How to inject urgency into the energy transition and achieve long-term climate goals?

Active co-creation is the only approach for decarbonisation on a global scale

Governments have given the world momentum to pivot towards achieving net-zero emissions. More and more are adopting binding long-term targets. The European Union is forging ahead, the USA has applied to rejoin the Paris Agreement and the recent election in Australia could signal more action there and across Asia.

To succeed the world’s energy system will need new technologies, fuels, platforms and business models. In effect, the challenge is to re-wire the global economy. According to Shell’s scenario’s team it’s just about doable – technically possible –  but the goals are audacious and, especially in my area of global transportation, we should not under-estimate the complexity of the challenge.

We must all accelerate. As the recent IPCC 6th Assessment report reminds us, we need a real sense of urgency. So, how do we accelerate reduction in emissions from commercial transportation today – through say lower carbon fuels – without losing sight of the long-term goal?

Jump on the paradigm shift in business

A series of reports published by Shell and Deloitte Consulting illustrate potential pathways to decarbonise aviation, shipping and commercial road transport. The reports are the voice of the hundreds of companies in each sector that contributed.

The reports remind us of the fragmentation, costs and challenges we must overcome, but they illustrate a business community that is willing to act; to stimulate customer demand for new low carbon products; to support investment in new infrastructure and assets; and to work collaboratively to accelerate the deployment of solutions.

As one expert from a global road transport company suggested:

“Let’s not ponder about the chicken-and-egg problem of infrastructure and truck production, but start to collaborate and enable the ecosystem to make it happen.”

I could feel this paradigm shift at the recent ACT Expo where thousands of America’s fleet operators gathered to look for low carbon solutions. There is support for action and investment decisions are changing. You could see this in Shell’s recent progress report on its own energy transition.

Maximise what we can do today

These fleet operators want reductions in emissions today. They know the eventual roll out of zero-emissions fleets and infrastructure at scale is key, but airlines, shipping companies and truckers need solutions that can deliver an impact now if society is going to be able to achieve mid-term decarbonisation.

Fortunately, solutions do exist in the shorter-term. Electric vehicle growth is rapid and trials for trucks are underway. For example, Shell is providing refueling infrastructure for Volvo LIGHTS, a test in California. Liquid biofuels and biogases are one of the largest sources of renewable energy in use today. They can be blended with traditional fuels and used in heavy duty vehicles and infrastructure without expensive modification.

Biodiesel, or FAME, and renewable diesel, or HVO, already provide significant emission saving for diesel-powered trucks. The amount of CO2 saved depends on the precise feedstock, but it’s significant compared to fossil fuels. The story is similar for sustainable aviation fuel where Shell supports mandates to stimulate the market. Strong bio-feedstock management is important so let’s find solutions that support decarbonisation.

And while we maximize these possibilities, we can also build for the future. For example, hydrogen deployment will also need to increase exponentially, starting from a low share of the energy system today. Our analysis, published in a scenario on the US energy system, expects biofuels to peak in the 2040s and decline as electrification and hydrogen use increases.

Encourage business action through policy support

Where there are clear, commercial pathways to decarbonisation, Shell calls for policies that drive urgent investment by the public and private sectors. For example, we advocate government policies that accelerate renewable power generation. In sectors that are harder to decarbonise, such as aviation, shipping, heavy industry and commercial road transport, we are calling for policies that create commercial markets for fuels such as sustainable aviation fuel, hydrogen and advanced biofuels.

Shell has peaked its oil production and is shifting to gas. The company is building hydrogen electrolysers and converting refineries to increase biofuels production. We are talking with our customers to stimulate markets for low carbon energy. At the same time, we are advocating for policy frameworks that look across economic sectors so industry can: create a stronger relationship between the supply and demand of lower-carbon energy, encourage the development and scaling of the necessary products, services and infrastructure, and stimulate customer demand by making sustainable options more attractive.

Solutions will not always be implemented everywhere at the same time, but what is critical is that the world’s policymakers keep this differentiated progress connected through consistent standards and a clear sense of direction for the world’s globally integrated sectors like transportation. We can learn from the roll out of electric charging infrastructure.  

Work together to accelerate deployment

Shell serves around 1 million heavy duty vehicles daily at around 200,000 roadside locations worldwide. Today, we produce electricity, we trade electricity, we market electricity… and on average, we’re installing a new charge point every 20 minutes. We are also building fueling networks for biogases and renewable natural gas and we are learning from trials with hydrogen, but even with our scale and expertise we know that no single company can do this alone.

We will create solutions, but we recognise we must collaborate and co-create – as we are with Penske, Hyundai, Microsoft and others – if we are to succeed in achieving our own strategic goals and those of society. As I see it, co-creation involves strategic partnerships and cross-sector R&D that can help advance the needs of society. This wider input – from customers and suppliers to OEMs and technology companies – allows for a greater democratisation of information. In turn, this can help accelerate response across a sector.

The world is moving towards decarbonisation. There may be no perfect solutions, but there are things we can do, so let’s accelerate the momentum we have through active co-creation of solutions that can be tested, adopted and scaled to meet the global challenge.

Want to learn more?

If you’d like to know more about Shell’s approach to accelerating decarbonisation across industrial sectors of the global economy, read our ‘sectoral approach’ or check out the paths for accelerated change in ‘aviation’, ‘shipping’ and ‘commercial road transport’.

Shell’s Sectors & Decarbonisation business

Shell is transforming its business to help lead change in the energy industry and accelerate decarbonisation. Shell has created a Sectors & Decarbonisation business that drives technical and commercial leaders to work more closely with their customers to develop pathways that will help decarbonise sectors of the global economy.

At Shell Sectors & Decarbonisation, we aim to help our customers avoid, reduce and mitigate their emissions through innovations, partnerships and policy incentives. We believe this will reduce costs, provide the incentives for new infrastructure, and stimulate customer demand.

The companies in which Shell plc directly and indirectly owns investments are separate legal entities. In this article “Shell” is used for convenience where references are made to Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Shell plc and its subsidiaries in general or to those who work for them.