Good afternoon, good evening, and good morning. Thank you for joining us for the launch of this year's BP Statistical Review of World Energy. The good news is we're back broadcasting here from BP's office in St. James, London. Last September, we launched BP's Energy Outlook from a really fancy film studio with all sorts of illuminated backdrops and 3D effects. All great, until the lights went out. We were off air for 10 minutes. Sometimes there's a lot to be said for the old and trusted. More on that in a minute. The bad news is we couldn't invite you to join us in person today. Although life in the U.K. is gradually getting back to normal, lockdown restrictions still haven't been fully lifted. Thank you for joining us virtually. At last count, more than 8,000 people had registered for today's launch. I would also like to thank all of the team, both here at BP and at Heriot-Watt University, our long-term partners on the stats review, for their tremendous hard work and dedication in compiling this year's review. Producing the stats review is never the easiest of tasks, but I think it's fair to say that doing so whilst working remotely under lockdown made it even more challenging. A huge thanks to everyone involved. This is the 70th anniversary of BP Stats Review, something we are incredibly proud of. Since it was published in 1952, the review has provided a constant source of objective, comprehensive, and I think most importantly, trusted data to help industry, governments, and commentators make sense of developments in global energy markets. Over those 70 years, the BP Stats Review has borne witness to some of the most dramatic episodes in the history of the global energy system. The Suez Canal crisis in 1956, the oil embargo of 1973, soon followed by the Iranian Revolution in 1979, more recently, the Fukushima disaster in 2011. All moments of great turmoil in global energy, all pale in comparison to the events of last year. The pandemic that engulfed the world last year is a humanitarian tragedy. As of last week, around 4 million people were reported to have died as a result of COVID. The true number is likely to be far higher, it continues to rise. The pandemic also led to huge economic loss. Global GDP is estimated to have fallen by over 3.5% last year, the largest peacetime recession since the Great Depression. The IMF estimate that around 100 million people have been pushed into poverty as a result of the virus, and the economic scarring from the pandemic, especially for the world's poorest and least developed economies, is expected to persist for many years after the virus is brought under control. Long COVID can take many different forms. For energy, the combination of the pandemic together with efforts to mitigate its impact led to developments and outturns unmatched in modern peacetime. For energy, 2020 was a year like no other, and the aim for today is to use the new BP Stats Review data to try to shed light on those developments, and I plan to focus the discussion on three questions. First, over the past year, we've been bombarded with daily headlines of unprecedented developments and volatility. If we stand back from all that noise, what exactly happened last year in the world of energy, and how surprising was it? Second, the global pandemic was a mother of all stress tests. Engineers will tell you that we can learn a lot from how systems behave under extreme pressure. In that spirit, what can we learn from how the global energy system responded to the COVID crisis? Finally, this all took place against a backdrop of increasing societal and political demands for an accelerated transition to a net zero energy system. Indeed, Glasgow in Scotland was due to host COP 26, arguably the most important UN climate conference since Paris. In the event, the conference had to be delayed until November of this year. As we prepare for Glasgow, what lessons can we draw from the past year and from developments since Paris for the challenges and opportunities for this year's COP? In that context, I'm delighted to say that for the second part of today's launch, there will be a panel discussion to consider these issues. I'm really excited that we've managed to persuade three highly expert guests to lead that discussion. Nigel Topping, the UK High-Level Climate Action Champion for COP26, Paul Bodnar, Global Head of Sustainable Investing at BlackRock, and BP's Giulia Chierchia, Executive Vice President, Strategy, Sustainability and Ventures. We have an equally distinguished guest to chair the panel and pose the questions, Gillian Tett for the Financial Times. Super cool panel, and you will have an opportunity to put your questions to them, so please do stay tuned. Ahead of that, the three questions about energy in the year of COVID, starting first with what actually happened last year, and how surprising was it? The headline numbers are dramatic. World energy demand, shown on the left here, is estimated to have fallen by 4.5%. Global carbon emissions from energy use on the right by 6.3%. As you can see from these charts, these falls are huge by historical standards, the largest falls in both energy demand and carbon emissions since World War II. Indeed, the fall of over two gigatons of CO2 means that carbon emissions last year were back to levels last seen in 2011. It's also striking that the carbon intensity of the energy mix, the average carbon emitted per unit of energy used, also recorded one of its largest falls in post-war history. How should we think about these reductions? From a historical perspective, the falls in energy demand and carbon emissions are obviously dramatic. From a forward-looking perspective, the rate of decline in carbon emissions observed last year is similar to what the world needs to average each and every year for the next 30 years to be on track to meet the Paris climate goals. More specifically, if carbon emissions declined at the same average rate as last year for the next 30 years, global carbon emissions would decline by around 85% by 2050. For those of you familiar with BP's Energy Outlook, that's roughly midway between the Rapid and Net Zero Scenarios, which are broadly consistent with maintaining global temperature rises well below 2 degrees Celsius and below 1.5 degrees Celsius respectively. Now, last year's fall in carbon emissions was obviously driven by the huge loss in economic output and activity. A simple calculation comparing the fall in emissions with the decline in world output equates to an implied carbon price of almost $1,400 per ton. Scarily high. The challenge is to achieve sustained falls in emissions of a similar scale without causing massive disruption and damage to everyday lives and livelihoods. It is interesting to ask how surprising the falls in energy demand and carbon emissions were last year. They were the biggest falls seen for 75 years, but they occurred against the backdrop of a global pandemic and the largest economic recession in post-war history. How surprising were they, given everything else that was going on? The purple line in this chart shows the annual growth in energy demand with that huge fall of 4.5% last year. This yellow predicted line is based on the same simple framework we used in the 2019 Stats Review to analyze movements in energy demand. The framework uses GDP growth, changes in oil prices, and the number of unusually hot and cold days to predict the growth of energy demand at a country level, and then aggregates to global energy. The neat thing about the framework is that although embarrassingly simple, it can explain most of the broad contours in energy demand over the past 20 years or so. If we use this framework to produce a predicted fall for 2020, shown here in the yellow line, you can see that the actual fall in energy demand was far bigger than what we predicted. Even after controlling for the collapse in economic activity, the actual decline in energy demand was close to twice the size of the predicted fall, 4.5% compared to a predicted fall of around 2.5%. The main cause of this surprise can be better understood by looking at the size of the falls in the different components of energy demand. Oil consumption is estimated to have fallen by an unprecedented 9.3%, or over 9 million barrels a day in 2020. As you can see from this chart, this is far bigger than anything seen in history. It's also far bigger than the falls in any of the other demand components. Indeed, the fall in oil demand accounts for around three-quarters of the decline in total energy consumption. It's also the key factor accounting for the near-record fall in the carbon intensity of the energy mix. This next chart uses a similar modeling approach to derive predicted movements for each of the demand components, shown in yellow, compared against the actual falls in purple. As you can see, the fall in oil consumption in 2020 was far bigger than expected based on past relationships, and the extent of that discrepancy was far greater than for any of the other demand components. The decline in natural gas was pretty much bang in line with the model prediction, and electricity consumption actually fell by less than predicted. Indeed, for those of you who like to think in statistical terms, the only statistically significant prediction errors were those for total energy demand and oil demand, and the surprise in total energy demand can be entirely explained by that greater-than-expected fall in oil. Of course, for all of us who experienced extended lockdowns last year, this is hardly surprising. The lockdowns detracted from oil demand in a completely different way to a normal economic downturn, crushing transport-related demand. Mobility metrics fell across the board. Use of jet fuel and kerosene, shown here