 2015. So electricity for hydrogen, that would be water electrolysis with renewables. And that means that green hydrogen is assumed to make up more than 10%, effectively 12% of power demand in rupture in 2,050.
That's a massive chunk of new demand. And as a side comment, let me just stress that it's really important in these scenarios to close the loop on secondary energy carriers like hydrogen because hydrogen is produced either from power or from gas. And therefore, the amount of gas or power consumed to create hydrogen needs to be accounted for in the models. If that's not the case, you cannot compare scenarios across each other. On the right, we show we zoom in on the energy use in the industry.
Electrification reaches 43%. That's the orange piece on the bar. But some heavy industries that require very high temperature, for instance, for heat, like cement, like steel, like chemicals, are hard to electrify. And therefore, the industry will continue to rely on other sources of energy, be they fossil fuel based or be they hydrogen based, for example. And that's what we're showing on the chart here.
In rupture, we assume that CCS Technologies will be deployed at scale and will therefore abate 50% of the remaining emissions from the industry sector. So of course, as I've said, to have an impact on carbon, this step increase in power demand means that power must go green. So renewables take the lion's share of power generation and momentum. Actually, 70% of the increase in power generation in this scenario is covered by solar and wind generation, which means doubling the pace of annual capacity growth versus the last 10 years for both offshore, onshore all wind and solar are actually going much faster than the capacity additions of 2018. As you can see, it halves the carbon intensity of the power sector, And therefore, it saves around 14 gigatons of CO2.
Gas is growing together with renewables to manage intermittency and seasonality and is also replacing some coal, especially in the OECD countries and of course, in Europe with the green deal. In rupture, the emissions from the power sector almost disappear. That's what's shown to the right. It's a key contribution to carbon neutrality. If you remember the pie chart on the CO2 emissions worldwide from the beginning, The power sector is a strong contributor to those emissions.
But here, they're almost gone. Coal is gone at least. 80% of the global power mix comes from renewables, including hydro. Gas is still used in power generation, although its relative weight compared to today is obviously much smaller. And you can see that in the various colors on the bar chart to the left.
In fact, we believe that gas has a key role to play in the ongoing energy transition. Let's look at that first in momentum and then in rupture. The outlook here for momentum has natural gas demand growing by 1 point 3% per annum, driven by demand out of Asia, where there's a lot of coal to substitute. That would also fit very nicely with the recent announcement out of China that China wants to reach carbon neutrality out of at 2016. Gas' contribution is vital in power generation, but also in the residential and commercial sectors for buildings and in the industry, both as combustion for heating and as feedstock.
In transport, most of the growth comes from trucks and bunkering. However, to fully play its role in the energy transition, gas has become much greener and much cleaner. That will come at a cost, at least in the early years. In momentum, the green gas penetration is only around 8% in 2,050 because of that additional cost. And that's what you can see on the top of the bar, says green gases.
Essentially, therefore, because it's much more expensive and because there are not strong enough mandates or carbon regulation put in place in this scenario. The European Green Deal means that half of the worldwide in 2015. Ethanol retains a key role in rupture. That's something we fundamentally believe in. Gas plays a central role on the path to carbon neutrality.
It's flexible. It's affordable. It's reliable. It benefits in many countries from available infrastructure. And it is very broad based used and can be of benefit to the whole economy.
In addition, it speeds up decarbonization everywhere while gas substitutes coal, and that's another key benefit. To the right, you can see how natural gas gets complemented by biogas or biomethane and by hydrogen over time so that overall gases are on the rise in this scenario all the way to 2,050. Unblended natural gas reaches a plateau around 2014. The next chart here elaborates a little further on natural gas supply, and it compares momentum and rupture. In our low carbon outlook, gas becomes much greener than in momentum.
So the penetration of green gases reached 25%, which is roughly 3 times more than in Momenta. When it comes to gas use, which is to the left, over 50% sorry, to the right, over 50% of gas use is decarbonized, thanks to carbon capture and storage, in addition to the green gases. Moving on to oil and liquids. As I pointed out in the introduction, in momentum, oil demand reaches a plateau around 2,030 and then declines slowly due to the accelerated substitution away from oil. Demand goes greener as for gas, thanks to biofuels penetration, which reaches around 8% worldwide in 2015.
So energy efficiency gains and regulation are impacting both transport and pet cams in Europe, worldwide, but with Europe leading the way, and we'll come back to that. The adoption of sustainable liquid fuels, meaning biofuels and synthetic fuels derived from hydrogen, for instance, is much more widespread in rupture and reaches more than 20% of total liquids demand in 2,050. So carbon neutrality effectively requires this massive adoption of these newer kind of fuels, starting with biofuels and then over time adding in synthetic fuels. And nevertheless, maybe I should point out that there remains a solid base of demand for oil around 45,000,000 barrels per day in 2,050, coming primarily from the transport sector in emerging markets. But of course, that would be much less than the level of demand for oil that we know today.
Zooming in now on the transport sector. The momentum chart here shows 2 things. To the right, you see a massive pickup in worldwide traffic, and that's all amalgamated road, air and sea traffic due to GDP expansion and access to mobility in emerging markets, together with the steady growth in freight transportation. So that pushes up fuels demand, obviously, but this increase is partially offset by improvements in energy efficiency and engine efficiency. The second big message is that there is a major diversification in transport fuels, as you can see to the left, with a strong increase in electrification, but also in the use of gas, the use of sustainable liquid fuels, essentially biofuels in this scenario and even a little bit of hydrogen, all of which ultimately results in lower oil demand for transport in 2,050.
So the carbon intensity of the transport sector, which is also one of these big contributors to worldwide CO2 emissions, That ends up decreasing by around 25%, and that saves 2 gigatons of CO2 per annum in 2,050 despite the growth in demand. That's less, of course, than in the power sector, which was close to 14 gigatons, but it's still very valuable contribution to carbon neutrality. I'm staying on momentum just for a while because the next chart here elaborates a little more on this mix diversification in transport. The message is, and I will let you look at it, that for the various sub segment, light duty vehicles, heavy duty vehicles, aviation or shipping, for those different subsectors, the best fuel will be different. There will be an increasing role of electrification in all cases.
But then there will be different use of the different fuels to decarbonize gases, sustainable liquid fuels and so on. That's what you see to the left. And to the right, you can see that our scenario assumes a massive penetration of electrical vehicles in the light duty vehicle fleet, reaching 60% in 2,050. This is spurred not only by the EU Green Deal, but also by China and the U. S.
In rupture, the change in the transport fuel mix is even more radical. And effectively, as the title says, moving to net 0 requires a real revolution in transport. And effectively also, that's what the layered bar says in the chart to the left. So the bar called the rupture 2,050. All the layered colors are all the different fuels that will then be used in the transport sector.
So what do we have? More autonomy in batteries will allow for strong electrification of light vehicles. Massive deployments of hydrogen and sustainable liquid fuels will help decarbonize heavy duty vehicles and aviation. Gas with incorporation of biogas, especially will be widely used, especially for shipping and heavy duty vehicles. I know that the headline news right now in aviation is aircraft powered by hydrogen.
What we're showing to the right is the different most promising energies per transport categories. And if you take the second one, which is aviation, we have modeled a high penetration of sustainable liquid fuels, so not hydrogen. But we will add hydrogen and to the aviation model in the next iteration of our scenarios. But still talking about hydrogen. This energy terror is emerging and one of the as one of the most promising contributors to carbon neutrality.
I remind you that clean hydrogen can be derived from either natural gas with carbon captured and storage, that's called what's called blue hydrogen, or from green power electrolysis, which is called green hydrogen. You can see here how we've modeled the pickup in supply. And so it's a scenario for both momentum and rupture. Once again, we have closed the loop of this hydrogen supply in our models for gas and for power, meaning that what you've seen so far in terms of gas and power has accounted for this level of hydrogen supply being available in the world in 2015. As you know, today, hydrogen is mainly used in refining and in some special chemical plants.
