NEW LENS SCENARIOS. CO 2 and Climate Change. The long term challenge of managing emissions. David Hone, Chief Climate Change Adviser, Shell

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1 NEW LENS SCENARIOS CO 2 and Climate Change The long term challenge of managing emissions David Hone, Chief Climate Change Adviser, Shell

2 MOUNTAINS OCEANS

3 MOUNTAINS A view from the top Influence concentrates amongst the already powerful, as advantage brings more advantage Economic development slowed by rigidities in structures and institutions However, some secondary policy developments facilitated

4 MOUNTAINS A view from the top ENERGY Moderate economic growth limits supply/demand tensions Natural gas becomes the backbone of the global energy system A profound shift occurs in global transport and infrastructure Moderated CO 2 and resource stresses; CCS takes off

5 EJ/year MOUNTAINS Total primary energy by source Year Oil Biomass Gasified Biomass Traditional Geothermal Other Biofuels Coal Nuclear Solar renewables Natural Gas Biomass/Waste Hydroelectricty Wind

6 OCEANS A view from the horizon Emerging interests increasingly accommodated Core reforms unleash growth and expectations for further reform Markets dominate However, more empowered constituencies hinder some secondary policy advancement

7 OCEANS A view from the horizon ENERGY Supply/demand tightness and high prices unlock expensive resources and drive user efficiency Liquid fuels and coal continue to dominate as gas undershoots global hopes, until solar becomes new backbone High CO 2 and resource impacts. CCS only mandated later

8 EJ/year OCEANS Total primary energy by source Year Oil Biomass Gasified Biomass Traditional Geothermal Other Biofuels Coal Nuclear Solar renewables Natural Gas Biomass/Waste Hydroelectricty Wind

9 Electricity consumption by source EJ/annum OCEANS Solar growth is extraordinary Coal from 1990 Solar from Years

10 OCEANS... with potential dominance by 2100

11 Climate change and the long term challenge of managing emissions

12 The climate change problem Need to avoid the trillionth tonne 1 of carbon to stay below 2 C... 1 trillion tonnes 0.8 ~2 C over half full today Starting in Warming caused by cumulative carbon emissions towards the trillionth tonne. Myles R. Allen, Malte Meinshausen et. al. Nature Vol 458, 30 April 2009

13 The climate change problem.. and using current proven 1 fossil reserves 2 takes us well over the mark. Early 2040 s Starting in BP Statistical Review of World Energy Current reserves of oil and gas are ~60 years each, coal ~110 years at current usage rates ~4 C ~3 C 1.6 trillion tonnes, with continued land use change and cement production..... and probably still rising into next century.

14 Cumulative stock and peak warming Warming caused by cumulative carbon emissions towards the trillionth tonne. Myles R. Allen, Malte Meinshausen et. al. Nature Vol 458, 30 April 2009

15 Current policies are unlikely to resolve the CO 2 issue By 2020, renewable energy will make up 20% of the energy supply We must improve energy efficiency, that will reduce emissions We must stimulate clean energy investment The green economy will offer jobs and energy security We will reduce the CO 2 intensity of the economy by 20%.

16 The real impact of current policies Geographical displacement: The fossil resource gets used elsewhere. Temporal displacement: The fossil resource gets used later. With no net change in cumulative emissions......

17 Carbon capture and storage is different Carbon Capture and Storage (CCS) is different. Carbon is returned to the geosphere where it came from. There is no geographical or temporal effect. Even limited local action has a global benefit.

18 Mountains A gas backbone with early and rapid deployment of CCS limits the stock Late 2040 s Capped by ~2100 Starting in

19 Oceans CCS comes years later with the result that the end stock is higher Late 2040 s Capped by ~ Starting in

20 Global CO 2 Emissions, Gt per annum Emissions in 2050 are stubbornly high Neither scenario meets current 2020 or 2050 goals or 2 C but both see emissions head to zero within this century Mountains Oceans emissions 50% reduction vs

21 CO 2 Stored, GT per annum CCS in the New Lens Scenarios Oceans Mountains

22 Key points on climate change and CCS Managing climate change means managing the cumulative emissions of CO 2. Net zero emissions is an eventual must have. Placing bets on renewable-energy outpacing efficiency-driven fossil fuel growth and assuming that enhanced efficiency will drive down demand, may be a foolish gamble. Only CCS will deliver the net zero requirement. CCS needs to come early and be rapidly deployed to manage the CO 2 issue within this century.

23 Disclaimer This scenarios presentation contains forward-looking statements that may affect Shell s financial condition, results of operations, and businesses of Royal Dutch Shell. 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 Royal Dutch Shell 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 Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this scenarios book, 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 addressingclimate 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 presentation 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 Royal Dutch Shell s 20-F for the year ended December 31, 2012 which is available at and These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this scenarios presentation, March Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forwardlooking 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 scenarios presentation.

24 Thank you for listening!