Energy transition

Meeting the energy challenge

A successful energy transition requires sustained and substantial investment in all energy sources, including oil and gas production, to meet the global demand needed to fuel economic development. If the world is to achieve an energy transition and approach net-zero emissions, our New Lens Scenarios suggest that society should grow its share of renewable energy to up to 70% by 2100.

Even if global demand for hydrocarbons is flat, there still needs to be investment in oil and gas supply simply to meet this demand. Without this ongoing investment, the production from existing fields drops an average 4–6% each year.

Managing the transition

The Paris Agreement has set the global direction for the energy transition. Government and business need to deliver policies and products in support of this. The energy transition will require a mixture of vision and realism, urgency and long-term planning.

There are many things that can be done now to reduce global emissions. Some will have a more immediate impact – such as substituting coal for natural gas or advancing renewable energy; while other solutions and technologies could play a larger role later in the transition – such as introducing new forms of transport fuels or carbon capture and storage (CCS). In a similar vein, it will be easier for some sectors of the economy or particular countries to reduce their carbon emissions faster than others in the coming decades.

Within Shell, we can best help to decarbonise the existing hydrocarbon energy system by promoting the use of cleaner-burning natural gas and by advancing CCS technology. We also support the implementation of widespread government-led carbon-pricing mechanisms (see Addressing climate change) and are investing in efficient fuels and lubricants, and transport alternatives that include biofuels and hydrogen fuel. (See Biofuels and Energy-efficient transport).

Yet, there needs to be a broader response with cross-sector collaboration on an unprecedented scale. Government, business and civil society need to work together, particularly in the design and implementation of local energy policies, city planning and infrastructure. For example, the transport and mobility sector needs greater collaboration among manufacturers, energy companies and governments if innovation is to reach the scale required. In 2015, Shell was a founding member of the Energy Transitions Commission. This is a cross-sector collaboration of leading individuals from the public, private and social sectors to make recommendations that will contribute to the energy transition.

We believe that our capacity to innovate and to take a long-term view on investment, along with our experience, can help us to make an important contribution to the energy transition.

Future energy needs

A successful energy transition requires substantial investment across all energy sources, including oil and gas production, to meet a growing demand for energy.

The energy challenge

There is more demand for energy globally as the world’s population and living standards increase.

Growing population

Global population will increase from around 7 billion today to nearly 10 billion by 2050, with 67% living in cities.

Rising demand

Global energy demand will likely be almost 60% higher in 2060 than today, with 2 billion vehicles on the road (800 million today).

Ongoing supply

Renewable energy could triple by 2050, but we will still need large amounts of oil and gas to provide the full range of energy products we need.

Mitigating climate change

Net-zero emissions is a potentially achievable societal ambition.

Source: UN World Population Prospects (2015 revision); World Urbanization Prospects (2014 revision); International Energy Agency, Energy Technology Perspectives 2015; Shell New Lens Scenarios.