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Old petrol pumps with Shell logo in Australia
Rob Deutscher/Flickr
OIL AND GAS
11 May 2016 7:00

Shell outlines ‘below 2C’ climate change scenario

Simon Evans

Simon Evans

05.11.16
Simon Evans

Simon Evans

11.05.2016 | 7:00am
Oil and gasShell outlines ‘below 2C’ climate change scenario

Oil major Shell has for the first time sketched out what it thinks it would take for the world to avoid 2C of global warming.

In a supplement to its well-known New Lens scenarios, titled, “A better life with a healthy planet, and released online this week, it sets out its vision for how to meet the ambition of the Paris climate deal, agreed last December.

Shell has previously studied – but refused to publish – a 2C-compatible scenario, telling Carbon Brief last year it might not be “helpful” to do so.

Carbon Brief runs through the highlights of Shell’s new work, and what it means for the company and beyond.

Change of heart

In the past, Shell has been criticised for failing to publish scenarios compatible with the global goal of avoiding 2C of warming. Instead, it has maintained that the world is not on course to avoid 2C.

Shell says its New Lens scenarios correspond to around 2.5C of warming this century, with global emissions reaching net-zero around 2100. In a 30-page letter to investors sent in mid-2014, Shell wrote:

“Our New Lens scenarios show that the world can tackle and resolve the climate issue over the course of this century, but not in less time than that…We also do not see governments taking the steps now that are consistent with [avoiding 2C].”

What’s more, Shell has dismissed those, such as Bank of England governor Mark Carney, who have warned that fossil fuel assets could become stranded and worthless in the face of climate action.

December’s Paris Agreement upped the ante by aiming to limiting warming since the pre-industrial period to “well below 2C” and to “pursue efforts” to limit it to 1.5C. Under shareholder pressure, Shell recently agreed to be more transparent about its exposure to climate risks, and to release other climate-related information.

Paris-compatible?

It’s in that context that Shell has published this week’s supplement to the New Lens scenarios. Whereas those scenarios contained detailed, quantitative outlooks for the future global energy mix in particular years, the supplement only provides a broad narrative sweep.

The new report expands on a 2014 essay by Jeremy Bentham, vice president global business environment for Shell and the head of the company’s scenarios team.

Glossary
Net-zero emissions: When greenhouse gas emissions are balanced by removals, so the sum total is zero or less. Scientists say the world must reach net-zero later this century to limit warming to below 2C. Read More

It sketches out what would need to happen under an “accelerated net-zero emissions scenario”, which would come closer to being compatible with the aims of the Paris agreement. Having previously argued that net-zero could not be reached before 2100, Shell concedes that it might be possible under a “Goldilocks” pathway with a “combination of all the most optimistic outcomes”.

In a foreword to the report, Bentham writes:

[This is the] story of one possible pathway involving a patchwork of solutions that could result in a better life with a healthy planet on a timescale consistent with global aspirations.”

Shell still contends that some sources of greenhouse gas emissions will be impossible to eliminate. It says carbon capture and storage (CCS) plus negative emissions technologies will be needed to offset these residual emissions. (Not everyone agrees. Check out Carbon Brief’s archive to learn more about the political, technical and environmental constraints at play).

Like its New Lens predecessors, therefore, the accelerated scenario involves reaching net-zero emissions. The difference is in how quickly the world gets there.

Shell says getting to net-zero by 2100 would equate to 2.5C of warming, with a 2070 deadline for 2C and 2050 for 1.5C. These dates are broadly in line with the latest science, which Shell cites in its report.

Shell does not explicitly give a date for net-zero emissions in its accelerated scenario, but it does say it would result in warming of no more than 2C, meaning net-zero would have to be reached around 2070.

Similarly, Shell does not say whether its new scenario would meet the Paris goal of staying “well below” 2C, let alone the aspiration to avoid 1.5C. The supplement includes the chart, below. Its accelerated scenario would lie somewhere in the orange shaded range.

Pathways for total CO2 graph.

How to avoid 2C

As noted above, Shell says it would take a “Goldilocks” combination of factors to reach its 2C scenario, but what would that actually mean? In its report, Shell sketches out what sort of things would need to change.

To support the transition, it says economic growth ought to be “neither too fast, so that there is time for adjustment, nor too slow, choking funds for investment”. The most important near-term change, it says, would be a shift away from coal-fired power generation towards natural gas.

