ManagingManagingGlobal EmissionsThe role of CCSDavid Hone Chief Climate Change Adviser ShellDavid Hone, Chief Climate Change Adviser, Shell

MOUNTAINS OCEANS

MOUNTAINSA view from the topA view from the top Influence concentrates amongst the

already powerful as advantagealready powerful, as advantage brings more advantage

Less dynamic economic Less dynamic economic development, muted by rigidities in structures and institutions.

Secondary policy developments facilitated, e.g. climate (CCS).

Natural gas becomes the backbone of the global energy system.

A profound shift occurs in global transport and infrastructure.

MOUNTAINSTotal primary energy by sourceTotal primary energy by source

1200

1000

800

ear

600

400

EJ/

ye

400

200

02000 2010 2020 2030 2040 2050 2060

Year

OilBiofuelsNatural Gas

Biomass GasifiedCoalBiomass/Waste

Biomass TraditionalNuclearHydroelectricty

GeothermalSolarWind

Other renewables

Natural Gas Biomass/Waste Hydroelectricty Wind

OCEANSA view from the horizonA view from the horizon Emerging interests intermittently

accommodated Influence widelyaccommodated. Influence widely distributed (e.g. “Twitter” world).

C f l h th dCore reforms unleash growth – and expectations for further reform.

Markets dominate and more empowered constituencies hinder some secondary policy advancementsome secondary policy advancement (i.e. CCS comes much later).

Hi h i d th i fHigher prices and the rise of distributed solar PV change the energy system.gy y

OCEANSTotal primary energy by sourceTotal primary energy by source

1200

1000

800

ear

600

400

EJ/

ye

400

200

02000 2010 2020 2030 2040 2050 2060

Year

OilBiofuelsNatural Gas

Biomass GasifiedCoalBiomass/Waste

Biomass TraditionalNuclearHydroelectricty

GeothermalSolarWind

Other renewables

Natural Gas Biomass/Waste Hydroelectricty Wind

21002100Climate change and the long term challenge of long term challenge of managing emissions

20502020

20502020

2013

The climate change problemNeed to avoid the trillionth tonne1 of carbon to stay below 2°C . . .

1 trillion tonnes

y

0.8 ~2°C0.6

2000-2012

0.4

1950-1999

2000 2012

0.2

1900-1949

1950 1999

0 1800-18491850-1899

1900-1949

Starting in 1750

1Warming caused by cumulative carbon emissions towards the trillionth tonne. Myles R. Allen, Malte Meinshausen et. al. Nature Vol 458, 30 April 2009

The climate change problem. . and using current proven1 fossil reserves2 takes us well over the mark.. . and using current proven fossil reserves takes us well over the mark.

Early 2040’s

4°C 1.6 trillion tonnes, with

ti d

~4°C

2000-2012

continued land use change and cement3°C

1950-1999

2000 2012 cement production

~3°C. . . . . and probably still

1900-1949

1950 1999 probably still rising into next century

1800-18491850-1899

1900-1949

Starting in 1750

century.

1BP Statistical Review of World Energy2 Current reserves of oil and gas are ~60 years each, coal ~110 years at current usage rates

Current policies may slow this down, but are unlikely to solve the problem!but are unlikely to solve the problem!

“We will reduce the CO2 intensity of the economy by 30%.e educe e CO2 e s y o e eco o y by 30%

“By 2020, renewable energy will make up 20% of the energy supply”

“We must first improve energy efficiency, that will reduce emissions”

“We must stimulate clean energy investment”

Carbon capture and storage is different

• Carbon is returned to theCarbon is returned to the “geosphere” where it came fromfrom.

• There is no geographical (emit it somewhere else) or(emit it somewhere else) or temporal (emit it later) shift effecteffect.

• Even limited local action has a global benefit.

