00:00:00.000 morning everybody thanks for waiting a 00:00:03.40900:00:03.419 few extra minutes we were running late 00:00:06.20000:00:06.210 and it's raining here in Washington so 00:00:08.39000:00:08.400 obviously can't do anything right on 00:00:10.79000:00:10.800 time 00:00:11.27000:00:11.280 excuse me I'm Sarah Ladislaw a senior 00:00:13.45900:00:13.469 vice president and director of the 00:00:14.66000:00:14.670 energy and national security program 00:00:16.16000:00:16.170 here at CSIS and we are delighted to 00:00:19.04000:00:19.050 have Dave Turk back I was just noticing 00:00:22.01000:00:22.020 that dave is now head of the strategic 00:00:25.34000:00:25.350 initiatives office at IEA so maybe he'll 00:00:27.29000:00:27.300 tell us a little bit about that because 00:00:28.55000:00:28.560 I actually didn't know that till I saw 00:00:30.80000:00:30.810 it on his slides and it's a new title 00:00:34.04000:00:34.050 for him he had leased two hats last time 00:00:37.34000:00:37.350 he was here presenting so I think he's 00:00:39.53000:00:39.540 running a bunch of really important 00:00:41.45000:00:41.460 things at the IAEA so Dave is not a 00:00:44.47900:00:44.489 stranger to many of you in the audience 00:00:45.97900:00:45.989 I can see some friends who've worked 00:00:48.11000:00:48.120 with him in the past had some really 00:00:50.66000:00:50.670 important roles in the White House at 00:00:52.91000:00:52.920 do-e on the hill doing energy 00:00:55.25000:00:55.260 policymaking over the last number of 00:00:57.41000:00:57.420 years and has left us to be in Paris for 00:00:59.75000:00:59.760 a while helping out Fadi and the IAEA 00:01:01.91000:01:01.920 team he's going to talk today about the 00:01:05.00000:01:05.010 future of petrochemicals I was really 00:01:06.83000:01:06.840 pleased to see the IAEA send around via 00:01:12.26000:01:12.270 Twitter that really great clip from the 00:01:15.32000:01:15.330 Graduate where Dustin Hoffman is assured 00:01:18.08000:01:18.090 that the futures in plastics 00:01:19.78900:01:19.799 well dave is going to tell us whether or 00:01:22.49000:01:22.500 not the future is in fact in 00:01:23.66000:01:23.670 petrochemicals this morning so without 00:01:25.82000:01:25.830 further ado we'll let Dave take the 00:01:27.56000:01:27.570 stage and then have a bit of a 00:01:29.06000:01:29.070 discussion so welcome 00:01:33.80000:01:33.810 [Applause] 00:01:38.70000:01:38.710 well first of all let me say thanks to 00:01:40.93000:01:40.940 Sara and Ian and the full CIS CSIS team 00:01:44.20000:01:44.210 for having me here today and for such a 00:01:47.53000:01:47.540 terrific relationship we have between 00:01:48.94000:01:48.950 the IAEA and CSIS for for many many 00:01:51.94000:01:51.950 years it's certainly something that 00:01:53.20000:01:53.210 Fatih Birol 00:01:54.04000:01:54.050 my executive director and the rest of us 00:01:56.11000:01:56.120 at IEA very much very much very much 00:01:59.05000:01:59.060 appreciate so what I'm going to do with 00:02:01.15000:02:01.160 the presentation today is really break 00:02:03.34000:02:03.350 it down into three parts first looking 00:02:06.40000:02:06.410 at petrochemicals recent trends what are 00:02:09.52000:02:09.530 they what are the numbers today just to 00:02:12.25000:02:12.260 give a snapshot now for some of you this 00:02:14.95000:02:14.960 may be a bit rudimentary some people are 00:02:17.17000:02:17.180 obviously experts in this area but what 00:02:19.66000:02:19.670 we found is there's a lack of 00:02:21.16000:02:21.170 appreciation of petrochemicals in part 00:02:23.29000:02:23.300 because of their complexity from a lot 00:02:25.30000:02:25.310 of otherwise quite smart people in the 00:02:27.46000:02:27.470 energy space and so we'll spend a little 00:02:29.32000:02:29.330 bit of time just breaking down what they 00:02:31.42000:02:31.430 are worth what the numbers are secondly 00:02:34.27000:02:34.280 we'll look at a scenario we call our 00:02:36.70000:02:36.710 reference technology scenario which is 00:02:38.38000:02:38.390 really where petrochemicals going into 00:02:40.21000:02:40.220 the future 00:02:40.84000:02:40.850 just under current trends current 00:02:42.46000:02:42.470 assumptions etc some i opening numbers 00:02:46.27000:02:46.280 in there we think but some also some 00:02:49.42000:02:49.430 interesting analysis geographically 00:02:51.37000:02:51.380 speaking etc and then the third piece is 00:02:53.89000:02:53.900 looking at some numbers of a different 00:02:55.99000:02:56.000 scenario what we call our clean 00:02:57.49000:02:57.500 technology scenario which is trying to 00:03:00.01000:03:00.020 figure out well what could we do more of 00:03:02.56000:03:02.570 from policy making side of things from a 00:03:05.14000:03:05.150 market design side of things to get the 00:03:07.36000:03:07.370 full advantage from petrochemicals 00:03:08.97900:03:08.989 plastics fertilizers but also to reduce 00:03:10.96000:03:10.970 the environmental toll the 00:03:12.79000:03:12.800 sustainability told that a lot of these 00:03:14.44000:03:14.450 chemicals are having and will have into 00:03:17.32000:03:17.330 the future but before doing that let me 00:03:19.42000:03:19.430 just give you a couple slides on the IEA 00:03:22.44900:03:22.459 itself now hopefully some of you and I 00:03:25.27000:03:25.280 know some of you are very familiar with 00:03:26.56000:03:26.570 the IEA some of you may be a little less 00:03:28.69000:03:28.700 familiar just to things real quick here 00:03:31.00000:03:31.010 first is the IEA is really changing into 00:03:33.58000:03:33.590 especially over the last couple of years 00:03:35.32000:03:35.330 under Fatih Birol to be a real global 00:03:37.78000:03:37.790 agency a global family so you see here 00:03:40.96000:03:40.970 our member countries these are our 00:03:42.52000:03:42.530 member countries many of whom than 00:03:43.99000:03:44.000 original member countries for 40-plus 00:03:45.76000:03:45.770 years but we also have our our 00:03:48.22000:03:48.230 association countries 00:03:49.51000:03:49.520 these are our partners around the world 00:03:51.58000:03:51.590 big emerging economies in particular you 00:03:54.28000:03:54.290 see China you see India Brazil Indonesia 00:03:56.85000:03:56.860 these are now part of the IEA family and 00:03:59.92000:03:59.930 very much strengthening our relationship 00:04:02.08000:04:02.090 with these countries as well and then 00:04:04.54000:04:04.550 when you look at our global data 00:04:05.65000:04:05.660 coverage some of our technology work it 00:04:07.57000:04:07.580 literally spans just about every country 00:04:09.58000:04:09.590 of the world so we call this now the IEA 00:04:12.49000:04:12.500 global family 00:04:13.92000:04:13.930 second thing is we are in all of energy 00:04:16.72000:04:16.730 all of technologies agency including and 00:04:19.57000:04:19.580 increasingly in the clean energy 00:04:21.25000:04:21.260 transition space so really trying to 00:04:23.65000:04:23.660 help countries help companies think 00:04:25.78000:04:25.790 through their own transitions where do 00:04:27.34000:04:27.350 they want to go into the future and how 00:04:29.32000:04:29.330 can i EA data analysis and solutions 00:04:32.05000:04:32.060 real world solution opportunities help 00:04:34.89000:04:34.900 so that's just the IEA plug on the front 00:04:37.81000:04:37.820 end this future of petrochemicals report 00:04:42.01000:04:42.020 fits into a broader series this is the 00:04:46.27000:04:46.280 third in a series so far we'll have more 00:04:48.19000:04:48.200 of these that we call exploring key 00:04:50.65000:04:50.660 blind spots that is those areas in 00:04:53.53000:04:53.540 global energy that from our perspective 00:04:55.60000:04:55.610 are frankly not getting as much 00:04:58.09000:04:58.100 attention as they should be given 00:04:59.83000:04:59.840 getting given their their importance in 00:05:02.89000:05:02.900 the energy space now and especially 00:05:04.54000:05:04.550 looking forward into the future so you 00:05:06.46000:05:06.470 see the three covers there the future of 00:05:08.95000:05:08.960 trucks we did last year the future of 00:05:11.56000:05:11.570 cooling just a couple numbers from that 00:05:13.60000:05:13.610 about why that's a blind spot and not 00:05:15.85000:05:15.860 getting enough attention I was just an 00:05:17.77000:05:17.780 Indonesia recently Indonesia right now 00:05:20.08000:05:20.090 has about ten percent penetration of air 00:05:22.60000:05:22.610 conditioners in the residential space 00:05:24.76000:05:24.770 right now for those who've been in 00:05:26.65000:05:26.660 Indonesia various points in the year 00:05:28.33000:05:28.340 that number will increase significantly 00:05:30.51000:05:30.520 as the middle class purchasing power 00:05:33.34000:05:33.350 emerges that is a good thing having more 00:05:35.38000:05:35.390 accurate air conditioning is a good 00:05:36.67000:05:36.680 thing but we see in terms of future 00:05:38.98000:05:38.990 trends is overall globally a tripling of 00:05:42.49000:05:42.500 additional energy demand just from air 00:05:44.83000:05:44.840 conditioning to 2050 now that's the 00:05:47.77000:05:47.780 amount of electricity right now that 00:05:49.90000:05:49.910 India and China consume just going to 00:05:52.93000:05:52.940 air conditioning into the future to 2050 00:05:55.15000:05:55.160 so again just showing you why we 00:05:57.10000:05:57.110 consider that a blind spot or an area 00:05:58.96000:05:58.970 that should be focused on similarly for 00:06:01.21000:06:01.220 petrochemicals 00:06:02.37900:06:02.389 and the whole presentation today is 00:06:04.20900:06:04.219 about why that should be appreciated 00:06:06.39900:06:06.409 should be appreciated more so let's get 00:06:09.27900:06:09.289 right into it again first part here is 00:06:11.32000:06:11.330 petrochemicals today so let's just look 00:06:14.55900:06:14.569 at where petrochemicals are in the world 00:06:17.37900:06:17.389 around us they are ubiquitous probably 00:06:20.67900:06:20.689 more so than a lot of people a lot of 00:06:22.62900:06:22.639 people appreciate first of all is just 00:06:25.08900:06:25.099 home in office obviously we're in an 00:06:27.04000:06:27.050 office environment here you can look 00:06:28.92900:06:28.939 around the room and think about all the 00:06:30.67000:06:30.680 petrochemicals that are going in 00:06:32.55000:06:32.560 insulation plastic pipes toiletries in 00:06:35.86000:06:35.870 your home in the morning medical 00:06:36.96900:06:36.979 supplies textiles electronics one data 00:06:40.54000:06:40.550 point there just to show the volume of 00:06:42.80900:06:42.819 petrochemicals and plastics in 00:06:44.67900:06:44.689 particular today it's estimated that we 00:06:47.05000:06:47.060 consume we go through about a million 00:06:49.80000:06:49.810 plastic bottles every minute in the 00:06:52.92900:06:52.939 world right now so again just to give 00:06:55.14900:06:55.159 you a sense of the scale of what we're 00:06:56.92000:06:56.930 talking about in terms of petrochemicals 00:06:58.77900:06:58.789 in that instance plastics in particular 00:07:01.76900:07:01.779 secondly is food and drink especially 00:07:04.24000:07:04.250 agriculture packaging and very important 00:07:07.29000:07:07.300 fertilizer huge amounts of 00:07:09.18900:07:09.199 petrochemicals go into fertilizer in 00:07:11.35000:07:11.360 particular one nugget there is 50% of 00:07:15.07000:07:15.080 today's world fooled food supply uses 00:07:19.08900:07:19.099 synthetic nitrogen the hopefully get the 00:07:23.05000:07:23.060 I guess they're up there so as long as 00:07:24.61000:07:24.620 they're up there they're good the slides 00:07:25.95900:07:25.969 just cut out right here 50 percent of 00:07:29.29000:07:29.300 global food production uses synthetic 00:07:30.96900:07:30.979 nitrogen the vast majority of that 00:07:32.46900:07:32.479 coming 00:07:33.10000:07:33.110 from petrochemicals from oil and gas in 00:07:35.67900:07:35.689 particular so again just showing you the 00:07:37.89900:07:37.909 volume and the importance of 00:07:39.42900:07:39.439 petrochemicals in in today's world third 00:07:42.93900:07:42.949 is on the move a lot of our 00:07:44.07900:07:44.089 transportation depends on petrochemicals 00:07:46.74900:07:46.759 in one way or another you see tires 00:07:48.12900:07:48.139 there the more UK spelling of tires I'm 00:07:50.92000:07:50.930 still getting used to the different 00:07:52.60000:07:52.610 spellings now be now being in the the 00:07:57.57900:07:57.589 kind of multilateral space where we tend 00:07:59.92000:07:59.930 to use UK Spelling's a little bit more 00:08:01.42000:08:01.430 than Americans buyers but tires whether 00:08:03.64000:08:03.650 you spell it with a wire and I one 00:08:05.95000:08:05.960 nugget there is about seven kilograms of 00:08:08.32000:08:08.330 oil is used for every average sized tire 00:08:10.83900:08:10.849 so again giving you a sense of how 00:08:14.83000:08:14.840 important petrochemicals are on that 00:08:16.72000:08:16.730 part of the transport space luggage 00:08:19.06000:08:19.070 luggage as well on that front and then 00:08:21.61000:08:21.620 forth petrochemicals use in energy 00:08:24.15900:08:24.169 supply and very importantly an 00:08:26.92000:08:26.930 increasingly energy supply in the more 00:08:31.90000:08:31.910 emerging newer