Shell and BP grapple with low carbon futures

The oil majors Shell and BP have both been pondering what the global energy future might look like, while also making plans for their own operations within that future.

First, Shell caught up with other long-term energy crystal ball gazers by releasing a future scenario compatible with the Paris Agreement target of limiting the global average temperature rise to well below 2°C from pre-industrial levels.

The scenario, which the company names ‘Sky’, is the first time the oil major has tackled such an ambitious emissions reduction pathway. It follows other 2°C-compatible scenarios such as the International Energy Agency’s Sustainable Development Scenario.

The Sky pathway sees the global economy reaching net-zero emissions by 2070. Shell describes the scenario as ‘technically [and economically] possible, but challenging’. In it, consumers, governments and companies would face ‘tough choices’ which would see the way society produces and uses energy transformed. It sees the global economy ‘completely re-wired’ in only 50 years.

In terms of energy, the scenario sees, from now until 2070:

• a massive increase in energy efficiency, driven largely by global carbon pricing mechanisms that are adopted in the 2020s;

• a tripling of the rate of electrification of final energy use – with global electricity generation reaching a level nearly five times that of today’s;

• clean energy growing fifty-fold, with primary energy from renewables overtaking fossil fuels in the 2050s; and

• a total of 10,000 large-scale carbon capture and storage (CCS) facilities being built (compared to the less than 50 that exist today).

It is worth noting that, like other well-below 2°C scenarios, Sky relies on negative emissions technologies to start removing carbon dioxide out of the atmosphere from the year 2030 onwards, to counter a potential overshoot of emissions and sectors that are difficult to decarbonise.

BP preceded the launch of Shell’s Sky scenario by releasing the 2018 edition of its Technology Outlook in mid-March, which investigates potential technology advances in the energy sector to the year 2050. Like Shell, BP’s Outlook says that Paris Agreement goals are technically feasible, but they cannot be delivered by technology alone and that policymakers will have a role to play alongside better consumer choices.

The Outlook says that energy efficiency improvements can save around 40% of current primary energy use by 2050 – with digital technology providing the most significant source of system-wide improvement; that onshore wind power will become the most economic source of electricity by 2050; and that gas with CCS, biogas, synthetic gas and hydrogen all have high potential to replace natural gas use in heating, transport and power systems.

Both BP and Shell have also recently announced steps to reduce their own greenhouse gas emissions. BP vowed in mid-April to curb any growth in operating emissions out to 2025 through carbon offsetting and reducing its projected emissions by 3.5mn tonnes of carbon dioxide – through efficiency improvements, shifting to more gas production upstream, and tackling methane emissions. It has also pledged to expand its renewables businesses.

Shell’s Energy Transition Report, also published mid-April, has more to say about how the company will move into new business areas, such as the power and renewables, hydrogen and electric vehicles markets, alongside improving the carbon-intensity of its normal operations. But the company also says that it will produce around 80% of its current proved oil and gas reserves by 2030 – which total around 6bn barrels of oil and 30bn cubic feet of gas.