 Good morning. We're in Switzerland. Everything starts on time ends on time. It's nine o'clock and welcome to this session one of two sessions on the new energy context this session today is going to focus this morning is going to focus on the technology Economic and geopolitical drivers of changes in the energy markets and then a panel this afternoon Chared by Dan Jurgen is going to focus on the geopolitical consequences of those of those changes I invite you to come back to the same room this afternoon to hear about how the drivers we're going to be talking about this morning are going to be changing Changing the markets and politics. My name is David Victor. I'm a professor at University of California, San Diego I run a lab that studies highly regulated industries, especially in the energy market And it's really my pleasure to welcome you to the session a reminder This session is being a simulcast and is on the record And please also turn off your electronic devices your telephones everything electronic turn it off But pacemakers keep those on but everything else. Please turn it off for the purpose of the flow of the of the session this morning It's hard to overstate how the drivers will be talking about today are changing the whole energy landscape We see today a glut of oil Rooted in part in changes in technology new supply technologies lots of other things going on as well. It's driven prices down Over the last seven months at the second fifth fastest rate in history We are seeing a slow but decisive transformation in the global natural gas markets As new supplies fracking a variety of other technologies and globalization through LNG Effect the way gas is priced and moved around the global markets and in electricity. We see profound changes in supply new renewable technologies Non-renewable technologies competing new challenges climate change in particular and on the demand side Energy efficiency is really transforming markets in ways that it that are just unbelievable It used to be that we always thought that demand for oil demand for gas demand for electricity would always rise We now see in many major markets demand flat or declining and a big part of that is changes in end-use efficiency So we're going to be talking about these kinds of factors today Let me briefly introduce the panel from left to right as you're as you're looking at the panel Patrick poyonnais who is CEO and president of the executive committee of totale next to him a deputy prime minister Shoees deputy prime minister of the government of Iraq Next to him Ignacio Sanchez Galan who is a chairman and CEO of Iberdrola Next to him is Alex Muller norily who is CEO of Johnson controls and to the furthest right is Ulrich Speeshofer who is CEO of ABB? We're gonna start and talk a little bit about oil and gas then talk about gas and electricity as we move left to right to the panel each of the Speakers is going to talk for a few minutes and opening remarks We're gonna have a conversation up here that I'm gonna bring you into that conversation And then we'll finish on time at at 10 o'clock so Patrick Let me begin with you first of all welcome to your first Davos meeting You're running One of the world's largest oil and gas companies You have a global perspective Tell us a little bit about how the changing price environment change changing investment environment How that's shaping where you think the attractive places are to invest. What's on the frontier now? Okay, first of all when you speak about energy and you need to have you have two Two horizons to keep in mind one is a medium and long-term horizons The world needs energy. It's the world's it's more energy. Why because the population is increasing We need all this new population will need transportation part of the emerging countries needs more power and so in the You all do you have to keep that in mind that? We take an assumption globally of 1% of growth of linear energy for the coming 20 years First come out so we need more energy second remark When you look to the energy mix the hydrocarbons will remain a big part of it But we're not necessarily increase in terms absolute terms when proportionally they should remain about 70% of the global energy mix in 2035 But that means that most of the growth will be covered by new energies like renewables like More nuclear etc. But hydrocarbons will be at the at the center of the energy mix in 20 years In hydrocarbons, you have of course coal all and gas For obvious reason because it was less developed in the past because it's cleaner gas share will increase and Coal should decrease you are not surprised. I'm an oil and gas producer. I'm not a coal producer I don't intend to become it because of co2 effect and One of the first message there for an oil and gas company is a gas is a cleaner energy We need hydrocarbons. We will need will increase the production of gas. This is important to give that in the land may be landscape the other point that you all have to keep in mind all will remain quite big around 100 million ball per day and It's maybe it's I have to repeat it. There is a natural decline in the oil production so between today and 2030 out of today's production 100 million bio per day 90 million bio per day half of the production will disappear Because of fields are declining naturally You can invest to maintain but you have a natural decline of 5% per year This means that we will have to invest a huge amount of money around If we want to cope with the request for oil in 2030 around 50 million by a day It's an enormous amount of investment behind that and this is why I speak about it because if you want to meet that All demand and gas demand you will need to go and develop technologies and address Resources which need higher cost. I mean which are more expensive like Of course title like oil sands, etc. Then I go to the short term What is happening? In fact, it's just a commodity a cyclical Commodity we are in a sign all is a sign is a commodity and you're a cycle What is cycle cycle is you've seen price I went up and you have two drivers behind the cycle It's money and technology Price went up to one at a lap about a lot of cash came in this industry a lot of cash means more projects Beginning to tackle with many with more expensive resources More cash with higher cost also also because the service companies because we we requested for better Technologies and service companies wanted themselves their share of the cake. So more projects Higher cost also because as you have more projects your whole industry as another eating and you have