HOUSTON—A Royal Dutch Shell Plc (NYSE: RDS.A) executive mapped out an efficiency-driven world’s road to a net-zero emissions future on Oct. 2 at Rice University.

Achieving the goals of the 2015 Paris Agreement on climate change won’t be easy, either from technological or political perspectives, Wim Thomas, Shell’s chief energy adviser and head of the company’s energy analysis practice, said during a presentation at the Baker Institute for Public Policy.

However, Shell’s Sky Scenario is both doable and affordable, he said. Following the plan modeled by Shell’s team, the world could achieve the Paris Agreement goal of an average global temperature of less than 2 degrees Centigrade above pre-industrial levels.

“Sky relies on a few things to happen, and they aren’t there yet but they are getting there,” Thomas said.

The scenario describes much more reliance on electricity in transportation and a much greater reliance on renewable fuels instead of fossil fuels for power generation. That would require significant cost reductions for wind and solar power, but Thomas sees that trend moving forward quickly.

“In the North Sea, the next auctions are basically subsidy-free and pretty soon they will have to bid—pay governments—to get a license for an offshore wind farm,” he said. “So, it’s getting to be a completely normal business there.”

By the mid-2020s, he said, renewables will be the cheapest way to generate electricity. Around that time, Shell’s analysts believe that oil consumption could peak.

Two factors will drive the transportation transition from oil to renewables, Thomas said:

  • A larger share of electric vehicles on the road; and
  • At least a doubling of the efficiency of the internal combustion engine.

That is the difficult part, he said. Automakers must be convinced to invest in the increased efficiency of their engines as consumers shift away from those engines toward electric vehicles. But an energy-hungry world will need fossil fuels for decades to come, Thomas said, and without more efficient engines, the goals set by the Paris accord cannot be met.

Shell’s plan between now and 2070 begins with a change in consumer mindset toward low-carbon, energy-efficient options. It includes a step change in energy use efficiency above historical trends; global carbon-pricing mechanisms during the 2020s to embed costs within consumer goods and services; a rapid rate of electrification to a level that is five times what it is now; a 50-fold increase on use of new energy sources such as renewables; construction of 10,000 carbon capture and storage facilities (fewer than 50 will be operating in 2020); and net-zero deforestation.

Thomas acknowledged that Shell’s Sky is more aggressive than other scenarios, such as Bloomberg’s. It calls for 100% of new vehicle sales to be electric by 2030 and all vehicles in the world to be electric by 2050.

The effort must be led by public policy, which becomes more challenging in an era where politicians adopt populist strategies.

“We’ve done it before,” Thomas said, reminding his audience that the world shifted from 80% dependence on renewable fuels to 80% dependence on fossil fuels. “Now we have to go back.”

Joseph Markman can be reached at jmarkman@hartenergy.com or @JHMarkman.

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