SHELL SCENARIOS

Sky
MEETING THE GOALS OF
THE PARIS AGREEMENT

2050 2055 2060 2065 2070 2075 208

CONTENTS
PLEASE CLICK ON THE CONTENTS BELOW TO NAVIGATE TO THE VARIOUS SKY CHAPTERS

Chapter 1  Well Below 2°C: The Paris Ambition 3

Chapter 2  Challenges for a 21st Century Scenario 11

Chapter 3  From Mountains and Oceans to Sky19

Chapter 4  A Scenario for Success – Sky25

Chapter 5  Sector Transformations 35

Chapter 6  Achieving the Balance 53

1
Chapter 7  The Paris Ambition Realised 63
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CHAPTER 1
WELL BELOW 2°C:
THE PARIS AMBITION
 1. WELL BELOW 2°C:
THE PARIS AMBITION

The December 2015 Paris Agreement on climate change is a remarkable document. Implementation of the Agreement is now Energy scenarios for the
In just 25 pages it offers a pragmatic blueprint for resolving one of the toughest under way, with most national governments pathways forward
responding quickly to the call for ratification
issues society faces. The aim of the Agreement is to hold the increase in the global and the delivery of their first national Scenarios are alternative stories of the
average temperature to well below 2°C above pre-industrial levels and to pursue contributions. New coalitions have also future that help us learn useful lessons for
formed around government-led carbon pricing the present. They are not policy proposals
efforts to limit the temperature increase to 1.5°C above pre-industrial levels.
and coal phase-out, but the task is only just – they do not argue for what should be
beginning. Success is hoped for but is not done. Nor are they forecasts – what will be
In pursuit of this goal, the Agreement calls total of carbon dioxide (CO2) emitted to the done, by society, industry, or anyone else.
a given.
for a “balance between anthropogenic atmosphere. If total cumulative emissions They offer descriptions of what could be done
emissions by sources and removals by sinks overshoot a threshold, it may be necessary The context for a pathway forward – plausible pathways for the future and useful
of greenhouse gases in the second half of to go beyond net-zero emissions to achieve insights along the way.
the century.” This emphasis on “a balance” “net-negative” emissions, where more CO2 is Our 2016 publication, A Better Life with a
– or what is also referred to as “net-zero extracted from the atmosphere than continues Healthy Planet, recognised the desire of a For over two decades Shell scenario thinking
emissions” – is a critical development to be released. In such a case, the global large part of the world’s population to have a has incorporated the issue of climate change,
because it recognises that surface temperature average surface temperature can fall. better life – which means that energy demand with different scenarios showing varying
4 warming is directly related to the cumulative will rise in relatively poor countries even as levels of success in addressing this critical 5
it may fall in relatively rich ones. Within this global issue. But with typical forward-looking
context of a better life for all, we highlighted timeframes of 25 years in the 1990s and
the key changes in each main sector of the reaching to 50 years in the early 2000s,
THE PARIS AGREEMENT CALLS FOR AN EARLY PEAK IN EMISSIONS, THEN A DECLINE TO economy – industry, transport, buildings, and the full resolution of the climate issue through
NET-ZERO EMISSIONS DURING THE SECOND HALF OF THE CENTURY power generation – that were required to complete transformation of the global
deliver a world of net-zero CO2 emissions energy system was never clearly visible.
from energy.
Peaking of emissions
While we know, in general, what key
conditions and energy system changes are
Positive emissions
required for net-zero emissions, it would be
Atmospheric CO2 rises
helpful to have a pathway to achieving that
goal by 2070 – a timeframe compatible with
Net-zero emissions Net-negative emissions holding the increase in the global average
Atmospheric CO2 falls In Sky, the rate of decline in
temperature to well below 2°C. Because the
global emissions after 2035
future is unpredictable, especially when it
comes to complex global societal systems exceeds the rate of growth
over an extended period involving technology, we’ve seen for this century –
2020 onwards Emissions sinks
government policy, and consumer behaviour, an eye-watering achievement.
the best approach to exploring this pathway is
to use scenarios.

Greenhouse gas emissions CO2 absorbed by emissions sinks

Source: Shell schematic

 That transformation has always been, and century, which means that they fall short of the
remains, a journey measured in generations, temperature goal of the Paris Agreement.
now extending out to the end of this century.
Looking beyond Mountains
In 2013 Shell published its New Lens and Oceans
Scenarios comprising two outlooks named
Mountains and Oceans. For the first time, the Drawing lessons from that previous work
and additional analyses, we now present
scenarios featured energy-system modelling
a possible pathway for decarbonising the
stretching to 2100, which allowed long-
global economy with the societal aim of
term transitions to be seen in their entirety.
achieving net-zero emissions from energy use
While exploring very different socio-political
by 2070 – a scenario called “Sky.”
contexts, the scenarios show that persistent
and widespread application of CO2-targeted Sky recognises that a simple extension of
policy frameworks, including large-scale current efforts, whether efficiency mandates,
switching to renewable energy and extensive modest carbon taxes, or renewable energy
use of CCS (carbon capture and storage), supports, is insufficient for the scale of change
would lead to net-zero emissions in the energy required. The relevant transformations in the
system. However, in the two scenarios, that energy and natural systems require concurrent
outcome is achieved around the end of the climate policy action and the deployment of

6 7
Introducing Sky – an ambitious scenario to hold the increase in
the global average temperature to well below 2°C.
This requires a complex combination of mutually reinforcing drivers
being rapidly accelerated by society, markets, and governments.
From now to 2070 –
1. A change in consumer mindset means that people preferentially choose low-carbon,
high-efficiency options to meet their energy service needs.
2. A step-change in the efficiency of energy use leads to gains above historical trends.
3. Carbon-pricing mechanisms are adopted by governments globally over the 2020s,
leading to a meaningful cost of CO2 embedded within consumer goods and services.
4. The rate of electrification of final energy more than triples, with global electricity generation
reaching a level nearly five times today’s level.
5. New energy sources grow up to fifty-fold, with primary energy from renewables eclipsing
fossil fuels in the 2050s.
6. Some 10,000 large carbon capture and storage facilities are built, compared to fewer than
50 in operation in 2020.
7. Net-zero deforestation is achieved. In addition, an area the size of Brazil being reforested
offers the possibility of limiting warming to 1.5°C, the ultimate ambition of the Paris Agreement.
 SHELL SCENARIOS COMPARED – GLOBAL AVERAGE SURFACE TEMPERATURE RISE

3.0

2.5
° C above 1861-1880

2.0

1.5

1.0

0.5

0.0

-0.5
1900 1940 1980 2020 2060 2100

History Sky Oceans Mountains

Note: The MIT Joint Program on the Science and Policy of Global Change modelled the climate impacts
of Sky in comparison with those of Mountains and Oceans. All series are five-year moving averages.
8 9
Source: MIT

disruptive new technologies at mass scale Sky begins with the current structure of
within government policy environments that economic sectors and government policies
strongly incentivise investment and innovation. and the capacity for change that exists
No single factor will suffice to achieve the now. It then assumes very aggressive, but
transition. Instead, Sky relies on a complex plausible, capacity-building and ratcheting
combination of mutually reinforcing drivers of policy commitments through the first two
being rapidly accelerated by society, markets, five-year review cycles embodied in the
and governments. Paris agreement. Beyond that time-frame,
there are naturally rather greater uncertainties By adopting an approach grounded in the The Paris Agreement has sent a signal around
Because climate challenges arise from the about how policies and technology may be
total accumulation of greenhouse gases in the current reality of the energy system but then the world; climate change is a serious issue
developed and implemented globally. So, the combined with a specific long-term goal, that governments are determined to address.
atmosphere, there are an infinite number of scenario progressively becomes driven simply
possible pathways for the annual reduction of we intend Sky to be both an ambitious By 2070, there is the potential for a very
by the ambitious goal to achieve net-zero scenario and a realistic tool for practical different energy system to emerge. It can be a
emissions over the coming decades that can emissions by 2070, taking full account of
result in an outcome consistent with the Paris considerations today. system that brings modern energy to all in the
the characteristics of scale, technological world without delivering a climate legacy that
ambition. Of course, some of these pathways substitution, and investment in the various Additionally, we are publishing extensive
are much more plausible than others – you society cannot readily adapt to. That is the
sectors of different national economies. quantitative data sets for the Sky scenario, essence of the Sky scenario.
wouldn’t expect that the global economy Such a goal-driven scenario is sometimes so that others can inspect and make more
can be completely re-wired overnight. referred to as “normative.” use of this information themselves.
Link to quantitative data sets
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CHAPTER 2
CHALLENGES FOR A
21st CENTURY SCENARIO
 2. CHALLENGES FOR A
21st CENTURY SCENARIO
Challenge: Energy demand is rising

