On the eve of the UN conference on climate change in Paris, how can the world slow down climate change and strengthen its economy?

Transcription

1 On the eve of the UN conference on climate change in Paris, how can the world slow down climate change and strengthen its economy? Shell Energy-Dialogue Berlin, Germany Harry Brekelmans Projects & Technology Director, Royal Dutch Shell plc November 23, 2015

2 Harry Brekelmans became Projects & Technology Director and a member of the Executive Committee of Royal Dutch Shell plc on October 1, He joined Shell after graduating in 1990 with a degree in Petroleum Engineering from Delft Technical University in the Netherlands. He began his career in the research and development department of Shell s Exploration & Production (E&P) business in the Netherlands, followed by a variety of assignments in Egypt and the UK. Harry was appointed Internal Audit Manager for Shell E&P Europe in In 2005 he became Global Audit Manager for both the E&P and Gas & Power businesses. From 2007, he was Chief Executive Officer of Salym Petroleum Development, a Shell joint venture in Russia. In September 2009, he became Executive Vice President (EVP) for Shell Group Strategy & Planning. In mid-2011, he returned to Russia as Country Chairman and EVP for Russia and the Caspian region. He moved back to his native city, The Hague, the Netherlands, in early 2013 to take up a new role as EVP for Upstream International Operated. Harry is a board member of the Global Leadership and Technology Exchange, which connects business, governments and civil society in seeking more efficient, low-carbon growth.

3 Ahead of the United Nations conference on climate change in Paris, Shell called on policymakers to incentivise ways to reduce emissions in the long term. Governmentled carbon pricing systems would be a crucial step in the world s journey towards more energy with less CO 2, Harry Brekelmans said in his recent speech in Berlin, in which he discussed ways to slow down climate change and strenghten the economy. Replacing Germany s coal plants with modern gas plants, for example, could eliminate about 150 million tonnes of annual CO 2 emissions, he said. Ladies and Gentlemen, It s an honour to debate the future of energy and the objectives of the Paris conference here today. Germany is a very important country for Shell. Not only do we have a big business here, but it is also at the front of many technical and political developments that are driving the world to change the way it produces and consumes energy. I listened with interest to Mr Schafhausen from the German Ministery of Environmental Affairs, who s targeting reduced greenhouse-gas emissions in the foreseeable future. And to Professor Edenhofer, who s aspiring to implement policies that help the world meet emissions targets. Please allow me to now share Shell s view on things. In our daily lives, we depend on reliable, affordable energy to turn on the lights, to heat our homes, to drive our cars. And energy is equally important to our economies. Sadly, however, some 3 billion people still lack access to the modern energy many of us take for granted. On top of this, there will be more people on this planet. For all these reasons, demand for energy is likely to grow. The challenge is how to balance demand for more energy with the need for cleaner energy. In short: how do we achieve more energy with less CO 2? At least three things are crucial to this endeavour: firstly, a greater share of natural gas and renewables; secondly, effective carbon pricing systems; and finally, collaborative innovation. Gas and renewables Let me start with natural gas and renewables. I know some people would like fossil fuels to be replaced by renewables as we speak. But for technical and economic reasons, this can t happen overnight. Some industrial sectors could decarbonise over the coming decades in particular power generation. Other sectors will need more time. And some will continue to need hydrocarbons. Having said that, Shell expects renewables to eventually become the largest component of the global energy mix. We think that their share could double from 13% now to around 30-40% of the global energy mix by This suggests that hydrocarbons will continue to play an important role for decades to come. Only hydrocarbons can provide a full suite of energy products and address the shortcomings of alternative energies in terms of availability, storage and energy density. But, at the same time, the world needs to reduce CO 2 emissions. This is why I m convinced the energy mix needs to be based on a greater share of natural gas in combination with renewables. Natural gas is relatively clean-burning, abundant and I I know some people would like fossil fuels to be replaced by renewables as we speak. But for technical and economic reasons, this can t happen overnight.

