 Good afternoon, ladies and gentlemen. Welcome to our session on strategic shifts in energy. My name is Vijay Vaithiswaran. I'm the China business editor for The Economist magazine. It's my great pleasure and honor to moderate this session of very distinguished panelists and drawn from the energy world, from around the world. I'll introduce them very briefly in going to my left here. Since we're in a circle, really, there's no right or wrong way to do this. But to my immediate left, Gao Jifan, chairman and CEO of Trina Solar here in China. Following on to my left, Khaled Alfali, president and CEO of Saudi Aramco. We have Simon Henry, chief financial officer of Royal Dutch Shell. And we have Lin Bo Chiang, director of the Center for Energy Economics Research at Xiamen University here in China. Please give them a nice round of applause. So this session, very importantly, is on the record. It is open to reporting press. It is being webcast live. And in fact, I am told that there is at least one person attending by remote beam technology, which you might see behind me, whose telepresence is here, even if the person themselves can't be. And I'm sure several other people are here by ESP and other means. So don't say anything you don't want broadcast everywhere in the world. I do say very interesting and provocative things. Those are my rules. We are going to modify the usual rule about turn off all your mobile devices in the following way. Put them on silent mode. Do keep them on whatever your connectivity is, Wi-Fi or cellular, because we're going to start with an opinion poll. We want to get a pulse of the room. So bring out your blackberries, crackberries, pinkberries, any other devices that are normally annoying people at meetings. And on this occasion, join in. If you look at the screens around the room, you'll see a URL that you can go to, and we'll do a couple of questions. When I get a sense that people are ready to go, I see people still reaching in their pockets, turning on their phones, etc. But the first question is really just a trial question, of course, just to get a sense of how we're doing here. Okay, why don't we start the polling? If you're at the URL, please go ahead and select what region are you from. And we'll let the polling go for a little while, and I'll ask for it to stop in just a moment. Is there anyone who's not able to get to the URL? Raise your hands if you're having problems. Okay, if you're having problems, staff will come over. I see a lot of people over there having problems as well. Anyone behind me having problems getting to the URL on the screen around you to do the polling? Some people will come around and try to help you. We're seeing some results already, so there we go. Hands up, how many people still having problems? Okay, I see a gentleman back there, but we'll have staff coming around. Okay, why don't we stop this test vote? I think we're seeing enough fluctuation in votes that we can move on. All right, while we get the last of the technical issues sorted out, I just wanted to set the frame a little bit. It seems to me the energy world is at a crossroads today, and that's really why we're here to discuss some of the strategic shifts. We're at an interesting moment in geopolitics in different ways, partly strictly arising out of political decisions, but also economic decisions, what we can call geo-economics. We'll talk about a little bit during our session, as well as disruptive technologies that are coming on, and business models associated with disruptions. Usually it's not the technology, of course, that's disruptive. It's being wrapped around a business model that creates value that makes it so disruptive, and we're seeing those also challenge some established and incumbent lines of business. And so we'll be picking up on these themes to discuss how that broad question is playing out for some of the most important actors on the energy stage. We'll talk about some of the decarbonizing technologies that are on the table, and we'll discuss unconventional oil and gas in our time together as well. Now, we have only an hour, so that's a lot to cover. But let's, again, let's try getting a pulse of the room. Let's put up our first question for the group. What we should think is the most important driver of strategic shifts in the energy sector today. Energy geopolitics, decarbonizing technologies and climate policies, unconventional oil and gas, demand factors. All right, I'll give you another 10 seconds and then we'll wind up the voting. All right, let's have the results. Wow, look at that. Well, there's an outcome that hadn't been forecast, but it's good to see there's going to be a real robust debate. We were thinking about using your results to lead off to other questions on that specific theme, drilling down and spending the whole hour on the exact topic you wanted, but it's going to be a bit more freewheeling than that. Let's scrap the second question. Let's just delve right into our experts then. We can see the audiences have mixed mind on what exactly is changing the energy world. Let's see, why don't we perhaps start, since we do have the head of the world's largest oil company here with us. Maybe I can start with you. Khaled Al-Fali. Tell us, as you see the geopolitics evolving right now, certainly we're seeing Russia on the global stage, tensions with Europe. We see alliance, perhaps, strengthening with China on the energy front. And also we're seeing, in a sense, North American energy, if not independent, something in that direction, thanks to the Shale Revolution, and people questioning whether America might remain engaged in the Middle East as it's a historic reliance on oil imports from that region diminish. Give us your perspective on the Middle East's role in geopolitics in energy and how it's shifting. Well, geopolitics, first of all, is nothing new to energy or oil. It's been with us since oil was discovered and traded and used to power economies. In fact, if you go back to the World War I and II, you will find that oil was a key part of global conflict. So I think what you're seeing today is a continuation. Our commodity, whether we like it or not, our business, our products, are the most political of all businesses and all commodities. The Middle East is central to oil. Despite the recent trend of the Shale oil and tight oil production out of the U.S., the Middle East remains the biggest source of conventional oil. 50% of oil reserves are spread in the Middle East and North Africa. And a significant amount of gas is also in the Middle East, especially