8 minute read 14 Feb 2020
Solar panel on hillside

How delivering the Paris Agreement could become a reality

By Andy Brogan

EY Parthenon Energy Sector Leader

Speaker and industry advocate, optimist, music addict and avid traveler.

8 minute read 14 Feb 2020
Related topics Oil and gas

In the Meet Me in Paris scenario, consumers lead the way as environmental awareness drives behavior and lifestyles adapt. 

This article is part of the Fueling the Future series, examining how oil and gas companies can navigate the opportunities and risks of the low-carbon transition.

Meet Me in Paris depicts the best-case scenario when it comes to the transition to low-carbon or no-carbon energy. None of the other three scenarios shows such a rapid move to low- or no-carbon energy.

Under the Meet Me in Paris scenario, advancement in solar generation, batteries and EVs goes on the fast track. EV and renewable energy costs become competitive with conventional sources quickly, consumers and industry adopt those technologies and the goals of the Paris Agreement are met:

  1. Alternative energy technology improves rapidly, very rapidly. It becomes cheap enough quickly enough to make it cost-effective for companies and consumers to abandon fossil fuel infrastructure
  2. Coal all but disappears from the power generation mix and is replaced almost completely with solar and wind
  3. Nuclear power holds its market share in the generation mix
  4. Natural gas is displaced by batteries to fill in for intermittent power
  5. EV adoption proceeds at a rate that reflects universal commitment by industry and consumers to stop producing and buying cars that are powered by internal combustion engines (ICEs)
  6. Climate change becomes a top priority for governments around the world
  7. Nations agree on, and quickly implement, carbon trading with caps and bans on internal combustion engines that are consistent with the goals of the Paris Agreement
  8. Ocean pollution reaches the top of the international agenda, leading to regulation and outright bans on single-use plastics
  9. Consumers lead the way on environmental awareness, driving dramatic lifestyle changes

In the other scenarios, EV market penetration is slowed (in varying degrees) by consumers who aren’t immediately convinced that cost and performance advantages of EVs are real and who have lingering anxieties about the distances the vehicles can travel before needing to be recharged and the time required to charge. Under these scenarios, adoption of renewable electricity is slowed by natural gas remaining competitive with batteries as the means of compensating for renewables’ intermittency.

Those obstacles fall away under the Meet Me in Paris scenario. Consumers embrace the change in habits necessary to make EVs work.

  • Methodology

    Of all the complex issues facing our world, the transition to a lower-carbon future may be one of the biggest. It’s not a question of “if”, but how and when.

    In our Fueling the Future analysis, EY undertook a deep dive to help oil and gas companies understand the opportunities and risks of the transition. In examining the disruptive forces impacting the industry, we developed a framework which looks at how various risk factors might change oil and gas demand and returns. We’ve distilled the possibilities into four scenarios, which range from a very gradual movement from hydrocarbons to a rapid adoption of renewables.

    Meet Me in Paris

    Technology improves rapidly; alternative energy quickly becomes cheap enough to displace existing infrastructure.

    The Long Goodbye

    Renewables take a place in the market. Oil demand peaks, but stock effects, consumer inertia and continued growth in aviation and petrochemicals keep it from a drastic drop.

    Slow Peak

    Peak oil does not happen soon, thanks to developing countries’ demand for petrochemicals, energy-intense industrial usage and aviation.

    Critical Gas

    Oil demand peaks and trails off fairly quickly as consumers migrate to electric vehicles (EVs). Capital moves toward gas-focused upstream and LNG assets.

Meet Me in Paris depicts the best-case scenario when it comes to the transition to low-carbon or no-carbon energy. None of the other three scenarios shows such a rapid move to low- or no-carbon energy.

So, what does it take to Meet Me in Paris?

Electric vehicle penetration

Transportation accounts for about 15% of carbon dioxide emissions. Transition from gasoline-powered cars to EVs won’t solve the climate change problem, but it will make a significant difference.  Of course, that transition won’t accomplish anything if gasoline and diesel fuel are displaced by electricity generated from coal. And if they’re displaced by natural gas, the effect won’t be as great as we’d like.

Sources of CO2 emissions
  Meet Me in Paris Critical Gas The Long Goodbye Slow Peak
2035 EV penetration by Scenario 99% 41% 37% 22%

Market penetration in 2018 was 2%, approximately double what is was in 2017. Achieving 99% by 2035 could happen with a sustained 25% annual share growth. Aggressive, but that’s what it will take to achieve the Meet Me in Paris scenario.