more projects more More demand than offer so higher cost and then also technology effect, which is thanks to this Capital more possibilities to spend capital will begin to develop new technologies. It was spectacular in the US in 20s in 2007 nobody was speaking about shell gas or even shallow It's seven years ago Why did they do we manage to develop shell gas heroes because a combination of higher prices and technology? The technology was well known Fracking is not a new technology But we will be we have been able to develop it because of a price signal It was becoming in fact profitable to frack and it was becoming profitable to develop shell gas at the beginning at Equivalent eight dollar per million BTU surprise when done and then the technology the efficiency of the whole system managed to maintain the pace of development so price and technology is also important in these commodity business on demand because of high prices People have developed technology to be more energy efficient It's true in our production processes, but it's also true in the car manufacturing sector today The motors of transportation the the new cars as much as are much more efficient in terms of consumption of Oil or oil than before so this has an effect on demand So high price more projects higher cost more technology more resources And then today what is happening you have more offer and less demand so the cycle and The cycle will do it in the other way, you know All is $50. I have announced today that I'm reducing my investments like all my code my colleagues probably so less Investments less see force on the energy efficiencies and then come back the bigger non This of long is a cycle and that there are plenty people who is explaining that they know. I don't know I will tell you in 2009 last six months in 1986 it lasts in a year. We don't know but this is the basics of the energy oil and gas industry but Me my last messages on the medium and long tail. We need more energy We need all and so the cycle will come back and the price will come back. I owe again. Thank you very much Let's hear from deputy Prime Minister show he's Iraq a lot happened in Iraq and yet. There's a tremendous amount of investment Tell us tell us Why Iraq is so successful now in attracting new investment? Are you worried about this new low-price environment or are you with Patrick and price is going to come back up and it's More investment charging ahead Well first of all when we are speaking about Iraq and Have to know that Iraq is one of the main oil producing countries in the Middle East And Iraq has huge Reserves of oil estimated about 140 billion barrel Beside that Iraq has also remarkable Gas reserves So It is how to say it. It is a main player Iraq is a main player in the energy marked That's why a lot of companies are looking at Iraq as a Source of of oil gas energy What is needed today in the world and for Iraq itself? crude oil Crewed oil extraction continued as a predominant Source of generating the gross domestic product at a rate of about 43 to 45 percent and Revenue from oil makes About 90 percent of the federal government budget This means that Iraq government is very concerned much concerned to develop the the The oil and gas Industry to have very good relations to all Companies who are concerned with with oil and gas and at the same time Because of the new challenges especially The price of of the oil Iraq has to Try its best to to rise its Oil production and its export We are facing challenges in Iraq beside the heritage from the old regime from Saddam Hussein's regime a Semi a semi socialist Economy policy Corruption social and and political problems. We are facing now We are facing now the battle and fight against terrorists especially is We are facing Huge number of ID ID IDs The number is estimated to be about two million people were Displaced internally From areas which are under the control of ice is to other safe areas especially to to Kurdistan These all these all are problems which we have to tackle to Found solutions for them Certainly Iraq alone cannot do that We are in need of the cooperation and help of the international community Coming back to the oil Iraq has a Unsufficient infrastructure Oil industry infrastructure the old one So a lot of work has to be done in this area Besides Political Problems among the different component of the Iraqi Population Has lead to a situation where Iraq cannot Produce its maximum or export its maximum of its capacity of of of oil I am glad to say that the last the last agreement between the Federal government of Iraq and the region of Kurdistan about the oil policy and About the oil export through the pipelines going through the Kurdistan region will enhance the Production of oil and export of oil it will rise the export of oil to a Level of more than 550,000 barrel a day this means that the Iraqi federal government and also the regional government of Kurdistan both both of them will benefit from this this Agreement, I'm sure there's going to be some more questions about that when we get let's get get some initial views from the other panelists We turn to you Nassia Sanchez Galan Your company a bedrola is in making huge investments in renewables and electric power grids Almost every study when they look to the future sees a future that's more electrified and especially if we reduce carbon emissions So tell us a little bit about Where this investment is going to come from and how that changing Structure the energy markets is that making it easier to track the investment needed or is it making it harder? well, perhaps I will try to make a Short view what is the world requiring the next few years So it's still in the world. They are 1.3 billion people without access to electricity So that is an issue so means that if you energy sector require investment in the case of electricity The sector require much more investment than or else so The expectation of growth in electricity demand in the next 40 years according to international energy energy agency It's on the range of 80% so which I think is quite a lot That will require investment in the range of 20 trillion dollars in the next 30 years. So which I think that is the main challenge Emerging countries those work with the steel in certain cases has not access to electricity We require almost two-thirds of this investment, but the little countries as well require quite a lot I think in most of the below countries networks are becoming obsolete We are seeing day-to-day the blackouts with existing country like United States They are already we are seeing