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Energy Transition in action: Example Shell in Germany
Living Energy Conference, April Rotterdam, 12Apr19 Stijn van Els Former CEO and Country Chair Shell Germany Deutsche Shell Holding GmbH CONFIDENTIAL 01/03/2018 1
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Definitions & cautionary note
This presentation contains data from Shell’s New Lens Scenarios. The New Lens Scenarios are a part of an ongoing process used in Shell for 40 years to challenge executives’ perspectives on the future business environment. We base them on plausible assumptions and quantifications, and they are designed to stretch management to consider even events that may only be remotely possible. Scenarios, therefore, are not intended to be predictions of likely future events or outcomes and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities. It is important to note that Shell’s existing portfolio has been decades in development. While we believe our portfolio is resilient under a wide range of outlooks, including the IEA’s 450 scenario, it includes assets across a spectrum of energy intensities including some with above-average intensity. While we seek to enhance our operations’ average energy intensity through both the development of new projects and divestments, we have no immediate plans to move to a net-zero emissions portfolio over our investment horizon of years. The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this presentation “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this presentation refer to companies over which Royal Dutch Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations” respectively. Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest. This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward- looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Royal Dutch Shell’s Form 20-F for the year ended December 31, 2016 (available at and These risk factors also expressly qualify all forward-looking statements contained in this presentation and should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, 12Apr19. Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. We may have used certain terms, such as resources, in this presentation that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 20-F, File No , available on the SEC website You can also obtain this form from the SEC by calling SEC-0330. Deutsche Shell Holding GmbH
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Shell and the German Energy Transition
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2015 2100 7+bn ~500 10bn ~1.000 Double world energy usage
Energy challenge Increasing population and energy demand 2015 2100 7+bn ~500 10bn ~1.000 WORLD POPULATION EXAJOULES ENERGY CONSUMPTION PER YEAR WORLD POPULATION EXAJOULES ENERGY CONSUMPTION PER YEAR Double world energy usage Copyright Shell Deutschland Oil GmbH Deutsche Shell Holding GmbH July 2017 4
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National CO2-Emissions targets in Germany
Millionen Tonnen Kohlendioxid-Äquivalente Source: Umweltbundesamt, Indikatorenbericht: Daten zur Umweltwelt 2017, Seite Deutsche Shell Holding GmbH 22. July 2017 5
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Renewable energy in Germany
Share of energy from renewable sources in EU Member States, 2015 (in % of gross final energy consumption) Renewable Energy in Germany 2015 (actual): 14.6 % 2020 (target): 18 % 50 2015 Europe 2020 target 40 30 German Energy consumption is about 4 times NL GDP and population size is about 5 times NL 20 10 Italy EU UK Finland Latvia Austria Croatia Estonia rtugal Spain Czech Sweden Denmark Romania Lithuania Slovenia Bulgaria Greece France Rep. Hungary Slovakia Poland Cyprus Ireland Belgium Malta Germany Po Netherlands Lu embourg x Source: Eurostat Newsrelease – 43/ March 2017 Copyright Shell Deutschland Oil GmbH Deutsche Shell Holding GmbH July 2017 6
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Climate Protection Plan 2050
Area of action 1990 (in million tonnes of CO2-equivalent) 2014 2030 (reduction in % compared to1990) Energy Sector 466 358 % Buildings 209 119 % Transport 163 160 % Industry 283 181 % Agriculture 88 72 % Subtotal 1.209 890 % Other 39 12 5 87 % TOTAL 1.248 902 % Source: Bundesministerium für Umwelt, Naturschutz, Bau und Reaktorsicherheit, Klimaschutzplan 2050, 14. November 2016, S.4. Deutsche Shell Holding GmbH July 2017 7
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SHELL ENERGIE SZENARIEN DEUTSCHLAND
