The Energy Podcast

How does the energy that powers lives move across the globe? In this episode, The Energy Podcast sets a course for the world of shipping with Karrie Trauth, Executive Vice President for Shipping and Maritime at Shell. She explains shipping’s vital, non-stop role as the backbone of today’s global energy system, connecting supply with demand across continents. Discover how much of global trade and energy are moved by sea, the challenges of keeping energy supplies flowing, and how the shipping industry is tackling decarbonisation. Learn more about The Energy Podcast Cautionary note For more on green corridors, click here. The Energy Podcast is a Starstruck Media production for Shell.See omnystudio.com/listener for privacy information.

The Energy Podcast explores the complex path to decarbonising road transport. From adoption of electric vehicles and biofuels to policy, infrastructure and consumer behaviour, this episode unpacks the challenges of reducing emissions of road travel and what it’ll take to progress further. We are joined by Patrick Carré, a Senior Vice President for Mobility and Convenience at Shell, and Dr. Thomas Becker, Vice President for Government Affairs and Sustainability at BMW Group. Whether you're a car enthusiast, energy professional or just curious about the future of road transport, this episode offers timely insights into what it really takes to drive change. Learn more about The Energy Podcast Cautionary note The Energy Podcast is a Starstruck Media production for Shell.See omnystudio.com/listener for privacy information.

Climate scientists, governments and organisations, including the Intergovernmental Panel on Climate Change and International Energy Agency, recognise that the world needs carbon capture and storage (CCS) technology if society is to achieve net-zero emissions. In this episode, hosts Bryony and Eddie are joined by Shell’s Vice-president for CCS, Bernhard Koudelka, to discuss the role of this combination of technologies in decarbonising heavy industry, and – as the world’s first project to offer commercial CCS as a service prepares to start up – the challenges of scaling the industry to the level the world needs. Whether you’re new to CCS or looking for a deeper understanding of its role in the energy transition, this episode offers expert insight and real-world examples. What are negative emissions? Practices or technologies that remove carbon dioxide from the atmosphere are often described as achieving negative emissions. Learn more about The Energy Podcast Read more about CCS Cautionary note The Energy Podcast is a Starstruck Media production for Shell.See omnystudio.com/listener for privacy information.

Demand for liquefied natural gas – or LNG – continues to grow due to its potential to deliver flexible energy around the world. It has its critics, but LNG plays an important role in the energy transition by helping to displace coal and supporting renewable power generation. In this episode, hosts Bryony and Eddie hear from Shell's President of Integrated Gas, Cederic Cremers, on why global demand for LNG is expected to grow, the importance of addressing methane emissions, and Shell's LNG ambitions. Read more about liquefied natural gas Learn more about The Energy Podcast Cautionary note The Energy Podcast is a Starstruck Media production for Shell.See omnystudio.com/listener for privacy information.

Where are we in the global transition from fossil fuels to low-carbon energy? In the first episode of a new season, hosts Bryony and Eddie are joined by Peter Wood, Shell’s Chief Energy Advisor, for a lively conversation taking stock of the world’s energy system today. How is it evolving – and where? What’s driving the pace of progress – and holding it back? And what’s Shell’s role in all of that? Listen for unique insights into an energy system that enables everything we do. Learn more about The Energy Podcast Cautionary note The Energy Podcast is a Starstruck Media production for Shell.See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.

Rapid advances in artificial intelligence (AI) are helping the energy industry accelerate the transition to a low-carbon future. The Energy Podcast explores how AI is being used today and discusses how to unleash its potential. Presented by Eno Alfred-Adeogun. Featuring Kate Kallot, founder and CEO of Amini, Bob Flint, CEO of Mirico and Amy Challen, Shell’s global head of AI. Additional reporting by Claire François and Berry Mulder. The Energy Podcast is a Fresh Air Production for Shell, produced by Annie Day and Sarah Moore and edited by Eno Alfred-Adeogun. 00:00:00 Eno Alfred-Adeogun: Today on The Energy Podcast. 00:00:07 Audio: I will be working alongside humans to provide assistance and support and will not be replacing any existing jobs. You sure about that, Grace? Yes, I am sure. 00:00:20 Eno Alfred-Adeogun: That’s Nurse Grace speaking at the world's first robot press conference last year. And yes, she’s a robot. Powered by artificial intelligence this humanoid can diagnose illness, deliver treatments, and even offer patients emotional support. Impressive, right? Well, yes, but she’s just one of many examples of AI-enabled machines designed to address some of the world's biggest challenges; social care, disease, hunger, and probably sooner than you think. Consider how deeply AI is already entwined in so much of our daily lives. From work commutes … 00:01:03 Audio: You’ve arrived at your destination. 00:01:04 Eno Alfred-Adeogun: ... to virtual learning … 00:01:07 Audio: (foreign language). 00:01:07 Eno Alfred-Adeogun: ... to, " Alexa, what’s on my to- do list?" 00:01:11 Audio: Subscribe to The Energy Podcast. 00:01:14 Eno Alfred-Adeogun: A global AI revolution isn’t coming, it’s already here. So, could this rapidly advancing technology also tackle the pressing challenge of lowering emissions? Hello, I’m Eno Alfred-Adeogun, and today on The Energy Podcast we ask, can AI get the world to net- zero faster? Joining me to discuss this is Kate Kallot, founder and CEO of the African tech startup Amini. Bob Flint, CEO of methane emission monitoring company Mirico. And Shell's global head of artificial intelligence, Amy Challen. It’s really great to have you all on the episode today. Now, before we delve into the world of AI, a really helpful place to begin is defining what it actually is. Because by the number of definitions I found when researching this episode, that's actually harder to do than it sounds. So let’s briefly see if we can reach a consensus of what it actually is. Kate, coming to you first. 00:02:20 Kate Kallot: For me, I have one simple definition of AI, which is going to literally take one sentence. It is the science to make computers think and take actions like humans. 00:02:30 Eno Alfred-Adeogun: Love it. Brilliant. Brilliant. Amy, what about you? Can you add to that? 00:02:34 Amy Challen: I think I’m going to give a more boring answer. I often think about it compared to software. In software, we write the rules. We say, " If this happens, then that happens," and we define what that rule is. But AI works differently. We give AI a load of historical data, and we say, " You tell us what happens based on the patterns you've observed in the past." And so it can be a bit of surprise what it comes up with. The other thing to watch out for is that if our historical data is biased, if the world has changed, then we're going to see that in the model. So we have to be quite careful. 00:03:10 Eno Alfred-Adeogun: Okay. Bob, no pressure. We’ve got two great answers. Do you have anything to add onto the definition? 00:03:16 Bob Flint: Yeah, I get to go last. I think all of the above, plus extending into areas where humans aren't necessarily good, which is looking at huge volumes of data. So being able to process all the bits and bytes that come from sensors from the real world and floods of information like you would find in an oil and gas company and process that in super high speed. 00:03:40 Eno Alfred-Adeogun: Okay, so now that’s clear, we can turn our attention to how the energy sector is actually harnessing the power of AI. So, Bob, your company, Mirico, it monitors emissions, and then companies can pair the data that you gather with AI, which can then help to combat the emissions found. Can you share some good examples of this pairing in action? 00:04:06 Bob Flint: What we do is primarily we address the issue of methane emissions from energy. And methane is about 30 times worse than carbon dioxide for global warming, so it’s something that we all should be concerned about. The good news is if you stop emitting methane, the world starts to cool pretty much immediately because methane just decomposes in the atmosphere. So that’s why it’s so important. So we scan an area, say, an oil and gas facility, for those emissions. Measurement leads to action, leads to reduction, and we can then put that data into one of Shell's systems of record, say a digital twin. 00:04:48 Eno Alfred-Adeogun: On the digital twin, because that's another concept I feel like I've read a lot about as well. Could you just expand on what that is? 00:04:54 Bob Flint: A digital twin would be a replica of something in the real world, a refinery, a rig and it sits in silico, in a computer rather than in the physical world. So that would enable you to, for example, start making predictions or what-if type of questions on what might happen in the real world in circumstances which you wouldn't want to see. So you might predict what happens if I change temperatures and pressures in a way that might be dangerous. Well, I can do that in a computer. I wouldn’t want to do that in the real world. 00:05:30 Eno Alfred-Adeogun: Now, considering the ambitious climate targets that have been set worldwide, it's really no wonder that people are looking to AI for solutions. Amy, what would you say are the main ways that AI is enabling a low-carbon energy system? 