BP : Clean energy – the single biggest market opportunity of our lifetime

Introduction

Hello everyone.

It's great to be with you today.

I'm delighted to participate in this latest Minds at Man session.

I gather it is the 52nd of 52 such programmes and there will be a hiatus after this - something which I hope is not related to my presence today!

In case you joined a little late, my name is Dev Sanyal.

Some of you will know me from my role as non-executive director at the Man Group.

But day-to-day I am bp's executive team heading up our gas and low carbon energy businesses globally.

A position I've held for 6 years now.

We started very small, but I now have a team of many tens of thousands who in the last year alone have contributed to over 400% growth in our business.

This growth matters in the context of what I want to talk to you about today.

Did you know that to reach net zero emissions by 2050, annual clean energy investment worldwide will need to more than triple by 2030?

To around $4 trillion.

That's $4 trillion, each and every year, according to the International Energy Agency.

And it could be as much as $110 trillion by 2050, according to the International Renewable Energy Agency.

Whatever scenario you look at the figure is trillions of dollars of investment in clean energy.

It is a huge sum of money.

But very hard to visualise.

One way to understand how big it is, is to think of it in time.

For example, how long ago do you think a million seconds was?

Let me tell you.

It was the 1 July this year.

What about a billion seconds ago?

Well, it was just after the fall of the Berlin wall. January 1990, to be exact.

It was also shortly after I started my career at bp.

A long time ago.

So, we know that a million seconds ago was 11 days prior to now.

And a billion seconds ago was 31 years back.

So, when was a trillion seconds ago?

100 years ago, maybe… 500 even?

It was actually 29,679 B.C.

It's absolutely incredible, and really illustrates just how big trillions is compared with billions and millions.

Another way to look at it is that $4 trillion was roughly the total GDP of Germany - the world's fourth biggest economy - in 2019.

Put simply, it is a huge amount of money.

That's why investment in clean energy is the single biggest market opportunity of our lifetime.

Its game changing.

In the way that the steam engines transformed the industrial revolution.

Or the internal combustion engine revolutionized people's individual mobility.

Or how the internet changed the face of commerce forever.

It's on that scale.

And rather than fear that scale of investment, as many do.

It is actually really exciting.

If you really embrace it, it can create massive value and be good for the world.

Because - as we know - the world is currently on an unsustainable path.

Our planet's carbon budget is finite, and it is running out.

So, it is incumbent on everyone:

On governments,

Businesses,

And individuals,

To do what they can.

It's the only way we can all solve the climate challenge.

And we see that momentum is really building across societies.

China has a new net zero target.

The EU has its Green Deal.

The US has re-joined the Paris Agreement.

And the UK has a plan for a green industrial revolution.

Around two-thirds of global GDP is now covered by countries with net zero ambitions.

And here in the UK we see that around a third of FTSE 100 companies have net zero targets.

That's real progress.

To achieve it will require - among many things - the decarbonisation of the energy sector.

at means a complete rewiring of the system.

Impacting everything.

From the energy in the boilers in our homes.

The cars that we drive

.To the power used in our hospitals and data centres.

It will all need to change.

And it's not just about decarbonising the energy system.

The trillions of dollars spent must also meet growing global demand for energy.

Just in the time I've been talking, around 1,500 new babies have entered the world.

By 2050, the global population could increase by 2 billion people, to around 10 billion.

Between then and now, the world's economy is set to keep on growing with GDP at around 2.6% growth a year.

80% of that growth comes from emerging economies, with China ‎and India contributing around half of the total.‎

And when it comes to growth in global energy demand out to 2050, that is entirely driven by emerging economies.

Growth in energy demand is not a bad thing.

Growing up in Darjeeling, India, I know first-hand the pitfalls of not having sufficient access to energy.

Power outages lasting several hours at a time were common.

They disrupted life and I'd often have to complete my homework by lantern.

That was 40 years ago.

But energy shortages are not a thing of the past.

Today around 3 billion people - that's 40% of the world's population - don't even have access to clean fuels for cooking.

Now that really is a problem.

So, this single biggest market opportunity of our lifetime is about driving decarbonisation.

But it is also about meeting increasing demand for energy, and the associated prosperity that goes with it.

To illustrate how we take advantage of this once in a lifetime opportunity I want to talk about inclusivity, integration, and imagination.

Let me explain.

Inclusivity

In today's fast-moving world there is often a desire to segregate into the good guys and bad guys when it comes to solving the climate crisis.

It's the idea that green companies are the good guys and companies that aren't yet green are the bad guys.

Solar and wind are positive for society, and oil and gas are negative - and so on.

But reality is not that simple.

Today's challenges are complex, and messy.

Yes, we must back green companies - of course.

But the truth is there is simply not enough of them to get the world to net zero.

Backing companies that are not low carbon today but are serious about becoming low carbon, is also important.

