BP p.l.c. (BP) Earnings Call Transcript & Summary

Hello, everyone. I'm Bernard, and welcome to BP Week. Welcome also to those of you who are joining specifically for the launch of the Energy Outlook. Just 6 weeks ago, we launched a new strategy for BP. It is rooted in our purpose to reimagine energy for people and our planet, our ambition to become a Net Zero company by 2050 or sooner and to help the world get to Net Zero, and in our core beliefs about the energy transition. The video you just saw captured some of the big changes we are planning by 2030: a tenfold increase in low-carbon investment to around $5 billion per year; a twentyfold increase in developed net renewable generating capacity to 50 gigawatts; a doubling of customer interactions to 20 million per day; a near tenfold increase in EV charging points to over 70,000; a 40% reduction in oil and gas production, becoming more focused, more resilient and higher value; energy partnerships with 10 to 15 major cities and 3 core industries; emissions reductions of 30% to 40% on Aims 1 and Aims 2, all underpinned by a resilient financial frame and in service of a compelling proposition for investors and other stakeholders. What we're doing has been described by many as both bold and ambitious, and we think so as well. We think it is ambitious, but we also think it is realistic, and we're confident we can deliver. And this week is about showing you why we have confidence, and in turn, aiming to give you confidence in BP and in our strategy. First and foremost, our new strategy is going to transform BP into a very different company, not overnight, given our size and scale, but fast because the world needs change. And importantly, we want to be part of that change. We've been an international oil company for 111 years. And over that time, our main focus has been on producing resources. We are now refocusing on delivering solutions for customers as we transform into an integrated energy company. And at the same time, as we transform, this has to be a decade of delivery for everyone connected with this company. We want to deliver for our customers, our suppliers, our partners and our employees. We want to deliver for the people who own and invest in this company. And we want to deliver for the countries and regions around the world we support and serve. We want to help cities like Houston and Aberdeen with their own decarbonization ambitions, and we want to help governments that set Net Zero goals and back them and their low-carbon policies. One debate here in the U.K. at the moment is around bringing forward the phaseout of sales of new petrol and diesel cars. We support that phaseout in the U.K. and believe it can and should be brought in sooner than 2040. Now whether that's 2035, 2032 or 2030, we're up for it. And importantly, up for the measures and supporting policies to boost electrification and hydrogen in transport that would make it possible. Looking back over the past few weeks, we've been heartened by the response to our plan. And I would like to thank everyone who took the time to share their views with us. Understandably, there were a few concerns, some skepticism and even a few myths. And we hear that. And it is why we wanted to create an opportunity to share the strategy in much more detail and to answer the many questions we know that you have. We also wanted to make this a different kind of event, open to everyone over the next 3 days, while still meeting the needs of those who invest in us and those who inform and advise the capital markets, and we will publish all of the presented materials online. [Operator Instructions] We want and need to take time to listen to everyone, those who can help us learn more, those who can help us improve our plan, those who are prepared to support and champion us as we transform. And that is what this week is about. It's about earning your confidence and your support. And we'll do our very best to make this time as useful to you as possible. Tomorrow and Wednesday are focused on delivery, and you'll hear from the people responsible for delivering the strategy, my colleagues on the leadership team. Today is a little different. We will focus on the work that has shaped our thinking and which guides our actions. You'll hear from Giulia, our Head of Strategy and Sustainability, about our new sustainability frame. The guide rails within which we intend to reimagine energy so that we do so for the good of the planet and in a way that improves people's lives. You will hear from Kerry, our Head of People and Culture, about how we're reinventing BP in a way that unlocks the amazing potential of our people. But first, we're going to hear from Spencer Dale, our Chief Economist. Normally, Spencer publishes the BP Energy Outlook in February. This year, we asked him to delay it. His team's analysis of the future energy landscape has shaped the core beliefs that, in turn, have informed the strategy we announced last month. With hindsight, the delay has also allowed for the impact of the COVID-19 pandemic to be factored into the outlook. I want to make 1 thing very clear, though. Our strategy is informed by the Energy Outlook. The outlook is not informed by our strategy. It is the same objectively researched and documented product as it has been every year for the last 10 years. So with that, let me hand you over now to Spencer for this year's launch of the BP Energy Outlook.

