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    Conservation Isn't Enough Says Shell Exec

    Although it's a start, alternative fuels and reducing CO2 also play a part, the CEO claims.

    PHILADELPHIA -- The world can meet its demand for energy and control greenhouse gases over the next 50 years, while still relying on fossil fuels to supply 70 percent of the world's energy needs, according to Royal Dutch Shell CEO Jeroen van der Veer, who spoke with U.S. News & World Report to discuss the effectiveness of conservation efforts.

    "The first priority is conservation, because more than half of the energy we generate today is wasted. Take the average car, which uses about 20 percent of the gas to move it forward; the rest is lost to heat," said van der Veer. "We can help by making better, cleaner-burning fuels, and the car companies can help by making more fuel-efficient cars."

    On a personal side, van der Veer doesn't drive an SUV and has recently installed solar electricity panels on his roof, noting that he'd have to live a long time to get payback.

    Increased prices due to government taxes could be a way to increase conservation efforts. "We can make good estimates of what would happen if you increased gas taxes: People will buy less fuel, and they'll use it more conservatively. So I can see the logic that says "tax gas." But in the end, this is for government to decide," he said.

    While conservation is important, it isn't enough, van der Veer said. "The biggest reason is that energy demand is accelerating; even with conservation, it will double by the year 2050," he said. In addition, while demand is rising, more of the world's conventional oil fields are going into decline, resulting in a struggle to keep easily accessible supplies of oil and gas at the level of demand, according to van der Veer. To compensate, there will be an increasing use of unconventional fossil fuels, such as oil sands, including coal, which is more than twice as CO2 intensive as natural gas, and abundantly available, he said.

    Meanwhile, the carbon dioxide also needs to be removed from fossil fuels. "If you capture the CO2, then you can store it in the ground, especially where you have gas fields," said Van der Veer. "That's something we already know about because we use CO2 to enhance oil recovery. And at our big refinery in Rotterdam, we capture CO2 and feed it to greenhouses so the tomatoes grow faster."

    Currently, Shell is storing and capturing CO2 in demonstration projects now, and the company still needs to explore the method on a larger scale. "It will take a decade to test the carbon-capture technology," said van der Veer. "Then we have to work things out with governments so we can make it [economically] worthwhile, because right now if you capture CO2, you don't get credit for it, which just isn't logical. A unit stored should be the same as a unit saved."

    While ethanol is promising -- as the nation is the world's largest distributor of first-generation transport biofuels, selling more than 3.5 billion liters, according to van der Veer -- the supply needed to offset demand would create complications with the food supply.

    "If you start to calculate how to make a real dent in demand, you will get huge competition with food that will push up prices. So that's not a real solution," he said. "Our strategy now is to focus on second-generation biofuels, which are made out of the nonfood parts of crops. We've invested in companies that are working to produce ethanol from cellulose and raw materials like wood chips, but the challenge is still to make biofuels cheaper and make production more energy efficient."

    Hydrogen fuels could also be an answer, it is facing complications as well, according to van der Veer, whose company jumped into hydrogen fuel in the 90s.

    "We were very early to start with hydrogen—in the mid-'90s—but it's gone slower than we expected at the time. To make it successful, we still need innovation in two industries: We need cars, and we need a system of hydro stations. And even then, you need to find a way to make the hydrogen without emitting a lot of CO2 in the process. This is technically possible, but it's still a long way out," he said.

    While there are a number of fuels that could be the answer to reduce CO2 and meet the nation's energy demand, one thing is required to make any work:

    "There has to be a new mind-set. All the recent hype about renewables and about being "carbon neutral" doesn't change the reality of what we face, but it does help with short-term awareness. That's how it starts," he concluded.

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