The Reuters news staff had no role in the production of this content. It was created by Reuters Plus, the brand marketing studio of Reuters.
Produced by Reuters Plus in partnership with
When it comes to energy transition, the world knows what we need to move away from and many of the cleaner energy solutions that can help, but the challenge of how to deploy them can only be solved by asking why value is key.
Energy isn’t just what people plug in, turn on, or refuel. It's fundamental to modern life, essential to health and education, travel, and leisure, and even art, fashion, and entertainment. Energy is shorthand for virtually everything we do, touch, eat, watch, ride, and enjoy.
Given its essential role in maintaining and enriching our varied lifestyles, businesses and consumers demand and expect affordable energy. To underline this, consider the economic, political, and social reverberations that occur when global energy markets are threatened by supply constraints or conflicts.
The challenge is that while the world demands a secure supply of affordable energy, it needs to simultaneously make that same energy cleaner, and there’s no avoiding the reality that those choices require significant investment – especially before they get to scale.
This is why Shell is committed to supporting its customers and the world through a balanced energy transition. That means:
Energy Transition:
What - How - Why?
To some degree “What?” is becoming the easiest question in the energy transition challenge. Around the world, leaders of business and society, consumers and constituents recognise what we need to achieve together; specifically, the imperative to transition to a cleaner energy ecosystem.
And the good news is the world already knows what cleaner energy solutions it already has to help with this. However, driving energy transition is neither a linear nor binary exercise. Challenges and their solutions differ by technology, sector, geography, and economy. So, while real progress has been made in renewable power generation and the electrification of cars and light transport, in other areas, the choice of fuel is still being made or the solutions are harder to implement.
What cleaner energy solutions?
Shell’s success has been driven by solving the energy challenges to progress: the problems that get between people and energy’s benefits. Today that challenge is how to meet demand for energy that maintains the benefits that people want and need today, while solving the cost challenges to choosing the lower-carbon energy needed to secure those benefits tomorrow.
If people only use price to define energy’s value rather than consider the true value of what that energy enables, then the ultimate price may be forfeiting those benefits tomorrow. Let’s look at that in the real world; sustainable aviation fuel (SAF) reduces flight emissions by up to 80%3 and the first flight using blended biofuel was in 20084. But 15 years’ later, SAF accounts for far less than 1% of fuel used5. This reflects both the demand challenge that airlines can’t switch to more expensive ‘manufactured’ fuels and maintain their ability to satisfy passengers’ demand for cheap seats as well as the supply challenge of investing in scaling up SAF production without a guaranteed return. To help solve this, Shell Aviation created Avelia6. This block-chain enabled ‘book and claim’ solution shares the premium cost of SAF across different parts of the aviation ecosystem, from suppliers to airlines and business travellers, with each party accounting for the carbon benefits they can afford to pay for. By unlocking the barriers to adoption, Avelia brings corporations and airlines together to help overcome the cost of SAF.
With the reality that short term competitive pressure can make it harder for a business to choose low carbon solutions, initiatives that ‘level the playing field’ have a disproportionate impact. The way forward is for sectors of the economy to agree on decarbonisation, set their own goals and shape a common pathway that allows them to compete fairly. This will require incentives from government to stimulate demand in lower carbon products and support for capital investment in the supply of those products. The policy frameworks that back up the transition will succeed if they can comprehend the scale of the challenge, deploy the latest physical and digital technologies, and focus on emissions as the thing that needs to be tackled.
How to deploy solutions?
By Anna Mascolo
Executive Vice President,
Low Carbon Solutions, Shell
Shell Low Carbon Solutions focuses on hard-to-electrify transport and industry. We develop and supply the fuels needed for energy today and decarbonisation opportunities. We conceive new commercial models to bring new customers to the marketplace. We offer product packages that provide for energy, decarbonisation, and abatement of those tough to avoid emissions. We take a sectoral approach to move with all players and shape policy support.