Thank you, Bernard. Good afternoon, good morning, good evening, everyone. And let me add my welcome and thanks to you all for joining BP Week and for the launch of this year's Energy Outlook. There are lots of differences to this year's outlook, not least, this launch venue in a very high-tech film studio. I'm not sure the basement within BP's offices that we normally use will have quiet feel the same again. Bernard, please note, and I'm missing the crowd of familiar faces that normally join me for the launch. I know watching online is not the same, but do stay with us. The issue surrounding the energy transition are hugely interesting and have never been more important. [Operator Instructions] And as we did last year, as part of the Q&A session, we plan to conduct a poll of your views about the energy transition. So stay tuned for that as well. Despite all these changes, 2 aspects of the outlook remain the same. First, the Energy Outlook is still very much a team effort. That includes the other members of the economics team who've been stretching Zoom to its very limits in recent months as well as a host of BP colleagues from far and wide who have contributed their expertise. The economics team holds a pen, but the insights come from right across BP so a huge thanks to all those involved. Second, the purpose of the outlook has not changed. In particular, the role of the Energy Outlook is not to predict or forecast how the energy system is likely to change over time. All the scenarios discussed in this outlook will be wrong. We can't predict the future. Moreover, we know we can't predict the future. Rather, the role of the outlook is to help better understand the range of uncertainty we face. These developments seem pretty similar across a range of scenarios and which are highly dependent on the precise policy or technology assumptions made. Improving our understanding of this uncertainty is important input into designing a strategy that is robust and resilient to the range of different outcomes we may face. As Bernard said, that's why we're launching this year's outlook as part of BP Week, which is looking in-depth at BP's new strategy. A key part of BP's new ambition is also to help the world get to Net Zero. In that context, I hope this year's outlook will be of use to others who are seeking ways to accelerate the energy transition and get to Net Zero. So lots of new analysis in this year's bumper booklet. If we start to take a peek inside, and I promise that's the only Harry Potter trick I have for today. Much of the analysis is focused around 3 main scenarios, which explore the possible nature of the energy transition over the next 30 years. Rapid, showing here in orange, is based on a series of policy measures, led by a significant increase in carbon prices. So it's a carbon emissions for energy use fall by around 70% by 2050. And this scenario is broadly comparable to the Rapid transition scenario, included in last year's outlook. Net zero, in blue, assumes the policies in Rapid are reinforced by significant shifts in societal behaviors and preferences, which further accelerate the reduction in carbon emissions. The design of Net Zero is based on the view that there are limits to the extent to which a really accelerated energy transition can be driven solely by government policies. Government policies may need to be reinforced by shifting societal preferences. And as a name suggests, carbon emissions from energy use are almost entirely eliminated in Net Zero, falling by over 95% by 2050. And finally, business as usual, or BAU, shown in green, which assumes that government policies, technologies and social preferences continue to evolve in a manner and speed seen over the recent past. A continuation of that progress, albeit slow, is enough to cause carbon emissions to peak in the mid-2020s, but little progress is actually made in decarbonizing the energy system with carbon emissions by 2050, around only 10% below their current levels. BAU is broadly comparable to last year's evolving transition scenario. Primary energy demand increases over the next 10 to 15 years in Rapid and Net Zero before broadly plateauing as gains in energy efficiency accelerate. In contrast, energy demand grows over the entire outlook in BAU. In all 3 scenarios, the growth in energy demand is driven entirely by emerging economies as prosperity and living standards improve. In the main booklet, we describe how it's possible to compare these carbon pathways with a range of scenarios included in the 2019 IPCC report, where the pink swathe here shows a range of IPCC scenarios judged to be consistent with maintaining intemperate rises well below 2 degrees C. And the blue swathe, the range scenario is consistent with maintaining temperature rises below 1.5 degree C. And as you can see here with Rapid, is broadly in the middle of that pink 2.5-degree range throughout the next 30 years. For Net Zero, the initial pace of decline in carbon emissions is a little bit above the 1.5-degree swathe but it falls to the lower half of that blue 1.5-degree swathe by the end of the outlook. As always, the full booklet contains lots more than I can do justice to today. So if today's discussion whet your appetite, please do go online and delve deeper. Today's discussion is built around 8 questions. Although there are many, many questions surrounding the energy transition, most of my discussions with Bernard and Giulia and rest of the strategy team over the past year as a new strategy has been developed, have revolved around these 8 questions. In a world of huge uncertainty, what do we know about how the energy system might change? How might the coronavirus pandemic affect the outlook? What are the prospects for oil demand and how they shaped by the mobility revolution? What role could natural gas play in the energy transition? Just how quickly will renewable energy grow over time where the options seem to be somewhere between really quick and really, really quick? How with the growing importance of electricity and power market shape the energy transition? What role for hydrogen and bioenergy as the world moves to a low-carbon energy system? And finally, what are the potential dangers and costs of delaying the energy transition? [Technical Difficulty] I'm very sorry. You would have realized we've been having some technical details. We're now back. The moral of the story is that basement room actually turns out to actually be quite a lot better than fancy studios. So Bernard, remember that for next time, I think. I've been carrying on presenting, thinking it was all going fine. And then we suddenly realized that, in fact, it was slipping. So I apologize and while we're going to go back to just so in terms of, I'm not quite sure what stopped where. So I've just listed those 8-questions. And I'm going to start from thinking about that first question. And that first question to remind you is, what do we know about how the energy system may change. Now one way into this question is to consider changes in the energy system, which are common across all 3 of the scenarios. Although the 3 scenarios, Rapid, Net Zero and BAU are by no means comprehensive, they do span a wide spectrum of possible transition parts and outcomes. As such, if some features of the energy system are common across all 3 scenarios that may give us some confidence that they might materialize in some shape or form. In that context, 3 features, in particular, are worth highlighting. First, the role of fossil fuels, coal, oil and natural gas declines overtime, falling from around 85% of primary energy today to between 60% and 65% and 20% across these 3 scenarios. In all 3 scenarios, this corresponds to a decline in the absolute demand for fossil fuels over the next 30 years. That will be entirely unprecedented. In the modern history of energy, there has never been a sustained decline in the consumption of any traded fuel. The shares of coal and oil have declined over time but not their absolute levels of consumption. That changes in all 3 scenarios. Second, the growth in primary energy is dominated by renewable energy, which for the purposes of the outlook, includes wind, solar, geothermal and bioenergy, but excludes hydroelectricity. The share of renewables in primary energy grows from around 5% today to between 20% and 60% in the 3 scenarios. In doing so, renewables in all 3 scenarios, including BAU, penetrate the energy system more quickly than any field in modern history. Again, unprecedented development common across all 3 scenarios. Third, the growth in renewables is supported by the increasing role of electricity as the world continues to electrify, with a share of electricity in total final consumption again growing in all 3 scenarios. Three features of energy demand apparent in all 3 scenarios: a decreasing role for fossil fuels, increasing share of renewable energy, supported by the growing electrification of the energy system. Another way into this question of what do we know, rather than identify common trends, is to ask how the structure of the energy system may change if and when there is a sustained transition to a lower-carbon energy system. To do this, we can focus on how the energy system evolves in Rapid, which, remind you, is broadly consistent with maintaining temperature rises well below 2 degrees C. The point here is not to focus on the precise profiles in Rapid, since these will vary across different scenarios. Rather, I want to highlight some more generic features of how the energy system might evolve if and when there is a material transition to a lower-carbon energy system. Now the eagle-eyed amongst you may have spotted that this chart starts in 1900. So it's covering a wide span of history. The point of doing so is to highlight how, for much of modern history, the global energy system has tended to be dominated by a single energy source. For the first half of much of -- the first half of the last century, much of this was dominated by coal shown here in black. And as black declined, you saw an increasing role for oil, shown here in green. In contrast, the energy transition in Rapid means that for much of the next 20 years, the global energy mix is far more diversified than previously seen, with oil, natural gas, non-fossil fuels, renewables and coal, all providing material parts of the energy system. This greater variety of fuels mean that the mix is likely to be increasingly driven by customer choice rather than fuel availability, which has been the dominant driver for much of the past 100 years. This more diversified fuel mix will also increase the need for integration across different energy sources and carriers. Linking back to the previous chart that the growing differentiation is further enhanced in Rapid by the increasing importance of electricity and, to a lesser extent, hydrogen. These energy carriers are more costly and inefficient to transport long distances than traditional hydrocarbons, causing energy markets to become more localized. The increasing diversification of the fuel mix also leads to greater competition, both across different forms of energy as they compete for market share and within individual fossil fuels, as resource owners compete to ensure their energy sources are produced against a backdrop of falling demand. This heightened competition increases the bargaining power of consumers with economic rents shifting away from traditional upstream producers. To repeat, the precise timing and extent of these changes will vary across different scenarios. There's nothing special about Rapid. But a transition to a lower-carbon energy system, if and when it happens, seems likely to be characterized by at least some of the generic features highlighted in Rapid: a more diversified fuel mix driven by customer choice, supported by increasing levels of integration across fuels, increasingly localized energy markets, and growing competition with economic rents shifting away from the upstream. That's what I wanted to say on this first question. Turning to the next question. How has COVID-19 affected the outlook? The COVID-19 pandemic is primarily a humanitarian crisis, with the reported death toll as of now exceeding 900,000 people. The fact that the number of new cases continues to increase, and there's still no generally approved vaccine means that any assessment of the ultimate impact of the virus on the economy and the energy system is obviously very preliminary and highly uncertain. The central view used in all 3 scenarios, shown here for Rapid, is that economic activity partially recovers from the impact of the pandemic over the next few years as the virus is brought under control and restrictions are eased, but some effects persist. The pandemic is assumed to reduce the level of global GDP by around 2.5% in 2025, increasing to around 3.5% in 2050. These economic impacts fall disproportionately on emerging economies, particularly India, Brazil and Africa, whose economic structures are most exposed to the economic fallout from COVID-19. Energy demand is assumed to be reduced by around 2.5% in 2025 and 3% in 2050. The majority of this impact stems from the weaker economic environment. But there's also an assumed impact from the various behavioral changes triggered by the pandemic as people travel less, switch away from public transport into alternative modes of travel and work from home more frequently. Many of these behavioral changes are projected to dissipate over time as the virus subsides and public confidence is restored. But some changes, particularly increased working from home, are assumed to persist. As shown here in these green bars, the impact from the virus are most pronounced on oil demand, reducing oil consumption by around 3 million barrels a day in 2025 and 2 million barrels a day in 2050. The greater impact on oil demand largely reflects a disproportionate impact of the virus on emerging economies, which is the principal source of oil demand growth over the outlook, and, to a lesser extent, the impact of the behavioral changes, which are concentrated in the transport sector. Although the assumed impacts from COVID-19 don't change the fundamental shape of any of the scenarios, 3 other points are worth highlighting. First, the impact of COVID-19 on oil demand means that in both Rapid and Net Zero, the level of demand never recovers to its pre-crisis level. As such, the pandemic has the effect of bringing forward the implied peaking in oil demand to 2019 in both Rapid and Net Zero. The same is also true for the profile of carbon emissions from energy use, which also peaks in 2019 in both Rapid and Net Zero. Second, there is considerable risk that the impact from coronavirus may be greater than a central assumption. The main book that considers an alternative case shown here in the chart on the right, in which COVID-19 reduces the level of global GDP by 4% in 2025 and by almost 10% in 2050 with correspondingly bigger impacts on the demand for energy. Third, it's possible that the fragilities exposed by COVID-19, together with a growing commitment to build back better, supported by unprecedented levels of government intervention, may help to accelerate the energy transition. That possibility is not explored explicitly in the outlook, which doesn't attach weight to the different scenarios. But if that were the case, the impact of COVID-19 on the future energy system could be far more substantial. The third question concerns the outlook for oil demand and how that might be affected by the mobility revolution. Oil demand falls over the outlook in all 3 scenarios. This decline is most pronounced in Rapid and Net Zero shown here, where -- in which after peaking in 2019 at close to 100 million barrels a day, oil demand by 2040 -- by 2050, falls to a little below 50 million barrels a day in Rapid and to around 25 million barrels a day in Net Zero. The outlook for oil consumption in BAU, shown here in green, is more resilient with demand recovering to around its pre-COVID levels where it remains for the next 10 to 15 years before gradually edging down over the last 10 or 15 years or so to around 90 million barrels a day by 2050. The scale and pace of these falls stems primarily from the increasing efficiency and electrification of road transportation. With the declining use of oil within road transport, shown here by these 2 blue bars for the 3 scenarios, accounting for between 50% and 60% of the total reduction in oil demand in Rapid and Net Zero and an even greater proportion in BAU. If we dig a little deeper into the role of electrification, the electrification of road transportation is most pronounced in Rapid and Net Zero, supported by ever tightening vehicle efficiency standards, higher carbon pricing and especially within Net Zero, a further shift in societal preferences towards electric vehicles. By 2050, upwards of 3/4 of all kilometers traveled by passenger cars and trucks are electrified in Rapid and Net Zero. Even in business as usual, over 25% of road transportation is electrified in 2050 compared with less than 1% today. On the passenger car side, the steep rise in electrification of road transportation from the early 2030s is driven by the interaction of electric vehicles with shared mobility and autonomous vehicles, the 3 elements combining to revolutionize the mobility sector. The emergence of fully autonomous vehicles from the early 2030s in Rapid and Net Zero, significantly reduces the cost of shared mobility services, causing consumers to shift away from public transport and private vehicles into these so-called robo-taxis, think fully autonomous Uber or Didi. Now the important point here is that the vast majority of these robo-taxis are electrified. That partly reflects the lower running costs of electric vehicles, which really matters for robo-taxis since they are driven far more intensely than privately owned cars. It's also supported by the improved air quality associated with electric vehicles, especially in major cities and towns where the use of robots -- robo-taxis is concentrated. And as you can see here from the chart on the right, the increasing competitiveness of robo-taxis, combined with a greater intensity of use, means that by the early 2040s in all 3 scenarios, they account for around 40% to 50% of passenger cars -- passenger vehicle kilometers powered by electricity. The nature of the mobility revolution, particularly with the emergence of autonomous vehicles, means electrification is likely to go hand-in-hand with increasing importance of shared mobility services. That's the interaction of oil demand with the mobility revolution. The next question concerns the role that natural gas might play in the energy transition. The outlook for natural gas is more resilient in all 3 scenarios. Take, for example, the outlook in Rapid shown here in orange. You may recall that oil consumption in Rapid peaked in 2019 and fell by around 50% by 2050. In contrast, consumption of natural gas in Rapid continues to grow for the next 15 years or so before gradually edging back to just below its current levels. This more resilient outlook for natural gas reflects 2 main components. First, the role of natural gas in supporting a shift away from coal in fast-growing developing economies, particularly in Asia over the next 15 years or so. And second, the role of natural gas when combined with carbon capture, use and storage, CCUS, as a source of near-zero carbon energy as the world increasingly decarbonizes. Let's take these 2 components in turn. The role of natural gas in supporting a shift away from coal stems from the possibility that renewables and other nonfossil fuels may not be able to grow sufficiently quickly to replace coal on their own, at least in the short to medium run. This may particularly be the case in emerging economies in which energy demand is growing quickly, making it hard for nonfossil fuels to both meet the growing new demand and replace the existing coal. In these situations, natural gas may also need to increase for a period to help fill the gap left by coal. This next chart illustrates this supporting role. The idea of the chart is to consider the role of gas in a scenario in which there's an accelerated energy transition, such as in Rapid, compared with a slower transition like BAU. And the chart focuses on India and other parts of developing Asia, where energy demand is growing quickly, and so there is greatest need for this supporting role. The chart compares how the shares of different types of energy evolve in Rapid relative to those in BAU. In particular, the black line here shows how the share of coal in Rapid declines far more quickly than in BAU, these negative numbers, reflecting the faster pace of decarbonization. A similar but less pronounced trend is also seen here for oil, shown in green. Much of this decline in the growth of coal and oil is offset by faster growth in the share of renewables and other nonfossil fuels, shown by the blue line here. Indeed, renewable energy increases more than 30-fold by 2050. But even that is not enough to fill all of the gap left by coal and oil. And so the share of natural gas, shown here in red, also increases, particularly over the first half of the outlook. To put these movements in context, natural gas demand in India and Asia -- and other Asia more than doubles over the first 15 years in Rapid, accounting for around 2/3 of the global growth in demand over this period. So the boost to natural gas from this supporting role in scenarios like Rapid, in which there's a relatively fast energy transition, can be quite substantial. The second component underpinning the relative resilience of natural gas is that its increasing role as a source of near-zero carbon energy when combined with CCUS. By 2050, around 40% of the natural gas consumed in Rapid is used in conjunction with CCUS, capturing over 2.5 gigatonnes of CO2 emissions. This year is even higher in Net Zero, with around 3/4 of natural gas used in conjunction with CCUS. And as you can see in the chart on the right, natural gas used with CCUS accounts for between 8% and 10% of primary energy in 2050 in Rapid and Net Zero, providing near-zero carbon energy, both directly to the industrial and power sectors, and indirectly via the production of blue hydrogen. Now I'm going to come on and say more about hydrogen in a moment. But before I do, I want to turn to the fifth question, just how quickly will renewables grow over the next 30 years. The focus here is on renewable energy using the power sector, which includes wind and solar power, biomass and geothermal. As I mentioned at the outset, renewable energy increases sharply in all 3 scenarios, led by wind and solar power, shown here in the blue and yellow bars. As shown here on the chart on the right, the strong growth is underpinned by continuing pronounced falls in the cost of wind and solar energy as they move down their learning curves, with solar costs shown here in this bottom set of 3 lines, close to falling by 60% or more in all 3 scenarios over the next 30 years. This Rapid growth in wind and solar power generation is made possible by a significant acceleration in the development of new wind and solar capacity. As you can see from this chart here, the growth in new capacity is particularly pronounced in Rapid and Net Zero over the first half of the outlook, with increases in new capacity averaging close to 350 gigawatts per year in Rapid and approaching 550 gigawatts per year in Net Zero. That compares with record increases seen in recent years of around 150 gigawatts, so a pronounced acceleration. And this sharp slowing we see in the rate of build-out in the second half of the outlook in those 2 scenarios, reflects an easing in the pace at which wind and solar penetrate the power sector as the intermittency cost associated with their increasing use grows. Although the pace of new capacity development in BAU, shown in green, is less dramatic, average increases, average around 200 to 300 gigawatts per year over the outlook, again, still significantly greater than recent build-out rates. So all 3 scenarios pointing to a significant pickup in the pace of wind and solar development. This faster pace of build-out, in turns, implies a significant increase in the level of investment needed to finance this development, shown here in the chart on the right. The average investment in wind and solar capacity in Rapid and Net Zero is between $500 billion and $750 billion per year. That is several times greater than recent investment levels in wind and solar and also considerably higher than the levels of investment in upstream oil and gas in these 2 scenarios. These levels of investment in wind and solar power may seem eye bogglingly high at first. But it's worth noting they are roughly equivalent to only around 3% of total global business investment last year. So they are perfectly achievable if there's sufficient, collective will and support. And there is more analysis of the investment implications of the different scenarios in the main booklet, so please do check that out. The strong growth in renewable energy goes hand-in-hand with increasing electrification of the energy system, which is the focus of the next question. As I mentioned earlier, the share of electricity in total final energy use increases in all 3 scenarios. What's also striking, shown here on the chart on the right, is that the increase in electricity demand is very similar in all 3 scenarios, growing around -- by around 80% over the next 30 years. Strong growth in electricity in all 3 scenarios. In terms of the power sector, generating this electricity, the key common shift in all 3 scenarios is a shift to a lower-carbon energy mix, driven by wind and solar power, shown here in orange, gaining share relative to coal, in black. So you can see in all 3 scenarios, this increasing share of renewable power, offset by declining share in coal. This shift in the fuel mix underpins the strong growth in renewables we just spoke about. Moreover, it plays a crucial role in decarbonizing the entire energy system. A move to greater electrification, be it in transport or heating or industry has little benefit if the energy used to generate that electricity is not decarbonized. The carbon intensity of power generation in Rapid falls by 90% by 2050 compared with just 50% in BAU. Indeed, in BAU, the power sector remains the largest single source of carbon emissions over the entire outlook. In contrast, in Net Zero, the increasing use of bioenergy combined with CCUS, so-called BECCS, means that CO2 emissions for the power sector are net negative by 2050. The shift towards an ever-increasing share of wind and solar power begins to flatten out in the 2040s. You can see -- in both Net Zero and Rapid, you can see just the pace at which the shares are increasing starting to flatten out. And this reflects the costs associated with managing the associated intermittency rises. Batteries play an increasing role in managing this intermittency. But it's important to remember that balancing issues don't just arise over very short-term intervals: seconds, minutes and hours. They also concern much longer periods across days, weeks and importantly, seasons. Batteries, at least based on current technologies, are less well-equipped to deal with managing these longer frequencies. And so as this diagram tries to convey, as the importance of wind and solar power increases in different power systems, a variety of technologies and responses to balancing the energy system and ensuring the availability of firm power are likely to be needed, including hydrogen, bioenergy and natural gas with CCUS. So the increasing use of electricity and the changing mix of power generation likely to play a central role in shaping global energy markets over the next 30 years. Thinking about the essential characteristics of a low-carbon pathway, decarbonizing the power sector and electrifying and energy use are core components. But not all activities can be easily or efficiently electrified, meaning there's a role for other types of energy and energy carriers in a low-carbon system, including hydrogen and bioenergy, which is a focus of the next question. The use of hydrogen as an energy carrier increases significantly in the second half of the outlook in both Rapid and Net Zero. The role of hydrogen in Business-as-usual is far more limited, and so I haven't included it on these charts. Hydrogen complements the increasing electrification of the energy system in Rapid and Net Zero by providing energy to activities which are difficult or costly to electrify, including high-temperature processes in industry and long-distance transportation, particularly heavy-duty trucks. By 2050, hydrogen accounts for around 6% of total final energy consumption in Rapid and over 15% in Net Zero. The production of hydrogen in both scenarios is dominated by so-called green and blue hydrogen. In the outlook, all the green hydrogen is assumed to be made by electrolysis of water using renewable power. The blue hydrogen is mainly extracted from natural gas, combined with CCUS. By 2050, there are broadly equal amounts of blue and green hydrogen in both scenarios. Importantly, the production of blue hydrogen helps overall global supplies of hydrogen to grow relatively quickly without relying too heavily on renewable energy. This matters for 2 reasons. First, relying exclusively on green hydrogen would require an even faster expansion in wind and solar capacity. This is a chart I just showed you about -- I just showed you a moment ago, showing the sharp acceleration in wind and solar capacity in all 3 scenarios. In the extreme case in which all hydrogen was produced using wind and solar power, to achieve the same production of hydrogen as in Net Zero would require even faster growth of wind and solar capacity, shown here by this blue bar. So this is how much wind and solar capacity would have to grow to achieve that same level as hydrogen as in Rapid. The general point here is that relying too heavily on green hydrogen could constrain the pace at which the hydrogen economy can grow. Second, the production of green hydrogen diverts renewable energy that could otherwise be used to decarbonize the electricity used in everyday uses. This is important, given that the vast majority of domestic power sectors are not fully decarbonized over the first 20 years or so of the outlook. The shift away from fossil fuels and towards a low-carbon energy system in Rapid and Net Zero also leads to an increasing role for bioenergy. The bioenergy takes several different forms with biofuels, used mainly in long distance transportation, doubling or more in the 2 scenarios: biomethane, increasingly used as a direct substitute for natural gas, accounting for between 6% and 10% of total gas consumption by 2050 in Rapid and Net Zero; and biomass, used predominantly in the power sector. By 2050, bioenergy accounts for around 7% of primary energy in Rapid and close to 10% in Net Zero. Our final question concerns the dangers of delaying the start of a decisive transition to a low-carbon energy system. Rapid and Net Zero both assume that governments and society begin to change policy and behavior relatively quickly such that carbon emissions from energy use start to fall over the next few years. But in reality, there could be an extended delay before these types of changes are implemented, with the world continuing on its current unsustainable path. This possibility is explored in an alternative Delayed and Disorderly scenario, in which global energy system is assumed to move in line with BAU until 2030 -- you can see it here moving in line for the first 10 years with BAU -- until sufficient policies and actions are undertaken, so cumulative carbon emissions over the entire outlook are the same as in Rapid. This assumed target for cumulative carbon emissions reflects the existence of a finite carbon budget, which implies that continuing high levels of emissions in the near term have to be compensated for at a later date. And you can see this in the red line here in this chart. So the continuing high levels of carbon emissions over the first 10 years of the outlook when the world continues in line with Business-as-usual and then offset by carbon emissions falling below Rapid in the second half of the outlook. Delayed and Disorderly is based on the view that the longer the world continues along an unstable path, the greater the likelihood that societal pressures will grow, triggering a decisive change. To paraphrase the late great German economist, Rudi Dornbusch, "The energy transition can take much longer to come than you think, but then happen much faster than expected." The scenario is obviously very stylized since the nature of any delayed transition path will depend on the factors triggering the eventual change and the subsequent response of government and society. But importantly, the scenario is based on the assumption that it's not possible to make greater progress in energy efficiency or fuel switching by 2050 than is achieved in Rapid. The significance of this is that there are real costs to delay. If the required reductions in carbon emissions cannot be met through energy efficiency or fuel switching, the only other way they can be achieved in this scenario is via widespread energy rationing. That is policies which stop or restrict any energy-using outputs or activities, generating significant economic costs and disruption. Now in reality, other options may be possible other than outright rationing, such as various negative emissions technologies. But the general point here is that the existence of a finite carbon budget means that the longer the world continues on an unstable path and decisive action is delayed, the more costly and disruptive the eventual pathway is likely to be. The famous adage by Rudi Dornbusch was based on an earlier observation from the American Economist Herbert Stein, which states that, "If something cannot go on forever, it will stop." When applied to the current unsustainable path of the global energy system, Stein's law has pretty clear and important implications. Sometimes the simplest observations can be the most insightful. That's all I wanted to say on the 8 questions in this whistle-stop tour of the new Energy Outlook. To conclude, this year's Outlook has changed in several respects. It's been extended to 2050 to include the period in which, at least in some of those transit scenarios, the pace of transition really accelerates. And the range of scenarios explored in detail has been expanded to help build a clearer sense of the range of uncertainty surrounding the future of the energy system. That span of uncertainty and common trends across the scenarios have helped to inform some core beliefs that underpin BP's new strategy, core beliefs as to how the structure of energy demand may change over the next 30 years, with the role of fossil fuels diminishing, offset by the increasing importance of renewable energy and electricity; and core beliefs as to how the structure of energy markets may evolve as the world transitions to a low-carbon energy system, with a more diverse energy mix, greater consumer choice, more localized energy markets and increasing levels of integration and competition. Bernard, Giulia, and the rest of the leadership team will be coming back to those core beliefs over the next few days as they discuss the strategy in more detail. I've been able to provide only a brief glimpse of the analysis in this year's outlook. So if you have time, please do take a look at the full booklet. And also, please let us know what you think. We are very aware of the huge uncertainty surrounding the energy transition and the future of energy markets. So any feedback on the analysis, and -- even better -- how it could be improved, would be very welcome. Okay. Now for the fun bit in terms of trying to answer some of your questions provoked by today's discussion. To help host this session, I'm going to be joined by my colleague, Kate Arbuthnot, who helps develop new business opportunities for BP in the Eastern Hemisphere. I first met Kate at last year's One Young World event, where Kate is an ambassador. If you're not aware of the One Young World event, it's an amazing event and really worth checking out, especially if you're ever in need of an injection of energy and positivity. Unbelievable. Kate helped out at last year's One Young World event and very kindly agreed to do the same again today. So we're going to take a very short break now because I need to walk across the studio to the other part of the studio where we're going to do the Q&A, where Kate is waiting, and then we're going to pick up your Q&A. In the meantime, please do keep submitting your questions. And we'll come back to answer those next. Thank you very much. [Break]