Energy enables the whole economy to function. It is needed and used New energy services will feature in the Challenge: Efficiency can have
everywhere – in homes, factories, shops, schools, personal transport, freight, 21st century as well, from extensive use of unexpected consequences
artificial environments in which people live
sanitation, water systems, agriculture, and construction. It is a vital hidden and work in comfort to trillions of connected Without limiting the availability of energy
ingredient in manufacturing and delivering almost all the products and services devices within the “internet of things.” As an services, energy demand growth can
early example, the connections people make potentially be slowed through rapid
modern society takes for granted.
through international travel have already improvement in the efficiency of such services.
doubled in the first two decades of this While this will inevitably happen it can
Through the course of the 20th century, clean water, sanitation, nutrition, health care, century (measured in terms of international be a double-edged sword. On the one
global energy demand increased ten-fold and education. Energy is a key enabler for air travel arrivals). Population growth, much- hand, increased efficiency has been one of
as population more than tripled, economic these basic needs. needed development, new energy services, the economic growth engines of the 20th
growth and development surged, extended and the extended use of existing services will century, with the manufacturing cost and
On a per capita annual basis, the range energy consumption of appliances such as
mobility became commonplace, and a wide all contribute to energy demand growth.
of primary energy use today is from 20 air conditioners falling consistently over the
range of new energy services appeared, from gigajoules (GJ) in a country such as Kenya,
refrigeration at the beginning of the century decades. But on the other hand, these lower
to about 300 GJ in the US. The global costs have also led to increasing uptake
12 to data-related services at its end. But in the average currently stands at nearly 80 GJ but 13
by consumers.
context of the UN Sustainable Development is expected to rise as near universal access
Goals, several billion people are still pursuing to modern energy services is achieved during
a better life through much-needed access to this century.

WORLD ENERGY DEMAND RISES WITH POPULATION AND DEVELOPMENT

8
Global population, billions

2015
Total Primary Energy
7
In 2016, vehicle ownership in
North America and Europe
6
varied from 500 to 800 per
1990 1000 people. China was 154
5 per 1000 people, with India at
42 per 1000, and inevitably
4 set to grow.
0.5 0.6 0.7 0.8
Human Development Index

Source: Shell analysis, IEA, UN

 For example, the most recent energy service Although the world is beginning to act,
COAL ELECTRICITY GENERATION CAPACITY
to see large efficiency gains is lighting, with substantive progress towards the Paris goal
LEDs rapidly replacing incandescent, halogen, will be challenging, partly because of coal.
and fluorescent bulbs. But there is now clear As renewables and natural gas increasingly 2000
evidence of growth in lighting services as a dominate the energy sector in developed
result, even in cities where lighting saturation countries, bringing down emissions, coal
was presumed to have been reached. use is increasing in some economies as 1500
Advertising is being transformed with LEDs, new generation capacity is required for
moving from street displays to giant billboards. development. Vietnam is one such economy,

GW
with several large coal-fired power stations 1000
Challenge: Coal remains popular under construction in 2018.
Limiting the rise of CO2 in the atmosphere will A stark reality of the early 21st century is the 500
require moving away from fossil fuels to other lack of a clear development pathway for
sources of energy as well as utilising CCS. an emerging economy that doesn’t include
But new energy sources will be challenged coal. Coal is a relatively easy resource to 0
to expand fast enough to meet both rapid East South Canada SE EU28 Non-EU Africa Eurasia Latin Australia
tap into and make use of. It requires little Asia Asia /US Asia Europe and America and
demand growth and the need to back out technology to get going but offers a great Middle East New Zealand
of existing emitting sources quickly enough. deal, including electricity, heating, industry,
Continued high demand growth can Operating Construction Pre-construction On hold
also put upward pressure on energy
prices, which, in turn, could encourage Note: Coal remains popular. New projects outside China could potentially exceed those under construction
in the country.
further extraction of coal, oil, and gas,
14 Source: Global Coal Plant Tracker, January 2017, endcoal.org 15
and discourage the transformation or
modification of existing infrastructure.

and, very importantly, smelting to make iron. processes, smelting, glass manufacture, and
Although solar PV and wind offer clean, others means that significant sectors of the
distributed electricity, benefiting households, industrial economy won’t trend rapidly to
electricity alone is currently insufficient for zero emissions. Even the power sector could
rapid urbanisation and industrialisation, still need support from conventional thermal
including the construction of cities and the generation in 2050.
manufacture of products such as automobiles
and appliances. Challenge: Some technologies
are “stalled”
Challenge: Some parts of the
energy system are “stubborn” Some promising technologies are currently
stalled, with hydrogen, perhaps, being the
Not all economies will reach net-zero notable example. Coming into this century it
emissions at the same time. The EU or North was seen as the future fuel in road transport, but
America may need to consider this as an hydrogen has now been eclipsed by battery
objective for the 2050s, in part to balance electric vehicle developments. More recently,
countries that arrive at this point much later in hydrogen has been proposed as a possible
the century. As a progressive country within solution for industrial processes requiring
a progressive region, Sweden has already intense heat, the metallurgical sector (where
set its eyes on 2045. But net-zero emissions coal is the staple), home heating, and air
in almost any industrial economy in the transport, where battery storage is severely
2050s is a tough ask. The apparent lack of limited owing to weight.
low-carbon solutions for aviation, shipping,
cement manufacture, some chemicals
 Another sector where progress has been As the 20th century arrived, an electric car
slower than originally anticipated is biofuels was the preferred choice on American roads,
technology, which has the potential to but by 1920 the world was in the middle of The photovoltaic (PV) effect was
provide essential, high-energy density, low- the Ford Model T combustion engine era. discovered in 1839, then eventually
carbon footprint fuels for certain transport Four billion cars later, the essential technology
deployed on satellites as solar PV
applications. Biofuel production could also be remains largely the same, yet with electric
developed as a route to negative emissions, mobility emerging again. from 1962. Four decades later, only
as seen in the US today, where CCS has two GW of capacity existed globally,
been attached to a bio-ethanol plant. Even electricity itself, which continues to but in the following fifteen years
transform our world, has not been a fast-paced
capacity increased two-hundred fold.
Challenge: Systems transformations energy technology. The first electricity grid
are unpredictable and take time appeared in New York in September 1882,
over 135 years ago. Although the technology
Limiting warming in line with the Paris has spread globally and appears ubiquitous,
Agreement means achieving net-zero it makes up less than 20% of final energy
emissions by 2070, just over 50 years use today; so, 80% of the energy we use
from now. In energy transition terms, a now isn’t electricity but fossil and bioenergy
decade is the blink of an eye, and a century hydrocarbons. Over the course of the last few
might typically see just a handful of major decades, electrification of final energy has
transformations, although not all follow moved relatively slowly, at around 2%-points
expected pathways. per decade – for example, it was about 17%
in 2005 and 19% in 2015.
16 By the 1960s a nuclear power revolution 17
seemed possible, but it had stalled completely
by the 1990s. Similarly, in the 1960s, solar
PV began to appear in highly specialist
applications, but it has taken 50 years to
pass 1% of global electricity production.

