So why has Shell Oil Co. remained an active member of this important organization?

THE WALL STREET JOURNAL

MARCH 8, 2010

Peter Voser of Royal Dutch Shell talks about the kind of energy legislation he’d like to see

These days, giant oil companies find themselves trying to balance two big pressures on their business. Governments are trying to slash carbon emissions—but the world’s thirst for oil is growing by leaps and bounds. Peter Voser, chief executive officer of Royal Dutch Shell PLC, is navigating the situation by joining a business-backed effort to push for global-warming laws, and making sure Shell has a strong exposure to natural gas and alternative fuels.

Mr. Voser sat down with The Wall Street Journal’s Alan Murray and Kimberley Strassel to talk about the future of climate-change legislation, the company’s push beyond oil, the prospects for electric vehicles and more.

Here are edited excerpts of their discussion.

Chief Executive of Royal Dutch Shell, Peter Voser talks about what kind of a future oil based energy can have in an environmentally conscious world.

ALAN MURRAY: I’d like to start by asking you about U.S. CAP [the U.S. Climate Action Partnership], the business effort to push for global-warming legislation. You are the last oil company there. Many of the other majors never joined to begin with. BP joined and then pulled out because it didn’t like the direction that it was going in. Why is Shell alone among the oil companies in continuing to push for this?

PETER VOSER: We have a belief that we need a market-based energy legislation in this country. And by the way, in all the other countries as well. We feel that we can do more by being inside U.S. CAP together with the other stakeholders represented there in order to actually achieve the right outcome.

KIMBERLEY STRASSEL: What kind of bill could you want or expect that would actually be good for your industry?

MR. VOSER: What we want is energy legislation that drives supply security in this country, which drives the country to lower fuel emissions, which generates new jobs but also preserves old jobs.

To then go further down, we are a keen proponent of market-based energy legislation. We will quite clearly look out for natural-gas developments, which we see as a long-term source of energy that has a lot of positives.

And in general, I think our industry is facing an interesting challenge that the demand in the world will double, but we have to provide that energy at a much lower cost to the environment. This will drive technology developments, innovation developments, etc., and that’s normally where our industry has always been in a leading position. And that’s what we want to see in the legislation so that we have certainty on the carbon price, certainty on, let’s say, legislation that will stay for a while so that we can operate.

MS. STRASSEL: What odds do you give passage of a cap-and-trade bill this year?

MR. VOSER: I’m still hopeful that we get something passed. I know the timing will be longer than what we expected maybe 12 months ago, but we will do our part in order to make sure that we get something that the industry and the country can take forward. But I think we are in for a longer period before we get something.

New in the Pipeline

MR. MURRAY: We talk about Shell as an oil company, but you’re very close to becoming a predominantly natural-gas company, aren’t you?

MR. VOSER: That’s absolutely correct. Shell started quite a while back, actually, to put a lot of emphasis on gas. And by 2012, we will have more gas production world-wide than we have oil.

So this has been a journey of 20, 30 years that we have used our technology and innovation in order to drive the gas development on a world-wide basis because, let’s face it, it has 50%, 70% less CO2 than coal, for example, and that’s exactly where we see the long-term benefit.

MR. MURRAY: And in your view, is that the big answer to our environmental problems for the next 50-plus years?

MR. VOSER: I don’t think there is one answer.

On a global perspective, the energy demand will double—this is pretty much proved now—by 2050. So we will need most of the energy forms that we know today.

MR. MURRAY: What percentage of your capital spending goes to renewable energy sources, roughly?

MR. VOSER: It is not the capital intensity that drives renewable energies and alternative energies. It’s what you spend in technologies and in innovation. Roughly 25% of our budget at this stage goes into what we call alternative energies from an R&D point of view.

MR. MURRAY: And of the 25% of your R&D budget that you spend on renewables, what in that portfolio do you personally think is the most promising?

MR. VOSER: We are focusing a lot on biofuels at this stage. We just announced a few weeks ago a big joint venture in Brazil where we are bringing our first- and second-generation biofuels technologies together with Cosan, a sugar ethanol producer there, in order to speed up the second-generation capabilities because we need to speed up that process. So biofuels is one.

We are in wind. We have gone out of solar. We tried both silicon and thin-film solar, but we can’t see that as being something that we can scale up globally and get the economies of scale. So we leave that. It’s a technology that will be developed, no doubt, but we leave that to a smaller, medium-sized players.

Driving Ahead

MR. MURRAY: For your oil business, transportation is obviously a key to the future. How long do you think it will take for electric cars to become a significant part of the vehicle fleet?

MR. VOSER: We think between now and 2050 we will go from one billion cars to two billion cars world-wide. So it’s quite a growth there. We think by 2050 that roughly 40% of those two billion cars will be electric cars.

