Category: Renewables

It’s climate target season, but one more target is needed

July 31, 2023

One of the features of an upcoming COP is that the months prior often bring with them a slew of proposals for new global targets and initiatives. This year is no different, perhaps also driven by the extreme heat and precipitation that has been challenging the Northern Hemisphere. In July, COP 28 President, Dr. Sultan al-Jaber, put forward a proposed COP28 action plan in a letter to the Parties. Along with a number of calls for increasingly rapid transformation and improved financing for developing countries, the plan includes the following three specific energy system targets which were also widely reported on in the media:  

  • Reach a global tripling of renewables capacity by 2030.
  • Doubling of the average global rate of energy efficiency improvements by 2030.
  • A dramatic scale up of new low-carbon hydrogen production and decarbonization of existing hydrogen production to reach an overall doubling of hydrogen production.

The plan also includes emission reduction targets for the oil and gas industry to achieve by 2030 and includes a call to transform heavy-emitting sectors, including scaling up use of low-carbon hydrogen, carbon capture and storage, and carbon dioxide removal, aligned with science. However, no specific targets are included for these heavy-emitting sectors.   This all represents quite a formidable ambition, but to put these three energy system targets into context the recent Shell Energy Security Scenarios provide a useful backdrop.

The scenarios comprise two different stories for the decades ahead, but both are built from the security-focused world in which we currently find ourselves. In Sky 2050, the troubles of the 2020s give way to intense global competition in a race to gain market share in the delivery of clean energy systems. Mutual interest prevails and net-zero emissions is achieved in 2050. But in the second scenario, Archipelagos, distrust, self-interest and security concerns prevail. Although a rapid transition takes place and emissions fall throughout the century, the net-zero goal isn’t realised until early in the 22nd century. Nevertheless, warming is limited to 2.2°C above the 1850-1900 baseline period.  

The Energy Security Scenarios data shows global renewable capacity at around 3,500 GW in 2023, implying a 2030 goal of around 10,000 GW. The 2023 capacity is comprised of 1,200 GW hydroelectricity, 1,200 GW solar PV (commercial at 800 GW and rooftop at 400 GW) and 1,100 GW wind power. There’s also 100 GW of commercial biomass burning, but not everyone considers this as renewable energy. While hydro and biomass show only modest increases over the remainder of this decade, wind and solar increase substantially in both scenarios. In 2023, solar PV looks to be increasing by about 300 GW and wind by 100 GW, although some of this may be related to COVID delayed projects now coming online. With seven full years before the end of 2030, delivery at these scales could mean some 3,300 GW of solar in total and 1800 GW of wind in 2030, but this is well below the goal of some 10,000 GW even with hydro and biomass included. The deployment rate needs to substantially increase and that is exactly what is happening in Sky 2050.

In Sky 2050 and Archipelagos, the growth to 2035 is shown below.

In Sky 2050 the goal is reached in 2030 but, in Archipelagos, it’s not until about 2035. This isn’t about different levels of ambition across the scenarios, but instead represents the very real headwinds that rapid deployment could face, particularly in the circumstances of Archipelagos. Trade disruption is a major outcome of the story, yet there is an important dependency on trade within the solar PV story. The minerals required, the manufacture of the panels, the grid expansion (including across borders) and even the labour required for installation all depend on good trading relationships and the free movement of people for work.   For a goal of 10,000+ GW, which might include 5,000 GW of solar PV, the current global manufacturing capacity and installation capability of around 300+ GW per year would have to at least triple to around 1000 GW per year, which means adding 100 GW of new production and installation capability each and every year between now and 2030. The project pipeline for new manufacturing facilities looks robust, with the limitation on deployment in many locations being grid connectivity.  

The second goal is the desire to double the average global rate of energy efficiency improvements across sectors. This is quite hard to unpick without further details, but it certainly doesn’t mean ‘doubling energy efficiency’ as reported by some media outlets. The goal could be in relation to the energy intensity of the global economy, which would be measured in energy use per unit of GDP, or on the provision of energy services, i.e. a true efficiency measure, which could be in units such as tonne-km/MJ for road freight. For this discussion I will focus on the former.