cleaner kinds of 00:08:34.02900:08:34.039 technologies so solar PV wind all of 00:08:37.75000:08:37.760 these technologies use plastics to one 00:08:39.96900:08:39.979 stent in one extent or another and we'll 00:08:42.10000:08:42.110 only see that going further in terms of 00:08:44.05000:08:44.060 plastics being a helpful place in the 00:08:46.78000:08:46.790 clean energy transitions part as well 00:08:49.60000:08:49.610 so obviously ubiquitous far-reaching and 00:08:53.07900:08:53.089 that will only increase going forward so 00:08:56.62000:08:56.630 let's look a little historically this is 00:08:58.30000:08:58.310 a chart showing growth for selected bulk 00:09:00.97000:09:00.980 materials compared against GDP so GDP is 00:09:04.06000:09:04.070 the dark blue line there that you see in 00:09:06.51900:09:06.529 front of you you see cement having 00:09:08.31000:09:08.320 outperformed if you will or done more 00:09:10.66000:09:10.670 than GDP you see aluminum right around 00:09:13.99000:09:14.000 GDP and cement actually cement was high 00:09:17.26000:09:17.270 steel is a little bit less less so so 00:09:19.87000:09:19.880 let's look at the plastic number on that 00:09:21.54000:09:21.550 just to see by comparison so what you 00:09:24.64000:09:24.650 see is over the last forty five years 00:09:26.19900:09:26.209 we've increased the future was in 00:09:28.36000:09:28.370 plastics the future is in plastics 00:09:30.93000:09:30.940 according to the Graduate back in back 00:09:33.67000:09:33.680 in the day what you see is actually 00:09:35.47000:09:35.480 about a tenfold increase since 1970 and 00:09:38.53000:09:38.540 certainly far outpacing GDP and far 00:09:41.62000:09:41.630 outpacing if you will a lot of these 00:09:43.21000:09:43.220 other bulk materials and what you see is 00:09:45.94000:09:45.950 plastics given its versatility actually 00:09:48.43000:09:48.440 finding itself and do a variety of other 00:09:50.65000:09:50.660 niches that was previously that were 00:09:52.36000:09:52.370 previously performed whether by Stewart 00:09:54.16000:09:54.170 steel aluminum cement etc etc along 00:09:58.24000:09:58.250 those lines so let's uh yeah bill I 00:10:02.86000:10:02.870 don't mind stopping at any point if 00:10:04.63000:10:04.640 anybody has any questions yep 00:10:11.00900:10:11.019 value of plastic so I think it's tons in 00:10:14.13900:10:14.149 this instance it's an index here but I 00:10:17.25900:10:17.269 think it's a volume of volume index I 00:10:20.53000:10:20.540 can look it up once I get a chance I 00:10:22.87000:10:22.880 should say the report that Sara 00:10:25.12000:10:25.130 mentioned and I showed you the cover of 00:10:27.04000:10:27.050 is now fully downloadable free it was 00:10:28.96000:10:28.970 launched just a few days ago by Fatih 00:10:31.80900:10:31.819 actually earlier this week by Foti at an 00:10:33.75900:10:33.769 oil and gas conference oil and money 00:10:35.76900:10:35.779 conference and in London so all the 00:10:38.82900:10:38.839 breakdowns and details can be in there 00:10:41.35000:10:41.360 but if other people have questions along 00:10:42.61000:10:42.620 the way I'm happy to if that's useful 00:10:44.47000:10:44.480 for folks yeah just wait for the mic 00:10:46.29000:10:46.300 okay all right so just looking at and 00:10:52.68900:10:52.699 I'll show you some real numbers in terms 00:10:54.18900:10:54.199 of our modeling going forward but just 00:10:55.74900:10:55.759 to give you a sense of the growth 00:10:57.12900:10:57.139 potential through one dynamic so this is 00:10:59.71000:10:59.720 looking at per capita demand for major 00:11:01.99000:11:02.000 plastics in 2015 you see Korea on the 00:11:04.66000:11:04.670 high end Canada Saudi Arabia no surprise 00:11:07.30000:11:07.310 that more developed countries use more 00:11:09.51900:11:09.529 plastics per capita and then you get to 00:11:11.80000:11:11.810 the point of India Africa on the other 00:11:14.37900:11:14.389 end of the spectrum showing quite much 00:11:17.05000:11:17.060 lower in fact 20 times lower per capita 00:11:19.56900:11:19.579 on plastic usage now one could think 00:11:22.60000:11:22.610 especially is the purchasing power in 00:11:24.24900:11:24.259 these countries increases the demand for 00:11:26.53000:11:26.540 a variety of consumer goods a variety of 00:11:28.42000:11:28.430 transportation options etc etc you could 00:11:31.05900:11:31.069 see that being a major source and we in 00:11:33.04000:11:33.050 fact do see that in our scenario work 00:11:35.41000:11:35.420 being a major source of plastics in 00:11:37.15000:11:37.160 particular growth going forward similar 00:11:39.69900:11:39.709 kind of bar chart can be shown on the 00:11:42.69900:11:42.709 fertiliser side which plastics and 00:11:44.65000:11:44.660 fertilizers are the two main uses of 00:11:46.44900:11:46.459 petrochemicals a little less Stark about 00:11:49.12000:11:49.130 ten times not twenty times on the 00:11:50.80000:11:50.810 fertilizer fertilizer size at the side 00:11:53.29000:11:53.300 of things so let's look at plastics and 00:11:57.79000:11:57.800 or petrochemicals more generally an oil 00:11:59.92000:11:59.930 and gas demand these are the numbers 00:12:02.11000:12:02.120 currently on the primary oil side of 00:12:04.26900:12:04.279 things and then the primary gas demand 00:12:06.81900:12:06.829 side of things 2017 numbers what you see 00:12:09.75900:12:09.769 of course on the oil side no surprise 00:12:11.74000:12:11.750 transport 56 percent is the key driver 00:12:14.73000:12:14.740 on demand right now plastics importantly 00:12:18.40000:12:18.410 a 14 percent which is quite significant 00:12:20.59000:12:20.600 especially comparing to some of the 00:12:21.81900:12:21.829 other category 00:12:22.51000:12:22.520 and then on the gas side of things about 00:12:24.55000:12:24.560 8% along those lines we'll see some 00:12:27.37000:12:27.380 numbers going forward about how that 00:12:29.22000:12:29.230 number changes and especially on oil 00:12:31.87000:12:31.880 increases significantly 00:12:34.05000:12:34.060 now before shifting over into some of 00:12:36.58000:12:36.590 this analysis going forward why is it 00:12:39.01000:12:39.020 that petrochemicals and plastics and 00:12:42.04000:12:42.050 fertilizers fly under the radar screen 00:12:44.53000:12:44.540 why is it a area that isn't as fully 00:12:47.41000:12:47.420 appreciated given some of the numbers 00:12:48.91000:12:48.920 given some of the ubiquity that we just 00:12:50.59000:12:50.600 we just looked at one of the answers to 00:12:52.93000:12:52.940 that is really the feedstock issue so 00:12:55.56000:12:55.570 plastics fertilizers use energy in two 00:12:58.09000:12:58.100 ways one is just like any other sector 00:12:59.98000:12:59.990 would use it 00:13:01.00000:13:01.010 thermal energy other ways to move things 00:13:03.49000:13:03.500 along but the second way is feedstocks 00:13:05.89000:13:05.900 so oil and gas various types of products 00:13:08.32000:13:08.330 you see a Sankey diagram in front of you 00:13:10.69000:13:10.700 a lot of different types of oil and gas 00:13:14.67000:13:14.680 coal etcetera along with a bunch of 00:13:17.23000:13:17.240 secondary reactants all mixing together 00:13:19.96000:13:19.970 in a variety of quite complicated ways 00:13:22.75000:13:22.760 and then forming fertilizers plastics 00:13:25.87000:13:25.880 fibers rubbers other kinds of products 00:13:28.03000:13:28.040 as well this is actually a simplified 00:13:30.16000:13:30.170 version of what could be shown in terms 00:13:32.65000:13:32.660 of the overall complexity of this so one 00:13:35.23000:13:35.240 of the answers to why plastics 00:13:39.67000:13:39.680 fertilizers petrochemicals more 00:13:41.29000:13:41.300 generally don't get the attention they 00:13:42.70000:13:42.710 deserve given the major role they play 00:13:44.83000:13:44.840 an oil and gas demand given the role 00:13:46.36000:13:46.370 they play more generally in our society 00:13:48.10000:13:48.110 is the complexity yeah question is where 00:13:53.77000:13:53.780 do you put natural gas liquids on the 00:13:55.72000:13:55.730 chart I think it fits in with the gas 00:14:02.65000:14:02.660 piece of it and then it's broken up in a 00:14:05.89000:14:05.900 variety of different ways feeding into 00:14:07.27000:14:07.280 the different products yeah yeah all 00:14:12.76000:14:12.770 right let's just all right so let's look 00:14:16.12000:14:16.130 at production around the world it varies 00:14:19.84000:14:19.850 from region to region this is looking at 00:14:22.12000:14:22.130 primary chemicals H VCS or high-value 00:14:25.15000:14:25.160 chemicals mainly used for plastics 00:14:26.92000:14:26.930 ammonia for fertilizers and then 00:14:29.08000:14:29.090 methanol the light blue for diverse 00:14:30.67000:14:30.680 products what you see is the various 00:14:33.46000:14:33.470 regions around the world there 00:14:35.43000:14:35.440 for big regions led by Asia Middle East 00:14:39.12000:14:39.130 Europe and the US little less 00:14:41.43000:14:41.440 contribution from other places but you 00:14:43.65000:14:43.660 see different kinds of materials HV C's 00:14:46.83000:14:46.840 being very important in the u.s. over 50 00:14:49.47000:14:49.480 US and North America more generally Asia 00:14:52.20000:14:52.210 a little bit more balanced on that end 00:14:54.12000:14:54.130 if you look at the feed stocks where 00:14:56.88000:14:56.890 these are actually coming from oil 00:14:59.16000:14:59.170 broken up into the three different 00:15:01.05000:15:01.060 categories you see different variations 00:15:03.57000:15:03.580 in there the one that stands out from 00:15:05.46000:15:05.470 the North America perspective is the 00:15:07.56000:15:07.570 ethane side of it from the oil side of 00:15:10.59000:15:10.600 the spectrum but again different 00:15:12.56000:15:12.570 different places yielding both different 00:15:15.57000:15:15.580 use of primary chemicals but also 00:15:17.64000:15:17.650 different feedstocks and these really 00:15:21.36000:15:21.370 are the four big regions if you will 00:15:23.34000:15:23.350 going forward and we'll look at some 00:15:24.51000:15:24.520 numbers about how these numbers how 00:15:26.58000:15:26.590 these change where are the growth 00:15:27.69000:15:27.700 opportunities for different regions etc 00:15:30.00000:15:30.010 in a few minutes here and this is owing 00:15:32.79000:15:32.800 in part in no small part to regional 00:15:35.61000:15:35.620 cost advantages right no surprise that 00:15:37.44000:15:37.450 different regions would have different 00:15:40.61000:15:40.620 opportunities going forward in terms of 00:15:43.67000:15:43.680 costs of petrochemicals this is a quite 00:15:47.67000:15:47.680 simplified levelized cost of 00:15:49.17000:15:49.180 petrochemicals in 2017 trying to compare 00:15:51.83000:15:51.840 apples to apples as much as possible in 00:15:55.47000:15:55.480 these kinds of in these kinds of ways 00:15:57.86000:15:57.870 one thing we're also seeing increasingly 00:16:00.21000:16:00.220 and the president is a variety of oil 00:16:02.34000:16:02.350 companies looking to strengthen leak 00:16:04.44000:16:04.450 links with petrochemicals to look to see 00:16:07.92000:16:07.930 this as a major source of funding going 00:16:09.87000:16:09.880 forward this is just a graph showing 00:16:11.88000:16:11.890 gasoline diesel and naphtha what you see 00:16:15.39000:16:15.400 here of course is the checkered boxes or 00:16:19.50000:16:19.510 rectangles they're for gasoline and 00:16:21.00000:16:21.010 diesel that represents the tax which 00:16:23.67000:16:23.680 eats up a lot of the potential revenue 00:16:25.56000:16:25.570 for some of those sources you don't have 00:16:27.36000:16:27.370 some of those same dynamics with some of 00:16:29.73000:16:29.740 the use of petrochemicals in ways that 00:16:31.74000:16:31.750 again for integrated refiners in 00:16:33.66000:16:33.670 particular can offer higher margins a 00:16:36.72000:16:36.730 good source of income going forward and 00:16:38.79000:16:38.800 we see that in a variety of places 00:16:41.01000:16:41.020 around the world that place that of 00:16:43.62000:16:43.630 course gets a lot of focus in the u.s. 00:16:45.57000:16:45.580 is in the Gulf area where you have a lot 00:16:48.00000:16:48.010 of that petrol come 00:16:48.80000:16:48.810 capacity already that refining capacity 00:16:50.60000:16:50.610 and there's some quite interesting 00:16:52.58000:16:52.590 things going on in that space for a 00:16:55.55000:16:55.560 whole number of reasons 00:16:56.57000:16:56.580 so let's look let's just look now at the 00:16:59.42000:16:59.430 current trajectory so this is what I 00:17:00.92000:17:00.930 mentioned before our reference 00:17:02.18000:17:02.190 Technology scenario our RTS this is the 00:17:08.36000:17:08.370 trajectory we're currently on just 00:17:10.61000:17:10.620 looking at for those who are familiar 00:17:14.15000:17:14.160 with the weeoo series the similar to 00:17:17.90000:17:17.910 what would be the new policy scenario so 00:17:20.24000:17:20.250 this is current levels of ambition baked 00:17:21.98000:17:21.990 in in a variety of ways just looking at 00:17:24.19900:17:24.209 future trends from that from that 00:17:26.27000:17:26.280 perspective so here's the trajectory we 00:17:29.54000:17:29.550 look at going forward key thermoplastics 00:17:32.90000:17:32.910 