Last month, Shell used rice farming carbon credits to offset a chunk of its annual emissions, claiming to reduce the “carbon intensity” of its fossil fuel products.

But experts have long argued that the sellers of these offsets are over-counting their emissions reductions and using accounting tricks to evade checks, as a Climate Home investigation showed last year.

These accusations led leading carbon standard Verra to suspend the projects early last year and launch an investigation. Shell took them off its website as a result.

But, although Verra’s review continues, on January 9 Shell quietly retired over a million credits produced by the suspended projects, meaning it counts the claimed emissions reductions towards its climate targets.

Rachel Rose Jackson, director of climate policy at Corporate Accountability, said Shell’s actions were “shameful, dubious and reckless against the backdrop of a deadly climate emergency”.

“To retire over one million offsets from projects actively under investigation reeks of bad faith and malintent”, she added.

Carbon Market Watch’s Jonathan Crook said Shell should have at least waited until Verra’s review had ended to see if there were problems with the offsets.

If the offsets do have problems then, he added, they “have no value from a climate perspective and using them towards net carbon intensity targets is totally inappropriate”.

Shell did not reply to detailed questions on these particular offsets. But a spokesperson said that the credits the company buys are “certified in accordance with independent standards and further screened through our due diligence process”.

Claiming to lower rice emissions

The idea behind the projects is that emitters like Shell pay for Chinese rice farmers to take measures to reduce their emissions that they wouldn’t otherwise be able to afford.

Rice is traditionally grown in flooded fields known as paddies. These have more bacteria than dry fields and the bacteria breaks down decaying plants, turning them into a potent greenhouse gas called methane.

To reduce the damage to the climate and save water, the project developers claimed they would pay farmers to periodically drain their fields. With less standing water, there are fewer bacteria and less methane.

A rice field irrigated with alternate wetting and drying methods

But opinions from experts and scientific literature suggest that lots of farmers already employ this technique across China, encouraged by the central government. So they do not need incentives from carbon credit to do so.

Carbon credit rating agency BeZero Carbon has given a Chinese rice cultivation project similar to Shell’s its lowest possible score. 

Its assessment says there is a “significant risk” that the emissions reduction measures are not additional to what would happen without the carbon credit money “due to the high level of government support for the project activities”.

A Climate Home investigation last year found that the project developers artificially divided up fields across several projects to pass them off as small-scale and avoid stricter checks.

Quality issues

These activities were initially given the green light by leading carbon standard Verra. But early last year, in response to concerns, it identified “quality issues”, launched a review and stopped the projects from producing any more credits.

But the suspension did not prevent offsets already in circulation from being sold or used to offset emissions.

When Climate Home approached Shell last year, the company said it was aware of Verra’s review and “would look carefully at the results when they are published”. 

The company took the offsets off a webpage dedicated to its portfolio of carbon credits offered to external clients, with a spokesperson saying this was “pending Verra’s review”.

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Nearly a year later, the results of the review have still not been published and the projects remain on hold. But Shell retired 1.23 million carbon credits issued by those projects, offsetting emissions equivalent to three gas-fired power plants running for a year.

A Shell spokesperson said the company had “recently retired a number of carbon credits as part of our net carbon intensity target”.

Finding a way out

Shell’s involvement in these projects is not just as a buyer. The schemes were originally set up by a Chinese firm but four years later Shell signed a series of agreements to become its exclusive agent.

The role granted Shell the right to either claim the credits against its emissions or sell them to other companies, potentially profiting from their sale.

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Before Verra suspended the projects, only a quarter of the credits issued by the projects had been used, primarily by Chinese state-owned oil company PetroChina. 

Shell retired the vast majority of the remaining credits on January 9. Carbon Market Watch’s Crook says it would appear Shell “had sunk money into the projects and had these credits sitting on their books”.

“Perhaps they have not been able to find any buyers since the projects were put on hold”, he added. “Or perhaps they are doubting that the review will be positive and it will be difficult to sell or trade any of these credits in the future. So they went ahead and used them themselves”.

Shell involved in rule-making

While Verra probes the credits, it has taken the rare step of banning any further use of the rice farming methodology under which the projects were developed.

The register is now working on a new rulebook for future rice farming offsets. It says it will allow project developers “to credibly achieve emission reductions and generate high-quality credits”.

To advise them on this, Verra has appointed an Indian company which is part of Shell, raising concerns about conflict of interests.

Crook described this as a “recurring issue” in the carbon credit world. He said: “You have actors who wear all these different hats. They can sometimes develop methodologies, transact carbon credits and/or use them towards their own targets, potentially based on rules they helped develop. It raises real questions around conflicts of interest and integrity.”

A Shell petrol station. Photo credit: Tomcat MTL/Flickr

A Verra spokesperson told Climate Home it “takes potential and actual conflicts of interest very seriously” and that methodologies “undergo an extensive review process before they are finalised” and at each stage “all stakeholders, including the public, have an opportunity to evaluate and comment”. 

They said: “This process is designed to promptly identify any issues with the methodology, including the opportunity to identify any perceived conflicts of interest”.

Investigation ongoing

The spokesperson said Verra does not comment on specific projects under review to avoid influencing the outcome of the investigation.

“The steps in a review, as well as the timeline for completing the review, depend on the underlying facts and circumstances, the complexity of the issues, the cooperation of third parties and other factors”, they said.

“A review may take several weeks or months to complete,” they added, “while every review is different, Verra aims to conduct an appropriately scoped review as expeditiously as possible.”

A spokesperson for Shell said: “We retire credits to compensate emissions, including those associated with the energy our customers use in transport, homes, producing goods and providing services. This approach complements our activities to avoid and reduce emissions from our own operations”.

The post “Shameful”: Shell uses carbon credits under investigation to meet climate targets appeared first on Climate Home News.

The initiatives are meant to slash methane emissions by changing irrigation methods in rice paddies. But projects in which Shell is involved have implemented a series of accounting tricks that would help them avoid stricter controls.

The oil and gas giant says the projects, certified by the leading carbon standard Verra, reduce greenhouse gas emissions, increase rice productivity, and provide job opportunities – particularly for women.

But their integrity is now under question.

Verra is now carrying out a quality review of its rice farming offsets after identifying a series of concerns with how rules were applied. It also banned any future use of the methodology under which the activities were developed.

Verra has put the projects linked to Shell on hold, pending its review. But the activities have already generated hundreds of thousands of carbon credits, which have been used by fossil fuel giants to compensate for part of their greenhouse gas emissions.

An investigation by Climate Home News has found alarm bells could have rung sooner.

It found rice paddies which are part of Shell’s carbon offsetting projects have allegedly been chopped into smaller plots to avoid stricter rules, according to an analysis of satellite images and emission reductions data.

Additionally, the techniques used are not entirely new, which further undermines their integrity. For nearly two decades, China had already rolled out the methane-reducing irrigation techniques championed by the project.

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Shell acts as a ‘carbon credits broker’ in at least nine of the Chinese rice farming projects currently under review by Verra. The role grants the oil and gas giant the right to either claim the credits against its own emissions or transfer them to other companies, potentially profiting from their sale.

Fossil fuel companies including state-owned PetroChina have purchased more than 450,000 carbon credits issued by the rice farming projects in which Shell is involved. According to Quantum, a carbon market data provider, credits in Chinese rice farming projects have been traded for around $6, meaning that Shell may have pocketed up to $2.7m from their sale. 

Gilles Dufrasne, an expert from Carbon Market Watch, says the findings “raise concerns about the quality of the credits”.

“If project proponents are willing to ‘game the system’ in that way, these credits are not worth what they’re supposed to be worth. They should not be used for offsetting emissions”, he added.

Verra said it takes any concerns about the integrity of projects registered in the VCS Program very seriously and is committed to investigating them thoroughly.

A Shell spokesperson told Climate Home News the company is conducting its own internal review.

“We are aware of the review Verra is conducting of some of its rice cultivation projects and will look carefully at the results when they are published. Our diverse portfolio of carbon credits includes rice cultivation,” it added.

Carbon credits form an integral part of Shell’s net zero strategy. The company aims to offset emissions of around 120 million tonnes a year by 2030 with nature-based solutions of “the highest independently verified quality”.

But Shell has also become a major player in producing offsets, as well as buying them. In 2022 it invested $92 million in carbon credits projects.

This line of Shell’s business has repeatedly come under fire. The company’s purchase of forest carbon credits has been a particular focus of controversy. At the same time, however, Shell has been acquiring a primary role in a nascent, and less scrutinised, niche of the carbon credits market: rice farming.

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Lowering rice emissions

The farming of rice is a big contributor to climate change. The flooded fields, known as paddies, that rice traditionally grows in, encourage bacteria.

This breaks down decaying plants, turning them into a potent greenhouse gas called methane.

To reduce the damage to the climate and save water, over the last few decades some farmers have started to periodically drain their fields. With less standing water, there are fewer bacteria and less methane.

A rice farmer in a field irrigated with alternate wetting and drying methods. Photo credit: IRRI Photos/Flickr

In the early 2000s, the UN’s official carbon offsetting scheme was set up. Known as the Clean Development Mechanism, it established a set of rules for how to get paid to reduce emissions.

One of these sets of rules was meant to reward rice farmers for reducing their methane emissions, encouraging them to drain their fields.

The scheme was aimed at small communities who wouldn’t otherwise have been able to afford the switch to the more climate-friendly irrigation method.

To encourage small farmers to get involved, the rules allow small-scale projects to face fewer checks and paperwork.

Any project which cuts less than 60 kilo tonnes of carbon dioxide equivalent every year is defined as small-scale.

But announcing a review of the methodology, Verra said it was concerned about how certain projects had been categorised as small-scale, therefore benefitting from looser requirements.

Chopped up rice fields

Climate Home News has analysed all of the 37 rice farming projects that have been registered by Verra using this methodology.

On average they declared annual emission reductions of 58.2 kilo tonnes of CO2. For one of the Shell projects the number is 59.99.

In other words, they manage to qualify as small-scale by a very narrow margin. If they had surpassed the 60 kilo tonnes threshold, they would have not been eligible as carbon credits.

Shell is a partner in at least nine paddy fields offsetting projects in China. They are all located in one of the country’s most important areas for rice production, the Eastern Anhui province.

On paper, the projects are presented as unrelated small-scale initiatives. But, at closer inspection, the similarities are striking. They were all approved on the same day, 29 May 2017, by the same proponent: Hefei Luyu, an agricultural technology company based in the capital of the Anhui province. The documents outlining the project's characteristics are broadly identical to one another and were written by the same Shanghai-based consultancy.

Each of those projects bundles together ten of thousands of disparate farms sitting on either side of the Yangtze river.

Our analysis can point to the close proximity of rice paddies grouped by Hefei Luyu under distinct projects. Climate Home News has identified the geographical location of the farms on satellite images. They show rice paddies intersecting into different projects without clear distinction. As little as 280 metres separate farms belonging to separate projects.

If all of those rice projects were merged into one, they would stretch for over 200 kilometers. They would also sum emissions reductions of over 500 kilo tonnes of CO2 per year, rendering them ineligible to be registered as carbon offsets.

Some of the rice fields included in different offsetting projects are only a few hundred meters away from one another

Verra began registering the projects in 2021 after having the proponent’s claims verified by external certification bodies based in China. Now, nearly two years later, Verra says its review has identified quality issues with the work of the validators.

Verra told Climate Home News it cannot comment on specific projects while they are under review.

Kazunori Minamikawa, a senior researcher at the Japan International Research Center for Agricultural Sciences who has conducted several studies on irrigation methods in rice paddies, believes the projects’ proponent may have artificially divided up fields across several projects to obtain the ‘small-scale’ status.

“They just follow the current rule,” he told Climate Home News. “But I think the developers of AMS-III.AU [the rice cultivation methodology] did not imagine such loophole at that time. To solve the concerns in the short run, Verra should create additional strict rules.”

Hefei Luyu did not respond to a request for comment.

Credits without integrity

The categorisation of a project as small-scale is not a trivial matter. In fact, this grants proponents a series of advantages.

Small-scale projects have more leeway in demonstrating that their type of activity is not already a common practice in the project's region. This key principle is known as additionality.

Under this requirement, a proponent needs to demonstrate that its emission reduction project would not have happened without the money obtained through the sale of carbon credits.

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Carbon Market Watch’s Gilles Dufrasne says the concept of additionality underpins the credibility of a carbon offsetting activity.

“The whole logic is that these projects should generate extra emission reductions and that's why they can be used to compensate other emissions somewhere else,” he told Climate Home News. “So it's plus one here, minus one there, it sort of matches up. But if that is not true, it actually leads to an increase in overall emissions. The entire system falls apart”.

The rice farming projects aim to cut methane emissions by helping farmers change irrigation method, switching from continuously flooded paddies to intermittently flooded ones. Thanks to the carbon credits, the projects outline says, farms have been equipped with the cement ditches necessary for the new water regime.

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Documents submitted by the proponents claim people in the areas “have poor living standards and economic backwardness”. Therefore, they would have been unable to implement a new methane-cutting irrigation system without the carbon offsetting initiatives. The documents add the additionality findings are based on surveys conducted by a local academy of social sciences.

Climate Home News has not been able to check the claims.

But opinions from experts and scientific literature suggest that the use of intermittent flooding in Chinese rice paddies is not entirely a new concept.

Chris Butenhoff, a physicist from Portland State University, studied efforts to reduce methane emissions in Chinese rice paddies in the early 2000s. He says it is certainly the case that changes in rice water management in China likely date back to at least the 1980s.

“The transition to intermittent flooding and drying of the rice paddy was driven in part by increased demand for water resources due to population growth, industrialization and expansion of hydropower resources,” he added.

Butenhoff says the data on this is poor so it is hard to have a precise historical record of how the practice spread geographically.

Rice farmers in the Anhui province of China take part in a trial implementing water-saving techniques. Photo credit: IRRI Photos/Flickr

Scientific studies suggest that in 2018 - when the offsetting projects began - around 41% of rice paddies in China were already being irrigated using an alternative wetting and drying method.

This rollout has coincided with the Chinese government making water-saving techniques a key tenet of its agricultural policy. The 2015 National Agricultural Sustainable Development Plan urged to “accelerate the construction of an efficient and water-saving agricultural system”. It set out a plan to increase the proportion of agricultural areas using water-saving irrigation to 75%.

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Kevin Chen, China Leader for CGIAR Mitigate + Initiative, says in recent years, China has invested significantly in building high-yield paddies through the construction of good irrigation systems. “At present, the water management method of paddy fields in most areas of China has changed from traditional flooding irrigation to mid-stage drying and wetting irrigation”, he added.

Chen says the impact has been known for a long time. "The adoption of intermittent flooding by paddy rice farmers might have reduced global emissions of methane from rice fields by about 12% during the decade 2000 to 2009".

Verra raised concerns about China’s rice farming offsetting projects not exceeding what is required by government regulations — the so-called surplus regulatory requirements.

Shell’s offsets

The rice farming projects first came into existence years before Shell entered the picture. Hefei Luyu decided to develop all its carbon credit projects at a meeting of their stockholders held on 29 May 2017.

Only three years later Hefei Luyu and a carbon trading consultancy based in Shanghai - its then partner in the projects - began submitting requests to Verra to have the offsetting projects validated and listed on the exchange.

Shell bursts onto the scene after Verra gave the green light. Starting from December 2021, Shell (Energy) China, a subsidiary of the oil giant, signed a series of agreements with Hefei Luyu, becoming a partner in at least nine rice farming projects.

In particular, according to the documents, Shell took on the role of an exclusive agent for the projects. Those were transferred into the Verra account of Shell (Energy) China, granting the company the right to request the issuance and transfer of carbon credits generated by the projects.

“Shell appears to be acting as a broker for the carbon credits”, Carbon Market Watch’s Gilles Dufrasne says.

“This is becoming increasingly common. Once they have access to the credits they can do what they want. They can use the credits towards their own targets or they can profit by selling them to other companies.”

In recent years, Shell has become an increasingly active player in the carbon credits industry through partnerships and direct acquisition of project developers.

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On a dedicated webpage illustrating its carbon credits portfolio, Shell says it “employs a rigorous internal screening process” to ensure it invests in activities with clear climate and environmental benefits. Shell’s environmental products division markets these carbon credits to customers needing them for compliance requirements or voluntary carbon compensation.

The portfolio lists dozens of offsets, including the nine rice farming projects in the Anhui province. Shell says they “cut greenhouse gases, increase rice productivity, and provide job opportunities - particularly for women”.

More than 450,000 credits issued by the rice farming projects in which Shell is involved have been purchased and used to compensate for emissions between June 2022 and January 2023, according to Verra’s registry.

The credits give polluters a license to emit 450,000 tons of carbon dioxide, more than Tonga emits in a year.

Over 85% of those credits ended up in the hands of PetroChina, the country’s state-owned oil and gas company. 

Verra says its investigation does not affect credits that were issued before the review began unless any excess credits were issued. "If Verra finds that excess VCUs [carbon credits] have been issued, the project proponent will be responsible for compensating for these excess VCUs," it added.

Shell and PetroChina are close commercial partners. In 2021 the companies signed a five-year deal for the supply of what they described as carbon-neutral liquified natural gas (LNG). For each cargo delivered under this agreement, PetroChina and Shell promised to offset the emissions generated using high-quality carbon credits. 

At the time environmental groups branded the initiative as 'greenwashing'. 

PetroChina did not respond to a request for comment.

The post Revealed: How Shell cashed in on dubious carbon offsets from Chinese rice paddies appeared first on Climate Home News.

In an email to over 1,000 Shell employees and directors, Caroline Dennett said she could no longer have Shell as a client because it “is not winding down oil and gas, but planning to explore and extract much more”.

“It pains me to end this working relationship which I have greatly valued, but I can no longer work for a company that ignores all the alarms and dismisses the risks of climate change and ecological collapse,” she wrote in her email on Monday morning.

Her resignation came the day before Shell’s annual general meeting, where the oil major is resisting calls by a shareholder activist group to align its activities with the targets of the Paris Agreement. If adopted, the resolution would result in “unrealistic interim targets”, company directors argued.

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Dennett told Climate Home News that she had started working with Shell shortly after the Deepwater Horizon disaster. While she was uncomfortable, she reasoned that her job was to prevent those kind of disasters.

She became more uncomfortable when she was tasked to work on new production projects in Nigeria.

“I just thought ‘this is not transitioning'”, she told Climate Home. “Supporting a company to continue to operate safely while they transition to hopefully renewables, that’s one thing. But to support new extraction projects, that’s another thing.”

Last month, XR campaigners demonstrated inside and outside Shell’s London headquarters. Their posters had the first names of individual Shell staff members on and invited them to “switch to the right side of history, before Shell turns toxic on your CV”.

They offered to fund career coaching to anyone thinking of making the leap.

BREAKING: Extinction Rebellion infiltrates London HQ of oil giant Shell, glue on to reception desk https://t.co/tbuzxyNrbC Extinction Rebellion

— Amplify Climate Rebellion (@AmplifyXR) April 13, 2022

Dennett saw a video of this action online. She went on XR’s TruthTeller.Life website and messaged a dedicated number using secure messaging app Signal. The message was picked up by Zoe Blackler, an investigative journalist and the TruthTeller project coordinator.

After phone calls, Dennett travelled from Dorset to London to meet Blackler in person and the two planned how Dennett would cut ties with Shell.