MountainsA gas “backbone” with early and rapid deployment of CCS limits the stock

Late 2040’s

2000-2012

1950-1999

2000 2012

Capped

1900-1949

1950 1999 Capped by ~2100

1800-18491850-1899

1900-1949

Starting in 1750

OceansCCS comes 20-30 years later with the result that the end stock is higher

Late 2040’s

2000-2012

1950-1999

2000 2012Capped by ~2110

1900-1949

1950 1999

1800-18491850-1899

1900-1949

Starting in 1750

Emissions in 2050 are stubbornly highNeither scenario meets current 2020 or 2050 goals or 2°C but because of

60

gCCS deployment both see emissions head to zero within this century

50

nnum Mountains

Oceans40

ns, G

t per

an Oceans

20

30

CO

2 E

mis

sio

1990 emissions

10

20

Glo

bal C

50% reduction vs. 1990

02010 2020 2030 2040 2050 2060 2070 2080 2090 2100

CCS in the New Lens Scenarios25

OceansMountains

20

nnum

Mountains

15

GT

per a

n

10

O2

Sto

red,

5

CO

02010 2020 2030 2040 2050 2060 2070 2080 2090 2100

The big dilemma – energy technologies take a generation to get going!take a generation to get going!

Key points on CCS development

• Managing climate change means managing the cumulative emissions of CO2 (under 1 trillion tonnes)2 ( )

• CCS is the only technology that deals directly with the “stock” emissions issuethe stock emissions issue.

• Net zero emissions is an eventual “must have”.

• CCS needs to come early and be rapidly deployed, but like all energy technologies it will take a gy g“generation” to really take hold.

• Waiting for a high renewables energy mix creates• Waiting for a high renewables energy mix creates additional carbon “stock” and additional warming.

DisclaimerThis scenarios presentation contains forward-looking statementsthat may affect Shell’s financial condition, results of operations,and businesses of Royal Dutch Shell. All statements other thanstatements of historical fact are, or may be deemed to be,f d l ki t t t F d l ki t t t

identification of suitable potential acquisition properties andtargets, and successful negotiation and completion of suchtransactions; (i) the risk of doing business in developingcountries and countries subject to international sanctions; (j)l i l ti fi l d l t d l t i l diforward-looking statements. Forward-looking statements are

statements of future expectations that are based onmanagement’s current expectations and assumptions andinvolve known and unknown risks and uncertainties that couldcause actual results, performance or events to differ materially

legislative, fiscal, and regulatory developments includingregulatory measures addressingclimate change; (k) economicand financial market conditions in various countries and regions;(l) political risks, including the risks of expropriation andrenegotiation of the terms of contracts with governmental

from those expressed or implied in these statements.Forward-looking statements include, among other things,statements concerning the potential exposure of Royal DutchShell to market risks and statements expressing management’sexpectations, beliefs, estimates, forecasts, projections, and

entities, delays or advancements in the approval of projects, anddelays in the reimbursement for shared costs; and (m) changesin trading conditions. All forward-looking statements contained inthis presentation are expressly qualified in their entirety by thecautionary statements contained or referred to in this section.expectations, beliefs, estimates, forecasts, projections, and

assumptions. These forward-looking statements are identified bytheir use of terms and phrases such as ‘‘anticipate’’, ‘believe’’,‘‘could’’, ‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’,‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘risks’’,‘‘seek’’ ‘‘should’’ ‘‘target’’ ‘‘will’’ and similar terms and phrases

cautionary statements contained or referred to in this section.Readers should not place undue reliance on forward-lookingstatements. Additional factors that may affect future results arecontained in Royal Dutch Shell’s 20-F for the year endedDecember 31, 2012 which is available atwww shell com/investor and www sec govseek , should , target , will , and similar terms and phrases.

There are a number of factors that could affect the futureoperations of Royal Dutch Shell and could cause those resultsto differ materially from those expressed in the forward-lookingstatements included in this scenarios book, including (withoutli it ti ) ( ) i fl t ti i d il d t l (b)

www.shell.com/investor and www.sec.gov.These factors also should be considered by the reader. Eachforward-looking statement speaks only as of the date of thisscenarios presentation, 15th November 2013. Neither RoyalDutch Shell nor any of its subsidiaries undertake any obligationt bli l d t i f dl ki t t tlimitation):(a) price fluctuations in crude oil and natural gas; (b)

changes in demand for Shell’s products; (c) currencyfluctuations; (d) drilling and production results;(e) reservesestimates; (f) loss of market share and industry competition; (g)environmental and physical risks; (h) risks associated with the

to publicly update or revise any forwardlooking statement as aresult of new information, future events or other information. Inlight of these risks, results could differ materially from thosestated, implied or inferred from the forward-looking statementscontained in this scenarios presentation.

Thank you for listening!for listening!WWW.SHELL.COM/SCENARIOS