in red, is estimated to have plunged by 40% as aviation around the world was grounded. Similarly, gasoline demand fell by around 13% as road mobilities crashed. In contrast, products most closely related to the petrochemical sector, naphtha, ethane, and LPG, were broadly flat, supported in part by increasing demand for medical and hygiene-related supplies. In comparison, natural gas showed far greater resilience. Gas demand is estimated to have fallen by a little over 2% in 2020, broadly similar to the decline seen in 2009 in the aftermath of the financial crisis. Consumption fell in most regions, with the notable exception of China, where gas demand grew by almost 7% last year. The relative immunity of natural gas was helped by sharp falls in gas prices, which allowed gas generation to gain share in the U.S. power market and hold its own in the EU. Electricity consumption is estimated to experience the smallest fall across the main components of final energy demand, declining by less than 1% in 2020. The relative resilience of electricity consumption was aided by the nature of the lockdowns, with falling power demand in industry and commercial buildings, partly offset by increased domestic use by home-based workers and lockdown families. The relative resilience of overall power generation disguises a more significant shift within the fuel mix. In particular, despite the fall in overall power demand, generation by renewable energy, which for this purposes excludes hydropower, recorded its largest ever increase. This growth was driven by strong increases in both wind and solar generation, shown by these turquoise and yellow bars. Encouragingly, the share of renewables in global generation recorded its largest ever increase, and that continues the strong growth seen in recent years. Over the past five years, renewable generation has accounted for around 60% of the growth in global power generation, with wind and solar power more than doubling. The growth in renewables last year came largely at the expense of coal-fired generation, which experienced one of its largest declines on record, shown in the drop of the black line on the right-hand chart. These trends are exactly what the world needs to see as it transitions to net zero. Strong growth in renewables crowding out coal. That said, that more than doubling in wind and solar generation over the past five years hasn't made even the smallest dent in total coal generation. Coal generation in 2020 was essentially unchanged from its level in 2015, as last year's fall simply offset increases from the previous few years. As you can see from the right-hand chart, there's still a long way to go to squeeze coal out of the power sector. It will take more than just strong growth in renewable energy to remove coal from the global power sector, especially at the pace it needs to happen. In the developed world, there needs to be greater progress on energy efficiency. As we highlighted in last year's Energy Outlook, for many emerging market economies to make significant inroads into coal while still ensuring improving energy access, they will likely need to see an expansion in natural gas alongside renewable energy over the next 15-20 years. Finally, in terms of this first question, how surprising was last year's fall in carbon emissions? Or put differently, what message should we take from this fall for future carbon trends? Is this the beginning of the much-hoped-for downward trend in emissions, or just a temporary COVID-induced dip? The two elements combining to produce a near-record decline in carbon emissions, the fall in energy demand, shown here in purple, and the fall in the carbon intensity of the energy mix, in orange, can both be largely traced back to the unprecedented decline in oil demand triggered by the lockdowns. This suggests that as the lockdowns around the world are eased and economic activity begins to recover, there's a significant risk that last year's fall in carbon emissions will be reversed. Indeed, the IEA recently estimated that the level of carbon emissions last December was already back above pre-crisis levels. That's all I wanted to say on the first question. Moving to the second question, what can we learn from the behavior of the energy system in response to the extreme stress test induced by the pandemic? The focus here is on the supply response. How did different parts of the energy industry react to the sudden, unexpected fall in demand? As I've already mentioned, it's striking that the seemingly relentless expansion of renewable energy was relatively unscathed by the pandemic. Impressive resilience. I will say more about the encouraging trends in renewables later. For now, I'm going to concentrate on oil and natural gas markets, which were more severely affected by the events of last year. Moreover, oil and natural gas markets could become increasingly challenged in the net zero transition. It's interesting to ask whether we can learn anything about their future behavior from their response to the stresses of last year. We start first with oil. Over the year as a whole, global oil production is estimated to have fallen by 6.6 million barrels a day. Again, the largest fall in post-war history. To get a sense of the timing and composition of that supply response, it's helpful to split the year into three phases. Phase I covers the onset of the global pandemic from December 2019 to April 2020. This is a period in which global oil demand literally collapsed, with demand reaching a trough in April, more than 20 million barrels a day below pre-COVID levels, shown here in the pink bar on the top panel. This fall in demand is off the charts relative to anything seen in history. The initial supply response was totally underwhelming. In fact, it was counterproductive. The obvious source of supply that could react quickly was OPEC. As you may recall, the key OPEC + meeting in early March last year ended in disagreement, with supply actually increasing for a period as a brief price war broke out. Oil inventories shown in the middle panel here accumulated at a record pace, increasing by around 750 million barrels a day in just four months. The scale of imbalance is unheard of and generated severe logistical issues, both in terms of the availability of storage and the ability of excess supplies to access storage sufficiently quickly. Prices responded accordingly. Brent reached a low of below $20 a barrel in April, and oil markets made front-page news as U.S. WTI prices turned negative for the first time in history. Negative oil prices. The second phase, from April to August, saw a significant supply response. The main supply reaction came from OPEC+, who agreed to cut oil production by 9.7 million barrels a day between May and June, later extended to July. U.S. tight oil also responded, with production falling by around 2 million barrels a day between March and May. In normal times, the responsiveness of tight oil is typically framed in terms of a combination of the rapid decline rates in tight oil basins, together with the speed with which new investment can be halted. There was nothing normal about last year. The pace of response in U.S. output was far quicker than natural decline, and was instead largely driven by producing wells being shut in due to a combination of logistics and economics. At the same time, demand partially recovered as lockdowns were eased, initially in April in Asia, and increasingly in the U.S. and Europe. This resulted in a convergence of oil production and consumption, with inventories broadly stable at their new elevated level. The third and final phase, from August through to the end of the year, was one of gradual adjustment. Demand continued to edge up, although second waves of COVID across different regions slowed the pace of recovery. Some of the supply response from both OPEC+ and U.S. tight oil was partially unwound. Continuing OPEC+ constraint and compliance meant the market moved into deficit and stocks began to normalize. By the end of the year, around half of the excess stocks accumulated during the first part of the year had been unwound, shown here in this middle panel, and prices shown at the bottom here had recovered to around $50 a barrel. What lessons can we draw from this real-world stress test of global oil markets? For me, the main lesson was OPEC+ was both able and willing to step in and stabilize oil markets. Whether this means it will always be able to do so depends on the type of shock affecting oil markets. The nature of OPEC's power to shift supply intertemporally from one period to another means it has the ability to offset temporary, short-lived shocks. Indeed, in response to an economics exam question on the type of demand shock OPEC is best able to offset, a global pandemic followed by a successful vaccine would be close to the perfect answer. Short-lived, temporary shocks. Which is what makes the initial failure of OPEC to reach agreement in March 2020 all the more surprising. In contrast, the ability and the incentive for OPEC to offset a sustained and growing fall in oil demand, in say, a net zero transition, is far less clear. In that case, there may be a greater incentive for individual OPEC members to worry more about protecting and growing their market shares and less about stabilizing markets. We turn now to natural gas markets. I want to focus here on the European gas market, both because it's the largest market with active gas-on-gas competition, and because of the key role it plays as a balancing market for LNG cargoes. What can we learn from its behavior in response to the stress caused by the pandemic, with European gas imports falling by over 8.5% last year? The gas-on-gas competition in Europe takes the form of pipeline