00:05:47 Amy Challen: I think there are four main ways it’s already doing this and is going to continue in the future. Firstly, it can improve the efficiency of everything we're already doing. Whether that’s renewables or hydrocarbons, a couple of percentage points of efficiency can make a difference to the productivity of our energy system and can reduce CO2 emissions and methane emissions. The second one is I don't think we're going to enable a widespread renewable system without having really excellent forecasting and optimisation, two things that AI is incredibly good at. Because renewables like wind and solar, they're intermittent. Sometimes the wind blows, sometimes the sun shines, sometimes it doesn't, and it's not entirely predictable. So, you use AI to predict when that will happen and to optimise how you use your battery, how you buy and sell energy to make sure that we always have the energy supply when we need it. The third way is through everything we can do in lab sciences, in research and development there, and in design of a new energy components and systems. So for example, with the lab sciences, you have a whole process of research you go through. You look at papers and patents to have an idea of what to research on. AI can really speed up your search there and find the right things to be looking at to make suggestions. And finally, it’s got a big role to play in monitoring. If we don’t know what the current situation is in terms of working out where methane emissions is, then we don't have a baseline, and we can't track. And that’s hugely important to be able to know what's effective, what's not, and where are we going. 00:07:25 Eno Alfred-Adeogun: Kate, you’re based in Africa, so it'd be really, really good if you could paint a picture of the role AI is playing on the continent, if at all, in different energy systems. 00:07:37 Kate Kallot: Africa is still the most data- scarce continent. We think about the data scarcity affecting many different places, whether it's having billions of people that are still unconnected, whether it's having data scarcity when it comes to satellite imagery, when it comes to meteorological data. So when we think about the transformative role of AI in Africa a little bit more broadly, there's still step one that needs to be fixed, which is the data scarcity. Now, when it comes to where AI can be applied, it's important to remind everyone that AI is just a tool, and it's not going to come and transform everything and make everything better – it’s a means to an end. It’s not actually the end. So when we think about the solutions that AI will enable to build, we always have to go back to the foundation, which is what problem we're trying to solve. 00:08:28 Amy Challen: And could I build on something Kate just said as well, which is there's no AI without data, absolutely foundational. But also, AI and data, they're not the answer to the energy transition. They’re both mega-enablers of it, but fundamentally, you have to have the physical and chemical technologies and a huge change in the way we work and the way we live in order to make that happen. 00:08:50 Eno Alfred-Adeogun: There’s an old adage, but don't ask me to quote where this came from. But I bet you might have heard of this, that you can't manage what you can't measure. So, with that in mind, Bob, how important is it to not only track greenhouse gas emissions, but to do so accurately? 00:09:11 Bob Flint: As you say, you stand no chance of understanding what to do if you don't know what the baseline is. And actually, maybe people think emissions often come from leaks, a flange that isn't quite tightened properly. In many cases, emissions like methane just come from the way that an asset is being managed. And actually, you can start to manage the asset in a different way if you know why emissions are happening. You can start to maybe change the way in which it's loaded and unloaded or even cleaned. And then the last piece where AI could really help in emissions is helping to optimise. So in that digital world, if you have got a digital twin and you're able to run some sophisticated algorithms, you can start to say, " Well, I'm not going to tolerate last year's emissions. This year, I’m going to make less. And I’m going to set myself a target, and I'm going to meet or exceed that target. 00:10:04 Eno Alfred-Adeogun: Now, with the speed at which technology is advancing, the potential solutions that will arise through AI are vast. And when it comes to the energy sector, we're already seeing that potential turned into reality. Take for instance the drone parked in a box at Shell's Energy and Chemicals Park Rotterdam in the Netherlands, where crude oil is processed. Claire François is with Shell’s robotics expert, Berry Mulder, to find out how the drone uses AI to monitor the site and detect leaks. 00:10:36 Berry Mulder: So, there’s actually no one on site to fly the drones. They’re sitting remotely, and the drones go around a few times a week to scan for emissions, to check on rooftops, and all the other things that operators typically go around for. 00:10:53 Claire François: Well, we’ve just seen the drone fly off. Can you tell us what it's doing now? 00:10:56 Berry Mulder: Looking at the tanks from above, so basically saving us many hours a day to, well, not walk up to the tanks every time. It just brings us the pictures. So, the people, the operations, they look at the pictures as if they would walk around and then interpret what needs to be done to the top of the tanks. 00:11:13 Claire François: And so how is AI part of this process? 00:11:17 Berry Mulder: Right now, people are still looking at the pictures because it's a learning process for all of it. We expect that AI machine vision analytics will help us to analyse our pictures faster and better in the near term, but just spotting the differences, the anomalies, corrosion or things that broke or emissions leaks similar to what we do with the ground robots right now. 00:11:38 Claire François: Can you tell us how a drone like this and your other robots in the field are helping to detect methane emissions or broader emissions? 00:11:46 Berry Mulder: So really having additional sensors on the ground and in the sky to detect leaks while they're still small, and so we can fix them while they're still small and not big. And that’s where having additional noses fly and drive around really helps us if you take it to the AI part. It’s also eventually sort of making correlations. Where are the sources coming from? Where is it building up faster? We expect it will even help us in emergency responses, try to detect the plumes, the concentrations faster than we do today. 00:12:23 Eno Alfred-Adeogun: As Berry just demonstrated, technical solutions to help reduce emissions already exist. But despite that, according to the United Nations, the world is falling short of its climate goals. How can AI be a better companion to existing digital technologies, Bob, to drive progress more quickly? 00:12:44 Bob Flint: Most operating companies would have vast data sets already. AI can play a role in just mining that data for information and then surfacing that so that it can be acted upon. The other thing I just want to point out is that the emissions challenge, and we heard something of that drone solution in that clip, is really about deploying lots of different solutions. There’s no single silver bullet in that measurement journey. So, you’ll probably have some satellite systems, some drone systems, some ground sensors, maybe even some robots. And bringing all those diverse data sets together is a big challenge, and AI can really help us do that. So, build one picture of what's happening in the real world from a set of very disparate data sets and then using that to drive decision- making. That will be a wonderful application. 00:13:43 Amy Challen: And that’s essentially what a digital twin is at the end of the day. It’s a combination of all these different data sources. So, like you say, Bob, your laser- based detection of methane using machine vision techniques to do that, and then all the other collection of data about, say, the operation of an asset, and you pull that together. And as Berry in the extract just said, you're going from quick detection of leaks, which you can shut down as quickly as possible, to prediction of leaks. So, you’re much less likely to happen because you can fix things in advance, you can work out where there's risk, and you can do preventative maintenance, so it doesn't have to happen. And that’s the aim at the end of the day, is how you can act in advance to reduce emissions rather than just react quickly. 