Tomorrow, which we show that to the right, transport industry, storage and gas networks may all contribute to incremental hydrogen demand. For that to happen though, costs have to come down. There's a lot of people working on that. So let's make the assumption that it will indeed happen. I've got only a couple of charts left before turning to the European Green Deal if there is time, and I think there is plenty of time, in fact.
So one chart on petrochemicals. Petrochemicals is another sizable contributor to oil demand, so it's worth looking at. The chart here actually combines the 2 scenarios, momentum and rupture. The message is that despite an increase in demand for plastics, especially in non OECD countries, the oil demand for petrochemicals is likely to come down. And that's because we assume there will be a steady increase in recycling on one hand and also a progressive ban on single use plastics, 1st in the EU and in China and then moving to a rupture on a worldwide basis.
So all of this holds back the need for virgin plastics and therefore, the need for oil. So the steady increase in recycling is assumed to go from 7% to 50% of remaining plastics in 2,050 in rupture compared to 40% in momentum. We assume in Russia that the single use plastics ban is implemented on a worldwide scale, as I said, and only in Europe and China in momentum. And just a word on bioplastics, which is an interesting market, but which we think will remain a niche market over the next decades. So much on energy demand.
What about supply? We have only one chart on energy supply today, but it's an important chart. So what you see here is the supply of natural gas, of oil and solar and wind capacities in gigawatts in 2018 first and then an assumption about demand in 2,050. And so the column saying 2,050 show the level of demand that comes from the momentum scenario and the level of demand coming from rupture. So for gas and for oil, momentum leads to more demand in 2,050 than in rupture, hence the arrow going down.
Whereas for renewable energies, solar and wind, rupture assumes a higher demand than in momentum, and therefore, the arrow is going up. And then what we have tried to do is to extrapolate from the current supply of oil and gas what would still be needed what would still be developed and generating supply in 2,050, what could be handled through infill wells of existing fields and then the massive need for new projects that you can see in orange for gas and in blue for oil. For wind and solar, we're just showing the massive need for new projects in addition to the installed base in the world, which is a little orange rectangle, in 20 and 50. So the message is really that significant investments are needed for new oil and gas projects to offset the natural decline in the existing fields and also that significant investments are needed in renewables if you want to support low carbon electrification and therefore support the growing demand for power with low carbon. As you know, we consider that this strong growth in renewables is an opportunity in addition to the continued need for new projects in oil and gas.
And then finally, where do we stand with respect to climate and carbon neutrality? Once again, as I said in the introduction, momentum may see ambitious in many ways, but worldwide emissions are barely stabilized in this scenario even with the European Green Deal with respect to 2018. So we're far from the target. As shown here, even in rupture, which is the bar to the further right, we need nature based solutions, carbon capture and storage, direct air capture and other carbon sinks or negative emissions to get to carbon neutrality. But with help from those carbon sinks, rupture is on the right trajectory for net 0.
What's important is to create the adequate policy framework for this to happen. And so we've listed just some very high level prerequisites on the chart. Efficient carbon pricing schemes strong regulation and mandates on biofuels, biogases, sustainable liquid fuels and incorporation and support, of course, for green innovation. That's all I had really on our 2 worldwide scenarios, momentum and rupture. What I will now do is to go quickly over how we've tried to account for the European Green Deal in both of the scenarios that we've covered today.
And please remember, when I say Europe, I do include the U. K. And Norway. The first chart here is an attempt to show how the European Green Deal will fundamentally reshape the way energy is used and supplied in Europe. The fact is carbon neutrality requires a new energy system.
I like this comparison with the man of the moon. It makes him impossible, the way reaching the moon seemed impossible many years ago. But Europe is setting out to do it. We have 30 years to reach net zero and every year counts. So we need to mobilize all the drivers listed here, which are the same as the drivers we looked at for momentum and rupture.
And there are many others, of course, as well. If you compare with rupture, and I will let you do that, but you will see that everything has been severeized for Europe. All the drivers go far beyond the scenario in rupture within the European Green Deal. So the Green Deal is even more disruptive, if you want, than rupture on a worldwide basis. And so you'll see that rupture effectively addresses both more energy and less carbon, whereas in Europe, we can consider that we have the energy we need.
And therefore, we can focus on less carbon. So again, a recap of the emissions of CO2 in Europe in 2018 just to set the stage. The 5 sectors that we spoke about are still there, but you'll see that power heat and generation and other energy and transformation plays an important role in energy supply, the emissions from energy supply, whereas we've slightly changed the setup. Residential and commercial sector, industry and transport make up most of the emissions from end user energy. So reaching net 0 in Europe requires a combination of regulation, market instruments, including, of course, CO2 pricing, technology breakthroughs and scale up, for instance, for hydrogen, CCS, storage and sustainable liquid fuels and it also requires significant changes in end user consumption patterns.
Cost efficiency and affordability of all these new solutions will be absolutely key for social acceptance. So this is what the total primary energy demand of Europe looks like in our illustrative green deal scenario. So as I said and unlike for the other scenarios, you can see that the primary energy demand here is decreasing. It's decreasing by 35% versus 2018. And that's because there are higher efficiency gains in Europe than on a worldwide scale and also because the European GDP growth is roughly half of the worldwide GDP growth over the next 30 years.
But you can see how carbon neutrality truly drives absolutely major transformations in the energy demand of Europe. Fossil fuels are down by some 70% to around 25% of primary energy demand. There is a residual demand for oil between 1,200,000 barrels per day, concentrated in transport and in industry, including petrochemicals. Natural gas is also keeping a key role in power and to generate blue hydrogen. The result of the Green Deal is that emissions are down by 95% in 2,050 after accounting for 0 point 4 gigatons of CCS per annum.
And you know that the commission just published very recently kind of milestone for 2,030 where emissions in the Green Deal would have to be down by 55%. In our scenario here, we are close to that milestone. I think we have minus 51% or 52% on the trajectory to net 0 in 2015. So it's very consistent. So very quickly, how is this massive reduction in CO2 in Europe achieved?
Well, again, electrification of final demand is a key driver. Electrification in Europe reaches 45% in 2,050, and renewables are at the heart of Europe's electrification. The total power demand grows by 1.5% per annum. So that's much more, of course, than the total primary energy demand, which was decreasing. So this is due the growth in power is due to the massive scale up of green hydrogen, which represents 25% of power generation in 2,050.
I'll let you just dwell on that. 25 percent of new power demand coming from closing the loop of the use of hydrogen in Europe under the Green deal. And that's twice as much as the power demand derived from for hydrogen in rupture, which was around 12% in 2015. With such a high demand for electrons in Europe and with power being largely derived from renewables, let me point out something else. The fact that firming up power is likely to become a key theme in Europe.
Gas batteries and hydrogen will all play an important role to create that supply of firm power. So the reliability and the flexibility of power supply will be key in Europe. And again, I think we'll hear more about that. So in fact, we believe that the Green Deal doesn't lessen the role of gas, on the contrary. But as in rupture, gases will become much greener.
They will account for green gases were around 25% of gas in 2,050 in rupture. Here, we assume that green gases account for 60% of gas in 2,050 and up to 75%. Three quarters of European gas would be low carbon if you add in carbon capture and storage. All gases combined represent an equivalent of 35% of Europe's primary energy demand in 2,050, which of course is a kind of theoretical calculation because these gases here are not all primary gases. They include hydrogen, for instance.