in Europe how we are already because of their wrong energy policy in certain countries We are already closing down certain efficient power plants. So because the planning was not correct and And I think that is one of the of the Opportunities which we have already in this moment I think in the in the emerging countries most of the investment is going to be addressed to build new power generation and new networks But I think they have the challenge to not repeat the mistake we have already make in the worst in world Mainly on the area of planning and mainly on the on the area of regulation so That's why I think in the world energy forum in the in the in the group of electricity with a chair We have already produced this year a yes a document Which is what is the future of electricity for the build countries and we are planning to make another one What is the future of electricity for for new for the emerging country just precise to try to see what are the challenges? so the main thing which We we address in these documents how to address how to rise the The huge amount of money with this investment for this investment with the country's require the first thing is a Strong plan is a strong planning and to make the right choice of the right technologies We have already making the worst and work quite a lot of mistakes in certain areas We have already invested heavily in certain renewables in a in an immature period So which I think that is already producing in this moment a tremendous problem of competitiveness of the in the electricity supply We have already to control properly They they have to control properly to make it adequate implementation of this investment and By far the most important thing is to make already a stable predictable a well-designed regulatory framework We have certain examples in these moment in countries which are already now in a growing period like Mexico Which does recently has already made these energy reform was already made the President Peña Nieto, which is already a good example how to address how to change the situation of a country how to attract investment so Renovables a withdrawal as you mentioned. We are the largest by far investor in the world We are more than 25 billion euros invested in in renewables But we try for all means to invest in those one which are more mature So those things which are immature can already live for certain periods of time under a good Let's say subsidy period, but that is not ready a real Balanced situation at long-term the consumer have to pay for it in the politician has already this Sensibility and it will change the rules as we are already facing. So I think those are the main address. Okay. Thank you very much Thank you very much. So Next I'd like to hear From Alex more narrowly CEO of Johnson controls Alex Your company is investing heavily in a whole range of energy efficiency technologies Tell us a little bit about what you see as the most important technologies and how they're going to change the way Users interface with the energy system Well, I'm a little unique on this panel because we've talked about supply side quite a bit and The choices that have to be made and how those choices are made at some at some point within the this this cycle or our Process you have to have decisions have to be made based off of what the user What the user requires so whether it's in buildings or whether it's in vehicles decisions are being made by the consumers that are forcing different supply sources different Pricing mechanisms You know along with regulations, but as these choices are being made one of the things we really don't talk about is is The ability to make those choices and how those choices are going to be made in a way That's not only efficient but effective because you can apply all these technologies and and if if you Were able to have a theoretical system that was most efficient. We have plenty of energy. That's being supplied today It's usually just in the wrong place at the wrong time and at the wrong cost but but with the choices that are being made and the technologies that exist within both vehicles and And buildings and residences those choices will become Easier to make and I think we're going to find ourselves certainly in the mature Countries that we're going to see less and less demand You know as an example you can look at we're both in the vehicle business and the buildings business in the in the vehicle business today just because of the just because of the rise of Legislation and alternative technologies fuel efficiency of vehicle of the combustion engine Which was under attack is not going to go away And I'm sure the technologies that you see in in the supply side of energy You have you have pressure from new technologies that's going to force more efficiency in the supply And so I think all these things are building an ecosystem that allows smart choices And if we're able to have those smart choices we can lose less energy and also get the energy to the right places And I think having a connected system both from the supply side of demand side is is is critical in order to make that happen Thank you very much I want to come back in just a moment and ask you some more questions about the surprises on the demand side But first let me get the last initial comment from Urex B. Soffer who's CEO of ABB your company sits kind of between supply and and user Do you agree with what Alex has said tell us about some of the other technological surprises you see in this whole space? So, thank you David If you look at the biggest challenges of mankind in the next decades one of them is to decouple economic growth from environmental pollution and The way we're gonna get there is by making sure for every unit of GDP output We use less energy and For every energy unit that still needed be used environmentally most friendly technology to produce it Electricity is coming stronger and stronger in focus There's more energy by wire than ever before First the rail industry moved from coal to diesel to electricity now we see electric cars coming So the focus that I want to take is on electricity If you look at power generation In 20 years time 40% of the global install energy capacity electricity capacity will be renewables This might be further accelerated by a simple fact we talk about the negative impact of the following oil price There's about half a trillion five hundred billion dollars spent every year on subsidies for fossil fuel In India alone, it's 30 billion more between 30 and 40 billion a year The redirection of that money might