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Energy and climate change

International climate experts state that greenhouse gas emissions are rising faster than ever. The Intergovernmental Panel on Climate Change’s Fifth Assessment Report recommends carbon dioxide emissions to be net-zero by 2100.

“Shell supports the introduction of effective carbon pricing.”

As early as 2040, the cumulative release of carbon into the atmosphere could pass 1 trillion tonnes of carbon or 3.7 trillion tonnes of carbon dioxide (CO2) – the greenhouse gas that is the main cause of climate change. This is likely to lead to an increase in global surface temperature exceeding 2 °C – the goal in average global temperature rise that was agreed within the United Nations Framework Convention on Climate Change (UNFCCC). Shell’s approach to climate change is based on understanding and addressing this challenge.

$150 MILLIONFuel consumption savings by our LNG fleet in 2013 and 2014

$40CO2 price per tonne factored in for project screening

The global economy is substantially dependent on carbon-based fuels. Despite the acceleration in the uptake of renewables, they will be unable to meet the full breadth and diversity of uses of energy needed to meet the growing demand by mid-century. The International Energy Agency’s (IEA) World Energy Outlook 2014 estimated that fossil fuels are still likely to make up around 75% of the energy mix in 2040 (based on the IEA’s New Policies Scenario). Shell’s scenarios state that 60-75% of energy will remain fossil fuel-based in 2050.

Nathaniel Keohane (photo)

External opinion

“Shell’s public calls for governments to put a price on carbon have been a welcome private-sector voice in support of a strong, sensible climate policy.

However, to show future leadership, Shell can – and should – do more to reduce its own emissions. A good place to start is to end venting and any methane leaks. As a greenhouse gas, methane is 84 times more potent than carbon dioxide over a 20 year time span; it also accounts for about 25% of the warming that our planet is experiencing today. Oil and gas production is a leading source of methane emissions but there are existing cost-effective steps that can be taken to reduce emissions and improve safety.

Shell needs to adopt a zero tolerance policy towards methane emissions in its own operations as well as push for sound government regulation to make this approach standard across the oil and gas industry. Shell can lead by its own actions as well as its advocacy.”

To read more about methane emissions, see “Preventing methane emissions”.

Nathaniel Keohane
Vice President, International Climate, Environmental Defense Fund, New York, USA

At Shell, we advocate for changes in policies that could lead to a reduction in the level of CO2 in the atmosphere. This is focused on three key areas:

  • encouraging countries to switch from coal to gas which could slow the rate of CO2 accumulation in the atmosphere;
  • encouraging policy makers to set effective and meaningful pricing on CO2 emissions; and
  • encouraging governments to provide support over a limited amount of time for all lower-carbon technologies including carbon capture and storage (CCS) and renewables.

Shell is working on the development of biofuels, hydrogen solutions and wind energy projects (see “Biofuels” and “Lower-carbon technologies”) and to reduce emissions from our existing oil and gas projects, refineries and chemical plants. We have emissions management plans in place but we recognise that we need to do more to reduce both our energy use and emissions.

Gas as an energy source

Shell believes that natural gas is a versatile, abundant and cleaner-burning fuel. (See “Gas”). Natural gas, the lowest-carbon fossil fuel, accounted for more than half of our energy production in 2014. A natural gas-fired power plant produces around half the CO2 emissions of a coal-fired plant.

Natural gas can also serve as a back-up system for intermittent renewable energy, such as solar and wind, to maintain a steady flow of electricity, as gas-fired plants can start and stop quickly. Gas is, therefore, ideally positioned to play a key role in the energy transition as a complement to renewables.

Effective carbon pricing

Shell supports the introduction of effective carbon pricing as a way to reduce global CO2 emissions. An effective carbon price means that all that release CO2 into the atmosphere, such as heavy industry and the power sector, would pay for every tonne emitted.

Carbon pricing systems have the potential to encourage energy efficiency and deploy a range of low-carbon technologies, including renewables.