Beyond the traditional sectors using gas, again, blue hydrogen derived from natural gas also contributes to pushing up demand. And you can see that on the bar chart called 2,050 Green Deal. It's at the very top. And so these various new green gases are a major contributor to Europe's deep decarbonization. All the more so, of course, as they can be deployed using the extensive existing gas infrastructure in Europe.
Here again, we show how we have assumed the growth in hydrogen supply in Europe to the left and in biogas, biomethane supply in Europe to the right. Blue hydrogen is likely to scale before green hydrogen because it's cheaper and easier to do. But both are required in the green deal. And biomethane is also a scalable green gas, but it may have a somewhat more limited potential in the long run, both due to feedstock availability and potentially cost if hydrogen delivers on its promise on scaling up and becoming much cheaper. In any case, the green gases deployment in Europe requires very large renewable energy resources, be it biomass or biomethane or be it wind and solar and other renewable energies for green hydrogen.
Of course, you can also derive hydrogen from nuclear, which is low carbon, but not something every European country is looking at, at this stage. Finally, a zoom on oil demand. As we've seen with the Green Deal, transport is being reinvented and oil demand becomes marginal. So to the very left, you see the decrease on oil demand in Europe, going from 2018 to what it would be without the Green Deal and what it becomes with the Green Deal. The substitution of waste from oil to cleaner energy takes hold in Europe.
And we're showing to the right that we've assumed 90% penetration of electrical vehicles in the light duty vehicles fleet in Europe. And so the transport mix becomes what you can see in the middle. The energy consumption is divided by more than 2 owing to energy efficiency gains and electrification. And the transport sector in Europe is decarbonized up to 85%, leading to a 90% reduction in emissions from the transport sector. Just as a comment, if you compare this with other scenarios, keep in mind that this is transport within Europe, so it excludes shipping and it excludes aviation.
A large last chart on the European Green Deal. I know it's very early days, and I know that we're only beginning to work on the Green Deal in this continent. But if there were any lessons to be had for the rest of the world, what would they be? Or maybe better than lessons, let's call them, no regret moves on the path to decarbonization. We've listed 10 here, and I will end my presentation with those 10 no regret moves learned from the European Green Deal.
Increased energy efficiency. In the Green Deal, there's a doubling of the pace in energy efficiency gains versus historical trends. Put a higher price on CO2. You know that Europe is working on efficient ETS and carbon board adjustment mechanisms to account for a cost related to carbon emissions. Making electricity greener.
In our illustrative scenario, 80% of power comes from renewables in Europe in 2,050. Eliminate coal. That's what the Green Deal does in Europe 30 years from now. Pursue innovation in gases and pursue also efficient energy system balancing. We assume in our scenario that 25% of the equivalent of primary energy demand will come from multiple kinds of gases, natural gas and greener gases.
Expand the low carbon hydrogen market and electricity storage. In our scenario, blue and green hydrogen makes up to 10% of final energy. Promote sustainable fuels and gases. We've modeled up to 50% of sustainable liquid fuels incorporation in our scenario. Make more efficient use of make more efficient use of plastics.
We've modeled a single use plastics ban in Europe by 2,040. And then consider that carbon capture and storage, other negative emission technologies, nature based solutions, direct air capture, All this is not an option. It's absolutely a necessity to reach carbon neutrality. In our Greendale scenario, we capture 0 point 4 gigatons of CO2 every year in 2,050. And then finally, speed up clean energy innovation.
That can then lead to scaling up of cleaner industries, and that triggers a virtuous circle for Europe in terms of growth, jobs and well-being. And that's essentially what the €1,000,000,000,000 Green Deal Investment Plan sets out to do. So that's what is all that I wanted to present today. Thank you for being online. Thank you for staying with us.
I hope you found the presentation useful. You will hear tomorrow how our macro views tie in with our strategy. I'd also like to thank all the teams in Total that have contributed to creating these scenarios and contributed, therefore, to the 2020 Total Energy outlook. Thank you to you. And now we're ready to take questions if you have any.
Thank you.
Thank you very much, Patrick and Helle, for the fascinating presentation. It's Michele from Goldman Sachs. I had two questions, if I may. The first one, of the underground storage. I was wondering if you see an opportunity for a different use of CO2, maybe strengthening cement or reverse engineering fuels that would make CCUS more widely acceptable?
And then my second question is on carbon pricing that you rightly highlight as one of the core avenues to achieve net zero. I was wondering how you see it evolving in Europe. It feels difficult to see an implementation of a broader and higher carbon price without a border adjustment. And do you think Europe can get it implemented or we run the risk of having a new trade war at the WTO? Thank you.
Okay. Good afternoon, everybody. Happy to be with you this afternoon. I think I will let Helene answer into the carbon pricing, not making politics myself. And just on CCS, I mean, just a few remarks.
First, it's clear that I think carbon capture and storage, storage onshore will face some resistance. It's obvious to us, I think and frankly, when we think to CCS, we need to think more to offshore storages, at least in Europe. Maybe it's different in the U. S. Where you have large spaces, I would say, inhabited.
But in Europe, I feel different it will be difficult for me to develop CCS onshore. Having said that, we are in Europe, have an asset, which is the North Sea, which we have developed and produced a lot of fields, which will be depleted with quite a lot of an industry, an offshore industry, which is also an asset. And so the question for us will be, can we reverse, I would say, these all these depleted fields and this knowledge of offshore in the capacity to store. This is exactly the markets of the Northland Alliance projects that we developed in Norway. And I think it's somewhere a vision that we should share.
And I think it's a vision which is shared by many countries in Germany of North Sea, Norway, U. K, Netherlands and Denmark, which have, again, a history in the offshore industry. Then there is, of course, other views because when we speak about carbon capture, there is something missing in CCUS and the use of CO2 is probably quite an interesting way forward. And when as you know, when Helle mentioned the sustainable liquid fuels, we all think to this equation, which is CO2 +H2 down is giving some synthetic fuels, I would say. So if you can combine once and capture with the CO2 and having some green hydrogen, you have the perfect equation and then you can produce in the future with sustainable liquid fuels.
So these synthetic fuels, I think, are really today are far I mean, we all know the chemistry of it. I think the scale up is not so complex, but of course, it's technology mature. Probably we can but it's economically quite immature, in fact. And so we have to develop all these, I would say, these road to synthetic fuels. It's clear when we think to the aviation of the future, that's something on which we need to work.
So that would be probably, I think, capturing the CO2, you are right, Michele, is probably better to think as a use of CO2. But of course, all these, I would say, possibilities are today quite expensive and difficult to from an economical point of view. Carbon pricing, maybe you can of course, Helmut, which has worked a lot, and I would like to thank Helmut and all the teams for this presentation. I can tell you it takes a lot of time to model all these scenarios. So thank you to you, but I'm sure that Helo, if you want to complement my own comments and take the second lesson.
No, I mean, Patrick and Michele fully agreed on what has been said. Of course, I think the World Research Labs, Japan, China, U. S, Europe, all over the world is working on the use of carbon. And so indeed, the synthetic fuels is what is taking the stage today, but there are other R and D projects on carbon use. We have some ourselves and of course, many start ups working on that topic also in addition to improving the way we capture carbon.
But so very fair comment. On carbon pricing, I think what you raised here, Michele, is really a key question for the competitiveness of Europe and for the European industry. So if Europe unilaterally implements very high carbon pricing, there is no doubt that the consequences for the European economy, certainly for the European industry, would be very detrimental. But the Commission is aware of that, and that's precisely why they are working on this project of a border adjustment. So will it happen?
Well, let's make the assumption that it will. Will it be simple to implement? Of course not. And will it trigger trade war? Maybe, maybe not.
But at least the notion within the Green Deal and within the commission is to create a level playing field for everybody wanting to sell goods to the final consumers in Europe. And I think that's a good way of trying to implement the carbon pricing. Now of course, it will be very complex to do. There's no doubt about that.