But there is a but to this. Which means in the meantime we will need all [types of environmentally friendly cars]. So we will need low-carbon-fuels cars, more-efficient engines. We will need the hybrids. There will be more electrical cars coming in. There will be fuel cells, there will be hydrogen. So I think there will be room and space to develop all of them.

Looking to the Market

MS. STRASSEL: You talked about how you wanted legislation here in the U.S. to help with the certainty. But as a global company you already operate in regions that do have climate restrictions. How has that affected your business?

MR. VOSER: I would like to have a market-based system that actually works on the global environment. Because the world, the trade flow today, is a global trade flow, so you cannot cut between frontiers, boundaries, countries, etc.

So while I think it is OK to start country or regionally, we need governments working together, and that’s where I think Copenhagen would have been a good way to achieve a global agreement. We didn’t get it. I’m not too disappointed because I think this is a journey. We will need more time.

The politicians or the governments also have to learn to bring some reality into the discussion from time to time. So we get biofuels legislation, for example, and two years later they change because they realize technically it’s not possible. I think that’s where governments, companies, NGOs can work together to set the right frames.

MS. STRASSEL: Some people say instead of all the negotiations and the offsets and the carbon trading, just put a carbon tax, in particular a gas tax, and see where that goes.

MR. VOSER: I would say you need a market-based system where you can actually give the right incentives for those industries that are affected to make sure that they can lower the CO2 over time and they can lower the costs to achieve that over time. You need an incentive there, and I just struggle to see that a tax is an incentive.

WSJ ARTICLE

THE WALL STREET JOURNAL

March 4, 2010, 12:55 PM ET

By Jim Carlton and Neal Lipschultz

Despite recent defections of two other oil majors, Royal Dutch Shell PLC has opted to stay in an influential lobbying group that has focused on shaping climate-change legislation, Chief Executive Officer Peter Voser said.

Mr. Voser, speaking Thursday at the Wall Street Journal’s ECO:nomics conference in Santa Barbara, Calif., was asked why Shell remained in the three-year-old U.S. Climate Action Partnership (USCAP) after two of its peers, BP PLC and ConocoPhillips, pulled out last month. The partnership is a broad business-environmental coalition that had been instrumental in building support in Washington for capping emissions of greenhouse gases, and the defections came amid growing debate over climate change.

“We feel we can actually do more being inside USCAP to achieve the right outcome,” Mr. Voser said.

But Mr. Voser agreed with a growing number of skeptics who don’t believe a climate change bill will be passed on Capital Hill this year. Asked how much money he would put betting on such an outcome, the CEO smiled wanly and said: “I think I can spend my money somewhere else.” Earlier at the conference, Michael Morris, chairman, president and CEO of utility giant American Electric Power, had pegged the chances of a climate bill’s passage in 2010 as “less than 50%.”

“The timing will be longer than we expected, but we will do our part” in influencing the bill, Mr. Voser said. He added Shell favors a market-based system of controlling carbon emissions, and that “I would like to have a marketplace that works on a global scale.” Mr. Voser said he believed eventually there would be carbon legislation in the U.S. and many other parts of the world, despite the failure of the Copenhagen climate talks to achieve a consensus.

“I think this is a journey,” Mr. Voser said. “We need more time.”

When asked about the theory of “peak” oil in the world and whether that theory was now dead, Mr. Voser said “I think what is dead is cheap oil.”

You need more technology, innovation and will find oil further away from markets, Mr. Voser said. More will be spent to get oil and consumers will pay, both for oil and gas.

Mr. Voser also said oil price volatility is here to stay. More money is flowing into commodities and there are more players in the market.

Shell, meanwhile, has been moving to become more of a natural gas supplier and continues to invest in alternative energies like biofuels, he said. With global energy demand expected to double by 2050, Mr. Voser said the world will need many sources of fuel, including oil. He predicted electricity would be needed to power 40% of  the world’s automobile fleet by 2050, when he predicted it would double to two billion vehicles from one billion.

WSJ ARTICLE

REUTERS

By Poornima Gupta

SANTA BARBARA, Calif., March 4 (Reuters) – Royal Dutch Shell Plc (RDSa.L) expects electricity-powered vehicles to account for as much as 40 percent of the worldwide car market by 2050, Chief Executive Peter Voser said on Thursday.

Voser, speaking at The Wall Street Journal’s ECO:nomics conference in Santa Barbara, said technological improvements and increases in the cost of producing gasoline will give a boost to vehicles that run on alternative power.

“We think between now and 2050, we will go from 1 billion cars to 2 billion cars worldwide,” he said. “We think by 2050, roughly 40 percent of those 2 billion cars will be electric.”

