“Shell’s track record on climate change does not inspire us with confidence...”

By business reporter Michael Janda and staff: 2 Oct 2015

Shell’s global chief executive says an effective carbon price is needed to tackle climate change, whether through a trading or tax system.

Speaking exclusively to ABC TV’s The Business, Ben van Beurden said a price on carbon was necessary to discourage pollution.

“Putting, in one form or another, a real, clear price on carbon that compels people to act with rational economic actions, I think is something that we need,” he told presenter Ticky Fullerton.

When pressed over the Government’s current Direct Action plan, which provides funding for programs to cut emissions rather than charging heavy emitters, Mr van Beurden said the design of the system was a matter for politicians in each country.

“Ultimately it doesn’t matter too much if you have a trading system, a tax system or another system, as long as it is effective at what it does,” he said.

With the Paris climate change conference now just a couple of months away, Shell has joined forces with a number of other energy producers and industrial firms to form a Commission of Energy Transition.

Members include Australian mining giant BHP Billiton – with its interests in coal, gas and oil – as well as Dow Chemical and General Electric, two major industrial firms which are major energy consumers.

The aim of the commission is to provide advice to governments about how to combat climate change with the least disruption to their economies.

Many environmental groups are deeply sceptical of the commission.

Carbon Tracker has said the group’s first report, which it said looked at how to lower the use of fossil fuels to 50 per cent of energy production by 2050, leaves the world open to warming twice as much as the current international target.

“We question the credibility and independence of an Energy Transitions Commission funded by fossil fuel incumbents,” Carbon Tracker’s chief executive Anthony Hobley said in a press release earlier this week.

“Shell’s track record on climate change does not inspire us with confidence and plans that would see half our power generated by fossil fuels in 2050 risk seeing us go way over the UN’s 2 degrees Celsius climate change target.”

However, Mr van Beurden said it was vital that companies with actual knowledge of energy production and usage were involved in the designing the solutions.

“The debate has gone to a place where some of the realism that we can bring to it has gone missing,” he said.

Exports needed to make Arrow’s Queensland gas viable

A local challenge that Shell faces is a battle to win approval for its takeover of BG Group and its LNG project in central Queensland.

The Australian Competition and Consumer Commission has raised concerns that the project could lower competition and raise domestic gas prices on the east coast.

That has led to some speculation that the ACCC might require much of Shell’s gas reserves to be set aside for domestic use.

While Mr van Beurden declined to suggest solutions to the ACCC’s concerns, he noted that gas exports were essential to the project’s viability.

“It’s going to be obvious in order to drive real scale in that project we will need to have access to export markets,” he said in the extended interview.

“The original plan was to build our own LNG plant. It may well be that we end up selling gas to other neighbouring LNG facilities so ultimately, and this is also what the ACCC has recognised, Arrow to be developed as a resource base does need the underpinning of an export project, whether its our own, whether it is somebody else’s, whether it is somebody else’s in which we have a share, is to some extent immaterial.”

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