Mitigating climate change
Shell is meeting the energy challenge in many different ways. Over the past decade we have invested in cleaner-burning natural gas and sugar-cane ethanol, a low-carbon biofuel. We are also working on new fuels for transport. Our approach to mitigating climate change is to take action in the following ways:
Natural gas as an alternative to coal
Natural gas produces half the amount of CO2 as coal when burnt to generate electric power. Greater use of natural gas as a fuel for power plants, instead of coal, could significantly reduce emissions from the power sector. This can also be the most affordable route for countries that are seeking to reduce their CO2 emissions while maintaining reliable power generation.
Government carbon-pricing mechanisms
Shell has long called for governments to create carbon-pricing mechanisms that deliver a meaningful cost on CO2 emissions. These mechanisms offer an effective way to stimulate the development of low-carbon technologies, generate revenue for governments and, ultimately, give consumers new energy choices. It could encourage the deployment of renewable energy, carbon capture and storage (CCS) and nuclear power plants.
Carbon capture and storage
The International Energy Agency estimates that without CCS the cost of achieving a 2°C scenario could be around 138% higher. Over time, CCS could capture enough CO2 to deliver a 13% reduction in overall emissions needed by 2050 to limit the rise in global temperature to 2°C. CCS is currently the only technology that can capture industrial CO2 emissions.
If CCS is to have an impact on global CO2 emissions it needs to be both supported by governments and taken up widely by industry, including power generation companies. In 2015, Shell started operating Quest, our CCS project in Canada. (See Carbon capture and storage).
Low-carbon energy: renewable energy and biofuels
Shell’s New Lens Scenarios show how renewable energy could eventually become the largest component of the global energy system. We currently produce biofuels in Brazil through our Raízen joint venture. We have longer-term investments with partners in developing alternative transport fuels, such as hydrogen, and advanced biofuels. (See Biofuels and Energy-efficient transport).
Combining renewable energy with hydrocarbons
Reliable energy solutions can be designed by combining fast-growing renewable energy with hydrocarbons. In practice, some countries may choose to develop smaller scale power grids that use a mix of energy sources. For example, Shell is working on the design of a combined natural gas and solar power project with Marikina City, Metropolitan Manila, the Philippines.
Across all our Upstream and Downstream operations, we strive for improved energy efficiency to help reduce Shell’s overall GHG emissions. Better energy efficiency can be achieved by improving the reliability of our equipment, by smart scheduling of maintenance activities or by installing more energy-efficient equipment. The main metric that we use to measure our energy efficiency is energy intensity – that is, the amount or energy consumed for every unit of output.
Each of our 13 Shell-operated refineries has to identify measures to improve energy efficiency every year. For example, in 2015 we installed a cogeneration unit at our Bukom refinery in Singapore. This unit improves energy efficiency by recovering waste heat from the gas turbine’s exhaust to generate steam.
Between 2009 and 2015, the energy intensity of our refineries decreased by about 6%, due to a combination of improved equipment reliability and better operating processes and energy-efficiency projects. Energy savings in downstream, combined with changes in the refining energy mix to lower-carbon alternatives, reduced the refining CO2 emission footprint by about 1.5 million tonnes each year. These energy savings helped us to reduce costs: the total annual energy cost of our 13 refineries is around $2.5 billion. We were able to reduce costs between 2009 and 2015 by about $100 million each year.
We also continue to improve the scheduling of our shipping operations which helps to reduce fuel consumption, loading and discharging times.
For information on our energy-efficiency performance, see Environmental performance.