In its 2008 sustainability report, Shell points out three ‘hard truths’ about the energy challenge ahead. One is that demand for energy will continue to rise as the world’s population grows. Shell expects that there will be 3 billion more energy users by the year 2050. The second is that it will be hard for energy supplies to keep up with the increased demand. And the third is that the increased use of energy will place increasing stress on the environment.
Shell also describes two potential scenarios for the way the energy system could play out between now and 2050. One is what the company calls a “scramble” scenario where individual countries rush to secure energy supplies for themselves, without much regard for other countries or the consequences for the environment. Individual government responses would be short-term and reactive, leading to economic volatility and wide swings in energy prices.
Shell calls the other scenario “blueprints”, which starts with a patchwork of local and national energy policies that later settles into a global policy framework for managing greenhouse gas emissions. This framework would encourage the development of technologies such as CO2 capture and storage, alternative energy sources, and a mix of plug-in hybrid, fully electric and hydrogen-powered vehicles. Shell, a company that operates in more than 100 countries and territories around the globe, would prefer to do business in a “blueprints” world.
Businesses need clarity in order to commit to the long-term, high-cost investments involved in energy projects. In order to make their return on investment calculations, they need to be able to reasonably predict the capital costs and the operating costs of projects. Since a carbon tax or cap-and-trade system to control greenhouse gas emissions can represent a significant cost, it is a factor that must be built into cost estimates. In addition to wanting to protect the environment and operate in a sustainable manner, businesses want to know what to expect in terms of prices and costs.
Shell has called on world governments to establish an international cost of emitting CO2 as part of a stable, long-term regulatory framework. This would help to provide the certainty and the incentive needed to make the big investments needed to shift toward renewable energy. Shell also expresses that different types of policies are needed for different types of energy users. According to the company, emissions trading systems would be more appropriate for power stations and industrial facilities. Transportation requires better vehicle efficiency standards and fuels that emit less CO2 on a total supply chain basis. And renewable energy sources such as wind and solar need to have straight-forward targets for their share of the electricity supply.
Shell is also encouraging governments to support CO2 capture and storage systems, which the company believes is one of the few technologies the world has now that could have a significant impact on the CO2 problem in a relatively short time. But carbon capture and storage requires large-scale demonstration project to develop business models that can be commercially successful. Shell is a member of the consortium that is carrying out the CO2Sink carbon storage pilot project at Ketzin in Germany.
In its sustainability report, Shell also expresses that there is much to be gained through government spending on energy projects, as part of government stimulus programs to bring economies out of the recession. According to the company, investments in renewable energy sources, clean energy technologies, and carbon storage projects, as well as upgrading the current infrastructure to be able to handle a wider range of energy supplies, would create jobs in the short term and help solve energy problems in the long term.
Political activity and public advocacy – Shell
Royal Dutch Shell PLC Sustainability Report 2008 – Shell
Shell and climate change – Shell