Signals to a brighter future
Jul 5, 2018
Speaking at the Powering Progress Together event in London, UK, Ben van Beurden, Shell’s CEO, sets out how collaboration, an acceptance of multiple answers and clear signals from the world’s governments can unlock a cleaner future for transport and beyond.
This time last year my colleague, John Abbott, gave a speech to open this event. He spoke about surprises. A month later the British government came up with its own surprise: the plan to end the sale of conventional cars and vans.
You might think that this would be an unwelcome surprise for the CEO of an oil and gas company.
Actually, I like it.
The reason I like it is because it provides a clear signal that will enable investment and help move consumer attitudes. There is a lot of work to do to take the emissions out of passenger road transport.
Today, the UK has around 45,000 pure-electric cars on the road, out of a total fleet of around 31 million. That is a tiny proportion. The market needs help. The market needs clear signals.
And the world, too, really needs more clear signals from its leaders. Because there is a lot of work to do to meet the aims of the Paris Agreement: to restrict warming to well-under 2° Celsius; to deeply cut global greenhouse gas emissions at the same time as meeting rising demand for energy.
Shell’s latest scenario, called Sky, looked at the scale of change the world might need to make. It looked at what meeting the Paris goals could mean.
This scenario includes a tripling of energy efficiency, an end to deforestation and substantial technological advances to solve challenges like large-scale battery storage.
It includes a massive expansion of wind and solar power generation. That is just a small taste of the change that might take place.
In this Sky world, autonomous vehicles could become truly common. Transport manufacturing could be revolutionised to the extent that most vehicles would be based on the same standard chassis. And every new passenger car in the world could be electric by 2050.
This is change on a scale that can only happen with a huge, coordinated, global effort backed by deep reserves of social and political willpower.
It requires people to make substantial changes to their lives: what they buy, the homes they live in and how they get around.
There is so much to do that the world has to be efficient in its action, if it wants to be effective. Unfortunately, today, so much time, energy and effort is wasted on disagreeing.
Solutions are so often defined in opposition to something else.
More innovation or more regulation? More gas-fired power or more renewables? When it comes to government-led carbon pricing mechanisms, should it be cap-and-trade or a tax?
Well, in every case, it doesn’t matter. Because the world needs more innovation and more regulation, more gas-fired power and more renewables, and in some places cap-and-trade works better than a tax.
We see the same in transport. Internal combustion engines against battery electric. Battery electric against hydrogen. Bikes against cars. On all these and more, it doesn’t matter. We need every solution we can get, because no one solution meets all needs, in all places, at all times.
And to deliver these solutions, there are so many technological steps we must take. So much that people will need to explore, accept and embrace. Driverless cars, ride-sharing, ownership models…to name just a handful.
We do not have time to waste on disagreeing.
And that is why events like today are so important. To bring people together, exchange ideas, find new solutions together. And that is why I am so grateful you have all come here today.
Because I deeply believe that the world does not need one solution or another. But one solution and another. And another, and then some more.
We need battery electric vehicles. And we also need hydrogen, liquefied natural gas, biofuel. And, yes, we also need to further improve the internal combustion engine. It will be around for a long time to come.
And there is a thriving market for older cars in the developing world. 99% of cars imported into Kenya are second hand. In Uganda the average age of an imported car is more than 16 years. In Mexico the average imported car is 11-years-old.
The global system is changing, but it takes a long time to change everything, everywhere.
Many of you will remember the time when leaded petrol was on sale. It was banned in Japan as long ago as 1986, but it is still on sale today in Algeria - 32 years on. And removing lead from petrol is far easier than removing carbon from the entire transport system.
The fact that it takes so long for the entire global system to evolve means it is even more important for countries like the UK to be acting now.
Shell is active in seeking ways to help improve the efficiency of the internal combustion engine, developing cleaner fuels and better lubricants in close partnership with vehicle manufacturers. Not just to lower carbon emissions, but air pollution too.
And Shell is active on many other fronts.
When it comes to transport, Shell is involved with battery electric vehicles, biofuels, hydrogen and liquefied natural gas, or LNG. And Shell is not just about fuels. We are looking at solutions across the sector.
That does not mean we are involved in everything. Please, do not expect to see a Shell-branded autonomous vehicle on your street any time soon.