00:14:23 Eno Alfred-Adeogun: Now, we haven't touched on an important group I think that we need to consider in this conversation, and that's energy customers, both businesses and the public. What benefits could AI offer that will encourage them to reduce their own emissions? Bob can I ask you that? 00:14:41 Bob Flint: Yeah, I think whether it's consumers or businesses, actually, energy is unfortunately a topic that's quite hard to get people to engage with. And one of the methods of doing that is price. We all feel energy is something that is visible when we get the bill. But in order to be energy efficient, maybe change our behaviours takes quite a lot of effort, and I think AI can really help us with taking away some of that friction by giving us maybe some price signals, “Here's a discount if you do something." Like maybe in the US, there are demand reduction programs, which are run by businesses for businesses, encouraging people to switch off their refrigerators and air conditioning systems for an hour during peak times. And it could even start to automate some of those interventions, turn things off automatically. So, taking away some of the pain of acting responsibly for people who want to do the right thing but who are busy and need to find the time to do it, I think AI will play a huge role in that. 00:15:48 Eno Alfred-Adeogun: AI may be helping to find solutions to reduce emissions, but we also need to consider the vast amount of energy that's used to develop and run it, which risks increasing the world's emissions. I’m thinking particularly about the huge amount of energy that's used to run data centers. What do you think is the most important action that the tech industry must take to prevent AI from contributing itself to global warming, Kate? 00:16:23 Kate Kallot: The technology has made so much advancements today that you don't actually need to build large scale data centres everywhere to be able to run the amount of compute that you need. There are new ways to do it. They’re decentralised ways, power- efficient ways. The industry is heading towards the right direction, but I think there's still a lot of work to do when it comes to understanding what that really means on the ground. For example, understanding that most of the compute that you need, you need it for the training. When it comes to deploying AI systems, it doesn't require that amount of compute. So, can you find innovative ways to share the computes between countries, between industry, between companies? Can you find innovative ways to build decentralised data centres or decentralised computing infrastructure where you have smaller amount of compute in different regions that are linked together, and different actors can get access to that compute at different times or different days? 00:17:21 Eno Alfred-Adeogun: Amy, is there any way we can stop AI becoming a monster in itself? 00:17:27 Amy Challen: Absolutely agree with Kate. Even more fundamentally, though, you can also ask yourselves, "Do you need to train this model?" So I think what I see externally is the technology companies in particular, they're in a kind of arms race to get the best generic large language model. Do we need 10 of them or do we just need a couple? Within Shell, certainly, I really challenge everyone, do we need to do this? And to Kate’s point, it's a lot more effort to train a model than just to deploy it. So if you’ve already got a really good core model, which you can just adjust slightly, whether through fine-tuning or prompt engineering, let's do the minimum we have to because that will save a lot of energy. 00:18:06 Eno Alfred-Adeogun: Now, before we close, I'm going to put each of you on the hot seat. I don’t know if you've already been feeling like you were on one, but it's about to get hotter! Because I want each of you in no more than 20 seconds to say what you think the most exciting development in the energy sector you expect or want to see AI transform in the future. Bob, let’s start with you. 00:18:30 Bob Flint: Ooh, okay. Great question. I think the bit we haven't really got to yet is thinking about energy as a system. How do we interconnect the traditional bits of that system, like the fossil parts with the new parts, like renewables and storage and hydrogen, to create a whole new ways of working? I think that’s really one of the areas where AI is going to have to be deployed if we're going to break down some of those barriers. Look at complex new areas like hydrogen, and use them most effectively. 00:19:06 Eno Alfred-Adeogun: Okay. Kate, same question to you. 00:19:09 Kate Kallot: I’m going to be a bit biased because I run a climate tech company, but for me is around exploration. So, making sure that using AI actually to better understand and assess the reserves, but also avoiding the destruction of more biodiversity. 00:19:26 Eno Alfred-Adeogun: And, Amy, what do you think? 00:19:28 Amy Challen: I think I’ll say it’s this use of AI in research and development and in design that I think we're only scratching the surface in how quickly we could speed up the advancement of development of materials, advancement of development of new chemical solutions, and in designs for better, more efficient assets. 00:19:51 Eno Alfred-Adeogun: Kate Kallot, Bob Flint, Amy Challen, thank you all so much for your incredible, insightful, and thought-provoking contributions today. Really great. You’ve been listening to The Energy Podcast brought to you by Shell. Be sure to follow and subscribe for free wherever you get your podcasts, so you don't miss a single episode. The Energy Podcast is a Fresh Air production, and the views you've heard today from individuals not affiliated with Shell are their own and not Shell PLC or its affiliates. I’m Eno Alfred- Adeogun. Thank you for listening. Goodbye.See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.

As the world grapples with the urgent challenge of climate change, the energy industry is working to reduce greenhouse gas emissions while continuing to deliver the secure and affordable energy people need today. Is switching to renewables the answer, and do oil and gas have a role to play? Presented by Julia Streets. Featuring Dr Bassam Fattouh of the Oxford Institute for Energy Studies, Sian Lloyd-Rees of Mainstream Renewable Power and Shell’s Zoe Yujnovich. The Energy Podcast is a Fresh Air Production for Shell, produced by Annie Day and Sarah Moore, and edited by Molly Lynch and Sophie Curtis. TRANSCRIPT Shell The Energy PodcastSeason 4, Episode 4 00:00:00Julia Streets: Today on The Energy Podcast. 00:00:07Bassam Fattouh: If oil and gas is to remain part of the energy mix, the key issue then becomes how to reduce greenhouse gas emissions from hydrocarbon related activities. 00:00:16Sian Lloyd-Rees: If we want to achieve net- zero by 2050, we all need to adopt that 2050 mindset now, making the decisions today that are consistent with the future that we want. 00:00:26Zoe Yujnovich: The journey to net-zero must be achieved whilst at the same time providing a stable and reliable supply of energy. 00:00:34Julia Streets: The science is clear and the world is in a fight to avoid the most serious effects of climate change. Energy and the use of it is one of the biggest contributors to global greenhouse gas emissions. And this means that the oil and gas industry, which supplies much of that energy, is under pressure like never before. Many countries are working to achieve net- zero carbon emissions by 2050, while continuing to meet the demand for secure and affordable energy. The impact of the war on Ukraine on the global energy market has shown just how delicate the balance is to maintain. Some critics argue that only a drastic scale back from oil and gas will do, advocating for actions like an immediate end to the development of new oil and gas fields. Others believe that the global economy cannot be decarbonized without the constructive participation of the oil and gas industry. On one thing, there is broad agreement that business as usual is no longer an option. How can the world manage the balancing act of meeting demand while investing in the energy of the future? Does it need to go further and faster? Hello, I'm Julia Streets, and today on the Energy Podcast we ask; is there a role for oil and gas in the journey to net- zero? With me to discuss this are Dr. Bassam Fattouh, Director of the Oxford Institute for Energy Studies, Sian Lloyd- Rees, the UK Managing Director for Mainstream Renewable Power and Shell's Integrated Gas and Upstream Director, Zoe Yujnovich. So, Bassam, let me start with you. How does the world get its energy today? 00:02:10Bassam Fattouh: Based on the latest statistics for 2022, hydrocarbons, that means oil, gas and coal, accounted for the bulk of primary energy consumption. Oil accounted for more than 30% of primary energy consumption, followed by coal, which still account for more than 25%, and then the share of natural gas is not far away, standing at around 25%. The share of renewables in the form of solar and wind has been rising fast and accounted close to 10% of primary energy consumption, surpassing nuclear energy and hydroelectricity. But Julia, it's important to focus not only on the shares, but also the growth rates. For instance, if you take coal, the growth rate between 2012 and 2022 was close to zero, whereas renewables grew more than 12% per annum during the same period. So the energy mix actually can evolve faster than implied by historical standards, which is needed if we are to meet our climate targets. 00:03:12Julia Streets: So in support of the UN Paris Agreement's ambition to limit the global temperature increase to 1. 5 degrees centigrade, above pre- industrial levels, many countries have set net- zero targets and I'm curious to know what does that mean for the energy industry? Sian, can I come to you? 00:03:28Sian Lloyd-Rees: As Bassam’s just talked about, the energy mix today includes a number of different energy sources and to achieve net- zero, we need to grow our cleaner energy mix going forward, but that's going to take time and it's going to take a balance of different things. From my perspective, as a wind developer, we are focused on trying to accelerate the uptake and the introduction of wind powered energy and solar energy on a global basis. But there are challenges. When we look at the wind resource in the world, a lot of it lies in the northern- hemisphere, the greatest need is in the southern- hemisphere. It lies far from offshore in quite deep waters, and that requires different technologies, floating technologies, to be able to access it. We then have the challenge of transporting that wind energy, once we've managed to deliver it at an affordable price, to different parts of the world. So we have technology challenges, we have geographical challenges. We also have the challenges around the supply chain and the materials that we need in order to be able to ramp up in terms of renewables. Yes, we need to grow our renewable energy percentage in terms of the mix, but we also need to focus on the energy sources today and we need to decarbonize those. Oil and gas today needs greater decarbonization, but so do many other heavy industries as well around the globe. 