Serious or Shellgame? Big Oil Offers 2 C Pathway

March 29, 2018

Shell Oil outlines a 2C scenario. Is it realistic?
See proposed milestones in timeline above.

Washington Post:

Royal Dutch Shell on Monday outlined a scenario in which, by 2070, we would be using far less of the company’s own product — oil — as cars become electric, a massive carbon storage industry develops, and transportation begins a shift toward a reliance on hydrogen as an energy carrier.

The company’s Sky scenario was designed to imagine a world that complies with the goals of the Paris climate agreement, managing to hold the planet’s warming to “well below” a rise of 2 degrees Celsius, or 3.6 degrees Fahrenheit, above preindustrial levels. Shell has said that it supports the Paris agreement.

The scenario, which finds the world in a net-zero emissions state by 2070, is based on the idea that “a simple extension of current efforts, whether efficiency mandates, modest carbon taxes, or renewable energy supports, is insufficient for the scale of change required,” the oil company document reads.

“The relevant transformations in the energy and natural systems require concurrent climate policy action and the deployment of disruptive new technologies at mass scale within government policy environments that strongly incentivize investment and innovation.”

“Anytime we see a forecast looking out many decades (in this case, 2070), it can be an interesting talking point but does not seriously influence investor decisions,” said Pavel Molchanov, energy analyst at the investment firm Raymond James, said in an email. “Even for long-term-oriented investors, that is simply too distant a time frame.”

Royal Dutch Shell chief executive Ben van Beurden in past interviews with The Washington Post has acknowledged that “climate change is real” and that “action is needed” but has asserted that the world will need to keep burning fossil fuels even if renewable energy catapults forward.

“It doesn’t mean we have to kiss hydrocarbons goodbye. In fact, we can’t,” he said.

In November, the company said it would cut the carbon footprint of making (not burning) its own petroleum products by 20 percent by 2035 and by about half by 2050. Shareholder groups, however, have noted that if Shell increases its overall fossil fuel production, then it will undercut some of those gains.

Below, analysis by Glenn Peters, of Oslo’s Center for International Climate Research, who has been a critic of overly rosy projections for carbon capture and storage in particular.

Glenn Peters, Center for Climate Forecasting, Norway: 

Shell has just released a new scenario, Sky, which meets the goals of the Paris Agreement. How does it compare with other low carbon pathways?

We have loads of scenarios consistent with the goals of the Paris Agreement, depending on how “well below 2°C” is interpreted.

The IPCC assessed more than 100 relevant scenarios in the Fifth Assessment Report in 2014, the new Shared Socioeconomic Pathways (SSPs) have about 30 relevant scenarios, a new paper just published 1.5°C scenarios, the International Energy Agency (IEA) has the World Energy Outlook (WEO) and Energy Technology Perspectives (ETP), and other oil companies also do relevant scenarios, such as Statoil.

Shell should be applauded for their new scenario, as it indicates there is an internal discussion of the risks and opportunities that lie ahead.

There is often a presumption that fossil fuel companies produce scenarios that fit their business model, and some argue the IEA backs them up. This is easy to test by comparing with scenarios originating from the climate community. I have now done comparisons for IEA, Statoil, and DNV GL.

Let’s have a look at Shell Sky

In this post, I only look at data and I don’t pay much attention to the glossy document that comes with it

A comparison of different scenarios is not easy. Each scenario can have a different socioeconomic background, and different models may give preference to different technologies. The same temperature outcome could be achieved with very different energy systems (e.g., low coal and high gas, or high coal and low gas).

In the following figures I show the 2°C scenarios from the SSPs in light grey, with the side-label representing the median value in 2100. The Shell Sky is shown in blue, though not sky blue!

Primary Energy Consumption: Shell Sky sits at the high-end of other 2°C scenarios, with strong and sustained growth in energy consumption. The IEA and Statoil both have much lower primary energy consumption in a 2°C world. One can debate the meaning and usefulness of primary energy consumption, and there is nothing wrong with high energy consumption as long as it’s net effects are benign.

