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Shell: Gas can cut emissions faster than renewables

By John Parnell

Gas will provide a quicker path to reducing emissions than a future that pursues renewable energy, according to a report published by Shell on Thursday.

In its New Lens Scenarios study it examines two potential energy and climate futures. It found that putting gas, carbon capture and storage and nuclear at the heart of future energy systems would mean global greenhouse gas emissions peaking in 2030.

This is what Shell brands the ‘Mountains scenario’, where governments take responsibility for policy.

But it contends that if renewables are given priority over gas and nuclear, peaking emissions would take 30 years longer and result in a 25% increase in overall greenhouse gas output.

This is referred to as the ‘Oceans scenario’, where decision making is influenced more by civil society and the free markets. In this world we would in fact use more coal according to Shell.

“Public resistance and the slow adoption of both policies and technology limit the development of nuclear power and restrict the growth of natural gas outside North America. Coal remains widely used in power generation until at least the middle of the century,” reads the report.

Neither model meets the targeted 2°C limit on warming.

Shell says a dash for gas would actually cut emissions more quickly than renewables (Source: Flickr/DeaconMacMillan)

A new Energy Bill in the UK is wrestling with the choice of a so-called “dash for gas” or aggressive investment in renewables and nuclear.

The Treasury is keen to focus on building more gas plants rather than investing heavily in wind and solar.

A 2030 decarbonisation target for the electricity sector was cut from the bill with a review of its inclusion 2016, but has now reappeared after an amendment was tabled.

This would see each kilowatt hour of electricity generated allowed to emit 50g of CO2 – a typical gas plant emits 200g.

Speaking at a debate in Parliament on decarbonisation this week, Shell climate change advisor David Hone refused to criticise the proposal but suggested it wasn’t the best path to take.

“One thing that we do know is the impact these types of policies have on the EU Emissions Trading Scheme (ETS), that’s the system that dictates the carbon budget for the power and industrial sector in Europe,” he said.

Broken market

The ETS caps European emissions during a certain block of time. Allowances are divided out between electricity generators and other sections of industry with excess permits traded between companies.

The current financial crisis has reduced economic output and unambitious emission reduction targets (the size of the cap essentially) mean there are too many carbon credits in circulation.

“One of the reasons it is struggling, one of the main reasons is the profusion of additional policies like the one we are here to discuss,” said Hone.

He pointed out that while strong domestic climate policies are good for the UK, they don’t affect cumulative global greenhouse gas emissions.

“There’s an equal and opposite response in the rest of Europe [to UK policies], what happens is this total EU reduction stays the same, irrespective of what the UK does. So less reduction is required in Europe because more is occurring in the UK,” he said.

“If the decarbonisation target is lower [per kWh] than the best that fossil fuels can offer, which is high efficiency gas, then you are essentially saying it has to be these types of technologies, renewables, nuclear and CCS. They potentially introduce an uncertain cost into the whole electricity mix.”

Misguided

Nick Molho, Head of Climate & Energy Policy at WWF-UK told RTCC this is an old and “misguided” argument.

“National action is important, the idea that all that matters is what happens under the EU ETS, not what happens domestically, creates what I would call a political race to the bottom,” he said.

“When you look at the ETS now and its very weak cap, we are seeing countries like Poland actually considering subsidising the construction of 8 new coal plants on the basis that they can get away with it under the current levels of the EU ETS.”

The limitations of the ETS in its current form mean the carbon price can’t rise fast enough to a level whereby it can support new low carbon technologies. It’s variable nature is also sensitive to political changes making it less attractive to potential investors.

Current proposals to reform the system by holding back credits to boost the price are experiencing delays in Brussels.

“As long as we want to support the development of new technologies that are currently not able to compete on a level playing field with mature fossil fuel technologies like coal and gas plants, carbon pricing will need to be accompanied by complementary policies such as feed-in tariffs that provide direct and targeted support to new technologies,” says Molho.

Strategic planning

David Kennedy, Chief Executive, Committee on Climate Change (CCC), the government’s independent advisors was also at the debate.

The CCC has been one of the biggest proponents of the target, recently writing to senior government figures reiterating its importance.

Kennedy believes that a strong ETS and more ambitious domestic action can operate hand in hand.

“A 2030 decarbonisation target goes together very well with what is being discussed in Europe,” who added that people should worry less about what future gas prices will be and more about the carbon price.

“It is reasonable to assume the carbon price will go up and it makes a lot of sense to invest in low carbon energy in a carbon constrained world.

“It makes no sense to dash for gas, and invest in an energy system that will only become more and more expensive until it has to get scrapped in 2030 when suddenly rapid investment would be needed to meet the decarbonisation target.”

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  • Spencer Lane

    It is of no surprise to me that a company such as Shell would make a claim in support of its business model. If memory serves, I can recall advertising campaigns a few years back were the oil companies were doing everything they could to distance themselves from their products of pollution. They were no longer fossil fuel companies but now have become “energy” companies. To me they will always “extraction” companies. Why change now?

    Is it too hard to go to the moon, eradicate smallpox or end apartheid? Is it too hard to build a computer that fits in your pocket? No? Then it’s not too hard to build a clean energy future, either. http://clmtr.lt/cb/pyK0nE

  • Louisette Lanteigne

    As a consumer, I’m not holding my breath for industry or government to change. I bumped up my home efficiency to the max. I purchase local foods, grow my own in my garden and support local industries. I purchase organic, invest in fair trade and use my dollars to help craft the kind of world I want to see. I’m not holding my breath for companies like Shell to lead the way. They’ve hand their day and we’ve got climate change, contaminated air and water as their legacy. Enough is enough. It’s up to us to be the game changers the world needs to see. The power is in our hands not theirs.