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Shell’s subtle switch from renewables to the murky world of ‘alternative’ energy homeGeorge Monbiot blog

Shell’s spending on renewables – except biofuel – appears to have fallen from $200m a year to zero over the past nine years

The Royal Dutch Shell headquarters in The Hague

Question time … the Royal Dutch Shell headquarters in The Hague. Robin Utrecht/EPA

So at last we have an explanation. During my video interview with Jeroen van der Veer, the chief executive of Shell, I asked the same question 15 times: “What is the value of your annual investments in renewable energy?”

After several attempts to change the subject, he admitted that he knew the figure, then flatly refused to reveal it. Nor could he give me a convincing explanation of why he wouldn’t tell me, claiming only that “those figures are misused and people say it is too small” and it “is not the right message to give to the people”.

Yesterday, Shell announced that it has stopped investing in conventional renewables: wind, solar and hydro. It will concentrate instead on developing second-generation biofuels. There are a number of possible reasons for this shift:

• Shell’s portfolio was spread too thinly

• Carbon prices, which reflect the carbon caps imposed by governments,are extremely low. Without some major policy shifts, they are likely to stay that way, which means that renewables are an unattractive investment

• The prospect of a liquid fuels-crunch caused by declining oil reservesmeans that Shell will get better returns for its money by investing in tar sands and biofuels than by investing in electricity supply

• Greenwash isn’t working any more. Some of us suspected that the primary purpose of Shell’s investment in renewables was public relations. Though he did not express himself clearly on this point, van der Veer appeared to concede in our interview that some of the company’s advertising had not been honest:

If we are very big in oil and gas and we are so far relatively small in alternative energies, if you then every day only make adverts about your alternative energies and not about 90% of your other activities … then I say transparency, honesty to the market, that’s nonsense.

So much for speculation. This week I received a leaked extract of van der Veer’s latest newsletter to his staff. It says:

Finally, let me update you on our renewable energy activities. As you know, our strategy is to investigate a range of alternative energy and CO2 technologies. We spent about $1.7bn on them in the last five
years. The one that is closest to our core business is sustainable biofuels. That’s where we’ll focus in 2009 and 2010. So as you can see, we’re making good progress. We are on track with our strategy and our projects, building the foundations of our future. Thank you for contributing to our momentum!

Now this is really confusing. The obvious explanation for van der Veer’s refusal to give me a figure for current investments – which appears to be supported by the comments he made – is that they had fallen from the previous level of spending. In 2000, the company had boasted that it would be investing $1bn dollars in renewable energy between 2001 and 2005.

So why, if its spending over the past five years has risen by 70%, wouldn’t he tell me? He didn’t even try the obvious excuse – that the figure was “commercially confidential”.

My guess is that the difference hinges on definition. You’ll notice than in the newsletter he switches from “renewables” to “alternative energy and CO2 technologies”. Alternative energy is not necessarily renewable energy. The figure might include the cost of assessing the prospects of exploiting oil shales, for example – an extremely polluting fuel source, from which it takes a great deal of energy to extract liquid fuels.

In our interview, van der Veer conceded that this was something Shell had been researching. The CO2 technologies might refer to investigating the prospect of capturing carbon from Shell’s tar sands operation. Alternatively, the money might all be going into biofuels.

So perhaps there is no conflict between these figures. Shell’s spending on renewables – except biofuel – appears to have fallen from $200m a year to zero over the past nine years. Its spending on liquid fuel production of all kinds has risen. Shell is consolidating: has it stopped pretending to be anything other than a liquid fuel and gas company?

The big question now, however, is this: without a strong carbon price, who is going to invest in renewables?

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