A screenshot of her resignation email was distributed to the press and she explained her decision in a LinkedIn post with video, where more than 2,000 people reacted positively.

While Dennett’s safety consulting firm has other clients, she says Shell is a “significant” one and she is sacrificing revenue for her firm.

“Thats a sacrifice that’s definitely worth making”, she said, while accepting that not every fossil fuel worker is in the position to quit.

How to be a responsible employee of an oil major. pic.twitter.com/p9dW6pQxo4

— Extinction Rebellion (@ExtinctionR) May 23, 2022

Blackler said she couldn’t discuss whether any other fossil fuel workers had got in touch but “we are very much hoping that this is the beginning of more to come”.

“Whether they do it through us or whether they do it quietly without us, it’s for anyone to choose how they want to do it. But if they want the support… come and talk to us,” she said.

Under its climate strategy, Shell plans to decrease oil production 1-2% a year on a path to net zero (with caveats) by 2050. It claims its wells have a natural decline rate of 5% so it can reduce production while opening new projects.

Dennett said that 1-2% a year is not enough. “We’ll overshoot any [of the] global heating predictions that the IPCC [scientists] say we mustn’t overshoot,” she said. “We don’t have 50 to 100 years to decarbonise our energy infrastructure”.

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Dennett pointed to the International Energy Agency’s finding that, if the world is to limit warming to 1.5C, then there must be no new oil and gas production.

She also cited the United Nations Secretary General Antonio Guterres. Last month, he said: “Climate activists are sometimes depicted as dangerous radicals. But the truly dangerous radicals are the countries that are increasing the production of fossil fuels.”

Asked to comment on Dennett’s resignation, a Shell spokesperson said: “Be in no doubt, we are determined to deliver on our global strategy to be a net zero company by 2050 and thousands of our people are working hard to achieve this.”

They added: “We have set targets for the short, medium and long term, and have every intention of hitting them. We’re already investing billions of dollars in low-carbon energy, although the world will still need oil and gas for decades to come in sectors that can’t be easily decarbonised.”

The post Extinction Rebellion inspires Shell safety consultant to jump ship appeared first on Climate Home News.

“The oceans are sacred to us,” said Sinegugu Zukulu, an Amadiba environmental activist. People in training to become traditional healers, known as sangomas, perform rituals on the beach to consult with their ancestors and many African churches perform baptisms in the ocean. “So we cannot allow our ocean to be used for activities that are going to lead to destruction and render the ocean useless to us.”

His warning is addressed at Shell, the European oil major that has paid ships to shoot soundwaves at the bed of the Indian Ocean in an attempt to find oil. Zuklulu and other campaigners took the oil major to court, arguing that local communities were not properly consulted. They say the seismic surveys will scare off fish and any future oil spill would devastate the region’s fishing and tourism industries and cause spiritual damage.

Just before the New Year, a high court judge made an interim ruling in their favour. He ordered Shell to stop drilling while the court case plays out. The timetable for the full case will be decided on Monday.

Shell has cancelled its contract with the survey vessel. As the weather window for surveying is closing, they are unlikely to start again any time soon. The oil major is “considering best way forward,” a spokesperson said.

Zukulu thinks the battle is far from over. “Shell doesn’t give up easily,” he said. “They have got deep pockets. They will always put up a fight”.

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But Shell’s stomach for a fight may be diminishing. In December, it pulled out of the Cambo oil field development off the coast of Scotland, only a few months after a Stop Cambo campaign got organised.

A spokesperson said the “economic case for investment in this project is not strong enough at this time, as well as having the potential for delays”. Why would there be delays? Kayaking activists for one. Opposition from Scotland’s first minister Nicola Sturgeon for another.

Under its climate strategy, Shell plans to decrease oil production 1-2% a year on a path to net zero (with caveats) by 2050. That doesn’t mean drilling stops. Its wells have a natural decline rate of 5%. Shell is still exploring new frontiers, just more selectively, prioritising “value over volumes”.

Last May, a Dutch court ruled that the Hague-headquartered company needed to go further, in a landmark case. Shell was ordered to reduce its emissions, including those from customers using its products, by 45% between 2019 and 2030.

Sjoukje Van Oosterhout, who led campaigners’ research for the Dutch court case, said that for Shell to comply with the court’s ruling then “there’s not many other ways than decreasing oil and gas production all over the world”.

The company is appealing but the appeal will not be heard until late 2023 at the earliest. In the meantime, it is legally obliged to comply with the judgement although how this will be enforced is unclear.

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Mike Coffin, a Carbon Tracker researcher and former BP geologist told Climate Home News that there was a divide between European oil majors like Shell, BP and Eni and US-based firms like Conoco Phillips, Exxon-Mobil and Chevron.

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He said: “Those [European] companies… see lower long term oil prices perhaps than North American companies who may be a bit more bullish on how long the oil sector can continue.”

In Argentina, Equinor and Shell’s proposals for offshore oil exploration provoked thousands of people to protest in Buenos Aires last week. Protesters told AFP they were worried about oil spills and the effects of seismic exploration on sealife.

In the US, campaigners are challenging in court an auction of oil exploration licenses in the Gulf of Mexico. Joe Biden’s administration, under pressure from a Louisiana court ruling, launched an auction at which Shell bought several leases.

Shell’s “core positions” for oil and gas production as of February 2021. They’ve now sold their Permian assets. (Photo: Screenshot/Youtube)

Elsewhere, Shell’s oil production has met less resistance. Shell holds a minority stake in Brazil’s offshore Mero oil and gas fields.  Claudio Angelo, communications co-ordinator at Brazilian NGO Climate Observatory, said this development is not a high-profile political issue, partly because journalists and campaigners are focused on emissions from the deforestation of the Amazon rainforest.

“Shell has long seen Brazil as a strategic lifeline as it faced setbacks elsewhere, for climate legislation or other reasons,” he said.

Other major Shell oil and gas production sites include those in Nigeria, Kazakhstan, Oman, Malaysia and Brunei where civil society is generally weaker and less focused on climate change.

The post Why Shell is becoming a softer target for climate campaigners appeared first on Climate Home News.

We did this in protest at the Science Museum’s decision to accept Shell sponsorship of their new climate change exhibition “Our Future Planet”.

An occupation was not our first choice of tactic. We had tried all of the “acceptable” tactics. We signed petitions, wrote letters, called a boycott and held a protest outside the museum, but the director and board of trustees ignored us and continued to justify and excuse the sponsorship, leaving us with no choice but to do more.

I genuinely love the Science Museum. I loved it when I was a 9-year-old who dreamed of being an astronomer, who was beyond excited to get to sleep under a rocket. I love it today as a 17-year-old biology and chemistry student, and it’s because I love it that I decided to act.

Because there’s really no justification for any museum accepting oil sponsorship right now. We are in the middle of a climate crisis. Lives are being lost, homes are being destroyed, our planet is on fire and these corporations are the ones fueling the flames. An oil company sponsoring an exhibition about climate change and solutions to the climate crisis is especially wrong. 

The Science Museum shouldn’t be helping to greenwash Shell’s reputation. It is a destructive and violent corporation, incessantly pursuing profit in the face of environmental catastrophe. It is complicit in human rights violations like the murder of the Ogoni Nine, and responsible for huge environmental degradation. Just since 2011, Shell has reported 17.5 million litres of spilled oil in the Niger Delta, destroying and damaging people’s homes and livelihoods.

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The Science Museum’s director Ian Blatchford seems determined to paint a picture of a false reality. He emphasises Shell’s “commitment” to net zero emissions by 2050. But a Dutch court recently ruled the oil company’s strategy was “not concrete enough and full of caveats”, ordering faster emissions cuts to align with the Paris Agreement.

On Saturday night we saw how far the Museum is willing to go to protect this sponsorship deal. It called more than 40 police officers to arrest and remove peaceful protesters. Young people. Scientists. The people that the Museum is meant to be there for.

Izzy Warren protests outside the Science Museum in London (Pic: Ron Fassbender)

The Science Museum stands alone right now. Both by accepting oil sponsorship, something that so many other cultural institutions now refuse to do, and by calling the police and refusing to facilitate peaceful overnight protests like the British Museum did in 2020 and the Tate in 2015.

We were there to create a place of genuine education about the climate crisis, not one led by Shell’s business interests. We had planned for a 24-hour livestream, with guests from around the world to talk about climate justice, solutions to climate change and the very real, very present impacts of the crisis on people’s lives. We wanted to create placards, alternatives to the ones included in the Science Museum’s exhibition which had been obtained without informing the young people who made them about the Shell sponsorship.

The Science Museum knows they can’t defend this sponsorship any longer. Their back is against the wall, and when you can’t justify something with words, you use force and threats. But we will not be threatened. We will not back down and we will not stop fighting until oil is out of not just this exhibition at this museum, but all of them.

Izzy Warren is a 17-year-old climate activist and member of UK Student Climate Network.

The post By greenwashing Shell, the Science Museum is failing young people appeared first on Climate Home News.

They’re also among the first to identify a major problem with Shell’s plan, which science suggests is better seen as a defence of their core gas and oil business rather than a genuine energy transition. Some have already announced their intention to reject the plan, and more are likely to follow.

These shareholders are part of a bigger story. As the integrity of Shell’s plan struggles to weather scrutiny, it highlights our collective need to equip investors, governments, and businesses with the scientific tools they need to assess the necessary and realistic pathways to limit global warming to 1.5C.

A failure to look clear-eyed at the science behind these transition plans will be disastrous for the planet. The likelihood of limiting temperature rises to 1.5C is vanishingly small already. If other businesses follow Shell’s lead and go unchallenged, our chances of tempering the most catastrophic effects of climate change will disappear altogether.

IEA: End fossil fuel expansion now for net zero energy emissions by 2050

As climate scientists, we watched Shell’s latest pledge to reach net zero by 2050 with interest. Recently, we analysed the Shell Sky Scenario – its previous climate change scenario – as part of a study evaluating the hundreds of proposed pathways to mitigate climate change this century to stabilise temperature rise to 1.5C.

Each pathway makes different assumptions about climate policies, energy demand, reforestation, technologies for carbon dioxide removal, and renewables take-up. A general challenge with climate scenarios is whether they are based on realistic assumptions, and our analysis aims to transparently separate feasible from fantasy scenarios.

In a rigorous peer-reviewed analysis by 16 scientists, we found serious problems with the feasibility of Shell’s pathway. Among the over 400 climate scenarios included in the IPCC 1.5C report, only 50 scenarios take us towards a 1.5C future, with no or limited overshoot.

Among these 50, only 20 are based on realistic assumptions that global emissions must bend around 2020 at the latest to reach close to zero around 2050. We included Shell’s Sky Scenario as an additional reference, and it was by far, the one that most clearly lies outside the feasibility corridor to limit temperature rise to 1.5C. If the world emits as much greenhouse gas as Shell’s scenario suggests, it would lead to global temperatures rising well beyond the agreed Paris range.

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When Shell announced its updated 1.5C Sky Scenario centered around a net zero target 20 years earlier than planned, we wondered what radical emission reductions it had priced in – only to find there weren’t any. Analysis of the latest plans show the company will attempt to meet their self-declared targets while freezing emissions at more or less the same level as today. In fact, it’s currently forecasting an increase in gas production and gas exports to global markets.

Rather than reducing its emissions, Shell plans to offset gigatonnes of emissions by planting trees to capture carbon. It says that reforestation and other nature-based technology will be enough to allow its expanding operations. But Shell’s Sky scenario requires a forest the size of Brazil to offset the volume of carbon it intends to continue pumping out.

Offsetting carbon emissions with forest growth at this scale is a dangerous fantasy. There’s limited land and water available for tree planting: if Shell plants this many trees, it risks diverting land we need to feed a growing population. And science tells us it is simply not possible to substitute carbon emissions from coal, oil and gas, with unstable ‘green’ carbon sinks in trees and soil.

While offsetting with nature-based solutions and techniques for carbon dioxide removal is necessary, it should only be used to offset residual, difficult to abate sectors like agriculture and aviation.

Spain to end fossil fuel production by 2042 under new climate law

Instead Shell’s focus must be on cutting emissions by half each decade and investing in keeping natural carbon stocks intact, maintaining vital resilience in forests, soils, permafrost, and freshwater and ocean systems. This investment cannot be double counted as offsets, and should receive funding as additional nature-based solutions.

In short, betting on tree planting to reach net-zero by 2050 is taking colossal risks with our common future.

It’d be easy pickings for Shell to find a profitable energy business away from fossil fuels, because the energy sector is ripe for innovation – we’ve already seen revolutionary transformation in electricity generation from renewables. But if it insists on maintaining a business as usual strategy it will need to play an outsized role in carbon trading markets to offset those emissions.

That would be bad news for other sectors which have few other options to decarbonise, and more legitimate reasons to offset. It could also be bad for Shell’s shareholders: if Shell is too firmly hedged on the side of oil and gas, shareholders may lose out in an eventual energy transition.

A plan based on questionable science, betting on unproven technology, and fantasising about planting a forest as big as Brazil isn’t corporate leadership, it’s corporate malfeasance on an unprecedented scale with fallout stretching many, many generations into the future.

If Shell pursues this plan, it should have no role with the UK presidency at Cop26, or in the Race to Zero campaign. Institutions like the Science Museum should ensure that Shell does not finance environmental exhibits as a way of greenwashing its reputation. Lastly, Shell should be removed as a member of the main committee for Mark Carney’s taskforce of scaling voluntary carbon markets, the Glasgow Financial Alliance for Cop26.

Shell sees oil and gas playing a role in our global economy for many decades to come. Science says that is simply not feasible if we want to avoid catastrophic climate breakdown. Shell is asking its shareholders to believe in unicorns not science.

Johan Rockström, is a professor in environmental science at the Stockholm Resilience Center, at Stockholm University; Gail Whiteman is director of the Pentland Centre for Sustainability in Business, at Lancaster University. 

The post Shell’s net zero plan will be judged on science, not spin appeared first on Climate Home News.

The case was brought by nine youth climate activists who argued that the law in its current form violates their right to a humane future, as it does not go far enough to reduce emissions and limit global temperature rise to 1.5C.

German energy minister Peter Altmaier described the ruling as “big and meaningful” and said it was “epochal” for the rights of young people and climate protection.

Top court rules German climate law falls short, in ‘historic’ victory for youth

Climate litigation is a maturing field. Over the past decade, lawyers have tested several strategies for challenging climate harm or inaction through the courts.

Here Climate Home News explores which legal avenues have been successful and which approaches have failed.

Human rights

Lawsuits that argue that governments have a human rights obligation to avoid dangerous levels of global warming are becoming increasingly widespread and successful, said Joana Setzer, a research fellow at the Grantham Research Institute on Climate Change and the Environment at Imperial College London.

The most pivotal climate lawsuit in the past decade, the landmark Urgenda case in the Netherlands, centred on human rights. 

In 2019, the Dutch Supreme Court ordered the government to cut its greenhouse gas emissions by 25% by the end of 2020, compared to 1990 levels, as its minimum fair share to tackle climate change. 

The case was brought by the Urgenda Foundation, a climate group representing the interests of 900 Dutch citizens who argued that the government was putting them in “unacceptable  danger”, by setting an insufficient emissions reduction goal of 14-17% by 2020, from 1990 levels. 

The court ruled that the government had failed to protect the human rights of its citizens by violating Articles 2 (right to life) and 8 (right to respect for private and family life) of the European Court of Human Rights (ECHR). 

Climate campaigners cheered and hugged each other as the verdict was read out at a district court in the Hague on 24 June 2015 (Photo: Urgenda)

The Urgenda verdict sparked a wave of human rights lawsuits around the world, from New Zealand to Ireland. 

Climate group Friends of the Irish Environment (FIE) used similar arguments when it brought a case against the Irish government for failing to take adequate action to curb emissions and protect its citizens’ right to life. The Irish Supreme Court ordered the government to draw up a new emissions mitigation plan, but did not tackle the human rights arguments invoked by FIE.

The right to life has also formed the backbone of high-profile climate displacement cases. 

The most famous relates to Ioane Teitiota, a man from Kiribati living in New Zealand, who fought numerous legal battles to stop him being deported back to the Pacific island nation. Teitiota argued that returning to a nation threatened by rising sea levels and other climate impacts posed a serious risk to his life.

UK aid cuts hit developing cities’ plans to protect against floods and fires

After New Zealand’s Supreme Court rejected Teitiota’s asylum claim as a climate change refugee, he took his case to the UN Human Rights Committee. 

While the committee denied Teitiota’s claim on the grounds that he did not face imminent danger, it did rule in January 2020 that countries may not deport people who face climate-related risks that violate their right to life.

The committee stated that “given the risk of an entire country becoming submerged under water is such an extreme risk, the conditions of life in such a country may become incompatible with the right to life with dignity before the risk is realised.”

“That recognition is significant; at some point countries could have an obligation to accept climate refugees,” Hillary Aidun, climate law fellow at Columbia University’s Sabin Center for Climate Law, told Climate Home News. 

Youth plaintiffs 

Another major theme is intergenerational inequity. “We see a trend of youth plaintiffs seeking to vindicate their rights as well as the rights of future generations,” said Aidun. 

Youth activists who are unable to vote have found a powerful way to make their voices heard: by organising climate strikes and filing lawsuits, said Kate McKenzie, a legal researcher at the Strathclyde Centre for Environmental Law and Governance.

One of the most pivotal cases is a lawsuit filed by six Portuguese young people at the European Court of Human Rights in Strasbourg. They have filed a legal action accusing 33 countries of violating their right life by not doing their fair share to tackle the climate crisis. 

This case highlights the urgency needed to tackle the climate crisis, McKenzie told Climate Home News. “With youth activism there is a sense of ‘we are running out of time.’ Governments don’t get to keep doing things slowly like they are used to doing,” said McKenzie.

The six Portuguese young people who filed the first climate case at the European Court of Human Rights in Strasbourg, France. From left to right and top to bottom: André Oliveira, Catarina Mota, Cláudia Agostinho, Mariana Agostinho, Martim Agostinho and Sofia Oliveira (Photos: Global Legal Action Network)

Young activists make powerful plaintiffs as they represent current and future generations who will suffer the worst impacts of climate change, Setzer told Climate Home News. 

“Often you cannot get the courts to protect generations that do not yet exist. Children are going to live another 80 years. They can force governments to make decisions about 2050 targets and change behaviours now in order to achieve those ambitious targets,” said Setzer. 

Young people successfully used the future generations argument in a case brought before Colombia’s Supreme Court. 25 young people argued that the government’s failure to curb deforestation of the Amazon rainforest threatened their rights and those of future generations.

Putin sounds methane alarm, under satellite surveillance and EU pressure

The court agreed with their arguments and ordered the government to come up with a plan to reduce deforestation. 

What made this case unique was that it recognised the Amazon rainforest as an entity with its own rights.

“Most countries don’t protect the environment as an entity. It’s all about humans,” said Setzer, noting that just 13 countries reference protecting the environment in their constitutions. 

Polluter accountability

Despite their clear contribution to global carbon emissions, it is difficult to hold big polluters accountable in court.

The tobacco litigation strategy, which directly linked smoking to disease, hasn’t worked for climate activists, said Setzer.

“One of the complicating factors is attribution: how much climate change can you attribute to a particular company?” said Aidun. “We have yet to see to what extent corporations can be held accountable for climate change.”