But it is already possible, here in the UK, to use a Shell charging point to recharge the battery of your electric car at home with electrons sold to you by Shell. That is because Shell now owns the power company First Utility. And it also owns NewMotion, one of Europe’s largest providers of charging points for electric vehicles.
We have also started putting recharging points at some Shell forecourts in the UK and, in partnership with high-powered charging network operator IONITY, across Europe.
It makes sense to invest in this area. Battery electric vehicles are excellent for personal travel covering relatively short distances, including so-called last mile delivery services. As you know, it can also be used for buses.
But we need other solutions too.
Hydrogen, for example.
Many of you here already understand that hydrogen enjoys the advantage of having a higher energy-density compared to batteries. Higher energy density brings longer range and the potential to handle the bigger loads hauled by trucks. I know the UK is looking into hydrogen-powered trains. And it is quick to refuel with hydrogen.
It is such advantages that have persuaded Shell to open two hydrogen filling sites in the UK with four more on the way. Shell is a founding member of the Hydrogen Council which seeks to promote innovation globally. We are also part of a joint venture to install a nationwide network of hydrogen filling stations in Germany.
It is already possible to drive a hydrogen-powered vehicle from the northern tip of Denmark to Lake Garda in Italy.
And Shell is building hydrogen filling stations in California too, including, significantly, a hydrogen stop for fuel cell trucks in one of the world’s busiest ports, Long Beach. Toyota is building the trucks, Shell is building the filling station.
As an aside, that Toyota truck project will be linked to a biogas plant which uses the waste produced from nearby dairy farms. Essentially, California is going to be getting the world’s first hydrogen trucks to be powered by cows.
Yet, even as solutions such as battery-electric and hydrogen build towards significant scale, the world needs yet other solutions that are available right now.
One of these is LNG, which can work well not only for trucks but also for shipping. It is cleaner to use than both diesel and heavy fuel oil, especially in terms of air pollutants.
Sovcomflot, one of the world’s leading shipping companies, will deliver the first crude oil tanker powered by LNG this month with a second one on the way next year. In 2019, cruise operator Carnival, will start adding LNG-powered ships to is fleet. Shell will provide LNG to both companies.
Gas-to-liquids technology means Shell can already provide a direct replacement for diesel in trucks that comes with much lower levels of air pollution.
In fact, if you watched the royal wedding in May, the power for a lot of the cameras and lighting came from generators being powered by this fuel. Unmodified diesel generators running on much cleaner-burning fuel.
Low-carbon biofuels can help with internal combustion engines right now. And the next generation of biofuels also has potential for aviation.
Shell is already one of the world’s largest blenders and distributors of biofuels. And Shell is looking to develop other biofuel technologies, such as waste-to-fuel and biogas.
We are looking at other solutions too. But, as I said, Shell is not involved in everything. I know many of you are working on other ideas, other solutions. That is good. No, not just good, but essential. I want to hear about your solutions, I want to know if we can work together.
Because the climate challenge is vast. To meet it the world needs governments, NGOs, businesses, consumers, academics and experts – all of us, working side-by-side. And we must get help to do so. Help in the form of clear direction from governments and regulators.
The UK’s plan to end the sale of conventional vehicles is a good example. And I hope the UK is about to give more direction, with Defra looking at air quality, the department for transport due to publish its “Road to Zero” strategy and the Treasury looking at fuel duty.
But the clearest, most powerful and most welcome piece of direction would come from government-led carbon pricing mechanisms, pulling both consumers and businesses towards lower-carbon choices.
The effect of the UK’s carbon price floor, which has helped to significantly lower CO2 emissions in the power sector, is an example of the potential waiting to be tapped around the world.
With clear, coordinated, consistent signals such as these, businesses can invest in the solutions the world needs. And with that investment, these solutions can be produced on ever-increasing scale.
With co-ordination, businesses can standardise. And with scale and standardisation comes lower costs for the consumer.
Lower costs for batteries and fuel cells, charging and refuelling points, for low-carbon solutions covering buses and trucks, cars and vans, trains and planes.
Much of the challenge involves producing solutions that customers are willing to pay for. That means more than having good solutions. It means having good solutions that are affordable.
Because ultimately, tackling climate change comes down to how people live their lives and the choices they make. It is about what people will trust, what they will pay for, what they will vote for.
People need to be persuaded. And they will only be persuaded by a united, cohesive, collaborative approach.
The sort of approach that results in good products at affordable prices. And exactly the sort of approach I know we are going to enjoy today.