Shell to cut in half net carbon footprint of energy it sells by 2050December 23, 2017
The world has a puzzle to solve, a jigsaw with a spectacular number of pieces to place. If it can succeed it will win a priceless prize: it will achieve the goal of the Paris Agreement, to limit global warming to under 2C. It is the puzzle of the energy transition.
Piecing together a solution is going to be tricky and we at Shell have been trying to make progress as a company. We have a way forward now and I am going to share it with you…but, first, the jigsaw.
Part of the challenge is that the world has to stop adding to the stock of greenhouse gases in the atmosphere, probably by 2070 according to credible scenarios.
That is hard enough to achieve but there is more to it than that: large parts of the world’s population still live without access to safe, reliable, affordable energy. The world’s population is growing and, as living standards rise, energy demand could double over the course of the century. All of this must be part of the solution, part of the picture, too.
We must work together to meet this challenge and we will not succeed by leaving others out. Fitting the pieces together means working with a large array of energy sources: coal, oil, gas, nuclear, hydro, solar, wind, geothermal among them. It also means understanding the almost infinite uses for that energy: heating and cooling, domestic and industrial, transporting people and goods. Energy is all around us, critical to every aspect of our lives.
It is no wonder that many people are looking for a simple answer. No more oil, gas or coal, just renewable energy. But that is no more possible than instantly solving a jigsaw. Perhaps, as CEO of Shell, I might be expected to argue this. But, deep down, I suspect most people distrust the simple answer just as much as I do.
The real answer is multi-faceted, working across the whole energy system and involves all of society: governments and consumers, businesses, non-governmental organisations and academia. And, of course, it involves companies like Shell too.
I hear so many suggestions for what Shell should do. There is a multitude of proposals, expectations and policy suggestions. We should abandon this or that project or business, reduce emissions, increase efficiency, sell less, produce more biofuel, stop drilling for oil, produce more natural gas… for some, we should simply cease to exist.
Admittedly, Shell has not always done a good job of explaining what our role is in this global challenge and what we can contribute. But we have been working hard on it and have come to the conclusion there is, in fact, only one way that truly matters: to set ourselves to the same task as the rest of society. To have the same aim.
If society is to stop adding to the stock of greenhouse gases in the atmosphere by 2070, it must halve the amount of such gases produced for each unit of energy used by 2050.
Shell must follow the same aim and it should deliver a mix of energy products that will help society – through our customers – achieve it. That is why Shell now intends to cut in half the net carbon footprint of the energy it sells by 2050. It will do so in step with society, reviewing and reporting on our progress every five years to ensure we neither fall behind nor get too far ahead.
To get to that point, Shell has further to go than others because we have so much oil and gas in our energy mix, little wind and solar to date, and no hydro or nuclear. We will have to catch up.
But 2050 is a long way away. We must all make rapid progress before then. So by 2035, Shell aims to reduce the net carbon footprint of its energy mix by around 20%. Can society do what it has to? Yes, if we work together.
Can Shell do this? Yes, if we use all the tools we have at hand. That means more natural gas, because it produces half the CO2 of coal when used to generate power. More biofuels, more renewable power and better energy efficiency in our operations. Carbon capture and storage on a wider scale is needed to put some of our CO2 emissions safely underground.
And nature-based solutions are also necessary: Shell will support the development of new forests and wetlands to suck carbon dioxide from the atmosphere. The company is already doing all of this but it will do much more. Do I know exactly how much solar Shell will have in our energy mix by 2035? How much in wind, biofuels or gas? How many carbon capture facilities?
How many trees we will help to grow? No. The details are unknowable right now. Much will depend on how governments behave, how consumers act and how technology evolves. Our aspiration may evolve as well.
But Shell’s ambition today is clear. We know the part we can play. We will play that part with humility because we don’t have an easy solution to the puzzle. No one does. We will play our part with sound financial discipline because destroying the value of the company helps no one. And we will play our part with conviction because otherwise progress will be too slow. We know what we have to do and, in step with society, we will do it.
This op-ed is by Ben van Beurden, the Chief Executive Officer and a member of the Executive Committee of Royal Dutch Shell.