broken up into a variety of 00:17:34.10000:17:34.110 subcategories on that front the kind of 00:17:37.19000:17:37.200 bottom line number is we do continue to 00:17:39.59000:17:39.600 see strong growth doubling an increase 00:17:42.08000:17:42.090 another doubling from 2010 to 2050 time 00:17:45.98000:17:45.990 time period and we also see per capita 00:17:49.30000:17:49.310 increases significantly in the RTS the 00:17:52.40000:17:52.410 reference technology scenario we 00:17:54.50000:17:54.510 actually did a high demand variant as 00:17:56.60000:17:56.610 well in which you could continue to see 00:17:58.34000:17:58.350 that increase going forward depending on 00:18:01.61000:18:01.620 your various assumptions about the 00:18:03.29000:18:03.300 saturation and how much per capita could 00:18:06.23000:18:06.240 increase could increase even going 00:18:08.06000:18:08.070 forward into the into the out years here 00:18:09.91900:18:09.929 into 2040 2050 time period a very very 00:18:13.49000:18:13.500 strong growth of plastics and 00:18:15.68000:18:15.690 petrochemicals more generally going 00:18:17.54000:18:17.550 forward this may be a clearer way to 00:18:20.45000:18:20.460 look at that in terms of oil demand 00:18:22.04000:18:22.050 growth in particular so here's our 00:18:24.91900:18:24.929 growth demand nine point six million 00:18:28.43000:18:28.440 barrels per day and let's look at the 00:18:30.86000:18:30.870 various components of that what's making 00:18:32.99000:18:33.000 up that growth in this scenario this 00:18:35.36000:18:35.370 referenced an area going to just 2030 in 00:18:37.91000:18:37.920 this instance so shipping passenger 00:18:40.82000:18:40.830 vehicles aviation Road freight and then 00:18:44.36000:18:44.370 petrochemicals providing a full third of 00:18:47.90000:18:47.910 that growth to 2030 if you extended this 00:18:51.38000:18:51.390 graph out and look to 2050 it'd be 00:18:53.54000:18:53.550 nearly half so significant driver and 00:18:57.47000:18:57.480 becoming the dominant driver of oil 00:18:59.90000:18:59.910 demand growth 00:19:01.36000:19:01.370 for from the petrochemicals 00:19:02.83000:19:02.840 petrochemical side of things now here's 00:19:06.76000:19:06.770 some numbers broken up 00:19:08.53000:19:08.540 regionally you can see the North America 00:19:12.85000:19:12.860 Europe Middle East Asia Pacific are the 00:19:14.98000:19:14.990 largest numbers what you see here is a 00:19:17.20000:19:17.210 couple things one especially looking 00:19:20.26000:19:20.270 between the first two bars that's a 00:19:22.06000:19:22.070 20-17 where we are currently looking to 00:19:24.67000:19:24.680 2030 you see significant amounts of 00:19:27.13000:19:27.140 increase in a couple places North 00:19:29.47000:19:29.480 America sees some increase so 00:19:30.97000:19:30.980 disaggregate that a little bit more for 00:19:32.74000:19:32.750 you middle ec some increases and then 00:19:35.62000:19:35.630 asia-pacific both in terms of the 00:19:37.99000:19:38.000 current volume but then the volume to 00:19:40.24000:19:40.250 2030 and especially 2050 you just see 00:19:43.21000:19:43.220 that bar being huge compared to some of 00:19:46.30000:19:46.310 the other bars and so shows the 00:19:48.90000:19:48.910 incredibly large amounts coming from the 00:19:51.10000:19:51.110 Asia Asia Pacific side of things 00:19:52.99000:19:53.000 including in the longer longer-term side 00:19:56.58000:19:56.590 so let's just look a little bit North 00:19:59.23000:19:59.240 America feedstock demand a little bit 00:20:01.21000:20:01.220 more in detail this will obviously be 00:20:03.13000:20:03.140 more meaningful for those who who have 00:20:06.01000:20:06.020 some some greater appreciation 00:20:09.18000:20:09.190 understanding on high-value chemical 00:20:12.07000:20:12.080 side of things you see the North America 00:20:14.05000:20:14.060 demand is really on the ethane side of 00:20:16.09000:20:16.100 things significantly to 2030 and even 00:20:19.24000:20:19.250 2050 and then you see natural gas being 00:20:22.33000:20:22.340 a prime driver on ammonia and methanol 00:20:24.94000:20:24.950 in particular different regions would 00:20:27.88000:20:27.890 have different breakdowns of this as 00:20:30.07000:20:30.080 well 00:20:30.97000:20:30.980 Europe and Asia Pacific especially China 00:20:34.03000:20:34.040 is a little bit more coal dominated and 00:20:36.64000:20:36.650 then the naphtha side of things as well 00:20:39.12000:20:39.130 so that's the reference scenario that's 00:20:42.58000:20:42.590 where we're currently headed under 00:20:44.65000:20:44.660 current levels of ambition current 00:20:47.20000:20:47.210 policy approaches etc etc so let me just 00:20:51.52000:20:51.530 show you a few slides now from what we 00:20:53.95000:20:53.960 call our clean technology scenario so 00:20:57.52000:20:57.530 it's a different scenario instead of 00:20:59.26000:20:59.270 just taking current trends and 00:21:00.58000:21:00.590 extrapolating and looking at to where 00:21:02.35000:21:02.360 those go into the future the clean 00:21:04.21000:21:04.220 technology scenario really tries to 00:21:07.03000:21:07.040 drive the model in ways that reduce a 00:21:10.18000:21:10.190 variety of 00:21:11.76000:21:11.770 a different sustainability challenges in 00:21:14.82000:21:14.830 particular we'll look at air pollution 00:21:16.08000:21:16.090 we'll look at climate impacts and then 00:21:18.66000:21:18.670 we'll look at water pollution as well 00:21:20.28000:21:20.290 which gets a lot of attention in this in 00:21:22.89000:21:22.900 this area in particular so this is just 00:21:25.89000:21:25.900 where we're at right now looking at co2 00:21:28.41000:21:28.420 emissions in a snapshot one thing to 00:21:30.84000:21:30.850 note here is even though chemicals is 00:21:33.33000:21:33.340 the largest of the industrial sectors in 00:21:36.00000:21:36.010 terms of global final energy demand you 00:21:38.43000:21:38.440 see chemicals there on the very far left 00:21:40.14000:21:40.150 iron and steel less so cement etc 00:21:43.43000:21:43.440 because of the feedstock issue because a 00:21:46.02000:21:46.030 lot of these petrochemicals are being 00:21:49.62000:21:49.630 locked into products that will last to 00:21:51.99000:21:52.000 varying degrees some very significant 00:21:54.39000:21:54.400 amounts of time the chemicals 00:21:56.31000:21:56.320 represented by the red dots they're 00:21:58.56000:21:58.570 direct co2 emissions is actually the 00:22:00.66000:22:00.670 third highest sector so iron and steel 00:22:03.54000:22:03.550 and cement is higher from a co2 00:22:05.94000:22:05.950 footprint even though chemicals is 00:22:08.91000:22:08.920 highest from a final energy demand 00:22:10.71000:22:10.720 perspective so just to give you a little 00:22:12.45000:22:12.460 bit of a snap a snapshot on where we're 00:22:15.03000:22:15.040 at currently on the environmental toll 00:22:16.77000:22:16.780 at least on that aspect so this is what 00:22:19.91000:22:19.920 the kind of challenges the pollutants 00:22:24.30000:22:24.310 coming from the again the reference 00:22:26.52000:22:26.530 technology scenario so this is all an 00:22:29.52000:22:29.530 index so it's a little easier to compare 00:22:32.07000:22:32.080 apples to apples between the three water 00:22:34.86000:22:34.870 pollutants is that dotted line going up 00:22:37.56000:22:37.570 significantly from 100 to 200 so that's 00:22:40.05000:22:40.060 about a doubling of the pollutants if 00:22:41.67000:22:41.680 you will from the primary chemical 00:22:44.07000:22:44.080 production going forward to that 2050 00:22:46.56000:22:46.570 time period you see the carbon dioxide 00:22:48.72000:22:48.730 emission significantly increase although 00:22:52.14000:22:52.150 start to flatten out a little bit as you 00:22:53.88000:22:53.890 get closer to 2050 and then you see air 00:22:56.37000:22:56.380 pollutants actually being reduced even 00:22:58.98000:22:58.990 in the reference technology scenario for 00:23:01.11000:23:01.120 for a number of reasons but that's the 00:23:03.66000:23:03.670 reference technology scenario now let me 00:23:06.21000:23:06.220 just show you the numbers in dark here 00:23:08.61000:23:08.620 the non dotted thicker lines this is our 00:23:11.22000:23:11.230 clean technology scenario so this is the 00:23:13.77000:23:13.780 scenario and I should say - this uses 00:23:16.08000:23:16.090 existing technologies it's 00:23:17.52000:23:17.530 cost-effective we'll get to that in a 00:23:19.56000:23:19.570 minute 00:23:20.31000:23:20.320 but this requires a significant amount 00:23:22.86000:23:22.870 of policy significant amount of market 00:23:24.99000:23:25.000 design 00:23:25.55000:23:25.560 try to really take advantage of these 00:23:27.53000:23:27.540 opportunities for enhanced 00:23:28.64000:23:28.650 sustainability so what you see here is 00:23:31.52000:23:31.530 air pollutants and water pollutants very 00:23:34.64000:23:34.650 much significantly reduced trying almost 00:23:37.28000:23:37.290 to get to the to get to the zero 00:23:39.41000:23:39.420 perspective it's actually an 85% 00:23:42.23000:23:42.240 reduction on the air pollution side and 00:23:44.12000:23:44.130 90% reduction on the water pollution 00:23:46.04000:23:46.050 side in this CTS this clean technology 00:23:48.71000:23:48.720 scenario and even the carbon dioxide 00:23:50.96000:23:50.970 that's the dark blue a decrease of about 00:23:53.66000:23:53.670 forty five percent reduction so again 00:23:56.18000:23:56.190 significant we're not just doing this 00:23:58.07000:23:58.080 scenario and nibbling around the margins 00:23:59.54000:23:59.550 this is a pretty significant 00:24:01.52000:24:01.530 sustainability scenario going forward 00:24:04.60000:24:04.610 now let's look at some of these a little 00:24:06.59000:24:06.600 bit more in detail let's start with the 00:24:08.27000:24:08.280 plastic issue the plastic pollution 00:24:10.70000:24:10.710 issue which does get a lot of attention 00:24:12.11000:24:12.120 these days sometimes a little bit out of 00:24:14.33000:24:14.340 perspective but let's look at the actual 00:24:17.18000:24:17.190 numbers of what's possible here what you 00:24:22.43000:24:22.440 see in front of you are secondary 00:24:24.11000:24:24.120 plastic production so compared to 00:24:26.84000:24:26.850 primary plastic production so the 00:24:28.55000:24:28.560 primary plastic production side of 00:24:30.14000:24:30.150 things is is showing up there in terms 00:24:34.61000:24:34.620 of yeah so in this instance the 00:24:46.13000:24:46.140 secondary plastic is the amount being 00:24:48.38000:24:48.390 recycled and brought in that way so it's 00:24:50.84000:24:50.850 not using yep 00:24:52.10000:24:52.110 that makes sense so what you see here is 00:24:55.28000:24:55.290 a number a number of things you see huge 00:24:58.76000:24:58.770 amounts of increases on the recycling 00:25:02.36000:25:02.370 side of things with the CTS versus the 00:25:04.79000:25:04.800 RTS so the clean technology scenario is 00:25:07.67000:25:07.680 the purple bar much higher in 2030 and 00:25:10.61000:25:10.620 especially much higher in 2050 compared 00:25:13.67000:25:13.680 to those light blue which are the RTS in 00:25:16.52000:25:16.530 2030 and 2050 so what we see here in the 00:25:19.55000:25:19.560 CTS is a significant amount much higher 00:25:22.37000:25:22.380 amount of recycling going on the global 00:25:26.72000:25:26.730 collection rate here I'll show you in 00:25:28.64000:25:28.650 red with a bit of a bar and you see a 00:25:31.43000:25:31.440 significant amount of primary chemical 00:25:32.84000:25:32.850 savings so the more you recycle and put 00:25:36.08000:25:36.090 into secondary plastic production the 00:25:37.73000:25:37.740 less you have to use 00:25:39.32000:25:39.330 from a primary chemical perspective now 00:25:44.00000:25:44.010 this is the plastic waste leakage into 00:25:46.64000:25:46.650 the ocean so the ocean bound plastic 00:25:49.04000:25:49.050 leakage that gets a lot of attention 00:25:51.05000:25:51.060 these big areas in the Pacific in 00:25:53.66000:25:53.670 particular that are accumulating all of 00:25:55.88000:25:55.890 this plastic some in larger amounts but 00:25:59.09000:25:59.100 also the micro plastics that are finding 00:26:01.04000:26:01.050 their way into fish and finding their 00:26:02.87000:26:02.880 way into the end of the food chain 00:26:05.26000:26:05.270 insignificant and amounts of number so 00:26:08.21000:26:08.220 what you see here is comparing the RTS 00:26:10.76000:26:10.770 reference case annual leakage those are 00:26:13.82000:26:13.830 the dotted boxes rectangles that you see 00:26:16.58000:26:16.590 increasing going forward starting at a 00:26:19.37000:26:19.380 significant amount already but 00:26:21.05000:26:21.060 increasing significantly amount going 00:26:23.81000:26:23.820 forward and the CTS is the dark 00:26:26.90000:26:26.910 rectangles towards the very bottom and 00:26:29.15000:26:29.160 really aggressively being pushed to try 00:26:31.67000:26:31.680 to have less and less annually going 00:26:34.25000:26:34.260 into the oceans if you look at the 00:26:36.68000:26:36.690 cumulative leakage that is how much is 00:26:38.84000:26:38.850 in the oceans you see the RTS cumulative 00:26:41.45000:26:41.460 leakage no surprise that those numbers 00:26:42.92000:26:42.930 would keep increasing if