in the Gulf region. So really the role of the Middle East remains central. North America is part of the global economy. The U.S. prices are linked to global prices. So what happens in the Middle East impacts the U.S. today as much as it did before. So really what I'm hearing is rather than independence, a message of interdependence that the Middle East still has lots of resources, particularly in the conventional area, but interdependence and global markets is what I'm hearing from you. Is that right? Absolutely. What about the challenge of rising costs? People have talked about peak oil that's been perhaps forecast a bit too early, but there's no denying that the cost of lifting is increasing and with it the cost to you and your firm and your economy, does that diminish your ability to play the role of the swing producer, which has been Saudi Arabia's stabilizing and pleasing role for the world economy? In a sense, you have kept the world from numerous global crises by acting as a shock absorber. Is that ability to perform that role diminished because the lifting cost and the curve of peak oil is making it harder for you to do so? We're far from peak oil, VJ. Reserves are well known that there are reserves for generations to come at current production levels, especially with the shared resource being within reach technically. So I think it's a question of demand being there to incentivize added production and added capacity. I spoke recently at a conference in Norway and I talked about the fact that in the next two decades we need 40 million barrels of new capacity that the reserves are there to support it, but the costs are going to be very, very high, which you alluded to. And therefore, healthy prices need to be in place to support bringing that capacity to the market. We in Saudi Arabia have the lowest cost by far compared to any major producers, so we're in the single digits, low single digits, in terms of our total cost of production, including capital. But a lot of the marginal barrels that are required to meet current demand and rising demand are not even supported by current prices. So I think prices have to be there. Costs have to be managed. You've seen costs of lifting, as you refer to, and regional areas like deep Arctic to be in the $100-plus-dollar range to take the risks and the total capital and operating costs. So I think they will need to be robust prices going forward. And capacity of the companies and the supply chain of the oil industry to bring that capacity to market. And also require a very long planning horizon, 10 years or so just to bring the project from conception to production. So people need to see the clarity of the market, regulations, and a healthy price going forward in order to finance that project. On that point, the long-term nature of what you talked about. Simon, your company, Shell, is famous for its long-term scenarios that you produce every so often looking into the future, your scenario planning exercises. Can you look into the crystal ball and tell us, picking up on the themes that we've heard from Khaled Al-Fali, in a world in which oil isn't immediately running out, particularly if one looks at unconventional resource bases, but the costs definitely are. And particularly where the best assets are locked up by national oil companies, companies like yours, private sector companies, are having to get more and more innovative, ingenious, and then more in going into riskier places to get the oil. Give us the outlook and what do you see in your scenarios? Well, many thanks, Vijay. And first I'd just like to say full agreement with Khaled that the geopolitics has been with us since the internal combustion engine was invented and I think since Churchill converted the British Navy to oil from coal. It is always there, it's unpredictable, it's always a factor, but it tends to be short-term in its immediate impact. Long-term drivers are a combination of technology, demand how that develops and particularly in recent years you alluded to competitive environment, new competitors. So yes, for 40 years now we've been looking out typically 30 to 50 years as to what are consistent ways in which demand, technology, societal attitudes and approaches to energy, how they may develop and developing internally consistent scenarios against which we test strategies. The last few rounds of that thinking have been clear about a couple of things, demographics and economic growth in the developing world. The 2 billion people not yet born, the 3 billion people moving into being consumers of energy, that's where demand will be driven from. It will not be driven in Europe or the US. So that's where we have to look about how is energy consumed and we need everything. It's not a question of fossil fuels or solar and wind. We as humanity, we need huge efficiency improvements and all sources of supply and to fundamentally change the way we consume energy. So we find it difficult to create a consistent scenario in which fossil fuels by the middle of the century are not at least 50% of the total energy demand which in itself may be 50, 60% higher than today. However, it is clear that alternatives and solar we believe will play a very big role, whatever the scenario and potentially in the even longer term a dominant role. But in the interim period all other sources will be required and what we need to look to as a company, you're very right, is technology and innovation to keep the cost down so that the products that we are involved in supplying are actually affordable, that they're acceptable to society and they form part of a secure energy supply because that's the other thing that's not come up, the importance of security of energy supply. Balancing all of those is part of what we need to do in our longer term things. I'm hearing that we're going to see a portfolio approach as it's been talked about, a variety of options including solar, which I know that Chairman Guo is very keen to talk about and we'll talk about in a moment his ambitious plans for China and solar. But a strong role, continued role for fossil fuels is what I heard from you. Indeed, although I tend to agree with Khaled the problem with or the chance for oil is not so much supply, it's likely to be demand. We see demand peaking most likely before the supply. And indeed, there's talk of peak car as it's been called in the OECD, the developed economies, and the shocking thing. I speak as an American that younger Americans don't always want to get their first car. It's part of American cultural tradition and it's actually seeing