This article is sponsored by Shell.
Editor’s Note: In the first section of this article, the president of Shell Oil Company offers the company’s view on transitioning to a net-zero economy in America. But in making climate-focused business decisions, Shell relies in part on the input of climate-focused nonprofit organizations who recognize the value of partnering with the private sector. So it invited the president of Center for Climate and Energy Solutions (C2ES), a nonprofit collaborating with businesses and policymakers at the local, global and international levels advancing climate solutions and energy technology to share this space in the second section to offer his own candid view on America’s net-zero 2050 target.
Gretchen Watkins, President, Shell Oil Company
The United States is back in the Paris Climate Agreement, and the Biden administration is aiming for net-zero greenhouse gas emissions by 2050.
At Shell, we agree that this country needs to reach net-zero by the middle of this century. But it won’t be easy.
Achieving net-zero — that is, a national economy that is no longer adding to the stock of greenhouse gas emissions in the atmosphere — will be a highly challenging endeavor. It will require fundamental changes to the U.S. energy system. It demands collaboration, technology and policy action at a scale and pace that is without precedent.
And we must ensure that it’s a just transition with clean energy benefits that are affordable and easily accessible to historically disadvantaged communities.
At Shell, we construct Scenarios that explore potential, future pathways for the global energy system. In December, we released a sketch outlining economically and technically possible pathways for the U.S. energy sector to achieve net-zero carbon emissions by 2050.
Just one example of how radical that shift must be: The sketch finds that today, fossil fuels account for roughly 82 percent of America’s primary energy use — from fueling automobiles to heating and powering homes. By 2050 renewable power must be able to tackle at least 68 percent of primary energy use.
So how can society go from one dominant form of energy to another in just 30 years? We believe it will require building coalitions, with a clear mission to reduce emissions within economic sectors. It will require the commercialization and scaling of clean technologies and fuels. And crucially, it will take policy frameworks to align interests and sustained commitment from government, businesses and society at large.
To that end, Shell has for years worked with industry partners and NGOs to advocate for national government-led carbon pricing mechanisms.
While several levers will have to be pulled, we don’t see a way for the country to get to net-zero without establishing a carbon price, then raising it over time as carbon is removed from the system.
This will enable low-carbon technologies to compete with fossil fuels, then ultimately gain an advantage. It would incentivize large-scale investment in lower-carbon technologies and infrastructure, such as carbon capture and sequestration, as well as energy efficiency for commercial buildings, homes and industrial facilities.
I joined Shell because I saw a company evolving to meet this challenge, approaching the energy transition as an opportunity. As an American, I’m excited to see this country emerging as the world leader in clean energy innovation.
In pursuing our net-zero ambitions at Shell, we are mindful that 90 percent of the company’s total emissions globally come from our customers using our products, so we are working with those customers to help us meet our target of becoming a net-zero emissions energy business by 2050, in step with society.
This is what sets Shell’s strategy apart: We are not aiming to simply produce commodity green electricity, although we expect that will be in our portfolio. Rather, we believe there’s more value in designing the right products and solutions for customers.
By reducing emissions from Shell’s operations, as well as from the fuels and other energy products we sell, we aim to transform our business and find new opportunities in areas such as biofuels, hydrogen and electric vehicle charging.
Bob Perciasepe, President, Center for Climate and Energy Solutions, former Deputy Administrator, EPA (2009-2014)
As we approach President Joe Biden’s highly anticipated April 22 summit, the world stands at an urgent moment for climate action. More than five years since the landmark Paris Agreement, global temperatures continue to rise along with emissions of greenhouse gasses. The summit is an opportunity for world leaders to focus on needed ambition and for the United States to once again establish itself as a partner, leader and advocate for action. Achieving net-zero emissions by 2050 will require leadership to nurture strong public support and collaboration between government and the private sector.
Meeting such a bold goal means quickly moving every corner of our economy to opportunity-building climate solutions. Transitioning to zero-emitting transportation, expanding zero-carbon electricity for our daily living and building sustainable farming and soil sequestration all grow jobs and the economy.
Deploying these solutions at the scale needed can happen only when businesses integrate the technology and solutions needed to decarbonize into their own operations. The continued growth of voluntary commitments of companies and cross-sectoral collaboration sends important signals to the economy and governments. Businesses are ready to work on supporting policy that accelerates action toward these commitments, and the world needs the significant investment of private capital. The C2ES Business Environmental Leadership Council and Climate Innovation 2050 initiative are centered around fostering these actions.
Governments and businesses are refining pathways to a sustainable, carbon-neutral economy, and setting a clear vision will be essential, particularly for key sectors. Companies that are building plans for a net-zero future need policy certainty, especially if they are to make the most of the potential economic opportunities of the energy transition.
The private sector, including the oil and gas industry, already has begun making important investments and trillions more will be needed over the next 30 years if the United States and world are to transform our economies. Those investments should position U.S. companies more competitively, but also open new markets for low-carbon technologies across the world. Companies also can provide important perspective about the challenges they face and, in collaboration with the government, work to address them. This collaboration will be critical if we are to meet the urgent task of decarbonizing our economy.
Effective government leadership will include a proper balance of accountability to ensure results and build public confidence, and support for the companies earnestly pursuing the transition to a net-zero economy. Smart investments and incentives can mobilize essential private sector investment. It also will be crucial for policymakers to create certainty and level the playing field to ensure first-movers and climate innovators are rewarded for greater ambition.
Many companies have called for a comprehensive market-based mechanism to efficiently drive investment, and so has C2ES. A carbon price, however, will be effective only when supported by additional complementary policies. All policies and actions must address environmental justice and the needs of communities in transition. Congress also should prioritize crucial infrastructure investments, including a decarbonized power grid, low-carbon industrial infrastructure such as pipelines for hydrogen and captured carbon, and more resilient communities.
The Biden administration’s summit can be seen as a restart for collaboration between Washington, the global community and businesses. It’s an opportunity to establish a broad, inclusive effort that harnesses the economic forces needed to facilitate the transition. We need every tool at our disposal, and that means working with good faith partners — including industries historically tied to the emissions that fueled our economy. A challenge so great requires a range of solutions at scale, and we all have a responsibility to advance the policies and technologies needed to pave the path to carbon neutrality.