Massive continuing reliance on fossil fuels, rapid growth in the use of hydrogen fuel, changes in consumer mindsets and energy efficiency practices, net-zero deforestation, a mere 10,000 new carbon capture and storage (CCS) plants around the world, and global carbon pricing mechanisms to encourage CCS are hallmarks of Royal Dutch Shell’s new scenario for keeping average global warming below 2.0°C between now and 2070.
In a scathing critique of the company’s Sky scenario, released last week, Oil Change International notes that the plan was largely driven by “pressure from the company’s shareholders to explain the risks to their investments arising from efforts to cut emissions,” after Michael Bloomberg’s Task Force on Climate-Related Financial Disclosures urged companies and investors to stress-test their portfolios against scenarios where the world acts on climate change.
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“Shell’s new report does not provide a stress test, because it describes a future with so much oil and gas that the company faces no stress,” writes Research Director Greg Muttitt. “The lesson is simple: If you want to know how to fix climate change, don’t ask a company that wants to sell you more oil and gas.”
In Shell’s version of a “rapid energy transition”, 2050 dawns with oil, natural gas, and coal at 88%, 93%, and 62% of their current consumption levels.
The 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 2.0°C, or 3.6°F, above preindustrial levels,” the Washington Post reports. “Shell has said that it supports the Paris agreement,” even though nearly 94% of its shareholders voted down a proposal last year to set production targets in line with the Paris deal.
During the company’s 2017 AGM in The Hague, shareholders “spent hours questioning Shell’s board members, who said that while the company supported the Paris agreement, setting company targets was ‘not in the best interest of the company,’” The Independent reported at the time.
Now, Shell’s latest future scenario projects hydrogen accounting for 10% of global energy consumption by 2100. It “envisages that as fossil fuel use declines, old oil and gas facilities will be repurposed for hydrogen storage and transport,” The Guardian explains. “Shell has no large-scale hydrogen production but is a major player in natural gas, from which hydrogen can be made. The company launched its first hydrogen refuelling point in the UK last year,” and opened a second one last week.
“Sky recognizes that simply extending current efforts will not be enough for the scale of change required. There will need to be both big changes in climate policies to encourage investment and innovation, and mass deployment of disruptive new technologies,” Forbes states. But the report claims a “lack of a clear development pathway” for phasing out coal, while pointing to “stubborn” parts of the energy system that will be tough to decarbonize.
“The apparent lack of low-carbon solutions for aviation, shipping, cement manufacture, some chemicals processes, smelting, glass manufacture, and others means that significant sectors of the industrial economy won’t trend rapidly to zero emissions,” it states. “Even the power sector could still need support from conventional thermal generation in 2050.”
“How can such a future be aligned with the Paris goals?” Oil Change asks. “The answer is that it’s not.”
Muttitt notes that the Paris goal is to keep average global warming “well below” the 2.0°C threshold, recognizing the UN Framework Convention on Climate Change (UNFCCC)’s strongly-stated preference for a 1.5°C “buffer zone” over a 2.0°C “guardrail”.
But “Shell appears not to understand this,” he writes. “The ‘Sky’ scenario aims for a two-in-three probability of keeping warming below 2.0°C, but this is only achieved if new technology is invented to suck carbon out of the atmosphere, as well as a dramatic turnaround in technology for capturing and burying carbon emissions.” By 2070, “the Shell scenario has eight billion tonnes of carbon dioxide sucked out of the atmosphere, which (if the technology works) could require a land area up to five times the size of India. Another 10 billion tonnes is captured when emitted. This combined 18 billion tonnes is equivalent to about half of today’s emissions.”
That means Shell “proposes gambling on the invention of new technologies, in order to have a modest chance of avoiding the severe dangers at and above 2.0°C. That is not ‘stringent defence’ of the 2.0°C limit. It is not ‘pursuing efforts’ to keep warming to 1.5°C. It is not aligned with the Paris goals.”
Muttitt adds that the “circular logic” in the Sky scenario “argues that capital investment locks in oil production, preventing a faster pace of change” that would leave colossal fossils like Shell with stranded assets. “From 2018 to around 2030, there is clear recognition that the potential for dramatic short-term change in the energy system is limited, given the installed base of capital,” the scenario report states—this from a company that previously said it would only face significant financial losses if energy systems changed over in less than 11.5 years, the estimated life of its proven fossil reserves.
“Investors may well feel frustrated at Shell’s circular logic, and at the company’s inability to seriously engage on the question of risk,” Muttitt writes. “But this also returns us to the question of Shell’s responsibility. If new investments lock in production and emissions, then every time Shell builds a new platform or pipeline, or drills a new well, the company is committing the world to increased climate change. This tacit admission may be useful in the growing number of climate lawsuits against Shell and other oil companies.”
And Shell isn’t alone. In its energy transition scenario released earlier in March, BP projected renewable energy technologies growing five-fold, but to only 14% of global demand, by 2040.
