How changing energy demand and supply can help fight climate change

  • The fight against climate change requires a change in energy demand and supply.
  • A sector-wide approach, supported by public-private partnerships, is the best way to achieve this.
  • Companies need to be more transparent about how they report on sustainability.

With the enormous uncertainty caused by the war in Ukraine, the volatility of energy prices and the threats to the security of energy supply, there are fears that countries and companies will back down on their promises to fight against climate change. I don’t believe they should. On the contrary, the world can – and must – accelerate its actions to achieve a net-zero energy system.

Fight against climate change

There is no doubt that the world urgently needs to reduce carbon emissions. In its latest publication, the Intergovernmental Panel on Climate Change (IPCC) states that without immediate and deep reductions in emissions across all sectors, limiting global warming to 1.5°C is out of reach.

The fight against climate change depends, in large part, on switching from fossil fuels to low-carbon energy. Energy companies have an important role to play in changing this energy supply – Shell is playing its part, among other things by offering much more wind and solar power, and charging electric cars.

This change in supply is necessary, but it will not be enough. If the world is to succeed in tackling climate change, it must also change demand.

Reducing emissions sector by sector

Imagine if Shell stopped supplying aviation fuel in an attempt to reduce carbon emissions and accelerate the energy transition. So we would close our kerosene factories, we would stop selling it to our customers and we would leave this sector completely. Would it reduce the number of flights around the world? Would it help the world get closer to net zero emissions or stop climate change? Not really.

That’s because reducing aviation emissions is incredibly difficult. New aircraft and engines remain in service for decades. Electricity and hydrogen can be long-term solutions, but not today. If Shell no longer supplied kerosene, airlines would simply buy fuel elsewhere. The demand for fossil fuels would not change at all.

Through the forums A clean sky for tomorrow coalition, stakeholders across the European aviation value chain aligned on key policy proposals to inform the RefuelEU initiative. Taken together, this industry-backed set of policies provides a clearly defined strategy for scaling up SAF in the EU – focused on measures that collectively increase SAF supply and demand signals to create a balanced market.

Developed as part of the World Economic Forum A clean sky for tomorrow coalition, this political report is accessible on the digital library of the Forum and signed by Airbus Group, Deutsche Lufthansa AG, Deutsche Post DHL Group, Dubai Airports, Groupe ADP, Heathrow Airport, International Airlines Group, KLM Royal Dutch Airlines, Ørsted, Royal Dutch Shell, Royal Schiphol Group, SkyNRG, The Boeing Company and Velocys, Inc.

So instead of one company, Shell, addressing the supply side of the argument by shutting down sales to aviation altogether, the company needs a different approach. A sector-by-sector approach like the Clean Skies for Tomorrow initiative. This coalition of businesses, governments and other organizations, led by the World Economic Forum, the Rocky Mountain Institute and the Energy Transitions Commission, helps the aviation sector as a whole achieve net zero emissions.

Each partner in this sector has a role to play. From aircraft manufacturers to airlines and from airports to governments. Energy companies like Shell must also play their part. That is why in Rotterdam in the Netherlands, for example, we are investing in an 820,000 tonnes per year biofuels facility at Shell Energy and Chemicals Park Rotterdam. Scheduled to start production in 2024, it will be one of the largest in Europe to produce sustainable aviation fuel and renewable diesel from waste and certified sustainable vegetable oils.

If the right policies and regulations are put in place to accelerate the shift in demand in aviation…it will help the sector move away from jet fuel, and emissions from aviation as a whole will begin to decline.

—Ben van Beurden, Chairman and CEO, Shell.

This sustainable aviation fuel will not replace all kerosene in the world in the next few years. But if the right policies and regulations are put in place to accelerate the shift in demand in aviation – preferably an international mandate for sustainable aviation fuel – it will help the sector move away from kerosene, and Aviation emissions as a whole will begin to decline. .

Aviation is just one sector among many. Governments, companies and organizations like the Forum are working together through the Mission Possible Partnership to change the type of energy used in all hard-to-decarbonise sectors. Known as the “hard to reduce” sectors, such as maritime transport, heavy road transport and the production of chemicals, steel and cement.

Transparent sustainability reporting

But even with a successful sector approach, we wouldn’t get far without the support of society. I’m under no illusions that people can have a hard time trusting oil and gas companies to do the right thing on climate change. And I believe there’s only one lasting way to fix it: we need to be transparent about what we’re doing, so people can make up their own minds about us.

This means being transparent about how we report on our sustainability. That’s why Shell is a member of the Forum’s Measurement Metrics Stakeholder. When it comes to ESG reporting, these metrics make it easier to compare companies, which is desperately needed. We also show the short, medium and long term goals we are using to transform Shell into a net zero emissions company. Each year we will publish a report on how we are achieving these goals, so everyone can see the progress we are making. And we ask our shareholders to vote on this progress as set out in the first of these reports at our general meeting in May.

To bring about real change in the global energy system, the world needs more low-carbon energy, more momentum for a sector-by-sector approach, and the right metrics to transparently show our progress. Given the uncertainty in the world and the urgent need to reduce carbon emissions, governments, businesses and society can and must accelerate their efforts to combat climate change.

Teresa H. Sadler