SCENARIOS NEW LENS

A SHIFT IN PERSPECTIVE FOR A WORLD IN TRANSITION

J.P. Jepp, Shell Canada June 18, 2014

WARNING: UNCERTAINTIES AHEAD This scenarios book contains forward-looking statements that may affect Shell’s financial condition, results of operations, and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections, and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘believe’’, ‘‘could’’, ‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’, and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this scenarios book, including (without limitation):(a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results;(e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable

potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal, and regulatory developments including regulatory measures addressingclimate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects, and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this book are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended December 31, 2012 which is available at www.shell.com/investor and www.sec.gov. These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this scenarios material, June 18, 2014. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forwardlooking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this scenarios book.

Agenda

1) Why do we do the Shell Scenarios? 2) The New Lens Scenarios- Introduction 3) Mountains vs. Oceans- comparison 4) Primary Energy Demand- Regional Scenarios 5) Primary Energy Demand- Road Transport 6) Mountains vs. Oceans- Cumulative CO2 7) Conclusion

3

4

WHY DO WE DO THE SHELL SCENARIOS? In the 1960s, Shell economists and engineers began to look at

the political, social, and economic forces affecting Shell The initial work allowed Shell management to better manage

the 1973 oil crisis. This was the start of Shell Scenarios. Since then, generations of Shell analysts have looked into the

future to identify uncertainties, challenges and opportunities. Summaries of some of these have been regularly shared

outside Shell, contributing to important public debates.

MOUNTAINS OCEANS

5

6

USA China Russia Japan India Germany

France Canada UK South Korea …etc

Heavy Industry Agriculture Services Transport

(passenger)

Transport (freight) Residential (heating) Residential

(appliances) Non-energy use

Solid Hydrocarbon Liquid Fuels Oil derived Gas derived Coal derived Biofules (1st gen)

Biofuels (2nd gen) Gaseous Hydrocarbon Electricity Heat Solar Hydrogen

Total Final Consumption Conversion technologies Total primary energy demand Supply/Demand

N. America Latin America Asia developed Asia developing Middle East & N.

Africa Sub Saharan Africa

Europe EU15 EU New 12 East other West other

Crude Oil Unconventional oil Natural Gas Unconventional gas Coal Nuclear Hydroelectricity

Biomass New renewables: Wind Solar Tidal Wave Geothermal Waste

NEW LENS SCENARIOS WORLD ENERGY MODEL Comprehensive country and sector analysis

WE ARE ENTERING AN ERA OF VOLATILITY & TRANSITIONS

Political and Social

Instability

Demographic Transitions

Urbanization

Emerging Resources- Shale Gas

Challenged Environmental

Boundaries

Building a ‘Mini Lateral’

World

Intensified Economic

Cycles

7

MOUNTAINS SCENARIO A VIEW FROM THE TOP

8

Political - Influence remains concentrated in the hands of the currently powerful - Leaders create stability via methods that promote the status quo

Economic - Rigid power structures and institutions hampers overall economic development - Some emerging economies see middle class grow, and then stagnate

Social - Inequalities continue to rise and expand in many societies - Young people lead increasing rebellion over social injustice

Energy - Slowed economic growth and compact cities alleviate demand pressures - Shale gas reaches widespread success; Gas becomes energy backbone - Slowing demand for liquid fuels limits growth

Climate - Sluggish economy and displacement of coal by gas = lower CO2 emissions - CCS becomes success as a way to maintain “our way of life”

MOUNTAINS TOTAL PRIMARY ENERGY BY SOURCE

1200

1000

800

600

400

200

0

EJ/y

ear

2000 2010 2020 2030 2040 2050 2060

Oil Biofuels Natural Gas

Biomass Gasified Coal Biomass/Waste

Biomass Traditional Nuclear Hydroelectricty

Geothermal Solar Wind

Other renewables

Year

9

OCEANS SCENARIO A VIEW OF THE HORIZON

10

Political - The current elite recognize their continued success requires compromise - Volatility and multiple constituencies impede policy development (e.g. sprawl)

Economic - Steady reform of economic structures keeps pace with emerging nations - Reform unleashes new economic productivity of broader sectors

Social - Focus on nation-state issues (rather than multi-lateral) - Increased connectivity enables profound shifts in opinion quickly = volatility

Energy - Growth in emerging nations boosts energy demand, squeezes supply - Shale gas does not meet expectations– especially outside North America - With limited growth in gas, coal maintains strong role– especially outside NA - Periods of high prices unlock new oil resources– long oil game - High prices for energy also unlocks expensive sources, and drives end-user EE

Climate - Emphasis on renewables and efficiency is not enough - GHG emissions continue to rise; need for significant adaptation

OCEANS TOTAL PRIMARY ENERGY BY SOURCE

1200

1000

800

600

400

200

0

EJ/y

ear

2000 2010 2020 2030 2040 2050 2060

Oil Biofuels Natural Gas

Biomass Gasified Coal Biomass/Waste

Biomass Traditional Nuclear Hydroelectricty

Geothermal Solar Wind

Other renewables

Year

11

MOUNTAINS vs. OCEANS PRIMARY ENERGY BACKBONE

12

PRIMARY ENERGY DEMAND- REGIONAL

13

PRIMARY ENERGY DEMAND- REGIONAL SCENARIOS (OCEANS)