And we're back. Apologies again for the technical hitches, we're going to get better over the next 3 days, I promise. I've been joined by Kate, who I said, is going to help us on the Q&A. I actually have a physical copy of the booklet, just to prove it wasn't just a virtual one and the pages don't slip out, okay? I need no dip -- did all the technical hitches mess up the Harry Potter or we still get the Harry Potter moment?

Sort of.

Okay. Just before we start into the Q&A, we also get -- we're going to start the poll. Some of you may recall, we did this last year where we asked you your views about the energy transition. The answers we're fascinating. So we're going to do the same again today. The poll will be open until about 5 minutes before the end of this session, and then we'll come back and show the answers before we wrap. So 3 questions, we want to get your views on today. First, will COVID-19 make the pace of the energy transition faster, slower or largely unchanged? That's question one. Question 2, out of the 4 scenarios I presented to you today: so Rapid; Net Zero; Business-as-usual; and delayed in disorderly, which do you think is most likely to happen? So which of those 4 scenarios do you think is most likely to happen? And finally, question 3, of those 4 scenarios presented, what would you most like to happen? So they are the 3 questions. On your screen now, hopefully, is the URL for you to join the poll. And for those of you are significantly younger than me also a QR code if you know how to use that as well. Please do go online. It should only take a couple of minutes. And as I say, we're going to close it just before the end of the Q&A, and then we'll show you the results. So that's all that. Now for the questions, and over to you, Kate.

Perfect. Thank you very much, Spencer. So first to say, we've had hundreds of questions. But we've got a team at the back who are updating it constantly as the live ones come in, so please do submit your questions. And Spencer, the first question that we've had is, as BP looks to further renewable energy substitutes, are their limits to growth for renewables?

So as I just was saying, we see a really strong growth in the pace of renewables, with renewable energy accounting for around 3/4 of the growth of energy -- power generation in business-as-usual and more than the entire growth of power generation in Rapid and Net Zero as it's gaining share from coal, and in doing so, wind and solar power and renewable energy, gaining -- penetrating the energy system more quickly than any fuel ever seen in history. And we showed that analysis in quite a lot of detail last year in the Energy Outlook, if you want to probe more into that question. So we see a really bright future for renewable energy. I think there are limits, though. And I think I'd perhaps point to 3 things. First is that point I was just showing you about how the pace of which renewable energy may start to flatten off as they start to get to levels in our analysis, sort of, much more than 60%, 65% for wind and solar. So overall, renewables more. But once wind and solar starts to get to 60%, 65%, the cost of that intermittency rises, and that sort of dampens that growth. A second point here is we will need to see significant levels of investment, as I've shown you, those sort of mind-boggling numbers of between $500 billion and $750 billion per year in Rapid and Net Zero. Now those numbers aren't huge compared to total business investment, that was a point I was making. But much of that investment will be needed in developing world is the emerging markets account for the majority of growth of renewables in all 3 scenarios. They're the same emerging economies, which are likely to be significantly hit by COVID. So the willingness of capital to flow into those economies, I think will be a second issue to think about. And I think, thirdly, I think, increasingly, as we go forward over the next 10, 15, 20 years, we're going to all become more aware of the physical presence of power as we see more power stations, we see more wind farms, we see more solar farms as well. And I think part of the issue here is society accepting that greater physical presence of those energies. And one of the issues that we highlighted in Net Zero, why you're able to get an even faster energy transition, is the fact that society embraces these changes as part of that transition to a lower carbon and cleaner world. So the future for renewables is extraordinarily bright but some of these things may just sort of pay that may -- mainly it's rather than really, really, really quick, just really, really quick.

Thank you, Spencer. The second question we have is from [ Andre Roman ]. Apologies for the pronunciation, he's from Canada. And so Andre's question is, how do you see the competitiveness and adoption of the blue hydrogen-based economy versus renewables-based green hydrogen?

So all these colors of hydrogen get really complicated. The Blues, green has also grays and depending on who you speak to there's lots of variety of other colors as well. The Energy Outlook, we framed it into terms of these 2. So blue hydrogen, largely coming from extracting the hydrogen from natural gas, combined with CCUS. And the second one, green hydrogen, and which in the Energy Outlook is based largely from renewable power using electrolysis of water. We start from a position today that in most countries, blue hydrogen starts at a cost advantage relative to green hydrogen. But over the next 20, 30 years, we think green -- the costs of green hydrogen are likely to fall more sharply than blue hydrogens. So in our analysis, for some key countries, we have the cost of green hydrogen falling by 60%, 65% over the next 30 years. That pull forward in the cost of green hydrogen, coming both because renewable power -- the sort of the power source getting cheaper, but also electrolysis, the underlying technology, also the cost of electrolyte is coming down. And as you see -- as the cost of green hydrogen falls Rapidly than blue hydrogen, we see an increasing share of green versus blue. So by the end, although broadly equal, it's actually green hydrogen is accounting for slightly more than blue. So both are playing a role. And I think the other point to emphasize is a point I tried to emphasize in the presentation. That role of blue hydrogen means it takes the pressure off of the green hydrogen. And my sort of instinct in nearly all aspects of the energy transition is if we try and find a single energy source or a single type of technology to solve all the problems, we're putting too much weight on one thing. If we want the hydrogen economy to grow, which we need to grow to complement electricity, I think what we need is both of these sources of clean hydrogen, blue and green, working together and expanding together.

Okay. So really -- so some of the hydrogen, it's taking the pressure off the renewables, really, having those types of...

Yes, indeed.

Okay. That's clear. And Andrew, I hope that answered your question. The next one we have is from [ Patrick Jankowski ]. He's based in the U.S.A. And so Patrick's question is, have we already reached peak demand for oil?

So peak oil demand. I sort by instinct, and then press office people always worry when I say this. But my sort of instinct on trying to predict the timing of peak oil is, I don't know, and I don't think it really matters. So let me explain why I don't know, which is perhaps a worry for Chief Economist of BP and why I don't think it matters. On the don't know, I showed you 4 scenarios today if we include delayed and disorderly, 2 in which oil demand has peaked and 2 in which it hasn't. So we don't know. And if it has peaked within Rapid in that 0, the reason why that's peaking has happened is the impact of COVID. It's brought forward oil demand, which may have peaked is on the mid-20s, and has brought it forward because of that impact of COVID and oil recovery. So I don't know. The second question -- the second thing is, why don't I think it really matters. I think there's 2 points here. First, when we're setting a strategy for BP, and I'm talking to Giulia, and I'm talking to Bernard, we're not out setting the strategy based on when oil demand peaks, when that first derivative oil demand goes from a small positive number to a small negative number. What we're trying to do is think about a range that we face for oil demand over the next 10 or 15 years. And so you think about that picture I showed you earlier, you have a range for oil demand where oil demand goes back up to its pre-COVID levels and a little bit higher and stays around that level for the next 10 years or so. And the alternative is it carries on declining and falls by around 10 million barrels a day over the next 10 years. And so when we're thinking about -- when I think about the strategy, that's the sort of range I'm trying to think about. I think we need to set a strategy, which is good for a world where oil demand is sort of rising back up above pre-COVID levels and staying there and another one where it's falling off by that 10 million barrels a day. That's what sort of resilient strategies are, not trying to pick whether it's 1 year or another year. The second point why I don't think, Patrick, this is so, so important is, sometimes people think that once oil demand peaks, somehow demand goes away and vanishes. That's clearly not the case. In all the scenarios I showed you, oil demand remains a central part of the energy system for the next 10, 15 years. And in the outlook, in the investment section, we showed that the levels of investment needed in upstream oil and gas are between $10 trillion and $20 trillion over the next 30 years. So even if we do see peak oil, oil is going to play a critical role in our energy system for the next 10 or 15 years requiring significant levels of investment. Sorry, that's a very long answer about why I don't know and why I don't think it matters, which I thought I needed to because Bernard's watching, he may worry if I don't know or say it don't matter. So a long answer to your question.

Okay. Perfect. Thank you. So the next question we have is from Jonathan Webster in the U.K. and this is a question which actually I've wondered about a lot. So thank you, Jonathan, for asking it. So it's, what role will bioenergy play globally in general and specifically, outside of Brazil?

So thank you, Jonathan. And so as I was just saying, we see an increasing -- an important and increasing role for bioenergy. As the world moves away from fossil fuels, providing alternative sources of energy. And it's coming in 2 or 3 different places. One, biofuel, where those fuels can be used in long distance transportation, marine, aviation, place -- bits of the energy system, which are hard to electrify and where -- so where there's a role for decarbonization. Biomethane, which is like a direct substitute for natural gas. And so you can start to mix biomethane with natural gas and so start to decarbonize the gas, which is being used in industry and in our houses. And also biomass, where one of the really exciting aspects of biomass is when used in the power sector, if you use biomass combined with carbon capture use and storage, it produces a negative source of power, which is why we get sort of this net negative, why the power sector in net zero has net negative emissions. So contributing to offsetting emissions in other parts of the world. Brazil, I think, is sort of like the Saudi Arabia of bioenergy. It is extraordinarily blessed with tremendous amounts of bioenergy. And we -- and as I'm sure you know, we have a very significant business in Brazil by producing biofuel. So I think when I see there are bio -- potential sources of bioenergy around the world, and I think they're going to become increasingly important as we shift to a lower carbon energy system. But Brazil, extraordinarily blessed in terms of the resources that it can offer in terms of bioenergy, and we're very excited with our partnership in Brazil. We've been in Brazil an awful long time, and I think we continue to expect to be there for an awful long time, too.

Thank you. Our next question comes from [ Jengo Lee ] based in China. And Jengo's question is, how will the wave of deglobalization affects the energy transition?

