If you want low-carbon energy at scale, "don’t forget the pipeline" - CERA Week 2023.

When talking about the energy transition, people understandably get excited about new low-carbon technologies, breakthroughs and possibilities, from Direct Air Capture to hydrogen and e-fuels. It’s right and necessary to develop these opportunities, but if society wants to see significant reductions in emissions in the 2020s, we need to work on getting existing low-carbon products that are available today to scale, more quickly.

For the harder to decarbonise transport sectors such as aviation and shipping, and to some degree heavy-duty trucks, biofuels (liquids and gases) must be considered. They are drop-in fuels that can be used in existing infrastructure, reduce emissions, and can improve energy security given the wide range of possible feedstocks. They are also relatively easy and safe for customers to handle.

• According to the US Department of Energy, most biofuels for marine and air transport emit at least 50% fewer lifecycle Greenhouse Gas (GHG) emissions compared to traditional fuel, with even more emissions savings for advanced biofuels.[1]
• However, according to the IEA's Transport Biofuels Report - tracking progress against their Net Zero Emissions by 2050 Scenario - the world needs to accelerate the deployment of biofuels.[2]

In my opinion, with biofuels in place, at scale, by the early 2030s the world would be in a better place to create a glide-path to e-fuels in future decades.

Don’t forget the pipeline

The debate and action have tended to focus on the production of energy supply, or the demand for new products. Yes, it’s critical to stimulate demand for low-carbon alternatives to fossil fuels and incentivise their production, but as I was preparing for CERAWeek, I was wrestling with the challenge of how to connect emerging demand with emerging supply. The phrase in my head was: "don’t forget the pipeline"; the physical supply chain and refuelling infrastructure”.

Existing physical infrastructure and supply chains – connecting feedstock to manufacturing assets, to trading markets, to customers and consumers – are currently inadequate or not in place for the scale needed. And, in my experience, while it only takes 2-5 years to build a new ship with a new propulsion system, it would take 10-15 years to build a new refuelling network so the ship could refuel as it travels around the world. It’s not dissimilar for planes or even cars, for that matter.

Of course, industry and governments could, and over time will, build more infrastructure and pipelines, but this is costly, takes time and raises its own sustainability questions. So, if it takes so long to build physical infrastructure, what can we do today? How could we better utilise existing systems and physical infrastructure?

Getting low-carbon solutions to scale, more quickly

There are emerging solutions that policymakers and industry could support to maximise existing physical infrastructure; using chain-of-custody platforms – like book & claim – that virtually connect supply from production with the demand from customers and the credit for the environmental benefit, without necessarily connecting the physical flow of the product through the supply chain. This platform could also integrate added advantages like blockchain digital technologies to "stamp" molecules and improve sustainability assurance and traceability.

This would allow customers seeking low-carbon solutions to pay for low-carbon products and benefit from the emissions savings without the energy supplier having to necessarily build new pipelines to connect emerging bio-supply chains or ship feedstock and product around the world.

It’s beginning to happen today but needs policy support and wider implementation. For example, Shell, Accenture and American Express Global Business Travel have launched Avelia, a blockchain-powered, book-and-claim solution to supply sustainable aviation fuel (SAF) for business travel. The pilot phase of the programme demonstrates the book-and-claim model, using blockchain technology to ensure secured allocation of SAF’s environmental attributes to companies and airlines after the fuel has been delivered. 

How virtual infrastructure helps to get biofuels to energy-system scale

1. Align on pathways to accelerate action across supply and value chains

Encourage the global aviation and shipping industries to align on pathways and work together on improving sustainability and the supply chain. For example, if airlines hope for access to greater volumes of more affordable, bio-based SAFs, then they can support the development of sustainable feedstock supply and trusted emissions credits.

2. Assure sustainability credentials and give sustainability a value

Replace paper-based, manual assurance processes with digital stamps to improve trust in information on feedstock origin, sustainability, and availability.

3. Add virtual infrastructure to get to energy system scale

Use Book-and-Claim type platforms to connect emerging demand from the customer with emerging supply and overcome the lack of physical infrastructure and limitations of existing supply chains. 

Bringing biofuels to energy-system-scale

There is more work to do, but in my opinion, combining these three ideas could improve sustainability, improve supply, and bring down costs of investment and the cost of biofuels. I’ve focused here on the role of virtual infrastructure. Industry and governments can also work together to address the price gap between low carbon fuels and traditional fuels and find ways to increase the supply of sustainable bio-feedstocks. Everything is linked. I’ll share my thoughts in the coming months.

References / Sources

[1] https://www.energy.gov/eere/bioenergy/transportation-biofuels

[2] Transport Biofuels – Analysis - IEA

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.  

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