WEB3

WHITEPAPER
Exploring the ‘Power to the People’ Web3
Scenario and potential impacts for Shell IDT
Authors:
for ShellAndreas
IDT Aas and Stephen Chantry
Andreas Aas & Stephen Chantry
Reviewers: Sabine Brink, Anish Joshi, Panagiota (Peny) Lantzouni, Jon
Rafferty, Vikram Seth, and Alexandra Osborne

Sponsored by Dieuwke Boxman

– IDT GM Sectors and Decarb,
B2B & CBDT

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Exploring the ‘Power to the People’ Web3 Scenario

INTRODUCTION:
This whitepaper explores a future 2033 scenario where there has been a transformative adoption of Web3 blockchain solutions and a
strong societal, corporate and consumer push for data privacy, financial democratization and climate action enabled by this
technology. This paper is inspired by the WEF 2023 ‘Blockchain for scaling climate action’ and the Shell Web3 Whitepaper1. It explores
how a variety of technological innovations could disrupt how customers digitally interacts with companies and potential implications
and opportunities this presents for Shell IDT. In this paper ‘Power to the People’ refers to the democratization of finance and data
ownership, with the value shifting away from intermediaries and Web2 platform giants, to the consumers and businesses participating
in the Web3 ecosystem2.

SCENARIO 2033: ‘POWER TO THE PEOPLE’

The year is 2033, and all B2B and B2C transactions are now automatically fulfilled with smart contracts3, encrypted, and stored on an
interoperable and connected web of decentralized Web3 platforms2. We see mainstream adoption of less energy-intensive consensus
mechanisms to validate transactions (i.e., proof of stake), tokenization3 and cryptocurrencies. Over the last 10 years, there has been
incredible efficiency gains with automated finance, smart energy grid trading systems, and supply chain inventory movements enabled
by smart contracts, IOT, AI and other monitoring, reporting and verification (MRV) solutions3. In this future, businesses, individuals,
and regulators can at any time digitally trace and verify product carbon footprint, ownership, authenticity, supply-chain origin, and
sustainability certificates end-to-end across complex value chains. There has been a changing market dynamic where more of the
value creation and margins is moved away from intermediaries, and over to the providers of products and services, and to
consortiums of participants on web3 platforms, as trust is automated and built into the system, reducing the reliance on mediators.
While the web3 revolution has led to efficiency-gains, new value streams and reduced trade risk, it has also refocused the importance
of cyber security and high-quality smart contract development to mitigate risks from hacking and exploitation of contract loopholes.
We have seen transformative change in the role IT and legal play in business ways of working, creating demand for new skills, talent,
and capabilities. Web3 developers collaborates with Legal and business account managers to program deal clauses and conditions
into transactional smart contracts in big B2B deals, with these clauses kick-starting the procurement process throughout the value-
chain. This combined with the emergence of generative AI and large language models (LLM) have created frictionless and low-human
interaction commerce sales and customer service experiences.

Another key development we have seen is how web3, AI and open source solutioning has enabled regenerative tokenonimics (Refi)3,
fractionalized assets, micro-investing, and community-based creators’ economies. In this new paradigm shift, economic activity
benefits all the system’s living participants and the planet, instead of unsustainably extracting resources, unfairly distributing profits
and ignoring the value of living ecosystems. Climate action and activism is governed by decentralised autonomous organisations
(DAO’s)3 to ensure transparent decision making and effective automatic allocation of capital towards impact projects, once set pre-
requisites are met, protecting the participants in the network. These trends have fuelled the emergence of public benefit corporations
(PBCs)3, where stakeholder value distribution and decision-making involvement are prioritized over only focusing on shareholder value
creation. PBCs’ have increased the bar for the ‘license to operate’ and have seen increased customer loyalty and engagement
compared to traditional corporations. Equally, these solutions have been adopted by start up’s, non-governmental organisations
(NGOs), venture capital firms (VC’s) and multinationals to operationalize support for social issues, increase transparency, to generate
new funding-streams and better manage collaboration in international consortiums and partnerships to tackle sustainable
development goals (SDGs), i.e., the World Bank, International Monetary Fund (IMF), social aid distribution, United Nations (UN), or
emerging liquid democracies.