imports, predominantly from Russia, competing against LNG imports, particularly from the U.S. Russia competing against the U.S. Sound familiar? What a great movie. As LNG imports have increased in recent years, it has raised the question of the extent to which Russia and other pipeline gas exporters will either compete against LNG to maintain their market share, or instead forego some of that share to avoid driving prices too low. This issue could obviously become more acute in a transition in which Europe moves away from natural gas and competition between different gas supplies intensifies. Although there's lots of complicating detail, it appears that Russian exporters were prepared to forego some market share last year. Pipeline imports from Russia as a share of European gas demand fell from 35% in 2019 to 31% in 2020, with much of that reduction happening in the first half of last year. Some of that reduction initially reflected record storage levels, which had been built up towards the end of 2019. Russian volumes remained low through the second quarter, when the impact of the pandemic on European gas demand was at its height. In contrast, LNG imports, shown here in turquoise, were up year-on-year in the first half of 2020, and their share of European demand for the year as a whole was broadly unchanged. Whether this provides a guide to the future behavior of Russian pipeline exports is less clear, and the argument here is similar to the point we just discussed in the context of OPEC. In response to a fall in demand that is expected to be relatively short-lived, it may be entirely rational for pipeline exporters to use their flexibility to reduce supply temporarily to help stabilize the market and support prices. The response to a sustained and growing contraction in gas imports as Europe transitions away from fossil fuels could be very different, with a stronger incentive for Russian pipeline exporters to compete to be the last producer standing. One of the factors affecting the response of pipeline exporters last year was their perception of how low European prices would need to fall to shut in LNG exports. This takes us to the second aspect I mentioned, Europe as a balancing market for LNG flows. Until last year, this question of the shut-in price for LNG exports was largely hypothetical. Shut-ins had never occurred at scale. That all changed last year. The red line in the top panel of this chart shows a highly simplified view of U.S. LNG exporters' short-run operating costs, the red line. As European LNG forward prices, shown here in green, fell below those operating costs, this triggered a significant shut-in of U.S. LNG exports. In simple terms, LNG exporters were making a loss on each cargo they supplied, so they stopped supplying them. Average utilization rates of U.S. LNG facilities, shown in the bottom panel, began to fall in April last year, reaching a low of around 30%-35% at the height of the summer. U.S. LNG exports still increased by around 30% last year, helped by three new LNG trains coming on stream and several others ramping up. Absent the shut-ins, the growth in U.S. exports would have been closer to 80%. Looking ahead, the European market is likely to remain a key barometer of global gas market trends. Turning to the third and final question, with the build-up to the Glasgow Climate Conference gathering pace, I want to spend a few minutes putting last year's developments into the broader context of progress made since the Paris COP in 2015. The goals agreed at Paris are widely seen as a watershed in terms of both achieving global alignment on ambitions for limiting temperature rises, and all countries agreeing to make their contribution to achieving those aims. Almost six years on from Paris, how is the world doing? One of the biggest changes since 2015 is the marked increase in focus and ambition on getting to net zero. At the time of the Paris Agreement, no major country had made a formal commitment to achieve net zero. That accolade went to Sweden, who in June 2017 pledged to reach carbon neutrality by 2045. Fast-forward to today, 10 countries, together with the European Union, have passed net zero targets into law, and a further 34 countries have either proposed legislation or outlined policy goals with the same intent. The IEA recently estimated that together, these commitments and intentions account for around 70% of global carbon emissions. Although still early days, there are encouraging signs that the collective jolt and huge costs of COVID may have led to increased determination to prevent an even more damaging global trauma in the form of climate change. Rising level of ambition is also evident at the corporate level. On last count, the number of companies with stated aims or ambitions to get to net zero had increased more than sixfold since 2019 to over 3,000, shown here on the right-hand chart. This rise in corporate ambition has coincided with growing societal expectations for companies to both increase further their transparency about climate-related risks and demonstrate their strategies and actions are Paris consistent. One manifestation of those changing societal expectations is the explosion in ESG-related investments. Inflows into ESG-related funds have increased from less than $30 billion in 2015 to over $330 billion in 2020, an elevenfold increase in just five years. The world of investment seems to have changed for good in both senses of the word. Although these developments are hugely encouraging, they come with two major caveats. First, countries' pledges still don't go far enough. Despite the substantial increase in net zero aims and intentions, the UN NDC Synthesis Report, published last December, concluded, and I quote, "That the current levels of climate ambition are not on track to meet our Paris Agreement goals." Second, these ambitions are not yet translated into outcomes. This chart is taken from the IEA's World Energy Outlook, or WEO, published in December 2015, so just prior to the Paris COP. The 2015 WEO contained three scenarios for carbon emissions based on different assumptions about the future setting of global energy policies. A continuation of current policies, shown here in red, the implementation of declared policy intentions in green, and a set of policies consistent with limiting global temperature increases to 2 degrees Celsius, the so-called 450 Scenario, in purple. If we compare those scenario paths with what's actually happened to carbon emissions since then, shown by this dotted line, you can see that until last year, carbon emissions had continued their unrelenting rise. That rise was pretty much in line with the policy intentions that had been declared prior to the Paris COP. Importantly, there was no sign of the decisive shift envisaged by the less than two degrees purple scenario. Last year's COVID induced fall put emissions closer to the two-degree pathway. As we discussed earlier, there's a good chance that much of that dip proves transitory. Hope and ambition need to be translated into tangible, concrete differences. Much of the attention of the Paris Agreement is on the response to climate change, the agreement stipulates that this response should be in the context of sustainable development and efforts to eradicate poverty. The UN Sustainable Development Goals for 2030, which were adopted around the same time as the Paris COP, provide a natural benchmark for monitoring progress on this aspect of the Paris Agreement. There are several strong interconnections between the Sustainable Development Goals and the global energy system, including on conservation and biodiversity. Perhaps the closest to home is SDG 7, ensuring access to affordable, reliable, sustainable and modern energy for all. The good news, significant improvements in energy access have been made over the past five years. The number of people without access to electricity has fallen from close to 1 billion in 2015 to a little over 750 million by 2019. Around 10% of the world's population, down from 15% in 2015. Encouraging progress. However, just as with emissions, that progress comes with caveats. The improvements have been uneven, with three-quarters of the global population without access to electricity concentrated in sub-Saharan Africa. Moreover, the impact of COVID has reversed some of that progress. The World Bank estimate that the pandemic has made basic electricity services unaffordable for 30 million more people, the first reversal for six years. Access to clean cooking facilities, the other focus of SDG 7, lags far behind, with around 2.6 billion people estimated not to have access. Moreover, the concept of energy access is somewhat nebulous. The UN defines access to electricity in terms of a minimum level of residential consumption. The level of energy needed to support strong, sustainable economic growth is likely to far exceed that. Energy is vital for productive uses as well as for household consumption. For example, the Energy for Growth Hub propose a modern energy minimum of around 1,000 kW per hour, per person, per year, which they argue is consistent with countries reaching a lower middle-income status. That's around 4x greater than the UN definition. Importantly, the Energy for Growth Hub estimates that more than 3.5 billion people, close to half the world's population, are living below the modern energy minimum. Half the world's population. Lots more to do in terms of energy access. Arguably, the single most important element of the energy system needed to address both aspects of the Paris Agreement, respond to the threat of climate change, and support sustainable growth, is a need for rapid growth in renewable energy. I'm pleased to say that renewable energy over the past five or