Carbon dioxide emissions. In the next decades, the Shell Sky CO2 emissions from fossil fuels and industry are a little higher than other 2°C scenarios, but by mid-century and towards 2100 Shell Sky is in the middle of the scenario cloud. To be clear, the CO2 emissions from Shell Sky are totally consistent with what is required for 2°C.

Fossil fuels. There are a few characteristics with the Shell Sky scenario that are different to many other 2°C scenarios, though still remaining within the range of other scenarios.

Coal. Shell Sky has relatively high coal consumption throughout the 21st century. Most other scenarios, including IEA and Statoil, have steep declines in coal. To maintain this level of coal consumption will require some carbon capture and storage.

Oil. Oil consumption is in line with most 2°C scenarios, though a little higher than many by 2100. As IEA and Statoil both argue, even with falling oil demand, there is a need for new oil exploration.

Gas. Gas is a really difficult one, with scenarios showing a huge range. No one, really, has a clue what role gas will play in the future. Gas investors beware! Shell has pretty steep declines in gas after a peak around 2030, but it remains in line with most scenarios.

Most 2°C scenarios are quite dependent on carbon capture and storage, something we need to learn to accept. While the SSP database does not provide output for the CO2 in CCS, it is possible to estimate from data on energy consumption.

Shell is at the low end of most other 2°C scenarios, which will surprise people since they mention the need for about 10,000 CCS operations by 2070. Yes, impressive, but no-where near as impressive as other 2°C scenarios.

A surprise to many, is that the IEA, Statoil, and Shell are all rather conservative on CCS. It is the SSPs that are the bulls! Shell, IEA, and Statoil (the most conservative on CCS) are all similar in 2040, still lower than most existing scenarios.

Last year, shareholders overwhelmingly rejected a proposal by an environmental group calling for Shell to set and publish annual targets to reduce carbon emissions.

In the Sky scenario, the world’s consumption of oil would rise through 2025 before starting to decline. Global oil consumption would begin to drop in the 2030 and fall below current levels in 2040.

“Liquid hydrocarbon fuel consumption almost halves between 2020 and 2050 and falls by 90 percent by 2070 in the sector,” the document says.

“It is striking that a company built on energy flow commodities sees them declining permanently after 2040,” said Peter Fox-Penner, director of the Institute for Sustainable Energy at Boston University, in an emailed comment on the scenario.

Other changes are just as massive. Nuclear power would triple, the total use of electricity would expand fivefold, and the world would be equipped with 10,000 carbon capture and storage (CCS) installations.

“The reliance on CCS stands out in Sky, and what surprised me was the rapid decline in natural gas after 2040,” said Morgan Bazilian, a professor at the Colorado School of Mines who studies energy and fossil fuels. “Those are interesting contours, given Shell’s move toward natural gas in the recent past.”


22 Responses to “Serious or Shellgame? Big Oil Offers 2 C Pathway”

  1. Sir Charles Says:

    We need to STOP using Shell’s products by 2050 + we need to introduce negative emissions (which still don’t exist) to keep global warming below 2°C. What Shell is advocating there is nothing but a farce!

  2. indy222 Says:

    Shellgame. Posturing as serious to neuter political outrage.

    These still use the old IPCC carbon budgets, which assume the only carbon emissions are direct from humans, not the melting permafrost, methane from tropical and polar sources (I’m not talking about very unlikely methane hydrate “apoocalypse”). Not HFCs, methane, and other shorter life GHGs which will not be eliminated (but we can hope, right??) So they’re all bogus. Not to be trusted.

    This is how you bamboozle to insure the status quo – economic growth and no population controls forever. It’s pro-business, not pro-future generations.

    Really, we need to be more outspoken on this. Pretending this is serious is only playing into their hands. What happens is that the confused avg Joe just thros up hands and assumes/hopes it’s all true and future peoples will “figure it out” so let’s just party on and stop worrying about it now.

