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Climate change on the agenda for Shell

14th July 2015

Renewables are an indispensable part of the future energy mix, but fossil fuels remain important to a sustainable energy future, said Ben van Beurden, CEO, Royal Dutch Shell

Perdidio platform
Shell’s Perdidio is the world’s deepest floating oil platform

“For a sustainable energy future we need a more balanced debate,” said Ben van Beurden, CEO of Royal Dutch Shell at an industry gathering earlier this summer.

“Fossil fuels out, renewables in — too often, that’s what it boils down to. Yet in my view, that’s simply naïve. Yes, climate change is real. And yes, renewables are an indispensable part of the future energy mix. But no, provoking a sudden death of fossil fuels isn’t a plausible plan.

At the end of the year, the UN’s Climate Change Conference will be held in Paris. In the run-up to this conference, the climate debate will rise to new heights of intensity. The outcome of the political process is uncertain, but the trends behind it are unmistakeable.

Even more than the oil price, these trends will shape the future of the industry over the coming decades.

“Today, three billion people still lack access to the modern energy many of us take for granted. This isn’t just about having a dustbuster or a television set. Energy access often makes the difference between poverty and prosperity. At the same time, demand is growing. There will be more people on this planet, more people living in cities and more people rising from poverty. They will all need energy if they are to thrive. The issue is how to balance one moral obligation, energy access for all, against the other: fighting climate change. We still need fossil fuels for a lower carbon, higher energy future.”

It is of course true that the use of renewable energy is growing, especially in electricity markets. But it will take some time before renewables can play an equally important role in transport, and the heating and cooling of people’s homes. “This is our chance to get ready,” van Beurden said.

“To discuss opportunities for new forms of energy or energy transport, Shell has a Future Technology Group. It reports directly to me, because I believe that future technology is crucial to the future of Shell. Exploring new horizons now is our chance of being a constructive part of the energy system later - both through the products and services we offer, and our contribution to the debate.

“In the meantime, however, the world’s energy needs will underpin the use of fossil fuels for decades to come. So, rather than ruling them out, the focus should remain on lowering their carbon emissions.

Three things are crucial to achieving that goal. “Firstly, a shift from coal to natural gas. When burnt for power, gas produces half the CO2 coal does. Secondly, carbon capture and storage. CCS fitted to power plants can be a real game-changer, like for example our project under design at Peterhead in Scotland. CCS can remove up to 90 per cent of CO2 emissions from power generation. “Thirdly, and most importantly, a well executed carbon pricing system. This would help promote natural gas as well as CCS, and a whole range of other low-carbon technologies.

Despite some encouraging signs, we’re a long way from achieving these three objectives. The debate - driven by NGOs - still revolves around emission targets, whereas the policies needed for meeting those targets are often overlooked. As a result, ineffective, inefficient or even counterproductive measures are taken in some countries and regions. Take Germany, the largest economy in Europe.”

The good news there is that renewables, with strong support from the German Government, are growing. The bad news is that coal plants are used as a flexible back-up. That has caused CO2 emissions in Germany to actually increase in 2012 and 2013, according to the European statistics agency Eurostat.

“This is bizarre and demonstrates the issues we face,” van Beurden said. “What can we as an industry do to help clear the way for a more informed debate? In the past we thought it was better to keep a low profile on the issue. I understand that tactic, but in the end it’s not a good tactic. 

“The debate about the future of energy is not always very balanced, partly because we keep such a low profile and there’s so little dialogue within our sector. Our industry should be less aloof, more assertive. We have to make sure that our voice is heard by members of government, by civil society and the general public. I’m well aware that the industry’s credibility is an issue. Stereotypes that fail to see the benefits our industry brings to the world are short-sighted. But we must also take a critical look at ourselves. 

“You cannot talk credibly about lowering emissions globally if, for example, you are slow to acknowledge climate change; if you undermine calls for an effective carbon price; and if you always descend into the ‘jobs versus environment’ argument in the public debate. 

So, to make our voice heard our sector needs to enter into the public debate alongside other credible parties — ranging from academics to non-governmental organisations and policy makers. Together, we can offer some realism and practicality to the debate.”

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