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New Shell Scenarios Sharpen Focus on Future for Society, Energy

2013-02-27 19:01 ET - News Release

THE HAGUE, The Netherlands, February 28, 2013 /PRNewswire/ --

Shell today released new scenarios that explore two possible ways the 21st century could unfold, with dramatically different implications for society and the world's energy system. One scenario sees cleaner-burning natural gas becoming the most important energy source globally by the 2030s and early action to limit carbon dioxide emissions. The other sees solar becoming the top source by about 2070, but with slower action to address the threat of climate change.

The New Lens Scenarios, which look at trends in the economy, politics and energy as far ahead as 2100, underscore the critical role that government policies could play in shaping the future.    

"These scenarios show how the choices made by governments, businesses and individuals in the next few years will have a major impact on the way the future unfolds," said Chief Executive Officer Peter Voser.

"They highlight the need for business and government to find new ways to collaborate, fostering policies that promote the development and use of cleaner energy, and improve energy efficiency."  

With the world's population headed toward 9.5 billion by 2060 and the rapid growth of emerging economies lifting millions of people out of poverty for the first time, the scenarios project that world energy demand could double over the next 50 years.

Called Mountains and Oceans, Shell's scenarios explore two plausible future pathways for society. Each scenario dives into the implications for the pace of global economic development, the types of energy we use to power our lives and the growth in greenhouse gas emissions.  The scenarios look further into the future than many other outlooks and highlight some surprising possible developments. Both see global emissions of carbon dioxide (CO2) dropping to near zero by 2100. One factor is increasing use of technology that takes CO2 out of the atmosphere, for instance by burning biomass to produce electricity, and then storing emissions underground. Although the Oceans scenario sees a dramatic increase in solar power, it also envisions greater fossil fuel use and higher total CO2 emissions over the century than the Mountains scenario, which will likely have more impact on the world's climate.        

The scenarios highlight areas of public policy likely to have the greatest influence on the development of cleaner fuels and renewables, improvements in energy efficiency and on moderating greenhouse gas emissions. They include:

  • Measures to promote the development of compact, energy-efficient cities, particularly in Asia and other rapidly urbanising parts of the world.
  • Mandates for greater efficiency in areas such as transportation and buildings.  
  • Policies to encourage the safe development of the world's abundant supply of cleaner-burning natural gas -- and to promote its wider use in power generation, transport and other areas.
  • A price on CO2 emissions and other incentives to speed the adoption of technologies to manage emissions, particularly carbon capture and storage (CCS).  

Mountains

The Mountains scenario imagines a world of more moderate economic development in which policy plays an important role in shaping the world's energy system and environmental pathway. Cleaner-burning natural gas becomes the backbone of the world's energy system, in many places replacing coal as a fuel for power generation and seeing wider use in transport.

A profound shift in the transportation sector sees global demand for oil peaking in about 2035. By the end of the century, cars and trucks powered by electricity and hydrogen could dominate the road. Technology to capture carbon dioxide emissions from power stations, refineries and other industrial installations becomes widely used, helping to reduce CO2 emissions from the power sector to zero by 2060. Another factor is the growth of nuclear power in global electricity generation. Its market share increases by around 25% in the period to 2060.

With these changes to the energy system, greenhouse gas emissions begin to fall after 2030. Nevertheless, emissions remain on a trajectory to overshoot the target of limiting global temperatures rise to 2 degrees Celsius.  

Oceans

The Oceans scenario envisions a more prosperous, volatile world with an energy landscape shaped mostly by market forces and civil society, with government policy playing a less prominent role. Public resistance and the slow adoption of both policies and technology limit the development of nuclear power and restrict the growth of natural gas outside North America. Coal remains widely used in power generation until at least the middle of the century.

Without strong support from policymakers, carbon capture and storage catches on slowly. By mid-century CCS captures only about 10% of emissions, growing to about 25% in 2075. This slow uptake is the main reason electricity generation becomes carbon-neutral some 30 years later in the Oceans scenario than in the Mountains scenario.      

Higher energy prices encourage the development of hard-to-reach oil resources, as well as the expansion of biofuel production. Oil demand continues to grow through the 20s and 30s, reaching a plateau after 2040. Liquid fuels still account for about 70% of road passenger travel by mid-century.

High prices also spur strong efficiency gains and the development of solar power. By 2070, solar photovoltaic panels become the world's largest primary source of energy. Wind energy expands at a slower pace, due to public opposition to large installations of wind turbines.  Elevated demand for coal and oil, a lack of support for CCS and less natural gas development outside of North America contributes to about 25% higher total greenhouse gas emissions than in the Mountains scenario.    

To explore Mountains and Oceans in more detail, download Shell's New Lens Scenarios at http://www.shell.com/scenarios.

Shell has a 40-year history of using scenario planning to explore possible future landscapes and aid strategic decision-making. The latest publication continues a tradition of sharing summaries of the scenarios to contribute to the public debate about possible ways to tackle some of society's long-term challenges.  

Notes to Editors

Royal Dutch Shell plc

Royal Dutch Shell plc is incorporated in England and Wales, has its headquarters in The Hague and is listed on the London, Amsterdam, and New York stock exchanges.  Shell companies have operations in more than 100 countries and territories with businesses including oil and gas exploration and production; production and marketing of liquefied natural gas and gas to liquids; manufacturing, marketing and shipping of oil products and chemicals and renewable energy projects. For further information, visit http://www.shell.com

Cautionary Note

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this announcement "Shell", "Shell Group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. "Subsidiaries", "Shell subsidiaries" and "Shell companies" as used in this announcement refer to companies in which Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this announcement, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect (for example, through our 23 per cent shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This announcement contains forward looking statements concerning the financial condition, results of operations and businesses of Shell and the Shell Group. 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 Shell and the Shell Group 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", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and the Shell Group and could cause those results to differ materially from those expressed in the forward looking statements included in this announcement, 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. All forward looking statements contained in this announcement 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 factors that may affect future results are contained in Shell's 20-F for the year ended 31 December 2011 (available at http://www.shell.com/investor and http://www.sec.gov ). These factors also should be considered by the reader.  Each forward looking statement speaks only as of the date of this announcement, 28th February 2013. Neither Shell nor any of its subsidiaries nor the Shell Group 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 announcement.

SOURCE Royal Dutch Shell plc

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