Shell chief explains why collaboration with renewables on carbon capture and pricing is floating to top of Oil agenda

Shell Chief Executive  Ben van Beurden
Shell Chief Executive Ben van Beurden

The leaders of eight of the world’s top oil companies will meet in Paris next week to explain how they will help combat climate change, as part of an offensive ahead of a UN summit later this year in the French capital.

The Oct. 16 meeting will be followed by a press conference, where the company heads are also expected to renew their call for a global carbon pricing mechanism, according to Patrick Pouyanne, chief executive of Total.

He said the oil chiefs would present proposals to combat global warming ahead of the December Paris climate talks, where governments will set new goals for combating climate change.

Ben van Beurden, Chief Executive of Shell – which is partnering with Perth-based SSE on the Peterhead carbon-capture project – explained:

Today, one may think that low oil prices are a real challenge. But the challenge of low oil prices may pale in the face of the challenge of moving towards a low-carbon future.

“So the challenge is how to balance growing demand with the need to make a transition to a cleaner energy future. To achieve this, we will still need hydrocarbons for decades to come.

“I know that some people would like fossil fuels to be replaced by renewables as we speak. But for technical and economic reasons, this can only happen step by step. And it will not happen across the board. Sectors like heavy industry, heavy duty transport, and chemicals need carbon to operate.

Peterhead power station
Peterhead power station

“And the resource base of the other large source for carbon – biomass – is insufficient to meet their demand, if we consider only the portion that doesn’t compete with food. This means that sectors like these will continue to need hydrocarbons. The upshot of all of this, by the way, is that hydrocarbon assets will keep their value.

“Other people think technology will solve the problem in the end. I agree that technological solutions play a crucial role. In our industry, this will also be about efficiency. Technologies like carbon capture and storage, CCS, are required to clean up the use of fossil fuels. Unfortunately, however, we can no longer wait for CCS technologies to mature slowly. The world needs to start applying them widely and without delay. 

“In my view, the issue is essentially about finding economic ways to invest in an energy transition. This is why governments should take the opportunity to put a price on carbon. By taking the costs of tackling climate change and air pollution into account, carbon pricing systems will drive the right behaviour of consumers and producers.

“Effective carbon pricing-systems would boost technologies like CCS, although more is needed to make CCS a success. Carbon pricing systems would also level the playing field for renewables. And they would level the playing field for natural gas against coal.

“Gas is a fossil fuel, yes, but a crucial one for the building of a low-carbon future. When burnt for power, gas produces around half the CO2 and one-tenth of air pollutants that coal does.

“A switch from coal to gas in power plants improves air quality today and helps deliver a sustainable energy system tomorrow – together with renewables.”

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