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Shell reinforces bet on 'clean energy' future.

By Myrna M. Velasco

As the planet burns and in the state of "energy toxicity" we're in, the world for sure cannot just sit idly by.

The science that we now know on climate change risks wrecking havoc on human's physical environment is indeed real - and attempts at reversing its track will certainly be a long game.

Multinational energy firm Royal Dutch Shell plc takes that challenge to the core - and investigates the science behind "the warming planet" through the series of "scenarios" it has been setting forth - and how the energy sector in particular can do its share to upend degenerating trends in the ecosystem.

Via its recently unveiled "Sky Scenario", Shell scrutinizes the 50-year trend of energy supply-and-demand of the world - and how technological advances and energy policies from now through year 2070 could keep pace or be diametrically opposed to the goals of the Paris agreement - or the concerted goal to contain global warming - at least within the level of 1.5 to 2.0 degrees C temperature limits prescribed by scientists.

Against the backdrop of unfolding milieus in the energy sector, Jeremy B. Bentham, vice president for Global Business Environment and head of Shell Scenarios, offers some glimmer of hope. "In our Sky Scenario - which is the scenario that is rooted in the reality of today but meets the Paris ambition, it shows that it is technically and economically feasible to have net zero emissions by 2070," he reckoned.

Beyond deployment of cleaner energy technologies, Mr. Bentham asserted that goals of mitigating global warming risks could be done in tandem with other solutions - such as increasing reforestation initiatives. "Reforesting globally an area the size of Brazil offers the possibility of reaching the stretch of Paris goal of 1.5[degrees]C," the company executive qualified.

As contemplated in the Paris agreement, Bentham said reality has been prudently examined by setting "a balance between emissions by sources and removals by sinks of greenhouse gases."

Fossil fuels

and the shifting paradigm

For many countries in the Asian region - the Philippines included - fossil fuels have remained "king" in the energy mix of many economies.

Bentham has concurred to the notion that technology shift is not something that can be done overnight - especially among nations still very much on their pathway to robust economic expansions. But over time, he said, these fossil fuel technologies can be substituted - like oil with biofuels; and the coal plants eventually getting replaced by green technologies like renewables or them being largely equipped with carbon capture and storage (CCS) technologies once they reach commercial viability scale. There is also that highly anticipated leap of hydrogen in the future energy mix.

"For instance in power generation, you can easily decarbonize power. You have technological choices that you can use - like wind or solar and even nuclear. And you can also combine coal or even gas with carbon capture and storage - so there are ways to decarbonize the electricity sector," he noted.

The Shell executive further opined that while fossil fuels may still be there in the next 50 years, their usage will be more confined to premium users - such as iron and steel sectors for coal; while oil and gas may have concentrated use in shipping, aviation or chemicals manufacturing. "So that's the kind of future mix that we envision - you move from essentially four-fifth of fossil fuels to one-fifth and then you have carbon capture and storage to take the edge off on remaining emissions," Bentham contended.

He expounded "oil demand is still growing, but it will peak in mid-2020s - and that's partly because of the increasing electrification of light and passenger vehicles in cities."

In terms of broadening the share of biofuels in the world's energy mix, the Shell executive proffered some degree of caution: That it must not compete with the food chain, thus, the advancing experiments with second generation feedstock such as algae for biodiesel production or those on cellulosic ethanol.

"First generation biofuels can be sustainable, but it's using a feedstock that can either be used in the food chain or grown on land that could be used in the food chain... for second generation biofuels, the technology is progressing and has been continuing, so we envisage in the Sky Scenario that this currently high-hanging fruit will become a low-hanging fruit just as solar costs have gone from high to low," the Shell executive enthused.

The policy equation:

The need for long-sightedness

The glue that will bind together the goals of Paris and the deployment of cleaner energy solutions would be hinged highly on policy prescriptions of governments - not the type that could just be leaning on "puffed decisions" or "horror show of policy reversals" but those that come with reasoned analysis and well-calculated implementation of rules and policies. "Governments have a role in choosing to put in not only the regulations on planning; but also on the enforcement of that regulation," Bentham said.

Chiefly, to propel certain innovations in technology to a rollout of commercial scale or for their costs to go down at mass production curve, government's push either on policy underpinnings or incentive schemes will be highly necessary.

Often with state-sponsored policy support, it is only then that the private sector players could also take their cue on advancing further on the deployment of certain technologies. Hence, Bentham noted this is some form of symbiotic relationship between the government and the private sector when it comes to shaping a viable energy future - keeping in mind both the environment and the cost-competitiveness aspect to consumers.

Toward a net zero carbon future in the energy mix, "carbon pricing" is one policy hurdle that government's action is critically needed, Bentham averred.

"If you have carbon pricing, then you will encourage the deployment of technologies in the most efficient way. Carbon pricing probably is never going to be sufficient to make high-hanging fruit suddenly becomes low-hanging fruit, but once they become lower, it will have an impact," he stressed.

In all this, the Shell executive holds out an all-important condition: The need for long-sightedness not just on planning the energy future but on policy decisions that will couple what's being cast on blueprints. "So whether you're looking at local issues like air quality or looking at global issues that really affect you - things like greenhouse gas emissions or rising sea levels, these are very valuable things for nations to have far-sightedness about and not just necessarily having a focus on more energy that you need... you need to think carefully about lower carbon future - like gas with lower emissions or solar with very low to zero emissions," he surmised.

And to the private sector, racing ahead on the technology curve could more or less entail "minimizing regrets" - and such will likely be the case because if a company couldn't keep pace with technology developments, it may eventually be forced out of business.

For the Philippines, from where it is at today on its energy choices, the Shell executive opined that the country still has extensive leverage on pulling off paradigm shift into a "more responsible energy future" - given prospects of additional gas discovery and the vast indigenous and renewable energy resources that could satiate its future energy needs.

"That's going to be understood specifically for the Philippines - you have indigenous gas, you've got Malampaya that we know well - and it's possible to look at the possibility that such can be further developed. You also have a lot of LNG (liquefied natural gas) in the region, so time will tell how will that come into the mix. And you also have a lot of solar and wind potential here, plus you have a lot of biofuels potential, all of these will play a role," he stressed.

By far, Bentham noted that the "scenario mindset' of many is what one Nobel Peace Prize winner describes as: "What you see is all there is," - meaning, "we know it's not true but we act like what we see is all the rest, what we see tends to be narrow - just based on our own experience and short-sightedness." That ought to change, he said, by having the human mindset see a broader picture of what's bound to happen.

"We tend to think of the future by just extrapolating from the past and that past experience or the things we see around us right now - instead, I must say: that we need to create better memories of the future." And to move into that, sharp thinking and strong will to innovate are needed so the scenarios being cast today will happen as they are in the future of the energy world.


Jeremy B. Bentham, vice president for Global Business Environment and head of Shell Scenarios
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Title Annotation:Business News
Publication:Manila Bulletin
Date:Jan 6, 2019
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