Big Oil the baddies because people can’t name coal companies, says Simon Henry, as strategy shaped by “carbon bubble”
By Alex Pashley
Staying within the Earth’s atmospheric budget for carbon dioxide is “simple arithmetic” – banish coal.
That was the view of Royal Dutch Shell’s chief financial officer in a week in which it and five oil majors backed a carbon price, effectively ringing the death knell for the world’s dirtiest energy source.
“Two-thirds of the carbon in the ground is coal. I could argue take coal out of the system, job done. It’s not oil and gas,” Simon Henry said at a London conference on Tuesday.
“The only reason Shell is in the headlines is because nobody knows the names of the coal companies, they’re all too small in that sense. Coal is the issue in terms of carbon bubble,” he said on a sustainable energy panel at a Chatham House event.
The world will burn through the planet’s remaining allowance of carbon dioxide to stay within a 2c temperature rise by 2100 within 30 years at current rates, scientists say.
And it was “simple arithmetic” that the world can’t move past CO2 concentrations of 450 parts per million, Henry said. The 400ppm mark was passed last month.
Though Shell continues the hunt for hydrocarbons. The Anglo-Dutch company has preliminary approval to drill in the Arctic, with Henry saying fossil fuels extraction will continue way beyond its 12 years of proven reserves.
With natural gas and oil cleaner than coal, a price on polluting will kill off coal companies and work to Shell’s advantage, independent experts say.
As energy demand soars as billions are hauled out of poverty worldwide while renewables suffer scale-up issues, fossil fuels are still critical.
Henry said Shell saw a “minimum” scenario of energy production soaring from 250 to 400 million barrels of oil equivalent from 2010-2050, as 3 billion people in the developing world move from subsistence to modern users of energy.
And Shell had a “moral imperative” to give them access to affordable energy.
It was time for “multi-decade solutions” and for business, government and civil society to decide on the right objective in directing $2 trillion of projected annual energy investment a year up to 2050, he said.
A carbon price, an “alignment of strategic intent that outlives the political cycle”, and a clear target for businesses to hit were three key conditions.
Shell took the unprecedented step to call for a carbon price on Monday with five European oil majors, signalling willing to work towards a UN climate agreement.
Fossil fuels would continue to play a role for the company, while clean energy struggled to be scaled up.
It accounts for just 20% of global energy production, with wind and solar just 1%, he said.
“Our industry is a core part of modern life,” Henry said. “We need it to make available, we need to make it affordable, and the way in which that energy is provided to citizens needs to be acceptable in an environmental sense.”