six years has been a perfect example of that tangible, concrete progress I mentioned. If we start with what happened last year, focusing on wind and solar energy, which is where most of the action is. Despite the huge disruptions associated with the global pandemic and the collapse in GDP, wind and solar capacity increased by a colossal 238 GW in 2020. That's 50% larger than at any time in history. The main driver was China, shown here in blue, which accounted for roughly half of the global increase in wind and solar capacity. As you can see from the chart on the left, the expansion in Chinese wind capacity last year is particularly striking, more than double anything seen in the past in China. Just look at the size of this increase in China's wind capacity in 2020, shown with a blue bar, compared to anything seen in history. It's likely that some of the reported increases reflects various changes to Chinese subsidies and accounting practices. Even controlling for that, it seems clear that 2020 was a record year for the build-out of wind and solar capacity. Viewed over a slightly longer period, wind and solar capacity more than doubled between 2015 and 2020, increasing by around 800 GW, which equates to an average annual increase of around 18%. That's pretty much in line with the growth rate envisaged in BP's Rapid and Net Zero Scenarios over the next 10 years. The challenge is to maintain that pace of growth as the overall size of renewable energy expands. In that context, it's interesting to ask what factors have underpinned the strong growth over the past five years. This chart compares the actual growth of installed wind and solar capacity in orange with the profiles in BP's 2016 Energy Outlook in green. As you can see, along with many other forecasters, we materially underestimated the growth of wind and solar power over the past five years. A key factor contributing to this underestimation is that costs of renewable energy have fallen by far more than we projected in 2016. The costs of onshore wind have fallen by around 40% over the past five years, and solar power by 55%, far more than the 15% and 20% projected in the 2016 outlook. Although it's a gross simplification, the processes driving cost reduction for renewables are often summarized in terms of a learning by doing framework. The idea here is that as ever-increasing amounts of renewable capacity are produced and deployed, manufacturers and producers along the supply chain learn how to become more and more efficient, driving costs progressively lower. Viewed in this way, renewable costs can fall by more than expected, either due to faster learning, if costs fall by more for a given increase in deployment, or due to more learning, if the increase in deployment is greater. This chart compares our projection for renewable costs in 2020, shown in green, so this is what we thought renewable costs for solar would be in 2020 when we made our Energy Outlook forecast in 2016, and it compares it with actual costs in 2020. What the charts try to do is disaggregate the factors causing the difference. The biggest factor accounting for the difference is faster learning, shown by those yellow bars, which explains around three-quarters of the error on wind costs and two-thirds for solar costs. Costs fell by more than we projected for a given increase in deployment. Interestingly, the majority of the more learning contributions, that is because deployment of wind and solar was stronger than expected, stemmed from China as renewables gained share from coal. This transition has gone hand in hand with a massive scaling up of China's renewable manufacturing capacity, which has helped reduce the cost of wind and solar power around the world. An upbeat message on renewables, but it's important to remember this pace of progress on renewable energy needs to be matched by the many other dimensions of the energy transition. Increasing energy efficiency, the growth of new energy vectors, such as hydrogen, to help decarbonize hard-to-abate sectors, the increasing use of bioenergy, and the build-out of CCUS, Carbon Capture, Use, and Storage. Continued rapid growth in renewable energy is necessary to get to net zero, it's not sufficient. 70th birthdays are an important milestone. They provide an opportunity to reflect on the events that have shaped your life. There's certainly been many changes in global energy markets since the review was first conceived in 1952. As my mother-in-law said to me recently, "You can still be surprised at 70." For the BP Stats Review, like so many of us, 2020 will go down as one of the most dramatic and surprising years in its long life, with the largest declines in energy demand and carbon emissions seen in modern peacetime. The importance of the past 70 years pales into insignificance as we consider the challenges facing the energy system over the next 10, 20, 30 years as the world strives to get to net zero. Will 2020 be seen as a turning point when the shock of COVID finally caused the world to take decisive action to mitigate the threat of climate change? Will the good intentions and increased ambitions of the past few years be translated into significant, sustained falls in emissions? Will renewables be able to maintain the rapid rates of growth seen over the past five years? How important will the private sector in the form of green and greening companies, prompted and supported by growing societal expectations, be in the eventual success or otherwise of the energy transition? If 70th birthdays are important, 100-year anniversaries are really special. What progress will the 100-year-old Stats Review report as it analyzes developments in 2050? To discuss some of these issues, and I'm sure many more, let me pass you over to Gillian Tett of the FT to introduce you to our panelists for the next part of today's launch. Gillian, over to you. Well, thank you very much indeed for that fascinating presentation, which in my view contains the good, the bad, and the ugly. The good news is that emissions fell last year. There's a new seriousness of purpose amongst many businesses and governments about the need for action. Also, renewable energy has soared. The bad news is that, as you said, the renewable energy increase is not enough to offset the coal usage. Many of the pledges that governments and businesses have made about net zero are not yet being implemented properly. At the same time, the carbon emission fall we saw last year may not be repeated this year. In fact, it's very unlikely to be repeated this year. It may have already been reversed. That leaves the ugly, which is that taken together, that suggests we are not going to hit the Paris climate change goals. Let me stress, on current trajectory, as far as I can see, we're not going to hit the Paris Agreement goals, which is very, very alarming. I'd like to ask the panel their thoughts about all this. We have a terrific group of people, Nigel Topping from the UN, we've got Paul Bodnar from BlackRock, and we've got Giulia Chierchia from BP itself. I'd like to start with you, Nigel, which is that you are the voice of independent reason and argument in all this debate. You are trying to be the global conscience and push people forward a bit like herding cats, given the different interests around the UN right now. When you look at this report, let me start with the most basic question. Does this imply that we're going to hit the Paris Agreement goals in your view? If not, just how bad is that going to be? Well, I mean, the report clearly doesn't say that we're going to hit the Paris Agreement, as you say. It says that we've got a big drop for understandable reasons, which Spencer explained really well, but that we're likely to rebound. I mean, there is some encouraging news in there, as you say, but we're really going to have to crank up the pace of change of deployment of renewables and of winding down the addition of hydrocarbons into global energy mix. I think that, if anything, the report just re-emphasizes how serious the challenge is. I think we're going to see this year a much stronger societal push for acceleration because we're going to have the next wave of scientific reports in a couple of months, which are not going to be good news, right? I mean, as people are experiencing right now with hurricanes ever earlier and with heat. I never knew that heat dome existed when I was a kid. I mean, what's a heat dome, right? Whole towns are disappearing now. No, I don't think the report for one minute suggests that we're on track to solve the problem. It just re-emphasizes how much more we need to do. There is the potential to do it. Right. Well, there is the potential. I'm going to come back later on and ask you about the potential to do things. I'd like to make a pause at this point because I'm going to the Venice G20 talks at the weekend. Terrible irony that it's happening in Venice because UNESCO is going to come out fairly soon, I suspect, and say that Venice is going to be endangered because of climate change. I'm curious, up until now, the emphasis of a lot of what people like BlackRock have been doing is on ESG, private sector initiatives amongst investors and businesses to tackle these issues and force companies to change. Do you think that the governments are doing enough? What do you want to see from the G20 meeting coming up this weekend, given the message from the BP report? I think it's understandable that for the first 25 years or so of humanity's efforts to deal with climate change, it was understood as a project of governments. That project culminated in the Paris Agreement and now the efforts to implement it. As the drive to net zero expands to the corporate sphere and to the financial sector, I think we're understanding