Balancing The Continued Demand For Traditional Fuels With The Diversification Of The Energy Mix

Traditional fuels continue to be a critical part of the energy mix around the world. Despite the shift towards non-fossil fuels, traditional hydrocarbons are still a fundamental source of energy to meet global demand and are expected to be needed for decades to come. The global market for liquid fuels (oil, biofuels and other liquids) evolves as demand peaks and supplies shift. The long-term trajectory of demand depends on a number of factors, including macro-economic trends, technology development and deployment, consumer needs and choices, and government energy and transport policies.

The global consumption of liquid fuels has returned to pre-Covid levels and is expected to grow further in the years ahead, with estimates ranging from 106 mb/d towards the end of the decade to 116 mb/d in 2045. Demand for liquid fuels is projected to continue to grow in Asia, particularly in India, and in Africa, offsetting the downward trend in consumption in developed economies. As we grow our global energy business, the Prax Group aims to play an increasingly material part in meeting the continuing demand for these fuels.

However, the transition to a lower-carbon environment is reshaping the future of the global energy system, with a more diverse energy mix. The role of fossil fuels is set to decline over time, offset by an increasing share of renewable energy and a growing role for electricity. Renewable energy, led by solar and wind power, is expected to be the fastest growing source of energy over the next 30 years, supported by a significant increase in the development of, and investment in, new wind and solar capacity. The intermittency of these power sources means a variety of different technologies and solutions are needed to balance the energy system. The use of hydrogen, as well as bioenergy (biofuels, biomethane and biomass), will increase as the energy system progressively decarbonises.

As a key enabler of this energy transition, we are developing a clear, fit-for-business energy transition strategy. This will reflect our strengths as an integrated global energy business and our focus on meeting the needs of our customers in different markets around the world, by establishing an asset-by-asset, country-by-country energy transition roadmap. As part of our strategy, we will aim to make the most of a balanced portfolio of decarbonisation technologies and solutions, including carbon capture utilisation and storage (CCUS), energy efficiency initiatives, co-processing hydrotreated vegetable oil (HVO), biofuels, sustainable aviation fuel (SAF) and hydrogen, while ensuring financial rigour and discipline in our approach. We want to make sure we fully understand, comply with, and report on the various requirements across the different jurisdictions in which we operate. We will strategically score each major asset and jurisdiction, including evaluating where the asset is on the energy transition journey and where it needs to be by 2030/2050, in line with country-specific legislation and regulations.

We believe that selecting realistic climate targets for all our different assets around the world is pivotal in navigating the complexities of jurisdictional emission reduction strategies, as well as developing and implementing a credible, fit-for-business energy transition architecture, so that we can continue to serve the needs of our customers for decades to come.