Shell’s CEO has stated that the company can achieve net zero emissions by 2050, but that it will require income from its oil and gas operations to do so.
Ben van Beurden criticized activist shareholder Third Point’s suggestion that the company decouple its traditional oil and gas sector from its renewables investment.
He told the BBC that the company’s goals for cleaner energy could only be supported by oil and gas in an exclusive interview.
“Right now, [the funding] comes from our heritage company,” he explained.
Mr van Beurden was speaking at Pernis, outside Rotterdam, Europe’s largest oil refinery, which he aims to convert from refining gasoline and diesel to producing biofuels and hydrogen over the next decade.
“These things can only be done if you have access to a facility (like Pernis) and the funds to do so.
“If we have to create a hydrogen plant from a billion-dollar wind farm in the North Sea, it won’t be paid by the hydrogen industry; it will be funded by the oil and gas industry,” he added.
New Oil Frontier
Oil and gas, on the other hand, isn’t only a relic of the past. Shell plans to develop additional oilfields in the North Sea, including Cambo, which it expects to yield 170 million barrels of oil.
What justification does he have for this?
Mr van Beurden believes the Cambo oilfield choice is ultimately up to the government, but that substituting UK resources for foreign imports to meet home demand makes little sense.
“Why would you say: Let’s not acquire our oil and gas demands from our own resources; instead, let’s import from somewhere else, most likely with a higher carbon footprint?” he said.
“I don’t believe it will improve the UK’s balance of payments, and it will certainly not help the world’s carbon impact.”
No Shortage Of Doubts
If you consider the emissions from consumers who use Shell goods, Shell now has a worldwide carbon footprint the size of Russia.
Next year, it intends to spend four times as much on oil and gas development as it does on renewables. This is why some people dispute Shell’s ability to meet its own goals, as well as those set by a Dutch court, which mandate it to cut its net emissions in half by 2030 and completely eradicate them by 2050. Shell intends to challenge a portion of the decision.
Shell is also obliged to make every effort to minimize its customers’ emissions, which account for 90% of the company’s entire carbon impact. Shell plans to challenge the court’s decision.
Shell’s investment plans have been examined by Shiu Ling Laew of consultancy firm Climate Insights, who believes that the oil company will produce more emissions by 2030 than it does currently as it expands its gas business.
“Even if you’re charitable and assume they acquire all the carbon capture, storage, and offsets they need, they could barely miss their 2030 objectives, and they won’t be able to meet their 2050 ambitions.”
“In reality, they will continue to increase emissions until 2030, and considerable quantities of emissions will still be produced in 2050,” he argues.
Mr van Beurden dismisses these projections as speculative, claiming that Shell is on track, having reduced its own carbon intensity by 17% since 2016.