The global natural gas market is undergoing dramatic changes, with additional LNG supplies set to hit the market in coming years, price competition between natural gas and renewables becoming fiercer, supply security concerns across Europe, and fugitive methane emissions as an increasingly large climate concern.
On a new episode of Columbia Energy Exchange, host Jason Bordoff is joined by Maarten Wetselaar, the Integrated Gas & New Energies Director and Member of the Executive Committee at Royal Dutch Shell, to talk about these issues and more. Maarten joined Shell straight out of university and has held numerous roles across the downstream, trading, and upstream businesses.
Maarten and Jason discussed Shell’s Gas and New Energy Portfolio, one of Shell’s largest businesses. Maarten provided his view of the outlook for global gas demand and also gave his thoughts on the way in which gas and renewables can work together as the world transitions towards a lower carbon future.
Other topics discussed include the integration of BG Group into Shell, Shell's goal to become an integrated power provider, the role that Shell can play to reduce its own carbon footprint -- particularly with respect to methane leakage -- and the role that policy can play in tackling this critical issue.
Read the Transcript
Jason Bordoff: Hello and welcome to the Columbia Energy Exchange. A weekly podcast from the Center on Global Energy Policy at Columbia University. I'm Jason Bordoff. The global natural gas market is undergoing dramatic changes. Huge additional LNG supplies set to hit the market in the coming years. New price competition happening between natural gas and renewable sources of energy. Supply security concerns across Europe. Methane emissions is rising as an important environmental issue gaining more attention from the industry and elsewhere. And at the same time renewable and other clean energy technologies are growing rapidly and the costs are falling very quickly. We wanted to discuss these and other issues and so I recently sat down with Maarten Wetselaar on the sidelines of the recent OPEC meeting in Vienna. Marteen is the Integrated Gas & New Energies Director and Member of the Executive Committee at Royal Dutch Shell. Marteen joined Shell straight out of university. He's held numerous positions across the downstream, trading and the upstream business. We had a fascinating conversation that also touched on Shell's role in a lower carbon world, the company's LNG and gas trading business, its investment into the renewables space and much more. Here's that conversation. Maarten Wetselaar thanks for joining us on Columbia Energy Exchange.
Maarten Wetselaar: Pleasure to be here, Jason. Good to see you.
Jason Bordoff: So integrated gas and new energy is just… Shell has really played a prominent role and become much more outspoken on issues of energy transition. Can you just help just as a starting point help our listeners understand your portfolio in the company? What falls into the categories of gas and new energies and then let's talk about each of those in turn.
Maarten Wetselaar: Yeah. The gas portfolio is what it is. It is the gas that Shell sells to customers. But also, the gas that we kind of get out of the ground, liquify in our liquefaction plants or turn into clean products in our gas to liquids plants and then transport around the world. So that's why we call it integrated gas because these value chains start underground and they end with the customer. And we like to run these chains as a single division in Shell because they are very integrated gases. It's not easy to store. So, once you produce it you want to get it to the customer quickly. And the gas markets are quite different around the world, regional around the world. So, making sure you optimize your production, your logistics and your commercial decisions is an integrated task. That's a very big business for Shell and about a third of our balance sheet and profit and cash comes from it.
Jason Bordoff: And bigger obviously with the BG acquisition. How is that going from your standpoint?
Maarten Wetselaar: Yeah that's…
Jason Bordoff: In retrospect.
