Speeches

In talking about their areas of expertise – energy supply, energy consumption and financial services - my fellow panellists have already spoken about the importance of a sound policy and regulatory framework in relation to the climate change dilemma.   I endorse and heartily agree with these comments.  In particular, enabling effective market mechanisms to work will be crucial in tackling this global problem of climate change.

Insert Slide 2 – Mobility is important

We have already heard about some of the dilemmas and challenges facing the world in relation to energy, services and finance – all, you’ll agree, essential to enable us to live the way we wish.  Transport is surely just as important as any of these other sectors in enabling us to live full and satisfying lives.   Transport is essential for economic development and growth, and increasingly important for personal recreation by allowing us to visit friends and family and take much needed holidays away from our workaday lives.

Insert Slide 3 – Personal transport activity and road & rail freight transport activity graphs

Our generation is more mobile than at any time in history, with a total of approximately 32 trillion passenger kilometres travelled in 2000.  This is expected to more than double to about 74 trillion passenger kilometres by 2050, with the largest percentage increase occurring in developing regions like China, India, Latin America and Africa.  The same story can be told in relation to road and rail freight transport activity – expected to rise from 15 trillion tonne kilometres per year in 2000 to 44 trillion tonne kilometres in 2050.  This increase in mobility will be an important element in all regions, but especially the developing countries, achieving their desired economic growth.

Which brings us to the central dilemma inherent in the transport sector.  How do we satisfy the world’s need for affordable mobility while at the same time lessening the impact of transport on the environment? 

Transport neatly illustrates the core of the sustainable development debate.  You can’t inhibit people’s mobility because that will inhibit economic growth.  At the same time, there can be little doubt that, without intervention, this dramatic increase in kilometres travelled will increase the amount of conventional and greenhouse gas emissions from the transport sector.

Insert Slide 4 – definition of Sustainable Mobility

How then do we achieve what the World Business Council on Sustainable Development calls ‘sustainable mobility’ – defined as “the ability to meet the needs of society to move freely, gain access, communicate, trade and establish relationships without sacrificing other essential human or ecological values today or in the future”?  The view of the WBCSD in their report “Mobility 2030: Meeting the Challenges to Sustainability” is that the way people and goods are transported today will not be sustainable if present trends continue, a view which I and my company share.  In fact, Shell and the other companies that participated in the Mobility 2030 project believe that our own long-term success depends on finding ways to make transport more sustainable.  So I believe that we have both a personal and a business imperative to get this right.

The dilemma is complex.  It brings with it political, economic, environmental and technological challenges.  For example, how do we ensure that mobility is extended into developing countries in a way that enables them to reach their full potential? Can we do this by better using existing technologies and fuels, or will new ways of getting around be required?  How can we do this at a price that ensures equitable access to mobility? What can be done about urban pollution and smog?

I don’t want to suggest that these challenges are insurmountable though.   On the contrary, I believe that it is possible to solve the dilemma but it will take sustained will and contribution from every part of society throughout the world.  But it can be done.

Insert Slide 5 – the 7 goals

The slide shows the 7 goals identified by the WBCSD that, if achieved, would improve the prospects for sustainable mobility significantly. 

While all these goals are important in reaching the desired end result, I will concentrate on the first two, given my background in energy production.   That is, how do we reduce conventional and greenhouse gas emissions from transport such that there is no significant public health or climatic damage?

The answer, I believe, is that we have to use today’s fuels and technologies more efficiently and cleanly, and we have to look at new technologies. 

Of course, transport is a broad term.  The main transport types are:  cars, four wheel drives, light trucks, aeroplanes, water transport, freight trucks, 2 & 3 wheelers, passenger rail, buses and minibuses. Light domestic vehicles (cars, 4WDs, and light trucks) are by far the most numerous.

