Constraints on supplies of natural gas, crude oil and coal are unlikely to occur worldwide before 2025, but in the next 20 years, the energy industry will be challenged to design sustainable technology that can replace depleted fossil fuels, the chairman of the Royal Dutch/Shell Group told a Houston audience.

Sir Philip Watts, keynote speaker at the inaugural conference for the Shell Center for Sustainability at Rice University on Wednesday, explained how Shell has begun advocating sustainable energy technologies to replace fading fossil fuels. Among other things, Shell has been a leading advocate to implement a worldwide emissions trading system to reduce greenhouse emissions.

Watts, who also chairs the World Business Council on Sustainable Development, noted that even though its business has expanded, Shell has reduced its emissions by 10% today from 1990 levels. The company achieved its reductions by ending routine gas venting, reducing gas flaring and improving energy efficiency.

Shell also is committed to continue reducing its routine gas flaring, with a goal to end it by 2008, said Watts. The company also plans to pursue “significant improvements in energy efficiency” and eventually will sell its technology and expertise to others. But Watts noted that producing fuel “only accounts for a small part of total emissions.”

Shell also is working to enable its customers to “use more natural gas, the most important medium-term response.” For example, in the United States, Shell is exploring for new natural gas reserves in the Rocky Mountains. Although he declined to offer details, Watts added that the company also is “working hard to deliver liquefied natural gas to the American market, helping to diversify energy supplies.”

However, at some point, the world will have to use still-to-be-developed sustainable energy technologies to replace dwindling natural gas, oil and coal resources.

“We stand with those who believe there is a problem and that it is related to the burning of fossil fuels,” Watts said. “We stand with those who are prepared to take action to solve that problem now, before it is too late.” Shell estimates that over the next 50 years, the world’s energy needs may grow another two to three times, and because of that, Watts said, “we must constantly develop new reserves to replace those we consume. Maintaining the supply security modern societies require is a vital challenge.”

He said, “We are entering a particularly innovative period in energy technology.” Shell has developed scenarios for two alternative energy paths to 2050. One path involves an “evolutionary progression from coal, to natural gas, to renewables.” The other is a switch to hydrogen, made possible by technological innovation. “Demand for hydrogen drives the expansion of both renewables and nuclear after 2030.”

The Shell chairman, who was knighted in January, said the company’s “paths” are only scenarios, not projections or prophecies. “The future is always obscure,” he said. “We will have to adapt our approach to this challenge as we learn.” But Watts reminded the audience that there would be no quick fix. “In particular, there is no quick fix by shifting rapidly to renewable energy, as some suggest.” Watts said there will be hurdles, “not [the] least significant environmental challenges” before renewables might offer the affordable mass energy the world will need.

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