DemandOIL AND GAS Achieving net-zero transitions requires addressing the growing demand for energy services while significantly lowering emissions. As markets evolve, low-emission alternatives such as biofuels, clean hydrogen-based fuels for transport and renewable energy sources for power generation are expected to become increasingly cost-competitive. For example, the EV market has seen exponential growth, with nearly 20% of new cars sold globally in 2023 being electric. In the NZE Scenario, from 2040, all new trucks in advanced economies and China will be powered by electricity or hydrogen, with other emerging markets following suit by 2045. In aviation, low-emission fuels, including liquid biofuels and hydrogen-based liquids, currently account for less than 0.01% of total fuel use. However, by 2050 in the NZE Scenario, these fuels will make up approximately three-quarters of aviation fuel consumption. Similarly, for shipping, low-emission fuels (predominantly hydrogen and its derivatives) are expected to comprise around 85% of the global shipping fleet’s fuel by 2050.555 Moreover, annual wind and solar capacity additions are projected to reach 1,150 GW in the NZE Scenario.556 The integration of electric motors in industries that require low-temperature heat, along with the adoption of heat pumps in households, commercial buildings and small-scale industries, will further enable sustainable energy use. To meet these ambitious targets, efforts are underway to decarbonize oil and gas operations, as these resources remain essential during the transition. For example, Chevron has made significant progress in reducing emissions in its Permian Basin operations, where oil and gas are produced with nearly one-third of the global industry average carbon intensity. Chevron’s efforts also include converting traditional diesel-powered drilling rigs to electric or natural gas, and switching hydraulic fracturing equipment to dynamic gas blending, which uses a combination of diesel and natural gas. Furthermore, Chevron has installed electric-powered compressor stations and is supplementing grid power with solar fields, further driving down emissions.557 The B2B green premium for the oil and gas sector ranges between 7-10%, translating to a business- to-consumer green premium of 1-6%.558 The market has shown limited price elasticity of demand in the long run, indicating that it can absorb these green premiums effectively.559 Top countries for oil production (2023),560 gas production (2023),561 and lowest CO2 emissions from oil production (2022)562FIGURE 63 Oil-producing countries (2023) 1 US 20% 2 Saudi Arabia 12% 3 Russia 12% 4 Canada 6% 5 China 4%Gas-producing countries (2023) 1 US 26% 2 Russia 14% 3 Iran 6% 4 Canada 5% 5 Qatar 5%Lowest CO2 emissions from oil production (2022) 1 Norway 36 kg CO2e/boe 2 Saudi Arabia 66 kg CO2e/boe 3 United Arab Emirates74 kg CO2e/boe 4 Kuwait 74 kg CO2e/boe 5 Brazil 82 kg CO2e/boe Net-Zero Industry Tracker: 2024 Edition 127

Net Zero Industry Tracker 2024