Just about one year ago, Triple Pundit writer Andrew Burger filed a two-part report on a web chat dialogue that Shell Oil had offered journalists. In the first post, Burger relayed how Shell had defined three hard truths that it, along with the rest of the global energy industry, are facing. In the second, he explained that while Shell believes renewable energy sources will take up a larger role in the future, its near-term spending would continue to focus on oil and gas exploration, while hoping that carbon capture and storage would address that CO2 problem associated with business as usual.
A lot has happened in the 12 months since these posts. For one thing, oil prices shot through the roof and then plummeted, along with the global economy. And Shell now says that the three hard truths – that demand for fuel will grow in step with global population, that energy supply won’t necessarily meet demand, and that the negative environmental impacts associated with the energy industry will grow – have only gotten harder.
That cheery message opens Shell’s 2008 Corporate Sustainability Report and acted as subtext for comments that Royal Dutch Shell CEO Jeroen van der Veer made during a press conference call today.
Van der Veer said that looking forward to 2050, Shell estimates that renewable fuel sources will make up 30 to 40 percent of global energy supply. He said a large percentage of vehicles will still run on gasoline and diesel fuel, but that they will be significantly more efficient than today’s cars. Let’s hope so. Biofuel-powered vehicles will play an important role as well, he said, as will electric vehicles (EVs). But van der Veer raised caution that the source of electrical generation must be factored into the carbon footprint that EVs create, noting that EVs will make a positive impact only if the electricity on which they run is also clean.
It’s somewhat ironic, then, that Shell announced in March that it will no longer invest in wind, solar and hydrogen. Meanwhile Shell continues to invest in the Athabasca oil sands project in Canada, despite the fact that extracting oil from oil sands is more energy and water intensive than conventional oil extraction.
Though he was asked – in multiple ways, by multiple reporters – what percentage of Shell’s spending will be put toward renewable energy in 2009, van der Veer would not offer up any concrete answer.
One reporter noted that among the entrants in Shell’s Eco-Marathon, in which young engineers compete to build vehicles that consume as little fuel as possible over a set distance, half of the field is developing vehicles that run on renewable energy. The teams stand to win the same prize, regardless of whether the winning car runs on conventional fuel or a renewable one. She asked why Shell’s own investments don’t reflect more interest in renewables.
“There is no point in building things that people aren’t prepared to buy,” was his response. In order to be economically viable, he also noted, fuels must be clean, cheap and convenient. He said Shell divested in its wind energy efforts (which were a decade old, by the way) because they “require subsidies and you can’t build a long-term business model on that.”
That may be true, but as the CSR report – which you can download here – notes, Shell is upping its concentration on unconventional (read: harder, more expensive and environmentally harmful) oil exploration. How is that a long-term business model? It’s one thing for Shell to give up on its wind and solar investments, but that’s all the more reason for it to be more forthcoming about its efforts in developing biofuels. They won’t become “clean, cheap and convenient” overnight, or without considerable corporate resources.