One reason systems transformations take time Challenge: Given the time frame of
is that the success of one transformation – 2070, there can be no slippage
from horses to the international combustion
engine, for example – can impede the Achieving net-zero emissions in just 50 years
progress of the next. A legacy of successful leaves no margin for interruption, stalled
development is the potential for lock-in of the technologies, delayed deployment, policy
resource on which the current system was indecision, or national back-tracking. Rather,
built. This potential for lock-in stems from the it requires a rapid acceleration in all aspects
resistance to stranding the original capital of an energy transition and particularly robust
investments and losing the jobs that have policy frameworks that target emissions.
been created. Success can be accomplished only through a
broad process that is embraced by societies,
led by governments, and lightly coordinated
by organisations including the UNFCCC, the
EU, ASEAN, and others.
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CHAPTER 3
FROM MOUNTAINS
AND OCEANS TO SKY
 3. FROM MOUNTAINS
AND OCEANS TO SKY

In the original New Lens Scenarios, we explored two possible ways the 21st Leadership to create a shared vision was an These developments introduce the notion of a
essential element of the Paris Agreement, as framework for resolution of global issues within
century could unfold, taking several pressing global trends and issues and using
demonstrated through bilateral agreements which various scenarios could be positioned.
them as “lenses” through which to view the world. between several heads of government in the That framework is not solely dependent on
two years before the final negotiation. But so, trends such as technological change, which
Mountains and Oceans provided a detailed progressive elements of both Mountains and too, was listening and responding to those features at an accelerated or even breakneck
analysis of current socio-political trends and Oceans. This collaborative approach has been most at risk from climate change, such as the pace in almost any 21st century story, but
their possible trajectories into the future, with seen in previous real-life incarnations, such as Alliance of Small Island States (AOSIS) with is born out of long-term self-interest and the
Mountains more government-led with a top- in the Montreal Protocol on ozone-depleting its deep concerns in relation to sea level rise. way society listens and reacts to the issues of
down approach and Oceans more bottom-up substances, but true long-term international Responding to these concerns, a “high ambition the day.
with a market-driven outcome. co-operation and a willingness to combine coalition” emerged in Paris and was responsible
national self-interest with the differing interests of for the incorporation of a stretch goal within the
The Sky scenario brings further to the surface other nations has generally eluded society as a Paris Agreement to limit warming to 1.5°C.
the emerging possibility of better multi-lateral lasting trend. Nevertheless, the Paris Agreement
collaboration to tackle climate and air-quality is built on such a model, albeit with a strong
issues. In this regard, it combines the most PRIMARY ENERGY BY SOURCE IN THE THREE SCENARIOS
element of peer review and challenge.
20 21

1400
SHELL SCENARIOS COMPARED – WORLD ENERGY-RELATED CO2 EMISSIONS

50 1200

1000
40
CO2 emissions, gigatonnes per year

EJ per year
800
30
600

20
400

10 200

0 0
2000 2025 2050 2075 2100
MTN OCN Sky MTN OCN Sky MTN OCN Sky MTN OCN Sky

-10 Oil Biofuels Natural gas Biomass

2000 2025 2050 2075 2100 Coal Nuclear Solar Wind
Other renewables MTN = Mountains OCN = Oceans
Sky Mountains Oceans

Source: Shell analysis Source: Shell analysis

 Strength of leadership
MOUNTAINS, OCEANS AND SKY:
Mountains Sky HOW DO THEY DIFFER IN APPROACH?

>2˚C <2˚C The modelling-and-development of the Sky scenario differs from the methodology
applied in earlier Shell scenario work, such as for Mountains and Oceans.
It also differs from the approach taken by most energy organisations that have
Mechanisms to share common interests developed 2°C scenarios.

Mountains and Oceans both started life develop as the outcome, both of which may
through a series of workshops that sought need to challenge plausibility to meet the limit
>>2˚C >2˚C to identify key societal trends that had the
potential to shape the landscape of the 21st
set on warming. This approach to scenario
building is known as “normative.”
century. From that work, narrative storylines
emerged that formed the basis of the two As noted in the introduction, Sky takes a
scenarios. These storylines were then tested by hybrid approach aimed at being helpful to
energy modelling to fully explore the impact those in society making decisions today.
of the trends in each scenario on the energy From 2018 to around 2030, there is clear
Oceans system. That modelling included feedback and recognition that the potential for dramatic
checks, such that a plausible and consistent short-term change in the energy system
scenario emerged where the narrative and is limited, given the installed base of
the energy numbers stood solidly together. capital across the economy and available
22 Sky requires both leadership and emerging technologies, even as aggressive new policies 23
The scenarios were open-ended and not goal-
coalitions from all sectors of society. The issue seeking, so outcomes such as warming of the are introduced. But the period is also assumed
of climate change is a global commons problem climate system emerged from the realpolitik of to include significant capacity-building and
requiring a solution that deals with the complexity the scenarios and the energy choices made technology cost reductions, following two
of multiple public and private interests. as a result. five-year nationally determined contribution
(NDC) cycles of the Paris Agreement, such
Oceans imagines a world where influence stretches In contrast, a narrow 2°C scenario establishes that after 2030, deployment can proceed at
far and wide, power is devolved, competing that level of warming as a given target from an accelerated pace to ensure a result well
interests are accommodated, and commerce is king. the outset, irrespective of the prevailing below 2°C.
Leadership is not strong, but an evolving recognition political and social conditions at any point in
of common interests is a feature of commerce. time. An energy pathway and storyline then
Economic potential is unleashed with technology
deployment and efficiency improvements driven
by the commercial engine.

By contrast, Mountains is a world with status

quo power locked in and held tightly by those
already influential. Stability is highly prized, and
the powerful align interests to unlock resources
steadily and cautiously, not solely dictated by
immediate market forces. Economic growth is
somewhat moderated, but centralised authority
offers the prospect of city transformation, a
revolution in modes of transport, and widespread
use of CCS – features that are important for limiting
overall emissions.
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CHAPTER 4
A SCENARIO FOR SUCCESS – SKY
 4. A SCENARIO FOR SUCCESS – SKY

Sky begins with the actions taken in the first decade of the Paris Agreement. usage remains relatively low in Sky because Success: Dealing with coal
Governments respond positively to the rapid cycle of assessment, review, and of unprecedented efficiency gains for energy
services – an approximate tripling in efficiency At COP23 in 2017, 25 countries and states
improvement of national contributions, as set up under the Paris Agreement. formed the Powering Past Coal Alliance,
is seen over the course of the century. As a
Prior to the 2023 stocktake, there is wide resubmission of national contributions, result, per capita primary energy demand
pledging to phase out existing traditional coal
with the notable change by China to a falling emissions pledge. In Sky, by the power in their jurisdictions. In the next few
converges near 100 GJ per year – far below
years, in Sky, a significant number of other
2028 stocktake, all contributions have been radically improved, with India now the numbers seen today in industrialised
countries join the Alliance with the result that
indicating an emissions plateau in the 2030s. economies but nevertheless a level that
coal for power generation diminishes in all parts
provides the broad range of energy services of the world. In Vietnam and even in India, new
During the 2020s in Sky, emissions reduction Success: Energy for all required for a better life. As a reference, coal for power construction ends before 2030.
progress is relatively slow while capacity a modern energy-efficient refrigerator will By the 2030s, additional solar and wind meet
builds. But beginning in 2030, the speed In Sky, the global population grows from consume just over one GJ per year. all incremental electricity demand.
of transformation accelerates rapidly as key 7.5 billion in 2017 to 10 billion by 2070,
sustainability challenges of the 21st century after which it stabilises. Energy demand also With the global population at 10 billion China’s push to accelerate the phase-out of
begin to be met. rises throughout the century, with a near late in the century and per capita energy coal in Sky means global peak coal demand
26 plateau from 2080. Importantly, per capita
27
use rising, the energy system in Sky is is now behind us, with rapid decline ahead,
approximately double its 2010 size. although coal remains important in some Asian
A BETTER LIFE FOR ALL

350
Primary energy consumption per capita,

300

250
GJ per year

200

150

100

50

0
1960 1980 2000 2020 2040 2060 2080 2100

North America Europe Developing Asia Pacific In Sky, absolute CO2 emissions peak
Africa Latin America World before 2040 in India, by then the most
Note: Today, a better life for all can be achieved for an average of 100 GJ per capita. populated country on earth.
Later in the century, efficiency gains mean that a better life can be achieved at still lower figures.
Source: Shell analysis, IEA (historical data)
 PEAK COAL USE IS BEHIND US IN SKY, WITH TOTAL CONSUMPTION FALLING RAPIDLY BATTERY COSTS FALL RAPIDLY IN SKY, IN PART DUE TO GOVERNMENT FUNDING
FROM THE EARLY 2030s ONWARDS OF NEW TECHNOLOGIES

