Energy Development, Innovation Key to Global Challenges

Mark Green
Posted September 29, 2011

Lots of insight in a speech this week by Shell's Hugh Mitchell, chief human resources and corporate officer, speaking at the Edinburgh University Business School.

The challenges: rising population - the world's population is expected to increase by a third over the first half of the century, from 7 billion to more than 9 billion - and rising wealth. Mitchell:

"As countries like India and China continue their economic development, by 2050 billions of people will be buying phones, fridges and cars which their grandparents would never have dreamed of. For the global energy system, these trends are already having a profound effect. Driven by rising demand and prosperity, global energy demand is set to double in the first half of this century. In China, energy demand could rise by 75% between 2008 and 2035. In India, it could double."

Mitchell said energy companies will meet these challenges by increasing conventional global energy supply while also boosting alternatives, including renewables, and reducing the "carbon intensity" of fossil fuels. On the first point, he said Shell plans more than $100 billion in investments between 2011 and 2014. Mitchell:

"In particular, we are raising our production of natural gas, the cleanest burning fossil fuel. Next year, we expect it to account for more than half of our production. Natural gas offers clear environmental benefits. New gas power plants emit up to 50% less CO2 than modern coal-fired plants, and up to 70% less CO2 than older coal-fired plants, of which there are hundreds in places like the United States and China. Gas plants also emit lower levels of other pollutants like carbon monoxide, can be built relatively quickly and cheaply, and make an ideal complement to the intermittent power provided by solar and wind."

Renewables will play an important role, Mitchell said, predicting that they could provide 30 percent of the world's energy (compared to 13 percent today). More:

"At Shell ... our main focus is on biofuels, which fit our traditional expertise in liquid fuels and our retail network. We're already one of the world's largest distributors of biofuels. We've now moved into production of low-carbon biofuels too, through the Raízen joint venture with Brazil's largest biofuels producer. Across the entire lifecycle, the sugar-cane ethanol which we'll produce emits up to 70% less CO2 than standard petrol, meeting rising demand for transport fuel in a sustainable way."

There's another part to the equation - the need for human capital. Mitchell said Shell and other energy companies need bright, passionate people to "transform our business."