  Insert Slide 6 – LDVs by region

The WBCSD estimates the number of light domestic vehicles will rise from nearly 700 million in 2000 to just over 2 billion by 2050, with nearly all of the increase in the developing world.  Light domestic vehicles and freight trucks consume a large fraction of the fuel used by the transport sector, and emit a large fraction of the sector’s conventional and greenhouse gas emissions.  So, cars, 4WDs and freight trucks are rightfully the focus of much of the work taking place to achieve sustainable mobility.  The goal in these sectors is to reduce conventional emissions, such as those that cause smog, and greenhouse gas emissions, particularly in the urban environment.  There are a variety of initiatives underway right now that will help us achieve this goal.  I will describe each of these briefly in turn:

Insert Slide 7 – New Initiatives

Cleaner gasoline and diesel:  Most developed countries have been enjoying the public health benefits of unleaded petrol for many years.  By 2010, it is expected that unleaded petrol will be available almost everywhere in the world.  Many developed countries, including Australia, are progressively tightening the specifications applying to the levels of sulphur and benzene in petrol and diesel, which will reduce the amount of volatile organic compounds in the air.  By 2009, the allowable level of sulphur in diesel in Australia will have fallen from 500 parts per million to 10 parts per million in less than a decade.  Low sulphur petrol and diesel are expected to be the norm in the developed world by 2010 and by 2030 should be available in all countries, thus dramatically improving levels of air pollution.  

Biofuels: Biofuels describe fuels produced from biomass, such as plants, straw or waste paper. Here in Australia, there has been much interest in using biofuels or biofuels components as a way of reducing both dependence on fossil fuels and emissions from transport fuels.  The Australian Government has set a target of 350 megalitres of biofuels in the Australian fuels market by 2010 – a target which my company and the broader oil industry supports. The two main bio-components for fuel are ethanol, typically blended with petrol, and bio-esters, typically blended with diesel.  Although the environmental benefits of ethanol depend on the feedstock and technology used to produce the ethanol, ethanol does enhance the octane content of petrol, which helps the fuel to burn more efficiently.  Shell in Australia now has an ethanol blend petrol, Shell Optimax Extreme, which has an octane content of 100.    While we believe that there will be an ongoing role for ethanol blend petrol in Australia’s fuel mix, we believe that it is biodiesel which will make the greatest contribution towards the Government’s 350 ML target.  New fuels based on biomass conversion have the potential to overcome limitations of scale and cost while also delivering bigger reductions in CO2.   In my view, Australia’s entrepreneurs should be looking at local commercial production of biodiesel components like rape seed oil, as this will be the way of the future.

Gas-to-Liquids: another exciting innovation is gas-to-liquids, or GTL, technology which turns natural gas, the lowest carbon intensive fossil fuel, into liquid transport fuels.  GTL fuel offers significant reductions in a range of local or conventional emissions, even over the most advanced conventional diesel engines and fuels.  In passenger diesel cars GTL fuel can reduce particulate emissions by 25-40%, and carbon monoxide and hydrocarbon emissions by more than 50% compared with conventional diesel fuel – all without a decline in engine performance.  GTL fuels can be used in existing engines and use existing service station infrastructure. 

Technologies to make vehicles more efficient: Moving away from fuels, there are plenty of things that vehicle manufacturers can do to make vehicles more efficient.  We are seeing continual development in both engine and emissions systems.  For example, we are seeing the efficiency of the internal combustion engine enhanced and conventional and greenhouse gas emissions reduced through the use of hybrid electric propulsion systems.  ICE hybrids can use conventional liquid fuels, or biofuels or GTL fuels, thus further reducing greenhouse gases. As well, there are other steps that vehicle manufacturers can take to improve efficiency and therefore emissions.  For example, a 10% reduction in vehicle weight can produce a 5-7% fuel saving if the vehicle’s powertrain is also downsized. Technologies for reducing aerodynamic drag and rolling resistance could also reduce vehicle fuel usage.  Using satellite navigation and mobile communications to help manage traffic flows could reduce congestion and provide alternative routes to travellers, thereby reducing fuel usage, emissions and hopefully road rage!