180 400
Coal primary energy demand, EJ per year

160

Battery costs, US$ / kWh

140 300

120

100 200

80

60 100

40

20 0
2015 2020 2025 2030
0
2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Source: Shell analysis, Bloomberg New Energy Finance (historical data)

World China India

by city authorities forces older vehicles off the committed to expand their use of these
Source: Shell analysis, IEA (historical data) road, and in many cities electric vehicles mechanisms. During the same year, China
28 become the natural replacement due to their announced the launch of its nationwide 29
convenience and the wide availability of emissions trading system, starting with the
countries, and metallurgical coal continues as a Success: Governments step up the pace recharging points. Scrappage incentives speed power sector. And by the beginning of
critical input for smelting. By 2070, coal’s share up the replacement of out-dated, less efficient 2018, California, Quebec, and Ontario
of global primary energy falls to around 6%, In Sky, governments around the world equipment in homes and offices. But the were operating under linked emissions
down from 25% in 2020. implement legislative frameworks to most significant emissions-targeted action trading systems.
drive efficiency and rapidly reduce CO2 taken by governments around the world is the
Success: Transformation of stubborn emissions, both through forcing out older
adoption of effective implicit or explicit carbon-
and stalled technologies energy technologies and through promoting
pricing mechanisms.
competition to deploy new technologies as
In the first decade following the Paris they reach cost effectiveness. Since Paris, government-led carbon-pricing
Agreement, energy system CO2 emissions are
largely locked in by existing technologies, For example, at the national and sub-national approaches have been gaining traction.
capital stock, and societal resistance to level, governments speed up the energy transition At the 2017 OnePlanet Summit, several
change. But by 2030 in Sky, the system is by adapting power markets to new renewable countries and states within the Americas
opening, triggered in the 2020s by significant technologies and putting a meaningful
advances in energy technologies and scale price or constraint on carbon emissions from
of manufacture leading to price falls for conventional thermal generation. Legislation
consumers and businesses. This is facilitated in many jurisdictions forces grids towards In Sky, solar PV maintains strong average growth
by targeted government intervention in 100% renewable energy by the 2040s. rates of 20% per year, exceeding 6500 GW installed
research and development and the important capacity by 2035. This will cover an area of 100,000 km²,
early commercialisation phase, with major Appliances, commercial and residential
buildings, and personal transport are all
equivalent to an area the size of South Korea. From then
gains in battery storage technology, CCS,
targeted with aggressive efficiency or emission on to 2070, nearly 1000 GW will have to be added
and advanced biofuels.
standards. The creation of low-emission zones every year, when solar PV’s global footprint approaches
the area of Spain.
 GOVERNMENTS RAPIDLY ADOPT CARBON-PRICING MECHANISMS THROUGHOUT THE IN SKY, HYDROGEN EMERGES AS A MATERIAL ENERGY CARRIER AFTER 2040,
WORLD IN THE 2020s; COMPLETE HARMONISATION IS ACHIEVED BY 2070 PRIMARILY FOR INDUSTRY AND TRANSPORT

250 80

70
200
60
US$ / tonne CO2

150
50

EJ per year
100 40

30
50
20

0 10
2010 2020 2030 2040 2050 2060 2070
0
Highest national carbon price implemented 2020 2030 2040 2050 2060 2070 2080 2090 2100
Global mean carbon price
Lowest national carbon price implemented Heavy industry Light industry Road transport Air transport Ship transport
Source: Shell analysis
30 Note: By 2100, hydrogen supplies a quarter of all transport energy demand and over 10% of 31
industrial energy

In Sky, government-led carbon pricing Second, carbon pricing encourages emissions Source: Shell analysis
emerges as a suite of taxes, levies, and reduction across the whole economy, especially
market mechanisms. Surprisingly quickly, a through improving energy efficiency, thus
common understanding is reached between generating significant shifts in consumer and
governments as to the appropriate level of producer behaviour.
the cost of emissions.
Success: New energy systems emerge
By 2030 in Sky, government-led carbon
pricing is firmly established throughout the Onshore and offshore hydrogen electrolysis
OECD and China, with Russia and India systems also begin to emerge around the
forming the second wave of entrants to carbon world in Sky. Initially, they make use of the
markets. Global implementation of carbon growing off-peak surplus of electricity from
pricing by governments is complete by the renewable sources, but later become fully
late 2030s, with all systems then achieving integrated base-load systems. As a result,
a credible limit to deter emissions. after 2040, hydrogen emerges as a material
energy carrier, steadily growing to account for
In Sky, carbon pricing has two other 10% of global final energy consumption by Hydrogen grows as an energy
significant consequences. First it speeds the end of century. carrier from 2040 in Sky, with
up the adoption of CCS for large emitters
As oil and gas use falls over time in Sky, 800 million tonnes per year
while driving the deployment of net-negative
technologies like bioenergy with CCS. redundant facilities are repurposed for global capacity by 2070 – more
hydrogen gas storage and transport. Indeed, than double the current global
the growing LNG supply in the early decades LPG market.
 of the century has enabled hydrogen to gain form of compressed or liquefied bio-gas for peer pressure provides the push in response to emissions become negative – in other words,
a foothold and develop scale. An immense ship, rail, and road uses. In the latter stages the transparency framework embedded in the drawing down CO2 from the atmosphere.
build-out of electricity networks and hydrogen of the transition, hydrogen emerges as a new Paris Agreement. New technologies become This is achieved by combining the use of
pipelines ensures secure and affordable energy carrier, particularly for aviation. increasingly cost-competitive by themselves biomass for energy with CCS. These countries
electricity and hydrogen supply, which as mass deployment increases. The five-year are then able to offer negative emission
stimulates switching across sectors, particularly Success: Paris works ratchet mechanism works in the Sky scenario. transfers to those countries still in positive
in transport and industry. territory, thereby achieving the global balance
In Sky, the Paris Agreement succeeds, driven Not all countries have reached net-zero called for under the Paris Agreement.
Even though aviation and shipping continue by government implementation of targeted emissions by 2070. But beginning in 2020,
to rely on crude oil for the first decades of energy policy at every level in parallel with progressive countries follow Sweden’s earlier
Sky, fuel synthesised from biomass begins aggressive action across the global economy, legal commitment to reach net-zero emissions
to take more and more of the market share. including the energy sector. by 2045. Along with Brazil and other
Sky assumes that this is in the form of liquid big economies, most European countries
These and similar actions multiply rapidly.
biofuels, given its greatest flexibility, but if reach net-zero by 2060, with some seeing
At first, government leadership is responsible
the conversion to methane proves the more continued falls such that their economy-wide
for the speed of change, but increasingly,
successful, then this equally could be in the

IN A NET-ZERO EMISSIONS WORLD IN 2070, SOLAR, BIOENERGY, AND WIND DOMINATE WORLD TOTAL FINAL ENERGY CONSUMPTION BY SECTOR IN SKY
RENEWABLES SUPPLY WHILST OIL REMAINS THE LARGEST FOSSIL ENERGY SOURCE
Industry Transport – Ship
1% 1% 1%
Fossil Oil 3%
9%
Buildings Transport – Rail
32 5% 3%
3% 33
9%
With Carbon Capture and Storage Natural gas 32% Passenger Transport – Road Transport – Air
22% 9%
Coal Freight Transport – Road Non Energy Use
TODAY
TODAY Bioenergy
13%
27% Nuclear

Solar 30%
32%
Wind
11% 15%
Other
32% 27%
6%
0.5%
14% SKY 3% SKY
SCENARIO SCENARIO
2070 11% 2070
6%
13%
8%
10% 30%

6% 8%

Source: Shell analysis Source: Shell analysis

015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 208

CHAPTER 5
SECTOR TRANSFORMATIONS
 5. SECTOR TRANSFORMATIONS

In Sky, the route to net-zero emissions in 2070 involves change at every level of THE FUEL MIX FOR PASSENGER VEHICLES SHIFTS RAPIDLY IN SKY, WITH ELECTRICITY
the economy and energy system, from urban configuration to consumer demand DOMINATING BY 2070 AND LIQUID FUELS NEARLY HALVING FROM 2020 TO 2050
for energy to the breakthroughs in technology required to deliver viable and cost-
30

