Our lives depend on energy wherever we live. But in order to prosper while tackling climate change, society needs to provide much more energy for a growing global population while finding ways to emit much less CO2.

Shell has long recognised the climate challenge and the role of energy in enabling a decent quality of life. We believe that, while technological developments will emerge, effective policy and cultural change is essential to drive low-carbon business and consumer choices and opportunities. The transition to low-carbon solutions is best underpinned by meaningful government-led carbon “pricing” mechanisms.

We welcome the efforts made by governments to cooperatively reach the global climate agreement and support long-term climate goals that balance environmental pressures with development opportunities. The Paris Agreement of December 12, 2015, could provide greater certainty about how the world can provide more energy with much less CO2.

Today, Shell is still primarily an oil and gas company, but we have a long tradition of innovation. We know that long-term success depends on our ability to anticipate the types of energy and fuels people will need in the future and remain commercially competitive and environmentally relevant.

Our natural gas businesses give governments the option to reduce emissions from electricity, by replacing coal, and we have an interest in a wind business with over 1,000 megawatts of capacity. We have also invested heavily in the lowest-carbon biofuel, through our Raízen joint venture with Cosan in Brazil, and we continue to explore second-generation biofuels options. More recently we have piloted a number of projects to bring liquefied natural gas (LNG) to shipping and trucking customers and, in 2015, we announced the first nationwide hydrogen-electric fuel network in Germany.

Shell is a long-time supporter of government-led carbon “pricing” mechanisms. We have a number of vehicles to support investment in new technology, such as Shell Technology Ventures (STV) – a venture capital body with an investment focus on a mix of traditional oil and gas, clean and green technology. In recent years, STV has supported both solar-based and wind businesses.

We are also committed to reducing our emissions intensity and continuing efforts to improve the energy efficiency of our operations as well as ending continuous flaring.

Shell Scenarios and pathways to decarbonisation

Shell Scenarios* envisage a future where renewable energies could eventually become the largest component of the global energy system. But, despite the rapid growth of renewables, they anticipate that it will only be possible to provide the full range of energy products by combining renewables with cleaner hydrocarbons such as natural gas, and deploying technology to capture and store emissions of CO2.

To achieve such an outcome for a global population of at least 9 billion by mid-century will require an enormous global undertaking supported by effective policy, a sense of urgency, and long-term vision.

According to Shell Scenarios, the energy system of the future will be something of a patchwork. Some countries and sectors of the economy could de-carbonise in the coming decades, while others – such as energy intensive heavy industries – will likely require more time to develop technology solutions.

Ways society can move towards a lower-carbon future include improving energy efficiency, switching from coal to natural gas, increasing electrification and the use of renewables. Further options include boosting the use of low-carbon fuels, rethinking land-use and agrarian policies, and improving low-carbon infrastructure planning for cities and transit systems.

Shell Scenarios suggest that the world will require means of achieving “negative” emissions in some sectors to offset remaining emissions. One way to do this is to combine sustainable biomass gasification with the capture and storage of carbon dioxide (CCS) in power generation.

Read more about ways to help reduce CO2 emissions, and where Shell is active.

Natural gas

Natural gas

Natural gas produces half as much CO2 as coal when used for electricity generation. Replacing a coal-fired plant with a gas-fired plant that has carbon capture and storage (CCS) can cut CO2 emissions by up to 90%.

The rapid implementation of natural gas in place of coal, and alongside greater use of renewables, could significantly reduce emissions from the power sector.

The use of natural gas in the power sector is almost certainly the fastest and most economical way in which some countries can reduce their CO2 emissions in the short term, as the UK and USA have both demonstrated. Natural gas in liquefied form can also be used as a transport fuel able to reduce costs for customers, decrease air pollution from current levels, and help to reduce global CO2 emissions.

Our natural gas business gives governments the option to reduce emissions by replacing coal-fired power stations with gas-fired ones.

We have piloted a number of projects to bring liquefied natural gas (LNG) to shipping and trucking customers. 