1
Shell Whitepaper written by Vikram Seth, Mihai Buca and Sabine Brink (2022), introduces a ‘Deeply Decentralised World’, where Web3 could transform the energy
sector by driving disintermediation, democratisation, and decentralisation, see Appendix 2
2
Web2 is characterized as participatory where users share data and transactions on few centralized platforms (i.e., Facebook AND Amazon), while in a Web3 world data
sharing, transactions, network governance and ownership is decentralized and built into the platform, meaning a reduced reliance on intermediaries, see Appendix 1.
3 Definitions: Smart Contracts, Tokenization, MRV Solutions p.7-9, Regenerative Finance (ReFi) and DAO's p.11-12 from WEF paper (see Appendix 3), and PBC's.
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Over the last ten years we have seen a constant friction between governments and central banks working to regulate open
decentralized permissionless platforms (i.e., Bitcoin, Ethereum), while introducing their own central bank digital currencies (CBDC's)
built on internationally regulated web3 networks. There has been a need to overcome interoperability challenges and define rules for
how CBDC’s, cryptocurrencies and non-fungible tokens (NFTs)4 can co-exist, be traded, and taxed globally, while managing the risk of
open permissionless cryptocurrencies that operate outside of the legal system. To resolve legislative challenges regulators, law-
enforcement and corporations are involved as mediators at the private key and digital identity creation stage. They receive permission
from customers and organisations to decrypt and access data to carry out ‘know your customer’ (KYC) processes and comply with
other legal requirements.

Corporations have seen increased scrutiny on their environmental impact and requirements for more transparent and granular
environment social and governance (ESG) disclosure, verification, and reporting. Stakeholders have over time developed less trust in
central custodians to themselves create, set, and commit to climate change action, which has led to pioneering companies adopting
web3 to give autonomy to shareholders and stakeholders to be involved in the process. Social pressure from consumers and
corporations have driven privacy legislative action (built on principles of GDPR and web3) towards the web2 technology giants like
Meta, Alphabet and Microsoft, greatly limiting what data from their users can be collected and stored without permission. This
legislation has incentivized innovation and adoption of hardware and software that offers data privacy encryption, and driven
mainstream adoption of web3 principles, platforms, and services. web2 leaders have been forced to change their business models,
traditionally built on monetizing big data for tailored digital advertising. This disruption has reduced key revenue streams from search,
pay-per-click and selling data for marketing intelligence, as there is now a price associated with acquiring the data. Early indications of
this trend were visible in the 2020’s, when Apple released their App Tracking Transparency privacy feature which slashed global digital
marketing RO1 38% and cost Meta in the region of $10bn in advertising revenue over the course of 2022 alone 5. The mass market
adoption of generative AI created a flood of harmful fake content and ‘Deepfake’ creation. Web3 and AI solutions were developed to
authenticate the source and ownership of data and to help detect fake content and protect intellectual property (IP) rights.

POTENTIAL IMPLICATIONS FOR SHELL :

We have identified four different operating spheres where Web3 and complementary emerging technologies could impact and
potentially transform the industry, Shell, and its wider operating ecosystem.

1. DAO’s to improve collaboration, decision making processes and automate trust.

DAO’s and Smart Contracts can automate, democratise, and streamline business partnerships and consortiums where
conflict of interest, lack of trust and subjectivity risks to slow down decision making, allocation of funds and achieving the
mission. Equally, Shell or its competitors could utilize decentralized solutions to build a competitive advantage and increase
efficiency in the exchange of data, external contracting, and due diligence processes beyond their corporate borders.

2. Web3 & Smart contracts transforms the customer purchasing journey and Carbon Accounting
A key impact would be changes to how B2B and B2C transactions are decentralized, encrypted, and automated across
multiple tokenized Permissionless distributed ledgers potentially disrupting ways of working for trading and supply (T&S) and
customer facing business units. Together with the emergence of complementary disruptive technologies like generative AI
and chatbots, AR and VR, IoT and Digital twins, this could reinvent how organisations like Shell automate sales and customer
service processes by creating frictionless commerce solutions. These could both impact e-commerce B2C sales processes and
more complex B2B pricing and deal making processes, with automation through WEB3 distributed databases, private keys for
digital signatures, and smart contracts. Gone could be the days of sending a PDF invoice and then waiting for a bank transfer
through centralised banks in B2B deal making and procurement processes. Another payment innovation is the ‘streaming’ of
money where any financial contract can be paid continuously in micro-amounts during any time interval, instead of having
30-, 60- or 90-days customer payment cycles or employee salary pay-outs. Web3 will become very central in authenticating
and verifying customers carbon footprint, to create and trade carbon credits, and in effectively implementing, monitoring,

4 Non-Fungible Tokens (NFTs): the replacement of data elements with digital tokens, i.e., creating a unique digital baseball card, see page 3, Shell web3 paper.
5 Forbes: Apple’s privacy changes on iPhone cut the average mobile advertiser’s return on investment by almost 40% and cost Facebook $10 billion in ad revenue.
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and enforcing carbon taxation and legislation. Shell and its competitors could create new customer value propositions (CVPs)
with carbon tracking and verification solutions, while utilizing these technologies to track reduction of its own carbon
footprint.