Shell faces Dutch court in case testing how Paris climate goals apply to businesses

An ongoing case involving Royal Dutch Shell may change this. The case, which is  being heard by the high court in the Netherlands, is testing whether the Paris Agreement applies to corporations and oil companies can be held liable for their CO2 emissions. 

Seven environmental groups are demanding that Shell cut its CO2 emissions by 45% by 2030 and to zero by 2050, compared to 2019 levels, in line with the toughest 1.5C temperature limit in the Paris pact.

Campaigners have built their case on the Urgenda precedent and argue that the duty of care law applies to companies as well as governments. A verdict is expected in May. 

Climate campaigners are demanding Shell cut its CO2 emissions by 45% by 2030 and to zero by 2050 (Pic: Wikimedia Commons/Lommer)

A victory for the campaigners would force one of the world’s largest energy companies to quickly phase down production of oil and gas and invest in clean energy sources instead.

Experts say it is a landmark case for corporate responsibility which could spark a wave of litigation cases against other big polluters, if campaigners win. 

“It forces behaviours to change in the future and that is very important,” said Setzer.

Most liability cases focus on claiming damages for past harm caused by climate change, whereas the Shell case looks into the future, she added. 

Greenwashing claims which accuse companies of misleading advertising campaigns are also on the rise. “People relate easily to greenwashing,” said Setzer. “No one likes being cheated.”

In 2018, environmental law charity ClientEarth lodged a complaint against BP, accusing the oil company of misleading the public by focusing on its low-carbon products, when over 96% of its annual spending is on oil and gas. ClientEarth argued that this type of advertising was in breach of guidelines for multinational firms issued by the Organisation for Economic Cooperation and Development.

UK faces legal action over public finance for Mozambique gas project

The legal complaint led to BP withdrawing the adverts. Lawyers said it set an important precedent that greenwashing cases can be challenged under international standards.

“It set a precedent for people to use the OECD guidelines to hold companies to account for their greenwashing on the basis of consumer interests,” ClientEarth lawyer Johnny White told Climate Home News.

“Fossil fuel companies using advertising to mislead the public over their climate impact were essentially put on notice,” White added.

“[Greenwashing cases] won’t change climate change, but they will change consumer and corporate behaviour,” Setzer said.

The post How youth climate court cases became a global trend appeared first on Climate Home News.

Friends of the Earth Netherlands sent a formal letter to the company today, outlining the steps the campaigners believe Shell must take to bring its business plan in line with the global climate goals as set out in the Paris Agreement.

The legal action was started after Shell announced it planned to continue to put around 95% of its investments into extracting more oil and gas. It expects to invest only around 5% in sustainable energy.

Shell is responsible for around 2% of global carbon dioxide and methane emissions between 1894 and 2010, research has previously shown. Shell’s business is jointly registered in the Netherlands and the UK, which gives the campaigners strong grounds to bring the case in Europe.

The campaigners said in a statement that the court case threat is a way to force Shell to “take responsibility for its part in causing global climate damage”.

The court case would be the latest in a series of legal actions to put major oil companies in the dock over their responsibility for climate change. New York is seeking compensation for the effects of climate change from the world’s five largest oil companies: BP, Chevron, ConocoPhillips, ExxonMobil and Shell. A similar suit is also underway in California.

Shell has previously been taken to court in the Netherlands over it liability for oil spills in Nigeria.

Report: Greenpeace appeals Norway Arctic oil drilling case

Craig Bennett, chief executive of the UK branch of Friends of the Earth, said in a statement: “Science tells us that time isn’t a luxury we have where climate change is concerned. When world leaders met in Paris in 2015 they agreed to end the fossil fuel era, but in the meantime, Shell continues to invest in new oil and gas sources.

“Shell must now move on from its history of earth damaging fossil fuel extraction and play a major part in the transition to a sustainable future, to keep temperature rises to near 1.5C. Currently, Shell and companies like it, are acting like big tobacco in decades past by failing to take responsibility for the harm that they cause.”

Sophie Marjanac, a lawyer with NGO Client Earth, said the case has “huge implications”.

“It has been filed in the Netherlands, where judges have already ruled in favour of an NGO’s climate case, resulting in the Dutch government being forced to cut its emissions. The arguments are strong and this could open the door to yet more climate challenges to fossil fuel majors, as we’ve seen with lawsuits around the world and campaigns like #ExxonKnew.”

Jeanne Martin, senior campaigns officer with ShareAction, which seeks to influence companies climate policy at shareholder level, said shareholders should now take the threat of legal action seriously and use their influence to “drive meaningful change in the oil industry”.

“The company says it supports the Paris Agreement and its goal to limit global warming to well below two degrees but its investment portfolio suggests otherwise. Instead of facing the biggest issue of our times, Shell is splashing cash at projects that are incompatible with their stated support of the Paris Agreement, and are likely to go bust in light of rising disruptive regulatory and technological forces.”

Shell had not responded to a request for comment at time of publication.

This article was originally published on DeSmog UK.

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In March Exxon attempted to block a climate resolution by appealing to the US Securities and Exchange Commission, only for the SEC to force Exxon to hold the vote.

The oil giant was warned about its conduct in no uncertain terms: ‘It does not appear that Exxon Mobil’s public disclosures compare favourably with the guidelines of the proposal’.

That’s one side of the coin. From a very different viewpoint some divestment campaigners, including 350 founder Bill McKibben, have criticised the slow pace of progress from engagement.

McKibben is urging investors to divest instead. It’s a valid argument that has gained traction in recent years, but one I think is flawed on a number of levels.

Less than 2 hours to the Exxon AGM. I shall be telling the board they are losing the confidence of their major investors on climate change.

— Edward Mason (@edwardcmason) May 25, 2016

First, we are seeing results. Progress is being made around company engagement, and divestment as a tool for managing climate risk has limits.

I would point to progress at Statoil, Total and Shell, where following years of engagement the argument that oil companies should re-direct capital to clean investment is being accepted.

Take for example Total’s solar expenditure and its newly released climate plan where it pledges to cease drilling for oil in the Arctic.

Will engagement make a difference at Exxon, a company with the ultimate bunker mentality?

The jury is out, but investors at today’s AGM in Dallas will let CEO Rex Tillerson know they are no longer satisfied with his stance on climate science and the company’s role in a sub 2C future.

It is certainly true that engagement can’t yet claim a track record that has materially switched the business plans of big oil.

Bluffer’s guide: The oil majors, climate change and investor pressure

But engagement is as much about big finance learning to take on a whole sector as it is about oil and gas itself.

Once investors learn new tricks, they don’t go backwards and with 136 resolutions raised against the oil and gas sector in the last two years against 64 in the previous 3 years there are signs they want to learn and act.

The pace may not suit Bill McKibben or any of us, but climate change is challenging investors in ways that not even the sub-prime crisis did.

This year’s Exxon and Chevron AGM’s will see a record 16 climate related shareholder resolutions covering climate change from a wide number of angles.

For the first time, one of these resolutions has been the subject of a unique alignment of interests. Exxon has been asked to prepare a 2C business scenario for its shareholders in a resolution co-filed by the European Aiming for A coalition and New York State Common Retirement fund.

This resolution (item 12 on the agenda) and its Chevron equivalent has been supported by a large coalition of NGO’s including civil society groups who have facilitated thousands of members in 50 countries to pressure their retirement fund to vote for the resolution through their VoteYourPension platform.

Briefing: Meet the investors pushing climate reality on carbon majors

Divestment has been rejected en masse by the retirement funds industry which hold the majority of shares in Exxon.

There are already signs that some oil assets are going off market into private equity and hedge funds where Bill McKibben et al will be unable to count them, let alone influence them.

Furthermore, Unions have expressed a strong desire to ensure that this industry does not collapse in a heap forcing millions out of work and whole communities to be stranded.

The advantages of the engage and diversify approach are copious.

Firstly, governments and regulators looking for a market solution would welcome a move to diversify these companies in a non-political way without regulation or carbon pricing.

Second, investors lower their portfolio risk over the long term from a more calamitous end for big oil at a time when regulators have no choice but to react to Mr McKibben’s rapidly worsening climate scenarios.

Thirdly, employees and suppliers would be allowed a smoother transition avoiding the kind of human contagion we saw in 2008.

Finally, and not without some irony, the companies themselves and their management will be rewarded for the transition, cementing their future and allowing them to grow further.

Having demonised oil and gas for some years, making big oil part of the solution is toxic to the environment movement but like the investors they too must learn on the job.

The blunt weapon of destructive capitalism is a grim alternative we experienced only recently after 2008 and it didn’t go very well.

Risky bet: Does divestment slow or speed green growth?

Nobody is suggesting that engagement is a panacea towards a low carbon economy but it is the only strategy where we can align interests of all stakeholders to drive change.

Engagement pressure is accelerating in ways that few could have envisaged in recent years.

Global collaboration between funds, associations and campaign groups can ensure that millions of retirement beneficiaries who ultimately own the majority of Exxon shares can have their long term interests aligned with the capital that Exxon and others have at their disposal.

To drive this change, we must all stay in the game rather than exit and allow a far more dangerous off market game to ensue.

The Exxon AGM will almost certainly see a majority vote for board access by investors and a very strong vote (possibly over 30%) for a 2 degree business scenario.

When this occurs it is time for the divestment movement to realise that accountability in the investment and corporate chain is being rapidly improved.

The stationary energy industry already has many diversified companies who are transitioning and thus this is no longer a simple black and white issue as some of those companies have coal and renewable assets.

We need big oil to join those diversified companies and compete in the new transition and return each year to challenge the companies at every AGM where investors are driven by beneficiaries to vote for change.

You have to be in it to win it.

Julian Poulter is CEO of the Asset Owner’s Disclosure Project (AODP)

The post Exxon and climate change: Why it’s better to engage than divest appeared first on Climate Home News.

Shell’s Gumusut-Kakap platform operates off the coast of Sabah, Malaysia (Pic: Shell/Flickr)

By Ed King

BP and Shell say the newly agreed Paris climate pact will likely lead to additional regulations and costs to the oil and gas industry.

Both hydrocarbon giants assert their products will be in high demand until mid-century, but warn new green policies could impact future growth and revenue streams.

“Changes in laws, regulations and obligations relating to climate change could result in substantial capital expenditure, taxes and reduced profitability,” says BP’s report.

“Rising climate change concerns have led and could lead to additional legal and/or regulatory measures which could result in project delays or cancellations,” says Shell’s ‘risk factors’ analysis.

“If our GHG emissions rise alongside our ambitions to increase the scale of our business, our regulatory burden will increase proportionally,” it adds later.

“If we are unable to find economically viable, as well as publicly acceptable, solutions that reduce our GHG emissions and/or GHG intensity for new and existing projects or products, we could experience additional costs or financial penalties, delayed or cancelled projects, and/or reduced production and reduced demand for hydrocarbons, which could have a material adverse effect on our operational performance, earnings, cash flows and financial condition,” – Shell 2015 Annual Report

The oil majors have long predicted climate regulations could impact their business models, but BP notes an “increased focus on climate change” through 2015.

The board says it was “pleased to support a resolution brought by a group of our shareholders that encouraged greater disclosure of our work in this area.”

Shell urges governments to offer a clearer policy framework in the form of a global carbon price, which it contends will aid the transition to lower carbon energy sources.

Without state leadership and support in the development of new polices and carbon capture technologies, the business could suffer, it says.

Scientists say 80% of the world’s known fossil fuels need to be kept in the ground if the world is to avoid warming beyond the 2C danger zone.

The 2015 Paris deal included an aspirational goal to limit warming to 1.5C above pre industrial levels, which some experts say means no unabated burning of oil, gas and coal beyond 2030.

The post BP, Shell acknowledge rising climate risk to business model appeared first on Climate Home News.

(Pic: Deepsea Aberdeen semi-submersible rig)

By Ed King

Fourteen multinationals including oil majors Shell and BP have signed up to a statement backing a “sensible and effective” global climate agreement.

“We believe the Paris agreement should commit all parties to undertake nationally determined efforts to reduce greenhouse gas emissions,” the companies say.

A proposed UN deal – set for sign-off in December – should ensure “require periodic renewal of national contributions to progressively strengthen the global effort” and support international carbon markets.

Other signatories include miners BHP Billiton and Rio Tinto, IT giants HP and Intel, metals trader Alcoa and Siemens, a major clean energy investor.

The companies – which employ over 1.5 million and have revenues above $1 trillion – say they will mobilise the technology and investment needed to move towards a low carbon economy.

But they are vague on how strong greenhouse gas slashing targets should be in the near term, calling instead for “long term direction” from Paris.

“These are companies with real skin in the game – either they’re large emitters or their products are,” said Bob Perciasepe, head of the Washington DC-based C2ES think tank that coordinated the statement.

“These leading companies support a Paris agreement that gets all the major economies on board, provides stronger long-term direction, and holds countries accountable.”

So far, 149 countries including the US, China, India and Europe’s 28 member states have submitted their climate plans to the UN, covering around 90% of global emissions.

A final week of talks on the Paris deal will start next Monday, with discussions focused on a draft set of proposals released at the start of October.

Jake Schmidt, climate director at the National Resources Defense Council, said the note sent a strong message to those US lawmakers who are opposed to a deal.

“Senate Republicans are going to make some noise to reject the Paris agreement and force a vote on it,” he said.

“These business are sending a clear signal to Senate Republicans that they want an strong international agreement and will hopefully support the final outcome as it will likely meet the conditions in the letter.”

The post BP, Shell, Rio Tinto offer support to Paris climate deal appeared first on Climate Home News.

Fossil fuel companies have historically offered strong returns, attracting fund managers (Pic: BP)

By Tom Burke

The Energy Transitions Commission was launched in Houston, Texas on Monday 28 September 2015. It is an initiative put together by Shell and McKinsey.

I was quoted online in the Financial Times on the Friday before the launch, describing the initiative as ‘ill-advised’. Let me explain why.

The purpose of the Commission is ‘to support energy decision-makers to meet the twin objectives of economic development and climate change mitigation.’

No-one could quarrel with the importance of this task, though one might wonder why this was only a matter for ‘energy decision-makers’. Energy is central to all our lives. Making a transition from high to low carbon energy has implications that go far wider than energy policy.

The world’s governments have accepted an obligation under the UN’s climate body to keep the climate within the 2C threshold of danger.

Should they fail then economic development will be delayed, damaged or destroyed for us all. Clearly, the world’s fossil fuel companies have a part to play, along with everyone else, in meeting this challenge. There is no doubting the value of creating a better informed public debate on how to do so.

Leadership?

Shell has been among the first of the fossil companies to respond to the urgency and gravity of limiting climate change to 2C. It has a better understanding than most of its peers about what is at stake.

No-one should doubt the importance of identifying whether there are pathways for fossil fuel companies to remain viable within this constraint. Why then my reservations about this initiative?

There are two principal reasons why it is ill-advised. Neither the model used to create the Commission, nor the process it has adopted to develop its findings command confidence. This would have been true prior to the recent revelations about Volkswagen. It is even more true now.

Credibility challenge

Large corporations are not trusted by the public or civil society. They are perceived to, and often do, put their commercial interests above the public interest.

Keeping the climate safe by eliminating carbon pollution is patently a direct threat to the future of fossil fuel companies. Faced with such a threat, any initiative primarily funded by the industry starts with a considerable credibility problem.

This is a difficult, but not insurmountable, problem. Unfortunately, the founders of this Commission have made no effort to solve it.

Rather, we are asked to take on trust the choice by Shell and McKinsey of how, on what terms and with whom to establish the Commission. I have no doubt the organisers mean well but that is not enough for confidence.

The ‘wise men’ model, and indeed all but one of this Commission are men of a certain age, of establishing authority is a throwback to the 20th Century.

The Brandt Commission on the global economy from 1977 and the Brundtland Commission on environment and development a decade later both helped start important global debates.

Group-think

But times have moved on. Authority of any kind is much less readily accepted. In a connected world a more informed and better educated citizenry expects to participate directly in global debates about its future. Through a vast array of civil society bodies it is well organised to do so.

There is no reason for anyone to doubt the independence or the integrity of the individual Commissioners. They are all people with long track records, predominantly in the established energy sector. As a group they are remarkably alike.

This creates an inevitable risk of group-think as their mutual respect for each other softens the edges of the acute debate between them necessary to tackle such a difficult set of problems.

This places a particular burden on the secretariat of the Commission. The Commissioners are busy people. The amount of time they will be able to devote to following the detail of the Commission’s work is, inevitably, limited.

Many of the Commissioners will, of course, have staff to support them personally. Even so, the scope of the Commission’s programme is so large – effectively advising nearly 200 nations on how best to build a carbon neutral energy system by the middle of the century – that much will depend on the knowledge and judgement of the secretariat.

Compromised expertise

It will be provided by McKinsey. This is a company with a great deal of experience in advising global corporations. It has been a significant thought leader in meeting the energy challenges of the 21st Century. It will undoubtedly bring a group of able and informed people to the task.

But, and this is a big but, McKinsey has an extensive set of other commercial relationships on a wide range of corporate issues with many of the companies represented on the Commission.

Fair minded people with any experience of the realities of the corporate world will find it difficult to take on trust that these relationships do not compromise McKinsey’s ability to provide the ‘trusted, authoritative fact-base on key debates’ to which the Commission aspires.

This is a very heavily contested space. The ‘facts’ are elusive and not widely agreed. Much of the debate is conducted on the basis of projections whose assumptions are unclear and whose significance is capable of a wide range of interpretation. The stakes are very high for the large, powerful companies involved. Trust is in short supply.

Nevertheless, the huge task of keeping the climate safe does require an informed and sustained engagement between the fossil fuel companies and the rest of society. Tackling a problem of this magnitude needs all of us to play a part – not just ‘energy decision-makers’.

Indeed, since we are all energy consumers we are all, in an increasingly important sense, energy decision-makers. An energy system compatible with a safe climate will not command the necessary investment if it does not also command wide public confidence.

Creating a group of like-minded Commissioner’s, selected by an obscure process, supported by a compromised secretariat is not obviously the best way to command public confidence. A difficult dilemma must first be resolved.

Dirty, dumb, dangerous?

Only corporations or governments can afford the required level of funding to pay for any such initiative on a global scale. But if they pay for it, understandably few civil society organisations will readily accept the findings.

If they do not pay for it, then it will not happen and the current dysfunctional debate will continue. This is a true dilemma. If the funding is accepted the value of the findings is lost. If the funding is not accepted there are no findings and so the value is lost anyway.

We have been here before. In the late nineties the global mining industry was widely considered to be dirty, dumb and dangerous.

If faced widespread opposition to its activities across the world. Demand for its products was growing but its efforts to meet that demand were increasingly impeded by opposition. It had no answer to the question ‘How can mining be sustainable?’

This was a far less difficult problem than the one currently faced by the fossil fuel companies as the world works to keep the climate safe. Nevertheless, lessons were learned that are relevant to the challenges the Commission intends to address but which its founders have overlooked.

Building trust

I was asked by Rio Tinto to advise the mining industry on how to meet this challenge. The result was the Global Mining Initiative which I created and helped to lead.

The centrepiece of the GMI was a shared analysis[1] of the issues facing the industry as it tried to define its contribution to sustainable development. Its purpose, much the same as the Commission’s, was to identify an agenda for action around which industry, government, international institutions and civil society could align their efforts.

