As the world grapples with the urgent challenge of climate change, the energy industry is working to reduce greenhouse gas emissions while continuing to deliver the secure and affordable energy people need today. Is switching to renewables the answer, and do oil and gas have a role to play?

Presented by Julia Streets. Featuring Dr Bassam Fattouh of the Oxford Institute for Energy Studies, Sian Lloyd-Rees of Mainstream Renewable Power and Shell’s Zoe Yujnovich.

The Energy Podcast is a Fresh Air Production for Shell, produced by Annie Day and Sarah Moore, and edited by Molly Lynch and Sophie Curtis.

TRANSCRIPT

Shell The Energy Podcast
Season 4, Episode 4

00:00:00
Julia Streets: Today  on  The  Energy  Podcast.

00:00:07
Bassam Fattouh: If  oil  and  gas  is  to  remain  part  of the  energy  mix,  the  key  issue  then  becomes  how  to  reduce  greenhouse  gas  emissions  from  hydrocarbon  related  activities.

00:00:16
Sian Lloyd-Rees: If  we  want  to  achieve  net- zero  by  2050,  we  all  need  to  adopt  that  2050  mindset  now,  making  the  decisions  today  that  are  consistent  with  the  future  that  we  want.

00:00:26
Zoe Yujnovich: The journey to net-zero must be achieved whilst at the same time providing a stable and reliable supply of energy.

00:00:34
Julia Streets: The  science  is  clear  and  the  world  is  in  a  fight  to  avoid  the  most  serious  effects  of  climate  change.  Energy  and  the  use  of  it  is  one  of  the  biggest  contributors  to  global  greenhouse  gas  emissions.  And  this  means  that  the  oil  and  gas  industry,  which  supplies  much  of  that  energy,  is  under  pressure  like  never  before.  Many  countries  are  working  to  achieve  net- zero  carbon  emissions  by  2050,  while  continuing  to  meet  the  demand  for  secure  and  affordable  energy.
 The  impact  of  the  war  on  Ukraine  on  the  global  energy  market  has  shown  just  how  delicate  the  balance  is  to  maintain.  Some  critics  argue  that  only  a  drastic  scale  back  from  oil  and  gas  will  do,  advocating  for  actions  like  an  immediate  end  to  the  development  of  new  oil  and  gas  fields.  Others  believe  that  the  global  economy  cannot  be  decarbonized  without  the  constructive  participation  of  the  oil  and  gas  industry.
 On  one  thing,  there  is  broad  agreement  that  business  as  usual  is  no  longer  an  option.  How  can  the  world  manage  the  balancing  act  of  meeting  demand  while  investing  in  the  energy  of  the  future?  Does  it  need  to  go  further  and  faster?  Hello,  I'm  Julia  Streets,  and  today  on  the  Energy  Podcast  we  ask;  is  there  a  role  for  oil  and  gas  in  the  journey  to  net- zero?  With  me  to  discuss  this  are  Dr.  Bassam  Fattouh,  Director  of  the  Oxford  Institute  for  Energy  Studies,  Sian  Lloyd- Rees,  the  UK  Managing  Director  for  Mainstream  Renewable  Power  and  Shell's  Integrated  Gas  and  Upstream  Director,  Zoe  Yujnovich.  So,  Bassam,  let  me  start  with  you.  How  does  the  world  get  its  energy  today?

00:02:10
Bassam Fattouh: Based  on  the  latest  statistics  for  2022,  hydrocarbons,  that  means  oil,  gas  and  coal,  accounted  for  the  bulk  of  primary  energy  consumption.  Oil  accounted  for  more  than  30%  of  primary  energy  consumption,  followed  by  coal,  which  still  account  for  more  than  25%,  and  then  the  share  of  natural  gas  is  not  far  away,  standing  at  around  25%.  The  share  of  renewables  in  the  form  of  solar  and  wind  has  been  rising  fast  and  accounted  close  to  10%  of  primary  energy  consumption,  surpassing  nuclear  energy  and  hydroelectricity.  But  Julia,  it's  important  to  focus  not  only  on  the  shares,  but  also  the  growth  rates.  For  instance,  if  you  take  coal,  the  growth  rate  between  2012 and 2022  was  close  to  zero,  whereas  renewables  grew  more  than  12%  per  annum  during  the  same  period.  So the  energy  mix  actually  can  evolve  faster  than  implied  by  historical  standards,  which  is  needed  if  we  are  to  meet  our  climate  targets.

00:03:12
Julia Streets: So  in  support  of  the  UN  Paris  Agreement's  ambition  to  limit  the  global  temperature  increase  to  1. 5  degrees  centigrade,  above  pre- industrial  levels,  many  countries  have  set  net- zero  targets  and  I'm  curious  to  know  what  does  that  mean  for  the  energy  industry?  Sian,  can  I  come  to  you?