In 2022 global energy use was about 4.6 GJ per US$1000 (2016) GDP. This had improved from 5.64 GJ in 2010, meaning an improvement of some 20% or about 1.5% per year. Presumably the ambition means shifting this to 3% per annum. If this were the case then energy use would fall to around 3.7 GJ per USS$1000 by 2030. Both Sky 2050 and Archipelagos are within this range, sitting respectively 0.1 GJ either side in 2030. Apart from general societal improvements in energy efficiency, which have been ongoing for decades (9.5 GJ per US$1000 (2016) GDP back in 1960), the main driver of change in this decade will be electrification of energy services. For example, using gasoline to power a car has a well-to-wheel efficiency of about 25%, but using electricity derived from solar or wind has a turbine-(or panel)-to-wheel efficiency of around 70% or more (losses in transmission and storage of electricity combined with the efficiency of the vehicle itself). This COP28 goal is a proxy for electrification, in all its forms. That means road transport, home cooking and heating and industrial use of electricity for heat. It looks quite possible, even in the slower Archipelagos transition.  

Finally there is the goal relating to hydrogen production, which seems very ambitious, but perhaps this depends on how it is interpreted. The letter calls for an overall doubling of hydrogen production, without a year being given. The Financial Times reported this as ‘Double hydrogen production to 180mn tonnes per year by 2030’. This number relates to the current global production of hydrogen which is about 90 million tonnes per year, but most of this sits within industrial processes such as the Haber process to make ammonia. The Haber process starts with natural gas, and hydrogen is an intermediate product in the production. Most global hydrogen production today comes from natural gas, releasing carbon dioxide as part of the conversion process. Some also comes from coal, with significantly increased emissions as a result. 

Hydrogen is also produced as a final energy product where it is then sold for other uses, such as in a fuel cell to power a truck or within a subsequent industrial process. This is where the future lies, with final energy green hydrogen replacing fuels such as diesel in trucks, Jet A1 in planes and coal in iron ore smelting. These applications amount to a small production of final energy hydrogen today, perhaps only 100,000 tonnes per annum. So doubling this number wouldn’t be ambitious at all and is almost certainly not what the letter is calling for.  

If we use the current overall global production of hydrogen and wish to double that by 2030, then the COP28 target would have the world at 180 million tonnes per year (as the Financial Times noted), which presumably means about 80 million tonnes for new final energy applications such as fuel cells in transport and iron ore smelting. This is considerably in excess of even the Sky 2050 scenario, which sees 10 million tonnes in 2030 and doesn’t reach 80 million tonnes of final energy hydrogen until 2040. In Archipelagos that date moves out to 2055.  

The challenge for hydrogen may not be the ability to produce it, given that electrolyser manufacturing capacity is ramping up very quickly. 80 million tonnes per annum of green hydrogen would require some 600 GW of electrolyser capacity to produce. According to the IEA, global electrolyser manufacturing capacity reached almost 11 GW per year in 2022, and based on company announcements, the global manufacturing capacity for electrolysers could reach more than 130 GW per year by 2030. This could deliver nearly 400 GW of capacity by 2030, still short of the COP28 goal but not markedly so. It’s also possible that significant electrolyser capacity could be introduced to replace the existing steam reforming of natural gas for ammonia production and this would certainly reduce emissions; but it wouldn’t create new demand for hydrogen as required by the target.  

The real issue for hydrogen as final energy (or a hydrogen carrier such as ammonia which is being looked at for ships) is creating that demand. There is almost none today. There are very few trucks that use hydrogen fuel cells – no planes, no ships and almost no industrial processes (other than those where it is an intermediate product now). In natural gas-based direct reduction ironmaking hydrogen does play a role, though this is in combination with carbon. Pure hydrogen is not currently used in ironmaking applications apart from a handful of pilot plants. The 10 million tonnes of new hydrogen final energy demand in Sky 2050 by 2030 is largely split between industry and road freight. Shipping is only just emerging in 2030 and aviation not until the 2040s.  

While the hydrogen goal seems almost misplaced in its ambition or perhaps has simply been misinterpreted, the package of targets still represents an important step to achieve by the end of this decade. But what is puzzling is why the package didn’t include a specific target for carbon capture and storage given that the UAE and Dr. Sultan al-Jaber have discussed the importance of the technology on many occasions. Irrespective of the objections of some environmental groups, repeated analyses by multiple organisations (including the Shell scenarios) show that without carbon capture and storage technology the 1.5°C goal cannot be realised. We also shouldn’t forget that while CCS projects can take a few years to deliver, their scale is significant at 1+ million tonnes CO2 per year per project once operational.

A substantial but not unachievable goal for 2030 would be to see the construction of 500 large scale (> 1 million tonnes per annum CO2) CCS facilities. As of late 2022, the Global Carbon Capture and Storage Institute reported 30 facilities in operation, 11 under construction and about 150 in various stages of planning.    