Fuel use, million barrels of oil equivalent per day

effective alternatives to fossil fuels. And in the world of Sky, transformation of the
energy system to produce fewer greenhouse gases is matched by transformations 25
in other sectors that produce the remaining one-third of greenhouse gas emissions.
20
One of the most important energy system energy economy, had already adopted an
15
trends in Sky is electrification – the increasing Electric Vehicle Initiative as one of its early
replacement of fossil fuels (such as natural actions, with the target of 20 million electric
10
gas for cooking and gasoline for mobility) vehicles deployed globally by 2020 and
by electricity. 30% new vehicle sales by 2030. And the UK
5
had pledged to phase out the sale of internal
A successful transport revolution combustion engine passenger cars by 2040.
36 0 37
By 2020, the foundation has been created 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
In Sky, this transformation occurs more rapidly
for a revolutionary transformation of the than many expect; as early as 2030, more Liquid hydrocarbon fuels Gaseous hydrocarbon fuels
transport system. The global Clean Energy than half of global car sales are electric,
Ministerial, which emerged in 2009 after Electricity Hydrogen
extending to all passenger cars by 2050.
the Copenhagen Climate Conference to One reason is that in some prosperous Source: Shell analysis
encourage the transition to a global clean large cities, workers enjoy the freedom and

convenience that the fleets of autonomous In this way, electric vehicle penetration
electric vehicles provide. Another reason for accelerates on the back of a new
the rapid increase of electric vehicles has manufacturing approach and customer value
to do with the exciting new options being proposition that offers complete customisation,
offered. For example, in Sky, a standardised a welcome reward for the loss of differential
In Sky, passenger electric chassis design emerges in combination engine performance. The change is as
with battery or fuel-cell (FCEV) architecture, profound as the arrival of the assembly line.
vehicles reach cost parity
being shipped in almost flatpack form to
with combustion engine cars local design companies for bespoke body Across all forms of transport, biofuels play
by 2025. By 2035, 100% of fabrication using 3D printing techniques. a critical role in the energy transition in
new car sales are electric in And a specialised CarOS (Operating System) Sky. With continued reliance on liquid fuels
evolves, including battery management and as the high energy density fuel of choice,
the EU, US, and China, with
autonomous operation, supplied as a single but set against the need to reduce CO2
other countries and regions emissions, biofuel use expands rapidly.
universal interface box.
close behind. While first generation fuels such as sugar
cane ethanol continue to mid-century before
 Electrification of the building stock proceeds ■■ Coal remains important in the metallurgical
ADVANCED BIOFUELS GROW RAPIDLY IN SKY, MEETING AN ONGOING NEED FOR
LIQUID HYDROCARBON FUEL. rapidly, with local use of natural gas declining sector and some other processes right
progressively from 2030. By 2070 in North through the century, but with government-
200
America and much of Europe, natural gas is no implemented carbon prices rising, CCS
longer used for residential heating and cooking. emerges as the solution.

Industrial transformation Industry also benefits from an increased focus

150
on the circular economy, which sees large-
The shift in industry required for net-zero scale recycling expand throughout the century,
EJ per year

emissions follows a more incremental to the extent that some resource extraction
100 path, largely driven by the progressive declines as a result.
implementation of government carbon-pricing
systems and the ratcheting up of the resultant An electric world
50 price that occurs as governments respond to
the Paris Agreement. The transformation is As electricity makes its way rapidly into
profound and follows three distinct routes: transportation, home heating and cooking,
0 and industrial processes, its role in the energy
2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 ■■ Efficiency improves continuously, with
system grows. By the 2070s, electricity
most industrial processes approaching
Oil Natural gas-to-liquids (GTL) Coal-to-liquids (CTL) Biofuels exceeds 50% of end-use energy consumption,
thermodynamic and mechanical efficiency
Note: By 2100, biofuels production has reached some 30 million barrels of oil equivalent per day.
compared with less than 20% in the 2010s.
limits by the 2050s.
Source: Shell analysis ■■ Some processes shift towards electricity, With renewables penetration increasing,
particularly for light industry, where issues associated with renewable intermittency
38 diminishing, the impetus comes from new in the sector. And even though road freight electricity use doubles from 2020 to 2040. and grid infrastructure receive policy attention. 39
synthesis pathways that produce drop-in holds on to diesel into the 2050s, because Hydrogen also emerges as an important Utility-scale and distributed electricity both
equivalent fuels for aviation, road freight, and of the need for a high-energy-density fuel, this fuel for light industry by 2050 as natural increasingly compete head-to-head with
shipping. These fuels can be derived from a sector also experiences its own transformation, gas use declines. But a similar change conventional thermal generation, leading
wider range of bio-feedstocks, reducing the split along biodiesel, hydrogen, and for heavy industry doesn’t emerge until electricity prices in some markets to fall below
dependency on food crops. electrification lines. after 2050, with hydrogen, biomass, and the variable cost of less efficient coal and gas
electricity substituting for natural gas and plants, thus hastening their decommissioning.
In Sky, the passenger vehicle transformation is The built environment some coal use.
largely complete by 2070. Liquid hydrocarbon
fuel consumption almost halves between Changes in the built environment, covering
2020 and 2050 and falls by 90% by 2070 both homes and commercial properties,
evolve over decades, but the foundations are
established in the 2020s. During this period,
governments implement radical changes in
building codes, set high efficiency standards
for appliances, establish new infrastructure In Sky, nuclear power
for district and regional heating needs, and grows steadily, with
establish practices that encourage attractive 1,400 GW of capacity
US domestic refrigerator efficiency compact urban development. by 2070, up from 450
has tripled since 1970. To offer a The efficiency drive is so effective that final GW in 2020.
better life for all but also manage energy demand for residential services,
energy demand, Sky matches these which include heating, cooking, lighting,
successes across the economy. and appliance use, remains steady at
around 90 EJ for all the century, even as
most of the growing global population gain
access to these amenities.
 CURRENT ELECTRIFICATION TRENDS ARE NOT SUFFICIENT FOR SKY

60

Electricity as a % of final energy use

50
The transition in Sky is at
least triple the historic rate
40

30
Historic electrification trend
is ~2% points per decade
20

10

0
1960 1980 2000 2020 2040 2060 2080 2100

Source: Shell analysis, IEA (historical data)

40 41

THE ELECTRICITY MIX SHIFTS HEAVILY TO SOLAR THROUGH THE CENTURY

ELECTRICITY IN THE 21st CENTURY Oil

Today, global electricity demand stands 2015 to 2016 against total added electricity
Natural gas
at some 22,000 terrawatt hours (TWh) generation of some 600 TWh. So, new
per year. In Sky it rises to around100,000 solar and wind are not yet close to meeting 2025 2050 Coal
TWh per year during the second half of additional generation demand. Although both
Nuclear
the century, or the addition of about 1,400 are rising quickly, thermal power stations will
TWh of generation per year from now on. continue to be needed to at least mid-century. Biofuels
As a reference, when complete, the 3.3 This also means that emissions from electricity
GW Hinkley Point nuclear power station generation globally will only fall in the medium Biomass
being constructed in the UK will add about term to the extent that natural gas and nuclear Solar
29 TWh, so this pace of development is can displace coal.
equivalent to some 50 giant power stations Wind
globally each year, or one additional such
Other renewables
facility per week. Global generation from 2075 2100
wind and solar was around 1,300 TWh in
2016, with about 200 TWh added from

Note: The diameter of the pie chart represents the total electricity demand.
Source: Shell analysis
 In Sky, electricity reliability issues are largely By 2070, oil production remains at some
IN SKY, BY MID-CENTURY FOSSIL ENERGY FINALLY RELINQUISHES ITS MAJORITY SHARE
managed through a combination of improved 50-60 million barrels per day due to
OF THE GLOBAL ENERGY SYSTEM
market design (for example, capacity the broad swathe of services that it still
markets), grid integration (for example, cross- supplies. Non-road transport continues to
100%
border integration in Europe), demand-side make significant use of liquid hydrocarbon
90% management (for example, smart grids), and fuels, with overall growth through to 2070.
80% deployment of cost-effective heat, battery, and Biofuels supplement the liquid fuel mix,
hydrogen storage. Falling capital costs ensure with hydrogen playing an increasing role
Share of world primary energy

70% that the renewables build-out is affordable, after 2050.