you keep 00:26:44.42000:26:44.430 increasing the amounts you're putting 00:26:46.40000:26:46.410 into the oceans the cts cumulative 00:26:49.37000:26:49.380 leakage is significantly significantly 00:26:52.40000:26:52.410 lower they're to the point of being 00:26:55.19000:26:55.200 halved from that cumulative level on the 00:26:58.64000:26:58.650 on the reference case scenario going 00:27:02.75000:27:02.760 forward so this is again a very 00:27:04.88000:27:04.890 aggressive plastics recycling program 00:27:07.93000:27:07.940 driving things down what you see here is 00:27:10.64000:27:10.650 still a significant amount of cumulative 00:27:12.32000:27:12.330 leakage even with this aggressive 00:27:13.91000:27:13.920 recycling even under this aggressive 00:27:16.03000:27:16.040 scenario one of the solutions has been 00:27:18.89000:27:18.900 looked at is to try to have active 00:27:20.57000:27:20.580 programs to remove some of those 00:27:21.86000:27:21.870 plastics from a variety of places in the 00:27:24.20000:27:24.210 oceans or certainly even before they 00:27:25.91000:27:25.920 before they get there so let's look at 00:27:28.49000:27:28.500 co2 emissions these are the differences 00:27:32.30000:27:32.310 between the again the reference case 00:27:34.61000:27:34.620 scenario co2 emissions increasing not 00:27:38.09000:27:38.100 increasing as much as other sectors 00:27:40.85000:27:40.860 again and in part because of the 00:27:42.83000:27:42.840 feedstock issue but increasing in 00:27:44.96000:27:44.970 significant amounts and then you see the 00:27:47.33000:27:47.340 CTS there which is really driving down 00:27:49.85000:27:49.860 the energy related emission 00:27:52.01000:27:52.020 again that's a significant part of the 00:27:54.23000:27:54.240 co2 profile is really the energy related 00:27:57.05000:27:57.060 emissions those amounts of energy used 00:27:59.24000:27:59.250 to drive different catalytic chemical 00:28:02.69000:28:02.700 reactions etc the process emissions 00:28:05.06000:28:05.070 starting quite a bit less decreasing 00:28:07.82000:28:07.830 less but the real emissions benefits you 00:28:10.16000:28:10.170 get is from the energy related emissions 00:28:11.60000:28:11.610 side of things and you see the 00:28:13.37000:28:13.380 cumulative arounds and the CTS quite 00:28:16.55000:28:16.560 significant again a 45 percent reduction 00:28:19.46000:28:19.470 in the CTS with energy related emissions 00:28:22.31000:28:22.320 declining declining and taking care of 00:28:24.95000:28:24.960 the significant part of it so this now 00:28:27.83000:28:27.840 looks at well how do you get there so 00:28:29.78000:28:29.790 assuming you want to get some of these 00:28:30.98000:28:30.990 benefits you want to get the 45% 00:28:32.81000:28:32.820 reduction on the co2 side you want to 00:28:34.85000:28:34.860 get the 90% reduction on the plastic 00:28:36.71000:28:36.720 leakage side of things what are the 00:28:38.96000:28:38.970 different policy mechanisms what are the 00:28:41.33000:28:41.340 ways cost-effectively to actually make 00:28:43.58000:28:43.590 those reductions a couple things are 00:28:45.47000:28:45.480 striking in this chart we break it up 00:28:47.81000:28:47.820 into five different categories one is 00:28:50.33000:28:50.340 the largest as CC us I'll have a slide 00:28:52.52000:28:52.530 in particular that dives into that but 00:28:54.59000:28:54.600 that ends up being very much and you see 00:28:57.74000:28:57.750 here over a third of the cost-effective 00:29:00.41000:29:00.420 opportunities to reduce the co2 00:29:02.18000:29:02.190 footprint from the petrochemicals 00:29:04.22000:29:04.230 industry secondly is feedstock shifts 00:29:08.51000:29:08.520 especially from coal to natural gas now 00:29:10.82000:29:10.830 China is the main country right now 00:29:12.68000:29:12.690 using coal as a feedstock into the 00:29:15.11000:29:15.120 petrochemical side of things a full 00:29:17.27000:29:17.280 quarter of the opportunity space in 00:29:20.60000:29:20.610 terms of reducing co2 footprint just 00:29:22.40000:29:22.410 from the coal to natural gas feedstock 00:29:24.29000:29:24.300 shift equally 25% from the energy 00:29:27.68000:29:27.690 efficiency side that's no surprise for 00:29:30.11000:29:30.120 those who focus on energy efficiency it 00:29:31.94000:29:31.950 ends up driving a large part of our 00:29:34.16000:29:34.170 various scenarios across different 00:29:35.87000:29:35.880 technologies across different industries 00:29:37.93000:29:37.940 it's interesting that the plastics 00:29:40.01000:29:40.020 recycling piece while important and 00:29:42.35000:29:42.360 again very much an aggressive recycling 00:29:44.78000:29:44.790 regime in this particular scenario is 00:29:47.00000:29:47.010 only responsible for 9% of the reduction 00:29:50.00000:29:50.010 of co2 emissions so lots of reasons to 00:29:53.93000:29:53.940 do the recycling including 00:29:55.76000:29:55.770 sustainability but it's not going to be 00:29:57.80000:29:57.810 the primary driver to really clean up 00:30:00.35000:30:00.360 the co2 footprint for sure from 00:30:03.06000:30:03.070 part of thing an alternative feedstocks 00:30:05.10000:30:05.110 at 6% now a lot of different assumptions 00:30:08.07000:30:08.080 about what kinds of alternative 00:30:09.69000:30:09.700 feedstocks will be available at what 00:30:11.31000:30:11.320 price there is some R&D going into this 00:30:13.47000:30:13.480 development it's one of the more 00:30:14.78900:30:14.799 difficult areas to actually model to 00:30:17.85000:30:17.860 figure out what's going to happen into 00:30:19.59000:30:19.600 the future but as we look at it much 00:30:22.23000:30:22.240 more cost effective solutions certainly 00:30:24.09000:30:24.100 in that time period of 2050 from CC us 00:30:26.51900:30:26.529 from recycling etc along those lines so 00:30:31.83000:30:31.840 let's look now at CCS what CCS in the 00:30:35.31000:30:35.320 petrochemical side of things really 00:30:37.71000:30:37.720 changes from using CCS and there's a 00:30:39.86900:30:39.879 significant amount of CC you if you will 00:30:42.02900:30:42.039 going on right now carbon capture for 00:30:46.04900:30:46.059 utilization you see that in the light 00:30:47.99900:30:48.009 blue bar they're going forward it's 00:30:50.39900:30:50.409 actually not that much different from 00:30:51.89900:30:51.909 RTS CTS those numbers are already 00:30:54.45000:30:54.460 significant those numbers are going up 00:30:57.50900:30:57.519 to a certain extent the real difference 00:30:59.58000:30:59.590 here is the CC you s the storage piece 00:31:03.38900:31:03.399 of the equation here that's where you 00:31:04.95000:31:04.960 get your significant carbon reductions 00:31:06.74900:31:06.759 is actually storing especially some of 00:31:09.11900:31:09.129 those process energy energy generated 00:31:12.18000:31:12.190 along those lines 00:31:13.01900:31:13.029 so again CCS doing a significant amount 00:31:15.89900:31:15.909 you see the dark rectangles there that 00:31:18.99000:31:19.000 capture for storage you see very little 00:31:20.85000:31:20.860 of that in the reference technology 00:31:22.52900:31:22.539 scenario no surprise because that costs 00:31:24.65900:31:24.669 extra money unless you have a carbon 00:31:26.49000:31:26.500 price or other mechanism to drive that 00:31:28.74000:31:28.750 you're just not going to see a whole lot 00:31:29.99900:31:30.009 of it whereas in the CTS where you do 00:31:32.43000:31:32.440 drive do drive policies in a significant 00:31:35.54900:31:35.559 way you see a significantly higher 00:31:37.74000:31:37.750 number on that front alright so how much 00:31:41.94000:31:41.950 more does the CTS the clean technology 00:31:45.50900:31:45.519 scenario cost from the reference 00:31:46.88900:31:46.899 technology scenario now one thing that's 00:31:49.23000:31:49.240 interesting is it actually costs less 00:31:51.96000:31:51.970 now it requires a whole little policies 00:31:54.81000:31:54.820 I'll get to that in a minute 00:31:55.95000:31:55.960 a whole slew of market designs but 00:31:58.71000:31:58.720 because of the savings you get from 00:32:00.38900:32:00.399 recycling and especially from coal to 00:32:02.63900:32:02.649 gas feedstock and you see that for 00:32:04.32000:32:04.330 ammonia methanol and HBC's on the chart 00:32:06.99000:32:07.000 in front of you it actually means that 00:32:08.87900:32:08.889 the CTS is less capital intensive about 00:32:12.38900:32:12.399 1.5 trillion compared to the RTS which 00:32:15.65900:32:15.669 is about one points 00:32:16.79900:32:16.809 and trillions about 200 million saved if 00:32:20.48900:32:20.499 you will through the CTS versus the RTS 00:32:23.82000:32:23.830 now that's just because there's 00:32:26.15900:32:26.169 theoretical cost savings doesn't mean 00:32:28.25900:32:28.269 it's going to happen it's a variety of 00:32:30.09000:32:30.100 different policies and mechanisms to 00:32:31.83000:32:31.840 have the incentive structure for that to 00:32:34.23000:32:34.240 to actually come to fruition a couple 00:32:37.20000:32:37.210 last words just looking at CTS and oil 00:32:39.48000:32:39.490 demand so we looked at the numbers 00:32:41.46000:32:41.470 previously about the third going to 2030 00:32:45.36000:32:45.370 the oil demand growth being driven by 00:32:48.50900:32:48.519 petrochemicals and the full half or 50% 00:32:51.33000:32:51.340 going forward so here's what that looks 00:32:53.90900:32:53.919 like in terms of percentage terms from 00:32:56.63900:32:56.649 the the RTS going forward this is 00:32:59.39900:32:59.409 looking at oil demand increases to about 00:33:02.07000:33:02.080 16 percent so 16 percent in 2050 of 00:33:05.60900:33:05.619 overall oil demand it isn't just growth 00:33:07.79900:33:07.809 this is overall oil demand will come 00:33:10.49900:33:10.509 from petrochemicals what happens in the 00:33:13.59000:33:13.600 cts is because of some of the 00:33:17.93000:33:17.940 constraints some of the mechanisms 00:33:19.94000:33:19.950 carbon pricing etc what you actually see 00:33:24.38900:33:24.399 is a greater reduction in other parts of 00:33:28.16900:33:28.179 oil demand especially in transport 00:33:30.14900:33:30.159 compared to a continued increase and you 00:33:33.72000:33:33.730 see the blue bar continuing to increase 00:33:35.27900:33:35.289 on oil demand from the petrochemical 00:33:38.10000:33:38.110 side of things to the point where 00:33:40.49900:33:40.509 instead of just 16% under the reference 00:33:42.65900:33:42.669 case by 2050 coming of oil demand coming 00:33:46.25900:33:46.269 from petrochemicals you see it increase 00:33:48.29900:33:48.309 to 26% so it's less oil demand but a 00:33:52.08000:33:52.090 greater percentage under that clean 00:33:53.87900:33:53.889 technology clean technology scenario we 00:33:57.23900:33:57.249 just show you one graph to make that 00:33:59.54900:33:59.559 point a little bit more apparent from 00:34:02.12900:34:02.139 the passenger transport side of things 00:34:04.01900:34:04.029 so what you see here are 2017 numbers 00:34:06.84000:34:06.850 for four different countries or regions 00:34:09.08900:34:09.099 US European Union China and India the 00:34:12.54000:34:12.550 green is the oil demand for Road 00:34:14.43000:34:14.440 Transport Road passenger transport huge 00:34:16.85900:34:16.869 in the US huge in European Union pretty 00:34:19.37900:34:19.389 significant in China India and then you 00:34:21.62900:34:21.639 see the oil demand for plastics 00:34:23.39900:34:23.409 consumption is the red they're 00:34:24.75000:34:24.760 comparably now this is what it looks 00:34:27.30000:34:27.310 like in the CTS so you get a significant 00:34:30.45000:34:30.460 amount 00:34:30.70000:34:30.710 of additional electric vehicles coming 00:34:33.31000:34:33.320 in under the CTS hundreds of millions of 00:34:36.12900:34:36.139 electric vehicles other ways that reduce 00:34:38.61900:34:38.629 the oil demand for road passenger 00:34:40.96000:34:40.970 transport you see the significant 00:34:42.55000:34:42.560 reduction on the US European Union etc 00:34:44.49000:34:44.500 whereas you see it increases and staying 00:34:49.57000:34:49.580 quite stable for the US and European 00:34:52.62900:34:52.639 Union China and India increasing 00:34:54.46000:34:54.470 significantly to the point where by 2050 00:34:57.67000:34:57.680 the per capita oil demand overtakes road 00:35:01.00000:35:01.010 transport in all of these regions in 00:35:02.95000:35:02.960 terms of again the oil demand under this 00:35:05.44000:35:05.450 more clean clean technology scenario so 00:35:09.04000:35:09.050 let me conclude with just a two slides 00:35:10.99000:35:11.000 as we do in a lot of reports well it's 00:35:13.63000:35:13.640 good to know that there's this scenario 00:35:15.37000:35:15.380 theoretically out there how would you 00:35:17.80000:35:17.810 actually take advantage of it if you 00:35:19.32900:35:19.339 were a government or a company what are 00:35:22.00000:35:22.010 the recommendations to actually get you 00:35:23.92000:35:23.930 from that reference case to that clean 00:35:26.02000:35:26.030 technology scenario so we'll break this 00:35:28.39000:35:28.400 up and do a series of five each five for 00:35:32.26000:35:32.270 production and then five for the use and 00:35:34.18000:35:34.190 consumption first no surprise stimulate 00:35:37.42000:35:37.430 that