Category: Hydrogen

Creating a 21st century energy hub in Singapore

dchone February 17, 2022

About a year ago the Shell Scenario Team released the Energy Transformation Scenarios, which looked in detail at possible pathways the world might take in this century as society responds to climate change and other pressures. The scenarios were built on earlier work that focused on the more immediate changes that society could see in the 2020s as a result of the pandemic. But the global story is just the tip of the iceberg; there is a wealth of national and regional detail below the surface of the Energy Transformation Scenarios thanks to the team’s energy modelling capacity.

One region that is of particular importance to the energy system is Asia and within the region Singapore is a key oil products supply and distribution hub. Given its unique geographical location and history as a major trading port, Singapore supplies some 20% of global marine bunkers, 3% of aviation fuel and exports a sizeable portion of the oil products used throughout the region.

*Singapore is a major oil products supply hub today (Source: Shell analysis of various data sources)*

But as the energy system shifts and oil products are replaced with electricity and fuels such as hydrogen, how might Singapore adapt to the transformation and what might this mean for its role as an oil products supply and distribution hub? To help people think about these key questions for Singapore, Shell has released a new Scenario Sketch, Singapore: A 21^st Century Energy Hub. The Sketch makes extensive use of the regional and country data within the Energy Transformation Scenarios, setting out three possible scenarios for the region.

These scenarios are not forecasts, predictions or plans, but possible pathways that could emerge if certain trends take hold. Only one scenario meets the goals of the Paris Agreement, which implies that very deliberate steps will need to be taken to ensure the goals are met. Scenarios can help craft our thinking about the future and catalyse the actions required to shape a particular outcome.

The three scenarios are known as Waves, Islands and Sky 1.5 and they reflect the underlying trends that can be seen across society as a result of the pandemic.

Waves: A focus on wealth and economic recovery, but this results in a late start to the rapid transition required to reach net-zero emissions around the middle of the century. Rather, the energy required to support growth in the 2020s comes from conventional sources. The transition is rapid from the 2030s, with a clear focus on ending fossil fuel use rather than directly managing emissions. Net-zero emission is reached around the end of the century.
Islands: National sentiment shifts inwards and security issues prevail. The transition slows along with economic growth. Although the transition eventually takes hold, net-zero emissions is not reached until well into the 22^nd century.
Sky 1.5: The pandemic leads to structural change across society, significant green investment and a realisation that the broader health and well-being of society is fundamental. In this scenario the goals of the Paris Agreement are met.

All three scenarios see the role of electricity expanding, for example in transport, the further emergence of biofuels and the introduction of hydrogen as an energy carrier for certain applications. But the time lines are very different. However, these shifts in the energy system all challenge the supply and distribution model that Singapore has established for oil products and tend to favour local production. This is certainly the case for electricity, but may also be true for biofuels where feedstocks are available on a local level and hydrogen should electrolysers become the preferred mode of production. However, hydrogen supply may also lend itself to a distribution model if significant renewable electricity is available in a particular area, although this is not currently the case for Singapore.

The more immediate change for Singapore comes in the aviation and marine sectors, where airlines and shipping companies are beginning to plan and implement strategies to make use of sustainable fuels and develop possible roadmaps for hydrogen as a future energy carrier. Although progress is slow in Islands, both Waves and Sky 1.5 see early developments. This opens up the prospect of Singapore leading the way in supplying such fuels, maintaining its role as a supply hub.

In Sky 1.5 another opportunity emerges for Singapore through Article 6 of the Paris Agreement. A feature of Sky 1.5 is significant activity to develop carbon removals, both through reforestation and carbon capture and storage technologies. The use of removals to balance continued use of fossil fuels in some sectors is an important part of the global strategy for limiting warming to below 1.5°C in 2100, but catalysing the investment required for removals and directing the benefit to emitters requires a carbon trading market to emerge. With it’s strong history as a commercial and financial centre, Singapore could lead the way here, particularly as the region holds significant opportunity for removals and Singapore itself is a centre for the two sectors that may make greatest use of them, namely aviation and marine.

*Singapore could become a major carbon trading hub*

A feature that does emerge across the stories is just how long Singapore may find itself as an important regional distributer of oil products, even as the transition gather pace. The Asian region is still developing rapidly, with some 2 billion people (ASEAN and China) moving from modest to middle income and making use of a broader range of energy services in the process. Immediate growth in the region will draw heavily on existing energy sources and services, given their availability and scalability. Only in the fastest of transitions is this trend overcome with new energy sources scaling quickly enough to match new demand.

Where Singapore stands as an energy hub in 2050 and beyond has yet to be established. But now is the time for the bold decisions necessary to create the best possible future. Scenario analysis is a useful tool for understanding new trends and directions. We hope this publication helps inform readers about an otherwise uncertain future and positions them for the journey ahead.

Also check out the scenario infographic here.

Shell’s scenarios, including this Singapore Sketch, are not intended to be projections or forecasts of the future and they are not Shell’s strategy or business plan. When developing Shell’s strategy, our scenarios are one of many variables that we consider. Ultimately, whether society meets its goals to decarbonise is not within Shell’s control. This Singapore Sketch is based entirely on the data and findings of the Shell Energy Transformation Scenarios, released in February 2021. Please read the full cautionary note at: http://www.shell.com/investor and http://www.sec.gov

The role of CCS in hydrogen production

dchone February 9, 2022

A recent report by Global Witness has cast doubt on the value that carbon capture and storage (CCS) can bring to the mitigation of emissions associated with hydrogen manufacture from natural gas. This is based on an analysis of the Quest CCS project in Canada. However, the report fails to discuss the full context in which this project was developed and therefore draws an incorrect conclusion as to the benefits delivered by the project and the prospect for CCS linked to future hydrogen production.

Just over 20 years ago, I attended my first meeting of the Shell Canada Greenhouse Gas Advisory Panel. Shell Canada had established this panel to recommend and oversee measures to manage the carbon footprint of its operations at that time. Led by the then President/CEO, the panel included Shell Canada staff, representatives from Canadian and international NGOs and First Nations, and me representing the broader Shell group.