Fuel cell technologies: Even further into the future are hydrogen fuel cell vehicles.  Fuel cell vehicles offer the highest overall propulsion systems energy efficiency.  If powered by hydrogen derived from carbon-neutral sources, or sourced from a manufacturing facility which geosequesters all its carbon emissions, hydrogen fuel cell vehicles will ultimately offer the lowest conventional and greenhouse gas emission type of transport available in the world.  Although there are many challenges to overcome before hydrogen fuel cell vehicles take over our roads, like commercially practicable hydrogen storage technologies, affordable fuel cell technologies and packaging the fuel cell system into a vehicle in a safe, reliable, attractive and affordable way, I believe that this will be the way of the future.  It is interesting to note that one of our Shell scenarios, the Spirit of the Coming Age,  foresees that almost 100% of the OECD vehicle fleet will use fuel cells by 2050.

Other methods of transport present different challenges.   Aeroplanes will be the method of transport that takes the longest to find a replacement for liquid petroleum fuel as the energy source.  Whilst aeronautical engineers are improving engine efficiency and achieving weight reduction through improved aerodynamics and the use of lightweight materials, the sheer rate of demand growth in air travel predicted over the next 50 years means that energy use and greenhouse gas emissions from air travel are predicted to increase faster than any other sector.  We don’ t yet know how this issue will be resolved.  On the other hand, marine transport should be able to benefit from many of the engine and fuel technologies that I have discussed above.  We may even be able to move to shipboard fuel cells one day, once the technical challenges of making fuel cells of that size are solved.

 Conclusion

There are many means by which we can answer the challenge of satisfying the world’s need for mobility without increasing conventional or greenhouse gas emissions from transport.    It is doubtful whether any one of these means will be, by itself, THE answer.  Certainly, if I look at my own company, we are actively engaged in many of the possible solutions:  we’re upgrading our refineries to produce cleaner fuel, we’re probably the world’s largest blender of transport biofuels, we are planning to build the world’s largest GTL plant and we are in partnership with the world’s largest car companies to make hydrogen fuel cell powered vehicles a reality.  We believe in measuring and reporting our emissions on a wells-to-wheels basis. Our long term survival and success depends on playing our part in solving the mobility dilemma. And how quickly some of these solutions come to market depends on a number of factors – for example, the higher the price of hydrocarbon fuels, the faster new fuels and more efficient engines will be developed.  Not only will consumers demand alternative and lower cost solutions, the incentives will be there for companies like mine to meet that demand.

The central dilemma of sustainable mobility is balancing the world’s need for affordable mobility with the imperative to reduce conventional and greenhouse gas emissions from transport.  There are many challenges in answering this dilemma, some of which are probably within striking distance of resolution, and some which are still ‘burning questions’.  It is with these burning questions that I would like to finish, and perhaps we can discuss some of them in the question time afterwards:

 See Slide 9 – the Burning Questions

• Reducing transport related emissions of conventional emissions in the developed world will increasingly be a political and social problem rather than a technological or economic one.  How much pressure will governments be able to bring to bear on their citizens to spend money to buy higher quality fuels or upgrade their vehicles to lower pollution levels?
  
• Will developing countries be able to achieve the right balance between reducing pollution from transport and encouraging economic growth?  To what extent will they require economic assistance from developed countries to achieve this balance?  To what extent will developed countries be prepared to offer this assistance?
  
• Bearing mind that, even with significant technological change, it may be necessary for people to change the ways in which they use transportation to achieve the desired outcome, will people be prepared to make that change? Will governments be able to encourage appropriate behaviour?
  
• What contribution to the final solution can we make as individuals? What contribution can we make through our companies?  For those of us in government and policy development, what should we be doing today to position Australia for a sustainable transport future?