Royal Dutch Shell has called for massive government intervention in the energy sector on a global scale in order to achieve reductions in greenhouse gases.

Jeremy Bentham, Shell's chief economist, said that politics and regulation are the key factors in cutting carbon dioxide emissions. The role of technology is key, but it is not a silver bullet and he predicted nuclear power would play a small role.

Shell reckons that a carbon dioxide price of between €50 and €100 per tonne would drive investment in carbon capture and storage (CCS) schemes, essential to carbon emission reduction. Mr Bentham said that a CO2 price closer to €100 per tonne, more than four times the current price on Europe's Emissions Trading System, will be needed to launch the initial CCS projects.

Shell's stark challenge to politicians emerged yesterday in the publication of its energy scenarios to 2050. Mr Bentham said that Shell was publicising its conclusion about the role of regulation because government action needed to be taken urgently. “The next five years are critical and will decide which path the world takes,” he said.

Shell's plea for more regulation came as the chief executive of Total separately expressed concern about the uncertainty in European climate change regulation. Christophe de Margerie said yesterday there was too much optimism in the European Commission's plans for renewables and he suggested that Europe's carbon trading systems was still “a project”. Referring to renewable targets, he said: “There is a gap between what [targets] we have and what is do-able. We can't invent things just because we like it.”

According to Shell, the world could move along two paths, which it called Scramble and Blueprint.

In the Scramble scenario nations and companies compete for resources, while governments choose cheap and easy options. There is a flight to coal by power generators seeking cheap fuel and to primitive biofuels, such as ethanol. Shell predicts a “triple crunch” after 2020 when further growth in coal and oil and gas demand becomes unsustainable.

“Scramble seeks to pursue business as usual, but it cannot be sustained,” said Mr Bentham. Energy prices would be highly volatile.

In the Blueprint scenario, carbon pricing is established early and the world moves more rapidly to electrification and energy efficiency.

Mr Bentham said that more regulation was not an obvious benefit for an energy company such as Shell. However, Shell's plea was “important from an environmental point of view and a humanitarian point of view”.

Governments also needed to guarantee carbon capture and storage schemes on a vast scale. By 2050, Shell reckons that the world will need to achieve carbon capture for 90 per cent of power generation in the developed world and 50 per cent in the developing world.

“We need thousands of power stations fitted with CCS. You need a regulatory framework to do that,” said Mr Bentham. In addition, government regulations on energy efficiency for buildings, renewable energy laws and the regulation of transport fuels will be needed.

Mr Bentham cites the EU's adoption of biofuels targets without proper specification as “not a good move”. Under Shell's Scramble scenario, demand for conventional biofuels surges while under the Blueprint scenario, biofuel consumption is weaker as the world shifts to second-generation biofuels and more electrification of vehicles.

Shell is sceptical of the role of nuclear power, arguing that the task of decommissioning and replacing old stations while expanding the fleet was too great.

“The nuclear industry has been wiped out - you have to recreate it. It has its own limits. It's not a silver bullet.”

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