We met 2-3 times per year up until the mid-2000s and the Shell Canada team took forward a number of the panel’s recommendations to reduce emissions at Shell’s operations in Alberta. One of the earliest discussion points was around the need to develop CCS at Shell’s Scotford Complex in Alberta. These were the early discussions that led to the Quest CCS project.

Shell opened the Scotford Complex in 1984 with a refinery and chemicals plants, then expanded it in the early 2000s to process heavy oil into refined petroleum products. To do this, Scotford incorporated an ‘upgrader’, a unit that transforms bitumen into a light/sweet synthetic crude oil by fractionation and hydrogenation (improving the hydrogen to carbon ratio of the oil).

At the time, some of the hydrogen at the Scotford Complex originated from a nearby industrial facility where it was a by-product. But as Scotford grew with increasing production, Shell built a steam-methane reformer (SMR) to produce its own hydrogen. This is a process where natural gas is converted to hydrogen, with the remaining carbon being emitted as carbon dioxide from the process. A simplified representation of the process is;

CH₄ (natural gas) + 2H₂O (water as steam) –> CO₂ (carbon dioxide emitted) + 4H₂ (hydrogen produced)

In the case of a conventional SMR, which the original unit is, additional CO₂ is also emitted from the process when natural gas is burned to provide energy.

Fast forward to today, Quest CCS has been running since 2015 and captures just over one million tonnes of CO₂ each year – more reliably and at a lower cost than expected – with the CO₂ coming from the reaction outlined above in the steam reformer that produces hydrogen for the upgrader.

Quest was designed as a million-tonne unit to capture one third of the emissions from the Scotford upgrader. Its purpose was to demonstrate not only that CO2 could be captured, but also that it could be stored more than 2 km underground in a geological formation that lies under much of Western Canada called the Basal Cambrian Sands. Quest is part of a knowledge sharing effort with the governments of Alberta and Canada to encourage wider use of CCS technology and bring down future costs. As such, its designs, emissions data and certain intellectual property are publicly available on the Government of Alberta website.

Quest was not, however, designed to capture all of the CO₂ emissions associated with steam reforming of methane to make hydrogen. Nor has Shell claimed in its publicity that Quest is capable of capturing all CO2 emissions from the hydrogen plants or the upgrader. Annual performance reports on the Government of Alberta’s website have been audited and reviewed, and reflect an accurate characterization of what Quest has achieved to date: it has successfully captured and then permanently stored underground more than six million tonnes of CO₂.

And importantly, Quest was not designed to produce blue hydrogen, and as such, it should not be used as an example of blue hydrogen production. Rather, Quest was designed to demonstrate that capture and storage of CO₂ does work; and it has done just that.

Diagrammatic representation of Scotford CCS. Source: Shell Canada

Since Quest began operating, the energy transition has gathered pace and the role of hydrogen as an energy carrier has become a focus of attention. As a result, how hydrogen is produced has also become an important consideration. There are two approaches under consideration for a world that needs to head towards net-zero emissions.

Green hydrogen – this is produced by the electrolysis of water using electricity from renewable energy sources. The basic process dates back over 200 years, but it has remained a relatively small scale process, until very recently. Now electrolysers are growing rapidly in size with Shell amongst a handful of companies installing very large units. In July last year, Europe’s largest PEM hydrogen electrolyser began operations at Shell’s Energy and Chemicals Park Rheinland, producing green hydrogen.
Blue hydrogen – this is produced through the conversion of natural gas to hydrogen, with a very high percentage of the carbon dioxide which would otherwise be emitted by the facility, captured and geologically stored. Although the Quest CCS project captures and stores CO₂ from hydrogen production, this is not a blue hydrogen facility. That is because only a portion of the CO₂ is captured, as per the design criteria discussed above.

The Global Witness report has drawn on the Quest experience and used it to criticise the carbon footprint of blue hydrogen. The report concludes that future blue hydrogen projects should not be considered based on the observation that the existing hydrogen facility on which Quest is attached continues to emit a good portion of total CO₂ produced.

But the analysis fails to contextualize Quest and doesn’t consider that future blue hydrogen projects would be designed very differently to Quest and the associated hydrogen plant, even employing different process technology for the methane conversion itself which in turns makes CO₂ capture much more manageable and cost effective. For example, the proposed Polaris CCS project that Shell is planning for Scoford’s refinery and chemicals plants would include what’s called ‘post-combustion capture’ which has the more than 90% CO2 capture rates needed to produce blue hydrogen.

The route towards the current best process for blue hydrogen is described in a white paper produced by Shell Catalysts and Technologies, with its infographic shown below. The paper indicates the possibility of >99% CO₂ capture in the Shell gas partial oxidation process (SGP).

Hydrogen processes with CCS. Source: Shell Catalysts and Technologies

As the century unfolds and the energy transition takes hold, hydrogen may become an important part of the new energy system. So society needs to be able to produce it at scale and do this quickly. Hydrogen from renewable sources and from natural gas with CCS will be required to meet demand. Both routes are more than capable of delivering hydrogen with a very low carbon footprint and ultimately cost will decide the winner, including the carbon cost associated with managing any ongoing emissions attributable to either process.

A very different pathway forwards for India

dchone March 31, 2021

As COP 26 approaches, the UK government (as President of the COP) and the UNFCCC are encouraging as many countries as possible, in accordance with Paragraph 36 of the Paris Agreement Decision Text, to communicate mid-century, long-term low greenhouse gas emission development strategies. These should ideally include a net-zero emissions goal for the same time period as such ambitious national contributions are required from all countries to meet the 1.5°C goal of the Paris Agreement. To date, about 30 such strategies have been posted on the UNFCCC website.