    These kind of stories make me a mixture of sad, angry, frustrated… The ShelllGame (and ExxonGame etc) are very effective at emasculating the kind of response needed today. These people are experts – at PR and bamboozling. Experts. Scientists are getting blown off the baseball field in this arena.

    • rhymeswithgoalie Says:

      I remember being stunned at how long the IPCC SLR estimates were only based on thermal expansion, and not on cryosphere melt. There’s a price to pay when planners try to be conservative so they’ll be taken seriously.

    • J4Zonian Says:

      Posts like yours also leave me with a mix of feelings. I strongly agree with most of what you say, but…again, you suggest population “controls” will accomplish something in this crisis, which is wishful thinking and scapegoating people who aren’t the problem.

      The idea that we have until 2070 to reach zero, let alone negative emissions, is nonsense. When everything is included, we’re already over 1.5°C,

      and short of an immediate global revolution by popular democratic forces determined to do what’s necessary, we have no chance of staying below 2°C. Future generations (like our children and grandchildren) will likely experience 3-4° of warming on the way to higher levels. The nonexistent technologies Shell and many others are assuming will make their fantasy scenarios work out, may work someday, or may not.

      The only reasonable actions are to reduce energy waste as much as possible through efficiency and wiser lives; replace fossil fuels with clean safe renewable energy; sequester carbon through reforestation and small-scale low-meat organic permaculture; replace flying with public EVs and a revitalized US-and-beyond rail system including high speed rail; replace shipping with local self-reliance and solar/wind electric sail-assisted ships… We need to do all this under the umbrella of a US WWII-level or above Climate Mobilization, and necessary war measures include political and economic equality, nationalizing the fossil fuel and agrochemical industries, universal health care and education, land redistribution throughout the world and more.

      PS Peter: The link in the text, “Shell should be applauded for their new scenario” leads to WaPo, which is behind the Great Wall of Payment.

  3. redskylite Says:

    Shell are also introducing a “hydrogen” supply and have just opened a refueling point alongside petrol and diesel at Beaconsfield in the U.K. The product is produced with methane, so not too “green” and not outside their present portfolio.

    With their vision relying on negative emission technology that presently does not exist and expensive underground carbon storage facilities, they are set to repeat the “Whale Oil” experience of the U.S.A in the late 19th century, when the investors fled the oil for newer industries.

    “Planes and trucks powered by hydrogen will be a crucial part of efforts to cut carbon emissions to safe levels, according to oil giant Shell.

    For the first time, the Anglo Dutch firm, which is facing calls by activist shareholders to take stronger action on global warming, has mapped out how the world could hit the Paris climate deal’s target of keeping temperature rises below 2C.

    While development of hydrogen cars has stalled in the face of rapid growth in battery-electric vehicles, Shell believes the gas could account for 10% of global energy consumption by the end of the century.”

  4. redskylite Says:

    Responsible management of Shell need to ask themselves, is their company’s job just keeping a bunch of shareholders well satisfied with profits, or to nurture the young and create a healthy habitat for the future generations, while maintaining their considerable skills in the energy industry. If they choose the latter they will have to come up with more radical ideas than expressed in this glossy document.

    If they need to be reminded of the urgency the good people of Potsdam can help.

    “Greenhouse gas emission cuts must be at least 20 per cent deeper than pledged under the Paris climate accord or the world will have to begin the costly direct removal of atmospheric carbon to avoid dangerous climate change, a new study argues.

    The Germany-based researchers examined the action needed if nations failed to deliver greater carbon curbs by 2030 but still kept global warming to under 2 degrees, compared with pre-industrial levels.
    “Each tonne of CO2 we don’t emit, we don’t have to remove from the atmosphere afterwards in an expensive and strenuous way,” said Jessica Strefler from the Potsdam Institute for Climate Impact Research and the lead author of the paper published on Thursday in Environmental Research Letters.”

    • redskylite Says:

      PIK’s media release of the analysis published in Environmental Research Letters.

      Stock-take 2018: Rapid emissions reductions would keep CO2 removal and costs in check

    • Sir Charles Says:

      Responsible management of Shell? You’re dreaming fairy tales, redskylite.