Jengo, thank you very much for your question. I think deglobalization is becoming an increasingly important issue. We actually had some analysis in last year's outlook on deglobalization, which at that point, was sort of prompted by the sort of increasing levels of trade wars and concerns about how -- and how sanctions are being used and affecting trade. I think COVID has increased even more the focus on deglobalization as companies have reduced and shortened their supply chains. We see governments focusing closer at home, and I think we see countries around the world being less comfortable with being exposed to having to import certain absolute critical materials and energy being one of those. So in this year's outlook, we sort of again looked at deglobalization, we have a particular scenario or sensitivity analysis in the book, which I encourage you to look at. And that has sort of 2 features, that deglobalization scenario. One feature is a world that -- a world which is less open, with less trade, will tend to grow less quickly. There's always this joke about if you put 10 economists in a line and ask them a question, they will come up with 11 answers, okay? Economists never agree. But one thing they do agree on is that trade is good for growth. And so in this scenario where -- of lower deglobalization, we reduced the average growth rate of the economy by 1/10 or 2/10, not much, but 1/10 or 2/10. In addition, what we say is that countries which are importing energy are more concerned about energy security. They're worried about being dependent on their economy being out to grow and importing that energy. And so what we say is, just a way of trying to proxy this, we say, suppose they put a 10% risk premium on energy they import relative to that which they produce themselves. So with oil prices today at $40, this would say, in a world, they would be indifferent to importing at $40 or producing their own oil at $44 because that gave them the extra security. Now these are pretty small changes, okay, 1/10 or 2/10 of a growth, this 10% risk premium. The impact it has on the energy systems are really quite profound. And that's why sometimes these types of outlooks are really helpful. They just have all the oil thinking. In -- the overall level of GDP growth or GDP in this scenario is about 6% lower. That's just sort of the math associated with locking up that small growth rate, with energy demand around 5% lower. But what you see in particular is this impact of more concern about energy security really hits traded fuels, particularly oil and gas. And so what you see is, in China, China's imports of oil and gas are around 30% lower as a result of this -- just these small changes. And U.S. exports of oil and gas, about 50% lower. And so the impacts of why I found fascinating about this scenario was just these relatively small changes, we should note -- we should note and had to then say, they sound pretty reasonable, can have really quite profound changes on the structure of the energy system, and particularly in terms of traded fuels and the through of fuels that you're being traded. So thank you for the question. So I think deglobalization has become an increasingly significant topic, and it could have quite profound effects on the energy system.

Yes. Just a follow-up question for that. So we're expecting prices to generally increase? So will that be offset by the diversification of different sort of available energy resources?

Yes. I don't think it necessarily pans out to prices as such. I think in this scenario here, what happens is it encourages domestic production. So for -- in countries like China and India, which are the largest importers of energy, it encourages greater growth of renewables, so that's a good news story for the environment, but it also encourages greater use of coal because they have abundant elements of coal. So in some sense, there's -- the impacts for this on carbon and environment is somewhat mixed. It boosts those new entities in terms of renewable energy, but it also means that coal is more persistent. So to give you an example, one of the massive drivers of growth of natural gas demand over the last few years has been China, switching away from coal into natural gas in order to improve air quality in their cities, the so-called battle for the blue skies. If you're coming -- but much of that marginal a source of gas is imported gas. And if you're worried about being able to access that gas, you may be less keen to make that type of fuel switch. So that's the sort of the issue there.

Okay. That makes sense. Our next question comes from [ Arlin Lynch ]. He's based in Trinidad and Tobago. So Arlin's question is, what does this transition mean for the countries, usually in the developing world, whose economies depend on oil and gas export revenues?

Thank you very much, Arlin, for your question. I was in Trinidad and Tobago visiting our business there. I think it must have been the end of last year, and I was lucky enough to go to an evening T20 match, which was spectacularly good fun. So fond memories. I think this is an important question, Arlin, because it relates to that increasing competition story I was talking about during the main presentation. So as we see this shift to a lower carbon energy system, 2 things happening in terms of oil and gas. One is increasing competition across fuels. So you can see this more naturally for gas, where gas is having to compete far more competitively against renewable energy in the power sector. You see that competition there. In oil, we're seeing increasing competition in transport, where oil is now competing against electricity and also natural gas. So one, competition across fuels; and secondly, also competition within fuels. In the world I was show -- in the world I showed you, say, for oil demand, oil demand, in some scenarios, goes back above pre-COVID levels but it's not growing very significantly. In others, oil demand is starting to contract. And in that world, we're going to have increasing competition within oil as owners of oil resources compete to make sure that their oil is produced and consumed. So I think the message for countries who are large oil and gas exporters is this -- the world is going to become more competitive with heightened competition. And so to make sure you're a winner in that world, you need to make sure that your oil and gas upstream operations are as efficient as possible so you can compete in this increasingly competitive world. And Arlin, I hope I'm going to be coming back to Trinidad and Tobago in future days once the COVID pandemic is under control, and I can watch -- well, a, spend time with our business, of course, but also get to watch other T20 match as well.

That makes sense. And our next question comes from [ Jacqueline Longstaff ]. He's based in Australia. And Jacqueline's question is about CCUS. So how credible is the application of CCUS? Has CCUS technology developments have been very slow and not receiving the appropriate attention compared to renewable energy?

And that's a great question, Jacqueline. I was going to say the last time I went to Australia, but Bernard will be worried about my travel budget. So I'm not going to throw any Australian question. So in our -- in the Energy Outlook, in Rapid, CCUS accounts around 4 gigatonnes of carbon capture by 2050. And in net zero, about 5.5 gigatonnes. Now for those of you who don't have these sort of numbers in your mind, we start today with carbon emissions from the energy sector around 32 tonnes (sic) [ gigatonnes ]. So that's how our 4 and 5.5 gigatonnes can relate to that. I'm -- the impact of carbon capture, so the amount of money that needs to be invested to achieve that is relatively small compared to the investments needed in renewables. So that's not a significant issue. Moreover, any sort of studies that we've done and other people have done around the world show that the pathway to decarbonize the energy system, including CCUS, is an awful lot cheaper than the pathways associated with -- where you don't have an active role for CCUS. So I totally agree with you, Jacqueline, developments have been slow. And what's sort of frustrating to me is we hasn't received the same sort of support as we've had for renewable energy. And as an economist, the way one thinks about this is when you have a new technology, which hasn't yet reached scale, you sometimes need to provide support around it. You put a ring-fence around it, not to provide it with unfair advantage, but just to allow it to grow to the point it achieves scale. Once it achieves scale, you can let go and it can compete in that same world. We haven't had that same sort of support for CCUS, where I think it needs to play a very significant role going forward. And those numbers I just told you, 4, 5 gigatonnes of CCUS. If you look at the most recent IPCC report, that report I was mentioning earlier, and you look at all the scenarios in the IPCC report. And you say to those scenarios, let's look at a point where all those scenarios get to a net zero energy system. So there's another piece of really fascinating work, I think, in the Energy Outlook that looks -- uses the IPCC scenarios to look at what a net energy -- net zero energy system may look like. The range of CCUS in those IPCC scenarios is between 8 and 18 gigatonnes of CCUS. So some people say, "Oh, BP, they would be very extreme about CCUS. It's helping their natural gas." Those IPCC scenarios consistent with a net zero energy system between 8 and 18 gigatonnes. So I think there's general consensus, not just in our analysis, but across many, many people, that CCUS needs to play a role in terms of the decarbonization of the energy system. I hope we will see more projects going forward.

Thank you. Building on your government support point. So the question from [ Thomas Streeter ] based in the U.K. So many governments will be banning internal combustion engine vehicle sales in the future. Do you see these policies as realistic given the world's need for mobility?

And I think -- I guess my starting point here is, I don't think there's sort of one role for everyone here. I think the way the needs for different parts of the world are going to be very different. And so I would expect the pace at which electric vehicles penetrate the developed world -- the rich developed world to be far more quick -- to be far quicker than the pace at which they do -- it penetrates in some of these emerging economies where still -- levels of car ownership are still incredibly low and so people still don't have the same sort of access to mobility that we do. In the outlook, the main driver of electrification for much of the period are vehicle emission standards. So as the vehicle emission standards, so like the CAFE standard in America or the EU vehicle emission standards here in Europe, as they tighten, one of the key ways in which the car companies are able to achieve those standards is by selling more and more vehicle -- electric cars. And so in Rapid and net zero, we see the tightening in those vehicle efficiency standards means that you're largely getting a phasing out of the sales of internal combustion engine cars by around 2040 or so in Rapid in the sort of the EU and the U.S. and around 2035 in net zero. So I think in the advanced world, I think a phasing out or tightening in the vehicle efficiency standards, which is predominantly going to really push electric cars, will -- is part of that future. As you saw, Bernard, before he's introduced me, talking about that in the context of the U.K. But I think that's a very different story to the developing world, where the priorities are somewhat different. So in some sense, we need the advanced rich world to use its sort of benefits it has to decarbonize their whole economy and the transport system, in particular, more quickly, to allow space for the developing world to catch up.

Yes. Okay. That makes sense. Our next question comes from [ Nils Chan ] -- again, apologies for the pronunciation -- from the USA. And Nils' question is, what are the key policy initiatives needed for the net zero scenario?

Thank you for your question, Nils. A key role being played in both Rapid and net zero is carbon pricing. We have, in the developed world, carbon prices in net zero and Rapid get to $100 per tonne by 2030, $200 a tonne by 2040 and $250 a tonne by 2050. And the wonderful thing about carbon prices as an economist, is it provides a level playing field. It puts a price on carbon. And then it lets markets, producers, investors, consumers find the most efficient way of reducing carbon emissions. So rather than saying to a government or a regulator, you tell me the most efficient way of doing that, which is incredibly hard thing to do, it puts a price and then find -- let everybody else, and then let's the market and producers, consumers find that -- the most efficient way. So carbon pricing playing a key role. The carbon prices can't do it all. We can't rely purely on carbon pricing. And so other policies, in particular sectors, so in transport, those vehicle emission standards doing a -- playing a key role. There'll be other role for other types of standards and policies in other sectors, particularly hard to abate sectors. And the other point I want to stress, Nils, is in that net zero scenario, the answer is, it's not just government. I think if we just say what's government going to do, I worry that they're just political and there's economic limits to what government do, unless society supports. And so a key feature of that net zero, why you can get -- why you get a faster transition, isn't just by more and more policies, it's also because society, consumers, businesses, in particular, are also changing their behaviors, more willingness to adopt clean technologies, clean energies, changing their behavior in terms of how they use and reuse and recycle products. And so I think it's government policies. But to get to net zero quickly, I think is also society playing its role as well. So a combination of the 2, Nils.

Thank you. The next questions are getting slightly more personal. So the next question comes from Azerbaijan, so Anar Valiyev. And Anar's question is, Spencer, how has your personal standpoint shifted on the topic of energy transition forecasting through the years? And why is that?

Oh my goodness, that's a fantastic question, Anar. I think 2 or 3 things have changed. And I think as we're getting -- we're just thinking more and more about these issues. I think one significant thing that comes to mind is, I think the growing role -- the growing awareness of the role that hydrogen can play in terms of the energy transition is one part of that. And I think alongside that, bioenergy as well. And so one of the things in this year's outlook, if you look at this year's outlook relative to previous outlooks, we spend far more time thinking about the role that hydrogen can play and also the role that bioenergy can play as a complement to electricity. So that's part of the story. So I think there's a technical issue there in terms of some of those sources of energy or energy carriers and the role that they can play. I think the other point is more a -- perhaps more a policy point, perhaps, than a technical point, is the thing that I've been very struck by in the last couple of years, Anar, is the role that society has played in driving the energy transition, sort of more quickly or alongside governments. So rather than relying on governments to take their cue, we see companies like BP and many other companies commit to what they want to do. That at the same time, we've seen investors also put increasing pressure on companies and saying, this is what -- how we want to invest in companies that are behaving this way. And I don't think that dynamic was so powerful 2 or 3 years ago. And I think that dynamic means we may be able to make quicker pace in terms of the energy transition than if we only relied on government. It relates back to Nils' question a moment ago. So there's some technical things about fuels and fuel carriers, but I also just think that the environment has changed in a way with this sorts of greater role being played by sort of society setting its own, if you like, voluntary carbon price, which is affecting people's behaviors.

Thank you. I think -- so we're coming through to our final question now. So our final question comes from David Horgan, he's based in Ireland. And David's question is, how will the extra costs of intermittent renewables be paid for? And after, what role will nuclear power play?