a car ownership or drivership dropping in the US. Europe's demand for oil peaked in 2006. It's entirely possible the same will happen in the US. And the growth is in developing markets. What we are saying is demand for gas is growing more quickly for a variety of reasons. Cheapness, environmental acceptability, and it is once established in infrastructure, it is a secure source of supply. Well, on the point of sticking with the point about, again, the forecast. Is it really going to be a century for gas? Or could we see a revival of King Cole returning? And we see, again, numerous developing countries particularly. Cole remains abundant and as of yet, not significant efforts at things like carbon pricing. Although there are pilot reforms including in China, carbon trading and so on. Cole is ubiquitous as a source. What is the internal thinking at your firm? As a default, absent an appropriate mechanism for either carbon pricing or appropriate pricing of the other pollutants associated with Cole. Cole is one of the cheapest ways of producing electric power in many countries around the world. Yes, Cole is making a comeback in aggregate, partly because of China and India, but also in certain countries like Germany where bizarrely carbon dioxide emissions are going up because of, what should we say, confused policy. Phasing out of nuclear among other things, phasing out of perhaps excessive renewables policies that were done in the wrong way. And Cole being the only thing that will fill the gap. Let me turn to Lin Bo Xiang. We've talked about the role of Cole. Can you give us, as a deep thinker on China's energy system, what is the outlook for Cole in China, which is a central question. There are a number of people in this room who are very concerned about climate change, for example. And it has been said that if China does not come to grips with how it uses Cole and whether it uses Cole, global efforts at climate change management will come to nothing. Tell me what you think about Cole in China. Let's look at a general picture. Cole has been down in the primary energy mix, has been down by roughly 1% per year over the last three years. And because of the current environmental, air pollution, clean up, I would believe that Cole will continue to go down in 1% per year, at least in the... As a share of the energy mix. As a share of the energy mix by 2020. The reason I'm saying that is for two reasons. One is that if you look at natural gas from Russia, that's a huge amount of it. Right. So the natural gas in the next five to six years is going to double, roughly. Right now it's about 6%. It could possibly go to 11% to 12%. So that's roughly 5% there. Another commitment from government is that by 2020, non-forces fuel will be 15%. Right now, the last number I changed is only 9.8%. So from now until 2020, government need to have another at least 5% of the non-forces fuel. Put these two together, Cole will go down by 10%. So if it's 65.7% now, you'll go down to 55%. It's far... It really overachieved the government target. The original target is 60% by 2020. Given the overall growth of the economy and the energy intensity of the economy, that will still mean China will probably burn more coal in absolute terms, but the share of the energy mix will moderate. Is that what I'm hearing? I think that's a very good question. I believe that within the research, we believe that the energy consumption, the coal consumption peak will come between 2020 to 2022. What I mean is that if that comes, that means the expansion of coal in absolute terms will stop. And that is why China is actually looking at the common cap at this moment. In that time frame for your analysis, which is the stronger forcing function? Is it carbon pricing driven by concerns about climate change or external pressure and so on? Or is it domestic concerns about air quality, air pollution, which is a very powerful of residents amongst Chinese citizens? Well, you can talk about all reasons. Which do you think is more likely to be the driver? I believe the two factors I mentioned earlier, natural gas and renewables, non-force of fear. It will be 10%. It will drop coal down all the way down to 55%. And that has come from slow economic growth. In my mind, it will clean up. Low carbon development. All put together. Well, we've mentioned, perhaps Chairman Guo will make his comments in Chinese. I encourage you all to use headsets if you need them. If I can ask him on the comments that have been made about the prospect for renewables, can you share with us what are your goals? I know you've put some ambitious targets for 2020 on the table recently in your capacity as a leader for the industry. Can you give us your vision for something like 2020 for renewables coming out of China? Well, Mr. Lin talked about the energy restructuring. The proportion of coal will be declined. And we're working toward that direction. As I said, I will talk about solar energy. Every year the installed capacity, newly installed capacity is about four or five gigabatts. By 2020, China's solar installed capacity can reach 150 gigawatts. And also, the wind energy in China is also increasing by a dozen of gigawatts every year. So by 2020, it will reach 200 gigawatts. Altogether, solar and wind energy can contribute to 350 gigawatts. And the contribution will increase from one point-something percent to five percent of the whole energy consumption in China. So as Mr. Lin pointed out, that coal proportion will be down by one percent every year if the Chinese government can adhere to this path to continue to restructure the energy mix, then the coal proportion will be going down even faster. Because LNG and nuclear energy can also contribute to this proportion change. So maybe from now to 2020, the coal consumption can have like five to ten percent of a reduction. Coal in China's energy structure should be brought down to less than 50 percent. In this way, we can change the Chinese energy structure totally based on coal. We can have a diversified energy structure. Within that framework of your ambitions, I do have a question for you about the industry itself. Now, the solar industry in China has had its challenges, including some companies with financial difficulties. The structure of government subsidies is being reconsidered. Can you tell me what lessons have been learned from the troubled period of recent years so that the industry can move on a stronger footing to achieve these ambitions? I want to talk about two aspects. A lot of colleagues in the solar sector commented that solar energy