It repeats its long-standing support for carbon pricing, preferably at global scale. It adds that state or national schemes might need to add border tax adjustments to avoid carbon leakage.

Shell also calls for technology investment –  in particular, for CCS – and for energy efficiency measures that can overcome non-financial barriers to deployment.

At country level, the report says China’s coal use would need to peak by 2020 (it’s worth adding that some believe it may have peaked already). In India, low-cost solar and gas grids would moderate coal expansion and emissions would plateau in the 2030s.

In the US, the 2C scenario would see “more people become aware of the costs of adaptation to climate change because of increased turbulent weather patterns and the impacts of ecological events on international (and hence national) security, trade and investment”.

The Clean Power Plan would overcome the legal challenges it faces, while “investors who face the prospect of holding ‘stranded’ capital in power generation…[would] instigate market reform” and wind and solar would thrive as “normal business[es]”.

In Europe, countries would progressively manage the intermittency of wind and solar energy through interconnected electricity networks, and surplus offshore wind would be used to generate hydrogen. Fossil fuels’ share of the EU energy mix would fall to around a fifth, from today’s 70%, though it does not say by when.

What it means for Shell

The report talks of major changes in the shape of the global economy. However, it lacks the information needed to assess in detail what it would mean for Shell and the wider world. Even so, it does contain some intriguing indications on Shell’s thinking.

For instance, it notes that some businesses may face “diminished returns as some investments – particularly unabated hydrocarbon infrastructure – become redundant”.

Elsewhere it says:

“We believe our portfolio is resilient under a wide range of outlooks, including the IEA’s 450 scenario [compatible with avoiding 2C of warming]…[However,] we have no immediate plans to move to a net-zero emissions portfolio over our investment horizon of 10–20 years.

In other words, despite publishing a 2C scenario, Shell’s position has not shifted significantly. It effectively argues not only that a well-below 2C or 1.5C scenario is stretching credulity, but that its “investment horizon” is too short to be materially affected, even if emissions are brought down to reach net-zero by 2070. Only time will tell if it is correct.

Main image: Old petrol pumps with Shell logo, Smeaton, Victoria, Australia. Credit: Rob Deutscher/Flickr.
  • Bruce Parker

    Just showing a “pathway” on a chart is not very meaningful, as the “pathways” often do not specify either the percent chance of meeting the target temperature or the “carbon budget” associated with that target temperature. By examining the “Pathway for Total CO2” chart, the total emissions from 2015 through 2100 for the “Target 2°C (MIT)”, “Shell Mountain”, and “Shell Oceans” pathways can be estimated to be about 1643, 2358, 1960 GTCO2 respectively. “For it to remain likely that we stay below two degrees, the total amount of carbon released through carbon dioxide emissions must be less than 1000 billion tonnes, the IPCC says. ‘Likely’ here means a 66 per cent chance.” (http://www.carbonbrief.org/carbon-briefing-making-sense-of-the-ipccs-new-carbon-budget). So to meet the 1,000 GTC budget, negative emissions of 643, 1358, and 960 GTC will be required for the “Target 2°C (MIT)”, “Shell Mountain”, and “Shell Oceans” pathways, respectively. The National Resource Council estimates that the carbon dioxide removal (CRS) costs (for negative emissions) will cost about $500/ton CO2 due the large quantities that need to be removed (since BECCS capabilities will be limited by available land) (http://www.nap.edu/catalog/18805/climate-intervention-carbon-dioxide-removal-and-reliable-sequestration). If the CDR costs can be brought down by 75% (to $125/ton CO2), then the costs for negative emissions for the three pathways would be $77.1, $162.9, $115.2 trillion respectively.

    Information like this provides a much-needed perspective.

  • SchroedingersDog

    Skimming this, it sounds like Shell’s plan is based on what can reasonably be accomplished, with an outline of how to get there. We’ll have to somehow back down from 2.5C, but we may as well admit we’re going to reach it at some point. Heck if it causes population growth to reverse in overcrowded places, it’ll be worth it.

    The outline makes makes sense…. so unfortunately neither the public nor politicians will support it. instead we’ll get the poles of denial and enviro-fetish, both at a long distance from reason.

    • Calamity_Jean

      “We’ll have to somehow back down from 2.5C….”