Note: Shell Scenarios are not predictions or expectations of what will happen, or what will probably happen. They are not expressions of Shell’s strategy, and they are not Shell’s business plan; they are one of the many inputs used by Shell to stretch thinking whilst making decisions. Read more in the Definitions and Cautionary note. Scenarios are informed by data, constructed using models and contain insights from leading experts in the relevant fields. Ultimately, for all readers, scenarios are intended as an aid to making better decisions. They stretch minds, broaden horizons and explore assumptions.

How quickly can a synthetic aviation fuel industry emerge?

May 15, 2023

In late April, the European Parliament and EU Member States reached agreement on new mandates for sustainable aviation fuels through to 2050. Under the final agreement, the percentage of sustainable aviation fuel (SAF) that must be blended with kerosene will start at 2% by 2025, moving to 6% by 2030, 20% by 2035, 34% by 2040, and reaching 70% by 2050. A dedicated sub-target for synthetic fuels derived from green hydrogen will also come into force from 2030. Although the final wording and requirements for these mandates have yet to be released, the headline numbers are clear even if the detail isn’t – starting at 1.2%, the synthetic fuel requirement will be scaled up to 5% by 2035, reaching 35% by 2050.

SAF is going to require a huge effort and should rightly be the immediate focus of attention, largely because of the state of technology and the amount of effort that has gone into preparing the groundwork for a SAF industry. But while the overall SAF target is challenging, given the small quantities produced today, the synthetic fuel mandate looks daunting. In EU parlance, synthetic fuels are renewable liquid and gaseous transport fuels of non-biological origin, meaning liquid or gaseous fuels which are used in the transport sector other than biofuels or biogas, the energy content of which is derived from renewable sources other than biomass. In the aviation industry this presumably means two types of fuel;

  1. Hydrogen as a direct fuel derived from renewable energy sources.
  2. Synthetic kerosene (also known as an e-fuel), produced by combining hydrogen derived from renewable energy sources (via electrolysis of water) and carbon from the atmosphere (via direct air capture or DAC), with the energy required for the capture and final synthesis also coming from renewable sources such as wind and solar PV.

For 2030, hydrogen as a direct fuel is a non-starter given that the planes don’t yet exist and probably won’t do so until 2040 at the earliest, although we might see some small commuter versions before that. So for 2030 and probably 2035, this mandate is really only about e-fuels. The synthesis of such a fuel is discussed in detail in a paper by Kraan et al., An Energy Transition That Relies Only on Technology Leads to a Bet on Solar Fuels, Joule (2019), with the energy schematic they developed shown below. This is to produce one barrel of fuel (5.5 GJ solar fuel on the right of the schematic).

The illustration above presumes feasibility and the availability of a wide range of thechnologies at large scale. In reality, that isn’t the case today. Clearly solar PV and synthesis technologies exist at scale, but Direct Air Capture (DAC) is still to be demonstrated at scale (i.e. 1 million tonnes per annum or more) and hydrogen electrolysis is only just reaching the sort of scale required for synthetic fuel production. As such, the discussion below should be viewed in that context and not just be a question of quickly building the necessary facilities.

In 2023 we can expect EU aviation fuel consumption to be somewhere around 1 million barrels per day, which includes both internal EU demand and international aviation bunkers for flights departing from the EU, for passenger and freight movements. So a 1.2% synthetic fuel mandate means the production of at least 12,000 barrels per day of e-fuel within seven years, or over 4 million barrels (600 kt) produced in 2030.

Jet fuel is mainly carbon in terms of weight, so 600 kt is about 500 kt carbon and 100 kt of hydrogen. This amount of hydrogen (but in practice more is needed) will require multiple 200 MW electrolyser projects, each similar to the project recently announced by Shell in Rotterdam that will produce 60,000 kg per day of green hydrogen, currently Europe’s largest such project. The Shell project will begin operation in 2025 after two years of construction, along with offshore wind capacity built in the Hollandse Kust Noord area.

The 500 kt carbon equates to nearly 2 million tonnes of atmospheric carbon dioxide capture in 2030, which is a scale of capture that doesn’t currently exist in the world. However, Occidental and its subsidiary 1PointFive announced in late 2022 they plan to begin detailed engineering and early site construction for their first large-scale DAC facility with start-up expected in late 2024. Upon completion, the DAC plant will be the world’s largest of its kind and is expected to capture up to 500,000 metric tons of carbon dioxide per year.