Yes. I mean just to compliment on it. I think it's really first mainly a real I think the green deal is globally a political project. And Europe wants to be like the image which was used by Helle to land on the moon.
It was to land on the line.
Okay, sorry. Landing on the moon. We want to be at the forefront of this climate change challenge. In fact, to transform it, there's a huge opportunity for the continent to develop the technologies and know how and not only to be green, but I think to have a green economy as a whole. Of course, this will require huge investments and this will have a cost for all everybody, including for the European consumers.
We should not hide it. So the question, of course, obviously, politically is, can we be the course without having some rewards, which are the opportunity of creating jobs? I think it's not possible. So of course, this is creating a lot of discussions and but either we are fully consistent in Europe or this could transform in disaster, paying the cost and not having the rewards, which will be, of course, not accepted by the European population because you cannot believe that we will implement the Green Deal against citizens and the consumers in Europe. What does that mean?
That I mean that I hear a lot about it's complex. Yes, it might be complex. I think the European Business Roundtable of Industryless, which we are part, is proposing to the Commission to begin by taking some sectors like cement, like steel to see how it could happen. Some few sectors to try to implement it sector by sector, not trying to have a very large approach where we raised many issues, but to try to be pragmatic and to see if it could work, of course, discussing with a few countries around the world. But I think it's a way also to be pragmatic and to implement it.
But I think Michele that the idea that we could build up a Green Deal without taking care of the jobs in Europe for our citizens would be a huge mistake and will mean we will not be able to land on the moon.
But I think, Patrick, as you said, the commission is at least addressing this. They are aware.
I see. Okay. Next question maybe.
Our next question comes from the line of Christian Malek from JPMorgan. Please go ahead with your question.
Hi. And yes, thank you for an excellent presentation and sort of very reasoned outlook on how we get to decarbonizing. And I have two questions. First of all, on your assumption of oil demand peaking or plateauing in 2,030. And where could you be wrong in that, in both being peaking sooner and ultimately that target being pushed out due to replacement and ability to actually source alternative fuels.
And within that context, how are you thinking about project sanctioning, particularly with long lead times? I know we'll hear more about it tomorrow, but as one of the kind of pioneers and leaders in Project Greenfield investment, how do you manage that outlook in the context of what could be quite a varied peak? And the second question is the extent to which you see the cost to decarbonize and how we should be thinking about that as analysts in modeling decarbonizing costs, whether it's carbon storage or the other solutions that you've talked about, to what extent will you have to sort of take the burden in terms of managing, investing in this? And should we be worried about its materiality?
I will let Helle answering to all your models could be wrong regarding the peak of oil demand. I will come back on the IFRS myself.
So could the models be wrong? Peak around 2,030. Honestly, I doubt it would happen much earlier. I think we have already been very aggressive in the modeling. And I will give you just one data point, which I mentioned and that you'll find in the chart again, Christian, but which is the aggressive assumption on electrification of transport with the penetration of EVs in light duty fleet, which is 60% worldwide in momentum.
And China and Europe being leading that and Europe being with the green deal at almost 90%. So I think we have a very severe scenario for oil demand. And therefore, of course, it could happen earlier, but I think there is more likelihood that it happens later than what we are showing here, although electrification of transport is happening. And so looking at FIDs, the question.
Okay. Now just to confirm, I know that one of our peers has announced that the peak is maybe already there. I mean, nobody knows, in fact. I mean, let's be clear. I think I'm sure also that I have some peers who consider that the peak will be in 2,040 or plus.
I mean, and honestly, I think we made a lot of mistakes in the past about supply peak. So don't let's not make the same mistake about demand peak. I think we don't move the energy system like it is. Obviously, this COVID pandemic has an impact on the short term. It's and we could derive of it, but maybe we'll never come back to the 100,000,000 barrels per day that we experienced last year.
We are not on that version. I think a lot of people in the world, including we should not forget the emerging world where the demand is coming from. And the real potential for the people there, they are looking for a better way of life and better living standards like it was set by Helle. And of course, here, we see a lot of push for electric vehicles. But to make to have EVs, you need to have electricity.
You don't have electricity everywhere. So honestly, I can support what just Helios said. Even in the momentum scenario, which fails to reach a 1.5 degree, The assumptions we have taken on board in terms of electrification of the worldwide labor to transportation is very high, and we are not yet on this trend. So having said that, what are the consequence for FIDs, Christian? I think obviously, for us, what is the consequence, I will come back tomorrow.
But it's the easy consequence is that if you consider that you will have a big whatever whatever whenever it is, to be honest, in 20 25, 2030, 2,035 and then the decline, that means that we this will have an impact on the oil price. So the consequence for us is that we need to take into account a reasonable scenario, a reasonable assumption. We take $50 on the long term. You can tell me, okay, we are at $40 but again, we are at 40 in the middle of a huge crisis where we have seen a big oversupply and a huge lack of demand. So it's not so unreasonable to take 50.
And that's the way we sanction the product. So I think the lesson for me or one of the main lesson pragmatically to our teams and to the Executive Committee on tariff investments is to stick to this assumption and not to begin because I'm sure that in 2, 3 years, we'll see again higher prices and to forget, like we have done in the last 5 years. We went from 30 to 50 to 60. So I think that's the fundamental message that we have. 2nd remark, I think the main issue for me is not really on the project we sanctioned today because it's rare to have projects which have a plateau of 15 or 20 years.
Most of our projects we sanctioned have a plateau of 5 to 10 years. So in fact, and then we'll decline. So most of the value we can extract for our shareholders are coming quickly in front of us, like the Uganda projects on which we work today. But it's more a question, of course, when you go to exploration. When you go to exploration, well, you have a cycle to explore for 8 to 10 years and then you will produce beyond.
This question is clear, and that means that this question of oil demand has an impact clearly of the portfolio of exploration license we must take on board, which is to go from, and I will come back tomorrow on it, so low cost oil. That's the main consequence of it. The last consequence, of course, is when you look to a very long term oil, which is expensive like oil sands between our positions, it's probably better to avoid to invest more in this type of place. Cost to decarbonize. After model the cost, are there material?
Helene?
Well, if you're if the question Christian is for states, well, the costs are material. If it's hotel, I'm not sure I got your question. So can you just rephrase it?
I think I got. I mean, we announced that we use $100 per ton beyond 2,030 as a sensitivity in our assumption. Is it the real cost to decarbonize? Maybe Christian, you can elaborate on your question and I'll answer you.
Yes. Yes. It's just whether you when we discussed before, if you have a high returns project versus a and you have it, it's also high carbon intensity and you want to retain that returns, so you don't want to sell the asset because it's sort of above the average carbon intensity, you're going to have to spend money to decarbonize. And the question becomes a trade off in terms of how you think about that relative to returns. I know it's difficult to quantify that cost at this point, but this is one of those trade offs, which I struggle with in terms of establishing either or if I'm looking at carbon and cost curve when I'm looking at an asset.
Your question on the scope 1 and 2 emissions?
Yes, I think so.
Okay. That's what I thought. Okay. Well, but so I think we'll talk about that a little bit tomorrow as well. But I think we have already told you that we take that into account when we look at projects.
Yes. And to answer to be more precisely, Christian, to your question, I think when you took $40 per ton immediately, honestly, the impact that we saw on the return of the project is less than 1%. So it's not a major impact. $1 per tonne beyond 2,030, of course, we'll have a higher impact. But it's maybe 1% it's 2%, let's say, at the end.