that this is really an all hands on deck project to decarbonize the global economy fast enough to avoid the most dangerous effects of climate change. We can't just think of action as the province of governments. We need to think and act the way the global economy is organized. It transcends borders. We have global supply chains, global markets, global technology trends. If you think about the forces that have the best track record of driving deep, rapid change in the global economy, it's market forces primarily. I think it's a positive development. Nigel's been rallying a lot of the companies and financial institutions, bringing them to the table that we see this as a collective project. Governments absolutely need to lead, and there are great examples that I'm sure will be discussed in Venice, like the fact that just focusing on decarbonization will create uneven effects in different kinds of communities. There needs to be a just transition that takes into account not just the potential stranding of assets, but the potential stranding of workers and communities along the way. Of course, that is definitely something for public policy to do. In my experience, I've worked in government and non-profit in the private sector. In my experience, there's a tendency to see climate action as something that is either a public sector project or some sort of voluntary private sector activity. I think we need a more nuanced approach going forward. That's what I'll be looking for signals of in Venice. Right. Giulia, I'm curious on your perspective because, the fact that you are essentially in charge of sustainability strategy for BP is striking. If we were to wind back the clock 5, 10, 20 years, this kind of tone or message from a report from an oil and gas major and energy company would not have been there. I'm curious, do you think that the oil and gas sector as a whole is moving fast enough to address these issues? Certainly, people like Greta Thunberg would argue no. I'm curious about how you see the overall pace of transition right now. Yeah. Thank you very much, Gillian. I think we have seen over the past few years, and I think COVID has been a tremendous accelerator in that process, significant acceleration and momentum. We are seeing the oil and gas industry and, in particular, specific companies within the oil and gas industry, making very specific steps forward in terms of commitments to net zero. We have indeed within 2020 announced a net zero commitment for the company specifically, as well as an ambition to actually help the world achieve net zero. I think I'm going back to Paul's point, which is this is very much an effort of working together. The oil and gas industry has a critical role to play in terms of decarbonizing the energy system. We have to work together with other stakeholders such as investors, such as governments, policymakers, so that we can actually define pathways which are achievable from an energy transition standpoint. That's what we're very much focused on in terms of working through it to define those paths, both at a sector standpoint, but also a geographic standpoint. Right. I should say if anyone's watching, I gather there are about 10,000 people watching who want to submit a question. There are ways to do that, both on LinkedIn, also through the system that you're watching with. I'm going to be trying to group them together. We've already got a number of questions on various key themes, I'm going to start actually picking up some of these questions right away because one of the questions that we have is around the emissions, our projection for 2021, 2022 emissions. Nigel, are you expecting us to continue, as the IEA has said, to exceed the 2019 emissions levels? If so, that really will make a mockery of the idea that we are actually weaning ourselves off carbon-intensive energy sources. Well, I mean, I've got no reason to second guess the IEA's prediction that we're bouncing back quickly. Again, every time the scientists come out, they tell us we're not doing enough, right? Spencer's demonstrated that even we're not even on the best trajectory there in Paris. They also tell us that the risks are higher of a 1.5 degree rise, and we're starting to live that all over the world now. I think just the pressure is ratcheting up. Paul mentioned the financial community. We now have over 200 asset owners, asset managers, and banks committing to net zero. That's going to put a huge pressure, and we're starting to see it through shareholders, on energy companies to change. I think we're going to go through a decade of real disruption, and those who are not getting ahead of this curve are going to see huge stranded assets and huge value destruction because society's losing patience, right? The scientists are getting bright, and policymakers are building up courage, and we're starting to see the technology pathways in every sector, as Giulia says. We've really got to crank up the speed. Those who are committing to it, and we've seen it now with the most valuable energy companies now being the pure-play renewable energy companies, right? They're the ones who are going to reap the rewards, and the fossil fuel companies who don't transform quickly enough are going to be left behind. Right. I mean, Paul, we saw just the other day, this extraordinary activist attack on Exxon with Engine No. 1, which you supported. I'm curious, do you think that we're going to see more such aggressive attacks and efforts by investors to take action against energy companies that they don't think are moving fast enough? Are the days of divestment over? Is it all going to be about people like yourselves and Vanguard and State Street and the other big investors essentially marching into boardrooms and demanding rapid change where it isn't occurring rapidly enough? Look, investors are interested in whether the companies they've invested in are able to generate long-term financial performance. That is what this is about. We're in an energy transition. I think that if you had one takeaway from this year's report, it's that energy systems are sticky and it takes time to transition them. Right? If you're an incumbent energy company looking at this long-term but fundamental transformation that needs to happen over the coming decade or two, the question is, how are you positioning yourself for that? Investors are asking these questions too. When we engage with the companies that we're invested in on behalf of our shareholders, we're asking these questions. Like, the direction of travel for decarbonization now is pretty clear. The question is pace. People can disagree reasonably about how fast this will unfold in practice, obviously benchmarking that against how fast it should unfold, depending on what public policy goal you're focused on. Certainly, we want to see evidence that companies are taking this seriously and that they have a plan for thriving in a world that is moving to net zero, because that is what will determine their long-term financial performance, which is what investors are focused on. If we talk about what investors are focused on, I'm going to start bringing in questions from the audience because there are so many good questions already coming through. There's a great question from M. Osman, who's with the company, Shell, and he says, essentially, he points out, the profit margins for renewables is much lower than hydrocarbons. Do you believe the major oil companies with huge overheads can make profits for shareholders? Are you not concerned from BlackRock's perspective that actually if the oil majors, including BP, switch big time into renewables, that's going to cause a significant decline in profit margins? Are you willing to tolerate that as a price towards a more sustainable future? Well, I think that is a great question for you to pose to BP, right? I'm about to. [crosstalk] If you're a company that's in the business of making energy, the world is going to need a lot of energy, right? Whether we're moving people around or goods around or lighting our homes or powering our factories, the world runs on energy, and we want to expand energy access to more and more people over time. Decarbonization implies a massive level of electrification, so electrify what's possible to electrify. There will be other applications for which electrification is not the right answer. It is absolutely for companies that are currently dominant in the energy space to figure out where they can apply their comparative advantage in terms of talent, in terms of engineering, in terms of experience with the way they currently manage energy systems and bring that across to the energy economy of the future. Of course, there will be competition and they will face stiff competition from disruptors. If you look at the history of the energy sector and you map out the rate of success of self-disruption in the energy system, it's clear that everyone has a lot of work to do to transfer from one system to the other. Profitability- Can I just- Yeah, go on. Let me just quickly though ask you directly before I ask the question to Giulia, which is, are you willing to tolerate lower profit margins if given that the profit margin on renewables are lower, particularly in a world where the oil price may be rising and making fossil fuel more profitable, not less profitable over the next year? I think that that is too narrow of a way to look at the prospect of long-term financial performance for major companies with huge balance sheets. I think the question is, what about hydrogen? What about other forms of energy that will come online? It's not just about, I think to think of this as a company produces oil today, it's going to produce renewable electricity tomorrow, as I'm sure BP will tell you is