For India, a mid-century goal of net-zero emissions points to a fundamentally different development pathway to one that might have been imagined just a few years ago. While the busyness and intensity of traffic and commerce in Indian cities like Mumbai and Delhi give the impression of a country bound to fossil fuels, the reality is very different. With around 1.4 billion people in total and a large rural population engaged in agricultural activities, per capita CO₂ emissions – at 1.8 tonnes per person in 2015 – are around a ninth of those in the USA and around a third of the global average of 4.8 tonnes per person.

However, overall, India is now the planet’s third-largest emitter of CO₂, behind China and the USA. Some costs of the country’s dynamic growth are increasingly visible, namely major congestion in urban centres and declining air quality.

The emissions focus should be on where India might go, rather than where it has been. For example, there are about 3 billion tonnes of steel in use within the country, in buildings, cars, appliances, pipelines and industrial plants. But as India aspires to be a developed economy, that number will likely rise to around 15 billion tonnes. Every other country has built its steel infrastructure with coal as the energy source, but if India does the same that could add another 24 billion tonnes of CO₂ to the atmosphere globally, based on production emissions of about 2 tonnes of CO₂ per tonne of iron. A good proportion of this would come from smelters in India, many of which may not have even been built yet. This is 6% of the IPCC 1.5°C carbon budget globally and would create a significant emissions spike, even considering efficiency improvements in smelting and optimised recycling. It will also add to the local environmental stresses that people in India feel each and every day. So a different smelting pathway should be considered and that is just one aspect of India’s future national development.

Similarly, the Indian electricity sector is largely based on coal fired generation, but here there are visible signs of change as solar and wind become the preferred choices for new generation capacity. By 2020, India had all but met its Nationally Determined Contribution goal of 40% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030 (solar, wind, nuclear, hydro, biomass). Whether its cars, trucks, housing, factories or commercial buildings, the story is largely the same; what is yet to come far exceeds what is already there.

This points to a strategic emissions focus for India that is very different to countries with substantial legacy infrastructure. Rather than needing to dislodge the status quo, India has the opportunity to embark on a different development pathway based around cleaner energy technologies and efficiency. These future choices will be important, not just at the national level when making important infrastructure decisions, but also in homes. At the household level, ownership of domestic appliances such as washing machines, refrigerators and air conditioners is relatively low, varying between 15% and 30%, depending on the appliance. As the country develops over the coming 30 years, appliance ownership may well head towards the 90% level seen in much of the world. Once in use these appliances will consume energy, so the choice of model and efficiency rating will be important. These appliances could add 300-500 terrawatt-hours a year to electricity demand, nearly a third of that generated in 2019, but lower efficiency choices might double this amount.

But what might such a development pathway look like? Over recent months the Shell scenario team and Shell India have worked with The Energy and Resources Institute (TERI) of India to illustrate what the future could hold. In this collaboration the team developed a Net-Zero Emissions (NZE) scenario, the principle focus of the work, to examine whether adequate opportunities exist to fully decarbonise the energy sector; areas where India’s energy sector does not have enough choices for full decarbonisation by 2050 are also highlighted. From a second scenario, Towards Net-Zero (TNZ), barriers to change that might emerge are revealed. Energy efficiency, electrification and a switch towards decarbonised fuels are the three main pillars of India’s energy strategy, with the need for a transformative move towards renewable electricity, hydrogen and bioenergy as key fuels. This analysis indicates that the industrial and heavy transport sectors are likely to face limits in achieving full decarbonisation, primarily due to technological constraints which leave residual emissions in the system. This necessitates the need for carbon removal options to achieve net-zero emissions, including both technical and natural solutions.

An overview of the pathway reveals both radical and very rapid change. For example, in India today, there is a successful programme of solar PV installation under way, but by 2030 as solar starts to dominate the generation mix in the NZE scenario, it will need to be matched by large-scale energy storage to manage intermittency. More than 1,000 gigawatts of solar PV, 700 GW of which with matching storage, needs to be installed through the 2020s, far exceeding the amount of solar PV installed over the last decade. This level of deployment is challenging, even in global terms. In 2019 global solar module production was about 140 GW, but growing at some 20% per year. Even if growth continues at this rate through the 2020s, the demand in India for modules under NZE would still equate to 20% of global supply. Embodied within the pathway is a monumental challenge, but one that is worth aiming to achieve.

The scenario analysis was released last week and can be found here. The analysis incorporates both the pathway forwards and the policy framework required to get there.

Note: Scenarios don’t describe what will happen, or what should happen, rather they explore what could happen. Scenarios are not predictions, strategies or business plans. Please read the full Disclaimer here.

A Climate-Neutral EU by 2050

dchone May 5, 2020

As the EU works to reset its emission reduction goals to align more closely with the 1.5°C goal of the Paris Agreement, a question arises around the scale and scope of the energy transition required. What will it look like? How fast should it proceed? Which technologies need to be accelerated to achieve the desired outcome? To help answer these and provide a perspective on the transition, my colleagues in the Shell Scenario team have produced a scenario sketch of the journey forward, arriving in 2050 with a net-zero emissions energy system (NB: The pathway was formulated in late 2019 prior to the COVID-19 pandemic and therefore does not include the energy system disruption being seen in 2020).

From a policy perspective, the EU has been addressing the climate issue for at least 15 years, with the EU Emissions Trading System in place since 2005. The 2020 energy situation arises from the 2007 climate and energy package, which included three key targets:

20% cut in greenhouse gas emissions (from 1990 levels)
20% of EU energy from renewables
20% improvement in energy efficiency

The targets were set by EU leaders in 2007 and enacted in legislation in 2009. They are also headline targets of the Europe 2020 strategy for smart, sustainable and inclusive growth. Within this, the EU Emissions Trading System is the EU’s key tool for cutting greenhouse gas emissions from large-scale facilities in the power and industry sectors, as well as the aviation sector. The ETS covers around 45% of the EU’s greenhouse gas emissions. In 2020, the target is for the emissions from these sectors to be 21% lower than in 2005.