60% being well within historical spending on the
new energy system as a share of global GDP. Natural gas, both as pipeline gas and LNG,
50% plays an important early role in supplanting
40% By the 2070s, the power generation coal in power generation and backing up
sector has progressed through two radical renewable energy intermittency as wind and
30% transformations. The first is one of scale, with solar grow in the power sector. But as solar
20% electricity approaching a five-fold increase PV expands rapidly, as battery costs fall, and
over 2017 levels. The composition of sources as the high cost of carbon emissions bites,
10% even natural gas succumbs to the transition.
has also changed, with fossil fuels effectively
0% absent from the sector and solar meeting It is the last fossil fuel to peak, with demand
2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 over half of global electricity needs in 2070 falling rapidly after 2040. By 2055, natural
Oil Natural gas Coal
and still increasing. A new addition to the gas use for power generation is back to 2015
sector is generation from biomass combustion, levels globally.
Source: Shell analysis
which is linked with CCS to offer an important
42 carbon sink. By the middle of the century the energy mix 43
is starting to look very different, with solar
IN SKY, PEAK COAL DEMAND IS ALREADY BEHIND US, PEAK OIL DEMAND FOLLOWS IN A new energy system emerging as the dominant primary energy
THE 2020s, AND AFTER A PLATEAU, GAS DEMAND FALLS RAPIDLY FROM 2040 supply source by around 2055.
In Sky, the first clear signs of the transition
emerge in the 2020s, with oil demand Energy system CO2 emissions peak in the
250 stagnating, coal declining, natural gas mid-2020s at around 35 gigatonnes (Gt),
growing as it replaces coal, and solar closing after which a continuous decline sets in.
in on nuclear as the largest non-fossil part of
200
the energy system.

150
EJ per year

100

50
Global natural gas demand
0 reaches a plateau by 2028
2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 in Sky at 4,600 billion
cubic metres per year
Oil Natural gas Coal
(bcma) – up from 3,700
Source: Shell analysis bcma in 2017.
 Other greenhouse gases and biosphere, which, in turn, has added to Although the emphasis in Sky has been on energy system CO2 emissions, a view on all aspects of
non-energy sectors atmospheric CO2. greenhouse gas emissions is needed to complete the scenario and understand the potential rise in
surface temperature. That view has been developed based on full implementation of all the steps
Sky arrives at net-zero CO2 emissions for the In the modern era, all these activities have in the table.
global energy system by 2070, although with accelerated, and new long-lived trace gases
a varied distribution among different sectors have appeared, some with extraordinary GAS SECTOR ACTION REQUIRED BY SKY
and countries. That covers all the carbon warming potentials. Sulphur hexafluoride, Carbon Cement ■■ Progressive substitution away from cement in buildings
contained within the coal, oil, and gas used common in gas-insulated transformers, is one dioxide ■■ Some substitution away from limestone as a feedstock,
for energy, but excludes feedstock for non- example, with a warming potential 24,000
e.g., using fly-ash
energy products, such as plastics. times that of CO2.
■■ Using carbon capture and storage (CCS)
But numerous other human activities have In the Sky scenario, significant changes Industrial ■■ Using CCS
changed the trace gas composition are made in all the greenhouse-gas (process emissions)
of the atmosphere, which have also producing sectors. While all the items in the
contributed to warming the climate system. accompanying table represent best practice Agriculture ■■ Eliminating deforestation for land gain
Cement manufacture is one example, where currently in some locations, the Sky pathway ■■ Implementing soil carbon programmes,
the calcination of limestone releases CO2. dictates universal uptake by about 2030, e.g., no-till farming, land-use rotation
but with some recognised slippage in the Urbanisation and ■■ Creating green cities through extensive tree planting
The agricultural system has added to the least developed economies. For short-lived development ■■ Maintaining green belts within and around cities
methane in the atmosphere due primarily to gases such as methane, the requirement is
bovine livestock and rice growing. Land-use significantly reduced emissions, rather than ■■ Avoiding city spread through higher density living
change over the course of several centuries, net-zero, as these gases break down in the ■■ Addressing traditional biomass usage through modern
such as deforestation and agricultural atmosphere over a few years. access to energy programmes
44 degradation of soil, has also lowered the 45
carbon-carrying capacity of the land-based Methane Coal mining ■■ Reducing coal consumption
■■ Implementing best practice for methane drainage
and use in coal mines (e.g., UNECE Guidance)
■■ Managing abandoned mines
NON-ENERGY SYSTEM GREENHOUSE GASES ALSO DECLINE SHARPLY IN SKY
Oil and gas ■■ Reducing oil and gas consumption
industry ■■ Oil and gas industry leaders implementing best-practice
25 from the 2020s, and all world production meeting
CO2 equivalent emissions, Gt per year

best-practice by 2050
20 Cattle farming ■■ Offering alternative products to consumers
■■ Changing cattle diets to minimise methane
15
Rice growing ■■ Reducing forced flooding in rice paddies
Urbanisation and ■■ Capturing methane from landfill
10
development
Nitrous Agriculture ■■ Implementing nitrogen fertiliser management, i.e.,
5
oxide application rate, formulation (fertiliser type), timing
of application, placement
0
Industrial ■■ Implementing catalytic decomposition and thermal
2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
processes destruction techniques
Carbon dioxide (land-use change) Carbon dioxide (process emissions, e.g., cement) Fluorinated Various ■■ Progressive substitution away from PFC, HFC, and SF6
Methane Nitrous oxide Perflurocarbons Hydroflurocarbons Sulphur hexafluoride gases (e.g., IT industry, ■■ Using best practice management
refrigeration,
■■ Introducing recovery programmes for retired equipment
Source: Shell analysis, MIT transformers)
(e.g., refrigerators, transformers)
 THE SCALE OF GLOBAL CHANGE IN SKY IS UNPRECEDENTED
40
First few countries All regions meet Last countries
to reach net-zero net-zero emissions to reach net-zero
emissions emissions

2020
30 2030
Global electricity consumption
2010 reaches 35,000 TWh/year,
having risen close to 50%
over the past decade Solar PV passes Majority of trucks powered Global energy Hydrogen
2040
Energy systems CO2 emissions, Gt per year

oil as the largest by electricity or hydrogen systems at 1000 EJ per at 10% of

energy source year (double 2010) final energy
Paris
Agreement
ratified
20
46 Biofuels overtake 48
Global liquid First intercontinental oil as the biggest
fuel demand for hydrogen flight component of
passenger vehicles Accelerated investment in 2050 liquid fuels
goes into decline low-carbon energy quadruples
solar PV and wind capacity to
5,000 GW total

10
Governments reach a
common understanding
as to the appropriate 850,000
level of the cost of 10 MW
emissions
India leads the 2060 turbines
world in solar PV

0
Global cumulative India and China each CO2 storage reaches
storage of CO2 reach one Gt CO2 12 Gt per year
passes the one Gt per year stored
milestone
2070

Action plans developed in

-10
C40 Cities targeting net-zero Net deforestation
comes to an end 2080 2090
emissions by 2050
2100
 A NEW ENERGY SYSTEM
Over the past 200 years, our contact with energy has changed radically. For most of the global by town gas, kerosene lamps, and for a rapidly increasing number of people, electricity.
population in the early years of the 19th century, energy needs were met individually by collecting While there remain a disturbing number of people with little to no energy access today, much
and burning wood, although coal deliveries in towns and cities were just commencing. Candles for of the global population make regular use of petroleum products, natural gas, and electricity.
domestic lighting were either made at home or purchased from a local chandler, who used various But what could that look like in the latter part of this century as we reach for net-zero emissions?
animal fats. One hundred years later, but primarily in wealthier countries, lighting was supplied In Sky, an electricity-based energy system supplants the largely fossil fuel-based system of today.