accelerate further Renewable technologies Renewable technology on the power generation side means more volatility Less predictability higher Intermittence that means we need to have a wider connection of Generation sources to ensure we can balance off the different pieces We need to make sure over the longer distances that renewable require because you don't build renewable power plants in the city of New York You need to have lower-loss technology and we recently saw many good developments Whether it's above ground or underground power transmission and distribution Lower-loss higher capacity technology will really help to make the renewable dream happen On the distribution side as said before by one of the colleagues here more than a billion people don't have access to electricity today New technology on micro grid and nano grid level where you bring together renewables some conventional backup Energy storage and local distribution will enable the 600 million people in Africa the 400 million people in India That don't have access to electricity to get that done in a more sustainable way If you look at the points of consumption energy efficiency is the key theme and it's still highly under-reliant and Doesn't get enough attention There's a sink simple device that we have an hour offering It's a drive which controls the consumption of electrical motors which then for about 30 to 40 percent of the global energy consumption Putting this drive into action the last couple of years We already save every year the equivalent of 100 million households energy consumption And we need to get more going on the energy efficiency side at using the technology in a smart way So all together using the technology smartly will allow us to run the world without consuming turf Great. Thank you very much. So let me ask each of the panelists a question or two and then we'll put it open to the audience Let me start with you Alex Patrick and Ignacio both quoted Widely read studies about increasing demand for energy yet I sensed in your remarks that there's potentially huge surprises on the demand side that Maybe the energy industry in fact doesn't really understand the customers very well and with new technologies The customers are going to react in ways and total demands going to go down How plausible is that are you seeing a future where demand at least for primary energy? Maybe not ultimate energy like illumination, but primary energy actually could go down in a substantial way And is that going to be massively disruptive to these markets? Oh, I think it already is I think that part of what what what you're seeing today is the particularly in the mature economies yours you're seeing the the use of Energy become much more efficient and effective Grids are better than they were. We have made progress Buildings and vehicles are more efficient the ability to use distributed energy sources as much more Plausible being forced as a unintended consequences of renewables all these things are happening that I think I was put in pressure on On the system I think that regulators are probably really in the way of making that really happen if we particularly in mature economies that you know regulations protect the status quo and that Incumbency I think is really what what is going to slow down what I think is something that it is disruptive There's an awful lot going on and when you get to the the emerging economies They'll take advantage of of the technologies that are in place today They don't have to rebuild the grid to have to build one They don't have to rebuild a communication system to have to put one in You can't help but connect things to the internet when you put a device in today And so I think that we're going to see the pace at which an emerging economy becomes much more efficient and effective Be much quicker than what we ever saw in the mature economy. So I saw many heads nodding Let me I didn't see yours. Yours was shaking. You disagree with that view Patrick. Yeah, I disagree I mean, I agree fully from the mature economies. I agree that you emerging countries will have access Quickly to more modern technologies But the population of the world is just increasing as somebody say it I think to you Three billion of people don't have access to power today And we cannot just have a world where we have split in two parts Where some people have access to energy to affordable energy and others would not have access to that And I think it's just some fundamentals. I think it's that when we speak about sustainable development It's not just only a question of environmental matters It's also primary for me a question of social development and we have to Organize a world in a way that these people will have access to energy reliable and affordable and that's true that some of these energies are quite expensive and We have to keep that in mind even if frankly even total, you know, we have we are today. It's that well known the second Solar company in the world in terms of equipment providing equipment. So we believe in these technologies We but does not mean that at the same time We will need not need the more traditional ones maybe more efficient But we will need to bring this technology to all these populations Okay, so two pretty different views here on something that I think a lot of us thought we we knew a lot about which is demand for energy Let me ask you Ulrich Tell us a little bit about how the business model is going to change Seems like one of the logical extensions of the arguments that several people have been making about new technologies is That with new renewables and more responsive customers and so on that the value chain the value in the value chain It's not necessarily going to flow to the traditional companies big electric utilities and so on. Do you see this as? fundamentally Disrupting their business. Do you see the big utilities as dinosaurs of the past and new kinds of companies coming in or the regulators in the way of that process Definitely fields where we will see some disruption. I recently sat down with Mukhajambani in India and had good discussions regarding Africa and As my colleague from Johnson controls just said if you take the economies There is no electricity supply today for large parts of the population You need to look at the total system cost of setting up electricity supply to an individual In the past you needed to build a street to an African village You need to get the petrol truck coming in there. You build up the diesel powered Generation and a generator and you off you go Today you don't put that in