Shell urges government action on CO2 emissions

Speaking in Brussels at the European launch of the Shell Energy Scenarios, Mr. van der Veer will in particular call upon European policymakers to urgently put in place incentive measures to ensure the rapid development of techniques to store CO2 underground.

“Because CO2 capture and storage adds costs and yields no revenues, government action is needed to support and stimulate investment quickly on a scale large enough to affect global emissions.  Delaying the widespread deployment of CO2 capture and storage beyond 2020 would translate into a yearly 1-ppm increase in long-term atmospheric CO2 stabilisation levels,” Mr. Van der Veer will say in his remarks at the event, organised by the Friends of Europe in association with Shell. “At the very least, companies should earn carbon credits for the CO2 they capture and store.”

Government policies adopted in Europe in the next five years could help shape the world’s energy landscape for a half-century to come, Mr. van der Veer will say. A particularly important step would be establishing incentives for companies to develop technology to capture CO2 from large industrial sites like power plants and safely store it underground. A failure to do so could jeopardise Europe’s leadership of the fight against climate change.

“The recent EU proposal for a Directive on CCS will provide the legal and regulatory framework to make the geological storage of CO2 possible. Yet, in the absence of an accompanying transitional EU funding mechanism to incentivise private sector investment, large-scale CCS projects in Europe are likely to be delayed. The upcoming policy debate on CCS and the EU Emissions Trading Scheme (ETS) provides a unique opportunity that must not be missed, to devise a framework for funding. We would support CCS projects being granted credits for the CO2 they capture and store, tradable in the ETS market. This could provide the necessary incentive to trigger private sector investment and make CCS happen today,” Mr. van der Veer will say.

The Shell Energy Scenarios to 2050, to be unveiled in Europe for the first time today, chart two plausible ways the world’s energy picture may evolve over the next half-century. The two scenarios are called Scramble and Blueprints. For the first time Shell is expressing a preference for one of them: Blueprints.

In the Scramble scenario, nations rush to secure energy resources for themselves, fearing that energy security is a zero-sum game, with clear winners and losers. The use of locally produced coal and homegrown biofuels increases fast. Taking the path of least resistance, policymakers pay little attention to curbing energy consumption – until supplies run short. Likewise, despite much rhetoric, greenhouse gas emissions are not seriously addressed until major shocks trigger political reactions. Since these responses are overdue, they are severe and lead to energy price spikes and volatility.

The Blueprints scenario is less painful, even if the start is more disorderly. Numerous coalitions emerge to take on the challenges of economic development, energy security, and environmental pollution through cross-border cooperation. Much innovation occurs at the local level, as major cities develop links with industry to reduce local emissions. National governments introduce efficiency standards, taxes, and other policy instruments to improve the environmental performance of buildings, vehicles, and transport fuels.

Importantly, a Blueprints world with widespread use of technology for CO2 capture and storage results in the least amount of climate change, provided emissions of other major manmade greenhouse gases are similarly reduced. It also provides a more stable business environment to make long-term investments.

However, conclusions from the Shell energy scenarios illustrate how much work must be done to achieve a world resembling the one imagined in Blueprints. Deployment of  CCS and a wide range of low-carbon technologies will be needed to meet the climate change challenge. For instance, the Blueprints scenario assumes CO2 is captured at 90% of all coal- and gas-fired power plants in developed countries by 2050, plus at least 50% of those in non-OECD countries. Today, none capture CO2.

Jeroen van der Veer will present the Shell Energy Scenarios at the Bibliothèque Solvay, Parc Léopold, Rue Belliard 137, 1040 Brussels, on April 7, 2008 at 17:30 hrs.

Notes to editors

Shell has estimated that each year we delay the widespread deployment of CCS beyond 2020 will translate into a 1-ppm increase in long-term CO2 stabilization levels. In other words, assuming deployment by 2020 can result in a 550 ppm stabilisation, then deployment by 2021 will mean that that 551 ppm is the best we can achieve, and so on.

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