Could the oil and gas industry help deliver the Paris Agreement?
Shell’s latest energy scenario, Sky, delivers on the goals of the Paris climate Agreement, but who is going to deliver the energy system that emerges in Sky over the coming decades? Many assume that the current energy companies – such as Shell – won’t deliver such a change.
The implication is that new players must emerge, and the older players fade away. But is that necessarily the case?
The skills to rewire the global economy and develop a new energy system with net zero emissions may well lie with the existing energy companies, although to imagine that no new participants enter is a stretch. While the big story in Sky is the expansion of wind and solar to eventually meet half of global energy needs, several other critical technologies are required, and their roots lie in the oil and gas industry that exists today.
In the Sky scenario, liquid fuels remain important for applications such as airplane fuel or for heavy goods transport. But over time oil plays a decreasing role in providing these fuels. In their place, bio technologies emerge, and large-scale biofuel production plants are built. In many cases, the chemistry behind biofuels is being developed by oil companies and the processes for manufacturing the biofuels are often the same or similar to those found in oil refineries around the world. The infrastructure to store, transport and supply biofuels will also be the same.
Alongside biofuels, hydrogen appears as an important fuel in Sky, both for transport and industrial uses. Today, most hydrogen is manufactured from natural gas and most of the conversion facilities sit in oil refineries and petrochemical plants, although the fertilizer industry is also an important hydrogen manufacturer. Transporting hydrogen, storing hydrogen and distributing hydrogen all happens today in the oil and gas industry.
But hydrogen manufacture from natural gas produces carbon dioxide. That could change. In Sky, hydrogen would come largely from electrolysis of water with renewable electricity, but natural gas sourced hydrogen could compete provided the carbon dioxide isn’t emitted into the atmosphere. At Shell’s hydrogen plant in the Scotford Refinery in Alberta, Canada, carbon capture and storage is applied to the process, effectively removing the carbon dioxide and permanently storing it geologically some 2-3 km below the surface.
The Sky scenario pathway makes significant use of carbon capture and storage, for example, in association with bioenergy production: a technology could effectively remove carbon dioxide from the atmosphere and deliver a carbon sink. In Sky, some 10 billion tons per annum of carbon dioxide is stored underground by late in the century. This success builds on a set of technologies that have been in use within the oil and gas industry for over half a century.
By late in the century, in Sky, more than half of global energy is provided by electricity, but the remainder is made up of various gas, liquid fuels and even some coal.
Delivery of all of these fuels will require the current skills available in the oil and gas industry today.
As policy develops to bring about the changes needed, the world will likely see the current energy companies competing to provide new services and making use of their commercial and technical expertise to thrive through the energy transition.
Read the Sky publication to see how the goals of the Paris Agreement could be met through a combination of technology, government policy and societal actions.
Could society achieve the goals of the Paris Agreement? What do you think? Share your thoughts on social media tagging @Shell and using #ShellScenarios.
This post is part of Shell scenarios ‘could the world achieve Paris’ series.
The Sky scenario illustrates a technically possible, but challenging pathway for society to achieve the goals of the Paris Agreement.
Discover the Sky scenario through our latest content series, twelve questions addressing key topics found within Sky.
Shell scenarios are not the Shell business plan nor a policy proposal. To find out what Shell is doing to thrive through the energy transition click here.
For over two decades Shell scenario thinking has incorporated the issue of climate change. The Sky scenario joins two previous Shell scenarios, Mountains and Oceans that saw rapid decarbonization but fell short of the goals of the Paris Agreement. To achieve the goals of the Paris Agreement, the Sky scenario relies on a complex combination of mutually reinforcing actions by society, markets and governments. It adopts an approach grounded in current economic and policy development mechanisms, but then progressively becomes ‘goal-driven’ to achieve society’s ambition for net-zero emissions by 2070. At Shell, we hope it’s a helpful contribution to one of the world’s toughest challenges. You can explore all three scenarios at www.shell.com/Scenarios