This project faced the same dilemma as the Commission. If the mining industry paid for the analysis its findings would be compromised.

If industry did not pay for the analysis there would be no findings. Resolving this dilemma, as with all true dilemmas, required innovation and imagination. The result was the creation of an elaborate, and expensive, governance structure to safeguard the integrity of the analysis.

The willingness of the global mining industry to invest in these safeguards was a token both of its good faith and the seriousness it attached to the findings. The project dispensed with ‘wise men’ recognising that to be credible its findings needed to flow from direct dialogues between industry leaders and other social partners.

A dedicated secretariat was created supervised by a global assurance group with 25 members. Written charters governed the activities of the secretariat, the assurance group and the industry sponsors[2]. The dialogue ran for two years, involved four regional processes and a large number of workshops involving over 750 participants.

Elaborate and expensive though it was the results justified the effort. A tenth anniversary review of the project’s report found that it was exerting a continuing and beneficial influence on the activities of the mining industry and its relationship with society.

I know from experience what it takes to build trust in a global industry regarded with suspicion or even hostility. The fossil fuel industry comes into the climate change debate with a reputation at least as badly damaged as the mining industry.

Hence my conclusion that the establishment of the Energy Transition Commission in its current form is ill-advised. It faces a far more difficult challenge than the mining industry. The fossil fuel industry is already seen by many as working to minimise the collision between its future and the maintenance of a safe climate.

Without the kind of integrity safeguards described above, or some equally credible alternative, the findings of the Commission will not, and should not, command public confidence. This will reduce their impact on the wide range of decision makers involved in bringing about the energy transition.

The Commissioners have invested their personal reputations in this project. If it fails the integrity test those reputations will be damaged. Furthermore, there is a risk that the Commission’s work will be seen as an industry public relations campaign rather than a serious effort to play a part in tackling the most urgent problem facing the whole of humanity.

It is not too late to redeem the Commission. The magnitude and urgency of keeping the climate safe to permit development badly needs initiatives of this ambition. As now constructed it lacks sufficient integrity to make a positive contribution.

Indeed, there is a real risk that it will be widely seen as an industry inspired effort to muddy the waters. The first meeting of the Commission will be an opportunity to remedy its defects. Whether it is taken will say much about the founders intent.

[1] This was the Mining Minerals and Sustainable Development Project whose report, Breaking New Ground, and further details of how the project was organised can be found on the IIED website at www.iied.org/mining-minerals-sustainable-development-mmsd

[2] The details of how the governance structure was established and worked can be found in the website cited in the above footnote.

This article first appeared at tomburke.co.uk

The post Can we trust Shell’s ‘Energy Transitions Commission’? appeared first on Climate Home News.

(Pic: Ed King/Climate Home)

By Ed King

The free market’s ability to spur innovation holds the key to tackling climate change, not tougher government policies, ExxonMobil CEO Rex Tillerson told fellow executives in London on Wednesday.

The threat of global warming could be addressed, said Tillerson, by using more natural gas, employing carbon capture (CCS) technologies and investing in energy efficiency measures.

“Government works best when it maintains a level playing field, opens the door to competition and refrains from picking winners and losers,” he said.

The Texan, who runs a company with a market value of US$357 billion, said Exxon was already a “global leader” in CCS, a technology deemed essential by many climate experts but which operates to scale at a mere 14 sites globally.

The head of the largest US oil major made a point of mentioning this year’s Paris climate summit in his address to the Oil and Money summit, an annual gathering of hydrocarbon leaders.

“We believe the risks [from climate change] are serious, but we also believe that by sound and wise actions we can mitigate those risks,” he said.

And he urged policymakers away from adopting tougher greenhouse gas cutting measures, suggesting the best policy was a global “revenue neutral” carbon tax.

“It’s up to the people in this room to communicate the foundations of these policies,” he added.

Report: Oil majors to release climate plan on 16 October says Total CEO

Earlier this year the Guardian revealed Exxon was still channelling millions to climate sceptic lawmakers in Congress, despite a 2008 pledge to quit lobbying on this issue.

The newly crowned Petroleum Executive of the Year swerved this issue, instead stressing the company’s focus on environmental standards and efficiency investments.

Exxon scientists had mapped internal climate scenarios since the 1970s he said, stressing the company had also cooperated with the UN’s Intergovernmental Panel on Climate Change.

The UN climate science panel’s latest report suggests the world has less than 30 years on current emission levels to avoid warming above and beyond the 2C danger zone.

But Tillerson dismissed calls for an end to oil and gas use, a potential outcome at this year’s Paris climate summit, calling fossil fuels a “moral and humanitarian imperative”.

Oil exploration companies had a better perspective of how energy poverty was affecting the world’s poorest than many campaigners, he said, given the geographic breadth of their operations.

The post ExxonMobil boss warns against tougher climate regulations appeared first on Climate Home News.

(Pic: World Economic Forum/Flickr)

By Ed King

Seven of the world’s top oil majors will reveal how they plan to contribute to a global climate pact after a meeting in Paris on 16 October.

Total CEO Patrick Pouyanne said areas of cooperation under discussion included pooling resources to accelerate carbon capture technologies and boosting energy efficiency measures.

“We cannot ignore the climate change issue… this is why last June we called for a carbon pricing mechanism,” Pouyanne said at the Oil and Money conference in London.

“The industry should not be defensive… we need to be on the offensive… we need to bring answers and solutions on the table and not leave policymakers think [we] are the devils,” he added.

Green with gas: Oil majors eye UN climate deal

The initiative includes Shell, BP, BG Group, Saudi Aramco, Sinopec, Pemex and ENI, and was first announced in June with a letter to UN climate chief Christiana Figueres.

“The challenge is how to meet greater energy demand with less CO2. We stand ready to play our part,” said the letter, which was signed by CEOs from all the companies.

Pouyanne joked the letter was not “marvellous” but stressed it was a sign the companies wanted to be part of a solution to global warming, and engaged a potential global climate deal this year.

And he claimed US oil majors Chevron and ExxonMobil, which declined to join the venture earlier this year, had similar views.

“We are not far from a full agreement… let’s be clear – most of them have engaged for many years in that debate,” he said.

Green groups are unlikely to be stunned by next week’s announcement, Pouyanne insisting that oil and gas would be a critical part of the global energy mix in the coming decades.

But he said a move to cleaner forms of fuel like gas would be an important step towards slowing global greenhouse gas emissions growth, which has rocketed in the past decade.

“Gas is cleaner than others… if do nothing and we let the market decide we will have more and more coal,” he said.

The post Oil majors to release climate plans on 16 October, says Total chief appeared first on Climate Home News.

Activists paddle up to Shell’s Polar Pioneer rig in Seattle, to protest Arctic drilling (Flickr/sHell No! Action Council/Charles Conatzer)

By Alex Pashley

The head of Royal Dutch Shell urged oil majors and utilities to come on board in backing a tax on carbon emissions on Tuesday.

Carbon pricing was pivotal in reversing the world’s reliance on fossil fuels and combating climate change, Ben van Beurden told an oil industry event in London.

The Anglo-Dutch company joined five European energy giants in endorsing a carbon price in June, writing an open letter to Christiana Figueres, the diplomat steering UN climate talks set to sign off on a new global climate pact in December.

“By taking the cost of tackling climate change and air pollution into account, carbon pricing will drive the right behaviour of both consumers as well as producers,” said van Beurden in an address to energy ministers and oil executives at the Oil and Money summit in London.

“The world needs to start applying them quickly and without delay.”

Innovation

The chief of Shell, which internally prices carbon at $40 a tonne, said pricing would spur producers to ditch coal for natural gas and would make it easier for renewable alternatives to compete on price terms.

Over 40 governments and 20 countries are now pricing carbon according to the World Bank, but that covers a mere 12% of global emissions.

The world must “broaden” the coalition from the domain of oil and gas companies to utilities, regulators and academia, he said.

The Shell chief said US oil majors such as Chevron or Exxon Mobil, which declined to follow their European counterparts’ lead, “had their reasons” but the group had to move forward to send a signal before the December summit in Paris.

Greenpeace dismissed van Beurden’s call as a “costly distraction” from the measures needed to curb emissions.

“While it appears progressive, the devil is in the detail,” said campaigner Charlie Kronick.

“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.”

Report: Shell stops Arctic drilling ‘for the foreseeable future’

One of the world’s largest publicly listed companies, Shell has come under fire for its $7 billion high stakes gamble on Arctic drilling and membership of fossil fuel lobby groups, a subject that was not mentioned in today’s question and answer session.

Last month it was kicked out of a climate group sponsored by the Prince of Wales.

Still, van Beurden has emphasised its commitment to tackling warming, lending its support to a clean energy venture, the Energy Transition Commission.

Last month, he said solar was the “backbone” of the future energy system, though predicted fossil fuels dominating for decades.

In spite of tumultuous oil markets, which have plummeted on a supply glut and which Shell see subdued for the short term, prices will rebound eventually, he said.

“In the long run I see no change to fundamental drivers to the oil market.

“There are more people on this planet, more living in cities, more buying their first car or refrigerator. The demand for energy including demand for oil is likely to grow.”

The post Shell chief: Business must account for cost of climate change appeared first on Climate Home News.

Shell CEO Bill van Beurden (Flickr/ Shell)

By Gerard Wynn

Royal Dutch Shell will launch next week a major initiative with multiple partners which it says will investigate and inform how the world can shift to a low-carbon economy.

The first task of its “Energy Transitions Commission” will be to prove its sincerity and impartiality.

Shell has recruited external thought leaders and the chief executives of multiple energy, technology and consultancy companies to the Commission, which it will launch at a “Fortune Brainstorm” conference on energy, technology and sustainability in Texas.

The aim, I am told, is to detail an orderly shift to a low-carbon future which keeps the world economy on track while cutting carbon emissions.

It is difficult to know, before seeing the results, how far the initiative is real enquiry, brand management, a strategic attempt to bend the debate, or a combination of all these.

Report: Shell to leave ALEC, citing climate change stance

Naturally, some sceptics might wonder if this is a PR job, after long-running environmental campaigns against its Arctic drilling. In the run-up to the biggest summit on climate change for years, in Paris at the end of this year, Shell may want to be on the front foot. Some might question how sincerely a fossil fuel company can engage in a debate on a low-carbon transition which ultimately seals the end of its core business.

My sources suggest that some “progressive” solar energy and digital technology companies have been invited to the Commission, which is a good sign, alongside fossil fuel companies such as BHP Billiton and Statoil. But would Shell follow the advice of the Commission, if it clashed with its own strategy, and how impartial can it be?

So far, Shell has offered a skewed vision of the world’s energy future. For example, its own analysis concludes that renewable energy will only make up – at the very most – 25% of the global energy mix in 2050. But even coal-dominated China has signalled that renewable energy will reach about this level in its own energy mix some 20 years sooner, in 2030. An alternative view is that the falling cost of solar power plus the ambition of technology companies like Apple to enter the energy space, including transport, will see fossil fuels get left behind over the next two to three decades.

Shell’s view naturally reflects its own fossil fuel business. In power generation, it has used the issue of climate change to promote its gas business over higher carbon-emitting coal. It is also a leader in developing carbon capture and storage (CCS), as a technology to eliminate emissions from gas-fired power. Meanwhile, it has exited most of its interests in wind and solar. In transport fuels, Shell has only very small biofuel ventures, and little or no interest in electric vehicles.

Shell may want to influence its Commission. One might expect key findings to reiterate its call for a global carbon price, which will hurt coal more. And it will want to underline the importance of CCS in the fight against climate change, given its strategic position, and the public funds at stake. For example in Britain, it is hoping to win next year a share of £900 million for its gas-CCS project at Peterhead in Scotland.

But if its Commission can also convincingly analyse, argue and inform across a wide range of other scenarios, it could make a useful contribution for investors, policymakers and entrepreneurs, and perhaps for Shell itself.

This article first appeared on the energy and carbon website. Follow Gerard @gerardfwynn

The post What’s with Shell’s new Energy Transitions Commission? appeared first on Climate Home News.

(Flickr/ Shell)

By Alex Pashley 

Solar power is approaching a “crossover point” where it makes sense for investors to back rays over coal, oil and gas, according to the head of oil major Royal Dutch Shell.

Amid tumultuous oil markets and tumbling costs as photovoltaic cells are rolled out globally, the value of solar is already evident in the world’s sunniest places, Ben van Beurden told BBC’s Radio 4 on Thursday.

“I have no hesitation to predict of course in years to come solar will be the dominant backbone of our energy system, certainly of the electricity system,” said the executive of the Anglo-Dutch energy giant.

“But in that same period though we will see that the demand for energy double, and I do not think solar can grow from the 1% it is now, to being the dominant force and thereby obviating the need for fossils fuel immediately, but it is going to be a multidecadal transition.”

Oil rout

Oil plunged below $40 a barrel in August, the first time in six years, as forecasts of slower demand growth raised concerns of a prolonged glut.

Lower prices have forced oil groups to shelve over $200 billion of assets. That increases the appeal of renewable energy, whose costs have tumbled in recent years.

Wind, solar, hydro and other renewable sources made up 59% of new power generation capacity installed in 2014. But that year renewables only accounted for 3% of global energy consumption, up from 0.9% a decade ago, according to BP’s statistical review.

The world will burn through the planet’s atmospheric allowance of CO2 emissions to cap within 30 years by some estimates to cap warming at 2C.

To meet that more than 80% of coal, half of gas and a third of oil needs to stay in the ground, analysts say.

If countries are serious in avoiding dangerous climate change, that signals vast fossil fuel investments in coal mines, oil rigs or gas fields will become “stranded”, incurring huge financial losses.

Analysis:  A 7-step plan to avoid stranding your fossil fuel assets

Shell’s chief financial officer Simon Henry said in June not busting the budget was “simple arithmetic” – switch production from dirty coal to lesser-emitting gas or oil.

The company sees energy production soaring from 250 to 400 million barrels of oil equivalent a year from 2010-2050 as its “minimum scenario”, as 3 billion in the developing world move from subsistence to modern users of energy, Henry said.

It has called for a carbon price with five European oil majors, signalling willing to work towards a UN climate agreement.

Van Beurden refused to predict oil’s future price, as Goldman Sachs forecast 15 years of weak crude at $20, but emphasised the company had thought hard before entering new ventures.

That includes Shell’s recent drilling in the Arctic, whose production cost could top $100 a barrel, James Henderson at Oxford University’s Institute for Energy Studies told the Guardian.

US benchmark West Texas Intermediate closed yesterday at $47.12.

The post Solar power ‘backbone’ of future energy system – Shell CEO appeared first on Climate Home News.

Polar Pioneer and an offshore supply vessel Harvey Supporter off the Alaskan coast (Pic: Shell/Flickr)

By Megan Darby

Shell has left the Prince of Wales Corporate Leaders Group, a network of European business chiefs advocating for climate action.

A source familiar with the matter told RTCC the oil major departed after internal rows over its continued presence.

As the only fossil fuel company in the group, Shell’s membership had always been contentious, the source said – and its Arctic drilling programme was the final straw.

Official spokespersons refused to comment on the reasons for Shell’s exit, which is a blow to its climate credentials in the run up to this December’s Paris summit.

Sandrine Dixson-Decleve, director of the CLG, said: “We have worked with Shell for ten years. They were one of the first in the group.

“It speaks for itself that they have been a very important member of the group.”

Other members of the group, which is supported by the UK’s Prince Charles, include GlaxoSmithKline, Tesco and Unilever.

Shell’s climate strategy: narcissistic, paranoid, and psychopathic

During its membership, Shell signed up to the Trillion Tonne Communique, which called for a greenhouse gas net zero emissions target this century.

That is the trajectory scientists say is necessary to hold global warming to 2C above pre-industrial levels, the internationally agreed limit.

Yet the company’s controversial Arctic drilling venture, started last month, is based on energy projections that appear to conflict with that pledge.

Researchers from UCL found a third of known oil reserves worldwide needed to stay in the ground to meet the 2C goal. High cost sources like Arctic oil should be “unburnable” in a 2C scenario, they said.

John Ashton, a former UK climate envoy, described the company’s strategy as “narcissistic, paranoid and psychopathic” in an open letter to chief executive Ben van Beurden earlier this year.

Report: Shell starts Arctic oil drilling amid risk warnings

A spokesperson for Shell said: “Energy experts accept that hydrocarbons will remain a major part of the energy system for many decades, as demand for energy grows.

“This is particularly the case in developing economies, whose people rightly aspire to the same standard of living that those in the developed world enjoy.”

The company “remains committed to actively engaging in developing solutions to the global energy challenge,” the spokesperson added.

That includes a carbon capture and storage project in the UK and calling for a global carbon price.

It is part of a coalition of oil majors seeking to play a constructive role in climate talks.

And it quit Washington DC-based ALEC last month, a lobby group known for trying to undermine climate policies.

That stance was “clearly inconsistent with our own”, a Shell spokesperson said at the time.

The post Shell exits Prince of Wales climate group amid row rumours appeared first on Climate Home News.

Helge Lund, CEO of BG Group, says climate change is one of the world’s greatest challenges (Pic: BG Group/Flickr)

By Ed King

The camera pans across the open sea catching glaciers collapsing, as a voice warns viewers of rising global temperatures, rising sea levels and shrinking ice caps.

As introductions to a film go, it would not look out of place on the websites of Greenpeace, Friends of the Earth or WWF.

Only this isn’t produced by treehuggers, as becomes clear moments later, rather by one of the world’s top gas exploration and extraction firms: BG Group.

In a carefully managed interview following this opening the company’s CEO Helge Lund, formerly head of Statoil, says climate change is “one of the biggest issues facing the world right now”.

He tells the interviewer he has a “really strong personal commitment to be part of solution” that will see the world find more energy while reducing CO2 emissions.

It is a slick production and Lund certainly looks like he’s serious about this. The BG Group spokesperson who sent RTCC the clip assures us that is the case.

https://www.youtube.com/watch?v=5RrRqEjmFjQ#t=16

He’s not the only one that’s talking tough.

Late on Friday, Shell’s press office admitted the company had decide to leave the conservative American Legislative Exchange Council (ALEC), a group linked to anti climate policy lobbying.

A statement said ALEC’s stance on climate was “clearly inconsistent” with our own.

“We have long recognized both the importance of the climate challenge and the critical role energy has in determining quality of life for people across the world,” it added.

Royal Dutch Shell was evidently keen to downplay this move. Press releases issued late Friday in August indicate a desire to bury news, or at least leave it thinly reported.

Perhaps that’s no surprise. Shell had been under increasing pressure to quit ALEC for over a year, with NGOs and shareholders making submissions to the board.

And once BP left in March it had even fewer excuses to remain allied to a group that is accused of systematically obstructing new US environmental legislation.

Divestment pressure

Not everyone is convinced. Greenpeace UK senior climate advisor Charlie Kronick told RTCC Shell had been “dragged out” of the organisation.

As long as Shell pushes ahead with plans to drill for oil in the Arctic, it is unlikely to get any slack from that quarter.

Others say increased levels of investor engagement and the rumble of the fossil fuel divestment movement are starting to be heard in board rooms.

PwC’s Jonathan Grant says energy companies “might have been surprised” by both developments, reflecting concerns that some of their assets will be “stranded” as climate action ramps up.

Still, whether the industry jumped or was pushed, it’s a sign that the message is getting through. With talks on a UN climate deal months from delivering, big oil needs to have a game plan.

