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Shell CEO Calls for Carbon Pricing; Environmentalists Say Devil Is in the Details

Shell CEO Ben van Beurden | Image credit: Reuters / Benoit Tessier

Royal Dutch Shell PLC CEO Ben van Beurden promoted a carbon-pricing plan at the Oil & Money conference in London on Tuesday. The Wall Street Journal reports that the plan will encourage investment in renewables and favor cleaner-burning natural gas over more carbon-intensive coal.

Shell and other companies in the oil industry have been vocal in promoting natural gas over coal and have been increasing gas’ share of their outputs. Shell itself is in the process of acquiring BG Group PLC for $70 billion, to make liquefied natural gas a primary focus of its business.

"Gas is a fossil fuel, yes, but a crucial one for the building of a low-carbon future," van Beurden said, echoing Shell’s board of directors’ resolution to commit to investing in a low-carbon future, ratified in February. Beurden assured the audience of executives and government officials that oil and gas will remain important parts of the energy system for years to come.

Van Beurden plans to cut back Shell’s spending on operations and exploration to focus on reducing costs in light of the 15-month slump in oil prices. Perhaps a cut in exploration and development funding should have been expected though, following Shell’s recent $7 billion failed endeavor in Arctic drilling.

Environmental groups are not convinced that the switch from coal to gas, nor a carbon-pricing scheme, will be sufficient to keep global temperatures from increase more than 2 degrees Celsius. The 2015 Lancet Commission on Health and Climate Change, a multidisciplinary and international team of researchers, reported in June that the time for switching from coal to gas has “almost certainly passed” if we hope to meet the 2 degree goal. Greenpeace, which campaigned for years against Shell and its aforementioned foray into Arctic drilling, highlighted that Shell and oil industry peers do not foresee even a 50 percent chance of meeting it.

"Both our scenarios and the International Energy Agency (IEA) New Policies Scenario (and our base case energy demand and outlook) do not limit emissions enough to be consistent with the back-calculated 450 ppm 2°C scenario,” reads a report-style letter to shareholders from Shell in May 2014.

Regarding the latest carbon pricing endorsement from Shell, Greenpeace campaigner Charlie Kronick said, “Carbon pricing is a costly distraction from meaningful action on emissions. While it appears progressive, the devil is in the detail. The oil industry’s support for climate action appears conditional on those actions having zero impact on its core business or its plans for unchecked expansion.”

“By calling for carbon pricing, Shell’s actually suggesting we wait around for 190 countries to agree on a coordinated approach before taking action, which would take more time than we have left to tackle climate change,” he added. “Effective carbon pricing effectively buys the industry more time to continue business as usual.”

BG, BP, Total, Statoil, and Eni are among the other companies which have called on governments to introduce carbon-pricing systems, according to Greenpeace. Shell also joined energy producers and industrial firms such as Dow Chemical, General Electric, and Australian mining giant BHP Billiton to form an Energy Transitions Commission to provide advice to governments on how to combat climate change without disrupting economies.

"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 last 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."


Hannah Furlong is one of Sustainable Brands's Contributing Writers, based in Canada. She is researching the circular economy as a Master's student in Sustainability Management at the University of Waterloo and holds a Bachelor's in Environment and Business Co-op. Hannah… [Read more about Hannah Furlong]


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