3. How we gather, access, share and utilise data will never be the same in a deeply decentralised world.
The engagement model for how we gather, access, store, manage, utilize, and monetise B2B and B2C customer data to be
used to understand consumer behaviours and marketing models is disrupted. Traditionally, Shell was able to mirror the
digital strategy of Web2 leaders like Google and Meta to collect and analyse data insights from its suite of e-commerce
platforms, mobile applications, loyalty programs, digital service offerings, and integrate this with internal ERP systems. The
dynamics used to be Shell asking their customers for permissions to gather data through cookies and terms and conditions
when using Shell’s mobile application and e-commerce platform, with built-in data collection capabilities. In this encrypted
Web 3 future, Shell would have to build a strategy for how they would incentivize customers to decrypt and share selected
valuable consumer data using their private key. There is a shift in power dynamics with individuals and businesses having
control over who and what institutions can access data about their purchasing behaviour and digital footprint across web
browser and applications. With the emergence of decentralized data storage solutions, only one copy of data for participants
on the Web3 network is required. This would fundamentally change requirements for duplicating data storage in cloud data
lakes and ERPs for each organisation, as Shell would use their set of private keys to access transactions related to its
operations on the shared distributed ledger. There would need to be developed an interface strategy to connect internal off-
chain data ERP systems and applications to read and write data to Web 3 platforms. Another area of implication would be an
increased scope to how Shell manages its data security and information and risk management processes (IRM), and the need
for new approved architecture patterns.

4. The final sphere of influence is the wider society and ecosystems, where more public lobbying towards government
regulations, liquid democracies, and community creation that drives public opinion, retail investors and brand perception are
taking place on Web3 powered digital platforms. If Shell does not play a part and engage in this ecosystem, there is a risk of
reduced ability to influence brand perception and public opinion about its corporate responsibility and license to operate.

POTENTIAL IMPACT TO SHELL IDT:

1. ERP, security, access and identity IDT programs and carbon credit trading and verification platforms might have to consider
two-way integration and interface options to decentralized Web 3 platforms. It will become critical to understand how to
manage encryption and decryption keys and develop standards and cloud strategies for sharing and capturing data externally
outside of Shell boundaries.

2. HR resource strategies would need to be developed for how to attract and encourage the top technical talent within Web3
Smart Contract, Integration Architecture and AI and LLM to join Shell. It will be equally as important to identify which skills
becomes redundant in this future, and the best paths to upskill our workforce, while raising general awareness across Shell
about IDT and emerging technology.

3. Shell’s IT Sales enablement data analytics and customer facing loyalty programs and applications would have to build in
incentive mechanisms to convince customers to decrypt and share their consumer behaviour data with Shell in exchange for
some loyalty reward, payment, or valuable data insights.

4. Transformative data programs that aim to create a single version of Shell’s customer across all our Line of businesses and
products that enables decarbonization services, should identify mitigation strategies to reduce risk from data fragmentation
(I.e., transactional data split across Web3 and internal platforms).
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KEY POTENTIAL RISKS AND MITIGATION :

• Increased risk of disruption in operational areas in the energy value chain where Shell’s margins are driven by their role as an
intermediary (i.e., trading and supply of 3rd party energy commodity products).
• Web3 and emerging technology disruption risk to Shell’s IDT, ERP and Cloud programs if they fail to incorporate potential
Web3 integration points, private key encryption/decryption mechanisms and decentralized databases into its strategy. New
entrants and competitors could enter and achieve competitive advantage or create lock in effects in networks, making it hard
for Shell to be fast follower.
• If there is a data autonomy power-shift to customer ownership, Shell’s Web 2 inspired data strategies to create and collect
in-depth customer data profiles to be monetised for advertising, loyalty programs or selling decarbonization data insights to
B2B customers would have to be reshaped to incorporate Web3. This creates the risk of reduced brand power and stickiness,
traditionally enabled by loyalty programs.
• Energy DAO’s and regenerative tokenomics enables NGO’s and activists to mobilise communities and capital to influence
public perception and social investments towards fighting climate change issues and disintermediate large energy
multinationals. This could raise the bar for Shell’s license to operate.