However, the provisions of the EU Directive on these types of fuels allows for other sources of CO2 to be used, but in some cases for a limited time period. Up until 2041 it will be possible to use CO2 from sources such as industry where allowances have already been surrendered against such emissions. It is also permissible to use the captured CO2 from the production or the combustion of biofuels, bioliquids or biomass fuels. These provisions mean that an immediate relaince on DAC as a source of carbon for synthetic fuels isn’t required.

Producing sufficient hydrogen and capturing enough carbon dioxide is energy intensive and is just the start. These then must be combined to make the synthetic fuel, which takes even more energy and more hydrogen than the molecular weight of jet fuel points to. For example, a hydrogen based reaction is required to convert the carbon dioxide to carbon monoxide, which is required for the subsequent synthesis reaction. If the facilities designed to do this make use of Fischer-Tropsch technology, jet fuel won’t be the only product. Its yield might be as much as 67% (with the other 33% being lighter and heavier hydrocarbons, but this will require an optimised catalyst), which means that for the above jet fuel requirement the picture becomes more complex and bigger. The required production of synthetic fuels rises to 18,000 barrels per day, of which 12,000 is jet fuel.

The synthesis plants are not simple projects either, although the underlying technology is tried and tested in facilities such as the Shell gas-to-liquids synthesis plant in Qatar. That unit takes natural gas and breaks it down into hydrogen and carbon monoxide (synthesis gas) before recombining these into longer chain hydrocarbon molecules such as for jet fuel. That facility operates on a very large scale, producing some 150,000 barrels per day of product (of which some is suitable for jet fuel use). Building smaller versions is possible, although even the first Shell synthesis pilot plant, built 30 years ago in Malaysia and still operating today, produces 14,700 barrels of oil product per day. Even smaller scale gas-to-liquids is also possible, with Petrobras operating such a unit in a remote location as a pilot for the conversion of associated gas from oil production into useful liquids.

Given the rapid scale up of the synthetic fuel mandate (4x from 2030 to 2035), the sensible approach will be for the EU to build reasonably large from the start. A first facility might be the size of the Shell Malaysia unit (the illustration shows an 18,000 b/d unit but this is still small by global refining standards), but would also require about 3 GW of green hydrogen capacity and three million tonnes per annum of DAC. Apart from the synthesis unit which is arguably smaller than the desirable scale for modern refining, the hydrogen and DAC units are unprecedented in size. However, both hydrogen and DAC are scalable technologies, with the latter currently deployed on a modular basis, and as noted above DAC isn’t an immediate requirement.

Building an 18,000 b/d synthesis facility, 3 GW of hydrogen electrolyser capacity and 3 MT per annum of DAC combined with large scale renewable energy production (say 6 GW of offshore wind) is a formidable project, costing many billion euros and taking years in terms of planning, approvals, financing and construction. Such a project will also stretch the available technologies, given that DAC in particular doesn’t yet operate at scale anywhere. But the EU needs to start at least five such projects over the coming 2-5 years, not just to meet the synthetic fuel mandate of 2030, but also with an eye on the 2035 mandate and beyond.

Can the energy transition help EU energy needs?

August 11, 2022

As the EU grapples with the challenge of displacing Russian oil and gas and meeting immediate needs as Russian supplies are cut, the question of the scale and speed of the energy transition emerges. How fast can Russian supplies be displaced by the transition itself?

The two charts below show the current situation. Prior to the Russian invasion of Ukraine, oil and gas supplies from Russia and into Europe contributed to about 40% of overall European demand, with local production making up much of the balance in the case of gas, but just about half the balance in the case of oil. In the case of gas, the flow to Europe is about a quarter of Russian supply, but for crude oil and oil products it’s nearly half.

Both charts show that European production has declined over twenty years and in the case of oil reached an apparent plateau around 2012. It’s unlikely that local production increases could make up for the cut in Russian supplies, so that leaves three immediate options;

  • Immediately cut overall energy demand, which in turn could translate to a reduced need for Russian supply.
  • Find supplies elsewhere.
  • Accelerate the energy transition to reduce the overall need for oil and gas in the energy mix.

While it’s clear from recent announcements that the EU strategy will embrace all three options in the short term, the longer term strategy will almost certainly rest with the transition itself. But such a transition could well take all of this decade, and probably longer, to complete.

Gas supply is perhaps the more problematic issue, as supply is less flexible globally than oil due to pipeline constraints, LNG capacity (the availability of shipping, liquefaction and regassification facilities) and long term storage. While gas has become a flexible commodity in the 21st century, it still remains easier to reorganise, redirect and store oil. However, gas may be faster to displace than oil from an energy transition perspective.