David, you've got 2 last questions. That's very cheeky. The key thing about when thinking about the "extra cost of renewable energy", I mean I've made 2 points. First, that cost of that renewable energy is coming down very significantly. So I showed you that chart a moment ago in the main presentation, where we saw solar costs falling by about 60%. And so over time, that cost of that renewable energy will be coming cheaper and cheaper. And so there will be a cost associated with intermittency, but that will be offset by that low cost. The other point, we think is really important that we have to see this thing in the round. Even if renewable energy is more costly at the margin, if it's taken out coal, the impact that -- the costs that coal will have on all of our lives, and not just sort of in terms of air quality, but in a hard-nosed way in terms of the economic costs associated with climate change, are very significant. So we shouldn't just see these things in a pure -- in a sort of narrow sense. I think the overall cost here of renewable energy are far lower than continuing on the sort of unsustainable path we're on at the moment. And in terms of nuclear energy, nuclear energy -- playing nuclear power generation more than doubles out to 2050 in Rapid. So it's playing quite a significant role. We have about more in terms of capacity, something like 500 gigawatts of nuclear capacity built out to 2050 in Rapid. That's really strong growth. That's going back to the heyday of the '80s when that growth was being built. And at the same time, a number of nuclear power stations, which is coming up for decommissioning in sort of 2030s and 2040s when they get to their 60-year-old, were pushing out some of that decommissioning to sort of reduce -- to make sure that that capacity stays and so nuclear can play a role. So nuclear can play a role as well. So thank you for that -- for those 2 questions, very cheeky, David. The poll. So okay, I'll let you into a secret. Over lunch, we were -- we had our own poll about what the questions will be. I'm not going to tell you what the answers are going to be. I'm not going to tell you, but we see -- I may give you a wink if they're similar to what I expected. Something just flashed up in front of me, we had over 2,000 people respond to the poll. So thank you. And part of the poll is just -- is to make this interactive. I'm also fascinated in the answer. So I think now, if without -- as long as we've got no more hitches, we will have the answers come up. So answers to the first question, if I -- if you remember, the first question is, will COVID-19 make the pace of the energy transition fast or slower or unchanged or don't know. And as you can see here, an overwhelming response for faster. So over 2/3 of the people responding, saying that it was -- that it will make it faster. And I think that's consistent with this sort of pressure -- greater awareness of the fragilities of the planet and the planetary boundaries we're in. This big momentum of building back better, which relates to that role of society I was just talking about earlier. And also the role of government here, where the scale of government interventions we're seeing at the moment to support the economy and get the economy going again, if you like, provides a once in a lifetime opportunity to build back better. So I share the optimism of our -- of 2/3 of our respondents. So question 2, out of the scenarios presented today, which do you think is most likely to happen? We have a split vote here. So as you can see, I would have thought given the confidence bands here, we have people broadly split between sort of Rapid -- well, perhaps it's a 3-way vote, Rapid, net zero and then the other -- and then half between -- so Rapid, delayed and disorderly, and the other 2 between net zero and business as usual. But the 2 biggest here, Rapid, and which would be this world where we're moving on a path broadly consistent with below 2 degrees. And I guess what you could say, another way of saying that is more than half the respondents saying a combination of either Rapid or net zero. So more than half of our people thinking we're going to get on a path consistent with the Paris goals. More worrying is almost 1/3 highlighting that delayed and disorderly issue, which is more of a worrying thing. And do remember the Stein's Law when we're going forward here. And I think the Stein's Law is very important when we're on such an unsustainable path. So that's what we think is most likely to happen. Final question, what would you like to happen? Okay. So I'll let you win. We did think -- we did hope that the majority of our -- people watching would go for some combination of net zero and Rapid. And as you can see, we have an overwhelming respondents wanting the majority to go for some combination of either net zero or Rapid. And I think that's fascinating. I mean the -- and I think sums it up. It's clear what we would like. We would like an accelerated transition consistent with meeting those Paris goals. Some people are hopeful about that. More than half hopeful that, that's going to be cheap. But a sizable minority worrying that the pace will be delayed and then owned up to be disorderly. And if you like, that's why a key part of BP's aims isn't to get just the company to net zero, but also help the world to get to net zero, to try and avoid that sort of delayed and disorderly scenario. Okay. I'm out of time. Apologies again for the technical hitches earlier. I do apologize. I think it's going to be completely smooth from now on, I'm assured, for the next -- rest of the day and for the next 2 days. I think we're taking a quick break. After which, we will be handing you back to Bernard. So thank you very much. And just to say, if we have whetted your appetite, please do go online to look at the full booklet of the Energy Outlook. We know we don't know the answers to all these things. This sets out our analysis where we are today. But we keep on learning. And so please let us know what you think. And if there's ways in which we can do better or improve it, please do and let us know. A key message from Bernard over the next -- the whole leadership team over the next few days is dialogue. So please open that dialogue with us, tell us what you think and how we can improve. And together, we can all build a better shape, a better view and understanding of the energy transition. So thank you very much. A quick break, and then back to Bernard. Thank you. [Break]

Thank you, Spencer, for a brilliant overview, and highly entertaining as always. What we have just heard has informed everything else you're going to hear for -- from us for the rest of this week. And what I'd like to do now is 3 things: first, emphasize the connections between our strategy, our ambition and the context provided by the Energy Outlook; second, to provide a brief recap of the 3 things we set out on the 4th of August, the strategy itself, the financial frame and the investor proposition; and third, introduce 5 key questions we have heard so far about the strategy and that we are aiming to answer this week. Now starting with those connections. As you just heard, global energy demand is going up, emissions do not look like they are coming down fast enough. The world is not on a sustainable path. But as Spencer points out, this is not set in stone. There is no one fixed pathway. There is no one single solution. There are a range of possible pathways to Paris. And that range is fundamental to how we have developed our strategy. We do not want business as usual. But equally, we must be resilient to it. We do want a Rapid transition, and we see huge opportunity in it. And that is why our strategy is resilient across scenarios, yet weighted towards a Rapid transition. It is consistent with our purpose of reimagining energy for people in our planet. It serves our ambition of getting BP to net zero by 2050 or sooner and helping the world get there as well. It balances cash flow from hydrocarbons with ambitious plans for growth in the energy transition. Now having said that context, let me now briefly recap the 3 things we set out on the 4th of August. First, the strategy itself, which is built on 3 focus areas of activity for BP: low carbon electricity and energy, convenience and mobility and resilient and focused hydrocarbons. And with 3 key sources of differentiation where we can amplify value in each of these focus areas by leveraging capabilities across BP: in the integration of energy systems along and across value chains; in partnering with countries, cities and industries as they shape their paths to net zero; and in innovation, particularly with a strong focus on digital to generate efficiencies, support the creation of new businesses and to enable new ways of engaging with our customers. And this strategy is underpinned by our new sustainability frame that you will hear more about from Giulia shortly. But to deliver this strategy, we need to be disciplined, and that brings me to the second point. That strategy is enabled by a resilient financial frame based on a set of firm principles and priorities. Murray will provide more detail on Wednesday, but at a high level, this is composed of a coherent and flexible approach to capital allocation and a cascade of 5 clear priorities, starting with the first priority of a reset and resilient dividend and ending in the return of surplus cash to investors by means of a commitment to share buybacks underpinned by a resilient balance sheet that prioritizes a strong investment-grade credit rating and with a disciplined approach to how we invest our capital, governed by clear criteria and a rigorous process of reviewing, challenging and managing every dollar of investment. And third, we outlined our new clear and, we believe, compelling investor proposition. We believe this will deliver long-term shareholder value through committed distributions, profitable growth and sustainable value. And as you can see, we laid out a lot of information on the 4th of August. And as I mentioned earlier, we've received a lot of feedback, much of it positive. And thank you, everyone, who has taken time to share their views with us. We are transforming this company for the people who own it, the people who depend on what we do and the BP people who deliver what we do each and every day. In other words, our shareholders, society and our fellow staff members. And those are not always the same people, but increasingly, we all want the same things: firm, affordable, cleaner energy, produced by a company that is a force for good. And we need to be a source of competitive returns. We see no contradiction, no trade-off in that. This is about creating sustainable value, and we believe our strategy meets each and all of those needs. Now as we have listened over the past few weeks, we have identified 5 key questions that we believe are important in terms of earning your support and giving you confidence in BP and in our plans. Our aim is to provide comprehensive answers to them throughout the week. And I will provide a high-level summary now as I introduce those questions. First question, why is a 40% reduction in your oil and gas production by 2030 the right thing to do? Now some people think it's not enough that it should be 100%. Others think 40% is too much. Now this is what we believe. First, we have worked hard to find a balance that enables growth in cash flow and returns, our EBITDA and ROACE as we define them, at the same time as transforming the company. At the core is a relentless focus on value over volume. Now it's a difficult balance to find, but we believe we have found it. But what does that enable? We can deploy our highly skilled workforce on only the highest margin barrels. And you will see how we plan to improve margin in Gordon's presentation. We will reduce capital intensity with our long wave of investment in new projects coming to an end as well as our cost and efficiency drive. We expect our development costs to come down to around $9 a barrel, well below our 2019 depreciation rate of $16 a barrel. And we can maximize value by divesting assets where they are worth more to others. Second, in redeploying capital into low carbon and capturing growth in these markets, we decarbonize and diversify BP and in doing so, reduce risk. And third, a 40% reduction by 2030 puts us well underway towards becoming a net zero company by 2050 or sooner. This is a clear source of differentiation for us. And one that we believe is right for where we want to take BP and for the energy transition. And to dispel any myths about a fire sale, we're in no rush to sell our hydrocarbon assets. We have a strong balance sheet underpinned by a wall of cash and reinforced by our recent $12 billion hybrid issuance and the disposal of our petrochemicals business. The $25 billion divestment program is already 50% underpinned by agreed transactions, with a suite of options being developed for the other half. So the decisions we take over the coming years will be thoughtful, value-driven and disciplined and will continue to enable us to high-grade our portfolio, building resilience to low prices while remaining leveraged to higher prices, reducing operational emissions and allowing us to achieve higher margins overall. That links to the second key question. How will we transition our cash flow from hydrocarbons to low-carbon over the next decade? And fundamentally, this question gets at how we will maintain the necessary cash flows from hydrocarbons, while we scale our low carbon and transition businesses. And I will provide more detail on how we expect each of the 3 vertical focus areas to contribute and start quite deliberately with convenience and mobility, which is a business driving ratable growth over the period. It has grown pretax earnings by 7% each year since 2014. It is a high-quality business exposed to major growth markets and with a track record of delivering around 20% returns. And we expect our strong brands and partnerships to contribute towards a near doubling in earnings through to 2030, while maintaining these strong returns. Turning next to resilient hydrocarbons. Firstly, this is not about turning off one tap and turning on a different one. This is about adjusting the flows. This part of our business is an engine of cash flow that is running really well, and we intend to keep it that way. In oil and gas, we have 25 major projects online. 8 due to come online before the end of 2021, and 11 more in the next few years, adding to a wave of higher-margin production. We have improved plant reliability by 1% over the past 5 years, adding almost $200 million in gross margin last year compared with 2014. And we are planning for another 1.6% improvement by the middle of this decade. We are holding our base decline to between 3% and 5%. We have a resilient and high-graded refining business, with strong availability and top quartile refining margins. And we are rolling out more efficient ways of working, like agile, centralization and digital technologies that have had remarkable impacts where they have already been introduced like in Azerbaijan. And finally, to low-carbon electricity and energy, where we will initially invest to grow, being disciplined in our choices and expect it to make more of a contribution in the second half of the decade. When put together, we see all this contributing to growing cash flow over the next 5 years. Taken together, underlying EBITDA is expected to grow by 5% to 6% per year through to 2025, with returns in the range of 12% to 14% in '25, up from around 9% today, and after allowing for the impact of divestments and reflecting the expected share buyback commitment, EBITDA per share is expected to grow by 7% to 9% per year through to 2025. And then from 2025, the transition really begins as we head towards 30% of our capital base being invested in the energy transition by 2030. We do expect the contribution from our oil, gas and refining businesses to decline over this latter period. But we expect this decline to be more than offset by ratable growth in convenience and mobility. And in low-carbon electricity and energy, where we expect EBITDA growth to accelerate as the capital we are investing matures and we begin to see the benefit of scale across the business. We also expect to sustain returns at 12% to 14%. The third question, the scale of your renewables ambition is huge. How achievable is this? Now we are aiming to have developed 50 gigawatts of net renewable generating capacity by 2030. In answer to the question, we think this is realistic and it is achievable. And we think so for the following 3 reasons: one, it represents between 1% and 4% of total global capacity that we see being developed over this period across the scenarios that Spencer introduced; two, our track record, which Dev will describe in detail; and three, the pipeline we are building. Now starting first with the capacity being developed, it is really important to put the 50 gigawatts into context. We expect the market to grow, and grow dramatically. In the Rapid scenario, it triples in size from around 1,400 gigawatts today to around 4,700 gigawatts by 2030. But even in the business-as-usual scenario, there is substantial growth with the market more than doubling in size. In terms of pipeline, across solar, biopower, onshore wind and now offshore wind, we already have a pipeline of projects at different stages of maturity that add up to about 20 gigawatts of capacity. Lightsource BP alone has 16 gigawatts in its pipeline, up from 9.8 gigawatts this time last year and just 1.6 gigawatts in 2018. And of course, we're now entering the offshore wind sector, which is growing faster than any other form of renewable energy. And I'm really excited about the partnership we have agreed to create with Equinor. They are a world-class offshore wind company, and we look forward to growing with them. But let me be clear. We know what happens when volume becomes more important than value. And therefore, we will only pursue opportunities that we believe can generate the disciplined returns we expect and our shareholders expect. And that links to the fourth question. Can we deliver the 8% to 10% returns from renewables? The answer is very simply, yes. We actually believe we can do better, and these returns could turn out to be conservative. But let me take you through why we have absolute confidence in our plan. It is firstly based on experience, specifically with Lightsource BP. Since we formed the partnership at the start of 2018, Lightsource BP has expanded its presence from 5 to 13 countries. As I mentioned, it has grown its project pipeline from 1.6 gigawatts to 16 gigawatts, and it has delivered 17 projects since 2018, and they typically achieve returns in the 8% to 10% range. So how do we get to 8% to 10% across our renewables portfolio as a whole? First, we know returns start at around 5% to 6% on an equity basis in a competitive auction. Second, we believe that through our extensive experience in operations and project management, we can add value through applying our processes, and we have track record here. For example, in biofields where we have, and more recently through the BP Bungue joint venture, we have increased the efficiency in harvesting by 50% since 2016. Third, we'll integrate with the rest of BP through trading, where we have a long track record, over 30 years, of delivering close to a 2% return uplift or through the application of our digital expertise to drive additional performance or by bundling our renewables offer with different forms of energy, along with our natural climate solutions and offsets portfolio to give customers what they want: clean, low cost, and firm energy. Fourth, we will use leverage, which is typical in this industry. The combination of these 4 areas gets us to 8% to 10%. Beyond this, we have the choice to optimize the portfolio, to farm down or not. And if we do, that could add a further 1% to 2%. So yes, we are confident we can deliver the returns we are targeting. And now the fifth and final question. Why BP? What is our competitive advantage really, especially in this new world? And there are 4 reasons. First, our strong track record in operations and project management; second, our focus on relationships and partnerships around the world; third, our approach to digital and how we are using it to drive cost benefits and generate incremental value; fourth, integration and specifically, our ability to integrate at a global level and across energy vectors. Starting with operations and project management. Today, we are strong in oil and gas, strong in refining and have demonstrated how many of these technical skills are transferable. We have an exceptional global project management organization. Top quartile in 4 out of 5 assessments of project teams made by the leading analysts for the oil and gas sector, the IPA. We will apply this to low carbon energy and electricity. We have a track record of improving oil and gas plant and wells reliability over the past 5 years. And in refining, we have delivered 2 consecutive years of record throughput and benefiting from sustained high levels of availability. And we are bringing that focus on operational excellence to our new businesses. In terms of relationships and partnerships, we are privileged to be working with many of the world's best companies. We like to team up with those who have strengths that we don't, and we will continue to do so. In the convenience sector, we are partners with M&S and REWE and Reliance. In EV charging, we're partnering with DiDi in China and now Uber in the U.K. In energy provision, we are partnering with Amazon and have another big corporate partnership to announce this week, so stay tuned. And in data science, we're partnering with Palantir and Beyond Limits. And where we lack capability, such as in solar development, we formed a joint venture in Lightsource BP, and we now have a deep execution capability to prosecute our solar build-out. We bought Chargemaster to do the same in EV charging. And the partnership we have agreed to create with Equinor takes us into offshore wind. Now everyone talks about being good at partnerships, but we genuinely embrace them. We believe in the power of working together, where 1 + 1 makes more than 2. But what we really like is where partnerships can take you. An example, who would have thought that when we first worked with Reliance in India 10 years ago that this would result in a compelling partnership in retail with Jio, one of the world's fastest-growing brands, to establish 5,500 service stations by 2025 in one of the great growth markets of the world. Thirdly, digital. We believe digital is a real source of differentiation for us. It has a central integrating role in enabling value creation across BP. It is an area we have invested in and will continue to, doubling our investment over the coming years, and we believe we are creating a track record of success. For example, in our oil and gas business where we believe we are one of the leading digital oil and gas companies. And this is due, in large part, to the collaboration with Palantir, where we have invested in data platforms, advanced analytics and data visualization, delivering significant value over the past 3 years. And it is this approach to collaboration and partnerships and our own mindset around innovation, which are key to challenging our thinking to building capability and, importantly, in enabling us to access new opportunities and new markets. And fourthly, integration. As we said earlier, customers are demanding integrated solutions that give them firm, cheap and cleaner energy. And very few companies can do this. We believe we have the skills to integrate these hugely complex ecosystems and give those customers a solution, energy when they need it, how they need it and where they need it. That could be electricity for their fleets, their cars, biojet for air travel or hydrogen for heavy transport. Providing these multi-energy solutions is a lot more complicated than it has been in the past with complexity, creating barriers to entry that only a few companies can overcome. And this is where BP can thrive. As Murray said, in August, we love complexity like this. And it is why we have elevated our trading function to the leadership table to help enable this, connecting all our businesses and assets and optimizing them at scale, cross geographies and cross commodities. And let me finish with a final reason as to why BP, and it is something you can't put in a spreadsheet, but in my opinion, it probably matters more than anything else. We have a massive determination to make this work and deliver what we laid out. We need to deliver for our employees, and they want to deliver. For them, executing our new strategy is not just about coming to work to do a job, it's about coming to work to reimagine energy for people and the planet. And BP is a company of people who are motivated by that and who really want to help the world reach net zero and improve people's lives. As well as for our employees, we need to deliver for our shareholders and for society and we want to, and we will. So let me summarize. If this week is going to be a success, we need to have answered each of those 5 questions in full and in a way that instills confidence and belief in our plans. These are the people who I hope will do this over the next few days. Tomorrow, you'll hear from Dev, from Carol, from William and from Emma, on our plans for gas, on low carbon energy, for integrating energy systems, for partnering with countries, cities and industries and for supporting the revolution in convenience and mobility. And on Wednesday you will hear from Gordon on how we will be focusing our resilient hydrocarbon business. David will talk about how we're driving digital and innovation throughout BP. And Murray will recap on the financial frame that underpins everything you will have heard through the week. Back in August, Murray, Giulia and I managed to get together safely for the launch of the strategy. And I'm very pleased to say that the full team you saw on that slide are now gathered here in person for BP week. We will be observing social distancing and all the appropriate protocols. But I have to say, it does feel good to get back together in this way. Later this afternoon, you're going to hear from Kerry about how we're reinventing BP to enable our people to deliver the strategy. Companies don't reimagine energy, people do. And Kerry will talk about why our purpose is so important, how we are evolving our culture and what we mean by leadership. And now you're about to hear from Giulia about the new sustainability frame that we mentioned in August and which we are now beginning to roll out. We have developed the frame in consultation with many of our stakeholders, including a huge amount of input from people in nongovernmental organizations. And I want to thank everyone who has helped and whose help, we will continue to need as we build it out. It is informing our decision-making. It underpins the strategy, and it gives us confidence that we are doing the right things in the right way. I appreciate we're asking for a lot of your time, and we'll try to make every minute relevant, useful and hopefully interesting as well. And I will join you later for today's Q&A session. And for now, I'll hand you over to the team. And first of all to Giulia.

