Outlook

“Decarbonisation, decentralisation and digitalisation.”

We are in the midst of an energy transition that will take us to a truly sustainable global energy system. However, this profound shift to low-carbon energy sources and technologies is a long-term phenomenon. Along the way, it is about satisfying the growing energy needs of an expanding world economy and population – especially the billions of people in the developing world who are still deprived of access to modern energy services.

Three big drivers will play a key role in shaping the future of energy usage: decarbonisation, decentralisation and digitalisation. Since sustainability is also about staying relevant, we will continuously evaluate challenges and opportunities related to these drivers in order to evolve with the ever-changing world that we live in. At the same time, we can use these concepts to explain our internal efforts.

Decarbonisation – our products as a stepping stone

Decarbonisation of the energy sector means reducing its carbon intensity; that is the emissions per unit of energy generated (often given in grams of CO2 per kWh). A shift from coal (which emits an average 900 grams of CO2/kWh) to lower carbon intensity fuels such as LPG and LNG already creates a reduction of approximately 50%. These two fuels can therefore provide a natural stepping-stone to the use of cleaner forms of energy (such as hydrogen and Bio-LPG) and renewable forms of energy (such as solar, wind and hydro).

There are different roadmaps towards a decarbonised economy. For instance, the European Commission is looking to cut greenhouse gas emissions to 80% below 1990 levels. We have a long way to go to meet such ambitions and we expect to play an important role in the process of getting there – for instance by shifting completely from regular LPG to Bio-LPG which is expected to be effective by 2040.

Internally, we will improve energy efficiency within our own value chain. We expect our new global energy monitoring framework – installed in 2017 – to be fully aligned with the Paris Agreement by 2019, through the methodology of Science-Based Target Setting. We also want to improve the data quality of our monitoring framework. This framework considers three levels of data quality that we measure, calculate and estimate. Today, as we measure data from our total carbon footprint, our data quality performance is 85%. Our goal is to have all of our carbon emissions measured by 2020.

Decentralisationour Renewable Energy Strategy 2020

Decentralisation is the process of redistributing energy production away from a central system. Clean technologies such as wind and solar are decentralised by nature, and together with storage solutions they can provide the energy that people need. The concept of decentralised energy is not new to us, since we are helping customers that are not connected to the grid with their energy needs. We help our customers become more energy efficient, while at the same time creating a cleaner living and working environment. In countries such as Brazil, Poland, India and China, where local indoor and outdoor air quality is a significant issue, we provide the information, tools and products needed to improve local air quality.

We are determined to build a renewable business as we climb the so-called ‘energy ladder’. For this purpose, we have developed our Renewable Energy Strategy 2020 (RES20). RES20 initially focused on all relevant areas, but given our ambition, strategic fit and market attractiveness, we have selected and prioritised three business opportunities to position us best for the near future (2020). 2018 will be used to further build upon this part of our organisation.

Digitalisation – a customer journey that is 80% digital

Digitalisation is all about technology and connectivity. The digitalisation of the power sector has already begun, with interconnected devices and smart meters becoming increasingly common. We are now getting to the point at which our energy system is fully digitalised, which creates opportunities and also imposes new risks. For instance, fears of cyber security and privacy issues are very much a part of public awareness, and should be on the agenda of every organisation that wants to take part in this transition, including us.

Our customers are increasingly exposed to the digital world, and they want us to move in that direction too. We have therefore set the goal of creating a customer journey that is 80% digital. We will also use a global team to develop a vision and way forward as we digitalise our supply chain where possible. This should enable us to drive more efficiently, reducing greenhouse gas emissions. Moreover, we will establish a global team to implement best practices in our filling plants across the world. This will help us to work more efficiently and safely.

Conclusion– from impact stories to detailed performance

In a world where climate change is having an increasingly negative impact on people’s life, and where air quality is a critical health issue for millions, action is required. Not tomorrow, but now. And as a privately-owned company with an international reach and local focus, we know that we can play a key role in creating the required solutions.

We have written this first company-wide sustainability review to answer questions and bring people together. It provides a first framework that describes what we stand for and how we want to work together as a company. Our objective is to keep building our Advancing Energy Together programme, since it provides focus and pushes us to find new ways of doing things together with our local business units and other parties within our value chain. This year our focus is on reporting our impact stories by highlighting what we are already doing across the world. Next year, we will accelerate our journey by reporting our performance in more detail and via meaning full quantitative key performance indicators. An important target here is to be GRI core-compliant by next year.

Securing a clean, sustainable and reliable energy supply is arguably one of the greatest challenges we face in the 21st Century. The products we sell today are clearly part of pursuing a truly sustainable world, but more transition is needed. After all, SHV has made a transition in its product portfolio before – SHV stands for Steenkolen Handelsvereeniging, which is Dutch for the Coal Trading Association. We feel confident that we can make a transition again.