The gas chart above also shows how the rapid deployment of wind energy across Europe could be used to offset Russian gas requirements, but it’s a journey that takes the best part of a decade. This assumes a compounding growth rate in wind deployment of 10% per year, slightly above current levels of 8%, but equivalent to the growth rate from 2010 to 2017. However, with a much larger installed base, 10% growth in 2029-2030 means installing some 50 GW of wind in that year versus the 15 GW installed in 2017 and again in 2021. So the annual installation rate has to at least triple. Of course wind isn’t the only technology, there is solar PV as well, at least for the southern latitudes of Europe.

Further to the above, if rapid growth in renewables is focussed entirely on displacing Russian gas or filling the void left by the absence of Russian gas, less progress will be made in displacing the current use of coal in the EU. This could make meeting the EU 55% by 2030 emissions reduction goal more challenging, as eliminating coal for a given electricity production can deliver twice the emissions reduction versus the same shift for gas.

By contrast, displacement of Russian oil through the energy transition looks to be a slower process, although it may turn out to be less necessary. Oil is a more flexible commodity in terms of source and destination, although there could still be pinch points in the system, for example inland east European refineries tied to Russian crude via pipelines. The largest portion of EU oil demand is for transport and within that the capacity for replacement in the 2020s sits with electrification of passenger vehicles, vans and city buses. Alternatives for larger trucks, ships, barges and planes are not yet mature enough for fast large scale deployment.

If we assume a very rapid deployment of electric vehicles (EV), to the extent that all new sales are electric by late in the 2020s (a rate faster than the current goal of 2035 for all EV sales), only about 50 million tonnes per year of oil is displaced by 2030, or about a fifth of the oil that comes from Russia. This is because of the time it takes to turnover the exiting stock of vehicles. Within Europe there are some 250 million passenger cars (Source: Eurostat), but new car sales are in the range 12-16 million vehicles per year, so in eight years only about half the total stock will be replaced anyway. With EVs currently comprising about 10% of new sales, albeit that share growing rapidly, replacing even half the total vehicle stock with EVs will take longer.

In the end, a rapid energy transition can contribute significantly to the EU weaning itself off Russian oil and gas, but this won’t happen in the next few years. By the end of the decade significant progress can be made, especially for gas, but it will likely be well into the 2030s before the same is achieved for oil.

The role of CCS in hydrogen production

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.

  1. 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.
  2. 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.

Can renewable deployment be exponential?

June 22, 2020

In recent months we have all had to learn quickly about exponential rates of change as COVID-19 spread throughout the world, but as has been seen with the virus itself, exponential patterns typically stop and some other pattern of change emerges. Some mechanism intervenes in the process, typically starving the exponential process of its means for reproduction.

With the urgency around rising levels of carbon dioxide in the atmosphere, there is a desire by many to see renewable energy grow exponentially and quickly back out fossil fuels. Four years ago Fortune magazine reported that American futurist Ray Kurzweil forecast the dominance of solar PV in a little over a decade. Fortune noted the following;

Kurzweil’s basic point, reported by Solar Power World, was that while solar is still tiny, it has begun to reliably double its market share every 2 years — today’s 2% share is up from 0.5% in 2012. Many analysts extend growth linearly from that sort of pattern, concluding we’ll see 0.5% annual growth in solar in the future, reaching 12% solar share in 20 years. But linear analysis ignores what Kurzweil calls the law of accelerating returns — that as new technologies get smaller and cheaper, their growth becomes exponential. So instead of looking at year over year growth in percentage terms, Kurzweil says we should look at the rate of growth — the fact that solar market share is doubling every 2 years. If the current 2% share doubles every two years, solar should have a 100% share of the market in 12 years.

There is no doubt that solar PV has been doubling on a near two year basis. In 2015 global deployment was 230 GW installed capacity and this year it should be approaching 800 GW, which isn’t quite doubling every two years, but is close. But can this rate of change persist? It would imply 10 TW installed capacity by 2030 and 120 TW by 2040, from which enough energy could be generated to about meet all global requirements (~900 EJ in 2040), assuming it could be stored and channeled to the necessary services at the right time and place.