Thank you, Bernard. Good morning, good afternoon and good evening to everyone. It's a pleasure to be here. My name is Giulia Chierchia and I am responsible for strategy and sustainability in BP. As Bernard mentioned, in February, we announced our new purpose, a net zero ambition, setting the direction for BP out to 2050. In August, we shared our new strategy and financial frame to enable our transformation from international oil company to integrated energy company. Today, I will introduce our new sustainability frame. Our new frame links our strategy to our purpose, reimagining energy for people and our planet. It includes our net zero ambition and aims as well as a wider approach to environmental and social issues. I plan to cover 4 areas. First, I will reflect on our track record on sustainability. Second, I will explain why we feel that now is the time to make our sustainability efforts more strategic and focused. Third, I will share the new frame and update you on our progress on our net zero aims. And fourth, I will close with how we plan to embed the frame at the core of everything we do, in our DNA. What I am presenting today represents a work in progress. Some areas are more advanced than others. This is a journey and we want to bring you, our stakeholders, along with us. So we want to be transparent and share our thinking as we are building and evolving the frame. Our commitment to sustainability is deeply held. And the frame is built on strong foundations: our values; a focus on safety in everything we do; and a nonnegotiable commitment to ethics and compliance, in line with our code of conduct. Turning to our track record. Let me start by recognizing we have had accidents in the past. Those accidents have shaped BP as it is today. We've worked hard to learn from them and to embed the lessons we have learned. At the same time, we do believe that there is much to be proud of. We have a long history of good environmental and social management. Let me share a few examples. First, in reducing emissions. In 2018, we set ourselves 3 targets under our previous Reduce, Improve, Create framework. And we have delivered. We targeted 3.5 million tonnes of sustainable emissions reductions for the period 2016 to 2025. We met this target 6 years earlier and are going further. We are on track to have delivered around 4.8 million tonnes by the end of 2020. We targeted 0.2% methane intensity. In 2019, we delivered the methane intensity of 0.14% under existing reporting protocols. The 10 aims we introduced in February have now replaced our previous framework and targets. They represent another step-change in our ambition. Next, in making a difference in societies in which we work. We contribute around the world as an energy provider, an employer, a taxpayer, a supply chain participant and investor in local communities. In 2019 alone, we generated over $283 billion in economic value. Our products and services improve the quality of life for millions of people. And we work to conduct our activities in ways that provide social benefits and respect human rights, in line with our global human rights policy in place since 2013. We invest in sustainable development projects that align with local needs, and we aim to recruit our workforce nationally and locally. As we deliver our new strategy, over time, we see an increasing share of our economic value being generated by our growth businesses. We also have a long history of systematic environmental management. Since 1998, we have implemented a leading environmental management standard, ISO 14001, at our major operating sites. Finally, we contribute to protecting our natural environment. I will describe our latest biodiversity and natural climate solutions efforts in more detail later. Before I do, let me highlight our involvement with forestry projects that have helped reforest or protect more than 3 million acres to date. But we, nonetheless, believe that the time is now right to progress a more holistic and strategic approach to sustainability. Let me explain why. We have seen, how around the world, access to energy is associated with improvements in education, health and economic growth. But we recognize the world is not on a sustainable path. One measure of this is Earth Overshoot Day. This is the day each year when human demand for ecological resources is estimated to exceed what the earth can regenerate in that year. This year, Earth Overshoot Day was August 22. Meaning that for each of the following 131days until the end of a year, humanity will be using more resources than can be renewed in this year. This is just 1 measure. But however you measure it, the data shows red light flashing across the dashboard. On emissions, average global temperatures are estimated to have risen by 1.1 degrees Celsius already, compared to the pre-industrial baseline used for the Paris goals. On people, while access to energy has increased significantly, 1 in 7 people still lack access to modern electricity. Mental health is a growing concern with over 10% of people in Europe living with mental health conditions. And over 2/3 of FTSE 250 companies have no ethnic minority representation on their boards. On the environment, 10 million hectares of forest were destroyed annually between 2015 and 2019. And only last week, WWF's Living Planet Index reported 1 million species are threatened with extinction over the long term. At the same time, there are reasons for hope. The collective intent to act is growing. On climate, the EU and 19 countries have now set net zero targets. And 114 cities are committed to a 1.5 degrees aligned climate action plan. On people, although more needs to be done, female representation in senior leadership roles is growing, helped by policy that encourages more reporting on gender balance, with diversity more broadly flagged as a priority area for many organizations. And regarding the environment, we have seen a call to action on biodiversity and an increasing focus on the need for protected areas. We believe that the private sector has an important role to play, and we want to play our part. When done well, sustainability is both the right thing to do and good business. We know we do not have all the answers, but we are listening to the calls from society from governments, from shareholders for a greater focus on sustainability from businesses. And here's what they are telling us. [Presentation]

Those powerful messages reinforce the need for action across multiple fronts; the need to think about sustainability holistically, encompassing climate and environmental concerns as well as various set of issues that impact society; the need for trust and transparency; and the need to follow through on our commitments and aims with timely efforts. So we need an approach that informs our thinking and decision-making; responds to changes in the world; puts us in action where we can make the most difference. For BP, that approach is founded on 4 building block, which together shape our new sustainability frame. First, clear focus areas. We are shifting from driving multiple initiatives to focusing on 3 areas: net zero, people and planet. Each of those 3 areas include prioritized themes linked to the UN Sustainable Development Goals. Our wide-ranging approach to sustainability has broad benefits but often at a local scale. We believe we can do more by being focused and setting global priorities to drive our activities around the world. Second, aims and objectives. As we have already done with our net zero ambition, we will set aims and objectives for the other 2 focus areas. And we will be transparent about our progress against them. These are not yet fully defined, but we will work with care to shape them, and we intend to update you in our next sustainability report. Third, sustainability embedded into our DNA, actively driving it through our operating model, our governance and our culture. And fourth, external collaborations. We are intensifying the search for partnerships that can help us drive progress, provide skills we may not have and help us shape the future together. In designing this approach, we have engaged with a wide range of stakeholders. I am extremely grateful to them. We want to continue to engage with and learn from key experts as we further detail our frame. Let me now move to our 3 focus areas. Our 3 focus areas are: get to net zero, become a net zero company by 2050 or sooner and help the world get to net zero; improve people's lives, support a just energy transition, promoting well-being for our workforce and communities where we work; and care for our planet, make a positive difference to the environment where we operate. We have chosen these 3 areas because together they put our purpose into practice, reimagining energy for people and our planet. They are aligned with and mutually reinforce our strategy. And recognizing that there is only so much that we can do, they concentrate our efforts and our resources where we believe we can make the most difference. I will now expand on each of the focus areas and highlight some of the ways we are already in action as well as some of our future plans. Starting with net zero. In August, we outlined our strategy and the pathways to delivering on our 2050 carbon aims. From the feedback, it was clear that there was interest in more specifics of how we intend to meet our 2025 targets and our 2030 aims. Let me start by reminding you of these. Aim 1 is to get to net zero for operational emissions by 2050 or sooner. We communicated a target of 20% reduction in our operational emissions by 2025, and aim for 30% to 35% reduction by 2030. Aim 1 one covers what are often called Scope 1 and Scope 2 emissions. Scope 1 is the emissions from running our own assets. Scope 2 is emissions associated with producing the electricity, heat and cooling that we buy to run our operations. Aim 2 is to get to net zero on an absolute basis, across the carbon in our oil and gas production by 2050 or sooner. Here, we target a 20% reduction by 2025, and aim for a 35% to 40% reduction by 2030. This is our Scope 3 aim because it covers the carbon dioxide, which is emitted if someone burns the gas we produce or a product made from the oil we produce. Aim 3 is to halve the carbon intensity of the products we market by 2050 or sooner. We also set ourselves at 2025 target to reduce our carbon intensity by 5% and an aim to reduce it by at least 15% by 2030. Aim 3 covers marketing sales of energy products, such as fuels, gas and power as well as offset supply to our customers. It covers the estimated life-cycle emissions associated with the production, processing and transportation of those products. And it also includes the CO2 emitted from the use of fuels and gas. Aim 4 is to install methane measurement at our major oil and gas processing sites by 2023, publish the data and then drive a 50% reduction in methane intensity in our operations. Methane intensity is the amount of methane emissions from our operated upstream oil and gas assets as a percentage of a total gas that goes to market from those operations. We have been doing a lot of work on this since we announced the aim in February. As you can see from the slide, we have now also set ourselves a methane intensity target to 2 decimal places, of 0.20% by 2025, using a measurement approach. Gordon Birrell, who leads Production and Operations, will be providing more details on aims 1 and 4 in a moment. Aim 5 is to increase the proportion of investments we make into our nonoil and gas businesses. As presented on August 4, we aim to scale our investments in low-carbon energy by up to eightfold by 2025 and tenfold by 2030 to around $5 billion per year. To deliver on those targets and aims, we will use a portfolio of available levers. Over the next 10 years, we expect the focusing of our hydrocarbons portfolio to be the most significant contributor to delivery of Aims 1 and 2, driven by the reduction in exploration and production volumes. Operational improvements will support the delivery of Aim 1. They also help to reduce the life cycle emissions for the marketed products we produce or refine. We expect our Rapidly growing low-carbon energy and electricity and next-generation mobility solutions to be a material contributor to Aim 3 in the next 10 years. We do expect the absolute level of emissions associated with our marketed products to grow out to 2030, even as the carbon intensity covered by Aim 3 falls. However, over time and as we transition our product portfolio, we expect the absolute emissions to fall as well. And finally, offsets. As we said in August, natural climate solutions have an important role to play in enabling the world to get to net zero, and we intend to support them. Offsets will count towards our aims when our businesses use them to meet compliance needs or provide their benefits to customers to help them meet their goals. But as we also said in August, we do not intend to rely on offsets to meet our 2030 aims. Instead, we see these offsets helping us to go beyond those aims, if we can. These levers are closely aligned with our strategy. And you will hear more in many of these areas over the next 2 days from Gordon, Dev, Emma, Carol and David. Before I hand over to Gordon, let me address 2 questions, which we have been asked. The first is does divesting oil and gas assets, which keep producing, really make any positive difference? We believe it will. We think of this in 2 ways, helping the world to decarbonize and decarbonizing BP. First, the world. These divestments help to fund our investments into our transition activities. We're aiming to increase our low-carbon investments to around $5 billion a year by 2030. We believe that this will help increase the world's access to low-carbon alternatives and will support the energy transition that the world needs because, as Bernard said in February, the whole energy system needs to be transformed. The global emissions that matter for meeting the Paris goals are driven by that system. And that is why low carbon advocacy is so central to our ambition and strategy. Next, decarbonizing BP. These divestments also help to decarbonize BP, moving towards our ambition to be net zero by 2050 or sooner. This reduces our exposure to carbon and allows us to diversify our portfolio, creating a more resilient BP to serve our stakeholders. The second question we have been asked is how is your activity in Rosneft consistent with your aims? As we said in August, Rosneft is an important strategic partner. We seek to work with them, including through our positions on the Board. We recognize and support their significant efforts and achievements in managing their emissions. They are targeting a top quartile operational emissions performance, which in turn, supports their resilience. Now I have asked Gordon to join me to take you through our plans on Aim 1 and 4 in more detail.

