Shell backs carbon pricing in 2050 energy scenario [fr] [de]
In the context of soaring global energy demand, demographic pressures, fossil fuel supply constraints and environmental degradation, Shell has come out in favour of a 'new coalition of interests' in support of less energy-intensive development.
Background
Big oil companies usually refrain from commenting on future energy supplies. But some are now starting to signal that oil reserves are declining fast. In a 2006 campaign, Chevron said: "It took us 125 years to use the first trillion barrels of oil. We'll use the next trillion in 30."
A report released by the International Energy Agency (IEA) last year warned that the world will face an oil "supply crunch" within the next five years (EurActiv 10/07/07).
In its last Global Scenario, released in 2005, Shell highlighted the methodology and planning needed to address the challenges of increasing demand for fossil fuels and tightening state control over supplies of hydrocarbons.
"We are facing an era of revolutionary transitions and considerable turbulence," according to Shell's 2008 Energy Scenarios to 2050, presented in Brussels on 7 April during a conference organised by Friends of Europe.
With energy demand set to double by 2050 while supplies decrease and pressures on the environment grow, Shell has presented two alternative scenarios that outline a global response to these three 'hard truths'.
'Scramble' versus 'blueprint'
The first and more pessimistic 'scramble' scenario is characterised by a 'flight to coal' and nationalisation of energy resources in the context of increasing global competition for energy supplies.
In this scenario, "demand-side policy is not pursued meaningfully until supply limitations are acute. Likewise, environmental policy is not seriously addressed until major climate events stimulate political responses," according to Shell.
An alternative and more optimistic 'blueprint' scenario, favoured by Shell, would be more pre-emptive and feature greater global co-operation between governments and the private sector.
A CO2 pricing mechanism accompanied by a functioning global carbon market would be a key feature of the blueprint scenario, as this would drive sustainable development in other areas, notably renewable energies and carbon capture and storage (CCS) technologies, which Shell considers fundamental for providing 'clean' energy from fossil fuels.
The right climate
The company's decision to back one scenario over another for the first time in its history "is not altruistic," according to Jeremy Bentham, Shell's Vice President for the Global Business Environment.
Shell says it is looking for a favourable and stable investment climate amid concerns that under the scramble scenario "the whole [energy] system will derail," said Jeroen van der Veer, the company's chief executive.
In the blueprint scenario, global CO2 emissions would be capped by 2020 and subsequently begin to decline to 2000 levels by 2050, according to Bentham, who believes this timeframe to be "realistic for achieving a global consensus on a meaningful set of agreements" to harmonise key energy systems.
If the blueprint scenario is not realised, necessary investments in the energy sector will be impeded, he warned.
Positions
Javier Solana, the EU's High Representative for the Common Foreign and Security Policy, warned during the conference that the EU is facing a "very important financial problem" in providing the funds necessary to stimulate more clean energy developments.
"We don't have the amount of investment necessary at our disposal," he said.
Commenting on the issue of rising energy demand, Fatih Birol, the International Energy Agency's (IEA) chief economist, pointed to a "new story" in which rising energy prices no longer have a downward pressure on demand.
During previous oil supply disruptions (notably in the early 1970s and late 1980s) characterised by increases of $40 per barrel of crude oil, global fuel demand declined by 3% to 4%. But the current spike in oil prices has been accompanied by a 4% increase in demand, an unprecedented situation that points to the "end of price elasticity," according to Birol, who questioned the Commission's assumption that rising energy prices strengthen energy demand reduction policies.
Green MEP Claude Turmes generally spoke in favour of Shell's blueprint scenario, but questioned the extent to which CCS technologies could be relied upon to provide cleaner fossil fuel alternatives.
CCS is a "joker, and we should not depend on it," he said, citing the high costs associated with developing the technology.
Birol supported Turmes' scepticism concerning CCS and argued that the technology is needed more crucially in developing nations like India and China, where coal is relied upon to provide a majority of these countries' energy needs.
If China and India's current energy policies and practices continue, Birol added, their CO2 emissions would dwarf those of many developed states, effectively negating the most ambitious CO2 emissions reduction policies of the EU and the US and leading to a rise in global average temperatures of up to six degrees Celsius.
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