14

0

100

200

300

400

500

600

700

800

2000 2010 2020 2030 2040 2050 2060

EJ / y

ear

(Ener

gy

sourc

e)

Year

Non - OECD - Total Primary Energy - By Source

Oil Natural Gas

Coal Nuclear

Hydro-electricity Biofuels

Biomass & Waste Biomass - Traditional

Geothermal Solar

Wind Other Renewables

FSB Energy - Shell WEM v2.5.12 - Oceans - US_Canada_NL

0

100

200

300

400

500

600

700

800

2000 2010 2020 2030 2040 2050 2060

EJ / y

ear

(Ener

gy

sourc

e)

Year

OECD - Total Primary Energy - By Source

Oil Natural Gas

Coal Nuclear

Hydro-electricity Biofuels

Biomass & Waste Biomass - Traditional

Geothermal Solar

Wind Other Renewables

FSB Energy - Shell WEM v2.5.12 - Oceans - US_Canada_NL

OECD Non-OECD

Oil Biofuels Natural Gas

Biomass Gasified Coal Biomass/Waste

Biomass Traditional Nuclear Hydroelectricity

Geothermal Solar Wind

Other renewables

15

2000 2010 2020 2030 2040 2050 2060 Year

0 20 40 60 80

100 120 140 160 180 200

EJ/Y

ear (

ener

gy S

ourc

e)

2000 2010 2020 2030 2040 2050 2060 Year

0 20 40 60 80

100 120 140 160 180 200

Oil Biofuels Natural Gas

Biomass Gasified Coal Biomass/Waste

Biomass Traditional Nuclear Hydroelectricity

Geothermal Solar Wind

Other renewables

Year

PRIMARY ENERGY DEMAND- REGIONAL SCENARIOS (OCEANS)

USA China

0

2

4

6

8

10

12

14

16

2000 2010 2020 2030 2040 2050 2060

EJ /

yea

r (En

ergy

sou

rce)

Year

Canada - Total Primary Energy - By Source

Oil BiofuelsNatural Gas Biomass GasifiedCoal Biomass / Waste SolidsBiomass Traditional NuclearHydro-electricity GeothermalSolar WindOther Renewables

FSB Energy - Shell WEM v2.5.17 - Mountains - Canada_v2

Oil Biofuels Natural Gas

Biomass Gasified Coal Biomass/Waste

Biomass Traditional Nuclear Hydroelectricity

Geothermal Solar Wind

Other renewables

16

0

2

4

6

8

10

12

14

16

2000 2010 2020 2030 2040 2050 2060

EJ /

yea

r (En

ergy

sou

rce)

Year

Canada - Total Primary Energy - By Source

Oil BiofuelsNatural Gas Biomass GasifiedCoal Biomass / Waste SolidsBiomass Traditional NuclearHydro-electricity GeothermalSolar WindOther Renewables

FSB Energy - Shell WEM v2.5.17 - Oceans - Bulgaria_v2

Mountains Oceans

PRIMARY ENERGY DEMAND- REGIONAL SCENARIOS- CANADA

17

PRIMARY ENERGY DEMAND- ROAD TRANSPORT SECTOR

Mountains Oceans

Electricity and Hydrogen

2000 2010 2020 2030 2040 2050 2060 Year

0

10,000

20,000

30,000

40,000

50,000

60,000

Billi

on v

ehic

le k

m

2000 2010 2020 2030 2040 2050 2060 0

10,000

20,000

30,000

40,000

50,000

60,000

Year

PRIMARY ENERGY DEMAND- ROAD TRANSPORT SECTOR- GLOBAL SCENARIOS

Gaseous Hydrocarbon Fuels

Liquid Hydrocarbon Fuels & Biofuels

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

2000 2010 2020 2030 2040 2050 2060

EJ /

yea

r (En

ergy

car

rier)

Year

Canada - Total Final Consumption - By Carrier - Passenger Transport - Road

Liquid Hydrocarbon Fuels Gaseous Hydrocarbon Fuels

Electricity - Commercial Hydrogen

FSB Energy - Shell WEM v2.5.17 - Mountains - Canada_v2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

2000 2010 2020 2030 2040 2050 2060EJ

/ y

ear (

Ener

gy c

arrie

r)Year

Canada - Total Final Consumption - By Carrier - Passenger Transport - Road

Liquid Hydrocarbon Fuels Gaseous Hydrocarbon Fuels

Electricity - Commercial Hydrogen

FSB Energy - Shell WEM v2.5.17 - Oceans - Canada_Bulgaria_v1 19

Electricity Hydrogen Gaseous Fuels Liquid Fuels

Mountains Oceans

PRIMARY ENERGY DEMAND- ROAD TRANSPORT SECTOR- CANADA

EMISSIONS CONTRAST: WORLD CUMULATIVE ENERGY-RELATED CO2 EMISSIONS

Mountains

3,500

3,000

2,500

2,000

1500

1000

500

0

Oceans

21st

Cen

tury

cum

ulat

ive

Gt C

O2

2061 - 2100 2031 – 2060 2013 - 2030 2000 - 2012

20

2ºC Pathway

GLOBAL ENERGY-RELATED CO2 EMISSIONS – The battle with time

IF WE WANT THINGS TO STAY AS THEY ARE, THINGS WILL HAVE TO CHANGE.”

“

GIUSEPPE TOMASI DI LAMPEDUSA The Leopard

QUESTIONS & ANSWERS

23

WWW.SHELL.COM/SCENARIOS