Do the research. European Intersectoral Summit on Research and Innovation Trinity College, Dublin. Matthias Bichsel

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1 Do the research European Intersectoral Summit on Research and Innovation Trinity College, Dublin Matthias Bichsel Projects & Technology Director, Royal Dutch Shell plc February 25, 2013

2 Matthias Bichsel became Projects & Technology Director on July 1, In this capacity, he is responsible for Shell s contracting and procurement as well as technology development and deployment. In addition, he has oversees Shell s safety and environmental performance. He joined Shell in 1980 after obtaining a doctorate in geology from the University of Basel, Switzerland. Matthias has worked for Shell companies and affiliates in Bangladesh, Oman, Canada, Indonesia, the USA and the Netherlands. In 1995, he became director of Petroleum Development Oman, looking after exploration and deep oil-field developments. In 1999, he transferred to Houston as managing director of Shell Deepwater Services.There, he was involved in all aspects of deepwater exploration and development on a global scale. From 2002 to 2006, he was Executive Vice President in charge of global exploration. And from 2006 until his current appointment, he was Executive Vice President - Technical for Shell Exploration and Production. He is a member of the American Association of Petroleum Geologists and the Society of Petroleum Engineers, where he is Member of the Industry Advisory Council. In 2011, he was appointed an honorary professor at the Chinese University of Petroleum, Beijing. A Swiss citizen, Matthias was born in He is married to Suzanne, and they have a daughter.

3 At an EU conference on the role of media in responsible research and innovation, Matthias Bichsel, Shell s Projects & Technology Director, argues that questions of energy policy must be resolved through fact-based debate. Research helps policmakers, technologists and journalists get the fundamental facts. On the basis of those facts, the public and private sectors can then collaborate to drive forward the energy-related innovation that society needs. The transition from small-scale development to large-scale deployment needs particular care. The media s role is to keep everyone honest. Good afternoon, everyone. I m very pleased to take part in this summit especially in these impressive, historic surroundings. I wish the Irish Government continued success in its presidency of the European Council. I know it s progressing a number of key issues around energy and technology. Shell looks forward to contributing to this work. As director of Shell's global Projects and Technology organisation, I must ensure that all of Shell s activities have the technology capabilities and expertise they need. I also oversee safety and environment across the Shell group of companies. So responsible research and innovation are right at the centre of my radar screen. Today I want to highlight the importance of good research for responsible innovation and for responsible communication about it. This might seem like a truism. But experience shows time and again how poorly researched news reporting can curb the political appetite to implement the necessary policies to capitalise on innovation. I also want to highlight the need for a proper understanding of innovation: not just great ideas in the lab, but something that gets deployed in the field to add value to business, the economy and society. Role of research Research for innovation is vital in the energy industry. I m talking about targeted, objective research that benefits stakeholders across the board. Without it, the EU would not have the innovations it needs to address the very ambitious decarbonisation agenda in the coming decades. But what we read or hear about these innovations doesn't always do them justice. Here s one example: carbon capture and storage, or CCS. The International Energy Agency has said that, if CCS is progressed rapidly, it could account for 19% of the CO 2 reduction effort that s globally needed by The IEA has also said that, without CCS, the cost of tackling climate change could be 70% higher. Yet several EU member states have stepped back from supporting CCS, even though it involves proven technologies and now just needs support for demonstration and deployment on a commercial scale. In the UK last month, the Labour party accused the Government of cutting its pot for supporting commercial-scale CCS projects by 80% over the next few years. The EU's NER300 scheme supporting CCS and renewables projects is also reported to have shrunk from 6 billion to less than 1.5 billion because of the low CO 2 prices. Disappointingly, in the first round of NER300 funding announced last December, all the 1.2 billion allocated went to 23 renewable-energy projects. Not a single CCS project benefitted. Don t get me wrong. The EU will undoubtedly need renewables. So it s good those projects got funding. But renewables alone will not be enough. Nor might they The EU will undoubtedly need renewables. So it s good those projects got funding. But renewables alone will not be enough. Nor might they be the cheapest way to decarbonise energy.