And the question is the more important question is what is the time to find a project which is will be achievable, which can match because you don't have all the situation around where you can make CCS, we can find the storage. So it's not a question of practicality. But so you can take the assumption 2%. Having said that, it's true that when you speak about hydrogen today, we are above $1 per tonne, the equivalent. If you want to make green hydrogen, I would say equivalent today in terms economically from hydrogen from gas, the real dollar per ton cost is $300 per ton.
So this technology that everybody is enthusiastic around in Europe in particular, yes, we can but at least we know that we have to the scale up of this technology could, will decrease the cost. That's what we observe in renewables. And that's clear that there are still a lot of efforts to be done in terms of how can we decrease the cost of the technology to come back to something more acceptable, dollars 300 per ton. But all the projects on which we work are more, I would say, demonstration projects. And the key question for all of us will be how can we embark and do we have but again, look to what happened to solar or wind offshore.
I think wind offshore, we were around $200 per megawatt few 3, 4 years ago. And today, we speak about $40 or $50 per megawatt. So I think it's to put in place the right support to allow the emergence of such technologies and markets, and then the cost will drive down. So we have to believe in the same mechanism, which again, we observed it very recently. But it's true that this market technology is green hydrated, will not emerge without a very strong support, to be clear, from the states.
It's clear that today, none of us is able to, I think, to invest at an industrial scale without such a support. We can do a demonstration project to implement it, I would say, at an initial scale. It will take a little time. But if we get the support, like it seems that the European states are willing to stop it because hydrogen is a core green deal. In France recently, like in Germany, the both governments have announced that within the package of supporting the economy, they put hydrogen of one's core area to invest.
This could happen. And then if we have the cars going down, the impact on the returns will be minimized, I mean. Okay. Next question maybe.
Our next question comes from the line of Irene Pimona from Societe Generale. Please go ahead with your question.
Thank you very much and good afternoon, Patrick and Helle. Going back to peak oil demand, just a question on the difference between the two scenarios. I would have expected under the more aggressive scenario rupture a much earlier peak, that momentum than perhaps the slides indicate. I'm looking at Slides 112. They don't show a huge difference.
So I wonder if you can talk a little bit more about the inertia that you see in the current energy system that is preventing an earlier peak under rupture?
Irene, I think the quick answer to that is that we say around 2013 momentum, it's a little later than that. And that momentum is already very aggressive as we just discussed. And you know that the fleets don't move that fast, but that's essentially the reason.
But there is a little time lag difference.
But there is a little time lag difference.
You have used the right word, Helene. Inertia, I think. There is an inertia which is just that you renew a fleet of vehicles, it takes 8 to 10 years. It's not in a 9, but it will happen. So there is an inertia in the system.
That's clear. That's why we have this delay and we are I mean, we have this not such a big not such difference.
In the early years.
In the
early years.
Any changes, yes.
Okay. Next question?
Our next question comes from the line of Lydia Renfrold from Barclays. Please go ahead with your question.
Thanks and good afternoon Thibault. I have two questions, if I could.
The first one, you did talk of
the need for technological breakthrough to get to the rupture scenario. How far away does the current technology get us? Is it 50%, 60%, 70% of the way there? And then the second one, if I could come back to hydrogen. Ashwin, the numbers on the residential and commercial and even the industry numbers look low relative to transport.
So can you just talk me through what the modeling assumes in terms of the lending of hydrogen? Or is that all closed loop systems for it? Thanks.
So essentially, Lydia, I would say of the at the macro level, what we've tried to do is to model rupture making the best of existing technologies. So but of course, if I take the example of batteries, they don't scale up as massively in momentum as they would do in rupture. But the answer to your first question is essentially what we see today in terms of possibilities for massive scale up of batteries and hydrogen and so on is limited green gases. One example I gave is that if the world doesn't embark on other very high carbon pricing or mandates or other forms of incentives to decarbonize gas, it won't happen. And therefore, it won't create this pull for hydrogen demand, for instance, because let's not forget what Patrick just said, but hydrogen is much more costly than natural gas.
So making hydrogen, gray hydrogen from natural gas with steam methane reforming is by far the best solution if you don't worry about carbon, right? So Momentum is trying to make the best of all these existing technologies, but then hits the cost of wall the wall of cost and hits the fact that there are not enough mandates worldwide outside of Europe to take you to where rupture takes you effectively. And then on carbon capture, direct air, I don't know if it's going to be widespread in 20 years from now and 40 years from now. But the assumption, of course, is that these newer technologies will scale faster in a world where carbon has a higher cost.
What are the key breakthrough which are taken into account in Rapture, just to come back maybe on more innovation? I think there are 2. 1 is storage. Storage? Energy storage is just fundamental.
And frankly, I do not think that we will lithium ion battery technology that we have today. We have what we have in hand to make massive battery system at the scale we need in Rapture. So that means that this is a technology field where we need to continue to look for. There are, of course, solid state and other ideas, but I think we don't have the best technology in our hand. That's something just essential.
The other mention, which was a question, is all what we call about synthetic fuels. This idea that we could develop synthetic fuels is a very good idea. But when you look to what are, let's say, the technology today, how can we develop it, it's really something fundamental. And then if you want to be net 0, you need to capture. We all hear about direct air capture technologies of because we see the limit of carbon capture and storage.
And we think that maybe there is a breakthrough that we don't have today. So the amount which is taken into account of carbon capture in the rupture scenario, which is around 7,500,000,000 tonne per year, is quite big. It's very large, in fact. It's even higher than what we need in the I think when I read the IEA scenario. So I think this will require another breakthrough.
So your question is, if we forget these 3 big technologies, what will be what where would we be between Rapture and Momentum in between? I think we are not far from the Momentum scenario, a little better. So I think we are out. But without this breakthrough technology clearly, we are not below 2 degree. That's the message.
So I know that today people think that we have all the technology in hand to reach the 1.5 degree scenario. I think it's not true. It's not true. We need to continue to innovate to look through looking. And I think it would be a mistake to believe that we have everything in our eyes.
It's just a matter of scaling up. Of course, we need to scale up what we have, but we need also to do more, which is to continue to look for technologies. And so it's I think the solution for climate change is not only a matter of carbon pricing, it's also a matter of investing massively in innovation. It would be a mistake of a public policies, which would focus on more of the economic side or the market side and forgetting this necessity to support innovation in many fields. The second question, what was it?
Yes,
sorry, Lydia. Can you repeat your second question?
And thank you very much for that. That's really helpful. It was just on hydrogen. I'm just wondering if you're looking at limits in terms of lending. So whether it's when you're looking at modeling, are you putting 10 percent blend into the mix?
Or is it 20% or are you going to 100% hydrogen in some of the heating at some stage?
In rupture, we're assuming that we're pushing the limits. But and as I just said, in momentum, the incorporation of hydrogen remains limited. But again, it goes back to your first question and in rupture. I mean, hydrogen is what it becomes a strong contributor to for industry even in potentially in Rescom. But so we have tried to model something which seems realistic today in terms of blending and including for power plants.
Yes. For example, on power plants, today people engineers told us that there is a form of limit of maximum 20% of hydrogen in a gas fired power plant. Obviously, the question will be how can we go beyond this limit, blending limit? I mean, I think it's a matter of look, innovation, reserves, right? It's the reason why we should not be able to do it, but today it's not in our hand.
So rupture has been designed without these limits. I mean, we consider that yes, it will be solved and that these hydrogen could be used extensively. Having said that, you know also that there is another limit to hydrogen to green hydrogen, which will be the capacity to produce more and more renewables because green hydrogen is in front of that. You need the renewable capacity otherwise. And so there is a chicken and egg story in the hydrogen, which will be another big issue, which will and the figures when you make the models are massive.
That's a point. There was a chart which was in the presentation of Helle where you could see that we need to increase a lot of the renewable capacity if we just want to be able to produce green hydrogen required by the rupture scenario. So that's something which is interesting and the way, another limit to the capacity to develop the hydrogen will be the capacity at the same time to develop these huge renewable capacity only for the purpose of green hydrogen. I think it's Slide 26. Somebody tell me.
