By CEO Ben van Beurden on Oct 28, 2021
The UN climate conference, or COP26, is about to get under way. Glasgow can become the city where real progress is made in setting the world on a path to net-zero emissions. A lot of work still needs to be done, but 197 governments can take a big leap forward in this city to achieving the goals of the Paris Agreement on climate change.
Glasgow was also the home of James Watt, the man whose version of the steam engine started the industrial revolution and brought unprecedented economic development to the world.
The industrial revolution led to something else as well. It led to a way of life, and energy use, that adds greenhouse gases to the atmosphere.
Today, many businesses are increasing their efforts to help the world tackle climate change. Shell has just announced additional milestones to Powering Progress, our strategy to become a net-zero emissions business by 2050, in step with society’s progress to achieve Paris. We’ve set a new 2030 target to halve our absolute greenhouse gas emissions, compared to the level in 2016, on a net basis. This covers all Scope 1 and Scope 2 emissions under Shell’s operational control. This means all emissions from our own operations, like refining, producing oil and gas and manufacturing chemical products, and all emissions from the energy we buy to run these operations, like electricity, heat and steam.
Our current business plans are changing to achieve this target, and we know we need to accelerate the change. We are taking action on several fronts. We are, for example, concentrating our refining operations into five integrated energy and chemicals parks, making strategic divestments, and bringing forward our aim to eliminate routine gas flaring from 2030 to 2025.
This new emissions target is another important step for us. But one company’s target to reduce carbon dioxide emissions will clearly not be enough for the world to achieve net zero. Changing the energy system requires changing demand, as well as supply. Let’s say Shell switched the products we sell overnight. Instead of petrol and diesel, motorists at our service stations could only get hydrogen, or recharge their electric cars. It wouldn’t make people buy a hydrogen or battery electric car. They would simply drive down the road and fill up at one of our competitors.
So governments will have to play an essential role in helping to shape demand, using mandates where needed, creating the right climate for investment and helping steer society towards low-carbon and renewable energy. This is why we are stepping up our advocacy for more ambitious and effective policies, asking governments to intervene more often with measures to regulate the energy sector. For example, we are asking for clear frameworks and timelines for phasing out cars and vans that run on petrol and diesel, as we’ve done in the UK, and phasing in battery electric and hydrogen vehicles. I’m hopeful governments will agree to do more in Glasgow.
To start, individual countries should show more ambition. With the national promises so far made, the world will not limit global warming to 1.5°C, compared to pre-industrial levels. In fact, the International Energy Agency’s most recent World Energy Outlook shows that the current nationally determined contributions will lead to the temperature rising to 2.1°C by the end of the century, passing the amount of carbon dioxide the world can use to stay within 1.5°C as soon as 2030. So countries must show leadership in Glasgow with ambitions that go further and faster.
Another way to do more is by extending policies to sectors of the economy that cause worldwide emissions rather than focusing only on national emissions. Think of emissions from sectors that cannot be easily decarbonised like aviation, shipping and the production of steel, cement and chemicals. This is why I’m hoping to see more support in Glasgow for a sector-by-sector approach. For example, an international mandate for sustainable aviation fuel. But also, support for ways to deal with industrial emissions that can’t be avoided, like solutions in nature or technologies that capture and store carbon dioxide.
All of these approaches would benefit greatly from robust carbon pricing and a way to trade carbon credits globally. The world needs governments in Glasgow to agree on a functioning framework for co-operative action that enables governments across the world to trade carbon. For countries that struggle to meet their emissions targets, this could allow them to buy emissions reductions from countries that have already achieved their target. This can give all countries the chance to achieve their targets, and overachievers an incentive to do even more.
Such a framework for co-operative action already exists on paper. It’s called Article 6 in the Paris Agreement. It was agreed in 2015, but for various reasons, it is still not operational. Governments could follow James Watt’s example and set change in motion by fixing this in Glasgow. If they also increase their ambitions and extend policies to hard-to-abate sectors, they can bring the world closer to net-zero emissions. As I said, I hope they will.
This article was originally posted on LinkedIn.