TODAY – AN ENERGY SYSTEM BASED ON FOSSIL FUELS SKY IN 2070 – AN ELECTRICITY-BASED ENERGY SYSTEM

49 51

Oil
Gas
Coal
Nuclear
Biomass
Solar
Wind CO2
Electricity
CO2 CCS
Hydrogen CO2
Fossil fuel power
Heavy industry
Manufactured products
015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 208

CHAPTER 6
ACHIEVING THE BALANCE
 6. ACHIEVING THE BALANCE

Remaining emissions

In Sky, fossil fuel use declines sharply after 2030 – but it cannot be eliminated
in all sectors to the extent that warming is limited to well below 2°C. Even with a
broad suite of technologies available and a 50-year timeframe for deployment,
not all technologies and energy services can be swapped out for non-emitting
alternatives at the necessary pace. Indeed, in so-called “hard-to-abate” sectors,
practical alternatives have yet to be developed, and innovation rather than
deployment is still the current order of the day.
REMOVING CARBON THROUGH USE
Carbon capture and use (CCU) operates addressed in Sky. Synthetic fuels are not
very differently from CCS (permanent a sink in themselves, since once they are
geological storage). There are examples of made and used, the CO2 is returned to
capture and use in practice today, such as the atmosphere.
HOW THE ENERGY SYSTEM CO2 EMISSIONS IN SKY TRANSFORM TO NET-ZERO BY 2070 the conversion of CO2 to certain chemicals ■■ CCU could be applied to the manufacture
54 (for example, urea, the basis for fertilisers)
55
of certain goods – for example, building
14 and the production of plastics such as
12.6 materials or plastics. But to act as a
12
polycarbonates. These processes all require mitigation mechanism akin to CCS, CCU
CO2 as a feedstock, but are not necessarily must lead to more-or-less permanent
10 designed to store it permanently. If the carbon storage. The total stock of the product must
Emissions, gigatonnes per year

is returned to the atmosphere, such as through be maintained for a very long time (at least
8 the degradation or incineration of the product
6.8 a century or more) for CCU to approach
6.1 that is made, then the net impact of the
6 CCS equivalence. In Sky, fossil fuels and
5.1 process may be zero in terms of atmospheric bio-feedstocks are used to make such
4 3.4 CO2 levels. products, acting as an effective carbon sink.
3.0 2.7
2 1.4 1.8 In a future energy system, there are two ways This situation means that assigning a mitigation
0.3 0.3 in which CCU could become effective: value to CCU plays a critical role. Doing so
0
0
-0.4 ■■ CCU might be focused on manufacturing for CCS is a relatively simple task – each
-2 -1.1 synthetic hydrocarbon fuels, which could tonne stored can be counted as permanent
displace the need for fossil hydrocarbons. mitigation and will contribute to the overall
-4 -3.4 However, the synthetic fuels industry would task of reaching net-zero emissions. The same
-4.3
need substantial technological innovation cannot be said for CCU. While carbon can
-6
and then would need to scale very be embedded in urea or polycarbonates,
Industry Buildings Road Non-road Non-energy Electricity Biomass Other
transport transport use and biofuels significantly before it could have a material there is no established protocol to define this
production impact, so this route is unlikely to be a as permanent mitigation. Work remains to be
2017 2070 significant contributor over the timescale done in this field.
Note: “Other” represents other energy-sector activities, such as the transport and refining of fossil energy,
centralised heat generation, and in the future, hydrogen production.
Source: Shell analysis
 Although every facet of the current energy 1. Conventional CCS applied in large point- Nature-based solutions: The design, implementation, and use of
system has either changed or is in transition source emitting facilities such as cement Reforestation, restoration, these mechanisms can trigger private sector
in 2070, remaining fossil fuel use leads to plants or iron ore smelters. The CO2 and avoided deforestation involvement, which in turn could accelerate
emissions of some 15 Gt CO2 per year, is geologically stored, typically two the necessary activities.
reducing to 11 Gt by 2100. This is about one to three kilometres below the surface. Land-use change throughout the world
third of today. For this reason, emission sinks CCS technology is applied at scale in over the last century (but extending back Early action is important in this area given
(i.e., removing CO2 from the atmosphere) several facilities around the world today. hundreds of years) has contributed to the rise the decadal process of restoration and
feature in most long-term, low-emission energy in atmospheric CO2 and continues to do so. reforestation. Therefore, in Sky, these nature-
2. Conventional CCS applied in power The Global Carbon Project has estimated that focused practices play an important role
scenarios, including Sky.
plants operating with a sustainably land-use changes have resulted in five Gt CO2 alongside the transformation of energy use
The Paris Agreement recognises this reality produced biomass feedstock. In totality, per year being emitted for each of the last across the economy. Indeed, in the coming
when it calls for a balance between this mechanism results in net removal of 20 years. If these changes can be stopped, decades, some of the initial impetus for these
emissions by sources and removals by sinks of CO2 from the atmosphere. many degraded ecosystems can be restored. developments can come through industry
greenhouse gases. Importantly, the Agreement 3. The production of various products, such The Nature Conservancy has estimated that support and utilisation of certified activities
recognises that even after significant mitigation as plastics, from fossil fuels or a biomass around 500 Gt CO2 in total can be drawn and traded certificates to compensate for
efforts through substitution, greenhouse gas feedstock. These materials are then used down from the atmosphere at costs today hard-to-mitigate energy-related emissions.
emissions will continue, meaning that sinks will by society and can deliver effective below US$100/tonne CO2 and sustainably CORSIA (Carbon Offsetting and Reduction
be essential at some level. storage of carbon rather than releasing stored by improved soils and extended Scheme for International Aviation), the system
it to the atmosphere as CO2. When the forest cover. agreed by the aviation industry in 2016 to
Balancing mechanisms in the counter the rising emissions in that sector, is
carbon is derived from biomass, this
energy system The fourth mechanism introduced into the a good example – nature-based solutions
mechanism also results in net removal of
scenario is one that is widely understood and feature within their proposed offset categories.
Within the energy sector, Sky utilises three CO2 from the atmosphere.
much used today – reforestation, restoration of Over time, however, in Sky, systems such as
56 mechanisms that either prevent the release of
The issue of greenhouse gas emissions degraded land, and avoided deforestation. CORSIA shift towards one of the three carbon- 57
CO2 or remove CO2 from the atmosphere. Without tackling these areas alongside the
extends beyond energy use, and there is capture categories above for offset purposes.
In total, the mechanisms handle one trillion energy system, overall net-zero emissions
also interplay between the energy system
tonnes of CO2 over the course of the century. cannot be achieved. Sky assumes significant By 2070 the goal of net-zero emissions is
and natural systems, for example, when using
bioenergy. Sky recognises this and the scope land-related actions to bring the land-use and achieved within the energy system, and the
that exists for actions in one system to help the agricultural systems back into balance and interplay between energy and natural systems
other and vice versa. ensure that by 2070 net deforestation has continues. As illustrated, the energy system
reached zero. balance is reached through combining CO2
use and geological CO2 storage with biomass
Further, very large-scale reforestation could feedstocks to balance remaining fossil fuel
accompany this, offering the opportunity emissions still going to the atmosphere.
to remove additional carbon from the
atmosphere and thereby approaching the Through a broader swathe of actions across
stretch goal of the Paris Agreement – to all sectors, including steps taken to bring net
In Sky, changes in land-use limit the rise of the global average surface deforestation to zero and to begin the process
and an end to deforestation temperature to just 1.5°C. of land restoration, the overall Paris Agreement
goal of balancing remaining anthropogenic
are critical to the overall The scale of change required in the land-use greenhouse gas emissions with sinks in the
outcome. But large-scale sector will require action by governments, second half of the century is achieved.
reforestation can be a game both domestically and through international
changer, with the potential cooperative mechanisms, such as those
to push even further to included within the Paris Agreement.
the ambitious 1.5°C goal of
the Paris Agreement.
 NATURE-BASED SOLUTIONS: EXTENDING AMBITION
THROUGH RESTORATION OF NATURE
Our base case for Sky assumes that CO2 Sky of 10 Gt CO2 per year is feasible through
emissions from land-use change fall to zero by reforestation, although the scale of the task is
2070, in line with the energy system reaching very large. Some 700 million hectares of land
net-zero emissions at the same time. But the would be required over the century, an area
restoration of ecosystems, including large-scale approaching that of Brazil.
reforestation, can play a critical additional
role, producing a net draw-down of CO2 We have run two sensitivities on the Sky
from the atmosphere and therefore offering a scenario, in consultation with The Nature
pathway to the ambitious 1.5°C outcome. Conservancy (TNC) and MIT. The first
sensitivity involves accelerated avoidance of
If social barriers can be overcome, such as deforestation and the introduction of a similar
the impact on agricultural communities, these scale of restoration. We have called this
nature-based solutions (NBS) can help to “Sky + Restoration NBS”. This adds five Gt
limit peak warming because scale-up can CO2 per year drawdown to Sky. The second
be considerably faster than transformation of sensitivity, “Sky + Extra NBS”, is required to
energy technologies. limit warming to 1.5°C and assumes many
cost and social barriers can be overcome
Research from institutions such as MIT, the more successfully so that an additional
Ecosytems Center at Woods Hole, and drawdown rate of 10 Gt CO2 per year
58 The Nature Conservancy has indicated (i.e., 15 Gt per year in total) can be reached. 59
that an additional drawdown beyond