Maarten Wetselaar: That's gone well and it was not something, we are not a company that normally is very acquisitive. We don't grow by acquisition much. We have a very organic growth DNA and background. So, making an acquisition you know over $60 billion of that size was the first time ever. And so, the integration was very well planned. But still something we weren't quite sure how good we would be at it. Two years down the line we can say the integration went extremely smoothly. We could declare victory on the synergies, on an upgraded synergy target early. But most importantly we were able to retain a lot of the good people that BG brought. Integrate a lot of the good practices that BG brought on the trading optimization side, on the nimbleness of the way they were looking at the opportunity development. So, it's not just been a cost cutting exercise, it's actually made our enterprise stronger and giving us some important gas positions in Australia, in Trinidad, in Equatorial Guinea but also a number of important oil positions particularly offshore Brazil. So, it's not only a gas play but it clearly has emphasized the role of gas in the company which has been an ongoing. So over last 15 years Shell has been growing gas as a share in the company and now it's bigger in oil. And we do think it's part of making Shell…Yeah, the defensive word would be to make it futureproof. But I like more of it to say more of it as a way to make Shell not only part of but over time a leader in the energy transition. I think an emphasis on gas is very important. But the other leg of my business, the new energy piece is equally important in terms of creating that leadership position in the energy transition. It is my view and our view that the energy system will pivot around gas or gas will be the backbone of the energy transition for it to pivot eventually from hydrocarbons to electrum dominated energy system. And so that's why the two are together and absolutely crucial. Gas being very big and very relevant. New energy still being quite small but growing fast.
Jason Bordoff: So, let's talk about each of those in turn where you see where do you see the gas market headed? As you know every year 2015, 16, 17 a cacophony of analysts saying we're going to have a glut in the gas market and oversupply in the gas market. We did a study recently showing in part that hasn't shown up yet because of the role that some of these small and lesser appreciated importers have played with FSRU, Floating Storage and Regasification Unit technology in Bangladesh and Egypt and places like that. What do you see as the outlook for gas demand around the world? Where is that going to come from and what will the drivers be?
Maarten Wetselaar: Now indeed we've been bullish on gas demand and particularly energy demand over the last few years. You can go back a number of years with us being on the record about being bullish on this even when the world was seeing a big glut coming. And so far, that's been the right bet. We were again in a tight gas market today. We had a tight winter and it doesn't look like it's going to ease anytime soon. And you're right. The reason why people are confused about it is that gas demand and particularly energy demand is not so easy to model anymore. It used to be the case that you could see LNG demand going four to five years ahead of time because people needed to build big onshore terminals that just needed three, four, five years construction. Now with the floating storage and re-gas units, you can go from deciding to import energy to actually importing LNG in 12 months. So, it has become much more difficult for people to model gas demand increases or energy demand increases and a lot more has sprung up that people couldn't or didn't model a few years ago. And I think that trend continues. There's a lot of suppressed gas demand around the world in countries that never had the capital to build half a billion-dollar LNG tanks on them and they never had the gas, the size of gas demand to do something big like that.
Jason Bordoff: Because these are rapidly growing economies, more energy demand, trying to address local pollution concerns. Are those the drivers?
Maarten Wetselaar: It is all three of those. So, it is economic growth, air pollution and substitution of coal often. It is also in a number of countries, it is actually the depletion of natural gas production in their own country. Pakistan is a great example. Pakistan has been a gas fired economy for a long time. Always built on its own resources but the local gas industry is depleted and is going down. And so here is a market that is actually huge and they start to import LNG and the growth is very fast because all the infrastructure to consume gas is already there. Whereas in countries that didn't import energy before you need to build a pipeline by pipeline connection by connections so it's a bit slower. The other underappreciated driver of gas, the gas demand over last two years has been China. The government has been very, very clear and transparent on its plant gas trajectory. But I think the market and the analyst community always discounted that commitment to for gas to grow from 5 percent of the energy mix in China a few years ago to 10 percent by 2020. People thought it was just imposable. But hey it's happening and LNG imports into China grew more than 50 percent last year.
Jason Bordoff: In part because of strong policy to deal with the air pollution issue. Coal for heating and buildings and…
Maarten Wetselaar: Absolutely. It's very policy driven. So, it is and to be frank I visit China a lot. And the main problem is not the price of energy, is not the availability of energy, it's the pollution that come from it. And that's all about coal. And to some extent about intercity diesel particularly from dirty engines. But the coal displacement in China is a huge opportunity for gas. And the federal government couldn't be more supportive of natural gas. They’re putting in legislation, they’re putting in targets. And you know the Chinese gas market today is 235 VCM. If that's going to grow to 435 VCM in the coming years that's a massive amount of gas that's needed. So, the Russian pipeline will be needed and a lot of more energy import will be needed and domestic supply.
