It will be necessary for the world to reach net-zero carbon dioxide (CO2) emissions if there is to be a successful shift to a low-carbon energy system and to keep global temperatures well below 2°C. This will require a combination of the best of renewables, gas and oil to meet all types of energy needs and create low-carbon economies and communities. It also requires the large-scale implementation of technologies, such as carbon capture and storage. A number of measures can be applied to reach net-zero emissions, including:
- regulatory measures such as government implemented carbon-pricing mechanisms to motivate investment in emissions reduction and energy efficiency;
- energy-efficiency to encourage smarter practices and stricter regulations for compact urban development, infrastructure and energy-efficient buildings, as well as investment in low-emission transport;
- ways to reduce or offset CO2 emissions, such as reforestation and carbon capture and storage (CCS);
- removal of consumption subsidies for fossil fuels to create a level playing field for all energy providers, and
- financial incentives that encourage the development, demonstration and deployment of new low-carbon technologies.
We are currently working with a number of governments around the world to develop an appropriate energy mix that can help these countries to move towards a low-carbon energy system. (See box).
China’s future energy mix
Since 2011, Shell has worked closely with the Chinese government’s Development Research Centre (DRC) of the State Council on China’s medium- to long-term energy development strategy. The ongoing collaboration has identified the key energy challenges facing the country and suggested detailed, practical solutions.
The recently concluded second phase of the collaboration examined the important role natural gas can play in helping China diversify its energy mix, boost economic development, improve air quality, and help meet China’s Intended Nationally Determined Contribution for reducing carbon emissions. Displacement of coal use was specifically identified as one of the key areas for natural gas development.
The research draws on international experience from other countries and regions that have increased the share of gas in their energy mix and offers insights into how China could replicate this. The Shell-DRC joint report “Research on China’s Gas Development Strategy” recommended the liberalisation of China’s natural gas value chain as a way to support and enable greater natural gas consumption.
This would require opening up China’s gas market to new entrants and increasing domestic natural gas supplies; enhancing the construction of pipeline networks and gas storage facilities, accelerating the reform of regulatory systems and institutions, and the development of market-based pricing mechanisms. The report recommendations have informed the development of China’s 13th Five Year Plan for 2016–2020.