Comic relief department: Shell CEO says the best way to finance clean energy is to consume more oil
A few years ago, when electric vehicles were considered an R&D project, the fossil fuel interests had little to say about them. Now that Tesla has grown to become a trillion-dollar company (larger than any of the legacy automakers, and larger than most of the “oil giants”), the petroleum crowd has launched a full-court press in the media. Every day, my LinkedIn feed is clogged with oil company-sponsored posts about how much they’re doing to green up their acts and save the planet for our grandchildren (to say nothing of the endless horror stories about EVs that come from who-knows-where).
Above: Shell gas station (Flickr: Open Grid Scheduler / Grid Engine)
I’ve seen some pretty laughable stuff, and I’m sure you have too, but this takes the cake. Ben van Beurden, Chief Executive of Royal Dutch Shell, told the BBC in a recent interview that his company wants to transition to net zero by 2050, but it will need the income from its oil and gas business to pay for it.
“At this point in time [the cash] comes from our legacy business,” Mr. van Beurden told the BBC, speaking at the gigantic Pernis oil refinery near Rotterdam, which he says Shell plans to transform from producing filthy petrol and diesel to making slightly cleaner biofuels and hydrogen—over the course of a decade. “If we have to build a hydrogen plant from a wind farm that we build in the North Sea for a billion dollars, that is not going to be funded by a hydrogen business—it will be funded by the oil and gas business.”
Even if we leave aside the question of whether hydrogen is anything other than a new market for oil and gas, this is the sort of argument that a philosophy textbook might use as an example of sophistry, circular reasoning, or any of various logical fallacies. It’s also the kind of argument that alcoholics and drug addicts use to justify one final binge.
Climate scientists agree that, if mankind is to avoid catastrophic environmental damage, we have to end the consumption of fossil fuels very soon. Not slightly reduce it, not gradually phase it out over the next three decades—end it.
Also highlighting the absurdity of the “we’ll quit tomorrow” argument is the fact that Shell and other oil majors have shown no intentions of winding down, or even freezing, what Mr. van Beurden calls their “legacy business”—au contraire, they want to expand it. Among other projects, Shell is currently working to develop a new oilfield called Cambo in the North Sea, which it hopes will produce 170 million barrels of oil. The company plans to spend four times as much on development of new oil and gas sources as on renewables next year. It is fighting several rulings by Dutch courts that would require it to reduce its emissions.
Shu Ling Liauw, of the research firm Global Climate Insights, has analyzed the oil firm’s spending plans, and estimates that Shell will be producing more emissions by 2030 than it is now. “Even if you’re very generous, and assume they get all the amounts of carbon capture and storage and offsets that they need...they will be increasing emissions until 2030, and still be producing significant amounts of emissions in 2050,” she told the BBC.
Oil companies have largely abandoned their attempts to argue that climate change is a myth, but now they’re pushing a variety of other arguments to justify the continued use of their products. Anyone who believes that these companies plan to make some sort of transition to renewable energy or EV charging, or that they’ll find a way to store, or remove, or hide, the pollution from burning fossil fuels, is smoking something, and it ain’t oil.
Birds got to fly, fish got to swim, oil companies got to drill. That’s what they do, and they will continue to use every means at their disposal—PR campaigns, political contributions, investments in clean energy firms—to eliminate obstacles to doing so. And it’s no good blaming Shell or any other individual oil company for the situation. Oil is fungible, and if Shell doesn’t drill in the Arctic or the Gulf of Mexico or your neighbors’ backyard, some other company will. Nor can any government policies or regulations change this.
“I think this energy transition can be done but it will require a lot of orchestration and a lot of faith of society that it can be done,” says Mr van Beurden. “If you want to destroy the faith by driving up energy prices, by creating shortages or market failures, I think politicians are going to lose societal acceptance that this is actually doable.”
Here he does have a point. What he’s saying is that, if governments try to choke off the supply of oil, while the demand remains the same, consumers are going to say the heck with it, and elect more “drill, baby drill!” strongmen (of which the world has far too many already). Reducing consumption requires incentives on both the supply and demand sides—that’s why California has both a ZEV mandate (to force automakers to sell EVs) and purchase incentives (to encourage drivers to buy them). And of course, the most important demand-side incentive of all is the growing selection of new, compelling EVs from Tesla and others.
There’s no doubt that oil companies have a part to play in the clean-energy transition. There are many things they can do to green up their acts that would be in their interest to do—for example plugging their millions of abandoned wells to stop methane leaks. And protecting the workers whose oily livelihoods are fading away must be a top priority. However, the non-negotiable bottom line is that the use of fossil fuels for transportation and energy generation must drop to near zero, a lot sooner than 2050, and this is something the Shells and Exxons of the world will never, ever accept willingly. If there were no Tesla, and no government-mandated emissions regulations and ICE bans, does anybody really believe that oil companies (or automakers) would consider doing anything other than business as usual? Take another puff.
Big Oil doesn’t just want a seat at the table, it wants to own the table, and control the discussion. At the recent COP26 conference, there were 503 delegates from fossil fuel companies—more than the largest delegation from any country. They’re using the same arguments we’ve heard from cigarette companies and drug-makers, shifting the blame to the consumers who use their products (because they have no other choice), meanwhile mounting massive campaigns of greenwashing and gaslighting to convince consumers and policymakers that it’s okay to keep burning billions of barrels of oil and gas.
Don’t fall for it. As Albert Einstein said, “We can’t solve problems by using the same kind of thinking we used when we created them.”