Yuri Sebregts, chief technology officer at Shell, succinctly laid out the energy dilemma facing the world over the rest of this century. On one hand, demand for energy is quickly growing as countries in the developing world modernize and the global population grows, with 100 gigajoules of energy per person needed annually to enable quality-of-life benefits and industrialization around the globe. On the other, traditional energy sources are quickly warming the planet, with the world already seeing the devastating effects of increasingly frequent extreme weather events.
While the goals of energy security and energy sustainability are seemingly at odds with one another, the two must be pursued in tandem, Sebregts said during his address at the MIT Energy Initiative Fall Colloquium.
"An environmentally sustainable energy system that isn't also a secure energy system is not sustainable," Sebregts said. "And conversely, a secure energy system that is not environmentally sustainable will do little to ensure long-term energy access and affordability. Therefore, security and sustainability must go hand-in-hand. You can't trade off one for the other."
Sebregts noted that there are several potential pathways to help strike this balance, including investments in renewable energy sources, the use of carbon offsets, and the creation of more efficient tools, products, and processes. However, he acknowledged that meeting growing energy demands while minimizing environmental impacts is a global challenge requiring an unprecedented level of cooperation among countries and corporations across the world.
"At Shell, we recognize that this will require a lot of collaboration between governments, businesses, and civil society," Sebregts said. "That's not always easy."
Global Conflict and Global Warming
In 2021, Sebregts noted, world leaders gathered in Glasgow, Scotland and collectively promised to deliver on the "stretch goal" of the 2015 Paris Agreement, which would limit global warming to 1.5 degrees Celsius — a level that scientists believe will help avoid the worst potential impacts of climate change. But, just a few months later, Russia invaded Ukraine, resulting in chaos in global energy markets and illustrating the massive impact that geopolitical friction can have on efforts to reduce carbon emissions.
"Even though global volatility has been a near constant of this century, the situation in Ukraine is proving to be a turning point," Sebregts said. "The stress it placed on the global supply of energy, food, and other critical materials was enormous."
In Europe, Sebregts noted, countries affected by the loss of Russia's natural gas supply began importing from the Middle East and the United States. This, in turn, drove up prices. While this did result in some efforts to limit energy use, such as Europeans lowering their thermostats in the winter, it also caused some energy buyers to turn to coal. For instance, the German government approved additional coal mining to boost its energy security — temporarily reversing a decades-long transition away from the fuel. To put this into wider perspective, in a single quarter, China increased its coal generation capacity by as much as Germany had reduced its own over the previous 20 years.
The Promise of Electrification
Sebregts noted the strides being made toward electrification, which is expected to have a significant impact on global carbon emissions. To meet net-zero emissions (the point at which humans are adding no more carbon to the atmosphere than they are removing) by 2050, the share of electricity as a portion of total worldwide energy consumption must reach 37 percent by 2030, up from 20 percent in 2020, Sebregts said.
He pointed out that Shell has become one of the world's largest electric vehicle charging companies, with more than 30,000 public charge points. By 2025, that number will increase to 70,000, and it is expected to soar to 200,000 by 2030. While demand and infrastructure for electric vehicles are growing, Sebregts said that the "real needle-mover" will be industrial electrification, especially in so-called "hard-to-abate" sectors.
This progress will depend heavily on global cooperation — Sebregts pointed out that China dominates the international market for many rare elements that are key components of electrification infrastructure. "It shouldn't be a surprise that the political instability, shifting geopolitical tensions, and environmental and social governance issues are significant risks for the energy transition," he said. "It is imperative that we reduce, control, and mitigate these risks as much as possible."
Two Possible Paths
For decades, Sebregts said, Shell has created scenarios to help senior managers think through the long-term challenges facing the company. While Sebregts stressed that these scenarios are not predictions, they do take into account real-world conditions, and they are meant to give leaders the opportunity to grapple with plausible situations.
With this in mind, Sebregts outlined Shell's most recent Energy Security Scenarios, describing the potential future consequences of attempts to balance growing energy demand with sustainability — scenarios that envision vastly different levels of global cooperation, with huge differences in projected results.
The first scenario, dubbed "Archipelagos," imagines countries pursuing energy security through self-interest — a fragmented, competitive process that would result in a global temperature increase of 2.2 degrees Celsius by the end of this century. The second scenario, "Sky 2050," envisions countries around the world collaborating to change the energy system for their mutual benefit. This more optimistic scenario would see a much lower global temperature increase of 1.2 C by 2100.
"The good news is that in both scenarios, the world is heading for net-zero emissions at some point," Sebregts said. "The difference is a question of when it gets there. In Sky 2050, it is the middle of the century. In Archipelagos, it is early in the next century."
On the other hand, Sebregts added, the average global temperature will increase by more than 1.5 C for some period of time in either scenario. But, in the Archipelagos scenario, this overshoot will be much larger, and will take much longer to come down. "So, two very different futures," Sebregts said. "Two very different worlds."
The Work Ahead
Questioned about the costs of transitioning to a net-zero energy ecosystem, Sebregts said that it is "very hard" to provide an accurate answer. "If you impose an additional constraint … you're going to have to add some level of cost," he said. "But then, of course, there's 30 years of technology development pathway that might counteract some of that."
In some cases, such as air travel, Sebregts said, it will likely remain impractical to either rely on electrification or sequester carbon at the source of emission. Direct air capture (DAC) methods, which mechanically pull carbon directly from the atmosphere, will have a role to play in offsetting these emissions, he said. Sebregts predicted that the price of DAC could come down significantly by the middle of this century. "I would venture that a price of $200 to $250 a ton of CO2 by 2050 is something that the world would be willing to spend, at least in developed economies, to offset those very hard-to-abate instances."
Sebregts noted that Shell is working on demonstrating DAC technologies in Houston, Texas, constructing what will become Europe's largest hydrogen plant in the Netherlands, and taking other steps to profitably transition to a net-zero emissions energy company by 2050. "We need to understand what can help our customers transition quicker and how we can continue to satisfy their needs," he said. "We must ensure that energy is affordable, accessible, and sustainable, as soon as possible."