You don't put in the subsidies to get the fuel cheap to the village you put in a solar park You combine it with storage and you might still have some back up and I give Patrick really a point You might need some back back up so I think the a smart coexistence and a new emergence of business models is coming and then if you look that Development of the electricity value chain and the development of communication a Village in India the people have a couple of needs the one is they want to have electricity to power up their mobile phone They're fridge in that TV, but they also want to do something with their mobile phone in terms of being connected So at the as the time as we put in electricity Somebody else might be putting in wireless communication networks to allow the people to get connected to the world So it's a coexistence. We will not have a total revolution in the traditional economies Turning tomorrow upside down, but we will have a more stronger perseverance and a higher speed of development And the going down of the all prices at the moment a lot of people say that will beat the renewables On Monday I was at the future energy week and Abu Dhabi kicking it off together with dr. Sultan of of The United Emirates and he said in front of all the oil companies and all the oil players He said the time where the oil price dominates the deployment of renewables is over Because the cost of renewables have gone down so massively Especially on the solar side that there is an acceleration coming and there needs to be a new model of coexistence coming Let me ask you Ignacio your company is the biggest investor in this space Do you agree with that assessment that this? The time when the oil price and therefore the price of natural gas in most of the world Basically determines what's feasible and renewables or not that that time is is now over So I was commenting then there to two kind of countries those countries with today's has already yes a good networks and Certain and certain efficient power plan in those countries have not ready Networks I have to decide what is the electricity system they would like to decide so I think today they are technological solution for making a ready distributed energy So it's today, but long time ago exist as well today is more more economically Babbled than it was but my concern is that we can create Already a bubble at the head already been created in Europe with certain renewable technologies because the fact is these Distributed technologies which I think is a good solution for countries Which they have to decide is to build or not to build a network and to build on to be a big power plan If it's more efficient to make a small one just to make it for provide electricity certain Areas without connection with the rest of the system That is the decision the fact is today. What is being built is just for let's say more than a Energy solution is a financial product in certain cases. They are already Those countries we have already all those people have already access The good wealth and they are already capabilities of investing in their own power plan They are already avoiding things of that to pay and that is the case of Europe Almost 50% of the cost of the bill which is charges and tar and rates and taxes Things of producing for themselves. So they are being created in in particular in Europe in certain cases in the state as well So some lack of solidarity because those people are already more wealth are those people which are able to build their own Service their own power plan. They are already as well They can serve and they can use as backup the existing network paying almost nothing for the service in those one We have not already wealth or those one. We have not already such a possibility of building this their own Self-production has to pay not only their cost But as well the cost and the taxes another one are avoiding. So let's try and insist on the good Fair regulation technologies assist for those countries have not already connected The good solution is those one which should be economical more viable Let me I'm not sure then the solar in the modest scale. I agree with solar. I agree with green I'm not sure then the small solar power plant will be more efficient than the large ones We can make a large one solar. Let's go last one green or last one hydro Which all of them are renovables in areas which are connected with always will be more efficient than the small one making for their own Let me quickly ask you for countries Many countries already have grids you said in your opening remarks that there have been a lot of bad choices with Technologies around renewables a lot of very expensive solutions You gave some examples of countries that are engaging in good reforms And I think the lower energy prices are opening a lot of opportunities for forms You conspicuously didn't say anything about Europe as a model of good reforms and yes There's a new push for lower emissions more renewables in Europe What's your view is is this new push on renewables going to be horrifically expensive or is it on the right track? So no, I think on this and then I want to ask Patrick and then we'll come back to the differences So I think in the in this particular scenario So there with the low energy prices in this moment is a unique opportunity in Europe to accelerate the process of Go to the ETS and to go to the reserve Mechanism for putting already a floor for the CO2 so I think European Union and the actual new Commissioner can get in the nearby pressing of the for European Union has already difficulty is the Europe has has already lost tremendous competitiveness toward Americans among others because of a lack of a proper regulation Putting charges on the bill with makes almost 50% of the cost now things of reduction of the Oil and gas prices that can already be introduced certain measures with incentive a then transfer one technology another one without increasing the prices and Reducing the reducing in this way the cost for all the consumers So I think far from being a negative effect I think it's a positive one for Accelerating the process for migration for clinic technologies using the particular moment and we are living That's a possibility we haven't yet happen. Do you want to comment very briefly on just one remark on solar? We are very engaged in solar. I would like to everybody to know the facts today's a capex per megawatt of solar is more Expensive as a capex per megawatt of nuclear That's the truth So people believe that because it's clean and solar is let not expensive That's not