The year 2020 represents a halfway point from 1990 to 2050, during which 20% of the hard deployment work has been done, but with a number of key technologies available at scale that hardly existed or didn’t exist around the turn of the century. Solar PV and Electric Vehicles are two examples (although solar PV did exist in 2000, it was expensive and small scale). That leaves just 30 years for the remaining 80% reduction, which must also include bringing to scale several other technologies which are yet to be deployed in the EU. This is a tall order and the scenario sketch illustrates how extraordinarily stretching it will be.

The additional key technologies that must move quickly to scaled deployment are as follows;

Clean hydrogen production via electrolysis of water or removing and storing the carbon from natural gas;
Hydrogen fuel cell road transport for heavy goods (see chart below).
Carbon capture and storage in various industrial settings – e.g. steel, cement, petrochemicals.
Biomass power plants fitted with carbon capture and storage (as a negative emissions technology).
Air transport that utilizes hydrogen as a fuel – in the sketch first flights are imagined in the mid-2030s.
Advanced biofuels for planes, ships and heavy road transport (see chart below).
Grid scale electricity storage.
Electrification of light and heavy industry processes.
Use of hydrogen in homes for heating and cooking.
Some technologies that appear late in the sketch will need intensive development over the medium term. Hydrogen as a fuel for industrial facilities, but particularly iron ore smelting, is a good example.

On the assumption that development and demonstration of all the above proceeds rapidly, deployment kicks in for most during the 2030s. But in the 2020s the energy technologies that have been nurtured over the last twenty years must be accelerated. For example, by 2030 solar must be quadruple current deployment, wind nearly triple current deployment and nuclear must be growing again, not declining.

In the 2030s the really hard work starts, with carbon capture and storage moving from first demonstration in the EU by 2025 to 40 medium sized facilities (one million tonnes CO2 stored per annum) by 2030 and over 100 by 2035. New technologies such as hydrogen fuel cell trucks must become ubiquitous during the 2030s, with at least 600,000 vehicles on the road by the end of that decade.

All of the above will require both technology development incentives and deployment policies. The analysis assumes a rising carbon pricing mechanism – whether explicit or implicit – to more than €200 per tonne of CO2 equivalent by 2050 to deliver and sustain the emission cuts and CO2 management necessary for the EU to reach climate neutrality. But even the EU ETS will need to change, as I discussed in a recent post.

While carbon pricing is an efficient lever for reallocating resources and driving behavioural change, it will not be enough on its own. A sectoral approach to policy which brings clean technologies, fuels and products to market, as well as their deployment and diffusion at scale, must urgently be developed. It is essential that policy should help provide consumers and businesses with low-carbon alternatives to adopt.

In the sketch, 2050 marks a point of climate neutrality for Europe, helped by the development of large scale carbon sinks through reforestation. But this isn’t the end of the transition, merely a point of significance. The hydrogen economy will continue to grow, electrification of industry will expand and efficiency gains will continue to be made. As was illustrated in the Sky Scenario, Europe will likely shift to become a net-negative emission economy during the second half of the century, a necessary requirement to ensure global net zero emissions and a 1.5°C limit on warming.

Download the EU Sketch here.

Aviation futures

dchone February 18, 2020

The aviation industry accounts for nearly one billion tonnes of carbon dioxide emissions annually against a global total in excess of 40 billion tonnes, which means it is around 2.5% of total emissions. However it is a high growth sector without obvious alternative energy carriers, implying that as other emissions fall and aviation continues to rise, its fraction of the total increases rapidly. Should global emissions fall by 50% in the same time that aviation doubles, then that fraction becomes ten percent.

Perhaps for the reasons given above, there is a particular focus on aviation emissions, far more so than a sector such as steel where emissions are currently much higher and will likely continue to be for many years. Additionally and unlike sectors such as steel and cement which are seen as essential elements for the provision of basic services such as homes and clean water, some people view aviation as a luxury which isn’t entirely necessary for modern society, hence the calls for limiting air travel as a means of limiting emissions from the sector. I don’t see rationing as a realistic pathway forward; the ability to traverse the globe in under a day has become too valuable.

The aviation sector will need to find another way forward. The current focus is on sustainable aviation fuels, such as those made from waste and sustainably harvested biomass, or perhaps even synthetic hydrocarbon fuels derived from processes that chemically combine hydrogen (from electrolysis of water using renewable energy) and carbon dioxide (from direct air capture). This latter route is currently very costly given the state of the variety of technologies required and large scale use of biomass always raises questions around its origin, the overlap with agriculture for food and the emissions that might arise from land use to create the biomass. Nevertheless, both these routes are worth pursuing.

But what other options might exist for the industry in the decades ahead?

Apart from balancing the emissions from aviation with some form of atmospheric carbon dioxide removal (from growing trees to direct air capture and geological storage), other routes would have to involve a shift away from hydrocarbon based fuels.

One possibility that is currently gaining favour is the development of electric propulsion, with the plane using battery storage for the electricity. This is also problematic due to the very low energy density of batteries when compared to hydrocarbons, a subject I discussed in an earlier posting. Battery electric planes might emerge for very short haul flights (e.g. London City Airport to Rotterdam, a flight I take quite a few times each year), but it is improbable for longer haul travel due to weight constraints. Today, 80% of the aviation industry’s emissions come from passenger flights longer than 1,500km, which means that a long-haul alternative technology needs to emerge.

One possibility is to use hydrogen directly as a fuel, either in a fuel cell configuration which essentially means an electric plane, or in a jet turbine engine in the same way planes use fuel today. The latter route means that planes could still attain the speeds and altitude of current jets. Hydrogen is well suited to a gas turbine engine.

Hydrogen isn’t weight constrained as an energy carrier, but volume considerations may prove challenging. A new airframe shape would likely emerge as a result.

	Jet A-1	Current Li-Ion Battery	Emerging Li-Metal Batteries	Liquid Hydrogen
Energy MJ/kg	42.8	~0.7	~2	120
Energy MJ/litre	37.4	~2	~4	8

Today, the development of hydrogen for aviation appears limited, with the BBC reporting a decade ago that there was no future for the fuel, despite proof of concept. Cost seemed to be the major issue, but today the cost of renewable electricity has fallen sharply and electrolysis to produce hydrogen is seeing a resurgence of interest.