00:04:39Julia Streets: And Zoe, perhaps I could bring you in here. I'd love to get your thoughts as well about what all this means for the energy industry. 00:04:44Zoe Yujnovich: The journey to net- zero must be achieved whilst at the same time providing a stable and reliable supply of energy. Whilst the global energy mix is changing, demand for energy services will continue to grow and it'll need to be met by a combination of different types of energy. It's certainly going to be critical that we don't dismantle the current energy system faster than we can build the clean energy system of the future. We are very focused on trying to understand how to change the demand patterns and indeed how we therefore supply alternative energy into those different demand hubs. Oil and gas will continue to play a crucial role in the energy system for decades to come, but of course we will see that demand reducing gradually over time. The other thing I think I would say is of course it's also very critical that we actually lead by example in how we drive that energy efficiency. And we are very focused on cutting emissions from the existing operations. So in short, it's absolutely essential that the energy mix will change, we must reduce emissions from our own operations and also find those profitable sustainable ways to transition to net- zero. 00:05:56Julia Streets: Just building on that, there's some warnings from environmental groups. The continued investment in oil and gas infrastructure can risk the making of the transition to cleaner energies even more difficult or even too expensive. And I'm really curious to hear from our guests today whether they think that is fair. Sian, can I come to you first? 00:06:16Sian Lloyd-Rees: Yes, and there is a lot of discussion around the concern that infrastructure decisions and investment today shape the energy future that we'll get. So from our global wind developer perspective, we look carefully at government policies and the subsidies and investment areas they prioritize. And the UK move faster than many countries in focusing its fiscal incentives into renewable development with a contract for different commercial mechanism, which they initiated, which guarantees a long- term contract certainty for wind developers. Likewise, in the USA, we're seeing the Inflation Reduction Act focused on attracting investors and infrastructure developers into the renewable energy space, and the EU has got a similar mechanism. So we certainly are seeing a subsidy reallocation trend in favor of renewable energy sources and the growth which all helps to address the argument around renewables being more expensive or not fit for purpose. But overall, if we want to achieve net- zero by 2050, we all need to adopt that 2050 mindset now, making the decisions today that are consistent with the future that we want. And this is what we look for when we engage with governments in different parts of the world in terms of where their future investment is going. 00:07:23Julia Streets: Bassam, can I bring you in here, because I'm curious what would be the impact of stopping new investments in oil and gas altogether? 00:07:30Bassam Fattouh: Well, at this stage of the transition where we haven't seen a fundamental shift in demand and in fact demand for oil and gas continues to rise, the impact of stopping investment will be higher and more volatile prices for the simple fact that by not investing, not only there will be no new oil and gas supplies, but also existing supplies will start declining. And high oil and gas prices have multiple effects. It raises the issue of affordability and governments will have to put in place packages to protect consumers, which will affect their fiscal balances. Also, energy transition policies may lose support from the general public if this results in high energy costs. That is why it's key to have an orderly and just transition. But there are also other unintended consequences. For instance, higher gas prices can result in substitution from gas into oil and coal which have higher emissions. In fact, the Russia- Ukraine war revealed these types of substitutions. In Europe as a result of high gas prices, we saw a substitution from gas into diesel, fuel, oil and coal in power. In some developing countries, which were priced out of the gas market, particularly the LNG market, we saw increased reliance on coal. Some developing countries' access to finance is extremely limited and they face high cost of borrowing and don't have in place the appropriate regulatory framework to attract investment in renewables. Also has been chronic underinvestment in distribution and transmission networks, which actually could limit the rapid deployment of renewables. 00:09:09Julia Streets: There's one other element to the finance investment discussion, which we must bring forward, because the profits of oil and gas companies regularly hit the headlines. And following from the energy crisis brought about by the invasion of Ukraine, energy costs for households have soared across the world. Meanwhile, companies like Shell have reported record gains. So I suppose my question is shouldn't oil and gas companies use more of their profits to fund the transition? And of course Zoe, I have to come to you with that question. 00:09:38Zoe Yujnovich: As we mentioned earlier, today's energy system is still overwhelmingly comprised of fossil energy and whilst recognizing the need to continue to decarbonize that energy, many of the oil and gas reserves have a natural decline. So we have to continue to invest to essentially ensure that we can have that stable production over time. Over the last 15 years, as well as maintaining our core business of oil and gas, we have been investing in a wide range of low carbon energies, from hydrogen production to de- risking carbon capture and storage, biofuel production, electric vehicle charging, as well as wind and solar generation. We have invested in 2022, about 8. 2 billion in low carbon energy and non- energy products. This is about a third of our total capital expenditures, and of that about 4. 3 billion went into low carbon energy solutions. 00:10:38Julia Streets: Bassam, I'm keen to get your voice on this discussion about the use of profits as well. Your thoughts? 00:10:43Bassam Fattouh: Well, in this current environment, international energy companies are generating very healthy cash flows. Part of these cash flows will be directed towards investment in oil and gas project, because the demand for oil and gas is still rising. But there are also expectations that companies must allocate much larger part of their cash flows and capex budget to clean technologies. And I think the amount of capital allocated to renewables has become a key metric for many investors and NGOs. The challenge really is how to allocate cash flows to these projects at an accelerated rate, while achieve attractive returns to their shareholders as some of these technologies, such as green hydrogen and CCS is yet to scale up. If the alternative opportunities in the clean technology space are limited and evaluations are inflated and large investments in hydrocarbons are not particularly rewarded by investors, because of fears that investment in new project increase the risk of stranded assets, then companies will use these high cash flows to reduce debt, return money to shareholders through buybacks and dividends. Actually a trend that we have seen in this cycle, this has the attraction of making the energy firms more resilient in terms of lowering their leverage ratios and making these companies more attractive for investors and shareholders. But of course for many investors and perhaps observers, this is a signal that companies are not doing enough to decarbonize their activities and they are not transforming their activities and operations fast enough. But from company's perspective, this is seen as ensuring that capital is not destroyed in projects that don't meet their profitability criteria and where scale has not yet been achieved. 00:12:28Julia Streets: So, how is the oil and gas industry driving down emissions from its existing operations? 00:12:34Bassam Fattouh: If oil and gas is to remain part of the energy mix, the key issue then becomes how to reduce greenhouse gas emissions from hydrocarbon related activities. And this requires heavy investment in areas such as electrification of platforms, reducing venting and gas flaring, CCS and the development of low carbon fuels in the aviation and transport sector. This also requires developing and harmonizing standards for measuring, monitoring, reporting and verifying emissions. And although there has been progress made in this area, I think the landscape remains very fragmented, which make it difficult to measure performance over time and compare between companies and countries. So that's why the efforts really should be concentrated on how to reduce the emissions of hydrocarbon related activities while demand is still there. 00:13:24Julia Streets: Zoe, keen to hear your thoughts. 