Yes. So in Europe, I told you that it's 25% of power demand would be linked to the need to create produced green hydrogen. And in rupture, it's around 12%. So we've tried to model this and I
Look on slide 26, the investments in solar and wind capacity, they doubled from 10,000 gigawatts in the momentum scenario to 20,000 gigawatts. And that additional 10,000 is largely due to the fact that we have included in the rupture scenario a lot of hydroquinazzle.
Exactly. And so I just repeat this importance of closing the loops. And if you compare our scenarios to other scenarios, you need to make sure that those scenarios have also tried to do this global loose cropping.
Okay. Next question.
Our next question comes from the line of Alastair Syme from Citi. Please go ahead with your question.
Thanks very much and thanks, hello, for the presentation. It just struck me really on that last point that as you build more and more cheaper renewables, we get closer to a point of theoretically 0 margin cost electricity. It just feels very deflationary. Do you think that view is right and that the outlook for energy could be very deflationary? And if that is right, how do you think the policy can act to continue to incentivize investment in an environment where returns might start to degrade?
So, Alastair, I think the answer is yes and no, but it's more no than yes. And the reason for that is that I do think renewables per se will become cheaper. But I do not think that, that necessarily means the power sector will become deflationary. For this reason then that the bigger the penetration of renewables, the higher the need for all the grid balancing and grid stabilization that we've spoken a little bit about. So, I don't think everybody has understood how, A, renewables are capital intensive.
Yes, the unit cost will come down, but the grid cost associated with a higher penetration of renewables is still something that I don't think has been modeled properly. And if we continue to see a role for gas in power generation, for hydrogen over time, for storage, as Patrick said, So for stable, reliable, flexible baseloads, and that could be in some countries nuclear, of course. If we continue to see that, it's also because these power grids will be terribly complex to manage. And the notion is, of course, that I believe there will be a price to manage the power grids and that there will be incentives, market incentives. It will come naturally so that there is a space for new projects, providing what I call the firm power.
I think just remember that even if renewables will have a big growth at the end by 2,050 in the rupture scenario, electricity up within 40%, only 40%. It's twice more than the 20% of the 40% of the demand for energy. So you still have in your energy mix other sources. And I think it would be a mistake to believe that the cheaper renewables will just it will influence clearly the electricity markets. And I think it will put a lot of volatility, in particular, in the intraday, I would say, a lot of intraday volatility because, obviously, when you will have all these offshore wind in U.
K, when the wind is coming, it's coming for everybody at the same time. You could imagine to have negative price at certain point of the day. And then on the other side of the day, you will have better prices because we'll have less wind. So I mean, this will create a lot of instability in particular intraday instability. I mean said that, again, the world is looking like it was said by Ele.
To reliable energy. And the reliability is we'll never rely only on renewables. I think Look to what recently happened in California. I think it's a good lesson for everybody. You are a system and the citizens, again, and the customers, they want reliable energy.
And so it's why by 2,050, you continue to look to the mix and you will have in the mix still some gas, still some oil. Of course, the fact that there is a decrease decline of demand for oil will influence the oil price at the Earth border. But I don't see that the global deflationary outlook for energy, again, but okay, I mean, again, I will be very I mean, it's a question of humidity. We are always wrong about the future of price of energy. So I think, again, it's a matter of but it's not only renewables.
Again, my message is it's part of the system, but the other part of the system will have also to be invested. And like Helmut told to show you, we need to continue to invest even by 2,050 because of natural declines in some oil reserves and gas reserves because there is no it's not either ore.
I'll just add one thing on Power Systems, Alastair. There's been a good study done in the U. K. On what would be required in the U. K.
If it was a renewable only electricity system, not energy. And I just remember the 3 main words are effectively storage, we agree, interconnectors, we agree. But if everybody interconnects with an unstable grid, it doesn't help the grid. So you still need the stability, flexibility, reliability. And the last topic, of course, is sector coupling, which is an awful word just to say that the fact that you can go from one energy to the other, for instance, through hydrogen can also be a way to address energy system instability.
So we essentially agree with the conclusions of the UK study. And
And the more you invest in renewable, the more we need enforce in decentralized synergies, the more you will have to invest in grades, which today are a little forgotten, interconnection and grades. People speak a lot about solar farms implementing supply on the supply side, but the electric systems have not been designed even if people makes it possible to absorb all this, again, intermittency and volatility. So there will have also huge investment to be done, which today are not taken into account in all the costs, which are mentioned because we when we speak about costs, we about renewable costs, we think as marginal to an existing system, but somebody else has And you know we learned in some segments like oil sands in the oil business. But then when you invest in production, it's forgetting the networks and the infrastructures, you could have some bad stories after that. So I think that could also happen in sales segment.
And these infrastructures are costing a lot. By the way, speaking about CCS, again, one of the discovery we are doing by working on a project on Northland Heights is that, in fact, it's not a question only of cost of capture and cost of storage. It's also a matter of cost of infrastructure. And that could be a limiting factor to the developments of CCCUS because if you need to build all these infrastructures, these are quite right. So all that is not just we should not go too quickly and to look to lead to one element of the chain even if each element has to diminish its cost.
Okay, next question maybe?
Our next question comes from the line of Christopher Kuplent from Bank of America Merrill Lynch. Please go ahead with your question.
Thank you very much and good afternoon. Thank you for your presentation. Two questions. 1 for Helle regarding the modeling and another one for maybe you, Patrick, on some of your views politically on the topic of nuclear. We're talking about, in fact, you just said, for hydrogen to be profitable today, you need a very significant premium on carbon prices.
And I suppose the same you could say about new nuclear. Why do you think nuclear has been struggling for regulatory support? And why do you think in these long range forecasts, it doesn't play a bigger role? What's your view? And for you, Helmut, just wanted to check whether these scenarios are driven primarily by the global warming, I.
E, how do we get to 1.5 percent or whether they are more bottom up regarding your views on technologies. Because ultimately, what I'm getting at is, of course, how you take into account elasticity of demand. So what kind of underlying price assumptions did you take? Or didn't you take any at all and you just wanted to show what's feasible from a net euro perspective? Hope that makes sense.
Thank you.
I will answer that quickly because it's easy. As I told you, rupture is a backcasting modeling exercise where we start with what we want to achieve, which is reducing carbon emissions to be on a trajectory that brings us to carbon neutrality. So that's how we've so we work backwards, if you want. Using then well, going having taken that as a first approach, it is a bottom up exercise. So going country by country, sector by sector and looking at how demand might evolve to achieve that result and how demand in each of these sectors, in each of these countries can be decarbonized.
So momentum is led by technology innovation and rupture is led by 1.5 degree, summarize, to sum up. And that's but we had to develop it to see what do we need in terms of breakthroughs. To come back on nuclear, I think, yes, it's clear that the best way to produce hydrogen today is to link to a nuclear. That's clear. I would be a nuclear company.
I think I would be a big advocate for more hydrogen. It's obvious to me. It's maybe a way, by the way, to renew the interest for nuclear. Having said that, what we observe in the world, I think, and Europe, of course, but except France,
we are
on exceptions. But in many countries, including China somewhere, which has very slowest nuclear program, since Fukushima, there is a huge question mark about the reliability, the security safety issue, which means that we see a bad trend for nuclear, which is from all the regulatory authorities to increase the level of requirements and to make nuclear not competitive, in fact. I mean, imposing including in France, I can tell you the nuclear safety authority. They are just putting more and more and more and more and more regulations. And at the end, it makes these nuclear projects very expensive and difficult to compete with other source of energy.
