Today if you ask a 10-year-old child what will be his or her first car, the
chances are the response will be: “An electric one”.

It does not really matter whether that first car will actually be electric:
more than one road leads to Rome.

More important is the underlying aspiration: to own a car that uses less
energy, saves money and is fun to drive. And since today’s young people are
tomorrow’s customers, companies need to embrace their aspirations.

Petrol and diesel will remain popular thanks to their convenience and efforts
to make them cleaner. Increasingly, they will be sold with biofuels blended
into them. There will certainly be a growing role for alternatives, ranging
from biofuels, to hydrogen, electricity and natural gas.

Within that mosaic of fuels, electric mobility is the talk of the global
village. That is not surprising. At Shell, we believe that the number of
cars with batteries is set to grow. But they will not all be the same.

Most consumers will continue to make pragmatic choices about which car to buy
based on cost and convenience, which is why hybrids are likely to
out-compete full electric cars for some time to come.

Hybrid vehicles combine electric mobility’s low-emission driving for shorter
distances with liquid fuels’ long range and swift refills.

Indeed, pure electric cars must overcome several hurdles before they can
compete with hybrids: the journey range of batteries needs to go up; quick,
convenient recharging or replacing of batteries must be made possible; and
electricity grids modernised and expanded to handle more power.

Batteries
Resource scarcity may also pose a challenge. Take lithium, a crucial component
of the lithium-ion batteries that will power tomorrow’s electric cars. It
can be easily produced in large quantities in only a few places on earth.

And current production methods put pressure on the environment. Making a big
shift to electric vehicles would require an expansion in the world’s
capacity to mine and recycle lithium, and its ability to do it sustainably
and responsibly.

Perhaps the most important thing is how we will generate the electricity
itself. By themselves, wind and solar will not be sufficient to power
large-scale electric mobility, at least not for the foreseeable future.

Coal
In the coming years, like it or not, most electric vehicles will rely to a
large extent on conventional coal-fired power, which is responsible for the
fastest growth in greenhouse gas emissions worldwide. That is not what
future customers have in mind when they think about their electric cars.

If electric mobility is to fulfil the hopes of future customers, we will have
to find ways to reduce emissions from coal. One way of doing this is to
capture CO2 emissions from power stations and store them underground, using
carbon capture and storage technology, or CCS. This promising but expensive
technology would get a tremendous boost if the United Nations Climate Change
Conference in Copenhagen in December expressed concrete support for it.

Natural Gas
Another way to quickly and cheaply reduce emissions from coal-fired power is
to burn natural gas instead. On average, a natural gas-fired power plant
emits half the CO2 of a coal-burning plant to produce the same amount of
electricity. It also generates significantly less local pollution.

Natural gas-fired power stations can also be switched on and off with relative
ease, making them ideal allies of the intermittent power generated by wind
turbines and solar panels. While natural gas is not a silver bullet, it is
difficult to see a plausible mobility future without it.

All this helps to explain why natural gas is an increasingly important part of
Shell’s portfolio. Last year, we produced enough natural gas to supply more
than 190m homes with electricity.

By 2012, half of Shell’s production will be natural gas. We may not be in the
business of building cars or developing batteries, but we will continue to
be at the heart of global mobility.

A decade hence, when the 10-year-old has grown into a young adult, he or she
may indeed drive a hybrid electric car that runs on a combination of liquid
fuels and electrons. If we make the right choices today, the electricity
powering the car will come from cleaner sources, including power stations
that use more natural gas and less coal, while capturing their CO2
emissions. And that will go much of the way towards meeting our future
customers’ aspirations.

Copyright Financial Times 2009, Peter Voser is CEO of Royal Dutch Shell

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