What will drive us tomorrow?
Oct 30, 2018
Speaking at the Singapore International Energy Week, Shell Downstream Director John Abbott looks at why the future of transport will be defined not by one solution, but many.
Ladies and gentlemen,
I am delighted to be here. It is always a pleasure to return to a region where I not only worked for Shell, but where I made a home. And how fitting to be here, in Singapore – in “Lion City”. The very name suggests that as well as being a prosperous city, a city of sweeping parks and sophisticated policy, Singapore has courage too. It has vision.
And this is what the world needs as we face up to a period of profound change. We need the courage to ask tough questions and the vision to seek difficult answers. To say: we do not know every solution yet… but we are working on it.
That is why events like this are so important. They give us the chance to bring people together, exchange ideas and find solutions. I may be one of the speakers, but I am here to listen, to understand and to learn. I am here to discuss the big questions about the region’s energy future. About the multiple solutions that society will need to meet demand, while reducing emissions to tackle climate change and air pollution.
Indeed, we meet at a critical moment. Earlier this month the Intergovernmental Panel on Climate Change outlined the need for an ever more rapid transition to a lower-carbon world. The report is a reassessment of what the world must do to keep the planet healthy – and that begins with CO2 emissions falling sharply from 2020. That is barely a year away.
The challenge comes in many forms, touches every part of our lives and reaches into all industries. It involves every one of us – our societies, our markets, our governments. And in no other area can you see all the issues at work better than the future of transport.
So how do we do things differently? How do we “transform energy”? The theme of the conference is: “invest, innovate and integrate” – and it reflects my answer to the question. There is not one solution… but many.
So, whether we are talking about Indonesia’s plan to phase out petrol and diesel cars by 2040. Or China’s use of liquefied natural gas for transport. Or the smart cities discussed in Vietnam last month, at the World Economic Forum. Or even Singapore’s vision of a city for cyclists and pedestrians, of an intelligent transport system…
Whether we are talking about any of those, I believe we need every solution we can get. Because no one solution can meet all needs, in all places, at all times.
That is certainly a key conclusion of Shell’s latest scenario work, which was cited in this month’s IPCC report. Our Sky scenario sets out a challenging but plausible route the world could follow to meet the aims of the Paris agreement and restrict the rise in global average temperature in this century to well under 2°C.
We all have to show courage and vision. We must be open to unprecedented and sustained collaboration – and the transport sector will certainly have to rise to the challenge.
Today, transport accounts for more than a quarter of the world’s energy use and one-fifth of global energy-related CO2 emissions. In the world of the Sky scenario, every new passenger car sold could be electric by 2050.
Battery electric cars and lighter vehicles will certainly have a big part to play in reducing emissions and achieving those aims. But that is not all we need. We need alternatives for heavy freight, for shipping and for aviation. And batteries do not provide an obvious answer for these sectors yet. Indeed, I have heard lorry drivers joke that if they had to run on batteries, the batteries would be so big that they would have to choose between carrying freight, or battery – not both.
We need to be broad in our thinking. The Asia-Pacific region has already done much to change its energy mix … but as coal use continues to increase and air quality worsens, much more is needed. We need to work together. In fact, Shell is in many ways heading on the same path, towards a transport system of many solutions.
Take battery electric cars. China, for one, accounts for about half of global production. It now has the most electric vehicles on the road – ahead of even the USA. Indonesia is considering tax incentives to boost the battery industry. In Singapore, the ride-hailing app Grab will start using 200 new electric vehicles from next year.
Shell is increasing its involvement too. We recently opened our first Shell Recharge station in China, after our launch in the UK and the Netherlands. In Europe, we signed a deal with IONITY, an operator of high-powered vehicle charging networks. We also acquired NewMotion, one of Europe’s largest providers of charge points, operating more than 40,000 private points for homes and businesses.
When it comes to hydrogen as a fuel, it has potential for heavy freight, including rail. In Japan, their vision of a “hydrogen society” begins in 2020, with plans for fleets of hydrogen fuel cell vehicles serving the olympic games in Tokyo.
Shell too, is growing its investment in hydrogen. In Germany, for example, our plans for a hydrogen mobility network include establishing a nationwide network of 100 filling stations by 2019. We already have refuelling stations in the UK and Canada and we plan to develop three refuelling stations for trucks serving the Port of Los Angeles.
And we can all see the advantages of natural gas as a transport fuel in trucking and shipping. China has the world’s largest fleet of vehicles running on liquefied natural gas – and the number of LNG trucks is rising. Last year, 96,000 were produced in China. At Shell, we signed deals in shipping with Carnival to supply the world’s first LNG-powered cruise ships and with Sovcomflot, to supply the first LNG-powered oil tankers.
And both Shell and the region recognise the potential of advanced biofuels. With responsible management, we see how they could help the aviation sector in the future. In Indonesia, the B20 regulation is a positive step towards the country’s emission reduction targets. At Shell, we are already one of the world’s biggest producers of low-carbon biofuels, through our joint venture in Brazil. Raízen produces about 2 billion litres a year of ethanol from sugar cane, and the venture continues to explore advanced biofuels. And at our Technology Centre in Bangalore, we are working on the advanced biofuel technology IH2, which will convert solid biomass into fuel that can go straight into a vehicle.
And I think we all understand that digitalisation is opening up many other solutions too. We see a future in which autonomous vehicles are connected and working as fleets. It is a future of innovative business models from ride sharing to mobility-on-demand. It is a future we could see on the streets of Singapore, with its innovative transport plan. Indeed, the finalists in our start-up programme Idea Refinery, came up with potential solutions for wireless charging of electric vehicles and a hydrogen-battery powered scooter.
The advance of digitalisation can be seen everywhere. In the Philippines, in Manila, Shell has developed Connected Freight, which uses sophisticated route-optimisation technology to make inner-city deliveries more efficient. We plan to expand this to other cities in the region, including Singapore.
Shell is also testing new business models using smart charging to help customers avoid charging their electric vehicles at peak times, when costs are high. It is by offering customers innovations such as these, that we ensure our long-term competitiveness.
But these many solutions will take time, we all have a lot of work to do and we must also make the best of the technology we have today. So do not write off the internal combustion engine just yet. Shell’s work continues to improve fuels and lubricants, and together with car makers – and policy makers – we can continue to improve the efficiency of today’s engines. And in shipping, Singapore is one of three ports where Shell is testing our new Very Low Sulphur Fuel Oil.
So here, in the city of courage and vision, the city that heads the ASEAN nations this year, I return to that big question. How will we transform energy? We will do it not with one solution, but many. We need to continue to work together as we make the many solutions a reality. We need to keep talking, listening and learning.
When I was in London this summer, we discussed hyperloops and ride-sharing. In China, it was artificial intelligence and transport as a service. In Berlin, it was hydrogen and the future of the engine. Today, I am in Singapore – and I will take what I have learnt from you to San Francisco next year.
I want this dialogue to continue. I want to keep listening. There is much we can all gain from deepening our partnership. And I am looking forward to doing so with you.
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An article posted on LinkedIn by John Abbott, Downstream Director of Royal Dutch Shell plc., on March 22 2018.
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