Shell CEO sees red lights on path to greener energy
Oil giant cites struggle of curbing emissions as demand grows
It’s no surprise major oil companies are viewed as contrarians when it comes to climate change, even though all of them acknowledge the phenomenon and agree on the need for a response to one extent or another.
After all, keeping temperatures from rising to catastrophic levels will require the world to wean itself off fossil fuels and turn to cleaner forms of energy, hardly an appealing proposition to the financial well-being of oil producers. But now the leader of one of the world’s biggest oil companies is telling his peers to accept the role unapologetically.
“When it comes to some of the beliefs about the challenge of the energy transition, which may be founded on less than solid fact, our industry should not shy away from being the contrarian in the room,” Ben van Beurden, the chief executive of Royal Dutch Shell, told an oil conference in Norway recently.
“All of us here today have a pivotal role to play in shaping the energy system of the future. With our knowledge, we have some indispensable — and you could say, contrarian — insights to offer.”
With that, van Beurden ticked off the difficulties of curbing emissions as demand for energy grows, especially in developing countries.
“The underlying question is: How far can countries transform their economies to meet demand and reduce emissions at the same time?” he asked. “And, crucially: How fast can they do that?
“Social, political and geographical conditions vary from country to country. So the energy transition is likely to play out in a different way in different places. … In some places, it will be relatively fast; in others, relatively slow.”
Oil, coal and natural gas — the primary culprits behind climate change — will remain essential on a large scale for years for longdistance air travel, heavy road transportation, steelmaking and other sectors, he said in remarks prepared for the Offshore Northern Seas Conference in Stavanger on Aug. 29.
His speech came six days before President Obama and China President Xi Jinping formally entered their two nations into last year’s Paris climate agreement, which aims to hold the increase in the global average temperature to below 2 degrees Celsius compared to preindustrial levels.
Obama calls the landmark accord “the single best chance we have” to save the planet.
The Anglo-Dutch company is no opponent of the climate deal; in fact, Shell has taken a formal position that the agreement “could provide greater certainty about how the world can provide more energy with much less carbon dioxide.”
Nor is Shell absent when it comes to lower-carbon and nocarbon alternatives.
With its $52 billion acquisition of BG Group earlier this year, Shell became the world’s top liquefied natural gas company at a time when gas, which emits half the carbon dioxide of coal, is displacing coal as a fuel for electricity generation around the globe.
The company backs projects in Norway, Canada and other countries seeking commercially viable ways of capturing carbon emissions from coal- and gas-burning power plants and burying them deep underground. In fact, the 109-year-old oil giant sees itself becoming gradually greener.
“As we have explained to our investors, new energies like wind, hydrogen and biofuels will become essential parts of our portfolio over time,” van Beurden said.
But despite dire warnings by scientists of the potential for a climate catastrophe if the rise in temperatures isn’t curbed relatively soon, and his own company’s acknowledgment of the problem, van Beurden cautions that suggestions of a quick fix can be deceptive.
“In other words,” he concluded, “this century’s landscape will inevitably be a patchwork of renewables and hydrocarbons. Or, to put it differently, some level of emissions will remain for some time.”
“All of us here today have a pivotal role to play in shaping the energy system of the future.” Ben van Beurden, chief executive of Royal Dutch Shell