Read more about Shell and natural gas

Carbon capture and storage

Carbon capture and storage

Shell believes the world will need to find ways to deploy carbon capture and storage (CCS) – a combination of technologies to capture and store CO2, preventing its release into the atmosphere – to achieve its ambition to tackle climate change. Already, CCS is capturing CO2 from power generation and industrial processes around the world. There are a number of large-scale CCS projects in operation, capturing around 25 million tonnes of CO2 each year, according to data from the Global Carbon Capture and Storage Institute.

Shell is a leader in helping to advance technology to capture and store CO2 emissions with CCS. This is one of the only technologies that can significantly reduce carbon emissions from industrial sectors of the economy.

Shell, working with its joint venture partners, has a large-scale CCS project in Canada called Quest, which captured and safely stored one million tonnes of CO2 in its first year of operation. But wider uptake of CCS is needed. The International Energy Agency says that the cost of tackling climate change could be 40% higher without CCS and, over time, that CCS could account for more than half the CO2 reductions needed to reach net-zero by 2100.

Read about our carbon capture and storage projects

Renewable energy

Biofuels at a Shell service station in Brazil
Shell produces one of the lowest-CO2 biofuels available today through our joint venture Raízen, which makes ethanol from sugar cane in Brazil

Renewable energy

Renewable energy sources including hydroelectric and biomass, and zero emissions nuclear power currently supply around 19% of global primary energy, of which around 1% comes from wind and solar, according to the International Energy Agency. The remaining 81% of primary energy comes from hydrocarbons.

Shell has a decade of experience in wind power, with an interest in a wind business in North America and Europe providing over 1,000 megawatts of capacity. Natural gas, as a complement to renewables, also addresses the current shortcomings of renewables in volume, availability, intermittency, storage and energy density. 

In Brazil we have made a substantial investment in the production of sugar-cane ethanol, which is the lowest-carbon biofuel. We continue to explore second generation biofuel options.

Shell Scenarios suggest that society will need to grow its renewable energy share to around 80% of an energy system much larger than today’s if the world is to complete an energy transition and achieve a long-term goal of near net-zero emissions by 2100.

Carbon "pricing" mechanisms

Carbon "pricing" mechanisms

Shell supports the establishment of government-led carbon “pricing” mechanisms that deliver a meaningful cost on CO2 emissions, necessary to create a shift to a lower-carbon power and fuel options.

A carbon “pricing” mechanism is an effective way to stimulate investment in the development of low-carbon technologies and to create new energy choices. Government carbon “pricing” policies are designed to change the cost of goods and services, to favour those that result in lower emissions.

Both CO2 taxes and emissions trading systems could generate new revenue for governments and ensure that consumers are not affected by higher energy costs. Ideally this could create a virtuous circle in which emissions fall, while living standards continue to rise.

Read about the World Bank initiative on carbon pricing

Low-carbon transport

Low-carbon transport

We believe that a wide range of low-carbon transport options is needed. For example, greater use of electric vehicles in cities could help to reduce pollution, while hydrogen could become a viable and affordable transport fuel for electric vehicles.

Meanwhile, biofuels, liquefied natural gas (LNG) and other liquid hydrocarbons will continue to play a significant role in road, sea and air transport.

In addition to pilot projects bringing LNG to shipping and trucking customers, in 2015 we announced the first nationwide network of hydrogen fuelling pumps at retail sites in Germany.

Read about Shell and the future of transport

Media release: Shell to install nationwide network of hydrogen vehicle fuelling pumps in Germany

Power generation

Power generation 

Greater use of low-carbon electricity to power our lives and economies is key to creating a lower-carbon future. Electricity’s share of the global energy total could grow significantly, spurred by greater use in heating and transport.

This increased use of electricity will need to come from lower-carbon sources, including renewables and natural gas if the world is to meet its energy needs and address climate change. 

*Shell Scenarios are part of an ongoing process used in Shell for 40 years to challenge executives on the future business environment. We base them on plausible assumptions and quantification, and they are designed to stretch management to consider even events that may be only remotely possible. Scenarios, therefore, are not intended to be predictions of likely future events or outcomes and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities.

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