Shell sketches future with drastically fewer fossil fuels
Coal, oil and natural gas would plummet within the next couple of decades in a new report Royal Dutch Shell released Monday, envisioning a future where world leaders cut greenhouse gas emissions as laid out in the 2015 Paris climate deal.
Why it matters: This is a company sketching a potential future where its primary products precipitously drop in use. That’s like McDonald’s imagining a future without beef hamburgers. Meanwhile, Shell is one of the most aggressive global hydrocarbon producers addressing climate change by investing in other energy technologies.
The gritty details: The report is not a forecast for what Shell thinks will happen. It’s a possible future if greenhouse gas emissions are cut dramatically through aggressive and coordinated government policies to produce a net zero emissions from energy use by 2070. That’s a herculean “if” statement given the lack of movement on this issue. This latest scenario is the most ambitious compared to two others Shell issued in 2013.
Highlights of this hypothetical future:
- Governments adopt carbon taxes just under $50 per ton by 2030 that reach $200 by 2070.
- Global coal demand has already peaked, oil demand peaks around 2025 and natural gas peaks around 2035.
- Solar becomes the dominant energy source around 2055.
- The shift to renewable energy is “affordable, being well within historical spending on the new energy system as a share of global GDP.”
- Shell CEO Ben Van Beurden told me earlier this month that oil demand could peak within seven years if the world took drastic action to cut carbon emissions.
- Shell announced late last year it would aim to cut the "net carbon footprint of its energy products by around half by 2050.”
Yes, but: Shell is still not moving aggressively enough for some shareholders. Activist investors are likely to push a resolution at its upcoming spring investors’ meeting calling on the company to be more aggressive with its strategy, The Financial Times reported Monday.
Related: Inside Exxon’s climate strategy