A trawl through various online resources reveals that hydrogen jet turbines have been demonstrated for over 60 years. The first such flight was a modified B-57 Canberra Bomber, with one jet engine powered by liquid hydrogen from a cryogenic wing suspended tank (shown below)

diagram-of-a-hydrogen-fuel-system-on-nacas-martin-b-57b-canberra-ce9f7f

Source: NASA

In the 1980s Tupolev modified a Tu-155 to act as a test vehicle for a variety of alternate fuels, which included liquid hydrogen. The Tu-155 first flew on 15 April 1988. It used hydrogen fuel and later liquified natural gas (LNG). It flew until the fall of the Soviet Union and is currently stored at Ramenskoye Airport near Zhukovskiy. The cryogenic tank was stored in the main fuselage of the plane, in part due to the volume constraint noted above.

TU-155-Liquid-Hydrogen-Aircraft-Design-Tupolev-2009

Source: Tupolev

In the mid to late 1950s Lockheed proposed a concept reconnaissance aircraft that operated on liquid hydrogen and a design was also proposed for a Lockheed L-1011 passenger plane some years later. This was in response to the oil shocks of the 1970s.

Source: Lockheed

Despite over sixty years of on-off development of hydrogen powered flight, hydrocarbon fuels remain the only energy carrier for commercial aviation. Today, the industry faces a long term challenge that may require it to revisit shelved technologies, applying new concepts and materials to the variety of issues that couldn’t be fully solved in the decades past. In the Sky Scenario, we imagine that the first hydrogen intercontinental flight takes place in the mid to late 2040s, with a new generation of planes entering service from about 2050. Even then, it takes decades more for this to become a mainstay within aviation, but then could well be the only technology of the 22^nd century. In the interim in Sky, biofuels and removal technologies (bioenergy with CCS in Sky or BECCS) are used to deliver a net-zero emissions aviation system.

Digging deeper into the Sky scenario

dchone April 8, 2019

About a year ago Shell released the Sky Scenario. Sky is designed to explore a challenging but technically possible pathway to achieving the objectives of the Paris Agreement, reaching net-zero emissions from energy use by 2070 and an 85% chance of limiting global surface temperature warming to below 2°C in 2100. The scenario also showed the additional action required to limit warming to 1.5°C in 2100 (with a 50% probability). It’s an optimistic vision – effectively involving the “rewiring” of the global economy in just 50 years – but one which is possible technologically, industrially and economically.

Along with the Sky story came a detailed spreadsheet with much of the data behind the scenario available for analysis. Now, that data is available in an online tool to allow for simple selection, extraction and viewing. In addition, Sky highlights and key milestones are also presented through charts and graphs.

For example, say you wanted to look at the development of hydrogen as an energy carrier for heavy industry in Europe. That data can be extracted in three simple steps;

Select Europe from the world map.

2. Select Total Final Consumption as the topic of interest.

3. Select Heavy Industry as the subtopic.

And then a chart will appear showing the final energy split for heavy industry in Europe through to 2100 in the Sky scenario. In this case, hydrogen consumption is the pink bar and it can be seen growing in the second half of the century, partly replacing some remaining coal and natural gas consumption. This could be hydrogen in iron ore smelting, a process now just staring development.

A comparison chart can be added, for example showing how European heavy industry compares with Africa. The charts will be set to the same scale for easy visualisation. In the Sky scenario it can be seen that African heavy industry exceeds the energy consumption of its European counterpart in about 2060, with hydrogen consumption growing rapidly.

Another feature is the Signposts interactive tool, allowing exploration of key events and signposts, by region, as CO2 emissions shift over time. The chart below illustrates CO2 emissions for China and the cursor is highlighting the expansion of wind power to over 1,000 GW by 2043.

To find out more, just explore the interactive tool on the Shell Scenario website.

You can also join Wim Thomas, Chief Energy Advisor on 10th April 11.00am (BST) / 12.00 (CET) for a webinar on Sky and provide a virtual tour of the new online tool. Please also share this invitation to others who might find the content useful and interesting.

Click here to register to this webinar

Note: Scenarios are not intended to be predictions of likely future events or outcomes and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities. Please read the full cautionary note in http://www.shell.com/skyscenario.

Powering remote activities

dchone March 28, 2019

Over the past three weeks I have been on a voyage from Cape Horn to the Cape of Good Hope, specifically Ushuaia to Cape Town. With good weather for most of the trip, we were fortunate to stop in the Falkland Islands, South Georgia and Tristan da Cunha (some pictures below). Each of these have communities ranging from a few people to two thousand in the case of Stanley and each has found its own solution to providing energy. Of course the other remote activity out here is the need of the ship itself which will have travelled for some 20 days without refuelling and carried 400 passengers and crew across the South Atlantic.

The Falkland Islands has the major settlement of Stanley, a couple of very small towns, a military garrison and numerous remote farms. The Islands have settled on wind power to displace diesel generators, achieving an average of 35-40% displacement and a peak of 54%. Rural wind power has also been a success for the remote farms. The next step is to look at the potential offered by modern energy storage technologies, although flywheels have been used since 2010 for some storage in association with the wind turbines. Given the geography and climate, neither solar or hydro have been a success, apart from some niche applications. But the Falkland Islanders also have a history of burning peat for heat, although this is in decline. Kerosine and diesel are the most common fuels used today.

South Georgia is completely different. Since 2008 South Georgia’s two settlements Grytviken and King Edward Point (KEP) have been powered by hydro electricity. On the slopes above Grytviken there is a dam, originally built by the whalers at the turn of the 20th century. The dam increased the capacity of Gull Lake to feed water to the first hydroelectric power plant in 1914. The electricity produced then was mainly used for lighting the whaling station. The plant was expanded in 1928 to reduce the station’s reliance on imported coal for steam to power the factory. The electricity produced was then used to power winches and other factory equipment. The new turbine house has been built just off the pathway from the settlement to Shackleton’s grave, with the only visible sign of it as a generating station being the small stream of water seemingly running from under the building and into the bay.