Jason Bordoff: So, people are trying to switch away toward lower carbon and cleaner sources of energy. Gas can play a role there. But increasingly we see the economics of renewables competing very favorably. In some cases, with subsidies and in some cases without.
Maarten Wetselaar: Yeah.
Jason Bordoff: Does that start to actually, you know people have, for a while thought of gas as a complement to variable renewables but increasingly it's competing head on hand. Is that a threat to gas demand? The fact that renewables are growing so quickly.
Maarten Wetselaar: No, I don't see it as a threat and I'll tell you why. First of all, I do indeed see gas and renewables as a very, very strong partnership to deliver not only clean energy but also reliable energy to customers. And in the fullness of time there will be, gas will be pushed out of. We’ll lose market share to renewables plus storage and that's fine. That's a good thing because we need to decarbonize the energy mix where possible. But today if you look at the energy mix 30 percent of global energy is still provided by coal. 20 percent by gas and a couple of percent by solar and wind if you’re kind. So, the opportunity for gas and renewables to both grow at the expense of coal is much bigger than the threat of renewables crowding out gas. And so, in the coming decades we see the journey very much being around renewables and gas together displacing coal and serving growing energy demand because energy demand is not static. It's growing at 1 percent a year and in the developing world much faster than that. So, it's to serve new energy demand and to crowd out coal there's a long runway for gas to grow together with renewables. Over time into forms of time, yes renewables will also eat into gas and that's a good thing.
Jason Bordoff: So is that, I mean some of our modelling is consistent with that including robust projections for gas demand growth and then a potential challenge is the fact that at the same time the gas demand outlook is strong. We've seen a collapse in FID. It's become much more difficult to finance these large multibillion dollar liquefaction projects. So is that setting us up for a challenge down the road. What's the business model that's going to work if it's not 20-year oil indexed contracts anymore.
Maarten Wetselaar: Yeah, I think the market is in transition in energy and you can still find 20-year buyers on traditional contracts. So, they're still there but it's diversified. And as a result, people are finding it more difficult to take FID in the classic sense of the world in the sense that you lie up all the demand, you sign the contract. You get the money from the banks and you build your facility. I think a lot more equity money will be needed in order to build LNG plants and that will narrow the playing field for people that are able to invest. But I think over time banks and financial institutions will also need to get more comfortable with the fact that energy is becoming a real market with a more transparent market price. And so, you don't need those long-term contracts anymore that they can actually start to finance projects with medium term contracts or even with a lot more [00:13:22] oil. But that will take, there's a gap there. Before the finance world is comfortable in financing energy plants without long term contracts that will still take some time and in the intervening period there is really the opportunity is for people who are willing to put equity money into these plants like us. But we're not the only ones. But it's a smaller cadre of investors than classically and that's going to be a challenge for the industry. How do we bring enough energy online in the next 10 years while the market really moves into something that is more transparent and that is financeable without long term contracts?
Jason Bordoff: And what's the role for a company like Shell in addition to bringing projects and supply online? I think the largest LNG portfolio player in the world. Now the trading houses are increasingly playing a role in the LNG market. What will that mean for how we meet that demand?