Thank you, Giulia. Starting with the Aim 1. We will continue to focus on emissions reductions in our assets as a core priority for our Production & Operations business. We continue to make progress by operating our facilities more efficiently to reduce energy usage, lower flaring and reduce methane emissions. As Giulia mentioned, on top of the 3.9 million tonnes of sustainable emissions reductions or SERs, as we call them, we delivered through 2019, we are on track to deliver about 0.9 million tonnes of SERs in 2020 through operational improvements in areas such as energy efficiency and flare optimization. We have so far approved funding for over 30 projects from our operations from our $100 million low-carbon fund, which will deliver future SERs. This includes recent approval of a project at our Lingen refinery, for example, developing an option for green hydrogen supply. As Dev will explain, we will be increasing our focus on these integration solutions, using our low-carbon growth areas to benefit Aim 1. We are also exploring options for electrification of our existing facilities, such as ETAP in the North Sea, and making our new major projects lower carbon by design, such as Cypre project in Trinidad and Tobago, which is designed to emit approximately 1/6 of the emissions of previous installations. Let me now turn to Aim 4, which focuses on methane. Methane has a much higher global warming potential than carbon dioxide, so tackling methane emissions can play an important role in meeting the Paris goals. The science of methane and climate is complex, and we've benefited hugely from the expertise of Princeton University through our long-standing partnership in the Carbon Mitigation Initiative. Current protocols for reporting methane emissions rely mostly on estimation and calculation rather than actual detection and measurements. It is, therefore, understandable when NGOs like the Environmental Defense Fund or EDF, raise questions about data quality. We've recognized the importance of such concerns. Aim 4 seeks to respond to these challenges by shifting from the current protocols towards greater use of measurement. And we've been doing a lot of work on this since we set out our aim in February. First, we've systematically reviewed our methane inventory. And we have decided to apply Aim 4 to all operated upstream oil and gas sites, which contribute towards our reported methane intensity. Methane emissions from these Aim 4 sites contribute to around 98% of our reported methane emissions. It is worth pointing out that the other 2% from operations, such as refineries, are covered by Aim 1. Second, we have developed a new measurement approach to implement Aim 4. We aim to have this in place at all relevant sites by 2023. We plan to publish this data, which will help us baseline our aim to halve our methane intensity. Our measurement approach includes deploying continuous detection and quantification technologies, and we will test these. We are learning which of them will work best for our assets. Importantly, our measurement approach also includes using technologies such as drones and satellite-based measurement to help validate our estimated or calculated emissions data. So we plan to deploy the right elements of our measurement approach for each site. More information regarding our measurement approach can be found on BP.com. Aim 4 and our new measurement approach represent a significant step forward. They shift our focus from the estimation and calculation on which current protocols largely depend to a much greater focus on measurement. Third, as Giulia mentioned, we are announcing today that we are targeting 0.20% methane intensity by 2025, as determined by our new measurement approach. This is an important supplement to our Aim 4 because the 0.2% methane intensity target, which we have had until now, and the 0.14% we reported for 2019, have both been based on current protocols. We are already in action detecting, monitoring and improving our measurement of methane emissions and working to reduce them. And we continue to collaborate with a range of stakeholders, such as EDF and the Oil and Gas Climate Initiative and to work under the Methane Guiding Principles. Our newly established nonoperating joint venture center of excellence will support our efforts to influence methane management in our nonoperated activities. We have also been an active participant in contributing to the Oil and Gas Methane Partnership, or OGMP version 2, which is all about enhancing reporting and methane emissions reductions. And I'm delighted to say that this month, we've signed up to this. Finally, we are advocating for robust methane policies. We support the use of OGMP version 2 to inform EU policies on performance standards for natural gas. And we have made clear our opposition to rollback of federal methane regulation in the U.S. So I hope you will agree, we have made tremendous progress, but we have so much more to do. Thank you. Now back to you, Giulia.

Thanks, Gordon. Our first 5 aims are to help BP to get to net zero. Our second 5 aims focus on helping the world get to net zero. We see these as vital. Because ultimately, what matters is the world achieving the Paris goals. We are already in action, and a lot has happened since February 12. Under Aim 6, more active advocacy for policies that support a net zero. We have been supportive of green recovery packages aiming to Build Back Better, including the European Green Deal. We shut down our corporate reputation advertising, as we said we would. And we intend to continue actively advocating for policies that support net zero. Under Aim 7, incentivizing our employees. We have already designed our annual cash bonus for our employees in a way that gives a balance score based on safety, environment, liability and financial measures. And we intend to increase our emphasis on strategy delivery, including low-carbon emissions reductions for our BP leadership team going forward. Kerry will talk more about aligning employees' performance and rewards in the next session. Under Aim 8, set new expectations for relationships with trade associations. We published a review of our most relevant associations earlier this year. And as a result of misalignment over climate change, we decided to leave 3 associations. We continue to engage with trade bodies on climate issues and actively monitor our memberships. And we will continue to make our case on climate policies within associations and be transparent where we differ. Under Aim 9, to be recognized as a leader for transparency of reporting. We have set out our strategy with clear and granular 2025 target and 2030 aims, providing transparency on our intended trajectory over the next 10 years. We have work ongoing to enhance our reporting in line with the Task Force on Climate-related Financial Disclosures recommendations, which we support. This includes our intention to build in detail, in our next annual report, on our use of our Energy Outlook scenarios to inform our strategy, including the short- and medium-term targets and aims. And finally, under Aim 10, clean cities and corporates. Our new Regions, Cities and Solutions team have moved incredibly quickly since being set up. They have already announced we are working in partnership with the cities of Houston and Aberdeen. You'll hear more on this from William tomorrow. There is plenty more to come under each of those aims, and we will continue to provide updates as we progress. Let me now turn to our focus on improving people's lives where we work and supporting a just energy transition. We have 3 priorities. First, provide more clean energy for more people because access to energy is essential for economic growth, reducing poverty and improving communities, health and wellbeing. Yet, 1 in 7 people still lack access to modern electricity. Second, respect human rights, promoting quality and sustainable livelihoods because we believe that everyone deserves to be treated with fairness, respect and dignity. Yet, that is not a reality for many people around the world. Third, promote wellbeing with a focus on mental and physical health because care for physical and mental wellbeing has always been a priority for BP. But the COVID-19 crisis has posed a new and serious challenge. So how are we planning to put these into action? Starting with providing more clean energy for more people. This is core to our new strategy. Dev and others will take you through more details over the next few days. But as a reminder, we plan to Rapidly increase our low-carbon energy portfolio. That includes aiming to have developed 50 gigawatts of renewables by 2030. When operational, we estimate it would be enough to power the equivalent of 31 million U.K. homes. And our sustainability frame is also about how our businesses do what they do, their approach to environmental and wider social issues. It's about living our purpose so that people can know that our great businesses in areas like energy and mobility, such as BP Chargemaster or Castrol, stand for positive change. Moving on to respecting human rights and promoting equality in sustainable livelihoods. On equality, we have just launched a new diversity framework in the U.S. and the U.K. Kerry will describe in the next session, what we are doing to make BP a more inclusive workplace where everyone can thrive. We will aim to promote sustainable livelihoods through a range of initiatives. And we will focus on driving our updated human rights policy into action, which I'll come back to in a few moments. On wellbeing, with a focus on mental and physical health, we are working to tackle the stigma around mental health issues within BP, particularly, as we learn more about the impact of COVID-19. We are proud to support mental health charity Mind in the U.K. as they provide help to people in this difficult time. And we're looking at other potential collaborations, including the British Association of Management to increase the focus on mental health and wellbeing in the training of future leaders. Kerry will talk further about some of the transformational plans we have for how we approach these vital issues within our organization and beyond. Coming back to human rights, I want to highlight our updated human rights policy that we launched this summer. It clarifies our commitment and strengthens our approach across several areas, including the right of workers and vulnerable individuals and groups, including indigenous peoples, and rights to water and sanitation, land rights and freedom of expression. Importantly, the new policy still has global scope and reach. It applies to all our employees and includes respect for the human rights of the communities where we work around the world. It also sets clear expectations for our engagement with our suppliers and other business partners, including our contractors, in line with the principles of our policy. And these expectations are supported by prioritized human rights due diligence assessments that inform purchasing decisions. And we are determined to get more systematic in our activities. We've developed Labor Rights & Modern Slavery Principles for our operations that we will use with our business partners and supply chains. We've also cofounded with peers a joint industry platform to drive a more consistent, effective and efficient industry approach to supplier human rights due diligence with a focus on labor rights and modern slavery. And we plan to undertake independent third-party assessment for selected sites and business activities on a risk-prioritized basis to review our progress and course correct as needed. The third dimension of our framework is the environment, caring for our planet. We have 3 priorities. First, promote cleaner environments, enhance biodiversity and promote natural climate solution because the continued decline in biodiversity and the degradation of our environment poses a serious risk to the natural resources upon which we all depend. And it is reducing the ability of ecosystem to take carbon out of the atmosphere, making it harder to tackle climate change. Next, use resources responsibly. As we saw earlier, material consumption has been growing with 86 billion tonnes consumed globally in 2017. Given this, we consider reducing consumption and embracing circularity to be an important lever in sustainability. We are looking at ways to adopt circularity principles across BP, reducing waste and keeping materials in use for longer. Finally, promote sustainability in our supply chain and promote sustainability with our business partners. Given the scale of our global supply chain, we're on track to spend $28 billion on third-party goods and services this year across tens of thousands of suppliers. We see it as an important lever for driving performance, including reducing carbon emissions. We believe this can create shared value along the supply chain by increasing efficiency, reducing resource costs and making supply chains more resilient. So how are we planning to put these into action? I will dive into how we're in action on promoting cleaner environments, enhancing biodiversity and promoting natural climate solutions in a moment. For responsible usage of resources, we are starting to identify circular opportunities across BP. For example, in Europe, we aim, by 2025, for BP-owned food brands, including our Wild Bean coffee cups to use packaging that is either reusable, recyclable or biodegradable. In promoting sustainability into our supply chain and with our business partners, we will need to prioritize our efforts, focusing mainly on the most significant contractors and suppliers and on the areas of most significance to each of them, areas such as: carbon emissions and usage of renewable energy; circularity provisions, including waste reduction or elimination; and natural resource management, including water consumption and sustainable sourcing of materials. Specifically, I want to highlight our new strengthened position on biodiversity that we released in June. For 14 years now, we have not entered into any of the most sensitive protected areas for oil and gas exploration and production. With our new position, we have now formalized it into a commitment. This covers UNESCO World Heritage Sites and also Strict Nature Reserves and Wilderness Areas as defined by the International Union for Conservation of Nature, the IUCN. Our position also states the following aims. First, to achieve a net positive impact on biodiversity in our new projects. This starts with looking ahead to identify direct impacts on biodiversity. We then deliver a plan, not just to mitigate potentially significant impact but to enhance biodiversity. Second, to enhance biodiversity around our existing major operating sites. And finally, to support biodiversity restoration and the sustainable use of natural resources. I want to thank Fauna & Flora International, Conservation International, UNESCO, the IUCN and other nature organizations, experts and investors for their valuable input and challenge through the development of our new position. Implementing this position will take a lot of work, including on our methodology for measuring net positive impact. But I am pleased to announce that we have now established a new collaborative partnership with Fauna & Flora International to help us deliver our new position. We will also be jointly exploring new opportunities where BP can support nature conservation. I also want to say a little more about Natural Climate Solutions or NCS. At its simplest, NCS is about protecting, restoring and, in some cases, creating natural sinks. These natural sinks, which include peatlands and forests both lock in carbon, keeping it out of the atmosphere and absorb CO2 from the atmosphere. We believe that NCS will be needed for the world to deliver net zero. They play a critical role in many Paris scenarios. Specifically, up to 500 million hectares need to be converted to forest by 2100 in line with IPCC scenarios. And when done in the right way, NCS can bring a range of sustainability co-benefits, such as enhancing biodiversity and sustainable livelihoods for local communities. We believe that BP is well placed to help enable NCS to play this role. We have a track record and the capability. We have supported over 50 million tonnes of forestry offsets in the U.S. We are active in NCS in more than 10 countries around the world. And we are building integrated partnerships, such as in our Finite Carbon venture, which David will discuss later. And we will support this market to grow. We have established a world-class NCS group within Trading & Shipping and will be scaling positions. We will promote high standards as we build new business models to meet growing demand for NCS from our customers, and we are advocating for policy to help build the markets for offset that will be required to underpin their role. This includes engaging with our global partners, such as a World Economic Forum, World Business Council for Sustainable Development and others in helping to find technical and policy solutions. Let me close by returning to our frame. It focuses on 3 areas and put sustainability at the heart of what we do. We will set aims and objectives for our focus areas on people and planet as we have done with net zero. We see these as a key vehicle for performance management and a clear basis for transparency, and for delivery. On governance, we aim to embed sustainability into our DNA as we reinvent the company. This means integrating sustainability in the way we work and into our decision-making on strategy and capital allocation, business development and execution. And finally, we are looking for partnerships to help drive progress and help us shape the future together. We will also work with our customers, suppliers, partners and other stakeholders to drive innovation and broaden our impact. We see this as a living frame, one that will evolve over time as we learn and respond to changes in our business and the world. So let me leave you with our key messages. As I have outlined, we have a track record on sustainability, but now is the time to enhance our approach. Our new sustainability frame with 3 focus areas put sustainability at the heart of what we do. We want to keep engaging and listening as we detail our frame and our aims and objectives as well as continuing to share our progress on sustainability as we move forward. I look forward to providing another update on our sustainability frame at the end of Q1 2021, when we plan to publish our annual sustainability report. And in the meantime, I look forward to talking with many of you watching today and to continue listening and learning. Now I'll hand over to Kerry Dryburgh, who leads People and Culture, to talk about how we're reinventing BP. Thank you. [Presentation]

