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Chatting with Shell About CO2

October 14, 2008, 3:00 AM 

By JAMES KANTER

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Jeroen van der Veer, the chief executive of the oil company Royal Dutch Shell, discussed emissions and biodiversity offsets with the IHT’s James Kanter. (Photo: Reuters)

Among the primary themes running through the World Conservation Congress last week in Barcelona was how economics, markets and business increasingly relate to environmental causes. Equally prominent was the role big business could play in helping reduce negative impacts of commerce and industry on plant and animal species.

The organizers of the meeting, theInternational Union for Conservation of Nature, held 50 events spread over four days centered around the theme of markets and business.

For the first time, the World Business Council for Sustainable Development had a large stand in the congress hall. Senior executives from a number of the world’s largest oil and mining companies were in also in attendance.

That’s a big change from past meetings, which are held once every four years and have traditionally been the preserve of scientists, government officials, experts and campaign groups.

One of the top business figures at the event was Jeroen van der Veer, the chief executive of Shell. I spoke with Mr. van der Veer in Barcelona about two of the ways businesses are becoming involved in the effort to prevent environmental degradation: compulsory carbon markets, and the use of a relatively new tool called biodiversity offsets that one day could mean companies will be compensating for their entire environmental footprint.

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Green Inc.: Can you update me on your views on regulations for capping carbon dioxide in Europe?

Jeroen van der Veer: Shell is not defensive about CO2 at all. The whole world is very concerned about it and we think this is a major opportunity. It is quite clear from most of our long-term energy scenarios that the world has huge problems seeing how we can lower concentrations of CO2. What I advocate to help most effectively is a relatively high CO2 price. We think the best way of doing that is building on the experience of the European trading system, preferably for other regions as well.

GI: Shell previously has said that the company is not ready to buy 100 percent of its carbon allowances for its refineries after 2012. What is your current position?

JV: The story is more complex. The problem is that refineries or chemical industries and cement industries in Europe are a very good example of when you have local industry exposed to a lot of import and export. If there is then only a penalty on the European industries while there is open import and export, and where CO2 is a significant part of the cost of the product, does this work? What we say is that we have various ways you can compensate for that. And then, if the rest of the world moves, you can be one step ahead, but not too big a step.

GI: So no obligation to buy 100 percent of your permits?

JV: From day one 100 percent basically means that you make part of European industry uncompetitive.

GI: And that would mean leaving Europe?

JV: No, that is a dramatic way of expressing it. I don’t like to do that. It is better to explain to EU officials in Brussels, “Hey hang on, we like this very much. It would be good for our reputation. We are even prepared to be a bit ahead of the world, but there is only so much we can do, so please realize that.” That is well understood. I try to work on the solutions rather than threaten.

GI: At a project in Qatar, Shell is voluntarily planning to offset some of the residual effects of constructing a new gas facility and undersea pipeline by protecting other parts of the local ecosystem. But can ecosystems really be preserved this way?

JV: I think this it’s simply a good approach to work this way. In China we built a chemical plant and in order to make the jetty part of the coral, not a lot, would have got lost. People found a way to take up that coral and to keep it alive and to transplant it. You can say on the total scale of corals in the world it was nothing. But it is amazing how proud people were. The message was, “See how we work.” People felt very good about it. So it is not only about nature conservancy, but what it means to work in a responsible way.

GI: Taking measures to compensate for any damage could become a major part of how extractive industries operate in the future. Should these measures be mandatory, should they be voluntary?

JV: It’s a good question. We are an extractive industry and we do build large installations – think about a refinery or something like that. Long term, as an international oil company, we can only get those new projects if we are in harmony with society, and certainly with local society. So, first, this is all part of a business model to have a sufficiently good reputation as a sustainable company. Secondly, would regulations help? I think it is too generic to say yes, or too generic to say no. I think in the end what is important is that you do it either in a way that is good project planning but so that this does not create a completely non-level playing field, because then the projects will not happen.

GI: Will offsetting your environmental footprint – you build over here and you do good here to make up the difference – become the norm?

JV: If you say its part of the thinking, yes. But that’s the easy part. The difficult part is for every project to find the right solutions and then to deliver on the expectations. It’s the delivery that matters. Secondly we see that the expectations today are different from the expectations 30 years ago. By the same token, I expect that the expectations 30 years from now are again going to be quite different from today. That’s quite a problem because many of the installations we build will last for 30 years or longer.

GI: It’s almost like the extractive industries are hunter-gatherers. They move around the globe, and as the good sites become scarce they will be under more pressure than before to clean up the trail they leave behind them. This offsetting could be a way of combating that.

JV: Combating, yes. But technology and working practices will help as well, and those improvements will continue. It is not a static game, where everything keeps going just one way to the negative and always requires compensation. My message is, first priority, reduce your footprint. Second priority – reduce your footprint even further. And then only can you start to think, are there compensations possible.

GI: If you do more that’s good than you’ve done that’s bad, you also could create a market on which to sell, or trade, these surplus gains for the environment.

JV: That is part of the business model, as we say.

http://www.nytimes.com/

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