A related issue emerged on Twitter recently when well-known climate and energy expert Glen Peters (@Peters_Glen) took issue with a paper written by two colleagues in the Shell scenario team and published in Nature over a decade ago. In a twelve-tweet discussion Glen challenged the findings;

Will energy technologies grow exponentially until they reach “materiality” & then have linear growth? A common perception, but what does history say? Short answer: Old technologies are growing exponentially (not nuclear), just slower due to crowding out effects! . . . . . The ability for renewables to *displace* fossil fuels (not add to existing supply) will dictate whether renewables can grow exponential beyond “materiality”. If fossil fuels are taken out of the energy system, there is more space for renewables to grow exponentially. There is probably no physical reason why we can’t have 100% renewables, just like we once had 100% bioenergy, 50%-50% bioenergy-coal, etc The only limit is the one in our heads . . . .

There are a number of points here, but the question of exponential growth keeps returning. This isn’t about the level in the energy mix that renewables finally reach, but about the time it might take to get there. Exponential growth, such as that proposed by Ray Kurzweil, ought to be able to deliver a 100% renewable energy system by 2040.

The original paper that Glen Peters refers to was written by Martin Haigh and Gert Jan Kramer, so I took the question to Martin for further discussion. He noted that much of the background work to their Nature paper concerned the supply industry constraints related to production of materials required for deployment, but they had only limited space in their article to go into the necessary detail with graphs and charts.

So in practice, ongoing exponential deployment of solar is unlikely to happen because of stranded solar PV production facilities. Let me explain using two simple scenarios. In both cases the goal is to supply global energy demand with solar PV (putting aside the technical issues related to actually doing this) and global demand is rising from the current level of about 600 EJ by 1% per annum. The basic model I have developed also assumes that a field installation lasts for 35 years and that newer cells have improved efficiency over older models.

In an exponential scenario, solar PV rises at the rate described above, but this must be supported by investment in manufacturing facilities. By the time global demand is met in 2040, the world would have PV manufacturing capacity of 18,000 GW per annum, doubling from 9000 GW per annum just three years earlier. Even building the production facilities at this rate is questionable. But most of this capacity would then become stranded assets as demand for new solar PV would collapse. There would be residual demand for the newest most efficient modules replacing older modules, but this wouldn’t keep the industry going. In reality, this scenario wouldn’t happen as investors would see the coming over capacity problem and back away, therefore starving the exponential process of its means of reproduction.

In an investment scenario, solar PV rises exponentially in the early years, but then starts to shift away from the exponential case as investment in PV cell manufacture tapers. The result is a much slower rise towards meeting demand, but the investors in manufacturing don’t end up with stranded assets. In this example, manufacturing levels out at around 3000 GW per annum, one sixth of the above. Once solar PV generation meets global demand, the industry remains roughly balanced as it caters for both growth in energy demand and replacement of older installation. For much of the deployment period, growth is linear, not exponential.

Exponential Scenario

Charts shown are for illustration purpose only

In the latter part of the century, some additional cell manufacturing capacity would be warranted, rising to around 4000 GW per annum due to the increasing replacement requirement. This would close the energy supply gap that is starting to appear after 2080.

But the outcome of the investment scenario is a 30 year delay in meeting the goal of 100% of global energy demand supplied by solar PV. This then challenges the other goal behind the requirement for very rapid deployment of new energy infrastructure; the need to limit warming to 1.5°C.

A Climate-Neutral EU by 2050

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.

Hydrogen trucks EU

Biofuels EU

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.

In the shadow of Apollo

August 2, 2019

The recent 50th anniversary of the first moon landing brought with it many calls for an “Apollo Project” approach to address climate change. Such an approach is never defined in detail by those calling for it, but it presumably means marshaling government funds, establishing more energy research organisations and focusing all efforts on getting a handful of key energy technologies up and running in a short space of time.

There is no doubt that the Apollo programme was an amazing technical and engineering achievement, but is it the right recipe for success for dealing with the climate issue?

Behind the Apollo programme and the broader NASA effort in the 1960s was an immense research effort, which included a great deal of energy system research. After all, space flight is a voracious consumer of energy but storing energy and carrying energy for the journey is challenging. The 1960s saw significant NASA backed research into a technology that we now pin great hopes on for the 21st century, solar PV. In both the USA and USSR solar was fitted to various space vehicles, starting with the Telstar communication satellite in 1962 and Soyuz 1 in 1967. The first orbiting space station, Skylab, was powered by solar PV in 1973.

