Shell Oil Bullish on Solar

Brian Hicks

Written By Brian Hicks

Posted March 6, 2013

Last Thursday, Royal Dutch Shell Plc (NYSE:RDS.A) revealed a report for its long-term outlook of the global economy. 

In it, the company estimated the world’s demand for oil will peak somewhere around 2040, and solar power and natural gas will become primary energy sources.

By 2060, solar could be the world leader in energy supply and renewables could compose up to 40 percent of the world’s energy, the report said.

Shell recognizes two possible ways that this may happen.  The first scenario the report dubs ‘Mountains’ and the second ‘Oceans,’ as RT reports.

The first, ‘Mountains’, sees the world moving at a slower but steady pace economically, largely controlled by government to stimulate global markets.  New, emerging markets will fail to produce and meet expectations and, at this time, coal will lose its spot as the leading fuel source in electricity.

Natural gas will start to dominate the world’s energy; internal combustion engines will be a thing of the past, and vehicles will run on electricity and hydrogen.

By the end of the century, transportation and technology will reduce CO2 emissions.  The hydrogen hype of the 1990s will come roaring back, and 2 percent of energy will be hydrogen output.

In the second scenario, ‘Oceans’, Shell sees the global economy moving more swiftly and smoothly, with less government interference.  When reform is made, it will constitute growth and production, and this will drive markets and adhere to the will of the people.

Because things proceed a bit faster in the latter scenario, political strife can cause instability, but overall, it is a much more dynamic and prosperous system.  Markets both large and small would be firing on all cylinders and the world would begin to unify economically; CO2 emissions would decrease and oil consumption would increase, but it would be superseded by another: solar.

Solar ranks 13th in energy supply now, but in the future it could dominates the energy sector; by the year 2100, it will make up close to 38 percent of the world supply, according to Shell’s first scenario, with oil providing for just 10 percent and natural gas 7.5 percent, Bloomberg reports.

“Despite their differences, in both scenarios energy consumption is about 80% bigger in 2060 than it is now,” said Jeremy Bentham, head of Shell’s Global Business Environment team, in an RT report.

Shell and competitor ExxonMobil Corp. (NYSE: XOM) make these types of predictions from time to time, but Shell this time has taken a broad view, deep into the future of our global economy, and no matter which scenario wins out, it’s an optimistic look at renewable energy.

Realistically, a middle ground will form between the two, and troubles could arise from both ends.

The interesting fact about the Shell report and its glowing optimism for renewable energy is the fact that just 4 years ago the company pulled out of any plans to pursue renewable technologies.

But Shell has kept its hand close to the pin.  Its report states that countries like Canada and those who are involved with shale and tight gas are the key holders.  And in both Shell scenarios, natural gas plays a big part of energy.  In 2030, natural gas will be the world’s primary energy source, stomping out a 70-year dominance by oil, the Financial Post reports.

If you look at oil consumption in the U.S. alone, last year it was at its lowest level since 1996 and had been declining in consecutive months, except for May.  At year end, consumption had decreased by 2.08 percent and was at 18.56 million barrels per day, according to a report by RT.

Tight oil is a heavier resource; the oil sands hold great value, and with proper development and advanced technical skills, they would become a great resource.  This is why Canada is important: with advanced carbon capture technology and storage, this resource will be exploited.

Shell is working on a carbon capture project right now in Alberta funded by federal and provincial governments.


While the U.S. and Canada are in full swing of an energy transformation, renewable energy like solar and wind are turning the energy tides.

Information and education abound, and there is an increasing desire for clean energy sources, something that is having a strong influence on government policies across the world.  And as different markets emerge, oil-rich countries are left scrambling to refocus efforts and stabilize their hold on current energy needs. 

Shell expects that the U.S. will hold its economic power into the next century – with Canada as its largest trading partner – and insists that the age of oil is not dead yet.

Right now oil is surging, and with new breakthroughs come new opportunities.   The key to unlocking those opportunities is getting all sides to come to an understanding.

Time and definitive answers are imperative, especially as globalization takes place and the environmental movement has more influence.

For now, Shell has decided to focus efforts on biofuels and other renewable energy.  In 2010, it set up a Raizen ethanol operation with Cosan SA Industria and Comercio, reported Bloomberg.

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