00:13:26Zoe Yujnovich: There are many things that we're doing recognizing that it's critical that we take action now on those things that we control, while also of course influencing the way demand will evolve for our customers. When we look at carbon emissions, we've been able to reduce ours from our own operations by 30% at the end of 2022, compared with 2016, which is our reference year, and this takes us more than halfway toward our target, a 50% reduction by 2030. For several years we've also been transforming our remaining integrated refineries into low carbon energy and chemical parks. But we also recognize that when we make new investments, we must hold a really high bar to ensure that they're not just economically resilient, but they're carbon resilient as well. So for example, we just recently brought online Timi in Malaysia, our first wellhead platform in the country that's powered by a solar and wind hybrid power system. We're also growing our liquified natural gas business that will play a critical role in a balanced energy transition in the way it also compliments renewables production. Liquified natural gas can be easily transported to places where it's needed most and that picks up on Sian's point that not all countries will be endowed with natural resources, whether they be hydrocarbons, wind or solar. And so it allows you to actually move that energy to where it's best needed. And of course, on average, natural gas emits about 50% less carbon emissions than coal when used to produce electricity, making it the natural lower carbon substitute in the near term. And we also are trying to look at ways in which we can re- scope the way we do our engineering. In our US Gulf of Mexico, we have Vito, a completely redesigned platform. We see by actually bringing new technology and integrating the way our scope is reviewed, that we've been able to reduce by 70% the lifecycle cost from the original host concept, a true demonstration of how we can really challenge ourselves to improve carbon and fiscal returns and how they can really work together in a complimentary way. 00:15:36Julia Streets: So on the subject, let's go offshore to hear what's happening on Shell's newest deep water platform, Vito. Vito is in the Gulf of Mexico and has been especially designed to deliver greater energy efficiency. Operations Maintenance Coordinator Rodney Townsend is there to show us around. 00:15:53Rodney Townsend: My name is Rodney Townsend and I'm currently standing on Shell's offshore platform Vito, Shell's 13th deepwater development. I'm around 150 miles southwest of New Orleans in the blue waters of the Gulf of Mexico. Vito is an amazing facility, four bright yellow cylindrical columns hold up the top sides, which are home to vessels, separators, pumps, generators, and compressors, all the processing equipment and support systems that we use in oil production. Vito is like a remote island made of steel and floating in the water. I'm one of 60 people in the Vito family currently offshore, where we work and live for 14 days at a time. The platform I'm standing on today is different than the original plans for the facility. In 2015, Shell began redesigning the Vito Project to take advantage of the latest technology and make it more cost- efficient while, reducing its CO2 footprint. It's about a third smaller than the previous platforms we've built, consumes less electricity and features energy efficient gas turbines, compression systems and more. These measures, along with others, resulted in a reduction of approximately 80% in CO2 emissions over the lifetime of the facility. Vito's simplified and replicable design is a blueprint for future deepwater projects. 00:17:24Julia Streets: So, could the world switch to a hundred percent renewable energy tomorrow? And if not, I'm curious, why not? Sian, what do you think? 00:17:33Sian Lloyd-Rees: The statistics on what percentage of the overall energy mix renewables makes up varies, but let's say it's currently contributes up to 25% of global energy demand, and that's taken us 40 years to get to that point. But we are now seeing a rapid increase in seabed leases for offshore wind being allocated and more solar and hydrogen developments as well. We're also seeing government subsidies and investment prioritizing renewable energy uptake. So good progress, but as I've mentioned previously, there remain challenges. And different parts of the world are addressing routes to market for the energy in different ways. In the UK, we're seeing some shorter term challenges for sure with inflation. The cost of development has increased. There's global supply chain challenges, and today we are actually seeing wind developers put their field development plans on hold, based on them being unaffordable at this point. And then you marry that with the fact that the average time to take a wind development to market is 10 years. Now solar is much quicker, but wind and solar both will need to be included in the energy mix. And similarly, hydrogen will play a key role, but the demand for hydrogen and the routes to market for hydrogen derivatives are yet to be fully understood. The industry and governments are working together on how they can also accelerate the policies, the fiscal measures that they put in place that attract the inward investment that we see going forward. So I think we can pick a pace and scale, but I'm not sure we can do it overnight. 00:18:57Julia Streets: Zoe can I bring you in? I'd love to hear your thoughts. 00:18:59Zoe Yujnovich: Yeah, I think about this in terms of perhaps three time horizons. In the first instance, it is about looking for ways to increase electrification, and so we've globally rolled out a significant footprint of EV charging. We're second to Tesla. And we also look at things like biofuel production, which can be drop- in fuels, which can use existing infrastructure and help to reduce the carbon intensity. So that is where you see things like sustainable aviation fuel, which is also helping to reduce the footprint of aviation. We then look at areas like carbon capture and storage. We have projects that are actively sequestering carbon in Canada, and in Australia. And we continue to look at additional opportunities to grow and scale that, recognizing it's such a critical part of decarbonizing the existing energy system. When you couple something like carbon capture and storage with liquified natural gas for example, you get blue hydrogen. And that perhaps brings us to the third horizon, which is in hydrogen, which today isn't seen as competitive, but there is an enormous amount of work that clearly we're doing around how we could de- risk that. And perhaps the best example to bring that to light would be Holland Hydrogen 1, where indeed it'll be Europe's largest renewable hydrogen plant once it's operational. It's currently in execution, it's a 200 megawatt electrolyzer, it's expected to produce about 80,000 kilograms of renewable hydrogen per day. So I think the time horizons will vary, much of which will be influenced by things like demand, but I think it's critical nonetheless that we do de- risk all of these time horizons together. 00:20:34Julia Streets: Bassam, can I bring you in here? Because I'd love to get your thoughts about the role of policymakers when it comes to this journey to net- zero. 00:20:43Bassam Fattouh: Well, the energy system has always been transitioning and as people discovered more efficient sources of energy, they switched from the less efficient, the higher cost energy to the more efficient, lower cost energy. I think this transition is different in a key aspect that many of the fuels we are using are efficient. The infrastructure around them has been built over many years and many of the assets are still economical and operational. But of course there's the issue of externality associated with emissions that need to be taken into account. And that's where governments play a very, very important role, because this needs to be priced either through carbon taxes or emission trading systems. But not only that, we need to achieve a decarbonized system fairly quickly. This would need, for instance, early retirement of assets. If you leave it to the private sector and without governments putting in place incentive through subsidies or taxes, this will not take place, at least not at the speed needed. Also, some of the technologies that we need to rely on, to reach our net- zero targets, need to be scaled up, so we could achieve the cost reductions. Again, I think governments need to play a key role here. Of course, this does not mean that the private sector shifts all the risk to governments. That's not what I'm saying at all. But there must be some reasonable allocation of risk to enable investment in new technologies and fuels to achieve scale, cost reduction, but also bankability of projects. 00:22:14Julia Streets: And Sian, your thoughts on this? 00:22:16Sian Lloyd-Rees: Well, let me just add, I think strong policy certainly encourages the investment that's needed. And again, we can look at the UK as this is a good example. Very early policy on wind encouraged that inward investment. It's why the UK currently has a hundred gigawatts of wind under development. Sweden moved quickly, they also have the same amount. And then of course we saw different policies in different parts of the world. In South Korea, there was a very strong policy in terms of local content provision as part of the seabed leases and the encouragement of technology to be developed. So South Korea will never be the largest wind development region in the world, but certainly they've moved very quickly to establish a very strong supply chain that can flourish as it serves global markets. So we do see policy as being a good signal for where the government's priorities are and how fast they want to move and how it differs in different parts of the world. 00:23:06Julia Streets: And Zoe, what are your thoughts on this question? 00:23:09Zoe Yujnovich: When we look at different policies, as we mentioned a bit earlier, we have seen quite a change in things like how the Inflation Reduction Act has really stimulated opportunities that might have previously been on the fence, but are now more interesting because of the tax credits that are being provided. And then perhaps just to bring it to life in terms of how we think collaboration can work, if we take an example for LNG Canada, which is an asset that we are partners in, it's on the west coast of Canada. It's on track for being commissioned by the middle of the decade. And having worked with customers, predominantly across Asia, who still rely on a significant aspect of gas in their energy ecosystem, we are able to produce, with new technology, a plant that actually has 60% lower emissions than the average facility that's currently performing today. And so an example of how collaboration with customers, with the governments, both federal and provincial level, enable us to develop an ecosystem that provides the right incentives and really drives change at a faster pace. 00:24:15Julia Streets: But I wonder if we could just look ahead a little. I'm curious to hear your thoughts and Sian, I'm coming to you first of all, what do you think the energy mix will look like by 2050? 