May 20, 2014 - In 2009, Oil Change International extensively analysed the CO2 intensity of ..... two studies by HSBC we
Shell’s Carbon Bubble Shell reserves: high carbon intensity, high extraction costs, high investment risks
The Authors:
Peter Polder, oil and gas specialist Rolf Schuttenhelm, climate science writer Kari Velure, environmental governance specialist Milieudefensie/Friends of the Earth Netherlands, May 20, 2014
Does Shell’s ‘answer to the climate problem fit the carbon bubble?
4. Biofuels: p.18
Shell’s high-carbon solution to a high-carbon problem
5. Recommendations to lower carbon emissions
p. 20
6. Shell’s additional climate risks
p. 23
Sources WAppendix: Methodology Sources
3
Shell’s Carbon Bubble, by Friends of the Earth Netherlands, May 2014
p. 25 p, 26
How deep is Shell drilling into the
CARBON BUBBLE ? UP TO
Global carbon bubble
$ 21 TRILLION Shell’s oil & gas reserves
overvaluation of in national, private & public energy 1
6
.2
BILLION
OVER
Extra capital expenditure
$ 1 TRILLION
to extract ‘unburnable carbon’
proven reserves 2
LOWER ESTIMATE
PROVEN OIL
ADDITIONAL
RESERVES
UNPROVEN
BARRELS
7.4
BILLION
BARRELS
HIGHEST ESTIMATE
PROVEN GAS
BILLION
46
ADDITIONAL
RESERVES
UNPROVEN
BARRELS
74
BILLION
BARRELS
By definition the carbon bubble excludes energy companies’ unproven fossil carbon reserves (and also possible future exploration). Mentioned global overinvestment (up to 80%) lies solely within proven reserves of energy companies.
Therefore reserves that offer high energy for low CO2 are to be favoured over more CO2 intense reserves. CO2 intensity follows from nature of carbon reserves and the energy input required to extract the reserves. ‘Unconventional fossil reserves’ (for instance: tar sand, deep see oil, shale gas) have relatively high CO2 intensity, as expressed per reserve per barrel of oil equivalent. CO2 intensity of shale gas (55) is for instance 2.5x that of conventional gas (22). These high CO2 intense reserves are therefore more likely to be classified as ‘unburnable’ and not an economically viable, high asset risk investment.
KG CO2
CO2 intensity Shell reserves The is the financial overvaluation of proven carbon reserves Thecarbon carbonbubble bubble is the financial overvaluation of proven carbonthat are classified ‘unburnable’ – following from a limited remaining atmospheric carbon reserves as that are classified as ‘unburnable’ – following from a limited budget – following from a limited remaining atmospheric carbon budget. remaining atmospheric carbon budget.