CIOs are critical players in reimagining and transforming organisations to drive more business value through digital and data – and they will be key enablers to support the energy transition.
The world faces an urgent challenge. How do we tackle climate change and move to a net-zero emissions energy system while also meeting the growing demand for energy? Innovative new technologies, including digital technologies and AI have an essential role to play in achieving a net-zero emissions future.
The International Energy Agency (IEA) recently reported that nearly half of the reductions in CO2 emissions by 2050 need to come from new technologies that are currently at the demonstration or prototype phase, while many more need to be created[1]. Major innovation efforts – including digitalisation – must take place in the near-term to bring these new technologies to market in time.
I believe that technological innovation is key to help us make the massive changes needed.
Shell is a pioneer in the development of many digital technologies. We partner with some of the world’s leading technology companies to deploy digital solutions at scale across our businesses. Artificial Intelligence (AI) is one of the most important- developments.
In a report published by PCW and Microsoft, it was estimated that the application of AI levers could reduce worldwide greenhouse gas (GHG) emissions by 4% in 2030, an amount equivalent to 2.4 Gt CO2e – equivalent to the 2030 annual emissions of Australia, Canada and Japan combined. At the same time as productivity improvements, AI could create 38.2 million net new jobs across the global economy offering more skilled occupations as part of this transition.[2]
At Shell, we are using digitalisation to help achieve our net-zero targets in the following three ways:
- reduce the carbon intensity of our operations.
- offer low carbon energy solutions to our customers
- design and optimise complex, multi-carrier energy systems.
At Shell, we set a target to reduce absolute emissions by 50% by 2030, compared to 2016 levels on a net basis. This covers all emissions in Scope 1, which come directly from our operations, and in Scope 2, from the energy we buy to run our operations, under our operational control. And we are making progress. At the end of 2022, we had reduced the absolute emissions from our operations by 30% compared to 2016.
Achieving net-zero emissions:
Digitalisation helps us to reduce the emissions from our own operations. Shell’s process optimiser for liquefied natural gas (LNG), for example, takes information from sensors and uses artificial intelligence (AI) to calculate efficient settings for equipment. These efficiency improvements can reduce carbon emissions at the Nigeria LNG facility by around 355 tonnes a day when the plant is operating at full capacity.
Digitalisation helps us offer our customers low-carbon energy products and services. Our smart-charging algorithm helps customers to charge their electric vehicles more cheaply. We own sonnen, a company that uses digital technology to automatically optimise how domestic customers use and store the power generated by solar panels on their home.
We are helping industrial and commercial customers to cut their emissions. For example, we are using data-driven simulations to help Dalmia Cement, a leading Indian cement manufacturer, analyse the effects of changing fuels, technology and raw materials. Our Just Add Water System (JAWS) software helps to reduce ships’ fuel consumption and emissions by recommending fuel-efficient trim and draft positions.
Digitalisation is helping us develop new low-carbon technology. We are using modelling and data-driven simulation to reduce the impact of air turbulence at wind farms, design new containers for the safer transport of hydrogen, and develop ways to use electricity instead of fossil fuels to heat steam cracker furnaces.
Generating shareholder value:
Digitalisation enables process improvements, cost reductions, production increases and increased customer margins across Shell’s businesses. For example, innovations such as predictive maintenance use data and AI to help us spot problems before they become big and expensive to fix. Shell is also using AI to sort through seismic data so we can find oil and gas more quickly, at a lower cost and improved recovery rates.
Improving safety and transparency:
Shell has used robots on more than 100 cleaning and inspection jobs and has flown more than 1,200 drone missions. Robots and drones can help improve safety by, for example, getting a machine rather than a person to work at height. We have expanded the use of digital twins that simulate conditions at physical assets through digital replicas. Such technologies help improve operational excellence and enable people to work remotely without having to go on-site. Gas imaging cameras, sniffer robots and satellite and drone-mounted sensors help Shell to detect, reduce and accurately report emissions and leaks.
At Shell, we also believe that it will take the development of open-source platforms and common data standards to accelerate innovation and make it easier to share data and code across organizational boundaries. But not every sector is yet convinced. CIOs, as digital and sustainability leaders, must work together to shift that mindset. Otherwise, we will miss out on a key lever to accelerate the energy transition. Recent research conducted by MIT, sponsored by Shell, reported that leadership’s support – including that of the CIO – is key to any successful digital transformation. Furthermore, a digital culture is also needed to understand and address the challenges of decarbonization.
The true value of digital technology is in the changes to people and processes enabling organizations to rethink traditional ways of working and to make better decisions based on new data-driven insights. Creating buy-in and ownership to embed it in within an organization is hard work and requires steadfast commitment from the CIO and the senior leadership team.
In summary, digitalization is already transforming the energy industry, by improving efficiency and safety as well as facilitating the use of renewable energy. Shell’s R&D and product deployment shows that digitalization is helping to drive the energy transition in three ways: 1. Helping to make existing operations more efficient and improving mechanisms to monitor and track emissions. 2. Enabling a more rapid redesign of the energy systems of the future with an operating system for more complex, decentralized, and diverse energy systems. 3. Developing new business models with economic incentives to help accelerate the transition to low-carbon energy sources.
I wish you the best of success with your own digitalisation and energy transformation journey.
To read more, visit www.shell.com/digitalisation.