      • redskylite Says:

        I disagree – I used to work with them, in the oil industry, and always found the company the most enlightened out of the lot of them.

        • J4Zonian Says:

          I agree. The smartest, most fun serial killer is always the best.

          Weren’t they the one who committed to big moves on renewable energy about 12 years ago? And then whoops, broke up with it to go back to their true love, oil? Both for no apparent reason? But this program is so revolutionary–a plan stretched out over 52 years that will be forgotten next week; a plan for ignoring the fact that they’re guaranteeing the collapse of civilization and the extinction of most life on Earth. A plan that depends on perpetual motion machines powered by unicorns. I’m not sure enlightened is what I’d call em, but yeah. They’re the best!

          I think we need a study of all these scenarios that shows a timeline not just showing time vs. cumulative emissions or temperature reached, but how many lives, mostly of poor people of color in faraway lands, they’re willing to trade each year in a rising curve, for their comfort and profit. For all our continued comfort. Inaction vs. people dead and species gone; we need a graph of that.

          • redskylite Says:

            I’m not trying to promote Shell as a company and indeed they have made some unethical business decisions in the past. They do have some good points, they were the first oil company to be ISO14001 accredited, and they do have a great staff including Geologists, (and I know some notorious deniers are Geologists), but most Geologists understand the planets history & dire situation better than most. My point was is if they fail to change their mission they will end up like the Whale Oil industry of the 1800’s.

            They state they agree with the Paris plan and respect environmental legislation etc. Lets get a U>S government that provide structures. For instance when I was involved they were ensuring compliance with the Montreal protocol. They have just appointed a woman chief in the U.S, who’s job it is to comply with Climate Change guidelines and environmental legislation.

            They must change to survive and to keep investors and shareholders happy. It is a job not for the faint hearted, but they could do it. Whether they do, hopefully we will see.

  5. dumboldguy Says:

    Some excellent comments, especially indy222’s and Jeffy4Z’s. Nothing much to add but ditto to “The smartest, most fun serial killer is always the best” and ask “20 Freaking SEVENTY!!!??” (We may be well on our way to Venus by then with the BAU “efforts” we are making).

  6. redskylite Says:

    Without wishing to labor the issue/post I find this report by Carbon Brief to be very insightful. I can vouch that Shell do produce very well thought out scenarios with excellent software to support each scenario. A very professional outfit that have made a few mistakes in the past, but capable to face the future with more realism than many of it’s peers.

    Shell’s head of scenarios tells Carbon Brief this would be “very challenging” for the firm, but that the company could still “thrive”. Others have criticised the work, arguing that it maintains fossil fuel use at today’s levels, for decades to come, thereby failing to genuinely test Shell’s existing business model.

    • Sir Charles Says:

      At the end you would have to believe a wolf who tells you he became a vegetarian.

      • redskylite Says:

        How fucking rude “Sir” Charles – I left the oil industry in 1999 and spent the final years working in retail and never had anything to do with the suppression of scientific reports. Are you calling all who worked in oil, coal, aircraft, computer and just about every other industry a “wolf” – then it is you who are dreaming. Since retirement I spend nearly every waking hour working for climate change action.

        So dont you dare to judge others so glibly.

  7. J4Zonian Says:

    In the end, the only legitimate business plan for any fossil fuel corporation is to shut down and dismantle it in the next 7 years. Anything else, they abdicate responsibility to humans and the rest of the biosphere, meaning the corporation must be nationalized and shut down as fast as its energy can be replaced with clean safe renewable energy.

  8. redskylite Says:

    Shell threatened with legal action over climate change contributions

    The global flurry of legal campaigns against “big oil” has widened, with Royal Dutch Shell being threatened with legal action unless it steps up efforts to comply with the Paris climate agreement.

    Friends of the Earth Netherlands on Wednesday demanded the Anglo-Dutch company revise plans to invest only 5% in sustainable energy and 95% in greenhouse-gas emitting oil and gas.

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