too simple a way to think about the prospect that faces them today. Right. Giulia, how would you answer the same question? Are you willing to accept lower profit margins as a company? How far do you actually see new sources like hydrogen-fueled sources of energy actually delivering reasonable margins in the future? Yep. I think Paul anticipated part of the answer, which is, I think as an integrated energy company, by no means are we actually planning on becoming a pure-play renewables player. That's not what we're trying to do. If you think about how energy systems will have to evolve overall, you have this massive growth in renewable power, right? Spencer talked to, I think 250 GW in terms of capacity added in 2020. We need to see that number going up to 350 or even 550 to be in a Paris-aligned scenario. As that increases, you will need more firm capacity to stabilize the system, which can be hydrogen-driven, it can be gas-driven, decarbonized gas-driven. You will need that power to actually flow also in the mobility transformation, e.g., as an example, electric vehicle mobility in which we're also playing. You will need hard-to-abate sectors such as steel, cement to apply a whole set of levers as they actually decarbonize, including hydrogen, including electrification, et cetera. We really see it as an integrated play where we think we have a differentiating capability in the ability to, one, bring these energy systems together in terms of transformation, optimize around the energy system in terms of trading, and really play a critical role in terms of creating global value chains that today don't exist. You asked about the hydrogen question. We need to actually ramp up hydrogen from something which is 70 million tons per annum produced today to 350 or 650 in Paris-aligned scenarios by 2050. We don't have the infrastructure, we don't have the production assets. Those value chains need to be built. If you think about actually moving that hydrogen around, be it blue or green, you need to convert it into ammonia, and you need to build those value chains, too, in terms of transport. That's something that we can do. Renewables will flow into it because renewables into green hydrogen, gas and CCUS into blue hydrogen, and that's where we plan on playing. That's the point that Paul was mentioning around we're not aiming to actually fossil fuel out renewables fall in. We're actually aiming to actually create those value chains and drive that integration. That is aside from the fact that we believe we can actually drive standalone attractive returns in renewables, and that's across technologies, solar, offshore wind, on a levered basis. We've communicated our hurdle rates, and we will only participate, if you wish, in investments where we think we can actually meet those hurdle rates. That's how we actually manage our investor proposition. Right. I should say there's been a lot of questions from the audience about hydrogen. It is an area where people are scrambling to get up the information curve. There's quite a lot of questions about when exactly we're going to start seeing a significant hydrogen business. Is there any more you can tell us about that, Giulia? Yeah. We see hydrogen playing a critical role in the energy transition. It has a critical role to play in terms of decarbonizing hard-to-abate sectors, such as cement, steel, as an example. We also see hydrogen playing a critical role in terms of heavy-duty long-haul transport versus electric solutions. In terms of scale, as I was saying, we're actually seeing hydrogen growing from 70 million tons per annum today to something that could actually reach more than 600 million tons per annum in 2050, and 90% of that having to be clean hydrogen. When we think about the mix of blue versus green, blue being, if you wish, decarbonized gas or green produced with electrolysis, we think of a mix which is a 50/50, blue and green. The reason why we think of a mix which is a 50/50 is that if you only try to produce hydrogen out of green hydrogen with electrolysis, you're basically increasing the amount of renewable that you need to deploy to the system from 550 GW in the next 10 to 15 years to 800 GW. The challenge in terms of additionality and decarbonizing the power sector is really high. In terms of competitiveness, first of all, you are seeing a significant acceleration in terms of hydrogen projects. I think we're talking already about 228 large-scale hydrogen projects announced to date. I think 18 months ago, we didn't have any hydrogen projects. Now, 18 months down the road, we have three large hydrogen projects at, if you wish, a feasibility study level. We see blue hydrogen becoming competitive versus grey hydrogen end of the decade, and in, if you wish, gas-favored hubs, and green hydrogen, again, in areas where you have very good wind and solar, if you wish, resource becoming competitive with blue towards 2035. It will still take some time, and we will need to see policy support for investments in technologies and likely subsidies to actually drive that, if you wish, switch from grey into blue and green hydrogen. Right. We got a couple questions about the IEA's recommendation or observation that we need no more investment in oil and gas. Basically, it should stop. I'm curious, I'd like to ask Nigel, because I see you nodding. Is that a comment that the United Nations would echo? If so, is it something that you are willing, as the UN, to tell explicitly to places like Russia and China, and dare I say, some of the Western energy majors that have also been indicating that they continue to press ahead with some oil and gas investment plans? I'm not the UN. I'm the UN action champion for COP 26. I do want to come in on this point because I think that the most interesting point of Spencer's presentation was the demonstration that the oil and gas sector has still got a cognitive block on understanding the pace of change. I thought the very honest presentation of how the BP Stats Review has consistently got the pace of change wrong, and I think it would be really good to focus more on some of the drivers of change, like the cost reductions, because they're actually very predictable. We're seeing electric vehicles, batteries coming down 20% a year. We know the shape of industrial transformation. That up until now, too many of the normative reports have had this cognitive block. They've kind of been written from an incumbent mindset, which really struggles to believe, and I hear even Giulia Chierchia saying that blue is going to be 50%. If you really look at the economic drivers, that's just crazy. Economics will determine that the capital will all pile into the cheapest end solution, green hydrogen. I think it'd be really important to look much more closely in this review at the rate of change of costs and the allocation of CapEx, because I think this is a real problem. If an incumbent industry is still allocating CapEx on the base of bad projections of the future, because that just leaves it open to the disruptors to reap the spoils. That's the sort of thing that investors are increasingly interested in. It's like, where's the CapEx going? Is it aligned with Paris, or not? If it's like these sort of fantasy projections of slow transitions, then they'll be misallocated, and they'll destroy value. It'll be locked into an energy economy that the world isn't going to follow. I think that's all. Too much of the review is about end of pipeline, what actually happened rather than what the real drivers are. That insight from Spencer about this cognitive block that the industry still has, despite the fact that we know the way industrial transformation always happens, is something to really shine more light on. I think that's what's going to be the key in the next 10 years. Well, I've just written a book called "Anthro-Vision" about the fact that, despite the wonderful Chinese proverb, a fish can't see water unless it jumps out of its fishbowl and goes and looks and talks to other fishbowls and looks back. It's very hard for professionals in any category to try and understand their own predicament clearly to break out of their tunnel vision, unless they actually make active efforts to go out and get lateral vision and to get a broader perspective, or as I call it, Anthro-Vision, to use the anthropology background. I will just say that in the book, I do tell the story about how Bernard Looney had actually been listening to some of the activists, and that has certainly been not just extremely rare in the energy sector, but appears to have actually provoked more debate, although I'm not trying to say that BP has all the answers at all. I'm curious, on this issue of cognitive blocks, I'd like to ask you, Paul, in terms of cognitive blocks, do you think the energy sector, the companies that you're investing in, actually get it yet in terms of the need for rapid capital reallocation, shifting CapEx patterns and profiles? Overall, yes. I think the challenge we have, and I think this conversation illustrates it well, is that we have become very good at talking about whether the world should go to net zero and buffing and polishing the scenario that shows us how to get there perfectly in order to hold temperatures to 1.5 degrees. Holding temperatures to 1.5 degrees has been clearly shown now to be a preferable outcome, right? Even from a fiduciary perspective, if you compare a world in which we fail to do that to the world in which we succeed, it's better for GDP, it's better for jobs, it's better for productivity, it's better for health outcomes, right? Generally speaking, obviously the effects are uneven of such a transition, but it's a better outcome for the world if we succeed. The fact that we set these targets, and Nigel's