will not be the core energy because it's too expensive. But I can tell you clearly that the cost of solar energy is quickly going down. In the past decade, the solar energy cost was down by 80 percent by 2020 or maybe 2022. The cost of solar energy will be even down by half compared with the current level. So the cost will be that of the natural gas. If in coastal regions in 2020, the solar power cost can be brought to 0.5 RMB, per kilowatt hour, then the cost will be almost like the coal-fired power plant. In this way, we'll enjoy even bigger development room. That's the first thing. Second, in the past, people see a lot of challenges and bankruptcy in the solar sector. But I think there are some good news as well. Of course, there are some bad news because of the bankruptcy of the companies. It has impact on the investor's interest or the banks. But the good news is this is inevitable. The survival of the fittest law in any industry's development. So in a fierce competition through management improvement or the technology advancement, some companies can survive and they can push forward this sector development. So it's a survival of the fittest process. If with this reshuffle, some companies can survive, then in a new development stage, these companies will be very strong. And also we hope that in the future development, be it capacity or efficiency, anybody entering this sector should be optimistic, but they should not be blindly optimistic to avoid the fluctuation in the sector. So we're still going to see ups and downs. The market's principles still work. Which do you think will be more important for your industry going forward? The role that technological innovation can play in reducing costs or the continued support of favorable regulation and subsidies? I think in countries like Japan and Europe, US and also China, the laws and regulations is already there. There is a clear framework on regulations. So I think technology advancement to bring down the cost matters more. But of course in developing or emerging countries such as the Middle East, Latin America, but of course the policy matters more. It will push forward the market development. There are trade disputes going on between China and Europe and separately with the US related to your industry. What is the likely outcome of these? How do you see the end game here? Yes, we're faced with a lot of trade disputes concerning the panel sector. It's happening more frequently. But I think it's harmful for the utilization of solar power Europe used to be the largest market with 18 gigawatts of install capacity every year. But after the anti-domping and countervading dispute with China, the price of European market is very high. Now the annual install capacity was down to 8 gigawatts every year. So it's actually harmful for the industry development. Notice to the audience, I want to come to you for your questions fairly soon. So please start collecting your thoughts. We have some microphone runners who can come to you. But with that advanced notice, let me press my panelists on one further topic. And that is unconventional hydrocarbons. We've made some mention of them. Maybe I can start with you, Khaled. If you can tell me, what is the outlook for shale and tight gas? I gather you are investing in some of this in your own territory. But globally, there's something of a revolution that's seen. Can you talk to us about what this means? Well, within the kingdom, first of all, let me say that we're really excited about the opportunities that have been opened up with the developments within North America. The kingdom already uses gas significantly. It's about 50% of our electric generation is from gas. And we're looking to take that to 70%, 80%. Because the other half is all liquids, all oil. The opportunity cost for it is significant going forward. And we want to do that switch as rapidly as possible. So we have a huge program of exploration, development, conventional, unconventional, gas onshore, offshore. And the early results are very promising. We have two major projects being developed today for non-associated conventional gas that will take our capacity up by 20%, 30%. And then we have three different areas of tight gas, shale gas, as well as some uniquely to our geology gas channels that are unconventional, which will be brought on stream, all of them within the next three to four years. So the opportunities are huge. We have to build up, of course, a special type of industry to do that cost-effectively. What's your incentive? You're sitting on such an easy money. Why would you invest in the hard stuff? Well, it's the long term. Really, our incentive is to save valuable liquids that are going to be needed for future generations. Like I said, our costs of producing and delivering liquids to our consumers within the kingdom are in the single digits by investing through the value chain, including refined products. But gas is the right way to go. We have the resources also in abundance. I think when I look globally, the resource base of gas and oil is going to allow the world a much more orderly transition to the world we talked about from over dependence on fossil fuels to a mixed energy mix to ultimately easing out completely from fossil fuel. But you need a long, long time to make that transition. I think having the security and the peace of mind that we have such an abundance of resources that can be brought to the market with the technologies available with also good economic opportunities being availed by the industry, jobs being created, materials being procured by the oil and gas industry. So there is also a spillover economic effect to anywhere where these developments take place. So where we are today has even more resources geologically speaking than the United States. And the question is, will China, through appropriate policies, supply chain and market development be able to access its resources in time to achieve the environmental and economic objectives it has? And I believe it will. I think if you look at... Well, let me take up that question, though. That's of great interest to many people in the world, the development of China's unconventionals. China has... Maybe I'll ask my gentleman here, which one of you wants to jump in. China has enormous resources in shale. But the geography is more complex than, for example, in the United States where it took off. The business model is quite different. Water questions become quite challenging. Ken, either of you who's looked at this question, give me an answer on the next decade. Are we really