Skylab_(SL-4) (1)

Skylab (Source: NASA)

As the 1970s unfolded and oil price shocks hit the global energy system, interest in solar PV picked up. In 1977 the U.S. Department of Energy launched the Solar Energy Research Institute, which later becomes known as the National Renewable Energy Laboratory (NREL). By 1980 ARCO Solar became the first panel manufacturer to hit 1 MW of yearly production. Two years later, the solar company installed the first megawatt-scale solar project in California. Today solar PV is deploying rapidly with current global solar generation (including thermal) now at 600 TWh, which represents about 2% of global electricity generation, which in turn is about 20% of all final energy use (Source: BP Statisitical Review of World Energy). Solar generation increased by 29% from 2017 to 2018 but remains a minor part of the energy system despite an average growth rate over the last decade of around 50% per year.

But this development from first invention at Bell Labs in 1954 and first use in 1962 has taken over 65 years to scale to 2% of the electricity system, yet it was born out of the Apollo project. While solar may be entirely fit for purpose in space based systems, that still isn’t the case on earth, where the day-night cycle, seasons, latitude and weather all factor into its usefulness. A large scale (e.g. big city, >1 million people) generation system that can rely on solar PV for 100% of its energy doesn’t exist yet, although a smaller solar thermal system with molten salt storage now operates in Morocco.

Of course the most visible outcome of Apollo was the big step forward in manned space travel, with huge hopes as the 1960s came to a close of a golden age emerging. In his 1968 film 2001: a Space Odyssey, Stanley Kubrick imagined vast space stations, a Pan Am shuttle service and manned bases on the moon.

2001

By 2012, with solar PV growing rapidly, not only had Pan Am long vanished, but the USA had no manned launch capacity given that the Space Shuttle programme was at an end. It would have been a brave futurist that made such a statement back in 1969. Rather, the USA currently relies on the launch capacity of Russia, using technology that has changed little since the 1960s. However, a new generation of advanced heavy lift rocketry is emerging from the private sector in the USA.

Nevertheless, the space programme and related government and private efforts within the USA in the 1960s contributed enormously to human technical progress, with the computing developments at the time giving rise to the internet revolution which shows every sign of being as trans-formative  as the industrial revolution in the 1800s. That revolution could yet have a significant impact on the energy system, but such a change is not yet clear.

What is apparent from the Apollo programme is that big focused efforts do not necessarily give rise to expected outcomes, even if they achieve their short term goals. Such efforts can certainly be game changing, and Apollo was, but in areas not necessarily targeted in the first instance. The other key factor is that large scale change doesn’t come quickly, as has been the case with solar PV. From a climate change perspective, there simply isn’t the time to allow new technologies to germinate and grow on a 60+ year timeline.

All the above raises the question as to what type of approach is needed to deliver broad energy system change over the coming decades. The Sky Scenario, released by Shell in 2018, attempts to illustrate this. It highlights the need for change across multiple fronts, using technologies that largely exist today or at least have a clear line of sight and driven by a strong policy framework. Sky relies on six key factors, with an important underpinning licence for change from society. It requires;

  1. The adoption of carbon-pricing mechanisms by governments globally over the 2020s,
  2. A step-change in the efficiency of energy use leads to gains above historical trends.
  3. The rate of electrification of final energy tripling, with global electricity generation reaching a level nearly five times today’s level.
  4. New energy sources growing up to fifty-fold, with primary energy from renewables eclipsing fossil fuels in the 2050s.
  5. Some 10,000 large carbon capture and storage facilities are built, compared to fewer than 50 in operation in 2020.
  6. Net-zero deforestation by 2070. In addition, an area the size of Brazil being reforested offers the possibility of limiting warming to 1.5°C, the ultimate ambition of the Paris Agreement.

Embedded within this are perhaps multiple Apollo programmes, across many countries and sectors, also requiring some level of collaboration across national borders and utilising well-funded public-private-partnerships . Those programmes must cover all the key sectors and engage at every aspect of the technology cycle, but particularly the need to take technologies across the so-called ‘valley of death’ by ensuring sufficient early deployment to achieve significant cost reductions. This was done very effectively for solar PV within the German Energiewende over the last decade, although that programme relied on the rapid scale-up of PV-Cell manufacture in China.

The ‘Apollo programme’ for climate is global in nature and is illustrated below.

Policy Framework for Sky

 

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.

 

Is Direct Air Capture the future?

