Panel 1. Tackling climate change and ensuring energy security - Tim Bertels, Shell


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Delivered at the Global CCS Institute's Global Status of CCS: 2013 event in Seoul, 10 October 2013.

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Panel 1. Tackling climate change and ensuring energy security - Tim Bertels, Shell

  1. 1. ROLE OF CCS IN TACKLING CLIMATE CHANGE AND ENSURING ENERGY SECURITY Presentation at: The Global Status of CCS Global CCS Institute Seoul, October 9-11, 2013 Quest construction Scotford, Alberta Tim Bertels Manager CCS Portfolio, Shell Global Solutions 1
  2. 2. Disclaimer Statement Resources: Our use of the term “resources” in this presentation includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves or SEC proven mining reserves. Resources are consistent with the Society of Petroleum engineers 2P and 2C definitions. The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this presentation “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this presentation refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. In this presentation, associates and jointly controlled entities are also referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 23% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest. This presentation contains forward-looking statements concerning the 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 forwardlooking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ 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 presentation, 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 potential litigation and regulatory measures as a result of climate changes; (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 31 December, 2012 (available at and ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, 10th October 2013. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking 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 presentation. There can be no assurance that dividend payments will match or exceed those set out in this presentation in the future, or that they will be made at all. We use certain terms in this presentation, such as resources, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website You can also obtain these forms from the SEC by calling 1-800-SEC-0330. 2
  3. 3. IN 2050, FOSSIL FUELS COULD STILL MEET AROUND 60% OF WORLD ENERGY DEMAND Copyright of Royal Dutch Shell Plc 3
  4. 4. MUST AVOID THE TRILLIONTH TON OF CO2 TO STAY BELOW 20 C 1 trillion tonnes 0.8 ~2°C 0.6 . . . well over half full today. 2000-2012 0.4 1950-1999 0.2 1900-1949 Starting in 1750 0 1850-1899 1800-1849 Reference: Warming caused by cumulative carbon emissions towards the trillionth tonne. Myles R. Allen, Malte Meinshausen et. al. Nature Vol 458, 30 April 2009 4
  5. 5. THE CLIMATE ISSUE IS A “STOCK” PROBLEM . . and using current proven1 fossil reserves2 takes us well over the mark. Early 2040’s ~4°C 2000-2012 ~3°C 1950-1999 1900-1949 Starting in 1750 1 BP 2 1.6 trillion tonnes, with continued land use change and cement production . . . . . and probably still rising later in the century. 1850-1899 1800-1849 Statistical Review of World Energy Current reserves of oil and gas are ~60 years each, coal ~110 years at current usage rates 5
  6. 6. IF THIS IS ALL THE COAL, GAS AND OIL THAT WE CAN USE . . . 2000-2012 1950-1999 1900-1949 Starting in 1750 1850-1899 1800-1849 About 425 billion tonnes carbon or About 1.5 trillion tonnes CO2 or Less than 40 years at current rates or Just 30 years at BAU rates 6
  7. 7. . . . THEN ENERGY DEMAND WILL NOT BE MET OVER THE CENTURY (despite rapid renewable energy growth) Lowest possible emissions Source: Shell “Oceans” Scenario Available stock 7
  8. 8. SO HOW CAN WE LIMIT THE TEMPERATURE RISE? Plants Minerals Oceans CO2 Capture & Storage There are a limited number of ways to reduce CO2 Copyright of Royal Dutch Shell Plc 8
  9. 9. THE SHELL SCENARIOS SHOW LARGE POTENTIAL FOR CCS 25 Oceans Mountains CO2 Stored, GT per annum 20 15 10 5 0 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 9
  10. 10. Mountains - A GAS “BACKBONE” WITH EARLY AND RAPID DEPLOYMENT OF CCS LIMITS THE STOCK Late 2040’s 2000-2012 1950-1999 Capped by ~2100 1900-1949 Starting in 1750 1850-1899 1800-1849 10
  11. 11. CCS ALSO ENABLES COMPETITIVE LOW CARBON ENERGY US$ per MWhr 250 200 150 100 Natural Gas Fired Plant 50 0 *Levelised cost of electricity of low-carbon technologies and conventional power generation – as presented in ‘The costs of CCS and other low-carbon technologies’ Global CCS Institute. Copyright of Royal Dutch Shell Plc 11
  12. 12. BUT WHAT IF WE WOULD NOT HAVE CCS AVAILABLE . . . US$ per MWhr 250 200 150 100 50 0 *Levelised cost of electricity of low-carbon technologies and conventional power generation – as presented in ‘The costs of CCS and other low-carbon technologies’ Global CCS Institute. Copyright of Royal Dutch Shell Plc 12
  13. 13. WITHOUT CCS IT WILL COST SOCIETY MORE TO DECARBONISE $1 Trillion A global delay in CCS deployment would cause an increase of power sector decarbonisation by $1Trillion IEA 2013 Copyright of Royal Dutch Shell Plc 32 Billion £/Annum Without CCS, the additional costs to run a decarbonised UK economy in 2050 will be £32Billion. 40% Without CCS, the IEA reports costs to halve emissions by 2050 will be 40% higher. UK Energies Technology Institute 13
  14. 14. BUT WE MUST GO THROUGH THE LEARNING CURVE First of a Kind (FOAK) Nth of a Kind (NOAK) Cost of each phone Carbon Capture & Storage Wind & Solar Gas Fired Power Total number of phones ever built Copyright of Royal Dutch Shell Plc Credit; 14
  15. 15. SHELL’S PORTFOLIO APPROACH TO CCS DEMONSTRATION TCM Quest Peterhead Boundary Dam Shell involvement in CCS Projects; Industrial scale projects in operation Gorgon Industrial scale projects in construction Planned industrial scale project (pre-FEED) Involvement through Shell Cansolv Technology 15 15
  16. 16. ALSO IN SHELL SEVERAL PROJECTS DIDN’T MAKE IT 1. Barendrecht  4. ZeroGen  5. Longannet  7. TCM 3. Boundary Dam 2. Draugen  6. Gorgon  9. Peterhead 8. Quest    No Final Investment Decision Yet 16
  17. 17. CRITICAL ENABLERS FOR CCS 1. It is good for Government 2. It is good for Industry Licence to Operate 3. It is good for the constituents 4. Enabling legislation exists 5. Clear liability agreement 6. Financial support for demonstration Build with Confidence 7. Early adopter benefits 8. Trust & Certainty 9. Knowledge sharing Replication 17
  18. 18. CCS WILL REQUIRE FINANCIAL SUPPORT FOR DEMONSTRATION – EFFECTIVE POLICIES NEEDED Objective – to provide adequate support to demonstrate CCS and reduce costs from FOAK to NOAK to deliver a competitive and viable technology in a decarbonised world. Nth OF A KIND FIRST OF A KIND DEVELOPMENT DEMONSTRATION DEPLOYMENT Capital grants (supports build) Opex support (ensures plant operates) Robust CO₂ price ... plus other temporary measures (e.g. CCS certificates?) if the uptake rate continues to be disappointing .... 18
  19. 19. KEY MESSAGES • The climate issue is a “stock” problem and rapid deployment of CCS limits the stock of CO2 • In most scenarios fossil fuels will meet around 60% of world energy demand by 2050; CCS is essential to ensure energy security in a decarbonised world • CCS deployment requires a robust CO2 price, meanwhile demonstration projects need capital grants, opex support and other temporary measures 19