In a speech last Thursday at International Petroleum Week - one of the biggest events on the industry’s calendar - Ben van Beurden, chief executive of Royal Dutch Shell, argued that big energy companies have not been assertive enough in the global warming debate and that they must advocate more strongly for climate action in the lead-up to the Paris Climate conference later this year.
He argued that:
The outcome of the political process is uncertain, but the trends behind it are unmistakable. Even more than the oil price, these trends will shape the future of the industry over the coming decades. For a sustainable energy future, we need a more balanced debate.The issue, Beurden argued, is “how to balance one moral obligation, energy access for all, against the other: fighting climate change. We still need fossil fuels for a lower carbon, higher energy future.” His comments came as negotiators from more than 190 countries met in Geneva to agree on a draft climate agreement that diplomats will take to the Paris summit in search of a deal.
Beurden has a significant platform from which to speak. His words will be weighed and considered by politicians around the world. But while he seeks to position Shell as a leader on climate advocacy, it is important to consider what motivations underlie his speech.
Is he seeking to build industry momentum to come to terms with climate science? Is his speech a reflection of growing tendency for oil and gas companies publicly to point the finger at coal producers? Or is Shell positioning itself to tap into the lucrative business to be made from the deleterious effects of climate change?
Context is crucial
To answer this question, we need to put Beurden’s speech into context and consider Shell’s record on climate change. In his instructive book, Windfall, US journalist McKenzie Funk notes that Shell was an early proponent of future scenario planning. This involves envisaging multiple versions of what the future could look like, and making plans in preparation for each of those alternatives.
Using this practice, Shell was able to predict and position itself to benefit from the twin OPEC oil shocks, the fall of the Soviet Union, the uprising against the World Trade Organization in Seattle, and the rise of global environmentalism.
Shell has been thinking about climate change since the 1970s. Unlike Exxonmobil, Shell did not plough huge funds into climate denial, and between 1998-1999 it even implemented an in-house version of the Kyoto protocol. According to Funk, this initiative included:
[p]lans to reduce the company’s own greenhouse-gas emissions by 10% by 2002, an internal cap-and-trade scheme, a shadow carbon price and a commitment to evaluate projects on the basis of not only the profit they would make but the carbon they would emit.Climate change became an even higher priority in 2005 when Beurden was appointed as chief executive. He wanted his futurists to rock the boat and ask questions that would be deeply inconvenient for an oil multinational, like: what does the emerging reality of climate change mean for Shell?
In 2008 Shell published its view of a future under climate change. The report, Shell Energy Scenarios to 2050, describes two different scenarios, called Blueprints and Scramble.
Blueprints represents a future in which grassroots advocacy results in timely action on climate change. Governments legislate a price on carbon, shift energy toward natural gas, and deploy industry-developed technology for carbon capture and storage.
Scramble is the opposite scenario, in which industry becomes embroiled in a race for scarce resource, while an energy crunch prevents governments from coming together on a climate deal. Politically, the United States and its allies point the finger at China, while China continues increasing its greenhouse emissions well into the 21st century.
While neither scenario was a completely accurate forecast of where we are now, we are certainly living in a Scramble world.
The financial imperative
The important thing to understand from this is that for the most part, Shell is not transforming into a “green” company for the sake of it (except perhaps in its PR department). The company itself just wants to make money as best it can in the future, and if there is going to be a future price on carbon, that becomes something to factor into its strategy.
Shell may have wanted the Blueprints scenario to materialise because that made for a less volatile world - and because it has more natural gas than its rivals. But when Blueprints became unrealistic the company switched gears and said “if it’s a Scramble world, we’re going to Scramble too.”
In fact, it was just after the collapse of the 2009 Copenhagen climate talks that Shell started to make big moves in search of Arctic oil. Shell plans to drill for oil in the Arctic this year.
In presenting this perspective, I want to make clear that Shell is not maniacally burning the Earth just to find a financial upside. Rather, the reality is that if governments are not going to act with sufficient urgency on climate change, figures like Beurden will attempt to use their influence to achieve certainty and satisfy their imperative for growth.
In the long term, anyone who looks seriously at climate change understands that this is only bad for society as a whole. As Naomi Klein argues in This Changes Everything, “the green billionaires won’t save us”.
We can add Beurden to the long list of chief executives, celebrities and media conglomerates who have promised an enlightened form of “green capitalism” but are also sticking closely to a path that leads to profit.
This article was originally published on The Conversation. Read the original article.