KEY RECOMMENDATIONS (SHORT TERM) :

• Refine long-term roadmaps for key Shell IDT and IRM programs potentially affected by Web3 to ensure that they incorporate
architectural interoperability and integration with decentralized databases, Open-source component tech stacks and AI
solutions. Ownership: (IDT Architecture & IRM)
• Use the green agenda potential of Web3 and AI as core components in talent acquisition and reskilling strategies and
introduce Web3 and open-source best practices in IT processes. Ownership: (IDE & HR)
• Build on work completed by Blockchain Innovation team to identify which Web3 use cases areas Shell should position itself as
an observer, fast follower or leader, see illustration bellow from Shell web3 paper. Ownership: (PTX & IDT)
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KEY RECOM MENDATIONS (MID AND LONG-TERM):

• Collaborate with partners to set up a consortium aimed to create DAO’s and web3 solutions that give wider society ability to
engage and participate in voting for how energy companies can best invest in low carbon solutions, ESG initiatives and solve
sustainable development goals. This could support Shell in building a strong brand reputation, help protect its license to
operate and establish transparency and trust with society and customers. Ownership: (IDT & Marketing Business)
• Shell should scale up investments in existing platforms, capabilities, and learnings within Web3 and decarbonisation solutions
(i.e., Avelia and PCF) to take position as an early mover and ecosystem orchestrator. This could ensure that Shell can capture
significant value and build a competitive advantage, as there is significant risk from being a late adopter due to network lock-
in effects and the technology’s disruptive potential. Ownership: (IDT & PTX)
• Set up pilot between IDT and Legal to build digital capabilities focused on reinventing contracting and deal-making processes
with automated legal clauses in Smart Contracts. Ownership: (IDT, Legal & Sales)
• Develop pilots that combines Digital Twins, IoT sensors, MRV solutions and Web3 to improve value-chain traceability, carbon
footprint calculation and verification and smart grid systems. Ownership: (IDT)
• Develop pilots that enable loyalty programs with tokenization, GameFi, payment streaming and NFT’s that incentivize
customers to decrypt and share data and to drive commerce. This will ensure a continued marketing capability to precisely
tailor offerings, advertise, communicate, and create decarbonization plans. Ownership: (IDT & Marketing)
• Collaborate with external partners to develop pilots for a ‘frictionless’ customer operations (CO) and sales processes where
AI GPT assistants and Web3 smart contract platforms automates and streamlines the B2B and B2C customer purchasing
journey. Ownership: (IDT & CO)

CONCLUSION:

Even though it is impossible to predict how the future looks like in 10 years, it is critical that we continue to utilise strategic scenario
analysis frameworks and thought experiments as illustrated by this whitepaper. This can help us understand how technological, social,
and legislative trends could potentially disrupt and impact business processes, strategic investments in long-term programs, help us
develop robust risk mitigation strategies and to identify the most valuable Web3 and AI opportunities to pursue.

If you found this paper interesting, I recommend reading the following publications:
1. Web3 Shell Whitepaper: Shell Web3 Whitepaper (2022)
2. World Economic Forum; Blockchain for scaling climate action: WEF Whitepaper (2023)

If you want to keep up to date and participate in great communities within Web3, the energy transition or IDT in Shell, then please
visit:
1. Shell.web3 DAO community: (1300+ members in Shell run by volunteers)
2. Blockchain Community, Shell.Web3 Yammer Group
3. Traceable Energy Products Website
4. Sectors & Decarbonisation & B2B IDT Yammer
5. Future Energy Leaders Yammer Group
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Appendix 1
What is the difference between Web2 and Web3?
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Appendix 2

Findings from the Web 3 paper highlights that wider the impact of web3 on the energy sector and Shell can be
characterized by three drivers: Disintermediation, Democratisation, Decentralisation, and can lead to the following market
changes (2):
• Reduced barriers to entry for small cap players
• Influx of purpose-driven capital from wider pool of investors
• Greater community involvement: via ownership & governance
• Increased requirement for transparency & traceability
• Sustainability is the new safety: foundational focus on net zero & circularity in every project
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Appendix 3

Appendix 4
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Appendix 5

Appendix 6
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