Leaders of commerce, industry and society understand and support the imperative to tackle emissions. The true challenge, and opportunity, is to work together to solve the challenges to making the lower carbon energy choices. Choices made easier when cost is viewed in the context of the ultimate value of energy.
Meeting demand for secure and affordable energy today, while reducing the carbon impact of that energy demand. For example, power station customers, who use coal to generate electricity, can affordably reduce today their greenhouse gas emissions by around 40%1 by switching to liquid natural gas (LNG). And maybe in the decades to come they will also have the option to switch to low carbon hydrogen, ammonia or e-fuels, provided the economic conditions will be there to support the switch at scale.
Working with customers and others to create the market conditions that could sustain the development and deployment of more of the low carbon energy the world needs. For example, a recent agreement between Yara and Northern Lights helps demonstrate the viability of commercial carbon capture and storage (CCS) and the market for transport and storage of CO₂. The Northern Lights JV2, which is owned by Equinor, TotalEnergies, and Shell, carries out the Norwegian government's ambition to establish a full-scale CCS value chain in northwest Europe.
For example, while it would be fantastic if there was, say, a switch that could be flicked to move steel production from coal-powered to renewable hydrogen-powered, the reality is less magical. Renewable hydrogen is proven but developing renewable electricity capacity to a scale to make this come true could take decades.
The same applies to efforts to decarbonise flight. The zero emissions aviation solutions of the future – say hydrogen or synthetic fuels – are precisely that… in the future. Today, the more immediate solutions are biofuels that are compatible with today’s aircraft engines and refuelling infrastructure and an easier ‘drop in’ solution.
The world faces a situation where people agree on the urgent need to decarbonise our energy but where demand for the benefits of cheap energy can act as a brake on investment in the cleaner energy needed to secure those benefits in future. It risks becoming a vicious circle where businesses might hesitate to invest in products and solutions if their customers feel they are too expensive, even if both sides would like to see the development happen. Here the right government policies can make such a difference in breaking this loop, policy makers can create a clear path forward for industries, customers, and financial institutions to move towards, joining supply and demand.
This dilemma occurs in the heavy transport and industry sectors which Shell serves. These sectors have big, complex energy needs and infrastructure to serve them, they include shipping, aviation, iron and steel and chemicals. Shell knows them well; our energy helped build these businesses and Shell grew with them as they enabled economic and social progress. These sectors are also the hardest to electrify and while they too can use the solutions available to achieve net zero emissions, their commercial models do not easily enable them to deploy these solutions and remain competitive.
What this means is that these businesses must secure the energy they need to prosper today while working with Shell and others to tackle the emissions of that energy and work with policymakers and financiers to create the commercial conditions that can enable them to make more and bigger cleaner energy choices.
Why value is key
1.
2.
The challenge is how to ensure that short term demand is met while also enabling investment in lower carbon energy solutions that create value for consumers, taxpayers, investors, and future generations. Without evident commercial value, it is harder for the financial and business communities to create investment opportunities.
Disclaimer: The Reuters news staff had no role in the production of this content. It was created by Reuters Plus, the brand marketing studio of Reuters. To work with Reuters Plus, contact us here.
Watch here
Anna Mascolo dives into the next steps in decarbonising the energy system
Moving from What to How
Nature Energy digesters in biogas plant, Holsted Denmark
1: Reuters LNG GHG vs black coal
2: Northern Lights who we are
3: IATA: What is SAF?
4: IEA: 2008 SAF flight
5: IATA: SAF 2024 volume
6: Avelia from Shell Aviation and partners
References
LEGAL DISCLAIMER
Energy Transition:
What - How - Why?
Energy isn’t just what people plug in, turn on, or refuel. It's fundamental to modern life, essential to health and education, travel, and leisure, and even art, fashion, and entertainment. Energy is shorthand for virtually everything we do, touch, eat, watch, ride, and enjoy.
Given its essential role in maintaining and enriching our varied lifestyles, businesses and consumers demand and expect affordable energy. To underline this, consider the economic, political, and social reverberations that occur when global energy markets are threatened by supply constraints or conflicts.