Six majors have already offered to work with the UN ahead of the Paris summit, writing a letter to its head climate official Christiana Figueres asking for a place at the negotiating table

In return she asked to see their solutions.

Banking on a price

So far the companies have made vague pledges to reduce emissions from production plants, curb methane releases and invest in energy efficiency.

But their main play is to push for a global carbon price.

“You have to combine or find solutions both to the increasing energy demand as well as reducing CO2 emissions,” Lund said in a later part of the interview.

“The best way to do this is to put a price on carbon, because then you can incentivise small companies, big companies, research institutions, you and me to bring forward the most efficient solution to this big issue.”

Carbon pricing gets only one mention in the UN climate negotiating text

Shell has already signalled its support for this, working with the International Emissions Trading Association to ensure a Paris deal recognises the role integrated carbon markets and pricing can play.

“Carbon pricing is an obvious, safe place to focus as so many businesses agree with the need for one, and of course, it would impact more on coal than gas or oil,” PwC’s Grant tells RTCC.

He has worked closely with Shell climate advisor David Hone to develop IETA’s proposals ahead of this December’s UN climate summit.

It may be too late for their text to make the final cut at the UN, but supporters in IETA believe it offers a roadmap for how the world’s carbon markets could be linked in the future.

Any plans?

It appears to be a strategy by leading EU hydrocarbon companies to work with the currents of change, rather than rage against them, as US majors Exxon-Mobil and Chevron have chosen to do.

“They are trying to get a degree of certainty and trying to plan,” said veteran industry analyst Paul Spedding, formerly global co-head of HSBC oil and gas research.

“Oil and gas projects can take at least 10 years – unless you are very quick – from discovery to production. For some projects that’s nearing 15 years.”

The Knarr is BG Group’s first floating vessel development in the North Sea – it cost over a billion dollars to build (Pic: BG Group/Flickr)

Mark Lewis, chief energy economist at financial advisors Kepler Cheuvreux, observes a radical shift of thinking has gone on in the headquarters of some firms in the past year.

The combination of a snowballing divestment campaign, the prospect of a UN climate deal and oil prices crashing to below US$50 a barrel have sent shivers up the spines of some chief executives.

Huge investments such as Shell’s Arctic venture may not deliver until 2030, and are now facing tough scrutiny from shareholders.

The recent write-off of $200 billion of new projects by oil majors will not have steadied nerves.

“No doubt what [oil companies] are trying to do is shift the terms of debate away from the stranded assets issue proposed by the Carbon Tracker Initiative – I think they have been spooked by that,” Lewis said.

“As recently as a year ago both Exxon and Shell were very dismissive of any notion of carbon risk. Here we are 12-15 months later realising investor concerns are not going away.”

Slow progress

Lewis cautions anyone thinking carbon pricing will realise instant dividends.

“The initiative to argue for a system of global pricing is very welcome. I think it’s fantastic news but one is left with the question how do you actually do that.”

Another question – as yet unanswered by the oil majors – is what price per tonne of carbon they deem appropriate.

Many are already operating with internal prices ranging from $8-60, according to the Carbon Disclosure Project, a hedge against future climate policy developments.

The International Energy Agency suggests $100 a tonne by 2030 could be necessary to set the world on a below 2C of warming trajectory, which Lewis said implies a price of $40-50 by 2020.

But these are not levels he thinks the oil and gas industry would like to see rolled out across the world.

Instead they appear to be pushing for a price low enough to preserve their margins and high enough to wipe out coal as a viable source of energy. In the EU, that would be around $27 a tonne.

Killing coal

That push for gas to replace coal is evidently a central part of Lund’s pitch to investors.

BG Group’s core product, gas, would also play a role for “many, many decades” he said, replacing other more polluting fuels.

And while he stresses he has no view “against coal”, he is keen to point out a gas plant emits half the greenhouse gas emissions of its coal equivalent.

Greenpeace’s Kronick worries the companies have one strategy – playing for time by throwing the coal industry under a bus.

“In short term coal to gas is a good thing, it’s important not to deny that,” he said. “But the question is at what point you are locked into gas.

“It’s a question they have not begun to answer, and it’s also based on a huge uptake of carbon capture technology post 2050, which they have not really started to invest heavily in.

“If there’s one thing that will secure their future it’s CCS. And you can’t claim it will be solution while not investing in it. You can’t have it both ways.”

Report: Leave coal in the ground, not oil and gas – Shell CFO

We’re now weeks away from finding out what the oil majors propose.

Some companies are reportedly ready to release a set of solutions in October, possibly at the annual Oil and Money conference in London, a significant gathering of industry big wigs.

UN climate chief Figueres has asked green groups to stop demonising them and gone out on a limb to stress their role as solution providers.

Few know what to expect, but Spedding cautions against anyone predicting radical change or a significant shift to investing in renewables.

Mobil went big on department stores in the 1970s, BP was into pet foods in the 1980s and clean energy in the late 1990s. Exxon once dallied with nuclear.

Oil majors have had mixed success in diversifying away from their core business. Climate change is their biggest challenge yet.

The post Green with gas: Oil majors eye UN climate deal appeared first on Climate Home News.

shell

By Ed King

Shell says it plans to leave the American Legislative Exchange Council (ALEC), an influential political group that advocates against climate policies.

In a statement sent to RTCC the company said ALEC’s stance on climate change is “clearly inconsistent with our own”.

The UK-Dutch oil giant said it would leave the Washington-based organisation when its membership expires in early 2016, as part of an “ongoing review of memberships and affiliations”.

“We have long recognized both the importance of the climate challenge and the critical role energy has in determining quality of life for people across the world,” the statement added.

Shell’s decision follows that of BP in March this year, and comes off the back of a campaign by the US Union of Concerned Scientists against its continued membership.

Google, British Petroleum, Facebook and Yahoo have also quit the group in the past year. Critics of ALEC say the conservative group actively promotes the denial of man’s influence on climate change, a charge it refutes.

A page on its website focusing on climate policy emphasises its belief that “the debate will continue on the significance of natural and anthropogenic contributions” to climate change, which it labels an “historical phenomenon.”

In the past couple of years Shell has tried to ditch its reputation as a major polluter, signing the Trillion Tonne Communique calling on governments to cut emissions, and offering to work with the UN to ensure a 2015 climate deal is a success.

Still, critics point to the company’s decision to drill in the Arctic for oil and gas as evidence it is still not factoring in the risks dangerous levels of climate change could pose to the planet.

The post Shell to leave ALEC, citing climate change stance appeared first on Climate Home News.

(Pic: UN Global Compact/Michael Dames)

By Ed King

The former chairman of Shell has spoken of his “distress” at the lack of action over the past two decades to address the causes of climate change.

Mark Moody-Stuart, who left the oil giant in 2005 after 39 years with the business said Shell and BP had acknowledged the threat of global warming in 1997.

“I find it distressing that 18 years after major oil companies such as Shell and BP acknowledged the threat of climate change and the need for precautionary action, and indeed began to put in to place many of the steps needed, the world has made very modest progress in addressing this challenge,” he said at a Carbon Trust event earlier this week.

In contrast to many senior fossil fuel executives he argued the growing divestment campaign was not “without some rationale”, recalling how oil and gas companies ditched coal assets in the 1990s.

“Given the inevitable continued demand for some forms of fossil fuels for some decades to come, divestment of all such holdings is probably not an economically sensible choice for most investors,” he said.

“Selective divestment or portfolio switching certainly is. As in all such choices, timing is critical.”

Report: Oil giants signal change in climate strategy

Moves this week by Shell, BP and other European hydrocarbon producers to back UN climate talks and get a global price on carbon were entirely rational – and one they had pushed for over the last 15 years, he said.

It could drive new investment in carbon capture technologies and would also lay to rest the stranded assets debate, ensuring hydrocarbons were not wasted in cars but used for “valuable” tasks in petrochemicals and lubrication.

“Although one might intuitively think that this is not in their interest, it is the only rational way to ensure that the lower carbon emitting fossil fuel sources and mechanisms are favoured. It is a guide to prioritising exploration and investment.”

Hopes of avoiding dangerous levels of warming were fast fading, he said, with only a few holding the 2C target out as an “article of faith.”

But with concern for climate change mounting “perhaps because of unusual weather events” he said he thought a loose climate deal in Paris later this year would take place.

“This is progress and will doubtless be hailed as an agreement, although one can certainly question whether an agglomeration of diverse commitments can really be hailed as a global agreement.”

The post Former Shell chair speaks of distress at climate policy inertia appeared first on Climate Home News.

Activists paddle up to Shell’s Polar Pioneer rig in Seattle, to protest Arctic drilling (Flickr/sHell No! Action Council/Charles Conatzer)

By Alex Pashley

Staying within the Earth’s atmospheric budget for carbon dioxide is “simple arithmetic” – banish coal.

That was the view of Royal Dutch Shell’s chief financial officer in a week in which it and five oil majors backed a carbon price, effectively ringing the death knell for the world’s dirtiest energy source.

“Two-thirds of the carbon in the ground is coal. I could argue take coal out of the system, job done. It’s not oil and gas,” Simon Henry said at a London conference on Tuesday.

“The only reason Shell is in the headlines is because nobody knows the names of the coal companies, they’re all too small in that sense. Coal is the issue in terms of carbon bubble,” he said on a sustainable energy panel at a Chatham House event.

REPORT: Oil giants support for UN climate pact signals change in strategy 

The world will burn through the planet’s remaining allowance of carbon dioxide to stay within a 2c temperature rise by 2100 within 30 years at current rates, scientists say.

And it was “simple arithmetic” that the world can’t move past CO2 concentrations of 450 parts per million, Henry said. The 400ppm mark was passed last month.

Energy demand

Though Shell continues the hunt for hydrocarbons. The Anglo-Dutch company has preliminary approval to drill in the Arctic, with Henry saying fossil fuels extraction will continue way beyond its 12 years of proven reserves.

With natural gas and oil cleaner than coal, a price on polluting will kill off coal companies and work to Shell’s advantage, independent experts say.

As energy demand soars as billions are hauled out of poverty worldwide while renewables suffer scale-up issues, fossil fuels are still critical.

Henry said Shell saw a “minimum” scenario of energy production soaring from 250 to 400 million barrels of oil equivalent from 2010-2050, as 3 billion people in the developing world move from subsistence to modern users of energy.

REPORT: Is natural gas really a bridge to a greener future?

And Shell had a “moral imperative” to give them access to affordable energy.

It was time for “multi-decade solutions” and for business, government and civil society to decide on the right objective in directing $2 trillion of projected annual energy investment a year up to 2050, he said.

A carbon price, an “alignment of strategic intent that outlives the political cycle”, and a clear target for businesses to hit were three key conditions.

Shell took the unprecedented step to call for a carbon price on Monday with five European oil majors, signalling willing to work towards a UN climate agreement.

Fossil fuels would continue to play a role for the company, while clean energy struggled to be scaled up.

It accounts for just 20% of global energy production, with wind and solar just 1%, he said.

“Our industry is a core part of modern life,” Henry said.  “We need it to make available, we need to make it affordable, and the way in which that energy is provided to citizens needs to be acceptable in an environmental sense.”

The post Leave coal in the ground, not oil and gas – Shell CFO appeared first on Climate Home News.

How the oil industry’s climate group sees the future – rusting rigs and gleaming panels (Pic: OGCI)

By Ed King

Eight of the world’s top oil and gas producers have offered an intriguing glimpse into a future of rusting oil rigs and gleaming solar panels.

A vision of old and new energy sources, on what looks like a dried out seabed, dominate the front page of the Oil and Gas Climate Initiative (OGCI) website, a project launched by BG Group, BP, Eni, Pemex, Saudi Aramco, Shell, Sinopec and Total.

They joined forces last week at the Paris business and climate summit to emphasise their qualified support for carbon cuts, and plan to reveal how they can contribute to global efforts to address climate change in a report due out later this year.

The oil giants – responsible for 25 million barrels of oil equivalent a day – a sixth of global hydrocarbon production – say they want to “drive the sector forward” on climate solutions.

Options discussed at a gathering of the OGCI last week include cuts to gas flaring and methane emissions from production facilities, together with work on measuring climate-related impacts.

“Outcomes from the workshop will help inform the OGCI’s first joint report that will be published ahead of the 21st session of the Conference of the Parties to the UNFCCC (COP21),” the group said in a statement.

New winds?

It offers another signal that after decades of blocking efforts to tackle climate change, some of the world’s top fossil fuel producers are now acknowledge rising levels of greenhouse gas emissions could be an issue.

Last week Saudi Arabia’s oil minister said the country could be finished with fossil fuels by 2040 or 2050, and offered the thought it could turn to exporting solar power.

BP and Shell recently adopted shareholder resolutions to force them to reveal if their assets will be unburnable under tighter climate regulations.

Chevron and Exxon Mobil, which are not part of the OGCI, have rejected calls to pull out of carbon-intensive projects. And apart from Total, which gas solar projects in the US, South Africa, Chile and Abu Dhabi, other OGCI members have insignificant renewable investments.

The “long term solutions” part of the website talks about digital solutions or regulatory behaviour. It doesn’t mention the UN climate science panel’s warning that at the rate of current emissions, in less than 30 years dangerous warming will be locked into the world’s climate.

Leopard, spots

Many seasoned observers of climate change talks have called the commitment of oil companies to decarbonise into question, pointing to Shell’s plans to drill in the Arctic this summer.

Environmentalist Jonathan Porritt, who once advised BP on its environmental strategies, said it was “impossible” for them to adapt to a world that needs to rapidly slash emissions.

The UK’s former top climate diplomat John Ashton has described Shell’s strategy of warning about climate dangers yet continuing to explore as “narcissistic, paranoid and psychopathic”.

But with the Paris summit fast approaching, there appear to be efforts at senior UN levels to offer the oil giants a way to bring solutions to the French capital.

UN climate chief Christiana Figueres and UN assistant secretary-general on climate change Janos Pasztor also addressed last week’s OGCI meeting, according to the statement.

Speaking to RTCC in Barcelona this week, Figueres said it was time to stop “demonising” hydrocarbon producers, arguing their technical expertise was vital in curbing emissions.

“We need everyone – climate change is so important so we cannot afford to demonise any country or company,” she said.

The post Oil giants brush up climate credentials ahead of Paris summit appeared first on Climate Home News.

Activists paddle up to Shell’s Polar Pioneer rig in Seattle, to protest Arctic drilling (Flickr/sHell No! Action Council/Charles Conatzer)

By Megan Darby

Shell today committed to reveal how its oil and gas assets will fare in a safer climate future, in response to a shareholder campaign.

Scientists estimate half of world gas reserves and a third of oil must stay in the ground to hold global warming to 2C. If burned, these fossil fuels would blow the carbon budget.

Shell’s controversial – and high cost – Arctic and tar sands ventures are among the most exposed to the risk of being “stranded” by climate action, analysts have warned.

Chief executive Ben van Beurden admitted the argument “sounds quite convincing” at the company’s AGM on Tuesday, under intense questioning by shareholder activists.

But he said: “That particular theory ignores the reality of our industry… It risks distracting from the real issues.”

With a growing population and billions rising out of poverty, Shell expects energy demand to double by 2050 and be mainly met by fossil fuels.

Even under “the most aggressive scenario”, it foresees alternative sources supplying only 35-40% of energy mid-century.

Halting investment in new oil supplies would lead to a shortfall of 80 million barrels a day by 2050, van Beurden claimed.

Stranded assets ignores ‘reality’ of industry says CEO. But aren’t plans for 4 degree world ignoring reality of climate change? #shellagm

— Louise Rouse (@rouselouise) May 19, 2015

In 2014, Shell supplied 2% of global oil demand and 3% of gas. It is set to merge with BG Group this year, expanding its market share.

It has two future scenarios, which Shell climate advisor David Hone told RTCC are consistent with 2.5-3C of warming.

Others have noted the forecasts are based on an International Energy Agency scenario linked to 4C warming and sea level rise of 52-98cm.

Shareholders voted 99% in favour of a resolution proposed by the “Aiming for A” coalition of investors, at a meeting lasting nearly five hours.

The resolution forces the company to consider the possibility of a 2C world – the internationally agreed goal for efforts to curb greenhouse gas emissions.

It follows the adoption of similar measures by BP last month.

Report: US decision to open Arctic to Shell drilling sparks green fury

Shell showed no signs of halting its ill-fated Arctic exploration plans, which analysts say are incompatible with the 2C goal.

Paul Ekins, expert in “unburnable carbon” at UCL, has said: “From an economic point of view, it would be unwise to extract the oil from the Arctic…

“It would mean less expensive oil elsewhere was left unused.”

Van Beurden dismissed the climate change case against Arctic exploration as “illogical”.

He reaffirmed plans to start drilling in the Chukchi Sea this summer, subject to permits and overcoming legal challenges. Last week’s green light from the US Department of the Interior was “very encouraging”.

Louise Rouse, a consultant to Greenpeace on the Arctic attending the AGM, begged to differ.

On the contrary, she told RTCC, its insistence on the project “reveals a huge gap in logic in Shell’s thinking”.

The Arctic rigs will not start full production until the 2020s and depend on high oil demand and a high oil price, she said. If that happens, “we are very likely to have missed our climate goal”.

The post Shell adopts climate plan, defends Arctic oil drilling appeared first on Climate Home News.

(Pic: 350/ Steve Liptay)

By Ed King

Leading US climate activist Bill McKibben says Barack Obama is guilty of “climate denial” after giving Shell permission to drill for oil and gas in the Arctic.

Writing in the New York Times, the founder of campaign group 350 accuses the US president of denying the “meaning” of climate science by allowing further fossil fuel exploration.

And he compared allowing Shell to drill to offering cigarettes to cancer patients, given the impact increased levels of greenhouse gases would have on the climate.

“This is not climate denial of the Republican sort, where people simply pretend the science isn’t real,” he writes.

“This is climate denial of the status quo sort, where people accept the science, and indeed make long speeches about the immorality of passing on a ruined world to our children.

“They just deny the meaning of the science, which is that we must keep carbon in the ground.”

In January a team of British scientists warned that the hydrocarbons in the Arctic are effectively unburnable if the world wants to avoid dangerous levels of global warming.

Green groups reacted with fury at the decision by the US administration to allow Shell to resume exploration off the Alaska coast.

The company plans to drill six wells at depths of 40 metres throughout the summer.

Shell’s previous effort to search for oil and gas in the region three years ago ended in farce after its safety procedures were questioned and a rig ran aground.

READ MORE: Shell climate policy “psychopathic” says ex UK chief diplomat

The post Obama guilty of climate denial after Shell green light, says McKibben appeared first on Climate Home News.

Icebergs in eastern Greenland (Flickr/ Mariusz Kluzniak)

By Alex Pashley

The Obama administration approved Royal Dutch Shell’s plan to restart drilling off the coast of Alaska on Monday, three years after it was forced to halt operations following a series of safety failures including an oil rig fire.

The Anglo-Dutch company wants to begin drilling up to six wells in water about 40 meters deep from this summer on the condition authorities in Washington and Alaska grant it permits.

Green groups criticised the move and warned of potential spills in fragile Arctic conditions, with insufficient means to respond to leaks.

Abigail Ross Hopper, director of the Interior Department’s Bureau of Ocean Energy Management which approved the plans, said it had taken a “thoughtful approach” recognising the “significant environmental, social and ecological resources in the region.”

