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

BP, Europe’s biggest oil company, has pulled out of the leading business group lobbying for curbs on US greenhouse gas emissions, a sign of fragmentation in the campaign for climate and energy legislation.

ConocoPhillips and Caterpillar of the US have also dropped out of USCAP, the group revealed on Tuesday. Royal Dutch Shell is now the only large oil company still a member.

Copyright The Financial Times Limited 2010.

FULL FT ARTICLE (Subscription)

Peter Voser, Shell’s chief executive, has pledged to concentrate on developing biofuels and clean coal, as part of the company’s attempt to reduce its carbon dioxide emissions.

BARENDRECHT, Netherlands: A plan by oil giant Shell to store 300,000 tonnes of carbon dioxide a year in a depleted gas reservoir beneath a Dutch city has drawn the ire of residents and local officials who have vowed to thwart it. “We are going to do everything to oppose this project,” declared Barendrecht deputy mayor Simon Zuurbier, who voiced fears for the safety of the city’s 50,000 inhabitants. “We are taking legal action to get it cancelled and we’ll approve none of the required permits.”

Fred Pearce
guardian.co.uk, Thursday 17 December 2009 07.00 GMT

Shell drip-feeds its environmental ‘credentials’ to the public. Photograph: James Boardman

Editors must love Shell. Almost whatever I have read about climate change and the UN talks in Copenhagen in recent weeks, it has been flanked by the familiar Shell logo somewhere in the background.

From geeky titles like New Scientist to politico mags such as Prospect and New Statesman; and newspapers like the Guardian, the world’s second largest corporation has been splashing out – filling screens and newsprint with adverts and underwriting special supplements. Shell also sponsored a major research project by the Economist Intelligence Unit, called Countdown to Copenhagen, launched early this year at a Shell-sponsored “sustainability summit”.

Nobody is suggesting that Shell is writing the copy. And surely only the most craven editor would leave out criticism of oil companies like Shell. But the unmistakeable message is that Shell is going green.

It’s not just a subliminal message, either. The ads are all about Shell developing new low-carbon technologies, like carbon-capture, biofuels and “helping our customers use energy more efficiently”. They have pretty images, like a butterfly net catching CO2, and a pocket calculator with a button marked “less CO2″.

It won’t be easy, says the message: “We’ll need to think the impossible is possible.” Trouble is, in reality, Shell wants to think the possible is impossible. As its recently retired chief executive, Jeroen van der Veer, said earlier this year of wind, solar and hydrogen power: “I don’t expect them to grow much at Shell from here.”

Back then I wrote that “Shell is the new Exxon“. But the latest evidence suggests it is worse than that. A new study of the environmental performance of the world’s top 10 oil and gas companies by the Madrid-based environmental auditing company Management & Excellence puts Shell last of all the western majors. That’s behind BP, Total, Chevron and even ExxonMobil.

Shell has fallen from fourth place to seventh in the past year, and is now propping up the bottom of the table with two Chinese oil giants, Sinopec and Petrochina, and the Russian monolith Gazprom. None are known for their environmental credentials.

The audit analyses the 10 companies according to 198 different criteria. Shell gets a rating of 51%, compared with top-ranking BP’s 77% and Exxon’s 62%.

Shell’s new chief executive Peter Voser last week made one statistical claim for his company’s progress to date. Its chemical plants were, he said, 8% more energy efficient that in 2001.

Good for them. But most other companies are doing better. The M&E study found Shell next to bottom on energy savings.

Shell failed to make the grade in other areas, too. It may spend millions promoting its expertise in alternative energy technologies, but Shell came in the bottom half here, too, with only half the scores of BP, Chevron and the Brazilian oil giant, Petrobras. Once, BP and Shell were bracketed together as companies taking the lead in expanding into renewables. But the report says that among the top 10 today “only BP seems to have a real business in alternative energies”.

Shell spokesman Shaun Wiggins said: “While Shell is aware of Management & Excellence, we have made a conscious choice to not participate in its rankings survey process.” The company says it prefers other environmental audits.

The findings will come as no surprise to those who read Friends of the Earth’s June report on Shell’s Big Dirty Secret, which charged the it with being “the world’s most carbon intensive oil company”.

Shell claims on its websites: “We were one of the first energy companies to acknowledge the threat of climate change.” The tragedy is that this is true, but that so little has come of it.

I have lost count of the number of false dawns at Shell. At the Earth Summit in Rio in 1992, I reported Shell scientists promising that the company was going to plant tree across the tropics to soak up carbon dioxide. Whatever happened to that idea? Just before the Kyoto climate conference in 1997, Shell announced it was making a $500m investment in solar power. By the World Summit in Johannesburg in 2002 it claimed to be installing solar panels across the developing world. Today it is absent from that business too.

Wiggins said Shell has spent $1.7bn on renewable in the past five years, but now concentrates on biofuels because they are “closest to our core business”. But he agreed that oil and gas still make up 95% of its business, and the truth is that the company has flattered to deceive for almost two decades now.

Readers of its current adverts are directed towards a zappy and visionary website devoted entirely to what might happen in the future. But the future has been a long time coming for Shell. And it seems ever further away.