These are what bp refers to as 'greening' companies.

And bp is one of them.

We're part of the sectors - energy, transport and industry - responsible for over two thirds of global emissions

That's why bp is changing, and we want to change.

To do that, we last year set out the biggest reorganisation of our business in our 112-year history.

We are shifting from being an international oil company focused on the production of resources……to an integrated energy company that delivers solutions for customers.

Part of that process sees us ramping up our own low carbon investment tenfold to around $5 billion a year.

And in the last year alone we have made good progress

.For example, our renewable pipeline grew from 4 gigawatts to 23 gigawatts.

That includes going from 0 gigawatts to 3.7 gigawatts in offshore wind, with moves here in the UK and over in the US.

That's enough gigawatts to power around 45 billion electric vehicle miles a year.

We've increased our electric vehicle charging points by 35% to over 10,000, helping make EVs a more viable choice for motorists.

And we are making great inroads in exploring the potential development of hydrogen hubs in the north-east of England, in Germany and in Australia.

I'll say more about hydrogen in a minute.

Our progress on low carbon energy is encouraging and is aligned with a global trend that has seen fantastic growth over the past few years.

Even last year - when primary energy consumption slumped to its largest annual decline since the Second Word War - renewable energy generation continued to grow.

Wind and solar capacity increased by a colossal 238 GW in 2020 - 50% larger than at any time in history.

That's enough energy to make over four thousand billion cups of coffee each year.

And over the next three decades, renewables are likely to be the fastest growing source of energy.

Growing in fact at a faster rate than any fuel in history.

Yet, despite this growth, they alone will not be able to match global demand for energy.

That's because energy transitions take time.

The transition from wood to fossil fuels - first coal, then oil and natural gas - took more than a century. It will therefore take time for renewables - but that has to be much faster than previous transitions.

That's why it's so important that the world comes together - be inclusive - in order to seek opportunities to speed up this transition.

After all, greater pace leads to scale; scale leads to lower costs; and this will lead to greater uptake.

Integration

That brings me to my second point - integration.

This is where the argument for integration is strong.

We know that the world needs a diverse set of fuels in order to decarbonise and match energy demand.

Pure play renewables companies aren't able to offer a blend of fuels.

We therefore need companies with the scale and capabilities to help make the energy system greener.

The automotive sector is a good example to illustrate my point.

Tesla sold nearly half-a-million electric vehicles last year - a fantastic achievement from a company on the up.

But that's still less than 1% of 73 million cars sold every year.

Around 30 million of those cars are shared between Toyota, Volkswagen and Renault Nissan.

So, for the EV market to truly take off the world needs those companies too.

They are the ones with the installed infrastructure, the market knowledge, the capability, and the consumer demand.

The same principle applies to the energy sector.

Allow me to give you an example.

Microsoft and Amazon are two firms that bp works with.

They came to us because they want electricity and energy for their data centres.

They want that electricity and energy to be reliable - every moment of every day.

They want it to be cost effective because they're trying to make a return. And they want it to be clean because they have their own net zero goals.

If they go to a wind company for their needs, they will get clean energy and they may get cost effective energy.

But it won't necessarily be reliable - because renewable energy is intermittent by nature.

In contrast, a company like bp can offer wind as well.

But we can complement it with natural gas, the perfect partner for renewables, as you can dial it up and down depending on how much you need.

And then, in future, potentially capture the carbon using CCUS.

On top of that, we can use the expertise of our world-class trading business and our digital platform.

That's what bp means by an integrated energy company. And how we can offer a solution tailored to the customer's needs.

Imagination

Let me finish by talking about my final point - my final I - imagination, and the possibilities from investing in clean energy.

Widespread electrification, fuelled by solar and wind, can help decarbonise the energy system and help support 700 million EVs on the world's roads by 2050.

Long distance transport, such as trucks, which are hard to electrify can be powered by hydrogen.

That's green hydrogen, made from renewable energy.

And blue hydrogen, made from natural gas, where the emissions are stored underground through carbon capture use and storage.

Many of these cars and trucks will be in, and driving to and from, cities, because that's where 70% of the global population will likely live in 2050.

Growing cities need places for people to live, work and shop, and that takes cement.

But cement is the second most widely used material in the world after water, and responsible for up to 7% of carbon dioxide emissions.

So how about if we decarbonise the production and distribution of cement?

Mayors of those cities will need help managing emissions, electrifying transport systems and dealing with waste.

Well, that waste can potentially be turned into biojet fuel for the planes that fly in and out of those cities.

And biofuels can also power aviation and boats bringing goods into ports.

The opportunities are limitless, and don't all have to be imagined, as many of them are already starting to take place.

So, as you see, this really is a once in a lifetime opportunity.

A chance to reimagine energy for people and the planet.

It will take inclusivity, integration and imagination.

It's up to all of us to go and grab it.

Thanks for listening.