going to see a significant takeoff here? Right now, I think it seems to me it's a bit slow. We have a target of 6.5 billion by this year. Last year, I looked at it, it's only 200 million. So it's pretty far away from the government's target. This year, somebody believed that we had some breakthrough, we have more numbers coming out. However, overall, I still believe that we do not put enough sufficient resources into shale gas development. The reason I'm saying that is that... Just look at what... A lot of talk, no question about it. But if you look at reality, how many people are actually doing it? That is really not sufficient number there. You said resource, what is the main obstacle in your opinion? That's something that is really parcel to many people because we are short of natural gas. No question about that. The shortage there. We have a high natural gas price compared to the United States for this matter. We need environmental cleanup, which requires substantial natural gas. I mean that we really need it, so urgent need it. Government comes as a subsidy for it. Why there's not many people there? Do you have an answer? Yes, I do have an answer. I believe there is uncertainty. For example, if I'm a private company in the United States, all I need to do is to pick up the shale gas with this cost. That's all I need to worry about. Going through a pipeline, going to the market, there's nothing to worry about. When China first, we did the natural gas. Because there's a different technology must be moving from the United States to China requires innovations and also some adjustments. So there's some technical ones? Technical ones. A technical one is related to the uncertainties. Because we are so not sufficient people in the fear. Let's say 10 people try to figure out technology issues, solutions. It's different from 1,000 people try to figure it out. But the reason not many people engage is because of uncertainties. For example, I'm the private company. I need to try to figure out how to take the shale gas out. But what about ownership? That's one question. Going through a pipeline, right now it's monopolized by the three major oil companies. And of course they promise that there will be no discrimination. But how do I believe that? We are in the same line. We are going through the same fraud. And we are going through the same market. How do I believe there will be no discrimination? Right. Finally going to the market. It's supposed to be a market price. That's what government promises. But unfortunately government promises on the market price and energy. The record is really not to go there. So put everything together. I think there's uncertainty there. But uncertainty need to delay in the investment decisions in enthusiastic participation. It sounds like there's as much risk above the ground as there is below the ground. Right. A quick follow-on on that. And then I'm going to come to the audience. Yeah. Mr. Lin is absolutely right on the main factors. I'd add a couple of other points though. In China we drill 50 wells. There's only a few hundred wells in total drilled in shale for unconventional gas. In the North American environment there are 10,000 wells a year being drilled every year. So well over 100,000 already being drilled in the last few years. And there's just so much more information. And then the infrastructure exists to get to market. So that reduces the level of uncertainty. And in fact it's quite likely the geology as well as the geography is actually more uncertain in China. So we need more activity, more information, more understanding of what it will take to bring the molecules up. And then I'm absolutely convinced China will build the infrastructure. But you can't build the infrastructure ahead of knowing what it is you have. And it's having 1,500 to 2,000 active rigs at any given time in North America that has meant that the US is today still the only serious shale gas and shale liquids producer. Is there an additional element? I mean shale is one of the world's great oil majors. You've had great success in many places. But along with other majors, you were not in the leading edge of the shale gas revolution in America. That's a story of the scrappy underdog of George Mitchell and the entrepreneurial guys who are willing to take risks that were seen as either too small or too high for the big companies. If we were to take that lesson away from the American shale revolution, what is the analog here in China are the right kinds of risk models, are there business models being applied yet? Or do you have some lessons learned that you are applying here that can help overcome that issue? I think the comparison between the US and even Canada and the rest of the world includes the rest of the world, not just China, and that is the incentives for small players to actually go after and take the risk, go after the prize are different. The landowners, the individual operators, sometimes literally a family company could hire a rig and drill and get to market quickly because things were known about the geology because everywhere had already been drilled and the market was certain. So it does need more activity and probably a more vibrant approach in terms of not just state owned or large companies, but you need both I think in the other countries because you need technology, you need operational capability, you need access to the infrastructure and that will only come through the large companies. So I think China is doing its best to get a long term view about how best to develop this, but it's certainly true that the dynamism, the innovation, the entrepreneurial animal spirit in the US is a huge factor to the first of all rapid development but also the widespread development and that is actually quite difficult to replicate elsewhere because it's part of the way America does things. Right. As promised, I'm going to turn to you, our collective wisdom. Let me see some hands on people who want to ask questions. Let me maybe come here to the front row here. There's a hand. Let's get a microphone. Just again some ground rules. Please identify yourself and your affiliation and please make it a question rather than a long winded statement. Nobody likes a gas bag. Go ahead. Thank you very much. That's almost from Japan teaching in Nagoya. I have a question to Simon Henry. This debate covers short term, long term and very long, long term. One of the comments made by Simon is solar energy may play a dominant role in future. So if that happened, what would be the fate of hydrocarbons we are enjoying today and