Maarten Wetselaar: I think the portfolio model that BG adopted first and Shell went to about 15 years ago is the model of the future where actually you absorb that market risk in your own portfolio. And you then and so you take your supply into your portfolio and you sell from that portfolio to customers. It’s the way of the future. It allows you to absorb the market risk rather than to try and pass it on to the customer. Therefore, you can delink the investment decision from the sell decision. So, you can invest when the time is right to invest and you can sell when the time is right to sell rather than have them all come together at the same time. And so, I think that will be the predominant model of the future. The trading houses play an important role in making the market more liquid and more diverse. And that is a good thing because eventually what we need is to develop a high level of trust in the liquidity of the energy market. If countries are going to commit significantly to LNG as a source of energy for the energy mix. Then they need to believe that the energy is always going to be around that they can buy it and sell it on any day. And so, the liquidity and the diversity of the market will be an important part of its growth.
Jason Bordoff: And where do you see the supply coming from? Obviously where people like to and some others are experimenting with new financing models to build projects in the U.S. But Qatar is growing production to 100 million tons a year. So, they say Iran has huge potential but obviously sanctions. East Africa, Eastern Med, where is the gas going to come from?
Maarten Wetselaar: I think the easy answer is all of the above because if you believe as we do that the energy market will continue, the demand will continue to grow by 4 percent a year and there are some credible estimates out there that are more bullish. And then we will need supply additions from Qatar, from East Africa, Mozambique, Tanzania, from the U.S., from Canada, from Australia from Russia as well as from Iran. Not all of it on a single day. But given how difficult it's been to get projects to investment decision we are more likely to see a shortage of investments than in length. So, we will need all these basins to contribute to energy supply growth and just diversity of energy supply. I think in that sense Canada and East Africa will be a really welcome additions to the world because they are in different basins, different geographies, different risk profiles. And they add to the security of supply around the world. But nobody, no single basin is going to be able to deal with the rising demand. It will have to be all of the above in the fullness of time.
Jason Bordoff: So, I want to switch to the other half of the portfolio with new energies. Just talk to us about how you and how Shell sees the energy transition unfolding and what the role for one of the largest oil and gas companies in the world like Shell in that transition.
Maarten Wetselaar: So, the world clearly needs to deal with… It needs to decarbonize and needs to clean up the air. These are the two game changing threats to the quality of life on the planet and the world needs to deal with it urgently. Those are easiest to address by large scale electrification. And this is not unconditional. It needs to be electrification using low carbon source of electricity. If you solve it by coal fired electricity you haven’t solved anything. But given how affordable solar and wind and in some cases, Hydro have become low carbon electricity particularly if it's complemented with natural gas fired electricity can really give you the solution to both decarbonization and to solving air quality. And so, because electricity can be so low carbon it needs to be the source of energy of choice. So, in a sense you can say any source of energy demand that can be electrified should be electrified and if you apply that to the world energy demand then we believe that up to 55 maybe even 60 percent of all energy demand could be served by electricity. And that could be almost entirely clean. And now if you believe those two things and clearly as a major energy company you have a choice. Am I going to evolve into being a niche player in the fullness of time in the world that continues to need oil, gas and chemicals which is a valid value proposition. But you are then more on the edge of the energy system. Or am I going to serve my customers with the electricity that are going to increasingly use as well. And that's a choice point and we have chosen to go there.
Jason Bordoff: And what do you know about being a power utility and shifting a company like Shell toward playing that role? That seems like a big change.
Maarten Wetselaar: Yeah, we have a lot to learn but we also have a number of things in place that I think any electricity company would envy as for. If you look at the brands that we have that people trust to buy energy from. If you look at the global access that we have to policymakers, to governments, to global credibility that we have to invest in any country in the world. The customer base that we have. We serve tens of millions of customers today with our energy. We have loyalty systems with them, we have a lot of data in this place and so we have a very loyal and significant, the largest customer base of any energy company in the world. And we have strong adjacencies in the sense that we are the biggest provider of mobility energy for mobility in the world and that will electrify. We are the biggest gas provider and trader in the world. So, in many ways we have a number of strong adjacencies to this. So as a starting point that is a pretty strong story. And the competition in this field isn't global that you can't find a company that is actually global in this space. So, our hypothesis is that if we leverage those strengths and if we're willing to be humble about what we don't know and if we have strong strategic intent we can become the first worldwide power seller and producer of low carbon power. And in that way play a leading role in the energy transition.