4 be the cheapest way to decarbonise energy. In 2050, even with rapid growth in renewable energy sources, fossil fuels are still likely to provide the majority of global energy. Indeed, the re-emergence of coal as a fuel of choice for power generation in Germany is particularly worrisome. The growth of coal without CCS can only hinder progress towards emissions reduction targets, and has serious implications for climate change. The time for action is now. There needs to be funding support for CCS demonstration projects; and an appropriate carbon price to ensure CCS deployment. Additional measures are needed to compensate for the reduced value of the allowances to be auctioned from the NER. And collectively, we need to promote knowledge sharing and collaboration within the EU and internationally. This will help to capture the best engineering value in CCS demonstration projects, and push deployment costs down. The EU requires a balanced, fact-based debate on CCS as a matter of urgency. And good research is vital to fuel that debate. Role of innovation Obviously, research also fuels the ongoing innovations themselves. Shell spends over $1 billion a year on R&D. We re at the top of the Patent Scorecard in the energy and environment sector. We re on last year s MIT Technology Review list of the 50 most innovative companies in the world, and this year s Boston Consulting Group list. But innovation is not just about having good ideas. It s about turning good ideas into reality, at the pace and quality required. In Shell, we spotted a bottleneck in our own organisation at that critical juncture between laboratory-scale R&D and large-scale commercial deployment. We now recognise that, even in the early stages of technology development, it s essential to tackle head-on questions about scalability, replication and standardisation. In the UK, the Energy Technologies Institute brings together global companies and government to make targeted investments in projects that bridge the gap between development and deployment. Something similar is called for across the EU. We need a better handover from smallscale development to large-scale deployment. And that requires sustained investment and close collaboration between the public and private sectors. On this issue, again, informed debate is needed urgently. Role of media Academics play an important part in such debate. They do much of the necessary investigation. And generally, the public trusts them more than they do businessmen, politicians or journalists. Nevertheless, the media also shape public debate. As the EU works towards an energy and climate-change framework for 2030, the media will question many things: the role of renewables; the role of natural gas; emission targets; funding for the transition to a low-carbon economy. I firmly believe in freedom of the press. It is a right, but also a great responsibility. There are many admirable, responsible journalists and news editors around the world. The less professional or accomplished ones are like football hooligans few in number, but they re the ones everyone notices. Online or offline, mainstream or specialist the media have a duty to properly frame debate: To make sure government officials and business leaders answer the right questions, using facts rather than opinions or uninformed theories. They must also hold policymakers accountable for their promises to deliver a cleaner, broader, more efficient The media have a duty to properly frame debate: To make sure government officials and business leaders answer the right questions, using facts rather than opinions or uninformed theories.

5 energy system which means supporting lab-based innovation and scaling up and commercialisation. Shell believes the best incentive for costeffective reduction of greenhouse gas emissions is an overarching target, supported by a strong Emission Trading Scheme. Yes, ETS prices have collapsed recently, partly because of the economic downturn. But we should not ignore the impact of overlapping policies for energy efficiency, renewable electricity, transport biofuels and so on. Nor should we ignore how the ETS price collapse has led to natural gas being squeezed out in favour of coal in the EU, as I mentioned. Conclusion To conclude: Well-researched innovation can drive the global energy system forward at the required pace and with the desired environmental, economic and social performance. Media, government, business, academia and society all have roles in making this happen. And all have the responsibility for ensuring they are properly informed through research good research so that they can carry out their roles. I look forward to the upcoming exchange of views. Media, government, business, academia and society all have the responsibility for ensuring they are properly informed through research good research so that they can carry out their roles.

6 Recent speeches by Shell s senior leadership The high road to innovation and technology, Matthias Bichsel Future of energy: solutions through cooperation, Marvin Odum Europe s stake in the Canadian energy supply revolution, Simon Henry Facing up to our global challenges in a volatile, uncertain world, Jorma Ollila ET Extraterritoriality Alien or Friend, Peter Rees Investment, innovation & imagination: The keys to Canadian-American leadership in the global energy challenge, Marvin Odum Natural gas: innovation for a sustainable future and global growth, Peter Voser South-East Asia: the journey to a more secure and sustainable energy future, Simon Henry Global legal challenges facing the petro-chemical industry, Peter Rees Energy demand, supply and downstream infrastructure challenge, Mark Williams Water, energy and the resource consumption puzzle: It s time for solutions, Peter Voser The natural gas revolution: a secure, abundant force for good, Peter Voser Growing global energy demand: a defining moment for Louisiana, Marvin Odum Shell and corporate tax, Simon Henry Meeting the needs of 9 billion people, Marvin Odum For information about Shell, including downloadable versions of these speeches and other publications, please visit Shell International B.V., Permission should be sought from Shell International before any part of this publication is reproduced, stored in a retrieval system, or transmitted by any other means. Agreement will normally be given, provided the source is acknowledged. The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this publication the expressions Shell, Group and Shell Group are sometimes used for convenience where references are made to Group companies in general. Likewise, the words we, us and our are also used to refer to Group companies in general or those who work for them. These expressions are also used where there is no purpose in identifying specific companies.