{"id":12988,"date":"2016-11-04T17:22:13","date_gmt":"2016-11-04T21:22:13","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/climate-change-as-a-competitive-advantage-for-an-oil-major\/"},"modified":"2016-11-04T17:28:58","modified_gmt":"2016-11-04T21:28:58","slug":"climate-change-as-a-competitive-advantage-for-an-oil-major","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/climate-change-as-a-competitive-advantage-for-an-oil-major\/","title":{"rendered":"Climate Change as a Competitive Advantage for an Oil Major"},"content":{"rendered":"

Royal Dutch Shell is fundamentally an energy company with significant hydrocarbon resources and believes oil and gas will be important for many decades to come (1). Shell Scenarios are widely regarded as insightful forecasting of macro-energy trends for the past 40 years and a way to challenge the existing business environment: \u201csociety will need to grow its renewable energy share to around 80% of an energy system much larger than today\u2019s if the world is to complete an energy transition and achieve a long-term goal of near net-zero emissions by 2100.\u201d(2)<\/p>\n

Shell expects the global economy to slowly shift from reliance on oil to increased use of natural gas and ultimately a more balanced mix of renewables. Leveraging hydrocarbons and renewable energy sources will be important to meet base and peak load energy demand with a growing world population.<\/p>\n

Level of Risk Exposure (3)<\/strong><\/p>\n

While Shell cites research and development and regional efforts in low-carbon biofuel, hydrogen fuel distribution, wind power, and solar, their only globally-scaled portfolio include oil, natural gas, and downstream hydrocarbons (see Figure 1). A traditional oil company pivoting to stay relevant in a future of 80+% renewables seems drastic and nearly impossible, but there\u2019s significant opportunity to take early action given the lack of enforceable carbon regulation.<\/p>\n

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Figure 1<\/strong><\/p>\n

\"Source:<\/a>
Source: Shell Energy Transitions & Portfolio Resilience, May 2016<\/figcaption><\/figure>\n
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Shell must consider their level of exposure and carbon footprint of direct and indirect emissions. In 2015, Shell produced 72 million tonnes of direct CO2e, a 5% reduction from 2014 that includes one-time divestments as well as the startup on the Quest Carbon Capture and Storage (CCS) project used to offset the carbon footprint of Canadian oil sands (4).<\/p>\n

Strategic Action<\/strong><\/p>\n

Operational Improvements of Direct Emissions<\/em><\/p>\n

On a more granular scale, many existing assets need to be considered. Since for many assets the local and regional regulations do not guide emission performance standards or required technology, Shell has developed its own internal best practices and reporting requirements.\u00a0 Shell \u201cdirect GHG emissions have fallen by 40 million tonnes of CO2 equivalent or 35% since their peak in 2003\u201d (5). Specifically:<\/p>\n