Jason Bordoff: How do you make money in a low margin business like power retail?
Maarten Wetselaar: I think you make, well skill will be important but I also think this business is going to change very quickly. At the moment for many people power is a low engagement product because they use it to basically light their house and power their fridge and television. In the future you're going to be using power for your mobility, to power your vehicle. You're going to use power to warm your home. It's going to be a much more intimate product and it's going to take a bigger market share in your wallet because you use so much more of it. And I think then the opportunity not only to brand but also different to differentiate we'll be bigger. With the use of digital and sensing technology the ability for a sophisticated provider to help you optimize your usage, to make sure that you can get the carbon intensity of power of your choosing. Low Carbon, medium carbon. There are more opportunities to serve the customers and to market power in the future than they have been in the past. And so, we believe that there will be a fair return there but clearly, we'll need to scale it up for this to become material for show.
Jason Bordoff: And tell us about some of the steps you've taken in that direction. The charging, the U.S. Solar Company, First Utility. What are some of the, what are some of the investments you've made and why have you made those?
Maarten Wetselaar: Yeah. So, what we aim to become is a really integrated provider of power and with probably the heaviest emphasis on the customer end. So, having a large portfolio of retail and commercial business customers that we serve with digitally enabled and sensoring enabled business models. So, we invest in First Utility who are and excellent provider of energy to retail customers. We bought a company in Texas called MP2 that provide electricity in very modern ways businesses. But we've also invested indeed in Solar Ranch in Silicon Ranch Company in the U.S. to provide solar. We do wind offshore in the Netherlands. At the moment these things are still geographically a bit dispersed and value chain wise a bit dispersed. And we will need to fill in the pieces of the puzzle in order to really get integrated change to prove our hypothesis. But if you look at our old business today, we sell 6 million barrels of oil. We refine 3 and we produce less than 2. So, we're much heavier at the customer end than actually at the production end. We will, we look for the same model in power where we predominantly serve customers. We do a lot of power trading and then behind that we generate enough to be a credible provider but we don't necessarily generate as much as we sell. So, we invest in all these parts of the value chain at the moment. We will connect these dots over time and then find the right balance between them and start to scale up. It is mostly concentrated at the moment in developed markets because they are deregulated and we believe that in order to make money from integration deregulation is an important element. We start in the middle with trading power. We are one of the biggest power traders in the world. So that's a skill we have. That's a position we have and we will go towards the customer from there and do our generation from there as well.
Jason Bordoff: And when you look at all these investments I think you've committed to invest one to two billion a year for the next several years in renewable power and clean energy and as you know some people who criticize say that's still a very small fraction of the overall investment budget. So, this is nice but it's not the real kind of commitment people would want to see toward a transition. How do you respond to that?
Maarten Wetselaar: There's two responses to it. I think in order for this business to become as material as are other businesses oil, gas, chemicals in the group we will need to step up beyond the 2 billion over time. That we first need to know what we're doing. So, we spent a few years spending wanted to and really prove our hypothesis before we scale up. But secondly and more importantly I am not yet sure that capital employed or balance sheet will be the right way to measure the size of a power business. Because what we see is that the generation and the solar and wind projects tend to be heavily project financed, tend to have multiple investors in them. We have been taking minority shares in them as long as we can actually off take the power. We don't need to own the whole thing. So, the balance sheet may not actually be the right expression of the materiality of the business. My sense is that we will be measuring the growth and health and size of our power business. More on the revenue side and the margin side than necessarily on the capital employed. That doesn't mean we'll be shy to spend capital on it. But we shouldn't fall into the trap of treating this as an oil and gas business. This is a different business. It will need to become sizable. And over time we'll learn exactly how you best express size and commit and empower.