The conversations we had with these young adults give us a snapshot of what the next generation wants from work. Hi, everyone. I'm Kerry. This reminds me of a conversation I had recently with my 20-year-old daughter, India. India is in university in Edinburgh. She's been applying for part-time casual work to help get her through her studies. And as she was considering opportunities, it became clear to me that she was looking for more than just some money to help her through. India was judging these opportunities, not on what they paid, but on whether the organization would make her feel good about coming to work and have a culture that she could identify with. India and the people in that video are representative of an entire generation and also to many people already in work. They want to work for an organization that makes a difference, a place that supports, encourages and empowers them, where they can work alongside inspiring colleagues in innovative and exciting work environments. I know that many of our colleagues in BP today are asking for very similar things. So the question for BP, in a world where people have more choice than ever, is can we give them what they want? You might be unsurprised to hear that, undoubtedly, I believe the answer is yes. I believe we're already offering many of the things they look for. And I'm determined to ensure we continue to do more for our people, both for those already in BP and those that will join us over the years ahead. But let's be honest, right now we have a problem with our image. Many people don't think of BP as an exciting, welcoming or inspiring place to work. We even heard 1 person say that they're not sure the energy industry is the right place for them. So let's not kid ourselves. We've got a bit of a challenge. To deliver on our strategy, we have to ensure we're doing everything we can to attract and retain the best people. As the person responsible for people and culture, I want to talk about how our people are key to delivering our strategy and reinventing BP, and what we're doing to help them perform at their best. To ensure we have the right people and capabilities, we must change. We will build on the strong foundations and deep expertise we already have as well as accessing what we need for the future. And we will unlock the human energy that exists within BP through our purpose, as you just heard from Giulia, guiding us forward, changing how we work to enable our people to be their best, and our leadership driving change. Ultimately, our success will be judged by our performance. Have we delivered on our purpose and ambition? But let me start by talking about where we are today. In my 10 years working for BP, I've met and had the privilege to develop some amazing talent. We have deep technical expertise with more than 16,000 engineers and operators, just under 9,000 biofuels experts, and that's just scratching the surface. We have skills that allow us to achieve extraordinary things, extracting oil and gas from seemingly impenetrable rocks in the U.S. or delivering lubricants that can work under the most extreme conditions including the outer reaches of space. And our experience in delivering large, complex projects means we can supply energy to the people who need it most. Whether that's the vast modernization of our Whiting refinery or delivering technically challenging projects like Shah Deniz 2. Our long experience and strong global relationships mean we are able to navigate ever-shifting energy markets from working with Reliance in India to create the Jio-BP retail network to developing transport solutions with DiDi in China. And our increasingly diverse teams mean we're able to draw on a range of talents, better reflecting the societies we serve. Our amazing people will be as valuable tomorrow as they are today. So the likes of Emeka Emembolu, who's leading our business in the North Sea, he has more than 20 years' experience in oil and gas and we'll be continuing to do what he does best for many years to come. We're also able to take skills from our existing businesses and use them in a reinvented BP, skills like project management, finance or trading. Other people have skills in 1 field that are directly applicable in another. Take Louise Jacobsen Plutt. Louise has a deep experience in wells, but now she's applying what she's learned to head up our hydrogen business, something of great importance to us. Of course, while we have many skills within BP, we don't have everything we need to deliver on our strategy. Where that's the case, we are already finding ways to get them. This involves reskilling our own people and unleashing their potential in a new direction. People like Mukta Tandon, who has a strong background in marketing and communications and now leads Castrol's global digital team, or hiring fresh and different talent from beyond our industry. And that's why we hired Fran Bell, who was working at the Toyota Research Institute, and before that, Uber. Fran will bring her exceptional skills to our data science team. Our ability to nurture the rich talent that already exists within BP as well as bringing in new capabilities is central to reinventing BP. But we know that building capability is something that any of our competitors can do. What I believe will make us distinctive is actually what guides us, how it feels to work here and how we lead. Let me explain what I mean. First of all, purpose. For more than a century, people at BP have been coming to work to help solve some of the world's greatest energy challenges. But our new purpose is inspiring our work like never before. It resonates with people, both those inside the company and the communities we serve. For those of us in BP, our purpose is what makes what we do more than just a job. It brings meaning and makes us proud to work here. Our new purpose is making people outside of BP want to work with us in a way that they didn't before. It will guide us in all we do. For example, in 2019, we committed over $80 million to social investment, of which more than $25 million specifically targets education and employment. I look forward to sharing more soon on how we're going to refocus this work to our new ambition. For now, we're expanding our sponsorship with the global educational NGO, AFS Intercultural Programs. And through a new partnership with The Prince's Trust, we're aiming to expand the reach of our apprentice and internship programs. What's also exciting about being in BP at the moment is you can really see our people living our purpose. COVID-19 provides a great illustration where our teams sprang into action. We offered free fuel to emergency services in 9 countries and PPE equipment in the U.S., U.K. and Australia. We donated high-performance computing power to support health care researchers. And then there are dozens of individual stories. People like Ricky Burns, a team lead in Houston, who used a 3D printer to make personal protective equipment. Amazing examples like that are helping change impressions of BP as well as enabling us to bring in the best talent. At the 2Q results and launch of our strategy, Bernard talked about Jo Alexander returning to BP. But I also have an example from my own team. Sarah Odell used to work with me, but she felt BP wasn't the place for her to make longer-term career, and she decided to leave, spending time in finance and then health care. Fortunately, I stayed in touch with Sarah, and then we announced our new purpose. She thought maybe BP was a place she could lead a fulfilling career after all. Well, I'm delighted to say that Sarah is rejoining BP to help us transform how we work. That's the power of purpose. It can win over critics, attract the best people and provide great inspiration. So we're building the right capabilities. We have a purpose to guide us. And now we need to shift how it feels to work here. To do this, we believe we need to be 3 things. The first is integrated. This plays into many areas. But in summary, we are integrating across and along with the energy value chain. Structurally, BP has moved away from the siloed upstream-downstream model to create an integrated and focused BP. Later this week, you'll hear from William and Carol, who, in addition to Giulia, lead entities that will help us do just that. And this will happen within a leaner and more focused organization, which, as you know, will see us reducing our workforce by around 10,000. The majority of which will leave BP this year. We're extremely sad to see our friends and colleagues leave and have spent a lot of time on how we can do more than we normally do to support them, including creating a new transition offer, MyFuture. We're on track to stand up the new structure on the first of January next year. With almost all the design work complete, we've appointed 730 leaders to new roles. The second, is being more agile. This means deploying cross-disciplinary teams and e empowering them to solve problems and seek opportunities. In the last 2.5 years, we've successfully run almost 800 agile projects across 5 continents. Now we'll look to roll that out much more widely. And in fact, my own people and culture team will itself operate in a fully agile way. Third is being increasingly diverse and inclusive. We will continue to operate as 1 global workforce with everyone playing a role. But we need to progress the D&I agenda further. When it comes to gender equality, nearly 40% of the 730 newly appointed leaders are women. Our goal is to continue to increase this proportion and exceed at lower levels. And in racial diversity, we want to do more. In the wake of recent racial injustices and subsequent social unrest, we've created a new framework for action in the U.K. and the U.S. with more to come globally. It focuses on transparency, accountability and increasing African-American and minority representation. We're doing this not just because it is the right thing to do or because it makes good business sense, but because we believe companies like ours should help drive forward social progress. And we will continue to make further steps along this road, under the leadership of Mark Crawford, recently appointed as our new SVP of Diversity & Inclusion. Being integrated, agile and inclusive will shape our people's experience of working at BP, an experience also enabled by 2 very important activities. The first is transforming our working environments, not just places where people feel they can speak up, but also places where people know they can be themselves and feel supported. The second is prioritizing our people's well-being. This is something I know Bernard is really passionate about and is aligned with our new sustainability frame. We're offering our people access to a range of facilities and services such as the Headspace meditation app or support through the employee assistance program. But we will go further. Our donation to the Mental Health Charity Mind is a testament to that. Well-being is becoming part of the BP language just in the way process safety is. It is a critical part of caring for our people and the communities in which we operate. The point of all of this is to say that we really care for our people and want them to be at their best. Let me move on to the third element, leadership. There are 2 parts to this. First, being clear on what we now expect from our leaders. And second, refreshing the profile of our leadership team. So let me start with the qualities we looked for. We searched for leaders who have a track record of delivery; who are curious and open-minded; who are purpose-driven, not ego-driven; who lead through our values, especially safety; and most importantly, leaders who are empathetic, but who are also prepared to hold others to account. Now let me tell you about the group of leaders we selected. First, we have removed an entire layer of management at the top of the company, halving the number of senior leaders from over 240 to under 120, connecting our leaders more closely with their teams. This 120 strong, new extended leadership team, or ELT, as we call them, are brilliant role models of the qualities I mentioned. They also bring together a broad and diverse set of expertise, views and perspectives. 37% are women, 28% are ethnically diverse and around 1/3 are new senior leaders promising individuals who might otherwise have waited longer before joining the ELT. Individuals like Nicola Buck, who's held several brand and marketing roles, but whose leadership qualities are clear for all to see. And 60% have experienced working in companies outside of BP, including 3 new external hires. People like Ben Gaunt, who joins us from Accenture and brings cross-industry experience as our new Head of Talent. We're extremely proud of our leadership group. But as Bernard has made clear to them on the first day of their onboarding process. We expect a lot, and we will hold them to account. In all of this, the real test of whether we have succeeded or not is our performance. Have we delivered on our purpose and ambition? Leadership will play a role, of course, but we're also changing how we enable individuals to deliver performance. We're evolving to a model of continuous planning and open, transparent and real-time feedback. So everyone will know what is expected of them and how they are performing. We're also better aligning remuneration to performance. There are 3 things we've done. Firstly, metrics for the 2020 annual cash bonus for the wider workforce are tied to a balanced scorecard, consisting of safety, environment, including sustainable emissions reductions, reliability and financial measures. Secondly, our 274 most senior leaders will see at least 30% of their equity award linked to low-carbon measures in support of our strategy. That's up from 5% in the 2018 to 2020 plan. And finally, BP's leadership team will see 25% of their total performance-related pay now linked to emissions reduction and delivery of the low-carbon strategy. I hope this demonstrates our intent to incentivize performance while we transform. I realize there's a lot take in here. But I hope that gives you a sense of what we're doing. It's a combination of capabilities, purpose, how we work, leadership and performance. Getting that recipe right is the key to success. And I believe it is also what will make BP unique. We have a lot of work to do. But I'm optimistic about our future. Delivering on the hopes and expectations set out in that video you saw at the start, feelings that are shared by many of my colleagues at BP. In fact, it is because of our people that I remain so optimistic, because they care for each other, for society and for their communities. And it is because our people care that I'm so confident BP will contribute to adjust transition, both for our teams and for the communities where we operate. This isn't some abstract idea. It's real. It's [ human ]. I could point to many examples but the most poignant for me was when I made my first visit to Tangguh, our gas business in Indonesia. It seems like a world away from London. A 36-hour journey, involving 4 planes and a boat. Since day 1, BP has invested in the local community, providing education, health care and jobs, developing really close ties with the people there. And on my trip, I had the privilege to meet some of the over 100 apprentices we are developing, about half of which are women. Hearing their stories, learning about their journeys, understanding how their BP relationship was transformative for them and their families was genuinely life-changing for me. It was living proof of how BP can have such a positive influence on the world and the communities we operate in. After all, BP itself is a community, a community made of great people who want to make a difference and care in a way that some other companies may not. So if we think back to where we started. India, my daughter found a job teaching maths to school kids. But more importantly, working for an engaging leader and an inclusive environment that makes her feel valued. And those young people, we saw in the video, talking about what matters to them, about making a difference to the world, I firmly believe that BP is the place for them. They are BP people. They just don't know it yet. We'll now take a short break, and then I'll be joining Bernard, Giulia and Murray to take questions from you on what you've heard today. Thank you. [Break]

Well, hi, everyone, and welcome back. Thanks for being with us. I think we had about -- I don't know, I was told, 12,000 people. They always tell me a few more people than we have. But hopefully, we had about 12,000 people. So hopefully, we have many of you still online. So thanks for being with us for the afternoon. I always learn something. I hope you learned something listening to the team. And it's now your turn to ask some questions. So there's been tons and tons of hundreds of questions come in. And they're coming up in front of us here. The team has been trying to sort through them. So I think we'll just get going. So I've got Murray, and I've got Kerry and I've got Giulia, obviously. So the first question is from Singapore. It's from Alan Chan. And Alan asks, how does BP leverage scenario planning in setting its new strategy? And does BP now assume a base case that is aligned or more aligned with achieving the Paris agreement goals? Giulia, you're probably the best person to answer that.