But environmentalists say drilling is more dangerous than in warmer seas, and could result in disasters on a grander scale than the 2010 Gulf of Mexico spill, which gushed 5 milion barrels of crude into the ocean.

And if the world is to avoid catastrophic global warming, that Arctic oil is “unburnable”, British scientists said in January.

Backward move

Without proven technologies to clear up possible spills, offshore drilling was “too great a risk to America’s Arctic”, said Margaret Williams, WWF’s managing director of US Arctic programmes.

The “decision to move closer to allowing fossil fuel extraction from the Chukchi Sea — home to majestic wildlife and a place where extreme weather, gale-fore winds, and rough seas make operations and response to spills extremely difficult — is a backward move at this time.”

Shell stopped Arctic drilling in 2012 after the failure of safety equipment to tackle spills. The rig it was using then ran aground after being towed back to port.

A firm working for Shell, Noble Drilling was handed $12 million in fines and payments to communities. The return to the Arctic comes after years of legal challenges. Shell called the decision an “important milestone“.

Report: John Kerry urges climate focus, bids to avert Arctic melt

Comment: Shell’s climate change strategy: narcissistic, paranoid, and psychopathic

Susan Murray, vice-president of environmental group Oceana, said in comments reported by the Guardian: “Once again, our government has rushed to approve risky and ill-conceived exploration in one of the most remote and important places on Earth.

“Shell’s need to validate its poorly planned investment in the Arctic Ocean is not a good reason for the government to allow the company to put our ocean resources at risk.”

In its campaign against Arctic drilling, the grass roots organisation Sierra Club said: “inviting a near certain oil spill that cannot be cleaned up, the Obama Administration should focus on developing clean energy and leave dirty fuels in the ground.”

Shell estimates that the Arctic holds around 30% of the world’s undiscovered natural gas and 13% of its yet-to-find oil.

Cuba OKs Total

On Monday, French energy giant Total SA signed an agreement to explore offshore oil with Cuban state oiler, CubaPetroleo (Cupet) in a deal brokered during President Francois Hollande’s visit to the Caribbean island.

The move sees Total return to drilling after abortive attempts which came up dry in the 1990s.

Last week Cuba announced it had new data revealing billions of barrels of oil beneath its Gulf of Mexico waters.

Hollande meets with Fidel Castro during historic visit to Cuba http://t.co/R75Qj94XFu via @FRANCE24

— Jon Lee Anderson (@jonleeanderson) May 12, 2015

That’s compared to 124 million barrels of proven crude oil reserves Cuba had as of this January, according to Oil and Gas Journal, the US Energy Information Administration reported.

Five months after a thaw in US-Cuban relations, Hollande called for the trade embargo to be lifted and said France “would be the first among Western nations to be able to say to the Cubans that we will be at their side if they decide themselves to take needed steps towards opening.”

The post US decision to open Arctic to Shell drilling sparks green fury appeared first on Climate Home News.

Shell CEO Ben Van Beurden (Pic: Shell/Flickr)

By John Ashton

Dear Mr van Beurden – one month ago, at the IP Week dinner in London, you gave a speech calling on your peers, as you put it in your title, to be “Less Aloof, More Assertive” on climate change. 

Given your prominence as CEO of Shell and the resurgence of interest in climate, your speech has rightly provoked debate. Perhaps I could set out some reflections that passed through my mind as I studied it.

I feel privileged to be doing so from this platform. I hope the CFE family, and Jean Eudes [Moncomble, CFE Secretary General] particular, will see this as an appropriate way of honouring their invitation.

Your speech, Mr van Beurden, was after all an appeal to your industry, which is strongly represented here today. Most of what I am about to say applies well beyond Shell.

The title of your speech is intriguing. I have been involved in this debate for twenty years, six of them as the UK’s diplomatic envoy on climate change. During that time many adjectives have been applied to your industry – not always fairly. But nobody has ever accused you of being aloof.

Yes, there have been more strident voices. You have spoken in measured terms, in prose not poetry, with the quiet confidence of those who know they never have to shout to be heard. And you have sometimes chosen to express yourselves behind closed doors, or through others, rather than out in the open.

You have an undeniable interest in the choices society makes about climate change. But you have been sophisticated in pursuit of that interest, as you perceive it. From the start, nobody has been less aloof, more assertive, nor more influential than the oil and gas industry.

For a leader in that industry now to express concern that it is not close enough to the climate debate sounds a bit, if you’ll forgive me, like a fish protesting that the ocean it swims through is not wet enough.

The summary that accompanies the published text of your speech also catches the eye.

It anticipates an “energy transition”. But it foresees no change “in the longer term” in the drivers of supply and demand for oil. And it urges the industry to “make its voice heard” at the COP21 climate conference.  This would add “realism and practicality” to a conversation from which, by implication, these attributes are currently lacking.

In other words, the energy transition to come will be an unusual kind of transition. It will have no structural consequences for the energy system itself, or at least for the markets on which your business model depends.

But this prospect, your summary suggests, is in jeopardy. The unrealistic and impractical voices that currently dominate the climate debate want to use COP21 to unleash a more threatening kind of transition. To prevent this, the industry must  overcome its habitual reticence and raise its voice.

Engagement, with delusions of aloofness. Commitment, to a transition that ends where it began. Such cognitive dissonance suggests, even before we get to the text, that your speech may say more about the state of mind of your industry than the external conditions that prompted you to speak out.

Report: Shell warns oil demand could fall without climate solution 

Those who have dedicated their lives and careers to your industry must sometimes feel your virtues go unacknowledged while the sins of the world are heaped at your door.

The story of civilization is an energy story. Nobody has told it better than your colleague Frank Niele in his classic book on energy, which should be better known.

The most gripping chapter of the energy story spans the last 150 years. That is your story, the story of oil and gas. As in any human endeavor, there have been episodes of frailty, venality and hubris. But so too have there been epic, even heroic deeds.

From beneath soil and sea you have wrested oil and gas in unimagined abundance, often under technically challenging and physically dangerous conditions, never failing to meet the demands of energy-hungry societies.

It would be only human if you were to reflect occasionally that without you, the prosperity enjoyed by billions, and aspired to by billions more, would not exist.

Human beings would be living shorter, more difficult lives, exposed to more hazards, trapped within narrower limits of experience, opportunity, and imagination.

And as your industry has grown to maturity, it has forged strong values, nowhere stronger than in Shell itself.

You are rooted in reality. With so many physicists and engineers it could hardly be otherwise. While our political discourse descends ever further into a miasma of dogma, artifice, spectacle and celebrity, you have done your best to remain reality-based. This is surely a virtue.

Nobody should think that words like “realism” and “practicality” issue casually from your lips.

You have never recoiled from the future. You have striven to solve its puzzles and bend it to your purpose.

Hope and delay

I am a lapsed diplomat (and a lapsed physicist). From early in my career the Shell Scenarios were seen in the British Foreign Office as the pinnacle of their art, and their then impresario, Ged Davis, as a modern Merlin.

Later you were way ahead of governments in sounding the alarm about the dangerous nexus of global risks linking food insecurity, water insecurity, energy insecurity and climate insecurity.

In Shell you quickly grasped the growing importance of cities, and the expanding cohort of newly affluent citizens, as a global shaping force. This is now orthodoxy. But Dave Sands and his team at Shell were onto it more than a decade ago.

Stronger even than the tug of reality and of the future, one instinct has long defined your industry.

Often in politics the first reaction to a new challenge is to ignore it and hope it will go away. There are enough problems.

If it won’t go away, the second reaction is to delay. If you can push it into tomorrow, it might yet go away and anyway, in politics, tomorrow never comes.

At your best you do not ignore or delay. You look for a response that turns challenge into opportunity.

Drilling in extreme conditions; converting gas into liquids for shipment around the world; capturing and sequestering carbon dioxide – whenever you have bumped into a frontier, especially a frontier of engineering, your urge has been to break through it.

You accept, grudgingly, the constraints imposed by the laws of thermodynamics. But within them no challenge has hitherto been too daunting.

Now you are being asked to play your part in the response to climate change, the biggest challenge your industry has ever faced.

Three masks

Surely, you might reasonably think to yourselves, we should acknowledge in return your role in bringing within our reach the fruits of modernity. Those fruits have turned out not to be as sweet as they seemed. But it was we who desired them. You never had to force them upon us.

It is in truth not your fault that climate change is a hard problem. Though your industry must bear some responsibility for our failure so far to face it, that is not exclusively your fault either.

But the choices of your generation of CEOs will be decisive, not only for you as corporations but for the eventual success or failure of our response to climate change.

That is why you will be held relentlessly to account for those choices; why what you said last month invites forensic scrutiny.

Every speech tells a story. And beneath the story on the surface there is always another, told more subtly, about the compulsions, desires and anxieties that animate the first.

Only if each story is true to the other; and only if each is rooted in an experience of the world shared between speaker and audience; only then will the speech truly be heard.

Not one story but three. The story of the mask you show, the story of your face beneath it, the story of the world.

The story of your mask last month was clear.

You accept the “moral obligation” to respond to climate change, including for your industry. COP21 will be crucial. The stakes here in Paris will be high.

But meanwhile, there is a march of progress. As we stride forward, a golden thread of growth links the size of the economy, demand for energy, and demand for oil and gas. This should continue indefinitely. Yours will remain “an industry that truly powers economies”, as “the world’s energy needs will underpin the use of fossil fuels for decades to come”.

Shell’s pitch to tackle climate change rests on carbon capture and storage technology, along with a global price for CO2 (Pic: Shell/Flickr)

You do not, it appears, see climate change as a threat to the steady march. But you fear we might be overzealous. Excessive concern for the climate might lead us to break the golden thread by constraining the combustion of your products.

This too is a question of morality. It is as you see it in conflict with the question posed by climate change itself. How, you ask, can we “balance one moral obligation, energy access…. against the other: fighting climate change”.

Your response is that we should ease off on climate. We can have a transition but it cannot  transform. The aim, in any meaningful timeframe, should not be an energy system that is carbon neutral nor even low carbon.

Instead we must settle for “lower-carbon”, whatever that means, to allow us the “higher energy” that “makes the difference between poverty and prosperity”.

And so the story of your mask leads inexorably to the conclusion that no choice is needed after all. Only one approach is morally and economically available. It is not transformational. It proceeds by very small steps.

And as for fossil fuels, “rather than ruling them out, the focus should remain on lowering their… emissions”.

Renewables gap

You have no compunction in immediately excluding coal, the product of a rival industry, from this endeavour. But that is to accommodate a shift to gas, not faster deployment of renewables (which would divert investment from gas); still less energy efficiency, which you do not mention at all.

You urge the adoption of carbon capture and storage, which Shell has, yes, pioneered. But you offer no proposal to overcome the main obstacle, the extra costs it imposes.

There is no engineering reason why dozens of large CCS installations should not already be running across Europe. I helped negotiate the New Entrant Reserve financing mechanism in 2008, working with many others including your colleague Graeme Sweeney. We thought then that we had broken through on financing.

Instead: still no plants. Your Peterhead project  could be first. But with no compact to share additional costs between taxpayers, consumers and shareholders, CCS at scale remains empty talk.

Empty price 

You call for “a well-executed carbon pricing system”. Leaving aside the poor execution of the European Emissions Trading Scheme, a carbon price can only ever drive change at the margin.

And it will not do that as well in real life, with all its uncertainty about forward prices and conflicting price signals, as it will in a well-behaved model.

It is now widely understood, except by those who live inside such models, that a climate response based primarily on a carbon price will deliver only marginal change. Politically it serves as a brake on ambition not a stimulus, especially when accompanied by an aversion, also evident in your speech, to hard caps on emissions.

That is the story of your mask: a manifesto for the oil and gas status quo, justified by the unsupported claim that the economic and moral cost of departing from it would exceed the benefit in climate change avoided.

Beneath the mask is the face. Its story is encoded in language and tone, and it does not match the mask.

You reject “stereotypes that fail to see the benefits our industry brings to the world”. But you resort freely to stereotypes yourself, to attack  those who want more ambition.

You and those who agree with you have a monopoly on realism and practicality. You are “balanced” and “informed”. Your enemies are “naïve” and “short sighted”.

And you accuse them of wanting “a sudden death of fossil fuels”. No phrase in your speech is more revealing. Nobody is asking for this and if they were they would be wasting their time. But the Freudian intensity of your complaint flashes from the text like a bolt of lightning.

Business model

Moreover, although you acknowledge doubts about the credibility of your industry, you don’t address them. You speak, as it were, peering down, with authority and detachment, at a world that should self-evidently look the same to others as it does to you.

And from that height, you seem to be want us to believe that the issue is not how to deal with climate change but how to do so without touching your business model.

You are not detached, and in reality your authority is compromised by your obvious desire to cling to what you know, whatever the cost to society.

For a leader in the oil and gas industry to call for continued dependence on oil and gas will sound to most like special pleading. Unless you acknowledge this, what you say won’t be truly heard.

Narcissus gazed into the pool and was dazzled by his own reflection.

Climate change is a mirror in which we will all come to see the best and the worst of ourselves.  In that mirror you seem to see the energy system you have done so much to build and to find it so intoxicating that you cannot contemplate the need now to build a different one.

There is a touch of narcissism in the story of your face.

The paranoiac fears conspiracies that do not exist. You fear a non-existent conspiracy to bring about your sudden death.

There is a touch of paranoia in the story of your face.

The psychopath displays inflated self-appraisal, lack of empathy, and a tendency to squash those who block the way.

Writing on the wall

All these traits can be found in your text. There is a touch of psychopathy in the story of your face.

I am sure you are not yourself narcissistic, paranoid, and psychopathic. But yours is part of a collective voice, and those attributes colour that voice.

The story of the mask and the story of the face behind the mask. The one, a picture of reason. The other in the grip of all too human emotions. They are not at peace with each other. Nor with the world.

The story of the world is as old as antiquity. It is the story of the writing on the wall. The warning to the last King of Babylon at his last great feast that he has been weighed in the balance, as it is written in the Book of Daniel.

The high carbon, resource-profligate modernity you helped build is a new Babylon. Every bite from its fruit poisons the tree from which we pluck it.

King Belshazzar of Babylon plundered goblets of gold from the Temple of Solomon. We take our plunder from an ecological fabric we no longer recognize as our first Temple. But if it crumbles we die both in body and in spirit.

Climate change is the writing on our wall.

If we heed it we can repair our Temple and avoid the fate of Babylon. If we don’t, we, too, fall.

You know this. If you didn’t, your exploration of the nexus must have shown you.

Inescapable science

Governments have obligated themselves to do whatever it takes to keep climate change within 2C. I once heard an industry peer of yours dismiss this. Politicians, he said, had promised it cynically to keep NGOs off their backs. But there was no will to act on it. At the table was one of your own predecessors, who did not demur.

The 2C obligation is not going to go away. It will be reasserted at COP21, which should now also state clearly that this means carbon neutral energy by mid century. 2C was not a casual reaction to civil society impossibilism. It was a political judgement, informed by science, about the threshold beyond which climate insecurity is likely to become unmanageable.

The commitments made at COP21 may still fall short of a 2C response. But the forces now at work will act inexorably to push up not rein back our ambition.

Your strategy seems to be to try to hold the line until the door finally closes on 2C. But governments cannot walk away from their obligation. They would have to explain what had changed to justify doing so.

Everything we have subsequently discovered invites more urgency not less. The real threat to prosperity lies in too little ambition not too much.

The only means we have to make choices in the public interest across society is politics.

I have lived in a period when politics has been linear, and therefore predictable. You are skilled at navigating linear politics. Corporations became ever more skilled at rigging the choices made by linear politics for their profit against the public interest. That is one reason why linear politics ending.

We are now entering a period of politics that is non-linear, politics whose outcomes will, from the old frame of reference, your frame of reference, be harder to predict. You are not skilled in navigating non-linear politics.

There is no feel for politics in the Shell Scenarios. That didn’t matter when politics were linear but it does now.

Non-linear politics will welcome new voices. Cities. Communities. Young people. Women. Consumers. Policy takers will become policy shapers.

Their voices will act like a ratchet, driving up ambition on climate.

Businesses exposed to climate risk will demand more ambition.

Businesses delivering carbon neutral energy will demand more ambition.

Businesses not locked into fossil energy supply chains will want to end up on the winning side and will welcome more ambition.

Businesses holding out for less ambition will no longer be able to take cover in a big tent, no longer be able to pretend to be part of the solution when their choices belie this. They will have nowhere to hide.

The low carbon economy is starting to take shape and it works.

New pathway

Germany has embarked on an irreversible restructuring of an electricity system that will be powered largely by renewables.

You have misread this. You point to generous subsidies for renewables in Germany. But these are the legitimate product of political consent. You point to baseload coal. But, strangely for an engineer, you fail to note that this is transient noise in a structural transition whose signal is the rise of renewables.

You deny your assets will be stranded. True, first tier assets are cheap, and those that are heavily invested in tend to bear fruit quickly. But your case also assumes failure on 2C and rates of renewables deployment long surpassed by reality.

The Bank of England is watching the carbon bubble. Bloomberg screens include a carbon risk valuation tool. The divestment movement may still be small but it is rallying young people, has moral authority, and can now make a prudential case as well as an environmental one.

Writing on the wall. Story of the world.

A friend of mine, who rose high in another energy company, told me of the remorse that overtook him when he retired at having lived a lie on climate.

Clean energy startups in the US are full of refugees from fossil energy.

E.On’s best staff clamour to join its renewables business when the company splits. Few want to keep making legacy power from coal and gas.

I wonder if people inside Shell feel the pull of the same forces.

They find themselves in an industry squeezed in a three way vice. Investors and regulators will increasingly want to de-risk unburnable carbon and future climate policy. New resources cost ever more to bring to market, in dollars and reputation. Regardless of the oil price now, its volatility will make new investments more of a gamble.

Is this industry still as inspiring to your younger colleagues as it was when you entered it?

Everybody except the real psychopath wants to feel part of the common good. Your company is full of good people. But good people can make bad choices in an institution clinging to a bad idea.

Tough decisions

Your own position is unenviable.

A gap has opened between wealth (which is high carbon) and value (which is low carbon). Non-linear politics is the response of the people, your customers, to that gap. For a while the gap was narrow enough to straddle. But no longer.

You cannot choose wealth and value. You cannot choose to transform and to struggle against transformation. You cannot choose high carbon and low carbon.

Now you must pick a side and accept the consequences.

It’s an agonizing choice. Either way, the costs will be huge. Either way, you will be rolling the dice. Nothing in your experience prepares you for this moment.

Choose wealth and you could stay, for a while, in your comfort zone, clinging to an old business model. Even in the three way vice it will remain viable for some time. Demand for your products will grow before it falls.

While this goes on you could keep trying to rein back ambition on climate. Your industry, acting strategically together as a political brake, probably can hold out until 2C becomes an impossibility of engineering and thermodynamics.

But it can’t do that without being weighed in the balance, perhaps on your watch. Confidence would drip away. Talented young staff would drift away. Respectability, already tarnished, would drain away. Drip. Drift. Drain.

Or you could choose value. You could accept squarely that your E.On moment has come, that the days of yesterday’s business model are numbered, that the challenge now is to manage its decline and build alongside it a new business fit for today, albeit that this is harder for an oil and gas company than it is for a utility.