true at all and this is why by the way we are engaged in that technology because we believe there is a Lot of improvement to be to be done, but it's very expensive and it's not because it's renewable, but it's cheap That's not true. Thank you very much. Let me go Son chart we are not gonna have a dispute about the capex of Solar right now, but we will come back to that later. Let me just ask last question here, and then we'll open the audience Deputy Prime Minister show he's You talked about in your opening remarks the tremendous security needs in Iraq You talked about the tremendous Needs for improving infrastructure to expand exports although a lots happened already tremendous progress Your government a month ago Adopted a new budget that is much leaner than the previous expected budget because of lower oil price Help us understand a little bit about what's gonna happen here Because it would seem like on the one hand lower oil prices are gonna create a lot of pressure on the government to make it hard to Deliver infrastructure and security and so on that are essential on the other hand. They're gonna force companies like Patrick's Many others to look around the world for the most competitive places to invest and Iraq This may be a tremendous offer there So help us understand how this low-price environment is gonna affect the ability of Iraq to compete with other countries to attract this investment First of all, it is true that Iraq The federal government has lost about 50% of its revenues all prices through the oil prices and I don't know whether it is true or not. We are still in Iraq believing that the oil prices will rise It is not permanent the situation. There should be some regulation in the prices and Also, I think it is also the duty of the international Community not just to think to lower the price of the energy for Europe or other countries But to think about the oil-producing countries also by such Low prices in Iraq We are facing complex problems and challenges And certainly the oil price is one of the newest challenges and It affects directly all the sites of life in Iraq What should be done in Iraq to address its challenges First of all, it is very important to stabilize the internal political scene There should be a mutual understanding between The political forces which are representing the components of the Iraqi population without the Civilizing the political situation we cannot Turn over and stabilize the the security situation and if we have Stabilized political situation and security situation then The doors are open for investments in Iraq in all parts of Iraq not in a certain regions where which are the case now Besides that it is the duty of the Iraqi government to take Effective steps to improve the administrative and financial performance of the government institutions itself We have seriously and urgently to battle the corruption and put in place new laws and mechanism that enable Securing additional funds through mechanism not to not so common in Iraq such as issuing government bonds loans, etc Also, we have to take urgent steps to boost the role of the private sector Especially the private banks and utilize the revenues from the energy itself To boost industrial agriculture and service sectors. Thank you very much for that. Let me just stop you there So we have chance for some questions please identify yourself over here identify yourself on a microphone comes and Ask your question briefly Hi David, it's Steve Howard from IKEA more of a comment than a question I think when we're comparing technologies We've got to look compare not just capex but OPEX and this I was thinking this decommissioning X as well Cap X OPEX and decommissioning acts when we're comparing things We're not a bedrower, but we've invested about two billion dollars in wind and solar. We find it a really No, we've done to your ten times ahead of us, but but yours comes with an instruction booklet yeah, and Successfully assembled as well And we find we knew it was a very attractive investment and because we've got full transparency of the costs after we've installed them And we can see we've started selling solar for customers in several markets And it's fantastically attractive for people if you look at the price development Renewables will win the energy debate We just haven't realized yet. Maybe some of us have but renewables are winning the energy debate Let me just ask Alex this question What's the biggest surprise you've seen as you learn more about what customers consumers actually want? What's the most surprising thing you've seen? Well, I Customers don't want I'll give you a good example Customers don't really want electric cars They want cars that are more efficient And I think that plays out and you could take that across any Any technology customers want that they want they want technologies to pay for themselves They went technologies That work and they want they want technologies that are reliable and they would like to they'd like to save Energy both from their pocketbook standpoint for the right things I would say that we have to be careful that we don't focus on technology for technology sake one of the unintended consequences of I'll use cars for a minute because we're in the battery business is that that Electric vehicles 30 40,000 50,000 vehicles a year If you look at just something simple like start-stop technology in Europe That's taken that that's taken a million and a half cars off the road if you look at what you know What kind of benefit that technology is brought so I think there's a lot of unintended consequences that are happening around efficiency And technologies at work that really go unnoticed next question here Hi, it's a Kamal Ahmed from the BBC. It's a question for mr. Piani Can you tell me what the low oil price means for a business like yours when you're approaching the future for your mature fields? And I'm thinking in particular obviously for the UK that means the North Sea In terms of investment and do you think to yourself that in the longer term those mature fields gonna take a lower and lower Proportion of your investment and secondly, what are the government and regulators when they're thinking about how to support mature fields? What a government and regulators what should they be doing? Should they now be looking at cutting taxes and encouraging you to invest more in those mature fields? Yeah, you know mature fields in North Sea Of course, it's it's capex intensive. You want to maintain to fight against the decline of mature fields The policy what happens in the last