Jason Bordoff: And one of the things we'll need to make that transition toward a low carbon future is not only zero carbon technologies but making sure lower carbon technologies actually achieve the greenhouse gas benefits we want them to. When it comes to gas methane leakage is a really big challenge there. Shell has been very active in trying to bring the industry together to make progress in reducing methane leakage. You brought a lot of companies together at the end of last year to sign a commitment to do that. Tell us what you what you are doing around methane emissions and what you think needs to be done. Moving forward we have you know the new things like the Environmental Defense Fund putting a satellite in space to tell us what's happening all around the world. There's going to be more scrutiny on this issue all around the world.
Maarten Wetselaar: Yeah, I think, it is quite an existential point for the gas industry. But luckily it isn't controversial.
Jason Bordoff: Even within the industry.
Maarten Wetselaar: Even within the industry. Nobody wants to leak their product. They want to sell their product. And so, it is clear that if you are really careless with your gas value chain or your gas logistics you can leak so much methane into the atmosphere that the benefits of natural gas, the carbon benefits of natural gas disappear. It's possible and at the same time we know that it is completely unnecessary for methane to leak into the atmosphere if you apply modern technology and modern operating practices. So, it is a mission for the gas industry and we want to lead in that mission by ourselves but with anybody who wants to lead together with us to make sure that the gas industry stops leaking methane. So really takes methane leaks down to something you can hardly measure because it's unnecessary and it's actually uneconomic. So what needs to happen is that participants up and down the value chain from upstream companies to pipeline companies to distribution companies adopt modern operating practices and invest in modern equipment that doesn't leak natural gas, that they commit to inspecting their pipelines and their installations which nowadays with infrared technology, with drone technology is really, really cheap to do. And then fix any leaks they find. We find a lot of proof that it isn't actually that expensive and that it is easy to do as long as you're committed to it. And the challenge it's not something we can solve. We can solve it for ourselves. But of course, the product we sell looks a lot like the product that a lot of people sell. Because natural gas is simply methane. So, convincing the whole industry to take this seriously is important. We made a big step last year with the help of Columbia to bring back a number of important actors in the energy industry. But what gives me real hope is that since then quite a number of companies have signed up to these guiding principles and they are not only the Shells and the BPs and the Exxons of this world but also KATA Petroleum, also Gazprom. CNBC is looking at joining. You know the major pipeline companies are looking at joining. And if we can get a major coalition together of the people in the gas value chain to stop methane leakage then that will be a big contribution to stopping climate change and to making sure that gas will take its rightful place in the energy mix going forward.
Jason Bordoff: A meeting that I chaired at your invitation. So just when people are wondering when you know when you said with the help of Columbia so the role we played in trying to help bring that together which I think was a very positive effort. What do you think the role of policy is? Because you know I heard you say people don't want to leak a valuable product. The industry has incentive to do the right thing here. And yet you do see some in the industry opposing government policy to require methane reductions or supporting in the U.S. this administration's effort to roll back methane rules. So sometimes people see an inconsistency there.
Maarten Wetselaar: Indeed. The biggest problem we see is for operators where gas is the byproduct. So, if you're a big oil producer and gas is a byproduct and it isn't actually the monetization of it, isn't actually your priority then some producers might be prone to say, we flare or we leak or we actually we don't inspect. And I think government and regulators have a crucial role here to make sure that there's a level playing field and that methane leakage and methane management is in for is defined and enforced by regulation. So, I do support strong regulation on this but it needs to be intelligently designed and this is where our effort comes in. We work together with regulators to make sure that regulations are intelligently designed so that they actually are implementable that are economic to implement and that they actually are aimed at the right thing, at keeping methane in pipe. That is entirely feasible and if we have smart regulation then anywhere around the world we will champion not only the implementation but also the enforcement of that. Because the industry unfortunately otherwise will take too long to get to a common denominator that is high enough to be proud of. So, we support regulation but it needs to be smartly designed in consultation with the industry.
