The idea that Shell might be doing its bit to save the world from environmental disaster is something Shell to Sea campaigners might find odd, but in fact the organisation has been seriously examining the issue for more than a decade.
The senior climate change adviser to Europe's largest oil and gas company, David Hone, was in Dublin recently for a talks in the Institute of International and European Affairs against the backdrop of the EU's almost collapsed carbon trading scheme.
He took time out to speak about his view on the crucial role to be played by carbon capture and storage (CCS) in preventing a catastrophic increase in global temperatures while, at the same time, providing for the world’s envisaged energy needs over the coming decades.
The interview took place just days after another publication by Carbon Tracker and the Grantham Research Institute on Climate Change and the Environment at London School of Economics on the subject of whether the world economy is putting too much money into fossil fuel companies which will not be able to burn the volumes of carbon over the coming years that the markets, by way of their share price valuations, believe they will.
Fossil fuels
Called
Unburnable Carbon 2013: Wasted Capital and Stranded Assets
, the paper (http://iti.ms/123Qqg2) draws attention to the fact that stock exchanges around the world contain listed fossil fuel companies, the market capitalisation of which is in part based on valuations of their stocks of oil, gas and coal.
Yet an analysis of the global targets on carbon emissions for the coming few decades indicates, it says, that up to 80 per cent of these fuel stocks cannot be burned if the climate change goals are to be met.
Hone, as you might have expected, was not impressed. He points out that most of the proven reserves of fossil fuels are held by unlisted State-owned companies, and says that if the fossil fuel companies are not able to continue in business, a lot of sectors are going to be hit, giving energy companies as an obvious example.
The whole idea of there being a “carbon bubble” does not address a number of realities, he says, number one of which is the fact that global energy needs are growing by a few per cent annually, and the key question is how those needs are to be met while at the same time preventing environmental catastrophe.
Even an unprecedented rate of growth in renewable energy production will not meet the expected growth in demand, according to calculations done by Shell.
On the other hand, there is no dispute that if the oil, gas and coal that is in the ground is burned so that the carbon goes into the atmosphere, the increase in global temperatures will exceed 2 per cent.
But for Hone the picture of a world stuck between a giant economic crisis or an even greater environmental one, misses the point. The challenge, he believes, is to provide the energy that is needed through ways that include the fuel that is in the ground, but not put carbon into the atmosphere while doing so. This is why he places so much emphasis on carbon capture and storage, or CCS.
He says the industry Shell belongs to is very capable of responding on a huge scale to the challenges it meets, and that what is needed at the moment is the “economic trigger” that will set the CCS scenario in motion.
There is a “returns issue” involved, and what the industry needs is Government interventions, such as the carbon trading regime and public private partnerships, that make the economic case for CCS. “All of the other stuff is just noise.”
For the public, and Government, the climate change challenge is being packaged along with a lot of other issues such as energy security, competition between regions and countries, security of supply, balance of payments issues, and so on.
But none of these address the core issue of not bringing the carbon levels in the atmosphere to heights where climate change becomes a global issue of existential dimensions.
Hone points out that driving an energy efficient car still contributes to the amount of carbon in the atmosphere. Reducing carbon emission levels gives us more time, but the more stuff that is put into the atmosphere, the more the world’s climate alters.
Future environment
According to the rather scary carbon- in-the-atmosphere digital counter site, (trillionthtonne.org), optimists believe the world needs to limit total cumulative carbon emissions (since the industrial age began) to below one trillion tonnes, if it is to stop warming going above two degrees.
The counter is whirring at an enormous rate but when this writer checked it was at 569 billion tonnes and, barring major changes, the trillionth tonne was predicted to enter the atmosphere on Monday, May 13th, 2041. That would mean we had passed the threshold for stopping the earth’s atmosphere from rising by two degrees.
The critical point to recall is that the process is a cumulative one. The billions of tonnes of carbon already in the atmosphere are having an effect on climate change and the more that is emitted, the greater the effect will become. Slowing the rate of emissions means the rate of climate change slows, but it still changes.
New Lens Scenarios , a booklet produced by Shell for its executives which looks at the possible shape of the future environment in which the company will operate – asking questions such as can the rise of China occur without conflict with the United States – speculates that cumulative emissions by the middle of this century will have overshot the levels that constitute the two-degree threshold, but that a pathway will then be devised to manage net global emissions.
Hone says CCS is the key to slowing the clock in a meaningful way. The technology is there for CCS though as matters stand it would add approximately 20 per cent to the cost of energy production for a major power station. Once it becomes widely used, that figure is likely to fall, says Hone, though probably not much below 10 per cent.
While it is perfectly reasonable to be depressed about the moribund international effort to combat climate change, Hone points out that there has been some progress over the past 20 years. There is some carbon pricing in Europe, and talk of linking the European system with the Australian one.
Tens of billions of euro have been invested in low carbon technology in developing countries, and the increased use of gas involves markedly greater efficiency when compared to older coal plants.
“You can see a pathway forward,” he says, while adding that we are “all at the precipice and the only way over is if we jump together.”
Of course the issue is a huge one for everyone but Shell’s particular commercial interest is in staving off a panicked political response to climate change that might involve the hasty, and economically catastrophic, decision to suddenly stop, or drastically reduce, the burning of fossil fuels.
Economic triggers
The world is either going to resolve the issue in a somewhat ordered manner or allow climate change to continue until it becomes an environmental crisis of such a scale that it will support the implementation of populist, drastic and unwise political responses.
From Shell’s point of view, it would most like to see the implementation of CCS projects, and the devising of economic triggers so that the potential of the fossil fuel sector can be brought into action on a massive scale once the world’s governments, and the people who look to them for leadership, realise there is no choice.
Hone’s personal guess is that there will be “knee jerk” reaction to the climate change crisis sometime in the 2020s.
In the meantime, there will be odd successes such as, he says, the Shell/ Government public private partnership that is behind a CCS oil sands operation in Alberta, Canada. The project, which involves the investment of hundreds of millions of euro of public funds, will see more than one million tonnes of CO2 produced from bitumen processing, being stored deep underground. The project is now at the construction stage.
Negotiations about a similar project in the UK are at an advanced stage but have been going on for five years. “You have to get your feet wet”, he says of these CCS projects. The world’s response to the crisis has been frustratingly slow, he says. But when the time is right, change will come faster than people currently imagine.