00:03:28
Sian Lloyd-Rees: As  Bassam’s  just  talked  about,  the  energy  mix  today  includes  a  number  of  different  energy  sources  and  to  achieve  net- zero,  we  need  to  grow  our  cleaner  energy  mix  going  forward,  but  that's  going  to  take  time  and  it's  going  to  take  a  balance  of  different  things.  From  my  perspective,  as  a  wind  developer,  we  are  focused  on  trying  to  accelerate  the  uptake  and  the  introduction  of  wind  powered  energy  and  solar  energy  on  a  global  basis.  But  there  are  challenges.
 When  we  look  at  the  wind  resource  in  the  world,  a  lot  of  it  lies  in  the  northern- hemisphere,  the  greatest  need  is  in  the  southern- hemisphere.  It  lies  far  from  offshore  in  quite  deep  waters,  and  that  requires  different  technologies,  floating  technologies,  to  be  able  to  access  it.  We  then  have  the  challenge  of  transporting  that  wind  energy,  once  we've  managed  to  deliver  it at  an  affordable  price,  to  different  parts  of  the  world.  So  we  have  technology  challenges,  we  have  geographical  challenges.  We  also  have  the  challenges  around  the  supply  chain  and  the  materials  that  we  need  in  order  to  be  able  to  ramp  up  in  terms  of  renewables.  Yes,  we  need  to  grow  our  renewable  energy  percentage  in  terms  of  the  mix,  but  we  also  need  to  focus  on  the  energy  sources  today  and  we  need  to  decarbonize  those.  Oil  and  gas  today  needs  greater  decarbonization,  but  so  do  many  other  heavy  industries  as  well  around  the  globe.

00:04:39
Julia Streets: And Zoe,  perhaps  I  could  bring  you  in  here.  I'd  love  to  get  your  thoughts  as  well  about  what  all  this  means  for  the  energy  industry.

00:04:44
Zoe Yujnovich: The  journey  to  net- zero  must  be  achieved  whilst  at  the  same  time  providing  a  stable  and  reliable  supply  of  energy.  Whilst  the  global  energy  mix  is  changing,  demand  for  energy  services  will  continue  to  grow  and  it'll  need  to  be  met  by  a  combination  of  different  types  of  energy.  It's  certainly  going  to  be  critical  that  we  don't  dismantle  the  current  energy  system  faster  than  we  can  build  the  clean  energy  system  of  the  future.  We  are  very  focused  on  trying  to  understand  how  to  change  the  demand  patterns  and  indeed  how  we  therefore  supply  alternative  energy  into  those  different  demand  hubs.  
 Oil  and  gas  will  continue  to  play  a  crucial  role  in  the  energy  system  for  decades  to  come,  but  of  course  we  will  see  that  demand  reducing  gradually  over  time.  The  other  thing  I  think  I  would  say  is  of  course  it's  also  very  critical  that  we  actually  lead  by  example  in  how  we  drive  that  energy  efficiency.  And  we  are  very  focused  on  cutting  emissions  from  the  existing  operations.  So  in  short,  it's  absolutely  essential  that  the  energy  mix  will  change,  we  must  reduce  emissions  from  our  own  operations  and  also  find  those  profitable  sustainable  ways  to  transition  to  net- zero.

00:05:56
Julia Streets: Just  building  on  that,  there's  some  warnings  from  environmental  groups.  The  continued  investment  in  oil  and  gas  infrastructure  can  risk  the  making  of  the  transition  to  cleaner  energies  even  more  difficult  or  even  too  expensive.  And  I'm  really  curious  to  hear  from  our  guests  today  whether  they  think  that  is  fair.  Sian,  can  I  come  to  you  first?

00:06:16
Sian Lloyd-Rees: Yes,  and  there  is  a  lot  of  discussion  around  the  concern  that  infrastructure  decisions  and  investment  today  shape  the  energy  future  that  we'll  get.  So  from  our  global  wind  developer  perspective,  we  look  carefully  at  government  policies  and  the  subsidies  and  investment  areas  they  prioritize.  And  the  UK  move  faster  than  many  countries  in  focusing  its  fiscal  incentives  into  renewable  development  with  a  contract  for  different  commercial  mechanism,  which  they  initiated,  which  guarantees  a  long- term  contract  certainty  for  wind  developers.  Likewise,  in  the  USA,  we're  seeing  the  Inflation  Reduction  Act  focused  on  attracting  investors  and  infrastructure  developers  into  the  renewable  energy  space, and the  EU  has  got  a  similar  mechanism.
 So  we  certainly  are  seeing  a  subsidy  reallocation  trend  in  favor  of  renewable  energy  sources  and  the  growth  which  all  helps   to  address  the  argument  around  renewables  being  more  expensive  or  not  fit  for  purpose.  But  overall,  if  we  want  to  achieve  net- zero  by  2050,  we  all  need  to  adopt  that  2050  mindset  now,  making  the  decisions  today  that  are  consistent  with  the  future  that  we  want.  And  this  is  what  we  look  for  when  we  engage  with  governments  in  different  parts  of  the  world  in  terms  of  where  their  future  investment  is  going.

00:07:23
Julia Streets: Bassam,  can  I  bring  you  in here, because  I'm  curi