      How? Carbon capture and storage is done from the stack gas of a power plant, where the CO2 concentration is considerably higher than in the free air. As far as all the experts are aware, once the CO2 gets into the air, it is likely to be there for many decades if not centuries. Do you know some way of inexpensively extracting carbon dioxide from the atmosphere? You need to announce the method so that the world can get started on it.

      • Carl Raymond S

        Carbon negative concrete isn’t cheap, but neither is the carbon positive kind that’s widely used, so let’s do a phased ban on the latter.

  • Peter Lang

    Sorry, this is nonsense. There’s no mention of nuclear playing a major role – e.g. supplying most of global electricity with electricity providing a larger proportion of total energy, including producing a significant proportion of transport fuels (e.g. unlimited, net-zero, petrol/gasolene, diesel, jet fuel etc. from seawater). Without nuclear playing a major role, there will be negligible progress. Renewables have to be powered by gas and can achieve little. They cannot provide a large proportion of global electricity, let alone total energy. If France reduces its nuclear proportion from 75% to 50%, the CO2 emissions intensity of France’s electricity will increase from 44 g/kWh to around 150 g/kWh.

    • Calamity_Jean

      “There’s no mention of nuclear playing a major role….”

      That’s because nuclear won’t play a major role; it’s too expensive and takes too long to build. The same amount of money invested in solar and wind will produce more power faster.

      “Renewables have to be powered by gas….”

      No, renewables are powered by the sun, either directly or indirectly vial wind or water. During the (ongoing) transition to renewables, natural gas is sometimes used during periods when renewables are insufficient. As more renewables are installed, gas will be used less.

      “They [renewables] cannot provide a large proportion of global electricity….”

      Why not? There are already places where renewables provide all or nearly all of the electricity. Kodiak Island, Alaska gets 98% of its electricity from hydro and wind, for example.

      • Peter Lang

        Calamity Jane,

        Thank you for sharing your opinions and beliefs. Unfortunately you’ve been very poorly informed. If strongly believe you are correct, perhaps you’d be willing to answer some questions. Please ensure all comparisons between nuclear and weather-dependent renewables (like wind and solar) are presented on a properly comparable basis – e.g., on a life cycle analysis basis; for costs please compare total system cost for supplying the same proportion of a grid’s electricity. For nuclear versus wind and solar please compare and contrast:

        1. The Energy Return on Energy Invested

        2. Total system cost per TWh at say 25%, 50%, 75% penetration

        3. The rate that costs may decline

        4. CO2 emissions intensity of grid with say 25%, 50%, 75% penetration

        5. CO2 emissions avoided per MWh

        6. Fatalities avoided per TWh

        7. Proportion of total world energy that could be provided and for what period (taking into account all resources required)

        8. Land area and materials required per TWh of energy supplied

        Here’s a few links you might want to look at (ion no particular order):

        http://epillinois.org/news/2016/5/1/why-environmentalists-changed-their-mind-on-nuclear

        http://www.thelancet.com/article/S0140-6736(07)61253-7/abstract

        http://pubs.giss.nasa.gov/abs/kh06000s.html

        http://www.sciencedirect.com/science/article/pii/S095183201500277X

        http://www.sciencedirect.com/science/article/pii/S2214993714000050?np=y

        http://nextbigfuture.com/2012/06/deaths-by-energy-source-in-forbes.html

        http://www.sciencedirect.com/science/article/pii/S0301421516300106?np=y

        https://judithcurry.com/2016/03/13/nuclear-power-learning-rates-policy-implications/

        http://erpuk.org/wp-content/uploads/2015/08/ERP-Flex-Man-Full-Report.pdf

        https://judithcurry.com/2016/01/19/is-nuclear-the-cheapest-way-to-decarbonize-electricity/

        http://festkoerper-kernphysik.de/Weissbach_EROI_preprint.pdf

        http://science-and-energy.org/wp-content/uploads/2016/03/EROI_LesHouches2016.pdf

        https://collapseofindustrialcivilization.files.wordpress.com/2016/05/ferroni-y-hopkirk-2016-energy-return-on-energy-invested-eroei-for-photo.pdf

        • Calamity_Jean

          My screen name is “Jean” not “Jane”. Same letters, different order.

