By Barney Smith
Just when it seemed safe to leave Big Oil to its own devices for a bit, Shell is involved in several actions which are sufficiently newsworthy that they cannot be ignored.
On Thursday 30 July the company released figures for Q2 2021, which were the best figures for any quarter since 2018 reflecting an oil price of over $70 a barrel. Shell also reversed a previous dividend cut, promising a thirty-five per cent increase and a $2 billion share buy-back campaign
This announcement seemed to confirm the view that Shell is a bit half-hearted about the Energy transition, yet earlier there was a somewhat more promising announcement about the involvement of Shell in a Carbon Capture and Storage (CCS) project. In the past, the British Treasury has twice aborted Government-led competitions for CCS, which is one of the great imponderables of a successful outcome for decarbonisation. But it duly figures as point 8 in Boris Johnson’s ten point plan for a green future, The Prime Minister’s commitments are:-
“We will establish CCUS in two industrial clusters by mid 2020s, and aim for four of these sites by 2030, capturing up to 10 Mt of carbon dioxide per year.. ….. Our £1 billion CCUS Infrastructure Fund will provide industry with the certainty required to deploy CCUS at pace and at scale…… Alongside this, we will bring forward details in 2021 of a revenue mechanism to bring through private sector investment in industrial carbon capture and hydrogen projects, to provide the certainty [that] investors require.”
So it was very much “with the grain” of the PM’s proposed plan that it was recently announced that Shell had signed an MOU with the Acorn CCS project which is getting under way in North-East Scotland. This is an ambitious programme designed to tackle climate change by capturing CO2 emissions from industry and other ‘hard to decarbonise’ sectors and to produce hydrogen. It crucially reduces the considerable expense normally involved by making use of oil and gas pipelines that are already in place, by relying on offshore geology that is ideal for permanently storing carbon dioxide (CO2), and focusing on a region that is embracing hydrogen as a fuel of the future. The project plans to capture carbon from the St. Fergus terminals. Shell is involved because the company is joint owner, with Exxon, of one of the three terminals which together account for around one third of all the natural gas used in the UK. One estimate is that the project could store more than 10 million tons of CO2 emissions by the mid-2030s.
Yet in apparent contrast to this modest advance in the “right” direction, on 20 July Shell announced that it would appeal against the “disappointing” ruling by a Dutch judge that by 2030 Shell should reduce its emissions by 45 per cent by comparison with 2019 in a case that was originally brought by the Dutch section of Friends of the Earth. The formal statement, quoting Shell‘s CEO, Van Beurden, now reads:-
“Shell wants to rise to the challenge of the ruling and accelerate its Powering Progress strategy to become a net-zero emissions energy business by 2050, in step with society’s progress towards the goal of the Paris Agreement on climate change. As part of this strategy, Shell had already set its own short- and medium-term targets for cutting carbon emissions. It is working with customers, governments and wider society, sector by sector, to establish rapid and realistic ways to get to net zero.”
“We agree urgent action is needed and we will accelerate our transition to net zero. But we will appeal because a court judgment, against a single company, is not effective. What is needed is clear, ambitious policies that will drive fundamental change across the whole energy system. Climate change is a challenge that requires both urgent action and an approach that is global, collaborative and encourages coordination between all parties.”
Leaving aside the question of whether it makes any sense to lodge an appeal in this case, the reasoning put forward by the company seems a little odd. As the company apparently agrees with the thrust of the judgement, one wonders what happens if the appeal is rejected? Will Shell’s reputation be some sort of casualty?
Indeed, what exactly is Shell’s reputation in terms of renewables?