The challenge is that while the world demands a secure supply of affordable energy, it needs to simultaneously make that same energy cleaner, and there’s no avoiding the reality that those choices require significant investment – especially before they get to scale.
This is why Shell is committed to supporting its customers and the world through a balanced energy transition. That means:
What cleaner energy solutions?
The challenge is how to ensure that short term demand is met while also enabling investment in lower carbon energy solutions that create value for consumers, taxpayers, investors, and future generations. Without evident commercial value, it is harder for the financial and business communities to create investment opportunities.
To some degree “What?” is becoming the easiest question in the energy transition challenge. Around the world, leaders of business and society, consumers and constituents recognise what we need to achieve together; specifically, the imperative to transition to a cleaner energy ecosystem.
And the good news is the world already knows what cleaner energy solutions it already has to help with this. However, driving energy transition is neither a linear nor binary exercise. Challenges and their solutions differ by technology, sector, geography, and economy. So, while real progress has been made in renewable power generation and the electrification of cars and light transport. In other situations, the choice of fuel is still being made or the solutions are harder to implement.
To some degree “What?” is becoming the easiest question in the energy transition challenge. Around the world, leaders of business and society, consumers and constituents recognise what we need to achieve together; specifically, the imperative to transition to a cleaner energy ecosystem.
And the good news is the world already knows what cleaner energy solutions it already has to help with this. However, driving energy transition is neither a linear nor binary exercise. Challenges and their solutions differ by technology, sector, geography, and economy. So, while real progress has been made in renewable power generation and the electrification of cars and light transport. In other situations, the choice of fuel is still being made or the solutions are harder to implement.
How to deploy solutions?
Produced by Reuters Plus in partnership with
The Reuters news staff had no role in the production of this content. It was created by Reuters Plus, the brand marketing studio of Reuters.
Shell’s success has been driven by solving the energy challenges to progress: the problems that get between people and energy’s benefits. Today that challenge is how to meet demand for energy that maintains the benefits that people want and need today, while solving the cost challenges to choosing the lower-carbon energy needed to secure those benefits tomorrow.
If people only use price to define energy’s value rather than consider the true value of what that energy enables, then the ultimate price may be forfeiting those benefits tomorrow. Let’s look at that in the real world; sustainable aviation fuel (SAF) reduces flight emissions by up to 80%3 and the first flight using blended biofuel was in 20084. But 15 years’ later, SAF accounts for far less than 1% of fuel used5. This reflects both the demand challenge that airlines can’t switch to more expensive ‘manufactured’ fuels and maintain their ability to satisfy passengers’ demand for cheap seats as well as the supply challenge of investing in scaling up SAF production without a guaranteed return. To help solve this, Shell Aviation created Avelia6. This block-chain enabled ‘book and claim’ solution shares the premium cost of SAF across different parts of the aviation ecosystem, from suppliers to airlines and business travellers, with each party accounting for the carbon benefits they can afford to pay for. By unlocking the barriers to adoption, Avelia brings corporations and airlines together to help overcome the cost of SAF.
With the reality that short term competitive pressure can make it harder for a business to choose low carbon solutions, initiatives that ‘level the playing field’ have a disproportionate impact. The way forward is for sectors of the economy to agree on decarbonisation, set their own goals and shape a common pathway that allows them to compete fairly. This will require incentives from government to stimulate demand in lower carbon products and support for capital investment in the supply of those products. The policy frameworks that back up the transition will succeed if they can comprehend the scale of the challenge, deploy the latest physical and digital technologies, and focus on emissions as the thing that needs to be tackled.
Shell Low
Carbon Solutions
Find out more
Disclaimer: The Reuters news staff had no role in the production of this content. It was created by Reuters Plus, the brand marketing studio of Reuters. To work with Reuters Plus, contact us here.
Watch here
Anna Mascolo dives into the next steps in decarbonising the energy system
Moving from What to How
Shell Low
Carbon Solutions
Find out more
Watch here
Anna Mascolo dives into the next steps in decarbonising the energy system
Moving from What to How
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