You would be accused by some of tribal betrayal and commercial lunacy. You really would be lifting the lid on carbon risk. Your share price would suffer, at least in the short term.

But you would be buying the chance to renew your business by design, not by default in response to shocks.

Sail into the storm

There would be no need for a mask. The face could look the world in the eye and see itself reflected back.

I do not know what the new business model looks like. You won’t begin to know yourselves until you accept that as an instrument of the common good the old one is already dead.

But I do know what the world needs to see if it is to accept your company as part of the solution and no longer part of problem.

Stop frustrating ambition.

Talk to us about how you will play your part in a 2C transition.

Tell us the inspirational story of that transition, backed by your knowledge and experience. The electrification of vehicles and heating; the decarbonization of electricity; new frontiers in efficiency. A new golden age of energy.

And don’t tell us through crocodile tears that this will all take a long time. Tell us what you will do to hasten it, and what you need from government to do it faster.

Come clean on your 2C carbon risk, and get out of investments that would increase it.

Stop pretending that gas is part of the answer to climate change, rather than a necessary stage in a transition to be kept as short as possible. Stop pretending that gas will always crowd out coal rather than renewables, that it won’t blur the political focus we need on efficiency.

Urge your peers to turn their backs on new fracking around the world, as you wisely have in the UK. It’s a high carbon sugar rush and a recipe for political grief. Look at the news from Algeria.

Stop grumbling about renewables. Unlock the opportunities they offer.

Manage a retreat from the carbon frontiers, especially the Arctic. Keep it in the ground.

Press the accelerator on CCS. Use your balance sheet to lever governments into a deal on costs.

It’s easier for an outsider to say what you should stop doing than what you should start. But the more you turn towards a 2°C world, the more you will see its opportunities.

A chance to lead

I am urging you to sail into a storm. But you are at your best in storms and the one that will hit you anyway if you delay will be more lethal. In Shell the spectre of Brent Spar hangs over the subject of political risk. Or if it doesn’t it should.

The Risorgimento broke like a wave over Sicily in the middle of the 19th century. It threatened to sweep away the privileges of an inward looking aristocracy convinced that their glory days would never end.

Their struggle to cling to a collapsing system of feudal power is brilliantly portrayed in Lampedusa’s novel The Leopard. A leading character is the worldly and cynical Prince Tancredi, who at one point remarks “Things must change around here if we want things to say the same.”

Wear a mask for change while setting your face against it. It’s a clever ploy and if the stresses aren’t too great – if politics is linear – it can even work.

But when the stresses are existential, it only buys false security. Those who follow the Tancredi strategy get swept away anyway.

You are now in Tancredi’s position. You gave a speech last month that was worldly. Will you now lead your company and your industry towards a choice that is wise?

Yours sincerely, John Ashton 

The writer was UK’s Special Representative for Climate Change between 2006-2012. Download a copy of this speech here. 

The post Shell’s climate change strategy: narcissistic, paranoid, and psychopathic appeared first on Climate Home News.

Shell’s Gumusut-Kakap platform operates off the coast of Sabah, Malaysia (Pic: Shell/Flickr)

By Ed King

Demand for oil and gas could fall if major producers fail to find economically viable and publicly acceptable ways of cutting their climate-warming gas emissions, Shell has warned. 

The oil giant revealed its fears in its Strategic Report for 2014, released on Thursday, telling investors that new climate change regulations “may result in project delays and higher costs.”

“Furthermore, continued and increased attention to climate change, including activities by non-governmental and political organisations, as well as more interest by the broader public, is likely to lead to additional regulations designed to reduce greenhouse gas emissions,” it said.

In the past 12 months World Bank and Bank of England have warned that some fossil fuel assets may be “stranded” as a result of new climate laws which mean they cannot be burnt.

But only last year Shell executive vice president JJ Traynor dismissed the idea of a carbon bubble as “alarmist” and said the theory had “fundamental flaws”.

New technology

In his foreword, Shell chairman Jorma Ollila said carbon pricing and technology to capture emissions remained the best ways to address climate change, but both needed “widespread” government support.

“I was encouraged to hear at the United Nations (UN) Climate Summit in New York in September 2014 that the need for effective carbon pricing systems had broad support,” he wrote.

“I hope that significant progress can be made on this at the crucial UN Climate Change Conference in Paris in December 2015.”

Report:  Shell makes climate pitch as UN targets zero carbon planet

In 2014 the company recorded an improvement in earnings, US$19.0 billion compared with $16.7 billion in 2013, on a current cost of supplies basis.

But like other oil companies, Shell has been hit hard by the dramatic fall in prices for crude, with its share prices underperforming over the past 12 months.

“We generally test projects and other opportunities against a long-term price range of $70-110 per barrel,” it said, significantly above the current price of $60 per barrel.

Shell also announced capital investment for 2015 would be lower than the $35 billion in 2014.

Report: McKibben slams Shell’s “Jekyll and Hyde” climate stance

Despite the threat of increased regulations as a result of a proposed global climate pact, Shell said its investments in natural gas, biofuels and carbon, capture and storage (CCS) place it in a strong position for growth into the 2020s.

In 2014 the company secured millions of pounds of UK government funding for a pilot CCS plant in Scotland, which aims to be the world’s first scale project at a gas-fired power station.

“We expect that, in combination with renewables and use of CCS, natural gas will be essential for significantly lower CO2 emissions beyond 2020.

“With Shell’s leading position in liquified natural gas (LNG) and new technologies for recovering gas from tight rock formations, we can supply natural gas to replace coal in power generation.”

New equipment to tackle spills would also allow it to drill for oil in the Arctic in 2015, the company said, an area it classes as one of its “future opportunities” and “resource plays”.

“Large reserves” in Iraq, Kazakhstan and Nigeria could also come available it added.

The post Shell warns oil demand could fall without climate solution appeared first on Climate Home News.

In 2012 the Athabasca Oil Sands in Canada represented around 4% of the company’s total production (Pic: Shell/Flickr)

By Ed King

The head of oil giant Shell says it’s time the industry woke up and took climate change seriously.

In comments released to the media ahead of a speech in London on Thursday, chief executive Ben Van Beurden is quoted calling on his peers to engage with the issues around global warming.

“In the past we thought it was better to keep a low profile on the issue,” he says in a release to the media.

“It’s not a good tactic. We have to make sure that our voice is heard by members of government, by civil society and the general public.”

According to reports, he plans to tell industry leaders they should back limited efforts to decarbonise the world’s energy system, such as carbon pricing or switching from coal to gas.

Based on current levels of greenhouse gas emissions, scientists say the world has around 30 years before warming above 2C – deemed dangerous by experts – is locked into the earth’s climate.

Some observers say Van Beurden’s intervention is a sign oil leaders are concerned by the increasingly effective ‘carbon bubble’ and ‘divestment’ campaigns to highlight the fossil fuel reserves that cannot be used in a below 2C world.

“The divestment campaign is asking valid questions about how [investment] funds manage climate risk,” said the chief executive of NGO Carbon Tracker, Anthony Hobley, in a statement.

Report: Shell makes climate pitch as UN targets zero carbon planet 

Among ideas being discussed at UN climate talks in Geneva this week are a set of proposals to target zero emissions between 2050-2100, which would require a radical cut in oil and gas use.

But Van Beurden says there’s a need for a “balanced debate” over the future of fossil fuels, labelling campaigners calling for oil, gas and coal to be replaced with renewables as “naïve”.

“Yes, climate change is real. And yes, renewables are an indispensable part of the future energy mix. But no, provoking a sudden death of fossil fuels isn’t a plausible plan,” he adds.

Shell’s shareholders will vote in May on a resolution that calls for the company to offer detailed analysis of how its business plan fits with global efforts to cut greenhouse gas emissions.

The company recently announced it wold drill for oil near the North Pole this summer, despite warnings from experts that Arctic oil cannot be burnt if the world is to avoid high levels of warming.

The post Shell boss calls on big oil to join climate change fight appeared first on Climate Home News.

By Megan Darby in Lima

The role of fossil fuel lobbyists at UN climate talks came under fire on Monday, as activists mobbed a side event in Lima.

In T-shirts emblazoned with “Get the FF out”, protesters descended on a panel discussion held by the Global Carbon Capture and Storage Institute.

Speakers had to fight their way through the throng, replete with TV cameras, to get to their seats – although the crowd quickly dispersed when the event started.

In it, Shell adviser David Hone set out two projections of future energy use, both of which entailed levels of warming scientists consider dangerous.

Negotiators are aiming to limit global temperature rise to 2C, a goal the International Energy Agency sees as attainable.

In line with that, they are seriously considering a target of zero net emissions by 2050. That means any remaining emissions from fossil fuels will have to be buried or offset with strategies like large scale tree planting.

Unlike other fossil fuel majors, Shell has signed up to the Trillion Tonne Communique, a statement recognising the need to curb emissions.

MT @GeoffreySupran: #GetTheFFOut of #COP20! Activists overwhelm #FossiloftheDay @Shell‘s anti #Divestment panel pic.twitter.com/tQ5Efy42kf

— Fossil of the Day (@FossiloftheDay) December 8, 2014

Yet its vision of the future, which assumes rising energy demand as well as greater energy efficiency and use of clean energy, leads to 2.5-3C of warming.

Hone told RTCC: “2C is possible from an engineering perspective, but our scenarios are based on society and political developments as well.”

Indeed, analysts at Climate Action Tracker calculated the latest commitments from the European Union, US and China put likely warming at 2.9-3.1C.

That is less than the previous trajectory but does not hit the target.

Campaigners say companies like Shell should be barred from the UN talks, because their interest in promoting fuel consumption conflicts with efforts to slash greenhouse gas emissions.

An audience member challenged Hone to explain Shell’s membership of the American Legislative Exchange Council (Alec), a lobby group with a reputation for denying climate science. Microsoft, Facebook and Google have all quit the group.

“We value the opportunities that Alec offers so we can talk to state legislators,” said Hone, but insisted: “We don’t promulgate their message on climate change.”

With CCS, fossil fuel companies argue they can be part of the solution.

Leading climate economist Nicholas Stern endorsed a strong role for CCS in cutting emissions, saying thousands of plants would be needed by 2050.

That is also supported by the Intergovernmental Panel on Climate Change, which found decarbonising the economy would cost more than twice as much without CCS.

In the long run, there are high hopes for bioenergy with CCS, which can in theory result in negative emissions. Carbon dioxide absorbed by plants will end up back underground.

Stern said measures like this would be needed to offset emissions that could not be eliminated, for example methane from cattle.

CCS expert Heleen de Coninck, from Radbound University, warned against placing too much faith in the technology.

The first CCS project on a coal-fired power plant, Canada’s Boundary Dam, went live in October, after decades of industry research and lobbying.

“It is not going fast enough and that is worrying,” said de Coninck.

Even if it does take off, there are limits on the volume of storage sites, she added. CCS on energy intensive industry like steel and cement, for which there are few alternatives to fossil fuels, should take priority.

“It is very important to never see CCS as an alternative to demand reduction and renewable energy.”

At a separate press conference, IPCC contributing author Malte Meinhausen stressed the need to phase out emissions.

“At some point emissions have to go to zero, no matter what,” he said. “Even at higher or lower temp levels there is no way around zero CO2 levels.”

International climate policy expert Farhana Yamin told RTCC countries were unlikely to oppose a 2050 zero emissions target for fear of being labelled “science deniers”.

Sweden, Norway, Costa Rica, Bhutan and the Marshall islands have been among the most vocal advocates for such a goal.

French president Francois Holland, who will host next year’s climate conference, and UN secretary general Ban Ki-moon have also called for long term ambition.

The post Shell makes climate pitch as UN targets zero carbon planet appeared first on Climate Home News.

Shell CEO Ben Van Beurden (Pic: Shell/Flickr)

By Ed King

Shell’s chief executive has branded last week’s US-China climate pact as “historic” and has written of his hopes it will “reinvigorate” efforts to secure a UN deal to curb greenhouse gas emissions.

In an article in the Times newspaper Ben van Beurden, who took over as CEO of the oil and gas giant in January 2014, said a proposed 2015 Paris climate deal was “desirable” and “achievable.”

“Why should we care? Well, if anyone were still complacent about the scale of the problem that climate change poses then the recent report by the IPCC will have come as a stark wake-up call,” he said.

Van Beurden added his backing to US efforts to decarbonise, arguing the country was now moving “farther and faster than ever before.”

“It seems fair to hope that the joint commitment by President Obama and President Xi will inject momentum into a far bigger effort,” he added.

Echoing recent calls from the head of Saudi Aramco and other leading oil and gas producers, he also argued that coal is the main obstacle to efforts to curb emissions.

Report: Oil majors target coal in fight for climate high ground

“I’ve already acknowledged the importance of shifting our power generation systems away from reliance on coal, by far the most polluting fossil fuel,” he said.

“That means, in part, a great role for natural gas in the medium term, as well as a steadily growing role for renewables, even if experience shows that growth will necessarily be slow.”

Shell’s boss cited plans to develop a carbon capture and storage plant in Scotland as evidence it is taking reducing its emissions seriously, saying a transition away from fossil fuels would be “decades long.”

The company has advertised the new project heavily across the UK, although critics like 350.org founder Bill McKibben say its efforts to drill for oil in the Arctic are evidence of its “Jekyll and Hyde” characteristics.

“If they follow their business plans then the planet tanks. That makes them very different to other kinds of corporations,” he told delegates at a climate conference earlier this month.

Van Beurden’s intervention comes a day after the former head of BP Lord Browne lambasted his former colleagues in the fossil fuel industry for ignoring climate change.

In a speech reported by the FT, Browne, who is now on the board of UK fracking company Cuadrilla, said there should be no debate over the basic science of climate change.

“This conclusion is not accepted by many in our industry, because they do not want to acknowledge an existential threat to their business,” he said.

Browne added that the US-China pact would likely see a radical reduction in oil consumption in the long term, reducing those countries’ demands by “17bn barrels of oil over the next 15 years.”

And he warned operators who “remain largely insensitive” to the consequences of new carbon cutting policies they should start accounting for them as a risk to business.

The post Shell boss hopes US-China climate deal will “reinvigorate” UN talks appeared first on Climate Home News.

Pic: Greenpeace Finland

By Sophie Yeo

Shell has applied for a permit to drill for oil in the Alaskan Arctic next summer, in a move criticised by environmental campaigners.

The company hasn’t made a final decision to persevere with summer drilling in the notoriously difficult location, it said, but that the proposals submitted to Washington kept its options open.

“We are undertaking activities including submitting this plan, in order to keep the option of a 2015 season,” said Shell spokesperson Megan Baldino.

The plan proposes two drilling rigs in the Chukchi Sea, producing more than 400,000 barrels a day.

Environmentalists are staunchly opposed to oil exploration in the Arctic. They point to the difficult conditions and fragile landscape, which means an oil spill would be particularly damaging and challenging to contain.

Reserves

The US Geological Survey estimates that around 13% of the world’s undiscovered oil reserves reside in the Arctic.

Climate campaigners, meanwhile, say it is illogical and financially risky to look for more oil when current reserves are more than enough to tip the planet into dangerous levels of warming.

Shell’s Arctic plans have been in motion for over a decade and cost around US$6 billion, but so far there is little to show for it. The company has drilled only two wells, neither of which struck oil.

Exploration in 2013 was thwarted by a series of errors, including Shell’s drilling barge, the Kulluk, running aground off the coast of Southern Alaska.

Plans were halted again in 2014, following a US federal court ruling that the area had been illegally opened to exploration.

“The company is lurching forward despite the flood of reports from government agencies and environmental groups that Arctic drilling is too risky, that the Arctic is too vulnerable, and that Shell itself is too incompetent to proceed,” said Greenpeace Arctic campaigns specialist John Deans.

“If the Obama Administration is serious about climate change, it needs to prove it by keeping Shell out of the Arctic.”

Tar sands failure

Shell’s failure to meet regulations in its exploitation of Canadian tar sands has given rise to further concerns that Arctic drilling could damage the environment.

Lorraine Mitchelmore, head of Shell Canada, admitted on Wednesday the company may not be able to meet its targets on reducing toxic waste produced by the oil sands.

“It’s going to be very challenging,” to meet targets for next year, she told the Wall Street Journal. She called for more flexible regulation that would ease requirements on the industry.

A report last year from Alberta’s Energy Resources Conservation Board said that Shell’s two tar sands mines had failed to meet 2009 clean-up goals. It waived financial penalties, angering environmentalists.

Louise Rouse from campaign group ShareAction said the failure to comply with regulation set a worrying precedent for Shell’s Arctic operations.

“It’s worrying to see Shell apparently failing, yet again, to comply with regulatory requirements on high-risk projects.

“Given the company’s highly controversial plans for US offshore Arctic drilling, investors should be troubled that the company’s focus appears to be on encouraging regulators to reduce requirements rather than ensuring full compliance with vital regulations.”

The post Shell prepares for 2015 Arctic drilling appeared first on Climate Home News.

Pic: Maurice/Flickr

By Kevin Smith

There’s no denying that the divestment movement is gathering pace.

With the World Council of Churches recently announcing its withdrawal from the fossil fuel sector, and a whole series of universities taking the first progressive steps towards greening their endowments, people are wondering which other institutions will recognize the ethical imperative in distancing themselves from the climate-devastation being carried out by fossil fuel companies.

There’s a growing awareness that after universities and faith-based institutions, it’s the cultural sector that needs to take steps to ensure that it isn’t helping to legitimize oil companies well past their sell-by date.

In the UK, big prestigious arts and culture organisations have been taking oil money for decades. It’s not about investments and endowments – it’s about long standing sponsorship deals.

In the week that parts per million of atmospheric carbon hit 400 for the first time in thousands of years, Tate Britain launched its major rehang – the “BP Walkthrough British Art.” More recently the National Portrait Gallery celebrated 25 years of BP sponsoring the BP Portrait Award. Shell has an on-going association with the Science Museum, including branding its climate science gallery.

Legitimacy

These relationships may seem like a trivial affair in themselves, but the many links that oil companies cultivate and maintain with all manner of galleries, theatres, museums, festivals and even children’s toy manufacturers like LEGO, all add up to support their “social licence to operate.”

This is an industry-term for the state of legitimacy and social acceptance that oil companies need in order to keep carrying out hugely controversial and contested operations like devastating communities, ecosystems and the planet. When oil companies sponsor an art gallery, they’re not doing it because they are art-loving philanthropists, they’re doing it because it’s an integral part of their business model of drilling and selling more and more oil.

Ending the sponsorship links between oil companies and cultural institutions is about stigmatizing those companies that are responsible for destroying the climate in much the same way that the divestment movement is doing.

Like the divestment movement, success depends on the change being pushed for from with the institutions.

Fee-paying Tate members have repeatedly tried to raise the issue at the annual Members AGM. Artists have teamed up with activists to from Liberate Tate, to create powerful unsanctioned performance pieces in gallery spaces like last year’s Parts Per Million.

An artist who was short-listed three times for the BP Portrait Award has spoken out on what it means to create work accompanied by the logo, writing: “I realised long ago that, as a painter, offering legitimacy to fossil fuel corporations is a far more significant statement than anything that might be communicated by an exhibition.”

In this last week some 70 theatre professionals were brought together by playwrights Mark Ravenhill, Caryl Churchill and BP or Not BP to discuss the growing controversy of the issue.

