It’s often asked, but it’s important: how do we ensure a secure energy supply and at the same time build a cleaner energy system? The question is the same for the UK as it is for the whole world. And it immediately throws up more questions. What kinds of energy do we need? What is the role of technology? What behaviour change will be needed? What practical steps have been taken already? And what can an oil and gas company possibly do to help?
With economic recovery under way, the steady upward march of global energy demand is resuming. Many developing countries have weathered the economic crisis in much better shape than the developed ones, a testimony to the dynamism that underscores the momentum in their vibrant economies. And there are signs of a fragile recovery in the rest of the world.
Global energy demand will nearly double in the first half of this century. Most of the new demand will come from the developing world, thanks to growing population and increasing personal prosperity. That’s partly due to population growth. The world will be home to about nine billion people in 2050, up from 6.8 billion today. At the same time, increasing wealth is improving living standards and raising millions of people out of poverty in developing regions. As incomes grow and living standards improve, people are buying their first cars or refrigerators – which need energy. Worldwide, we expect the number of cars and trucks on the roads to rise from around 900 million today to around two billion by mid-century.
As energy demand accelerates, the world will need to develop all energy types, even assuming heroic steps to use existing energy sources more efficiently. That means everything from traditional fossil fuels and nuclear to renewables such as biofuels and wind.
Indeed, unless we concentrate on increasing energy supplies, we could experience shortages in the decades ahead, especially for oil. The International Energy Agency (IEA) figures the world will need to invest about $1,100bn (£700bn) every year for the next 20 years in new energy projects. That’s the picture on the supply side.
But there’s plenty to be done on the demand side, too.
Greater energy efficiency has a crucial role to play, particularly in developed countries. We need an energy revolution on the demand side, where we can make big changes relatively quickly. Those of us in the developed world have an obligation to use energy more efficiently as part of our contribution to the improvement of living standards in the rest of the world. Legislation such as that to improve vehicle fuel economy in Europe and the USA will help. But more effort is needed.
And we all know that there are substantial environmental implications for greater energy use. Scientists tell us the world needs to cut greenhouse gas emissions in half by mid-century, if we hope to avoid the worst effects of climate change. So, the world will need twice as much energy, but with half the emissions. That’s a big ask.
NEW ENERGY FUTURE
What will the new energy future look like? It will be a world powered by cleaner fossil fuels, more renewable energy and nuclear. It will be a world where cars, appliances and buildings are much more energy-efficient.
Biofuels, wind and solar will grow rapidly from their small base. Renewables could make up 30 per cent of the world’s energy by 2050, if you include hydroelectricity. Fossil fuels and nuclear will make up the rest.
In the transport sector, consumers will enjoy a wider array of fuel choices. Vehicles will be powered by everything from advanced petrol and diesel to biofuels, electricity and, eventually, hydrogen. However, describing this cleaner energy system is a lot easier than creating it. The transition will take time. History shows that once a new energy technology is proven, it takes about 30 years for it to achieve 1 per cent of the overall market.
As the world moves towards a cleaner energy system, companies, governments and consumers will all need to contribute. At Shell, we’ve already started. We’re increasing our production of natural gas, the cleanest-burning fossil fuel.
Natural gas emits 50 to 70 per cent less CO2 than coal when used to generate electricity. Shifting from coal to gas is the fastest, least-expensive way to lower emissions from power generation. That’s important because power generation accounts for about a quarter of greenhouse gas emission.
Then there are biofuels – provided they come from more sustainable sources. Of all the low-carbon transport options, we think biofuels can make the greatest contribution over the next two decades. We’re collaborating with companies and universities on research and development of advanced biofuels, some of which could be made from non-food sources such as crop residue.
CLEANER FOSSIL FUELS
To produce cleaner fossil fuels, we’re working on ways to capture CO2 emissions from power plants, refineries and other large industrial installations, and store them safely underground. The IEA estimates that carbon capture and storage (CCS) could account for 19 per cent of global CO2 reductions by 2050. We are also working on a CCS project to reduce the emissions impact of oil sands.
Much of the focus has been on coal-fired power stations. The technology works for gas-fired plants, too. Since gas plants produce half the CO2 of their coal counterparts, they need only half the available storage.
Shell’s other major focus is on energy efficiency – in our own operations and for our customers. For example, we’re introducing products and services that help our customers to use less energy. A recent example is Shell FuelSave: one of the most advanced fuel-economy products in the market, it is designed to help drivers to save up to one litre of fuel per tank*.
TECHNOLOGY & INNOVATION
Technology and innovation will be crucial to producing enough energy to meet customer needs in the decades ahead – while at the same time safeguarding the environment. Thanks to advances in drilling and production techniques, tight gas, shale gas and coal-bed methane have become economically viable. These are all abundant gas sources trapped in dense geological formations, making them hard to tap.
We are embarking on a journey to create a new energy system, one that will continue to fuel human progress and help to raise living standards. But importantly, one that leaves a healthy planet. It’s a challenge we must all help to meet by constantly looking for smarter, more efficient ways to use the earth’s valuable energy resources.
*Based on a minimum tank size and fill-up of 50 litres. Comparison between a standard gasoline with the same characteristics as the previous Shell formula and that same-standard gasoline containing our new instantaneous fuel-economy formula. Actual savings may vary according to vehicle, driving conditions and driving style.