job is to rally the world to stick to the 1.5 goal and make sure that we're all on board and making the commitments necessary to solve the collective action problem for which it is necessary but not sufficient to get everyone to commit to do it. The thing is, and I think that what we're talking about here is in practice, the challenge is great. It's precisely because, and again, my key takeaway from this report is that, yes, you can freeze the energy economy and unfreeze it, and it should not surprise you that when you unfreeze the energy economy that you had before, it will bounce back largely to the way it was. Yes, there are a few encouraging things like people realize that they can work from home in some cases, and that the sort of miles traveled per GDP output might go down, and therefore the use of certain fuels like kerosene or jet fuel might experience a more sustained drop. Shifting an entire energy economy is hard. The reason is because the assets that do the emitting, that provide the essential services for the global economy that we want, are long-life assets, whether they're passenger cars or power plants or steel mills or cement factories or container ships or commercial buildings, right? So, freezing and unfreezing, as we learned last year, does not change that fact. It requires planning, and it does require CapEx. Yes, investors are very interested in where the opportunities are in building the new climate economy, and I think they're increasingly confident that this transition has already started in earnest in many sectors and will continue. Giving investors an unbiased view of how fast the transition will happen is very important, and it's tricky when we're focusing on how fast the change should happen. Gillian, if you bring in climate impacts and physical risk into the equation, right? As central banks have done, and financial supervisors, right? We want to understand what cocktail of physical risk and transition risk we're going to get. That's what investors want to know. If you want an estimate of physical risk, you need to be able to say how fast temperature will rise, which is, of course, a function of how fast the transition is. When investors look at this opportunity and the CapEx, and they look at energy companies and how fast they're investing, and they're also looking at the risk side of the equation and the question of how we are going to take offline all of those assets that are causing emissions today, right? Because building renewables is the easy part. Building a wind farm, strictly speaking, doesn't reduce greenhouse gas emissions. What reduces greenhouse gas emissions is pulling out of service an asset that is emitting carbon, and the two do not go automatically hand in hand. A great illustration is what's happening right now in coal-fired power. Right. By 2025, three-quarters of the global coal fleet will be uncompetitive with renewable energy on a CapEx to OpEx basis, meaning it will be cheaper to build new renewables plus storage than to continue to operate coal plants for 75% of the world. 93% of coal is shielded from competition with renewables by long-term contracts and tariffs. Right? The picture is very complex. It's not just about pouring money into the new and encouraging more and more investments to be made in the green economy. It's about, again, working together with the policy world, to understand how we are going to actually reduce emissions by accelerating the rate at which capital stock is turned over in the global economy. Right. Well, I got a couple of questions for Giulia. Firstly, one of the things that the energy companies that have been trying to forge a cleaner path have been doing is selling off their dirty assets or ring-fencing them to others. Does that not create the danger that you're going to have other players essentially coming in and operating those dirtier assets in a way that's bad for climate change overall? Yes. Thanks, Gillian. Let me answer that. Before I answer that, I'd like to go back to two points that Nigel actually mentioned. The first one is the IEA report. The IEA report does not say there is no investment in oil and gas required in the future. It actually talks to $350 billion investments in the next 10 years, and then that number actually decreases to $170 billion in the following 10 years. We have an energy system that needs to continue to run, and yes, we need less oil and gas going forward, but we still need oil and gas. The question is, by the IEA report is that new reserve or is it existing reserve? The investments in the oil and gas system needs to continue. The second point in terms of the cognitive block, well, first of all, I don't come from the same fishbowl. I'm an external fish coming into the fishbowl. I can tell you that we have made an announcement that we aim to reduce oil and gas production by 40% to 2030. I think we are pretty aligned on the cognitive elements of the energy transition. Some of the elements we bring in terms of blue and green hydrogen are really anchored in the facts, the numbers, and the competitiveness of the different resources and trying to bring some practicality into how do we make the energy transition happen beyond what we would like to see happen. In the terms of divestments, we've said it very clearly, divestments is a critical part of our strategy. The reason why we think divestments is a critical part of the strategy is because we think it actually contributes to us building, if you wish, the alternative in terms of energy systems. Divestments basically support and together with our resilient and focused hydrocarbons business, our investments into low carbon alternatives. We are building low carbon alternatives, and it's not only investments into solar, it really is investments into new value chains. That's the differentiating factor, which is we think we are in a privileged position to shape those global value chains, which are complex to shape versus smaller companies. Divestments help us shape new value chains and therefore contribute to that. The second element is, we have Paul on the panel. We also have a responsibility to our shareholders. Our responsibility to our shareholders is one of actually creating a resilient BP in the energy transition. Creating that resilient BP goes through diversifying, if you wish, our portfolio for the long term in line with the energy transition. I think the other point I would call out on divestments is, in every single scenario, even the IEA scenario, you have a residual demand in 2050 of 24 million to 26 million barrels a day. There is no, if you wish, 1.5-degree scenario, which does not have oil in the equation. You will continue to need to have fossil fuels in the equation to 2050 to actually continue to power the energy system. We're not talking about no fossil fuel production in 2050. The question then becomes who's the best asset owner in the long run? I also think that it's given the increasing pressure from a societal standpoint, Nigel, that you were mentioning, I don't think we will see a world where companies, be it a BP or another owner, will not be under scrutiny in terms of emissions performance in the long term. In a nutshell, we see it fit with the strategy. It helps us invest in the energy transition, and it helps make BP a more resilient company for the future. Right. Gillian, if I could. Nigel, yes. I think it's a really important interplay between Paul's response and Giulia's in that, yes, a company can, and I think should be free to dispose of assets that it doesn't see part of its future strategy, which is to try to align with societal expectations. That does also send signals of risk and cost of capital to the market. It doesn't, which I think is behind the question, take them out of the energy system, which goes back to Paul's point that this has to be an interplay between markets and policy, right? At some point, policymakers have to get serious about how do we take, as Paul very clearly said, how do we take polluting assets out of the energy system? I think we haven't really grappled with that question enough yet. That's the question that we have to take very seriously because otherwise, we have a situation where we have a few leading companies going further than the regulatory framework drives them to, but they can go only so far before they get penalized by the majority of shareholders who are looking for, who are thinking very short-term. This has to be an interplay between markets and regulators. That's why the green shoots of 70% of emissions being under at least the beginnings of a policy commitment are there, but that has to turn to 100% of regulatory regimes driving the whole energy system towards the zero carbon future. Otherwise, we'll have this dilemma existing for a long time. Nigel, I'd like to ask you a question, which I touch upon in a column which is just going up in "The FT" shortly. "The FT" is covering a lot of these issues, I should stress. Is it possible to do any of this without a carbon price? We've seen the European Union embracing this, but the U.S. government has hitherto, in my view, shamefully, not yet embraced this, nor have other parts of the world. Do we actually need a carbon price? Is that going to change the whole debate? Yeah, because the carbon price has really helped, right? It internalizes the externality. We know that carbon pricing works really well in some sectors, like in power generation, it pushes from coal to gas, and then it will push to renewables if it gets high enough. In other sectors, it doesn't work well, like in automotive sector, $50 a ton price on carbon, that's about $100 a year. The cost of running a mid-size family car, that doesn't change. That's more of a behavioral decision. Actually, that's where you