what is the time frame that solar energy may play a dominant role in the world? Thank you. Thank you for the question. We would say it really being the second half of the century and it depends on certain choices made in policy terms and the rate of development of technology. I think Mr. Gows correct that the cost of any given unit of capacity is potentially in the next decade one tenth of the cost that it was until quite recently. But there's a huge installed capacity in the energy industry in general. One and a half trillion dollars a year is already invested in the energy industry of which maybe two to three hundred billion is going into solar and wind even today. So there's a massive investment required to make a huge difference. So that's why we see fossil fuel pertaining for a very long time. The other question is although solar is very strong in potentially in the power market it's a bit more difficult in the transport market or in certain other areas of energy consumption. So liquid fuels we see is remaining by far the strongest and best placed economic solution for transport simply because of energy density. Well you mentioned you mentioned that topic with all the buzz around Tesla in the western world. The Chinese government's interest in electrification of vehicles local champions that have like BYD here. What is the forecast you guys are working with on electric vehicles as part of the car fleet going out 2030 2050. It's a little similar to solar. It depends a little bit on the rate of development technology and then on the capacity to build. Yes electric vehicles will play a role. It's difficult to see that being a major one in the next 10 to 15 years by fuels we see. Well fleet turnover takes time obviously. That's why we push it out to 2030 2050. At the moment electric cars need in general quite a lot more subsidy than solar does. Solar is approaching grid parity. Electric vehicles are some way from that. And particularly it's only at the passenger car level. It's not at the truck or the bus which is a major part of the transport fuel demand as well. At the heavier end of transport gas liquefied gas natural gas is becoming particularly here in China an alternative. That's the Chinese we see as being in the lead in this this part of the future transport fuel segment with the Americans and the Europeans also looking to develop that. How do you see that threat from Evie's. Well I don't see it as a threat. I agree with Simon that it's going to play a role small role initially and growing over time. But I think we have to link it to the discussion taking place earlier about the energy mix. If you are in a country like China where coal is the dominant fuel for electricity then it's a counterproductive switch because you're increasing demand. For electricity and electricity is primarily coal based. So the electricity demand curve is going up even steeper and given the tightness and gas and the limitations or renewables. I think you're ending up with a more carbon intensive energy mix than you would have if you've gone for efficient hybrids that are petroleum based until technologies. On renewables develop and become competitive so that you can shift significantly the energy mix away from coal. So the convenience is another factor. Also if you're talking about cars and the tens of millions and the subsidies that are required and the battery manufacturing process is going to also be draining on the economy on material supply. So I think there are a lot of wrinkles that have to be ironed out before we declare that electrification will solve mobility. We hear great I would say caution or skepticism about the prospects of electric vehicles or alternative drive vehicles disrupting the internal combustion engine paradigm as it stands. I would offer a thought having written a book on this topic that disruption happens in ways that one doesn't expect. And in particular I would watch energy storage a huge area of scientific and technological investment. If we were to see advances in this area I think our conversation would be different when we meet five or 10 years hence. And that could lead to not all not just electricity but possibly a variety of fuels or other options that come up. But let me get back to the audience. Yes let me come on this side here not neglect those behind me again. Identify yourself sir. I can't. Can from Myanmar. I'm in a energy sector. So there's the energy mix the movement in the energy mix and then the monopoly against the monopoly of the this in a pipeline structure. So how does it impact the regional demand on this the natural gas. And then the landscape for the the LNG development projects originally and the the last last lead the price of the LNG in Asia. Sounds like a question for you. Simon. Okay. Thank you. And today the gas global gas market is around maybe two thirds of the size of the oil market but growing at three four percent a year. Of that LNG is only around 10 percent of the total. The rest is basically pipeline. These are in revenue terms. Volume. Volume. Volume equivalent. Because LNG is priced at a great premium. Energy equivalent. Yeah. So the the gas market is growing quickly and LNG is an important part of it because LNG is leading to a more global approach to pricing. So there is some equalization of pricing that was not there five years ago even. Because there was not enough supply that had a choice about where to go. Could we see could we see gas as a fungible global commodity the way oil is 10 years sense. Longer term that that is looking entirely possible indeed. But pipeline will always have a cost advantage. So it'll be more at the margin in terms of part of a portfolio of energy mix. The regional regional pipelines Russia is a big player and the Middle East could choose to create pipelines e.g. from Iran into Pakistan India to the major population centers and then Russia into Europe is the other one. The Americas will stay as a self contained gas island in that sense. But we do see an equalization of gas prices over time and that will drive. We think access to infrastructure which increasing the will follow an American or European model that the owner of the infrastructure has to make it available at equal access to any user. And that's something that many developing countries including China have not yet reached that stage. But I think are quite likely to do so in the not too distant future. We have seen oil used as a political weapon historically. Could we see as sometimes Europeans in the middle of winter fear gas uses a political weapon in anything