Jason Bordoff: And that's always the goal of policymakers I think is smartly designed regulation. But as you know that's not always the outcome. And there's political considerations and there's a reason the outcome of a policy process can be messier. So, when you look at the kind of climate policy you think we need moving forward, Shell for example supports a price on carbon. But when we see the actual politics of trying to do that in the real world the kind of carbon pricing policies people put in place can be not maybe as perfect as one might design on paper. How do you think about what policies make sense to support and what you think government should be doing moving forward on climate change?
Maarten Wetselaar: First of all, let’s say just a quick one back on methane regulations. The model regulations that we develop, we don't develop them as industry players only. We bring some leading academics such as Columbia but also some leading NGOs such as the Environmental Defense Fund and the World Bank into the thinking on these regulations. So, we want to make clear that this is not only the companies themselves arguing regulation we want to make this an inclusive effort. So, we come up with something that doesn't look like it's biased like it's something that can actually be supported from multiple ends. And when it comes to carbon pricing we've been a long-standing advocate of carbon pricing. You can go back 20 years and see Shell arguing for a carbon price. Maybe we haven't argued hard enough because the progress we made in the last 20 years has been disappointing. Although recently we see more progress. We see progress in Canada and the European Union has reformed its system and it's getting better. And we see carbon pricing spring up around the world. Now what the temptation that we need to resist is to only to argue against imperfect carbon pricing. We see systems springing up around the world and we can criticize them because they're not as good as they could be. But I think our role for now is to really cheer on efforts to put a price on carbon even if imperfect. To let’s say let's get going with it and learn as society and learn as government and industry and these imperfections can be over time ironed out. Rather than argue against one because it's 20 percent of where it should be. So front out putting a price on carbon in almost any way is better than not having one.
Jason Bordoff: So, we're just about out of time but my last question because you focus on new energies. We talked about renewables that's not the only potential new energy. So just when you look on the horizon, Shell has a major gas to liquids plant. If you look at next generation biofuels or hydrogen and fuel cells what are you excited about? What's coming around the corner that we're not talking about?
Maarten Wetselaar: I think hydrogen is going to be big in the future. So, in two ways, hydrogen is a really good way to decarbonize heavy transport where batteries are difficult to make work. Hydrogen can and so any government or any region that wants to really decarbonize heavy transport will look at hydrogen and we believe it's going to be feasible. And that's going to be a way in to hydrogen playing a role also in light vehicles. So, you get away from this problem of cars being range bound or from discharging thing. So, hydrogen in transport, heavy transport and increasingly light transport is going to play a significant role. But Hydrogen is also a great way to store electricity that is surplus to requirements. As the world gets heavy on wind and solar power then there will be periods where there's too much electricity in the market and in those periods, you can actually use electricity to electrolyze water, produce hydrogen and then use it later on when the solar and wind don't produce enough. So, it's an ideal way to store electricity. It isn't very efficient but it is lasting. The problem with normal batteries is they're great for let's say day night storage but you can't use it seasonally whereas hydrogen you can simply store for in the summer and use in the winter. So, I think hydrogen both in power and in mobility will play a big role and I'm convinced that we need second generation biofuels. So, waste-based biofuels to also play a big role because we will need to, we continue to need liquid fuels for flying, there is quite a number of applications where liquid fuels will continue to be required. Second generation biofuels are around the corner. There are a number of really promising technologies one of them is ours. But we are very willing to use third party technology as well and has significant potential to be the backbone of the liquid fuels market of the future. So, I'd say hydrogen and biofuels are the two main ones and we are active in both.
Jason Bordoff: Great. Well at the pace at which these technologies are advancing we'll need to have you back often and frequently to let us know how Shell sees the market adapting and moving forward. But Maarten Wetselaar thanks for taking time to join us today. Thanks to all of you for listening. For more information about the Columbia Energy Exchange and the Center on Global Energy Policy visit us online at Energypolicy.columbia.edu or follow us at columbiauenergy. We’ll see you next week.