May 25, 2019

Almost all scenario thinking that relates to the goal of net-zero emissions during the second half of this century has to consider the role of negative emission technologies. These are mechanisms and approaches which result in the removal of carbon dioxide from the atmosphere and its sequestration in the biosphere (e.g. trees) or lithosphere (i.e. geological storage). This is necessary because we are very unlikely to see out the century with a complete end to fossil fuel use, industrial processes and land change practices all of which lead to the release of carbon dioxide into the atmosphere. Further, the application of carbon capture and storage on facilities such as cement plants and steel mills won’t deal with remaining emissions from mobile sources such as aviation and shipping so removal elsewhere must be done to balance these remaining sources. In addition, many scenarios utilise negative emission technologies as a way to correct the overshoot of goals from earlier in the century, effectively mopping up carbon dioxide released earlier.

There are a number of ways in which carbon dioxide can be removed from the atmosphere, with the simplest being an expansion of the biosphere through reforestation. But as was illustrated in the Shell Sky scenario, even very large scale reforestation isn’t sufficient to balance ongoing fossil fuel use. Global reforestation of some 700-800 million hectares of land (an area the size of Brazil) shifted the outcome in 2100 from 1.75°C (midpoint of a range reflecting uncertainty) to 1.5°C, which required a sink of some 10 Gt carbon dioxide per annum (current fossil fuel use results in some 32 Gt of carbon dioxide emissions – Source: IEA).

In addition to reforestation, the Sky scenario utilises CCS for industrial facilities and incorporates bioenergy production with carbon capture and storage (BECCS) to act as a negative emission technology (see illustration below), giving a total geological based sink of about 10 Gt per annum. BECCS hardly exists in practice today but a 1 million tonne per annum facility is operating in the USA. The technology is well understood and effectively a commercial proposition given the right CO2 pricing system.

BECCS

Balance 2070

Apart from reforestation and BECCS, another technology exists to remove carbon dioxide from the atmosphere, known as direct air capture (DAC). This technology captures the carbon dioxide from the very low concentration in the atmosphere and then makes it available for use or geological storage (DACCS). A small demonstration plant is running in Iceland as part of a much larger geothermal power complex and I was fortunate to be able to visit it a few weeks ago.

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Sitting within the ON Power Geothermal facility sits a single Climeworks air capture unit. It takes in air with a carbon dioxide concentration of some 410 ppm (ambient atmospheric conditions) and vents air with a concentration at about 100 ppm. An amine system acts as the sorbent and 4-6 times per day the unit recharges itself by using geothermal energy to heat the amine sorbent and release the carbon dioxide under controlled conditions.

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That carbon dioxide then joins a larger carbon dioxide stream (from the geothermal plant) and is injected into the subsurface where it reacts with various minerals to form carbonates, effectively fixing itself into the geology.

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This single unit captures and stores approximately 50 tons per annum of carbon dioxide, which is about enough to balance the emissions of eight Icelanders, but only three American citizens. This is very much a pilot unit for demonstration and proof of concept purposes, with plans by Climeworks for scaling the technology.

In the Sky Scenario we chose to use BECCS rather than DACCS as our negative emission technology because BECCS is visible and scalable today. This is because all the related processes and practices like biomass collection and use, geological storage and carbon dioxide transport are all scalable or have been scaled. As such, a scaled systems approach for BECCS could be envisaged in the decades ahead. In the case of DACCS, the scope is potentially huge, but the development pathway for this technology probably has some way to go. This is illustrated by the debate underway in academic circles about the cost of DACCS. DAC is challenged simply by the vast quantity of air that must be processed to extract every ton of carbon dioxide. Today, BECCS can be visualised as a cost effective technology whereas that is not yet the case for DACCS.

Ultimately DAC may also have another use, that being the manufacture of synthetic fuels and materials. Even if society eventually stops extracting fossil fuels, it’s very unlikely that we will stop using hydrocarbons, they are just too useful. But manufacturing them from scratch needs a source of carbon and a source of hydrogen, both of which could come eventually come from renewable energy powered processes. For carbon, it would be DAC and for hydrogen it would be electrolysis of water. Combined and with enough energy, you can make pretty much anything. But scaling this technology is a daunting prospect, which I wrote about a few years ago with reference to the manufacture of synthetics Jet A1 for aviation. All of these technologies will also require years or perhaps decades of development to see significant cost improvements emerge.

It was fascinating to see this technology in action, albeit at a very small scale. Whatever finally emerges, it probably won’t look anything like the plant in Iceland, but we shouldn’t underestimate the ability to innovate in the face of real need and commercial opportunity. It will likely take a long time, but later in the century it may well be the case that planes are flying on air in more than one sense.

Further reading: For a very comprehensive look at greenhouse gas removal technologies, a recent report from the Royal Society is worth a look.

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.