Shell in Germany – Energiewende very relevant SZENARIEN DEUTSCHLAND Head office, Hamburg Grasbrook Lubricants Centre, Hamburg Harburg PCK refinery Shell Technology Centre, Hamburg Seefeld BEB, Hannover CRI Catalyst Leuna Rheinland refinery Floersheim Retail >2,000 sites, 20% market share1) Commercial fuels significant market share Gas, Power, CO2 Trading, B2B, B2C Hydrogen Ludwigshafen Wuerzburg MiRO refinery Altmannshofen “H2M” JV: ~100 stations 2019 1) Source: Energieinformationsdienst EID, 14Aug17 Deutsche Shell Holding GmbH
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Shell Energy Scenarios Germany
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Drivers of Energy Demand
Scenario Sectors Demographics and Immigration Power Winning the Marathon Economy Mobility German Politics (Regulations/Legislation) Residential Heating Slowing Momentum Technology Industry Global Politics and Economy Copyright Shell Deutschland Oil GmbH Deutsche Shell Holding GmbH 10
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Winning the Marathon & Slowing Momentum
■ Stable population via immigration (80 mio) Resilient economy, new industries; GDP +1,6% p.a. Strong and stable governments; climate consensus with support from society and industry; coal phased out by 2040; CCS/U applied post 2030 Strong and consolidated EU; rise of China benefits Germany due to past investments Germany testing ground for new technologies Highest rate of electrification in all sectors All levers pulled and stretched to maximum Population declining to 75 mio by 2050 GDP + 0.5% p.a. Lower urbanisation Diversified political landscape, less consensus, coal still in the mix in 2050 Less aligned EU and global cooperation Increased resistance to new technologies; industry looks towards more vibrant places Speed of change is slower - 70% CO2 reduction - 80% CO2 reduction Deutsche Shell Holding GmbH 11
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Primary Energy Consumption By Scenario
Germany – Total Primary Energy By Source EJ/year (Energy source) Strong growth in Renewables Nuclear phase out by 2022 Similar energy mixes until 2020s Thereafter Marathon: Marathon Momentum 16 14 12 10 8 6 4 2 ■ Primary energy demand remains high (11.5 EJ/a) Coal phase out around 2040 Half renewables, half oil and gas (40%) Thereafter Momentum: ■ Primary energy demand -30% to 8.5 EJ/a (less people, lower GDP growth) Coal still in mix by 2050 Half renewables, half oil and gas (more oil due to less electrification in mobility ■ Coal Nuclear Biomass Geothermal Other Renewables Oil Hydropower Solar Natural Gas Biofuels Wind Source: Shell Analysis Deutsche Shell Holding GmbH 12
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Electricity Consumption By Scenario
Germany – Total Electricity Consumption By Source Total Electricity – EJ/year (Energy carrier) Marathon Maximum electrification of all sectors Electricity grow by 250 % > 50% share of primary energy consumption Well >50% renewables (requiring GW newly installed capacity p.a., 6x more than today) CCS/U for 60% of fossil-based power plants and some heavy industry Momentum Also high rates of electrification Electricity grows by 50% (lower overall energy demand) > 40% share of primary energy consumption 5 Marathon Momentum 4.5 4 3.5 3 2.5 2 1.5 1 0.5 Biofuels Natural Gas Hydropower Other Renewables Biomass Geothermal Oil Coal Nuclear Solar Wind Source: Shell Analysis Deutsche Shell Holding GmbH 13
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Residential Heating and Heavy Industry By Scenario
Germany – Total Final Consumption By Carrier Residential Heating – EJ/year (Energy 3 Marathon Momentum 2.5 2 1.5 1 Germany – Total Final Consumption By Carrier Heavy Industry – EJ/year (Energy carrier) 3 Marathon Momentum carrier) 2.5 2 1.5 1 0.5 0.5 Natural Gas Electricity Biomass Natural Gas Electricity Biomass Solid Hydrocarbons Heating Oil Distributed Heat Solar Thermal Solid Hydrocarbons Oil Hydrogen Distributed Heat Source: Shell Analysis Deutsche Shell Holding GmbH Source: Shell Analysis 14
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Non-Energy Use Feedstock for Petrochemicals
Winning the Marathon Slowing Momentum Germany - Total Final Consumption – By Carrier - Non Energy Use - EJ /year (Energy carrier) 1.4 Germany - Total Final Consumption – By Carrier - Non Energy Use - EJ /year (Energy carrier) 1.4 EJ / Year (Energy carrier) EJ / Year (Energy carrier) 1.05 1.05 0.7 0.7 0.35 0.35 Solid Hydrocarbon Fuels Liquid Hydrocarbon Fuels Gaseous Hydrocarbon Fuels Biomass - Commercial Solid Hydrocarbon Fuels Gaseous Hydrocarbon Fuels 2040 2050 2050 Year Year Liquid Hydrocarbon Fuels Biomass - Commercial Deutsche Shell Holding GmbH 15
