April 12 (UPI) — A transition to a cleaner economy is underway as evidenced by a rate of decline in global oil demand, but it’s a long journey, Royal Dutch Shell said Thursday.
The Dutch supermajor has committed to reducing its carbon footprint in half by 2050 and said it would invest about $2 billion per year on alternative energy solutions until the end of the decade. CEO Ben van Beurden said that Shell would play its part in meeting global energy demand with cleaner options.
The company last year signed on to a transparency measure on climate steered by former New York Mayor Michael Bloomberg, who steered efforts through the multilateral Task Force on Climate-related Financial Disclosures. The task force estimated the transition to a low-carbon economy could require as much as $1 trillion in net investments per year.
In an energy transition review published Thursday, the company said it would expand its business into areas that it expects will be important to the transition in the energy sector. Long term, however, the company said there is a great degree of uncertainty.
“This is a long-term journey,” van Beurden said in the report. “There are tough challenges ahead that society will need to address because the transition will require enormous levels of investment, and profound changes in consumer behavior.”
In an annual forecast, British energy company BP said it expected 180 million electric vehicles on the world’s roads by 2035. That’s expected to crimp global oil demand in the coming years as about 30 percent of total miles driven in 2040 will be fueled by electricity.
More than 90 percent of all transportation-related energy consumption in the United States, the world’s leading economy, comes from petroleum-based products, however, with electric vehicles accounting only for a small fraction of total consumer use.
Shell’s forecast shows oil demand increases 1 percent annually through 2025, but then declines 1 percent per year until about 2040. In all scenarios it examines, however, the company said investments in new production are needed to meet the world’s appetite because demand drops off slower than natural declines in output from existing oil and gas fields.
As of year-end 2017, Shell said it said about 80 percent of its proven oil and gas reserves will be produced by 2030, and then 20 percent from then on. All of its conventional oil and gas projects, meanwhile, break even over the next two year so long as oil holds above $40 per barrel. The price for Brent crude oil, the global benchmark, was around $70 per barrel early Thursday.