more than saber rattling. Of course I'm talking about Russia and gas prom and its relations with its immediate neighbors. We've seen this but in terms of much longer term. Is this something that to worry about. I think I think the collective wisdom of the world today is to avoid using oil and gas and political conflicts. People aren't always wise in their collections. I hope I hope that we've learned the lesson. I think I think from the experiences when it was used that has backfired and it has been counterproductive to the interests of producers. Likewise countries that have markets I think are better served by opening their markets and attracting an interdependence with with suppliers. So I'm personally a believer in open markets open trade and letting suppliers of energy consumers of energy not only have these long term trade relationships that serve the interest of both but co-invest in a ways that tie their interests together and that basically shapes our strategies around the world. Wherever we go we try not only to be a reliable supplier of oil which is what we do but we try to invest in the well-being and in the robustness of the market that we are supplying and become part of the landscape. This is our strategy here in China. We're doing the same with Shell in the U.S. in Japan. We're doing it in Korea and elsewhere. And the same thing I believe would go for gas suppliers. We're not one of them but others I believe would see the wisdom of their choice. We see that mutual interdependence as the best mitigants against the conflict situations you described. And remember the Middle East has never failed to supply oil and actually Russia throughout the entire Cold War never failed to supply gas to Europe either. And that's the thing about pipelines isn't it? The interdependence goes both ways. If you are piping the gas you're also reliant on your customer for money. And so I think that I support your argument. And let's have another question. We'll come to this third of the room. Maybe the lady in the front row here. We get a microphone. Please identify yourself. Sure. Enes Azevedo, Carnegie Mellon University. The panel has talked about a growing demand of the portfolio of technologies and sources that are going to indeed be needed. The pace of transitions in the energy infrastructure is extraordinarily slow. We put out electric power plants that are going to be around for six years. So what the panel has not commented on is climate policy. Are we doomed? Right. Climate policies. Are we doomed? Who wants to take the bait? All right. Okay. Go ahead. I think there's some good news. At least from China. We used to have a largest incremental in the CO2 emissions. But since last year I'm moving forward in the next few years. Incremental is going to be substantially slowed down. And if we can reach the Coke and Samsung P by 2020, assuming that happens, then you are going to see that China come up with a cap for CO2 after 2020. Because they become feasible. And that will be done through domestic mechanisms, not as part of international treaties and negotiations. Right. Because it's very easy to figure it out. Once the coast stops and we can begin to add the clean energy into the system, it's obviously you can reach the peak. Right. Not that difficult. So I would say that there's some good news. At least from part of China. And that's a big news. Again, how much of that is driven by policy versus a slowdown in the economy? I think both. But I think the policy is stronger than the slowdown economy. Because in the slowdown economy, China's energy incremental is roughly still about 4%, something like that. It's about from GDP to energy about 1 to 0.4, not 4%, 3 to 4%. So that's the substantial number. Given the current, you know, you are talking, you're still talking about roughly 1 billion coal equivalent. That's the huge number. Well, on this point you mentioned in passing, we've had a very supply side conversation. No big surprise since we have three supply side folks at the table. Give me an idea of the role for demand side improvements. You know, in particular, if you're talking about the linkage between energy consumption and GDP. Historically we know that as economies develop, they tend to use less energy per input of GDP. China is at that middle income point, inflection point, where we could see dramatic improvements in some of these things. What are the levers that need to be handled properly to accelerate that? What it really needs to, the government really have to be sure that, leaving the GDP aside from the energy. Because right now, if you look at 30 years, energy is 1 to 0.6, 30 years. Look at 10 years, energy is 1.2.5. Moving forward, not 10 years, energy is 1 GDP, 1 energy, primary energy 0.4. You see the natural decline because of the structural changes, because of efficiency improvement, everything. However, there's a critical point that the government really have to look at the GDP away from the energy. The reason I'm saying that is that right now the number is going quite good. But I'm worried about if GDP starts to slow down a bit, why the parties can revert back to support the GDP. That could be quite reasonable. Now you emphasize one dimension of this, that is structure of the economy. We know that China's, the rise of the services sector, the tertiary sector in China, next year may well be the first year in which the tertiary sector becomes more than 50% of China's GDP. In a place like Shanghai it's already 60%. But there's another dimension of the same problem that is urbanization. China crossed the line of urbanization just a year ago, really more than 50% of its population living in cities. Simon, I know this is a topic you've thought about, energy use and urbanization. Depending on how cities are put together with transport and infrastructure options, it can either be heaven or hell when it comes to energy. Want to share a thought on what might be the smart ways forward? Certainly we would agree that as it's quite likely by the middle of the century 80% of energy demand will be in urban environments, that how cities are designed, buildings are constructed, how transport systems are designed and really a policy framework to create that. The right outcome will be hugely influential, not only on how much energy but what kind of energy is developed. Maybe Mr. Gow has some views on how solar can play into that. For example in building construction, using PV photovoltaic type materials. Either of you want to follow up? Yeah, I was just going to say that the policy on the environmental issue