years is that we invested more in this field So they have a new life because the payout was quite short if you divide by two The the price of the oil price the payouts is twice longer And so we will not allocate the same amount of capex and the UK taxation has been increased like the Norwegian Taxation has been increased but in the past UK authorities have been flexible about it I think it's the interest of the country to try to adapt its taxation system if they want to encourage investments but obviously and I Among the cuts that will down into 2015 the allocation of capital into a capex to this type of mature fields will be diminished That's true. So we'll see what will be the answer of the regulators But it will be the case not only in mature fields all over the world We have to adapt ourselves and even if we keep a long term strategy again I speak a long-term short term, but you know when we have embarked in greenfield projects when we cannot stop them We have to we have to maintain them So the part of the capital and the investments that we can arbitrate is More mainly on this type of mature fields Next question here, please sir Stefan Danda with Royal DSM. We are active in advanced biofuels from agriculture waste and in solar two questions One for mr. Molina early and mr. Spiezo for I have not heard anything about energy storage development and energy Energy storage obviously very important for renewables and for me see a Puyane You talked about the sustainability aspects from a social point of view, but Obviously, there's also the environmental story. Do you expect a more aggressive price on carbon? Anytime soon in the different geographies that you are active in thank you We start with that one $100 a ton. I Think the question there is a worldwide question I think we need to price and we have sign I've signed my system by from my first act as a CEO I've signed a declaration where I support the price of a co2 But I think we need the floor you'd probably the ceiling as well as long as it's not across So at least the developed economies because Europe from that point of view is a leader But we can be a leader if we are alone, which will have little impact on the global warming Global warming if we just destroyed jobs in Europe I can't show you and I wonder the telepathy if we are alone to do that The rule every industry will disappear in Europe So as long as the other countries in particular developed countries question of I'm Davos here of global Competition if you put a burden on certain parts of the world Then it has an impact at $100 a ton refining and petrochemical pair in Europe disappear in five years They'd be clear. That's true. So I am advocating So for a price of co2 because it's good to make a signal It will be not only the only answer to the global warming but it's part of the global solution But we know also probably to be reasonable and to have a sort of I think you know when we set up in Europe the European currency system in the old times You had a sort of snake and I think it would be good to try to maneuver or co2 price Maybe it's what by the way with your mechanism this complex mechanism that we want to put in place Stabilization system is what we're trying to achieve, but I think so yes for price But it's not the rule solution don't believe that let's just get quickly Ignacio on this You know if you have a floor and a ceiling pretty soon you have a tax so that we could see the end In effect the end of tax in Europe. You need unanimity a floor and a ceiling you don't need it Ignacio very briefly then I want to get these guys in on storage But I think probably the last opportunity of the world for doing something serious in terms of a mission Is the next summit in Paris unless all we agree to do something in this respect The world is going and the world means all of us. We're going to suffer I think we are already put in the short term in front of what the world we would like to lift our children So we are already doing something which is not absolutely right another point on related Energy storage I've been as well in some time we were partners or yourself in In the stories, but I think they are a very good storage with nobody talks about as as well because of lack of regulation Which is pumping a storage so the hydro pumping a story cannot already accumulate Huge amount of energy in the moment the renewables energy is already not in need But I think unfortunately with the exception of certain companies what we are doing for our own without any support of the public Sector we the solution exists I think the rest of the solution using a small batteries Etc. It's nice for them all devices in a huge scale the only Industrial solution is pumping the storage so using the reversible power plant hydro power plant to pump Water up and down in the moment that is needed, but that's in Switzerland has it's think we have in certain countries will require as well It's not sexy, but it's gravity and it works. We know how to make it work briefly guys Alex and Ulrich are you seeing transformative things in the storage or is Basically, it's gonna be pumping water is so far the dominant solution Well if it works why not do it? I don't think that I Think this chasing technology is important as it relates to As relates to energy storage or any energy system, but I think there's technologies that do work today You have to apply the wreck top wreck technology in the right application You know somebody talked about Distributed solar systems you can't do that without some sort of energy storage system There's batteries everywhere in the world and other energy storage devices of the four of the the four billion people that Need power a billion of them only are gonna get power through a set of batteries and and and solar Energy so I think that I think the battery the battery industry is not as bad as what people Would say around costs. I think technologies are being misapplied and I think regulations are driving some things that That just don't make a lot of sense So sometimes incentives for you to do things that just don't make a whole lot of sense So for example what California is doing, I think California is a great example of what is Not only is it not a good idea, but it's also creating, you know, multiple technologies and is creating a system That's too expensive for for the rest of the world. All right I couldn't agree more basically if you look at affordable energy storage will really change to build and Whether it's hydrocarbon for mass storage Hydro pumps for mass storage or whether that's local Batteries