Breaking ties

The terrifying threat of climate change and the increasingly climate conscious public means that now is the time to redefine the boundaries as to what are the acceptable forms of corporate sponsorship.

Twenty five years ago before BP took over, the National Portrait Award was being sponsored by the John Player tobacco company. People recognized that tobacco companies shouldn’t benefit from the kudos of cultural associations, and an ethical funding boundary was created.

It’s important to note that arts institutions and sporting events were all able to adapt and survive when tobacco sponsorship was given the boot. According to our research on the proportion of income that oil money represents to the biggest arts institutions, the same would be the case today.

As Archbishop Desmond Tutu recently said, “People of conscience need to break their ties with corporations financing the injustice of climate change… We can encourage more of our universities and municipalities and cultural institutions to cut their ties to the fossil-fuel industry.”

Breaking the sponsorship link between arts and oil will not alone prevent the worst impacts of climate change from happening. But by creating and informing a public debate that questions the legitimacy of these companies in being associated with respectable and cherished cultural institutions, we can strengthen attempts to hold them accountable in other political and financial spheres.

This is an essential step in ending the stranglehold that the companies have on the corridors of power – a major obstacle that we face in the transition to a low carbon society.

Kevin Smith is an oil and sponsorship campaigner at Platform (@platformlondon)

The post Should the arts reject money from oil companies? appeared first on Climate Home News.

Shell expects fossil fuel demand to rise despite climate dangers

By Megan Darby

Shell was accused of “Orwellian doublethink” in its attitude to climate change on Wednesday, as an influential think-tank published new analysis.

In the latest instalment of the “carbon bubble” debate, the Carbon Tracker Initiative (CTI) highlighted flaws in the oil major’s optimistic assessment of its future profitability.

In a letter to shareholders in May, Shell dismissed as “alarmist” warnings that global action to mitigate climate change could destroy the value of its assets.

Executive vice president JJ Traynor played down the likelihood of effective action to limit global temperature rise to 2C. The company predicts fossil fuel demand will grow 40% to 60% by 2050.

Anthony Hobley, CEO of CTI, said: “With this combative stance, Shell has missed an opportunity to explain to its shareholders how its capital expenditure plans are resilient to the impending energy transition.

“Acknowledging the seriousness of the climate challenge whilst at the same time asserting no effective action will be taken until the end of the century is as classic a case of Orwellian double think as you are likely to find.”

The CTI, in partnership with Energy Transition Advisors, has produced a detailed rebuttal of Shell’s argument. It said Shell had selectively focused on its proven fuel reserves, which are expected to last for 11.5 years at current extraction rates.

The company’s growing portfolio of unconventional and deepwater projects involve higher capital costs, longer lead times and longer payback periods.

Over the next 10 years, the CTI estimates Shell could invest US$ 77 billion in high cost, high risk projects that would need an oil price of US$ 95/barrel to pay off.  These assets are at greater risk of becoming “stranded” by pollution limits, the CTI warned.

While Shell’s assessment mainly focused on today’s energy realities, the CTI said it relied on carbon capture and storage (CCS) as a panacea to allow the continued burning of fossil fuels.

CCS technology is not yet commercially viable and can only extend the global carbon budget by 14% to 2050, according to CTI research.

Climate contradiction

Perhaps most critically, Shell acknowledged the need for urgent action on climate change but based its assurances to shareholders on the expectation world leaders will fail to deliver.

It cited the authoritative International Panel on Climate Change report: “There is a high degree of confidence that global warming will exceed 2 degrees Celsius by the end of the 21st century.” That is the politically accepted safe level of warming.

This quote misrepresents the report, the CTI said, as that is only one stated outcome if no action is taken to reduce carbon emissions. In a direct opposition of Shell’s position, the CTI believes climate regulation is gathering pace.

Mark Fulton, ETA founding partner and advisor to CTI, said: “We believe that by stress testing more aggressively Shell’s future assumptions about demand and climate policy that this will lead to a productive dialogue with investors on capital management and capital discipline in relation to high-price high-carbon investments.”

The post Shell ‘short sighted’ on climate risk – study appeared first on Climate Home News.

Melting Arctic ice is opening up new opportunities for shipping companies. (Source: pixabay/David Mark)

By Megan Darby

Controversial moves to drill for oil in the Arctic are to come under scrutiny from UK peers in a specially formed committee.

The Arctic is particularly vulnerable to global warming, with temperatures rising twice as fast as the rest of the world. Sea ice around the North Pole is shrinking rapidly, which opens up previously off-limits areas to mining and shipping.

Gazprom is already extracting Arctic oil and other major companies, including Shell, are set to follow. Green groups have campaigned vigorously against such exploration, raising local and global environmental concerns.

It will be a hot topic for the newly formed parliamentary Arctic Committee, led by Liberal Democrat peer Lord Robin Teverson.

The UK “needs to be involved” in the debate, said Lord Teverson. “We recognise that economic development and some drilling already takes place in these areas, but we have to look very carefully at what the environmental issues are around that.”

Governance

The committee will look at how the UK influences international bodies on the Arctic, as well as domestic policy.

Decisions on how to regulate development in the region are largely down to the Arctic Council. This group is made up of eight Arctic states, including Russia and the United States, and six organisations representing indigenous peoples. These members are “very individual in the way they look at things,” Lord Teverson said.

The UK is one of 12 observer members of the Council. It has recently been joined by China, India and Singapore, which will be affected by the opening up of new shipping routes.

These countries could stand to benefit from economic development of the area but are also exposed to environmental and financial risks.

Scientists have found links between a warming Arctic and extreme weather in the US and Europe. Meanwhile, Share Action and Greenpeace have warned investors in Arctic oil could be inflating a carbon bubble.

That is, if and when climate change policy results in tighter emissions limits, fossil fuel companies will not be able to sell their product and their assets will become worthless.

The committee hearings kick off with senior government officials giving evidence next Wednesday, 9 July.

Committee members are also planning to visit the region, according to Lord Teverson, with Svalbard the most likely destination. Svalbard is an island in the Arctic circle with a Russian and Norwegian presence and several research centres.

The post UK Lords set to examine Arctic oil drilling appeared first on Climate Home News.

By Ed King

Shell has branded warnings its assets may become unusable if countries reach an ambitious global warming deal at the UN as “alarmist”, accusing critics of trivialising the issue.

In a punchy letter to shareholders ahead of the company’s AGM on Tuesday, Shell Executive Vice President JJ Traynor dismissed the ‘Carbon Bubble’ concept, which holds that oil and gas explorers risk wasting billions of investor’s cash by drilling for reserves that cannot be used without warming the planet to unsafe levels.

“It has some fundamental flaws and there is a danger that some interest groups use it to trivialise the important societal issue of rising levels of carbon dioxide in the atmosphere,” he wrote.

“We do not believe that at a minimum any of our potential reserves are at risk from any potential change in regulation from climate change or the carbon bubble/stranded assets concept.”

Instead Traynor told investors fossil fuel use will likely grow 40-60% by 2050, and argued that rather than cut oil and gas production, the best way to avoid dangerous climate change is to invest in carbon capture and storage technology.

“In the interim at least, CCS becomes a key technology for delivering something that approaches the 2C goal.”

Traynor added that Shell “did not see” governments taking carbon cutting actions consistent with avoiding warming above 2C, a level deemed dangerous by scientists and politicians.

In response, the team at Carbon Tracker, which produced the Carbon Bubble analysis, said the assumption that oil demand would continue to rise was flawed.

“Shell does not explain how it is solving the contradiction between the predictions of high oil demand and its acceptance of the need to address climate change,” they said in a statement.

“Carbon Tracker argues that high-cost production and growing oil demand assumptions are inconsistent with a more resilient global economy and stable global climate.”

Rising concern

Torbjørn Kjus, an Oil Analyst at DNB Markets told RTCC the tone of the letter is a sign that Shell has been rattled by the Carbon Bubble campaign and the effect it has had on creating shareholder uncertainty.

“They are taking this seriously, and if you talk with big companies in Germany, and ask them 6-7 years ago did they have any anticipation what was going to happen six years ago, they did not.

“Now some of them have lost 90% in value, so the energy world can change quicker than 30-40 years. To have a view that goes further than five years is extremely difficult these days.”

Shell’s latest intervention comes in a year of unprecedented scrutiny on the fossil fuel industry, a year before countries are set to sign off a global deal to cut carbon emissions under the UN.

The company’s annual report for 2013 warned than any agreement reached at the scheduled UN climate summit in Paris next December could affect its long term profits.

Last year’s annual profits fell to $16.75bn (£10.05bn), from $27bn in 2012. Capital expenditure for 2014 is set to be $9 billion lower than 2013.

Backed by the World Bank, divestment campaigners are targeting leading academic institutions calling on them to ditch their oil, gas and coal holdings, placing further pressure on the industry.

And in January the UN’s top climate official Christiana Figueres said fund managers could be breaking the law if they failed to account for the threats of global warming in future investments.

“Investment decisions need to reflect the clear scientific evidence, and fiduciary responsibility needs to grasp the intergenerational reality: namely that unchecked climate change has the potential to impact and eventually devastate the lives, livelihoods and savings of many, now and well into the future,” she said.

The post Shell dismisses Carbon Bubble concept as ‘alarmist’ appeared first on Climate Home News.

(Pic: Shell)

By Ed King

Oil and gas giant Royal Dutch Shell says tougher climate regulations are likely to affect the company’s profitability in the future.

Its financial report for 2013 warns shareholders the company need to explore “economically viable” and “publicly acceptable” ways to reduce its carbon emissions, or face a downturn in business.

“Continued attention to climate change, including activities by non-governmental and political organisations, is likely to lead to additional regulations designed to reduce greenhouse gas emissions,” the report says.

It also warns that “in the years to come” governments could impose a carbon price resulting in higher energy, product and project costs.

Earlier this year Shell revealed annual profits fell to $16.75bn (£10.05bn), from $27bn in 2012. Capital expenditure for 2014 is set to be $9 billion lower than 2013.

Currently the company’s carbon reduction plans focus on four areas: supplying more natural gas and biofuels; investing in carbon capture and storage (CCS) technologies and energy efficiency measures.

The company also decided to suspend plans to drill for oil and gas in the Arctic due to regulatory concerns.

A recent analysis from campaign groups Share Action and Greenpeace warned “significant questions” remained over the economic viability of Arctic exploration.

Report: Shell’s Arctic oil plans face shareholder scrutiny

In a message for shareholders, Chief Executive Ben Van Beurden said the company would have to be more careful when choosing future regions to explore.

“In 2014, we will make hard decisions about our next phase of projects. Capital discipline and potential returns will be critical factors in deciding which to take forward to development,” he said.

Regulations governing the use of fossil fuels are likely to get tougher if a UN climate change deal is agreed, as scheduled, next year in Paris.

Nearly 200 countries are meeting in Bonn this week to discuss how such an emissions reduction pact could work.

Analysts at the Carbon Tracker Initiative say that annual investments of around $674 billion a year into exploring fossil fuel reserves could be at risk if an agreement is reached under the UN.

“Shell have acknowledged the general principle that constraints on carbon emissions are growing. What investors have asked for is more detail on how the company’s capital expenditure plans take that into account,” James Leaton, Research Director at Carbon Tracker said in an email.

Samantha Smith, leader of the WWF Global Climate & Energy Initiative said: “WWF and many other organisations have been calling for investors to get their money out of fossil fuels and into investments in renewable energy. So it’s welcome that even fossil fuel companies are waking up to our demands.”

Charlie Kronick, Climate Policy Advisor, Greenpeace UK, said: “The company’s new direction, if it is genuine, represents an important first step towards a rational business model. Their Arctic programme represents the shoe they left behind.”

The post Shell warns global climate deal will affect profits appeared first on Climate Home News.

By Katherine Baird

The Arctic is one of most vulnerable ecological sites on earth and, with the Arctic ice melting; the effects of the changing climate are already being felt.

A major oil spill would devastate the landscape and destroy the habitat of the animals that live there.

Today, ShareAction launches our latest Green Light online action; this time to get pension funds to stop Shell drilling for oil in the US Arctic Ocean.

A key aim of the campaign is to ‘disrupt’ the flow of pensions funds’ capital into new fossil fuel projects that threaten to take us over the 2 degrees threshold – and Shell’s work in the US Arctic ocean is a central focus in this fight.

Shell is the biggest company in the FTSE 100, with shares currently worth over £130 billion. Its size makes it the biggest shareholding of almost every UK pension fund.

Report: Shell’s Arctic plans face investor scrutiny

Investment manager BlackRock is Shell’s single biggest investor, owning more than 5 per cent of holdings.

That’s why the role that investors play in influencing company behaviour can’t be underestimated, and it’s why pressure from pension fund members could be the key to getting them to challenge Shell’s high risk plans in the Arctic.

And, after 3 years of costly, and, as yet unsuccessful attempts to drill in the Arctic behind them, investors should be asking Shell some very tough questions indeed.

As well as the catastrophic effect a spill would have on this unspoilt part of the world, the clean-up costs would hit Shell’s profits hard.

According to a report by WWF clean-up of a major oil spill in the Canadian Beaufort Sea would be impossible for seven months of the year and highly restricted even during the summer months.

The effects of a major oil spill in could be devastating to the Arctic landscape and wildlife. However it could also have devastating impact on UK pension pots.

A major spill in the US Arctic Ocean could have serious implications on the performance of pension funds’ investments in Shell. The Deepwater disaster resulted in a collapse in BP’s share price, the cancellation of its dividend for the first time since World War II and a sell off of assets.

Risky business

While other oil majors are pulling away from the U.S. Arctic, Shell is still trying to plough ahead with its plans, despite plummeting share prices, ever rising costs and coordinated global opposition.

The rising costs and regulatory uncertainty are reason enough for investors to question the viability of this project.  Now, as Shell pause to ‘review our options’, campaigners are focussing their attentions on the investors with the power to get Shell to pull out of the Arctic for good.

In the next few weeks, shareholders will tell Shell’s new CEO, Ben van Beurden, what they think about the company’s Arctic plans – and our pension funds make up some of the biggest of these shareholders. They have the power to convince Shell to retreat from the high risk, high cost US Arctic for good.

Pension funds have enormous power and influence. If you’ve got a pension fund you can get them to challenge Shell on the Arctic.

Katherine Baird is Campaigns Coordinator at Share Action. To take part in the campaign visit the Green Light campaign website.

The post Are investors the key to protecting the Arctic? appeared first on Climate Home News.

Shell’s Noble Discoverer drillship is one of its main Alaska Arctic vessels (Pic: Flickr/Shell)

By Ed King

Shareholders in Royal Dutch Shell face warnings today that the company’s ambitious plans for Arctic oil and gas exploration are placing its future profits at risk.

So far Shell has spent around $5 billion exploring for hydrocarbons in one of the world’s most challenging environments, with little guarantee of success.

An analysis released today by Share Action, Greenpeace and a wider coalition of green groups says “significant questions” remain about the economic viability of Shell’s plans.

Earlier this year the company issued a profit warning amid concerns of rising exploration costs and static oil prices, an issue also highlighted by researchers behind the Carbon Bubble concept.

The ‘bubble’ represents annual investments of around $674 billion in fossil fuel reserves that analysts say cannot be burnt if the world is to avoid dangerous levels of global warming.

The study also focuses on the oil giant’s efforts in and around the Chukchi Sea off the west coast of Alaska, where there is an estimated 14 trillion cubic feet of natural gas.

Report: Fossil fuel giants face UN ‘climate stress test’ call
Report: IPCC sets ‘global carbon budget’

Shell’s last major attempt to explore the Arctic in 2012 was hit by a series of calamities. Its Arctic Challenger safety ship failed basic safety tests on its seaworthiness, while the Noble Discoverer drilling vessel nearly ran aground.

The authors of the report say Shell has not learnt from those mistakes, and want shareholders to ask the oil giant’s new chief executive Ben Van Beurden if plans are in place to address these concerns.

They expect thousands of investors to email the company’s largest shareholder Blackrock urging them to apply pressure to abandon plans for high-cost, high-risk drilling projects.

“Now is a good time for Shell to change direction on the Arctic,” said Charlie Kronick, senior climate advisor at Greenpeace UK.

“There is a growing divide within the oil industry over the feasibility of Arctic Drilling, and other majors have walked away from what they now recognise was a bad bet.”

Five questions for Shell to answer:

-What is the company’s anticipated total capital expenditure for the lifetime of the company’s offshore US Arctic projects?

-Who at senior management level is overseeing potential legal threats to Shell’s Arctic plans?

-Has the company carried out an analysis of the environmental and financial worst case spill scenario and, if so, will it be publicly available?

-Does Shell have any plans to conduct more rigorous testing of its spill response equipment (particularly well containment devices) in Arctic and simulated real-life conditions. Will the company make detailed disclosures of the conditions and results of these tests?

-What impact would a reduction in subsidies and fiscal incentives currently available to the company have on its US Arctic operations?

The post Shell’s Arctic oil plans face shareholder scrutiny appeared first on Climate Home News.

(Pic: BP)

Leading oil and gas companies are integrating internal carbon prices into their business strategies, disclosures to the CDP organisation indicate.

A study published this week reveals Exxon, Shell, BP and Total are all internally pricing a tonne of carbon between US$ 8-60, referring to this as a carbon cost, fee or price.

Delta Airlines, Google, Walt Disney and leading US utilities also have pricing strategies, which CDP says is now a “core element” of most large corporations’ long term planning.

An increasing number of companies believe carbon pricing will form a part of future regulations to address climate change, say CDP, a non-profit aimed at encouraging companies to report their environmental and social impacts.

“Therefore, companies cite use of a carbon price as a planning tool to help identify revenue opportunities, risks, and as an incentive to drive maximum energy efficiencies to reduce costs and guide capital investment decisions,” the report says.

BP says its price of US$40 per tonne of CO2 is based on estimates of what “might realistically be expected in particular parts of the world.”

Chevron, whose CEO John Watson dismissed climate concerns earlier this year, says that all capital projects of more than $5 million must estimate emissions and the range of carbon costs and benefits.

ConocoPhillips, which works off a price range of US$6-46 per tonne of CO2e, recommends all projects costing more than US$ 75m or with potential emissions of more than 25,000 T/CO2e must evaluate how they would work with a carbon price.

Also of note is Delta Airlines’ decision to incorporate the potential costs of the aviation emissions trading scheme the EU is trying to enforce for all flights in and out of the region.

It says this is “in anticipation of compliance with EU ETS and regarding future expectations of CO2 emissions costs into decisions for future aircraft purchases.”

While the study illustrates how major fossil fuel companies are concerned about the impact climate policies could have on their operational costs, analysts say they do not take into account the impact of the use of fuels they extract.

“For the companies this reflects the likely costs to them but means only around one eighth of the emissions are covered, and the impact on the demand end for consumers is not incorporated,” said James Leaton, Research Director at the Carbon Tracker Initiative.

“The current limited application does not change investment decisions in the same way it might for a utility, which is why oil companies are still considering oil sands projects for example.”

A carbon price set at US$150 is frequently mentioned as a level required to incentivise investments in low carbon technologies, and is significantly higher than the US$7 carbon currently sells at in the EU’s emissions trading scheme.

A discussion paper written by climate economist Chris Hope in 2011 suggests a price of US$100 per tonne could raise around £32 billion in the first year.

The post Exxon, Shell and BP operating ‘internal carbon prices’ appeared first on Climate Home News.