Sky scenario
Could society achieve the goals of the Paris Agreement?
Could carbon capture and storage be key to meeting the goals of the Paris Agreement?
The Paris Agreement has sent a signal, but could society do enough to achieve the goals of this landmark climate agreement?
Fundamental changes in the way society produces and uses energy are beginning to emerge. Wind and solar can produce more electricity, and electricity is beginning to power our cars and homes. However, a deep look at this energy transition, such as Shell has done for its Sky, scenario, shows that many current uses of fossil fuels – coal, oil and natural gas – are unlikely to find alternatives in the time needed to meet the goals of the Paris Agreement. While renewables and nuclear power have the potential to replace most, if not all, of the fossil fuel currently used to produce electricity within the next 50 years, the alternative energy sources to power planes, to smelt iron ore and to manufacture many other products, remain distant.
As carbon dioxide is emitted into the atmosphere it accumulates and creates warming. This means that climate change is linked to the total amount of emissions over time. The instantaneous rate of emissions is perhaps surprisingly less important. The solution to tackling climate change isn't just to reduce emissions to a level lower than today, but to bring emissions to zero so that carbon dioxide in the atmosphere doesn't keep increasing. Even at that point, the stock of carbon dioxide may still be greater than the goal to limit it, so removal becomes an important end-game in achieving the Paris Agreement.
In Sky, there is a significant timing gap between the need to stop adding carbon dioxide to the atmosphere and society's collective ability to stop using fossil fuels.
It is possible that society could be using oil, gas and even coal well into the 22nd century. For this reason, the term 'net-zero emissions' has emerged, emanating from the Paris climate Agreement, meaning that zero emissions are achieved on a net basis by removing the same amount of carbon dioxide from the atmosphere as is being added. Over the long term, the most suitable removal mechanism for carbon dioxide is to permanently store it underground through carbon capture and storage (CCS). [https://blogs.shell.com/2018/04/11/achieving-the-balance/].
CCS is already a viable and deployable technology. There are 20 major facilities operating around the world and the technologies required are well established in the oil and gas industry. The challenge to develop CCS further and quickly is economic not technological. To support the Paris Agreement CCS requires some form of incentive to encourage investment, such as have benefitted many emerging technologies. Carbon pricing is arguably the simplest approach, but a more focused mechanism to stimulate CCS may be required.
In the Sky scenario, the world in 2070 still makes considerable use of fossil fuels, albeit declining, with various forms of carbon removal becoming a major global industry.
In the decades after 2070, Sky sees more carbon dioxide removed from the atmosphere than is added. This acts as a correcting mechanism for emissions now and in the years to 2070, and therefore would deliver on the Paris goal. Further, the existence of a major carbon removal industry in 2100 offers the potential for climate restoration in the 22nd century. Surely something worth thinking about.
Carbon capture and storage, in some form, will be part of the global journey to net-zero emissions. Its deployment today would need to accelerate for success under the Paris Agreement. The CCS industry needs encouragement commensurate with the importance of its future role in the energy system. It is a significant key to the prize we collectively seek.
Read the Sky publication to see how the goals of the Paris Agreement could be met through a combination of technology, government policy and societal actions.
Could society achieve the goals of the Paris Agreement? What do you think? Share your thoughts on social media tagging @Shell and using #ShellScenarios.
This post is part of Shell scenarios 'could the world achieve Paris' series.
Download Sky Scenario
The Sky scenario illustrates a technically possible, but challenging pathway for society to achieve the goals of the Paris Agreement.
Discover the Sky scenario through our latest content series, twelve questions addressing key topics found within Sky.
Shell and the energy transition
Shell scenarios are not the Shell business plan nor a policy proposal. To find out what Shell is doing to thrive through the energy transition click here.
For over two decades Shell scenario thinking has incorporated the issue of climate change. The Sky scenario joins two previous Shell scenarios, Mountains and Oceans that saw rapid decarbonization but fell short of the goals of the Paris Agreement. To achieve the goals of the Paris Agreement, the Sky scenario relies on a complex combination of mutually reinforcing actions by society, markets and governments. It adopts an approach grounded in current economic and policy development mechanisms, but then progressively becomes 'goal-driven' to achieve society's ambition for net-zero emissions by 2070. At Shell, we hope it's a helpful contribution to one of the world's toughest challenges. You can explore all three scenarios at www.shell.com/Scenarios
This web page contains data from Shell's new Sky scenario. Unlike Shell's previously published Mountains and Oceans exploratory scenarios, the Sky scenario is targeted through the assumption that society reaches the Paris Agreement's goal of holding global average temperatures to well below 2°C. Unlike Shell's Mountains and Oceans scenarios which unfolded in an open-ended way based upon plausible assumptions and quantifications, the Sky scenario was specifically designed to reach the Paris Agreement's goal in a technically possible manner. These scenarios are a part of an ongoing process used in Shell for over 40 years to challenge executives' perspectives on the future business environment. They are designed to stretch management to consider even events that may only be remotely possible. Scenarios, therefore, are not intended to be predictions of likely future events or outcomes and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities.
Additionally, it is important to note that Shell's existing portfolio has been decades in development. While we believe our portfolio is resilient under a wide range of outlooks, including the IEA's 450 scenario (World Energy Outlook 2016), it includes assets across a spectrum of energy intensities including some with above-average intensity. While we seek to enhance our operations' average energy intensity through both the development of new projects and divestments, we have no immediate plans to move to a net-zero emissions portfolio over our investment horizon of 10-20 years. Although, we have no immediate plans to move to a net-zero emissions portfolio, in November of 2017, we announced our ambition to reduce our net carbon footprint in accordance with society's implementation of the Paris Agreement's goal of holding global average temperature to well below 2°C above pre‑industrial levels. Accordingly, assuming society aligns itself with the Paris Agreement's goals, we aim to reduce our net carbon footprint, which includes not only our direct and indirect carbon emissions, associated with producing the energy products which we sell, but also our customers' emissions from their use of the energy products that we sell, by 20% in 2035 and by 50% in 2050.
This web page contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ''anticipate'', ''believe'', ''could'', ''estimate'', ''expect'', ''goals'', ''intend'', ''may'', ''objectives'', ''outlook'', ''plan'', ''probably'', ''project'', ''risks'', "schedule", ''seek'', ''should'', ''target'', ''will'' and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this web page, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this web page are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Royal Dutch Shell's Form 20-F for the year ended December 31, 2017 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forward-looking statements contained in this web page and should be considered by the reader. Each forward-looking statement speaks only as of the date of this web page, March 2018. Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this web page.
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