Facing up to the “3 Hard Truths” identified by Shell’s Global Business Environment team in its “Global Energy Scenarios to 2050” (see previous post) means facing up to the hard reality of humanity’s growing population, tight energy supplies, increasing energy consumption and associated environmental stresses, according to Shell executive Jeremy Bentham in the company’s first Shell Dialogue live web chat May 15.
Summarizing what Shell’s team has learned over the last three years while putting together its “Energy Scenarios to 2050” report, Bentham added that the “3 Hard Truths” are “very hard. Transitions are inevitable…technology is key, but a portfolio of technologies is required…
“There is no single silver bullet — a portfolio is needed, political and regulatory [actions] are pivotal and the next five years are critical– that’s just due to natural time scales of energy systems…Policy choices in next five years will shape energy production and usage, and economic and environmental progress for the next 15 years.”
Energy Dialogues, Investing in Renewables, Reducing GHG Emissions
Explaining the motive force for Shell’s Global Business Environment team, the development of its alternative Scramble and Blueprint scenario analyses, and launching the Shell Dialogues program one team member stated, “We develop scenarios to improve Shell business decisions and to prepare our leaders for future developments of different degrees of uncertainty. We also share our thinking with others as part of our contribution to important public dialogue – sharing our insights and expertise to help others make important decisions that shape our global energy system.”
Asked about Shell’s efforts to develop renewable energy sources, the Environment team responded, “Renewables will be important part of any future energy mix. It must be recognized that all energy supplies have challenges to growth, which includes renewables. However, we believe that renewables will still grow significantly to make up approximately 30% of primary energy by 2050…
“We spent $1 billion over the years 2003-2007 in the areas of solar, hydrogen, wind and biofuels. We are currently focused on increasing our spending on second-generation biofuels going forward.”
At present, Shell “has various alternative energy ‘pots on the fire’ at differing stages of R&D and execution. This enables us to be at the forefront of technologies in the alternative energy space. These ‘pots’ will take time to mature; it is therefore difficult to predict our exact investments in this area. Shell is committed to develop one commercial scale renewable energy business in the course of the next decade.”
Asked about efforts to reduce greenhouse gas emissions in its own operations, Bentham said, “In the late ‚Äò90s, acknowledging the threat of climate change, we set voluntary targets for reducing our own CO2 emissions through to 2010. Improvements in our downstream facilities for example have already delivered 1 million tons per annum of reductions. Hydrogen is potentially an important future energy carrier, and we continue to work to understand better how this will play a role in our future business.”
Oil Sands, Carbon Capture & Storage
Though Shell is investing some of its vast resources to develop renewable energy sources and improve energy efficiency, it’s clear that based on its perception of the ramifications of the “3 Hard Truths” petroleum exploration, production and distribution – both conventional and non-conventional – is where Shell will continue to focus the vast bulk of them, at least for the next decade or more. And that will continue to prompt criticism and protest from those who want to see oil majors make a more decisive commitment to developing renewable alternatives.
Shell is making major investments in Canada’s oil sands, for instance, projects that will require carbon capture and storage technology that appears to be far off in the future if associated carbon dioxide and greenhouse gas emissions are to be minimized, as one web chat participant noted.
“Indeed it [CCS] is one of the key mechanisms we see which the world can use to tackle climate change,” one Shell team member responded. “Our Blueprints scenario envisages that by 2050 90% of fossil fueled power plants in the developed world and 50% in the developing world would have CCS applied.
“This is a massive change from today and will require a vast amount of investment and work, as a world we need to start doing this as early as possible and Shell is actively advocating CCS to many governments.
Regarding oil sands, the three hard truths we describe as the preliminary to our scenarios, which are observables realities today, really dictate that the world will need all the energy it can get, including oil sands.”