the lady is concerned about is going to be impacted in every country by local politics. So what is the issue of localization around the energy, supply, infrastructure and industry? You know solar, a lot of the friction that we talked about earlier in trade is actually driven by desires in countries that are switching to solar to build their own solar industry. Coal producers are going to resist, the mining industry is going to resist. So a global framework will have to come to a lowest common denominator unfortunately where governments around the table are driven to a large degree by their local political landscapes and therefore I think there is an opportunity for industry to take the lead. Not wait for a global framework to develop but take initiatives on our own that are leading in that direction. Again using technology, innovation, pre-investing for a future that is less carbon intensive. We're doing a lot of this not only on the supply side which we've talked about but also on the demand side. We're investing with and researching with the auto industry on doing radical improvements or achieving radical improvements in efficiency of petroleum based vehicles on capturing carbon on the automobile, on converting that carbon to a useful marketable product. This may be far fetched today but if you pre-invest and commit resources to them again looking at a world 15, 20 years from now where we need to reduce the carbon intensity I believe it can be done. Great. Let me see. Please go ahead. I think the previous speakers are very reasonable and also talk about the geopolitics and the relationship with oil and gas. I'm thinking that whether a country can be more autonomous or independent in energy but oil and gas is out of control because for example Russia has a lot of gas and at least have a lot of oil but for solar most countries can be autonomous. For example Germany. We know that there are not so much sunshine in Germany and its total consumption is very large but its land area is not that large. Currently the solar energy already accounts for 15% of the total energy consumption. Why is that? I think our colleague here said in the previous session that because of the renewable energy policy that the European energy price is high so it's not comparable to the United States but in the future 10 years it will have a competitive price edge. For example Saudi Arabia in a few years time maybe for solar energy its cost will be even lower than oil and gas. So we can create a new energy mix based on solar. It can contribute to the energy independence. It can help the country to import less oil and gas. Chairman Gao because you have given a provocative idea and we're almost out of time. Another provocative idea is that Saudi Arabia will be a superpower in solar energy. And like that great idea I want to go around to the rest of my panelists in the two minutes I have remaining and challenge you to put forward one provocative idea drawn from our conversation that we can all leave with to take away with in a sentence or two. Well first of all to respond we are investing also in solar technology and Saudi Arabia is intent of being a superpower in solar. We have a number of research projects already ongoing within the kingdom and we as an oil company have set our strategy to be a broad energy company and solar will be somehow within our portfolio. Give us an insight from the past hour that you will take away with you or you want us to take away something that struck you during our conversation. Well I think the idea of fossil fuels going down to 50% is provocative and we know today it's much higher than this but I would also add to this that the energy consumption by the middle of the century is going to be also twice as much as it is now. So the demand on fossil fuels remains huge. The decline rates. So Ramco will still be in business. Not only this but I think the industry, my concern is not about Ramco. My concern is about the audience and policy makers not realizing the amount of investment that has to be put in place to achieve that declining percentage of fossil fuel in a world that is going to require a lot more energy. It's in the trillions of dollars and that requires not only our industry but our supply chain, talent, all of that has to be channeled to producing that energy that the world needs and needs it sustainably so investment in technology and innovation has to go hand in hand with the production of that energy. Hala Dalfalli, thank you. Simon Henry, a provocation. That's a good question. I always think coming to China makes you stretch the limits of imagination and you can hear from the discussion that the best way of protecting against being doomed in an industry that invests for very long times is to take coal out of the energy equation. I think China is making some very big steps to think about how to do this but what about the rest of the world? If we take coal out then the CO2 problem is a quarter the size of what it is today. And the way to do that is regulation. How about that in the next 10, 15 years? You start with policy, you encourage technology, whether it be solar, gas, or nuclear, that is a challenge. All right, I asked for provocative and we got the end of coal. Excellent. Lin Bo Xiang, your final word. We talk about a couple of issues, three issues. One is geopolitics and the carbonized technology and also the unconventional gas. Put everything together, I believe that the structure of the energy supply globally is going to be changed. Demand is also going to be changed so that we are looking for a changing in our energy situation. You said demand will change. You don't see any scenario in which demand will come down. Demand is all going to change. It's still going to go up, demand will always go up. And we need to prepare for that. Okay, well that's not provocative at all but it is nevertheless a wise word to finish on. The world will change and be prepared for it. Very good. You started us off but if you're burning too, very short. Well, very briefly about technology, be it all your coal or natural gas, in the next 15 years, the trend of the technology, everybody is pretty clear. But we're very uncertain about the future of the solar energy. Just as the professor said from Japan, solar energy and electric cars, the future will exceed our expectations. That's why we need to keep developing. We probably wouldn't know when that expression will happen. Thank you. The future remains sunny from Chairman Gao. Thank you all. Give a round of applause for my speakers. Great. Thank you very much.