The Outlook for Energy is our latest view of energy demand and supply through 2050. It forms the basis for our business planning and is underpinned by a deep understanding of long-term fundamentals. In addition to assessing trends in economic development, technology advances, and consumer behavior, the Outlook seeks to identify potential impacts of climate-related government policies, which often target specific sectors.
View our 2022 Outlook for EnergyNo single energy transition pathway can be reasonably predicted, given the wide range of uncertainties. Key unknowns include yet-to-be-developed government policies, market conditions, and advances in technology that may influence the cost, pace, and potential availability of certain pathways. Scenarios that employ a full complement of technology options are likely to provide the most economically efficient pathways. We use projections and scenarios from reputable third parties such as the IEA and the Intergovernmental Panel on Climate Change (IPCC) to help inform our thinking, including the resiliency of our portfolio and opportunities.
We have used the assumptions in the IEA NZE scenario to test the resiliency of our current portfolio even though the IEA acknowledges that society is not on the IEA NZE pathway.
We modeled a hypothetical business and investment portfolio based on the IEA NZE scenario and used a respected third party to conduct an independent audit and confirm the integrity of our model. The evaluation considered existing operations and future opportunities across our business in oil, natural gas, fuels, lubricants, chemicals, lower-emission fuels, hydrogen, and carbon capture and storage.
Outcomes of our testing demonstrate that, under the IEA NZE assumptions, we have flexibility to continue to grow cash flows over time through reduced investments in oil and natural gas and increased investments in accretive projects in chemicals, carbon capture and storage, lower-emission fuels, and hydrogen.
1. The statements and figures contained in this section are hypothetical in nature, do not constitute a forecast of future company performance and are based on assumptions from International Energy Agency (2021), Net Zero by 2050, IEA, Paris.
Read more about IEA NZE scenario analysis and how we assess potential impacts in our 2023 Advancing Climate Solutions Progress ReportUsing our own experts and third-party sources, we monitor a variety of signposts that may indicate a potential shift in the energy transition, including increasing electrification of energy systems, developments in technology for energy storage, development of scalable alternative energy technologies, advances in carbon capture and storage technology, and implementation of new policies and regulatory initiatives, such as carbon pricing. These signposts inform our strategy as we position our portfolio to compete successfully in a broad range of scenarios.
Read more about signposts in our 2023 Advancing Climate Solutions Progress Report