00:24:26Sian Lloyd-Rees: So my preference would be that the energy mix in 2050 resembles where we start from today, which is to have an ambition of around 80% renewable energy in the mix by 2050 and certainly the remainder much cleaner. And I do believe we'll take a mix of cleaner energy from the use of carbon capture, use of hydrogen, et cetera, but also in terms of the uptick in renewable energy, predominantly in wind and solar as the primary sources. 00:24:53Julia Streets: And Zoe, can I ask the same question of you? What do you think the energy mix will look like by 2050? 00:24:59Zoe Yujnovich: I hope it's radically different to the one that we see today. I do hope that where hydrocarbons are part of the energy mix, they're largely decarbonized, both because of the emissions in the creation of the hydrocarbons, but also in the way that we can couple that with things like carbon capture and storage for customers. I hope that technology will play a really significant role in ensuring that that's affordable and scalable. And I also hope that we do so in a way that's quite thoughtful in the way that the transition is navigated, so we don't see these volatile moments that we've experienced that are incredibly painful for the world to endure as we've seen over the past 12 to 18 months. 00:25:40Julia Streets: Well, it's been a fantastic discussion. Thank you for all your thoughts, because in a really short period of time, we've talked about supply and demand, supply and value chains, security, affordability, technology, and innovation. We've thought about policy and also ultimately the need for collaboration in the ecosystem. This is all about action to achieve the ambition. So my thanks to Dr. Bassam Fattouh, Sian Lloyd- Rees and Zoe Yujnovich. You've been listening to The Energy Podcast brought to you by Shell. Listen and follow for free wherever you get your podcast, so you don't miss a single episode. The Energy Podcast is a Fresh Air Production, and I must remind you that the views you've heard today from individuals not affiliated with Shell are their own and not Shell PLC or its affiliates. I'm Julia Streets. Thank you for listening and until next time, goodbye.See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.

Carbon markets are advancing on a global level, following the first country-to-country trades at COP27. The Energy Podcast investigates how carbon pricing works and examines what role it can play in the race to reduce greenhouse gas emissions. Presented by Julia Streets. Featuring Dr Hasan Muslemani from the Oxford Institute of Energy Studies, Andrea Bonzanni from the International Emissions Trading Association and Shell’s senior carbon pricing policy advisor, Dr Malek Al-Chalabi. With additional contribution by Stephen Kansuk, Head of Environment and Climate Change at the United Nations in Ghana. The Energy Podcast is a Fresh Air Production for Shell, produced by Annie Day and Sarah Moore, and edited by Molly Lynch and Sophie Curtis. EPISODE TRANSCRIPT: 00:00Julia Streets: Today on The Energy Podcast... MUSIC BED COMES IN Andrea Bonzanni: Emissions must be reduced globally irrespective of where they take place. The atmosphere is one at the end of the day. Article VI allows reducing emissions where it’s more efficient. Dr Hasan Muslemani: We have solutions that are being praised as the holy grail of net- zero… The issue is that we need all the solutions that we can get because in the fight against climate change, we are really in a race against time. Julia Streets: The cost of climate change. It's a phrase commonly used by governments, companies, and campaigners across the world when discussing the need to limit global warming to well below two degrees Celsius. Quantifying the exact cost of far- reaching effects of climate change is not an easy task. But putting a price on emissions is viewed by many as an effective means to help drive down levels of CO2 in the atmosphere. The idea is simple. Putting a price on carbon emissions creates a financial incentive to reduce them.Carbon markets have existed for decades. There are many carbon pricing systems around the world, but at present, it is estimated that only a quarter of emissions are priced. That could soon change. At last year's COP27 climate conference in Egypt, the first country- to- country carbon trades took place. Could this pave the way for further uptake of carbon trading and what impact could that have in the fight against global warming? Hello, I'm Julia Streets, and today on The Energy Podcast: How can carbon markets limit climate change? MUSIC ENDS With me to discuss this are Andrea Bonzanni, who's the international policy director at the International Emissions Trading Association, who you may well remember from a previous episode of The Energy Podcast. He is joined by Dr. Hasan Muslemani, who is the head of Carbon Management Research at the Oxford Institute for Energy Studies. And our third guest is Dr. Malek Al- Chalabi, who is a senior carbon pricing policy advisor at Shell. Hasan, perhaps I could start with you. For the benefit of the audience, would you just mind explaining what we mean when we talk about carbon markets? 02:18Dr. Hasan Muslemani: The fundamental concept behind a carbon market is really to put a price on carbon, or in other words, to quantify the cost of damages that emissions will cost our society over time. To do this, we have, at the heart of carbon markets, what is called carbon accounting or greenhouse gas accounting. This represents a set of standards and methods that help us quantify but also verify the impact that each business creates on the environment, and this impact is reported in terms of tons of CO2 emitted. Now, something that I really want to emphasize here is that today, we speak of carbon markets, but we need to differentiate between two different types of markets. The first is what we call a compliance market, which is a market that is heavily regulated and corresponds to a specific region or jurisdiction, and where companies within that jurisdiction have to take part in the market. The other one is a voluntary one. This is a lot less regulated and where participation is voluntary, as the name implies. The voluntary carbon market is based on the concept of offsetting. That is where a company wishes to mitigate or neutralize its own emissions. So, it goes out and invests in projects which are reducing equivalent amounts of emissions elsewhere in the world. 03:30Julia Streets: Can you talk to us a little bit about how they work in practice in everyday terms? 03:36Dr. Hasan Muslemani: Starting on the compliance markets, and the objective is really to put a price on carbon, there's two different ways to do this. The first one is carbon taxation, which should be a simple concept. We have countries like Norway and Denmark, which would impose a specific tax on every ton of CO2 that a company would produce within those countries. The key here, really, is for that carbon tax to be high enough to incentivize businesses to change behavior or to move to greener production. This is essentially a stick form of regulation where businesses have to lower their emissions or face an additional cost. The other mechanism, which is a cap and trade mechanism, which is the more familiar one, and in this system we have an authority, say, the European Commission, which sets a cap on how much emissions can be generated as a whole within the continent, within Europe, and then allocates a number of allowances or carbon credits to European countries and companies for them to trade amongst each other. Here, each carbon credit or allowance is representative of one ton of CO2. This allocation process, what I want to note, is done using the historical emissions of each one of these companies. This is a process that we call grandfathering. The overall cap is reduced each year in order to meet a certain European climate target in the future. The way this works is where companies that have lowered their emissions below their targets, now they have surplus of allowances, which they can go into the market and sell to companies that did not do so well and will require to buy credits. So, this mechanism really is sort of a carrot but also a stick sort of regulation. 05:12Julia Streets: Thank you for explaining how they work. I suppose my next question, is how effective are they proving to be? 05:19Dr. Hasan Muslemani: The longest running and actually the biggest ETS in the world, that is the EU ETS or emission trading scheme. This has started in 2008 and has gone through different phases over the years. But I do want to mention that it has suffered from a number of setbacks over those years. To give an overview, the carbon price at the beginning was around 30 euros per ton, but that price has crashed to less than 5 euros around the financial crisis of '09. This was most likely because of two main reasons. The first one is that companies had to report their emissions in such a regulated manner that they have not done before, and so they might have overestimated how much emissions they emit and hence how much allowances they eventually received from the system. But also, because of the financial crisis itself, it meant that business offices aren't lit, emissions aren't as high as usual, so they did not need to surrender as much allowances at the end of the compliance phase, which eventually meant there's an oversupply of credits in the market, and so the price has crashed. The good news is the EU ETS has gone through sort of a recovery mode over the past 10 years, and today the price has not only recovered but reached the level which is believed to incentivize most sectors to lower emissions, and that level is around 100 euros per ton. 06:41Julia Streets: It's been so helpful to get a sense of progress, thinking about the dynamics of the market since launch, and also to think about the market share. Andrea, let me bring you in here because this is about the world's attempts to limit global warming to well below two degrees Celsius, in line with the Paris Agreement. Are we likely to see the growth of carbon markets in pursuit of this great ambition? 