Tristan da Cunha has a single settlement of about 270 people and an export factory to process the fish and lobster that are caught around the island. Although much of the electricity system was replaced about a decade ago after a fire, an entirely diesel based system was rebuilt. In recent years some changes have taken place with the installation of a few home solar water heaters, saving on bottled LPG which is used to heat water in Tristan houses. A small solar farm was also constructed west of the fishing factory. It consists of 26 solar panels, aligned to face the northern midday sun and each capable of generating 250 watts, so a combined capacity of 6.5kW. The connection to Tristan’s electricity grid was made on 30th April 2015. There are further plans for change, but the logistics of getting equipment to Tristan is enormously challenging. The island can only be approached by sea and few ships stop there. As we discovered on a second stop there (to pick up a local government person so we could land on Inaccessible Island), weather can quickly close the port and conditions can persist for days. But the case for further change is strong, given the community dependency on the import of diesel fuel and LPG. The eventual solution for Tristan may be a combination of parts. Although there is excellent wind, it can be ferocious at times, bordering on hurricane conditions, which perhaps isn’t ideal for turbine operation. Solar can also be challenging, with thick cloud shrouding the island at times. And although there is ample rainfall, collecting this and channelling it through a hydro plant would also be very difficult given the geography.

This then brings the focus to the key dependency for all remote activities, the transport to get there and transport once there. As was the case for our vessel, all these locations are completely dependent on long distance, self-powered transport and that remains almost entirely powered by liquid fuels coming from petroleum. While renewables are starting to provide local energy solutions for remote activities, the energy for the transport associated with such activities has no immediate zero emission alternatives. Synthetic fuels, either from a biomass / biowaste starting point or formulated from hydrogen and carbon dioxide offer a simple drop-in possibility, but the bio-alternatives are still relatively small scale and the pure synthesis route is still at the pilot plant stage of development. It should be noted that large scale synthesis of fuels from hydrogen and carbon monoxide does exist, but the starting points are coal (SASOL in South Africa) or natural gas (Shell in Qatar). For a net-zero emission synthetic fuel, the hydrogen would need to be produced by electrolysis of water using renewable energy and the carbon extracted from the air as carbon dioxide.

Apart from synthetic fuels, the best prospect for change is perhaps hydrogen itself, in that there is good experience containing and carrying it and fuel cells can power even large motorised vessels such as ships. Nuclear exists on ships in the military, but after an attempt to demonstrate the feasibility of nuclear powered commercial ships in the 1960s, nothing more has come from this form of propulsion. The challenge will lie with the providers of heavy transport; shipping companies, airlines and aerospace companies and large road haulage entities. Perhaps like the remote activities themselves, different solutions will emerge over time for the various requirements faced. Some remote locations may even be well placed to provide hydrogen in that they could have an abundance of renewable electricity to put towards hydrogen production via electrolysis. Scotland’s Orkney Islands are starting to experiment with such a route forward, as recently reported by the BBC.

Albatross chick on West Falkland

King penguins on South Georgia

A king penguin colony on South Georgia

King penguins on South Georgia

Me on Tristan da Cunha

The worlds most remote inhabited island, Tristan da Cunha

Northern rockhopper penguins on Gough Island

Fur seal on Gough Island

Fur seals on Gough Island

Inaccessible Island

Birds returning in the evening to Nightingale Island

A new pathway to Paris

dchone February 6, 2019

A new book that outlines a pathway to meet the 1.5°C goal of the Paris Agreement has been released for open access online , but is also available in hard copy from March 7th on Amazon. The work has been conducted by various academic institutions and is largely sponsored by the Leonardo DiCaprio Foundation. The route chosen is to meet all energy needs with renewables such as wind, solar and hydroelectric with the consequent phase-out of fossil fuel use for all energy needs by 2050. Carbon capture and storage (CCS) is not considered as an option, but natural sinks play an important role through large scale land restoration and reforestation. So rapid is the proposed transition that emissions fall sharply from next year (2020) and fossil fuel consumption is reduced by 60% in just a decade. An important additional component is an overall reduction in energy demand through a very strong efficiency drive.

There are six major components to the transition, with the first five relating to objective of 100% renewables for all energy use;

Increased capacity to generate electricity mostly through solar and wind power, enabling the electrification of all energy uses including power, heating, transportation, and even industrial uses.
Increased storage capacity in the form of battery arrays and pumped hydroelectric (which uses excess generation to pump water up to a reservoir releasing the energy when needed).
Improved energy efficiency – decreasing overall energy consumption, especially in the developed world, by making buildings, cities, and vehicles more efficient.
Re-purposing the existing gas pipeline and storage infrastructure to deliver hydrogen produced by renewable sources.
A gradual retraining of the energy workforce to participate in the burgeoning green economy.
Land restoration and reforestation to meet negative emissions requirements.

Following the IPCC 1.5° Special Report last October (SR15), it is clear that the lowest risk pathway in terms of climate impact is one that sees emissions fall rapidly, with minimal temperature overshoot before the end of the century. The book effectively follows the pathway P1 (no CCS, rapid fall in fossil fuel use) set out in SR15, although they make more extensive use of land sinks than P1.

Source: IPCC SR15

The IPCC P1-P4 archetype pathways can be categorized in terms of final energy demand and their use of sinks (both natural and artificial, e.g. bio-energy with CCS or BECCS), which also allows a comparison with the Shell Sky Scenario that featured in SR15.

Sky is akin to the SR15 P4 pathway, in that the additional energy demand they both foresee leads to extensive use of sinks to balance overall emissions and deliver a 1.5°C outcome. Within the Sky scenario efficiency plays a major role in curbing demand, but final energy demand still rises throughout the century (see chart below), albeit coming close to a plateau from 2080. This is driven primarily by the demands of some 2-3 billion people moving from modest income to middle income. In addition, there are a further 2-3 billion people moving from little income to modest or even middle income. Even with a major efficiency push, energy demand just doesn’t fall that easily, unless of course consumers hold back in their demand for energy services, e.g. travelling by air.

