At about this time last year, Ben van Beurden, Chief Executive of Shell, made a speech that was designed to show how Shell saw the need for technology and action to counter climate change. In the build-up to the Paris summit, he said:
…Firstly, a shift from coal to natural gas. When burnt for power, gas produces half the CO2 coal does.
Secondly, carbon capture and storage. CCS fitted to power plants can be a real game-changer, like for example our project under design at Peterhead in Scotland. CCS can remove up to 90 percent of CO2 emissions from power generation.
Thirdly, and most importantly, a well-executed carbon pricing system. This would help promote natural gas as well as CCS, and a whole range of other low-carbon technologies.
This sort of response, (and others in the oil and gas industry say very similar things), seems to be supportive, but is actually a thinly veiled set of self-serving untruths, which are ultimately destructive to the goal of tackling climate change. Let’s understand what they are saying and why:
1. Shift from coal to gas in developed world. Why, because renewables will not be big enough to take the place of coal, let alone gas and oil, and as a corollary to this required shift, exploit shale gas to the maximum. It is the message on renewables, heard over and over again, that is most concerning, but the message on increased use of gas is simply self-serving for oil and gas companies that want to sell more gas at the expense of coal. In order to make the case they have to assert that renewables will not be developed at scale in our lifetimes. But we see that the facts are not supportive of this. Renewables are being deployed at gigawatt scale around the world.
2. Develop CCS for coal in the developing world and gas in OECD. This says directly that countries in Africa, some parts of Asia and South America, need to build new coal fired power stations because these will be cheaper than renewables, even though this is clearly not the case. It completely ignores the costs that will be associated with CCS, which seem astronomical at the moment, and the costs of putting in a massive grid infrastructure in emerging markets where none exists. The dramatic fall in the price of solar means that decentralized power plants, not just a few panels on the rooftop but where land is available hundreds of megawatts, can be built cheap and quickly. Moreover, I am very pessimistic about CCS, and I want to make clear that it does not solve the sustainable development problems of coal, which go far beyond CO2, and adds a tremendous cost burden to the energy. Again, in most of sub Saharan Africa today we can build PV at scale for less than coal, especially if it is to be modern, highly efficient coal power, with CCS, and with a grid that does not currently exist.
3. Establish a carbon price globally. Of course this is a very facile suggestion when you know that political consensus on a global basis is completely impossible, and at low fossil fuel prices it would probably not be that damaging to demand. But it is particularly advantageous if you are a gas supplier, wanting to take some of coal’s market share.
4. Oil will continue to be overwhelming dominant fuel for transport for the foreseeable future. This might be true, but it doesn’t have to be. It fails to recognize our ability to decarbonize electricity, progress on storage, and that building electric cars is much simpler than we thought just a decade ago. The interesting thing is that because of the timing of recharging large numbers of electric cars, they do not add that much to the requirements for power generation. And we now know that it will be much simpler to introduce autonomous vehicles in all electric cars than with internal combustion engines. But of course it is not in the interest of an oil company to recognize that electrification of the vehicle fleet could occur very rapidly.
So sure, industry support for progress on the climate change agenda is important, and in the past some of the oil and gas companies have made important steps to show that this is possible. But statements like these are misleading, not helpful, and seem to persuade some of our political leaders and newspaper columnists to go off in the wrong direction.
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