36 37 Funding the Growth 7 Calls to halt investment in fossil fuels were premature. Demand for oil in 2050 will have barely fallen from today’s levels and as such, so we must at least sustain the current level of investment and continue to invest in innovation, to produce harder-to-access oil and increase the recovery rate from existing fields. Today’s operators, with the help of AI, are becoming smarter, building topside capacity to limit initial peak production but maintain production for longer, upgrading recoverable oil estimates to prolong this production and minimize costs, which has helped to drive today’s oil prices below the long-term average of $73/bbl in 2024 real terms. The rate of electrification in the Global North and some industrial heartlands of the Global South will simply not be able to scale up renewables fast enough or reliably enough to satisfy growing demand for electricity. Electrification will grow from 22% of energy demand to 35% in 2050 (or 51% in a high case). While renewables will account for 85% of new installed capacity, gas will play a significant role in replacing retiring inefficient coal generation capacity (800GW of Coal retirements anticipated 2024-2050) and meeting the demand gap. As domestic gas demand in the US and Europe peaks, and production in Asia declines as it increasingly industrialises and needs increased dispatchable power loads, LNG demand will grow ~70% to resolve the regional imbalance. Efficient & effective distribution of capital to unlock global growth AI and the Intelligence Age will not run on code alone, but will require an abundance of kW to achieve their potential. Islanded data centers with their own power generation will evolve to support the power consumption of a city the size of Dubai, requiring reliable energy to run training models 24/7. The uncertainty in data center power demand is significant, with the base case assuming The world requires vast amounts of materials as it prospers, building huge cities of steel and cement, industrial plants and the infrastructure that connects it all together. The electrification of our energy system will add to this materials demand, with the associated demand for these metals being 1% of total energy demand alone. Petrochemicals will play an increasing role in substituting more energy-intensive materials, increasing from 6% of core materials (excluding lumber). While the world may need abundant affordable energy, it needs to make choices along the way. Getting the speed of transformation right can help to reduce energy demand, emissions, materials and capital, but it is a complex jigsaw to solve. See Call Out Box 3 BEV PHEV FFV New ICE On Road ICE 11 19 34 34 43 -41% LDV Energy Consumption per Vehicle (GJ/yr) 36 143 96 148 189 241 208 112 BEV* PHEV FFV New ICE On Road ICE PHEV- Green Case -24% -22% Cumulative Carbon Intensity per vehicle (gCO2e/Km) 1.67 1.38 Energy Payback Time for Different Power Technologies (Years) Hydro Solar Geothermal Wind Coal Gas Nuclear 0.58 0.58 0.17 0.14 0.12 BEV PHEV FFV New ICE On Road ICE 11 19 34 34 43 -41% LDV Energy Consumption per Vehicle (GJ/yr) 36 143 96 148 189 241 208 112 BEV* PHEV FFV New ICE On Road ICE PHEV- Green Case -24% -22% Cumulative Carbon Intensity per vehicle (gCO2e/Km) 1.67 1.38 Energy Payback Time for Different Power Technologies (Years) Hydro Solar Geothermal Wind Coal Gas Nuclear 0.58 0.58 0.17 0.14 0.12 BEV PHEV FFV New ICE On Road ICE 11 19 34 34 43 -41% LDV Energy Consumption per Vehicle (GJ/yr) 36 143 96 148 189 241 208 112 BEV* PHEV FFV New ICE On Road ICE PHEV- Green Case -24% -22% Cumulative Carbon Intensity per vehicle (gCO2e/Km) 1.67 1.38 Energy Payback Time for Different Power Technologies (Years) Hydro Solar Geothermal Wind Coal Gas Nuclear 0.58 0.58 0.17 0.14 0.12 BEV PHEV FFV New ICE On Road ICE 11 19 34 34 43 -41% LDV Energy Consumption per Vehicle (GJ/yr) 36 143 96 148 189 241 208 112 BEV* PHEV FFV New ICE On Road ICE PHEV- Green Case -24% -22% Cumulative Carbon Intensity per vehicle (gCO2e/Km) 1.67 1.38 Energy Payback Time for Different Power Technologies (Years) Hydro Solar Geothermal Wind Coal Gas Nuclear 0.58 0.58 0.17 0.14 0.12 Electrification is a key enabler of the energy transformation when it provides efficiency gains , even if decarbonization of the electricity produced occurs over time. Electric vehicles have much higher engine efficiency than ICE (90 % vs.30 % ), which translates to EVs being a lower carbon intensity option even when the electricity is generated via gas. Only when the marginal source of electricity is coal do EVs have a negative emission impact – although early switching is still beneficial due to the lag times necessary to