Global Energy Pathways
Oct. 12, 2017
Speaking at the Generation Energy forum in Winnipeg on October 12, 2017, Shell Canada’s President & Country Chair Michael Crothers shares his views on the energy transition and the need for both pragmatism and collaboration.
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Shell has an overarching Purpose set by our Executive Committee: to power progress by delivering more and cleaner energy to the world. Within that purpose, we have three overarching ambitions: 1) being a world class investment case; 2) winning in the energy transition to deliver that more and cleaner energy, so we remain relevant for decades to come; and 3) to be a force for good in society so we continue to earn the license to grow.
As Yogi Berra once said, “It’s tough to make predictions, especially about the future.” It’s a great reminder to be humble in our attempts to figure out what hasn’t happened yet. That said, some key trends and drivers are quite clear. First: the world needs more energy because our population is growing and living standards are improving – global energy demand is forecast to double by 2050. Second, this energy must be cleaner to combat climate change. Third, this transition is being accelerated by policy, regulation, and entrepreneurship. At Shell we see our purpose as enabling this transition, by providing more and cleaner energy in multiple forms. We know renewables will play a greater role. We expect that the global vehicle fleet will grow from 800 million to 2 billion by 2060. We know that the portion of electric and fuel cell vehicles in that fleet will continue to grow rapidly from less than 1% today – it’s happening in front of our eyes. But we also know that the gasoline powered cars purchased today will be on the road an average of 15 years – this is not an overnight change. We must transform power generation to make it cleaner, revamp infrastructure to deliver that electricity, and manage the intermittency of renewables. Natural gas and carbon capture have a huge role to play in the transition. Finally, this energy vital to our prosperity must be affordable and abundant. So, the unfolding story we’re all part of is one of great change and innovation, but also of pragmatism: we need more and cleaner energy from a variety of sources.
There is no one answer – we need many answers and this is highly evident across Canada’s diverse needs. No one company or region or country will be able to do this alone. We need to find ways to work together.
In terms of advice for how Canada can succeed in the global energy marketplace of the future, I’m a little hesitant. There are a lot of very smart companies and people in our country!
When I look at Canada, I see many of the prerequisites to succeed. These are founded on a mature debate in which we’re all beginning to agree that we don’t have to choose between economic and environmental objectives.
These include diverse energy resources, high regulatory standards, a supportive policy environment for innovation and enormous talent across all sectors of Canadian society. I also see some barriers, including complex regulations that are inconsistent across the country and a tendency to look inwards rather than grasp the role Canada can play in the world as a force for good.
On a personal note, my wife and I are going to be grandparents next April for the first time. It got me thinking more about how my grandkids will use energy in 2040 as they enter the workforce. That energy will certainly be cleaner, but will our energy system be efficient and competitive for the next generation?
I’ll offer one piece of advice. I’m an optimist and Shell is optimistic about the energy transition. We’re involved in many initiatives - EV charging, hydrogen, wind, solar, biofuels - with one thing in common, and that for me is what will determine our success in any part of the planet: collaboration. Collaboration based on sound science, non-partisanship and a willingness to learn as we go. That includes more piloting of concepts to gain experience. Collaboration that does not try to pick technology winners and losers, but that allows innovation to thrive based on clear market signals including a cost on carbon and the cost of energy…. collaboration fully in the interest of the next generation of Canadians.
I’m encouraged to see the unlikely and fruitful partnerships developing on this journey. Initiatives like Smart Prosperity bringing together companies from all sectors with environmental organisations and academics to develop sound research based policy; the Alberta Climate Leadership Plan, where government, oil industry players and a number of ENGOs got on the same page and same stage in late 2015. This is unusual - where an oil producing jurisdiction has taken such a bold step with industry and ENGOs by raising the price of carbon, setting an emissions limit and agreeing on tidewater access. And the Clean Resource Innovation Network, building the capability to drive down carbon emissions in the oil and gas sector, lower costs and enable export of responsibly produced energy.
There are more hard and challenging conversations ahead. It is a very exciting time and Shell is committed to helping meet the goals of more, cleaner and affordable energy for the next generation.