EXTENDING AMBITION IN SKY

2.0
°C above 1861-1880

1.5

1.0

0.5
2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

History Sky
Sky without NBS Sky + Restoration NBS Sky + Extra NBS
Source: Shell analysis, MIT
 Fossil fuels Geological storage of CO2

THE EVOLVING ENERGY SYSTEM CO2 BALANCE SHEET IN SKY

Bioenergy with CCS Carbon in products Growing biomass
Fossil fuel production CCS Biofuel production Bioenergy with CCS Carbon in products Growing biomass

2020
2020 Bioenergy production and use
Bioenergy production and use
6.7 Gt
2100 Emissions from biofuel use
6.7 Gt 16.1 Gt
Photosynthesis
Net emissions Photosynthesis Net-negative
Net emissions
35.2 Gt Photosynthesis emissions 6.4 Gt 26.1 Gt
35.2 Gt 6.7 Gt
(all emissions 6.7 Gt 3.7 Gt
are Gt of CO2) 1.8 Gt
Materials 6.5 Gt
Materials
2.6 Gt
2.6 Gt

2.6 Gt 8.3 Gt

37.8 Gt 13.7 Gt
37.8 Gt
Fossil fuels Fossil fuels Geological storage of CO2
Fossil fuels
Today, most carbon in fossil energy production is burned and emitted to the atmosphere, In Sky, at 2100, the bioenergy system has reached its resource base limit and is twice the
while the CO2 absorbed by wood and other plants used for energy is also returned to size of the fossil energy system in CO2 terms. The active management of CO2 means that
60 61
the atmosphere. Fossil fuel production Conventional CCS Biofuel production
the total energy system is providing a drawdown of CO2 from the atmosphere.
Fossil fuel production Conventional CCS Biofuel production

2050
2050 Emissions from biofuel use
Emissions from biofuel use
11.8 Gt 2070 Emissions from biofuel use
Net emissions 11.8 Gt 15.1 Gt
Net emissions
18.4 Gt Photosynthesis Photosynthesis
18.4 Gt Photosynthesis
1.8 Gt 13.6 Gt 21.6 Gt
1.8 Gt 13.6 Gt 1.8Gt
6.5 Gt
0.1 Gt
5.0 Gt 0.1 Gt 0.4 Gt
5.0 Gt 5.0Gt
6.5 Gt

3.3 Gt 1.7 Gt
3.3 Gt 1.7 Gt 3.4 Gt 6.1 Gt

28.6 Gt 16.5 Gt
28.6 Gt Geological storage of CO2
Geological storage of CO2 Fossil fuels Geological storage of CO2
Fossil fuels
Fossil fuels Note: The numbers do not add up exactly in 2070 owing to rounding up of data.

In Sky, in 2050, the storage of CO2 is rapidly scaling up. There are equal contributions from In Sky, in 2070, the energy system has achieved net-zero emissions. Fossil energy production is
the embedded carbon in materials production and CCS. Fossil energy CCS leads the way, less than half today’s level. Alongside
Bioenergy with CCS direct CCS and
Carbon in the use of carbon Growing
products for materials,
biomassthe remaining
but bioenergy CCS (BECCS) is close behind. fossil energy emissions are fully offset by captured CO2 from an expanded bioenergy system.
015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 208

CHAPTER 7
THE PARIS AMBITION REALISED
 7. THE PARIS AMBITION REALISED

In Sky, beyond 2070, carbon capture levels off at around 12 Gt per year,
but fossil fuel use continues to decline. This takes the overall energy system into
negative emission territory, which draws down on accumulated carbon within the
biosphere. As a result, warming peaks during the 2060s and declines through
the balance of the century.

By 2100, warming of the climate system Of course, the big challenge is whether there
is held to around 1.75°C according to is the political will and, underlying this, the
independent expert analysis of the energy- societal will to put in place and maintain the
system emissions trajectory described by frameworks that are necessary to address
Sky. In addition, a meaningful legacy this awe-inspiring task – re-wiring the whole
carbon removal industry offers the 22nd- global economy in just the next 50 years.
century society the opportunity for further
climate restoration. The Sky scenario outlines what we believe
64 to be a technologically, industrially, and 65
In addition to the actions covering the energy economically possible route forward.
system outlined in Sky, significant reforestation This should give us all some hope – and
action and restoration of natural ecosystems, perhaps some inspiration. In more practical
such as wetlands, offer the possibility of terms, perhaps this analysis can provide
limiting warming to 1.5°C, the ultimate useful pointers to areas where focused
ambition of the Paris Agreement. attention could produce the best results.
Acknowledgements

We wish to thank the many people consulted externally in the development of Sky.

Particular thanks go to The Nature Conservancy.

We would like to recognise the Massachusetts Institute of Technology (MIT) Joint Program
on the Science and Policy of Global Change for assessing the climate impacts of Sky and
contrasting it with Mountains and Oceans.

The future depends on

For the Sky scenario, MIT modelled the impact using their Integrated Global System
Modelling (IGSM) framework. Shell has donated US$100,000 to the Joint Program in
recognition of the effort. MIT will publish a Joint Programme Report on the work it has done.

what we do in the present. This work is partially based on historical data from the International Energy Agency’s (IEA)
World Extended Energy Balances © OECD/IEA 2017. The work has been prepared by
Shell International B.V. and does not necessarily reflect the views of the IEA.
Mahatma Gandhi
Please visit www.shell.com/skyscenario for additional data tables and further
background information.
 Sky, GLOSSARY
Energy Units

extending the bcma

GJ
billion cubic metre per year
gigajoule (109 joule). The joule, J, is a unit of energy; 4.2 J are needed

Mountains and Oceans

to heat one gram of water by 1°C.
EJ exajoule (1018 joule)
kWh kilowatt-hour (There are 3600 J per Wh). The unit Wh is commonly used for

scenarios TWh
electricity generation, and J for energy more broadly.
terawatt-hour (1012 watt-hour, or one trillion watt-hours). A one GW power
station operating for 300 days per year will produce about seven TWh.
GW gigawatt (109 watt, one billion watts). A one GW power station is the typical
size for a modern coal, gas, or nuclear installation.
Gt gigatonne (109 tonne)

Other Terms
BECCS bioenergy with carbon capture and storage
66 CCS carbon capture and storage 67
CCU carbon capture and use
DACCS direct air capture with carbon capture and storage
EV electric vehicle, defined as either a battery electric vehicle or a plug-in hybrid
electric vehicle
FCEV fuel-cell electric vehicle
LPG liquefied petroleum gas
NBS nature-based solutions; the use of avoided deforestation, reforestation, and
other restoration of natural ecosystems
NDC nationally determined contribution; the actions countries take to reduce
greenhouse gas emissions under the Paris Agreement
NZE net-zero emissions, i.e., a balance between anthropogenic emissions by sources
and removals by sinks of greenhouse gases
primary energy the supply of energy sources including oil, natural gas, coal, bioenergy, nuclear
energy, and renewables. Primary energy is energy drawn from nature, in its
first usable form.
final energy the demand for energy carriers, such as electricity or liquid fuels, by final
consumers, such as industry, households and transport, for all their energy uses.
When natural gas is used for home heating, it is counted as final energy; when it
is used to generate electricity in a power station it is counted as primary energy.
solar PV solar photovoltaic panels used for electricity generation
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