replace the existing fleet (avg. car age 15-20 years) and allow the reaping of the benefits of a future decarbonized grid. Similarly, heat pumps with 300% efficiency and coal do 73% less energy consumption than conventional gas boilers result in 4 5 % carbon savings per unit of heat provided even when electricity is sourced from gas. On the other end of the spectrum, efuels (combining green hydrogen + DAC) while being zero-emission, are incredibly energy inefficient with end-use efficiencies (process + use) below 15%. With the average CO 2 intensity of the grid still roughly at par with gas (121 gCO 2 e/MJ), the energy waste associated with eFuels can be detrimental to the de-carbonization of the Optimizing the Energy system: Energy Efficiency, Carbon & Resource Intensity An efficient energy system transformation requires the whole system to be optimized across energy efficiency, carbon intensity and resource intensity, finding optimal trade-offs for each sector. Achieving a zero-carbon solution at the end user level might still prove a suboptimal solution, if associated with energy waste throughout the production process, or a disproportionate increase in the call on material/ minerals and resources. * Range based on average grid intensity to 100% coal in China. BEV PHEV FFV New ICE On Road ICE 11 19 34 34 43 -41% LDV Energy Consumption per Vehicle (GJ/yr) 36 143 PHE PHEV- Green Case Cumulative Ca 1.67 1.38 Energy Payback Time for Different Power Technologies (Years) Hydro Solar Geothermal Wind Coal Gas Nuclear 0.58 0.58 0.17 0.14 0.12 BEV PHEV FFV New ICE On Road ICE 11 19 34 34 43 -41% LDV Energy Consumption per Vehicle (GJ/yr) 36 14 PH PHEV- Green Case Cumulative C 1.67 1.38 Energy Payback Time for Different Power Technologies (Years) Hydro Solar Geothermal Wind Coal Gas Nuclear 0.58 0.58 0.17 0.14 0.12 global demand will grow 10-fold from 71GW today to 800GW in 2050, but the range of analyst views is wide, with the US alone (38% of data center demand) ranging from 220GW to 950GW in 2050. Yet let’s not get carried away – while data centers share of electricity demand will grow from 1.5% today to 8% in 2050, we have a lot of work to do to keep the lights on across the globe. This year, keeping the lights on has caught a lot of media attention. Today’s grid languishes in the 20th Century, relying on transformers with an average age of between 24 and 45 years. The grid is the largest machine in the world, connecting spinning generating capacity to thousands of spinning motors, all vulnerable to the smallest of changes in grid’s frequency. As the power system increasingly relies on renewable generation, the grid capacity needs to be increased three to four times that of conventional thermal power capacity, adding to the challenge of bringing the grid into the 21 st Century. In the US alone, the grid will need 70,000 miles of additional transmission capacity by 2035, yet last year only 350miles of capacity was built. At that rate we will only have enough capacity by 2235 not 2035! Unattributed quote Box 3: There’s $40 trillion sitting in sovereign and pension funds. It’s not about the money — it’s about execution. We need to rewire the financial system so that capital can flow into power and data infrastructure. overall system as it cannibalizes green electrons which can be used elsewhere. Moreover, achieving green electrification is, in itself, a source of additional energy demand , given the higher material intensity of renewable energy infrastructure vs. conventional alternatives. In the case of efuels, this additional energy might risk bringing the already low process efficiency even closer to zero. The embodied energy of solar and wind (i.e. the amount of energy needed to produce the material required for one unit of power produced) is almost 10 times that of gas due to larger infrastructure material requirements and lower load factors, which result in much higher payback times for clean power technologies than fossil fuels . The reliance on silicon in the case of solar, and concrete in the case of hydro, makes the energy payback times of these two technologies particularly high. Thus, when direct electrification is not possible and molecules are required, pairing conventional fossil fuels with DAC offer, a better decarbonization option than eFuels , as the latter suffer from the double whammy of high energy and material intensity (associated with the build-up of renewables capacity) and the energy losses derived from converting electricity into molecules. In fact, the overall production efficiency of eJet is 25%, versus a total process efficiency of producing Jet while offsetting its emission (of use) with DAC of ~ 60%.