So that's the question. And so there might be and there are some it's interesting to look to maybe new technologies maybe like the ones in nuclear the nuclear modular technologies, which are looked by some startups in the U. S. In particular, which is worth to look because it's a way to try to address on one side the security safety issues, but on the other side to making maybe from a new concept and less, I would say, massive and less expensive. It's the idea to have small modules of 400 megawatts, but making some cluster of modules.
That's something which might be a way to revive the nuclear, I would say, fuel in the future. It's clear that it's quite tempting to solve the 1.5 degree scenario, the rupture scenario. It's quite a temptation to put more nuclear in it, to be honest. We resisted because it's clear that you mentioned. But today, it seems that this and why also we know that there is a resistance look to the debate, the parliament, European Parliament, but nuclear is considered as black as oil, I would say, just because there is the idea that nuclear is nuclear waste, and that's not acceptable, I would say.
And so that's something which is linked. And there was just about nuclear in France, there was a poll there recently in France, which was mentioned to us recently by Mr. Confin, which is the President of the European Parliament Environmental Commission, which said that in the streets, we asked the people in France, do you believe what do you think nuclear, does it emit CO2? 70% of the French people believe that nuclear is emitting CO2. So I mean that nuclear in the mindset of people is linked to impact on the environment.
And so that's, I think, something which has to be taken into account. And I think it's there is a limit there to this to the, I would say, the expansion of this technology. But again, never say never. It's good to have a look at these modular technologies in the U. S, which are developed.
Thank you. Next question?
Our next question comes from the line of Martin Ratz from Morgan Stanley. Please go ahead with your question.
Yes. Hi. Good afternoon and thanks for the presentation. I wanted to ask you about the oil market. And specifically, what outlooks like this, which are becoming, at least in our part of the world, more consensual, what they're doing to the competitive dynamics.
And what I'm sort of trying to sort of point at is this, when oil prices were still very high, there was lots of funding available, but the resources were relatively scared and you competed against other oil companies to gain access to resources all around the world. But outlooks like this sort of paint very much opposite picture. It increasingly looks like there is a large amount of oil still to be monetized in coming decades, whilst at the same time, the amount of dollars that are willing to invest in upstream oil projects is increasingly scarce. So it looks like the dynamic has turned around where the resources are now abundant and the capital is scared. I was wondering if this is an actual effect or whether I'm kind of sort of hypothesizing about something that isn't actually happening.
Are you finding that countries that own large amounts of resources are sort of starting to adopt their behavior to outlooks like this and actually coming to you and say, Hey, do you want to monetize our resources and perhaps offer better terms to do so than in the past? Or is that dynamic not yet happening?
No. It does not yet happen, but it's a good dynamic because it's clear that there is maybe a large amount of oil. But again, with the perspective that we have, we need to look for our oil, which is will be which will have a low cost to be produced. And this is a lot of oil with a low cost to be produced, but in the hand, mainly of some national companies. And by the way, when you say there is less capital to invest in oil, it's true probably for listed companies in the Western world.
It's not true for plenty of national companies, which have in their hand 90% of the reserves. So and it's an excellent question, and this is a challenge for us. In fact, the next challenge will be to and for me, and that's why Total from my perspective, I will come back on that tomorrow. So I will not I don't want to anticipate is well positioned. The question for us is, how can we have access to these reserves or oil reserves which have a low cost to be produced in the future?
And which country can we and which we need to focus. And that's true that they are most of them are in Middle East and North Africa. And for most of them, we all know that. That's why from this perspective, I think Total has a competitive advantage to be used in the future, including to have access to these low cost oil reserves. But again, I will come back on it, but it's but the dynamic that you mentioned, Martin, it's clearly on the top of our agenda.
We need to work for to create it. I think it will come because I think also when we listen to the political leaders of these countries, they could be afraid that maybe they will not produce all their resource. And so it's a question of do they want to accelerate it. And from this perspective, maybe some of them will accept to have part of our capital to be invested. So that's a very clear and a very good observation, and I share your point.
Okay, next question.
Our next question comes from the line of Anish Kapadia from Policy Advisor. Please go ahead with your question.
Good afternoon. First question is, again, looking at the economic impact of the move to a greener world, there's clearly going to be a big governmental and consumer impact from the loss of taxes on things like gasoline and diesel at the pump, which are big source of revenue, and the cost of funding the likes of hydrogen and CCS, which is additional cost. I'm just wondering how you think about that and also in the context of potentially higher interest rates because one of the things that's helped Renewables at the moment is very low interest rates. And the second question is just, again, looking out to 2,050, there's a lot of things that could change, and there's a lot of other technologies that could be of interest. Can you just talk a little bit about some of the other low carbon sources of electricity, such as hydropower, geothermal and even more speculative like wave power and fusion.
What your thoughts are around that and how much investment you're putting in, in terms of R and D on those technologies?
Yes. I will take maybe the last question first. We have hydro in the primary energy demand. So we have considered that. When you look around, there are not 100 of new massive hydro projects worldwide.
It's a good technology and old technology that has been largely, I would say, deployed in many countries. And so it will continue to be there, but we do not think that hydroelectricity projects will suddenly be booming. That would be the quick answer. Fusion, we mentioned a little bit when we talked about next gen nuclear, which could be either fusion or decentralized nuclear plants and so on. So I think we've covered that.
Wave, geothermal and whatnot, I think it may be there. Geothermal is already there. Wave technology, we know that very well, of course, through everything we do offshore. The yields from these turbines and these systems when they're not even turbines involved, but they're very low. So we don't think that it would be a game changer over the next 30 years.
But having said so, we're probably going to be wrong, okay? But that's how we've looked at that. So it's part of the picture, but it doesn't really show up except for hydro.
Yes. I think they are very different, by the way, 3 segments. Hydro is quite mature, in fact. Reality is that hydro was the first venue we've all. And so when you look to the potential of very large hydro gigawatts, etcetera, yes, you have few in some emerging countries, but already it has been quite a lot developed.
Hydro is the 1st renewable history of renewable energy. So I think potential to grow hydro is not so large even if steal some projects. Wave, I would say today, honestly, it could make a lot of sense in islands environment, isolated environments where cost of energy are expensive, where you have some, but it's still very early said. And Xuzhong, I think, is still at the R and D stage. So we are far from that, so we didn't take that into account.
First question, I think, by the way, it's an interesting question, Manish, because you answered to, I think, it was the Alastair question about decreasing energy. Why do I don't believe that there will be a sort of deinflation in the energy because of what you just mentioned? The more we'll develop all these new energies, the more there will be taxes, there will be courses, etcetera, because and we'll be in that is the same world, but today where we have almost 0 rate in 0 interest rate. I think this will have an impact on the global economy and the cost of energy. So it's clear that today all that is helping a lot to support and fund, but maybe it's a unique opportunity that Europe is trying to, I would say, to grow.
To live on. To live on. It's clear that launching, I think, a €700,000,000,000 project program on with green energies in Europe. It's clearly something you can do today in these circumstances, which help the states to subsidize and to fund all these massive investments which need to be done. But it's clear as well that at the end, if there is a loss of taxes on one side, then we have to find other taxes.
So I think there is a I'm absolutely convinced that even if you don't transport gasoline in Europe, you will you don't tax gasoline I mean, you don't receive taxes of gasoline in Europe tomorrow, You will tax the use of the roads and because these infrastructures need to be financed and the maintenance of it. So no dream. And that's part of something which is today by the way, in the electricity, when you look to the electricity price for consumers in Europe, today you have more than 50% of taxes or 50% of taxes, and part of them are financing the development of renewables today. It's already part of it is already embedded. So the again, the big mistake would be and that's, by the way, a big difficulty with the Citizens.