Sky, like P4, doesn’t see emissions falling until about 2030 in that this is the minimum time the scenario requires to build the necessary political and technical capacity to introduce carbon prices, ramp up production of various technologies and at least begin developing further out technologies such as hydrogen use for metallurgical smelting.

But the new pathway proposed in the publication seemingly allows no time for such change. As noted, under that pathway emissions fall sharply from 2020, yet we are currently in a period of sharply rising emissions (according to an analysis by the Global Carbon Project, 2018 emissions are estimated to have risen by 2.7% compared to 2017). While such a fall would be an ideal outcome and for a better than 50% chance of being below 1.5° is probably required, the difficult question that must nevertheless be answered is by what process this happens? In the Sky Scenario it was proposed that rapid ratcheting of NDCs throughout the 2020s could lead to emissions beginning to fall by 2030.

A further challenge is the decision by the authors not to employ any form of CCS and also phase out all fossil fuel use by the 2050s. For sectors such as aviation, the likely energy source in 2050 will still be hydrocarbon liquids, even if new engine technologies have begun to appear. Some planes that will be flying in 2050 are being built now and there is no line of sight to an alternative technology, so presumably the current generation of planes will continue to be built for several decades.

With no CCS, it means that the fuels must be synthetically produced, either from biomass or by chemical conversion of hydrogen (generated by electrolysis of water using solar energy) and carbon dioxide (extracted from the air), such that they have a net-zero impact on atmospheric carbon dioxide. But these synthesis technologies hardly exist today, although parts of the possible process do (the Shell synthetic fuel plant in Qatar which uses natural gas as the starting point). Just meeting aviation and marine needs with synthetic fuel plants in 2050 would require some 100 large scale facilities, starting from a current position of zero (or perhaps two, if the synthesis reactors in the handful of existing facilities were re-purposed).

A 100% renewable energy world will still require an energy carrier that isn’t electricity, for example for intense heat in certain combustion applications. Hydrogen could be such a carrier and could also be used for energy storage as well as having a role in liquid fuel synthesis. But the scale of a global hydrogen industry to support the renewable energy world would far exceed the global Liquefied Natural Gas (LNG) industry we have today. The LNG industry includes around 300 million tonnes per annum of liquefaction capacity and some 400 LNG tankers. That amounts to about 15 EJ of final energy compared to the current global primary energy demand of 500 EJ. In a completely new energy system in 2050, a role for hydrogen as an energy carrier that reached 50 EJ would imply an industry that was four times the size of the current LNG system. The current LNG system has emerged over a period of 60 years; building a system four times the size in 30 years seems unlikely.

There is no doubt that the 1.5°C Paris pathway outlined in the book is an incredibly ambitious one, but it may even be beyond the bounds of the possible. It will take some time to review the full publication, so I hope to report back in the coming weeks on various aspects of the story presented.

Note: Scenarios are not intended to be predictions of likely future events or outcomes and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities. Please read the full cautionary note in http://www.shell.com/skyscenario.

What next for coal?

dchone December 5, 2018

With COP24 now underway deep in the heart of coal country in Poland, we can’t help but be reminded of the important role that coal still plays in the energy system today.

There is hardly an economy in the world today that hasn’t relied on coal for its industrial development. A few have done so, notably Japan (although even in that country coal mining rose to some 55 million tonnes per annum during the Second World War), but most economies have developed on the back of coal, or oil and gas where these were in abundance domestically. It was the use of coal that supported the rise of industry in Germany, Great Britain, the US and Australia and more recently in China, South Africa and now India.

Coal is a relatively easy resource to tap into and make use of. It requires little technology to get going but offers a great deal, such as electricity, railways (in the early days), heating, industry and very importantly, smelting (e.g., steel making). For both Great Britain and the US, coal provided the impetus for the Industrial Revolution. In the case of the latter, very easy-to-access oil soon followed, and mobility flourished, which added enormously to the development of the continent.

Over a century ago, coal was used widely to produce gas for lighting and heating and in two instances, coal has also been used to supply liquid fuels. In Germany during the Second World War, coal was steam reformed and then catalytically converted to diesel fuels for the military. The same process was developed in South Africa during the apartheid years when oil was partly embargoed and remains today with the legacy of the two largest single point sources of carbon dioxide emissions on the planet. Coal is also used in China to make hydrogen for ammonia plants, a critical part of the fertilizer industry.

But the legacy that this leaves, apart from a wealthier society, is a lock-in of the resource on which the society was built. So much infrastructure is constructed on the back of the resource that it becomes almost impossible to replace or do without, particularly if the resource is still providing value.

As developing economies emerge, they too look at resources such as coal. Although natural gas is cleaner and offers many environmental benefits over coal (including lower carbon dioxide emissions), it also requires a higher level of infrastructure and technology to access and use, so it may not be a natural starting point. It often comes later, but in many instances it has been used as well as the coal rather than instead of it. Even in the US, the recent natural gas boom has not completely displaced its energy equivalent in coal extraction; rather, some of the coal has shifted to the export market.

A stark reality of the 21^st century is that despite great technical prowess, society still cannot offer a developing country a route towards a full industrial economy that does not involve coal. Little wonder then, as the UN published new data on rising carbon dioxide emissions, that the New York Times prominently featured a story titled “The World Needs to Quit Coal. Why Is It So Hard?”. In fact, the article only discussed the easiest of the current uses for coal to dislodge, as a source for electricity. Solar, wind and nuclear all offer zero emission alternatives and natural gas can offer a much lower emissions pathway. But coal is used abundantly in industry, particularly for iron ore smelting where it is fundamental to the conversion process itself.

Yet as the New York Times clearly point out, coal use must start to decline and do so quickly. In the Sky Scenario, released earlier this year by Shell, even an expansion of natural gas use and very aggressive deployment of renewables only sees coal plateau globally, with the real decline not emerging until the 2030s. This may be the best that can be achieved, given the number of new coal fired power stations being built in Asia, many part of China’s Belt and Road initiative.