investment in R&D if you don't do 00:35:39.28000:35:39.290 the investment in R&D about the 00:35:41.17000:35:41.180 sustainable chemical production routes 00:35:43.00000:35:43.010 whether alternative feedstocks or other 00:35:45.28000:35:45.290 R&D that can be done you're not going to 00:35:47.53000:35:47.540 have those technological options options 00:35:50.32000:35:50.330 going forward secondly establishing 00:35:53.71000:35:53.720 extending plant level benchmarking 00:35:55.63000:35:55.640 schemes for energy performance again 00:35:58.03000:35:58.040 incenting the adoption through fiscal 00:36:00.00000:36:00.010 incentives really trying to drive the 00:36:02.23000:36:02.240 market in ways that you that you want 00:36:05.07000:36:05.080 efforts to reduce co2 emissions the CTS 00:36:08.85900:36:08.869 very much as part of a broader series of 00:36:11.74000:36:11.750 measures to really to really drive the 00:36:14.58900:36:14.599 co2 emissions air quality standards can 00:36:18.52000:36:18.530 certainly be helpful on this side those 00:36:20.85900:36:20.869 for industry can help be part of the 00:36:22.72000:36:22.730 solution going forward and then fuel and 00:36:25.83900:36:25.849 feedstock prices should reflect actual 00:36:27.49000:36:27.500 market value if you want the incentive 00:36:29.71000:36:29.720 structures right to really drive that 00:36:32.98000:36:32.990 you have to have the fuel and feed stock 00:36:34.59900:36:34.609 prices reflecting actual market value 00:36:36.64000:36:36.650 we've obviously had a lot of efforts on 00:36:38.53000:36:38.540 the subsidization of fossil fuels a lot 00:36:41.44000:36:41.450 of discussion about that a lot of 00:36:42.73000:36:42.740 challenge some countries have made 00:36:43.96000:36:43.970 progress in 00:36:44.52900:36:44.539 recent years some countries are losing 00:36:47.43900:36:47.449 some of that progress because of the 00:36:49.20900:36:49.219 high oil price recently in particular 00:36:52.22900:36:52.239 second set of five recommendations this 00:36:55.05900:36:55.069 is on use in disposal of chemical 00:36:56.79900:36:56.809 products it is incredibly helpful to 00:37:00.33900:37:00.349 reduce the reliance on single-use 00:37:01.80900:37:01.819 plastics that's what's getting a lot of 00:37:03.40000:37:03.410 attention these days the straw is the 00:37:05.91900:37:05.929 bags etc that can certainly be a part of 00:37:10.05900:37:10.069 the solution but again very importantly 00:37:12.88000:37:12.890 only a part of the solution it really 00:37:14.62000:37:14.630 requires a much more comprehensive 00:37:16.52900:37:16.539 thoughtful regime to get at the full 00:37:19.17900:37:19.189 sustainability benefits improving waste 00:37:21.51900:37:21.529 management practices consumer awareness 00:37:24.13000:37:24.140 design products with disposal in mind 00:37:26.89000:37:26.900 don't just design your product for that 00:37:28.80900:37:28.819 immediate consumer experience but what 00:37:30.54900:37:30.559 is it and where is that product going 00:37:32.10900:37:32.119 after that and then looking at some 00:37:35.16900:37:35.179 different mechanisms to have producer 00:37:36.66900:37:36.679 responsibilities so with producers are 00:37:38.94900:37:38.959 putting out a certain amount of products 00:37:40.92900:37:40.939 out there what's the right incentive 00:37:42.78900:37:42.799 structure to make sure that those get 00:37:44.22900:37:44.239 recycled those get reused in ways that 00:37:47.22900:37:47.239 are appropriate for the overall system 00:37:48.75900:37:48.769 not just that that producer so just a 00:37:52.59900:37:52.609 few conclusions here petrochemicals 00:37:55.35900:37:55.369 really are deeply embedded in our 00:37:57.03900:37:57.049 economies everyday lives they also play 00:37:59.16900:37:59.179 as I said a role in many clean energy 00:38:01.47900:38:01.489 technologies today this will only 00:38:03.48900:38:03.499 increase under any scenario that you 00:38:05.55900:38:05.569 could look at in a realistic world going 00:38:07.95900:38:07.969 forward into the next several decades 00:38:09.42900:38:09.439 period of time petrochemicals are the 00:38:12.18900:38:12.199 largest driver of global oil demand a 00:38:14.49900:38:14.509 third of that growth to 2030 nearly half 00:38:16.65900:38:16.669 to 2050 frankly even a larger percentage 00:38:19.77900:38:19.789 in a clean technology scenario in a 00:38:22.29900:38:22.309 world that's trying to maximize more 00:38:24.06900:38:24.079 sustainability benefits us-china in the 00:38:27.27900:38:27.289 Middle East in particular leading growth 00:38:29.31900:38:29.329 in petrochemicals with some interesting 00:38:31.68900:38:31.699 near-term opportunities in the u.s. in 00:38:34.41900:38:34.429 particular production use in disposal of 00:38:37.50900:38:37.519 chemicals take an environmental toll 00:38:39.57900:38:39.589 they do have a significant environmental 00:38:41.40900:38:41.419 footprint right now and that will 00:38:43.35900:38:43.369 increase into the future but there are a 00:38:45.54900:38:45.559 variety as we talked about achievable 00:38:47.82900:38:47.839 cost-effective steps steps that can be 00:38:50.40900:38:50.419 taken and just one last plug for the IEA 00:38:54.60900:38:54.619 blindspots 00:38:55.56900:38:55.579 series we did trucks we did air 00:38:57.45900:38:57.469 conditioner 00:38:58.72000:38:58.730 we actually have some focus on modern 00:39:01.24000:39:01.250 bioenergy that's now out part of our 00:39:03.34000:39:03.350 renewables annual renewables report and 00:39:05.71000:39:05.720 more to come looking at rail looking at 00:39:08.23000:39:08.240 a variety of other areas that we think 00:39:09.97000:39:09.980 are blind spots aren't getting as much 00:39:12.43000:39:12.440 attention as they should give for a 00:39:14.53000:39:14.540 whole variety of reasons going forward 00:39:16.78000:39:16.790 but thanks again for having me here 00:39:19.03000:39:19.040 Sarah and Ian and the full CSIS team 00:39:21.43000:39:21.440 thank you for all coming out on a rainy 00:39:23.56000:39:23.570 day I hope the rain has stopped and 00:39:26.32000:39:26.330 spending a little bit of time and more 00:39:28.57000:39:28.580 than happy to certainly answer questions 00:39:30.25000:39:30.260 and more than happy to continue our 00:39:32.26000:39:32.270 collaboration from the IEA side of 00:39:34.03000:39:34.040 things with with a variety of you right 00:39:36.55000:39:36.560 of you going forward so thanks thanks 00:39:44.11000:39:44.120 Dave no I think you did bring out the 00:39:45.91000:39:45.920 nice weather so it's much better right 00:39:47.53000:39:47.540 now than then whenever Benny arrived 00:39:48.97000:39:48.980 okay so first off congratulations I 00:39:51.61000:39:51.620 think the blind spot series is really 00:39:52.93000:39:52.940 important I think the way in which that 00:39:54.94000:39:54.950 you guys have applied frameworks for 00:39:57.16000:39:57.170 thinking about issues that people 00:39:59.26000:39:59.270 fundamentally don't understand or don't 00:40:00.58000:40:00.590 appreciate enough in our sort of normal 00:40:03.30000:40:03.310 energy market or policy dialogue has 00:40:06.07000:40:06.080 been really important I thought the air 00:40:07.57000:40:07.580 conditioning cooling one was 00:40:08.98000:40:08.990 particularly insightful and this one is 00:40:11.20000:40:11.210 as well so a couple things I wanted to 00:40:13.66000:40:13.670 ask about first going back to the 00:40:16.30000:40:16.310 beginning of your presentation you 00:40:17.59000:40:17.600 talked about the commercial strategy if 00:40:22.30000:40:22.310 you will you don't think you use those 00:40:23.68000:40:23.690 terms but sort of the attractiveness of 00:40:25.45000:40:25.460 petrochemicals to oil and gas company 00:40:28.00000:40:28.010 strategy and I think that that's an 00:40:30.07000:40:30.080 interesting that's an interesting point 00:40:32.05000:40:32.060 it's certainly something that we've 00:40:33.04000:40:33.050 observed that as you know companies are 00:40:35.77000:40:35.780 looking out into the world and looking 00:40:37.93000:40:37.940 at the future of oil demand and all of 00:40:39.61000:40:39.620 the both you know potential positive and 00:40:41.80000:40:41.810 negative uncertainties out there about 00:40:45.10000:40:45.110 the trajectory of that demand 00:40:46.74000:40:46.750 petrochemicals has really sort of turned 00:40:49.03000:40:49.040 out to be one of those things where they 00:40:51.34000:40:51.350 can create more value added they feel 00:40:53.41000:40:53.420 like it gives them sort of a deeper 00:40:55.05000:40:55.060 connection into some of the consuming 00:40:57.64000:40:57.650 countries where they you know suppliers 00:41:00.28000:41:00.290 of what I would like to participate in 00:41:01.63000:41:01.640 those markets but what I find 00:41:03.43000:41:03.440 interesting is is if you look at what 00:41:05.44000:41:05.450 you've just presented that calls that 00:41:07.78000:41:07.790 into a question a little bit right so so 00:41:10.63000:41:10.640 the idea is 00:41:11.65000:41:11.660 that petrochemicals are gonna be a 00:41:12.78900:41:12.799 larger share but if we actually go about 00:41:15.52000:41:15.530 trying to apply all the sustainable 00:41:18.75000:41:18.760 criteria to petrochemicals that we do to 00:41:21.67000:41:21.680 the way that we consume energy we're 00:41:23.71000:41:23.720 actually going to be reducing demand for 00:41:25.53900:41:25.549 those products over all at the same time 00:41:28.72000:41:28.730 when we talk to companies we find them 00:41:31.80900:41:31.819 wanting to embed petrochemicals and 00:41:33.76000:41:33.770 plastics into more portions of the built 00:41:37.48000:41:37.490 environment so not using cement and 00:41:39.54900:41:39.559 steel as much but being able to use 00:41:41.22000:41:41.230 plastics and other petrochemicals for 00:41:43.48000:41:43.490 more and more things can you talk a 00:41:45.67000:41:45.680 little bit about as you guys were 00:41:46.99000:41:47.000 engaging with companies where you see 00:41:50.26000:41:50.270 the kind of outlay that you've looked at 00:41:52.90000:41:52.910 here for petrochemicals and in and how 00:41:55.51000:41:55.520 that's factoring into some of their 00:41:57.03900:41:57.049 commercial strategy no thanks thank 00:42:02.50000:42:02.510 thanks Sara obviously different 00:42:04.00000:42:04.010 companies different perspectives some 00:42:06.96000:42:06.970 have a greater or lesser appreciation 00:42:10.35900:42:10.369 depending on what their particular 00:42:11.31900:42:11.329 business model is so a couple thoughts 00:42:14.38000:42:14.390 on this one in we try never to present 00:42:18.94000:42:18.950 our scenarios as this is how things are 00:42:20.68000:42:20.690 definitely going to play out like the 00:42:22.24000:42:22.250 world is too complicated to do that the 00:42:24.01000:42:24.020 scenarios are less forecasts and more 00:42:26.52900:42:26.539 models of what the world could look at 00:42:28.45000:42:28.460 lenses in which to view whether certain 00:42:31.53900:42:31.549 decisions make sense from a business 00:42:33.22000:42:33.230 perspective or not on that side of 00:42:35.65000:42:35.660 things 00:42:36.02900:42:36.039 certainly the chart which if I were an 00:42:38.44000:42:38.450 oil and gas company or others in this 00:42:40.75000:42:40.760 space that I think is maybe the most 00:42:43.21000:42:43.220 compelling is that historic chart with 00:42:45.19000:42:45.200 that tenfold increase since 1970 over 00:42:48.25000:42:48.260 this forty five forty seven plus year 00:42:51.81900:42:51.829 period of time huge increase and what 00:42:54.49000:42:54.500 we've seen is the plastics and chemicals 00:42:57.22000:42:57.230 industry more generally has a huge 00:43:00.25000:43:00.260 amount of flexibility for as you just 00:43:01.93000:43:01.940 mentioned new products new solutions 00:43:05.14000:43:05.150 we've got 3d in manufacturing coming 00:43:09.70000:43:09.710 which opens up all sorts of different 00:43:11.74000:43:11.750 business models that aren't based on a 00:43:13.72000:43:13.730 manufacturing facility in one big 00:43:15.70000:43:15.710 location and shipping products but a 00:43:17.74000:43:17.750 much more distributed manufacturing kind 00:43:19.77900:43:19.789 of opportunity space going going forward 00:43:22.90000:43:22.910 on that side so you could certainly 00:43:25.27000:43:25.280 envision a variety on the plastic side a 00:43:27.52000:43:27.530 variety of different applications in 00:43:29.20000:43:29.210 different kinds different kinds of ways 00:43:31.51000:43:31.520 ways as well so that I think is a pretty 00:43:36.25000:43:36.260 significant data point that historic 00:43:38.83000:43:38.840 data point and what the trends have been 00:43:40.36000:43:40.370 and and in the past I think it's 00:43:43.81000:43:43.820 actually useful to look both at the RTS 00:43:47.02000:43:47.030 the reference case and then the clean 00:43:48.79000:43:48.800 technology case in both of those 00:43:51.64000:43:51.650 instances you still see a significant 00:43:54.67000:43:54.680 amount of increases on the oil demand 00:43:56.56000:43:56.570 side certainly overall and even more a 00:44:01.03000:44:01.040 percentage increase from oil demand 00:44:03.70000:44:03.710 going into petrochemicals in the clean 00:44:05.53000:44:05.540 