SOURCE ARTICLE

Shell Oil and British Petroleum express their vehement support for a global carbon tax in “Copenhagen Communique”

EXTRACTS

Paul Joseph Watson
Prison Planet.com
Monday, December 7, 2009

The big irony behind top globalists descending on Copenhagen in luxury private jets and stretch limos is not just the fact that their own behavior completely contradicts their self-righteous hyperbole about CO2 emissions, but that their propaganda is vehemently supported by the very same big oil interests they accuse climate skeptics of pandering to.

Probably one of the most flagrant examples of climate cronyism to emerge from the climategate scandal were emails in which CRU scientists, the body that provides much of the foundational global warming data for the UN IPCC, discuss how they conducted meetings with Shell Oil in order to enlist them as a “strategic partner” while getting them to bankroll pro-man made global warming research.

READ THE FULL ARTICLE HERE

Strange bedfellows these, strange bedfellows indeed. On one side, curled snugly under the duvet, is Dr James Hansen, one of the earliest and most fierce prophets of climate change, and a man who has previously said that the chief executives of fossil fuel companies ‘should be tried for high crimes against humanity and nature’. Sharing a pillow on the other side are the chief executives of Shell and ExxonMobil, the world’s biggest and second-biggest fossil fuel companies (actually biggest and second-biggest companies of any kind), Peter Voser and Rex Tillerson. As they wake up on this, the first morning of the Copenhagen climate summit, what is it that these former foes have found to unite them?

…companies such as BP and Royal Dutch Shell, which have bailed out of some unproductive renewable energy sources, are directing most of their environmental attention towards next-generation biofuels designed to alleviate these problems. Shell, for example, is experimenting with cellulosic ethanol made from plant waste such as straw and wood chips and biodiesel made from algae, which can be grown in the sea. However, technologically advanced versions are unlikely to be widespread for another 10 years at least.

Peter Voser, Viewpoint

The Times: December 5, 2009

We are seeing early signs of a far-reaching shift in our world’s energy system. Desire for secure energy supplies and concern over global warming have consumers, companies and governments embarking on a long journey towards a more sustainable energy future.

Government policymakers are in the best position to accelerate our trip. Starting with the climate change summit in Copenhagen this month, they will largely determine whether society steps on the throttle or idles along at the current speed. Building a new energy future will take huge effort. But it will be a boon for consumers, thanks to a great proliferation of energy types, from cleaner fossil fuels to renewables, such as biofuels, wind and solar, to nuclear and hydrogen. Everything from cars to fridges will be much more efficient than what we know today.

Some people hope that that future can arrive as fast as the next big hit in consumer electronics. That is unrealistic. Over the past century each new energy technology, once proved, has taken about 25 to 30 years to grow to providing 1 per cent of the world’s energy. Biofuels are just now reaching that mark. Wind could be there by 2015, 25 years after the world’s first big wind farms went up in Denmark and the United States.

It simply takes time to build the industrial and people capacity needed to produce energy on a massive scale. And to learn by doing. Today’s largest wind turbines have nearly 100 times the generating capacity of the ones available in the mid-1980s.

Society’s great hope for accelerating the pace of change lies with aggressive government policies, incentives and financial support for new energy technologies, from the lab all the way through commercial deployment. Indeed, every major new energy source since coal and oil has flowered thanks to extensive government support and a regulatory framework conducive to private investment.

This is not about government handouts to business. It is about spurring innovation and encouraging companies to invest in technologies that can help to reduce emissions but are still far from able to make money.

Support must be tailored to individual technologies, depending on their stage of development.

Take the promising technology to capture carbon dioxide emissions from power plants and other industrial facilities and store it safely underground. The knowhow exists but remains to be proved in practice. Governments in Europe, the US, Canada and Australia have pledged more than $20 billion to support some two dozen pilot projects with the hope of having at least ten running by about 2015.

In the longer term, the main factor encouraging deployment of low-carbon technologies will be a price on emitting carbon dioxide. The most effective pricing mechanism is a system that caps CO2 emissions and allows companies to trade emission allowances, as the European Trading Scheme already does.

However, when carbon markets such as Europe’s are still young, they may not produce a carbon price high enough to prime the technology pump. Governments may need to intervene in early years with policies that give additional support to a range of technologies. For instance, Europe has already done so for pioneering carbon capture and storage projects by offering them bonus emission allowances to sell.

Companies are already taking important steps towards a more sustainable future. They are improving the efficiency of facilities and reducing emissions. For instance, Shell chemical plants are nearly 8 per cent more energy efficient than they were in 2001. And we are providing energy-saving advice and products to our customers. We are also raising production of cleaner-burning natural gas. When used to generate electricity, natural gas emits 50 per cent less CO2 than coal. It can help to build a bridge to a future when renewable energy comes of age. By 2012 more than half Shell’s production will be natural gas.

In Copenhagen, governments can lay the foundations of a global policy framework that would help the world to move towards a more sustainable energy future. That is a tall order, given divergent views. But the world needs, and deserves, real progress toward a final deal with binding commitments for emission reductions and funding to help developing nations to do their part.

With governments’ lead, society can jump-start the development of new technologies with the potential to reduce greenhouse gas emissions. Let’s get going.

• Peter Voser is chief executive of Royal Dutch Shell

TIMES ARTICLE