The future of coal will depend on a variety of developments. Renewable energy deployment will certainly play a role, but it’s effectiveness in displacing coal will depend on how well it can be integrated into the electricity grid. Will we still need base load? South Australia has shown that not to be the case, with a mix of wind, solar, natural gas and interconnectors, glued together with a 100 MW Tesla battery, but has experienced something of a difficult journey to reach that point; the state was an early adopter, so presumably others will fare better.

But coal also needs to be dislodged from industry or married with carbon capture and storage where alternatives don’t present themselves. This means rapid development on several fronts;

Industrial processes need to find alternative sources for heat or even electrify their processes where possible.
A new smelting process needs to emerge for iron ore. Two look promising.
1. In Abu Dhabi, Emirates Steel use natural gas for smelting and have added carbon capture to the process.
2. In Sweden, there are plans for a first demonstration plant using hydrogen for iron ore reduction.
Carbon capture and storage needs to be deployed much more rapidly than is the case today, but there is a dependency on government policy emerging to incentivise its application or ultimately require it.

A recently released report by the Energies Transition Commission looks in depth at a number of sectors where abatement has yet to start, but concludes that there are technologies available to begin the journey to net-zero emissions and to deliver such an outcome.

All the above does happen in the Sky scenario and at an accelerated pace. The likely real world outcome is that coal will be with us for some time yet before we bid it farewell. Even late in this century, coal may well remain the feedstock of choice in some countries for petrochemicals. It could well be a very long goodbye.

Note: Scenarios are not intended to be predictions of likely future events or outcomes and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities. Please read the full cautionary note in www.shell.com/skyscenario.

Timing for new technologies

dchone November 1, 2018

Over the past fortnight I have been fortunate to present the Sky Scenario to a number of different audiences in Doha, Delhi, Singapore and Canberra. Irrespective of the audience and location, questions always emerged around rates of transition in Sky and more often than not the question referred to the emergence of a hydrogen economy. In all cases, there was surprise that the emergence in the scenario is not as fast as expected.

Sky Scenario Hydrogen Economy

Hydrogen is an important energy carrier in Sky and its presence solves many issues associated with hard to abate sectors. This includes aviation, heavy industry and road freight. For example and as noted in a recent post, hydrogen can be used instead of coal for reducing ores to metals in the metallurgical industry. But within Sky, these solutions take some decades to emerge and don’t really grow to meaningful scale until well into the second half of the century.

This then raises the question of the rate of deployment of a new energy technology. Historically, new energy technologies can take 30 years to move from first application to meaningful deployment, which in turn may be as little as one percent of the system. It is only when such a level is reached that the true future potential of the technology starts to become apparent. The analysis behind this finding was conducted by members of the Shell Scenario team back in 2008-2009 and subsequently published in Nature magazine (No Quick Switch to Low-Carbon Energy – Nature 462 – 3 Dec 2009 – Kramer and Haigh).

As an example, solar PV (photovoltaic cells) started its long journey back in the late 1970s and is only now building towards 1% of global energy demand, although within the electricity sector its contribution is approaching 4%. That is a 30+ year journey to scale. Wind has followed a similar path. Electric vehicles have had many false starts, including a large scale false start around the turn of the last century which was soon eclipsed by the Ford Model T. The pathway for nuclear was exceptional; it emerged from projects in the Second World War and developed quite rapidly from the early 1960s, but has remained largely static during this century at 5% of the global energy mix. The time from the first nuclear reactor in 1942 to 1% of global electricity generation was only 20 years.

But why so long? Take for example the potential application of hydrogen in iron ore smelting instead of the traditional use of coal. The chemistry of the process is well understood, but not a single demonstration of the process exists. However, a consortium of northern European companies have announced the planned construction of a pilot plant, with a view to have an operational process by 2035. Should this be successful, the first commercial scale plant may then be considered, which in turn will take some time for design, funding, decision and then construction. Future deployment by other companies may rest on a ‘wait-and-see’ decision following the start-up of such a first facility.

While the number of large blast furnaces in the world is in the dozens, it would still take many years to replace them all. In Sky, the heavy industry sector that utilises hydrogen begins to emerge after 2045, which aligns with the above consideration of suitable process designs being ready by the late 2030s and construction proceeding from that point in time. Between 2055 and 2080 the sector grows by a factor of six, which represents a rapid transition to the new technology.

The same may be true of a sector such as aviation, but possibly with an even later start. Aviation is completely dependent on energy dense hydrocarbon fuels, although there is some discussion of electric planes for very short haul routes. Hydrogen might emerge as a fuel for long-haul aviation and in Sky, we imagined that this would be the case. There has been some research over the years, but apparently very little at the moment. A Google search in the UK throws up a 2010 BBC report that notes hydrogen propulsion had been shelved completely by plane makers in favour of biofuels and continued efficiency improvements, although the same search also reveals a company in Singapore attempting development of a small test plane. While synthetic hydrocarbon fuels of some description may win the day in aviation, there is always the possibility of another contender emerging, but probably not yet. In Sky a first intercontinental hydrogen prototype flies in the 2040s, but scaled investment and use of hydrogen in aviation doesn’t commence in earnest until the 2050s. This is perhaps the earliest such deployment could be envisaged given the current state of development.

The thinking around transition timing discussed above is built into the Sky scenario, but it has also been pushed where possible to obtain the fastest possible transition. Big systems take time to change and major investments in emerging energy technologies come with caution and a lower appetite for risk. One aspect favouring this transition is the potential fragmentation of the energy system into smaller systems, including microgrids, local processing of waste and biomass (where local collection favours a smaller scale business model) and perhaps even technologies such as small modular nuclear reactors. Each of these can be built with smaller individual investments, negating the more cautious big investment approach.

Note: Scenarios are not intended to be predictions of likely future events or outcomes and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities. Please read the full cautionary note in www.shell.com/skyscenario.