Gas and renewables in the generation mix

At present, power generation accounts for 25% of carbon dioxide emissions. End use sectors (industry and buildings) account for another 27% and are expected to be increasingly, or completely, electrified in most net carbon neutrality scenarios. If electrification is the key to decarbonization, it’s essential that power generation be decarbonized. 

Under ordinary circumstances, power sector decarbonization would occur through attrition. Fossil fuel plants would gradually wear out and be replaced by solar, wind and other zero-carbon generation.  However, a process of attrition and replacement will not lead us down a path consistent with the goals of the Paris Agreement. It will be necessary to proactively retire fossil-fuel plants and replace them with plants that don’t produce carbon.

For the scenarios, EY teams measured the speed of transition to renewables by determining what percentage renewables and natural gas take, after accounting for demand growth, coal attrition and increases or decreases in nuclear generation. Under Critical Gas, the marginal share is 55% renewables. Under Long Goodbye, it’s 80%. And under Meet Me in Paris, it’s 105%.

In other words, for every 100 megawatt-hours (MWh) of “new” power (demand growth adjusted for changes in coal and nuclear) generated by renewables, 5 MWh of natural gas generation is taken away.

The role of coal and nuclear power

As electricity demand has grown in the developing world, coal has been the fuel of choice. It’s cheap, the technology is easy to implement, and supplies are reliable. However, if the world stands any chance of meeting its climate change goals, this cannot continue.

In the Meet Me in Paris scenario, we assume that coal-fired generation decreases by an average of 5% per year globally, which is well above that of recent history. In the last five years, global coal consumption has gone down by 0.5% per year, largely due to reductions in the cost and price of natural gas and the emergence of cheaper renewables. The story is very uneven geographically, however. Coal consumption has gone down by 5% per year in Europe and North America; increased by 5% per year in India; and, contrary to conventional wisdom, held steady in China.

Meet Me in Paris assumes 2% growth in nuclear power. This may seem like low growth for a no-carbon energy source, but it’s hard to imagine more than steady-state in terms of market share.  On one hand, it is an obvious no-carbon alternative to coal and natural gas. On the other hand, it has well-documented safety and cost issues. The same constituencies that have led the opposition to nuclear power tend to be those who are most concerned with climate change, setting up an interesting political dynamic that no one can predict.

The impact on oil and gas demand

Under Meet Me in Paris – and other scenarios consistent with the Paris Agreement – oil demand falls, and natural gas demand grows slowly, preceding a downturn just before the middle of this century. Conservation and increases in renewable energy lead to the reduction in fossil fuel use.

In this scenario, peak oil demand occurs in 2022, and oil demand falls steadily after that. Natural gas demand grows by only 42 billion cubic feet (BCF) per day, less than 10% over 32 years or 0.3% per annum (p.a.). But under The Long Goodbye scenario, natural gas demand grows by 285 BCF per day (1.8% p.a.), and in the Critical Gas scenario, it grows by 613 BCF per day (3.1% p.a.).

What does this mean for returns?

Compared with the other scenarios, Meet Me in Paris helps deliver returns that fall short across the board. This is no surprise, as the levels of demand fall abruptly, at a rate that comes close to what EY teams expect in terms of asset attrition. As a result, the need for capital (and the high returns necessary to attract it) is reduced. It is important to note that Meet Me in Paris is a bookend on what we might expect and an extreme one at that. 

Returns on oil and gas assets

Although returns are low (some might say subpar), when you weigh up the likelihood of the various scenarios, the primary finding of EY  Fueling the Future research holds: investments in oil and gas assets can be undertaken without substantial risk of regret. No one knows how this will turn out, but there will be oil and gas demand for the foreseeable future.

Evidence of climate change is accumulating, and something will change. Decarbonized energy is an eventual outcome, the only questions are when and how. The Paris Agreement sets ambitious targets, and the Meet Me in Paris scenario reflects that ambition.  


Under Meet me in Paris, all the obstacles to radically increased electrification and greening of the electricity system fall away simultaneously. Not only do electric vehicles (EVs) become cost- and performance-competitive, but consumers become quickly aware, and convinced, of those advantages and are willing to act on them. The cost of distributed energy systems becomes competitive with utility power. Consumers take the risk of buying solar panels and battery backup systems for their homes, potentially disconnecting from the local utility. Companies and capital markets quickly step up with investments in renewable energy and earn returns that make those investments sustainable.  

About this article

By Andy Brogan

EY Parthenon Energy Sector Leader

Speaker and industry advocate, optimist, music addict and avid traveler.

Related topics Oil and gas