07:03Andrea Bonzanni: Well, we know that meeting the goals of the Paris Agreement requires a radical transformation of many areas of our economies and our lives, and for the reason outlined by Hasan, carbon markets and carbon pricing in general are one of the tools that governments are increasingly considering. Carbon markets are spreading from a core of rich runs economies such as the EU, California, South Korea, and New Zealand, to middle- income and emerging countries. This year, we had Mexico and Indonesia launching their emission trading systems, and the two schemes are expected to expand and evolve over time. There are other countries in Southeast Asia and Latin America that are implementing carbon markets, and even some African countries are starting to consider them. 07:45Julia Streets: Andrea, when we last spoke, you would just at COP27. As I mentioned in the introduction, that's when the first country- to- country carbon trade took place. Could you tell us a bit more about that and what happened at COP27? 07:58Andrea Bonzanni: Sure. At COP27, Ghana authorized the transfer to Switzerland of certified emission reductions. This transaction was the first of its kind under Article VI of the Paris Agreement. There were emission reductions generated in Ghana thanks to the implementation of enhanced rice production techniques that avoided CO2 and methane emissions. These emissions will be counted towards the climate target of Switzerland. In turn, Ghana commits to apply a corresponding adjustment to its emission account. Mechanisms like this have vast potential to generate investment flows in climate change mitigation and sustainable development from the Global North to the Global South. Article VI is still a small, nascent market, but we expect it to grow and countries are looking to buy and sell emissions to each other. In addition to Ghana and Switzerland, after COP27, another transfer was authorized, this time from Thailand to Switzerland. A country like Japan has 26 bilateral agreements with countries around the world and is looking to import emission reductions in the near future. Countries like Singapore, South Korea, New Zealand and Canada are all looking to purchase carbon reduction from abroad. Many countries around the world, mostly developing countries, are preparing and getting ready to become sellers in this market. 09:20Julia Streets: Andrea, just picking up on one of the comments you made there. One project being implemented under the Ghana- Switzerland, Article VI carbon pricing deal is a UN initiative that aims to reduce greenhouse gas emissions from rice cultivation by training local farmers in sustainable agriculture practices. Rice cultivation currently accounts for over 10% of global methane emissions, and this is because the main method of rice farming involves flooding the fields, which prevents oxygen from penetrating the soil, causing a buildup of bacteria. This bacteria emits methane into the atmosphere, contributing to global warming. The United Nations Development Program aims to promote climate- smart rice cultivation for Ghanian farmers, leading to a significant reduction in methane emissions. Stephen Kansuk, Head of Environment and Climate Change at the United Nations in Ghana, speaking from the capital Accra, told us more…. 10:18Stephen Kansuk: In Ghana, rice is cultivated as both food and cash crop. Research shows that in 2020, Ghana's total rice consumption was about 1. 4 million metric tons. To support rice farmers to reduce methane emissions in Ghana, the United Nations Development Program, the Ministry of Environment Science Technology Innovation, the Ministry of Food and Agriculture, and the Environmental Protection Agency, all in Ghana, and the future office for the environment in Switzerland are implementing a climate- smart rice project. The project is supporting over 7, 000 rice farmers across Ghana to adopt an alternate wet and drying technology in rice cultivation to reduce methane emissions. This project is one of the initiatives under a partnership between the government of Switzerland and Ghana. The agreement is to allow public and private institutions to collaborate to invest in climate change mitigation interventions in Ghana and exchange carbon credits with Switzerland for payments. In terms of benefits with this climate smart rice project, our target is to achieve about 1. 1 million tons of carbon dioxide equivalents, emission reduction targeted by 2030. The project will also provide extra incomes for the farmers as a carbon revenue through a performance bids payment system, and this will help increase their resilience. The project is also helping to create a number of jobs at the rural level so that they will be able to adapt effectively to the impact of climate change. 12:14Julia Streets: Andrea, I wonder if I could bring you in because there has been some reaction that has accused governments of rich countries of outsourcing their emissions reductions to governments of developing countries. Is that fair? 12:27Andrea Bonzanni: Emissions must be reduced globally irrespective of where they take place. The atmosphere is one at the end of the day. Article VI allows reducing emissions where it's more efficient, deploying capital where it can abate or remove more emissions. Researchers have quantified the cost savings of meeting climate targets used in Article VI will be up to 250 billion US dollars a year by 2030. There is a perception out there that projects reducing emissions abroad replace strong climate action at home. But I don't think there is evidence supporting this thesis. In the longer run, achieving net- zero means that every ton of CO2 emitted must be compensated by a ton of CO2 removed from the atmosphere. It is not rational to believe that all countries, especially European ones, can get to net- zero without using international carbon market mechanisms. International carbon markets deploy investments in things like natural climate solutions or emission removal technologies, such as direct air captures, bioenergy with CCS, and then deploy the capital where these projects are feasible. Not all geographies, not all jurisdictions have the potential to scale these solutions and achieve net- zero within their borders. Rich countries need strong climate action both at home and abroad, and we need carbon markets. We need well- designed one. 80% of countries in their nationally determined contributions said that they're planning to use carbon markets to meet their goals. So, we should start implementing carbon markets soon and let investment flows from rich countries into developing countries. 14:02Julia Streets: So we've explored this from the point of view of what are carbon markets. We've thought about this from an international global sort of point of view, and whether or not this is fair from a jurisdiction point of view. We've also heard about a real case study and its application of where some of this collaboration comes in. Malek, could I ask you, from a corporate point of view, why does this particularly matter to a company like Shell? 14:25Dr. Malek Al-Chalabi: Yeah, thanks. Thanks, Julia. At Shell, we've set a target to become a net- zero emissions energy business by 2050, and our policy positions on climate and energy transition serve as a global framework for Shell's advocacy with governments, international organizations, and associations. This includes supporting government policies that will help the world to achieve net- zero emissions by 2050. A variety of policy tools are required, one of which is carbon pricing, and at Shell, we advocate to put a direct price on carbon emissions as part of a broader policy framework to achieve net- zero emissions. The carbon price, whether through tax, cap and trade, or hybrid system, should apply to as many sectors of the economy as possible and increase over time. Additionally, Shell advocates for greater international cooperation through systems that transfer carbon credits between countries and ensure that international carbon credit transactions have environmental integrity by avoiding double- counting across national inventories. In summary, a carbon price can be an effective mechanism, and success depends on it being part of a comprehensive energy transition policy framework that incentivizes innovation and encourages commercialization of new and clean technologies. 15:33Julia Streets: You talked there about the importance of collaboration. I'm curious, what needs to happen to get more countries trading carbon? 15:41Dr. Malek Al-Chalabi: If we look at the data from the World Bank and look back 30 years, the first carbon prices took place in the 1990s. If we fast- forward today, there's approximately 70 carbon pricing initiatives and, as you've said, covering 25% of the world's emissions, which represents a sizable improvement. But this still means that 75% emissions are still unpriced, and more work needs to be done in this space. I think it's important to recognize a tremendous amount of work to operationalize carbon pricing policies has taken place. The International Chamber of Commerce at COP26 focused on global carbon pricing principles that are needed to help deploy carbon markets, and at COP27, a business review was also done to highlight opportunities for decarbonization. There are 10 principles which include, but are not limited to, focusing on greenhouse gas reduction as a prime target, creating a reliable and predictable overall framework, promoting the linkage of carbon pricing instruments, and ensuring cooperation for greater consistency globally. 