it is really changing and if you look at it today The battery density and the battery cost of electric cars will go down by about 70% in the next five years So you get the same amount of for the same amount of cost You're gonna get three times the storage capacity in the next couple of years You're gonna put these batteries into households And you have a solar system combined with a battery that we're already offering today And you have paid basically a pretty autonomous Assistant, but as one of the speakers says before that is not enough mass to get going So I think we need to play the grand piano on all the different storage technology Applied them to the different segments that I make the most sense and then we can have a great coexistence between renewables as a backup of conventional systems and Storage technologies Let me see if we can go time Let's just I want to get one more question in here before we run out of time, please sir So Anthony Goldblum from Kaggle, Mr. Point point a spoke about the fact that we're in the bottom of a cycle at the moment And people talk about the client rates in tight oil fields very being very fast And that might mean that cycles are much faster nowadays than they've been historically love to hear your reaction to that I'm I think you know People underestimate today the capacity of the system in particular the US industry to To react in terms of efficiency. We've seen that in the shale gas. We'll see that in the shale oil I think there is a room for improvement a huge room for improvement You have to know that today around 80% of the shale title Production as a cost of under $70 per bowl. It's quite easy I think to strap that cost to something around under $50 per bowl I think say that there is a limitation which is a financing system the cash Because what today it will hurt the US independence is more to have access to cash because they are leveraging a lot Even into a slate. So you will see and you have seen the announcements Most of most of them are announcing Investment cost by 40% for next year, which is quite big. So it will have an impact But then I believe we we don't have to underestimate the capacity of being more efficient and of Technology and the world adaptation of the US all industry Another point is that unconventional are very capital intensive, but of a flexibility So if you want to stop your investment and we will do that We have some fields in the US on on the eastern coast. My instruction is clear. We will limit this year The capital investments that why because I will not drill somewhere else during one year I can come back in one year when we are all pricing gas private come back So flexibility plus access for financing, which is not my case. I'll be clear this is more arbitration But I have to back to do my part of the job also if I want the price to come back Access flexibility plus access to financing on the in schools will have an impact But another point all that in all in gas you have sort of inertia It's quite resilient. So you don't see a big drop quickly. So but so This is a complex issue and I think I'm more believing what I said before that the impact on a low price will affect your decline rate on the mature fields Which has a big impact at the end of the day on the production rather than all on all these new resources You have other resources which are much more expensive like old science for example One more question, please last question here Ken Hirsch NGP energy capital management in the States Mr. Bonnie you seem to be talking up past each other you focus on The petroleum system. There's a billion cars and trucks in the world The rest of the panel is talking about electricity, which is a minority of energy And it's actually not an energy source. How do we if if we had a convergence between transportation and electricity? What would be the incremental demand that would be needed in natural gas and other energy electricity producers Let me see if anybody wants to comment on that Let me ask it instead of a Alex, did you want to comment on this? Not the microphone anymore. I'm not sure. I got the question completely. Let me let me Summarize let me first summarize this factually and then I want to ask you question technologically Which is the the work that's been done every electric power search Institute For example has done a bunch of work in this area and the overall impact increased demand for Electricity for a big shift to electric cars is surprisingly small. It's in the kind of 10% range order of magnitude So that's not transformative. It's not zero, but it's not transformative, but I just want to ask the panel very quickly do you see electric vehicles as Creating this convergence between oil and then gas and electricity or do you think they're going to remain a niche a niche product? Well, I have a strong opinion. I What I comes back to economics and I think unless you're the to 2 to 3 percent of early adopters that were adopters of hybrids and now electric vehicles The technology regardless of prices coming down 70% for things like electric vehicles or plug-ins It's just not going to pay for itself the consumer the consumer looks at vehicles in a three-year time cycle So you may get to 5% But what's what it is going to do? Which is doesn't answer your question completely. It's going to force The combustion engine and the technology to become more and more efficient. That's what really will happen Last comment on this one. I think it depends greatly on the region of the world where you go If you take China as an example as a market for electric vehicles today, 17 million electric scooters on the street 65% of the fuel being imported through the South China Sea There is a lot of political tension. There are different Reasons by certain parts of the world will really push electric wheels in a very strong way to become become more independent of electric fuel Of conventional fuels so all together we will see some markets where electric vehicles are coming at lightning speed And we see it at the moment of deployment in parts of the world in other parts I'm fully with Alex it might be going a little bit slower but push down the hurdles for Efficiency needs for conventional vehicles great. Well tremendous changes underway across the energy business in some sense the uncertainties Are going up things that we thought we knew we maybe don't know anymore like future demand And certainly the future price of major Energy sources, please it's not it's 10 o'clock. It's Switzerland. We're gonna finish now Please join me in thanking our panelists