technology sector so if I was a company 00:44:07.81000:44:07.820 and I was looking at that that would 00:44:09.85000:44:09.860 mean that with any variation of a future 00:44:13.39000:44:13.400 world in which the world either gets its 00:44:15.16000:44:15.170 act together on the Paris agreement or 00:44:17.20000:44:17.210 other goals whether they're air 00:44:18.64000:44:18.650 pollution climate goals or other goals 00:44:20.83000:44:20.840 the oil demand growth still looks very 00:44:24.01000:44:24.020 solid even in that clean scenario and 00:44:26.92000:44:26.930 maybe even more solid in that clean 00:44:29.14000:44:29.150 scenario compared to transport fuels or 00:44:32.35000:44:32.360 other kinds of things if you were 00:44:33.67000:44:33.680 thinking of it thinking of it from that 00:44:35.68000:44:35.690 perspective that perspective as well 00:44:38.94000:44:38.950 third thing and this is going to be 00:44:41.17000:44:41.180 interesting to see is what is the public 00:44:43.45000:44:43.460 reaction to the various campaigns going 00:44:45.55000:44:45.560 on right now single-use plastics the 00:44:47.59000:44:47.600 straws and Starbucks other kinds of 00:44:49.36000:44:49.370 things as well and certainly if I were 00:44:51.79000:44:51.800 thinking from oil and a chemical 00:44:54.85000:44:54.860 producer a plastics producer trying to 00:44:57.46000:44:57.470 get ahead of that curve trying to figure 00:44:59.74000:44:59.750 out ways that you could encourage 00:45:03.73000:45:03.740 recycling reduce single-use because 00:45:06.76000:45:06.770 there's so many other opportunities out 00:45:08.89000:45:08.900 there you don't want to have a backlash 00:45:10.75000:45:10.760 on one part of your business segment 00:45:13.51000:45:13.520 that frankly isn't as important as other 00:45:16.30000:45:16.310 parts in some ways if that makes sense 00:45:17.83000:45:17.840 so there's an incentive here I think to 00:45:20.05000:45:20.060 be a little bit forward leaning and 00:45:22.45000:45:22.460 trying to avoid any of that kind of 00:45:24.31000:45:24.320 backlash from the sustainability side of 00:45:26.71000:45:26.720 things and I take your point on Alderman 00:45:30.40000:45:30.410 growing in both instances but RTS 00:45:32.41000:45:32.420 scenario has less oil demand overall 00:45:34.66000:45:34.670 than the CTS scenario so what I I find 00:45:37.39000:45:37.400 interesting is in the 00:45:38.53000:45:38.540 sort of context to the peak oil demand 00:45:39.85000:45:39.860 debate right petrochemicals you're right 00:45:41.71000:45:41.720 is the thing that holds strong but it's 00:45:43.69000:45:43.700 not like it doesn't incur pressure right 00:45:45.40000:45:45.410 there's not like there there's sort of 00:45:47.32000:45:47.330 the same things that are driving all of 00:45:48.94000:45:48.950 the things you know on peak oil demand 00:45:51.66000:45:51.670 not effecting petrochemicals so you 00:45:55.27000:45:55.280 ended on policy I want to get back to 00:45:57.01000:45:57.020 some of the mechanics in the middle in a 00:45:58.24000:45:58.250 second before we open it up for 00:45:59.50000:45:59.510 conversation but when I think about say 00:46:03.07000:46:03.080 the policy environment for driving 00:46:05.14000:46:05.150 renewable energy and electricity 00:46:06.94000:46:06.950 production or for low carbon electricity 00:46:10.54000:46:10.550 production in those sorts of things I 00:46:11.95000:46:11.960 can think about how mature that policy 00:46:14.98000:46:14.990 environment is what I think about 00:46:16.33000:46:16.340 petrochemicals and sort of the RTS 00:46:18.67000:46:18.680 portfolio that a scenario started the 00:46:21.97000:46:21.980 CTS scenario that you put out there and 00:46:23.98000:46:23.990 then you talked about some of your 00:46:25.69000:46:25.700 policy recommendations I really don't 00:46:27.13000:46:27.140 have a sense of how developed that 00:46:29.26000:46:29.270 policy environment is how I mean is like 00:46:31.87000:46:31.880 what level of maturity should we think 00:46:33.82000:46:33.830 about with regard to policy makers 00:46:38.08000:46:38.090 thinking about sustainability within 00:46:39.73000:46:39.740 this sector so the short answer in some 00:46:44.77000:46:44.780 ways and this goes back to why this is a 00:46:46.93000:46:46.940 blind-spot and one that's 00:46:48.28000:46:48.290 underappreciated it's underappreciated 00:46:49.81000:46:49.820 by policy makers as well and it's 00:46:52.36000:46:52.370 complicated this is not a simple simple 00:46:55.39000:46:55.400 environment we rarely say there's a 00:46:57.43000:46:57.440 silver bullet in fact most times when 00:46:59.11000:46:59.120 you're giving a list of some kind of 00:47:00.28000:47:00.290 policy recommendations you say there's 00:47:01.69000:47:01.700 not a silver bullet in this instance 00:47:03.40000:47:03.410 it's maybe even doubly or triply true 00:47:06.13000:47:06.140 and it's very complicated markets it's 00:47:08.59000:47:08.600 different for the different feedstocks 00:47:10.21000:47:10.220 it's different for the other kinds of 00:47:12.04000:47:12.050 pieces that feed into it so it's very 00:47:15.55000:47:15.560 challenging for policy makers I think to 00:47:18.94000:47:18.950 get their hands around the full equation 00:47:20.86000:47:20.870 and a lot of times they're probably not 00:47:22.90000:47:22.910 looking at petrochemicals and let me get 00:47:24.91000:47:24.920 my hands around that they're looking at 00:47:26.44000:47:26.450 plastics or they're looking at a part of 00:47:28.69000:47:28.700 it to be a little bit along those lines 00:47:31.15000:47:31.160 so there's a lack and this is part of 00:47:33.49000:47:33.500 one of the reasons we did this report is 00:47:35.11000:47:35.120 the there is an audience here of 00:47:37.03000:47:37.040 regulators policymakers market designers 00:47:40.15000:47:40.160 to say hey maybe you should think or 00:47:42.79000:47:42.800 look at the lens of the petrochemicals 00:47:44.53000:47:44.540 industry as a whole thinking through 00:47:47.14000:47:47.150 these various components components of 00:47:49.75000:47:49.760 it in that way 00:47:51.37000:47:51.380 within some of the subcomponents so if 00:47:53.50000:47:53.510 you look at the 10 the list of 10 there 00:47:55.60000:47:55.610 are certain parts of the world different 00:47:58.72000:47:58.730 countries different regions that are a 00:48:00.16000:48:00.170 little bit further along maybe more 00:48:02.35000:48:02.360 aggressive European Union on plastics 00:48:04.90000:48:04.910 recycling being a little bit more 00:48:06.49000:48:06.500 forward leaning a little bit more 00:48:08.13000:48:08.140 further along and thinking through those 00:48:10.48000:48:10.490 kinds of kinds of equations but overall 00:48:13.62000:48:13.630 there's a lot and they put it this way 00:48:15.82000:48:15.830 there's a lot of growth opportunity 00:48:17.59000:48:17.600 there's a lot of improvement for further 00:48:20.22000:48:20.230 thoughtful policymaking in this space to 00:48:23.68000:48:23.690 kind of technical questions and then I 00:48:25.30000:48:25.310 want to at your colleagues here ask you 00:48:27.61000:48:27.620 some of their own questions you said 00:48:30.22000:48:30.230 that the CTS scenario is broadly made up 00:48:32.95000:48:32.960 of existing technologies that are 00:48:34.39000:48:34.400 cost-effective but they do require 00:48:35.86000:48:35.870 policy design but a third of that came 00:48:39.19000:48:39.200 from CC us 00:48:53.01000:48:53.020 this is when you're like regret 00:48:55.00000:48:55.010 animating your slides and so I guess my 00:49:02.50000:49:02.510 assumption was that I don't know as much 00:49:05.35000:49:05.360 on the carbon capture utilization break 00:49:07.75000:49:07.760 out of that number but on the CCS I'd 00:49:09.82000:49:09.830 CCS and petrochemicals it's hard to 00:49:12.37000:49:12.380 argue absent a carbon price that that 00:49:14.17000:49:14.180 would be cost-effective so so is that 00:49:17.05000:49:17.060 the policy design that you're talking 00:49:19.18000:49:19.190 about so perhaps even more straight 00:49:22.06000:49:22.070 striking on that instance so it really 00:49:24.73000:49:24.740 is it's the storage piece and the 00:49:26.65000:49:26.660 storage piece won't happen unless you 00:49:29.05000:49:29.060 have some kind of incentive structure 00:49:31.72000:49:31.730 could be a price per say 00:49:34.21000:49:34.220 certainly incentive structures like 45 Q 00:49:36.85000:49:36.860 here in the US there's other ways to 00:49:39.10000:49:39.110 incent and encourage those kinds of 00:49:41.47000:49:41.480 pieces but left to itself without that 00:49:45.82000:49:45.830 kind of signal you'll just get the light 00:49:48.61000:49:48.620 blue maybe a little bit but you won't 00:49:50.98000:49:50.990 get significant amounts of it it really 00:49:53.17000:49:53.180 requires policy to drive and take 00:49:55.27000:49:55.280 advantage of that 35% again this is a 00:49:58.12000:49:58.130 cost optimized model so what what we 00:50:00.85000:50:00.860 show is if you want to do this as 00:50:03.28000:50:03.290 cost-effectively as you can here's how 00:50:05.29000:50:05.300 you get 35% of that but it will require 00:50:07.51000:50:07.520 actually paying something to to actually 00:50:10.27000:50:10.280 generate okay and then so my last 00:50:12.01000:50:12.020 question technical question on this CTS 00:50:13.96000:50:13.970 scenario is you have savings that come 00:50:17.20000:50:17.210 from recycling that are generally based 00:50:20.53000:50:20.540 on the feedstock right so is there a 00:50:23.68000:50:23.690 loss on the energy side of the equation 00:50:26.08000:50:26.090 for recycling what like what are the 00:50:27.55000:50:27.560 energy inputs into reuse and are those 00:50:30.91000:50:30.920 taken into account when you're doing 00:50:32.89000:50:32.900 these scenarios so yes and I'm not sure 00:50:39.28000:50:39.290 they must not be terribly sick well 00:50:41.80000:50:41.810 that's what I was just thinking and I'd 00:50:43.24000:50:43.250 have to ask are I should have mentioned 00:50:46.09000:50:46.100 this at the outset so the two colleagues 00:50:47.74000:50:47.750 who spent the most time on this some of 00:50:50.29000:50:50.300 you may know araceli fernandez who's the 00:50:53.23000:50:53.240 head of our industry group at the I a 00:50:55.27000:50:55.280 terrific colleague and then the other 00:50:57.40000:50:57.410 colleague Peter Levi the two of them 00:51:00.25000:51:00.260 were the heart and soul of this report 00:51:02.29000:51:02.300 others of us go and speak about the 00:51:03.94000:51:03.950 report 00:51:04.66000:51:04.670 they don't yeah they did all the 00:51:07.05900:51:07.069 terrific analysis and really did a 00:51:08.92000:51:08.930 phenomenal job on this one of the very 00:51:10.75000:51:10.760 complicated subject matter so I'm not 00:51:13.72000:51:13.730 sure where it feeds into it but it I 00:51:15.60900:51:15.619 think your assumptions right it's not 00:51:17.20000:51:17.210 that significant certainly compared to 00:51:19.69000:51:19.700 the avoided production okay great all 00:51:23.34900:51:23.359 right well I'm gonna open up for 00:51:25.51000:51:25.520 questions please wait for the microphone 00:51:27.01000:51:27.020 to state your name and affiliation 00:51:28.15000:51:28.160 question in the form of a question and 00:51:30.33900:51:30.349 we'll get as many of you in as possible 00:51:32.55900:51:32.569 we'll start with yan and then we're just 00:51:34.08900:51:34.099 gonna go right down the line here all 00:51:37.39000:51:37.400 right i'm i'm yan mayors and resources 00:51:39.76000:51:39.770 for the future is there a reason that 00:51:43.18000:51:43.190 you all don't specifically talk about a 00:51:45.57900:51:45.589 price in carbon and maybe you've got a 00:51:47.82900:51:47.839 policy that you can't recommend it 00:51:50.44000:51:50.450 because that's the clear elephant in the 00:51:53.53000:51:53.540 room and in fact that's why the 00:51:55.03000:51:55.040 petrochemical industry and the chemical 00:51:56.85900:51:56.869 industry have expanded over 50 years 00:51:58.80900:51:58.819 they looked at all products but with 00:52:01.51000:52:01.520 such they might compete and the prices 00:52:04.05900:52:04.069 thereof and figure out how to make a 00:52:05.47000:52:05.480 comparative product cheaper so a price 00:52:09.70000:52:09.710 on carbon would make an enormous 00:52:11.23000:52:11.240 difference for this industry and they 00:52:13.29900:52:13.309 can solve the problem 00:52:15.49000:52:15.500 [Music] 00:52:25.10900:52:25.119 this actually might work together with 00:52:27.78900:52:27.799 it sir okay a reduction with the United 00:52:30.78900:52:30.799 Nations Foundation 00:52:33.03900:52:33.049 I think this feeds into what Iran was 00:52:35.31900:52:35.329 asking RIF for a little bit for me Dave 00:52:39.03900:52:39.049 on the future of plastics in particular 00:52:42.67000:52:42.680 in a highly carbon constrained 00:52:45.43000:52:45.440 environment very high carbon price 00:52:49.50000:52:49.510 aiming at a you know 80 or 100 percent 00:52:52.99000:52:53.000 reduction in carbon across the economy 00:52:55.18000:52:55.190 in 2050 one thing that occurs to me is 00:53:00.03900:53:00.049 you have to obviously consider the 00:53:02.02000:53:02.030 lifecycle profile of the alternatives so 