need regulation, right, fuel efficiency standards. We've seen that working very well in the EU, actually working very well in the U.S. before the standards were wound back. In particular, what works really well is a clear cut-off date, like you won't be able to sell a combustion engine after 2030, or you won't be able to burn coal after 2025. Those are like infinite price signals that work really well. Giulia, does BP have a view on the carbon prices? Do you have an internal projected carbon price that you're using for your own evaluations? We strongly support carbon prices for the global market. We also strongly support carbon border adjustment policy. We do have an internal projection on our carbon prices, which we use to evaluate investments. That projection actually sees carbon prices rising to $100 per ton in 2030. I think I agree with Nigel in the sense that carbon price are a good mechanism to drive change in the energy system, but it is not the only mechanism, right? We need to have policy look at how do we frame, if you wish, almost industry-specific policies. Mandates or policy to actually drive change from a demand standpoint, be it, think aviation, think hard-to-abate sectors such as steel, if I think about hydrogen, injection target into the infrastructure. Carbon price is not the only answer to the transition, but we think that carbon price is a critical element, and we very strongly support it. Right. We haven't got a lot of time, but I'd like to turn to a question which has been asked by a lot of people in the audience, and I'm constantly being asked, particularly in Silicon Valley, where all the boy wonders, and they are mostly boy wonders, tell me that carbon capture will solve everything. If only we can get carbon capture, be it that a trillion trees being planted, be it all the other whiz kid ideas floating around Silicon Valley, everything will be solved. Giulia, tell us quickly from the BP point of view, what is the reality of carbon capture today? Then I'd like to quickly ask that same question to Nigel and to Paul. Yeah, will carbon capture actually solve everything? No. I think that's one of the complexities of the energy transition, which is there is no one simple answer to the energy transition. We need all technologies to actually come into play. There was an interesting IPCC analysis that actually showed that a well below two- degree scenario without carbon capture was 138% more expensive than with carbon capture. If you look at actually the net zero scenario, we see carbon capture with 5.5 gigatons by 2050. The IEA scenario is even higher. I think it's around 7.6. Carbon capture has a role to play, and that role is actually fueled by the role of blue hydrogen in terms of decarbonizing, if you wish, the hard-to-abate sectors. Is it the solution to everything? No. Does it have a role to play? Yes. We see multiple projects, and as you know, we are present in Net Zero Teesside and Northern Endurance Partnership, which are actually aiming to drive carbon capture at scale. Now, the question again for carbon capture, similarly to what we described in hydrogen is, what is the mechanism to support from an economic standpoint, carbon capture as a viable solution for the energy system. Right. Okay, Paul and then Nigel, you just got one minute to talk about carbon capture. Well, I'll just- Anything else. Yeah. You'd like. I think there's two really interesting versions of this that people are working on. One is carbon capture on an industrial level, where you capture the CO2, where it's a sort of bespoke industrial retrofit project. That's one version. The other one that's coming up new and uncertain is direct air capture, which has the theoretical benefit of being uncorrelated with any other part of the economy. You put something out, it sucks CO2 out of the air, and it captures it wherever you want. Very expensive, very uncertain still about how it's going to work. If it does work and the cost can be brought down, it's a sort of pure hedge against the efforts to decarbonize as fast as possible. I think in summary, I would say we need carbon capture to work from a scientific point of view, as Giulia has said. I think that banking on it to be the answer and leaving our foot off the gas, so to speak, on the rest of decarbonization, that's surely not a smart strategy. Nigel, one minute. We need all of the above. CCS has got a bad rap because it's been touted as the solution to allow us to keep on business as usual for so long. There's a lot of skepticism. This is why I think we need to really focus on what is the CapEx going into it to see whether it's got a credible chance of becoming commercially viable. Giulia talked about some really impressive figures of commercial hydrogen projects. That's why I think there's a lot of belief that hydrogen's really going to take off this time, but still very skeptical about CCS, even though we need to pursue it. Last thing I'd say, I really agree with Giulia and Paul about the need for this sort of sectoral pull-through. When we all agree that we need to get to over 10% sustainable aviation fuels in the next 10 years, or under $2 a kilogram of green hydrogen, or 5% of shipping being zero carbon by 2030, then that public-private ambition loop, as we call it, can really kick in and help us get there much faster. Thank you very much indeed. It's been a fascinating discussion. We've had a lot of detail about the projections, a lot of numbers, a lot of charts. If I step back as someone who's a journalist and an anthropologist, I would sort of draw three key points out of this conversation, which rise above the technical detail. One, that we do have to recognize that the energy sector has had a cognitive block, to quote Nigel. As I say in my book, "Anthro-Vision," people are stuck in fishbowls, and a fish can't see water very easily unless they jump out of their fishbowl. That is now starting to change, but whether it's changing fast enough, I just don't know. Secondly, it's also very clear, as I also have written a lot about, that this cannot be solved with tunnel vision. We need lateral vision. We need a wider perspective. Not only do we need tremendous amounts of collaboration right now to tackle these problems, but we also need to recognize that there are going to be tricky trade-offs. You cannot deal with trade-offs without lateral vision, not tunnel vision. Thirdly, I guess one of the other key messages, which is still taking a long time to permeate into the minds of some investors and some consumers, because guess what. It's human nature to assume that the recent path that we know is going to be a good guide to the future. That concept that the past is going to be a guide to the future has driven most of our economic models, most of our big data sets as well. What is clear as we look at the scale of climate change challenges we're facing today, is that we can no longer assume that is the case, which has implications for everybody from big data modelers to economic modelers and companies and many others. COVID has driven that message home very clearly that the past is not always a good guide to the future, I think climate change is going to drive that through even more. Thank you all very much indeed. On that note, I'm going to hand that back to Spencer to wrap up in magisterial style. I'm not sure magisterial style, but thank you, Gillian, and thanks to all panel members, Nigel, Paul, Giulia. Great job, guys. Really thought-provoking. I guess in terms of Nigel's cognitive block, I think we understand that, and it's exactly why we encourage panels like this. Exactly why we've just had that panel of 45 minutes with people from three very different fishbowls communicating and talking to each other. I think we feel strongly that listening and learning from people with a range of different perspectives is critical. I think the one thing we all, certainly at BP, believe, are we're only going to be able to meet this challenge if we're working together. Working together will mean understanding the different perspectives of different people. I was listening to the conversation, and I think I'm less pessimistic than Gillian's good, bad, and the ugly. Then I was trying to rack my brains for a different movie title, but failed. I ended up going back to my Rocky movies. If you think about some of those original Rocky movies, they showed with hard work and determination, good can win out. The point here, and it's an important point, is the world has the technologies and know-how to get to net zero. We don't need huge technological breakthroughs. The challenge is to apply those alternative technologies and energies at the pace and scale that we need to see. That links back to Paul's point and Paul's call for an all hands on deck. Government setting the right policy backdrop, supported by increased societal expectations, and change on the ground being led by green and greening companies, which will be vital over the next 10 years. I'd like to thank all of you for watching and for all your questions. I'm sorry we couldn't get to all of them. As Gillian said, there was literally hundreds of questions flowing in. I was watching them as the panel discussion was going through. I'm sorry that we couldn't get to all of those today. That's it for today's launch of BP's Statistical Review. Just to remind you, all the data and analysis from this year's BP Stats Review are now available free of charge from bp.com. Please do download the data and let us know what your thoughts are of what's happening to global energy last year and the implications that may have for the energy transition. Let's keep this conversation between different fishbowls, let's keep that fishbowl conversations going. Thank you very much and goodbye.