Global support for natural gas use, as well as the technology to trap and store carbon dioxide (CO2) emissions from burning fuel, would curb greenhouse gas (GHG) emissions in this century, but it will take cooperation between government and the industry, according to Royal Dutch Shell plc.

If the world doesn’t turn to natural gas as the dominant fuel, solar power eventually could become the dominant energy source, but that likely wouldn’t occur before 2070, by which point higher GHG emissions would result, according to Shell’s annual scenarios report, which was published Thursday.

The New Lens Scenarios, which looks at trends in the economy, politics and energy as far ahead as 2100, underscores the critical role that government policies could play in shaping the future.

Shell’s executive team didn’t play favorites on a particular outcome, but CEO Peter Voser said the “scenarios show how the choices made by governments, businesses and individuals in the next few years will have a major impact on the way the future unfolds.” Voser on numerous occasions has said he expects natural gas to play a major role not only in his company’s future, but also a major role in the world’s energy mix over the next few decades, growing at a much faster pace than oil (see NGI, Nov. 19, 2012).

Shell’s integrated gas earnings earnings have more than tripled over the past five years. It remains one of the top oil producers in the world, but it increasingly has turned its focus to developing natural gas, from converting diesel to gas in Qatar, to constructing gas-to-liquids facilities and to building liquefied natural gas (LNG) export facilities (see related story). In addition to LNG export projects in Australia and Africa, Shell and a trio of Asian partners have a long-term export license for the biggest North American LNG terminal planned to date, which is to be sited on British Columbia’s west coast (see related story).

The two scenarios, “Mountains” and “Oceans,” explore two plausible future pathways for society. Each scenario dives into the implications for the pace of global economic development, the types of energy used to power the world, as well as the growth in GHG emissions. In some ways, the scenarios mirror some of the projections about the growth of the world’s gas markets published earlier this year in separate reports by BP plc and ExxonMobil Corp. (see NGI, Jan. 21; Dec. 17, 2012). However, Shell’s differs in that it consider the trends to 2100, while BP’s and ExxonMobil’s considered the trends over the next 20 to 30 years.

In areas of public policy, Shell’s report highlights areas that could have the biggest influences on developing “cleaner” fuels and renewables, improvements in energy efficiency and on moderating GHG emissions that include: measures to promote developing compact, energy-efficient cities, particularly in Asia and other rapidly urbanizing parts of the world; mandates for more efficiency in areas such as transportation and buildings; policies to encourage the safe development of the world’s abundant supply of natural gas and to promote its wider use in power generation, transport and other areas; and prices on CO2 emissions and other incentives to speed technology adoption to manage emissions, particularly CCS.

Shell’s two scenarios explore two possible ways the 21st century could unfold. One scenario sees natural gas becoming the most important energy source globally by the 2030s and early action to limit CO2 emissions. Under this scenario, Shell envisions government support for a carbon tax and carbon capture and storage (CCS) technology, along with policies to encourage natural gas development in the power generation and transport sectors.

The second scenario sees solar becoming the top source by about 2070, but with slower action to address the threat of climate change.

The first scenario would result in lower CO2 emissions than the second, where market forces rather than policy shape the energy landscape, Shell said. The expansion of low-carbon power, including nuclear power, would be limited in the second scenario and the growth of natural gas outside North America would be restricted, allowing coal to be widely used in power generation until at least the middle of the century.

“Without strong support from policymakers, carbon capture and storage catches on slowly,” the second scenario predicted. “By mid-century CCS captures only about 10% of emissions, growing to about 25% in 2075.” By 2060 global CO2 emissions would total about 35 billion metric tons, double that of the first scenario.

“With the world’s population headed toward 9.5 billion by 2060 and the rapid growth of emerging economies lifting millions of people out of poverty for the first time, the scenarios project that world energy demand could double over the next 50 years,” Shell said.

The scenarios highlight some surprising possible developments. Both see global emissions of CO2 dropping to near zero by 2100. One factor is increasing use of technology that takes CO2 out of the atmosphere, for instance by burning biomass to produce electricity, and then storing emissions underground. Although the Oceans scenario sees a dramatic increase in solar power, it also envisions more fossil fuel use and higher total CO2 emissions over the century than the Mountains scenario, which likely would have more impact on the world’s climate, Shell said.

The Mountains scenario imagines a world of more moderate economic development in which policy plays an important role in shaping the world’s energy system and environmental pathway. Natural gas becomes the backbone of the world’s energy system, in many places replacing coal as a fuel for power generation and seeing wider use in transport.

A profound shift in the transportation sector sees global demand for oil peaking in about 2035 under the Mountains scenario. By the end of the century, cars and trucks powered by electricity and hydrogen could dominate the road. Technology to capture CO2 emissions from power stations, refineries and other industrial installations becomes widely used.

The Oceans scenario envisions a more prosperous, volatile world with an energy landscape shaped mostly by market forces and civil society, with government policy playing a less prominent role. Public resistance and the slow adoption of both policies and technology limit the development of nuclear power and restrict the growth of natural gas outside North America. Coal remains widely used in power generation until at least the middle of the century. Without strong support from policymakers, CCS catches on slowly. By mid-century CCS captures only about 10% of emissions, growing to about 25% in 2075. This slow uptake is the main reason electricity generation becomes carbon-neutral about 30 years later in the Oceans scenario than in the Mountains scenario.

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