00:53:05.17000:53:05.180 we've all seen the paper versus plastic 00:53:07.45000:53:07.460 debates and often plastic works out 00:53:10.80900:53:10.819 better on a life on a lifecycle analysis 00:53:14.70000:53:14.710 and add into that the the virtue or lack 00:53:21.30900:53:21.319 thereof of biodegradable plastics and 00:53:24.21000:53:24.220 think how to think about plastics the 00:53:27.09900:53:27.109 way people are starting to think about 00:53:28.92000:53:28.930 lumber in long-lived uses like building 00:53:33.73000:53:33.740 materials and what kind of plastics fit 00:53:36.43000:53:36.440 that how big a share of the market that 00:53:38.17000:53:38.180 is so in a highly carbon constrained 00:53:42.03900:53:42.049 environment what happens to plastics 00:53:43.87000:53:43.880 generally so so excellent questions 00:53:50.62000:53:50.630 yonder answer your questions so number 00:53:53.62000:53:53.630 three there pursue effective efforts to 00:53:55.69000:53:55.700 reduce co2 emissions certainly if you're 00:53:57.57900:53:57.589 looking at it from an economists 00:53:58.80900:53:58.819 perspective it's the carbon tax or some 00:54:02.26000:54:02.270 kind of trading mechanism or other kinds 00:54:03.81900:54:03.829 of things so that is built into the 00:54:07.32900:54:07.339 assumptions when we drive the models 00:54:09.01000:54:09.020 under the CTS is looking at some kind of 00:54:11.85900:54:11.869 carbon 00:54:15.28000:54:15.290 do you mean oh you're just asking 00:54:17.27000:54:17.280 whether he can specify what policy no I 00:54:22.64000:54:22.650 don't think no I mean we at the IEA try 00:54:26.15000:54:26.160 to call it like we see it it's not for 00:54:28.07000:54:28.080 us to dictate what countries should do 00:54:29.72000:54:29.730 there's political constraints all those 00:54:31.16000:54:31.170 kinds of things but that's why we you 00:54:34.31000:54:34.320 know with recommendation number three 00:54:37.07000:54:37.080 along those lines I think we're pretty 00:54:38.60000:54:38.610 clear and our other modeling assumptions 00:54:40.46000:54:40.470 whether it's the the weo sustainable 00:54:42.50000:54:42.510 development scenario the carbon price 00:54:44.69000:54:44.700 that's embedded within that to drive 00:54:46.64000:54:46.650 those kinds of changes to reach those 00:54:48.77000:54:48.780 objectives whether they're Paris 00:54:50.06000:54:50.070 agreement objectives or otherwise so I 00:54:52.73000:54:52.740 think where we try to be pretty 00:54:54.77000:54:54.780 straightforward about those kinds of 00:54:56.06000:54:56.070 things and again as we were talking 00:54:57.77000:54:57.780 about you don't get from the reference 00:55:00.44000:55:00.450 case to the CTS the clean technology 00:55:03.35000:55:03.360 scenario in this instance or similarly 00:55:04.88000:55:04.890 with other bits of our analysis unless 00:55:06.71000:55:06.720 you have mechanisms that drive that 00:55:09.53000:55:09.540 drive that the carbon tax of course 00:55:11.54000:55:11.550 being being one of them so read to your 00:55:15.59000:55:15.600 question what do plastics look like in a 00:55:17.93000:55:17.940 carbon constrained environment in many 00:55:20.75000:55:20.760 ways that's the CTS so the CTS is a very 00:55:23.60000:55:23.610 carbon constrained environment so the 00:55:25.52000:55:25.530 CTS is very much in line with and built 00:55:28.49000:55:28.500 off of our we owe sustainable 00:55:30.95000:55:30.960 development scenario so that's our Paris 00:55:33.83000:55:33.840 compliant well below 2 scenario that 00:55:36.74000:55:36.750 achieves the Paris agreement objectives 00:55:38.42000:55:38.430 it also reduces air pollution and brings 00:55:41.30000:55:41.310 energy access as well it's a more 00:55:42.71000:55:42.720 integrated look at what's going forward 00:55:45.22000:55:45.230 but that is a very near-term peak on 00:55:49.94000:55:49.950 global co2 emissions from the energy 00:55:51.74000:55:51.750 sector and then a very significant 00:55:53.06000:55:53.070 reduction thereafter so the cts numbers 00:55:56.84000:55:56.850 really show certainly compared to 00:56:00.41000:56:00.420 transport compared to a lot of other 00:56:02.00000:56:02.010 areas Plastics ends up doing better if 00:56:06.14000:56:06.150 you will than a lot of other areas in 00:56:09.08000:56:09.090 part because of their flexibility and 00:56:12.17000:56:12.180 utility including for a lot of clean 00:56:14.89000:56:14.900 technology applications or technologies 00:56:18.86000:56:18.870 into the future so solar PV obviously 00:56:21.65000:56:21.660 has a lot of silicon it has a number of 00:56:23.15000:56:23.160 other things built into it but plastics 00:56:26.09000:56:26.100 are one of the 00:56:27.26900:56:27.279 components for a lot of the light 00:56:29.33900:56:29.349 weighting of vehicles plastics light 00:56:31.25900:56:31.269 weighting of other kinds of things along 00:56:33.29900:56:33.309 those lines so the future in a 00:56:37.19900:56:37.209 carbon-constrained world it's less 00:56:39.29900:56:39.309 overall amounts of plastics or 00:56:41.72900:56:41.739 feedstocks as we were just talking about 00:56:43.31900:56:43.329 but it's significantly higher and even a 00:56:45.95900:56:45.969 higher percentage that 26% compared to 00:56:48.17900:56:48.189 that 18% it's a higher percentage of 00:56:51.08900:56:51.099 overall oil demand coming from that area 00:56:53.84900:56:53.859 in a carbon-constrained environment now 00:56:58.30900:56:58.319 our companies are policy makers our R&D 00:57:01.62000:57:01.630 folks fully looking at the range of ways 00:57:05.30900:57:05.319 to get the most out of the plastics as 00:57:08.51900:57:08.529 feedstocks and the energy in order to 00:57:11.20900:57:11.219 take advantage no that's part of the 00:57:13.55900:57:13.569 reasons we put out this report was to 00:57:15.08900:57:15.099 encourage some of that R&D and other 00:57:16.46900:57:16.479 kinds of analysis I think your point on 00:57:19.38000:57:19.390 lifecycle analysis is exactly right and 00:57:21.63000:57:21.640 what we should be thinking about whether 00:57:23.06900:57:23.079 it's plastics or wood or other kinds of 00:57:25.01900:57:25.02900:57:25.31900:57:25.329 what is the emissions profile how how 00:57:29.15900:57:29.169 many years do those carbon molecules get 00:57:33.41900:57:33.429 locked up in plastics for different 00:57:35.81900:57:35.829 products when do those get released over 00:57:37.79900:57:37.809 a period of time or some stored and in 00:57:40.82900:57:40.839 terms of longer and comparing that to 00:57:42.20900:57:42.219 different other products other products 00:57:45.02900:57:45.039 out there on those lines but given 00:57:47.42900:57:47.439 plastics versatility given its 00:57:49.16900:57:49.179 importance for a lot of these clean 00:57:50.39900:57:50.409 energy technologies it seems like it 00:57:53.30900:57:53.319 will play a significant and maybe even 00:57:56.51900:57:56.529 an enhanced role percentage terms in a 00:57:58.89000:57:58.900 carbon constrained world my name is 00:58:07.07900:58:07.089 Warren VHF scan from the Energy 00:58:08.69900:58:08.709 Information Administration and actually 00:58:10.79900:58:10.809 I'll just note a particular absence of 00:58:14.06900:58:14.079 do ii and ii IA references in your 00:58:15.80900:58:15.819 report and i note that because i'm not 00:58:19.49900:58:19.509 sure if you're aware but at eiu a we've 00:58:21.83900:58:21.849 embarked on this what we call 00:58:23.72900:58:23.739 hydrocarbon gas liquids effort and that 00:58:26.15900:58:26.169 started up in 2012 because we had 00:58:29.06900:58:29.079 already recognized that there was a 00:58:30.39000:58:30.400 blind spot in the way that energy is 00:58:34.70900:58:34.719 looked at in the absence of the 00:58:37.31900:58:37.329 petrochemical industry so so you know 00:58:39.80900:58:39.819 under hydrocarbon gas liquid 00:58:41.00900:58:41.019 we're looking at both the natural gas 00:58:42.23900:58:42.249 liquid so you know ethane propane 00:58:43.57900:58:43.589 butanes natural gasoline and then we're 00:58:46.16900:58:46.179 also looking at the ethylene propylene 00:58:48.65900:58:48.669 butylenes so we've attempted to tabulate 00:58:52.43900:58:52.449 these numbers in a very particular 00:58:54.97900:58:54.989 methodology the methodology way 00:58:58.34900:58:58.359 precisely because right well we are the 00:59:01.01900:59:01.029 Energy Information Administration we 00:59:02.60900:59:02.619 recognize that a significant quantity of 00:59:05.00900:59:05.019 these materials goes right into the 00:59:06.41900:59:06.429 petrochemical industry so my question is 00:59:10.04900:59:10.059 you know you've built up a tremendous 00:59:13.01900:59:13.029 model right a great analytical framework 00:59:15.59900:59:15.609 for looking at the petrochemical 00:59:16.76900:59:16.779 industry but without really getting a 00:59:21.53900:59:21.549 good handle on the underlying data I 00:59:24.28900:59:24.299 don't think that it's possible to 00:59:26.24900:59:26.259 actually make the kinds of outlooks that 00:59:31.31900:59:31.329 that you're attempting to to produce 00:59:34.72900:59:34.739 right so how is IEA going to tackle the 00:59:39.50900:59:39.519 data blind-spot 00:59:40.60900:59:40.619 because without the good data right you 00:59:42.95900:59:42.969 really can't good can't create good 00:59:45.05900:59:45.069 analysis is EA's a global hgl databases 00:59:49.01900:59:49.029 are just for the United States so on a 00:59:51.53900:59:51.549 global basis a lot of our data comes 00:59:53.99900:59:54.009 from IEA and you know I'm sorry not to 00:59:56.78900:59:56.799 you know poopoo your efforts but we have 00:59:59.39900:59:59.409 found I ate to be sorely lacking but 01:00:01.73901:00:01.749 what's yours so what we do is we take a 01:00:04.62001:00:04.630 data and for a number of countries we 01:00:08.06901:00:08.079 actually modify the numbers that we get 01:00:09.77901:00:09.789 from IAEA so that we can get something 01:00:11.39901:00:11.409 that's a little bit more reasonable in 01:00:14.24901:00:14.259 terms of what we would expect to be okay 01:00:15.77901:00:15.789 yeah is like organically generated data 01:00:20.83901:00:20.849 shown in jails is it just for the United 01:00:23.42901:00:23.439 States because I know you guys have had 01:00:24.62901:00:24.639 a big push on that for a while yeah so 01:00:26.30901:00:26.319 we have we have international data right 01:00:28.73901:00:28.749 and we publish that and what right now 01:00:30.32901:00:30.339 what we have is we have ethane and we 01:00:32.51901:00:32.529 have LPG right we're not able to get a 01:00:35.18901:00:35.199 good handle on what's coming out of the 01:00:37.75901:00:37.769 refineries in terms of ethylene or 01:00:39.71901:00:39.729 propylene outside of the United States 01:00:41.24901:00:41.259 and as a result we try to kind of steer 01:00:45.71901:00:45.729 away from that so that's probably going 01:00:47.00901:00:47.019 to be into our other oils category but 01:00:49.82901:00:49.839 when we do our modeling 01:00:51.79001:00:51.800 we take the data that we have corrected 01:00:53.80001:00:53.810 and then we apply better analyst 01:00:57.01001:00:57.020 knowledge and then we create forecasts 01:00:59.80001:00:59.810 for the international demand and one of 01:01:01.87001:01:01.880 the things that we work on aside from 01:01:04.03001:01:04.040 just the consumption of feedstocks is we 01:01:06.28001:01:06.290 actually try to estimate how much carbon 01:01:08.50001:01:08.510 is you know quote-unquote sequestered in 01:01:11.14001:01:11.150 plastics because as you had mentioned 01:01:13.08901:01:13.099 right the carbon intensity of the 01:01:15.16001:01:15.170 petrochemical industry is lower than it 01:01:17.77001:01:17.780 is for example for for steel precisely 01:01:20.17001:01:20.180 because a lot of that feedstock ends up 01:01:22.66001:01:22.670 as part of the output right so that's 01:01:25.03001:01:25.040 you know sequestered in you know you 01:01:27.22001:01:27.230 know in lingo I guess I'm the OE in 01:01:29.29001:01:29.300 general so it sounds like both AIA and 01:01:32.07901:01:32.089 IEA have at least assertion that both 01:01:35.29001:01:35.300 have problems getting good data on the 01:01:38.32001:01:38.330 petrochemical side so what is that we've 01:01:41.68001:01:41.690 you know this has been a good energy 01:01:43.45001:01:43.460 data for the history of IEA and EAS have 01:01:46.32901:01:46.339 been along a long tail is there other 01:01:48.33901:01:48.349 efforts to try and collect more that 01:01:50.71001:01:50.720 other more granular level so a few 01:01:54.28001:01:54.290 thoughts first as a do e alumni 01:01:56.91001:01:56.920 certainly very strong appreciation of 01:01:59.34901:01:59.359 our aia colleagues all the phenomenal 01:02:02.82901:02:02.839 work that you all do not only with us 01:02:05.29001:02:05.300 data of course but global data as well 01:02:07.81001:02:07.820 and I think there's been a very 01:02:09.49001:02:09.500 long-standing partnership between IEA 01:02:11.44001:02:11.450 and EIA as there should be to try to 01:02:14.62001:02:14.630 make sure that we all have the best data 01:02:17.49001:02:17.500 secondly certainly as you know and I 01:02:19.78001:02:19.790 think everybody appreciates but maybe 01:02:22.27001:02:22.280 says it but doesn't always fully 01:02:24.19001:02:24.200 