Oil major to launch new low carbon programme with BHP Billiton, Statoil and some solar firms in bid to green image
By Gerard Wynn
Royal Dutch Shell will launch next week a major initiative with multiple partners which it says will investigate and inform how the world can shift to a low-carbon economy.
The first task of its “Energy Transitions Commission” will be to prove its sincerity and impartiality.
Shell has recruited external thought leaders and the chief executives of multiple energy, technology and consultancy companies to the Commission, which it will launch at a “Fortune Brainstorm” conference on energy, technology and sustainability in Texas.
The aim, I am told, is to detail an orderly shift to a low-carbon future which keeps the world economy on track while cutting carbon emissions.
It is difficult to know, before seeing the results, how far the initiative is real enquiry, brand management, a strategic attempt to bend the debate, or a combination of all these.
Naturally, some sceptics might wonder if this is a PR job, after long-running environmental campaigns against its Arctic drilling. In the run-up to the biggest summit on climate change for years, in Paris at the end of this year, Shell may want to be on the front foot. Some might question how sincerely a fossil fuel company can engage in a debate on a low-carbon transition which ultimately seals the end of its core business.
My sources suggest that some “progressive” solar energy and digital technology companies have been invited to the Commission, which is a good sign, alongside fossil fuel companies such as BHP Billiton and Statoil. But would Shell follow the advice of the Commission, if it clashed with its own strategy, and how impartial can it be?
So far, Shell has offered a skewed vision of the world’s energy future. For example, its own analysis concludes that renewable energy will only make up – at the very most – 25% of the global energy mix in 2050. But even coal-dominated China has signalled that renewable energy will reach about this level in its own energy mix some 20 years sooner, in 2030. An alternative view is that the falling cost of solar power plus the ambition of technology companies like Apple to enter the energy space, including transport, will see fossil fuels get left behind over the next two to three decades.
Shell’s view naturally reflects its own fossil fuel business. In power generation, it has used the issue of climate change to promote its gas business over higher carbon-emitting coal. It is also a leader in developing carbon capture and storage (CCS), as a technology to eliminate emissions from gas-fired power. Meanwhile, it has exited most of its interests in wind and solar. In transport fuels, Shell has only very small biofuel ventures, and little or no interest in electric vehicles.
Shell may want to influence its Commission. One might expect key findings to reiterate its call for a global carbon price, which will hurt coal more. And it will want to underline the importance of CCS in the fight against climate change, given its strategic position, and the public funds at stake. For example in Britain, it is hoping to win next year a share of £900 million for its gas-CCS project at Peterhead in Scotland.
But if its Commission can also convincingly analyse, argue and inform across a wide range of other scenarios, it could make a useful contribution for investors, policymakers and entrepreneurs, and perhaps for Shell itself.