We made some interesting inquiry. In fact, in the mindset of people, renewables means free energy. It's coming from the sun. It's coming from the sun wind. It's given to us by mother nature.
So in the mindset of the consumers, they think that this energy, which is given to us by, I would say, the planet, to the planet, should be free. And that will be a very difficult a political difficulty, not for we are part of it, of the system. But tomorrow, to explain to the people that they will have to pay the same price of the energy for, I would say, electricity which is going on EV. We agree on electricity and what they are paying today for oil. In fact, as you know, oil is not so expensive today.
In fact, that's the reality. It's less expensive than water. So I would say that's something which could be, again, I would say, hurdle from a society point of view in order to deploy largely these energies. Okay. I think maybe I don't know if it's next question.
Our next question is actually our last question and it comes from the line of Jason Gabelman from Cowen. Please go ahead with your question.
Yes. Hey, thanks for the presentation and thanks for taking my question. I have 2. First on the nature based solutions, which haven't really been discussed today, but it seems to be, in most company forecasts, are reducing global carbon emissions. What is the amount you expect to contribute?
Is it the same in the momentum and rupture case? And do you expect those nature based solutions to be kind of fully deployed in the near term given their kind of lower cost in nature than some of the other solutions to reducing carbon emissions? And then my second question is on Slide 5 where you list out the sector based assumptions. There are 2,050 targets, but I was wondering which of these 7 do you expect to have the most and least progress made by 2,030 or if you think the progress is going to be immaterial to 2,030? And then same question on which one of these sector based assumptions do you expect to have the most progress made by 2,040?
Thanks.
Okay. Let's go for NBS first.
Okay. On NBS, I would say we have essentially assumed the same amount of NBS in the two scenarios. Of course, the higher the price of carbon, the more projects would become economical, both for CCS and Nature Based Solutions and any other form of carbon capture or negative emissions. So that would be the short answer. And we also think that there are opportunities for nature based solutions to be deployed short term because there are available projects that are less costly, for instance, than CCS short term.
So that would be quickly on that. And of course, they cannot scale forever either in Nature Based Solutions. On Slide 5, so your question is
What's the assumption?
Yes, on the assumption. So well, that's there's going to be a qualitative answer here. So yes, so by 2,030 and 2,040, you said. I think, again, it depends also on different parts of the world. It's going to be difficult for me, Jason, to give you one short answer.
Electrification of end user demand, including transport, for instance, I think it's clear that China is set out to try and lead the electrical car industry. And so that is therefore going to happen even in the next 10 years. The same with the emission constraints put on conventional internal combustion cars in Europe. So I think Europe and China will push ahead with electrification of transport for passenger vehicles over the next 10 years. So I think that's very likely to happen.
And that's certainly what we've modeled in momentum and civil rights and for the rest of the world in rupture and certain states, of course, in the U. S. As well and California would be a good example. Power decarbonization, again, my answer is going to be depends on the parts of the world, but Europe is trying to speed up decarbonization. On the other hand, you know that Germany is not going to phase out coal in the next 10 years.
So it will be contrasted.
So just to answer, I think this one is probably one of the easy one because we see a lot of investments coming in renewable. So the acceleration of the base, we could I mean someone this one which could we should be able to do it. Yes. If I'm trying to just to take the relay, I think when you
look at the list,
the last 2 are probably very challenging.
Yes.
CCS, I think by 2,030, Again, I don't think we'll have industrial scale of CCL by 2,030, maybe 2,040. We still because it's quite expensive. So we need to create the momentum. By the way, the oil and gas industry is quite engaged with the OGCI. I see many initiatives being taken and it's necessary to go from a pilot demonstration to more industrial scale projects in order to try to but we need also to convince the state and not only the Norwegian states.
And energy efficiency, look the figure, Helle reminded you that what we have done in the last 20 years was around 1.5%. And I think this statistic is 1.6% of energy efficiency. I think it's what even on longer period, you find more or less between 1% 2%. So the idea that we can accelerate the energy efficiency to something above 2.5% is a huge effort. I'm not convinced that today this effort of energy efficiency, but the policies are really at the level required to go from 1.5 to 2.5.
5. And so that would be one of the big challenge. I would say plastics probably 2,030. We need to develop the chemical recycling technology. And so that's just, I would say, emerging today.
We have announced a project very which will come a first project in Europe on our side last week. So that will be I think the more at the horizon of 2,030 is a challenging one. Maybe you want to comment gas and sustainability?
No, you're right. Mechanical recycling is there, but it won't take us all the way we need and doesn't enable to recycle all plastics, especially for food users. So you're right, Patrick. Chemical recycling would be a factor that might slow down recycling in plastics single. Indications that this may gain some traction in certain countries.
And again, China and Europe would be leading. Mobility, we saw a little bit about. Gas getting greener, we've also touched upon when we've spoken about hydrogen and biogas. I think 2,030, it will be a stretch. 2,040, more likely.
It all goes back to what we discussed on the cost. This is extremely expensive to do. And so it goes back to government subsidies, incentives, feed in tariffs or whatever. And the ability for these greener gases to scale rapidly. And so I would put that after 2,030, but that's my qualitative personal Yes.
Just to remember to everybody that in 2,005, nobody was speaking about last year's solar. In 2015, it seems obvious to everybody that there is plenty of large scale solar around the world. So in 10 years, and this is I think maybe as a conclusion, we have all to be optimistic about capacity to innovate it would be a mistake to consider all this future only with present technologies. We need to be and again, it's a matter, of course, of policies and putting all the strengths together. But if clearly Europe is serious about hydrogen, in 10 years, you could have, like we've done in renewables.
And the policy that Germany has developed after Fukushima has put has given a huge push through the revenue we bought plus China. There was a big event. I think President Xi announced this week that in the Unique Nation last week that China will be neutral by 2,060. I'm convinced that it's a very serious announcement, and you will see the acceleration of China on EVs, on hydrogen, on all these new energies. Recycling.
Recycling, everything. So I'm convinced because when you see such a huge economy becoming serious about these topics, this will give a big impulse to the capacity of delivering these targets. So again, we have to think to what happened in our energy in the last 20 years. It's incredible capacity to develop energies, in particular to develop if we have the right economic, I would say, signals because new wave also have been developed because oil was around $100 per barrel. So it was too expensive.
So we give room for developing these technologies, but then the economic signals are important. I think I would say that there is no more I understand that was last question for more the lady which is giving us the question. So thank you for your attendance. That was the first part. I think we spent 2 hours on this Total Energous Look 2020.
I think it's, of course, it's paving, I would say, the landscape for what we will explain tomorrow about our own strategy. So we'll not come back on very few elements. But I think it was worth to share with you the various scenarios and challenges and how we can address this carbon neutrality, getting to net 0 with you. We've done it today because obviously, we would have already spent 2 hours. So I know that your attention is strong to what Total is willing to do, but it was better to cut it in 2 parts.
So tomorrow, I will I think I hope you will all be there via 2 p. M. Paris Time, 1 p. M. London Time and 8 p.
M. New York Times. We've done it for you in the U. S. After that, you have to wake up a little early or to sleep a little longer.
But even in Singapore, it will be 8 p. M. So I think it's acceptable. The session should last around 4 hours, 4 hours, 30 minutes. So we'll have one session where I will present you the strategy of the company, then a Q and A on it.
And then you will have free Zoom around 1 hour, a little more by Philippe on renewables, by burnout on biofuels and by Alexis on electric mobility. And with that, we will have covered, I think, so you should keep in your agenda from 2 to 6:30, probably 6, 6:30. It will but the more question you will have, the better it will be, of course, for all of us. But I think we'll try to keep the momentum and in order to present you this outlook of our strategy. So thank you for your attention today, and hope you will all be there with us tomorrow afternoon.