internalize it appreciate it everything 01:02:26.58901:02:26.599 depends on the data right like if you 01:02:28.18001:02:28.190 start off with bad numbers your analysis 01:02:30.43001:02:30.440 is only gonna be flawed so it's the 01:02:33.33901:02:33.349 foundation that starts on everything and 01:02:35.23001:02:35.240 it's why we spend a lot of time from the 01:02:36.82001:02:36.830 IEA side of things third there aren't 01:02:41.50001:02:41.510 great data for some of these pieces out 01:02:43.18001:02:43.190 there right now and will need to be 01:02:45.40001:02:45.410 continually improved in terms of of what 01:02:49.87001:02:49.880 we get not only from our member 01:02:51.13001:02:51.140 countries the u.s. of course being a 01:02:52.78001:02:52.790 founding member and key member country 01:02:54.60901:02:54.619 for the IEA but increasingly for us 01:02:58.23001:02:58.240 working as I showed you on the map at 01:03:00.37001:03:00.380 the very front end with the China's and 01:03:02.02001:03:02.030 India's the other major emerging 01:03:03.37001:03:03.380 economies the other major sources of 01:03:05.53001:03:05.540 different energy use production etc to 01:03:07.90001:03:07.910 get better and better data so that we 01:03:10.57001:03:10.580 all can have the best global data we 01:03:13.06001:03:13.070 possibly can 01:03:14.08001:03:14.090 and I think on the petrochemical space 01:03:15.60901:03:15.619 along with a number of other areas we 01:03:18.04001:03:18.050 need to keep working on those efforts so 01:03:20.29001:03:20.300 I know our chief statistician Duncan 01:03:23.20001:03:23.210 Maillard was out not too long ago 01:03:24.52001:03:24.530 meeting with you all and will look to 01:03:26.85901:03:26.869 continue continue improving that but 01:03:29.08001:03:29.090 there's I guess the way I think about it 01:03:31.33001:03:31.340 is try to get the best data you can try 01:03:35.32001:03:35.330 to always improve that data but 01:03:38.04001:03:38.050 certainly for us with petrochemicals or 01:03:40.63001:03:40.640 elsewhere you can't wait for the perfect 01:03:43.66001:03:43.670 data to do any analysis you know what I 01:03:45.43001:03:45.440 mean you've got to keep working on 01:03:46.48001:03:46.490 improving your data while you try to do 01:03:48.01001:03:48.020 analysis with the data that you have 01:03:49.30001:03:49.310 with the caveats associated with it and 01:03:51.58001:03:51.590 continuing to improve it so that's 01:03:52.99001:03:53.000 that's what we're at is trying to 01:03:54.34001:03:54.350 continue to improve it other questions 01:03:57.34001:03:57.350 okay Paula and then here and they will 01:04:01.09001:04:01.100 go back three thanks Sarah and Dave I'll 01:04:04.39001:04:04.400 echo echo Sarah's rave reviews for the 01:04:07.69001:04:07.700 blind-spot series I think it's really 01:04:09.01001:04:09.020 important and done in a way only that 01:04:10.54001:04:10.550 only IEA can do I'd like to ask you to 01:04:15.31001:04:15.320 talk a little bit more about the 01:04:17.44001:04:17.450 existing technologies that are embedded 01:04:19.35901:04:19.369 in the CTS that are that are envisioned 01:04:22.48001:04:22.490 to be deployed but also I know y'all are 01:04:24.97001:04:24.980 doing parallel work on digitization and 01:04:26.74001:04:26.750 other clean tech investments what are 01:04:29.89001:04:29.900 some sparkly things in the in your sort 01:04:31.66001:04:31.670 of field of vision that you think could 01:04:33.28001:04:33.290 also intersect to enable the CTS an area 01:04:36.22001:04:36.230 that y'all set out right here 01:04:42.41001:04:42.420 at Amasia Oxford University and also 01:04:46.67001:04:46.680 government advisor in the Gulf 01:04:48.57001:04:48.580 particularly a slight a question of a 01:04:50.76001:04:50.770 slightly more short-term horizon of 01:04:53.67001:04:53.680 interest into your thoughts on how some 01:04:55.98001:04:55.990 of the large industrial conglomerates 01:04:57.35901:04:57.369 the SAVAK settle how they are sort of 01:05:01.08001:05:01.090 managing the sort of an energy pricing 01:05:03.03001:05:03.040 reform situation and how it's affected 01:05:05.22001:05:05.230 our competitiveness particularly in a 01:05:06.90001:05:06.910 Mina thank you keeping in mind the 01:05:10.05001:05:10.060 acquisition that's coming up coming in 01:05:16.73001:05:16.740 reduction again in your clean technology 01:05:20.43001:05:20.440 scenario it seemed like you had a 01:05:21.78001:05:21.790 relatively small role for biomass and 01:05:24.81001:05:24.820 I'm wondering about the high carbon 01:05:28.26001:05:28.270 price scenario wouldn't it be true that 01:05:31.04001:05:31.050 bio-based plastics that are then put 01:05:36.63001:05:36.640 into permanent kind of plastic products 01:05:38.97001:05:38.980 would in effect be a negative emission 01:05:41.07001:05:41.080 strategy all right so let's take take 01:05:48.96001:05:48.970 all of those first quality your question 01:05:51.90001:05:51.910 on on the technologies side of things 01:05:54.48001:05:54.490 especially a digitalization so when we 01:05:57.12001:05:57.130 do our modeling assumptions and similar 01:05:59.94001:05:59.950 to this and the CTS although comparable 01:06:03.24001:06:03.250 to other our huios sustainable 01:06:06.57001:06:06.580 development scenario or 2° scenarios etc 01:06:09.50001:06:09.510 we don't try to include some kind of 01:06:12.45001:06:12.460 crazy breakthrough that may or may not 01:06:14.16001:06:14.170 happen very difficult for those who are 01:06:16.77001:06:16.780 modelers to try to incorporate that kind 01:06:19.77001:06:19.780 of kind of thing so I think any modeling 01:06:21.90001:06:21.910 exercise has a bit of a caveat and that 01:06:24.83901:06:24.849 you could if you do the right 01:06:26.57901:06:26.589 investments RPE other kinds of things 01:06:28.58901:06:28.599 along those lines you could get some 01:06:30.12001:06:30.130 real breakthroughs that mix things up 01:06:31.65001:06:31.660 disrupt things and quite significant 01:06:34.07901:06:34.089 kinds of ways that are very difficult to 01:06:36.78001:06:36.790 capture in a modeling exercise so what 01:06:39.93001:06:39.940 we what we capture in this scenario is 01:06:42.29001:06:42.300 existing technology some cost reductions 01:06:45.03001:06:45.040 right the worlds not static but not any 01:06:47.64001:06:47.650 kind of significant breakthroughs that 01:06:49.98001:06:49.990 may or may not may or may not happen 01:06:52.11001:06:52.120 going forward one of the most 01:06:54.66001:06:54.670 interesting parts of that and you 01:06:55.98001:06:55.990 referenced this is on the digitalization 01:06:57.87001:06:57.880 front what do the various ICT 01:06:59.88001:06:59.890 technologies bring to the equation 01:07:02.10001:07:02.110 including in this petrochemical space 01:07:03.78001:07:03.790 but more broadly into the energy space 01:07:06.12001:07:06.130 more generally so we did a big effort a 01:07:09.63001:07:09.640 year ago trying to work with analysts 01:07:11.94001:07:11.950 across the eye a on a digitalization and 01:07:13.83001:07:13.840 energy overview I'm really trying to 01:07:16.95001:07:16.960 figure out where are the gains happening 01:07:18.87001:07:18.880 where they're interesting things already 01:07:20.25001:07:20.260 happening in digitalization and energy 01:07:21.87001:07:21.880 on efficiency predictive maintenance 01:07:23.73001:07:23.740 artificial intelligence etc and then 01:07:26.28001:07:26.290 where does the future go and having 01:07:29.70001:07:29.710 spent a lot of time on that helping to 01:07:31.65001:07:31.660 co-lead that effort with a colleague of 01:07:33.63001:07:33.640 mine Laura Cote from the weo team it's 01:07:36.39001:07:36.400 very very difficult to discern where 01:07:39.75001:07:39.760 things are headed on that digitalization 01:07:41.37001:07:41.380 and energy space beyond the next few 01:07:43.14001:07:43.150 year period of time or five year period 01:07:45.15001:07:45.160 of time there's a lot of ways the 01:07:47.52001:07:47.530 technology intersects with human 01:07:50.19001:07:50.200 behavior and sosial what incentive 01:07:53.76001:07:53.770 structures you have could be huge 01:07:55.17001:07:55.180 rebound effects for autonomous vehicles 01:07:57.00001:07:57.010 or other kinds of things that you might 01:07:58.32001:07:58.330 think would have an otherwise positive 01:08:00.98001:08:00.990 reduction in energy consumption along 01:08:03.51001:08:03.520 those lines so I think this is a 01:08:05.22001:08:05.230 fascinating area to explore further 01:08:07.40001:08:07.410 including in the in the petrochemical 01:08:10.38001:08:10.390 space which I think the petrochemicals 01:08:12.42001:08:12.430 and digitalization and what does that 01:08:13.74001:08:13.750 mean in terms of different opportunities 01:08:16.17001:08:16.180 going forward it sorted to your to your 01:08:19.56001:08:19.570 question read earlier and your current 01:08:22.14001:08:22.150 question I think there's an interesting 01:08:23.31001:08:23.320 bit of analysis on that front to your 01:08:26.28001:08:26.290 broader question on negative emissions 01:08:27.90001:08:27.910 are there some smart ways to not only 01:08:29.55001:08:29.560 think about reducing the co2 footprint 01:08:31.59001:08:31.600 but really driving in absolutely so one 01:08:35.07001:08:35.080 thing I referenced was on bioenergy more 01:08:37.05001:08:37.060 generally we had that be the major focus 01:08:38.76001:08:38.770 of our renewables report that comes out 01:08:41.07001:08:41.080 an annual basis really trying to figure 01:08:44.43001:08:44.440 out a variety of really interesting 01:08:46.32001:08:46.330 opportunities again thinking of what an 01:08:48.54001:08:48.550 a lifecycle basis when you look at 01:08:50.79001:08:50.800 bioenergy more generally biomass you 01:08:52.77001:08:52.780 need to figure out the sustainability 01:08:54.33001:08:54.340 part of it do you have enough land do 01:08:56.34001:08:56.350 you have enough of the resources of 01:08:57.66001:08:57.670 fertilizers other kinds of things to 01:08:59.58001:08:59.590 really drive those pieces but strikes me 01:09:02.52001:09:02.530 that's a really interesting follow-on 01:09:04.11001:09:04.120 piece here we didn't get into that 01:09:05.82001:09:05.830 as much as we would have liked to 01:09:06.93001:09:06.940 certainly in this report but to really 01:09:09.03001:09:09.040 think about bio-based plastics other 01:09:11.49001:09:11.500 kinds of mechanisms not only reducing 01:09:13.89001:09:13.900 the foot button but potentially even 01:09:15.48001:09:15.490 being a net-net sink if you will on the 01:09:18.96001:09:18.970 on the co2 side of things and then 01:09:21.98001:09:21.990 finally just on the energy pricing 01:09:24.69001:09:24.700 reform so it's a dynamic environment 01:09:26.34001:09:26.350 more generally right now of course on 01:09:28.71001:09:28.720 the oil side you've got high oil prices 01:09:30.86001:09:30.870 which is a significant part my boss 01:09:34.07901:09:34.089 Fatih Birol was just in London speaking 01:09:36.96001:09:36.970 about this and speaking about how we're 01:09:38.82001:09:38.830 in a a red zone in the q4 time period 01:09:42.72001:09:42.730 where unless we have some additional 01:09:43.86001:09:43.870 production coming online that's throwing 01:09:46.77001:09:46.780 a variety of incentive structures and 01:09:49.65001:09:49.660 very challenging places around the world 01:09:52.02001:09:52.030 it's putting some of the progress we've 01:09:55.05001:09:55.060 seen on reducing inefficient and fossil 01:09:56.88001:09:56.890 fuel subsidies putting some real 01:09:58.56001:09:58.570 pressure on that from a domestic 01:10:00.29001:10:00.300 perspective from a producer economy side 01:10:03.18001:10:03.190 of things 01:10:03.84001:10:03.850 one special report it's actually going 01:10:07.17001:10:07.180 to be a standalone 01:10:07.95001:10:07.960 report that my Weil colleagues are 01:10:09.81001:10:09.820 working on right now is looking at 01:10:11.07001:10:11.080 producer economies in particular and 01:10:13.77001:10:13.780 looking at a variety of scenarios going 01:10:15.66001:10:15.670 forward about how to diversify how to 01:10:18.69001:10:18.700 make sure that they don't get caught in 01:10:20.28001:10:20.290 some of the volatility it's a really 01:10:22.23001:10:22.240 interesting piece of analysis will come 01:10:23.76001:10:23.770 out in November and hopefully be helpful 01:10:26.51001:10:26.520 to help the producer economies think 01:10:29.67001:10:29.680 through their strategies going forward 01:10:32.87001:10:32.880 well we thank you very much Dave for 01:10:35.19001:10:35.200 coming and presenting the future of 01:10:36.87001:10:36.880 petrochemicals report I'm sure everyone 01:10:38.97001:10:38.980 should download it and take a look it's 01:10:40.50001:10:40.510 got a lot of really good information in 01:10:42.30001:10:42.310 it but as we've talked about today I 01:10:44.34001:10:44.350 think it's really one of those areas 01:10:45.57001:10:45.580 where a lot more work can be done so we 01:10:47.76001:10:47.770 look forward to that as well 01:10:48.90001:10:48.910 would you please join me in thanking 01:10:49.98001:10:49.990 Dave for being with us today 01:10:51.16001:10:51.17001:10:55.13001:10:55.140
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