16:49Julia Streets: Hasan, earlier you were talking about some of the market dynamics at play. I would love to get your thoughts on what do we need to do if we want to have an ambition for a global price on carbon? 17:01Dr. Hasan Muslemani: First off, I would say it's probably not easy and may not even be possible to have one carbon price that fits all jurisdictions in the world. This is because what may work for a country or a region or a jurisdiction might not work for another. We might have some that prefer a carbon tax mechanism, but others which might prefer a cap and trade, or an emission trading scheme, or ETS for short. Not only that, but the sectors which are included within these different ETSs in the world that we have today are not the same sectors. Some of them might include cement or steel or oil. Some others might include different sectors. To give an example from my own background, which is in steel production in China, specifically. Producing steel in China is much cheaper than in Europe. That's the first thing. The second thing is measures which we have that we can take to lower emissions from steel production in China versus in Europe are different and their costs are different. So, that means that the abatement costs for each company and each country are different. The problem with not having a global price becomes important when trading happens between these regions, so if you're importing or exporting steel into and out of Europe. For that reason, I think carbon prices should be complemented with what we now call carbon border adjustments. The EU has already introduced such a mechanism that will come online as of October of this year. Under these adjustments, what happens is any steel that would be imported from China into the EU will have to face the same carbon tax based on its carbon footprint. In that way, the steel manufacturer is now subject to the carbon price in Europe, the EU ETS price, creating what I would like to call an implicit global carbon price. 18:47Julia Streets: Andrea, I'd love to get your thoughts, if you would, about some of the risks and some of the opportunities for Article VI? And what do skeptics say about its limitations? 18:57Andrea Bonzanni: Well, the opportunities generated by Article VI are obvious. They go down to basic economic theory. We have to reduce or remove emissions where it's more efficient because that will allow us to do it faster and to do more at lower cost. So, we need an international mechanism that brings together countries with access to capital and technologies, but without access to cheaper emission abatement options, and on the other hand, countries without capital and technology, but with plenty of opportunities for reductions. So that's, to me, very clear; it's a mechanism that can work. Some of the risks around Article VI are related to the complexity of these mechanisms, and this is where the skeptics are coming from. Critics have magnified, in some instances, the cases where carbon markets have not delivered what they promised. They highlighted cases where methodologies to calculate carbon reductions were not robust, or measurements overstated the impact of certain projects. However, the industry is aware that markets need to improve, and there are many initiatives to address market integrity. 20:06Julia Streets: Malek, I'd love to get your thoughts about what are your hopes for the carbon markets in the future? 20:12Dr. Malek Al-Chalabi: I think if I build on what Andrea has said, I believe further operationalization of Article VI country- to- country trades increasing in the future would be a welcome development to take place. I think also, as some may know, Article VI. 4, which is the globally led carbon market by the UN, looking to operationalize in the next one to three years would also be another welcome development to help facilitate carbon markets. But also, as Hasan has mentioned, the growth of compliance and voluntary markets would also be a welcome development where countries can continue to use implicit or explicit carbon pricing mechanisms to help further incentivize low and clean technologies at a price that is helping assist decarbonization efforts. 21:07Julia Streets: Gentlemen, I'd love to come to each of you with your closing thoughts for our listeners. 21:12Andrea Bonzanni: Carbon markets need to grow. Growth, growth, growth is what we need. We need to shift gears, scale up markets, both in terms of coverage and in terms of price levels. We said that about a quarter of emissions are priced nowadays, but the World Bank estimates that only 4% are priced at the level that will allow us to achieve the goals of the Paris Agreement. So, whatever the economic and geopolitical situation, we cannot afford to put carbon markets on hold. 21:40Julia Streets: And Malek, what would be the one thing that you think that the audience should hang onto and really take away? 21:45Dr. Malek Al-Chalabi: I think our message would be that to put a direct price on carbon emissions as part of a broader policy framework to achieve net- zero emissions, and whether it's through a carbon tax, cap and trade, or a hybrid, they should apply to as many sectors of the economy as possible and increase over time. 22:04Julia Streets: Hasan, would you agree with that? What would be your message? 22:07Dr. Hasan Muslemani: I think markets have already picked up momentum, and they are here to stay. The next step is really to ensure integrity of what's being traded and sold in the market. That word integrity has really become the buzzword in the carbon market space lately, where we're seeing a lot of quality frameworks being developed to define what is integrity. We have solutions that are being praised as the holy grail of net- zero solutions, such as capturing CO2 directly from air or other solutions, and they're sort of being put in competition with each other. The issue is that we need all the solutions that we can get because in the fight against climate change, we are really in a race against time. Because this task is so critical to us as a human race, if anything, it's much better to be vaguely right than precisely wrong. MUSIC BED COMES IN 23:00Julia Streets: It's been a wonderful conversation because in such a short period of time, we've thought about the dynamics of the carbon markets; we've thought about some real use cases of how there's been some international collaboration; we've thought about why this matters for different people. But we've also been very considerate in terms of where are some of the limitations and perhaps some of the things that skeptics are talking about. But this is about integrity. This is about momentum, and this is about growth. Exactly as you say, this is all about us using all the tools at our disposal to drive change at pace and at scale. Andrea Bonzanni, Dr. Malek Al- Chalabi, and Dr. Hasan Muslemani, thank you very much for being with us today. You've been listening to The Energy Podcast, brought to you by Shell. Listen and follow for free wherever you get your podcast so you don't miss a single episode. The Energy Podcast is a Fresh Air Production, and I must remind you that the views you've heard today from individuals not affiliated with Shell are their own and not Shell, PLC, or its affiliates. I'm Julia Streets. Thank you for listening, and until next time, goodbye. MUSIC ENDS See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.

With COP27 closed out, The Energy Podcast hears different perspectives from people who attended the conference in Egypt, and their views on what needs to happen next. Presented by Julia Streets. Featuring Rebekah Shirley, World Resources Institute Africa; Susan Shannon, Shell; Eduarda Zoghbi, Global Student Energy; Andrea Bonzanni, International Emissions Trading Association. The Energy Podcast is a Fresh Air Production for Shell, produced by Annie Day. See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.

In the third episode of our series on heavy industry we explore chemicals. From t-shirts and trainers, medicines and mattresses, to cars and computers, phones and TVs, our modern-day lives are filled with products made from chemicals. But the chemicals industry produces a lot of CO2 emissions. What can be done to reduce these emissions? The Energy Podcast investigates. Presented by Julia Streets. Featuring Peter Goult from Systemiq, Naoko Ishii from the University of Tokyo and Robin Mooldijk from Shell. Additional reporting by Alexander Mante. The Energy Podcast is a Fresh Air Production for Shell, produced by Annie Day. See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.

Cement… it’s all around us. But producing it generates a huge amount of CO2 every year. So what can be done to take carbon out of the cement-making process? The Energy Podcast investigates. Presented by Julia Streets. Featuring Kristin Myskja, Director General of the Climate, Industry and Technology Department at the Norwegian Ministry of Petroleum and Energy, and Audny van Helden, VP Energy Marketing, Sectors and Decarbonisation, Shell. Additional reporting by Judith Durkin. You can find out more about the Northern Lights project here: https://www.youtube.com/watch?v=kbPDlZKB5os&t=22s The Energy Podcast is a Fresh Air Production for Shell. Edited by Claire Daley. Produced by Annie Day. Exec Producers: Neil Cowling and Michaela Hallam.See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.