Shell unveils five energy sector trends to watch in 2023

Shell unveils five energy sector trends to watch in 2023

UK-headquartered energy giant Shell has highlighted five trends in its energy sector outlook for 2023 observed through the prism of energy security, economics and transition to low-carbon sources.

Illustration; Source: Shell

Shell’s energy outlook for 2023, which was published earlier this week, points out that the energy transition is not something that can stand on its own, as it is in “a natural balance” with energy security and economics. Within the context of these three elements, five trends are seen as most impactful in the energy sector in 2023.

Elise H. Nowee, President of Shell Catalysts & Technologies, remarked: “As we enter 2023 and learned even more from 2022, it is important that we continue to remain flexible to adapt to changing world markets and (geopolitical) dynamics. The world has a growing need of energy and an urgency to limit global warming – all means needed to strive through with current core products in a more sustained way as well as thriving into the future energy transition, while delivering energy sources to all people worldwide.”

Nowee highlights that it is a global imperative that the energy transition is “already successful,” thus, to achieve the Paris Agreement goals of limiting global warming to 1.5 degrees this century, “we must collaborate to accelerate. In our collaboration, we must ensure that we are clear about how energy security, energy economics and the energy transition are brought together.”

  • Trend 1: Impact of inflationary pressures resulting in the high supply chain cost environment

Nowee outlines that preparations should be made to continue working in “a tough and severe environment,” as the industry will remain exposed to the challenges of higher energy prices, higher raw material costs and logistics shortages. These market dynamics will continue to impact the business and prices of catalyst products well into 2023.

“Now, things are slowly and steadily improving on logistics, and though hard to predict the energy prices should come down with a changing supply/demand balance. There will be an equilibrium in energy usage in many regions. We are already seeing consumers and industries reducing their energy demand by lower consumption, optimisation and transformation,” underlined Nowee.

The wave of traditional investments, travel and consumer buying hype that was seen coming out of the Covid-19 pandemic, is expected to slow down with high inflations. However, investments are anticipated to continue being high in the coming decades within the energy transition sector.

  • Trend 2: Resilience in the context of geopolitical pressures

Current global trends indicate that countries are moving away from being highly dependent on imports and exports, as many governments want companies to not only have a presence in the country they are headquartered but also to have their assets there, explains Nowee.

Due to the challenges experienced during the Covid-19 and the Russia-Ukraine war, people increasingly focus on more local products and businesses with a shorter and more secure supply chain. Nowee believes that it is important to have local employees across countries who speak the language to retain relationships and resiliency through changing geopolitical dynamics.

  • Trend 3: Innovation in decarbonisation solutions to achieve net-zero ambitions

There is a growing need to diversify energy sources and engage in the circular economy and Nowee claims that Shell is “powering progress in the energy transition and is a leader in the broader industry and cross-sectoral conversations,” as it has been “at the forefront” of investing in new energy sources, such as utilising hydrogen and CO2 to produce liquid fuels and treating and processing biowaste into renewable fuels.

Shell, along with a growing number of industry partners, is looking to decarbonise, however, Nowee underscores that in 20-30 years to come, “we will still need oil and gas. There are not sufficient alternative sources that can supply the energy required for a growing population of 8 to 10 billion by 2050.”

Furthermore, Nowee points out that there are multiple solutions for refineries to maximise the value out of the barrel, increase energy efficiencies in production (yields), lower emission levels and increasingly recycle material, waste and used products back to plastics, lubricants or base oils to support the circular economy and meet demands for cleaner energy.

Shell has multiple solutions to leverage in processing, but also in decarbonisation, such as Shell Cansolv CO2 capture technology to capture, store and utilise the CO2 that is emitted from different assets. Along with decarbonising existing assets, Nowee underlines that the availability and affordability of various energy sources need to continue to reach energy transition ambitions.

  • Trend 4: Innovation in core refining and petrochemical businesses

For Nowee, the key to leveraging core business assets in the current climate is to build upon existing technologies for an evolved purpose. In line with this, the advanced technologies developed by Shell’s R&D team support the firm’s target to become a net-zero emissions energy business by 2050.

“The breakthroughs from the lab and testing sites are now being realised at scale at the Shell Energy and Chemicals Park Rotterdam, the Netherlands, where facilities once used to process crude oil are now being transformed to process low-carbon fuels from industrial and agricultural waste. At the Shell Energy and Chemicals Park Rheinland, Germany, existing facilities are being repurposed to chemically recycle lubricants for reuse,” elaborated Nowee.

Shell collaborates with customers to build upon existing refinery assets to produce oil into chemicals, which can then be used to make more sustainable products. Nowee illustrates this with an example of the co-process of renewable feedstocks in their same core units to reduce emissions.

  • Trend 5: Collaborate to accelerate energy transition progress

Shell’s Nowee emphasizes that to limit global warming to 1.5 degrees by 2050, “we have to work very closely together. We can only be successful if we collaborate to accelerate. We all know that we must accelerate to reach Paris Agreement goals.”

Shell and the industry are not the only ones that “must drive change,” as this also requires communities, governments and countries to work together, says Nowee, while adding that as a company, Shell wants to provide access to energy to all people over the world.

“Shell Catalysts & Technologies is working closely with many parties in the value chain to powering and transforming energy together. We do bring our great expertise, technical solutions and track record of high-quality delivery over decades. It is in our veins. It is important for us to focus on those solutions needed by our customers to produce safe, sustainably and competitively and thrive in the energy transition,” concludes Nowee.

Regarding Shell’s other activities, it is worth noting that the oil major put the wheels into motion recently to advance its digitalisation journey through a global agreement with Kabal.

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