In the next 40 years, the market needs low-carbon fuels, more efficient engines and hybrid vehicles, Voser said.

“I think there will be room and space to develop all of them,” he added.

Gasoline demand in developed countries like the United States has started to decline, partly as vehicles running on alternative fuels have entered the market. Companies such as Shell and BP (BP.L) are spending more money on those newer technologies, including for next-generation biofuels.

Automakers such as Ford Motor Co (F.N) and Nissan Motor Co Ltd (7201.T) are racing to launch electric cars, betting these will be the environmentally friendly transportation of the future. Small players like Tesla Motors already sell electric vehicles.

Voser said Shell was investing 25 percent of its research and development budget into renewables, including wind power and biofuels.

Shell has bet big on ethanol by striking a deal with Brazil’s Cosan (CSAN3.SA) to create a $21 billion a year ethanol joint venture.

The 50-50 joint venture, with almost 4,500 filling stations nationwide, will better position Cosan and Shell to compete with the two top players in the market, state oil giant Petrobras (PETR4.SA) and Ipiranga, a unit of Brazil’s Grupo Ultra (UGPA4.SA).

(Reporting by Poornima Gupta. Editing by Robert MacMillan)

REUTERS ARTICLE

Posting by former Shell Executive Paddy Briggs on the article “Shell defends continued focus on fossil fuel-paper“: Mar 2nd, 2010 at 11:20 am

By Jonathan Soble in Tokyo
Published: March 1 2010 07:48

Showa Shell, the Japanese affiliate of Royal Dutch Shell, is placing a $1bn bet on the future of thin-film solar panels as it seeks to become the world’s largest producer of the renewable-energy technology.

Showa Shell said the “energy payback time” of its panels – the average time they take to produce more energy than it took to make them in the factory – is one year, compared with two to three years for silicon-based panels.

Copyright The Financial Times Limited 2010.

FULL FT ARTICLE (SUBSCRIPTION)

THE WALL STREET JOURNAL

JANUARY 13, 2010, 12:58 P.M. ET

By James Herron

Of DOW JONES NEWSWIRES

LONDON (Dow Jones)–Several analysts cut their earnings forecasts for Royal Dutch Shell PLC (RDSB.LN) Wednesday as an increasingly grim picture of the company’s refining and marketing operations emerged.

Brokerage Evolution Securities reduced its full year clean earnings per share estimate for Shell by 12% to $1.91. Royal Bank of Scotland cut its fourth quarter earnings estimate for the company 19% to $2.9 billion, citing “extremely weak refining margins.”

ING analyst Jason Kenney said he now expects a fourth quarter loss of $150 million in Shell’s refining and marketing division.

“We now anticipate [fourth quarter] results from the downstream business to show a quarter-on-quarter decline of 87%,” said Evolution Securities analyst Richard Griffith.

Evolution expects Shell to post a 25% year-on-year fall in clean net profit to $2.91 billion for the fourth quarter of 2009, despite a 29% rise in the price of oil from year earlier levels. “While the upstream part of Shell should have benefited from higher crude prices, the downstream business…has continued to deteriorate,” Griffith said.

Refiners are caught between crude oil prices that have soared on expectations of a global economic recovery and refined product prices that have remained low due to weak end user demand. The amount of money a refiner could earn by processing a barrel of oil in the fourth quarter of 2009 was just over a quarter of its level a year earlier, according to data from BP PLC (BP).

It’s not clear when refining proift margins could recover, because that depends on a combination of industrial demand, economic growth and employment, said Kenney. The only thing for sure is, “we’re a long way off from that,” he said.

Shell’s downstream operations are such a “dog’s dinner” that it will prevent the company posting year-on-year profit growth until the third quarter of 2010, Kenney predicted.

This is in stark contrast to BP, which Kenney expects to post a 76% year-on-year rise in fourth quarter earnings and continue this strong momentum through 2010. “BP and Shell are worlds apart,” he said.

BP is ahead of Shell because it is already reaping the benefits of a restructuring and cost cutting program started in 2007. “Shell’s ‘Transition 2009′ internal restructuring is running behind BP’s program, but appears similar in ambition and scale,” said RBS in a research note.

“Around 5,000 staff were expected to leave Shell by the end of 2009, suggesting that pre-tax cuts in operating costs of $1 billion in the first nine months of 2009 will intensify this year. Operational momentum is likely to improve in 20011-2012,” it said. RBS recommends buying Shell shares.

Shell B shares closed down 1.4%, or 25 pence, at 1798p Wednesday.

Company Web site: http://www.shell.com

-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjones.com

WSJ ARTICLE

London: Shell has become embroiled in a major row with the World Bank and green energy companies after allegations that it is unfairly refusing to honour warranties on solar power systems sold to the developing world.