          I looked at most of your links; for those that weren’t behind a paywall, they generally gave me the impression that the authors were working hard to cast nuclear power in a good light or renewables in a bad one. Some seemed to assume that the current state of European and American electrical grids is what will be the permanent condition rather than what it is, a transitional state.

          Whatever you or I write on the Internet is really irrelevant. What counts is real-world results, and in the real world of electrical supply renewables are clearly outpacing nukes.

          In conclusion, I will give you one of my favorite quotations:
          “People who say it cannot be done should not interrupt those who are doing it.” George Bernard Shaw

          • Peter Lang

            Calamity_Jean,

            Clearly you have no answers to the questions and have no idea what you are talking about. For example you say:

            “renewables are clearly outpacing nukes”

            On what basis do you say that?
            1. Proportion of electricity supplied?
            2. Total system cost of electricity?
            3. Ability to supply a large component of the worlds’s energy effectively indefinitely?
            4. CO2 emissions avoided (from all technologies needed to provide reliable, dispatchable power are included).

            Compare emissions intensity of electricity in France and Germany.

            In case you haven’t been told, growth rate is irrelevant given renewables are at single digit proportion of global electricity generation and given the massive subsidies for renewables (100 times higher than for nuclear):

            EIA, 2015, Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2013 http://www.eia.gov/analysis/requests/subsidy/

            Non-hydro Renewable electric = $12.8 billion (253.5 TWh)

            Nuclear = $1.66 billion (789 TWh)

            (Note: The Federal subsidies included here are only part of the total subsidies paid by Federal Government, State Governments, local governments, tax payers, rate payers and consumers).

            US Federal Government subsidies per MWh (approx.)

            Solar = $280

            Wind = $35

            Hydro = $1.47

            Nuclear = $2.10

            https://i1.wp.com/i.imgur.com/X0dRcyp.png

          • Nicole Bearup

            That’s interesting…I forgot about subsidies, better than subsidies to fossil fuels. Nuclear does provide more bang for the buck. Since Fukushima, nuclear doesn’t look good to the general public. However I recently learned about a student nuclear physicist who is developing a reactor that will generate energy from the piles of nuclear waste we have stored.

          • There are many new nuclear technologies – I like Thorconnpower http://thorconpower.com/library/announcements/indonesiaexploringliquidfuel but I think it will be long time before they are used. Till then gas + renewables. Eventually we will either adapt to much higher CO2 or switch to nuclear.

          • Nicole Bearup

            Thanks for the link. Indonesia… their energy supply isn’t too stable, or I should say their grid isn’t. Power outages occur almost daily, at least that’s what I experienced while working there a few years ago. That country is amazingly beautiful and diverse; however, there’s a lot of environmental exploitation as well. Those islands are on the ring of fire, so I hope this nuclear technology takes that into consideration.

          • The reactor has “passive” safety – basically if the liquid salt in the reastor gets too hot it melts the plug and all the fuel drains out into a tank below the reactor. Their site explains it well.

            More generally though, we have three choices: burn fossil fuels and live in a hot world, return to the world pre-industrial revolution, go flat out for nuclear. People fdo not realise this trilemma beause the case can only be made with numbers, not adjectives (as the late and great David MacKay used to say).

  • Nicole Bearup

    “Our New Lens scenarios show that the world can tackle and resolve the climate issue over the course of this century, but not in less time than that…We also do not see governments taking the steps now that are consistent with [avoiding 2C].” I agree with Shell on this.

    “We believe our portfolio is resilient under a wide range of outlooks, including the IEA’s 450 scenario [compatible with avoiding 2C of warming]…[However,] we have no immediate plans to move to a net-zero emissions portfolio over our investment horizon of 10–20 years.” But I don’t like this statement.

  • The IPCC has concluded that the world CO2 concentration past the 1 degree global warming around 1970. Which we reach today, 2016
    And in 2000, the world passed the CO2 concentration for 2 degrees global warming. To be reached around 2040, if non-lineair effects are ignored.

    This is the IPCC picture
    http://www.duurzamebrabanders.nl/blog/wp-content/uploads/2016/02/CO2-heats-the-earth-delayed-ipcc_wg3_ar5_technical-summary.jpg

    Scientists added the the 2 lines for 1 and 2 degrees global warming, but the version with the lines, did not survive the “summary for policymakers”

    What is carbon briefs comment about this finding about delayed global warming, Simon?


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