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Road Transport By Scenario
Germany – Total Final Consumption By Carrier Passenger Transport Road – EJ/year (Energy carrier) Germany – Total Final Consumption By Carrier Freight Transport Road – EJ/year (Energy carrier) Marathon Momentum Marathon Momentum 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 Oil Biofuels CNG/LNG Electricity Hydrogen Oil Biofuels CNG/LNG Electricity Hydrogen Source: Shell Analysis Deutsche Shell Holding GmbH Source: Shell Analysis 16
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CO2-Emissions from Fossil Energy
Germany – CO2 Emissions from fossil energy - By Source Gt CO2 /year (Energy source) By Scenario Reflects both direct and indirect emissions Marathon Marathon Momentum 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 ■ -80% target met Max. electrification; extreme efficiency gains in industry and transport; strong growth in RE CO2 from power generation drops from 0.29 Gt/a (2000) to 0.17 Gt/a (target: 0.08 Gt/a) ■ Hence 0.09 Gt/a CCS/U post-2030 required Passenger Transport Momentum Industry Freight Transport Services Residential Heating ■ -70% reduction achieved 0.09 Gt/a in power generation achieved (lower demand) Source: Shell Analysis ■ No CCS/U Deutsche Shell Holding GmbH 17
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Summary Winning the Marathon Slowing Momentum
Progress required in all energy consuming sectors (not just power generation), but sector specific challenges If all levers pulled to the maximum: % CO2 can be achieved (Winning the Marathon); Slowing Momentum: % Both scenarios see high growth of renewables ■ Winning the Marathon Slowing Momentum Higher primary energy need (11.5 EJ/a; -15% compared to today); about half renewables, other half oil and gas (40%) Highest rate of electrification in all sectors Electricity demand more than doubles (to 50% of final energy consumed) 6x new RE capacity p.a. (11-12 GW p.a.) CCS/U needed after 2030 High electrification rates, but lower overall energy demand (8.5 EJ/a; -40%) due to smaller population and lower GDP growth Higher oil demand higher due to slower penetration of electrification in mobility sector About half from renewables, other half oil, gas and coal Electricity demand +50% (to 40% of final energy consumed) 5x new RE capacity p.a. (9-10 GW p.a.) No CCS accepted Deutsche Shell Holding GmbH
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Implication for Policy Framework
Single CO2 target Adequate and effective CO2 price Gas key for Energiewende No technology bias Market compliant mechanisms Most cost-effective solutions first and now Consumer choices will be key Deutsche Shell Holding GmbH July 2017 19
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Shell Germany What we do, now… and beyond
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Shell and the energy transition(s) in Germany Now
Member of H2 Mobility and Clean Energy Partnership Building 400 H2-site across Germany by (some 50% at Shell sites) Gas-to-Liquids fuels from natural gas for road and marine applications Produce less local emissions Shell PrivatEnergie with First Utility Shell New Motion Gas and Power (incl. green power) for German households and small users Shell Energy Europe sells power to industrial customers Supplying LNG bunker fuel to Aida Cruises in Hamburg Chartered 15 LNG barges Opening LNG retail sites Exploring opportunities from Gasunie Terminal Brunsbüttel ■ ■ ■ ■ ■ ■ Copyright Shell Deutschland Oil GmbH Deutsche Shell Holding GmbH 21
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H2 Electrolyser at Rheinland refinery
Cost of „Green Hydrogen“ has come down fast 10 MW electrolyser at Shell Rheinland is largest application to date H2 Electrolyser at Rheinland refinery 2018 Hydrogen 100 H2M JV stations end 2018 400 H2M JV stations end 2023 Source: Shell Analysis, Industry data Shell Wesseling Electrolyser tentative design Deutsche Shell Holding GmbH 22
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The “REFHYNE” project creates strategic value
Products Hydrotreating Methanol Synthesis Hydrogen consumers Crude Oil Gasoline Platformer Natural Gas Reformer Hydrogen Electrolyser Naphtha Cracker Residue Gasification Oil Products Natural Gas Petrochemicals Water Hydrogen Electricity Flexibility Hydrogen producers 1937 Hydrogen compressors at Wesselin Deutsche Shell Holding GmbH
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