4 versatile. When burnt for power, it produces half the amount of CO 2 that coal does. In Germany, renewables are growing fast in power generation - heavily subsidised by so called feed-in tariffs. On the other hand, coal plants are running full throttle and are used as a back-up. We all know the energy transition will have a different shape from country to country. However, it is disappointing that the share of natural gas in German power generation slipped below 10% last year, whereas coal s share was at 43%. If all these coal plants were replaced with modern gas plants, Germany could eliminate about 150 million tonnes of annual CO 2 emissions. To put this into perspective: Currently, Germany emits around 900 million tonnes per year, and the government wants to lower these further, to 750 million tonnes by Just the fuel switch from coal to gas could achieve the reductions required by the government s Climate Programme for I think the recent decision of Germany s government to close down 2.7 gigawatts of coal-fired power plants by putting them into a reserve is a step in the right direction. But more work needs to be done. Carbon Pricing Systems Turning to next week s conference in Paris, Shell calls on policymakers to incentivise options that focus on emissions reduction over the long term. Government-led carbon pricing systems, ladies and gentlemen, are a crucial step in our journey towards more energy with less CO 2. These systems have the potential to promote low-carbon technologies and also encourage energy efficiency. I m glad the German government supports a strong Emissions Trading System as the most important instrument of EU climate policy. With other energy companies, Shell has established a Paying for Carbon initiative. We ask governments to introduce carbon pricing systems where they do not yet exist. And we ask them to create a framework, along the lines proposed by the International Emissions Trading Association, that could connect all the national systems. To be clear: the establishment of a global CO 2 pricing mechanism will take its time. In the meantime and this is no easy-tomanage task we have to be careful and try to avoid carbon leakage in industrialised economies. However, if we get CO 2 pricing right, carbon pricing systems could really reinforce the transition to a low-carbon future in particular switching from coal to gas in power generation. Collaborative Innovation On to my third and final point: collaborative innovation. To give some examples related to mobility: we are working with automakers and other partners to improve the efficiency of transport fuels. Also, we are a leader in the liquefied natural gas, or LNG, industry. At Shell we use this knowledge to extend the LNG market beyond its current primary use of generating power, into transport. LNG is now beginning to emerge as a costcompetitive and cleaner fuel for shipping and heavy-duty road transport. And let s not forget hydrogen: In many conceptions of a net-zero-emissions world, this will be used as a fuel. It can be made from electricity and water, and it could store excess energy, while possibly providing heat for industry. Turning to next week s conference in Paris, Shell calls on policymakers to incentivise e options that focus on emissions reduction over the long term. Government-led carbon pricing systems, ladies and gentlemen, are a crucial step in our journey towards more energy with less CO 2.

5 Looking at Germany, I m glad that in collaboration with the federal government, Daimler, Linde and others we re looking to build a network of about 400 hydrogen fillup sites across this country. This will be a visible step to achieving the Energiewende in the mobility sector. Shell has been a pioneer in developing and delivering infrastructure for hydrogen mobility in the US, but particularly here in Germany. Our hydrogen fill-up network is meant to become a starting point for activities in more European countries. For me, these examples demonstrate how hugely important collaboration and publicprivate partnerships are in shaping the needed energy transition. Looking at Germany, I m glad that in collaboration with the federal government, Daimler, Linde and others we re looking to build a network of about 400 hydrogen fill- up sites across this country. This will be a visible step to achieving the Energiewende in the mobility sector. Conclusion In sum: Shell fully acknowledges that the energy system is moving towards a lowcarbon future. For us, this is an opportunity. An opportunity to help produce more energy with less CO 2, an opportunity to be a partner in progress inside and outside Germany. Thank you for listening. I look forward to our discussion. For information about Shell, including speeches and other publications, please visit Shell International Limited, Permission should be sought from Shell International before any part of this publication is reproduced, stored in a retrieval system, or transmitted by any other means. Agreement will normally be given, provided the source is acknowledged. The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this publication the expressions Shell, Group and Shell Group are sometimes used for convenience where references are made to Group companies in general. Likewise, the words we, us and our are also used to refer to Group companies in general or those who work for them. These expressions are also used where there is no purpose in identifying specific companies.